PJAEE, 17(6) (2020)

FINANCIAL KEY PERFORMANCE INDICATORS OF JIO INFOCOMM

K P EZHIL MARAN
Assistant Professor, Department of Commerce, College of Science and Humanities
SRM Institute of Science and Technology, Kattankulathur – 603202
Mail id: ezhilmap@srmist.edu.in

K P EZHIL MARAN, FINANCIAL KEY PERFORMANCE INDICATORS OF JIO

INFOCOMM – Palarch’s Journal of Archaeology of Egypt/Egyptology 17(6) (2020).
ISSN 1567-214X.

KEY WORDS: Financial Performance, Capital Structure and Reliance JIO.

ABSTRACT
Motive of any business concern will achieve the maximum profit and higher profitability leads to
maximize the wealth of the investors as well as the nation. The purpose of financial performance
analysis identifies the financial strengths and weaknesses of the firm by properly establishing
relationships between the items of the balance sheet and profit and loss account. The present
study focuses on financial performance of Reliance JIO Infocomm for the five year period from
2014-15 to 2018-2019. Reliance JIO Infocomm is the highest GST payer in the country and
revenue from retail business grew 8 times in last five years. The objective of this study to
evaluate the financial performance of the company, analyze the capital structure and other
financial changes and identify future result by using comparative statement and trend analysis.
The study will help investors to identify the nature of JIO infocomm and will also help to take
decision regarding investment.

I. INTRODUCTION
Financial performance analysis is the process of identifying the
financial strengths and weaknesses of the firm by properly
establishing the relationship between the items of balance sheet and
profit and loss account. There are many tools to find financial
performance of the company, one of the most useful tools is
comparative and trend analysis. The financial analysis is done to find
the firm’s current position with that of market situation. This

2855
 PJAEE, 17(6) (2020)

analysis is used by creditors, shareholders, board. Finance always

being disregarded in financial decision making since it involves
investment and financing in short-term period. Further, also act as a
restrain in financial performance, since it does not contribute to
return on equity (Rafuse, 1996). A well designed and implemented
financial management is expected to contribute positively to the
creation of a firm’s value (Padachi, 2006). The researcher attempts
to measure the company’s capital structure and other indicators that
the business is conducted in a rational and normal way; ensuring
enough returns to the shareholders to maintain at least its market
value.
II. ABOUT THE COMPANY
Reliance Jio Infocomm Limited, d/b/a Jio, is an Indian
telecommunications company and a subsidiary of Jio Platforms,
headquartered in Mumbai, Maharashtra, India. It operates a national
LTE network with coverage across all 22 telecom circles. It does not
offer 2G or 3G service, and instead uses only voice over LTE to
provide voice service on its 4G network. It is the largest mobile
network operator in India and the third largest mobile network
operator in the world with over 40.56 crore (405.6 million)
subscribers.
III. REVIEW OF LITERATURE
1. Campbell (2008) constructed a multivariate prediction model that
estimates the probability of bankruptcy reorganization for closely
held firms. Six variables were used in developing the hypotheses and
five were significant in distinguishing closely held firms that
reorganize from those that liquidate. The five factors were firm size,
asset profitability, the number of secured creditors, the presence of
free assets, and the number of under-secured secured creditors. The
prediction model correctly classified 78.5% of the sampled firms.
This model is used as a decision aid when forming an expert opinion
regarding a debtor’s likelihood of rehabilitation. No study has
incorporated the financial performance analysis of the central public
sector enterprises in Indian drug & pharmaceutical Industry. Nor has
any previous research examined the solvency position, liquidity
position, profitability analysis, operating efficiency and the
prediction of financial health and viability of public sector drug &
pharmaceutical enterprises in India.
2. Yunus, N.M., Malik, S.A. (2012) states thatthe use of financial
model is to predict the performance of a company. The theoretical
analysis in the development of model is done using the matrix
solution of the Matlab software. The model is then validated with the
actual company's business performance to determine the predicting
accuracy.
3. (Singh, 2017) in an empirical study impact of Reliance Jio on
Indian Telecom Industry using SWOT analysis, found various

2856
 PJAEE, 17(6) (2020)

potentials available for Jio to upgrade its competitive strategies with

reference to the existing scenario prevailing and the level of
offerings by other players in the industry. (Haq, 2017), in a
qualitative research, used differential plans comparison and found
correlation with subscription share & concluded that: Data is the new
oil which will run future rigorously and massive investment in visual
& delivery of content is anticipated.

IV. RESEACH METHODOLOGY

Statement of the problem
Many studies were carried out to find out the impact of Jio on other
companies in telecom industry. The results are mixed in terms of
SWOT analysis and technological advantages, but present study is
different in analyzing the capital structure and other indicators for
decision regarding investment.
Importance of the study
It is essentially concerned with how the firm decides to divide its
cash flows into two broad, components, a fixed component that is
earmarked to meet the obligations towards debt capital and a residual
component that belongs to equity shareholders. The Purpose of the
study is to know the effect of change in size, growth in the
capital structure of the company.
Objectives of the study
• To examine the capital structure of reliance JIO Infocomm.
• To evaluate the overall financial performance of the company
Data used
1. The secondary data were collected from company’s annual reports
and their websites.
2. The period of study for the project is 5 years (2014-2015 to 2018-
2019).
Tools Applied
The simple percentage analysis, comparative statement and trend
analysis had been used for the study.
Limitations
• The study is restricted for a period of five years.
• The analysis is based on annual reports of the company.

V. ANALYSIS AND INTERPRETATION

2857
 PJAEE, 17(6) (2020)

Table -1
Capital Structure of the JIO INFOCOMM (` in Cr.)
Sources 2014-2015 2015-2016 2016- 17 2017 – 18 2018 - 19
Share Capital 30,000 45,000 45,000 45,000 45,000
(70.61) (62.41) (36.21) (28.13) (34.95)
Reserve & Surplus (7,748) (7,764) 25,864 57,933 4,600
(18.23) (-10.76) (20.81) (36.22) (3.57)
Long – Term debt 20,226 32,301 47,461 43,728 75,611
(47.61) (44.80) (38.19) (27.34) (58.69)
Short – Term debt 8 2,561 5,922 13,263 3601
(0.02) (3.55) (4.76) (8.29) (2.79)
Total 42,486 72,098 1,24,247 1,59,924 128,812
(100) (100) (100) (100%) (100)
Sources : Annual Reports
Note : The figures in brackets denote Percentage to total column
Interpretation
From the above table, it could be seen that the proportion of share
capital to total capital structure has been fluctuating for the entire period of
study. However, a sharp increase in share capital during 2015 – 16 Rs.
30,000 lakhs to Rs. 45,000 lakhs have been due to the issue of equity share
capital. The proportion of Reserves and Surplus to total capital structure
shows a fluctuating trend for the entire period of the study. The proportion
of long-term debt to capital structure has been declining trend for the first
four years the proportion of long-term debt is highest in the year 2018 – 19
with 58.69 %. The proportion of short-term debt to capital structure has
been shows a increasing trend for the first four years of the study. Its
percentage to total capital structure has been the highest in the year 2017 –
18 with 8.29%.

Table 2
Comparative Statement & Trend analysis of Long – Term Debt
Absolute Percentage of Trend Percentage
Year Long – Term Debt Increase/Decrease Increase/Decrease
(`. In Cr.)
2014 – 15 20,226 - - 100%
2015 – 16 32,301 12,075 59% 160%
2016 – 17 47,461 15,160 47% 235%
2017 – 18 43,728 -3,733 - 7.8% 216%
2018 – 19 75,611 31,883 73% 374%
Sources :Annual Reports
Inference

2858
 PJAEE, 17(6) (2020)

In the year 2014 – 15 the debt is Rs. 20,226 lakhs,

which is increased to Rs. 32,301 lakhs in financial year 2015 – 16 and
decreased in the year of 2016-17, After that the debt is rapidly increases
from the financial year 2017 – 18 onwards.
From trend analysis it could be seen that the
trend percentage of debt has been increasing for first 3 years period, in
the year 2017-18 the trend percentage is decreased to 216% and it
increased in 2018-19.
Table 3
Comparative Statement & Trend analysis of Short – Term Debt
Short – Absolute Percentage of
Year Term Debts Increase/Decrease Increase/Decrease Trend Percentage
(`. In Cr.)
2014 – 15 8 - - 100
2015 – 16 2,561 2,553 31913 32012
2016 – 17 5,922 3,361 131 74025
2017 – 18 13,263 7,341 124 165788
2018 - 19 3,601 -9,662 73 45013
Sources : Annual Reports

Inference:
From the Table, it could be seen that the Short
– term debt of JIO INFOCOMM, its show a increasing trend for the entire
period of the study except in the year of 2018 – 19 the debt is decreased to
Rs. 3,601 lakhs.
From trend analysis it could be seen that the
trend percentage of debt has been increasing for the whole period except in
the year of 2018-19. In that year the trend percentage is decreased to
45013% .
Table 4
Comparative Statement & Trend analysis of Equity Share
Year Equity Share Absolute Percentage of Trend
Capital Increase/Decrease Increase/Decrease Percentage
(` In Cr.)
2014 – 15 30,000 - - 100%
2015 – 16 45,000 15,000 50 150%
2016 – 17 45,000 NIL NIL 150%
2017 – 18 45,000 NIL NIL 150%
2018 – 19 45,000 NIL NIL 150%
Sources : Annual Reports

Inference:
From the above table clear that the Equity
share capital of JIO INFOCOMM, it is constant during the period of the

2859
 PJAEE, 17(6) (2020)

study i.e.2014-15 t0 2018-19 except first year i.e. 2014-15. In that year
equity share capital at Rs, 30,000 lakhs and thereafter it shows at Rs,
45,000.
From trend analysis it could be seen that the trend
percentage of equity share capital has been stable from 2015-16 to 2018-19
except in the first year of 2014-15. In that year the trend percentage is
100%.

Table 5 Comparative Statement & Shareholder’s Fund from the Period of

2014 - 15 to 2018-19

Year Shareholder’s Fund Absolute Percentage of

( ` In Cr.) Increase/Decrease Increase/Decrease Trend Percentage
2014 – 15 30,075 - - 100
2015 – 16 45,051 14,976 49.79 150
2016 – 17 62,426 17,375 38.56 207
2017 – 18 1,02,933 40,507 64.88 342
2018 - 19 1,40,400 37,467 36.39 467
Sources : Annual Reports
Inference:-
From the table 5, it could be seen that the Shareholder’s fund of JIO
INFOCOMM, its shows constant increasing in the entire period for the
study. In the financial year 2014 – 15 the shareholder’s fund is Rs.
30,075 lakhs which is increased to Rs. 1,40,400 lakhs during the
financial year 2018 – 19.
From the table shows it could be seen that trend percentage of
shareholder’s fund has been increasing for the entire period of the
study. Trend percentage of Shareholder’s fund shows an considerable
increase from the year 2015 – 16 with 150%. However a sharp
increase in the financial year 2016 – 17, 2017 – 18 and 2018-19 with 207
%, 342% and 467%.
Table - 6
Comparative Statement & Trend analysis of Working Capital

Year Working Absolute Percentage of Trend

Capital ( `. In Increase/Decrease Increase/Decrease Percentage
Cr.)
2014 – 15 (20,248) - - 100
2015 – 16 (36,608) (16,360) 81% 181%
2016 – 17 (49,527) (12,919) 35% 245%

2860
 PJAEE, 17(6) (2020)

2017 – 18 (66,948) (17,421) 35% 331%

2018 - 19 (47,406) 19,542 41% 234%
Sources : Annual Reports

Inference:-
From the Table 6, it could be seen that the working capital of JIO
INFOCOMM. It has been shows a increasing negatively for the entire
period of the study. except In the financial year 2018 – 19 the working
capital is lakhs which is decreased to Rs.47406 lakhs.
From the above it could be seen that trend percentage of working
capital has been increasing for the entire period of the study. Trend
percentage of working capital shows considerable increase from the year
2015 – 16 with 181 %. However a sharp increase in the financial year 2016
– 17 and 2017 – 18 with 245 % and 331%.
VI. FINDINGS
• The proportion of share capital to total capital structures shows 70.61%
during the year 2014-15 but it declines to 34.94% during the year2018-19.
• The proportion of Reserves & Surplus to total capital structure shows
18.23% during the year 2014-15, which has been increased to 36.22% during
the year 2017-18.
• The proportion of Long-term debt to total capital structure shows 47.61%
during the year 2014-15, which is increased up to 58.69% but it declines to
27.34% during the year 2017-18.
•
•
• The proportion of short-term debt to total capital structure 0.02% during
the year 2014-15 but it increases to 8.29% during the year 2017-18
• The total Long-term debt shows Rs.20,226 lakhs during the year 2014-15,
which is increased up to Rs.75,611 lakhs during the year 2018-19.
• The total short-term debt shows Rs.8 lakhs during the year 2014-15, but it
increases to Rs.13,263 lakhs during the year 2017-18 but it declines to Rs.
3,601 07 in the year of 2018-19.
• The Equity Share capital shows Rs.30,000 lakhs during the year 2014=15
which is increased to Rs.45,000 lakhs during the year 2015-16 to 2018-19.
• The Shareholder’s fund shows Rs.30,075 lakhs during the year 2014-15
which is increased to Rs.1,40,400 lakhs during the year 2018-19.
• The working capital shows (Rs.20,248) lakhs during the year 2014-15, but
it declines to (Rs.47,406) lakhs during the year 2018-19.
VII. SUGGESTIONS
1. The Reserve in the financial year 2017 – 18 is 36% of total compression of
capital structure, it is suggested that it can be used for productive purposes.
2. Steps should be taken to stabilize Operating profit.
3. Steps should be taken to reduce cost of equity.
4. Proportion of equity can be increased, so that the firm can have total
control of debts.

2861
 PJAEE, 17(6) (2020)

5. Should maintain the current level of short – term debt as working capital
showing a declining trend.
VIII. CONCLUSIONS
Thus, empirically we found out that capital structure is a significant
factor affecting the cost of capital. Although debt is considered to be the
cheapest source of finance, because of tax advantages, there are some other
consideration as well, which are consider while taking decision on capital
structure. But due time and cost constraint, the researcher, could not collect
primary data relating to the cost o specific sources of secured and unsecured
loans. Had these data been collected the study would bring to light more
useful information.
REFERENCE
1. Ali, H., & Ahmad, I., & Bahrudin, N,Z, (2011). Assessing the financial
performance of SMEs through Islamic financing schemes, IEEE International
journal, PP. 975 – 980.
2. Atan, R., & Raman, Abdul. & Suryani, & Sawiran, & Sahar, Mohamed. &
Nafsiah. & Rasid. (2010). Financial performance of Malaysian local
authorities: A trend analysis, IEEE International journal, PP. 271 – 276.
3. Hajek, P., & Olej, V. (2014). Comparing corporate financial performance
and qualitative information from annual reports using self-organizing maps,
IEEE International journal, PP. 93 - 98.
4. Ignatius, J., & Behzadian, M., & Malekan, H,S., & Lalitha, D. (2012).
Financial performance of Iran's Automotive sector based on PROMETHEE
II, IEEE International journal, PP 35 – 38.
5. Jiaming Ma, & Fei Huang, & Xincheng Lu. (2011). Vertical mergers and
acquisitions of listed coal company's financial performance evaluation, IEEE
International journal, PP. 842 – 846.
6. Altman, E., 1968. Financial ratios, discriminant analysis and the prediction
of corporate bankruptcy. J. Finance, pp: 589-609.

2862