Pricol feels slowdown heat, goes for production holidays

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Published: September 20, 2019 1:52:18 AM

In a communication to the stock exchanges on Thursday, Pricol said as part of aligning production with sales requirements, the company has decided to absorb non-working days across its plants in September 2019.

Pricol, auto slowdown, auto sector, auto sector slowdown, production holiday, Sundram Clayton, Lucas TVS, Ashok Leyland, Tata Motors, M&M, Maruti, Indonesia, Brazil, the Czech Republic, Mexico, Spain vvvAccordingly, Plant 1 (the oldest plant) at Coimbatore will absorb one to three non-working days, Plants 3 and 4 (Coimbatore) will absorb three to six days as non-working days.

Coimbatore-based auto components maker Pricol has joined other parts makers in announcing production holidays across its plants in India, for a minimum of a day to a maximum of six days. Pricol follows auto components makers such as Bosch, Wabco, TVS group companies like Sundram-Clayton and Lucas TVS, among a few others, which earlier announced production holidays across their plants in India due to weak demand.

Even original equipment manufacturers (OEMs) like Ashok Leyland, Tata Motors, M&M and Maruti have announced production holidays in the recent past.

In a communication to the stock exchanges on Thursday, Pricol said as part of aligning production with sales requirements, the company has decided to absorb non-working days across its plants in September 2019. Accordingly, Plant 1 (the oldest plant) at Coimbatore will absorb one to three non-working days, Plants 3 and 4 (Coimbatore) will absorb three to six days as non-working days. While Plant 5 at Pune will go for one to three days, Plant 10 at Sri City (near Chennai but in Andhra Pradesh) will absorb three to six days as non-working days.

Plants 2 and 9 at Gurgaon and Plant 7 at Pantnagar (Uttarkhand) will also absorb a maximum of three days, the company informed the stock exchanges. Started in 1975, Pricol is one of the oldest and leading auto parts makers in India with an interest in auto-wiping systems, driver information systems and sensors, fuel pumps and allied products, telematics, oxygen sensors, electrical water pumps and has had almost all the OEMs of two-wheelers, three-wheelers, four-wheelers, CVs, tractors and off-road vehicles as its customers over the decades. The company has 13 manufacturing plants and also has operations in Indonesia, Brazil, the Czech Republic, Mexico and Spain to serve global customers.

Like others, Pricol too had to undergo labour unrest at its plants in Coimbatore sometime last year, owing to wage revision; workers had gone on strike for sometime. Due to this, the company had resorted to dismissing a few and transferred some to its Pune plant.
For the quarter ended June 2019, the company reported a loss of `19.07 crore (against a profit of `4.86 crore in the same quarter last fiscal) and a reduced turnover of `303.06 crore, against `341.54 crore in Q1 of FY19.

Rating company CRISIL, in its recent analysis, said that auto parts companies’ revenue growth is to halve in the next two fiscals. Auto OEMs are expected to take a sales hit due to the implementation of new safety norms, BS-VI emission norms, which in will have a telling effect on the components sector, as OEMs alone account for 65% of components demand.

That being said, the new safety and emission norms do offer a ray of hope to component manufacturers as these will increase the component content in vehicles. Aftermarket demand (16% of sector revenue) is expected to maintain the trend of 7-8% growth. Exports (19% of sector revenue) are likely to grow at 10-12% in fiscals 2020 and 2021, well below the 18% seen in the preceding two fiscals, because of lower demand in traditional markets such as the US and Europe, CRISIL further pointed out in its analysis.

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