SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

Scope of work:
Ajay Kumar (1411211), Gokulram (1411229) Naseef K.P.O. (1411246), and Amit
Kumar Sah (1411280), Group 7, Sec-D students of IIM Bangalore undertook the
study of 2013-14 financials of Sintex Industries. The scope of the study is restricted to
Strategic Analysis, Ratio Analysis, Accounting Analysis and Cash Flow Statement
Analysis. The report was prepared as part of project-II for Financial Accounting taught
by Padmini Srinivasan at Indian Institute of Management Bangalore. The financial
reports for years ranging from 2011 to 2014 have been taken up from bseindia.com.
The views and analysis presented here belong to individuals of the groups and they are
no way responsible for losses arising from the interpretation of the document.

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

Contents
1.

Strategy Analysis: .............................................................................................................. 3

1.1 Risks and vulnerabilities: ................................................................................................. 3
1.2 Future Prospects:............................................................................................................. 3

2.

Major Accounting Standards and Policies followed: ............................................................. 4

3.

Financial Analysis............................................................................................................... 4
3.1

Horizontal Analysis:.................................................................................................... 4

3.2

Vertical analysis:......................................................................................................... 5

3.3

Ratio Analysis:............................................................................................................ 5

4.

Cash Flow Analysis............................................................................................................. 7

5.

Conclusion: ....................................................................................................................... 7

6.

References: ....................................................................................................................... 8

7.

Annexures......................................................................................................................... 9
Annexure 1: Balance Sheet and Profit and Loss Statement 2013-2014 ...................................... 9
Annexure 2: Horizontal Analysis ........................................................................................... 11
Annexure 3: Vertical Analysis: .............................................................................................. 12
Annexure 4 Profitability Ratios: ............................................................................................ 13
Annexure 5: Operating Figures............................................................................................. 14
Annexure 6 Liquidity Ratios.................................................................................................. 16
Annexure 7: Valuation Ratios ............................................................................................... 17
Annexure 8: Solvency Ratios: ............................................................................................... 17

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

1.

Strategy Analysis:
a) Plastic Industry : Plastic Industry has positive and growing outlook for upcoming years.

It is expected to more than double by 2020 i, ie, an annual average growth of 17%.
b) Company Analysis: It supplies plastic products for infrastructure purposes such as
tanks, doors and sheds; it supplies customized plastic industrial products ranging from
for electrical equipments, aerospace, automobiles defence, telecommunication etc.
c) Mergers and Acquisitions related: July 2014: Sintex Industries successfully acquired
France based SIMONIN Group3 which manufactures technical components and metalplastic sub-assemblies. August 2014: Sintex Wausaukee Composites Inc., owned by
Sintex, is bringing its light resin transfer moulding expertise to India. 4
d) Company Growth vs. Industry growth: 1.The plastic industry grew by a healthy 10-12%
%1. Revenue from plastic industry grew by only 6.77% however; the Operating Profit
has increased by 21.2%. 2. The textile revenues grew by a healthy 15.7% as compared
to an industry average of 11%5
e) Company export vs. Industry Export: Company Export grew at meagre 5.3 %. Indian
plastics exports have grown at a rate of 16.56% 2
1.1 Risks and vulnerabilities:
1. Pre-fabricated and monolithic segment which accounts for over quarter of their
revenues is entirely dependent on government projects.
2. China has near about the same population as India and is 3 to 20 times better
positioned in volumes of plastic manufacturing.
3. Despite having 29% share in cotton production, China houses 46% of world spinning
capacity and 45% of global trade.
1.2 Future Prospects:
1. The per capita income has increased by a percentage of 10.4% as compared to 2012-13.
Innovative demands for Water management, Nursery Management, Surface cover
Cultivation, Controlled Environment Agriculture and Innovative Packaging Solutions
are some of the new market potentials.
2. Govt thrust on social spending to drive the Prefab and Monolithic business: The new
government at centre came to power with promised focus on rural/urban housing.
Monolithic and Prefab business will receive a boost on this account.
3. SIMMON gives Sintex capabilities of metal stamping as well as plastic moulding on
metals7 . Addition of customers like Valio, Vignal Systems, SKF to portfolio in future.
4. India as a global hub for small cars, revival of transportation and car segment,
packaging industries robust growth estimates and rapid urbanisation creates demand.
5. SIL is planning to setup a spinning unit with a capacity of producing 4.06 crore Kg of
yarn per annum at Amreli, Gujarat6 . This will be commercialized from April 1, 2016.
6.

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

2.

Major Accounting Standards and Policies followed:

Type of account
1.

Accounting Policy used

Depreciation on Buildings, Plant and
Machinery is provided on straight line
method; Furniture, Fixtures, Office
Equipments, Borewell and Vehicles is
written down value method. Method is
same for peer companies.
Intangible assets are amortised over a
period of five years.
Inventories are carried at lower of cost or
net realizable value; COGS is accounted
on Weighted Average Method

Depreciation

Amortisation
Inventory

The cost of fixed assets is based on the purchase price and the expenses incurred to
bring it to its intended use. Borrowing of funds not directly related to the acquisition of
qualifying assets are expensed or else they are capitalised.
Current Investments are stated at lower of cost or fair value.
Current tax is based on companys analysis of tax to be paid, and deferred tax is
accounted on account of timing difference between Income Tax department and
company accounts.
The accounting methodologies have remained the same for the past 3 years, and there
has been no deviation from the used methods.
The financial information of subsidiaries reflecting total assets (net) of 1,280.65 crore
as at 31st March, 2014, total revenues of 1,520.72 crore and net cash inflows
amounting to 25.97 crore for the year ended on that date have not been prepared by the
same auditors. This information has been furnished to Deloitte who prepared the rest of
the report.

3.

Financial Analysis
3.1 Horizontal Analysis:
a) Shareholders Funds: There has been healthy growth of reserves and surplus over

the last three years. The growth in year 2011-12 and 2013-14 was not that
substantial and was meagre 7.4%. The reason was substantial dependence on
monolithic sector which is highly dependent on government projects. 2011-12 was
the zenith of policy 3000
paralysis.
2500

b) Borrowings : Over the last

2000

three years the %age of

debt over total assets has
remained pretty constant at

1500

Borrowings
Long Term
borrowings

1000
500

(Crore)

2011-2012

2012-2013

201-2014

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

46%. Loans have been steadily rising at the rate of 13% per annum, and total assets
have been posting a similar growth. So loans are not being used to repay interest
cost, and pay dividends. They are being used to build assets.
c) Trade
Receivables
and
payables: Trade receivable

Trade Payable

is a sizeable amount of sales 400

for every year. The average 300
collection period is high and 200
remains in 140 days range. 100
Trade Payable
Government
projects,
0
(Crore)
subsidies all amount. On the
contrary Sintex is good in
terms of payment to its
suppliers.
d) Inventory : The ratio of assets to inventory has fallen by 8% from 30% to 22.8% in
2013-14. The reasons are better management of inventory by Sintex.
e) Profit year on year : Year 2011-12 saw a drop in profit after tax on account of
reduced sales. However, they managed quite well not to be ever in red. Monolithic
sector gave them nightmares that year. However, the year on year returns have been
good.
3.2

Vertical analysis:

a) Profit after Tax as percentage of Revenue: The profit for the year 20013-2014 has
been a healthy 10%. It has increased from 8.7% in 2012-2013 to 10.11% present
value. The cause of this has been increase in sales, also to a certain extent better
containment of costs.
b) EBITA of Revenue: EBITA has been good for year 2013-14 at 25%. It has shown a
positive improvement from 21.88% in 2012-2013.
c) Fixed Assets of Revenue: Fixed Assets have been healthy and form close to 1/3 rd of
total assets.
d) Finance Cost of Revenue: Financial cost as part of Revenues has increased to 7%.
3.3

Ratio Analysis:
3.3.1
Liquidity Ratios:
a) Current Ratio: The current ratio of 1.53 shows capability of Sintex to pay its

liabilities. The industry is asset intensive industry and all competitors have current
ratios greater than 1.
b) Operating Cycle: The operating cycle has been reducing however still it is at a high
level of 168 days. The major contributor in the huge operating cycle is average

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

collection period, which itself is 143 days. Government projects, and infrastructure
projects is a major source of this lateness of payment.
3.3.2 Profitability Ratios:

a) Profit Margin: Profit Margin has been improving since last three years marginally.
Presently the profit margin is 10.36%. Operating Profit Margin stood at 22.14%. So
22.14% of total revenue generated was profit and had been generated from operating
activities. The reason for this has been higher %age increase in sales and lower
%age increase in expenses leading to higher operating profit.
b) Return on Asset: The return on asset,
was at 4.54% as compared to 4.09% of
last year. The ROA of industry has been
near about 5%, so the number is not bad.
However, operating ROA has been
showing good numbers of close to 10%.

c) Return on Equity : Return on Equity

has marginally increased from 10.49%
to 11.47%. This was mainly because
of higher increase in PAT.

Return on Asset(%)
5
4.5
4
3.5

Return on
asset(%)

Return on Equity(%)
1500
1000
Return on
Equity(%)

500

3.3.3 Market Ratio:

2011-20122012-2013 201-2014

a) Earnings Per Share: Earnings per share been increasing for the company because of
enhanced profits after tax. Presently Basic EPS stands at 10.77. SupremeInd and
FinolexInd have better EPS, hinting towards their shareholders getting better value
per rupee invested.

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

b) P/E ratio: The people in market are ready to pay 6.8 times the income on one share.
The industries P/E of competitors are in the range of 22 to 26. This either means the
buyers are not much optimistic of the share, or the share is undervalued.
c) Price-book ratio: The price-book ratio of Sintex is 0.748. The companies balance
sheets is fine, and business is continuous so Sintex is undervalued.
3.3.4 Solvency Ratios:

a) Debt Equity Ratio: The debt to equity ratio of Sintex is 1.12. It is in the same range
of FinolexInd 1.36.
b) Interest-cover ratio: The interest cover ratio is 2.85, and is a good value as the
profit before interest and tax is fully capable of paying of interest on debts.

4.

Cash Flow Analysis

a) Cash generated from operations is 803.96 Crore , and the Profit Before Tax was 438 Crore.
So the earning quality of Sintex is indeed good. The amount of collection is 98% of total
sales for this year. A good part of the cash generated from Operations and 664 crore from
cash and cash equivalents was used to i) buy assets worth 1293.62 crore
b) A long term loan of 757 crore was taken to pay interest, dividends, and reduce other high
interest rate borrowings by 382 crore.
c) There is a healthy cash flow from operations and the increase of long term borrowings is
not a strain on the company. In the end of 2013 the company was sitting on a cash balance
of over 700 crore. The utilisation of this money in purchasing of assets is a sound decision.
d) Cash Flow from operations covered interest payment by a factor of 2.6 times, meaning
even if there is a downfall in the operations still the company will be in a position to
honour its debtors.
e) The free cash flow of Sintex is negative, and it has been rapidly expanding itself through
modernization and acquisitions.
f) The firm enjoys a current ratio of 1.53 which is good enough to help it sail through
unfortunate times without risking operations.

5.

Conclusion:
a)
i) Strong areas is economic development of the nation will lead to more purchase of plastics
in both urban areas and development areas.
ii) Sintex is focussed on both organic growth, and acquisitions which leads to more customers
and more market penetration.
iii) The operating cash flow is good making the business sustainable in terms of payments and
other fulfilment of obligations.
iv) The weak area is monolithic sector which is heavily dependent of government policies such
as JnNURM.

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

v) 65% of shares owned by owners has been pledged8.
b)
i) Where to find which item in Financial Statement.
ii) Understanding the financial health of a company. In case I want to buy a share I can at-least
realise how is the company doing; what is the source of dividend payments; historically
what have been the dividends corresponding to earnings.
iii) Is the business cyclic, in case it is cyclic what makes it cyclic. For instance, the monolithic
sector if Sintex is heavily dependent on Government projects.

6.

References:
1.http://www.plasticsnews.com/article/20140123/NEWS/140129959/indian- industrylooks-to-double-plastics-use-by-2020#
2. http://www.ficci.com/spdocument/20396/Knowledge-Paper-ps.pdf
3. http://commerce.nic.in/eidb/ecomq.asp (specific commodity: 39)
4.http://www.vccircle.com/news/engineering/2014/07/25/sintex-buys-out- frenchplastic-products- maker-groupe-simonin-242m
5.http://www.plasticsnews.com/article/20140812/NEWS/140819976/sintex-wausaukeecomposites-opens-manufacturing-plant-in- india
6.http://www.commodityonline.com/news/indian-textile-industry-to-grow-11-annuallyto-$220-bn-by-2020-57558-3-57559.html
7.http://www.careratings.com/upload/CompanyFiles/RR/Sintex%20Industries%20Limi
ted-03-21-2014.pdf
8. http://content.icicidirect.com/mailimages/IDirect_Pledgedshares_Q3FY14.pdf

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

7.

Annexures
Annexure 1: Balance Sheet and Profit and Loss Statement 2013-2014

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

Annexure 2: Horizontal Analysis

Description

%age change
14-13

%age change
13-12

%age
change 1211

A. BALANCE SHEET
Total Assets:
Fixed Assets (Net)
Investments

12.1 %
23.22 %
7.64 %

11.42 %
6.99 %
7.72 %

8.03 %
13.07 %
-22.2 %

Total Liabilities:
Net Worth
Loan Funds
Deferred Tax Liability (Net)

12.1 %
8.67 %
13.12 %
14.91 %

11.42 %
19.94 %
12.92 %
18.14 %

8.03 %
7.43 %
10.37 %
18.97 %

8.14 %

16.55 %

-1.67 %

23.76 %
64.29 %
12.3 %

15.86 %
30.77 %
25.63 %

-10.77 %
27.26 %
9.86 %

12.73 %
-82.22 %
40.18 %
137.96 %
24.47 %

8.83 %
93.72 %
-3.41 %
-53.88 %
17.19 %

-21.66 %
647.44 %
-32.42 %
-22.57 %
-35.76 %

0.63 %
26.96 %
5.34 %

23.57 %
16.56 %
6.72 %

8.24 %
-38.24 %
-11.18 %

-16.27 %

14.34 %

0.62 %

B. STATEMENT OF PROFIT &

LOSS
Gross Sales
Earning before interest, tax
and depreciation
Finance Costs
Depreciation
Profit before Exceptional
Items
Exceptional Items
Profit Before Tax
Taxation
Profit After Tax
Dividend (including dividend
distribute tax)
Retained Earnings
Export Growth

Inventory

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

Annexure 3: Vertical Analysis:
Description

31.03.2014 31.03.2013

31.03.2012

A. BALANCE SHEET
Total Assets:
Fixed Assets (Net)
Investments

100%
37.25%
13.73%

100%
33.89%
14.3%

100%
35.3%
14.79%

Total Liabilities:
Net Worth
Loan Funds
Deferred Tax Liability (Net)

100%
41.21%
46.14%
4.22%

100%
42.51%
45.73%
4.12%

100%
39.49%
45.12%
3.88%

100%

100%

100%

25.03%
7.16%
4.17%
13.7%
0.48%
13.21%
3.11%
10.11%
0.77%
9.34%

21.88%
4.71%
4.02%
13.14%
2.95%
10.19%
1.41%
8.78%
0.83%
7.95%

22.01%
4.2%
3.73%
14.08%
1.77%
12.3%
3.57%
8.74%
0.78%
7.95%

B. STATEMENT OF PROFIT & LOSS

Gross Sales
Earning before interest, tax and
depreciation
Finance Costs
Depreciation
Profit before Exceptional Items
Exceptional Items
Profit Before Tax
Taxation
Profit After Tax
Dividend (including dividend distribute tax)
Retained Earnings

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

Annexure 4 Profitability Ratios:
Profitability Ratios

31-03-2014

31-03-2013

31-03-2012

PAT
Sales

10.36 %
335.060
3233.120

9.07 %
269.190
2,969.26

8.96 %
229.7
2,562.59

Sales
Total Assets

0.44 times
3233.120
7,381.58

0.45 times
2,969.26
6,584.82

0.43 times
2,562.59
5,909.69

Profit
Assets

4.54 %
335.060
7,381.58

4.09 %
269.190
6,584.82

3.89 %
229.7
5,909.69

PAT
Equity

11.47%
335.060
2920.735

10.49%
269.190
2566.605

10.19%
229.7
2253.145

PAT
Number of Shares

10.767
335.060
31.120

8.650
269.190
31.120

8.473
229.7
27.110

Operating Profit Margin

Operating Profit before Tax
Sales

22.14 %
715.90
3233.120

19.81 %
588.26
2,969.26

19.66 %
517.12
2,629.65

Sales
Operating Assets

0.72 times
3233.120
4,465.13

0.66 times
2,969.26
4508.69

0.61 times
2,629.65
4,280.54

Operating Profit
Operating Assets

9.97 %
444.99
4,465.13

8.66 %
390.42
4508.69

5.46 %
233.66
4,280.54

Return on Financial Assets

Net financial Income
Financial Assets

2.87 %
89.479046
3,117.01

2.23 %
64.600618
2892

2.15 %
48.36599
2,252.38

Profit Margin

Asset Turnover

Return on assets

Return on Equity

Earning Per Share

Asset Turnover

Return on assets

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

Annexure 5: Operating Figures
31-032014

31-032013

31-03-2014

Sales

3233.12

2969.26

2562.59

Raw Material
Consumption

2056.52

1961.19

1657.98

23.37

-28.85

-4.32

131.62
112.99

134.91
106.4

105.37
94.46

192.72

207.35

191.98

2517.22

2381

2045.47

Operating Profit

715.9

588.26

517.12

Depreciation
Tax as reported
Deduct tax on
other income

138.33

123.18

167.82

Net change in
inventory(Opening
InvenetoryClosing Inventory)
spares
consumption
Employee Cost
Miscellenous and
administrative
cost
Total Expense

Add Tax on
interest expense
Deduct Tax on
exceptional Items
Tax on operating
profit

102.94

43.26

-24.36818

-17.593

90.96
14.4028

50.79932

30.9209

29.0948

3.212

18.07

9.99029

132.58314

74.6579

115.642

Net Operating
Profit after Tax

444.98686

390.42208

233.657734

Financing Cost
Tax @21.42%
Exceptional Items
Tax @21.42%

-237.38
50.846796
-16.06
3.440052

-144.49
30.949758
-90.35
19.35297

-135.83
29.094786
-46.64
9.990288

Net Operating
Profit after tax

245.83371

205.88481

90.272808

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

Total Assets

7381.58

Non-current
Investment
Long term loans
and advances
Current
Investments
Short-term loans
and
advancements

6584.82

5909.69

1013.66

941.71

841.71

1800.03

877.61

157.82

15.58

24.84

32.52

87.18

231.97

597.1

Operating Assets

4465.13

4508.69

Financial Income
Other Income

89.479046
113.87

64.600618
82.21

48.366
61.55

Deduct Income
tax@.2142

24.390954

17.609382

13.184

Financial Asset

3117.01

2892

2252.38

1013.66

941.71

841.71

1800.03

877.61

157.82

15.58

24.84

32.52

102.7

781.29

605.63

87.18

231.97

597.1

97.86

34.58

17.6

Non-current
investments
Long-term loans
and advances
Current
investments
Cash and bank
balances
Short-term loans
and advances
Other current
Asset

4280.54

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

Annexure 6 Liquidity Ratios

31-03-2014

31-032013

31-032012

Current Ratio
Current Asset
Current Liabilities

1.530
1771.240
1157.870

1.765
2510.280
1422.020

1.136
2561.540
2254.970

Quick Ratio
Current Assets- Inventories
Current Liabilities

1.384
1602.960
1157.870

1.624
2309.310
1422.020

1.058
2385.770
2254.970

Accounts Receivable Turnover

Sales
Average Accounts Receivable

2.550
3233.120
1268.135

2.492
2969.260
1191.350

2.583
2562.590
992.095

Accounts Payable Turnover

COGS
Average Accounts Payable

8.338
2655.550
318.495

10.772
2504.180
232.480

9.481
2143.520
226.095

Inventory Turnover Ratio

COGS
Inventories

14.383
2655.550
184.625

13.294
2504.180
188.370

12.233
2143.520
175.230

Average Collection Period

Days
Accounts Receivable Turnover

143.165
365.000
2.550

146.448
365.000
2.492

141.308
365.000
2.583

Inventory Holding Period

Days
Inventory Turnover Ratio

25.376
365.000
14.383

27.456
365.000
13.294

29.838
365.000
12.233

Operating Cycle Days

168.541

173.904

171.146

Liquidity Ratios

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035

Annexure 7: Valuation Ratios

Valuation Ratios

31-03-2014

31-03-2013

31-032012

0.065
21.920
335.060

0.081
21.920
269.190

0.077
17.740
229.700

89.953
2799.340
31.120

74.996
2333.870
31.120

Dividend Payout Rates

Dividend
Net Income
P/E Ratio
Market Price
Earning Per Share
Book-ratio
Net-worth
Number of share
P/Book Ratio
Market Price
Book-ratio

6.789
73.100
10.767
97.755
3042.130
31.120
0.748
73.100
97.755

Annexure 8: Solvency Ratios:

Debt-Equity Ratio
Debt
Equity

1.12
3406.01
3042.13

1.08
3011.00
2799.34

Liabilities-Equity Ratio
Liabilities
Equity

1.43
4,339.45
3042.13

1.35
3,785.48
2799.34

2.85 times
675.38
237.38

3.79 times
547.29
144.49

Total Debt
Long-term borrowings
Short-term borrowings
Other-current Liabilities

3,406.01
2,856.06
549.95
202.95

3,011.00
2,078.94
932.06
200.22

Liabilities
Non-current liabilities
Current liabilities

4,339.45
3,181.58
1,157.87

3,785.48
2,363.46
1,422.02

Interest-Cover
Profit-before-interest and tax
Interest expense

SINTEX INDUSTRIES: BSE: 502742 ; ISIN: INE429C01035