Gokaldas Exports board clears merger proposal with BRFL Textiles
Gokaldas Exports Ltd. has approved a merger with BRFL Textiles to create a vertically integrated apparel and textile business, offering BRFL shareholders stock or a combination of stock and cash. This move aims to enhance fabric capabilities, improve margins, and ensure consistent supply amidst challenges like increased US tariffs.
iStock A year after making a strategic investment, Gokaldas Exports Ltd has approved a draft scheme to merge BRFL Textiles Pvt Ltd (BTPL) with itself to create a vertically integrated apparel and textile business. The board cleared the proposal at its meeting on Saturday.
Under the scheme, BRFL Textiles shareholders will have the option to receive either 40 equity shares of Gokaldas Exports (face value Rs 5 each) for every 3,581 shares (face value Rs 10) held in BRFL, or a combination of stock and some cash wherein investors can opt to receive 30 Gokaldas shares plus Rs 8,952.50 in cash for the remaining 10 BRFL shares, the company said in a filing to the stock exchanges.
The development comes at a time when Trump's 50% tariff shocker on Indian garments exports to the US has impacted the industry significantly. The two companies operate in complementary segments — Gokaldas in garment design, manufacturing and exports to leading global fashion brands, and BRFL in fabrics such as cotton, linen, viscose, polyester and blends under brands like Bombay Rayon, LinenVogue – La Classe, and Giza Classe.BRFL has been valued at Rs 552 crores for 100% of its paid up equity capital.
'The merger will help us with fabric capabilities,' said Sivaramakrishnan Ganapathi, CEO and Managing Director of Gokaldas Exports.' Fabric helps us improve margins, enable consistent fabric supply, give us faster response time to customers and in R&D in apparel innovation. Plus, we are getting a high-end capacity instead if waiting for a greenfield unit to come up. These are significant benefits.' It will consolidate resources and create economies of scale through backward integration,' the company said.Last June, Gokaldas had agreed to buy 19% of BRFL Textiles by subscribing through Optionally Convertible Debentures (OCD). In its first tranche, Gokaldas subscribed for Rs 50 crore, with the remaining OCDs worth up to Rs 300 crore subscribed subsequently in multiple tranches, depending on the funding requirements. These funds shall be utilized mainly to meet the working capital needs, with a smaller portion towards the capex requirementsBRFL was recently formed as a separate entity in August 2020 as part of a restructuring process undertaken by Bombay Rayon Fashions Limited, in which it hived-off its yarn dyeing & fabric processing units located in Tarapur, into BTPL by way of a slump sale on a going concern basis. It received investments from JM Financial Group, Think Investments among others.The merger will result in a vertically integrated business model, enabling Gokaldas to secure a consistent and quality supply of fabrics for its garment manufacturing operations, it said. The scheme is subject to approvals from stock exchanges, the National Company Law Tribunal, shareholders and creditors.As of March 31, 2025, BRFL Textiles had total assets of Rs 877.13 crore, net worth of Rs 147.57 crore and turnover of Rs 371.42 crore. Gokaldas Exports reported assets of Rs 2,763.37 crore, net worth of ?2,144.92 crore and turnover of Rs 2,476.70 crore. Its current market value is Rs 5238 crore on BSE. Shares of textile names like Gokaldas Exports Ltd., Pearl Global Ltd., Indo Count Industries Ltd., KPR Mill Ltd., Welspun Living Ltd., among others fell as much as 5% on Thursday, August 7, after US President Donald Trump signed an executive order to double the tariff rate on India to 50% from 25% earlier. On Friday, Gokaldas shares closed at ?715, down from the previous close of ?721. Year to date the stock is down 39%.Gokaldas was the first acquisition of Blackstone in India. It was turned around much later by Florintree Advisors, the investment firm of Mathew Cyriac. A widely held company, mutual funds hold 31.58% stake in Gokaldas. Foreign Institutional Investors (FIIs) hold 24.89%, Insurance companies hold around 4.73%. Major public shareholders include fund houses such as Nippon India (7.38%), SBI Magnum Children's Benefit Fund (7.20%), Goldman Sachs (5.3%), and HSBC Business Cycles Fund (4%). Currently, the promoters of the company include Clear Wealth Consultancy Services LLP that holds 8.83% stake and Gautham Madhavan who holds 0.34% stake.
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