PC JEWELLER

(FINANCIAL ANALYSIS REPORT)

MASTER OF BUSINESS ADMINISTRATION

(MITTAL SCHOOL OF BUSSINESS)
LOVELY PROFESSIONAL UNIVERSITY
PHAGWARA, PUNJAB

Declaration:
I declare that this Assignment is my work. I have not copied it from any other
student’s work or any other source except where due acknowledgment is
made explicitly in the text, nor has any part been written for me by any other
person. I had done this assignment on my own, in this, I have not been assisted
in any way by any person.

NAME: - NEHA
ROLL NO.:- RQ2145B55
REGISTRATION NO.:- 12101732
SUBMITTED TO: - Dr. Sachin
COURSE: - FINANCIAL REPORTING, STATEMENTS AND ANALYSIS-I
Industry – Jewellery
Founded – 2005
Head Quarters – New Delhi, India
Managing Director- Balram Garg
Products- Gold, Diamond Jewellery and silver articles.

PC Jeweller limited started operation in April 2005, in New Delhi with one
showroom at Karol Bagh, Delhi. Now it is present in 19 states and have around
84 stores in 70 cities.
PC jeweller are involved in manufacturing, exporting, wholesale and retailing
gold and diamond jewellery in India.
 Comparative Balance sheet
PC Jeweller
Standalone Balance Sheet ------------------- in Rs. Cr. -------------------
Absolute Percentage Absolute
Percentage
Change change %, Change
  Mar 21 Mar 20 Mar 19 change %,
2019-20 2019-20 2020-21
2020-21

  12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 465.40 395.00 394.65 0.35 0.25 70.4 17.82
Total Share Capital 465.40 395.00 394.65 0.35 0.088 70.4 17.82
Reserves and Surplus 3,809.94 3,607.03 3,541.84 65.19 1.84 202.91 5.62
Total Reserves and 65.19 202.91
3,809.94 3,607.03 3,541.84 1.84 5.62
Surplus
Total Shareholders 65.54 273.31
4,275.34 4,002.03 3,936.49 1.66 6.82
Funds
NON-CURRENT LIABILITIES
Long Term Borrowings 0.32 0.66 11.58 -10.92 -94.3 0.34 -51.51
Other Long Term 101.78 -11.35
90.43 101.78 0.00 10178 -11.15
Liabilities
Long Term Provisions 4.62 44.09 45.00 -0.91 -2.02 -39.47 -89.52
Total Non-Current 89.95 -51.16
95.37 146.53 56.58 158.97 -34.91
Liabilities
CURRENT LIABILITIES
Short Term Borrowings 2,293.82 2,282.40 2,090.65 191.75 9.17 11.42 0.50
Trade Payables 920.23 1,081.05 1,264.86 -183.81 -14.53 -160.82 -14.87
Other Current Liabilities 276.89 366.75 313.19 53.56 17.10 -89.86 -24.50
Short Term Provisions 2.25 2.81 2.27 0.54 23.78 -0.56 -19.92
Total Current Liabilities 3,493.19 3,733.01 3,670.97 62.04 1.69 -239.82 -6.42
Total Capital And 217.53 -17.67
7,863.90 7,881.57 7,664.04 2.83 -0.22
Liabilities
ASSETS
NON-CURRENT ASSETS
Tangible Assets 33.50 151.06 59.18 91.88 155.25 -117.56 -77.82
Intangible Assets Under 0.3 -0.75
0.00 0.75 0.45 66.66 -100
Development
Fixed Assets 33.50 151.81 59.63 92.18 154.58 -118.31 -77.93
Non-Current Investments 136.25 136.25 135.23 1.02 0.75 0 0
Deferred Tax Assets [Net] 51.21 46.71 36.99 9.72 26.27 4.5 9.63
Long Term Loans And -7.43 6.21
156.05 149.84 157.27 -4.72 4.14
Advances
Other Non-Current Assets 105.02 15.97 26.54 -10.57 -39.82 89.05 557.60
Total Non-Current 84.92 -18.55
482.03 500.58 415.66 20.43 -3.70
Assets
CURRENT ASSETS
Current Investments 8.06 7.53 8.39 -0.86 -10.25 0.53 7.03
Inventories 5,793.72 5,258.84 4,988.11 270.73 5.42 534.88 10.17
Trade Receivables 1,305.33 1,780.55 1,773.00 7.55 0.42 -475.22 -26.68
Cash And Cash -91.97 -52.6
174.31 226.91 318.88 -28.84 -23.18
Equivalents
Short Term Loans And -0.23 -1.87
34.38 36.25 36.48 -0.63 -5.15
Advances
OtherCurrentAssets 66.07 70.91 123.52 -52.61 -42.59 -4.84 -6.82
Total Current Assets 7,381.87 7,380.99 7,248.38 132.61 1.82 0.88 0.011
Total Assets 7,863.90 7,881.57 7,664.04 217.53 2.83 -17.67 -0.22
 COMPARATIVE BALANCE SHEET
ANALYSIS
TOTAL SHAREHOLDERS FUND:

1.Current Assets :
Current Asset has increased from 2019-2021 (in last 3 Financial years,
FY)
 The current Assets of company has increased in 3 financial years
(FY), 2019-2021.
 The company’s liquidity position is satisfactory.
 The company is having enough cash to pay off creditors.
 The company is having enough cash to run day to day operations
of the business and to pay for the ongoing operating expenses.
2.Non-Current Assets :
 The non-current assets have increased by 20.43% in financial year
2019 -2020.
 Implies increase in production capacity of PC Jeweller.
Hence, PC Jeweller is on way of expansion.
 Company is purchasing more non-current assets.
 The non-current assets have decreased have decreased by 3.7% in
financial year 2020-2021.
 May be decrease in production capacity or demand of PC
Jeweller.
 Company is selling Fixed asset (non-current assets) to gain
money (to increase money inflow).
3.Non-Current Liabilities :
 The non-current liabilities of company have increased by 158.97%
in financial year 2019-2020.
 Implies increase in financial risk due to increase in interest
payment obligations, outsider’s claim on business got
increased.
 May be PC Jeweller is on its way of expansion or
undertaking strategic changes.

 The non-current liabilities of company have decreased by 34.91%

in financial year 2020-2021.
 Implies decrease in financial risk due to decrease in interest
payment obligations, outsider’s claim on business got
decreased.
 Even we can notice non-current assets has decreased in
2020-2021. So may be company sold some non-current
assets and used it in payments of current liability and even
non-current liability, as both decreased in 2020-2021.
4.Current Liabilities :
 The company current liabilities have increased by 1.69% in
financial year 2019-2020.
 Company has seen an increase in short term debt and
liabilities, burden to pay them off increased.
 Increased liabilities mean positive cash flow impact.
 Increased in creditors, short term loans. May be company
purchased goods on credits.
 It implies financial risk on company is increased due to
increase in short term obligations, pressure is slightly more
as it has to be made in less than 1 year or few months.
(Depend on credit period)
 And we can notice increase in current assets, may be due to
it current liabilities increased in 2019-2020. May be
company is planning of expansion or undertaking some
strategic changes.
 The company current liabilities have decreased by 6.42% in
financial year 2020-2021.
 The company has seen decrease in short term debt and
liabilities, burden to pay them off decreased.
 Decreased liability means negative cash flow impact.
 Decreased in creditors, short term loans. May be company
used more cash payment instead of credit purchase as
compare to last year.
 The company has paid back what they owe to suppliers.
 It also implies financial risk on company is decreased.
 Ratio Analysis
Ratio 2019 2020 2021
Current Ratio 1.974 1.977 2.11
Debtor turnover 4.73 2.77 1.73
Ratio
Debt-equity Ratio 0.014 0.036 0.022
Proprietary Ratio 0.513 0.507 0.543
1.Current Ratio :
Current Ratio is the ratio of total current assets to total current liabilities.

Current Ratio= total current assets/ total current liabilities

2019, Current Ratio= 7,248.38/3,670.97= 1.974
2020, Current Ratio= 7,380.99/3,733.01= 1.977
2021, Current Ratio= 7,381.87/3,493.19= 2.11
Interpretation :
 As we see the current ratio has increased from 2019-2021.
 Ratio is 2.11:1 (2021) , it implies that every 1 rupee of current liabilities,
company have 2.11 rupee of current assets to meet them.
 Higher the current ratio, the larger is the amount of rupees available per
rupee of current liability, so firm has the ability to meet its current
obligations and greater is the safety of funds of short-term creditors.
 Liquidity position/short term solvency of the company has improved
from last 3 years.

2.Debtors Turnover Ratio :

Debtors Turnover Ratio = Net credit sales/ Average debtors

2019, Debtors Turnover Ratio=8368.85/(1761.81+1773.00/2)= 4.73

2020, Debtors Turnover Ratio=4938.59/(1773.00+1780.55/2)= 2.77
2021, Debtors Turnover Ratio=2669.34/(1780.55+1305.33/2)= 1.73
Interpretation :
 Debtors Turnover Ratio is decreasing from last 3 years. (2019-2021)
 As we can see decrease in debtor turnover ratio, it suggests company’s
debt collection process is poor (not frequent and efficient collection of
accounts receivables).
 PC Jewellers have to improve its collection polices in order to mat the
short term financial needs.
 This can be due to company extending credit terms to non-credit worthy
customers or distributors, who are experiencing financial difficulties.
 Low ratio also indicates that company is extending its credit policy for
too long.
 Due to time value of money principle, the longer a company takes to
collect on its credit sales, the more money a company effectively loses.
 Debtors’ Turnover ratio, also called as accounts receivable turnover ratio
is an indicator of a company’s financial and operational performance. A
higher ratio id better, as it indicates that company’s collection of
accounts receivable is frequent and efficient.

3.Debt-Equity Ratio :
Debt-Equity ratio is the ratio of outsider’s fund (long term debt) to
shareholder’s equity.

Debit-Equity Ratio= Debit (outsider Funds)/equity (shareholders’

Funds)
2019, Debit-Equity Ratio=56.58/3,936.49=0.014
2020, Debit-Equity Ratio=146.53/4,002.03=0.0366
2021, Debit-Equity Ratio=95.37/4,275.34=0.022
Interpretation :
 It is the ratio of amount invested by outsiders to amount invested by
owners of the business.
 As we can see, Debt-Equity Ratio is decreased 2020 to 2021. It is 0.022:1
(2021) . which is better as it implying that for every 0.022 rupee of
outsider liability, the firm has 1 rupees of owner’s capital. It indicates
safety of margin.
 Debt-Equity ratio is less then 1, indicates company is having low leverage
and low risk of bankruptcy.
 Low financial risk.
 It also indicates that company depends less on borrows and its capacity
to pay off debt is also good.
4.Proprietary Ratio :
Ratio is related to owner’s/proprietor’s fund to total assets; it is also known as
Debt to total capital Ratio.

Proprietary Ratio= total shareholders’ funds/ Total Assets

2021, Proprietary Ratio=4,275.34/7863.90=0.543
2020, Proprietary Ratio=4,002.03/7,881.57=0.507
2019, Proprietary Ratio=3,936.49/7,664.04=0.513

Interpretation :
 The ideal ratio is 0.5:1. higher the ratio better the long-term solvency
(financial) position of the company. It indicates the proportion of total
assets financed by the owners.
 we see in year 2021= 0.54 or 54%, it means stockholders has contributes
54% of total assets, and remaining 46% has been contributed by
creditors.
 Proprietary ratio is increased from 2019-2021 by 3%, means increased
financial heath (position) of company and increased security for
creditors. Decreased interest expenses, creditors interest.
 It indicates company is depended less on debt for operations from last 2
years, it decreases risk of bankruptcy, financial risk is decreased.
 COMPETITORS ANALYSIS
Top competitors by Mcap:

Company Market Cap(Rs Cr)

PC Jewellers 1,368.29
Titan Company 227,632.81
Kalyan Jewellers 8,116.82
Rajesh Exports 19,091.51

Profitability Ratios

PC Jewellers and Kalyan Jewellers

 1) Return on Investment:

ROI = EBIT (Earnings before interest & tax)/ Total funds

PC Jewellers Kalyan Jewellers

2021 2020 2021 2020
ROI=398/4275.34*100 ROI=492/4002.03*100 ROI=503/3025.45*100 ROI=548/2157.37*100

ROI=9.30 ROI=12.29 ROI=16.62 ROI=25.40

 In case of profitability, Kalyan Jewellers is more profitable than PC

Jewellers, ROI of Kalyan Jewellers is more than PC Jewellers in
both the years (2021&2020).
 ROI simply measures the gain or loss from an investment relative
to the cost of investment.
 Normally, ROI ratio greater than 7% is considered a good ROI for
an investment in stocks. So, we can analyse that both companies
are good for investment but Kalyan jewellers is better.
 Higher ROI % indicates that the investment gains of a project are
favourable to their costs.
 2)Return on Assets:
ROA= Profit After Tax/ Total Assets

PC Jewellers Kalyan Jewellers

2021 2020 2021 2020
ROA=60.84/7863.90*100 ROA=78.50/7881.57*100 ROA=138.23/7912.44*100 ROA=156.35/6707.37*100

ROA=0.77 ROA=0.99 ROA=1.74 ROA=2.33

 In case of profitability, Kalyan Jewellers is more profitable than PC

Jewellers, return on assets (ROA) of Kalyan Jewellers in 2021 is
more than two times higher than ROA of PC Jewellers. In 2020,
also Kalyan Jewellers ROA is more than twice of PC Jewellers.
 Which means in 2021, with the asset worth INR 100, PC Jewellers
made profit of INR 0.77 and Kalyan Jewellers manages to make
profit of INR 1.74.
 It shows Kalyan Jewellers uses its assets more efficiently than PC
Jewellers to make profit.
 In 2020 the ROA of both companies has decreased from previous
year. This could be due to increase in price of raw materials and
increase in freight charges as well.
SHOULD WE INVEST IN PC JEWELLER SHARES OR NOT?

Investment Decision
Financial Ratio Indication FY Change % FY
(2020-21) (2020-21)
Liquidity Ratio
Current Ratio Increase 7.10
Efficiency Ratio
Debt to turnover decrease -37.54
Ratio
Solvency Ratio
Debt-equity Ratio Decrease -38.88
Proprietary Ratio Increase 7.10
Profitability Ratio
Return on Asset Decrease -22.22
Return on Decrease -24.32
Investment

Company has good financial performance throughout 3 consecutive

years (2019,2020,2021). Analysis of company’s balance sheet in
comparative manner shows that even in surge of epidemic, the company
very well maintained its financial status. Ratio analysis of the company
has also shown that company is doing well in all aspects.

But, companies Debt to turnover ratio is decreasing and ROI &ROA both
are decreasing as compare to last 2 financial years. And ROI &ROA of
company is also less then its competitors. In long run company may face
financial issues and strong competition with its peer competitors.
So for long term investment one should avoid investing in this
company.
 REFERANCES
https://www.moneycontrol.com/india/stockpricequote/
diamondcuttingjewellerypreciousmetals/pcjeweller/PJ

https://www.moneycontrol.com/stocks/company_info/print_main.php

https://www.moneycontrol.com/financials/pcjeweller/balance-
sheetVI/PJ#PJ

https://www.moneycontrol.com/india/stockpricequote/
diamondjewellery/kalyanjewellersindia/KJI01

https://www.moneycontrol.com/financials/kalyanjewellersindia/
balance-sheetVI/KJI01#KJI01

https://www.moneycontrol.com/india/stockpricequote/diamond-
cuttingjewelleryprecious-metals/pcjeweller/PJ#sec_peers