Kesoram to raise capacity, cut debt

Kolkata: Manjushree Khaitan-led B K Birla Group flagship Kesoram Industries is planning for a brownfield expansion of its cement capacity by four million tonne taking its grinding capacity to 15 million tonne (MT). The company is also planning to retire Rs 600 crore debt in the next 18 months taking its total debt stock to Rs 1,000 crore. This was disclosed after the AGM — the first in the city after over two Covid-hit years — of the firm.

The whole-time director and CEO of Kesoram, P Radhakrishnan, told reporters that the company would require to invest Rs 500 crore for expanding the capacity to 15 MT from 11 MT in the next three-four years. He pointed out that Kesoram is also increasing the weightage of blended cement in the product mix to increase the margin which in turn would help improve its financial health.

Currently, 50% of capacity of Kesoram is blended, which would go up to 80% in next few years. “There is a difference in cost between ordinary Portland cement (OPC) and blended cement. So for blended cement EBIDTA is higher,” he added.

According to him, total debt of Kesoram is now at Rs 1,650 crore. A few years back, it was Rs 2,200 crore. The average cost of borrowing of the company now is 19%. The CEO said the firm is looking at an average interest rate of 14-15%. Kesoram has a credit rating of BBB- and it has set a target to reach AA.

On retiring the debt stock, he added that it would be done via internal accrual mainly but the company may look to add other options. It is also planning to refinance Rs 400 crore debt via corporate instruments and another Rs 200 crore by taking public deposit.

Commenting on Cygnet Industries, the arm of Kesoram, he added that it has Rs 200 crore debt on book.