Gokaldas Exports Ltd Management Discussions

Global economic overview

In 2024, the global economy grew at an estimated 3.2%, reflecting resilience despite trade tensions and geopolitical uncertainties, according to the International Monetary Fund (IMF). Emerging markets, particularly India (7.0%) and China (5.0%), drove nearly half of this growth, fueled by strong domestic demand, infrastructure investments, and supportive policies, while advanced economies like the US (2.6%) and the Euro area (0.8%) faced challenges from tighter monetary policies and subdued demand. Key growth drivers included moderating inflation, which allowed some central banks to ease monetary tightening, resilient consumer spending in the US, and global trade adaptability, though trade growth lagged at 1.7% due to emerging frictions. For 2025 and 2026, the IMF projects global growth to moderate to 2.8%-3.3%, with emerging markets maintaining stronger performance (3.7% in 2025) amid risks from escalating trade wars and policy uncertainties.

This trajectory underscores the importance of adaptive policies and trade resilience to sustain growth. While emerging markets will likely continue to lead, advanced economies face structural challenges, and global cooperation will be critical to navigate trade barriers and geopolitical risks in the coming years.

Global apparel industry overview

The global apparel industry in 2024 remained a critical component of the world economy, navigating a complex landscape marked by shifting supply chains and evolving trade dynamics. The industry, valued at approximately US$ 575 billion in global apparel exports, is projected to grow to

US$ 715 billion by 2030, driven by rising demand in key consumption markets like the EU, US, and China. Emerging sourcing hubs, particularly India, are gaining prominence due to competitive labour costs, a large untapped labour force, and a stable geopolitical environment. Indias overall apparel exports grew by 10% in FY25, and exports to the UK grew by 8% during the same period, which is expected to be bolstered by strategic trade agreements like the India-UK FTA, which offers a 12% duty advantage over competitors like China. However, near-term challenges persist, with US reciprocal tariffs creating uncertainty, impacting consumer sentiment and the textile value chain. US brands are adopting cost-absorption strategies and negotiating discounts, but the reciprocal tariffs that are reinstated could lead to higher consumer prices hence dampening demand. The realignment of global supply chains, spurred by rising labour costs in traditional hubs like China and Vietnam and geopolitical tensions affecting suppliers like Bangladesh, underscores Indias growing role as a preferred sourcing destination for global apparel brands subject to Indias trade agreements with key importing countries.

The global apparel industry, valued at US$ 575 billion in 2025 and projected to reach US$ 715 billion by 2030, faces a transformative future shaped by trade uncertainties and supply chain realignment, with India emerging as a key sourcing hub due to its competitive labour costs, stable policies, and the India-UK FTAs 12% duty advantage. Near-term challenges include US tariffs impacting consumer demand and supply chain disruptions in traditional hubs like China and Vietnam, while long-term opportunities arise from Indias 10% export growth in FY25, ongoing FTA negotiations with the EU and US, and a global push for sustainability, positioning India to capture a larger market share by leveraging its integrated value chain and ESG initiatives like decarbonization and workforce empowerment.

Key trends shaping the global apparel industry

Several key trends are shaping the global apparel industry, influencing both the current landscape and future outlook:

Supply chain diversification

The global apparel industry is witnessing a significant realignment of supply chains due to rising labour costs in traditional manufacturing hubs like China and Vietnam, compounded by geopolitical tensions affecting suppliers such as Bangladesh. Subject to finalization of trade agreements with key importing countries, India could emerge as a preferred sourcing destination, leveraging its competitive labour costs, large untapped labour force, and stable policy environment. Indias overall apparel exports grew by 10% in FY25, and exports to the UK grew by 8% during the same period, which is expected to be bolstered by strategic trade agreements like the India-UK FTA, which offers a 12% duty advantage over competitors like China. Ongoing FTA negotiations with the EU-27 and bilateral discussions with the US further enhance Indias attractiveness.

Sustainability and ESG compliance

Increasing consumer and regulatory demands for sustainability are driving the apparel industry toward environmentally and socially responsible practices. Companies are prioritizing decarbonization, resource conservation, and circular economy models to align with global ESG standards. Gokaldas Exports exemplifies this trend through its commitment to decarbonizing operations and fostering a net-positive apparel industry. The Companys initiatives include upskilling 28,000 employees, achieving 30% gender balance in supervisory roles, and training 100,000 women to lead, demonstrating a focus on social empowerment alongside environmental goals. The Times of India underscores that green compliance is becoming a competitive differentiator, with brands facing pressure to adopt sustainable practices to meet consumer expectations and regulatory requirements, particularly in major markets like the EU and US. This trend is reshaping sourcing decisions and encouraging investments in sustainable manufacturing processes.

Trade uncertainties

US reciprocal tariffs introduced in 2025 have created significant uncertainty in the global apparel industry, impacting consumer sentiment and the textile value chain. US brands are adopting strategies such as absorbing costs internally or negotiating discounts with manufacturers to manage tariff-related cost increases. However, reciprocal tariffs that are reinstated could lead to higher consumer prices hence dampening demand. This uncertainty is prompting brands to diversify sourcing away from tariff-affected regions, further accelerating the shift toward tariff efficient countries. These trade dynamics are creating short-term volatility but also reinforcing the long-term strategic importance of alternative sourcing hubs with favourable trade agreements and stable geopolitical environments.

Digitalisation

Digitalisation is transforming the global apparel industry by enhancing efficiency, innovation and responsiveness across the value chain. The adoption of advanced technologies, such as automation and data-driven manufacturing, is enabling companies to optimise production processes and improve resource efficiency. Digital tools are also facilitating better supply chain management and demand forecasting, helping brands navigate trade uncertainties like US tariffs.

Emerging new low-cost apparel manufacturing hubs

The global apparel industry is witnessing a shift toward new low-cost manufacturing hubs in South Asia, Africa, and Latin America, driven by rising labour costs in traditional hubs like China and Vietnam. India offers competitive labour costs—lower than China and Vietnam but higher than Bangladesh—supported by a stable policy environment and a 10% export growth in FY25. In Africa, Kenya and Ethiopia are emerging as viable hubs due to their low labour costs and abundant, low-to-medium-skilled labour pools, though they face challenges with high fabric sourcing lead times due to underdeveloped textile ecosystems. Electricity costs are negligible, as apparel manufacturing is not power-intensive. Kenya benefits from duty-free access to the US under AGOA and to the EU and UK via the Economic Partnership Agreement (EPA) and Generalized Scheme of Preferences (GSP). Ethiopia enjoys duty-free access to Japan, the EU, the UK, and Canada due to its Least Developed Country status, though its AGOA exclusion in 2022 (with potential reinstatement) limits its US market access. These emerging hubs are poised to capture a growing share of the global apparel market, projected to reach US$ 715 billion by 2030.

Factory Costs

COST	EXPORTING COUNTRY
ELEMENTS	CHINA	BANGLADESH	VIETNAM	ETHIOPIA	KENYA	INDIA
Cost of Labour (US $ per month)	534	150	327	110	150	199
Labour Skills	High	High	High	Low-Medium	Low-Medium	High
Cost of Electricity (US$/KWh) (US $ per month)	9-15	9	8	2-5	16-18	7-12
Lead Time (Days)	30-45	50-70	35-50	60-90	60-90	40-60
Textile Integration	High	Medium	Medium	Low	Low	High (Cotton)

Source: Various sources, The cost of labour for Ethiopia, Kenya & India is our estimate.

Indian economic overview

Indias economy in FY 2024-25 demonstrated resilience despite global uncertainties, with real GDP growth projected at 6.5%–6.8%, marking the slowest pace since the COVID-19 pandemic but maintaining India as one of the fastest-growing major economies. The National Statistical Office (NSO) estimated growth at 6.5%, driven by robust private consumption, stable agriculture, and a rebounding services sector, though Q2 growth dipped to 5.4% year-on-year, surprising markets. Key growth factors included strong domestic demand, improved rural consumption, and a robust financial sector, as noted in the Economic Survey 2024-25. Indias overall apparel exports grew by 10% in FY25, and exports to the UK grew by 8% during the same period, which is expected to be bolstered by strategic trade agreements like the India-UK FTA, which offers a 12% duty advantage over competitors like China. The Reserve Bank of India (RBI) adopted an accommodative monetary policy, cutting interest rates to 5.50% in June 2025 to bolster growth amid global trade uncertainties, particularly US tariffs, while projecting inflation at 4.5%. For FY 2025-26, the RBI and IMF forecast GDP growth at 6.5%, with the OECD slightly lower at 6.3%, supported by strengthening private consumption and investment cycles. However, challenges such as US tariff impacts, global geopolitical tensions, and the need for inclusive growth through structural reforms in manufacturing and labour markets could temper the outlook. Indias focus on sustainability, digitalization, and trade diversification positions it to sustain its growth trajectory and potentially overtake Germany and Japan to become the third-largest economy by 2030.

Indian apparel industry overview

The Indian apparel industry in FY 2024-25 solidified its position as a key player in the global market, with apparel exports growing by 10% to contribute significantly to the global export market valued at US$ 575 billion. Indias competitive edge stems from its lower labour costs compared to China and Vietnam, a large and skilled workforce, and strategic trade agreements like the India-UK

FTA, which offers a 12% duty advantage over competitors. The industry benefits from a robust domestic market and an integrated value chain, with companies like Gokaldas Exports enhancing efficiency through digitalisation and automation. Looking ahead, the industry is poised for strong growth, with the global apparel market projected to reach US$ 715 billion by 2030.

Indias future prospects are bolstered by ongoing FTA negotiations with the EU-27 and potential US agreements, which could drive production shift towards India to mitigate US-China tariff risks. Sustainability is a key focus, with initiatives like decarbonization and workforce empowerment, including Gokaldas Exports upskilling of 28,000 employees and achieving 30% gender balance in supervisory roles, aligning with global ESG demands. However, challenges such as fragmented manufacturing and the need for large-scale, efficient factories must be addressed to fully capitalize on these opportunities. Indias apparel industry is well-positioned to capture a larger global market share, leveraging its cost advantages, trade policies, and commitment to sustainable practices.

Company overview

Founded in 1979, Gokaldas Exports Limited has grown into a leading player in Indias apparel manufacturing and export sector, leveraging over four decades of expertise to serve global markets. The company delivers high-quality garments to top-tier fashion brands across multiple continents, capitalizing on Indias 10% apparel export growth in FY25. Operating numerous advanced manufacturing units, Gokaldas employs cutting-edge technologies and digitalization, showcased during its Innovation Day, to enhance efficiency across the apparel value chain. With a workforce of thousands, the company emphasizes sustainability and inclusivity, upskilling 28,000 employees and achieving 30% gender balance in supervisory roles, aligning with global ESG standards. Strategic trade advantages, such as the India-UK FTAs 12% duty benefit, position Gokaldas to capture a growing share of the global apparel market, projected to reach US$ 715 billion by 2030, despite challenges like US tariff uncertainties.

Product overview

Product category	FY24	FY25
Women	57%	52%
Men	35%	38%
Kids	7%	9%
Others	1%	1%

 

Product mix	FY24	FY25
Jackets	24%	22%
Pants	19%	32%
Tops/shirts	53%	45%
Others	4%	1%

Financial performance

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013, and in conformity with the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules 2016, as amended and other accounting principles generally accepted in India.

Analysis of the profit and loss statement of consolidated financial statements

Revenues

The Companys total income was D3917.18 crore in FY 2024-25 compared to D2,408.99 crore in FY 2023- 24. Revenue from operations was D3,864.24 crore, reported a 62.4% growth from D2,378.88 crore in FY 2023-24. FY 2024-25 includes full-year consolidated results of the acquired entities, contributing ~34% to the groups revenue. GEXs like-for-like pre-acquisition revenue grew 19% over the previous year, driven by a strong order book and execution excellence.

The first half of the year witnessed a strong growth in the US retail clothing sales, with volume growth. While revenue growth was robust, the company faced cost-related challenges, including higher wage expenses due to VDA adjustments and increased airfreight costs, mainly in Gokaldas Exports & Atraco. However, operationally, Gokaldas Exports entity has performed well in the current year, but the acquired entities experienced headwinds due to lower seasonal demand, which impacted EBITDA margins. Integration of the newly acquired entities has progressed well and is poised to gain from operating leverage in the coming years.

Expenses

Total expenses (excluding interest and depreciation) of the Company increased by 64.4% to D3,493.27 crore in FY 2024-25 from D2124.88 crore in FY 2023-24. This significant increase was due to the inclusion of the two newly acquired entities in the Q4 FY24 (i.e. Atraco and Matrix), excluding which the expenses have increased comparatively by 19.85% over the previous year. The material consumption to the revenue from operations has increased to 50.0% in FY 2024-25 from 47.7% in FY 2023-24 due to change in the product mix subsequent to the inclusion of Atraco and Matrix.

Employees expenses increased by 57.7% to D1,226.52 crore in FY 2024-25 from D777.59 crore in FY 2023.24 (like for like excluding the acquired entities, the increase was 20.42% increase over the previous year). The employee strength ramped up in the Madhya Pradesh unit to meet the delivery plans of the new export orders executed in the Q3 & Q4 FY25 has contributed to the significant increase in the employee expenses.

Also, the Companys EBITDA margin decreased by 1% to 10.8% in FY 2024-25 from 11.8% in the FY 2023-24. During the year, the companys consolidated earnings before income tax, depreciation and amortisation (EBITDA) was D423.91 crore, a 49% YoY growth, contributed by the acquisitions. While, there was growth in EBITDA in absolute terms, but the margins stood at 10.8% a drop of 97 basis points (bps) compared to the previous year. The weak volume in the acquired entities, followed by airfreight costs in the second quarter and sharp appreciation in Kenyan Shilling against the US dollar weighed down on the margins. Further, increase in employee strength in Madhya Pradesh unit to meet the delivery impacted the margins. These cost challenges were offset by better cost management and operational productivity. On a like for like basis, your company reported an EBITDA of D308.63 crore, registering a 9% YoY growth and a margin of 11.9% which was flat on YoY basis, due to impact of airfreight cost and increased employee cost in Madhya Pradesh during the year as mentioned above. On a consolidated basis, the company has reported profit before tax of D218.07 crore and profit after tax of D158.54 crore, reflecting a healthy YoY growth of 37% & 21% respectively.

Analysis of the balance sheet

Sources of funds

The net worth of the Company has increased by D789.34 crore (61.13%) to D2,080.68 crore as of March 31, 2025 from D1,291.34 crore as of March 31, 2024. The company raised equity capital of D600 crore during the year through qualified institutional placement (QIP), for meeting various strategic initiatives, acquisition funding, and working capital needs. This has resulted in significant increase in the overall net worth. As a result of the QIP inflows, the net debt of the company came down to D158.24 crore as of March 31, 2025, from D336.29 crore as of March 31, 2024.

Finance costs of the Company increased by 113.1% to D77.43 crore in FY 2024-25 from Rs. 36.34 crore in FY 2023-24 due to increased borrowing position attributed to the two newly acquired entities. As a standalone operation, the companys finance cost has not increased. The Companys interest cover decreased to 3.82x in FY 2024-25 from 5.38x in FY 2023-24.

Applications of funds

Fixed assets (gross) of the Company increased by 49.78% to D900.02 crore as of March 31, 2025 from D600.88 crore as of March 31, 2024, owing to acquisition of Atraco and Matrix, besides, during the year the company has spent investment of D191 crore towards modernization and upgradation of existing machines, capacity creation, meeting compliance standards and also in the new projects. These investments are expected to increase revenue and yield operational productivity in the future. Depreciation on fixed assets (excluding right of use assets) increased by 30.98% to D66.87 crore in FY 2024-25 from D51.05 crore in FY 2023-24, owing to an increase in fixed assets during the year.

On a like-for-like comparison, the capital employed of the Company has increased by 4.0% to D2,058.92 crore as of March 31, 2025, from D1,487.28 crore as of March 31, 2024. The capital employed does not include certain components like the mutual fund investments, and adjusted for capital work in progress and other investments that are yet to yield returns. Adjusting the above, the ROCE has decreased by 130 basis points to 14.4% in FY 2024-25 from 13.1% in FY 2023-24 on a like-for-like basis (capital employed excluding the effect of acquired entities, on a comparable basis, was 22% in FY 2023-24).

Working capital management

Current assets of the Company increased by 32.89% to D1,842.70 crore as of March 31, 2025, from D1,386.60 crore as of March 31, 2024. The current asset includes investment in the mutual funds which has increased by D163 crore over the previous year. The current and quick ratios of the Company was 1.89 and 1.19, respectively in FY 2024-25 and 1.37 and 0.77, respectively in FY 2023-24. Inventories including raw materials, work-in-progress and finished goods among others increased by 12.98% to D681.94 crore as on March 31, 2025, from D603.60 crore as of March 31, 2024. Trade receivables have increased by 21.63% to D428.79 crore as on March 31, 2025, from D352.52 crore as of March 31, 2024.

Key ratios

Particulars	FY25	FY24
Debtor turnover ratio	9.16	8.98
Inventory turnover ratio	5.57	4.89
Interest coverage ratio	3.82	5.38
Current ratio	1.89	1.37
Net debt/(net cash) equity ratio	0.08	0.26
EBIT to total income	7.5%	8.1%
Net profit margin	4.0%	5.4%
Return on net worth	9.4%	12.0%

Outlook

As Gokaldas Exports looks ahead, it is well-positioned to capitalise on emerging opportunities in the global apparel market. The companys strategic initiatives, robust manufacturing capabilities, and commitment to sustainability provide a strong foundation for future growth. In FY 2024-25, US apparel retail grew by over 3% YoY with steady performance throughout the year, while the UK remained flat, showing a recovery only in the final quarter. Indias apparel exports surged by 10%, benefiting from better demand in key consuming markets. The USs broad reciprocal tariffs created global uncertainty, prompting brands to absorb costs across supply chains in the short term and consider price hikes and diversified sourcing strategies in the long term. Countries with lower tariff exposure, such as Kenya and Ethiopia, are likely to be favoured for sourcing to the US. India, with lower tariffs compared to China, a dominant player in apparel exports, is also well-positioned alongside its Asian peers and stands to benefit from the increasing sourcing preference. However, uncertainty over potential punitive US tariffs could pose near-term risks. Despite this, the ongoing sourcing diversification trend is expected to create significant opportunities in the long term for Indian manufacturers, and Gokaldas Exports, with its strong manufacturing base and strategic acquisitions, is well-placed to capture a larger share of the global apparel market.

The company remains focused on driving operational excellence, realising synergies from its acquisitions, and capitalising on growth opportunities. With its expanded capabilities, global presence, and commitment to innovation and sustainability, Gokaldas Exports is poised to strengthen its position as a leader in the global apparel manufacturing industry.