Blackstone struggles to keep Gokaldas Exports afloat

Blackstone, the private equity (PE) investor, who had

acquired a 68 percent stake in Gokaldas Exports at 158.7 million dollars (Rs 978.4 crores) in 2007, is struggling to keep the business running. The originally Hinduja-owned Bangalore-based company has failed to perform in the last five years of after Blackstone bought the majority stake.

The company has come down to net sales of Rs 981 crores for 2012-13 against sales of Rs 1,005 crores in 2006-07. The stock, for which the PE major had paid Rs 275 for every share of Gokaldas Exports in 2007, whereas this week the scrip closed at Rs 45.60 on the BSE showcasing Blackstone’s inability to sustain growth.

What hit the once flourishing business was also the economic slowdown in 2008-09 that ensued immediately after the stake acquisition, which led to heavy loss of orders from the US and Europe, which are major importing countries. On the other hand, experts say, usually PE investors let the experienced company promoters run the business even after acquiring it to ensure smooth functioning but in Gokaldas Exports’ case Blackstone made a mistake of taking over the management.