Indo Count buys GHCL’s home textiles business, IP, inventory for Rs 576 cr

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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.

20211206-192813

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