Sintex Industries Shareholders Demand Fresh Bids since Media Leak Violated Principle of Confidentiality
Moneylife Digital Team 14 January 2022
The shares of Sintex Industries Ltd  (Sintex) are lower circuit from 11 January 2022 onwards after a report from The Economic Times mentioned that Reliance Industries Ltd (RIL) and Welspun have emerged as the top-2 contenders with conditional bids to acquire the bankrupt company.
 
The report says that the RIL offer, if accepted, will lead to existing equity being written off. In the new shareholding structure, RIL will hold 79%, Assets Care and Reconstruction Enterprises (ACRE) will hold 11% and lenders will receive a 10% equity stake. However, the plan is not yet finalised and Sintex Industries' resolution professional (RP) Pinakin Shah has asked the two bidders to resubmit their revised ‘unconditional’ resolution plans. 
 
The latest shareholder data showed that individual investors with up to Rs2 lakh capital are holding 74.02% stake in the company. Retail investors have been buying most of the stocks going into such resolution proceeding, in the hope to find the next Ruchi Soya. But most resolutions are leading to equity write off such as DHFL(Dewan Housing Finance Corporation Ltd). It is still not clear how the resolution plans became public and who leaked, it as it is a clear violation of the resolution laws. 
 
On the news item Sintex clarified "Presently, the company is under the corporate insolvency resolution process (CIRP) under the IBC Code 2016 and is making all necessary disclosures required to be disclosed under the said Code and the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015."  
 
A bunch of shareholders have demanded that since details of the bids have been leaked, it violates the principle of maintaining confidentiality during the entire resolution process.
 
They cite a comment by the Mumbai bench of the National Company Law Tribunal (NCLT) in the Videocon resolution case. The NCLT had said,  “…even if the confidentiality clause is in existence, in view of the facts and circumstances as discussed above a doubt arises upon the confidentiality clause being in real-time use, therefore, we request IBBI to examine this issue in depth so as to ensure the confidentiality clause is followed unscrupulously, without any compromise in letter and spirit by all the concerned parties, entities connected. If not IBBI can frame appropriate regulations, safeguards there by the maximisation of value of the assets of the Corporate Debtor(s) would further increase which in turn will benefit all the stakeholders.” 
 
Citing this ruling, shareholders of Sintex have requested the resolution professional to cancel the existing ongoing process immediately; invite fresh bids; debar the defaulting bidders – RIL and ACRE from the process.
 
Lenders of Sintex Industries have received 16 expressions of interest (EoIs), including bids from foreign fund CarVal Investors and Varde Capital-backed Aditya Birla Asset Reconstruction Co. Other EoIs came from Edelweiss Alternative Assets Advisors Ltd, Asset Reconstruction Company of India (Arcil), Prudent ARC, Ludhiana based Trident Ltd, Punjab-based Lotus Hometextile, Mumbai-based Indocount Industries and Nitin Spinners.
 
RIL has been looking to diversify its business from petrochemicals to telecommunication, green energy and fashion. It has recently purchased IPR (intellectual property rights) to use the iconic Lee Cooper brand in India and acquired a stake in some other fashion brands. RIL is interested in Sintex since it had been a supplier to global brands such as Armani, Hugo Boss, Diesel and Burberry. RIL has also entered into partnerships with Burberry Group Plc, Hugo Boss AG and Tiffany & Co.
 
Spring Ventures a deep tech investment firm led by Aviv Refuah had also bought 30.5 lakh Sintex shares at Rs12.7 per share in December 2021. The matter is still under consideration and equity write-off (delisting) may be declined by SEBI (Securities and Exchange Board of India) as in the case of Alok Industries which has been acquired by RIL.
 
SEBI, addressing minority shareholders concerns in the case of Alok Industries, said the resolution plan must lay down “specific procedure to complete delisting of such shares or provide an exit option to the existing public shareholders at a price specified in the resolution plan.” 
Comments
aptesudhir
2 days ago
Another important issue needs investigation. From the day the news about writing off shares appeared in Economic Times one can observe a few crore shares of Sintex submitted for sell even before 9.15. So ordinary shareholder who wants to sell his shares after the news appeared does not a get a chance to sell them. Surprisingly a few lac shares are bought everyday. So who is getting the opportunity to unload his or their shares in crores and who are the gullible buyers who are buying these shares which are going to be worthless after Sintex is sold, as per the terms mentioned in ET?
I think SEBI should protect the interests of small and in fact all shareholders. Alok industries example is quite apt. Sintex is not a bogus company. Their haste in increasing the capacity indiscriminately got them in trouble. But their plant is in working condition and client base is valuable. AS there are a lot more buyers who have submitted EOR the concerned authorities should invite fresh bids.
shivamdhari3
2 days ago
It is very important to complain.To fight for our rights
Kamal Garg
Replied to shivamdhari3 comment 2 days ago
But how to do that? Can we, the existing shareholders, form a group with a common purpose to contest this case at various forums including MoF, SEBI and other redressal forums like Court, etc.
I think, having raised this issue, in its right earnest, MoneyLife can take this matter forward by starting a social media mass campaign to make the authorities and regulators aware of this thing happening and to seek justice on behalf of hapless shareholders.
vinodjoshi181
1 week ago
Please all shareholder complain to PMO, Ministry of Finance, SEBI and Piyush Goyal minister of commerce through twitter etc. That's the only way we can get some help.
Kamal Garg
Replied to vinodjoshi181 comment 6 days ago
We all hope that "rule of law" prevails in this country and people do not loose faith in the system which regulate and govern this country. Laws are there for smooth functioning, non-discrimination and governance and therefore a fair and transparent atmosphere must be created/maintained so that people do not feel cheated by the system/system's loopholes.
Kamal Garg
1 week ago
I think the point being missed by many is that how can there be a "leak" of confidential bids submitted to RP/CoC. The bids are submitted in sealed cover with complete confidentiality guaranteed. Since these confidential bid information has been leaked from the office of RP/CoC, therefore, it is imperative to cancel the earlier bids and call for fresh bids and follow all legal norms / requirements / procedures.
sahidul7hs
1 week ago
What should I do as the shareholder of sintex industries Ltd,if I unable to sell shares at any rate, I will have to loss the entire amount,or any suggestions from the guys, please inform me
ragup
1 week ago
Why is there 74.02% of retail investors in this bankrupt company? Is it possible many "rushed in" since Reliance or Welspun are planning to acquire it, enabling institutional investors to dump these?
Manoj Soni
1 week ago
Why all time only retail small investor face losses via write off. Is it possible to show write off loss in Income tax?
Kamal Garg
Replied to Manoj Soni comment 1 week ago
You have raised a very interesting question as how to write off this loss in income tax. Interesting thing is that if you are able to sell this scrip in the market, then, you can book the loss as STCG or LTCG depending upon your period of holding. However, due to continuous lower circuit before delisting, if you are not able to sell in the stock exchange, then, you cannot claim any loss in income tax. The shares will lie in your demat account with no value attached to it.
bpshah0
2 weeks ago
We have to boycott reliance industries too .. reliance industries brighten only due to retail investors.How can reliance industries offer equity write off of sintex retailers..
nirpatel.1984
2 weeks ago
Sometimes I feels that IBC is made to loot tax payer money legally. Gov should take some action against those corporate who tooks disadvantages
Kamal Garg
Replied to nirpatel.1984 comment 2 weeks ago
Yes, it seems so. So far, how Insolvency cases have been handled and how "recovery" has been made itself shows a pathetic performance as far as recovery is concerned and it looks like the prized assets are sold at throwaway prices through the IBC route which is a mockery of the law.
welcome.ansh
2 weeks ago
You r right sir. Every time a small investors are ruined by big fisheres. Last time when *glitch* word comes after a complete session get down by NSE and news spread that punishment will be given all those guilty but now. Everything gone in bury.
rajeevmib
2 weeks ago
In my opinion, this is the fundamental right retail investors, SEBI should safeguard retail investors interest to attract more investors to the share market to make India a 5 trillion economy, SEBI should not support only the Big Business tycoons and to safeguard their interest SEBI is killing the spirit of small investors those who are investing their hard-earned money for their better future, same thing happened in Videocon case. We will not allow SEBI to continue the way they have been killing retail investors, this is the High time to have a Union of retail investors to voice out against the indifferent approach of SEBI, there should be a law which protects retail investors when there is a bankruptcy company purchased by any New company, they should protect the interests of Retail investors before committing anything to the new buyer. How can someone make retail investors equity holding zero when they are also equal owners of the company. This is ridiculous, SEBI should change their existing laws and make it more favourable to the retail share holders. They should look into the Videocon deal also.
Kamal Garg
2 weeks ago
In my opinion, how can there be a "leak" of the proposal submitted to CoC/RP with confidentiality agreements in place i.e. signed.
1. A probe should be ordered on how ET came to know about this news/story and how ET carried a headline story with such grievous consequences.
2. The very fact that there were 24 bidders itself shows that "many" have been interested in this asset and therefore all the existing bids should be cancelled and a fresh bid should be invited with strict confidentiality clause and also a right to CoC/RP to cancel the bid and bar the bidder whoever makes any attempt to break the confidential submissions and proceedings.
singhmiki1955
2 weeks ago
Sebi and government must ensure that retail investors are not harmed as in case of videocon ind and dhfl. There is strong impression that govt. favours corporates and doesn't care for retail investors. Same is case for food inflation, because of which govt. Will be punished in elections.
hst7757
2 weeks ago
Retail investors are less informed minority stake holders, there protection must be granted by SEBI as to motivate retail investment which has emerged as a 3rd force in capital market in India.
hst7757
2 weeks ago
Retail investors are less informed minority stake holders, there protection must be granted by SEBI as to motivate retail investment which has emerged as a 3rd force in capital market in India.
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