Alok Industries

Textile firm, Alok Industries was up some time ago on news coming in through media reports that the company is planning to raise around Rs.2000 crore over the next 2 years through land sale in a bid to pare down its huge debt and double its exports over next 36 months; exports currently contribute 25% to its total revenue.

For Q2FY15, the company posted a net profit at Rs.45 crore, down 54% (YoY) and this was on a flat net sales of Rs.3745 crore. An NPM of a meagre 1.2%. The biggest culprit is the interest outgo, which on an average, every quarter is around Rs.525- Rs.550 crore and for H1FY15, it was at Rs.2066 crore, which is 14% of the net sales earned. Its consolidated debt currently stands at around Rs.20,000 crore and this alone has wiped off the stock price from the Rs.30 levels it was ruling 5 years ago.

The company has approached banks for restructuring its loans and is planning to swap its local loans wit dollar loans to bring down interest cost by almost 50%. It has already converted around Rs.5000 crore of domestic debt into dollar debt and before the end of the fiscal, plans to convert another Rs.9800 crore in dollar loan. It has been selling its realty since FY13 and that has helped it raise Rs.900 crore. It now has a land bank of around 450 acres in Silvassa Industrial estate. There is also news about its selling its non-core assets, like the 100% stake in Mileta International and another 91% stake in Grabal Alok, which could fetch the company around Rs.2000 crore by FY17.