Alok Industries
Interest burden continues to be remain the bane of this textile firm. In current quarter ended 31st Dec 2014, the company’s interest outgo was at Rs.600 crore and that for 9MFY15 it stood at Rs.2665 crore v/s Rs.2542 crore for entire FY14. This and the lower topline continues to restrict the company’s bottomline. Net sales for the quarter was down 3% (YoY) at Rs.3572 crore. Despite the 16% rise in raw material cost, the company reduced all other costs and brought down operating costs by 5%. This helped the EBITDA – which was up 8% at Rs.855 crore and margins were up from 21.54% to 23.94%. But after the interest outgo, net profit was pretty small at Rs.26 crore, down 75%. This will be a 18-month year for the company as it has extended its year ending from 30th Sept to 31st March.
The company is sitting on debt of around Rs.20,000 crore and it plans to repay most of it by 2017. The textile major has approached banks for debt restructuring. At the same time, it is taking several steps to increase exports. With higher dollar earnings, the company is also planning to swap its local loans with dollar loans, thereby cutting the interest cost by half and reducing the annual outgo by almost Rs. 600 crore.
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. Promoters stake is at 39.33% of which 99.77% is pledged.