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Kesoram Industries Ltd is expecting the demerger of its tyre business into a separate company — Birla Tyres Ltd (BTL) — to be complete by July.
It is hopeful of getting the in-principle clearance from the Securities and Exchange Board of India (SEBI) by the month-end.
The stock exchanges have given in-principle clearance for the demerger plan which is currently before the SEBI, said a source in the know of the matter.
“Once we get SEBI’s clearance, we will have to approach the National Company Law Tribunal. We expect the process of demerger to be complete by July,” the source said requesting anonymity.
Kesoram, the flagship company of the BK Birla Group had, in December 2018, announced its decision to demerge its tyre business.
BTL and debt position
BTL will become a listed company with its shareholding pattern mirroring Kesoram. Cement which is the other business segment for it.
The proposed demerger is part of the company’s ongoing exercise to realign and recalibrate operations.
The demerged tyre entity is likely to bear a debt of ₹500-1,000 crore, while the cement business is likely to have a debt of around ₹2,500-3,000 crore.
As on March 31, 2018, Kesoram had a total debt of close to ₹3,624 crore.
Food packaging solution
Kesoram Rayon, a unit of Cygnet Industries, a wholly-owned subsidiary of Kesoram Industries, has been in the business of transparent paper since 1961 primarily for use in industrial segment. The company has relaunched an environment-friendly food packaging solution aimed at the retail segment.
According to HK Kandoi, Financial Controller, Kesoram Rayon, the household demand for food wrapping is currently being met by plastics and aluminium foil.
Cygnet Industries, which has three business divisions including rayon, chemicals and transparent paper, is expecting to clock a turnover of ₹350 crore by the end of this fiscal.
With the launch of Kesophane biodegradable cellouse transparent films, the company is expecting to cross ₹400 crore revenue by next fiscal. Rayon business contributes about 60 per cent to its annual turnover, while transparent paper has a share of 30 per cent with the remaining coming from chemicals.
“Currently, we are EBITDA positive. We are expecting to clock a revenue of ₹400 crore by the next fiscal (FY2019-20) and are also hopeful of reporting net profit,” Kandoi said.
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