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Indo Count buys GHCL's home textiles business, IP, inventory for Rs 576 cr
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SME Times News Bureau | 06 Dec, 2021
In a Rs 576 crore deal, home textile major Indo Count Industries Ltd
(ICIL) and its subsidiary will acquire the home textile business of GHCL
Ltd in India and identified assets (inventory and intellectual
property) of its US subsidiary Grace Home Fashions LLC (GHF).
According
to ICIL, it will buy GHCL's Rs 435.41 crore revenue home textile
business, including its manufacturing facilities of 45 million metres,
located at Gujarat's Vapi.
The deal does not include GHCL's
spinning unit in Tamil Nadu's Madurai which will be demerged and
transferred to GHCL Textiles Ltd.
The price for the GHCL's home
textile business is fixed at Rs 539 crore on a debt and cash free basis
of which fixed consideration is Rs 340 crore and the balance Rs 199
crore towards net realisable current assets, subject to certain
adjustments in the Business Transfer Agreement (BTA).
The ICIL's
subsidiary Indo Count Global Inc would acquire the identified assets
(inventory and intellectual property) of about Rs 105 crore GHF for Rs
37 crore subject to certain adjustments in accordance with the Asset
Transfer Agreement (ATA).
As to the rationale for the
acquisition, ICIL said with the addition of almost 50 per cent new
capacity, the company will become the largest home textile bedding
company globally.
The annual production capacity post acquisition will be about 153 million metres.
Apart
from adding a new customer base, ICIL will be able to leverage the
joint capabilities of design, innovation and products and also de-risk
manufacturing facilities with twin state geographical diversity.
"This
is a significant step towards achieving a formidable leadership
position in the Home Textile Bedding business 'globally'. The new
enhanced capacity will fuel growth for Indo Count to efficiently scale
and serve a wider spectrum of customers and markets thereby increasing
its global market share," ICIL Executive Chairman, Anil Kumar Jain,
said.
The acquisition has the potential to add about Rs 1,300-1,500 crore per annum to ICIL's topline, the company said.
The purchase transaction is expected to be completed by March 2022.
On its part, GHCL said it will demerge its about Rs 609 crore spinning division to group company GHCL Textiles.
The GHCL Textiles will issue its equity shares with a face value of Rs 2 to the shareholders GHCL on 1:1 ratio.
The
GHCL also said it expects to realise an additional Rs 20 crore out of
GHF and the total income from the divestment and demerger will be Rs 596
crore.
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