Engineering company Greaves Cotton Ltd, which manufactures engines and heavy equipment, has signed a pact to acquire Bestway Agencies Pvt. Ltd, a Haryana-based company that develops and makes electric vehicles.
Greaves is acquiring Bestway through wholly owned unit Ampere Vehicles Pvt. Ltd, it said in a stock-exchange filing on Monday.
Ampere will pay Rs 7 crore ($930,000 at current exchange rates) in cash to acquire a 74% stake in Bestway in the first phase by the end of July.
In the second phase, it will acquire the remaining 26% – in April 2021 – based on the fair value of Bestway at the end of the current fiscal year.
Through the acquisition, Greaves aims to accelerate its development of clean energy technology solutions and addressing a wider range of customer segments with clean energy mobility solutions, the company said.
Shares of Greaves Cotton advanced 3.08% on the BSE on Monday to close at Rs 88.70 apiece. The stock has touched a high of Rs 154.15 and low of Rs 66.25 over the past year.
Mumbai-based Greaves had acquired electric two-wheeler maker Ampere in August 2018 from a bunch of investors including Tata Sons chairman emeritus Ratan Tata and Infosys co-founder Kris Gopalakrishnan. Tata had invested in Ampere in July 2015. Gopalakrishnan first invested in December 2015 and again the following year.
Greaves is among the handful of traditional manufacturing companies betting on new-age electric vehicle makers. Hero MotoCorp Ltd, the country’s biggest two-wheeler maker, has backed Ather Energy Pvt. Ltd while TVS Motor has invested in Ultraviolette Automotive Pvt. Ltd.
Greaves makes petrol and diesel engines for automakers as well as two-wheeler companies. It also makes farm equipment and power generating sets. It has six factories, over 380 retail outlets and supplies its products through a network of more than 6,300 service outlets, as per its website.
Apart from investor and corporate interest in the electric vehicle sector, the central government also announced initiatives aimed at promoting the segment to both companies and end-consumers.
In her budget in July 2019, finance minister Nirmala Sitharaman said the government would provide an income-tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles as well as reduce customs duty on certain parts. She said the deduction amounts to a benefit of around Rs 2.5 lakh over the loan period.
High manufacturing and sourcing costs have thus far resulted in low electric vehicle sales, but the industry expects demand to pick up in coming years. According to the Society of Manufacturers of Electric Vehicles, total electric vehicle sales in India rose 20% to 156,000 units for the year ended March 2020.
Electric vehicle sales in 2018-19 rose to 130,000 units from 56,000 units the year before and 25,000 in 2016-17. The numbers are dominated by the sale of electric two-wheeler vehicles.