Plastic goods maker Sintex Industries managed to maintain its year-ago profit level in the April to June quarter. However, its operational performance was weaker than expected. In the current market conditions, the aggressive growth plans of Sintex may not appeal to investors, who are actively shunning leveraged companies. For the April to June quarter, Sintex posted a 4.4% year-on-year growth in consolidated revenues at . 1,128.1 crore, but operating profits fell over 19% to . 104.6 crore. Its interest burden, too, was 22.8% higher at . 43.4 crore. Only the sharp drop in forex losses and lower tax provisions helped the company post a slightly better net profit than a year ago. The company has been facing working capital issues in its monolithic business, which has forced it to go slow. Hence, the 13% fall in revenues for that segment, on the back of a 7.8% drop in FY13, was not unexpected. However, Sintex also took a hit on its domestic custom moulding business, whose revenues fell 16.4% year on year during the quarter; the business was one of the star performers in FY13, posting a strong 29% growth. “Domestic business witnessed strong pressure from the automotive segment, where the number of large automotive manufacturers has seen a decline with the sluggish economic environment,” said the company’s press release. Sintex’s business of pre-fabricated structures remains as the main growth driver, with revenues during the quarter growing 18.8%, after a 35% spurt in FY13. Its textile segment also did well. The company is planning . 1,700-crore capex to set up a value-added yarn plant in Gujarat. At a time when the performance of its existing businesses is under pressure and the balance sheet is leveraged — consolidated debt-equity of 1 as on March 31 — this may not go down well with its investors. On the other hand, a potential 37% equity dilution, assuming all convertibles and warrants are converted into equity shares, will almost neutralise the gains to retail shareholders.
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