Kesoram Industries Ltd., a BK Birla group company, is hopeful of getting the National Company Law Tribunal’s (NCLT) final nod soon for demerging its tyre business. The demerged entity is likely to come into effect by early January.
According to P Radhakrishnan, Chief Financial Officer, Kesoram Industries, the company has received approvals from all concerned stakeholders including shareholders, secured and unsecured creditors.
“There are some procedural aspects which may take until November-end. The demerger is likely to take effect by January 2020,” Radhakrishnan told BusinessLine.
Kesoram is in the process of demerging its tyre vertical into a separate entity - Birla Tyres Ltd. (BTL). The new entity will focus on the passenger radial tyre segment which would help rebalance its portfolio. The commercial segment accounts for nearly 90 per cent of the tyre unit’s total turnover at present.
The company has invested close to ₹775 crore for adding a fresh line for passenger radial tyres in its existing plant at Balasore in Odisha over the last three-four years. It is likely to infuse an additional ₹225-250 crore in the unit, which would take its capacity to 2.5 million tyres.
“The plant may need an additional investment of ₹50 crore to ramp up the capacity to 4 million tyres,” he said.
It would focus on getting the plant “up and running” and “sweat the assets”. Once that is done it would look for partnership with a global tyre major for making optimum use of its capacity. There are a number of global players who are looking for ready (tyre) capacity in India.
“The focus is to make ready capacity available,” he said.
Net loss widens
For the quarter ended September 30, the company’s consolidated net loss widened to ₹134 crore compared with ₹113 crore in the same period last year.
Consolidated revenue from operations declined 20 per cent to ₹811 crore (₹1,010 crore).
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