Today I tried to change the encoding quality manually. The reason for this is that if the jpeg core is running at 100% quality then the quantisation step of JPEG encoding is useless. For that I changed the code of JPEG top and used switched in board to select the encoding quality. Unfortunately after flashing the firmware, mplayer and guvcviewer could not play the HDMI input. Things are going slow because it takes around 15 mins in my system to generate the bitstream. I will try to get things working tomorrow too. If things don't work, I will reach out for help.