Sintex aims to double monolithic biz, acquire small companies

Sintex Industries remains bullish on the monolithic business, which makes its popular black water tanks, among other things. Though the business has not been doing well for some time now, the company is hoping to double revenues from the business this fiscal, Sunil Kanojia, group president, Sintex Industries, told Promit Mukherjee. Excerpts from the interview:

The monolithic business has been a drag...
I will not call it that. While our pre-fabrication and custom-moulding businesses are the drivers of growth, the monolithic business, which is our oldest, has the potential to grow to Rs 1,700-2,000 crore in the next one year from the current Rs 1,029 crore. The problem is largely the macro-economic environment and the government’s decision-making and multiple approvals. Also, the ticket size of the orders is too large and deliveries of receivables take a lot of time. If these things are in control this year, we can double the revenues from the business.

So, pre-fab and custom-moulding will be the real drivers this fiscal...
The pre-fab business has shown tremendous potential for rapid growth. It has grown from zero to Rs 1,000 crore in 12 years and we expect it to grow around 35% this year from 25% last year. The ticket sizes here are small and deliveries are very fast. Besides, the demand is firm. The margins in pre-fab are also the best, at 20%, if we keep our textile business aside.

The margins are good even in custom-moulding. But why have they suffered in the overseas market?
In the overseas market, especially Europe, while the demand is strong, the pricing power is not that strong. We are growing quite rapidly there, but have been able to clock margins of just 7%. But I think it is just a blip and we will get back to a near-20% margin this year.

We are moving manufacturing to low-cost nations such as in Eastern Europe or Northern Africa and then supplying to places such as Germany, France and Italy where we can get better prices.

Also, we are synergising the expertise in places like Germany and bringing it to India, while Indian practices of cost-effectiveness are being incorporated there. We expect this to help in restoring our margins in the overseas market.

Any more acquisitions this year?
We are looking at smaller acquisitions, which can help improve margins. We have not kept an acquisition war chest, but would like to acquire any company which can help serve the big customers that we are not serving.

Last year, we brought in some Fortune 500 customers such as Bosch and Porsche, and would like to expand that customer list further this year. Our focus is not volumes but margins in the overseas market this year.