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Volatile rupee hits Alok Industries' bottom-line
04
Dec '13
The continuous volatility in the rupee saw Alok Industries reporting a steep decline of 66.5 per cent in net profit for the quarter ended September 30, 2013 at Rs 96.98 crore as against Rs 289.62 crore in the corresponding quarter of previous fiscal.

Alok Industries, India's leading fully integrated textile company with a dominant presence in the Cotton and Polyester segments, reported a foreign exchange loss of Rs 74.57 crore in the September quarter as against a gain of Rs 67.05 crore in the year ago period. From around 59.5/USD on July 1 to 68.85 on August 28, the rupee fell 13 per cent and turned out to be the worst performing Asian currency, causing huge dent on the financials of the company.

Also, weighed down by rising input costs, the operating EBITDA of the company fell 4.5 per cent at Rs 879.76 crore from Rs 921.65 crore in the year ago period.

The company performed well in terms of revenue growth in Q2 FY14, growing at a pace that was not only faster than the corresponding quarter but also than any other quarter in the previous year, although net profit declined on account of higher costs and rupee’s depreciation.

Alok Industries’ revenues grew 12.5 per cent at Rs 3,740.67 crore in Q2 FY’14 from Rs 3,324.77 crore in Q2 FY’13. Revenue break-up showed that the company reported a growth in both the domestic and international sales. Growth in domestic revenues was 6.7 per cent during the quarter, but internationally it was 30 per cent.

The situation of Alok Industries clearly indicates that despite the improvement in demand in domestic as well as international markets, the bottom-line continues to stay under pressure as such companies shy away from raising prices amidst global economic slowdown.

Fibre2fashion News Desk - India

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