Kolkata, India – Indian company Kesoram Industries is spinning off its tire business to create a separate Birla Tyres Ltd (BTL) entity, the company announced 4 Dec.
The “demerger” process is set for 1 Jan 2019, subject to the approval of authorities, and BTL will be listed on the Kolkata Stock Exchange.
The move is part of Kesoram’s ongoing restructuring, which it has undertaken in the past few months.
Kesoram, part of the Basant Kumar Birla group of companies, owns three businesses of tires, cement and rayon.
Through the restructuring, the company said it aimed to transform each business into entities that are “market-driven” in their approach.
For BTL, the spin-off is expected to attract new investment to revitalise the existing product portfolio range and extend the reach into new segments and markets
The company, which manufactures Birla-branded tires, aims to leverage the positive brand image to continue growth within the market.
According to the ERJ Global Tire Report 2018, Birla Tyres manufactures 143 tonnes per day of tires at its production plant in Balasore, Orissa, eastern India.
In its most recent financial statement, Kesoram reported a pre-tax operating losses of $30 million (€26.4 million) and $42 million for Birla Tyres for the quarter and six months ended 30 Sept, respectively, on sales of $54 million and $107.5 million.
Birla Tyres was established by Kesoram in 1991, initially as a collaboration with Pirelli Tyre SpA.
Today its production range at its sole plant, a 24-year-old unit in Balasore, includes tires for two- and three-wheelers, light commercial vehicles, medium trucks/buses and farm, industrial and mining equipment.
India’s Economic Times claimed 4 Dec that the move is a bid to control its debt of Rs35 billion (€435 million).
The paper went on to state that Kesoram sold off its Laksar tire plant near in northern India to JK Tyres two years ago due to increasing debts.
ERJ sister publication Tire Business contributed to this report.