Two-wheeler company Kinetic Motor Co. Ltd is in talks with a private equity fund and other automobile makers, in addition to Mahindra and Mahindra Ltd, to raise about Rs150 crore and try revive its flagging fortunes.
The Firodia family, which owns the company, is not averse to becoming junior partners and hold a minimum of 26% stake as they want to focus on their auto components business, said a person intimately familiar with the situation. The Pune-based family holds nearly 55% of Kinetic Motor through personal holdings and group firms. Of this, 43% is owned by auto parts maker Kinetic Engineering Ltd.
Kinetic’s spokesperson declined to comment.
In the past three years, Kinetic has raised Rs52 crore through preferential share placements to Taiwanese scooter maker Sanyang Industry Co. Ltd and the Reliance-Anil Dhirubhai Ambani Group, and an undisclosed amount from Citicorp Financial India Ltd through convertible debentures. It also tied up with foreign two-wheeler makers Italjet Moto SpA and Sanyang to introduce new products. But its market share remains at less than 1%, and it has posted losses for 19 straight quarters.
“Kinetic Motor is sub-scale in this market and needs to boost volumes,” said this same person, who didn’t want to be identified. The company’s promoters are “looking for someone with financial muscle to help revive the business”.
The Firodias recently hived off the auto parts business to Kinetic Engineering and other group companies, and moved the two-wheeler business to Kinetic Motor. They signed several alliances for auto electrical parts and started a design services business, and plan to make gearboxes for the Tata Nano, the Rs1 lakh car by Tata Motors Ltd.
“The future for the Kinetic group is in the auto parts business,” this person said. “Reviving the two-wheeler business will also help the auto parts business indirectly since Kinetic Motor is the largest customer of Kinetic Engineering.”
Ammar Master in Mumbai contributed to this story.