Query about Reliance alok industries

Alok Industries was in the news because its share price was increasing. Whenever share price of a company increases some people join the buying spree and then release these shares later at a higher value and make profit by selling them. This is basically a bull technique undertake by the bull operators. In this particular case it seems that Reliance Industries was the prime factor for the increase in the share prices. It is also to be noted that Reliance Industries might have an agenda of taking this company under control by buying majority shares and claiming its control as happens in the share market so often. If Reliance Industries finds that the fundamentals of Alok Industries are good and buying its share makes sense for subsequently taking over its control then the buying of shares by Reliance Industries is justified. As per the NCLT rules any entity or a group of investors who hold more than 75% shares of a company can approach NCLT offering takeover of the said company. So these are the things that can be inferred from the information given in your query. These activities in the market are probably going in culminating in the takeover of the Alok Industries by Reliance Industries. However it is only a speculation based on the market movements and we cannot be ascertained about it until Reliance submits such a proposal in NCLT and this information becomes public.

Reliance Industries acquired a 37.7% stake in t Alok Industries for Rs.250 crore. Reliance had jointly bid for Alok Industries along with JM Financial Asset Reconstruction Co. when it was auctioned under the insolvency and bankruptcy law by the institutions which gave loans to the company. This bid was approved by the Ahmedabad bench of the NCLT.

In addition to the above RIL was also allotted 250 crore optionally convertible preference shares at Rs.1, taking the overall consideration to Rs.500 crore. Now the total money infused is Rs.500/- crores. Reliance can shell the shares what it has acquired directly but not the additional shares which they got under preferential shares which will have 3 years lock-in period. The role of NCLT will be over once the money to the lenders paid back. But I don't think Reliance will sell it shares at this juncture as they are trying to acquire that industry.

Alok Industries has a product portfolio consisting of cotton yarn, apparel fabrics, bed linen, terry towels, embroidery, garments etc. For RIL, this gels perfectly with its aggressive retail plans. That is why the shares prices are going up.

Whenever a company is in pursuit of acquiring some other company which gives it some advantage in the business world by reducing the competition and making oneself a bigger entity in that area, then the easiest way is to buy the shares from the market. It is the most common form adopted in the acquisitions and mergers. Slowly when the buyer company accumulates enough share percentage as per the rules and regulations of the acquisitions, it would approach NCLT for the necessary formalities in this acquisition process. This takes time and if the buyer company follows the correct procedure then it overtakes the other company and then runs it in a way as directed by its new board of directors. Acquisitions and mergers sometimes lead to legal disputes also and due to that the process is sometimes considerably delayed.