ISIN news update courtesy of The Economic Times. Pricol Ltd (ISIN Code: INE605A01026), an auto instruments major from India, has informed the Bombay Stock Exchange that on December 11, 2014, the Board of Directors of the company has proposed to acquire 99.99% of stake in a Brazil based auto component manufacturing.
COIMBATORE: In its first ever overseas buyout, auto instruments major Pricol is acquiring Melling do Brasil, which makes oil and water pumps, cold start valves and aluminum castings, for an undisclosed sum. Pricol is buying the 99.99% stake held by owners in the unlisted Melling in an all-cash transaction that would be completed by January. The Pricol scrip, which hit a high of 47.45, ended the day at 43.9%, a 2.7% increase on the BSE.
The acquisition is being made through Pricol Espana, Pricol’s wholly-owned Spanish subsidiary. The buyout is being funded through a mix of internal accruals and debt. Melling had revenues of 301.1 crore in 2013 but has slipped into the red. Pricol however said that Melling would generate profits with positive cash flows from next year.
“All major OEMs (original equipment manufacturers) have moved to global platforms. There is commonality of engine platforms in India, Indonesia, Europe and Brazil,” said N Diwakar, chief strategy officer, Pricol. This has made direct presence in these markets a necessity, he said.
Pricol already has a presence in Indonesia through a wholly-owned subsidiary, which generates revenues of 120-130 crore a year. The company took the greenfield route for its Indonesian foray. It set up its unit in 2006.
The city-based Pricol, which had revenues of 891 crore in 2013-14, would also infuse fresh capital in the acquired entity. “We would infuse fresh equity through our Spanish subsidiary in the next 18-24 months,” Diwakar stated. Pricol is targeting revenues of $60 million (around 375 crore) from the Brazilian market in the next three years, he said.
Melling has a significant presence in Brazil and is among the top-2 players in the market for oil and water pumps used in cars, he said. Though it serves primarily the Brazilian market, the company also supplies components to OEMs based in the US.
Pricol said it was selling its speedometer cable business to Bangalore-based Suprajit Engineering to focus on its core businesses that include auto instruments, oil sensors and pumps in September.
The company, which is among the largest manufacturers of dashboard instruments and speedometers in the country, is planning to raise 125 crore either through public or private offerings to eligible investors including qualified institutional buyers. It won board approval for the fund raising proposal in September this year.