KOCHI: Kitex Garments Ltd (KGL) is once again under the auditor’s scanner – not for a new issue, but for an old one that refuses to go away. Its US subsidiary, Kitex USA LLC, continues to bleed, yet the parent company maintains there’s no need to write down its investment or make provisions for over Rs118 crore in dues.
Kitex US unit’s net worth remains fully eroded, and it has continued to post losses for several quarters now.
Q1 profit down
Kitex Garments reported a net profit of Rs26.05 crore for the quarter ended June 30, 2025, down from Rs29.95 crore a year ago. The first-half net profit stood at Rs55.66 crore.
In the meantime, the company has secured board approval to raise up to Rs3,000 crore through the Qualified Institutional Placement (QIP) route – without disclosing the purpose of the fundraising. The amount is presumably meant to support its massive Telangana subsidiary project – Kitex Apparels Park Ltd (KAPL).
The announcement of Kitex’s Telangana project a few years ago had ruffled feathers in political circles, as it came at a time when the Kerala government was aggressively pitching the state as a business-friendly investment destination.
Kitex has provided a corporate guarantee for borrowings availed by its ambitious subsidiary, KAPL in Telangana. Of the Rs2,023 crore sanctioned by banks, Rs951.57 crore has been disbursed up to the current quarter.
Big bet on Telangana
Kitex is in the process of setting up integrated textile units in Telangana, in two phases under KAPL, at an initial estimated cost of Rs2,890 crore (including preoperative expenses), funded through a 70:30 mix of term loans and promoter contributions.
A change in scope – towards automating seamless goods movement via conveyors, and the addition of power substations – has increased the Phase I cost by Rs261 crore, pushing the revised cost to Rs1,751 crore.
Phase I was initially expected to be completed by March 2025, and Phase II by March 2027. However, it is now learnt that full-fledged operations under Phase I may not begin before December 2025.
