OF

(FINANCIAL MANAGEMENT)

(TOPIC:Analysis of the capital structure )

(Mindtree, Birla cement, Karur Vysya bank)

Submitted in the partial fulfillment of the Degree of masters of business administration

SUBMITTED BY:- GUIDED BY:

Name- Aditya mohan gupta Mr.Amarjit Saini

Regd- No 10906097

Rollno- RS1901B36

SUBMITTED TO

Department of management Lovely Professional University Phagwara

 ACKNOWLEDGEMENT

I take this opportunity to present my votes of thanks to all those guidepost who really acted as lightening
pillars to enlighten our way throughout this project that has led to successful and satisfactory completion
of this study.

Iam really grateful to our COD Mr.Devdhar shetty for providing us with an opportunity to undertake
this project in this university and providing us with all the facilities. Iam also highly thankful to Mr.
Amarjit saini for her active support, valuable time and advice, whole-hearted guidance, sincere
cooperation and pains-taking involvement during the study and in completing the assignment of
preparing the said project within the time stipulated.

Lastly, Iam thankful to all those, particularly the various friends , who have been instrumental in creating
proper, healthy and conductive environment and including new and fresh innovative ideas for me during
the project, without their help, it would have been extremely difficult for me to prepare the project in a
time bound framework.

Name: Aditya mohan gupta

Regd.No.: 10906097

Roll no: RS1901B36

 Introduction

Capital Structure: A mix of a company's long-term debt, specific short-term debt,

common equity and preferred equity. The capital structure is how a firm finances its overall
operations and growth by using different sources of funds.

Debt comes in the form of bond issues or long-term notes payable, while equity is classified
as common stock, preferred stock or retained earnings. Short-term debt such as working
capital requirements is also considered to be part of the capital structure.

A company's proportion of short and long-term debt is considered when

analyzing capital structure. When people refer to capital structure they are most likely
referring to a firm's debt-to-equity ratio, which provides insight into how risky a company is.
Usually a company more heavily financed by debt poses greater risk, as this firm is relatively
highly levered.

Evaluating A Company's Capital Structure: For stock investors that favor companies with
good fundamentals, a "strong" balance sheet is an important consideration for investing in a
company's stock. The strength of a company' balance sheet can be evaluated by three broad
categories of investment-quality measurements: working capital adequacy, asset
performance and capital structure. In this report, I am looking at evaluating balance sheet
strength based on the composition of a company's capital structure.

A company's capitalization (market capitalization) describes the composition of a

company's permanent or long-term capital, which consists of a combination of debt and
equity. A healthy proportion of equity capital, as opposed to debt capital, in a company's
capital structure is an indication of financial fitness.
 Meaning

 Capital structure refers to the combination or mix of debt and equity which a company
uses to finance its long term operations.

The capital structure is how a firm finances its overall operations

and growth by using different sources of funds

 Raising of capital from different sources and their use in different assets by a
company is make on the basis of certain principles that provide a system of capital so
that the maximum rate of return can be earned at a minimum cost.

 This sort of system of capital is known as capital structure

Optimal Capital Structure

 The optimal or the best Capital structure implies the most economical and
safe ratio between various types of securities.

 It is that mix of debt and equity which maximizes the value of the company
and minimizes the cost of capital.

 Essentials of optimal capital structure minimum cost of capital, minimum

risk, maximum return, maximum control.
 INTRODUCTION

MindTree Limited : It is a global IT Solutions Company specializing in IT Services,

Infrastructure Management and Technical Support (IMTS), Independent Testing ,Knowledge
Services and Product Engineering, which comprises R&D Services, Software Product
Engineering and Next in Wireless (NIW). MindTree was started in 1999 by 10 industry
professionals who came from Cambridge Technology Partners, Lucent
Technologies and Wipro. Currently co-headquartered in Warren, New
Jersey and Bangalore, India, it has 3 development centers in India and 15 offices spread
across Asia, Europe and the United States. The founding team was led by Ashok Soota, who
was at that time vice chairman and president of Wipro, one of India's largest software
companies.
MindTree crossed USD 100 million in revenues in April 2006 [1]; the fastest Indian IT
company to achieve the target . MindTree is also the world's youngest company to be
assessed at both CMMi and P-CMM.
MindTree has been involved in the creation of Bluetooth technology  and is an Associate
Member of the Bluetooth Special Interest Group Its Bluetoothprotocol stack is licenced
to NEC.
On 29 September 2009, Mindtree agreed to buy Bangalore-based Kyocera Wireless India Pvt
Ltd and make an upfront payment of $6 million.

Balance sheet
  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Sources of funds
Owner's fund

Equity share capital 38.00 37.92 37.75 5.87 4.37

Share application money - 0.05 0.02 0.05 0.24

Preference share capital - - - - 66.55

Reserves & surplus 492.36 496.05 397.71 122.87 22.32

Loan funds
Secured loans 137.57 91.72 26.38 74.20 50.02

Unsecured loans 1.80 - - - -

Total 669.73 625.75 461.85 202.99 143.50

Uses of funds
Fixed assets

Gross block 388.93 347.44 136.79 93.68 64.37

Less : revaluation reserve - - - - -

Less : accumulated depreciation 149.41 111.76 80.03 57.62 37.54

  Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Net block 239.52 235.68 56.76 36.06 26.83

Capital work-in-progress 4.27 23.29 13.18 2.79 9.47

Investments 310.84 165.49 214.06 53.76 33.94

Net current assets

Current assets, loans & advances 381.41 335.08 281.62 191.81 126.88

Less : current liabilities & provisions 266.31 133.79 103.76 81.44 53.62

Total net current assets 115.10 201.29 177.86 110.38 73.26

Miscellaneous expenses not written - - - - -

Total 669.73 625.75 461.85 202.99 143.50

Notes:
Book value of unquoted investments 310.84 25.97 0.02 0.02 -

Market value of quoted investments - - - - -

Contingent liabilities 7.90 16.06 69.50 4.57 -

Number of equity sharesoutstanding (Lacs) 379.97 379.21 377.53 293.63 43.70

Key Financial Ratios of MindTree ------------------- in Rs. Cr. -------------------

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Investment Valuation Ratios

Face Value 10.00 2.00 10.00 10.00 10.00
Dividend Per Share -- -- 1.00 2.00 1.00
Operating Profit Per Share (Rs) 57.94 26.96 29.33 33.45 70.34
564.1
Net Operating Profit Per Share (Rs) 152.85 156.37 193.52 266.49
0
Free Reserves Per Share (Rs) -- 41.81 105.00 129.96 130.69
Bonus in Equity Capital -- -- 67.16 66.86 66.73
Profitability Ratios
Operating Profit Margin(%) 10.27 17.64 18.75 17.28 26.39
Profit Before Interest And Tax Margin(%) 5.89 12.84 14.47 12.17 21.65
Gross Profit Margin(%) 11.24 12.97 14.61 12.52 21.76
Cash Profit Margin(%) 10.87 16.80 18.93 17.55 24.62
Adjusted Cash Margin(%) 11.09 16.80 18.93 17.55 24.62
Net Profit Margin(%) 6.70 11.95 15.10 13.79 2.94
Adjusted Net Profit Margin(%) 6.70 11.95 15.10 13.79 2.94
Return On Capital Employed(%) 13.49 29.87 19.91 18.07 33.70
Return On Net Worth(%) 18.06 42.10 20.67 19.51 5.65
Adjusted Return on Net Worth(%) 63.24 41.18 20.30 18.27 38.42
Return on Assets Excluding Revaluations 8.56 19.06 15.92 13.72 3.21
Return on Assets Including Revaluations 8.56 19.06 15.92 13.72 3.21
Return on Long Term Funds(%) 13.51 38.42 20.65 18.07 33.70
Liquidity And Solvency Ratios
Current Ratio 2.37 1.12 2.06 2.50 1.43
Quick Ratio 2.37 2.36 2.67 2.44 1.38
Debt Equity Ratio 4.37 0.58 0.06 0.17 0.26
Long Term Debt Equity Ratio 4.37 0.23 0.02 0.17 0.26
Debt Coverage Ratios
Interest Cover 9.26 11.52 30.68 19.18 13.93
Total Debt to Owners Fund 4.37 0.58 0.06 0.17 0.26
Financial Charges Coverage Ratio 14.54 13.79 28.72 21.36 14.08
Financial Charges Coverage Ratio Post Tax 14.35 13.73 29.25 21.07 4.97
Management Efficiency Ratios
Inventory Turnover Ratio -- -- -- -- --
Debtors Turnover Ratio 5.12 5.29 5.20 5.07 5.23
Investments Turnover Ratio -- -- -- -- --
Fixed Assets Turnover Ratio 10.20 -- -- -- --
Total Assets Turnover Ratio 1.75 2.21 1.28 1.17 --
Asset Turnover Ratio 4.00 4.79 4.32 2.11 2.60
Average Raw Material Holding -- -- -- -- --
Average Finished Goods Held -- -- -- -- --
106.9
Number of Days In Working Capital 88.54 108.46 98.75 40.92
9
Profit & Loss Account Ratios
Material Cost Composition -- -- -- -- --
Imported Composition of Raw Materials
-- -- -- -- --
Consumed
Selling Distribution Cost Composition -- 1.02 1.15 0.70 0.55
Expenses as Composition of Total Sales -- 88.45 93.76 93.08 93.67
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit -- -- 8.76 8.50 14.82
Dividend Payout Ratio Cash Profit -- -- 6.89 6.37 5.78
100.0
Earning Retention Ratio 100.00 91.08 90.93 97.82
0
100.0
Cash Earning Retention Ratio 100.00 93.01 93.32 98.23
0
AdjustedCash Flow Times 1.79 0.97 0.23 0.69 0.56

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Earnings Per Share 38.63 18.46 23.85 27.47 7.90

Book Value 61.08 43.84 115.35 140.81 139.58

CAPITAL STRUCTURE OF MINDTREE

2007 2008 2009

 EQUITY SHARE CAPITAL 37.75 37.92 38

  TOTAL RESERVES 397.71 496.05 492.36

NET WORTH 435.46 533.97 530.36

TOTAL DEBT 26.38 91.72 139.37

DEBT TO EQUITY RATIO 0.06058 0.17177 0.262784

ANALYSIS
 • Equity of the company has constantly grow each year because company
provides with employee stock .

• Debt of the company has increase from 26.38crore in 2007 to 91.72 crore
in 2008

and 139.37 crores in 2009.

Interest rate of the company has gone up on year on year basis

because of the company raising loan. These were mainly secured loan raised for
to meet the working capital need and for expansion in SEZ area in Bangalore and
Chennai

COST OF EQUITY CAPITAL

  2007 2008 2008

20092009
NET WORTH 435.46 534 530.4
  NET PROFIT 90.05 103.3 56.4
COST OF EQUITY 20.6792817 19.3 10.6
(%)

2007 2008 2009

Dividen 6.82 7.57 3.8

d
  The company is paying dividend as a percentage of equity capital. i.e. 20%
for 2007, 20% for 2008 and decreased to 10% in 2009. The decrease is
mainly due to the reduction in the profit after tax of the company which has
drastically fallen for 112.73 in 2008 to 32.55 in 2009. The reason for the
fall might be the economic slowdown. So is the esp. has also gone down.

INTRODUCTION

The Cement Division of Birla Corporation Limited has seven plants, two
each at Satna (M.P.) - Satna Cement Works & Birla Vikas Cement,
Chanderia (Rajasthan) - Birla Cement Works & Chanderia Cement Works,
Durgapur (W.B.) - Durgapur Cement Works & Durga Hitech Cement -
and one at Raebareli (U.P.)-Raebareli Cement Works. They manufacture
varieties of cement like Ordinary Portland Cement (OPC), 43 & 53 grades,
Portland Pozzolana Cement (PPC), Fly Ash - based PPC, Low Alkali
Portland Cement, Portland Slag Cement, Low Heat Cement and Sulphate
Resistant Cement.
 
The cement is marketed under the brand names of Birla Cement SAMRAT, Birla Cement
KHAJURAHO, Birla Cement CHETAK, Birla Cement and Birla Premium Cement,
bringing the product under the common brand of Birla Cement while retaining the niche
identity of SAMRAT for blended cement, i.e. PPC & PSC, for all the
units, KHAJURAHO (for the OPC product of Satna) and CHETAK (for the OPC product
of Chanderia).

All our cement plants are ISO 9001:2000 Certificated, covering the entire range of
production and marketing. SCW & BVC have received the IS/ISO 14001 certificate, an
international recognition for "Implementation of Environmental Management System".
(SCW has been awarded GREENTECH Safety Silver Award 2009 and GREENTECH
Environment Excellence Award 2008 by GREENTECH Foundation, New Delhi. It has also
received the First Prize for Maximum Reduction in KWH/ton of cement in M.P. from FLS
Energy Award, Bhopal, in 2008. The Satna units received the Quality Circle Excellence
Award from Quality Circle Forum of India, Durgapur Chapter; Quality Circle Excellence
Award and Quality Circle Distinguish Award from Quality Circle Forum of India, Kanpur
Chapter, both in 2008, and Quality Circle Forum of India, Baroda. SCW has received the
National Award for Excellence in Water Management from CII, Hyderabad and First Prize
for Lowest Thermal Energy Consumption K. Cal/kg clinker under the 10th FLS Energy
Award 2007.

BCW & CCW have received the IS/ISO : 14001 Certification for "Environmental
Management System". BCW & CCW have bagged various awards from the NPC &
NCCBM

Balance sheet of Birla cement

(In crores)
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 77.01 77.01 77.01 77.01 77.01

Equity Share Capital 77.01 77.01 77.01 77.01 77.01

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 225.47 297.71 580.08 919.53 1,202.48

Revaluation Reserves 10.31 9.52 8.73 8.44 8.22

Networth 312.79 384.24 665.82 1,004.98 1,287.71

Secured Loans 172.39 205.50 211.24 206.01 219.40

Unsecured Loans 33.28 25.49 27.80 21.49 8.36

Total Debt 205.67 230.99 239.04 227.50 227.76

Total Liabilities 518.46 615.23 904.86 1,232.48 1,515.47

Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 876.22 1,098.07 1,154.35 1,173.44 1,354.20

Less: Accum. Depreciation 578.07 597.84 635.21 672.64 694.15

Net Block 298.15 500.23 519.14 500.80 660.05

Capital Work in Progress 126.03 33.90 25.74 149.11 141.86

Investments 110.20 175.31 420.08 634.00 552.29

Inventories 102.95 105.72 142.59 200.45 192.88

Sundry Debtors 56.22 22.48 27.22 31.71 20.00

Cash and Bank Balance 13.12 25.00 24.96 28.94 38.73

Total Current Assets 172.29 153.20 194.77 261.10 251.61

Loans and Advances 101.38 137.43 297.89 473.54 175.73

Fixed Deposits 15.95 34.23 9.43 2.42 280.99

Total CA, Loans & Advances 289.62 324.86 502.09 737.06 708.33

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 298.63 377.15 370.42 435.43 480.15

Provisions 13.22 44.89 192.15 353.07 66.90

Total CL & Provisions 311.85 422.04 562.57 788.50 547.05

Net Current Assets -22.23 -97.18 -60.48 -51.44 161.28

Miscellaneous Expenses 6.30 2.96 0.38 0.00 0.00

Total Assets 518.45 615.22 904.86 1,232.47 1,515.48

Contingent Liabilities 120.46 60.60 122.07 92.46 237.54

Book Value (Rs) 39.28 48.66 85.33 129.41 166.16

Key Financial Ratios of Birla

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

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 1.50 2.25 3.50 4.00 4.50
Operating Profit Per Share (Rs) 16.66 23.31 64.11 74.78 57.86
147.8
Net Operating Profit Per Share (Rs) 158.23 203.43 224.00 234.12
8
Free Reserves Per Share (Rs) 28.25 38.07 75.07 119.21 155.95
Bonus in Equity Capital 35.90 35.90 35.90 35.90 35.90
Profitability Ratios
Operating Profit Margin(%) 11.26 14.72 31.51 33.38 24.71
Profit Before Interest And Tax Margin(%) 8.60 11.85 28.61 30.48 21.99
Gross Profit Margin(%) 9.79 14.13 31.20 30.98 22.30
Cash Profit Margin(%) 10.19 13.04 23.06 24.25 18.40
Adjusted Cash Margin(%) 9.20 12.64 22.66 24.25 18.40
Net Profit Margin(%) 7.59 10.25 20.56 22.45 17.68
Adjusted Net Profit Margin(%) 6.59 9.85 20.16 22.45 17.68
Return On Capital Employed(%) 20.46 25.22 52.89 45.94 28.40
Return On Net Worth(%) 28.72 33.56 49.65 39.49 25.28
Adjusted Return on Net Worth(%) 25.47 32.50 48.71 38.50 22.91
Return on Assets Excluding Revaluations 10.46 12.12 22.23 19.47 15.69
Return on Assets Including Revaluations 10.59 12.24 22.36 19.56 15.75
Return on Long Term Funds(%) 23.09 28.92 60.06 51.08 30.24
Liquidity And Solvency Ratios
Current Ratio 0.71 0.59 0.67 0.73 0.98
Quick Ratio 0.52 0.48 0.62 0.65 0.90
Debt Equity Ratio 0.68 0.62 0.36 0.23 0.18
Long Term Debt Equity Ratio 0.50 0.41 0.20 0.10 0.11
Debt Coverage Ratios
Interest Cover 4.79 11.22 25.58 26.71 19.42
Total Debt to Owners Fund 0.68 0.62 0.36 0.23 0.18
Financial Charges Coverage Ratio 6.17 13.73 27.72 28.68 21.39
Financial Charges Coverage Ratio Post Tax 6.38 12.74 20.75 21.66 17.64
Management Efficiency Ratios
Inventory Turnover Ratio 11.11 11.60 11.13 20.17 26.19
Debtors Turnover Ratio 26.43 30.96 63.03 58.53 69.73
Investments Turnover Ratio 21.01 26.83 23.53 20.17 26.19
Fixed Assets Turnover Ratio 3.12 2.60 2.95 1.47 1.33
Total Assets Turnover Ratio 2.24 2.01 1.75 1.41 1.20
Asset Turnover Ratio 1.30 1.11 1.36 1.47 1.33
Average Raw Material Holding 23.27 27.87 64.92 43.04 24.02
Average Finished Goods Held 13.35 7.92 8.78 12.68 9.66
Number of Days In Working Capital -7.03 -28.71 -13.90 -10.74 32.21
Profit & Loss Account Ratios
Material Cost Composition 23.90 22.00 19.49 19.95 24.41
Imported Composition of Raw Materials
7.87 14.80 16.06 23.44 5.34
Consumed
Selling Distribution Cost Composition 15.52 14.87 12.75 12.43 14.34
Expenses as Composition of Total Sales 7.48 4.24 2.97 4.06 5.01
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 15.16 15.70 9.66 9.15 12.53
Dividend Payout Ratio Cash Profit 11.28 12.35 8.61 8.28 11.04
Earning Retention Ratio 82.55 83.66 90.15 90.61 86.18
Cash Earning Retention Ratio 87.50 87.26 91.24 91.53 87.96
AdjustedCash Flow Times 1.95 1.49 0.66 0.54 0.68

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Earnings Per Share 11.28 16.33 42.36 51.11 42.01

Book Value 39.28 48.66 85.33 129.41 166.16

capital structure

Period Instrument Authorized Capital Issued Capital -PAIDUP-

From To (Rs. cr) (Rs. cr) Shares (nos) Face Value Capital
2008 2009 Equity Share 214.75 214.75 298250000 10 214.75
2007 2008 Equity Share 214.75 214.75 298250000 10 214.75
2006 2007 Equity Share 214.75 214.75 298250000 10 214.75
2005 2006 Equity Share 214.75 214.75 298250000 10 214.75
2004 2005 Equity Share 214.75 214.75 298250000 10 214.75
2003 2004 Equity Share 214.75 214.75 298250000 10 214.75
2002 2003 Equity Share 214.75 214.75 298250000 10 214.75
2001 2002 Equity Share 214.75 214.75 298250000 10 214.75
2000 2001 Equity Share 214.75 214.75 298250000 10 214.75
1996 2000 Equity Share 214.75 214.75 256968000 10 214.75
1995 1996 Equity Share 214.75 214.75 240298000 10 214.75
1994 1995 Equity Share 214.75 214.75 240298000 10 214.75

Analysis of capital structure

As we know that the capital structure is mix of debt and equity. Here watching the balance
sheet of Birla cement Company for last three years we can find that The equity share capital
in Mar’07 was 77.01 crores which remains same in Mar’08 to 77.01 and no further equity
shares were issued after that which means it remain 77.01 crores in Mar’09. But when we
see the unsecured loan of the company is decreasing from 27.80 crores to 21.49 in Mar’08
and further decreased to 8.36 in Mar’09.

The condition suggest that the company is not going for leverage as it is
continuously moving down its fund through issuing equity shares instead of issuing
unsecured for raising fund.

Through P/E ratio

2007 2008 2009

Adjusted EPS 42.36 51.11 42.01
Book value 85.33 129.41 166.16
P/E Ratio 85/42.36=2.014 129.41/51.11=2.53 13.79/42.01=3.95
As we know that price earnings ratio decreases with increase in debt capital in capital
structure. Here when we calculate P/E ratio by dividing the book value of share by earnings
per share, we can easily find out that the P/E ratio is rising from 2.014 in 2007 to 2.53 in
2008 and further declining to 3.95 in 2009. This is because of the fact that the company has
relied on equity shares and hasn not opted for unsecured loans in the past three years that has
mounted to 661.65 crores in 2009 from 411.22 crores in 2007.

Through EPS

As when a company goes for raising its fund through debt, its earnings per share increases
with increase in its leveraging. Here we find that the company’s EPS has increased
considerably in 2008 by 155.5%(4.88/3.22*100). During this year the company has raised its
fund through unsecured loan by 206.55 crores that is 50% more than the last year.
 INTRODUCTION

Karur Vysya Bank: It is a privately held Indian bank, headquartered in Karur in Tamil

Nadu. It was set up in 1916 by M. A. Venkatarama Chettiar and Athi Krishna Chettiar. Its
current chairman is Mr P. T. Kuppuswamy.
The bank has 322 branches — about 45 of them are in rural areas. The bank has installed
275 ATMs across the country so far. All the branches are powered with CBS — Core
Banking Solution. The bank also offers Internet banking and mobile banking facilities to its
customers.

Balance sheet
 Mar ' Mar '
  Mar ' 09 Mar ' 08 Mar ' 07 06 05
Sources of funds
Owner's fund
Equity share capital 53.95 53.94 49.49 17.98 17.98
Share application money - - - - -
Preference share capital - - - - -
Reserves & surplus 1,296.21 1,136.06 1,013.67 853.65 742.90
Loan funds
Secured loans - - - - -
Unsecured loans 15,101.39 12,549.99 9,340.29 7,576.84 6,672.19
Total 16,451.56 13,739.99 10,403.45 8,448.47 7,433.06
Uses of funds
Fixed assets
Gross block 278.75 251.92 219.61 199.11 179.92
Less : revaluation reserve - - - - -
Less : accumulated depreciation 163.05 142.52 122.93 100.92 78.12
Net block 115.69 109.40 96.69 98.19 101.80
Capital work-in-progress - 0.01 0.01 0.24 0.35
Investments 4,715.98 3,526.33 2,873.95 2,298.13 2,219.03
Net current assets
Current assets, loans & advances 445.02 339.19 295.94 273.53 288.69
Less : current liabilities &
provisions 586.15 514.69 447.04 363.80 359.47
Total net current assets -141.13 -175.50 -151.10 -90.27 -70.78
Miscellaneous expenses not written - - - - -
Total 4,690.55 3,460.23 2,819.54 2,306.30 2,250.41
Notes:
Book value of unquoted
investments - - - - -
Market value of quoted investments - - - - -
Contingent liabilities 4,797.16 6,330.05 2,926.85 2,898.15 2,385.15
Number of equity sharesoutstanding
(Lacs) 539.41 539.41 539.99 179.79 179.78
Key Financial Ratios of KARUR VYSYA BANK

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

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Investment Valuation Ratios
Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 10.00 12.00 10.00 12.00 12.00
Operating Profit Per Share (Rs) 72.58 109.63 44.45 57.86 65.49
350.7
Net Operating Profit Per Share (Rs) 421.67 177.46 236.70 302.42
3
226.0
Free Reserves Per Share (Rs) 264.86 122.03 132.23 141.39
7
Bonus in Equity Capital 33.37 33.37 36.32 33.33 33.32
Profitability Ratios
Interest Spread 4.28 4.13 4.24 4.05 5.34
Adjusted Cash Margin(%) 19.29 20.65 18.73 17.63 15.58
Net Profit Margin 16.28 17.67 16.47 16.12 14.35
Return on Long Term Fund(%) 60.43 63.05 70.10 90.21 101.19
Return on Net Worth(%) 14.30 16.58 16.54 17.50 17.46
Adjusted Return on Net Worth(%) 13.83 15.53 15.03 17.50 17.44
Return on Assets Excluding Revaluations 1.34 1.50 1.44 1.43 1.38
Return on Assets Including Revaluations 1.34 1.50 1.44 1.43 1.38
Management Efficiency Ratios
Interest Income / Total Funds 8.41 8.98 9.54 9.95 10.31
Net Interest Income / Total Funds 3.96 4.62 4.36 3.99 3.76
Non Interest Income / Total Funds 0.22 0.09 0.13 0.12 0.07
Interest Expended / Total Funds 4.46 4.36 5.18 5.96 6.55
Operating Expense / Total Funds 2.21 2.29 1.97 1.55 1.53
Profit Before Provisions / Total Funds 1.70 2.16 2.30 2.40 2.18
Net Profit / Total Funds 1.41 1.60 1.59 1.62 1.49
Loans Turnover 0.15 0.15 0.15 0.16 0.16
Total Income / Capital Employed(%) 8.63 9.07 9.67 10.07 10.38
Interest Expended / Capital Employed(%) 4.46 4.36 5.18 5.96 6.55
Total Assets Turnover Ratios 0.08 0.09 0.10 0.10 0.10
Asset Turnover Ratio 3.50 3.81 4.36 5.07 5.85
Profit And Loss Account Ratios
Interest Expended / Interest Earned 56.55 56.53 59.98 67.49 71.62
Other Income / Total Income 2.54 1.03 1.31 1.20 0.70
Operating Expense / Total Income 25.66 25.20 20.39 15.43 14.75
Selling Distribution Cost Composition 1.32 0.56 0.98 0.57 0.63
Balance Sheet Ratios
Capital Adequacy Ratio 16.07 14.79 14.51 12.58 14.92
Advances / Loans Funds(%) 72.30 76.43 81.20 83.94 74.35
Debt Coverage Ratios
Credit Deposit Ratio 68.68 71.41 74.46 75.20 71.72
Investment Deposit Ratio 34.90 31.70 30.57 29.24 29.81
Cash Deposit Ratio 5.63 5.98 6.30 7.74 7.46
Total Debt to Owners Fund 8.77 8.69 8.79 10.55 11.18
Financial Charges Coverage Ratio 1.44 1.56 1.49 1.43 1.35
Financial Charges Coverage Ratio Post Tax 1.37 1.43 1.35 1.30 1.25
Leverage Ratios
Current Ratio 0.04 0.03 0.03 0.03 0.03
Quick Ratio 14.72 17.32 17.74 21.10 20.16
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 19.46 18.17 39.44 36.35 32.11
Dividend Payout Ratio Cash Profit 16.41 15.55 34.67 33.23 29.54
Earning Retention Ratio 80.54 81.84 60.54 63.64 67.85
Cash Earning Retention Ratio 83.58 84.46 65.31 66.77 70.43
AdjustedCash Flow Times 53.46 47.88 51.35 55.07 58.97

Mar
Mar '06 Mar '07 Mar '08 Mar '09
'05

Earnings Per Share 58.59 75.28 29.63 38.62 43.72

423.2
Book Value 484.80 196.88 220.61 250.30
2

Capital Structure

Period Instrument Authorized Capital Issued Capital -PAIDUP-

From To (Rs. cr) (Rs. cr) Shares (nos) Face Value Capital
2008 2009 Equity Share 200 54 53951619 10 53.95
2007 2008 Equity Share 100 54 53941369 10 53.94
2006 2007 Equity Share 100 54 53919529 10 53.92
2005 2006 Equity Share 100 18 17979085 10 17.98
2004 2005 Equity Share 50 17.98 17978435 10 17.98
2003 2004 Equity Share 50 17.98 11999856 10 12
2002 2003 Equity Share 50 17.98 17978435 10 17.98
2001 2002 Equity Share 50 6 5999928 10 6
2000 2001 Equity Share 20 6 5999928 10 6
1998 2000 Equity Share 20 6 6000000 10 6
1997 1998 Equity Share 12 6 5999928 10 6
1996 1997 Equity Share 12 6 5999928 10 6
1995 1996 Equity Share 12 6 6000000 10 6
1994 1995 Equity Share 12 4 4000000 10 4
1992 1993 Equity Share 3 2 2000000 10 2
1991 1992 Equity Share 3 2 1500000 10 1.5
1990 1991 Equity Share 3 1.5 1500000 10 1.5

Issued Capital

1. The issued capital of 3,59,99,568 equity shares consists of:

i. 9,779 equity shares kept in abeyance in the rights issue of shares during the year 2003
ii. 9,779 equity shares kept in abeyance in the bonus issue of shares during the year 2006
21,349 Shares were kept in abeyance in 2003 rights issue in respect of transfer and
transmission of shares due to legal and family disputes. Out of the said 21,349 shares, during
the year 2005, Bank allotted 650 shares in view of the settlement of disputes in those cases
bringing down the balance under abeyance category to 20,699 shares. Recently 10,920 were
allotted to six shareholders in view of the settlement of dispute among the legal heirs.
Presently the balance in the abeyance shares are only 9779 equity shares under Rights 2003
and 9779 equity shares under Bonus 2006.
In the proposed rights issue also, pending the settlement of the disputes, the rights
entitlement for above mentioned rights and bonus shares will be kept in abeyance.

Present Issue
The present issue of rights shares is in the ratio of one share of Rs. 10/- each for every two
shares held on the record
date i.e. December 20, 2006.

Analysis of capital structure

As we know that the capital structure is mix of debt and equity. Here watching the balance
sheet of KARUR VYSYA BANK for last three years we can find that The equity share
capital in Mar’07 was 49.49 crores which increased in Mar’08 to 53.94 and further equity
shares were issued after that a slight rise is being seen which is been shown as 53.95 crores
in Mar’09. But when we see the unsecured loan of the company it increased from 9340.29
crores to 12549.99 in Mar’08 and further increased to 1,5101.39 in Mar’09.

The condition suggest that the company is going for leverage as it is

continuously raising its fund through unsecured loans instead of issuing equity shares for
raising fund.

Through P/E ratio

2007 2008 2009

Adjusted EPS 29.63 38.62 43.72
Book value 196.88 220.61 250.30
P/E Ratio 196.88/29.63=6.64 220.61/38.62=5.7 250.30/43.72=5.7
 1
As we know that price earnings ratio decreases with increase in debt capital in capital
structure. Here when we calculate P/E ratio by dividing the book value of share by earnings
per share, we can easily find out that the P/E ratio is declining from 6.64 in 2007 to 5.72 in
2008 and further declining to 5.71 in 2009. This is because of the fact that the company has
not relied on equity shares but has opted for unsecured loans in the past three years that has
mounted to 661.65 crores in 2009 from 411.22 crores in 2007.

Through EPS

As when a company goes for raising its fund through debt, its earnings per share increases
with increase in its leveraging. Here we find that the company’s EPS has increased
considerably in 2008 by 155.5%(4.88/3.22*100). During this year the company has raised its
fund through unsecured loan by 206.55 crores that is 50% more than the last year.