CHAPTER- 1

INTRODUCTION

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.
Since 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
Day Trader and Short Term Investor.
The price of a security represents a consensus. It is the price at which one person agrees to buy
an another agrees to sell. The price at which an investor is willing to buy or sell depends
primarily on his expectations. If he expects the securitys price to rise, he will buy it; if the
investor expects the price to fall, he will sell it. These simple statements are the cause of a major
challenge in forecasting security prices, because they refer to human

expectations. As we all

know firsthand, human 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) become less important than knowing what other investors expect it to sell for. Thats
not to say that knowing what a security should sell for isnt importantis. Other investors
expect it to sell for. But there is usually a fairly strong consensus of a stock's future earnings that
the average investor cannot disprove .Fundamental analysis and technical analysis can co-exist in
peace and complement each other .since 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.

NEED /STATEMENT OF PROBLEM:Studies analyze the performance of the three companies for the last five years and comparison in
made of their performance in different year.
The problem of this study is addressed based on findings of previous literature in the same field
the basic objective is to go through previous literature and to get what already done what is
lacking in that areas .Though for the study some research already done in different time period
with different companies but not done with the present companies what I have selected for this
study.

OBJECTIVES:To study the equity analysis mechanism in IT sector.

To suggest the best equity investment alternative in IT sector.
To analyze dividend payment ability in IT sector.

SCOPE OF STUDY:The scope of the study includes collecting the data from selected software companies like TCS,
INFOSYS, and WIPRO. The studies also includes understanding and collecting the information
relating to equity investment performance of selected software companies and draw the
reasonable conclusions and suggestions relating to equity investments to investors.
PERIOD OF STUDY:The study includes 5 years of data from 2008-2013 for analyzing the equity invest performance
fluctuations and its impact on investor returns.

METHODOLGY:Research method:
The descriptive method is used for this study.
3

Sample size:
For this study three IT companies are selected.
Source of data:
For purpose of present study both primary and secondary sources are used. The primary data
will be in the form of design questioners administered among the target group. Secondary data
from various websites, newspapers, and magazines.
Statistical tools used for various analyses:
EIC approach and financial ratios-debt and equity current ratio, ROE and, EPS ratios are
used

DATA COLLECTION:PRIMARY:
Which is collected for the first time thorough questionnaire from the India bulls staff and
officials.
SECONDARY:
The secondary information is mostly taken from websites, books, journals, etc...

LIMITATIONS:The study has been conducted purely to understand equity analysis for investors.
The study is restricted to three companies based on fundamental analysis.
The study is limited to the companies having equities
Detailed study of the topic was not possible due to limited size of the project.
There was a constraint with regard to time allocation for the research study i.e, for a period of 45
days. Suggestions and conclusions are based on the limited data of 5 years.
4

CHAPTER-2
LITRATURE REVIEWS

Review:-1
S. Uma Asst. Professor Department of Commerce. He has conducted a study on analysis of share
price behavior of the selected industries.
The Indian capital Market has witnessed a tremendous growth. There was an explosion of
investor interest during the nineties and an Equity Guilt emerged in statutory legislations has
helped the capital market. Foreign Exchange regulation act is one such legislation in this
direction.

An important recent development has been the Entry of Foreign Institutional investors are
participants to the primary and secondary markets for the securities. In the past several years,
investments in developing countries have increased remarkably. Among the developing countries
India has received considerable capital inflows in recent years. The liberalization policy of the
government of India has now started fielding results and the country is poised for a big leap in
the industrial and economic growth. The Economy of the country is mainly based on the
development of the corporate sectors. A better understanding of the stock market trend will
facilitate allocation of financial sources to the most profitable investment opportunity. The
behavior of stock returns will enable the investors to make appropriate investment decisions. The
fluctuations of stock returns are due to several economic and non-economic factors. The study is
aimed at ascertaining the behavior of share returns. This project analyses the equity share
fluctuations in India Selected Industry. It also measures the strength of the trend and the money
involved in investing in the stocks. Simple moving average model is applied for selected
companies which would give the investor a sell signal or buy signal.
In India most of the industries require huge amount of investments. Funds are raised mostly
through the issue of share. An investor is satisfied from the reasonable return from investment in
shares. Speculation involves higher risks to get return on the other hand investment involves no
such risks and returns will be fair. An investor can succeed in his investment only when he is
able to select the right shares. The investors should keenly watch the situations like market price,
6

economy, company progress, returns, and the risk involved in a share before taking decision on a
particular share. This study made will help the investors know the behaviour of share prices and
thus can succeed.

Review:-2
The project entitled Comparative analysis of finance and banking equity stocks is about doing
analysis on stocks and suggesting the investor in making a decision to buy, sell or hold. The
project consists of two types of analysis.
1. Fundamental Analysis
2. Technical Analysis
Fundamental analysis consists of economy analysis, industry analysis and company analysis.
Economy analysis includes economic factors like GDP, inflation rates, interest rates, exchange
rates. Industry analysis consists of analysis of industry recent developments in the industry etc.
Company analysis includes analyzing the companys ratios etc.
Technical analysis mainly consists of charts, graphs etc. It takes the closing prices and plots the
graphs. It is mainly used for short term purpose.
The project contains five banking and finance stocks namely, ICICI Bank, HDFC Bank, Axis
Bank, Infrastructure Development Finance Company Ltd (IDFC Ltd), and Housing Development
Finance Corporation Ltd. (HDFCL). The analysis is done on these five stocks to determine
which one is better for investor. For each stock based upon the ratios I have recommended which
stock to buy. Some investors look for sales of a company, some may look for dividend payout
ratio. It again depends on investor. Based upon the ratios he can choose which stock to invest.
At the end conclusion and recommendations have been specified so as to make the project work
more meaningful and purposeful.

Review:-3
M. Campbell Gunn (February 2000) has conducted a study on Global equity management and
valuation AIMR conference proceedings. Global equity investors must decide whether to
construct equity portfolios using macroeconomic analysis or global sector analysis. A
macroeconomic approach can have major drawbacks, but to use sector analysis is to confront the
potentially serious limitations of traditional valuation methods. Alternative methods, however,
also have flaws, and the challenge for investors is to make the right trade-offs in developing an
approach to suit their particular needs.
Review:-4
Paul R. Brown (February 2000) has conducted a study on Financial Reporting and Disclosure
for Equity Analysis AIMR Conference Proceedings. In the complex circumstances of the
current reporting environment, financial statement analysis often presents challenges that cannot
be addressed with a direct, quantitative approach. Analysts can benefit by beginning the
evaluation process with information other than the raw numbers and focusing particular attention
on understanding the economic characteristics of a company's industry, identifying company
strategies, and" cleansing" the financial statement. The perspective gained from these efforts can
help analysts interpret peculiar aspects of financial statement analysis, such as accounting for
such "soft" assets as research and development.

Review:-5
Richard H. Lawrence (February 2000), Jr., CFA has conducted a study on Analyzing Asian
Companies AIMR Conference Proceedings Total reliance on traditional valuation methods to
evaluate Asian companies can be dangerous because of the companies' lack of transparency and
inadequate financial disclosures. Fundamental investment principles still apply, but analysts need
to look beyond basic accounting data and often earnings projections. Focusing on cash flow,
accounting-adjusted earnings, and enterprise value; making repeated company visits; and
8

evaluating management can all help analysts uncover the common ways in which Asian
companies destroy value.

Review:-6
Christopher J. Malloy (October 27, 2003) has conducted a study on The Geography of Equity
Analysis. I provide evidence that geographically proximate analysts are more accurate than
other analysts. Stock returns immediately surrounding forecast revisions suggest that local
analysts impact prices more than other analysts. These effects are strongest for firms located in
small cities and remote areas. Collectively these results suggest that geographically proximate
analysts possess an information advantage over other analysts, and that this advantage translates
into better performance. The well-documented underwriter affiliation bias in stock
recommendations is concentrated among distant affiliated analysts; recommendations by local
affiliated analysts are unbiased. This finding reveals a geographic component to the agency
problems in the industry.

Review:-7
Shai Bernstein, Josh Lerner, Mortem Sorensen and Per Stromberg they are conducted a study on
Private Equity and Industry Performance. The growth of the private equity industry has
spurred concerns about its potential impact on the economy more generally. This analysis looks
across nations and industries to assess the impact of private equity on industry performance.
Industries where PE funds have invested in the past five years have grown more quickly in terms
of productivity and employment. There are few significant differences between industries with
limited and high private equity activity. It is hard to find support for claims that economic
activity in industries with private equity backing is more exposed to aggregate shocks. The
results using lagged private equity investments suggest that the results are not driven by reverse
causality. These patterns are not driven solely by common law nations such as the United
Kingdom and United States, but also hold in Continental Europe.

Review:-8
A study on Fundamental equity valuation a case study of TCS, WIPRO, and INFOSYS
companies. The author has examined behavioral view on the process of common stock
valuation our main goal is to value common stocks using a sop hesitated Discounted Cash Flow
(DCF) valuation model. We build the model and estimate it s inputs by trying to replicate as
closely as possible investors behavior in valuing stocks in the stock market and consequently
use a mix of different methods to determine cash flow growth, the growth duration and the
discount rate. We test the models ability to differentiate between underand overvalued stocks
in the US market over the ten year period from 1993-2002. The results of the approach are very
promising: an investment strategy buying undervalued stocks as identified by the model yields
an annual return of 27.57% over the ten year testing period compared to a benchmark return of
19.47% and the returns of a portfolio of overvalued stocks as identified by the model of only
6.26%. We conclude therefore that a complex discounted cash flow valuation model can identify
and exploit systematic mispricing in the stock market.

Review:-9
A study on Tools of Fundamental Analysis Fundamental analysis is the process of looking at a
business at the basic or fundamental financial level. This type of analysis examines key ratios of
a business to determine its financial health and gives you an idea of the value its stock.
Many investors use fundamental analysis alone or in combination with other tools to evaluate
stocks for investment purposes. The goal is to determine the current worth and, more
importantly, how the market values the stock.
This article focuses on the key tools of fundamental analysis and what they tell you. Even if you
dont plan to do in-depth fundamental analysis yourself, it will help you follow stocks more
closely if you understand the key ratios and terms.

10

Earnings
Its all about earnings. When you come to the bottom line, thats what investors want to know.
How much money is the company making and how much is it going to make in the future.
Earnings are profits. It may be complicated to calculate, but thats what buying a company is
about. Increasing earnings generally leads to a higher stock price and, in some cases, a regular
dividend.
When earnings fall short, the market may hammer the stock. Every quarter, companies report
earnings. Analysts follow major companies closely and if they fall short of projected earnings,
sound the alarm. For more information on earnings, see my article: Its the Earnings.
While earnings are important, by themselves they dont tell you anything about how the market
values the stock. To begin building a picture of how the stock is valued you need to use some
fundamental analysis tools. These ratios are easy to calculate, but you can find most of them
already done on sites like cnn.money.com or MSN MoneyCentral.com.
Review:-10
A study on You want to be an equity analysis Equity research analysts work on both the sell
side and the buy side. Sell-side researchers will work at an investment bank or independent
research company, while the buy side typically indicates hedge funds or investment
management.
On the sell side, researchers develop earnings and cash-flow models of the companies they
follow, said Paul Lemming, an independent analyst affiliated with Soleil Securities, a New Yorkbased equity research, sales and trading firm. The research is driven by stock performance: Is
Google, for example, a good investment for a shareholder?
A sell-side analyst will cover a specific group of companies and "know more about less"
compared to a buy-side analyst, said Richard Lip stein, a managing director at Hawthorne, N.Y.based Boyden Global Executive Search. For example, an analyst might cover 12 oil-services
companies, write reports and make presentations to the clients, which may include investment
11

managers like Fidelity and Putnam.

On the buy side, an analyst will probably follow 30 to 40 companies in two to three different
industries, Lemming said. The buy-side analyst focuses on suitability elements for the client
involved. They don't publish their research like sell-side analysts do, but instead feed their
insights to the portfolio managers who are managing money for the client. Reports can range
from two to three pages after a company's earnings to 10 to 15 pages for a longer outlook piece.

Not all analysts have to cover companies, however. Christina Wood, an associate in global
emerging markets at Citigroup, analyzes macro trends across countries, a job for which she must
stay on top of current events. With the recent protests in Egypt, for example, Wood's team
examined how they would affect gross domestic product and how the country would be affected
from an investment standpoint.
Review:-11
Dr. Abdelghafour Al-Zawahre (Department of business Administration, the Hashemite
University, Jordan) has conducted a study on The Utility of Equity Theory in Enhancing
Organizational This paper will focus on examining equity theory, its propositions and
underlying assumptions. I will examine the research on equity theory in regard to pay since it is
assumed to be one of the essential and most important outcomes. A critique will follow to
determine the feasibility and utility of the theory. Finally, there would be summary and
recommendations for future research. The research question is to explore the effect pay outcome
has on other outcome variables such as motivation, job satisfaction, and performance. The
second research question is whether or not comparison other, communication, or status in
occupation has an influence on the perceived fairness of pay. This paper will provide human
resource professionals with a broad understanding of the importance of pay in motivating
employees and in improving their productivity. It appears that pay is a major factor in perceived
equity therefore; attention needs to be given to this concept.

12

Review:-12
R. C. Kelln and John H.Ellard they are conducted study on An Equity Theory Analysis of the
Impact of Forgiveness and Retribution on Transgressor Compliance Forgiveness, when thought
of as an unsolicited gift, may increase the perceived debt of the transgressor to the victim
whereas retribution should reduce it. Male undergraduates participated in a study designed to test
this equity interpretation of forgiveness and retribution. Participants were induced to break a
piece of electronic equipment during an ostensible memory study; the reaction of the
experimenter served as the experimental manipulation. Participants experienced one of
forgiveness, retribution, both retribution and forgiveness, or neither, and were then asked to
comply with a request from the experimenter as an indirect measure of perceived inequity.
Consistent with an equity analysis, a planned contrast analysis indicated that forgiveness alone
yielded the most compliance and retribution yielded the least compliance.
Review:-13
Antonio Zoratto Sanvicente has conducted a study on Learning Theory and Equity Valuation
This paper tested the Pastor and Veronese (2003) hypothesis that the market-to-book ratio(M/B)
is negatively related to the number of years (age) during which a firm has had its stock traded on
an Exchange. The predicted decline takes place as a result of a learning process by investors. The
authors tested this implication in the U.S. market using the Fame and Macbeth (1973)
methodology. In the present article a more general econometric approach is adopted, with the use
of panel data and fixed-factor regresses, with data for stocks traded at the Sao Paulo Stock
Exchange (BOVESPA). The evidence does not reject the Pastor and Veronese hypothesis.
Additional conjectures were tested regarding the learning process. These tests indicate that the
greater availability of data on a company amplifies the effect of the age variable on the M/B
ratio, implying a more accelerated learning process. This paper concludes that the evidence for
the Brazilian market supports the theory that investors learn.
Keywords: Learning finance; efficient markets; equity valuation.

13

Theoretical frame work on equity

analysis
What is Equity?
Equity is the ownership interest of investors in a business firm. Investors can own equity shares
in a firm in the form of common stock or preferred stock. Equity ownership in the firm means
that the original business owner no longer owns 100% of the firm but shares ownership with
others .On a company's balance sheet, equity is represented by the following accounts: common
stock, preferred stock, paid-in capital, and retained earnings. Equity can be calculated by
subtracting total liabilities from total assets.
EQUITY ANALYSIS:Stock analysis is a term that refers to the evaluation of a particular trading instrument, an
investment sector or the market as a whole. Stock analysts attempt to determine the future
activity of an instrument, sector or market. There are two basic types of stock analysis:
fundamental analysis and technical analysis. Fundamental analysis concentrates on data from
sources including financial records, economic reports, company assets and market share.
Technical analysis focuses on the study of past market action to predict future price movement.
FOUNDATIION OF RESEARCH:The basis of research is the data and information relevant for the purpose. There are two
categories-on internal to the company and other external sources. The first relates to the working
operations results, plans and financial statements of the company. The second relates to the
information from outside agencies, like the government and its policies, from the information
developments, press reports on both domestic and international economic and financial
developments industry and commerce chambers and federations, company executives reports
from security firms financial analysts and a host of development affecting the company
14

published in the daily financial press. The government publications, like Economic survey and
Ministry Reports and bulletins published by the RBI, CMIE, FICCI, etc.. Constitute some of the
examples of such information sources. Many security firms like J.M., DSP and Insight
Management Company etc., publishing reports on industry and company analysis like those of
Merrill Lynch chase, etc., in foreign markets.
The information base is therefore the first step in Investment research
company wise profiles are available in the directory of information, published by B.S.E. and in
the form of floppies from various computer firms, as software for use and analysis through
personal computers. In additional to economic times, financial Express, business line and
business standards, which are daily financial papers, There are also fortnightly and monthly
journals like capital markets, dalal street, business India which give company reports ,and
sometimes detailed industry reports based on authentic interviews and research.
Techniques of Analysis:Investment research firms adopt many techniques and methods of collecting and collating data,
relevant for analysis. The more important methods are set our below, for illustrations:
1. Collecting from the daily press: cuttings from the daily press and journals, field in company
profiles with information updated from time-to-time. Some firms like PRIME publications from
New Delhi sell these updates of information through regular Weekly and monthly Handout and
Reports. Some software companies sell these updates on floppies on a regular basis. The
individual investors can collect these data from daily press.
2. Survey/Questionnaire Techniques: Data can be collected from the survey or by sending
questionnaire to the industry association and companies. Many big research organizations like
Madras institute of financial management and research, RBI and CMIE adopt these techniques,
in addition to sponsored research by U.G.C. and by the universities. The results of the research
projects are sometimes published in journals as research articles, as in journal of finance or
journal of institute of public enterprises, etc.
3. Factory and plant visits: The research team visits the factory and the corporate offices of the
company and study the operational efficiency on the spot and secure oral evidence from the
15

departmental heads regarding the raw material and input problems, labor problems. Managerial
plans for expansion, diversification and for improving productivity and efficiency. The analysts
may also interview the M.D. or chairman for their version on the assessment of the working of
the factory. This can be supplemented by interviewing some executives down the line, suppliers,
creditors, dealers and consumers of the product sold by the company. The can also secure the
evidence from the competitors in the field or industry line and the relevant associations in which
the company is represented. Data to be collected and analyzed by questionnaire and factory visit
methods are given in the Appendix.
4. Desk study of financial statement: Annual reports, half yearly unaudited reports etc. give the
information on the companies, available from the companies themselves and are a through many
referred to below.
FORECASTING METHODS
The traditional approaches to the forecasting of the earnings are through estimation of sales, net
present value of future dividend flows and earnings per share and price earnings multiple, which
were discussed in an earlier chapter. These approaches are through and ready methods and
unscientific as they consider only the expected returns, but not expected risks and risks are
equally important as returns under modern portfolio analysis. The more scientific approaches are
:(a) Regression and correlation Analysis,
(b)Trend Analysis,
(c)Decision tree Analysis and
(d)Econometric Models
(1) Regression and Correlation:

16

Simple relation of two variables can be expressed and studied through simple linear
regression equation. This is represented as y=f(x) or y=a+b(x) where y is sales and x is personal
disposable Income and a is a constant graphically these relationship can be expressed as
follows: a is a constant. If x is zero, y value is a and later on x takes any positive value, y value
will change as a multiple of x and that multiple is the slope of the graph y=a+b(x), in the above
graph .The data on x and y can be rates of growth or absolute figures.
If the relationship involves more than two variables, it is called multiple linear
regression and the equation may take the form of y=a+b(x)+c(z)+u. An example of multiple
linear equations can be given by taking sales s a function of personal disposable income, bank
credit and money supply etc. Correlation tells the analyst how will is the explanatory power of
the independent variable how much of the change in y can be explained by x in the above
equation? Correlation technique helps the user to test the goodness of fit of the equation and to
change the variable or the relationship depending upon the results of the research.
(2)Trend Analysis:
In trend analysis, regression techniques Is used and the dependent variable, say sales is
regressed over time, say month or years. Thus, earnings can be regressed over time, say months
or years. Thus, earnings can regressed over time graphically by taking years on the x-axis and
17

earnings on the y-axis to fit a single straight line. If these are absolute figures, then it is a sample
arithmetic graph. If it is a semi-logarithmic graph, then the growth rates of y variable are taken
and the x variable remains unchanged, say number of years. Thus, the growth rates of earnings
per share or total earnings can be taken on the taken on the y axis instead of absolute figures. The
semi-logarithmic graph can be depicted as shown in figure.
The slopes of the graph will change due to change in growth rates. They are not parallel.
These techniques require a good deal of data of the past and analysis for a length of time for
experimentation. Thus, it is time consuming and subject to ensure of judgment in the section of
variables, the time periods or even the relationship itself. A good economic analysis and
reasoning is necessary to establish relationships, logically rational, justified and dependable.
Besides, the qualitative and subjective factors like the role of management, quality variations in
the products effect these equations. If the error left over is large, then equations become
undependable and these unaccounted variables are left in the error term. Thus, if the equation is:
Y=a+b(x)+c(z)+u, where x and z are variables explaining the y variable, in the form of gross
block (x) and sale (z), then u is the error term comprising of many unknown variables, which
also explains the dependent variable y. There are a number of statistical pitfalls and possible
errors in such experiments. Even after such laborious work, and time involved in the process is
undertaken, there is no survey that the predictive power of equations is 100% fool proof. There
will be need for medications in the decisions, depending on the discussions with the
management, chief executives and other concerned parties. Subjective judgments on labor
quality, expansion plans, time lag, involved and the management perspective become necessary
and decisions have to be modified accordingly.
(3) Decision Tree Analysis
The earlier techniques assume certainly of events for estimation; they also quantify the
qualitative aspects and use statistical tools and economic rationale. Major subjective factors are
not quantifiable, like the quality of the management or labor efficiency. The estimates so made
do not carry with them the probability of their occurrence. It is only in the Decision Tree

18

Analysis that estimates can be made with probabilities varying with the occurrence of
intermediate events and in the sequence of events or in the process of sequencing.
Specifically, growth of sales depends on the capacity built and capacity utilized which in turn
depend on the gross block. Given the capacity built, it depends on the capacity used. If the
utilization is say 50%, one possible outcome of sales will be there, say the sales growth will be
20% and if the capacity utilization is 80%, then growth of sales will be 25% and so on. All these
possible alternatives can be examined in the decision tree analysis, along with their outcomes.
Based on the sales growth, the net earnings and dividend pay outs can be decided. Even these
can take various alternative possibilities, depending on the rate of depreciation and taxation
assued and the rate of dividend distribution estimated. Thus, the final outcome of share price
may take various values depending on these various intermediate factors, referred to above. But
this technique can be adopted if full knowledge of all alternatives is possible, say technical
process used, details of operations etc.
Fundamental analysis is one of the most useful tools that investors use when making decisions
about which stocks theyre going to buy. It is a process of examining key ratios that show the
current worth of a stock and the recent performance of a company.
Fundamental analysis is used to determine the amount of money a company can make and the
kind of earnings an investor can expect. Future earnings may be subject to interpretation but
good earning histories create confidence among investors. The stock prices may increase and the
dividends may pay out.
Stock market analysts determine whether a company is meeting its expected growth by
examining the earnings that are reported by the company on a regular basis. If the company
doesnt meet its expected growth, the prices of its stocks usually experience a downturn.
There are a lot of tools that are used to determine the earnings and the value of a company on the
stock market. Most of these tools rely on the financial statements released by the company.
Details about the value of a company which include competitive advantages and ownership

19

ratios between the management and the outside investors can be revealed through further
fundamental analyses.
Financial Statements
Public traded companies are required to publish regular financial statements. These statements
are available either in printed forms or in online pages. These statements include an income
investment, a balance sheet, an auditors report, and a cash flow statement. They also include a
description of the planned activities and expected revenues for the coming year.
Auditors Report
One of the most important sections found in financial statements is the auditors report. The
auditor, who is an independent Certified Public Accountant (CPA), is the one who examines the
financial activities of the company in order to determine whether the financial statement is an
accurate description of the earnings or not. A financial report is considered worthless without an
independent auditors report because it might contain some misleading or inaccurate information.
Although it is not a guarantee of accuracy, an auditors report provides credibility to the financial
statement.
Balance Sheet
The balance sheet, which is another important section in financial statements, serves a
snapshot of the companys financial condition at a single point in time. It shows the
relationship between the assets such as cash, property, and equipment; the liabilities such as debt;
and the equities such as retained earnings and stocks.
Income Statement
The section in financial statements that shows the information regarding the companys net
income, revenue, and earnings per share over a certain period of time is called the income
statement. The top line of the income statement shows the amount of income that is generated by

20

sales, underneath which the costs incurred in doing business are deducted. The bottom line
shows the companys net income or loss and the companys income per share.
Cash Flow
The cash flow statement shares some similarities with the income statement because both
sections provide a picture of a companys performance over time. Unlike the income statement,
the cash flow statement doesnt use accounting procedures like depreciation. It simply indicates
how a company handles its income and its expenses. The cash flow statement shows the
incoming and outgoing cash from the sales, the investments, and the financing of a company. It
is used as a good indicator of how the management runs the company and how the company
handles the creditors. It also shows from where a company receives its growth capital.

Risk and returns concepts and analysis

Investors have different motives for investing. Leaving aside a few who love the power and
prestige of holding a major share or a minor share in a company, the majority of the investors
have one of the following motives or a combination of them:
(a) Regular income either in the form of dividend or interest.
(b) Capital gains or capital appreciation.
(c) Hedge against inflation, a positive real rate of return
(d) Safety of funds and regularity of payment of interest and principal
(e) Liquidity and marketability in the sense that investor can convert his investment into cash
or liquidity and back again into investment when cash is not needed.
Security analysis involves an examination of expected return and accompanying risks. The first
three motives of income, capital appreciation and positive hedge against inflation refer to the
expected return. The last two motives of investor lead to the risk involved in the investments.
21

These risks are due to uncertainty or returns, regularity of returns, safety of funds, marketability
or lack of it, etc.
Investors generally desire to have maximum return possible, as they like returns, but
dislike the risk and the extent of risk aversion various from investors to investors. But the return
depends on the extent of risk that the investors take. The return composes of riskless return
(normally paid on a treasury bill or a bank deposit) plus a risk premium depending on the risk
taken by the investor.
Investments are made based on security analysis and decisions involved are what
securities to be brought or sold and extent or proportion of funds to be invested in each.
Components of return
Return is measured by taking the income plus the price change. Income is either dividend
or interest and price change of the security is the capital gain or loss. The term yield is also used
in respect of the fixed income securities. Thus, we buy a 12.5% central government bond for
Rs.95. the coupon rate is 12.5 per annum and face value is Rs.100 but purchased for Rs.95. then
the investor gets Rs. 12.5 by holding the bond for one year on investment of Rs. 95. Then the
yield (also called current yield) works out to 12.5/95= 13.5%
The expected return may differ from the realised return and the variation in return is
again a risk element.
Thus, to generalized the return measurement as applicable to both variable dividend
security and fixed income security, we have
Total return=income received + price change/purchase price of asset
This return should refer to a period of time, say a year and price change is the difference
between the price at the end and price at the beginning of the period. The income may be nil and
price change can be both positive and negative or both can be positive and herein again lies the
risk element.

22

Risk elements
The components of risk are broadly two:
1.

Systematic risk: which refers to the portion of the total variability of the return caused by
common factors affecting the price of all securities in the market alike through economic
and social factors?

2.

Unsystematic risk: which refers to that portion of the total variability of the return caused
due to unique factors, relating to that firm or industry, through such factors as
management failure, labor strikes, raw materials scarcity etc.,

Examples of systematic risk

(1) Market risk- changes in market conditions.
(2) Interest rate risk-changes in interest rates.
(3) Purchasing power or inflation risk.
(4) Trade cycles or business conditions or monsoons for agriculturally based economic
like India.
Examples of unsystematic risk
(1) Business risk relating to the industries.
(2) Financial risk due to heavy interest burden or inefficient capital management.
(3) Management risk due to poor efficiency, faulty planning.
(4) Labor and other input risks of the company.
While the systematic risk is common to all companies and has to be borne by the investor
and compensated by the risk premium, the unsystematic risk can be reduced by the

23

investors through proper diversification and planning a proper investment strategy for the
purpose.
Risk concept
All investment are risky, whether in stock and capital markets or banking and financial sector,
real estate, bullion, gold, etc. the degree of risk however varies on the basis of the feature of the
assets, investment instrument, the mode of investment, or the issuer of the security etc. even the
so called riskless assets like bank deposits carry some cast and time in the relation of proceeds or
in conversion into cash.
Risk and uncertainty
Risk and uncertainty go together. Risk suggest that then decision maker knows that there is some
possible consequence of investment decision but uncertainty involves a situation where the
outcome is not know the decision maker but basically when their the outcome know are not the
investment involve both risk and uncertainty for our decision the word risk is used a comprise all
elements of variability of returns uncertainty of the outcomes etc.
Some risk can be controlled by the investors and some by the issue of securities by planning
others cannot be controlled and they are not the borne compulsorily by the investor.

What cause the risks?

These risks are caused by the following factors:
(1) Wrong decision of what to invest in.
(2) Wrong timing of investment.
(3) Nature of the instrument invested say, the category of assets like corporate share or
bonds, chit funds, nidhis, benefit funds ete., are highly risky, as they are in the
unorganized sector. Some instruments as bank deposit or P.O. certificates are less risky,
due to their certainty of payment of principal and interest.
24

(4) Creditworthiness of the issuer: the securities of government and semi government bodies
are more creditworthy than those issued by the corporate sector and much less secure are
those in the unorganized sector like indigenous banker, shroffs, and chit funds. Private
limited companies share and share of unlisted companies are more risky.
(5) Maturity period or the length investment: the longer the period, the more risky is the
investment normally.
(6) Amount of investment: the higher the amount invested in any security the large is the
risk, while a judicious mix of investments in small quantities may be less risky.
(7) Methods of investment, namely, secured by collateral or not.
(8) Terms of lending such as periodicity of servicing, redemption periods, etc.
(9) Nature of the industry or business in which the company is operating.
(10)

National and international factors, acts of god, etc.

Equity theory can be broken down into four basic propositions (Huseman, Hatfield, &
Miles, 1987).
1) Individuals develop their perception of fairness by calculating a ratio of their inputs
and outcomes and then comparing this to the ratio of others (Huseman, et. al.,
1987).
Inputs are the value proposition of individuals, such as their productivity, time, and education.
Other examples include the experience, knowledge, ability, qualifications and ambition of the
individual (Cory, 2006). Outcomes are the rewards an individual receives. These rewards can be
tangible, such as financial compensation, or intangible, such as recognition or job security. The
comparable other could be a co-worker, a relative, the industry norm, a friend, or even a group of
individuals (Adams, 1963). The comparable other can even be oneself in a past job (Adams,
1963). For example, an individual may not perceive he is being treated fairly when he works 40
25

hours per week (input) and receives $500 in pay (output) while his co-worker works 30 hours per
week and receives $650 in pay.
2. If the comparative ratios are perceived by the individual to be unequal, then inequity
exists (Huseman, et. al., 1987).
According to equity theory, an individual needs to perceive that the ratios of their contributions
are weighted fairly: determined by equal ratios. Equity is all about balance (Spector 2008).
Equity is present when a person feels that they are receiving the appropriate amount of outcomes
from their inputs, when compared to their chosen comparison other. Inequity exists when there is
a perceived difference in the ratios of inputs and outcomes. Two specific types of inequity exist:
underpayment inequity and overpayment inequity. Underpayment inequity occurs when an
individual perceives that their ratio is smaller than their comparison other: they are getting less
for their inputs. For example, if someone feels they are putting in more effort or working harder
than a co-worker, yet they earn equal or less compensation, their perceived ratios will be
different and that person will experience underpayment inequity. In contrast, overpayment
inequity tips the scales in the other direction. For example, someone will feel they are being paid
too much considering their work, when compared to the work and compensation of a co-worker.
This can cause feelings of guilt and the ratios used for comparison are based upon the perception
of an individual, and not an objective measure of inputs and outcomes. Additionally, the choice
of a comparison other is also the subjective selection of the individual.
3. As the difference in inequity increases, the tension and distress felt by an individual will
increase (Huseman, et. al., 1987). Smaller differences of inequity are more tolerable than
significant differences of inequity. Not every person will experience equity or inequity in the
same way because people have varying tolerance levels or sensitivity to perceived situations of
inequity. Three types of individuals have been identified along an equity sensitivity spectrum:
benevolent, equity sensitives, and entitled (Houseman, et. al., 1987). Benevolent are more
tolerant of under-reward (Huseman, et. al., 1987). Equity sensitives follow the norm of equity
theory and prefer their ratios to be equal to their comparison other (Huseman, et. al., 1987).
Entitled prefer to be in over-reward situations and want their ratio to exceed that of their
26

comparison other (Huseman, et. al., 1987). Entitleds frequently have the attitude that the world
owes them a favor, so they will freely accept and seek over-reward situations.
4. The greater tension an individual feels due to perceived inequity, the harder they will
work to decrease their tension and increase perceived levels of equity (Huseman, et. al.,
1987). Most individuals will attempt to achieve equity by adjusting their own inputs and
outcomes, or attempting to change the inputs or outcomes of the comparison other. Individuals
can use behavioral processes or cognitive processes in order to attempt to restore equity.
Examples include decreasing productivity at work, finding a new job, asking for a wage increase,
changing the comparative other, or attempting to distort or justify changes in their perceptions of
inputs and/or outcomes (Adams, 1963). The means of reducing inequity will vary depending on
the situation and will not all be equally satisfying to an individual (Adams, 1963).

27

CHAPTER -3
Company and Industrial Profile

28

Indiabulls Group is one of Indias top business houses with businesses spread over Real Estate,
Infrastructure, Financial Services, Securities, Retail, Multiplex and Power sectors. The group
companies are listed on important Indian and Overseas markets. Indiabulls has been conferred
the status of a Business Super brand by The Brand Council, Super brands India

To be the largest and most profitable financial services organization in Indian retail market and
become one stop shop for all non banking financial products and services for the retail
customers.

Rapidly increase the number of client relationships by providing a broad array of product
offering to emerge as a clear market leader.

Indiabulls Group has five separately listed companies with subsidiaries which contributed in
enhancing scope and profile of the business.

29

Top Indiabulls Financial Services Limited

Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s Orbis
Infotech Private Limited at New Delhi under the Companies Act, 1956. The name of company
was changed to M/s. Indiabulls Financial Services Private Limited on March 16, 2001. In the
year 2004, Indiabulls came up with it own public issue & became a public limited company on
February 27, 2004. The name of company was changed to M/s. Indiabulls Financial Services
Limited.

The company was promoted by three engineers from IIT Delhi, and has attracted more than
Rs.700 million as investments from venture capital, private equity and institutional investors and
30

has developed significant relationships with large commercial banks such as Citibank, HDFC
Bank, Union Bank, ICICI Bank, ABN Amro Bank, Standard Chartered Bank and IL&FS.

The company headquarters are co-located in Mumbai and Delhi, allowing it to access the two
most important regions for Indian financial markets, The marketing and sales efforts are
headquartered out of Mumbai, with a regional headquarter in Delhi. Back office, risk
management, internal finances etc. are headquartered out of Delhi/NCR allowing the company to
scale these processes efficiently for the nationwide network.

Company is listed on:

National Stock Exchange

Bombay Stock Exchange

Luxemburg Stock Exchange

Market capitalization:

Over 7 Billion USD

Net worth

Over 2.5 Billion USD

Highest Ratings from CRISIL CRISIL is India's leading ratings, research, risk and policy
advisory company

31

Broad array of product offering

1. Consumer Finance
2. Housing Finance
3. Commercial Loans
4. Life Insurance
5. Asset Management
6. Advisory Services
Top Strategic Updates

Indiabulls Financial Services Limited (IBFSL) completed the de-merger of its real estate
business into a separate publicly traded company, (IBREL) unlocked over Rs. 10000
crore of shareholder wealth.

De-merger: De-merger of Indiabulls Securities Limited from Indiabulls Financial

Services Limited. Each shareholder of Indiabulls Financial Services Limited received a
share of Indiabulls Securities Limited.

SARFAESI Act Notification: Indiabulls Housing Finance Limited, a wholly owned

subsidiary of Indiabulls Financial Services Limited has been notified as a Financial
Institution for the purpose of SARFAESI Act, 2002. This notification is being
32

effectively used by the company to yield positive results in speedy recoveries of

delinquent mortgage loans.
New Business Venture Updates:

Life Insurance Venture: Indiabulls Financial Services Limited (IBFSL) has entered into
an MOU with Sogecap, the insurance arm of Societe Generale (SocGen) for its upcoming
life insurance joint venture. Sogecap will invest Rs 150 crore to subscribe to 26% of the
paid up capital in the joint venture.

Commodities Exchange (ICEX) : a screen based on-line derivatives exchange for

commodities and has established a reliable, time tested, and a transparent trading
platform. It is also in the process of putting in place robust assaying and warehousing
facilities in order to facilitate deliveries. ICEX is promoted by Indiabulls Financial
Services and MMTC.

Asset Management Business: Indiabulls Financial Services Limited proposes to set up

an asset management company to manage mutual funds and has applied to SEBI for its
approval and the same is awaited.

Indiabulls Real Estate Limited

Indiabulls stepped into the real estate market as Indiabulls Real Estate Limited (IREL) in 2005.
A joint venture between Indiabulls and a US based investment major Farallon Capital
Management LLC resulted in bringing FDI (Foreign Direct Investment) for the first time in the
Indian real estate market. Another joint venture amongst Indiabulls and DLF, Kenneth Builders
and Developers (KBD), has brought up projects for development of residential apartments.

33

Our Projects:
Indiabulls is currently evaluating many large-scale projects worth several hundred million
dollars.
1. One Indiabulls Centre
2. Indiabulls Central Park
3. Central Park Madurai
4. Central Park Hyderabad
5. Castlewood
6. Indiabulls Finance Center
7. HighStreet Vadodara
8. Central Park Vadodara
9. Indiabulls Greens
10. Centrum Park
11. Indiabulls Riverside
12. Gurgoan Housing
13. Sonepat Township
14. Chennai Township
15. Indiabulls Greens Panvel
16. Mumbai Township
17. Nashik SEZ
18. Raigarh SEZ
19. Goa Luxury Resort

Indiabulls Power Limited

Indiabulls Power Limited was established in 2007 to capitalize on emerging opportunities in the
Indian power sector. It develops and intends to operate and maintain power projects in India.
Indiabulls is currently developing five thermal power projects with an aggregate capacity of
approximately 6600 MW. These projects include:
34

- Amravati Phase-I (1320 MW)

- Amravati Phase-II (1320 MW)
- Nasik (1335 MW) in Maharashtra
- Bhaiyathan Thermal Power Project (1320 MW)
- Chhattisgarh Power Project (1320 MW)
In addition to the above Indiabulls is also developing four medium size Hydro Power Projects in
Arunachal Pradesh aggregating to 167 MW.
Indiabulls Securities Limited
Indiabulls Securities Limited is the jewel in the crown of Indiabulls group.
Indiabulls Securities Limited is Indias leading capital markets company with All-India presence
and an extensive client base. Indiabulls Securities is the first and only brokerage house in India
to be assigned the highest rating BQ 1 by CRISIL. Indiabulls Securities Limited is listed on
NSE, BSE & Luxembourg stock exchange.

Indiabulls also provide commodity brokerage services under Indiabulls Commodities Limited
(ICL). It deals in research work and formation of reports on agri-commodites and metals. ICL
has one of the largest retail branch networks in the country.
Products offered Equities and Derivatives

Offers purchase and sale of securities (stock, bonds, debentures etc.)

Broker assisted trade execution

Automated online investing

Access to all IPO's

35

Equity Analysis

Helps to build ideal portfolio

Satisfies need by rating stocks based on facts-based measures

Free of cost for all securities clients

Depository Services

Depository participant with NSDL and CDSL

Helps in trading and settlement of dematerialized shares

Performs clearing services for all securities transactions

Offers platform to execute trade and settle transactions

Sales force in Indiabulls Securities Limited is divided into two groups. i.e. Online & Offline
Mentioned below are the names of EVP's managing respective regions
EVP's Name
(Online)

Vijay Babbar

Managing NCR and UP,

Region

Punjab,Haryana,Uttranchal,
Rajasthan and Gujarat

Amiteshwar Chaudhay
Managing Mahrashtra and
Goa, Kerala, Karnataka,
Andhra Pradesh
and Tamil Nadu

36

Prasenjeet Mukherjee

Managing West Bengal,

Orissa, Bihar and
Jharkhand

EVP's Name
(Offline)

Nirdosh Gaur
Managing NCR
and Haryana

Region

Hemanshu

Anirban

Manoj

Kamdar

Bhattacharya

Srivastava

Managing Bengal,
Andhra Pradesh ,Tamil Managing Mumbai,

, Punjab, Uttar

Nadu, Karnataka and

Pune and other

Pradesh and

part of Mumbai and

surrounding regions

Madhya Pradesh

Gujarat

Managing
Rajasthan,
part of Gujarat
and Mumbai

Top Customer Care Department Providing solution to the queries of customers as well as
branches from a centralized location based out of gurgaon
Clients
0124 - 4572444

Client Helpline Number

39407777
(Local dialing from 25 cities)
helpdesk@indiabulls.com

Securities client can E-mail at

Available from 25 cities: Ahmadabad, Bangalore, Bhopal, Chandigarh, Chennai,

Coimbatore, Delhi, Ernakulam, Hyderabad, Jaipur, Jalandhar, Kolkata, Kozhikode,
Ludhiana, Lucknow, Mumbai, Mangalore, Nashik, Pune, Salem, Surat, Vadodra,
Vadodra - Alkapuri, Vishakhapatnam.

37

Branch
Branch Helpline Number

0124-3989444

Queries

E-mail at

Funds related

funds@indiabulls.com

Reallocation related

reallocate@indiabulls.com

Documents related

documents@indiabulls.com

Other queries except above

help@indiabulls.com

Milestones Achieved

Developed one of the first internet trading platforms in India

Amongst the first to develop in-house real-time CTCL (computer to computer link) with
NSE

Introduction of integrated accounts with automatic gateways to client bank accounts

Development of products such as Power Indiabulls for high volume traders

Indiabulls Signature Account for self-directed investors

Indiabulls Group Professional Network for information and trading service

38

Top Corporate Information

Registered Office
F-60, Malhotra Building, 2nd Floor,
Connaught Place, NEW DELHI - 110001, INDIA
Website: www.indiabulls.com

Corporate Offices
S.P.Centre, C Wing, 41/44, Minoo Desai
Road, Near Radio Club, Colaba,
MUMBAI 400005

39

40

Industrial profile
FINANCIAL MARKETS
Finance 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. Financial 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.
Financial 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. They are typically defined by having transparent pricing, basic regulations on
trading, costs and fees and market forces determining the prices of securities that trade.
Generally, there is no specific place or location to indicate a financial market. Wherever a
financial transaction takes place, it is deemed to have taken place in the financial
market. Hence financial markets are pervasive in nature since financial transactions are
themselves very pervasive throughout the economic system. For 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:

1. Financial markets
2. Organized markets
3. Un organized markets
4. Capital markets
5. Money markets
41

6. Industrial security markets

7. Government securities market
8. Long term loan market
9. Primary market
10. Secondary market
11. Call money market
12. Commercial bill market
13. Treasury bill market money, lenders, indigenous bankers
Capital market:The capital market is a market for financial assets which have a longer indefinite maturity.
Generally 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 the available for industrial and commercial enterprises and public authorities. As
hole, capital markets facilitates rising of capital. The major functions performed by a capital
market are:
1) Mobilization of financial resources on a nation-wide scale.
2) Securing the foreign capital and know how to fill up defict in the require resources for
economic growth at a faster rate.
3) Effective allocation of the mobilized financial resources, by directing the same to projects
yielding highest yield or to the projects needed to promote balanced economic
development.
Capital consists of primary market and secondary market.

42

Primary market:Primary market is a market for new issues or new financial claims. Hence it is also called as
new issues market. It basically deals with those securities which are issued public for the first
time. The market, therefore, makes available a new block of securities for public
subscription. In other words, it deals with rising of fresh capital by companies either for cash
or for consideration other than cash. The best example could be initial public offering (IPO)
where a firm offers shares to public for the first time.

Secondary market:Secondary 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. Generally,
such securities are quoted in the stock exchange and it provides a continuous and regular
market for buying and selling of securities. This market consists of all stock exchanges
recognized by the government of the India.
Money market:Monet markets are the markets for short-term, highly liquid debt securities. Money markets
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 consist of a number
of sub markets which collectively constitutes the money market namely call money market,
commercial bills market, acceptance market, and Treasury bill market.
Derivatives market:The derivatives market is the financial market for derivatives, financial instruments like
futures contracts or options, which have divided from other forms of assets a derivative is a
security whose price is independent upon or derived from or more underlying assets. The
derivative itself is merely a contract between two more parties its value is determined by
fluctuations in the underlying asset. The most common underlying assets include stocks,
43

bonds, commodities, currencies, interest rates market indexes. The important financial
derivatives are the following

Forwards:-forwards are the oldest of all the derivatives. A forward contract refers to
an agreement between two parties to exchange an agreed quantity of asset for cash at
a certain date in future at a pre determined price specified in that agreements. The
promised asset may be currency, commodity, instrument etc.

Futures:-future contract is very similar to a forward contract in all respects excepting

the fact that is completely a standardized one. It is nothing but a standardized forward
contract which is legally enforceable and always traded on an organized exchange.

Options:-a financial derivative that represents a contracts old by one party (option
writer) to another party (option holder). The 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(excise date). Call options due to the option to buy at certain price, so the buyer
would want the stock to go up put options give the option to sell at a certain price. So
the buyer would want stock to go down.

Swaps:- it is yet another exciting trading instruments. Infect, it is combination for

wards by two counter parties. It is arranged to reap the benefits arising from the
fluctuations in the market or interest rate market or and Other market for that
matter.

Foreign

exchange market:-it is market

in which participants are buy, sell,

exchange and speculate on currencies foreign exchange markets are made up of

banks commercial companies, central banks, investment management firms, hedge
funds, and retail forex broker and investors. The forex market is considered to be the
largest financial market in the world. It is a worldwide decentralized over-the-counter
financial market for the trading of currencies. Because the currency markets are large
and liquid, they are believed to be the most efficient financial market. It is important
44

to the realize 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.

Commodities market:- It is a physical or virtual market place for buying selling and
trading raw or primary products. For investors purposes there are currently about 50
major commodity markets worldwide that facilitate investment trade in nearly 100
primary commodities.

Commodities are split in two types: hard and soft commodities. Hard
commodities are typically natural resources that must be mined or extracted (gold,
rubber, oil, etc.), where as soft commodities are agricultural products or investors
(corn, wheat, coffee, sugar, soybeans, pork, etc.)
Indian financial market:Indian financial 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. The history of India capital
markets dates back 200 years toward the end of the 18th century. When India was under the role
of the east India Company. The development of the capital markets in India concentrated around
Mumbai 770 count less than 200to 250 securities broker were active during the second half of
the 19th century. The financial market in India today is more developed than many other sectors
because it was organized long before with the securities exchanges of Mumbai, Ahmadabad and
Kolkata were established as early as the 19th century. By the early 1960s the total number of
securities exchanges in India rose to eight, including Mumbai, Ahmadabad and Kolkata apart
from madras, Kanpur, Delhi, Bangalore and Pune today there are 21 regional securities
exchanges in India in addition to the centralized NSE (national stock exchange) and OTCEI
(over counter exchange of India). However the stock markets in India examined stagnant due to
stringent controls on the market economy that allowed only a handful of monopolies to dominate
their respective sectors. The corporate sector wasnt allowed into many industry segments, which
were dominate by the state controlled public sector resulting in stagnation of the economy right
45

up to the early 1990s. therefore when the India economy began liberalizing and the controls
began to be dismantled or eased out; the securities markets witnessed a flurry of IPOs that were
launched this resulted in many new companies across different industry segments to come up
with newer products and services. A remark able feature of the growth of the India economy in
recent years has been the role played by its securities markets in assisting and fueling that growth
with money rose within the economy. This was in marketed contrast to the initial phase of
growth in many of the fast growing economies of East Asia that witnessed huge doses of FDI
(foreign direct investment) spurring growth in their initial days of market decontrol. During this
phase in India much of the organized sector has been affected by high growth as the financial
markets played an all inclusive role in sustaining financial resources mobilization. Many psus
(public sector under taking) that decided to offload part of their equity were also helped by the
well organized. Securing market in India.
The launch of the NSE (national stock exchange) and the OTCEI (over the counter exchange of
India) during the mid 1990s by the government of India was meant to usher in an easier and
more transparent from of trading in securities. The NSE was conceived as the market for trading
the securities of companies from the large-scale sector and the OTCEI for those from the small
scale sector. While the NSE has not just done well to growth and evolve into the virtual back
bone of capital markets in India.
The OTCEI struggled and is yet to show any sign of growth and development. The integrations
of IT into the capital market infrastructure has been particularly smooth in India due to the
countries world class IT industries. This has pussed up the operational efficiency of the Indian
stock market to global standards and as a result the country has been able to capitalize on its high
growth and attract foreign capital like never before.
The regulating authority for capital market in India is the SEBI (securities and exchange board of
India). SEBI came into prominence in the 1990s after the capital market experienced some
turbulence. I had to take drastic measures to plug many loop holes that were exploited by certain
market forces to advance their vested interests after this initial phase of struggle SEBI has grown
in strength as the regulator of Indias capital markets and as one of the counters most impotent
institutions.
46

Financial market regulators:Regulations are an absolute necessity in the face of the growing importance of capital markets
through the world. The development of market economy is independent on the development
involves.
The regulations of securities; these rules enable the capital market to function more efficiency
and impartial a well regulated market has the potential to encourage additional investors to
partake and contribute in, for therein the development of the economy. The chief capital market
regulatory authority Is securities and exchange board of India (SEBI). SEBI 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 government of Indian 1992 with SEBI act 1992 being
passed by the 70 country parliament. Chaired by behave, SEBI is head quarter in the popular
business district of bundra-kurla complex in Mumbai, and has northern, eastern, southern and
western regional offices in new-Delhi, Kolkata and Chennai and Ahmadabad. In place of
government control, 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 basic objectives of the board were identified as:

To protect the interests of investors in securities;

To promote the development of securities market;

To regulate the securities market and for matters connected there with or
incidental there to since its inception SEBI has been working targeting the
securities and is attending to the fulfillment of its objectives with commendable
zeal and dexterity. The improvements in the securities markets like capitalization
requirements, margining, establishment of clearing corporations etc. reduced the
risk of credit and also reduced the market. SEBI has introduced the
comprehensive regulatory measures prescribed.
Regulation norms, the eligibility criteria, the code of conduct for different intermediaries like
bankers, brokers and sub-brokers, registers, portfolio managers, credit rating agencies, under
47

writers and others. It has farmed bye-laws, risk identification and risk management systement for
clearing houses of stock exchange, surveillance system etc. which has made dealing insecurities
both safe and transparent to and investor another significant event is the apporoval of tading in
stock. Include (like s&p CNX nifty & sensex) in 2000. A market index is convenient and
effective product because of the following

It acts as a barometer for market behavior;

It is used to bench mark portfolio performance;

It is used in derivative instruments like index future and index options;

It can be used for passive found management as in case of index funds.
Two board approaches of SEBI is to integrate the securities market at the national level, and also
to diversity the trading products, so that there is an increasing number of traders including banks,
financial institutions, insurance companies, mutual funds, primary dealers etc. to tan scent
through the exchange. In this context the introduction of derivatives trading through Indian stock
exchange permitted by SEBI in 2000 ad is a real land mark. SEBI 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 T+2 basses), SEBI has
been active in setting up the regulations as required under law.
Stock exchange in India:Stock exchanges are an organized market places, either corporation or mutual organization,
where member of the organization gather to trade company stocks or other securities. The
members may act either as agents for their customers, or as principal for their own accounts as
per the securities contact regulation act, 1956 a stock exchange is an association, organization 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 stock exchange
facilitate for the issues and redemption of securities and other financial instrument including the
payment of income and dividends. The record keeping is central but trade is linked to such
physical place because modern markets are computerized the trade on an exchange is only by
members and stock broker do have a seat on the exchange.
48

List of stock exchange in India:Bombay stock exchange, national stock exchange of India regional stock exchange
 Ahmadabad
 Bangalore
 Bhubaneswar
 Calcutta
 Cochin
 Coimbatore
 Delhi
 Gowahati
 Hyderabad
 Jaipur
 Ludhiana
 Madhya Pradesh
 Madras
 Magadha
 Mangalore
 Meerut
 Pune
 Saruashtra kutch
 Uttarapradesh
 Vadodara
Bombay exchange:A very common name for all traders in the stock market, BSE, stands for Bombay stock
exchange. It is the oldest market not only in the county, but also in Asia. In the early days, BSE
was known as the native share &stock brokers association it was established in the year 1875
and became the first stock exchange in the country to be recognized by the government. In 1956,
BSE obtained permanent recognition from the government of India under the securities contracts
49

act, 1956. In the past and even now, it plays a pivotal role in the development of the countrys
capital market. This is recognized worldwide and its index, SENSEX, is also tacked worldwide
earlier it was association of personal [AOP], but now it is a demutualised. And 870 count 87 ized
entities incorporated under the provisions of the companies act, 1956, pursuant to the BSE
(Corporatization and demutualization) scheme, 2005 notified by the securities and exchange
board of India (SEBI).

BSE VISION
The vision of the Bombay stock exchange is to Emerge as the premier Indian stock exchange by
establishing global bench marks.
BSE MANAGEMENT
Bombay stock exchange is managed professionally by board of. If comprises of eminent
professionals, representatives of trading members and the managing director. The board is an
inclusive one and is shaped to benefit from the market intermediaries participation. The board
exercises complete control and formulates larger policy issues. The day to-day operations of BSE
are managed by the managing director and its school of professional as a management team.
BSE Network:The exchange researches physically to 417 cities and towns in the 880 count. The framework of
it has been designed to safe guard market integrity and to operate with transparency. It provides
an efficient market of the trading in equity debt instrument and derivatives its online trading
system. Popularly known as BOLT, is a proprietary system and it is BS 7799-2-2002 certified
the BOLT network was expanded, nationwide in 1997. The surveillance and clearing settlement
functions of the exchange are ISO 9001:2000 certified.
BSE facts:-BSE as a brand is synonymous with capital markets in India. The BSE SENSEX is
the branch mark equity index that reflects the robustness of the economy and finance. It was the

50

First India to introduce equity derivatives

First India to launch a free flat index

First in India to launch US $ version of BSE SENSEX

First in India to launch exchange enabled internet trading platform

First in India to obtain ISO certified for surveillance, clearing &settlement.

BSE online trading system(BOLT) has been awarded the globally recognized the
information security management system standard BS 7799-2:2002

First to have an exclusive facility for financial trading.

Moved from open outcry to electronic trading within just 50 days.

BSE with its long history of capital market development is fully geared to continue its
contributions to further the growth of the securities markets of the country, thus helping India
increases its sphere of influence in international financial markets.
National stock exchange of India limited:The national stock exchange of India limited has genesis in the report of the high powered study
group on establishment of new stock exchange, which recommended promotion of a national
stock exchange by financial institutions (FIs) to provide access to investors from all across the
county on an equal footing. Based on the recommendations, NSE was promoted by leading
financial institutions at the behest of the government of India and was incorporated in November
1992 as a tax paying company unlike other stock exchange under the securities contracts
(regulation) act, 1956 in April 1993, NSE commenced operations in the wholesale debt market
(WDM) segment in the June 1994 the capital market (equities) segment commence operations in
November 1994 and operations in derivatives segment commenced in June 2000.
NSE group national securities clearing corporation ltd (NSCCL):It is a wholly owned subsidiary, which was in corporate in August 1995 and commenced clearing
operations in April 1996. It was formed to build confidence in clearing and settlement of
securities, to promote and maintain the short and consistent settlement cycle, to provide a
counter-party risk guarantee and to operate a tight risk containment system.

51

NSE ITS ltd:It is also a wholly owned subsidiary of NSE and is its IT arm. This arm of the NSE in uniquely
positioned to provide products, services and solutions for the securities industry. NSE IT
primarily focuses on in clearing and settlement, web-based, insurance, etc. A long with this, it
also provides consultancy and implementation services in data warehousing, business continuity
plans, site maintenance and backups. Stratus mainframe facility management, real time market
analysis & financial news.
India index services & products ltd (IISL):It is a joint venture between NSE and CRISIL ltd. To provide a variety of incidents and index
related services and products for the India capital markets. It was set up in May 1998. IISL has a
consulting and licensing agreement with standard and poors(S&P), worlds leading provider of
investible equity indices, for co-branding equity indices. National securities depository
ltd.(NSDL) NSE joined hands with IDBI and UTI to promote dematerialization of securities.
This setup was taken to solve problems related to trading in physical securities. It commenced
operations in November 1996.
NSE facts:
It uses satellite communication technology to energize participation from around 400
cities in India.

NSE can handle up to 1 million trades per day.

It is one of-the largest interactive VSAT based stock exchanges in the world.

The NSE-network is the largest private wide area network in India and the first
extended VSAT network in the world.

presently more than 9000 users are trading real time online NSE application. Today,
NSE is one of the largest exchange in the world and still forging a head at NSE, we are
constantly working towards creating a more transparent, vibrant and innovative capital
market.

52

Over the counter exchange of India:OTCEI was incorporated in 1990 as section 25 company under the companies act 1956 and is
recognized as a stock exchange under section4 of the securities contracts regulation act, 1956.
The exchange was set up to aid enterprising promotes in raising finance for new projects in a
cost effective manner and to provide investors with transparent and efficient mode of trading
modeled along the lines of the NASDAQ market of USA, OTCEI introduced many novel
concepts to the Indian capital markets such as screen-based nationwide trading, sponsor ship of
companies, market marking and scrip less trading. As a measure success of these efforts, the
exchange today has 115 listings and has assisted in providing capital for enterprises that have
gone on to build success full brands from the themselves like VIP advanta, son or a tiles and
brilliant mineral water, etc.
Need for OTCEI:Studies by NASSCOM, software techno ledge parks of India, the venture capitals funds and
governments IT tasks force, as well as rising interest in IT pheremceutical, biotechnology and
media shares have repeatedly emphasized the need for a national stock market for innovation and
high growth companies innovative companies or critical to developing economics like India,
which is undergoing a major technological revaluation with their abilities to generate
employment opportunity and contribute t the economic, it is essential that these companies not
only expanded existing operations but also setup new units. The key issued for these companies
is raising timely, cost effective and long term capital to sustained their operations and enhance
growth. Such companies, particularly those that have been in operation for short time, are enable
to raise funds through traditional financing methods, because they have not yet been evaluated
by the financial world..

53

CHAPTER-4
DATA ANALYSIS AND INTERPRETATION

54

EQUITY ANALYSIS OF IT INDUSTRIES:The data analysis has been done with the following ratios to find/ analyze the equity performance
in IT sector.
1) Return on investment (ROI)
2) Earnings per share (EPS)
3) Dividend per share (DPS)
4) Dividend payout ratio (DPR)
5) Price earnings ratio (P/E ratio)
1) Return on investment(ROI):Meaning:- A performance measure used to evaluate the efficiency of an investment or to
compare the efficiency of a number of different investments. To calculate ROI, the benefit
(return) of an investment is divided by the cost of the investment; the result is expressed as a
percentage or a ratio.

The return on investment formula:

Table No:-1
return on

year

investment

mar'14

mar'13

mar'12

mar'11

mar'10

Tcs

2.167

1.021

0.929

0.357

-0.288

Infosys

0.517

1.098

5.011

3.862

0.251

Wipro

-5.429

-0.546

-0.552

-0.453

-0.568

Source:-Money control.com
55

Graph No:-1

ROI
6
Rs in crores

2.167

tcs

0
-2

infosys
mar'14

mar'13

mar'12

mar'11

mar'10

wipro

-4
-6

years

Interpretation:From the above graph it has been observed that ROI of TCS has been increased year by year
from 2010-2014.
2014. It is also observed that ROI of WIPRO is in negative in all the years. But the
ITFOSYS ROI is showing fluctuations ddue to unfavorable market conditions.
2) Earnings per share(EPS):
share(EPS):Meaning:- Earnings per share is generally considered to be the single most important
variable in determining a share's price. It is also a major component used to calculate the priceprice
to-earnings valuation ratio.
Calculated as:

For example, assume that a company has a net income of $25 million. If the company pays out
$1 million in preferred dividends and has 10 million shares for half of the year and 15 million
shares for the other half, the EPS would be $1.92 (24/12.5). Firs
First,
t, the $1 million is deducted from
the net income to get $24 million, then a weighted average is taken to find the number of shares
outstanding (0.5 x 10M+ 0.5 x 15M = 12.5M).
56

Table No-2
Earnings per share
Year

mar'14

mar'13

mar'12

mar'11

mar'10

Tcs

94.17

65.23

55.97

38.62

28.62

Infosys

178.4

158.75

147.5

112.22

101.13

Wipro

22.94

19.05

19.73

33.36

20.3

Money control.com
Source:-Money
Graph.No-2

Rs in crores

EPS
200
150
tcs

100
50
0

infosys
wipro
mar'14

mar'13

mar'12

mar'11

mar'10

years

Interpretation:Above graph no.2 representing EPS of TCS increase

increased year by year from 2010-2014.
2010
It is also
observed that EPS of WIPRO has fluctuations in all the years and INFOSYS has a highest
increase compared to other companies.
3) Dividend per share(DPS)
(DPS):Meaning:- Dividends per share are usually easily found on quote pages as the dividend paid
in the most recent quarter which is then used to calculate the dividend yield. Dividends over the
57

entire year (not including any special dividends) must be added together for a proper calculation
of DPS, including interim dividends. Special dividends are dividends which are only expected to
be issued once so are not included. The total number of ordinary shares outstanding is sometimes
calculated using the weighted average over the reporting period.
DPS can be calculated by using the following formula:

D - Sum of dividends over a period (usually 1 year)

SD - Special, one time dividends
S - Shares outstanding for the period
For example: ABC company paid a total of $237,000 in dividends over the last year of which
there was a special onetime dividend totaling $59,250. ABC has 2 million shares outstanding so
its DPS would be ($237,000-$59,250)/2,000,000
$59,250)/2,000,000 = $0.0889 per share.
Table No:-3
Dividend per
share
Year

mar'14 mar'13

Tcs

320.00

220.00

250.00

140.00

200.00

Infosys 126.00

84

94

120.00

50

Wipro

30

30

30

20

35

mar'12

mar'11

mar'10

Source:- money control.com

Graph No:-3

Rs in crores

DPS
400.00
tcs

200.00
0.00

infosys

58
mar'14 mar'13 mar'12
mar'11 mar'10
years

wipro

Interpretation: Above graph no.3 representing the DPS of TCS has fluctuated in the year from 2010-2014. It
also observed that DPS of WIPRO has slight increase from 2010-2014 and INFOSYS has
fluctuated in all the years.
4) Dividend payout ratio:Meaning: The payout ratio provides an idea of how well earnings support the dividend
payments. More mature companies tend to have a higher payout ratio.
In the U.K. there is a similar ratio, which is known as dividend cover. It is calculated as earnings
per share divided by dividends per share.
Calculated as:

Dividend payout ratio

Table No:-4
year

mar'14

mar'13

mar'12

mar'11

mar'10

Tcs

33.98

33.92

44.66

36.25

69.88

Infosys

7.062

5.291

6.372

10.693

4.944

Wipro

15.25

15.74

15.2

8.99

9.85

Source: Money control.com

59

Graph No:-4

Rs in crores

DPR
100

tcs

0
mar'14 mar'13 mar'12 mar'11 mar'10

infosys

years

wipro

Interpretation:Above graph no.4 representing DPR of IT companies. It is observed that DPR of TCS has
decreased in all the years, It is also observed that INFOSYS has fluctuations at the beginning of
two years later on it was constant. WIPRO has been increasing since beginning.
5) Price earnings ratio(P/E ratio):
ratio):Meaning:- In general, a high P/E suggests that investors are expecting higher earnings
growth in the future compared to companies with a lower P/E. However, the P/E ratio doesn't tell
us the whole story by itself. It's usually more useful to compare the P/E ratios of one company to
other companies in the same industry, to the m
market
arket in general or against the company's own
historical P/E. It would not be useful for investors using the P/E ratio as a basis for their
investment to compare the P/E of a technology company (high P/E) to a utility company (low
P/E) as each industry has much different growth prospects.
Calculated as:
P/E ratio=Market valuee per share/ earnings per share
share.

60

Table No:-5

P/E ratio
year

mar'14 mar'13 mar'12

mar'11 mar'10

Tcs

22.46

32.42

39.56

57.34

77.382

Infosys 17.86

20.04

21.60

28.35

31.46

Wipro

27.84

26.81

15.85

26.05

23.06

Graph No:-5

P/E RATIO
100
80
60

Tcs

40

Infosys

20

Wipro

0
mar'14

mar'13

mar'12

mar'11

mar'10

Interpretation:Above graph no.5 representing DPR of IT companies it is observed that TCS has decreased from
2010-2014, at the same time INFOSYS has decreased in all the years. WIPRO starting two years
there is a decrease but later on again there is increase from the third year i.e., from 2012.

61

Chapter-5
Findings and Recommendations

62

Findings:It has been observed the following findings from the data analysis and interpretations of three
companies viz. TCS, WIPRO, and INFOSYS.

From the study it is observed that ROI of TCS has been increased year by year from
2010-2014. It is also observed that ROI of WIPRO is in negative in all the years. But the
ITFOSYS ROI is showing the fluctuations due to unfavorable market conditions.

From the study it is analyzed that EPS of TCS increased year by year.

It is found from the study that dividend pay per share to the share holder of WIPRO
Company is increasing. In case of INFOSYS and TCS though divided payment is there, it
is not constant all through the 5 years. But over all observation it is identify dividend
payment to the share holders of TCS is higher compare to other companies.

From the study it is found that earnings of TCS Company well supported for the dividend
payments hence the TCS has considered to be more matured company as it has higher
payout ratio compare other companies.

Investors can expect higher earnings growth in future for TCS Company as there P/E
ratios for the 5 years of TCS is more than other two companies.

Suggestions:

EPS of INFOSYS is good compare to other companies so it is suggested that the investor
can have INFOSYS as their investment option.

Investors should have knowledge about market before taking investment decision.

Investors should have knowledge of analysis of financial statement about the importance
of ratios. Otherwise they should meet financial advisers.

Investors are expected to have minimum knowledge related to EPS, DPS, and P/E ratio.

63

Conclusion:

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. Since the introduction of shares concept, large numbers of investors are
showing interest to invest in stock market

Hence in overall TCS can be considered as the premium company in comparison with the
other WIPRO and INFOSYS based on parameters taken ROI, DPS, DPR, EPS and P/E
ratios. These ratios are higher in TCS compared to other two companies.

64

BIBLIOGRAPHY
1) V.A.avadani,2005,security analysis and portfolio management, Himalaya publishing
house( Nagpur, Delhi, Hyderabad, Bangalore)
2) DR.periasarey,2009, A text book on financial cost and management accounting,
Himalaya publishing house( Nagpur, Delhi, Hyderabad, Bangalore)
3) http://www.scribd.com/doc/49630303/Final-pROJECT-INDIAN-IT-sECTOR-1
4) Money contol.com.
5) https://wikispaces.psu.edu/display/PSYCH484/5.+Equity+Theory

65

APPENDIX

66

------------------in Rs. Cr. ----alance Sheet of Infosys

--------------

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Total Share Capital

286

287

287

287

287

Equity Share Capital

286

287

287

287

287

Share Application Money

Preference Share Capital

Sources Of Funds

Reserves
Revaluation Reserves
Networth

41,806.00
0
42,092.00

35,772.00 29,470.00
0

36,059.00 29,757.00

24,214.00 21,749.00
0

24,501.00 22,036.00

Secured Loans

Unsecured Loans

Total Debt

Total Liabilities

42,092.00

36,059.00 29,757.00

24,501.00 22,036.00

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

67

Application Of Funds
Gross Block

10,374.00

8,029.00

4,061.00

4,056.00

6,357.00

Less: Accum. Depreciation

4,642.00

3,576.00

2,578.00

Net Block

5,732.00

4,453.00

4,061.00

4,056.00

3,779.00

954

1,135.00

588

249

409

6,717.00

4,344.00

1,409.00

1,325.00

4,636.00

7,336.00

6,365.00

5,404.00

4,212.00

3,244.00

Capital Work in Progress

Investments
Inventories
Sundry Debtors
Cash and Bank Balance

24,100.00

20,401.00 18,057.00

13,665.00

929

Total Current Assets

31,436.00

26,766.00 23,461.00

17,877.00

4,173.00

Loans and Advances

7,873.00

6,330.00

6,296.00

5,347.00

4,201.00

8,868.00

Fixed Deposits
Total CA, Loans & Advances
Deffered Credit

39,309.00

33,096.00 29,757.00

23,224.00 17,242.00

Current Liabilities

4,503.00

3,181.00

2,454.00

1,880.00

1,995.00

Provisions

6,117.00

3,788.00

3,604.00

2,473.00

2,035.00

Total CL & Provisions

10,620.00

6,969.00

6,058.00

4,353.00

4,030.00

Net Current Assets

28,689.00

Miscellaneous Expenses
Total Assets

Contingent Liabilities
Book Value (Rs)

0
42,092.00

36,059.00 29,757.00

18,871.00 13,212.00
0

24,501.00 22,036.00

1,020.00

1,693.00

1,024.00

1,016.00

295

736.64

627.95

518.21

426.73

384.02

------------------Profit & Loss account of Infosys

26,127.00 23,699.00

in Rs. Cr. ----68

--------------

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income

44,341.00
0
44,341.00

36,765.00 31,254.00
0

36,765.00 31,254.00

25,385.00 21,140.00
0

25,385.00 21,140.00

2,576.00

2,298.00

2,313.00

1,147.00

967

46,917.00

39,063.00 33,567.00

26,532.00 22,107.00

Expenditure
Raw Materials

22

Power & Fuel Cost

Employee Cost
Other Manufacturing Expenses
Selling and Admin Expenses
Miscellaneous Expenses
Preoperative Exp Capitalised
Total Expenses

24,350.00

19,932.00 15,481.00

12,464.00 10,356.00

3,990.00

2,969.00

3,947.00

3,196.00

1,993.00

992

3,474.00

2,849.00

1,765.00

1,311.00

415

31,814.00

25,750.00 21,193.00

16,971.00 13,778.00

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

69

Operating Profit

12,527.00

11,015.00 10,061.00

8,414.00

7,362.00

PBDIT

15,103.00

13,313.00 12,374.00

9,561.00

8,329.00

Interest

13,313.00 12,374.00

9,561.00

8,327.00

PBDT
Depreciation

15,103.00

1,101.00

956

794

740

807

Other Written Off

Profit Before Tax

14,002.00

12,357.00 11,580.00

8,821.00

7,520.00

12,357.00 11,580.00

8,821.00

7,520.00

Extra-ordinary items
PBT (Post Extra-ord Items)
Tax

0
14,002.00

3,808.00

3,241.00

3,110.00

2,378.00

1,717.00

Reported Net Profit

10,194.00

9,116.00

8,470.00

6,443.00

5,803.00

Total Value Addition

31,814.00

Preference Dividend
Equity Dividend
Corporate Dividend Tax

25,750.00 21,193.00

16,971.00 13,756.00

3,618.00

2,412.00

2,699.00

3,445.00

1,434.00

615

403

438

568

240

5,714.03

5,742.36

5,742.30

5,741.52

5,738.25

178.4

158.75

147.5

112.22

101.13

1,260.00

840

940

1,200.00

500

736.64

627.95

518.21

426.73

384.02

Per share data (annualised)

Shares in issue (lakhs)
Earning Per Share (Rs)
Equity Dividend (%)
Book Value (Rs)

70

------------------Balance Sheet of Tata Consultancy

Services

in Rs. Cr. ------------------

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Total Share Capital

195.87

295.72

295.72

295.72

295.72

Equity Share Capital

195.87

195.72

195.72

195.72

195.72

Share Application Money

Preference Share Capital

100

100

100

100

Sources Of Funds

Reserves
Revaluation Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities

43,856.01
0
44,051.88

32,266.53 24,560.91
0

32,562.25 24,856.63

19,283.77 14,820.90
0

19,579.49 15,116.62

88.64

161.6

93.47

35.87

29.25

1.05

1.52

2.76

5.25

6.49

89.69

163.12

96.23

41.12

35.74

44,141.57

32,725.37 24,952.86

19,620.61 15,152.36

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

11,220.11

9,152.32

7,282.02

6,030.16

4,871.21

5,290.92

4,048.04

3,218.40

2,607.98

2,110.69

Application Of Funds
Gross Block
Less: Accum. Depreciation

71

Net Block

5,929.19

5,104.28

4,063.62

3,422.18

2,760.52

Capital Work in Progress

3,047.53

1,763.85

1,726.88

1,345.37

940.72

Investments

5,832.42

6,324.38

5,688.39

5,795.49

7,893.39

8.57

6.34

4.14

5.37

6.78

Sundry Debtors

14,471.89

11,202.32

9,107.72

4,806.67

3,332.30

Cash and Bank Balance

12,566.26

4,054.16

203.18

224.77

212.31

Total Current Assets

27,046.72

15,262.82

9,315.04

5,036.81

3,551.39

Loans and Advances

15,748.33

14,556.81

7,877.86

5,063.51

4,101.84

5,587.02

5,379.75

3,183.85

Inventories

Fixed Deposits
Total CA, Loans & Advances

42,795.05

Deffered Credit

29,819.63 22,779.92

15,480.07 10,837.08

Current Liabilities

7,355.18

6,121.11

4,761.43

3,932.39

3,352.74

Provisions

6,107.44

4,165.66

4,544.52

2,490.11

3,926.61

Total CL & Provisions

13,462.62

10,286.77

9,305.95

6,422.50

7,279.35

Net Current Assets

29,332.43

19,532.86 13,473.97

9,057.57

3,557.73

Miscellaneous Expenses

Total Assets

44,141.57

32,725.37 24,952.86

Contingent Liabilities

10,880.43

10,984.51

6,537.78

3,938.76

3,292.50

224.9

165.86

126.49

99.53

76.72

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Book Value (Rs)

19,620.61 15,152.36

------------------Profit & Loss account of Tata

Consultancy Services

in Rs. Cr. ------------------

72

Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income

64,672.93
0
64,672.93

48,426.14 38,858.79
0

0.25

48,426.14 38,858.54

29,275.68 23,044.84
0.27

0.39

29,275.41 23,044.45

3,114.71

2,230.39

2,685.18

486.44

182.1

-0.26

-0.87

-1.38

67,787.64

50,656.53 41,543.46

29,760.98 23,225.17

Expenditure
Raw Materials

0.02

25.04

11.81

17.75

23.75

292.1

240

183.62

21,466.56

17,081.72 14,100.41

10,190.31

7,882.43

Other Manufacturing Expenses

0 10,575.83

8,135.57

6,446.99

Selling and Admin Expenses

1,686.41

1,194.72

1,268.03

21,672.63

17,013.11

806

724.37

571.08

Power & Fuel Cost

Employee Cost

Miscellaneous Expenses
Preoperative Exp Capitalised
Total Expenses

43,139.21

34,119.87 27,472.56

20,502.72 16,375.90

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Operating Profit

21,533.72

14,306.27 11,385.72

8,771.82

6,667.17

PBDIT

24,648.43

16,536.66 14,070.90

9,258.26

6,849.27

Interest

23.41

16.4

20.01

9.54

16,506.04 14,054.50

9,238.25

6,839.73

PBDT
Depreciation
Other Written Off

24,625.02

30.62

1,080.55

802.86

688.17

537.82

469.35

73

Profit Before Tax

23,544.47

Extra-ordinary items
PBT (Post Extra-ord Items)
Tax

0
23,544.47
5,069.55

15,703.18 13,366.33

8,700.43

6,370.38

-129.49

-13.98

15,703.18 13,236.84

8,700.43

6,356.40

2,260.86

1,130.44

737.89

7,569.99

5,618.51

2,916.84

Reported Net Profit

18,474.92

12,786.34 10,975.98

Total Value Addition

43,139.19

34,094.83 27,460.75

Preference Dividend
Equity Dividend
Corporate Dividend Tax

20,484.97 16,352.15

28.76

19

22

11

17

6,267.33

4,305.88

4,893.04

2,740.10

3,914.43

788.96

712.18

797.34

450.82

657.51

Per share data (annualised)

Shares in issue (lakhs)
Earning Per Share (Rs)

19,587.28

19,572.21 19,572.21

19,572.21 19,572.21

94.17

65.23

55.97

38.62

28.62

3,200.00

2,200.00

2,500.00

1,400.00

2,000.00

224.9

165.86

126.49

99.53

76.72

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Total Share Capital

492.6

491.7

490.8

293.6

293

Equity Share Capital

492.6

491.7

490.8

293.6

293

1.8

1.5

Equity Dividend (%)

Book Value (Rs)

------------------in Rs. Cr. ----Balance Sheet of Wipro

--------------

Sources Of Funds

Share Application Money

74

Preference Share Capital

Reserves
Revaluation Reserves
Networth
Secured Loans

0
23,736.90
0
24,229.50

23,860.80 20,829.40
0

24,352.50 21,320.20

17,396.80 12,220.50
0

17,692.20 12,515.00

50.4

9.6

Unsecured Loans

3,995.60

5,242.20

4,701.20

5,530.20

5,013.90

Total Debt

4,046.00

5,243.20

4,710.80

5,530.20

5,013.90

Total Liabilities

28,275.50

29,595.70 26,031.00

23,222.40 17,528.90

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Gross Block

8,312.50

8,761.60

7,740.60

6,761.30

5,743.30

Less: Accum. Depreciation

4,403.10

4,111.80

3,503.60

3,105.00

2,563.70

Net Block

3,909.40

4,649.80

4,237.00

3,656.30

3,179.60

378.9

301.2

396.4

991.1

1,311.80

10,335.20 10,813.40

8,966.50

6,895.30

Application Of Funds

Capital Work in Progress

Investments
Inventories

10,904.20
320.5

785.1

724.9

606.9

459.6

Sundry Debtors

8,499.40

7,967.00

5,781.30

5,016.40

4,446.40

Cash and Bank Balance

7,800.40

6,232.80

5,203.30

1,938.30

1,902.10

14,984.90 11,709.50

7,561.60

6,808.10

Total Current Assets

16,620.30

Loans and Advances

8,893.80

8,324.80

6,963.50

5,425.90

4,202.00

3,726.00

2,507.10

Fixed Deposits
Total CA, Loans & Advances
Deffered Credit

25,514.10

23,309.70 18,673.00

16,713.50 13,517.20

Current Liabilities

8,792.80

5,984.20

5,121.20

4,874.20

5,564.30

Provisions

3,638.30

3,016.00

2,967.60

2,230.80

1,810.70

75

Total CL & Provisions

12,431.10

Net Current Assets

13,083.00

Miscellaneous Expenses
Total Assets

Contingent Liabilities
Book Value (Rs)

0
28,275.50

9,000.20

8,088.80

7,105.00

7,375.00

14,309.50 10,584.20

9,608.50

6,142.20

29,595.70 26,031.00

23,222.40 17,528.90

2,657.80

2,820.50

1,677.90

778

1,045.40

98.38

99.04

86.86

120.49

85.42

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

------------------in Rs. Cr. ----Profit & Loss account of Wipro

--------------

Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income

33,226.50
0
33,226.50

31,682.90 26,300.50
0

31,682.90 26,300.50

23,006.30 21,612.80
84.3

105.5

22,922.00 21,507.30

1,325.30

1,227.40

680.7

866.7

-480.4

18.2

-44.9

31.6

111

-3.8

34,570.00

32,865.40 27,012.80

23,899.70 21,023.10

Expenditure
Raw Materials

2,701.40
76

4,684.90

3,805.60

3,768.80

3,438.80

Power & Fuel Cost

Employee Cost

230.4
15,904.20

233.4

200.5

141.4

154

13,311.50 10,937.40

9,062.80

9,249.80

Other Manufacturing Expenses

2,145.30

1,687.80

Selling and Admin Expenses

1,491.40

1,523.00

7,475.20

7,365.20

5,627.70

921.8

691.4

Miscellaneous Expenses
Preoperative Exp Capitalised
Total Expenses

26,311.20

25,595.00 20,571.20

17,531.50 16,744.80

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Operating Profit

6,933.50

6,043.00

5,760.90

5,501.50

4,758.70

PBDIT

8,258.80

7,270.40

6,441.60

6,368.20

4,278.30

Interest

352.4

605.7

136

99.8

196.8

7,906.40

6,664.70

6,305.60

6,268.40

4,081.50

701.3

746.1

600.1

579.6

533.6

Other Written Off

Profit Before Tax

7,205.10

5,918.60

5,705.50

5,688.80

3,547.90

PBT (Post Extra-ord Items)

7,205.10

5,918.60

5,705.50

5,688.80

3,547.90

Tax

1,554.90

1,233.50

861.8

790.8

574.1

Reported Net Profit

5,650.20

4,685.10

4,843.70

4,898.00

2,973.80

Total Value Addition

23,609.80

PBDT
Depreciation

Extra-ordinary items

Preference Dividend
Equity Dividend
Corporate Dividend Tax

20,910.10 16,765.60

13,762.70 13,306.00

1,724.70

1,475.20

1,472.60

880.9

586

289.2

239.3

220.4

128.3

99.6

Per share data (annualised)

Shares in issue (lakhs)

24,629.35
77

24,587.56 24,544.09

14,682.11 14,649.81

Earnings Per Share (Rs)

Equity Dividend (%)
Book Value (Rs)

22.94

19.05

19.73

33.36

20.3

350

300

300

300

200

98.38

99.04

86.86

120.49

85.42

78