Internship (2)

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.

6

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.

12

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.

17

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:

21

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


thermal properties along with good bond

strength.



J-952 One side corona treated bi-axially oriented translucent and

matte surface polyester film

12, 23, 36, 50µ


thermal properties along with good bond

strength.



Films for Flexible packaging and for General purpose

J-200 Untreated plain bi-axially 10, 11, 12, 15, High Mechanical, Packaging, Printing,

24

http://jindalpoly.com/products/pdf/J200.pdf

http://jindalpoly.com/products/pdf/J-952.pdf

http://jindalpoly.com/products/pdf/J-951.pdf


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

25

http://jindalpoly.com/products/pdf/J200M0.pdf




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

27

http://jindalpoly.com/products/pdf/J200P0.pdf

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.

28

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

http://en.wikipedia.org/wiki/Question

http://en.wikipedia.org/wiki/Research

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

http://en.wikipedia.org/wiki/Economics

http://en.wikipedia.org/wiki/Liability_(financial_accounting)

http://en.wikipedia.org/wiki/Asset

http://en.wikipedia.org/wiki/Accounting

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 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 Assets of JPFL= 7,768,442,292


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.


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


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


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


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


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.


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


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


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

http://strategiccfo.com/wikicfo/insolvency-definitio/

http://strategiccfo.com/wikicfo/accounting-asset-definition/

For Year 2013

Long Term Debt=1,958,858,990


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


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


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


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


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=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=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

http://economictimes.indiatimes.com/jindal-poly-films-ltd/stocks/companyid-8826.cms

http://jindalpoly.com/financial/FY_2013_14.pdf

http://jindalpoly.com/products.html

http://jindalpoly.com/about-us.html

http://jindalpoly.com/

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

Documents

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