Kesoram Industries fell 13.73% to Rs 83.85 at 11:41 IST on BSE after the company said it will spin off its tyre business into a separate entity.
The announcement was made after market hours yesterday, 4 December 2018.Meanwhile, the S&P BSE Sensex was down 213.47 points, or 0.59% to 35,920.84.
On the BSE, 2.24 lakh shares were traded in the counter so far compared with average daily volumes of 2.95 lakh shares in the past two weeks. The stock had hit a high of Rs 97 and a low of Rs 83.50 so far during the day.
The stock hit a 52-week high of Rs 173.25 on 10 January 2018. The stock hit a 52-week low of Rs 54.50 on 23 October 2018.
Kesoram Industries decided at a board meeting to spin off its tyre business ("Birla Tyres" ) by demerging this undertaking as per the "demerger" provisions in the Income Tax Act, 1961 into a resulting company, Birla Tyres ("BTL"). Upon grant of the requisite approvals, BTL will also become a listed company with its shareholding pattern mirroring Kesoram. The appointed date for such demerger will be commencement of business 1 January 2019. Kesoram shareholders will get one share of Rs 10 each of Birla Tyres for each share held in the company.
The demerger proposed is part of an ongoing exercise undertaken by Kesoram over the past few months in further realigning and recalibrating operations. The objective has been to transform each business into entities that are market driven in their approach.
With the proposed spin-off, Kesoram's focus on the both its businesses viz. cement and tyre will get even further sharpened and pave the way for their robust growth.
More From This Section
For BTL, especially, the proposition and its implementation will open new growth vistas as it looks at opportunities with renewed vigour. The process is expected to act as a stimulant for further investments into BTL. Resultantly, BTL will be benefited through the revitalising of its existing product portfolio range by extension of reach into a much wider spectrum of tyre segments and markets; and leveraging of the positive brand image of Birla Tyres and the enormous brand equity of the "Birla" name to take on a rapidly growing yet discerning tyre market, the company said in a statement.
Kesoram Industries reported net loss of Rs 96.25 crore in Q2 September 2018 as against net loss of Rs 139.59 crore in Q2 September 2017. Net sales rose 10.18% to Rs 926.15 crore in Q2 September 2018 over Q2 September 2017.
Kesoram Industries is engaged in cement and automobile tyre business.
Powered by Capital Market - Live News