The Indian auto segment is hotting up by the day. While two-wheeler maker Bajaj Auto has announced its intent to enter the four-wheeler segment, reports now say that Mahindra & Mahindra, known for their sports utility vehicles and farm equipment, is looking to enter the two-wheeler segment.
“Kinetic is incurring losses for the last three years. The company’s revenues are so low that it cannot even meet the operating costs,” says an analyst from a broking firm. He added that if one needs to evaluate the company, it has to be done on the basis of sales, which, considering the company’s sales of 200 crore units, comes to around Rs 150 crore on the higher side.
Adds another analyst, “The company has been scouting for a buyer and is believed to be looking at exiting from the business where it is struggling to make a mark in the market after parting ways with Honda.”
However, one cannot deny the fact that Kinetic is a well-known brand and if bought by M&M will definitely not be a bad deal since will be not only fulfill M&M’s s long standing desire to foray into the segment but will also be cheaper than venturing all alone.
“If M&M enters the two-wheeler segment, the company is capable of handling all the businesses it enters,” says an analyst, however adding that all depends upon whether the company will look at acquisition, tie-up or merger. Earlier, M&M was in the news for a joint venture with Chinese two-wheeler major Chongqing Lifan. However, the company, in a filing to the BSE said, “The company examines/pursues various opportunities in different areas, from time to time on a continuing basis and it is not practicable to comment upon every opportunity at every stage.”