The Hindu Business Line : `Indo-Thai FTA will not hit Pricol'

THE Free Trade Agreement (FTA) between India and Thailand, the first phase of which comes into effect from September 1 and which has created apprehension among a section of the corporate sector about cheaper imports flooding India, will have no impact on Pricol Ltd.

This is because even with the existing 10 per cent duty, the Thai importers find the company's products cost-effective, according to the Chairman and Managing Director, Mr Vijay Mohan.

He expects the company to maintain a 15-20 per cent growth on a year-on-year basis with the expected pick up in the sales of new launches in the second half of the current fiscal.

Mr Vijay Mohan told Business Line that the company's export performance in the first quarter was substantially higher than last year and he anticipated the export sales to witness a growth of at least 30 per cent in 2004-05 compared to the previous fiscal.

Asked about the fears expressed by a section of the industry about the likely adverse impact of the FTA, he said the Japanese auto giant Suzuki's unit in Thailand sourced components from Pricol. The company found the price competitive in spite of the 10 per cent duty levied by the Thai Government on imports from it.

Pricol also has a small exposure to the replacement market in Thailand. Mr Vijay Mohan said that the Thai importers would find it more price-competitive when the import duty goes.

Commenting on the company's performance in the first quarter of current fiscal, theCMD said sales registered a 24 per cent growth to touch Rs 95.01 crore, compared to Rs 76.2 crore in the corresponding period last year.

The raw material cost was higher at Rs 50.9 crore against Rs 40.9 crore. After providing for interest, depreciation and tax, the net profit was marginally higher at Rs 7.2 crore ( Rs 6.4 crore).

Mr Vijay Mohan said the company had to absorb part of the increase in raw material prices and there was also pressure on the pricing front, which is being felt by all the auto component producers. The company is able to cushion the impact of pricing pressure by achieving higher sales volume.

Going by this estimate, Pricol might end this fiscal with a turnover of about Rs 450 crore to Rs 460 crore and the growth in net profit would be in tandem with the growth in sales.

More Stories on : Outlook | Automobile Components | Foreign Trade

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page