The Ajay Piramal group textile flagship, Morarjee Goculdas Spinning & Weaving Company, has bought out the remaining stake in its joint venture Morarji Brembana from its Italian partner Italian Manifattura Di Valle Brembana.
The 50:50 joint venture was formed in 1995. While Morarjee Gokuldas picked up 49 per cent additional stake, its employee union has bought the remaining 1 per cent.
As part of the reorganisation of the textiles business, the board of Morarjee Goculdas approved the hiving off of its manufacturing facilities at Mumbai to Morarjee Brembana's Nagpur unit. Morarjee Gokuldas will restrict its functions to just marketing.
"We have gone ahead with this acquisition as the Italian partner had expressed a desire to exit for they were in need of liquidity," P K Gothi, managing director, Morarjee Gokuldas, said.
However, the Italian partner will continue to provide Morarjee Brembana with designs, technical support and marketing inputs and the products will continue to be sold under MBL brands for the next five years.
"The Mumbai plant was not viable owing to rising costs and local taxes and with MBL as a 100 per cent subsidiary, we have now decided to consolidate the manufacturing activities of the textiles division of MGL to MBL's premises at Butibori near Nagpur", Gothi added.
The land released at the Mumbai plant will be used for commercial and residential property development by MGL.
The relocating of manufacturing facilities was on the company's agenda for sometime and, according to company officials, has now been facilitated by the acquisition.
The transfer was done to the Nagpur unit in view of the fact that at the relocated site, the costs in terms of variable inputs are much lower.