The Hindu Business Line : Pricol to set up unit in Indonesia

The company's board, which met on Friday to take on record the results for the second quarter of current fiscal, approved the proposal for the Indonesian venture, which comes in the wake of the decision by domestic two-wheeler manufacturers to establish units in Indonesia.

Since, Pricol is a major OE supplier to the domestic two-wheeler industry, it is expected the move would provide synergy in operations to Pricol in Indonesia.

A company spokesperson told Business Line that Pricol's plant would come up at a location close to Jakarta. He said the investment details of the project are still being worked out. Initially, the Indonesian plant would be an assembly unit, and it would later become a manufacturing unit.

Apart from the domestic two-wheeler manufacturers, Pricol has on its customers' list Japanese vehicle manufacturers such as Suzuki and Yamaha, and it is expected that its Indonesian plant could become a sourcing point for the foreign manufacturers also.

Pricol, despite showing increase in income from sales and service in the second quarter of 2005-06, saw its net profit fall due to higher raw material cost, employee cost and other expenditure.

According to the unaudited financial results for the second quarter of this year, the income from sales and services was higher at Rs 121.94 crore compared with Rs 114.05 crore in the corresponding period last year. The raw material cost was higher at Rs 68.23 crore (Rs 65 crore), and the employees' cost also moved up to Rs 20.2 crore (Rs 17.86 core). Outgo on other expenditure was higher at Rs 16.2 core (Rs 12.9 core).

The profit before tax slipped to Rs 8.39 crore (Rs 15.80 crore), and after providing for tax the net profit before extraordinary items was Rs 5.58 core (Rs 10.2 crore), and after extraordinary items of Rs 1.8 crore, the net profit was Rs 7.4 core. The EPS (face value of share Re 1) before extraordinary items was Rs 0.62 against Rs 1.13 in the second quarter of last year and after extraordinary items, the EPS was Rs 0.82 (Rs 1.13).

The company source explained that the higher employee cost was due to upward revision of wages by about 10 per cent from July, but this was expected to even out in the coming quarters. He expected the other expenditure to be less in future quarters.

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