Alok Industries Limited, an Indian certified Textile manufacturing company that has its roots in Mumbai and export business spread over 90 countries, faced a major setback in 2017. Failure to repay the debt of approximately INR 300 Billion to the lead lender State Bank of India, initiated insolvency proceedings against the textile giant. To make things run hassle-free, the National Company Law Tribunal (NCLT), which adjudicates issues relating to Indian companies, approved the bid of Reliance Industries Limited which was in consortium with JM Financial Asset Reconstruction Company, to buy Alok Industries in the bankruptcy process.
An initial amount of INR 5 Billion has been invested by Reliance Industries, which comprises of INR 2.50 Billion towards equity shares and INR 2.50 Billion for optionally convertible preference shares. Reliance Industries reported that the bid was made for INR 50.5 Billion in accordance with the approved resolution plan by NCLT, of which Reliance has already infused INR 5 Billion. Reliance expects to raise the remaining fund from bank loans. In pursuance to this acquisition, RIL will acquire an equity share capital of 37.7 percent in Alok Industries.