The Firodia Group has decided to merge two group outfits — Kinetic Engineering (KEL) and Kinetic Motor Company (KMCL).

A scheme of amalgamation has been proposed and an application is intended to be made to the Bombay High Court.

As a result, 4 shares of KEL will be issued for every 31 shares of KMCL. Post-merger, the stake of the promoters in Kinetic Engineering would stand at 52.85 per cent against 57.49 per cent now.

The merger is expected to create value addition by diversification of value and value addition through manufacturing business as well as investment into Mahindra Two Wheeler Ltd. (MTWL). KMCL transferred the operating assets of its two wheeler business to Mahindra Two Wheeler (MTWL) in November 2008, for cash and for a 20 per cent strategic stake in MTWL.

Speaking to this correspondent, Sulajja Firodia Motwani, Managing Director, KEL, said, “We have successfully built KEL's business from an automotive business to an automotive systems business. We had invested around Rs.55 crore two years ago in a new unit to cater to the demand for Tata Nano. However, with depressed market, the demand has not kept up with expectations over the last 18 months. We expect this to pick up and go to 6,000 units a month in the near future. This unit also cater to the complete gear box for light commercial vehicles made by Mahindra Navistar and Piaggio.''

The board of KEL approved resolutions to appoint Ms. Motwani as Vice-Chairperson of KEL and seek approval from the Reserve Bank of India for the extension of the FCCBs issued by KEL worth $18 million, from February 2013 to February 2014.