A late entrant into the two-wheeler segment, Amara Raja Batteries Limited, one of the leading manufacturers of industrial and automotive batteries, will soon join the original vehicle (OV) bandwagon after establishing a substantial market share in the replacement market.
“Discussions are on and we will be entering into an agreement with one of them (OVs) very soon,” said Jaya Galla, managing director of Amara Raja here on Friday. He, however, declined to name the entity with which the company is expected to tie-up for supply of batteries.
Amara Raja entered the two-wheeler market three years ago and already commands close to 28 per cent market share in the two-wheeler battery replacement market. The company had, for the first time, crossed the Rs 500-crore revenue mark (Rs 525 crore from net sales) in the first quarter of FY11 and registered an 18 per cent growth in gross sales income during the period.
Of the 12-14 million batteries sold in the market each year, OVs account for up to 2 million units. “What is more interesting here is that earlier only one out of four batteries used to be replaced as most of them used to have only the kick-start function. With electric starters becoming a standard feature, the replacement market is expected to expand very fast,” he said on the sidelines of the CII-Southern Council meeting.
The company is the first one to introduce its proprietary VRLA (valve-regulated lead acid) technology in two-wheeler batteries, which claims to have more powerful performance at 30 per cent higher cranking power.
Responding to a question on the possible impact of the decline in passenger car sales on battery sales, Galla said the current dip was not a permanent loss.
Still there is a 10-15 per cent growth in the OV market and the rest of it will come back very strongly adding to sales growth as the customers have only postponed their buying decisions. In the next 5-10 years, there will not be any problem as far as the demand is concerned, he said. The company commands a 30 per cent market share in four-wheeler battery market.
According to Galla, the company has expanded its market share by 4-5 per cent in the last 12-18 months.The company is planning to start work on its next greenfield project, possibly spreading across multiple locations, in the year 2012-13.