GHCL to Spin Off Home Textiles, Retailing
April 7, 2008,
The board of directors of industrial conglomerate GHCL Ltd. gave in-principle approval to a plan to restructure the company's business — which would spin off the home textiles sourcing and manufacturing division to a 100%-owned subsidiary, while the retail units would shift India and U.K.-based retail operations to a 100% retail subsidiary.
The home textiles company will include three U.S.-based businesses: Dan River, HW Baker, and Best Textiles. The retail business includes the 300-store Rosebys home furnishings specialty chain in the U.K.
The company also approved a revised Employees Stock Options Scheme (ESOP) and the grant of stock options to employees of subsidiary companies.
GHCL chairman Sanjay Dalmia said, "This restructuring initiative would lead to creation of independently focused organizations with a potential to achieve fast growth in their individual arenas. The restructuring would provide enhanced financial flexibility to the businesses in order to independently raise resources for their future growth requirement and unlock potential valuations for the shareholders."
Dalmia added, "This initiative would get optimal valuation for the retail venture as an independently and separately listed entity along with increasing its ability to attract and retain high quality talent through implementation of ESOPs."
GHCL said it is nearly ready to launch retail operations in the Indian market through a chain of specialty stores under the Rosebys brand. "Effective launch of the product range is expected to roll out in early next quarter," the company said.
Pointing to its vertical prowess in home textiles, GHCL noted it now has sourcing hubs in India, China, Pakistan, Cambodia, Turkey, and Mexico; and design centers in the U.S, E.U. and India, with more than 40 designers in house and others through various brand licensing agreements.
GHCL is now seeking final approval of the restructuring from stakeholders and lenders. The company plans to report audited financial results for the most recent fiscal year by no later than June 30.