A few points on Pricol, assimilated from the Annual Report, AGM, and some from my own work:
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Majority of the products are propulsion agnostic.
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Adding one greenfield plant in Pune.
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Company is in advanced discussions with 7 OEMs for disc brake systems. This will be huge growth area in the coming years, says the management.
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Seven or eight manufacturers are getting added to the EV portfolio soon.
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Has made significant investments in PCBs making it an electronics company from a mechanical company, says the management. Have even made robots in-house for manufacturing requirements. Going ahead, turnover will increase but manpower will not increase.
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Has filed 20 patents for 15 inventions in India and abroad, with 17 patents already granted and the rest under review
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Has successfully designed and started development of the Pricol E-cockpit platform. However no immediate revenue stream should be expected from this, it is a long-term opportunity for the company, nevertheless. Presently the prototypes are designed and discussion with customers are going on.
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Has kick-started Battery Management System (BMS) development along with technology partner BMS Power Safe. Here again, no immediate revenues should be expected but this too is a good long-term opportunity. At present, the prototype development meeting the new regulatory requirements of Indian market is going on and expected to be completed by end of this calendar year. Post which, customer roadshows will be undertaken for commercialisation.
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Pricol Telematics Control Unit (TCU) with SIBROS Software are installed & successfully running in 2-Wheeler, Off-Highway & Commercial vehicles in Domestic & International customer side. Here again, revenues are expected to start post FY26 onwards. At present, the integrated platforms are under testing with various domestic and international OEMs.
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Achieved 62 % of energy consumption through renewable sources. Striving to achieve the target of 75 % in FY2024-25 and 100 % by FY2026
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Balance in Retained Earnings is now negative Rs.65 crores only. Once it turns positive (most likely this year itself), the Board can declare dividends
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I find there is a sharp increase in Warranty Expenses (Rs.31 crores this year Vs Rs.10 crores last year) as well as Provisions for Warranty Related Claim (Rs.20 crores this year Vs. 6 crores last year) in recent years. I asked the company if there is a change in the nature of customer contracts, but it said the increase is due to increase in sales, and additional provisioning based on the expected claims from customers.
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As at 31st March, 2024, the contingent liability on account of various labour related cases has increased to Rs. 54.58 crores (Previous year – Rs.46.66 crores) with the addition of one more year’s interest.
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The industry is facing a GST dispute with the government on whether instrument clusters attract GST at 18 % or 28 %. This matter is pending in Madras High Court and is an unspecified contingent liability.
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Interestingly, the Company has claimed loss on disposal of investment in Spanish subsidiary amounting to Rs.408 crore as business loss in the return filed for the AY 21-22 but paid advance tax on the same. If the claim is accepted by the tax authorities, the company are sitting on a potential cash bonanza worth (income tax refund) of at least Rs.100 crore upwards if I am not wrong.
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Suzuki looking at us as key partner for their global operations, said the management at the AGM.
Excellent business, but some housekeeping issues linger from a troubled past.
(Disc.: Invested)
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