Gujarat-based company to launch 0.5-tonne, CNG three-wheeler by Diwali and plans entry into the 0.35-tonne segment by December.
India is the world’s leading manufacturer, consumer and exporter of three-wheelers. According to apex industry body SIAM, domestic sales stood at 513,251 units and exports at 362,876 units in 2011-12. Three-wheelers are widely used as an affordable means of short-to-medium distance public and goods transportation. Split into three categories, they belong to 0.75, 0.50- and 0.35-tonne classes as per their gross vehicle weight (GVW). The 0.35-tonne passenger carrier class holds 50 percent of the entire three-wheeler (3W) market in India and Bajaj Auto stands as the undisputed leader of this segment with an over 50 percent share.
According to ICRA Research, the domestic 3W cargo segment (primarily 0.75 tonnes and 0.50-tonne 3W) has witnessed negative growth at nine percent CAGR over the last five years, thanks to the four-wheeled LCVs pioneered by the Tata Ace in 2005-06, which has transformed the industry dynamics by slowly and steadily eating into the 0.75-tonne three-wheeler market. However, as per the report, the 3W passenger carrier segment has registered 21 percent CAGR during the same period, and it is thanks to the increased need for affordable public transportation that the 0.50- and 0.35-tonne 3W passenger carrier segments continue to bustle with good volumes.
Making new moves
Contemplating this growth, the Gujarat-based Atul Auto, a multi-state player so far, is gearing up to make it to the next level. The company has its presence only in the 0.5-tonne 3W segment through its two basic product lines – the ageing front-engined passenger and cargo 3Ws sold under the ‘Atul Shakti’ brand name and the more recent rear-engined 3Ws retailed as ‘Atul Gem’.
Built using tubular chassis made out of basic fabrication and welding work, the Shakti 3Ws are being rolled out since 1999 from the company’s Rajkot plant and are sold primarily in Gujarat, Rajasthan, Madhya Pradesh and parts of Haryana and Punjab. However, in 2009, the company adapted the rear engine platform and started rolling out the 3Ws using monocoque chassis’ which extended the company’s markets to other states such as Kerala, Karnataka, Chattisgarh, Assam and J&K.
The 3Ws under both these brands are powered by the BS III-approved, 435cc diesel engine sourced from Greaves Cotton while the gearboxes are produced in-house. According to company officials, Shakti, the sales of which may be headed for saturation with time, sells 1,000 units every month. It is the Gem, which sells 1,500 units per month, that is driving growth for the firm. The sales of Gem 3Ws grew by 19 percent between April-August 2012 YoY and have powered the company to 15 percent of the total market share in the 0.5-tonne 3W segment.
Gradually building up its production, expertise and R&D capabilities, the company now plans a product upgrade – a CNG-powered Gem 3W by Diwali and an entry into the high-volume, 0.35-tonne 3W segment by December-January 2013.
J V Adhia, vice-president, finance, Atul Auto, says: “We are aiming to roll out the 0.35-tonne three-wheelers under a new brand name, in diesel as well as petrol, using the 400cc Greaves diesel engine and a petrol engine with smaller capacity.” The company plans to roll out 700-800 units of the forthcoming 0.35-tonne 3W initially and gradually increasing the same to 900-1000 units by the third month onwards.
Atul Auto had earlier announced an investment of Rs 60 crore for capacity expansion at the Rajkot plant, primarily directed at accommodating the extra capacity required for the upcoming 0.35-tonne 3Ws. “That includes the ongoing construction of another paint shop at the cost of Rs 8-10 crore,” says Adhia. Although the current production capacity is 24,000 units per annum on a single-shift basis, the company aims to build a capacity of 48,000 units by November 2012.
The plant currently has two manual assembly lines which jointly roll out 50 Shakti 3Ws daily while one automatic conveyor belt rolls out 60-80 Gem-based models every day, both on a single eight-hour shift basis.
Eyeing the four-wheeler space
Furthermore, not overlooking the promising growth displayed by the four-wheeled LCV segment, the company’s R&D is working to explore the development of these vehicles for cargo as well as passenger applications in the long run.
“We are progressively working on a one-tonne, four-wheeler project. Expect a fully built vehicle in 2-3 years initially with cargo applications followed by passenger-friendly models. However, our immediate priorities are to tap the existing domestic markets with the Gem and the forthcoming 0.35-tonne 3W which would help us clock a turnover of Rs 1,000 crore by 2015-16,” explains Adhia. The firm’s turnover in 2011-12 was Rs 298 crore.
The company also plans to increase its current network of 130 dealerships to 200 in the next 12-18 months. As per the ICRA Research report, the 3W industry is expected to register a moderate volume CAGR of 7-8 percent over the next five years, driven by exports and the passenger carrier segment. Atul Auto is banking on making the most of that growth with new 3Ws.
AMIT PANDAY