RIL buys 37.7% stake in textile manufacturer Alok Industries for Rs250 cr
02 March 2020
Reliance Industries Ltd (RIL) on Saturday said it has acquired 37.7 per cent stake in textile manufacturer Alok Industries Ltd for Rs250 crore, following approval from the Ahmedabad bench of the National Company Law Tribunal and the Competition Commission of India
Reliance Industries Ltd (RIL) jointly with JM Financial Asset Reconstruction Co Ltd had bid for acquiring Alok Industries that was auctioned under the insolvency and bankruptcy law by lenders to recover their unpaid loans.
"Please note that in accordance with the approved Resolution Plan, ALOK has today allotted 83.33 crore equity shares of Re1 each at a premium of Rs2 per equity share for cash at a total consideration of Rs250 crore to RIL," Reliance Industries Ltd (RIL) said in a regulatory filing.
Pursuant to this acquisition, RIL will hold 37.7 per cent equity share capital of Alok Industries, it added.
Also, in accordance with the approved resolution plan, Alok Industries has allotted 250 crore 9 per cent Optionally Convertible Preference Shares (OCPS) of Re1 each for cash at par, for a total consideration of Rs250 crore to RIL.
The NCLT had, in March 2019, approved the sole RIL-JM Financial ARC bid for Alok for Rs5,050 crore. RIL had planned to raise about Rs4,550 crore through bank loans while infusing Rs500 crore equity in the company.
Incorporated on 12 March 1986, Alok Industries is a Mumbai-based is an integrated textile manufacturer with interests in the polyester and cotton segments.
It manufactures a range of textle products, including cotton yarn, apparel fabrics, bed linen, terry towels, embroidery, garments and polyester yarn. The company has representative offices for sales promotion in Sri Lanka and Bangladesh. It posted a profit of Rs2,283.82 crore on a turnover of Rs3,128.76 crore in 2018-19.
"Approval of National Company Law Tribunal, Ahmedabad Bench and Competition Commission of India have been received," the filing said.
SBI, the lead bank, had initiated insolvency proceedings against Alok Industries in June 2017. It was among the 12 accounts with outstanding loans greater than Rs5,000 crore that the Reserve Bank of India (RBI) asked banks to refer to the NCLT process.
Alok Industries owed lenders a total of Rs30,000 crore.