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Kesoram sticks to core strength

Calcutta, June 26: Kesoram Industries (KIL) has embarked on a restructuring plan to consolidate core competence, under which it will close down oil mills and the extraction division of Bharat General section at Malkapur in Maharashtra, and hive off its Asansol refractory.

The focus will be on cement, tyres and rayon, which continue to be major contributors to the group turnover. “We count on cement, tyres and rayon, which have been major contributors to profit over the past few years. We are planning to come out of small and loss-making businesses,” Kesoram chairman B. K. Birla said.

The B.K. Birla group flagship has sought permission from the Maharashtra government to close down the Malkapur unit. “We will restructure sick businesses. The refractory division will have to be hived off.”

Bharat General turned in profits in the initial years since KIL acquired it in 1945. But with the competition over the past couple of years intensifying, it became unviable; the case with the refractory business is also similar.

The company suspended work at its refractory unit in February 2002, and it remained idle during the previous financial year. The Malkapur unit, however, operated even in the face of spiralling raw material costs.

“The situation was aggravated by higher wages and energy cost, apart from low prices in the domestic and overseas markets,” Birla said. He gave hints that the refractory division would be leased out to a firm with expertise.

The bulk of the profit, he said, came from the tyre division, followed by cement and rayon. “The company’s future is tied to cement, which contributed Rs 118 crore (Rs 93 crore) to profits in 2002-03; the tyre division accounted for Rs 68 crore (Rs 32 crore), while rayon made up Rs 25 crore (Rs 23 crore).

“We have no plan to expand cement capacity since the prices are still low,” Birla said.

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