Alok Industries Ltd is scheduled to buy 60 percent shares of Czech firm Mileta International for 13.96 million euros (US$17.81) in order to enforce its apparel and home textile business. It has further retained the option of buying another 19.6 percent shares.
Managing Director of Alok Industries, Dilip Jiwrajka informs that Mileta is having wonderful design capabilities and products which we will use along with our cost-effectiveness to target international markets and brands.
The deal is expected to saturate in three months and the operations in 12 months after the takeover. Mileta which is worth 18 million euros, prepares shirting fabrics, handkerchiefs and a range of home furnishing.
Alok will become owner of brands like Wall Street, Osaka while licensed rights for Daks handkerchiefs because of the deal and the company intends to use Mileta's brands to expand its retail business. It plans to increase its number of stores from two to nine by year end.
Sonal Shrivastav, senior analyst with Religare emphasized that after capacity increase they need to enhance margins through increase in production up to 10-12 million metres of high value fabric annually for which they have the capacity now.
She further added that fabric makers get the profit of US$1.75 per metre but with brands and specialized products capability the margin can increase to $3-4 per metre. Alok Industries has enhanced its capacity to 82.5 million, a jump of 73 percent in the last three years.
In July, the company bagged an order to supply 5 million metres of value-added flannel shirting to Teviz Textil Vizela SA, a Portugal based shirt maker for a year.