Kesoram expects tyre business demerger to be completed by July-end

By: | Published: February 22, 2019 12:16 AM

BK Birla Group flagship Kesoram Industries expects the proposed demerger of its tyre business to be completed by the end of July after getting all necessary regulatory approvals.

Kesoram expects tyre business demerger to be completed by July-endKesoram expects tyre business demerger to be completed by July-end

BK Birla Group flagship Kesoram Industries expects the proposed demerger of its tyre business to be completed by the end of July after getting all necessary regulatory approvals.

The Kesoram board in December last year had approved the demerger of the company’s loss-making tyre business into a separate firm, Birla Tyres (BLT), for opening new “growth vistas” for the new entity by attracting fresh investment and technology.

The company believes finding a strategic partner for the tyre business would gather steam after the proposed demerger, for which it is awaiting regulatory approvals from capital markets regulator Sebi and the National Company Law Tribunal (NCLT).

Demerger will hopefully be completed by end of July.

Stock exchanges have given in-principle clearances, and now it is before the Sebi for its clearance.

“Sebi’s clearance of the demerger is expected by end of February. After that, we will approach the NCLT,” a company source said.

After granting of the requisite approvals, BTL will become a listed company with its shareholding pattern mirroring Kesoram.

After the spin off of its tyre business by demerging, the company will have the cement and rayon businesses under its fold.

Following the current restructuring, the demerged tyre entity would likely to “bear a debt of `500-1,000 crore” while Kesoram’s cement business will have a debt of around `2,500-3,000 crore, according to the source cited above.

The proposed demerger is part of an ongoing exercise undertaken by the Kolkata-based company over the past few months in further realigning and recalibrating operations, aiming to transform each business into entities that are market driven in their approach.

During the December quarter this fiscal, Kesoram posted a net loss of `115.35 crore and its revenue from operations was at `984.21 crore.

During October-December, its tyre and cement businesses clocked revenues of `335.20 crore and `649.01 crore, respectively.

Tyre business reported an operating loss of `43.46 crore, while cement segment posted an operating profit of `42.96 crore in the period.

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