With this strategic partnership, Pricol plans to expand its sensors portfolio in India and be ready for the upcoming Bharat Standard (BS) VI emission norms which the Indian government is set to implement by April 1, 2020.
14 Oct 2017 | 17843 Views | By Kiran Bajad
Three years before BS VI emission norms kick in, Pricol readies to cater to the two- and three-wheeler segments with o2 sensors licensed from Kerdea Technologies.
The Coimbatore-based Pricol has entered into a new exclusive licensing agreement with Kerdea Technologies of the US for oxygen (o2) sensors. According to ...
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Three years before BS VI emission norms kick in, Pricol readies to cater to the two- and three-wheeler segments with o2 sensors licensed from Kerdea Technologies.
The Coimbatore-based Pricol has entered into a new exclusive licensing agreement with Kerdea Technologies of the US for oxygen (o2) sensors. According to the company, with Kerdea’s patented technology in oxygen sensors and Pricol’s manufacturing capabilities, this product will be locally manufactured to cater to combustion engine applications in the two-wheeler and three-wheeler vehicle segments in India.
With this strategic partnership, Pricol plans to expand its sensors portfolio in India and be ready for the upcoming Bharat Standard (BS) VI emission norms which the Indian government is set to implement by April 1, 2020. The oxygen or o2 sensor is designed to constantly monitor the oxygen content in the exhaust gases from the engine. o2 sensors help maintain the right air-fuel mixture so that the engine runs efficiently with emissions well within the regulatory norms.
Commenting on the MoU, Vikram Mohan, managing director, Pricol said, “In a fast-changing environment, it is critical to draw upon the highest level of expertise to design the technologies of tomorrow. We are excited to partner with Kerdea to bring innovative, ground-breaking technologies to our Indian customers. This licencing partnership will contribute to our constant efforts to deliver robust, technologically advanced and cost saving products in India. After the rollout of BS VI norms by 2020, Pricol expects to add over US$ 60-70 million to its top line with a healthy EBITDA margin with the products developed through Kerdea’s technology.”
Signing the MoU, Dr Douglas M Carnes, CEO, Kerdea Technologies, said, “We are extremely happy to partner with Pricol to create a transformation in the o2 sensor market and thereby create a pollution-free India with the use of o2 sensors. This licensing partnership will help us expand our footprint in India by redefining fuel efficiency and emission control and thereby improve product performance for the two-wheeler and three-wheeler vehicle segment in India.”
Pricol supplies its products to the two-, three- and four-wheeler, CV, tractor, and construction and industrial tooling segments worldwide. The company has 30 patents, eight manufacturing units, and five business offices worldwide including in India, Indonesia, Brazil, USA, Germany, Singapore, Thailand and Japan.
COMPREHENSIVE SENSOR PORTFOLIO
Pricol already has a wide range of sensors product portfolio including temperature sensors, pressure sensors, position sensors and fuel level sensors. It also produces pressure, temperature, position, oil level and safety switches and nearly 19 percent of its revenue come from the sensors and switches portfolio.
Speaking to Autocar Professional, Sundararaman G, president, Pricol, said, “The Kerdea partnership will help Pricol to add one of the most important product oxygen sensors to our portfolio. With Kerdea's patented technology in oxygen sensors and Pricol's manufacturing capabilities, this product will be made ready to cater to combustion engine applications in the two-wheeler and three-wheeler vehicle segments in India. This will enable us to be fully ready when India switches to BS VI emission norms in 2020.”
The oxygen sensors, also known as Lambda sensors or o2 sensors, are among the most sensitive and critical components of a combustion engine (Petrol) with the fuel injection system controlled by Engine Control Module (ECM). An oxygen sensor generates a voltage signal, or changes its resistance, proportional to the amount of oxygen in the exhaust gas and sends this signal to the on-board computer or ECM. The ECM uses feedback from the oxygen sensor, fitted on the exhaust, to determine whether the air-fuel mixture is rich (more fuel + less air) or lean (less fuel + more air) and then make adjustments to desired/ optimal levels – Economy or Power modes as decided by OEMs.
The Kerdea o2 sensor combines the resistive-based micro-electro mechanical systems (MEMS) technology and with state-of-the-art thick film technologies to produce the smallest, fastest and efficient oxygen sensor available in the market. In comparison with competitors’ sensors, 17 percent less emission is observed with Pricol- Kerdea sensor, due to its fast switching cycles.
Speaking on the commercial use and local manufacturing of the o2 sensor, he said, “There already exists a market for o2 sensors in higher cubic capacity motorcycles after BS IV in India. But when BS VI emission norms are enforced in 2020, the entire two-wheeler segment will need o2 sensors. Pricol is expected to be ready to start manufacturing in Q4 this year and commercial sale is expected to begin in Q1 next year.”
Apart from o2 sensors, Pricol aims to position itself as a big supplier of a new range of sensors, primarily in line with the requirement of BS 6 norms like high-temperature sensor and high-pressure MEMS-based sensors. It will introduce a park assist system to comply with the legislative requirement of a reverse park alarm system. This will be done through local production of ultrasonic sensors along with buzzer and display units. With its expansive range of sensors, Pricol will target both domestic customers and the export markets.
BUYS OUT PMP AUTO WIPER SYSTEM BIZ
The company has also acquired 100 percent of the wiping systems business of the Ashok Piramal Group’s PMP Auto Components. PMP had acquired this business in 2008 from Magna and is currently operating manufacturing facilities in the Czech Republic, Mexico, and India.
The business supplies wiper motors to global OEMs including Volkswagen, Fiat, John Deere, Skoda, Audi and Seat and has a turnover of around Rs 250 crore currently with a confirmed order book and revenue visibility of more than Rs 450 crore in FY2020.
The acquisition will help Pricol diversify its product offerings and provide access to manufacturing facilities in Europe and North America, where it currently does not have a footprint, helping it cement its status as a global supplier. The acquisition will enable Pricol to increase its presence with PV OEMs, thereby diversifying revenue streams and opening up multiple cross-selling opportunities.
The wiper systems business is said to be immune to the global shift to EVs. Commenting on the acquisition, Vikram Mohan, MD, Pricol, said: “This acquisition ties in well with our long-term strategy of driving growth and achieving product diversification. We believe that wiping systems is a growing product segment which would be largely immune to the ever-changing technological trends in the automotive sector and the eventual move to electric vehicles. With a manufacturing presence in the Czech Republic and Mexico, this acquisition fits in perfectly with our ongoing plans to establish a presence in these regions. We are also very excited about the potential of this business in India and confident of extracting synergies.”
Harsh Piramal, MD of PMP Auto Components, said: “PMP has decided to divest this business as part of its strategic portfolio reallocation where this business has been determined as non-core. We are happy that an automotive-focused group like Pricol is taking over this business and hope that they will take it to further heights.”
PLUGGING PRODUCT GAPS IN PORTFOLIO
In an interview with Autocar Professional last year, Vikram Mohan had said, "As part of our aspirations to go global and fuel future growth, the company is aggressively looking at 2-3 acquisitions in Europe and the US. The acquisitions would be made to plug the gaps in Pricol's product portfolio. To fill in those gaps and gain entry into the larger European market, Pricol is eyeing two acquisitions in Europe (one each for pumps and sensors for CV, tractor, off-road instrument clusters) and one instrument cluster company in the USA.
“The criteria to buy a company are based on five parameters including financial health, customer base, local management expertise, technology roadmap and quality of manufacturing asset. Unless three of them are complete, we won’t buy the company. It took us 2-3 years to identify the right assets," he had said.
(This article was first published in the August 1, 2017 print edition of Autocar Professional)