San Yang to buy 11% in Kinetic

Kinetic Motor Company has decided to offer 11.1 per cent stake to the Taiwan-based automaker San Yang Industry Co (SYM) for Rs 13.63 crore. SYM will subscribe to 20.65 lakh preferential shares of Kinetic Motor at Rs 66 a share.

Post-offer, promoters' holding in Kinetic Motors would come down to 56.76 per cent, on the expanded equity base, from the existing 62 per cent.

The $ 1 billion SYM has production bases in Taiwan, China and Vietnam. SYM produces two-wheelers with engine capacities in the range of 50 to 500 cc, including electric scooters and fuel injection technology vehicles.

The company produces more than 6 lakh motorcycles and 20,000 units of automobiles including scooters and cars per annum. The company's products are sold under its own brand name 'SYM'.

"This equity participation by SYM will enable us to expand our business in India and other countries. We will also sign agreement for technology transfer to produce technologically enriched scooters in India. Kinetic would also be manufacturing for SYM for the Taiwanese and European markets," said Sulajja Firodia Motwani, joint managing director, Kinetic Motors.

The announcement pushed the Kinetic Motor stock today in a weak market. The shares closed at Rs 66.9, a 4.94 per cent increase over its previous close of Rs 63.75.

SYM was founded in Taipei in 1954. The company is headquartered in Hsin Chu Industrial Park in Taiwan.

HSBC and Amarchand Mangaldas were the advisors to the Kinetic group, while KPMG Corporate Finance & AZB partners were the advisors to SYM.

Kinetic Motor reported net sales of Rs 147.2 crore for March 2005, a decline by 25.38 per cent against net sales of Rs 197.28 crore in the previous year. The company registered a net loss of 31.3 crore for the year ended March 2005 against a net loss of Rs 21.34 crore in the previous period.