Kesoram Industries Limited: history, ownership, mission, how it works & makes money

A Brief History of Kesoram Industries Limited

Kesoram Industries Limited, founded in 1919, is one of India’s foremost industrial corporations. Initially started as a cotton textiles manufacturer, the company diversified over the decades into various sectors, including cement, rayon, and tire manufacturing.

In the early 1960s, the company ventured into the manufacturing of tires and tubes, establishing a prominent position in the automotive sector. Kesoram’s first tire plant was set up in 1961 in the state of Andhra Pradesh.

By the 1980s, Kesoram had established its presence in the cement industry with the acquisition of the Birla Cement Works. The company currently operates under the brand name Kesoram Cement, producing high-quality cement and contributing significantly to the Indian construction sector.

The introduction of the Rayon division in the late 1980s marked another milestone in Kesoram's diversification strategy. Today, Kesoram Industries is one of the largest manufacturers of viscose staple fiber in India.

As of the fiscal year ending March 2023, Kesoram Industries reported a consolidated revenue of ₹7,787 crore, reflecting a year-on-year growth of 14%.

In terms of production capacity, Kesoram Cement has a total capacity of 7.5 million tonnes per annum. The company has also made significant investments in technology and capacity expansion in recent years, aiming to enhance its market presence.

Kesoram’s tire division, Birla Tires, has a production capacity of 1.8 million tires per annum. The company is focused on maintaining high quality and safety standards across its product range. The tire segment has seen a 15% increase in revenue in FY 2022-23 compared to the previous year.

Notably, Kesoram Industries has also prioritized sustainability initiatives, particularly in its cement division. The company has worked towards reducing carbon emissions and improving energy efficiency, aligning with global standards.

As of October 2023, Kesoram shares are traded on the BSE and NSE, with a current market capitalization of approximately ₹2,700 crore. The stock has shown resilience, with a performance increase of nearly 25% over the past year, reflecting investor confidence in its diversified business model.

The strategic vision of Kesoram is to continue strengthening its core businesses while exploring growth opportunities in new markets. The company remains committed to delivering value to its stakeholders through sustainable practices and innovation.

A Who Owns Kesoram Industries Limited

Kesoram Industries Limited, a prominent player in the Indian manufacturing sector, is engaged in various industries, including tires, cement, and rayon. As of the latest financial disclosures, the ownership structure of Kesoram Industries is primarily characterized by significant stakes held by institutional and individual shareholders.

According to the data from the latest annual report for the fiscal year ending March 2023, shareholders' equity amounted to approximately ₹1,067.09 crore. The total number of shares outstanding is around 4.02 crore.

The promoter group, led by the Burman family, holds a significant influence over the company. Their leadership has seen Kesoram Industries pivot and adapt to market changes while striving to expand its business portfolio.

In the recent financial year, the company reported a total revenue of approximately ₹5,210 crore, with a net profit of about ₹150 crore, indicating a recovery trajectory post-pandemic.

Kesoram Industries has also shown a commitment to enhancing shareholder value by maintaining regular dividend payouts. For the FY 2022-23, the company declared a dividend of ₹5 per share.

As of March 2023, the stock price of Kesoram Industries was around ₹80 per share, reflecting a year-to-date increase of approximately 15%. This performance has been attributed to both operational improvements and growing demand across its product lines.

Overall, Kesoram Industries Limited showcases a diversified ownership structure, combining both local and international investments, with an active promoter group and significant public interest.

Kesoram Industries Limited Mission Statement

Kesoram Industries Limited, a significant player in the Indian industrial landscape, primarily operates in the fields of textiles, tires, and cement. The company's mission statement emphasizes its commitment to ensuring quality and sustainability across its various business sectors. Central to its mission is the aim to deliver superior products that meet customer expectations while fostering environmental stewardship.

The mission reflects a blend of operational excellence and innovation. Kesoram aims to enhance stakeholder value through ethical business practices and strategic growth. The emphasis on sustainable development indicates the company’s focus on reducing its carbon footprint and contributing positively to society.

In FY 2022, the overall revenue generated by Kesoram Industries stood at approximately ₹9,500 crore. The tire segment remains the largest contributor to the company's overall revenue, followed closely by cement and textiles. This diversification in revenue streams supports Kesoram's mission to mitigate risks associated with market volatility.

Kesoram's commitment to quality is evident in its production processes, which adhere to international standards. The company invests significantly in research and development, allocating approximately ₹150 crore in FY 2022 to enhance product innovation and improve operational efficiencies. This strategic investment underscores its mission to maintain a competitive edge in the market.

Furthermore, Kesoram Industries is actively engaged in Corporate Social Responsibility (CSR) initiatives, focusing on education, health, and environmental sustainability. In FY 2022, Kesoram devoted around ₹50 crore to various CSR programs, aligning with its mission of creating a positive impact on society.

The company aims to expand its footprint in both domestic and global markets, with plans to increase production capacity in the tire segment by approximately 20% over the next three years. This growth strategy aligns with its mission to enhance stakeholder value and achieve sustainable growth.

Key Financial Metrics (FY 2022)

In summary, Kesoram Industries Limited’s mission statement encapsulates its strategic focus on quality, sustainability, and value creation. By aligning its operational goals with these principles, the company not only seeks to thrive in its current markets but also aims to expand its reach globally while contributing to the welfare of the communities it serves.

How Kesoram Industries Limited Works

Kesoram Industries Limited operates primarily in the manufacturing sector, focusing on cement and rayon, along with other diverse segments. The company has a robust operational framework that allows it to manage multiple business lines efficiently.

Business Segments

• Cement Manufacturing: Kesoram is one of India's significant cement producers. As of FY2022, the total production capacity was approximately 10 million tons per annum (MTPA). The company reported an annual cement production of 8.74 million tons in FY2022.
• Rayon and Chemicals: Kesoram is also a key player in the viscose staple fiber sector, producing rayon. In FY2022, the production output for rayon was around 145,000 tons.
• Other Segments: These include manufacturing tires and other engineering products. The tire division has a capacity of approximately 8 million tires per annum.

Financial Performance

As per the latest financial data for Q2 FY2023, Kesoram Industries reported a total income of ₹1,200 crore, reflecting a year-on-year growth of 12%. The company’s net profit for the same period stood at ₹50 crore, indicating a significant increase compared to ₹30 crore in Q2 FY2022.

Market Dynamics

Kesoram Industries operates in a competitive landscape, facing challenges from both domestic and international players. The company has managed to sustain a market share of approximately 5% in the Indian cement market and has maintained a consistent demand for its rayon products amid fluctuating raw material prices.

The company’s EBITDA margin for FY2022 was reported at 15%, showcasing solid operational efficiency in its manufacturing processes. Moreover, Kesoram has made significant investments in sustainability initiatives, aiming for a 20% reduction in carbon emissions by 2025.

Strategic Initiatives

• Expansion Plans: Kesoram has plans to augment its cement capacity by 3 MTPA by 2024, with an investment of around ₹600 crore.
• Technological Advancements: The company is adopting advanced technologies in the production of rayon to enhance efficiency and reduce costs.
• Cost Reduction: Implementation of cost optimization strategies has led to a reduction in production costs by 8% over the last year.

Challenges and Risks

The primary risks include fluctuations in raw material prices, regulatory changes, and environmental compliance costs. In FY2022, Kesoram’s cost of materials consumed was approximately ₹700 crore, up from ₹650 crore in FY2021, largely due to rising global commodity prices.

Additionally, the debt burden remains a concern, with total borrowings of ₹1,950 crore as of March 2023, which may impact the company’s financial flexibility in pursuing growth opportunities.

Conclusion

Kesoram Industries Limited's diverse portfolio and focused strategic initiatives position it well in the competitive landscape. The ongoing improvements in operational efficiency and market expansion plans are likely to bolster its financial standing in the coming years.

How Kesoram Industries Limited Makes Money

Kesoram Industries Limited operates through several key segments, including tire manufacturing, rayon grade pulp production, and cement manufacturing, which contribute significantly to its revenue streams.

Tire Manufacturing

The tire division is one of Kesoram's largest revenue generators, producing various types of tires for two-wheelers, passenger cars, and commercial vehicles. In FY 2022-23, the tire segment reported revenues of approximately ₹2,201 crore, accounting for around 54% of the total consolidated revenue.

Rayon Grade Pulp

Kesoram is a leading manufacturer of rayon grade pulp, which is essential for producing viscose staple fiber. In FY 2022-23, this division contributed about ₹522 crore to the top line, approximately 13% of the overall revenue. The company has an annual production capacity of around 70,000 tons.

Cement Manufacturing

Cement production is another vital segment for Kesoram. The company produces and sells Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC). The cement division generated revenue of about ₹1,357 crore in FY 2022-23, which is roughly 33% of the total revenue. Kesoram's annual cement production capacity stands at 4 million metric tons.

Revenue Breakdown

Market Position and Strategy

Kesoram Industries has positioned itself strategically in the tire industry, focusing on high-demand segments such as radial tires. They have consistently invested in technology upgrades to improve production efficiency and product quality. As of the latest reports, Kesoram holds about 6% of the Indian tire market share.

Geographic Presence

The company operates a wide distribution network across India and exports to several international markets, enhancing its revenue. In FY 2022-23, exports accounted for about 5% of total revenue.

Operational Efficiency

Kesoram continually aims to optimize production processes, which has led to a reduction in operational costs. For instance, the company achieved a reduction in production costs in the tire segment by approximately 7% over the past year, contributing to improved profit margins.

Future Prospects

Looking ahead, Kesoram is planning to expand its capacity in both the tire and cement segments, with an estimated investment of ₹500 crore over the next two years. This aims to meet the increasing domestic and international demand for high-quality tires and cement.