Grasim sells Century Enka pie for Rs 47 cr

Grasim Industries has sold its entire holding of 7.39 per cent in Century Enka Ltd to group company, TGS Investment & Trade, and Rajashree Birla for Rs 47 crore. Century Enka is a Rs 1,123 crore joint venture between the Dutch major Acordis and the B K Birla group, Grasim has sold Century Enka shares at Rs 221 a piece against a market price of Rs 212.80.

"This is a routine deal. Grasim has sold its stake to a group company and unlocked the value of its holding," said D D Rathi, group executive president and CFO of the AV Birla group.

Century Enka share closed at Rs 212.80 on the Bombay Stock Exchange, higher than its previous close of Rs 205.25. The Grasim Industries stock closed at Rs 1,058 on the BSE compared with the previous closing price of Rs 1,062.

Grasim has sold its 7.38 per cent stake, comprising 21,14,970 shares, of Century Enka to TGS Investment. A minuscule 0.01 per cent (2200 shares) of Century Enka has been sold to Rajashree Birla.

In the past, TGS has bought stake in various companies for the AV Birla Group, which includes buying out 20 per cent of Indo Gulf Fertilizers in 2003 and acquisition of 38.83 per cent stake in August 2004 through a preferential route in Birla Global Finance. Prior to the selloff, Rajashree Birla and TGS jointly held 1,35,800 shares in Century Enka, representing 0.47 per cent of the shares.

The mode of sale is inter se transfer and off-market, Grasim Industries informed the Bombay Stock Exchange. The deal assumes significance against the backdrop of Century Enka's 30 per cent buyback offer for its foreign promoter Acordis announced on May 10. Acordis holds 38.24 per cent stake in the company.

The company would have to shell out Rs 104 crore for the buyback (at Rs 122 per share). The buyback is expected to bring down the euro 620 million Dutch major's stake to 11.76 per cent per cent and the Birla group's holding to go up to 18.92 per cent on the reduced equity capital of the company. The Birla group holds 13.25 per cent stake.

The buyback will push up the B K Birla group's holding. The company, a joint venture between Acordis and the B K Birla group, had earlier informed the stock exchanges that the scheme of arrangements would be "beneficial to remaining shareholders" as it would result in an increase in the book value and earnings per share.

Incorporated in 1965 with collaboration with Enka International, a part of Akzo Nobel, Century Enka witnessed entry of Acordis in the company in 2005.

The change of hands from Akzo Nobel to Acordis, the euro 620 million man-made fibre major followed restructuring in Akzo Nobel in 1999. Acordis was formed at that time by bringing under one roof the worldwide fibre business of Akzo Nobel and the former Courtaulds plc.

Other major shareholders in the company are Life Insurance Corporation (4.28 per cent), Oriental Insurance Company (1.18 per cent) and New India Assurance (1.13 per cent). The public shareholding stands at 26.83 per cent.

Century Enka has three plants: Century Enka at Pune, Konkan Synthetic Fibres at Mahad in Maharashtra and Rajashree Polyfil at Bharuch in Gujarat. It produces nylon and polyester filament yarns, speciality yarns, industrial yarns and tyre cord fabrics.