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Financial statement analysis of JK PAPER LTD.

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 the mechanized 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 S.R. Luthra Institute of Management
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Financial statement analysis of JK PAPER LTD.

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.

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Financial statement analysis of JK PAPER LTD.

Porter's Five Forces analysis of Indian Paper Industry


Michael Porters model identifies the most powerful driving forces within industries and 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 S.R. Luthra Institute of Management
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Financial statement analysis of JK PAPER LTD.

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.

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Financial statement analysis of JK PAPER LTD.

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 Arun Bharat Ram Dhirendra Kumar Hari Shankar Singhania Harsh Pati Singhania Harsh Pati Singhania M H Dalmia Om Prakash Goyal R V Kanoria S K Pathak Shailesh Haribhakti Suresh Chander Gupta Suresh Chander Gupta Udayan Bose Vinita Singhania Wim Wienk Director Director Chairman & Managing Director CEO Managing Director Director Whole Time Director Director Director Director Company Secretary & Compliance Officer Secretary Director Director Director Designation

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Financial statement analysis of JK PAPER LTD.

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 Board JK 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 Future Plans Planning the installation of a new paper machine of 150,000 TPAand pulp mill of 200,000 TPAalong with utilities Net Profit: Rs91crores Growth Rate: 10%

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Financial statement analysis of JK PAPER LTD.

Classification of Ratio

Short term

1.Current ratio 2. Liquidity ratio 3. Cash position ratio 4. Stock ratio 5.Debtors velocity 6. Creditors velocity

Solvency
Long term 1. Proprietary ratio 2. Debt equity ratio 3. Leverage ratio 4. Security ratio 5. Interest coverage ratio

Profitability Classification of Ratio

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

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Financial statement analysis of JK PAPER LTD.

1.
1.

RETURN ON INVESTMENT RATIO:


Return on net worth:
Return on net worth (RONW) = PAT preference dividend 100 Share holder Equity (Net worth)

Year 2008 2009 2010 2011 2012

PAT 34.71 40.8 94.16 108.21 49.32

Preference dividend 0.06 0.05 0.03 0.01 0.01

Share holder equity 392.58 408.86 475.74 588.89 851.46

RONW (%) 8.80 9.97 19.78 18.37 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.

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Financial statement analysis of JK PAPER LTD.

2.

Earnings per share:


Earnings per share (EPS) = PAT preference dividend No. of share out standing

Year 2008 2009 2010 2011 2012

PAT 34.71 40.8 94.16 108.21 49.32

Preference dividend 0.06 0.05 0.03 0.01 0.01

No. of share outstanding 78.15 78.15 78.15 78.15 136.62

EPS 0.44 0.52 1.20 1.38 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. S.R. Luthra Institute of Management
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Financial statement analysis of JK PAPER LTD.

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 47.14 70.11 71.51 71.71 Total no. of equity share 78.15 78.15 78.15 78.15 136.62 CEPS

2008 2009 2010 2011 2012

34.71 40.8 94.16 108.21 49.32

0.06 0.05 0.03 0.01 0.01

1.05 1.42 2.12 2.30

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.

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Financial statement analysis of JK PAPER LTD.

4.

Return on capital employed:


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

(In cr.) Year 2008 2009 2010 2011 2012 NP 71.11 117.79 182.54 200 101.5 Capital Employed 1111.22 1103.26 1023.68 1126.31 ROCE 6.40 10.68 17.83 17.76

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.

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Financial statement analysis of JK PAPER LTD.

5.
1.

EFFICIENCY RATIO:
Fixed assets turnover ratio:
Fixed assets turnover ratio = Net sales

Total Fixed Assets (Net block) (In cr.) Year 2008 2009 2010 2011 2012 Net sales 686.65 1,206.36 1,258.82 1,387.78 1,494.85 Total Fixed Assets 949.46 928.71 879.58 844.45 807.06 Fixed asset turnover ratio 0.72 1.30 1.43 1.64 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.

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Financial statement analysis of JK PAPER LTD.

2.

Net worth Turnover:


Net worth Turnover = Net sales Net Worth (In cr.) Year 2008 2009 2010 2011 2012 Net sales 686.65 1,206.36 1,258.82 1,387.78 1,494.85 Net worth 392.58 408.86 475.74 588.89 851.46 Net worth Turnover 1.75 2.95 2.65 2.36 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.

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Financial statement analysis of JK PAPER LTD.

3.

Working capital turnover:


Working capital turnover = Net sales Working capital

(In cr.) Year 2008 2009 2010 2011 2012 Net sales 686.65 1,206.36 1,258.82 1,387.78 1494.85 Working capital (CA CL) 142.78 157.83 81.37 105.19 157.48 Working capital turnover 4.88 7.64 15.47 13.19 9.49

Interpretation:
The working capital turnover ratio is continuously increasing. It means the company has more efficient managing and utilization of liquidity.

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Financial statement analysis of JK PAPER LTD.

4.
1.

SOLVENCY RATIO:
Net asset value:
Net asset value = Shareholder fund No. of equity share outstanding (In cr.) Year Shareholder fund No. of equity share outstanding 78.15 78.15 78.15 78.15 136.62 Net asset value

2008 2009 2010 2011 2012

392.58 408.86 475.74 588.89 851.46

5.02 5.23 6.09 7.54 6.23

Interpretation:
Here, the ratio increase for all the years and higher the ratio higher the capacity of company to raise further capital borrowed as well as equity.

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Financial statement analysis of JK PAPER LTD.

2.

Debt Equity Ratio:


DER = Long Term Debt

Equity shareholder fund + preference capital misc.exp. (In cr.) Particulars Secured loan Unsecured Loan Shareholder Funds 2008 2009 2010 2011 2012 583.54 563.42 392.15 412.40 701.84 137.78 132.45 156.06 125.96 274.45 389.9 407.39 475.47 587.95 819.86 1.86 1.71 1.15 0.92 1.19 DER (in times)

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.

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Financial statement analysis of JK PAPER LTD.

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Financial statement analysis of JK PAPER LTD.

3.

Capital Gearing Ratio:


Capital gearing ratio= Fixed interest Gearing Funds 100 Equity capital

(In cr.) Year 2008 2009 2010 2011 2012 Fixed interest Gearing Funds 0.81 0.41 0.20 0.09 0.03 Equity capital 78.15 78.15 78.15 78.15 136.62 CGR 1.04 0.52 0.26 0.12 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.

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Financial statement analysis of JK PAPER LTD.

4.

Interest coverage ratio:

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

(In cr.) Year PAT & non-cash charge 2008 2009 2010 2011 2012 119.87 176.06 218.64 230.16 171.29 Interest on long term debt 38.01 65.15 52.97 50.24 48.98 ICR 3.15 2.70 4.13 4.58 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. S.R. Luthra Institute of Management
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Financial statement analysis of JK PAPER LTD.

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 2008 2009 2010 2011 2012 PAT & non-cash Interest on long term debt charge 38.01 119.87 176.06 218.64 230.16 171.29 65.15 52.97 50.24 48.98 Installment of principle due 0.00 0.00 0.00 0.00 .00 DSCR 3.15 2.70 4.13 4.58 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.

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Financial statement analysis of JK PAPER LTD.

6.

Proprietary Ratio:
PR = Shareholder Fund Total assets

(In cr.) Year 2008 2009 2010 2011 2012 Shareholder Fund 389.9 407.39 475.47 587.95 819.86 Total asset 1113.90 1104.72 1023.96 1127.24 1827.65 PR 0.35 0.37 0.46 0.52 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.

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Financial statement analysis of JK PAPER LTD.

7.

Total assets to debt Ratio:


TADR = Total asset Long term debt

(In cr.) Year 2008 2009 2010 2011 2012 Total asset 1,113.90 1,104.72 1,023.96 1,127.24 1,827.65 Long term debt 721.32 695.87 548.21 538.36 976.19 TADR 1.54 1.59 1.87 2.09 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.

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Financial statement analysis of JK PAPER LTD.

8.

Liability to equity ratio:


LER = Total liability Equity Shareholder fund

(In cr.) Year Total liability Equity Shareholder fund 389.09 406.98 475.27 587.86 819.86 LER

2008 2009 2010 2011 2012

1,113.90 1,104.73 1,023.95 1,127.25 1,827.65

2.86 2.71 2.15 1.92 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.

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Financial statement analysis of JK PAPER LTD.

9.

LIQUIDITY RATIOS:

1.

Current ratio:
CR = Current asset + loans & advances + short term investment Current liability + provisions + short term debt

(In cr.) Year 2008 2009 2010 2011 2012 Current assets 408.15 420.72 400.24 438.07 712.76 Current liability 265.37 262.89 318.87 332.88 555.28 Current ratio 1.54 1.60 1.26 1.32 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 of short term creditors is also more. S.R. Luthra Institute of Management
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Financial statement analysis of JK PAPER LTD.

2.

Quick ratio:
QR = Current asset Inventory Prepaid Exp. Current liabilities B.O.D + short term debt (In cr.) Year 2008 2009 2010 2011 2012 Quick assets 287.81 107.9 273.34 310.54 548.57 Quick liability 265.37 262.89 318.87 332.88 555.28 Quick ratio 1.08 0.41 0.86 0.93 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 the firm had difficulty to pay its current liability. The liquidity position is marginally satisfactory. S.R. Luthra Institute of Management
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Financial statement analysis of JK PAPER LTD.

3.

Stock Turnover Ratio:


STOR = COGS

Avg. Inventory (In cr.) Year 2008 2009 2010 2011 2012 COGS 321.99 635.96 555.45 644.36 Avg. inventory 108.38 118.73 122.0 127.22 145.86 STOR (In times) 2.97 5.36 4.55 5.06

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.

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Financial statement analysis of JK PAPER LTD.

4.

Stock Turnover Period:


STOP = Avg. Inventory 365 COGS (In cr.) Year 2008 2009 2010 2011 2012 Avg. inventory 108.38 118.73 122.0 127.22 145.86 COGS 321.99 635.96 555.45 644.36 STOP (In days) 123 68 80 72

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.

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Financial statement analysis of JK PAPER LTD.

5.

Debtors Turnover Ratio:


DTOR = Net Credit Sales Avg. debtors (In cr.) Year 2008 2009 2010 2011 2012 Credit sale 686.65 1,206.36 1,258.82 1,387.78 1,437.35 Avg. debtors 110.87 107.15 104.49 107.87 144.19 DTOR (In times) 6.28 11.26 12.05 12.87 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.

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Financial statement analysis of JK PAPER LTD.

6.

Debtors Turnover Period:


DTOP = Debtors 365 Credit sales (In cr.) Year 2008 2009 2010 2011 2012 Debtors 110.87 107.15 104.49 107.87 144.49 Credit sale 686.65 1,206.36 1,258.82 1,387.78 1,494.85 DTOR (In days) 58 32 30 28 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.

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Financial statement analysis of JK PAPER LTD.

7.
1.

Profitability Ratio:
Gross Profit Ratio:
Gross Profit Ratio = Gross profit 100 Net sales (In cr.) Year 2008 2009 2010 2011 2012 Gross profit 375.66 570.40 703.37 743.42 Net sales 686.65 1206.36 1258.82 1387.78 1494.85 GP Ratio 54.71 47.28 55.88 53.57

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.

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Financial statement analysis of JK PAPER LTD.

2.

Profit before depreciation, interest and tax margin

Profit before depreciation, interest and tax margin = PBDIT 100 Net sales (In cr.) Year 2008 2009 2010 2011 2012 PBDIT 118.25 187.90 254.05 271.71 174.44 Net sales 686.65 1206.36 1258.82 1387.78 1494.85 PBDIT Ratio 17.22 15.58 20.18 19.58 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.

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Financial statement analysis of JK PAPER LTD.

3.

PBIT Margin or Operating profit margin:

PBIT Margin or Operating profit margin = PBIT 100 Net sales (In cr.) Year 2008 2009 2010 2011 2012 PBIT 71.11 117.79 182.54 200 101.5 Net sales 686.65 1206.36 1258.82 1387.78 1437.35 PBIT Ratio 10.36 9.76 14.50 14.41 7.06

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.

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Financial statement analysis of JK PAPER LTD.

4.

PBT and Extra-ordinary items Ratio (PBTEOT):

PBT and Extra-ordinary items Ratio (PBTEOT) =

PBTEOT 100 Net sales (In cr.)

Year 2008 2009 2010 2011 2012

PBTEOT 34.92 56.87 130.06 150.24 52.55

Net sales 686.65 1206.36 1258.82 1387.78 1494.85

PBTEOT Ratio 5.09 4.71 10.33 10.83 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.

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Financial statement analysis of JK PAPER LTD.

5.

PBT margin:

PBT margin = PBT 100 Net sales (In cr.) Year 2008 2009 2010 2011 2012 PBT 33.10 52.64 129.57 149.76 52.47 Net sales 686.65 1206.36 1258.82 1387.78 1494.85 PBT Ratio 4.82 4.36 10.29 10.79 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 is continuously increases because the increase in income or profit. S.R. Luthra Institute of Management
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Financial statement analysis of JK PAPER LTD.

6.

Net profit After tax Margin or PAT margin:

Net profit after tax Margin or PAT margin = NPAT 100 Net sales

(In cr.) Year 2008 2009 2010 2011 2012 NPAT 34.71 38.01 91.03 106.42 49.32 Net sales 686.65 1206.36 1258.82 1387.78 1494.85 NPAT Ratio 5.05 3.15 7.23 7.67 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.

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Financial statement analysis of JK PAPER LTD.

7.

Effective tax rate:

Effective tax rate = Current income tax 100 Profit before tax

(In cr.) Year 2008 2009 2010 2011 2012 Current income tax 0.21 16.07 35.90 42.03 2.8 PBT 33.10 52.64 129.57 149.76 52.47 Effective Tax rate 0.63 30.53 27.71 28.06 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.

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Financial statement analysis of JK PAPER LTD.

8.

Operating ratio:

Operating ratio = COGS+ Operating expenses 100 Net sales

(In cr.) Year COGS Operating expenses 2008 2009 2010 2011 2012 310.99 635.96 555.45 644.36 823.1 218.84 370.36 432.63 467.92 527.81 686.65 1206.36 1258.82 1387.78 1494.85 Net sales Operating ratio 77.16 83.42 78.49 80.15 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. S.R. Luthra Institute of Management
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Financial statement analysis of JK PAPER LTD.

9.

DU PONT ANALYSIS:
Return on net worth

1.

Return on net worth = Net profit preference dividend 100 Net worth (In cr.) Year 2008 2009 2010 2011 2012 Net profit preference dividend 34.65 40.75 94.13 108.2 Net worth 392.58 408.86 475.74 588.89 851.46 Return on net worth 8.83 9.97 19.79 18.37

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 is increase in RONW. S.R. Luthra Institute of Management
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Financial statement analysis of JK PAPER LTD.

2.

Return on total assets:

Return on total assets = Net profit preference dividend 100 Total assets (In cr.) Year Net profit preference dividend 2008 2009 2010 2011 2012 34.65 40.75 94.13 108.2 Total assets 1256.68 1367.61 1342.83 1460.12 Return on total assets 2.76 2.98 7.00 7.41

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.

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Financial statement analysis of JK PAPER LTD.

Particular Income : Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income

2008

2009

2010

1. CO 2011

109.55 9.55 100.00 1.28 0.60 101.87

105.38 5.38 100.00 0.30 0.58 100.88

103.47 3.47 100.00 0.16 -0.71 99.45

103.57 3.57 100.00 0.53 -0.75 99.78

Expenditure : Raw Materials Power & Fuel Cost Employee Cost 50.38 9.20 10.36 52.45 10.19 8.29 44.90 9.41 9.55 46.48 9.81 9.41

MM ON SIZE STA TEM ENT OF PRO FIT AN D LOS S ACO UNT :

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Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Total Expenses

0.35 11.96 2.40 84.65

0.58 11.64 2.15 85.30

0.43 13.03 1.94 79.27

0.36 14.14 0.00 80.20

PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit

17.22 5.54 11.69 6.68 0.19 4.82 0.27 5.09 0.03 5.05

15.58 5.40 10.18 5.78 0.03 4.36 0.35 4.71 1.33 3.38

20.18 4.21 15.97 5.56 0.12 10.29 0.04 10.33 2.85 7.48

19.58

Inter 15.96 preta tion: 5.16


0.01 1. 10.79 0.03 10.83 3.03 7.80 The comm onsize profit and loss accou

3.62

nt shows that in the current year 2011, the NPAT has increased to 7.80% from 7.48% in the previous year. This is because there is 0.93% increase in the total expenses and 0.33% increase in total income.

2.

In the NPAT, there is a more or less fluctuation in every year. This is because of fluctuations on the total income and total expenses.

3.

Further analysis indicates that profitability is more but there is also increase in total expenses.

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Financial statement analysis of JK PAPER LTD.

4.

COMMON SIZE STATEMENT OF BALANCESHEET: 2008 2009 2010 2011 2012

Particular Sources Of Funds: Equity Share Capital Share Application Money Preference Share Capital Total Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities

7.02 0.00 0.07 7.09 27.57 0.58 35.24 52.39 12.37 64.76 100.00

7.07 0.00 0.04 7.11 29.39 0.51 37.01 51.00 11.99 62.99 100.00

7.63 0.00 0.02 7.65 38.28 0.53 46.46 38.30 15.24 53.54 100.00

6.93 0.00 0.01 6.94 44.97 0.33 52.24 36.58 11.17 47.76 100.00

7.48 0.00 0.00 7.48 38.91 0.20 46.59 38.40 15.02 53.41 100.00

Application Of Funds: Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets
122.77 37.53 85.24 1.46 0.25 10.80 9.95 0.11 20.87 127.95 43.88 84.07 1.26 0.25 10.60 9.70 0.07 20.37 139.54 53.64 85.90 2.03 4.10 12.39 10.20 0.10 22.70 129.11 54.20 74.91 8.33 7.34 11.31 9.57 0.70 21.58 81.13 36.97 44.16 41.51 3.99 8.98 7.89 0.47 17.34

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Financial statement analysis of JK PAPER LTD.

Loans and Advances Fixed Deposits Total CA, Loans & Advances Deferred Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets

15.57 0.20 36.64 0.00 21.37 2.45 23.82 12.82 0.24 100.00

14.69 3.03 38.08 0.00 21.37 2.43 23.80 14.29 0.13 100.00

15.72 0.67 39.09 0.00 28.62 2.52 31.14 7.95 0.03 100.00

15.24 2.04 38.86 0.00 28.94 0.59 29.53 9.33 0.08 100.00

14.05 7.61 39.00 0.00 28.80 1.58 30.38 8.62 1.73 100.00

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. This condition 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.

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Financial statement analysis of JK PAPER LTD.

1.

TREND ANALYSIS OF PROFIT AND LOSS ACCOUNT:


Particular Income: Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income 1.00 1.00 1.00 1.00 1.00 1.00 1.69 0.99 1.76 0.41 1.70 1.74 1.73 0.67 1.83 0.23 -2.19 1.79 1.91 0.76 2.02 0.84 -2.56 1.98 2.08 1.03 2.18 1.59 4.06 2.18 2008 2009 2010 2011 2012

Expenditure: Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Total Expenses 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.83 1.95 1.41 2.92 1.71 1.57 1.77 1.63 1.88 1.69 2.26 2.00 1.48 1.72 1.86 2.15 1.84 2.09 2.39 0.00 1.91 2.38 2.95 1.78 2.46 2.54 0.00 2.32

PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax

1.00 1.00 1.00 1.00 1.00 1.00

1.59 1.71 1.53 1.52 0.33 1.59

2.15 1.39 2.51 1.53 1.15 3.91

2.30 1.32 2.76 1.56 0.07 4.52

1.48 1.29 1.56 1.59 0.04 1.59

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Financial statement analysis of JK PAPER LTD.

Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit

1.00 1.00 1.00 1.00

2.32 1.63 76.52 1.18

0.27 3.72 170.95 2.71

0.26 4.30 200.14 3.12

0.04 1.50 13.33 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.

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Financial statement analysis of JK PAPER LTD.

1.

TREND ANANLYSIS OF BALANCESHEET:


Particular Sources Of Funds: Equity Share Capital Share Application Money Preference Share Capital Total Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities 1.00 0.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 0.00 0.51 0.99 1.06 0.87 1.04 0.97 0.96 0.96 0.99 1.00 0.00 0.25 0.99 1.28 0.83 1.21 0.67 1.13 0.76 0.92 1.00 0.00 0.11 0.99 1.56 0.58 1.50 0.71 0.91 0.75 1.01 1.75 0.00 0.04 1.73 2.32 0.55 2.70 1.20 1.99 1.35 1.64 2008 2009 2010 2011 2012

Application Of Funds: Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.03 1.16 0.98 0.86 1.00 0.97 0.97 0.61 1.04 1.31 0.93 1.28 15.25 1.05 0.94 0.81 1.06 1.46 1.89 5.78 30.10 1.06 0.97 6.40 1.08 1.62 0.85 46.74 26.53 1.36 1.30 7.03

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Financial statement analysis of JK PAPER LTD.

Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deferred Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets

1.00 1.00 1.00 1.00 0.00 1.00 1.00 1.00 1.00 1.00 1.00

0.97 0.94 14.74 1.03 0.00 0.99 0.98 0.99 1.11 1.55 0.99

1.00 0.93 3.03 0.98 0.00 1.23 0.94 1.20 0.57 0.10 0.92

1.05 0.99 10.14 1.07 0.00 1.37 0.25 1.25 0.74 0.35 1.01

1.36 1.48 61.25 1.75 0.00 2.21 1.06 2.09 1.10 11.78 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.

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Financial statement analysis of JK PAPER LTD.

1.

COMPARATIVE ANALYSIS OF

PROFIT AND LOSS ACCOUNT FOR THE YEAR 2011 AND 2012
Particular Increase /decrease (Amount) % increase/ decrease

Income: Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure: Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Total Expenses 178.11 50.54 -4.08 0.89 27.61 37.14 -3.12 17.84 125.01 17.94 107.07 6.60 27.06 140.73 8.70 36.19 7.72 89.68 -258.45 10.16

12.54 0.00 238.00

6.39 0.00 21.38

PBDIT Interest

-97.27 -1.26

-35.80 -2.51

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Financial statement analysis of JK PAPER LTD.

PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit

-96.01 1.32 -0.04 -97.29 -0.40 -97.69 -39.23 -58.89

-43.35 1.84 -44.44 -64.96 -83.33 -65.02 -93.34 -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.

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Financial statement analysis of JK PAPER LTD.

1.

COMPARATIVE ANALYSIS OF

BALANCESHEET FOR THE YEAR 2011 AND 2012

Particular

Increase /decrease (Amount)

% increase/ decrease

Sources Of Funds: Equity Share Capital Share Application Money Preference Share Capital Total Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities 58.47 0.00 -0.06 58.41 204.34 -0.18 262.57 289.34 148.49 437.83 700.40 74.82 0.00 -66.67 74.65 40.31 -4.77 44.59 70.16 117.89 81.33 62.13

Application Of Funds: Gross Block Less: Accum. Depreciation Net Block 27.40 64.79 -37.39 1.88 10.60 -4.43

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Financial statement analysis of JK PAPER LTD.

Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deferred Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets

664.69 -9.81 36.66 36.32 0.78 73.73 84.94 116.02 274.69 0.00 200.18 22.22 222.40 52.29 30.63 700.41

707.95 -11.85 28.75 33.67 9.91 30.31 49.45 504.00 62.70 0.00 61.37 331.64 66.81 49.71 3258.51 62.13

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Financial statement analysis of JK PAPER LTD.

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 in current assets. Thus, working capital position of the company is not good.

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Financial statement analysis of JK PAPER LTD.

Bibliography
Web Sites:http://planningcommission.nic.in/aboutus/committee/wrkgrp12/wg_paper.pdf http://economictimes.indiatimes.com/jk-paper-ltd/infocompanymanagement/companyid11827.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/

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