Sintex to acquire 3 cos by next year
On the heels of announcing on December 3 this year’s fourth acquisition abroad, Sintex Industries Ltd on Thursday said it is set to acquire at least three more foreign companies next year to mainly boost its diversified businesses into composites, aiming to make it a $3 billion multinational company by 2012.
Sintex is planning to acquire these companies mainly in Europe through its foreign arm, Sintex BV, headquartered in Holland, for around $150 million, Mr Amit Patel, Managing Director, told Business Line. He said talks were in progress with these companies but declined to elaborate on details at this stage.
Investments
Besides, in the next three years, Sintex is also investing Rs 150 crore to build capacities in textile segment, Rs 250 crore in plastics segment and Rs 200 crore in monolithic pre-fabricated structures, he said.
Sintex, known for its water tanks, is now increasingly diversifying into its foreign businesses of composites and textiles, through its companies and joint ventures abroad, and into pre-fabricated structures in India, which it sees as the fast-growing, emerging markets. In the US, the current composites market of $6 billion is projected to increse to $40 billion in the next three years, with aviation, automobile and defence sectors increasingly replacing metals. In India, this market is set to increase from the current Rs 350 crore to Rs 2,000 crore in the next three years, Mr Patel said.
In the pre-fabricated structures business, Sintex already has an order book for supply of material worth Rs 1,300 crore, including that from the Gujarat municipal bodies to the tune of Rs 750 crore, for the next three years. It also has orders worth Rs 280 crore from the Delhi Government for the coming Commonwealth Games for construction of a sportspersons’ complex. In all, it is supplying pre-fabricated material to seven States.
In the next three years, with more and more SEZs and other industrial areas seeking temporary shelters for workforce, this demand is likely to go up to Rs 2,500 crore. In fact, the bulk of Sintex’ workforce, around 8,000 out of 11,600, is working on this and the composites segment.
Raise funds
For these plans, Sintex is planning to raise nearly Rs 1,800 crore, mainly through the issue of securities in Indian and global markets. This includes issuance of foreign currency convertible bonds (FCCBs) worth Rs 600 crore ($150 million) and a like amount in global depository receipts (GDRs), to raise around Rs 1,200 crore ($ 300 million) altogether, for its aggressive global plans. Besides, it plans to raise another Rs 600 crore by issuing equity shares on QIP basis.
In the last seven months, Sintex has moved aggressively with its acquisition of four companies for $150 million in India and abroad for its plastics business. On December 3, it announced acquisition of the US-based Nero Plastics Inc, for $17 million through its downstream subsidiary Wasaukee.
The reasons for this shifting of emphasis in the company with a turnover of Rs 1,100 crore in 2006-07, from water tanks to composites and other emerging businesses are dictated by the changing scenario. Its mainstay of water tanks, with many competitors now, contributes only seven per cent of the company’s revenue. On the other hand, composites revenues are growing at 30 to 35 per cent, mainly in its overseas business.
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