GHCL to demerge into 3 separate companies
As per the plan, GHCL is likely to demerge into three companies which would be involved in soda ash, home textiles and retailing. Existing investors of GHCL will get shares of the three firms.
By Vivek Sinha, TNN |
NEW DELHI: Sanjay Dalmia group flagship company GHCL is demerging its businesses into three separate firms which would all be listed entities. The company is currently engaged in chemicals business through the soda ash division apart from home textiles.
As per the plan, it is likely to demerge into three companies which would be involved in soda ash, home textiles and retailing. Existing investors of GHCL will get shares of the three firms.
Sources said an announcement to this effect is expected within a week. When contacted, a GHCL spokesperson declined to comment on the development. GHCL, on a consolidated basis, has an annual global turnover of around $700 million or Rs 2,800 crore.
This includes the parent company, which has revenues of around Rs 1,000 crore from its soda ash and home textile manufacturing business in home market. This apart, it has five international firms which were acquired over the past two years.
In the US, GHCL acquired three home textile companies — Dan River, HW Baker and Best Manufacturing Group. It has also acquired UK’s largest home textile retailer Rosebys in 2006 and a soda ash firm in Romania. While Rosebys is into retailing, the three US-based home textile firms cater to institutional sales with home textile products sourced globally, including its Indian plants.
As per the plan, Rosebys’ business, which currently encompasses the retail operations of the group, would be floated as a separate firm. At present, Rosebys generates annual revenues of around Rs 1,000 crore.
GHCL, which is in the process of starting home textile retail chain in India under the Rosebys brand, as reported first by ET, would also house this business under the retail company.
The home textile manufacturing units of GHCL in India would be part of the separate home textile company which would also have the US businesses. The idea is to separate the home textile business into a B2C and B2B company.
Even though GHCL demerger was expected given the diversification of the firm into home textile retailing — whose valuation the management felt was not being captured in the existing listed company — sources say the decision to demerge it into three firms was taken recently.
The soda ash business has robust margins but profitability in the home textile manufacturing unit is much lower, as per the standalone results of the parent company.
As per the plan, it is likely to demerge into three companies which would be involved in soda ash, home textiles and retailing. Existing investors of GHCL will get shares of the three firms.
Sources said an announcement to this effect is expected within a week. When contacted, a GHCL spokesperson declined to comment on the development. GHCL, on a consolidated basis, has an annual global turnover of around $700 million or Rs 2,800 crore.
This includes the parent company, which has revenues of around Rs 1,000 crore from its soda ash and home textile manufacturing business in home market. This apart, it has five international firms which were acquired over the past two years.
In the US, GHCL acquired three home textile companies — Dan River, HW Baker and Best Manufacturing Group. It has also acquired UK’s largest home textile retailer Rosebys in 2006 and a soda ash firm in Romania. While Rosebys is into retailing, the three US-based home textile firms cater to institutional sales with home textile products sourced globally, including its Indian plants.
As per the plan, Rosebys’ business, which currently encompasses the retail operations of the group, would be floated as a separate firm. At present, Rosebys generates annual revenues of around Rs 1,000 crore.
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GHCL, which is in the process of starting home textile retail chain in India under the Rosebys brand, as reported first by ET, would also house this business under the retail company.
The home textile manufacturing units of GHCL in India would be part of the separate home textile company which would also have the US businesses. The idea is to separate the home textile business into a B2C and B2B company.
Even though GHCL demerger was expected given the diversification of the firm into home textile retailing — whose valuation the management felt was not being captured in the existing listed company — sources say the decision to demerge it into three firms was taken recently.
The soda ash business has robust margins but profitability in the home textile manufacturing unit is much lower, as per the standalone results of the parent company.
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