Gokaldas Exp

The company has proved that its profit in Q4FY16 was indeed not sustainable. Tax write backs and exceptional gains alone will not help in the long run. And we are seeing that happening in Gokaldas Exports since Q1FY17, where it had a loss of Rs.12 crore and that widened to Rs.28 crore in current Q2. A 39% (YoY) drop in net sales led the poor show. The company has blamed this on poor macro environment, loss of large business from a key exporter  and delay in onboarding new customers. The company has stated categorically that demand for its products remains challenged due to increased competition from other apparel exporting countries.

The company continues to be recognized as a Blackstone promoted company but Blakcstone is also beating a hasty retreat. It sold 7.4% stake in the company for Rs 29.2 crore  in July , at Rs 113.5 each or less than half the price at which it had invested in the firm. Blackstone has bought majority stake of 68% from the Hinduja’s in 2007, when the markets were at its peak, just before the crash. At that peak, it had paid Rs.275/share. Many blame the fall of the company on Blackstone taking over as it never really knew the ways to run a textile business in India. Blackstone has been consistently trimming its stake and it now stands at 39.97%.