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December 05, 2018 01:00 AM

Kesoram to 'demerge' Birla Tyres, list it separately

Tire Business Staff
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    KOLKATA, India — Kesoram Industries Ltd. plans to spin off its Birla Tyres Ltd. business unit by "demerging" it and listing it as separate company on the Calcutta Stock Exchange.

    Kesoram said the proposed demerger is part of an ongoing realignment and recalibration of its own operations. The objective, it said, has been to "transform each business into entities that are market driven in their approach."

    The demerger will "open new growth vistas" for Birla Tyres, Kesoram said in a statement to the Calcutta Stock Exchange, and will act as a "stimulant for further investments" into the Kolkata-based tire maker.

    Specifically, Kesoram said Birla Tyres will benefit due to being able to "revitalize" its product portfolio and leverage the positive brand image and "enormous brand equity" of the Birla name.

    Birla Tyres was ranked 67th worldwide on the Tire Business Global Top 75 Tire Makers list this year, based on fiscal 2017-18 sales of $225.2 million.

    In its most recent financial statement, Kesoram reported a pre-tax operating losses of $30 million and $42 million for Birla Tyres for the quarter and six months ended Sept. 30, 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 S.p.A.

    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.

    This is the second action Kesoram has taken in the past few years to shore up Birla Tyres.

    In 2015 it sold a truck and two-wheeler tire and tube plant in Haridwar, India, to JK Tyre & Industries Ltd. That factory, in Laksar-Haridwar, Uttaranchal Province, opened in 2009 and was rated at 4.4 million tires per year.

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