A joint forum of banks, led by State Bank of India, has decided to convert the loans extended to the integrated textile company Alok Industries into a 65 per cent stake by invoking the strategic debt restructuring optio. The company will issue fresh equity shares worth about Rs 2,558 crores by March as the banks convert their debt into equity, wielding the loan-recovery weapon the RBI has armed them with.
As of the September quarter, the company’s total standalone debt was Rs 12,642 crores. One of the largest exporters of home textiles, Alok Industries has been in trouble the past few years as it ventured into retailing and building brands in the domestic and international markets with the launch of H&A retail outlets to sell home textiles and readymade garments. However, with debt piling up and intense competition in the domestic market, it decided to exit the retail venture and focus on the export market.
In the September quarter, the company registered a standalone loss of Rs 242 crores against a net profit of Rs 45 crores in the same period last year. Net sales during the quarter fell 15 per cent. Under Reserve Bank of India rules, banks can convert a part of their debt for a majority stake in a defaulting company and find a suitor within 18 months.
www.alokind.com/
