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R.Y. Narayanan

COIMBATORE, Nov. 11

THE pick-up in the automobile industry in the current fiscal has infused confidence in the dash board instruments major, Premier Instruments and Controls Ltd (Pricol). It expects a 15-20 per cent topline growth this fiscal.

The company, which is investing about Rs 18 crore in 2002-03 in augmenting its capacity and in modernisation, is hopeful of sustaining this annual growth rate for the next two to three years.

Speaking to Business Line here on Monday, Mr Vijay Mohan, Vice-Chairman and Managing Director, Pricol, said the company had also become a supplier to Suzuki, Thailand, through its technical partner Denso Corporation of Japan, for its two wheelers and was on course to supply certain products to Maruti Suzuki from the next fiscal.

Mr Vijay Mohan said the year ended March 2002 was not a good one for a majority of the auto component manufacturers in the country due to the downturn in the offtake of cars and commercial vehicles. It was only the motorcycle segment which showed robust growth last year. But from April-May 2002 onwards, there has been an uptrend in the sales of not only motorcycles, but cars and commercial vehicles also. However, tractor sales remained sluggish due to erratic monsoon.

Consequently, majority of component manufacturers have shown much better results in the first half of this year and indications are that the performance will be on similar lines during the rest of the year. The only point of worry is the stand-off between Iraq and the US and its impact on the export market .

On whether the slew of new car launches in recent months had contributed to the growth of the component industry, Mr Mohan said most of the new car models were in the `D' segment (luxury segment), whose volumes were low and which have taken the CKD/CBU route. There was very little scope for Indian component manufacturers to supply to such models, but there was substantial volume in A, B and C segments which offered good potential.

Mr Vijay Mohan said an investment of Rs 18 crore was being made during this year to increase capacity as well as in modernisation, with no new product launch in the current year. But from April 2003, Pricol would supply three new products to Maruti, including vacuum switching valves and manifold absolute pressure sensors and these were import substitutes. From April 2002, Pricol has been supplying instrument clusters to Suzuki, Thailand, for fitment in two wheelers. The volumes have steadily increased and touched 20,000 units a month now.

Commenting on the share of export sales to Pricol's total sales turnover, he said during 2000-01, export sales accounted for Rs 27 crore. However in the subsequent year, this fell sharply to Rs 19 crore due to downturn in the US and European economies. With the turnaround in their economies, Pricol's exports to these markets had considerably improved and with the new customer (Suzuki) in Thailand picking up good volume, he expected this year's export performance to touch Rs 30 crore and the total turnover to reach Rs 290 crore from the Rs 252-crore recorded last year. The company was operating at full capacity. He conceded, however, there was continued pressure on pricing from the vehicle manufacturers.

Asked about the prospects of Indian component manufacturers becoming the outsourcing hubs for global automobile giants, Mr Vijay Mohan said there was potential for component manufacturers in India to become global suppliers. At the moment, there were very few like Sundram Fasteners and Bharat Forge who were in this league. However, companies such as Pricol and Rico Auto had made a breakthrough and there was no reason why others too could not become suppliers to OEMs overseas.

It was the lack of proper infrastructure and the cascading effect on cost due to multiple levels of taxes that may hold back this development. If the Union Government initiated measures to improve infrastructure such as making available quality power, better logistics, especially quick clearance at the ports and rationalise taxes, exports would improve tremendously.

Onthe future growth of Pricol, Mr Vijay Mohan said if the thrust on continued introduction of new products for domestic markets as well as increase in exports was successful, the potential to grow at a minimum of 15 per cent to 20 per cent every year over the next two or three years existed.

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