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Gokaldas to buy out knitwear maker Matrix Design for Rs 489 cr in part-cash deal

Bengaluru-based apparel manufacturer Gokaldas Exports has signed up with Gurugram-based Matrix Clothing, proposing to buy 100% of its equity in Matrix Design & Industries for Rs 489 crore. The deal would involve Gokaldas paying for equity worth Rs 247.5 crore by way of a share swap and Rs 86.48 crore in cash.
The share swap-plus-cash deal pegs the enterprise value of the company at Rs 489 crore. The equity value, net of debt, is pegged at Rs 333.98 crore. Post buyout transaction, Matrix will hold 4.31% equity in the apparel exporter.

This is the second acquisition announced by Gokaldas in the current financial year. In August, it announced the acquisition of UAE based apparel maker Atraco.

Matrix, a profitable company, manufactures men’s, women’s, and children’s knitwear apparel for global brands with exposure to Europe, the UK, and North America. It operates four units in Gurugram and one in Ranchi.

The deal would help Gokaldas gain access to the knit apparel business segments, a mutually exclusive global customer base, greater access to European and the UK markets, geographical diversification and low-cost capacity expansion potential in the future, the company vice-chairman Siva Ganapathi told ET. “While we are into woven fabric and more US-centric, Matrix makes premium embellished knitwear and Europe-focussed.”

“The acquisition of Matrix is an important step for us as it is strategically relevant, possesses a good complementary customer base, operationally strong, and above all, it is a leader in its own sphere,” Ganapathi said.“The acquisition will give us cross-selling opportunities. We are building our own modern knit mill at Erode in Tamil Nadu which we hope to commission in the next quarter. We will supply raw material from here to Gurugram and Rachi,” he added.He was happy his company grew its export business 6% year-on-year in the December quarter while India’s apparel exports dipped 12% in the same period. “We are bucking the trend though the overseas market is not that great. But we are seeing signs of buying sentiments picking up as the inventory in the US market is depleting.”

Gokaldas ended the December quarter with a revenue of Rs 559.8 crore, registering 6% growth over the same period last year and with a net profit of Rs 30.4 crore, a year-on-year decline of 25%. “Our performance reflects a good recovery, both on a YoY and sequential basis, as we have overcome most of the business headwinds prevalent in the previous quarters. We intend to build on the revival and continue the growth momentum. We will stay focused on improving operating parameters and remain confident in the medium to long- term prospects of the company,” Ganapathi said.

The company ended the December quarter with a headcount of 32,000 people in India and 11,000 employees in Kenya and Ethiopia.

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