Century Enka Gets Okay From Shareholders For Share Split

The management of Century Enka of the B K Birla group received shareholders approval for division of its Rs 100 per share into shares of Rs 10 each at the annual general meeting held in Calcutta yesterday. In other words, about 28,00,000 equity shares of Rs 100 each will be substituted by 2,80,00,000 equity shares of Rs 10 each.

Meanwhile, the group has hired the services of chartered accountants, N M Raiji & Company and Dalal & Shah for the proposed merger of Century Enka and Rajashree Polyfils resulting in the creation of one of the largest polyester company in the country.

 

While Century Enka has appointed Dalal & Shah as valuers, Rajashree Polyfils has appointed N M Raiji & Company as its valuers, said B K Birla, chairman, Century Enka.

Sources said the swap ratio will be decided after the submission of valuation report by the consultants. The company is likely to receive the reports within a fortnight. Necessary legal formalities will be completed after the board of directors approve the valuation report prepared and submitted by the Mumbai-based chartered accountants.

The board of directors of both the companies had recently taken an in-principal decision to merge the companies to create the country's largest synthetic textile major after Reliance Industries and Indo-Rama Synthetics.

Rajashree Polyfils, the joint venture between the B K Birla group and Swedish major, Akzo Nobel, is engaged in the manufacture of polyester chips and partially oriented yarn (POY).

The manufacturing unit of Rajashree Polyfils in Bharuch, Gujarat, has an installed capacity of 66,600 tonnes of polyester chips and 27,900 tonnes of POY.

Once the merger comes through, Century's polyester POY capacity will increase from around 20,000 tonnes to 86,000 tonnes. Industry analysts feel Century Enka can either use the chips' capacity to produce POY or sell it directly. If they decide to convert chips to POY, the capacity will automatically increase to 86,600 tonnes.

Efforts are being made to jointly market polyester filament yarn and polyester chips with Rajashree Polyfils to save sales and marketing costs as well as achieve synergy in marketing.

The issued and subscribed capital of Rajashree Polyfils is Rs 180 crore. While Century Enka holds 25 per cent in the joint venture company, nearly 18 per cent is held by Akzo Nobel.

The balance is held by Indian financial institutions and the public.

Century Enka, posted an 11 per cent decrease in sales to Rs 534.55 crore in the financial year ended March 31, 1997. Though the gross profit for the year dipped by 2 per cent to Rs 64.83 crore, net profit stood at Rs 31.06 crore indicating an increase of about 26 per cent from Rs 24.69 crore in the previous fiscal.

The company has undertaken expansion of the polyester filament yarn capacity at its Mahad unit. The project is likely to be commissioned by the fourth quarter of 1997. Moreover, the company is also planning to expand its nylon tyrecord fabric capacity by 5,400 tonnes per annum.