Tyre unit sale in offing: Kesoram Industries shares surge nearly 8%

Shares of Kesoram Industries flared up nearly 8 percent in early trade Monday, defying the weak broad market sentiment, on reports the flaghsip company from the BK Birla Group is likely to sell Birla Tyres to JK Tyre for a tad over Rs 2,000 crore. The deal, if materialises, will help Kesoram Industries deleverage its balance sheet, which has a debt of Rs 4,425 crore at the end of September 2014, The Economic Times report said. [caption id=“attachment_2328788” align=“alignleft” width=“380”] Reuters[/caption] Although, JK Tyre has emerged at the forefront to win the bid, Kesoram has been in talks with other three leading tyre manufacturers in India — MRF, Apollo and JK - over the past six months, the report said. For JK Tyre, the deal is likely to be funded through a combination of debt and equity. The company will take a loan of Rs 1,500 crore from public and private sector banks with the rest coming from internal accruals. At 11.10 am, Kesoram Industries’ stock was traded at Rs 86.45, up nearly 6 percent from previous close. Earlier, the stock scaled a high of Rs 88, up around 8 percent. Around 7 lakh shares changed hands on BSE so far as against a two-week average volume of 4.77 lakh shares. JK Tyre shares, too, traded in positive territory at Rs 85.75, up 1.8 percent from previous close.