Sintex Plastics Technology (Sintex Plastics), Sintex-BAPL Limited (Sintex BAPL) is WoS of Sintex Industries Limited (SIL). Sintex Infra Projects Limited (Sintex Infra) is WoS of BVM Overseas Limited (BVM) and BVM is WoS of SIL, so Sintex Infra is step down subsidiary of SIL.

Sintex Industries has issued secured Redeemable Non-Convertible Debentures (NCD) which are listed on BSE. Sintex industries also has foreign currency convertible Bonds (FCCB) listed on Singapore Exchanged Securities Trading Limited.

The Company has been able to segregate all three major divisions with a listing of just one more entity.

In July 2016, Sintex Industries board has also approved “Right Issue” and there on in September 2016 it has issued right share in the ratio of 26 equity shares for 151 fully paid up equity shares at Price of Rs. 65 per share (premium of Rs. 64 per share). It has the raised for repayment of certain working capital facilities with interest and other charges if any.

Fig 1: Current Company and Wholly Owned Subsidiary Structure.


Composite scheme of arrangement for the demerger of the ‘custom moulding business’ and the ‘prefab business’ from Sintex Industries to Sintex-BAPL and Sintex Infra Projects, respectively.


Fig 2 :Transaction Overview

STEPS of transaction:

  • Conversion of Sintex BAPL and Sintex Infra as WoS of Sintex Plastics Technology
  • Demerger of Custom Moulding and Prefab Division of Sintex Industries into Sintex BAPL and Sintex Infra respectively
  • Consideration to be issued by Sintex Plastics Technology for Demerged as holding company of resulting company
  • Reduction of the share capital of Sintex Plastics pursuant to Cancellation of Share held by Sintex Industries into Sintex Plastics Technology.
  • Sintex Plastics Technology will be listed


Since it is an internal structuring involving segregation of business into various entities there is no involvement of fair valuation exercise.
  • The group started the business as textile with diversification into plastic also. Now the company major revenue generation ~ 80% (28% from custom moulding & 52% from prefab business) is from a plastic division.
  • The Textile business is high margin segment of the company with the tag of the largest producer of high-end Jacquard and structured fabric in India. In 2014 it has stepped up Greenfield textile processing plant at Pipavav in Amreli and was expected to be commercial by 2016-17.
  • The Plastic Division has basically two verticals namely Custom Moulding business and Prefab Business based on their business characteristics and customer profiles. Sintex also carries on the business of custom moulding through its overseas wholly owned subsidiary i.e. Sintex Holdings B.V. Netherlands.
  • The business carried on Sintex BAPL are similar to custom moulding business and similarly business carried on by Sintex Infra are similar to the prefab business.
  • The segregation of Business into three entities will results in more focus and also invite strategic/ financial partner specific to entities. Since the textile business and the plastic business are capable of attracting a different set of investors, strategic partners, Lenders and other stakeholders and it will also provide scope for independent collaborations and expansion.
  • With this structure, there will be no change in the economic interest of shareholder, as all the shareholders of SIL will be shareholders of Sintex Plastics. Swap ratio is Sintex Plastics will issue one equity share for every two equity shares of SIL for Custom Moulding Division and similarly for Prefab Division.

Since it internal structuring involving segregation of business into various entities there is no involvement fair valuation exercise, so the swap ratio has arrived based on relative valuation and identical to SIL.


Since the textile business has gone for a major expansion in 2014 it assets base is heavy, during the year the company has converted FCCB in equity share on revised conversion from Rs. 75 .60 per share to Rs. 65.74, which has increased the number of equity share capita during the year. Therefore, FCCB stakeholders which has been issued equity shares on conversion will be part of all entities post demerger as a shareholder.

*Other Business mainly includes Textile Business
**Networth might also include the expansion done by Textile Business

Note: PAT Margins of Custom Moulding, Prefab and Other Division are 8.1%, 12.95% and 11.95% respectively.

The major short-term borrowing has been transferred to the Prefab Undertaking and there is no any long-term borrowing transferred to Prefab Undertaking. The major long-term borrowings has been transferred to custom moulding but the major of which was secured by assets of the business of textile which needs to relook by the bankers.

The other liability bifurcation is not available so we are unable to comments which liabilities which transfer as per part of demerged undertaking. And also the funds raised from right issued utilised for which division is not clear.


Since scheme talks of compliance demerger under section 2(19AA), it will not only be a tax neutral demerger but the shares issued by the holding company Sintex Plastics of resulting companies Sintex BAPL and Sintex Infra will also comply under section 2(41A) of the Income Tax Act 1961.



The Demerged Company has adjusted net assets transferred to maximum extent possible against the capital reserve details bifurcation as follows:

Table 1: Financials of Demerged Businesses

Net Assets of both Demerged Undertakings (Custom Moulding and Prefab) 1,905.00
Reduction/Adjustment against reserve
a. Capital Reserve47.80
b. Capital Redemption Reserve15.05
c. Securities Premium till date 31.03.20161,714.02
d. Securities Premium on right Issue128.13

Please Note: The Right issue was post appointed date 01.04.2016 whether the company will adjust balance against securities premium arise on right issue or general is not clear, but our working we have securities premium received on right issue for reduction. 



The Equity share issued by the Sintex plastics to the shareholders of SIL will be credited to equity share capital of the company and the second effect will be given to investment in Sintex BAPL and Sintex Infra proportionally as may be decided by the management and auditors.

Sintex BAPL and Sintex Infra:

The Difference Between assets and liabilities transferred from SIL to the company is credited to General Reserve Account. So there is the creation of free reserve from the transaction whereas the demerged company has reduced capital reserve/share premium account.


The Company has been able to segregate all three major divisions with a listing of just one more entity. Sintex Plastics will be holding company for Sintex BAPL and Sintex Infra. Going forward all three entities are ready for future growth and also for attracting investors, strategic partners or exit from lower margin business.  As promoters’ stake is around 33%, holding company structure will enable the promoters to raise funds and reduce debt by diluting stake at a subsidiary level without losing management control.

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