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 JCT PHAGWARA

JCT limited a blue chip company of the Thapar Group and was
incorporated on 28th October, 1946 under the name of M/S
Jagatjit Cotton textiles Mills. The establishment of JCT limited
was the result of the decision taken by the government of India
under the post war development plan. It was decided to locate
the mill in the north India and after much discussion;
Kapurthala was selected as a site for textile venture. It was
M/S Karamchand Bros. Ltd. Who entered into a final contract
with the government of India to set a mill at Phagwara
(Punjab). The disadvantage of unfavorable weather was offset
by other factors such as cheap labour, availability of raw
material, and government¶s aid. Thus, the company came into
existence in 1946.
± JCT Limited, one of the leading manufacturer of textiles and filament yarn.

± With operations in two distinct businesses ± cotton, synthetic & blended textiles and
nylon filament yarn ± JCT Limited is a market driven company fueled by good work
ethic, values and a high standard of performance.

± JCT Limited was the first textile manufacturer in the country to introduce eco-friendly
fabrics made of organic cotton and its textile division was the first in the industry to be
accredited with an ISO 9002 certification in 1996

± Recently JCT went in for modernization of both the textiles unit and invested about two
hundred crore rupees for modernization of Phagwara unit.

± JCT¶s growth is phenomenal. Its annual turnover, which was Rs.1.8 crore in the year
1951, has already crossed Rs.300 crores in respect of company¶s textile division.

± Originally it was created as a part of Thapar group but now it is working under able
guidance of Mr. Sameer Thapar (vice chairman and MD of company).
 O
  

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 started the business on a small and the company was manufacturing only cotton
fabrics but now started manufacturing  !! !
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!!!!"$!!!%$"&

1). SPINNING
2.) WEAVING
3). PROCESSING

!!!!!"$!!!%$"&

1).Warehouse
2).Marketing
3).Raw Material Department
4).Fabric Development Department
5).Production Planning Department
6).Research and Development
7).ISO Department

'!!"$!!!%$"&
1).Human Resource Department
2).Finance and Accounts Department
3).Information Technology Department
4).Administration Department
5).Purchase Department
6).Engineering Department
7).Lab our & Industrial Relation Department
 
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„
'
„
!+ , (Cotton and Man-made Fiber Textiles)
„
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„  ,&
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"
# (Home furnishing and Suit Fabrics)
„ O
## (Textiles)
„ @ , (Yarn, Cotton & Man-made Fiber)
„ "# (Manmade Textiles)
„
!+ , (Cotton and Man-made Fiber Textiles)

JCT LTD gets tough competition from market but in spite of this tough
competition jct¶s sale increase by 8.90% than a previous year. The company
has three manufacturing facilities in Punjab and has production capacity of
4.5 million metres per month. Its annual sales are around Rs.320 crore.
 * *


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@ @  # 1(

Research is an organized and systematic way of finding answers to

questions.

(

 because there is a definite set of procedures and
steps which we will follow. There are certain things in the research
process which are always done in order to get the most accurate
results.

1
2 is that in which there is a structure or method going

about doing research. It is a planned procedure, not a spontaneous
one. It is focused and limited to specific scope.
$'&

Descriptive research is also called Statistical Research. The main goal of this type of research
is to describe the data and characteristics about what is being studied. Although this research is
highly accurate, it does not gather the causes behind a situation. Descriptive research is mainly
done when a researcher wants to gain a better understanding of a topic.

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 ##  

"&

The primary data are those, which are, collected a fresh and for the first time and thus happen
to be original in character.

!&

The secondary data is that which have already collected by someone else and which have
already been passed through the statistical process. I have only used secondary data for my
project report. The secondary data has been taken from financial statements that are Income
Statements, Balance Sheets, Annual Reports of JCT and some other financial records.
 3' 

† The main objective of my project is to know the financial status of the JCT.

†To find out reasons for the losses being faced by JCT and to suggest some
remedies for those losses to improve the financial position of the same.

† To know efficiency of concern in utilizing the resources.

† To know company ability to meet short term or current obligations.

† To have comparative view over its business financial position measuring

changes in composition and figures of various Assets and Liabilities.

† To know the profitability position of the concern.

!"$'!"
"!<;5667B5668
"!? 
+@

 ( 4

5667 5668
"! 9
Net sales 29234.13 29322.54 88.42 0.30
(-) Cost of goods sold 22282.78 22554.60 271.81 1.22
1! ! 76:; <: =7=7 >: 057: :6 0< 88

?0@ $ ,$

Administration expenses 756.59 822.82 126.22 16.68
Selling & Distribution Expenses 931.78 747.28 -184.49 -0.19

! $ ,$ ;=88 <7 ;A76 6> 0;;8 58 07 66

$ ! A<A5 >7 A;>7 8A 0;AA ;< 05 8>

(+) Non operating Income 490.09 781.09 291.00 59.38

?0@ ! !$ ,$
Interest & Financing charges 689.56 593.82 -95.75 -13.88
Excise Duty 1101.16 771.09 -330.08 -29.98
Depreciation 1094.85 1764.47 669.62 37.95
! ! $ ,$ 588A A7 <;5> <7 5:< 7> 8 :A

 $!4#! 5>A7 :> 58:> A7 0;67 >< 0< =A

!"$'!"
"!<; 5668B566>
"!? 
+@

 ( 4

5668 566>
"! 9
Net sales 29322.54 32009.65 2616.51 8.90
(-) Cost of goods sold 22554.60 28367.16 5812.56 25.77
1!! =7=7 >: <=:5 :> 0<;5A :A 0:= ;8

?0@ $,$
Administration expenses 822.82 962.99 140.19 17.04
Selling & Distribution Expenses 747.28 902.32 155.04 20.75

! $,$ ;A76 6> ;8=A <; 5>A 55 ;8 86

$! A;>7 8A ;777 ;7 0<:56 =7 0=A 86

(+) Non operating Income 781.09 492.44 -288.45 -36.95

?0@!!$,$
Interest & Financing charges 593.82 1013.82 420.00 70.72
Excise Duty 771.09 222.94 -548.15 -71.09
Depreciation 1764.47 3529.42 1764.95 100.00
!! $,$ <;5> <7 :7== ;8 ;=<= 86 A5 <6

$!4#! 58:> A7 05:>= A= 0A<:= ;< Ö;87 =6

!"$'O
"!<;5667B5668
"!? +@
 ( ?4@
5667 5668
"! 9



&
Inventory 8220.63 9225.54 1004.91 12.22
Debtors 2365.20 3274.78 909.58 38.46
Cash and Bank Balance 374.66 221.24 -153.42 -40.95
Loan and advances 1505.52 1322.05 -183.47 -12.19
!
 ;5:== 6; ;:6:< =; ;A77 =6 ;5 =A
,&
Net Block 8112.04 36630.92 28518.88 351.56
Capital WIP incl. advances against mach. & 17829.43 4223.56 -13605.87 -76.31
civil work.
Machine in Transit 219.21 1578.18 1358.97 619.94
!,
 5=;=6 =8 :5:<5 == ;=57; >8 =5 56
!
 <8=5= => A=:7= 57 ;78:> A8 := 5;
#
#& 867= 78 8:6A ;< <58 <A : 6=
#!
'&
Secured loan 3530.66 3883.04 352.38 9.98
Unsecured loan 385.00 1028.32 643.32 167.09
Total Loan & Advances 3915.66 4911.36 995.70 25.43
! C# ;;>>5 :: ;<<;= :> ;<5: 6A ;; 6:
Capital 23676.77 40310.22 16633.45 70.25
Reserves 2957.48 2849.56 -107.92 -3.65
!# <8=5= => A=:7= 57 ;78:> A8 := 5;
!"$' O
 " ! <; 5668 B 566>
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5668 566>
"! 9



&
Inventory 9225.54 8015.49 -1210.05 -13.12
Debtors 3274.78 3131.87 -142.91 -4.36
Cash and Bank Balance 221.24 187.91 -33.33 -15.06
Loan and advances 1322.05 1577.86 255.81 19.34
!
 ;:6:< =; ;5>;< ;< 0;;<6 :8 0 8 6A
,&
Net Block 36630.92 42128.14 5497.22 15.00
Capital WIP incl. advances against mach. & 4223.56 223.29 -4000.27 -94.71
civil work.
Machine in Transit 1578.18 0.00 -1578.18 -100.00
!,
 :5:<5 == :5<A; :< 08; 5< 06 ;>
!
 A=:7= 57 AA5=: A= 0;5;; 7; 05 ;:
#
#& 8:6A ;< 8:A> :8 A: <A 6 =A
#!
'&
Secured loan 3883.04 3760.74 -122.3 -3.15
Unsecured loan 1028.32 2340.77 1312.45 127.63
Total Loan & Advances 4911.36 6101.51 1190.15 24.23
! C# ;<<;= :> ;:A=6 >> ;5:: A > <A
Capital 40310.22 43200.13 2889.91 7.17
Reserves 2849.56 -2496.57 -5346.13 -187.61
!# A=:7= 57 AA5=: AA 0;5;; 7; 05 ;:
 

#(

 

#

566:


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(

AMOUNT (Rs. in lakhs)

(
 566: 566A 566= 5667 5668 566>

 * 27169.15 27477.22 27532.96 29234.12 29322.54 32009.65
 100.00 101.13 101.33 107.60 107.93 117.82
 

#(

 
 1 

#
566:


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(

AMOUNT (Rs. in lakhs)

YEAR 2004 2005 2006 2007 2008 2009

AMOUNT 21746.48 21606.52 21650.10 22282.78 22554.60 28367.16
TREND 100.00 79.59 79.75 82.08 83.08 104.50
 

#(

 1

 
566:


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(

AMOUNT (Rs. in lakhs)

YEAR 2004 2005 2006 2007 2008 2009

AMOUNT 5422.68 5870.76 5882.82 7041.34 6767.94 3642.49
TREND 100.00 108.26 108.48 129.84 124.81 67.17
 

#(

    4#

566:


O

(
 AMOUNT (Rs. in lakhs)

YEAR 2005 2006 2007 2008 2009

AMOUNT 102.95 1441.15 2957.49 2849.57 -2496.56
TREND 100.00 1399.85 2872.74 2767.92 - 2425.02
 

#(

 )

566:


O

(

AMOUNT (Rs. in lakhs)

YEAR 2004 2005 2006 2007 2008 2009

AMOUNT 10816.26 8984.91 8940.02 26160.69 42432.66 42351.43
TREND 100.00 83.07 82.65 241.86 392.30 391.55
 

#(

 * 

566:


O

(

AMOUNT (Rs. in lakhs)
YEAR 2004 2005 2006 2007 2008 2009
AMOUNT 9850.16 10146.77 10582.01 12466.01 14043.61 12913.13
TREND 100.00 103.01 107.43 126.56 142.57 131.09
 

#(

 * #
O# 

566:


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(

AMOUNT (Rs. in lakhs)

YEAR 2004 2005 2006 2007 2008 2009

AMOUNT 4127.29 4633.53 6153.36 8076.78 8405.13 8459.48
TREND 100.00 112.26 149.09 195.69 203.65 204.96
 ! 
#.!

In order to analyze the liquidity position or short-term financial position of the JCT,
the following data have been collected and ratios have been calculated.

!&0 The current ratio is a ratio of firm¶s total current assets to total current liabilities.

!D !4 !

( 
 # !

2004 9850.16 4127.29 2.37

2005 10146.76 4633.53 2.18
2006 10582.01 6153.36 1.72
2007 12466.01 8076.78 1.54
2008 14043.61 8405.13 1.67
2009 12913.13 8459.48 1.53
 +!
+!D#.
4#

( #.
? @ #? @ +!? "@

2004 3916.67 4127.29 0.95

2005 4153.12 4633.53 0.89

2006 4139.85 6153.36 0.67

2007 4245.38 8076.78 0.52

2008 4818.07 8405.13 0.57

2009 4897.63 8459.48 0.58

+!

1
0.8
0.6
Q
0.4
0.2
0
2004 20052006 2007 20082009

!.!

!#.!D
!#.
4#

(
!#.  V

 


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2004 189.38 4127.29 0.046

2005 192.16 4633.53 0.041
2006 217.47 6153.36 0.035
2007 374.66 8076.78 0.046
2008 221.24 8405.13 0.026
2009 187.91 8459.48 0.022

?


 

0.05
0.04
0.03
0.02
0.01
0
2004 2005 2006 2007 2008 2009
 #'!
In order to analyze the long-term solvency position of JCT, following data have been collected and
ratios have been calculated.
0.!&0 This ratio describes the lender¶s contribution for each rupee of the
owner¶s contribution.
0.!D C4
!

( C

! .!

2004 8105.91 12560.51 64.53

2005 9128.61 10003.06 91.28
2006 10509.25 9012.77 116.60
2007 11992.44 26634.25 45.03
2008 13316.49 43159.78 30.85
2009 14560.99 40703.56 35.77

.!
140
120
100
80
60 bt uity atio
40
20
0
2004 2005 2006 2007 2008 2009
 .!4!$!

!$ !D
!C 4 !


(
!C !
 !$ 
2004 12560.51 20665.93 60.78
2005 10003.06 19131.67 52.29
2006 9012.77 19522.02 46.17
2007 26634.25 38626.69 68.95
2008 43159.78 69232.40 62.34
2009 40703.56 66186.11 61.50

÷

80

60

40

20

0
2004 2005 2006 2007 2008 2009

'!
In order to analyze the turnover ratios of JCT Ltd. Phagwara, the following data have been
collected and ratios have been calculated.

!+!'!&0 Stock turnover ratio measure the velocity of conversion of stock
into sales & evaluate its efficiency with which a firm is able to manage its inventory.

!+ !'!D!!1!!
!4
''!
( !!1!!!
' '! '! !'!
2004 29153.02 1365.17 21.35
2005 29240.56 1626.08 17.98
2006 28326.85 1618.88 17.50
2007 31185.62 1747.95 17.84
2008 20018.49 1965.73 10.18
2009 26206.08 1918.46 13.66

!+   !' !
25
20
15
10 Sto ck Tu rm o ver
a tio
5
0
2004 2005 2006 2007 2008 2009
 ! !'!

! !'!D4
' !

(

' ! ! !'!

2004 27169.15 3161.85 8.59
2005 27472.22 2902.62 9.46
2006 27532.96 3043.57 9.05
2007 29234.13 2691.03 10.86
2008 29322.54 2819.99 10.39
2009 32009.65 3203.32 10.00

u
 
 


]



   



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 1
&
Ë 566:
The company has suffered the losses amounts to Rs 656.15 lakhs. The major
reason was disproportionally increase in the cost of goods sold in respect of
sales. There by the company earned 5422.67 lakhs Gross Profits. Company¶s
position is further declined because of company has paid 681.52 lakhs excess on
interest and financial charges.

Ë 566A
In 2005, the company earned operating profit amounts to Rs 4099.24 lakhs. The
company¶s overall profitability position seems to be good because profits have
been increased by Rs. 386.72 lakhs from last year. The sales of the company also
increased by Rs. 303.06 lakhs and non operating expenses decreased by Rs.
323.87.

Ë 566=
In 2006, the company earned operating profits amounts to Rs 4321.75lakhs
which was 222.50 lakhs more than from its last year. It was mainly because of
decrease in operating and non operating expenses to the tune of 1324.06 lakhs
while sales increased with Rs.60.743 lakhs only.
Ë  5667
In 2007, the company earned operating profits amounts to Rs 5352.97lakhs which
was Rs.1011.23lakhs more than from its last year. While sales increased with
Rs.1701.93 lakhs only. But the company¶s overall profitability position seems to
be good because of far reaching decrease in the non operating expenses.

Ë  5668
In 2008, the company earned operating profits amounts to Rs.5197.85 lakhs which
is Rs.155.13 lakhs less than the previous year. Also sales increases with the
meager amount of Rs.88.42 lakhs but non operating expenses increase with an
amount of Rs.243.79 lakhs also direct expenses increases with an amount of
Rs.271.81lakhs. due to which company suffered a net loss of Rs.107.93lakhs.

Ë  566>
In 2009, operating profit of company decreases by Rs.3420.17 lakhs; this may be
due to increase in cost of goods sold to the tune of Rs.5883.16lakhs. Also
operating and non-operating expenses of company increase with an amount of
Rs.1932.24 lakhs so this results in net loss of Rs. 5:>= A= lakhs to the company.
 RECOMMENDATIONS

† Company is following very conservative credit policy for its debtors and there is need to
increase the credit period for its debtors in order to increase its sales and profits. On the
other hand company should avail the factoring facility from banks.

† The company has to increase its Creditor Turnover Ratio in order to avail the discounting
facilities and to bring down the cost of goods sold.

† JCT continuously relying more and more on shareholders¶ fund. Thus the firm has not
been able to use low cost outsider¶s fund to magnify their earnings. So there is a need to
rely on outsiders¶ fund also in order to take the benefit of µTrading on Equity¶.

† The company¶s fixed assets were continuously increasing. There is a need to go through
the Project analysis before investing in fixed assets.
† The company is meeting its losses by sale of fixed assets. It is not good for the long
term position of the company.

† The company is paying large amount on non operating expenses due to which the
company¶s overall profitability position is not good. The company should have to
control its interest and financial charges in order to bring down the non operating
expenses.

† Obsolete machinery should be replaced with new machinery for controlling increased
cost of goods sold.

† Organization should improve their marketing strategy to get more orders and to get
higher turnover in order to complete with its competitors.

† Company should reduce its receivables so that the blocked amount can be properly
utilized. Factoring should be introduced in the company for converting inactive asset
(book asset) into a productive asset (cash) by selling book debt to a company that
specialized in their collection and administration.