Mumbai: B.K. Birla group-controlled Century Textiles and Industries Ltd said on Monday that it will issue to its founders 18.65 million warrants, which on conversion into as many shares will raise the promoter group’s holding from 40.23% to 50.21%.

It is going to be the first company in which the B.K. Birla group has raised its ownership to more than 50%.

The price at which these warrants are going to be issued isn’t immediately known, but if allotted at the current market price of Century’s shares, these would be worth at least 711 crore. The shares of Century Textiles gained 7.3% to 381.5 on Monday on BSE in a flat market in which the Sensex rose 0.18%. The announcement came during market hours.

The stock price of Century Textiles rose because investors took heart from promoters infusing around 700 crore into its operations, said Rajesh Agarwal, a stock market analyst.

It was not immediately clear which promoter group entities and so-called persons, acting in concert with whom, Century Textiles is to issue these warrants.

B.K. Birla, chairman of the group, has said in several interviews that he wanted his grandson Kumar Mangalam Birla to take over his flagship firm Century Textiles, which has interests in cement, rayon and paper. It is widely expected the Kumar Mangalam Birla, chairman of the A.V. Birla group, would make the investment in Century Textiles.

It is unlikely that the warrants are going to be allotted to Pilani Investment and Industries Corp. Ltd, the single largest shareholder in Century Textiles, said people familiar with the company’s plans, asking not to be named.

Pilani owns 36.78% in Century Textiles. Pilani used to be the holding arm of the extended Birla family, until B.K. Birla bought out the stakes of other factions of his family, except the 25% held by the M.P. Birla group.

The control of the M.P. Birla group is disputed by the extended Birla family, and for the past 10 years, they have been battling legal battles over erstwhile chairperson Priyamvada Birla’s will.

If the shares are not allotted to Pilani, its control over Century Textiles will stand diluted.

It was unlikely that Pilani Investment (the largest promoter group company) or Kesoram Industries Ltd (the second largest promoter group company) will subscribe to the warrants, said Mumbai-based independent stock market analyst S.P. Tulsian. They may not have sufficient financial muscle, he said.

“Moreover, there is no dispute over the management of Century Textiles between Kumar Managalam Birla and granfather B.K. Birla. Kumar Mangalam Birla has a significant say in the company even without this warrant issue," Tulsian added.

Century Textiles has three business divisions including textiles, cement and pulp and paper. According to Mint research, Century Textiles’ total debt on 30 September 2013 was 4,780.62 crore.

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