Highlights of the call:

• Export sales expanded 56.51% to Rs 201.40 crore in Q2 of FY 2008 over Q2 of FY 2007. The growth was driven by home textiles (45.22% growth) and garments (gained from Rs 4.32 crore to Rs 21.88 crore)

• 50% of the total sales comprises exports. Of this 50% is contributed by the US and the remaining by the European markets.

• There was a fire at the texturising plant at Silvassa, which resulted in a total loss of the plant and related inventory. The estimated loss of the fixed assets based on written down values is around Rs 158 crore and loss of inventory is valued at around Rs 42 crore. The assets are fully insured on a ‘replacement basis’ and there is also a loss of profit policy in place. The insurance claim is under process and the company is confident of having the claim settled in full. In the meantime, the insurance company has paid Rs 75 crore as an interim measure. The topline growth during the quarter would have been steeper if this fire had not taken place.

• Final approval was received from the government of India for textile special economic zone (SEZ) at Silvassa. The investment made for the SEZ to be operational is around Rs 100 crore which will be funded by a mix of debt and internal accruals.

• A capex of around Rs 542 crore was added in the quarter.

• Other income of a routine nature was Rs 3.52 crore in Q2 of FY 2008; the balance Rs 10.35 crore is on account of foreign exchange gain.

• Total loans increased from Rs 3336.76 crore on 31 March 2007 to Rs 4712.04 crore on 30 September 2007. This increase in loans have been mainly on account of the ongoing capacity expansions availed under the Technology Upgradation Funds scheme (TUFS) at competitive rates of interest. The increase in the loan quantum has also been reflected in the increased interest and financing costs.

Cotton spinning

• 25,000 new spindles were commissioned in the quarter resulting in 75,000 operative spindles. The output quality of the spun yarn is upto international standards.
• An additional 1,75,000 spindles will be installed by March 2008; the total spindles on 31 March 2008 will be 2,50,000. A further 1,00,000 spindles will be installed in FY 2009.
• Total capacity will be 3,50,000 spindles towards the end of this expansion phase by March 2009 - the largest in India at a single location

Apparel fabric

• Better realisation and growth in knitted fabric has contributed to a modest 1.24% growth over Q2 of FY 2007. This segment contributed around 47.64% of the total turnover in the first half of the financial year.
• Wovens have shown improved realisation per metre; however, there has been a marginal decrease in volumes.
• New Clients added include VF Corporation, Victoria Secret, Tesco, C & A.

Home textiles

• Home textiles have shown significant growth, both during the quarter and the half-year. Consequently, the overall share of business has increased (from 18.3% during FY 2006-07) to 22.84% during the first half of the current financial year.
• New client added includes K-Mart Corporation.
• The capacity utilisation stands at 80%.

Garments

• Garments have started showing increasing sales, consequent to the new capacities going on-stream.
• The six-month cumulative sales of the division (Rs 37.33 crore) exceed the total sales of the division in FY 2007 (Rs 29.03 crores).
• New clients added include Defacto – Turkey, Steeve & Berry – USA, Zebra –Swiss, Kappa-Italy

POY & texturising

• Operations during the quarter have been adversely affected due to the fire in the Saily plant at Silvassa on 16 August 2007.
• Work to restore capacity is in full swing. It is expected that full capacity will resume by end December 2007. In the interim period, the company is selling POY production in the open market.
• The division has maintained its share of business (on a half-yearly basis) at 31.65% and has recorded a growth of 13.54% compared with the corresponding six months of the previous year.

Retail

• Alok’s retail foray was launched last year under ‘H & A’; targeting the mid-market segment for garments and home textiles.
• 14 stores have become operational by 30 September 2007, four more stores were expected to open by first fortnight of November 2007; 80 stores planned for rollout by end FY 2008.