Accelerate growth through expansion initiatives

India is actually struggling with textile exports. For some time, the Indian textile industry has been declining due to fierce competition from Bangladeshi and Vietnamese companies.

India’s garment exports declined by 11.23% in September 2023 compared to the same month last year. India is the 5th largest country in the world for textile and apparel exports. Europe and the United States receive more than half of these shipments.

$10 billion is invested in American clothing each month. In recent weeks, the value of inventory has fallen to $7 billion. The United States wants to reduce this amount to $5 billion. In the future, American businesses will probably have $7 billion in inventory.

But surprisingly, the Bengaluru-based garment manufacturer has weathered the decline in exports. India’s textile exporters are struggling, but Gokaldas Exports has been able to reach duty-free consumers in the US and Europe thanks to timely acquisitions.

Gokaldas’ expansion comes almost entirely from its $55 million acquisition of Dubai-based clothing manufacturer Atraco Group. If Atarco’s contribution is removed, Gokaldas’ effort would be identical to last year’s profit.

Gokaldas Imports’ stock performance is also very good, delivering multiple-bagger returns. The stock price soared nearly 100% compared to last year, and over three years, the stock returned a whopping 858%. So let’s take a closer look at the article to understand what the future holds.

Gokaldas Export Industry Overview

Rising labor costs and geopolitical instability are likely to drive textile and apparel exports away from China. China’s market share has been gradually decreasing over the past 10 years due to the effects of rising factor costs, exchange rates, and trade restrictions.

These changes provide new opportunities for developing Asian countries, especially India, to capture a larger share of the market. The sourcing industry in India is growing, and this is becoming more and more evident.

Moreover, competing countries have the opportunity to benefit from changing trade dynamics due to geopolitical issues between the United States and China and the U.S. ban on cotton goods from China’s Xinjiang region.

This trend is further supported by domestic factors in China, including rising labor costs, a declining working-age population, increasing social security benefits, and a shift away from low-cost clothing exports.

Gokaldas Export Company and Products Overview

Gokaldas Exports holds a significant presence in the Indian fashion sector and specializes in producing and exporting a wide range of high quality ready-to-wear garments. With a strong presence in global markets, the company serves the needs of renowned international fashion brands and retailers across more than 50 countries.

The company’s success is due to a thorough understanding of apparel specifications, a strong awareness of customer preferences, and a consistent commitment to providing products that meet rigorous quality and compliance standards.

As of 2023, the company has an annual manufacturing capacity of 36 million garments. It also has over 20 state-of-the-art manufacturing facilities, over 15,000 advanced machines and five value-added service units.

Gokaldas Imports has built lasting relationships with key customers that have played a pivotal role in growing and maintaining its market position. The company’s customer base extends to regions such as North America, South America, Europe, Africa, Oceania and various parts of Asia.

A trusted and preferred partner in the international fashion scene, Gokaldas Imports remains well-known for its commitment to quality and customer-first philosophy. Most of the company’s revenue comes from outside India, with 84% coming from globally.

Gokaldas Export Finance

In FY 2023, Gokaldas exports witnessed a significant increase in sales, surging 24.12% to reach ₹2,222.2 crore as compared to ₹1,790.32 crore in FY 2022. Gokaldas Exports has achieved this revenue growth primarily through its ability to balance current orders with execution capacity. Analyzing the four years from FY2020 to FY2023, the company recorded a solid Compound Annual Growth Rate (CAGR) of 17.47%.

At the same time, there was a notable increase in net profit, which increased by 47.7% from ₹117.08 crore in FY2022 to ₹172.97 crore in FY2023. The four-year cumulative net profit from fiscal year 2020 to fiscal year 2023 recorded a CAGR of 78.54%.

In FY23, Gokaldas Exports maintained favorable financial metrics with return on equity (ROE) of 19.58% and return on equity (ROCE) of 21.20%.

future prospects

capacity expansion

To maximize capacity utilization, improve machinery for efficiency and unlock the capacity of the current facility, GKEL plans to invest Rs. 37 billion. Gokaldas Exports invested Rs. In fiscal 2023, we will invest $160 million to reverse integrate fabric processing for knitted garments and set up a new greenfield plant in Madhya Pradesh.

Pilot production of the MP capacity began in the fourth quarter of 2023. Commercial production is scheduled to begin in the first quarter of 2024. In FY2024E, an additional Rs. Revenue 5 billion won.

In FY2025E, the addition of a knitwear factory in Tamil Nadu (capital expenditure of Rs. 75-100 at core) is expected to contribute to additional revenue generation of Rs. 30 billion.

Strong market position and long track record

GEL benefits from established relationships with reputable international clothing stores in North America and Europe, as well as repeat orders and continued growth in wallet share with important customers.

Gokaldas Imports’ strong business profile is evidenced by its presence across the manufacturing value chain and operating revenue of Rs 2,222 crore in FY23. The main reason for this was increased volume, up from 23 million in fiscal 2022. It is expected to increase to 27.9 million in fiscal year 2023.

For the first nine months of fiscal 2024, GEL reported revenue of ₹1,566 crore despite turbulent economic conditions in the US and Europe. In the mid-term, business performance is expected to improve following the acquisition of MCPL and Atraco Group, and synergies are also expected in future quarters.

conclusion

In conclusion, Gokaldas Exports has shown remarkable resilience and growth in the face of global challenges in the textile industry. With strategic expansion plans, strong market presence, and strong financial performance, Gokaldas Imports is poised for continued success.

But the future is never certain, and it remains to be seen how Gokaldas will navigate the ever-changing landscape of international trade and consumer preferences. What do you think about the future prospects of Gokaldas exports? Do you think their strategy will be able to maintain momentum and capture a larger share of the global textile market?

A work written by Nalin Surya S.

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