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Auto components manufacturer Pricol is hiving off its wholly-owned Spanish subsidiary Pricol Espana SL and some step-down subsidiaries.
The aim is to arrest further flow of funds into unviable markets, said the firm.
Pricol has informed the stock exchange that apart from the Spanish subsidiary, it is hiving off a step-down subsidiary in Brazil, and others in the Czech Republic and Mexico, along with its investment in Pricol Wiping Systems India Ltd as a strategic/bundled offer to minimise the financial impact of the disposal.
₹232-crore provision
The company has classified these as “non-current” investments held for sale and discontinued operations and made a provision of ₹231.97 crore.
Revenue decline
Pricol’s revenue from operations fell 1.95 per cent year-on-year in the fourth quarter of FY19 to ₹337.67crore (₹386.21 crore).
It attributed the fall to lower demand, mainly due to weak market sentiments consequent to the introduction of BS-VI norms from April 2020, and a prolonged strike by a section of its workforce at its plant here.
“The strike increased our employee cost during the last quarter FY19. We have taken strong alternative measures to reduce the impact,” said Vikram Mohan, Managing Director.
Mohan further said that with the proposed divestment of the company’s manufacturing subsidiaries in Europe, North America and South America, Pricol’s consolidated sales could drop more significantly.
“We will be paring down our debt significantly and divesting the chronically loss making subsidiary in Brazil to achieve a healthier balance sheet and overall positive cash flows,” he said.
Pricol’s other subsidiaries include PT Pricol Surya in Indonesia and Pricol Asia Pte Limited in Singapore.
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