Tuesday, May 27, 2008

Amara Raja promoters plan holding company

Founders of Amara Raja Batteries (Ramachandra Naidu Galla) plan to form a holding company, representing six companies including Amara Raja Infra, in a bid to sell stake to overseas investors.

Amara Raja Batteries, the only listed company in the group, is 26 per cent owned by US-based Johnson Controls.

The formation of the holding company would be the first step in taking the group to global investors, though no immediate plans have been made in this regard, Jayadev Galla, managing director, Amara Raja Batteries.

"In the past, we have gone to public once (ARBL), raised some debt and brought in some strategic investors (into the group companies), but nothing exciting beyond that," he said.

Galla plans to turn his group into a Fortune 500 corporation in the next two decades.

The Rs 1,400 crore, Tirupati-headquartered group has diversified interest with listed company ARBL being the largest with an estimated turnover of over Rs 1,000 crore in FY08.

The other group companies are Amara Raja Power Systems, Mangal Precisions Products, Amara Raja Electronics and Galla Foods. The newly- formed Amara Raja Infra, which is also completely owned by the family, will be handling all infrastructure works for group companies such as civil works.

"The first step is to consolidate the family holding in the group companies," he added. Formal announcement on the formation of a holding corporation is expected to be made in two months.

The group's flagship, ARBL, plans to invest Rs 200 crore in the current financial year to expand capacity to make industrial and automotive batteries. Half of the fresh investment will be funded through debts with the rest coming from internal accruals.

Additionally, the company is also considering setting up a greenfield plant in Haridwar.
A new plant in the north would allow the company to access retail market in the region and cover automobile companies at lower cost, Galla said. The company at present makes batteries in Tirupati.

Galla Foods, maker of fruit pulp and juices, recently forayed into the domestic retail market with the launch of a mango juice brand in Tirupati and Hyderabad.

This company until recently, was an export-oriented unit. Plans are on to take this beverage brand nationally by end of FY09.
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