InvestorQ : Why is Reliance Industries acquiring a stake in Alok Industries, which is a sick textile company?
Anu Biswas made post

Why is Reliance Industries acquiring a stake in Alok Industries, which is a sick textile company?

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Neelam Naik answered.
12 months ago
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Reliance Industries acquired a 37.7% stake in textile manufacturer Alok Industries for a consideration of Rs.250 crore. It may be recollected that Reliance had jointly bid for Alok Industries along with JM Financial Asset Reconstruction Co. Alok Industries was auctioned under the insolvency and bankruptcy law by lenders to recover their unpaid loans. The Ahmedabad bench of the NCLT had approved the joint bid in the year 2019. A total of 83.33 crore shares of face value Rs.1 were purchased from Alok at a premium of Rs.2 taking the total consideration to Rs.250 crore in cash. In addition, RIL was also allotted 250 crore optionally convertible preference shares at Rs.1, taking the overall consideration to Rs.500 crore. Alok Industries has a product portfolio consisting of cotton yarn, apparel fabrics, bed linen, terry towels, embroidery, garments etc. For RIL, this gels perfectly with its aggressive retail plans.

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Nair Radha answered.
10 months ago
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RIL along with JMFARC trust will hold approximately 75%stake in Alok Industries in the coming weeks.250crs OCPS@9% is to safegaurd any hostile takeover by competitors.Total shares currently held is 83.3 crs(not from the capital reduction)but apart from the 137crs after capital reduction.Now there is another 171 crs shares to be alloted to JMFARCtrust as per the RP,which takes RIL JMFARC promoters with 72% stake(6.5% already revoked by JMFARC)The whole idea is to merge the company with one of the RIL subsidiary(RRL)and act as a feed manufaturer for the Reliance brands,where depenency of external sources would be minimum.Stay tuned.Reliance is picking up shares from the open market slowly and steadily
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