Greaves Cotton, one of the leading engineering and electric vehicle company, has been on an aggressive derisking spree, be it venturing into the electric mobility space, forging partnerships, or acquiring companies, it is looking to be profitable on all fronts.
“We are using our CAPEX (capital expenditure) judiciously to acquire forward-looking technology, which gives us a competitive edge,” says Nagesh Basavanhalli, Executive Vice Chairman, Greaves Cotton.
He was sharing his view on a post-earnings call with Financial Express. It was on February 9, 2023, that the company signed a term sheet to acquire Excel Controlinkage for Rs 385 crore, which will be completed in four phases till FY2026.
Basavanhalli says the move will enable Greaves Cotton to build a complementary product portfolio with common customer segments, commence its international footprint and export revenues, and aid in the growth of the fuel-agnostic powertrain portfolio. At present, around 30 percent of Excel’s business comes from the global markets, while the remaining is with domestic customers, which includes the likes of Tata Motors, Mahindra, Volvo Eicher Commercial Vehicles, JCB, and Caterpillar among others.
Going forward the integration of Excel will give Greaves Cotton capabilities in push-pull cables, and sensors. “This will help us and it is extremely profitable. It has about 28-29% operation profitability at EBITDA.”
He further mentions that at the end of December, the company was sitting on a comfortable cash surplus of over Rs 1,000 crore, which gives it enough firepower to focus on future strategies. The focus now is to consolidate its positions and sustain the growth momentum. For FY2023, he expects the company to see strong growth over the previous years.
“We believe we have strong business verticals, Greaves Powertrain, which is the traditional engine business. We also have e-powertrain, motors, controllers and now also getting into control systems, electronic sensors, and future-oriented technology. Electric mobility is also a strong area for us and retail sales continue to grow. The three strong levers, will continue to grow and you will start to see that result because now each one of them and even the engine business has recovered from the worst of the COVID shared mobility concerns,” says Basavanhalli.
When queried about Greaves Cotton’s intention to enter the lithium-ion battery manufacturing business, he says the company will work on products that differentiate it – motors, controllers, and BMS among others. But entering the cell manufacturing business, “That’s an area that we have decided, at least for now not for us. We will probably get into battery pack design and assembly, where we will buy cells from whoever sells it, which at present comes from outside India. But going forward there is a lot of talk about a lot of major Indian players getting into cells, then we will be open to working with them,” he concludes.
