The Hindu Business Line : Kesoram plans further capacity expansion

Kolkata, June 26 The board of Kesoram Industries Ltd, a B K Birla group company, has decided to expand the capacity of its cement and tyre units located at Balasore (Orissa) and Sedam (Karnataka) respectively.

Mr B K Birla, Chairman of the company, told a press conference here on Friday that that radial capacity of the Balasore unit would be increased by 1.65 million tonnes per annum and the capacity of the Sedam cement plant by 4 lakh tonnes per annum cement within next 15 months at an estimated total cost of more than Rs 1,500 crore.

Mr S K Parik, Director of the company, said that the management had been given three months to firm up the expansion plans and place it before the board. He said that the proposal for the cement project was likely to cost Rs 750 crore, while the tyre capacity would entail a cost of around Rs 800 crore.

Though the financing of the project would be planned later, the board has not considered fresh equity issue. “Two thirds of the project costs is likely to be funded by debt and the balance through internal accruals,” Mr Parik said.

Mr Parik said that during next 15 months, the company would require Rs 450 crore, primarily for the ongoing projects such as motorcycle tyre project at a cost of Rs 190 crore at Haridwar and waste heat recovered power project (cost has not been finalised) at its cement plant in Andhra Pradesh.

Earlier, Mr Birla said that during the financial year to March 31, 2009, the Balasore plant had to resort to production cut for 41 days owing to poor off-take by original equipment manufacturers. However, the company achieved higher sales in the replacement market though higher input cost had impacted the margins, he added.

Succession plan

Mr B K Birla at a press conference here on Friday made it clear that he revised his will once more last month and finally decided how the controls of the companies of his group could be distributed among his daughters and grandson and granddaughter.

He said Kesoram, along with Century Textiles and Century Enka would go to his grandson Mr Kumar Mangalam Birla. “At 90, I want to hand over charge of the three companies to Kumar,” he observed, ruling out any split in two core businesses – cement and tyre -- of Kesoram. Mr Birla’s grandson Mr Kumar Mangalam Birla is still not on the Kesoram board, but daughter, Ms Manjushree Khaitan, is on the board. Mr Birla said Ms Khaitan would control Manjushree Plantations and her daughter Ms Vidula Jalan would control Mangalam Cement and Mangalam Plywood. Ms Jay Shree Mohta, Mr Birla’s elder daughter, would control Jay Shree Tea & Industries.

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