Greaves Cotton expects international markets to drive revenue as local business slows

Greaves Cotton, a Mumbai-based engineering company, is increasing its focus on international markets in the backdrop of slowing business across its category in the domestic market.

The company, that manufactures industrial and commercial vehicle engines along with agri and construction equipment, is looking at higher revenues from the international markets, with focus on three territories – including the Middle East, South East Asia and East Africa.

At present, the company operates five main divisions – agricultural equipment, automotive, industrial engines, auxiliary power and construction equipment.

Talking to dna, Sunil Pahilajani, managing director and chief executive officer of Greaves Cotton, said, "Our international business contribution was negligible a few years back at around 1% or even less. But this year, we have reached 3%. I have an ambition to take this to 10% of the total turnover in the next 3 years, assuming that turnover will keep increasing."

Maintaining the focus on three territories, Pahilajani said the company has an office in Indonesia, which caters to South East Asia. To meet the requirements of the Middle East markets, the company has set up its own company in Dubai, while it has another office in Tanzania that caters to the African market. "All this has come up in the last 1-2 years and we have set up our own base and people and started establishing service and distribution network," said Pahilajani.

The company said the focus going ahead will be on increasing the market shares in these territories. The company currently supplies gensets, industrial engines etc in the international markets.

For Greaves, its automotive segment is one of the major contributors to its overall revenues. The company is one of the biggest suppliers of diesel engines for small commercial vehicles (SCVs) and three-wheelers in the domestic market. The commercial vehicle industry, including the SCVs, has seen a sharp slowdown in sales for the past two years. The company however, expects things to revive in the medium and long term with the opening up of investments in infrastructure.

Greaves will invest Rs 100 crore across its business division, of which more than half will be dedicated for the automotive business, the company said.

Pahilajani clarified that it does not intend to enter into the passenger car segment, and will continue to focus on sub 3.5 tonne SCVs.

The company said that it is looking at newer accounts, new players, in order to maintain the sustainability. "Players are coming from Europe, China, which is good news for us. I am sure, not all of them will have engines ready or have engines for India. Some of them are good potential for us," said Pahilajani.

With increasing volatility in the automotive business, Pahilajani said entry into the new segments (4-wheelers) and increasing the reach has helped the company derisk itself from the ongoing slowdown. Company's engine segment grew 5% in the first quarter of the current financial year, while its infrastructure segment continued to decline due to slowdown in the industry.

The company has currently suspended the production of its construction equipment business. However, it is currently looking for a partner in order to revive the business.

"Construction equipment business has not been performing well and has been stressed for the past 2 years. The industry is not performing well. That is the area of concern. We have been looking for partnerships and solutions, in order to make it viable. We will happy to turn it around and we are trying that," said Pahilajani.