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• Alok Industries is a fully integrated textile company and one of the largest textile manufacturers in the country.
• The company has been displaying healthy operational performance. It has been able to pass through rising cotton
prices, which has protected margins. This, along with increasing end-user demand, has helped the company deliver
strong volume growth. Alok’s export growth has been outperforming its domestic growth.
• It recently purchased a substantial proportion of its cotton requirement at Rs39,000 per candy (1 candy = 356 kg) as
against prevailing prices of Rs48,000-50,000 per candy. This low-cost inventory should provide a cushion for the
coming quarters amid rising cotton prices.
• The company added 20 ‘H&A’ stores in Q3FY11, taking the total number of stores to 271. However, it has reduced its
store target for March 2011 to 350 from 400 earlier.
• Alok plans to incur capex of ~Rs8bn, mainly in polyester and cotton spinning. It has a capacity of 0.34m spindles in
cotton spinning, which it aims to increase to 0.4m. With the commencement of its second polyester plant, total
capacity would increase to 0.4m tpa (from 0.2m tpa now). The company is also planning an additional 0.2m tpa in the
polyester segment.
• It has captive power capacity of 70MW, of which 15MW is contributed by a gas-based plant in Vapi. The balance
55MW comes from a plant in Silvassa, which operates on furnace oil. The company expects to run the plant on gas to
reduce production cost. It also has a parallel connection with the grid in Silvassa, from which it sources power at an
average realization of Rs4/ unit.
• Real estate: Alok has two commercial properties, Ashford Centre and Peninsula Business Park, which are ready for
sale. The properties are valued at ~Rs14bn. The company holds a 50% stake through a JV in a residential project in
Nahur, Mumbai, valued at Rs4bn.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
• Alok Industries is a fully integrated textile company and one of the largest textile manufacturers in the country.
• The company has been displaying healthy operational performance. It has been able to pass through rising cotton
prices, which has protected margins. This, along with increasing end-user demand, has helped the company deliver
strong volume growth. Alok’s export growth has been outperforming its domestic growth.
• It recently purchased a substantial proportion of its cotton requirement at Rs39,000 per candy (1 candy = 356 kg) as
against prevailing prices of Rs48,000-50,000 per candy. This low-cost inventory should provide a cushion for the
coming quarters amid rising cotton prices.
• The company added 20 ‘H&A’ stores in Q3FY11, taking the total number of stores to 271. However, it has reduced its
store target for March 2011 to 350 from 400 earlier.
• Alok plans to incur capex of ~Rs8bn, mainly in polyester and cotton spinning. It has a capacity of 0.34m spindles in
cotton spinning, which it aims to increase to 0.4m. With the commencement of its second polyester plant, total
capacity would increase to 0.4m tpa (from 0.2m tpa now). The company is also planning an additional 0.2m tpa in the
polyester segment.
• It has captive power capacity of 70MW, of which 15MW is contributed by a gas-based plant in Vapi. The balance
55MW comes from a plant in Silvassa, which operates on furnace oil. The company expects to run the plant on gas to
reduce production cost. It also has a parallel connection with the grid in Silvassa, from which it sources power at an
average realization of Rs4/ unit.
• Real estate: Alok has two commercial properties, Ashford Centre and Peninsula Business Park, which are ready for
sale. The properties are valued at ~Rs14bn. The company holds a 50% stake through a JV in a residential project in
Nahur, Mumbai, valued at Rs4bn.
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