INTRODUCTION

India is a developing country. Nowadays many people are interested to invest in financial markets especially on equities to get high returns, and to save tax in honest way. Equities are playing a major role in contribution of capital to the business from the beginning. ince the introduction of shares concept, large numbers of investors are showing interest to invest in stock market. In an industry plagued with skepticism and a stock market increasingly difficult to predict and contend with, if one looks hard enough there may still be a genuine aid for the !ay "rader and hort "erm Investor. "he price of a security represents a consensus. It is the price at which one person agrees to buy and another agrees to sell. "he price at which an investor is willing to buy or sell depends primarily on his expectations. If he expects the security#s price to rise, he will buy it$ if the investor expects the price to fall, he will sell it. "hese simple statements are the cause of a major challenge in forecasting security prices, because they refer to human expectations. %s we all know firsthand, humans expectations are neither easily quantifiable nor predictable. If prices are based on investor expectations, then knowing what a security should sell for &i.e., fundamental analysis' becomes less important than knowing what other investors expect it to sell for. "hat#s not to say that knowing what a security should sell for isn#t important((it is. )ut there is usually a fairly strong consensus of a stock#s future earnings that the average investor cannot disprove *undamental analysis and technical analysis can co(exist in peace and complement each other. ince all the investors in the stock market want to make the maximum profits possible, they just cannot afford to ignore either fundamental or technical analysis.

FINANCIAL SERVICES IN INDIA:

"he Indian economy is estimated to have grown by ,.- per cent in .//0(/1. %ccording to the latest 2entral tatistical 3rgani4ation &2 3' data, financial services, banking, insurance and real estate sectors rose by -.0 per cent in the third quarter of ./+.(+/."he government has taken a number of steps in recent months to revive the economy, including slashing interest rates, lowering factory levies and more than doubling the limit on foreign investment in corporate bonds. "he financial services space is a rapidly growing one in India. %s per the ecurities and Exchange )oard of India & E)I', number of registered *IIs as on 5arch .1, ./++ was +-+/ and the cumulative investments in equity since November +11. to 5arch .1, ./++, was 6 7 -,.-8 billion, while the cumulative investments in debt during the same period were 6 7 ++.09 billion. "he average assets under management of the mutual fund industry stood at 6 7 +-8./, billion for the month of *ebruary ./++, an increase of nearly :, per cent from 6 7 +++.99 billion in *ebruary ./+., according to the data released by %ssociation of 5utual *unds in India &%5*I'. *unds raised by the Indian corporate sector via %!;s< =!;s has jumped over :: times from around 6 7 +/+.-. million in .//0 to about 6 7 :.9/ billion in ./+..*urthermore, with economic outlook on Indian as well global markets being positive, >E funds are closing deals more speedily than last year. "he merger and acquisition &5?%' activity has shown similar momentum, with domestic deals ruling the charts.>E funds closed .1 deals in @anuary ./++ compared to only +, during the same period last year. "he value of such deals saw a significant jump of :/: per cent, from 6 7 :/1 million in @anuary ./+. to 6 7 +..8 billion this year.%lso, a study by >roject *inance International &>*I', a source of global project finance intelligence and a "homson ;euters publication has ranked India on top in the global project finance &>*' market in ./+., ahead of %ustralia, pain and the 6 .

STOCK MARKET OF INDIA:

tock markets refer to a market place where investors can buy and sell stocks. "he price at which each buying and selling transaction takes is determined by the market forces &i.e. demand and supply for a particular stock'.Aet us take an example for a better understanding of how market forces determine stock prices. %)2 2o. Atd. enjoys high investor confidence and there is an anticipation of an upward movement in its stock price. 5ore and more people would want to buy this stock &i.e. high demand' and very few people will want to sell this stock at current market price &i.e. less supply'. "herefore, buyers will have to bid a higher price for this stock to match the ask price from the seller which will increase the stock price of %)2 2o. Atd. 3n the contrary, if there are more sellers than buyers &i.e. high supply and low demand' for the stock of %)2 2o. Atd. in the market, its price will fall down. In earlier times, buyers and sellers used to assemble at stock exchanges to make a transaction but now with the dawn of I", most of the operations are done electronically and the stock markets have become almost paperless. Now investors dont have to gather at the Exchanges, and can trade freely from their home or office over the phone or through Internet.

History of the Indian Sto ! Mar!et " The Ori#in: 3ne of the oldest stock markets in %sia, the Indian tock 5arkets have a .// years old history. $%th Cent&ry $%'()s $%*()s $%+()s $%,()s $%,(",$ East India 2ompany was the dominant institution and by end of the century, business in its loan securities gained full momentum )usiness on corporate stocks and shares in )ank and 2otton presses started in )ombay. "rading list by the end of +0:1 got broader ;ecognition from banks and merchants to about half a do4en brokers ;apid development of commercial enterprise saw brokerage business attracting more people into the business "he number of brokers increased to ,/ "he %merican 2ivil Bar broke out which caused a stoppage of cotton supply from 6nited tates of %merica$ marking the beginning of the C hare 5aniaC in India $%,-",' $%,+ "he number of brokers increased to about .// to .9/ % disastrous slump began at the end of the %merican 2ivil Bar &as an example, )ank of )ombay hare which had touched ;s. .09/ could only be sold at ;s. 0-'
.RE"INDE.ENDANCE SCENARIO " ESTA/LISHMENT OF DIFFERENT STOCK E0CHAN1ES

$%2*

Bith the rapidly developing share trading business, brokers used to gather at a street &now well known as C!alal treetC' for the purpose of transacting business.

$%2+ $%%()s $%3* $%%( " 3()s $3(% $3-(

C"he Native hare and tock )rokers# %ssociationC &also known as C"he )ombay tock ExchangeC' was established in )ombay !evelopment of cotton mills industry and set up of many others Establishment of C"he %hmedabad hare and tock )rokers# %ssociationC harp increase in share prices of jute industries in +0-/#s was followed by a boom in tea stocks and coal C"he 2alcutta tock Exchange %ssociationC was formed 5adras witnessed boom and business at C"he 5adras tock ExchangeC was transacted with +// brokers. 8

$3-' $3'* $3', $3'2

Bhen recession followed, number of brokers came down to : and the Exchange was closed down Establishment of the Aahore tock Exchange 5erger of the Aahoe tock Exchange with the >unjab tock Exchange ;e(organisation and set up of the 5adras tock Exchange Aimited &>vt.' Aimited led by improvement in stock market activities in outh India with establishment of new textile mills and plantation companies

$3*(

6ttar >radesh tock Exchange Aimited and Nagpur tock Exchange Aimited was established

$3** $3*2

Establishment of C"he Dyderabad tock Exchange AimitedC C!elhi tock and hare )rokers# %ssociation AimitedC and C"he !elhi tocks and hares Exchange AimitedC were established and later on merged into C"he !elhi tock Exchange %ssociation AimitedC

NEED OF THE STUD4

"o start any business capital plays major role. 2apital can be acquired in two ways by issuing shares or by taking debt from financial institutions or borrowing money from financial institutions. "he owners of the company have to pay regular interest and principal amount at the end.

tock is ownership in a company, with each share of stock representing a tiny piece of ownership. "he more shares you own, the more of the company you own. "he more shares you own, the more dividends you earn when the company makes a profit. In the financial world, ownership is called 5E6&ity78
%dvantages of selling stockE % company can raise more capital than it could borrow. % company does not have to make periodic interest payments to creditors. % company does not have to make principal payments tock<shares play a major role in acquiring capital to the business in return investors are paid dividends to the shares they own. "he more shares you own the more dividends you receive. "he role of equity analysis is to provide information to the market. %n efficient market relies on informationE a lack of information creates inefficiencies that result in stocks being misrepresented &over or under valued'. "his is valuable because it fills information gaps so that each individual investor does not need to analy4e every stock thereby making the markets more efficient.

O/9ECTIVES OF THE STUD4

"he objective of this project is to deeply analy4e our Indian %utomobile Industry for investment purpose by monitoring the growth rate and performance on the basis of historical data. "he main objectives of the >roject study areE !etailed analysis of %utomobile industry which is gearing towards international standards %naly4e the impact of qualitative factors on industryFs and companyFs prospects uggesting as to which companyFs shares would be best for an investor to invest.

SCO.E OF THE STUD4

"he scope of the study is identified after and during the study is conducted. "he project is based on tools like fundamental analysis and ratio analysis. *urther, the study is based on information of last five years.

"he analysis is made by taking into consideration five companies i.e. "%"% 5otors, 5aruti u4uki and 5ahindra and 5ahindra.

"he scope of the study is limited for a period of five years. "he scope is limited to only the fundamental analysis of the chosen stocks.

METHODOLO14
;esearch design or research methodology is the procedure of collecting, analy4ing and interpreting the data to diagnose the problem and react to the opportunity in such a way where the costs can be minimi4ed and the desired level of accuracy can be achieved to arrive at a particular conclusion. "he methodology used in the study for the completion of the project and the fulfillment of the project objectives.

"he sample of the stocks for the purpose of collecting secondary data has been selected on the basis of ;andom ampling. "he stocks are chosen in an unbiased manner and each stock is chosen independent of the other stocks chosen. "he stocks are chosen from the automobile sector.

"he sample si4e for the number of stocks is taken as : for fundamental analysis of stocks as fundamental analysis is very exhaustive and requires detailed study.

LIMITATIONS

"his study has been conducted purely to understand Equity valuation for investors.

"he study is restricted to three companies based on *undamental analysis. "he study is limited to the companies having equities. !etailed study of the topic was not possible due to limited si4e of the project. "here was a constraint with regard to time allocation for the research study i.e. for a period of 89 days.

uggestions and conclusions are based on the limited data of two years.

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REVIE: OF LITERATURE:
"he literature agrees on the importance of the investigations on the accuracy of valuations. "he valuation of real activities &e.g. enterprises, investments or projects' is indeed always 2hallenged in the real world. "o this aim, the literature proposes two perspectives of validation respectively the Gex(anteF and the Gex(postF perspective. "he Gex(anteF perspective draws origin from the study of the criticality of the inputs of a Haluation >rocess. "wo main approaches have been proposedE the sensitivity analysis and the simulation. "he former indicates which are the critical parameters and also the levels of the inputs that have an elevated sensitivity of the result. tudies on this topic in the financial literature go back to the seventies. "hese studies supply analytical instruments in order to face the uncertainty of the output with respect to one single variable. "he present paper proposes a formal approach that considers the effect of more variables altogether and defines a joint sensitivity. "he second methodology of Gex(anteF investigation is the simulation. "his procedure considers the inputs of a valuation as alienator variables treated through simulation methods like the 5onte 2arlo. "he output of a simulation is a probability distribution of the estimated value. Dowever, the real applicability of the simulation is quite scarce with respect to firm valuations. Indeed, it requires to define the specific shape of the probability density function associated to each input variable and to supply forecasts of its Inominal valueJ and of the level of variability &that is, in a stochastic approach, to supply the forecast of both the expected value and the expected variance of the alienator variable of input'. Aast, valuation accuracy can be verified Gex(postF through a validation process that compares. "he estimated value &for instance, the target price in the case of equity reports' with a term of ;eference &often the value attributed from the market to the company or the effective value of one transaction'. "he literature focused in the last ++

decade on the empirical validation of the validity of the direct valuation methodologies, often comparing between themselves or with indirect techniques.

!E*INI"I3N E Equity HaluationE !ividend 2apitali4ation %pproachE

%ccording to the dividend capitali4ation approach, a conceptually very sound approach, "he value of an equity hare is equal to the present value of dividends expecte8d from its ownership plus the present value of the resale price expected when the equity share is sold. *or applying the dividend capitali4ation approach to equity stock valuation, we will make the following assumptionsE &+' !ividends are paid annually this seems to be a common practice for business firms in India$ and &.' "he first dividend is received one year after the equity share is bought.

ingle(period valuation model equity share for one

Aet us begin with the case where the investor expects to hold the Kear. "he price of the equity share will beE >oLd+<&+Mks'Mp+<&+Lks' Bhere poLcurrent price of the equity share !+Ldividend expected a year hence >+Lprice of the share expected a year hence NsLrate of return required on the equity share.

+.

Equity valuationE ratio approach

Bhile conceptually the dividend capitali4ation approach is unassailable, it often not as widely practiced as it should be. >ractitioners seem to prefer the ratio approach, Aargely because of its simplicity. "he kinds of ratios employed in the context of valuation are discussed below. )ook valueE "he book value per share is simply the worth of the company &which is equal to paid up equity capital plus reserves and surplus' dividend by the number of outstanding equity shares. *or example, if the net worth of 4enith limited is rs. :- million and the number of outstanding equity shares of 4enith is . million, the book value per share works out to rs. +0.9/ &rs. :- million dividend by . million. Dow relevant and useful is the book value per share as a measure of invfestment valueO "he book value per share is firmly rooted in financial accounting and hence can be established relatively easily. !ue to this, its proponents argue that it represents.
!tMptMpt(+<pt(+L!+<pt(+Mpt(pt(+<pt(+ Bhere "3"%A ;E";6;N L !IHI!EN! KIEA!M2%>I"%A =%IN KIEA!P

+:

H%A6%"I3N 3* E26;I"IE E

)ond valuationE "erminologyE

% bond or debenture &hereafter referred to as only bond', akin to a promissory note, is an instrument of debt issued by a business or governmental unit. In order to understand the valuation of bonds, we need familiarily with certain bond(related terms. >ar value this is the value stated on the face of the bond. It represents the amount the firm borrows and promises to repay at time of maturity. 6sually the par or face value of bonds business firms is rs. +//. ometimes it is rs+, ///.

)y >;% %NN% 2D%N!;%

)ookE *IN%N2E 5%N%=E5EN"

+8

E;UIT4 VALUATION VERSUS FIRM VALUATION: "he value the entire business, with both assets(in(place and growth assets$ this is often termed firm or enterprise valuation.

"he second way is to just value the equity stake in the business, and this is called equity valuation.

+9

"herefore, Equity Haluation, value just the equity stake in the business *irm Haluation, value the entire firm, which includes, besides equity, the other claimholders in the firm

+,

INDUSTR4 .ROFILE
FINANCIAL MARKETS
*inance is the pre(requisite for modern business and financial institutions play a vital role in the economic system. It is through financial markets and institutions that the financial system of an economy works. *inancial markets refer to the institutional arrangements for dealing in financial assets and credit instruments of different types such as currency, cheques, bank deposits, bills, bonds, equities, etc. *inancial market is a broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives. "hey are typically defined by having transparent pricing, basic regulations on trading, costs and fees and market forces determining the prices of securities that trade. =enerally, there is no specific place or location to indicate a financial market. Bherever a financial transaction takes place, it is deemed to have taken place in the financial market. Dence financial markets are pervasive in nature since financial transactions are themselves very pervasive throughout the economic system. *or instance, issue of equity shares, granting of loan by term lending institutions, deposit of money into a bank, purchase of debentures, sale of shares and so on. In a nutshell, financial markets are the credit markets catering to the various needs of the individuals, firms and institutions by facilitating buying and selling of financial assets, claims and services.

+-

CLASSIFICATION OF FINANCIAL MARKETS

Finan ia< =ar!ets

Or#ani>ed =ar!ets

Unor#ani>ed =ar!ets

Ca?ita< Mar!ets

Money Mar!ets

Money LendersA Indi#en&os /an!ers

Ind&stria< Se &rities Mar!et

Ca<< Money Mar!et

.ri=ary Mar!et

Co==er ia< /i<< Mar!et

Se ondary =ar!et

Treas&ry /i<< Mar!et

1o@ern=ent Se &rities Mar!et Lon#"ter= <oan =ar!et

+0

Ca?ita< Mar!et "he capital market is a market for financial assets which have a long or indefinite maturity. =enerally, it deals with long term securities which have a period of above one year. In the widest sense, it consists of a series of channels through which the savings of the community are made available for industrial and commercial enterprises and public authorities. %s a whole, capital market facilitates raising of capital.

"he major functions performed by a capital market areE +. 5obili4ation of financial resources on a nation(wide scale. .. ecuring the foreign capital and know(how to fill up deficit in the required resources for economic growth at a faster rate. :. Effective allocation of the mobili4ed financial resources, by directing the same to projects yielding highest yield or to the projects needed to promote balanced economic development.

2apital market consists of primary market and secondary market. Primary market: >rimary market is a market for new issues or new financial claims. Dence it is also called as New Issue 5arket. It basically deals with those securities which are issued to the public for the first time. "he market, therefore, makes available a new block of securities for public subscription. In other words, it deals with raising of fresh capital by companies either for cash or for consideration other than cash. "he best example could be Initial >ublic 3ffering &I>3' where a firm offers shares to the public for the first time. +1

Secondary market: econdary market is a market where existing securities are traded. In other words, securities which have already passed through new issue market are traded in this market. =enerally, such securities are quoted in the stock exchange and it provides a continuous and regular market for buying and selling of securities. "his market consists of all stock exchanges recogni4ed by the government of India.

Money Mar!et 5oney markets are the markets for short(termA highly liquid debt securities. 5oney market securities are generally very safe investments which return relatively low interest rate that is most appropriate for temporary cash storage or short term time needs. It consists of a number of sub(markets which collectively constitute the money market namely call money market, commercial bills market, acceptance market, and "reasury bill market. Deri@ati@es Mar!et "he derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets. % derivative is a security whose price is dependent upon or derived from one or more underlying assets. "he derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. "he most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. "he important financial derivatives are the followingE

./

Forwards: *orwards are the oldest of all the derivatives. % forward contract refers to an agreement between two parties to exchange an agreed quantity of an asset for cash at a certain date in future at a predetermined price specified in that agreement. "he promised asset may be currency, commodity, instrument etc.

Futures: *uture contract is very similar to a forward contract in all respects excepting the fact that it is completely a standardi4ed one. It is nothing but a standardi4ed forward contract which is legally enforceable and always traded on an organi4ed exchange.

Options: % financial derivative that represents a contract sold by one party &option writer' to another party &option holder'. "he contract offers the buyer the right, but not the obligation, to buy &call' or sell &put' a security or other financial asset at an agreed(upon price &the strike price' during a certain period of time or on a specific date &exercise date'. 2all options give the option to buy at certain price, so the buyer would want the stock to go up. >ut options give the option to sell at a certain price, so the buyer would want the stock to go down.

Swaps: It is yet another exciting trading instrument. Infact, it is the combination of forwards by two counterparties. It is arranged to reap the benefits arising from the fluctuations in the market Q either currency market or interest rate market or any other market for that matter.

.+

It is a market in which participants are able to buy, sell, exchange and speculate on currencies. *oreign exchange markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors. "he forex market is considered to be the largest financial market in the world. It is a worldwide decentrali4ed over(the(counter financial market for the trading of currencies. )ecause the currency markets are large and liquid, they are believed to be the most efficient financial markets. It is important to reali4e that the foreign exchange market is not a single exchange, but is constructed of a global network of computers that connects participants from all parts of the world. Co==odities Mar!et It is a physical or virtual marketplace for buying, selling and trading raw or primary products. *or investors# purposes there are currently about 9/ major commodity markets worldwide that facilitate investment trade in nearly +// primary commodities. 2ommodities are split into two typesE hard and soft commodities. Dard commodities are typically natural resources that must be mined or extracted &gold, rubber, oil, etc.', whereas soft commodities are agricultural products or livestock &corn, wheat, coffee, sugar, soybeans, pork, etc.'

..

INDIAN FINANCIAL MARKETS

India *inancial market is one of the oldest in the world and is considered to be the fastest growing and best among all the markets of the emerging economies.

"he history of Indian capital markets dates back .// years toward the end of the +0th century when India was under the rule of the East India 2ompany. "he development of the capital market in India concentrated around 5umbai where no less than .// to .9/ securities brokers were active during the second half of the +1th century. "he financial market in India today is more developed than many other sectors because it was organi4ed long before with the securities exchanges of 5umbai, %hmadabad and Nolkata were established as early as the +1th century. )y the early +1,/s the total number of securities exchanges in India rose to eight, including 5umbai, %hmadabad and Nolkata apart from 5adras, Nanpur, !elhi, )angalore and >une. "oday there are .+ regional securities exchanges in India in addition to the centrali4ed N E &National tock Exchange' and 3"2EI &3ver the 2ounter Exchange of India'. Dowever the stock markets in India remained stagnant due to stringent controls on the market economy that allowed only a handful of monopolies to dominate their respective sectors. "he corporate sector wasn#t allowed into many industry segments, which were dominated by the state controlled public sector resulting in stagnation of .:

the economy right up to the early +11/s. "hereafter when the Indian economy began liberali4ing and the controls began to be dismantled or eased out$ the securities markets witnessed a flurry of I>3Fs that were launched. "his resulted in many new companies across different industry segments to come up with newer products and services.

% remarkable feature of the growth of the Indian economy in recent years has been the role played by its securities markets in assisting and fuelling that growth with money rose within the economy. "his was in marked contrast to the initial phase of growth in many of the fast growing economies of East %sia that witnessed huge doses of *!I &*oreign !irect Investment' spurring growth in their initial days of market decontrol. !uring this phase in India much of the organi4ed sector has been affected by high growth as the financial markets played an all(inclusive role in sustaining financial resource mobili4ation. 5any > 6s &>ublic ector 6ndertakings' that decided to offload part of their equity were also helped by the well(organi4ed securities market in India.

"he launch of the N E &National tock Exchange' and the 3"2EI &3ver the 2ounter Exchange of India' during the mid +11/s by the government of India was meant to usher in an easier and more transparent form of trading in securities. "he N E was conceived as the market for trading in the securities of companies from the large(scale sector and the 3"2EI for those from the small(scale sector. Bhile the N E has not just done well to grow and evolve into the virtual backbone of capital markets in India the 3"2EI struggled and is yet to show any sign of growth and development. "he integration of I" into the capital market infrastructure has been particularly smooth in

.8

India due to the countryFs world class I" industry. "his has pushed up the operational efficiency of the Indian stock market to global standards and as a result the country has been able to capitali4e on its high growth and attract foreign capital like never before. "he regulating authority for capital markets in India is the E)I & ecurities and

Exchange )oard of India'. E)I came into prominence in the +11/s after the capital markets experienced some turbulence. It had to take drastic measures to plug many loopholes that were exploited by certain market forces to advance their vested interests. %fter this initial phase of struggle E)I has grown in strength as the regulator of

IndiaFs capital markets and as one of the countryFs most important institutions.

.9

FINANCIAL MARKET RE1ULATIONS

;egulations are an absolute necessity in the face of the growing importance of capital markets throughout the world. "he development of a market economy is dependent on the development of the capital market. "he regulation of a capital market involves the regulation of securities$ these rules enable the capital market to function more efficiently and impartially. % well regulated market has the potential to encourage additional investors to partake, and contribute in, furthering the development of the economy. "he chief capital market regulatory authority is ecurities and Exchange )oard of India & E)I'. SE/I is the regulator for the securities market in India. It is the apex body to develop and regulate the stock market in India It was formed officially by the =overnment of India in +11. with E)I %ct +11. being passed by the Indian >arliament. 2haired by 2 ) )have, E)I is headquartered in the popular business district of )andra(Nurla

complex in 5umbai, and has Northern, Eastern, outhern and Bestern regional offices in New !elhi, Nolkata, 2hennai and %hmedabad. In place of =overnment 2ontrol, a statutory and autonomous regulatory board with defined responsibilities, to cover both development ? regulation of the market, and independent powers has been set up.

The Basi oBCe ti@es of the /oard Dere identified as:

to protect the interests of investors in securities$ to promote the development of ecurities 5arket$ to regulate the securities market and .,

*or matters connected therewith or incidental thereto.

ince its inception E)I has been working targeting the securities and is attending to the fulfillment of its objectives with commendable 4eal and dexterity. "he improvements in the securities markets like capitali4ation requirements, margining, establishment of clearing corporations etc. reduced the risk of credit and also reduced the market.

E)I has introduced the comprehensive regulatory measures, prescribed registration norms, the eligibility criteria, the code of obligations and the code of conduct for different intermediaries like, bankers to issue, merchant bankers, brokers and sub( brokers, registrars, portfolio managers, credit rating agencies, underwriters and others. It has framed bye(laws, risk identification and risk management systems for 2learing houses of stock exchanges, surveillance system etc. which has made dealing in securities both safe and transparent to the end investor.

%nother significant event is the approval of trading in stock indices &like ?> 2NR Nifty ? ensex' in .///. % market Index is a convenient and effective product because of the following reasonsE

It acts as a barometer for market behavior$ It is used to benchmark portfolio performance$ It is used in derivative instruments like index futures and index options$ It can be used for passive fund management as in case of Index *unds. .-

"wo broad approaches of E)I is to integrate the securities market at the national level, and also to diversify the trading products, so that there is an increase in number of traders including banks, financial institutions, insurance companies, mutual funds, primary dealers etc. to transact through the Exchanges. In this context the introduction of derivatives trading through Indian tock Exchanges permitted by E)I in ./// %! is a real landmark. E)I has enjoyed success as a regulator by pushing systemic reforms aggressively and successively &e.g. the quick movement towards making the markets electronic and paperless rolling settlement on "M. bases'. regulations as required under law. E)I has been active in setting up the

STOCK E0CHAN1ES IN INDIA

tock Exchanges are an organi4ed marketplace, either corporation or mutual organi4ation, where members of the organi4ation gather to trade company stocks or other securities. "he members may act either as agents for their customers, or as principals for their own accounts. %s per the ecurities 2ontracts ;egulation %ct, +19, a stock exchange is an

association, organi4ation or body of individuals whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities.

.0

tock exchanges facilitate for the issue and redemption of securities and other financial instruments including the payment of income and dividends. "he record keeping is central but trade is linked to such physical place because modern markets are computeri4ed. "he trade on an exchange is only by members and stock broker do have a seat on the exchange. List of Sto ! EE han#es in India )ombay tock Exchange National tock Exchange 3"2 Exchange of India Re#iona< Sto ! EE han#es +. %hmedabad .. )angalore :. )hubaneswar 8. 2alcutta 9. 2ochin ,. 2oimbatore -. !elhi 0. =uwahati 1. Dyderabad +/. @aipur ++. Audhiana +.. 5adhya >radesh +:. 5adras +8. 5agadh +9. 5angalore +,. 5eerut +-. >une +0. aurashtra Nutch .1 +1. 6ttar >radesh ./. Hadodara

/OM/A4 STOCK E0CHAN1E

% very common name for all traders in the stock market, ) E, stands for )ombay tock Exchange. It is the oldest market not only in the country, but also in %sia. In the early days, ) E was known as C"he Native hare ? tock )rokers %ssociation.C It was established in the year +0-9 and became the first stock exchange in the country to be recogni4ed by the government. In +19,, ) E obtained a permanent recognition from the =overnment of India under the ecurities 2ontracts &;egulation' %ct, +19,.

In the past and even now, it plays a pivotal role in the development of the country#s capital market. "his is recogni4ed worldwide and its index, EN ER, is also tracked worldwide. Earlier it was an %ssociation of >ersons &%3>', but now it is a demutualised and corporatised entity incorporated under the provisions of the 2ompanies %ct, +19,, pursuant to the ) E &2orporatisation and !emutuali4ation' cheme, .//9 notified by the ecurities and Exchange )oard of India & E)I'.

/SE Vision "he vision of the )ombay tock Exchange is to CEmerge as the premier Indian stock exchange by establishing global benchmarks.C

.OST INDE.ENDANCE SCENARIO: "he depression witnessed after the Independence led to closure of a lot of exchanges in the country. Aahore Estock Exchange was closed down after the partition of India, and later on merged with the !elhi tock Exchange. )angalore tock Exchange Aimited was registered in +19- and got recognition only by +1,:. 5ost of the other Exchanges were in a miserable state till +19- when they applied for recognition under ecurities 2ontracts &;egulations' %ct, +19,. "he Exchanges that were recogni4ed under the %ct wereE +. )ombay .. 2alcutta :. 5adras 8. %hmedabad 9. !elhi ,. Dyderabad -. )angalore 0. Indore 5any more stock exchanges were established during +10/#s, namelyE

2ochin tock Exchange &+10/' 6ttar >radesh tock Exchange %ssociation Aimited &at Nanpur, +10.' >une tock Exchange Aimited &+10.' Audhiana tock Exchange %ssociation Aimited &+10:' =auhati tock Exchange Aimited &+108' Nanara tock Exchange Aimited &at 5angalore, +109' 5agadh tock Exchange %ssociation &at >atna, +10,' @aipur tock Exchange Aimited &+101' )hubaneswar tock Exchange %ssociation Aimited &+101' aurashtra Nutch tock Exchange Aimited &at ;ajkot, +101' Hadodara tock Exchange Aimited &at )aroda, +11/' 2oimbatore tock Exchange

5eerut tock Exchange %t present, there are twenty one recogni4ed stock exchanges in India which does not include the 3ver "he 2ounter Exchange of India Aimited &3"2EI' and the National tock Exchange of India Aimited &N EIA'. =overnment policies during +10/#s also played a vital role in the development of the Indian

tock 5arkets. "here was a sharp increase in number of Exchanges, listed companies as well as their capital, which is visible from the following tableE

$ S8 No8 As on '$st De e=Ber 3 * , + No. of tock Exchanges + . No. of Aisted 2os. + . 9 + : No. of tock Issues of Aisted 2os. 9 / , 2apital of Aisted 2os. &2r. ;s.' . /

$ 3 , $ + . / : . + + + 9 : + . 1 . , : + / +

$ 3 2 $ 0 + 9 1 1 . 0 : 0 + 0 + . . , 9 + + : + , +

$ 3 2 + 0 + 9 9 . : . : / . , + 8 : . : + , 0 . + + +

$ 3 % ( 1 . . , 9 : , 1 : 1 : , 9 / + 9 . 1 0 +

$ 3 % + + 8 8 : 8 8 , + 8 1 . : . 9 : / . . . 8 9 0 . . 9+ 8 +-/ :8 ,1 : 99 ,8 0/ ++ /. -1 80+ .+ :. /8 + 01 ,++ -0 8 91 90 : ,. .1 09 1: ./ .. $3 3$ $3 3+

5arket value of 2apital of Aisted 2os. &2r. ;s.'

1 +

2apital per Aisted 2os. &8<.' &Aakh ;s.' 5arket Halue of 2apital

. 8 0 , :

per Aisted 2os. &Aakh ;s.' &9<.' %ppreciated value of

2apital per Aisted 2os. &Aak ;s.'

9 0

8 0

. ,

, /

Tradin# .attern of the Indian Sto ! Mar!et Indian tock Exchanges allow trading of securities of only those public limited companies that are listed on the Exchange&s'. "hey are divided into two categoriesE

Ty?es of Transa tionsE "he flowchart below describes the types of transactions that can be carried out on the Indian stock exchangesE

Indian stock exchange allows a member broker to perform following activitiesE

%ct as an agent, )uy and sell securities for his clients and charge commission for the same, %ct as a trader or dealer as a principal,

)uy and sell securities on his own account and risk. O@er The Co&nter EE han#e of India FOTCEIG "raditionally, trading in tock Exchanges in India followed a conventional style where people used to gather at the Exchange and bids and offers were made by open outcry. "his age(old trading mechanism in the Indian stock markets used to create many functional inefficiencies. Aack of liquidity and transparency, long settlement periods and benami transactions are a few examples that adversely affected investors. In order to overcome these inefficiencies, 3"2EI was incorporated in +11/ under the 2ompanies %ct +19,. 3"2EI is the first screen based nationwide stock exchange in India created by 6nit "rust of India, Industrial 2redit and Investment 2orporation of India, Industrial !evelopment )ank of India, )I 2apital 5arkets, Industrial *inance 2orporation of India, =eneral Insurance 2orporation and its subsidiaries and 2an )ank *inancial ervices.

Ad@anta#es of OTCEI:

=reater liquidity and lesser risk of intermediary charges due to widely spread trading mechanism across India "he screen(based scrip less trading ensures transparency and accuracy of prices *aster settlement and transfer process as compared to other exchanges

 horter allotment E;UIT4 MARKET:

procedure &in case of a new issue' than other exchanges

"he Indian Equity 5arket is also the other name for Indian share market or Indian stock market. "he equity brokerage industry in India is one of the oldest in the %sia region. India had an active stock market for about +9/ years that played a significant role in developing risk markets as also promoting enterprise and supporting the growth of industry. India has been one of the best performers in the world economy in recent years, but rapidly rising inflation and the complexities of running the worldFs biggest democracy are proving challenging. STRUCTURE OF E;UIT4 MARKET: "he Indian market of equities is transacted on the basis of two major stock indices, National tock Exchange of India Atd. &N E' and "he )ombay tock Exchange &) E'. In terms of market capitali4ation, there are over .9// companies in the ) E chart list with the ;eliance Industries Aimited at the top. "he EN ER today has rose from +/// levels to 0/// levels providing a profitable business to all those who had been investing in the Indian Equity 5arket. "here are about .. stock exchanges in India which regulates the market trends of different stocks. =enerally the bigger companies are listed with the N E and the ) E, but there is the 3"2EI or the 3ver the 2ounter Exchange of India, which lists the medium and small si4ed companies. "here is the E)I or the ecurities and Exchange )oard of India which supervises the functioning of the stock markets in India. tock markets became intensely technology and process driven, giving little scope for manual intervention that has been the source of market abuse in the past. Electronic trading, digital certification, straight through processing, electronic contract notes, online broking have emerged as major trends in technology. ;isk management became robust reducing the recurrence of payment defaults. >roduct expansion took place in a speedy manner. brokers as owners of the exchanges and traders<dealers. Every asset has a value; we just dont know what it is, states >rofessor !amodaran. "hus valuation is the first step toward intelligent investing. Haluation of a firm or an equity as a going concern is the basis for any investment exercise. Nnowing what an asset is worth and what determines that value is a pre(requisite for intelligent decision making (( in choosing investments for a portfolio, in deciding on the appropriate price to pay or receive in a takeover and in making investment, financing and tock exchange reforms brought in professional management separating conflicts of interest between

dividend choices when running a business. Bithout original value, one is set floating in a sea of random short(term price movements and gut feelings. It is important for the *inance 5anager in particular and other manager in general to understand the process and method of valuing equity or a firm. "he valuation of equity is dependent on the basic financial concepts of "ime Halue of 5oney, ;isk and ;eturn and *uture 2ash *low. VALUATION : "he term Ivaluation Iimplies the task of estimating the worth<value of an asset, a security, or a business. "he price an investor or a firm &buyer' is willing to pay to purchase a specific asset<security would be related to this value. "herefore equity valuation is$ E;UIT4 VALUATION: !eterminin" the total value o# a company involves more than reviewin" assets and revenue #i"ures$ %n equity valuation takes several financial indicators into account$ these include both tangible and intangible assets, and provide prospective investors, creditors or shareholders with an accurate perspective of the true value of a company at any given time. Equity valuations are conducted to measure the value of a company given its current assets and position in the market. "hese data points are valuable for shareholders and prospective investors who want to find out if the company is performing well, and what to expect with their stocks or investments in the near future. Haluation methods based on the equity of a company typically include a thorough analysis of cash accounts, as well as a forecast or projection of future dividends, future earnings &revenue' and the distribution of dividends. FEATURES OF E;UIT4 VALUATION: *ollowing are the features of Equity Haluation$ Equity Haluation is a highly speciali4ed process. Aike other assets in finance, the value of a stock is the >resent Halue of its 2ash *lowFs. "he total equity of a company is the sum of both tangible assets and intangible qualities. "angible assets include working capital, cash, and inventory and shareholder

equity. Intangible qualities, or intangible Cassets,C may include brand potential, trademarks and stock valuations. "he valuation may also take the firm#s enterprise value &EH' into account$ this is calculated by combining the net debt per share with the price per share. >erformance indicators include the price<earnings ratio, dividend yield, and the Earnings )efore Interest, !epreciation and %morti4ation &E)I!%'. %ny company under consideration for sale needs proficient, objective valuation, whether its stock is privately owned by one individual or publicly traded on one or more of the major exchanges or in the over the counter market. tocks are typically valued as perpetual securities as corporations potentially have an infinite life, and thus can pay dividends forever.

"oday many organi4ations are frequently employing some form of competency mapping to understand how to most effectively employ the competencies of strengths of workers. "hey are also using competency mapping to analy4e the combination of strengths in different workers to produce the most effective teams and the highest quality work. "he value of competency mapping and identifying emotional strengths is that many employers now purposefully screen employees to hire people with specific competencies. "hey may need to hire someone who can be an effective time leader or who has demonstrated great active listening skills. %lternately, they may need someone who enjoys taking initiative or someone who is very good at taking direction. Bhen individuals must seek new jobs, knowing oneFs competencies can give one a competitive edge in the job market. 6sually, a person will find themselves with strengths in about five to six areas. ometimes an area where strengths are not present is worth developing. In other cases, competency mapping can indicate finding work that is suited to oneFs strengths, or finding a department at oneFs current work where one#s strengths or needs as a worker can be exercised. % problem with competency mapping, especially when conducted by an organi4ation is that there may be no room for an individual to work in a field that would best make use of his or her competencies. If the company does not respond to competency mapping by reorgani4ing its employees, then it can be of little short(term benefit and may actually result in greater unhappiness on the part of individual employees. % person identified as needing to learn new things in order to remain happy might find himself or herself in a position where no new training is ever required. If the employer cannot provide a position for an employee that fits him or her better, competency mapping may be of little use.

/SE Mana#e=ent )ombay tock Exchange is managed professionally by )oard of !irectors. It comprises of eminent professionals, representatives of "rading 5embers and the 5anaging !irector. "he )oard is an inclusive one and is shaped to benefit from the market intermediaries participation.

"he )oard exercises complete control and formulates larger policy issues. "he day(to(day operations of ) E are managed by the 5anaging !irector and its school of professional as a management team. /SE NetDor! "he Exchange reaches physically to 8+- cities and towns in the country. "he framework of it has been designed to safeguard market integrity and to operate with transparency. It provides an efficient market for the trading in equity, debt instruments and derivatives. Its online trading system, popularly known as )3A", is a proprietary system and it is ) --11(.(.//. certified. "he )3A" network was expanded, nationwide, in +11-. "he surveillance and clearing ? settlement functions of the Exchange are I 3 1//+E./// certified. /SE Fa ts ) E as a brand is synonymous with capital markets in India. "he ) E EN ER is the

benchmark equity index that reflects the robustness of the economy and finance. It was the Q *irst in India to introduce Equity !erivatives *irst in India to launch a *ree *loat Index *irst in India to launch 6 7 version of ) E ensex *irst in India to launch Exchange Enabled Internet "rading >latform *irst in India to obtain I 3 certification for urveillance, 2learing ? ettlement

#) E 3n(Aine "rading recogni4ed ) --11(.E.//.. the

ystemF &)3A"' has been awarded the globally ecurity 5anagement ystem standard

Information

*irst to have an exclusive facility for financial training 5oved from 3pen 3utcry to Electronic "rading within just 9/ days

%SE with its lon" history o# capital market development is #ully "eared to continue its contri&utions to #urther the "rowth o# the securities markets o# the country, thus helpin" 'ndia increases its sphere o# in#luence in international #inancial markets$

NATIONAL STOCK E0CHAN1E OF INDIA LIMITED

"he National tock Exchange of India Aimited has genesis in the report of the Digh >owered tudy =roup on Establishment of New tock Exchanges, which recommended promotion of a National tock Exchange by financial institutions &*IFs' to provide access to investors from all across the country on an equal footing. )ased on the recommendations, N E was promoted by leading *inancial Institutions at the behest of the =overnment of India and was incorporated in November +11. as a tax(paying company unlike other stock Exchange in the country. 3n its recognition as a stock exchange under the ecurities 2ontracts &;egulation' %ct, +19, in %pril +11:, N E commenced operations in the Bholesale !ebt 5arket &B!5' segment in @une +118. "he 2apital 5arket &Equities' segment commenced operations in November +118 and operations in !erivatives segment commenced in @une .///. NSE 1ROU. Nationa< Se &rities C<earin# Cor?oration Ltd8 FNSCCLG It is a wholly owned subsidiary, which was incorporated in %ugust +119 and commenced clearing operations in %pril +11,. It was formed to build confidence in clearing and settlement of securities, to promote and maintain the short and consistent settlement cycles, to provide a counter(party risk guarantee and to operate a tight risk containment system. NSE8IT Ltd8 It is also a wholly owned subsidiary of N E and is its I" arm. "his arm of the N E is uniquely positioned to provide products, services and solutions for the securities industry. N E.I" primarily focuses on in the area of trading, broker front(end and back(office, clearing and settlement, web(based, insurance, etc. %long with this, it also provides consultancy and implementation services in !ata Barehousing, )usiness 2ontinuity >lans, ite 5aintenance

and )ackups, *inancial News.

tratus 5ainframe *acility 5anagement, ;eal "ime 5arket %nalysis ?

India IndeE Ser@i es H .rod& ts Ltd8 FIISLG It is a joint venture between N E and 2;I IA Atd. to provide a variety of indices and index related services and products for the Indian 2apital markets. It was set up in 5ay +110. II A has a consulting and licensing agreement with the tandard and >oor#s & ?>', world#s leading provider of investible equity indices, for co(branding equity indices.

Nationa< Se &rities De?ository Ltd8 FNSDLG N E joined hands with I!)I and 6"I to promote demateriali4ation of securities. "his step was taken to solve problems related to trading in physical securities. It commenced operations in November +11,.

NSE Fa ts It uses satellite communication technology to energi4e participation from around 8// cities in India. N E can handle up to + million trades per day. It is one of the largest interactive H %" based stock exchanges in the world. "he N E( network is the largest private wide area network in India and the first extended 2( )and H %" network in the world. >resently more than 1/// users are trading on the real time(online N E application.

"oday, N E is one of the largest exchanges in the world and still forging ahead. %t N E, we are constantly working towards creating a more transparent, vibrant and innovative capital market.

OVER THE COUNTER E0CHAN1E OF INDIA

3"2EI was incorporated in +11/ as a section .9 company under the companies %ct +19, and is recogni4ed as a stock exchange under section 8 of the securities 2ontracts ;egulation %ct, +19,. "he exchange was set up to aid enterprising promotes in raising finance for new projects in a cost effective manner and to provide investors with a transparent and efficient mode of trading 5odeled along the lines of the N% !%S market of 6 %, 3"2EI introduced many novel concepts to the Indian capital markets such as screen(based nationwide trading, sponsorship of companies, market making and scrip less trading. %s a measure of success of these efforts, the Exchange today has ++9 listings and has assisted in providing capital for enterprises that have gone on to build successful brands for themselves like HI> %dvanta, onora "iles ? )rilliant mineral water, etc.

Need for OTCEI: tudies by N% 235, software technology parks of India, the venture capitals funds and the

governmentFs I" tasks *orce, as well as rising interest in I", >harmaceutical, )iotechnology and 5edia shares have repeatedly emphasi4ed the need for a national stock market for innovation and high growth companies.

Innovative companies are critical to developing economics like India, which is undergoing a major technological revolution. Bith their abilities to generate employment opportunities and contribute to the economy, it is essential that these companies not only expand existing operations but also set up new units. "he key issue for these companies is raising timely, cost effective and long term capital to sustain their operations and enhance growth. uch

companies, particularly those that have been in operation for a short time, are unable to raise funds through the traditional financing methods, because they have not yet been evaluated by the financial world.

235>%NK >;3*IAE
%ngel broking trust with customer relation since +10-."oday %ngel has emerged as one of the most respected stock broking and wealth 5anagement 2ompany in India. Bith its unique retail focused stock trading business model angel is succeeded in providing real valve money to its clients. "he %ngel group is the member of the )ombay stock Exchange,N E,%nd the leading commodity exchange in India&52R ? N2!ER' COM.AN4 /USINESS"

+'Equity trading. .'2ommodities. :'>ortfolio 5anagement ervices. 8'5utual *unds. 9'Aife Insurance. ,'>ersonal Aoans. -'I>3. 0'!epository ervices. 1'Investment %dvisory. Co=?any ?resen es" +'National(wide presences of .+ regional hubs present in +.8 cities. .'3ver -09/ sub(brokers and business associates. :'5ore than ,.9 lakh clients.

An#e< 1ro&?

+'%ngel )roking Atd. .'%ngel capital ? !ebt 5arket Atd. :'%ngel 2ommodities )roking Atd. 8'%ngel ecurities Atd. Core Va<@es of Co=?any" $GMotto" "o have complete harmony between quality in process and continuous improvement to deliver exceptional service that will delight our customer and client. -GCRM .o<i y"C&sto=er is !in#" 2ustomer is the most important person in our premises. De is not dependent on us but we are dependent on him. De is not an interruption in our work but a part of it. Be are not doing him favors by serving it but he is doing favors on us by giving an oppournity to serve him. 'G/&siness .hisi<o?hy I +' Ethical practice ? transparency in our all dealing. .' 2ustomer interest is above all. :' %lways deliver for what we have promise. 8' Effective cost management. *G ;UALIT4 ASSURANCE .OLIC4" Be are committed to provide the world(class services which exceed the expectation of our customers achieved by team(work and by a process of continuous improvement. Indian markets have recently thrown open a new avenue for retail investors and traders to participate commodity derivatives. *or those who want to diversify their portfolios beyond shares, bonds and real estate, commodities are the best option. "ill some months ago, this wouldn#t have made sense. *or retail investors could have done very little to actually invest in commodities such as gold and silver (( or oilseeds in the futures market. "his was nearly impossible in commodities except for gold and silver as there was practically no retail avenue for putting in commodities. Dowever, with the setting up of three multi(commodity exchanges in the country, retail investors can now trade in commodity futures without having physical stocksT

2ommodities actually offer immense potential to become a separate asset class for market( savvy investors, arbitrageurs and speculators. ;etail investors, who claim to understand the equity markets may find commodities an unreliable market. )ut commodities are easy to understand as far as fundamentals of demand and supply are concerned. ;etail investors should understand the risks and advantages of trading in commodities futures before taking a leap. Distorically, pricing in commodities futures has been less volatile compared with equity and bonds, thus providing an efficient portfolio diversification option. In fact, the si4e of the commodities as a whole of the industry segment in India is also quite a significant industry, which constitutes about 90 per cent of the =!>. Aike any other market, the one for commodity futures plays a valuable role in information pooling and risk sharing. "he market mediates between buyers and sellers of commodities, and facilitates decisions related to storage and consumption of commodities. In the process, they make the underlying market more liquid.

CONCE.T OF SHARE TRADIN1 IN INDIA:"

"rading in shares is old phenomena its regulation had been started when securities contract act had been formed in +19,. "ransfer of resources from those with idle resources to others who have a productive need for them is most efficiently achieved through the securities market. It provides a channel for reallocation of savings to investments. SE/I "he ecurities and Exchange )oard of India & E)I' is the regulatory authority in India established under ection : of E)I %ct, +11.. E)I %ct, +11. provides for establishment of ecurities and Exchange )oard of India & E)I' with statutory powers for &a' protecting the interests of investors in securities &b' promoting the development of the securities market and &c' regulating the securities market. Its regulatory jurisdiction extends over corporate in the issuance of capital and transfer of securities, in addition to all intermediary rise and persons associated with securities market. E)I has been obligated to perform the aforesaid functions by such measures as it thinks fit. In particular, it has powers forE ;egulating the business in stock exchanges and any other securities markets ;egistering and regulating the working of stock brokers, subQbroker etc. >romoting and regulating self(regulatory organi4ations >rohibiting fraudulent and unfair trade practices 2alling for information from, undertaking inspection, conducting

inquiries and audits of the stock exchanges, intermediaries, self Q regulatory organi4ations, mutual funds and other persons associated with the securities market.

"he National tock Exchange of India Aimited has genesis in the report of the Digh >owered tudy =roup on Establishment of New tock Exchanges. It recommended promotion of a National tock Exchange by financial institutions &*Is' to provide access to investors from all across the country on an equal footing. )ased on the recommendations, N E was promoted by leading *inancial Institutions at the behest of the =overnment of India and was incorporated in November +11. as a tax(paying company unlike other stock exchanges in the country. 3n its recognition as a stock exchange under the ecurities 2ontracts &;egulation' %ct, +19, in %pril +11:, N E commenced operations in the Bholesale !ebt 5arket &B!5' segment in @une +118. "he 2apital 5arket &Equities' segment commenced operations in November +118 and operations in !erivatives segment commenced in @une .///. /SE
)ombay tock Exchange is the oldest stock exchange in %sia with a rich heritage, now spanning three centuries in its +:: years of existence. Bhat is now popularly known as ) E was established as C"he Native hare ? tock )rokers# %ssociationC in +0-9. ) E is the first stock exchange in the country which obtained permanent recognition &in +19,' from the =overnment of India under the ecurities 2ontracts &;egulation' %ct +19,. ) E continues to innovate. In recent times, it has become the first national level stock exchange to launch its website in =ujarati and Dindi.

DATA ANAL4SIS:
)%A%N2E EE" ? >;3*I" %N! A3
BALANCE SHEET AT MARCH 31, 2011 SCHEDU LE SOURCES OF FUNDS SHARE HOLDERS FUND Shar Ca!ita" R s r( s ) s*r!"*s Uns ,*r - ".ans Di// r - ta0 "ia1i"iti s(N t) Funds employed APPLICATION OF FUNDS FIXED ASSETS 2r.ss 1".,3 L ss4 !r.(isi.n /.r - !r ,iati.n n t 1".,3 Ca!ita" 5.r3 in !r.6r ss Investment C*rr nt ass ts,".ans)a-(an, s Cash an- 1an3 1a"an, L.ans an- a-(an, s Oth r ,*rr nt ass ts L ss 4 ,*rr nt "ia1i"iti s ) !r.(isi.ns C*rr nt "ia1i"iti s 9r.(isi.ns Net current assets Funds ut l sed S !n " cant account n! pol c es #notes on accounts N 8 : 32,&$$ 1,+$,+%3 1,'#,23# 23,+%,21# 1,#&,1#,1+% &+,+&$ ',#',&%' %,$$,2+3 2$,+&,312 1,#&,'&,2&% F 2 H 1+,1+,30' %,#$,#+# +&,3'% 2+,$&,$+$ 23,%1,2#' %,%&,3&# 12,%20 3$,00,+&+ E D 23.3&2 &,223 1#,13% 7 1#,13% 1,+2,$0,'03 1%,03+ 3,#1' 1+31# 3+2 1+,&&% 1,+2,1$,2'' A B C #,$%,&&' 1+#1$01$# 2'1+ 11,+0,&3+ 1,#&,1#,1+% 2,%%,'2& 1,&2,3$,&1% 23+1 11,$%,$#% 1,#&,'&,2&%

%<2F E
As at 31.03.2011 (Rs in 000) As at 31.03.2012

PROFIT # LOSS FOR $EAR ENDED %ARC& '() *+(( SCHEDU As at LE 31.03.2011 INCO%E EXPENDITURE Prov s on "or determ nat on n value o" nvestment L ss4 D !r ,iati.n int r st 9r.(isi.n /.r - t r<inati.n in (a"* ./ in( st< nt pro" t .e"ore e/cept onal tem # ta/ A--4 E0, !ti.na" it <s PROFIT 0EFORE TAX PRO1ISION FOR TAX C*rr nt ta0 D / rr - ta0 /rin6 1 n /it ta0 Ta0 a-=*st< nt ./ ar"i r > ars PROFIT AFTER TAX A--4 Ba"an, !r./it 1.*6ht /.r5ar/r.< ar"i r > ars Pro" t ava la.le "or appropr at on Appropr at on prepared d v dend N.r<a" S! ,ia" Di(i- n- -istri1*ti.n ta0 2 n ra" r s r( s S*r!"*s ,arri - t. 1a"an, sh Earn n!s per s2are , "ace value o" Re ( eac2B /.r 0, !ti.na" it < 0 0 t 7 +00 10,000 1,1+,23,12& 1,1&,'3,+'3 1,$%,%+# 1,1&,'3,+'3 +0,000 1,1&2 +30 1+& #%,&&& 1,1&,03,%1# 7 1,31,+1$ 1,31,+1$ 2,&+# 3'3 ; L 2$,++,$$$ %2,&3+ 1,+2,'0%

,RS n +++ As at 31.03.2012 3,&&,%+% ##,&&3 2,'%,2%& 1,02' +$#

1',2++ 7 2,'#,#21 1,#2,30,1'+ 1,#+,1#,%0& 2#,&0,000 11,++,&2' &+0 ?+' 1,3&,01,&'& 3,#%,&%$ 1,3%,'1,3'0 1,+0,000 &,00,000 1,2#,$&3 1+,00,000 1,1&,03,%1# 1,3%,'1,3'0

0 1'

A/t r 0, !ti.na" it <

$G DISCONTED CASH FLO: METHOD: %' 2%A26A%"I3N 3* 23 " 3* !E)"E 23 " 3* !E)" L F $"T G R L &+(/.:/'+:.,+U L /.-V+:.,+U L /./19:V+// Nd L 1.9:UU )' 2%A26A%"I3N 3* 23 " 3* ES6I"KE !&+M=' " L 2orporate tax

23 " 3* ES6I"K L the year > growth

M=

!L !ividend of =L Expecting > L current market

price per share /../&+M/.+.' L :,../ /...8 L :,../ L +..,U M/.+. M/.+.

CALCULATION OF :EI1HTED AVERA1E COST OF CA.ITAL:

;s in crores
>articulars !ebt Equity "otal L )ook value .,0+9 +,,8,,:,-/1 +,,8,,,,9.8 Beights /.///+/.1110/ 2ost of equity +..,U 1.9:U "otal /.////. /./19: /./19:.

B%22 L /./19:.V+// L1.9:U

INTER.RETATION: the above graph represents totsl cost of capital of finan ia< ?osition to @a<&ate the o=?any ?erfor=a e8

IF THE 1RO:TH IN INCOME INCREASES /4 %J If the Income Increases by 0U Income&.,89,888W0U' AessE(Expenditure &1.,,:9W0U' E/IDTA AessE(!epreciation&.,,9-W0U' E/IT AessE(Interest&:0:W0U' ./T AessE("axX:/U .rofit after taE

.,9,/-1.9. +//,/89.0/ $,+(''82.,0,1.9, $,-$,*8$, 8+:.,8 $,$2+(8+80,9.9.+, $$'--+8',

DISCOUNTED CASH FLO: TECHNI;UE FDCFG:" !2*L>rofit after tax +Mweighted average cost of capital L +, +:,..9.:, +/.9:U L ++, 18, +-/, ,. FOR:ARD EARNIN1S .ER SHARE:" *orward Earnings per hareL >rofit after tax No of equity shares ++,18,+-/,,. -,81,-0.9// L/.+91

AVERA1E OF .RICEKEARNIN1S RATIO OF + COM.AN4LS :

COM.AN4 ;EAI=%;E IN!I% IN*3AINE @5 *IN%N I%A 53!E;N D%;E ? "32N );3 )D%;%" )D6 D%N D%;E );3 A"! AVERA1E
(++ 5+ 4+ 3+ *+ + P6 ERATIO

.KE RATIO 18.:+0.11 9-.+: +/.:9 0.8+ '28%+

RE L I7ARE

INDIA INFOL INE

8 % FINANSIAL

%ODE RN S&ARE# S TOC90RO 0&ARAT 0&US&AN S&ARE 0RO L TD

INTER.TRETATION: A1ERA7E of ?Ke ratio8 ABo@e #ra?h shoDs that @a<&ation of e6&ities of + o=?anies

D%;E >;I2E L %H= 3* ><EV *3;B%;! E> L :-.09V/.+91 L ,./+0

IF THE 1RO:TH IN INCOME INCREASES /4 $(J

If the Income Increases by +/U Income&.,89,888W+/U' AessE(Expenditure &1.,,:9W+/U' E/IDTA AessE(!epreciation&.,,9-W+/U' E/IT AessE(Interest&:0:W+/U' ./T AessE("axX:/U .rofit after taE

.,1,100.8/ +/+,010.9/ $,%(%383( .,1...-/ $,+$,28-( 8.+.: $,*2*+83( 81,8.:.-$$+'--8$'

DISCOUNTED CASH FLO: TECHNI;UE FDCFG:" !2*L>rofit after tax +Mweighted average cost of capital L +, +9, :...+: +/.9:U L +/, 19,+-,.1.

FOR:ARD EARNIN1S .ER SHARE:" *.Earnings per hareL >rofit after tax No of equity shares L +/, 19,+-,.1. -, 81,-0.,9// L /.//+8,

SHARE .RICE L %H= 3* ><EV *3;B%;! E> L :-.09V/.//+8, L /./99.

IF THE 1RO:TH IN INCOME INCREASES /4 $+J If the Income Increases by +9U Income &.,89,888W+9U' AessE(Expenditure &1.,,:9W+9U' E/IDTA AessE(!epreciation &.,,9-W+9U' E/IT AessE(Interest &:0:W+9U' ./T AessE("axX:/U .rofit after taE

.0.,.,/.,/ +/,,9:/..9 $2+2'(8'+ :,/99.99 $2-,2*8%( 88/.89 $2--'*8'+ 9+,,-/.:+ $-(+,*8(*

DISCOUNTED CASH FLO: TECHNI;UE FDCFG:" !2*L>rofit after tax +Mweighted average cost of capital L +, +9, :...+: +/.9:U L ++, 88,19-.,8

EARNIN1S .ER SHARE:" Earnings per hareL >rofit after tax No of equity shares ++, 88,19-.,8 -, 81,-0.,9// L/.//+9 SHARE .RICE L %H= 3* ><EV *3;B%;! E> L :-.09V/.//+9. L /./9E0.LANATION: The ?&r?ose of a< &<atin# DCF is to !noD the f&t&re share ?ri e of the o=?any8 -GMETHODS OF COM.ARA/LEFRATIO /ASEDG: >rice to ales ;atio L hare >rice ;evenue >er hare &;> L ales<no.of shares' :,../ L & .,89,888<+/////////' )ook value L equity capital M reserves ? surplus L+,,8,,:,:/1M+,9-,+8,/8+ L :,.+,--,:9/ L+8--9.9

>rice< )ook value ratio L

5arket Halue of Equity )ook Halue of Equity :,../ L .+.1, L+.91: Net >%"

Earnings per share ratio L

No.of equity shares -1,,,, L L /./+ -8,1-,0.,9// ><E ;atio L 5arket price per share &5> ' Earning per share &E> ' :,../ L /./++ E0.LANATION: These ratios are eE?enses ratios8 This o=?any Do&<d Be Better Be a&se of o=?any ha@in# <oD ratios 'G OTHER A..ROCHES: %' Economic value addedE EH% L N>%" Q &B%22 V "2E' L -1,,,,(&:/.,1U V +,,8,,:,-/1' L ( 81,-:,/8,..1 )' 5arket value addedE 5H% L 5arket value of firmFs equity Q Equity capital investment<funds L :.1/.1/

MARKET VALUE RATIOS: "otal *ixed assets *ixed asset per share L No.of equity shares .,::,,.,/// L -8,1-,0.,9// "otal investment Investment per share L No.of equity shares +9.8/0/:/// L -8,1-,0.,9// L ./.:. L /./:+

"otal cash 2ash per share L No.of equity shares +,9+,9:,/0,/// L -8,1-,0.,9// L .././

"otal debt !ebt per share L No.of equity shares .0,+9,/// L -8,1-,0.,9// L/.//:-

RATIO ANAL4SIS: !E)" ES6I"K ;%"I3E "otal debt !ebt equity ratioL Equity KE%; ./++ ./+. %536N" .,:9+<+,0,,:/,9.. .,0+9 < +,,8,,:,-/1 >E;2E"%=E U /.///+., /.///+-

IN"E;>;E"%"I3NE !ebt equity ratio measures the ability of the firm to meets its debts. a debt equity ratio of less than + is considered as ideal ,but in the above case the ratio is more than one. o the is not good in paying its debts IN";E " 23HE;%=E ;%"I3E Interest coverage L KE%; ./++ ./+. E)I" Interest %536N" .,01,.1, < 98+,9.,0/1 < :0: >E;2E"%=E U 9.0.00 :10.10

 IN"E;>;E"%"I3NE It measures as many times the company will cover its interest on its earnings therefore the higher the ratio. Digher is the profit of the firm. "he company is good in this ratio !IHI!EN! >%K36" ;%"I3E !ividend payout ratio L !ividend per share E> %536N" .9 < /.89 /../ < /./++ >E;2E"%=E U 99.9, +0.++

KE%; ./++ ./+. IN"E;>;E"%"I3NE

"he ratio is decreased by :-.:0U compared to last year this is not a good sign for the company. "he company should take care on its earnings.

!IHI!EN! KIEA! ;%"I3E !ividend yield ratio L !ividend per share 5arket price per share >E;2E"%=E U ..9 /../

KE%; ./++ ./+.

%536N" .9 < +/ /../ < +

 IN"E;>;E"%"I3N E "he ratio measures how the dividend is earning. *or a good yield the ratio must be high. "he company is having a low yield on its dividend this is not a good sign for the company

*IRE! %

E" ;%"I3E *ixed asset ;atio L *ixed asset Aong term funds >E;2E"%=E U ,.9,./1

KE%; ./++ ./+. IN"E;>;E"%"I3NE

%536N" +9,:+- < .:9+ +-,+:1 < .0+9

"he ratio indicates that for + unit of fixed asset how much investment it is making. "he higher the ratio is high profit to the company. "he above case the ratio is decreased compare to its previous year. "his is not a good sign for the company.

"3"%A !E)" "3 "3"%A %

E" ;%"I3E "otal debt "otal asset

"otal debt to total asset ratioL

KE%; ./++ ./+.

%536N" .:9+ < +,0,,:/,9.. .,0+9 < +,-0,/8,:1,

>E;2E"%=E U /.///+., /./+9

IN"E;>;E"%"I3NE Bhen compared to last year the debt has been increased by /.//:U. so it is not good and bad as well.so the company position towards its debt and asset is satisfactory ;E"6;N 3N % E" ;%"I3E Net income &>%"' ;eturn on asset L "otal assets KE%; ./++ ./+. %536N" +,:,,/+,,0,< +,0,,:/,9.. -1,,,, < +,-0,/8,:1, >E;2E"%=E U /.-: /.89

IN"E;>;E"%"I3NE "he higher ratio is the profit to the company. "he ratio has been decreased when compared to last year the company should invest its assets in a more appropriate way, so that the returns are high.

%AE "3 *IRE! %

E" ;%"I3E ales *ixed asset >E;2E"%=E U .:.1, +8.:.

ales to fixed asset L KE%; ./++ ./+.

%536N" :,,,,191 < +9,:+.,89,888 < +-,+:1

IN"E;>;E"%"I3N E "he ratio is decreased compared to the last year. "here is no ideal ratio to this ratio, higher is the ratio is high benefit to the company. "he company having a low ratio which is no good sign KE%; %536N" >E;2E"%=E U ./++ :,,,,191 < +,0,,:/,9.. /./. ./+. .,89,888 < +,-0,/8,:1, /./+8 "%"%A % E" "3 "6;N3HE; ;%"I3E "otal asset turnover ratio L ales< "otal assets

IN"E;>;E"%"I3NE "he ratio has been increased from its previous year, this is a good sign for the company even through sales have been decreased when compared to last year

26;;EN" ;%"I3E 2urrent assets 2urrent ratio L 2urrent liabilities KE%; ./++ ./+. %536N" :8,//,9,9 < 1,88,.9: .9,8,,898 < +,0-,.:>E;2E"%=E U :.,/ +:.,/

IN"E;>;E"%"I3N Bhen compared to last year the current asset ratio has been increased +/U it indicates that the company is not investing its current assets properly this is a not good sign for the company.

E%;NIN= >E; D%;E ;%"I3E Earnings per share L Net >%" No. 3f equity shares

KE%; ./++ ./+.

(++ 5+ 4+ 3+ *+ + (st :tr *nd :tr 'rd :tr 3t2 :tr

%536N" +,:,,/+,,0, < :,//,//,/// -1,,,, < -8,1-,0.,9//

>E;2E"%=E U /.89 /.++

E ast ;est Nort2

IN"E;>;E"%"I3NE E> indicates how much a share is earning on its investment. "he above table shows that there is a decline in the current year compare to last year. "his is not a good sign to the company.

NE" >;3*I" ;%"I3E Net profit Net profit L Net sales KE%; ./++ ./++
(++ 5+ 4+ 3+ *+ + (st :tr *nd :tr 'rd :tr 3t2 :tr E ast ;est Nort2

V+//

%536N" +,:,,/+,,0, < :,,,,191V+// -1,,,, < .,89,888V+//

>E;2E"%=E U :-.,, :..8,

IN"E;>;E"%"I3NE

=enerally the ratio should be high. Dere the ratio is consistent in both the years. o the companyFs position is satisfactory.

;E"6;N 3N "3"%A ES6I"K ;%"I3E >%" ;eturn on total equity L "otal equity

KE%; ./++ ./+.

(++ 5+ 4+ 3+ *+ + (st :tr *nd :tr 'rd :tr 3t2 :tr

%536N" +,:,,/+,,0, < +,,9,:8,899 -1,,,, < +,,8,,:,-/1

>E;2E"%=E U /.0. /.//80

E ast ;est Nort2

IN"E;>;E"%"I3NE "his ratio shows that for + unit of profit how much equity he company is generating. "he higher ratio is considered to be ideal. "he ratio is less than one in both years. o company position is not satisfactory.

FINDIN1S

%ccording to the equity valuation I am find out the following pointsE Bhen compared to last year the debt has been increased by /.//:U. so it is not good and bad as well. o the company position towards its debt and asset is satisfactory. Bhen compared to last year the current asset ratio has been increased +/U it indicates that the company is not investing its current assets properly this is a not good sign for the company. !ebt equity ratio measures the ability of the firm to meets its debts. a debt equity ratio of less than + is considered as ideal ,but in the above case the ratio is more than one. o the is not good in paying its debts. "he interest coverage ratio measures as many times the company will cover its interest on its earnings therefore the higher the ratio, Digher is the profit of the firm. "he company is good in this ratio. Bhen the return on asset get high ratio that shows to the profit to the company. "he ratio has been decreased when compared to last year this is not a good sign. "he total asset turnover ratio has been increased from its previous year, this is a good sign for the company even through sales have been decreased when compared to last year. "he dividend payout ratio is decreased by :-.:0U compared to last year this is not a good sign for the company. "he company should take care on its earnings. "he dividend yield ratio measures how the dividend is earning. *or a good yield the ratio must be high. "he company is having a low yield on its dividend this is not a good sign for the company.

SU11ETIONS: "he company is not paying its debt properly sufficient care must be taken in paying its debt,so that the company can raise capital through loans. Normally the current ratio of .E+ is considered as ideal. "he ratio is more than . in both. the years so management should take care on its current assets, so that the company can increase its profits "he treatment towards assets is not good that is assets are not being invested properly. "he assets can be invested in a more appropriate way so that return on asset will be high. "he company is no good in paying in their dividends. o I suggest that sufficient care must be taken to ensure that dividends are paid to investors timely Externally the company position is good but internally there are some problems lacking in there performance. o I suggest that top management should take care on its performance internally "he company should take care on its return on total equity ratio, otherwise the company will have to face serious consequences

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