Birla Tyres will resurface on Indian roads a year from now, courtesy the new owners of the company and the brand — Himadri Speciality Chemicals Ltd and Dalmia Bharat Refractories.
The consortium of Himadri and Dalmia took physical possession of the plant and machinery of Birla Tyres at Balasore, Odisha, on Tuesday after closing the transaction with the creditors of the ailing tyre maker.
According to the resolution plan approved by the National Company Law Tribunal, the consortium partners paid Rs 306 crore to the creditors and acquired control of Birla Tyres within 15 days of the pronouncement of the order.
“We will roll out tyres for commercial and passenger vehicles a year from now under the well-established brand name of Birla Tyres,” Anurag Choudhury, chairman and managing director of Himadri, told The Telegraph.
Birla Tyres, which was once part of the famed BK Birla empire before slipping into insolvency, will be a subsidiary of Calcutta-based Himadri, which claims to be the third largest producer of carbon black, a key ingredient in tyre making. “It will be Birla Tyres by Himadri,” Choudhury said.
Himadri will be the majority owner in the consortium, which is in the process of assessing the condition of the Balasore plant. The investment required to restart the unit that was closed for more than 30 months will be known following a detailed assessment after a month.
While Birla Tyres used to produce CV tyres, the company’s plan to roll out passenger radial tyres never took off. However, the previous management had bought machinery for radial tyres, which have to be installed. The present capacity of the Balasore unit, spread over a 190-odd acre plot on the National Highway, is 400 tonnes per day. The consortium partners aim to roll out passenger car tyres especially for electric vehicles.
One of the key assets, apart from the land, acquired by the Himadri and Dalmia duo is the Birla Tyre brand. “It would have probably taken 20 years for us to start from scratch and establish the brand in the market. But with the recall of the three-decade old Birla Tyre brand, the time can be reduced,” Choudhary said.
Himadri estimates a greenfield unit would have taken 24 months and the replacement cost would be Rs 3,100 crore.
Manav Investment & Trading, a promoter group company of Kesoram Industries — the flagship of the BK Birla group — had objected before the NCLT to the use of "Birla" name by the successful resolution applicants, arguing they have no connections with the Birla family.
The NCLT had rejected the plea of Manav, noting the applicant is neither a member of the “Birla” family nor a authorised person to represent the “Birla” family. The applicant has no locus standi to raise this allegation, the NCLT held.