Kesoram looking for partner for its tyre business

Kolkata: Kesoram Industries Ltd, which says it will continue to focus on commercial vehicle bias tyres, is looking at inducting a strategic partner for its tyre business, an official said on Friday.

“We are looking for a partner for the tyre business, particularly for the passenger car radial tyre, which will require technology,” its Director and CFO Tridib Kumar Das said on the sidelines of the 99th Annual General Meeting of the company.

The company has hired an investment banker to search for a “strategic partner” and it has kept for all options open, Das said, adding that the company does not want to exit from the tyre business.

He also indicated that the company could require to separate its tyre business in order to induct the partner.

“We will focus on bias segment and this segment on commercial vehicles is still 50 per cent of the total tyre market. However, this segment is going down while radial is increasing,” he said.

According to him, the company is also working on deepening market penetration in the light commercial vehicles, farm and OTR as well as two- and three-wheeler segments, beyond commercial vehicle bias.

Speaking on its cement business, he said the volume “dropped by 4 per cent” last year.

The company’s 45-50 per cent cement production goes to Maharashtra but the prices in that market remained subdued due to low demand, he said, adding that company’s cement business was EBITDA-positive.

“Both businesses are inherently EBITDA-positive and, indeed, the cement business has never deviated from being EBITDA-positive over the years despite the price pressures it has been subjected to. The functioning of the tyre business is being restructured, including if so required, through the induction of a strategic partner for thoroughly remodulating the business’s vision going forward,” its latest annual report said.

According to the report, the promoter group brought in non-debt funds during 2017-18 to counter balance cash deficits.

Responding to shareholder queries on the buy-back of spun pipe and the heavy chemicals businesses from Camden Industries Ltd, Das said that the B.K. Birla group firm had transferred its sick businesses of heavy chemicals and spun pipes to Camden Industries for a valuation of around Rs 400 crore and got back both the divisions at Rs 422 crore.

However, these undertakings continue to be under suspension of work, the report said.

Das also said that the company’s legal expenses have gone up as it has been looking at realigning and rearranging its businesses.