As the textile firm Alok Industries heads into likely liquidation, about 12,000 permanent employees of the company are set to lose jobs.
The Ahmedabad bench of the NCLT admitted insolvency proceedings against the textile firm last July. A consortium of lenders, led by the State Bank of India (SBI), is claiming dues of over INR 23,000 crore from Alok Industries.
The 270-day deadline before which lenders had to finalize a resolution plan ended April 14 this month. Plans to revive the distressed firm failed as lenders were unwilling to accept an offer that involved a substantial haircut. Earlier last week, lenders to Alok Industries did not approve an offer by Reliance Industries and JM Financial ARC to acquire the bankrupt company.
As per a media report, only 70% of the lenders endorsed the revised all-cash offer of INR 5,050 Crore, which was just about INR 100 crore higher than the previous one. For a resolution plan to be passed, at least 75% of the lenders must vote in its favor.
Consequently, the firm looks headed for liquidation and could be one of the biggest labor casualties since the implementation of the bankruptcy code.
There were 11,759 full-time employees as on March 31, 2017, with the total staff strength around 18,000. Meanwhile, staff costs amounted to INR 283.31 Crore during that financial year. Data compiled by Corporate Professionals that used the financials reported by the company for 2016-17 showed that these employees earned an average salary of INR 1.45 lakh a year.
The insolvency proceedings are also expected to impact hundreds of small vendors and service providers to the company. Almost 2.05 lakh equity shareholders, including public financial institutions and retail investors, are also looking in the face of losses as the company heads into liquidation.
Besides Alok Industries, ABG Shipyard and Lanco Infratech are among the 12 first large non-performing assets (NPAs) identified by the Reserve Bank of India (RBI) for resolution under the Insolvency and Bankruptcy Code (IBC), 2016.