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Pricol Ltd.

BSE: 540293 Sector: Auto
BSE 09:47 | 07 Apr 34.65 1.15






NSE 09:49 | 07 Apr 34.55 1.05






OPEN 34.05
52-Week high 66.25
52-Week low 21.90
Mkt Cap.(Rs cr) 328
Buy Price 34.25
Buy Qty 72.00
Sell Price 34.60
Sell Qty 72.00
OPEN 34.05
CLOSE 33.50
52-Week high 66.25
52-Week low 21.90
Mkt Cap.(Rs cr) 328
Buy Price 34.25
Buy Qty 72.00
Sell Price 34.60
Sell Qty 72.00

Pricol Ltd. (PRICOLLTD) - Director Report

Company director report

Your Directors have pleasure in presenting the Eighth Annual Report and auditedaccounts for the financial year ended 31st March 2019.


The summarised financial results are: र Lakhs
2018-19 2017-18
Net Sales & Services
- Domestic 122195.63 109564.18
- Export 7593.97 8107.26
Other Operating Revenue 6825.62 5793.55
Other Income 592.53 667.46
Total Revenue excluding Excise Duty & Sale of Land held as Stock-in-Trade 137207.75 124132.45
Profit from Operations before Finance Cost Depreciation and Amortisation Expense & Exceptional Items 9074.62 10499.90
Less : Finance Costs 1808.74 1139.39
: Depreciation 5757.67 4894.46
Profit from Operations before Amortisation Expense
Exceptional Items & Tax 1508.21 4466.05
Less : Amortisation Expense 2262.07 2262.07
Add : Sale of Land held as 1010.36 7129.77
Less : Impairment of Land and (133.99) 1911.93
Building - Provision for/(Reversal)
Profit from Operations before Exceptional Items & Tax 390.49 7421.82
Less : Exceptional Items # 23197.75
Profit/(Loss) Before Tax (22807.26) 7421.82
Less : Tax Expense
Current Tax 95.80 2015.62
Deferred Tax (14.31) 1669.54
MAT Credit (95.80) (1610.70)
Profit/(Loss) for the year (A) (22792.95) 5347.36
Other Comprehensive Income 47.79 245.65
Income tax relating to these items (16.70) (85.01)
Other Comprehensive Income for the year after tax (B) 31.09 160.64
Total Comprehensive Income for the year (A) + (B) (22761.86) 5508.00

# Exceptional Items

The Board has subject to shareholders lenders and regulatory approvals taken aconsidered decision to hive off its investment in its wholly owned subsidiary PricolEspana S.L. Spain primarily to hive off the step down subsidiary unit at Brazil whichrequires continuous investments for its day to day operations. The Board is necessitatedto hive off its other step down subsidiaries Pricol Wiping Systems Czech s.r.o and PricolWiping Systems Mexico S.A. de C.V. along with the Investment in Pricol Wiping SystemsIndia Limited as a strategic/bundled offer reckoning commonality of customer base and inorder to minimise the financial impact of the disposal. The decision was taken to arrestfurther flow of funds into markets which are not conducive for sustaining the business atthe current levels and also which does not seem to revive in the near future.Consequently these investments have been classified as Non-current Investments held forsale in accordance with Ind AS 105 - "Non Current Assets held for sale andDiscontinued Operations". A provision of र23197.75 Lakhs including an estimateddevolvement on account of guarantee has been made in Standalone Financial Statementsbased on a preliminary assessment of estimated realisable value of the Investments lesscost to sell and an Impairment of Goodwill on Consolidation of र5170.67 Lakhs has beenprovided in the Consolidated Financial Statements. Any additional provision to be made orexcess provision to be reversed will be appropriately dealt with in the year in which thetransaction reaches finality.


In view of loss in this financial year your Directors do not recommend any dividendand not transferred any amount to reserves for the year 2018-19.


During the year the Auto Industry's domestic market grew by 5% and exports by 14%. Theoverall Auto Industry growth was 6% as against 14% in the previous financial year.


Vehicle Production *

Pricol Sale to OEM
2018-19 2017-18 Growth % Growth %
2 Wheeler 3 Wheeler 25771809 24177019 7 % 12 %
Commercial Vehicle 1112176 895448 24 % 30 %
Tractors 782350 711400 10 % 2 %
4 Wheeler 4026047 4020267 - 18 %
Total 31692382 29804134 6 % 11 %

1 As per Society of Indian Automobile Manufacturers (SIAM)


In domestic market Company primarily caters to Two wheelers Commercial VehiclesTractors and Off-road vehicles.

The Company's sales to OEM grew by 11% and overall Company's sales by 10.3% compared tothe previous year.

The profit from operations before Amortisation expense Exceptional items & Taxdecreased from र4466.05 Lakhs to र1508.21 Lakhs. The profit before Exceptional item& tax decreased from र7421.82 Lakhs to र390.49 Lakhs. Decrease in sale of landheld as stock-in-trade Increase in borrowings and corresponding increase in Finance costare the key factors for decrease in profit when compared to previous year.

The new plant at Hosur Tamilnadu will not commence operations due to change inbusiness strategy of the Company in line with customer expectations. The Company is in theprocess of sale of land & building located at Hosur.


PT Pricol Surya Indonesia

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

In the financial year 2018-19 the company has achieved a sales of Indonesian Rupiah594134 Lakhs (र 2860.75 Lakhs) as against the previous year sales of IndonesianRupiah 841700 Lakhs (र4044.37 Lakhs) a decrease of 29.41% in Indonesian Rupiah &29.27% in INR terms.

The decrease in sales is mainly on account of phasing out of vehicle models for whichthe company is supplying. The Company had a profit before tax of Indonesian Rupiah 55603Lakhs (र267.73 Lakhs) as against the profit before tax of Indonesian Rupiah 56023 Lakhs(र269.19 Lakhs) of previous year.

Pricol Asia Pte Limited Singapore

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

In the financial year 2018-19 the Company achieved sales of USD 313.27 Lakhs(र21086.83 Lakhs) as against the previous year sales of USD 294.05 Lakhs (र19106.67Lakhs). The company made a profit of USD 515948 (र347.30 Lakhs) during the year2018-19 as against USD 842338 (र547.33 Lakhs) in 2017-18.

Pricol Espana Sociedad Limitada Spain

It is an investment arm of Pricol to acquire companies in Europe and the Americas.During the financial year the company has incurred a loss of EURO 14.92 Lakhs (INR1179.86 Lakhs) as against loss of EURO 11.28 Lakhs (INR 845.13 Lakhs) in 2017-18 whichis mainly due to exchange fluctuations especially on the borrowings amounting to USD 200Lakhs.

The company's wholly owned subsidiary companies are 1) Pricol do Brasil ComponentesAutomotivos LtdA

2) Pricol Wiping Systems Czech s.r.o. and

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

Pricol do Brasil Componentes Automotivos LtdA

Pricol do Brasil Componentes Automotivos LtdA (PdB) manufactures and sells Pumps &Mechanical products to wide range of Domestic and International customers such asVolkswagen Fiat Fiat Power train General Motors Mack Trucks etc.

During the financial year 2018-19 PdB has achieved a sales of BRL 533.56 Lakhs (INR9990.00 Lakhs) as against the previous year sales of BRL 631.50 Lakhs (INR 12781.46Lakhs). PdB incurred a loss of BRL 391.10 Lakhs (INR 7322.74 Lakhs) during the year2018-19 as against BRL 451.63 Lakhs (INR 9140.92 Lakhs) in 2017-18.

Pricol Wiping Systems Czech s.r.o.

During the financial year 2018-19 PWS Czech has achieved a sales of CZK 12480.54Lakhs (INR 38625.67 Lakhs) as against sales of CZK 6739.75 Lakhs (INR 19657.09 Lakhs)in 2017-18 (From Sep 2017 onwards) and registered losses before taxes of CZK 948.68 Lakhs(INR 2936.04 Lakhs) in 2018-19 as against loss of CZK 166.12 Lakhs (INR 484.51 Lakhs) in

2017-18 (From Sep 2017 onwards).

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

During the financial year 2018-19 PWS Mexico had revenue of MXN 344.64 Lakhs(INR1234.75 Lakhs) as against revenue of MXN 256.10 Lakhs (INR 887.80 Lakhs) in 2017-18(From Sep 2017 onwards) and incurred loss of MXN 87.78 Lakhs (INR 314.48 Lakhs) as againstloss of MXN 171.55 Lakhs (INR 594.68 Lakhs) in 2017-18 (From Sep 2017 onwards).

Pricol Wiping Systems India Limited

During the financial year 2018-19 the company has achieved sales of INR 3142.69 Lakhsas against sales of INR 2238.31 Lakhs in 2017-18 (from Sep 2017 onwards). The companyincurred losses to the extent of INR 554.47 Lakhs in 2018-19 as against loss of INR 192.86Lakhs in 2017-18 (From Sep 2017 onwards).

PT Sripri Wiring Systems Indonesia

During the financial year 2018-19 the Company has achieved sales of IDR 107587 Lakhs(INR 518.03 Lakhs) as against sales of IDR 36711 Lakhs (INR 174.56 Lakhs) in 2017-18. TheCompany incurred loss to the extent of IDR 32456 Lakhs (INR 156.28 Lakhs) in 2018-19 asagainst loss of IDR 14699 Lakhs (INR 69.89 Lakhs) in 2017-18.


Pricol Wiping Systems India Limited India (PWS India) and Pricol Espana SociedadLimitada Spain (Pricol Espana) are the Wholly Owned Subsidiary Companies of PricolLimited.

Pricol Espana's Wholly Owned Subsidiary Companies are : 1) Pricol do Brasil ComponentesAutomotivos Ltd A (Pricol do Brasil) 2) Pricol Wiping Systems Czech s.r.o (Pricol Czech)and 3) Pricol Wiping Systems Mexico C.V (Pricol Mexico).

Pricol Limited through Pricol Espana acquired Pricol do Brasil in January 2015 mainlyto expand its market in the auto four-wheeler segment and Brazil was a growing economy atthat time. The company had good facilities and technology in the variable flow oil pumpwhich was the next generation oil Pump. The company had good customer base with customerslike Fiat General Motors Volkswagen Harley Davidson etc. The acquisition was envisagedto provide a solid base for Pricol to enter into the Americas. However within a span offew months of our takeover the Brazilian economy went through a crisis mainly due tovarious political scams and socioeconomic factors and the market suffered a steep fall.The sales nearly went down by 50%. This was totally unforeseen.

Pricol Limited had to keep the operations funded over and above what was originallyenvisaged. In order to overcome this situation it was decided to move to a place wherethe labour cost will be cheaper Pricol do Brasil moved to a new location in 2017-18.Pricol do Brasil also won two new programs from General Motors (GM) and Volkswagen (VW)during this time. The new business from GM will commence at the end of FY 2019-20 and fromVW in the beginning of FY 2020-21.

In the meanwhile in August 2017 Pricol Limited acquired Wiping Business from thePiramal Group with manufacturing facilities located in Prague Czech Republic PueblaMexico and one small plant in Satara India. The main customer was Volkswagen which wascommon to pump business in Brazil. This business was envisaged to expand the footprint ofPricol both in terms of product profile and territory.

Even after shifting the business to a new location in Brazil the business was notpicking up and there were no signs of recovery in the immediate future. In the meanwhilePricol has been pumping in funds to keep the operations running.

While so during 2018-19 Indian business also went through tough period with rupeeweakening combined with shortage of electronic components which is critical to Pricol.Pricol Limited was also expanding to meet the customer needs in 2020-21 to meet the BS VInorms which will be implemented from April 1 2020. This requires huge Capex and Pricolhas to invest in the same.

In this situation it was decided by the Board of Pricol that it is best to divestPricol do Brasil to avoid further losses in the said operations. Pricol appointed Alvarez& Marsal who are the leading M&A advisors in Brazil. There were nearly five tosix probable buyers who went through the profile and visited the plants. But none of themother than discussions with Chroma GP LLC Delaware USA (Chroma) progressed totransaction level. Chroma has good expertise in turning around stressed assets and hassignificant interest in Auto component industry in Brazil.

Chroma GP LLC Delaware USA (Chroma) is a US- based General Partnership in charge ofmanaging Limited Partnerships and their respective Holding and Operational companiesmainly dedicated to Auto-parts Manufacturing. Chroma GP LLC manages several plants andhundreds of employees in the Americas producing high-quality auto-parts. Its clients areamong the main brands in the global vehicles production market. Chroma is not a relatedparty to the company or its promoters.

Chroma is in the process of conducting a detailed due diligence and in the meanwhileexpressed difficulty for them to take over Brasil asset on a standalone basis andapproached Pricol for a bundled offer for purchase along with Wiping Systems facilities inall locations. It was in this context decided by the Board of directors of Pricol keepingin mind the interest of standalone Pricol that Pricol will sell its subsidiary in Spainnamely Pricol Espana which holds the shares of Pricol do Brasil Pricol Czech and PricolMexico along with PWS India which is a wholly owned subsidiary of Pricol Limited.

Further to detailed discussions it was agreed that Chroma will acquire 80.5% of PricolEspana and 74% of PWS India for a consideration of Euro 100000 net of specified loanstaken over. The buyer will take over around र250 crores of specified loan in PricolEspana and its subsidiaries subject to adjustment if any resulting from any obligation ofPricol to indemnify for any unforeseen liabilities/due diligence and further subject tothe approval of specified lenders. Pricol India will continue as a minority shareholderwith an option to exit at a future date.

The proposed sale will help to reduce the cash outflow for Pricol in the coming years .Pricol's senior members team can concentrate on the operations of Pricol which has goodorder books for the coming years. This will help to enhance the value of Pricol for allits stake holders. The major gain is in arresting further cash flow to subsidiaries in thenext few years.

Accordingly the Board of Directors of the Company at its meeting held on 21st June2019 has resolved subject to the approval of shareholders lenders Reserve Bank of Indiaand any other requisite approval(s) if any to sell 80.5% shareholding of Pricol EspanaSociedad Limitada Spain and 74% shareholding of Pricol Wiping Systems India Limited toChroma GP LLC Delaware USA or its affiliates.

The transaction with Chroma is subject to due diligence subject to finalisation ofterms and conditions of transaction documents approval of shareholders lenders andReserve Bank of India which approval are conditions precedent to the closing of thetransaction. If for any reason the Board is required to re-negotiate the terms with Chromaor explore any other option including for sale to any other party who is not a relatedparty will be explored by the Board.



The automotive industry ended up with a marginal growth rate in 2018-19 compared to2017-18. The major reasons for the flat growth was due to higher bank interest ratescoupled with low sentiments in the rural segments. Also there were few mandatoryregulations which was implemented in the two wheeler segment which made the end price moreexpensive thereby contributing to reduction in sale.

The outlook for 2019-20 is that the automotive industry is expected to grow by 4-5% maxcompared to 2018-19 due to pre buying of BS IV vehicles (current vehicles produced) beforeBS VI vehicles gets implemented by April' 2020. The BS VI vehicles are expected to bearound 7% to 15% more expensive compared to current BS IV vehicles produced due tostricter emission norms. The business outlook for Pricol for 2019-20 is totally based onthe BS-VI implementation from April 1 2020.The second half of 2019-20 may witnessslowdown in production due to inventory reduction by all OE manufacturers but at the sametime starting January 2020 there will be requirement for BS-VI components and due toproduction commencing for BS VI platform across all segments of market (2W 3W 4W CV andtractor). Based on the above along with new business wins by Pricol in products likeconnected Vehicle Clusters TFT clusters Fuel Pump module for 2W for meeting BS VIregulations are the major contributors for growth for Pricol starting January 2020.Nevertheless overall industry will see major growth only post July 2020 as per industryexperts based on how the market reacts for increased prices for vehicles in all segmentsconsequent to implementation of BS VI.


2018 saw the first decline in global auto sales after eight consecutive years ofgrowth with demand posting 93.66 million units down 0.6% (provisional figures). Thingscould get worse before they get better with 2019 off to a slow January & February2019 demand posted 13.52 million units down 7.2%. The auto industry faces significantheadwinds especially challenging tariff/trade conditions the policy riddle of Brexitopaque US policy intentions US-Sino trade tensions the confusing EU28 WorldwideHarmonised Light Vehicle Test Procedure (WLTP/CO2) rules and particular concerns for thehealth of key auto markets (especially China).


In South America volumes have been slightly downgraded in the short term owing to acombination of the Argentinian crisis' enduring impact and of some product changesthemselves. The Brazil forecast is for a moderate domestic-led recovery. This putsfull-year 2019 Brazil production levels (estimated) at 2.98 million units or 7.3% aheadof 2018 levels. Overall the South American region will see output grow by 3.8% to 3.56million units led by Brazil. As it has been the case for most of the recent recoveryperiod the positivity is rooted in the interior market health. Even though there has beena positive growth in Brazilian market for 4W we have to wait and see as to how the growthtranslates for the year.


European light vehicle production was down by 1% in 2018 with a 5% decrease during thesecond half of the year. The Seasonally Adjusted Annual Rate (SAAR) of production for theregion had dropped by more than 1 million units during the last 12 months and is at athree- year low. Given that the basis of year-on-year comparisons will get more favorableas we go through 2019 production is expected to fall 6% in the first half and increase 2%during the second half.

The eurozone economy started the second quarter (Calendar year) on a disappointingfooting with the flash PMI falling below consensus expectations to one of the lowestlevels since 2014. The data add to worries that the economy has failed to rebound with anyconviction from one-off factors that dampened activity late last year and continues toshow only very modest growth in the face of headwinds from slower global demand growth andsubdued economic sentiment.


Risk Management Policy for identifying and managing risk at the strategic operationaland tactical level has been adopted by the Company. Our risk management practices aredesigned to be responsive to the ever- changing Industry dynamics. At present the Companyhas 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 weblink there to is Policy.pdf.


The Company's internal control systems have been strengthened taking into account thenature 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 andmanagement policies and procedures.

The Company through its own Corporate Internal Audit

Department carries out periodic audits at all locations and all functions and bringsout any deviation to internal control procedures. The observations arising from audit areperiodically reviewed and compliance ensured. The summary of the Internal Auditobservations is submitted to the Audit Committee. The Audit Committee at its meetingsregularly reviews the financial operating internal audit & compliance reports toimprove performance. The heads of various monitoring/operating departments are present forthe Audit Committee meetings to answer queries from the Audit Committee.


During the year the Company has not accepted/renewed any fixed deposit from public. Thetotal deposits remained unpaid or unclaimed as at 31st March 2019 is Nil. There is nodefault in repayment of deposits or payment of interest thereon during the year. TheCompany undertook several steps to keep a control over borrowings and cost of borrowings.ICRA has revised credit rating for Long term fund based facilities to 'BBB (Negative)' andfor short term fund based & non fund based facilities to 'A3+'. Previous year 2017-18credit rating for long term fund based facilities 'A-' and for short term fund based &non fund based facilities 'A2+'.


All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of the business. During the year therewere no materially significant related party transactions made by the Company withPromoters Key Managerial Personnel or other designated persons which may have potentialconflict with the interest of the Company.


As per the provisions of Section 149 of the Companies Act 2013 Regulation 25 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Membersappointed Independent Directors as mentioned below:

Name of Independent Director Period of Appointment
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 26 th May 2021
Mr.S.K.Sundararaman Upto 29 th May 2023

Mr.R.Vidhya Shankar and Mr.Suresh Jagannathan Independent Directors have given theirconsent for their reappointment as Independent Director for the second term of 5 yearsfrom 1st August 2019 to 31st July 2024. The Board recommends their reappointment asIndependent Directors. Approval of the members for reappointment of the said directors byspecial resolutions were sought through postal ballot notice dated 30th May 2019. Theresults of the voting by postal ballot will be announced on or before 23rd July 2019.

Mr.G.Soundararajan due to his other unavoidable commitments and pre-occupationsinformed his inability to continue as a Director and did not opt for the reappointment.The Board wish to place its appreciation for the valuable services rendered by him duringhis tenure of office as Independent Director of the Company.

Mr.P.Shanmugasundaram was appointed as an Additional Director (Independent) of theCompany by the Board of Directors at their meeting held on 15th June 2019 and whose termof office expires at this Annual General Meeting ('AGM'). The Board recommends theappointment of Mr.P.Shanmugasundaram as an Independent Director of the Company to holdoffice for a term of 5 (five) consecutive years commencing from 15th June 2019 to 14thJune 2024 and suitable resolution is included in the AGM notice.

Mr.K.Ilango was appointed as an Additional Director (Independent) of the Company by theBoard of Directors at their meeting held on 15th June 2019 and whose term of officeexpires at this Annual General Meeting ('AGM'). The Board recommends the appointment ofMr.K.Ilango as an Independent Director of the Company to hold office for a term of 5(five) consecutive years commencing from 15th June 2019 to 14th June 2024 and suitableresolution is included in the AGM notice.

Mr.V. Balaji Chinnappan was appointed as an Additional Director of the Company by theBoard of Directors at their meeting held on 15th June 2019 and whose term of officeexpires at this Annual General Meeting ('AGM'). The Board recommends the appointment ofMr.V.Balaji Chinnappan as a Director liable to retire by rotation.

The Board of Directors at the aforesaid meeting appointed Mr.V.Balaji Chinnappan asChief Operating Officer (Whole Time Director) for a period with effect from 15th June 2019to 31st March 2022 and fixed the remuneration payable to him as set out in the text of theresolution in the AGM notice subject to the approval of the shareholders. The Boardrecommends the appointment & remuneration payable to him.

Mr. Vikram Mohan a Non- Independent Director retires by rotation at the ensuing AnnualGeneral Meeting and is eligible for reappointment.

The Board of Directors at their meeting held on 19th March 2019 reappointed Mr.VikramMohan as Managing Director for a period of three years with effect from 1st April 2019 to31st March 2022 and fixed the remuneration payable to him as set out in the text of theresolution in the AGM notice subject to the approval of the shareholders. The Boardrecommends the appointment & remuneration payable to him.


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

The Board's performance was evaluated based on the criteria like Structure GovernanceDynamics & Functioning Approval & Review of Operations Financials InternalControls etc.

The performance of the Independent Directors as well as Individual Directors includingthe Chairman of the Board were evaluated based on the evaluation criteria laid down underthe 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 referencespecified by the Board to the said Committee. The Board of Directors were satisfied withthe evaluation process which ensured that the performance of the Board its CommitteesIndependent Directors and Individual Directors adhered to their applicable criteria.


The Key Managerial Personnel of the Company as stipulated under Companies Act 2013 areMr. Vikram Mohan Managing Director Mr.K.Ramesh Chief Financial Officer &Mr.T.G.Thamizhanban Company Secretary.

Mr.K.Ramesh Chief Financial Officer had been appointed as Key Managerial Personnelwith effect from 7th February 2019 in place of Mr.J.Sridhar.


M/s. VKS Aiyer & Co. Chartered Accountants Coimbatore (ICAI Firm Registration No:000066S) the Statutory Auditors of the Company were appointed as Statutory Auditors ofthe Company for a term of 5 years from the conclusion of 7th Annual General Meetinguntil the conclusion of the 12th Annual General Meeting of the Company to be held in thecalendar year 2023.

Statutory Auditors M/s. VKS Aiyer & Co. Chartered Accountants have confirmedtheir eligibility for continuing as Statutory Auditors of the Company.


The Board of Directors at their meeting held on 15th June 2019 appointedMr.G.Sivagurunathan Cost Accountant as the Cost Auditor for conducting the Cost Auditfor the financial year 2019-20. A resolution seeking members' ratification of theremuneration payable to Cost Auditor is included in the AGM notice. The Cost Audit Reportwill be filed within the stipulated period. The Company is maintaining the Cost Records asper Section 148(1) of the Companies Act 2013.


The Company appointed M/s.P.Eswaramoorthy and Company Company Secretaries to undertakethe Secretarial Audit of the Company for the financial year 2019-20. The Secretarial AuditReport for the financial year 2018-19 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 ofenhancing value to the society and the environment around us. The contribution in thisregard has been made to the registered trust which is undertaking these schemes inaddition to the CSR activities directly undertaken by the Company. The Annual Report onCSR activities is annexed herewith as "Annexure B".


Monthly Goodwill meeting with the Operators are being conducted to redress the shopfloor issues. This has ensured smooth functioning of the Plant operations. Periodicalinteractions with the union office bearers and the line operators have improved theconducive Industrial Relations. Based on the business exigencies some of the operatorsfrom Coimbatore Plants were transferred to the Plants located outside Tamilnadu. Though afew operators have accepted the transfer order others refused to accept and the issue ispending before the Labour Department. However there is no disturbance in the shop floorsof Plant-1 and Plant-3. The number of people employed as on 31st March 2019 is 5365.


In accordance with the provisions of Section 134(3)(c) & (ca) of the Companies Act2013 the Directors would like to state that :

a) in the preparation of annual accounts for the financial year ended 31st March 2019the applicable accounting standards have been followed;

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

c) they had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets 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 2019on a going concern basis;

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

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


1. Independent Directors have given declarations that they meet the criteria ofindependence as provided in Section 149(6) of the Companies Act 2013 and SEBI (ListingObligation and Disclosure Requirements) Regulations 2015.

2. Salient features of the Nomination and Remuneration Policy is disclosed in theReport on Corporate Governance.

3. Qualification reservation or adverse remark or disclaimer made by Statutory Auditor& Secretarial Auditor in their report : NIL

4. The particulars of Loans Guarantees and Investments made by the Company underSection 186 of the Companies Act 2013 are given in Note No. 2.66 to the FinancialStatements.

5. Particulars of contracts/arrangements entered into by the company with relatedparties referred to in sub-section (1) of section 188 of the Companies Act 2013 includingcertain arms length transactions under third proviso thereto :

All the related party transactions entered by the Company during the financial year2018-19 are in the ordinary course of business and at arm's length. There is no materialcontract or arrangement.

6. There are no significant and material orders passed by theRegulators/Courts/Tribunals which would impact the going concern status and the Company'soperations in future.

7. Material changes and commitments affecting the financial position of the companywhich have occurred between the end of the financial year of the company to which thefinancial statements relate and the date of the report;

Details are provided in the Directors' Report under the heading "Sale ofSubsidiary Company(s)".

8. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 (3) of the Companies (Accounts) Rules 2014 is annexed herewith as "AnnexureC".

9. Extract of the Annual Return

The extract of the Annual Return in Form No.: MGT-9 is annexed herewith as "AnnexureD" and available at the Company's website

10. Particulars of Employees

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 employeesof the Company is annexed herewith as "Annexure E".

11. Disclosures of transactions of the listed entity with any person or entitybelonging to the promoter/promoter group which hold(s) 10% or more shareholding in thelisted entity in the format prescribed in the relevant accounting standards for annualresults.

Details are given in Note No.2.65 to the Financial Statements.

12. Number of other board of directors or committees in which a director is a member orchairperson including separately the names of the listed entities where the person is adirector and the category of directorship

Disclosed in the Report on Corporate Governance (Annexure "F" pointno: 2)

13. Detailed reasons for the resignation of an independent director who resigns beforethe expiry of his tenure along with a confirmation by such director that there are noother material reasons other than those provided.

There is no resignation by any of the Independent Directors during the year 2018-19.

14. Details in respect of frauds reported by auditors under section 143(12) of theCompanies Act 2013.

During the year under review there were no frauds reported by the auditors to theAudit Committee or the Board under section 143(12) of the Companies Act 2013.

15. Key Financial Ratios (Explanations for significant change i.e. change of 25% ormore as compared to the immediately previous financial year) :

Key Financial Ratios 2018-19 2017-18 % Change Explanations if any
i) Debtors Turnover 6.60 6.19 7 NA
ii) Inventory Turnover 5.20 4.88 7 NA
iii) Current Ratio 0.95 1.02 (7) NA
iv) Interest Coverage Ratio 5.65 13.79 (59) Provision for impairment of noncurrent Investments decrease in Sale of land held as Stock-in-trade Increase in Borrowings and corresponding increase in Finance cost are the key factors for changes.
v) Debt Equity Ratio 0.41 0.14 193
vi) Operating Profit Margin (%) 2.23 8.40 (73)
vii) Net Profit Margin (%) or sector-specific equivalent ratios as applicable. (17.56) 4.54 (487)

16. Details of any change in Return on Net Worth as compared to the immediatelyprevious financial year along with a detailed explanation thereof.

Particulars 2018-19 2017-18 % Change Explanations if any
Return on Net Worth (30.00) 6.24 (581) Provision for impairment of non-current Investments decrease in Sale of land held as Stock-in-trade Increase in Borrowings and corresponding increase in Finance cost are the key factors for change.

17. List of all credit ratings obtained by the entity along with any revisions theretoduring the relevant financial year for all debt instruments of such entity or any fixeddeposit programme or any scheme or proposal of the listed entity involving mobilization offunds whether in India or abroad.

Disclosed under the heading "Finance" in the Directors Report.


Your company reaffirms its commitment to good corporate governance practices. Thecompany complies with corporate governance requirements specified in regulation 17 to 27and clauses (b) to (i) of sub-regulation(2) of regulation 46 of the SEBI (ListingObligations 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 Reporthas been annexed herewith as "Annexure F".

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

Practicing Company Secretary's Certificate regarding compliance of conditions ofCorporate Governance is made a part of this Directors' Report. All the Board Members andSenior Management personnel have affirmed compliance with the code of conduct for the year2018-19.


Management Discussion and Analysis forming part of this Report is in compliance withSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and suchstatements may be "forward-looking" within the meaning of applicable securitieslaws and regulations. Actual results could differ materially from those expressed orimplied. Important factors that could make a difference to the Company's operationsinclude economic conditions affecting demand/supply and price conditions in the domesticand overseas markets in which the Company operates changes in the Government regulationstax laws and other statutes and other incidental factors.


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

For and on behalf of the Board
Vanitha Mohan
Coimbatore Chairman
21st June 2019 (DIN: 00002168)