Alok Industries

Alok Industries was up over 4% yesterday after it reported a net profit at Rs.240 crore, which is a turnaround on a YoY from a net loss at Rs.37 crore. Sequentially though, net profit has slipped 17%. The YoY performance was helped by a strong growth in topline, which was up 45% (up 6% on QoQ) at Rs.3521 crore. The market is more enthused about the fact that the company has taken steps to downsize its operations in Alok H&A by bringing down the number of retail stores to 50 and is strategically taking the right steps to exit non-core areas by June 2014.

The company became overambitious and this resulted in its getting sucked in the red. It got aggressively in retailing and real estate and all these ventures pushed up the debt of the company from Rs.6500 in 2009 to Rs.13,000 crore at end of Dec’12. The company is now selling its realty ventures to raise money. It has entered into realty deals worth Rs.1073 crore and till end of Q3FY13, it had received Rs.336 crore. Recently in Dec, it sold its 615,000 sq ft of area in Tower B of the Peninsula Business Park building at an average of Rs 16,750 a sq ft or Rs 1,030 crore. This was actually sold at a loss as the company had purchased this property in 2007 for Rs.1,055 crore or Rs 17,154 per sq ft. The company has got approval for its Rs.551 crore rights issue and shareholders of the company will get two shares for every three shares that they hold in the company. The issue price is to be at par, i.e. Rs 10, and the record date is February 19.