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