Sunil Khandelwal, CFO of Alok Industries, in an interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee, spoke about the recent happenings in his country and the road ahead.
Below is a verbatim transcript of the interview. Also watch the accompanying video.
Q: There have been some talks on the flagship TUF scheme being resumed. Can you take us through the details? What could it mean for the sector and your company?
A: This was long awaited move. The entire industry has been waiting for this. The TUF scheme was in the ambiance since June 2010. It took a long time for the government to come out with the new scheme. It is a welcome step.
Definitely, the industry is in a growth path. For the first time, we are getting into a scenario where the demand is exceeding supply. In this scenario, the industry needs a lot of investment.
A study by Technopak says that in next 10 year from 2011 to 2020, the industry is likely to do a capex of USD 70 billion and achieve a target of USD 220 billion size of the industry by 2020.
It is a huge number. The government’s move will definitely strengthen and motivate the industry players to go for the large capex.
Q: How does this move or fund materially benefit your company given your outlined capex plans?
A: We are majorly through with our large capex. We are targeting only the balancing or marginal capex of about Rs 400 crore per annum for the next two-three years.
Definitely, we will get the benefit of the scheme for whatever new capex we do. The large backlog of interest subsidy would also get released with the new budget provision.
Q: What is the total debt of Alok Industries right now?
A: Alok’s standalone debt in the books is about Rs 9,500 crore. If we add another Rs 900 crore of the consolidated, the total consolidated debt is expected to be about Rs 10,500 crore as on March 2011.
Q: You had indicated that a part of the debt restructuring could involve you selling the real estate pockets and hence bringing down your debt equity with the money that you raised. Have you made any progress on that front?
A: It is not a part of the debt restructuring. It is a part of our overall consolidation of the group businesses. We have identified certain businesses in the group which are not core to our main businesses.
We are slowing exiting out of those businesses, one of which is realty. It will release a lot of cash to repay the debt at the subsidiary level and repayment of the Alok’s debt of another Rs 400-500 crore.
The next two years will be a year of consolidation for the group. We would be focusing on our core business that is textile. Within textile, we have identified three businesses like apparel fabric, home textiles and polyester yarn. These businesses will grow at least double or three times in the next four-five years.
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