Reliance Industries, the Mumbai-based multinational conglomerate owned by Mukesh Ambani, has further expanded its presence in the textile industry with the completion of its acquisition of debt ridden Sintex Industries. The acquisition was made for a total of 3567 crore rupees, and as part of the resolution plan, Reliance Industries has invested ₹1,500 crore into the yarns and fabric maker.
Following the completion of the acquisition, Reliance Industries now owns almost 70% of Sintex Industries, with SIL issuing shares worth ₹600 crore and optionally fully convertible debentures worth ₹900 crore to Reliance Industries on Tuesday.
Reliance Industries also stated in a regulatory update that any shares of SIL issued prior to the approval of the resolution plan have been cancelled.
Resolution of Sintex Industries Completed
Sintex Industries, a textile-focused company, had declared bankruptcy several months ago due to its inability to repay its debts. A Committee of Creditors, consisting of lenders, approved a joint resolution plan submitted by Reliance Industries and Assets Care & Reconstruction Enterprise (ACRE) nearly a year ago.
Under the approved resolution plan, Reliance Industries will take over the textile company and settle Sintex’s total debt of Rs 7,719 crore at a 54% discount. Last month, the resolution plan received approval from the National Company Law Tribunal.
According to sources familiar with the matter, Reliance Industries transferred the required funds to the bank accounts of the lenders on Tuesday. The lead lender, Punjab National Bank (PNB), received Rs 700 crore, followed by Bank of Baroda (BoB) at Rs 533 crore. Exim Bank of India, which was the third-largest creditor, is expected to receive Rs 389 crore from the resolution
People who are aware of the development told that both financial and operational creditors have received their payments in accordance with the approved resolution plan. The successful completion of the resolution plan comes as a great relief to public sector banks just before the end of the financial year, as this account had already been fully provided for, and will result in a full write-back, directly improving their bottom line.