Battered by the lukewarm performance of the Tata Nano in the market, its gear supplier, Pune-based Kinetic Engineering, is now pinning its hopes on orders from other players such as Mahindra & Mahindra (M&M) and Piaggio.
Firodia family-controlled Kinetic Engineering, a supplier of powertrain and transmission systems, had invested Rs 260 crore to put up gear and power train components manufacturing facility, primarily to supply for Tata Motors’ Nano project.
However, three years since the investment, the suply for the Nano have not yet paid commensurate return. Orders much less than what was expected affected Kinetic’s finances.
The Nano production at Tata Motors’ Sanand plant is at around 30% of its installed capacity of 250,000 units a year.
Kinetic has reported losses for five consecutive quarters. Its yearly loss last fiscal year was Rs 11 crore. The company plans to seek RBI approval for the extension of date of conversion/redemption of its $18 million (Rs 93.6 crore) foreign currency convertible bonds by a year.
Sulajja Firodia Motwani, vice -chairperson of Kinetic Engineering, said the company’s topline will improve with orders coming from several vehicle manufacturers. “We will supply gears for upcoming products such as Mahindra Navistar’s light commercial vehicle and Piaggio’s four-wheeler,'' she told Hindustan Times.
She expects this fiscal topline to be around Rs 120 crore from Rs 97 crore last fiscal and hopes will reach Rs 200 crore in 2013-14.
“We will not change facilities we installed for making gears for Nano,” she said. “We have hopes on Nano, especially the new version. That will pick up sales.”