Kitex CMD Sabu Jacob richer by Rs222 cr as he moves expansion poject out of Kerala
14 July 2021
The stock market has given a big thumps up to Kitex Garments’ decision to move its expansion plan out of Kerala to investor-friendly Telangana, taking the stock price up more than 55 per cent in just five trading sessions, making Kitex chairman and managing director Sabu Jacob richer by Rs222 crore, as he owns 55 per cent in the BSE-listed company.
The stock price of the Kochi-based kids’ garment maker shot up by 44.26 per cent since Friday when Sabu Jacob announced his decision to dump his Rs3,500-crore investment proposal for Kerala following alleged harassment by the Left-led government and announced plan to invest Rs1,000 crore in Telangana.
The Kitex stock which rose nearly 20 per cent on Friday, gained another 20 per cent on Monday when Sabu Jacob said his company would not make any more investments in Kerala, and that he was in discussions with neighbourinfg states like Tamil Nadu, Andhra Pradesh and Karnataka for future expansions.
The company’s stock price increased from Rs108.9 to Rs168.65 on Monday, taking the overall gain to 55 per cent in just five trading sessions since the controversy broke out between the Kerala government and Kitex Group.
The market value of Kitex, the world’s third-largest infant garment maker, touched Rs1,121.52 crore, an increase of Rs408.32 crore in a week since Tuesday last. The gain in Kitex’s stock price comes at a time when the company’s net profit has been coming down. For the quarter ended March 2021, its profit after tax plunged 53.06 per cent to Rs8.27 crore from Rs17.62 crore during the same quarter of the previous year. Total sales had also declined by 23.65 per cent to Rs111.70 crore in the quarter ended March 2021.
Meanwhile, the Andhra Pradesh government has invited Kitex Garments to invest in the state. The invitation by the AP government comes after the company signed an agreement with the Telengana government to invest Rs1,000-crore in a new garment facility in the state. The talks, however, are reported to be in the preliminary stage. The AP government has mailed the industry policy and details of the textile cluster development policy being adopted by the state government to the Kitex Group, reports said.
Sabu Jacob said all South Indian states except Kerala were making competitive offers for Kitex to invest in their respective states. “It is a golden opportunity for Kitex and we are getting attractive offers from all southern states. On Monday, the Andhra Pradesh Industries Minister called me up and requested for a meeting. The minister said he will arrange a meeting with the chief minister (YS Jagan Mohan Reddy),’’ Sabu said, adding that the minister assured that all our requirements would be discussed.