The Hindu Business Line : Pricol units’ relocation will hit vendors in Coimbatore region

Coimbatore, July 9 Relocating the manufacturing facilities of auto component maker Pricol Ltd from Coimbatore district will not only have a serious impact on the future of 130 SSI units (supplying components) in and around Coimbatore, employing around 5,000 workers, but also on the investment psyche in the region itself, according to industry circles.

The value of components sourced by Pricol from its vendors in the region is about Rs 260 crore. (Pricol’s last year’s turnover was Rs 614 crore and it has plants in Pune, Gurgaon and Pantnagar, apart from three plants in Coimbatore district.)

If the relocation becomes a reality, many suppliers would have to relocate to where Pricol shifts its production facilities at a significant cost or hunt for alternative clients, which would be difficult in these times of slowdown.

Ms Vanitha Mohan, Executive Director, Pricol, said in the last two years, the company has shifted about 20 per cent of production of critical components to its other facilities.

Some facilities shifted

Mr Vikram Mohan, Director, said at the behest of some of the vehicle manufacturers, Pricol had moved certain production facilities such as oil pumps out of Coimbatore to Pune and Gurgaon.

But the company tries to keep as much production as possible in the Coimbatore units because “this is our home base, all our suppliers’ bases are here, our entire vendors are here”.

Mr Mohan said the 130 vendors directly employed about 3,500 workers and there were 1,500 indirect employees working for these units. The State Government earned Rs 16 crore last year as sales tax from them. At present, Pricol ships some of the components from here to its other locations “at an extremely high logistics cost”. The company cannot afford to keep it going for ever, he said.

The impact of losing Pricol as a client would be severe since to 75 per cent of the vendors, Pricol is the sole customer.

Worrisome trend

Mr K. Ilango, President, Coimbatore District Small Industries Association (Codissia), says Pricol is known to take care of its employees and what is happening there “is a worrisome trend for all of us” and the development is “very scary”.

Mr Jayakumar Ramdass, President, the Southern India Engineering Manufacturers’ Association (Siema), Coimbatore, said it was not merely the business interest of vendors that was at stake. The future of workers would become uncertain and suppliers of commodities to these vendors would lose a huge chunk of business.

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