Pri­col ac­quires wip­ing sys­tems busi­ness of PMP Auto Com­po­nents

Auto components India - - CONTENTS - ACI

Coim­bat­ore-based au­to­mo­tive com­po­nents man­u­fac­turer Pri­col Ltd has signed bind­ing agree­ments to ac­quire 100% of the wip­ing sys­tems busi­ness of Ashok Pi­ra­mal group’s PMP Auto Com­po­nents Pvt. Ltd. The ac­qui­si­tion would be un­der­taken through the whol­ly­owned sub­sidiaries of Pri­col. The trans­ac­tion will be funded by a com­bi­na­tion of in­ter­nal ac­cru­als and ex­ter­nal debt. The trans­ac­tion would be EPS ac­cre­tive to the share­hold­ers of Pri­col and the prof­itabil­ity is ex­pected to fur­ther im­prove upon in­te­gra­tion of the busi­ness with Pri­col.

PMP had ac­quired this busi­ness in 2008 from Magna and is presently run­ning man­u­fac­tur­ing fa­cil­i­ties in Czech Re­pub­lic, Mex­ico and In­dia. The busi­ness is sup­ply­ing wiper mo­tors to global au­to­mo­tive cus­tomers in­clud­ing VW, Fiat, John Deere, Skoda, and Audi. It has a turnover of around Rs 250 crore with a con­firmed or­der book and rev­enue vis­i­bil­ity of more than Rs 450 crore in FY 2020.

The ac­qui­si­tion will help Pri­col di­ver­sify its prod­uct of­fer­ings and pro­vide ac­cess to man­u­fac­tur­ing fa­cil­i­ties in Europe and North Amer­ica, where it does not have a foot­print, help­ing it ce­ment its sta­tus as a global sup­plier. Ad­di­tion­ally, with this ac­qui­si­tion, Pri­col will in­crease its pres­ence with pas­sen­ger ve­hi­cles cus­tomers di­ver­si­fy­ing rev­enue streams and open­ing up mul­ti­ple cross sell­ing op­por­tu­ni­ties. Pri­col also ex­pects to re­alise sub­stan­tial syn­er­gies within the first cou­ple of years to fur­ther boost the fi­nan­cial per­for­mance of the busi­ness. Pri­col’s fo­cus as an auto com­po­nent sup­plier and ex­pe­ri­ence in low-cost pro­duc­tion and sourc­ing can be lever­aged by the tar­get busi­nesses for re­al­is­ing cost sav­ings in sourc­ing raw ma­te­ri­als and re­duc­ing man­u­fac­tur­ing over­heads. Joint R&D is also ex­pected to re­duce prod­uct de­vel­op­ment costs.

Vikram Mo­han, Man­ag­ing Di­rec­tor, Pri­col said, “This ac­qui­si­tion ties in well with our long-term strat­egy of driv­ing growth and achiev­ing prod­uct di­ver­si­fi­ca­tion. We be­lieve that wip­ing sys­tems is a grow­ing prod­uct seg­ment which would be largely im­mune to the ever chang­ing tech­no­log­i­cal trends in the au­to­mo­tive sec­tor and the even­tual move to elec­tric ve­hi­cles. With man­u­fac­tur­ing pres­ence in Czech Re­pub­lic and Mex­ico, this ac­qui­si­tion fits in per­fectly with our on­go­ing plans to es­tab­lish pres­ence in these re­gions. We are also very ex­cited about the po­ten­tial of this busi­ness in the In­dian mar­ket and con­fi­dent of ex­tract­ing syn­er­gies.”

Harsh Pi­ra­mal, Man­ag­ing Di­rec­tor, PMP Auto Com­po­nents Pvt. Ltd. said, “PMP has de­cided to di­vest this busi­ness as part of its strate­gic port­fo­lio re­al­lo­ca­tion where this busi­ness has been de­ter­mined as non-core. We are happy that an au­to­mo­tive fo­cused group like Pri­col is tak­ing over this busi­ness and hope that they will take it to fur­ther heights.”

The trans­ac­tion is sub­ject to cus­tom­ary clos­ing con­di­tions and the par­ties to the trans­ac­tion are bound by stan­dard con­fi­den­tial­ity obli­ga­tions. BMR Ad­vi­sors acted as trans­ac­tion and fund rais­ing ad­vi­sor to Pri­col. PWC was the trans­ac­tion ad­vi­sor to the share­hold­ers of PMP.

Pri­col, as a lead­ing man­u­fac­turer of au­to­mo­tive com­po­nents for the global au­to­mo­tive mar­ket, thrives on in­no­va­tion, cut­ting edge tech­nol­ogy and su­pe­rior prod­ucts across two, three and four-wheel­ers, com­mer­cial ve­hi­cles, trac­tors, and con­struc­tion and in­dus­trial tool­ing seg­ments. The com­pany’s per­for­mance is driven by over 30 patents, 8 man­u­fac­tur­ing units and 5 in­ter­na­tional busi­nesses in In­dia, In­done­sia, Brazil, USA, Ger­many, Sin­ga­pore, Thai­land and Ja­pan.

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