Greenfuel rides CNG wave while coping with Covid

by Shahkar Abidi 07 May 2021

The first quarter of this fiscal could hit revenue projections of Greenfuel Energy Solutions by 20 percent as a result of the ferocious resurgence of Covid-19 nationwide.

“It remains to be seen how long this situation will last. I believe demand will bounce back in the latter quarters of the fiscal just like it did last year,” says Akshay Kashyap, MD. The company, which supplies CNG and other alternative fuel systems to leading OEMs, clocked 21 percent (YoY) growth in revenue during FY2021.

Kashyap is confident that this quarter may not see a complete washout on the lines of last year since the lockdowns are more localised. However, challenges remain on the suppliers’ side and could aggravate due to labour shortage, spike in commodity prices and difficulties in logistics .

Greenfuel’s clients include Maruti Suzuki, VE Commercial Vehicles, Tata Motors, Isuzu and Ashok Leyland. It has a 35 percent market share in the CNG space where it also supplies filling systems to gas station companies. Nearly 95 percent of Greenfuel's total sales comes from its CNG systems.

One of the biggest benefits in recent times was the industry transitioning to Bharat Stage VI emission norms which spawned a 'J-curve’ demand (an initial loss followed immediately by a dramatic gain) for cleaner mobility solutions like CNG. 

Ashok Kumar Choudhary, Business Head – Gas Fuel Division, had earlier told Autocar Professional that the onset of BS VI prompted the company to relook at all its product segments and do major value engineering to lower cost structures. This led to development of newer and modular products while also cutting costs. 

Further, the constant price hikes of petrol and diesel now makes CNG-powered vehicles more attractive to customers as it is seen to be 60 percent cheaper than petrol and 40 percent vis-a-vis diesel. What has also helped is the rapid proliferation of CNG outlets with over 700 being added last fiscal alone taking the total tally to 2,800. The Centre plans to enhance this to over 10,000 outlets in the next eight years and this is the best piece of news to carmakers like Maruti Suzuki which sold nearly 1.6 lakh CNG models last fiscal. 

With Covid cases rising by the day, Greenfuel has kicked off a two-fold strategy to handle the situation. One is to be financially prudent in these times and the other is to reach out proactively to employees, suppliers. This is by way of vaccination programmes for eligible employees, providing medical aid including mental health, delivering groceries and so on. The idea is to ensure that there is no worker migration which could only spread infections back in their hometown.

Even as Greenfuel expects the share of EVs in the company's overall revenue to reach about 50 percent in the next few years before eventually taking its primary business of CNG systems, the results so far have been rather lukewarm.   "Battery business is down because the market is too distributed, very low cost, cheap assembled products right now. That's the market of EV in India. While we make higher level, premium, reliable products," continued Kashyap when asked to offer a break-up on sales in its EV portfolio. 

Greenfuel, which got into the lithium-ion battery packs segment in 2018 have designed battery packs with a block of 2KW each and can be assembled in multiples based on individual needs.

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