Coimbatore-based auto component major Pricol has raised an objection with the Competition Commission of India (CCI) over the acquisition of 24.5 per cent stake by its rival Minda Corporation in Pricol.
This is part of a battle between the two companies that started this February, when Minda Corporation acquired 15.7 per cent in Pricol for Rs 400 crore in an open market transaction. Early this month, Minda had sought CCI's nod to buy 24.5 per cent additional stake in Pricol.
“We would like to state that the Company has filed a preliminary objection against the Minda Corporation application to CCI for making investment in Equity Shares of Pricol up to 24.5 per cent of total Equity Shares of Pricol, while also reserving right to challenge in detail on merits at the appropriate stage,” Pricol said in an exchange filing
Pricol reportedly has a 40 per cent share in the two-wheeler instrument cluster market, while Minda has around 15 per cent. “We take all legal measures that are required to oppose that petition for the simple reason that they are competitors and have not sought prior permission from CCI, number one. Number two, I would like to reiterate that the current management stands absolutely committed to running and growing this business in the coming years and I have absolutely no intention of (allowing Minda to) seize control of our business not just now, but any point in time in the near future,” said Vikram Mohan, managing director of Pricol, addressing an earnings call last week.
“We will take whatever steps necessary, legally and financially, to maintain absolute control of management and board of this company to continue to nurture value for all of our stakeholders,” he added.
It was on February 17 this year that Minda bought 19.1 million shares of the Coimbatore-based company for Rs 400 crore, at Rs 209 apiece. It was an open-market deal and no prior approvals were obtained. The move was expected to help Minda strengthen its foothold in the dashboard instruments segment. This came after the Pricol promoter group, which holds 36.53 per cent in the company, informed the BSE that it is unaware of the deal and dismissed any plans of making a secondary sale or raising investment. The group later informed the media that it would not allow any hostile takeover by Minda. The public shareholding in Pricol is 63.47 per cent.
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According to Mohan, both companies have the driver information system as a common product. “Of course, they are much smaller than us. We have a much larger market share than Minda,” he added.
Pricol is one of India's leading dashboard manufacturers and makes driver information systems and sensors, pumps and allied products, telematics and wiping systems catering to leading automotive original equipment manufacturers in two or three-wheeler, passenger vehicles, commercial vehicles, farm equipment and offroad vehicles across India and in international markets.