Insolvency Proceedings Initiated Against Former Directors of Alok Industries

In a dramatic turn, insolvency proceedings have been initiated against the erstwhile directors of Alok Industries, marking a significant escalation in the company's financial woes.

The Small Industries Development Bank of India (SIDBI) has taken assertive legal action against these guarantors, with Dr. Ajay Kummar Pandey, a distinguished advocate of the Supreme Court of India, spearheading the effort by filing an application under Section 95 of the Insolvency and Bankruptcy Code (IBC) on behalf of SIDBI in the National Company Law Tribunal (NCLT) in Ahmedabad.

Dr. Pandey, renowned for his expertise in handling complex and high-profile financial matters, brings his formidable legal acumen to bear on the case. With a track record of navigating intricate legal landscapes, Dr. Pandey is known for his tenacity and diligence in pursuing justice for his clients in the highest echelons of the Indian judiciary.

His application on behalf of SIDBI seeks to address the daunting debt exceeding Rs. 35 crore owed by Alok Industries, which had solicited financial aid from various institutions, with the directors providing guarantees for these loans.

The biggest challenge in filling this application was finding a way to deal with the issue of limitation under the law. The biggest lenders were of the opinion that the petition can't be filled on account of exceeding the limiation for the same. But, we insisted and found a way to deal with it, said, Dr. Pandey.

Alok Industries, once a formidable player in the textile sector, has been mired in financial quagmire for a considerable period. The company's struggle to meet financial obligations has led to defaults on loans guaranteed by its directors. This latest move to initiate personal insolvency proceedings underscores the severity of the situation facing Alok Industries, even after it was taken over by Reliance Industries (RIL) and JM Financial Asset Reconstruction (JM Financial ARC) in 2020 through the bankruptcy law auction. 

   

The NCLT's forthcoming decision regarding the insolvency application will be closely monitored by stakeholders, including creditors, investors, and industry observers. The fallout from these proceedings is expected to resonate widely, affecting the company, its stakeholders, and the broader financial landscape.

As the legal proceedings unfold, attention will also be drawn to the erstwhile directors' alleged involvement in offshore scandals and bribery accusations. Named in the Pandora Papers, the erstwhile directors of Alok Industries have faced scrutiny for their purported roles in establishing offshore entities while defaulting on substantial bank loans in India.

Records show that between 2010 and 2014, brothers Ashok Jiwrajka, Dilip Jiwrajka, and Surender Jiwrajka set up four firms in the British Virgin Islands: Triumphant Victory Holdings Limited; Alok Worldwide Ltd; Alok International Ltd; and Alok Overseas Limited.

The Jiwarjika-led Alok Industries was one of 12 companies identified by the Reserve Bank of India as among the country’s biggest loan defaulters. The company owed Rs 29,000 crore to Indian banks.

Moreover, recent arrests by the Central Bureau of Investigation (CBI), implicating government officials and an associate of Alok Industries in a bribery case related to matters pending at the Ministry of Corporate Affairs, further tarnish the company's reputation and add layers of complexity to its legal challenges.

This multifaceted ordeal underscores the critical need for effective debt resolution mechanisms and highlights the far-reaching implications of corporate malfeasance. As the saga unfolds, stakeholders brace for the outcome, mindful of the broader lessons and implications for the integrity of the financial system.

Alok Industries Limited, is an Indian Textile manufacturing company based in Mumbai. It Is Owned By Reliance Industries . Alok Industries Limited is one of India’s largest vertically integrated textile company offering end-to-end solutions through its five core divisions: Home Textiles, Cotton Yarn, Apparel Fabric, Garments, Technical Textiles, Textile Accessories and Polyester Yarn. Its main business involves weaving, knitting, processing, home textiles, ready made garments and polyester yarns. It exports 26% of its products to over 90 countries in the US, Europe, South America, Asia and Africa. It's customer base includes multiple renowned brands like Levi's , Walmart , Zara , Calvin Klein , H&M, Tommy Hilfiger , PVH , Tesco , Costco Wholesale , Bestseller , Bershka , Kohl's , NEXT , Pull&Bear , Reliance Retail And Many More. Alok Industries Also Have A Majority stake in a Czech republic incorporated textile company Mileta which supply its product across the europe region. The export represents 90% of the entire production. Alok Industries have Global Organic Textiles (GOTS), OEKOTEX, Made In Green, Fairtrade, Egyptian Cotton certified, amongst others. including (ISO 9001), Environment Management System (ISO 18001), Occupational Health and Safety System (OHSAS 45001), MADE IN GREEN - STeP certification, and OKEOTEX 100. 

 

Founded in 1986 as a private limited company. In 1989, the inauguration of Their first polyester texturizing plant marked a significant milestone, By 1993, They had transitioned into a public limited company.

Over the decades, They have diversified into weaving, knitting, processing, home textiles, and garments.

Alok Industries has shutdown all its direct retail stores(Store 21, H&A). However, they have started selling Some Of their products On Their parent Reliance backed Ajio And Amazon. They Also Supply Their Products To Reliance Retail.

As per the latest Annual Report (2022), total sales of the Company increased by 91.44% to Rs. 7,150.91 crore from Rs. 3,735.31 crore in the previous year. Domestic sales increased by 96.22% to Rs. 5,451.37 crore from Rs. 2,778.11 crore in the previous year. Export sales increased by 77.55% to Rs. 1,699.54 crore from Rs. 957.20 crore in previous year. Operating EBITDA (before exceptional items) was positive at Rs. 611.61 crore as compared to negative EBITDA (before exceptional items) of Rs. 432.63 crore in the previous year. Operating Profit Before Tax (PBT) (before exceptional items) was negative at Rs. 184.18 crore as compared to negative PBT (before exceptional items) of Rs. 1,190.78 crore in the previous year.

Alok’s export business has increased to Rs. 1699.54 crore in the current year as against Rs. 957.20 crore in the previous period representing growth of 77.55%.

Reliance Industries Hold 40.01% Stake While JM Financial (Acting As PAC with RIL) Through Its Subsidiary Holds 35% Stake In It. Reliance Industries also have 9% optionally convertible preference shares and Non Convertible redeemable preference shares worth 3300 crores. making it a subsidiary of Reliance.

The paid-up Share Capital of the Company as on 31 March 2022 was 496.52 crore shares of Rs. 1/- each.

( LLM, MBA, (UK), PhD, AIMA, AFAI, PHD Chamber, ICTC, PCI, FCC, DFC, PPL, MNP, BNI, ICJ (UK), WP, (UK), MLE, Harvard Square, London, CT, Blair Singer Institute, (USA), Dip. in International Crime, Leiden University, the Netherlands )


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