Kesoram decided to transfer the division to an unlisted entity, Cygnet Industries.
B K Birla Group flagship Kesoram Industries is hiving off its rayon and transparent paper business in a bid to trim its diversified business operations as its ownership moves to grandson Kumar Mangalam Birla.
Kesoram on Saturday decided to transfer the division to an unlisted entity, Cygnet Industries, a wholly-owned subsidiary for Rs 480 crore based on a valuation done by SBI Caps.
The transfer of the business division is part of the management's on-going effort to "reorganise and realign its existing operations", a senior official of the company told dna.
"The restructuring process started when we decided to transfer our Haridwar tyre plant to J K Tyre for Rs 2,200 crore. The current transfer of the rayon and transparent paper division is also part of this strategy, to bring in more focus, which is otherwise not fully realised in a diversified entity," company secretary Gautam Ganguli said.
The division, with a gross revenue of Rs 257 crore in FY15, is Kesoram's smallest business division, contributing just 4.68%.
Kesoram would now be left with its cement and tyre businesses, divisions having the scale and the size that the new promoter Kumar Mangalam Birla would be comfortable in managing.
The truck and bus radial tyre plant at Haridwar was sold off not to exit tyre business, but to get rid of a much delayed project carrying high debt burden.
The development comes at a time when head of the Aditya Birla group, Kumar Mangalam, has been steadily raising his control over the company which is now being managed by B K Birla's daughter Manjushree Khaitan.
Kesoram in February made referential allotment to a K M Birla-owned investment company Manav Investments which raised its stake in the company from 7.87% to 12.93%.
K M Birla-controlled group investment company Pilani Investments had earlier hiked its stake in Kesoram to 24.91% from 5.28%.
With these transactions, K M Birla now effectively controls B K Birla group's flagship entity.
Kesoram management also decided on Saturday to replace Arvind Kumar, its chief executive officer, who was primarily looking after the tyre division, with Enrico Malerba, who has been heading Pirelli Tyres's Romania operations.
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