This story appears in the May 9, 2016 issue of Forbes Asia. Subscribe to Forbes Asia
When Jayadev Galla took over running the family battery business from his father in 2003, he felt a shock. Industrial battery prices had crashed, the auto segment that he forayed into didn't take off, and the overall economy was weak. Profits at Amara Raja Batteries tanked to $300,000--from $1.6 million the previous year.
"We were missing our numbers every quarter," recalls Jay, as the vice chairman and managing director, now 50, is known. "Everybody thought, 'This guy has taken over the business, and he's ruining it.' My dad was like, 'Why did you get us into this?' "
But he was confident he'd get out of the morass. From that low point in fiscal 2004, revenues grew 18-fold to $674 million in fiscal 2015 while profits soared to $66 million. And for the first nine months of this fiscal year, they've run ahead of that pace.
This bodes well for the Galla family, whose 26% stake in the business is worth $600 million. Dad--79-year-old Chairman Ramachandra Galla--credits much of the success to Jay, the second of his two children.
The Andhra Pradesh company sells batteries powering everything from telephone towers to ATMs and has wrangled a hefty market share in the auto sector in the past decade. Today every third car in India and every second car in Singapore has an "Amaron" battery under the hood. Marquee clients include Ford, Maruti,
"Amara Raja has a wide distribution network, good earnings visibility and a strong balance sheet," says Padmaja Ambekar, research analyst at Mumbai's BOB (
Amara Raja's 19-year-old technology tie-up with U.S.-based
Jay Galla, who on top of his role at Amara Raja in 2014 became a member of parliament from India's south, is now looking to reach $2 billion in company revenues in the next five years--propelled by acquisitions and the establishment of international factories. "He took more aggressive steps and brought in new ideas," admits his father. "Jay can really inspire people."
In opening the business in 1985, Galla senior focused on batteries used by the telecom, power and oil-and-gas sectors. Jay, who joined the business in 1992, quickly zoomed in on vehicles, dominated by market leader Exide Industries. He offered three-year warranties as opposed to the usual one-year deals. Earlier, batteries needed some maintenance, but Amara Raja rolled out zero-maintenance, fit-and-forget batteries. "We've always used the best technology," says his father. "We take the world as a reference point--not just India."
Brand Amaron was blitzed across TV ads and billboards. One campaign had company representatives handing out 350,000 bottles of mineral water at traffic signals. The message was: You need water in this heat, not your Amaron battery.
Jay also focused on the buying experience, creating PitStops that were clean and well-lit--as opposed to the dark, grimy auto shops that traditionally sold batteries. "The product, the overall packaging, the pro rata warranty and the positioning were all different," says Christopher Joseph, a franchisee for the company in Pondicherry and southern Chennai. "But the core of it was the technology and the price. It was priced cheaper than the competitors."
Jay also launched a new franchisee model. Only a few hundred of them sell to 30,000 retailers across India--from oil-and-lube stores to mechanic sheds and service stations.
Exide, with $1.1 billion in fiscal 2015 revenues, remains the market leader. But Amara Raja continues to gain on it. The Gallas' growth didn't come, however, without conflicts between the two generations. Jay pushed for auto batteries because being only in industrial made the company vulnerable. But Galla senior resisted the idea because the sector had an entrenched player like Exide on one end and unorganized players churning out cheap knockoffs on the other. He relented after three years of constant bombardment by Jay.
"We were getting into heated arguments," recalls Jay. "It was good for the business. But if it had gone on like that, it would have really affected our relationship. I was starting to assert myself more, and he wasn't willing to give in yet."
Jay finally told his dad: "This town isn't big enough for the two of us. One of us has to quit." Jay started exploring businesses outside but quickly realized that it was better to build on something that already existed.
So his father took a backseat, getting into other group businesses--today they have a combined $200 million in sales--while Jay took charge of the flagship. The lines of control were clearly drawn. "I used very strong language with him and everyone else," Jay recalls. "I told him he was banned from our strategic meetings. I told my team, 'If I see any of you guys seeking clarity from him you'll be banned.' "
Jay had joined the business after earning a bachelor's degree from the University of Illinois. It was a homecoming of sorts for him, because he'd moved to the U.S. with his parents when he was 4 (his father had a consulting job after grad school there) and went through the public school system in Chicago's suburbs, where he says he stuck out like a sore thumb in all-white schools. In college he started out in engineering but shifted to political science and economics when he decided to move back to India. "My goal was to get into politics--it's taken me 22 years," he laughs.
Business has always been a stepping stone: "Basically, if I had to be the kind of politician I wanted to be, I needed the financial strength to do that." His inspiration was his maternal grandfather, who was active in politics. (Amara Raja is named after that pair of grandparents.)
At Amara Raja Jay's aim was to change the top-down culture to a more collaborative one. He brought in budgeting, strategic thinking and HR processes. "When setting up Amara Raja, Ramachandra had the vision and commitment needed to see the organization through to the leadership position. He built a high-quality product, a distribution system and brand in the Indian market," says Johnson Controls' Shemanski. "Amara Raja is now evolving, and Jay is the right leader at the right time. He's connected to the market and political dynamics inside India, as well as the battery business."
Next up? Lithium-ion batteries for cellphones and rooftop solar power.
Succession planning is also becoming important with two of Galla's grandsons (a daughter's sons) entering the business. They are senior management executives. The Gallas formed the Amara Raja Corporate Council in 2013 for planning the future direction of the group. Apart from family members it includes the CEOs of the six group companies and the heads of key functions like supply chain and finance.
Jay's sons--Ashok, 23, and Siddharth, 21--aren't part of the business. They are into movies and are taking acting lessons. Jay has started a film company to launch their careers. (His wife's brother, Mahesh Babu, stars in Telugu-language films.) Meanwhile, Jay is adjusting to life as a politician--and the schleps from his home in Hyderabad to parliamentary digs in Delhi. He has set up videoconferencing facilities in both places as well as in his constituency office to take business calls.
People power, it turns out, is key in both of his pursuits.
"If we need to grow to a $3 billion group we need three to four times the number of leaders that we have today," he says. "And we need it at a fairly fast pace. The human resource challenge is going to be the biggest challenge."
