India's textile exporters are struggling for growth and the Bengaluru-based Gokaldas Exports is no exception. However, Sivaramkrishnan Ganapathi, Vice Chairman and Managing Director of Gokaldas Exports, told CNBC-TV18 that he expects a 10-12% growth in revenue.

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Almost all of the growth for Gokaldas will come from the recently acquired Atraco Group, a Dubai-based apparel maker, for $55 million. If you take the contribution from Atarco out, Gokaldas' attempt "is to come to the level of last year’s revenue,” Ganapathi said.

Much like the rest of the industry, Gokaldas' export revenue fell over 20% in the second quarter of the current financial year ending March 2024. This, despite a 9.7% rise in exported volume. Essentially, players are getting squeezed on prices as the buyers, especially those in the US, have been trying to reduce inventory.

Gokaldas is using manufacturing units in other countries to be able to offer competitive prices.

In August 2023, Gokaldas acquired Atraco, a 37-year old company in Dubai, with five plants that make shorts, t-shirts and dresses for customers across age groups. The products made in Atarco's plant in Kenya go duty-free to the US. Similarly, the plant in Ethiopia gets to sell its products duty-free in Europe.

Ganpathi expects Gokaldas to make a profit margin of 12-12.5% for the full-year ending March 2024. That's roughly the same as the margin for last year. “Over the next two-three years we should be able to drive another 1.5% improvement,” he added.

But India's struggle with textile exports is very real

India's apparel exports, which is the mainstay of Gokaldas, saw a 11.23% decline in September 2023, compared to the same month last year. India ranks fifth among countries that export textile and apparel products. More than half of those exports go to the US and Europe.

Indian textile industry has been on a downtrend for a while, with tough competition from players in Bangladesh and Vietnam

"US apparels stocking was $10 billion per month. In the last few weeks the stocking has declined to $7 billion. US wants to lower this number to $5 billion. Most likely, US (companies) will maintain $7 billion inventory in the future," Centrum, a Mumbai-based broking firm, said in a report dated October 9.

Going forward, Gokaldas' hopes are also pinned on the UK-India free trade agreement, which is still being negotiated. Hope floats that a new agreement will make it easier to export from India itself, without having to scout for plants or players in other geographies.

“There are multiple components to the trade agreement. I am not in a position to guess as to when it will happen but my sense is that it should happen soon enough,” he explained.

Sharekhan has identified Gokaldas, with a market capitalisation of over ₹5,000 crore, as one of their Diwali picks. The stock that was priced around ₹370 at the start of the year, now costs over ₹800. Bulk of the rally came after the announcement of the Atarco acquisition.

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