Pricol marches confidently towards Vision 2020

It has been a remarkable turnaround story for the Coimbatore-based Pricol. The auto component maker, which was plagued by labour unrest, mounting losses and accumulated debt till not-so-long ago, is now back in the black and eyeing new frontiers.

Today, Pricol has moved beyond Coimbatore to other parts of the country as well as new geographies. The person who spearheaded this comeback script was Vikram Mohan who had to step into the business operated by his parents, Vanitha and Vijay, in 2010.

This was a trying period when plants had to be shut down and Pricol was struggling to stay afloat with mounting losses and debt. A serial entrepreneur who had been constantly incubating companies earlier, Mohan quickly got into the driver’s seat and set about working on the turnaround.

Today, Pricol is on the fast track with acquisitions, collaborations and expansions taking top priority. It has earmarked ₹700 crore investments over the next three years and targeting revenues of ₹3,000 crore by 2020, an over two-fold jump from ₹1,268 crore in 2016-17.

Mohan can probably rest easy now after all the turmoil seven years ago when Pricol was virtually skating on thin ice. He did contemplate restructuring the business and selling it but since this idea did not go down well with the family, the only other option was to put things back on track.

Mohan then started putting the rebuilding blocks in place, which kicked off with an exit from the unviable four-wheeler passenger vehicle instrumentation space. This move brought in the much needed cash that helped the company retire its debt and strengthen its balance sheet.

The next step was to shut down loss-making units and exit many other small product segments. Downsizing manpower was another key part of the cost-cutting exercise. Mohan also rebuilt the engineering and R&D capabilities, which today boasts of a few hundred engineers. Nearly 4.5 per cent of Pricol’s revenues are earmarked for R&D, which is among the highest in the Indian auto parts sector.

Mohan’s next big bet is Vision 2020, which will involve a mix of growth, acquisitions and collaborations. Driven by the ‘rule of three’ theory, it endeavours to put Pricol in the Top 3 in geographies and businesses. This has resulted in the creation of new product verticals and expansion of the existing portfolio in instruments and pumps.

Sensors, for instance, were identified as a key business and Pricol is today the world’s second largest two-wheeler instrument maker by volumes. Likewise, in pumps, it decided to go beyond two-wheelers and this is where its acquisition in Brazil paved the way for variable flow pumps.

However, the script went awry thanks to the collapse of the Brazilian economy immediately after the deal that led to Pricol losing nearly ₹100 crore. Things could look up now “after a deep restructuring exercise” even while the country is gradually limping back to normalcy.

Another focus area is electric mobility where wiping systems was identified as the core growth area. This is where the acquisition of the Ashok Piramal group company, PMP Auto Components, will help take things forward. A foothold in the wiping assets space will also give Pricol a presence in the replacement market.

April 2020 will usher in the Bharat Stage VI emissions era and Pricol will focus on three product verticals – fuel pump modules, oxygen sensors and park assist systems – to be part of the action.

Over the last five months, it has entered into two technical collaborations and, even more recently, a joint venture, which will translate into a combined business of ₹1,000 crore in the coming years. It is also readying facilities in Sri City and Hosur, which will meet the needs of the clusters in Chennai and Bengaluru.

Beyond products, the company is keen on growing in the solutions business. Today, it has one of the largest installations in the hardware side of telematics where it aims to be a total solutions provider.

“This year, we should be doing business of about ₹1,800 crore,” says Mohan. “We have now very respectable profits, low debt on our books, a global manufacturing footprint and no loss-making entities. Yes, we are future-ready.”

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