Mumbai: Diversified Century Textiles & Industries Ltd said on Friday it is partially suspending production of tyre yarn in stages from 21 May at its Century Rayon plant in Kalyan, a city suburb.
The firm is halting production of viscose filament yarn and tyre yarn and production of viscose yarn is likely to fall by about 25% of total installed capacity, Century said in a statement to the BSE.
The suspension is due to adverse market scenario and demand slowdown, it said.
However, operations of rayon yarn and chemicals would continue unaffected, Century said in the statement.
Century Rayon, which makes rayon, tyre cord and chemicals, has an annual production of 25,000 tonnes of textile and tyre yarn.
Century Textiles, which also makes paper, denim and cement, said it would closely monitor the situation to restore operations.
“The management will closely monitor the situation to restore the operation at appropriate time. Meanwhile, the factory will undertake the preventive maintenance of the tyre cord plant and related equipments”.
Suspension of tyre cord operations is an indication that the diversified firm is increasingly focusing on unlocking its real estate business, analysts said.
Century Textiles, which has a large land bank in Worli in central Mumbai, is constructing two buildings for commercial purposes to be completed in 12-15 months.
“Century’s core focus has become realty since they are developing the Worli property and is looking at large valuations in realty,” said Kishor P Ostwal, chairman at CNI Research Ltd, that tracks small- and mid-cap stocks.
Its textiles and paper divisions reported losses in FY10 while profits in its cement division rose during the year.
“They are not doing very well in textiles either. The clear focus seems to be on realty. As and when they get cash flow on realty they may even spin off their cement and pulp divisions,” Ostwal said.
The company’s shares, which fell as much as 3.5% earlier in the session, were down 2.98% at Rs440 in a weak Mumbai market.