Rajesh Jindal - head, Automotive Battery Division, Amara Raja Batteries
The head, Automotive Battery Division, Amara Raja Batteries, speaks to Brian de Souza on tackling the slowdown, capacity expansion and recycling.
How did the last fiscal year go for Amara Raja, given the slow market conditions?
Amara Raja Batteries has done very well in the last fiscal. The market slowdown was only in the OEM segment. The replacement market in which we have a large role witnessed strong demand. Demand grew by around 12 percent while we grew by around 22 percent. We were able to grow both the segments beyond industry growth rates, thereby increasing market share. Our OEM to replacement ratio will be 1:2.
When is the expansion programme slated for?
The expansion is slated to take place in 2014-15 and will be by 2.25 million numbers. We are looking at minor additions in terms of an assembly line in the fourth quarter of this financial year based on internal adjustment between the auto and industrial divisions.
Given improved aftermarket sales, what plans does the company have in terms of expanding locational reach and advertising?
We currently have a presence all over India. However, further strengthening of the distribution network and increasing penetration levels is a continuous development at Amara Raja. Further, we believe in consistency in advertising, year on year. We will continue this approach to strengthen the brand position.
Apart from Honda Motorcycle & Scooter India, which other new clients has the company added to its roster in recent times?
We have initiated supplies to Honda Motorcycle & Scooter India and will ramp up production based on their own ramp-up. With this, we will be present in most of the OEMs, barring a few, where discussions are underway. We expect these discussions with other OEMs to close by the fourth quarter of this fiscal or the first quarter of the next fiscal.
What impact is the weak rupee having on Amara Raja and how do you see it panning out in 2013-14?
The weakening of the rupee has had a huge impact on our business as the bulk of the raw material that includes lead and separators are imported. This affects the entire battery manufacturing industry, not just Amara Raja in particular. The nature of contracts with OEMs and regular passing on of such increases in input costs by the battery industry in the replacement market, ensures that we don’t get adversely impacted by the rupee's depreciation.
Given the environmental implications of automotive batteries, what is the company doing to lessen the environmental impact and aspect of recycling?
Currently, we do not have any plans to start recycling. The operation is not financially viable, in view of the large unorganised market for battery and lead in India which leads to very high prices for junk batteries. However, we support our trade partners to ensure that junk batteries find their way to authorised smelters only. We have tie-ups with large authorised smelters for collection of junk batteries from our channel partners. The lead that is generated from these batteries after breaking and refining is taken from these smelters for limited use in our operations.
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