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Sintex Industries Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 109.91 Cr. P/BV 0.04 Book Value (₹) 52.85
52 Week High/Low (₹) 3/1 FV/ML 1/1 P/E(X) 0.00
Bookclosure 30/09/2019 EPS (₹) 0.00 Div Yield (%) 13.51
Year End :2018-03 


(i) 2,500 (Previous year 2,500) 9.41% Secured Redeemable Non-Convertible debentures of Rs,10,00,000/- each, are redeemable at par on 8th October, 2020. The Debentures are secured by first pari passu charge on fixed assets (excluding spinning unit) of the Company.

(ii) 1,375 (Previous year 1,375) 10.70% Secured Redeemable Non-Convertible debentures of Rs,10,00,000/- each, are redeemable at par in three equal annual installments starting from 30th September, 2019. The Debentures are secured by first pari passu charge on fixed assets (excluding spinning unit) of the Company.

(iii) 1,125 (Previous year 1,125) 10.70% Secured Redeemable Non-Convertible debentures of Rs,10,00,000/- each, are redeemable at par in three annual installments starting from 11th June, 2019. The Debentures are secured by first pari passu charge on fixed assets (excluding spinning unit) of the Company.

(iv) Term Loans from the banks and Financial Institution referred in point no (f) of Note (vi) below are secured by first charge on pari passu basis on all the immovable and movable properties of the Company, both present and future excluding properties of spinning unit and on specified current assets and book debts on which prior charge created in favour of the Banks for working capital facilities (refer note 23).

(v) Term Loans from the banks and Financial Institution referred in point no (a) (b) and (c ) of Note (vi) below from the banks and financial institution are secured by first charge on pari passu basis on respective project assets of the spinning unit.

(vi) Terms of repayments of term loans (including current maturities of long term debt) carrying interest rate range of 2.4% to

11.25% p.a. are given below:-

(a) Loan outstanding of C1,097.99 crores (previous year C1,220.00 crores) - the overall loan repayment term includes 30 quarterly installment of C40.67 crores each starting from August 2017 to November, 2024.

(b) Loan outstanding of C1,217.95 crores (previous year C984.35 crores) - the overall loan repayment term includes 30 quarterly installment of C40.67 crores each starting from April, 2018 to September, 2025 .

(c ) Loan outstanding of C1,289.37 crores (previous year C300.00 crores) - the overall loan repayment term includes 36 quaterly installment of C52.40 crores each starting from September, 2019 to June, 2028.

(d) Loan outstanding of C80.44 crores (previous year C82.5 crores) - the loan repayment term includes 32 structured quarterly installment of Cl.03 crores each starting from December, 2016 till September, 2021 and C4.125 crores starting from December, 2021 to September, 2025(For Security refer note (i) to (iii) above)

(e) Loan outstanding of C89.58 crores (previous year C Nil) - the loan repayment term includes 32 structured quarterly installment of C 1.15 crores each starting from December, 2017 to September, 2021 and C 4.59 crores starting from December,2021 to September 2025. (For Security refer note (i) to (iii) above)

(f) The Technology Upgradation Fund Scheme (TUFs) term loans include:

(i) Loan outstanding of C104.33 crores (previous year C129.33 crores) - the overall loan repayment term includes 32 quarterly installment of C6.25 crore each starting from 1st October, 2014 till 1st July, 2022.

(ii) Loan outstanding of C76.66 crores (previous year C94.69 crores) - the overall loan repayment term includes 32 quarterly installment of C4.51 crore each commencing after 27 months moratorium period i.e. starting from 1st October, 2014 till 1st July, 2022.

(iii) Loan outstanding of C47.94 crore (previous year C63.56 crores) - the overall loan repayment term includes 32 quarterly installment of C3.13 crore each commencing from 1st October, 2014 till 1st July, 2022.

(vii) Foreign currency loan of C65.04 crore (previous year C63.02 crore) payable in 2 yearly equal installment commencing from 5th April, 2021

36 Composite Scheme of Arrangement:

Upon the sanction of the Composite Scheme of Arrangement (the 'Scheme') by the Hon'ble NCLT bench at Ahmedabad vide Order dated 23rd March, 2017 between the Company, Sintex Plastics Technology Limited, Sintex-BAPL Limited and Sintex Infra Projects Limited, the Custom Moulding business and the Prefab business of the Company along with its related assets and liabilities at the values appearing in the books of accounts of the Company on the close of business hours on 31st March,2016 had been transferred in accordance with the Scheme to Sintex-BAPL Limited and Sintex Infra Projects Limited respectively effective from 1st April, 2016, being the Appointed Date of the Scheme.

The difference between the value of assets and value of liabilities of the Custom Moulding business and Prefab business amounting to C1688.09 crore transferred to Sintex-BAPL Limited and Sintex Infra Projects Limited and the cancellation of equity shares held by the Company in the paid up share capital of Sintex Plastics Technology Limited of RS,199.91 crore, aggregating to RS,1888.00 crore had been appropriated as under :

(i) Capital Reserve RS,47.80 crore

(ii) Capital Redemption Reserve RS,15.05 crore

(iii) Securities Premium Account RS,1714.02 crore

(iv) General Reserve RS,111.13 crore

37 Foreign Currency Convertible Bonds (FCCBs)

On May 25, 2016, the Company issued USD 110 million Step Down Convertible Bonds due 2022 ("FCCBs"). The FCCBs bear interest (i) at the rate of 7% p.a from May 25, 2016 to May 25, 2018 and (ii) at the rate of 3.50% p.a from May 25, 2018 to May 25, 2022, payable semi-annually in arrear on the interest payment dates falling on 25 November and 25 May.

The FCCBs are convertible at any time on and after July 5, 2016 and up to the close of business on May 15, 2022 by holders of the FCCBs into fully paid equity shares with full voting rights of the Issuer each with a nominal value of C1 at the option of the holder, at an initial conversion price of C93.8125 per share with a fixed rate of exchange on conversion of C67.4463 = USD 1.00. The conversion price is subject to adjustment in certain circumstances and may be reset on November 25, 2018 and November 25, 2019 in accordance with the terms and conditions of the FCCBs.

As per the Scheme of Arrangement, on exercising option for conversion of the FCCBs, the FCCB holders shall receive one fully paid equity shares of C1 each with full voting rights of Sintex Plastics Technology Limited and furhter the repayment of FCCBs is guaranteed by Sintex Plastics Technology Limited.

The FCCBs contain two components: liability and equity elements. The equity element is presented in equity under the heading "Equity component of compound financial instruments".

During the year ended March 31, 2018, FCCBs aggregating to USD 67.5 million have been converted into 4,93,99,134 equity shares, resulting in to increase in equity share capital by RS,4.94 crores and security premium by RS,437.78 crores. There are USD 13.5 Million FCCB's outstanding for conversion as on March 31, 2018.

38 Segment information

The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 3 of Ind AS 108 'Operating Segments', no disclosures related to segments are presented in this standalone financial statements.

39 Related Party Transactions

a. Names of the related parties and description of relationship

Sr. No. Nature of relationship Name of Related Parties

1 Key Management Personnel Shri Rahul A. Patel, Managing Director (Group)

Shri Amit D. Patel, Managing Director (Group)

Shri S.B.Dangayach, Managing Director (up to 6th June, 2017)

2 Relatives of Key Management Personnel Shri Dinesh B. Patel, Chairman

Shri Arun P. Patel, Vice-chairman

3 Subsidiary BVM Overseas Limited

* Figures in brackets indicates figures of previous year

b.3 Disclosure of Material Related Party Transactions during the year and Balance outstanding

1 Purchase of goods from BVM Overseas Ltd. C25.79 crores (Previous Year C16.47 crores), Balance as on March 31, 2018 RS,8.28 crores (Previous Year RS,14.48 crores).

2 Sale of goods to BVM Overseas Ltd RS,375.03 Crores (Previous Year Nil). Balance as on March 31, 2018 RS,71.62 crores (Previous Year Nil).

3 Managerial Remuneration include remuneration to Shri Rahul A. Patel RS,5.12 crores (Previous Year RS,5.53 crores), Shri Amit D. Patel RS,5.21 crores (Previous Year RS,5.56 crores), Shri S B Dangayach RS,0.19 crores (Previous Year C1.86 crores).

4 Sitting fees paid includes to Shri Dinesh B. Patel RS,0.03 crore (Previous Year RS,0.04 crore), Shri Arun P. Patel RS,0.03 crore (Previous Year RS,0.06 crore).

40 Employee benefits plans

a. Defined contribution plan

The Company operates defined contribution retirement benefit plans for all qualifying employees. The assets of the plans are held separately from those of the Company in funds under the control of trustees. Where employees leave the plans prior to full vesting of the contributions, the contributions payable by the Company are reduced by the amount of forfeited contributions.

The Company makes Provident Fund and Superannuation Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized RS,9.11 crores (for the year ended March 31, 2017 RS,6.15 crores) for Provident Fund contributions and RS,0.46 crores (for the year ended March 31, 2017 RS,0.68 crores) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the scheme.

b. Defined benefit plans:

The Company sponsors funded defined benefit plans for qualifying employees. The defined benefit plans are administered by a separate Fund that is legally separated from the entity. The board of the fund is composed of an equal number of representatives from both employers and (former) employees. The board of the fund is required by law and by its articles of association to act in the interest of the fund and of all relevant stakeholders in the scheme, i.e. active employees, inactive employees, retirees, employers. The board of the fund is responsible for the investment policy with regard to the assets of the fund.

Under the Gratuity plan, the eligible employees are entitled to post-retirement benefit at the rate of 15 days salary for each year of service until the retirement age of 58, 60 and 62, without any payment ceiling. The vesting period for Gratuity as payable under The Payment of Gratuity Act is 5 years. Under the Compensated absences plan, leave encashment is payable to all eligible employees on separation from the Company due to death, retirement, superannuation or resignation. At the rate of daily salary, as per current accumulation of leave days.

The defined benefit pension plans requires contributions from employees. Contributions are in the following two forms; one is based on the number of years of service and the other one is based on a fixed percentage of salary of the employees. Note 2(X) describes change in accounting in the current year following the adoption of the amendments to Ind AS 19.

The plans in India typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

The risk relating to benefits to be paid to the dependents of plan members (widow and orphan benefits) is re-insured by an external insurance company. No other post-retirement benefits are provided to these employees.

The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out at March 31, 2018 by M/s Kapadia Actuaries & Consultants. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

c. The Company offers the following employee benefit schemes to its employees:

i. Gratuity (Funded through annual payment to Life Insurance Corporation of India) and other Insurance Companies.

ii. Compensated Absences (Unfunded)

The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factor.

The current service cost and net interest expense for the year are included in the 'Employee benefit expense' line item in the Statement of Profit and Loss.

The remeasurement of the net defined benefit liability is included in other comprehensive income.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation recognized in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

Each year an Asset-Liability-Matching study is performed in which the consequences of the strategic investment policies are analyzed in terms of risk-and-return profiles. Investment and contribution policies are integrated within this study.

41 Financial instruments 1 Capital management

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt and total equity of the Company.

(i) Debt is defined as long-term and short term borrowings (excluding derivative, financial guarantee contracts and contingent consideration), as described in earlier notes ( Refer note 20, 23 and 25).

* The fair value of company's fixed interest borrowing are determined by using Discounted Cash Flow Method.

3 Financial risk management objectives

The Company's Corporate finance department provides services to business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse the exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company's policies approved by the Board of Directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the Management and the internal auditors on a continuous basis. The Company does not enter into or trade financial instruments, including derivatives for speculative purposes.

The Corporate Treasury function reports quarterly to the Company's risk management committee, an independent body that monitors risks and policies implemented to mitigate risk exposures.

4 Market risk

The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates due to foreign currency borrowings and variable interest loans. The Company has entered into derivative contracts to manage part of its foreign currency risk. The Company does not enter into derivative contracts to manage risks related to anticipated sales and purchases.

5 Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilizing forward foreign exchange contracts and currency options taken at the time of initiation of the booking by the management. Such decision is taken after considering the factors such as upside potential, cost of structure and the downside risks etc. Quarterly reports are submitted to Management Committee on the covered and open positions and MTM valuation.

5.1 Foreign currency sensitivity analysis

The Company is mainly exposed to USD and EURO currency.

The above table details the Company's sensitivity to a 10% increase and decrease in the INR against relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency risk denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans where the denomination of the loan is in a currency other than the functional currency of the lender or the borrower. A negative number below indicates an increase in profit/equity where the INR strengths 10% against the relevant currency. For a 10% weakening of the INR against the relevant currency, there would be a comparable impact on the profit/equity and the balances below would be positive.

5.2 Forward foreign exchange contracts

Company had entered into forward foreign exchange contracts to cover foreign currency payments and receipts.

6 Interest rate risk management

The Company is exposed to interest rate risk because funds are borrowed at both fixed and floating interest rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate. The Company has exposure to interest rate risk, arising principally on changes in PLR and LIBOR rates. The Company uses a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like non-convertible debentures and short term loans. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.

The table in 6.1 provides a break-up of the Company's fixed and floating rate borrowings:

6.1 Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.

The following table provides a break-up of the Company's fixed and floating rate borrowings and interest rate sensitivity analysis.

7 Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company uses publicly available financial information and its own trading records to rate its major customers. The Company's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

The Company does not have significant credit risk exposure to any single counterparty. Concentration of credit risk related to the above mentioned company did not exceed 10% of gross monetary assets at any time during the year.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

7.1 Collateral held as security and other credit enhancements

The Company does not hold any collateral or other credit enhancements to cover its credit risk associated with its financial assets.

8 Liquidity risk management

Liquidity risk refers to the risk of financial distress or extraordinary high financing costs arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and requiring financing. Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Company's short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods and its non-derivative financial assets. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.

To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the earliest date on which the Company may be required to pay.

9 Fair value measurements

This note provides information about how the Company determines fair values of various financial assets. Some of the Company's financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique(s) and inputs used).

10 In respect of overseas direct investment (ODI) made by the company in the earlier years in erstwhile wholly owned subsidiary, the Directorate of Enforcement, Department of Revenue, Ministry of Finance, Government of India has held that the end-use of such funds made by the then foreign subsidiary company is in contravention of the provisions of Section 4 of the Foreign Exchange Management Act (FEMA), 1999 and has, therefore, vide its Seizure Order dated 15th December, 2017 attached the immovable property of the company by way of certain unencumbered open plots of land admeasuring in aggregate about 1,27,851.50 sq. metres having aggregate cost of Rs. 3.69 Crores as per books of accounts of the company. The company strongly believes that it has not contravened provisions of FEMA as alleged in the seizure order and is, therefore, taking appropriate steps under the law. In the opinion of the management of the Company all the activities carried out by the then foreign subsidiary are in compliance with the ODI route under FEMA read with the relevant rules and regulations. The Company's management is confident of successful outcome from the proceedings. Therefore, no accounting adjustments have been made in the books of accounts of the Company in this regard.

The lease agreements are executed for a period of 12 months with a renewal clause.

11. Interest on borrowings is net of interest subsidy of RS,134.40 crores (Previous Year RS,129.52 crore)

12. On introduction of Goods & Service Tax (GST) w.e.f. 1st July,2017, in accordance with the Textile Policy of Government of Gujarat, income by way of subsidy/benefit in respect of GST has also been accounted for as the management of the Company strongly believes that GST (both SGST & CGST) shall also be entitled for subsidy/benefit as envisaged in the Policy.

* Against duty saved of RS,398.07 crore (Previous Year RS,323.49 crores) company has export obligation of RS,2,388 crore (Previous year RS,1,114.58 crore) out of which company has already completed export obligation of RS,1,355.00 crore (Previous Year RS,403.17 crore) for which company has applied for Export obligation discharge certificate to concerned licensing authority.

* The amount deposited with the authority in respect of above Income Tax and Service Tax demands of RS,29.41 crores (previous year RS,14.76 crores) and C4.04 crores (previous year RS,4.04 crores) respectively

13 Contingent assets

The are no contingent assets recognized as at March 31, 2018.

14. Approval of financial statements

The financial statements were approved for issue by the board of directors on 8th May, 2018.

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