Kinetic Engineering jumps after selling entire stake in MTWL

Kinetic Engineering was locked at 5% upper circuit at Rs 35.20 at 14:09 IST on BSE after the firm said it has sold its entire shareholding in Mahindra Two Wheelers to Samena Capital, a Private Equity Investment Group focused on Asia and Middle east.

The announcement was made during trading hours today, 25 February 2014.

Meanwhile, the S&P BSE Sensex was up 10.61 points or 0.05% at 20,822.05.

On BSE, so far 750 shares were traded in the counter as against average daily volume of 2,682 shares in the past one quarter.

The stock opened with an upward gap, surging by the maximum 5% daily circuit and remained locked at the 5% level at Rs 35.20 so far in the day. The stock had hit a 52-week high of Rs 103 on 26 February 2013. The stock had hit a 52-week low of Rs 33.50 on Monday, 24 February 2014.

The stock had underperformed the market over the past one month till 24 February 2014, sliding 15.7% compared with the Sensex's 1.52% fall. The scrip had also underperformed the market in past one quarter, declining 56.99% as against Sensex's 2.94% rise.

The small-cap company has equity capital of Rs 13.57 crore. Face value per share is Rs 10.

Kinetic Engineering (KEL) said that the stake-sale in Mahindra Two Wheelers (MTWL) will fetch approximately Rs 182.10 crore to the company, and after certain committed payments towards NCD repayments and cost of financing etc, KEL expects to receive net proceeds of around Rs 109.80 crore. KEL will utilize the net proceeds to meet various obligations of its business including working capital and substantially towards FCCB/debt repayment obligations to strengthen its balance sheet, the company said in a statement.

Kinetic group had originally acquired stake in MTWL over 5 years ago, in November 2008, when its group company, Kinetic Motor Company (KMCL), sold its two wheeler business assets to MTWL, for cash as well as a 20% strategic equity stake. Subsequently, KMCL was merged with KEL in year 2012, and thus, the stake had been transferred to KEL.

KEL has recently entered into two technical alliances, with Magna Steyr and with TGB of Taiwan and intends to build its business with a focus on Transmission Systems through these tie ups.

Kinetic Engineering reported a net loss of Rs 7.82 crore in Q2 September 2013, higher than net loss of Rs 7.75 crore in Q2 September 2012. Net sales declined 36.8% to Rs 13.33 crore in Q2 September 2013 over Q2 September 2012.

Kinetic Engineering manufactures a variety of automobile components.

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