Financial Daily from THE HINDU group of publications
Thursday, Aug 18, 2005
GHCL looking to buy home textile cos in US, Europe
New Delhi , Aug. 17
GUJARAT Heavy Chemicals Ltd (GHCL), flagship company of the Dalmia Group, is all set for a series of acquisitions in the US and Europe which would enable it to enter the home textiles export market in a big way.
This would cost the company in excess of $100 million (Rs 435 crore), part of which would be raised through issue of securities in foreign markets. The company is in the last stages of negotiation fro these acquisitions.
The Chairman of GHCL, Mr Sanjay Dalmia, told Business Line that the company is on the verge of acquiring at least four large home textile companies in the US and Europe in the coming months.
This would be part of the company's strategy to become a major player in the home textiles segment.
With home furnishing products such as bed sheets, table cloths, curtains and a whole finished product range, the company will target the US, Japanese and European markets, taking advantage of the existing quota free regime.
One of the current negotiations with a company in Western Europe will amount to $40-50 million (Rs 176-220 crore).
"The acquisitions will give us capacity several times more than that at our Vapi unit and add several global brands to our portfolio," he said.
The Vapi unit's capacity currently is 36 million metres per annum.
Currently, the textile division of GHCL has a total installed capacity of 68,000 spindles and is dedicated to manufacturing of cotton and polycotton yarn.
The company intends to move up the textile value chain with an investment Rs 230 crore in a greenfield project at Vapi, Gujarat to be commissioned by March 2006.
"But this would only be the beginning. The companies that GHCL plans to acquire in the US and Europe would make us one of the dominant players in the sector," he said.
He also said that he is looking at setting up another manufacturing unit in India in any of the three States of Punjab, Gujarat or Andhra Pradesh, for which an investment of Rs 1,000 crore was in the offing.
The unit may also be an extension of the unit at Vapi. "The major issue here is the price of power and the decision will be based purely on economic considerations," he said.
GHCL's expansion plans include relocating the machinery and shifting the manufacturing from the US and Europe to one of the three countries, India, Pakistan or China.
"We are still studying the pros and cons of manufacturing in the three countries and the decision will hinge on wherever we find the maximum economic advantage," he said.
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