Alok Industries to sell stake in retail, garment divisions
Daily News & Analysis, India
MUMBAI: Alok Industries, the Mumbai-based textile firm, is likely to sell minority stake in its demerged retail and garment businesses to private equity players.
The demerged businesses need capital for expansion and don’t want to depend on the parent for it. Equity dilution, therefore, is the preferred option.
Sunil Khandelwal, chief financial officer (CFO), declined to comment on the dilution. Alok Industries is raising garment capacity to 22 million pieces from the current 8 million by the end next fiscal.
The demerged retail business will have 100 stores in Maharashtra and Gujarat by the end of the current fiscal. At present, Alok Industries runs 13 stores.
Currently, nearly one-third of Alok’s revenues are from exports. This fiscal, the company has set an ambitious goal of 56% growth in exports to Rs 1,000 crore. The company is in the midst of a Rs 2,300 crore expansion through four phases.
The Phase I and II were completed in March 2014 and March 2014, respectively where the company had invested Rs 1,175 crore on capacity expansion of garments, knit processing, ring spinning and woven processing.
Under phase III, Alok Industries is setting up 2 lakh spindles costing Rs 1,100 crore and is likely to be commissioned in March 2014, along with a terry towel project costing Rs 100 crore.
In phase IV, a 50 MW power plant and another 1 lakh spindles costing Rs 1,180 crore will be set up by March 2014.
Earlier, the company has been sanctioned Rs 950 crore term loan under the Textile Upgradation Fund Scheme.
India’s textile exports are expected to touch $50 billion by 2014 from current $20 billion. According to textile ministry, investments in the sector will reach Rs 1,50,600 crore by 2012, which will generate 17.37 million jobs.
The sector has grown nearly 22% post the Multi-Fibre Arrangement from $14 billion in 2004-05 to $17.85 billion in 2005-06.
MFA governed world trade in textiles and garments from 1974 to 2004 under which, quotas were imposed on the amount developing countries could export to developed countries. The agreement expired on January 1, 2005.
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