Battery maker Amara Raja to go ahead with Rs 350 crore capex on production

Company says it saw demand picking up in May and has managed coronavirus crisis well.

Amara Raja Batteries Ltd would need at least Rs 350 crore in capex this fiscal year as it expands its main business and scales up the e-rickshaw division, said analysts.

The proposed expansion includes completing a green-field unit for a third automotive battery plant and improving other facilities for domestic and export markets, said the company.

"We are revisiting as much as possible to see what all capex that we need to reconsider considering the demand situation and also the current economic scenario, so at this point of time our estimate is on capex around Rs 350 crore could be the cash flow," said S Vijayanand, the company’s chief executive officer, in a recent investor call.

The company's third plant will produce about 6 million batteries over time, as two more facilities are set up to produce 2 million batteries separately.

A four-wheeler plant is under construction and should be completed in financial year 2021, said the company as it aims to gain volumes in the domestic and export markets.

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“We should reach about 1.6 (million) to 1.7 million battery capacity as far as tubular batteries is concerned," said Vijayanand.

The company has managed the last two months of the nationwide lockdown to contain the coronavirus outbreak without a major setback to operations. April saw no demand but recovered in May. “Next two-three months would be critical to see how this situation evolves and the best approach is not to predict what is happening, but be prepared to deal with the context,” he said.