Kerala-based Kitex Garments Ltd. shares have gained nearly 25% in the last five days after the textile company decided to quit Communist-ruled Kerala over increasing harassment by the Pinarayi Vijayan-led government
Earlier this month, the largest private-sector employer in Kerala – Kitex Group had announced their decision not to go forward with the Rs.3,500 crore investment project in the state. The company had said that the state authorities are running a witch-hunt against them. Kitex Garments is the second-largest kids’ apparel manufacturer in the world.
The group had also announced that they have got informal invites from over ten states, including Gujarat and formal invites from the state of Tamil Nadu, to shift their investments. In fact, Tamil Nadu had even offered an array of subsidies, discounts and freebies if Kitex decides to shift its projects while stating how it is the most business-friendly state.
Amidst all this, a delegation from Kitex Garments visited Hyderabad in a ‘special flight’ sent by the Telangana government to discuss the possible investment in the Telangana government. Kitex Managing Director Sabu Jacob had confirmed that he along with a five-member team would be heading to Hyderabad Friday by a special jet flight sent by the Telangana government.
Following the meeting, Telangana IT minister KT Rama Rao announced Kerala-based Kitex Group will invest Rs 1,000 crores in Kakatiya Mega Textile Park in Warangal.
Delighted to announce the entry of KITEX group, world’s 2nd largest manufacturer of kids apparel into Telangana with an initial investment of ₹1,000 Cr— KTR (@KTRTRS) July 9, 2021
They’ve chosen KMTP, Warangal for their factories
My gratitude to Mr. Sabu M. Jacob, MD of KITEX group on a quick decision 🙏 pic.twitter.com/CgMf67DpxN
Kitex Garments Ltd shares soar over possible exit from Communist-ruled Kerala
As speculations began to float regarding Kitex Garments’ possible withdrawal from Kerala due to the government’s alleged witch-hunt and the company’s subsequent investment in Telangana, the investors, who seemed to be overjoyed, flushed huge money into Kitex Garments Ltd. stocks taking the stock price of the company to an all-time high.
In fact, on Friday alone, the stock value of Kitex Garments Ltd. rose over 20 per cent. The closing level on Friday was also at its 52-week high at 140.85. Kitex Garments Ltd. shares opened at Rs 117.75 after ending at Rs 117.40 on Thursday.
The gains came after Kitex Garments Ltd. sent out a strong message to its investors that it was no more willing to do business with Communist-ruled Kerala, instead, the company would invest in any of the other industrialised southern states.
In the last five days, Kitex Garments Ltd. share has cumulatively gained nearly 25 per cent. Only on July 5, Kitex Shares opened at 113.40. Five days later, due to increased investments, the stock price has gone up to 140.85, gaining over 24 per cent.
Meanwhile, following the backlash over its archaic industrial policies and ‘license raj’ system, the Kerala government has now backtracked, saying it has an ”open approach” towards the issues raised by the Kitex group.
”The government is still open, issues can be discussed with the investors and take things forward,” Kerala Industries Minister P Rajeev said on Friday.