Kesoram Industries to pare debt to ₹1,000 crore

BL Kolkata Bureau | | Updated on: Jun 17, 2022
P Radhakrishnan, Chief Executive Officer, Kesoram

P Radhakrishnan, Chief Executive Officer, Kesoram

Also eyeing reduction in interest rate payable on debts to around 9-10 per cent, from 19 percent

The BK Birla Group company, Kesoram Industries, is looking to bring down debt to ₹1,000 crore from the current ₹1,650 crore by the end of the current financial year or by first quarter of 2023-24. It is also looking to refinance around ₹400 crore of existing debt to reduce finance costs.

The company is currently paying around 19 per cent interest to its creditors after resorting to a spate of borrowings to revive the company.

According to P Radhakrishnan, Chief Executive Officer of Kesoram, some of the debt repayment will be done from internal accruals and the loan recast will be done via market instruments. The company is, however, yet to firm up the relevant mechanism.

“We are looking to partly refinance our debt to the tune of around ₹400 crore. We are hopeful of bringing our debt down to ₹1,000 crore by the end of this fiscal or Q1FY24.. Our target is to bring down the interest rate payable on our debts to around 9-10 per cent over time,” Radhakrishnan told newspersons on the sidelines of the company’s annual general meeting here on Friday.

During the current fiscal, Kesoram will aim at bringing about four per cent reduction on the outgoing interest rate, he said.

Brownfield expansion

Over the next two-to-three years, Kesoram is also looking to ramp up cement capacity by around 36 per cent to 15 million tonne (mt), from the current 11 mt. . The company has clinker capacity of 6.4 mt. It also plans to add one mt capacity via debottlenecking over the next year. This will entail a capex of around ₹80-100 crore.

The company is also looking to add another kiln at its existing unit that will add another 3 mt capacity over three years. This will entail an investment between ₹300-₹500 crore and will mostly funded internally.

Blended cement sales

Kesoram is also planning to increase the share of blended cement sales to nearly 80 per cent from the current 50 per cent over the next two-to-three years. This will help ensure higher profitability.

The company’s EBITDA is expected to shoot up to around ₹960 a tonne from the current ₹750-800 a tonne once it is able to increase the share of blended cement to 80 per cent of total sales. The income earned from this can be pumped in to finance the brownfield projects and also pay off some debts, he said.

Published on June 17, 2022
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