Firodia Motwani Gets 20% Stake And Rs 110 Cr As Consideration Amount

Arun Firodia-promoted Kinetic Motors Company Ltd (KMCL), which is reeling under persistent losses over the last few years, has sold its business assets to automotives major Mahindra & Mahindra Ltd (M&M) for a consideration of Rs 110 crore. Additionally, Kinetic Motors will get a 20 per cent equity in a new company which M&M will form to take over the assets. Kinetic Motors managing director Sulajja Firodia Motwani will be a nonexecutive director in the new company.
The media and markets had got the buzz about the proposed takeover some three months ago, though Motwani had dismissed it as “completely speculative”. A formal announcement from M&M on Wednesday morning however put all speculation to rest.
M&M said its board of directors gave the nod to the deal which will enable it to design and market a range of scooters, value-engineered motorcycles and high-end motorcycles for the Indian and global markets, helping it establish a robust, end-to-end two-wheeler business in every segment of the industry.
“The acquisition of the business assets of KMCL is a defining moment in the history of Mahindra as it will give us an opportunity to emerge as a full-range player with a presence in almost every segment of the automobile industry. KMCL is a strategic fit with our overall two-wheeler strategy. The strong in-house design and development competencies provided by Mahindra Engineering Services (MES) and the recent acquisition of Italy-based design house, Engines Engineering, coupled with KMCL’s expertise will enable us to assume a significant position in the rapidly growing Indian and global two-wheeler market,” said Anand Mahindra, vice-chairman and managing director, Mahindra Group.
Anoop Mathur, presidentdesignate for Mahindras’ twowheeler business, will spearhead this new venture.
“KMCL is a company with a rich heritage spanning more than three decades. Over the years, we have introduced several new concepts such as the Luna and India’s first gearless scooter which have revolutionized the two-wheeler industry. Hence, we are delighted to associate with Mahindra, another pioneering automobile company with a rich legacy which will add long term value to the business and take it to greater heights,” Motwani said.
Within the overall twowheeler strategy, scooters will form M&M’s entry point into the Indian market and will be an important part of the company’s overall two-wheeler product portfolio. There are several macro environmental trends which make the scooter market especially attractive to Mahindra. These include a younger, more affluent customer base with a significant number of empowered women and increased scooter demand in tier-2 cities and small towns. M&M is strongly positioned to cater to this demand, given the company’s significant presence and brand equity in these markets.