Batteries included: Amara Raja's game plan
Amara Raja Batteries Ltd, India’s second-largest lead-acid battery manufacturer. The battery industry is in the throes of change with the emergence of lithium-ion batteries, which are enjoying a boom in demand thanks to the rapid adoption of electric vehicles. If Amara Raja does not invest in the new technology, it will be finished.
If it does, Galla explains, its margins will take a hit in the interim as the imported content in a lithium-ion battery will be high and the stock market will punish the company. The Amara Raja boss, however, is clear that he will not miss the bus. A lot has happened in the last few quarters.
Amara Raja has announced a ₹9,500 crore investment in a lithium-ion Giga factory at Divitipalli in Mehaboob Nagar district of Telangana (a Giga factory produces lithium-Ion batteries on a large scale). It has laid the foundation for a state-of-the-art research facility near Hyderabad, which will look into not just lithium-ion batteries but also other advanced cell chemistries. Indeed, over the long term, Amara Raja harbours ambitions of becoming India’s biggest li-ion battery maker.
But can Amara Raja realistically think of becoming the leader in the domestic lithium-ion battery space? To do so, it needs to develop an efficient product that is competitive both in terms of performance and cost, not just in India, but globally. It has to get a supply chain in place. Getting all this right the first time is critical as it needs to scale up fast to ensure an optimal return on investment.
At the same time, it has to achieve all of this without losing focus on its lead-acid business. For good reason—because that is its core business, and one that is doing rather well. Lead-acid batteries serve as a source of
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