KOCHI: Kitex Garments Ltd (KGL) may have wrapped up FY25 with a strong financial performance and ambitious expansion plans in Telangana, but its troubled US joint venture continues to cast a shadow on the group’s otherwise bright outlook.
The flagship company, KGL. posted a revenue of Rs982.8 crore and a net profit of Rs153 crore for the financial year ended March 31, 2025.
The board has also declared a dividend of Re1 per share for shareholders, signaling management’s confidence in its core business.
Meanwhile, its domestic growth engine – the Telangana project under subsidiary Kitex Apparel Parks Ltd (KAPL) – is gaining traction.
KAPL, jointly owned by KGL and Kitex Childwear Ltd (KCL) in a 70:30 ratio, is executing a two-phase integrated textile unit in Telangana, with a revised capex of around Rs3,351 crore, up from the earlier estimate of Rs2,890 crore.
The project is being funded by Rs2,023 crore in long-term bank loans and the balance through promoter contributions. The first phase is now projected to cost Rs1,751 crore after scope enhancements such as automation for seamless material handling and upgraded power infrastructure.
KAPL going strong
Phase I is said to have completed in March 2025, with Phase II targeted for completion by March 2027 – a year behind the initial projections. A cost escalation of Rs200 crore is expected for the second phase as well.
The company expects to see a meaningful contribution from the Telangana operations starting FY26, with debt metrics improving significantly thereafter.
Government subsidies, once the units are operational, are also expected to ease liquidity stress – although the timing of such receipts remains uncertain.
US venture still in deep water
Despite the forward momentum in India, Kitex’s US story continues to disappoint. The company’s investment in Kitex USA LLC – an associate company – has been fully eroded as of March 31, 2025.
The Rs27.76 crore investment remains on the books, but the auditors have again qualified their opinion on the matter, citing lack of sufficient evidence to support the company’s claim of recoverability.
Worryingly, the group also has Rs122.77 crore in trade receivables due from the US associate – a number that has only grown from Rs102.25 crore a year ago.
Management has maintained that the receivables and investment are still good, based on projected revenues and planned business changes in the US entity. However, auditors have flagged the absence of corroborative evidence to support these assumptions.
This issue has now seen recurring qualification in all three quarterly results for FY25, as well as in the FY24 audit report, suggesting a prolonged concern that refuses to go away.
Looking ahead
The Kitex Group is clearly betting big on its Telangana play to power future growth. While the flagship business is healthy and dividends are flowing, the continued stress from its US joint venture raises questions about asset quality and risk oversight.
For now, the numbers in India provide comfort – but unless the US operations show credible signs of revival or recovery of dues, the overseas drag could continue to weigh on investor sentiment.
