Why has Kesoram Industries Risen 17% in One Week

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Why has Kesoram Industries Risen 17% in One Week

By Aditya Raghunath

Investing.com -- BK Birla Group’s flagship company Kesoram Industries (NS: KSRM ) has risen up over 17% since November 24 to Rs. 49.75. The company will receive an infusion of funds to the tune of Rs. 1,800 crore by a Goldman Sachs-led consortium. The company will use the funds to restructure its finances, particularly debt and working capital.

As part of its restructuring process, the company demerged its tire business to create a new company called Birla Tyres Ltd, and Kesoram is now pre-dominantly a cement company. Now Goldman Sachs (NYSE: GS ) and an Edelweiss Fund (NS: EDEL ) will pump in Rs. 1,600 crore in the form of 5-year debentures, and Rs. 200 crores that will be used to meet the shortfall in working capital.

The company had a total debt of Rs. 2,038 crores including Rs. 1,500 crores of long-term debt. Banks including SBI (NS: SBI ), ICICI Bank (NS: ICBK ), Yes Bank (NS: YESB ), Axis Bank (NS: AXBK ), and IndusInd Bank (NS: INBK ) have lent money to the company.

According to a PTI report, the infusion of funds will not change the overall debt that the company owes but the company will be in a better position to handle it. The Rs. 1,600 crores will be used to pay off a large part of the debt and the balance will be converted into long term financial instruments due between FY28 and FY32.

An Economic Times report said that the debentures by the consortium will attract a 10% rate for the first two years and a 15% rate for the remaining three years. All debentures are secured against the fixed assets of the company.

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  • Rajesh baraiya @Rajesh baraiya
    Good news comes too late to retail investors.. Lok
    Like 4

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