NEW DELHI, January 16: New York-based Johnson Controls Inc (JCI) has signed an agreement with Amara Raja Batteries (ARBL) to acquire 23 per cent equity interest in the latter by way of preferential allotment to become an equal partner.JCI would invest Rs 23 crore in ARBL's preferential equity at a price of Rs 89 including a premium of Rs 79, according to company officials.ARBL equity would increase to Rs 10.37 crore after the preferential allotment and both would have 23 per cent stake each in the equity, with the rest being held by the public."We have got all the necessary approvals and have the option to raise the stake of JCI to 30 per cent within the next few years," Jayadev Galla, executive director ARBL, said here today.JCI and ARBL had entered into a technical assistance and licence agreement to provide access to technologies of the Johnson Controls Battery group. ARBL would pay JCI a royalty of three per cent on the value added for a period of five years, with no initial lumpsum payment, CMD ARBL Ramchandra Galla told PTI.ARBL, which is presently manufacturing maintenance free valve regulated lead acid (MF-VRLA) batteries for industrial purposes, intends to utilise the investment and technology from JCI to enter the automotive battery business, he said."We presently have a market share of 80 per cent in the VRLA segment and produce batteries ranging from 40 amps to 5600 amps and this agreement will enable us to widen our product range to manufacture batteries below 40 amps and also manufacture maintenance free automotive batteries," he said.ARBL was a major supplier to the railways, electricity boards, power generation companies and the telecommunication sector in the country and had made a beginning by exporting its products in the current year, he added.Though the estimated market size of automotive batteries was seven to eight billion units, 50 per cent of which comes from the unorganised sector, the number of players offering maintenance free batteries was minimal, Galla said.
