Battery major Amara Raja Energy & Mobility Ltd is likely to invest close to Rs 3,000 crore as capital expenditure for its new energy and lead-acid businesses in two years – fiscal years 2025 and 2026 – as it looks to participate aggressively in India’s growing electric vehicle space.
The country’s largest lead-acid battery manufacturer, Amara Raja generates around 67 percent of its revenue from the automotive battery business. The lead-acid battery business currently accounts for a significant part of the company’s revenue.
While the company looks to strengthen its presence in the lead acid battery market, it is also diversifying the business by focusing more on lithium cell manufacturing and battery pack assembly as well as on power electronics and charger manufacturing through its new energy business.
“For fiscal 2025, we may need to spend close to about Rs 1,500 crore between lead acid and new energy business. I think lead acid would need about Rs 300-400 crore, whereas the new energy business will require Rs 1,000-1,100 crore as capex,” the company’s Chief Financial Officer Delli Babu told investors in a post-earnings call.
He noted that the capital expenditure for the financial year 2026 might also be of the same order. The split of investment between the new energy and lead acid business is likely to be similar, maybe a little less for the lead acid business.
In the financial year 2024, the company’s capital expenditure was around Rs 800 crore. The battery maker is setting up a giga factory for manufacturing lithium-ion cells and battery packs in Telangana that will have a capacity of 16 GWh cell capacity and 5 GWh battery pack capacity over the next 10 years. The company plans to start commercial operations of the first phase of the factory with a capacity of 2 GWh by the end of 2025-26. The cell capacity of 2 GWh is estimated to cost Rs 1,500 crore.
“The initial capex of between this year and next year, we will take the burden on the holding company balance sheet, considering the free cash generation that we are having,” Babu said. Earlier, the company had announced a capital expenditure of Rs 9,500 crore for 16 GWh capacity. “Once we have the initial capacity up and running, we can explore other possibilities of funding the growth either through debt or equity plan,” he added.
The management noted that it would start commercial production of localised chargers in the last part of the current quarter. Initially, these chargers will be for three-wheelers but the company plans to expand it to two-wheelers as well by the end of the year. Meanwhile, the company has completed the construction of its battery pack facility in Telangana and it expects to start commercial production next month.
Traditional battery manufacturers are currently looking to cash in on the anticipated growth in the sales of electric vehicles in India. The country sold around 1.6 million electric vehicles during 2023-24. Exide Industries Ltd is also planning to invest around Rs 1,000 crore in its lithium-ion cell manufacturing and battery pack solutions subsidiary Exide Energy Solutions Ltd during the current financial year. The first phase of Exide’s lithium-ion cell manufacturing is expected to be operational next with a capacity of 6 GWh.
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