The Hindu : Business : Amara Raja upbeat over Vodafone entry

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Saturday, Jun 23, 2007
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Amara Raja upbeat over Vodafone entry

Special Correspondent

Will focus more on non-automotive segments

Net profit up at
Rs. 47 crore
Plans stock split

CHENNAI: The entry of Vodafone into the Indian market through the acquisition route has provided ‘beyond the expectation’ opportunity for battery makers like Amara Raja Batteries.

Addressing a press conference here on Friday to announce the annual results, Jayadev Galla, Managing Director, said Vodafone’s arrival had triggered a heightened activity in the Indian telecom space, with each and every player, including the BSNL, embarking on a huge network expansion, resulting in a big surge in battery usage. “None of us anticipated this trigger in demand,” he said. A little over a third of the company’s revenue came from battery sales to the telecom vertical, according to Suresh K., Financial Controller.

Mr. Galla said Amara Raja would focus increasingly on non-automotive segments. In this context, he pointed out the ‘beyond the imagination’ pace of growth in demand for inverter batteries. “More homes will have inverter battery, which can outpace the growth in automotive battery,” he said.

He said the slowdown in the automobile sector would have no impact on the company since only 20 per cent of the automotive battery volume came from the OEM (original equipment manufacturer) segment. The rest of the demand for automotive batteries came from the after-market segment, he said. Mr. Galla was confident that Amara Raja would go in for an aggressive capacity use and maintain the growth in the current year in view of the aforesaid factors.

The company reported gross revenue of Rs. 745.10 crore during 2006-07, up from Rs. 445.83 crore in the preceding year. Net sales were Rs. 595.80 crore, up from Rs. 363.67 crore. The profit after tax was Rs. 47 crore against Rs. 23.85 crore. The company also announced its plans to sub-divide the face value of the stock from Rs. 10 each to Rs. 2 each fully paid-up.

The objective was to improve liquidity, said Mr. Galla. The Managing Director expressed concern over the rise in lead prices globally. It had shot up from $1,400-1,500 to $2,600 a tonne now. It was expected to rise further to $2,900 a tonne.

This had offset the gain the company had got from the rupee appreciation, he said. In this context, Mr. Galla said Amara Raja would go in for hedging fixed price contracts.

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