Grasim Industries, the Aditya Birla group flagship has, decided to sell its loss-making fabric manufacturing unit at Gwalior to the Bhilwara-based Swastik group company Melodeon Exports.
The unit, which has a book value of Rs 15 crore, will be sold for a negative consideration of Rs 15 crore.
The new management will continue to provide employment to 1,250 employees working at the Gwalior plant.
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Given the pressures faced by the textile sector as a whole the challenging market environment in the suitings sector, aggressive competition and operational issues, Grasim had undertaken an extensive techno-commercial evaluation of both of its units at Gwalior and Bhiwani.
Consequently, Grasim will now manufacture both of its brands, "Grasim" and "Graviera" under a single location at Bhiwani. This will help considerably improve the competitive position of its fabric business in terms of economies of scale and operations, a company statement said.
On the Bombay Stock Exchange, the Grasim counter after opening at Rs 299 and touching a high of Rs 305, closed at Rs 301, a marginal gain of one per cent over its previous close and clocked a volume of 3.01 lakh shares.
Vikram Rao, group executive president responsible for the fabric and apparel segments, said, "Consolidating fabric manufacturing operations at one location is a strategic step to bring in better synergies, bolster operational efficiencies and ensure the profitability of this business."
Both brands, "Grasim" and "Graviera", along with their entire range such as Uncrushables, Acquasoft, Finesse, Safari, Coolers, E-stretch and All Seasons, will continue to be manufactured and marketed from Bhiwani. A slew of other innovative fabrics viz, the "Ice Touch" range and "Purista" Collection, are soon to be launched, Rao said.
The company had repositioned both the fabric brands Grasim and Graveria -and had dropped the Gwalior suffix from the Grasim brand.
Grasim is targeted at the premium to super-premium category while Graveria caters to the medium and lower end of the market.
The textiles business accounted for 6 per cent of the diversified company's revenues for the year 2000-01 with viscose staple fibre and cement together accounted for 78 per cent of net revenues.
Also, with a shift from tailor-made to ready-to-wear trousers continued competition from smaller producers, mushrooming of brands and spurious producers has impacted Grasim's textile business.