Chemicals major GHCL Ltd on Monday said it is divesting its home textiles business to Indo Count Industries Ltd for Rs 596 crore.
The company, one of the leading manufacturers of soda ash, had initiated the process of carving out its textiles business into GHCL Textiles Ltd, in order to segregate both businesses and to have two separate listed entities with mirror shareholding.
"In the interim, GHCL has got an opportunity to unlock value of its home textiles business (HT business), not being its strategic growth area, by divesting the same to Indo Count Industries Ltd (Indo Count),” the company said in a regulatory filing.
GHCL said it expects to "realise a consolidated sum of Rs 596 crore from the divestment of its HT business”.
As part of the deal, the transfer of HT business will be made for a consideration of Rs 539 crore, of which fixed consideration is Rs 340 crore and the balance Rs 199 crore is towards net realisable current assets (subject to certain adjustments in accordance with the business transfer agreement to be paid by Indo Count to GHCL), the filing added.
Further, GHCl said that in line with the group’s decision of a complete divestment of HT business, its US-based subsidiary Grace Home Fashions LLC (GHF) has also entered into an Asset Transfer Agreement (ATA) for transfer inventory and intellectual property to Indo Count Global Inc, USA, a US subsidiary of lndo Count for Rs 37 crore.
In addition, the company/GHF expects to realise Rs 20 crore on its own account, it added.
GHCL Ltd Managing Director R S Jalan said, "Over the last decade, home textiles business of GHCL has grown to become a prominent market player in the HT sector. The sale to lndo Count promises the continuity and further growth of the HT business as they are market leaders in this particular product category.”
GHCL plans to utilise the cash flow from slump sale of HT business to focus on its core business — chemical and spinning business, he added.
"We expect this process to be seamless for our customers, suppliers, employees and other stakeholders with no disruption to our operations,” Jalan said.
GHCL said it expects to complete the slump-sale of HT business by the end of March 2022, subject to regulatory, shareholders and other approvals.