Indo Count Industries Ltd to acquire Home Textile business of GHCL Ltd

The Board of directors of Indo Count Industries Ltd at its meeting held today has approved (i) acquisition of Home Textile business of GHCL Limited, which includes manufacturing facilities at Vapi, Gujarat on a going concern basis, by way of slump sale in accordance with the terms of Business Transfer Agreement and (ii) acquisition of specified assets (inventory and intellectual property) of the US subsidiary of GHCL Limited in accordance with the terms of Asset Transfer Agreement.

Grace Home Fashions LLC,viz. ("GHF"), is a wholly owned subsidiary of GHCL. GHF carries on business of sale of home textiles products in the United States of America ("USA").

The Company would acquire the Home Textiles business of GHCL, including the manufacturing facilities of 45 million meters annually located at Vapi, Gujarat ("HT Business") and the Company's subsidiary, Indo Count Global Inc., would acquire the identified assets (i.e., inventory and intellectual property) of GHF. The assets of GHF would be acquired through our Wholly Owned Subsidiary viz. Indo Count Global Inc., USA.

The overall consideration for acquisition of Home Textiles Business is Rs. 539 crores on a debt and cash free basis of which fixed consideration is Rs. 340 crores and balance Rs. 199 crores is towards net realizable current assets, subject to certain adjustments in accordance with the Business Transfer Agreement.

Additionally, Indo count Global Inc., USA, would be paying Rs. 37 crores to GHF as a purchase consideration towards the Assets purchased, subject to certain adjustments in accordance with Asset Transfer Agreement.

This acquisition will catapult Indo Count to a leadership position in the Global Home Textiles Bedding segment. With addition of almost 50% new capacity, Indo Count becomes the largest Home Textile Bedding company, globally, with annual capacity of approximately 153 million meters.

Indo Count adds a whole new avenue of customer base which is untapped, thereby leading to gain in global market share. Leverage joint capabilities of Design, Innovation and Products to a wider spectrum of customers.

De-risking manufacturing facilities with twin state geographical diversity.

Potential addition of Rs. Rs.1300 - 1500 Crores p.a. to the topline of the Company.

Edelweiss Finance & Investments Limited acted as transaction advisor and Khaitan & Co. acted as legal advisor to the transaction.

Commenting on this acquisition, Mr. Anil Kumar Jain, Executive Chairman, said: "Today marks a landmark occasion for Indo Count with our Board approving the acquisition of the Home Textile business of GHCL. 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.

This strategy enhances our customer centric approach leading to increased flexibility and better service levels. Further, we will leverage the joint capabilities of design and innovation to offer complete sleep experience.

We welcome the new team to Indo Count's family and look forward to utilise their skills and experience to achieve the Company's long-term vision.

Shares of GHCL Limited was last trading in BSE at Rs. 410.35 as compared to the previous close of Rs. 426.80. The total number of shares traded during the day was 19631 in over 1275 trades.

The stock hit an intraday high of Rs. 428.85 and intraday low of 407.00. The net turnover during the day was Rs. 8247308.00.

Shares of Indo Count Industries Limited was last trading in BSE at Rs. 265.95 as compared to the previous close of Rs. 241.95. The total number of shares traded during the day was 148311 in over 4298 trades.

The stock hit an intraday high of Rs. 277.20 and intraday low of 241.00. The net turnover during the day was Rs. 39788573.00.

Source : Equity Bulls

Keywords

GHCLLimited INE539A01019 IndoCountIndustriesLimited INE483B01026 HomeTextiles Acquisition