In Short:
Gokaldas Exports aims to integrate its new Atraco and Matrix units by FY25, despite a 16.5% profit drop due to high costs and productivity losses. They invested ₹280 crore in new facilities in Madhya Pradesh, Tamil Nadu, and Bangladesh. Revenue increased by 79.9% to ₹939.7 crore, but profits fell to ₹27.2 crore. The company anticipates better stability and capacity utilization soon.
Gokaldas Exports Eyes Strategic Integration of New Units
**Gokaldas Exports**, a prominent player in the apparel manufacturing sector, is set to wrap up the integration of its newly acquired **Atraco** and **Matrix** units by the close of FY25. Recently, the company saw its profits slide by 16.5% due to soaring freight costs and productivity losses linked to the transitional phase during the last financial quarter.
Acquisitions Fuel Growth
Back in August 2023, **Gokaldas Exports** took a significant step by agreeing to purchase **Atraco**, a well-recognized apparel manufacturer in the **US** and **Europe**, for a cool $55 million. Following this, in April 2024, the company also announced the acquisition of **Matrix Design & Industries Private Limited** for a hefty enterprise value of ₹489 crore.
Positive Revenue Trends Despite Profit Dip
**Sivaramakrishnan Ganapathi**, the Executive Vice-Chairman and Managing Director, shared insights with businessline, noting, “Our revenue got a boost from the organic growth of **Gokaldas Exports** and the addition of new facilities.” The company reported an impressive 79.9% jump in consolidated revenue, soaring to ₹939.7 crore compared to ₹522.2 crore during the same April to June quarter last year. However, the profit dip to ₹27.2 crore in Q1 FY25, down from ₹32.6 crore, came largely due to temporary challenges and increased expenses.
Future Optimism Amidst Challenges
In the initial stages of this transition, **Gokaldas Exports** anticipates incurring some costs that won’t immediately translate into revenue. Yet, Ganapathi remains optimistic that expenses will taper off as operations stabilize and the new facilities start to yield positive results.
Addressing Transition Issues
The hurdles faced in the transition from **Atraco** during the fourth quarter significantly impacted the first quarter’s profitability—leading to a non-recurring airfreight cost of ₹8.6 crore. Nevertheless, the company is optimistic about strong business volume in the upcoming quarters, with plans to fully utilize capacity across all newly acquired and expanded apparel units.
Expansion Plans Taking Shape
Moreover, the new manufacturing unit in **Madhya Pradesh** is gearing up for full operational capacity, with expectations to reach optimal levels by Q3 FY25. Additionally, a fabric processing unit in **Tamil Nadu** is on track to commence commercial production later this quarter, in Q2 FY25.
₹280 Crore Investment in Growth
With an ambitious investment plan, **Gokaldas Exports** has committed ₹280 crore over the next two years to establish three new manufacturing facilities in **Madhya Pradesh**, **Tamil Nadu**, and **Bangladesh**.
Concerns in Bangladesh
In a recent post-results conference call, Ganapathi provided an update on the **Bangladesh** manufacturing unit, stating, “The issues in **Bangladesh** have been escalating and reached a critical point a week ago.” He elaborated on the company’s cautious approach to expanding capacity in the region due to worries regarding safety, security, and overall business viability.
Exploring Cost-Effective Alternatives
Moreover, the company is keen to explore new avenues for capacity expansion in lower-cost areas. “We already have a factory in **Madhya Pradesh**, and through our **Matrix** acquisition, another in **Ranchi, Jharkhand**. These locations are more cost-effective and might compete well with **Bangladesh** in the market,” he concluded.
