Kolkata, Feb 21 (IANS) B.K. Birla Group’s flagship Kesoram Industries is expecting that the proposed demerger of its tyre business will likely be completed by July, sources said on Thursday.
In December, the company’s board had approved a scheme for demerger of its tyre business into Birla Tyres Limited and it also said that the demerged entity would become a listed company with its “shareholding pattern mirroring Kesoram” after getting all the requisite approvals from regulators and the National Company Law Tribunal (NCLT).
“It will hopefully complete by end of July. Stock exchanges have given in-principle clearance and now it has been before the Securities and Exchange Board of India (SEBI) for clearance. SEBI’s in principle clearance of the demerger should be expected by end of February. Then, we will approach the NCLT,” a source close to the development said.
The company has been looking for a strategic partner for the tyre business.
When asked about this, sources said: “We are still looking for a partner and nothing has been finalised. The proposed demerger is in the line of inducting a partner.”
According to the sources, the demerged tyre entity would likely “bear a debt of Rs 500-Rs 1,000 crore” and Kesoram’s cement business would have a debt of around Rs 2,500-Rs 3,000 crore.
The company had earlier said the demerger process would act as a stimulant for further investments in Birla Tyres which would be benefited by revitalising its existing product portfolio range covering a wider spectrum of tyre segments and markets.
During the October-December period of the current fiscal, Kesoram posted a net loss of Rs 115.35 crore and its revenue from operations during the quarter was Rs 984.21 crore, up by over 11 per cent year-on-year from Rs 883.01 crore in the corresponding period in the previous fiscal.
During the quarter, the tyre business clocked Rs 335.2 crore revenue while the cement business posted Rs 649.01 crore turnover.
However, the tyre business during the quarter ending December 2018, reported an operating loss of Rs 43.46 crore while its cement business posted an operating profit Rs 42.96 crore in the period.