The Hindu Business Line : Gokaldas bullish on tapping Blackstone customer base

Bangalore, Aug. 21 Gokaldas Exports hopes that the Rs 676-crore acquisition by global private equity firm Blackstone Group will help the company expand its client base.

Mr Rajendra Hinduja, Managing Director, said: “Apart from acquiring financial power, we hope to gain access to Blackstone’s clientele base.”

He added: “Blackstone has investments in several big mills and textile and garment manufacturing companies globally — in the US, China and Europe. It also intends to buy garment retail chains in the US and maybe in India at a later stage. These companies could provide a potential customer base for us in the future.”

Global, domestic clients

Gokaldas Exports currently has 100 clients globally, including Nike, Gap and Reebok.

The company also supplies to the domestic market to retailers such as Madura Garments, Big Bazaar, Shoppers’ Stop and Lifestyle.

About five per cent of the company’s Rs 1,000-crore revenues come from the domestic market.

It aims to ramp this up to 10 per cent soon.

On whether greater dependence on the US market would be in the company’s interests, given the rupee appreciation, Mr Hinduja said: “We have to settle with the idea that the exchange rate will be around the Rs 40 level. About 70 per cent of apparel business comes from the US. We can’t do without the US market.”

He also said that the Blackstone acquisition process could take months to be completed. “However, it will not affect the working or management.”

The money obtained through the stake sale (50.1 per cent) will be pumped into the company’s SEZ project in Bangalore.

The land acquisition process is on and is expected to be completed in eight weeks, said Mr Hinduja.

The SEZ will house around 50 export units; the project is expected to be completed in two years.

Gokaldas Exports has 46 manufacturing facilities across Bangalore, Mysore, Hyderabad, Tumkur and Chennai.

The total production capacity is 2.5 million garments a month.

While exports will continue to be a key focus area, what are the company’s plans on the domestic retailing front?

Mr Hinduja said that the company was not “enthusiastic” about retail at the moment. However, it plans to revive the Wearhouse chain sometime in the future.

(The company has shut down most of its Wearhouse outlets; only three are operational in Bangalore.)

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