Alok to decrease debt-equity ratio

Alok Industries the fully integrated textile to retail company has reported Rs1,451 crores revenue

for the quarter ended September 30. The company’s market capital stood at Rs 2245 crores. It has now put together a strategy to decrease the debt-equity ratio of 1.81 over the next few years. The main strategy is to sell off large amounts of real estate currently being held by the company and generate higher profits through its retail businesses in India and the UK. Two years ago, the company had plans to raise private equity for its retail businesses. Alok Industries primarily manufactures textiles and owns retail stores in India and the UK. The company operates 260 stores called H&A in India through the franchise model.

About the imminent sell off, Alok Industries CFO Sunil Khandelwal says, the total value of the real estate portfolio, held in step-down subsidiaries is Rs 2,200 crores. The company expects to receive at least Rs. 1,500 crores by the end of March 2012. At the moment they have 640,000 sq. ft. of commercial real estate held in step-down subsidiaries. Alok Industries is also considering exiting their retail business in the UK by selling off the stores. The reason for opening the UK stores was to sell Alok Industries’ products but so far it has not gone as per the company’s expectations. Only 20 stores in the UK are expected to generate profits this year.

Khandelwal says they are looking to expand to 400 stores by the end of March 2011 and will look at unlocking the value in the retail business segment only when they reach 700 to 800 stores over the next couple of years. They are also considering bringing UK brands to India through the H&A outlets.