The Hindu Business Line : Pricol floats joint venture in Iran

Overseas mission
Iran is the second foreign country where Pricol has chosen to invest after Indonesia.
Both partners would hold equal stake in the share capital of the newly floated outfit.

Coimbatore June 1 Pricol Ltd, the Coimbatore-based instrument clusters and speed sensors manufacturer, is setting its foot in Iran by entering into a joint venture with a local manufacturer to meet the requirements of the local automobile industry, initially in the four-wheeler space.

Iran is the second foreign country where Pricol has chosen to invest after Indonesia, where its wholly owned subsidiary commenced production in April this year.

Enormous Scope

Speaking to Business Line, a company source said Pricol saw enormous opportunity for investment in Iran where there are not many players in the product range in which Pricol was involved. For its Iranian joint venture, Pricol has tied up with an Iranian company Nava Khodro Plastic Company and both partners would hold equal stake in the share capital of the newly floated outfit — $2,500,000. The estimated cost of the project in the first phase over a period of three years is $8,500,000, the company has stated in a notification to the NSE.

He expected the new venture to begin commercial production by December this year.

Asked about the funding for the new project , the Pricol source said the funds needed for the Iranian venture would be met through borrowings and internal accruals and there was no plan to go for any equity dilution.

Net profit slips

Despite `a strike by a section of workers' at its Coimbatore plants in March 2007, Pricol has recorded a near 15 per cent jump in income from sales and services in the fourth quarter of last year.

According to the audited financial results, the income from sales and services in fourth quarter of 2006-07 was Rs 152.58 crore (Rs 133.31 crore). But the total expenditure was higher at Rs 128.14 crore (Rs 110 crore) and after providing for interest and depreciation, the profit before tax dipped to Rs 11.86 crore (Rs 14.2 crore). The net profit was lower at Rs 8.2 crore (Rs 9.8 crore) before extraordinary items in the last quarter of 2006-07.

For the full year, Pricol witnessed a substantial jump in its turnover to Rs 583.38 crore (Rs 481.68 crore). The net profit witnessed a near 20 per cent increase to Rs 36.21 crore against Rs 30.30 crore before extraordinary items in the previous fiscal. The full year EPS (share face value Re 1) was Rs 4.02 (Rs 3.37) and the company's board has recommended a dividend of Re 1 per equity share of Re 1 each involving an outflow of Rs 10.52 crore, including tax on dividend.