Minda vs Pricol: CCI raises concern

CHENNAI: Raising concerns that the Minda Corporation’s attempt to acquire 24.5 per cent shares in Coimbatore-based Pricol was likely to result in potential harm to competition, the CCI said it would inquire further into the matter.

This has come as a relief for Pricol, which has been resisting the potential suitor after it acquired 15.7 per cent stake from the secondary market at Rs 209 per share last February. If its attempt to buy 24.5 per cent stake goes through, Minda would emerge as the largest shareholder in the firm.

In a BSE filing, the Vikram Mohan-led auto component major said it has received a communication dated January 3 from the Competition Commission of India (CCI) stating: “…prima facie, the proposed combination by Minda is likely to result in an appreciable adverse effect on competition for multiple reasons, that therefore CCI intends to conduct further inquiry into the matter to address the potential harm to competition.”

The automotive components and precision engineering company added in its filing that it would respond appropriately to the CCI in due course, and added that it reserved the right to challenge Minda Corporation’s application to the CCI in detail on merits at the appropriate stage.

When Minda acquired 15.7 per cent stake, widely perceived here as a “creeping” acquisition, it triggered an outright protest by Pricol, which said that it did not have any information about the intent of its competitor’s share transaction deal.

Objecting this, Pricol, which holds close to 40 per cent share, moved the Madras High Court and obtained a stay. However, the matter did not end there. The stay was vacated, emboldening Minda to approach Sebi to seek approval for picking up the 24.5 per cent share that would put it in the driver’s seat. The industry sources whom DT Next spoke to opined that Minda’s entry would disrupt the ecology of Coimbatore’s business environment. Meanwhile, Pricol is confident of surmounting this challenge as it has “nothing to worry since we are financially, legally and structurally sound”, an official, who did not wish to be quoted, told DT Next.

Pricol, a specialist in instrument clusters, driver information systems and connected vehicles solutions, catering to over 400 suppliers, has been growing at nine per cent CAGR. It has around 7,000-odd employees, including 1,500 contract workers. Minda is a six-decade-old entity that supplies automotive components to original equipment manufacturers. It has over 16,000 employees across 33 plants in six countries, including the US, Japan, Indonesia, Vietnam and Uzbekistan. Pricol is said to have a market share of 45 per cent, while Minda has garnered 15 per cent of the auto component business.