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Amara Raja bets on capacity addition to up market share

Amara Raja Batteries is expanding market share in its main battery business by adding more capacity, its chief financial officer has said.

, ET Bureau|
Feb 17, 2014, 04.06 AM IST
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Amara Raja wants a market share of 24-25 per cent from 16-17 per cent currently, though OEM market share expansion will entirely depend on recovery in the automotive space. 
Amara Raja wants a market share of 24-25 per cent from 16-17 per cent currently, though OEM market share expansion will entirely depend on recovery in the automotive space. 
MUMBAI: Amara Raja Batteries is expanding market share in its main battery business by adding more capacity, its chief financial officer has said. The company is targeting a market share of 47 per cent in the four-wheeler OEM (original equipment manufacturer) segment in the next three to four years from 30 per cent now.

In the replacement market, it expects market share to improve to 30 per cent from 24 per cent, while in the two-wheeler segment, Amara Raja wants a market share of 24-25 per cent from 16-17 per cent currently, though OEM market share expansion will entirely depend on recovery in the automotive space.

Suresh Kalyan, CFO, Amara Raja, ruled out any change or cut in prices. “We will maintain our existing structure of price mechanism, which is +/-2 per cent of dealer land price compared to competition,” he added. “Our aim is not to distort price mechanism to push volume growth and maintain amargin of 14-15 per cent.” It is investing Rs 750 crore to raise capacity in two-, four-wheeler and industrial segments.

The new two-wheeler capacity atRs 100 crore will become operational from March and supplies will start from April. Post expansion, the two-wheeler capacity will reach 8.25 million units from 5.64 million. Given the demand in replacement and OEM, the company is planning to add another 2.4 million units beyond its existing expansion plan.

“We are adding 2.4 million units over and above the existing plan of 8.25-million capacity in the two-wheeler segment. The two lines for additional 2.4-million capacity will be operational in the next six to eight months,” said Kalyan.

Volume is expected to grow in all segments except in the OEM four-wheeler category in the near term. It is expecting volume growth in fourwheeler OEM segment, 15-16 per cent growth in the telecom segment as well as the UPS segment in FY14.

In the telecom space, the company is striving for a 55 per cent share by FY15 than 48 per cent now. The stock has rallied 26 per cent in the past year and 12 per cent in one month, and is being lapped up by FIIs like Copthall Mauritius and William Blair.

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