Key Outcomes from Pricol's Board Meeting

On December 2, 2024, Pricol Limited's board finalized significant decisions to drive business growth and diversification.

1. Acquisition of Sundaram Auto Components' Plastic Division

• Target: Injection moulded plastic component solutions division of Sundaram Auto Components, a subsidiary of TVS Motor Company.
• Cost: ₹215.3 crore (cash transaction).
• Purpose: Strengthening operations in the auto component sector through its wholly-owned subsidiary, Pricol Precision Products Private Limited.
• Impact:
  • The acquired division reported a revenue of ₹727.33 crore in FY24.
  • Enhances Pricol’s offerings in automotive plastic components for two-wheelers, four-wheelers, and commercial vehicles.
• Timeline: Expected completion by January 31, 2025, subject to conditions precedent under the business transfer agreement.

2. Investment in Pricol Precision Products Private Limited

• Amount: Up to ₹120 crore in multiple tranches.
• Objective: To support the acquisition of the Sundaram Auto Components division and scale operations.
• Details:
  • Incorporated in 2023, this subsidiary is positioned as a key player in auto component manufacturing.
  • The investment will help operationalize the new acquisition effectively.

3. Corporate Guarantee for Pricol Precision Products

• Guarantee Limit: Up to ₹250 crore.
• Purpose: To secure loans for the subsidiary, Pricol Precision Products, facilitating funding for operational and strategic needs.
• Impact:
  • Classified as a contingent liability in the company’s financial statements.
  • Reinforces financial support for the wholly-owned subsidiary.

4. Investment in PQSI Digital Private Limited

• Equity Stake: Up to 26%.
• Investment Amount: ₹10 crore in multiple tranches over three years.
• Purpose:
  • PQSI Digital specializes in Industry 4.0 products, focusing on IoT and smart factory solutions.
  • The investment aligns with Pricol’s strategy to integrate digital transformation into manufacturing.
• Background:
  • Incorporated in 2018, PQSI Digital has a growing presence in the smart manufacturing domain.
  • Revenue Highlights:
    • FY24: ₹49.77 lakh
    • FY23: ₹24.53 lakh

Strategic Rationale

These decisions reflect Pricol Limited's growth-oriented strategy:

1. Diversification: Expanding product portfolio with Industry 4.0 solutions and advanced auto components.
2. Vertical Integration: Strengthening the supply chain through acquisitions and subsidiary investments.
3. Market Leadership: Enhancing capabilities to meet the growing demands of the automotive and smart manufacturing industries.

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