Kinetic Motors to retire debt with M&M cash

31 July 2008

Sulajja Firodia Motwani, joint managing director, says the company would work towards operationalising its branding plans over the next two months after the transaction involving the transfer of the business to a new Mahindra & Mahindra-led joint venture company (See: M&M in aquisition deal with Kinetic Motors), expected to be named Mahindra-Kinetic Scooters.

"The Kinetic brand for two-wheelers would be licensed to the new company. The Kinetic brand for all other segments such as auto components, elevators and infrastructure areas would continue to belong to Kinetic," she said.

She added that the Rs110 crore cash consideration M&M would pay it, would be be used by Kinetic Motor to clear its liabilities, while the 20-per cent minority stake in the new company would be long-term value creation for Kinetic shareholders.

Motwani will be the non-executive director in the new company to be led by Anoop Mathur from Mahindra & Mahindra, who will spearhead M&M's entry into the two-wheeler segment. Mathur is president designate of the Mahindra & Mahindra two-wheeler business.

According to Newswire 18, M&M said it will need to hike vehicle prices and the time frame is undecided. 

According to CNBC-TV18's Swati Khandelwal, the structure of the deal is such that Mahindra & Mahindra and Kinetic will jointly set up the new company, Mahindra-Kinetic Scooters.