The BK Birla Group’s flagship company Kesoram Industries is restructuring its tyre business by selling one unit and investing Rs 300 crore to foray into radial tyres for cars.
This investment over the next six months is in addition to the Rs 500 crore already spent for the move into car radials. “We do not need to invest more for commercial vehicle tyres as the infrastructure is in place at the Balasore plant,” Tridib Kumar Das, the company’s chief financial officer, told Business Standard. He added the company’s radial tyres would be available from next May.
Production capacity of the Balasore plant will improve significantly to 600,000 car radials a month, 200,000 tyres for two wheelers and another 125,000 tyres for commercial vehicles.
Kesoram Industries has a 10 per cent market share in tyres for commercial vehicles. It also makes tyres for two wheelers and trades in radial tyres.
The fresh investment announced during its annual general meeting here today will assure shareholders Kesoram Industries is not planning to exit the tyre business. In September, the company signed a binding term sheet with JK Tyres to sell its stake in a tyre making facility in Laksar in Uttarakhand for Rs 2,195 crore. The deal will help the diversified Kesoram Industries, with interests in cement and rayon. It is awaiting approval from the Competition Commission of India.
The sale of the Laksar plant, which has the capacity to make 4.4 million truck tyres a year, will not affect Kesoram Industries’ tyre revenues because production at the Balasore unit will be increased. “This is a restructuring. We were not utilising our existing capabilities in the tyre segment fully,” Das said.
In this endeavour, the company has planned an extensive marketing campaign. “Since we have assertive plans in the passenger car segment, branding will play a key role,” Das said. Kesoram Industries is the principal sponsor of the Atletico de Kolkata team in the Indian Super League.
The company’s chairman, BK Birla, did not attend the annual general meeting due to failing health.