Mumbai: Textile firm Alok Industries Ltd expects to earn Rs 1300-1400 crore from the sale of commercial properties in Mumbai this financial year, a senior official said on Monday.
“We are confident we should be able to sell in FY12. We are getting good enquiries for leasing also,” Sunil Khandelwal, chief financial officer, told Reuters over the telephone.
“So, once we lease out about 50% of the property then there are a couple of real estate funds who want to buy the property on outright basis,” he added.
The properties are held by the firm’s wholly-owned subsidiaries.
Other top textile firms Bombay Dyeing , Century Textiles , Provogue India and Arvind are also intent on developing or selling valuable land parcels to boost cash flow and cut debt.
Raymond Ltd has plans to sell one of its properties near Mumbai while Arvind is looking to tap its 1,000-acre land bank in and around Ahmedabad.
In 2010, Arvind had said the firm was forming a equal joint venture with B. Safal group to develop about 1 million square feet of residential space.
Alok Industries posted a 53% growth in net profit in FY11 on robust sales, and Khandelwal expects to maintain this growth in FY12 on the back of higher volumes.
It seeks to double revenue to around $3 billion over the next three years, primarily on growing exports and a resurgence in domestic demand, managing director Dilip Jiwrajka had said in September 2010.
It has earmarked a capital expenditure of Rs 450-500 crore each for FY12 and FY13 to ramp up capacity across products, including terry towels, bedsheets, technical textiles and polyester. The company is going through a Rs 700 crore expansion programme in the current fiscal.
The firm, which has doubled its polyester yarn capacity to 400,000 tonnes, expects to increase its share to 50% of total output from 25% now to meet rising demand.
“Cotton prices are high so it is becoming unaffordable for the masses. Also, the higher demand for fibre cannot be met by cotton alone,” Khandelwal said, justifying the move to push polyester production.
“We expect polyester demand to further go up.”
Also, the return on capital in polyester far outweighs that of cotton with the former giving returns twice as much as cotton, he added.
Shares in Alok Industries, which the market values at $475 million, were trading up 1.7% at Rs 27.15 in the Bombay Stock Exchange.