Alok - Alok Inds to invest 400 mln rupees on retail expansion

Textiles firm Alok Industries Ltd (ALOK.BO: Quote, Profile, Research) is investing 400 million rupees in FY09 to expand its domestic retail network and reduce dependence on the U.S. market and boost growth, a top official told Reuters on Monday.

"As part of our overall strategy, we are exploring other markets such as Europe and the Middle East and the domestic market," Chief Financial Officer Sunil Khandelwal said.

"We plan to add 100 stores and take our total retail stores (in India) to 125 this year," he said over the telephone.

The firm will invest 4 million rupees per store in this current fiscal, taking its total investment to 400 million rupees, Khandelwal added.

The money will be raised through a mix of internal accruals and debt, he said.

Alok Industries is in the process of separating its retail business into Alok Homes & Apparels Pvt Ltd, a wholly owned subsidiary, as part of a larger plan to open over 400 stores in India by 2010/11.

The company is increasing exports to regions like Europe, the Middle East and Latin America to cut dependence on the U.S., which is seeing a slowdown in consumer spending.

Exports, which currently form about 45 percent of Alok's revenue stream, is led by the U.S. which accounts for around 35 percent of total exports.

European and Asian countries account for 15 to 20 percent each of Alok's exports, Khandelwal said.

PE DEAL BY JULY

Alok Industries plans to raise funds by end-July from private equity investors for its realty unit Alok Infrastructure, which develops commercial and residential projects, Khandelwal said.

"It should have been done by now, but the market sentiments went down a bit...but our efforts are on and we hope to close the deal in July," he said.

The firm is in talks with some foreign private equity firms, operating in India to sell part of its stake in the unit and raise funds, he said.

"But it is difficult to say how much we can raise, as the deal for our realty venture will be done on a project by project basis. Investors are selecting projects which they would like to enter," he said.

Axis Bank, Motilal Oswal and IL&FS are advising the firm on the deal, while Ernst and Young is valuing the properties.




Link to the article: http://in.reuters.com/article/domesticNews/idINBOM628720080623