Cap Boost For Amara Raja

According to Ramachandra Galla, managing director, the plastic cases project will go on stream in November 1997. The capacity of this unit will increase commensurate to that of the battery capacity which is expected to reach a level of 2.75 lakh batteries from 1.8 lakh batteries. The companys order book position is full.

The company saw its OPM dip in the last year to 24.19 per cent from 27.5 per cent in 1995-96. This was caused by the high prices of lead. However, lead prices have softened significantly from a high of Rs 730 per kg in January 1997 to the current level of Rs 680 per kg in the domestic market. This should significantly improve the margins .

Penetrating the highly competitive automotive battery segment having major players like Exide and Amco will be difficult for the company. However Galla says that foreign technical collaboration will enable them to introduce high quality products. Though Exide has entered the VRLA segment, Amara Raja is not feeling the heat since it has already built up an excellent client base.

The company is the market leader in the industrial battery segment but it gets a discounting of less than five times at a price of Rs 89. This may improve once the benefits of taking on a foreign financial partner become clear.