Blackstone takesover Gokaldas

Three years after it purchased a controlling stake in the Indian garment exporter, Blackstone

Group LP, the world’s biggest private equity firm, has finally rolled its engine to play an active role in Gokaldas Exports. To head its sales and marketing division and drive its overseas business, the company has appointed Gautam Chakravarti, Executive Director at US-based Blackstone as additional director. He replaces former executive chairman Madanlal Hinduja who retired in the month of January. Another Blackstone executive director, Amit Dalmia, will handle finances.

Surging prices of cotton, soaring key raw material and demand for garments in Western nations have failed to revitalize the Gokaldas to recover from a slump that began in 2007-2008, following the global financial crisis making it difficult for them to raise prices. The company has reported a loss of Rs 16.72 crores in the quarter ended December 31, and a deficit of Rs 27.1 crores in the preceding three months. Out of its Rs 1,200 crore sales in 2009-10, 90 per cent of turnover is being constituted by export.

The investment agreement in 2007 between the PE firm and the exporter, which gave the founding family of Gokaldas three years to hand over the management to Blackstone, ends this month. Blackstone has invested around $161 million in Gokaldas and raised its stake to 68 per cent in the year 2007. Now the founding family holds about 20 per cent and Anand Jain’s Jai Corp owns 6.64 per cent.