The Kinetic Group has been part of the India mobility story for decades. In its new avatar as Kinetic Green Energy & Power Solutions, its co-founder and CEO, Sulajja Firodia Motwani, who is also vice-chairperson of the Kinetic Group, speaks to Nilesh Wadhwa on the future prospects of electrification in India.
Let’s begin with Kinetic Green and your vision for the group.
Kinetic Green is a light-mobility company and will focus on electric vehicles for the last-mile of people, logistics or goods — which is basically two- and three-wheelers. We are a well-known mass brand and understand frugal engineering very well. Bringing advanced technologies at affordable cost is in our DNA.
We also believe that with intra-city vehicles, the opportunity for women is also quite large. When you are working on two-, three-wheelers or golf karts, it is basically 1kw to 8kw size of the system, which means there is synergy in the supply chain, manufacturing and R&D.
The Kinetic Safar Star (top) and Safar Jumbo electric three-wheelers.
This year, we want to grow the volumes for our Safar Jumbo in the e-commerce space and other segments too. We expect a lot more competition in the EV space and will leverage what we have going for us. We are amongst the early players, have gone through our learnings, set up a dedicated network of suppliers, dealers and team. We have a unique asset-light model and our breakeven is just 400 vehicles a month.
Could you throw more light on the automotive ecosystem within Kinetic?
Our automotive systems vertical has now reached over Rs 1,000 crore revenue and makes transmission systems, engine parts, automotive electricals, electronics and electric motors through multiple group companies. We are working with Renault, Mahindra Group, American Axle, Hero MotoCorp and Eicher Motors in addition to meeting the needs of two-/three-wheeler and commercial vehicle makers.
We have now entered the EV component space and make motors, controllers and axle-products through different group companies which also support Kinetic Green.
After extensive research on various industries — generators for power backup to consumer electronics and durables — we decided to look at EVs as an upcoming space. In 2013, there were no policies, technology or component manufacturing in EVs and we joined hands with the Council of Scientific and Industrial Research. It had a programme where EVs were seen as a field for the future in India. We worked with three of their labs to create the first electric three-wheeler in the country from ground-up developing in-house technology. The Centre had set up a group along with the Society of Indian Automobile Manufacturers to look at the policy for EVs. During one of the meetings, I highlighted the topic of electric two- and three-wheelers, which was added to the policy (initially, two- and three-wheelers were not in the map of the FAME 1 discussion).
How has the journey been since then?
We have worked a lot with the Centre to bring in focus on electric two- and three-wheelers as India sees 85 percent of its population use them along with buses for mass transportation. A developing nation like India needs to see EV reach the masses not just classes.
The first three-wheeler we developed had almost 65 percent import content but now except for the cells, we are buying everything locally including batteries. The Kinetic Group has played a key part not only in manufacturing e-three-wheelers but also in policy formation, supply chain development where we worked with suppliers to provide our domain knowledge and designing the specs for Indian driving conditions.
When we entered the e-three-wheeler space, there was no market for such products and a lot of effort went in to create the narrative. We worked with the UP government to bring in e-three-wheelers for better livelihoods and health. In Dantewada, Chhattisgarh, we worked with women in the Naxalite belt to provide them with e-three-wheelers.
Kinetic Green was set up as an independent company as opposed to division of an existing company. It has its own business model since an EV is altogether a different animal where people need to be passionate and have a different approach.
How has a legacy brand like Kinetic coped with this transition?
I am pleasantly surprised that though Kinetic was out of the retail market for a few years, the response was tremendous when Kinetic Green was launched. While dealers wanted to join hands with us, customers also knew that our products offered better-quality, service and reliability.
Kinetic has always been out there amongst the top brands given that we created life-changing products like the Kinetic Honda and Luna that were category creators. The brand was always iconic. Interestingly, there is a lot of buzz in the market about the electric Luna. Because of the iconic status of the Kinetic brand, it remains fairly on top-of-recall for the customer.
So, are you hinting on Luna returning in an electric avatar?
The electric two-wheeler space is beginning to look exciting and will accelerate from here onwards. I can neither confirm nor deny anything about our efforts in this direction. From an industry perspective, the tide is now turning rapidly for e-two-wheelers. We had consciously put off any activity in this space as we had our hands full with three-wheelers. Secondly, we also had a non-compete clause with Mahindra till November 2018.
We have been doing a wonderful job in electric three-wheelers, starting from developing to localising content and to developing our own L5 vehicle platform. We have been making good strides here. We have also joined hands with Lamborghini for the golf kart project, which would have seen us launch the vehicles this year but due to Covid-19 this has been delayed to 2022. The JV has been formed, the prototypes made and the products are being readied.
In electric three-wheelers, the customer understands the TCO (total cost of ownership) while for e-two-wheelers, it is more about initial purchase cost. Ather Energy, for instance, has created a very good product but not been able to retail much. However, in the last few years with FAME 2 coupled with state EV policies, the price parity becomes competitive.
What do you think are the key challenges in the EV space?
It is a disruptive opportunity which also means it throws open opportunities for new companies. We have been one of the early players and have set up a unique business model that can build up in a very strong way. The focus will be more on growth and capital investment. At the same time, there will be challenges as EVs become mainstream and more competition will come in. Yet, there is space for many players as the market is quite large.
Could you throw light on your company’s growth and the investments planned?
While it is early days yet, thusfar, we have sold around 30,000 vehicles. We have a cumulative topline of Rs 350 crore. Last year, we had a sales decline because of the Covid-19 situation but are targeting Rs 200 crore topline this fiscal. Our revenues have been around Rs 70-100 crore for the last 3-4 years. We are now in an acceleration phase and see the market as a multi-thousand crore opportunity.
We have already invested around Rs 100 crore in Kinetic Green. The promoters have invested around Rs 50-60 crore in equity and Rs 40 crore in other forms of financing. But now we have just signed a very aggressive plan to invest around Rs 300 crore in the next 3-4 years through promoter and Series A funding. We intend to complete the Series A funding in the next 12 months.
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