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PTI kolkata India
Updated: 04-12-2018 18:36 IST

B K Birla group company Kesoram

Industries on announced demerger of its tyre business in a

major second round of restructuring in the wake of

unsustainable debt of the company.

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 CFO Radhakrishnan told PTI.

Two years ago, the company had sold off 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 debt which

currently stands at Rs 3,500 crore, but was grappling to

manage it.

The turnover of the demerged tyre division is Rs 1453

crores which is 39 per cent of the total company topline as on

last fiscal. Approximately Rs 1000 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 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 shall be subject to the approval

by National Company Law Tribunal.

Post demerger, Kesoram will retain cement business in

Andhra Pradesh with an installed capacity of 7.5 million tonne

and rayon.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)