Brickwork Ratings has assigned arating of BWR AA [Pronounced BWR Double A] with Stable Outlook for Century Textiles and Industries Ltd.’s(CTIL or “the Company”) proposedNon-convertible Debenture issue of`500 Crore (`Five HundredCrore) having a tenor of 2-5 years. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

The rating has, inter alia, factored that the Company belongs to the B. K. Birla group (one of the oldest and prominent business houses of India), has experienced management and has a well-established operation with diversified business segments from Textiles to Cement to Paper. The rating is however constrained by massive capacity addition in the Cement Industry which has put pressure on the prices, availability of raw material and coal, slow-down in Pulp and paper segment. The rating is sensitive to timely execution of the Company’s future expansion and modernization plansand maintaining profitability in the current challenging environment.

BWR has essentially relied upon the audited results of FY12, Q1 FY13 results, projected business plans and financials, publicly available information and information and clarifications provided by the Company.

Incorporated in the year 1897 as a Public Limited Company, Century Textiles and Industries Limited had only one industrial unit – Cotton Textile Mills till 1951. Since then the company has made rapid progress in widely diverse fields. At present, the company has presence in textiles, cement, pulp and paper industries and has recently ventured in to real estate business. CTIL’s cotton yarn unit is situated in Madhya Pradesh, with a capacity of 24,960 spindles. Its denim unit is also situated in Madhya Pradesh, with a capacity of 21 million metres of denim fabric per year.

Century Textiles And Industries Ltd. has embarked upon augmenting cement manufacturing capacity from 8.5 million tonnes per annum to 12.8 million tonnes per annum. The Company is in the process of establishing a split location cement grinding unit of 1.5 million tonnes per annum capacity at Sagardighi, Dist. Murshidabad in the state of West Bengal and has undertaken establishment of a cement plant of 2.8 million tonnes per annum capacity in the premises adjacent to Manikgarh Cement, at Gadchandur, Dist. Chandrapur in the state of Maharashtra.

CTIL has a (Pulp Plant) with a capacity of 1.62 lac tonnes per annum and Multilayer Packaging Board Plant with a capacity of 1.8 lac tonnes per annum at Lalkua, Nainital

(Uttarakhand). It has a rayon grade pulp capacity of 31,320 tonnes per annum, writing and printing paper capacity of 1,97,800 tonnes per annum and capacity of 36,000 tonnes per annum for tissue paper.

During FY12, income from operations increased from ` 4760.03 Crore in FY11 to ` 4872.78 Crore in FY12. However, PAT fell from ` 237.49 Crore in FY11 to ` 22.13 Crore in FY12 mainly due to increase in interest expenses, other expenses, and losses in Textile, and Pulp and Paper segments.  Net-worth declined to ` 1898.92 Crs in FY12 from ` 1936.27 Crs in FY11. The Company paid dividend of ` 59.35 Crs in FY12 from reserves.

During FY12, Net sales from Cement contributed ` 2685.27 Crs (~54%) followed by Textiles which contributed ` 1296.92 Crs (~26%), Paper contributed about ` 870.46 Crs (~18%) and others stood at ` 104.51 (~2%).

In Q1 FY13, revenue from operation increased to ` 1388.68 Crore from ` 1176.03 Crore in Q1 FY12; however, PAT decreased to ` 2.41 Crore   from ` 23.90 Crore.

CTIL is operating in crucial Industrial sectors of Textiles, cement and paper. The Company’s performance in the recent past has been affected in view of the general slowdown in the economy. However, it is operating in such vital Industrial segments that as the economy picks up, the Company’s performance would also improve. The Rating reflects the Company’s well-established operations, growth plans, experienced management and the group support it enjoys.  The Company’s ability to keep costs under check, improve margins and ensure timely execution of the expansion and modernization plans are key rating sensitivities.