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Mahindra enters two-wheeler market riding on Kinetic

Utility vehicles leader Mahindra & Mahindra today announced its entry into the two-wheeler segment by acquiring an 80 percent...

By: PTI | Mumbai |
July 31, 2008 12:53:35 am

Utility vehicles leader Mahindra & Mahindra (M&M) today announced its entry into the two-wheeler segment by acquiring an 80 per cent stake in Honda’s former Indian partner — Kinetic Motor Company Ltd. M&M will form a new company — Mahindra Kinetic Scooters & Motorcycles Ltd — to execute the acquisition of Kinetic by purchasing ‘all operating assets of the company’, M&M chief financial officer Bharat Doshi said.

Kinetic would hold 20 per cent stake in the new company. “The consideration of the acquisition is a sum of Rs 110 crore, plus a 20 per cent stake to Kinetic. M&M will hold the balance 80 per cent stake in the company,” Doshi said. Mahindra’s entry into the fast-growing Indian two-wheeler market is expected to intensify competition in the segment.

“The two-wheeler market is still largely under-penetrated. This acquisition will provide greater opportunities, taking us into another orbit,” M&M vice-chairman and managing director Anand Mahindra said. Kinetic, which has a large customer base, especially among women, will continue as a ‘long-term strategic partner’, said Kinetic Motor managing director Sulajja Firodia Motwani, who will serve as non-executive director in the new venture.

M&M, which has a sizable chunk of business in farm equipment, utility vehicles and sedan segments in domestic market, plans to design and roll out a range of scooters, value-engineered motorcycles and high-end motorcycles for the Indian and global markets, Mahindra said.

“The acquisition is expected to be completed in three months,” a top M&M official said. The M&M Board also approved the scheme of amalgamation of Punjab Tractors Limited (PTL) with itself. Mahindra had acquired a 63.33 per cent stake in PTL in July, 2007, while its subsidiary MHFL has a 1.31 per cent holding in the company.

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