Consider the evidence: we were a completely textile company at one time; today, plastic accounts for about 90% of our revenues; our plastic business was largely single product, today it covers 3,500 products. Then our plastic revenues were largely retail; today retail sales account for only a small proportion of our plastic revenues today.

The result of this willingness to change was that Sintex moved with speed following the identification of inflection points; we entered businesses at the nascent end of their life cycles resulting in a first-mover’s market share and mind share leading to attractive value-creation.

A number of observers believe Sintex is growing laterally into non-synergic businesses that could potentially impede medium-term profitability. The reverse is true: while a number of our business verticals and products may appear unconnected, there is a common thread binding them: the novel application of plastic to replace conventional material in high-growth sectors with long-term potential. The remarkable feature of this strategy is that even though we introduced plastic water storage tanks in the early nineties around this concept, the business registered a robust growth in the five years leading to 2009-10. Interestingly, what used to be a flagship product accounts for less than 10% of our business today as the company has registered a growing presence in power, electricals, telecom, realty, automotive, water and liquid storage solutions, among others.

Realty: Our mass housing solution business has a robust order book that will translate into adequate work for two years. This scope will increase following growing approvals from state government authorities. For example, we constructed houses in flood affected areas in Karnataka; today we are one of the two companies approved by the Karnataka State Government to create houses in the state’s villages. Similarly, we expect to widen our footprint across Jharkhand, Chattisgarh and West Bengal. As an extension of our contracting business (for government and private agencies) in mass housing, we are entering the business of land development and possess three land parcels which we expect to develop over the near future.

Power: Our industry position in the power sector is expected to yield significant returns. Consider this: India is adding over 100,000 MW of power in five years, which means a wider market for our transmission and distribution products. Besides, the government’s focus on reducing AT&C losses and provision of free power to the agricultural sector for a few hours will warrant a growing investment in the country’s power infrastructure, widening our market.

International business: Our international business strengthened with developed markets emerging from the global meltdown concurrent with our reorientation towards value-addition. The cascading impact of our acquisition began: the facility dedicated to Schnedier India was commissioned and its full benefits are soon expected. We expect the proportion of our international business to grow even as our total business expands.

While the actual is interesting, the apparent is even more so. Our global business partners are reinforcing our capability in the area of composites – next generation of plastics – that are still to come to India in a big way. As global companies seek to leverage India’s low-cost advantage and the demand for composites emerges, Sintex will be among the first to capitalise.

Infrastructure space: Sintex intends to capitalise on the sizeable growth coming out of India’s infrastructure space. For instance, waste management is a government priority on account of growing urbanisation and inadequate waste management infrastructure. The government has earmarked sizable funds for this segment: about 366 projects with an investment outlay of Rs. 436.11 bn under the JNNURM scheme and 738 water related projects for Rs. 117.74 bn under the UIDSSMT. We created Sintex Infra Projects Ltd., a wholly-owned subsidiary in November 2009 to capitalise on this opportunity. I am pleased to state that the subsidiary has already secured Rs. 174.50 crore contracts from U.P Jal Nigam to survey, investigate, design, supply, lay, commission and test 150 mm-1600 mm diameter RCC/PSC/HDPE/GRP pipes in trunk/lateral/branch sewers and allied works like manhole chamber construction, among others.

Decentralised waste water treatment systems (DEWATS): Sintex sees in liquid management an area of attractive possibilities. A number of sub-urban Indian towns and small cities are deficient in drainage. As urban limits are redefined, waste management systems may be unable to keep pace with the extension, raising the need for decentralised waste water treatment solutions for primary waste management and onward connection to a centralised sewerage infrastructure. To strengthen our offerings, we collaborated with Aqua Nishihara, a pioneer in waste management solutions in Japan and Thailand. The result is that our package drainage system is unique in treating waste water and making it suitable for agricultural purposes and we are looking at initiating installations across Gujarat and Rajasthan.

Warehousing: India is losing food items worth Rs. 50,000 crore annually on account of the poor post-harvest handling of farm produce (Source: The Economic Times; July 28, 2009). Logistic companies in India drew up an investment plan of Rs. 50 billion for 2010-12 to expand warehouse operations nationwide to 30 million sq. feet. This investment may not suffice; India will faces a shortage of 50 million sq. feet of warehousing space owing to complex land procurement (Source: RNCOS portal- December 5, 2009). Sintex is prepared for this opportunity through the manufacture of customised pallets for diverse applications, racking systems, new walling solution (sandwich panel with puff insulation), complete warehousing solutions and cold-chain management solutions.

Oil exploration: We acquired 100% equity stake in Esveegee Steel (Gujarat) Pvt. Ltd (renamed Sintex Oil & Gas Pvt. Ltd.). Under the New Exploration Licensing Policy (NELP) for exploration of oil and natural gas, our subsidiary submitted bids for six inland type S-blocks in NELP-VIII and emerged successful in three blocks (CB-ONN-2009/1, CB-ONN-2009/2 and CB-ONN-2009/7). As per NELP guidelines, we will sign a production sharing contract with the Indian government to explore, develop and produce petroleum resources in these blocks, opening up an entirely new high-value business vertical.

As a growth-driven corporate, we will continue to identify opportunities that are synergic with our existing spectrum of businesses with the objective to accelerate our momentum and enhance value for our family of shareholders.

Regards,

Dinesh B. Patel