Greaves Cotton Shuts Ranipet Plant; Will Focus On Operational Efficiency

Greaves Cotton has decided to shut down its Ranipet plant in Tamil Nadu. According to a report from PTI, the engineering major took this step as a part of its exercise to consolidate plants. However, its group CEO and Managing Director Nagesh Basavanhalli said the company will continue to work on operational efficiency. The company expects passenger three-wheeler segment to recover in the second half of this fiscal, which has been impacted because of COVID-19. The company has six manufacturing plants across the country, including in Ranipet, Aurangabad and Pune.

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The company operates in multiple segments such as automotive, non-automotive, aftermarket, retail. It also functions in the electric mobility space through Ampere Electric for electric scooters and other electric industrial products and e-rickshaws.

Basavanhalli said, "The company will continue to work on the operational efficiency. We have already committed to some plant consolidation, taking out over 10 per cent of fixed costs, which would mean there will be plant consolidation, some overhead cost reduction and strong focus on working capital management, cash flow, among others, going forward."

The company has six manufacturing plants across the country, including in Ranipet, Aurangabad and Pune.

Mentioning that the company has a very strong working capital and cash flow management, he said, "As part of the operational efficiency, the company has decided to shut Ranipet (Tamil Nadu) plant and consolidate operations at Aurangabad plant in Maharashtra."

He also mentioned that the company's non-auto small engine business is performing well compared to the pre-COVID level. Even, the cargo engine segment is doing well, which is down by 10-20 per cent. He stated, "The company saw a good rebound in Q2 in the non-auto small engine segment which was also the big part of the company's diversification strategy. The aftermarket business is back to pre-COVID level with 6,000 retailers added and stores returned to normal, and e-mobility business, although a small segment, is growing at an all-time high."

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The firm expects a recovery in the three-wheeler passenger segment which has dipped approximately 50 to 60 per cent because of concerns on shared mobility due to COVID-19. As consumer confidence is returning gradually, the segment is anticipated to get better every passing month. Moreover, Genset segment is also expected to pick up in the second half of the fiscal.

Do note that Greaves Cotton registered a consolidated net loss of Rs 22.49 crore in the second quarter ended September 30 as against a consolidated net profit of Rs 43.63 crore in the year-ago period. Its consolidated revenue from operations stood at Rs 329.38 crore as compared to Rs 512.42 crore in the same quarter last fiscal. Company's revenue from the engine business accounted for 47 per cent of its total revenue during the quarter, while the aftermarket segment contributed 25 per cent share. According to the company, its share of e-business revenue was at 13 per cent, while the rest of 15 per cent was from other businesses.