Kinetic Engineering has decided to raise over Rs 54 crore from various available sources including promoters and sale of its non-core assets.
This, it says will be used to drive expansion, reduce debt and invest in its electric vehicle subsidiary.
The company aims to issue 22.85 lakh equity shares on preferential basis, to promoters & promoter group companies totalling Rs 26.27 crore at a price of Rs 115 per share (including a premium of Rs 105 per share).
This is the 3rd year in a row where promoters have increased their stake in the company, which will stand at 59.35 percent. The previous year’s conversion includes 9.95 lakh shares in 2021-22 and 11.72 lakh shares in 2022-23.
In addition to the same, the board further approved Optionally Convertible Cumulative Preference Shares (OCCPS) totalling to Rs 2.18 crore to Jayashree Firodia Trust, part of the promoter group. In this manner nearly Rs 28 crore shall be raised by the company through equity, significantly increasing its Net Worth.
In addition, the board also approved the sale of excess land parcels of the company at a consideration of Rs 25.50 crore, after following due process including valuation done by a Registered Valuer.
Ajinkya Firodia, MD, Kinetic Engineering said “KEL has completed its restructuring of auto-components and turned around its operations over the past 3 years and achieved continuous growth in net profit during the last couple of years. Now we strongly believe time has come to cash in on all the efforts, learnings and opportunities that lie ahead in our current business and future potential. We would like to utilise these funds for three main goals – Build a healthy balance sheet by further reducing debt of Rs 18 crore; build a strong auto-component business by revamping our facilities, investing in new equipment, investing for new business and in working capital and Capex in KEL to the tune of Rs 13-15 crore; and build a strong future in EV by capitalising its subsidiary company, Kinetic Watts & Volts (KWVL), with additional equity of Rs 22-23 crore.”
Firodia says that currently its existing customers including Mahindra & Mahindra as well as American Axle have indicated various new business opportunities in transmission and the axle domain. It is also in the process of adding new customers including Sonalika Tractors and Case New Holland.
Furthermore, it is betting on the new product line of making chassis for two- and three-wheelers beginning with the E-Luna.
All these opportunities will require revamp of the facilities, working capital, new machinery and capacity enhancement.