Mumbai-based Greaves Cotton has committed to a capital expenditure (capex) program of Rs 500 to 700 crore over the next five years to anchor its new "Greaves Next" strategy.
The strategic reset comes at a critical juncture for the automotive components industry, which is grappling with the dual pressures of stringent emission norms and the accelerating though uneven transition to electric mobility. Greaves Cotton’s response is a multi-pronged approach that emphasizes technological IP, international expansion, and a shift from being a product-centric vendor to a comprehensive systems provider.
Capital Allocation
The earmarked capital expenditure (capex) of Rs 500-700 crore is dedicated to the company’s core businesses, excluding its electric vehicle (EV) subsidiary. This capital is not intended for mere capacity addition but is focused on three high-leverage areas: product development, capability enhancement, and geographic expansion.
"We have earmarked Rs 500 to 700 crores towards new technologies, product development, and capacity expansion," said Parag Satpute, MD and CEO of Greaves Cotton during the company’s Q3FY26 earnings call. He further clarified that this investment will be front-loaded, with the heaviest spending occurring in the first two years to catalyze growth.
A significant portion of this outlay is directed at R&D to upgrade product platforms for international markets, where operating conditions demand higher technical specifications than domestic Indian standards. Furthermore, the company is investing in advanced manufacturing capabilities, such as AI-based robotics for 100% accurate final inspections, replacing manual processes with high-tech automation to drive cost efficiencies and quality consistency.
The ‘Greaves Next’ Framework
Late last year, the 165-year-old engineering Group announced its "Greaves Next" strategy, a multi-year framework designed to position the firm as a future-ready engineering solutions company. This strategy organizes the core operations into three distinct segments: Energy Solutions, Mobility Solutions, and Industrial Solutions.
In the Mobility segment, Greaves is transitioning from being a component supplier to a solutions architect. This shift is best exemplified by its partnership with the French micro-car manufacturer, Ligier. Rather than supplying a standalone engine, Greaves now provides the entire powertrain system, including the engine, exhaust systems, Electronic Control Units (ECUs), and wiring harnesses. "We become the kind of architect and the go-between with the customer," Satpute noted, highlighting that this model allows Greaves to hold the IP for core systems while integrating partner technologies.
Financing the Electric Leap: The Rs 1,000-Crore GML IPO
While the core B2B business remains the cash cow, Greaves Cotton is preparing for a significant liquidity event to fund its ambitious electric mobility aspirations. Its subsidiary, Greaves Electric Mobility Limited (GML), has filed for an Initial Public Offering (IPO) to raise approximately Rs 1,000 crore in primary capital.
The IPO, which has already received final observations from SEBI and is valid until May 2026, is intended to fund the "next phase of growth" for the EV vertical. GML has emerged as a top-six player in India’s electric two-wheeler market, with its Magnus Grand model driving significant retail traction and the company crossing the 2.5 lakh cumulative sales mark.
"The money raised from the primary will be directly infused into Greaves Electric Mobility," explained CFO Akhila Balachandar during the same analyst call. This capital infusion is vital as GML moves from a startup phase to a scaled OEM, requiring a dedicated management structure and separate capital pool from the parent company. Post-IPO, Greaves Cotton intends to remain a large shareholder, though the electric business will operate with its own independent leadership.
Global Aspirations and Geopolitical Headwinds
International business is a cornerstone of the Greaves Next roadmap, with the company aiming to increase exports from the mid-teens to over 20% of total revenue within the next five years. Success in Europe with Ligier has proven the company's ability to meet stringent Euro 5+ and Euro 6 emission norms, providing a springboard for further expansion into developed markets.
However, the path to global dominance has not been without friction. Excel Controlinkage, a key 2019 acquisition specializing in engineered components like push-pull cables and electronic sensors, has seen its export business impacted by geopolitical instability. Specifically, a significant drop in demand from the Russia/CIS region due to the ongoing war has softened export figures.
Despite these setbacks, Excel’s domestic business remains robust, growing 17% in the first nine months of FY26, driven by strong ties to India's medium and heavy commercial vehicle (MHCV) industry. To offset Russian losses, Greaves is aggressively targeting new markets in Europe and North America, leveraging a dedicated international business team to open local assembly partnerships.
Technological Moats: ER&D and Rare-Earth-Free Motors
To support its pivot toward a high-tech future, Greaves is leveraging its engineering and R&D (ER&D) subsidiary, Greaves Technologies. With a pool of 400 highly skilled engineers, this unit serves marquee global automotive clients while providing internal tech upgrades to make Greaves' core products future-ready.
A standout technological venture is the partnership with Chara Technologies. This collaboration is focused on developing rare-earth-free electric motors, specifically for the L5 three-wheeler segment. By eliminating dependence on rare-earth minerals, whose supply chains are often volatile and geopolitically sensitive, Greaves aims to create a sustainable and cost-competitive electric powertrain.
This technological agnostic approach extends to its traditional powertrain business. Greaves continues to develop CNG, hydrogen-test engines, and ethanol-blended diesel solutions. "We can seriously be called a multi-fuel or fuel-agnostic company now," Satpute emphasized, noting that the company expects multiple fuel technologies to coexist.
Way Forward
By earmarking Rs 700 crore for its core while simultaneously spinning off its EV wing through a Rs 1,000-crore IPO, the company is attempting to balance the profitability of the present with the necessities of the future.
The shift from a diesel engine company to a technology-led solutions provider is a narrative of adaptation. As Parag Satpute concludes, the goal is to ensure Greaves remains a stakeholder in the new industrial revolution, leveraging its 165-year legacy not as an anchor, but as a foundation for 16% to 20% organic growth in the years ahead.