Kinetic Engineering Ltd to raise Rs.54 Cr by way of equity issue & OCCPS issue to Promoters and Sale of Non-core assets

Kinetic Engineering Limited, the flagship company which completed 50 years recently seems to be very bullish on the future. The company, in its recently concluded board meeting, has approved the raising over Rs 54 crores from various available sources including promoters & sale of its non-core assets. Accordingly, the board approved the issue of 22.85 Lakh equity shares on preferential basis, to promoters & promoter group companies totaling Rs. 26.27 Cr 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%. The previous year's conversion includes 9,95,000 shares in 2021-22 & 11,72,879 shares in 2022-23. In addition to the same, the board further approved Optionally Convertible Cumulative Preference Shares (OCCPS) totaling to Rs. 2.18 Cr to Jayashree Firodia Trust, part of the promoter group. In this manner nearly Rs 28 crores 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 Cr, after following due process including valuation done by a Registered Valuer.

Speaking on this big development, Mr. Ajinkya Firodia, Managing Director, Kinetic Engineering Limited, said "KEL has completed its restructuring of auto-components & 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 & opportunities that lie ahead in our current business & future potential. We would like to utilize these funds for three main goals:

- Build a healthy balance sheet by further reducing debt of Rs 18 Cr

- Build a strong auto-component business by revamping our facilities, investing in new equipment, investing for new business and in working capital & capex in KEL to the tune of Rs 13 to 15 Cr

- Build a strong future in EV by capitalizing its subsidiary company, Kinetic Watts & Volts Ltd. (KWVL), with additional equity of Rs. 22 to 23 Cr"

He further explained that "In the current business, existing customers including prestigious players such as Mahindra & Mahindra as well as American Axle have indicated various new business opportunities in transmission & axle domain. Further the company is in process of adding new customers including Sonalika tractors & Case New Holland. It is also bullish on the new product line of making chassis for 2 & 3 wheelers beginning with the very exciting project for E-Luna. All these opportunities require a focus on revamping the facilities, working capital, new machinery & capacity enhancement. KWVL shall continue to tap the glorious opportunity in the booming EV space where KEL has already developed axles, chassis & various other parts. It recently revived and restructured its paint shop & CED shop to offer fully painted body parts to EV players. Various other plans in EV space are underway and shall be revealed in stepwise manner as they fructify."

"The opportunities are huge. The time is ripe. So we are moving ahead confidently to make it happen. After all, all Kinetic stakeholders, deserve the best," added Mr. Firodia.

Shares of KINETIC ENGINEERING LTD. was last trading in BSE at Rs. 118.30 as compared to the previous close of Rs. 112.70. The total number of shares traded during the day was 39613 in over 287 trades.

The stock hit an intraday high of Rs. 118.30 and intraday low of 113.00. The net turnover during the day was Rs. 4651820.00.

Source : Equity Bulls

Keywords

KINETICENGINEERING INE266B01017 FundRaising NonCoreAssetSale