Greaves Cotton will introduce BSVI complaint engines soon: Neetu Kashiramka, CFO
Neetu Kashiramka, Chief Financial Officer (CFO), Greaves Cotton, during an interview with Swati Khandelwal, Zee Business said that BSVI compliant diesel engines will be introduced to meet the needs of the changes emission norms in recent future.
BSVI compliant diesel engines will be introduced to meet the needs of the changes emission norms in recent future says Neetu Kashiramka, Chief Financial Officer (CFO), Greaves Cotton, during an interview with Swati Khandelwal, Zee Business. She also spoke about the company’s outlook for FY20, CNG engines, investment and expansion plans. Excerpts:
Q: What is your outlook on Greaves Cotton for next fiscal?
A: We have grown by 11 per cent in the first nine months of the fiscal and have also reported a profit of 11 per cent. The company has also seen 10 per cent growth in its volume, which is quite good. However, the third quarter has been better than the first two quarters as we registered 13 per cent volume growth and our profitability EBITDA stood at 14 per cent in the period.
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The company has launched several initiatives for the purpose. The company is primarily into diesel engines and it contributes 49 per cent to our business. The remaining 51 per cent comes from aftermarket, Gensets and farm business.
If we talk about new strategies, then we will introduce BSVI complaint diesel engines, which is our core business, as there will be a change in the emission norms. In addition, new CNG engines will be introduced, the time by when BSVI will also be launched, around April-May 2020. The engine is being developed in partnership with Pinnacle Technology.
Apart from this, Greaves Cotton has entered the electric mobility segment by acquiring stakes in two-wheel electric vehicle maker Ampere Vehicles. In addition, we have almost readied our technology for three-wheeler vehicle and it will be introduced by when the market will start moving towards the electric vehicle.
Q: You are focusing on futuristic technology, but you are heavily dependent on diesel business at present. Let us know about the switch over from diesel to other technology including electric and CNG?
A: I would like to correct you on heavy dependence as we are no more heavily dependent on diesel as we are de-risking our over dependency on the segment. Four years ago, diesel engines were contributing 80 per cent to our business but today it has been brought down to 49 per cent. So, things will change slowly. Today, we have other technologies like electric and CNG products in our bucket. These products will be introduced as soon as the market starts moving towards the electric segment.
Q: Are you conversating with OEMs?
A: Yes, the talks are on with OEMs. You can see some tie-ups in the next 3-4 months.
Q: Let us know about the new CNG engine and the products where it will be introduced? Also, speak about the technology tie-up related to it?
A: Basically, our company revolves around three-wheelers. So, the CNG engine being developed with Pinnacle will be fitted into three-wheeler rickshaws.
Q: So, should I consider TVS, Bajaj and other three-wheeler makers as the probable partners?
A: Yes, we are showcasing these engines to those who are buying diesel engines from us. The engine is in the proto stage and will be 25 per cent fuel efficient than the existing CNG engines.
Q: How it will impact your margins?
A: We are entering new business segments after analysing that it doesn’t have a negative impact on our EBITDA. Currently, our EBITDA stands in a range of 14-15 per cent and we will make sure that it remains there.
Q: You are moving towards electric mobility and I would like to know about your readiness for it. Can you introduce it in a day or two?
A: We have a new product in the two-wheeler segment. However, it is moving slow but will catch the speed with new launches. Something we are going to launch as early as April. Our technology is ready for the three-wheeler segment and we are in a position where we can assist a company in launching an electric three-wheeler within two months.
Q: Do you think that the companies will expedite their process with the introduction of FAME (Faster Adoption and Manufacturing of Electric vehicle) 2 scheme?
A: Yes, they can expedite. However, they need an infrastructure to support it. There is a shortage of infrastructure that can support electric mobility, so it will take time.
Q: How prepared you are ready to meet the unprecedented demand?
A: We are ready for it and I have already said that we can help a company to launch its product in a gap of two-three months.
Q: I would like to know about the investment that will be made to meet the demands of this technology shift? Also, update us on the expansion plans of the company?
A: We will be investing Rs200 crores in the next two years, i.e. 2019 and 2020. And, the expansions will be made in the six plants that are functional in India with some modifications. We don’t need a new plant.
Q: So, this investment will take care of all the segments including electric and CNG.
A: Everything put together between two years, 2019 and 2020.
Q: What is your view on merger and acquisition?
A: We have cash of Rs450 crore and it will be used to acquire good opportunities that come on our way. The investments will be made in companies whose business are growing.
Q: But what are the areas, where you are ready to invest?
A: Areas means adjacent to the categories where we are.
Q: Provide your outlook for the auto industry for FY20 and name the segment where you will focus? What are your growth expectation in terms, top line, bottom line and margins, in FY20?
A: I can say that we will continue the growth trajectory where we are, i.e. we will continue to grow in the range of 11-12 per cent, Profitability wise also we will be able to maintain the margin of 14-15 per cent.
Q: Any segment that you will focus on?
A: We are focusing on all the segments but the diesel, which contributes 49 per cent to our business, will have a single digit growth while other 51 per cent contributors will grow faster.
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