Kesoram has completed the refinancing of its nearly Rs 1900 crore high-cost debt, yielding a benefit of almost 800 basis points in interest rates, a senior company official said on Thursday.
The company borrowed approximately Rs 1900 crore in March 2021 from a group of investors in Non-Convertible Debentures and Optionally Convertible Debentures at an interest rate of close to 19%.
On Thursday, the company announced the redemption of the entire outstanding outstanding NCD amounting to Rs 1487 crore before maturity. OCDs were redeemed earlier, officials said.
"We have refinanced the entire debt on our books. We have refinanced about Rs 1500 crore from Tata Capital group and another Rs 350 crore from Hero Finance," Kesoram's whole-time director & CEO P Radhakrishnan told PTI.
"Our average cost of debt has now decreased to nearly 11.25% from over 19% previously. This will lead to a reduction in our interest burden by more than Rs 30 crore on a quarterly basis, positively impacting our bottom line," he added.
Regarding the progress of the sale process of the cement business to UltraTech Cement, Radhakrishnan mentioned that although the effective date remains April 2024, he expects it to take some time to obtain all regulatory approvals.
UltraTech Cement to acquire Kesoram Industries' cement business in an all-share deal valued at approximately Rs 7,600 crore, including debt. In this arrangement, Kesoram shareholders will receive one share of UltraTech Cement for every 52 Kesoram shares of Rs 10 each.
Kesoram currently operates two integrated cement units in Sedam (Karnataka) and Basantnagar (Telangana) with a total installed capacity of 10.75 million metric tonnes per annum (MTPA), along with a 0.66 MTPA packing plant in Solapur, Maharashtra. In 2022-23, Kesoram's turnover from cement operations was Rs 3,533.75 crore.
The deal was executed within the Birla family, with Kumar Mangalam Birla, the grandson of BK Birla. UltraTech is the third-largest cement producer in the world, outside of China, with a total grey cement capacity of 137.85 MTPA and the ongoing projects will take its capacity to 160 million.
Post demerger, Kesoram will now retain Cygnet, which operates in the viscose rayon filament yarn and chemical manufacturing verticals and has around 2,500 employees. In FY23, it registered a turnover of Rs 260.62 crore and a loss of Rs 78.61 crore.
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