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Rajashree Birla, one of the promoters of the Aditya Birla group, joined the Century Textiles board on Tuesday as a promoter director.
The appointment, cleared by the company’s board today, is significant because Aditya Birla group companies are increasing their stakes in Century Textiles to 50 per cent from 45 per cent after conversion of a preferential offer of shares issued to the promoters in July 2014.
The appointment is seen as a precursor to the BK Birla group companies, Century Textiles and Kesoram Industries, synergising operations with Aditya Birla group companies.
The board position fell vacant after Sarala Birla, wife of BK Birla, died last month. Kumar Mangalam Birla, chairman of the Aditya Birla group, Rajashree's son and BK Birla’s grandson, chairs board meetings at Century Textiles.
Century Textiles’ shares closed 5.24 per cent down today at Rs 707 as investors were expecting the company to announce the transfer of the company’s cement division to Aditya Birla group’s Ultratech. The Century Textiles stock has shot up 35 per cent since January on merger reports.
Century Textiles also announced a net profit of Rs 11 crore in the March 2014 quarter against a loss of Rs 4.9 crore in the same period last year.
For 2014-15, the company reported Rs 7,559 crore of revenue and Rs 15 crore of profit.
In an interview on Sunday, Kumar Mangalam Birla denied plans to demerge Century Textiles’ cement division and merge it with Ultratech. Birla, however, said Ultratech was planning to increase its cement capacity to 100 million tonnes from 71 million tonnes. Century Textiles has 12.8 million tonnes of cement capacity while Kesoram Industries has 7.25 million tonnes.
In a note dated April 14, global brokerage firm Credit Suisse said Ultratech could improve the profitability of BK Birla’s cement assets by 50 per cent and a merger with Ultratech would be a win-win deal for all stakeholders. Approval by the Competition Commission of India for the deal might be needed in Maharashtra, Karnataka and Madhya Pradesh.
According to a plan prepared by Axis Capital, Century Textiles and Kesoram Industries could merge their cement units with Ultratech in an all-stock transaction. The Birlas have not confirmed this plan.
IN A NUTSHELL
- Century Textiles’ shares closed 5.24 per cent down on Tuesday at Rs 707
- The Century Textiles stock has shot up 35 per cent since January on merger reports
- It also announced a net profit of Rs 11 crore in the March 2014 quarter against a loss of Rs 4.9 crore in the same period last year
