BK Birla group firm Kesoram Industries Ltd on Friday announced that its promoters had agreed to inject up to Rs350 crore in the maker of tyres and cement, and that the company may induct a partner with expertise in radial technology to boost its tyre business.
Several means of fundraising were evaluated at Friday’s board meeting. Eventually, it was decided that Manav Investment and Trading Co. Ltd, a unit owned by the founder shareholders, would buy convertible warrants to infuse up to Rs350 crore, Kesoram said in a regulatory filing.
Kesoram did not immediately clarify how the funds are to be deployed. Company officials declined to comment on plans.
However, people who track the company said the funds are to be invested mostly to scale up the tyre business. There are no immediate plans to expand the cement division.
In September 2015, Kesoram concluded a deal to sell its tyre factory in Haridwar to the JK Group for Rs2,195 crore. The factory commissioned in 2008-09 was set up at a cost of around Rs3,000 crore, funded largely through debt. The debt stretched Kesoram’s finances and eventually forced it to sell the unit.
Even after the sale of the prized unit, Kesoram remained invested in the tyre business.
It has a 25-year-old factory near Balasore town in Odisha. The company has been investing in this unit to expand its manufacturing capacity of passenger car radials. A new line is currently being installed at an estimated cost of Rs800 crore, according to people familiar with Kesoram Industries’ plans.
The sale of the Haridwar unit cost Kesoram dearly in terms of goodwill, said the people cited above, who asked not to be named.
The company has been investing in its Birla Tyres brand to revive the business, but is struggling to change perceptions, said these people.
Internally, the company has been evaluating the option of bringing in a partner to change perceptions for some time, they added.
Kesoram has previously had a partnership with Italian tyre maker Pirelli. Its Balasore unit was initially set up with the Italian firm’s technology.
Even in recent times, the company has had several rounds of discussions with Pirelli over a potential partnership. It isn’t, however, immediately clear if Kesoram is looking to tie up with Pirelli again, said the people cited above.
Source: Mint