Kesoram Industries Prioritises Tyre Factory Before Closing Partnership Deal

The brand is investing Rs 200 crore in its new tyres factory, and it is claimed that initially, it will have an installed capacity to manufacture 2 million tyres and is also capable of scaling up the figures to 4 million tyres

Kesoram Industries Prioritises Tyre Factory Before Closing Partnership Deal

One of the pioneer companies of India, Kesoram Industries Limited is prioritising its passenger car radial tyre factory at Odisha to make a financially strong entity with Birla tyres. The brand has decided to set up its factory first and then move forward with the partnership talks. The chief financial officer of Kesoram Industries Limited has said in a statement that, showing commitment and seriousness to the tyre business is the first priority for the company.

The brand is investing Rs 200 crore in its new tyres factory, and it is claimed that initially, it will have an installed capacity to manufacture 2 million tyres and is also capable of scaling up the figures to 4 million tyres. P Radhakrishnan, the chief financial officer at Kesoram Industries, said “The partner also needs to take us seriously, and unless we show some commitment from our side, there can be some doubts in the partner’s mind. So, we have prioritised first to make operational the plant.”

According to the company, the manufacturing facility will take around 12-14 months to start production. In order to get build brand awareness and hit the markets rapidly, it has plans to outsource tyre production to third parties. “After the necessary approvals are obtained, Birla Tyres will be listed on the bourses. The idea is to turn both Kesoram and Birla Tyres into financially strong listed entities. The debt was taken at a consolidated basis, and like the asset split ratio, the debt will also be split in a similar ratio,” said Radhakrishnan.

Kesoram has reported a pre-tax loss of Rs 133.58 crore in the quarter ended September 31, 2019, and the revenue dropped by 19.68 per cent at Rs 811.39 crore. However, the same in the identical quarter of 2018 stood at Rs 113.04 crore and Rs 1,010.16 crore, respectively.

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