Gokaldas share surges after decision to sell assets

Gokaldas Exports informed the stock exchanges that the Board of Directors of the company have decided to sell land, buildings and other related assets pertaining to some of its properties at Bengaluru, Mysore and Hyderabad. The company did not disclose the reason for the sale of assets and funds received,  in the announcement. The stock surged nearly 10% to Rs 73 on the Bombay Stock Exchange after the announcement. 

The properties include Global Garments Unit-III at Mahalakshmipura, Yeshwanthpur, No. A-7/1, I.D.A, Nacharam Industrial Area, Hyderabad, Plot No. 28D and 28E in Sy No. 318 & 51 in Belavadi Industrial Area, Mysore District and Balaji Fashion House, Bangalore, the company said in a release. Further, the Board has decided to seek the consent of shareholders by way of Postal Ballot to this effect.

Gokaldas Exports, incorporated in 1995, is the largest exporter of garments in India. The company manufactures blazers and pants (formal and casuals), shorts, shirts, blouses, denim wear, swim wear, activity and sportswear. The Company operates from approximately 30 manufacturing units spread across the states of Karnataka, Tamil Nadu and Andhra Pradesh and has an installed capacity to produce approximately three million garments per month. 

On the financial front the total consolidated operating revenue of Gokuldas for FY15 stood at Rs 1090 crores, a decrease of 3.62 percent as compared to Rs 1131 crores in FY14 . The EBITDA stood at Rs 24.8 crores a decrease of 47.95 percent and the EBITDA margin is of 2.27 percent compared to 4.21 percent for the same period last year. The net profit of the company for FY15 stood at Rs 34.69 crores as compared to the loss of Rs 6.7 crores in the previous year. The net profit earned this year is attributed to  income from exceptional items, and other income of Rs 43.55 crores and Rs 47.26 crores respectively. The total debt of the company for FY15 stood at Rs 288.78 crores, a decrease of 6.56 per cent from the previous year. The debt burden of the company stands at 43.82 per cent of the total assets. 

With this Gokuldas also entered into a Share Purchase Agreement for the sale of its wholly owned subsidiary, Robot systems, to Silver Spark Apparel, a subsidiary of Raymond, for Rs 28 crores. This unit did not have any significant operations and had zero revenues in the year ended March 31, 2014. The proceeds from the sale of assets in Bengaluru, Hyderabad and Mysore, as also its subsidiary Robot systems, can help the company in reducing its debt burden and can further improve the financials of the company.