Detroit, MI, April 22, 2016 --(PR.com
)-- Pricol limited, global automotive components manufacturer plans to enter into Africa market and likely to set up new plant in Nigeria by 2020, says Mr Vikram Mohan, MD, Pricol. Vikram Mohan continued saying, “I would not be surprised if I set up a facility in Nigeria even before 2020 to cater to the two-wheeler market.”
It was less than two months ago when Mohan made known the Pricol’s new global roadmap that included setting up operations in Vietnam and Mexico as part of Vision 2020. “The next big growth driver for Pricol will be Africa since its two-wheeler market will see explosive growth,” says Mohan.
The ₹1,450-crore Pricol Company is India’s lead player in 2-wheeler automotive pumps, telematics solutions for tractors as well as speed governors and cabin tilt mechanisms for commercial vehicles. It is also among the top global manufacturers of driver information systems for two-wheelers, instrument clusters (tractors and off-highway vehicles) and automotive sensors.
In a nutshell, Vietnam is more critical for Pricol’s ASEAN strategy since its manufacturing costs are significantly lower than Indonesia. Any growth from now will happen out of here as the company has decided not to grow further in Indonesia with its high labour costs. “Vietnam will be the growth driver for ASEAN and to de-risk the business, we will use it as an export base to Japan and the US,” adds Mohan. The next stopover for Pricol will be Mexico. “If we want to be in the top league, it is imperative to be in the five biggest global markets and Mexico is the logical choice,” explains its boss. Not only is it the backdoor for the US for auto components but is also tipped to become the fourth largest car market by 2020.
Mohan would still like to wait and watch world events over the next 18 months considering that Latin America and Russia are in bad shape. It is in this context that Pricol’s recent acquisition in Brazil could be seen as one of bad timing given the fragile state of the economy.
Yet, Mohan does not quite agree with this gloomy premise. “Did I make a mistake (in acquiring Melling do Brasil)? No, I think what we did was sensible simply because of global access to big names like Volkswagen, General Motors and Fiat,” he says. In the business of pumps, Brazil was at least 4-5 years ahead in technology that is now being brought to India.
“A technology agreement would have cost me a lot more than an acquisition though I would have been very happy if the market had not plunged into a crisis,” adds Mohan. Effectively, this means that instead of recovering investments in 2.5 years, this could now be twice as long but business has its 'shades of grey where nothing is black and white'.”
From Pricol’s point of view, the world is one market for tractors, CVs and two-wheelers which explains why acquisitions in Germany, the UK or US make sense. These countries have a large presence of CVs and tractors and to keep pace, Pricol will logically need to be in the business of making pumps. It is here that a strategic acquisition makes more sense than a Greenfield investment.
If the company has to be dynamic and move from one location to another, an asset-less flexible model works best. “It will allow me to change course if need be and quickly correct rather than have fixed assets which would otherwise be a millstone around my neck,” says Mohan.
About Pricol Limited
Pricol Limited a leading manufacturer of automotive components for the global automotive market, thrives on innovation, cutting edge technology and superior products across two, three and four wheelers, commercial vehicles, tractors, fleet management solutions and construction & industrial tooling segments across the global market. The company’s performance is driven by over 38 patents, 8 manufacturing units and 7 business offices across the globe including India, Indonesia, USA, Brazil, Germany, Singapore and Japan. For further information on the organisation and its products, please visit http://www.pricol.com/