Alok Industries has raised Rs 7,000 crore from parent Reliance Industries and two lenders – Axis Bank and State Bank of India, according to various disclosures by the company and people with knowledge of the matter.
The textile manufacturer raised Rs 3700 crore in the form of term loans and working capital loans from banks, while Reliance Industries infused Rs 3300 crore in the form of non-convertible cumulative redeemable preference shares (NCCRPS). Funds are raised for expansion and repaying high-cost debt, the people said.
Reliance Industries, along with JM Financial Asset Reconstruction Company, acquired Alok Industries under the Insolvency and Bankruptcy Code in 2020.
State Bank of India and Axis Bank provided Rs 1750 crore nine-year term loan each, including two years of moratorium. Effectively, the payment by Alok Industries will start from January 2026, the people cited above said.
The loan raised by Alok Industries has a corporate guarantee from Reliance Industries. The proceeds from the borrowing will be used to repay high-cost debt of Rs 4800 crore raised by Alok Industries when it was acquired by Reliance Industries. The new loan is sanctioned at 9% and will be linked to the marginal cost of lending rate (MCLR) of respective banks, people cited above said.
Axis Bank and State Bank of India have provided non-fund-based limits and working capital loans of Rs 100 crore each.
The NCCRPS is structured such that it offers a 9% dividend and would be redeemed in 20 years.
Alok Industries has a direct synergy with RIL‘s retail ventures, where textile products manufactured by AIL are also marketed through Reliance Retail‘s Fashion and Lifestyle segments.
According to a rating report by Care Ratings, Alok Industries’ liquidity is primarily driven by support from its parent, RIL, which provided credit support when it incurred losses in FY23 and 9MFY24. “This has resulted in positive cash flow from operations for ensuring timely debt repayments,” it said. CARE Ratings expects AIL to generate adequate cash accruals to service its external debt obligations.
ET has sought response from Reliance Industries.
