Alok Ind may launch IPO for retail biz

Company to spend Rs 40 crore on 100 new outlets

MUMBAI: Alok Industries, a Rs 2,160-crore textile company, is  planning an initial public offering (IPO) for its retail business to raise Rs 500-600 crore, sources said.

Alok, which entered the $15-billion organised retail sector in the country in 2006, operates 23 retail stores called ‘H&A’, short for Home & Apparel, in Mumbai, Bangalore, Vapi, Hyderabad, Ahmedabad, Silvassa and others.

A few days ago, chief financial officer Sunil Khandelwal had said that Alok would set up 100 new stores in FY09 with an investment of Rs 40 lakh per store. So the total investment marked is Rs 40 crore.

The expansion would be funded through a mix of internal accruals and debt. By 2010-11, the company hopes to take the number of stores to 400. The retail business presently contributes 1% to the company’s turnover.

In April, Alok’s board had approved the spin-off of the H&A business into a separate subsidiary called Alok Homes & Apparels.

“The fact that Alok is heavily increasing the number of stores means it wants to generate awareness about its retail presence and list the business as a separate entity,” said a source.

The retail division, however, is not doing too well. An H&A store in Pune shut down recently and a few in Mumbai too may shut shop soon.