Capitaline

Analyst Meet / AGM 02-Aug-11

Conference Call

Alok Industries

Capex for FY12 to be around Rs 800-850 crore

Alok Industries has come up with the financial performance for the quarter ended June 11 and has conducted concall on 1 Aug 11 to discuss the financial performance of the company. Dilip Jiwrajka – Managing Director, Sunil Khandelwal – CFO addressed the call.
Highlights of the call are:

The company has posted robust 50% jump in the topline at Rs 1644.89 crore for the quarter ended June 11 and modest 25% increase in Net Profit at Rs 57.77 crore for the quarter ended June 11. The price increase contribution to the total sales growth was 23-24% and that of volumes 26-27% in quarter under review.
Operating Profit margins slipped by 220 bps in the quarter under review to 27.5% owing spike in the raw material costs. With increase in the proportion of polyester business revenues, margins are expected to come down in the coming years. However, the volume growth will compensate for the lower EBITA margins of the polyester segment. The management expects margins to be around 27% for FY12.
Revenues from exports have improved by 38% to Rs 602.19 crore while that of domestic revenues improved by 57% to Rs 1042.70 crore in the quarter under review.
Revenues from polyester yarn business have surged by 82% to Rs 643.61 crore in the quarter under review. The exports of polyester yarn have improved by 38% to Rs 161.86 crore. The polyester capacity of the company will increase from 860 tons per day currently to 1100 ton per day from September 2011 and increase further to 1300 tons a day by end of December 11.
Revenues from apparel fabric (woven and Knitted) has improved by 41% to Rs 680.12 crore of which export revenues surged by 145% to Rs 155.06 crore.
Home textile revenues grew by 30% to Rs 235.36 crore. Export constituted 98% of revenues from this business at Rs 231.59 crore, up by 36%.
The company has opened H&A stores during the quarter taking the total count to 311 (including shop in shop) and plans to reach a count of 500 by end of March 12.
Store Twenty One – the UK retail Chain of value forma stores continued to do reasonably well in the quarter under review. Its store count was 219 at end of July 11. Grabal Alok (UK) continued to generate positive EBIDTA of 0.71 million pounds over sales of 31.47 million pounds in quarter under review. The management expects Alok UK to turn positive at Net Pat level in FY12.
The company has considered and proposal of amalgamation of Grabal Alok Impex (GAIL). The company will issue one fully paid equity share of Rs 10 each of Alok Industries for every one equity share held in GAIL.
The company has contracted the following deals relating to real estate held by its wholly owned subsidiary (a) Two commercial floors out of Twenty floors in Tower B of Peninsula Business park, Lower Parel has been leased out to a leading FMCG MNC. The area leased was 64000 sq ft for Rs 1.45 crore per month for a term of 9 years (b) 73 areas of land at Silvassa have been agreed to sold off to six different parties. The management expects to generate Rs 1400 crore from above projects in FY12 and another rest around Rs 600 crore in next two years.
The capex for FY12 would be in order of Rs 800-850 crore. The company has already spent Rs 400 crore in Q1FY12.
Consolidated debt stood at Rs 12000 crore at end of June 11. Average cost of debt is 9%. The Debt to equity ratio stood at 2.5 at end of June 11. The management expects DE ratio of 1.5 by FY 16.

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