Acordis may exit Century Enka

Century Enka, the Rs 1,123 crore (Rs 11.23 billion) joint venture between the Acordis group and the BK Birla group, plans to launch a buyback programme exclusively for its non-resident shareholders, including the foreign promoters.

The move might aim at providing an option to the euro 620 million Dutch major to pare its stake from 38.24 per cent in the company, sources close to the development said.

The buyback proposal was slated to be discussed at Saturday's Century Enka board meeting, sources said, adding that the extent and price of the buyback were yet to be determined.

"We have decided that the offer will be meant for non-resident shareholders and the shares, which will be bought back through the programme, will be extinguished," a source in the Birla group said. The total foreign shareholding (including GDRs) in Century Enka stands at 39.98 per cent.

Industry sources said Acordis might exit Century Enka by offloading its entire stake if its earlier statement to the Securities and Exchange Board of India was anything to go by.

Consequent upon its acquisition of Akzo Nobel in December 2000, Acordis had got indirect shareholding in Century Enka five years ago.

Consequently, Sebi directed Acordis to make an open offer for an additional 20 per cent stake even though the company clarified that it viewed the acquisition of stake as purely an investment.

However, Sebi directed it to come out with an open offer at Rs 114 a share, including interest. The open offer closed on April 29.

Although the exact outcome of the open offer is not known, it may have failed to get a good response, considering that the offer price was less than the ruling market rate. The stock closed at Rs 153.70 on the Bombay Stock Exchange.

Sources said the buyback proposal, once formally adopted by the board, would seek shareholders' approval at the next annual general meeting. They declined to comment on whether the Acordis group would exit completely from Century Enka through the buyback programme.

The BK Birla group holds a 13.25 per cent stake. Other major shareholders are Life Insurance Corporation (4.28 per cent), Oriental Insurance Company (1.18 per cent) and New India Assurance (1.13 per cent). The public shareholding stands at 26.83 per cent.

Century Enka has three plants: Century Enka at Pune, Konkan Synthetic Fibres at Mahad in Maharashtra and Rajashree Polyfil at Bharuch in Gujarat. It produces nylon and polyester filament yarns, speciality yarns, industrial yarns and tyre cord fabrics.