Directors Report of Sintex Industries Ltd.
Mar 31, 2018
Directors'' Report
To,
The Shareholders,
The Directors take immense pleasure in presenting the 87th Annual Report highlighting the business and operations of the Company on a standalone basis and the accounts for the financial year ended March 31, 2018.
Financial highlights
(Rs, in crore)
|
Particulars |
2017-18 |
2016-17 |
|
Gross turnover |
2042.26 |
1433.84 |
|
Gross profit |
313.88 |
263.42 |
|
Less: Depreciation |
142.16 |
132.22 |
|
Profit before tax |
171.72 |
131.20 |
|
Less: Provision for taxation â current tax |
4.07 |
26.89 |
|
Deferred tax |
31.67 |
(23.17) |
|
Profit for the Year |
135.98 |
127.48 |
Note: Previous yearâs figures have been regrouped/re-classified, wherever required.
Financial performance
Fiscal 2017-18 was good year for the Company reflected in the improved financials. Your Company reported 42.43% growth in gross sales from RS, 1433.84 crore in 2016-17 to RS, 2042.26 crore in 2017-18 -the growth catalysed by superior performance in the Textile and yarns businesses.
EBIDTA increased from RS, 353.17 crore in 2016-17 to RS, 420.67 crore in 2017-18 owing to value led growth which improved business profitability. And, the profit after tax for the year grew by 6.67% from RS, 127.48 crore in 2016-17 to RS, 135.98 crore in 2017-18. The earnings per share (face value of RS, 1) stood at RS, 2.37 (basic) and RS, 2.37 (diluted) for 2017-18 against RS, 2.62 (basic) and RS, 2.62 (diluted) for 2016-17.
Your Company continued its focus on deleveraging the financial statements. It repaid debts worth RS, 187.08 crore during the financial year under review. The Company also converted FCCBs worth US$ 67.50 million (of the US$ 110 million FCCB issue) converted into Equity, which increased the Company''s net worth by RS, 366.14 crore, strengthening the Company''s financial muscle to pursue growth opportunities over the horizon.
Dividend
Your Directors are pleased to recommend dividend of RS, 0.10 per share on equity shares having face value of RS, 1 each (Previous year RS, 0.25 per equity share on face value of RS, 1 each). The dividend is recommended based upon the financial performance of the Company.
The dividend will be paid to the eligible shareholders subject to the approval of Members, whose names appear on the Register of Members of the Company at the forthcoming Annual General Meeting as on the specified date.
Increase in Share capital due to conversion of Foreign Currency Convertible Bonds
During the year under review, the Company has allotted in aggregate 4,93,99,134 equity shares of RS, 1/- each at a premium of RS, 91.16 each per equity share on exercise of conversion by the FCCB-holders and accordingly, the paid-up share capital of the Company on 31st March, 2018 stands increased to RS, 59,40,95,088/- divided into 59,40,95,088 equity shares of RS, 1/- each. As at 31st March, 2018, FCCBs worth US$ 13.50 million (of the US$ 110 million FCCB issue) were outstanding for conversion into equity shares.
Fixed deposits
During the year under review, your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the rules made there under.
State of Company''s affairs
Sintex is a reputed and respected brand in the global textile industry as a quality-conscious manufacturer of high-end men''s structured fabric addressing high-end fashion shirting. The Company''s fibre-to-fabric facility (Kalol) is one of the largest weaving Unit in India which manufacturers fabrics for some of most renowned global brands in the fashion industry - its wide product basket comprising multiple varieties of blended fabrics are marketed under the BVM brand.
Having established a global presence in the niche-fabric business space, the Company has entered the spinning business. For this, the Company is setting up a 1-million spindle manufacturing unit generating compact and other special yarns in a phased manner. In this highly sophisticated facility, about 6 lac spindles are operational as on March 31, 2018.
Textiles Business
Fiscal 2017-18 has been a remarkable one for the Company as it scaled new heights in performance and capability. The business registered a topline of C 2042.26 crore in 2017-18 against RS, 1433.84 crore in 2016-17 - a growth of 42.43% owing to successful business strategies implemented by the team, which has increased product awareness and acceptability in India and across global markets.
The Company continued to strengthen its business capability which reflected in adding products to in every market (domestic and international) and market segment (institutional and retail). This allowed the Company to entrench its presence in the Indian fabric market and widened its footprint in key international geographies.
Yarn Business
Sintex Yarn, a high-potential business division of Sintex Industries has strategically set up its greenfield unit at Rajula, Amreli district, Gujarat, which is India''s richest cotton belt and is in a proximate to prominent seaports of Gujarat. Of the envisaged 1-million spindles, more than 6 lac spindles are in operation. The project will also include weaving and knitting facilities in the future. This large and state-of-the-art spinning facility is revolutionizing the textile industry with its "NO TOUCH" yarns.
The Company plans to provide its customers 100% contamination-free cotton yarn (premium), positioning it as one of the preferred suppliers of quality-respecting global brands. It has de-risked its business by prudently balancing its marketing exposure in different geographies. While 30% of the produce will be marketed domestically, the company plans to market the remaining output to leading global textile players.
Performance of subsidiary - BVM Overseas Limited
Sintex''s presence in domestic as well as export market is through its wholly owned subsidiary, BVM Overseas Limited.
BVM Overseas Limited
The Company is the trading arm of Sintex Industries in India and in international markets, since the last quarter of FY 2015-16. While the Company currently trades in yarn, other products like fabrics, sheeting etc. will be brought under the Company''s fold for capitalizing on trading opportunities in India and with international customers over time.
The financial year under review has been a very good year for the Company as it more than doubled its turnover from RS, 1181.64 crores against RS, 511.59 crore in 2016-17. Of the total turnover, about 70% accrued from the international market. The Company reported an EBIDTA of RS, 16.54 crore in 2017-18.
Changes in subsidiaries, associates and joint ventures/wholly-owned subsidiaries:
During the year under review, there was no change in the status of subsidiaries and joint ventures/ wholly-owned subsidiaries.
Corporate Social Responsibility initiatives
As part of its initiatives under Corporate Social Responsibility, the Company has under taken projects in the areas of education, livelihood, sports, health, water and sanitation. These projects are in accordance with Schedule VII to the Companies Act, 2013.
The Annual Report on CSR activities is annexed here with as ''Annexure - A''.
Internal Financial Control (IFC) systems and their adequacy
As per the provisions of the Companies Act, 2013, the Directors have the responsibility for ensuring that the Company has implemented robust system / framework for IFCs to provide them with reasonable assurance regarding the adequacy and operating effectiveness of controls, to enable the Directors to meet with their responsibility.
The Company has in place, a sound financial control system and framework in place to ensure:
The orderly and efficient conduct of its business,
Safeguarding of its assets,
The prevention and detection of frauds and errors,
The accuracy and completeness of the accounting records and
The timely preparation of reliable financial information.
A formal documented IFC framework has been implemented by the Company. The Board regularly reviews the effectiveness of controls and takes necessary corrective actions where weaknesses are identified as a result of such reviews. This review covers entity level controls, process level controls, fraud risk controls and Information
Technology environment. Based on this evaluation, there is nothing that has come to the attention of the Directors to indicate any material break down in the functioning of these controls, procedures or systems during the year. There have been no significant events during the year that have materially affected, or are reasonably likely to materially affect, our internal financial controls. The management has also come to a conclusion that the IFC and other financial reporting was effective during the year and is adequate considering the business operations of the Company.
Auditors and Auditors'' Report
M/s. Shah & Shah Associates, Chartered Accountants, Ahmedabad (FRN 113742W), Statutory Auditors of the Company were appointed as Statutory Auditors of the Company for a period of five years at the 83rd Annual General Meeting of the Company held on 1st August, 2014 till the conclusion of 88th Annual General Meeting of the Company pursuant to provisions of Section 139(1) of the Companies Act, 2013.
In accordance with the Companies Amendment Act, 2017, enforced on 7th May, 2018 by Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting. Pursuant to Regulation 33(1)(d) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Auditors have confirmed that they have valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI).
There were no qualifications, observations, reservation or comments or other remarks in the Auditors Report, which have any adverse effect on the functioning of the company. The notes on financial statement referred to in the Auditor''s Report are self-explanatory and do not call for any further comments. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.
Cost Auditor
Pursuant to Section 148(3) of the Companies Act, 2013, M/s. Kiran J. Mehta & Co., Cost Accountants, Ahmedabad were appointed as the Cost Auditors of the Company for financial year 2017-18 by the Board of Directors. However, due to resignation of M/s. Kiran J. Mehta & Co., as the Cost Auditor of the Company, the Board of Directors of the Company appointed M/s. Shah Mehta & Co., Cost Accountants, Ahmedabad, as Cost Auditor of the Company for the financial year 2017-18, to fill the casual vacancy. The Board of Directors of the Company at its Meeting held on 8th May, 2018 appointed M/s. Shah Mehta & Co., Cost Accountants, Ahmedabad as the Cost Auditors of the Company for financial year 2018-19.
Accordingly, payment of remuneration to M/s. Shah Mehta & Co., Cost Accountants, Ahmedabad for the financial years 2017-18 and 2018-19 is subject to ratification of Members at the ensuing 87th Annual General Meeting of the Company.
Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. M. C. Gupta & Co., Company Secretaries, Ahmedabad to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2017-18 is annexed herewith as ''Annexure - B''. There were no qualifications, observations, reservation or comments or other remarks in the Secretarial Audit Report, which have any adverse effect on the functioning of the Company.
Directors and Key Managerial Personnel
Mr. Arun P. Patel, Director is due to retire by rotation at this Annual General Meeting in terms of Section 152(6) of the Companies Act, 2013 and is eligible for reappointment.
On the recommendations of the Nomination and Remuneration Committee, Mr. Gagan Deep Singh (DIN: 01895911) was appointed as an Additional Director of the Company w.e.f. 8th May, 2018.
During the year under review, Smt. Indira J. Parikh and Mr. Ashwin Lalbhai Shah, ceased to be Independent Directors w.e.f 14th September, 2017 and Mr. Ramnikbhai Ambani ceased to be Independent Director w.e.f 1st January, 2018.
During the year, the Board of Directors, on the recommendations of the Nomination and Remuneration Committee, had appointed Ms. Maitri Mehta (DIN: 07549243) and Mr. Vimal R. Ambani (DIN: 00351512) as Additional Non-Executive Directors in the Category of Independent Directors w.e.f. 30th October, 2017 and 12thJanuary, 2018 respectively. During the period under review, Mr. Sunil Kumar Kanojia (DIN: 00490259) was appointed as an Additional NonExecutive Director of the Company w.e.f. 30th October, 2017 and has been re-designated as an Additional Independent Director w.e.f. 8th May, 2018. The above Additional Independent Directors hold the office up to the ensuing Annual General Meeting. The Board considers it desirable to avail their services. The Company has received notices from members pursuant to the provisions of Section 160 of the Companies Act,2013 proposing the appointment of all such Directors of the Company.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The tenure of re-appointment of Mr. Rahul A. Patel and Mr. Amit
D. Patel, Managing Directors (Group) is due for completion on October 20,2018. The Board of Directors on the recommendation of the Nomination and Remuneration Committee has re-appointed Mr. Rahul A. Patel and Mr. Amit D. Patel as Managing Directors (Group) of the Company for a period of 5 (five) years with effect from October 21, 2018, subject to approval of Members at ensuing Annual General Meeting.
As stipulated under Regulation 36(3)of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations, 2015, brief profiles of the Directors proposed to be appointed/re-appointed, nature of their expertise in specific functional areas, names of the companies, in which they hold directorships and shareholding are provided in the Notice forming part of the Annual Report.
The Independent Directors have been updated with their roles, rights and responsibilities in the Company by specifying them in their appointment letter along with necessary documents, reports and internal policies to enable them to familiarize with the Company''s procedures and practices.
There was no change in the Key Managerial Personnel during the year.
Awards and Recognitions
During the year, the Company was the recipient of "Business Leader of the Year Award" for Institution Building for Yarn Division of the Company from World Federation of Marketing Professionals & Human Resource Professionals on the occasion of 26th anniversary of "Times of India, Ascent World HRD Congress" held at Taj Land''s End, Mumbai on 15th & 16th February, 2018.
Insurance
The Company''s plant, property, equipmentâs and stocks are adequately insured against major risks. The Company has also taken Directors'' and Officers'' Liability Policy to provide coverage against the probable liabilities arising on them, if any.
Board evaluation
Pursuant to the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out through a structured evaluation process covering various aspects of the Board functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, contribution at the meetings. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013 that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the company for that period;
c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors had prepared the annual accounts on a going concern basis; and
e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
f) the systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.
Sintex ESOP 2018
The Board of your Company at its Meeting held on 17th July, 2018, has approved Sintex Industries Limited -Employees Stock Option Plan-2018, which is subject to approval of Members at the ensuing Annual General Meeting. The Scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. Details as specified under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are available and will be available from time to time on website of the Company at the link http://www.sintex.in/investors/.
Secretarial Standards
The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ''Meetings of the Board of Directors'' and ''General Meetings'', respectively, have been duly followed by the Company.
Meetings of Board of Directors
Regular Meetings of the Board are held to discuss and decide on various business strategies, policies and other issues. During the year, four meetings of the Board of Directors were convened and held on 19th May, 2017, 31stJuly, 2017, 30th October, 2017 and 12th January, 2018. The intervening gap between two consecutive meetings was not more than one hundred and twenty days. Detailed information on the Meetings of the Board is included in the Corporate Governance Report, wh ich forms part of the Annual Report.
Committees of the Board of Directors
In compliance with the requirement of applicable laws and as part of the best governance practice, the Company has following Committees of the Board as on 31st March, 2018:
i. Audit Committee
ii. Stakeholders Relationship Committee
iii. Nomination and Remuneration Committee
iv. Corporate Social Responsibility Committee
v. Share and Debenture Transfer Committee
Independent Directors'' Meeting
The Independent Directors met on 12th January, 2018, without the attendance of Non-Independent Directors and Members of the Management. The Independent Directors reviewed the performance of non-independent directors and the Board as a whole; the performance of the Chairman of the Company, taking in to account the views of Executive Directors and Non-Executive Directors and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties
Consolidated financial statements
The Board reviewed the affairs of the Company''s Subsidiary during the year at regular intervals. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the Company and its subsidiary, which form part of this Annual Report. The Consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company and its subsidiary, as approved by its Board of Directors. Further a statement containing salient features of the Financial Statements of the subsidiary in Form AOC-1 forms part of the Consolidated Financial Statements. The statement also provides the details of performance and financial position of the subsidiary.
Transfer of shares to IEPF demat account
The Company has transferred 5,36,486 Equity Shares to the IEPF demat account held with Central Depository Services (India) Limited (CDSL) in terms of Section 124 (6) of the Companies Act, 2013 and the notified Rules of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, in respect of those shareholders, who have not claimed the dividend for the period of seven consecutive years or more.
Policies
Remuneration policy
The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of the Directors, the senior management and their remuneration. The remuneration policy is stated in the Corporate Governance Report.
Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information
In pursuance to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the Company adopted the Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information as per Regulation 8 set out in Schedule A to said regulations, in order to protect investors'' interest.
Whistleblower policy
The Company has adopted a Whistle Blower Policy through which the Company encourages its employees to bring to the attention of Senior Management, including Audit Committee, any unethical behavior and improper practices and wrongful conduct taking place in the Company. The details of the same is explained in the Corporate Governance Report and also posted on the website of the Company at the linkhttp://www.sintex.in/ wp-content/uploads/2016/07/Whistle_blower_policy.pdf
Code of Conduct to Regulate, Monitor and Report Trading by Insiders
In pursuance to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the Company adopted the Code of Conduct to regulate, monitor and report trading by the employees, insiders and connected person(s), in order to protect investors'' interest as approved by the Board in its meeting held on 7th May, 2015.
In pursuance to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015, the Company adopted Policy on Determination of Materiality of Events, Policy on Preservation of Documents, Website Content Archival Policy and Risk Management Policy in its meeting held on 15th October, 2015. The details of the said policies are forming part of the Corporate Governance Report.
Particulars of loans given, investments made, guarantees given and securities provided
Particulars of loans given, investments made, guarantees given and securities provided under section 186 of the Companies Act, 2013 are provided in the standalone financial statement (Please refer to Note 7, 8, 12, 16 and 50 to the standalone financial statement), which are proposed to be utilized for the general business purpose of the recipient.
Contracts and arrangements with related parties
All Related Party transactions that were entered into during the financial year under review were in ordinary course of business and were on arm''s length basis. There are no materially significant related party transactions made by the Company, which may have potential conflict of interest.
Further, there were no material related party transactions which are not in ordinary course of business and are not on arm''s length basis and hence there are no information required to be provided under Section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 in form AOC-2 and under Section 188(2) of the Companies Act, 2013.
Corporate Governance
Corporate Governance is, essentially, a philosophy. It encompasses not only the regulatory and legal requirements, but also the voluntary practices developed by the Company to protect the best interests of all stakeholders. The Company complies withal the Standards, Guidelines and Principles governing disclosures and obligations set out by the Securities and Exchange Board of India (SEBI) and the Stock Exchanges on corporate governance.
A separate Report on Corporate Governance along with Practicing Company Secretary''s Certificate on compliance with the conditions of Corporate Governance as per Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges is provided as a part of this Annual Report, besides the Management discussion and analysis report.
Your Company has made all information, required by investors, available on the Company''s website www.sintex.in.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, as amended from time to time is annexed to this Report as ''Annexure - C
Extract of the annual return
As required under the provisions of sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of annual return in Form No. MGT-9 forms part of this Report as ''Annexure - D.
Particulars of employees
The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms part of this report as ''Annexure
E. Having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, this Annual Report is being sent to all the members and others entitled thereto, excluding the said annexure. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid annexure is also available for inspection by Members at the Registered Office of the Company, 21 days before the ensuing Annual General Meeting and up to the date of Annual General Meeting during business hours on working days.
Significant and Material Orders impacting going concern basis passed by the regulators or courts or tribunals
No significant or material orders impacting going concern basis were passed by the regulators or courts or tribunals, which impact the going concern status and Company''s operations in future.
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.
Risk Management
The Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. During the year, the Board of Directors has reviewed the risks associated with the business of the Company, its root causes and the efficacy of the measures taken to mitigate the same. There are no risks which in the opinion of the Board threaten the existence of the Company.
Audit Committee
The Committee consists of Members viz. Dr. Narendra Kumar Bansal (Chairman), Ms. Maitri Mehta (Vice Chairperson), Dr. Rajesh B. Parikh and Mr. Amit D. Patel. There were no instances, where recommendations of Audit Committee were not accepted by the Board of Director
Material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this Financial Statements relate and the date of this Report. There has been no change in the nature of business of the Company.
General
Your Directors state that no disclosure or reporting is required in respect of the following items, as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Companies Act, 2013.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company.
Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Acknowledgements
The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. The Boards of Directors also wish to place on record its deep sense of appreciation for the committed services by the Company''s executives, staff and workers.
On behalf of the Board, Dinesh
B. Patel
Date:17th July, 2018 Chairman
Place: Ahmedabad (DIN : 00171089)
Mar 31, 2017
Dear Shareholderâs
The Directors take immense pleasure in presenting the 86th Annual Report highlighting the business and operations of the Company on a standalone basis and the accounts for the financial year ended March 31, 2017.
Financial highlights
(Rs. In crore)
|
Particulars |
2016-17 |
2015-16 |
|
Gross turnover |
1433.84 |
918.02 |
|
Gross profit |
263.42 |
214.00 |
|
Less: Depreciation |
132.22 |
72.53 |
|
Profit before tax |
131.20 |
141.47 |
|
Less: Provision for taxation â current tax |
26.89 |
6.32 |
|
Deferred tax |
(23.17) |
24.83 |
|
Profit/(loss) after tax from continuing operations |
127.48 |
110.32 |
|
Profit from discontinued operations before tax |
- |
573.76 |
|
Tax expense of discontinued operations |
- |
134.13 |
|
Profit from discontinued operations (after tax) |
- |
439.63 |
|
Profit for the Year |
127.48 |
549.95 |
Note: Previous year figures have been regrouped/re-classified, wherever required and the same are not comparable due to effect of the Demerger as per the Composite Scheme of Arrangement.
The Composite Scheme of Arrangement
A. Approval of the Composite Scheme of Arrangement
In order to lend greater/ enhanced focus to the operation of the Textile business and the Plastic business and to reorganize the Custom Moulding Undertaking and the Prefab Undertaking of the Company and to transfer the same to Sintex-BAPL Limited and Sintex Prefab and Infra Limited, respectively, which are wholly owned subsidiaries of Sintex Plastics Technology Limited, the Board of Directors of your Company at its Meeting held on 29th September, 2016 approved the Composite Scheme of Arrangement between the Company and Sintex Plastics Technology Limited and Sintex-BAPL Limited and Sintex Prefab and
Infra Limited and their respective shareholders and creditors (âSchemeâ), pursuant to the provisions of the Companies Act, 2013. In terms of the Order passed by the Honâble High Court of Gujarat at Ahmedabad, the Scheme was placed before the Equity Shareholders, Secured Creditors (including Debentureholders) and Unsecured Creditors of the Company and the same has been approved with requisite majority on 17th January, 2017. The Scheme has been sanctioned by the Honâble National Company Law Tribunal, Bench, at Ahmedabad vide its Order dated 23rd March, 2017. The Scheme, has become effective on 12th May, 2017 consequent upon receiving necessary statutory approvals.
B. Rationale and purpose of the Scheme
1. Streamlining Separate Business: Separating the âCustom Moulding Businessâ and âPrefab Businessâ into Sintex-BAPL Limited and Sintex Prefab and Infra Limited (Formerly known as âSintex Infra Projects Limitedâ) respectively, which are the entities engaged in the same / similar line of business, will enable the respective companies to pursue different business strategies and raise resources for meeting their respective growth requirements. Each of the business has got tremendous growth & profitability and will require focused leadership and management attention.
2. Attracting Strategic Investors and capturing Shareholders value for Investment: The nature of risk and competition involved in the businesses carried out by Sintex Group is distinct and are capable of attracting different set of Investors like strategic partners, lenders, etc. thereby unlocking value of respective businesses and existing shareholders.
3. Focus on Core Business: It would enable the respective companies to focus on and enhance their core businesses by streamlining operations, cutting costs and ensuring more efficient management control. Further, it would enable respective management(s) to concentrate on core businesses and strengthen competencies and provide independent opportunities to increase scale of operations.
4. It would create enhanced value for shareholders and allow a focused strategy and specialization for sustained growth, which would be in the best interest of all the Stakeholders.
C. Key Highlights of the Scheme:
- The Demerger of the Custom Moulding Undertaking (which includes the Companyâs strategic investment in its wholly owned subsidiary, namely, Sintex Holdings B.V.) on a going concern basis, together with all its assets and liabilities) and the Prefab Undertaking of the Company and vesting of the same to Sintex-BAPL Limited and Sintex Prefab and Infra Limited, respectively;
- The appointed date of the Scheme, being the date on which the Undertakings shall vest in the respective resulting companies, has been fixed at 1 April 2016;
- Reduction of Capital Redemption Reserve Account and Securities Premium Account of the Company.
Financial performance
Your Companyâs gross sales jumped by RS.515.82 crore from RS.918.02 Crore in 2015-16 to RS.1433.84 crore in 2016-17 driven by robust growth in the Textile & Yarn Business.
EBIDTA of Textile & Yarn Business increased by 25.30% from RS.281.86 crore in 2015-16 to RS.353.17 crore in 2016-17 and the profit after tax for the year grew by 15.55% from RS.110.32 crore in 2015-16 to RS.127.48 crore in 2016-17. Consequently, the earnings per share (face value or RS.1) stood at RS.2.62 (basic) and RS.2.62 (diluted) for 2016-17 against RS.2.50 (basic) and RS.2.50 (diluted) for 2015-16.
Your Company repaid debts worth RS.60.06 crore. Besides, FCCBs worth US$ 29.00 million (of the US$ 110 million FCCB issue) were converted into Equity, which increased the Companyâs net worth by RS.191.61 crore, thus strengthening the financials of the Company.
Dividend
Your Directors are pleased to recommend dividend of RS.0.25per share on equity shares having face value of Re.1 each (Previous year RS.0.70 per equity share on face value of Re.1 each). The dividend is recommended based upon the financial performance of textiles operations of the company.
The dividend will be paid to the eligible shareholders subject to the approval of members, whose names appear on the Register of Members of the Company at the forthcoming Annual General Meeting as on the specified date.
Increase in Share capital due to Rights Issue of Equity Shares and conversion of Foreign Currency Convertible Bonds
During the year under review, the Board of Directors of the Company at its Meeting held on 28th July, 2016 approved the issuance of equity shares of face value of RS.1/- each, for cash aggregating upto RS.500,00,00,000/-, on a rights basis to the Equity Shareholders at a price of RS.65/- per share (including premium of RS.64/- per Rights Equity Share), which was oversubscribed. The Committee of Directors- Rights Issue at its Meeting held on 26th September, 2016 has allotted 7,69,21,900 Rights Equity Shares of the face value of Re.1/- each at a price of RS.65/- per share (including premium of RS.64/- per Rights Equity Share) of the Company to the respective applicants.
Further, during the year under review, the Company has allotted in aggregate 2,12,23,333 equity shares of RS.1/- each at a premium of RS.91.16 each per equity share on exercise of conversion by the FCCB-holders and accordingly, the paid-up share capital of the Company on 31st March, 2017 stands increased to RS.54,46,95,954/- divided into 54,46,95,954 equity shares of RS.1/-each. As at 31st March, 2017, FCCBs worth US$ 81.00 million (of the US$ 110 million FCCB issue) were outstanding for conversion into equity shares.
Fixed deposits
During the year under review, your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the rules made there under.
State of Companyâs affairs
Sintex is globally-respected for the manufacture of structured fabrics addressing high-end fashion shirting manufacture. The Companyâs fibre-to-fabric facility (Kalol) is one of the largest weaving Unit in India; the Company operates one of the largest corduroy facility in India. It produces multiple varieties of blended high-end shirting fabrics marketed under the BVM brand.
To strengthen its presence in the Indian textile space, the Company is in the midst of setting up one of Indiaâs largest compact yarn facilities in India housing 1 mn. spindles -to be commissioned in a phased manner.
Textile Division
The business registered a topline of RS.1514 crores in FY2016-17 against RS.990 crores in FY2015-16 - a growth of 53 % owing to successful business strategies implemented by the team, which has increased product awareness and acceptability in India and across global markets.
In addition, the Company has strengthened its business by adding capabilities and capacities which promise to widen its opportunity canvass. In addition, it has deepened its market penetration in existing markets - institutional and retail and entered new markets. These initiatives should facilitate in sustaining business momentum over the coming years.
Yarn Division
The first phase comprising 3.06 lac spindles of the high-tech yarn facility at Pipavav, Gujarat commenced operations in the first half of FY 2016-17 with spinning quality compact yarn for weaving and knitting application and achieved a capacity utilization of about 98% by the close of the financial year. The Yarn Division reported a gross revenue of RS.646.46 crore in the first year of commercial operations.
Performance of subsidiary - BVM Overseas Limited
Sintex enjoys a strong presence in compact yarn space in India and the international market its wholly-owned subsidiary BVM Overseas Limited.
Having commenced trading of quality yarns for weaving and knitting in India and global markets in 2015-16, the Company has made considerable progress. It achieved a gross turnover of RS.511.59 crores with EBIDTA of RS.13.92 crores in its first full financial year FY17 as against RS.25.90 crore turnover of FY16. Of the total turnover, about 79% accrued from exports while the balance was earned from its marketing efforts in India. Going forward, as the Company establishes a firm footing in the domestic and international markets, the management plans to expand its product basket by including value-added products namely fabrics and sheeting.
Changes in subsidiaries, associates and joint ventures/ wholly-owned subsidiaries:
During the year under review, Sintex-BAPL Limited ceased to be subsidiary of the Company by way of divestment of shareholding to Sintex Plastics Technology Limited.
Further, during the year under review, Sintex Prefab and Infra Limited (formerly known as âSintex Infra Projects Limitedâ) ceased to be subsidiary of the Company on account of divestment of shareholding by BVM Overseas Limited, the Wholly Owned Subsidiary to Sintex Plastics Technology Limited.
Sintex Plastics Technology Limited also ceased to be a Subsidiary of the Company due to cancellation of shares held by the Company, on the Composite Scheme of Arrangement becoming effective on 12th May, 2017.
Consequent upon restructuring, the Company has only one Subsidiary Company i.e. BVM Overseas Limited.
Corporate Social Responsibility initiatives
As part of its initiatives under Corporate Social Responsibility, the Company has undertaken projects in the areas of education, livelihood, sports, health, water and sanitation. These projects are in accordance with Schedule VII of the Companies Act, 2013.
The Annual Report on CSR activities is annexed herewith as âAnnexure - Aâ.
Internal Financial Control (IFC) systems and their adequacy
As per the provisions of the Companies Act, 2013, the Directors have the responsibility for ensuring that the Company has implemented robust system / framework for IFCs to provide them with reasonable assurance regarding the adequacy and operating effectiveness of controls, to enable the Directors to meet with their responsibility.
The Company has in place, a sound financial control system and framework in place to ensure:
- The orderly and efficient conduct of its business,
- Safeguarding of its assets,
- The prevention and detection of frauds and errors,
- The accuracy and completeness of the accounting records and
- The timely preparation of reliable financial information.
A formal documented IFC framework has been implemented by the Company. The Board regularly reviews the effectiveness of controls and takes necessary corrective actions where weaknesses are identified as a result of such reviews. This review covers entity level controls, process level controls, fraud risk controls and Information Technology environment. Based on this evaluation, there is nothing that has come to the attention of the Directors to indicate any material break down in the functioning of these controls, procedures or systems during the year. There have been no significant events during the year that have materially affected, or are reasonably likely to materially affect, our internal financial controls. The management has also come to a conclusion that the IFC and other financial reporting was effective during the year and is adequate considering the business operations of the Company.
Indian Accounting Standards (IND AS) - IFRS Converged Standards
In accordance with the notification issued by the Ministry of Corporate Affairs (MCA), your Company is required to prepare financial statements under Indian Accounting Standards (Ind-AS) prescribed under section 133 of the Companies Act 2013 read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 with effect from 1st April 2016. The Ind-AS has replaced the existing Indian GAAP and accordingly the Company has adopted Ind-AS with effect from 1st April 2016 with the transition date of 1st April 2015 and the financial Statements for the year ended 31st March 2017 has been prepared in accordance with Ind-AS. The financial statements for the year ended 31st March 2016 have been restated to comply with Ind-AS to make them comparable. The effect of the transition from IGAAP to Ind-AS has been explained by way of a reconciliation in the Standalone Financial Statements and Consolidated Financial Statements.
Auditors and Auditorsâ Report
M/s. Shah & Shah Associates, Chartered Accountants, Ahmedabad (FRN 113742W), Statutory Auditors of the Company were appointed as Statutory Auditors of the Company for a period of five years at the 83rd Annual General Meeting of the Company held on 1st August, 2014 till the conclusion of 88th Annual General Meeting of the Company pursuant to provisions of Section 139(1) of the Companies Act, 2013. Their appointment is subject to ratification by the Members at the Annual General Meeting of the Company.
Your Directors recommend the ratification of their appointment as Statutory Auditors of the Company for the financial year 201718 and request you to fix their remuneration.
Pursuant to Regulation 33(1)(d) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Auditors have also confirmed that they have valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI).
The notes on financial statement referred to in the Auditorâs Report are self-explanatory and do not call for any further comments. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.
Cost Auditor
Pursuant to Section 148(3) of the Companies Act, 2013, M/s. Kiran J. Mehta & Co., Cost Accountants, Ahmedabad have been appointed as the Cost Auditors of the Company for financial year 2016-17 by the Board of Directors and their remuneration has been ratified by members at the 85th Annual General Meeting of the Company. The Board of Directors of the Company at its Meeting held on 31st July, 2017 appointed M/s. Kiran J. Mehta & Co., Cost Accountants, Ahmedabad as the Cost Auditors of the Company for financial year 2017-18 and their remuneration is subject to approval of Members at the ensuing 86thAnnual General Meeting of the Company.
Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. M. C. Gupta & Co., Company Secretaries, Ahmedabad to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the F.Y. 2016-17 is annexed herewith as âAnnexure - Bâ. There were no qualifications, reservation or adverse remarks in the Secretarial Audit Report.
Directors and Key Managerial Personnel
Mr. Amit D. Patel, Managing Director (Group) is due to retire by rotation at this Annual General Meeting in terms of Section 152(6) of the Companies Act, 2013 and is eligible for reappointment. The Board recommends the reappointment of Mr. Amit D. Patel as the Director of the Company.
Mr. S. B. Dangayach has expressed his desire for not renewing his term as Managing Director of the Company, due for completion on 6th June, 2017. With a view to facilitate the restructuring post Demerger, he has also resigned as a Director of the Company and accordingly, ceased to be a Director w.e.f. 6th June, 2017. The Board places on record its appreciation for the services rendered by him as Director as well as Managing Director of the Company.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
As stipulated under Regulation 36(3) of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations, 2015, brief profiles of the Directors proposed to be reappointed, nature of their expertise in specific functional areas, names of the companies in which they hold directorships and shareholding are provided in the Notice attached forming part of the Annual Report.
The Independent Directors have been updated with their roles, rights and responsibilities in the Company by specifying them in their appointment letter along with necessary documents, reports and internal policies to enable them to familiarise with the Companyâs procedures and practices.
Appointment of New Independent Directors
All Independent Directors are completing their first term at the 86th Annual General Meeting of the Company. The Board of Directors has decided that Mr. Ramnikbhai H. Ambani, Dr. Rajesh B. Parikh, Dr. Lavkumar Kantilal Shah, Dr. Narendra K. Bansal and Mrs. Indira J. Parikh, the Independent Directors be given the second term upto 89th Annual General Meeting of the Company.
Mr. Ashwin Lalbhai Shah, the Independent Director has requested the Board not to consider him for re-appointment and relieve him from the office of the Director after the expiry of his present term due to health issues. The Board also placed on record its appreciation for his contribution.
Insurance
The Companyâs plant, property, equipments and stocks are adequately insured against major risks. The Company has also taken Directorsâ and Officersâ Liability Policy to provide coverage against the probable liabilities arising on them, if any.
Board evaluation
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 on its applicability, the Board has carried out through a structured evaluation process covering various aspects of the Board functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, contribution at the meetings. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
Directorsâ Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013 that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) the Directors had prepared the annual accounts on a going concern basis; and
e) the Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;
f) the systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.
Meetings of Board of Directors
Regular Meetings of the Board are held to discuss and decide on various business strategies, policies and other issues. During the year, seven meetings of the Board of Directors were convened and held on 7th May, 2016, 19th May, 2016, 30th May, 2016, 28th July, 2016, 29th September, 2016, 12th November, 2016 and 20th January, 2017. The intervening gap between two consecutive meetings was not more than one hundred and twenty days. Detailed information on the Meetings of the Board is included in the Corporate Governance Report, which forms part of the Annual Report.
Committees of the Board of Directors
In compliance with the requirement of applicable laws and as part of the best governance practice, the Company has following Committees of the Board as on 31st March, 2017:
i. Audit Committee
ii. Stakeholders Relationship Committee
iii. Nomination and Remuneration Committee
iv. Corporate Social Responsibility Committee
v. Share and Debenture Transfer Committee
Independent Directorsâ Meeting
The Independent Directors met on 20th January, 2017, without the attendance of Non-Independent Directors and Members of the Management. The Independent Directors reviewed the performance of non-independent directors and the Board as a whole; the performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties
Consolidated financial statements
The Board reviewed the affairs of the Companyâs Subsidiary during the year at regular intervals. In accordance with section 129(3) of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the Company and its subsidiary, which form part of this Annual Report. The consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company and its subsidiary, as approved by its Board of Directors. Further a statement containing salient features of the Financial Statements of the subsidiary in Form AOC-1 forms part of the Consolidated Financial Statements. The statement also provides the details of performance and financial position of the subsidiary.
Policies - Remuneration policy
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of the Directors, the senior management and their remuneration. The remuneration policy is stated in the Corporate Governance Report.
- Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information
In pursuance to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the Company adopted the Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information as per Regulation 8 set out in Schedule A to said regulations, in order to protect investorsâ interest.
- Whistle blower policy
The Company has adopted a Whistle Blower Policy through which the Company encourages its employees to bring to the attention of Senior Management, including Audit Committee, any unethical behaviour and improper practices and wrongful conduct taking place in the Company. The details of the same is explained in the Corporate Governance Report and also posted on the website of the Company at the link http://sintex.in.cp-50.webhostbox.net/wp-content/ uploads/2016/07/Whistle_blower_policy.pdf
- Code of Conduct to Regulate, Monitor and Report Trading by Insiders
In pursuance to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the Company adopted the Code of Conduct to regulate, monitor and report trading by the employees, insiders and connected person(s), in order to protect investorsâ interest as approved by the Board in its meeting held on 7th May, 2015.
In pursuance to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company adopted Policy on Determination of Materiality of Events, Policy on Preservation of Documents, Website Content Archival Policy and Risk Management Policy in its meeting held on 15th October, 2015.The details of the said policies are forming part of the Corporate Governance Report.
Particulars of loans given, investments made, guarantees given and securities provided
Particulars of loans given, investments made, guarantees given and securities provided under section 186 of the Companies Act, 2013 are provided in the standalone financial statements (Please refer to Note 7, 8, 12, 16 and 51 to the standalone financial statements), which are proposed to be utilized for the general business purpose of the recipient.
Contracts and arrangements with related parties
All Related Party transactions that were entered into during the financial year under review were in ordinary course of business and were on armâs length basis. There are no materially significant related party transactions made by the Company, which may have potential conflict of interest.
Further, there were no material related party transactions which are not in ordinary course of business and are not on armâs length basis and hence there are no information required to be provided under Section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 in form AOC-2 and under Section 188(2) of the Companies Act, 2013.
Corporate Governance
Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organizationâs brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholdersâ expectations. The Company can comply withall the Standards, Guidelines and Principles governing disclosures and obligations set out by the Securities and Exchange Board of India (SEBI) and the Stock Exchanges on corporate governance.
A separate Report on Corporate Governance along with Practising Company Secretaryâs Certificate on compliance with the conditions of Corporate Governance as per Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges is provided as a part of this Annual Report, besides the Management discussion and analysis report.
Your Company has made all information, required by investors, available on the Companyâs website www.sintex.in
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, as amended from time to time is annexed to this Report as âAnnexure - C
Extract of the annual return
As required under the provisions of sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of annual return in Form No. MGT-9 forms part of this report as âAnnexure - D.
Business Responsibility Report
The Business Responsibility Report for the year ended 31stMarch, 2017 as stipulated under Regulation 34 of the SEBI Listing Regulations is annexed which forms part of this report as âAnnexure - Eâ.
Particulars of employees
The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms part of this report as âAnnexure F. Having regard to the provisions of the first proviso to Section 136(1) of the Act, this Annual Report is being sent to all the members and others entitled thereto, excluding the said annexure. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid annexure is also available for inspection by members at the Registered Office of the Company, 21 days before the 86th Annual General Meeting and up to the date of Annual General Meeting during business hours on working days.
Significant and Material Orders impacting going concern basis passed by the regulators or courts or tribunals
No significant or material orders impacting going concern basis were passed by the regulators or courts or tribunals, which impact the going concern status and Companyâs operations in future.
Risk Management
The Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. During the year, the Board of Directors has reviewed the risks associated with the business of the Company, its root causes and the efficacy of the measures taken to mitigate the same. There are no risks which in the opinion of the Board threaten the existence of the Company.
Audit Committee
The Committee consists of Members viz. Mr. Ashwin Lalbhai Shah (Chairman), Dr. Rajesh B. Parikh, Mr. Amit D. Patel and Mrs. Indira J. Parikh. There are no instances, where recommendations of Audit Committee are not accepted by the Board of Directors.
GENERAL
Your Directors state that no disclosure or reporting is required in respect of the following items, as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company.
Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Acknowledgements
Your Directors are highly grateful for all the guidance, support and assistance received from the Government, Financial Institutions and Banks. Your Directors thank all shareholders, esteemed customers, suppliers and business associates for their faith, trust and confidence reposed in the Company. Your Directors wish to place on record their sincere appreciation for the dedicated efforts and consistent contribution made by the employees at all levels, to ensure that the Company continues to grow and excel.
On behalf of the Board,
Date: July 31, 2017 Dinesh B Patel
Place: Ahmedabad Chairman
(DIN : 00171089)
Mar 31, 2016
Dear Shareholder''s
The Directors take immense pleasure in presenting the 85th Annual
Report highlighting the business and operations of the Company on a
standalone basis and the accounts for the financial year ended March
31, 2016.
Financial highlights
(Rs. In crore)
Particulars 2015-16 2014-15
Gross turnover 4922.65 4,086.80
Gross profit 900.76 761.59
Less : Depreciation 183.35 144.84
Profit before tax 717.41 616.75
Less: provision for taxation - current tax 153.68 135.60
MAT credit entitlement (121.73) (112.03)
Deferred tax 136.18 136.58
Profit/(loss) after tax before prior period 549.28 456.60
items
Short/(Excess) provisions for taxation of (0.33) (0.92)
earlier years
Profit after tax 549.61 457.52
Balance of profit of previous year 2,077.57 1,731.90
Profit available for appropriation 2,627.18 2,189.42
Appropriations
General reserve 46.00 46.00
Debenture redemption reserve 40.42 27.31
proposed dividend on equity shares 32.67 31.07
Tax on dividend 6.65 6.18
Impact of depreciation as per Schedule-II - 1.29
Balance carried to Balance Sheet 2,501.44 2,077.57
TOTAL 2,627.18 2,189.42
Note: Previous year figures have been regrouped/re-classified wherever
required.
Financial performance
Your Company''s gross sales jumped by 20.45% from Rs.4086.80 crore in
2014-15 to Rs.4922.65 crore in 2015-16 driven by robust growth in three
business segments namely prefabricated structures, custom mouldings and
textiles.
EBIDTA increased by 10.23% from Rs.1011.91 crore in 2014-15 to
Rs.1115.45 crore in 2015-16 and the profit for the year grew by 20.12%
from Rs.457.52 crore in 2014-15 to Rs.549.61 crore in 2015-16.
Consequently, the earnings per share (face value or Rs.1) stood at
Rs.12.44 (basic) and Rs.12.44 (diluted) for 2015-16 against Rs.12.48
(basic) and Rs.11.64 (diluted) for 2014-15.
Your Company repaid debts worth Rs.532.41 crore. Besides, FCCBs worth
US$ 24.15 million (of the US$ 140 million FCCB issue) were converted
into equity which increased the Company''s net worth by Rs.132.73 crore,
thus strengthening the Balance Sheet.
Dividend
Your Directors are pleased to recommend dividend of Rs.0.70 per share
on equity shares having face value of Rs.1 each (Previous year Rs.0.70
per equity share on face value of Rs.1 each). The Total outgo for the
current year amounts to Rs.32.67 crores, including dividend
distribution tax of Rs.6.65 crores, against Rs.31.07 crores including
dividend distribution tax of Rs.6.18 crores in the previous year.
The dividend will be paid subject to the approval of shareholders whose
names appear on the Register of Members of the Company as on record
date of 9th August, 2016 at the forthcoming Annual General Meeting.
Share capital
During the year under review, the Company has allotted in aggregate
2,01,89,527 equity shares of Rs.1 each at a premium of Rs.64.74 each
per equity share on exercise of conversion by the FCCB-holders and
accordingly the paid-up share capital of the Company on 31st March,
2016 increased to Rs.44,65,50,721 divided into 44,65,50,721 equity
shares of Rs.1 each. There are no outstanding FCCBs for conversion into
equity shares.
Fixed deposits
During the year under review, your Company has not accepted any fixed
deposits within the meaning of Section 73 of the Companies Act, 2013
and the rules made there under.
Debentures
During the year under review, the Company has issued 5,000 - 9.41%
rated, listed, secured, fully redeemable, dematerialised
non-convertible debentures of the face value of Rs.10,00,000 each of
the aggregate nominal value of Rs.500 crore on 8th October, 2015 for a
tenure of five years on a private placement basis listed on the
wholesale debt market segment of the BSE Limited.
The Company has also issued 2,000 - 9.36% rated listed, secured, fully
redeemable, dematerialised non-convertible debentures of the face value
of Rs.10,00,000 each of the aggregate nominal value of Rs.200 crore on
27th May, 2016 for a tenure of ten years on a private placement basis
listed on the wholesale debt market segment of the BSE Limited.
Further, the Company has fully redeemed 3,500 listed, secured, fully
redeemable, dematerialised non-convertible debentures of the face value
of Rs.10,00,000/- each of the aggregate nominal value of Rs.350 crore.
Credit rating
Care, a reputed Rating Agency, has reaffirmed the highest credit rating
of CARE AA for long-term debts, CARE AA for non-convertible
debentures and CARE A1 for short-term debts.
State of Company''s affairs
Despite a sluggish global economic environment, the India strengthened
its foothold on the economic revival pathway. The Central Government''s
landmark initiatives like ''Swachh Bharat Abhiyan'', ''Housing for All''
and ''Deen Dayal Upadhyay Gram Jyoti Yojna'', among others are expected
to catalyse demand for your Company''s products. A detailed discussion
of your Company''s operations is given under the ''Management discussion
and analysis report.''
A. Plastics division: The Company''s flagship business vertical
contributed 81.36% to the Company topline driven by incremental sales
of prefabricated structures, sandwich panels, water storage solutions
and customs moulding. This business segment grew by 19.14% from
Rs.3361.40 crore in 2014-15 to Rs.4004.63 crore in 2015-16.
The growing emphasis of cleanliness, increasing corporate contributions
towards improving social infrastructure and the pressing need for
significantly enhancing warehousing infrastructure across India
catalysed the demand for prefabricated structures and sandwich panels.
Water storage solutions - a traditional product vertical gained
momentum consequent to the Company''s investment in strengthening brand
awareness and a new product launch which was well received by the
customers.
B. Textiles division:The textile division reported a healthy
performance as revenue grew by 26.55% from Rs.725.40 crore in 2014-15
to Rs.918.02 crore in 2015-16. This superior performance was the result
of a robust growth in sales volumes in the domestic market - by brands
and through our retail channel. The Company''s focus on superior design
creation and product development increased product acceptance in
''Collection Sales'' in international markets which is expected to result
in heartening volumes in the current year. In addition, the Company''s
significant efforts in streamlining plant and business operations
facilitated in strengthening the profitability of this division.
Performance of subsidiaries
Sintex''s presence in custom moulding in India and globally is through
its subsidiaries Sintex NP SAS (Europe), Sintex Wausaukee Composites
Inc. (US) and Sintex-BAPL Limited (India) (formerly Bright AutoPlast
Ltd.). These companies provide highly-engineered custom moulding
solutions to large global and Indian brands with a presence in diverse
sectors. In addition, Sintex Infra Projects Ltd. undertakes EPC
contracts for various infrastructure projects across India.
1) Sintex NP SAS:
The Company registered a consolidated turnover of 239.5 Million Euros
as against 199.06 Million Euros for prior year. The main driver of this
increase of 20.3% was the integration of SIMONIN group last year.
Mostly all the other subsidiaries were at the expected financial
performance levels and thus the financial situation of SINTEX NP, its
industrial facilities, its technological differentiation would allow
the Company to begin FY 2016-17 with composure.
2) Sintex Wausaukee Composites Inc.:
The combined turnover for Wausaukee Composites Inc. was $27.4 Million
against $26 Million for the prior year, an increase of 5.4 %. Owosso
too incurred costs due to material usage and revenues declined due to
weakness in the Agricultural and mining sectors. The Company has taken
the decision to sell this factory and move all its work to the
Wisconsin facility in this year. Gillett had an increase of $1.1
million in total revenue for the division. The coming year will be a
transformational one for SWC with decreasing costs and increased
infrastructure utilisation. The Company anticipates to more than
doubling its EBITDA performance in the calendar year 2016.
3) Sintex-BAPL Limited:
There has been a lot of activity under this division with the Company
registering a top line growth of 19% as compared to an average growth
of 8% in the auto industry. This increase in various projects led to a
utilisation of 70%-84% of capacity utilization. The Company has
undertaken a lot of projects in the year under review such as:
Two successful assembly lines have been established for MSIL- the
S-CRoSS and the BALENo vehicle by the unit in Sohna. & Successful
development of parts and supply of Creta Hyundai parts from Aug-2015.
- Oragadam Plant in Chennai successfully tried out TVSM Cylinder Cover
Head where Flatness requirement was in range of 0.5 millimetres.
The present need in the automotive space is for precision and the
precision part manufacturing division of the Company has entered in
automotive space leading to orders from brands like TRW and BorgWarner.
All these initiatives have helped the Company to expect a topline
growth of above 15% in 2016-17.
4) Sintex Infra Projects Limited:
The Company did not pursue any new projects in this segment actively
due to the slow take off of the government programs. Hence focus this
year was on the completion of work in the Company''s kitty. There were
projects in uttar pradesh, Delhi- NCR and pondicherry, out of the six
projects in hand, three have been completed. Sintex plans to adopt a
cautious strategy while accepting new work in this division.
Changes in subsidiaries, associates and joint ventures/wholly-owned
subsidiaries:
With a view to export and trading of yarn to be manufactured at the
proposed spinning unit of the Company, the Company has acquired by
purchase of entire share capital of BVM overseas Limited from its
promoters at par value and accordingly BVM overseas Limited has emerged
as a wholly owned subsidiary of the Company.
As a part of restructuring of the new business activity in terms of
Spinning project, the Company has transferred entire shareholding of
Sintex Infra projects Limited to BVM overseas Limited, a wholly owned
subsidiary Company and accordingly Sintex Infra projects Limited has
emerged as a step down subsidiary of the Company. The Company has also
acquired by purchase of entire share capital of Neev Educare private
Limited to make it a wholly owned subsidiary of the Company.
pursuant to provisions of Section 129(3) of the Companies Act, 2013, a
statement containing salient features of the financial statements of
the Company''s subsidiaries in Form AoC-1 is attached to the financial
statements of the Company. The statement also provides the details of
performance, financial position of the subsidiaries of the Company.
Corporate social responsibility initiatives
As a part of its initiatives under corporate social responsibility, the
Company has undertaken projects in the areas of education, livelihood,
sports, health, water and sanitation. These projects are in accordance
with Schedule VII of the Companies Act, 2013.
The Annual Report on CSR activities is annexed herewith as ''Annexure
A''.
Internal Financial control (IFC) systems and their adequacy
As per the provisions of the Companies Act, 2013, the Directors have
the responsibility for ensuring that the Company has implemented robust
system / framework for IFCs to provide them with reasonable assurance
regarding the adequacy and operating effectiveness of controls to
enable the Directors to meet with their responsibility.
The Company has in place a sound financial control system and framework
in place to ensure:
- The orderly and efficient conduct of its business,
- Safeguarding of its assets,
- The prevention and detection of frauds and errors,
- The accuracy and completeness of the accounting records and
- The timely preparation of reliable financial information.
A formal documented IFC framework has been implemented by the Company.
The Board regularly reviews the effectiveness of controls and takes
necessary corrective actions where weaknesses are identified as a
result of such reviews. This review covers entity level controls,
process level controls, fraud risk controls and Information Technology
environment. Based on this evaluation, there is nothing that has come
to the attention of the Directors to indicate any material break down
in the functioning of these controls, procedures or systems during the
year. There have been no significant events during the year that have
materially affected, or are reasonably likely to materially affect, our
internal financial controls. The management has also come to a
conclusion that the IFC and other financial reporting was effective
during the year and is adequate considering the business operations of
the Company.
Indian Accounting Standards (IND AS) - IFRS Converged Standards
The Ministry of Corporate affairs vide its notification dated February
16, 2015 has notified the Companies (Indian Accounting Standard) Rules,
2015.
In pursuance of this notification, the Company, its subsidiaries and
joint venture company will adopt IND AS for the periods beginning on or
after April 1, 2016 with the comparatives for the periods ending March
31, 2016.
The implementation of IND AS is a major change process for which a
company has established a project team and is dedicating considerable
resources. The impact of the change on adoption of IND AS is being
assessed.
Auditors and Auditors'' Report
M/s. Shah & Shah Associates, Chartered Accountants, Ahmedabad (FRN
113742W), Statutory Auditors of the Company had been appointed at the
83rd Annual General Meeting of the Company held on 1st August, 2014
till the conclusion of 88th Annual General Meeting of the Company
pursuant to provision of Section 139(1) of the Companies Act, 2013.
Their appointment is subject to ratification by the members at 85th
Annual General Meeting of the Company.
Your Directors recommend the ratification of their appointment as
Statutory Auditors of the Company for the financial year 2016-17.
As per Regulation 33(1)(d) of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the Auditors have also confirmed that
they have valid certificate issued by the peer review board of the
Institute of Chartered Accountancy of India.
The notes on financial statement referred to in the Auditor''s Report
are self-explanatory and do not call for any further comments. The
Statutory Auditors have not reported any incident of fraud to the Audit
Committee of the Company in the year under review.
Cost Auditor
Pursuant to Section 148(3) of the Companies Act, 2013, M/s. Kiran J.
Mehta & Co., Cost Accountants, Ahmedabad and M/s. V. H. Shah, Cost
Accountants, Ahmedabad have been appointed as the Cost Auditors of the
Company for financial year 2015-16 by the Board of Directors and their
remuneration has been ratified by members at the 84th Annual General
Meeting of the Company.
Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed M/s. M. C. Gupta &
Co., Company Secretaries, Ahmedabad to undertake the Secretarial Audit
of the Company. The Report of the Secretarial Auditor is annexed
herewith as ''Annexure B''. There were no qualifications, reservation or
adverse remarks in the Secretarial Audit Report and thus does not
require any further clarifications/comments.
Directors and Key Managerial Personnel
Mr. Dinesh B. Patel, Chairman and Mr. Rahul A. Patel, Managing Director
(Group) are due to retire by rotation at this Annual General Meeting in
terms of Section 152(6) of the Companies Act, 2013 and are eligible for
reappointment. The Board recommends the reappointment of above
Directors of the Company.
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and clause 49 of the Listing Agreement.
As stipulated under Regulation 36(3) of Securities and Exchange Board
of India (Listing Obligations and Disclosure Requirements) Regulations,
2015, brief profiles of the Directors proposed to be reappointed,
nature of their expertise in specific functional areas, names of the
companies in which they hold directorships and shareholding are
provided in the Notice attached forming part of the Annual Report.
The Independent Directors have been updated with their roles, rights
and responsibilities in the Company by specifying them in their
appointment letter alongwith necessary documents, reports and internal
policies to enable them to familiarise with the Company''s procedures
and practices.
Insurance
The Company''s plant, property, equipments and stocks are adequately
insured against major risks. The Company has also taken Directors'' and
Officers'' Liability Policy to provide coverage against the probable
liabilities arising on them, if any.
Board evaluation
Pursuant to the provisions of the Companies Act, 2013 and Listing
Agreement read with SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 on its applicability, the Board has
carried out through a structured evaluation process covering various
aspects of the Board functioning such as composition of the Board &
committees, experience & competencies, performance of specific duties &
obligations, contribution at the meetings. The manner in which the
evaluation has been carried out has been explained in the Corporate
Governance Report.
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134(3) (c) of the Companies
Act, 2013 that:
a) in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
b) the Directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit and loss
of the Company for that period;
c) the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
d) the Directors had prepared the annual accounts on a going concern
basis; and
e) the Directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and were operating effectively;
f) the systems to ensure compliance with the provisions of all
applicable laws were in place and that such systems were adequate and
operating effectively.
Meetings of Board of Directors
Regular meetings of the Board are held to discuss and decide on various
business strategies, policies and other issues. During the year, four
meetings of the Board of Directors were convened and held on 7th May,
2015, 11th July, 2015, 15th October, 2015 and 9th January, 2016. The
intervening gap between two consecutive meetings was not more than one
hundred and twenty days. Detailed information on the meetings of the
Board is included in the Corporate Governance Report which forms part
of the Annual Report.
Committees of the Board of Directors
In compliance with the requirement of applicable laws and as part of
the best governance practice, the Company has following Committees of
the Board as on 31st March, 2016:
i. Audit Committee
ii. Stakeholders Relationship Committee
iii. Nomination and Remuneration Committee
iv. Corporate Social Responsibility Committee
v. Share and Debenture Transfer Committee
Independent Directors'' Meeting
The Independent Directors met on 9th January, 2016, without the
attendance of Non-Independent Directors and members of the Management.
The Independent Directors reviewed the performance of non-independent
directors and the Board as a whole; the performance of the Chairman of
the Company, taking into account the views of Executive Directors and
Non-Executive Directors and assessed the quality, quantity and
timeliness of flow of information between the Company Management and
the Board that is necessary for the Board to effectively and reasonably
perform their duties
Consolidated financial statements
The Board reviewed the affairs of the Company''s subsidiaries during the
year at regular intervals. In accordance with section 129(3) of the
Companies Act, 2013, the Company has prepared Consolidated Financial
Statements of the Company and all its subsidiaries, which form part of
this Annual Report. The consolidated Financial Statement have been
prepared on the basis of audited financial statements of the Company
and its subsidiaries and its associates Company, as approved by their
respective Board of Directors. Further a statement containing salient
features of the Financial Statements of each subsidiary in Form AOC-1
forms part of the Consolidated Financial Statements. The statement also
provides the details of performance and financial position of each
subsidiary.
Policies
- Remuneration policy
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a policy for selection and appointment of the
Directors, the senior management and their remuneration. The
remuneration policy is stated in the Corporate Governance Report.
- Code of Practices and Procedures for Fair Disclosure of Unpublished
Price Sensitive Information
In pursuance to the Securities and Exchange Board of India (prohibition
of Insider Trading) Regulations, 2015, the Company adopted the Code of
practices and procedures for Fair Disclosure of unpublished price
Sensitive Information as per Regulation 8 set out in Schedule A to said
regulations, in order to protect investors'' interest as approved by the
Board in its meeting held on 7th May, 2015.
- Whistle Blower Policy
The Company has adopted a Whistle Blower policy through which the
Company encourages its employees to bring to the attention of Senior
Management, including Audit Committee, any unethical behaviour and
improper practices and wrongful conduct taking place in the Company.
The details of the same is explained in the Corporate Governance Report
and also posted on the website of the Company at the link
http://sintex.in/investor/Whistle_blower_ policy.pdf.
- Code of Conduct to Regulate, Monitor and Report Trading by Insiders
In pursuance to the Securities and Exchange Board of India (prohibition
of Insider Trading) Regulations, 2015, the Company adopted the Code of
Conduct to regulate, monitor and report trading by the employees,
insiders and connected person(s), in order to protect investors''
interest as approved by the Board in its meeting held on 7th May, 2015.
In pursuance to the Securities and Exchange Board of India (Listing
obligations and Disclosure Requirements) Regulations, 2015, the Company
adopted policy on Determination of Materiality of Events, policy on
preservation of Documents, Website Content Archival policy and Risk
management policy in its meeting held on 15th october, 2015. The
details of the said policies are forming part of the Corporate
Governance Report.
Particulars of loans given, investments made, guarantees given and
securities provided Particulars of loans given, investments made,
guarantees given and securities provided under section 186 of the
Companies Act, 2013 are provided in the standalone financial statement
(please refer to Note 12, 13, 15, 28.1(a) and 28.7 to the standalone
financial statement), which are proposed to be utilized for the general
business purpose of the recipient.
Contracts and arrangements with related parties
All Related party transactions that were entered into during the
financial year under review were in ordinary course of business and
were on arm''s length basis. There are no materially significant related
party transactions made by the Company which may have potential
conflict of interest.
Further, there were no material related party transactions which are
not in ordinary course of business and are not on arm''s length basis
and hence there are no information required to be provided under
Section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the
Companies (Accounts) Rules, 2014 in form AoC-2 and under Section 188(2)
of the Companies Act, 2013.
Corporate Governance
Corporate governance is an ethically driven business process that is
committed to values aimed at enhancing an organization''s brand and
reputation. This is ensured by taking ethical business decisions and
conducting business with a firm commitment to values, while meeting
stakeholders'' expectations. The Company comply with all the Standards,
Guidelines and principles governing disclosures and obligations set out
by the Securities and Exchange Board of India (SEBI) and the Stock
Exchanges on corporate governance.
A separate Report on Corporate Governance along with practising Company
Secretary''s Certificate on compliance with the conditions of Corporate
Governance as per Securities and Exchange Board of India (Listing
obligations and Disclosure Requirements) Regulations, 2015 with the
Stock Exchanges is provided as a part of this Annual Report, besides
the Management discussion and analysis report.
Your Company has made all information, required by investors, available
on the Company''s website www.sintex.in
Conservation of energy, technology absorption and foreign exchange
earnings and outgo
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 134(3) (m)
of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts)
Rules, 2014, as amended from time to time is annexed to this Report as
''Annexure C
Extract of the annual return
As required under the provisions of sub-section 3(a) of Section 134 and
sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule
12 of the Companies (Management and Administration) Rules, 2014, the
extracts of annual return in Form No. MGT-9 forms part of this report
as ''Annexure D''.
Particulars of employees
The information required pursuant to Section 197 read with Rule 5 of
The Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company, forms part of this
report as ''Annexure E''. However, as permitted in terms of Section 136
of the Act, this Annual Report is being sent to all the members and
others entitled thereto, excluding the said annexure. Members who are
interested in obtaining these particulars may write to the Company
Secretary at the Registered Office of the Company. The aforesaid
annexure is also available for inspection by members at the Registered
Office of the Company, 21 days before the 85th Annual General Meeting
and up to the date of Annual General Meeting during business hours on
working days.
Employee stock option scheme
The Compensation Committee of the Board of Directors of the Company at
its meeting held on 28th September, 2015, has decided to wind up the
Sintex Industries Limited Employee Stock Option Scheme, 2006 to comply
with applicable provisions of SEBI (Share Based Employee Benefits)
Regulations, 2014. Accordingly, the trustees of the said Sintex
Employee Welfare Trust have divested the entire shareholding lying with
the Trust and surplus has been dealt in accordance with the applicable
provisions.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS
No significant or material orders were passed by the regulators or
courts or tribunals which impact the going concern status and Company''s
operations in future.
RISK MANAGEMENT
The Company recognizes that risk is an integral part of business and is
committed to managing the risks in a proactive and efficient manner.
The Company periodically assesses risks in the internal and external
environment. The Board of Directors have approved the risk management
policy of the Company. There are no risks which in the opinion of the
Board threaten the existence of the Company.
AUDIT COMMITTEE
The Committee consists of Members viz. Mr. Ashwin Lalbhai Shah
(Chairman), Dr. Rajesh B. Parikh, Mr. Amit D. Patel and Mrs. Indira J.
Parikh. There are no instances, where recommendations of Audit
Committee are not accepted by the Board of Directors.
GENERAL
Your Directors state that no disclosure or reporting is required in
respect of the following items as there were no transactions on these
items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the
Company.
4. Neither the Managing Director nor the Whole-time Directors of the
Company receive any remuneration or commission from any of its
subsidiaries.
Your Directors further state that during the year under review, there
were no cases filed pursuant to the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Acknowledgements
Your Directors wish to place on record the excellent support,
assistance and guidance provided by the financial institutions, banks,
customers, suppliers and other business associates. We would like to
thank our Company''s employees for their tireless efforts and high
degree of commitment and dedication. Your Directors especially
appreciate the continued understanding and confidence of the Members.
On behalf of the Board,
Date: June 07, 2016 Dinesh B Patel
Place: Ahmedabad Chairman
(DIN: 00171089)
Mar 31, 2015
Dear Members,
The Directors have the pleasure of presenting their 84 th Annual
Report on the business and operations of the Company on standalone
basis and the accounts for the financial year ended March 31, 2015.
Financial highlights (Rs. in Crore)
Particulars 2014-15 2013-14
Gross turnover 4,088.10 3,314.47
Gross profit 761.59 576.33
Less : Depreciation 144.84 138.33
Profit before tax 616.75 438.00
Less: Provision for 135.60 93.07
taxation  Current
tax
MAT credit entitlement (112.03) (35.36)
Deferred tax 136.58 40.40
Profit/(loss) after 456.60 339.89
tax before prior
period items
Short/(Excess) provisions
for taxation (0.92) 4.83
of earlier years
Profit after tax 457.52 335.06
Balance of profit of
previous year 1,731.90 1,490.75
Profit available for
appropriation 2,189.42 1,825.81
Appropriations
General reserve 46.00 35.00
Debenture redemption
reserve 27.31 33.27
Proposed dividend on
Equity Shares 31.07 21.92
Tax on dividend 6.18 3.72
Impact of depreciation
as per 1.29 -
Schedule-II
Balance carried to
Balance Sheet 2,077.57 1,731.90
TOTAL 2,189.42 1,825.81
Note: Previous year figures have been regrouped/re-classified wherever
required.
Financial performance
Your Company''s performance reflects the strong improvement in India''s
corporate sentiments fuelled by the progressive policies of the
newly-instated Central Government.
Your Company''s gross sales jumped by 23.34% from Rs.3,314.47 crore in
2013-14 to Rs.4,088.10 crore in 2014-15 driven by robust growth in
three business segments namely prefabricated structures, custom
moulding and textiles.
EBIDTA increased by 21.95% from Rs.829.77 crore in 2013-14 to
Rs.1,011.91 crore in 2014-15 and the profit for the year grew by 36.55%
from Rs.335.06 crore in 2013-14 to Rs.457.52 crore in 2014-15.
Consequently, the earnings per share (face value of Rs.1) stood at
Rs.12.48 (basic) and Rs.11.64 (diluted) for 2014-15 against Rs.10.77
(basic) and Rs.10.77 (diluted) for 2013-14.
Your Company repaid Rs.112.04 crore in debts. Besides, US$ 115.85
million of the US$ 140 million FCCBs were converted into equity which
increased the Company''s net worth byRs.636.70 crore - strengthening the
Balance Sheet.
Dividend
Your Directors are pleased to recommend dividend of Rs.0.70 per share
on Equity Shares having face value of Rs.1 each (Previous year Rs.0.70
per Equity Share on face value of Rs.1 each) and any further equity
shares that may be allotted by the Company upon conversion of FCCBs
prior to book closure date for 2014-15.
The dividend will be paid subject to the approval of shareholders at
the forthcoming Annual General Meeting to those shareholders whose
names appear on the Register of Members of the Company as on the
specified date.
Share capital
During the year under review, the Company has allotted 1,64,00,000
Equity Shares of Rs.1 each on conversion of warrants at a premium of
Rs.68.01 per Equity Share. The Company has also allotted in aggregate
9,68,51,214 Equity Shares of Rs.1 each at a premium ofRs.64.74 each per
Equity Share on exercise of conversion by the FCCB-holders and
accordingly the paid up share capital of the Company on March 31, 2015
increased to ''42,63,61,194 - 42,63,61,194 Equity Shares ofRs.1 each and
to Rs.44,59,23,717-44,59,23,717 Equity Shares of Rs.1 each as on 10th
July, 2015.
Debentures
During the year under review, with a view to meet the Company''s
requirements of funds for ongoing capital expenditure, Long-term
working capital and general corporate purposes, the Company has issued
debentures in two tranches as mentioned below:
2,250 and 2,750 -10.70% rated, listed, secured, fully redeemable,
dematerialised Non-Convertible Debentures (''NCDs'') of the face value of
Rs.10,00,000 each of the aggregate nominal value of Rs.225,00,00,000
and Rs.275,00,00,000 on 11th June, 2014 and 30th September, 2014
respectively for a tenor of seven years.
Credit rating
The Company''s financial discipline and prudence is reflected in the
strong credit ascribed by rating agencies as given below:
Instrument Rating Agency Rating Remarks
Revised from
Long-term care AA CARE AA
debt (Double A)
Non- Revised from
convertible CARE AA CARE AA
debentures (Double A)
Short-term CARE A1 Reaffirmed
debt
State of Company''s affairs
Bouyed by the economic reform agenda announced by the dynamic Central
Government, business confidence in India touched a three year high
reflected in a Business Confidence Index of 55 in 2014-15. Moreover,
the Government''s emphasis on cleanliness has emerged as an important
business driver for your Company. In keeping with this optimism, your
Company''s key verticals performed exceedingly well. A detailed
discussion of your Company''s operations for the year under review is
given under the ''Management discussion and analysis report'' pursuant to
Clause 49 of the Listing Agreement with the Stock Exchanges, is annexed
to this Report and forms part of this Annual Report.
A. Plastics division: The plastic division is the flagship division of
your Company contributing 82.26% to its topline. This business segment
grew by 21.46% from Rs.2,768.61 crore in 2013-14 to Rs.3,362.70 crore
in 2014-15.
Business growth was driven primarily by two product segments namely
prefabricated structures and custom moulding; other product segments
registered healthy growth in business volumes.
Demand for prefabricated structures was driven by the Government''s
Swaach Bharat initiative. Besides, the positive business and consumer
sentiment improved the performance of the automobile sector
(four-wheelers and two-wheelers) leading to robust growth for the
custom moulding business.
The Company strategically consolidated its operations in the monolithic
construction space by cherry-picking only those projects which provided
healthy margins and revenue visibility.
B. Textiles division: The textile business registered healthy growth
driven by volume increase and value enhancement. The commissioning of
the additional capacity in 2013-14 provided significant leg room for
increasing sale volumes while the focus on design creation and product
development increased ''Collection Sales'' in international markets and
grew volumes with key Indian textile players.
Corporate Social Responsibility initiatives
As part of its initiatives under corporate social responsibility, the
Company has undertaken projects in the areas of livelihood, health and
sanitation. These projects are largely in accordance with Schedule VII
of the Companies Act, 2013.
The Annual Report on CSR activities is annexed herewith as Annexure A.
Internal control systems and their adequacy
The Company has an internal control system, commensurate with the size,
scale and complexity of its operations. The scope and authority of the
internal audit function is defined in the internal audit charter. To
maintain its objectivity and independence, the internal audit function
reports to the Chairman of the Audit Committee of the Board.
The internal audit department monitors and evaluates the efficacy and
adequacy of internal control system in the Company, its compliance with
operating systems, accounting procedures and policies at all locations
of the Company and its subsidiaries. Based on the report of internal
audit function, process owners undertake corrective action in their
respective areas and thereby strengthen the controls. Significant audit
observations and corrective actions thereon are presented to the Audit
Committee of the Board.
Performance of subsidiaries
Sintex''s presence in custom moulding in India and globally is through
its subsidiaries Sintex NP SAS (Europe), Sintex Wausaukee Composites
Inc. (the US) and Bright AutoPlast Ltd. (India). These companies
provide highly-engineered custom moulding solutions to large global and
Indian brands that have a presence in diverse sectors. In addition,
Sintex Infra Projects Ltd. undertakes EPC contracts for various
infrastructure projects across India.
1) Sintex NP SAS: The Company registered an all-round performance as
its topline grew by 22.11% over the previous year while the bottomline
increased by 14.75% over the same period. The integration of the new
subsidiaries Poschman (German and Polish) progressed on schedule with
the implementation of good practice of the SINTEX NP group - resulting
in improved capacity utilisation and profitability.
In 2014, Sintex NP SAS acquired Groupe Simonin a French Company for 18
million euros. This Company has unique capabilities of moulding over
metals (not part of the Sintex portfolio) and caters to the requirement
of Fortune 500 companies from the electrical, automotive and appliance
sector.
2) Sintex Wausaukee Composites Inc.: The Company continued to thrive
and expand its business during the fiscal gone by. The extraordinary
measures the management undertook in 2013 delivered palpable results --
with improvements in EBITDA, throughput, sales and profitability.
The Company''s success stems from the growth in sales and significant
improvements in operational performance with the implementation of six
sigma techniques. The sales team was successful in gaining business
from new OEMs, organically growing sales within established OEM
accounts as well as regaining lost business for the special projects
vehicle. The operations teams made significant progress strides in
improving product flow and throughput within the production facilities.
3) Bright AutoPlast Ltd.: Leveraging the improved performance
of the automotive sector, the Company registered a strong topline and
bottomline growth of 15.84% and 110.22% respectively over the previous
year. The Company''s roto- moulding facility at Pithampur commenced
operations which strengthened business volumes. In addition, the
Company made heartening progress in securing approvals from large and
respected global and Indian brands for new products - laying the
foundation for robust growth.
The Company''s unique LRTM facility set up with technology and
assistance with Sintex Wausaukee has commenced operations. This
first-of-its-kind facility in India is expected to generate sizeable
business volumes for the Company as its custom moulded composite parts
receive the approval from leading players in the mass transit and
off-road vehicle spaces.
4) Sintex Infra Projects Ltd.: Having completed the projects in its
pipeline, the Company is currently focused on executing an EPC contract
worth Rs.1,300 crore from Shirpur Power Pvt. Limited. The project has
progressed as per schedule and the Company has consistently received
funds as per schedule.
Changes in subsidiaries, associates and joint ventures/ wholly-owned
subsidiaries:
The wholly-owned subsidiary of the Company viz. Sintex NP SAS, France
acquired Groupe Simonin France in July, 2014 and accordingly the said
Company has emerged as a step down subsidiary of the Company.
There was no other change in the status of subsidiaries, associates and
joint ventures/ wholly-owned subsidiaries.
Auditors and Auditors'' Report
M/s. Shah & Shah Associates, Chartered Accountants, Ahmedabad (FRN
113742W), Statutory Auditors of the Company had been appointed at the
83rd Annual General Meeting of the Company held on 1st August, 2014
till the conclusion of 88th Annual General Meeting of the Company
pursuant to provision of Section 139(1) of the Companies Act, 2013.
Their appointment is subject to ratification by the members at 84 th
Annual General Meeting of the Company.
Your Directors recommend the ratification of their appointment as
Statutory Auditors of the Company for the financial year 2015-16.
As required under Clause 49 of the Listing Agreement, the Auditors have
also confirmed that they have valid certificate issued by the peer
review board of the Institute of Chartered Accountancy of India.
The notes on financial statement referred to in the Auditor''s Report
are self-explanatory and do not call for any further comments.
Cost Auditor
The Company has filed the consolidated Cost Audit Report for the year
ended March 31, 2014 on September 29, 2014 within the time limit as
prescribed by the Ministry of Corporate Affairs. The Company has also
filed the Cost Compliance Report on September 29, 2014 within the time
limit as prescribed by the Ministry of Corporate Affairs.
Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed Messrs M. C. Gupta &
Co., a firm of Company secretaries in practice to undertake the
Secretarial Audit of the Company. The Secretarial Audit Report is
annexed herewith as Annexure B''.
Directors
Mr. Amit D. Patel, Managing Director (Group) and Mr. Arun P Patel, Vice
Chairman are due to retire by rotation at this Annual General Meeting
in terms of Section 152(6) of the Companies Act, 2013 and are eligible
for reappointment. The Board recommends the reappointment of above
Directors of the Company.
At the AGM of the Company held on August 1, 2014, the Members had
appointed the existing Independent Directors viz. Mr. Ramnikbhai H
Ambani, Smt. Indira J Parikh, Dr. Rajesh B Parikh, Dr. Luvkumar
Kantilal Shah, Dr. Narendra K Bansal and Shri Ashwin Lalbhai Shah as
Independent Directors under the Act, each for a term of three years
upto the conclusion of 86th Annual General Meeting of the Company in
the calendar year 2017.
The Board of Directors of the Company at its meeting held on 7 th May,
2015, subject to approval of members at the ensuing Annual General
Meeting, reappointed Mr. S. B. Dangayach as Managing Director for a
period of two years from June 7, 2015.
As stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges, brief profiles of the Directors proposed to be reappointed,
nature of their expertise in specific functional areas, names of the
companies in which they hold directorships and shareholding are
provided in the Notice attached forming part of the Annual Report.
The details of programmes for familiarisation of Independent Directors
with the Company, their roles, rights, responsibilities in the Company,
nature of the industry in which the Company operates, business model of
the Company and related matters are put up on the website of the
Company at the link: http://sintex.
in/investor/SIL_familiarisation_programe_for_independent_
directors.pdf.
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
Key managerial personnel
Pursuant to Section 203 of the Companies Act, 2013, Mr. Amit D. Patel &
Mr. Rahul A. Patel, Managing Directors (Group), Mr. S. B. Dangayach,
Managing Director, Mr. Prashant D. Shah, Head - Accounts & Audit and
CFO and Mr. Hitesh T. Mehta, Company Secretary were appointed as key
managerial personnel with effect from 5th August, 2014.
Board evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an annual performance
evaluation of its own performance, the directors individually as well
as the evaluation of the working of its Audit, Nomination &
Remuneration and Stakeholders Relationship Committees. The manner in
which the evaluation has been carried out has been explained in the
Corporate Governance Report.
Directors'' Responsibility Statement
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the
following statements in terms of Section 134(3)(c) of the Companies
Act, 2013 that:
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
(b) the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit and
loss of the Company for that period;
(c) the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern
basis; and
(e) the Directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and were operating effectively;
(f) the systems to ensure compliance with the provisions of all
applicable laws were in place and that such systems were adequate and
operating effectively.
Number of meetings of the Board of Directors and Audit Committee
A calendar of meetings is prepared and circulated in advance to the
Directors.
During the year, five Board Meetings and five Audit Committee Meetings
were convened and held. The details of which are given in the Corporate
Governance Report. The intervening gap between the meetings was within
the period prescribed under the Companies Act, 2013.
Consolidated financial statements
The consolidated financial statements have been prepared in accordance
with the accounting standards prescribed by the Institute of Chartered
Accountants of India, in this regard.
Remuneration policy
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a policy for selection and appointment of the
Directors, the senior management and their remuneration. The
remuneration policy is stated in the Corporate Governance Report.
Whistleblower policy
The Company has established a whistleblower policy for the Directors
and employees to report their genuine concern. The details of the same
is explained in the Corporate Governance Report and also posted on the
website of the Company at the link
http://sintex.in/investor/Whistle_blower_policy.pdf .
Particulars of loans given, investments made, guarantees given and
securities provided
Particulars of loans given, investments made, guarantees given and
securities provided along with the purpose for which the loan or
guarantee or security is proposed to be utilised by the recipient are
provided in the standalone financial statement (Please refer to Note
13, 14, 16, 29.1(a) and 29.7 to the standalone financial statement).
Contracts and arrangements with related parties
Related party transactions that were entered into during the financial
year were on arm''s length basis and in the ordinary course of business.
Further, there are no material related party transactions during the
year under review with the Directors or key managerial personnel. All
related party transactions are placed before the Audit Committee as
well as the Board for approval.
The policy on related party transactions as approved by the Board is
uploaded on the Company''s website at the link http://sintex.in/
investor/Related_party_transaction_policy.pdf.
Corporate Governance
Sintex continues to be committed to good Corporate Governance aligned
with the best practices. It has complied with all the standards set out
by SEBI and the Stock Exchanges.
A separate Report on Corporate Governance along with Practising Company
Secretary''s Certificate on compliance with the conditions of Corporate
Governance as per Clause 49 of the Listing Agreement with the Stock
Exchanges is provided as a part of this Annual Report, besides the
Management discussion and analysis report.
Your Company has made all information, required by investors, available
on the Company''s website www.sintex.in
Conservation of energy, technology absorption and foreign exchange
earnings and outgo
A statement containing the necessary information required under Section
134(3)(m) of the Companies Act, 2013 read with Companies (Accounts)
Rules, 2014 are annexed herewith as Annexure C''.
Extract of the annual return
The details forming part of the extract of the annual return in form
MGT 9 is annexed herewith as Annexure D''.
Employees stock option scheme
The shareholders of the Company had approved of its Employee Stock
Option Plan (Sintex Industries Limited - Employee Stock Option Scheme,
2006) in February 2006.. These ESOPS are administered by the Sintex
Employee Welfare Trust on the basis of recommendations of the
Compensation Committee of the Board. Pursuant to the Provisions of the
Securities and Exchange Board of India (Share-based employee benefits)
Regulations, 2014, the said scheme shall be aligned with the said
regulations within the prescribed time. The details of the scheme are
set out in Annexure E of this Report.
Particulars of employees
The information required pursuant to Section 197 read with Rule 5 of
The Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company, forms part of this
report as Annexure F''. However, as permitted in terms of Section 136 of
the Act, this Annual Report is being sent to all the members and others
entitled thereto, excluding the said annexure. Members who are
interested in obtaining these particulars may write to the Company
Secretary at the Registered Office of the Company. The aforesaid
annexure is also available for inspection by members at the Registered
Office of the Company, 21 days before the 84 th Annual General Meeting
and upto the date of Annual General Meeting during business hours on
working days.
General
Your Directors state that no disclosure or reporting is required in
respect of the following items as there were no transactions on these
items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the
Company under any scheme save and except ESOPs referred to in this
Report.
4. Neither the Managing Director nor the Wholetime Directors of the
Company receive any remuneration or commission from any of its
subsidiaries.
5. No significant or material orders were passed by the regulators or
courts or tribunals which impact the going concern status and Company''s
operations in future.
Your Directors further state that during the year under review, there
were no cases filed pursuant to the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Acknowledgements
Your Directors wish to place on record the excellent support,
assistance and guidance provided by the financial institutions, banks,
customers, suppliers and other business associates. We would like to
thank our Company''s employees for their tireless efforts and high
degree of commitment and dedication. Your Directors especially
appreciate the continued understanding and confidence of the Members.
On behalf of the Board,
Date : July 11, 2015 Dinesh B Patel
Place: Ahmedabad Chairman
Mar 31, 2014
Dear Shareholders,
The Directors are pleased to present the 83rd Annual Report together
with the audited accounts of your Company for the financial year ended
31st March 2014.
Financial highlights
The financial performance of the Company for the financial year ended on
31st March, 2014 is summarised below:
(Rs. in Crore)
Particulars 2013-14 2012-13
Gross turnover 3314.47 3,064.85
Gross Profit 576.33 435.63
Less : Depreciation 138.33 123.18
Profit before tax 438.00 312.45
Less: Provision for
taxation  Current 93.07 62.68
tax
MAT Credit Entitlement (35.36) (62.10)
Deferred tax 40.40 41.62
Profit/(loss) after tax
before prior 339.89 270.25
period items
Add/(Less): Short
provisions for (4.83) (1.06)
taxation of earlier years
Profit after tax 335.06 269.19
Balance of Profit of
previous year 1490.75 1,307.81
Profit available for
appropriation 1825.81 1,577.00
Appropriations
General reserve 35.00 27.50
Debenture redemption
reserve 33.27 33.27
Proposed dividend on
equity shares 21.92 21.92
Tax on dividend 3.72 3.56
Balance carried to
balance sheet 1731.90 1,490.75
TOTAL 1825.81 1,577.00
Note: Previous year figures have been regrouped/re-classified wherever
required
Financial performance :
Your Company''s performance was commendable despite the prevailing
policy logjam and the Government''s inability to clear important growth
inducing policies which put economic progress on the backburner.
Your Company''s posted a gross turnover of Rs.3314.47 Crores in 2013-14 Â
a growth of 8.14% over Rs.3064.85 crores in 2012-13. The growth was
primarily due to the robust performance of the prefab business
supported by good business volumes from other business verticals.
The Company''s flagship business segment  monolithic construction
reported a subdued performance due to the prevailing external factors
that impacted business profitability  namely delays in site clearances
and a stretched receivables cycle.
EBIDTA grew to Rs.829.77 crores against Rs.670.47 crore in the previous
year, while Net Profit climbed to Rs.335.06 crore against Rs.269.19 crore
over the same period. The earning per share stood at Rs.10.77 (basic) and
Rs.10.77 (diluted) in 2013-14.
Cash plough back into the business was Rs.592.39 crore in 2013- 14 as
against Rs.525.98 crore in 2012-13 Â providing an adequate cushion for
funding growth initiatives.
Dividend
Your Directors are pleased to recommend dividend of Rs.0.70 per share on
face value of Rs.1/ each, on 31,31,09,980 Equity shares fully paid up as
on March 31, 2014 (Previous Year Rs.0.70 per share on face value of Rs.1/
each, on 31,31,09,980 Equity shares) and any further equity shares that
may be allotted by the Company upon conversion of FCCBs and Warrants
prior to book closure date for 2013-14.
The dividend will be paid subject to the approval of shareholders at
the forthcoming Annual General Meeting to those shareholders whose
names appear on the Register of Members of the Company as on the
specified date.
Business review and divisional performance:
Despite the external environment being plagued with high interest
costs, stubborn inflation and a policy logjam, your Company''s
performance was heartening. Most key business verticals, other than
monolithic construction, registered improved numbers. A detailed
discussion of your Company''s operations is given under the ''Management
discussion and analysis report.''
A. Plastics division: The Company''s plastics business performed well.
Revenue grew 6.77% from Rs.2593.14 crore in 2012- 13 to Rs.2768.61
crore in 2013-14 despite the planned de growth in the monolithic
construction space. The plastics business contributed 90.87% of the
Company''s consolidated revenues.
The prefab business retained its star performer position with large
business volumes from Maharashtra (for sprucing up education
facilities), Gujarat (for strengthening infrastructure in tribal areas)
and heartening volumes from other states.
Other businesses namely water storage tanks, sandwich panels and
sub-ground structures logged in strong business volumes to make a
meaningful contribution to the business segment growth.
The SMC business remained the key growth contributor as the Company
extended its footprint into new states generating heartening volumes.
Pallets and insulated boxes also made important contribution to the
division''s growth.
B. Textiles division: Your Company''s textile business recorded a
strong rebound in 2013-14 supported by strong business volumes. Revenue
grew 15.72% from Rs.471.71 crore in 2012- 13 to Rs.545.86 crore in
2013-14. This was achieved primarily due to the shift in focus from
international markets to domestic customers which strengthened business
volumes. Besides, the Company''s innovation efforts in rejuvenating its
products baskets, optimising costs and widen its reach in domestic
markets also contributed rich dividends.
Subsidiaries
The Company''s subsidiaries Nief Plastics SAS, Sintex Wausaukee
Composites Inc., Bright AutoPlast Ltd and Sintex Infra Projects Ltd and
provide infrastructure and highly-engineered custom moulding solutions.
These companies work closely with each other to generate more business
and enhance Profitability of the parent company. On Account of
disinvestment, of entire holding, Zep Infratech Limited has ceased to
be a subsidiary of the Company.
Performance of subsidiaries
1) Nief Plastics SAS: The figures of the financial year closed to March
31st , 2014 represent a growth as well as an excellent resistance to
the difficult economic and business environment that prevailed across
Europe. The integration of the new subsidiaries during 2012 (German and
Polish) progressed on schedule with the implementation of good practice
of the SINTEX NP group. This allowed us to be close to local markets
and enrich the customer basis with prestigious German references. The
year 2014 should go further in consolidating these gains and ensure the
further development of SINTEX NP.
2) Sintex Wausaukee Composites Inc.: During the year, Sintex Wausaukee
undertook extraordinary action that facilitated the Company''s return to
Profitability. In addition, the team implemented several initiatives to
expand its capabilities which would drive growth in 2014 and beyond.
Some of them include:
- Added an ERP system to improve our cost accounting and reporting
- Restructured our organization to allow our sales and marketing teams
to drive growth in our new Business Units
- Securing organic growth with our core OEMs including the awarding of
Phase III at New Flyer and reorganizing our plants to meet the
increased demand for components.
- Seek opportunities to expand our capabilities with strategic
acquisitions in thermoforming and RIM.
- Continue to drive the growth of our Special Projects Vehicle with the
installation of the Pune LRTM cell and growth opportunities with
Cummins Power Generation.
We are confident that these initiatives will strengthen the Company
contribution to the consolidated revenue and Profitability.
3) Bright AutoPlast Ltd.: Due to de-growth in the automotive segment
the key customer for Bright Auto resulted in a subdued performance for
the Company thus revenue declined by 2.8% - its first decline in
absolute numbers since its takeover, However, due to various cost
reduction measures, Company has improved its EBIDTA by 10.8%. Also the
Company made heartening progress in securing approvals from large and
respected global and Indian brands for new products which will lay the
foundation for a robust growth in the coming years. These approvals
include:
- Eicher-Polaris: Tailgate outer, Hood Cover, Front & Rear Fender, Fire
Wall, Fuel Tank etc.
- Volvo Eicher: Fuel tanks, degassing tanks, Cabin ducts, Air- intake
system ducts and wheel guards
- Volvo: DEF Tank (Urea) to serve domestic and export demand for ducts
and wheel guards
- Borg-Warner: engine management components
- TRW: PAB Cover LH and RH.
- Hydec: degassing tanks.
The Company has set-up a Roto-moulding facility inside its Pithampur
factory which is expected to commence operation in the second quarter
of 2014-15. In addition, the Company is setting up a new composite
manufacturing facility with LRTM (Light Resin Transfer Moulding) at its
Pune unit. This technology has been acquired from Sintex Wausaukee
Composites Inc USA and will be used for manufacturing large- sized
exterior and interior parts of (more than 2 Sq Meter) with painting for
automotive, construction equipment, mass transit and medical equipment
OEMs.
4) Sintex Infra Projects Ltd.: The Company leverages its rich track
record of executing civil and mechanical construction to execute
infrastructure projects. It is working on some important projects
namely 1) executing an EPC Contract worth Rs.1300 crore for Shirpur Power
2) creating check posts projects in Madhya Pradesh and 3) creating
pollution management infrastructure in Uttar Pradesh and 4) a low- cost
housing project in Rajasthan. These projects have progressed as per
agreed schedules and the Company has consistently received funds as per
the scheduled milestones.
During the year under review, the company successfully bagged a major
EPC contract worth Rs.1406.51 Crores for setting up the Spinning Project
in the state of Gujarat.
Employee stock option scheme
The shareholders of the Company had approved of its employee stock
option plan (Sintex Industries Limited Employees Stock Option Scheme
2006) in February 2006. These ESOPS are administered by the Sintex
Employee Welfare Trust on the basis of recommendations of the
Compensation Committee of the Board. In terms of the plan, the Company
periodically granted stock options to eligible employees. The Company
will conform to the accounting policies specified in the guidelines as
amended periodically. The details of the scheme are set out in Annexure
I of this Report.
The Members of the Company in the Annual General meeting held on
September 17, 2012 have approved the extension of exercise period from
two years to four years of Sintex Industries Limited Employees Stock
Option scheme 2006.
Fixed deposits
Your Company did not foat any deposit scheme to which provisions of
Section 58A of the Companies Act, 1956 and the Rules made there under
are applicable.
Listing of shares and securities
The names and addresses of the stock exchanges where the Company''s
securities are listed are given below:
- The National Stock Exchange of India Ltd, Exchange Plaza, Plot No.
C-1, G Block, IFB Centre, Bandra Kurla Complex, Bandra (East),
Mumbai-400051
- BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001
- Singapore Exchange Securities Trading Limited, 2 Shenton Way, # 19 Â
00 SGX Centre 1, Singapore-068804. (FCCB''S US$ 140 million)
- BSE Limited (Wholesale Debt Market), Phiroze Jeejeebhoy Towers, Dalal
Street, Mumbai-400001 (NCD Rs.250 crores and NCD Rs.350 crores)
The equity shares of the Company have been delisted from Ahmedabad
Stock Exchange Limited w.e.f. 26th August, 2013 and the Company paid
Listing Fees to all the above Stock Exchanges for FY 2014-15.
Management Discussion and Analysis
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, the Management Discussion and Analysis Report for the year
under review are annexed to this Report and forms part of this Annual
Report.
Corporate Governance
Sintex continues to be committed to good Corporate Governance aligned
with the best practices. It has complied with all the standards set out
by SEBI and the Stock Exchanges.
A separate Report on Corporate Governance along with Practising Company
Secretary''s Certificate on compliance with the conditions of Corporate
Governance as per Clause 49 of the Listing Agreement with the Stock
Exchanges is provided as a part of this Annual Report, besides the
Management Discussion and Analysis.
Your Company has made all information, required by investors, available
on the Company''s website www.sintex.in
Directors
Mr. Rahul A. Patel, Managing Director (Group) and Mr. S. B. Dangayach,
the Managing Director of the Company are due to retire by rotation at
this Annual General Meeting in terms of section 152(6) of the Companies
Act, 2013 and are eligible for reappointment. The Board recommends the
reappointment of above Directors of the Company.
The independent directors of the Company were appointed as such being
liable to retire by rotation under the erstwhile Companies Act, 1956.
However, Explanation to Section 152(6) (e) of the Companies Act, 2013
provides that for the purpose of this sub section "total number of
directors" shall not include independent directors , whether appointed
under this Act or any other law for the time being in force, on the
Board of a company. Accordingly, none of the Independent director
shall be liable to retire by rotation under the new term.
The company at present has six independent directors and in terms of
clarification issued by Ministry of Corporate affairs vide Circular No.
14/2014 Dated 9th June, 2014 and provisions of Section 149(5) of the
Companies Act, 2013, all the independent directors as on commencement
of new act have to be appointed under the provisions within a period of
one year. Mr. Ramnikbhai H Ambani, Smt. Indira J Parikh and Dr. Rajesh
B Parikh are due for retirement in 2014 and other independent directors
Dr. Luvkumar Kantilal Shah, Dr. Narendra K Bansal and Shri Ashwin
Lalbhai Shah are due to retire in 2015, 2015 and 2016, respectively.
However, in view of the aforesaid circular, the above three Independent
directors would be deemed to have demitted their office at the ensuing
Annual general Meeting and would be appointed for the first term as
Independent Director for a term of three years i.e. up to the 86th
Annual General Meeting in the year 2017. The Company has received
declaration in terms of Section 149(6) of the Companies Act, 2013. The
Company has received specific notices from the members of the Company
under section 160 of the Companies Act, 2013, along with a requisite
security deposit in each case for appointments as Independent Directors
for a term of 3 (three) years.
The Board recommends the appointment of above as Independent Directors
of the Company.
As stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges, brief profile of the Directors proposed to be re-appointed,
nature of their expertise in specific functional areas, names of the
companies in which they hold directorships and shareholding are
provided in the Notice attached forming part of the Annual Report.
Directors'' Responsibility Statement
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956 with respect to Directors Responsibility Statement, it is
hereby confirmed that:
1. In the preparation of the annual accounts for the year under
review, the applicable accounting standards have been followed and
there have been no material departures.
2. The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the Profit of the
Company for that period.
3. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting frauds and other
irregularities.
4. The annual accounts of the Company have been prepared on a ''going
concern'' basis.
Consolidated financial statements
The Consolidated Financial Statements have been prepared in accordance
with the Accounting Standards prescribed by the Institute of Chartered
Accountants of India, in this regard.
Subsidiaries
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit & Loss
Account and other documents of the subsidiary companies are not being
attached with the Balance Sheet of the Company. However, the financial
information of the subsidiary companies is disclosed in the Annual
Report in compliance with the said circular. The Company will make
available the annual accounts of the subsidiary companies and the
related detailed information to any member of the Company who may be
interested in obtaining the same. The annual accounts of the subsidiary
companies will also be kept open for inspection at the Registered Office
of the Company and that of the respective subsidiary companies. The
Consolidated Financial Statements presented by the Company include the
financial results of its subsidiary companies.
Conservation of energy, technology absorption, and foreign exchange
earnings and outgo
A statement containing the necessary information required under Section
217(1)(e) of the Companies Act, 1956, read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988, are given in the Annexure II forming part of this Report.
Particulars of employees
The information required as amended under section 217(2A) of the
Companies Act, 1956, read with Companies (Particular of Employees)
Rules, 1975, forms part of this report as Annexure III. However, as
permitted by Section 219(I) (b) (IV) of the Companies Act, 1956, this
Annual Report is being sent to all shareholders excluding the said
Annexure. Any shareholder interested in obtaining the particulars may
obtain it by writing to the Company Secretary at the registered office
of the Company.
Insurance
All the Properties of your Company, including plant and machinery,
buildings, equipments, and stocks among others have been adequately
insured.
Auditors and Auditors Report
M/s Deloitte Haskins & Sells, Chartered Accountants, Ahmedabad, are
associated with the Company, since long as Statutory Auditors. The
Company is in receipt of a Special Notice u/s 140 (4) read with section
115 of the Companies Act, 2013 proposing M/s Shah & Shah Associates,
Chartered Accountants, Ahmedabad (FRN 113742W) as Statutory Auditors in
place of M/s Deloitte Haskins & Sells, Chartered Accountants, the
retiring Auditor of the Company. Although not statutorily required
under the provisions of the Companies Act, 2013, but as part of
pro-active governance and considering the Auditor''s rotation, the Board
of Directors on the recommendation of the Audit Committee has decided
to support the said Special Notice. M/s. Shah & Shah Associates,
Chartered Accountants, Ahmedabad (FRN 113742W) have furnish a letter
dated 27th June, 2014 to the effect that the appointment, if made,
would be within the prescribed limits under the Section 141(3)(g) of
the Companies Act, 2013 and they are not disqualified for appointment.
The Board places on record its appreciation for services rendered by
M/s Deloitte Haskins & Sells, as Statutory Auditors'' of the Company.
The Notes on Financial Statement referred to in the Auditors Report are
self explanatory and do not call for any further comments.
Cost Auditor
The Central Government has approved the appointment of M/s. Kiran J
Mehta & Co, Cost Accountants, Ahmedabad (Membership No. 00025) and Mr.
V. H. Shah, Cost Accountants, Ahmedabad (Registration No. 100257) for
conducting Cost Audit for the Financial Year 2013-14 for the Textile
and Plastic Businesses of the Company respectively.
The Company has fled the consolidated Cost Audit Report for the year
ended March 31, 2013 on September 27, 2013 within the time limit as
prescribed by the Ministry of Corporate Affairs. The Company has also
filled the cost compliance report on September 27, 2013 within the time
limit as prescribed by the Ministry of Corporate Affairs.
Acknowledgements
Your Directors wish to place on record the excellent support,
assistance and guidance provided by the financial institutions, banks,
customers, suppliers and other business associates. Thanks to our
Company''s employees for their tireless efforts and high degree of
commitment and dedication. Your Directors especially appreciate the
continued understanding and confidence of the Members.
On behalf of the Board,
Date: July 4, 2014 Dinesh B Patel
Place: Ahmedabad Chairman
Mar 31, 2013
Dear Shareholder''s
The take pleasure in presenting 82nd Annual Report of the Company,
together with Audited Annual Accounts for the year ended on March 31,
2013.
Financial highlights:
The financial performance of the Company for the financial year endec
on March 31, 2013 is summarised below:
(Rs. in crore)
2012-13 2011-12
Gross turnover 3,059.77 2,629.65
Gross profit 435.63 421.54
Less : Depreciation 123.18 98.05
Profit before tax 312.45 323.49
Less: Provision for taxation  Current tax 62.68 64.63
MAT Credit Entitlement (62.10) (15.05)
Deferred tax 41.62 36.58
Profit/(loss) after tax before
prior period items 270.25 237.33
Add/(Less): Short provisions for
taxation of earlier years (1.06) (7.63)
Profit after tax 269.19 229.70
Balance of profit of previous year 1,307.81 1,157.00
Profit available for appropriation 1,577.00 1,386.70
Appropriations
General reserve 27.50 25.00
Debenture redemption reserve 33.27 33.27
Proposed dividend on equity shares 21.92 17.74
Tax on dividend 3.56 2.88
Balance carried to balance sheet 1,490.75 1,307.81
Total 1,577.00 1,386.70
Financial performance:
Your Company''s performance was commendable despite the Government''s
preoccupation in managing multiple politico-economic issues which put
economic progress on the backburner.
Your Company''s posted a gross turnover of Rs. 3059.77 crores in 2012-13
- a growth of 16.36% over Rs. 2629.65 crores in 2011-12. The growth was
primarily due to the robust performance of the prefab business
supported by growth in the domestic custom moulding.
The Company''s flagship business segment - monolithic construction
reported a subdued performance. This was primarily due to the
management''s timely decision to optimise the Company''s exposure in
monolithic construction business due to a stretched receivables cycle
from some projects which adversely impacted project profitability and
business liquidity.
EBIDTA grew to Rs. 644.07 crores against Rs. 578.67 crore in the
previous year, while Net Profit climbed to Rs. 269.19 crore against Rs.
229.70 crore over the same period. The earning per share stood at Rs.
9.46 (basic) and Rs. 9.44 (diluted) in 2012-13.
Cash plough back into the business was Rs. 525.98 crore in 2012-13 as
against Rs. 468.18 crore in 2011-12 - providing an adequate cushion for
funding growth initiatives.
Dividend:
Your Directors are pleased to recommend dividend of Rs. 0.70 per share
(Previous Year Rs. 0.65 per share). The total quantum of dividend, if
approved by the members, will be Rs. 25.48 crores including dividend
tax.
The dividend will be paid subject to the approval of shareholders at
the forthcoming Annual General Meeting to those shareholders whose
names appear on the Register of Members of the Company as on the
specified date.
Business review and divisional performance:
Despite the external environment being plagued with high interest
costs, stubborn inflation and a policy logjam, your Company''s
performance was heartening. Most of the key business vertical, other
than monolithic construction, registered improved numbers. A detailed
discussion of your Company''s operations is given under the ''Management
discussion and analysis report.''
A. Plastics division:
The Company''s plastics business performed well. Revenue grew 19.727=
from Rs. 2,161.83 crore in 2011-12 to Rs. 2,588.06 crore in 2012-13
despite a strategic decision to curtail the Company''s business exposure
in the monolithic construction space. The plastics business contributed
90.93% of the Company''s consolidated revenues.
The building products division registered a subdued performance
primarily due to the curtailed business exposure to monolithic
construction. In this division, the prefab business was the star
performer in 2012-13 clocking large business volumes from Maharashtra
and Madhya Pradesh by sprucing up the educational and
sanitation-related infrastructure of the states. The healthy growth
largely cushioned the fall in revenue from the monolithic business.
This was a result of a strategic management decision to curtail the
Company''s business exposure in the monolithic construction space, to
sustain business profitability and liquidity despite external
adversities beyond the control of the Company.
Other businesses namely water storage tanks, sandwich panels and
sub-ground structures registered considerable growth.
The custom moulding division performed satisfactorily during the year
under review. The SMC business remained the key growth contributor as
the Company extended its footprint into new states generating
heartening volumes.
B. Textiles division:
Despite a depressed global textile sector, your Company''s textile
business managed to end the year with a turnover of Rs. 471.71 in 2012-
13 against Rs. 467.82 in 2011-12. This was achieved primarily due to
the shift in focus from the international markets to the domestic
customers. Besides, the Company undertook a number of initiatives to
optimise costs and widen its reach in the domestic markets which
contributed to the division''s stable performance.
Subsidiaries:
The Company''s subsidiaries Nief Plastics SAS, Sintex Wausaukee
Composites Inc., Bright AutoPlast Ltd, Sintex Infra Projects Ltd and
Zep Infratech Limited provide infrastructure and highly-engineered
custom moulding solutions. These companies work closely with each other
to generate more business and enhance profitability of the parent
company.
Performance of subsidiaries:
1) Nief Plastics SAS
Despite the persisting economic slowdown in Europe, the Company
successfully grew its 2013 against 2012. The Company acquired two units
of the German group Poschmann - one in Germany, now rechristened as NP
POSCHMANN and the other in Poland, named NP POLSKA. This initiative
provides multiple benefits - 1) geographic diversity, 2) access to
large and globally respected brands in the automotive and
non-automotive spaces and 3) expertise in thermoplastics and
thermosetting polymers.
Nief has opened new opportunity windows for Sintex''s Indian operations.
This European subsidiary, through technical and business assistance,
facilitated the setting up of the Precitech Division of Bright Auto,
Chennai, (another Sintex subsidiary) which manufactures electrical
component for Nief''s customer, Schneider for their Indian operations.
This new business relation has now started to generate revenue for
Bright Auto in 2012-13. Going ahead, a number of such growth
opportunities are expected to cascade to the Indian operations.
2) Sintex Wausaukee Composites Inc.
In 2012-13, the Company re-commissioned its Dake SMC unit which widens
its opportunity canvass. It enables the Company to cater to the
requirements of the food service industry. Further, the Company
expanded its capabilities in thermoforming, RIM, SMC and paint
technology which strengthens its ability to increase its wallet share
with existing customers. In 2012-13, Wausaukee Composites Inc was
renamed as Sintex Wausaukee Composites Inc., which will strengthen the
Sintex visibility in the American markets.
As the US operations stabilise in the next 12 months, Wasaukee''s
customer relations in the US are expected to create new growth
opportunities for Sintex''s domestic custom moulding segment. Bright
Auto will service the requirements of the Indian operations of
Wasaukee''s American customers.
3) Bright AutoPlast Ltd.
Despite a de-growth in the passenger car segment, the Company
registered a significant double-digit growth with a similar increase in
business profitability. This was due to the Company''s timely movement
into the electrical business which derisked the Company from an
overdependence on a single user-sector. To strengthen the business
further, the Company established a presence in the commercial vehicle
segment. The Company signed a MoU with Johnson Control, a global Tier-1
company for certain key automotive components. This JV has already
secured business from Maruti Suzuki and is in advanced discussions with
other Indian and MNC automotive OEMs.
4) Sintex Infra Projects Ltd.
Sintex infra Projects Ltd. is engaged in the various projects of
monolithic construction and prefabricated structures under the various
orders from State Governments and also private sectors across the
country. The Company is also engaging into the laying of underground
sewage lines, road check-posts among others.
The Company has also started executing the EPC contract that was
awarded to them last year. Keeping in mind the untapped potential in
infrastructure business and especially engineering, construction and
contract business, the Company further would like to spread its
footprints in the more high-end segments of the infrastructure
business.
5) Zep Infratech Ltd.
The Company has fully diversified into infrastructure company due to a
meltdown in the telecom infrastructure segment. The Company is under
consolidation phase and now transitioned its operation as an
infrastructural solutions provider and focuses on small-ticket
projects. The current focus of the Company include PUF insulated
panels for walls and roof, pre-fabricated structure, cold rooms and
panels, refrigerated truck bodies, bunk houses, labour rooms, shelter
for various applications.
The Company is also in process of setting the new marketing strategy to
reach directly to the vast customer base across India.
Employee stock option scheme:
The shareholders of the Company had approved of its employee stock
option plan (Sintex Industries Limited Employees Stock Option Scheme
2006) in February 2006. These ESOPS are administered by the Sintex
Employee Welfare Trust on the basis of recommendations of the
Compensation Committee of the Board. In terms of the plan, the Company
periodically granted stock options to eligible employees. The Company
will conform to the accounting policies specified in the guidelines as
amended periodically. The details of the scheme are set out in Annexure
I of this Report.
The Members of the Company in their meeting held on September 17, 2012
have approved the extension of exercise period from two years to four
years of Sintex Industries Limited Employees Stock Option scheme 2006.
Fixed deposits:
Your Company did not float any deposit scheme to which provisions of
Section 58A of the Companies Act, 1956 and the Rules made there under
are applicable.
Qualified Institutional Placement:
Pursuant to the approval of the shareholders at the Annual General
Meeting of the Company held on September 17, 2012, your Company made a
Qualified Institutional Placement (QIP) in accordance with Chapter VIII
of SEBI (Issue of Capital and Disclosure Requirements) Regulations,
2009.
Through the QIP, Sintex mobilised Rs. 174.76 crores by issuing
2,65,19,114 Equity Shares of a face value of Rs. 1/- each to qualified
institutional buyers at a premium of Rs. 64.90 per share.
The Company used the net proceeds received from the offering for part
redemption of FCCBs, due in March 2013.
Issue of USD 140 million, 7.5% Step Down Foreign Currency Convertible
Bonds (FCCBs) due 2017:
Pursuant to approval of the shareholders at the Annual General Meeting
of the Company held on September 17, 2012, your Company made an issue
of USD 140,000,000, 7.50%, with an average YTM of 5.25% p.a step down
convertible bonds due in 2017, convertible into Equity Shares at a
price of Rs. 75.60 per share. The bonds were issued on November 28,
2012 and listed on the Singapore Exchange Securities Trading Limited.
The Company used all of the proceeds of said FCCBs for part redemption
and prepayment of the foreign currency convertible bonds due in March,
2013.
Preferential Warrants Allotment:
In terms of shareholders'' approval at the Extra Ordinary General
Meeting held on November 9, 2012, your Company has allottee 3,00,00,000
warrants optionally convertible into Equity Shares to Promoter Group
Companies on preferential basis at a price of Rs. 69.01 per warrant
(25% consideration paid upfront).
The warrants are optionally convertible into Equity Shares within 18
months from the allotment date. During the year, the Company made
allotment of 1,36,00,000 Equity Shares at a price of Rs. 69.01
(inclusive premium of Rs. 68.01 per share) to Promoter Group Companies
on their exercise of the options for conversion of 1,36,00,000
warrants.
The net proceeds from the preferential allotment was utilised for
general corporate purpose and repayment of debts.
The full conversion of all warrants into equity shares will reinforce
the Company''s networth by Rs. 207.03 crores, strengthening the capital
structure.
Changes in Authorized Share Capital:
In terms of your approval in the Extra Ordinary General Meeting held on
November 9, 2012, the authorised share capital of the Company has been
reclassified from Rs. 65 crores comprising 50,00,00,000 Equity Shares
of Rs. 1/- each and 15,00,000 preference shares of Rs. 100/- each to
Rs. 65 crores comprising 65,00,00,000 Equity Shares of Rs. 1/- each by
re-classifying un-issued preference share capital into equity share
capital.
Changes in Equity Share Capital:
In 2012-13, the following changes were effected in the share capital of
the Company:
I. Issue of equity shares to qualified institutional buyers: Allotment
of 2,65,19,114 equity shares of Rs. 1/- each at a premium of Rs.
64.90/- per share.
II. Issue of equity shares upon warrants conversion: Allotment of
1,36,00,000 Equity Shares of Rs. 1/- each at a price of Rs. 69.01 per
share (inclusive of a premium of Rs. 68.01 per share) to Promoter Group
Companies, following the conversion of 1,36,00,000 warrants.
Pursuant to the allotment of the aforesaid equity shares, the paid-up
equity share capital of the Company increased from Rs. 27.30 crores to
Rs. 31.31 crores and the securities premium account increased by Rs.
264.60 crores.
The new shares issued in 2012-13 rank pari passu with the existing with
the existing equity shares of the Company.
Prepayment/Redemption of FCCBs 2008:
During the year the Company had made prepayment and cancelled 574 FCCBs
of the face value of US$ 100,000 each at a discount, which has resulted
in savings of Rs. 21.27 crores, as per the approval/guidelines of RBI.
The balance 1,676 FCCBs of the face value of US$ 100,000 each were
redeemed on maturity date i.e. March 13, 2013.
Listing of shares and securities:
The names and addresses of the stock exchanges where the Company''s
securities are listed are given below:
-The National Stock Exchange of India Ltd, Exchange Plaza, Plot No.
C-1, G Block, IFB Centre, Bandra Kurla Complex, Bandra (East),
Mumbai-400051
-BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai- 400001
-Ahmedabad Stock Exchange Ltd., Kamdhenu Complex, Panjrapole,
Ahmedabad-380015
-Singapore Exchange Securities Trading Limited, 2 Shenton Way, s 19 -
00 SGX Centre 1, Singapore-068804. (FCCB''S US$ 140 million)
-BSE Limited (Wholesale Debt Market), Phiroze Jeejeebhoy Towers, Dalal
Street, Mumbai-400001 (NCD Rs. 250 crores and NCD Rs. 350 crores)
The Company paid Listing Fees to all the above Stock Exchanges for FY
2013-14.
Management Discussion and Analysis:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, the Management Discussion and Analysis Report for the year
under review are annexed to this Report and forms part of this Annual
Report.
Corporate Governance:
Sintex continues to be committed to good Corporate Governance aligned
with the best practices. It has complied with all the standards set out
by SEBI and the Stock Exchanges.
A separate Report on Corporate Governance along with Statutory
Auditors'' Certificate on compliance with the conditions of Corporate
Governance as per Clause 49 of the Listing Agreement with the Stock
Exchanges is provided as a part of this Annual Report, besides the
Management Discussion and Analysis.
Your Company has made all information, required by investors, available
on the Company''s website www.sintex.in
Directors
Mr. Dinesh B. Patel, Chairman and Mr. Arun P. Patel, Vice Chairman of
the Company had expressed their unwillingness for reappointment as
Wholetime directors of the Company which was due for renewal on
October11, 2012 and accordingly have ceased to be Wholetime directors
and continue to act as Chairman and Vice Chairman respectively as Non
executive directors.
Mr. Dinesh B. Patel, Mr. Arun P. Patel, Mr. Ashwin L. Shah and Dr.
Lavkumar Kantilal, the Directors retired by rotation, but being
eligible, offer themselves for re-appointment at the ensuing Annual
General Meeting.
Shri Rooshi Kumar Pandya, Director of the Company has ceased to be a
Director w.e.f. April 13, 2013 on account of his sudden demise. The
Board placed on record its appreciation for the services rendered by
him as a director of the Company. The Board of Directors in their
meeting held on May 7, 2013 have appointed Dr. Narendra Kumar Bansal as
Director in casual vacancy caused by the death of Mr. Rooshi Kumar
Pandya.
As stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges, brief profile of the Directors proposed to be re-appointed,
nature of their expertise in specific functional areas, names of the
companies in which they hold directorships and shareholding are
provided in the Notice attached forming part of the Annual Report.
Directors'' Responsibility Statement:
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956 with respect to Directors Responsibility Statement, it is
hereby confirmed that:
1. In the preparation of the annual accounts for the year under
review, the applicable accounting standards have been followed and
there have been no material departures.
2.The Directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period.
3. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting frauds and other
irregularities.
4.The annual accounts of the Company have been prepared on a ''going
concern'' basis.
Consolidated financial statements:
The Consolidated Financial Statements have been prepared in accordance
with the Accounting Standards prescribed by the Institute of Chartered
Accountants of India, in this regard.
Subsidiaries:
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit &
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. However, the
financial information of the subsidiary companies is disclosed in the
Annual Report in compliance with the said circular. The Company will
make available the annual accounts of the subsidiary companies and the
related detailed information to any member of the Company who may be
interested in obtaining the same. The annual accounts of the subsidiary
companies will also be kept open for inspection at the Registered
Office of the Company and that of the respective subsidiary companies.
The Consolidated Financial Statements presented by the Company include
the financial results of its subsidiary companies.
Conservation of energy, technology absorption and foreign exchange
earnings and outgo:
A statement containing the necessary information required under Section
217(1)(e) of the Companies Act, 1956, read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988, are given in the Annexure II forming part of this Report.
Particulars of employees:
The information required as amended under section 217(2A) of the
Companies Act, 1956, read with Companies (Particular of Employees)
Rules, 1975, forms part of this report as Annexure III. However, as
permitted by Section 219(I) (b) (IV) of the Companies Act, 1956, this
Annual Report is being sent to all shareholders excluding the said
Annexure. Any shareholder interested in obtaining the particulars may
obtain it by writing to the Company Secretary at the registered office
of the Company.
Insurance:
All the Properties of your Company, including plant and machinery,
buildings, equipments, and stocks among others have been adequately
insured.
Auditors:
M/s. Deloitte Haskins & Sells, Statutory Auditors of the Company,
retire at the ensuing Annual General Meeting and being eligible, have
expressed their willingness to be reappointed. As required under the
provisions of Section 224 of the Companies Act, 1956, the Company has
received a letter from the Statutory Auditors to the effect that their
reappointment, if made, would be in conformity with the limits
specified in Section 224 (1B) of the Companies Act, 1956 and they are
not disqualified for reappointment within the meaning of Section 226 of
the said Act.
The observations made in the Auditor''s Report are self-explanatory and
do not call for any further comments under Section 217 of the Companies
Act, 1956.
Cost Auditor:
The Central Government has approved the appointment of M/s. Kiran J
Mehta & Co, Cost Accountants, Ahmedabad (Membership No. 00025) for
conducting Cost Audit for the Financial Year 2012-13 for the Textile
Business of the Company.
The Company has filed the Cost Audit Report for the year ended March
31, 2012 on January 23, 2013 within the time limit as prescribed by the
Ministry of Corporate Affairs.
Acknowledgements:
Your Directors wish to place on record the excellent support assistance
and guidance provided by the financial institutions, banks, customers,
suppliers and other business associates. Thanks to our Company''s
employees for their tireless efforts and high degree of commitment and
dedication. Your Directors especially appreciate the continued
understanding and confidence of the Members.
On behalf of the Board,
Date: May 7, 2013 Dinesh B Patel
Place: Ahmedabad Chairman
Mar 31, 2012
The Directors have pleasure in presenting the 81st Annual Report of
the Company, together with audited accounts for the year, which ended
on March 31, 2012.
Financial results:
Your Company's financial performance for 2011-12 was heartening
considering the external adversities that plagued the economic and
industrial environment of the country.
(Rs. in crore)
2011-12 2010-11
Gross turnover 2,629.65 2,674.21
Gross profit 421.54 567.94
Less : Depreciation 98.05 89.25
Profit before tax 323.49 478.69
Less: Provision for taxation à Current tax 64.63 95.48
MAT Credit Entitlement (15.05) (22.09)
Deferred tax 36.58 40.68
Profit/(loss) after tax before prior
period items 237.33 364.62
Add/(Less): Short provisions for taxation
of earlier years (7.63) (7.06)
Profit after tax 229.70 357.56
Balance of profit of previous year 1,157.00 888.60
Profit available for appropriation 1,386.70 1,246.16
Appropriations
General reserve 25.00 40.00
Debenture redemption reserve 33.27 28.58
Proposed dividend on equity shares 17.74 17.74
Tax on dividend 2.88 2.84
Balance carried to balance sheet 1,307.81 1,157.00
Total 1,386.70 1,246.16
Financial performance:
Your Company's posted a Gross turnover of Rs. 2,629.65 crores in 2011- 12
as against Rs. 2,674.21 crores in the previous year 2010-11. This
underperformance was primarily due to the degrowth in the monolithic
construction business - the Company's flagship business vertical - a
conscious decision by the management to control the ballooning working
capital requirement consequent to the decline in cash flow from these
projects from government agencies. The key business driver for 2011-12
was the prefabricated structures supported by marginal growth in the
custom moulding segment for domestic OEMs. The textiles business also
witnessed reasonable growth.
EBIDTA slipped to Rs. 578.67 crores against Rs. 648.52 crores in the
previous year, while Net Profit decelerated to Rs. 229.70 crores as
against Rs. 357.56 crores over the same period.
Cash plough back into the business was Rs. 468.18 crores in 2011-12 as
against Rs. 567.93 crores in 2010-11 - providing an adequate cushion to
fund growth initiatives to capitalise on emerging opportunities.
The earning per share stood at Rs. 8.48 (basic) and Rs. 8.48 (diluted) in
2011-12.
Dividend:
After considering your Company's profitability, cash flow and expansion
needs, your Directors are pleased to recommend a Dividend of Rs. 0.65 per
equity share on a face value of Rs. 1/- each on 27,29,90,866 equity
shares fully paid-up as on March 31, 2012 (previous year Rs. 0.65 each
per equity share on a face value of Rs. 1/- each on 27,29,90,866 equity
shares) and any further equity shares that may be allotted by the
Company upon the conversion of FCCBs prior to book closure date for
2011-12. This dividend will be paid subject to the approval of
shareholders at the forthcoming Annual General Meeting.
The total quantum of dividend, if approved by the members will be Rs.
20.62 crores, including dividend tax.
Business review and divisional performance:
Your Company's performance was depressed in 2011-12 impacted by a
considerable decline in the monolithic construction segment which
overshadowed the otherwise healthy growth in other business verticals
and sub-segments. A detailed discussion of your Company's operations is
given under 'Management discussion and analysis report.'
A. Plastics division:
This is the Company's flagship business which accounts for more than
90% of the Company's revenue. Over the years, the Company moved up the
value chain from manufacturing plastic products for final consumption
to leveraging plastic products into creating unique solutions -
monolithic construction is a case in point.
The plastics division of the Company exhibits a heartening performance
despite external challenges which were compelled a slowing down of
business operations in key business verticals. It clocked a turnover of
Rs. 2,161.83 crores as against Rs. 2,278.95 crores in 2010-11.
Monolithic construction: Fiscal 2011-12 was the toughest for this
business division as funds inflow remained a concern due to the
government's preoccupation with other priorities and challenges. Your
Company consciously strategised to accelerate execution for projects
with timely cash flow visibility to optimise working capital
requirement. Despite this, the Company witnessed a growth in revenues
and order book size through efficient project management skills. Your
Company displayed intelligent project management skills by executing
the single-largest township development project in Delhi - constructing
600 buildings.
Prefabs: Your Company's prefab business generated sizeable revenue in
2011-12, facilitated by increased social spending by the government on
healthcare and education. In 2011-12, your Company received sizeable
business volumes from Madhya Pradesh to strengthen its healthcare
infrastructure across the state. Additionally, your Company
successfully marketed prefab solutions as the preferred solution for
educational infrastructure in forest and tribal areas, which was well
received by decision-making agencies with reasonable business inflow.
Building products: Your Company strengthened its presence in the
interiors business primarily doors; it introduced unique promotional
schemes with reasonable success. Additionally, it bundled doors and
windows with monolithic and prefab projects. Also, your Company
launched and aggressively marketed plastic kitchen cabinets as a
value-for-money product with inherent benefits over the plywood- based
traditional variants.
Sandwich panel segment, essentially a business-government model (B-G
model), your Company marketed these products through its retail network
(B-C model) to increase customer awareness and volumes.
Water and liquid storage: Water tanks, the Company's flagship brand,
maintained its growth and expanded its presence across geographies with
greater reach in rural and semi-urban markets, maintaining a dominant
position. In 2011-12, your Company launched the high-value,
triple-walled white water storage tanks pan-India through a unique
positioning which transformed a commodity into an aspiration.
Additionally, your Company's underground FRP tanks were approved by
IOCL, HPCL and BPCL for installation at all new dispensing stations
pan-India - a huge opportunity over the coming years. Your Company
successfully marketed these products to large malls and commercial
complexes for liquid storage purposes.
Sub-ground structures: Your Company made significant progress in this
business vertical which comprised manhole structures, underground
septic tanks covers and packaged water treatment solutions - these
products received approvals from a number of state government
authorities. Your Company successfully marketed a sizeable volume of
septic tanks in urban locations leveraging its key USP - underground
applications leading to space saving.
Your Company created a special marketing team to strengthen the
awareness of its decentralised packaged waste water treatment solution
from managing liquid waste with considerable success - the Company
successfully marketed these products to state agencies anc private
builders.
Environmental products: Your Company is a leader in portable,
prefabricated and moulded biogas plants in India, a unique solution
perfectly suited for Indian villages bereft of basic utilities
primarily electricity. The product received clearances from central and
state governments as it provided energy to rural areas - the
government's top priority. During the year, your Company marketed good
volumes across Gujarat, Maharashtra, Karnataka, Tripura and Kerala.
Custom moulded products: The Company has two important segments in this
division - 1) products which are customised to certain applications and
2) products which are customised to customer requirements. The pallets
business registered a robust growth as your Company intelligently
segmented the market with unique products to suit various applications.
In the SMC-based enclosures targeted to the power distribution space,
your Company established its footprint in Kerala, Uttar Pradesh and
Uttarakhand in 2011-12. During the year, it also initiated the product
approval process in Himachal Pradesh, Punjab, Haryana, Tamil Nadu and
West Bengal. In the OEM business, the Company customised a number of
products for global and large Indian corporate brands which will
generate significant returns over the coming years.
B. Textiles division:
Your Company created a niche for itself in the value-added textile
segment by supplying high-end yarn dyed structured fabrics for men's
shirting, yarn dyed corduroy, ultima cotton yarn-based corduroy and
fabrics for ladies wear.
The Company's textiles business managed to maintain turnover of Rs.
467.82 crores as against Rs. 439.79 crores in 2010-11.
The improved performance was on account of increased demand from
domestic as well as international markets. The Company's recent entry
into ready-to-stitch fabric received favourable response in the
domestic market and it plans to further develop this market. Your
Company increased its product portfolio in the ladies wear segment,
registering robust volumes.
Your Company is working towards strengthening its infrastructure by
replacing existing machinery with sophisticated equipment to improve
product quality and machine productivity to capitalise on growing
opportunities. Additionally, your Company's innovation in product
development is also expected to create a demand pull for its products
from discerning international brands.
Subsidiaries:
The Company's subsidiaries Zep Infratech Limited, Bright AutoPlast Ltd,
Wausaukee Composites Inc., Nief Plastics SAS and Sintex Infra Projects
Ltd provide infrastructure and highly-engineered custom moulding
solutions. These companies work closely with each other to generate
more business and enhance profitability of the Group.
Performance of subsidiaries:
During the year, your subsidiaries registered a moderate performance.
While revenues grew to Rs. 1,904.53 crores in 2011-12 against Rs. 1,883.55
crores in 2010-11. Profit after tax dipped significantly to Rs. 65.56
crores from Rs. 102.45 crores over the same period. Their contribution to
consolidated revenues remained stable at 42% in 2011-12.
1) Zep Infratech Limited
The Company strategically diversified as a holistic infrastructure
company due to a meltdown in the telecom infrastructure segment. The
Company aims to streamline business with other group companies (Sintex
Infra and Zillion Infra Projects) to improve technical, project
management and execution skills, and take advantage of a large work
force availability.
The Company's current focus areas include:
- Value-added and O&M (operation and maintenance) services to telecom
operators
- BT shelter installation for defence sector at high altitudes
- Cold chain management solutions
- Prefabs for classroom in rural areas
The Company successfully transitioned its operations as an
infrastructure solutions provider and is working on small projects to
build credentials.
2) Bright AutoPlast Ltd
The Company specifically focuses on auto and electrical sectors for
custom moulding solutions. It successfully created synergies with Nief
to gain better technical skills to work with MNCs in India. This
resulted in good topline growth for the Company despite challenging
conditions.
During the year, the Company commissioned its Precitech division
undertaking European technology. The unit specialises in manufacturing
precision parts for the electrical and automotive sectors. The Company
also started manufacturing fuel tanks, fuel filler pipes, air vent
assemblies, precision parts in engineering materials and a range of
interior parts for various MNCs in India.
3) Wausaukee Composites Inc.
The Company manufactures high-engineered composites for OEMs in mass
transportation, construction equipment, agricultural equipment, wind
energy, medical and security imaging, corrosion-resistant material
handling, architectural and commercial site furnishings, therapeutic
and specialty bathing system and recreation industry.
During the year, the Company appointed a new CEO to focus on growth,
expansion, new technology adoption and creating new business segments.
In 2011-12, the Company received orders from NeuroLogica for medical
imaging x-ray compound and the US Airport for baggage screening x-ray.
4) Nief Plastics SAS
The Company manufactures thermoplastics and thermosetting sub-
assemblies for clients in automotive, electrical, medical, aeronautics,
defence, household appliances and building industries. During the year,
the Company successfully shifted its manufacturing presence to low-
cost locations in Hungary, Slovakia, Tunisia and Morocco, resulting
into higher margins.
The Company received a major order from Snecma Safran to supply
aeronautic parts for Airbus and Dassault Aviation. The Company also
received 'best supplier award' from Schneider Electric and Safran.
5) Sintex Infra Projects Ltd
Sintex Infra focuses on executing all infrastructure projects of the
parent company. The Company has a track record of executing civil and
mechanical construction work in airports, industrial plants,
residential and commercial complexes, road and land development
projects among others.
During the year, the Company successfully bagged a major project worth
Rs. 1,300 crores for civil and mechanical construction of Shirpur power
plant.
Employee stock option scheme:
The shareholders of the Company had approved of its employee stock
option plan (Sintex Industries Limited Employees Stock Option Scheme
2006) in February 2006. This ESOPS is administered by the Sintex
Employee Welfare Trust on the basis of recommendations of the
Compensation Committee of the Board. In terms of the plan, the Company
periodically granted stock options to eligible employees. The Company
will conform to the accounting policies specified in the guidelines as
amended periodically. The details of the scheme are set out in Annexure
I of this report.
Directors:
In accordance with the requirements of Section 256 of the Companies
Act, 1956 and the Articles of Association of the Company, Shri
Rushikumar Pandya , Shri Rahul A. Patel and Shri Amit D. Patel, the
Directors retire by rotation, but being eligible, offer themselves for
reappointment at the ensuing Annual General Meeting.
The necessary resolutions for obtaining the approval of the members for
the aforesaid re-appointments are contained in the Notice of the
ensuing Annual general Meeting.
A brief resume of each of them, the nature of their expertise and the
names of the companies in which they hold directorships and the details
of membership of the committees of the Board are enclosed. Your
Directors recommend their appointments and reappointments.
Fixed deposits:
Your Company did not float any deposit scheme to which provisions of
Section 58A of the Companies Act, 1956 and the Rules made thereunder
are applicable.
Listing of shares and securities:
The names and addresses of the stock exchanges where the Company's
securities are listed are given below:
- The National Stock Exchange of India Ltd, Exchange Plaza, Plot No.
C-1, G Block, IFB Centre, Bandra Kurla Complex, Bandra (East),
Mumbai-400051
- Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal
Street, Mumbai-400001
- Ahmedabad Stock Exchange Ltd., Kamdhenu Complex, Panjrapole,
Ahmedabad-380015
- Singapore Exchange Securities Trading Limited, 2 Shenton Way, # 19 -
00 SGX Centre 1, Singapore-068804. (FCCB'S US$ 225 million)
- Bombay Stock Exchange Limited (Wholesale Debt Market), Phiroze
Jeejeebhoy Towers, Dalal Street, Mumbai-400001 (NCD Rs. 250 crores and
NCD Rs. 350 crores)
The Company paid listing fees to all the above stock exchanges for F.Y.
2012-13.
Management Discussion and Analysis:
Management Discussion and Analysis Report for the year under review as
stipulated under Clause 49 of the Listing Agreement is presented in a
separate section forming part of the Annual Report.
Corporate Governance Report:
Your Company has taken structured initiatives towards Corporate
Governance and its practices are valued by the various stakeholders.
In terms of Clause 49 of the Listing Agreement, a Report on Corporate
Governance for the year ended March 31, 2012, supported by a
certificate from the Company's Statutory Auditors confirming compliance
of conditions, forms part of this Report.
Your Company has made all information, required by investors, available
on the Company's website www.sintex.in
Your Company is also in the process of implementing Corporate
Governance Voluntary Guidelines, 2009 issued by the Ministry of
Corporate Affairs, Government of India in December, 2009
Directors' Responsibility Statement:
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956 with respect to Directors Responsibility Statement, it is
hereby confirmed that:
1. In the preparation of the annual accounts for the year under
review, the applicable accounting standards have been followed and
there have been no material departures.
2. The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent, so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit of
the Company for that period.
3. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting frauds and other
irregularities.
4.The annual accounts of the Company have been prepared on a going
concern basis.
Consolidated financial statements:
The Consolidated Financial Statements have been prepared ir accordance
with the Accounting Standards prescribed by the Institute of Chartered
Accountants of India, in this regard.
Subsidiaries:
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit &
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance sheet of the Company. However, the
financial information of the subsidiary companies is disclosed in the
Annual Report in compliance with the said circular. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any member of the Company who may be
interested in obtaining the same. The annual accounts of the subsidiary
companies will also be kept open for inspection at the Registered
Office of the Company and that of the respective subsidiary companies.
The Consolidated Financial Statements presented by the Company include
the financial results of its subsidiary companies.
Conservation of energy, technology absorption and foreign exchange
earnings and outgo:
A statement containing the necessary information required under Section
217(1)(e) of the Companies Act, 1956, read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988, are given in the Annexure II forming part of this Report.
Particulars of employees:
The information required as amended under section 217(2A) of the
Companies Act, 1956, read with Companies (Particular of Employees)
Rules, 1975, forms part of this report as Annexure III. However, as
permitted by section 219(I) (b) (IV) of the Companies Act, 1956, this
Annual Report is being sent to all shareholders excluding the said
Annexure, Any shareholder interested in obtaining the particulars may
obtain it by writing to the Company Secretary at the Registered Office
of the Company.
Insurance:
All the insurable interests of the Company, including plant and
machinery, stocks, loss of profits, standing charges and insurable
interest are adequately insured.
Auditors:
M/s. Deloitte Haskins & Sells, Statutory Auditors of the Company,
retire and being eligible, have indicated their willingness to be
reappointed. The observations made in the Auditor's Report are
self-explanatory and do not call for any further comments under Section
217 of the Companies Act, 1956
Cost Auditor:
The Central Government has approved the appointment of M/s. Kiran J
Mehta & Co, Cost Accountants, Ahmedabad (Membership No. 00025) for
conducting Cost Audit for the Financial Year 2011-12 for the Textile
Business of the Company. The Cost Audit report of the Textile Business,
for the year 2010-11 was due for submission within 180 days from the
close of the financial year. It was submitted on 5th September, 2011.
Acknowledgements:
Yours Directors are highly grateful for all the help, guidance and
support received from valued customers and various government, semi-
government and local authorities, suppliers and other business
associates, vendors, as well as the various banks.
Your Directors thank all the members of the Sintex Family and business
partners for their trust and confidence reposed in the Company.
Your Directors wish to place on record their sincere appreciation for
the efforts and contributions put in by all associated with the Company
at all levels, to ensure that the Company continues to grow and excel.
On behalf of the Board,
Date: May 10, 2012 Dinesh B Patel
Place: Ahmedabad Chairman
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting the 80th Annual Report of
the Company, together with audited accounts for the year, which ended
on March 31, 2011.
Financial results
Your Company's financial performance for 2010-11 has been encouraging,
as summarised below
(Rs. in crore)
2010-11 2009-10
Gross turnover 2718.74 2103.56
Gross profit 567.94 425.51
Less : Depreciation 89.25 84.03
Profit before tax 478.69 341.48
Less: Provision for taxation - Current tax 95.48 58.05
MAT Credit Entitlement (22.09) (18.54)
Deferred tax 40.68 21.46
Profit/(loss) after tax before
Prior period items 364.62 280.51
Add/(Less): Short provisions for
taxation of earlier years (7.06) (6.81)
Profit after tax 357.56 273.70
Balance of profit of previous year 888.60 674.17
Profit available for appropriation 1246.16 947.87
Appropriations
General reserve 40.00 30.00
Debenture redemption reserve 28.58 10.22
Proposed dividend on equity shares 17.74 16.38
Tax on dividend 2.84 2.67
Balance carried to balance sheet 1157.00 888.60
Total 1246.16 947.87
Financial performance
Your Company reported another strong performance this year as it
extended its presence into value-added business verticals and
strengthened its market position in existing businesses - delivering
superior value to its stakeholders.
Gross turnover grew 29% from Rs.2,103.56 crore in 2009-10 to Rs.2,718.74
crore in 2010-11, due to a significant increase in existing business
volumes. While all business segments contributed to your Company's
growth, the key growth drivers were monolithic construction and civil
infrastructure.
The EBIDTA grew 37% from Rs.476.83 crore in 2009-10 to Rs.654.76 crore in
2010-11, facilitated by growing sales volumes, increased project
delivery and a thrust on value-added business segments.
Your Company registered a 31% growth in profit after tax to Rs.357.56
crore in 2010-11 against Rs.273.70 crore in 2009-10. Cash plough back
into the business grew 33% from Rs.425.51 crore in 2009-10 to Rs.567.93
crore in 2010-11 Ã providing an adequate cushion for funding
initiatives to capitalised on emerging growth opportunities.
The earning per share stood at Rs.13.19 (basic) and Rs.13.19 (diluted) in
2010-11.
Dividend
Your Company always maintained a prudent balance between its need to
reward shareholders with its need to grow business for delivering
superior returns to shareholders over the medium-term. Considering the
sizeable capital-intensive projects on the anvil, your Directors are
pleased to recommend a dividend of Rs.0.65 per equity share on a face
value of Rs.1 each on 27,29,90,866 equity shares, fully paid up as on
March 31, 2011 (previous year Rs.1.20 per equity share of face value of
Rs.2 each on 13,64,95,433 equity shares), and any further equity shares
that may be allotted by your Company upon the conversion of FCCBs prior
to book closure date for 2010-11. This dividend will be paid subject to
the approval of shareholders at the forthcoming Annual General Meeting.
The dividend payout, if approved by members will be Rs.17.74 crore, while
Rs.2.84 crore will be paid by the Company towards dividend tax and
surcharge on the same. Dividend in the hands of the shareholders will
be tax-free.
Business review and divisional performance Your Company registered an
overall improved performance in 2010-11, where all business verticals
and sub-segments grew at a robust pace. A detailed discussion of your
Company's operations is given elsewhere in this annual report under
'Management discussion and analysis report.'
A) Plastics division
Plastics division, the critical growth driver of your Company grew at
31% from Rs.1,666.93 crore in 2009-10 to Rs.2,180.43 crore in 2010-11,
strengthening its significance for the Company - it accounted for
83.35% of your Company's revenues in 2010-11 against
82.91% in 2009-10. It also vindicated your Company's philosophy of
creating products and solutions around areas that impact the essentials
for the common man, and those that are high on the government's
priority list.
The monolithic construction segment reported a massive increase for the
third successive year, emerging as the flagship business vertical in
the plastics division. Other significant contributors included prefabs,
water storage solutions and custom moulded products (including SMC
products). Your Company also introduced novel products and solutions
which strengthened the 'Sintex' brand recall and grew market share in
key business verticals. In 2010-11, your Company established a strong
presence in creating water distribution and sewerage collection
infrastructure.
Monolithic construction: This business registered a stellar performance
à larger order execution and increased business volumes, enlarging the
already huge order book. Your Company also extended its presence in a
larger number of states for providing low-cost housing solution through
this technology à opening huge opportunity windows over the coming
years. More importantly, your Company received large business from
other segments, namely the security forces and police departments.
Prefabs: Your Company grew this business vertical by tapping into
opportunity pockets from the health and education segments which are
high on government priority, for which sizeable funds were allocated.
Your Company's products received numerous approvals from different
states in 2010-11, expanding business opportunities in coming years.
Your Company also created prefab structures for the defence forces
across diverse geographies.
Building products: Your Company focused its energies on strengthening
its presence in plastic doors à aggressive marketing through unique
schemes and promotional programmes with satisfying results. Your
Company also launched sandwich panels specially designed for roofing
application, interior partitions, and high-altitude structures which
were well received. Your Company marketed sizeable volumes of sandwich
panels to successfully set-up warehouses across diverse Indian terrains
à showcasing product suitability for cold chain applications, high on
government priority.
Water and liquid storage: Water tanks, the Company's flagship brand,
maintained its growth and expanded its presence across geographies with
greater reach in rural and semi-urban markets, maintaining a dominant
position. Your Company introduced a number of new sub-brands,
segregating the water tank market into smaller segments à enabling it
to cater to a wider customer range and facilitate increased
penetration. Your Company re-launched its underground tank range which
was successfully installed in a number of locations.
Sub-ground structures: Your Company made significant progress in this
business vertical which comprised manhole structures, covers and
packaged water treatment solutions à these products received approvals
from a number of state government authorities and private clients,
generating sizeable revenue for the Company in 2010-11. This segment is
expected to register a robust growth over the coming years largely due
to the increased government thrust on pollution management, consequent
to growing urbanisation.
Custom moulded products: This business segment registered a significant
growth largely due to product customisation to suit niche applications.
Besides, your Company successfully developed numerous products for
diverse sectors, catering to both global and domestic customers. Some
products were under advanced stages of approval which should open new
growth opportunities.
In the energy segment, your Company built upon its long and healthy
business relationship with the electrical sector for marketing its
enclosures with a special focus on distribution and feeder-pillar boxes
to capitalise on opportunities emerging from the modernisation of the
T&D segment of the energy value chain.
Your Company received business from leading OEM namely, John Deere,
M&M, Cummins and BEL among others, for specialised and customised
products. Besides, a number of products were also approved by leading
Indian and multi- national brands, which is expected to yield sizeable
revenues over the coming years.
B) Textiles division
The textile division grew by a significant 27% on the back of robust
demand from international clients. The domestic business also
registered a sizeable increase in business volumes. Your Company
strengthened its position in women's wear and home furnishing segments
through a wider product basket, generating increased business volumes.
During the year, your
Company added a number of renowned fashion labels to its client list,
opening new opportunity windows. Your Company created a robust retail
network for marketing ready-to-stitch fabric, primarily catering to
rural and semi-urban markets. Your Company is working towards
strengthening its infrastructure through sophisticated equipment which
will improve product quality and machine productivity to capitalise on
growing opportunities.
Subsidiaries
During the year under review, M/s. Bright AutoPlast Private Limited, a
wholly-owned subsidiary was converted into a Public Limited Company
with a new name - M/s. Bright AutoPlast Limited, and Sintex Oil & Gas
Limited ceased to be the Company's subsidiary.
Performance of subsidiaries
Your subsidiaries registered a robust performance à revenue and profit
after tax grew 46% and 85% respectively. More importantly, their
contribution to the consolidated revenue increased from Rs.1,271.09 crore
in 2009-10 to Rs.1,859.18 crore in 2010-11; the contribution to the
bottomline strengthened from 4.3% in 2009-10 to 5.5% in 2010-11.
1) Zep Infratech Limited (Formerly known as Zeppelin Mobile Systems
India Ltd.)
The Company shifted its focus from being just a telecom infra Company
to a holistic infrastructure Company, due to a melt down in the telecom
sector. The Company plans to leverage its existing capability and
competence to take advantage of the huge potential in the
infrastructure sector.
The new business focus areas would be à infrastructure/civil projects,
telecom products and services, prefabs made of PUF panels, PEB
structures and cold chain management.
Cold chain management will be a huge opportunity for the Company, as it
is becoming a matter of national interest with almost 42% of
agricultural production in India being perishable items. The government
also laid thrust on developing new cold chains by providing full
exemption on excise duties.
2) Bright AutoPlast Ltd.
The Company performed exceptionally well à higher volumes, new
businesses, new customers and new capacities à resulted in a 44%
topline growth and an improvement in margins in 2010-11 over the
previous year.
Our business with Schneider performed extremely well. This resulted in
other electric companies showing serious intent in
partnering with us à primarily customers of Nief who also have
manufacturing bases in India. In the automotive segment, volumes from
existing clients increased and new customers opened multiple growth
opportunities.
We created a new unit à Chennai 3 à dedicated to electrical customers
which commenced operations in April 2011. This allowed us to grow our
client base in this vertical. Additionally, we strategised in setting
up greenfield facilities proximate to automotive hubs to capitalise on
the huge demand from the automotive segment. We are also looking to
enter the commercial vehicle segment à multiplying our growth
opportunities.
3) Wausaukee Composites Inc.
Your Company bought out our partner's stake in Wausaukee, making it a
100% subsidiary of Sintex. This was necessary for our accelerated
growth in the US. What we also need to remind shareholders is that for
Wausaukee, there were issues related to the wind energy business, but
otherwise Wausaukee doubled in size, post our acquisition. The returns
were also significant.
In 2010-11, we started prototyping products for a number of new
customers, volumes are expected to flow in the current year. Your
Company is also focused on expanding its manufacturing footprint in the
US through inorganic initiatives, as we realise that the custom
moulding business is region and customer-centric à you need to be at
the right place with the right client.
4) Nief Plastics SAS
Nief performed very well this year with a topline growth of 23-25% and
margin growth from 11 to 13%.
At Nief, contributions from the automotive segment that was 65% at the
time of acquisition was 45% last year and this year it is 40%. This
year 40% of Nief's business was from auto, 30% from electrical, 20%
from aerospace and medical and 10% from others.
Nief's acquisition of Simop (moulding unit) and Sicmo (moulds and tools
making unit) gave the Company access to three new customers à plastic
products for doormatix, personal care products and modem making
companies.
Nief also expanded operations in East Europe (Hungary and Slovakia) and
North Africa (Tunisia and Morocco) to take advantage of low production
costs, leading to its overall optimisation.
In 2010-11, the Company also introduced a new process called 'machining
of plastics' (machines cut plastics in required shape), for
manufacturing medical equipment.
5) Sintex Infra Projects Ltd
The Company enabled Sintex to establish a strong foothold in the
Infrastructure space. The Company successfully delivered various
infrastructure projects in the field of construction of airports, road
and land development, construction of industrial plants, developing
commercial and residential complexes, among others. With good
management skills and demonstrated execution capabilities, the Company
has a healthy order book.
In 2010-11, your Company acquired 30% ownership of Durha Constructions
Private Limited (DCPL) at an investment of Rs.42.21 crore. DCPL is
engaged in the civil and mechanical construction in diverse
infrastructure sectors including power, petrochemicals, cement from
medium to large projects for private and public sectors clients à key
projects include Delhi International Airport, Hyderabad International
Airport, Indraprastha Power Station, among others. It has an impressive
client base comprising large corporates, namely, BHEL and L&T.
Employee stock option scheme
The shareholders of the Company approved of its employee stock option
plan (Sintex Industries Limited Employees Stock Option Scheme 2006) in
February 2006. This ESOPS is administered by the Sintex Employee
Welfare Trust on the basis of recommendations of the Compensation
Committee of the Board. In terms of the plan, the Company periodically
granted stock options to eligible employees. The Company will conform
to the accounting policies specified in the guidelines as amended
periodically. The details of the scheme are set out in Annexure 1 of
this report.
Changes in equity share capitalDuring the year, each equity share of Rs.2
each was sub-divided in to 2 equity shares of Rs.1 each.
Directors
In accordance with the requirements of Section 256 of the Companies
Act, 1956 and the Articles of Association of the Company, Shri
Ramnikbhai H. Ambani, Smt. Indira J. Parikh and Dr. Rajesh B. Parikh
retire by rotation, but being eligible, offer themselves for
reappointment.
For the kind perusal of the shareholders, a brief resume of each of
them, the nature of their expertise and the name of the companies
in which they hold directorships and the details of membership of the
committees of the Board are enclosed. Your directors recommend their
appointments.
Fixed deposits
Your Company did not float any deposit scheme.
Listing of shares and securities The names and addresses of the stock
exchanges where the Company's securities are listed are given below:
- The National Stock Exchange of India Ltd., Exchange Plaza, Plot No.
C-1, G Block, IFB Centre, Bandra Kurla Complex, Bandra (East), Mumbai -
400051
- Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal
Street, Mumbai - 400001
- Ahmedabad Stock Exchange Ltd., Kamdhenu Complex, Panjrapole,
Ahmedabad - 380015
- Singapore Exchange Securities Trading Limited, 2 Shenton Way, # 19 Ã
00 SGX Centre 1, Singapore - 068804. (FCCB'S US$ 225 million)
- Bombay Stock Exchange Limited (Wholesale Debt Market), Phiroze
Jeejeebhoy Towers, Dalal Street, Mumbai - 400001 (NCD INR 250 crore &
NCD INR 350 crore)
The Company paid listing fees to all the above stock exchanges for
2011-12.
Corporate Governance report
Your Directors adhered to the requirements set by the Securities and
Exchange Board of India's Corporate Governance practices and
implemented all the stipulations prescribed.
A separate Corporate Governance Report is furnished as a part of
Directors' Report and the Certificate from the Company's Statutory
Auditors regarding compliance with the conditions of Corporate
Governance is annexed to it.
Your Company complies with the provisions related to Corporate
Governance as per Clause 49 of the Listing Agreement. Your Company is
also in the process of implementing the Corporate Governance Voluntary
Guidelines, 2009 issued by the Ministry of Corporate Affairs,
Government of India in December, 2009.
Directors' responsibility statement
To the best of their knowledge and belief and based on the
information obtained by them, your Directors make the following
statement in terms of Section 217 (2AA) of the Companies Act, 1956:
1. That in the preparation of the annual accounts for the year ending
March 31, 2011, the applicable accounting standards have been followed
and there have been no material departures.
2. That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent, so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for that period.
3. That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting frauds and other
irregularities.
4. That the annual accounts for the year ending March 31, 2011 have
been prepared on a going concern basis.
Consolidated financial statements
The Central Government vide General Circular no. 2/2011 under no.
5/12/2007/CL-III dated February 8, 2011 has granted general exemption
to the companies from attaching the annual accounts of the subsidiary
companies, subject to compliance of certain conditions as given in the
said circular.
Your Company is presenting in the annual report the consolidated
financial statements of holding Company and all subsidiaries duly
audited by the Statutory Auditors, complying with all other conditions,
the annual accounts of the subsidiary companies are not attached, with
this annual report.
Further, the annual accounts of the subsidiary companies and the
related detailed information will be made available to any member of
the Company/its subsidiaries at any point of time. The annual accounts
of the subsidiary companies will also be kept for inspection by any
member of the Company/its subsidiaries at the registered office of the
Company and that of the respective subsidiary companies.
Conservation of energy, technology absorption, etc. A statement
containing the necessary information required under the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 is annexed to this report as Annexure 2.
Particulars of employees
The information required as amended under section 217(2A) of
the Companies Act, 1956, read with Companies (Particular of Employees)
Rules, 1975, forms part of this report as Annexure 3. However, as
permitted by section 219(I) (b) (IV) of the Companies Act, 1956, this
annual report is being sent to all shareholders excluding the said
Annexure. Any shareholder interested in obtaining the particulars may
obtain it by writing to the Company Secretary at the registered office
of the Company.
Insurance
All the insurable interests of the Company, including plant and
machinery, stocks, loss of profits, standing charges and insurable
interest are adequately insured.
Auditors
M/s. Deloitte Haskins & Sells, Statutory Auditors of the Company,
retire and being eligible, have indicated their willingness to be re-
appointed. The observations made in the Auditor's Report are self-
explanatory and do not call for any further comments under Section 217
of the Companies Act, 1956.
Cost accounting records
As required under the order made by the Central Government, the Company
is maintaining necessary cost accounting records with respect to cotton
textiles.
Acknowledgements
Your Directors thank the Company's valued customers and various
government, semi-government and local authorities, suppliers and other
business associates, vendors, as well as the various banks for their
continued support to the Company's growth and look forward to their
continued support in the future also.
Your Directors place on record their appreciation of the contribution
made by the employees at all levels across the Company towards the
efficient working and operations of the Company. Last but not the
least, the Board of Directors wish to thank the investors and
shareholders for their unstinted support, co-operation and faith in the
Company.
On behalf of the Board,
Date : April 30, 2011 Dinesh B. Patel
Place : Ahmedabad Chairman
Mar 31, 2010
The Directors take pleasure in presenting the 79th annual report and
audited accounts for the financial year ended 31 March 2010.
Financial results
Your Companys financial performance for 2009-10 is given below:
(Rs, in crore)
2009-10 2008-09
Gross turnover 2,103.56 1,982.04
Gross profit 425.51 404.06
Less: Depreciation 84.03 62.40
Profit before tax 341.48 341.66
Less: Provision for taxation
- Current tax 58.05 41.32
MAT Credit Entitlement (18.54) -
Deferred tax 21.46 31.24 Profit/(loss)
after tax before prior
period items 280.51 269.10
Add/(Less): Short provisions for
taxation of earlier years (6.81) (2.39)
Profit after tax 273.70 266.71
Balance of profit of previous year 674.17 456.16
Profit available for appropriation 947.87 722.87
Appropriations
General reserve 30.00 30.00
Debenture redemption reserv 10.22 1.17
Proposed dividend on equity shares 16.38 15.02
Tax on dividend 2.67 2.51
Balance carried to Balance Sheet 888.60 674.17
Total 947.87 722.87
Review of numbers
Your Directors are pleased to report that your Company reported
positive growth in 2009-10, reflected in the financial statements.
- Gross turnover grew 6.13% at Rs, 2,103.56 crore in 2009-10 as against
Rs, 1,982.04 crore in 2008-09
- EBIDTA stood at Rs, 476.83 crore in 2009-10 as against Rs, 468.03
crore in 2008-09
- Profit after tax rise to Rs, 273.70 crore in 2009-10 as against Rs,
266.71 crore
- Cash plough back in the business grew 5.31% from Rs, 404.06 crore in
2008-09 to Rs, 425.51 crore in 2009-10
- Earning per share stood at Rs, 20.20 (basic) and Rs, 20.20 (diluted)
in 2009-10
What is of greater significance is that the year under review
vindicated the robust and flexible business model which facilitated
achieving these numbers despite a key business vertical of 2008-09
namely Basic Telecom (BT) shelters generating marginal income in 2009-10.
Your Company sustained its growth momentum during the year and
continued to aggressively pursue inorganic and organic opportunities to
strengthen its competitive position and enhance stakeholder value.
Dividend
Your Company practices a policy of maintaining a prudent balance
between the need to reward shareholders for their faith in the
management and its own investment need to capitalise on emerging business
opportunities through a larger proportion of internal accruals which
would further strengthen shareholder value.
The benefit of this policy is reflected in a 77-year uninterrupted
dividend payout and an enterprise value which registered a 25% CAGR
over the last decade (leading to 2009-10).
In keeping with its conventional policy, your Directors are pleased to
recommend a dividend of Rs, 1.20 per equity share (Rs, 1.10 per share
in 2008-09) on a face value of Rs 2 each on 13,64,95,433 equity shares
and any further shares that may be allotted by the Company, following
the conversion of bonds prior to September 14, 2010. This dividend will
be subject to the approval of shareholders, financial institutions and
banks at the forthcoming Annual General Meeting.
2006-07 2007-08 2008-09 2009-10
Dividend as
percentage of
net profit (%) 8.23% 6.31% 5.63% 5.98%
Dividend per share
Rs, per share) 0.96 1.00 1.10 1.20
Business review and divisional performance A detailed discussion of
your Companys operations is given elsewhere in this annual report
under ÃManagement discussion and analysis report.
1) Plastics division
The plastics division strengthened its position as the Companys key
growth engine:
- Registered a 10% growth from Rs, 1,515.32 crore in 2008-09 to Rs
1,666.93 crore in 2009-10
- Accounted for 82.91% of your Companys revenue in 2009-10 against
80.46% in 2008-09
- Contributed 119.70% to the Companys 6.13% topline growth which
nullified the marginal decline in the textiles division
This division grew despite marginal contribution from last years
key business driver, the BT shelters business, owing to the massive
growth in earnings from the monolithic construction business. Other
contributors include building products and custom moulded products.
Your Company introduced a number of novel products and solutions which
strengthened the ÃSintex brand recall and grew market share in key
business verticals.
Monolithic construction: It was another year of excellent results for
your Companys affordable housing programme which strengthened its
position as the leader in mass housing for EWS/LIG segment, vindicating
the managements initiative of pioneering this technology in the Indian
environment. Your Companys ability to deliver superior-quality and
low-cost mass housing solutions is reflected in the following business
realities:
- Delivered significant number of dwelling units in 2009-10
- A sizeable unexecuted order book which represents revenue visibility
over the current year
The Central Governments initiative to provide homes to every family
below the poverty line is expected to boost the Companys growth plans.
Moreover, your Company has taken definite steps to establish itself as
a real estate developer to offer low-cost housing solutions under its
own brand name.
Prefabricated structures: The prefabs business suffered a setback in
2009-10. This was largely owing to slackened demand from the telecom
sector.
As telecom majors halted their roll out plans, the demand for BT
shelters remained absent. Your Company expects this scenario to
continue over the short term. What was heartening was that your
Companys established position as a total solution provider for telecom
service providers yielded impressive returns. This opportunity is
expected to grow over the coming years. Your Company increased its
focus on pre fabricated structures for education and health sectors
where large capital for infrastructure creation is earmarked.
In 2008-09, your Company also introduced a new line to manufacture
sandwich panels, which are expected to emerge as a revolutionary
product group that will help the Company redefine construction. Cold
storages built with sandwich panels are gaining success and are
expected to emerge as a robust growth engine over the short term. In
2009-10, your Company undertook a campaign to promote sandwich panels,
a relatively lesser known product.
Your Company expanded its range of doors and windows where PVC/UPVC
windows witnessed increasing acceptance owing to their various
advantages like energy efficiency and sound proof over traditional
windows. The doors and windows division, coupled with plastic sections,
is expected to deliver impressive growth in the future.
Besides, your Companys products gained international
acceptance owing to superior functional attributes.
Custom moulding: It was a very interesting year for your Company in
this segment with numerous successful product developments for diverse
sectors catering to both global and domestic customers. Some products
were under advanced stages of approval, for others, your Company
received orders which are expected to yield significant results.
Your Company actively pursued the OEM business, securing approval from
companies like John Deere, M&M, Cummins and Kirloskar Engines, among
others, for specialised and customised products.
Additionally, your Company built upon its excellent business
relationship with the electrical sector to grow its revenue from the
energy sector. Your Company is focusing on the distribution and
feeder-pillar boxes to capitalise on the opportunity emerging from the
modernisation of the T&D segment of the energy value chain. Your
Company is now moving towards a total solution provider by integrating
various equipments with its boxes to be one-point source for utility
companies. Your Company was rated the best contractor for its turnkey
projects in Rajasthan, an event that could create new business
opportunities in this geography.
In the FRP tanks segment, your Company increased its business
visibility with approvals from HPCL, Essar and IOC for its underground
tanks.
Liquid management solutions: Water tanks, the Companys flagship brand,
maintained its growth and expanded its presence across geographies with
greater reach in rural and semi-urban markets. Water tanks, maintained
a dominant position and a range of panel type tanks for larger
capacities was added to your Companys product basket.
In anticipation of huge opportunities for decentralised waste water
systems, the Company increased focus on septic tanks, collaborating
with Aqua Nishihara Corporation Ltd, Thailand and Japan to develop
Decentralised Wastewater Treatment Systems (DEWATS). The great utility
of the packaged sewage treatment plants was reflected in several
successfully installations across the country. Your Company expects to
replicate this success across wider regions in India over coming years.
The Companys other innovative solutions -- rain water harvesting
system for drinking water and grey water recycling systems -- received
good responses.
Material handling solution: The Company offered a total material
handling solution to industries and institutions by adding racking
systems and equipment to its range, registering a positive growth.
Green initiatives and prospects: Your Company initiated green
orientation around built-up structures. It created awareness
regarding sustainable development and green building products and
technology in association with CEPT University, Ahmedabad. Under Sintex
Chair, CEPT signed an MoU with the Indian Green Building Council for
evaluation, approval and recommendation of various materials and
technologies that form a part of green buildings in India.
With the integration of certain Ãgreen elements, your Company offers
various technologies for affordable green housing solutions like
decentralised wastewater treatment systems, grey water recycling
systems, solar water heating systems, biogas plants, composting bins
and rain harvesting structures.
2) Textiles division
Following the global meltdowns effect on advanced economies,
consumption expenditure, especially fashion textile off take, was
significantly curtailed, impacting the textile business in 2009-10;
turnover stood at Rs, 343.63 crore in 2009- 10 against Rs, 368.09 crore
in 2008-09 while exports stood at Rs, 27.07 crore against Rs, 21.07
crore in 2008-09. In line with global realities, your Company
intelligently focused on the domestic market, especially on semi-urban
and rural markets which sustained product offtake. Further, your
Company expanded its product basket for womens wear and added a number
of global and domestic customers to its largely branded-clientele.
Your Company continued to add new equipments replacing conventional
machinery with technology-intensive, high-speed, contemporary variants,
which is expected to drive business volumes in the coming years.
Subsidiaries
During the year under review,
- Zeppelin Mobile System India Ltd, a subsidiary, became a wholly-owned
subsidiary as the Company acquired the balance 26% stake.
- Sintex Infra Projects Ltd, a wholly owned subsidiary, was
incorporated in November,2009
- Esveegee Steel (Gujarat) Pvt. Ltd (now known as Sintex Oil and Gas
Private Limited)- 100% equity stake was purchased in September,2009
Subsidiaries - performance
1) Zeppelin Mobile Systems India Ltd.
In 2009-10, the Companys revenue grew 20.77% to Rs, 133.84 crore as
compared with Rs, 110.82 crore in 2008-09, driven primarily by telecom
TSP contracts and also by the newly established telecom training
centre, EPC business and the strategic initiative of shifting and
expanding from telecom infrastructure to infrastructure space.
During the year under review, raw material expenses skyrocketed owing
to the telecom sector dominating the sales mix. Higher salary and wage
cost owing to induction of more
skilled labour increased human asset investment. In the future, higher
value project execution is expected to reduce labour cost impact on
turnover. The uncertainty on 3G auction, BSNL mega infrastructure
tender, site sharing by new operators and the technology shift to
outdoor BTS impacted new cell site demand and the margins.
During financial year 2009-10, Zeppelin devised and implemented a
strategic path to gradually diversify and become an infrastructure
entity with interest in EPC contracts and government businesses.
2) Bright AutoPlast Pvt. Ltd
With six manufacturing units across five locations, Bright AutoPlast
reported a Rs, 191.13 crore revenue with improved profit margin during
the period under review. The commissioning of its second facility at
Chennai in March 2009 added significantly to the Companys growth and
profitability. Moreover, product approvals for new applications of
existing customers and a wider customer base helped improve the
Companys profits. The Companys Pune unit is certified with TS-16949
certificate that provides for continual improvement, emphasising defect
prevention and reduction of variation and waste in the supply chain.
3) Wausaukee Composites Inc. (WCI)
Wausaukee Composites Inc., despite the global crisis, reported topline
of US$ 30.84 mn in 2009-10. The Company caters to New Flyer Bus
Company, the largest North American bus manufacturer for a programme
worth around US$1.20 mn annually. The Company also gained from the
launch of the Harley-Davidson and Tri-Glide Motorcycle Body Programme.
With a long-term view of wind energy development, especially in North
America, the production of wind turbine nacelles and blade hub covers
for Acciona Wind Energy and Clipper Wind was on an upward trend. The
Company was awarded the Siemens Transportation Systems as well as Salt
Lake City Interior Components Programme of Mass Transit segment.
4) Nief Plastics SA
During 2009-10, despite an unprecedented crisis in Europe and negative
GDP for the Europe area, Nief Plastics grew business revenue and
preserved various profitability ratios. The main reason for this
positive performance and profitability ratios were Niefs business
diversity and associated technological and marketing expertise. Nief
Plastics manufactures a wide variety of plastic products with
applications in the automotive, electrical and electronics, aeronautics
and defence, household appliances and building industries. Nief
Plastics also acquired two more companies named SICMO and SIMOP,
specialised in studying, making and testing metallic moulds for plastic
injection or light metal alloy. The Company strengthened its position
in Europe through these acquisitions and a wider client base. The
Company aims at group development through
external growth, as the economic situation favours consolidation of the
plastic sector in Europe.
5) Sintex Infra Projects Ltd
A wholly-owned subsidiary was incorporated in November 2009 to cater
exclusively to the infrastructure sector. The Indian economy is
targeting a double digit GDP growth rate in 2011-12. Increase in demand
for goods and services, fresh capital investment by private sector in
industrial and service sectors, buoyant capital market and heavy thrust
by government on infrastructure development is likely to boost and
consolidate economic growth over next few years. In this economic
environment, the construction industry continues to grow at a scorching
pace. Given the positive economic climate and sound fundamentals, the
industry is poised for a big leap. To achieve these paramount benefits
of the business, your Company thinks its the ideal time to get into
this industry.
Sintex Infra Projects secured contracts worth Rs, 174.50 crore from
Northern States for work relating to survey, investigate, design,
supply, lay, commission RCC/PSC/HDPE/GRP pipes in trunk/ lateral branch
sewers and its allied works such as construction of manhole chambers,
among others.
6) Esveegee Steel (Gujarat) Pvt. Ltd
The subsidiary was added through the acquisition of 100% equity stake
and subsequently, the name was changed to Sintex Oil & Gas Pvt. Ltd.
Under the New Exploration Licensing Policy (NELP) for exploration of
oil and natural gas, Sintex Oil and Gas submitted bids for six inland
type S-Block under the NELP-VIII offer. It emerged successful for three
blocks - CB-ONN-2009/1, CB-ONN-2009/2 and CB-ONN-2009/7. As per the
NELP guidelines, the Company will sign a production sharing contract
with the Indian Government to explore, develop and produce petroleum
resources in these blocks.
Re Set of Conversion price - FCCB
Pursuant to the terms and conditions of the Bonds, the conversion price
has been reset on March 12, 2010 from Rs, 580 per Equity Shares to Rs,
493 per equity share.
Due to conversion price reset, on full conversion of FCCBs, the Company
has to issue 1,84,97,464 equity shares of Rs, 2 each instead of
1,57,22,844 equity shares of Rs, 2 each as per original conversion
price.
Employee stock option scheme
The shareholders of the Company had approved of its employee stock
option plan (Sintex Industries Limited Employees Stock Option Scheme
2006) in February 2006. This ESOPS is administered by the Sintex
Employee Welfare Trust on the basis of recommendations of the
Compensation Committee of the Board. In terms of the plan, the Company
periodically granted stock options to eligible employees. The Company
will conform to the
accounting policies specified in the guidelines as amended
periodically. The details of the scheme are set out in Annexure 1 of
this report.
Changes in equity share capital In 2009-10, there was no change in
the share capital of the Company.
Directors
In accordance with the requirements of the Companies Act, 1956 and the
Articles of Association of the Company, Shri Ashwinbhai Lalbhai Shah,
Dr. Lavkumar Kantilal and Shri, S.B. Dangayach retire by rotation, but
being eligible offer themselves for re- appointment.
Your Directors reappoint, subject to the approval of members at the
meeting, Shri S. B. Dangayach as Managing Director for a period of 5
years from June 7, 2010.
For the kind perusal of the shareholders, a brief resume of each of
them, the nature of their expertise and the name of the companies in
which they hold directorships and the details of membership of the
committees of the Board are enclosed. Your Directors recommend their
reappointment.
Fixed deposits
Your Company did not float any deposit scheme.
Listing of shares and securities
The names and addresses of the stock exchanges where the
Companys securities are listed are given below:
The National Stock Exchange of India Ltd, Exchange Plaza, Plot No.
C-1, G Block, IFB Centre, Bandra Kurla Complex, Bandra (East), Mumbai
400051
- Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal
Street, Mumbai 400001
- Ahmedabad Stock Exchange Ltd, Kamdhenu Complex, Panjrapole, Ahmedabad
380015
- Singapore Exchange Securities Trading Limited, 2 Shenton Way, # 19 Ã
00 SGX Centre 1, Singapore 068804 (FCCBS USD 225 million)
- Bombay Stock Exchange Limited (Wholesale Debt Market), Phiroze
Jeejeebhoy Towers, Dalal Street, Mumbai 400001 (NCD Rs, 250 crores)
The Company paid listing fees to all the above stock exchanges for
2010-11.
Corporate Governance report
Your Directors adhered to the requirements set by the Securities and
Exchange Board of Indias Corporate Governance practices and
implemented all the stipulations prescribed.
A separate Corporate Governance report is furnished as a part of
Directors report and the Certificate from the Companys Auditors
regarding compliance with the conditions of Corporate Governance is
annexed to it.
Your Company is complying with the provisions related to Corporate
Governance as per clause 49 of the Listing Agreement. Your Company is
also in the process of implementing the Corporate Governance Voluntary
Guidelines, 2009 issued by the Ministry of Corporate Affairs,
Government of India on December, 2009
Directors responsibility statement
To the best of their knowledge and belief and based on the
information obtained by them, your Directors make the following
statement in terms of Section 217 (2AA) of the Companies Act,
1956:
1. That in the preparation of the annual accounts for the year ending
March 31, 2010, the applicable accounting standards have been followed
and there have been no material departures.
2. That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for that period.
3. That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting frauds and other
irregularities.
4. That the annual accounts for the year ending March 31, 2010 have
been prepared on a going concern basis.
Consolidated financial statements
The Company made an application u/s. 212(8) of the Companies Act, 1956
to the Central Government seeking exemption from attaching an annual
accounts of subsidiaries and expects to receive the same.
The some key information has been disclosed in a brief abstract forming
part of this Annual Report. Accordingly, the report contains the
consolidated audited financial statements prepared as per Clause 41 of
the Listing Agreement entered into with the stock exchanges and
prepared in accordance with the accounting standards prescribed by the
ICAI.
Further, the annual accounts of the subsidiary companies and the
related detailed information will be made available to any member of
the Company/its subsidiaries at any point of time. The annual accounts
of the subsidiary companies will also be kept for inspection by any
member of the Company/its subsidiaries at the Registered Office of the
Company and that of the respective subsidiary companies.
Conservation of energy, technology absorption A statement containing
the necessary information required under the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988 is annexed
to this report as Annex 2.
Particulars of employees
The information required under section 217(2A) of the Companies Act,
1956, read with Companies (Particular of Employees) Rules, 1975, forms
part of this report as Annex 3. However, as permitted by section
219(I)(b ) (iv) of the Companies Act, 1956, this Annual Report is being
sent to all shareholders excluding the said Annexure. Any shareholder
interested in obtaining the particulars may obtain it by writing to the
Company Secretary at the Registered Office of the Company.
Insurance
All the insurable interests of the Company, including plant and
machinery, stocks, loss of profits, standing charges and insurable
interest are adequately insured.
Auditors
M/s. Deloitte Haskins & Sells, statutory auditors of the Company,
retire and being eligible, have indicated their willingness to be re-
appointed. The observations made in the Auditors Report are self-
explanatory and do not call for any further comments under Section 217
of the Companies Act, 1956.
Cost accounting records
As required under the order made by the Central Government, the Company
is maintaining necessary cost accounting records with respect to cotton
textiles.
Acknowledgements
Your Directors express their gratitude for the cooperation and support
received from vendors, customers, banks, financial institutions,
shareholders and society at large. Your Directors also take, on record,
their appreciation for the contribution and hard work of employees
across all levels. Without their commitment, inspiration and hard work,
your Companys consistent growth would not have been possible.
On behalf of the Board,
Date : April 30, 2010 Dinesh B. Patel
Place : Ahmedabad Chairman
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