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Kinetic Motors account expected to move following acquisition by M&M

04-November-2008
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Kinetic Motors account expected to move following acquisition by M&M

In July 2008, Mahindra &Mahindra (M&M) had announced the acquisition of 80 per cent Pune-based two-wheeler maker Kinetic Motor Company Ltd in a Rs 110-crore all-cash deal (subject to closing due diligence). M&M has formed a new company – Mahindra Kinetic Scooters & Motorcycles Ltd – to execute this acquisition, where Kinetic has a 20 per cent stake.

However, nothing else was known about this new company’s marketing and communication plans.

An industry source now informs that it is very likely that the agencies on board for Kinetic Motors might lose their businesses to M&M’s agencies. When exchage4media tried to contact officials from Kinetic Motors, nobody was available for comments.

The current agencies on board for the Kinetic Motors business are Publicis Ambience for creative duties and Madison Media for media duties. The M&M account is handled by Interface (for creative duties) and Lodestar Universal (for media duties).

An industry official on a condition of anonymity explained that Kinetic Motors was yet to decide whether to scout for new agencies or stay with the present ones. However, it will still take a week’s time to come to any decision. Meanwhile, the officials are busy giving shape to their new marketing strategy.

According to some media reports, the Rs 110 crore would be used to repay some liabilities of Kinetic Motors, which has term loans of around Rs 60 crore. While the deal will help M&M get a foothold in the scooters and motorcycles segment, the new JV is open to talking to other global two-wheeler players to enter the higher end of the two-wheeler space. The JV will rely heavily on global sourcing to get competitive and build a differentiated brand.

Sulajja Firodia Motwani, the current MD of Kinetic Motor, is a Non-Executive Director in the new company, while Anoop Mathur, M&M’s president designate of two-wheelers business, is spearheading the new venture.

Kinetic has a product portfolio ranging from mopeds, scooterettes, scooters to motorcycles. Its popular two-wheeler models include Luna, Nova 135, Zing, Velocity, Boss, Aquila and Comet. In the meanwhile, SYM, a Taiwanese two-wheeler maker which has a strategic alliance and an 11 per cent stake in Kinetic Motors, will continue to work with the new JV.

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