Alok Industries outlines strategies for increasing operating margins

27 Jan '09

5 min read

We prodded him further by asking him, the strategies adopted by Alok to increase contribution of operating margins. His replies were very expansive when he said, “The company has adopted many measures to increase contribution like”;

Backward Integration into Cotton Spinning:
The Company has 251712 spindles and 936 rotors with an installed capacity of 33300 tpa and will commence the Phase IV capacities of 48000 spindles and 2856 rotors with an installed capacity of 25200 tpa by March 2009. This will meet almost 60% of the total yarn requirement of the company. The backward integration will reduce the cost of manufacturing by about Rs.2/- per kg and help in ensuring high quality of yarn.

Backward Integration into Polyester Spinning:
The company has backwardly integrated into manufacturing of POY, the raw material for texturised yarn through the Poly Condensation Plant route with an installed capacity of 200750 tpa. The backward integration will reduce the cost of manufacturing by Rs. 3/- per kg and help in enhancing the product line and value addition.

Captive Power Plant:
The company out of its planned captive power plant of 50 MW at Silvassa, has commissioned 28 MW and balance is likely to be commissioned by March 2009. The plant is dual fired with furnace oil and gas. The byproduct i.e. heat generated by the power plant is utilized in Water Chilling Plant for air conditioning of the plant, thereby bringing down the consumption of electricity.

Shift towards Value added products:
The company's per unit realization across its products is improving because of its initiative to move more towards value added products such as; Organic Cotton based products and Institutional work wear with special finishes like Flame Retardant, Water Repellent, Anti-Bacteria, Vitamin –E finish, Ice Finish fabric, Anti Static, Aroma finish, Mosquito Repellent, etc., which have a distinct market and application such as Defense, Oil exploration, Hospitals, Hotels, Auto Industry, etc.

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