Reliance IndustriesBSE -1.17 % Ltd (RILBSE -1.17 %) may be looking at buying part of textile maker Alok Industries LtdBSE 4.77 %, three people familiar with the development said.
The interest may be focused on the polyester yarn unit, they said. Alok IndustriesBSE 4.77 % is one of 12 large accounts identified by the Reserve Bank of India in June for bankruptcy proceedings after having defaulted on loans.
“All the business is not of interest to Reliance because it would not add synergies, but one or two divisions may be value accretive to it,” said one of the persons cited above.
Reliance Industries did not respond to an email seeking comment. Alok Industries is a fully integrated textile unit with four core divisions — cotton yarn, apparel fabric, home textile and polyester yarn.
The company has defaulted on more than Rs 20,000 crore of loans as its diversification both locally and globally ran into rough weather. It’s now managed by insolvency professional Ajay Joshi, who couldn’t immediately be reached for comment.
“We are informed that Reliance Industries has shown interest in part or all of the unit of Alok and discussions are on with the company promoters and the resolution professional,” said the second person.
Joshi had invited bids for Alok’s assets from applicants with a minimum net worth of Rs 500 crore and assets under management of Rs 3,000 crore. October 12 was the last day for the bids.
Alok’s lenders had attempted to revive the company through a strategic debt restructuring (SDR) scheme. This allows lenders to convert part of their debt into equity and sell it to a new promoter. This got stuck following an order by the Bombay High Court that stayed the sale of assets and a change in the company’s equity structure.
The court issued the order following a petition filed by HSBC on behalf of a few unsecured lenders to settle dues amounting to $ 55 million. The account was classified as non-performing in the books of the bank by November 2016.
Alok Industries was admitted by the National Company Law Tribunal’s Ahmedabad bench on July 19, which gives the lenders and the promoters, the Jiwrajka family, time till the middle of January to arrive at a resolution plan.
They will get another 90 days to come up with a workable scheme, failing which the assets of the company will be liquidated. The company posted a loss of Rs 3,502 crore on revenue of Rs 8,326 crore in the year ended March.
