Sintex looking at acquisitive growth

Ahmedabad-based Sintex Industries is hopeful of diversifying into new infrastructure segments through an acquisition, possibly this fiscal, said group president Sunil Kanojia.

The company is looking to buy a majority stake in an infrastructure contractor, primarily to build its execution capabilities in the monolithic construction segment.

“But the companies we are looking at for an acquisition also execute projects in sectors like water and balance of plant (BoP) for power projects,” Kanojia said in an investor call on Tuesday, adding that as a result of the buy, Sintex would gain the expertise needed for infrastructure projects.

Sintex is targeting companies with revenue of Rs120-150 crore and operating margin of 15-16%, Kanojia said.

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.

In the fourth quarter of the last fiscal, Sintex formed a 100% subsidiary, Sintex Infra Projects to take advantage of some accounting norms and to help it during the tender process for projects. As Sintex is a manufacturer it can book revenues only after the completion of a project whereas Sintex Infra, as a contractor, can do so even after partial completion. Moreover, Sintex can bid for projects both on its own and through Sintex Infra.

Sintex Infra is currently executing a Rs220 crore sewage pipeline project.

Monolithic, along with pre-fabricated buildings and storage tanks, falls under building products, a segment which contributed over 45% to Sintex’s topline last fiscal. Custom mouldings account for another 45% and textiles 10%. In two years, the share of building products is set to rise to 60%. Sintex has a monolithic order book of Rs 2,600 crore.

For the quarter ended September 30, Sintex’s consolidated revenues rose 30% and net profit 70% to about `921 crore and Rs100 crore, respectively.