jk statement

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A Study On

FINANCIAL STATEMENT ANALYSIS

With reference to

JK Paper Mills

A project report submitted to Andhra University, Visakhapatnam

in partial fulfillment of the requirement for the award of thedegree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

P.KUMAR RAJU

(Regd No: 110250402066)

Under the guidance of

Mr. Siva Rama Kiran

Assistant Professor

MAHARAJA`S POST GRADUATE COLLEGE

(Accredited with `A` Grade by NAAC)

(Affiliated to Andhra University, Visakhapatnam, recognized by AICTE, New Delhi)

Phool Baugh, Vizianagaram

2010-2012


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ACKNOWLEDGMENT

I am thankful to project guide Mr.Siva Rmam Kiran (faculty), department

of management studies, M.R.P.G College, Vizianagaram for guiding and helping me

in the completion of this project.

I sincerely thank Shri.C.A.Sunil Das Section Officer (Finance) and Staff of

the Accounts Department & Mr.Santeeb Kumar Samal Officer (HRD)of M/s JKPaper Mills for their interactive sessions giving guidance and support despite their

work schedule.

I also thank to the training department of M/s JK Paper Mills for permitted

me to complete my industrial training work at JK Paper Mills.

I express my profound sense of gratitude to Prof.P. SRINVAS SUBBA

RAO Head of the department, who had extended his valuable time and guidance to

me in structuring of the report.

I am grateful to K. HANUMANTH RAO garu of MAHARAJA`S POST

GRAUATE college, Vizainagaram for his endower and co-operation in doing the

project study.

Place:

Date:

(P.KUMAR RAJU)


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CERTIFICATE

This is to certify that the project entitled A study on

FINANCIAL STATEMENT ANALYSIS in JK Paper Limited,

Rayagada is a bonafide work done by Pulapa Kumar Rajuunder my guidance and supervision during 2nd May to July 2nd

submitted in partial fulfilment for the award of degree of Master

Of Business Administration (MBA), Sri Maharajah Post

Graduation Institution of Management Studies , Vizianagaram,

Andhra Pradesh.

C.A.Sunil Das

Sr.Manager (Accounts)


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DECLARATION

I hereby declare that this project entitled FINANCIALSTATEMENT ANALYSIS carried in JK Paper LTD,

Rayagada has been successfully completed and prepare by

me during the period of 2nd May to July 2nd in partial

fulfilment of degree of MBA.


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INTRODUCTION

In our present day economy, finance is defined as the provision of

money at the time when it is required. Finance may be defined as the art and

sciences of managing money. Finance holds key to all human activity. No

business activity can ever be pursued without financial support.

Finance is the only common decision/ denominator for a vast range of corporate

objectives. The major part of any corporate plan must be expressed in financial

terms.

Financial management is the managerial activity, which is concerned with the

planning and controlling of the firms financial resources though it was a branch

of economics till1890 as a separate discipline it is of recent origin. Still it has no

unique body of knowledge of its theoretical concepts even today.

Of great interest to academicians because the subject is still developing and

there are still developing and there are still certain areas where controversies

exit for which no unanimous solutions have been reached as yet. Practicing

managers are interested in this subject because among the crucial decisions of

the firm are those which relate to finance and on understanding of theory of

financial management provides them with conceptual and analytical incites to

make those decisions skillfully.

the area of financial management has undergone far-reaching changes over a

time. The finance function assumes a lot of significance in the modern days in

the view of increased size of business operations and growing complexities

associate there to.


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A firm performs finance functions simultaneously and continuously in

the normal course in the business. They do not necessarily occur in a sequence.

Finance function call for skillful planning, control and execution of business

activities.The financial statements provide a summarized view of the financial position

and operation of the organization. Therefore much can be learnt about the

organization by a careful examination of its financial statements or they are the

invaluable documents regarding the financial performance of an organization.

this analysis of financial statements is an important id to financial analysis. the

focus on key figures in the analysis of financial statements is a process off

evaluating relationships between components parts of financial statements to

obtain a better understanding of the financial position and performance.

Managements of the organization are confronted with taking decision

about source of finance its capital structure and credit policy its application of

funds. In order to take strategic decision the management needs to asses the

progress and performance of the organization. Ratio analysis funds flow

analysis is the some of the tools.

Financial statement analysis can be undertaken either by the

management of the organization or by outside parties, viz., creditors investors

and public. The nature of analysis differs depending upon the purpose of

analysis.

The analysis and interpretation of financial statements is an importantaccounting activity. The end users of financial statement will get further insight

about financial strengths and weakness of the firm. Management will be

particularly interested in knowing financial strengths of the firm to make their

best use to be able to spot out financial weakness to take suitable corrective

actions. Also the further plans of the firm should be laid down in view of firms

financial strengths and weakness.


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A proper financial analysis must be used to analyze a firm past

performance and asses its present financial strengths for making the better

future plans. The financial resources of every organization are always scarce

and therefore require proper planning and control in order to achieve the bestout of funds available.

The financial information of companies consists of three basic financial

statements like balance sheet, trading and profit & loss appropriation account.

These statements are very useful for evaluating the financial position and

performance of a firm through financial analysis.

The information given in the basic financial statements serves no useful

purpose unless it is interpreted and analyzed in some comparable terms. So the

ratio analysis is one of the tools in the hands of those who want to know

something more from the financial statements.

The relationship between two accounting figures expressed

mathematically is knows as financial ratio. The relationship can be expressed as

percentages, fractions and proportions of numbers. Ratio helps to summarize the

large quantities of financial data and to make qualitative judgment about the

firms financial performance. Ratios may be compared with its own past records

and similar firms for efficient financial management. So the ratio analysis

reveals the relationship in more meaningful way so as to enable one to draw

conclusions from them.

The parties interested in financial analysis are short and long term creditors

owners and management. These people use ratios to determine those financial

characteristics of the firm in which they are interested are:

The financial condition and the ability of the firm to meet its current

obligations.

The extent to which the firm has used its long-term solvency by

borrowing funds.

The efficiency with which the firm is utilizing its assets in generating

sale revenue. The overall operating efficiency and performance.


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Thus one can understand that the financial management is the key to the

successful business operations and without proper administration of finance no

business operations. And without proper administration of finance no business

enterprise can utilize its full potential for growth and success.

NEED FOR THE STUDY

Financial analysis of identifying the financial strengths and weakness of

the firm by properly establishing relationship between the items of the balance

sheet and the profit & loss account. Management of the firm can under take

financial analysis or by parties outside the firm that is owners, creditors,

investors and others. The nature of analysis will differ depending purpose of the

analyst.

To enable the students to acquire the skills and abilities for identifying

studying, analyzing and solving any managerial and business related problems.

Thus moulding students in to decision- makers.

To fill the gap between theory and practices of business operations.

To analyze the financial performance of the J.K. Paper Ltd

The present work is undertaken to put forth the effect for appraising the

financial performance of J.K. Paper Ltd by adopting Ratio analysis.

The study concentrates on the financial state of affairs of the

company. It helps to present broader picture of the financial position of the

company through ratios. This helps the companys success in making its

requirements and production of paper.

J.K. Paper Ltd is one of the profitable organizations in India,

rendering useful services to the society and has been playing a vital role in


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generating income to the country as well as in promoting industrial

development.

J.K. Paper Ltd is huge; so the effective management of the capital is

required. For which continuous monitoring of the various operations is needed

for the organization. So in order to achieve its objective the organization with

the help of evaluation of ratios should implement the best course of action.

Besides studying the financial position one can study the various

aspects relating to organizational financial analysis which covers every aspects

of management. This is probably one of the main reasons that evoked the

interest and need for the study.

OBJECTIVES OF THE STUDY

The present study in J.K. Paper Limited Rayagada has been undertaken

to evaluate the overall performance by applying theoretical concepts to a

particular situation in J.K. Paper Ltd and to compare and correlate the actual

achievements with the theoretical conclusion.

The main objectives of the study are:

To review the paper Industry in India with reference to JK PAPER Ltd.

To describe the significance of financial statement analysis for measuring financial

Performance.

To compare the financial performance of JK PAPER Ltd. over the years

by using Different financial statements analysis techniques.

To summarize and to suggest strategies for the better financial

performance of JK PAPER Ltd.


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METHODOLOGY

Methodology is a systematic procedure of collecting information in order toanalyze and verify a phenomenon.

The present study is based on data collected from primary and secondary

sources.

Primary Data:

It is the information collected directly without any references. Primary

data consists of information obtained from interaction and discussion with

concerned official of the organization to elicit their opinions on various relevant

matters. In the process of interaction with officials it is planned to confirm

through secondary sources.

The data collection includes:-

Conducting personnel interviews with the concerned officers of finance

department of J.K. Paper accounts department.

Secondary Data:

Secondary source of data includes collection of data through study of

official records, journals, annual reports, administration reports and various

magazines related to J.K. Paper Limited.

The data collection includes:-

Collection of required data from annual reports of J.K. Paper Limited.

References from textbooks and journals relating to financial

management.


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The information so collected from both the sources will be subjected to

statistical treatment to make the study a useful one. Application of statistical

techniques helps to draw useful conclusions and to enable to give appropriate

suggestion to improve the efficiencies off the organization.


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LIMITATIONS OF THE STUDY

Though the project is completed successfully a few limitations can be observed

in the study.

The time allotted for the project study is too short, to depict a clear

and real picture of the company and its operations.

Reliability on usage of secondary data.

The study was conducted with the data available, and the analysis

was made accordingly.

Some aspects of financial information were not available because of

the confidentiality of the J.K. Paper Limited.

Interpretations are based on the validity of the data collected.

During the period of analysis the companys current financial

information is not available.

This work is confined to the published data available.

Due to the busy schedule of the executives. It was very difficult to

get valuable information about the organization.


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PAPER INDUSTRY IN INDIA

WHAT IS PAPER?

Paper has played a vital role in the development of mankind since times

immemorial, as a means of communication as the most versatile material for

packing of goods as a medium of preserving knowledge for progeny.

Paper is defined as A MAT OF CELLULOSE FIBERS ARRANGED

IN CRISES CROSS FASHION WITH HYDROGEN BOND AND OTHER

FORCES.

Paper is derived from the word PAPYRUS. Today paper includes a

wide range of products with very different applications: Communication,

Cultural, Educational Artistic Hygienic Sanitary as well as storage and transport

of all kinds of goods. Its almost impossible to imagine a life without paper.

There is degree of consensus that the art of making paper was first

discovered in china and its origin in that country is traced back to second

century. In about AD 105 Tsailun, an official attached to imperial court of

china, created a sheet of paper using mulberry and other baste fibers along with

fishnets, old rags and hemp waste.

Chinese considered paper a key invention and kept this a closely

guarded secret for five centuries until the technology slowly made it way west

ward. The Arab captured chine city containing a paper mill in the early 700s

and from this stated their own paper making industry (Early 700s). Invention of

printing in 1450s brought a vastly increased demand for paper.

Paper was first made in England in 1496. The first US Mill was built in

1690, the rittent house mill, German town, Pennsylvania.

Paper has been found to have necessary use besides being a stationary

and it may use besides being a stationary and it may perhaps be true that

equipped with this powerful art craftsmans has been for the centuries

discovering new usage and benefits paper has been found to be the most


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essential product as a writing aid over which our attention is focused at the

movement, it has much to talk about. Indeed it involves itself in a wide range of

activities from WHITE HOUSE OFFICALS releases to kinder garnet copy

writing from toilet issue paper to the currency notes and many more.

Another big example of use of paper is none other than my project work

without which this would which this would not have happened.

In spite of good achievement to its credit in the development of the

economy, India is record is dismal in the scripts on leaves and metals later on

which the development of the paper sheets, it becomes possible for everything

known to us in the form of books, records and reports.

Long back people used to writ on walls, wooden plants, leaves of palm

etc, but then paper was invented in china and was called PAPYRUS. Since

then the world has got as excellent media for writing printing and several other

purposes. A material that has been playing such an important role in our day to

day life initiated the research of this project to take up this product paper is

playing a vital role in day to day life of every individual. Though the computers

have existed and many programs have been done to do paperless job works. But

it is not possible to go out of paper or to not need it any instance of time. This is

the reason why ht researcher chose paper as the product.

From economic point of view paper industry in all over the world is

facing problems of hardwood and bamboo being prime raw materials for the

industry need cutting of the forest. Along with cutting, plantations of the trees

are to be carried out. But it takes time for growing of trees factories are facing

raw material problem. They are leading to closure of the company only few

companies are doing well. For this substitute raw materials are being constantly

being worked for. The company which is fittest able to survive and cope with

the conditions and among them in India is JK PAPER.

ORGANIZATIONAL PROFILE OF JK PAPER LTD


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JK Organization was founded over 100 years ago and ranks, among the

largest private sector groups in India in terms of assets and sales. J.K

organization has a distinguished record of having pioneered several new

products and processes in India. The group has multi-business, multi productand multi location operations.

JK owes its name, to the two great visionaries- Late Lala Juggilal

Singhania and his son Late Lala Kamlapat Singhania as they conceived an

industrial entity. A dynamic personality with a broad vision, inspired by the

cause of the Swadeshi movement of Mahatma Gandhi, and driven by the zeal to

set up an Indian enterprise, Lala Kamlapat Singhania founded J.K. Organization

in the 19th century with its headquarters at Kanpur (U.P.) ushering in a new

industrial era in India.

Equipped with tenacity of purpose, perseverance, and foresightedness,

he achieved success in his mission and in a short span of time, between 1921

and 1937, a series of Industries with diversified interests were set up by him

Kamla Ice Factory, JK Jute Mills Co. Ltd, JK Cotton Manufacturers, JK Iron

and Steel Co. Ltd. against the tough opposition of British Industrialization and

an alien Government.

He died at an early age of 53 on 31st May 1937 and left the legacy of his spirit of

patriotism, swadeshism and the aptitude for planning and social service to his

three illustrious sons- Sir Padampatiji, Lala Kailashpatiji and Lala

Lakshmipatiji, who along with other family members have contributed the best

of their services to the growth of the organization, in a team spirit.

JK ORGANIZATION has been a forerunner in the economic and

social advancement of India. It has always aimed at creating job opportunities

for a multitude of countrymen and to provide high quality products. It has

strived to make India self-reliant by pioneering the production of a number of

industrial and consumer products, by adopting the latest technology its own

know-how. Besides serving the nation, it has also undertaken industrial ventures

in several other countries.


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JK ORGANIZATION is an association of industrial and commercial

companies, employing nearly 50,000 persons engaged in the manufacture of a

variety of products and in diverse field of commerce. JK Organization

comprising more than 50 in number, the groups companies are mostly publiclimited, where it has controlling interest ranging from 35% to 80% and the

number of public shareholders aggregate over 7, 00,000.

JK ORGANIZATION is headed by Shri Hari Shankar Singhania, an

eminent Industrialist who enjoys reputation of a high order in the country, as

well as abroad. He was the President of the International Chamber of

Commerce, Paris for 1993 & 1994. Apart from heading apex bodies of Commerce and

Industry, he is holding top positions in the premier Professional Bodies in India and abroad.

In honor of his contribution to the society, Government of India has bestowed the

prestigious National PADMA BHUSHAN award to Shri Hari Shankar

Singhania on 26-01-2003. He has been honored with the nations third highest

civilian award for distinguished service of high order in trade and industry.

JK ORGANIZATION has made many forays into several fields such as:

Paper and Boards, Cement, Automotive Tyres and Tubes, Pharmaceuticals,Paper and Boards, Cement, Automotive Tyres and Tubes, Pharmaceuticals,

Agrochemical, Hybrid seeds, Cosmetics, Audio Magnetic Tapes, V.Belts,Agrochemical, Hybrid seeds, Cosmetics, Audio Magnetic Tapes, V.Belts,

Conveyor Belting, Automotive Belts, Material Handling Systems, Sugar, DairyConveyor Belting, Automotive Belts, Material Handling Systems, Sugar, Dairy

& Food Products.& Food Products.

JK ORGANIZATION has achieved a number of important

technological break-through and has an impressive record ofFIRSTS in India,

prominent among them being:

1994- First in India to produce Aluminum Virgin Metal from

Indian Bauxite. (The company was nationalized in 1973)

1949- First in India to manufacture Steel Engineering Files.

1962- First Indian Paper Mill to receive ISO-9001 certification.

1969- First in India to set up continuous Rayon plant.


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1977- First in India to produce Steel Belted Radical Tyres for

Passenger cars, trucks and buses.

1980- First in the world to make Steel Radical Tyres for 3

wheelers.

1984- First to produce White Cement in India using dry process

technology.

1989- First in India to produce magnetic tapes with cobalt

technology.

1994- First Tyre industry in world to receive ISO-9001

Certification for entire operation.

JK PAPER LIMITED VISION

To set benchmarks in the Indian Paper Industry in Quality of Products,

Services, People, Profitability, Growth, Innovation and Environmental

Management to contribute to the Development of the nation.

CORPORATE MISSION

To achieve growth and leadership through the JK brand equity, customer

obsession, technological innovation and cost leadership, with a clear focus on

environment, while continuously enhancing shareholder value.

QUALITY POLICY:


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To provide Customer Delight both internal and external through our

products and services at Lowest Cost by Continuous Improvement in processes,

productivity, quality and management systems.

ENVIRONMENTAL POLICY:

We, at JK Paper Mills, Rayagada, Orissa (India) are committed to:

Comply with applicable Environmental Legislations

Prevention of Pollution

Continual improvement in environmental performances

We shall improveour Environmental Performance by:

A forestation through social and farm

forestry supported by clonal technology

Cleaner technologies and processes

Reducing pollutants in discharged water

Reducing particulate emissions

Solid waste management

Conservation of resources

SAFETY AND HEALTH POLICY

We are committed to:

Adhere legislation and government regulations related to safety and health

in manufacturing activity.

Foster safety and health awareness among its employees through

preventable measures, continuous development, awareness and

improvement in the work environment.

Give top priority to proactive steps like:

Safety audits

Work permit systems

Health check

Engineering and process up gradation

Improved work practices


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ENERGY CONSERVATION POLICY:

We are committed to reduce the energy consumption and cost by:

Optimization of plant and equipment efficiency

Elimination and prevention of all types of losses such as water, power,

steam, coal, compressed air

Maximizing condensate recovery &use, process heat recovery, waste

minimization

Increasing the co-generation of steam and power

Improved utilization of natural resources leading to environmental benefits

Energy conservation through total emploee involvement.

ENERGY SAVED IS PROFIT EARNED

CORE VALUES OF JK ORGANIZATION

Caring for people

Integrity including intellectual honesty, openness, fairness and trust

Commitment to excellence.

PROFILE OF JK PAPER LTD.

JK Paper is an independent company of the JK Organization, a leading

Indian conglomerate with diversified business interest. JK Paper was among the

first in India to set up integrated manufacturing facilities of internationalstandards. And recorded a turnover of Rs 6,255 million in 2001-2002. The

Companys world class pulp mill is the largest in the country and occupies a

place of pride in the Indian Pulp & Paper Industry.

The companys commitment to continuously raise quality

benchmarks resulted in JK Paper Mills becoming the first integrated pulp and

paper plant in India to receive the ISO 9001 certification & is now aiming at

attaining the TPM Award.


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Currently, the group ranks amongst Indias top Industrial

Houses with assets in excess of Rs 50 billion. The Group has diverse business

operations in India and abroad, automotive tyres and tubes, cement, sugar, audio

magnetic tapes, dairy and other agri-products. It employs nearly 17,000 peopleand has over 2, 90,000 public shareholders across its major public limited

companies.

J.K. Paper has one of the strongest distribution networks in the

paper industry and has a national wide reach through its 4 regional offices, 13

warehouses, 95 wholesalers and over 1600 dealers. The company exports paper

to several countries including, Srilanka, Bangladesh and several West Asian

nations. Branded copier paper accounts for nearly 50% of the exports.

PLANT LOCATION JAYKAYPUR

Jaykaypur is located on the slopes of the Eastern Ghat Plateau in the Southern

part of Orissa bordering the state of Andhra Pradesh and its geographical position 83-25

East longitude and 19 10 North Latitude. Its average height above the mean sea level is

758 feet.

The township has a population of about 25,000 and has a self-sufficient

marketing complex, including Employees Multi purpose Co-operative Society, a sub-

post & Telegraph Office, a Branch Post Office, a Police Out post and has two Banks viz.,

state Bank of India and Indian Overseas Bank. The Township has two Schools and

places of worship of al major faiths. Singapore Road Railway Station (SPRD) on the

raipur- Waltair Section of south eastern Railway Station and is at a distance of 2 KM

from the Mills and all passenger and Express trains halt here.

JAYKAYPUR 765 017, DIST.RAYAGADA, ORISSA (INDIA)

The nearest town in Rayagada, which is the district headquarters and is located at

distance of about 10 KM from the Mills.

Rayagada District has a predominance of tribal population. Therefore, the villages in

and around the Mills are inhabited mostly by the adivasis, who too are assimilating the

industrial culture and are thus coming into the national mainstream.


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HISTORY OF JK PAPER LTD

Incorporated in the year 1938, JK Corp Limited, started its operation with a board

mill at Bhopal for manufacture of straw board. Since then the activities of the company

have been diversified from time to time. In the year 1962, JK Corp Ltd. set up this

integrated Pulp and Paper Mill in the backward district of Rayagada in Orissa. In 1982,

the activities of JK Corp Ltd. were further diversified when it set up a most modern

cement plant by the name Lakshmi Cement.

In 2001 JK Paper Ltd. was formed by amalgamating the JK Paper Mills at

Rayagada and the Central Pulp Mills at Songadh, Gujarat, to become Indias 2 nd largest

producer of quality paper with a turnover exceeding Rs. 650 crores. It is the first Indian

Paper Mill to receive the Sword of Honour from British Safety Council and ISO 9001

Certification by DNV Norwegian agency.

The company is conscious of the need to constantly update technology of

existing plants and machineries and in this direction there are regular schemes of

modernization and renovation from time to time.

The companys strategy continues to be to offer more and more value added

products, continuously modernize and upgrade its plants for achieving better efficiencies,

improved quality of products and internationally recognized environmental standards.

Towards this end, the company is implementing an Offline Coated Paper Project with a

capacity of 46,000 TPA at JKPM Unit. This plant will utilize contemporary blade

coating technology and coupled with the companys high quality base paper, will be able

to offer the product in the upper segment of the market. The company would thus

become the second largest coated paper producer in India.

The company is also commissioning a modern Recovery Boiler at its CPM Unit,

which would result in higher chemical recovery and increased pulp production.

These projects along with other modernization programs would cost around Rs.

100 crores and would result in reduced cost and higher production. The projects are

scheduled for commissioning during the financial year 2004-05.

J.K. Paper Mill was expanded in phases and at present has 5 paper machines with an

installed capacity of 1,00,000 TPA with plans to expand the capacity further to 1.6


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lakhs TPA during the next five years. Besides the new paper machine, imported cutter

for automatic cutting and packaging of paper was commissioned during the year 1994-

1995.

The Mill manufactures quality writing, printing and business communication

papers and paperboards using primarily hardwood and bamboo procured locally found

in and around Orissa.The mill undertook a massive modernization Program during

1997-98 with an investment of Rs.300 crores. J.K.Paper Mills have continuously

upgraded the technology by modernizing and renovating the plant, machinery and

equipment to face the present day challenges of Eco-friendly manufacture.

The state-of-the-art blade coating plant is expected to be commissioned during

the year.

The Central Pulp Mill, a unit of JK Paper Ltd. is one of the largest integrated Pulp

and Paper Mill in Western India. The mill was incorporated in 1960 with its registered

office at Pune. The mill began commercial production on April 01, 1968 with an

installed capacity of 30,000 tones per annum for production of pulp. The capacity of

mill was enhanced to 40,000 tones per annum by undertaking balancing scheme. Due to

heavy investments and unfavorable market conditions CPM faced financial problems

and was referred to BIFR in 1987 as having negative worth.


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JK PRODUCTION CAPACITIES

CENTRAL PULP

MILLSJK PAPER MILLS

Installed capacity

(paper) 47,000 Tons per annum 90,000 Tons per annum

Actual production achieved

in the year 2002-2003

51,740 Tons 1,06,521 Tons

Pulp production

Capacity 44,000 tons per annum 1 Lakh tons per annum

Market pulp production

Capacity

(ADMT)

Actual Production:2002-03

(ADMT)

15,290 tons per annum

13,617 tons per annum


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PHASES AT JKPM

OPERATIONAL EXCELLENCE

J.K. Paper has undertaken an integrated operational improvement Program named

Operational Excellence with the objective of improving the profitability of the organization.

This program is driven by a team of J.K. Paper executives and is supported by consultants from

McKinsey & Company.

operational excellence encompasses streams of manufacturing, purchasing and

marketing. this program aims to achieve an accelerated pace of development by identifying

improvement opportunities in various streams as part of a concerted and focused effort. as a

result, it aims to build capabilities within the organization to be able to maintain this rapid pace

of continuous improvement in future also.

In Phase 1, the team has generated about a thousand ideas through brainstorming,

interaction with experts around the world, research on the internet and reading technical

journals. It has then evaluated each of these ideas rigorously in a fact-based manner and is

currently in the process of implementing 110 ideas. Excepting 7/8 ideas, all other ideas have

been successfully implemented as on today.

In Phase 2, the team has about 450 ideas and evaluated. After short listing and

evaluation, final syndication has been done and finally 64 ideas were accepted for

implementation. All these ideas are in the final stage implementation.

In Phase 3, ideas were taken up from the CPM unit and 39 ideas were finally accepted

for implementation.

Currently, Phase 4 is in progress at JKPM. This phase is still under ideas generation stage.


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EMPLOYMENT, MANPOWER AND CATEGORIES OF EMPLOYEES

JK Paper Mills provide direct employment to about 1400 persons. In addition, about

1000 persons on an average are engaged intermittently for material handling, waste disposal

and other additional jobs at the Mills.

The various categories of employees working in the Mills are as follows;

1. Officers

2. Supervisory Staff

3. Workman (Staff)

4. Sub-ordinate Staff

5. Workman (Operatives)

Apart from permanent employees, for casual and extra jobs there is a pool of casual

mazdoors. Various jobs like loading and unloading and civil construction works are done

through contract labour. To have a trained, developed and educated manpower for future needs

and requirements, there are various categories of Trainees like Management Trainees,

Executive Trainees, Staff Apprentices, Trade Apprentices and Craftsman Trainees.

CLASSIFICATION OF JOBS OF WORKMEN (OPERATIVES)

The jobs of Workman (Operatives) are classified into 7 grades A to G Different trades

of Workmen (Operatives) is distributed into these 7 grades. A and B grades represent

unskilled workers; C, D and E grades represent semi-skilled workers and F and G

grades represent skilled and highly skilled workers.

Except the workers working in Finishing House and Feeding jobs, stitching and stacking of

paper Reams and Reels, who are paid on piece rate basis, all other workers are time rated wage

earners on daily basis. Wages are distributed monthly.


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SHIFT TIMINGS:

The Mills runs in 3 Shifts and General Shift m the timings of which are as follows:

A Shift 6.00 am to 2.00 pm

B Shift 2.00 pm to 10.00 pm

C Shift 10.00 pm to 6.00 am

GENERAL SHIFT

7.00 am to 11.30 am

1.30 pm to 5.00 pm

Commencement and finish of shift period is indicated through blowing of siren and siren also

blows 30 minutes before the commencement of each shift.

ATTENDANCE:

The names of all regular employees are borne on the muster roll. All employees, except

workmen, are expected to mark their attendance by entering the attendance-recording card

inside the Card Reader at the beginning and end of the Shifts. Workers attendance is marked

on the basis of the token system.

HOLIDAYS AND LEAVE:

Weekly off day is given as per provisions of the factories Act. Generally, for those working in

General Shift, Sunday is the Weekly off day.

The Mills observes Festival and National Holidays as follows:

Pongal Republic Day

Maha Shivaratri Holi

Utkal Divas May Day

Ratha Jatra Independence Day

Gandhi Jayanti DasaraDiwali.


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PAYMENT DAYS:

Payment of salaries and wages for the month to Mills employees is as given below:

For Officers, Staff, Sub-ordinate - 5th Day of the following month

For workers - 10th Day of the following month

Withdrawal of salaries and wages through Bank is encouraged.

Wages to Contractors employees is disbursed by the respective Contractors on 7th Day of the

month. In case scheduled days fall on Sunday or Holiday, Salaries /Wages are paid on the day

proceeding such Sunday/Holiday.

DEPARTMENTS ATJKPM

PULP MILL

STOCK PREPARATION

PAPER MACHINE

PAPER FINISHING

PLANT FINISHING HOUSE

SODA RECOVERY

QUALITY CONTROL

CENTRAL LABORATORY

PULP AND PAPER LABORATORY

WATER SERVICE

ENVIRONMENTAL AND POLLUTION CONTROL

MECHANICAL ENGINEERING

ELECTRICAL ENGINEERING

INSTRUMENTATION

PLANNING AND DESIGNING

POWER HOUSE

CIVIL DEPARTMENT

TECHNOLOGICAL DEVELOPMENT

HRD AND PERSONAL

TOWNSHIP AND TRANSPORT

WORKS OFFICE


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ACCOUNTS

STORES AND YARD

SALES AND STOCK

SECURITY

DISPENSARY

SAFETY AND MANAGEMENT SERVICES

SOCIAL FORESTRY BY JK:

The member unit of JK Organization has been planting trees and saplings for increasing

the Green Cover. JK Paper Mills alone plants more than 1.5 lakh trees per year. Seedlings are

distributed every year by JK Paper Mills to the farmers who are willing to green their land with

trees.

The company has helped farmers with plantation in about 50,000 acres of

degraded wastelands in Orissa and Andhra Pradesh. This plantation program has seen the

development of fast growing, high yielding Eucalyptus clones involving an area of 17431hectares, benefiting 13666 farmers and generating 90,00,000. Man days of employment for

tribal.

Similarly CPM also continued to contribute towards the socio-economic development

of the rural population in the backward districts of Gujarat by providing free seedlings to the

local farmers and imparting direct and indirect employment opportunities to the local

community.

Until now social forestry scheme of CPM has benefited 14381 farmers in 196 villages

of five districts of Gujarat and Maharashtra with 87 lakhs plants in 2620 hectares. Besides, it

also gives job opportunity of 1500 man days to raise one lakh seedlings and 450 man days to

plant 1 hectare. CPM has introduced high yielding JK super clones under Social Forestry

Program.


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Others

1. The mills provided approach roads for the villagers.

2. JK Paper contributed a sum of Rs 57,000 in the year 1997 to the Lions Club of

Rayagada for the construction of Multipurpose Community Hall at Rayagada.

3. For the construction of Lord Sri Jagannath Temple at Rayagada, the mills have

contributed Rs 7.5 lakhs for the pletion of the construction work of the temple.

we believe generating revenue is not the ultimate end of business for us, creation of wealth is

more appropriate objective. the wealth of social infrastructure. the wealth of support and

caring for people around us.

ACHIEVEMENTS

The various achievements of J.K. Paper Mills:

Only integrated mill in India to achieve less than 100 meter cube

of water consumption per ton of paper.

Highest chemical recovery (more than 95%).

Excellent fiber recovery system (more than 95%)

Absorbable Organic Halide (AOX) level 0.5 to 1 kg per ton

of paper, so far the best in the country and comparable with

international levels.

Highly efficient Electro Static Precipitators (ESP) in all

boilers.

Pioneer in Social and Farm Forestry. Supplied in excess of 90 million samplings and

covered over 27,000 hectares under plantation.

Stood 2nd

all over India and was awarded 3 leaves Award by CSE


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Awarded outstanding Performance by State Safety Council, Govt. of Orissa for Safety,

Health, and Hygiene & Environment Management.

JK Paper in leadership through quality. It has been setting quality bench marks from its

inception, and continues to do so. Its major brands include JK Copier, JK Easy Copier, JK

Evervite, JK Excel Bond, JK Bond, JK SHB Map litho, CPM Parchment and JK MICR. Its

marketing volume is to the tune of 1, 60,000 MT per annum. J K Paper has one of the largest

distribution networks in the paper industry. With close to 100 wholesalers, over 1700 dealers,

10 warehouses and 4 regional offices spread across country, it has achieved unparalleled

service levels.

JK Paper has also been consistently exporting its products to markets such as Sri Lanka,

Bangladesh and several West Asian Countries. Nearly 50% of the exports are of branded

products.

OVERVIEW OF J K ORGANIGATION :

During the later half of the 18th

century, Shri Binodia Ram Singhania of village Singhana,which lies in the shekavatiregion of Rajasthan, migrated to uttarpradesh. The family settled

down in Kanpur and slowly spread its roots there. JK organization was born under the

leadership of Lala Kamlapatji and his father Lala Juggilalji. Hence the name-JK

The foundation of JK organization was laid when the nation was passing through turbulent

times. It was the time when Indians were discriminated against, in their own home land. Born

on 7th November, 1884, Lala Kamalapatji, the worthy son of Lala Juggilal Singhania, had the

determination to fight against this discrimination and a vision to make Indian Business self

reliant.

With this inspiration, he setup the 1st cotton in Northern India i.e., JK Cotton Spinning Mill in

1921, exclusively using Indian capital, management and labour. After this may other

enterprises were started by him. JK Jute Mills Co. Ltd., JK Iron & steel Co. Ltd., JK Oil Mills,

JK Cotton Manufacturers, JK Hosiery, Kamapat Motiala Sugar Mills, Kamla Ice Factory- an

empire was being created.

Keeping alive the script of entrepreneurship, the three sons of Lala Kailashpat Singhania and

Lala Lakshmipat Singhania established a number of industries across India and further


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consolidated the existing business. They were the pioneers in sitting up a mini steel plant in

1924, and first Indian Jute Mill in Uttar Pradesh in 1929.

Moving ahead, 1938 saw the inception of a mill in Bhopal, converting wheat straw in tostraw boards, with later became the foundation of JK Paper Ltd., Producing top quality paper

and boards. 1944 witnerrsed the beginning of the first plant in India, manufacturing Aluminium

from India Bauxite and a variety of end products, including aluminium extrusion foils and

ACSR products. In 1952, JK Steel pioneered the manufacture of Jute Bailing hoops, Steel wires

& wire ropes, Electric hoists and material handling equipment etc.

Venturing into other areas, JK acquired Raymond Woollen Mills in 1944 and turned it

around. Today the be=rand Raymond is well known in the country and the world over as a

hallmark for impeccable quality and styling. It diversified into manufacture of readymade

garments and steel engineers files, as the second largest manufacturer in the world.

1977 was yet another landmark year for JK Organization as the conglomerate entered

into business of producing tyres, which was till then the domain of multi-nationals. JK Tyres

commenced production in its ultra modern manufacturing unit in Kankroli, Rajasthan, in

technical collaboration with General Tyre Company of USA and pioneered the launching of

steel belted radial car tyres for the first time in India. Today, JKs radial is the cutting edge

technology in the industry.

Under the visionary leadership of Shri Hari Shankar Singhania, President, JK

Organization, ably supported by his brothers, the Organization has shown continuous andexemplary growth in diversified fields of industry. The group had achieved a lead position in

major business over the years.


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SIGNIFICANCE OF THE EMBLEM

The Hand and Hammer of JK Organization came into use in the beginning of 1943.

This symbol was chosen by Lala Lakshmipat Singhania, third son of Late Kamlapt

Singhania, the founder of JK Organization.

The circle denotes industry. 24 teeth in the circle symbolizes round -the- clock activity.

The hand and hammer signify labour and tool. The hard grip of the hand stands for the

employee strength and workmanship.

This emblem signifies the strong belief of the organization in the capability of its

employees.

The Group employs over 1200 Managers, 3000 Engineers besides a large contingent of

workmen with various skills

All the plants work at high efficiency and productivity levels using latest state of the art

technologies and equipment procured from India & abroad. The success of the

companies is based on innovative ideas and techniques, continuous Research &

Development, as also on its wide and effective marketing network of over 150

distributors and retailers and 3000 dealers and service Centers , operating pan India


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SOCIAL CONSCIOUSNESS & CORPORATE SOCIAL

RESPONSIBILITY

The JK Organization believes in taking the Nation forward by improving the quality of life of

its citizens by continuously working in sphere of education, health care, religious upliftment,

sports etc.

JKs contribution to society has been carried forward as an abiding commitment. Identifying

with social issues and contributing to the society has been a philosophy, which has been carried

on from the founding fathers. Various institutions set up by the group throughout India in

diverse fields of social welfare stand testimony to this philosophy.

CONCERN FOR ENVIRONMENT

In the pursuit of maintaining the environment and ecology, the group had already taken steps

to reduce carbon-di-oxide emissions by replacing fossil fuel biomass.

Group has a total commitment the environment of more than five decades of planning trees and

creating green factories by installing state-of art equipment for preventing pollution and

controlling harmful emissions.

CORE VALUES OF JK ORGANIZATION

1. Caring for people

2. Inegrity including intellectual honesty, openness fairness and trust.

3. Commitment to excellence.


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FINANCIAL STATEMENT ANALYSIS

Accounting process involved recording, classifying and summarizing various business

transactions. The aim of maintaining various records is to determine profitability of the

enterprise from operation of the business and also to find out is financial position. Financial

statements are in term reports, presented annually and reflect a division of the life of an

enterprise in to more or less arbitrary accounting period more frequently a year.

DEFINITIONS:

According to john n.myer the financial statements provide a summary of the accounts

of a business enterprise, the balance sheet reflecting the assets, liabilities, and capital as on a

certain date and the income statement showing the results of operations during a certain

period.

the term financial statement generally refers to following basic statements:

The income statement.

The balance sheet.

A statement of retained earring.

A statement of changes in financial position.

.

FINANCIAL

STATEMENT


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INCOME STATEMENT

The income statement (also termed as profit and loss account) is generally considered to

be the most useful of all financial statements. It explains what has happened to a balance sheet

dates. The nature of the income which is the focus of the income statement can be well

understood if a business is taken as an organization that uses inputs to produce output.

BALANCE SHEET

It is a statement of financial position of a business at a specified moment of time. It

represents all assets owned by the business at a particular moment of time and the claims of the

owners and outsiders against those assets at that time. The important distinction between as

income statement is for a period while balance sheet is on a particular date.

STATEMENT OF RETAINED EARNINGS

The term retained earnings means the accumulated excess earnings over losses and

dividends. The balance shown by the income statement is transferred to the balance sheet

through this statement after making necessary appropriations.

it is fundamentally a display of things that have caused the beginning of the period

retained earnings balance to be changed in to the one show in the end-or-the-period balance

sheet.

STATEMENT OF CHANGES IN FINANCIAL POSITION

the balance sheet shows the financial condition of the business at a particular moment

of time while the income statement discloses the results of operations of business over a period

of time for a better understanding of the affairs of the business, it is essential to identify the

movement of working capital or cash in the statement of changes in financial position.

INCOME

STATEMENT

BALANCE

SHEET

STATEMENT

OF RETAINED

EARNINGS

STATEMENT OF

CHANGES IN

FINANCIAL


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NATURE OF FINANCIAL STATEMENTS

The financial statements are prepared on the basis of recorded facts. The recorded facts

are those which can be expressed in monetary terms. The statements are prepared for a

particular period, generally one year. The transactions are recorded in a chronological order as

and when the events happen. The financial statements by nature are summaries of the items

recorded in the business and there statements are prepared periodically generally for the

accounting period.

THE FOLLOWING POINTS EXPLAIN THE NATURE OF FINANCIAL

STATEMENTS

1. RECORDED FACTS

The term recorded facts; refers to the data taken out from the accounting records. The

records are maintained on the basis of actual cost data. The figures of various accounts such as

cash in hand, cash at bank, bills receivables, sundry debtors, fixed assets are taken as per the

figure recorded in the accounting books. As the recorded facts are not based on replacement

costs the financial statements do not show current financial condition of the concern.2. ACCOUNTING CONVERSIONS:

Certain accounting converters are followed while preparing financial statements. The

conversion of valuating inventory at cost or market price, whichever is lower, is followed. The

valuing of assets at cost less depreciation principle for balance sheet purposes statements

comparable, simple and realistic.

3. POSTULATES:

The accountants make certain assumption while making accounting records. One of

these assumptions is that the enterprise is treated as a going concern. The other alternative to

this postulate is that the concern is to be liquidated the concern. So the assets are shows on a

going concern basis. Another important assumption is to presume that the value of money will

remain in the same in different periods.

4. PERSONAL JUDGMENTS:

Even though certain standard accounting conversions are followed in preparing

financial statement but still personal judgment of the accountant plays on important part.


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CHARACTERISTICS OF FINANCIAL STATEMENT

The financial statements are prepared with a view to depict financial position of a

concern. The financial statements should be prepared in such a way that they are able to give a

clear and orderly picture of the concern. The ideal financial statement has the following

characteristics.

1. DEPICT TRUE FINANCIAL POSITION

The Information Contained In The Financial Statements Should Be Such That A True

And Correct Idea Is Taken About The Financial Position Of The Concern.

2. ATTRACTIVE:

The Financial Statements Should Be Prepared In Such A Way That Important

Information Is Underlined So That It Attracts The Eye Of The Reader.

3. COMPARABILITY:

The results of financial analysis should be comparable. The financial statements should

be presented in such a way that they can be compared to the previous years statements.

Previous years figures in the balance sheet.

4. BRIEF:

If possible, the financial statements must be prepared in brief. The reader will be

able to form as idea about the figures.

IMPORTANCE OF FINANCIAL STATEMENTS

Financial Statements Contain A Lot Of Useful And Valuable Information Regarding

Profitability Financial Position And Future Prospective Of Business Concern.

THE UTILITY OF FINANCIAL STATEMENT TO DIFFERENT PARTIES MAY BE

SUMMARIZED AS FOLLOWS:

1. Management


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the financial statements are useful for assessing the efficiency of different cost centers.

The management is able to decide the course of action to be adopted in future.

2. Creditors

the trade creditors are to be paid in a short period. The crs will be interested in current

solvency of the concerns. The calculations of current ratio and liquid ratio will enable the

creditors to assess the current financial position of the concerns in relation to their debts.

3. Investors

the investors include both short-term and long term investors. They are interested in the

security of the principal amounts of loan and regular payments by the concern. The investors

will not only analyze the parent financial position but will also study the future prospectus and

expansion plans of the concern.

4. Government:

the financial statements are used assess tax liability of business enterprises. The

government studies economic situation of the country from these statements. These statements

enable the government to find out whether business is following various rules and regulations

or not.

5. Trade associations:

these associations provide service and protection to the members. They may analyze

the financial statements for the purpose of providing facilities to these members. They may

develop standard ratios and design uniform system of accounts.

6. Stock exchange

the stock exchange deal in purchase and sale of securities of different companies. The

financial statements enable the stock broker to judge the financial position of different

concerns.

LIMITATIONS OF FINANCIAL STATEMENTS

financial statements are relevant and useful for the concern, still they do not present a

final picture of the concern, and otherwise misleading conclusions may be drawn. The financial

statements suffer from following limitation:

1. Ignoring of non-monetary aspects:

These statements are prepared with the help of accounting information which mainly

consider monetary aspects only. The value of business depends both on qualitative and

quantitative factors.

2. Historical cost:


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The statements are prepared on the basis of historical cost. The values of fixed assets

are at there original cost less depreciation. The balance sheet value are not shown the value of

assets may be sold more over they do not reflect the market value which is as important factor

in determining the solvency of an enterprise

3. Personal judgment:

in preparing financial statements certain items are left to the personal judgment of the

accountant. If any accountant is not following accounting principles correctly his judgment

will give wrong picture.

4. Conversion of conservation:

due to conversion of conservation the income statement may not disclose true income

of the business. This is due to ignorance of probable incomes and accounting probable losses.

FINANCIAL ANALYSIS

financial analysis is the process of identifying the financial strength and

weakness of the firm by properly establishing between the items of the balance sheet and profit

and loss account.

There are various methods or techniques used in analysis financial statements such as

comparative statements, trend analysis, common size statements, schedule of changes in

working capital, funds flow and cash flow analysis cost volume profit analysis and ratio

analysis.

Meaning and concept of financial analysis

the terms financial analysis also known as analysis and interpretation of

financial statements refers to the process of determining financial strength and weaknesses of

the firm by establishing strategic relationship between the items of the balance sheet, profit

and loss account and other operative data.

Types of financial analysis

financial analysis can be classified in to different categories depending up on:

On the basis of material used.

On the basis of modules operandi


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[1] IN THE BASIS OF MATERIAL USED

ACCORDING TO THE BASIS, FINANCIAL ANALYSIS CAN BE OF TWO

TYPES:

EXTERNAL ANALYSIS

This analysis is done by those who are outsiders for the business. These persons mainly

depend up on the published financial statements. Their analysis serves only a limited purpose.

INTERNAL ANALYSIS

This analysis is done by persons who have access to the books of account and at other

information related to the business. Such as analysis can be done by executives and employees

of the organization.

The analysis is done depending up on the objective to be achieved through this analysis.

[2] ON THE BASIS OF MODULES OPERANDI

According to this financial analysis can also be of two types:

Horizontal Analysis

Types ofFinancial Analysis

Analysis

On the basisof material

Used

On the basis ofmodulesOperandi

VerticalAnalysis

HorizontalAnalysis

ExternalAnalysis

InternalAnalysis


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In case of this type of analysis, financial statements for a number of years are reviewed

and analyzed the current years figures are compared with the standard or base year.

The analysis statement usually contains figures for two or more year and the change are

shown regarding each item from the base year usually in the form of percentage. Since this type of

analysis based on the data from year to year rather than on date, it is also termed as Dynamic

Analysis

Vertical Analysis

In case of this type of analysis a study is made of the quantitative relationship of

various items in the financial statement on a particular date. Since this analysis depends on the

data for one period, this is not very conductive to a proper analysis of the companys financial

position.

It is also called static analyses as it is frequently used for referring to ratio developed

on one date or for one accounting period.

Techniques of financial analysis:

A financial can adopt one or more of the following techniques/ tools of financial analysis:

Comparative Financial Statements

Common Size Financial Statements

Trend Percentages

Ratio analysis

Cash Flow Analysis

Funds Flow Analysis

Ratio C.V.P. Analysis


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COMPARATIVE FINANCIAL STAGEMENTS:

The statements which have been designed in a way so as to provide time perspective to

the consideration of various elements of financial position embodied in such statements figures

for two or more period side by side to facilitate comparison.

both the income statement and balance sheet can be prepared ni the form of

comparative financial statements.

The comparative financial statements contain the following items.

Absolute figures (amount in rs. /-) as given in the final accounts.

Absolute figures expressed in terms of percentages.

Increase of decrease in absolute figures in terms of money value.

Increase or decrease in terms of percentages.

Comparison expressed in ratios.

Percentages of totals.

COMPARATIVE INCOME STATEMENTS:

FinancialAnalysis

Techniques

Funds flowAnalysis

RatioAnalysis

TrendPercentages

Comparative

Financial

Statements

Cash Flow

Analysis

C.V.P.Analysis

Common SizeFinancial

Statements


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The income statement (profit & loss a/c) gives the results of the operations during a

definite period. It reveals the profit carried or loss incurred by the cancers. The comparative

study if income statement for more than 1 year may enable us to know the program of the

concern.

First two columns gibe figures of various items for two years. The third and fourth

column used to show increase or decrease in figures in absolute adopted in preparing

comparative balance sheet.

In first step, find out the changes in absolute figures i.e., increase or decrease should

be calculated.

In second step percentage of change should be calculated with the help of following

formula.

Percentage of change =AmountyearBase

AmountinChange 100


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COMPARITIVE INCOME STATEMENT

PARTICULARS PREVIOUS

YEAR

CURRENT

YEAR

INCREASE/DECREASE

AMOUNT

(Rs)

PERCENT

AGE

Net Sales **** **** **** ****(Less): Cost of goods

sold

*** *** *** ***

Gross Profit ***** ***** ***** *****

Gross Profit ***** ***** ***** *****

(Less): Operating

Expenses:-

Office & Administration

Expenses

*** *** *** ***

Selling & Distribution

Expenses

*** *** *** ***

Total Operating Expenses ***** ***** ***** *****

(Add): Operating

Incomes

**** **** **** ****

Total Operating Incomes **** **** **** ****

Operating Profit ***** ***** ***** *****

(Add): Non-Operating

Incomes:-

Income on Investment *** *** *** ***

Profit on sale of assets *** *** *** ***

Dividends received *** *** *** ***

Total Non-Operating

Incomes

***** ***** ***** *****

(Less): Non-Operating

Expenses:-

Loss on sale of Fixed

Assets

**** **** **** ****

Net Profit Before Interest

& Tax [EBIT]

***** ***** ***** *****

Net Profit Before Interest

& Tax [EBIT]

***** ***** ***** *****

(Less): Interest Paid *** *** *** ***Net Profit Before Tax **** **** **** ****


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(Less): Income Tax Paid *** *** *** ***

Net Profit After Tax ***** ***** ***** *****

GUIDELINES FOR INTERPRETATION

The increase or decrease in sales should be compared with increase or decrease in cost of

goods sold. If increase in sales is more than the cost of goods sold. It means that the

profitability of the concerns is increased.

The amounts of gross profit should be studied.

Operating profits should be studied. The express should be deducted from gross profit to

find out operating profit and then operating incomes should be added.

The next step is some of the non operating expenses are to be deducted from the operating

profits and non operating incomes should be added to get net profit

The opinion should be formed the profitability of the business concern and it should be

given at the end.

COMPARATIVE BALANCE SHEET

The balance sheet prepared on a particular date reveals the financial position of the

concern on the date to study the trends of business over a period of time comparative balance

sheet reveals the cause for changes in the financial position on amount of various transactions.

The comparative studies throw light on financial policies adopted by management. The

comparative balance sheet consists of two columns for the original data. A third column used

to show increase or decrease in various items. A south column containing the parentage of

increase or decrease may be added.


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COMPARITIVE BALANCE SHEET

PARTICULARS PREVIOUS

YEAR

CURRENT

YEAR

INCREASE/DECREASE

AMOUNT

(Rs)

PERCENT

AGE

ASSETS:

Current Assets: (C.L)

Cash & Bank Balances *** *** *** ***

Sundry Debtors *** *** *** ***

Bills Receivable *** *** *** ***

Stock (Inventories) *** *** *** ***

Prepaid Expenses *** *** *** ***

Marketable Securities *** *** *** ***

Temporary Investments *** *** *** ***

Accrued Incomes *** *** *** ***

Total Current Assets ***** ***** ***** *****

Investments:

Short-term loans and

advances

*** *** *** ***

Staff Advances *** *** *** ***

Other Advances *** *** *** ***

Fixed Assets: (F.A)

Good Will *** *** *** ***

Land *** *** *** ***

Buildings *** *** *** ***

Plant & Machinery *** *** *** ***


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Furniture & Fittings *** *** *** ***

Free Hold Property *** *** *** ***

Lease Hold Property *** *** *** ***

Preliminary Expenses *** *** *** ***

Patent Rights *** *** *** ***

Trade Marks *** *** *** ***

Other Deferred Expenses *** *** *** ***

Total Fixed Assets ***** ***** ***** *****

TOTAL ASSETS

[ C.L + F.A ]

****** ****** ****** ******

Current Liabilities: (C.L)

Sundry Creditors *** *** *** ***

Bills Payable *** *** *** ***

Out Standing Expenses *** *** *** ***

Bank Over Draft *** *** *** ***

Unclaimed Dividends *** *** *** ***

Propose Dividends *** *** *** ***

Provision For Tax *** *** *** ***

Accrued Expenses *** *** *** ***

Total Current Liabilities ***** ***** ***** *****

Long Term Liabilities:

(L.T.M)

Mortgage Loan *** *** *** ***

Debentures *** *** *** ***

Total Long Term

Liabilities

***** ***** ***** *****


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Share Capital & Reserves:

(CAP. & RES.)

Equity Share capital *** *** *** ***

Preference Share Capital *** *** *** ***

Share Premium *** *** *** ***

General Reserve *** *** *** ***

Appropriation of Profits *** *** *** ***

Total Capital & Reserve ***** ***** ***** *****

TOTAL LIABILITIES

[C.L + L.T.M + CAP. &

RES.]

***** ***** ***** *****

GUIDE LINES FOR INTERPRETATION OF BALANCE SHEET:

The short term financial position can be studied y comparing the working capital of both

years.

To study the liquidity position changes in liquid assets must be ascertain if there is any

increase in liquid assets. We must understand that is an improvement in the liquidity

position of the concern and vice versa.

A high increase in sundry debtors and bills receivable mean in increase in risk in collecting

the amount of dues.

A high increase in closing stock may mean that decrease in the demand.

Long term financial position of the business concern car be analysed by studying the

changes in fixed assets, long term liabilities and capital.

Fixed assets must be compared with long term loans and capital. If the increase in fixed

assets is more than the increase in long term financiers from the working capital which is

not good.

Common size statements:

The common size statements, balance sheet and income statement are shown in

analytical percentages. The figures are shown as percentages of total assets, total liabilities

and sales. The total assets are taken as 100 and different assets are expressed as percentage of


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the total. Similarly various liabilities are taken as a part of total liabilities. These statements

are also known as component parentage or 100% statements because every individual item is

stated as a percentage of the total 100 the short statements because every individual item is

stated as a percentage of the total 100 the short-comings in comparative statements and trend

percentages where changes in item could not be compared with the total have been covered up.

The common size statements may be prepared in the following way.

The totals of assets or liabilities are taken as 100.

The individual assets are expressed as a percentage of total assets i.e., 100 and different

liabilities are calculated in relation to that liability.

COMMON SIZE INCOME STATEMENT

The items in income statement can be shown as percentages of sales to show the

relation of each item to sales. A significant relationship can be established between items of

income statement and volume of sales. The increase in sales will certainly increases selling

expression and volume of sales. The increase in sales will certainly increases selling expresses

and not administrative or financial expenses. In case the volume of sale increases to a

considerable extent, administrative and financial expenses may go up. In case the sales are

declining, the selling expenses should be reduced at once. So, a relationship is establishedbetween sales and other in income statement and this relationship is helpful in evaluating

operational activities of the enterprises.

COMMON SIZE BALANCE SHEET

Statement in which balance sheet items are expressed as the ratio of each asset to total

assets and the ratio of each liability is expressed as a ratio of total liabilities is called common

size balance sheet. The common size balance sheet is a horizontal analysis. The comparison of

figures in different periods is not useful becomes total figure may be affected by a number of

factors. It is not possible to establish standard norms for various assets. The trends of year to

year may not be studied and even they may not give proper results.


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COMMON SIZE BALANCE SHEET PERFORMANCE

Particulars

Previous Year Percentage Current Year Percentage

ASSETS:

Current Assets: (C.L)

Cash & Bank Balances *** *** *** ***

Sundry Debtors *** *** *** ***

Bills Receivable *** *** *** ***

Stock (Inventories) *** *** *** ***

Prepaid Expenses *** *** *** ***

Marketable Securities *** *** *** ***

Temporary Investments *** *** *** ***

Accrued Incomes *** *** *** ***

Total Current Assets ***** ***** ***** *****Investments:

Short-term loans and

advances

*** *** *** ***

Staff Advances *** *** *** ***

Other Advances *** *** *** ***

Fixed Assets: (F.A)

Good Will *** *** *** ***

Land *** *** *** ***

Buildings *** *** *** ***

Plant & Machinery *** *** *** ***Furniture & Fittings *** *** *** ***

Free Hold Property *** *** *** ***

Lease Hold Property *** *** *** ***

Preliminary Expenses *** *** *** ***

Patent Rights *** *** *** ***

Trade Marks *** *** *** ***

Other Deferred Expenses *** *** *** ***

Total Fixed Assets ***** ***** ***** *****

TOTAL ASSETS[ C.L + F.A ]

****** ****** ****** ******

Current Liabilities: (C.L)

Sundry Creditors *** *** *** ***

Bills Payable *** *** *** ***

Out Standing Expenses *** *** *** ***

Bank Over Draft *** *** *** ***

Unclaimed Dividends *** *** *** ***

Propose Dividends *** *** *** ***Provision For Tax *** *** *** ***


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Accrued Expenses *** *** *** ***

Total Current Liabilities ***** ***** ***** *****

Long Term Liabilities:

(L.T.M)

Mortgage Loan *** *** *** ***

Debentures *** *** *** ***Total Long Term Liabilities ***** ***** ***** *****

Share Capital & Reserves:

(CAP. & RES.)

Equity Share capital *** *** *** ***

Preference Share Capital *** *** *** ***

Share Premium *** *** *** ***

General Reserve *** *** *** ***

Appropriation of Profits *** *** *** ***

Total Capital & Reserve ***** ***** ***** *****

TOTAL LIABILITIES

[C.L + L.T.M + CAP. &

RES.]

***** ***** ***** *****

TREND ANALYSIS:

Trend analysis is an important and useful technique of financial analysis. It involves

computation of index numbers of the moments of the various financial items in the financial

statements for a number of periods. It enables to know the changes in the financial position

and the operational efficiency between the period chosen.

Through trend analysis the analysis can give his opinion as to whether favorable or

unfavorable tendencies are reflected by the accounting date.

The comparative and common size balance sheets suffer from a major limitation i.e.,

absence of basic standard to indicate whether the proportion of an item is normal or analysis

values are calculated for each item in isolation but conclusions are to be drawn by studying the

related items also.

Trend analysis can be analysis in the following ways:

i. By calculating trend ratio (or) percentage.

ii. By plotting on graph paper (or) charge.


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TREND RATIO (OR) PERCENTAGE

It involves the ascertainment of arithmetical relationship which each item of

several year to the same item of base year. Any year maybe as the base year, it is usually the

earliest year.

PROCEDURE FOR CALCULATING TREND RATIO:

The following procedure maybe adopted for calculating trend ratio.

i. Select any year as base year the selected year should be normal year for the base year

the trend value is taken as 100.

ii. Trend percentage of each item should be calculated with the help of following formula.

Trend Percentage =year valueBase

year valueCurrent 100

COST-VOLUME-PROFIT ANALYSIS

Cost Volume Profit analysis is an important tool of profit planning. It studies the

relationship between cost, volume of production, sales and profit. It is not strictly a technique

used for analysis of financial statements. However, it is an important tool for the management

for decision making. Since the data is provided both cost and financial records. It tells the

volume of account of variation in output, selling price and cost, and finally, the quantity to be

produced and sold to reach the target profit level.

RATIO ANALYSIS

Financial analysis depends to very large extents of the use of ratios through there are

other equality important tools of such analysis. Thus, a direct examination of the magnitude of

two released items is somewhat enlightening but the comparison is greatly facilitated by

expressing the relationship as a ratio.

Ratio analysis of business enterprises enters on efforts to derive quantitative measures

or guides concerning the expected capacity of the firm to meet its future financial obligation or

expectations present and past data are used for the purpose and whatever extrapolations appearnecessary. They are made to provide no indication of feature performance. Alexander Walt,


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who criticized the bankers for its lap sided development owing to their decisions regarding the

grant of credit on current ratios a lone, made the presentation of an elaborate system of ratio

analysis in1919.

RATIO

Ratio is an expression of the quantitative relationship that exists between the two

numbers. The ratio is defined as the indicated quotient of two mathematical expressions the

ratio should be determined between related accounting variables to be meaningful and

effective.

CASH FLOW ANALYSIS

Cash flow analysis enables the management to plan and co-ordinate the financial

operations of the enterprise, and furnish the basis for evaluating financing policies. It provides

a barometer for ensuring the profitability of the business and makes financing problems of the

business much more manageable.

This statement is prepared to know clearly the various items of inflow and outflow of

cash. It is an essential tool for short-term financial analysis and is very helpful in the evaluation

of current liquidity of a business concern. It helps the business executives of a business in theefficient cash management and internal financial management.

A statement of changes in the Financial Position of firm on cash basis is called a cash

flow statement.

The cash flow statement is to be presented as per the AS-III of the institute of Charted

Accountants of India (ICAI). The ICAI issued AS-III in June 1981 for the first time; later in

March 1997 it is revised and standard. All the listed companies / Estates whose financial year

ends on March 1996 and thereafter will be required to give cash flow statement comes into

effect immediately i.e., on 15/02/1996.

FUNDS FLOW ANALYSIS


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The Funds Flow Statements is the statement which shows the movement of funds and is

a report of the financial operations of the business under takings. It indicates various stages by

which funds obtained during a particular period of time and the wages which these funds were

employed. In simple words it is a statement of sources and application of funds.

The term fund has been defined a number of ways. In narrow sense fund means cash

only. In broader sense the term fund refers to any current assets and liabilities. In popular sense

the term fund means Working Capital. Every firm should forecast the requirement of working

capital to estimate the working capital is the help of Funds Flow Statements.

This statement is prepared in order to reveal clearly the various sources where from the

funds are produced to finance the activities of a business concern during the accounting period

and also brings to highlight the uses to which these funds are put during the said period.

The following process is adopted for the preparation of Funds Flow Statement.

Preparation of schedule of changes in Working capital (Working Capital Statement).

i. Calculation of funds from operations with the help of Non-current assets and Non-

current liabilities ledger A/Cs.

ii. Preparation of Funds Flow Statement.


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COMMON SIZE BALANCE SHEETS FOR THE YEARS

2008-2009 AND 2009- 2010

Table - 4.1

PARTICULAR 2008-09 % 2009-10 %

CURRENT ASSETS

INVENTORY 126.89 9.45 117.11 8.56

SUNDRY DEBTORS 104.49 7.78 107.15 7.53

CASH AND BANK

BALANCES 7.87 0.58 34.22 2.5

LOAN AND ADVANCES 160.78 11.97 162.24 11.89

MISCELLANCES 0.47 0 1.47 0.1

TOTAL CURRENT ASSETS 400.3 29.78 422.19 30.85

FIXED ASSETS

GROSS BLOCK 1428.79 104.59 1413.45 103.39

LESS:DEPRECIATION 549.21 484.74 35.44

NET BLOCK 879.58 65.5 928.71 67.95

CAPITAL PROGRESS 20.8 1.54 13.96 1.02

INVESTMENT 41.94 3.12 9.75 0.2

TOTAL FIXED ASSETS 942.32 70.16 945.42 69.17

TOTAL ASSETS 1342.62 100 1367.61 100

CURRENT LIABILITIES 184.31 13.73 152.95 11.18


TOTAL CURRENT

LIABILITES 184.31 13.73 152.95 11.18

.

FIXED LIABILITES

CAPITAL 78.35 5.83 78.56 5.74

RESERVED & SURPLUS 397.39 29.61 330.3 24.15

SECURED LOAN 392.15 29322 563.41 41.96UN SECURED LOAN 156.06 11.62 132.45 9.68

DEFFRED TAX 134.56 10.02 109.94 8.03

TOTAL FIXED LIABILITES 1158.51 86.3 1214.66 89.56

TOTAL LIABILITES 1342 100 1367.61 100


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INTERPRETATION:

Above table 4.1 reveals the common size balance sheets of JKPaper LTD for the

years 2008-09 and 2009-10.

From the above table it is evident that the Capital in the year 2008-09 is 9.45 % and

in the year 2009-10 it was decreased to 8.56% due to an decrease in reserves and surplus. The

loans and advances decreased from 11.97% in the year 2008-09 to 11.89% in the year 2009-10.

In the case of application of funds the gross block of the fixed assets is 104.59% in the

year 2008-09, it increased to 103.39% in the year 2009-10. The net block of the fixed assets is

65.5% in the year 2008-09; it increased to 67.95% in the year 2009-10, The capital work in

progress for the year 2008-09 was 1.54% and it decreased to 1.02% in the year 2009-10. There

is an increase in case of net current assets from 29.78% in the year 2008-09 to 30.85% in the

year 2009-10. This decrease is the result of an increase in current liabilities and provisions.

By over all comparison the companys financial position is satisfactory

.



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2007-2008 AND 2008-2009

Table - 4.2

INTERPRETATION:

PARTICULAR 2007-08 % 2008-09 %

CURRENT ASSETS

INVENTORY 120.34 8.72 117.11 8.56

SUNDRY DEBTORS 110.87 8.03 107.15 7.53

CASH AND BANK BALANCES 3.50 0.25 34.22 2.5

LOAN AND ADVANCES 41.70 3.02 162.24 11.89

MISCELLANCES 2.68 0.19 1.47 0.1


FIXED ASSETS

GROSS BLOCK 1367.52 99.10 1413.45 103.39

LESS:DEPRECIATION 418.06 30.29 484.74 35.44

NET BLOCK 949.46 68.81 928.71 67.95

CAPITAL PROGRESS 148 10.72 13.96 1.02

INVESTMENT 2.75 0.19 9.75 0.2


TOTAL ASSETS 1379.87 100 1367.61 100



TOTAL CURRENT

LIABILITES 171.09 12.40 152.95 11.18

FIXED LIABILITES

CAPITAL 78.96 5.72 78.56 5.74


SECURED LOAN 583.57 42.50 563.41 41.96

UN SECURED LOAN 137.78 9.98 132.45 9.68DEFFRED TAX 94.28 6.83 109.94 8.03

TOTAL FIXED LIABILITES 1208.21 87.56 1214.66 89.56

TOTAL LIABILITES 1379.3 100 1367.61 100


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Above table 4.2 reveals the common size balance sheets ofJK PAPER LTD for the

years 2007-08 and 2008-09.

From the above table it is evident that the Capital in the year 2007-08 is 5.72 % and

in the year 2008-09 it was increased to 5.74% due to an increase in reserves and surplus. The

loans and advances decreased from 3.02% in the year 2007-08 to 11.89% in the year 2008-09.

In the case of application of funds the gross block of the fixed assets is 99.10.% in the

year 2007-08, it increased to 103.39% in the year 2008-09. The net block of the fixed assets is

68.81% in the year 2007-08; it decreased 67.95% in the year 2008-09, The capital work in

progress for the year 2007-08 was 10.72% and it decreased to 1.02% in the year 2008-09.

There is an increase in case of net current assets from 20.21%in the year 2007-08 to 30.85% in

the year 2008-09. This decrease is the result of an increase in current liabilities and provisions.


2006-2007 AND 2007-2008

Table - 4.3


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PARTICULAR 2006-07 % 2007-08 %

CURRENT ASSETS

INVENTORY 96.41 7.11 120.34 8.72

SUNDRY DEBTORS 107.24 7.91 110.87 8.03

CASH AND BANK

BALANCES 4.83 0.35 3.50 0.25LOAN AND ADVANCES 176.83 13.04 41.70 3.02

MISCELLANCES 2.79 0.20 2.68 0.19


FIXED ASSETS

GROSS BLOCK 1071.20 79.03 1367.52 99.10

LESS:DEPRECIATION 375.17 27.68 418.06 30.29

NET BLOCK 696.03 51.35 949.46 68.81

CAPITAL PROGRESS 265.57 19.59 148 10.72

INVESTMENT 5.57 0.41 2.75 0.19


TOTAL ASSETS 1355.27 100 1379.87 100



TOTAL CURRENT

LIABILITIES 177.65 13.10 171.09 12.40

FIXED LIABILITIESCAPITAL 78.96 5.82 78.96 5.72


SECURED LOAN 595.49 43.93 583.57 42.50

UN SECURED LOAN 107.29 7.91 137.78 9.98

DEFFRED TAX 95.20 7.62 94.28 6.83

TOTAL FIXED

LIABILITES 1177.19 86.68 1208.21 87.56

TOTAL LIABILITES 1355.84 100 1379.3 100

INTERPRETATION:

Above table 4.3 reveals the common size balance sheets ofJK PAPER LTD for the

years 2006-07 and 2007-08.

jk statement

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