Comments
BK Birla group-controlled Kesoram Industries Ltd, which sits on a debt of Rs 4,700 crore, expects to reduce its working capital requirement by around Rs 300 crore this fiscal.
This move is part of a strategy to pare debt, which will also see the company sell some of its unproductive assets.
The diversified company plans to improve the debt-equity ratio from nearly 4.5:1 now to a more manageable 3:1 over the next couple of years, according to Arvind Kumar Singh, CEO.
Of the total debt of Rs 4,700 crore, around Rs 1,300 crore is working capital borrowing.
“We have shortened the working capital cycle by larger advances from buyers and faster collection of proceeds and lower inventories. The exercise is likely to squeeze out Rs 300 crore this fiscal from the level of working capital required last year,” Singh told reporters after the launch of the company’s new brand identity.
He said the company, after turning the operating loss into operating profit, decided to repay some of the old debts and take fresh loans. “Net debt will be lower because of the working capital management,” Singh told Business Line .
The promoters have already brought in Rs 416 crore as capital. The CEO, however, ruled out any land sale. “Land is the last thing we will let off.” Unproductive assets in West Bengal of the closed Hindustan Heavy Chemicals and Kesoram Spun Pipes could be sold, but their value is “insignificant”.“The proceeds from the rights issue (earlier this year) were largely used to repay debt. The promoters are committed to take necessary steps to bring down the debt," Singh added.
Radial tyre unit Kesoram now needs to invest Rs 230 crore for its stalled passenger radial tyre unit at Balasore in Odisha. The project’s Rs 400-crore debt, particularly its Rs 40 crore a year servicing cost, has been putting pressure on the company’s bottomline.
“We have already invested Rs 480 crore for the 95-tonne-a-day passenger steel radial tyre unit. The project will need another Rs 230 crore for making it operational," Singh said. Because of legal hurdles, the project could not be implemented in the past two years even after import of machinery and a partial installation. Now that the hurdles have been removed, the remaining work could be taken up. This would complete the entire tyre range for two and four-wheelers for Kesoram. Tyre business accounted for more than 60 per cent of Kesoram’s Rs 5,700-crore revenue in 2012-13.
Brand revamp Meanwhile, Kesoram has re-branded its corporate logo and launched new logos for its tyres, cement and rayon yarn divisions with the help from Grey Group of Singapore. It is also creating a new advertising campaign, including a commercial for the company. Grey Group is also creating Websites for the company and its divisions.
>jayanta.mallick@thehindu.co.in
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.