BK Birla group not to offload Century Enka stake to Acordis

B K Birla group is not likely to offload its stake in the group chemical outfit Century Enka in the open offer of Acordis BV of Netherlands, the joint venture partner of the company.

Acordis BV along with Acordis Overseas Investment BV and CVC Capital Partners have come out with an open offer for 20 per cent additional stake in Century Enka at Rs 113.89 a share.

The offer will open from March 31. The financial institutions too are unlikely to offload stake through open offer as it feels that the offer price is too low compared with the price prevailing at the market of Rs 130-131.

Sources in the B K Birla group informed that it has no intention to participate in the open offer of Acordis. "The management control of Century Enka is with B K Birla group. We have very good relation with our overseas partners. So there is no question of change of control or structure," sources said. However, the official version of Acordis regarding the offer was not available.

According to sources, Century Enka is in a growth path now following the completion of the capex in the area of polyester yarn and tyre coating chemicals.

"The company has completed Rs 115 crore capex in polyester yarn and tyre coating chemicals in February 2005. We do not feel that there is any possibility of destabilisation in management structure," added sources.

B K Birla group holds around 18 per cent stake in Century Enka through Kesoram Industries, Aditya Birla group outfit Grasim and other investment entities. Acordis holds 38.24 per cent in the outfit through Acordis Overseas Investment BV.

The company posted a net profit of Rs 4.3 crore in the third quarter of this fiscal over a turnover of Rs 219 crore. Sources in the financial circle informed that UTI, LIC and banks are not happy with the pricing of open offer.

"The price is too low," said sources. LIC and UTI combined hold around 7 per cent in Century Enka. Besides, Aditya Birla group asset management outfit Birla Sun Life Trustee Company holds around 4.04 per cent in the company.

Sources close to Acordis informed that the existing open offer is a follow up offer pending from June 2003. "Sebi asked Acordis to make an open offer in as early as 2000 following the takeover of a portion of business of Akzo Nobel BV by Acordis in October 1999.

Akzo Nobel was originally the joint venture partner of B K Birla group. But due to pricing and method it gets delayed," said sources. Incidentally, Acordis products include acrylic, polyester, nylon, and reinforced carbon fibres.