Kesoram Industries, the most trending stock on the social media today, is down in the red. The stock price slipped almost 8% to Rs.89.60.
At the company’s Board meeting yesterday, it announced its decision to spin off its tyre unit by demerging into a new entity, Birla Tyres Ltd, which in turn will be listed, with its shareholding pattern mirroring Kesoram. Around Rs 1,000-crore debt will get transferred to the demerged tyre company.
The Appointed Date for such Demerger will be commencement of business 1st January 2019. Kesoram shareholders will get one share of Rs 10 each of Birla Tyres for each share held in the company.
The market is obviously unhappy because this tyre unit contributed almost 40% to the Kesoram’s topline in FY18.
Post this demerger, Kesoram was left with cement business in Andhra Pradesh with an installed capacity of 7.5 million tonne and rayon.