Financial Analysis of Jaiprakash Associates Ltd
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Financial Analysis of Jaiprakash Associates Ltd Financial Analysis of Jaiprakash Associates Ltd Document Transcript

  • LOVELY PROFESSIONAL UNIVERSITY, PUNJAB Financial Analysis of Jaiprakash Associates Limited Assignment Ishfaq Shah Roll No. RQ1101A15 Group 6 Submitted to: Lalit Bhalla 25-Aug-11Common-size Analysis, Comparative Analysis & Trend Analysis of final accounts of JAL India.SWOT Analysis.
  • Jaiprakash Associates LimitedIntroduction:Jaiprakash Associates Ltd. (JAL), the flagship company of the Jaypee Group, was incorporated in 1996. In2003 JAL was formed due to merger of Jaiprakash Industries (JIL) and Jaiprakash Cement (JCL).JAL is the engineering and construction arm of the Jaypee group focused on development of river valleyand hydro electric projects and a leader in construction of river valley and hydropower projects onturnkey basis for more than four decades.Incorporation:Date of Establishment: 1996Revenue: 2341.57 ( USD in Millions )Market Cap: 121419.3346922 ( Rs. in Millions )Corporate Address: Sector 128,,Noida-201304, Uttar Pradesh www.jalindia.comManagement Details: Chairperson - Manoj Gaur MD - Sunny Gaur Directors - A K Sahoo, B K Goswami, B K Jain, B K Taparia, B Samal, Gopi K Arora, Harish K Vaid, J N Gupta, Jaiprakash Gaur, K P Rau, M J Subbaiah, M S Srivastava, Manoj Gaur, Pankaj Gaur, R K Singh, R N Bhardwaj, Rahul Kumar, Ranvijay Singh, S C Bhargava, S C Gupta, S C Guptac, S D Nailwal, Sarat Kumar Jain, Sunil Kumar Jain, Sunil Kumar Sharma, Sunny Gaur, V K Chopra, Viney KumarBusiness Operation: Engineering – ConstructionJaiprakash Associates- The engineering and construction wing of the Group is an acknowledged leader inthe construction of multi-purpose river valley and hydropower projects. It has had the unique distinctionof executing simultaneously 13 hydropower projects spread over 6 states and the neighboring countryBhutan for generating 10,290 MW of power. 2
  • The company also has the distinction of executing three out of five hydropower projects contracted onan EPC basis in the country till March 2007. Two of these, 300 MW Chamera - II and 520 MWOmkareshwar, have been completed ahead of schedule.The 900 MW Baglihar (Stage-I and II) hydroelectric project in Jammu & Kashmir, in the challengingenvironment of the State with 22 million cubic meters of concrete, has been the largest EPC projectexecuted in the country in hydropower sector, so far.The group has various working divisions:  Civil Engineering  Private HydroPower  Cement  Hospitalitty  Integrated Towenship  Information Technology  ExpresswayFinancials: Total Income - Rs. 116717.8 Million ( year ending Mar 2010) Net Profit - Rs. 17083.6 Million ( year ending Mar 2010) Company Secretary- Harish K Vaid Bankers Auditors- MP Singh & Associates Company History_TimelineWith a single minded focus in mind, to achieve pioneering myriads of feat in civil engineering Shri.Jaiprakash Gaur, Founder Chairman of Jaiprakash Associates Limited after acquiring a Diploma in CivilEngineering in 1950 from the University of Roorkee, had a stint with Govt. of U.P. and with steadfastdetermination to contribute in nation building, branched off on his own, to start as a civil contractor in1958, group is the 3rd largest cement producer in the country. The groups cement facilities are located inthe Satna Cluster (M.P.), which has one of the highest cement production growth rates in India.The company is currently executing various projects in hydropower / irrigation / other infrastructurefields and has had the distinction of executing simultaneously 13 hydropower projects spread over sixstates and the neighbouring country Bhutan for generating 10,290 MW of power. The Jaypee Groupundertakes projects involving:- 3
  •  Large quantities of rock excavation (both surface and underground)  Controlled earth/rock fill  Concrete manufacture and placement (including chilling)  Fabrication and erection of penstock liners  Hydro-mechanical equipment procurement and erection  Steel Structures  Expressway Construction  Real Estate DevelopmentThe projects that have been commissioned or in the advance stages of completion have beenundertaken by it either as a successful EPC contractor or as a Non EPC contractor.Transforming challenges into opportunities has been the hallmark of the Jaypee Group, ever since itsinception four decades ago. The group is a diversified infrastructure conglomerate and has a formidablepresence in Engineering & Construction along with interests in the power, cement and hospitality. Theinfrastructure conglomerate has also expanded into real estate & expressways.The group has been assigned “CR1” grade by ICRA Ltd indicating very “Strong Contract ExecutionCapacity with best prospects of timely completion of projects without cost overruns etc. for projectswith average value of Rs.2500 crores.” It is the only group in India, which pre-qualifies on its own for thebidding of various projects that are awarded in the country.The Jaypee Group is a Rs 6,500 crore well diversified infrastructural industrial conglomerate in India.Over the decades it has maintained its salience with leadership in its chosen line of businesses. Jaypeegroup is the 3rd largest cement producer in the country. The group produces special blend of portlandpozzolana cement under the brand name ‘Jaypee Cement’ (PPC).The group also has secured three BOT contracts in the private hydropower generation sector after theopening up of the doors by the Government of India in 1991 for private sector power generationcompanies.The Group is a pioneer in the development of India’s first golf centric real estate. Jaypee Greens -- a worldclass fully integrated complex consists of an 18 hole Greg Norman Golf Course. Stretching over 450 acres,it also includes residences, commercial spaces, corporate park, entertainment and nature in abundance.Other group companies:  Jaypee Hotels Limited (JHL)  Jaiprakash Hydro-Power Limited (JHPL)  Jaiprakash Power Ventures Limited (JPVL)  Jaypee Karcham Hydro Corporation Limited (JKHCL)  Jaypee Cement Limited (JCL)  Jaypee Power Grid Ltd.(JPL)  Gujarat Anjan Cement Limited (GACL)  Jaypee Infratech Limited (JIL)  Jaypee Ganga Infrastructure Corporation Limited (JGICL)  JPSK Sports Private Limited (JPSKSPL) 4
  •  Gujarat Jaypee Cement & Infrastructure Limited (GJCIL)  Bhilai Jaypee Cement Limited (BJCL)  Himalayan Expressway Ltd.  Madhya Pradesh Jaypee Minerals Limited (MPJML)Milestones:  Year 1957 - Completed first work as contractor in Kota (India).  Year 1979 - Jaiprakash Associates Private Ltd. (JAPL)  Year 1983 - Establishment of Japyee Rewa Cement Plant (JRCL) with an initial capacity of 1 million tonnes.  Year 1980- Hotels Siddharth and Vasant Continental set up.  Year 1986- Formation of Jaiprakash Industries Limited (JIL) by amalgamating JAPL into JRCL.  Year 1992 - Formation of Jaiprakash Hydro Power Ltd. (JHPL) and Jaiprakash Power Venture Ltd. (JPVL)  Year 1996- Establishment of Jaypee Bela Cement Plant (JBCP) with an initial capacity of 1.9 million tonnes.  Year 2000 - Formation of Jaypee Cement Ltd. (JCL) by merging JRCL and JBCP.  Year 2003 - Formation of Jaiprakash Associates Ltd. (JAL) formed by merging JIL with JCL.  Year 2005 - Shares of JHPL listed on BSE/NSE. First hydropower company to be publicly held and listed in the country.  Year 2006 - Merger of Jaypee Greens with Jaiprakash Associates Ltd. (JAL)Achievements/ recognition:-Year 2003: National Safety Award.Year 1992: Corporate Excellence Award, Presented By Dalal Street Journal for Outstanding Performancein the Activity Category.Year 1991: Maharashtra Chapter of American Concrete Institute Award, Presented By MaharashtraChapter of American Concrete Institute for Most Outstanding Concrete Structure in India Arch CumGravity Dam Chamera in H.P.Year 1990: OCCI Export Award, for Maximum Turnover in Overseas ProjectsYear 1986: OCCI Award, Presented By Overseas Construction Council of India for Maximum ForeignExchange repatriated from Overseas Construction Contracts.Certifications:  Jaiprakash Associates Ltd. has been awarded ISO 9001 : 2000 Quality Certification Accredited by UKAS, RVA, ANAB and NABCB.  ISO 2006 : ISO 14001 : 2004  OHSAS 2006 : OHSAS 18001 : 1999  Safety , Health and Environment Policy  Year 2005 : CR1 Grading 5
  •  Year 2005 : CT1 GradingPurpose:Vision-“As a group, we are committed to strategic business development in infrastructure, as the key to nationbuilding in the 21st century. We aim to achieve perfection in everything we undertake with acommitment to excel. It is the determination to transform every challenge into opportunity; to seizeevery opportunity to ensure growth and to grow with a human face.”Mission-“Our solitary Mission is to achieve Excellence in every sector that we operate in - be it Engineering &Construction, Cement, Real Estate or Consultancy. To augment our core competencies and adopt themost comprehensive modern technology to overtake the obstacles in our path of achievement. Toobtain sustainable development and simultaneously enhancing the shareholders value and fulfilling ourobligations towards building a better India". Financial Analysis of the CompanyCommon-Size Analysis:Balance SheetJaiprakash Associates LtdIndustry :Construction - Civil /Turnkey – Large Common Size Balance Sheet (Rs in Crs) Year Mar 10 % of Total Mar 09 % of Total Mar 08 % of Total SOURCES OF FUNDS : Liabilities Liabilities LiabilitiesShare Capital 424.93 1.61 280.36 1.42 234.3 1.82 Reserves Total 8,075.79 30.58 6,258.85 31.60 3,965.20 30.73 Equity Share Warrants 0 0.00 158.8 0.80 398.5 3.09 Equity Application Money 0 0.00 0 0.00 0.02 0.00 Total Shareholders Funds 8,500.72 32.19 6,698.01 33.82 4,598.02 35.63 Secured Loans 11,358.01 43.01 7,338.28 37.05 4,643.55 35.99Unsecured Loans 6,550.70 24.80 5,767.89 29.12 3,662.03 28.38 Total Debt 17,908.71 67.81 13,106.17 66.18 8,305.58 64.37 Total Liabilities 26,409.43 100.00 19,804.18 100.00 12,903.60 100.00 6
  • APPLICATION OF FUNDS : % of Total % of Total % of Total Assets Assets Assets Gross Block 12,847.14 48.65 8,619.22 43.52 5,166.24 40.04Less : Accumulated Depreciation 2,228.46 8.44 1,801.31 9.10 1,454.73 11.27 Less:Impairment of Assets 0 0.00 0 0.00 0 0.00Net Block 10,618.68 40.21 6,817.91 34.43 3,711.51 28.76 Lease Adjustment 0 0.00 0 0.00 0 0.00Capital Work in Progress 3,891.64 14.74 5,081.94 25.66 4,219.01 32.70 Investments 5,576.26 21.11 4,465.20 22.55 3,224.83 24.99 Current Assets, Loans & 0.00 0.00 0.00AdvancesInventories 2,909.68 11.02 1,954.69 9.87 1,307.47 10.13 Sundry Debtors 2,285.03 8.65 1,022.04 5.16 586.18 4.54Cash and Bank 3,879.18 14.69 2,908.59 14.69 1,815.44 14.07 Loans and Advances 4,025.10 15.24 3,276.28 16.54 2,253.84 17.47 Total Current Assets 13,098.99 49.60 9,161.60 46.26 5,962.93 46.21 Less : Current Liabilities and 0.00 0.00 0.00Provisions Current Liabilities 5,201.43 19.70 4,554.39 23.00 3,349.07 25.95Provisions 651.46 2.47 482.31 2.44 306.05 2.37 Total Current Liabilities 5,852.89 22.16 5,036.70 25.43 3,655.12 28.33 Net Current Assets 7,246.10 27.44 4,124.90 20.83 2,307.81 17.89 Miscellaneous Expenses not 0 0.00 3.86 0.02 0.1 0.00written off Deferred Tax Assets 32.83 0.12 30.41 0.15 11.49 0.09 Deferred Tax Liability 956.08 3.62 720.04 3.64 571.15 4.43 Net Deferred Tax -923.25 -3.50 -689.63 -3.48 -559.66 -4.34 Total Assets 26,409.43 100.00 19,804.18 100.00 12,903.60 100.00 Analysis of Common Size Balance Sheet  The Company’s capital structure is based on a significant amount of debt in terms of the long- term loans especially the Secured Loans. The debt part is holding 64% of the fund sources in 2008 which has come up to about 68% in 2010 with a unit percent increase annually. This means that the company is making the use of the leverage component in their structure, which may be for getting a healthy tax shield & enhancing the earnings to shareholders or the part of the company’s capital structure policy.  The total shareholder’s funds barely form one-third of the total liabilities as the total debt taken by the company forms the major part. This depicts that the company would have to resort more on the external sources of finance for any future program of expansion or diversification. 7
  •  The company has got all the Equity Share Warrants, issued by company in 2008, converted into equity shares by converting the rest of outstanding warrants in 2009, so this item is eliminated in 2010 financials.  The Net block of the company has increased by an amount near to 4,000 crores in 2010 & by an amount of 3,000 crores in 2009 that means the company has acquired a significant amount of assets in the two years may be for the expansion purposes or the technological need.  The capital work in progress of the company has decreased in 2010 by the tune of 1,250 crores means a notable decline in the operations of the company, may be due to the decrease in the number of the projects undertaken by the company or may be the company has completed various projects in 2010.  The outstanding warrants in 2009 have been converted into shares in 2010 thereby increasing the actual share capital amount by about 150 crores.  There is no other significant change in the composition of other items of the Balance Sheet.Income Statement:Jaiprakash Associates LtdIndustry :Construction -Civil / Turnkey – Large Common Size Income Statement(Rs in Crs) Year Mar10 % of Net Mar09 % of Net Mar08 % of Net Sales Sales Sales INCOME :Sales Turnover 10,497.25 104.05 6,129.17 105.81 4,326.87 108.76Excise Duty 408.34 4.05 336.58 5.81 348.5 8.76Net Sales 10,088.91 100.00 5,792.59 100.00 3,978.37 100.00Other Income 1,582.87 15.69 359.76 6.21 288.87 7.26Stock Adjustments -105.44 -1.05 70.68 1.22 61.98 1.56Total Income 11,566.34 114.64 6,223.03 107.43 4,329.22 108.82EXPENDITURE : 0.00 0.00 0.00Raw Materials 240.99 2.39 132.05 2.28 122.51 3.08Power & Fuel Cost 474.95 4.71 264.69 4.57 201.19 5.06Employee Cost 657.72 6.52 334 5.77 250.13 6.29Other Manufacturing 4,977.59 49.34 2,656.12 45.85 1,684.08 42.33ExpensesSelling and Administration 957.91 9.49 618.23 10.67 558.59 14.04ExpensesMiscellaneous Expenses 271.26 2.69 75.66 1.31 85.15 2.14Less: Pre-operative 0 0.00 0 0.00 0 0.00Expenses CapitalisedTotal Expenditure 7,580.42 75.14 4,080.75 70.45 2,901.65 72.94 8
  • Operating Profit 3,985.92 39.51 2,142.28 36.98 1,427.57 35.88Interest 1,148.19 11.38 582.33 10.05 380.92 9.57Gross Profit 2,837.73 28.13 1,559.95 26.93 1,046.65 26.31Depreciation 456.06 4.52 308.97 5.33 203.3 5.11Profit Before Tax 2,381.67 23.61 1,250.98 21.60 843.35 21.20Tax 439.69 4.36 256.96 4.44 157.76 3.97Fringe Benefit tax 0 0.00 7.57 0.13 6.37 0.16Deferred Tax 233.62 2.32 89.44 1.54 69.55 1.75Reported Net Profit 1,708.36 16.93 897.01 15.49 609.67 15.32 Analysis of Common Size Income Statement  The sales turnover has shown a very positive change of more than 4,000 crores in 2010 resulting in almost doubling of the net sales figure of 2010 as compared to 2009. This effect is also enhanced by a lower rate of excise duty in 2010 which may be due to a change in the government policy.  Company’s other income has quadrupled in 2010 which may be due to reason that the company has resorted to a heavier outside investment in 2010 as compared to 2009.  The total income of the company has almost doubled due to the combined effect of surged net sales & a significant contribution of other incomes generated by the outside investments of the company.  The total expenditure of the company has increased by 5% from 70.45 to 75.14% which is matter of concern for the company. It has surged mainly due to the increase in the Other manufacturing expenses so the company should take steps towards the improvement in cost control, minimization of the wastage of raw materials and optimum utilisation of manpower.  The interest amount has increased by 1% which is due to the increase in the amount of term loans taken by the company.  Although the Net block of the company has increased, the depreciation, otherwise increased by an actual amount of about 150 crores, has shown a decrease of 1%. This may be due to the fact that the sales of the company have increased at a greater rate than the depreciation allowed on the assets.  The tax amount paid has shown a decrease which is due to the tax shield benefit derived from the additional debt inclusion in the capital structure of the company.  The reported net profits of the company have shown a increase of 1.5% as compared to 2009. This may again be the effect of financial leverage & also the increased turnover of the company. 9
  • Comparative Analysis:Balance Sheet:Jaiprakash Associates LtdIndustry :Construction -Civil / Turnkey - Large Comparative Balance Sheet (Rs in Crs) Year Mar 10 Mar 09 Change % Mar 09 Mar 08 Change % Change Change SOURCES OF FUNDS :Share Capital 424.93 280.36 144.57 51.57 280.36 234.3 46.06 19.66 Reserves Total 8,075.79 6,258.85 1816.94 29.03 6,258.85 3,965.20 2293.65 57.84 Equity Share Warrants 0 158.8 -158.8 -100.00 158.8 398.5 -239.7 -60.15 Equity Application 0 0 0 0 0.02 -0.02 -100.00Money Total Shareholders 8,500.72 6,698.01 1802.71 26.91 6,698.01 4,598.02 2099.99 45.67Funds Secured Loans 11,358.01 7,338.28 4019.73 54.78 7,338.28 4,643.55 2694.73 58.03 Unsecured Loans 6,550.70 5,767.89 782.81 13.57 5,767.89 3,662.03 2105.86 57.51 Total Debt 17,908.71 13,106.17 4802.54 36.64 13,106.1 8,305.58 4800.59 57.80 7 Total Liabilities 26,409.43 19,804.18 6605.25 33.35 19,804.1 12,903.60 6900.58 53.48 8 APPLICATION OF 0 0FUNDS : Gross Block 12,847.14 8,619.22 4227.92 49.05 8,619.22 5,166.24 3452.98 66.84 Less : Accumulated 2,228.46 1,801.31 427.15 23.71 1,801.31 1,454.73 346.58 23.82Depreciation Less:Impairment of 0 0 0 0 0 0Assets Net Block 10,618.68 6,817.91 3800.77 55.75 6,817.91 3,711.51 3106.4 83.70 Lease Adjustment 0 0 0 0 0 0 Capital Work in Progress 3,891.64 5,081.94 -1190.3 -23.42 5,081.94 4,219.01 862.93 20.45 Investments 5,576.26 4,465.20 1111.06 24.88 4,465.20 3,224.83 1240.37 38.46 Current Assets, Loans & 0 0Advances Inventories 2,909.68 1,954.69 954.99 48.86 1,954.69 1,307.47 647.22 49.50 Sundry Debtors 2,285.03 1,022.04 1262.99 123.58 1,022.04 586.18 435.86 74.36 Cash and Bank 3,879.18 2,908.59 970.59 33.37 2,908.59 1,815.44 1093.15 60.21 Loans and Advances 4,025.10 3,276.28 748.82 22.86 3,276.28 2,253.84 1022.44 45.36 Total Current Assets 13,098.99 9,161.60 3937.39 42.98 9,161.60 5,962.93 3198.67 53.64 Less : Current Liabilities 0 0and Provisions Current Liabilities 5,201.43 4,554.39 647.04 14.21 4,554.39 3,349.07 1205.32 35.99 10
  • Provisions 651.46 482.31 169.15 35.07 482.31 306.05 176.26 57.59 Total Current Liabilities 5,852.89 5,036.70 816.19 16.20 5,036.70 3,655.12 1381.58 37.80 Net Current Assets 7,246.10 4,124.90 3121.2 75.67 4,124.90 2,307.81 1817.09 78.74 Miscellaneous Expenses 0 3.86 -3.86 -100.00 3.86 0.1 3.76 3760.0not written off 0 Deferred Tax Assets 32.83 30.41 2.42 7.96 30.41 11.49 18.92 164.66 Deferred Tax Liability 956.08 720.04 236.04 32.78 720.04 571.15 148.89 26.07 Net Deferred Tax -923.25 -689.63 -233.62 33.88 -689.63 -559.66 -129.97 23.22 Total Assets 26,409.43 19,804.18 6605.25 33.35 19,804.1 12,903.60 6900.58 53.48 8 Analysis of Comparative Balance Sheet  The share capital has shown a 51% increase which is due to the conversion of outstanding equity warrants of worth Rs. 158 crores into shares.  The total shareholders funds have increased by only 26% as compared to previous year’s 47% because in this year(2010) the transfers to reserve have decreased as compared to the previous year.  The unsecured loans taken by the company have decreased to 13% from previous year’s 57% which may be due to the policy the of the company to secure their creditors as noted in the annual report of the company.  The total liabilities have shown a decrease from 53% to 33%. This is mainly due to decrease in the shareholder’s funds percentage & the reduced unsecured loans.  Sundry debtors of the company have shown a considerable increase of 123% means this year the company has promoted the credit sales at a good tempo.  Cash & bank Item shows the rise of 33% only as compared to the previous 60%. This may be due to the increased credit sale policy of the company.  Current liabilities of the company have shown a rise of 14% only as compared to last record of 35%. This means that the company has met a lot of its current obligations which may lead to a significant effect on working capital of the company. This depicts that the company’s short-term position is becoming stable. 11
  • Income Statement:Jaiprakash Associates LtdIndustry :Construction - Civil/ Turnkey - Large Comparative Income Statement (Rs in Crs) Year Mar10 Mar09 Change % Mar09 Mar08 Change % Change ChangeINCOME :Sales Turnover 10,497.25 6,129.17 4,368.08 71.27 6,129.17 4,326.87 1,802.30 41.65Excise Duty 408.34 336.58 71.76 21.32 336.58 348.5 -11.92 -3.42Net Sales 10,088.91 5,792.59 4,296.32 74.17 5,792.59 3,978.37 1,814.22 45.60Other Income 1,582.87 359.76 1,223.11 339.98 359.76 288.87 70.89 24.54Stock Adjustments -105.44 70.68 -176.12 -249.18 70.68 61.98 8.70 14.04Total Income 11,566.34 6,223.03 5,343.31 85.86 6,223.03 4,329.22 1,893.81 43.74EXPENDITURE : 0.00Raw Materials 240.99 132.05 108.94 82.50 132.05 122.51 9.54 7.79Power & Fuel Cost 474.95 264.69 210.26 79.44 264.69 201.19 63.50 31.56Employee Cost 657.72 334 323.72 96.92 334 250.13 83.87 33.53Other Manufacturing 4,977.59 2,656.12 2,321.47 87.40 2,656.12 1,684.08 972.04 57.72ExpensesSelling and Administration 957.91 618.23 339.68 54.94 618.23 558.59 59.64 10.68ExpensesMiscellaneous Expenses 271.26 75.66 195.60 258.52 75.66 85.15 -9.49 -11.15Less: Pre-operative Expenses 0 0 0.00 0 0 0.00CapitalisedTotal Expenditure 7,580.42 4,080.75 3,499.67 85.76 4,080.75 2,901.65 1,179.10 40.64Operating Profit 3,985.92 2,142.28 1,843.64 86.06 2,142.28 1,427.57 714.71 50.06Interest 1,148.19 582.33 565.86 97.17 582.33 380.92 201.41 52.87Gross Profit 2,837.73 1,559.95 1,277.78 81.91 1,559.95 1,046.65 513.30 49.04Depreciation 456.06 308.97 147.09 47.61 308.97 203.3 105.67 51.98Profit Before Tax 2,381.67 1,250.98 1,130.69 90.38 1,250.98 843.35 407.63 48.33Tax 439.69 256.96 182.73 71.11 256.96 157.76 99.20 62.88Fringe Benefit tax 0 7.57 -7.57 -100.00 7.57 6.37 1.20 18.84Deferred Tax 233.62 89.44 144.18 161.20 89.44 69.55 19.89 28.60Reported Net Profit 1,708.36 897.01 811.35 90.45 897.01 609.67 287.34 47.13 12
  • Analysis of Comparative Income Statement  The net turnover of the company has increased by 45% in 2009 but in 2010 the turnover has increased by 74% which indicates the company is going in the favorable side regarding the growth of the company.  The other incomes have shown a drastic rise of 334% in 2010 because of the increased investments in the outside world.  Total income in 2010 has shown a rise of 85% which is double of that in 2009. The credit for this fully goes to increased sales & the whooping Investments.  The raw material expenses have shown an increase of 108 crores which accounts for a rise of 82% as compared to 2009. This can be mainly attributed to the increased turnover as raw material is the main factor of operations. But the company has to be cautioned as the rise recorded is more than the rise in net sales.  All other expenses like power, manufacturing expenses, selling expenses and administrative expenses are showing a rise by double change from last year’s change. It is relevant to increase in sales volume of the company.  The increase in the interest is attributed to the increase in the amount of secured debt taken by the company.  The reported net profit has shown a rise of 90% as compared to previous year’s 47%. This is mainly due to the increase in the operating profit.Trend Analysis:Balance SheetJaiprakash Associates LtdIndustry :Construction -Civil / Turnkey - Large Trend Analysis Balance Sheet (Rs in Crs) Year Mar 10 Compared Mar 09 Compared Mar 08 Compared Mar 07 Base to 2007 to 2007 to 2007 Year SOURCES OF FUNDS : Share Capital 424.93 193.82 280.36 127.88 234.3 106.87 219.24 100 Reserves Total 8,075.79 304.32 6,258.85 235.85 3,965.20 149.42 2,653.71 100 Equity Share Warrants 0 158.8 398.5 0 Equity Application 0 0.00 0 0.00 0.02 100.00 0.02 100Money Total Shareholders 8,500.72 295.89 6,698.01 233.14 4,598.02 160.04 2,872.97 100Funds Secured Loans 11,358.01 308.14 7,338.28 199.09 4,643.55 125.98 3,685.95 100 Unsecured Loans 6,550.70 362.48 5,767.89 319.17 3,662.03 202.64 1,807.17 100 13
  • Total Debt 17,908.71 326.02 13,106.17 238.59 8,305.58 151.20 5,493.12 100 Total Liabilities 26,409.43 315.67 19,804.18 236.72 12,903.60 154.24 8,366.09 100 APPLICATION OFFUNDS : Gross Block 12,847.14 305.74 8,619.22 205.13 5,166.24 122.95 4,201.93 100 Less : Accumulated 2,228.46 174.10 1,801.31 140.73 1,454.73 113.65 1,279.97 100Depreciation Less:Impairment of 0 0 0 0Assets Net Block 10,618.68 363.41 6,817.91 233.33 3,711.51 127.02 2,921.96 100 Lease Adjustment 0 0 0 0 Capital Work in Progress 3,891.64 178.01 5,081.94 232.46 4,219.01 192.98 2,186.20 100 Investments 5,576.26 313.49 4,465.20 251.03 3,224.83 181.30 1,778.74 100 Current Assets, Loans &Advances Inventories 2,909.68 222.70 1,954.69 149.61 1,307.47 100.07 1,306.56 100 Sundry Debtors 2,285.03 505.48 1,022.04 226.09 586.18 129.67 452.05 100 Cash and Bank 3,879.18 271.31 2,908.59 203.42 1,815.44 126.97 1,429.81 100 Loans and Advances 4,025.10 362.29 3,276.28 294.89 2,253.84 202.86 1,111.03 100 Total Current Assets 13,098.99 304.67 9,161.60 213.09 5,962.93 138.69 4,299.45 100 Less : Current Liabilities andProvisions Current Liabilities 5,201.43 256.71 4,554.39 224.77 3,349.07 165.29 2,026.22 100 Provisions 651.46 214.25 482.31 158.62 306.05 100.65 304.07 100 Total Current Liabilities 5,852.89 251.17 5,036.70 216.14 3,655.12 156.85 2,330.29 100 Net Current Assets 7,246.10 367.98 4,124.90 209.48 2,307.81 117.20 1,969.16 100 Miscellaneous Expenses 0 0.00 3.86 2757.14 0.1 71.43 0.14 100not written off Deferred Tax Assets 32.83 352.25 30.41 326.29 11.49 123.28 9.32 100 Deferred Tax Liability 956.08 191.43 720.04 144.17 571.15 114.36 499.43 100 Net Deferred Tax -923.25 188.38 -689.63 140.71 -559.66 114.19 -490.11 100 Total Assets 26,409.43 315.67 19,804.18 236.72 12,903.60 154.24 8,366.09 100 Trend Analysis of Balance Sheet  The share capital of the company is constantly increasing as the company is investing in new technology & new methods. The share capital of the company has increased by 74% in 2010 which is due to the conversion of outstanding warrants of previous year into equity shares in 2010.  The company has constantly maintained a CAGR of 44% in 3 years with increase of 49%, 85% & 74% increase in 2008, 2009 & 2010 respectively.  The company is showing a trend of reducing the amount of unsecured loans & increasing the secured loans part of the total debt. The company has issued 24,000 non-convertible secured debentures. 14
  •  The net block of the company is increasing at a rate of 105% & 130% in 2009 & 2010 respectively, as the company is acquiring the newer technology & updated machinery.  The trend in capital work in progress depicts that the company has completed many projects in a period of 1 year as the capital work-in-progress increases in 2009 but it again decreases in 2010 which means that the company has completed a number of projects in this year.  The investments by the company have shown a consistent increase of about 70% each year in the period of three years.  The sundry debtors have increased drastically in 2010. This may be due to the fact that the projects completed this year have not yielded the quick returns as the payment may be in the form of installments.  The total assets are growing at a significant proportion each year which is due increase in the current assets & the net block of the company as the company has made huge expenditures in building new offices & grading the existing ones.Income Statement:Jaiprakash Associates LtdIndustry :Construction -Civil / Turnkey - Large Trend Analysis Income Statement (Rs in Crs) Year Mar10 Compared Mar09 Compared Mar08 Compared Mar07 Base to 2007 to 2007 to 2007 YearINCOME :Sales Turnover 10,497.25 281.18 6,129.17 164.18 4,326.87 115.90 3,733.26 100Excise Duty 408.34 158.57 336.58 130.70 348.5 135.33 257.52 100Net Sales 10,088.91 290.27 5,792.59 166.66 3,978.37 114.46 3,475.74 100Other Income 1,582.87 1,622.96 359.76 368.87 288.87 296.19 97.53 100Stock Adjustments -105.44 -54.32 70.68 36.41 61.98 31.93 194.1 100Total Income 11,566.34 307.01 6,223.03 165.18 4,329.22 114.91 3,767.37 100EXPENDITURE :Raw Materials 240.99 205.05 132.05 112.35 122.51 104.24 117.53 100Power & Fuel Cost 474.95 228.78 264.69 127.50 201.19 96.91 207.6 100Employee Cost 657.72 415.52 334 211.01 250.13 158.02 158.29 100Other Manufacturing 4,977.59 306.62 2,656.12 163.61 1,684.08 103.74 1,623.40 100ExpensesSelling and Administration 957.91 201.81 618.23 130.24 558.59 117.68 474.67 100ExpensesMiscellaneous Expenses 271.26 247.52 75.66 69.04 85.15 77.70 109.59 100Less: Pre-operative 0 0 0 0Expenses CapitalisedTotal Expenditure 7,580.42 281.69 4,080.75 151.64 2,901.65 107.82 2,691.08 100Operating Profit 3,985.92 370.34 2,142.28 199.04 1,427.57 132.64 1,076.29 100 15
  • Interest 1,148.19 391.43 582.33 198.52 380.92 129.86 293.33 100Gross Profit 2,837.73 362.44 1,559.95 199.24 1,046.65 133.68 782.96 100Depreciation 456.06 279.71 308.97 189.49 203.3 124.69 163.05 100Profit Before Tax 2,381.67 384.20 1,250.98 201.80 843.35 136.04 619.91 100Tax 439.69 225.38 256.96 131.71 157.76 80.87 195.09 100Fringe Benefit tax 0 0.00 7.57 250.66 6.37 210.93 3.02 100Deferred Tax 233.62 3,385.80 89.44 1,296.23 69.55 1,007.97 6.9 100Reported Net Profit 1,708.36 411.75 897.01 216.20 609.67 146.94 414.9 100 Trend Analysis of Income Statement  The compound annual growth rate in net sales shown by the company from 2007 – 2010 is 42% but in 2008 the company has shown just 14% increase & in 2010 the net sales have shown a growth of 130%. This phenomenon can be attributed to the fact that in 2008 the economy was struggling with recession which has had a significant impact on the Sales of the company. In 2010, the economy has came out of the recession as such the sales were moving steep upwards & also the company has acquired a lot of operational assets which are paying for them now.  The other income item of the Income statement has shown a steep growth of 1300% as compared to the CAGR of 153% due to the increased investment.  If the other income is ignored the operating income of the company has shown an increase of 124% in 2010 but the total expenditure has shown an increase of 130% which means that the company has incurred relatively more expenses. Though the difference is not much but it depicts the inefficient approach of the company.  Reported net profit of the company in 2010 has shown an increase of 195% as compared to previous year’s 70% but this increase is mainly backed by the income from the investments of the company in the outside world. 16
  • SWOT Analysis of JP AssociatesStrengths:  The Group has the largest market share in the Indian Hydropower.  Only integrated solution provider for Hydropower projects in the country.  Amongst the largest cement producers in the country.Weakness:  Fall in margin over the last one year due to increasing cost of raw material.Opportunities:  The road freight industry will be growing at a compound annual growth rate (CAGR) of 9.9 per cent from 2007-08 to 2011-12 (Planning Commission).  The government is targeting an investment of US$ 20.38 billion over the next two years in the infrastructure sector.  US$ 494 billion of investment is proposed for the Eleventh Plan period (2007-12), which would increase the share of infrastructure investment to 9 per cent of GDP from 5 per cent in 2006-07 (Planning Commission).Threats:  Slowdown in the economy could impact investment and activity in infrastructure and adversely affect business.  Increased competition in Engineering and Construction may put pressure on operating margins.Key developments:  The Company is expanding its Cement Production Capacity to 29.25 MTPA. An additional capacity of 4.3 MTPA is being added through Joint Ventures with SAIL (Steel Authority of India Limited) taking the Group’s total capacity to 33.55 MTPA by 2011 which will make Jaypee Group the 3rd largest Cement producing group in India.  The company in the process of implementing new Greenfield projects in Northern, Central, Western & Southern parts of the country. 17
  •  It has raised Rs 10 billion through issue of non-convertible debentures (NCDs) to Standard Chartered India. Company has also decided to raise low cost funds to the extent of Rs. 5 billion by way of private placement of unsecured rated commercial papers. It has also decided to disinvest / offer for sale upon 60 million equity shares out of 1.21 billion equity shares of Rs 10 each held by the company in Jaypee Infratech, a subsidiary of Jaiprakash Associates. Commissioning of new 2.4 MTPA cement plant at Sewagram in Kutch, Gujarat. Company crossed one million tonne mark in cement despatches in November 2009 for the first time. Commissioning of 1.75 MnTPA Jaypee Himachal Cement Grinding and Blending Plant, Bagheri, H.P. Commissioning of 2.2 MnTPA Bhilai Jaypee Cement Ltd., Satna (Madhya Pradesh). Jaypee Cement announced the commissioning of its state-of-the-art Jaypee Roorkee Cement Grinding Unit (JRCGU) at Roorkee, Uttarakhand. The unit, with an annual capacity of 1.2 million tonnes, shall further consolidate the strength of Jaypee Cement in the markets of Uttarakhand and Western UP. Issue of bonus shares in December 2009 in the ratio of 1 equity shares for every 2 equity shares of Rs 2 each held on 18th December 2009.FCCBs aggregating USD 10,000 (Out of total FCCB-1 of USD 100 million due on 17.02.2010) have been converted into 9264 equity shares of Rs 2 each at a pre-determined price of Rs 47.262 per share, thereby increasing the paid-up share capital of the company by Rs 18,528 and the share premium account by Rs 4.19 lakh. Thank You Sir… 18