Textiles-to-chemicals major, GHCL Limited, on Monday announced divestment of its home-textiles business to lndo Count Industries Limited for a consolidated amount of ?596 crore.

The development comes after the company’s Board of Directors approved the divestment of home-textiles business along with the identified assets of US-based wholly owned subsidiary, Grace Home Fashions LLC (GHF).

The decision on divestment of textiles division comes on the heels of GHCL’s ongoing process of demerger of textiles business into GHCL Textiles Limited. The company has been in the segment for past 15 years but it has not been a strategic fit for the company’s growth.

Of the ?596 crore consolidated transaction, the home-textiles business will be transferred for a consideration of ?539 crore, including ?340 crore as fixed consideration and ?199 crore towards net realisable current assets to be paid by lndo Count to GHCL. Also, the GHF will transfer identified assets to lndo Count Global Inc., USA, a US-subsidiary of lndo Count, for an agreed consideration of ?37 crore. Additionally, the company expects to realise ?20 crore on its own account.

GHCL’s home-textiles undertaking had a total income of ?454.98 crore for FY21, with networth of ?384.44 crore.

lndo Count Industries is a listed entity having interests in the manufacturing of home-textiles, including bed sheets, pillow covers, and comforters. The company has revenue from operations at ?2,514.74 crore, with Profit Before Tax at ?352.58 crore.

“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,” Anil Kumar Jain, the company’s executive chairman, said.

New demerger plans

Meanwhile, GHCL’s Board of Directors has approved modifications to the ongoing scheme of demerger of the entire textile business. It has proposed a withdrawal of the current scheme of demerger for NCLT approval, and proposed a demerger of the remaining textiles business, the spinning division, to GHCL Textiles Limited. This will have mirror shareholding as that of GHCL Limited, it said.

“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.