Kinetic Engineering Ltd on Tuesday said it will raise Rs 54 crore through preferential issue of shares to promoters and sale of non-core assets to cut debt and invest in new business and electric vehicle vertical.
The company's board in a recently concluded meeting approved the raising of over Rs 54 crore from various available sources, including promoters and sale of its non-core assets, Kinetic Engineering Ltd (KEL) said in a regulatory filing.
"Accordingly, the board approved the issue of 22.85 lakh equity shares on preferential basis, to promoters and promoter group companies totalling Rs 26.27 crore at a price of Rs 115 per share, including a premium of Rs 105 per share," it said.
This is the third year in a row where promoters have increased their stake in the company, which will stand at 59.35 per cent. The previous conversions include 9,95,000 shares in 2021-22 and 11,72,879 shares in 2022-23, the company added.
The board also approved issuance of Optionally Convertible Cumulative Preference Shares (OCCPS) totalling Rs 2.18 crore to Jayashree Firodia Trust, part of the promoter group, it said, adding that a total of nearly Rs 28 crore would be raised by the company through equity.
At the same time, the board has approved sale of excess land parcels of the company for Rs 25.50 crore following due process, including valuation done by a registered valuer, Kinetic Engineering said.
KEL Managing Director Ajinkya Firodia said the company has completed its restructuring of auto components and turned around its operations over the past three years and achieved continuous growth in net profit during the last couple of years.
"Now we strongly believe that time has come to cash in on all the efforts, learnings and opportunities that lie ahead in our current business and future potential," he added.
Firodia said the company would utilise these funds for three main areas, including building a healthy balance sheet by further reducing debt of Rs 18 crore.
KEL will also look to enhance the auto-component business by revamping facilities, investing in new equipment, new business, working capital and capex to the tune of Rs 13 crore to Rs 15 crore, he added.
Moreover, KEL will also aim to build a strong future in EV by capitalising its subsidiary company, Kinetic Watts & Volts Ltd (KWVL), with additional equity of Rs 22 crore to Rs 23 crore, Firodia said.
In the current business, he said existing customers, including Mahindra & Mahindra and American Axle, have indicated various new business opportunities in transmission and axle domain.
"Further, the company is in process of adding new customers, including Sonalika tractors and Case New Holland," he added.
Besides, Firodia said KEL is "also bullish on the new product line of making chassis for two and three-wheelers beginning with the very exciting project for E-Luna".
"All these opportunities require a focus on revamping the facilities, working capital, new machinery and capacity enhancement," he added.
KWVL would continue to tap opportunities in the booming EV space, where KEL has already developed axles, chassis and various other parts and recently revived and restructured its paint shop and Cathodic Electro Deposition shop to offer fully painted body parts to EV players, Firodia said.
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