Paul Noronha

Prized assets: (From right) Ms Sulajja Firodia Motwani, Managing Director, Kinetic Motor; Mr Anand Mahindra, Vice-Chairman and Managing Director, Mahindra Group; and Mr Bharat Doshi, Executive Director & Group Chief Financial Officer, Mahindra & Mahindra Ltd, at a press meet in Mumbai on Wednesday. —

Our Bureau

Mumbai, July 30 Ending months of speculations about its entry into the two-wheeler sector, utility vehicles and tractor major Mahindra & Mahindra on Wednesday announced the acquisition of scooter maker Kinetic Motor Company.

M&M will pay Rs 110 crore cash and a 20 per cent stake in a new company – Mahindra Kinetic Scooters and Motorcycles Ltd – to be formed to acquire the business assets of Kinetic. M&M will hold 80 per cent stake in the new company.

The Pune-based Kinetic has its main manufacturing plant in Pitampur in Madhya Pradesh.

Mahindra officials clarified that the company will not take over the liabilities of Kinetic and the acquisition cost of Rs 110 crore is subject to the closing of due diligence.

Mr Anand Mahindra, Vice-Chairman and Managing Director, M&M, is expected to head the board of the new company and Ms Sulajja Motwani, Managing Director of Kinetic Motors, will be a non-executive director in the new company. Mr Anoop Mathur, President Designate, Two-Wheeler Sector, Mahindra group, will spearhead the new business, the company said in a statement.

Mr Anand Mahindra said, “It will give us an opportunity to emerge as a full range player with a presence in almost every segment of the automobile industry. Kinetic is a strategic fit with our overall two-wheeler strategy.”

Kinetic Motors has a long-term debt of Rs 60 crore and an accumulated loss of Rs 140 crore. Kinetic Motors’ existing stakeholders, including Taiwan-based SYM, will have a pie of the 20 per cent stake in the new company .

Ms Motwani said that Kinetic will gain about Rs 110 crore, 20 per cent stake in the new company (valued at Rs 27.50-29.50 crore) and Rs 40 crore worth real estate assets by way of the transfer of assets. “Even after repaying our debts, we will be left with some surplus cash. Kinetic, as a group, would like to focus on our auto component business and infrastructure business,” she said.

Kinetic Motor’s Rs 10 shares closed 5 per cent higher on the NSE today at Rs 20.90.

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