The Pune-based Firodia Group today said it will merge its two entities Kinetic Engineering (KEL) and Kinetic Motor Company (KMCL) for better synergies. "Both the companies belonging to the Firodia Group,approved a scheme for the merger of KMCL with KEL today. A scheme of amalgamation has been proposed to be filed under sections 391,394 and 101 of the Companies Act,and an application is intended to be made to the Bombay High Court for approval," the companies said in a joint statement. Under the merger scheme,four shares of KEL will be issued for every 31 shares of KMCL. Post-merger,the stake of the promoters in KEL will be reduced to 52.85 percent,from 57.49 percent now. The balance will be held by public and financial institutions. The merger will result in substantial synergies including enhanced financial strength and flexibility and financial consolidation of operating activities and investment in one entity,leading to better governance,reduction of cost and higher value creation for stakeholders,the statement said. The merger also marks the culmination of restructuring taken up by the Kinetic Group where the group's manufacturing and engineering entity Kinetic Engineering was restructured and positioned to become a focused player in the automotive systems and components business while the two-wheeler business of Kinetic Motor was hived off to a new alliance with the Mahindra Group in 2008,it said. KEL further said it has appointed Sulajja Firodia Motwani as a vice-chairperson of KEL and the board has proposed to seek RBI approval for the extension of the FCCBs issued by KEL worth USD 18 million by one year from February 2013 to February 2014. KPMG will be the tax and structuring advisor for amalgamation while SSPA will do the valuation and IDFC Investment Banking will be responsible for providing the fairness opinion,the statement said.
