Gokaldas locked at 20% upper circuit on Atraco acquisition deal

In a release, Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director, Gokaldas Exports said that the acquisition was an important step as Atraco is "strategically relevant, possesses a good complementary customer base, operationally strong, and above all, a leader in its own sphere."

With this acquisition, Gokaldas exports is hoping to gain access to low-cost duty-free locations for manufacturing. "Together, we can deliver a wider choice and value proposition to our global customers," Ganapathi said.

According to the company, this duty-free access to the US is a key strength of the deal. Through the acquisition, the company will also gain access to large-scale production facilities that are located in low-cost locations. This would play an important role in driving expansion going forward.

"Atraco additionally has a strong performance record, manufacturing capabilities, high employee productivity and machine efficiency and a series of long-standing relationships with well recognized global apparel brands," the company said in an investor presentation.

Also read: A good yarn: Gokaldas Exports’ story of success likely to continue

For the quarter ending June 2023, Bangalore-based Gokaldas reported a revenue of Rs 522 crore, down by around 14 percent year-on-year from Q1FY23. The revenue also saw a sequential decline of 1.5 percent from Rs 530.1 in Q4FY23. The company also saw a 17.4 percent Y-o-Y and 31 percent Q-o-Q decline in consolidated net profit to Rs. 32.6 crore in Q1 FY 24. Earnings before interest, depreciation, taxes and amortisation (EBITDA) declined by 8 percent Y-o-Y and  12 percent Q-o-Q decline to Rs 67.8 crore in Q1FY24. EBIDTA margin grew by 18.5 basis points Y-o-Y and declined by 15 basis points Q-o-Q to 13 percent for the quarter ending June 2023.

In an interview with CNBC TV 18, Ganapathi said that the demand should pick up in the second half of the year. "Most of the global brands are sitting with excess inventory from the previous year and hence they are buying a lot less since then."

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