"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 UltraTech 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.