The demerger of the cement business of Kesoram Industries Ltd into UltraTech Cements is expected to be complete by the end of this fiscal year, drawing curtains on the major business operation of one of Calcutta’s well-known companies.
After receiving various regulatory nods, including from the Competition Commission of India, Kesoram has filed an application before the Calcutta bench of the National Company Law Tribunal on May 20, seeking the transfer of the cement business by a scheme of arrangement.
“We are expecting to complete the demerger process by December, if not earlier,” P. Radhakrishnan, whole-time director & CEO of Kesoram, said after the company’s annual general meeting in Calcutta on Tuesday.
Kesoram shareholders will get one share of UltraTech Cement, run by Kumar Mangalam Birla, for every 52 shares held in the company. The scheme of arrangement was approved by the board of the two companies on November 30, 2023.
The transaction would add over 7 million tonnes (mt) cement production to UltraTech’s kitty. The company is India’s largest cement maker and is in the process to further consolidate its position in the wake of Adani Cement’s meteoric rise. On June 27, UltraTech acquired a 22.8 per cent stake in Chennai-based India Cements from Radhakrishnan Damani and family.
After the demerger of the cement division, Kesoram will be left with transparent paper and rayon business which is housed under wholly owned subsidiary Cygnet, which reported ₹246.4-crore turnover in FY24 and loss of ₹67.61 crore. In comparison, the standalone operation (cement business) reported ₹3,783.54-crore turnover and loss of ₹331.67 crore.
Radhakrishnan said Kesoram would explore all options with Cygnet. “We will do whatever that creates value for shareholders,” he informed. One of the options would be to expand the transparent paper business, a biodegradable alternative to plastics, with the help of Futamura of Japan. A strategic investment by the Japanese firm can not be ruled out, he added.
Kesoram Industries, the flagship company of Basant Kumar Birla Group, was headed by Manjushree Khaitan, daughter of Basant Birla. Khaitan passed away on May 16, and the baton to carry the family legacy is now with Kumar Mangalam, the grandson of B.K Birla.
In the AGM, shareholders paid their respect to late Khaitan, crediting her for putting untiring effort to turn around Kesoram.
CFO Rohit Shah informed shareholders that Kesoram recorded ₹420-crore EBIDTA and 7.25mt of cement production. But it was not enough to cover the finance cost which was ₹462 crore in FY24. However, Kesoram managed to refinance high cost NCDs with cheaper loans in January.