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The board of Procter & Gamble Hygiene & Health Care has recommended the sale of its detergent manufacturing unit in Madhya Pradesh (MP) to Procter & Gamble Home Products Ltd for Rs 101 crore (Rs 1.01 billion).
Of the sale price, Rs 38 crore (Rs 380 million) will be towards tangible and intangible assets of the unit.
The remaining Rs 62 crore (Rs 620 million) would be towards the value of the inventory of raw material and finished goods, which might vary according to the inventory on hand on the date of transfer, a media release from P&G said.
The release also said that the sale would not have any significant impact on PGHH's profits.
Bharat Patel , non-executive chairman, PGHH, has said: "The transfer via sale will benefit PGHH in three ways: reduce complexities, ensure that each company is focused on growing its core categories; and in effect, free up Rs 101 crore (Rs 1.01 billion) of cash for productive use in PGHH's core businesses and for augmenting company's distributable profits."
PGHH will transfer its employees together with severence liability to PGHP.
Procter & Gamble Company USA's Indian operations include 65 per cent listed subsidiary PGHH and 100 per cent unlisted subsidiary PGHP. Till date, PGHH has been contract manufacturing detergents Ariel and Tide for PGHP, through its MP plant.
PGHP markets Ariel and Tide in India. It is also in charge of P&G's shampoo brands Head & Shoulders, Pantene and Rejoice.
PGHH is in charge of P&G's health care brand Vicks and feminine hygiene brand Whisper, which are manufactured at its Goa plant.
PGHH will seek the approval of shareholders for the proposed transfer of the business. On approval of shareholders and concerned authorities, the transfer of the MP unit is expected to be effective from October 1 2005, the P&G release said.