A PROJECT REPORT ON CAPITAL STRUCTURE DECISIONS OF BIRLA CEMENT AT INDIA INFOLINE Ltd.

Project su !"tted "# $%rt"%& 'u&'"&&!e#t 'or t(e %)%rd o' t(e De*ree o'

MASTER OF BUSINESS ADMINISTRATION

+,--.+,-/ Su !"tted 0 NAME1 MB.NARES2 2T NO1 -/-3.--.45+.,+3 DEPARTMENT OF BUSINESS ADMINISTRATION PRINCETON POST 6RADUATE COLLE6E 7A''"&"%ted to Os!%#"% U#"8ers"t09 R%!%#t(%$ur, 20der% %d.

OSMANIA UNI:ERSIT; 2;DERABAD < =,,,,5

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DECLARATION
I hereby declare that this Project Report titled A Study on CAPITAL STRUCTURE DECESIONS OF BIRLA CEMENT AT submitted by me to the Department of Business Management is a bonofide work undertaken by me and it is not submitted to any other ni!ersity or Institution for the award of any degree or diploma"certificate or published any time before#

Name: MB.NARESH Signatu e o! t"e Student Date:

AC>NO?LED6EMENT

It gives me immense pleasure in adding a few heartfelt words for the people who were part of this project in numerous ways & people who gave unending support right from the stage the project idea was generated.

Firstly I would like to express my gratitude to our beloved principal Dr. S"st%&% Su r%!%#0%!, for generously granting me permission to use the re uired resources of the college! which were inevitable for my projects.

"ith deep sense of gratitude I acknowledge Mrs. M. S)%t(0 Redd0 #ead of the $epartment and guide.

I would like to thank Mrs. Mee#%@s(" Faculty member of %.&.'.! $epartment of &usiness 'dministration! under whose valuable guidance and painstaking supervision! I able to successfully complete my project.

INDEX
$#%&# ' LIST OF TABLES B LIST OF FI#URES ( ) ABSTRACT

CONTENTS

PA#E NO.

C2APTER.I
INTRODUTION TO TOPIC NEED FOR THE STUD$ OB%ECTI&ES OF STUD$ METHODOLO#$ SCOPE OF THE STUD$ LIMITATIONS OF THE STUD$

'()

* + ,

C2APTER . II
RE:IE? OF LITERATURE

*(+* +,(-+ -.()/

C2APTER < III

COMPAN; PROFILE

C2APTER < I:
DATA ANAL;SIS AND INTERPRETATION A. DATA ANAL;SIS B. INTERPRETATION

C2APTER <:
FINDIN6S, SU66ESTIONS AND CONCLUSIONS A. FINDIN6S B. SU66ESTIONS C. CONCLUSIONS BIB"LIO6RAP2;

)'().

)-

LIST OF TABLES

S.No

N%!e o' t(e T% &es

$ummary of estimated cost of the project %et cash accruals of ssi franchisee.in rupees/ %et present !alue of cash in flows0)12.interst rate/ Internal rate of return of ssi franchisee Internal rate of return of ssi franchisee

P%*e. No
43 45 46 47 48

1 2 3 4 5

*I+, -F .#'/,+
S&. No.
1 2 3 4

N%!e o' t(e C(%rts

3ross profit and net cash accruals Present !alue of cash inflows0)12 annuity # Present !alue of cash inflows0*-2 annuity Present !alue of cash inflows0*12 annuity

P%*e No.
45 47 48 49

ABSTRACT
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Investors have always been in search of new investment options! which can give more rate of interest or seek for the value appreciation. In this era of high stock market volatility! people are unable to read the market properly. +o a mutual fund is an option to invest in stock market. 1eople are interested in government securities! company bonds and money market instruments! which are less volatile and give constant returns. &eing a na2ve in instrument arena he can3t directly invest in these areas. +o mutual funds provide an option. 's a whole! mutual funds cater to the most of financial needs of the investors basing on his risk taking ability. ,his project mainly attempts to understand mutual funds! its advantages and disadvantages. It is also aimed to measure the performance of various e uity schemes for the current year. ,o understand the %utual Funds! +chemes offered by Fund +chemes of life insurance %utual Funds. ,o understand the benefits of investing in mutual Funds over other forms of investments 1ortfolio of %utual Funds. It can be concluded that mutual funds are better investments option. Investing in portfolio of mutual funds can minimutual funds. ,his has to be overcome. It can also be said that it is suitable to people from all backgrounds and all age groups.
&I/*' +45 *IF6

and also %utual

respectively 'dvantages and $isadvantages of

C2APTER < I INTRODUCTION

C2APTER < II RE:IE? OF LITERATURE

C2APTER < III COMPAN; PROFILE

C2APTER < I: DATA ANAL;SIS AND INTERPRETATION

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C2APTER < : FINDIN6S A SU66ETIONS

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CAPITAL STRUCTURE INTRODUTION< 6very organi=ation re uires funds to run and maintain "ts us"#ess t(e reBu"red 'u#ds !%0 e r%"sed 'ro! s(ort ter! sources or &o#* ter! sources or % co! "#%t"o# ot( t(e sources o' 'u#ds, so %s to eBu"$ "t se&' )"t( %# %$$ro$r"%te co! "#%t"o# o' '"Ced %ssets %#d curre#t %ssets. Curre#t %ssets to % co#s"der% &e eCte#t %re '"#%#ced )"t( t(e (e&$ o' s(ort ter! sources. Nor!%&&0, '"r!s %re eC$ected to 'o&&o) % $rude#t '"#%#c"%& $o&"c0, %s re8e%&ed "# t(e !%"#te#%#ce o' #et curre#t %ssets. T(ese #et $os"t"8e curre#t %ssets !ust e '"#%#ced 0 &o#* ter! sources. 2e#ce &o#* ter! sources o' 'u#ds %re reBu"red to '"#%#ce 'or ot(. Lo#* ter! %ssets 7'"Ced %ssets9 Net )or@"#* c%$"t%& 7Pos"t"8e Curre#t %ssets9. A '"r! c%# e%s"&0 est"!%te t(e reBu"red 'u#ds 0 % det%"&ed

stud0 o' t(e "#8est!e#t dec"s"o#. I# ot(er )ords, %#t"c"$%t"o# o' t(e reBu"re 'u#ds !%0 e est"!%ted %#%&0D"#* t(e "#8est!e#ts dec"s"o#. O#ce %#t"c"$%t"o# o' reBu"re 'u#ds "s co!$&eted t(e# t(e #eCt ste$ "s '"#%#c"%& 'or t(e !%#%*er to !%@e dec"s"o#s re&%ted to t(e '"#%#ce or t(e se&ected "#8est!e#t dec"s"o#s. 6e#er%&&0 c%$"t%& "s r%"sed 'ro! t(e $r"!e source %re EBu"t0
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De t T(e# t(e Buest"o#s %re )(%t s(ou&d e t(e $ro$ort"o# o' eBu"t0 %#d de t "# t(e c%$"t%& structure o' % co!$%#0. 's the objective of a firm should be directed towards the maximi=ation of the valve of the firm! the capital structure decision should be examined from the point of its impact on the firm. If the valve of the firm can be affected by capital structure! a firm would like to have a capital structure! which maximi=es the market valve of the firm. ,here exist conflicting theories on the relationship between capital structure and the valve of the firm. .apital structure decisions are significant finance of the corporate firm in that they influence the return as the risk of e uity shareholders. T(%t t(ere eC"st c&ose NeCus et)ee# o$t"!u! jud"c"ous de t %#d t(e !%r@et 8%&8eE8%&u%t"o# o' t(e '"r! "s )e&& reco*#"Ded "# &"ter%ture o' '"#%#ce. ?("&e t(e eCcess"8e use o' de t !%0 e#d%#*er t(e e8er0 sur8"8%& o' t(e cor$or%te '"r!s, t(e co#ser8%t"8e $o&"c0 !%0 de$r"8e "ts eBu"t0.(o&ders t(e %d8%#t%*e o' de t %s % c(e%$er source o' '"#%#ce to !%*#"'0 t(e"r r%te o' retur#. Fo&&o)"#* suc( %# o8er. co#ser8%t"8e $o&"c0 ru#s cou#ter t(e %s"c o ject"8e o' '"#%#c"%& dec"s"o# !%@"#* to !%C"!"De t(e )e%&t( o' eBu"t0 (o&der. A$%rt 'ro! '"#%#c"%& r"s@ retur# co#s"der%t"o#, #o#.'"#%#c"%& '%ctors %re %&so &"@e&0 to e 8er0 dec"s"8e "# des"*#"#* c%$"t%& structure o' t(e cor$or%te '%!ous 'or "#st%#ce use o' de t, u#&"@e eBu"t0 does#Ft d"&ute t(e co#tro&&"#* $o)er o' eC"st"#* o)#ers "#

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r"e', de t "s #ot %# u#!"Ced &ess"#* %#d, (e#ce % d"&e!!% 'or t(e cor$or%te '"#%#ce !%#%*er.

ASSUMPTIONS1

Firms employ only two types of capital! debt and e uity. ,he firm has a policy of paying 1;;> dividends. ,he corporate and personal income taxes do not exist. ,he operating profit ?6&I,@ is not accepted to grow. ,he total assets are given and do not change. &usiness risk is constant over time and is assumed to be independent of its capital structure.

NEED OF T2E STUD;1

,he corporate and personal income taxes do not exist. ,he business risk is constant over time and is assumed to be independent of its capital structure.

,he given the assumptions of perfect information and rationality. ,he business risk is e ual among all firms with in similar operating environment.

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OBJECTI:E OF T2E STUD;< ,o know over all the cost capital ?A-@ and the valve of the firm ?B@ are independent of the capital structure. ,o know the capitali=ation rate of an e uity and premium for financial risk. ,o know cut off rate for investment purposes is completely independent of the way in which an investment is financed. ,o make the impact of ?.apital@ not work in financial performance.

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MET2ODOLO6;1 Met(odo&o*0 "s % s0ste!%t"c $rocedure o' co&&ect"#*

"#'or!%t"o# "# order to %#%&0De %#d 8er"'0 % $(e#o!e#o#. T(e co&&ect"o# o' d%t% t(rou*( t)o $r"#c"$&e sources 8"D. ?1@ Pr"!%r0 d%t% ?2@ Seco#d%r0 d%t% PRIMAR; DATA1 It "s t(e "#'or!%t"o# co&&ected d"rect&0 )"t(out %#0 re'ere#ce. I# t(e stud0 "t )%s !%"#&0 "#ter8"e)s )"t( co#cer#ed o''"cers %#d st%''s e"t(er "#d"8"du%&&0 or co&&ect"8e&0. So!e o' t(e "#'or!%t"o# (%d 8er"'"ed or su$$&e!e#ted )"t( $erso#%& o ser8%t"o#, t(e d%t% co&&ected t(rou*( co#duct"#* t(e $erso#%& "#ter8"e) )"t( t(e o''"cers o' A#j%#" Port&%#d Ce!e#ts L"!"ted. SECONDAR; DATA< ,he secondary data was collected from already published sources such as pamphlets annual reports! reports and internal records the data includes< .ollection of re uired data from annual reports of 'njani 1ortland .ements *imited. Re'ere#ce 'ro! teCt oo@s %#d re&%t"#* to '"#%#c"%& !%#%*e!e#t. Art"c&es $u &"s(ed "# us"#ess det%"&s &"@e t(e eco#o!"c t"!es, us"#ess t"!e etc.

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SCOPE OF T2E STUD;1 +ince it will not be possible to conduct a micro level of all cement industries in 'ndhra 1radesh! the study is restricted to 'njani 1ortland .ements *imited o#&0. LIMITATIONS OF T2E STUD;< ,he data of study of project collected of investor or capital structure may not applicable in the situations. ,he study of capital structure analysis of company financial position may be affected or not.

,he calculations and methods adopted in my study may be carried an appropriately.

$ue to time constant of )0 days! the data of the study may on way net present overall view of the capital structure.

It is dipped to judge the resultsCvalve due to the change market valves of the firm.

LITERATURE RE:IE?
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-. D0#%!"c c%$"t%& Structure1 Co!$%r%t"8e A#%&0s"s Bet)ee# ICT %#d No#.ICT F"r!s D%#0 Aou# affiliation not provided to ++/5 Ju#seo@ 2)%#* Seou& N%t"o#%& U#"8ers"t0 . Co&&e*e o' E#*"#eer"#* Ic'%" Jour#%& o' I#dustr"%& Eco#o!"cs, :o&. G, No. +, $$. 5.+4, M%0 +,,5 T("s $%$er de8e&o$s % !ode& o' d0#%!"c c%$"t%& structure %sed o# % s%!$&e o' NASDAH &"sted '"r!s %#d est"!%ted t(e u#o ser8% &e o$t"!%& c%$"t%& structure us"#* % )"de r%#*e o' o ser8% &e deter!"#%#ts. T(e %ut(ors se$%r%te t(e '"r!s "#to t)o c%te*or"es . I#'or!%t"o# %#d Co!!u#"c%t"o# Tec(#o&o*0 7ICT9 %#d #o#.ICT . "# order to test )(et(er t(e u#"Bue#ess o' t(e 'or!er (%s %#0 d"''ere#t "!$&"c%t"o#s. For % $%#e& o' ICT %#d #o#.ICT '"r!s &"sted o# t(e NASDAH stoc@ eCc(%#*e, t(e resu&ts re8e%& t(%t t(e &e8er%*e r%t"o o' %# ICT '"r! "s !ore %''ected 0 "#co!e 8%r"% "&"t0, u#"Bue#ess, %#d t(e dot.co! cr"s"s co!$%red to #o#.ICT '"r!s+.

+. Per'or!%#ce, c%$"t%& structure %#d (o!e cou#tr01 A# %#%&0s"s o' As"%# Cor$or%t"o#s
19

/. .harles %oyer! $ean .ameron 4niversity! +chool of &usiness! 29;; ". Dore &oulevard! *awton! -A 8(0;0 4+' &abcock Draduate +chool of %anagement! "ake Forest 4niversity! "instonC+alem! 5. 281;: 4+' 'vailable online 1 'pril 2;;2. (. .apital structure analysis of the fertili=er industry< a case study O' IFFCO %#d I#do 6u&' Cor$or%t"o# Ltd., I#d"%

'uthors< Ahatik! +.A.1E +ingh! 1.A.2 Source1 I#ter#%t"o#%& Jour#%& o' F"#%#c"%& Ser8"ces M%#%*e!e#t, :o&u!e -, Nu! ers +./, / M%0 +,,4, $$. -5/.-3I7-59 C%$"t%& structure, or )(%t "s *e#er%&&0 @#o)# %s c%$"t%& !"C, "s 8er0 "!$ort%#t to co#tro& t(e o8er%&& cost o' c%$"t%& "# order to "!$ro8e t(e e%r#"#*s $er s(%re o' s(%re (o&ders. A'ter *&o %&"D%t"o# %#d &" er%&"D%t"o#, 8%r"ous '"#%#c"%& sector re'or!s )ere st%rted 0 *o8er#!e#ts, suc( %s reduc"#* r%tes o' "#terest etc., )("c( d"rect&0 %''ected t(e c%$"t%& structure $&%##"#* o' '"r!s. Due to t("s s"tu%t"o#, t(e 'ert"&"Der "#dustr0 %&so reor*%#"Ded t(e"r c%$"t%& structure. T(e '"#%#c"#* o' % c%$"t%& structure dec"s"o# "s % s"*#"'"c%#t !%#%*er"%& dec"s"o#. I#"t"%&&0, t(e co!$%#0 )"&& (%8e to $&%# "ts c%$"t%& structure %t t(e t"!e o' "ts $ro!ot"o#. Su seBue#t&0, )(e#e8er 'u#ds (%8e to e r%"sed 'or '"#%#ce %#d "#8est!e#t, % c%$"t%& structure dec"s"o# "s "#8o&8ed. I# t("s rese%rc( %rt"c&e, rese%rc(ers tr0 to e8%&u%te t(e co#ce$t o' c%$"t%& structure, c%$"t%& structure $&%##"#* %#d $%tter#s
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o' c%$"t%& structure "# IFFCO %#d I#do 6u&' Cor$or%t"o# Ltd. ?e 'ou#d t(%t ot( co!$%#"es %re us"#* t(e !%C"!u! $oss" &e &o#*. ter! de t "# t(e"r c%$"t%& structure $&%##"#*. Dur"#* t(e stud0 $er"od, ot( t(e co!$%#"es r%"sed !ore %#d !ore &o#*.ter! 'u#ds to !eet t(e"r de8e&o$!e#t %#d eC$%#s"o# #eeds ec%use de t "s % c(e%$er source o' '"#%#ce, es$ec"%&&0 'ro! -IIG -II= o#)%rds )(e# r%tes o' "#terest decre%sed re*u&%r&0 "# t(e I#d"%# c%$"t%& !%r@et. Aeywords< 6.-5-%I.+ '5$ FI5'5.6 F-4/5'*+E 'ccounting and Finance $ocument ,ype< /esearch article

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/. co!$%#0 $ro'"&e

"#d"% "#'o&"#e co!$%#0 #%!e1 india infoline ltd re*"stered o''"ce1 india infoline ltd G 1C9C97: bldg. no. 80! sanjar pla=a! 1st floor! prakash nagar opp.begumpet airport! hyderabad ! ap 0;;;17 tel.< :1C;);7)07;89) est% &"s(!e#t< in 1::0! india infoline was founded by a group of professionals. r"e' ("stor01 india infoline was founded by a group of professionals in -II=! a seemingly distant past in the internet age. company3s meticulous research was published and distributed in printed form to a client base comprising the whoHs of indian business including leading mncs! investment banks and consulting firms. the uality of research was highly acclaimed and soon became
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the industry benchmark. over the last few years! our research coverage has grown to cover practically all companies! sectors! economy and financial markets. the breadth and depth of company3s content is unmatched C stock markets! mutual funds! personal finance! taxation and economy. entering in to internet< pioneer in online trading< company saw an opportunity to expand client base! from a few hundreds to several millions and also to complete the value chain. in early 1:::! when internet penetration in india was at its infancy and the future unknown! company took hard decision of killing their business model and embracing the internet. company discontinued delivery of reports in printed form and made available uality research at the click of a mouse. thus! was born www.indiainfoline.com. the site has emerged as the most popular company site on india business and finance.

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E#ter"#* "# to "#ter#et1 $"o#eer "# o#&"#e tr%d"#*1 .ompany saw an opportunity to expand client base! from ' few hundreds to several millions and also to complete the value chain. In early 1:::! when Internet penetration in India was at its infancy and the future unknown! company took hard decision of killing their business model and embracing the internet. .ompany discontinued delivery of reports in printed form and made available uality research at the click of a mouse. ,hus! was born www.indiainfoline.com. ,he site has emerged as the most popular company site on Indian business and finance. In early 1:::! a colleague had a cra=y idea that if the company made all the research available free on the web! the number of the userswell jump from 20; to 2.0millionIII ,o make it true! the business re uired a reincarnation. 'nd the preCre uisite was a death. It meant that the company put up all the information free on the website and let go of all the revenues and the profits. "orse! if the new avatar failed! there would be no JcomebacksK. ,he idea was too compelling to worry about the conse uences. 1robity took a wholehearted plunge. ,he advertisement! alongside! said it all. ,he new avatar business model took off. 'nd it took off like a rocketIII 'll the employees! angel investors and the wellwishers were ecstatic. *ittle did they know that the rocket would run out of fuel in midair.Benture capitalists and private e uity investors lined up to sign term
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sheets without even looking at the balance sheet. India Infoline raised 4+L1 million in the first round and completed the second round at the peak of dotcom euphoria around %arch 2;;; and raised 4+L0 million. I# t(e ;e%r +,,,he internet bubble started bursting faster than anybody could have imagined. ,he dotcom suffix which was the sexiest tail to any business name! suddenly became the worst stigma to have. Funding disappeared completely! regardless of valuation! business model or management depth. ,he company also had a crash landing and was forced to jettison the number of plans including one set up a ,B channel. India Infoline decided to narrow its focus on businesses where it could leverage its core competencies to the maximum. ,he key business lines that emerged were mutual funds! life insurances and eCbroking. ,he company became heavily dependent on its eCbroking business for survival. ,he odds were against them. ,here was no money available from the private e uity investors at any valuation. 'll competitors were backed by institutions or had abundant capital. ,he core promoters of the company had little experience of broking. ,o add to it! the market was hit by a scam. ,hey also had their share of price to pay and lessons to learn. It was difficult to retain people. 'lthough devastating for morale! but not surprising! most market observers had written them off.
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,here was a core group who never lost hope. ,hey cut all possible costs and worked on a bare bones structure. ,hey survived against all odds and started capturing market share. 5ot broking alone but mutual funds and life insurance businesses also grew strongly. ,he company rose strength to strength to become the leading corporate agent in life insurance and among the top retail players in the mutual fund and broking space. ,hen the story took an interesting turn. ,hey raised capital by the way of an I1-. In India! investment advisory is a sunrise industry! with tremendous long term promise. ,he young Mearning3 and Msaving3 class of the population is growing very rapidly. Falling interest rates are compelling people to look around for advised investment. ,he industry is consolidating as smaller players find it difficult to meet strict compliance standards and service customers with research and technology. 4nderstandably! competition is intense. ,he business is susceptible to cyclical gyrations. ,he landscape is changing everyday and the road ahead is less traveled by. India Infoline *td. 'long with its subsidiaries is a uni ue one stop Investment shop which offers everything from information and advice to execution and service to the retail customers for the entire gamut of investment products from riskCfree /&I &onds to highCrisk! high reward e uities and also services and commodities broking! again leveraging upon their competencies in research and technology.
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,he company promises to continue to deliver high uality independent research and maintain high standards of integrity and compliance. ,he management reali=es the business is highly vulnerable to lapses in the risk management. -ver the years! it has evolved a clear and logical risk management system! which stood the trial by fire on %ay 18! 2;;). ,hey will continue to fortify the same

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A out Us "e are a oneCstop financial services shop! most respected for uality of its advice! personali=ed service and cuttingCedge technology. :"s"o#1 -ur vision is to be the most respected company in the financial services space. M"ss"o#1 %ission is to gain respect in financial services. 'im is to become leader in financial services with innovative technology & with good &usiness ethics. I#d"% I#'o&"#e 6rou$ ,he India Infoline group! comprising the holding company! India Infoline *imited and its whollyCowned subsidiaries! straddle the entire financial services space with offerings ranging from 6 uity research! 6 uities and derivatives trading! .ommodities trading! 1ortfolio %anagement +ervices! %utual Funds! *ife Insurance! Fixed deposits! DoI bonds and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites www.indiainfoline.com and www.0paisa.com

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,he company has a network of :87 business locations ?branches and subCbrokers@ spread across (70 cities and towns. It has more than 9;;!;;; customers. I#d"% I#'o&"#e Ltd India Infoline *imited is listed on both the leading stock exchanges in India! vi=. the +tock 6xchange! %umbai ?&+6@ and the 5ational +tock 6xchange ?5+6@ and is also a member of both the exchanges. It is engaged in the businesses of 6 uities broking! "ealth 'dvisory +ervices and 1ortfolio %anagement +ervices. It offers broking services in the .ash and $erivatives segments of the &+6 as well as the .ash segment of the &+6. It is registered with 5+$* as well as .$+* as a depository participant! providing a oneCstop solution for clients trading in the e uities market. It has recently launched its Investment banking and Institutional &roking business.

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' +6&I authori=ed 1ortfolio %anagerE it offers 1ortfolio %anagement +ervices to clients. ,hese services are offered to clients as different schemes! which are based on differing investment strategies made to reflect the varied riskCreturn preferences of clients. I#d"% I#'o&"#e Med"% %#d Rese%rc( Ser8"ces L"!"ted ,he content services represent a strong support that drives the broking! commodities! mutual fund and portfolio management services businesses. /evenue generation is through the sale of content to financial and media houses! Indian as well as global. It undertakes e uities research which is acknowledged by none other than Forbes as H&est of the "ebH and HNa must read for investors in 'siaH. India InfolineHs research is available not just over the internet but also on international wire services like &loomberg ?.ode< II**@! ,homson First .all and Internet +ecurities where India Infoline is amongst the most read Indian brokers. I#d"% I#'o&"#e Co!!od"t"es L"!"ted India Infoline .ommodities 1vt *imited is engaged in the business of commodities broking. -ur experience in securities broking empowered us with the re uisite skills and technologies to allow us offer commodities broking as a contraCcyclical
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alternative to e uities broking. "e enjoy memberships with the %.O and 5.$6O! two leading Indian commodities exchanges! and recently ac uired membership of $D.O. "e have a multiC channel delivery model! making it among the select few to offer online as well as offline trading facilities. I#d"% I#'o&"#e M%r@et"#* A Ser8"ces India Infoline %arketing and +ervices *imited is the holding company of India Infoline Insurance +ervices *imited and India Infoline Insurance &rokers *imited. ?a@ India Infoline Insurance +ervices *imited is a registered .orporate 'gent with the Insurance /egulatory and $evelopment 'uthority ?I/$'@. It is the largest .orporate 'gent for I.I.I 1rudential *ife Insurance .o *imited! which is IndiaHs largest private *ife Insurance .ompany. India Infoline was the first corporate agent to get licensed by I/$' in early 2;;1. ?b@ India Infoline Insurance &rokers *imited India Infoline Insurance &rokers *imited is a newly formed subsidiary which will carry out the business of Insurance broking. "e have applied to I/$' for the insurance broking licence and the clearance for the same is awaited. 1ost the grant of license! we propose to also commence the general insurance distribution business.

(;

I#d"% I#'o&"#e I#8est!e#t Ser8"ces L"!"ted .onsolidated subsidiary. shareholdings -rient of all a the subsidiary companies engaged in loans and financing activities under one /ecently! Dlobal! +ingaporeCbased investment institution invested 4+$ 87.8 million for a 22.0> stake in India Infoline Investment +ervices. ,his will help focused expansion and capital raising in the said subsidiaries for various lending businesses like loans against securities! +%6 financing! distribution of retail loan products! consumer finance business and housing finance business. India Infoline Investment +ervices 1rivate *imited consists of the following stepCdown subsidiaries. ?a@ India Infoline $istribution .ompany *imited ?distribution of retail loan products@ ?b@ %oney line .redit *imited ?consumer finance@ ?c@ India Infoline #ousing Finance *imited ?housing finance@ Port'o&"o M%#%*e!e#t Ser8"ces Pou get recessions. Pou have stock market declines. If you donHt understand thatHs going to happen! then youHre not readyE you wonHt do well in the markets. 5o need to worry. "e at India Infoline would take care of all issues related to managing your hard earned money. -ur 1ortfolio %anagement +ervice is a product wherein an e uity investment portfolio is created to suit the investment
(1

objectives of a client. "e at India Infoline invest your resources into stocks from different sectors! depending on your riskCreturn profile. ,his service is particularly advisable for investors who cannot afford to give time or donHt have that expertise for dayC toCday management of their e uity portfolio. It is all about your money! being managed by the experts! while you continue with your routine life. IsnHt it simple and totally hassle free. "hatHs more! you can keep track of your dividends Q bonus Q rights issues with paperless tracking. +o you always know how fast your investment is growing. It basically means assigning the right job to the right person. +alient Features of India Infoline 1%+< 6xpert team of /esearch 'nalysts +tock 1icking done by the Investment .ommittee $edicated /elationship %anager ,echnology and +ervice driven &ackC-ffice AC2I:EMENT1 ' publication! no less than Forbes has chosen us in their MBest o' t(e )e u#der t(e As"%# I#8est"#* c%te*or0F. It3s no surprise that India Infoline is the one and only Indian company site to make it to the exalted list. ,o uote Forbes C J % !ust re%d 'or "#8estors "# Sout( As"%J. For es (%s r%ted Co. %s t(e Best As"%# Co!$%#0 s"te o# F"#%#ce %#d I#8est"#* t)"ce.
(2

STREN6T2S T2AT SET US APART .ompany has been in information services for the last seven years and has assiduously built the data and skill sets necessary for the business. .ompany has leveraged our content to create the India Infoline brand! which is synonymous with high uality and credible information on business and finance. -ur top management team represents a skill set! which is mutually exclusive but collectively exhaustive. ,he strength of the organi=ation has been to continuously innovate and reinvent itself. .ompany! as a team! continuously learning and are in sync with a rapidly changing environment. "ithout this approach company would never has killed our earlier business model! and gone into Internet space. .ompany would not have opened up Investor 1oints when people were still counting eyeballs and page views. .ompany would not have offered services that were till then the preserve of large corporate houses and company would not has offered brokerage rates that are now the delight of investors. "ith us you can be sure that tomorrow will not be just another day. Ad8ert"se o#&"#e /each out to the seriousCminded Indian surfer with India Infoline. "e are the biggest 1ersonal Finance site in India averaging about 1; million pageCviews a month with about 8.0 *ac 4ni ue visitors.
((

' highly attractive +egment of seriousCminded! educated business professionals with high purchasing power forms the majority of our viewers. Indians comprise 90> of our Biewers visCRCvis the average 2;> on other Indian portals. ,his audience not only has aboveCaverage disposable income but is also technologically savvy. 'verage time spent per visit on our site is significantly higher than the time spent on general portalsQ search engines. "e do not simply report news and give information! but add value to the viewer3s uest for information. ,he viewers aim to gather as much information as possible before taking an investment decision. ,his is the most opportune time to expose the viewers to the relevant communication about your productsQservices.

()

T("rd P%rt0 Ad8ert"s"#* "e use %ax-nline and other thirdCparty advertising companies to serve ads when you visit our "eb site. ,hese companies may use information ?not including your name! address! email address or telephone number@ about your visits to this and other "eb sites in order to provide advertisements on this site and other sites about goods and services that may be of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies! please click here. T("rd P%rt0 Coo@"es In the course of serving advertisements to this site! our thirdCparty advertiser may place or recogni=e a uni ue JcookieK on your browser. AD:ERTISERFS TO.DATE1 FINANCIAL AD:ERTISERS .itibank Aothari 1ioneer I.I.I 1rudential *ife Insurance 1rudential I.I.I %utual Fund $+1 %errill *ynch &ank of 1unjab Surich %utual Fund
(0

 'lliance .apital '%. Franklin ,empleton '%. #$F. Droup +&I '%. &irla +un *ife '%. I.I.I #ome *oan I.I.I +afety &onds Aotak %ahindra -% *ife Insurance +undaram Finance "alletwatch

(7

Pr"8%c0 Po&"c0 ,his privacy statement is applicable to Indiainfoline.com. Indiainfoline.com does not collect personal information about individuals except when such individuals specifically provide such information on a voluntary basis. For example! such personal information may be gathered for contest registration! the registration process for subscription sites or services and in connection with content submissions! community postings ?e.g.! message boards@! suggestions! and votingQpolling activities. 1ersonal information on individual users will not be sold or otherwise transferred to unaffiliated third parties without the approval of the user at the time of collection. 't such points of collection! the user will have the opportunity to indicate whether he or she would like to Topt outT of receiving promotional andQor marketing information about other products! services and offerings from Indiainfoline.com andQor any third parties. Indiainfoline.com reserves the right to perform statistical analyses of user behavior and characteristics in order to measure interest in and use of the various areas of the site and to inform advertisers of such information as well as the number of users that have been exposed to or clicked on their advertising banners. Indiainfoline.com will provide only aggregated data from these analyses to third parties. 'lso! users should be aware that Indiainfoline.com may sometimes permit third parties to offer subscription andQor registrationCbased services through a
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Indiainfoline.com site. Indiainfoline.com is not responsible for any actions or policies of such third parties and users should check the applicable privacy policy of such party when providing personally identifiable information. 4sers are also being aware that nonCpersonal information and data may be automatically collected through the standard operation of Indiainfoline.comHs internet servers or through the use of Tcookies.T T.ookiesT are small text files a web site can use to recogni=e repeat users! facilitate the userHs ongoing access to and use of the site and allow a site to track usage behavior and compile aggregate data that will allow content improvements and targeted advertising. .ookies are not programs that come onto a userHs system and damage files. Denerally! cookies work by assigning a uni ue number to the user that has no meaning outside the assigning site. 4sers are also being made aware that Indiainfoline.com cannot control the use of cookies or the resulting information by advertisers or third parties hosting data for Indiainfoline.com. If a user does not want information collected through the use of cookies! there is a simple procedure in most browsers that allows the user to deny or accept the cookie featureE however! users should note that cookies may be necessary to provide the user with certain features ?e.g.! customi=ed delivery of information@ available from Indiainfoline.com.
(9

Indiainfoline.com reserves the right to change this alternative to e uities broking. "e enjoy memberships with the %.O and 5.$6O! two leading Indian commodities exchanges! and recently ac uired membership of $D.O. "e have a multiCchannel delivery model! making it among the select few to offer online as well as offline trading facilities. I#d"% I#'o&"#e M%r@et"#* A Ser8"ces India Infoline %arketing and +ervices *imited is the holding company of India Infoline Insurance +ervices *imited and India Infoline Insurance &rokers *imited. ?a@ India Infoline Insurance +ervices *imited is a registered .orporate 'gent with the Insurance /egulatory and $evelopment 'uthority ?I/$'@. It is the largest .orporate 'gent for I.I.I 1rudential *ife Insurance .o *imited! which is IndiaHs largest private *ife Insurance .ompany. India Infoline was the first corporate agent to get licensed by I/$' in early 2;;1. ?b@ India Infoline Insurance &rokers *imited India Infoline Insurance &rokers *imited is a newly formed subsidiary which will carry out the business of Insurance broking. "e have applied to I/$' for the insurance broking licence and the clearance for the same is awaited. 1ost the grant of license! we propose to also commence the general insurance distribution business.
(:

I#d"% I#'o&"#e I#8est!e#t Ser8"ces L"!"ted .onsolidated subsidiary. shareholdings -rient of all a the subsidiary companies engaged in loans and financing activities under one /ecently! Dlobal! +ingaporeCbased investment institution invested 4+$ 87.8 million for a 22.0> stake in India Infoline Investment +ervices. ,his will help focused expansion and capital raising in the said subsidiaries for various lending businesses like loans against securities! +%6 financing! distribution of retail loan products! consumer finance business and housing finance business. India Infoline Investment +ervices 1rivate *imited consists of the following stepCdown subsidiaries. ?a@ India Infoline $istribution .ompany *imited ?distribution of retail loan products@ ?b@ %oney line .redit *imited ?consumer finance@ ?c@ India Infoline #ousing Finance *imited ?housing finance@ Port'o&"o M%#%*e!e#t Ser8"ces Pou get recessions. Pou have stock market declines. If you donHt understand thatHs going to happen! then youHre not readyE you wonHt do well in the markets. 5o need to worry. "e at India Infoline would take care of all issues related to managing your hard earned money. -ur 1ortfolio %anagement +ervice is a product wherein an e uity investment portfolio is created to suit the investment
);

objectives of a client. "e at India Infoline invest your resources into stocks from different sectors! depending on your riskCreturn profile. ,his service is particularly advisable for investors who cannot afford to give time or donHt have that expertise for dayC toCday management of their e uity portfolio. It is all about your money! being managed by the experts! while you continue with your routine life. IsnHt it simple and totally hassle free. "hatHs more! you can keep track of your dividends Q bonus Q rights issues with paperless tracking. +o you always know how fast your investment is growing. It basically means assigning the right job to the right person. +alient Features of India Infoline 1%+< 6xpert team of /esearch 'nalysts +tock 1icking done by the Investment .ommittee $edicated /elationship %anager ,echnology and +ervice driven &ackC-ffice AC2I:EMENT1 ' publication! no less than Forbes has chosen us in their MBest o' t(e )e u#der t(e As"%# I#8est"#* c%te*or0F. It3s no surprise that India Infoline is the one and only Indian company site to make it to the exalted list. ,o uote Forbes C J % !ust re%d 'or "#8estors "# Sout( As"%J. For es (%s r%ted Co. %s t(e Best As"%# Co!$%#0 s"te o# F"#%#ce %#d I#8est"#* t)"ce.
)1

STREN6T2S T2AT SET US APART .ompany has been in information services for the last seven years and has assiduously built the data and skill sets necessary for the business. .ompany has leveraged our content to create the India Infoline brand! which is synonymous with high uality and credible information on business and finance. -ur top management team represents a skill set! which is mutually exclusive but collectively exhaustive. ,he strength of the organi=ation has been to continuously innovate and reinvent itself. .ompany! as a team! continuously learning and are in sync with a rapidly changing environment. "ithout this approach company would never has killed our earlier business model! and gone into Internet space. .ompany would not have opened up Investor 1oints when people were still counting eyeballs and page views. .ompany would not have offered services that were till then the preserve of large corporate houses and company would not has offered brokerage rates that are now the delight of investors. "ith us you can be sure that tomorrow will not be just another day. Ad8ert"se o#&"#e /each out to the seriousCminded Indian surfer with India Infoline. "e are the biggest 1ersonal Finance site in India averaging about 1; million pageCviews a month with about 8.0 *ac 4ni ue visitors.
)2

' highly attractive +egment of seriousCminded! educated business professionals with high purchasing power forms the majority of our viewers. Indians comprise 90> of our Biewers visCRCvis the average 2;> on other Indian portals. ,his audience not only has aboveCaverage disposable income but is also technologically savvy. 'verage time spent per visit on our site is significantly higher than the time spent on general portalsQ search engines. "e do not simply report news and give information! but add value to the viewer3s uest for information. ,he viewers aim to gather as much information as possible before taking an investment decision. ,his is the most opportune time to expose the viewers to the relevant communication about your productsQservices.

)(

T("rd P%rt0 Ad8ert"s"#* "e use %ax-nline and other thirdCparty advertising companies to serve ads when you visit our "eb site. ,hese companies may use information ?not including your name! address! email address or telephone number@ about your visits to this and other "eb sites in order to provide advertisements on this site and other sites about goods and services that may be of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies! please click here. T("rd P%rt0 Coo@"es In the course of serving advertisements to this site! our thirdCparty advertiser may place or recogni=e a uni ue JcookieK on your browser. AD:ERTISERFS TO.DATE1 FINANCIAL AD:ERTISERS .itibank Aothari 1ioneer I.I.I 1rudential *ife Insurance 1rudential I.I.I %utual Fund $+1 %errill *ynch &ank of 1unjab Surich %utual Fund
))

 'lliance .apital '%. Franklin ,empleton '%. #$F. Droup +&I '%. &irla +un *ife '%. I.I.I #ome *oan I.I.I +afety &onds Aotak %ahindra -% *ife Insurance +undaram Finance "alletwatch

)0

Pr"8%c0 Po&"c0 ,his privacy statement is applicable to Indiainfoline.com. Indiainfoline.com does not collect personal information about individuals except when such individuals specifically provide such information on a voluntary basis. For example! such personal information may be gathered for contest registration! the registration process for subscription sites or services and in connection with content submissions! community postings ?e.g.! message boards@! suggestions! and votingQpolling activities. 1ersonal information on individual users will not be sold or otherwise transferred to unaffiliated third parties without the approval of the user at the time of collection. 't such points of collection! the user will have the opportunity to indicate whether he or she would like to Topt outT of receiving promotional andQor marketing information about other products! services and offerings from Indiainfoline.com andQor any third parties. Indiainfoline.com reserves the right to perform statistical analyses of user behavior and characteristics in order to measure interest in and use of the various areas of the site and to inform advertisers of such information as well as the number of users that have been exposed to or clicked on their advertising banners. Indiainfoline.com will provide only aggregated data from these analyses to third parties. 'lso! users should be aware that Indiainfoline.com may sometimes permit third parties to offer subscription andQor registrationCbased services through a
)7

Indiainfoline.com site. Indiainfoline.com is not responsible for any actions or policies of such third parties and users should check the applicable privacy policy of such party when providing personally identifiable information. 4sers are also being aware that nonCpersonal information and data may be automatically collected through the standard operation of Indiainfoline.comHs internet servers or through the use of Tcookies.T T.ookiesT are small text files a web site can use to recogni=e repeat users! facilitate the userHs ongoing access to and use of the site and allow a site to track usage behavior and compile aggregate data that will allow content improvements and targeted advertising. .ookies are not programs that come onto a userHs system and damage files. Denerally! cookies work by assigning a uni ue number to the user that has no meaning outside the assigning site. 4sers are also being made aware that Indiainfoline.com cannot control the use of cookies or the resulting information by advertisers or third parties hosting data for Indiainfoline.com. If a user does not want information collected through the use of cookies! there is a simple procedure in most browsers that allows the user to deny or accept the cookie featureE however! users should note that cookies may be necessary to provide the user with certain features ?e.g.! customi=ed delivery of information@ available from Indiainfoline.com.
)8

Indiainfoline.com reserves the right to change this policy at any time by notifying users of the existence of a new privacy statement. ,his statement and the policies outlined herein are not intended to and do not create any contractual or other legal rights in or on behalf of any party.

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COMPAN; PROFILE
2"stor0 B"r&% Port&%#d Ce!e#t L"!"ted 7BPCL9 is a decade old company with a proud *egacy of .ement to display. ,he genesis of &irla was inspired and motivated by the pioneer in cement industry Aumara %angalam ?former chairman of .ement .orporation of India@! who has been instrumental in the growth of cement industry in India! especially 'ndhra 1radesh. ,rained and sculpted by this cement luminary! the architects of '1.* have built its organi=ational structure on a very strong pedestal of infrastructure! technology! experienced human resource and strong social commitment. ' take over of an ailing company called %Q+ +he= .ement 1vt. *td. in 1::: set the beginning of the onerous journey to the top. ,he first batch of clinker produced after the takeover stood up to all set uality norms. 'fter the initial hitches and subse uent advancement in infrastructure! &irla tread the growth path. B"r&% Ce!e#t is a popular brand in south India for its uality and commitment to service. ,he .ompany! which came to be &irla 1ortland .ement *td. in 1:::! before the completion of a decade of production! has been awarded the MFastest Drowing .ement .ompany3 at .onstruction "orld 'nnual 'wards in 2;;:. +tarting with initial production capacity of ;.( million tonnes per annum in 1:::! the .ompany has now achieved a uantum shift in its production capacity to 1.2 million tonnes per annum. ,he second plant powered with the latest and modern technology and infrastructure has
):

started operations in 2;1; and has poised the company on an energi=ed growth path to achieve new performance levels and service standards. ,he professional teams of technical! financial! marketing! strategic planning and human resources have served through prestigious capacities in the industry with integrity and repute for more than (; years. ,he responsibility and accountability of these professionals is evident in their good management practices and shared objectives. ,he present standing of &irla .ement is credited to the commitment of this notch team. ,he cement is only as good as its raw materials and primarily depends on the uality of the lime stone used. ,he limestone mines of &irla are acclaimed as the best mines amongst the cement brackets of 5algonda district! thus confirming the superior uality of the cement produced. "ith its exemplary growth in production and services! &irla .ement has captured the market in 'ndhra 1radesh and competes with the national players in the industry. &irla has now extended its reach to ,amil 5adu! -rissa and Aarnataka and also made forays into the markets of %aharashtra. 'n excellent dealer network system ensures successful spread and sales of the cement within and outside the state. +ound /&$ ensures continuous innovation in technology and reali=ation of best uality standards. &irla 1owder /esearch .entre conducts research and takes up relentless testing procedures of cement of all available brands for improvement and standardi=ation of the products. &irla .ement also makes persistent effort to restore and maintain the eco
0;

balance and greening process in and around the cement plants. ,he /'&# technology ensures minimum air pollution in and around the plant. 6fforts are made towards greening the environment by planting and nurturing trees and other flora in the cement plant vicinity. 's a responsible corporate! &irla cement has taken conscious and decisive measures to develop knowledge based society by providing uality education for the families of the employed and neighboring villages. 'n innovative venture U &B /aju Institute of .ement ,echnology was initiated by the company to train the rural youth in cement technology and production for potential employment in cement industries. :"s"o# ,o evolve as market leader in south India and stand for customer delight with consistent uality and service standards. %ission ,o rise as a symbol of professionalism and transparent human resource management practices to work an optimum balance between employee security and stake holder satisfaction.

01

D"rector"%& Bo%rd C(%"r!%# A M%#%*"#* D"rector ,his thriving organi=ation is escalating the growth path under the competent leadership of the .hairman and %anaging $irector %r. AB Bishnu /aju who completed his &.,ech in .hemical 6ngineering from /.6...! ,richy and %.+. from the %ichigan ,echnological 4niversity 4+'. #e started his career with $u1ont! 4+' and later extended his knowledge and furthered his skills at indigenous cement industry in India and elevated the company to unforeseen heights. &irla is making firm derivatives in the aegis of his able leadership. ECecut"8e D"rector %r. 1.B./.*. 5arasimha /aju is a commerce graduate from -smania 4niversity and has extensive experience in %arketing and Finance in .ement! .onstruction! .eramics and 'griC &usiness. #e is actively involved in the marketing activities of &irla 1ortland .ement *imited and is also instrumental in execution of Bennar .eramics power plant.

02

D"rectors %r. /.'. /ama /aju is a ,echnical $irector with over () years of experience in the cement industry. #e started his career in '.1. +cooters! later served /aasi .ement *td. and 1riyadarshini .ement *td. %r. 1.+. /anganath C .hartered 'ccountant in practice for more than 18 years is a partner of F&/A & .o. which is a five partner firm having wide experience in management consultancy services and audits of public sector! government and private sector in areas including internal audit and special audits. %r. 1.B. +ubba /ao is an advocate in practice at present. #e has retired as a Foint .ommissioner of .ommercial ,axes! 'ndhra 1radesh government. #is association with commercial tax department has spanned for about four decades. #e does not currently hold directorships in any other company. %r. 1. /amachandra /aju is a graduate in commerce! FI."' and '.+ ?Inter@ has ); years rich experience in Finance! .ost and %anagement as well as in .ompany *aw matters holding senior positions both in private and public sector undertakings. M"&e Sto#es -III.+,,, .ommenced commercial production after takeCover of management and changed the name to &irla 1ortland .ement *imited. +,,,.+,,

'c uired %Qs.Bennar .eramics *imited! a gas based power generating company to cater to 7;> of power re uirement.
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+,,-.+,,+

Installation of secondary crusher at the plant. +,,/.+,,G Introduction of high efficiency cyclones! burners and introduction of screw compressors in place of unit conpressors. +,,G.+,,=

.alciner modification done to improve production. +,,=.+,,4 Installed an additional cement mill to increase cement grinding capacity. +,,4.+,,5 Installed high efficiency fans! ac uired grinding unit ?%Qs.1achava .ements *td.@ $eclared %aiden $ividend. +,,5.+,,3

Installation of /.'.&.#. and distribution control system. 'c uired #iC,ech print +ystems *td.! a leading security printer in south India. +,,I

Inauguration of &irla 1owder /esearch .entre. +,-,

Inauguration of new corporate office U &irla .ement .entre. &irla +tudio Ufirst of its kind to be launched in the industry. +tarted production at the second plant and achieved rated capacity in Fuly 1;3. &irla 1ortland .ement *imited has been certified as an I+- :;;1<2;;9 company. Inauguration of &B /aju Institute of .ement ,echnology.

0)

T2EORITICAL FRAME ?OR> OF CAPITAL STRUCTURE DEFINITION AND S;MBOLS1 BASIC S;SMBOLS1 SK,otal market valve of money. BK ,otal market valve of debt. IK ,otal interest payments. :K ,otal market valve of the firm. ?B+V&@. NIK5et income available to e uity holders. BASIC DEFINITION1 1. Cost o' de tWInterestQ%arket value $ebtO1;; Balve of debt ?&@ WIQA1 2. .ost of e uity ?Ae@ W ?$IQ1o@ Vg ?if there is income tax@ "here $IW net dividedE (. O8er%&& cost o'W6&I,Qvalue of the companyO1;; 1oWcurrent market price of shares gWbr?rWrate of return@ ?If there is no I,@ AeW ?6 1?O@ 5@ W ?6&I,CI or5I@Qs 1er share basis ?1-@ W 61QA ,otal basis?s@ W1-5W ?6&I,C1@QAe ?e"*(ted %8er%*e cost o' c%$"t%&1 A;W"1A1W"2A2 ?w1! w2 are relative weight@ or A;W ?IC5F@Q ?vW6&F,QB "here BW6&I,QA;

00

Deter!"#%#ts o' C%$"t%& Structure1 -. Cost o' orro)"#*s 7CB91 "hen the cost of borrowing increases! the dependence on borrowed funds is likely to decline. 's a result! the leverage ratio is expected to have a negative relationship with the cost of borrowing. ,he cost of borrowing can be measured as total interest payment as percentage of total borrowings of total borrowings of the firm. +. Cost o' EBu"t0 7CE91 If the cost of e uity increases! the firm is likely to depend more on debt than e uity capital. ,herefore! the leverage ratio can be accepted to be an increasing function of the cost of e uity. ,his variable can be measured as the ratio of dividend payment to share capital of the company. /. S"De o' t(e F"r! 7SF91 It has been suggested by a number of authors t(%t t(e s"De o' t(e '"r! "s &"@e&0 to e $os"t"8e&0 re&%ted to t(e &e8er%*e r%t"o. T(e r%t"o#%& e("#d t("s 8"e) "s $ro8"ded 0 ?%r#er 7-I559, %#d A#*c(u% %#d McCo##e&& 7-I3+9. T(e0 (%8e %r*ued t(%t t(e r%t"o o' d"rect %#@ru$tc0 costs to (%8e '"r!Fs 8%&8e decre%ses %s t(e 8%&8e o' '"r! "s s%"d to e #e*&"*" &e "s %&so %r*ued t(%t t(e &%r*er '"r!s %re !ore d"8ers"'"ed %#d t(e0 (%8e e%s"&0 %ccess to t(e C%$"t%& M%r@ets, %#d orro) !ore '%8or% &e "#terest r%tes. A&so C(u#* 7-II/9 %r*ued t(%t t(e &%r*er '"r!s (%8e &o)er %*e#c0 costs %ssoc"%ted )"t( t(e %ssets su st"tut"o# %#d u#der "#8est!e#t $ro &e!s )("c( !ost&0 %r"se 'ro! t(e co#'&"ct"#* "#terests o' s(%re(o&dersL Furt(er, t(e s"!"&%r '"r!s %re !ore &"@e&0 to e &"Bu"d%ted )(e# t(e0 %re "# '"#%#c"%& d"stress. A&&, suc( co#s"der%t"o#s su**est % $os"t"8e re&%t"o#s("$ et)ee# t(e '"r! s"De "s !e%sured %s t(e 8o&u!e o' tot%& %ssets o' '"r! %#d t(e &e8er%*e r%t"o.

07

G. Pro % "&"t0 7PR91 %yers ?1:88@ suggested that the firms prefer retained earnings as their main source of financing. ,heir second preference is for debt financing followed by new e uity issues! which might be due to the significant transaction cost of issuing new e uity. It is suggested that the observed capital structure of the firm would reflect the cumulative re uirements for external financing. 'n unusually profitable firm with a slow growth rate will end up with an unusually low leverage low ratio compared with the industry average in which it operatives. -n the other hand! an unprofitable firm in the s%!e "#dustr0 )"&& e#d u$ )"t( % re&%t"8e&0 ("*( &e8er%*e r%t"o. T(e $ro'"t% "&"t0 o' t(e '"r! e#% &es "t to use ret%"#ed e%r#"#*s o8er eCter#%& '"#%#ce %#d t(ere'ore, o#e s(ou&d %cce$t % #e*%t"8e. Assoc"%t"o# et)ee# t(e $ro'"t% "&"t0 o' t(e '"r! %#d "ts de t r%t"o. B%rto# %#d 6ordo# 7-I339 (%8e %&so %r*ued t(%t % '"r! )"t( ("*( r%tes )ou&d !%"#t%"# % re&%t"8e&0 &o)er de t &e8e& ec%use o' "ts % "&"t0 to '"#%#ce "tse&' )"t( "#ter#%&&0 *e#er%ted 'u#ds. T("s "s co#s"ste#t )"t( t(e $ro$ort"o# t(%t t(e !%#%*e!e#t o' '"r! des"re '&eC" &e %#d 'reedo! 'ro! t(e $ro'"t% "&"t0 o' t(e '"r!. ?("c( c%# e !e%sured %s t(e r%t"o o' o$er%t"#* "#co!e to tot%& %ssets, )"&& e #e*%t"8e&0 re&%ted to t(e de t &e8e& o' t(e '"r!L =. 6ro)t( R%te 76R91 ,he growing firms need more funds. ,he greater the future need for the funds! the more likely that the firm will retain earnings or issue debt. ' firm is except to rarely on debt financially to rely on debt financing to maintain its debt ratio as its e uity increases due to the large retention of earnings. ,hus the firm3s debt level and growth rate are expected to have a positive relationship. ,his variable can be measured as the annual growth rates are expected to have a positive relationship. ,his variable can be measured as the annual growth rate of total assets of the company.

08

4. Co&&%ter%& :%&8e o' Assets 7C:A91 +ome capital structure theories have argued that the type of assets owned by the firm affects its capital structure choice. +cott ?1:88@ ahs suggested that by selling the secured debt! the firms can increase the valve of their e uity by taking away the wealth without payment! from their existing unsecured debtors. &y issuing debt secured by assets! the firm can avoid higher interest costs and high issuing cost. For these reasons the firms with assets that can be used as collateral may be expected to issue more debt. ,herefore! the collateral valve attribute can be one of the determinants of capital structure of the firm. ,his variable can be measured as the ratio of accounts receivable plus net fixed assets to total assets! and it can be expected to be positively related with the leverage ration. 5. L"Bu"d"t0 7LH91 *i uidity ratios are mostly used to judge a firm3s ability to meet its short term obligations. ,he li uidity ratio may have conflicting affects on the capital structure decisions of the firm. First! the firm with higher li uidity rations might have relatively higher debt rations. ,his is due to greater ability to meet shortCterm obligations. Form this viewpoint one should accept a positive relationship between the firm li uidity position and its debt ratio. #owever! the firms with greater li uid assets may use these assets to finance their investments. If this happens there will be a negative relationship between the firm3s li uidity ratio and debt ratio. "e include the li uidity as the argument in our capital structure determination model. It is measured as the ratio of current assets to current liabilities and the direction of its effect on capital structure is allowed to be empirically determined.

09

3. No#.De t T%C S("e&ds 7NDTS91 $e'ndelo and %asulis ?1:9;@ presented a model of optimal capital structure that incorporated the impact of corporate taxes personal taxes and nonCdebt related corporate tax shields such as deprecation! investment tax credits! etc. ,hey argued that to use less borrowed capital. 5$,+ X-perating IncomeCInterest 1aymentsC?tax paymentsQcorporate tax rate@YQ,otal assets. ,he relationship between the nonCdebt tax shields and leverage ratio can be expected to be negative. T2EORIES OF CAPITAL STRUCTURE< $ifferent kinds of theories are have been 1. 5et Income 'pproach?5I@ 2. 5et -perating Income 'pproach?5-I@ (. ,he ,raditional 'pproach ). %odigliani and %illar 'pproach?%%@ 1. 5et Income 'pproach ?5I@< ,his approach introduced by M$urand3. ' firm can minimi=e weighted average cost of capital and increase the valve of the firm and share valve in the market. ,his approach is based upon the following assumptions< 7I9 T(e cost o' de t "s &ess t(%# t(e eBu"t0. 7""9 T(ere %re #o t%Ces. ?iii@ ,he risk percentages of inversion are not changed by ,he use of the de t.

0:

De*ree o' &e8er%*e1 T(e re%so#s 'or %ssu!"#* cost o' de t "s &ess t(e# cost o' EBu"t0 %re t(%t "#terest r%tes %re &o)er t(e# d"8"ded r%tes due to e&e!e#t o' r"s@ %#d t(e e#e'"t o' t%C %s t(e "#terest "s % deduct" &e eC$e#ses. ,he total market valve of a firm on the basis of 5I is< BW+V$ BW,otal market valve of firm. +W,otal market valve of e uity shares ?or@ NIEEBu"t0 c%$"t%&"D%t"o# r%te. DK!%r@et 8%&8e o' de t. ?e"*(ted A8er%*e Cost o' C%$"t%& c%# e c%&cu&%ted %s1 >OKEBITE:

,.Ae

>o .ost of .apital ;.;0

De*ree o' &e8er%*e<

7;

T(e re%so#s 'or %ssu!"#* cost o' de t "s &ess t(%# t(e cost o' eBu"t0 %re t(e "#terest r%tes %re &o)er t(%# d"8"de#d r%tes due to e&e!e#ts o' r"s@ %#d e#e'"t o' t%C %s t(e "#terest "s % deduct" &e eC$e#ses. ,he total market value of firm on the basis of 5I is< B W +V$ B W ,otal market value of firm +W ,otal market value of e uity share ?or@ NIEEBu"t0 c%$"t%&"D%t"o# DKM%r@et 8%&ue o' de t. "eighted average cost o' c%$"t%& c%# e c%&cu&%ted %s >O K EBITE: +. Net O$er%t"#* I#co!e A$$ro%c(< ,his theory suggested byM$urand3. It is opposite to the 5I approach .#ere .hange in the capital structure of a company does not effect in the market valve of the firm and the weighted cost of capital remains constant whether the debtCe uity mix is 0;<0; or 2;<9; or ;<1;;. ,his theory presumes that<
?i@ ?ii@ ?iii@

r%te

,he market capitali=es the valve of the firm as a whole ,he business risk remains constant. ,here are no corporate taxes. ,he valve of the firm can be determined as<
71

BW6&I,QAA-W-verall cost of capital ; >e7,E,9

>o7,E,9

>"7,E,9 OM Le8er%*e %#d cost o' c%$"t%& 7NOI9

T(e !%r@et 8%&8e o' eBu"t0 "s1 SK:.D SKM%r@et 8%&ue o' eBu"t0 s(%res :KTot%& !%r@et 8%&ue o' '"r! DKTot%& !%r@et 8%&ue o' de t

/. T(e Tr%d"t"o#%& A$$ro%c(<

72

,he traditional approach also known! as MIntermediate 'pproach3 is a compromise between the two extremes of income approach and net operating Income approach. 'ccording to this theory! the valve of the firm can increase initially or the cost of capital can be decreased by use more debt is a cheaper sources of funds than e uity. ,hus! a proper debtCe uity mix can reach the capital structure "hen the increased cost of e uity can3t be offset by the advantage of low cost debt. ,hus the overall cost of capital according to this theory! decrease up to a certain point! remains more are less unhinged for moderate increase in debt thereafter! and increase or rise beyond a certain point.

Ae

Ao Ad

,raditional 'pproach

G.Mod"*&"%#" .M"&&er 7MM9 A$$ro%c(1 ,he %% thesis relating to the relationship between capital structures! cost structures! cost of capital and valuation is a kin to the 5-, approach! in other
7(

words! does not provide operational justification for the irrelevance of the .apital +tructures. ,he %% proportion supports the 5-, approach relating to the independence of the independence of the capital of the degree of leverage level of debtCe uity ratio.

?;Q;@Ao

In ?/s@

Bo $egree of *everage ?&QB@

B%s"s Pro$ort"o#s1 1@ T(e o8er %&& cost o' c%$"t%& 7>O9 %#d t(e 8%&8e o' t(e '"r! 7:9 %re "#de$e#de#t o' t(e c%$"t%& structure. 2@ >e "s eBu%& to t(e c%$"t%&"D%t"o# r%te o' % $ure eBu"t0 stre%! $&us $re!"u! 'or '"#%#c"%& r"s@Nto t(e d"''ere#ce to t(e $ure eBu"t0 c%$"t%&"D%t"o# 7>e9 t"!e t(e r%t"o o' de t to eBu"t0. (@ T(e cut o'' r%te 'or "#8est!e#t $ur$oses "s co!$&ete&0 "#de$e#de#t o' t(e )%0 "# )("c( %# "#8est!e#t "s '"#%#ced. Assu!$t"o#1
7)

a@ 1erfect capital market the implication of a perfect capital market is that. +ecurities are infinitely divisible. Investors are free to busyQsell securities. Investors can borrow without restrictionsE ,here is no transaction cost. Investors are rational.

b@ Diven the assumption of perfect information and rationally. c@ &usiness risk is e ual among all firms with in similar o$er%t"#* e#8"ro#!e#ts. C%$"t%& Structure P&%##"#* %#d Po&"c01 Introduction< .apital structures refer to the mix of longCterm of sources of the funds! such as debentures! longCterm debt and preference shares. +ome companies do not plan there capital structure they may face considerable difficulties in raising funds to finance there activities. %ay also fail to economi=e the use of their funds. Features of an appropriate capital structure< ,he capital should be planned generally keeping in view the interest of the e uity shareholders! being the owners of the owners of the company. 'n appropriate capital structures should have the following features<

/eturn /isk Flexibility .apacity .ontrol

70

A$$ro%c( to est% &"s( c%$"t%& structure1 ,here are ( most common approaches to decide about a firm3s capital structures. 1. 6&I,C61+ '11/-'.#< For %#%&0D"#* t(e "!$%ct o' de t o# EPS.

+. :ALUATION APPROAC21 To @#o) 8%&ue o' t(e co!$%#0. (. CAS2 FLO? APPROAC21 For %#%&0D"#* t(e '"r!Fs % "&"t0 to +erve debt. 1ractical .onsiderations in determining capital structures<

.oncern for dilution of control $esire to maintain operating flexibility. 6ase of marketing capital inexpensively. .apital for economics of scale. 'gency costs.

BIBLIO6RAP2;
Re'ere#ce Boo@s1 %anagement "eb +ite<
our group Z leadership team Z board of directors 77

I.M.P%#de0 .Financial %anagement M.;.>(%# A P.>.J%"# . Financial Fournals< Finance India Fournals www.anjanicement.com

Mr. >u!%r M%#*%&%! B"r&% . C(%"r!%# o' t(e Ad"t0% B"r&% 6rou$
%r. Aumar %angalam &irla ?)0@ is the .hairman of the 4+L ); billion multinational 'ditya &irla Droup! which operates in (7 countries across six continents. -ver 0; per cent of its revenues flow from its operations outside India. 1 1 Cor$or%te Ce&&s

1 T(e @"#*Os 1 *%! "t 1 1 >u!%rOs "* ets

1 B%#%r%s 2"#du 1 U#"8ers"t0 %r. &irla chairs the &oards of the major Droup companies in India and globally. ,he global companies include 5ovelis! .olumbian .hemicals! 'ditya &irla %inerals! 'ditya &irla .hemicals! ,hai .arbon &lack! 'lexandria .arbon &lack! $omsj[ Fabriker and ,errace &ay 1ulp %ill! among others. In India! %r. &irla chairs the &oards of #indalco! Drasim! 'ditya &irla 5uvo! 4ltra,ech! Idea! 'ditya &irla Financial +ervices and 'ditya &irla /etail. ,he Droup3s businesses are spread across a swath of industries. ,hese include aluminium! copper! cement! textiles ?pulp! fibre! yarn! fabric and branded apparel@! carbon black! insulators! natural resources! power! agribusiness! telecommunications! financial services! I,QI,e+! retail and trading. Bus"#ess record 78 co#'ers D.L"tt o# Mr. >u!%r M%#*%&%! B"r&% 1 ?e !"*(t e "# 1 o#e !ore &%r*e us"#ess 1 >u!%r B"r&% o# 1 )or&d st%*e 1 ?(%t t(e0 do#Ot 1 te%c( 0ou %t B. sc(oo& 1 6rou$ $ro'"&e 1 1 1 'e%tures

%r. &irla took over as .hairman of the Droup in 1::0! at the age of 29! after the untimely demise of his father. 's .hairman! %r. &irla has taken the 'ditya &irla Droup to an altogether higher growth trajectory. In the 18 years that he has been at the helm of the Droup! he has accelerated growth! built a meritocracy and enhanced stakeholder value. In the process he has raised the Droup3s turnover from 4+L 2 billion in 1::0! to 4+L ); billion today. %r. &irla has restructured the businesses to emerge as a globalQnational leader in the sectors in which the Droup operates. #e has made 27 ac uisitions in 18 years in India and globally! the highest by an Indian multinational in India. ,he ac uisition of 5ovelis! a global metals major! in 2;;8! the second largest ac uisition ever by an Indian company! led to a newfound respect for Indian companies and stoked a higher level of interest in the country as well. /ecently! the ac uisition of .olumbian .hemicals! a 4+Cbased company and the world3s third largest carbon black manufacturer positioned the Droup as the 5o. 1 player in this sector! given its own si=eable carbon black operations. *ikewise! the ac uisition of $omsj[ Fabriker! a leading +wedish speciality pulp manufacturer enables the Droup3s 1ulp and Fibre business to further consolidate its global position. &esides these! over the years %r. &irla has ac uired manufacturing plants in .anada! .hina! Indonesia! plantations in *aos! and mines in 'ustralia! set up new plants in 6gypt! ,hailand and .hina. 'longside! he has expanded capacities in all of the Droup3s manufacturing units. In India as well! he has made major ac uisitions! the most notable being the .ement division of *arsen & ,oubro! Indal from 'lcan! %adura Darments from .oats Biyella and the .hlor 'lkali division of Aanoria

1 1

!ed"% @"t

1 !%#u'%ctur"#* 1 &oc%t"o#s 1 1 c%reers

79

.hemicals. 4nder his stewardship! the 'ditya &irla Droup enjoys a position of leadership in all the major sectors in which it operates. -ver the years! %r. &irla has built a highly successful meritocratic organisation! anchored by an extraordinary force of 1(7!;;; employees belonging to )2 different nationalities. I# @e0 res$o#s" &e $os"t"o#s o# 8%r"ous re*u&%tor0 od"es %r. &irla holds several key positions on various regulatory and professional &oards. #e is a $irector on the .entral &oard of $irectors of the /eserve &ank of India. 6arlier! he was .hairman of the 'dvisory .ommittee constituted by the %inistry of .ompany 'ffairs and also served on ,he 1rime %inister of India3s 'dvisory .ouncil on ,rade and Industry. 's the .hairman of +ecurities and 6xchange &oard of India ?+6&I@ .ommittee on .orporate Dovernance! he authored the First /eport on .orporate Dovernance titled J/eport of the Aumar %angalam &irla .ommittee on .orporate DovernanceK. Its recommendations were path breaking and became the basis of corporate governance norms. Furthermore! as the .onvener of the 1rime %inister3s ,ask Force on 'dministrative and *egal +implifications! the extensive recommendations made by him in his report! have been implemented in totality. %r. &irla also served as .hairman of +6&I3s committee on Insider ,rading! which formulated .orporate Dovernance principles for Indian corporates. #e is on the 5ational .ouncil of the .onfederation of Indian Industry and the 'pex 'dvisory .ouncil of the 'ssociated .hambers of .ommerce and Industry of India. 7:

O# t(e o%rd o' educ%t"o#%& "#st"tut"o#s %r. &irla is deeply engaged with educational institutions. #e is the .hancellor of the renowned &irla Institute of ,echnology & +cience ?&I,+@! with campuses in 1ilani! Doa! #yderabad and $ubai. #e is a $irector of the D. $. &irla %edical /esearch & 6ducation Foundation. #e serves on the *ondon &usiness +chool3s 'sia 1acific 'dvisory &oard and is a #onorary Fellow of the *ondon &usiness +chool. Acco&%des co#'erred o# Mr. B"r&% %r. &irla has won recognition for his exemplary contribution to leadership processes and institutionQsystems building. ' selective list< Forbes India *eadership 'ward U Flagship 'ward JE#tre$re#eur o' t(e ;e%r, +,-+K MR%#@ed t(e /rd Most Po)er'u& CEO 7+,-+93 in the 4conomic 5imes6 .orporate India3s $efinitive 1ower listing of 1;; .6-s ,he De*ree o' Doctor o' Sc"e#ce ?#onoris .ausa@ in recognition of his role in J$"o#eer"#* *re%t E#*"#eer"#* $roducts "#8o&8"#* Mu&t".d"sc"$&"#%r0 E#*"#eer"#* t(ou*(t $rocesses "# t(e Cou#tr0K by the Bisvesvaraya ,echnological 4niversity! Aarnataka! 2;12 5'++.-%3s M6&o %& Bus"#ess Le%der A)%rd3! 2;12 CNBC.T:-3 I#d"% Bus"#ess Le%der A)%rd +,-+ 'or JT%@"#* I#d"% A ro%dK TD\ &usiness *eader of the Pear 'ward C 2;11K from .ond] 5ast India 1vt. *td.! an affiliate of .ond] 5ast Dlobal JCNN.IBN I#d"%# o' t(e ;e%r +,-, < Bus"#essK! Jfor being the most outstanding business person and making a success out of most businesses including the sunrise sectorK! 2;1; 8;

T(e A&& I#d"% M%#%*e!e#t Assoc"%t"o#Fs ?'I%'@! %anaging India 'wards JBus"#ess Le%der o' t(e ;e%rK! 2;1; TT(e AIMA < JRD T%t% Cor$or%te Le%ders("$ A)%rdK! 2;;9 ,he 2o#or%r0 De*ree o' Doctor o' Sc"e#ce ?#onoris causa@ in Jrecognition of his invaluable co#tr" ut"o# in the field of &usiness 'dministrationK by the 6. D. P%#t U#"8ers"t0 o' A*r"cu&ture A Tec(#o&o*0! 2;;9 JFor the development of technology and also for the involvement in the field of Industries in r"#*"#* the country at par with other countries in the field of IndustriesK! the SRM U#"8ers"t0 "# T%!"& N%du co#'erred t(e De*ree o' Doctor o' L"ter%ture! 2;;9 ,he 'sia 1acific Dlobal #/ 6xcellence U JECe!$&%r0 Le%derK 'ward! 2;;8 JT(e 6&o %& I#d"%# Le%der o' t(e ;e%rK by 5$,B 1rofit in their &usiness *eader 'wards category! 2;;8 ,he *akshmipat +inghania U II%! *ucknow JN%t"o#%& Le%ders("$ A)%rd, Bus"#ess Le%derK! 2;;7 /epresented India at the Er#st A ;ou#* ?or&d E#tre$re#eur A)%rd in %onte .arlo! %onaco in Fune 2;;7! where he was inducted as a J%ember of the 6rnst & Poung "orld 6ntrepreneur of the Pear 'cademyK HTT(e Er#st A ;ou#* E#tre$re#eur o' t(e ;e%rK 'ward! 2;;0 J;ou#* Su$er Per'or!er "# t(e CEO C%te*or0K by Business 5oday! 2;;0 .hosen by the "orld 6conomic Forum ?$avos@ as one of the J;ou#* 6&o %& Le%dersK! 2;;) JT(e D. L"tt 7(o#or"s C%us%9 De*reeK by ,he &anaras #indu 4niversity! 2;;) J2o#or%r0 Fe&&o)s("$K by the 'll India %anagement 'ssociation! 2;;) JT(e Bus"#ess Le%der o' t(e ;e%rK! ,he 6conomic ,imes 'wards for .orporate 6xcellence 2;;2C2;;( JBus"#ess M%# o' t(e ;e%r.+,,/K by Business India ,he /ajiv Dandhi 'ward for JBus"#ess ECce&&e#ce %#d ("s 81

co#tr" ut"o# to t(e cou#tr0K by the %umbai 1radesh Pouth .ongress! 2;;1 ,he 5ational #/$ 5etwork! JT(e Outst%#d"#* Bus"#ess M%# o' t(e ;e%rK! 2;;1 ,he Institute of $irectors3 J6o&de# Pe%coc@ N%t"o#%& A)%rd 'or Bus"#ess Le%ders("$K! 2;;1 7industan 5imes8! JT(e Bus"#ess!%# o' t(e ;e%rK! 2;;1 ,he &ombay %anagement 'ssociation U JT(e M%#%*e!e#t M%# o' t(e ;e%r -III.+,,,K JA!o#* t(e -, su$er St%rs o' Cor$or%te F"#%#ceK U 3lobal 9inance! 1::9 JA!o#* t(e to$ -, o' I#d"%Fs !ost %d!"red %#d res$ected CEOs %#d t(e to$ CEO o' t(e co!"#* !"&&e##"u!K! Business :orld! 1::9 Be0o#d us"#ess1 Re%c("#* out to t(e !%r*"#%&"sed sect"o#s o' t(e soc"et0 ' firm practitioner of the trusteeship concept! %r. &irla has institutionalised the concept of caring and giving at the 'ditya &irla Droup. "ith his mandate! the Droup is involved in meaningful welfare driven activities that distinctively impact the uality of life of the weaker sections of society! touching hundreds of villages that are among the poorest in India! ,hailand! Indonesia! 1hilippines and 6gypt. In India! the Droup is engaged in (!;;; villages! reaching out to seven million people annually and making a difference to their lives through meticulously conceived projects focusing on health care! education! sustainable livelihood! infrastructure and social causes. For instance! the Droup runs )2 schools which provide uality education to )0!;;; children. -f these! over 19!;;; children receive free education. 'dditionally! over a 1;;!;;; youngsters benefit from bridge educational programmes and vocational training. Its 19 hospitals tend to more than a 82

million villagers. In line with the commitment to sustainable development! a partnership has been formed with the .olumbia 4niversity in establishing the .olumbia Dlobal .entre3s 6arth Institute in %umbai. ,o embed .+/ as a way of life in organisations! the FI..I U 'ditya &irla .+/ .entre for 6xcellence was set up in $elhi. Educ%t"o#%& %c@*rou#d ' commerce graduate from the %umbai 4niversity! %r. &irla is a chartered accountant. #e earned an %&' from the *ondon &usiness +chool. Perso#%& det%"&s &orn Fune 1)! 1:78! in Aolkata! %r. &irla was raised in %umbai. %r. &irla and his wife! %rs. 5eerja &irla! have three children! 'nanyashree! 'ryaman Bikram and 'dvaitesha.

Company Profile
B"r&% Cor$or%t"o# L"!"ted is the flagship .ompany of the %.1. &irla Droup. Incorporated as &irla Fute %anufacturing .ompany *imited in 1:1:! it was L%te Mr. M%d(%8 Pr%s%d B"r&% who gave shape to it. 's .hairman of the .ompany! Mr. M%d(%8 Pr%s%d B"r&% transformed it from a manufacturer of jute goods to a leading multiC 8(
%r. % 1 &irla %rs. 1riyamvada &irla

product corporation with widespread activities. 4nder the .hairmanship of Mrs. Pr"0%!8%d% B"r&%! the .ompany crossed the /s. 1(;; C crore turnover mark and the name was changed to &irla .orporation *imited in 1::9. 'fter the demise of %rs. 1riyamvada &irla! the .ompany continued to consolidate in terms of profitability! competitiveness and growth under the leadership of Mr. R%je#dr% S. Lod(%! late .hairman of the %.1. &irla Droup. 4nder his leadership! the .ompany posted its best ever results in the years ended (1.(.2;;7! (1.(.2;;8 and (1.(.2;;9. ,he .ompany continued to record impressive growth in 2;;9C;: and 2;;:C1;. %r # B *odha is now .hairman of the .ompany. &irla .orporation *imited has products ranging from cement to jute goods! 1B. floor covering! as well as auto trims ?jute feltCbased car interiors@. I#st%&&ed C%$%c"t0 %#d Product"o# I#st%&&ed C%$%c"t0 Product Ce!e#t Jute 6oods P:C F&oor Co8er"#* Auto Tr"! P%rts Iro# A Stee& C%st"#* 8.9; lakh 1cs (!80; tons ;.7) lakh 1cs 1!;89 tons 7.)7 %ill. ,ons. (9;;; % , )9.7; lakh s . mtrs

Product"o# 7+,,I.+,-,9

0.7: %ill. ,ons. 28!(;; %, 1.;: lakh s . mtrs.

our group Z logo

The name Aditya Birla evokes all that is positive in !siness and in li"e# $t

1 Mr. >u!%r 1 M%#*%&%! 8)

e%empli"ies inte&rity' (!ality' per"orman)e' per"e)tion and a ove all )hara)ter# *!r lo&o is the sym oli) re"le)tion o" these traits# $t is the )ornerstone o" o!r )orporate identity# $t helps !s levera&e the !ni(!e Aditya Birla rand and endo+s !s +ith a distin)tive vis!al ima&e#

1 Cor$or%te soc"%& 1 res$o#s" "&"t0 $o&"c0 ?.pdf 9;kb@ 1 1 1 1 6rou$ $ro'"&e

% !%rBue o' eCce&&e#ce

,epi)ted in vi rant' earthy )olo!rs' it is very arrestin& and sho+s the s!n risin& over t+o )ir)les# An inner )ir)le sym olisin& the internal !niverse o" the Aditya Birla -ro!p' an o!ter )ir)le sym olisin& the e%ternal !niverse' and a dynami) meetin& o" rays )onver&in& and diver&in& et+een the t+o# Thro!&h its +ide !sa&e' +e )reate a )onsistent' impa)t.oriented -ro!p ima&e# This !ndo! tedly enhan)es o!r pro"ile amon& o!r internal and e%ternal stakeholders# *!r )orporate lo&o th!s serves as an !m rella "or o!r -ro!p# $t si&nals the )ommon val!es and elie"s that &!ide o!r ehavio!r in all o!r entreprene!rial a)tivities# $t em eds a sense o" pride' !nity and elon&in& in all o" o!r 136'/// )ollea&!es spannin& 36 )o!ntries and 42 nationalities a)ross the &lo e# *!r lo&o is o!r est )allin& )ard that opens the &ate+ay to the +orld# 0 ,r# 1ra&nya 2am as the 3hie" 3!stodian o" the Aditya Birla -ro!p lo&o#

1 %&& our 1 co!$%#"es 1 1 our sectors

1 Mr. Ad"t0% 1 :"@r%! B"r&%Os s$eec(es 1 1 1 1

our heritage

&e%ders("$ te%!

1 !%#u'%ctur"#* 1 &oc%t"o#s 1 1 c%reers

Our Vision

1 Mr. >u!%r 1 M%#*%&%! B"r&%, C(%"r!%#, T(e Ad"t0% B"r&% 6rou$ 80

To e a premi!m &lo al )on&lomerate +ith a )lear "o)!s on ea)h !siness# Our Mission

To deliver s!perior val!e to o!r )!stomers' shareholders' employees and so)iety at lar&e# Our Values $nte&rity 3ommitment 1assion 4eamlessness 4peed

1 Cor$or%te soc"%& 1 res$o#s" "&"t0 $o&"c0 ?.pdf 9;kb@ 1 1 1 1 6rou$ $ro'"&e

% !%rBue o' eCce&&e#ce

1 %&& our 1 co!$%#"es 1 1 our sectors

1 Mr. Ad"t0% 1 :"@r%! B"r&%Os s$eec(es 1 1 1 1

our heritage

leadership team

1 !%#u'%ctur"#* 1 &oc%t"o#s 1 1 c%reers

our group Z milestones

87

;e%r 2;12 ^ 2;11 ^ 2;1; ^ 2;;: ^ 2;;9 ^ 2;;8 ^ 2;;7 ^ 2;;0 ^ 2;;) ^ 2;;( ^ 2;;2 ^ 2;;1 ^ 2;;; ^ 1::: ^ 1::9 ^ 1::7 ^ 1::0 ^ 1::) ^ 1::2 ^ 1::1 ^ 1::; ^ 1:9: ^ 1:99 ^ 1:98 ^ 1:97 ^ 1:90 ^ 1:9) ^ 1:92 ^ 1:89 ^ 1:88 ^ 1:80 ^ 1:80 ^ 1:8) ^ 1:8( ^ 1:7: ^ 1:78 ^ 1:77 ^ 1:70 ^ 1:72 ^ 1:09 ^ 1:)8 ^ 1:1: ^ 1908 1 Mr. >u!%r 1 M%#*%&%! B"r&%, C(%"r!%#, T(e Ad"t0% B"r&% 6rou$ 1 Cor$or%te soc"%& ,he 'ditya &irla Droup! IndiaHs first multinational corporation! traces its origins back to the tiny village of 1ilani in the /ajasthan desert! where +eth +hiv 5arayan &irla started cotton trading operations in 1908. ,oday! the DroupHs footprint extends to (7 countries and its revenues are 4+L); billion. "e retrace the highlights of this remarkable journey! starting from the present< 1 res$o#s" "&"t0 $o&"c0 ?.pdf 9;kb@ 1 1 1 1 6rou$ $ro'"&e
% !%rBue o' eCce&&e#ce

1 %&& our 1 co!$%#"es 1 1 our sectors

1 Mr. Ad"t0% 1 :"@r%! B"r&%Os +,-+ 11 ,he 'ditya &irla Droup ?'&D@ bags the H6conomic ,imes .orporate .iti=en 'ward C 2;11C12H. ,he award seeks to honour the contribution to public good through commitment to critical social causes that influence the lives of thousands of needy Indians. '&D was the recipient of this coveted award for the first time in 2;;2. +,-11 ,he H.orporate .iti=en of the PearH 'ward was bestowed upon the 'ditya &irla Droup by the 1ublic /elations .ouncil of India for Tits touchingly engaging work amidst the rural poor in our country and for setting a fine example for other corporatesT. %rs. /ajashree 88 1 1 1 1 s$eec(es our (er"t%*e
leadership team

1 !%#u'%ctur"#* 1 &oc%t"o#s 1 1 c%reers

&irla received the award at the hands of %r. #. A. $ua! %ember of 1arliament and formerly 1ress 'dvisor to the 1rime %inister! and one of the most distinguished editors of the country. 11 In the 11th annual edition of Business 5oday8s H&est .ompanies to work for in IndiaH survey! the 'ditya &irla Droup was on top of the league in their Trankings of most loved companiesT. 11 'ditya &irla %emorial #ospital has been awarded the 1erformance Q 6xcellence ,rophy for its .ompassionate \uality C #ealthcare by the Indian %erchant .hambersH ?I%.@ /amkrishna &ajaj 5ational \uality 'wards .ommittee ?%umbai! India@. 11 ,he 'ditya &irla Droup is ranked 5o. ) in the list of global top companies for leaders and 5o.1 in 'sia 1acific for 2;11! in a study conducted by 'on #ewitt! 9ortune Maga;ine and /&* ?a strategic #/ and *eadership 'dvisory firm@. 11 %rs. /ajashree &irla was presented the 'll India %anagement 'ssociation ?'I%'@ %anaging India 'ward 2;11 for H.orporate .iti=en of the PearH. ,he award was presented by %r. 1. .hidambaram! India3s 4nion %inister for #ome 'ffairs. 11 ,he Dovernment of India has bestowed the 1adma &hushan 'ward on %rs. /ajashree &irla for her exemplary contribution in the area of M+ocial "ork3.,he 1adma &hushan is among the highest civilian awards in India and was conferred on %rs &irla at a special ceremony on ;1 'pril 2;11. 11 Bikram .ement "orks wins the I%. /amkrishna &ajaj 5ational \uality 'ward for the year 2;1;C11. 11 ,he &usiness "orld FI..I U +6$F .orporate +ocial /esponsibility 'ward 2;1;C11 is awarded to Bikram .ement "orks in recognition of its .+/ activities. +,-, 11 4ltratechHs H.oncern for #ealthH project awarded the 'sian .orporate +ocial /esponsibility 'ward by the 'sian Institute of %anagement .entre for .orporate +ocial /esponsibility. 89

Brands

Company

&irla +uper 4ltra,ech .ement Bikram .ement

Drasim Drasim

4ltra,ech .ement Drasim

/ajashree .ement

4ltra,ech .oncrete Drasim

4ltra,ech .ement

&irla "hite

8:

-. IN:ESTMENTS1 ,otal investments! as on (1st %arch! 2;;9 is /s.)892.77 *akhs as against /s.2998.29 *akhs as on (1st %arch! 2;;8. +. FINANCIAL1 ,4/5 -B6/ '5$ 1/-FI,< &irla 1ortland .ements *imited recorded a turnover of /s. ());(2.17 *akhs during 2;;:C1; as against /s.2017)0.9: *akhs during 2;;9C;:.5et profit after ,ax is /s. (9((0.;) *akhs as compared to /s.27079.(2 *akhs during the previous year i.e.2;;9C;: .'1I,'* +,/4.,4/6< ,he authori=ed share capital of &irla 1ortland .ements *imited "s Rs.-+,,,.,, L%@(s. T(e "ssued, su scr" ed %#d $%"d u$ c%$"t%& =5=G/= s(%res o' Rs.-,E. e%c( %&&otted %s 'u&&0 $%"d u$ )"t( out $%0!e#ts e"#* rece"8ed "# c%s( $ursu%#t to % sc(e!e o' %!%&*%!%t"o# %#d =IGIG3, s(%res o' Rs.-,E. e%c( %&&otted %s 'u&&0 $%"d u$ o#es s(%res 0 )%0 o' c%$"t%&"D%t"o# o' reser8e, G,,,,, s(%res o' Rs.-,E. e%c( Rs./.5=E. $er s(%re rece"8ed "# c%s( %#d %&%#ce cred"ted %s o#us 0 )%0 C%$"t%&"D%t"o# o' Reser8e G=5G//-3 ord"#%r0 S(%res o' Rs.-,E. e%c( 'u&&0 $%"d Rs.G=5G.-4 L%@(s. /. SECURED LOANS 1. ,6/% *-'5+ from a@ /s.0;9(( *akhs from +tate &ank of India.
9;

b@ /s.)99; *akhs from +tate &ank of #yderabad. c@ /s.17(2 *akhs from +tate &ank of &ikaner & Faipur d@ /s.(207 *akhs from +tate &ank of Indore. e@ /s1221 *akhs from +tate &ank of %ysore. 2. F/-% +.#6$4*6$ &anks 1270;.:7 *akhs 45+6.4/6$ *-'5+<
a@ b@

&y Fixed $eposits /s.17).22 *akhs &y +ecurity $eposits from selling agents and others /s.122)7.;9 *akhs +hort term *oans /s.11011.;7 *akhs Interest free loan from +tate Industrial & Investment .orporation of %aharastra *td. /s.17.;0 *akhs. G. RESER:ES AND SURPLES1 '@ .'1I,'* /6+6/B6< $uring the year the company has not transferred any c%$"t%&. B9 6ENERAL RESER:E1 /s.);;; *akhs have been transferred from profit & *oss 'Q. during the year. ,he closing balance as on (1st march +,,3 "s Rs./-/I-.= L%@(s . C9 FOREI6N PROJECT RESER:E1 $uring the year! the company did not make Foreign Project Reser8e.

c@ d@

91

.'1I,'*I+',I-5 +,',6%65, Rs. I# L%@(s +*.5' & . $ 6 1articulars $ebt< a@+hort term b@*ong term $ebt Tot%& De t %9EBu"t0 S(%re C%$"t%& 9Resu&ts %#d Sur$&us Tot%& EBu"t0 Tot%& :%&8e o' t(e co!$%#0 De tEEBu"t0 R%t"o 's on (1C12C2;12 88)0.19 19(8;.)( 27110.71 19:(.97 0:;7.22 ((:10.7: 88P

=. S2ARE CAPITAL1

92

,he company did not raise any .apital during the year under report. ,he authori=ed .apital .ompany is )!;;!;;!;;; EBu"t0 S(%res o' Rs.-,E. e%c(. T(e ISSUED AND, SUBSCRIBED, PAID.UP CAPITAL o' t(e co!$%#0 "s G, =5, G/,/-3 EBu"t0 s(%res o' Rs.-,E. e%c( 'u&&0 $%"d. ;EAR 0;;; UP CAPITAL 2;11C12 2;1;C11 2;;:C1; 2;;9C;: 2;;8C;9
90 80 70 )0;; 60 50 40 30 20 10 0 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

TOTAL DI:IDEND PAID +IG/.G= +,34./= -=G4.54 -/,/.I5 -+I,.--

TOTAL PAID G=5G.-4 G=5G.-4 G=5G.-4 G=5G.-4 G=5G.-4

East West North

);;;

4. DI:IDENDS1

9(

(0;;

'njani 1ortland .ements *imited $%0s I#ter"!s d"8"de#d. T(e Co!$%#0 $%"d I#ter"!s d"8"de#d o' Rs.+,34./= L%@(s to t(e eBu"t0 S(%re (o&ders 'or t(e '"#%#c"%& 0e%r o' +,,3.,I. &-'/$ -F $I/6.,-/+ %66,I5D
(;;; ,he &oard of $irectors annual Deneral meeting of B"r&% Port&%#d Ce!e#ts

L"!"ted (e&d o# -Gt( M%rc(, +,,5. T(e0 dec&%red "#ter"!s d"8"de#d 'or t(e '"#%#c"%& 0e%r+,,3.,I. T(e "#ter"! d"8"de#d $%"d o# G, =5, G/, /-3 Ord"#%r0 S(%res '%ce 8%&8e o' Rs.-,E. e%c( Q Rs.GE. $er s(%re. F-/ ,#6 P6'/ 65$6$ %'/.#! 2;;8 $IBI$65$ /61-/, ?/s. In *akhs@

1articulars 20;; +hare .apital Face valve?/s@ /ate of $ividend Final Interim 'mount of dividend Final In term
2;;;

2;;9

2;;8 )08).17

2;;7

2;;0

2;;)

)08).17 )08).17 )08).17 1;QC C )QC C 1(82.2: 1;QC C )QC C 11)(.0 1;QC C )QC C 11)(.0

)08).17 C )QC _

1;QC C )QC C 192:.8(

9)

10;;

1;;;

5. PROFIT1 1rofit before $epreciation & ,ax /s.7)19;.;9 *akhs during the current year +,,I. -, %*%"#st $re8"ous 0e%r +,,3.,I )%s Rs.G,,,3.I5 L%@(s. Pro8"s"o# 'or I#co!e T%C 'or t(e 0e%r +,,I.-, Rs.-4=,, L%@(s %s %*%"#st $re8"ous 0e%r +,,3.,I Rs.5=,, L%@(s. Pro'"t %'ter T%C )or@s out Rs. +4=43./+ L%@(s "# +,,I.-, %*%"#st Rs.+4=43./+ L%@(s 'or t(e 0e%r o' +, 3.EPS C%&cu&%t"o#1
0;;

1articulars 5et 1rofit 'fter ,ax ?/s.in *akhs@ 5o. of 6 uity shares 61+ Face Balve of +hare

2;;:C1; )08;.:2 )08)(.(1 9 :.:: 1;QC

2;;9C;: 27079.(2 )08)(.(1 9 09.;9 1;QC

2;;:C1; (9((0 )08)(.(19 9(.9 1;QC

90

2;;:C1;

I. ?OR>IN6 RESULTS1 1articulars ,urnover in *akhs Interest $epreciation 1&, 1rovision for tax 1', $ividend & ,ax 2;;:C1; 107082.1 0 (1):.8( 0(0:.19 92::.0 2;;; 72::.0 11)(.0 2;;9C;: 18;:;1.0 ( 2;)1.1 0():.2 )(01.29 1;;; ((01.2 11)(.0 2;;:C1; 198891.0 0 2289.:8 0108.18 9;:2.:2 ();; )08;.:2 1(82.2: 2;;9C;: 2017)0.9 : 2::1.2: 09(;.7) ()189.(2 80;; 27079.( 192:.8( 2;;:C1; ());(2.17 021;.82 9:27.9: 0020(.1: 170;; (9((0 2009.0

Pro'"t A Loss %ccou#t o' B"r&% Cor$or%t"o#

M%r O-+ -+ !t(s Income +ales ,urnover 6xcise $uty 5et +ales -ther Income +tock 'djustments ,otal Income 6xpenditure 2!0:7.92 (;8.(7 2!29:.)7 1;9.)2 C);.(8 2!(08.01 STANDALONE M%r O-M%r O-, -+ !t(s -+ !t(s 2!)(0.(8 29: 2!1)7.(8 111.9 (7.;) 2!2:).21 2!);1.88 2(8.(( 2!17).)) 1;9.07 ().)2 2!(;8.)2 M%r O,I -+ !t(s 2!;):.;) 2)7.2( 1!9;2.91 0;.0) C10.(7 1!9(8.:: M%r O,3 -+ !t(s 1!::7.97 281.:0 1!82).:1 ().;( 2:.08 1!899.01 97

/aw %aterials 1ower & Fuel .ost 6mployee .ost -ther %anufacturing 6xpenses +elling and 'dmin 6xpenses %iscellaneous 6xpenses 1reoperative 6xp .apitalised ,otal 6xpenses

7)1.17 0(2.08 21(.9 88.81 (89.29 )(.1) C07.;1 1!9(;.70 M%r O-+ -+ !t(s )19.)) 027.97 1;9.;: )19.88 9; ; ((9.88 8.29 ()7.;0 1;7.9) 2(:.21 1!19:.): ; )7.2 8.0 88;.;0 (1.;7 7; 2:;.()

7().7) )0:.98 18).27 91.() (07.91 (7.08 C:.(2 1!8().18 M%r O--+ !t(s ))9.2) 07;.;) 71.:0 ):9.;: 7).9( ; )((.27 ).)2 )(8.79 118.89 (1:.99 1!;::.0( ; )7.2 8.08 88;.;0 )1.0) 7; 277.2(

0;9.17 (92.1 1)7.28 98.;9 (27.01 28.71 ; 1!)88.8( M%r O-, -+ !t(s 821.1( 92:.7: 27.:8 9;2.82 00.7) ; 8)8.;9 1(.8( 87;.91 2;(.7( 008.19 :7:.08 ; )7.2 8.80 88;.;0 82.(7 7; 2(1.08

));.10 (79.21 1)9.0: 7).0) 2:0.12 20.27 ; 1!()1.98 M%r O,I -+ !t(s ))0.09 ):7.12 22.;0 )8).;8 )(.)2 ; )(;.70 0.91 )(7.)7 112.:0 (2(.01 :;1.82 ; ().70 0.9: 88;.;0 )2.;1 )0 177.17

()).27 (29.(2 1)1.)0 :(.;1 2)9.1: 2(.) ; 1!189.7( M%r O,3 -+ !t(s 080.90 7;:.99 21.;0 099.9( )1.)) ; 0)8.(: (.91 001.2 108.71 (:(.08 9().(9 ; (;.9 0.2( 88;.;0 01.11 ); 12:.)1

-perating 1rofit 1&$I, Interest 1&$, $epreciation -ther "ritten -ff 1rofit &efore ,ax 6xtraCordinary items 1&, ?1ost 6xtraCord Items@ ,ax /eported 5et 1rofit ,otal Balue 'ddition 1reference $ividend 6 uity $ividend .orporate $ividend ,ax 1er share data ?annualised@ +hares in issue ?lakhs@ 6arnings 1er +hare ?/s@ 6 uity $ividend ?>@ &ook Balue ?/s@

Co#so&"d%ted Pro'"t A Loss %ccou#t o' B"r&% Cor$or%t"o#

M%r O-+ -+ !t(s Income +ales ,urnover 6xcise $uty 5et +ales -ther Income +tock 'djustments ,otal Income 6xpenditure /aw %aterials 2!0:7.92 (;:.:2 2!297.:; 127.27 C);.(8 2!(82.8: 000.97 M%r O--+ !t(s 2!)(0.(9 29: 2!1)7.(9 111.:( (7.;( 2!2:).() 7((.() M%r O-, -+ !t(s 2!);1.89 2(;.;) 2!181.8) 1;9.7( 28.12 2!(;8.): 0;7.:9 M%r O,I -+ !t(s 2!;):.;9 2)7.2( 1!9;2.90 0;.79 C10.(8 1!9(9.17 )(:.17 M%r O,3 -+ !t(s 2!;;2.89 281.:7 1!8(;.92 29.11 2:.08 1!899.0; ()(.8) 98

1ower & Fuel .ost 6mployee .ost -ther %anufacturing 6xpenses +elling and 'dmin 6xpenses %iscellaneous 6xpenses 1reoperative 6xp .apitalised ,otal 6xpenses

0(2.08 21(.(8 17:.)) ; )21.:1 ; 1!9:(.10 M%r O-+ -+ !t(s (0(.(9 )8:.7) 02.7) )28 9;.09 ; ()7.)2 ; ()7.)2 1;7.:: 2(:.)) ; ; 2(:.)) 1!((8.2: ; )7.2 8.0 88;.;0 (1.;: ; 2:1.70

)0:.98 18).21 91.() (07.9( (8.;2 C:.(2 1!8((.2: M%r O--+ !t(s )):.12 071.;0 71.:0 )::.1 70.)1 ; )((.7: ).)2 )(9.11 118.: (2;.21 ; ; (10.8: 1!;::.:0 ; )7.2 8.08 88;.;0 )1.09 ; 277.01

(92.1 1)7.29 98.;9 (27.0( 29.;0 ; 1!)88.;2

(79.21 1)9.7: 7).0) 2:0.1) 20.01 ; 1!()1.20

(29.(2 1)1.7: :(.;1 2)9.22 2(.00 ; 1!189.0(

-perating 1rofit 1&$I, Interest 1&$, $epreciation -ther "ritten -ff 1rofit &efore ,ax 6xtraCordinary items 1&, ?1ost 6xtraCord Items@ ,ax /eported 5et 1rofit %inority Interest +hare -f 1Q* -f 'ssociates 5et 1Q* 'fter %inority Interest & +hare -f 'ssociates ,otal Balue 'ddition 1reference $ividend 6 uity $ividend .orporate $ividend ,ax 1er share data ?annualised@ +hares in issue ?lakhs@ 6arnings 1er +hare ?/s@ 6 uity $ividend ?>@ &ook Balue ?/s@

M%r O-, M%r O,I M%r O,3 -+ !t(s -+ !t(s -+ !t(s 721.84 446.23 581.86 830.47 496.91 609.97 26.97 22.05 21.05 803.5 474.86 588.92 56.22 44 41.94 0 0 0 747.28 430.86 546.98 13.74 5.67 3.81 761.02 436.53 550.79 203.74 112.95 157.58 557.31 323.59 393.2 0 0 0 0 0 0 543.57 970.03 0 46.2 7.75 770.05 72.37 0 231.81 317.92 902.09 0 34.65 5.89 770.05 42.02 0 166.38 389.38 834.8 0 30.8 5.23 770.05 51.06 0 129.62

Br"&% cor$or%t"o# B%&%#ce S(eet

M%r O-+ -+ !t(s +ources -f Funds ,otal +hare .apital 6 uity +hare .apital +hare 'pplication %oney 1reference +hare .apital 88.;1 88.;1 ; ; M%r O--+ !t(s 88.;1 88.;1 ; ; M%r O-, -+ !t(s 88.;1 88.;1 ; ; M%r O,I -+ !t(s 77.01 77.01 0 0 M%r O,3 -+ !t(s 88.;1 88.;1 ; ; 99

/eserves /evaluation /eserves 5etworth +ecured *oans 4nsecured *oans ,otal $ebt ,otal *iabilities

2!109.9; 8.8: 2!2)(.7; :22.72 2;1.81 1!12).(( (!(78.:( M%r O-+ -+ !t(s

1!:8(.12 8.8: 2!;08.:2 88;.7) 18).88 :)0.)1 (!;;(.(( M%r O--+ !t(s 1!801.(2 880.:1 :80.)1 )99.:) 1!17:.21 (0:.7 )).27 28.(: )(1.20 (18.79 ()(.79 1!;:2.71 ; 78;.28 02.08 822.9) (7:.88 ; (!;;(.(( (:2.0 277.2(

1!8;7.21 9 1!8:1.22 019.2 1(2.(7 70;.07 2!))1.89 M%r O-, -+ !t(s 1!)(;.;2 8(1.(( 7:9.7: (28.88 1!1)1.70 29(.81 22.10 21.;: (27.:0 220.07 (19.1: 98;.8 ; 0(2.;7 7).:0 0:8.;1 28(.7: ; 2!))1.9; ((1.7 2(1.08

1,202.4 8 8.22 1,287.7 1 219.4 8.36 227.76 1,515.4 7 M%r O,I -+ !t(s 1,354.2 0 694.15 660.05 141.86 552.29 192.88 20 38.73 251.61 175.73 280.99 708.33 0 480.15 66.9 547.05 161.28 0 1,515.4 8 237.54 166.16

:1:.0( 9.)) 1!;;).:9 2;7.;1 21.): 228.0 1!2(2.)9 M%r O,3 -+ !t(s 1!18(.)) 782.7) 0;;.9 1):.11 7() 2;;.)0 (1.81 29.:) 271.1 )8(.0) 2.)2 8(8.;7 ; )(0.)( (0(.;8 899.0 C01.)) ; 1!2(2.)8 :2.)7 12:.)1

'pplication -f Funds Dross &lock *ess< 'ccum. $epreciation 5et &lock .apital "ork in 1rogress Investments Inventories +undry $ebtors .ash and &ank &alance ,otal .urrent 'ssets *oans and 'dvances Fixed $eposits ,otal .'! *oans & 'dvances $effered .redit .urrent *iabilities 1rovisions ,otal .* & 1rovisions 5et .urrent 'ssets %iscellaneous 6xpenses ,otal 'ssets .ontingent *iabilities &ook Balue ?/s@

2!2;1.11 9)9.09 1!(02.0( 0;:.72 1!;)).91 )18.1 (8.20 22.)( )87.89 (;7.2: )17.1) 1!1::.21 ; 78).2) 7) 8(9.2) )7;.:8 ; (!(78.:( 2)(.01 2:;.()

9:

ANAL;SIS AND INTERPRETATION

+,,I.-, FINANCIAL ;EARS CAPITAL STRUCTURE ANAL;SIS -. C%$"t%&"D%t"o# I#'or!%t"o# P%rt"cu&%rs $ebt< a@+ecured loans b@4n secured loans Tot%& de t 6 uity .apital< a@6 uity share capital b@/eserves and surplus Tot%& EBu"t0 C%$"t%& Rs. I# &%@(s

A.

:81;7.;2 2)(80.(7 -+-G3-./3

B.

)08).17 :(718 I3-I-.-4

:;

C.

,otal Balue< a@.apital 6mployed Tot%& :%&ue o' t(e Co!$%#0

21:782.0) +-I45+.=G

D.

$ebtQ6 uity /atio

-.+/

+. EBIT.EPS ANAL;SIS $%rt"cu&%rs 6&I, *ess< Interest 1rofit before ,ax *ess< 1rovision for ,ax *ess< 1rovision for Fringe &enefit 1rofit 'fter ,ax 1roposedQInterim $ividend & ,ax 6arning 1er +hares?EPS@ X?1',Q+hare capital@O 1;Y +,,I.-,7Rs. I# L%@(s@ 7;709.:( 0);0.8) 0020(.1: 170;;.;; )19.1: (9((0 7:)( (9((0Q)08).((19O1;W9(.9;

O8er%&& cost o'W6&I,Qvalue of the companyO1;; AoW7;709.:(Q21:782.0)O1;;W28.78> Cost o' de tWInterestQ%arket value $ebtO1;; A$W 0);0.8)Q121)91.(9O1;;W).)0>

:1

/. R%t"os +,,I.-, /eturn on capital employed /eturn on 5et worth $ebtQ6 uity ratio )9.12> (:.;)> 1.21

I#ter$ret%t"o#1 i. ii. iii. iv. v. ,otal net value of &irla 1ortland .ements *imited was increased in the year 2;;:C1; from 9829;.;; to121)91. 6 uity capital of the &irla 1ortland .ements *imited same as the previous year. ,he value is )08).17 *akhs. $ebt 6 uity ratio was recorded as1.2( in the year 2;;:C1;. 5et worth of the company (:.;) in the financial year 2;;:C1;. 6arning per share of the company was /s.9(.9;.

SOURCE OF FINANCE ,he total investment on (1st %arch! 2;;9 is /s. (;27.;2 *akhs. ,he source of investments is given below. BIRLA CEMENT Port&%#d Ce!e#ts L"!"ted FS Sources o' F"#%#ce %s /-st Dec, +,-+

:2

,otal Investment /s. (;27.;2 *akhs D-B6/5%65, +6.4/I,I6+ &-5$+ F4**P 1'I$ +#'/6+ 1'/,I'**P 1'I$ +#'/6+ ;.1( 2:.7) 29::.;2 7.12

+,--.-+ FINANCIAL ;EAR CAPITAL STRUCTURE ANAL;SIS -. C%$"t%&"D%t"o# I#'or!%t"o# P%rt"cu&%rs $ebt< a@+ecured loans b@4n secured loans Tot%& de t 6 uity .apital< a@6 uity share capital b@/eserves and surplus Tot%& EBu"t0 C%$"t%& C. ,otal Balue< a@ .apital 6mployed b@ Balue 'dded Rs. I# &%@(s )1((7.9( 2;8:9.7; 4+-/=.G/

A.

B.

)08).17 (8;(;.9) G-4,=.,, 1;(8);.)9

:(

Tot%& :%&ue o' t(e Co!$%#0 $ebtQ6 uity /atio D.

-,/5G,.G3 -.G=

+. EBIT.EPS ANAL;SIS $%rt"cu&%rs 6&I, *ess< Interest 1rofit before ,ax *ess< 1rovision for ,ax *ess< 1rovision for Fringe &enefit 1rofit 'fter ,ax 1roposedQInterim $ividend & ,ax 6arning 1er +hares?EPS@ X?1',Q+hare capital@O 1;Y +,--.-+7Rs. I# L%@(s@ 11(79.2: (280.(8 9;:2.:2 ();;.;; 122.;; )08;.:2 107).87 X?)08;.:2Q)08).((19@O1;YW:.::

O8er%&& cost o'W6&I,Qvalue of the companyO1;; AoW11(79.2:Q1;(8);.)9O1;; AoW1;.:0> Cost o' de tWInterestQ%arket value $ebtO1;; AdW (280.(8Q721(0.)(O1;; AdW0.28>
:)

/. R%t"os +,,5.,3 /eturn on capital employed /eturn on 5et worth .urrent ratio $ebtQ6 uity ratio 18.;)> 1;.:9> 2.9 1.)0

I#ter$ret%t"o#1 i. ii. iii. iv. v. ,otal debt value of &irla 1ortland .ements *imited was increased in the year 2;;8C;9 from 0;)00.2) to 721(0.)0. 6 uity capital of the &irla 1ortland .ements *imited was same as the previous year. ,he value is )08).17 *akhs. $ebtQ6 uity ratio was recorded as ;.:: in the year 2;;8C;9. 5et worth of the company 1;.:9> in the financial year.2;;8C;9. 6arnings per share of the company were /s.:.::.

SOURCE OF FINANCE ,he total investment on (1st $ec 2;12 is /s.2:;1.01 *akhs. ,he source of investments is given below.

:0

B"r&% Port&%#d Ce!e#ts L"!"ted FS Sources o' F"#%#ce %s /-st M%rc(, +,,4 ,otal Investment /s.2:;1.01 *akhs D-B6/5%65, +6.4/I,I6+ &-5$+ F4**P 1'I$ +#'/6+ 1'/,I'**P 1'I$ +#'/6+ 18.18 1:.7) (;;9.8; 2.97

-*5627867T 46392$T$64 B*7,4

:9;;< 1A$, 4=A264 1A2T$A;;< 1A$, 4=A264

:7

+,--.-+ FINANCIAL ;EARS CAPITAL STRUCTURE ANAL;SIS

-. C%$"t%&"D%t"o# I#'or!%t"o#

A.

P%rt"cu&%rs $ebt< a@+ecured loans b@4n secured loans Tot%& de t 6 uity .apital< a@6 uity share capital b@/eserves and surplus Tot%& EBu"t0 C%$"t%& ,otal Balue< a@.apital 6mployed

Rs. I# &%@(s (;879.;: 1(9:0.7( GG44/.5/ )08).17 (;28).12 /G3G3.+5 8:012.;;

:8

B.

C.

Tot%& :%&ue o' t(e Co!$%#0 D. $ebtQ6 uity /atio

5I=-+.,, -.+3

+. EBIT.EPS ANAL;SIS P%rt"cu&%rs 6&I, *ess< Interest 1rofit before ,ax *ess< 1rovision for ,ax *ess< 1rovision for Fringe &enefit 1rofit 'fter ,ax 1roposedQInterim $ividend & ,ax 6arning 1er +hares?EPS@ X?1',Q+hare capital@O 1;Y +,--.-+7Rs. I# L%@(s@ 97)2.90 ()(2.29 92::.08 2;;;.;; C 72::.08 12:;.11 X?72::.08Q)08)(.(1@O1;YW1(.88

O8er%&& cost o'W6&I,Qvalue of the companyO1;; AoW97)2.90Q8:012O1;; AoW1;.97> Cost o' de tWInterestQ%arket value $ebtO1;;
:9

AdW ()(2.29Q))77(.8(O1;; AdW8.97>

/. R%t"os +,--.-+ /eturn on capital employed /eturn on 5et worth .urrent ratio $ebtQ6 uity ratio 18.00> 19.;8> 2.01> 1.29>

I#ter$ret%t"o#1 i@ ii@ iii@ iv@ B@ ,otal debt value of &irla 1ortland .ements *imited was increased in the year 2;;0C;7 from ));:;.21 to ))77(.8(. 6 uity capital of the &irla 1ortland .ements *imited was same as the previous year. ,he value is )08).17 *akhs. $ebt 6 uity ratio was recorded as ;.99 in the year 2;;0C;7. 5et worth of the company 19.;8> in financial year 2;;0C;7. 6arnings per share of the company was /s.1(.88.

SOURCE OF FINANCE ,he total investment on (1st %arch! 2;;) is /s.2)::.;( *akhs. ,he source of investments is given below.
::

B"r&% Port&%#d Ce!e#ts L"!"ted FS Sources o' F"#%#ce %s /-st Dec, +,-,otal Investment /s.2)::.;( *akhs D-B6/5%65, +6.4/I,I6+ &-5$+ F4**P 1'I$ +#'/6+ 1'/,I'**P 1'I$ +#'/6+ 9.99 1:.7) 2)::.;2 :.02

CONCLUSION1 'fter analy=ing the financial position of &irla 1ortland .ements *imited and evaluating its .apital +tructure 'nalysis in respect of /atio 'nalysis and source and utili=ation of founds. ,he following conclusions are drawn from the project preparation. ,he progress of &irla 1ortland .ements *imited shows that 6 uity .apital to /s.)17;0.;; *akhs from during the year 2;;:C1; and the 5et worth of the .ompany (:.;)>. /egarding .apital +tructure 'nalysis 6 uity .apital was decreased from 2;;9C;: to 2;;:C1; and t;otal $ebt Balve increased from 9829:.;; to 121)91.;; *akhs during the year.
1;;

/egarding .apital +tructure 'nalysis ,urn -ver was increased and decreased in the year 2;;9C;: and profit after tax was increased during the year 2;;:C1;. /egarding .apital +tructure 'nalysis 6 uity /atio was decreased from 1.2( to 1.(( and current ratio decreased from 2.9to 2.(:. From the above study can be said that the &irla 1ortland .ements *imited financial position on .apital +tructure 'nalysis is uite satisfactory.

SU66ESTIONS ,he &irla 1ortland .ements *imited is one of the private sector cement .ompany in India. It is a profitable .ompany. 5owCaCdays the cement industry playing a major and important role in the construction field! these are for construct #omes! Flyovers! Industries etc. 5owCaC days cement industry facing of challenge like /egional re uirements /egional cement demands *ack of resources

1;1

"ith all the above problems cement industry has to produce the .ement with profits. I want to express my views with few points! they are 1@ &irla 1ortland .ements *imited has been maintaining .onstant 6 uity +hare .apital +ince 2;;7! this has to improve. 2@ -ffer additional shares to investors from profits instead of giving $ividend. "ith this! there is a chance to increase reserves and surplus. (@ $ebtQ6 uity /atio in &irla 1ortland .ements *imited is ;.:9> this is more than the idle ratio of debt. &ut if the proportion of $ebtI 6 uity ?;.0 and not less than ;.0@ will decrease from ;.:9 to ;.0. It would decrease the responsibility. Investments through 6 uity from rural people i.e. rural investments are important.

BIBILIO6RAP2;
Re'ere#ce Boo@s1 I.M.P%#de0 .Financial %anagement M.;.>(%# A P.>.J%"# . Financial %anagement

Fournals< Finance India Fournals

"eb +ite<

www.anjanicement.com

1;2

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