Force Motors to invest Rs 2000cr for expansion in 3-4 yrs

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Force Motors to invest Rs 2000cr for expansion in 3-4 yrs

Firodia Group has big plans for its two companies CV-maker Force Motors and component-maker Kinetic Engineering. The company is investing over Rs 2,000 crore for expansion in both listed entities in the next three to four years and says that promoters will not be averse to selling stake to raise funds if required

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Excerpts from Power Breakfast on CNBC-TV18 Watch the full show » Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news Kinetic Engineering |

Firodia Group has big plans for its two companies CV-maker Force Motors and component-maker Kinetic Engineering . The company is investing over Rs 2,000 crore for expansion in both listed entities in the next three to four years and says that promoters will not be averse to selling stake to raise funds if required, reports CNBC-TV18's Swati Khandelwal Jain.

Force Motors which essentially makes commercial vehicles that include three-wheelers, tractors and trucks is now looking at expanding its product portfolio and setting up a small commercial vehicle plant. For this they are looking at investing Rs 2,000 crore over a period of three to four years. Out of the Rs 2,000 crore, Rs 800 crore has already been invested via internal accruals and the remaining Rs 1,200 crore has to be arranged. And, various options are being looked at for raising this Rs 1,200 crore, including a promoter's stake sale.

The small commercial vehicle plant that the company is planning to set up may come up by financial year 2011. The company will be looking at an initial capacity of about 60,000 units per annum. As far as new products are concerned, they will be looking at introducing a new SUV, which will be launched by February 2011. And, this will be in the range of Rs 10 lakh or so.

Kinetic Engineering has an order book of Rs 400 crore for the next two years which includes orders from Nano, Mahindra and Piaggio Gear Box. The company's revenue stands at Rs 150 crore. The capex for transmission is pegged at Rs 100 crore, which has already been invested. However it needs to make an additional investment of about Rs 20-25 crore every year. This funding, Kinetic says will be done by raising debt and the promoters' holding which currently stands at 65% may also be brought down.