Amara Raja Energy & Mobility Limited
Know the Company
Amara Raja Energy & Mobility Ltd (ARE&M) is the flagship company within the Amara Raja Group, which was founded in 1985 by Ramachandra Naidu Galla, at Tirupati in Andhra Pradesh. The storage batteries business unit of the group commenced operations in 2001 as a joint venture with Johnson Controls, US – the world’s largest manufacturer of automotive batteries. This joint venture pioneered the introduction of zero maintenance technology in India’s automotive battery segment, the key differentiator in the Indian electric power storage sector. Now the Company has grown into a diversified provider of energy storage solutions and its products selling in India and exports to over 50 countries across the globe. Presently, Indian market contribution stands at approximately 87% of its revenue and the rest from exports. Presently, the Company has five manufacturing plants located at Chittoor in Andhra Pradesh.
ARE&M’s products spans across Lithium-ion cell manufacturing, EV chargers, Lithium – Ion battery pack assembly, automotive and industrial lubricants, as well as exploration of new chemistries for the storage cells. The company’s energy storage products serve both industrial and automotive applications with leading industrial battery brands such as PowerStack, AmaronVolt, and Quanta, and renowned automotive battery brands Amaron and Powerzone.
ARE&M is a preferred suppliers for almost all automotive companies, major telecom service providers, telecom equipment manufacturers, the UPS sector, Indian Railways, and numerous companies from the Power, Oil & Gas industries. It also a major OEM supplier for leading automotive companies in India including Ashok Leyland, Ford India, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki, and Tata Motors, etc.
Strengths
ARE&M’s strength relies on technological innovation, market leadership position with strong brands, and strategic technology partnerships. The Company is the largest player in the automotive replacement battery segment in India and the largest exporter of 4W batteries in the country. Its brands in the automotive battery segment include Amaron and PowerZone. The company is credited with being the first to manufacture AGM motorcycle and car batteries in India. It is also the first to manufacture Punched Grid motorcycle batteries in the world.
ARE&M is a pioneer in Valve Regulated Lead Acid (VRLA) battery technology in India and the largest exporter of VRLA batteries from the country. The company holds the largest market share in the Indian telecom industry battery segment and the Indian data center battery segment. Its brands in this sector include PowerStack, Amaron Volt, and Amaron Quanta. The company’s industrial battery division markets its batteries under brand names such as Amaron Sleek, Amaron Brute, and Amaron Solar.
Amara Raja Energy and Mobility is undertaking large-scale expansions, particularly in the latest technologies for the storage cells industry. Recently, ARE&M signed technical licensing agreements with Gotion High-Tech Company headquartered in Hefei, China to leverage advanced lithium iron phosphate (LFP) cell technology for manufacturing world-class lithium-ion cells. The licensing agreement provides access to cell technology IP, support for establishing gigafactory facilities with the latest generation process technologies, integration with Gotion’s global supply chain network for critical battery materials, and customer technical support for solutions deployment.
The company plans to increase the capacity of lithium-ion cell manufacturing at its greenfield Gigafactory to over 25 GWh per year, up from the earlier target of 16 GWh. The proposed Rs 9,500 crore Gigafactory in Telangana will also manufacture battery packs. This project includes one of India’s largest lithium-ion Giga factories for Advanced Chemistry Cell (ACC) manufacturing and Battery Pack assembly at New Energy Park, Mahbubnagar, Telangana. The company aims for 16 GWh of cell capacity and 5 GWh of battery pack capacity within the next ten years. The first phase of the project, with 2 GWh capacity, is scheduled for completion in the next financial year. Additionally, the company is a bidder for the government’s PLI scheme for 10 GWh of Advanced Chemistry Cell Manufacturing.
ARE&M’s products play a vital and indispensable role in various industries, such as telecommunications, data centers, railways, and electric mobility. The increasing demand for fuel-efficient vehicles and the expansion of 5G networks are significantly boosting the company’s products growth.
ARE&M aims the reliability and proven technology of Lead Acid Batteries and are committed to optimising its performance, targeting specific market segments, prioritising sustainability, integrating new technologies, and providing excellent customer support. The Company is continually undertaking various initiatives to integrate new technologies and enhance the performance of lead acid batteries. As part of the optimization efforts, the company is setting up a battery recycling unit with a capacity of 150,000 tons.
As per the Company’s AR, over the next five years, India’s vehicle production is expected to experience exponential growth, with a projected count of approximately 252 million two-wheelers and over 96 million four-wheelers, by 2028. These projections indicate ample opportunities for battery manufacturers and suppliers.
Policy support from the union government, such as increasing FDI from 49% to 100% in the telecom sector, the Telecom Ministry’s efforts on a new data center bill to facilitate more data center deployments, a revival package for BSNL and MTNL, and the introduction of PLI schemes for the telecom sector, vehicle scrappage policy would significantly boosts the demand for various power storage solutions. The company already has a presence in over 50 countries worldwide and derives approximately 14% of its revenue from international operations. It now aims to enter Western markets and further expand its footprint in Africa and other regions.
ARE&M reported strong financial performance for the quarter ending March 31,2024 (Q4FY24) and FY2024. The Company’s consolidated profit after tax rose 62% to Rs 230 crore for the fourth quarter ended March 2024 as against a profit after tax of Rs 142 crore in Q4FY23. At the same period revenue grew by nearly 15% to Rs 2,797 crore, with the support of 19% rise in the lead-acid batteries and allied products segment. For the financial year ended on March 31, 2024, the company reported a profit after tax of Rs 934 crore as against Rs 731 crore in the FY2022-23. Revenue from operations for the FY2024 rose to Rs 11,708 crore as compared to Rs 10,392 crore in FY2023.
Outlook
Outlook of ARE&M looks quite strong supported by several factors such as new product development, capacity expansion and latest technological tie-ups. Each segment, where the Company has strong dominance, looks bright, especially in the automobile and telecom. The company’s strategic investments in lithium-ion technology and collaborations with global leaders like Gotion High-Tech Co positions it favorably to take advantage of the increasing demand for advanced energy storage solutions.
The swift adoption of electric vehicles (EVs), especially in the 2W and 3W segments offers substantial growth opportunities for ARE&M. The company’s emphasis on developing cells and batteries specifically designed for these segments in India positions it as a major player in the EV market. The rollout of 5G networks and rising requirements for uninterrupted power in data centers are anticipated to fuel demand for UPS batteries. ARE&M’s products are poised to satisfy these expanding requirements, and the company is enhancing its footprint in these rapidly growing sectors.
Risk Factors
The Andhra Pradesh Pollution Control Board issued a closure order in 2021 for the lead battery plants located at Karakambadi, Tirupati, and Nunegundlapalli in the Chittoor district of Andhra Pradesh, citing environmental rules violations. However, the Andhra Pradesh High Court granted the company interim relief from these orders. Still, it is learned that the issue is under litigation procedure. Any adverse verdict from the higher court, if it happens, could adversely affect the company’s operations.
The Company’s products depend on specific industries like telecommunications and automotive, which are susceptible to economic downturns.
Storage power product technologies are still considered to be in a nascent stage and may undergo significant technological advancements in the near future. This is another cause for concern, particularly the company is heavily investing in current technologies