Country’s second-largest battery maker wants to crack North American market

The Hyderabad-based auto ancillary firm is doubling down on building a local distribution network in the North American market to benefit from its edge in one of the advanced technologies in the lead acid battery industry to win incremental business at a time when tariffs in the US have brought uncertainty for Indian businesses, according to a top executive.

“One of the most exciting opportunities, especially on the lead acid side, is building ourselves up in North America. That's where we see certain technology trends like a move towards AGM (Absorbent Glass Mat) batteries,” Harshavardhana Gourineni, executive director at Amara Raja, told Mint.

“We're the only manufacturer in India that's supplying AGM batteries to the OEMs. We'd like to use that technological prowess to build market share and build long-term and robust customer relationships,” he added.

In FY25, the company earned ₹12,405 crore in revenue, of which 13% came from exports to automotive and industrial clients worldwide. The company does not disclose its export revenue by geography. AGM is a technology used in lead-acid batteries, which leads to improved battery life and provides strong support for stop-start functions in vehicles.

According to experts, AGM batteries are on the premium end of the lead-acid segment, used widely in start-stop vehicles, hybrids, SUVs, pickups, and as auxiliary batteries in EVs.

Highlighting North America as a growth market has been a rare instance for an auto ancillary company in the last 10 months, given the imposition of reciprocal tariffs by US President Donald Trump’s administration to shore up domestic manufacturing.

Tariff trip

In FY25, total exports of auto component makers reached $23 billion, with nearly a third of these exports coming from the North American market, which is the largest export base for Indian auto component makers.

Gourineni admits that imposition of tariffs has introduced a layer of uncertainty, which creates an issue in building up the business, but insists that the company has been able to compete by using some carefully crafted strategies.

“We've been at 25% duty for the last 10 months or so. And yes, this definitely affects our competitiveness. It also creates a lot of suspense and confusion around which direction this may move and how long,” he said.

“But the fact is, we've still been able to compete. We've maintained our customer relationships. We've doubled down on building some distribution strength and getting a bit more local in the US, so that we can support the customers in a better way. And if things move in a positive direction, we can definitely build our volumes and take more market share,” Gourineni explained.

The top executive also explained that the company is open to having local finishing operations for its batteries, which can help in cost competitiveness.

"We just have to be very careful on the level of capital commitment we put through, because that will be a dedicated resource. Dedicating resources at such a volatile time is quite risky,” he said.

“Setting up some distribution and warehousing, some after-sales support, what we feel is fairly inexpensive and goes a long way with the customers. Meanwhile, we have control of the supply chain in our manufacturing operations from India. So that allows us to hedge ourselves quite a bit," he said.

Localize manufacturing

Gourineni added that the company can also consider localizing a part of its manufacturing process for overseas markets, including North America, which will help provide better products to customers if the company secures good business commitments and navigates the tariff barriers.

"I think when it comes to our manufacturing process, we have good scope to do the final, we call it formation, whereas we fill the battery with acid and then put it through a charge-discharge cycle. And then the labelling and packaging. That part is definitely something that we can look at, you know, making the region specific," he said.

Part of the third generation of Amara Raja’s founder family, Gourineni joined the company back in 2015 as a senior management executive and now sits on the board. He is the son of Ramadevi Gourineni, who is the daughter of Amara Raja founder Ramachandra Naidu Galla.

Galla set up Amara Raja’s first plant in Karakambadi, a town 12km from Tirupati in Andhra Pradesh, in 1985. Six years later, in 1991, he took the company public and served as its chair until June 2021. Thereafter, his son, Jayadev Galla, took over as chairman and managing director of Amara Raja.

The main promoter entity, RNGalla Family Pvt. Ltd holds about 32.86% of the shares in Amara Raja, while the remaining shares are held by public investors. Earlier this year, RN Galla executed an arrangement whereby the shareholding of the main promoter entity was divided into four family trusts to ensure a seamless transfer to the next generation.

Gourineni says that the ambition is to generate more than one-fourth of revenue from exports in the next five years, as the company seeks to expand its geographical presence beyond its existing strongholds in Africa, West Asia, and Southeast Asia.

Market reality

Amara Raja’s shares have declined by 19% over the last year, compared to a 23% growth in the Nifty Auto index.

“I think we've been trying to be very conscious about concentration risks and making sure that we have customers across geographies, across product segments. We are also benefited that all of our manufacturing locations are centralized,” he said.

Experts note that AGM batteries in the lead acid segment present a significant opportunity in global markets; however, it will not be an easy ride for domestic companies to establish a strong presence in the sector.

Harshvardhan Sharma, group head at Nomura Research Institute, stated that North America represents a large and resilient market for AGM batteries, driven more by replacement demand from a vast and ageing fleet of vehicles.

"This is not an easy market to enter. The AGM segment in North America is highly consolidated, with entrenched players, long-standing customer relationships, and strict quality and reliability expectations," he explained, adding that a large share of the profit pool is in the after-market segment.

"For Indian players, the opportunity is therefore selective rather than transformational. They are technically capable and cost-competitive in AGM manufacturing, but success will depend on execution, focusing on niche segments, private-label or B2B supply models, and potentially building a local footprint or partnerships to improve credibility and cost-to-serve," he added.