Operational efficiency, market demand are key drivers of our growth, says Nagesh Basavanhalli, MD and CEO, Greaves Cotton Ltd.
Q: What have been the growth drivers of Greaves Cotton?
Basavanhalli: A key growth driver that we have been witnessing is stronger customer demand post the usual suspects of demonetisation and the roll-out of GST in 2017. This has led us to have a strong strategic focus. We have laid down the roadmap for the next 5 years. It has led to a top-line growth. For bottom-line growth, we have been very cognizant of the fact that commodity inflation is on the rise. To counter it, we have been aggressive in terms of low-cost production and innovative techniques.
Operational efficiency combined with the demand for our products have been the key drivers of our growth.
Q: How do you look at the journey from the diesel engines to a range of alternative fuel powertrains?
Basavanhalli: We manufacture 1 engine every minute. Eight out of 10 diesel vehicles use a Greaves Cotton engine. We have sold 5 million engines till date. We offer 15 engine variants – from 4 hp to 700 hp. We are touching millions of people through our presence in the business of enhancing productivity. We have a 3500 strong retail network. Our scale is what provides us the cost advantage. It is what makes it possible for us to offer our customers lower total cost of ownership. It is this value proposition that we are backing up with a strategy to build fuel agnostic powertrains.
Consumer preferences are changing. We are aligning our business inline with these changes. We are increasing our capability by entering into technological alliances. We have entered into one with Pinnacle Engines for example. The new range of engines that we build is based on green technology. These engines maintain a power-to-performance ratio while delivering over 30% percent fuel economy. At times, it is not possible to incorporate all – power, fuel efficiency, etc. Our endeavour is to incorporate them all; to give the consumer what he wants. Consumer preferences are moving towards CNG, petrol, hybrid and electric. We are looking at the entire ecosystem. We are looking at a low cost, lightweight platform. Putting a battery on an existing platform, which is heavy would not lead to optimisation, and much like an electric vehicle powered by a coalbased energy source will not make an optimal solution. From a powertrain perspective, we are looking at light weighting of the body with our partners. By bringing in alternative powertrain solutions, we are providing end consumers with the desired value proposition.
Q: What are you doing to change the perception of being a three-wheeler powertrain provider?
Basavanhalli: A majority of our customers are in the three-wheeler space. We also offer BS-VI multicylinder engines for four-wheelers.
We are talking to OEMs, and once they reach a certain level we will make a formal announcement.
Q: What about your offerings in the hybrid and electric space?
Basavanhalli: We have the solutions. It is necessary for us to gauge the market sentiment and get a feedback. On the basis of it, we will be able to fine-tune our strategy. It is necessary to work out the economics. Others are also certain to be working on this front. The need is for a supporting infrastructure like fast charging for example. Our announcement of Greaves Care is a step in the direction of creating an infrastructure.
Q: How strong is your after-sales network?
Basavanhalli: We embarked on a concept of multi-brand spares 2 years ago. It took our network one step ahead. It gave our channel partners the ability to strike a business in an environment that is largely unorganised. The environment tomorrow is going to be organised, and we will have a big advantage. We are building a strong multi-brand service network for three-wheelers. We have over 3500 plus spare parts and multi-brand parts partners. We will scale up the network with the help of the right partners.
Q: How do you work out your partnerships with OEMs and allied partners?
Basavanhalli: We are partnering with over 35 OEMs on the engine front. They have reinforced their faith in us not only for BS-IV but for BS-VI too. We will continue to support them; to offer them a value proposition that involves investing in technology and building our capabilities. We are bringing in a scale, a financial model, and technology partners with the knowledge that the time is short. Our strategy is to strike the right partnership as this would help reach the market faster.
Q: How far do think EVs will come to dominate?
Basavanhalli: EVs are progressing. Diesel, I feel, will move away from major cities to rural and semi-rural areas where access to diesel is easier. Over the short to medium term, CNG and petrol would continue. Over a period of time, hybrid and electric powertrains will start to take over. If one looks at markets like Europe, there are 2 million charging stations. Yet the per centage of ICE versus electric is such that the former outdoes the latter in per centage terms. We are also moving in the same direction. The shift will not be instant. It will take place over a period of time, and will be influenced by infrastructure and economics.
Q: What is your R&D set-up?
Basavanhalli: At Greaves Cotton, we have a highly skilled team. It is well versed with different technologies. It provides us with a distinct advantage. We also are working closely with our partners.
Q: How do you look at the opportunities and challenges?
Basavanhalli: Three-wheeler demand is picking up. The engine business is picking up. The agriculture business that we are in, is also picking up. Not just these 2, the genset business that we are in, is also growing. It is clocking double-digit growth for us. The trend is likely to continue. In the aftermarket business, we are also seeing strong traction. We are driving several new initiatives. Each is transitioning to the next level. The key challenge that we see is about the ecosystem; about our suppliers getting ready and setting up the infrastructure to meet BS-VI, well before it is to be implemented.