Zerodha warns about investing in Sintex shares

Sintex Industries’ lenders have approved the joint bid of Reliance Industries (RIL) and Assets Care & Reconstruction Enterprise (ACRE) to acquire the debt-ridden textiles firm under the insolvency resolution process. The Committee of Creditors (CoC) of Sintex unanimously voted in favor of the resolution plan by RIL and ACRE.

“As per Resolution Plan of Reliance Industries Limited jointly with Assets Care & Reconstruction Enterprise Limited it is proposed that existing share capital of the company shall be reduced to Zero and the company will be delisted from the stock exchanges ie BSE and NSE,” Sintex Industries had announced in an exchange filing.

Bengaluru-based online stock brokerage firm Zerodha’s founder and chief executive officer (CEO) Nithin Kamath expressed his concern over some investors still trying to buy Sintex shares on its platform, even as the stock price will go to zero.

“It is concerning that we have a few customers still buying Sintex shares even after this nudge that the stock price will go to 0 and mandating a TOTP. There are so many who decide to buy just because a stock is at 52 week or all-time lows without caring about the reason,” Kamath said in a tweet.

The insolvency resolution for Sintex was approved, and the equity is being written off, Zerodha said in a tweet with sharing the screenshot of the nudge saying “Equity shares of Sintex Industries will be delisted, and the equity will be reduced to zero as part of the insolvency resolution process. You will lose your entire capital if you invest.”

Insolvency proceeding against Sintex Industries was initiated in April last year. As per the procedures under the Insolvency & Bankruptcy Code, the CoC has to approve a bid with at least a 66% majority before it goes to the NCLT for final clearance. The company said it is in the process of filing an application for approval of the said resolution plan by the NCLT.

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