I would like to thank you all for your continuous support and trust in Alok Industries.
Despite the challenges faced by the company in the last few years, we remain optimistic
for a resolution that
will help us rebuild and regain our position in the industry. In terms of capacity and
potential, we continue to be India's largest fully integrated textile company with a
dominant presence in the cotton and polyester value chain. We continue to be driven by
best global practices and a vision for bringing about a positive change. Our
state-of-the-art manufacturing facilities built over the years continues to give us
strength and confidence in our ability to fulfill customer demand at all times. Our major
challenge remains the current debt situation and the corresponding working capital crunch,
which has further affected the utilization levels of all the divisions and overall
performance of the company.
In terms of the external market scenario, FY 2016-17 saw a slow pickup in the world
economy with growth projected at 3.4% up from 3.1% in the previous year. Corresponding
growth in emerging market and developing economies reached 4.3% from 4% in the previous
year. India emerged as one of the fastest growing major economy at 7.1% GDP growth in
2016-17 despite a temporary slowdown due to demonetization. For the textile industry, one
of the concerning factor is recent policies implemented by China regarding import of yarn
& cotton which has brought the industry on back foot. China has recently reduced
import of cotton & yarn which has been primary market for Indian textile spinning
companies and these recent restrictions are hurting the industry growth. Raw material for
polyester became expensive due to levying of anti-dumping duty by the government and hence
raised the manufacturing cost. Shortage of raw material due to regular breakdowns in the
plants producing PTA also resulted in lower capacity utilization.
Major reforms like demonetization had short-term impact in the form of slow growth but
holds the potential for long-term benefits in the form of reduced corruption, greater
digitalization of the economy, increased flows of financial savings, better tax compliance
and greater tax revenues all of which could eventually lead to higher GDP growth.
GST is another important landmark in the Indian economy. It will create a common Indian
market, improve tax compliance and governance, and boost investment and growth. GST will
catalyze in making the unorganized segment of the textile value chain more organized and
will bring them under the GST ambit to avail input tax credit. This will help in
streamlining the Indian textile value chain. However, the recently released rates for
textile industry still didn't answer to the Industry's long said demand of duty neutrality
at fiber and yarn level.
The special package for the textile and apparel sector released by the Union Government
last year is a strategic decision that would strengthen the Indian textile and apparel
sector by improving its cost competitiveness in the global market. Over the medium run,
the implementation of the Goods and Services Tax (GST), follow-up to demonetization,
effective implementation of the special package and enacting other structural reforms is
expected to take the economy towards its true potential and make business environment more
conducive for the industry.
As mentioned earlier, the overall performance of Alok industries in recent past has
been impacted by low plant utilization levels due to unavailability of required working
capital. However, once working capital requirement is addressed all the business divisions
of Alok are capable of running on self-sustaining basis and there are good opportunities
for each division to grow. In the polyester division, Alok has developed a very good
reputation for quality and developed a good brand name (Alok) for its polyester yarn in
the domestic and export market. The Company has developed strong network of agents and
distributors for marketing of its products both in the domestic and
export markets. Alok has a well-established Home Textiles division. Its large scale and
integrated operations, high product quality, competitive pricing and timely delivery
schedules has enabled it to add in its portfolio of customers large reputed global
retailers, and importers over the years. The apparel fabric segment company is the largest
revenue generator for the company. Alok has been expanding its apparel fabric capacities
i.e. weaving, knitting and processing from time to time and has emerged as the largest
supplier of Apparel fabrics. Alok is also offering more value added products than before
and its consumer base includes globally renowned brands. Overall Alok's position in terms
of its operational capabilities are good technically and sustainable for each of the
divisions and capable of growing once the debt resolution is achieved.
I would like to take this opportunity to thank all our stakeholders - our financers,
our shareholders, our employees, our customers, our vendors and our well- wishers across
the country and the globe for their tremendous dedication, commitment and contribution
towards strengthening Alok over the years. We are continuously working forward to fulfill
our mission of generating maximum value for our stakeholders. I also wish to express my
gratitude to fellow Board members for their guidance and direction; and our shareholders
for placing their faith in us. I urge you all to continue to repose faith in us as we
strive to resolve current issues and turn the corner for a brighter future.
Yours Sincerely
S.K. Bhoan
Chairman