Textile maker Alok Industries’ 100 per cent retail subsidiary is scaling down its March-end target of having 150 stores to 100, Chief Financial Officer Sunil Khandelwal said today.
He also said the company is in talks with private equity funds to sell stake in its retail arm as well as two of its Mumbai realty projects. The company’s shares, already up in line with the key indices, rose further on news of stake sale. At the close of the day’s trading, the scrip ended at Rs 18.65, up 5.07 per cent, on the National Stock Exchange.
“Initially, we had a target of 150 stores. However, we are now looking at around 100 stores, as we will be closing 10-12 non-profitable ones in December-January due to high rentals,” Khandelwal said in an interview. He, however, said the company is on track to achieve its guidance of setting up 500 stores by the end of 2009-10 (April-March).
Alok Industries had recently hived off its retail division into a separate company, Alok Retail (India). It currently operates 54 retail stores under the H&A brand. The stores — spread across 800-1,000 sq ft in Maharashtra, Punjab, Andhra Pradesh, Rajasthan, Karnataka, Gujarat, Uttar Pradesh—sell apparel, home textiles and accessories. Khandelwal said he expects the retail arm to break even in the next financial year. The company targets revenues of Rs 50-75 crore by March 31, 2010, he said. He said Alok Retail may dilute up to 26 per cent stake to raise funds for expansion.
“We are looking at the opportunity (of selling stake). We are talking to a private equity investor, and if everything goes well we could close the deal soon.” Having already invested Rs 16 crore in setting up 54 stores, the retailer will pump in an additional Rs 109 crore to expand its footprint over the next two years. Alok Industries, which has also diversified into the realty sector, plans to raise around Rs 460 crore by selling stake in two of its commercial projects in Mumbai—Peninsula Business Park at Lower Parel and a premium office complex in Nahur.
