ACC- 506

CA-02

CASE STUDY ON

GREENPANEL INSDUSTRY LIMITED

SUBMITTED BY SUBMITTED TO
DRESTHI PALIWAL Dr. SUKHPREET KAUR
REG NO. – 12003622
 INTRODUCTION

Greenpanel is India’s largest manufacturer of wood panels. The state-of-the-art

manufacturing plants in Uttarakhand and Andhra Pradesh produce Medium
Density Fibre Boards (MDF), Plywood, Block Boards, Veneers, Wood Floors
and Doors. Company culture of innovation and sustainability permeates
everything they make. Greenpanel MDF is made with 100% renewable agro-
forestry wood. Greenpanel, previously known as Green Panelmax, is the largest
producer of MDF in the country. Our manufacturing plants have a combined
annual capacity of more than 500,000 cubic meters of MDF. This is
complemented by our robust distribution network of 3,000-plus outlets spread
across the country.
 PART- A

Q- 1) Analysing the application of two accounting concepts of the

allotted company?

A-1) The two accounting concepts which are used by Greenpanel Industry
Limited are as follows-
A.
 FULL DISCLOSER PRINCIPLE – The full disclosure principle
is a concept that requires a business to report all necessary information
about their financial statements and other relevant information to any
persons who are accustomed to reading this information.

IMPORTANCE OF FULL DISCLOSER PRINCIPLE

 The full disclosure principle ensures that the readers and users of a
business’s financial information are not mislead by any lack of
information. This way it assure stakeholders such as creditors and
investors that they are aware of the any relevant information and are fully
informed about the company when making business decisions concerning
the company.
 The purpose behind the full disclosure principle is to avoid managers or
accountants not disclosing any information that could be of great
importance and affect the businesses financial situation. The reason for
not disclosing information could be to manipulate their financial
statements to look stronger than the business actually is.
 The financial statements should be transparent and include any
information that could potentially influence the judgement of an outsider
on or about the company.

B.
 MATCHING PRINCIPLE – The matching principle states that the
related revenues and expenses must be matched in the same period. This
is done in order to link the costs of an asset or revenue to its benefits.

IMPORTANCE OF MATCHING PRINCIPLE

 To ensure consistency in financial statements, such as the income

statement, balance sheet etc. Recognizing the expenses at the wrong time
may distort the financial statements greatly and provide an inaccurate
financial position of the business.

 The matching principle helps businesses avoid misstating profits for a

period. For example, an expense that is recognized earlier than it is
appropriate results in a lower net income. Certain financial elements of
business also benefit from the use of the matching principle.

 The matching principle allows an asset to be distributed and matched

over the course of its useful life in order to balance the cost over a period.

Q- 2) Appraising the method of depreciation adopted by the

allotted company?
A-2)
 Depreciation for the year is perceived in the Announcement of Benefit and
Misfortune. Depreciation is determined on cost of things of property, plant and
hardware less their assessed lingering esteems over their assessed helpful lives
utilizing the straight line technique over the valuable existences of resources, in
the way indicated .Resources obtained under money rent are deteriorated over
the shorter of the rent term and their valuable life except if it is sensibly sure
that the Organization will get possession before the finish of the rent term.
Freehold land isn't devalued. Leasehold land (incorporates advancement cost) is
amortized on a straight line premise over the time of individual rent, aside from
leasehold land obtained on unending lease. Depreciation techniques, valuable
lives also, leftover qualities are audited at each money related year end and
balanced as proper.
The assessed valuable existences of things of property, plant and gear are as per
the following:
 Asset Useful life as per Schedule II
 Buildings 3 to 60 years
 Plant and equipments 15 to 25 years
 Furniture and fixtures 10 years
 Vehicles 8 to 10 years
 Office equipments 3 to 10 years

KEY POINTS

 Per the matching principle of bookkeeping, depreciation attaches the

expense of utilizing an unmistakable resource with the advantage
increased over its valuable life.

 There are numerous sorts of depreciation, including straight-line and

different types of quickened depreciation.

 Collected depreciation alludes to the entirety of all depreciation recorded

on a resource for a particular date.
 The conveying estimation of an advantage on the asset report is its
chronicled cost less totally amassed depreciation.

 The conveying estimation of an advantage after the sum total of what

depreciation has been taken is alluded to as its rescue esteem.

 STRAIGHT LINE METHOD-

 Straight Line Depreciation Strategy is one of the most well known

techniques for depreciation where the benefit consistently devalues
over its valuable life, and the expense of the advantage is equally
spread over its helpful and practical life.

 Consequently, the depreciation cost in the pay proclamation

continues as before for a specific resource over the period. In that
capacity, the salary explanation is discounted uniformly, so is the
estimation of the benefit on the asset report.

 The conveying measure of the benefit on the accounting report

decreases by a similar sum. This method is more suitable in case of
leases and where the useful life and the residual value of the asset
can be calculated accurately.

 However, where the repairs are low in the initial years and increase
in subsequent years, this method will increase the charge on profit.
Also, while applying this method, the period of use of the asset
should be considered.

 If an asset is used only for 3 months in a year then depreciation

will be charged only for 3 months. However, for the Income Tax
purposes, if an asset is used for more than 180 days full years’
depreciation will be charged.

 Benefits of SLM
There are a few benefits of the strategy

a) This strategy isn't just easy to see yet in addition simple to ascertain.

b) The book estimation of an advantage can be completely discounted

c) The life of the specific resources now and then rely upon contracts like
leasehold property, licenses, exchange marks and so on. In such case this
strategy is especially fitting.

d) Viable existence of a benefits, scrap worth, fixes and upkeep cost, pace of
intrigue and so on can't be estimated with conviction. Along these lines, no
single

e) strategy can weight all the components one after another with equivalent
significance for

f) fixing the measure of depreciation. From this view point, this strategy

g) shows up generally sensible as some ideal effect of certain components are

counterbalance by negative impacts of others.

 Negative marks of SLM

As against the focal points counted over, the straight-line technique has a few
weaknesses too. A portion of the drawbacks are :

a) This technique doesn't consider the enthusiasm on capital contributed on the

assets.
b) Under this technique the measure of depreciation can never be equivalent to
the estimation of administrations delivered from the benefit. A benefit is relied
upon to deliver more compelling administrations during prior period than later
time of its helpful life as it's proficiency diminishes over occasions.

c) The charge for depreciation stays steady year to year yet the fix furthermore,
upkeep costs may go up with the benefit becoming more established and more
established.

d) The recuperation of 'Genuine Capital' is unimaginable under this technique as

the measure of depreciation continues as before quite a long time after year. Just
the recorded expense is recouped.

e) This strategies overlooks the time estimation of cash and swelling factor.
Q.3) Identifying the inventory valuation model adopted by the
allotted company and reason for the adoption?
A- 3
 Inventories which involve raw materials, work-in-progress, completed
merchandise, pressing materials, stores and extras are estimated at the
lower of cost and net feasible worth.

 The expense of inventories is found out on the 'weighted average'

premise, and incorporates consumption caused in getting the inventories,
creation or transformation costs and different expenses acquired in
carrying them to their current area and condition.

 Raw materials, segments and different supplies held for use in the
creation of completed items are not recorded underneath cost aside from
in situations where material costs have declined and it is assessed that the
expense of the completed items will surpass their net feasible worth.

 The correlation of cost and net feasible worth is made on a thing by-thing
premise. The net feasible estimation of work-in-progress is resolved
concerning the selling costs of related completed items.

 On account of fabricated inventories and work-in-progress, cost

incorporates a suitable portion of fixed creation overheads dependent on
typical working limit.

 Net feasible worth is the assessed selling cost in the common course of
business, less the assessed expenses of culmination and the assessed costs
important to make the deal.

 Appraisal of net feasible worth is made at each resulting detailing date.

At the point when the conditions that recently made inventories be
recorded underneath cost do not exist anymore or when there is away
from of an expansion in net feasible worth in light of changed monetary
conditions, the measure of the record is turned around.
 WEIGHTED AVERAGE METHOD

 The weighted average cost strategy in bookkeeping is one of three

methodologies of esteeming your organizations stock and decides the
average expense of all stock things dependent on the individual expenses
and the amount of everything held in stock. Organizations utilize the
weighted average to decide the sum that goes into the stock and the
expense of merchandise sold (cost of goods sold).

 At the point when a business buys things of stock, they may address
various costs because of decent variety in the kinds of stock or similar
stock things, bought at various occasions.

 In the weighted average cost technique, the expense of products ready to

move is separated by the quantity of units ready to move and is ordinarily
utilized when stock things are so merged or indistinguishable from one
another that it is difficult to dole out explicit expenses to single units.

 ADVANTAGES OF WEIGHTED AVERAGE METHOD

 The weighted average technique limits the impact of bizarre high

and-low material costs.

 The weighted average technique is handy and reasonable for

charging cost of material used to creation.

 It is valuable for the executives in examining of working outcomes.

 This technique is simple to apply if receipts of material are not

various.
 DISADVANTAGES OF WEIGHTED AVERAGE
METHOD

 Materials utilized may not be charged to creation at the current

cost.

 The cost charged to creation are not the real costs.

 On the off chance that the receipts are various, numerous

estimations are required.

PART – B
Q.4) Addressing the impact of Covid–19 on the financial results
and position of the allotted company in past three quarters.
(Quarter, April-June) for FY 2020-21 is to be compared with
corresponding Quarter for FY 2019-20 (Quarter, April-June) and
FY 2018-19 Quarter, AprilJune)?
A-4)
FINANCIAL HIGHLIGHTS
Financial performance of the company

Particulars 2019-20 2019-2020 2018-2019 2018-2019

Standalone consolidated standalone consolidated
Reveneue from operations 85,979.39 87,656.62 58,731.41 59,911.39
Profit before fincacial 13,733.24 14,000.26 9,616.51 9,005.03
charges, tax,
depreciation/amortization

Less finance charges 4,766.74 4,828.94 2,391.15 2,463.24

Profit before depreciation/ 8,966.50 9,171.32 7,225.36 6,541.79
amortization
Less depreciation 6,537.86 6,916.54 5,031.60 5,303.34
Net profit before exceptional 2,4286.64 2,254.78 2,193.76 1,238.45
items and tax
Exceptional items 1,083.74 1,171.04 2,193.76 1,238.45
Net profit before tax 1,344.90 1,171.04 2,218.99 2,218.99
Provision for tax 275.02 275.02 2,218.99 2,218.99
Profit / loss after tax 1,619.92 1,446.06 4,412.75 3,457.44
Balance brought forward 4,407.56 3,452.25 5.19 5.19
from earlier year
Balance carried to balance 6,027.48 4,898.31 4,407.56 3,452.25
sheet

Dimensions FY (2020-21) FY (2019-20) FY (2018-19)

Revenue from operations 90.16 203.74 127.5
PAT -34.07 2.7 14.09
Employee Cost 23.84 22.07 19.48
Equity & Reserve 661.64 645.49 0.05
Current Assets 316.92 287.79 0.05

Greenpanel tackling the pandemic situation-

Effect of Coronavirus

 Because of episode of Coronavirus which has been proclaimed as

Pandemic by World Health Organisation and resulting lock down
arranged by the Focal and State Government(s) in India, the producing
office of the Organization at Rudrapur , Uttarakhand stayed suspended
from Walk 24, 2020 till May 26, 2020, and at Chittor, Andhra Pradesh
from Walk 26, 2020 till May 21,2020.Inadherence to the security
standards endorsed by Administration of India, the tasks have been
incompletely continued according to Government rules in assembling
units and workplaces.

 A similar will be scaled up as per the rules being given by the particular
States and due thought for wellbeing of representatives. This
circumstance has upset the monetary action through break in assembling
exercises.

 Taking into account that the lockdown is in effect progressively lifted and
monetary action resumes to its typical levels moving along without any
more disturbance, it is relied upon to accomplish. Normalcy in operations
from Q3 of FY 2020-2021.

 The Company has availed moratorium on some of the payments falling

due between March and May 2020 in order to maintain proper liquidity
position. During lockdown period revenues and profitability of the
Company were adversely impacted. The exact impact on profitability is
yet to be determined as on date.
 Although the overall demand of the products has been impacted for a
short-term, but due to easing out of restriction in lockdown demand for
the products is gradually recovering.
 ANALYSIS

How Greenpanel could profit from pandemic- The market for MDF could
develop at the cost of less expensive pressed wood Acknowledge could improve
in the Indian market, profiting MDF makers The processing plant made
furniture portion could develop quicker, fortifying MDF offtake Indian
producers like Greenpanel could manufacture bigger scope and rise as
successful exporters Homegrown producers could profit to the detriment of
worldwide organizations who fare to India There could be a more grounded
offtake for MDF Indian MDF producers like Greenpanel could recoup their
speculations and develop quicker, profiting the enormous partner eco-
framework.
Counter-challenge initiatives, FY2019-20
• Greenpanel leveraged its relatively low capital cost per ton to sustain
operations

• The Company strengthened its brand through direct and indirect (promotions)
engagements

• The Company grew volume and value sales in FY2019-20.

The Company addressed customer needs with a quicker turnaround time than
imports

• Greenpanel increased its MDF capacity utilisation from 47% in FY2018-19 to

60% in FY2019-20 and plywood capacity utilisation from 57% in FY2018-19 to
78% in FY2019-20, strengthening competitiveness.
• The Company was part of an industry representation to The Ministry of
Commerce, Government of India, advocating an imposition of an anti-dumping
duty on cheap MDF imports.
• The Company scaled revenues from H198 cr in the first quarter of FY2019-20
to H227 cr in the fourth quarter of FY2019-20.

 Uncertain incomes of consumers

 Cheaper imports

 threatening jobs in India Restrictions in on-site furniture fabrication

 Bigger commitment to Make in India

 Social distancing influencing everything Fear of job security

 RESPONSIBILTY OF GREENPANEL TOWARDS

STAKEHOLDERS, CUSTOMERS, EMPLOYESS

Customers

• Maximised precautions during product delivery

• Made sure that the prices of its products did not increase due to the
pandemic.

Employees

• Protected their mental, physical and financial well-being

• Implemented high workplace safety / sanitation standards

• Sprayed sodium hydro chloride across the manufacturing plants to

prevent virus spread

• Transitioned to working from home

• Engaged in periodic ‘All Hands Meet’ calls through electronic video

communication
 • Managed essential plant services with a limited work force that was
provided masks, hand sanitisers, temperature scans while maintaining
social distancing

Investors

• Sustained focus on a healthy Balance Sheet

• Focused on cost rationalisation and reduction in wastage

• Availed moratorium on some of loan payments falling due between

March and May 2020 to protect liquidity position

• Foresee no immediate impairment of assets due to Covid-19

• No major capital expenditure apart from routine maintenance capital

expenditure.

REFERENCES

 https://www.greenpanel.com/wp-content/uploads/2020/08/
Greenpanel-Annual-Report-2019-20.pdf
 https://www.greenpanel.com/annual-report

 https://www.investopedia.com/

 https://www.greenpanel.com/about