Jobaaj Stories
The bankrupt tyre manufacturing arm of the Birla Group has found several bidders for it as famous players like Ceat, Jindal Power, and a handful of others have sent their Expression of Interest (EoIs).
Birla Tyres came into being in 1991 as a part of Kesoram Industries, a company of the "B. K. Birla Group of Companies". The company manufactures tyres for motorcycles, automobiles, farm vehicles, commercial vehicles and heavy machinery.
The company was taken to insolvency court by lender SRF Ltd. to whom the company owed Rs 15.84 crores in dues.
The National Company Law Tribunal (NCLT) admitted Birla Tyres for insolvency after being satisfied by the documents presented.
Claims worth around Rs 1,800 crores were accepted by the Resolution Professional (RP), including claims from financial institutions like SBI, ICICI, WBIDFC, ARC (India) Ltd, DBS Bank (India) Ltd., Yes Bank, and PNB. Axis Bank has the highest exposure with an outstanding loan of Rs 556 crores.
The company's operations were a mess as it only had Rs 19.74 lakhs in revenues, down 93.2% YoY, while its losses mounted to Rs 29.9 crores for Q1FY23!
However, due to the company's strategically located factories and abundant land, the company has garnered the interest of several companies and PE Funds.
Some of the most prominent names that have reportedly submitted their EoIs are Ceat, Jindal Power, Dalmia Bharat Refractories, MCPI, Falcon Marine Exports, Himadri Specialty Chemicals, a consortium led by DD Steel and Power, etc.
Investors reacted positively to the news as the share of Birla Tyres surged over 4.5% in today's session. At reporting time, the stock was trading around Rs 4.65 per share.
The bankrupt tyre manufacturing arm of the Birla Group seems to have attracted the attention of several bidders, with the resolution process likely to see a competitive bidding process.
The insolvency and the interest shown by several companies and PE funds provide an opportunity for the company's future.
- Aman Agarwal
