ABOUT THE COMPANY

Sundaram-Clayton Limited (SCL) is part of the US $3 billion TVS group of companies, the largest
automotive component manufacturing and distributing group in India.

SCL established its Die casting division in 1968 for quality and high precision aluminium castings. The
division's two plants, one at Chennai and the other at Hosur are equipped with the latest technology in
Pressure Die Casting, Gravity Die Casting and Low Pressure Die Casting.

Having a wide customer base, SCL is one of the largest supplier of aluminium die castings in the
country. SCL exports its products to international Original Equipment Manufacturers having proven its
credentials as a reliable supplier of world class products.

The Die casting division's infrastructure supports two modern and fully equipped plants: Plant-I at
Chennai with a capacity of 14000 Metric Tonnes per annum and Plant-II at Hosur with a capacity of
10000 Metric Tonnes per annum.

Together these two plants have capability to produce Pressure Die Castings in the weight range of 0.25
kg to 22 kg, Gravity die Castings ranging from 0.2 kg to 28 kg and Low pressure Die castings ranging
from 2.5 kg to 18 kg. Additionally these facilities are supported by the company's allied capabilities in
product design and development, machining and assembly and machine building.

Thus, providing a robust foundation to the company's intent of providing total engineering solutions for
the industry's die casting needs (full service support).

PRODUCTS

 Products & Services:

• Commercial Vehicles Assembly

• Passenger Cars Assembly
• Two Wheelers Assembly
• Air Connectors
• Charge Air Pipe
• Filtration Module Casting
• Lube Oil Cooler Cover Assembly

• Turbo Charger

1
 PROMOTERS HOLDING
Share Holding as on : 30 Jun 2010 31 Mar 2010 31 Dec 2009
Face Value 5.00 5.00 5.00
No. Of % No. Of % No. Of %
Shares Holding Shares Holding Shares Holding
PROMOTER'S HOLDING
Indian Promoters 30,348,128 80.00 30,348,128 80.00 30,348,128 80.00
Sub Total 30,348,128 80.00 30,348,128 80.00 30,348,128 80.00
NON PROMOTER'S HOLDING
Institutional Investors
Mutual Funds and UTI 2,329,677 6.14 1,427,470 3.76 1,429,338 3.77
Banks Fin. Inst. and
804 0.00 804 0.00 804 0.00
Insurance
FII's 11,626 0.03 21,626 0.06 153,664 0.41
Sub Total 2,342,107 6.17 1,449,900 3.82 1,583,806 4.18
Other Investors
Private Corporate Bodies 718,803 1.89 878,443 2.32 796,253 2.10
NRI's/OCB's/Foreign
64,839 0.17 80,208 0.21 75,794 0.20
Others
Sub Total 783,642 2.07 958,651 2.53 872,047 2.30
General Public 4,461,291 11.76 5,178,489 13.65 5,131,187 13.53
GRAND TOTAL 37,935,168 100.00 37,935,168 100.00 37,935,168 100.00

http://www.indiamart.com/company/2422841/products.html

http://www.valuenotes.com/valuenotes/ShareHolding.asp?
companycode=13520019

PRESENT GLOBAL ECONOMIC ANALYSIS

2
Global Economic Analysis is a macro-level study of all the economies of the world taken as a whole.
Globalization has helped the world economy become more integrated and homogenized with the free
movement of goods and services.

Global economic Analysis tends to project a skewed picture of the economic development experienced
by the world in general. Although globalization has marched on rapidly in recent years, it has not been a
bed of roses all the way.

The darks days of the East Asian Currency Crisis and the recession of the Latin American economies of
the 90’s may have been forgotten by the world but a lot more needs to be done to regulate the global
financial markets further. International Trade has to be rationalized to give way to equitable
development and to bring about a drastic reduction in poverty levels globally.

The broad macro-economic indicators on the basis of which an analysis can be done are the following :

• Gross Domestic Product (GDP),

• Growth of GDP
• Rate of inflation
• Per capita income
• Unemployment Level
• Balance of Payments
• External Debt as a percentage of GDP .

Countries from different regions across the world including newly industrialized nations such as China,
Brazil and India and developed economies such as USA, Russia and some East European countries like
the Czech Republic and Poland have been considered while doing the analysis. Analyses on South
Africa and Australia have also been done.

Although inflation rates have been found to be the highest in Zambia and Russia, both these countries
have been experiencing steady economic growth of late. While high growth rates coupled with
inequality in income continue to plague the BRIC (Brazil, Russia India and China) economies, Africa
continues to be the poorest continent of the world with low per capita income and high population
growth rates. The economies of the East European countries like Poland and the Czech Republic have
however grown steadily over the years.

While analysing trends in the global economy it has been observed that serious challenges confront the
WTO as far as implementation of the Doha Round of World Trade Talks are concerned. The Trade
Talks aims to allow greater accessibility to world markets to goods produced in the Third World
Countries. Agriculture continues to be the primary occupation in developing countries with more than
50% of the population employed in this sector.

Environmental degradation also poses a major challenge to globalization and adequate steps should be
taken to curb this menace.

http://www.economywatch.com/node/6451/

PRESENT INDIAN ECONOMIC ANALYSIS

3
About India economic analysis

India economic analysis provides various inputs on economic condition of this south-east Asian
country. It can be done both at a microeconomic as well as a macroeconomic level. India economic
analysis could also be described as being an explanation of various economic phenomena going on in
this country.

According to the estimates by the Ministry of Statistics and Programme Implementation, the Indian
economy has registered a growth of 7.4 per cent in 2009-10, with 8.6 per cent year-on-year (y-o-y)
growth in its fourth quarter. The growth is driven by robust performance of the manufacturing sector on
the back of government and consumer spending. GDP growth rate of 7.4 per cent in 2009-10 has
exceeded the government forecast of 7.2 per cent for the full year. According to government data, the
manufacturing sector witnessed a growth of 16.3 per cent in January-March 2010, from a year earlier.

Economic activities which showed significant growth rates in 2009-10 over the corresponding period
last year were mining and quarrying (10.6 per cent), manufacturing (10.8 per cent), electricity, gas and
water supply (6.5 per cent), construction (6.5 per cent), trade, hotels, transport and communications (9.3
per cent), financing, insurance, real estate and business services (9.7 per cent), community, social and
personal services (5.6 per cent). The Gross National Income is estimated to rise by 7.3 per cent in 2009-
10 as compared to 6.8 per cent in 2008-09. The per capita income is estimated to grow at 5.6 per cent in
2009-10.

India’s industrial output grew by 17.6 per cent in April 2010. The manufacturing sector that accounts
for 80 per cent of the index of industrial production (IIP) grew 19.4 per cent in April 2010, as against
0.4 per cent a year-ago.

Capital goods production grew by 72.8 per cent against a contraction of 5.9 per cent a yearago.
Consumer durables output continued to grow at a fast pace of 37 per cent, mirroring higher purchase of
goods such as televisions and refrigerators.

The Economic scenario

The number of registered foreign institutional investors (FIIs) was 1710 as on May 31, 2010 and the
total FII inflow in equity during January to May 2010 was US$ 4606.50 million while it was US$
5931.80 million in debt.

Net investment made by FIIs in equity between June 1, 2010 and June 14, 2010 was US$ 530.05
million while it was US$ 875.73 million in debt.

As on June 4, 2010, India's foreign exchange reserves totalled US$ 271.09 billion, an increase of US$
9.88 billion over the same period last year, according to the Reserve Bank of India's (RBI) Weekly
Statistical Supplement.

Moreover, India received foreign direct investment (FDI) worth US$ 25,888 million during April-
March, 2009-10, taking the cumulative amount of FDI inflows during August 1991 - March 2010 to
US$ 1, 32,428 million, according to the Department of Industrial Policy and Promotion (DIPP).

4
The services sector comprising financial and non-financial services attracted 21 per cent of the total
FDI equity inflow into India, with FDI worth US$ 4,392 million during April-March 2009-10, while
construction activities including roadways and highways attracted second largest amount of FDI worth
US$ 2,868 million during the same period. Housing and real estate was the third highest sector
attracting FDI worth US$ 2,844 million followed by telecommunications which garnered US$ 2,554
million during the financial year 2009-10.

• Exports from India were worth US$ 16,887 million in April 2010, 36.2 per cent higher than the
level in April 2009, which touched US$ 12,397 million, according to the Ministry of Commerce
and Industry. India's imports during April 2010 were valued at US$ 27,307 million representing
a growth of 43.3 per cent over April 2009.
• India's logistics sector is witnessing increased activity—the country's major ports handled
560,968 metric tonnes (MT) of cargo during April-March 2009-10, an increase of 5.74 per cent
over previous year traffic, according to revised estimates released by the Ministry of Shipping.
• Foreign tourist arrivals in India during the month of May 2010 were 345,000, an increase of
15.5 per cent over May 2009. Foreign tourist arrivals during January-May 2010 were 2.263
million, an increase of 11.3 per cent over the corresponding period last year. Foreign exchange
earnings during May 2010 were US$ 951 million, an increase of 42.2 per cent over May 2009.
Foreign exchange earnings during January-May 2010 were US$ 5822 million, an increase of
38.3 per cent over the corresponding period last year, according to data released by the Ministry
of Tourism.
• The total telephone subscriber base in the country reached 638.05 million in April 2010, taking
the overall tele-density to 54.10, according to the figures released by the Telecom Regulatory
Authority of India (TRAI). Also the wireless subscriber base increased to 601.22 million.
• According to the latest statistics from the Association of Mutual Funds in India (AMFI), the
assets under management (AUM) of mutual funds were worth US$ 170.46 billion in May 2010
as compared to US$ 135.58 billion in May 2009.
• As per NASSCOM’s Strategic Review 2010, the BPO sector continues to be the fastest
growing segment of the industry and is expected to reach US$ 12.4 billion in 2009-10, growing
at 6 per cent.
• According to data released by Society of Indian Automobile Manufacturers (SIAM), the total
number of vehicles including passenger cars, commercial vehicles, two wheelers and three
wheelers produced in 2009-10 was 14,049,830, as compared to 11,172,275 produced in 2008-
09.
• According to the Gem and Jewellery Export Promotion Council, the exports of gems and
jewellery from India including rough diamonds, rose by 57.08 per cent during April-May 2010
to touch US$ 5551.24 million.
• According to the Ministry of Civil Aviation, domestic airlines carried 211,380 passengers
between January-May 2010, an increase of 21.95 per cent over 173,340 passengers carried in
the same period last year.
• The number of corporate merger & acquisitions (M&As) and private equity (PE) transactions,
have more than doubled during January-May 2010. 439 M&A and PE deals valuing over US$
30 billion took place between January-May 2010 as compared to 179 deals worth US$ 8.1
billion in the corresponding period in 2009.
• The HSBC Markit Business Activity Index, which measures business activity among Indian
services companies, based on a survey of 400 firms, rose to 62.1 in April 2010, its highest since

Agriculture
5
Agriculture is one of the strongholds of the Indian economy and accounted for 15.7 per cent of the
 PRESENT INDUSTRY ANALYSIS

AUTO ANCILLARY INDUSTRY

The Indian auto ancillary industry is one of India's sunrise industries with tremendous growth
prospects. The automotive industry is an important segment of the economy in any country as it links
many industries and services.

Presently, India is:

• The largest two-wheeler manufacturer in the world.
• The largest three-wheeler market in the world.
• The second-largest two-wheeler market in the world.
• The fourth –largest commercial vehicle market in the world.

The fortunes of the automotive components segment are linked to the performance of the auto industry.
The auto ancillary industry gives support to sectors such as metals that includes steel, aluminum,
copper and also to many other machine tools, plastics, rubbers, polymers, glass, surface transport.
As per Indian Suppliers’ report, the automotive sector in India contributes to 5% of the nation’s GDP and
17% of the indirect taxes as a result of which the government last year charted a 10-year blueprint for
the sector’s growth. This envisages the automotive sector “output reaching a level of $145 billion
accounting for more than 10% of the GDP” by 2016.

Industry Structure & Segments:- An auto ancillary company comprises of:

• OEM (original equipment manufacturers).
• Replacement Market.

Industry Turnover

The Indian organized auto ancillary industr y revenue grew 6% y o y to INR720bn in FY09. Exports
increased by 6% y o y to INR150bn. The recent financial performance of auto ancillary companies with
a greater reliance on OEMs and exports has been inferior to those with a larger focus on the replacement
market. Yet, replacement stocks have underperformed. Despite the recent rise in commodity prices,
the average price for FY10f to be lower . This would provide little benefit to the - OEM dependent
stocks, while the stronger INR is likely to hurt exports.
Replacement stocks are likely to retain the savings from decreased material prices and a rising
INR. Profitability may improve for both groups, but replacement stocks are more likely to
outperform over the medium term as the market appreciates their stronger position.

Performance of Indian Auto Ancillary Industry companies

INR(bn) FY-08 FY-09 Y-O-Y increase (%)

Revenue 720 763 6
Exports 141 150 6
Imports 210 275 31

http://www.valuenotes.com/fairwealth/fairwealth_AUTOANCILLARY_05Jan10.asp?
ArtCd=150897&Cat=I&Id=11

6
 RISK

YE 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
AR

BETA 0.6692 0.6102 0.574 0.747 0.1694 0.587 0.261 0.714 0.3817 0.8854
6 0 1 7 2

BETA 0.4478 0.3723 0.330 0.558 0.0286 0.344 0.068 0.510 0.1457 0.7839
SQUARE 1 0 7 5 0

SYSTEMATI 1.8957 0.5194 0.488 1.419 0.0339 0.923 0.164 5.036 0.7283 0.8638
C RISK (SR) 3 3 4 3 6

UNSYSTEM 28.415 9.5100 6.725 6.511 2.6018 6.766 3.200 26.68 10.387 8.8162
ATIC RISK 6 4 3 9 1 57 7
(UR)

TOTAL RISK 30.311 10.029 7.213 7.930 2.6357 7.690 3.364 31.72 11.116 9.6800
(TR) 33 4 7 6 3 4 23 0

SR/TR 0.0625 0.0518 0.067 0.179 0.0129 0.120 0.048 0.158 0.0655 0.0892
7 0 0 8 8

UR/TR 0.9375 0.9482 0.932 0.821 0.9871 0.880 0.951 0.841 0.9345 0.9108
3 0 0 2 2

7
ANALYSIS OF SYSTEMATIC AND
UNSYSTEMATIC RISK
8
• From the above values we can see that the company is less depends on the market forces and
conditions, as the proportion of unsystematic risk is more than the systematic risk in all the
years so we can conclude the company risk does not depend on the market forces.

• As the value of beta indicates the amount of change taken place in the market, so as we can
conclude that the value of beta is less than 1 in all the years which shows that systematic risk
have less impact than the unsystematic risk proportion to the total risk.

RATIO ANALYSIS

LIQUIDITY RATIOS
9
  CURRENT RATIO

Interpretation- According to International Accounting Standard this should be in the ratio of 2:1 on the
other hand in Indian context it is 1.33:1 while here it is about 0.90 on average. In 2008 current asset is

YE 2001 2002 2003 2004 2005 2006 2007 2008 2009

AR

CALCULATE 1.24 1.26 1.30 1.21 1.04 0.98 1.09 1.36 1.33
D

CAPITAL 1.30 1.25 1.15 0.95 0.76 0.86 1.21 1.13 0.99
LINE

less than the average because of may be recession effect otherwise the current asset if fine in previous
years.

 INVENTORY TURNOVER RATIO:

YE 2001 2002 2003 2004 2005 2006 2007 2008 2009

AR

CALCULATE 17.35 20.79 23.79 21.69 16.32 11.00 9.30 3.88 4.06
D

CAPITAL 17.35 23.63 27.65 25.40 18.95 13.18 10.84 4.48 4.41
LINE

Interpretation-This ratio present that what is the ratio of Inventory the company is keeping against its
Sales. Lower ratio is good to save option for investment, while the high ratio presents the safety if high
sale is occur.

 DEBTORS TURNOVER RATIO:

YE 2001 2002 2003 2004 2005 2006 2007 2008 2009
AR

CALCULATE 1.02 1.01 1.10 1.17 1.12 1.08 1.13 0.69 1.07
D

CAPITAL 3.72 4.53 6.45 7.1 7.14 7.22 7.52 4.42 6.23
LINE

Interpretation - This ratio represents the debtor ratio with sales. Debtors are divided by the net sales
made. The ratio in 2009has increased from 2008 due to the occurring of losses during the financial year.

10
 STRUCTURAL RATIOS

YE 2001 2002 2003 2004 2005 2006 2007 2008 2009

AR

CALCULATE 0.22 0.14 0.06 0.14 0.35 0.48 0.57 0.83 1.27
D

CAPITAL 0.22 0.14 0.06 0.14 0.35 0.48 0.57 0.83 1.27
LINE

 DEBT TO EQUITY RATIO

Interpretation -This ratio shows in what ratio the company has kept the debt on equity. This also
represents the capabilities of the company to work. Yet other people says using other money and earn is
a big challenge. On the standard it is said that the ratio of 2:1 is better. Here we can see the ratio as 0.83

YE 2001 2002 2003 2004 2005 2006 2007 2008 2009

AR

CALCULATE 0.05 0.05 0.04 0.12 0.25 0.26 0.26 0.45 0.66
D

CAPITAL 0.08 0.07 0.04 0.03 0.06 0.2 0.39 0.36 0.43
LINE

in 2008 as compare to other years is more due to recession. In the year 2009 company is occurring
losses which lead to make increment in debt component of capital structure.

 LONG TERM DEBT TO EQUITY RATIO

Interpretation - The analysis of Long Term Debt-Equity ratio shows that the firm had 0.66 Long term
D-E ratio

11
 YE 2001 2002 2003 2004 2005 2006 2007 2008 2009
AR

CALCULATE 1.78 1.65 1.78 2.10 2.11 1.85 1.93 1.08 1.36
D

CAPITAL 1.77 1.87 2.03 2.3 2.18 2.04 2.18 1.2 1.37
LINE

ACTIVITY RATIO
 FIXED ASSETS TURNOVER RATIO

Interpretation: Fixed Assets turnover ratio show the proportion of the fixed assets in net sales made
during the year. Fixed Assets turnover ratio is showing the fluctuation in the table.

 TOTAL ASSETS TURNOVER RATIO:

12
Interpretation: The ratios show that on an average Total Assets get converted into sales In 1 days
which is satisfactory figure for the firm.

 INTEREST COVERAGE RATIO:

Interpretation: This is the ratio shows that what the ratio between interest earned on the assets. In the
table the ratio of investment is continuous reducing the reason behind is company is earning less
interest on their assets.

YE 2001 2002 2003 2004 2005 2006 2007 2008 2009

AR

CALCULATEYE 2001
78 2002
79 2003
66 2004
62 2005
66 2006
70 2007
51 2008
64 2009
36
AR
D(in days)
CALCULATE 1.35 1.39 1.65 1.94 1.92 1.67 1.63 0.80 0.93
D

 DEBTORS VELOCITY RATIO:

200 2001 2002 200 2004 2005 2006 2007 2008 2009
YEAR 0 3

CALCULAT 26. 13.51 19.36 806 66.06 17.67 13.41 8.72 3.68 1.27
ED 93

CAPITAL 26. 13.51 19.36 806 66.06 17.67 13.41 8.72 3.40 1.27
LINE 93

Interpretation:If the average collection period is 1 month (or 30 days), it means debtors on an
average are collected in 1 month (or 30 days).The lesser, the better.A very long collection period
implies either poor credit selection or inadequate collection effort.A very short collection period
will severely curtail sales.In this case , the time is 69 days which is less than previous years.

 CREDITORS VELOCITY RATIO:

13
 Interpretation: It is better for the firm to have a low payables T/O ratio or larger credit period
availed from the creditors and in this case period availed for creditors is shorti.e. for 36 days.
YE 2001 2002 2003 2004 2005 2006 2007 2008 2009
AR

CALCULATE
YE 2000 1182001 1122002 812003 742004 712005 752006 702007 1042008 69 2009
AR D(in days)

CALCULATE 16.62 14.69 16.98 20.09 19.70 18.98 21.87 21.30 17.25 13.00
D

CAPITAL 17.04 14.66 14.91 17.36 16.92 16.44 18.80 18.65 14.70 12.03
LINE

PROFITABILITY RATIOS
 PROFIT BEFORE INTEREST AND DEPRECIATION TAX MARGIN:

 PROFIT BEFORE INTEREST AND TAX MARGIN:

14
  PROFIT BEFORE DEPRECIATION AND TAX MARGIN:

 CASH PROFIT MARGIN:

Y 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
EAR

CALCULAT 13.18 10.76 12.58 16.07 16.04 14.98 17.60 17.29 10.75 6.70
ED

CAPITAL 13.59 10.72 11.04 13.91 13.79 13.00 15.24 15.21 9.07 6.22
LINE

 ADJUSTED PROFIT AFTER TAX MARGIN:

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
YEAR

CALCULA 16.12 13.90 16.34 20.07 19.46 18.13 20.51 19.27 14.17 7.67
TED

CAPITAL 16.53 13.87 14.34 17.35 16.71 15.70 17.67 16.91 12.03 7.11
LINE

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
YEAR

CALCULA 12.81 11.35 13.29 15.98 14.79 13.82 15.44 14.75 11.49 7.55
TED

CAPITAL 13.23 11.31 11.66 13.82 12.72 12.00 13.44 13.03 9.94 7.00
LINE

15
 Interpretation: There is a big difference in the ratio of year 2007 to 2008 and 2009. The reason behind
it is the slowdown in the profits of the company adjusted ones.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
YEAR

CALCULAT 9.36 7.41 8.89 11.96 11.13 9.83 11.17 10.73 4.99 1.24
ED

CAPITAL 9.78 7.37 7.79 10.37 9.59 8.55 9.88 9.58 4.32 1.18
LINE

 RETURN ON CAPITAL EMPLOYED:

Interpretation: This ratio represents the percentage of return provided on capital the company had
YE 2001 2002 2003 2004 2005 2006 2007 2008 2009
AR

CALCULATE 14.45 18.10 27.99 30.43 26.10 27.45 27.36 8.18 6.02
D

CAPITAL 14.41 17.73 27.62 30.84 26.97 29.28 29.06 8.42 6.18
LINE

made. For few years in the beginning Return on capital employed is increasing due to the increase in
profit due to interest but later on decrement is shown due to the declining in profits.

 RETURN ON NET WORTH:

YE 2001 2002 2003 2004 2005 2006 2007 2008 2009

AR

CALCULATE 12.10 14.28 21.57 24.24 23.64 26.56 27.65 7.31 2.55
D

CAPITAL 12.05 14.22 21.74 24.47 23.88 28.13 28.77 7.31 2.64
LINE

Interpretation:This ratio present the percentage of return provided on the equity shareholders
fund.Again the reason behind it is the slowdown in the profits of the company adjusted ones.

16
  VALUE OF OUTPUT/TOTAL ASSETS:

YE 2001 2002 2003 2004 2005 2006 2007 2008 2009

AR

CALCULATE 1.78 1.64 1.76 1.98 1.91 1.75 1.90 1.08 1.27
D

 VALUE OF OUTPUT/GROSS BLOCK:

2001 2002 2003 2004 2005 2006 2007 2008 2009

YEAR

CALCULAT 1.35 1.41 1.73 1.93 1.82 1.64 1.67 0.83 0.91
ED

RATIOS- DUPONT MODEL

17
 YE 2001 2002 2003 2004 2005 2006 2007 2008 2009
AR

PBDIT/SALE 0.17 0.15 0.17 0.20 0.19 0.19 0.22 0.21 0.17
S

SALES/NET 5.30 6.98 11.36 16.21 19.97 11.68 6.58 2.22 2.27
ASSETS

OPERATING 0.76 1.71 2.15 3.54 3.37 1.83 1.04 0.36 0.29
PROFIT/NET
ASSETS

PAT/PBIDT 0.57 0.50 0.522 0.60 0.57 0.53 0.51 0.31 0.09

NET 0.30 0.16 0.16 0.11 0.13 0.27 0.49 0.89 0.92
ASSETS/
NET WORTH

ROE 0.121 0.142 0.216 0.242 0.236 0.265 0.276 0.073 0.025

ALTMAN Z-SCORE
Formula to calculate Altman's Z-Score:

18
Z-score = 1.2 a + 1.4 b + 3.3 c + d + .6 f
e g

Where: a = working capital, b = retained earnings, c = operating income, d = sales, e = total

assets,

f = net worth and g = total debt

The Altman z-score is a bankruptcy prediction calculation.

YE 2001 2002 2003 2004 2005 2006 2007 2008 2009
AR

CALCULATE 9.85 12.42 20.36 14.82 11.43 10.23 10.13 5.74 5.70
D VALUES

The z-score measures the probability of insolvency (inability to pay debts as they become due).

• 1.8 Or less indicates a very high probability of insolvency.

• 1.8 to 2.7 indicates a high probability of insolvency.
• 2.7 to 3.0 indicate possible insolvency.
• 3.0 Or higher indicates that insolvency is not likely.

ANALYSIS:

In this case, company is having z-score value as more than 3 in all the years which indicate that
insolvency is not likely.

JUSTIFICATIONS FOR ASSUMPTIONS

19
 • Rf 7.5 %

SOURCE: http://www.rbi.org.in/SCRIPTs/FAQView.aspx? CCIL

Id=79#1 Rf

Coupon
7.49% paid on face value

Maturity
: AFTER 10 YRS.

Coupon Payment Dates

: Half-yearly every year

Minimum Amount of issue/ sale

: Rs.10,000

20
 • β –last 3 years average

• Rm – Corporate India issue 15th August 2010 ,page 77 ,equity research report of company by S.P
Tulsian and also the industry report n its future which is expected to boom by 14 % [ref:

http://www.ncaer.org/downloads/journals/macrotrack_june2006.pdf

http://www.moneycontrol.com/news/stocks-views/buy-prism-cement-tulsian_450674.html

• Explicit Period in years - 6 years company will make fast growt rate due to the emerging trends in
the industry
Growth in assets 1 year
Growth in assets 2 year
Growth in assets 3 year
Growth in assets 4year
Growth in assets 5 year
Growth in assets 6 year

Growth in assets 7 year onwards

Growth in assets 7 year onwards
(all estimated as per average of % increment in total assets/capital employed of the company )

• Tax Rate- referred slab rate for public company (corporate income tax)

21
 • Pre Tax Kd - percentage of interest to total debt only from current year (5.18%) estimated to b (7%)

• NOPAT as % of Capital Employed – for the previous year came to be 14% & on average 11% so
estimated to be 9%

• %Increase in Sales/Total Income/E—25% as expansion of company will lead to increased sales &
exports also

• Increase in Sales/Total Income/E by- 25%.

• % of Total Operating Expenses- In comparison to previous year % of operating expenses to sales is
also 90% approx

• Increase decrease in Interest amonut -due to fall in fixed interest rate overall fall of 200

• Depreciation for next year 20% - notes of account :-

• Prime Lending Rates -RBI reports & Inflation

http://www.moneycontrol.com/news/economy/rbi-sees-policy-impacting-6-12-
mths_477493.html

http://www.moneycontrol.com/news/economy/inflation-concerns-remain-medium-termkaushik-
basu_477560.html

• Inflation next year—The estimates of future salary increases of 4 to 5%, considered in actuarial
valuation, take into account the general trend in salary rise and the inflation rates. Inflation considered 5
% so as to get accuracy and make balance to other effects .

22
 • GDP growth rate next year-Coprorate India magazine 15 th August issue as per IMF & RBI PAGE 1

• DIV1 as per last year dividend history 5.48% .

DFCF METHOD

Total of PV of all FCFs = EV= 885.112978

Less Total Debt (EV-TD)=Eq 2 b. DFCF
= 545.812978 Method
Eq V/N = Po = 287.8760432
PE MULTIPLIER APPROACH
Projected Total
EPS Income 671.05
Total Operating 597.234
Expenses 5
PBIT 73.8155
Interest Projected -173.75
Depreciation 20.01
227.555
PBT 5
152.462
PAT 19
80.4125
EPS 45
3.56537
P/E 94
286.70
Po = 123

4 a. PE Multipler, Projected Growth 89.1

Rate in Earnings= 34

4 b. PE Multipler, Prime Lending Rates 46.3

= 5

4 c. PE Multipler, Inverse of Real

Return, Real Return = 9
Real Return = Rm-Inflation In decimals 0.09
Invers 11.1
e 1
Po = 39.6
23
 15
4 d. PE Multipler, Expected GDP 32.0
Growth Rate = 88
SUMMARY OF ABOVE METHODS
122.4 PE inverse of 39.61
Asset Based Approach 21 RR 533
Earning Capitalization 171.4 32.08
Approach 99 PE GDP 841
287.8
DCF or FCF 76 MVA 426.06
286.7 7.938
P-E Multiplier Approach 01 EVA 99
PE Multi, Gr Rate in 89.13 46.76
Earnings 45 DGM 799
46.34 Price as on
PE Multi, PLR 99 …, 767.3

TECHNICAL ANALYSIS

 ROC Graphs

For 100 days data:

24
For 200 days data:

25
26
For 60 days data:

27
 MACD Graphs
28
For 60 days data:

29
For 100 days data:

30
For 200 days data:

31
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