An Inside Look at Atul Auto’s Evolution with Jitendra Adhia!
We chat with Jitendra Adhia, President – Finance at Atul Auto, to discuss the company’s 30-year journey. From their early days with rural transportation to their current diverse range of three-wheelers (including EVs), Atul Auto has consistently innovated to meet changing market needs.
Their latest strides? Expansion into green tech, a strategic partnership with Jio for enhanced connectivity, and a robust EV plan backed by in-house battery tech. Plus, with over 250% growth in the last two years, they’re ready to scale both domestically and globally. Tune in to the whole conversation here on SmallCap Spotlight!
Rumela Banerjee: Hello and welcome to Small Cap Spotlight. I am Rumela Banerjee and we have Jitendra Adhia, President – Finance at Atul Auto with us on the show. Many thanks for joining.
Rumela Banerjee: Mr. Adhia, you have been with Atul Auto since 1992. How has the company evolved over the past three decades and what have been some of the most pivotal turning points as per you?
Jitendra Adhia: It has remained really very exciting after joining Atul Auto Limited. I have seen the complete changeover right from conventional vehicle to EV as of now. But if I recall this three decades journey, it has, as I said earlier, remained a very exciting one. We started our career with a rural transportation vehicle which was famously known as Chakra in this particular region and then we had a reason to move to a regular three-wheeler business. We graduated comfortably with a 750 kg payload capacity three-wheeler first.
Soon we realized that there is a niche between 350 kg and 750 kg payload capacity vehicles and we started developing a half-turner three-wheeler. Post launch of the front-engine half-turner three-wheeler, it was time to get into the rear -engine part which was preferred across the entire country and we further expanded our capacity at Rajport and into that rear-engine three-wheeler. After acquiring a decent market stake in this 0.5-turner dieselized three-wheeler, it was the time for us to move to customization and then we developed a fleet of customized three-wheelers.
Post that, there was a time when we were outperforming the industry. We thought that it is time now to move to an alternative tool three-wheeler which is more greener. Accordingly, we started developing the product.
Along with that, we continued our journey of expanding our capacity as well and as a part of that, we set up a green field project close to Ahmedabad and have set up another 60,000 unit capacity here at Ahmedabad with a state-of-the-art modern technology and plant. We are now operating from Ahmedabad. Unfortunately, because of COVID, there was a hold for a while but we are out of the tunnel and it is expected that soon we will be going to pre-COVID level.
One good thing which really gives us more confidence and inspiration is that as of now, in this three-wheeler space, none of the players is having a complete product range. Atul Auto has got some unique USP. We have 0.5, 0.35 ton products in our product basket having many applications like standard cargo and passenger.
Apart from that, we have customized fleet of vehicles like we manufacture garbage carrier, we manufacture a small firefighter, vegetable vending machine, ice cream parlor, hooper, teeper, water tanker, soft drink carrier, tailor-made vans and what not. Going ahead with another USP of Atul, we are manufacturing multichoice three-wheelers, one diesel, petrol, CNG, LPG and electric. In electric, we have our L3, L5 category vehicles.
L5 category vehicles, basically there are two different solutions. One is available with a fixed battery, the other is available with a separate battery. So, if I look at the journey, when we began, it was Chakra, which was the most economical transport solution in that particular time.
Right from that day till now, Atul has grown multiple ways and there were a lot of learnings all the time. We stick to genuine ethics of business, our knowledge, our insight, we kept growing in that particular field and today, we are one of the fastest growing three-wheeler players in this space.
Rumela Banerjee: Atul Auto has shown remarkable growth with over 250% increase in the last two years. What strategies have driven this rapid expansion and how do you plan to sustain this growth?
Jitendra Adhia: We have a complete product range, so that is one thing which we are having. In this particular space, we are the youngest, we have enough room available for expanding our network within the country as well as outside the country. Our vehicles deliver best value to the end user, giving best mileage in terms of operating force, having minimum maintenance and wherever the maintenance is required.
We have required, prepared and service stations available. So, we believe in these simple rules of the business, we have set a network as well as we have seasoned leaders for each of the functions. Our after market is genuinely very robust, put all the things together, we are able to keep on growing at a decent rate.
Rumela Banerjee: As the only player offering a complete range of three-wheelers across all fuel types, how does Atul Auto maintain its competitive edge in such a diverse market?
Jitendra Adhia: Let us understand, first is the product offerings, we offer the best features with our products available across any brand. The other major thing which really matters here is our operating expenditures where we are more economized in terms of delivering the mileage as well as our spare parts are not cheap but affordable and delivering value to the customer. So, one is product offering, other is after market, these two things put together obviously put Atul in the limelight.
Rumela Banerjee: Can you please also elaborate on Atul Auto’s EV plans, how do you see electric vehicles shaping the future of your company and the three-wheeler market in general?
Jitendra Adhia: First, let us understand three-wheelers in general and then I will come specifically to Atul Auto Limited. The technology is still in an evolving stage, three-wheeler is quite price-sensitive market because the end-user comes as a three-load operator mostly that you will rarely find fleet operators although almost 70-75% is being operated individually, it is a means for self-employment for them. So, it is quite necessary that one needs to have a good tab over the acquisition course.
Thanks to the policies announced by the government from time to time, they offer certain incentives when they buy the product. Apart from the central government, there are few schemes offered by state governments as well but from a technology point of view, this particular technology is still under evolving stage. Even OEMs and governments, everyone is learning how to set the safety standards, what is going to be the life cycle of the product.
I expect that going forward in a couple of years, there will be some stability. As of now, the major challenge is whether people would like to go with NMC chemistry or LFP chemistry, what would be the right size or right weight of the battery, how it would be charged, will it be charged with a regular charging, will it be charged with a fast charging, what is the standardization on charging in price, all these things are still under evolving stage. Whether lithium ion is the right choice or will it be sodium ion or will it be a solid state battery which will be the right choice.
People may choose a fixed battery solution or they may go for a replacement or swappable battery system as well. I believe it may take another couple of years to stabilize with all these challenges. Having said this, if I come back to Atul, we have done a baby step investment, we have our own battery wherein we have, that is being built with NMC chemistry, we got our own BMS, we got our own telemetry.
We expect that once the market stabilizes by then, things will be more crystal clear and we can have higher investment in this category. As of now, to keep the range in 90, we have developed our product with a single as well as double battery or dual battery which can deliver on a single charge up to 200 kilometers. We have a 6.5 kWh battery, we offer it for cargo as well as passenger applications.
As I was telling, we got our own telemetry and BMS with which we can provide better maintenance and safety standards and if anything goes wrong with the vehicle, we would first come to know and we can immediately repair the vehicle.
Rumela Banerjee: There’s been a recent partnership with the Jio platform for e-mobility solutions. Could you please explain the nature of this partnership and how it fits into Atul Auto’s broader strategy?
Jitendra Adhia: Data plays a very important role in this time. Obviously, our partnership with Jio is going to help us in a couple of ways. They are going to offer us international sim cards, so as and when we would be exporting the vehicle, definitely those vehicles will remain connected with our server. That is point number one.
Second, at different Jio stores, they are going to set up a charging facility for our three wheelers. They are going to offer a lot many other features with that Jio platform to the end user. This class of the customer, they would all obviously would like to remain connected with affairs which are going on across the country as well as globally.
So these three things, I believe that when Jio has got a larger data and technology platform, Atul will be able to synergize with its technology and we would be able to give the best services and best vehicle to the end user.
Rumela Banerjee: Investors have seen strong returns from Atul Auto. What measures are you taking to ensure the sustainability of these returns in the long term?
Jitendra Adhia: What is set at Atul Auto’s platform? One is we have enough required manufacturing capacity which is well set at Rajkot and Ahmedabad plot. The manufacturing and product development, everything has been well set. Supply chain is up to the mark. Vehicles are already well tested and have been homologated.
It has been well tested in the market as well. Customers who have used or end users who have used the vehicle, they got a positive response for the vehicle. All said and done, it was all about clearing that tunnel when what came after COVID.
Now, I believe there are no major cap ex in a short to mid-term. It is all about expanding the market and leverage the facilities or intra what we are having today.
Rumela Banerjee: So your company has been investing strategically in R&D, particularly for electric vehicles. Can you share some insights into your innovations and how they compare to traditional three-wheelers in terms of comfort and performance?
Jitendra Adhia: See, first of all, we offer both the applications that are cargo as well as passenger to the end user. So from an application point of view, we have a ready-made vehicle platform which was well tested with conventional technology. While we were designing the product, we kept that provision of giving single as well as dual battery so it might kill the range anxiety.
Apart from giving our own fixed battery, the company has tied up with Honda. So whosoever would like to keep the acquisition cost low, they may opt for a swappable battery solution wherein the swapping stations and the battery will be provided by Honda. Apart from that, as everyone knows, we are trying to develop a good green tech as a technology company.
That is why we are trying to just, you know, have a tie-up with a platform like Jio. All said and done, the company has got its own R&D where we have our own vehicular platform. So at the same time, in terms of technology, if there is a need of developing any different type of battery, the company has got its own capability with its own R&D.
We have two different dedicated teams. One is for technology and another is for vehicle technology. So it would synergize when it comes to the offering.
Rumela Banerjee: Atul Auto’s production turnover has tripled in the past five years. What challenges have you faced in managing this rapid growth and how have you addressed them?
Jitendra Adhia: Till 2021, we were operating from a single plant that was Rajkot. After acquiring, you know, the complete or optimized utilization of capacity, we started putting up greenfield expansion at Ahmedabad where we have set up another manufacturing facility. So currently, we have required production capacity in place. We are expecting that in mid-term, we will be able to offer our products not only into the domestic market, but we will be reaching out to 36 different countries overseas as well, which are using three wheelers.
So if I look at our mid-term, long-term plan, I believe that it is all about increasing the capacity once we reach out and once we have a proper network in place. The only challenges in the domestic market, what we see is availability of retail finance because these kinds of end users don’t have banking habits and they are not able to get that, you know, credit facilities smoothly from the banks and other financial institutes. So the retail finance option is one major challenge which we need to definitely, you know, set it right.
Another thing is overseas business where it is beyond anybody’s hands because it’s a law of the land, but they keep on changing according to their political agenda. So that is one thing is vulnerable and geopolitical situations that may hamper the plan of the company.
Rumela Banerjee: Okay, so the last question, looking ahead, what are Atul Auto’s plans for expanding its product line, particularly in the alternate fuel segment? And how do you see the 0.50 tonnes capacity vehicles fitting into the market?
Jitendra Adhia: See, as long as product development is concerned, as we have a complete product range available, even with alternate fuel, we are offering a 200cc full engine.
Apart from that, none other player has a 400cc water cooled engine. So as long as product offerings or product expansion is concerned, as of now, we have sufficient products in our product basket. What we are looking forward to is we will be expanding our network within the domestic as well as the overseas market.
A 0.50 tonnes capacity vehicle, presently it is being used at the outer part of the city where they carry more than three passengers. So obviously, we have put it all over there. Apart from that, this 0.50 tonnes capacity vehicle is mainly used for cargo.
So in cargo, yes, if you look at historically, our sales composition, we are generally having, you know, better hand over cargo. Our sales composition is having 40% cargo and 60% passenger.
Rumela Banerjee: Alright, with that, we will wrap up this interview. Many thanks for speaking to us and thank you for watching.