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SENSEX NIFTY India | Notes to Account > Plastics > Notes to Account from Sintex Plastics Technology - BSE: 540653, NSE: SPTL

Sintex Plastics Technology

BSE: 540653|NSE: SPTL|ISIN: INE501W01021|SECTOR: Plastics
Oct 17, 16:00
-0.1 (-4.59%)
VOLUME 236,901
Oct 17, 15:57
-0.1 (-4.17%)
VOLUME 132,785
Mar 17
Notes to Accounts Year End : Mar '18

3. Critical Judgements in applying accounting policies and key sources of estimation uncertainty

3.1 Critical judgements in applying accounting policies

In the course of applying the policies outlined in all notes under section 2 above, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future period, if the revision affects current and future period.

3.2 Key sources of estimation uncertainty

i) Useful lives and residual value of property, plant and equipment

Company reviews the useful lives and residual values of property, plant and equipment at least once a year. Such lives are dependent upon an assessment of both the technical lives of the assets and also their likely economic lives based on various internal and external factors including relative efficiency and operating costs. Accordingly, useful lives are reviewed annually using the best information available to the Management.

ii) Fair value measurements and valuation process

Management uses its judgement in selecting an appropriate valuation technique for financial instruments not quoted in an active market. Valuation techniques commonly used by market participants are applied. Other financial instruments are valued using a discounted cash flow method based on assumptions supported, where possible, by observable market prices or rates.

* Note:

The average credit period on sales of goods is 0 to 120 days. No interest is charged on trade receivables for the first 120 days from the date of the invoice. Thereafter, Interest is charged at 18-24% per annum on the outstanding balance.

Before accepting any new customer, the Company assesses the potential customer’s credit quality and defines credit limits of each customer. Limits and scoring attributed to customers are reviewed twice a year.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables. The expected credit loss allowance takes into account historical credit loss experience and adjusted for forward- looking information.


Pursuant to the Composite Scheme of Arrangement (‘the Scheme’) between Sintex Industries Limited and Sintex Plastics Technology Limited (the company) and Sintex-BAPL Limited (wholly owned subsidiary of the Company) and Sintex Infra Projects Limited (wholly owned subsidiary of the Company) and their respective shareholders and creditors, the Company has issued 55,49,41,700 equity shares of INR 1 each to the equity shareholders of Sintex Industries Limited on May 30, 2017.

4. Equity share capital (Cont...)

(ii) Terms/ Rights attached to equity shares

The Company has only one class of equity shares having a par value of '' 1/- per share. Each holder of equity share is entitled to one vote per share.

The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of shareholders in the ensuing AGM.

(iii) As at March 31, 2018: 98,79,844 shares (As at March 31, 2017: 5,92,78,978 shares) were reserved for issuance towards Foreign Currency Convertible Bonds.

(i) Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.

(ii) General reserve

The general reserve is used from time to time to transfer profits from retained earnings for appropriate purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be reclassified subsequently to statement of profit and loss.

(iii) Retained Earnings

The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the balance in this reserve and also considering the requirements of the Companies Act, 2013. Thus the amounts reported above are not distributable in entirely.

Note: The amount disclosed under share suspense account has been considered as shares deemed to be issued. There are no potential equity share issued by the Company which are anti-dilutive in its nature.

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

6.. Share Warrant

Pursuant to approval given by the Members by postal ballot on March 10, 2018 and the In-Principle Approval granted by BSE Limited and National Stock Exchange of India Limited for issue and allotment of 6,67,00,000 Fully Convertible Warrants into equity shares of face value of Rs, 1/- each, at any time within 18 months from the date of allotment of the Warrants, for cash, at an exercise price of Rs, 90/- per Warrant (including a premium of Rs, 89/-) aggregating upto Rs, 600.30 crores, the Company on March 26, 2018 has allotted 2,04,33,334 Equity shares of face value Rs, 1/- each (with a premium of Rs, 89/- per equity share) to M/s. Star Line Leasing Limited, the company belonging to promoter group of the Company, upon exercise/conversion of equivalent number of warrants. There are 4,62,66,666 warrants outstanding for conversion as on March 31, 2018.

7. Financial risk management objectives

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

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

8. Market risk

The Company’s activities is not exposed to the financial risks of changes in foreign currency exchange rates and interest rates on foreign currency borrowings and variable interest loans. The Company has not entered into any foreign transactions and has not borrowed any funds during the reporting period.

9. Foreign currency risk management

All transactions of the Company are in INR only.

10. Interest rate risk management

The Company is not exposed to interest rate risk because the Company has not borrowed funds during the reporting period.

11. Credit risk management

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

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

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

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

12 Collateral held as security and other credit enhancements

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

13. Liquidity risk management

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

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

8. Fair value measurements

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

*There were no transfers between Level 1 and Level 2 in the period

14.Related Party Transactions

a. Names of the related parties and description of relationship Sr. No. Nature of relationship Name of Related Parties

1 Key Management Personnel Shri Amit D. Patel

Shri Rahul A. Patel

2 Enterprises over which Key Managerial Personnel are Som Shiva Impex Limited able to exercise significant influence /control Healwell International Limited

Prominent Plastics Limited

3 Subsidiaries Sintex-BAPL Limited

Sintex Prefab & Infra limited

15. Approval of financial statements

The financial statements were approved for issue by the board of directors on May 9, 2018.

Source : Dion Global Solutions Limited
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