Kinetic Motor Company (KMCL) announced on Tuesday that its board of directors has decided to allot 14.18 lakh shares on a preferential basis to Bennett Coleman & Company (BCCL), publishers of The Economic Times, The Times of India and other group publications. BCCL will invest around Rs 10 crore for an 8.6% stake in the Pune-based scooter manufacturer at a price of Rs 70 per share with a face value of Rs 10.
Sulajja Firodia Motwani, joint managing director, Kinetic group, said, “The proceeds of the investment will be used towards brand building and the launch of the new Italjet range of products.” The promoter group's holding, post-allotment, will be 63.8%.
Ms Motwani declined to comment on market speculation about any moves by KMCL to bring in any other strategic investor. KMCL has planned a seven-scooter lineup from Italjet in the 50-250 cc range. These are expected to fall in a price band of Rs 25,000-75,000 and would be manufactured at KMCL's Pithampur (MP) plant, which has an annual capacity of 2.25 lakh scooters. The first of the Italjet scooter lineup, Millennium, will be launched by November end, followed by the Jet Set. KMCL's aggressive plans are expected to help the company turn around its fiscal performance.
KMCL started operations in 1984 as a joint venture with Honda Motor of Japan to market advanced scooters in India. The JV pioneered the variomatic gearless transmission scooter and self-start concepts in the country, till then dominated by Bajaj Auto (BAL).
In 1998, the arrangement with Honda Motor was realigned as a technical collaboration. With that, the company became the first Indian company to buy out the controlling stake from its foreign partner. After the realignment, the company has posted growth in sales and profitability, introduced new models and made several key improvements in its products.
“We believe that the Italjet range is a category-breaking product like the Kinetic Honda gearless scooters, which we pioneered,” Ms Motwani said. Deepak Mane from Biztech Systems advised Kinetic Motor Company on the equity transaction. The company will hold an extraordinary general meeting (EGM) on November 9, seeking approval for the allotment.