Alok Industries puts SEZ plan on hold

Textile major Alok Industries has decided to put on hold its textile special economic zone (SEZ) project at Silvassa in Dadra & Nagar Haveli, following the global demand slump and the credit shortage.

The fall in demand for textile products in the US and the Europe has been the primary reason why the company has decided against going ahead with the project. The financial market is also not supportive of raising the fund required for the export-oriented SEZ, said sources.

Confirming the development, KH Gopal, the company secretary of Alok said, “We are not pursuing the project at least till March 2009, for completing other expansion plans of the company. The cost of these expansions would be around Rs 2,280 crore. After the completion of the expansions, we will consider the SEZ project,” Gopal said.

The government has given its formal go-ahead in September 2007 for the project to Alok Infrastructure, a wholly-owned subsidiary of Alok Industries. The company has also completed acquisition of 183 acre for the SEZ. But the global financial crisis and the subsequent fall of major industries have forced the company to put its greenfield project on the back-burner, said sources.

“The company has already tied up for the finance of phase-III & phase-IV expansions. The phase-III expansion, which will cost around Rs 1,100 crore, will be completed by December this year while the Rs 1,180-crore phase-IV expansion will continue till March 2009. For the SEZ, we have not finalised the funding strategy as the project structure is yet to be formalised. We have three options before us — we could give the acquired land to the companies coming to the SEZ, or develop the land and handover it to them, or construct buildings and develop infrastructure before the sale,” said Gopal.