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Case Code: FINC130
Case Length: 12 Pages 
Period: 2007-2017    
Pub Date: 2018
Teaching Note: Available
Organization : Gokaldas Exports Limited
Industry : Textiles and Apparel
Countries : India
Themes:  Fundamental Analysis/ EIC Analysis
Case Studies  
Business Strategy
Human Resource Management
IT and Systems
Leadership & Entrepreneurship

Blackstone’s Stake Sale in Gokaldas-Is it a Value Making Deal for ICICI?

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For the fiscal year 2015-16, the Indian textile industry contributed US$ 40 billion in the form of exports and had a 5% share in the Gross Domestic Product and a 14% share in the overall Index of Industrial Production (IIP) . During the year, the Government of India (GoI) initiated several measures for the development and promotion of the Indian textile industry at the domestic and global level and allowed 100% FDI through the automatic route . For the period April 2000 to March 2016, the textile industry attracted an FDI of US$ 1.85 billion (Refer to Exhibit-I for Trends in Investments and Partnerships in Indian Textile Industry)..

Finance Case Studies | Case Study in Management, Operations, Strategies, Business Environment, Case Studies
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Gokaldas Exports Limited (GEL) was incorporated in the year 1978 as a partnership form of organization. It was converted into a Private Limited Company in the year 1995. GEL went in for a public offering in the year 2005. It had 20 manufacturing units spread across the southern Indian states of Karnataka, Tamil Nadu, and Andhra Pradesh. GEL’s manufacturing units had the capacity to produce 2.5 million apparels per month, and the company employed 22,500 people across all the divisions . The target market for GEL’s primarily included menswear, womenswear, and the kidswear. Though GEL had a majority share in menswear, it specialized in the manufacture of womenswear, tops, and outerwear (Refer to Table-I for Target Market Composition of GEL), a unique competitive advantage of GEL (Refer to Exhibit-III for the competitors of GEL)...
According to an economic survey conducted by the International Monetary Fund (IMF), during the fiscal year 2015-16, India emerged as the fastest growing economy in the world. It was estimated that the Gross Domestic Product of the country would grow by 7% to 8% during the fiscal years 2016-17, 2017-18, and 2018-19 .

The newly launched initiatives of the Government of India like Make in India, Digital India, and the stable implementation of the monetary policy by the Reserve Bank of India resulted in the improvement of the economic fundamentals of the Indian economy during the fiscal year 2015-16 (Refer to Exhibit-VII for Trends in Key Economic of Indian Economy).
ICICI Bank Limited (ICICI) had been consistently betting on investing in GEL stock since 2014. By the end of the third quarter of the fiscal year 2014-15, ICICI had a stake of around 10% in GEL . On June 23, 2016, ICICI brought down its stake to 7% by selling a part of its investments in GEL , and Blackstone held a stake of around 47.52% .
Exhibit I: Trends in Investments and Partnerships in Indian Textile Industry.
Exhibit II : Subsidies and Incentives announced by Government of India
Exhibit III : Major Competitors of GEL
Exhibit IV : Major Clients of GEL
Exhibit V : Profit and Loss Account of GEL for the Year Ended on March 31, 2016
Exhibit VI : Balance Sheet of GEL as on March 31, 2016
Exhibit VII : Trends in Key Economic of Indian Economy
Exhibit VIII : Historical Stock Price of GEL on BSE and NSE Trading Platform