Pricol Promoters Dig In As Rival Minda Buys Surprise 15.7% Stake

Noida-based Minda purchased 19 million shares for ₹400 crore through open market deals. It termed the move as “merely a financial investment" that does not give it any special rights. However, the move is considered hostile since the promoter group of Pricol led by managing director Vikram Mohan had earlier rebuffed buyout offers from Minda.

Foreign portfolio investors Minerva Emerging Opportunities and Aidos India sold a total of six million shares in Pricol at ₹209 each, trimming their stakes from 3.73% and 2.26% respectively. Other institutional sellers included Stream Value Fund, Aakarshan Estates Pvt. Ltd and Antara India Evergreen Fund.

Pricol is Minda’s largest rival in the two-wheeler instrument cluster business. The transaction may lead to further consolidation in the instrument clusters market, where Pricol currently has a 40-50% market share with Minda holding a 15% share.

Interestingly, private equity firm Phi Capital owns nearly 6% of Pricol, as well as 5% in Minda. This could allow Minda to enhance its stake in Pricol, if Phi Capital chooses to sell. Promoters led by Mohan have 36.53% stake in Pricol. The rest is held by the public including banks and foreign portfolio investors.

Shares of Pricol fell on the news to close 4.4% lower at ₹199.05 on the BSE. The stock has nearly doubled in the last 12 months.

In an interview, Mohan said the promoters don’t intend to sell their shares to Minda and will hold on to their entire shareholding.

“I’ve had the chance to speak to our key institutional investors, collectively owning 16% stake in the company, over last night and in the morning. I have a firm commitment from FIIs that they stand supportive of the current promoter group," Mohan said, adding that reports of Minda looking to acquire a 16% stake in Pricol caught him unawares on Thursday night, but he doesn’t know what Minda’s strategy is. “I have spoken to our advisors and we have countermeasures prepared," he said. “I’d like to hold my cards close to my chest," he said when asked on the countermeasures Pricol would explore. Mohan asserted that he would have control of the company and will continue to run it.

On Pricol’s operations, Mohan said the company is “on a firm financial footing and generating great cash; we have a committed management team, customers that have great faith in us. We have a strong order book and are long-term debt free. None of my shares are pledged, nor do I have a liquidity problem."

“I have the next generation of our family coming in to join me in the business. I don’t see why I should sell any shares in the company," he added.

Pricol runs seven factories in the country across Coimbatore, Pantnagar, Manesar and Sri City. It also has a manufacturing operation in Indonesia, and offices in Japan and Singapore.“Pricol has a healthy market position in dashboard instruments and driver information systems, with track record of about 50 years in supplying to leading domestic OEMs. Pumps and mechanical products contribute 23% of revenues while switches and sensors contribute 11% of the revenues," Jay Kale, senior vice president, Elara Capital said.In addition to two-wheelers, Pricol manufactures driver information systems, telematics and pumps for leading three-wheeler, commercial vehicle and farm equipment companies. During the Auto Components Expo earlier in January, the firm showcased a range of EV-agnostic products that can be deployed across vehicle segments.