The pricing of the preferential allotment at Rs 20 is suprising as it is at a 54 per cent premium to the current market price. Company officials say, Rs 20 was considered to be a benchmark as the rights issue last year was priced at that price. ``If we had priced the preferential allotment in tune with the market price, it would have sent a wrong signal to both our shareholders and the FIIs. They would have thought we're averagingour cost by booking profits at the time of the rights issue and picking up the shares now at a much lower cost,'' points out a top-ranking official of the company.

The company is tight-lipped about the impending private placement with FIIs and financial institutions. The official refused to divulge the names of the FIIs and domestic financial institutions who had been approached. ``The negotiations are at a preliminary stage and, hence, I cannot disclose anything,'' he says. He, however, adds that the FIIs and FIs together could pick up around 10 per cent stake in the company. At present, there is no FII/FI holding in the company although some domestic institutions have a debt exposure.

Company officials say the downtrend in the textile industry notwithstanding, Alok Textile Industries hopes to clock a turnover growth of around 17-18 per cent in fiscal 1997-98. Compared with Rs 167.97 crore during 1996-97, Alok Textiles hopes to post a sales turnover of Rs 195 crore. Net profit is expected to grow byaround 28 per cent to Rs 8 crore from Rs 6.23 crore last year. ``The fact that we are a mutli-divisional company has helped us to overcome the downtrend in the industry,'' notes the official.

Alok Textiles has four divisions -- weaving, knitting, process house for both woven and knitted fabric and texturising of polyester yarn. Of these, the weaving and knitting divisions have contributed to the rise in turnover.

``However, it is the state-of-the art process house where the real gains have come as it has helped us improve our margins considerably,'' says the official. Besides, the completion of the expansion projects in the first-half of 1997-98, have also added to the turnover growth. ``The real growth will come next year when we hope to clock a turnover of Rs 250 crore,'' he adds.

Even on an enhanced equity of Rs 12.50 crore, the earning per share is expected to rise to Rs 6.4 compared with Rs 5.5 last year. However, an earnings dilution is on the cards with the company planning a private placementof equity shares to FIIs and FIs.