After Century Textiles, the Aditya Birla group is raising its stake in Kesoram Industries to 50 per cent from the present 46 per cent by way of a preferential share issue. Kesoram is the second B K Birla group company in which Kumar Mangalam Birla owned- promoter companies are raising stake.
Kesoram announced to the stock exchanges that its board has approved preferential offer to promoter companies of Aditya Birla group. B K Birla had said in the past that Kumar Birla will be taking charge of his group companies after him.
Kesoram said on Wednesday that it would issue preferential equity shares of face value of Rs 10 each of an amount up to Rs 90 crore to Manav Investment and Trading, a promoter group company and Optionally Convertible Preference Shares of face value of Rs 100 each of an amount up to Rs 90 crore to Induslnd Bank Ltd. Manav currently holds 8 per cent stake in Kesoram (see chart). Earlier, the board of directors of the company at its meeting held on December 19, 2015, had approved the fund raising of amount upto Rs 650 crore through qualified institutional placement of equity shares and/or any other financial instruments or security convertible into equity, FPO, ADR, GDR or FCCB,” Kesoram Industries said in a statement.
Kesoram stock closed 2 per cent down at Rs 80 a share on Wednesday.
The board has also given the go-ahead to dispose off the company's spun pipe and the heavy chemical units located in West Bengal as well as divestment of certain of its investments in listed companies at prevailing market prices for the purpose of enhancing cash inflows, it added. The company said in aggregate the current market value of such investments is approximately Rs 470 crore. The company’s performance was dismal and market analysts expect the company to improve their performance under the Aditya Birla group management.
In September last year, Kesoram had sold its tyre unit to Singhania family-promoted JK Tyre for Rs 2,200 crore. The acquisition will help JK Tyre, the country's third largest player by revenue to strengthen its position in the industry and enter the two-wheeler and three-wheeler tyre market.
Kesoram Industries will be able to reduce its debt which currently stands at about Rs 4,000 crore. The company has reported losses for last four years due to high interest burden.