Kolkata, Nov 4: Kesoram Industries Ltd, part of the B K Birla Group, may see capital infusion from its promoters to alleviate the operational strain due to high input costs and lower realisation in the first two quarters of the current financial year, sources said.
According to the sources close to the development, the promoters may infuse around Rs 100 crore capital in tranches.
The company board is going to meet on November 8 to discuss various options to raise capital.
The company currently has an outstanding of Rs 1,641 crore high interest cost debt which it aims to bring down considerably with a combination of higher EBIDTA and replacing the high cost debt with low interest funds.
“The promoters are considering supporting the company with fresh funds. In 2021, the promoters of Manjushree Khaitan-led company had planned to inject Rs 100 crore of equity but that was later dropped as the company management chose to increase the amount of rights offer to Rs 400 crore in last year’s capital raising round,” sources told PTI.
Kesoram had successfully raised Rs 400 crore, which helped the company to reduce the high cost of borrowing of Rs 1,641 crore. This outstanding was over Rs 2,000 crore raised at an interest of 19 per cent in 2020.
According to sources, the capital injection will provide the company with the much-needed support it needs to move into traditional banking channels to raise funds and reduce interest costs.
Kesoram has also opted to hit the fixed deposit market and was offering around 12.25 per cent in annual return in an endeavour to raise low-cost working capital.
The company has raised around Rs 100 crore so far through this route out of a window of up to Rs 187 crore, officials said.
Kesoram’s consolidated loss for Q2 of FY23 was Rs 59 crore due to high input costs and lower realisation due to monsoons.
Company officials said demand and realisations will improve in the second half of the year as the pressure of the first two quarters is easing out with moderations in input commodities.
“We were able to earn an EBIDTA of Rs 140 crore in the April-September 2022 period amid pressure on cost and expecting better realisation and higher capacity utilisation. The company is operating at around 60 per cent of the total about 10 million tonne of cement capacity,” an official said.
Cement is the mainstay for Kesoram while rayon, transparent paper and chemicals businesses account for less than 10 per cent of its total revenue. (PTI)
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