KKR India Financial Services Ltd, the non-bank lending arm of the global private equity firm, has approached the bankruptcy court against Sintex-BAPL Ltd to recover a debt it had sanctioned just two years ago.
The non-banking finance company (NBFC) has filed a petition in the Ahmedabad bench of the National Company Law Tribunal (NCLT) against Sintex-BAPL, a stock-exchange filing shows.
Sintex-BAPL, a subsidiary of Sintex Plastic Technology and engaged in the manufacturing of automotive products, owed KKR India a principal sum of Rs 1,190 crore along with interest, the filing shows.
Gujarat-based Sintex-BAPL had raised the debt from KKR India in May 2018 to refinance some existing loans and finance its growth in a vertical.
Prior to being dragged to the bankruptcy tribunal, the Sintex-BAPL management was working on a restructuring plan in order to revive the company.
“Sintex-BAPL is in active negotiations with the lenders for an appropriate debt resolution plan, and is also considering options of monetising other assets of custom moulding and auto division,” the company had said in its financial statement approved in June.
The firm also completed the sale of the entire equity holding of its indirect wholly-owned subsidiary Sintex NP SAS in October 2019 for 155 million euros (Rs 1,364.95 crore).
The stock-exchange filing also shows that Aditya Birla Finance Ltd, an NBFC that’s part of the diversified Aditya Birla Group, has dragged another unit of Sintex Plastic Technology to the NCLT, namely, Sintex Prefab and Infra, for defaulting on a loan of Rs 20.4 crore.
Sintex-BAPL Ltd is not the first firm KKR India Financial Services Ltd has dragged to the bankruptcy tribunal.
The non-banking finance unit of global private equity giant KKR had dragged Kwality Ltd to the bankruptcy court in October 2018.
Also, KKR plans to merge the non-bank lending unit with InCred Financial Services Ltd via an all-stock deal that would give it a minority stake in the combined company, people familiar with the matter had told VCCircle last month.
The planned deal comes at a time when KKR India Financial Services Ltd has been struggling with a rise in bad loans, a slump in valuation and a top-management churn for the past year.
The proposed merger appears to be a dramatic change in strategy by KKR, which had committed an additional $150 million to the NBFC as recently as January to strengthen its position in India’s non-bank lending segment.
Sintex-BAPL
Sintex-BAPL manufactures injection-moulded plastic components for the automotive industry. It has seven facilities across the country.
Its product portfolio includes exterior systems for front and rear bumpers, overhead, side walls, acoustic management, seating and hood.
Incorporated in 2007, Sintex-BAPL was earlier known as Bright Autoplast Pvt. Ltd and was previously the automotive division of Bright Brothers Ltd.
For the year ended March 2020, Sintex-BAPL’s losses jumped to Rs 1,280.80 crore from Rs 0.79 crore a year earlier. Its revenues dropped by more than half to Rs 853.39 crore from 1,711.12 crore during the period.
In its financial statement, the company said, “As the brand value has reduced from Rs 1,500 crore to Rs 700 crore so the firm has provided Rs 800 crore as impairment expenses (exceptional item) in its profit and loss account. Also, due to loss and impairment of brand value of Sintex, the net worth has turned out to be negative as on 31 March 2020.”
Brickwork Ratings India Pvt Ltd has junked the credit rating for the non-convertible debentures of the company to D.