×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Alok Industries starts to divest realty assets

Alok Industries starts to divest realty assets
Comment E-mail Print Share
First Published: Sun, Jul 31 2011. 10 33 PM IST
Updated: Sun, Jul 31 2011. 10 33 PM IST
Bangalore: Alok Industries Ltd, one of India’s largest textile firms, has started divesting its real estate portfolio to ease debt, almost a year after announcing the plan.
The company has signed an agreement to sell 73 acres at a 500-acre land parcel in Silvassa, the capital of Dadra and Nagar Haveli, to a group of manufacturers, and has sold a portion of its commercial building in Lower Parel, central Mumbai.
It is also close to leasing out two floors at Peninsula Business Park, an office building in the same area. These deals will together garner about Rs70 crore.
“We have stepped up our efforts in divesting assets and there should be more momentum in the coming months,” chief financial officer Sunil Khandelwal said.
The Mumbai-based firm aims to earn about Rs1,500 crore by selling its property portfolio over the next 18 months. Most of the money will be used to retire the debt of real estate subsidiaries and partly repay the Rs9,000 crore debt on Alok Industries, Khandelwal said.
The company’s board has also accepted a proposal to merge Grabal Alok Impex Ltd, a joint venture between Alok Industries and Austria’s Grabal Group, with Alok Industries.
Khandelwal said that after the merger, Alok Industries’ share in Grabal Alok UK Ltd, which runs the Store Twenty One chain of retail stores, will increase to 90%. “This consolidation will provide better synergy and growth of the UK retail business,” he said.
Alok Industries posted a 64% fall in net profit to Rs58 crore in the June quarter, compared with the previous three months, on a 25% fall in revenue to Rs1,646 crore, it said on Friday night. Net profit increased 24% over a year earlier, while revenue rose 50% in the same period.
The June quarter is typically the slowest for the the company in terms of overseas demand and business, Khandelwal said.
Analysts said a steep increase in cotton price put pressure on the margins of textile firms. The price of the raw material rose from Rs35,000 a candy in mid-2010 to Rs62,000 a candy by April, though it has since eased to Rs30,000 a candy. One candy is 356kg. The softening will have an impact on the margins of textile firms a few months down the line as raw material is stocked well in advance, analysts said.
“Till then, the pressure on pricing and margins would continue,” said Harminder Sahni, managing director, Wazir Advisors, a management consultancy. “Though overseas customers would have started to expect and ask for immediate discounts on bookings due to this price fall, it’s difficult to happen.”
Global demand has not picked up for most textile exporters and retail pricing remains low.
Gokaldas Exports Ltd, India’s largest garment exporter, registered a 5% fall in net sales to Rs233.72 crore in the June quarter compared with a year earlier, but reduced losses by Rs4.27 crore to Rs13.46 crore in the same period through better cost management. “With our key markets of US and Europe still not picking up, we have been able to show marginal growth in our topline,” the company said in a statement.
madhurima.n@livemint.com
Comment E-mail Print Share
First Published: Sun, Jul 31 2011. 10 33 PM IST