Gokaldas Exports net sales drop 11.7% in Q2

Gokaldas Exports, the Blackstone controlled apparel firm

is experiencing a rough ride as it reported net sales of Rs 264 crores. Struggling to shrug off the backwash effects of global economic slowdown, Gokaldas reported 11.7 per cent drop in net sales for the quarter ended September 30 to Rs 264 crores over the same period a year ago. The company slipping into the red with net loss of Rs 27.1 crores compared to Rs 9.2 crores profit in the second quarter of the previous fiscal.

Their list of woes seems a trifle too long. Gokaldas Exports attributed the poor financials to higher wage bill (26 per cent rise), increase in cotton fabric prices (up 50 per cent), forex volatility (rupee strengthening 6 per cent in six weeks) and low price realizations due to pricing pressures. And they couldn’t pass on the rise in cotton prices to their customers since they were old contracts finalized much earlier. Even if the flow of orders is now improving, it has not reached the pre-crisis levels seen in 2007. The future doesn’t look too bright either, as its main markets for exports the US and the EU are yet to emerge from the economic downturn. It will take some time for apparel exports to regain its boom.

However, the company predicts to make profits in the next two quarters. They are trying to get better prices from customers. Their order book for Q3 stands at Rs 300 crores and for Q4 they have hand orders for Rs 200 crores and booking is still on.