India's GHCL divests home textiles business to Indo Count Industries

“The company believes that the divestment of home textiles business is a significant value unlocking exercise for GHCL and its stakeholders, which would enable GHCL to continue to focus on its strategic growth pillar, i.e., chemical business, where it has the opportunity to undertake various initiatives, such as, greenfield expansion, increasing its product baskets, enhancing the capacity of refined bio-carbonate business, enter into JVs/ arrangements, exploring opportunities in automation,” GHCL said in a press release.

The company expects to realise a consolidated sum of ₹596 crore from the divestment of its business. Of this, the transfer of home textiles business will be made for a consideration of ₹539 crore of which fixed consideration is ₹340 crore and balance ₹199 crore is towards net realisable current assets.

In line with GHCL’s decision of a complete divestment of home textiles business, the company’s US based subsidiary Grace Home Fashions LLC (GHF) has also entered into an Asset Transfer Agreement for transfer of identified assets (i.e., inventory and intellectual property) to Indo Count Global Inc., USA, a US subsidiary of Indo Count for an agreed consideration of ₹37 crore. In addition, the company/GHF expects to realise ₹20 crore on its own account.

The board of directors of GHCL have approved the transfer of home textiles business to Indo Count by way of slump-sale, which is expected to be completed by the end of March 2022 subject to regulatory, shareholders and other approvals.

“Over the last decade, home textiles (HT) business of GHCL has grown to become a prominent market player in the HT sector. The sale to Indo Count promises the continuity and further growth of the HT business as they are market leaders in this particular product category. We expect this process to be seamless for our customers, suppliers, employees and other stakeholders with no disruption to our operations. GHCL plans to utilise the cash flow from slump sale of HT business to focus on its core business, i.e., chemical and spinning business," said RS Jalan, managing director, GHCL.

Fibre2Fashion News Desk (RKS)