Gokaldas Exports Ltd Targets European Export Share at 25%-30%

Gokaldas Exports expects Europe to account for about 25%-30% of its exports within three to five years, up from around 15%, as it broadens its customer base beyond the United States and prepares for potentially improved trade access. The company is adding Indian capacity while rebuilding momentum in its African operations.

Why is Gokaldas Exports increasing its focus on Europe?

Gokaldas Exports is targeting a European export share of 25%-30%, compared with about 15% currently, to reduce its dependence on the US market. Managing Director Sivaramakrishnan Ganapathi said the company is holding discussions with major European retailers in preparation for duty-free trade, although the EU trade agreement remains pending.

The strategy reflects the concentration of the company’s export business in North America. Business-segment information describes North America as contributing about 84% of export revenue, while a Reuters report puts the US share at 69%. These figures measure different geographies, with North America broader than the US, but both indicate the importance of market diversification.

Gokaldas Exports has identified Europe as a market where it can use its India manufacturing base rather than shift production to another geography. The company expects its Indian business to maintain strong growth with European customers, supported by customer additions and planned capacity expansion.

What is supporting Gokaldas Exports' European growth plan?

Gokaldas Exports is expanding its production platform and building a higher-value product portfolio to serve European buyers. Its 2024 acquisition of Matrix Design for ₹489 crore added five factories and capabilities in embellished knitwear, a category that can broaden the company’s access to European and UK customers beyond its established woven-apparel operations.

The company is also prioritising customers and product categories that offer better profitability. Two premium international customers, including one European customer, were added for India operations, with commercial execution scheduled to begin in FY27. Management has separately said that the order book becomes stronger from the third quarter and that two new customers are expected to begin operations in FY28.

India remains the principal manufacturing base. The group operates more than 30 facilities across India, Kenya and Ethiopia, with more than 30,000 machines and annual capacity of around 92 million pieces. Management expects double-digit volume growth in India from FY28, with revenue growth expected to gather pace from the third quarter of the current fiscal year.

How do African operations fit into the strategy?

Gokaldas Exports views Kenya and Ethiopia as a geographic sourcing option for customers seeking duty-related advantages in the US and European markets. The 2024 acquisition of Atraco Group brought five factories, more than 13,000 workers, 7,000 machines and annual capacity of 40 million garments, giving the company an established operating base rather than a greenfield expansion.

Kenya has duty-free access to the US under AGOA and to the EU and UK under relevant trade arrangements. Ethiopia has duty-free access to Japan, the EU, the UK and Canada due to its least-developed-country status. The restoration of AGOA until December 2026 has improved customer visibility, and management said inquiries for Kenya operations increased after the policy clarity.

Africa revenue fell by about ₹180 crore in FY26 when uncertainty over AGOA renewal affected orders. The African business then expanded 17% year-on-year in the fourth quarter after clarity returned. Gokaldas Exports has secured two new African customers, one American and one European, with operations expected to begin in April 2027.

But the recovery remains operationally dependent on customer quality and factory utilisation. Africa utilisation had dropped to around 40% in the second quarter, and the company is reducing exposure to a financially weaker customer that represented about 20%-25% of African revenue. Management expects Africa utilisation to reach 80%-85%, while India utilisation is expected at about 90%-93% in the third quarter.

What are the capacity and financial implications for investors?

Gokaldas Exports is bringing forward investment plans to meet expected customer demand, with a focus on Bhopal and Ranchi in India. Management has indicated combined investment of ₹450-500 crore for the next year, while Reuters separately reported ₹125 crore of FY27 investment for overall capacity expansion and facility upgrades.

The Ranchi factory is expected to contribute about ₹400 crore of revenue after it is fully ramped up. Management has also estimated India revenue capacity at about ₹4,000 crore and Africa revenue capacity at about ₹1,250 crore. These capacities show the scale of the manufacturing platform being built to support growth from India, Europe and Africa.

The contribution from acquired businesses is also expected to rise. The merger with BRFL Textiles, referred to as BTPL, is expected in late November or early December 2026. BTPL is projected to contribute around ₹300 crore between December and March and about ₹1,200 crore in FY28, although management noted that roughly 35% of its revenue is netted off for intra-company sales to Gokaldas Exports.

For profitability, management expects African operations to reach an EBITDA margin of 10% in FY28. That outlook is tied to stronger utilisation, new customer starts and a recovery in African demand. Higher wages, freight costs and an uneven consumer environment remain relevant operating factors for the wider apparel-export business.

Conclusion

Gokaldas Exports is pursuing a more balanced export portfolio by raising Europe’s share toward 25%-30% while retaining India as its central manufacturing base and using Africa as an additional sourcing location. The plan is supported by new factories, acquired knitwear capabilities, European customer discussions and expected contributions from BTPL.

The next developments to watch are progress on the pending India-EU trade agreement, the April 2027 start of two African customer programmes, the proposed BTPL merger in late 2026 and the ramp-up of new Indian capacity. Africa’s utilisation and the scheduled expiry of restored AGOA access in December 2026 will also remain important to the company’s export outlook.