Alok Industries to shut 45 retail stores

Textiles company Alok Industries is planning to shut 45 out of the 137 exclusive retail outlets it operates under the H&A brand by next month as it looks to improve bottomline and focus on its core business of manufacturing.

“If this rationalisation exercise doesn’t work out well, we will start folding the retail division,” said Dilip Jiwrajka, managing director, on an earnings call.

The company also runs 154 shop-in-shop (SIS) format outlets on franchisee basis, which are profitable and are hence likely to be continued.

“The rental component associated with exclusive outlets is making a big dent in profitability,” said Jiwrajka.

Currently, the company occupies around 230,000 square feet retail space.

According to Crisil Research, after the non-profitable exclusive outlets are closed, the management will not make any further investments in retail.

It said Alok’s domestic retail business contributes less than 10% to the company’s consolidated topline and hence the rationalisation of the retail division may not have any major impact.
Focusing primarily on return on capital employed, the company had earlier started exiting non-core business, primarily real estate. With a debt of Rs12,900 crore on its books, it plans to raise Rs2,500 crore over two years.

“Around Rs1,500 crore will be raised this fiscal. We have negotiated transactions worth `600 core and received Rs150 crore in advance payments,” said Jiwrajka.

This year Alok sold eight floors Peninsula Business Park project in Mumbai for an estimated `400-450 crore and three out of the eight floors at the Ashford Centre in Lower Parel.