Greaves Cotton to continue work on operational efficiency, shut Ranipet plant
Engineering major Greaves Cotton will continue to work on operational efficiency, and has decided to shut its Ranipet (Tamil Nadu) plant as part of its exercise for consolidation of plants, its group CEO and Managing Director Nagesh Basavanhalli said.
The company expects passenger three-wheeler segment, which has taken a hit due to concerns around shared mobility, to recover in the second half of this fiscal, he said.
Greaves Cotton is a leading manufacturer of fuel-agnostic engines in CNG, petrol, and diesel segments. It operates in multiple segments, namely automotive, non-automotive, aftermarket, retail, electric mobility through Ampere Electric for electric scooters and other electric industrial products and e-rickshaws.
“The company will continue to work on the operational efficiency. We have already committed to some plant consolidation, taking out over 10 per cent of fixed costs, which would mean there will be plant consolidation, some overhead cost reduction and strong focus on working capital management, cash flow, among others, going forward,” Basavanhalli told PTI.
Stating that Greaves has a very strong working capital and cash flow management, he said, “As part of the operational efficiency, the company has decided to shut Ranipet (Tamil Nadu) plant and consolidate operations at Aurangabad plant in Maharashtra.”
The company has six manufacturing plants across the country, including in Ranipet, Aurangabad and Pune.
He said the company”s non-auto small engine business has been doing well and is roughly at 1.75x of pre-COVID level.
“The company saw a good rebound in Q2 in the non-auto small engine segment which was also the big part of the company”s diversification strategy. The aftermarket business is back to pre-COVID level with 6,000 retailers added and stores returned to normal, and e-mobility business, although a small segment, is growing at an all time high,” Basavanhalli said.
“Also, the company is doing well in the cargo engine segment which is down only by 10-20 per cent,” he added.
In October-March, the company is expecting recovery in the three-wheeler passenger segment (automotive engine segment) which has declined almost 50-60 per cent because of concerns on shared mobility due to COVID-19, he said.
The segment is anticipated to get better every passing month with consumer confidence returning. Genset segment is also expected to pick up in the second half of the fiscal, he added.
Greaves Cotton is continuously looking at new markets, new products and offerings in order to get closer to customers, he said, adding that the company will continue focusing on profitable growth going forward.
The company reported a consolidated net loss of Rs 22.49 crore in the second quarter ended September 30 as against a consolidated net profit of Rs 43.63 crore in the year-ago period.
Its consolidated revenue from operations stood at Rs 329.38 crore as compared to Rs 512.42 crore in the same quarter last fiscal.
The revenue from engine business accounted for 47 per cent of the total revenue during the quarter, while the aftermarket segment had 25 per cent share.
Share of e-business revenue was at 13 per cent, while the rest of 15 per cent was from other businesses, as per the company.