 "Amaron")
For nearly a decade now, Amara Raja Batteries (ARB) has been chipping away at the near unassailable lead that market leader Exide has had in the Indian battery market. But it is only in the last five years that company has begun to close the gap; from just 10 per cent of the automotive (original equipment manufacturer, OEM market), Amaron now has 33 per cent of the four wheelers market. But it is in the replacement market, that the brand has narrowed the lead down considerably, so much so that the difference between Exide and Amaron is just 3-4 per cent in some categories. Jayadev Galla, whose father built the business 16 years ago, says that they have done that by expanding product platforms, widening the geographical spread of the distribution network and investing consistently in brand building.
The company believes that it can overtake Exide and has set itself a target of doubling the turnover in the next four years to Rs 12,000 crore. Its claims are being taken seriously among a section of its peers and analysts and an analyst from ICICI Direct notes, “ARBL has benefited from EIL’s lack of clear strategy to gain a major foothold in the minds of customers in a profitable manner.” However, if the brand has to step up its share of the market, it will need to get more aggressive in the two wheeler market where Exide is still way ahead.
Galla, vice chairman and managing director, ARBL says that the company is aware of the challenges. But he says that the determination demonstrated by his father when Exide was a near monopoly player has taught the company a lot. He says when they launched Amaron in 2000 few had given them a chance against the market leader. It has not been easy, it took the company over five years to build factories of comparable capacity, which impacted ARBL’s performance in 2003-04 and 2004-05, he says.
However over the past five years, the focus has been on making the brand more relevant across a wider category of engines and that has helped take on the might of Exide. Rajesh Jindal, VP and CMO, ARBL, said that the company has moved its focus “from a single platform (battery maker) to become one stop solution for all the battery needs of a customer.” Even five years back, he says, the Amaron brand catered to 85 per cent of the market but now it has extended its presence to meet the needs of 100 per cent of the market. The company has invested over Rs 1,800 crore towards this and other brand building initiatives.
Jindal is particularly pleased with the fact that Amaron batteries can now serve Maruti’s Swift and Dzire engines. Previously these engines ran only on Exide batteries. Amara Raja today supplies to all four-wheeler platforms (includes commercial vehicles), three-wheelers, two-wheelers (new platforms) and has expanded its industrial business too. As a result, the automotive battery business contributes around 55 per cent of the turnover, with the balance from industrial batteries.
Its share in four wheeler replacements, which is estimated to be around 15 million batteries, is around 28 per cent. Exide takes away around 30 per cent. In two-wheelers, ARBL’s share is around 30 per cent, while Exide is around 34 per cent in 2015-16. For OEMs, ARBL says it accounts for 33 per cent for four wheelers, while Exide is around 50 per cent. In two-wheelers, ARBL is around 15 per cent but Exide is still way ahead at around 60-65 per cent.
Jindal says that the company changed the way automotive batteries are produced and sold (on a cash and carry basis) and serviced (with a three-year warranty). This has helped win over dealers and manufacturers. Also, Amaron has been consistent with ad spends. The first campaign ran a series of ads that used claymation (an expensive but visually appealing format) and is still recalled by many. The company says it has been launching a campaign every two years as it believes it needs to stay in touch with replacement buyers who (typically) look for a new battery every three years. ARBL spends about one per cent of its turnover on brand building and while the percentage will remain the same, the quantum will increase substantially said Jindal.
Apart from Amaron, ARBL has another brand PowerZone for rural markets where it competes with rivals Exide and SF Batteries. “We are happy with PowerZone’s performance in rural, now we are planning to bring the brand to semi-urban areas,” said Jindal.
“We definitely aspire to be the number one player in auto and are looking to close the gap”, Rajesh Jindal, VP and CMO, Amara Raja Batteries
