Kesoram Industries to raise high-cost funds via FDs; to offer 12.25% rate

To offer 12.25% rate; plans to use proceeds for working capital, pare debt

Kesoram Industries, owned by Manjushree Khaitan, daughter of late Basant Kumar Birla, is raising three-year deposits by offering a coupon rate of 12.25 per cent per annum. The company, which has a total cement capacity of 10.8 million tonnes per annum, plans to use the proceeds for its working capital requirements.
 
The company is raising high-cost fixed deposits after it recently raised Rs 400 crore as rights issue to repay non-convertible debentures (NCDs) of Rs 55 crore and prepay optionally convertible debentures worth Rs 294 crore. The fixed deposit rates are far higher than what is currently being offered by other companies in the market. For three-year fixed deposits, Manipal Housing Finance Syndicate is offering the highest coupon of 7.75 per cent per annum while Shriram Transport Finance Co is offering 7.48 per cent per annum interest, according to statistics collated by Paisabazaar.com.

 
Analysts said Kesoram, which made a loss of Rs 130 crore on revenues of Rs 3,540 crore for the financial year ending March 2022, is taking several steps to pare its debt.
 

“KIL is exposed to refinancing risks with 78 per cent of the debt amortising in February 2026 and high premium on redemption. Further, the absence of any sanctioned working capital limits may adversely impact the ability to fund the incremental working capital requirements, should the need arise. Nonetheless, it plans to refinance the existing high-cost debt with favourable terms in the near term, which is likely to support the debt coverage metrics going forward,” said analysts at rating firm ICRA in June this year.

 
In the 2022 fiscal year, the strong growth in sales volume was mainly due to improved liquidity post the one-time settlement with the lenders, the rating firm said.
 
In the rest of the ongoing financial year, analysts expect the company to report a sales volume growth of around 6-8 per cent on a year-on-year basis as demand from the infrastructure and housing segment picks up.
 
On Monday, Kesoram shares closed 3 per cent down at Rs 46.5 a share, thus giving it a total market capitalisation of Rs 1,134 crore. Kesoram has two integrated cement manufacturing plants at Sedam in Karnataka and Basantnagar Telangana. The combined capacity of the clinker is 6.3 MTPA and the cement units was 10.8 mtpa.

Kesoram Industries: Financial in a nutshell
FY 2022:	FY 2021:
Revenues: 3539 cr	Revenues:  2415 cr
Net Loss:   130 cr	PAT:  Rs  167 cr
Source: ICRA