Kinnetic Automobile Company Case Study

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Kinetic Automobile Company was founded in 1972 with a market cap of Rs 154.85 Cr by a known philanthropist and industrialist HK Firodia, who was known as the doyen of Indian automobile industry.
The company was incorporated as a private limited company on 8th October 1975 and commenced production in the same year. It was transformed into a public limited company on 1st October1975. The Company started manufacturing Luna mopeds and business in leasing and hire purchase financing in 1977. The technical know-how for the manufacture of engine and gear box including drawing material specifications were purchased from Jaya Hind Motors on payment of Rs.1 lakh.
Kinetic Engineering Limited is a manufacturer as well as a supplier of automotive. Kinetic
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key Products/Revenue Segments include Gear Boxes which contributed Rs 29.33 Cr to Sales Value (50.69% of Total Sales), Stearing Arm/Slip Yoke which contributed Rs 14.20 Cr to Sales Value (24.54% of Total Sales), Auto Components which contributed Rs 10.70 Cr to Sales Value (18.49% of Total Sales), Processing Charges which contributed Rs 2.01 Cr to Sales Value (3.47% of Total Sales), Engines (Internal Combustion) which contributed Rs 1.05 Cr to Sales Value (1.81% of Total Sales), Front Forks which contributed Rs 0.49 Cr to Sales Value (0.85% of Total Sales), Other Operating Revenue which contributed Rs 0.06 Cr to Sales Value (0.11% of Total Sales), for the year ending …show more content…
Mahindra and Mahindra holds 80% stake in the new firm against a payment of INR 110 Crore. This puts the valuation of KMCL’s two wheeler business at INR 137 Crore. The deal will enable Mahindra to design and market a range of scooters, value engineered motorcycles and high end motorcycles for the Indian and Global markets. Mahindra got indirectly involved in motor racing with the acquisition of Italy based engineering and design from engines engineering in 2008. This is because Kinetic had previously acquired the Italian firm Muegello and by acquiring Kinetic Mahindra found a way into motor racing. For KMCL point of view the whooping deal of INR 100 Crore would be used to repay liabilities of Kinetic motors which has term loads of around INR 60 Crores.
Kinetic Engineering and Kinetic Motors
In 2011 Kinetic Engineering board had approved the merger of Kinetic Motors with a swap ratio of 31 shares of Kinetic Motors for every 4 of Kinetic Engineering. The merged entity held Kinetic Motor’s 17 % stake in Mahindra two wheelers. In September 30 quarter of 2011, Kinetic Engineering losses jumped more than threshold from a year ago to INR 7 Crores. Its net sales fell to INR 21.27 Crores from INR 24.54 Crores a year earlier. In fiscal 2010-2011, Kinetic Engineering had reported a net loss of INR 10.03 Crores with a sale value of INR 90.03

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