Amara Raja Industry Analysis
Essay by Prasana An • August 8, 2015 • Case Study • 1,078 Words (5 Pages) • 1,305 Views
Group | 1 |
Industry | Automotive components |
Company | Amara Raja Batteries |
Members | |
Submission Number | IV |
1. | Abdur Rehman (31001) |
2. | Ajay C N (31002) |
3. | Annamalai AN (31003) |
4. | Arun Kumar R (31004) |
Product pricing strategies in vogue in the industry – and the strategy adopted by the company for pricing its products | ||||||||||||||||||||
For the success of any aftermarket product competitive pricing can go a long way in increasing the visibility across markets. In 2013, the Company’s Industrial Battery business registered a double digit revenue growth over the previous financial year with an improvement in price realisation, despite capacity constraint and challenging & competitive market conditions. Diminishing price gap between the organised and unorganised players increased the preference for branded products. The company used the right pricing strategy in this situation and had an edge over other players as it produced high quality products at competitive prices. This was at a time when the battery industry witnessed significant additions in capacity by existing suppliers as well as new entrants, supply outstripped demand requirements, creating unfavourable pricing trends in the industry. Passenger car aftermarket battery prices were increased twice by 3.5% each in December 2012 and March 2013 to cover inflation and lead prices. There was an increase in material costs owing to increased volumes, enhanced trading, rupee depreciation against the US$ and increase in lead prices (Q4/2012-13). Material cost as a percentage of net sales was 67.4% in 2012-13 compared with 68.0% in 2011-12. The people cost increased on account of an increase in annual compensation, marginal headcount addition and the annualised effect of the cost of the previous year. In spite of all this just because of the competitive pricing strategy adopted by the company the net profit for the year jumped 33.29% from Rs. 2,151 million in 2011-12 to Rs. 2,867 million in 2012-13. | ||||||||||||||||||||
Various promotion/ communication strategies used by the industry and the company , branding and importance of branding in the industry and the company | ||||||||||||||||||||
Promotion of a company includes Personal selling, advertising, sales promotion and public relations. These components constitute the promotional mix. There is no one right promotional mix these strategies used in different ways help the company achieve its overall objectives. Amaron batteries have also used some of these components extensively to promote its brand. Some of the recent promotional activities by Amaron include,
The reason behind choosing Narain Karthikeyan as the brand ambassador was to position the battery as a sturdy build, strong constitution with enormous stamina to endure sub-sonic speeds which resonates with speedster Narain Karthikeyan. The main focal point behind these promotional activities was to tap potential customers and create various indirect touch points to link them to the brand and influence their buying decision, thereby, increasing the trials for the brand and promoting value added services. | ||||||||||||||||||||
Details of the company | ||||||||||||||||||||
Details of production, capacity availability, utilization levels
Source: http://www.newindianexpress.com/cities/hyderabad/Amara-Raja-to-Set-Up-Three-Battery-Plants-near-Chittoor/2014/10/09/article2468532.ece | ||||||||||||||||||||
Share price movements ( yearly high, yearly low, current share price. PE multiple and comparison with industry Calculation of beta and cost of capital for the company. | ||||||||||||||||||||
Share price
Source: http://www.moneycontrol.com/india/stockpricequote/autoancillaries/amararajabatteries/ARB PE multiple
Source: https://www.edelweiss.in/company/Amara-Raja-Batteries-Ltd/company-fundamental-comparision/2110.html Beta and cost of capital
Source: Excel sheet attached | ||||||||||||||||||||
Take up a survey on the usage / preference / purchasing behaviour etc pertinent to the firm / product. (A visit to the dealer outlet /sales outlet is essential). You may take inform the instructor of what you intend to study. | ||||||||||||||||||||
Battery are available from 2.5amps to around 200amps and price varies from Rs 550 to Rs 19000. UPS battery has seasonal demand based on present power shortage so demand is high during summer. Car Batteries has a general life of about 4 years for petrol cars and it lesser for diesel cars. Exide and SF Sonic (Owned by Exide now) has long been in battery replacement market so there are in customer mind. Amara Raja batteries are high on performance and reliability and is preferred choice for informed, repeat customer and recommend one by retail outlets. The electrolyte solution used in Amaron Battery is stable to sustain till life of battery so they are low on maintenance where as other battery require frequent change in electrolyte solution. Price are Amaron Batteries are placed competitively with price bit lower than Exide. It gives one more reason to choose Amaron. Also for retailer ,Amaron appoint only one distributor per area, when compared to other such as Exide who appoints many distributor per area so retailer are able to sell Amaron batteries at full mrp price which is not possible in Exide because of competition among distributors. | ||||||||||||||||||||
Updates on recent developments and news pertaining to the industry, user industry and the company under study. | ||||||||||||||||||||
October 8, 2014 1. Amara raja batteries is expected to set up three new plants at Chittoor for their automotive batteries(INR 450 crores), Home ups batteries and plastic batteries division at the estimated cost of INR 1000 crores to expand its business. Source: http://www.newindianexpress.com/cities/hyderabad/Amara-Raja-to-Set-Up-Three-Battery-Plants-near-Chittoor/2014/10/09/article2468532.ece December 18, 2014 1. Exide and Amara raja batteries are expected to benefit from the passing of GST bill. Source: http://economictimes.indiatimes.com/markets/stocks/news/exide-industries-jubilant-foodworks-asian-paints-itc-to-benefit-once-gst-bill-is-passed/articleshow/45558257.cms November 11, 2014 1. Board of director’s meeting was held. 2. Amara raja’s quarterly profit increases to INR 100 crore which is 6% higher than the previous period. Revenue increases by 32%. Source: http://www.moneycontrol.com/news/results/amara-raja-q2-profit6-to-rs-100-cr-revenue-jumps-32_1224679.html?utm_source=ref_article November 12, 2014 1. Board of directors approved an investment of INR 500 crores in setting up of a tubular batteries manufacturing plant at chittor. Source: http://economictimes.indiatimes.com/amara-raja-batteries-ltd/stocks/companyid-12713.cms January 12, 2015 1. Board of directors meeting would be held on January 27, 2015 and the unaudited financial results of Q3 will be released. Source: http://economictimes.indiatimes.com/amara-raja-batteries-ltd/stocks/companyid-12713.cms January 13, 2015 1. Shareholding pattern was submitted to BSE Source: http://economictimes.indiatimes.com/amara-raja-batteries-ltd/stocks/companyid-12713.cms January 19, 2015 1. Amaron- the flagship brand of amara raja batteries has been awarded as the ‘Asia's Most Promising Brand’ for the year 2013-14 under Automotive Category by the World Consulting and Research Corporation (WCRC). The award was based on the brand for its innovation, customer satisfaction and brand image. Source: http://www.thehindubusinessline.com/companies/?categoryId=53850 |
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