Gokaldas Exports turnaround courtesy trimming of non-core assets

Private equity giant Blackstone has sold under 10 per cent stake in garment exporter Gokaldas Exports or one-sixth of its total holding in the firm as it looks to gradually liquidate one of its loss-making investments in India. The PE firm sold shares at Rs 126.2 each or less than half the price at which it had invested in the firm. It pocketed Rs 43.5 crores. Exchange data show ICICI Bank bought the shares. Blackstone had previously part exited from Gokaldas Exports two years ago. It had initially sold 5.6 per cent stake out of its 68.2 per cent holding in June 2014 for Rs 16.19 crores. At that time, it had sold shares for Rs 83.9 a piece. Later that year, it sold another 4.5 per cent stake for Rs 10.48 crores at Rs 67.65 each. That time too, the shares were acquired by ICICI Bank, as per bulk deal disclosure on the BSE. The latest transaction marks the third part-exit for the PE giant from one of its private investment in public enterprise (PIPE) deals in the country.

Meanwhile Gokaldas Exports has surged 47 per cent this month, 91 per cent this year and 148 per cent over the last one year. This fiscal it made a profit of Rs 61.3 crores. This turnaround has been possible because the company is selling off its non-core factories and non-core assets. With a Rs 445 crores market capitalisation, 80 per cent of Gokaldas’ revenues come from exports. The company was earlier owned by the Hinduja Group and in 2007 Blackstone Group invested in the company. The company was making losses from FY11-FY14. In FY14, the losses came off a bit and narrowed to Rs 7 crore and in FY15-FY16, the company turned around and in FY15 made a profit of about Rs 35 crores.

When Blackstone invested in the company, Gokaldas had about 46 factories but now the numbers have come down to 26. In FY16, the company sold one factory to Raymond for Rs 28 crores and approval was granted for the sale of three other factories in Bengaluru, Hyderabad and Mysore. These measures have helped to raise some money for the company. The cash has risen from Rs 15 crores in FY13 to Rs 211 crore in FY16. The cash sitting on the books is half of its current marketcap. This is despite the stock running up as much as 150 per cent in the last one year.