No chance of recovery, Sintex lenders in talks with three players to sell firm

Mumbai: Lenders are talking to three potential bidders for the debt-laden textile and yarn company Sintex Industries in a last ditch effort to recover their dues totalling Rs 6,500 crore after efforts at other recoveries were fruitless.

The Balkrishan Goenka-controlled Welspun India, Rajinder Guptaowned Trident Group and Paul Oswal-controlled Vardhman Group have been approached by the bankers to buy the debt-laden company, three people who are familiar with the matter said.

“These talks are still preliminary but there is no other option before us,” said a banker involved in the negotiations. “None of the banks want to infuse more money into this company because of fears that they may be dragged into unnecessary investigations by the government in the future. A decision has not been made yet.”

State-owned Punjab National Bank is the lead lender to Sintex Industries and PNB Investment Services, the merchant banking arm of the bank, is helping the lenders find a buyer for the company. However, initial bids for the company have been short of lenders’ expectations.

“The preliminary bids that we have received so far after minimal due diligence have been below 50% of the loan value, which is not good enough,” said another banker involved in the negotiations. “The next option for us is to go to the NCLT under the insolvency code, but because the NCLT process is long and expensive, banks are reluctant to go directly for it. But if these bids are not good enough, then that is our only recourse.” The Sintex Group as a whole owes banks a total of Rs 10,000 crore. Sintex Plastics Technology, the company which is ubiquitous for plastic water tanks in India, is also part of the group. However, the majority of the debt is owed by Sintex Industries and it is already classified as an NPA by banks.

Banks also signed an inter creditor agreement (ICA) for the account last month. Besides PNB, the other lenders to Sintex include Bank of India, Bank of Baroda and Union Bank of India (UBI).

Sintex Plastics, the other arm of the group, is also making an effort at reducing debt. Last month, the company entered into a definitive agreement to sell its European subsidiary, Sintex NP SAS, to Xtech Invest SAS for a consideration of €155 million. The transaction is expected close by October 31.