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a project on jindal poly films for ipu studentsTRANSCRIPT
A STUDY ON
“FINANCIAL ANALYSIS”
CONDUCTED AT
Jindal Poly Films Limited
Submitted in Partial Fulfilment for the Award of theDegree of Bachelor in Business Administration 2011-2012
Under the Guidance of: Submitted By: Dr. Rachna Jain Paras Mahajan
11814701712
Maharaja Agrasen Institute of Management StudiesAffiliated to Guru Gobind Singh Indraprastha University, Delhi
PSP Area, Plot No. 1, Sector 22, Rohini, Delhi 110086
1
STUDENT DECLARATION
This is to certify that I have completed the Project Report titled”A study on business and
financial analysis of Jindal Poly Films Limited ” under the guidance of Dr Rachna Jain for
partial fulfillment of the requirement for the award of Degree of Bachelor of Business
Administration at Maharaja Agrasen Institute of Management Studies, Delhi. This is an
original piece of work & I have not submitted it earlier elsewhere.
Name: Paras Mahajan
Enrollment No.:11814701712
2
CONTENTS
S. No. Topic Page No.
1 Student Declaration 2
2 Certificate 4
3 Acknowledgement 5
4 Executive Summary 6
5 Chapter-1: Introduction 7
6 Chapter-2: Company profile 13
7 Chapter-3: Research Methodology 27
8 Chapter-4: Data analysis and Interpretation 29
9 Chapter-5: Findings 56
10 Chapter-6: Conclusion 48
11 Chapter-7:Reccomendation 50
12 Chapter-8:Limitations of study 52
3
CERTIFICATE
This is to certify that the project report titled ” A study on business and financial
analysis of Jindal Poly Films Limited” is an academic work done by Paras Mahajan
submitted in the partial fulfillment of the requirement for the award of the degree of
Bachelor of Business Administration at Maharaja Agrasen Institute of Management Studies,
Delhi, under my guidance & direction. To the best of my knowledge and belief the data&
information presented by her in the project has not been submitted earlier.
Assis. Prof. MAIMS: Dr. Rachna Jain
Signature:
4
ACKNOWLEDGEMENT
I owe my sincere thanks and gratitude to Dr. Rachna Jain who inspired me by her able
guidance and was a constant guiding light during the course of project study. The support
and knowledge provided by her has been a great value addition for me and will go a long
way in building a promising career.
First of all I would like to thank Dr. C.S. SHARMA (Director of MAIMS) who gave me this
golden opportunity to learn something new about project writing.
The help provided to me by the entire division of Jindal Poly Films Limited also obliges
me in making this project too.
BBA (GEN) 3rd YEAR
Enrolment No.:11814701712
5
Executive Summary
Jindal Poly Films Limited is engaged in the manufacturing and marketing of Flexible Packaging Films,
Polyester Chips. Till 1985 the company was producing only polyester yarn but diversified in 1996 into
BOPET film production. In 2003, Jindal Poly Films Limited commenced production of BOPP film and
metallised film. Jindal Poly Films Limited capabilities were strengthened by acquisition in November 2003
of Rexor S.A.S, in France. Products produced by Jindal Poly Films Limited are PET Films, BOPET Films,
BOPP Films. Jindal Poly Films Limited plant at Nasik, Maharashtra is the world’s largest single location
plant for the manufacture of BOPET and BOPP films.
Jindal Poly Films Limited is the 8th largest manufacturer of the BOPET films in the World and the largest in
the whole of the Asia. The company controls around 58.5% share of the films in the India. The company
achieved a Financial Turnover of Rs. 2630.72 cr for the financial year 2013-2014.
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CHAPTER 1
INTRODUCTION
Company Logo
1.1 Nature of the organisation:
7
The company is engaged in the manufacturing and marketing of Flexible Packaging Films, Polyester Chips.
Till 1985 the company was producing only polyester yarn but diversified in 1996 into BOPET film
production. In 2003, Jindal Poly Films Limited commenced production of BOPP film and metallised film.
Jindal Poly Films Limited capabilities were strengthened by acquisition in November 2003 of Rexor S.A.S,
in France, which produces metallised and coated films as well as tear tape, stamping foil, security thread and
other high-value products. Jindal Poly Films Limited plant at Nasik, Maharashtra is the world’s largest
single location plant for the manufacture of BOPET and BOPP films. Jindal Poly Films Limited offers
various products some of them are as follows:
1.1.1 PET Films:
Jindal Poly Films Limited today delivers full range of PET films which includes Chemical coated films,
Opaque white films, Matte films, Co-extruded clear and Ultra clear films, High strength yarn grade films for
the converting industry, graphic arts industry, electrical insulation applications, labels, release liner coating
and other wide range of applications. Current Pet Films capacity is 127000 tpa with 5 Lines.
1.1.2 BOPP Films:
Jindal Poly Films Limited started the manufacture of BOPP films in 2003; the most widely used flexible
packaging films in the world. Taking advantage of India's growing demand, Jindal Poly Films Limited has
rapidly increased its BOPP film Capacity from 90000 MT in 2006 to 214000 MT in Financial Year 2012-
2013 and we are now India's largest producer of BOPP films. State-of –the-art manufacturing facilities from
DORNIER, BRUCKNER, GOEBEL & KAMPF help JPFL produce thin films, matte films, over wrap films,
heat sealable films, metalizable / metalized films, label films, opaque white and P.S. tape / garment bag film
etc.
1.2 Vision and Mission of the company:
8
1.2.1 Vision of Jindal Poly Films Limited:
Vision of Jindal Poly Films Limited is “Openness and Transparency, Integrity and Honesty, Dedication &
Commitment, Creativity and Teamwork, Mutual Trust & Appreciation, Pursuit of Excellence and to be an
acknowledged Leader in terms of maximizing stakeholder value, profitability and growth by being a
financially strong, customer friendly, progressive Organisation.”
1.2.2 Mission of Jindal Poly Films Limited:
To seek global market leadership.
To create a winning work culture, operating in the highest standards of ethics and values.
Development and growth in BOPET and BOPP films.
Excellence in customer service, quality and R&D.
The business is focused around the delivery of three strategic priorities which aim to increase growth,
reduce risk and improve their long-term financial performance. These priorities are: grow a diversified
global business, deliver more products of value, and simplify the operating model.
Figure 1: Mission and Vision of JPFL
9
GROW
SIMPLIFY
DELIVER
MISSION
1.3 Product Range Of the Company:
Jindal Poly Films Limited is the largest manufacturer of BOPET and BOPP films in India. The company
also produce Metallised BOPET film and BOPP films and Coated BOPET film and BOPP films. Various
products manufactured by the company are as follows:
1.3.1 PET Films:
JPFL today delivers full range of PET films which includes Chemical coated films, Opaque white films,
Matte films, Co-extruded clear and ultra clear films, and High strength yarn grade films for the converting
industry, graphic arts industry, electrical insulation applications, labels, release liner coating and other wide
range of applications. Current Pet Films capacity is 127000 tpa with 5 Lines
Figure 2: CLIENTS OF JPFL (PET FILMS)
10
1.3.2 BOPP Films:
JPFL started the manufacture of BOPP films in 2003; the most widely used flexible packaging films in the
world. Taking advantage of India's growing demand, JPFL has rapidly increased its BOPP film Capacity
from 90000 MT in 2006 to 214000 MT in Financial Year 2012-2013 and we are now India's largest producer
of BOPP films.State-of –the-art manufacturing facilities from DORNIER, BRUCKNER, GOEBEL &
KAMPF help JPFL produce thin films, matte films, over wrap films, heat sealable films, metalizable /
metalized films, label films, opaque white and P.S. tape / garment bag film etc.
Figure 3: CLIENTS OF JPFL (BOPP FILMS)
1.3.3 Metalized Films:
Jindal Poly Films Ltd commenced the first metallizing production in January 2003 using sophisticated
technology. We have world class Metalizers from Applied Materials, Germany.Metallized BOPET Films are
used for Flexible, packaging, metallic yarn, sequins for textiles, decoratives etc. Metallized BOPP films are
used for flexible packaging, gift wraps and decoaratives. The thickness of films ranging 10 micron-
150micron, the max width is 2850mm, and min width is 210mm that can be slitted into different sizes as per
customers' specifications.
Figure 4: Metalized Film Plant11
1.3.4 Coated Films:
As a part of the forward integration of BOPP and PET Films, JPFL installed one coating lines for
manufacturing of entire range of specialty coated films like PVdC, Acrylic, Low Temperature Seal and High
Seal Integrity coatings. The main features of our Coated Films are:
Solvent Free coatings.
Excellent Optics.
Good Barrier - Moisture, Oxygen, Aroma, Gases.
Good Printability.
Heat Sealable.
Good Machinability.
Can be used as Monofilm or part of Laminate structure
State of the art high performance coating facility from K-MEC enhance JPFL’s capability to produce entire
range of coated BOPP and PET film as well as development of new coatings for different applications and
tailoring the products as per customer’s requirements.
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CHAPTER-2
COMPANY PROFILE
ABOUT JPFL
13
14
Jindal Poly Films Ltd
Parent Company B.C. Jindal Group
Category Industrial Products
Sector Diversified chemicals
Tagline/ Slogan -
USP Largest single location plant in the world
STP
Segment
Polyester film, polypropylene film, steel pipes, and
photographic products
Target Group
Polyethylene terephthalate (PET) films, biaxially- oriented
polypropylene (BOPP) films, metalized films, and coated
films for textile and packaging industry.
Positioning Largest players in polyfilms
Size of the Organisation:
1.3.5 In terms of Manpower:
Jindal Poly Films Limited is a large company having total manpower of around 400 to 425 workers engaged
in manufacturing of films at their Nasik plant besides around 40 to 50 employees at their corporate office.
1.3.6 In terms of Financial Turnover:
The company achieved a turnover of Rs. 2630.72 cr for the financial year 2013-2014.
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1.4 Organisation Structure of the Company:
Jindal Poly Films Limited is a part of INR 30 billion B.C.Jindal group, a 58 year old
industrial group but is managed by professionals. Hemant Sharma is the chief executive officer assisted by
L.P Soni Chief Financial Officer and Ajit Mishra Company Secretary and Compliance Officer. Samir
Banerjee is marketing head of the company as well as Director of the company.
Organisation Structure of Every Department:
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Unit Head
Functional Head
Figure5: Organisation Structure of every Department
1.5 Market Share & Position of The Company:
Jindal Poly Films Limited is the 8th largest manufacturer of the BOPET films in the World and the largest in
the whole of the Asia. The company controls around 58.5% share of the films in the India.
1.6 Leadership of the company:
Hemant Sharma is the chief executive officer of the company. During the summer training I interacted with
Mr. Ashish Bhargava(Manager Finance) and Mr. Devesh Kumar(Manager Accounts) of the company.
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Head of Department
Sectional Head
Co-ordinators
BOARD OF DIRECTORS OF THE COMPANY:
Name Executive /
Non-Executive
Promoter /
Non-
Promoter
Age Qualification Experience
Rashid Jilani Non -
Executive &
Independent
Non-
Promoter
72 M.Com,
C.A.I.I.B
44 years experience in
Banking & Finance.
Former CMD of PNB.
Jogesh Bansal Non -
Executive &
Independent
Non-
Promoter
61 B.A. 39 years experience in
trading and industry.
R. K. Pandey Non-Executive
and
Independent
Non-
Promoter
73 M.Com,
LLB, FCS
45 years experience in
Finance and Corporate
matters. Former
Executive Director of
Delhi Stock Exchange
Sanjay Mittal Executive Non-
Promoter
48 B.Com,
CA(Inter)
25 years of experience
in Accounts, Taxation
and Management.
Rathi Binod Pal Executive Non-
Promoter
44 B.Com , CA
(Inter)
22 yrs Experience in
Commercial,
Accounts and
Management
Table 2: Board of Directors of JPFL
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2.1 SWOT:
A SWOT analysis (alternatively SWOT matrix) is a structured planning method used to evaluate
the strengths, weaknesses, opportunities, and threats involved in a project or in a business venture. A SWOT
analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the
business venture or project and identifying the internal and external factors that are favourable and
unfavourable to achieve that objective. Some authors credit SWOT to Albert Humphrey, who led a
convention at the Stanford Research Institute (now SRI International) in the 1960s and 1970s using data
from Fortune 500 companies. However, Humphrey himself does not claim the creation of SWOT, and the
origins remain obscure. The degree to which the internal environment of the firm matches with the external
environment is expressed by the concept of strategic fit.
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Setting the objective should be done after the SWOT analysis has been performed. This would allow
achievable goals or objectives to be set for the organization.
Strengths: Characteristics of the business or project that give it an advantage over others.
Weaknesses: Characteristics that place the business or project at a disadvantage relative to others
Opportunities: Elements that the project could exploit to its advantage
Threats: Elements in the environment that could cause trouble for the business or project
Identification of SWOTs is important because they can inform later steps in planning to achieve the
objectivive.
2.2 SWOT analysis of Jindal Poly Films Limited:
SWOT analysis is a strategic planning method used to evaluate the strengths, Weaknesses, opportunities,
and Threats involved in Marketing of products by manufacturing companies. It involves specifying the
objective of the business and identifying the internal and external factors that are favourable and
unfavourable to achieve that objective. Companies like Jindal Poly Films Limited Cosmo Films Ltd,
Polyplex Corporation, and Midland polymer are also facing massive amount of new challenges. There
are many factors that affect the overall competition in the Poly Films industry and there are many factors
that can add to the competitive advantage of Poly Films Company in order for them to be one of the
biggest players in Poly sector. Thus it was important during the research to find out the strengths,
weakness, opportunity and threats of the Jindal Poly Films Limited.20
2.2.1 Strength:
Strength of Jindal Poly Fims Limited in comparison to its competitors is as follows:
1. Huge Investment:
Jindal Poly Films Limited has made huge investment in low cost and highly efficient modern thin film
extrusion plants.
2. Safety of Assets:
Jindal Poly Films Limited employs stringent controls to ensure the safety of its asset base against loss and
misuse.
3. Purchasing Power:
There has been an increase in purchasing power in the developing countries which has resulted in a
significant rise in per capita consumption of flexible packaging materials.
4. Industrial Relations:
Jindal Poly Films Limited maintains excellent industrial relations which induces the right culture for an
efficient working and makes the work environment healthier.
5. Largest Player:
Jindal Poly Films Limited is one of the largest players of poly films in India.
6. Economical and Efficient BOPET and BOPP:
Jindal Poly Films Limited produces economical and efficient BOPET and BOPP through backward and
forward integration.
7. Transparency:
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The major strength of Jindal Poly Films Limited is that it has Transparency in its working system.
2.2.2 Weakness:
Weakness of Jindal Poly Films Limited in comparison to its competitors is as follows:
1. Down of Capacities:
The recession witnessed closing down of capacities in Western Europe and U.S.A. coupled with the shift in
demand.
2. Limited Production
Production of thick BOPETS is limited to established producers in U.S.A., Europe, Japan and Korea.
3. Employee Turnover:
Major weakness of Jindal Poly Films Limited is that the employee turnover is high.
2.2.3 Opportunities:
Opportunities of Jindal Poly Films Limited in comparison to its competitors is as follows:
1. Increasing Consumption:
Thin BOPET films constitute nearly three fourth of the worlds consumption and the company manufacturers
both thick and thin BOPETs.
2. High Profit Margin:
High demand for thin BOPET films and comparably high profit margin.
3. Huge Opportunities for Growth:
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Penetration of flexible packaging in the developing economies in Asia is still low and huge opportunities
exist for growth with the increase in organized retail and small serve packs.
2.2.4 Threats:
Threats of Jindal Poly Films Limited in comparison to its competitors is as follows:
1. Pressure on input cost:
Given the volatile trend in crude oil and demand for polymers for competing applications the pressure on
input costs can fluctuate.
2. Modern Machinery:
Latest and modern machinery with most competent technical backup does not ensure success against fierce
competitions.
3. No Increase in demand:
Capacity increase in many parts of Asia and India, without corresponding increase in demand.
4. Threats from other competitors:
JPFL is facing threats from other leading manufacturers of polyfilms such as Cosmo Films Ltd, Polyplex
Corporation, Midland polymers.
5. Increasing Price of Raw Material:
Major threat of Jindal Poly Films Limited is that the prices of raw material are increasing very rapidly.
2.3 Unique Selling Preposition of Different Products:
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Jindal Poly Films Limited produces various products such as PET Films, BOPET Films, BOPP Films
etc. JPFL has different USP for these products which is explained as follows:
2.3.1 PET Films:
JPFL today delivers full range of PET films which includes Chemical coated films, Opaque white films,
Matte films, Co-extruded clear and Ultra clear films, High strength yarn grade films for the converting
industry, graphic arts industry, electrical insulation applications, labels, release liner coating and other
wide range of applications. Current Pet Films capacity is 127000 tpa with 5 Lines.
USP of PET FILMS:
USP of different products under PET Films is explained as follows:
TYPE DESCRIPTIONSTANDARD THICKNESS
* (µ)USP APPLICATION
Matt Films
J-950 Bi-axially oriented translucent & matte surface polyester film
12, 19, 23, 36, 50, 75µ
Medium surface gloss, excellent machinability &
thermal properties.
Muted Metallization, wood grain application, label &
other industrial application
J-951 One side chemically treated bi-axially oriented translucent and
matte surface polyester film
12, 23, 36, 50µ
Medium surface gloss, excellent machinability &
thermal properties along with good bond
strength.
Muted Metallization, wood grain application, label &
other industrial application
J-952 One side corona treated bi-axially oriented translucent and
matte surface polyester film
12, 23, 36, 50µ
Medium surface gloss, excellent machinability &
thermal properties along with good bond
strength.
Muted Metallization, wood grain application, label &
other industrial application
Films for Flexible packaging and for General purpose
J-200 Untreated plain bi-axially 10, 11, 12, 15, High Mechanical, Packaging, Printing,
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oriented polyester film 23, 36, 50µ Optical and Thermal
characteristics.
Lamination and Metallization.
J-201 One side corona treated bi-axially oriented polyester film
10, 11, 12, 15, 23, 36, 50µ
High Mechanical, Optical & Thermal
characteristics with improved
ink / metal adhesion
characteristics.
Printing, Packaging, Lamination and Metallization.
J-203 One side low corona treated bi-axially oriented polyester film
10, 11, 12, 15, 23, 36, 50µ
High Mechanical, Optical & Thermal
characteristics with improved
ink / metal adhesion
characteristics.
Printing, Packaging, Lamination and Metallization.
Table 3: USP of PET Films
2.3.2 BOPET Films:
BOPET Film is a versatile product broadly classified according to thickness of the film. Thick
Films (50-350 microns in thickness) find application in photographic/X-ray, electronics, printing and
document lamination. Thin films are used in Flexible packaging yarn and cables etc.
USP of BOPET FILMS:
USP of different products under BOPET Films is explained as follows:
TYPE DESCRIPTIONSTANDARD
THICKNESS* (µ)
USP APPLICATION
J200M0
Normal density metallization on plain side and other side is also plain
10, 12µGood bond strength plus
barrier properties.Flexible packaging
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J201M0
Normal density metallization on Corona side and other side plain
10, 12µHigh bond strength plus
barrier properties.Flexible packaging
& Printing
J201M1
Normal density metallization on un treated side and other side corona
10, 12µGood bond strength plus
barrier properties & better printability on other side.
Flexible packaging & Printing
J202M0
High density Metallization on corona surface and
other side plain10, 12µ
Exceptionally high barrier properties & bond strength.
Flexible packaging
J202M1
High density Metallization with plasma and other side
corona10, 12µ
Exceptionally high barrier properties & bond strength along with improved ink adhesion on other side.
Flexible packaging & Printing
J221M0
Normal density metallization on pre-coated co polyester side and other
side plain
12µGood barrier properties &
bond strength.Flexible
Table 4: USP of BOPET Films
2.3.3 BOPP Films:
JPFL started the manufacture of BOPP films in 2003; the most widely used flexible packaging films
in the world. Taking advantage of India's growing demand, JPFL has rapidly increased its BOPP film
Capacity from 90000 MT in 2006 to 214000 MT in Financial Year 2012-2013 and we are now
India's largest producer of BOPP films.
USP of BOPP FILMS:
USP of different products under BOPP Films is explained as follows:
TYPEDESCRIPTIO
N
STANDARD THICKNESS*
(µ)USP APPLICATION
26
PVDC Coated Films
J200P0 One side PVDC coated biaxilly
oriented polyester film
14µ Excellent barrier properties See through flexible
Packaging & printing.
J202P0 One side PVDC (High GSM)
coated biaxilly oriented
polyester film
16µ Excellent barrier properties See through flexible
Packaging & printing.
C405R0 One side Coated transparent
polyester film.
30µ Excellent mechanical properties
Suitable for label face film,
coating and other general
applications.
C406S0 One side Silicone coated Other side plain.
30µ Better anchorage then in line coated product.
Designed for release purpose for label liner application where easy release is required.
C600R0 One side Coated white opaque
film.
50µ Excellent mechanical properties
High opacity film suitable for label face film,
coating and other general
applications
C950RM One side coated bi axially
oriented Matte Metallized
Polyester film.
50µ Excellent dimensional stability
Designed for Face film of
label application.
Table 5: USP of BOPP Films
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CHAPTER-3
RESEARCH
METHODOLOGY
OBJECTIVES OF STUDY
Objectives of my study are as follows:
To make comparative analysis of financial statements for Jindal Poly Films Limited.
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To improve my business acumen for the manufacturing industry.
To analyse various accounting policies followed by the organisation.
RESEARCH DESIGN
Determined the Information Sources: The data has been gathered through primary sources. PRIMARY DATA is collected through balance sheet, trading account and profit and loss account
DATA COLLECTION
The data has been collected by gathering information through the balance sheet, trading account and profit and loss account. In these accounts, the charted accountant records all the financial details and display them here . This method of collecting data is usually carried out in structured ways were output depend upon the ability of interviewer to a large extent.
DATA SOURCE:
There are two main source of data collection i.e. through primary data collection are secondary data collection method. I have adopted primary data collection method for the survey. Under this method the method of survey was best suited with my sample size and requirement of data. Primary sources being interaction with various customers of Kailash Stores and filling up questionnaire by them.
INSTRUMENT USED:
A Ratio analysis was used for analysing financial status.
A ratio analysis is a research instrument consisting of a series of different ratio which helps in analysing different aspect of finance .
29
CHAPTER-4
DATA ANALYSIS AND
INTERPRETATION
3.1 Finance :
Finance is a field closely related to accounting that deals with the allocation of assets and liabilities over
time under conditions of certainty and uncertainty. Finance also applies and uses the theories
of economics at some level. Finance can also be defined as the science of money management. Finance is
30
important for the organisation because funds are required for the purchase of land and building, machinery
and other fixed assets.
3.1.1 Comparative Ratio Analysis of Jindal Poly Films Limited:
Comparative Ratio Analysis of Jindal Poly Films Limited has been done through accounting ratios which is
as follows:
Current Ratio:
Current ratio is most commonly used to perform the short term financial analysis. Also known as working
capital ratio, this ratio matches the current assets of the firm to its current liabilities.
Meaning of Current Assets:
Current Assets includes: (a) Cash in hand and at bank, (b) Readily Marketable Securities, (c) Bills
Receivable, (d) Stock in Trade, (f) Prepaid Expenses, (g) Any other assets which, in the normal course of
business will be converted in cash in a year’s time.
Meaning of Current Liabilities:
These include all obligations maturing within a year such as: (a) Sundry Creditors (b) Bills Payable (c) Bank
Overdraft (d) Income Tax Payable (e) Dividends Payable.
Formula:
Current Ratio=Current Assets/Current Liabilities
Significance and Objective:
31
Current ratio throws a good light on the short term financial position and policy. It is an indicator of a firm’s
ability to promptly meet its short-term liabilities. A relatively high current ratio indicates that the firm is
liquid and has the ability to meet its current liabilities. On the other hand a relatively low current ratio
indicates that the firm will find it difficult to pay its bills.
Normally a current ratio of 2:1 is considered satisfactory. In other words current assets should be twice the
amount of current liabilities. If the current ratio is 1:1 it means that the funds yielded by current assets are
just sufficient to pay the amounts due to various creditors and there will be nothing left to meet the expenses
which are being currently incurred. Thus the ratio should be always more than 1:1.
For Year 2013
Current Ratio=Current Assets/Current Liabilities
Current Assets of JPFL= 7,497,649,318
Current Liabilities of JPFL=5,657,262,582
Current Ratio= 7,497,649,318/5,657,262,582
Therefore Current Ratio of the JPFL for year ending
2013= 1.3:1.
For Year 2014
Current Ratio=Current Assets/Current Liabilities
Current Assets of JPFL= 7,768,442,292
Current Liabilities of JPFL=7,582,033,311
Current Ratio=7,768,442,292/7,582,033,311
Therefore Current Ratio of the JPFL for year ending
2014= 1.02:1.
Table 6: Calculation of Current Ratio
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2013 20140
0.2
0.4
0.6
0.8
1
1.2
1.4
CURRENT RATIO OF JPFL
CURRENT RATIO OF JPFL
Figure 7: Bar Graph of Current Ratio
Interpretation: In 2013 the current ratio of JPFL was 1.3:1 and in 2014 it was 1.02:1. This tells the current
ratio is declining and company is continuously using its current asssets. The funds yielded by the current
assets are just sufficient to pay the amounts due to various creditors and there will be nothing left to meet the
expenses which are currently incurred.
Quick Ratio:
Quick ratio is also known as acid test ratio or liquid ratio. It is a more severe test of liquidity of a company
than the current ratio. It shows the ability of a business to meet its immediate financial commitments. It is
used to supplement the information given by the current ratio.
Meaning of Quick Assets and Quick Liabilities:
The quick assets include cash, debtors (excluding bad debts) and securities which can be realise without
difficulty. Stock is not included in quick assets for the purpose of this ratio. Similarly prepaid expenses are
also excluded as they cannot be converted into cash. Quick Liabilities refer to all current liabilities except
bank overdraft.
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Formula:
Quick Ratio=Quick assets/Current Liabilities.
Significance and Objective:
Quick Ratio is a more rigorous test of liquidity of a firm than the current ratio. When a quick ratio is used
along with current ratio, it gives a better picture of the firm’s ability to meet its short term liabilities out of its
short term assets. This ratio is of great importance for banks and financial institutions.
Generally a quick ratio of 1:1 is considered to represent a satisfactory current financial position. If the ratio
is less the business may find itself in serious financial difficulties.
For Year 2013
Quick Ratio=Quick Assets/Current Liabilities
Quick Assets of JPFL=Current Assets-Inventories
Quick Assets of JPFL=7,497,649,318-2,717,869,729
Quick Assets of JPFL=4,779,779,589
Current Liabilities of JPFL=5,657,262,582
Quick Ratio=4,779,779,589 /5,657,262,582
Therefore Quick Ratio of the JPFL for the year
ending 2013= 0.84:1.
For Year 2014
Quick Ratio=Quick Assets/Current Liabilities
Quick Assets of JPFL=Current Assets-Inventories
Quick Assets of JPFL=7,768,442,292-3,218,093,163
Quick Assets of JPFL=4,550,349,129
Current Liabilities of JPFL=7,582,033,311
Quick Ratio= 4,550,349,129/7,582,033,311
Therefore Quick Ratio of the JPFL for the year
ending 2014= 0.60:1.
Table7: Calculation of Quick Ratio
34
2013 20140
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
QUICK RATIO OF JPFL
QUICK RATIO OF JPFL
Figure 8: Bar Graph of Quick Ratio
Interpretation: In 2013 the Quick ratio of JPFL was 0.84:1 and in 2014 it was 0.60:1. The quick ratio has
declined and which is not a good indicator. The company is continuously using its fixed assets. If the quick
will keep on declining like this the in future the company may find itself in serious financial difficulties.
Debt-equity Ratio:
Debt-Equity Ratio attempts to measure the relationship between total debts and shareholders fund. In other
words, this ratio measures the relative claims of long term creditors on the one hand and owners on the other
hand, on the assets of the company.
Formula:
Debt-Equity Ratio=Total Debts (short term+ long term)/Shareholders Fund
Total debts includes all outside liabilities both short term and long term. In other words external equities
include debentures, sundry creditors, bills payable, bank over Draft. Internal equities refer to shareholders
funds.
35
Significance and Objective:
This Ratio shows the relative amount of funds supplied to the company by outsiders and by owners. A low
debt equity ratio implies a greater claim of owners on the assets of the company than the creditors. On the
other hand a high debt equity ratio indicates that the claims of the creditors are greater than those of the
owners.
The debt equity ratio of 1:1 is generally acceptable. From the viewpoint of the company, the lower this ratio,
the less the company has to worry in meeting its fixed obligations. This ratio also indicates the extent to
which a company has to depend upon the outsiders for its financial requirements.
For Year 2013
Debt-equity Ratio=Total debts/Shareholders Fund
Total debts= Long term debts+ Short term debts
Total debts of JPFL= 1,958,858,990+2,986,415,230
Total debts of JPFL=4,945,274,220
Shareholders Fund of JPFL=11,293,156,017
Debt-equity Ratio= 4,945,274,220/11,293,156,017
Therefore debt equity ratio for year ending 2013=
0.43:1.
For Year 2014
Debt-equity Ratio=Total debts/Shareholders Fund
Total debts= Long term debts+ Short term debts
Total debts of JPFL=322,629,434+2,720,812,363
Total debts of JPFL=3,043,441,797
Shareholders Fund of JPFL=12,588,889,470
Debt-equity Ratio=3,043,441,797/12,588,889,470
Therefore debt equity ratio for year ending 2014=
0.24:1.
Table 8: Calculation of Debt Equity Ratio
36
2013 20140
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
Debt Equity Ratio
Debt Equity Ratio
Figure 9: Bar Graph of Quick Ratio
Interpretation: In 2013 the debt equity ratio of JPFL was 0.43:1 and in 2014 it was 0.24:1. The debt equity
ratio has declined which is a good indicator. The ratio 0.24:1 indicates that for every rupee of equity the firm
has raised 24 paisa by long term debt.
Proprietary Turnover ratio:
Proprietary Turnover ratio is a variant of debt equity ratio. It measures the relationship between shareholders
funds and total assets.
Formula:
Proprietary Ratio=Shareholders funds/total assets.
Shareholders fund comprise of ordinary share capital, preference share capital and all items of reserves and
surplus. Total assets include all tangible assets and only those tangible assets which have a definite realisable
value.
Significance and Objective:
37
Proprietary ratio shows the extent to which the shareholders own the business and thus indicate the general
financial strength of the business. The higer the proprietary ratio the greater the long term stability of the
company and consequently greater protection to creditors. However a very high proprietary ratio may not
necessarily be good because if funds of outsiders are not used for long term financing a firm may not be able
to take advantage of trading on equity.
For Year 2013
Proprietary Turnover ratio= Shareholders Fund/Total
Assets
Shareholders Fund of JPFL=11,293,156,017
Total Assets of JPFL=20,620,229,126
Proprietary Turnover
ratio=11,293,156,017/20,620,229,126
Therefore Proprietary Turnover ratio is 0.54:1.
For Year 2014
Proprietary Turnover ratio= Shareholders Fund/Total
Assets
Shareholders Fund of JPFL=12,588,889,470
Total Assets of JPFL=22,208,526,752
Proprietary Turnover Ratio
=12,588,889,470/22,208,526,752
Therefore Proprietary Turnover ratio is 0.56:1.
Table 9: Calculation of Proprietary Turnover Ratio
2013 20140.53
0.535
0.54
0.545
0.55
0.555
0.56
0.565
Proprietary Turnover Ratio of JPFL
Proprietary Turnover Ratio of JPFL
Figure 10: Bar Graph of Proprietary Turnover Ratio38
Interpretation: In 2013 the proprietary ratio of JPFL was 0.54:1 and in 2014 it is 0.56:1. Increase in
proprietary ratio is a good indicator. The increase in proprietary ratio is showing that there is an increase in
the extent to which the shareholders own the business. Thus indicating good financial strength of business.
Total Debt to Total Assets Ratio:
Total debt to total assets is a leverage ratio that defines the total amount of debt relative to assets. This
enables comparisons of leverage to be made across different companies. The higher the ratio, the higher the
degree of leverage, and consequently, financial risk. This is a broad ratio that includes long-term and short-
term debt (borrowings maturing within one year), as well as all assets – tangible and intangible.
Formula:
Total Debt to Total Assets Ratio=Total Debt (Short Term Debt+Long Term Debt)/Total Assets
For Year 2013
Total Debt to Total Assets Ratio=Total Debt (Short
Term Debt+Long Term Debt)/Total Assets
Total Debt= Short Term Debt+Long Term Debt
Total Debt=1,958,858,990+2,986,415,230
Total Debt=4,945,274,220
Total Assets= 20,620,229,126
Total Debt to Total Assets
Ratio=4,945,274,220/20,620,229,126
Total Debt to Total Assets Ratio=0.24:1
For Year 2014
Total Debt to Total Assets Ratio=Total Debt (Short
Term Debt+Long Term Debt)/Total Assets
Total Debt= Short Term Debt+Long Term Debt
Total Debt=322,629,434+2,720,812,363
Total Debt=3,043,441,797
Total Assets=22,208,526,292
Total Debt to Total Assets
Ratio=3,043,441,797/22,208,526,292
Total Debt to Total Assets Ratio=0.14:1
Table10: Calculation of Total Debt to Total Assets Ratio
39
2013 20140
0.05
0.1
0.15
0.2
0.25
0.3
Total Debt to Total Assets Ratio
Total Debt to Total Assets Ratio
Figure 11: Bar Graph of Total Debt to Total Assets Ratio
Interpretation: In 2013 the Total Debt to Total Assets Ratio of JPFL was 0.24:1 and in 2014 it came down to
0.14:1. The lowering of ratio is a good indicator. In 2013 24% of total assets were financed by total debt
whereas in 2014 it came down to 14%.
Long Term Debt to Total Assets Ratio:
The Long Term Debt to total asset ratio defined, at the simplest form, an indication of what portion of a
company’s total assets is financed from long term debt. The value varies from industry and company.
Comparing the ratio with industry peers is a better benchmark.
Long term debt to total asset ratio explained a measure of the extent to which a company is using long term
debt. It is an indicator of the long-term solvency of a company. The higher the level of long term debt, the
more important it is for a company to have positive revenue and steady cash flow. It is very helpful for
management to check its debt structure and determine its debt capacity.
Formula:
Long Term Debt to Total Assets Ratio= Long Term Debt/ Total Assets Ratio
40
For Year 2013
Long Term Debt=1,958,858,990
Total Assets=20,620,229,126
Long Term Debt to Total Assets Ratio= Long Term
Debt/ Total Assets Ratio
Long Term Debt to Total Assets
Ratio=1,958,858,990/20,620,229,126
Long Term Debt to Total Assets Ratio=0.09:1
For Year 2014
Long Term Debt=322,629,434
Total Assets=22,208,526,292
Long Term Debt to Total Assets Ratio= Long Term
Debt/ Total Assets Ratio
Long Term Debt to Total Assets
Ratio=322,629,434/22,208,526,292
Long Term Debt to Total Assets Ratio=0.01:1
Table 11: Calculation of Long Term Debt to Total Assets Ratio
2013 20140
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
0.1
Long Term Debt to Total Assets Ratio
Long Term Debt to Total Assets Ratio
Figure 12: Bar Graph of Long Term Debt to Total Assets Ratio
Interpretation: In 2013 Long Term Debt to Total Assets ratio of JPFL was 0.09:1 and in 2014 it came down
to 0.01:1. The lowering of Long Term Debt to Total Assets Ratio is a good indicator. In 2014 the company
had Rs. 0.01 as long term debt for every rupee it has in assets.
41
Fixed Assets to Equity Ratio:
Fixed assets to equity ratio measures the contribution of stockholders and the contribution of debt sources in
the fixed assets of the company. It is computed by dividing the fixed assets by the stockholders’ equity.
Formula:
Fixed Assets to Equity Ratio=Fixed Assets/Shareholders Fund
Significance and Interpretation:
If fixed assets to Shareholders equity ratio is more than 1, it means that shareholders’ equity is less than the
fixed assets and the company is using debts to finance a portion of fixed assets. If the ratio is less than 1, it
means that shareholders’ equity is more than the fixed assets and the shareholders’ equity is financing not
only the fixed assets but also a part of the working capital.
For Year 2013
Fixed Assets to Equity Ratio=Fixed
Assets/Shareholders Fund
Fixed Assets=12,982,072,586
Shareholders Fund=11,293,156,017
Fixed Assets to Equity
Ratio=12,982,072,586/11,293,156,017
Fixed Assets to Equity Ratio=1.14:1
For Year 2014
Fixed Assets to Equity Ratio=Fixed
Assets/Shareholders Fund
Fixed Assets=12,056,521,818
Shareholders Fund=12,588,889,470
Fixed Assets to Equity
Ratio=12,056,521,818/12,588,889,470
Fixed Assets to Equity Ratio=0.95:1
Table 12: Calculation of Fixed Assets to Equity Ratio
42
2013 20140.85
0.9
0.95
1
1.05
1.1
1.15
1.2
Fixed Assets to Equity Ratio
Fixed Assets to Equity Ratio
Figure 13: Bar Graph of Fixed Assets to Equity Ratio
Interpretation: In 2013 the Fixed Assets to Equity ratio of JPFL was 1.14:1 and in 2014 it came down to
0.95:1. The lowering of Fixed Assets to equity Ratio is not a good indicator. In 2014 the shareholder equity
is less than 1 it means that shareholders’ equity is more than the fixed assets and the shareholders’ equity
is financing not only the fixed assets but also a part of the working capital.
Return on Investment(ROI):
This is the most important test of profitability of a business. It measures the overall profitability. It is
ascertained by comparing profit earned and capital employed to earn. This ratio is expressed as a percentage.
Formula:
ROI: Earnings before Interest and Tax/Capital Employed*100
For Year 2013
Earnings before Interest and Tax=2,604,740,145
Capital Employed=Debt+Equity
Capital Employed=1,985,858,990+11,293,156,017
Capital Employed=13,279,015,007
For Year 2014
Earnings before Interest and Tax=518,214,142
Capital Employed=Debt+Equity
Capital Employed= 322,629,434+12,588,889,470
Capital Employed=12,911,518,904
43
ROI= Earnings before Interest and Tax/Capital
Employed*100
ROI=2,604,740,145/13,279,015,007*100
ROI=19.62%
Earnings before Interest and Tax/Capital
Employed*100
ROI=518,214,142/12,911,518,904*100
ROI=4.5%
Table 13: Calculation of Return on Investment
2013 20140.00%
5.00%
10.00%
15.00%
20.00%
25.00%
ROI
ROI
Figure 14: Bar Graph of Return on Investment
Interpretation: In 2013 ROI of JPFL was 19.62% and in 2014 it came down to 4.5%. The lowering of ROI is
not a good indicator. This tells the profits of JPFL declined in 2014 to a significant amount.
Return on Proprietors Equity:
This is also known as Return on Shareholder’s Funds. It shows the ratio of net profit to owner’s capital.
Formula:
Return on Proprietors Equity: Profit after taxes and interest/Shareholders funds*100
44
For Year 2013
Profit after taxes and interest=1,391,540,170
Shareholders Fund=11,293,156,017
Return on Proprietors Equity: Profit after taxes and
interest/Shareholders funds*100
Return on Proprietors
Equity=1,391,540,170/11,293,156,017*100
Return on Proprietors Equity=12.32%
For Year 2014
Profit after taxes and interest=346,670,102
Shareholders Fund=12,588,889,470
Return on Proprietors Equity: Profit after taxes and
interest/Shareholders funds*100
Return on Proprietors
Equity=346,670,102/12,588,889,470*100
Return on Proprietors Equity=3.5%
Table 14: Calculation of Return on Proprietors Equity
2013 20140.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Return on Proprietors Equity
Return on Proprietors Equity
Figure 15: Bar Graph of Return on Proprietors Equity
Interpretation: In 2013 Return on Proprietors Equity of JPFL was 12.32% and in 2014 it came down to 3.5%.
The lowering of this ratio is not a good indicator.
Earnings Per Share(EPS):
This Ratio measures the earning per equity share i.e. it measures the profitability of the firm on per share
basis.
Formula:
45
EPS=Profit after Taxes/No. of Equity Shares
For Year 2013
Profit after taxes=1,391,540,170
No. of equity shares=42,047,713
EPS=Profit after Taxes/No. of Equity Shares
EPS=1,391,540,170/42,047,713
EPS=33.10
For Year 2014
Profit after taxes=346,670,102
No. of equity shares=42,047,713
EPS=Profit after Taxes/No. of Equity Shares
EPS=346,670,102/42,047,713
EPS=8.25
Table 15: Calculation of EPS
2013 20140
5
10
15
20
25
30
35
EPS
EPS
Figure 16: Bar Graph of EPS
Interpretation: In 2013 EPS of JPFL was 33.10 and in 2014 it came down to 8.25. The lowering of EPS is
not a good indicator. The company need to look into it.
46
Chapter-5
FINDINGS
FINDINGS
47
The condition of the current ratio of both the years is not satisfactorily. The ratio in 2013 was more than in 2014. The current ratio should be 2:1 ratio but the company’s ratio is not in that form.
The quick ratio should be 1:1. The condition of the current ratio is better than the quick ratio of the company.
The debt equity ratio of the firm should be 1:1. The debt equity ratio of the company has decreased from 2012-13, which is not good for the company.
67% is considered as the best ratio for the company. Higher ratio is not considered good for the company. The ratio is increased in the two years which shows the burden of payment and it is quite alarming
Proprietary ratio has increased as compared to last years. Long term solvency of the firm has decreased.
The Long Term Debt to total asset ratio has decreased for the company compared to last year.
The Fixed Assets to Equity ratio of JPFL has also declined in 2014 which is not a good indicator.
Return on investment has declined considerably for JPFL in the last year.
Return on Proprietors Equity has also declined compared to last year.
Earnings Per Share has been reduced from 33.1 to 8.25 in the last year.
48
Chapter 6
CONCLUSIONS
49
CONCLUSION
The current ratio of the company for both the years is not in the satisfactory condition.
Some of the ratios of the company are not in the satisfactory condition and there is a need to improve the condition of the company.
The overall position of the company is okay. No need to take any extreme measures. But there is need to monitor some areas like liabilities needs to be controlled, need for more proprietary shares
In the comparison of 2012-13 and 2013-14, the position of company in 2012-13 was better as compared to 2013-14.
Fixed assets are effectively utilized from 2012 to 2013.
50
Chapter 7
RECOMMENDATIONS
51
RECOMMENDATIONS
Company has a lot of liabilities both short term and long term .There is need for more shareholders fund to maintain balance. It can bring more partners or find a different for increasing its financial status. They need to find places for investment or they can convert some loan providers into shareholders
The firm has to make some efforts so that it can pay its liabilities on time.
There is need to change the selling price of the products or there is need for cost cutting and more efficient utilisation of resources so that the costs can be reduced.
52
Chapter 8
LIMITATIONS OF THE STUDY
Limitation of the study
53
The study is based on the secondary data. The period of study is 2012-13 to 2013-14 only. Another limitation is that of standard ration with which the actual ratios may be compared
generally there is no such ratio, which may be treated as standard for the purpose of comparison because conditions of one concern differ significantly from those of another concern.
The accuracy and the correctness of the ratios are totally dependent upon the reliability of the data contained in the financial statements on the basis of which ratios are calculated.
Limitation of Ratio
Comparison not possible if different firms adopt different accounting policies. Ratio analysis becomes less effective due to price level changes. Ratio may be misleading in the absence of absolute data. Limited use of a single data. Lack of proper standards. False accounting data gives false ratio. Ratios alone are not adequate for proper conclusions. Effect of personal ability and bias of the analyst.
54
Bibliography
55
Management Accounting By J.R. Monga and A.K. Malhotra Edition 2010
http://jindalpoly.com/
http://jindalpoly.com/about-us.html
http://jindalpoly.com/products.html
http://jindalpoly.com/financial/FY_2013_14.pdf
http://economictimes.indiatimes.com/jindal-poly-films-ltd/stocks/companyid-8826.cms
http://en.wikipedia.org/wiki/Crankshaft
56
Annexure
(Balance Sheet)
Balance sheet of Jindal Poly Films Limited:
Balance sheet of Jindal Poly Films Limited for last two years is as follows:
57
As at 31.03.2014 As at 31.03.2013
I. Equities & Liabilities
1) Shareholders’
Funds
a) Share Capital 420,477,130 420,477,130
b) Reserves & Surplus 12,168,412,340 12,588,889,470 10,872,678,887 11,293,156,017
2) Non-Current
Liabilities
a) Long-Term Borrowings
322,629,434 1,958,858,990
b) Deferred tax Liabilities
1,714,974,537 2,037,603,971 1,710,951,537 3,669,810,527
3) Current
Liabilities
a) Short-Term Borrowings’
2,720,812,363 2,986,415,230
b) Trade Payables 2,346,992,009 1,134,800,989
c) Other current liabilities
2,389,562,842 1,428,593,979
d) Short-term Provisions
124,666,297 7,582,033,311 107,452,384 5,657,262,582
TOTAL 22,208,526,752 20,620,229,126
II. Assets
1) Non Current
Assets
a) Fixed Assets
i) Tangible Assets 11,548,506,679 12,494,180,384
ii) Intangible Assets - -
58
iii) Capital Work- in
Progress
508,015,139 487,892,201
iv) Intangible Assets
Under Development
-
12,056,521,818 12,982,072,586
b) Non- current investments
2,198,027,407 97,006,001
c) Deferred Tax Assets - -
d) Long Term loans and advances
185,535,235 14,440,084,460 43,501,222 13,122,579,808
2) Current Assets
a) Current Investments
348,172,881 979,466,847
b) Inventories 3,218,093,163 2,717,869,729
c) Trade Receivables
1,816,653,429 1,570,161,897
d) Cash & Bank Balance
630,706,448 195,323,363
e) Short-term Loans & advances
539,620,986 589,221,180
f) Other current assets
1,215,195,385 7,768,442,292 1,445,606,302 7,497,649,318
TOTAL 22,208,526,292 20,620,229,126
Table 16: Balance Sheet of JPFL
59
60