BK Birla group firm Kesoram Industries nosedives 8% after Birla Tyres demerger announcement

By: | Published: December 5, 2018 11:00 AM

Shares of BK Birla Group firm Kesoram Industries nosedived on Wednesday morning, after the firm announced its decision to hive off loss making tyre business into a separate firm.

Kesoram Industries share price plunged 7.8% to Rs 89.60 per share today after the company made the announcement of demerger of Birla Tyres Ltd.

Shares of BK Birla Group firm Kesoram Industries nosedived on Wednesday morning, after the firm announced its decision to hive off loss making tyre business into a separate firm. Kesoram Industries share price plunged 7.8% to Rs 89.60 per share today after the company made the announcement.  The stock marked the biggest intraday percentage loss since October 8. “..board decided on Tuesday to spin off its tyre business by demerging this undertaking into a resulting company, Birla Tyres Limited (BTL),” the flagship company of the BK Birla Group said in its filing.

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The stock posted it’s  biggest intraday percentage loss since October 8. BK Birla Group flagship Kesoram Industries on Tuesday said its Board has approved the demerger of the company’s loss-making tyre business into a separate firm, Birla Tyres Limited (BTL), for opening new “growth vistas” for the new entity by attracting fresh investment or technology partnership. Kesoram Industries stock is down nearly 30% this year as of last close.

Offering the rationale for the demerger, the Kesoram management said in a filing earlier, “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.”

Kesoram Industries shares had rallied more than 20 percent in previous four sessions after media reports said that there could be demerger of company’s tyre business. Notably, Kesoram had reported loss of Rs 96.25 crore for the quarter ended September 2018 due to its loss-making tyre business.

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