After Durha buyout, Sintex to bid for BOT projects

Ahmedabad-based Sintex Industries will develop projects in monolithic construction, solid waste & water management and power after its acquisition of a majority stake in New Delhi-based Durha Constructions Pvt Ltd (DCPL), said group president Sunil Kanojia.

Sintex on Monday announced that it has acquired 30% in DCPL for Rs42 crore, valuing the latter at Rs140 crore. It will acquire another 21% by early next fiscal based on DCPL’s 2010-11 results.

DCPL had a topline and operating profit of Rs150 crore and Rs25.2 crore, respectively and is hoping to take them to Rs230 crore and Rs45 crore this fiscal.

“We will think of buying the rest of the stake may be after two years,” Kanojia said. DCPL, which has an order backlog of Rs750 crore, will be a subsidiary of Sintex Infra Projects, a 100% subsidiary of Sintex Industries, which it formed late last year.

In a conference call in October, Kanojia had said an acquisition in the construction space was on the cards this fiscal, primarily to build its execution capabilities in the monolithic segment.

DCPL takes up civil & mechanical construction contracts in sectors such as power, cement, ports, roads and mines. “We want it to become an EPC (engineering, procurement & construction) player from just a contractor and also take up BOT projects in areas other than roads,” Kanojia said, citing land acquisition issues as a big deterrent in highway projects.

The company has put in bids for a couple of government monolithic housing projects, valued at Rs400-500 crore, on BOT basis. A BOT project is one which a company bids for, and after winning it, builds and operates it for a specified period, earns revenues, and returns it to the government.

Sintex at the end of the three months ended September 30 had a monolithic order book of Rs2,600 crore.

These are projects where Sintex is just a contractor and not a developer.

Monolithic construction is a building solution where a mould of a structure is made and erected at the construction site and liquid concrete is poured  through the mould, which is then
removed.

This is cheaper and takes a shorter time to build than conventional buildings so it’s preferred by the government for, among other things, low-cost housing.

Asked if Sintex would look at further inorganic expansion in infrastructure, Kanojia said, “Yes, we need to be spread out geographically.”

Other than monolithic construction and storage tanks, which it is best known for, Sintex makes pre-fabricated buildings, parts for auto, wind power & other sectors, and textiles.

On Monday, Sintex closed at Rs192.70, up 4.04% from Friday’s close.

They shot up 8.11% to touch intra-day high of Rs200.50.