Kolkata, March 17 (PTI): BK Birla Group’s Kesoram Industries, which has raised around Rs 2,063 crore high-cost debt to aid its turnaround strategy, is hopeful to repay it in the next 25-26 months and aiming at a 30 per cent growth in its cement sales, an official said on Wednesday.
The company has sufficient cash flow at the operating level for servicing the debt, its whole-time director and CEO P Radhakrishnan said.
“Though we raised around Rs 2,063 crore, the principal amount is close to Rs 1,900 crore as Rs 163 crore was used for the upfront interest payments to the investors. If we compare with bank loan terms, our interest rate comes at 19 per cent.
“Yes, the rate is high, but it is for survival and turnaround strategy of the company,” Radhakrishnan told PTI in an interview after the process of raising debt was completed.
The cement maker on Tuesday said it has completed raising close to Rs 2,063 crore through NCDs and OCDs on a private placement basis.
The securities of the cement maker were considered ‘junk’ as they were rated ‘D’ by a rating agency, according to analysts of the industry.
The analysts sought to know the company’s ability to service these high-cost securities and the possible impact on the promoter’s shareholding if it defaults.
“We are having an EBITDA of Rs 370-400 crore with sales of 5-5.5 million tonne of cement a year. The quarterly interest outgo on the debt would be around Rs 240 crore. So there is no question of default,” he said.
Radhakrishnan also mentioned that the Kolkata-based company is focusing on its operation and targeting a 30 per cent growth in cement sales to take the volume to around 7 million tonnes.
“At the current prices, we will be able to register net profit,” he said.
The company informed bourses that it has raised Rs 1,603 crore via non-convertible debentures with maturity in February 2026, and optionally convertible debentures amounting to Rs 459 crore.
Radhakrishnan said the company intends to repay the “entire high-cost debt in the next 25-26 months with infusing equity capital and low-cost borrowing, once the company attains stability”.
“A worst-case scenario was also considered while formulating the structure of the deal. We kept in mind that the promoters’ holding should not come down below 25-26 per cent,” he said.
The BK Birla group company was facing liquidity challenges and defaulted on loans.
The first phase of the restructuring included the demerger of its tyre business from the company and the creation of a new entity, Birla Tyres Ltd.
Raising the debt from a clutch of private investors took nearly a year to complete.