Alok Industries, the textile player whose net worth has been eroded, has approached lenders for fresh funds so that it can increase production. The highly indebted textile company, which owes bankers a whopping Rs 20,000 crores, believes it can boost production if given access to more funds. The company reported a consolidated loss of Rs 3,774.2 crores for financial year 2016 on revenues of Rs 13,040.9 crores, down 46 per cent over financial year 2015.

Alok Industries management is trying to convince the State Bank of India that if it is lent fresh funds, its performance can improve. The company says capacity utilisation at its plants in Silvassa went up by about 10 to 15 per cent in the first quarter of financial year 2017. Last month, a court stayed sale of assets and change in the company’s equity structure, keeping banks from converting any loans into equity. The court’s order followed a winding up petition filed by HSBC on behalf of a clutch of unsecured lenders including VTB Capital to settle outstanding dues worth 55 million dollars.

While the RBI doesn’t prohibit banks from extending fresh loans to a defaulter, bankers are generally reluctant to do so.