Professional Documents
Culture Documents
FINANCIAL ANALYSIS
CONDUCTED AT
Jindal Poly Films Limited
Submitted in Partial Fulfilment for the Award of the
Degree of Bachelor in Business Administration 2016-2017
1564880008
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TABLE OF CONTENTS
1. Executive Summary 12
2. Introduction 3 20
3. Research Methodology 21 23
4. Sector Overview 24 30
5. Company Overview 31 38
6. Internship Activities 39 57
7. Internship Assessment 58 59
8. Conclusion 60 61
9. Illustration 62 65
10. Bibliography 66 67
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ACKNOWLEDGEMENT
I owe my sincere thanks and gratitude to MR.ASHEESH BISHT
who inspired me by his 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. P.C KAVIDAYAL (HOD of DMS,
Bhimtal) who gave me this golden opportunity to learn
something new about project writing.
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MBA INTEGRATED 5TH SEM
Enrolment No.: 1564880022
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.
Working capital is one of the most difficult financial concepts to understand for the small-business
owner. In fact, the term means a lot of different things to a lot of different people. By definition,
working capital is the amount by which current assets exceed current liabilities. It involves the
relationship between a firms short term assets and its short term liabilities.
Funds needed for short term needs for the purpose like payment of wages and other day to day
expenses are known as working capital. The goal of working capital management is to ensure that
the firm is able to continue its operation and that it has sufficient cash flow to satisfy both maturing
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short term debt and upcoming operational expenses. Working capital is primarily concerned with
The study involved few personal interviews with the financial heads of the company and through
observation methods. Company annual reports were being evaluated and working capital
management was being analyzed from it. For the purpose of the study convenience sampling
CHAPTER 1
INTRODUCTION
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Company Logo
INTRODUCTION
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Management is an art of anticipating and preparing for risks, uncertainties and overcoming obstacles. An
essential precondition for sound and consistent assets management is establishing the sound and consistent
assets management policies covering fixed as well as current assets. In modern financial management,
efficient allocation of funds has a great scope, in finance and profit planning, for the most effective
utilization of enterprise resources, the fixed and current assets have to be combined in optimum proportions.
Working capital in simple terms means the amount of funds that a company requires for financing its day-to-
day operations. Finance manager should develop sound techniques of managing current assets.
Working capital refers to the investment by the company in short terms assets such as cash, marketable
securities. Net current assets or net working capital refers to the current assets less current liabilities.
Symbolically, it means,
Net Current Assets = Current Assets Current Liabilities.
In accounting, Working capital is the difference between the inflow and outflow of funds. In other words, it
is the net cash inflow. It is defined as the excess of current assets over current liabilities and provisions. In
other words, it is net current assets or net working capital.
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Working capital represents the total of all current assets. In other words it is the Gross working capital , it is
also known as Circulating capital or Current capital for current assets are rotating in their nature.
A study of working capital is of major importance to internal and external analysis because of its close
relationship with the day-to-day operations of a business. Working Capital is the portion of the assets of a
business which are used on or related to current operations, and represented at any one time by the operating
cycle of such items as against receivables, inventories of raw materials, stores, work in process and finished
goods, merchandise, notes or bill receivables and cash.
Working capital comprises current assets which are distinct from other assets. In the first instance, current
assets consist of these assets which are of short duration.
Working capital may be regarded as the life blood of a business. Its effective provision can do much to
ensure the success of a business while its inefficient management can lead not only to loss of profits but also
to the ultimate downfall of what otherwise might be considered as a promising concern.
The funds required and acquired by a business may be invested to two types of assets:
1. Fixed Assets.
2. Current Assets
Fixed assets are those which yield the returns in the due course of time. The various decisions like in which
fixed assets funds should be invested and how much should be invested in the fixed assets etc. are in the
form of capital budgeting decisions. This can be said to be fixed capital management.
These types of assets are required to ensure smooth and fluent business operations and can be said to be life
blood of the business. There are two concepts of working capital Gross and Net. Gross working capital
refers to gross current assets. Net working capital refers to the difference between current assets and current
liabilities. The term current assets refers to those assets held by the business which can be converted into
cash within a short period of time of say one year, without reduction in value. The main types of current
assets are stock, receivables and cash. The term current liabilities refer to those liabilities, which are to be
paid off during the course of business, within a short period of time say one year. They are expected to be
paid out of current assets or earnings of the business. The current liabilities mainly consist of sundry
creditors, bill payable, bank overdraft or cash credit, outstanding expenses etc.
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Working capital may be regarded as the lifeblood of the business. Without insufficient working capital, any
business organization cannot run smoothly or successfully. In the business the Working capital is
comparable to the blood of the human body. Therefore the study of working capital is of major importance
to the internal and external analysis because of its close relationship with the current day to day operations of
a business. The inadequacy or mismanagement of working capital is the leading cause of business failures.
The need of gross working capital or current assets cannot be overemphasized. The object of any business is
to earn profits. The main factor affecting the profits is the magnitude of sales of the business. But the sales
cannot be converted into cash immediately. There is a time lag between the sale of goods and realization of
cash. There is a need of working capital in the form of current assets to fill up this time lag. Technically, this
is called as operating cycle or working capital cycle, which is the heart of need for working capital. This
working capital cycle can be described in the following words. If the company has a certain amount of cash,
it will be required for purchasing the raw material though some raw material may be available on credit
basis. Then the company has to spend some amount for labour and factory overheads to convert the raw
material in work in progress, and ultimately finished goods. These finished goods when sold on credit basis
get converted in the form of sundry debtors. Sundry debtors are converted in cash only after the expiry of
credit period. Thus, there is a cycle in which the originally available cash is converted in the form of cash
again but only after following the stages of raw material, work in progress, finished goods and sundry
debtors. Thus, there is a time gap for the original cash to get converted in form of cash again. Working
Capital needs of company arise to cover the requirement of funds during this time gap, and the quantum of
working capital needs varies as per the length of this time gap.
Thus, some amount of funds is blocked in raw materials, work in progress, finished goods, sundry debtors
and day-to-day requirements. However some part of these current assets may be financed by the current
liabilities also. E.g. some raw material may be available on credit basis, all the expenses need not be paid
immediately, workers are also to be paid periodically etc. But still the amounts required to be invested in
these current assets is always higher than the funds available from current liabilities. This is precise reason
why the needs for working capital arise. From the Financial management point of view, the nature of fixed
assets and current assets differ from each other--
1. The fixed assets are required to be retained in the business over a period of time and they yield the returns
over their life, whereas the current assets loose their identity over a short period of time, say one year.
2. In the case of current assets, it is always necessary to strike a proper balance between the liquidity and
profitability principles, which is not the case with fixed assets. E.g. If the size of current assets is large, it is
always beneficial from the liquidity point of view as it ensures smooth and fluent business operations.
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Sufficient raw material is always available to cater to the production needs, sufficient finished goods are
available to cater to any kind of demand of customers, liberal credit period can be offered to the customers to
improve the sales and sufficient cash is available to pay off the creditors and so on.
However, if the investment in current assets is more than what is ideally required, it affects the profitability,
as it may not be able to yield sufficient rate of return on investment. On the other hand, if the size of current
assets is too small, it always involves the risk of frequent stock out, inability of the company to pay its dues
in time etc. As such, the investment in current assets should be optimum. Hence, it is necessary to manage
the individual components of current assets in a proper way. Thus, working capital management refers to
proper administration of all aspects of current assets and current liabilities. Working Capital Management is
concerned with the problems arising out of the attempts to manage current assets, current liabilities and
inter-relationship between them. The intention is not to maximize the investment in working capital nor is it
to minimize the same. The intention is to have optimum investment in working capital. In other words, it can
be said that the aim of working capital management is to have minimum investment in working capital
without affecting the regular and smooth flow of operations. The level of current assets to be maintained
should be sufficient enough to cover its current liabilities with a reasonable margin of safety. Moreover, the
various sources available for financing working capital requirements should be properly managed to ensure
that they are obtained and utilized in the best possible manner.
Working capital cycle indicates the length of time between a firms paying for materials entering into stock
and receiving the cash from sale of finished goods. In a manufacturing firm, the duration of time required to
complete the sequence of events is called operating cycle.
In case of a manufacturing company, the operating cycle is the length of time necessary to complete the
following cycle of events
The above operating cycle is repeated again and again over the period depending upon the nature of the
business and type of product etc. the duration of the operating cycle for the purpose of estimating working
capital is equal to the sum of duration allowed by the suppliers.
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Working capital cycle can be expressed as
R+W+F+D+C
Where,
R - raw material storage period = avg. stock of raw material / avg. cost of production per day
W work in progress holding period = avg. work in progress inventory / avg. cost of production per day
F finished goods storage period = avg. stock of finished goods / avg. cost of goods sold per day
D debtors collection period = avg. book debts / avg. credit sales per day
C credit period availed = avg. trade creditors avg. credit purchases per day.
Realization Sales
Accounts Receivable
Purchases Production
Production
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WORKING CAPITAL MANAGEMENT
To start any business, First of all we need finance and the success of that business entirely depends on the
proper management of day-to-day finance and the management of this short term capital or finance of the
business is called Working Capital Management.
Working Capital is the key difference between the long term financial management and short term financial
management in terms of the timing of cash. Working capital management is a short term financial
management. Working capital management is concerned with the problems that arise in attempting to
manage the current assets, the current liabilities & the inter relationship that exists between them. The
current assets refer to those assets which can be easily converted into cash in ordinary course of business,
without disrupting the operations of the firm.
Working capital management or short-term financial management is a significant facet of financial
management. It is important due to 2 reasons:
Working capital involves activities such as arranging short-term finance, negotiating favorable credit terms,
controlling the movement of cash, administrating accounts receivables, and monitoring the investment in
inventories also take a great deal of time.
Management of working capital is concerned with the problem that arises in attempting to manage the
current assets, current liabilities. The basic goal of working capital management is to manage the current
assets and current liabilities of a firm in such a way that a satisfactory level of working capital is maintained,
i.e. it is neither adequate nor excessive as both the situations are bad for any firm. There should be no
shortage of funds and also no working capital should be ideal. WORKING CAPITAL MANAGEMENT
POLICES of a firm has a great on its probability, liquidity and structural health of the organization. So
working capital management is three dimensional in nature as
1. It concerned with the formulation of policies with regard to profitability, liquidity and risk.
2. It is concerned with the decision about the composition and level of current assets.
3. It is concerned with the decision about the composition and level of current liabilities.
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Composition of working capital--
2) Bills receivables
3) Sundry debtors
a. Raw material
b. Work in process
d. Finished goods
7) Prepaid expenses
8) Accrued incomes.
9) Marketable securities.
3) Dividends payable.
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4) Bank overdraft.
6) Bills payable.
7) Sundry creditors.
The gross working capital concept is financial or going concern concept whereas net working capital is an
accounting concept of working capital. Both the concepts have their own merits.
The gross concept is sometimes preferred to the concept of working capital for the following reasons:
1. It enables the enterprise to provide correct amount of working capital at correct time.
2. Every management is more interested in total current assets with which it has to operate then the
source from where it is made available.
3. It take into consideration of the fact every increase in the funds of the enterprise would increase its
working capital.
4. This concept is also useful in determining the rate of return on investments in working capital.
The Goal of Capital Management is to manage the firm s current assets & liabilities, so that the satisfactory
level of working capital is maintained. If the firm can not maintain the satisfactory level of working capital,
it is likely to become insolvent & may be forced into bankruptcy. To maintain the margin of safety current
asset should be large enough to cover its current assets.
Main theme of the theory of working capital management is interaction between the current assets & current
liabilities.
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On the basis of concept working capital can be classified as gross working capital and net working capital.
On the basis of time, working capital may be classified as:
Permanent or fixed working capital is minimum amount which is required to ensure effective utilization of
fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a minimum
level of raw material, work- in-process, finished goods and cash balance. This minimum level of current
assets is called permanent or fixed working capital as this part of working is permanently blocked in current
assets. As the business grow the requirements of working capital also increases due to increase in current
assets.
Temporary or variable working capital is the amount of working capital which is required to meet the
seasonal demands and some special exigencies. Variable working capital can further be classified as
seasonal working capital and special working capital. The capital required to meet the seasonal need of the
enterprise is called seasonal working capital. Special working capital is that part of working capital which is
required to meet special exigencies such as launching of extensive marketing for conducting research, etc.
The extra working capital needed to support the changing production and sales activities, is
called variable or functioning or temporary working capital.
Temporary working capital differs from permanent working capital in the sense that is required for short
periods and cannot be permanently employed gainfully in the business.
Solvency of the business: Adequate working capital helps in maintaining the solvency of the
business by providing uninterrupted of production.
Goodwill: Sufficient amount of working capital enables a firm to make prompt payments and makes
and maintain the goodwill.
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Easy loans: Adequate working capital leads to high solvency and credit standing can arrange loans
from banks and other on easy and favorable terms.
Cash Discounts: Adequate working capital also enables a concern to avail cash discounts on the
purchases and hence reduces cost.
Regular Supply of Raw Material: Sufficient working capital ensures regular supply of raw material
and continuous production.
Regular Payment Of Salaries, Wages And Other Day TO Day Commitments: It leads to the
satisfaction of the employees and raises the morale of its employees, increases their efficiency,
reduces wastage and costs and enhances production and profits.
Exploitation of Favorable Market Conditions: If a firm is having adequate working capital then it
can exploit the favorable market conditions such as purchasing its requirements in bulk when the
prices are lower and holdings its inventories for higher prices.
Ability to Face Crises: A concern can face the situation during the depression.
Quick And Regular Return On Investments: Sufficient working capital enables a concern to pay
quick and regular of dividends to its investors and gains confidence of the investors and can raise
more funds in future.
High Morale: Adequate working capital brings an environment of securities, confidence, high
morale which results in overall efficiency in a business.
Every business concern should have adequate amount of working capital to run its business operations. It
should have neither redundant or excess working capital nor inadequate nor shortages of working capital.
Both excess as well as short working capital positions are bad for any business. However, it is the inadequate
working capital which is more dangerous from the point of view of the firm.
Every business needs some amounts of working capital. The need for working capital arises due to the time
gap between production and realization of cash from sales. There is an operating cycle involved in sales and
realization of cash. There are time gaps in purchase of raw material and production; production and sales;
and realization of cash.
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Thus working capital is needed for the following purposes:
To maintain the inventories of the raw material, work-in-progress, stores and spares and finished
stock.
For studying the need of working capital in a business, one has to study the business under varying
circumstances such as a new concern requires a lot of funds to meet its initial requirements such as
promotion and formation etc. These expenses are called preliminary expenses and are capitalized. The
amount needed for working capital depends upon the size of the company and ambitions of its promoters.
Greater the size of the business unit, generally larger will be the requirements of the working capital.
The amount of working capital required depends upon a number of factors which can be stated as below
Nature of Business:
Some businesses are such, due to their very nature, that their requirement of fixed capital is more rather than
working capital. These businesses sell services and not the commodities and not the commodities and that
too on cash basis. As such, no funds are blocked in piling inventories and also no funds are blocked in
receivables. E.g. Public utility services like railways, electricity boards, infrastructure oriented projects etc.
Their requirement of working capital is less. On the other hand, there are some business like trading activity,
where the requirement of fixed capital is less but more money is blocked in inventories and debtors. Their
requirement of the working capital is more.
In some business like machine tool industry, the time gap between the acquisitions of raw material till the
end of final production of finished product itself is quite high. As such more amounts may be blocked either
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in raw materials, or work in progress or finished goods or even in debtors. Naturally, their needs of working
capital are higher. On the other hand, if the production cycle is shorter, the requirement of working capital is
also less.
In very small companies the working capital requirements are quite high overheads, higher buying and
selling costs etc. As such, the medium sized companies positively have an edge over the small companies.
But if the business starts growing after a certain limit, the working capital requirements may be adversely
affected by the increasing size.
If the company is operating in the period of boom, the working capital requirements may be more as the
company may like to buy more raw material, may increase the production and sales to take the benefits of
favourable markets, due to the increased sales, there may be more and more amount of funds blocked in
stock and debtors etc. Similarly, in case of depression also, the working capital requirements may be high as
the sales in terms of value and quantity may be reducing, there may be unnecessary piling up of stocks
without getting sold, the receivables may not be recovered in time etc.
There is an inverse co-relationship between the question of working capital and the velocity or speed with
which the sales are affected. A firm having a high rate of stock turnover wuill needs lower amt. of working
capital as compared to a firm having a low rate of turnover.
Credit Policy:
The firms credit policy directly affects the working capital requirement. If the firm has liberal
credit policy, hence the more credit period will be provided to the debtors so this will lead to more
working capital requirement. With the liberal credit policy operating cycle length increases and
vice versa.
Production Policy:
If the policy is to keep production steady by accumulating inventories it will require higher working capital.
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Seasonal Variations:
In certain industries like raw material is not available throughout the year. They have to buy raw material in
bulk during the season to ensure an uninterrupted flow and process them during the year. Generally, during
the busy season, a firm requires larger working capital than in slack season.
Some firms have more earning capacity than other due to quality of their products, monopoly conditions, etc.
Such firms may generate cash profits from operations and contribute to their working capital. The dividend
policy also affects the requirement of working capital. A firm maintaining a steady high rate of cash
dividend irrespective of its profits needs working capital than the firm that retains larger part of its profits
and does not pay so high rate of cash dividend.
Changes in the price level also affect the working capital requirements. Generally rise in prices leads to
increase in working capital.
Others FACTORS:
Operating efficiency.
Management ability.
Irregularities of supply.
Import policy.
Asset structure.
Importance of labor.
Banking facilities, etc
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Gross Working Capital
Net Working Capital
If the working capital is efficiently managed then liquidity and profitability both will improve. They are not
components of working capital but outcome of working capital. Working capital is basically related with the
question of profitability versus liquidity & related aspects of risk.
Working capital is required to run day to day business operations. Firms differ in their requirement of
working capital (WC). Firm s aim is to maximize the wealth of share holders and to earn sufficient return
from its operations. WCM is a significant facet of financial management. Its importance stems from two
reasons:
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Investment in current assets and level of current liability has to be geared quickly to change in sales.
The importance of WCM is reflected in the fact that financial managers spend a great deal of time in
managing current assets and current liabilities. The extent to which profit can be earned is dependent upon
the magnitude of sales. Sales are necessary for earning profits. However, sales do not convert into cash
instantly; there is invariably a time lag between sale of goods and the receipt of cash. WC management
affect the profitability and liquidity of the firm which are inversely proportional to each other, hence
proper balance should be maintained between two.
To convert the sale of goods into cash, there is need for WC in the form of current asset to deal with the
problem arising out of immediate realization of cash against good sold. Sufficient WC is necessary to sustain
sales activity. This is referred to as the operating or cash cycle.
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ABOUT JPFL
Tagline/ Slogan -
STP
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oriented polypropylene (BOPP) films, metalized films,
COMPANY INFORMATION
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MR. P. UMA SHANKAR, CHAIRMAN & NON
BOARD OF DIRECTORS : EXECUTIVE DIRECTOR
: MR. R.K. PANDEY, INDEPENDENT DIRECTOR
MR. SUNIL KUMAR AGARWAL, INDEPENDENT
: DIRECTOR
: MS. SHAKSHI GUPTA, NON EXECUTIVE DIRECTOR
MR. SANJAY DIGAMBAR KAPOTE, WHOLE TIME
: DIRECTOR
MR. SURESH DATTATRAYA GOSAVI, WHOLE TIME
: DIRECTOR
CHIEF FINANCIAL
OFFICER : MR. MANOJ GUPTA
COMPANY SECRETARY
& : MR. SANJEEV KUMAR
COMPLIANCE OFFICER
M/S KANODIA SANYAL & ASSOCIATES, CHARTERED
AUDITORS : ACCOUNTANTS
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1.1 Products 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:
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
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1.1.2 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.
Jindal Poly Films Ltd commenced the first metallizing production in January 2003 using
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.
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Figure 4: Metalized Film Plant
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:
Excellent Optics.
Good Printability.
Heat Sealable.
Good Machinability.
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.
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1.3.4 Nonwoven Material Fabrication: SSS (spunbond+
used for manufacture of consumer products catering to hygiene and medical end uses. The
incontinence and wipes whereas the medical segment end-products consist of masks, caps,
drapes, gowns, covers and shoe covers made of polypropylene spun bond fabric & spun melt
(non-woven fabric)
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CHAPTER-2
COMPANY PROFILE
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ABOUT JPFL
Tagline/ Slogan -
STP
Target Group and coated films for textile and packaging industry.
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COMPANY INFORMATION
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Size of the Organisation:
1.1.5 In terms of Manpower:
Jindal Poly Films Limited is a large company having total manpower of around 400 to 425
The company achieved a turnover of Rs. 2,72,851.91 cr for the financial year 2016-2017.
industrial group but is managed by professionals. Hemant Sharma is the chief executive
officer assisted by Mr.L Manoj Gupta Chief Financial Officer and Sanjeev Kumar
Company Secretary and Compliance Office Further Mr. P. Uma Shankar, chairman &
non executive director , Mr. R.K. Pandey & Mr. Sunil Kumar Agarwal, Independent
director Ms. Shakshi Gupta, Non-executive director : Mr. Sanjay Digambar Kapote, &
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Organisation Structure of Every Department
Unit Head
Functional Head
Head of Department
Sectional Head
Co-ordinators
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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.
Setting the objective should be done after the SWOT analysis has been performed. This would allow
Strengths: Characteristics of the business or project that give it an advantage over others.
to others
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 objective.
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2.2 SWOT analysis of Jindal Poly Films
Limited:
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
2.2.1 Strength:
1. Huge Investment:
Jindal Poly Films Limited has made huge investment in low cost and highly efficient modern
2. Safety of Assets:
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Jindal Poly Films Limited employs stringent controls to ensure the safety of its asset base
3. Purchasing Power:
There has been an increase in purchasing power in the developing countries which has
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.
Jindal Poly Films Limited produces economical and efficient BOPET and BOPP through
7. Transparency:
The major strength of Jindal Poly Films Limited is that it has Transparency in its working
system.
2.2.2 Weakness:
1. Down of Capacities:
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The recession witnessed closing down of capacities in Western Europe and U.S.A. coupled
2. Limited Production
and Korea.
3. Employee Turnover:
Major weakness of Jindal Poly Films Limited is that the employee turnover is high.
2.2.3 Opportunities:
1. Increasing Consumption:
Thin BOPET films constitute nearly three fourth of the worlds consumption and the
High demand for thin BOPET films and comparably high profit margin.
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 .
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2.2.4 Threats:
Given the volatile trend in crude oil and demand for polymers for competing applications the
2. Modern Machinery:
Latest and modern machinery with most competent technical backup does not ensure success
3. No Increase in demand:
Capacity increase in many parts of Asia and India, without corresponding increase in
demand.
JPFL is facing threats from other leading manufacturers of polyfilms such as Cosmo Films
Major threat of Jindal Poly Films Limited is that the prices of raw material are increasing
very rapidly
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1.1 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
i) National Stock Exchange of India Ltd., (NSE) Exchange Plaza BandraKurla Complex, Bandra
ii) BSE Limited,(BSE)- Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai- 400 00, Scrip Code
500227
40
February 2017 355.2 316.1
42
CHAPTER-3
RESEARCH
METHODOLOGY
43
OBJECTIVES OF STUDY
Objectives of my study are as follows:
To make comparative analysis of financial statements for Jindal Poly Films Limited.
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 &
secondary data collection method. I have adopted both primary data collection method as
well as secondary 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 officials of jindal poly films.
44
INSTRUMENT USED:
A Ratio analysis was used for analysing financial status.
.Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm's financial performance in several key areas. The ratios are categorized as
Short-term Solvency Ratios, Debt Management Ratios, Asset Management Ratios,
Profitability Ratios, and Market Value Ratios.
Ratio Analysis as a tool possesses several important features. The data, which are provided
by financial statements, are readily available. The computation of ratios facilitates the
comparison of firms which differ in size. Ratios can be used to compare a firm's financial
performance with industry averages. In addition, ratios can be used in a form of trend
analysis to identify areas where performance has improved or deteriorated over time.
Because Ratio Analysis is based upon Accounting information, its effectiveness is limited by
the distortions which arise in financial statements due to such things as Historical Cost
Accounting and inflation. Therefore, Ratio Analysis should only be used as a first step in
financial analysis, to obtain a quick indication of a firm's performance and to identify areas
which need to be investigated further
A ratio analysis is a research instrument consisting of a series of different ratio which helps
in analysing different aspect of finance
45
CHAPTER-4
DATA ANALYSIS AND
INTERPRETATION
46
3.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.
Limited:
Comparative Ratio Analysis of Jindal Poly Films Limited has been done through accounting
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,
47
(g) Any other assets which, in the normal course of business will be converted in cash in a
years time.
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.
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.
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
Current Assets of JPFL=80,065 (in lacs) Current Assets of JPFL= 95,640 (in lacs)
Current Liabilities of JPFL=64,295 (in lacs) Current Liabilities of JPFL= 60,963 (in lacs)
48
Therefore Current Ratio of the JPFL for year Therefore Current Ratio of the JPFL for year
1.6
1.4
1.2
0.6
0.4
0.2
0
2016 2017
Interpretation: In 2016 the current ratio of JPFL was 1.25:1 and in 2017 it was 1.57:1. This
tells the current ratio is increasing and company. The funds yielded by the current assets are
sufficient to pay the amounts due to various creditors and there will be adequate fund left to
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.
49
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
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.
Therefore Quick Ratio of the JPFL for the year Therefore Quick Ratio of the JPFL for the year
50
Table7: Calculation of Quick Ratio
0.8
0.6
QUICK RATIO OF JPFL
0.4
0.2
0
2016 2017
Interpretation: In 2016 the Quick ratio of JPFL was 0.81:1 and in 2017 it was 1.07:1. The
quick ratio has increased and which is a good indicator & represent a satisfactory current
financial position. If the quick ration remains more than one likewise to 2017 then company
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.
term)/Shareholders Fund
51
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
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
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.
Total debts= Long term debts+ Short term debts Total debts= Long term debts+ Short term debts
Therefore debt equity ratio for year ending 2016= Therefore debt equity ratio for year ending 2017=
0.71:1. 0.71:1.
52
Table 8: Calculation of Debt Equity Ratio
0.7
0.6
0.5
0.4
Debt Equity Ratio
0.3
0.2
0.1
0
2016 2017
Interpretation: In 2016 the debt equity ratio of JPFL was 0.71:1 and in 2017 it was 0.71:1.
The debt equity ratio has remain same as previous year if it would have declined than it
could have been a good indicator for company. The ratio 0.71:1 indicates that for every
rupee of equity the firm has raised 71 paisa by long term debt.
Proprietary Turnover ratio is a variant of debt equity ratio. It measures the relationship
53
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
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
Proprietary Turnover ratio= Shareholders Fund/Total Proprietary Turnover ratio= Shareholders Fund/Total
Assets Assets
Therefore Proprietary Turnover ratio is 0.58:1. Therefore Proprietary Turnover ratio is 0.58:1.
54
0.7
Proprietery turnover ratio of JPFL
0.6
0.5
0.4
0.3
0.2
0.1
0
1
2015 2017
Interpretation: In 2016 the proprietary ratio of JPFL was 0.58:1 and in 2017 it is 0.58:1.
There has not been any Increase or decrease in proprietary ratio whereas if the ratio would
have risen up it would have been a good indicator for company because increase in
proprietary ratio shows that there is an increase in the extent to which the shareholders own
the business whereas PR of 0.58 is also adequate and indicates good financial strength of
business.
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
55
Formula:
Total Debt to Total Assets Ratio=Total Debt (Short Term Debt + Long Term
Debt)/Total Assets
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
Total Debt= Short Term Debt+Long Term Debt Total Debt= Short Term Debt+Long Term Debt
Total Debt to Total Assets Ratio=123,726/296,368. Total Debt to Total Assets Ratio=131,892/315,266
Total Debt to Total Assets Ratio=0.41:1 Total Debt to Total Assets Ratio=0.41/1
0.4
0.35
0.3
0.25
0.15
0.1
0.05
0
2016 2017
56
Figure 11: Bar Graph of Total Debt to Total Assets Ratio
Interpretation: In 2016 the Total Debt to Total Assets Ratio of JPFL was 0.41:1 and in
2017 also it remains same. The lowering of ratio is a good indicator but data doesnt shows
any decrease in ratio. In 2016 & 2017 41% of total assets were financed by total debt .
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
Long Term Debt to Total Assets Ratio= Long Term Long Term Debt to Total Assets Ratio= Long Term
57
Long Term Debt to Total Assets Long Term Debt to Total Assets
Long Term Debt to Total Assets Ratio=0.20:1 Long Term Debt to Total Assets Ratio=0.22:1
0.22
0.215
0.21
Long Term Debt to Total Assets
0.205 Ratio
0.2
0.195
0.19
2016 2017
Figure 12: Bar Graph of Long Term Debt to Total Assets Ratio
Interpretation: In 2016 Long Term Debt to Total Assets ratio of JPFL was 0.2:1 and in 2017
it rise up to 0.22:1. The rising of Long Term Debt to Total Assets Ratio is not a good
indicator. In 2017 the company had Rs. 0.22 as long term debt for every rupee it has in
assets.
58
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
Formula:
Fund
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.
59
Table 12: Calculation of Fixed Assets to Equity Ratio
Interpretation: In 2016 the Fixed Assets to Equity ratio of JPFL was 0.83:1 and in 2014 it
came down to 0.77:1. The lowering of Fixed Assets to equity Ratio is not a good indicator. In
2017 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
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
60
Formula:
Earnings before Interest and Tax=38625 Earnings before Interest and Tax=25873.
ROI= Earnings before Interest and Tax/Capital Earnings before Interest and Tax/Capital
Employed*100 Employed*100
ROI=38625/296,368*100 ROI=25873/315,266*100
ROI
14.00%
12.00%
10.00%
8.00%
ROI
6.00%
4.00%
2.00%
0.00%
2016 2017
Interpretation: In 2016 ROI of JPFL was 13% and in 2017 it came down to 8%. The
lowering of ROI is not a good indicator. This tells the profits of JPFL declined in 2017 to a
significant amount.
61
Return on Proprietors Equity:
This is also known as Return on Shareholders Funds. It shows the ratio of net profit to
owners capital.
Formula:
interest/Shareholders funds*100
Profit after taxes and interest=29208 Profit after taxes and interest=16814
Return on Proprietors Equity: Profit after taxes and Return on Proprietors Equity: Profit after taxes and
62
Return on Proprietors Equity
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
Return on Proprietors Equity
6.00%
4.00%
2.00%
0.00%
2016 2017
Interpretation: In 2016 Return on Proprietors Equity of JPFL was 16% and in 2017 it came
This Ratio measures the earning per equity share i.e. it measures the profitability of the firm
Formula:
EPS=Profit after Taxes/No. of Equity Shares EPS=Profit after Taxes/No. of Equity Shares
EPS=44 EPS=25
63
EPS
50
40
30
20 EPS
10
0
2016 2017
Interpretation: In 2016 EPS of JPFL was 44 and in 2017 it came down to 25.
The lowering of EPS is not a good indicator. The company need to look into it.
64
Chapter-5
FINDINGS
65
FINDINGS
The condition of the current ratio of both the years is not satisfactorily. The ratio
in 2017 is increased comparative to 2016. The current ratio should be 2:1 ratio but
the companys ratio is not in that form.
The quick ratio should be 1:1. But in 2016 it was 0.81/1 & 1.07/1 in 2017 which is
good for the company
The debt equity ratio of the firm should be 1:1. The debt equity ratio of the
company remains same at 0.71/1 for 2017 likewise to 2016 , which is average
for the company.
Proprietary ratio has remain constant at 0.58 in 2017 likewise to 2016 . Long
term solvency of the firm has not decreased nor increased.
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 increased in 2017 which is a good
indicator.
Return on investment has declined considerably for JPFL in the last year.
Earnings Per Share has been drastically reduced from 44 to 25 in the last year.
66
Chapter 6
RECOMMENDATIONS
67
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.
68
Chapter 7
CONCLUSIONS
69
CONCLUSION
The current ratio of the company for both the years is not in
the satisfactory condition.
70
Chapter 8
LIMITATIONS OF THE
STUDY
71
Limitation of the study
The study is based on the secondary data.
The period of study is 2015-16 to 2016-17 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.
72
Bibliography
73
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_2016_17.pdf
http://economictimes.indiatimes.com/jindal-poly-films-
ltd/stocks/companyid-8826.cms
http://en.wikipedia.org/wiki/Crankshaft
http://www.zenwealth.com/businessfinanceonline/RA/RatioAnalysis.html
http://profit.ndtv.com/stock/jindal-poly-films-ltd_jindalpoly/financials-ratio
https://economictimes.indiatimes.com/jindal-poly-films-
ltd/stocks/companyid-8826.cms
https://economictimes.indiatimes.com/jindal-poly-films-
ltd/directorsreport/companyid-8826.cms
https://economictimes.indiatimes.com/jindal-poly-films-
ltd/infocompanymanagement/companyid-8826.cms
74
Annexure
(Balance Sheet)
75
76
(Rs. In
FINANCIAL RESULTS (2016-17) Lacs)
Particulars 2016-2017 2015-2016
Profit from Operations (EBITDA) 38625.3
before Exceptional Items 25873.72 0
Add/ (Less ) Exceptional items 1653.23 -158.31
Less: Finance Cost 3746.41 3607.55
34859.4
Profit Before Depreciation and Tax 23780.54 4
Less: Depreciation and amortization 6966.18 5650.46
29208.9
Profit before Tax 16814.36 8
Less: Income Tax 3267.56 9098.19
Less Deferred Tax 2185.45 605.04
19505.7
Profit After Tax 11361.35 4
Add : Balance brought forward
Balance available for appropriation
APPROPRIATIONS
Dividend on Equity Shares 437.86 420.48
Tax on Dividend 89.14 85.60
Transfer to General Reserve - -
82725.6
Balance carried forward 93559.98 3
77