| In terms of market
share, where does Amara Raja stand in both the segments?
Amara Raja's share in the standby VRLA market is around 42% and
continues to maintain its leadership position in this segment. In
the automotive battery segment, 2000-01 is the first full year of
operation for the company. We currently manufacture and market a
limited range of batteries for the passenger (car, utility vehicle
and light truck) segment. In the OE segment we have added on an
exclusive supply relationship with Mahindra & Mahindra (Bolero)
and for a portion of Ashok Leyland cargo vehicles. A
few other relationships are being finalized shortly. This is in
addition to the exclusive supply arrangements we have with Ford,
General Motors (Opel diesel) and DaimlerChrysler (Mercedes Benz).
 We
estimate that on the basis of the supplies effected in all of 2000-01
we would end with an overall market share of around 3% of the total
OEM market; we currently operate at a market share level of 6-7%.
In the replacement market, we had rolled out into different cities
starting with Delhi. In our served market in the passenger segment
hi-life batteries have garnered a share of over 8% overall with
shares in the most mature markets exceeding 14%.
What is the market situation like for both
these segments right now?
The market in both sectors is growing steadily.
In the industrial sector we were the first to introduce maintenance-free
VRLA batteries. Other manufacturers have followed suit and
we believe increased competition has allowed for expansion of the
market and resulted in the customer getting the benefit of superior
products and services. In fact, in the last few years, in
sector after sector we have seen conventional industrial batteries
yielding ground to the VRLA technology we pioneered. The industrial
sector caters to core utilities such as railways, telecom, power-generating
stations, non-conventional energy sectors and process industries.
With growth in these sectors the demand for batteries will increase
and we will grow our volumes as the category develops and expands.
Again in the automotive sector we pioneered the introduction of
hi-life silver alloy batteries. With premature failure and
area of concern in high heat tropical environments as in India,
this technology promises to enhance battery service-life substantially
giving the customer more value for money. We believe that
the long-term prospects in the auto OE sector are bright and the
after-market continues to enjoy robust growth. Automotive
OEMs are in a state of consolidation that will result in many new
models of vehicles which will result in OEMs seeking out the best
battery technology that we are in a position to derive benefit from.
In the after-market too we have adopted a differentiated approach
that has thus far yielded strong and positive results which we expect
to build on. We are confident that as the customer realizes
the long-term value of superior products and as he or she increasingly
exercises informed choices we will stand to benefit from the same.
What are the expected growth rates (in the
industry) for both the segments in the next 5 years?
Growth rate in the automotive after-market and OEM sector is around
10-12% p.a.
Growth rate in the industrial sector is estimated at 15% p.a.
Which is more profitable automotive or industrial
batteries?
While traditionally the margins for industrial batteries are higher
compared to the automotive batteries, the auto battery industry
is a volume game. Therefore both sectors are profitable, but
on different parameters. We believe strong, significant presence
in both sectors is essential and necessary for long term profitable
growth.
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