US home textile business of GHCL set for overhaul

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Mumbai, Apr 21: Gujarat Heavy Chemicals Ltd (GHCL), the $700-million chemicals and textiles company, is planning to restructure its home textile business in the US. The company is restructuring the business previously operated under Dan River, Best Textile and HW Baker under one Global B2B vehicle to pursue its vision of enhancing B2B operations. The US home textiles business of GHCL is close to $275 million, with majority contribution coming in from the global outsourcing which is close to $225 million. The company expects this business to be in the region of $400 million-$500 million in about a year's time.

It is creating focused verticals for its US business wherein all its institutional and hospitality businesses (supplies to hotel chains, restaurants, laundries, hospitals) would come under one vertical. Further, this move is in line with GHCL's own restructuring of soda ash and home textiles, where the home textiles holding entity of GHCL will be called Fabient. As a first step, the company is in the process of implementing the new look of Fabient across its home textile facilities in India which will be done during the course of this year.

Sanjay Dalmia, chairman, GHCL, "As the group is looking to enter into US retail business directly, this poses a conflict of interest with the existing retailers as the market category between Dan River and the existing clients may remain the same. In the current sluggish US retail market, where retailers themselves are struggling to make margins at the expense of the supplier, such a strategy reduces the attractiveness for Dan River to maintain third party relationships. We are moving away from Dan River business of supplying to retailers on CIF basis because of the huge costs involved. Going forward, we would be servicing the relationships through Fabients, Vapi and global sourcing units via the FOB model, as is being done at present, which will require a limited set up of about 15-20 people and a saving of $ 15 to 20 million dollars on an yearly basis."

Fabient would be focusing upon under-retailed markets of Eastern Europe and will also play a role in sourcing for GHCL's retail foray into India. 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, stated a GHCL release.