Kinetic Engineering, a prominent component maker, is scripting a remarkable turnaround story, marked by seven consecutive profitable quarters. Ajinkya Firodia, the Managing Director, revealed their plans to further increase equity stake, underscoring newfound stability. As the company eyes sustained growth, it adopts a two-pronged strategy—earning investor confidence and funding future expansions through stake dilution.
Unlocking Potential Through Increased Stake: Having already elevated their stake from 49% to 59%, the Firodia family eyes the maximum permissible limit of 75% for promoters in a listed company. With a stable business foundation, the move aims to bolster investor trust while offering financial flexibility for future endeavors.
Strategic Equity Rise for Growth and Expansion: Firodia envisions substantial capital requirements for the company’s next growth phase, foreseeing either extensive CapEx or renovation funds. The strategic equity rise aligns with plans to raise capital at a higher valuation, demonstrating confidence in Kinetic Engineering’s potential.
Electric Dreams and Collaborations: Kinetic Engineering positions itself at the forefront of the electrification megatrend, eyeing EV solutions as a “gold mine.” With 10% of the turnover derived from EV-focused offerings, Firodia seeks collaboration opportunities in the EV space, particularly with entities from Korea, Japan, or China. Strengthening EV capabilities through partnerships is crucial for tapping into the burgeoning market.
Design Competency for Competitive Edge: Acknowledging the limitations of the build-to-print model, Kinetic Engineering emphasizes design and development competency. Actively recruiting designers and exploring collaborations with European companies, the company aims to transition into a more disruptive and competitive player.
Global Partnerships for Sustainable Growth: Renewing ties with American Axle, a global Tier 1 company, injects confidence into Kinetic Engineering’s growth trajectory. The extended contract, spanning seven years, solidifies a long-standing association, contributing to 50% of the company’s export revenue. This strategic move adds stability to the business, with a significant contract expected to be valued at INR 300 crore.
Debt-Equity Ratio Improvement and Sustained Success: The current phase of Kinetic Engineering’s turnaround journey reflects in an improved debt-equity ratio of 8:1, up from 6:1 four years ago. Despite the commendable performance, sustained success necessitates a forward-looking approach in the ever-evolving technology landscape.
As Kinetic Engineering renews its commitment to growth and innovation, the Firodias’ proactive strategies position the company as a formidable player in the dynamic automotive industry.
