Kumar Birla to bring Kesoram back on track

Kumar Mangalam Birla-led Kesoram Industries is taking a series of steps to bring the loss-making company back on track. On Tuesday, Kesoram sold shares worth Rs 400 crore in various listed companies of Birla group to Pilani Investments, the holding company of Birla group. This comes months after Kesoram sold its tyre business to JK Tyres for Rs 2,200 crore.

The latest move is part of a restructuring plan by Kesoram to reduce its debt worth Rs 4,800 crore and improve cash flows. The investments were sold to NSE-listed Pilani Investments by way of bulk deals on Tuesday morning. Kesoram sold investments in Century Textiles (2.75 million shares), Century Enka (1.34 mn shares), Mangalam Cements (3.82 mn shares), Mangalam Timber (2.53 mn shares), Aditya Birla Fashions (3.19 mn shares), AB Nuvo (614,000 shares) and Grasim (140,000 shares).

Kesoram shares closed 10 per cent up at Rs 101 per share on Tuesday as investors bet on the company's sagging fortunes to turn around. The company is currently in transition, with Aditya Birla group chairman Kumar Mangalam Birla taking key decisions as his ailing grandfather, BK Birla takes a back seat. The company made a loss of Rs 274 crore for the quarter ending December 2015 on revenues of Rs 1,020 crore.

 

In September last year, Kesoram had sold its tyre unit to Singhania family-promoted JK Tyre for Rs 2,200 crore.

The sale was expected to help the company reduce its debt which ballooned to Rs 4,800 crore as on September last year. Kesoram has reported losses for the last four years because of high interest burden.

The board of the company has also given a go-ahead to sell off its spun pipe and the heavy chemical units located in West Bengal.

Analysts said Kesoram and another BK Birla group company, Century Textiles, may merge their cement operations with UltraTech Cement in future. However, this possible merger has so far been denied by the Aditya Birla group.

On February 17, Kesoram announced that the Aditya Birla group was raising its stake in Kesoram Industries to 50 per cent from 46 per cent by buying preferential shares worth Rs 180 crore. Kesoram is the second B K Birla group company after Century Textiles in which Kumar Mangalam Birla-owned promoter companies are raising their holdings.