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Alok Ind to raise Rs 2000 cr via land sale in 12 months

Published on Mon, Aug 01, 2011 at 10:57 | Source : CNBC-TV18

Updated at Mon, Aug 01, 2011 at 14:23

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Alok Industries

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Textile firm Alok Industries has announced its first quarter (April to June) results. Its net profit rose 24.20%. Dilip Jiwrajka, managing director of Alok Industries, in an interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee, said the company is likely to raise about Rs 2000 crore through a land sale over next 12 months.

"Money raised from the land sale will be used for retiring debt," added Jiwrajka.

Below is a verbatim transcript of the interview. Also watch the accompanying video.

Q: Before talking about numbers, update us on what is going on the real estate front. I believe that you are now looking to sell land in Silvassa as well. Can you update us on where things stand on that front to raise money from the real resources?

A: We had made an announcement on Friday that we have sold a part of the land; we have also sold part of the office block that we had. We have also rented out about 10% of our Lower Parel property.

Q: How much has been sold at what price and what remains now in terms of the land bank for Alok?

A: As far as land is concerned, we have sold about 73 acres of land at a good price and we hope that the balance land of about 450 acres is also sold at a good price. As far as our office property is concerned, we had two blocks; one was about 644,000 square feet, out of which we have been able to lease out 20% to an MNC. We have been able to sell about 2-3 units of the other office block.

Q: What primarily will the money raised be employed for because there is a high debt overhang that Alok has; so does this go into working capital needs or are you retiring debt with the money you are raising from real estate sales?

A: It's basically for retiring debt.

Q: Could you give us some numbers because your shareholders would like to know how much debt reduction will happen from these proceeds? How much 73 acres got sold at and how much did you realise for the sale of the two units in Lower Parel?

A: We have been able to sell 72 acres at roughly about Rs 50 crore and from the two units, we have been able to realise about Rs 35 crore. As far as leased property is concerned, we have been able to give it out at a good price. So ultimately, we would be getting roughly about Rs 2,000 crore out of sale of real estate and that would happen within the next 12 months.

Q: Your operating margins have slipped a couple of percentage points for the current quarter; they are down to 27.5%. Can you take us through why that happened?

A: Earlier we have been concentrating on cotton-made fabric and cotton was our main product whereas this time around, our capacity is polyester, which has gone up and polyester's margins are lower compared to the cotton based fabrics. Our average works out little lower than what it was in the past but ultimately the volume growth comes from polyester business and that leads to a better margin in terms of real numbers.

Q: You have had consistent sales growth over the past couple of quarters. On the basis of what you have reported this quarter, what do you think you could finish the full year with, in terms of sales for Alok?

A: We should be having sales growth equivalent to the growth rate that we have projected in Q1 and I hope our exports will also keep pace with that. Our export has grown by almost about 40% this quarter and I hope growth in exports continues. I hope that we would end up the year with a number which would be equivalent to the growth rates that we have achieved in Q1.

Also read: CRISIL assigns fair value of Rs 31 to Alok Industries