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Shares of Alok Industries zoomed up and hit their upper circuit after the promoter Reliance Industries infused ₹3,300 crore by subscribing to preference shares issued by the textile company. The company issued and allotted 3,300 crore non-convertible redeemable preference shares with a coupon of 9 per cent to RIL, following board approval in November and the approval of shareholders last week.
Most of the funds raised will be used by the company to pay down its debt.
The stock of Alok Industries opened at ₹21.65 on the NSE and was under pressure in early trades. After an exchange filing about the issue of preference shares to RIL, the share price turned positive and it soon hit the 20 per cent upper circuit, ending at ₹25.80.
At the end of September, RIL held around 40 per cent take in Alok Industries.
As its promoter, RIL has been extending a lot of financial comfort. Last month it executed a deed of guarantee in favour of the State Bank of India for a term loan of ₹1,750 crore that had been sanctioned to Alok Industries. Prior to that, it had signed a similar guarantee with Axis Bank for a similar amount.
In 2020, RIL along with JM Financial Asset Reconstruction Co had acquired Alok Industries under bankruptcy process. Alok Industries reported a loss of ₹175 crore in the September quarter, a little lower than the loss of ₹192 crore a year ago. In the half year to September it reported a loss of ₹401 crore, higher than the loss of ₹333 crore a year ago.
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