This story is from June 21, 2005

Kinetic Engg in financial recast mode

Gouri Athale / TNN / Jun 21, 2005, 17:26 IST

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PUNE: Kinetic Engineering Ltd has worked out a Rs 110 crore corporate debt restructuring (CDR) programme with its banks, lead by ICICI Bank.

PUNE: Kinetic Engineering Ltd (KEL), the motorcycle and moped manufacturer, has worked out a Rs 110 crore corporate debt restructuring (CDR) programme with its banks, lead by ICICI Bank. Under the CDR, the banks have pumped in an additional Rs 25 crore, having sanctioned a lower rate of interest and a moratorium on repayment till June 06.
The Kinetic group, comprising KEL and Kinetic Motor Company Ltd (KMCL), the scooter manufacturer and former joint venture with Honda, has losses totalling just under Rs 150 crore.KEL's losses amount to Rs 110 crore and those of KMCL are in the range of Rs 30-35 crore.
Both companies made losses in the last fiscal, 04-05, this being KEL's third consecutive loss-making year. KEL's losses in 04-05 were Rs 45.59 crore and Rs 51.66 crore in 03-04. During 04-05, KMCL's losses were Rs 31.33 crore. It has been making losses for the past two years, from FY 04.
The CDR will allow KEL to focus on developing its auto component business, in a unit called Kinetic International. The additional Rs. 25 crore funding it has received from the banks will go towards that business.

"With the CDR, cash flows will go towards building the new business instead of servicing debt and interest repayment," Sulajja Firodia Motwani, joint managing director, Kinetic group, said.
The banks, lead by ICICI Bank, had appointed Dalal Mott and McDonald, an independent consultant, to evaluate KEL's project, products and projections in the auto component business.
While KEL will focus on developing its auto component business, it will also manufacture motorcycles and mopeds. Ms Firodia Motwani ruled out any plans to discontinue these product lines. In fact, she added that they will launch new products of their own in the bike segment.
In a parallel move, the authorised share capital of group company KMCL, the former joint venture with Honda, has been raised from Rs 20 crore to Rs 35 crore. This has been done to strengthen its equity base, the scooter maker having debts in the range of Rs 20-30 crore.

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