K. ARAVIND
It is during times of crisis that companies explore new opportunities. Companies that approach crises and setbacks as opportunities seize them and can reap benefits in the long run. Various companies with sufficient surplus funds are moving in this direction.
Acquisitions, mergers, share sales and share purchases during crisis periods are all equally viable for companies to survive and grow. When debt-ridden companies are forced to sell out, it benefits other companies. It is also a vision in such a context to lead the business in new directions by establishing new relationships through the sale and purchase of shares.
Reliance Industries, the company with India’s highest market value, is one that practices all these methods at the same time. Through its partnership with Reliance Jio, they have teamed up with Facebook, Google and other companies to open new avenues in business and become a debt-free company. At the same time, Reliance is looking to expand its business in the retail sector by acquiring shares in other companies. Reliance is looking to acquire Future Retail, a leading company in the retail sector. Reliance has recently acquired a company in the field of e-pharmacy.
It is in this context that Eicher Motors’ acquisition of Volvo Bus’ business in India should be seen. The high savings and efficient financial management of the company helped in this deal. It is almost always possible for companies with surplus funds to take risks in times of crisis.
VE Commercial Vehicles, a manufacturer of trucks and buses operating under Eicher Motors, acquires Volvo Bus’ business in India. The acquisition is worth Rs.100 crore. In this regard, an agreement has been signed between the two companies. The agreement will pave the way for the formation of a new bus division between Eicher and Volvo. Royal Enfield, which operates under Eicher Motors, is doing well. Sales of Royal Enfield bikes continue to thrive during this period.
COVID-era news is that Hero Motors is preparing to build electric three-wheelers. The goal is to use the surplus money effectively. The company is currently focusing on budget bikes such as the Splendor and Passion. The production of electric three-wheelers will help the company to reduce its dependence on the budget bike business.
The electric three-wheeler market in India is highly unorganised. Vehicles imported from China dominate the sector. The GST on electric vehicles is only 5%. That is one of the main reasons for the increase in sales of such vehicles. Mahindra & Mahindra currently dominates the organized electric three-wheeler segment. Bajaj Auto and TVS Motors are also planning to launch electric three-wheelers in the coming months.
Earlier, Chinese bikes could not hold their own in the Indian market due to poor quality. Following in the footsteps of Mahindra, Hero Motors, Bajaj Auto and TVS Motors will enter the electric three-wheeler market.
