It was a little over two months ago when Jeddah-based Abdul Latif Jameel (ALJ) invested $150 million for a 35 percent stake in Greaves Electric Mobility. It will invest an additional $70 million going forward as part of a total commitment of $220 million in this electric arm of Greaves Cotton.
The money will be used for new products, technologies and manufacturing. ALJ has a global presence in over 30 countries and across six continents with a workforce of 10,000 plus people. It has also been associated with Toyota in the distribution arena for many decades.
According to Nagesh Basavanhalli, Managing Director and Group CEO of Greaves Cotton, ALJ is expected to provide tremendous value in electric mobility. It is the third largest shareholder in electric truck maker, Rivian Automotive, and this experience by itself will be useful to Greaves Electric as it gets set for new challenges.
“They are globally strong and we need to grow internationally too. This, therefore, becomes a strategic fit especially with their levels of exposure,” says Basavanhalli. Once products and platforms are in place, Greaves Electric “could check out” the possibilities of entering overseas markets since access will not be a problem with the ALJ partnership.
“Our need for capital is good enough for now and if we need more, we will look at it. We have a great partner and can learn from their experiences . The top priority right now is about product and technology while executing things well,” adds Basavanhalli.
For now, the script is playing out well with the company reporting sales of over 25,000 electric scooters in the preceding quarter. This is nearly twice as much from the levels reported in the same period last year which clearly indicates that the e-mobility momentum is well and truly in place.
“Things are looking positive,” agrees the MD with the Ranipet electric two-wheeler facility in Tamil Nadu firing on all cylinders. It is operating on a single shift right now which translates into 2.5 lakh units per annum and it is only a matter of time before this doubles to half a million units with two shifts.
“We have also added a lot of talent in engineering, development and leadership,” says Basavanhalli. The Magnus brand has been clocking good numbers and Greaves is keen to take forward the message of sustainable mobility and make it “acceptable to a larger customer base”. It is also in this context that ALJ will play a key role in helping out across the value chain.
“We can also take Ranipet up to a million million and will go ahead when demand is in place. The plant is big enough at 35 acres and there is scope for a second facility even while the current capacity is good enough,” adds Basavanhalli. The workforce here compresses over 70 percent women from the local community who have contributed to rolling out over 50,000 scooters already.
“Re-skilling the local community has also built a unique culture on the shop floor,” he says. Ranipet is now the sole base for production of electric two-wheelers with the company exiting Coimbatore where Ampere Electric had its facility.
After the acquisition (of Ampere), Greaves continued using this unit but has now completely moved to Ranipet. Hyderabad will be the base for its electric three-wheelers following the strategic acquisition of MLR Auto.
According to Basavanhalli, Bengaluru is a critical part of this ecosystem and will be the base for R&D catering to both Ranipet and Hyderabad. The logistics also work out well since the Chennai-Bengaluru belt has a robust supplier base and also has easy access to the port for future export shipments. “Ranipet is located between Bengaluru and Chennai which will attract the right talent for us,” he says.
Greaves Electric has also been hiring key people from non-auto sectors like FMCG and the like since electric is an all-new domain which will require a different set of skill sets. “Understanding customers is important in the electric arena since it is about connectivity. An EV is essentially a tablet on wheels and a consumer product,” explains Basavanhalli.
Hence understanding market preferences and giving a new spin to sales and distribution along with a sharper focus on digital become top priorities. “Online shopping is yet another new dynamic along with lifecycle management and it is this focus on software/connectivity where strong B2C leaders will make a difference,” he reiterates.
Greaves Electric will also use a mix of digital and the traditional dealership model to retail its electric scooters even while D2C (direct-to-consumer) is now emerging a new mantra. “We will do both since nearly 60 percent of the work is being done before leading up to the closing deal that is carried out physically. The transaction time is a lot faster by the time the customer comes to the showroom,” says Basavanhalli.
The electric transition also brings its own set of new challenges when it comes to getting the Greaves workforce ready for the future. “The sheet metal industry has given way to mechatronics, electronics and software,” he adds while pointing out that this will need a lot of training and re-skilling across the company and its supply chain.
This will need more mentoring in software, customer data etc and “we also have to unlearn many things”. As he puts it, the industry is in the midst of a massive technology disruption and it is important to constantly stay ahead of the curve.
“It is all tech-led and the key is to set up competencies, find the right skills and all this will call for both lateral hiring and freshers,” says Basavanhalli. Right now, the average age within Greaves Electric hovers around the late 20s and early 30s which is just perfect given that the new lot of electric scooter buyers are millennials. The customer connect is therefore in sync which is critical to the growth of the business.
ALJ’s role will also be relevant here too since it has worked with other startups across the world. “They have seen these cycles which will bring a much global perspective,” he adds. Localisation is also being given a lot of attention (except for the cells and chips) since Ranipet’s role will grow rapidly as a global electric scooter hub.
On the future of auto fuels, Basavanhalli admits that the share of diesel will “definitely go down” in the future owing to costs, pollution and cost of ownership which will make electric a far more attractive alternative. Yet, the internal combustion engine will not disappear overnight and will continue to be around for the next eight to ten years. CNG will also play a big role and this is where Greaves Cotton believes it can offer a host of fuel options to its OE customers as well as within its own vehicle range.
“We are building the blocks and over the next year there will be greater focus on marketing and brand building. We are looking at new two- and three-wheelers too by the end of this fiscal,” says Basavanhalli.