Alok Industries, which has built the biggest capacities in yarn, fabrics, processing and garments, accumulating a heavy burden of debts running into thousands of crores, has begun a serious exercise of consolidation. To redeem itself from the shackles of debt, the company has got down to business by disposing of its NPAs, which are in the forms of land, buildings and investments in non-core areas. ´Our interest burden has gone up beyond control and we have learnt from our mistakes. By 2016, we will be back on manageable shape, having got rid of most of the debts burden,´ say Dilip Jiwarajka, Managing Director and Surendra Jiwarajka, Joint Managing Director of Alok Industries.
Alok Industries will leave no stones unturned to see that the company is back on rails, says Sunil O Khandelwal, Executive Director and Chief Financial Officer of Alok Industries. ´We have no plan for any investments in the next 4 years. We are taking a holiday and is in the process of consolidation. We had a visit from Ms Nikki Haley, Hon´ble Governor of South Carolina (USA), who along with a high level business delegation from South Carolina was here to explore possibilities on building up on trade relations between the two countries, specifically between Maharashtra and South Carolina,´ says Surendra Jiwarajka.
Arun Agarwal, CEO & Director of NEXT Creations, which manages the retail chain distribution in the US was also in Mumbai recently, and he expressed his confidence in the Alok Industries continuing its relationship in the coming years.´NEXT Creations is closer to our biggest market, ie, US. We will be leveraging this tie-up and with NEXT Creations setting up facilities in Singapore soon, we are looking at more export business in the coming years,´ says Khandelwal.
About 35 per cent of Alok´s total exports goes to the US. And exports from 30 per cent of its total turnover. ´Alok Industries has closed all the retailing stores in India. Its facilities in the UK is also scouting for buyers. Alok is not a retailer and we have been supplying to big brands and we will build the future on this expansion. We will also be expanding the product basket in association with the NEXT Creations,´ says Surendra Jiwarajka.
Alok Industries is also making efforts to reduce the cost in other areas. ´For instance we are moving out of gas and taken up coal in a big way. This will make a big difference in energy costs. Besides, at present we are getting 60 per cent of our needs from the power grid. With Silvassa having the lowest power cost in the country, we are saving enough in our production cost,´ says Khandelwal.
Says Surendra Jiwarjaka: ´We have already cut the losses. Major outgo is the interest cost and we are already addressing the problem. We have made way to save already 6 per cent of the total debt of Rs 10,000 crore, which comes to around Rs 600 crore per annum. We will be almost rid of the big problem of debt in March 2016´. ´Our polyester yarn business is doing well since China needs a lot of yarn. The situation is very good. There is no need to hunt for new markets and what we need is to produce and service the existing markets. Alok is already established in over 80 countries, and we are confident of raising exports and bailing Alok out of this unexpected debt trap,´ says Dilip Jiwarajka.