The Sintex Group, which is well known for its name-brand water tanks, spun off its flagship textiles and plastics companies to maximise shareholder value. After a few years, investors have lost practically all of their wealth.
Founded in 1931 at Kalol in Gujarat, Sintex Industries (formerly known as The Bharat Vijay Mills Ltd) is a diversified company. Its textile segment offers fabric and yarn.
The plastic segment offers water tanks, doors, windows, prefab, custom moulding, and others. Its infrastructure segment undertakes engineering, procurement and construction contracts.
Shares of the parent Sintex Industries Ltd. have plunged more than 95 percent since its peak in 2017, just before the restructuring of the group. Sintex Plastic Technologies Ltd. has tumbled 96 percent since it started trading separately.
In September 2016, the group carved out its custom moulding and prefab unit to streamline operations, cut costs and ensure better management control. Sintex Industries remained a pure-play textile company, making yarn and fabric. Both segments ran into headwinds.
That came a year after its purchase cost of fabric nearly doubled to ₹962 crore because of higher cotton prices and an increase in the minimum support price of the crop in FY18.
As on March-end 2021, the total financial indebtedness including short-term and long-term debt stood at ₹7,802 crore.
Sintex Industries’ debt rose during the period as the cost of infrastructure and automation increased despite its efforts to strengthen financials and deleverage the balance sheet.
In June 2019, Care Ratings Ltd. and Brickwork Ratings Ltd. had cut the ratings of Sintex Industries to default, Citing delays in repaying bank loans and debentures.
In Sep 2019, An insolvency tribunal has admitted fraud-hit textile and yarn manufacturer Sintex Industries on a plea by Invesco Asset Management (India) Pvt Ltd over a ₹15.4 crore default.
The plea was filed after Sintex Industries made a disclosure in June 2019 about a ₹90 crore default on bonds in which the fund had invested.
Lenders also rejected to Sintex industries plea against a debt restructuring plan, and intend to push it into bankruptcy code.
Reliance Industries- Assets Care & Reconstruction Enterprise (ACRE) team, a Welspun entity, Himatsingka Ventures and GHCL Ltd have submitted resolution plans in January.
Reliance Industries-ACRE team has offered ₹2363 crore which includes ₹2280 crore to financial creditors and the remaining to trade creditors and employees. In addition to this, they also offer 10% equity to the financial creditors and ₹500 crore for working capital requirements.
Welspun’s Easygo Textile offered ₹2300 crore to financial creditors, of which ₹2200 crore is for financial creditors and the remaining is for trade creditors and employees.
The resolution plan from Himatsingka Ventures is ₹2210 crore of which ₹2200 crore is for financial creditors
while GHCL offered ₹2040 crore of which ₹2000 crore is for financial creditors.
The Resolution professional has admitted that ₹7,534.6 crore of claims from 27 financial creditors.
Stock price on the rise
The stocks of Sintex Industries has been rising ever since Reliance Industries emerged as one of the bidders who showed interest to acquire the bankrupt firm.
The company's shares had risen 172 percent in 2021, as exchange data showed.