Alok Industries (AIL) has informed the stock exchanges that Reliance Industries (RIL), which in consortium with JM Financial Asset Reconstruction Company had won the right to buy it through the insolvency process, has infused Rs 500 crore into its equity.
In a communication to the stock exchanges on Friday, the bankrupt textile company said RIL was accordingly allotted 83.33 crore equity shares of Rs 1 each at a premium of Rs 2 a share.
Reliance Industries was also allotted 250 crore optionally convertible preference shares of the face value of Rs 1 each on a preferential basis.
The development comes weeks after the lead banker State Bank of India (SBI) reported asking RIL to complete its proposed takeover of the bankrupt textile company by paying up its equity contribution to complete the long pending resolution process.
RIL, the senior partner in the consortium that secured right to buy Alok Industries in the bankruptcy process, is reportedly in talks now with the lenders to fund the majority of the transaction through loans.
The lead lender SBI had in June 2017 initiated the insolvency proceedings against Alok Industries, which owed around Rs 30,000 crore to financial creditors and around Rs 624 crore to operational creditors.
The Ahmedabad bench of the National Company Law Tribunal (NCLT) had in March last year approved the bid of RIL-JM Financial consortium for Alok for Rs 5,050 crore. Of this, RIL is looking to raise about Rs 4,550 crore through bank loans while agreeing to infuse around Rs 500 crore as equity into the bankrupt textile company.
In a separate communication on Friday, Reliance Industries informed the stock exchanges that it has infused funds into the equity of Alok Industries, comprising Rs 250 crore towards equity shares and Rs 250 crore for optionally convertible preference shares.
RIL said the funds infusion was “in accordance with the approved Resolution Plan” and that Alok has accordingly allotted the equity shares and optionally convertible preference shares on Friday.
“Pursuant to this acquisition, RIL will hold 37.7% equity share capital of Alok,” said the Mukesh Ambani-controlled conglomerate in its communique to the stock exchanges.
The Mumbai headquartered integrated textile manufacturer Alok Industries has interests in polyester and cotton segments and has a product suite comprising of cotton yarn, apparel fabrics, bed linen, terry towels, embroidery, garments and polyester yarn. It also has representative offices for sales promotion in Sri Lanka and Bangladesh.
As against suffering losses of Rs 3,503 crore on a turnover of Rs 8,326 crore in 2016-17 and incurring losses of Rs 18,207 crore on a turnover of Rs 5,382 crore in 2017-18, Alok Industries has reported a turnaround by posting a profit of Rs 2,284 crore on a turnover of Rs 3,219 crore in 2018-19.
