The Hindu Business Line : Century Enka moves up on product price hike hopes

Kolkata, Sept. 4 Century Enka, a BK Birla group outfit and slated to be succeeded by the A V Birla group eventually, today moved up by around 6 per cent on the expectation that company is likely to raise it price of its polyester product prices.

Industry sources said that Reliance on Monday raised prices of different grades and varieties of polyester items by Re 1 to Rs 10 per kg.

An official of the company told Business Line that Century Enka, which produces polyester and nylon filament yarn, nylon tyre cord fabric and polyester chips, was not making any statement on the subject now.

According to analysts, demand growth has created room for existing players to raise price and earn higher margin. “Internationally, the future of the industry looks bright for the next couple of years. Profitability of Century Enka, a leading player, may go up substantially”, said an industry insider.

Completion of capacity expansion for nylon tyre cord fabric (NTCF) at Bharuch from 14,000 tpa to 22,000 tpa has left the company in a strong position to avail itself of the opportunity thrown up by increase in demand globally and domestically.

A commodity analyst with an overseas fund house said that with the polyester prices is on the uptick, the expectation of a higher PAT is causing revaluation of the stock.

The company’s current market capitalisation is roughly one fourth of its annual sales and the stock’s book value is upwards of Rs 225 as per 2006-07 balance-sheet, analysts pointed out.

Interestingly, when Sensex was at around 3000, the market price of Century Enka hovered around the current level.

Stakeholders

In 2006, A V Birla group led by Mr Kumarmangalam Birla, became the largest stake holder in Century Enka. TGS Investment & Trade Pvt, an AV Birla group outfit, holds 7.82 per cent of the total paid-up equity of Rs 28.64 crore, while Ms Rajashree Birla, mother of Mr Kumarmangalam Birla, holds around 0.09 per cent. Kesoram Industries, a B K Birla group company, holds 4.68 per cent in Century Enka. Birla Sunlife Trustee Co Pvt Ltd had 3.65 per cent in the company as on September 30, 2005.

Century Enka completed a buy-back deal with its foreign promoters, Accordis Overseas Investment BV, of 85.93 lakh shares representing 30 per cent of the paid up capital of the company for a sum of around Rs 104.84 crore in early 2006. Before this sell-off, Accordis held 38.36 per cent stake in Century Enka, which has now come down to 8.36 per cent. Currently Accordis has completely exited form the company.

Since the deal was through a buy-back exercise, the paid-up capital of the company was reduced.

The stock finished at Rs 136.20 with around one lakh shares changing hands on Tuesday on the BSE.