Greaves Cotton plans 3-pronged strategy to derisk biz

Auto industry body Society of Indian Automobile Manufacturers (SIAM) says growth in FY14 will be among the low single-digits. So, an engineering giant Greaves Cotton whose main focus was automotive segment has begun taking steps at derisking its business. Steps like banking on products like the mini-tractor, ‘Ustad’ to pull it back on the path of high growth.

The company is one of the largest suppliers to the commercial vehicle business of Tata Motors and M&M and with projections that the auto industry will not speed up anytime soon, it hopes to reduce its dependence on its auto component vertical for revenues from the current 55 percent reports CNBC-TV18’s Sunanda Jayaseelan. However, vehicles like the Ustad are just one part of a three-pronged strategy. Commenting on their three-pronged strategy, Sunil Pahilajani, MD & CEO, Greaves Cotton said, “The three dimensions in which we are working is one is you extend your product range, second you extend your  market range and third is  you extend your geographies.” Extending market range includes entering and strengthening its presence across the Middle East, South East Asia and South Africa and increasing the contribution of exports from the approximate 1% right now to 10% in the next 4-5years. Ustad marks the start of an exercise to strengthen its farm equipment portfolio. An expansion that will increase this vertical's share of revenues from the current 15 percent and more new products are expected to roll out soon.  “Challenges are of cyclic nature. The industry is going through difficult period for most and growth is subdued. But this is the right time when we should introspect and focus on several things and our product strategy is one key element in that, added Pahilajani. However Pahilajani is being realistic when he says that any uptick in the farm equipment business may take a couple of quarters more, So, while the company waits for the market to pick up, it will invest 100 crore rupees to build capacity across verticals.