You are here: Home » Companies » News
Business Standard

Ultratech, Grasim deals to help reduce Century Textiles debt: K M Birla

Currently, CTIL has exposure to the cement, textiles, pulp and paper and real estate businesses

Press Trust of India  |  Mumbai 

Kumar Mangalam Birla
Kumar Mangalam Birla

and Industries' decision to demerge the cement business into Cement and transfer the viscose filament yarn business to will help it reduce the debt and focus on textiles, pulp and paper and real estate businesses, a top company official said.

and Industries (CTIL) in May this year announced plans to demerge its cement business into firm Cement.

The company last year also entered into a deal with Industries to manage and operate its viscose filament yarn (VFY) business for a period of 15 years. The agreement would provide the right to use the relevant assets of CTIL, however, the ownership of assets to remain with CTIL.

Grasim would be paying Rs 6 billion royalty and a refundable security deposit of Rs 2 billion, to be done through internal accruals.

"This will help the company in reducing its debt," CTIL vice chairman Kumar Managalam Birla told shareholders at the annual general meeting today.

The company's debt is estimated at around Rs 41 billion at present.

Currently, CTIL has exposure to the cement, textiles, pulp and paper and real estate businesses.

Its VFY plant is located at Shahad, Thane, having a capacity of 25,000 tonne, which includes 19,000 tonne of VFY and 6,000 tonne in rayon tyre yarn.

"CTIL has also decided to demerge 13.4 million tonne cement capacity to Cement which will enable transfer of debt of around Rs 30 billion," Birla said, adding UltraTech is in a growth phase and the acquisition will give the company ready capacities in growing markets.

Shareholders of CTIL will receive one share of UltraTech for every eight shares held.

"This transaction will help the firm in deleveraging balance sheet and creating an opportunity for its growth in the remaining businesses especially in unlocking the value in the real estate portfolio," he said.

Currently the company has around 30 acre in Worli area in the city, besides around 100 acres in Kalyan.

It also has land parcel in Pune, which will be developed at a later stage, the company said.

The company yesterday reported a net profit of Rs 1.62 billion for the three months to June, against Rs 1.20 billion in the year-ago period.

First Published: Tue, July 31 2018. 23:19 IST
RECOMMENDED FOR YOU