Quarterly Performance

For the quarter ended September 09, Alok Industries have reported modest performance with 40% increase in topline to Rs 974.79 crore. OPM has spurted up by 520 bps to 29.8% and pushed up Operating Profit by 69% to Rs 290.90 crore. However, interest cost spurted by 137% to Rs 122.17 crore and depreciation by 59% to Rs 84.61 crore and restricted PBT growth to 26% to Rs 85.08 crore. The company has accounted Rs 0.11 crore of forex gains in the quarter under review as against loss of Rs 3.11 crore in the corresponding previous year and took Net Profit up by 35% to Rs 57 crore.

Highlights of the call are:

• Total Sales increased by 40% over the corresponding quarter of the previous year to reach Rs 974.79 crore. Export Sales for the quarter was Rs 318.77 crore, a growth of 22% over the corresponding quarter of the previous year.
• The polyester yarn segment has increased its share of pie in the total sales with 30% coming from Rs 258.35 crore in the quarter ended September 09.
• Apparel fabric constituted 40% of total sales at Rs 331.12 crore of which the woven fabric has constituted 36% at Rs 317.47 crore. The Kint fabrics is a small contributor to the total sales, but this segment has high visibility in coming two years with the more capacity coming in by end of March 09.
• The company expects Average realization for Knit fabric to improve from current Rs 200 per Kg to Rs 225 per kg and while that of garments to increase from USD 4 per Piece to USD 5 per Piece by next 6 -12 months.
• Maximum Q-O-Q growth has been seen in Cotton Yarn (101.01%); followed by Polyester Yarn (92.70%). Home Textiles grew by 29.40%; Apparel Fabrics by 16.96% and Garments by 21.09%.
• The terry towel business is on a good pace and the company expects to produce 450-500 tons of terry towels per month from December 09.
• On the exports front, Maximum sales value growth took place in Home Textiles (Rs. 168.99 crore vs. Rs. 131.88 crore – a Q-O-Q growth of 28.14%
• The company's share of exports to North America and US has declined to 34% in the quarter under review as against 46% in the corresponding previous quarter. On the flip side, share of exports to Asian Countries has increased to 38% as against 29% in the corresponding previous year.
• Domestic retail expansion is progressing satisfactorily: 38 new ‘H&A' stores opened during the quarter: a total of 138 stores now opened across India.
• On an average, every H&A store generates revenue of Rs 2 lakh per month as on quarter ended September 09. The company has targeted to improving the revenues to Rs 4 lakh per month in next 1 year of time. It also expects that the retail business to break even by September 2010.
• The company has Rs 900 crore of order book as on quarter ended September 09 of which Rs 500 crore pertain to the export order book.
• Rights Issue of 40.87 crore shares of face value Rs. 10.00 with a premium of Re. 1.00 were offered to existing shareholders in the ratio of 83 shares for every 40 shares held, aggregating to Rs. 449.60 crore. Post Right Issue Equity has increased to Rs. 605.08 crore

Retailing Overseas

• Grabal Alok (UK), the UK retail arm of the Alok group, continues its turnaround in Q2 of 2009-10; Sales during the quarter grew by 11.19% to £ 27.53 million (compared to £ 24.76 million in Q2 of 2008-09); YTD Q2 2009-10 sales grew 6.45% Y-O-Y to £ 51.01 million.
• On the Other hand, YTD Q2 2009-10, Cash Profit was at £ 0.01 million (compared to loss of £ 10.06 million during YTD Q2 2008-09)
• Q3 indicators show similar uptick in sales and prospects for the year look positive
• Re-branding of stores from ‘qs' to ‘Store 21' ongoing; the rebranding has resulted in an average of 32% increase of sales in the refitted stores: some refitted stores have reported increased sales to the extent of 50%.
• The company plans to rebrand further 35 stores by the end of this financial year: 15 stores pre-Christmas and another 20 stores during Feb-Mar 2010.