A Kothari Group firm has sold its Punjab-based textile spinning unit to Cedaar Textile Private Limited.
Gillanders Arbuthnot & Company Ltd said in a stock exchange filing: “The company has executed an agreement for sale of its North India Spinning Mill (NISM) unit.”
The sum received from the sale is Rs 67 crore (about $9 million) after adjustments with respect to surplus/deficit of assets over liabilities, the filing stated.
Established in September 2020 with a corporate office in Bengaluru, Cedaar has a factory in Ludhiana manufacturing yarn and fabric and also providing spinning, knitting and dyeing with a focus on organic and recycled fibres.
In September last year, Kolkata-headquartered Gillanders Arbuthnot & Co had received shareholders' approval for sale of its unit.
“The textile industry in general and spinning industry in particular have been passing through a huge crisis mainly due to poor demand in both domestic and international markets. The cotton spinning mills are highly dependent on export of yarn, which was down by about 30% in 2019-20, resulting in a big crisis for the spinning mills,” the company had said in its annual report for 2019-20.
Covid-19 further affected the industry.
Gillanders Arbuthnot & Co was founded by FM Gillanders and GC Arbuthnot in 1935.
As on December end, the promoters Kothari family and group companies held 68.74% stake in the firm and Life Insurance Corporation of India (LIC) 4.80%.
Gillanders Arbuthnot & Co has struck other deals as well.
Last year in February, it entered into an agreement for slump sale of one of its tea estates to Jutlibari Tea And Plantations LLP, Assam, for Rs 15.90 crore. In its annual report, the company stated that the sale was done “in order to reduce debts and improve the overall profitability”.
In 2017, the company sold its chemical division to Waldies Compound Ltd (formerly Barfani Builder Ltd) in a stock deal.
In 2014, it agreed to buy Malawi-based Group Development Ltd and its three subsidiaries engaged in the business of producing and selling tea, macadamia and other crops.
For the quarter ended September 2020, the company reported a 67.5% year-on-year jump in net profit at Rs 25.9 crore. It posted a net loss of Rs 14.7 crore for the April-June quarter 2020.
For the year ended 2019-20, the firm swung to a net loss of Rs 15.2 crore from a profit of Rs 32.4 lakh, on a total income of Rs 660 crore, which was down 12% year-on-year.