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Textile manufacturer and exporter Gokaldas Exports, in which recently, NR Narayana Murthy-led VC firm Catamaran Ventures LLP picked up a small stake, anticipates improved financial performance in the upcoming Q3 and Q4 as brands, which have been purchasing 25 per cent less than the previous year due to excess inventory, are expected to rebound, a top company executive told businessline.
In the first quarter of fiscal year 2023–24 (Q1 FY24), Gokaldas Exports experienced a 17.4 per cent y-o-y decline in consolidated net profit to ₹32.5 crore, attributed to reduced exports to the US and European nations. Consolidated revenue also decreased by 15.7 per cent y-o-y to ₹514 crore in the first quarter.
“ We are seeing very good traction because in Q3 we are producing for Spring 24, and the brands are coming back and are buying. In fact, we are seeing both sequential and annual growth. So, after a little blip in this in the first two quarters, we are seeing decent traction picking up in the third and fourth quarters,” said Sivaramakrishnan Ganapathi, MD, Gokaldas Exports.
Earlier this month, Narayana Murthy’s Catamaran Ventures bought a 1.12 per cent stake in apparel manufacturer, according to market filings.
Exploring opportunities
Further, it remains committed to expanding its capacity within the domestic market and is increasingly exploring opportunities in tier-2 cities and States with lower production costs.
Presently, the company operates 24 manufacturing units with an annual business turnover of over ₹2,200 crore. He explained that the company’s growth strategy focuses on both organic and inorganic expansion, with a particular emphasis on new customers, product lines, and geographies when evaluating acquisition deals.
The recent acquisition of Atraco provides duty-free access to the US from Kenyan operations and opens up cross-selling opportunities.
Regarding the possibility of moving its production to duty-free regions in the future, the company emphasised that recent acquisitions, like the Dubai-based Atraco Group, are aimed at future expansion and incremental growth, with India remaining their top priority.
Further, it currently has a cash flow of ₹350-400 crore, with approximately $15 million allocated for the acquisition and the remaining $40 million to be financed through borrowing.
In terms of capex expenditure, “the current fiscal year sees an allocation of about ₹145 crore, with the next fiscal year’s expenditure expected to be under ₹100 crore,” the MD noted.
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