52 Week Blockbuster: Amara Raja Batteries ::Business Line,

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The financial year 2010-11 was a challenging one for Amara Raja Batteries. Lower off-takes and subdued realisations in the telecom batteries segment, higher sale of batteries to auto OEMs (Original Equipment Manufacturers) where margins are lower and spiralling prices of lead curtailed growth and squeezed margins.

For the year ended March 2011, net profits dropped by seven per cent year-on-year to Rs 148 crore. But the fortunes of the company have changed in 2011-12 and this has been a major reason for the 75 per cent returns clocked by the stock.

On the automotive front, while most auto component players have borne the brunt of the industry slowdown, Amara Raja has benefited from the after market/replacement battery demand for cars.

Battery makers generally have higher pricing power in this segment too. Besides, a slow revival in the demand for telecom batteries, export opportunities in this segment and good volume growth in the UPS batteries, thanks to the continued power shortage situation, has helped growth in its industrial batteries division.

These factors coupled with stabilisation in lead prices in the second half of 2011 have resulted in the company recording a 45 per cent growth in net profits to Rs 156 crore in the nine months ended December 2011. Net sales grew by 35 per cent to Rs 1,697 crore