India’s GHCL to restructure its US home textile business

April 24th, 2008 - 1:53 pm ICT by admin  

By P.S. Anantharaman
Ahmedabad, April 24 (IANS) Global textile and chemical firm GHCL Ltd, formerly Gujarat Heavy Chemicals Ltd, is set to restructure its US home textile business and foray into the American retail market as well. “The move is aimed at merging home textiles and retail businesses under one umbrella. The merged entity will have four units - retail, institutional sales, sourcing and design,” R.A. Jalan, managing director of GHCL, told IANS here.

GHCL had in 2005 acquired the Virginia-based Dan River, a major home textiles producer having global operations, for $93 million. Its annual turnover is worth $250 million and its clients included mega retailers such as JC Penny, Wal-Mart, Linen & Things and Bed, Bath and Beyond.

Following the acquisition, the GHCL’s US home textiles business has increased to $275 million. It is expected to go up to $400-500 million in a year’s time.

Jalan said the move was in line with GHCL’s decision to restructure its soda ash and home textiles business in India. The strategy announced in March envisaged that GHCL’s home textiles entity will be called Fabient.

As an extension of this strategy, GHCL is putting all US operations under Fabient.

Fabient will be a 100 percent subsidiary of the GHCL, Jalan said.

The company would build upon the combination of its strong sourcing teams and existing vendor base in India, Pakistan and China along with the manufacturing competence in India, Cambodia and Mexico. Fabient will also be focusing on under-retailed markets of Eastern Europe, he added.

As a first step, GHCL has begun implementing the “new look of Fabient across its home textiles facilities in India, which will be completed during the year,” Jalan said.

“As the group is looking to enter into the US retail business directly”, it wanted to avoid any “conflict of interest with existing retailers as well as clients since the market category could be the same”, Jalan said, elaborating on the restructuring strategy of GHCL’s US business.

The new strategy could be evolved because the current sluggish US retail market, where retailers themselves were struggling to make margins at the expense of the suppliers, reduced the attractiveness for Dan River to maintain third party relationships.

Asked whether the strategy could be reviewed if the market revived sooner or later, Jalan replied in the negative.

He said that the strategy, which is to be implemented, will be long term.

The current market conditions had only helped the company evolve the strategy, he explained.

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