Kinetic's EV component biz will be up to Rs 1.5K cr in 4 years: Firodia

Firodia talked about his plans for the EV-components business, and the components business at large for the group

Auto-component major Kinetic group is setting up an advanced electric vehicle (EV) battery manufacturing plant with an initial capacity of 60,000 units per annum with an investment of ₹50 crore in Ahmednagar, Maharashtra. The Range-X brand of batteries for two-wheelers and three-wheelers will be based on both LFP (lithium iron phosphate) and NMC (lithium-nickel-manganese-cobalt) technologies. Speaking to Sohini Das in a video interview, Ajinkya Firodia, vice-chairman and managing director, Kinetic group, spoke about his plans for the EV-components business, and the component business at large for the group. Edited excerpts: 

Why venture into battery business? 

Over the last four-five years, we at the Kinetic group have been taking the EV boom quite seriously, and investing in manufacturing EV components through our various arms. But, you know, commitment to EV is not complete if you don’t venture into the battery business, because 50 per cent of the cost of the vehicle is the battery. There are several technologies — some long-lasting, some safer, some price-efficient. We have acquired a large piece of land in Ahmednagar near our existing factory for operational efficiency. We have been manufacturing there for 50-52 years, and we know the local culture. We can also customise the battery according to our customer requirements. Apart from the Indian engineering team, we also have contacts in Korea, China, etc. where battery-making is popular. We have kept the brand as Range-X to keep it distinct from the Kinetic identity, as this is an independent company that aims to sell battery packs to two-wheelers and three-wheelers. We have an installed capacity of 60,000 packs per annum, which can be expanded to 120,000 packs with incremental capex. 

You are making both LFP and NMC batteries. Which one do you think will have more traction? 

At present, almost 90 per cent of the Indian electric two-wheeler market is NMC batteries. This has happened because in China there is a culture of two-wheeler use-and-throw, and they replace a scooter in five years or so. The Indian e-two-wheeler market opened with Chinese batteries, and, therefore, NMC has a larger share. Ideally, it should be LFP batteries, which have a longer life (2,000 cycles as opposed to 500 cycles of an NMC battery), and are also safer. The drawback is these are heavier and bigger batteries. In my opinion, the Indian consumer values a product with a larger lifecycle, and it's only possible with LFP technology.  

What will be the turnover of your EV components business in five years? 

EV two-wheelers and three-wheelers are doing extremely well where one does not have a long distance range anxiety. Over a 10-year horizon, this segment will get better and better, with more value for money products coming in. There are European companies that are wanting to talk to us for their EV products. We are making controllers, motors, gear boxes, axles, EV batteries — pretty much everything needed in a vehicle in the Kinetic group. We can thus offer an integrated solution. We have put in a lot of capex in our group companies to build product portfolio and technology. We have promised another ₹177 crore, of which around ₹100 crore would go into EV components capex. The EV component business of the Kinetic group would be anywhere between ₹800 crore and ₹1,500 crore in the next two-to-four years. 

Will you focus on non-US markets, with the tariff overhang? 

The US tariff issue is an overhanging sword, but a weak rupee also offsets that, which makes us competitive in the export market. Any changes in this space, I think, would happen over a period of time, and even if there are tariffs, they cannot suddenly change from sourcing from India. It is going to take five-ten years. American labour is expensive. Our government is taking steps to mitigate risks. So, instead of panicking, we should see how the situation pans out in six months. 

The promoters plan to raise stake in Kinetic Engineering . What is the rationale? 

We have been through a very difficult transformation in Kinetic — from a two-wheeler (erstwhile Luna) maker into auto-component manufacturing. Now, we have built products, and are confident of the next five-ten years’ growth. So, we think the current market valuation will increase further. It’s better to put in money ourselves now, and when we have 70 per cent equity, we can dilute at a later stage if we want to take the next big leap for joint ventures, or invest in technologies.