Greaves Cotton posts higher Q3 sales, targets increased supplies to small CV makers

Mumbai, January 31, 2013: Engineering company Greaves Cotton has reported higher revenue of Rs 515.8 crore for the quarter ended December 31, 2012 as against Rs 465.1 crore for the corresponding quarter the year before (an increase of 10.9%). EBITDA was Rs 71.7 crore as against Rs 57.7 crore, for the same period in 2011. Profit After Tax (PAT) after exceptional item of provision for diminution in value of investment in its subsidiary amounting to Rs 14.2 crore was Rs 34.4 crore as against Rs 34.2 crore, for the same period in 2011.

Commenting on the performance, Sunil Pahilajani, MD and CEO, said: “The revival of overall business health with signs of gradual recovery of the economy has helped Greaves record an increase in topline, this quarter. Our specific emphasis on cost optimisation has resulted in cost efficiencies and has helped control material costs effectively. On the business front, increased demand for our engines for small four-wheelers along with our keen customer focus, attributed to the Greaves Automotive Engine business contributing to the increase in top line”.

Greaves’ Automotive Division has a wide portfolio of automotive engines and is among the largest independent manufacturers of single-cylinder engines with a production of over 450,000 engines per annum.

These light diesel engines, which conform to BS III norms, are supplied to small commercial vehicle (SCV) manufacturers like Tata Motors, Piaggio Vehicles, Mahindra & Mahindra, Atul Auto and Scooters India among others. The engines are also available for adaptation on CNG/LPG usage.

The company’s manufacturing units, located at Ranipet in Tamil Nadu and Aurangabad in Maharashtra, are ISO/TS 14649 certified. Greaves, which also has a state-of-the-art technology centre at Aurangabad, has an aftermarket product support infrastructure throughout India with a countrywide network of offices and over 1,200 authorised dealers.

Aiming for higher growth, focus on CNG The company has charted out plans for higher growth and is expected to launch a 265cc engine for three-wheelers and a 900cc engine for four-wheelers this year. “Our focus is on growing the business in the four-wheeler sector,” Sanjiv Kumar, CEO – automotive engine business, Greaves Cotton, had told Autocar Professional earlier this year.

The company’s new thrust on business from four-wheeler OEMs comes as the ongoing healthy drive of the 4-wheeler small and light commercial vehicles is attracting the company. The segment grew 17 percent during the April-December 2012 period to 342,562 units.

Currently Greaves Cotton supplies to vehicles like the Tata Ace Zip, Magic Iris and Piaggio’s Ape Truk. “We are looking at bigger engines for rest of the SCV segment,” Kumar told Autocar Professional. The company, which works with several technology providers, may also look at expanding its range up to a 2.0-litre four-cylinder engine. Greaves has two distinct engine platforms. “We are working on a new range,” says Kumar.

Greaves Cotton has also entered into a seven-year agreement with Atul Auto to be the sole supplier of engines for the latter’s three-wheeler range. It is likely that Atul Auto, which is planning to enter the four-wheeler SCV segment, may source the engine for the vehicles from Greaves Cotton.

Greaves Cotton is also planning to introduce more CNG versions and its engineers are developing a CNG version of the 600 series engine. In its communication to investors, Greaves Cotton says it will invest around Rs 150 crore on enhancing its technology, product development capabilities and complete expansion in its Ranipet plant.