B. K. Birla group company Kesoram Industries has decided to explore options on re-organising and re-aligning its existing businesses. The company has three business verticals — tyres, cement and rayon.
The Kesoram board, at its meeting on June 26, noted the “imminent necessity for the company to explore options for re-organising and re-aligning its existing businesses.”
The meeting was led by Kesoram’s nonagenarian chairman Basant Kumar Birla. The company’s day-to-day affairs are now conducted by his daughter Manjushree Khaitan, the executive vice-chairperson.
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The meeting also decided to constitute a core committee comprising three directors, two of whom are independent.
“They will consider and evaluate steps that the company may need to pursue, to implement such reorganisation and realignment,” the company said in a filing to the stock exchanges.
Indications were that the need to examine the options on recast of business sprang from Kesoram’s increased finance costs, which touched Rs.572.8 crore in 2013-14 against Rs.514.4 crore in 2012-13. The company’s borrowing stood at over Rs.4,200 crore including a working capital component of Rs.1,200 crore and Rs.3,000 crore long-term borrowing.
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Out of its three verticals, tyres contribute the largest volume of business for Kesoram, which was founded in 1919 as Kesoram Cotton Ltd. The business, which had reported a huge loss in 2012-13, had turned around in 2013-14 with a small profit of Rs.17.4 crore. Cement profit, too, was halved in the last fiscal (compared to the previous one) while rayon business, which contributed only Rs.269 crore to Kesoram’s total turnover of Rs.5,063 crore in 2013-14, is in the red.
The company’s net loss increased to Rs.5,155.6 crore in 2013-14 from Rs.329.2 crore the year before. In December 2013, the company had launched a new brand aimed at forging a uniform identity.