alfred
TRANSCRIPT
A Study On Financial Performance Analysis of West Coast Paper Mills Ltd Dandeli
Presented by: Alfred Mascarenhas
The Financial Analysis is the Methodological Classification of data given in the financial statements. The financial statements provide a summarized view of the operation of a firm.
It helps in obtaining a better understanding about the financial position and the performance of the firm.
FINANCIAL PERFORMANCE ANALYSIS
Comparative Financial Statements: In these statements, figures of two or more
period are placed side by side to facilitate comparison, which helps in studying the trends in an enterprise.
Ratio Analysis Ratio analysis is defined as the systematic
use of ratios to interpret the financial statements so that the strengths and weakness of firm and the current financial condition can be determined.
The Company was promoted by Shri. Digvijay Cement Company Limited Sikka, Gujarat state in 1955. Originally the plant was designed to manufacture 18000 MT per year of writing, printing and packaging paper.
It is incorporated under the Indian Companies Act 1956, with its registration office in Mumbai and later it was shifted to Dandeli.
INTRODUCTION OF THE COMPANY
The Indian paper industry currently has a turnover of over Rs. 30000 crores and contributes over Rs. 3000 crores to the national exchequer. Even more importantly it is providing employment opportunities to over 1.5 million people, mostly in rural areas.
Indian paper industry has continued to upgrade its capacities and technologies, in spite of huge challenges like shortage of raw material, highly capital intensive nature of the industry, threat of cheaper imports from China, Indonesia etc.
INDUSTRY PROFILE
Competitors of WCPM are Mysore Paper mills ltd, Bhadravati Ballarpur Paper mills ltd, Andhra Pradesh Seesai Paper mills ltd, Andhra Pradesh
MARKET SCANNING
Wood free Writing & Printing Paper Wood free Offset Paper Security paper Accounts Book Paper Duplex Board
PRODUCT SCANNING
Indian Aluminum Co. Ltd. State Bank of India, Bank of Baroda, Central
Bank of India, Syndicate Bank Canara Bank, Corporation Bank, Indian
Bank, Indian Overseas Bank, Standard Chartered Bank, HSBC, etc.
CUSTOMER SCANNING
Problem Identification The company posted gross profit of Rs.
158.66 Crores as against Rs. 189. 18 Crores in the previous year – lower by Rs. 30.52 Crores (16%) whereas there was a net loss of Rs. 33.56 Crores as against profit of Rs. 90.08 Crores in the previous year.
METHODOLOGY
The net loss is due to following reasons; It is observed that the company has procured
10.31 lakhs MT of wood and bamboo as against 6.89 lakh MT in the previous year,
With the Company geared to source more than 10 lakhs MT of raw material per annum on sustained basis which is insufficient to meet the requirements.
Though there was shortage in the supply of raw material the establishment cost remained same.
Increasing rates of wood due to competition among the paper mills.
Other reasons are hike in the price of fuel and transportation cost.
Change in method of calculation of depreciation, resulting in higher depreciation by Rs. 104.42 Crores.
The company has reinstated Foreign Currency Loans/External Commercial Borrowings of USD 141.49 Million at the exchange rate prevailing as on 31st March 2012.
The “Thane” cyclone which hit coasts of Tamilnadu and Pondicherry in December 2011 has had its own share of strains on the supply side.
Paper industry has been removed from Core Sector for supply of coal by subsidiaries of Coal India Ltd. This may increase rates of coal substantially.
The paper industry is one of the 18 highly polluting categories of industries
Problem Formulation
CONTROLABLE
VARIABLES
UNCONTROLABLE
VARIABLES
Electricity.
Raw material.
Safety
Technology
Labor efficiency
Production volume
Quality of paper
Competitors
Instability of government
Lack of adequate fund
Inflation(fuel,power,
transportation)
Understanding the Relationship between Controllable & Uncontrollable variables:-
ELECTRICITY: Electricity is one of the controllable variables in the west coast paper mill because they use to have their own power plant in the industry now they are taking it from HESCOM were HESCOM is providing better price for the industry. Production of Chipping and Pulping it will take more electricity power so they have to pay more taxes to Govt. and also the electricity will be uncontrollable it may cause to short circuit which might lead to fire.
Problem Specification
EMPLOYEES: In production of Chipping, Pulping, Chemical Recovery, Paper Making it requires well educated person with required level of experience there will be a specific period of training for the employees. The company is providing more safety measures for employees to work difficult situation. Safety means avoiding the future unexpected happenings. Globalisation will affect employees because it will leads to job hopping.
To analyze the financial performance of the company for the period 2007 to 2012
To analyze the financial positions, overall growth & stability of the Company.
To analyze organization efficiency based on profitability and liquidity ratios.
OBJECTIVES
Secondary data: The secondary data has been collected from
the company, they include annual reports and financial statements, balance sheet provided by the company for the year 2007 to 2012
DATA COLLECTION METHODS
The study is limited to only five years of financial statements.
The interpretations made are based on the data available from the annual reports of the company.
The study assumes that the information gained by interaction with the company people is true to their knowledge.
Some of the department heads were not so cooperative towards the answering of questions
LIMITATIONS OF THE STUDY
Net Profit Ratio Formula: - EATNet Profit Ratio = --------------- X 100
Net Sales
DATA ANALYSIS AND INTERPRETATION
Particulars 2007-08 2008-09 2009-10 2010-11 2011-12
EAT 8,190.33 9,053.82 5,470.21 9,008.18 (3356.00)
Net Sales 58,322.71 61,975.14 62,390.71 1,06,473.00 1,30,517.00
Net profit
ratio
14.04 14.60 8.76 8.46 (2.57)
2007-08 2008-09 2009-10 2010-11 2011-12
-4
-2
0
2
4
6
8
10
12
14
16
14.0414.6
8.76 8.46
-2.57
Net profit ratio
Years
Rati
o
Findings The company’s liquidity position for the
current year is not healthy. Remarkable decline in the quick ratio of the
company for the present year. Return on capital employed, Return on
shareholder’s fund, Return on total fixed assets is very low compare to past 4 years.
FINDINGS, SUGGESTIONS AND CONCLUSION
The gross profit for the year 2011-12 is decreased compared to previous year.
For the present year 2011-12 the company has posted net loss. The net loss is due to non availability of sufficient raw materials, hike in the price of fuel and transportation cost, high rate of depreciation, high labor turnover, higher training cost, High amount of foreign Currency Loans/External Commercial Borrowings and the highly polluting nature of the company.
Suggestion The company should concentrate on increasing
the current assets in order to have a healthy liquidity position.
Company should take right steps in decreasing the depreciation rate and maintenance charges.
The company should take all possible steps towards the collection of debts.
It is favorable for the company to minimize the establishment cost to earn more revenue.
The company should stress to acquire more land in addition to existing land for the plantation of bamboos which is the main source of raw material for production
Right the company is in a position to get nearly 50% of the raw material requirement from the bamboos already planted in the acquired land by providing little source of income to the farmers engaged in the said land.
It is feasible to extend the existing plantation land to cultivate the bamboos to make it available the remaining raw material required per annum.
The company should take necessary steps to get the other raw materials like coal etc on cheaper basis to minimize transportation cost, freight etc.
THANK YOU