Kitex Garments Limited


(Vineet Reynolds) #1157

This news is a bit dated, but would be interesting to see how Kitex would compete with private label clothing lines from Amazon, especially Scout+Ro. It's not sufficient to be listed as a seller on Amazon marketplace, when the company also has to compete with a serial monopolist.


(nirmalsashi) #1158

Toysrus: I think in terms of %, Kitex has 12-18% sales to babiesrus (toysrus company). :frowning:
Online retailers like amazon will continue to impact traditional retailers and take market share.
Almost all major traditional retailers are having loss / lesser profit . Carter is the exception I guess and they are growing well. The likes of Sears, Kmart is also under pressure. But Dont think Kitex currently has sales to kmart / sears. MD mentioned in previous call they are having customers like sams club (walmart grp), amazon, target, carter, ross stores, gerber, toysrus, buybuybaby etc. In terms of % of sales I think gerber is the largest. May be gerber buys 25% from kitex . gerber gives to walmart / target etc. Direct sales to walmart , target will lead to increase in profits. Lamaze license earlier was with gerber, now kitex got it. (read some where not sure)


(nirmalsashi) #1159

I was not aware of this . Thanks for sharing. :slight_smile:
But amazon also might have tied up with some players for manufacturing. May be Kitex can explore :slight_smile:
Went through amazon website, it shows up for 4 to 14 years childrenwear (under Scout+Ro). Dont think they are in infantwear as of now.


(newbie_4ever) #1160

One more company for Kitex to focus could be Costco. Great bargain shopping experience. When the recession hit the US, their sales was going up and up.

However, Amazon is the beast in retail.


(Chirag Tekriwal) #1161

Hi,
I have written a blog post on Kitex Garments currently apprehended by the Stock Market as the market believes the management to be fraud. Let’s see some of the facts (and opinions) which might help you make a better decision. For further read, click on this link https://tekriwalchirag.wordpress.com/2017/09/23/why-kitex-garments-will-fail-invert-always-invert/


(nirmalsashi) #1162

I posted 15 days back that duty drawback might be reduced to 2%. Now it became reality. GST, high cotton price, rupee appreciation, key customer bankruptcy, less duty drawback... things are affecting negatively. I called Motilal Oswal grp analyst to find out why company is not hosting conference call for investors. I got reply that they have stopped tracking and wont be hosting in near future. So only hopes is AGM / media discussion after quarter results.


(Prash) #1163

Excerpts from the Restructuring information in Toys R Us website:

  1. Will vendors be paid for goods and services delivered prior to the filing date?
    • Payment for pre-filing amounts owed varies based on the entity to which you supply goods and services:
    o For vendors to U.S. entities: Under U.S. bankruptcy law, unpaid debts for goods and services provided
    to Toys“R”Us prior to the filing date, also known as “pre-petition claims,” generally cannot be paid.
    n If you believe you have a pre-petition claim or an administrative claim for goods and services
    provided to Toys“R”Us, you may need to file a proof of claim with the Bankruptcy Court to be
    eligible for payment on your claim or otherwise consult an attorney for guidance.
    n Information about the claims process will be made available at a later date.
    n If you have any questions, you can call our information hotline toll-free at (844) 794-3476 or email
    [email protected]
    o For vendors to Toys“R”Us Canada: Unpaid debts for goods and services provided to Toys“R”Us
    Canada, prior to commencing proceedings under CCAA, generally cannot be paid.
    n If you believe you have a pre-petition claim or an administrative claim for goods and services
    provided to Toys“R”Us Canada, you may need to file a proof of claim with the Bankruptcy Court
    to be eligible for payment on your claim or otherwise consult an attorney for guidance.
    n Information about the CCAA proceedings is available on a separate site maintained by an
    independent Monitor at www.grantthornton.ca/ToysRUs. The Monitor also has a hot line at 416-
    777-7202 or 1-855-747-2648.
    o For vendors to Asia, Australia and Europe entities: The Company’s subsidiaries in Asia, Australia and
    Europe are not part of the Chapter 11 filings or CCAA proceedings. Toys“R”Us will pay vendors for all
    goods and services provided tothese entities in the normal course.

Has anyone tried to reach Kitex management about the impact of on receivables and future business ? There would be meterial impact to topline as well as bottom line if Kitex is selling directly to the US arm "Toys R US"


(Dheeraj) #1164

I'm a new investor and new to VP as well. I recently became interested in Kitex due to their high operating margins. However, I got concerned on these margins which are in the same range as of Infosys. It seems highly unlikely for a textile player, primarily a supplier.

All large US retailers like Walmart, Target, Toys'R'Us sell hundreds of brands/non-brands and most consumers buy based on their trust with these stores. Unless you are well recognized or popular brand, there is no pricing power.

I became even more concerned seeing a high Modified C-Score (available on Valueresearchonline). I would like to thank VP members who have presented a very detailed analysis on this thread and raising red flags on the management quality.

I do not have a clear perspective of my own about these red flags yet. However, the thumb rule I'm following is - do not invest when in-doubt. I intend to create a portfolio of 15-20 high quality companies in next 2-3 years and I believe there are enough such companies available in the overall stock universe to give Kitex miss.


#1165

Came across this tweets from Amit Mantri picking holes in AR 2016-17 of Kitex Garments. Most of them have already been picked up here by forum members.

Discl: Not invested. Academic interest only


(nirmalsashi) #1166

Toys r us- vendors- list of creditors affected by bankruptcy / restructuring.
https://www.grantthornton.ca/services/reorg/bankruptcy_and_insolvency/ToysRus

In the section of 'List of creditors' saw few indian players like SCM Garments, GHCL.
Surprisingly Kitex is missing. Is this because they might have done sales using LC so secured ? I think 2014 research report of Kitex had 15 to 20 pc sales to Toysrus

SCM Garments: http://www.scmgarments.com/products.html

GHCL is diversified business and listed company with presence also into textile.
http://ghcl.co.in/wp-content/uploads/2017/08/GHCL_Investors_Conference_Transcript_31-07-2017.pdf


(kauban) #1167

This is the creditor list for Toys R Us Canada, Kitex sells/invoices to the US parent I think. Maybe thats why you don’t see it here.


(nirmalsashi) #1168

Thanks. I checked in US entity also.
https://cases.primeclerk.com/toysrus/Home-ClaimInfo
Not sure why its not there. May be wrong link


(mg22) #1169

I have an introspective question for all who are invested in Kitex:

How much of a role does it play in your mind that Sanjay Bakshi is invested in this company?

I'm just curious. Because I am invested and this factor is maybe affecting my judgement even if I try to be as objective as possible about the company.


(rskothari) #1170

I was invested in this company and exited completely today. Investment of Professor was only reason because of which I delayed my exit.

I think Investment by Professor plays a big role and particularly for small investors. Many are ignoring lot of red flags because of conviction from his invested. I wondered what may happen to this stock if Professor exits from this stock and I exited as feeling was not good from the thought.


(Abhishek) #1171

zero role... market doesnt care about individual's positions... its highly
democratic...


(grohal) #1172

Market doesn't care in long term, but in short term it is inefficient and it does care!


(Nolan) #1173

Presence of a big investor cannot be the investment thesis but should only come as a confirmation of the thesis. I don't deny Professor's presence had that effect upon me too but after a series of disappointing results and some governance issues, I exited Kitex long back.


(KalyanKool) #1174

Kitex’s latest Shareholding pattern is out just a while back and Professor’s stake is unchanged.

Disc: Exited almost, holding small tracking quantity


(Furkan Alam) #1175

Yes professor invested did have an impact on the way we think about the company.

But with some delays due to above factor finally i exited based on the lacklustre results quarter on quarter. Management arrogance and over confidence also helped me to think through this. They seem to have failed to deliver what they promise many times.

I feel a heavyweight investor does influence your thinking on a company but we need to question and scrutinize the results and company performance closely and take our own decisions based on them.

Disc : Exited completely sometime back. Please take your own decisions


(Kumar Saurabh) #1176

I would humbly suggest to look them for knowledge and stock ideas but post that all analysis n decision should be mutually exclusive else it won’t lead to any personal conviction