Devagya Jha – B19014 | Gaurav Nair – B19017

Nikhil Jindal - B19030 | Ronit Ray – B19040

| Sahil Gupta – B19041

FM – Assignment
Synopsis
Alok Industries is a textile company with a presence in the cotton and polyester segments. The Company
is engaged in manufacturing of textile, including mending and packing activities, leather and other apparel
products.

In March 2019, NCLT approved the Rs 5,052 crore bid of takeover of Alok Industries by RIL. Two key
decisions taken by SEBI and the government of India last year are at the center of the dispute between
Reliance and some minority shareholders of Alok who are opposing the delisting plans.

On 21st November 2019, The National Company Law Appellate Tribunal (NCLAT) has allowed Reliance
Industries to delist textile manufacturer Alok Industries, which it has acquired through the insolvency
process, in accordance with SEBI guidelines.

Financial leverage which is also known as leverage or trading on equity, refers to the use of debt to acquire
additional assets. The use of financial leverage to control a greater amount of assets (by borrowing money)
will cause the returns on the owner's cash investment to be amplified. That is, with financial leverage:

1. an increase in the value of the assets will result in a larger gain on the owner's cash, when the
loan interest rate is less than the rate of increase in the asset's value
2. a decrease in the value of the assets will result in a larger loss on the owner's cash

Valuation is a process of determining the economic value of a company. Business valuation can be used
to determine the fair value of a business for a variety of reasons, including sale value, establishing partner
ownership, taxation, and even divorce proceedings. The 4 popular methods of valuation are:

 Relative Valuation
 Discounted Cash Flows
 Precedent transactions
 Intrinsic Valuation

Since Alok Industries is a bankrupt company, we will use the Asset based Intrinsic valuation to value the
shares of Alok Industries.