Century Textiles - Market Cap 2500 Crore as on 25th March 2020, Debt 1400 Crore as on Dec’19
Century Textiles did a demerger of its cement undertaking in October 2019.The Cement Division of Century which consisted of 3 integrated cement units with a total capacity of 11.4
MTPA was transferred to Ultratech Cement (excludes 1.2 MTPAfor which statutory clearance is pending) and 1 grinding unit of 2 MTP).
Along with that approx 3000 Crore of Debt was also transferred to Ultratech
All shareholders got 1 share of Ultratech for every 8 Century Textiles
Post this Demerger, the market due to its anomaly is now paying us to own certain assets
Let me explain how
As on March 2020, the basic details of the business is as follows
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The Paper Biz has done an EBITDA of 417 Crore for 9 months FY20. Even last year it did EBITDA of similar amount i.e. 600 Crore odd. Co is doing well in this segment and is even planning capacity exapnsion. West Coast Paper does lesser EBITDA than Century and is trading at 1300 crore Enterprise Value even in this depressed market. In a more better market this business would fetch upwards of 2000 Crore
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Real Estate - The company has fully leased out Commercial buildings in Worli through which it earns 140 Crores of Rent yearly. At a Capitalisation rate of 8 time, this business can be valued at 1200 Crores approx
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There is Textile business which the company has been partially leased out to Grasim for a yearly rental of 50 Crore. On December 12, 2017, Grasim entered into an agreement with Century Textiles and Industries Ltd - Pursuant to the agreement Grasim will receive the right to manage and operate the viscose filament yarn (VFY) business of Century for 15 years, and consequently, right to use assets related to this business. - Grasim has paid an upfront 600 Crores Royalty and refundable interest free as Security Deposit of 200 Crore - The VFY Plant is located in Shahad in Thane District. After the agreement ends, the entire asset will come back to Century Textiles
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The other part of Textile division is still earning 80 Crores of EBITDA for the year and hence together the entire textile business can be conservatively valued at 500 Crores roughly
Therefore we have operating biz being valued at 3000 to 3500 Crore value depending atleast.
Apart from this the company has now a Real Estate Division which it has floated under the Brand Name Birla Estates and which has the following land bank and projects under it.
- 132 Acres of land in Kalyan - already started construction work
- 31 acres of land in prime area of Worli - all Muncipal approvals obtained. Construction to start in 2021
- 44 Acres land in Talegaon near Pune
- Company has now started JDA work with various developers in Bangalore and Gurgaon and using Godrej Property Model is working on developing these land parcels.
Land bank story never excites me unless there is a trigger
In case of Century Textiles the trigger is that company has floated a new subsidiary under the name of Birla Estates (https://www.birlaestates.com/) and is looking at active developement of these land parcels that it owns. What is heartening to note is that the quality of Senior Management hired by them for the Birla Estates divisions
Notes from Birla Estate Website
- Birla Estates will be developing many land parcels held by the group as well as look at joint development/strategic tie-ups across top cities .
Management
Name | Designation | Last Company |
---|---|---|
KT Jithendran | CEO | MD, Godrej Property |
Ananya Gindotra | Head – Design | Taj Hotel |
Gaurav Jain | COO | Godrej Property |
Anitha Krishnan | Head – Marketing | JWT |
Sachin Sinarkar | Head – Liasion | Hiranandani |
Narendra Joshi | Head – Project | Godrej Property |
Commercial Projects
- Birla Aurora – 22 Floors - Worli
- Birla Centurion – Worli
- Century Bhawan – Worli – 4 Floor
Residential
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Birla Vanya Phase 1 – Kalyan
- Maha RERA P51700019178
- 21 Acre area, 4 towers being built
- Hafeez Contractor is the Designer
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Birla Alokya – Nangalore, Whitefield
- PRM/KA/RERA/1250/304/PR/190724/002725
- https://rera.karnataka.gov.in/
- 8 Acre land , 5 Towers , 218 Apartments being built
- Project Cost – 295 Crore
Partners and Alliances
- Foster + Partners – World’s best Arhcitechure Firm, has developed Wembley, Apple HQ, Bloomberg HQ
- Sasaki – Landscaping Architect – Did work for 2008 Olypmics
- Leslie E Robertson Associates (LERA)
- Hafeez Contractor
- BuroHappold Engineering – Consulting Engineers – but they have worked on Lodha , Omkar also
- LDP, Sydney – Lighting Designers
Disclosure : 15% of my portfolio and no trades in last 30 days