B K Birla group company Kesoram may demerge ailing tyre business

13 Jul 2018

KOLKATA: B K Birla Group flagship Kesoram Industries, which is reeling from consecutive losses, is likely to demerge its loss-making tyre business in order to induct a strategic partner. It has appointed a merchant banker to complete this process within a year. Kesoram plans to venture into passenger car radials through a partnership after the possible demerger of the ailing tyre business. Kesoram chief financial officer Tridib Das disclosed this following a stormy 99th AGM of the cement and tyre maker amid emand from a section of shareholders to nduct Kumar Mangalam Birla, the grandson of ‘Basant Babu’, into the board in the centenary year of the company. Kumar is on the board of Century Textiles Industries.

Kesoram had posted a standalone loss of Rs 463 crore in 2017-18, while the consolidated loss was Rs 577 crore. The tyre business made a loss of Rs 129 crore in 2017-18, while in 2016-17, the loss was Rs 67 crore. Das said that the company is optimistic about roping in a partner for the tyre business.

Kesoram, which sells tyres under the Birla Tyres brand, does not have a presence in the high-margin passenger radial segment. Kesoram had earlier sold the tyre unit at Haridwar to J K Tyres for Rs 2,195 crore in 2015. The tyre division of the company constitutes almost 35% of the turnover. Das made it clear that the company does not want to exit the tyre business and said it has not ruled out the possibility of forming a JV for the same after a demerger.

 A host of shareholders, who spoke at the AGM, urged the management to induct K M Birla into the board as they argued that it will change the fortunes of the ailing company. Kesoram is managed by Manjushree Khaitan, the younger daughter of B K Birla.