Leading component supplier Pricol Ltd has opened its high-efficiency plant built across 6.58 acres in Phulgaon, Pune.
The new facility incorporates green concepts of solar power and Variable Frequency Drive (VFD) air conditioning. Roof-top solar panels fulfil 40% of the daily power requirement. The production lines are designed on lean manufacturing principles with an improved layout for streamlined material flow to ensure quality consistency and material efficiency.
The company expects the state-of-the-art manufacturing plant to generate annual revenues of
Rs 220 crore in the next two years, up from the current Rs 120 crore. New investments in Surface-mount Technology (SMT), Printed Circuit Boards (PCB) manufacturing lines will cater to the growing electronic cluster business not only in two-wheeler but also in the commercial vehicle, off-road and tractor segments. Investments in electronics manufacturing will also contribute to the growing Body Control Module (BCM) and telematics businesses.
The plant also has new technology pump production lines catering to the domestic and export markets. With manufacturing operations in Indonesia, Brazil and India, the new plant in Pune will add impetus to the manufacturing operations of Pricol in the global market.
Speaking at the launch, Vikram Mohan, MD, Pricol Ltd, said, “While India continues to emerge as a global auto hub, one of the cities that has contributed towards this growth is Pune. Pricol’s new greenfield plant in Pune will not only cater to the requirement of the growing Indian market but further strengthen our position by serving as a key manufacturing unit for Pricol’s global operations. The plant’s lean and unique capabilities will not only increase our efficiency but also create a synergy in manufacturing and leveraging the latest technologies, which Pricol aims at. The new state-of-the-art high quality manufacturing plant is a major milestone in our journey and we look forward to an exciting future with its establishment.”
Given increasing real estate prices, Pricol is not keen to invest in land and build a plant. Speaking to Autocar Professional last year, Vikram Mohan said that the company is moving away from buying land and building plants to collaborating with industrial parks for built-to- suit operations. “As change is going into asset-light models, collaborating with industrial park operators to develop customer-built plants is better. So if the dynamic of the industry changes we can shut the plant easily and move rather than keeping the plant shut-down”, he said.
Acquisitions on the cards
As part of its aspiration to go global and fuel its future growth, the company is aggressively eyeing a couple of acquisitions in Europe and the US. These acquisitions would be made to plug the gaps in its product portfolio.
To gain an entry into the European market, Pricol is eyeing two acquisitions in Europe (one each for pumps and sensors for CVs, tractors, off-road instrument clusters) and one instrument cluster company in the USA. While acquiring any company, Vikram has set very clear criteria. “The criteria to buy a company are based on five scales including financial health, customer base, local management expertise, technology roadmap and quality of manufacturing asset. Unless three of them are complete, we won’t buy the company. It took us 2-3 years to identify the right assets. So we have a focused strategy,” Mohan told Autocar Professional.
Once the acquisitions are completed, the three companies are likely to add anywhere near Rs 750-1,000 crore to Pricol's top-line taking it close to its goal of reaching the Rs 3,000 crore revenue mark by 2020. To fund these acquisitions, the company has earmarked a capex of Rs 400 crore for the next four years by leveraging its strong balance-sheet and profit from existing business. It could also raise some funds for the same.
As the Pune plant is ready, the company looks to set up another greenfild plant in the next 24 months to fuel domestic growth. “The greenfield plant will either be in Gujarat or outside of Chennai in Andhra Pradesh as there are some good polices and power availability is not a problem,” said Mohan.
At present, Pricol is sitting pretty on a healthy export business. It derives Rs 100 crore revenue from its Indonesia plant, Rs 120 crore from the Brazilian plant and nearly 120 crore from export out of India. Exports from Brazil or India are expected to touch Rs 400 crore by 2020.
As its business outlook looks robust and armed with a healthy order book, Pricol is aiming high by targeting ambitious goals with a new-found aggression. The company, which is currently the fifth largest global cluster supplier in the off-highway segment in the world, is aiming to be in the top three.