Century Textiles to Purchase Land from Hindalco in Kalwa, Thane, Issues Rs 400 Crore Corporate Guarantee

Century Textiles and Industries Ltd has evolved significantly since its origins as a single-unit textile company in 1987. Over the years, it has transformed into a diversified conglomerate with a strong presence across multiple sectors. While the company remains a leader and trendsetter in the cotton textiles industry, it has also expanded its reach into other prominent sectors, including Pulp and Paper, as well as Real Estate. This growth has positioned Century Textiles as a major commercial powerhouse in the Indian industrial landscape.

Century Textiles Issues Rs. 400 Crore Corporate Guarantee for Land Acquisition

Century Textiles and Industries Ltd (CTIL) announced on September 4, 2024, that it has issued a corporate guarantee worth Rs. 400 crores in favour of Hindalco Industries Ltd (HIL). This guarantee is linked to the acquisition of a land parcel in Kalwa, Thane, by Ekamaya Properties Private Ltd (EPPL). EPPL is a wholly-owned subsidiary of Birla Estates Private Ltd (BEPL), which, in turn, is a wholly-owned subsidiary of Century Textiles.

The corporate guarantee was formalized through a deed executed on the same day. The guarantee will support EPPL in acquiring the Kalwa land from Hindalco, with payments scheduled to be made in multiple tranches over time.

Transaction at Arm’s Length, No Related Party Involvement

Despite the fact that Century Textiles, Birla Estates, and Ekamaya Properties are related entities, Hindalco Industries is not considered a related party in this transaction. Century Textiles confirmed that the acquisition has been conducted at arm’s length, ensuring transparency and fairness. Century Textiles’ balance sheet lists the corporate guarantee as a contingent liability. Its value will gradually decrease as Ekamaya Properties Private fulfills its payment obligations to Hindalco.

Conclusion: By issuing this corporate guarantee, Century Textiles demonstrates its financial backing of the land acquisition deal. The transaction is expected to enhance the company’s real estate footprint, while the contingent liability will diminish over time as payments are completed. Century Textiles’ stock gained around 2% today and closed at Rs.2,370.30 per share.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.