The company reported a phenomenal performance for the first quarter ended 30th June 2009. During the quarter, the net profit of the company surged 2.27 times to Rs.141.62 crore as against Rs.62.50 crore in Q1FY09. Net sales increased to Rs 1,121.7 crore versus Rs 951.8 crore, YoY.
Its biggest earner has been cement, contributing 64% to the net sales at Rs.717.90 crore. EBIT from this division for the quarter was at Rs.255.66 crore, up over 117% on a YoY. EBIT margin at 36% is one of the best in the cement sector. The other two –pulp & paper and textiles have not really done too well. Pulp division posted a sales of Rs.235.70 crore, which is 21% of the net sales. On this, it posted an EBIT of merely Rs.1.02 crore, which is much below the EBIT of Rs.30.45 crore it had in Q1FY09. The textiles unit continues to suffer the most. Sales was at Rs.174.62 crore, which is today just 15% of the net sales. And its losses mounted in this division to Rs.19.86 crore during Q1FY10, up from Rs.9.31 crore loss in Q1FY09. The results for today thus means that though it is known as 'Century Textiles', its bread winner is the cement unit and that has been the case for some time now. The promoters of the company must quickly change its name to Century Industries Ltd.
Starting Feb 09', the company had temporarily suspended production of Tyre Yarn production at its Kalyan factory. This has been started partially from 1st July 2009 but overall capacity has been reduced to about 12% pa as against 25% pa reported earlier. The company has also deferred the expansion project for Multi-layer Packaging Board plant till the economic scenario improves. This had an outlay of Rs.775 crore and was scheduled to go on stream by Q2 of current fiscal.
Century is sitting on prime property of 40 acres in Worli, Mumbai. The company closed its textile mill at Worli, paid off all the labours, and obtained the closure permission from Labour Commissioner and Government of Maharashtra. Hence, property is all set for development and once the realty sector improves, this could become the biggest earner for Century. The company is not planning to sale any significant portion but is planning to lease it and this can give it an annual rental income of around Rs.800 crore. In addition to Worli property, Century owns Century Bhavan at Prabhadevi, having area available for development of close to 2 lakh sq. ft. and about 1.5 lakh sq. ft. at Shivaji Park known as Century Flats. Both these properties have present value of close to Rs.1500 crore and would see development in the near future.
We have been recommending this stock all along and maintain our 'buy' at current levels.
Source: www.premiuminvestments.in By S P Tulsian
