Shares of Century Textiles have declined 12% to Rs 935 per share, also their 52-week low on the BSE in intra-day trade, after the company said its board approved demerger of cement biz into UltraTech Cement through a share-swap deal.
At 10:53 am; shares of UltraTech Cement were trading 0.41% lower at Rs 3,843 per share after hitting high of Rs 4,021 per share on the BSE in early morning trade. On comparison, the S&P BSE Sensex was down 0.21% at 34,776 points.
Under the arrangement, Kumar Mangalam Birla-led UltraTech will merge Century Textiles’ 13.4 million cement capacity with itself, taking UltraTech’s capacity to 105.9 million tonnes per annum (mtpa) in the domestic market, and consolidate its leadership position in the Indian cement industry.
UltraTech will give Century Textiles shareholders one share for every eight shares held.
Century Textiles’ cement business consists of three integrated units — one each in Madhya Pradesh, Chhattisgarh, and Maharashtra — with a capacity of 11.4 mtpa, and a grinding unit in West Bengal of 2 mt, while an additional capacity of 1.2 mt is pending statutory clearance.
Cement accounted for 53.2% of Century Textiles’ revenue of Rs 43.06 billion and had earnings before interest, tax, depreciation and amortisation (Ebitda) of Rs 4.92 billion excluding non-recurring items.
“The Company is undertaking the demerger for unlocking the value of the cement business for the shareholders of the company; and assisting in the de-leveraging of its balance sheet including reduction of debt and outflow of interest as well as creation of value for its shareholders,” Century Textile said in a statement.