The Hindu Business Line : Confusion on eve of Century Textiles AGM

Contentious issues
Senior group sources, on condition of anonymity, however, said that so far no formal claim has been received from the Wadias.
The company's Mumbai properties were a mixture of leasehold and freehold.

Kolkata , July 11

Confusion ruled on the eve of 109th AGM of Century Textiles and Industries in Mumbai as a sudden ownership claim over a part of the land that houses the company's textiles mill by the Wadias cropped up.

The company, which is in the process of changeover of control - from Mr B.K. Birla to Mr Kumar Mangalam Birla — did not officially react to the claim during the day. Business Line learnt that the Chairman of the company, Mr B.K. Birla, who was on holiday today at Lonavala near Mumbai, was not available for comment.

Senior group sources, on condition of anonymity, however, said that so far no formal claim has been received from the Wadias.

The company's Mumbai properties were a mixture of leasehold and freehold. Century Textiles has a total of about 44 acres of land in Mumbai. The plots are at situated four places in Worli area — Century Bhavan, which houses the registered office, the mill land at Worli, Century mill workers' colony and a piece of land on which Century developed a multi-storied building.

Group sources said that no decision has yet been taken on developing the mill land even though the scale of operations has been reduced significantly in the past few years.

The 2005-06 Annual Report of Century Textiles and Industries noted: "As of now, it appears that operating a composite textile mill in Mumbai may not be viable in the long run due to technical limitations of the machinery, high labour costs, Octroi taxes, municipal taxes, water charges and cost of electricity, although we are making our best efforts to continue the operations even on a reduced scale." The management discussion also noted that almost all the textile mills in Mumbai have already closed due to unviable operations. "Only four mills are in operation at a reduced capacity today".

Century mill is located on Pandurang Bhutakar Marg at Worli. According to one version floating in the real estate market in Mumbai, part of the mill property was originally leased to one Chunnilal Mehta, who had a small mill. Birlasacquired property to set up the textile mill and lease-holding right got automatically transferred.

According to another version, the lease is for 999 years, which has been taken from Wadia's. Till today only 108 years have expired.

Book value of the mill land on Century's latest balance sheet has been placed Rs 9.9 crore.

Meanwhile, the Wadia claim spooked the buoyant sentiment in the Century counter.

The market has been placing additional premium to the stock's valuation in view of possible development of the prime land at the heart of the financial capital.

The stock declined today by a per cent at Rs 387 on both the NSE and the BSE after a steady rise of 16 per in the last one month.

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