MUMBAI: Utility vehicles leader Mahindra & Mahindra on Wednesday announced its entry into the two-wheeler segment by acquiring 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's Chief Financial Officer Bharat Doshi told reporters here.
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 the prevailing competition in the segment among leading players such as TVS, Hero Honda and Bajaj.
"The two-wheeler market in the country is still largely under-penetrated. This acquisition will provide greater opportunities, taking us into another orbit," M&M's Vice Chairman and Managing Director Anand Mahindra said.
Kinetic, which has a large customer base especially women, will continue as a 'long-term strategic partner' in the new company, said Kinetic's Managing Director Sulajja Firodia Motwani, who will serve as a non-Executive Director in the new venture.
The gross revenue of M&M, during the quarter, stood at Rs 3,749.2 crore, up 26.1 per cent, from Rs 2,972.8 crore in the year-ago period.
The exchange loss of the company included a loss of Rs 58.2 crore on account of the revaluation of USD 200 million Foreign Currency Covertible Bonds (FCCB) issued in April, 2006, the company said.
The domestic MUV sales of the company, during the quarter, grew by 21.6 per cent to 37,919 MUVs from the sale of 31,171 MUVs in the year-ago period, it said.
A similar growth was seen in its domestic tractor industry sales, which jumped by 13.1 per cent to 85,289 from 75,424 in Q1 in last year, the company said.