PremiumNEW DELHI: Amara Raja, the maker of Amaron brand lead batteries, has announced plans to transform into an energy and mobility solutions provider for automotive and other sectors. The move, the company expects, will help double its compound annual general growth (CAGR) to 16% or above from the current 7-8%, said Jayadeva Galla, chairman, in an interview to Mint.
In a board meeting on Saturday, the company finalised plans to foray into the lithium-ion segment and that of electric vehicle charging and battery swapping devices. The division, to be known as ‘New Energy’, will be headed by S Vijayanand.
The decision comes weeks after the union government announced Production Linked Incentive (PLI) scheme to promote manufacturing and subsequently exports of advanced chemistry cell (ACC) batteries.
“We want to be an energy and mobility player and what’s taking us into that is the investments we are making in the new energy business. In terms of impact on the company we are looking at moving from present CAGR of 7-8% and with all the initiatives, we plan to double it around 16% and above," said Galla.
He added the company is open to mergers and acquisitions to grow the new businesses.
However, the company is yet to decide on the quantum of investments needed for these new ventures and a board approval has not yet been sought for any new projects.
Amara Raja, along with companies like Tata Chemicals, has shown interest in utilising the PLI incentives to set up manufacturing capacities for lithium cells and batteries.
India on its part is rolling out its roadmap for transition to electric mobility that involves manufacturing of lithium-ion batteries.
According to the PLI scheme, manufacturers would have to commit to set-up a manufacturing facility with a minimum capacity of 5 GWh and ensure a minimum 60% domestic value addition within five years at ‘Project’ level.
Subsequently, the battery or cell manufacturer will have to achieve a domestic value addition of 25% and will have to show a minimum investment of Rs225 crore per GWh within two years and raise it to 60% domestic value addition within five years “either at Mother Unit, in-case of an integrated unit, or at the project level, in-case of "Hub & Spoke" structure.
The Indian government is eyeing direct investments of around Rs45,000 crore from leading domestic and global manufacturers in the coming decade following the scheme.
“In the PLI scheme you have to bid for the minimum of 5GWH and our assessment is, to be at a globally competitive scale, we actually have to be 8-10 GWH. Our intention is to become globally competitive and not become dependent on Indian market. We made that journey in the lead acid battery and we plan to do that with lithium as well. But to get to that scale, the investment that will be required is a moving target now," said Galla.
In addition to approving the transition, Amara Raja's board has also approved certain changes in the company management, wherein vice-chairman Jayadev Galla will assume the position of chairman. Incumbent Ramachandra Galla, has decided not to seek a reappointment.
The board will also induct Harshavardhana Gourineni and Vikramadithya Gourineni, nephews of chairman designate, as executive directors of the company.
“The promoter family had adopted a robust and transparent process of succession planning in 2013 when both Harsha and Vikram were identified as gen-next leaders. Both of them have played transformative roles in building businesses and taking them to new heights. They have proved their leadership capabilities and excelled at all the roles they have been leading over the past 7-8 years," said the company in a statement.
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