Kesoram Industries puts Birla Tyre on the block; appoints BofA-ML for sale process_Kesoram Industries puts Birla Tyre on the block; appoints BofA-ML for sale process

Kesoram Industries puts Birla Tyre on the block; appoints BofA-ML for sale process

May 29, 2024

It’s Eastern time.

Mumbai: A major restructuring exercise has begun at BK Birla Kesoram’s Kesoram Industries, which will pave the way for Kumarrr Mangalam Birla’s acquisition of the creative agency. Sources close to the matter said that Kesoram Industries has decided to exit the tire business and entrust the sales process to Bofa-ML.

The deal is still at an early stage and experts say the price of Birla replacement tires could be close to Rs 1, 500 crore higher than the current market capitalization of parent company Kesoram Industries. Sources said that Kesoram Industries is carrying a huge debt of more than Rs 4, 50,000 crore and the sale of Birla Tire will help reduce the debt burden of the company.

An expert said, “The tire sector has been attracting investor interest and now is the best time for Birla to sell its tire manufacturing assets.”

BK Birla operates four business units-tires, cement, rayon and heavy chemicals. The tire business accounts for about 60% of total sales, but the company’s high operating costs have hurt performance. Birla Tire has manufacturing plants at Balasore in Orissa and Laxal near Hariwar in Uttaranchal.

According to sources close to the Birla Group, the Kesoram Industries restructuring marks the final takeover of the company by KM under the provisions of the will of BK, Birla Birla. KM Birla Pilani Investments has 24.9% stake in Kesoram slightly below the IPO trigger limit.

A Kesoram Industries spokesperson said: “Kesoram Industries Limited must categorically state that it is not aware of any developments shown in the news stream, which makes the news stream full of Aditya Birla Group speculations.” Answering questions from ET NOW.

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