Pallonji sets ball rolling for Gokak recast | india | Hindustan Times
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Pallonji sets ball rolling for Gokak recast

The Shapoorji Pallonji group is set to revamp the operations of its consumer durables to textiles conglomerate Forbes Gokak, reports Sabarinath M.

india Updated: Nov 21, 2006 06:40 IST

The Shapoorji Pallonji group, promoted by Pallonji Mistry-the construction baron who is also ranked among the top 10 billionaires in India, is set to revamp the operations of its consumer durables to textiles conglomerate, Forbes Gokak. The restructuring plan may involve the demerger of businesses, relocating plants and divestment of unviable operations.

The Forbes Gokak board is meeting on November 28 to consider a report on restructuring drafted by a panel of directors in consultation with accounting and legal advisors. The restructuring, which is mainly aimed at unlocking the "hidden" value for investors, will be done through a series of steps spread over a period of one year. "The board will have to take the final call. The blue-print is ready," said a company source familiar with the situation.

Forbes Gokak is understood to be examining the option of demerging the textile division, which accounts for 50 per cent of its total turnover of Rs 625 crore. "The board is likely to consider a proposal for the demerger. It may not happen in the first stage," said the source. The demerger will help the company to raise funds for the textile business which holds promise after the phasing out of textile quotas, according to sources. Forbes Goak's history dates back to 1715 when it set up a textile mill at Gokak in the Belgaum district of Karnataka.    

Forbes Gokak's chief financial officer did not reply to questions on the proposed restructuring. Despite repeated attempts, Forbes Gokak's Company Secretary declined to comment on the restructuring of the textile business. Forbes Gokak managing director KC Mehra was unavailable for comment since he was travelling abroad.

Besides textiles, Forbes Gokak has engineering, logistics, automation and contract manufacturing divisions. While the engineering business has a turnover of Rs 68 crore, logistics' business has a turnover of Rs 51 crore. Forbes Gokak's wholly owned arm Eurkea Forbes - which is the leader in the water purifier and vacuum cleaner businesses - has turnover of Rs 500 crore. Hence, the consolidated turnover of Forbes Gokak is at around Rs 1,100 crore.  

Another important step could be to relocate plants to unlock the value of real estate. The company has filed intent of manufacturing with the concerned government agency on September 18 to set up a plant to produce fixtures, jigs and moulds at Kanchipuram in Tamil Nadu. Similarly, plans are under way to set up a plant at Nainital. Sources said that the company may look at the option of relocating some plants in South India, which are located on vast tracts of land, according to sources. As part of the strategy, the company may look at restructuring the lottery business too.

Shapoor Mistry, the son of Pallonji Mistry and the chairman of Forbes Gokak, is also putting in a new management team in place. Ashok Barat, an executive with the multinational food major Heinz India, has recently joined as the COO of the company. Five months back, the company has appointed SL Gokalney, managing director of Eureka Forbes, as an additional director on the board. SH Bhaskar had earlier taken over as the head of textile business.