Amara Raja charged up for the future

Amara Raja Batteries has taken the next step in their business model by concentrating equally in both lead acid batteries and newer mobility needs (lithium-ion).

The company, which in 2021 announced strategic plans, said that they will expand their growth model in lead acid batteries and also establish a new energy SBU encompassing lithium cell and battery pack, EV chargers, energy storage systems and more.

The battery maker is planning capacity expansion in both the chemistries. But, Jayadev Galla, chairman and Managing Director, Amara Raja Batteries feels that lead acid batteries will last longer than lithium-ion batteries,“It is not the same technology stream and it has been there for 100 years now. It will be there for 100 years more. Whereas, lithium-ion will move on to solid state, and on to other chemistries. I would not be surprised if the lead acid outlasts li-ion.”

He added that the company will also be getting into solid state batteries in the future, “To stay in the EV segment, we have to keep up with the technology. We are investing in R&D and we will get there.”

For the lead acid battery business, Galla explained that Amara Raja is looking at various options to expand geographically outside India. “We are looking at Africa, Middle East and South East Asia as a focus now. We are in the scouting process and are also looking at acquisitions. If we find a right company, then we may not need to set up a greenfield project.”

Suppliers to major automotive batteries under OE relationships to Ashok Leyland, Ford India, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki and Tata Motors, Amara Raja conceded that demand has gone down a bit now leading to a drop in production and disturbed the order book slightly. But, to ensure that the company leads the way, their automotive battery brand Amaron, recently unveiled their mascot – The Ron.

For Amara Raja, currently the share of the auto sector is around 65 percent. Rest is for industrial applications. Galla pointed out that the power situation is getting worse indirectly boosting demand. “Generally, as long as we get the cost back under control, we will be fine. There is no major challenge as of now at this point. The auto demand is a little bit down. That will pick up again. The replacement market is there and that is going on strongly. Also, the share between the two will keep changing. There are times that industrial was more. Depending on demand we also act accordingly,” he said.

Powering newer mobility
Last year, the Board of Amara Raja Batteries (ARBL) launched several strategic initiatives to take advantage of fast emerging new opportunities to accelerate growth and enhance stakeholder value. With this, ARBL announced ‘Energy and Mobility’ as the strategic focus for the company going forward. 

The company also noted that they will invest in advanced process technologies to maintain its technological edge as well as recycling to enhance critical raw material security and expand its commitment to environmental responsibility. “ARBL is confident that these initiatives will result in higher growth rates, increased market share and enhanced stakeholder value,” Galla explained.

Keeping this in mind, the company has plans to invest up to one billion dollars in their new mobility segment. Galla also added they can also invest a similar amount in the lead acid business too, “Over a period of time, we are ready to invest up to a billion dollars in the lithium-ion cells business. This will be over a period of 5-10 years.” Galla said the company has tied up for technology sharing as of now and will look to set up a commercial pilot plant to test the manufacturing process, and then go for the giga-factory, “All of this is expected to happen within 12-18 months.”

The company’s ‘New Energy’ business will build on technological innovations such as lithium and other new age chemistries that are enabling accelerated transformation in renewable energy, electric mobility, microgrids, etc. ARBL plans to invest in a bouquet of products and services to accelerate its transformation to an Energy and Mobility solutions provider.

“We are talking to several people and once we finalise, we will announce it. Right now, we will do a mega factory first and then a giga factory,” he added.

The company has an R&D plant in Tirupati for cell manufacturing and to prove the product design. “We are importing cells now from China, Taiwan and Korea. Sourcing Li-ion will be a challenge. There are new deposits being discovered every day,” he said.

Managing competition and cost are the two key challenges for the battery maker at the moment. “Like the war in Russia-Ukraine it has not been easy. Getting anything important, the transportation costs have gone up tremendously. Distribution costs have gone up and our profits are under a little bit of pressure. Once things come back to normal, we hope the profits come back to normal,” Galla mentioned.

Sharing his thoughts about the other battery chemistries entering the mainstream, the chairman said they are doing Hydrogen cells on an EPC contract in Ladakh. “It is quite exciting and we are looking to see whether Hydrogen will win or Li-ion will win. We have to wait and see,” he stated.

ARBL have also been partnering and supplying batteries to the start-ups. Galla says that there are more such partnerships, keen to make investments in startups. They want to help them where they can scale up and commercialise the product where Amara Raja will be a partner to them. “We will be across both in terms of EVs and stationary applications,” he said.

With such a huge investment and growth trajectory, the end of life and disposal of batteries will be a major concern in the near future. ARBL will not be getting into recycling these batteries immediately but will tie-up with suitable customers where they partner and work accordingly.

Even now none of the lead acid batteries end in landfill. There are plenty of secondary and tertiary uses and then it leads to recycling. Lead acid is being recycled. The question is how many enter the organised sector, and how much into the unorganised area, “Going into the unorganised sector will probably lead to more pollution as they do not follow all the guidelines. This is the case with Li-ion too. There are a lot of valuable metals for people to just throw away. It will come back and get recycled. The ecosystem has to be there and there will be players, part of that value chain,” he concluded. 

This article is a part of the South India special in the issue dated 15 July 2022 

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