Kinetic Engineering Ltd. (KEL) promoters are investing INR 177 crore in convertible warrants to boost the company's growth, targeting a revenue of INR 1,000 crore by 2029. This investment will support expansion in electric vehicle components, increase the promoters' stake to 70%, and strengthen the company's overall market position. The plan includes phased investments over the next few years, with contributions from outside investors as well.

KEL's promoters will invest INR 177 crore through convertible warrants over 18 months. An initial investment of INR 55 crore is committed by March 2025. Outside investors, including Transaction Square LLP and Sai Geeta Penumetsa, have subscribed to warrants worth INR 17.10 crore.

A roadmap to the investment

The investment plan is structured in phases. INR 60 crore will be invested by March 2025, followed by INR 44 crore by March 2026 and INR 73 crore by March 2027.

The promoters aim to increase their stake in KEL from 59% to 70% by 2027. This involves issuing approximately 93.5 lakh new shares to the promoters, bringing their total holding to 2.26 crore shares. The company's total outstanding shares will reach 3.26 crore by July 2027.

The company's founder and chairman, Arun Firodia, along with the Arun Firodia Trust and Jayashree Firodia Trust, are leading this investment initiative. Since 2017, the promoters have increased their stake from 49% to the current 70%, marking a 21% overall increase.

The investment will be used to strengthen working capital, improve manufacturing capabilities, and foster innovation in product development. A key focus area is the development of electric vehicle (EV) components.

“Kinetic Engineering Limited has over 50 years of experience in manufacturing. It has successfully transformed into an auto components business and enjoys strong relationships with the world’s largest OEMs. Leveraging these long-standing partnerships, we expect to finalise significant business deals shortly. Additionally, we are heavily focused on the EV segment, with plans for our subsidiary, Kinetic Watts & Volts, nearing finalisation. These initiatives will drive an 8x to 10x revenue growth, and we are pleased to make this investment to meet the required capital expenditure, working capital, and growth initiatives. This infusion of capital from the promoters reinforces our growth blueprint, enabling us to take bold strides toward achieving our INR 1,000 crore revenue milestone. We are committed to using this investment to fuel innovation, improve operational efficiencies, and meet the evolving demands of the automotive and EV industries,” stated Ajinkya Firodia, Vice Chairman, Kinetic Group.

KEL's growth strategy

KEL's growth strategy involves expanding its export business, diversifying its portfolio, and focusing on the EV sector through its subsidiary, Kinetic Watts & Volts. The company also plans to implement cost-reduction initiatives.

KEL aims to significantly scale its business both domestically and internationally. The company wants to maintain its leadership position in the automotive components sector.

Kinetic Watts & Volts, incorporated in September 2022, focuses on developing advanced drivetrain solutions, gear systems, and other products for EVs. New products from this subsidiary are expected to be launched soon.

KEL is investing in research and development to enhance its presence in the EV segment. The company is also exploring collaborations with original equipment manufacturers (OEMs) to accelerate its growth in this area.

The promoters' increased investment and stake expansion demonstrate their commitment to KEL's future growth. This investment enables the company to pursue ambitious plans in the changing automotive landscape. KEL's transformation strategy is focused on sustainable growth, long-term value creation, and effective execution in a competitive market. The company's current revenue stands at INR 150 crore. They are aiming for a substantial increase to INR 1,000 crore by 2029.