Auto sector firm, Kinetic Motor (KMCL) will soon be merged with Kinetic Engineering (KEL), whose board cleared a proposal for the merger. The two firms from the Firodia Group will now work as a new merged company.

The merger will include swap ratio of 31 shares of KMCL for every four shares of KEL. The new merger company will be the owner of the Kinetic Motor's 17% stake in Mahindra Two Wheelers.

Kinetic Engineering was earlier producing mopeds and motorcycles, but it become a supplier of automotive systems and power-train components after moving its business to Kinetic Motor.

The board also said appointed Sulajja Firodia Motwani, who is a director of the company, as vice chairperson of the merger company.

"KEL's stake in Mahindra Two Wheelers was indirectly, through Kinetic Motor which had no significant operations. KMCL was predominantly becoming an investment arm. Now, we have a clean and focused structure and this is the culmination of the restructuring in KEL," said Motwani.

The companies have proposed a scheme of amalgamation and are expected to file an application in the Bombay High Court soon.