UCAL Fuel Systems to close Puducherry Plant

UCAL Fuel Systems Ltd has decided to close completely the manufacturing activities at its Plant II situated at A-98-A100-A107, PIPDIC Industrial Estate, Mettupalayam, Puducherry - 605 009 to be effective from 12.03.2022.

The restriction on emission norms imposed by the Government, technological change, and transition of Bharat Stage IV to Bharat Stage VI, and ultimately to Electric Vehicles has resulted in rendering the products completely out-dated and fall into disuse. Alternative products in the fuel systems and diversification of business were considered to be far-fetched besides Company facing intense competition. As such there is no alternative business or business prospects to continue our operation at Puducherry Plant II.

The sales turnover from Plant II which was Rs.140 Crores during the financial year 2018-19 has been gradually reduced from Rs.117 Crores in 2019-20 to Rs.23 Crores in 2020-21 and from 01/04/2021 to 30/09/2021, the sales turnover was only Rs.10 Crores.

As the customers are already in transition from Bharat Stage VI to Electric Vehicle leaving no market for the products manufactured by the Company, the lack of orders from our customers has created serious challenges to the planning and feasibility of running the Plant II at Puducherry efficiently and economically.

Further when the company to contain losses in Plant II issued transfer orders to few operators to relocate themselves to other plants of the Company, some of the operators indulged on sudden illegal strike which had resulted in Plant II declaring a lock out on 03.01.2021 and was eventually lifted on 26.03.2021. The lockout as well as the lockdown declared by the Government due to Covid-19 pandemic further deteriorated the sales prospects and the Management has found it extremely difficult to run the Plant II at Puducherry after the sales turnover started plummeting. The future business prospects are very bleak to run the Plant II at Puducherry with the existing manpower for a meagre sale.

In view of the above, the Management, after carefully considering the entire situation, is left with no other option but to take the decision to close down the Plant II situated at A-98-A100-A107, PIPDIC Industrial Estate, Mettupalayam, Puducherry - 605 009.

Further the Company is constrained to close down the Puducherry Plant as it would only lead to the burden of excessive cost of production resulting in financial loss and thus becoming a drain on the resources of the Company.

Under the above circumstances, the Company is compelled to close down the Puducherry plant on the expiry of 60 days from the date of this notice given to the concerned Authorities.

The manufacturing activities of the above unit will be closed after completion of necessary formalities and machinery either relocated to the company's existing facilities or disposed off. It is pertinent to mention here that the said unit comprise an insignificant portion of operations of the Company and the said closure does not have any material and adverse effect on operations of the Company.

Shares of Ucal Fuel Systems Limited was last trading in BSE at Rs. 159.50 as compared to the previous close of Rs. 161.90. The total number of shares traded during the day was 13965 in over 526 trades.

The stock hit an intraday high of Rs. 164.00 and intraday low of 158.80. The net turnover during the day was Rs. 2250494.00.

Source : Equity Bulls

Keywords

UcalFuelSystems INE139B01016 PlantClosure Puducherry EVImpact