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Projecting to double its turnover to $2 billion (Rs 9,000 crore) by 2013-14, diversified group Sintex Industries Ltd plans to invest around Rs 1,100 crore on its upcoming capacity expansion projects across India.
Between 2011-12 and 2013-14, the company will invest Rs 250 crore on facilities for custom moulding, Rs 220 crore on prefab, Rs 300-350 crore on monolithic, Rs 150 crore on captive power and Rs 50 crore on textiles, Mr Amit Patel, Managing Director, told Business Line at the Kalol (Mehsana) headquarters of the company.
New growth drivers
Having shifted its focus from textiles and water tanks to its new growth drivers such as building products like monolithics and pre-fabricated structures, Sintex is looking at the new market for pre-fabs in the tribal areas of the country, for which the Planning Commission has recommended an outlay of Rs 8,000 crore a year to provide shelters to the tribal people, he said.
The bulk of Sintex's investments will be at its manufacturing in Gujarat, Himachal Pradesh, Nagpur, Kolkata, Salem and Uttar Pradesh. Despite a slowdown in construction activity and the resultant low cement dispatches, Sintex growth continues as pre-fab structures use little cement, he said.
Asked about a slowdown in infrastructure investments as well, Mr Patel said, Sintex is not a hard-core infrastructure development company. Its monolithic products are used in mass housing, railway, government staff quarters and defence, among others.
“Although we do get affected due to fluctuation in cement prices, we do not have plans to stock up materials beyond 120 days. We have 35 manufacturing locations and cannot stock up inventories for lengthy periods.”
Textile margins
About the textile business margins slipping, Mr Patel said the company expected it to go up to 27 per cent this year, as in 2007-08, as the cotton prices are low and demand up. This could mean capacity utilisation up to 80 per cent in two years.
About the group acquiring the Delhi-based Durha Construction, he said the latter's civil construction vertical interested Sintex to acquire 30 per cent shares for Rs 42 crore. “We may opt to increase it to 51 per cent in the next three-four years.”
In the next two to three years, Sintex is projecting a 25-30 per cent topline growth. This year, it expects custom moulding to contribute 42 per cent revenues, building products 48 per cent and textile 10 per cent. Prefab business, started in 2001, witnessed a CAGR of 22 per cent in the last nine years, while monolithic segment, commenced in 2006, has a CAGR of 85 per cent.
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