Kesoram to demerge tyre division
Kesoram shareholders will get one share of Rs 10 each of Birla Tyres Ltd for each share held in the company
Kolkata: B K Birla group company Kesoram Industries on announced the demerger of its tyre business in the second round of restructuring.
Kesoram, in a statement, said the company approved the demerger of the tyre undertaking into a new entity, Birla Tyres Limited.
“We are open for investors but will continue to be in the business of tyres,” Kesoram chief financial officer Radhakrishnan said.
Two years ago, the company sold the Laksar tyre plant near Haridwar to JK Tyres for close to Rs 2,000 crore in a bid to control its debt of Rs 5,300 crore.
The company has been continuously paring its debt, which currently stands at Rs 3,500 crore.
The turnover of the demerged tyre division is Rs 1,453 crore, which is 39% of the total company’s topline as on the last financial year. Around Rs 1,000-crore debt will get transferred to the demerged tyre company.
Kesoram shareholders will get one share of Rs 10 each of Birla Tyres Ltd for each share held in the company.
Offering the rationale for the demerger, the Kesoram management said, “Enabling a dedicated management for tyre will help focus and accelerate growth of both the tyre and cement businesses, unlocking significant value for Kesoram shareholders and accessing varied sources of funds for the rapid growth of both businesses.”
The Proposed demerger will be subject to the National Company Law Tribunal’s (NCLT’s) approval.
Post demerger, Kesoram will retain the cement business in Andhra Pradesh with an installed capacity of 7.5 million tonne and rayon.
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