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A STUDY ON

FINANCIAL ANALYSIS
CONDUCTED AT
Jindal Poly Films Limited
Submitted in Partial Fulfilment for the Award of the
Degree of Bachelor in Business Administration 2011-2012
Under the Guidance of:

Submitted By:

Dr. Rachna Jain

Paras Mahajan

11814701712

Maharaja Agrasen Institute of Management Studies


Affiliated to Guru Gobind Singh Indraprastha University, Delhi
PSP Area, Plot No. 1, Sector 22, Rohini, Delhi 110086

STUDENT DECLARATION

This is to certify that I have completed the Project Report titled A study
business and financial analysis of

on

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

CONTENTS

S. No.

Topic

Page No.

Student Declaration

Certificate

Acknowledgement

Executive Summary

Chapter-1: Introduction

Chapter-2: Company profile

13

Chapter-3: Research Methodology

27

Chapter-4: Data analysis and Interpretation

29

Chapter-5: Findings

56

10

Chapter-6: Conclusion

48

11

Chapter-7:Reccomendation

50

12

Chapter-8:Limitations of study

52

CERTIFICATE

This is to certify that the project report titled


financial analysis of

A study on business and

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:

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

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 worlds 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.

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 worlds 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 20122013 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:


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.

GROW

MISSION

DELIVER
SIMPLIFY

Figure 1: Mission and Vision of JPFL


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
10

Figure 2: CLIENTS OF JPFL (PET FILMS)

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
11

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 micron150micron, 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 Plant


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 JPFLs 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 customers requirements.

12

CHAPTER-2
COMPANY PROFILE

13

ABOUT JPFL
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
Polyester film, polypropylene film, steel pipes, and
Segment

photographic products
Polyethylene terephthalate (PET) films, biaxially- oriented
polypropylene (BOPP) films, metalized films, and coated

Target Group

films for textile and packaging industry.

Positioning

Largest players in polyfilms


14

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.
1.4 Organisation Structure of the Company:
15

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:


Unit Head

Functional Head

Head of Department

16

Sectional Head

Co-ordinators

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.
BOARD OF DIRECTORS OF THE COMPANY:
Name

Executive /
Non-Executive

Promoter / Age Qualification

Experience

NonPromoter

Rashid Jilani

Non -

Non-

72
17

M.Com,

44 years experience in

Executive &

Promoter

C.A.I.I.B

Independent
Jogesh Bansal

Banking & Finance.


Former CMD of PNB.

Non -

Non-

Executive &

Promoter

61

B.A.

39 years experience in
trading and industry.

Independent
R. K. Pandey

Non-Executive

Non-

and

Promoter

73

M.Com,

45 years experience in

LLB, FCS

Finance and Corporate

Independent

matters. Former
Executive Director of
Delhi Stock Exchange

Sanjay Mittal

Executive

Non-

48

Promoter

B.Com,

25 years of experience

CA(Inter)

in Accounts, Taxation
and Management.

Rathi Binod Pal

Executive

Non-

44

Promoter

B.Com , CA

22 yrs Experience in

(Inter)

Commercial,
Accounts and
Management

Table 2: Board of Directors of JPFL

18

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.
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.

19

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.

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:

20

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:
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:


21

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:
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.
22

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.

23

2.3 Unique Selling Preposition of Different Products:


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:

DESCRIPTION

STANDARD
THICKNESS
* ()

Bi-axially oriented translucent


& matte surface polyester film

TYPE

USP

APPLICATION

12, 19, 23, 36,


50, 75

Medium surface
gloss, excellent
machinability &
thermal
properties.

Muted Metallization, wood


grain application, label &
other industrial application

J-951 One side chemically treated biaxially oriented translucent and


matte surface polyester film

12, 23, 36,


50

Medium surface
gloss, excellent
machinability &
thermal
properties along
with good bond
strength.

Muted Metallization, wood


grain application, label &
other industrial application

J-952

12, 23, 36,


50

Medium surface
gloss, excellent
machinability &
thermal
properties along
with good bond
strength.

Muted Metallization, wood


grain application, label &
other industrial application

Matt Films
J-950

One side corona treated biaxially oriented translucent and


matte surface polyester film

Films for Flexible packaging and for General purpose


J-200

Untreated plain bi-axially

10, 11, 12, 15, High Mechanical,


24

Packaging, Printing,

oriented polyester film

J-201

One side corona treated biaxially oriented polyester film

23, 36, 50

Optical and
Thermal
characteristics.

Lamination and
Metallization.

10, 11, 12, 15, High Mechanical,


23, 36, 50
Optical &
Thermal
characteristics
with improved
ink / metal
adhesion
characteristics.

Printing, Packaging,
Lamination and
Metallization.

J-203 One side low corona treated bi- 10, 11, 12, 15, High Mechanical,
axially oriented polyester film
23, 36, 50
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

DESCRIPTION

STANDARD
THICKNESS*
()

USP

APPLICATION

J200M
0

Normal density
metallization on plain side
and other side is also plain

10, 12

Good bond strength plus


barrier properties.

Flexible packaging

25

J201M
0

Normal density
metallization on Corona
side and other side plain

10, 12

High bond strength plus


barrier properties.

Flexible packaging
& Printing

Normal density
J201M
metallization on un treated
1
side and other side corona

10, 12

Good bond strength plus


barrier properties & better
printability on other side.

Flexible packaging
& Printing

High density Metallization


on corona surface and
other side plain

10, 12

Exceptionally high barrier


Flexible packaging
properties & bond strength.

High density Metallization


J202M
with plasma and other side
1
corona

10, 12

Exceptionally high barrier


properties & bond strength Flexible packaging
along with improved ink
& Printing
adhesion on other side.

Normal density
J221M metallization on pre-coated
0
co polyester side and other
side plain

12

J202M
0

Good 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:

TYPE

STANDARD
DESCRIPTIO
THICKNESS*
N
()

USP

26

APPLICATION

PVDC Coated Films


J200P0

One side PVDC


coated biaxilly
oriented
polyester film

14

Excellent barrier properties

See through
flexible
Packaging &
printing.

J202P0

One side PVDC


(High GSM)
coated biaxilly
oriented
polyester film

16

Excellent barrier properties

See through
flexible
Packaging &
printing.

C405R0

One side Coated


transparent
polyester film.

30

Excellent mechanical
properties

Suitable for label


face film,
coating and other
general
applications.

C406S0

One side
Silicone coated
Other side plain.

30

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.

50

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.

50

Excellent dimensional
stability

Designed for
Face film of
label application.

Table 5: USP of BOPP Films

27

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.
To improve my business acumen for the manufacturing industry.
To analyse various accounting policies followed by the organisation.
28

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 .

CHAPTER-4
29

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 important for the
organisation because funds are required for the purchase of land and building, machinery and other fixed
assets.

30

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 years 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:
Current ratio throws a good light on the short term financial position and policy. It is an indicator of a firms
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.
31

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

For Year 2014

Current Ratio=Current Assets/Current Liabilities

Current Ratio=Current Assets/Current Liabilities

Current Assets of JPFL= 7,497,649,318

Current Assets of JPFL= 7,768,442,292

Current Liabilities of JPFL=5,657,262,582

Current Liabilities of JPFL=7,582,033,311

Current Ratio= 7,497,649,318/5,657,262,582

Current Ratio=7,768,442,292/7,582,033,311

Therefore Current Ratio of the JPFL for year ending Therefore Current Ratio of the JPFL for year ending
2013= 1.3:1.

2014= 1.02:1.
Table 6: Calculation of Current Ratio

CURRENT RATIO OF JPFL


1.4
1.2
1
CURRENT RATIO OF JPFL

0.8
0.6
0.4
0.2
0
2013

2014

Figure 7: Bar Graph of Current Ratio

32

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.

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 firms 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.

33

For Year 2013

For Year 2014

Quick Ratio=Quick Assets/Current Liabilities

Quick Ratio=Quick Assets/Current Liabilities

Quick Assets of JPFL=Current Assets-Inventories

Quick Assets of JPFL=Current Assets-Inventories

Quick Assets of JPFL=7,497,649,318-2,717,869,729

Quick Assets of JPFL=7,768,442,292-3,218,093,163

Quick Assets of JPFL=4,779,779,589

Quick Assets of JPFL=4,550,349,129

Current Liabilities of JPFL=5,657,262,582

Current Liabilities of JPFL=7,582,033,311

Quick Ratio=4,779,779,589 /5,657,262,582

Quick Ratio= 4,550,349,129/7,582,033,311

Therefore Quick Ratio of the JPFL for the year Therefore Quick Ratio of the JPFL for the year
ending 2013= 0.84:1.

ending 2014= 0.60:1.


Table7: Calculation of Quick Ratio

QUICK RATIO OF JPFL


0.9
0.8
0.7
0.6
QUICK RATIO OF JPFL

0.5
0.4
0.3
0.2
0.1
0
2013

2014

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.

34

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.
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

For Year 2014

Debt-equity Ratio=Total debts/Shareholders Fund

Debt-equity Ratio=Total debts/Shareholders Fund

Total debts= Long term debts+ Short term debts

Total debts= Long term debts+ Short term debts

Total debts of JPFL= 1,958,858,990+2,986,415,230

Total debts of JPFL=322,629,434+2,720,812,363

Total debts of JPFL=4,945,274,220

Total debts of JPFL=3,043,441,797


35

Shareholders Fund of JPFL=11,293,156,017

Shareholders Fund of JPFL=12,588,889,470

Debt-equity Ratio= 4,945,274,220/11,293,156,017

Debt-equity Ratio=3,043,441,797/12,588,889,470

Therefore debt equity ratio for year ending 2013= Therefore debt equity ratio for year ending 2014=
0.43:1.

0.24:1.
Table 8: Calculation of Debt Equity Ratio

Debt Equity Ratio


0.5
0.45
0.4
0.35
0.3

Debt Equity Ratio

0.25
0.2
0.15
0.1
0.05
0
2013

2014

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:

36

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:
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

For Year 2014

Proprietary Turnover ratio= Shareholders Fund/Total Proprietary Turnover ratio= Shareholders Fund/Total
Assets

Assets

Shareholders Fund of JPFL=11,293,156,017

Shareholders Fund of JPFL=12,588,889,470

Total Assets of JPFL=20,620,229,126

Total Assets of JPFL=22,208,526,752

Proprietary Turnover

Proprietary Turnover Ratio

ratio=11,293,156,017/20,620,229,126

=12,588,889,470/22,208,526,752

Therefore Proprietary Turnover ratio is 0.54:1.

Therefore Proprietary Turnover ratio is 0.56:1.

Table 9: Calculation of Proprietary Turnover Ratio

37

Proprietary Turnover Ratio of JPFL


0.57
0.56
0.56
Proprietary Turnover Ratio
of JPFL

0.55
0.55
0.54
0.54
0.53
2013

2014

Figure 10: Bar Graph of Proprietary Turnover Ratio


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 shortterm 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

For Year 2014

Total Debt to Total Assets Ratio=Total Debt (Short Total Debt to Total Assets Ratio=Total Debt (Short
Term Debt+Long Term Debt)/Total Assets

Term Debt+Long Term Debt)/Total Assets


38

Total Debt= Short Term Debt+Long Term Debt

Total Debt= Short Term Debt+Long Term Debt

Total Debt=1,958,858,990+2,986,415,230

Total Debt=322,629,434+2,720,812,363

Total Debt=4,945,274,220

Total Debt=3,043,441,797

Total Assets= 20,620,229,126

Total Assets=22,208,526,292

Total Debt to Total Assets

Total Debt to Total Assets

Ratio=4,945,274,220/20,620,229,126

Ratio=3,043,441,797/22,208,526,292

Total Debt to Total Assets Ratio=0.24:1

Total Debt to Total Assets Ratio=0.14:1


Table10: Calculation of Total Debt to Total Assets Ratio

Total Debt to Total Assets Ratio


0.3
0.25
0.2

Total Debt to Total Assets


Ratio

0.15
0.1
0.05
0
2013

2014

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:

39

The Long Term Debt to total asset ratio defined, at the simplest form, an indication of what portion of a
companys 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

For Year 2013

For Year 2014

Long Term Debt=1,958,858,990

Long Term Debt=322,629,434

Total Assets=20,620,229,126

Total Assets=22,208,526,292

Long Term Debt to Total Assets Ratio= Long Term

Long Term Debt to Total Assets Ratio= Long Term

Debt/ Total Assets Ratio

Debt/ Total Assets Ratio

Long Term Debt to Total Assets

Long Term Debt to Total Assets

Ratio=1,958,858,990/20,620,229,126

Ratio=322,629,434/22,208,526,292

Long Term Debt to Total Assets Ratio=0.09:1

Long Term Debt to Total Assets Ratio=0.01:1

Table 11: Calculation of Long Term Debt to Total Assets Ratio

40

Long Term Debt to Total Assets Ratio


0.1
0.09
0.08
0.07
Long Term Debt to Total
Assets Ratio

0.06
0.05
0.04
0.03
0.02
0.01
0
2013

2014

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.

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

41

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

For Year 2014

Fixed Assets to Equity Ratio=Fixed

Fixed Assets to Equity Ratio=Fixed

Assets/Shareholders Fund

Assets/Shareholders Fund

Fixed Assets=12,982,072,586
Fixed Assets=12,056,521,818
Shareholders Fund=11,293,156,017
Fixed Assets to Equity

Shareholders Fund=12,588,889,470

Ratio=12,982,072,586/11,293,156,017
Fixed Assets to Equity
Fixed Assets to Equity Ratio=1.14:1

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

Fixed Assets to Equity Ratio


1.2
1.15
1.1
Fixed Assets to Equity
Ratio

1.05
1
0.95
0.9
0.85
2013

2014

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

For Year 2014


Earnings before Interest and Tax=518,214,142

43

Capital Employed=Debt+Equity
Capital Employed=Debt+Equity
Capital Employed= 322,629,434+12,588,889,470
Capital Employed=1,985,858,990+11,293,156,017

Capital Employed=12,911,518,904
Earnings before Interest and Tax/Capital

Capital Employed=13,279,015,007

Employed*100

ROI= Earnings before Interest and Tax/Capital

ROI=518,214,142/12,911,518,904*100

Employed*100

ROI=4.5%

ROI=2,604,740,145/13,279,015,007*100
ROI=19.62%

Table 13: Calculation of Return on Investment

ROI
25.00%
20.00%
15.00%

ROI

10.00%
5.00%
0.00%
2013

2014

Figure 14: Bar Graph of Return on Investment

44

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 Shareholders Funds. It shows the ratio of net profit to owners capital.
Formula:
Return on Proprietors Equity: Profit after taxes and interest/Shareholders funds*100

For Year 2013

For Year 2014

Profit after taxes and interest=1,391,540,170

Profit after taxes and interest=346,670,102

Shareholders Fund=11,293,156,017

Shareholders Fund=12,588,889,470

Return on Proprietors Equity: Profit after taxes and

Return on Proprietors Equity: Profit after taxes and

interest/Shareholders funds*100

interest/Shareholders funds*100

Return on Proprietors

Return on Proprietors

Equity=1,391,540,170/11,293,156,017*100

Equity=346,670,102/12,588,889,470*100

Return on Proprietors Equity=12.32%


Return on Proprietors Equity=3.5%
Table 14: Calculation of Return on Proprietors Equity

45

Return on Proprietors Equity


14.00%
12.00%
10.00%
Return on Proprietors
Equity

8.00%
6.00%
4.00%
2.00%
0.00%
2013

2014

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:
EPS=Profit after Taxes/No. of Equity Shares

For Year 2013

For Year 2014

Profit after taxes=1,391,540,170

Profit after taxes=346,670,102

No. of equity shares=42,047,713

No. of equity shares=42,047,713


46

EPS=Profit after Taxes/No. of Equity Shares

EPS=Profit after Taxes/No. of Equity Shares

EPS=1,391,540,170/42,047,713

EPS=346,670,102/42,047,713
EPS=8.25

EPS=33.10
Table 15: Calculation of EPS

EPS
35
30
25
EPS

20
15
10
5
0
2013

2014

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.

47

Chapter-5
FINDINGS

FINDINGS

48

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 companys 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.

49

Chapter 6
CONCLUSIONS

50

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.

51

Chapter 7
RECOMMENDATIONS

52

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.

53

Chapter 8
LIMITATIONS OF THE
STUDY

Limitation of the study


54

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.

55

Bibliography

56

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

57

Annexure
(Balance Sheet)

Balance sheet of Jindal Poly Films Limited:


Balance sheet of Jindal Poly Films Limited for last two years is as follows:
As at 31.03.2014
I. Equities & Liabilities
1) Shareholders
58

As at 31.03.2013

Funds
a) Share Capital
b) Reserves &
Surplus

420,477,130
12,168,412,340

12,588,889,470

420,477,130
10,872,678,887

11,293,156,017

2) Non-Current
Liabilities
a) Long-Term
Borrowings
b) Deferred tax
Liabilities

322,629,434
1,714,974,537

1,958,858,990
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
d) Short-term
Provisions

2,389,562,842

1,428,593,979

124,666,297

7,582,033,311

107,452,384

22,208,526,752

TOTAL

5,657,262,582
20,620,229,126

II. Assets
1) Non Current
Assets
a) Fixed Assets
i) Tangible Assets
ii) Intangible Assets

11,548,506,679
iii) Capital Work- in 508,015,139
Progress
iv) Intangible

12,494,180,384
487,892,201

Assets -

Under Development
b) Non- current
investments
c) Deferred Tax
Assets
d) Long Term
loans and
advances

2) Current Assets
a) Current
Investments
b) Inventories

12,056,521,818
2,198,027,407

12,982,072,586
97,006,001

185,535,235

14,440,084,460

43,501,222

348,172,881

979,466,847

3,218,093,163

2,717,869,729
59

13,122,579,808

c) Trade
Receivables
d) Cash & Bank
Balance
e) Short-term Loans
& advances
f) Other current
assets

TOTAL

1,816,653,429

1,570,161,897

630,706,448

195,323,363

539,620,986

589,221,180

1,215,195,385

7,768,442,292

1,445,606,302

22,208,526,292
Table 16: Balance Sheet of JPFL

60

7,497,649,318
20,620,229,126