Kesoram Industries radial tyre project in limbo

B K Birla group company, Kesoram Industries, has put its passenger car radial tyre project on hold, in the wake of weak market conditions.

“The project is in limbo. It was supposed to be commissioned by the end of 2011-12, but we are undecided as to when we should commission the project,” Birla Tyres chief executive officer, Arvind Singh, said, on the sidelines of the company’s annual general meeting.

The passenger car radial tyre project at Balasore would have a per day production of 80 tonnes, once commissioned. The total investment in the project is about Rs 750 crore, of which Rs 350-400 crore has been invested.

“The tyre business is clearly not the star of the show and this decision is in view of the market perspective,” Singh explained.

However, he also added that losses of in the fourth had halved, compared to the second and third quarters, which were the worst.

Margin pressure, on account of raw material prices and energy cost, had affected the business. Although

Prices of finished products moved up, these increases were not entirely commensurate with the higher input costs.

The tyre business had so far focused on the truck and bus tyre categories. “This radial tyre project would complete our product range in that respect,” Singh pointed out.

On the cement front, Kesoram had expansion plans, but they were yet to be finalized. The company on Wednesday got shareholders’ approval to raise the borrowing limit to Rs 6,000 crore.

Company officials said, it was just an enabling resolution. At present, borrowings stood at Rs 2,755 crore against a limit of Rs 4,000 crore. “So we have enough head room,” a Kesoram official said.

Cement and tyres were the two main business drivers for Kesoram.