The growth in economic activities across the country after the Covid-hit disruption is making Nagesh Basavanhalli, Group CEO and MD, Greaves Cotton, feel happy. That’s because it’s also leading to growing demand for his company’s electric two-wheelers, aftermarket spares, service, engines for non-automotive applications. Basavanhalli’s outlook is positive for all of them, but what’s a concern for him is the state of the market for diesel three-wheelers. “The demand in the automotive diesel engines has not come back, as the 3-wheeler automotive industry has taken a hit of over 70%,” Basvanhalli told ETAuto.
However, a technology agnostic growth strategy that Basavanhalli led for Greaves Cotton after joining the company about five years ago is gradually yielding fruitful results. Demand for CNG three-wheelers is on the rise, while electric three-wheelers are also gradually gaining acceptance. Investments in both the areas were part of the technology agnostic strategy for the 162 year old company.
As diesel gradually loses ground in the mobility industry, alternative options like CNG and electric are set to gain more traction. “Fortunately, we had seen it 3 or 4 years ago. That’s why we went down that strategy. Are we seeing, witnessing that? The answer is yes, and Covid probably accelerated it,” Basavanhalli said. Share of CNG in Greaves Cotton’s auto engine business has shot up from single digit last year to around 25% now.
Greaves Cotton’s diesel engines for applications like marine, construction, defence, and gensets are witnessing good demand though, according to him. Auto engine sales dropped 16% to 9,426 units, while demand for non-auto engines shot up by 78% to 9,447 units during Q1 of the current financial year, compared to the same period the previous year. The Q2 figures are expected next week.
As part of the growth strategy, Greaves Cotton made an investment in the Hyderabad-based electric three-wheeler maker MLR Auto through its EV subsidiary Ampere Vehicles two months ago. Three years ago, Greaves Cotton entered the electric vehicle industry by acquiring Ampere Vehicles.
The technology agnostic growth strategy saw Greaves Cotton also invest in expanding its retail business vertical, Greaves Retail, by adding a multi-brand EV retail entity called Auto EV Mart. “E-mobility is growing significantly, which I see as an enabler. So, this is how we looked at it as our overarching strategy of plus (diesel + CNG + electric). Bringing all these three will help us,” Basavanhalli said. He is also betting on the spares sales network of 7,000 retailers, over 600 exclusive outlets, and access to 12,000 mechanics to help his customers’ vehicles to have a high uptime.
E-mobility is growing significantly, which I see as an enabler. So, this is how we looked at it as our overarching strategy of plus (diesel + CNG + electric). Bringing all these three will help usNagesh Basavanhalli, Group CEO & MD, Greaves Cotton
The new businesses, set up over the past few years are in investment mode and yet to return profits, but Basavanhalli says that may happen “sooner than later”. In terms of top line contribution to the INR 1,500 crore company, their combined share stands at around 60%.
While the loss of diesel demand is being offset by CNG and electric, Greaves Cotton is facing a supply chain challenge due to the semiconductor crisis and non-availability of some CNG components in adequate numbers. “Our supply chain teams across the board are working hard to kind of help secure some of the supplies for CNG as well as electric,” says Basavanhalli. This challenge may still be better than sitting on an inventory of diesel engines with no demand for them.
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Greaves Cotton, which has been one of the largest suppliers of engines to the three-wheeler industry, now has its fingers in several pies. It has acquired electric two-wheeler maker Ampere and electric three-wheeler company Bestway. Recently, it also bought a stake in electric three-wheeler maker MLR Auto.
Greaves Cotton, a 162-year old engines maker, and eWheelers, a boot-strapped startup, are among the first ones to try their hands at multi-brand EV chain. Both the companies plan to retail all kinds of electric two- and three-wheelers both online and offline.
