Alok Ind secures Rs 7,000 cr from RIL and two banks for growth and debt repayment

In 2020, Reliance Industries, in collaboration with JM Financial Asset Reconstruction Company, acquired Alok Industries through the Insolvency and Bankruptcy Code.

Alok Industries reportedly secured Rs 7,000 crore in funding from its parent company, Reliance Industries, as well as two lenders, Axis Bank and State Bank of India.

The textile manufacturer obtained Rs 3,700 crore through term loans and working capital loans from banks, while Reliance Industries contributed Rs 3,300 crore through NCCRPS (non-convertible cumulative redeemable preference shares). The purpose of raising funds was cited as expansion and settling high-cost debt.

In 2020, Reliance Industries, in collaboration with JM Financial Asset Reconstruction Company, acquired Alok Industries through the Insolvency and Bankruptcy Code.

State Bank of India and Axis Bank extended a nine-year term loan of Rs 1,750 crore each, with a two-year moratorium included. Reportedly, Alok Industries will commence payments from January 2026.

The loan obtained by Alok Industries is backed by a corporate guarantee from Reliance Industries. The raised capital will be utilised to repay the high-cost debt of Rs 4,800 crore incurred by Alok Industries during its acquisition by Reliance Industries. The new loan carries a 9% interest rate and is linked to the marginal cost of lending rate (MCLR) of the respective banks.

Axis Bank and State Bank of India provided non-fund-based limits and working capital loans of Rs 100 crore each.

The NCCRPS has a structure that entails a 9% dividend and a redemption period of 20 years.

Alok Industries is said to have a direct synergy with Reliance Industries’ retail ventures, with the textile products manufactured by AIL being marketed through Reliance Retail’s Fashion and Lifestyle segments.

According to a Care Ratings report, Alok Industries’ liquidity is predominantly supported by its parent company, RIL, which extended credit support during periods of losses in FY23 and 9MFY24. The report states that this support resulted in positive cash flow from operations, ensuring timely debt repayments. CARE Ratings anticipates AIL to generate sufficient cash accruals to meet its external debt obligations.