The document provides an overview and analysis of Jaiprakash Power Ventures Ltd (JP Power), an Indian power generation and distribution company. Some key points: - JP Power is part of the large Jaypee Group conglomerate and was incorporated in 1994 to develop hydroelectric and thermal power projects. It is currently the largest private hydroelectric company in India. - The company owns and operates hydroelectric plants totaling 1700MW in Himachal Pradesh and Uttarakhand. It is also developing a 1250MW coal plant in Madhya Pradesh. - A financial analysis shows the company's major shareholders, revenues, expenses, and SWOT analysis. While production efficiency is a strength, high

1. SUMMARY
The project was undertaken at First Call India Equity Advisors Pvt Ltd with a view to study the
credit appraisal in an Indian company. Credit appraisal is an important activity which is carried
out in the banks with a view to find out whether a borrower is worthy enough to avail of a long
term loan. Credit appraisal basically deals with judging the credit worthiness of a borrower. While
investigating a credit appraisal banks need to understand all the aspects related to the company.
The main purpose of the project is to understand the different techniques applied while
conducting a credit appraisal. For the purpose of credit appraisal Jai Prakash Power Venture Ltd a
power generation and distribution company will be appraised based on various parameters like
company background, background of the promoters, business of the company, financial statement
analysis of the company the company valuation and other such factors.

2. Background
The Jaypee Group is a conglomerate which is into
various business interests like Engineering &
Construction, Power, Cement, Real Estate,
Hospitality, Expressways, IT, Sports & Education
not-for-profit). Jaiprakash Power Ventures Limited,
a part of the Jaypee Group was incorporated in
1994. The company was incorporated The
Company was incorporated on December 21, 1994
with the object to set up hydro-electric or Thermal
power projects and for the supply of general
electric power. The company is the largest private
sector hydropower company with 1700 MW in
operation. The company is in the business of
planning, developing and implementing power
projects in India. Presently the company owns and
operates the 300 MW Baspa-II Hydroelectric Project at District Kinnaur, Himachal Pradesh , 400
MW Vishnuprayag Hydroelectric project, at District Chamoli, Uttarakhand and 1000 MW
Karcham-Wangtoo at District Kinnaur, Himachal Pradesh. As on 31st March 2014 the the
Company had a total workforce of 1973 employees which include Engineers, Chartered
Accountants, managers and other employees.
BUSINESS TRENDS
JPVL has also acquired Bina Power Supply Company Limited (BPSCL) from the Aditya Birla
Group and is setting up a 1250 MW coal fired Thermal Power Plant at Bina in the State of
Madhya Pradesh. JSW Energy was in talks to buy JPJP Power's Nigrie and Bina thermal power
units. JSW Energy thereafter had agreed to buy two hydropower projects from Jaiprakash Power
Ventures Ltd for 97 billion Indian rupees ($1.57 billion) including debt. In February 2015, JSW
Type : Public
Traded as: BSE: 532627
NSE: JPPOWER
Industry: Conglomerate
Incorporated year: 1994
Headquarters: Solan District, Himachal
Pradesh,India
Key People: Manoj Gaur (Chairman)
Industry/Sector: Power
Generation/Distribution
Business Activity:Engaged in setting up
hydro electric, thermal power
projects and general electric
power.
Revenue: Rs.2740.50 Crores
Web site: www.jppowerventures.com
JAIPRAKASH POWER
VENTURES LTD
(Detailed Research Report)

3. Energy got approval from CCI to acquire the 2 hydropower projects. JPV had announced in 2010
of raising $200 million through convertible bonds. The conversion price of the paper, due next
month, was fixed at 85.81 rupees a share. However in Feb 13 JPV announced that it was likely to
default on the payments for convertible bonds worth $200 million. The reason was the company’s
inability to generate sufficient revenues from its operation.
SHAREHOLDING PATTERN (As on 31st March 2014)
PARTICULARS
No. of Shares
Promoters 1,868,648,237
Others 344,107,873
General Public 252,004,086
Foreign Institutions 183,414,038
Other Companies 118,536,661
NBFC and Mutual Funds 110,148,515
Financial Institutions 27,925,944
Foreign - Others 25,067,286
Foreign - NRI 8,150,444
TOTAL 2,938,003,084
64%
12%
8%
6%
4%
4%
1% 1% 0%
SHAREHOLDING PATTERN
Promoters
Others
General Public
Foreign Institutions
Other Companies
NBFC and Mutual Funds
Financial Institutions
Foreign - Others
Foreign - NRI

4. BOARD OF DIRECTORS AND ITS MANAGEMENT PERSONNEL (31st March 2015)
NAME DESIGNATION PROFILE
Mr. Manoj Gaur Chairman
● A Degree in Civil Engineering from BITS Pilani.
● Rich Experience of around 22 years in Corporate and Finance
related matters he has utilized this experience to head the helm at
the conglomerate.
● Instrumental in setting up the marketing network and has been
associated with various activities of the Jaypee Group, such as
engineering construction, hydro power, cement, real estate,
information technology, and other initiatives.
● Won the Global Standard Award at NDTV Profit Business
Leadership Awards 2011.
Shri.Sunil Kumar
Sharma VC and CEO
● A B.Sc graduate from University of Meerut
● Hands on experience of 30 years in the field of procurement
and management.
● Vast knowledge on various disciplines has been instrumental in
the completion of several engineering construction projects,
including raising the height of the Lakhya Dam in Karnataka and
in the construction of various hotels.
Mr. Suren Jain MD and CFO
● A Bachelor’s degree in Prod Engineering and has a experience
of around 20 years in fields related to corporate finance and
planning.
● Involved in various capacities of the Jaypee Group and works
in a team which is part of various business strategies related to
the business
● Solely responsible for the construction activities and the
hydro-power wing of the Jaypee group.
Shri B.B. Tandon
Non-Executive
Independent
Director
● A Bachelor’s Degree in Law and Master’s Degree in
Economics from the University of Delhi
● Held various positions in the Government of India and
Government of Himachal Pradesh including as Principal
Secretary, Power and Chairman, Himachal Pradesh State
Electricity Board.
Shri. Raj Narain
Bhardwaj
Non-Executive
Independent
Director
● Post graduate degree in economics from the Delhi School of
Economics and a Diploma in Industrial Relations and Personnel
Management from Punjabi University, Patiala.
●Over 37 years of experience with LIC and has served in various
key positions including as its Managing Director & Chairman.
Also held position of director in various companies

5. Shri. A. K. Goswami
Non-Executive
Independent
Director
● A Bachelors’ Degree in Mechanical Engineering
● Over 42 years of work experience in various capacities with
the Central Government and the Government of Himachal
Pradesh, including several senior level positions such as
Secretary, Ministry of Water Resources, and Chief Secretary
amongst other positions.
Shri. S. S. Gupta
Non-Executive
Independent
Director
● Served in key positions such as the Chairman and CEO of
Himachal Pradesh Electricity Regulatory Commission.
● Also worked with East African Power and Lighting Company,
Kenya.
● Member of the Steering Committee of South Asian Forum of
Infrastructure Regulators.
Shri. Dharam Paul
Goyal
Non-Executive
Independent
Director
● Renowned Hydro-Power Development (Construction and
Contract Management) Expert and carries with him vast
experience of around 48 years in the field of Hydro-Power
Projects.
● Previously working as the Director (Technical) with Tala
Hydro-Electric Project Authority, Bhutan. Shri Goyal was sent
on deputation from HPSEB on Foreign Service terms of the
Ministry of External Affairs, Government of India to Tala Hydro-
Electric Project Authority
Shri D.P. Lieutenant
General (Retired)
Ravindra Mohan
Chadha
Non-Executive
Independent
Director
● Over 44 years of experience in conceptualization, planning,
direction and implementation of various projects especially in
personnel management, equipment/ materials, logistics and
financial aspects.
● Served in the Indian Army for 40 years before retiring as a
Lieutenant General.
● Joined as President in erstwhile Jaiprakash Power Ventures
Ltd, in 2007 and thereafter appointed as Whole-time Director in
the said Company and was looking after the operations of 400
MW Vishnuprayag Project at Site.
Shri. Praveen
Kumar Singh
Whole-time
Director
● Associated with the Jaypee Group for the past 16 years and has
been involved in the construction and implementation of
Karcham-Wangtoo HEP.
● Also involved in the construction of the Indira Sagar hydro
electric project and was the unit in-charge of Omkareshwar
hydroelectric project.
Ms. Sunita Joshi
Non-Executive
Director
● A Masters’ Degree in International Business Management and
possess about 24 years experience in related fields especially
information technology, IT education and software development,
sales and marketing and corporate communications.
● A Whole-time Director of JIL Information Technology
Limited.
Shri G.P. Gaur
Non-Executive
Independent
Director
●More than 38 years of experience in material management and
construction.
● Oversees the purchase & procurement for the projects related

6. to the JP group.
Shri Arun Bala
Krishnan
Independent
Director
● B.E (Chemical) from the College of Engineering, Trichur,
Kerala and has Post Graduate Diploma in Management from the
Indian Institute of Management, Bangalore.
● Currently on board of HPCL Mittal Energy Ltd., Western
Coalfields Ltd., NCDEX (National Commodities & Derivatives
Exchange) Spot Ltd., and KSS Global BLV.
●Acts as an advisor to Mittal Energy India Services Ltd. and
other companies
Shri S.L. Mohan
Independent
Director
● Ex - Chairman Cum Managing Director, The Oriental
Insurance Company Ltd.
Shri Atanu Sen
Independent
Director
Dr. Jagan Nath
Gupta
Non-Executive
Independent
Director
Shri S.D.Nailwal
Non-Executive
Independent
Director
Shri K.N. Bhandari
Independent
Director
BREAK-UP OF EXPENDITURE (31ST
Mar 2014)
26%
3%
53%
16%
2%
Expenses (2013-14)
Cost of operation and maintenance
Employee benefits expense
Finance costs
Depreciation and amortization expense
Other expenses

7. SWOT ANALYSIS of JP POWER VENTURE LTD
Helpful
to achieving the objective
Harmful
to achieving the objective
Internalorigin
(attributesofthesystem)
STRENGTHS
1. Production process of the plants is
high on efficiency.
2. The company is a subsidiary of the
Jaypee group which is a strong
conglomerate thereby making its
presence strong.
3. Use of green technology and
upgradations thereby making the process
environmentally friendly.
WEAKNESSES
1.Huge competition which implies that
only few players dominate the market
and therefore limited market share.
2. Large amount of debts accumulated
by the firm over a consistent period of
time.
Externalorigin
(attributesoftheenvironment)
OPPORTUNITIES
1.Company aimed to find new avenues
of power generation due to increase in
competition. By 2020 the demand for the
power is expected to go up to 400000
MW.
2.. The power generation companies are
eligible for a 100% tax deduction as per
Income Tax Act 1961 on the profits for
10 consecutive years. This benefit can be
procured till 2017.
3. Investment in the power sector is
expected to be around Rs 750000 crore
from which the private sector includes
nearly half of the investments
THREATS
1.Failure to meet the targets of power
generation. Increase in the cost of raw
materials like coal which increases the
overall cost of production.
2. Obtaining private investment in
power projects considering the high
financial risk.
3. Getting the required permission for
the land availability and other clearances
for the project
4. Lesser number of employees in this
sector as the candidates prefer more
lucrative opportunities.

8. BALANCE SHEET OF JAIPRAKASH POWER VENTURES LTD
BALANCE SHEET AMOUNT IN LACS
(` in Lacs)
PARTICULARS 2014 2013 2012 2011
I. EQUITY AND LIABILITIES
(1) Shareholders’ Funds
(a) Share Capital 293,800 293,800 262,476 262,476
(b) Reserves and Surplus 339,171 350,636 284,024 254,590
(3) Deferred Revenue 56,266 48,716 39,207 31,302
(4) Non Current Liabilities
(a) Long-term borrowings 1,737,028 1,580,138 1,310,803 1,173,993
(b) Deferred tax liabilities (net) 13,704 14,333 12,344 –
(c) Other Long-term liabilities 2,798 3,395 1,253 9,669
(d) Long-term provisions 25,310 44,636 35,533 34,672
(5) Current Liabilities
(a) Short-term borrowings 19,031 23,707 51 5,082
(b) Trade payables 101,280 101,625 81,127 32,952
(c) Other current liabilities 317,571 216,814 174,363 31,406
(d) Short-term provisions 27,410 16,696 36,561 1,947
TOTAL CURRENT LIABILITIES 465,292 358,842 292,102 71,387
TOTAL 2,933,369 2,694,496 2,237,742 1,838,089
ASSETS
Non-current assets
(a) Fixed assets
Tangible assets 1,244,873 1,121,680 965,700 307,414
Capital work-in-progress 991,310 911,994 638,377 896,216
(b) Non-current investments 500,499 443,417 386,308 360,630
(c) Long-term loans and advances 31,104 37,196 68,394 21,596
(d) Other non-current assets 13,341 4,176 9,661 10,578
(2) Current assets
(b) Inventories 15,834 13,572 4,866 1,753
(c) Trade receivables 25,287 45,157 43,036 15,566
(d) Cash and bank balances 55,700 58,367 71,581 202,424
(e) Short-term loans and advances 51,301 54,993 46,615 16,539
(f) Other current assets 4,120 3,944 3,204 5,373
TOTAL CURRENT ASSETS 152,242 176,033 169,302 241,655
TOTAL 2,933,369 2,694,496 2,237,742 1,838,089

9. The share capital has been increasing from Rs 262476 lacs in 2011 to Rs 293800 in 2014.
lacs. As far as the reserves and surplus component is concerned it has increased at a CAGR of 7%
but comparing it to the previous year it has decreased from 350,636 lacs to 339171 lacs. It means
that the company may need to keep on hold their expansion and other strategic plans. The long
term debt though has increased majorly from Rs 1183662 lacs in 2011 to Rs 1739826 lacs in
2014. This states that the company is more dependent on its external borrowings. The profits have
decreased from the previous years as a result of which the earnings for the shareholders have
reduced. The current assets have reduced by a CAGR of 10.91%.where as the current liabilities
for the same period have increased by a CAGR of 59% which states that the company has
accumulated debts and they will have to reduce their debts significantly.

10. INCOME STATEMENT OF JPVL
AMOUNT IN LACS
PARTICULARS 2014 2013 2012 2011
I. Revenue from operations 267,750 225,262 161,556 73,689
II. Other Income 6,300 3,818 7,074 10,385
III. Total Revenue 274,050 229,080 168,630 84,074
IV. Expenses :
Cost of operation and maintenance 69,981 38,963 4,936 2688
Employee benefits expense 7,422 5,739 4,329 2,434
Finance costs 144,768 112,409 85,945 44,844
Depreciation and amortization expense 44,659 32,389 23,005 9,491
Other expenses 5,868 4,669 4,116 2,969
Total expenses 272,698 194,169 122,331 62,426
V. Profit before exceptional and extraordinary items
and tax (III-IV) 1,352 34,911 46,299 21,648
VI. Exceptional items Prior Period Expenses 8 – – –
VII. Profit before extraordinary items and tax (V-VI) 1,344 34,911 46,299 21,648
VIII. Extraordinary items – – – – – 1,002
IX. Profit before tax (VII-VIII) 1,344 34,911 46,299 20,646
X. Tax Expense :
Net Current Tax – – – – – 4,116
(ii) Previous Year - Written Off – 7 -124 -4
(iii) Deferred tax charge/(reversal) -629 1,989 6128 4,135
XI. Profit/(loss) from operations (IX-X) 1,973 32,915 40,295 16,511
XII. Profit/(loss) from continuing operations -21,044 -6,200 –
XIII. Tax expense of continuing operations -2,192 -3,196 –
XIV. Profit/(loss) from continuing operations (after
tax) (XII-XIII) -18,852 -3,004 – –
XV. Profit/(loss) from discontinuing operations 22,388 41,111 – –
XVI. Tax expense of discontinuing operations 1,563 5,192 – –
XVII. Profit/(loss) from discontinuing operations
(after tax) (XV-XVI) 20,825 35,919 40,295 –
XVIII. Profit/(loss) for the period (XIV + XVII) 1,973 32,915 40,295 16,511
XIX. Earnings per equity share :
Before Extraordinary items
(i) Basic 0.07 1.24 1.54 0.84
(ii) Diluted 0.06 1.19 1.47 0.67
After Extraordinary items
(i) Basic 0.07 1.24 1.54 0.79
(ii) Diluted 0.06 1.19 1.47 0.64

11. The sales have increased at a CAGR of 34% from 2011 to 2014. It has increased from Rs 84074
lacs to Rs 274050 lacs. This shows that in order to reduce its mounting debts the company is
selling off its power plants. The depreciation has also increased from Rs 9491 lacs in 2011to Rs
44659 lacs in 2014 since the company has increased the purchase of its assets. The profits of the
company have shown a steady decline from Rs 16511 in 2011 to Rs 1973 lacs in 2014. The
declining profits also have had an impact on the EPS. For the investors EPS forms one of the
major criteria for investing in any company. But investors also look into the operating cash flows
of the company to decide whether or not to invest. The operating cash flow for the company has
been at 0.7 in the year 2014 which is higher than the EPS. This states that the quality of the
earnings is of the highest quality since the company is generating more revenue from the
operations.

12. RATIOS OF JPV LTD
RATIOS 2011 2012 2013 2014
1 CURRENT RATIO 3.39 0.58 0.49 0.33
2 QUICK RATIO 3.36 0.56 0.45 0.29
3 WORKING CAPITAL TURNOVER
RATIO 2.03 -0.73 -0.80 -1.14
4 DEBT EQUITY RATIO 2.30 2.40 2.49 2.78
5 DEBT TO ASSETS RATIO 0.70 0.74 0.74 0.77
6 EQUITY TO ASSETS RATIO 0.28 0.24 0.24 0.22
7 ASSETS TURNOVER RATIO 20.64 25.38 21.58 22.63
8 INVENTORY TURNOVER RATIO 42.04 33.20 16.60 16.91
9 GROSS PROFIT MARGIN (%) 84.45 92.88 81.32 72.17
10 NET PROFIT MARGIN (%) 22.41 24.94 14.61 0.74
11 RETURN ON CAPITAL EMPLOYED (%) 1.17 2.38 1.49 0.05
12 RETURN ON EQUITY (%) 3.19 7.37 5.11 0.31
13 NET FIXED ASSETS TO NET WORTH
RATIO 0.59 1.77 1.74 1.97
14 INTEREST COVERAGE RATIO 1.62 1.62 1.37 1.04
15 EXPENSES TO TOTAL SALES RATIO 74.25 72.54 84.76 99.50

13. 1. CURRENT RATIO
The current ratio of a company basically shows how good a company is in meeting its short term
debt obligations. Current ratio for the company for the financial year was 3.39:1 in 2011 and due
to the increasing debts that the company has incurred this has drastically declined to 0.58 in 2012,
0.49 in 2013 and 0.33 in 2014. This suggests that the company needs to sort out its working
capital management.
2. ACID TEST RATIO
The acid test ratio is an indicator of a company’s ability to show how quickly it can convert assets
into cash. Inventory been slow moving, it is not included in the acid test ratio. The ratio has been
declining from 3.36 in 2011 to 0.29 in 2014.
3.39
0.58 0.49 0.33
0.00
1.00
2.00
3.00
4.00
Mar '11 Mar '12 Mar '13 Mar '14
Current Ratio
3.36
0.56 0.45
0.29
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
Mar '11 Mar '12 Mar '13 Mar '14
Quick Ratio

14. 3. WORKING CAPITAL TURNOVER RATIO
Like the other liquidity ratios this ratio also determines how much liquid assets are present with
respect to its liquidity. The higher the net working capital to sales ratio the better is the ability of
the company to meet its debt obligations.
For the year 2010-11 the ratio was 2.03 which is a very satisfactory ratio. But due to the mounting
debt obligations the ratio has been in the red since Mar 2012. The ratio has plummeted to -1.14 in
Mar 2014.
4. DEBT EQUITY RATIO
The debt equity ratio indicates how aggressively a company finances its overall growth by
way of debt. Debt indicates loan and equity means how much capital the company can bring
in. The graph basically shows the debt equity ratio of the company. The debt equity ratio
basically has increased from 2.3 in March 2011 to 2.78 in March 2014. This basically shows
the company’s dependence on its debt portion for financing the growth has increased
Mar '11 Mar '12 Mar '13 Mar '14
Net working Capital to Sales 2.03 -0.73 -0.80 -1.14
-1.50
-1.00
-0.50
0.00
0.50
1.00
1.50
2.00
2.50
WORKINGCAPITAL
TURNOVERRATIO
WORKING CAPITAL TURNOVER RATIO
2.30 2.40 2.49
2.78
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Mar '11 Mar '12 Mar '13 Mar '14
Debt Equity Ratio

15. 5. DEBT TO ASSETS RATIO
This ratio basically shows the company’s capability to pay off its debt with the help of the assets.
In an ideal scenario a company with higher debts will have a higher debt ratio which is not ideal
for any company. For this ratio the debt ratio is rising very marginally albeit the ratio is on the
higher side. It was 70% in 2011 but in 2014 the ratio has increased till 77%. The company will
require reducing its dependency on its external borrowings.
6. EQUITY TO ASSETS RATIO
Equity ratio shows how much assets are owned by the investors of the company. Additionally it
also shows how much burden the company has with respect to its debt portion. As of the present
situation the scenario does not look all that favorable for the company. It has decreased from 28%
in 2011 to 22% in 2014.
0.70 0.74 0.74 0.77
0.00
0.20
0.40
0.60
0.80
1.00
Mar '11 Mar '12 Mar '13 Mar '14
DEBT TO ASSETS RATIO
0.28
0.24 0.24
0.22
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
Mar '11 Mar '12 Mar '13 Mar '14
EQUITY TO ASSETS RATIO

16. 7. ASSETS TURNOVER RATIO
The asset turnover ratio basically determines a company’s ability to generate sales from its assets.
It shows how efficiently a company can generate sales from its assets. In 2013 it stood at 21.58%
but it has risen to 22.63%. For every 1 rupee of asset the company is generating 22 paise in return.
As seen in the graph the assets and the sales have more or less kept pace with each other.
8. INVENTORY TURNOVER RATIO
This ratio determines a company’s ability to generate sales from its inventory. It also shows how
much stock can be sold in a given period of time. The chart illustrates that the inventory turnover
ratio has decreased from 42 in 2011 to 33 in 2012 and has declined further to 16.91 in 2014.
Given the nature of the industry the company is part of, it is quite satisfactory that the company is
doing a satisfactory job when it comes to maintaining the inventory ratio.
20.64
25.38
21.58 22.63
0.00
20.00
40.00
60.00
80.00
100.00
Mar '11 Mar '12 Mar '13 Mar '14
ASSETS TURNOVER RATIO
(%)
42.04
33.20
16.60 16.91
0.00
10.00
20.00
30.00
40.00
50.00
Mar '11 Mar '12 Mar '13 Mar '14
INVENTORY TURNOVER RATIO

17. 9. GROSS PROFIT MARGIN
Gross profit ratio connotes the operational efficiency of a firm. The gross profit at this company
shows that it has increased from 84 % in Mar 2011 to 92% in March 2012 thereafter it has
steadily declined to around 72% in 2014. This indicates that the pricing strategy of the company is
faulty. It also shows that the company is not been able to properly maintain the expenses
10. NET PROFIT MARGIN (%)
Net profit ratio is the ratio of profit after tax to sales. To arrive at the net profit all the costs of
administration, financing and production are deducted from it. The net profit for the firm has had
a slight decline in the year 2012 from 22.41% in 2011 to 24.94% in 2012. Thereafter it has shown
a steady decline and in 2014 it has drastically declined to 0.74% which is very low.
84.45
92.88
81.32
72.17
0.00
20.00
40.00
60.00
80.00
100.00
Mar '11 Mar '12 Mar '13 Mar '14
GROSS PROFIT MARGIN
(%)
22.41 24.94
14.61
0.74
0.00
20.00
40.00
60.00
80.00
100.00
Mar '11 Mar '12 Mar '13 Mar '14
NET PROFIT MARGIN (%)

18. 11. RETURN ON CAPITAL EMPLOYED (%)
Return on capital employed portrays a company’s ability to generate return using its equity and
debt. The ROCE has seen a steady decline since 2012. It was around 1.17 %in 2011 and has
declined to 0.05% . This indicates that the firm is not been able to deploy its capital in an effective
manner and hence it has not been able to increase its shareholder’s value.
12. RETURN ON EQUITY (%)
Return on equity also known as return on net worth shows the amount of profit a company
generates on its equity. It shows a company’s ability to depend on its own capital rather than the
outsider’s capital. Much of the company’s financing occurs through borrowings. The ROE ratio
has increased from 3 % in Mar 2011 to 7% in Mar 2012 and thereafter it has steadily declined to
5%. For 2013-14 the ROE stands at 0.31 which is a very drastic fall down.
1.17
2.38
1.49
0.05
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Mar '11 Mar '12 Mar '13 Mar '14
Return On Capital Employed(%)
3.19 7.37 5.11 0.31
0.00
25.00
50.00
75.00
100.00
Mar '11 Mar '12 Mar '13 Mar '14
Return On Equity(%)

19. 13. NET FIXED ASSETS TO NET WORTH RATIO
Net fixed assets to net worth ratio shows how much of the company’s assets are tied up in fixed
assets and how much funds available for the operations of the company. Ideal ratio for any
company is 0.75. The ratio has shown an increasing trend except in Mar 2013 where it improved
marginally.
14. INTEREST COVERAGE RATIO
This ratio basically deals with a company’s ability to pay interest on its debt. It can be calculated
by dividing a company’s EBIT upon its interest. The interest coverage ratio was 1.69 in Mar 2011
and thereafter it has declined to 1.04 Even though the company sales figure is growing at an
average of 50% yet there seems to be no effect of decrease in its interest costs. The company is
struggling to pay off its debt.
0.59
1.77 1.74
1.97
0.00
0.50
1.00
1.50
2.00
2.50
Mar '11 Mar '12 Mar '13 Mar '14
NET FIXED ASSETS TO NET WORTH RATIO
1.69 1.62 1.37 1.04
0.0
1.0
2.0
3.0
4.0
5.0
Mar '11 Mar '12 Mar '13 Mar '14
INTEREST COVERAGE RATIO
Interest Cover

20. 15. EXPENSES TO SALES RATIO (%)
As the name of the ratio it indicates how much expense form as part of the sales. The expenses
have been increasing at a higher rate than usual. In 2014 the expenses have touched close to 100%
which shows that the company is not been able to struggle with the costs in an effective manner
and therefore there is a subsequent decline in the profits. This ratio can also be used to determine
and estimate the future expenses.
16. EARNINGS PER SHARE
EPS shows the net profit earned per share of the company. It shows capability to earn profits for
the investors. EPS can be compared with companies in the same industry. The EPS has been
declining since 2013 from 1.24 to 0.07 in 2014.
74.25 72.54
84.76
99.51
0.00
20.00
40.00
60.00
80.00
100.00
Mar '11 Mar '12 Mar '13 Mar '14
EXPENSES TO SALES RATIO (%)
0.84
1.54 1.24
0.07
0
0.5
1
1.5
2
2.5
2011 2012 2013 2014
EARNINGS PER SHARE

21. 17. PRICE EARNING RATIO
PE ratio basically determines the price that the market is willing to pay based on its earning. It is
assumed that higher P/E is better, which shows that the company has good potential to grow in
the near future. A higher ratio indicates that the investors expect the growth in the future. The PE
ratio has been declining since 2011 but in 2014 due to low earnings per share the ratio has risen
from 15.24 in 2013 to 172.29 in 2014. It means that the investors are ready to put Rs 172.29 to
earn one rupee in the year 2014.
18. BOOK VALUE RATIO
Book value ratio calculates what a shareholder would receive should the company liquidates. The
growth has been more or less constant. It was Rs 22.15 in 2011 and has decreased slightly to Rs
21.54 in 2014.
41.90
24.42 15.24
172.29
0.00
25.00
50.00
75.00
100.00
125.00
150.00
175.00
200.00
2011 2012 2013 2014
PRICE EARNING RATIO
22.15
20.82 21.93 21.54
0
5
10
15
20
25
30
2011 2012 2013 2014
BOOK VALUE PER SHARE

22. 19. PRICE TO BOOK VALUE
Price to Book ratio measures the market price with respect to its book value. Price to book of JPV
has been from 1.81 in 2012 to 0.56 in 2014. This ratio changes due to change in the market price.
There has been a reduction in market price which has reduced from 35.2 in 2011 to 12.06 in 2014.
20. PRICE TO SALES RATIO
Price to Sales ratio is valuation tool. It may change due to change in the market capitalization of
the firm. It shows how much exchange value every rupee of company sales. The market value of
the share has been decreasing due to a decrease in market price of the share. For every rupee of
sale the exchange is valuing the share at Rs 8.77 in 2011 to Rs 1.29 in 2014.
1.59
1.81
0.86
0.56
0.00
0.50
1.00
1.50
2.00
2011 2012 2013 2014
PRICE TO BOOK VALUE
8.77
5.85
2.42
1.29
0.00
2.00
4.00
6.00
8.00
10.00
2011 2012 2013 2014
PRICE TO SALES RATIO

23. ALTMAN’S Z SCORE
PARTICULARS 2011 2012 2013 2014
Working Capital/Total Assets (X1) 0.09 -0.05 -0.07 -0.11
Retained Earnings/Total Assets (X2) 0.01 0.02 0.01 0.0007
EBIT/Total Assets (X3) 0.04 0.06 0.05 0.05
Market Capitalization/Total liabilities (X4) 0.54 0.51 0.24 0.13
Sales/Total Assets (X5) 0.05 0.08 0.09 0.09
ALTMAN'S Z SCORE 0.61 0.53 0.34 0.21
The Altman Z score devise by Edward I. Altman in 1968 is a score which shows the likelihood of
a firm going into bankruptcy. A score below 1.8 suggests that bankruptcy is likely whereas a
score higher than 3.0 suggests that bankruptcy is unlikely for the next 2 years. Scores in between
1.8 and 3.0 mean that the company is in grey area. In 2011 the Z score was 0.61 but it slipped to
0.53 in the next year and further slipped to 0.26 in 2014. Comparing the company’s performance
to its competitors, Reliance Infrastructure has got an average Altman Z score of 1.03, for Adani
Power it stands at 0.44, Tata Power has got an average of 1.01 whereas Jai Prakash Power
Venture stands at 0.44. By analyzing the Z score the X3 component has been more or less stable.
The retained earnings component X2 has gone down majorly since 2012 and has reached the
value of 5 in 2014. As far as the market equity X4 is concerned it has reduced from 0.54 in 2011
to 0.13 in 2014. The liquidity component X1 has been showing a downward trend from 0.09 to -
0.61 0.53 0.34 0.26
0.00
0.50
1.00
1.50
2.00
2011 2012 2013 2014
ALTMAN'S Z SCORE

24. 0.11. The sales component however has shown a healthy trend. It is showing an increasing trend
from 0.05 to 0.09 on account of the sales increasing at 65% rate. On the whole the Z score has
been at a decreasing rate to 0.21 at -29%. In all of the years above, the company is in distress
zone.

25. WEIGHTED AVERAGE OF VALUATION
PRESENT VALUE OF THE FIRM(Rs in lacs)
VALUATION TYPE
Present Value
of the firm Weights Weighted average value
DCF 2228650 33.34% 743032
Price Book Valuation 354323 33.33% 118096
Price Earning Valuation 210067 33.33% 70015
TOTAL 100.00% 931143
Number of Outstanding shares 29380
Value of Equity share 31.69
For valuing the company 3 methods have been utilized and have been given an equal weight age.
The total value of the firm comes to around Rs 931143 lacs. The value of the share comes to
around Rs31.69.
For the year 2014 the market price stands at Rs 12.06. It can be stated that the share is
undervalued and it is recommended that the share may be purchased. The reasons for the stock
being undervalued are
 The company has not been paying dividends for the past 4 years since it intends to utilize the
earnings Company’s expansion plans/investment in subsidiaries executing power projects.
 The stock of the company is not a household name. The shares do have potential but there is
lack of visibility on the same.
 The rising debts of the company have has caused the public to panic and ultimately based on
the market sentiments it is the investor which speculate and dictate the market price.
 The company’s declining profits been lower than expectation have lead to the investors sell
their share and causing the stock price to fall down.
 Expected mergers and acquisition had been called off like the TAQA India Power Ventures
Limited who in principal had agreed to buy two hydroelectric power but later backed out of
the expected deal. This called the share prices to decline considerably.

26. RECOMMENDATIONS
1. Banks need to maintain a full proof credit appraisal system failing which they can run the risk
of running into high NPA’s. Banks need to be accustomed to apply modern technology to
mitigate risk.
2. Though different banks follow different procedures for the credit appraisal yet most of the
banks follow a rigorous credit appraisal procedure.
3. In terms of the overall appraisal of the company, Jaiprakash Power Ventures is performing at
below its expectations. Although the financials and other parameters have not been favorable
yet the management with its experience can turnaround the situation and significantly reduce
its debt proportion.
4. Rather than declaring bankruptcy the company would benefit if it enters into debt
restructuring which will reduce the debt and extend the payment term. Alternatively the
company can go for the debt-for- equity swap in which the creditors will reduce some of its
debt in turn for the equity in the company.

27. CONCLUSIONS
1. By conducting a credit appraisal on the company the company’s performance is not
satisfactory on all the grounds especially the financials. As far as the whether JPV will be
eligible for availing loan it can be noted that the company may need to concentrate on
reducing its massive amount of debt before availing credit.
2. In terms of appraising the company the qualitative tools needs to be given due importance. As
far as the qualitative criteria is concerned the promoter’s contribution, evolution of the
company, management quality, M &A, environment evaluation, strategies of the business and
the past record are one of the most valuable tools for evaluating the company. SWOT analysis
can be one of the tools that can be utilized as it help[s the firm to find out whether the
company is performing well, understand the external and the internal factors affecting its
performance and also evaluate the business for any future course of action. Also the Porter’s
five forces can act as an effective tool in determining the overall industrial purview.
3. Ratio analysis remains one of the quantitative tools used by banks for credit appraisal even if
though the result is historical in nature and cannot give any estimate about the future earnings.
Altman Z-score gives a comprehensive view based on the financials of the company although
it may not be totally suitable for evaluating the power industry.
4. Valuation techniques can pitch in the lacunae where ratio analysis fails to do so. Even though
valuations are based purely on assumptions yet it acts as a fortune teller; it gives a projected
results based on the financial results.
5. For a comprehensive credit appraisal, banks may need to apply a perfect mix of both
quantitative as well as qualitative tools. Banks should understand the nature of the business
thoroughly and the market conditions and accordingly makes the right judgment.