Reliance's ₹5,000-crore IBC plan saved Alok Industries and restarted sales growth

Alok Industries, one of India's largest integrated textile makers, entered insolvency in July 2017 after SBI filed a plea; lenders claimed over ₹23,000 crore. The Ahmedabad NCLT admitted the company under IBC as one of the country's first big default cases, and by April 2018 it was close to liquidation.

The first auction failed: only 72% of financial creditors backed the ₹5,000-crore joint plan of Reliance Industries and JM Financial Asset Reconstruction Company, short of the then-required 75%, and the bid was close to Alok's ₹4,000-crore liquidation value. After the IBC approval threshold was cut to 66%, the tribunal allowed a second round, and on March 8, 2019 the same ₹5,000-crore plan was approved for Alok's plants at Silvassa, Vapi, Navi Mumbai and Bhiwandi.

Implementation followed in 2020: RIL took 37.7% through a ₹250-crore equity allotment plus preference shares, and the board was reconstituted in September 2020 with RIL at 40% and JM ARC at 35%. Operations recovered — FY22 sales grew 91% to ₹7,151 crore with ₹612-crore EBITDA and a ₹161-crore cash profit — though the textile downcycle then brought fresh losses in FY23.

Alok avoided liquidation; FY19 swung from an ₹18,207-crore loss to a ₹2,284-crore profit, and FY22 sales rose 91% to ₹7,151 crore with ₹612-crore EBITDA.

RIL-JM ARC bid near liquidation value, keeping plants and brands alive instead of breaking them up.

Lowering the IBC approval threshold to 66% let creditors approve a plan they had already backed at 72%.

The ₹250-crore equity infusion and preference issue recapitalized a company whose equity had been wiped out.

68,000 tonnes of yarn and 170,000 tonnes of polyester capacity gave the new owners a base to restart sales.

A rescue bid near liquidation value can work when the buyer sees value in plants others discount — yet fixing capital is only the start; cyclical markets can push the rescued firm back into losses.

By 2023 Reliance held about 40% and JM Financial ARC 35%. The FY22 recovery — sales up 91% to ₹7,151 crore — proved the plants could run again, but the company posted losses again in FY23 as the textile cycle turned, with accumulated losses of about ₹21,000 crore as of December 2022. The turnaround was real but incomplete: a fixed balance sheet and restarted operations under a strong owner, without yet a durable run of profits.