Pricol: On a roll

Anup Menon

GIVEN the rates on offer, the fixed deposit programme of Premier Instruments and Controls (Pricol) may be a good investment option for investors with a moderate risk profile.

The rates are comparable to other investment options with the same risk profile. The company's fundamentals are fairly stable. The gearing levels are steady and have improved over the last few years. The ability to cover interest payments is also fairly good. In this backdrop, the company is not likely to face problems servicing its fixed deposit base.

Investors can consider the one-year option under both the cumulative and fixed deposit schemes. The longer tenures can be avoided given the low level of incremental benefit available to the investor.

Pricol's fixed deposit programme is open for investment. The tenure for the fixed deposit scheme is one, two and three years respectively, with interest rates of 12, 12.25 and 12.50 per cent respectively. For the same periods, the cumulative deposit scheme yields around 12.55, 12.82 and 13.10 per cent respectively.

The minimum investment for all options under both schemes is Rs 10,000. Additional investments can be made in multiples of Rs 1,000 each. Deposits are accepted at the company's registered office at Premier Instruments and Controls, Post Box No. 6331, 1087, Avanashi Road, Coimbatore -- 641 037.

Pricol is a major player in the domestic auto ancillary industry. The company is one of the many ventures of the Premier group. Its product profile includes dashboards and oil pumps. The slowdown in the user-industry in 1997 and 1998 affected the company's performance. This is evidenced by the lower levels of capacity utilisation in this period.

The company has a firm grip over the original equipment market. However, a key challenge would be its ability to retain customers considering that competition is increasing and the end-user market is not growing as fast.

This is where the company's tie-up with Denso Corporation, Japan, could prove useful. The product quality is likely to be high and the company will also get a toehold in the international market, thereby diversifying the risks of concentration in a single market. Overall, the company's prospects in the near- to medium-term appear fairly bright.

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Pricol's financial performance for the quarter ended September 2000 was fairly good. Sales revenues rose 23 per cent to Rs 60.66 crore compared to the previous corresponding period. In contrast, operating margins fell 20 per cent to 17.5 per cent. Post-tax earnings declined marginally by around 6 per cent to Rs. 3.06 crores.