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Amara Raja Batteries Ltd

BSE: 500008 | NSE: AMARAJABAT ISIN: INE885A01032
Market Cap: [Rs.Cr.] 15,133.73 Face Value: [Rs.] 1
Industry: Auto Ancillaries

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Management Discussions

Global economy

The global economy remain subdued as global GDP growth decelerated for the third year– 3.9% in 2011 to 3.1% in 2012 and 3% in 2013. Most developed economies addressed thereality through appropriate remedial fiscal policy action. Besides, a number of emergingeconomies, which had already experienced a debilitating slowdown in the past two years,encountered new domestic and international headwinds during this period.

Prospects: Looking ahead, global growth is projected to strengthen to 3.6% in 2014 and3.9% in 2015 (Source: IMF April 2014). Global activity is expected to improve during2014-15, with much of the impetus coming from advanced economies. Many emerging marketeconomies account for more than two-thirds of global growth and their output growth islikely to be lifted by exports to advanced economies.

Challenge: Global recovery is still fragile despite improved prospects with significantdownside risks. Among old risks, those related to emerging market economies increased.According to the Global Financial Stability Report, rapid normalisation of the Americanmonetary policy or renewed bouts of high risk aversion on the part of investors couldresult in further pain (Source: IMF, April 2014).

Indian economy

India’s economic growth of 4.7% in 2013-14 was marginally higher than the previousyear due to an improved performance in the agriculture and allied sectors.

The slowdown was primarily due to an unsupportive external environment, regulatorypolicy logjam, structural constraints and inflation. Despite these challenges, there werepositives which provided a foundation for resurgence:

The current account deficit contracted; the fiscal deficit target was met

India implemented substantive measures to narrow external and fiscal imbalances,tighten monetary policy, move forward on structural reforms and address market volatilityto reduce vulnerability

India built upon its foreign exchange reserves

The Indian economy is placed better than what it was in 2013. A dynamic government atthe Centre strengthens optimism of robust economic growth, which is projected at 5.6% in2014, rising to 6.0% in 2015 (Source: RBI).

User sectors

Telecom: India’s telecom industry posted a 10.1% revenue growth in 2013-14 from8.6% in the previous fiscal despite intense competition and call rates declining to anall-time low. The improvement was largely a result of growth in the wireless subscriberbase, reduced churn levels and an improvement in revenue realisation.

More importantly, 2013-14 will be regarded as a transformational year for the industry.The uncertainty of the previous years ended with fresh spectrum auctions taking place. TheDepartment of Telecom, Government of India, announced significant initiatives - revisionof the ‘tower rollout policy’ and the ‘mergers and acquisitionspolicy’, which permitted 100% FDI in the sector. Spectrum auction in the last quarterof FY 2013-14 enhanced a clarity for sectoral expansion.

HUPS: An estimated 17 states witnessed significant power supply shortages in 2013-14.As per CEA estimates, South India experienced a power deficit of 19.1% in 2013-14 comparedto a 15.5% deficit in 2012-13. This unreliable power supply made UPS backup a criticalaspect of technology-led operations, strengthening demand for UPS batteries.

Automotive OEMs: The domestic passenger vehicle industry, pegged at 2.5 million unitsin 2013-14, declined by 6.1% over the previous year as all three sub-segments (passengercars, utility vehicles and vans) experienced a demand contraction despite an excise dutycut and the introduction of 101 models (35 completely new). Demand had declined over twoyears (FY2012-14) due to a sharp increase in the cost of ownership while growth in realper capita income declined to an average of 4%. However, the domestic two-wheeler industryrecorded a sales volume of 14.8 million units in 2013-14, a growth of 7.3% over theprevious year.

Automotive replacement: The demand for batteries from this segment continued toregister healthy growth due to the addition of vehicles. Besides, battery usage increased(due to road congestion and the need to optimise fuel consumption) resulting in fasterbattery replacement.

With the automotive battery being recognised as a critical component, users show anincreasing preference for branded products.

Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

Ramachandra N Galla , Chairman

Jayadev Galla , Vice Chairman & M.D.

Shu Qing Yang , Director

Nagarjun Valluripalli , Director

Company Head Office / Quarters:

Renigunta-Cuddapah Road,
Andhra Pradesh-517520
Phone : Andhra Pradesh-91-877-2285561/2265000 / Andhra Pradesh-
Fax : Andhra Pradesh-91-877-2285600/2285560/2286999 / Andhra Pradesh-
E-mail : amararaja@amararaja.co.in
Web : http://www.amararaja.co.in


Cameo Corporate Services Ltd
Subramanian Building,1ST Floor No 1,Club House Road,Chennai - 600002

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