Seven years on, Alok Industries remains an IBC outlier as RIL deconsolidates the textile unit

The RIL disclosures indicate that, seven years after the RIL-JM Financial ARC consortium took control of Alok Industries through the insolvency process, the textile company has yet to turn its balance sheet around. Losses have narrowed year-on-year and operating EBITDA has turned positive by small margins, according to Alok’s own filings, but shareholder equity remains deeply negative, and RIL’s decision to deconsolidate the entity in its FY26 accounts marks a shift in how India’s largest company by market value now formally characterises its relationship with Alok Industries — from a controlled subsidiary to an associate held for “significant influence.”

The trajectory sets Alok apart from other large corporate defaulters resolved under the Insolvency and Bankruptcy Code around the same period. Bhushan Steel, taken over by Tata Steel in 2018 and renamed Tata Steel BSL, turned a consolidated net profit within about two years of acquisition — posting a profit of ₹341.71 crore in the September 2020 quarter against a loss a year earlier. Essar Steel’s 2019 resolution, under ArcelorMittal Nippon Steel India, delivered full recovery of the principal amount to financial creditors and is widely cited as the Code’s most successful large-ticket resolution. Alok Industries, by contrast, remains loss-making and balance-sheet-insolvent well into its seventh year under new ownership.

What RIL’s FY26 annual report shows

RIL’s “Annexure A” to the consolidated financial statements lists Alok Industries among “Subsidiaries which have ceased to be subsidiary/liquidated/sold/merged during the year,” reclassifying it as an associate under the “significant influence” test rather than a controlled subsidiary. RIL’s shareholding is unchanged at 40.01%, held through 1,98,65,33,333 equity shares carried at a book value of ₹268.81 crore.

The reclassification comes as Alok Industries’ net worth attributable to RIL’s stake stood at a negative ₹8,613.27 crore as on March 31, 2026 — meaning RIL’s share of the company’s accumulated liabilities exceeds its share of assets by that amount. Under the equity method now applicable, RIL’s disclosure shows nil profit-or-loss pickup for the year, since the carrying value of its investment had already been written down to the point where further losses are not recognised.

Related-party dealings continue at scale

Despite the change in consolidation status, RIL’s related-party disclosures show continuing, and in one case rising, commercial ties with Alok Industries during FY26:

• RIL billed Alok Industries ₹940 crore for electric power, fuel and water supplied during the year, up from ₹552 crore in FY25.
• Revenue from operations booked from Alok Industries fell to ₹206 crore from ₹258 crore.
• Trade payables owed by RIL to Alok Industries stood unchanged at ₹3,500 crore at both year-ends.
• RIL’s standalone investment in Alok Industries — ₹3,300 crore in 9% non-convertible redeemable preference shares, ₹250 crore in 9% optionally convertible preference shares, and ₹269 crore in equity — was carried at the same values as the previous year.

RIL’s own management discussion and business-segment sections of the annual report make no reference to Alok Industries; the only disclosures appear in the notes to the consolidated and standalone financial statements.

Alok’s own numbers point to persistent distress

Alok Industries’ own FY26 results, reported separately to exchanges, show a consolidated net loss of ₹744.11 crore for the year, narrower than the ₹816.43 crore loss in FY25, on revenue of ₹3,714.79 crore. Standalone filings put the FY26 net loss at ₹779.81 crore against ₹768.81 crore a year earlier, on standalone revenue of ₹3,525.30 crore. The company’s negative net worth was disclosed at roughly ₹20,630 crore as of the March 2026 quarter — a figure broadly consistent with, though not identical to, the scale implied by RIL’s ₹8,613.27 crore attributable-share disclosure at its 40.01% holding. The gap between the two may reflect differing measurement bases between RIL’s equity-accounted carrying value and Alok’s own reported net worth, and has not been separately reconciled in either filing.

Alok Industries’ promoter holding has stayed at 75% for several quarters, split between RIL’s 40.01% and JM Financial Asset Reconstruction Company Limited’s 34.99%, dating to the resolution plan the National Company Law Tribunal approved in 2019-20 following the company’s insolvency proceedings.

Contrast with steel-sector resolutions

The steel accounts resolved under the IBC’s first list of defaulters followed a different arc. A CRISIL Ratings study of five large steel resolutions — Bhushan Steel, Bhushan Power and Steel, Essar Steel, Electrosteel Steels and Monnet Ispat & Energy — found capacity utilisation at the acquired plants rising from 65% in FY18 to over 80% within three years, aided by a sustained rally in steel prices and, in most cases, deep-pocketed strategic acquirers such as Tata Steel, JSW Steel and ArcelorMittal Nippon Steel India who moved quickly to inject working capital and management control.

Alok Industries’ post-resolution ownership has instead combined a strategic promoter, RIL, with an asset reconstruction company, JM Financial ARC, as co-promoters holding 40.01% and 34.99% respectively — a structure that has kept the shareholding stable but has not, on the evidence of seven years of results, replicated the operational and balance-sheet turnaround seen at Bhushan Steel or Essar Steel. With RIL now also stepping back from subsidiary-level consolidation of Alok Industries in its FY26 accounts, even as related-party commercial ties with the textile maker continue at scale, the company’s insolvency resolution stands out as one of the IBC’s more prolonged unresolved cases among large, marquee-name defaults.

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