The Hindu Business Line : Kesoram may review chemical biz hive-off

THE Rs 1,800-crore Kesoram Industries Ltd, the flagship company of the B.K. Birla Group, may reconsider its earlier decision to hive off its heavy chemicals if it fails to get a suitable buyer within the next three months.

According to a senior company official, the management may have decided to sell off this division, but it would never be a "distress seller" and would consider all aspects before taking a decision.

It was learnt that two or three buyers had shown interest and their representatives had also visited the factory for a reconnaissance, but no further development had taken place.

Earlier, Mr B.K. Birla had declared that the company had no plans of making fresh investments in the heavy chemicals business, which suffered due to irregular supply and high international price of sulphur.

Kesoram's heavy chemicals factory, which is located at Khardah in West Bengal, is operating, and sources said there has been no disruption of work.

Heavy chemicals and the spun pipes section together generates only seven per cent of Kesoram's total revenue against 44 per cent of the tyre section and 39 per cent of the cement division.

The company had decided to make fresh investments in their tyre and cement businesses, and subsequently, in rayon and transparent paper and, then, spun pipes. As of now, there are no plans of making fresh investments in heavy chemicals division.

As the company has failed to find a suitable buyer for this division in the last six months, it might change its strategy. "We would wait for another three months. If no development takes place, we may reconsider our decision. In any case, the board is meeting in March a decision might be taken then only," the official said.

When queried whether the business would be spun off into a subsidiary, the official said that it depends on the needs of the proposed buyer.

Assam Cotton Mills: In another development, the company has initiated the process of merging its wholly owned subsidiary Assam Cotton Mills Ltd. Machinery of this closed unit has already been sold.

The management is now trying to sell the land and the adjoining shade of Assam Cotton Mills. The official said that discussions are on with the Central Reserve Police Force (CRPF) for this purpose.

CRPF, which is under the Union Home Ministry, has shown keen interest for Assam Cotton Mills' land and the shade too. Sources said that it might be rebuilt as a barrack for CRPF jawans.

Earlier this year, Kesoram Industries sold the machinery of this factory. In September, the board of directors had decided to merge this company with Kesoram Industries.

Fresh capacities: Kesoram Industries has already undertaken an expansion programme of its cement division, which is located at Karnataka. Fresh capacity of 16.5 lakh tonnes is being added at a cost of Rs 425 crore, and it is likely to be commissioned by the end of the next year.

Once it is through with the cement expansion programme, the management would chart out a plan for the expansion of tyre division (Birla Tyres), which is located at Balasore in Orissa.

For the year ended March 31, 2005, Kesoram Industries registered a gross turnover of Rs 1,759 crore against Rs 1,635.29 crore in the previous year. Net profit, however, dropped to Rs 33.51 crore from Rs 62.99 crore.

At the BSE on Tuesday, the Kesoram stock opened at Rs 147.5 and reached a high of Rs 151.35 before closing at Rs 150. More than 6,000 shares were traded throughout the day.