BK Birla Group controlled Kesoram
Industries Ltd had concluded a deal to sell its Tyre manufacturing unit near
Haridwar in Uttarakhand to JK Tyre and Industries Ltd for Rs. 2195 crore. Based
on Kesoram previous disclosures the company is estimated to have spent around
Rs. 3000 crore to build the factory. It was commissioned in 2008-09.
This factory, which has the capacity
to produce up to 600 tonnes of tyre a day or about 4.4 Million truck tyres
annually, was carved out of Kesoram and transferred to a subsidiary Cavendish
Industries Ltd earlier this year. Kesoram owns 99% of Cavendish. The factory
was at that time valued at Rs. 2800 crore an indication of what the company was
looking to raise from its sale. The revised valuation of the unit stands at Rs.
2195 crore.
There were 4-5 interested parties,
JK Tyre was the only company that made a firm price bid, and stuck to its
price, which was lower than Kesoram expectations. The deal will strengthen
Kesoram balance sheet, adding that the cash will be used to repay debts. The BK
Birla Group Company will remain invested in the tyre business. It has a less
efficient unit near Balasore in Odisha, which is 23 years old now.
Besides tyres, Kesoram has
interests in cement and rayon, which continues to report growth. Kesoram
produces around 7.5 Million tonnes of cement, and the segment generates about
Rs. 750 crore in operating profit annually. It also said it is expanding its
rayon business.
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