Jk Papers Finance Project

8/13/2019 Jk Papers Finance Project

1/53

Financial statement analysis of JK PAPER LTD.

S.R. Luthra Institute of Management Page 1

Introduction to Paper Industry

The use of paper by a society is often taken as a yardstick of its development. The need for

documentation of knowledge and record keeping has long been perceived to be linked to the

intellectual prowess of a nation. The tradition of use of bhoj patra or the bark of the

Bhoj Tree for documentation of our scriptures is acknowledged the world over Such

recording pre-dates most of the earliest known documentation on paper like substances. As

time progressed, the need for cheaper means of documentation of records was felt by

civilizations. It was here that the Chinese made their first attempt to manufacture paper from

plant resources. Historians believe that it was the Moghals, who introduced the traditional

paper makers - the kagzis- in the country as they expanded their empire in India. It was in

1832 that the first modern paper mill was set up in Sreerampur, West Bengal, using themechanized process for paper making developed in the western world. Thus the journey of

machine made paper in India has seen over a century and a half pass by.

Unlike the West, however, India had very little soft wood for the manufacture of paper. Since

machines were designed to process soft wood, there was a problem in using them for harder

indigenous raw materials. In the year 1914, a process was developed to use bamboo for paper

making. This provided the required impetus to the paper making operations in the country.

Figure 1 shows some of the major events that shaped the fortunes of the paper industry in its

journey from a single unit in 1832, to the present day scenario.

After independence the country faced a major challenge of marshalling all the available

resources to lay down the foundations of an industrialized India. Consequently, most


2/53



manufacturing was placed under government control through an elaborately administered

license regimen. Under this regimen the paper industry grew rather slowly over the next three

decades. However, the paper "famine" of 1970 changed the working environment of the

paper sector, and a number of licenses were given to smaller units for manufacture of paper.These units used agricultural residues and waste paper as the raw material base, and eased the

paper scarcity in the country. However, this also created a fractured structure in the industry,

where small, medium as well as large mills came in to co-existence.

India began its program of economic reform in 1991. One by one, the industrial sectors were

freed from an administered license regimen. In July, 1991, the government decided to deli

censes the paper industry. This acted as an incentive for the growth of the industry (Fig. 2).

Today, there are 759 Pulp & Paper mills with an installed capacity of 12.7 million tons

producing around 10.11 million tons/annum of paper/paper board and newsprint out of an

annual consumption of around 11.15 million tons.

The steady growth rate shown in the figure above tells a satisfying growth story for the Indian

paper industry.


3/53



Porter's Five Forces analysis of Indian Paper Industry

Michael Porters model identifies the most powerful driving forces within industriesand the

interactions between them to determine the competitive position and profit potential. The five

driving forces are;

Threat of new entrants

Bargaining power of suppliers

Bargaining power of buyers

Threat of substitute products or services

Rivalry among existing competitors

Porters five forces indicating the competitive intensity and attractiveness of the market for

the Indian Paper Industry are shown in Fig. The analyses of these forces indicate that industry

is operating under various positive and negative forces which have a mixed effect on its

competitiveness. Competition among the mills is low due to large number of grades being

manufactured. High switching cost among the products also makes the industry rivalry less

intense; however the difficulties to exit from the business due to high capital cost increases

the chances of the rivalry among the producers of similar grades. The threat from new


4/53



entrants is low on account of high capital cost, low return on investment and scarcity of raw

materials for paper making.

Bargaining power of suppliers of raw materials i.e. wood, straws, biogases, waste paper,

energy (coal etc.) and modern technology is high which a deterrent for growth of the industry

is. A positive factor for growth & competition among the industry is the forecasted increase

in consumption of paper with growing per capita income, literacy rate and living standards.

However increase in imports of duty free newsprint and diversified customer requirement are

the negative factors for the industry. Apart from these, Industry is also facing tough

competition from electronic media, wide spread use of internet, computerization, ebooks and

imported printed books. The industry is thus operating under various constraints and high

risks, as mentioned above. Therefore it requires support from Government, in terms of policy

interventions for its sustenance.


5/53



JK Paper Limited

Headquarter:New Delhi

Works: JK Paper Mills (Rayagada, Orissa); Central Pulp Mills (Songadh, Gujarat)

Branch Location:NewDelhi, Kolkata, Mumbai, Chennai

No. of Employees: Close to 3000 employees

Management

Name Designation

Arun Bharat Ram Director

Dhirendra Kumar Director

Hari Shankar Singhania Chairman & Managing Director

Harsh Pati Singhania CEO

Harsh Pati Singhania Managing Director

M H Dalmia Director

Om Prakash Goyal Whole Time Director

R V Kanoria Director

S K Pathak Director

Shailesh Haribhakti Director

Suresh Chander Gupta Company Secretary & Compliance Officer

Suresh Chander Gupta Secretary

Udayan Bose Director

Vinita Singhania Director

Wim Wienk Director


6/53



New Technologies Adopted since 2008

Trials for usage of WGCC / PCC as fillers in JK Branded products were undertaken, for

improving the printing properties of paper and also the aesthetic look.

Product Launches since 2008

Branded Copier Cedar

Packaging BoardJK Endura, JK IV Board, JK Pristine Cote

Stationery Note Pal (notebook), JK Printblank (plotter roll)

Steps taken towards better Environment & Society

The savings envisaged equal the average annual water consumption of 75,000 Indian

households and energy use of 9,100 families.

Installed lime sludge recycling plants at both factories.

25 Women Self-Help Groups have been formed in 12 adopted villages with a membership of

294 rural Women, mostly belonging to Tribal Community. As a part of Health Education, 29

Balika Mandals with 466 adolescent girls were formed for sensitizing the target audience on

basics of health care.

To intensify the efforts on the Community Development front and thereby to create a better

quality of life to the people of the society in the vicinity, the company has formed a new

NGO named SPARSH.

Financials (2009-10)

Turnovers 1300 crores Net Profit: Rs91crores Growth Rate: 10%

Future Plans

Planning the installation of a new paper machine of 150,000 TPAand pulp mill of 200,000

TPAalong with utilities


7/53



Classification of Ratio

Classificationof Ratio

Solvency

Short term

1.Current ratio

2. Liquidity ratio

3. Cash position ratio

4. Stock ratio

5.Debtors velocity

6. Creditors velocity

Long term1. Proprietary ratio

2. Debt equity ratio

3. Leverage ratio

4. Security ratio

5. Interest coverage ratio

Profitability

1. Gross profit ratio

2. Net profit ratio

3. Expenses ratio

4. Operating profit ratio

5. Return on capital

employed ratio

Activity

1. Capital turnover

2. Creditor turnover

3. Debtors turnover

4. Cash turnover

5. Stock turnover

Earnings

1. Dividend ratio

2. Earning per share

3. Price earning ratio

4. Pay out ratio

5. Earning power ratio


8/53



1. RETURN ON INVESTMENT RATIO:

1. Return on net worth:

Return on net worth (RONW) = PATpreference dividend 100

Share holder Equity (Net worth)

Year PAT Preference dividend Share holder equity RONW (%)

2008 34.71 0.06 392.58 8.80

2009 40.8 0.05 408.86 9.97

2010 94.16 0.03 475.74 19.78

2011 108.21 0.01 588.89 18.37

2012 49.32 0.01 851.46 5.79

Interpretation:

The return on net worth ratio indicates that in the last two years, the net worth increases. The

firm has earned a factory return for its equity holders. The rate of return on net worth is of

crucial significance for the company.


9/53



2. Earnings per share:

Earnings per share (EPS) = PATpreference dividend

No. of share out standing

Year PAT Preference dividend No. of share outstanding EPS

2008 34.71 0.06 78.15 0.44

2009 40.8 0.05 78.15 0.52

2010 94.16 0.03 78.15 1.20

2011 108.21 0.01 78.15 1.38

2012 49.32 0.01 136.62 0.36

Interpretation:

EPS indicates that, EPS increases from the last four years. This means that, the firms

profitability has increase. Here, the no. of share outstanding remains constant for all the

years. This shows that, it does not necessarily follow that the firms profitability has

improved for all the years.


10/53



3. Cash earnings per share:

Cash earnings per share (CEPS) = PAT - preference dividend + non cash expenses

Total no. of equity share

(In cr.)

Year PAT Preference dividend Non cash

expenses

Total no. of

equity share

CEPS

2008 34.71 0.06 47.14 78.15 1.05

2009 40.8 0.05 70.11 78.15 1.42

2010 94.16 0.03 71.51 78.15 2.12

2011 108.21 0.01 71.71 78.15 2.30

2012 49.32 0.01 136.62

Interpretation:

The CEPS ratio indicates that, it increases from year to year. which shows that the cash

generating ability of the firm increases. In 2008, as PAT decreases, the cash generating

ability of the firm also decreases. And after that in 2009, as PAT increases the cash

generating ability of the firm also increases.


11/53



4. Return on capital employed:

Return on capital employed (ROCE) = NP (before interest & tax) 100

Capital employed

(In cr.)

Year NP Capital Employed ROCE

2008 71.11 1111.22 6.40

2009 117.79 1103.26 10.68

2010 182.54 1023.68 17.83

2011 200 1126.31 17.76

2012 101.5

Interpretation:

The ratio indicates that, the higher the ratio the more efficient is the use of capital employed.

Here, in the last three years it increases. which means that company is using long term fund

of owners and lenders efficiently. In 2008, the ratio decreases because the NP decreases.


12/53



5. EFFICIENCY RATIO:

1. Fixed assets turnover ratio:

Fixed assets turnover ratio = Net sales

Total Fixed Assets (Net block)

(In cr.)

Year Net sales Total Fixed Assets Fixed asset turnover ratio

2008 686.65 949.46 0.72

2009 1,206.36 928.71 1.30

2010 1,258.82 879.58 1.43

2011 1,387.78 844.45 1.64

2012 1,494.85 807.06 1.85

Interpretation:

The fixed asset turnover ratio is continuously increasing. It means the company has more

efficient managing and utilization of assets. And the company expands the sale without

additional capital investment or purchase of fixed assets.


13/53



2. Net worth Turnover:

Net worth Turnover = Net sales

Net Worth

(In cr.)

Year Net sales Net worth Net worth Turnover

2008 686.65 392.58 1.75

2009 1,206.36 408.86 2.95

2010 1,258.82 475.74 2.65

2011 1,387.78 588.89 2.36

2012 1,494.85 851.46 1.75

Interpretation:

The net worth turnover ratio is continuously increasing. This means that the company has

more efficient managing and utilization of share capital and reserves. And the company

expands the net worth; it means the company can operate higher level of activity.


14/53



3. Working capital turnover:

Working capital turnover = Net sales

Working capital

(In cr.)

Year Net sales Working capital (CACL) Working capital turnover

2008 686.65 142.78 4.88

2009 1,206.36 157.83 7.64

2010 1,258.82 81.37 15.47

2011 1,387.78 105.19 13.19

2012 1494.85 157.48 9.49

Interpretation:

The working capital turnover ratio is continuously increasing. It means the company has

more efficient managing and utilization of liquidity.


15/53



4. SOLVENCY RATIO:

1. Net asset value:

Net asset value = Shareholder fund

No. of equity share outstanding

(In cr.)

Year Shareholder fund No. of equity share

outstanding

Net asset value

2008 392.58 78.15 5.022009 408.86 78.15 5.23

2010 475.74 78.15 6.09

2011 588.89 78.15 7.54

2012 851.46 136.62 6.23

Interpretation:

Here, the ratio increase for all the years and higher the ratio higher the capacity of company

to raise further capitalborrowed as well as equity.


16/53



2. Debt Equity Ratio:

DER = Long Term Debt

Equity shareholder fund + preference capitalmisc.exp.

(In cr.)

Particulars Secured loan Unsecured Loan Shareholder

Funds

DER (in times)

2008 583.54 137.78 389.9 1.86

2009 563.42 132.45 407.39 1.71

2010 392.15 156.06 475.47 1.15

2011 412.40 125.96 587.95 0.92

2012 701.84 274.45 819.86 1.19

Interpretation:

DER of 1.5:1 is satisfactory. In 2007 to 2009, the ratio is very high and higher the ratio, more

the financial risk of default in interest and debt service. It also adversely affects capacity of

company to raise cheaper funds. In 2010 and 2011, the ratio is decreasing which shows that

the company had less financial risk of default in interest and debt service.


17/53




18/53



3. Capital Gearing Ratio:

Capital gearing ratio= Fixed interest Gearing Funds 100

Equity capital

(In cr.)

Year Fixed interest Gearing

Funds

Equity capital CGR

2008 0.81 78.15 1.04

2009 0.41 78.15 0.52

2010 0.20 78.15 0.26

2011 0.09 78.15 0.12

2012 0.03 136.62 0.02

Interpretation:

Capital gearing ratio indicates the proportion between owners funds and non owners funds.

JK paper has lower gearing which means company goes slowly towards corporate goal and

company is over capitalize.


19/53



4. Interest coverage ratio:

ICR = PAT+ interest on long term debt + non-cash charges

Interest on long term debt

(In cr.)

YearPAT & non-cash charge Interest on long term debt ICR

2008 119.87 38.01 3.15

2009 176.06 65.15 2.70

2010 218.64 52.97 4.13

2011 230.16 50.24 4.58

2012 171.29 48.98 3.50

Interpretation:

An idle ratio is 2:1 times. The ratio measuring the capacity of company to pay the interest

liability it has incurred on its long term borrowing. Over the last 2 year ratio is increasing and

higher the ratio, greater the ability of a company to service interest, lesser the financial risk of

default and higher the comfort level of the lenders.


20/53



5. Debt service coverage ratio:

DSCR (times) = PAT+ interest on long term debt +non-cash charge

Interest on long term debt + installment of principle due

(In cr.)

Year PAT & non-cash

charge

Interest on long term debt Installment o

principle due

DSCR

2008 119.87 38.01 0.00 3.15

2009 176.06 65.15 0.00 2.70

2010 218.64 52.97 0.00 4.13

2011 230.16 50.24 0.00 4.58

2012 171.29 48.98 .00 3.50

Interpretation:

An idle ratio is 1.6:1 times. The ratio measuring the capacity of company to pay the

interest liability it has incurred on its long term borrowing. Over the last 2 year ratio is

increasing and higher the ratio greater the ability of a company to service interest, lesser

the financial risk of default and higher the comfort level of the lenders.


21/53



6. Proprietary Ratio:

PR = Shareholder Fund

Total assets

(In cr.)

Year Shareholder Fund Total asset PR

2008 389.9 1113.90 0.35

2009 407.39 1104.72 0.37

2010 475.47 1023.96 0.46

2011 587.95 1127.24 0.52

2012 819.86 1827.65 0.45

Interpretation:

Proprietary ratio shows the long term solvency and general strength of the business. Total

assets are greater than share holders fund is good for the company. Over the last 2 years, the

ratio increasing, the position of the firm is good.


22/53



7. Total assets to debt Ratio:

TADR = Total asset

Long term debt

(In cr.)

Year Total asset Long term debt TADR

2008 1,113.90 721.32 1.54

2009 1,104.72 695.87 1.59

2010 1,023.96 548.21 1.87

2011 1,127.24 538.36 2.09

2012 1,827.65 976.19 1.87

Interpretation:

The ratio measuring the capacity of the company for more investment compare with its long

term debt. The acceptable ratio was 4:1 for the company to raise assets. Here, the total assets

are high but long term debts are high, with respect to total asset which shows that the position

of company is not good.


23/53



8. Liability to equity ratio:

LER = Total liability

Equity Shareholder fund

(In cr.)

Year Total liability Equity Shareholder

fund

LER

2008 1,113.90 389.09 2.86

2009 1,104.73 406.98 2.71

2010 1,023.95 475.27 2.15

2011 1,127.25 587.86 1.92

2012 1,827.65 819.86 2.23

Interpretation:

The ratio measuring the total liability of the company & also increases the capital capacity.

Here, the LER decreasing from year to year which shows that it is good for the company

because the total liabilities are decreasing from year to year and share holder fund s are

increasing.


24/53



9. LIQUIDITY RATIOS:

1. Current ratio:CR = Current asset + loans & advances + short term investment

Current liability + provisions + short term debt

(In cr.)

Year Current assets Current liability Current ratio

2008 408.15 265.37 1.54

2009 420.72 262.89 1.60

2010 400.24 318.87 1.26

2011 438.07 332.88 1.32

2012 712.76 555.28 1.28

Interpretation:

As a standard norm, this ratio should be 1.33:1. Here, current ratio for all the years is higher

which shows that the firms ability meet current obligation is more. And the safety of fund ofshort term creditors is also more.


25/53



2. Quick ratio:

QR = Current assetInventoryPrepaid Exp.

Current liabilitiesB.O.D + short term debt

(In cr.)

Year Quick assets Quick liability Quick ratio

2008 287.81 265.37 1.08

2009 107.9 262.89 0.41

2010 273.34 318.87 0.86

2011 310.54 332.88 0.93

2012 548.57 555.28 0.99

Interpretation:

The quick ratio of the company in past years is more than the standard of 1:1. This ratio has

decreases in last 2 years. which shows that the availability of the current asset to pay current

liabilities goes down. In 2009, the ratio is below the 0.5, which indicates that in that year thefirm had difficulty to pay its current liability. The liquidity position is marginally satisfactory.


26/53



3. Stock Turnover Ratio:

STOR = COGS

Avg. Inventory

(In cr.)

Year COGS Avg. inventory STOR (In times)

2008 321.99 108.38 2.97

2009 635.96 118.73 5.36

2010 555.45 122.0 4.55

2011 644.36 127.22 5.06

2012 145.86

Interpretation:

In 2008, the ratio decreases from 4.42 to 2.97 which show that, the inventory does not selling

fast and stays in the warehouse for the long time. From 2009, the ratio increases continuously

which shows that inventory is sold fast.


27/53



4. Stock Turnover Period:

STOP = Avg. Inventory 365

COGS

(In cr.)

Year Avg. inventory COGS STOP (In days)

2008 108.38 321.99 123

2009 118.73 635.96 68

2010 122.0 555.45 80

2011 127.22 644.36 72

2012 145.86

Interpretation:

The stock turn over period is continuously decreases, it means the company can fast selling

the inventory and the companys liquidity position is good or improved in over the years. In

2008, STOR is very high which shows that company cant sell the inventory fast.


28/53



5. Debtors Turnover Ratio:

DTOR = Net Credit Sales

Avg. debtors

(In cr.)

Year Credit sale Avg. debtors DTOR (In times)

2008 686.65 110.87 6.28

2009 1,206.36 107.15 11.26

2010 1,258.82 104.49 12.05

2011 1,387.78 107.87 12.87

2012 1,437.35 144.19 9.97

Interpretation:

The debtors turnover ratio shows that over the last 3 years, it increases. which shows that

there is a shorter time lag between credit sale and cash collection. And thus receivables are

collected rapidly. In 2008, it is 6.28 times which shows that debts are not being collected

rapidly.


29/53



6. Debtors Turnover Period:

DTOP = Debtors 365

Credit sales

(In cr.)

Year Debtors Credit sale DTOR (In days)

2008 110.87 686.65 58

2009 107.15 1,206.36 32

2010 104.49 1,258.82 30

2011 107.87 1,387.78 28

2012 144.49 1,494.85 35

Interpretation:

In 2008, DTOP is 58 days which is very high which shows that receivables are not collected

rapidly. And from 2009, it decreases continuously which shows that the receivables are

collected rapidly.


30/53



7. Profitability Ratio:

1.

Gross Profit Ratio:Gross Profit Ratio = Gross profit 100

Net sales

(In cr.)

Year Gross profit Net sales GP Ratio

2008 375.66 686.65 54.71

2009 570.40 1206.36 47.28

2010 703.37 1258.82 55.88

2011 743.42 1387.78 53.57

2012 1494.85

Interpretation:

In 2011, the ratio is decreasing which shows that cost of production of firm is relatively

high and selling price is low because there may be lack of demand, competition from

rival firm, and inferior quality of the product.

In 2010, the ratio is increasing which shows a good sign of good management because the

cost of production is low and selling price is high.


31/53



2. Profit before depreciation, interest and tax margin

Profit before depreciation, interest and tax margin = PBDIT 100

Net sales

(In cr.)

Year PBDIT Net sales PBDIT Ratio

2008 118.25 686.65 17.22

2009 187.90 1206.36 15.58

2010 254.05 1258.82 20.18

2011 271.71 1387.78 19.58

2012 174.44 1494.85 11.67

Interpretation:

In 2011, the ratio is decreases which show that the firms ability to pay expenses is declining.

There is a less increase in profit as compared to increase in sale.


32/53



3. PBIT Margin or Operating profit margin:

PBIT Margin or Operating profit margin = PBIT 100

Net sales

(In cr.)

Interpretation:

The PBIT ratio is continuously fluctuated but in last years it is increases. that describes that

the adequate return to the owners as well as a company withstand adverse economic

condition when selling price is declining, cost of production is rising and demand for the

product is falling.

Year PBIT Net sales PBIT

Ratio

2008 71.11 686.65 10.36

2009 117.79 1206.36 9.76

2010 182.54 1258.82 14.50

2011 200 1387.78 14.41

2012 101.5 1437.35 7.06


33/53



4. PBT and Extra-ordinary items Ratio (PBTEOT):

PBT and Extra-ordinary items Ratio (PBTEOT) = PBTEOT 100

Net sales

(In cr.)

Year PBTEOT Net sales PBTEOT

Ratio

2008 34.92 686.65 5.09

2009 56.87 1206.36 4.71

2010 130.06 1258.82 10.33

2011 150.24 1387.78 10.83

2012 52.55 1494.8 3.52

Interpretation:

The ratio is continuously fluctuated but in last years it is increases that describes that the

ability of the firm to pay income tax is satisfactory.


34/53



5. PBT margin:

PBT margin = PBT 100

Net sales

(In cr.)

Year PBT Net sales PBT Ratio

2008 33.10 686.65 4.82

2009 52.64 1206.36 4.36

2010 129.57 1258.82 10.29

2011 149.76 1387.78 10.79

2012 52.47 1494.85 3.51

Interpretation:

The ratio is continuously fluctuated but in last year, it is increases. The PBT ratio is

continuously increases over the period of that describes that the taxes paid by the company iscontinuously increases because the increase in income or profit.


35/53



6. Net profit After tax Margin or PAT margin:

Net profit after tax Margin or PAT margin = NPAT 100

Net sales

(In cr.)

Year NPAT Net sales NPAT Ratio

2008 34.71 686.65 5.05

2009 38.01 1206.36 3.15

2010 91.03 1258.82 7.23

2011 106.42 1387.78 7.67

2012 49.32 1494.85 3.30

Interpretation:

The NPT ratio is continuously increases over the period of time that describes the adequate

return to the owners as well as to the company.


36/53



7. Effective tax rate:

Effective tax rate = Current income tax 100

Profit before tax

(In cr.)

Year Current income tax PBT Effective Tax

rate

2008 0.21 33.10 0.63

2009 16.07 52.64 30.53

2010 35.90 129.57 27.71

2011 42.03 149.76 28.06

2012 2.8 52.47 5.34

Interpretation:

The ratio is continuously fluctuated. In the last year, ratio is increasing which shows that

company has to pay more income tax. So there is less profit.

In 2008, income tax rate is so less, but it is not good as there is PBT is very less.


37/53



8. Operating ratio:

Operating ratio = COGS+ Operating expenses 100

Net sales

(In cr.)

Year COGS Operating

expenses

Net sales Operating

ratio

2008 310.99 218.84 686.65 77.16

2009 635.96 370.36 1206.36 83.42

2010 555.45 432.63 1258.82 78.49

2011 644.36 467.92 1387.78 80.15

2012 823.1 527.81 1494.85 90.37

Interpretation:

Operating ratio shows an operational efficiency of firm. Here, in the 2011 the ratio is 80.15%,

which shows that net sale is higher than the expenses which are good for the company. So we

can say that company is managing its operating expenses well.


38/53



9. DU PONT ANALYSIS:

1. Return on net worth

Return on net worth = Net profitpreference dividend 100

Net worth

(In cr.)

Year Net profitpreference

dividend

Net worth Return on net worth

2008 34.65 392.58 8.83

2009 40.75 408.86 9.97

2010 94.13 475.74 19.79

2011 108.2 588.89 18.37

2012 851.46

Interpretation:

In the year 2008 to 2009, there is decrease in RONW contributed by decrease in net profit

margin and increase in net worth.

In the year 2009 to 2011, there is increase in net profit margin and in net worth so there isincrease in RONW.


39/53



2. Return on total assets:

Return on total assets = Net profitpreference dividend 100

Total assets

(In cr.)

YearNet profitpreference dividend Total assets Return on total assets

2008 34.65 1256.68 2.76

2009 40.75 1367.61 2.98

2010 94.13 1342.83 7.00

2011 108.2 1460.12 7.41

2012

Interpretation:

The return on total asset ratio is continuously increases that the net earnings available to

companys owner and to lenders as assets are financed by owners as well as creditors of the

company.


40/53



1. CO

MM

ONSIZE

STA

TEM

ENT

OF

PRO

FIT

AN

D

LOS

S

ACO

UNT

:

Particular 2008 2009 2010 2011

Income :

Sales Turnover 109.55 105.38 103.47 103.57

Excise Duty 9.55 5.38 3.47 3.57

Net Sales 100.00 100.00 100.00 100.00

Other Income 1.28 0.30 0.16 0.53

Stock Adjustments 0.60 0.58 -0.71 -0.75

Total Income 101.87 100.88 99.45 99.78

Expenditure :

Raw Materials 50.38 52.45 44.90 46.48

Power & Fuel Cost 9.20 10.19 9.41 9.81

Employee Cost 10.36 8.29 9.55 9.41


41/53


42/53



4. COMMON SIZE STATEMENT OF BALANCESHEET:

Particular 2008 2009 2010 2011 2012

Sources Of Funds:

Equity Share Capital 7.02 7.07 7.63 6.93 7.48

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.07 0.04 0.02 0.01 0.00

Total Share Capital 7.09 7.11 7.65 6.94 7.48

Reserves 27.57 29.39 38.28 44.97 38.91

Revaluation Reserves 0.58 0.51 0.53 0.33 0.20

Net worth 35.24 37.01 46.46 52.24 46.59

Secured Loans 52.39 51.00 38.30 36.58 38.40

Unsecured Loans 12.37 11.99 15.24 11.17 15.02

Total Debt 64.76 62.99 53.54 47.76 53.41

Total Liabilities 100.00 100.00 100.00 100.00 100.00

Application Of Funds:

Gross Block 122.77 127.95 139.54 129.11 81.13

Less: Accum. Depreciation 37.53 43.88 53.64 54.20 36.97

Net Block 85.24 84.07 85.90 74.91 44.16

Capital Work in Progress 1.46 1.26 2.03 8.33 41.51

Investments 0.25 0.25 4.10 7.34 3.99

Inventories 10.80 10.60 12.39 11.31 8.98

Sundry Debtors 9.95 9.70 10.20 9.57 7.89

Cash and Bank Balance 0.11 0.07 0.10 0.70 0.47

Total Current Assets 20.87 20.37 22.70 21.58 17.34


43/53



Loans and Advances 15.57 14.69 15.72 15.24 14.05

Fixed Deposits 0.20 3.03 0.67 2.04 7.61

Total CA, Loans & Advances 36.64 38.08 39.09 38.86 39.00

Deferred Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 21.37 21.37 28.62 28.94 28.80

Provisions 2.45 2.43 2.52 0.59 1.58

Total CL & Provisions 23.82 23.80 31.14 29.53 30.38

Net Current Assets 12.82 14.29 7.95 9.33 8.62

Miscellaneous Expenses 0.24 0.13 0.03 0.08 1.73

Total Assets 100.00 100.00 100.00 100.00 100.00

Interpretation:

1. The common-size balance sheet shows that, in the year 2011, total current assets as a

percentage of total assets have decreased by 1.12% over previous year. The current

liabilities of the firm also have been increased by 0.32%.over previous year. Thiscondition indicates that liquidity position of the firm is not very well.

2. Here, net current assets have been 1.38% increased, which shows that company has

ability to pay its obligations. But, it is not that way, because here current assets are less

as compared to current liabilities.


44/53



1. TREND ANALYSIS OF PROFIT AND LOSS ACCOUNT:

Particular 2008 2009 2010 2011 2012

Income:

Sales Turnover 1.00 1.69 1.73 1.91 2.08

Excise Duty 1.00 0.99 0.67 0.76 1.03

Net Sales 1.00 1.76 1.83 2.02 2.18

Other Income 1.00 0.41 0.23 0.84 1.59

Stock Adjustments 1.00 1.70 -2.19 -2.56 4.06

Total Income 1.00 1.74 1.79 1.98 2.18

Expenditure:

Raw Materials 1.00 1.83 1.63 1.86 2.38

Power & Fuel Cost 1.00 1.95 1.88 2.15 2.95

Employee Cost 1.00 1.41 1.69 1.84 1.78

Other Manufacturing Expenses 1.00 2.92 2.26 2.09 2.46

Selling and Admin Expenses 1.00 1.71 2.00 2.39 2.54


Total Expenses 1.00 1.77 1.72 1.91 2.32

PBDIT 1.00 1.59 2.15 2.30 1.48

Interest 1.00 1.71 1.39 1.32 1.29

PBDT 1.00 1.53 2.51 2.76 1.56

Depreciation 1.00 1.52 1.53 1.56 1.59

Other Written Off 1.00 0.33 1.15 0.07 0.04

Profit Before Tax 1.00 1.59 3.91 4.52 1.59


45/53



Extra-ordinary items 1.00 2.32 0.27 0.26 0.04

PBT (Post Extra-ord Items) 1.00 1.63 3.72 4.30 1.50

Tax 1.00 76.52 170.95 200.14 13.33

Reported Net Profit 1.00 1.18 2.71 3.12 1.42

Interpretation:

1. The trend analysis of profit and loss account shows that, the net sales increases from year

to year, which is a good position for a firm. But a net sale is increasing at a very less rate.

2. The total income of the firm are also increasing from year to year .but total expenses are

also increasing from year to year. This is not good for company. Because expenses are

increasing more as compared to increase in sales and total income.

3. Here, NPAT for the last years is very high as compared to years 2008 and 2009, which

shows that company is making profit high over the years. Higher the profit, higher the

ability to meet with the future expenses.

4. The overall growth of the firm is satisfactory as the net sales as well as NPAT have

increased substantially.


46/53



1. TREND ANANLYSIS OF BALANCESHEET:

Particular 2008 2009 2010 2011 2012

Sources Of Funds:

Equity Share Capital 1.00 1.00 1.00 1.00 1.75

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 1.00 0.51 0.25 0.11 0.04

Total Share Capital 1.00 0.99 0.99 0.99 1.73

Reserves 1.00 1.06 1.28 1.56 2.32

Revaluation Reserves 1.00 0.87 0.83 0.58 0.55

Net worth 1.00 1.04 1.21 1.50 2.70

Secured Loans 1.00 0.97 0.67 0.71 1.20

Unsecured Loans 1.00 0.96 1.13 0.91 1.99

Total Debt 1.00 0.96 0.76 0.75 1.35

Total Liabilities 1.00 0.99 0.92 1.01 1.64


Gross Block 1.00 1.03 1.04 1.06 1.08

Less: Accum. Depreciation 1.00 1.16 1.31 1.46 1.62

Net Block 1.00 0.98 0.93 1.89 0.85

Capital Work in Progress 1.00 0.86 1.28 5.78 46.74

Investments 1.00 1.00 15.25 30.10 26.53

Inventories 1.00 0.97 1.05 1.06 1.36

Sundry Debtors 1.00 0.97 0.94 0.97 1.30

Cash and Bank Balance 1.00 0.61 0.81 6.40 7.03


47/53



Total Current Assets 1.00 0.97 1.00 1.05 1.36

Loans and Advances 1.00 0.94 0.93 0.99 1.48

Fixed Deposits 1.00 14.74 3.03 10.14 61.25

Total CA, Loans & Advances 1.00 1.03 0.98 1.07 1.75

Deferred Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 1.00 0.99 1.23 1.37 2.21

Provisions 1.00 0.98 0.94 0.25 1.06

Total CL & Provisions 1.00 0.99 1.20 1.25 2.09

Net Current Assets 1.00 1.11 0.57 0.74 1.10


Total Assets 1.00 0.99 0.92 1.01 1.64

Interpretation:

1. The trend analysis of balance-sheet shows that, the net worth of the company increasing

from year to year, this shows that it has relied more on its own funds than on outsiders

funds.

2. Here, total liabilities are fluctuating from year to year. But if total liabilities are very high,

then it is not good for company.

3. The total current assets are fluctuating from year to year. Cash in hand is very high in the

year 2011, which is good. Total current liabilities are also increasing. Here net current

assets are fluctuating over the years, which show that working capital position is bad.


48/53



1. COMPARATIVE ANALYSIS OF

PROFIT AND LOSS ACCOUNT FOR THE YEAR 2011 AND 2012

Particular Increase /decrease

(Amount)

% increase/ decrease

Income:

Sales Turnover 125.01 8.70

Excise Duty 17.94 36.19

Net Sales 107.07 7.72

Other Income 6.60 89.68

Stock Adjustments 27.06 -258.45

Total Income 140.73 10.16

Expenditure:

Raw Materials 178.11 27.61

Power & Fuel Cost 50.54 37.14

Employee Cost -4.08 -3.12

Other Manufacturing

Expenses

0.89 17.84

Selling and Admin Expenses 12.54 6.39

Miscellaneous Expenses 0.00 0.00

Total Expenses 238.00 21.38

PBDIT -97.27 -35.80

Interest -1.26 -2.51


49/53



PBDT -96.01 -43.35

Depreciation 1.32 1.84

Other Written Off -0.04 -44.44

Profit Before Tax -97.29 -64.96

Extra-ordinary items -0.40 -83.33

PBT (Post Extra-ord Items) -97.69 -65.02

Tax -39.23 -93.34

Reported Net Profit -58.89 -54.42

Interpretation:

1. The net sales of the company have increased by 10.35% in the year 2011 from the

previous year 2010, which is quite good.

2. The total income has also been increases by 10.60% in the year 2011.and total expenses

increases by 11.53%.so, total expenses are increasing more than increase in total income.

This situation is not good and company should control expenses.

3. The NPAT has increase by 14.92%, which is quite satisfactory.

4. The overall profitability is somewhat satisfactory, because expenses are more than

income.


50/53



1. COMPARATIVE ANALYSIS OF

BALANCESHEET FOR THE YEAR 2011 AND 2012

Particular Increase /decrease

(Amount)

% increase/ decrease

Sources Of Funds:

Equity Share Capital 58.47 74.82

Share Application Money 0.00 0.00

Preference Share Capital -0.06 -66.67

Total Share Capital 58.41 74.65

Reserves 204.34 40.31

Revaluation Reserves -0.18 -4.77

Net worth 262.57 44.59

Secured Loans 289.34 70.16

Unsecured Loans 148.49 117.89

Total Debt 437.83 81.33

Total Liabilities 700.40 62.13


Gross Block 27.40 1.88

Less: Accum. Depreciation 64.79 10.60

Net Block -37.39 -4.43


51/53



Capital Work in Progress 664.69 707.95

Investments -9.81 -11.85

Inventories 36.66 28.75

Sundry Debtors 36.32 33.67

Cash and Bank Balance 0.78 9.91

Total Current Assets 73.73 30.31

Loans and Advances 84.94 49.45

Fixed Deposits 116.02 504.00

Total CA, Loans & Advances 274.69 62.70

Deferred Credit 0.00 0.00

Current Liabilities 200.18 61.37

Provisions 22.22 331.64

Total CL & Provisions 222.40 66.81

Net Current Assets 52.29 49.71

Miscellaneous Expenses 30.63 3258.51

Total Assets 700.41 62.13


52/53



Interpretation:

1. Net fixed assets in the year 2011, decreased by Rs. 35.13 and decreases by 3.99%.which

are low. But it is not good for company.

2. The total current assets increases by 4.68%, but current liabilities increases by

11.29%.thus, there is a high increase in current liabilities as compared to increase incurrent assets. Thus, working capital position of the company is not good.


53/53


Bibliography

Web Sites:-

http://planningcommission.nic.in/aboutus/committee/wrkgrp12/wg_paper.pdf

http://economictimes.indiatimes.com/jk-paper-ltd/infocompanymanagement/companyid-

11827.cms

http://rapidbi.com/porterfiveforces/

http://economictimes.indiatimes.com/jk-paper-ltd/infocompanyhistory/companyid-11827.cms

http://papermart.in/2010/05/31/top-paper-companies-in-india/
http://planningcommission.nic.in/aboutus/committee/wrkgrp12/wg_paper.pdfhttp://planningcommission.nic.in/aboutus/committee/wrkgrp12/wg_paper.pdfhttp://economictimes.indiatimes.com/jk-paper-ltd/infocompanymanagement/companyid-11827.cmshttp://economictimes.indiatimes.com/jk-paper-ltd/infocompanymanagement/companyid-11827.cmshttp://economictimes.indiatimes.com/jk-paper-ltd/infocompanymanagement/companyid-11827.cmshttp://rapidbi.com/porterfiveforces/http://rapidbi.com/porterfiveforces/http://economictimes.indiatimes.com/jk-paper-ltd/infocompanyhistory/companyid-11827.cmshttp://economictimes.indiatimes.com/jk-paper-ltd/infocompanyhistory/companyid-11827.cmshttp://papermart.in/2010/05/31/top-paper-companies-in-india/http://papermart.in/2010/05/31/top-paper-companies-in-india/http://papermart.in/2010/05/31/top-paper-companies-in-india/http://economictimes.indiatimes.com/jk-paper-ltd/infocompanyhistory/companyid-11827.cmshttp://rapidbi.com/porterfiveforces/http://economictimes.indiatimes.com/jk-paper-ltd/infocompanymanagement/companyid-11827.cmshttp://economictimes.indiatimes.com/jk-paper-ltd/infocompanymanagement/companyid-11827.cmshttp://planningcommission.nic.in/aboutus/committee/wrkgrp12/wg_paper.pdf

Documents

Jk Papers Finance Project