R A PODAR INSTITUTE OF

MANAGEMENT
UNIVERSITY OF RAJASTHAN

PROJECT REPORT ON SINTEX

INDUSTRIES LTD.

SUBMITTED TO:
BY:
Mr. PRASHANT SIPANI
PRAJAL MUSAL

SUBMITTED

MBA SM (2ND SEM)

INTRODUCTION TO THE INDUSTRY

1931 - The Company was incorporated at Kalol, North Gujarat. The main objective of the
company is to manufacture textile goods. The products manufactured are poplins, coatings,
shirtings, sarees, dhoties, etc.
1975 - Plastics division was named as Sinter Plast Containers Division. Products
manufactured in Plastics division are large size containers of capacities ranging from 60 litres
to 1000 litres and 5000 litres for chemical industry. Items like card cans, pallets and baskets
for textile industry.
1980 - The company purchased the land, buildings, plant and machinery and the use of the
"GOPI" trade mark of The New Commercial Mills Co., Ltd. and took possession of the mill
on 24th November. Consequent upon the acquisition of The New Commercial Mills Co.,
Ltd. the company was to issue 50,000 equity shares of Rs. 100 each of the Company to the
non-management shareholders of The New Commercial Mills Co., Ltd. at a premium of Rs.
275 per share in the proportion of 1 equity share held in of the Company to every 2 equity
shares of Rs. 50 each. The New Commercial Co., Ltd.
1999-SINTEX International Limited (SIL) gets United States Food and Drug Administration
(FDA) approval to sell its range of homeopathic medicines in that country.
2002-Sintex Industries Ltd has informed that Mr Kirtikant S Nanavati has resigned from the
Directorship of the Company.Mr Ashwin Lalbhai Shah has been appointed as an additional
Director to hold the office till the conclusion of next AGM of the Company.Mr Anil Ahuja
and Mr Anurag Mathur also resigned from the Board of the Directors of the Company and Mr
P S Chhabra and Mr Girish Baliga are appointed as Directors of the Company.
2007-Sintex Industries acquires the Automotive products business of Bright Brothers Ltd in
an all cash transaction valued at INR 1.

- Wausaukee Composites mc, USA (WCI), a downstream subsidiary of Gujarat-based Sintex

Industries, has purchased Nero Plastics Inc.

2012-Sintex Industries Ltd has recommended Dividend Rs. 0.65 per equity share.

CAPITAL STRUCTURE OF PAST 14 YEARS.

Capital Structure (Sintex Industries)
Period
Instrument
Authorized Issued Capital
Capital
From To
(Rs. cr)
(Rs. cr)
2013
2014 Equity Share
65
31.31
2012
2013 Equity Share
65
31.31
2011
2012 Equity Share
50
27.3
2010
2011 Equity Share
50
27.3
2009
2010 Equity Share
50
27.3
2008
2009 Equity Share
50
27.3
2007
2008 Equity Share
50
27.3
2006
2007 Equity Share
35
22.39
2005
2006 Equity Share
35
19.73
2004
2005 Equity Share
35
18.48
2003
2004 Equity Share
35
14.56
2002
2003 Equity Share
35
14.56
2001
2002 Equity Share
35
14.56
2000
2001 Equity Share
35
14.56

- PAI D U PShares (nos)

313109980
313109980
272990866
272990866
136495433
136495433
136495433
111938763
98658320
18476664
14561664
14561664
1500000
14561664

After going through the capital structure of Sintex Industries Ltd. It can be inferred that there
is slight change in the policy of the company as there is no major change in the capital of the
company and whenever there is change in the issued capital, capital structure changes .this
has happened just four times in last 14 years which shows the consistency in the structure of
the company.

Face Value
1
1
1
1
2
2
2
2
2
10
10
10
100
10

CAPITAL BUDGETING POLICY OF SINTEX INDUSTRIES LTD.

Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance with the
Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the
Accounting Standards notified under Section 211(3C) of the Companies Act, 1956(the 1956
Act) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013
(the 2013 Act) in terms of General Circular 15/2013 dated 13 September, 2013 of the
Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as
applicable. The financial statements have been prepared on accrual basis under the historical
cost convention.

Fixed Assets (Tangible/ Intangible)

Fixed assets are carried at cost less accumulated depreciation / amortisation and impairment
losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts
and rebates, any import duties and other taxes (other than those subsequently recoverable
from the tax authorities), any directly attributable expenditure on making the asset ready for
its intended use, other incidental expenses and interest on borrowings attributable to
acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. The
Company has adopted the provisions of Para 46A of AS 11 The Effects of Changes in Foreign
Exchange Rates, accordingly, exchange differences arising on restatement / settlement of
long-term foreign currency borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the remaining useful life of
such assets .Fixed assets retired from active use and held for sale are stated at the lower of
their net book value and net realisable value and are disclosed separately.
INFERENCE:
After going through the fixed assets policy of the company it can be inferred that company is
following the policy in which cost allocated to the assets is as when charged which does not
have any future implication regarding the valuation or charging the deprecation to the asset.
As it can be seen that some of the machinery is imported from foreign that means foreign
exchange rates is applicable and for that company is following the required policy or
accounting standard which is beneficial for the stake holders.

Depreciation and amortisation

Depreciation on Buildings, Plant and Machinery is provided on straight line basis at the rates
and in the manner specified in Schedule XIV of the Companies Act, 1956. Depreciation on
Furniture, Fixtures, office equipment, bore well and vehicles is calculated on written down
value basis at the rates and in the manner specified in Schedule XIV of the Companies Act,
1956.Premium on leasehold land is amortized over the period of lease.

Intangible assets viz. technical knowhow and software are amortised over a period of five
years.
INFERENCE:
It can be seen that company is following all the methods prescribed in companies act 1956
regarding buildings, plant and machinery it is following straight line method and for furniture
and fixtures written down is followed. This shows company is following the consistency
principle.

Inventories
Inventories of finished goods, raw materials and work in progress are carried at lower of cost
and net realisable value. Fuel and stores & spare parts are carried at cost after providing for
obsolescence and other losses. Cost for raw materials, fuel, stores& spare parts are
ascertained on weighted average basis. Cost for finished goods and work in progress is
ascertained on full absorption cost basis and includes excise duty.
INFERENCE:
Company is following the method in witch lower of the cost or net realisable value witch is
lower is recorded in the books of accounts.Which in deed shows that company is following
the approach of conservation.

Revenue Recognition
Revenue is recognized based on the nature of activity, when consideration can be reasonably
measured and there exists reasonable certainty of its recoverability.
Revenue from sale of goods is recognised when substantial risk and rewards of ownership are
transferred to the buyer under the terms of the contract.
Sales value is net of discount and inclusive of excise duty but does not include other
recoveries such as handling charges, transport, octroi, etc.
Revenues from service contracts are recognised when services are rendered and related costs
are incurred.

INFERENCE:
It can be inferred that company is recording the revenues as prescribed in the companies act
1956, and following all the procedure to record it .Company is dealing in both product and
services and accordingly recorded in the books of accounts .

Foreign Currency Transactions/ Translation

a) Transactions in foreign currencies entered into by the Company are accounted at the
exchange rates prevailing on the date of the transaction. Foreign currency monetary items of
the Company, outstanding at the balance sheet date are restated at the year-end rates. Nonmonetary items of the Company are carried at historical cost.

b) Exchange differences arising on settlement / restatement of short-term foreign currency

monetary assets and liabilities of the Company are recognised as income or expense in the
Statement of Profit and Loss.
c) Exchange difference on long-term foreign currency monetary items: The exchange
differences arising on settlement /
restatement of long-term foreign currency monetary items are capitalised as part of the
depreciable fixed assets to which the monetary item relates and depreciated over the
remaining useful life of such assets. If such monetary items do not relate to acquisition of
depreciable fixed assets, the exchange difference is amortised over the maturity period / up to
the date of settlement of such monetary items, whichever is earlier, and charged to the
Statement of Profit and Loss except in case of exchange differences arising on net investment
in non-integral foreign operations, where such amortisation is taken to Foreign currency
translation reserve until disposal / recovery of the net investment. The unamortised exchange
difference is carried in the Balance Sheet as Foreign currency monetary item translation
difference account net of the tax effect thereon, where applicable.

INFERENCE:
As company is having the subsidiaries in the foreign countries and to record the revenue it
must follow the rules which is prescribed by the ICAI and after seeing the policy of the
company its following the policies related to foreign exchange prescribed in the act.

Accounting for Tax

Current tax is accounted on the basis of estimated taxable income for the current accounting
period and in accordance with the provisions of the Income Tax Act, 1961. Deferred tax
resulting from Timing Differences between book and taxable profit is accounted for using
the tax rates that have been enacted or substantively enacted on the Balance Sheet date.
Deferred tax assets are recognised for timing differences of items other than unabosrbed
depreciation and carry forward losses only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these can be realised.
However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets
are recognised only if there is virtual certainty that there will be sufficient future taxable
income available to realise the assets. Deferred tax assets are reviewed at each balance sheet
date for their realisability.

INFERENCE:
It has been already observed that cash flows to be considered for to be considered for
purposes of capital budgeting are net of taxes .The tax laws permit carrying losses forward to
be set off against future income . Now regarding the tax related to deprecation are contained
in section 32.

CONCLUSION REGARDING CAPITAL BUDGETING POLICY:

Capital budgeting decisions relate to long term assets which are in operations and yield a
return over a period of time. They generally follow the practices of discounted cash flows
(DCF) for selecting the projects. Vast majority of corporates use the combination of
traditional as well as DCF techniques. Such decisions are of paramount importance as they
affect the profitability of a firm and are the major determinants of the efficiency and

competing power. While an opportune investment decision can yield the spectacular return
and incorrect decision can endanger the very survival of the firm. After going through the
capital budgeting policy of Sintex Industries Ltd. It is satisfactory and investing decisions is
done following the all tools and techniques.

WORKING CAPITAL POLICY OF SINTEX INDUSTRIES LTD.

There are two type of working capital gross and net. Gross means all the current assets of the
company. And net working capital means current assets less all the current liabilities.
Policy regarding investment of current assets is generally of three types : (1) relaxed,
(2)aggressive,(3) moderate.
Now regarding working capital policy which Sintex industries is following can be seen from
past five years investments related to currents assets is shifted from relaxed current assets
investing policy to moderate current assets policy which is much more beneficial for the
company.

THE RATIOS WHICH ARE RELATED TO WORKING CAPITAL POLICY

OF THE COMPANY:
(1) CURRENT RATIO
(2) LIQUID RATIO.
Current ratios of sintex industries for past five years are as follows:
March14
1.96

march13
1.83

march12

march11

1.04

1.40

march10
1.63

After seeing the current ratio it can be inferred that company is trying to reach the ideal
current ratio which is 2:1 and company is able to attain that by changing the policy of the
current assets mentioned above.
Liquid ratios of sintex industries for past five years are as follows:
March14
3.68

march13
3.46

march12

march11

3.05

2.80

march10
3.63

Looking at the quick ratio it can be inferred that company is having more money is blocked
in the liquid assets which is not good regarding the ideal ratio is 1:1 and company should
work on it to better utilize the short term funds.

MANAGEMENT OF WORKING CAPITAL FOR SINTEX INDUSTRIES

LTD.

Indian corporates seem to have adequate and satisfactory level of working capital as reflected
in their liquidity ratios. The foreign controlled companies are placed in a better position
relative to domestic companies and due to this sintex is having advantage due to its
subsidiaries.
The majority of Indian companies maintains relatively lower cash/bank balances Marketable
securities are yet to emerge as a popular means of cash management. The excess cash is
deployed to retire short term debt/in short term bank deposits.
The length of operating cycle is the most widely used method to determine working capital
need. The working capital financing policy is based on the matching approach. The majority
of the companies have occasionally experienced working capital shortage due to excess
inventory accumulation and poor debt collection and this is the reason SINTEX industries
have work on the the liquidity ratios and shown significant change in it.

LEVERAGE OF SINTEX INDUSTRIES LTD.

Leverage refers to the use of an asset or source of funds which involves fixed costs or fixed
returns. There are three types of leverage which are as follows:
(1) Degree of Operating leverage = %change in EBIT/ % change in sales
(2) Degree of Financial leverage = %change in EPS/% change in EBIT
(3) Degree of Combined leverage = DOL*DFL
EBIT of Sintex for past five years :(all figures in rs crores)
March14

march13

march12

march11

march10

1025.57

738.70

721.52

867.22

623.81

Net sales of sintex for past five years:

March14

march13

march12

march11

march10

5842.62

5079.44

4436.77

4475.15

3281.57

EPS of Sintex for past five years:

March14
11.61

march13

march12

march11

10.23

11.06

16.79

OPERATING LEVERAGE:

march10
24.26

BIBLOGRAPHY
http://www.sintex.in/
http://www.sintex-plastics.com/
http://www.moneycontrol.com/
http://en.wikipedia.org/