Consumer durables maker and electronics manufacturing services provider PG Electroplast Ltd (PGEL) has lined up an investment of Rs 100 crore for the ongoing fiscal year, of which the majority will be spent on setting up a new air-conditioner manufacturing plant at Ahmednagar in Maharashtra, according to a senior company official.
The company, which had to put on hold its CAPEX plans when the first wave of COVID-19 pandemic hit India last year, is now going ahead with its planned expansions and is also planning to apply for the PLI scheme for air-conditioners.
''We have a large CAPEX coming up for expanding our capabilities and capacities in the air-conditioning segment and we are putting up a complete greenfield plant for which we acquired a land parcel of 10 acres around three months back,'' PG Electroplast Ltd Executive Director - Operations Vikas Gupta told PTI.
For FY22, he said, ''The total CAPEX plans is in range of around Rs 100 crore. The majority part (70 to 80 percent) of that will go into our AC plant, which is coming up in Ahmednagar near Pune and the balance amount will go into expanding the capacity of new plants.''
The Ahmednagar plant should start production by December, around quarter three of the current financial year and the Greater Noida plant by around October, Gupta said.
In terms of production capacity, he said in plastic molding the company has a capacity to produce around 50,000 tonnes of plastic every year. ''When we talk about products, in air-conditioners, we are building a capacity of one million in the first phase and we will be extending that also in subsequent years in subsequent phases,'' he said.
In washing machines, Gupta said, ''We have expanded our capacity last year, and currently we have a capacity of almost 0.8 million washing units per annum. Recently we have started production of fully automatic washing machines for our clients. So, washing machine is also one strong growing business for us and we expect to have a substantial growth in washing machines.''
Stating that the company is also looking to apply for PLI scheme for air conditioners, he said, ''We are already planning to apply for AC PLI scheme which has been announced by Government of India. We are planning to participate in that and submit our application.'' He, however, said the company's current capex plans are independent of the PLI scheme.
''Irrespective of whether the AC PLI happens or not, whether we get selected for that PLI scheme our CAPEX plans are independent of it. Nevertheless, if we are able to get the benefit of the AC PLI we are looking forward to it,'' he added.
At present, the company's main business is from the domestic market with negligible exports and it will continue to scale up its capabilities before looking for big expansion in the export markets.
''We are trying to scale up the capabilities and do better in the domestic market. Once we are able to achieve a certain level of volume, I think we will have that kind of economies of scale and we might be able to offer a competitive size as compared to what China is offering to export markets,'' Gupta added.
On the market outlook, he said usually Diwali and festive season sees a spike in the growth of the sales for all product categories and the company is expecting a similar thing happening this year too.The company, which supplies to clients like Reliance, Lloyd and e-commerce sites like Flipkart, has already started getting some quotes, he said adding, ''I think we will be able to maintain a similar level of momentum that we saw last year and we see a bump up of sales happening from July or August onwards to cater to the festive demand.''