Restructuring nod fuels GHCL

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The stock of GHCL appreciated 54 per cent from Rs 73.65 to Rs 113.35 after the board of directors gave an in-principle approval to the company's restructuring plans.

The board proposed to transfer the sourcing and manufacturing of the home textile business to its 100 per cent subsidiary, while the inorganic chemical business consisting mainly of soda ash will remain with the parent company.

The retail (home textiles) business accounted for 34 per cent (Rs 365 crore) of the company's total turnover (Rs 1,083 crore) in fiscal 2006-07. However, the segment contributed only seven per cent or Rs 16.90 crore of the total Rs 239 crore operating profit during the same period.

According to the company, the business restructuring would provide enhanced financial flexibility and unlock value for the shareholders. The home textiles entity is set to become one of the strongest sourcing power houses in the world, backed by a global network of vendors and sourcing teams.

The company had earlier acquired three companies in the USA, apart from the largest home textiles retail chain of the UK consisting of more than 300 stores operating under the brand name of Rosebys.