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What is the story about?
Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director of Gokaldas Exports, expects ₹6,000 crore in revenue by March 2028, 50% more than the nearly ₹4,000 crore in FY26. About ₹400 crore of the estimated annual revenue in March 2028 will come from BRFL Textiles, which merged with Gokaldas last year.
Shares of the Bengaluru-based textile company have gained nearly 11% over the past year, while the company has a market capitalisation of around ₹5,663.99 crore.
This is an edited transcript of the interview.
Q: Lots happened, and most of the things in the right direction, right? India-UK is done, and the US tariffs, which there was a fair bit of uncertainty after — how they would go, whether they'd be a step higher or a step lower — that's also largely worked out. So, give us a sense of the lay of the land right now. Has all of this reduced uncertainty? What about customer inquiries? This is also, in that sense, the busy period. What is it looking like?
A: Among the big markets, both Europe and the US, there is US tariff levelling off, which means we have a level playing field in terms of having the Section 301 tariff of 10%, which is across the board in most countries. And our operations in Kenya, where it is 0%, actually bestow a favourable advantage to us.
So, on the tariff front, as far as the US is concerned, it looks good for us for the moment, especially coming out of that 50% penal tariff that we encountered in the second, third and fourth quarters of last year (2025-26 (FY26). So, good scenario on that front.
UK tariff being rated to zero is helping us gain ground in that market. We are in advanced discussions with a new customer based out of the UK, in addition to growing our existing customers, so that side is also going well.
Eagerly waiting for the European Free Trade Agreement (FTA), which would open up access to a very large market. And if that happens sometime in the next calendar year, that'd be great. Then most of the economic constraints for India would be lifted, and we would have very favourable access to major markets.
So, on the macroeconomic front, things are looking good. Again, subject to any new uncertainty that comes our way these days, that seems to be standard, and we have to just prepare ourselves for anything. But for the moment, the coast seems to be clear.
As far as demand is concerned, retail demand so far has been good in the US as well as Europe. However, I'm seeing month-on-month growth slowing a bit. We've got to keep a close watch on how 2027 pans out.
We've got order books full until Q3. So, we are now looking at summer 2027, which is quite some time away, almost next year. We'll have to see how the retail market behaves then, with inflation in the US, etc. But given the supplier consolidation and all that's going on, we seem to have a fairly strong order book to sustain our business and growth trajectory.
Q: So, you're saying the order book is full till December calendar 2026?
A: Yes, that's correct.
Q: And that new customer in the UK is large enough for you to make a mention, I'm assuming?
A: Yeah, it is large enough. It's a good customer.
Q: So, you're talking to them with this UK FTA?
A: That is correct. In addition to the existing set of customers with whom we're growing anyway.
Q: And you'd said that you'd given us the big number for the industry, which is that exports to the UK are about a billion dollars, right?
A: As an opportunity, industry level.
Q: Industry level that you said could go to that, could double, right, is what you'd said?
A: No, I said that the opportunity is the incremental opportunity post the tariff being rated down to zero, which is a billion dollars' worth for India. And that will pan out over the next three to four years, depending on how fast the ramp-ups will happen.
Q: Walmart is a key client of yours, isn't it? When Walmart reported their numbers, the Street was very disappointed. The stock cracked, and I remember they reported the slowest quarterly growth in nearly six years, and the Q3 guidance was also cautious, which disappointed the Street. Now you just said that while the order book is full for now, you are seeing month-on-month US retail demand slow down. To what extent, and how do you think FY27, based on the early indications you have, would compare with FY26?
A: So, if you look at the first half of calendar 2027 versus 2026, retail demand has been higher. When I say month-on-month it is slowing down, the growth is slowing down, that's all. But it's still growth over last year.
So, this kind of monthly volatility could be there, but as long as it is growth, it's a good sign. The June or July number over the same period last year was about 2.4%. So, it's still a growth. And for that large market, it's still good.
Now, we've got to see how the holiday season goes. Most of our production for those seasons is getting over as we speak, and we'll be starting summer. So, our order books have been full. Most of our customers think demand will be good.
But I'm really looking at 2027 and, from a macroeconomics perspective, how things will pan out. It's a bit too early to say. The US market has always pleasantly surprised us rather than the other way around. So, I'm cautiously optimistic about the retail demand.
However, if I look at retailer inventory, that seems very, very low. So, I'm not particularly worried because most of the ecosystem has been prepared. I think, from a demand standpoint, it shouldn't be a challenge at all, and our order books support that, and they seem pretty healthy as well.
Q: The other big story is a surge that we've seen in global cotton prices. I believe from the lows in February, it's up 35%. Of that, a 15% surge has happened in the last month. Is that going to negatively impact you? How is raw material inflation?
A: Any runaway increase in raw material prices does impact us because, overall, whether the supply chain is able to pass it on to the customers.
For us, raw materials are generally a pass-through, and we factor in the higher raw material costs. And cotton prices, by the time it comes into fabric that we consume, it kind of peters down quite a bit.
So, so far, we have been able to price it into our orders. But if there's runaway inflation, there also could be a switch between cotton and polyester. So, these kinds of dynamics also play out. If one fibre peaks in pricing, demand for another fibre could offset it, blending could increase, and so on.
Q: What is the call on margins for the second half of the year?
A: There should be growth. Usually, the second half is better than the first half. Number one. Number two, even in the first half, most orders were secured when we were going through a 50% tariff. So we offered some discounts to our customers, which aren't there in the second half. The second-half margin should be above the first-half margins for us.
Q: So, directionally, you are saying that margins could hover around that 12–13% odd mark?
A: It should. I mean, it should go up to that 12-odd per cent is the impression.
Q: You've done various acquisitions, the BRFL, Matrix, you've done it in the last few years. Now this integration is taking place. I think BRFL takes place during the course of the year as well. At peak revenue potential, what can the business look like? Put all this inorganic growth together.
A: You are talking of BRFL revenue or Gokaldas revenue?
Q: Overall, consolidated, putting BRFL into the piece.
A: Gokaldas itself is growing at about 15 to 20%, and that's the trajectory that we will have this year. So, last year we did ₹4,000-odd crore in revenue. So you can estimate this year's growth.
And then BRFL will merge towards the end of this calendar year, so somewhere around November. So, we will have only one quarter of revenue. So, that may not add much; it may add about ₹400 crore-odd in revenue this year.
But next year BRFL will also yield about ₹1,200-plus crore of top line, in addition to another 15%-plus growth on Gokaldas. So, we are looking at a revenue trajectory which, including BRFL, is approaching about ₹5,800 crore or about ₹6,000 crore next year.
Q: That's FY28.
A: That's correct.
Q: With margins of 12%, very roughly.
A: That's right.
Q: Give us a sense in terms of your return ratios. You know, because of this inorganic growth as well, the sell side is waiting for these ratios actually to improve. So, as an entity, what kind of return ratios are you looking at? If you want to break it down for us, how much has this inorganic growth diluted your return ratios?
A: Our investments in BRFL are not borne out in our books because we are not consolidating those numbers.
If you look at the apparel return on investment, it should be around 20% or higher, and that's the trajectory we have always held. We have been in the range of 27-odd per cent in the past, and I think with these new acquisitions playing out this year, next year we should be in that 20%-plus trajectory.
The fabric investments may be in the teens. However, fabric's contribution to overall revenue will be sub-20%.
So, overall, I think the return on investment or return on capital employed should hover in the high teens to 20%, and it should only keep on improving going forward.
So, I'm talking of FY28 and then 20. Further ahead, we will focus on improving it because a lot of investments have already happened, and those capexes will start playing out in the quarters ahead.
Rupee depreciation is also not fully realised in our books at the moment, so that hopefully will also play out in terms of improved margins and thus improving return on capital employed (ROCEs)
Q: What about the debt in books? What will consolidated-level debt be at peak?
A: Debt at peak, once the merger of BRFL happens, BRFL debt will also come onto us, and we will peak at about ₹800-plus crore, ₹850-odd crore, and then it will start falling because this year also will be generating a good amount of cash flow. That will also help with debt reduction.
The peak debt will start falling from that level downwards going forward.
Q: In the next two years or so, what should the debt number look like? That's 2028-29 (FY29).
A: I would think FY29 we should be sub-₹500 crore, maybe closer to the ₹250–300 crore level.
Q: There is some news that you're looking at setting up some more machines as well. What is the capex plan? The asset turn as well. I think Karnataka and various other states are what you've said that you're looking at adding some capacity.
A: That is correct. We need to look at growth beyond. And if I start looking at capexes today, they will start yielding revenue in late FY28, but early FY29 is when that will happen. Looking at how the FTAs are panning out, etc., we are keen on adding capacity.
So, my sense is that in the next year we will be adding about ₹125–150 crore of capex, and this year also we would be gunning towards about ₹125-plus crore of capex.
Watch the full conversation here
Q: BRFL breaks even in, I think it starts reflecting from November-December, so it breaks even in a couple of quarters.
A: It will break even in Q1 for sure. It may break even in Q4 itself at an earnings before interest, taxes, depreciation and amortisation (EBITDA) level, but at a profit after tax (PAT) level, it'll start doing that in the next calendar year.
Catch all the latest updates from the stock market here
Shares of the Bengaluru-based textile company have gained nearly 11% over the past year, while the company has a market capitalisation of around ₹5,663.99 crore.
This is an edited transcript of the interview.
Q: Lots happened, and most of the things in the right direction, right? India-UK is done, and the US tariffs, which there was a fair bit of uncertainty after — how they would go, whether they'd be a step higher or a step lower — that's also largely worked out. So, give us a sense of the lay of the land right now. Has all of this reduced uncertainty? What about customer inquiries? This is also, in that sense, the busy period. What is it looking like?
A: Among the big markets, both Europe and the US, there is US tariff levelling off, which means we have a level playing field in terms of having the Section 301 tariff of 10%, which is across the board in most countries. And our operations in Kenya, where it is 0%, actually bestow a favourable advantage to us.
So, on the tariff front, as far as the US is concerned, it looks good for us for the moment, especially coming out of that 50% penal tariff that we encountered in the second, third and fourth quarters of last year (2025-26 (FY26). So, good scenario on that front.
UK tariff being rated to zero is helping us gain ground in that market. We are in advanced discussions with a new customer based out of the UK, in addition to growing our existing customers, so that side is also going well.
Eagerly waiting for the European Free Trade Agreement (FTA), which would open up access to a very large market. And if that happens sometime in the next calendar year, that'd be great. Then most of the economic constraints for India would be lifted, and we would have very favourable access to major markets.
So, on the macroeconomic front, things are looking good. Again, subject to any new uncertainty that comes our way these days, that seems to be standard, and we have to just prepare ourselves for anything. But for the moment, the coast seems to be clear.
As far as demand is concerned, retail demand so far has been good in the US as well as Europe. However, I'm seeing month-on-month growth slowing a bit. We've got to keep a close watch on how 2027 pans out.
We've got order books full until Q3. So, we are now looking at summer 2027, which is quite some time away, almost next year. We'll have to see how the retail market behaves then, with inflation in the US, etc. But given the supplier consolidation and all that's going on, we seem to have a fairly strong order book to sustain our business and growth trajectory.
Q: So, you're saying the order book is full till December calendar 2026?
A: Yes, that's correct.
Q: And that new customer in the UK is large enough for you to make a mention, I'm assuming?
A: Yeah, it is large enough. It's a good customer.
Q: So, you're talking to them with this UK FTA?
A: That is correct. In addition to the existing set of customers with whom we're growing anyway.
Q: And you'd said that you'd given us the big number for the industry, which is that exports to the UK are about a billion dollars, right?
A: As an opportunity, industry level.
Q: Industry level that you said could go to that, could double, right, is what you'd said?
A: No, I said that the opportunity is the incremental opportunity post the tariff being rated down to zero, which is a billion dollars' worth for India. And that will pan out over the next three to four years, depending on how fast the ramp-ups will happen.
Q: Walmart is a key client of yours, isn't it? When Walmart reported their numbers, the Street was very disappointed. The stock cracked, and I remember they reported the slowest quarterly growth in nearly six years, and the Q3 guidance was also cautious, which disappointed the Street. Now you just said that while the order book is full for now, you are seeing month-on-month US retail demand slow down. To what extent, and how do you think FY27, based on the early indications you have, would compare with FY26?
A: So, if you look at the first half of calendar 2027 versus 2026, retail demand has been higher. When I say month-on-month it is slowing down, the growth is slowing down, that's all. But it's still growth over last year.
So, this kind of monthly volatility could be there, but as long as it is growth, it's a good sign. The June or July number over the same period last year was about 2.4%. So, it's still a growth. And for that large market, it's still good.
Now, we've got to see how the holiday season goes. Most of our production for those seasons is getting over as we speak, and we'll be starting summer. So, our order books have been full. Most of our customers think demand will be good.
But I'm really looking at 2027 and, from a macroeconomics perspective, how things will pan out. It's a bit too early to say. The US market has always pleasantly surprised us rather than the other way around. So, I'm cautiously optimistic about the retail demand.
However, if I look at retailer inventory, that seems very, very low. So, I'm not particularly worried because most of the ecosystem has been prepared. I think, from a demand standpoint, it shouldn't be a challenge at all, and our order books support that, and they seem pretty healthy as well.
Q: The other big story is a surge that we've seen in global cotton prices. I believe from the lows in February, it's up 35%. Of that, a 15% surge has happened in the last month. Is that going to negatively impact you? How is raw material inflation?
A: Any runaway increase in raw material prices does impact us because, overall, whether the supply chain is able to pass it on to the customers.
For us, raw materials are generally a pass-through, and we factor in the higher raw material costs. And cotton prices, by the time it comes into fabric that we consume, it kind of peters down quite a bit.
So, so far, we have been able to price it into our orders. But if there's runaway inflation, there also could be a switch between cotton and polyester. So, these kinds of dynamics also play out. If one fibre peaks in pricing, demand for another fibre could offset it, blending could increase, and so on.
Q: What is the call on margins for the second half of the year?
A: There should be growth. Usually, the second half is better than the first half. Number one. Number two, even in the first half, most orders were secured when we were going through a 50% tariff. So we offered some discounts to our customers, which aren't there in the second half. The second-half margin should be above the first-half margins for us.
Q: So, directionally, you are saying that margins could hover around that 12–13% odd mark?
A: It should. I mean, it should go up to that 12-odd per cent is the impression.
Q: You've done various acquisitions, the BRFL, Matrix, you've done it in the last few years. Now this integration is taking place. I think BRFL takes place during the course of the year as well. At peak revenue potential, what can the business look like? Put all this inorganic growth together.
A: You are talking of BRFL revenue or Gokaldas revenue?
Q: Overall, consolidated, putting BRFL into the piece.
A: Gokaldas itself is growing at about 15 to 20%, and that's the trajectory that we will have this year. So, last year we did ₹4,000-odd crore in revenue. So you can estimate this year's growth.
And then BRFL will merge towards the end of this calendar year, so somewhere around November. So, we will have only one quarter of revenue. So, that may not add much; it may add about ₹400 crore-odd in revenue this year.
But next year BRFL will also yield about ₹1,200-plus crore of top line, in addition to another 15%-plus growth on Gokaldas. So, we are looking at a revenue trajectory which, including BRFL, is approaching about ₹5,800 crore or about ₹6,000 crore next year.
Q: That's FY28.
A: That's correct.
Q: With margins of 12%, very roughly.
A: That's right.
Q: Give us a sense in terms of your return ratios. You know, because of this inorganic growth as well, the sell side is waiting for these ratios actually to improve. So, as an entity, what kind of return ratios are you looking at? If you want to break it down for us, how much has this inorganic growth diluted your return ratios?
A: Our investments in BRFL are not borne out in our books because we are not consolidating those numbers.
If you look at the apparel return on investment, it should be around 20% or higher, and that's the trajectory we have always held. We have been in the range of 27-odd per cent in the past, and I think with these new acquisitions playing out this year, next year we should be in that 20%-plus trajectory.
The fabric investments may be in the teens. However, fabric's contribution to overall revenue will be sub-20%.
So, overall, I think the return on investment or return on capital employed should hover in the high teens to 20%, and it should only keep on improving going forward.
So, I'm talking of FY28 and then 20. Further ahead, we will focus on improving it because a lot of investments have already happened, and those capexes will start playing out in the quarters ahead.
Rupee depreciation is also not fully realised in our books at the moment, so that hopefully will also play out in terms of improved margins and thus improving return on capital employed (ROCEs)
Q: What about the debt in books? What will consolidated-level debt be at peak?
A: Debt at peak, once the merger of BRFL happens, BRFL debt will also come onto us, and we will peak at about ₹800-plus crore, ₹850-odd crore, and then it will start falling because this year also will be generating a good amount of cash flow. That will also help with debt reduction.
The peak debt will start falling from that level downwards going forward.
Q: In the next two years or so, what should the debt number look like? That's 2028-29 (FY29).
A: I would think FY29 we should be sub-₹500 crore, maybe closer to the ₹250–300 crore level.
Q: There is some news that you're looking at setting up some more machines as well. What is the capex plan? The asset turn as well. I think Karnataka and various other states are what you've said that you're looking at adding some capacity.
A: That is correct. We need to look at growth beyond. And if I start looking at capexes today, they will start yielding revenue in late FY28, but early FY29 is when that will happen. Looking at how the FTAs are panning out, etc., we are keen on adding capacity.
So, my sense is that in the next year we will be adding about ₹125–150 crore of capex, and this year also we would be gunning towards about ₹125-plus crore of capex.
Watch the full conversation here
Q: BRFL breaks even in, I think it starts reflecting from November-December, so it breaks even in a couple of quarters.
A: It will break even in Q1 for sure. It may break even in Q4 itself at an earnings before interest, taxes, depreciation and amortisation (EBITDA) level, but at a profit after tax (PAT) level, it'll start doing that in the next calendar year.
Catch all the latest updates from the stock market here
