One Engine A Minute, 400,000 Engines Roughly We Touch About 10 Million Passengers And 5 Lakh Tonnes Of Cargo On Any Given Day

With over 5 million happy customers served in India, Greaves Cotton Limited is a leader in providing last mile transport solutions to its customers. From being the leading 3 wheeler diesel engine manufacturer in the country, the company has now aligned its strategy to be ready for a technological, regulatory and business model disruption by 2020. With investments in new technologies and building capabilities to meet the demand for fuel agnostic, future-ready solutions, Greaves has recently announced a number of strategic partnerships.

In a One on One Conversation with Siddharth Shankar from BW BusinessWorld Nagesh Basavanhalli, Managing Director and CEO – Greaves Cotton Limited discusses his strategic vision, the launch of the 100th Greaves Care store and Greaves Cotton Limited’s current and future growth plans.

A Company with a legacy of over 150 years, how has the brand evolved? 

Like you said, I think a great legacy over the last 100 plus years and when you look at it we have the Brand, Reach, Capability and Scale. The brand has been known for a long time, there is recall across. We have the reach with over 5,000 outlets, Capability- when you look at low-cost engineering and manufacturing across diversified portfolios which is engines or mobility, farm, gensets and aftermarkets. These are the four distinct businesses.

When you look at the scale we cater to about 400,000 plus engines per year, which means we almost produce an engine a minute. We have several 100 suppliers and getting the right scale and scale efficiency and making sure that the OEM customers, we have over 30 OEM customers. So how do you cater to them at the right time, at the right value proposition so by using any of the methods mentioned which is Brand, Reach, Capability and Scale. In some cases, we could be providing engines, spare parts, multi-brand service and sometimes all of the above.

With Electrification eminent, What is GCL – a 158-year-old engine making company’s roadmap for the future?

I’m just going to talk about our mobility division, I said mobility farm, energy and after-market so I’ll talk about mobility. In the mobility division a couple of years ago, almost two and a half years ago we set out on our roadmap a five-year strategic plan, which was very clear. We set out to be a fuel agnostic solutions and service company and what we meant was what was good for us, what got us here, which was being predominantly a diesel engine company which has to evolve to a diesel which we’re taking to a BSVI also providing the right value proposition plus a petrol, CNG, hybrid and electric option. So we are going to work on an entire range of possibilities, we will see the fuel processors change, we don’t believe its going to happen overnight, which means urban city’s like Delhi will go away from diesel in certain categories but it will probably go to rural and some ideally because of the availability of fuel. What has made us significantly successful in the past is that 7 out 10 engines in the three-wheeler segments diesel engines are coming from Greaves Cotton so almost 70+ market share right? And why is that because of even an operator or a driver who runs a vehicle for 15+ hours a day through all the overloading and abuse and still wants maximum uptime because for him its daily food on the table. If he doesn’t run that X amount of hours a day and sometimes running in two shifts he doesn’t make food on the table. So it is our obligation to deliver that maximum uptime, what we call total value ownership or the total cost of ownership. I think that is what has made us successful. Now taking that same principle, we are working on the CNG and the electrification. So what we’re doing on the CNG is that we have a homegrown solution which is one the cargo size CNG applications, we weren’t doing that a couple of years ago but we’ve made inroads into that segment. Next, we got into some hybrid and electric by providing kits so retrofit kits. We can take out a three-wheeler engine and put in a retrofit kit, for hybrid/ electric depending on the customers’ requirements. So I can do a retrofit through my after-market solutions.

In the pure electric we earlier announced our takeover of Ampere wherein the affordable market space, in the lower end where we believe the people who want affordable mobility, we will offer that through the Ampere brand for two-wheelers at optimal speeds, both high speeds and low speeds. Which will ensure that a consumer who wants to from point A – B that we provide an affordable solution, for first-time buyers, that kind of where we see where we are committed to all the technologies. For CNG we have partnered up with a global partner, it’s a California based company where we are bringing our opposed piston technology which is the state of the art first time in this part of the world which line to line comparison vs a traditional IC can give you 25%+ so a CNG engine which is obviously clean tech plus 25% fuel efficiency vis a vis conventional CNG (traditional IC CNG engine) it is a slightly different technology which is called opposed pistons technology, two pistons opposing each other which uses the concept of lean burn. So bringing in the technology we are investing money where we believe it is cleaner tech, which could be CNG as the govt. does the CNG infra push we believe CNG will continue to grow. In electric we are going after the mass segment which is like I said there are more than 200 million people in the affordable segment in the bottom of the pyramid in India for people who need affordable transportation. Now what we’re looking at if you take a step back today our products touch about like I said 1 engine a minute, 400,000 engines roughly we touch about 10 million passengers and 5 lakh tonnes of cargo on any given day so now as we evolve as a company the fuel preferences could evolve meaning instead of all diesel it maybe Diesel + CNG + Electric and we will be there and have our presence in the mobility. So that’s kind of how we see ourselves evolving and we are going to be putting our investments in the right technology in the right future area. So wherever the consumer preference is, we will be ready. The fundamental mantra has been the same, how can I give a reliable and robust product which is true to the brand and trustworthy as well give them the total cost of ownership and value proposition.

The three-wheeler concept vehicle at the Auto Expo 2018 which GCL has created along with MG Auto,  what is the update on that?

We were testing the market, we were trying to see because our foray into that was a concept vehicle first of all. And we said anytime you do an electric vehicle you have to think it from the ground up if you use an existing platform with heavy weight and bring in an electric powertrain you will have challenges so this was a total rethinking of the design rethinking of the light-weighting  of the material using composites and bringing in the powertrain we had developed and having them. So I think that it proved its point and I think we will continue to evaluate electric powertrain options that we can provide to all our OEM’s customers. As and when the market is ready, either the OEM or the aftermarket through the retrofit kits. We will be ready to give all the powertrain solutions.

With the Supreme court recently banning BSIV Vehicles post-2020,  what is your viewpoint on this?

So we’re aware of that and have been working with our OE partner to be ready with it by 2020 with clean BS VI solutions.

Electrification is the future, so what trends do you see will come down to India or how will it be implemented in India and globally?

If you look at a country like Europe or even a western country. Europe has more than 2 million charging stations as of the 2017 data. So infrastructure is going to be the key, especially if you’re going to get into the mass mobility and personal usage. So Infrastructure push on the electric side is going to be a challenge in India. In India, we believe that public transportation will be an area that will be happening first and on the two-wheeler side, for example, Ampere branded vehicles, a lot of the scooters we offer will have an overnight wall mounted charger or I can go to my 100+ Greaves Care centres and I can get charging done. So we are looking at not only providing electric mobility but also the infrastructure. We are working with partners to develop swappable solutions so for some customers and this could be the aggregators wherein the two-wheeler/three-wheeler is going from point A to B where we can swap the battery in the middle of the day. We have prototype solutions which we have demonstrated to customers. So I believe in the two-wheeler/ three-wheeler infrastructure is coming, fast charging capability, infra from the govt. and a lot of PSUs are announcing infrastructure. Infra will have to come in, in addition to that private players like us through our outlets, aftermarket outlets will provide electric charging infra. As that comes in the electric adoption will increase, it will be driven by infra and economics, so the without any value proposition the person may not switch, he may say that in an interview that he wants to switch but he will only switch if he sees value or economics. He needs to see cost per/km and that is where we believe we can show that today on two-wheelers.

Swappable Batteries and other solutions? 

It will almost be like fill it shut it and go and that’s a solution we are looking at it with some partners to see if it will help in adoption rates. For an individual customer it will be fast charging option or if the customer is okay with a slower speed vehicle, we also cater to those vehicles which can be a wall-mounted charge or the highest capacity lithium-ion charge which will have to be fast charging or swappable options. The good part is that Greaves is working on vehicles, charging, the infra and the aftermarket network

Every manufacturer who is into electrification has their solution for fast charging like Greaves has Greaves care centres and home chargers. Everyone has their proprietary stuff going on, but for this whole thing to take off, there needs to be a unified standard of charging? 

It is in its infancy, it has to be there.

Recent legislation changes govt. is really dilly-dallying on what to do and what not do. So how does GCL consult and support its partners like pinnacle?

On the electric side, we have the approach that with or without subsidy we have to make it work. We have to make it work for our end consumer. On the Pinnacle side, we are looking at it again what does it mean for the end consumer, for him to shift from diesel to CNG, what is the value proposition? Can I give him the 25% plus fuel efficiency which means the total cost of ownership goes down. We have to give the customer a better value proposition and ensure they trust the brand.

What about fame and fame II?

We support the govt policy of moving to lithium and continuation of that. The industry is in its infancy and we are committed to offering value to the consumer, while we would prefer that in the long-term value proposition is the focus and building the brand and consumer experience and aftermarket support. So if someone buys a two-wheeler he can go to our 5,000 outlets and get the spare part. Be it the two-wheeler or e-rickshaw the customer can go to the greaves centre or greaves care in the future and get spare parts and then infrastructure or charging available. We are slowly setting that up and it’s still it in its infancy. We will be ready and our network and reach will be ready when the market takes off we will be ready.

You spoke about spare parts, spurious and fake parts are everywhere. How is Greaves Cotton handling this problem?

We have always been good at organizing the unorganized, we are working on leveraging our brand, we used to sell spare parts now we sell three wheeler spare parts and also selling two wheeler spare parts. What we are getting at is the right level of quality and value proposition which will not be present on a spurious part. We believe there is a shift from the unorganized to the organized that’s kind of where we fit in. So anything on a three-wheeler service through the Greaves Care outlets, we have more than 100, a customer can come in and get his service done. Get his engine re-hauling and his service done.

Tell me a little bit about GCL’s investment in cleaner energy?

When you look at the last 19 - 24 months we’ve invested into Pinnacle technology where we put money on the clean energy CNG engine. Working with a western partner to bring in the tech to India and we are now able to demonstrate a 25% fuel efficiency improvement. We also have a two-wheeler engine that is now available with a similar tech. We invested in the electric vehicles and the Ampere acquisition which has been announced, a 150+ crore acquisition over the time. We also work with partners for hybrid and electric infrastructure. We’ve invested in CNG, Hybrid and Electric. We will be ready when the consumer preferences change.

Have you also invested in the service part?

When you look at it as an engine player we are now engine + spare parts + multi-brand service + entire solution. We can give the consumer anything they want.

What are the current mobility solutions GCL is working on?

We provide powertrains, electric powertrains, electric infrastructure, engine + spare parts + multi-brand service. We are moving closer and closer to the consumer because Greaves Care alone gets over 10,000 customers on any given month. Our 5,000 outlets get about more than 50 customers a day per outlet. Customer interfaces from our traditional B2B company we are becoming a B2C company. It could be electric, hybrid, engines, services and CNG.

Tell us about Greaves Care and how you started it?

There about 20,000 mom and pop shops who were doing service for the three-wheelers, there is also the OEM service stations which are used during the warranty period. So we wanted to make the unorganized, organized. So bring in the Greaves brand with its trust, we have more 9,000 + Greaves certified mechanics. Over the years these mechanics became ambassadors for Greaves. This is a franchise type of organization which has grown significantly. It has become viable and feasible for the partner. We also have spare parts for Petrol and CNG. Certain of the Greaves Care outlets are also branching into two-wheelers service to. The idea is to be a one-stop shop. A three-wheeler fleet operator goes in with a few vehicles for service, he will be able to get genuine parts so peace of mind, reasonable rates because we are positioned in between the roadside mechanics and OEM rates. Building a trustworthy brand and maximize the uptime. We have to ensure that the vehicles have the least time and our Greaves Centres should be one-stop shops so that we maximize and quality. We are about 100+ pan India and we are growing. Since it’s our brand name we have a reputation to keep. We are getting upwards of 10-12,000 customers per month. We are seeing a decent uptake.

Tell us about GCL an Internal Combustion engine manufacturer acquiring Ampere an EV Startup?

Our DNA is about affordable mobility when we looked at the pyramid of Indian customers, people going from their home to the metro or college to home or a housewife who wants to go from point A. to B. They had to rely on public transport or nothing at all. This is where Ampere comes in with affordable mobility and the thought process is that a lot of them are first time buyers so it gives them a sense of convenience, freedom and comfort. Greaves has the aftermarket support with 5,000 outlets and multi-brand service and together we believe this is a market which has tremendous potential because, in terms of optimal speed, slow or high, lead acid or lithium, we believe there is an affordable transportation because the cost per km is less than an IC engine. We are committed to developing a brand or customer experience, which a customer would love to come back and shop and building that positive experience is the combination we are looking for. Ampere has done a good job in bringing and adapting that tech in India and getting ready for the Indian market. As they are ready to scale they needed somebody like us to take them to the next level. The combination of Greaves and Ampere can provide together would be more significant. We are also seeing aggregators, like Swiggy etc who are looking for last mile, affordable mobility solution.

GCL’s partnerships with Pinnacle and Altigreen in terms of electrifications and future mobility?

For both Altigreen and Pinnacle, we have developed hybrid with Altigreen and with some of our other customers, we have developed both hybrid and electric platforms and swappable solutions and we are testing it out in the market. 

When you get into Pinnacle for the CNG we believe we are in the stage of providing a 25% increased fuel efficiency as compared to an IC engine. We are in the Alpha stage of the program moving towards products

Tier II and III cities, 3 wheelers 2 wheelers and rural markets. What sort of performance are you expecting in 2019 or 2020?

In general, we had a decent monsoon, which means our businesses automotive, farm and gensets business we hope will benefit. We believe as the rural demand picks up from these businesses we will continue to see an uptick in demand. We are cautiously optimistic, we do see the macro headwinds in short term but we do believe in the long term.