“Equity shares of Sintex Industries will be delisted, and the equity will be reduced to zero as part of the insolvency resolution process. You will lose your entire capital if you invest, ” as per a tweet by Zerodha.
Nithin Kamath, Founder and CEO of Bengaluru based online stock exchange firm Zerodha expressed his concern over some investors who are trying to buy the shares of Sintex Industries on its platform even now when they know that the stock price is going to go to zero.
“It is concerning that we have a few customers still buying Sintex shares even after this nudge that the stock price will go to 0 and mandating a TOTP. There are so many who decide to buy just because a stock is at 52 week or all-time lows without caring about the reason,” he said in a tweet.
Insolvency proceedings against textiles and yarns manufacturer, Sintex Industries Limited was initiated in April last year and the CoC (Committee of Creditors) had to approve a bid with at least a 66% majority before it could go to the NCLT for final clearance, as per the procedures under the Insolvency & Bankruptcy Code.
The members of the CoC have approved the resolution plan submitted by Reliance Industries Ltd (RIL) jointly with Assets Care & Reconstruction Enterprise Ltd (ACRE).
The combined offer for this resolution plan was ₹ 3,650 crores, while the claims of 28 financial creditors aggregate to ₹7,719 crores, as per regulation 14 of Corporate Insolvency Resolution Process (CIRP) regulations, 2016. This means that the creditors will have to take a haircut of about 53 per cent.
Punjab National Bank (₹1,563 crores), Bank of Baroda (₹1,169 crores), Union Bank of India (₹700 crores), Bank of India (₹673 crores), Canara Bank (₹560 crores) and Export-Import Bank of India (₹545 crores) are some of these creditors, with large exposure.
Sintex Industries Limited in a regulatory filing on Sunday said that as per the resolution plan, it is proposed that the existing share capital of the company shall be reduced to Zero and the Company will be delisted from the stock exchanges — BSE and NSE.
In accordance with Section 30(6) of the Code for approval of the said Resolution Plan by the National Company Law Tribunal (NCLT), the Interim Resolution Professional is in the process of filing an application.
As per the company’s Q3 results, it is undergoing substantial financial stress and severe liquidity constraints since last Financial Year coupled with Covid related disruptions, changed industrial dynamics, time and cost overrun in completion of its projects, reduction in subsidies and incentive benefits, and so on.
