Omar Khalid
Sintex, formerly known as The Bharat Vijay Mills Ltd and Sintex Industries Ltd, is a company that operates in Europe, America, Africa, and Asia. It is the world's largest producer of plastic water tanks and Asia's largest manufacturer of corduroy fabrics. Despite its strong position in the market, Sintex has faced financial troubles in recent years, including declining cash flow, high debt levels, and defaults on repayment commitments. Analysts have advised investors to be cautious about investing in the company due to these financial risks. In 2023, Sintex Industries Ltd (SIL) and Sintex Plastics Technology Limited were acquired by different companies, with SIL being acquired by Reliance Industries (RIL) and the latter by Welspun Group. While Sintex has shown initiatives towards sustainability, it has also faced bankruptcy and stock price declines.
| Characteristics | Values |
|---|---|
| High debt | --- |
| Poor cash flow | --- |
| Lack of confidence in the business | --- |
| Poorly managed | --- |
| Poor stock price | --- |
| Poor future prospects | --- |
| Downgraded by CARE Ratings | --- |
| Defaulted on non-convertible debentures from Punjab National Bank | --- |
| Entered bankruptcy | --- |
| Unclear sustainability practices | Sintex Yarns works with technology that can process cotton into high-quality sustainable yarns |
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What You'll Learn
- Sintex Industries Ltd. and Sintex Plastics Technology Ltd. were acquired by different companies in 2023
- Sintex Plastics Technology has a high debt level and declining cash flow
- Sintex Industries entered bankruptcy in 2021
- Sintex Industries was downgraded by CARE Ratings in 2019
- Sintex Plastics' stock price has declined
Sintex Industries Ltd. and Sintex Plastics Technology Ltd. were acquired by different companies in 2023
Sintex Industries Ltd. (SIL) and Sintex Plastics Technology Ltd. have had a tumultuous few years, with analysts warning investors to be wary of the companies due to declining cash flow and high debt levels. In 2017, Sintex demerged, with its textiles business remaining under the name Sintex Industries Ltd., and the plastics and prefab side becoming Sintex Plastics Technology Ltd. Despite strong initial showings after the demerger, Sintex Industries Ltd. struggled financially, defaulting on non-convertible debentures and eventually filing for bankruptcy in 2021.
In March 2023, it was announced that both companies had been acquired by different parent companies. Sintex Industries Ltd. was acquired by Reliance Industries (RIL), which now holds 70% of the company's share control and will manage the company jointly with Assets Care & Reconstruction Enterprise (ACRE). Sintex Plastics Technology Ltd., on the other hand, was acquired by Welspun Group.
The acquisition of Sintex Industries Ltd. by RIL is a significant move for the company, as Sintex is the world's largest producer of plastic water tanks and Asia's largest manufacturer of corduroy fabrics. Sintex operates in multiple regions, including Europe, America, Africa, and Asia, with a strong presence in France, Germany, and the US. The company has a diverse range of products, including building materials, textiles, prefabricated structures, custom moulding products, monolithic construction, and water storage tanks.
On the other hand, the acquisition of Sintex Plastics Technology Ltd. by Welspun Group is also noteworthy. Sintex Plastics Technology Ltd. has faced challenges, including declining stock prices and difficulties in meeting repayment commitments. However, the company has a presence in the retail plastics, auto, and defence plastics sectors, and KKR has invested significantly in its subsidiary, Sintex-BAPL.
The separate acquisitions of Sintex Industries Ltd. and Sintex Plastics Technology Ltd. by different companies mark a new chapter for both entities. With new ownership and management, the companies will likely undergo strategic changes and direction, aiming for financial stability and growth in their respective markets.
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Sintex Plastics Technology has a high debt level and declining cash flow
Sintex Plastics Technology Ltd. (formerly known as The Bharat Vijay Mills Ltd and Sintex Industries Ltd) is the world's largest producer of plastic water tanks and Asia's largest manufacturer of corduroy fabrics. The company operates in Europe, America, Africa, and Asia, particularly in France, Germany, and the US.
In 2017, Sintex Plastics Technology underwent a demerger, with its textiles business remaining under the name Sintex Industries Limited, and the plastics and prefab business becoming Sintex Plastics Technology Limited. Despite strong initial showings after the demerger, Sintex Plastics Technology has since faced financial challenges, including high debt levels and declining cash flow.
The company's high debt levels have been a cause for concern, with analysts noting that the group's debt is not well-managed. In March 2023, it was announced that Sintex Plastics Technology Limited was acquired by Welspun Group. Prior to the acquisition, the company explored options to refinance its debt, including the sale of its auto division. However, challenges in the auto sector may impact the company's ability to get a good valuation.
The declining cash flow at Sintex Plastics Technology has also increased business risks, according to analysts. This has been exacerbated by higher costs and sluggish demand, leading to a depletion of cash reserves. The company has also faced challenges with its earnings, as indicated by Amit Patel, the managing director at Sintex Plastics, who noted that the automotive segment remained sluggish.
The financial challenges faced by Sintex Plastics Technology have had a significant impact on investors, with shares of the company tumbling by 94% since it started trading separately. Analysts have advised investors to be cautious, noting the promoters' lack of confidence in the business and its turnaround. The stock has also declined significantly, losing 93% since its listing in August 2017.
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Sintex Industries entered bankruptcy in 2021
Sintex Industries Ltd. (SIL), formerly known as The Bharat Vijay Mills Ltd, is a diversified company that was founded in 1931 in Kalol, Gujarat. The company operates in Europe, America, Africa, and Asia, with a focus on France, Germany, and the US. It specializes in building materials, textiles, prefabricated structures, custom moulding products, monolithic construction, and water storage tanks. Sintex Industries is also the parent company of Sintex Plastics Technology Ltd., which became a separate entity after the demerger of the custom moulding and prefab business in 2017.
Despite initial success following the demerger, Sintex Industries began to encounter financial difficulties. In June 2019, the company was downgraded by CARE Ratings to "issuer non-cooperating" and defaulted on non-convertible debentures from Punjab National Bank. The company's financial troubles continued, and in December 2020, Invesco Asset Management filed a plea. As a result, Sintex Industries entered bankruptcy in April 2021.
The bankruptcy was precipitated by Sintex Industries' significant financial indebtedness, which included short-term and long-term debt totalling Rs 7,802 crore as of March 2021. The company had also posted consistent net losses, with a Rs 215 crore loss in the December 2020 quarter compared to Rs 293 crore and Rs 239 crore losses in the same quarters in 2019. Additionally, Sintex Industries faced challenges with declining cash flow and high debt levels, further increasing business risks.
Sintex Industries' subsidiaries were not immune to these financial troubles. Sintex-BAPL, a subsidiary involved in manufacturing automotive products, defaulted on its repayment commitments. This prompted KKR, a non-bank lending arm of a global private equity firm, to approach the tribunal to recover a debt of Rs 1,190 crore. The promoters of Sintex Plastics Technology, another subsidiary, also declined to convert their warrants into equity shares, reflecting a lack of confidence in the business.
In March 2023, Sintex Industries Ltd. was acquired by Reliance Industries (RIL), which now holds 70% of the company's share control. RIL will jointly manage SIL with Assets Care & Reconstruction Enterprise (ACRE). This acquisition came after fruitless attempts by lenders to recover their dues from Sintex Industries, which amounted to a total of Rs 6,500 crore.
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Sintex Industries was downgraded by CARE Ratings in 2019
Sintex, formerly known as The Bharat Vijay Mills Ltd and Sintex Industries Ltd, is the world's largest producer of plastic water tanks and Asia's largest manufacturer of corduroy fabrics. The company operates in Europe, America, Africa, and Asia, with a focus on France, Germany, and the US. Sintex works with building materials, textiles, prefabricated structures, custom moulding products, monolithic construction, and water storage tanks.
In 2017, Sintex demerged, with its textiles business continuing under the name Sintex Industries Limited, and the plastics and prefab business becoming Sintex Plastics Technology Limited. Despite strong initial showings after the demerger, Sintex Industries faced financial challenges in the following years. In June 2019, Sintex Industries was downgraded by CARE Ratings to the "'issuer non-cooperating' category due to its failure to provide information for rating monitoring and non-payment of surveillance fees.
The downgrade was followed by a default on non-convertible debentures from Punjab National Bank, and a significant decline in profits, falling to ₹21.5 crore in FY19 from ₹141.8 crore in FY18. Sintex Industries also faced challenges with its high debt levels, reduced financial flexibility, and declining cash flow, leading to increased business risks.
In March 2023, it was announced that Sintex Industries Ltd. was acquired by Reliance Industries (RIL), with RIL gaining 70% share control. This acquisition was expected to provide a boost to public sector banks and enhance their position. Despite these challenges and changes in ownership, Sintex has shown a commitment to sustainability initiatives, such as developing an anaerobic digester in 2008 to capture emissions from human waste for fuel or electricity generation, and launching the ReviveOurRivers campaign in 2017 to encourage people to keep rivers clean.
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Sintex Plastics' stock price has declined
Sintex Plastics Technology Ltd (SPTL) is the world's largest producer of plastic water tanks and Asia's largest manufacturer of corduroy fabrics. The company operates in Europe, America, Africa, and Asia, with a focus on France, Germany, and the US. SPTL's stock price has seen a significant decline, losing 93% of its value since its listing on August 8, 2017, with a share price of ₹9.05 on Friday, a drop of 10%.
There are several reasons for this decline in stock price. Firstly, SPTL has faced issues with its promoters, who defaulted on meeting repayment commitments at their other listed company, Sintex Industries. This has led to a lack of confidence in the business, with promoters conveying their inability to exercise their right of conversion of warrants. Additionally, SPTL has experienced declining cash flow and high debt levels, increasing business risks. The company's high debt has been poorly managed, leading to doubts about the wisdom of investing in their stocks.
The subsidiary, Sintex-BAPL, received an investment of ₹1,250 crore from KKR to refinance debt and finance growth in the B2C business, but this does not appear to have been enough to turn the company's fortunes around. Sintex Industries, the former parent company of SPTL, entered bankruptcy in April 2021, which may have also impacted investor confidence in SPTL.
Despite these challenges, Sintex Plastics Technology Ltd holds several positive signals, and analysts recommend a "hold or accumulate" position while awaiting further developments. The company is exploring options such as the sale of its auto division to de-leverage the balance sheet, although the prospects for a good valuation in the current auto sector climate are uncertain.
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Frequently asked questions
Sintex Plastic is a subsidiary of Sintex-BAPL, which is a subsidiary of Sintex Industries Ltd. Sintex Industries Ltd used to be called Sintex.
Sintex Plastic's parent company has struggled with high debt and declining cash flow. In 2019, Sintex Industries was downgraded by CARE Ratings to "issuer non-cooperating" and it defaulted on non-convertible debentures from Punjab National Bank.
Sintex Industries entered bankruptcy in April 2021.
Sintex Plastic produces building materials, textiles, prefabricated structures, custom moulding products, monolithic construction, and water storage tanks.
Sintex Plastic's stock price has been falling. In 2017, the stock lost 93% of its value and declined 10% to 9.05 rupees on Friday.
