Business & Policy

The Ultimate Revelation On The Reliance Industries Completes Sintex Textiles Acquisition Industry.

Published: April 21, 2023
Author: DIGITAL MEDIA EXECUTIVE

Synopsis The Rs 3,567 crore acquisition of India’s Sintex Industries by Reliance Industries, which had been agreed upon a year earlier and sanctioned by the National Company Law Tribunal (NCLT) in February, has now been completed. Public sector banks will benefit from the action because it will result in a full write-back, boosting their bottom line.

Exactly one year after banks approved the acquisition and one month after the National Company Law Tribunal (NCLT) approved the transaction, Reliance Industries, the largest company in India by market value and promoted by Mukesh Ambani, completed its Rs 3,567 crore acquisition of textile company Sintex Industries.

Two persons with knowledge of the event stated that the money was moved and handed to banks late in the day on Tuesday, concluding the sick company’s resolution.

“Banks received the funds on Tuesday, as well as operational creditors and financial debtors. This is a huge relief for public sector banks shortly before the end of the financial year as this account was fully planned for and will result in a full write-back, directly improving bottom line’, said one of the individuals.

Punjab National Bank (PNB), the transaction’s main lender, received Rs 700 crore, followed by Bank of Baroda (BOB), at Rs 533 crore. The third-largest creditor, Exim Bank of India, stands to gain Rs 389 crore from this resolution. 

An email requesting a comment from Reliance officials did not receive a prompt response.

Sintex was the subject of a joint offer by Reliance and Assets Care & Reconstruction Enterprise (ACRE). On March 20, it got clearance from the Committee of Creditors (COC) of Sintex to purchase the heavily indebted textiles company after more than 97% of the lenders voted in favor of the proposal.

However, the case was delayed due to litigation surrounding the purchase, problems with claims made by associated parties, and some government reimbursements.

 In February of this year, the NCLT eventually agreed to the plan, dismissing the request for equitable distribution made by unsecured creditor Axis Bank. 

Out of the four resolution proposals presented to creditors, lenders decided to pay Sintex’s entire debt of Rs 7,719 crore at 54% haircut. RIL has now acquired three businesses through the bankruptcy procedure. Together with JM Financial Asset Reconstruction Co., it had finalized the acquisition of another struggling textile manufacturer, Alok Industries, in 2020. Most recently, in December 2022, its telecom division Reliance Jio finalized a Rs 3,720 crore deal to buy Reliance Infratel Ltd. ‘s tower and fiber assets from RCom.

 

By: Mansi Suryawanshi

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