Kesoram Industries rose 4.55% to Rs 107.95 at 12:55 IST on BSE after the company announced that its board of directors approved disposal and transfer of the company's rayon and transparent paper undertaking to Cygnet Industries.
The announcement was made on Saturday, 26 March 2016. The stock market remained closed on Thursday, 24 March 2016 and Friday, 25 March 2016 due to holidays.Meanwhile, the S&P BSE Sensex was down 135.53 points or 0.53% at 25,202.03.
On BSE, so far 1.61 lakh shares were traded in the counter as against average daily volume of 1.31 lakh shares in the past one quarter. The stock hit a high of Rs 111 and a low of Rs 105.80 so far during the day. The stock had hit a 52-week high of Rs 148.85 on 13 April 2015. The stock had hit a 52-week low of Rs 69.50 on 15 June 2015. The stock had outperformed the market over the past one month till 23 March 2016, rising 20.13% compared with the Sensex's 8.23% rise. The scrip had, however, underperformed the market in past one quarter, sliding 6.39% as against Sensex's 1.98% fall.
Kesoram Industries announced that the board of directors of the company at a meeting held on 26 March 2016, approved disposal and transfer of the company's rayon and transparent paper undertaking to Cygnet Industries, an unlisted and unrelated entity through a slump sale. Cygnet is however, proposed to be converted into a company's wholly owned subsidiary upon Kesoram acquiring its entire issued and paid-up share capital. The disposal and transfer of rayon undertaking will be effective from close of business 31 March 2016 and will further be subject to receipt of such permissions and consents, if any, that may be required.
The transfer will be at such consideration as may be decided by the board in the best interest of the company subject to such consideration not being lower than Rs 480 crore payable in a manner as may be agreed by and between the company and Cygnet (including by way of issue of equity shares of Rs 10 each of Cygnet to the company of an amount not exceeding Rs 50 crore) and such transaction is at arms length.
The amount of gross revenue and net worth of the rayon undertaking and percentage thereof, in relation to company as a whole for the financial year ended 31 March 2015 (FY 2015) was Rs 257 crore and Rs 109 crore respectively. It is expected that the transaction will be consummated within 30 June 2016. A Term Sheet and such other relevant documentation as may be required will be executed between the company and Cygnet. There can, however, be no assurance that such transaction will be completed within the time frame indicated or at all, Kesoram Industries said.
Kesoram Industries reported net loss of Rs 274.04 crore in Q3 December 2015 compared with net loss of Rs 244.60 crore in Q3 December 2014. Net sales declined 16.2% to Rs 1014.88 in Q3 December 2015 over Q3 December 2014.
Kesoram Industries is a diversified company. The company manufactures tyres, cement and rayon yarn.
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