 "We've closed loss making units to focus on profit-making ones: Sunil Pahilajani")
While the market continued to be subdued in the first quarter, some early signs of revival are being seen in the automotive segment which is expected to drive faster growth towards the second half of the current financial year, says Sunil Pahilajani, managing director and chief executive officer in an interview with Dilip Kumar Jha. Edited excerpts:
FY14 was a challenging year for Greaves Cotton. Have you reworked your strategy to bring growth back on track?
Yes. We have freed ourselves from the three loss making businesses. While the centurion foundry in Pune with 500 tonnes of installed castings capacity with a third of average utilization, has been shut down and the engineering unit in Germany was sold, we have suspended the operations of our infrastructure division. Therefore, going forward we will concentrate on profit making business.
What portion of these three business segment constituted of the group's turnover in 2013-14?
That's hard to find as profit making units run loss making business.
Why did you shut down / sold plants when revival options were open?
Our foundry unit in Pune was operating with a loss since beginning. We ran it for some emotional reasons. But now, we decided to part with loss making entities permanently and concentrate on profit making business instead of spending time and energy on loss making ones for revival and wait for years for a turnaround.
You had forayed into mini tractor business last year. What is its progress?
We launched mini tractor business in pilot basis. But, we did not move beyond test marketing. Its commercial launch is on hold currently due to strategic business decisions. Tractors require continuous innovation with higher capacity to compete with other market players. Somewhere, we were not comfortable with continuous innovation.
What will be your future growth drivers then?
We saw improved performance in the 3 wheeler segment. Genset segment transitioned to the new CPCB2 emission regime from July'14 and we expect to improve market positioning with the launch of its new efficient and cost competitive genset range. Overall, engines segment which is the dominant part of the company grew by 5 per cent in the Q1FY15.
However, infrastructure equipment segment continued to suffer due to further decline in the industry. We are focusing on new launches with better focus on research and development (R&D). We launched CPCB2 genset last year which is working well.
Agricultural weeder and reeper are also on our focus going forward. We are also increasing focus on new geographies including India and overseas with auto components and agricultural equipment. We have allocated Rs 100 crore investment on R&D for this year. Our auto and agricultural equipment business will deliver a good growth going forward.
How is Greaves Cotton dealing with spurious products which has grown as a parallel market?
We have appointed a small team for inspection and monitoring of spurious products currently sold as our products in the north Indian markets.
They have been trained to identify distinction between products manufactured by us with duplicated by others. Consumers' education is the best way to deal with spurious products.
We conduct consumers' education on regular basis to make them aware with the differences. The spurious products are 50% cheaper than the original and hence, customers are attracted to the spurious products due to price difference.
As part of our endeavour to continuously improve customer engagement, we launched an IVR based toll free number offering customer support across all business areas during the first quarter.