Century Textiles Chalks Out Three-Pronged Thrust

Century Textiles and Industries, the B K Birla group flagship, has chalked out a three-pronged strategy under which the company will withdraw from shipping business, continue with its chemicals and adhesive division, and focus on cement, rayon and paper as its long-term business plan.

Sources said the Rs 2,376 crore company has initiated its withdrawal from shipping business by offloading ships gradually.

Century's fleet consists of four ships, down from 13 a few years ago, aggregating over 1.30 lakh tonne deadweight.

"We have decided not to buy ships. At the same time, we are in no hurry to sell off the existing vessels. We will take at least four years to hive off the entire fleet," sources added.

The company's decision to retain its chemicals and adhesive interests was based on the fact that the rayon division -- the main money spinner -- used the products of the division as raw materials.

The division's products -- namely sulphuric acid, carbon-di-sulphide, caustic soda, liquid chlorine, hydrochloric acid and refined salt -- are used at the rayon unit.

Rayon, cement and paper have been identified as core areas owing to their substantial contribution to the company's turnover, sources added.

However, the company has no plans to infuse fresh capital in the core area of business as well.

"Owing to its huge outstanding debt of nearly Rs 900 crore, the company is not in a position to go for fresh investments. Rather, we would like to inject small capital for modernisation of plants and alternation of product mix, if required," source said.

They added that the company's priority was to share surpluses with shareholders through dividends, followed by repayment of debt to financial institutions.

Century Textiles' proposal to repay part of its loans by selling the Manikgarh cement plant is yet to bear results.

The company passed a resolution permitting sale of the plant at its last annual general meeting. It had given mandate to execute the sale to ICICI Securities.

In 1999-2000, the company posted a net profit of Rs 34.52 crore over a gross sales of Rs 2,376.13 crore.

Century Textiles was acquired by R D Birla, G D Birla's brother, from an industrialist named Sir Chunilal Mehta in 1951.

Gradually, its ownership shifted to the G D Birla group. Basant Kumar, who inherited Century Textiles from G D Birla, now controls 46.5 per cent of the company's Rs 93.04 crore equity through group companies.