Amara Raja Batteries (ARBL) has kick-started production at its manufacturing facilities located at Andhra Pradesh immediately after receiving High Court orders that suspended the Andhra Pradesh Pollution Control Board (APPCB) orders to close its plants.
Global asset management firm Brookfield-backed ARBL was under investors’ focus last week after APPCB ordered the company to shut its plants at Nunegundlapalli and Karkambadi at Chittoor district of Andhra Pradesh.
ARBL is the second largest battery maker in India. Batteries and power units produced by it caters to critical sectors like hospitals, defence and telecom. With a workforce of over 11,000 employees, it asked its employees to immediately embark to resume production on Friday evening itself.
In a note last week, Nomura said the closure of plants will impact the entire production capacity of the company. “ARBL is the No 2 supplier of batteries in India and a shutdown could disrupt production for the entire auto sector. In case the closure extends, there is risk of shortage of batteries, pan-India, across OEM, replacement and industrial segments.”
Shares of ARBL fell more than 10% to close at Rs 780 after the news of plant shutdown hit the market. It had touched a 52-week high of Rs 1,025 in January this year.
The company in its statement said that it has taken proactive measures to ensure that its obligations to supply products and services to its customers are met in a timely manner without causing any inconvenience, whatsoever. “We are assessing the impact of the short-term disruption, and gearing up to sufficiently cater to the demands of all our customers and business partners,” it added.
Recently, the company embarked on an “Advanced Lithium Technology Research Hub” with pilot plant facility for cell development and is setting up a 50MW solar power plant in Andhra Pradesh with an outlay of Rs 220 crore. It has developed a wide range of battery packs for e-mobility and energy storage applications and already secured approvals from some OE’s and fleet operators for commercial supplies. It also will set up a greenfield lead recycling unit with capacity of one lakh tonne.
The capital outlay for this project is expected to be Rs 2,800 crore to be spent over the next 18 months. The total capex for the financial year 2021-22 is likely to be up to Rs 700 crore.
The company, which is one of the largest manufacturers of lead acid batteries for both industrial as well as automotive sectors in India, is owned by leading institutional investors such as Brookfield and Nalanda Capital, who hold 24% and 10% stake, respectively. It competes with Exide Industries, which is the leader in the automotive segment.
