Noida-headquartered Minda Corporation Ltd’s purchase of a 15.7 per cent stake for ₹409 crore in Coimbatore-headquartered Pricol Ltd, a manufacturer of auto parts and precision-engineered products on Friday, has sparked speculations over a hostile takeover attempt by the former.

Also read: Minda Corp buys 15.7% stake in Pricol for ₹400 crore

Minda Corporation, a leading auto parts maker and part of Spark Minda Group, announced that it has bought 191,40,342 shares of Pricol at ₹209 per unit. It was done for a cash consideration through an open market purchase. The purchase was merely a financial investment without providing the company any special rights in Pricol other than the rights as a shareholder, it said in a filing to the exchanges.

‘No intention’

The development and resultant speculation prompted the Vikram Mohan, MD of ₹1,553-crore Pricol, to respond: “As managing director and representative of the promoter group of Pricol Ltd, I would like to reiterate that the promoter group stands committed to the company and its prospects.”

Mohan said they have turned around the company in the last few years by making it net debt free, set it on a firm growth path, and proved customer confidence with a healthy order book, while the company continues to invest significantly in both product and process technology to stay ahead of the competition.

“The promoters have absolutely no intention of undertaking any secondary sale of promoter stake nor does the company have any intent of raising equity capital of any form as the company has strong financial fundamentals and healthy cash profits that will meet the needs of capital for its future growth,” he said.

Meanwhile, it appears that Pricol will be an attractive acquisition opportunity for Minda. The company has established a strong presence in some businesses where Minda Corporation is aiming to grow.

Growth areas

Analog clusters in the driver information systems are now moving towards digital clusters with integrated telematics and ADAS systems. Minda is moving from a mechanical cluster to incorporate the latest TFT (thin film transistor) digital cluster where Pricol has a strong position with its own R&D and technological capabilities.

Minda Corporation, a ₹3,554-crore (including JV firms) company with 16,000 people and 34 plants (including three units in the ASEAN region), is deepening its focus on clusters and sensors business in view of the emerging growth opportunities. TFTs, telematics and sensors for safety are among the key product segments in this line of business where Pricol has established a strong presence.

Pricol is a leading player in driver information systems, which includes telematics as an integral part and actuation and control systems. It is the second largest manufacturer in the world for both Instrument cluster and fuel level sensors for 2/3-wheeler applications. Pricol is also a major supplier of telematics solutions. More than three lakh Pricol-designed and manufactured telematics are working in the field.

BSE data show that the promoter group has 36.53 per cent stake in the company, while the other 63.47 per cent is with the public. On the BSE, the Pricol shares closed at ₹199.05 on Friday, 4.44 per cent lower than the previous close.

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