Sintex financial

1

S .V. INSTITUTE OF MANAGEMENT

PREFACE

As a part of the course curriculum, the first year M.B.A. students are required to

prepare a financial project report. The objective behind preparing this project report is

to relate the management subjects taught in the classroom to their practical

application.

The preparation of this project report is based on financial analysis of annual reports

of 5 consecutive years for a public limited company using Ratio Analysis, Common

Size Statements and other financial tools.

The scope of the project report is limited to the study of the financial position of the

company on the basis of the published data available.

Our work in this project is, therefore, a humble attempt toward this end.

In spite of our best efforts there may be errors of omissions and commissions, which

may please be excused.

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ACKNOWLEDGEMENT

Through this Acknowledgement we express our sincere gratitude towards all those

people who have helped us in the preparation of the project, which has been a learning

experience.

We would like to thank the Director, Prof. Bhavin Pandya, the faculty, the computer

lab instructor and the librarian of S. V. Institute of Management for their support.

Finally, we express our sincere to Prof. Nikunj Patel and Prof. Kalpesh Prajapati who

guided us throughout the project and gave us valuable suggestions and

encouragement.

“A success is sustained by the hands of more than one person directly or indirectly.”

We are grateful to our parent‟s & friends for their love and moral support.

At last but not the least, we are grateful to the almightily God, who has created this

beautiful World.

Purvi Rathi

Anushree Karani (MBA - 1)

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EXECUTIVE SUMMARY

Executive Summery is an important part of the project in which have we included all

the information of my project in a short manner. My project is on the titled financial

analysis of SINTEX INDUSTRIES LTD.

About Company

Sintex Industries Limited was earlier known as The Bharat Vijay Mills Ltd. It is an

Indian-based Company which operates in two business divisions – textiles and

plastics. In the area of textiles, they had been pioneers in high value fabrics. Its

Plastics Division started in the year 1975 and today they have most diversified

manufacturing capabilities in plastic processing in the world, with 10 plants spread

across the country, more than twelve manufacturing processes under one roof, having

more than 500,000 Sq. meter area and a more than 1000 strong work force.

The plastic division has a huge range of products with numerous applications. The

products manufactured by the Company in plastic segment include prefabs,

monoliths, storage tanks, containers, doors, windows and many more. In the textiles

segment the Company manufactures men‟s structured shirting fabrics, yarn-dyed

corduroy and cotton yarn-based corduroy, and fabric for ladies wear also.

About Analysis

Objectives

To find out various critical aspects of the financial statements.

To analyze and interpret the financial strength of the company.

To know about trends of profit, sales expenditure, net worth, fixed assets and various

other trends of the profit & loss and balance sheet statements.

And the last and foremost thing is to fulfil the requirement of the course.

Analysis:-

We have calculated various ratios such as liquidity ratios, profitability ratios, solvency

ratios, turnover ratios to find out the financial performance and soundness of the

company.

We have also compared the balance sheet and profit & loss account of the company

for last 5 years.

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CONTENT

Chapter

No. Particulars

Page

No.

Preface 1

Acknowledgment 2

Executive summary 3

1 Chapter – 1

Brief overview of the industry 6

Introduction Of The Company 7

History Of The Company 7

Founder & Leaders 9

Objectives, vision & mission 10

Organizational Design 11

Production 15

Marketing 21

Personnel 26

2 Chapter – 2

Comparative Balance Sheet And Analysis Of Balance

Sheet 29

3 Chapter – 3

Comparative Profit & Loss Account And Analysis Of

Profit & Loss Account 32

4 Chapter – 4

Common Size Statements and its Analysis 35

5 Chapter – 5

Trend Analysis (Index Analysis) 41

6 Chapter – 6

Analysis of Cash flow Statement 46

7 Chapter – 7

Ratio Analysis 49

8 Chapter – 8

Finding and Suggestions 78

9 Chapter – 9

Other Topics 80

Annexure 90

Biblliography 95

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CHAPTER 1:

INTRODUCTION

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A.BRIEF OVERVIEW OF THE INDUSTRY:

Plastics, is one of the fastest growing industries in India. Plastics have a vital role to

play. Indian Plastics Industry is expanding at a phenomenal pace. The plastic

industry of India has a big market potentiality and is gradually prospering. This

potentiality of the market will surely actuate the entrepreneurs to invest in this

industry. Entrepreneurs are trying to provide high quality plastic products, so that it

becomes a booming industry.

Many companies from various sectors such as automobiles, electronics,

telecommunications, food processing, packing, healthcare etc. have set-up large

manufacturing bases in India. Therefore, demand for plastics is rapidly increasing and

soon India will emerge as one of the fastest growing markets in the world.

SOME ASSOCIATED INDUSTRIES:

The potentiality of plastic industry India propels other associated industries to grow

side by side. One of such growing industry is petrochemical industry. Both these

industries are reciprocal to each other. The petrochemical industry facilitates the

plastic industry to produce plastic products that will meet the domestic demand as

well as that of the overseas market.

FINISHED PRODUCTS OF PLASTIC INDUSTRY INDIA:

The plastic processing industry consist of over 30,000 units which are producing a

wide range of plastic products through the process of injection moulding, then blow

moulding, extrusion, and finally calendaring.

End user markets: These are the plastic products basically used for domestic

purposes. Some of the end user plastic products are plastic balls, plastic bags,

polypropylene bags, polyethylene bags, plastic barrels, plastic caps, plastic bottles,

plastic baskets, plastic basins, plastic basins, plastic bowls.

Appliances: These are basically the plastic mechanical components like plastic

bearings, plastic bellows, plastic belting etc. Some other industries, where plastic

materials are used are automotive, building & construction, electrical and electronics,

industrial, medical, .packaging, transportation etc.

STRATEGIES OF PLASTIC INDUSTRY INDIA:

The government of India is trying to set up the economic reforms to elevate and boost

the plastic industry by joint venturing, foreign investments.

PROSPECT OF PLASTIC INDUSTRY INDIA:

Plastic industry India is symbolizing a promising industry and at the same time

creating new employment opportunities for the people of India. The per capita

consumption of plastic products in India is growing and is moving towards 8% GDP

growth.

http://www.economywatch.com/world-industries/plastic/india.html

http://www.economywatch.com/world-industries/plastic/india.html

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B. HISTORY OF THE COMPANY:

Sintex Industries Limited was earlier known as The Bharat Vijay Mills Ltd. It is an

Indian-based Company which operates in two business divisions – textiles and

plastics. In the area of textiles, they had been pioneers in high value fabrics. Its

Plastics Division started in the year 1975 and today they have most diversified

manufacturing capabilities in plastic processing in the world, with 10 plants spread

across the country, more than twelve manufacturing processes under one roof, having

more than 500,000 Sq. meter area and a more than 1000 strong work force.

The plastic division has a huge range of products with numerous applications. The

products manufactured by the Company in plastic segment include prefabs,

monoliths, storage tanks, containers, doors, windows and many more. In the textiles

segment the Company manufactures men‟s structured shirting fabrics, yarn-dyed

corduroy and cotton yarn-based corduroy, and fabric for ladies wear also.

They have also created extensive finishing, assembling, metal fabrication and

concrete products facilities. Combination of such varied capabilities along with their

state-of-the-art design and tool room facilities enables them to give vast array of

products and solutions.

Established in India in 1931, Sintex has a proven track record of pioneering

innovative concepts in plastics and textile sectors in India and an uninterrupted 77

years of dividend payment to its shareholders. They strive to develop products that no

one else had made before.

Pioneers in the development of innovation in building products, custom moulding and

textiles, the Sintex group creates best in class products that deliver better utility and

value to its customers.

It is Sintex‟s quest to deliver quality products at affordable prices. Recently, they have

even expanded their global footprints by acquisitions to offer total solutions to their

customers.

Their application driven Research & Development team is constantly on the look-out to

come up with products that can be made by integrating different materials with Custom

Moulded solutions.

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HISTORY OF SINTEX INDUSTRY LIMITED:

1931-74

• Incorporated as The Bharat Vijay Mills Limited in June 1931

• Established composite textile mill in Kalol, Gujarat

1975-90 • Commenced manufacturing of plastic moulded polyethylene liquid storage tanks

including water tanks.

• Introduced new plastic products like doors, window frames and pallets

• Plastic Sections for Conversion into Partitions, False Ceilings, Wall panelling,

Cabins, Cabinets, Furniture etc.

1995 • Renamed to Sintex Industries Limited

• Commenced manufacturing of SMC moulded products, pultruded products, resin

transfer moulded products and injection moulded products

• Modernization and expansion of the textile unit

• Commenced structured yarn dyed business

2000-Till date

• Alliance with European design houses and a UK based textile marketing company

• Commenced production of pre-fabricated structures for classrooms, booths

kiosks and office rooms

• Acquisition of 74% stake in Indian subsidiary of Zeppelin Mobile systems

Ltd.,Germany

• Entered the housing sector with monolithic construction

• First international acquisition by acquiring 81% stake in Wausaukee Composites

Inc.,USA.

• Acquired 100% stake in Nief Plastic SA, a French company

• Acquired automotive business division of Bright Brothers Limited

• Wausaukee acquired 100% stake of its competitor, Nero Plastics Inc., USA

• Zeppelin acquired Digvijay Communications and Network Pvt. Ltd., Indore and

became the total solution provider for telecom sector

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C. INTRODUCTION TO THE FOUNDING MEMBERS:

Sintex Industry Ltd. which was earlier known as Bharat Vijay Mills was established

in 1931. Its plastic division was established in 1975. The chairman of the industry is

Mr Dinesh P Patel who started the industry. The vice chairman of the industry is Mr

Arun P Patel. They are the owners of the industry.

Sintex has a proven track record of pioneering innovative concepts in plastics and

textile sectors in India. They are the oldest in manufacturing plastic products and are

also the pioneer of the industry, so they have the brand image and Sintex is their

brand name.

About Mr. Dinesh Patel:

He is the Chairman of Sintex Industry Limited.

He has done his B.Sc from Bombay University.

He has more than 5 decades of work experience.

About Mr. Arun Patel:

He is the Vice-Chairman of Sintex Industry Limited.

He has also done his B.Sc from Bombay University.

He has more than 5 decades of work experience.

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D. PHILOSOPHY/MOTTO/OBJECTIVES OF THE COMPANY:

Objectives are goals or aims which the management wishes the organisation to

achieve. Any industry first has to decide objectives. Objectives are helpful to achieve

target and with the help of them company can decide right direction.

There are two types of objectives i.e. primary objective and secondary objective. It is

generally believed that business activity is carried out only for profit. To a certain

extent it has been found that successful business cannot afford to keep profit as its

sole objective. So they have other objectives which are secondary objective which are

equally important.

OBJECTIVE OF SINTEX INDUSTRIES LIMITED:

Sintex Industries Limited is a multi-faceted activity industry. They are doing flexible

thinking and actively thinking.

They constantly want to reach out for new height of excellence.

Their aim is to expand the business by establishing a presence in global markets while

at the same time consolidating in the Indian market too.

They are happily accepting every challenge that comes in their ways.

They are constantly involved in achieving consumer satisfaction through total quality

excellence and by providing competitive value to their customers.

MOTTO OF SINTEX INDUSTRIES LIMITED:

“The Way We Are Of Sintex; By Sintex, From Sintex”

“Active Thinking”

VISION OF SINTEX INDUSTRIES LIMITED:

“To achieve global presence in textile business through continuous product and

technical innovation, customer orientation and a focus on cost effectiveness,

quality and services”.

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ORGANISATIONAL

DESIGN

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I.) TOP MANAGEMENT:

The top level management is known as the upper level of organisation. Top managers

are responsible for making organisation-wide decisions and establishing the plans and

goals for the organisation. Top management consists of Chief Executive Officer,

Board of Directors, President, Executive Vice President, Managing Director, Chair

person, Chief Operating Officer.

Top Management Of Sintex Industries Limited is.....

Chairman : Dinesh Patel

B.sc from Bombay University

More than 5 decades of work experience

Vice-chairman : Arun P Patel

B.sc from Bombay University

More than 5 decades of work experience

Managing directors : Rahul A Patel

Bachelors degree in Communications

MBA from USA

More than 24 years experience in textile and plastic

Amit D Patel Bachelors degree in Commerce

MT from USA

18 years of experience in textile, chemical and plastic

S B Dangayach B.Sc (Hons)

P.G.D.B.A. from IIM, Ahmedabad

3 decades of experience in plastics

Sintex Group Of Companies Is Managed By Independent Professionals Are:

President CEO : David Lisle

Gilles Nief

Indru G Advani

CEO : Sandeep Harsh

Neelesh Jain

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II.) HIERARCHY:

III.) ORGANISATIONAL STRUCTURE AND CHART:

Lower level

Middle level

Higher level Dinesh Patel (Chairman)

Arun Patej (Vice-Chairman)

SBU 1- Mr. Sanjiv Roy

Building related products and industries and

electric related

S B Dangayach (Managing Director)

SBU 2- Mr. S Venktachalam

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IV.) DEPARTMENTALIZATION AND ITS BASIS:

PRODUCT DEPARTMENTALISATION:

In Sintex Industry Ltd. there is departmentalisation on the basis of product as they

have a huge range of products. They are manufacturing more than 50 types of

products.

CUSTOMER DEPARTMENTALIZATION:

Sintex has customer departmentalization as it manufactures the products according to

the customers need because main aim of the industry is to provide quality products at

affordable prices.

GEOGRAPHICAL DEPARTMENTALIZATION: The plant of Sintex is located in Kalol near Gandhinagar in Gujarat. As Kalol is a

village and it is not highly developed so it is beneficial for the industry.

PROCESS DEPARTMENTALIZATION:

Sintex Industry Ltd. also has departmentalization on the basis of process into various

departments like..... Production unit

Packaging department

Quality control unit

Personnel department

In addition to this Sintex Industry Ltd. also has departmentalisation on the basis of

time, in which working hours for workers are fixed for specific period. In Sintex they

have two shifts for workers i.e. morning- 7 a.m. to 4 p.m. and evening- 4 p.m. to 11

p.m.

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PRODUCTION

16


I.) PLANT LOCATION:

The plant of Sintex Industry Ltd. is located in Kalol (N.Gujarat) near Gandhinagar.

The address of the plant location is as under.

ADDRESS:

SINTEX INDUSTRIES LIMITED

Plastic Division

NEAR SEVEN GARNALA

KALOL (N. GUJARAT) 382 721. INDIA

Phone: 253500, Fax: (02764) 253800

Email: [email protected]

HEAD OFFICE OF SINTEX INDUSTRY LIMITED

BRANCHES OF SINTEX INDUSTRIES LIMITED

AHMEDABAD BANGALORE BHOPAL

CHANDIGARH CHENNAI JAIPUR

KOLKATA LUCKNOW MUMBAI

NEW DELHI PUNE RANCHI

SECUNDERABAD TRIVANDRUM

mailto:[email protected]

http://sintex-plastics.com/Contact_Ah.htm

http://sintex-plastics.com/Contact_Ba.htm

http://sintex-plastics.com/Contact_Bh.htm

http://sintex-plastics.com/Contact_Chandi.htm

http://sintex-plastics.com/Contact_Chen.htm

http://sintex-plastics.com/Contact_Jai.htm

http://sintex-plastics.com/Contact_Kol.htm

http://sintex-plastics.com/Contact_Luc.htm

http://sintex-plastics.com/Contact_Mum.htm

http://sintex-plastics.com/Contact_Del.htm

http://sintex-plastics.com/Contact_Pun.htm

http://sintex-plastics.com/Contact_Ran.htm

http://sintex-plastics.com/Contact_Hyd.htm

http://sintex-plastics.com/Contact_Tri.htm

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FACTORS AFFECTING PLANT LOCATION:

There are so many factors affecting plant location. Factors are categorized into two

parts i.e. primary data and secondary data.

Primary Factors includes-

RAW-MATERIAL: The basic raw material used by Sintex Industry Ltd. is powder

which is in granule form. The major suppliers of raw material for Sintex are

Reliance, Haldia and IPCL.

MARKET: Sintex is located in Kalol near Gandhinagar which is a good place for

manufacturing products. Sintex is a national player so it has a network in internal as

well as global market.

TRANSPORT: As Sintex is located in Kalol, it has cheap transportation cost.

LABOUR: The location of Sintex is in Kalol which is not highly developed as it is a

village. So the unskilled labourers are easily available over there which is beneficial

for the industry as they are employed at very low wages.

There are Secondary Factors that may affect the industry which are.....

Land

Climate

Political and strategically considerations

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II.) PRODUCT PORTFOLIO:

Sintex leads in meaningful innovations and solutions. With their multifarious

capabilities in the field of plastics, metals, concrete etc. they have created many path

breaking products. They have an excellent design, engineering, marketing and

manufacturing set up to offer many standard and custom products and solutions for

satisfying needs anywhere in the world.

Sintex produces a wide range of products. It produces 50 types of plastic products.

The product portfolio of Sintex Industry Ltd. is as under.

Sintex product range comprises the following:

Product Category Products Name

Prefabs Industrial

1. Prefabs For Schools

2. BTS Shelters / Instrument Enclosures

3. Prefabs For Housing

4. Prefabs For Site Offices

5. Bunk Houses

6. Prefabs Toilets / Bathrooms

7. Compound Wall (Prefabricated, Relocatable)

Industrial Product

1. Pallet Containers (Returnable Reusable Containers)

2. FRP Underground Petroleum Storage Tanks

3. Chemical Tanks

4. Uno Pallets

5. Intermediate Bulk Containers (IBC)

6. Supertuff Crates

7. Processing Trolleys

8. Mixing Tanks

9. Pallets

10. Racking Systems

11. Insulated Boxes

12. Open Mouth Packaging Drums

Electrical Product

1. SMC Meter Boxes

2. SMC Distribution Pillar Boxes

3. SMC Distribution Boxes

4. SMC Distribution Boards (DBS)

5. SMC Pole Mounted Junction Boxes (Street Light

Boxes)

6. FRP Straight Cross Arms (REC Design)

7. FRP V type Cross Arms (REC Design)

8. FRP Cable Trays

9. SMC Trench Covers

10. SMC Danger Notice Plates

Consumer 1. Multi Bins

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PICTURES OF PRODUCTS MANUFACTURED BY SINTEX INDUSTRY

LIMITED:

BUILDING

AND

CONSTRUCTI

ON

PREFABRICATED

BUILDING

ELECTRICAL

ENGINEERING

INTERIO

RS

INDUSTRI

AL

CONSUM

ER

http://sintex-plastics.com/Building_Construction.htm

http://sintex-plastics.com/Electrical_Engineering.htm

http://sintex-plastics.com/Interior.htm

http://sintex-plastics.com/Industrial.htm

http://sintex-plastics.com/Consumer.htm

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CUSTOM

MOULDI

NG

PALLE

TS

OPEN MOUTH

PACKAGING

DRUMS

INSULATED

BOXES

SINTEX WATER

TANKS

CONTINOUS

SANDWICH PANEL

http://sintex-plastics.com/Custom_Mold.htm

http://sintex-plastics.com/Pallet.htm

http://sintex-plastics.com/Open_Mouth_Drum.htm

http://sintex-plastics.com/Insulated_Boxes.htm

http://sintex-plastics.com/Water_Tank.htm

http://sintex-plastics.com/Continuous_Sandwich_Panel.htm

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MARKETING

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4 P’s OF MARKETING.

Marketing is a completely separate function that helps position products and services

correctly so that sales can be made more effective. At the core of Marketing are the

“four P‟s” – Price, Product, Promotion, and Place. Marketers adjust each of these

components to arrive at a mix that the customer will prefer over competitors

Diagram showing 4 P‟s of management:

PRODUCT:

The product is the full bundle of goods and services offered to the customer. This

includes the appearance, functionality, and support or non-tangibles the customer will

receive.

The plastic segment of Sintex Industry Ltd. produces a wide range of plastic products

that are used in every field i.e. in household, electrical industry, construction,

consumer, etc. They produce more than 50 types of products. Some of the products

that Sintex produces are as under:

SMC Panel Tanks

Prefabs for Anganwadis

Wall paneling and false ceiling

Septic Tanks

Primary and integrated waste collection

FRP Underground Water Storage Tanks

Home and office furniture

The above mentioned is a list of some products manufactured by the Sintex Industry

and products are already shown in the portion of product portfolio.

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PRICE:

The price is the amount a customer pays for a product.

The price of the products manufactured by Sintex Industry Ltd. is fixed according to

market situation and the prices are fixed at a reasonable price so that everyone can

afford it to buy.

PLACE:

This is where and how your product is distributed and sold. Will you sell it yourself,

through a broker, or a distributor? If a service, do you deliver in person or through the

internet or telephone? These all questions involves “place”. Place means distribution

network of company.

As Sintex Industry Ltd. is a national player, so it has a wide distribution network.

Sintex has a strong presence in the European, American, African, and Asian markets

including countries like France, Germany and USA.

PROMOTION:

Promotions are activities such as advertising, personal selling, and sales promotion

which communicate the merits of the product and persuade target customers to buy it.

Sintex Industry Ltd. carries out promotional activities like campus recruitments,

seminars, conferences, advertisement on various websites or through some sources.

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II.) TARGET CUSTOMERS

Customer is the king of the market. Today customers are harder to please, they are

smarter, more price conscious, more demanding, etc. Company has to spend

considerable time and resources searching for new customers. For these company

creates ads and places them in media, sends direct mail, etc. Market is more

customers oriented. Market is operated according to customer‟s tastes and

preferences. Target customers are those customers who actually buy the products.

Engineered structural plastic products supplied to Global OEM‟s, etc.

Mainly Sintex deals with Government and Semi-government sectors, construction &

building companies, households, agriculture, etc. So they all are the target customers

of Sintex.

The major clients of Sintex Industry Ltd. are ABB, Siemens, Eicher, Reliance energy,

Reliance Infocomm, Larsen & Tourbo, UNICEF, WHO, CARE, Torrent Pharma,

Cipla, Ranbaxy, GE Motors.

Sintex‟s target customers are their competitors who are as under:

- Grasim

- Voltas

- Century

- Nava Bharat Ven

- Prakash Ind

- 3M India

- Bombay Dyeing

- Kesoram

- Orient Paper

III.) PLACE: DISTRIBUTION NETWORK:

A set of interdependent organisations involved in the process of making a product or

service available for consumption on consumer is known as Distribution Network.

Sintex Industry Ltd. has large distribution network in India and also outside India.

The main office of the company is located at Kalol in Gujarat. They also work with

Western and Southern part of the country. They have their presence in 9 countries

across 4 continents. Sintex has a strong presence in the European, American, African,

and Asian markets including countries like France, Germany and USA.

IV.) PRICE:

Price is the amount a customer pays for the product. The business increases or

decreases their prices if other stores having the same product.

Sintex is the pioneer for manufacturing of plastic products. They are producing high

quality products at affordable price so that the consumers are happy with the products.

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V.) PROMOTIONAL AND ADVERTISING CAMPAIGN:

Advertising and promotions is bringing a service to the attention of potential and

current customers. Advertising and promotions are best carried out by implementing

advertising and promotions plan. The goals of the plan should depend very much on

the overall goals and strategies of the organization.

Sintex is promoting cost savings, new products and new ideas. Sintex promotes

through various advertisements, news papers, various websites, campus recruitment,

etc.

VI.) COMPETITORS:

Competitors are the other business entities that compete for resources as well as

market. They offer substitute which attract our present customers. Competition may

be direct and indirect. Competition shapes business. A study of the competitive

scenario is essential for the marketer, particularly threats from competition.

Competitors of SINTEX INDUSTRY LIMITED are as follows:

- Grasim

- Voltas

- Century

- Nava Bharat Ven

- Prakash Ind

- 3M India

- Bombay Dyeing

- Kesoram

- Orient Paper

VII.) EXPORTS:

Sintex is an international player. They have their presence in 9 countries across 4

continents. Sintex has a strong presence in the European, American, African, and

Asian markets including countries like France, Germany and USA.

26


PERSONNEL

27


I.) STRENGTH OF PERSONNEL DEPARTMENT:

Personnel management is that phase of management, which deals with effective

control, use of man power or human resources. Labour is the main factor of

production.

Sintex has almost more than 2500 employees. It is very important to have strength of

employees for Sintex.

Following are some of the strengths of Sintex Industry Ltd.

They have internal audits.

Management is most important for the industry, so they also have management

meetings.

As they are the leading company, it is important for them to have contract procedures.

As they are selling high quality products, they also have product quality review.

II.) RECRUITMENT POLICY: Recruitment is the process of locating, identifying and attracting capable applicants to

an organisation.

As such Sintex has no specific recruitment policy, they generally have several sources

of recruitment policy, which are as under: Internet

Employee referrals

Company website

College recruiting

Professional recruiting organizations

III.) TRAINING & DEVELOPMENT:

The training is an act of increasing the knowledge and skill of a worker for doing a

certain job. A skill thus acquired by the employee through training is thus an asset to

the organisation and the employer.

Sintex has a training institute i.e. ITI in Kubernagar. Generally they give training to

the freshers and unskilled labourers so that the production process doesn‟t have any

breakdown.

IV.) REWARD SYSTEM:

Many organisations provide rewards to their employees for their precious work

contribution. The rewards may be in the form of incentives, gifts articles, and

appretiational items like award for best employee, etc. These rewards may be given to

employees at the end of the year in their annual meeting. By giving rewards to

employees they feel that they are an important part of organisation and thereby they

are motivated to work more efficiently.

Sintex also gives rewards to their employees so that they are motivated.

28


CHAPTER 2: COMPARATIVE BALANCE

SHEET AND ANALYSIS OF

BALANCE SHEET

29


COMPARATIVE BALANCE SHEET

PARTICALAR 2006 2007 2008 2009 2010

(RS IN CRORES)

SOURCES OF FUNDS: Share Capital 19.73 22.19 27.10 27.10 27.10

Share Warrants & Outstandings 5.41 0.00 50.53 12.00 22.27

Total Reserves 429.73 628.68 1434.02 1588.63 1832.75

Shareholder's Funds 454.87 650.87 1511.65 1627.73 1882.12

Secured Loans 359.53 506.00 636.15 791.99 1058.72

Unsecured Loans 223.13 172.26 900.78 1146.37 1115.65

Total Debts 582.66 678.26 1536.93 1938.36 2174.37

Total Liabilities 1037.53 1329.13 3048.58 3566.09 4056.49

APPLICATION OF FUNDS : Gross Block 674.96 881.85 1079.02 1575.11 1773.64

Less: Accumulated Depreciation 205.43 246.42 295.06 353.82 437.05

Net Block 469.53 635.43 783.96 1221.29 1336.59

Capital Work in Progress 19.02 38.79 242.68 197.38 136.75

Investments 156.83 206.54 429.77 637.89 807.94

Current Assets, Loans & Advances Inventories 86.28 145.54 162.93 181.15 168.70

Sundry Debtors 150.67 213.04 476.70 495.80 677.06

Cash and Bank 355.35 385.30 1325.87 1099.47 815.04

Other Current Assets 0.00 0.00 0.00 Loans and Advances 36.99 66.83 327.14 444.73 789.26

Total Current Assets 629.29 810.71 2292.64 2221.15 2450.06

Less: Current Liabilities and Provisions Current Liabilities 163.98 254.79 312.43 289.79 228.63

Provisions 15.73 37.30 289.74 291.31 294.07

Total Current Liabilities 179.71 292.09 602.17 581.10 522.70

Net Current Assets 449.59 518.62 1690.47 1640.05 1927.36

Miscellaneous Expenses not written off 4.52 2.12 1.15 0.17 Deferred Tax Assets / Liabilities -61.95 -72.37 -99.45 -130.69 -152.15

Total Assets 1037.53 1329.13 3048.58 3566.09 4056.49

Contingent Liabilities

26.65 304.10 317.82 247.31

Book Value 45.10 58.47 107.75 119.23 137.26

Adjusted Book Value 22.55 29.24 53.87 59.61 68.63

30


ANALYSIS

The share capital of the company has remained constant from 2007 to 2010. This

means that the company has not issued any equity shares after 2006.

Company‟s total reserves is showing increasing trend which is a good indicator of its

performance. Total reserves consist of retained earnings and net profit.

Total debts of the company shows an increasing trend which means that the interest

burden on the company has been increasing which is not a good sign. Total debt

consists of secured loans and unsecured loans. Till 2007 secured loans were than

unsecured loans but after 2007 unsecured loans were more than secured loans.

Company has been acquiring new assets every year which means that their production

capacity is increasing.

Companies investments are also showing an increasing trend which means that they

are investing their money in the market.

Inventories are showing increasing trend till 2009 but in 2010 it reduces by 7%.

Since the company‟s debtors are increasing year by year, it means that either the

company‟s collection mechanism is not sound or it allows high credit period o its

debtors.

Although company‟s debtors are increasing, its cash balance is also shoeing an

increasing trend which means that the company is earning profit from other sources as

well.

Current liabilities of the company are not consistent in last five years and there are lot

many fluctuations.

31


CHAPTER 3: COMPARATIVE PROFIT AND LOSS

ACCOUNT AND ANALYSIS OF

PROFIT AND LOSS ACCOUNT

32


COMPARATIVE PROFIT & LOSS ACCOUNT

PARTICULAR 2006 2007 2008 2009 2010

(RS IN CRORES)

INCOME : Gross Sales 913.98 1212.80 1790.29 1982.04 2103.56

Less: Sales Returns Less: Excise Duty 60.56 95.04 134.59 98.63 93.01

Net Sales 853.42 1117.76 1655.70 1883.41 2010.55

EXPENDITURE : Increase/Decrease in Stock 6.89 -37.47 -20.76 -20.91 14.01

Raw Material Consumed 510.54 695.40 1025.08 1159.22 1272.89

Power & Fuel Cost 34.47 46.63 58.79 70.80 59.86

Employee Cost 32.70 43.17 57.69 70.82 77.44

Other Manufacturing Expenses 58.70 75.56 94.15 93.75 104.17

General and Administration Expenses 41.88 55.60 71.78 72.63 68.43

Selling and Distribution Expenses 20.80 20.25 24.01 30.72 32.98

Miscellaneous Expenses 3.17 1.33 1.04 33.08 0.85

Less: Expenses Capitalised Total Expenditure 709.14 900.47 1311.78 1510.11 1630.63

Operating Profit (Excl OI) 144.29 217.29 343.92 373.30 379.92

Other Income 29.79 26.70 44.56 94.73 96.91

Operating Profit 174.08 243.99 388.48 468.03 476.83

Interest 29.09 40.99 56.25 63.97 51.32

PBDT 144.99 203.00 332.23 404.06 425.51

Depreciation 30.68 41.47 51.70 62.40 84.03

Profit Before Taxation & Exceptional Items 114.30 161.53 280.53 341.66 341.48

Profit Before Tax 114.30 161.53 280.53 341.66 341.48

Provision for Tax 22.29 30.95 64.20 74.95 67.78

Profit After Tax 92.02 130.58 216.33 266.71 273.70

Adjustments to PAT Profit Balance B/F 110.88 177.80 280.80 456.16 674.17

Appropriations 202.90 308.38 497.13 722.87 947.87

Equity Dividend % 44.00 48.00 50.00 55.00 60.00

Earnings Per Share 9.33 11.77 15.97 19.68 20.20

Adjusted EPS 4.66 5.88 7.98 9.84 10.10

33


ANALYSIS

Net sales of the company are increasing since last five years which is a very good

indicator for the company.

Power and fuel cost of the company is almost constant and does not show any major

fluctuations.

Employee cost is also increasing each year which increases company‟s total

manufacturing expenses.

Company‟s administrative expenses have shown increase of 63% from 2006 to 2010.

Company‟s selling and distribution expense have increased about 58% which are less

than the administrative expenses.

Company is able to control its miscellaneous expenses as it is showing decreasing

trend.

Company‟s interest income is also showing increasing trend.

As assets of the company are increasing it directly affect the depreciation and

depreciation of the company also increases year by year.

Company‟s equity dividend percentage from Rs 44% to 60% that is almost 150%.

Company‟s earnings per share is also increasing which means it leads to wealth

maximization of shareholders.

34


CHAPTER 4:

COMMON SIZE

STATEMENTS

35


COMMON SIZE STATEMENT OF BALANCE

SHEET

PARTICULARS 2006 2007 2008 2009 2010

(RS IN CRORES)



Total Reserves 41.42 47.30 47.04 44.55 45.18


Secured Loans 34.65 38.07 20.87 22.21 26.10

Unsecured Loans 21.51 12.96 29.55 32.15 27.50

Total Debts 56.16 51.03 50.41 54.36 53.60

Total Liabilities 100 100 100 100 100

APPLICATION OF FUNDS :

Gross Block 65.05 66.35 35.39 44.17 43.72


Less: Impairment of Assets 0.00 0.00 0.00 0.00 0.00

Net Block 45.25 47.81 25.72 34.25 32.95

Lease Adjustment A/c 0.00 0.00 0.00 0.00 0.00


0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00

Investments 15.12 15.54 14.10 17.89 19.92

Current Assets, Loans & Advances 0.00 0.00 0.00 0.00 0.00

Inventories 8.32 10.95 5.34 5.08 4.16

Sundry Debtors 14.52 16.03 15.64 13.90 16.69

Cash and Bank 34.25 28.99 43.49 30.83 20.09

Other Current Assets 0.00 0.00 0.00 0.00 0.00

Loans and Advances 3.57 5.03 10.73 12.47 19.46


Less: Current Liabilities and Provisions 0.00 0.00 0.00 0.00 0.00

Current Liabilities 15.80 19.17 10.25 8.13 5.64

Provisions 1.52 2.81 9.50 8.17 7.25



Miscellaneous Expenses not written off 0.44 0.16 0.04 0.00 0.00

Deferred Tax Assets / Liabilities -5.97 -5.44 -3.26 -3.66 -3.75

Total Assets 100 100 100 100 100

36


Application of Funds

37


ANALYSIS:-

Contribution of total current assets in the total assets is 42% in 2006, which slightly

decreased in 2007 which was 40%. It increased in 2008 up to 55% and again it

decreased in 2010 by 47%. Current assets includes debtors, inventories, cash etc.

Contribution of total current liabilities in the total liabilities is 12% in 2006, which

slightly increased in 2007 which was 14%. Then slightly changes were there.

Contribution of net block in the total assets is 11% in 2006 and 10% in 2007. It

significantly decreased in 2008 up to 19% and again it increased in 2009 by 26% and

25% in 2010. In last two years company has acquired assets and expand its production

capacity.

Contribution of investments in the total assets is 11% in 2006, and 10% in 2007 &

2008.then it increased in 2009 & 2010 by 13% & 15% respectively.

38


COMMON SIZE STATEMENT OF PROFIT AND

LOSS ACCOUNT

PARTICULARS 2006 2007 2008 2009 2010

(RS IN CRORES)

INCOME :

Gross Sales 104.63 105.24 108.13 108.50 107.10

Less: Inter divisional transfers 0.00 0.00 0.00 0.00 0.00

Less: Sales Returns 0.00 0.00 0.00 0.00 0.00

Less: Excise Duty 4.63 5.24 8.13 8.50 7.10

Net Sales 100.00 100 100 100 100

EXPENDITURE :

Increase/Decrease in Stock 0.70 -0.06 -1.25 -3.35 0.81


Power & Fuel Cost 2.98 0.20 3.55 4.17 4.04

Employee Cost 3.85 0.20 3.48 3.86 3.83





Less: Expenses Capitalised 0.00 0.00 0.00 0.00 0.00

Total Expenditure 81.10 4.20 79.23 80.56 83.09


Other Income 4.82 0.26 2.69 2.39 3.49


Interest 2.55 0.18 3.40 3.67 3.41

PBDT 21.16 1.12 20.07 18.16 16.99

Depreciation 4.18 0.17 3.12 3.71 3.60


Exceptional Income / Expenses 0.00 0.00 0.00 0.00 0.00



Profit After Tax 13.61 0.74 13.07 11.68 10.78

39


ANALYSIS OF COMMON SIZE STATEMENT

The contribution of gross sales to net sales was nearly same in all the year it was near

about 107 to 104% over 5 years and excise duty has increased 2006 to 2008 and for

last two years it has decreased which is good for the company.

Contribution of total expenditure to net sales is around 80% to 83% over 5 years.

Which simply means that company is able to generate profit by 20% to 17% in last 5

years and because of this it can able to expand its operations. Major portion increase

in total expenditure was raw material consumed.

Contribution of depreciation to net sales was 4.18% in 2006 and it significantly

decreased in 2007 and it was 0.17% only. After that it increased due to acquisition of

assets by the company.

Profit before tax is around 17% in 2006 and it highly decreased in 2007 and it was

only 0.95% and it again increased in 2008 and then it was decreasing in 2009 and

2010.

Thus we can say that here 2007 was not a good financial year for the company

because profit and sales of the company has significantly decreased.

40


CHAPTER 5:

TREND

ANALYSIS

41


TREND ANALYSIS OF BALANCE SHEET

PARTICALAR 2006 2007 2008 2009 2010

(RS IN CRORES)



Total Reserves 100.00 146.30 333.70 369.68 426.48


Secured Loans 100.00 140.74 176.94 220.29 294.48

Unsecured Loans 100.00 77.20 403.70 513.77 500.00

Total Debts 100.00 116.41 263.78 332.68 373.18




Net Block 100.00 135.33 166.97 260.11 284.67


Investments 100.00 131.70 274.04 406.75 515.18


Sundry Debtors 100.00 141.39 316.38 329.06 449.36

Cash and Bank 100.00 108.43 373.12 309.41 229.37

Other Current Assets Loans and Advances 100.00 180.65 884.32 1202.19 2133.53


Less: Current Liabilities and Provisions

Current Liabilities 100.00 155.38 190.53 176.73 139.43

Provisions 100.00 237.08 1841.62 1851.60 1869.14



Miscellaneous Expenses not written off 100.00 46.95 25.47 3.76 0.00

Deferred Tax Assets / Liabilities 100.00 116.82 160.53 210.96 245.60

Total Assets 100.00 128.11 293.83 343.71 390.98

Contingent Liabilities 100.00 Book Value 100.00 129.65 238.91 264.37 304.34


42


ANALYSIS

Above graph shows the trend analysis of share capital, investments, total current

assets, and total current liabilities over 5 years.

Share capital has remained constant since last 3 years, it has increased 37% from 2006

to 2010.

Investments has increased about 31%, 174%, 306%, and 415% in years 06-07, 07-08,

08-09, 09-10 respectively.

Total current assets has increased about 28%, 264%, 253%, and 289% in years 06-07,

07-08, 08-09, 09-10 respectively. Though current assets are increasing we cannot say

that the company is performing well because debtors are increasing at a higher rate

than the cash.

Total current liabilities has increased about 62%, 235%, 223%, and 190% in years 06-

07, 07-08, 08-09, 09-10 respectively. Total current liabilities include provisions which

are increasing at a alarming rate.

0

200

400

600

800

1000

1200

1400

2006 2007 2008 2009 2010

YEARS

Total Current Liabilities

Total Current Assets

Investments

Share Capital

43


TREND ANALYSIS OF PROFIT &LOSS

ACCOUNT

PARTICULAR 2006 2007 2008 2009 2010

(((RS IN CRORES)(RS)IN CRORES

INCOME : Gross Sales 100 132.69 195.88 216.86 230.15

Less: Sales Returns 100 Less: Excise Duty 100 156.94 222.24 162.86 153.58

Net Sales 100 130.97 194.01 220.69 235.59

EXPENDITURE : Increase/Decrease in Stock 100 -543.99 -301.39 -303.57 203.40

Raw Material Consumed 100 136.21 200.78 227.06 249.32

Power & Fuel Cost 100 135.28 170.56 205.41 173.67

Employee Cost 100 132.01 176.41 216.57 236.81

Other Manufacturing Expenses 100 128.72 160.39 159.71 177.46

General and Administration Expenses 100 132.76 171.40 173.43 163.40

Selling and Distribution Expenses 100 97.38 115.46 147.72 158.59

Miscellaneous Expenses 100 42.00 32.84 1044.69 26.84

Total Expenditure 100 126.98 184.98 212.95 229.95

Operating Profit (Excl OI) 100 150.59 238.35 258.72 263.30

Other Income 100 89.63 149.58 318.00 325.32

Operating Profit 100 140.16 223.16 268.86 273.92

Interest 100 140.89 193.35 219.88 176.40

PBDT 100 140.01 229.15 278.69 293.48

Depreciation 100 135.15 168.49 203.36 273.85

Profit Before Taxation & Exceptional Items 100 141.32 245.43 298.91 298.75

PBDT 100 140.01 229.15 278.69 293.48

Provision for Tax 100 138.88 288.09 336.32 304.15

Profit After Tax 100 141.91 235.10 289.85 297.45

Adjustments to PAT Profit Balance B/F 100 160.35 253.24 411.40 608.01

Appropriations 100 151.99 245.02 356.27 467.17

Equity Dividend % 100 109.09 113.64 125.00 136.36

Earnings Per Share 100 126.19 171.18 211.04 216.57

Adjusted EPS 100 126.19 171.18 211.04 216.57

44


ANALYSIS Above graph shows the trend analysis of Profit after tax, Profit before

depreciation and tax, Total expenditure and Net sales over 5 years.

Net sales has increased about 31%, 94%, 120%, and 135% in years 06-07, 07-08, 08-

09, 09-10 respectively. Net sales of the company is increasing which is a good sign

for the company.

Total expenditure has increased about 27%, 85%, 113%, and 130% in years 06-07,

07-08, 08-09, 09-10 respectively. Total expenditure includes raw material consumed,

employee cost, selling & distribution expenses and administrative expenses. As

production increased, the raw material consumed cost increased and overall expenses

of the company increased.

Profit before depreciation & tax has increased about 40%, 129%, 178%, and 193% in

years 06-07, 07-08, 08-09, 09-10 respectively. Here, since other income is also

included so we can say that there the entire profit is not from the core business of the

company.

0

200

400

600

800

1000

1200

2006 2007 2008 2009 2010

YEARS

Profit After Tax

PBDT

Total Expenditure

Net Sales

45


Profit after tax has increased about 41%, 135%, 190%, and 197% in years 06-07, 07-

08, 08-09, 09-10 respectively. Net profit has continuously increased so for investors it

is a good opportunity to invest in the company.

CHAPTER 6:

ANALYSIS OF

CASH FLOW

STATEMENT

46


CASH FLOW STATEMENT

PARTICULARS Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

(RS IN CRORES)


Adjustment 54.26 89.84 93.43 66.36 38.96

Depreciation 84.03 62.40 51.70 41.47 30.68

Impairment

29.09

Interest Expenses 51.32 63.97 56.25 40.99 Profit/Loss on sale of Fixed Assets -8.67 -19.63 -13.18 -1.47 -15.80

Dividend Received -0.22 -2.02 Interest Income -33.00 -65.70 -13.47 -10.58 -6.85

Effect of Exchange Rate Change -49.64 51.96 8.55 -5.33 -0.70

Provision for doubtful debts &advances

0.25 -0.12

0.10

Misc. Expenses written off 0.17 0.98 0.97 1.28 2.43

Other Adjustments 10.27 -2.37 2.73 Changes In working Capital -610.01 -148.00 -298.04 -55.96 40.04

Trade & Other receivables -563.54 -156.06 -337.99 -90.47 1.98

Inventories 12.45 -18.38 -17.40 -59.25 20.56

Trade & Other payables -58.92 26.44 57.35 93.76 17.50

Cash Flow after changes in WorkingCapital -214.27 283.50 75.92 171.93 193.31

Interest Paid

-28.73

Tax Paid -66.64 -63.19 -35.48 -21.90 -12.09

Cash From Operating Activities -280.91 220.31 40.44 150.03 152.48

Cash Flow from Investing Activities -112.76 -891.02 -638.34 -230.22 -131.26

Purchase of Fixed Assets -94.25 -434.62 -380.02 -221.50 -161.44

Sale of Fixed Assets 1.06 1.12 0.74 0.43 0.17

Sale of Investments

24.01

Investment in Subsidiaries -71.88 -420.74 -127.91 -18.00 Dividend Income 0.22 2.02

Interest received 29.63 65.70 13.47 10.58 6.85

Loans & advances given to subsidiaries / partnership firms etc. 32.99 26.23 -144.62 -1.73

Other Investment Activities -10.53 -130.73

-0.85

Cash from Financing Activities 253.86 59.70 1681.46 143.56 254.87

Increase / (Decrease) in Loan Funds 27.64 -201.01 129.84 148.65 20.74

Proceeds from Long Term Borrowings 339.10 354.91 Proceeds from Debenture / Bonds

885.21

215.91

Proceeds from Issue of Equity Share Capital

759.53 50.62 26.64

Equity Dividend Paid -17.51 -15.94 -12.56 -10.09 -8.42

Interest Paid -95.37 -78.26 -80.56 -45.62 Net Cash Inflow / Outflow -139.81 -611.01 1083.56 63.37 276.09

Opening Cash & Cash Equivalents 1046.50 1657.51 573.95 510.58 234.49

Closing Cash & Cash Equivalent 906.69 1046.50 1657.51 573.95 510.58

47


ANALYSIS

The profit and loss account reports only the effects of the current operation of the

enterprise on its financial position. The balance sheet shows the financial position of

the enterprise at the end of the year. Neither of these statements describes the

investments in assets during and how those investments are financed.

The statement of cash flows is a relatively new financial statement that reflects the

major sources of cash receipts and cash payments of an enterprise. It reports the cash

effects during a period of not only the enterprise‟s operations but also its investing

and financing activities.

In the above statement, it can be observed that the cash flow from operating activities

is showing negative balance in 2006 and then in 2007 it is showing positive balance.

In 2008 the cash flow again decreased and then it is increasing. Negative cash flow

clearly indicates that its manufacturing expenses were greater than the income from

the sales of goods.

Cash flow from investing activities is negative in all the 5 years. This is only due to

purchase of more fixed assets and unrecovered of loans.

Cash flow from financing activities was highest in 2007-08 and in remaining years it

had small fluctuations.

48


CHAPTER 7:

RATIO ANALYSIS

49


Meaning : A ratio is a statistical yardstick that provides a measure of relationship

between two figures. Ratio analysis of financial statements stands for the process of

determining and presenting the relationship of items in the statement.

There are several ratios which an analyst can employ, but the type of ratio he would

precisely use depends on the purpose for which analysis is made. So, investers will be

interested in such ratios as earning per share, dividend per share.

Ratios are expressed in various forms a) Pure ratio which are arrived at by the simple division of one number by another, e.g.,

current ratio to current liability ratio 2:1

b) Rate at which is ratio between two numerical facts, usually over a period of time, e.g.,

stock turnover ratio is 3 times a year.

c) Percentage which is a special type of rate expressing the relation in hundredth, gross

profit ratio is 25% on sales.

Uses of Ratio Analysis 1) It facilitates the comprehension of financial statement and evaluation of

several aspects such as financial health, profitability and operational efficiency of

undertaking.

2) It provides inter-firm comparison to measure efficiency and helps the

management to take remedial measures.

3) It is also helpful in forewarning corporate sickness and helps the management

to take corrective actions.

4) It helps in investment decisions in the case of investors and lending decisions

in the case of bankers and financial institutions.

50


A) LIQUIDITY RATIO

Liquidity is defined as the ability to realize value in money e most liquid of assets.

The liquidity ratio measure the liquidity of the firm and its ability to meet its maturing

short- term obligations. It refers to the ability to pay in cash, the obligations that are

due.

The corporate liquidity has two dimensions that are quantitative and qualitative

concepts. The quantitative aspects includes the quantum, structure and utilization of

liquid assets and in the qualitative aspect, it is the ability to meet all present and

potential demands on cash from any source in a manner that minimizes cost and

maximizes the value of the firm.

Excess liquidity results into: 1) lower profitability

2) Deterioration in managerial efficiency

3) Ideal cash fund giving lower returns

4) Too liberal credit and dividend policies

Too little liquidity result into: 1) Reduce rate of return

2) Missing of profitable business opportunities

The important ratio measuring short-term solvency are :

1) Current ratio

2) Quick ratio

51


1)CURRENT RATIO

1.1) Meaning:

Current ratio measures relationship between current assets and current liabilities. This

ratio measures the solvency of the company in the short-term. Current assets are those

which can be converted into cash within a year. Current liabilities and provisions are

those liabilities that are payable within a year.

1.2) Formula:

Current ratio =Current Assets

Current Liabilities

Where current assets include inventories, sundry debtors, cash & bank balances

etc. and current liability includes creditors, bank overdraft.

1.3)

Particular 2006 2007 2008 2009 2010

Current Assets(RS IN CRORES) 629.99 810.71 2292.64 2221.15 2450.06

Current Liabilities(RS IN CRORES) 179.71 292.09 602.17 581.1 522.7

Current Ratio 3.51:1 2.78:1 3.81:1 3.82:1 4.69:1

1.4) Analysis:

The ideal current ratio is 2:1. When current ratio is double than current liabilities the

firm has no difficulties in paying short term obligations on time. From the above

table, the current ratio is increasing. This may be bcause the inventory of the company

ahs increased due t low sales. Due to high proportion of obsolete, slow moving stock,

the current ratio may be high but its capacity to meet its current liabilities is definitely

weak

52


2) QUICK RATIO

2.1) Meaning:

Quick ratio is used as a measure of the company‟s ability to meet its current

obligations. The quick ratio establishes a relationship between quick assets and

current liabilities. Here inventory is deducted because rupee of cash is more readily

available to meet current obligations than a rupee of inventory.

2.2) Formula:

Quick ratio = Current Assets - Inventory

Current Liabilities

2.3)

Particular 2006 2007 2008 2009 2010

Current Assets(RS IN CRORES) 629.99 810.71 2292.64 2221.15 2450.06

Inventories(RS IN CRORES) 86.28 145.54 162.93 181.15 168.7

Current Liabilities(RS IN CRORES) 179.71 292.09 602.17 581.1 522.7

Quick Ratio 3.03:1 2.28:1 3.54:1 3.51:1 4.36:1

2.4) Analysis:

The ideal quick ratio is 1:1. From the table it is clear that quick ratio for all the 5 years

is more than the ideal ratio. This indicates that the company‟s liquidity position is

good and it has enough cash resources on hand to meet its urgent cash requirements

53


B) LEVERAGE RATIO

The leverage ratio may be defined as financial ratios which throw light on the long

term solvency of a firm as reflected in its ability to assure the long term lenders.

There are two aspect of long term solvency

1) Ability to repay the principal when due,

2) Regular payment of interest

The long term financial stability of the firm may be considered as depedent upon its

ability to meet all its liabilities, including those not currently payable. Thus long term

solvency of the firm can be examined by using the leverage ratios.

There are three type of leverage ratios :

1) Debt – Equity ratio

2) Capital Employed to Net Worth ratio

3) Fixed Interest Coverage ratio

54


1) DEBT-EQUITY RATIO

1.1) Meaning : This ratio indicates the relationship between total debt and net worth of the company.

The relationship between borrwed funds and owner‟s capital is a popular measure of

the long term financial solvency of a firm. This relationship is shown by the debt

equity ratio.

1.2) Formula :

Debt – Equity Ratio = Total Debt

Net Worth(excl. pref. share cap.)

Where, total debt = secured loans + unsecured loans.

Net worth = share capital+ reserves & surplus - fictitious assets.

1.3)

Particular 2006 2007 2008 2009 2010

Total Debt(RS IN CRORES) 582.66 678.26 1536.93 1938.36 2174.37

Net Worth(RS IN CRORES) 444.94 648.75 1459.97 1615.56 1859.85

Debt-Equity Ratio 1.31 1.05 1.05 1.20 1.17

1.4) Analysis : This ratio indicates the relationship between total debt and net worth of the company.

If debt equity ratio is low the company is said to be low geared company and it is not

taking advantage of trading on equity. Debt equity ratio of 2:1 is accepted norm for

financial institutions for giving loans for projects. In this company debt equity ratio is

very low than required once. In 05-06 it was 1.31, in 09-10 it was 1.17. The main

reason behind this is that therre are no preference shares and debentures.

Capital structure of the company does not include debentures and pref. shares so

company loses advantage. Ultimately ratio is very low so company is low geared one.

55


2) CAPITAL EMPLOYED TO NET WORTH RATIO

2.1) Meaning:

This ratio establishes a relationship between how much capital employed in the

company and the net worth. This ratio is found out to know how much capital is

employed to net worth.

Capital employed including share capital, reserves and surplus and long term loans

and net worth includes share capital and reserves and surplus.

2.2) Formula:

CE to NW Ratio = Capital Employed

Net Worth inclu. Pref. share capital

Capital Employed = share capital + reserves & surplus + secured Loans –

fictitious Assets

Net worth = share capital+ reserves & surplus - fictitious assets.

2.3)

Particular 2006 2007 2008 2009 2010

Capital Employed(RS IN CRORES) 804.47 1154.75 2096.12 2407.55 2918.57

Net Worth(RS IN CRORES) 444.94 648.75 1459.97 1615.56 1859.85 Capital Employed to Net Worth Ratio 1.81 1.78 1.44 1.49 1.57

2.4) Analysis:

This ratio is found out to know how much capital is employed to net worth. In this

company in 05-06 capital employed ratio was 1.81 that means company‟s total

capital is 1.81 times more than net worth of the company. While in 06-07 it was 1.78,

it decreases and in 07-08 it slightly decreased and it was 1.44.and in last 2 years it was

1.49 & 1.57 respectively. Long term loans are not much employed so this ratio is near

to one and it remains same for last three years.

56


3) FIXED INTEREST COVERAGE RATIO

3.1) Meaning:

This ratio measures the debt serving capacity of a firm insofar as fixed interest on

long term loan is concerned. This ratio can be determined by dividing the operating

profits by the fixed interest charges on loan.

3.2) Formula:

Fixed Interest Coverage Ratio = Earning Before Interest And Taxes

Interest

3.3)

Particular 2006 2007 2008 2009 2010

EBIT(RS IN CRORES) 174.08 243.99 388.48 468.03 476.83

Interest(RS IN CRORES) 29.09 40.99 56.25 63.97 51.32

Fixed Interest Coverage Ratio 5.98 5.95 6.91 7.32 9.29

3.4) Analysis:

This ratio measures the debt serving capacity of a firm insofar as fixed interest on

long term loan is concerned. From the table, it is clear that this ratio shows increasing

trend. It means that the financial strength of the company is sound because it has

greater ability to handle fixed charge liabilities.

57


C) PROFITABILITY RATIO

The purpose of study and analysis of profitability ratios are to help assessing the

adequacy of profits earned by the company and also to discover whether profitability

is increasing or declining. The profitability of the firm is the net result of a large

number of policies and decisions. The profitability ratios show the combined effects

of liquidity, asset management, and debt management on operating results.

Profitability ratios are measured with reference to sales, capital employed,

shareholders funds etc.

The major profitability ratios are as follows :

1) Gross Profit Ratio

2) Net Profit Ratio

3) Operating Profit Ratio

4) Operating Ratio

5) Expenses Ratio

6) Return On Shareholder’s Fund

7) Return On Total Assets

8) Return On Capital Employed

58


1) GROSS PROFIT RATIO

1.1) Meaning:

The ratio measures the gross profit margin on the total net sales made by the

company. The gross profit represents the excess of sales proceeds during the period

under observation over their cost, before taking into account administration, selling &

distribution and financial charges.

1.2) Formula:

Gross Profit Ratio = (Sales – Cost Of Goods Sold) *100

Net Sales

1.3)

Particular 2006 2007 2008 2009 2010

Gross Profit(RS IN CRORES) 145.43 203 322.23 404.06 425.51

Net Sales(RS IN CRORES) 853.42 1117.76 1655.7 1883.41 2010.55

Gross Profit Ratio(%) 17.04 18.16 19.46 21.45 21.16

Cost Of Goods Sold = Opening Stock+ direct exp. – closing stock Net sales = sales – other income

1.4) Analysis:

The ratio measures the gross profit margin on the total net sales made by the

company. In 05-06 this ratio was 17.04% which is low because near to 30% is good

for the company. From 06-07 to 09-10 it shows increasing trend.

59


2) NET PROFIT RATIO

2.1) Meaning:

This ratio establishes relationship between net profit and sales of firm. The ratio is

designed to focus attention on the net profit margin arising from the business

operations business after operating expenses, interest & tax is deducted.

2.2) Formula:

Net Profit Ratio = Profit After Tax *100

Net Sales

2.3)

Particular 2006 2007 2008 2009 2010

PAT(RS IN CRORES) 92.02 130.58 216.33 366.71 273.7


Net Profit Ratio(%) 10.78 11.68 13.07 19.47 13.61

2.4) Analysis:

This ratio establishes relationship between net profit and sales of firm. In 05-06 the

ratio was 10.78% which is not good for the company. In 06-07 it slightly increased

and it was 11.68%. As compare to both years in 07-08 it further increased and it was

13.07%. The ratio was highest in 08-09 which was 19.47%

60


3) OPERATING PROFIT RATIO

3.1) Meaning:

This ratio measures a relationship between operating profit and net sales of the

company. It is focus on profit arising from business operations before interest & tax is

deducted and after the deduction of other incomes.

3.2) Formula:

Operating Profit Ratio = (Earning Before Interest & Tax – Other Income)

Net sales

3.3)

Particular 2006 2007 2008 2009 2010

EBIT(RS IN CRORES) 174.08 243.99 388.48 468.03 476.83

Other Income(RS IN CRORES) 29.79 26.7 44.56 94.73 96.91


Operating Profit Ratio 0.17 0.19 0.21 0.20 0.19

3.4) Analysis:

This ratio measures a relationship between operating profit and net sales of the

company. In 05-06 Operating Profit Ratio was 0.17 which was very low. As compare

to previous year in 06-07 it was 0.19 and it was same in 2010 which is slightly

increasing. Though sales were showing increasing trend but operating profit was

fluctuating.

61


4) OPERATING RATIO

4.1) Meaning:

The ratios of all operating expenses that means material used, labour, administration

& selling expenses etc. to sales is the operating ratio.

4.2) Formula:

Operating Ratio = 1 – Operating Profit Ratio

4.3)

Particular 2006 2007 2008 2009 2010

Operating Profit Ratio 0.17 0.19 0.21 0.20 0.19

Operating Ratio 0.83 0.81 0.79 0.8 0.81

4.4) Analysis:

The ratios of all operating expenses that means material used, labour, administration

& selling expenses etc. to sales is the operating ratio. From the above table we can say

that operating ratio is almost constant in last 5 years and it is high. This is less

favourable because it would have small margin to cover interest, income tax,

dividends and reserves.

62


5) EXPENSE RATIO

5.1) Meaning:

This ratio measures a relationship between total expense incurred by the company and

net sales. It shows that how much company is expending for selling its product.

5.2) Formula:

Expense Ratio = Total Expenses *100

Net Sales

5.3)

Particular 2006 2007 2008 2009 2010

Total Expenses(RS IN CRORES) 709.14 900.47 1311.78 1510.11 1630.63


Expenses Ratio(%) 83.09 80.56 79.23 80.18 81.10

5.4) Analysis:

This ratio measures a relationship between total expense incurred by the company and

net sales. Total expenditure shows small fluctuations since last 5 years. Total

expenditure includes raw material consumed, employee cost, selling & distribution

expenses and administrative expenses. As production increased, the raw material

consumed cost increased and overall expenses of the company increased.

63


6) RETURN ON SHAREHOLDER’S FUND

6.1) Meaning:

This ratio express the profit after tax in terms of the equity shareholder‟s funds. This

ratio is an important yardstick of performance for equity shareholder since its

indicates the return on the funds employed by them.

6.2) Formula:

Return On Shareholder’s Fund = Profit After Tax *100

Shareholder’s Fund

Shareholder’s Fund = equity sh. Capital + reserves & surplus – fictitious assets

6.3)

Particular 2006 2007 2008 2009 2010

PAT(RS IN CRORES) 92.02 130.58 216.33 366.71 273.7 Shareholder‟s Fund(RS IN CRORES) 444.94 648.75 1459.97 1615.56 1859.85 Return On Shareholder‟s

Fund(%) 20.68 20.13 14.82 22.70 14.72

6.4) Analysis:

This ratio expresses the profit after tax in terms of the equity shareholder‟s funds. In

05-06 the ratio was 20.68%. In 07-08 it decreased up to 14.82%. And in 09-10 it

further decreased to 14.72%. Decreasing trend shows that this is not a good option for

investing. Funds employed by the shareholder are not giving them sufficient return.

64


7) RETURN ON TOTAL ASSETS

7.1) Meaning:

This ratio indicates relationship between profit after tax and total assets employed.The

profitability of the firm is measured by establishing relation of net profit with the total

assets of the organization. This ratio indicates the efficiency of utilization of assets in

generating revenue.

7.2) Formula:

Return On Total Assets = Profit After Tax *100

(Fixed assets+Inbvestments+Current assets)

7.3)

Particular 2006 2007 2008 2009 2010

PAT(RS IN CRORES) 92.02 130.58 216.33 366.71 273.7

Total Assets(RS IN CRORES) 1255.65 1652.68 3506.37 4080.33 4594.59

Return On Total Assets(%) 7.33 7.90 6.17 8.99 5.96

7.4) Analysis:

This ratio indicates relationship between profit after tax and total assets employed.

From 2006 to 2010 the ratio shows many fluctuations because total assets of the

company was increasing but profits was not constant in last five years.

65


8) RETURN ON CAPITAL EMPLOYED

8.1) Meaning:

This ratio shows relationship between profit after tax and total capital employed. It

indicates how effectively the operating assets are used in earning return.

8.2) Formula:

Return On Capital Employed = Profit After Tax *100

Total Capital Employed

Total Capital Employed = share capital + reserves & surplus + secured loan

8.3)

Particular 2006 2007 2008 2009 2010

PAT(RS IN CRORES) 92.02 130.58 216.33 366.71 273.7 Total Capital Employed(RS IN CRORES) 808.99 1156.87 2097.27 2407.72 2918.57 Return On Total capital Employed(%) 11.37 11.29 10.31 15.23 9.38

8.4) Analysis:

This ratio shows relationship between profit after tax and total capital employed. In

this company, the return was highest in 2009 which indicates the company is able to

earn good profits on its capital employed. The ratio in the year 2010 is bit low which

is not satisfactorily.

66


D) TURNOVER RATIO

Turnover ratio involved a relationship between sales and assets. Turnover ratios are

also called activity ratios because they indicate the spend with which assets are being

converted into sales. This ratio measures how effectively the firm employes its

resources. This ratio involves comparison between the level of sales and investment in

various accounts – inventories, debtors, fixed assets etc.

In turnover ratio, following ratios are to be computed :

1) Inventory Turnover Ratio

2) Fixed Assets Turnover Ratio

3) Working Capital Turnover Ratio

4) Total Assets Turnover Ratio

5) Net Worth Turnover Ratio

6) Debtors Turnover Ratio

67


1) INVENTORY TURNOVER RATIO

1.1) Meaning:

The inventory turnover ratio measures how many times a company‟s inventory has

been sold during the year. The higher the stock turnover rate or the lower the stock

turnover period the better.

1.2) Formula:

Inventory Turnover Ratio = Cost Of Goods Sold

Average Inventory

Average Inventory = opening stock + closing stock

2

1.3)

Particular 2006 2007 2008 2009 2010

COGS(Sales - GP) (RS IN CRORES) 707.99 914.76 1333.47 1479.35 1585.04

Average Inventory(RS IN CRORES) 86.28 115.91 154.24 172.04 174.93

Inventory Turnover Ratio(Times) 8.21 7.89 8.65 8.60 9.06

1.4) Analysis:

The inventory turnover ratio measures how many times a company‟s inventory has

been sold during the year. In 05-06 inventory turnover ratio was 8.21 times that means

8.21 times inventory was sold during the year that is good for the company. In 06-07

this ratio slightly decreased from the previous year and that is 7.89 times their

inventory was decreasing. In 07-08 it was further increased up to 8.65 times and also

cost of goods sold increased in 07-08 is higher than previous year. It was highedt in

2009-10 which means that the company is able to secure more sales.

68


2)FIXED ASSETS TURNOVER RATIO

2.1) Meaning:

The relationship between net sales and fixed assets is known as fixed assets turnover

ratio. The assets are used to generate sales. Hence, the company should utilize its

assets efficiency to maximize the amount of sales.

2.2) Formula:

Fixed Assets Turnover Ratio = Net Sales

Net Fixed Assets

2.3)

Particular 2006 2007 2008 2009 2010


Net Fixed Assets(RS IN CRORES) 469.53 635.43 783.96 1221.29 1336.59 Fixed Assets Turnover

Ratio(Times) 1.82 1.76 2.11 1.54 1.50

2.4) Analysis:

The relationship between net sales and fixed assets is known as fixed assets turnover

ratio. In 05-06 ratio was 1.82 times and in 2009-10 it was 1.50.Net sales was

increasing in last five years. Net assets were also increased up to considerable extent.

The management purchased new fixed assets because they had expanded their

operation. In 06-07 assets were not effectively used so it results into slight decreased

in this ratio.

69


3)WORKING CAPITAL TURNOVER RATIO

3.1) Meaning:

This ratio indicates the extent of working capital turned over in achieving sales of the

firm.

Working capital is difference between current assets and current liability of the

company.

3.2) Formula:

Working Capital Turnover Ratio = Net Sales

Net Working Capital

Net Working Capital = current assets – current liability

3.3)

Particular 2006 2007 2008 2009 2010

Net Sales(RS IN CRORES) 853.42 1117.76 1655.7 1883.41 2010.55 Net Working Capital(RS IN CRORES) 449.59 518.62 1690.47 1640.05 1927.36 Working Capital Turnover Ratio(Times) 1.90 2.16 0.98 1.15 1.04

3.4) Analysis:

This ratio indicates the extent of working capital turned over in achieving sales of the

firm. This ratio was highest in 2006-07 and it was lowest in 2007-08.

70


4)TOTAL ASSETS TURNOVER RATIO

4.1) Meaning:

This ratio establish a relationship between net sales and total assets. This ratio shows

firm‟s ability in generating sales from all financial resources commited to total assets.

The assets are used to generate sales for a firm. Hence, the company should utilize its

assets efficiently to maximize the amount of sales.

4.2) Formula:

Total Assets Turnover Ratio = Net Sales

Total Assets

4.3)

Particular 2006 2007 2008 2009 2010


Total Assets(RS IN CRORES) 1255.65 1652.68 3506.37 4080.33 4594.59 Total Assets Turnover Ratio(Times) 0.68 0.68 0.47 0.46 0.44

4.4) Analysis:

This ratio establishes a relationship between net sales and total assets. This ratio

shows firm‟s ability in generating sales from all financial resources committed to total

assets. In 05-06 & 06-07 this ratio was 0.68 times. In 09-10 ratio was 0.44 times

which was slightly lower than previous years. It shoes inefficient utilization of

resources.

71


5) NET WORTH TURNOVER RATIO

5.1) Meaning:

This ratio establishes a relationship between net sales and net worth. This ratio shows

ability to generate sales from net worth of the company. Net worth of the company

includes equity share capital and reserves of the company.

5.2) Formula:

Net Worth Turnover Ratio = Net Sales

Net Worth Excl. Pref. Capital

5.3)

Particular 2006 2007 2008 2009 2010


Net Worth(RS IN CRORES) 444.94 648.75 1459.97 1615.56 1859.85 Net Worth Turnover Ratio(Times) 1.92 1.72 1.13 1.17 1.08

5.4) Analysis:

This ratio establishes a relationship between net sales and net worth. This ratio shows

ability to generate sales from net worth of the company. From the above table, we can

say that the net worth turnover ratio is decreasing from 2005-06. This means that the

company is not using the funds provided by the owner efficiently. It also means that

the productivity of the sources, the owner has committed to carry out firms operation

is low.

72


6) DEBTORS TURNOVER RATIO

6.1) Meaning:

This ratio measures the amount of resources tied up in debtors is reasonable and

whether the company has been efficient in converting debtors into cash. Generally

higher the ratio, better the position.

6.2) Formula:

Debtors Turnover Ratio = Net Sales

Debtors + Bills Receivables

6.3)

Particular 2006 2007 2008 2009 2010


Debtors(RS IN CRORES) 150.67 213.04 476.7 495.8 677.06

Debtors Turnover Ratio(Days) 5.66 5.25 3.47 3.80 2.97

6.4) Analysis:

This ratio measures the amount of resources tied up in debtors and whether the

company has been efficient in converting debtors into cash. From the above table we

can say that the ratio is a moderate in all the 5 years. This indicates that the

company‟s credit collection department is functioning very efficiently. It also implies

better liquidity as debtors make prompt payment. But this can also be looked as very

short collection period. This means that the company follows very strict collection

policy which may reduce the volume of sales. The company should follow a

reasonable collection policy which is determined on the basis of practice of trade

credit in the industry.

73


E) VALUATION RATIO

A valuation ratio is a measure of how cheap or expensive a security (or business) is,

compared to some measure of profit or value. A valuation ratio is calculated by

dividing a measure of price by a measure of value, or vice-versa. The market value is

determined by multiplying the quoted share price of the company by the number of

shares.

Valuation approach is the general way which is followed to determine a value

indication of a business, corporate ownership interest, security, or intangible asset.

Business Valuation is an estimation of the market value of a corporation / business. It

differs from appraisal in the sense that appraisals only takes into consideraton the

tangible. Valuation ratios tell you something about whether the market is pricing your

candidate as a value, growth, or momentum stock. In this context, value stocks are out

of favor; that is, they are of no interest to most market participants who prefer growth

stocks.

The following are the valuation ratios :

1) Dividend Yield Ratio

2) Dividend Payout Ratio

3) Price Earning Ratio

74


1) DIVIDEND YIELD RATIO

1.1) Meaning:

This ratio reflects the percentage yield that an investor receives on this investment at

the current market price of the shares. This measure is useful for investors who are

interested in yield per share.

1.2) Formula:

Dividend Yield Ratio = Dividend Per Share

Avg. Market price per share

1.3)

Particular 2006 2007 2008 2009 2010

DPS(Rs) 0.88 0.96 1 1.1 1.2

MPS(Rs) 62.1 96.2 195.28 189.07 88.65

Dividend Yield Ratio(%) 0.014 0.010 0.005 0.006 0.014

1.4) Analysis :

This ratio reflects the percentage yield that an investor receives on this investment at

the current market price of the shares. It shoes the actual returns on the amount

invested by him. From the table above, it was same in 2006 and in 2010 with minimal

fluctuations i between the year.

75


2) DIVIDEND PAYOUT RATIO

2.1) Meaning:

Dividend payout ratio indicates the extent of the net profits distributed to the

shareholders dividend. A high payout signifies a liberal distribution policy and a low

payout reflects conservative policy.

2.2) Formula:

Dividend Payout = Dividend Per Share

Earning per share

2.3)

Particular 2006 2007 2008 2009 2010

DPS(Rs) 0.88 0.96 1 1.1 1.2

EPS(Rs) 9.33 12.15 18.35 19.68 20.2

Dividend Payout Ratio(Times) 0.09 0.08 0.05 0.06 0.06

2.4) Analysis:

Dividend payout ratio indicates the extent of the net profits distributed to the

shareholders as dividend. From the above table that although comany‟s earning per

share is increasing but it is paying less dividend to its investors and its preferring to

reinvest in the business more.

76


3) PRICE – EARNING RATIO

3.1) Meaning:

The ratio indicates the market price of an equity share to the earning per share. It

measures the number of times the earnings per share discounts the market price of an

equity share.

3.2) Formula:

Price EarningRatio = Avg. Market price per share

Earning Per Share

3.3)

Particular 2006 2007 2008 2009 2010

MPS(Rs) 62.1 96.2 195.28 189.07 88.65

EPS(Rs) 9.33 12.15 18.35 19.68 20.2

Price Earning Ratio(Rs) 6.66 7.92 10.64 9.61 4.39

3.4) Analysis:

The ratio indicates the market price of an equity share to the earning per share. It

signifies the price that is currently rulling in the market for each rupee of earnings

being made by company per share. This ratio was highest in the year 2007-08 which

indicates the investor‟s confidence in the stability and growth of company‟s income.

77


CHAPTER 8: RECOMMENDATONS &

SUGGESTIONS

78


SINTEX INDUSTRY LTD. is one of the big names in production of plastic products

and textiles. Sintex is pioneer in manufacturing of plastic moulded products which

exports their products in various places beyond the country and thus it has bright

prospect ahead of it.

One of the most important thing is they are running their business since last 35 years.

So they are having good experience of the market. At present there are many

competitors, so they have to give their best in terms of quality of the products.

The company shares excellent business relationships with the electrical sector as it is

one of the largest enclosure manufacturers for various products like meters, fuses, and

electrical equipments , among others.

The company also serviced utility companies in both private and public sectors and

executed turnkey projects for lastmile connectivity in Rajasthan, Karnataka and

Gujarat.

The company integrated certain “green” elements. They have been associated with

CEPT University, Ahmadabad who have helped it to spread awareness regarding

green and sustainable building materials and technologies.

This initiative will help the country in general and the company in particular, by

bringing about green orientation in the field of build up structures. In the forth

coming years the company will be able to offer affordable green housing solutions

using several technologies like decentralized wastewater treatment systems, gray

water recycling systems, solar water heating systems and rain harvesting structures.

79


CHAPTER 9:

OTHER TOPICS

80


SALES

YEARS 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

SALES/OTHER INCOME 296.28 376.56 447.01 547.27 687.98 853.42 1117.76 1655.7 1883.41 2010.55

NET WORTH

YEARS 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

NET WORTH 320.12 327.4 346.28 348.78 500.39 444.94 648.75 1459.97 1615.56 1859.85

0

500

1000

1500

2000

2500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

SALES/OTHER INCOME

SALES/OTHER INCOME

0

500

1000

1500

2000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

YEARS

NET WORTH

NET WORTH

81


PROFIT BEFORE DEPRICIATION & TAX

YEARS 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

PBDT 40.29 44.34 56.5 71.85 98.86 145.43 203 332.23 404.06 425.51

PROFIT BEFORE DEPRICIATION INTEREST AND TAX

YEARS 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

PBDIT 59.58 65.91 84.99 98.09 123.71 174.53 243.99 388.48 468.03 476.83

050

100150200250300350400450

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

YEARS

PBDT

PBDT

0

50

100

150

200

250

300

350

400

450

500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

YEARS

PBDIT

PBDIT

82


PROFIT AFTER TAX

TOTAL ASSETS

YEARS 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

TOTAL ASSETS 582.7 569.98 624.18 694.69 916.56 1099.48 1401.49 3148.03 3696.78 4208.64

0

50

100

150

200

250

300

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

YEARS

PAT

PAT

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

YEARS

TOTAL ASSETS

TOTAL ASSETS

YEARS 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

PAT 24.14 19.22 23.95 33.66 53.91 92.02 130.58 216.33 266.71 273.7

83


EARNING PER SHARE

YEARS 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

EPS 3.32 2.36 2.97 4.43 7.14 9.95 12.15 18.35 19.68 20.2

0

5

10

15

20

25

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

YEARS

EPS

EPS

84


CAPITAL STRUCTURE

Capital structure refers to the mix of long-term sources of funds, such as debentures,

long-term debt, preference share capital and equity share capital including reserves

and surplus.

The financial manager should plan an optimum capital structure for his company. The

optimum capital structure is obtained when the market value per share is maximum.

The value will be maximized when the marginal real cost of each source of funds is

the same.

A sound appropriate capital structure should have the following features:

Profitability:-

The capital structure of the company should be most advantageous. Within the

constraints, maximum use of leverage at a minimum cost should be made.

Solvency:-

The use of excessive debt threatens the solvency of the company. To the point debt

does not add significant risk, it should be used otherwise its use should be avoided.

Flexibility:-

The capital structure should not be inflexible to meet the changing conditions. It

should be possible for a company to adapt its capital structure within minimum cost

and delay if warranted by a changed situation. It should also be possible for the

company to provide funds whenever needed to finance its profitable activities.

Capacity:-

The capital structure should be determined within the debt capacity of the company,

and this capacity should not be exceeded. The debt capacity of a company depends on

its ability to generate future cash flows. It should have enough cash to pay creditors,

fixed charges and principles.

85


CAPITAL STRUCTURE OF 2005-06

PARICULARS RS IN CRORES %

Share Capital 19.73 1.91

Reserves & Surplus 429.73 41.64

Secured Loans 359.53 34.83

Unsecured Loans 223.13 21.62

Total 1032.12 100

ANALYSIS:-

In the year 05-06, the reserves and surplus constituted around 42% where as the share

capital constituted merely 2% of the total capital structure. The share of secured and

unsecured loan was about 35% and 21% respectively. This shows that the liabilities of

the interest payments on the company is high.

Share Capital2%

Reserves & Surplus

42%

Secured Loans35%

Unsecured Loans21%

2005-06

86






Secured Loans 506 38.06


Total 1329.63 100

ANALYSIS:-




the interest payments on the company are high. Here from the previous year reserves

are increasing and secured loans are also increasing. It means that company has

distributed less profit and maintain excessive reserves and surplus to execute growth

plans.

Share Capital2%

Reserves & Surplus

47%Secured Loans

38%

Unsecured Loans13%

2006-07

87








Total 2998.05 100

ANALYSIS:-




the interest payments on the company are high.

Share Capital1%

Reserves & Surplus

48%

Secured Loans21%

Unsecured Loans30%

2007-08

88








Total 3554.09 100

ANALYSIS:-





Share Capital1%

Reserves & Surplus

45%

Secured Loans22%

Unsecured Loans32%

2008-09

89








Total 4034.22 100

ANALYSIS:-





Share Capital1%

Reserves & Surplus

45%

Secured Loans26%

Unsecured Loans28%

2009-10

90


ANNEXURE

91


BALANCE SHEET OF SINTEX INDUSTRIES LIMITED

PARTICALAR 2006 2007 2008 2009 2010

(RS IN CRORES)



Total Reserves 429.73 628.68 1434.02 1588.63 1832.75


Secured Loans 359.53 506.00 636.15 791.99 1058.72

Unsecured Loans 223.13 172.26 900.78 1146.37 1115.65

Total Debts 582.66 678.26 1536.93 1938.36 2174.37




Net Block 469.53 635.43 783.96 1221.29 1336.59


Investments 156.83 206.54 429.77 637.89 807.94


Sundry Debtors 150.67 213.04 476.70 495.80 677.06

Cash and Bank 355.35 385.30 1325.87 1099.47 815.04

Other Current Assets 0.00 0.00 0.00 Loans and Advances 36.99 66.83 327.14 444.73 789.26


Less: Current Liabilities and Provisions Current Liabilities 163.98 254.79 312.43 289.79 228.63

Provisions 15.73 37.30 289.74 291.31 294.07



Miscellaneous Expenses not written off 4.52 2.12 1.15 0.17 Deferred Tax Assets / Liabilities -61.95 -72.37 -99.45 -130.69 -152.15

Total Assets 1037.53 1329.13 3048.58 3566.09 4056.49

Contingent Liabilities

26.65 304.10 317.82 247.31

Book Value 45.10 58.47 107.75 119.23 137.26


92


PROFIT & LOSS ACCOUNT OF SINTEX INDUSTRIES LIMITED

PARTICULAR 2006 2007 2008 2009 2010

(RS IN CRORES)

INCOME : Gross Sales 913.98 1212.80 1790.29 1982.04 2103.56

Less: Sales Returns Less: Excise Duty 60.56 95.04 134.59 98.63 93.01

Net Sales 853.42 1117.76 1655.70 1883.41 2010.55

EXPENDITURE : Increase/Decrease in Stock 6.89 -37.47 -20.76 -20.91 14.01


Power & Fuel Cost 34.47 46.63 58.79 70.80 59.86

Employee Cost 32.70 43.17 57.69 70.82 77.44





Less: Expenses Capitalised Total Expenditure 709.14 900.47 1311.78 1510.11 1630.63


Other Income 29.79 26.70 44.56 94.73 96.91


Interest 29.09 40.99 56.25 63.97 51.32

PBDT 144.99 203.00 332.23 404.06 425.51

Depreciation 30.68 41.47 51.70 62.40 84.03




Profit After Tax 92.02 130.58 216.33 266.71 273.70

Adjustments to PAT Profit Balance B/F 110.88 177.80 280.80 456.16 674.17

Appropriations 202.90 308.38 497.13 722.87 947.87

Equity Dividend % 44.00 48.00 50.00 55.00 60.00

Earnings Per Share 9.33 11.77 15.97 19.68 20.20

Adjusted EPS 4.66 5.88 7.98 9.84 10.10

93


AUDITORS’ REPORT

To the Members of

Sintex Industries Limited

1. We have audited the attached Balance Sheet of SINTEX INDUSTRIES LIMITED

(“the Company”) as at 31st March, 2010, the Profit and Loss Account and the Cash

Flow Statement of the Company for the year ended on that date, both annexed thereto.

These financial statements are the responsibility of the Company‟s Management. Our

responsibility is to express an opinion on these financial statements based on our

audit.

2. We conducted our audit in accordance with the auditing standards generallaccepted

in India. Those Standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material

misstatements. An audit includes examining, on a test basis, evidence supporting the

amounts and the disclosures in the financial statements. An audit also includes

assessing the accounting principles used and the significant estimates made by the

Management, as well as evaluating the overall financial statement presentation. We

believe that our audit provides a reasonable basis for our opinion.

3. Without qualifying our opinion, we draw attention to Note 4 of Schedule 20 to

these financial statements, regarding the Scheme of Arrangement (the “Scheme”)

approved by the Honourable High Court of Gujarat, as per which Scheme, in the year

2008-09 the Company earmarked ` 200 crore from Securities Premium Reserve to

International Business Development Reserve Account (the “IBDR”) and has adjusted

against the earmarked balance of IBDR, ` 141.46 crore upto 31st March, 2010

(including ` 10.53 crores during the year) being expenses of the nature as specified

under the Scheme. The said accounting treatment has been followed as prescribed

under the Scheme. The relevant Indian Generally Accepted Accounting Principles, in

absence of such Scheme, would not permit the adjustment of expenses against the

Securities Premium Reserve / IBDR. Had the Company accounted for these expenses

as per Generally Accepted Accounting Principles in India, instead of accounting for

as per the Scheme, the balance of Securities Premium Reserve / IBDR would have

been higher by ` 141.46 crore as at 31st March, 2010 and Profit after tax would have

been lower by ` 10.53 crore for the year ended on 31st March, 2010.

4. As required by the Companies (Auditor‟s Report) Order, 2003 (CARO) issued by

the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we

enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of

the said Order.

5. Further to our comments in the Annexure referred to in paragraph 3 above, we

report as follows:

a) we have obtained all the information and explanations which to the best of our

knowledge and belief were necessary for the purposes of our audit;

94


b) in our opinion, proper books of account as required by law have been kept by the

Company so far as it appears from our examination of those books;

c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt

with by this report are in agreement with the books of account;

d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow

Statement dealt with by this report are in compliance with the Accounting Standards

referred to in Section 211(3C) of the Companies Act, 1956;

e) in our opinion and to the best of our information and according to the explanations

given to us, the said accounts give the information required by the Companies Act,

1956 in the manner so required and give a true and fair view in conformity with the

accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of the affairs of the Company as at

March 31, 2010;

ii) in the case of the Profit and Loss Account, of the profit for the year ended on that

date; and

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on hat

date.

6. On the basis of the written representations received from the Directors as on 31st

March, 2010 taken on record by the Board of Directors, none of the Directors is

disqualified as on 31st March, 2010 from being appointed as a director in terms of

Section 274(1)(g) of the Companies Act, 1956.

For Deloitte Haskins & Sells

Chartered

Accountants

(Registration No. 117365W)

Gaurav J. Shah

Ahmedabad Partner

Date: April 30, 2010 Membership No. 35701

95


BIBLIOGRAPHY

Gupta R. L., Radhaswamy M, 1999, “Advanced Accountancy”, „Sultan Chand

&Sons‟, 26-50

“Accounting”, „The ICFAI University‟, 310-334.

Kishore M. Ravi, 2000, “Cost & Management Accounting”, „Taxmann‟

SOURCES OF INFORMATION

http://www.investopedia.com/terms/f/financialmanagement

www.business dictionary.com/definition/.html

http://www.netmba.com/marketing/mix/

http://www.learnmarketing.net/servicemarketingmix.html

http://www.michelfortin.com/how-to-target-your-perfect-customer/

Main search engines are:

www.google.com

www.yahoo.com

www.wikipedia.com

http://www.investopedia.com/terms/f/financial

http://www.netmba.com/marketing/mix/

http://www.learnmarketing.net/servicemarketingmix.htm

http://www.michelfortin.com/how-to-target-your-perfect-customer/

http://www.google.com/

http://www.yahoo.com/

http://www.wikipedia.com/

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