The proceeds from the sell-off will be used to retire its high cost debt and reduce interest burden, said a company statement. The divestment decision, based on a valuation report by a firm of chartered accountants, would not affect the distribution agreement between GFL and Godrej Pillsbury Ltd, Sudhir Awasthi, GFL managing director said.

GFL's rights issue to raise about Rs 18 crore would be in the ratio of 3:4 and the premium is likely to be between Rs five and Rs eight, Awasthi said. ``The issue is expected to increase the equity base of the company and reduce debt further,'' he said.

GFL has incurred an interest burden of Rs 19.37 crore for the financial year ended March 31, 1999, twice the level of theinterest for the previous year. ``With this restructuring, we believe we will be able to improve the company's performance and maximise returns to our shareholders,'' he said. Awasthi said GFL has been passing through a lean period during the last two years. It posted a 55 per cent increase in sales turnover at Rs 400 crore for the year ended March 31, 1999.