Century Textiles has shelved planned projects worth over Rs 1,000 crore due to poor profitability, slack market conditions and low prospects of raising finance to fund them.
Among the projects which have been shelved include a Rs 225-crore pig-iron project in West Bengal, a 300-tonnes per day (tpd), Rs 700-crore paper project in Uttar Pradesh, a 200 tpd paper project in Punjab. All these projects were in various stages of planning and the company had formed a separate division, Century Iron and Steel, to undertake the pig-iron project. Besides, the land procurement for the paper project was on full swing.
The shelving is likely to cause tensions between B K Birla, the chairman of Century and C K Birla, who joined the Century board last year, by virtue of being one of the majority owners of Pilani Investments, the holding company.
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C K Birla was inducted on the explicit promise that all the new projects would be handled by him. The company was planning a $125-million global depository receipt (GDR) issue last year to fund the projects like pig iron and paper.
In a statement issued here, the company said it will take up only the paper board projects and others would be kept in abeyance.
B K Birla, however, denied the shelving of the projects would lead to misunderstanding. Everything has been amicably settled between us, he told Business Standard.
But he added everyone has to have patience and all projects cannot be undertaken at the same time.
We will take up the projects, when we can fund them and market conditions are better, he said.
Analysts said the move was expected ever since Century put off its GDR issue earlier this year. Their performance is unlikely to enthuse lenders and they could not have raised equity abroad, said one analyst. The capital cost of the paper board project, which Century is pursuing, has risen from Rs 150 crore to Rs 275 crore and capacity has risen from 300 tpd to 350 tpd.
The project site has been shifted from Uttar Pradesh to West Bengal.
For better viability of the project, the plant is being revamped with the best technology available to produce high-quality product mix of coated and uncoated varieties, said the company.