MUMBAI: Kinetic Motor Company today said it will extend the brand licence agreement with Kinetic Engineering for the use of ‘Kinetic’ brand and will also sub-licence the brand to Mahindra Two Wheelers.

The pact would be extended for another 25 years with effect from April 1, 2009 and the sub-licensing would also be for 25-year-period, Kinetic Motor said in a filing to the Bombay Stock Exchange.

“For renewal of the said Brand Licence Agreement, KMCL has agreed for a consideration of Rs 7.75 crore to be paid to KEL,” the filing added.

While Rs 2.75 crore has to be paid on or before March 31, 2010, the rest would by way of issuing five lakh redeemable cumulative preference shares of Rs 100 each, fully paid up, in the share capital of the company.

Further, Kinetic Motor would invest up to Rs 29.5 crore in equity shares of Mahindra Two Wheelers Pvt Ltd, subject to shareholders nod and other approvals. These decisions were taken at the Kinetic Motor’s board meeting held today.

Mahindra Kinetic Scooters and Motorcycles, the newly formed joint venture between utility vehicle leader Mahindra & Mahindra and two-wheeler manufacturer Kinetic Motors, wants to roll out scooters and explore opportunities to become a volume player.

“We wish to launch at least two scooters in the first year of operation. The joint venture will continue to make Kinetic’s existing line of products. We have a capacity of 3-3.5 lakh units each and can be expanded by another 1.5 lakh units,” a source said.

Sulajja Motwani, managing director of Kinetic Motors, told The Telegraph, “We hope to become a volume player in the segments we operate. We will share more details once the due diligence process by Mahindra is over.”

Kinetic has a manufacturing facility at Pitampur in Madhya Pradesh where it produces about 90,000 units a year, including two-wheelers for export.

Sources say Mahindra-Kinetic will also foray into the performance segment of motorcycles. Pune-based Kinetic Motors currently sells its two 100cc bikes — the Shakti and the CK — both of which are meant for the rural market.

“Our aim is to become a volume player in the next three to four years in both the segments. In motorcycles, we will get into the performance segments (125cc and 150cc). Given Mahindra’s strong foothold in the rural market, we will tap it and try to price our products more competitively,” the source said.

Some of the products will carry a Mahindra-Kinetic logo. Last month, Mahindra announced the acquisition of Kinetic Motors. According to the agreement, Mahindra will pay Rs 110 crore to acquire the assets of Kinetic Motors. Mahindra will hold an 80 per cent stake in the new company, while the balance will be held by Kinetic.

Mahindra officials said the company would not take over the liabilities of Kinetic Motors, and the acquisition cost of Rs 110 crore was subject to the closing of due diligence.

MUMBAI: Mahindra & Mahindra, Kinetic Motors to form JV for manufacturing two-wheelers; M&M to hold 80 pc, Kinectic 20 pc in the JV.

Mahindra, India’s top utility vehicle and tractor maker, would hold an 80 per cent stake in the new firm, which would be called Mahindra Kinetic Ltd, with Kinetic holding the rest, the source said.

Talks between Mahindra & Mahindra and Kinetic Motor have been going on for quite some time now and the Mumbai-based auto major was reportedly carrying out due diligence to acquire the two-wheeler maker.

For Mahindra & Mahindra, the acquisition would pave way for entering into the two-wheeler business, the area it has been looking at for some time now.

Putting up a greenfield project is much more expensive and time-consuming than acquiring a ready-made firm like Kinetic Motor since it has been in business for over three decades. Besides, Kinetic offers a full product portfolio ranging from mopeds to scooters to motorcycles, sources said.

Kinetic Motor, however, was incurring losses for some years now. The company had recorded a net loss of Rs 18 crore in the fourth quarter ended March 31, 2008, slightly below from the third quarter of the previous fiscal when it had posted Rs 19.75-crore net loss.

Kinetic Motor’s promoters, the Firodia family, owns 54.83 per cent in the company. The firm needs funds to revamp its operations and it was looking for raising anything between USD 100-125 million.

MUMBAI: Pune-based two-wheeler maker Kinetic Motor may not sell stake to Mahindra and Mahindra at all, and instead may go in for an alliance to cash in on the auto major’s huge network and expertise.

“The Kinetic Motor Board will meet on Wednesday and there the matter will come up for discussion. The company may not at all sell any stake to M&M, but forge an allaince with them,” sources close to the development told PTI.

The talks between Mahindra & Mahindra and Kinetic Motor have been going on for quite some time now and the Mumbai-based auto major was reportedly carrying out due diligence to acquire the two-wheeler maker.

For Mahindra & Mahindra, the acquisition would have paved the way for entering into the two-wheeler business, the area it has been looking at for some time now.

Putting up a greenfield field is much more expensive and time-consuiming than acquiring a ready-made firm like Kinetic Motor since it has been in the business for over three decades. Besides, Kinetic offers a full product protfolio ranging from mopeds, scooterettes, scoters to motorcycles, sources said.

Kinetic Motor, however, was incurring losses for some years now. The company had recorded a net loss of Rs 18 crore in the quarter ended March 31, 2008, slightly below from the third quarter of the previous fiscal when it had posted Rs 19.75-crore net loss.

Kinetic Motor’s promoters, the Firodia family, owns 54.83 per cent in the company. The firm needs funds to revamp its oeprations and to fund that it was looking for raising anything between USD 100-125 million.

Source: economictimes.timesofindia.com