Minda Corp acquires 15.7% stake in Pricol from the open market

Following the announcement in the early hours of Friday, Pricol’s scrip which opened at Rs215 fell and closed at Rs 199.05, down 4.44%. Minda’s shares also lost closing at Rs 204.10, down 4.58%.

Minda has paid an average price of Rs208.9 per share aggregating to Rs 400 crore for 1.91 crore equity shares of Pricol. This represents 15.7% of the total 12.18 crore equity shares based on shareholding pattern of Pricol as on December 31, 2022, Minda said in a disclosure to the stock exchanges.
“This is merely a financial investment without providing the company any special rights in Pricol other than the rights as a shareholder,” Minda said in the disclosure.

While Minda is a manufacturer and supplier of array of parts, aggregates and solutions, including instrument clusters, die casting parts, sensors etc to automakers, Pricol specialises in electricals and electronics parts and aggregates including instrument cluster, driver information system, fluid management systems, to name a few.

In a statement issued to the exchanges, Vikram Mohan, managing director, Pricol said, “The promoters have absolutely no intent of undertaking any secondary sale of promoter stake nor does the company have any intent to 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.”
While mergers and acquisition as a growth strategy is very common in India’s auto component sector, this is perhaps the first time that a listed auto component firm is seeing a hostile takeover bid.
Offering a rationale behind the takeover bid, Anshul Saxena, head of investor relations, Minda Corporation said, “We understand the company (Pricol) and the products they make. It’s an excellent one with good corporate governance standards. Hence our board approved the transaction.”

Sinha was non-committal on whether Minda will consider hiking its stake further. “We cannot comment about that. Right now, it’s just a financial transaction for us,” Sinha told ET.

Pricol’s Mohan said after the recent turnaround, it’s a net debt free company and on a firm growth path and boasts of a healthy order book. “We continue to invest significantly in both product and process technology to keep us ahead of competition.”