Precision Camshafts Ltd (PCL) the country's leading manufacturer and supplier of camshafts, today announced that its board of directors have approved to initiate liquidation of the company's wholly owned subsidiary PCL, Shanghai. Through the subsidiary, Precision Camshafts held minority stake in one joint venture each for machined components and forging in China.
The company had incorporated its subsidiary in February 2011, with a target to expand business on the back of the growing OEM base in China. PCL says in the first few years, its Chinese operation was able to get on board new clients, with Ford Motor Company being one of its major customers. The company was supplying camshaft castings to Ford in China.
Over the last few years, the particular camshafts got phased out in China, which impacted the operations of PCL (Shanghai) along with its profitability. Coupled with the phase out of these camshafts, the overall auto industry faced challenging times in China, making it unsustainable for the company to continue with its operations.
PCL's board of directors say therefore they have strategically decided to shutdown business operations of PCL (Shanghai) within the next three to 6 months. The board has also approved to initiate liquidation of the same, which will help free resources and allow management to focus on its core manufacturing business in India and Europe and serve its global marquee OEM base.
The company incurred loss of Rs. 59.36 lakh in PCL, Shanghai in the year ended March 2018 and losses have continued in the FY2019. The camshaft company says it will now be able to curtail these losses going forward after the approval of liquidation from the Board of Directors. PCL is one of the few global players with technological capabilities across all the manufacturing processes – chilled cast iron, ductile iron, hybrid and assembled camshafts.
Precision Camshaft's exit from China comes at a time when the world's largest carmarket sees a slowdown and the Indian company looks to focus on building its presence in the European region where it has made a few acquisitions.