WHY MINDA HAS ITS EYES ON PRICOL'S DASHBOARD

Can the Coimbatore-based auto components maker preempt a possible takeover attempt?

- N. Madhavan

When Vikram Mohan got a call from his elder daughter on 17 February, he thought it would be a routine chat. The managing director of Pricol Ltd, a Coimbatore-based auto component company, was in New Delhi on work. His daughter was calling from London. The call, as it turned out, was anything but routine. Rival Minda Corporation Ltd, she told the stunned Vikram, had acquired a substantial stake in Pricol.

In an announcement to stock exchanges, Minda said it had built up a 15.57% stake from the open market at a cost of ₹400 crore. This set off panic among Pricol’s stakeholders as the promoters do not have a majority stake—they own 36.53%—in the company.

“I had to spend the rest of the day explaining to the media and other stakeholders that I have absolutely no intention of relinquishing control, now or at any time in the near future," Vikram told Mint, recalling that exhausting day.

Minda had stated that the investment was “purely" financial in nature. But its executive director, Aakash Minda, hinted at the company’s true intentions a few days later (on 20 February) when he said in an investor call, “This is a financial investment as of now and as and when any inorganic opportunity comes across...we will take it to the Board".

Less than three months later, on 2 May, Minda sought permission from the Competition Commission of India (CCI) to increase its stake in Pricol to 24.5%. Pricol strongly objected to this move and has challenged Minda’s CCI application in the Madras High Court.

“This is a very unfair and unethical thing to do (to acquire a stake surreptitiously)," said Vikram. He added he is now ready with a war chest and a “strong strategy" to counter the threat.