Alok Industries

Quoted at Rs.6 levels, this company has today become a penny stock, thanks to its gargantuan debt of around Rs.10,000 crore. And it is not a small company, given the fact that in Q3 ended 30^th June 2013, it posted a net turnover of Rs.2995 crore, a 24% YoY rise. But its forex loss was also huge at Rs.190 crore and the interest outgo of over Rs.400 crore dented the bottomline. It ended the quarter with a net profit at Rs.33 crore, up 10%.  The market has thus rightly valued its pitiable NPM of 1.10% for the current quarter. The company is taking steps to correct this huge debt scene. It downsized 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 this quagmire. It got aggressively into retailing and real estate and all these ventures pushed up the debt of the company from Rs.6500 in 2009 to over Rs.10,000 crore now. The company is now selling its realty ventures to raise money. It has entered into realty deals worth Rs.1103 crore of which in this quarter, it received Rs.672 crore. In December, 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 concluded its rights issue in May’13 and post this, equity capital has almost doubled up to Rs.1377 crore compared to Rs.826 crore earlier. Promoters have increased their holding from 34.16% to 36.44% (QoQ) though FII holding has come down from 3.89% to 3.19% and DII from 12.07% to 9.28%. the company has extended its year ending to 30^th September 2013 and till end of 15 months, as at 30^th June 2013, the company has a net profit of Rs.823 crore.