After the acquisition of the automotive plastics division of Bright Brothers in September for Rs 149 crore, Sintex is again on the prowl and closer to acquiring another overseas firm.
The Rs 1,500 crore Ahmedabad-based plastics maker known for its water tanks, is completing due-diligence for acquisition in the composites business at Europe or US.
The deal size is seen at $120 million and is likely to be announced in November, sources said.
Recently, a clutch of foreign investors — HSBC, Lehman Brothers, Merrill Lynch, Master Trust, Bank of Japan and Batterymarch Financial — had bought 14.3% stake in Sintex Industries from Warburg Pincus.
Amit Patel, managing director, Sintex Industries, said at an analysts’ conference on Monday that the company will invest Rs 350 crore in the next three years.
“Out of this, Rs 140 crore would be for textiles and rest Rs 210 crore will go into plastic business.”
Sintex said monolithic construction and composites are the next growth area.
The company has designed a housing solution (monolithic construction) targeted at slum rehabilitation for low-cost housing needs in India. The product comprises fabrication using a unique work system with casting of all four walls and slab together.
The facility can be built in a fraction of the time required for conventional structures and used for multi-storied construction.
“We have orders worth Rs 1,250 crore for using the monolithic construction technology from cities such as Chandigarh, Delhi, Jabalpur, Vadodara, Surat and Ahmedabad, which would be completed over the next three years,” Patel said
Analysts Chirag Shah and Ritesh Shah of broking house SSKI said monolithic construction and new products in the pipeline will help Sintex to achieve its $1 billion revenue target by financial year 2012 as these can emerge into a scalable business in the next few years.
The global composites market is currently valued at $6.2 billion, and is expected to grow rapidly. The use of plastic as a composite in automobiles is expected to increase from 57 kg in 1990 to 139 kg per passenger vehicle by 2010, according to SSKI.
Besides automobiles, composites find wide application in electrical accessories and medical devices.
Sintex has an over 50% market share in the domestic water tank business.
A major chunk of business comes from prefabricated structures catering to the construction and infrastructure sector.
For the quarter ended September 2007, net profit at Sintex rose 35.50% to Rs 41.99 crore compared with Rs 30.99 crore during the previous quarter ended last year. Sales rose 26% to Rs 320.40 crore from Rs 254.29 crore.
Source: DNA India