Century Textiles Ltd. is planning to sell its paper division and then explore a merger with Grasim Industries Ltd. as part of a plan to synergise operations, two company executives in the know of the proposed restructuring told BloombergQuint.
The board of Century Textiles, a BK Birla Group company, is looking to exit non-core businesses and drive synergies with the Aditya Birla Group, the executives said. This was first reported in Mint newspaper in May 2017.
ITC Ltd., JK Paper Ltd., International Paper APPM Ltd. and a Finland-based paper company are in the fray for the paper business, said the people quoted above. Century Textiles is looking at an enterprise valuation of Rs 4,500-5,000 crore for the unit, they said.
BK Birla has often indicated that he wants his grandson Kumar Mangalam Birla to take charge at Century Textiles. Kumar Birla was named vice-chairman nearly two years ago.
Once the paper division is sold off, Century Textiles will explore a merger with Grasim, said the executives quoted above. Its cement capacity will augment UltraTech's existing plants while Century Textiles will operate as a pure-play real estate arm, they said.
Century Textiles' businesses span textiles, rayon, cement, paper and real estate. The paper division contributes 23 percent of the total revenues and 29 percent of its earnings before interest, tax, depreciation and amortisation. Its operating margins stand at 16.8 percent. The division had debt and liabilities worth Rs 446 crore, and Rs 3,250-crore assets as of March, according to its filings.
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Century Textiles and Grasim did not respond to BloombergQuint's emailed queries. International Paper and a spokesperson for JK Paper said in emailed replies that the companies do “not comment on trade or business speculation”. ITC didn't respond to emailed queries, but denied the talks over the phone.
Aditya Birla Group recently completed a restructuring that involved Aditya Birla Nuvo's merger with Grasim, after carving out the financial services business into a separate listed entity. Birla is also merging his telecom arm, Idea Cellular Ltd. with Vodafone India.
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