Gokaldas defers Bangladesh Apparel Unit plan as unrest lingers

BENGALURU : Textile and garments player Gokaldas Exports recently said that the company had been anticipating ‘problems’ in Bangladesh, and has thus not been creating capacities given concerns over security and the business environment.

In the earnings call post June quarter results, Gokaldas Exports vice Chairman and Managing Director Sivaramakrishnan Ganapathi said that foreign brands are looking to de-risk their businesses with Bangladesh now, and some European companies have approached them with for help in meeting demand. “A directional shift to more sourcing from India will definitely happen and that augurs well for us from a capacity creation standpoint,” Ganapathi added.

Gokaldas exports to over 50 countries including the US, Canada and some European nations. The orderbooks of Gokaldas are full for the quarters ahead, managing director Ganapathi said, adding that the company ‘may not stand to benefit’ too much immediately, for they don’t have any more capacity to accept orders. However, he sees more textile export orders coming to India, now. “A directional shift to more sourcing from India will definitely happen and that augurs well for us from a capacity creation standpoint,” said Ganapathi.

“I think the long-term prospects was good and it has become slightly better. And India can take some of the incremental growth if it comes our way,” he added. Given the high volumes of orders from Bangladesh, stronger players are in much better position to leverage the benefits coming out of this, according to Gokaldas Exports.

Having spoken to some of textile players based out of Bangladesh, Ganapathi said most of the factories there have resumed operations but the whole country is ‘not out of the woods yet’. Textiles were Bangladesh’s largest exports in FY24. “The garment industry in Bangladesh is a significant industry and the government will do everything in their power to make sure that the garment industry functions well,” said Sivaramakrishnan Ganapathi.

The cost economics and duty-free access to Europe makes Bangladesh an attractive hub for textile manufacturing for many suppliers in the West.

Sivaramakrishnan G told analysts that global customers had been sensing some unrest for almost a year. “Many of the customers have talked to us almost a year back saying that we want
to diversify away from Bangladesh. So, customers who are, let’s say, heavily weighted towards Bangladesh have had come to us and talked about incremental capacity here,” he said, adding that more customers will diversify going forward.