Alok Industries which makes cotton and polyster yarn, apparel fabric, garments and home textiles plans to separate its operations into two or three units that can be individually sold to financial investors, as it struggles under the weight of debt. As of March 31, 2015, the textile maker had Rs 15,347 crores of debt, which, adjusting for non-fund based exposure, would come close to Rs 20,000 crores now.
The main lenders include State Bank of India and IDBI Bank. It is believed that Alok Industries’ creditors are currently in the process of appointing an external auditor to conduct a forensic audit of the company’s books.
Lenders to Alok Industries decided on a strategic debt restructuring (SDR) of the company in November 2015, the company said in a stock exchange notification. In January this year it said, lenders planned to acquire 65 per cent of the company by converting debt to equity under SDR. SDR, introduced by the Reserve Bank of India (RBI) in June 2015, allows banks to convert a part of a defaulting borrower’s debt into majority equity and assume operational control.