Pricol looks at splitting business divisions to be future-ready
The MD of the Coimbatore-based ancillary supplier is looking at a possible recast of the business divisions which will help Pricol be better prepared to take on mobility challenges of the future.
Pricol, the Coimbatore-based ancillary supplier, is exploring the possibility of splitting its business divisions to be better prepared for future challenges.
“We cannot look at business in a traditional or myopic mindset going forward; maybe I will have to slice a division out and have a JV with a majority stake in one, a minority in another and 100 per cent ownership in the third,” Vikram Mohan, Managing Director, told Autocar Professional in a recent interview.
Over the last four years, he has been working on an idea which could see Pricol emerge as three companies. In this model, the entire driver information systems vertical can be one entity with different manufacturing footprints and engineering. Likewise, the pumps and hydraulics can be a separate vertical as also the telematics and switches and so on.
“One of the other things we are looking at is breaking it into divisions which will be under one holding company to give us the flexibility,” said Mohan. In a way, this is what has been implemented in manufacturing where for each of the divisions, facilities have been created in the north, south and west.
“So going forward, if I have to break the company into three divisions with a majority in one, minority in one and 100 per cent ownership in one under one Pricol Ltd, I have prepared (the company) for it. This will happen sooner rather than later — three years down the line between 2023 and 2025,” continued Mohan.
The coming decade will be challenging in terms of mobility disruptions and further consolidation happening in the automotive space. It is, therefore, important for Pricol to react quickly to challenges. Eventually, the idea is to be “very open” to anything that will ensure shareholder wealth, preserve market share and keep the growth pace intact.
Additionally, Mohan acknowledged that “the pace of change in electronics is so much” that the company needed to be dynamic. “This is why I am very keen to invest in technologies and stay ahead of the game.”
Electric is another area where the Pricol chief is “personally bullish” and also puts in context why a big segment of the company’s revenue — driver information systems — is electric-ready. Electric also means going up the value chain in bikes. Two decades ago, instrument clusters (or driver information systems) were retailed at Rs 250 apiece but are a lot pricier today at Rs 2,500 to even Rs 6,000 for high end bikes with a lot of electronics coming in.
“The instrument cluster is important as a feature and bike makers are looking for the best,” said Mohan. In electric bikes, the key parameters are styling, mileage and information and this is where the instrument cluster becomes relevant.
“This is why I invested in hardware and software development rather than being dependent on third parties. The decision helped me launch clusters quickly and grab market share in the last couple of years and this is where my R&D foray paid off,” he added.
Beyond bikes, come September, nearly 70 per cent of Tata Motors vehicles will have a Pricol cluster that is completely electronic. Cluster exports will also begin soon for Peugeot Citroen (now part of Stellantis, the newly merged entity of Groupe PSA and Fiat Chrysler Automobiles) with perhaps more big brands to follow.
“We are looking at certain strategic investments for specific technologies in the EV space for people to collaborate within the next two years. We have given the mandate to two firms to look for certain companies and bring them to the table,” said Mohan.
Pricol is also looking at some components in the EV space and has dedicated a team for this effort which will reach maturity in two years…”this will involve creating factories when we start getting business”.
You can read the complete interview in Autocar Professional's May 15 issue.
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