Kesoram Industries Ltd.
NEW COVERAGE: Kesoram Industries, Birla Tyres Appoint EY India to Restructure INR 30B Cumulative Debt
Wed 05/06/2020 06:48 AM
Relevant Documents:
2019 Annual Report
Kesoram Default Filing
Birla Tyres Default Filing
Kesoram-Birla Tyres demerger announcement
Kolkata-based Kesoram Industries Ltd., which defaulted on interest and principal payments in January, has appointed EY India to restructure its INR 20.7 billion ($273 million) debt, said two sources with knowledge of the matter.
EY India has also been given the mandate to restructure the debt of Birla Tyres Ltd., which was carved out of Kesoram in February and has INR 9.14 billion of debt, the sources added.
Birla family-controlled Kesoram defaulted on principal and interest payment of INR 791.3 million on Jan. 9, the company said in a March 7 BSE Ltd. filing. The company has a total outstanding debt of INR 20.70 billion rupees, according to the filing.
101-year-old Kesoram Industries has been battling high leverage for some time now, leading to a default in January, a banker and an advisor source said. The company demerged and then listed its tyre unit to unlock value to restructure its debt. However, the Covid-19 lockdown and the expected economic slowdown will spell more trouble for the company, the sources added.
Kesoram Industries reported a consolidated loss of INR 1.02 billion in the December quarter on a revenue of INR 6.45 billion. Finance cost for the period stood at INR 892.9 million and contributed 84% to its quarterly loss, according to its earnings filing.
As of Dec. 31, Kesoram’s cement business contributed 87% of its revenue from operations, while rayon and the chemicals business accounted for the rest, according to its quarterly filing.
Debt Reduction
Kesoram, which manufactures rayon yarns and cement, had planned to cut debt by INR 7 billion through the infusion of fresh equity and internal cash generation to bring down interest costs, the Telegraph reported in February.
Its board approved a capital raising plan of up to INR 12 billion by way of a rights issue or preferential share allotment to pare debt, the company said in Feb. 18 BSE filing. A committee has been set up to finalise the instrument, which may also include convertible securities and qualified institutional placement, and the timing, the filing added.
Kesoram’s promoters hold 53.13% stake in the company and 44.82% of their holdings is pledged, according to BSE data. The company’s shares have declined 52% this year to INR 24.50 with a market cap of INR 3.49 billion as of May 6, according to exchange data.
According to the March 7 filing, the lenders to Kesoram are State Bank of India, Punjab National Bank, Axis Bank, indusInd Bank, ICICI Bank, Yes Bank, Karur Vysya Bank, Lakshmi Vilas Bank, West Bengal Infrastructure Development Finance Corporation, South Indian Bank, HDFC Bank.
Birla Tyres
Birla Tyres defaulted on Jan. 6 on its working capital and term loan obligations worth INR 482 million having a principal of INR 357 million and interest of INR 125 million, according to a March 6 BSE statement.
Birla Tyres has a total outstanding debt of INR 9.14 billion which includes fund based working capital of INR 2.20 billion, non-fund based working capital of INR 231 million and term loans of INR 6.7 billion, the statement added.
Birla Tyres plant in Balasore, Odisha resumed operations after a temporary closure of the manufacturing operations from March 26 to contain the spread of Covid-19 pandemic, the company said in a May 4 BSE statement.
The lenders to Birla Tyres include State Bank of India, Punjab National Bank, Axis Bank, ICICI Bank, Yes Bank, Karur Vysya Bank, Lakshmi Vilas Bank, West Bengal Infrastructure Development Finance Corporation, South Indian Bank and HDFC Bank, according to a March 6 filing.
Background
Kesoram was founded in 1919 under the name of Kesoram Cotton Mills Ltd. Later the company expanded into the production of rayon and its first rayon plant was built in 1959, with a production capacity of 4,635 metric tons of rayon yarn per year, according to the company’s website.
Kesoram entered the tyre and cement businesses and in 1986 changed its name to Kesoram Industries Limited. The company is listed on the National Stock Exchange of India, Bombay Stock Exchange, Calcutta Stock Exchange Association, and the Société de la Bourse de Luxembourg.
EY India, Kesoram Industries and Birla Tyres did not respond to requests for comments.
The capital structure of Kesoram Industries as of March 31, 2019, is as follows:
-Rajhkumar K Shaaw, Santanu Chakraborty
2019 Annual Report
Kesoram Default Filing
Birla Tyres Default Filing
Kesoram-Birla Tyres demerger announcement
Kolkata-based Kesoram Industries Ltd., which defaulted on interest and principal payments in January, has appointed EY India to restructure its INR 20.7 billion ($273 million) debt, said two sources with knowledge of the matter.
EY India has also been given the mandate to restructure the debt of Birla Tyres Ltd., which was carved out of Kesoram in February and has INR 9.14 billion of debt, the sources added.
Birla family-controlled Kesoram defaulted on principal and interest payment of INR 791.3 million on Jan. 9, the company said in a March 7 BSE Ltd. filing. The company has a total outstanding debt of INR 20.70 billion rupees, according to the filing.
101-year-old Kesoram Industries has been battling high leverage for some time now, leading to a default in January, a banker and an advisor source said. The company demerged and then listed its tyre unit to unlock value to restructure its debt. However, the Covid-19 lockdown and the expected economic slowdown will spell more trouble for the company, the sources added.
Kesoram Industries reported a consolidated loss of INR 1.02 billion in the December quarter on a revenue of INR 6.45 billion. Finance cost for the period stood at INR 892.9 million and contributed 84% to its quarterly loss, according to its earnings filing.
As of Dec. 31, Kesoram’s cement business contributed 87% of its revenue from operations, while rayon and the chemicals business accounted for the rest, according to its quarterly filing.
Debt Reduction
Kesoram, which manufactures rayon yarns and cement, had planned to cut debt by INR 7 billion through the infusion of fresh equity and internal cash generation to bring down interest costs, the Telegraph reported in February.
Its board approved a capital raising plan of up to INR 12 billion by way of a rights issue or preferential share allotment to pare debt, the company said in Feb. 18 BSE filing. A committee has been set up to finalise the instrument, which may also include convertible securities and qualified institutional placement, and the timing, the filing added.
Kesoram’s promoters hold 53.13% stake in the company and 44.82% of their holdings is pledged, according to BSE data. The company’s shares have declined 52% this year to INR 24.50 with a market cap of INR 3.49 billion as of May 6, according to exchange data.
According to the March 7 filing, the lenders to Kesoram are State Bank of India, Punjab National Bank, Axis Bank, indusInd Bank, ICICI Bank, Yes Bank, Karur Vysya Bank, Lakshmi Vilas Bank, West Bengal Infrastructure Development Finance Corporation, South Indian Bank, HDFC Bank.
Birla Tyres
Birla Tyres defaulted on Jan. 6 on its working capital and term loan obligations worth INR 482 million having a principal of INR 357 million and interest of INR 125 million, according to a March 6 BSE statement.
Birla Tyres has a total outstanding debt of INR 9.14 billion which includes fund based working capital of INR 2.20 billion, non-fund based working capital of INR 231 million and term loans of INR 6.7 billion, the statement added.
Birla Tyres plant in Balasore, Odisha resumed operations after a temporary closure of the manufacturing operations from March 26 to contain the spread of Covid-19 pandemic, the company said in a May 4 BSE statement.
The lenders to Birla Tyres include State Bank of India, Punjab National Bank, Axis Bank, ICICI Bank, Yes Bank, Karur Vysya Bank, Lakshmi Vilas Bank, West Bengal Infrastructure Development Finance Corporation, South Indian Bank and HDFC Bank, according to a March 6 filing.
Background
Kesoram was founded in 1919 under the name of Kesoram Cotton Mills Ltd. Later the company expanded into the production of rayon and its first rayon plant was built in 1959, with a production capacity of 4,635 metric tons of rayon yarn per year, according to the company’s website.
Kesoram entered the tyre and cement businesses and in 1986 changed its name to Kesoram Industries Limited. The company is listed on the National Stock Exchange of India, Bombay Stock Exchange, Calcutta Stock Exchange Association, and the Société de la Bourse de Luxembourg.
EY India, Kesoram Industries and Birla Tyres did not respond to requests for comments.
The capital structure of Kesoram Industries as of March 31, 2019, is as follows:
-Rajhkumar K Shaaw, Santanu Chakraborty
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