Gokaldas eyeing mega Wal-Mart deal

With many top European retail stores moving part of their

sourcing requirements from China to other Asian markets, PE giant Blackstone-controlled apparel exporter Gokaldas Exports may grab new business contracts with the world’s largest retailer Wal-Mart and other niche players. Wal-Mart Stores may become one of the largest clients for Bangalore-based Gokaldas with a six million pieces annual mega order. Meanwhile, German outdoor and leisure clothier Jack Wolfskin, US-based Sports Authority and Tailor Vintage are already in talks with the Indian exporter.

Rising labor costs, high inflation and appreciating yuan have forced several global retailers look for other options. China’s current apparel exports account to $90 billion. India’s $13 billion apparel export industry is also facing fierce competition from competitors in Bangladesh and Vietnam. The domestic garment export leaders, including Gokaldas, have struggled in scaling up business with hardly 6-7 local firms having annualized revenue in excess of Rs 300 crores.

Wal-Mart’s order for its US operations could well be in the range of around Rs 175 crores annually. Nike and Abercrombie are among the biggest clients of Gokaldas. The company’s top eight clients account for roughly 80 per cent of its annual revenue, out of which Gap and Nike alone account for almost 50 per cent when Blackstone acquired it four years ago.

Apart from perking up growth margins with Abercrombie and Diesel in the current difficult economy, the company has also tapped new growth leaders such as All Saints and Land’s End in European and US fashion retail. Besides, Gokaldas has focused on the growing India retail market with revenues projected to cross Rs 150 crores this year, up from Rs 50 crores two years ago.