Alok Textile Industries

Sales turnover was up 36.9 per cent to Rs 74.83 crore in the six months ended September 1996. This was attributed to the company's modern fabric processing house at Navi Mumbai for processing/finishing 201 lakh meters p.a. of woven fabrics and 1226 tpa of knit fabrics. The knitting division at Silvassa was also instrumental. The company, however, could not generate more profit from the high volume growth as manufacturing costs moved up by 37.2 per cent, as against the 36.9-per cent rise in sales turnover. Operating margins declined to 11 per cent, from 11.3 per cent, and gross profit margins fell to 6.2 per cent from 7.4 per cent. Increased borrowings for expansion programmes pushed up the interest expenditure by 69.2 per cent to Rs 3.62 crore. Surprisingly, the company's provision for depreciation declined 10.3 per cent to Rs 1.26 crore.

 

This was despite a 62-per cent jump in gross fixed assets during the financial year 1995-96. The absence of any provision against minimum alternate tax jacked up the net profit by 28.6 per cent to Rs 3.39 crore. Alok Textiles' shares, now quoting at a price of Rs 27.50, is down from its 52-week high of Rs 45.

Though the company's year-end equity capital stands at Rs 3.75 crore, this is likely to shoot up in the near future for a variety of reasons. First, the promoters have brought in Rs 7.24 crore as share application money towards their contribution for the project and the proposed public issue.

Second, it has proposed a rights issue in the ratio of two shares for every share held. Thus, given the possibility of an equity dilution in the future, the trailing 12 months EPS which stands at Rs 18.08, may decline substantially in the near future.

Market Price : Rs 27.50 EPS : Rs 18.08 P/E : 1.52