Century Textiles Backs Hindalco with ₹400 Crore Corporate Guarantee

Shares of Century Textiles and Industries saw a rise of approximately 3.5% during the morning session on September 5, following the company's announcement of a corporate guarantee worth ₹400 crore in favor of Hindalco Industries.
This guarantee is connected to Ekamaya Properties, a wholly-owned subsidiary of Birla Estates, which itself is fully owned by Century Textiles. Ekamaya Properties is acquiring a land parcel in Kalwa, Thane, from Hindalco Industries as part of this deal.

As of 10 a.m. IST, Century Textiles' stock was trading at ₹2,410.3 on the NSE, up by 3.7% from the previous session’s closing price.

The company, in a stock exchange filing, stated, "The Company has issued a Corporate Guarantee in favor of Hindalco Industries Ltd (HIL) for the acquisition of a land parcel located in Kalwa, Thane by Ekamaya Properties Private Ltd (EPPL), a fully-owned subsidiary of Birla Estates Private Ltd (BEPL), which in turn is wholly owned by Century Textiles."

Century Textiles will make this payment gradually in multiple installments. "The Corporate Guarantee will be recorded as a contingent liability in the Company's books. The amount will reduce progressively as payments are made to HIL in tranches," the company clarified in its filing.

The corporate guarantee was formalized on September 4, 2024, via a corporate guarantee deed, supporting Ekamaya Properties’ acquisition of the land from Hindalco Industries, with payments to be made over time.

Despite the involvement of entities under the same corporate group, Hindalco Industries is not considered a related party in this transaction. The deal was conducted on an arm's length basis.

Additionally, on July 15, Birla Estates acquired a 5-acre land parcel in Gurugram, which has a development potential of around 10 lakh square feet and is expected to generate revenue exceeding ₹1,400 crore, according to the company's statement.

“Gurugram has been a key market for us since the beginning. The real estate potential in this area is vast, strengthening our focus on the Delhi-NCR region,” said KT Jithendran, MD and CEO of Birla Estates, in an exchange filing.

Over the last year, Century Textiles and Industries shares have more than doubled, rising over 100%, significantly outperforming the Nifty 50 index, which increased by 30% during the same period.

Century Textiles and Industries Ltd (CTIL) is a diversified conglomerate engaged in the production and supply of textiles, as well as pulp and paper products. Its textile offerings include a wide range of products such as cotton textiles, cotton yarn, denim, apparel, viscose filament yarn, general yarn, and rayon tyre yarn. In addition, CTIL provides various paper products, including paper pulp, writing and printing paper, multilayer packaging boards, and tissue paper.

The company operates yarn manufacturing facilities across Gujarat, Maharashtra, and Madhya Pradesh, while its paper and pulp plants are located in Uttarakhand. CTIL markets its textile products under well-known brands like Cottons by Century, Century Yarn, Century Rayon, Century Denim, and Birla Century. Its paper and pulp products are sold under the Century Pulp & Paper brand. CTIL is headquartered in Mumbai, Maharashtra, India.