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    Greaves Cotton in ‘transition phase,’ derisking from auto

    Synopsis

    For the current fiscal, the company is expected to clock total revenue of Rs 1,943 crore. It has cash and liquid investments of more than Rs 600 crore.

    Basavanhalli
    Basavanhalli said he expects inflation to persist for another quarter.
    MUMBAI: Engineering major Greaves Cotton is in a “phase of transition” where it is derisking itself from automotive by beefing up capabilities in areas of generators, energy and aftermarket products, and marking its entry into the B2C segment, a senior executive said.

    The company, which makes more than 400,000 engines a year, has also begun preliminary work to prepare for its foray into creating charging infrastructure for electric vehicles. It is also partnering with Silicon Valley companies like Pinnacle Engines for the production of BSVI-compliant engines for three-wheelers.

    “Greaves Cotton is in a phase of transition where we are moving from a traditional diesel-engine company to fuel agnostic solutions company,” said Nagesh Basavanhalli, managing director, Cotton Greaves. He, however, said the company is not moving away from its core competency of producing diesel and petrol automobile engines, a segment that is growing on the back of the automotive sector which logged 17% year-on-year growth in production in the first quarter. "Auto will continue to form 50% of our business while the rest will come from farm equipment manufacturing, generator sets and other new products,” Basavanhalli said.

    A research report by ICICI Direct said that going forward, the company’s revenue from non-auto segment is expected to be about Rs 960 crore for the current fiscal and Rs 1,081 crore in the next, with a growth rate of 12.3% between 2017 and 2019. For the current fiscal, the company is expected to clock total revenue of Rs 1,943 crore. It has cash and liquid investments of more than Rs 600 crore.

    On the electric vehicles front, the company said it is in the “incubation and innovation” phase. It will be partnering with startups in the area of electric vehicles where it’s putting its innovation and incubation funds to use.

    The company will be spending close to Rs 50 crore in the current fiscal on immediate needs. Basavanhalli refused to share details for the investment outlined for electric vehicles, saying the company is investing “whatever it takes from a capex point of view to invest in technologies for the future”.

    However, the engineering goods company has been a victim of commodity price inflation in the last two quarters that hit operating expenses, leading to lower margins.

    Basavanhalli said he expects inflation to persist for another quarter.


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