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Pricol Ltd.

BSE: 540293 | NSE: PRICOLLTD |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE726V01018 | SECTOR: Auto Ancillaries

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Annual Report

For Year :
2018 2017

Director’s Report

The Directors have pleasure in presenting the Seventh Annual Report and audited accounts for the financial year ended 31st March, 2018.


The summarised financial results are:

Rs. Million

Net Sales & Services



- Domestic



- Export



Other Operating Revenue



Other Income



Total Revenue excluding Excise Duty & Sale of Land held as Stock-in-Trade



Profit from Operations before Finance Cost, Depreciation and Amortisation Expense & Exceptional Items



Less : Finance Costs



: Depreciation



Profit from Operations before Amortisation Expense, Exceptional Items & Tax



Less : Amortisation Expense



Add : Sale of Investment in Subsidiary



Add : Sale of Land held as Stock-in-Trade



Less : Impairment of Land and Building


Profit Before Tax



Less : Tax Expense

Current Tax



Deferred Tax



MAT Credit



Profit for the year (A)



Other Comprehensive Income



Income tax relating to these items



Other Comprehensive Income

for the year after tax (B)



Total Comprehensive Income for the year (A) (B)



First year of implementation of Indian Accounting Standards (Ind AS):

Financial year 2017-18 is the first year of implementation of the Indian Accounting Standards (Ind AS). The financial statements for the year ended 31st March, 2018 have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 and other relevant provisions of the Act. The financial statements for the year ended 31st March, 2017 have been restated in accordance with Ind AS for comparative information. Detailed information on the impact of the transition from previous GAAP to Ind AS is provided in the annexed financial statements.


Your Directors recommend a dividend of Rs. 1/- per share of Rs. 1/- face value for the year ended 31st March, 2018 and the total dividend payout is Rs. 114.283 Million including dividend distribution tax.


During the year, the Auto Industry domestic market grew by 14.22% and exports by 16.22%. The overall growth was 14.48% as against 5.09% in the previous financial year.

The performance as per Society of Indian Automobile Manufacturers (SIAM) is :


Vehicles Sold




2017-18 %

In numbers

Passenger Car /

Utility Vehicle








Medium & Heavy

Commercial Vehicle




Light Commercial





Motor cycles /

Scooters / Mopeds




Three Wheelers









In domestic market, Company primarily caters to are Two wheelers, Commercial Vehicles, Tractors and Off-road vehicles.

Overall company sales decreased by 3% when compared to the previous year. This was mainly due to phasing out of Speed Limiting Devices due to introduction BS IV engines.

The profit from operations before Amortisation expenses, Exceptional items & Tax decreased from Rs. 902 Million to Rs. 447 Million.

The profit before tax increased from Rs. 623 Million to Rs. 742 Million, which includes profit from sale of land held as Stock-in-Trade and after impairment of land & building.

For the ensuing year 2018-19, the Company’s business is expected to grow between 12% to 15%, mainly due to new business generated.


PT Pricol Surya Indonesia

The Company is supplying Instrument Clusters to the 2-Wheeler manufacturers in Indonesia & Thailand.

In the financial year 2017-18 the company has achieved a sales of Indonesian Rupiah 84,170 Million (Rs. 404.437 Million) as against the previous year sales of Indonesian Rupiah 186,339 Million (Rs. 922.378 Million) a decrease of 54.83% in Indonesian Rupiah & 56.15% in INR terms.

The decrease in sales is mainly on account of phasing out of vehicle models for which the company is supplying. The Company had a profit before tax of Indonesian Rupiah 5,602 Million (Rs. 26.919 Million) as against the profit of Indonesian Rupiah 1,986 Million (Rs. 9.829 Million) of previous year.

During November 2017, the company acquired 100% shares of PT Sripri Wiring Systems, Indonesia, manufacturing of wiring harness and supplier to the company.

Pricol Asia Pte Limited, Singapore

This purchasing arm of our Company mainly assists in global procurement of raw materials and components to supply our Company and associate companies.

In the financial year 2017-18, the Company achieved sales of USD 29.405 Million (Rs. 1,910.667 Million) as against the previous year sales of USD 22.877 Million (Rs. 1,500.798 Million). The company made a profit of USD 842,338 (Rs. 54.733 Million) during the year 2017-18 as against USD 762,345 (Rs. 50.011 Million) in 2016-17.

Pricol Espana Sociedad Limitada, Spain

It is an investment arm of Pricol to acquire companies in Europe and the Americas. In August 2017, the Company has acquired the Wiping Systems businesses in Czech Republic and Mexico from Ashok Piramal Group (Pricol Wiping Systems Czech s.r.o and Pricol Wiping Systems Mexico S.A. de C.V). During the financial year, the company has incurred a loss of EURO 1.128 Million (Rs. 84.513 Million), as against EURO 0.120 Million (Rs. 8.665 Million), in 2016-17.

Pricol do Brasil Componentes Automotivos LtdA, Brazil

Pricol do Brasil Componentes Automotivos Ltd A (PdB) manufactures and sells Pumps & Mechanical products to wide range of Domestic and International customers such as Volkswagen, Fiat, Fiat Powertrain, General Motors, Mack Trucks etc. PdB has a strong backward integrated facility with diverse manufacturing capabilities (Die Casting, Machining and Assembly) and extensive Testing and Validation facilities to provide end to end solution and add value to the Customer.

R&D capabilities are another strong area of PdB and several new programs are on the advanced stage of development, such as :- Electric Coolant Pump, Electric Vacuum Pump, Electric Coolant Valve, Variable Flow Oil Pump, Variable Flow Water Pump, Solenoid Valve and Electric Oil Pump.

The development of the new CSS Prime business is a major milestone for the Company as it is expected to generate annual revenues of BRL 45 Million (USD 15 Million). Forecast is to initiate ramp up of production from April 2019 onwards.

During the year, the Company has shifted its manufacturing facility from Diadema to Jarinu to reduce employee cost and operational cost. It has started production and supplies to the customer from the new plant from November 2017. During the restructuring, company negotiated with Employee union and retrenched 181 employees at Diadema and hired 125 employees from Jarinu.

In the financial year 2017-18, PdB has achieved a sales of BRL 63.150 Million (Rs. 1,278.146 Million) as against the previous year sales of BRL 62.940 Million (Rs. 1,233.804 Million). PdB incurred a loss of BRL 45.163 Million (Rs. 914.092 Million) during the year 2017-18 as against BRL 22.224 Million (Rs. 435.654 Million) in 2016-17. The loss during the year includes BRL 18.556 Million (Rs. 375.571 Million) towards employee settlement and BRL 1.516 Million (Rs. 30.683 Million) towards relocation expenses.

Acquisition - Wiping Systems business

Pricol completed the acquisition of the automotive business from Ashok Piramal Group consisting of the Wiping Systems business on 28th August 2017. With manufacturing facilities in Czech Republic, Mexico and India the business is into the manufacture of front and rear wiper motors and assembly of wiper linkages for the automotive segment.

The acquisition of the Wiping Systems business was carried out with an intention to develop a manufacturing footprint at Europe and Mexico, to make further inroads into the Fourwheeler business and expanding the product portfolio. With a strong focus on R & D and quality improvement, Pricol is confident of improving the profitability of the business.

As a part of the acquisition, Pricol Limited incorporated Pricol Wiping Systems India Limited as its wholly owned subsidiary. Pricol Espana Sociedad Limitada, Spain, wholly owned subsidiary of Pricol Limited acquired PMP PAL International s.r.o.,Czech and PMP Auto Mexico SA. de C.V., Mexico. PMP PAL International s.r.o. was acquired by Pricol Espana Sociedad Limitada through its wholly owned subsidiary, Pricol Wiping Systems Czech s.r.o. on August 28, 2017.

Pricol Wiping Systems Czech s.r.o.

With a track record of over 90 years in Czech Republic, PAL serves a wide range of customers including Volkswagen, Skoda, Seat, Fiat Chrysler Automobiles, John Deere, etc., predominantly across the European Union and globally.

With new business wins with customers, Volkswagen, Seat and Audi, PWS Czech recorded an y-o-y increase in Revenue from sale of finished products by 32.6% in FY 2017-18 vis-a-vis FY 2016-17. PAL was merged with PWS Czech with effect from 1st April 2018. During FY 2018-19, Start of Production for Audi’s new programme will add to the topline growth of the Company. PWS Czech is working on activities such as productivity improvements, 5S implementation, supplier rationalization strategies which are being taken to improve and sustain long-term profitability.

During the period from September 2017 to March 2018, PWS Czech has achieved a sales of CZK 673.975 Million (Rs. 1,965.709 Million) and registered loss before tax of CZK 16.612 Million (Rs. 48.451 Million).

Pricol Wiping Systems Mexico S.A. de C.V.

Pricol Wiping Systems Mexico S.A. de C.V. (PWS Mexico) formerly known as PMP Auto Mexico S.A. de C.V., and located at Puebla, Mexico commenced manufacturing operations in November 2016. PWS Mexico manufactures and supplies Wiping Systems to Volkswagen in Mexico.

With the gradual phase out of projects at Mexico, there has been a drop in Revenues at Mexico since October 2017.

Inline with expected synergies of the acquisition, the company has won a water pump program from VW Mexico’s EVO engine platform in collaboration with Pricol do Brasil’s R & D expertise.

The project will commence production by end of 2020 and will represent an additional business of Rs. 1,300 Million (USD 20 Million) per year. The estimated life of the project is 8 years.

During the period from September 2017 to March 2018, PWS Mexico had revenue of MXN 25.610 Million (Rs. 88.780 Million) and incurred loss of MXN 17.155 Million (Rs. 59.468 Million).

Pricol Wiping Systems India Limited

With effect from 28th August, 2017, Pricol Wiping Systems India Limited took over the wiping India business and integrated the same successfully and started direct billing to all the OEMs with effect from 1st March, 2018.

On successful integration of the business, Pricol Wiping Systems India Limited intends to establish itself as a major vendor for four wheeler segment in supply of Wiping systems to passenger and commercial vehicle segment in India.

During the period from September, 2017 to March, 2018, the company has achieved sales of Rs. 223.831 Million. The company incurred losses to the extent of Rs. 21.411 Million during the period as per the unaudited financials for the period ended 31st March, 2018.

The company has already secured additional orders from existing and new OEM customers in India, and is expected to be profitable from the FY 2018-19.


GDP growth estimates for FY 2018-19 are positive and International Monetary Fund predicts India to be amongst the fastest growing economy with growth rates over 7%. The Automotive Industry in India is expected to continue the growth momentum into FY 2018-19. According to SIAM, M & HCVs are expected to grow by 8-10% compared to FY 2017-18 and two-wheeler growth is expected to grow by 11-13%. With GST corrections in Tractors and Off-road vehicles, Government’s infra and rural push, and forecasted normal monsoons, growth in Tractors and Off-road Vehicles is expected to be between 15-20% during 2018-19.

Pricol envisages to outgrow the market through new revenue opportunities from existing product line up such as oil pumps, die-casting, switches and sensors. Pricol aims to achieve its revenue target for 2021 through key strategic partnerships and organic growth.


The global auto industry looks set for an interesting year in 2018, especially as improving global economic conditions brighten the mood. Challenges remain - specifically China’s car tax reboot, US domestic tax cuts and recent eyebrow-raising tariff initiatives, Europe’s flux and the relative health of key recoveries around the world (especially Russia and Brazil).


After the recession that impacted Brazil’s economy in 2015 (GDP -3.5%) and 2016 (GDP -3.5%), finally the country has seen some relief with 2017 GDP growth of 1% to BRL 6.559 Trillion (USD 2 Trillion).

Forecast for 2018, GDP is expected to grow at 2.75%. The automotive sector has indeed helped on 2017 economic recovery. Vehicle production increased by 25% from 2.15 Million in 2016 to 2.70 Million vehicles in 2017, helped by exports which grew 46% and local sales by 9%. This ends a 3 consecutive year decline in production. Forecast for 2018 is an increase of 13%.

Pricol do Brasil anticipates to outgrow the market, as a result of efforts to increase the share of business with OEMs and increase in aftermarket business volumes.


For 2018, stable demand developments in Western and Central Europe are expected, while shipments to Eastern Europe and export markets are forecast to grow 8%. As a result, the 2018 production forecast is expected to be at 23 Million units, representing an increase of 2.6% compared with 2017. Output will grow in the Iberian Peninsula ( 9%), Central Europe ( 5%), and Russia ( 9%). From an OEM perspective, the highest performances are expected from Volkswagen, Ford, Volvo, and Jaguar Land Rover owing to the addition of new sport utility vehicle models to their portfolios.

Pricol Wiping Systems Czech expects revenue growth over and above the market growth, resulting mainly from start of new businesses, ramping up of volumes from businesses which had commenced in FY 2018, and a focus on increase in aftermarket volumes, amongst other initiatives.


Risk Management Policy for identifying and managing risk, at the strategic, operational and tactical level, has been adopted by the Company. Our risk management practices are designed to be responsive to the ever-changing Industry dynamics. At present the Company has not identified any element of risk which may threaten the existence of the Company.

The Risk Management policy has been placed on the website of the Company and the web link there to is http://www.pricol.com/Risk-Management-Policy.pdf.


The Company’s internal control systems have been strengthened taking into account the nature of business and size of operations to provide for :

- Reliability and integrity of financial and operational information;

- Effectiveness and efficiency of operations and assets;

- Compliance with applicable statutes, policies, listing requirements and management policies and procedures.

The Company, through its own Corporate Internal Audit Department, carries out periodic audits at all locations and all functions and brings out any deviation to internal control procedures. The observations arising from audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations is submitted to the Audit Committee. The Audit Committee at its meetings regularly reviews the financial, operating, internal audit & compliance reports to improve performance. The heads of various monitoring / operating cells are present for the Audit Committee meetings to answer queries from the Audit Committee.


During the year, the Company has not accepted / renewed any fixed deposit from public. The total deposits remained unpaid or unclaimed as at 31st March, 2018 is Nil. There is no default in repayment of deposits or payment of interest thereon during the year.

The Company undertook several steps to keep a control over borrowings and cost of borrowings.

ICRA has reaffirmed / assigned the credit rating of “A-” for Long term fund based facilities and “A2 ” for short term fund based & non fund based facilities.

The particulars of Loans, Guarantees and Investments made by the Company under Section 186 of the Companies Act, 2013 are given in Note No. 2.64 & 2.65 to the Standalone Financial Statements.


All related party transactions that were entered into during the financial year were on arm’s length basis and were in the ordinary course of the business. During the year, there were no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the Company at large.


There are no significant and material orders passed by the Regulators / Courts / Tribunals which would impact the going concern status and the Company’s operations in future.


As per the provisions of Section 149 of the Companies Act, 2013, Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Company’s Directors retirement policy at the age of 70, the Members of the company appointed the independent directors as mentioned below:

Name of Independent Director

Period of Appointment

Mr. C.R.Swaminathan

Upto 28th February 2018

Mr. K.Murali Mohan

Upto 31st March 2018

Mr. Suresh Jagannathan

Upto 31st July 2019

Mr. R.Vidhya Shankar

Upto 31st July 2019

Mr. G.Soundararajan

Upto 31st July 2019

Mrs. Sriya Chari

Upto 26th May 2021

Mr.S.K.Sundararaman was appointed as an Additional Director (Independent) of the Company by the Board of Directors at its meeting held on 30th May 2018 and whose term of office expires at this Annual General Meeting (‘AGM’). The Board recommends the appointment of Mr.S.K.Sundararaman as an Independent Director of the Company to hold office for a term of 5 (five) consecutive years commencing from 30th May 2018 to 29th May 2023.

All Independent Directors have given declaration that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013.

In line with the Directors retirement policy, Mr.Vijay Mohan, aged 70 years, non-executive Chairman retired with effect from end of 11th November 2017. The Board wish to place a special appreciation to Mr.Vijay Mohan, Chairman for his leadership and valuable services rendered for nearly 45 years in the formation, growth and success of Pricol, since its inception.

During the year, in line with the Directors retirement policy, Mr.C.R.Swaminathan and Mr.K.Murali Mohan, Independent Directors retired from the Board of Directors of the Company with effect from the end of the day, 28th February 2018 and 31st March 2018 respectively. The Board wish to place its appreciation for the valuable services rendered by them during their tenure of office as Directors of the Company.

Mrs.Vanitha Mohan appointed as Chairman of the Company with effect from 14th November 2017. She retires by rotation at the ensuing Annual General Meeting and is eligible for re- appointment.


The Board has made a formal annual evaluation of its own performance, Committees of the Board, Independent Directors and Individual Directors of the Company.

The Board’s performance was evaluated based on the criteria like Structure, Governance, Dynamics & Functioning, Approval & Review of Operations, Financials, Internal Controls etc.

The performance of the Independent Directors as well as Individual Directors including the Chairman of the Board were evaluated based on the evaluation criteria laid down under the Nomination and Remuneration Policy and the Code of Conduct as laid down by the Board.

The Committees of the Board were evaluated individually based on the terms of reference specified by the Board to the said Committee. The Board of Directors were satisfied with the evaluation process which ensured that the performance of the Board, its Committees, Independent Directors and Individual Directors adhered to their applicable criteria.


The Key Managerial Personnel of the Company as stipulated under Companies Act, 2013 are Mr.Vikram Mohan, Managing Director, Mr.J.Sridhar, Director Finance (CFO) & Mr.T.G.Thamizhanban, Company Secretary.

Mr.J.Sridhar, Director Finance (CFO) had been appointed as Key Managerial Personnel with effect from 30th May 2018, in place of Mr.S.Shrinivasan.


M/s.Haribhakti & Co. LLP, Chartered Accountants, Coimbatore, (ICAI Registration No. 103523W/W100048), due to their internal restructuring, consequent to which they are unable to continue as Statutory Auditors of the company, resigned with effect from 15th June 2018. Board of Directors at their meeting held on 26th June 2018 appointed M/s.VKS Aiyer & Co, Chartered Accountants, Coimbatore (ICAI Registration No : FRN 000066S) as statutory auditors, in place of casual vacancy caused due to the resignation of M/s.Haribhakti & Co. LLP, from 26th June 2018 to the conclusion of this 7th Annual General Meeting, subject to the approval of shareholders.

M/s. VKS Aiyer & Co., Chartered Accountants are eligible for appointment and have confirmed that their appointment, if approved, will be in compliance with Section141 of the Companies Act, 2013.

Your Board recommends the appointment of M/s. VKS Aiyer & Co., Chartered Accountants, Coimbatore (ICAI Registration No : FRN 000066S) as statutory auditors for a term of 5 years, from the conclusion of 7th Annual General Meeting until the conclusion of the 12th Annual General Meeting of the Company to be held in the calendar year 2023.


The Board of Directors at its meeting held on 30th May 2018 appointed Mr. G. Sivagurunathan, Cost Accountant, as the Cost Auditors for conducting the Cost Audit for the financial year 2018-19. A resolution seeking members’ ratification of the remuneration payable to Cost Auditor is included in the 7th AGM notice. The Cost Audit Report will be filed within the stipulated period.


The Company had appointed M/s. P. Eswaramoorthy and Company, Company Secretary in Practice to undertake the Secretarial Audit of the Company for the financial year 2018-19. The Secretarial Audit Report is annexed herewith as ‘‘Annexure A”.


The company had complied with the applicable Secretarial Standards.


Pricol’s Corporate Social Responsibility (CSR) activities reflect its philosophy of enhancing value to the society and the environment around us. The contribution in this regard has been made to the registered trust which is undertaking these schemes in addition to the CSR activities directly undertaken by the Company. The Annual Report on CSR activities for the financial year 2017-18 including CSR Policy is annexed herewith as “Annexure B”.


The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 is annexed herewith as “Annexure C”.


The extract of the Annual Return in Form No.MGT-9 is annexed herewith as “Annexure D”.


Monthly meeting with the Union Representatives is being conducted every month and periodic review on the redressal of the points raised in the meeting is also conducted. Monthly Goodwill Meeting with the Operators also conducted to redress the shop floor issues of the operators in their day-to-day working environment. Periodical interactions with the union office bearers and the line operators have improved the conducive Industrial Relations. During the year, the Company incurred Rs. 2 Million towards health and safety. The number of people employed as on 31st March 2018 is 5,121.


The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any sexual harassment complaint during the year 2017-18.


The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is annexed herewith as “Annexure E”.


In accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013, the Directors would like to state that:

a) in the preparation of annual accounts for the financial year ended 31st March 2018, the applicable accounting standards have been followed;

b) they had selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the year under review;

c) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they had prepared the annual accounts for the financial year ended 31st March 2018, on a going concern basis;

e) they had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively and

f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.


Your company reaffirms its commitment to good corporate governance practices. The company complies with corporate governance requirements specified in regulation 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Pursuant to Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Report on Corporate Governance which forms a part of this Report, has been annexed herewith as “Annexure F”.

Managing Director and Chief Financial Officer have certified to the Board with regard to the financial statements and other matters as required under Regulation 17 (8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Practicing Company Secretary’s Certificate regarding compliance of conditions of Corporate Governance, is made a part of this Directors’ Report. All the board members and senior management personnel have affirmed compliance with the code of conduct for the year 2017-18.


Management Discussion and Analysis forming part of this Report is in compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and such statements may be “forward-looking” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include economic conditions affecting demand / supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other i ncidental factors.


The Board takes this opportunity to place on record appreciation to Customers, Distributors, Dealers, Suppliers, Shareholders, Bankers and Government authorities for their continued support and co-operation during the year under review. The Directors also wish to place on record their appreciation to the employees at all levels for their continued co-operation and commitment.

For and on behalf of the Board

Vanitha Mohan

Coimbatore Chairman

26th June, 2018 (DIN: 00002168)

Director’s Report