The process of forming new entities will be completed over the next 12-15 months, and the company hopes to have investors on board by the end of FY23
With revenues of Rs 1,400 crore as of FY21, Pricol is a Tier 1 supplier to major two-wheeler, three-wheeler and four-wheeler manufacturing companies, including Hero MotoCorp, Bajaj Auto, Maruti Suzuki, Tata Motors, Ashok Leyland and Mahindra.
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var titStr=”;var editw=”; var typevar=”; var pparr= new Array(‘Monitoring your investments regularly is important.’,’Add your transaction details to monitor your stock`s performance.’,’You can also track your Transaction History and Capital Gains.’); var phead =’Why add to Portfolio?’; if(secglbVar ==1) { var stkdtxt=’this stock’; var fltxt=’ it ‘; typevar =’Stock ‘; if(lastRsrs.length>1){ stkdtxt=’these stocks’; typevar =’Stocks ‘;fltxt=’ them ‘; } } //var popretStr =lvPOPRHS(phead,pparr); //$ (‘#poprhsAdd’).html(popretStr); //$ (‘.btmbgnwr’).show(); var tickTxt =’‘; if(typparam1==1) { var modalContent = ‘Watchlist has been updated successfully.’; var modalStatus = ‘success’; //if error, use ‘error’ $ (‘.mc-modal-content’).text(modalContent); $ (‘.mc-modal-wrap’).css(‘display’,’flex’); $ (‘.mc-modal’).addClass(modalStatus); //var existsFlag=$ .inArray(‘added’,newappndStr[1]); //$ (‘#toptitleTXT’).html(tickTxt+typevar+’ to your watchlist’); //if(existsFlag == -1) //{ // if(lastRsrs.length > 1) // $ (‘#toptitleTXT’).html(tickTxt+typevar+’already exist in your watchlist’); 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//$ .each(d.ac,function(i,v) //{ // accStr+=”+v.nm+”; //}); $ .each(d.data,function(i,v) { if(v.flg == ‘0’) { var modalContent = ‘Scheme added to your portfolio.’; var modalStatus = ‘success’; //if error, use ‘error’ $ (‘.mc-modal-content’).text(modalContent); $ (‘.mc-modal-wrap’).css(‘display’,’flex’); $ (‘.mc-modal’).addClass(modalStatus); //$ (‘#acc_sel_port’).html(accStr); //$ (‘#mcpcp_addportfolio .form_field, .form_btn’).removeClass(‘disabled’); //$ (‘#mcpcp_addportfolio .form_field input, .form_field select, .form_btn input’).attr(‘disabled’, false); // //if(call_pg == “2”) //{ // adtxt =’ Scheme added to your portfolio We recommend you add transactional details to evaluate your investment better. x‘; //} //else //{ // adtxt =’ Stock added to your portfolio We recommend you add transactional details to evaluate your investment better. x‘; //} //$ (‘#mcpcp_addprof_info’).css(‘background-color’,’#eeffc8′); //$ (‘#mcpcp_addprof_info’).html(adtxt); //$ (‘#mcpcp_addprof_info’).show(); glbbid=v.id; } }); } }); } else { AFTERLOGINCALLBACK = ‘pcSavePort(‘+param+’, ‘+call_pg+’, ‘+dispId+’)’; commonPopRHS(); /*work_div = 1; typparam = t; typparam1 = n; check_login_pop(1)*/ } } function commonPopRHS(e) { /*var t = ($ (window).height() – $ (“#” + e).height()) / 2 + $ (window).scrollTop(); var n = ($ (window).width() – $ (“#” + e).width()) / 2 + $ (window).scrollLeft(); $ (“#” + e).css({ position: “absolute”, top: t, left: n }); $ (“#lightbox_cb,#” + e).fadeIn(300); $ (“#lightbox_cb”).remove(); $ (“body”).append(”); $ (“#lightbox_cb”).css({ filter: “alpha(opacity=80)” }).fadeIn()*/ $ (“#myframe”).attr(‘src’,’https://accounts.moneycontrol.com/mclogin/?d=2′); $ (“#LoginModal”).modal(); } function overlay(n) { document.getElementById(‘back’).style.width = document.body.clientWidth + “px”; document.getElementById(‘back’).style.height = document.body.clientHeight +”px”; document.getElementById(‘back’).style.display = ‘block’; jQuery.fn.center = function () { this.css(“position”,”absolute”); 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Pricol, a Coimbatore-based auto parts manufacturer, is looking to finalise nearly half a dozen partnerships over the next several months to source technology while simultaneously starting the process of spinning off verticals into separate companies to unlock shareholder value.
With revenues of Rs 1,400 crore as of FY21, Pricol is a Tier 1 supplier to major two-wheeler, three-wheeler and four-wheeler manufacturing companies, including Hero MotoCorp, Bajaj Auto, Maruti Suzuki, Tata Motors, Ashok Leyland and Mahindra.
Hiving off verticals
The company’s three business verticals make driver information systems (DIS) and sensors, pumps and allied products, and telematics. These will be hived off into separate companies, with Pricol being the mother entity.
“We are three companies rolled into one. DIS is actually a technology business while the pump business is an auto-component business. (Therefore) we are not able to attract the right partners for technology or equity. From April 2022, we will start slicing the company into three,” said Vikram Mohan, Managing Director and CEO, Pricol.
Due to business diversification, Pricol, which started out as an auto-component manufacturer, has not been able to meet the requirements of investors, who are willing to pour funding only into specific business interests. The company hopes that by hiving off its business verticals it will be able to convince investors to tap into Pricol.
“Each entity will have a technology partner or a private equity (PE) partner — partners who can take the business to other geographies. This whole process should get completed in the next financial year. This is a six to nine months process because it involves shareholder approval and a whole bunch of regulatory procedures. This is unbottling Pricol’s value, which will provide flexibility and leverage,” Mohan added.
The process of forming new entities will be completed over the next 12-15 months, and the company hopes to have investment partners on board by the end of FY23.
“At this point we are not talking to anybody (investors). We will start holding dialogues from next September (2022) onwards and complete it by March 2023, because by that time I will have products with the right (technology) partners,” Mohan added.
Seeking tech partners
In August, Pricol announced a strategic partnership with Austria-based Candera to gain access to global human-machine interface solutions for its next-generation DIS. Pricol is pursuing technical know-how for future business development.
“We will have four to five partners for technology and will be announcing them in the next six to eight months. We have three product verticals, and we are entering a fourth product vertical, which will be propulsion-agnostic, and used in any kind of two-wheeler and off-road commercial vehicles. We are talking to the partner and product trials are going on but we are bound by a non-disclosure agreement (NDA), so we cannot disclose the product type,” Mohan added.
Pandemic impact
As it did with the rest of the auto industry, the COVID-19 pandemic crippled Pricol’s revenues. However, the company claims that it was through with the major part of its capital expenditure (capex) plans just before the pandemic, adding two new plants.
“Just before the pandemic hit us, we went for a massive round of capex where we added two new plants, and did capacity addition at our existing plants, which was supposed to generate Rs 2,400 crore worth of business over two to three years,” said Mohan.
“If all was normal this year we would have done Rs 1,800 crore in FY22 and Rs 2,300-2,400 crore in FY23. So, as a consequence, we are extremely capex-light this year and next year,” he added.
“We are having a lot of free cash flows even at lower sales levels and that is how we will become a debt-free company over the next 12 to 18 months. This will allow us to have a very strong balance sheet and get better credit ratings,” said Mohan.
