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Share value erosion irks Century shareholders

Our Bureau

MUMBAI, July 10

THE issue of erosion in shareholder value caught up with Mr S.K. Birla once again at the annual general meeting of Century Textiles and Industries Ltd. Mr Birla was chairing the meeting in the absence of the company Chairman, Mr B.K. Birla.

The price of the Century scrip, quoting at abysmal levels compared to a few years ago, drew flak from at least one speaker at the AGM. Alleging that the management had failed miserably to deliver, one shareholder, Mr J.S. Sanghvi, said it had backtracked on its promises.

He said last year an enabling resolution was passed to sell Century's Manikgarh cement unit to retire debt and reduce interest burden. Not only was this not done citing unattractive offers but the company had also changed its mind on selling the plant, s aying the cement business was looking up, he said.

Similarly, the company had stated at the last AGM that it would exit the shipping business, which had also not happened, he said. These measures were supposed to be taken for the restructuring of the company.

``The small shareholder is the victim of the ownership sentiment of clinging on to assets...even though theoretically it is true that you do not have control over the share price; you are the trustees of our money and have the responsibility to at least maintain the book value of the share,'' Mr Sanghvi said.

He demanded that Century offer a buyback so that the small shareholder could exit the company.

Replying to shareholders' queries, Mr Birla said the company had offered an exit option five years ago and those who wanted could have availed it then. ``Mere paas aaj paisa nahin hai, jab paisa ayega tab baat karoonga (I don't have money today, we'll ta lk when I have money),'' he said. If the economy moves up ``there will be an exit option'', he added.

On shipping, he said the company would not expand the business and whenever possible, will sell the vessels and gradually exit the business.

Mr Birla said textile production had come down by 15 per cent this year and may drop further in the current year.

He said the textile business was facing a real threat from cheap Chinese imports. ``I am quite confident but cautiously optimistic about a better performance in the current year,'' he told shareholders.

Pic.: Mr S.K. Birla, Chairman, Century Textiles and Industries Ltd (right), and Mr B.L. Jain, Wholetime Director, at the company's AGM in Mumbai on Tuesday.

Picture by Shashi Ashiwal