Amara Raja Energy & Mobility: Imagine a world without the constant hum of electricity. Cars sit silent, factories grind to a halt, and even a simple phone call becomes impossible. This power outage might seem like a nightmare, but it highlights the crucial role of energy storage in our daily lives. 

Here comes Amara Raja Energy and Mobility Ltd which stands tall as a leading player in this vital space. They focus on lead acid batteries, the dependable workhorses of the industry. From the roar of motorcycles to the quiet hum of telecom towers, Amara Raja’s batteries became the silent partners ensuring everything ran smoothly. 

But Amara Raja isn’t content with just keeping the lights on. They are innovators at heart. Their collaboration with Johnson Controls, a global battery leader, allows them to stay at the forefront of technology. This translated into high-performance, low maintenance batteries that cater to the ever-changing needs of various industries. 

Their exploration of Lithium ion battery technology holds immense potential for electric vehicles and integrating renewable energy sources. Come lets try to understand their business model 

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Industry Overview Of Amara Raja Energy & Mobility

The Indian automotive industry is on the cusp of significant growth, valued at US$222 billion and contributing 8% to the country’s total exports and 7.1% to its GDP. It is expected to become a US$300 billion market by 2030.

Several key drivers are fuelling this growth-rising disposable incomes of a burgeoning middle class, India becoming the world’s youngest nation by 2025 with an average age of 25 years, increasing vehicle penetration expected to reach 72 vehicles per 1,000 people by 2025, and India’s position as a major R&D hub with the automotive sector accounting for 8% of the country’s R&D expenditure.

The government’s Make in India and Atmanirbhar Bharat initiatives, providing incentives like the Rs 25,900 crore PLI scheme for the auto sector, are also boosting domestic manufacturing capabilities. The industry is expected to record a 10-12% growth in FY2024 after a robust 7-9% growth in FY2023, driven by post-Covid pent-up demand.

In parallel, India is witnessing rapid growth in digitization, data centers and renewable energy adoption – key drivers for the industrial battery and energy storage market that Amara Raja Energy & Mobility operates in. The data center market was valued at US$4.35 billion in 2021 and is projected to reach US$10.09 billion by 2027. The Indian UPS market was pegged at US$1.17 billion in 2022 and is forecasted to grow at 8.2% CAGR through 2030.

The transition towards electric mobility and sustainability is also creating massive opportunities in the lithium-ion battery segment. India’s electrification demand is projected to be 150GWh by 2030 across user segments like mobility, telecom and data centers. With comprehensive strategies and investments, Amara Raja Energy & Mobility is well-positioned to capitalize on these emerging opportunities in the automotive and new energy markets.

Company Overview Of Amara Raja Energy & Mobility 

Amara Raja Energy and Mobility was incorporated in 1985, they are engaged in a business of manufacturing and selling lead-acid batteries for both automotive and industrial applications in the Indian storage battery industry. 

The company’s brands like Amaron and Powerzone have a strong recall in the Indian domestic market. Amara Raja Energy & Mobility has 7 manufacturing facilities in Andhra Pradesh, out of which 4 have been recognised with gold in international-level quality circle competitions (ICQCC) held in Jakarta, Indonesia. 

Amara Energy Energy & Mobility became the first AGM manufacturer for 2W and it is also the first VRLA battery manufacturer in India. They entered into New energy Business in 2022 through their subsidiary firm named Amara Raja Advanced Cell Technologies. 

The company has 23 branches and 39 distribution points for its sales network in India. Their clients include Maruti Suzuki, Tata, TVS, Ashok Leyland, Hero, Royal Enfield and Airtel. 

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Financial Of Amara Raja Energy & Mobility

FY 2023FY 2022FY 2021FY 2020
Revenue (in crores)10,3888,697.157,149.786,839.17
Net profit (in profit)694.53512.57646.83660.8
ROE14.10%11.70%16.45%18.91%
ROCE18.49%15.18%21.20%23.08%

In the Financial year 2023, Amara Raja Energy & Mobility saw a good increase in revenue by 19.44% to reach 10,388 crores as compared to 8,697.15 crores in FY 22. Analyzing FY 2023, the company displayed a good Compound Annual Growth Rate (CAGR) of 14.95% in revenue. 

The company in FY 23 also increased its net profit margin by 35.49% to 694.53 crores as opposed to 512.57 crores in FY 22. In FY 23, Amara Raja maintained favorable financial metrics with a Return on Equity (ROE) of 14.10% and a Return on Capital Employed (ROCE) of 18.49%.

The increase in revenue took place because of an increase in sales which happened both in Automotive industry and Industrial battery segments, driven by increased demand and market share gains.

Future Plans Of Amara Raja Energy & Mobility

Amara Raja Energy & Mobility plans to have a new Giga Corridor in Divitipally, Telangana. For that, they have announced a capex of Rs 9,500 crore. In this location, they want to set up a lithium-ion manufacturing facility with 16 GWh capacity over the next 10 years. 

They also want to set up the E Positive Energy labs facility in Hyderabad for new energy solutions and plan to manufacture EV charging products in addition to lithium-ion cells and packs to provide comprehensive EV solutions. Recently the company acquired Amara Raja Power Systems Limited to bolster EV charging infrastructure offerings.

Amara Raja Energy & Mobility is also in the process of setting up a 1.5 LPTA-led recycling facility through wholly owned subsidiary ARCSPL to promote a circular economy. 

The company is increasing its focus on exports to over 50 countries that are currently served. They are enhancing their distribution network in India with over 1 lakh points of sale currently.

They also plan to increase their renewable energy usage from the current 19.6% level across operations. They want to invest in digitalization, technology, and process automation initiatives across the country. 

Conclusion

Amara Raja Energy & Mobility Ltd has established itself as a cornerstone of India’s energy storage landscape. Their unwavering commitment to quality and innovation has secured their position in lead acid battery technology. Looking ahead, their exploration of Lithium ion batteries positions them for exciting possibilities in the burgeoning electric vehicle and renewable energy sectors. 

By strategically leveraging their existing expertise and embracing advancements in technology, Amara Raja is poised to continue powering progress for decades to come. They are well on their way to becoming a key player in shaping a more sustainable and efficient future of energy storage. 

What would you bet on their future? Do let me know in the comments below. 

Written by Pavunkumar V M

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