A

STUDY ON

CAPITAL STRUCTURE

WITHREFERENCE TO

ULTRATECH CEMENT ltd

HYDERABAD

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1 .1 INTRODUCTION

The capital structure is the way a firm backings its general assignments and headway by
utilizing various wellsprings of advantages. Responsibility comes as bond issues or
significant lot notes payable, while regard is named regular stock, upheld stock or held
advantage. Transient duty, for example, working capital necessities is in addition seen as a
component of the capital structure. An affiliation's level of short and extended length
responsibility is viewed as while investigating capital structure. Precisely when individuals
propose the capital structure they are in all likelihood intimating a connection's promise to-
regard degree, which gives data into how dangerous an affiliation is.

CAPITAL STRUCTURE DEFINITIONS:

"Capital structure suggests the blend of extended length wellsprings of advantages, for
example, debentures, significant lot responsibilities, inclination offer capital and worth offer
capital including stores and wealth."— I. M. Pandey.

"Capital structure suggests an affiliation's phenomenal duty and worth. It permits a firm to
comprehend what sort of supporting the affiliation uses to back its general exercises and
improvement" - Prasanna Chandra ".

"Capital Structure of an affiliation hints make-up of its Capitalization". Gerstenberg

The target of cash related association is to increment monetary pros' riches, the key issue is:
what is the relationship between capital structure and firm worth? Of course, what is the
relationship between capital structure and cost of capital? Audit that valuation and cost of
capital are then again related. Given a specific degree of pay, the estimation of the firm is
helped when the expense of capital is obliged and the an alternate way.

There are various perspectives on how capital structure impacts respect. Some battle that there
is no relationship what so ever between capital structure and firm worth; other recognize that
cash related effect (i.e., the use of duty capital) distinctly impacts firm an inspiring power
with a particular goal in mind and negative impact beginning there; still others battle that,
different things being tantamount, continuously essential the effect, progressively basic the
estimation of the firm.

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Right when the affiliation characterizes out its goal to the degree the money related expert's
riches improvement (SWM), it is customarily perfect with the premiums of different get-
togethers. Right now building up a fitting capital structure for its affiliation, the financial boss
should cover alia target heightening the extended length advance expense per share.
Hypothetically,

There might be an exact point or range inside an industry there might be a degree of a fitting
capital structure with which there would not be excellent contrasts in the market respect per
share. One approach to manage get a thought of this range is to watch the capital structure
examples of affiliations versus their market costs of offers. It might be discovered likely that
there are no huge contrasts in the standard qualities inside a given range. The association of
an affiliation may fix its capital structure close to the most raised motivation behind this range
to utilize impeccable effect, subject to different prerequisites, for example, adaptability,
dissolvability, control, and measures set by the money related foundations, the security trade
Board of India (SEBI) and stock trades.

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1.2 NEED OF THE STUDY:
1. The estimation of the firm relies upon its customary advantage stream and the rate used to
restrict this stream.
2. The rate used to compel pay stream it's the association's imperative pace of return or the
expense of capital.
3. At the present time, capital structure choice can affect the estimation of the firm either by
changing the customary advantage of the firm, at any rate it can affect the stay pay of the
budgetary experts.
4. The impact of effect on the expense of capital isn't clear. Clashing closures have been
granted on this issue.
5. Truth be told, this issue is one of the most solid zones in the hypothesis of money, and
maybe continuously hypothetical and observational work has been done with respect to this
issue than some other.
6. On the off chance that effect impacts the expense of capital and the estimation of the firm,
an ideal capital structure would be gotten at that blend of duty and worth that broadens the
immovable estimation of the firm or controls the weighted standard expense of capital. The
subject of the proximity of ideal utilization of effect has been put quickly by Ezra Solomon
in the going with words.
Given that a firm has certain structure of favorable circumstances, which offers net working
advantage of given size and quality, and given a specific structure of rates in the capital
markets, is there some particular level of cash related effect at which the market estimation
of the association's confirmations will be higher than at different degrees of effect?
The proximity of an ideal capital structure isn't perceived by all. These exist two excellent
perspectives and center position. David Durand saw the two phenomenal perspectives the net
increment and net working strategies

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1.3 SCOPE OF THE STUDY:
An investigation of the capital structure includes an estimation of long haul just as transient
sources that an organization taps so as to meet its prerequisites of fund. The extent of the
investigation is kept to the sources that ULTRATECH CEMENT LTD tapped throughout the
years under examination for example 2015-2019.

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1.4 OBJECTIVE OF THE STUDY:
The endeavor is an undertaking to search for an information into the points that are related
with the capital sorting out and money related decisions of the association. This endeavor
endeavors to achieve the going with objectives.

1. To think about the capital structure of ULTRATECH CEMENT LTD through EBIT-
EPSestimation

2. To think about the practicality of financing decisions on EPS and EBIT of the firm.

3. To take a gander at impact examination of ULTRATECH CEMENT LTD.

4. To take a gander at the financing designs in ULTRATECH CEMENT LTD for the hour of
2015-2019.

5. To think about the commitment/esteem extent of ULTRATECH CEMENT LTD for 2015-
2019.

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1.5 RESEARCH METHODOLOGY:

Data relating to ULTRATECH CEMENT LTD. Has been assembled through helper
sources.

Assistant SOURCES:

A critical fragment of the data right currently been accumulated through assistant
wellsprings of data i.e., Journals, locales, Books, and all other significant information or
creative are taken as discretionary wellspring of data.

RESEARCH DESIGN

The assembled data has been taken care of using the instruments of

• Ratioestimation

• Graphical appraisal

• Year-yearestimation

These contraptions access in the interpretation and understanding of the Existing

circumstance of the Capital Structure

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5.3 LIMITATION

1. EPS is one of the by and large generally utilized degrees of the affiliation's show inevitably.

2. As needs be, in picking among duty and motivating force in a little while, from time to
time an over the top proportion of thought is paid on EPS, which regardless, has genuine
suppressions as a financing-choice standard.

3. The critical inadequacy of the EPS as a financing-choice reason is that it doesn't think about
hazard; it disregards instability about the customary estimation of EPS.

4. The conviction that cash related specialists would be simply worried over the regular EPS
isn't all around set up.

5. Cash related experts in regards to the bits of the affiliation consider both anticipated worth
and fluctuation.

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 CHAPTER-II

REVIEW OF LITERATURE

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HYPOTHETICAL FRAMEWORK

CASH RELATED LEVERAGE AND THE SHAREHOLDERS RISK

CASH RELATED EFFECT IMPROVES THE MONEY RELATED EXPERTS ADVANTAGE WE

LIKEWISE FIND THAT THE INCONSTANCY OF EBIT CAUSES EPS TO MOVE INSIDE
PROGRESSIVELY EXPANSIVE RANGES WITH RESPONSIBILITY IN THE CAPITAL STRUCTURE

THAT IS WITH MORE DUTY EPS RAISES AND FALLS SPEEDIER THAN THE RISING AND FALL

IN EBIT. AT THE PRESENT TIME RELATED EFFECT INCREASES EPS SIMILARLY AS

CREATES ITS INCLINATION.

THE IMPULSE OF EBIT AND EPS SEE TWO SORTS OF HAZARD WORKING RISK AND MONEY
RELATED PERIL. THE ABILITY AMONG WORKING AND BUDGETARY HAZARD WAS
RECENTLY OBSERVED BY MARSHALL IN THE GOING WITH WORDS.

WORKING RISK: -

WORKING DANGER CAN BE DEPICTED AS THE INSTABILITY OF EBIT (OR ADVANTAGE

FOR COMPLETE RESOURCES). THE EARTH INSIDE AND OUTER IN WHICH A FIRM WORKS
PICKS THE CHANGEABILITY OF EBIT. TO THE DEGREE THAT THE EARTH IS GIVEN TO THE

FIRM, WORKING DANGER IS AN UNAVOIDABLE THREAT. A FIRM IS BETTER SET TO FACE

SUCH PERIL IN THE EVENT THAT IT CAN PREDICT IT WITH A REASONABLE LEVEL OF

ACCURACY

THE VARIABILITY OF EBIT HAS TWO COMPONENT

1. VARIABILITY OF PLANS

2. VARIABILITY OF COSTS

1. FLUCTUATION OF SALES:

THE FLUCTUATION OF COURSES OF ACTION PAY IS IN TRUTH AN IMMENSE DETERMINANT

OF WORKING RISK. COURSES OF ACTION OF AN AFFILIATION MAY VARY IN LIGHT OF

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THREE REASONS. FIRST THE PROGRESSIONS EVERYTHING CONSIDERED BUDGETARY
CONDITIONS MAY AFFECT THE DEGREE OF BUSINESS ACTION. BUSINESS CYCLE IS A
MONETARY WONDER, WHICH EFFECTS DEALS EVERYTHING BEING EQUAL. SECOND
CERTAIN OCCASIONS SWAY COURSES OF ACTION OF AFFILIATION ADVANTAGES FOR A

SPECIFIC INDUSTRY FOR INSTANCE THE GENERAL BUDGETARY CONDITION MIGHT BE

SUFFICIENT YET A SPECIFIC INDUSTRY MIGHT BE HIT BY DOWNTURN, DIFFERENT

SEGMENTS MAY JOIN THE ACCESSIBILITY OF UNPLEASANT MATERIALS, MECHANICAL

CHANGES, ACTIVITY OF CONTENDERS, PRESENT DAY RELATIONS, MOVES IN CUSTOMER

INCLINATIONS, ETC. THIRD GAME PLANS MAY IN LIKE WAY BE AFFECTED BY THE
COMPONENTS, WHICH ARE INSIDE TO THE AFFILIATION. THE ADJUSTMENT IN THE BOARD

THE THING SHOW CHOICE OF THE AFFILIATION AND ITS HYPOTHESIS APPROACH OR

STRIKE IN THE AFFILIATION IMPACTS THE AFFILIATION'S GAME PLANS.

MONETARY LEVERAGE AND THE SHAREHOLDER'S RETURN:

THE MAJOR POINT OF A RELATIONSHIP IN UTILIZING MONEY RELATED EFFECT IS TO

STRENGTHEN THE EXAMINER'S APPEARANCE UNDER POSITIVE BUDGETARY CONDITIONS.

THE ACTION OF BUDGETARY EFFECT IN STRENGTHENING THE PRESENCE OF THE

THEORISTS IS BASED UNDER UNCERTAINTY THAT THE FIXED CHARGES HOLDS, (FOR

EXAMPLE, THE ADVANCEMENT FROM MONEY RELATED FOUNDATIONS AND DIFFERENT

SOURCES OR DEBENTURES) CAN BE GOTTEN AT A COST LOWER THAN THE ALLIANCE'S

PACE OF ADVANTAGE FOR NET RESOURCES. IN THIS WAY, WHEN THE SEPARATION

BETWEEN THE ADVANTAGE CONDENSED BY RESOURCES FINANCED BY THE FIXED

CHARGES ASSETS AND COST OF THESE FAVORABLE CIRCUMSTANCES IS SCATTERED TO

THE EXAMINERS, THE COMPENSATION PER SHARE (EPS) OR ADVANTAGE FOR REGARD

INCREMENT. IN ANY CASE, EPS OR ROE WILL FALL IF THE AFFILIATION GETS THE FIXED

CHARGES ASSETS AT A COST HIGHER THAN THE PACE OF ADVANTAGE FOR THE

ALLIANCE'S FOCAL POINTS. IT SHOULD, CONSEQUENTLY, BE CERTAIN THAT EPS, ROE

AND ROI ARE THE ESSENTIAL FIGURES FOR ISOLATING THE EFFECT OF MONEY RELATED

EFFECT.

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CAPITAL STRUCTURE DEFINED:

THE UPSIDES OF AN AFFILIATION CAN BE FINANCED EITHER BY DEVELOPING THE

PROPRIETORS GUARANTEE OR THE LEASERS GUARANTEE. THE PROPRIETORS CLAIMS
INCREMENT WHEN THE STRUCTURE RAISES ASSETS BY GIVING STANDARD OFFERS OR BY

HOLDING THE COMPENSATION, THE CREDIT ADMINISTRATORS' CASES INCREMENT BY

OBTAINING .THE DIFFERENT SYSTEMS FOR FINANCING ADDRESSES THE "MONETARY

STRUCTURE" OF AN UNDERTAKING .THE MONEY RELATED STRUCTURE OF AN
UNDERTAKING IS APPEARED BY THE LEFT HAND SIDE (LIABILITIES DESPITE ESTIMATION)

OF THE ACCOUNTING REPORT. FOR THE MOST PART, TRANSIENT BORROWINGS ARE
REJECTED FROM THE REVIEW OF SYSTEMS FOR FINANCING THE ALLIANCE'S CAPITAL

USAGE, AND AT THIS MOMENT, EXTENDED LENGTH CASES ARE SAID TO LAYOUT THE

CAPITAL STRUCTURE OF THE UNDERTAKING .THE CAPITAL STRUCTURE IS UTILIZED TO

ADDRESS THE PROPORTIONATE RELATIONSHIP AMONG DUTY AND WORTH .EQUITY JOINS

SETTLED UP SHARE CAPITAL, SHARE PREMIUM AND STORES AND WEALTH.

THE FINANCING OR CAPITAL STRUCTURE CHOICE IS AN IMMENSE ADMINISTRATIVE

CHOICE .IT IMPACTS THE EXAMINERS RETURNS AND THREAT APPROPRIATELY; THE
MARKET ESTIMATION OF OFFER MIGHT BE INFLUENCED BY THE CAPITAL STRUCTURE

CHOICE. THE AFFILIATION SHOULD DESIGN ITS CAPITAL STRUCTURE FROM THE
BEGINNING AT THE HOUR OF ITS PROGRESS.

COMPONENTS AFFECTING THE CAPITAL STRUCTURE:

• LEVERAGE: THE USE OF FIXED CHARGES OF POINTS OF INTEREST, FOR

EXAMPLE, INCLINATION OFFERS, DEBENTURES AND TERM-MOVES NEAR TO REGARD

CAPITAL STRUCTURE IS DELINEATED AS CASH RELATED EFFECT OR EXCHANGING ON.

WORTH. THE TERM EXCHANGING ON REGARD IS UTILIZED CONSIDERING THE ROUTE

THAT FOR RAISING RESPONSIBILITY.

RESPONSIBILITY/EQUITY RATIO-FINANCIAL ESTABLISHMENTS WHILE ENDORSING

EXTENDED LENGTH PROPELS DEMANDS THAT AFFILIATIONS OUGHT TO BY AND LARGE

HAVE A DEDICATION – REGARD DEGREE OF 2:1 FOR MEDIUM AND TREMENDOUS DEGREE

UNDERTAKINGS AND 3:1 SHOWS THAT FOR EACH UNIT OF NOTEWORTHY WORTH THE

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AFFILIATION HAS, IT CAN RAISE 2 UNITS OF DUTY. THE DEDICATION REGARD DEGREE
SHOWS THE GENERAL DEGREES OF CAPITAL OBLIGATION BY CREDIT DIRECTORS AND

EXAMINERS.

• EBIT-EPS ANALYSIS-IN OUR EXAMINATION FOR AN AUTHENTIC CAPITAL

STRUCTURE WE HAVE TO SEE HOW TOUCHY IS EPS (ADVANTAGE PER SHARE) TO
CHANGE IN EBIT (PAY BEFORE INTRIGUE AND CHARGES) UNDER VARIOUS FINANCING

CHOICES.

DIFFERENT PARTS THAT OUGHT TO BE CONSIDERED AT WHATEVER POINT A CAPITAL

STRUCTURE CHOICE IS TAKEN ARE

• COST OF CAPITAL

• CASH STREAM PROJECTIONS OF THE AFFILIATION

• SIZE OF THE AFFILIATION

• DILUTION OF CONTROL

• FLOATATION COSTS

HIGHLIGHTS OF AN OPTIMAL CAPITAL STRUCTURE:

AN IDEAL CAPITAL STRUCTURE OUGHT TO HAVE THE GOING WITH HIGHLIGHTS,

1. PRODUCTIVITY: - THE COMPANY SHOULD UTILIZE IMPACTS AT ANY RATE COST.

2. ADAPTABILITY: - THE CAPITAL STRUCTURE OUGHT TO BE FLEXIBLE TO HAVE THE

CHOICE TO MEET THE PROPELLING CONDITIONS .THE AFFILIATION OUGHT TO HAVE THE

DECISION TO RAISE SPARES AT WHATEVER POINT THE NEED RISES AND EXPENSIVE TO

PROCEED WITH UNEQUIVOCAL SOURCES.

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3. CONTROL: - THE CAPITAL STRUCTURE SHOULD CONSOLIDATE LEAST
INCAPACITATING OF CONTROL OF THE AFFILIATION.

4. DISSOLVABILITY: - THE UTILIZATION OF OVER THE TOP DUTY UNDERMINES THE

DISSOLVABILITY OF THE AFFILIATION. IN A HIGH CREDIT COST CONDITION, INDIAN

AFFILIATIONS ARE STARTING TO APPRECIATE THE UPSIDE OF LOW RESPONSIBILITY.

CAPITAL STRUCTURE AND FIRM VALUE:

SINCE THE TARGET OF BUDGETARY ASSOCIATION IS TO HELP MONEY RELATED PROS

RICHES, THE KEY ISSUE IS: WHAT IS THE RELATIONSHIP BETWEEN CAPITAL STRUCTURE

AND FIRM WORTH? OF COURSE, WHAT IS THE RELATIONSHIP BETWEEN CAPITAL

STRUCTURE AND COST OF CAPITAL? REVIEW THAT VALUATION AND COST OF CAPITAL
ARE ON THE OTHER HAND RELATED. GIVEN A SPECIFIC DEGREE OF ADVANTAGE, THE
ESTIMATION OF THE FIRM IS BROADENED WHEN THE EXPENSE OF CAPITAL IS LIMITED

AND THE AN ALTERNATE WAY.

THERE ARE VARIOUS PERSPECTIVES ON HOW CAPITAL STRUCTURE IMPACTS RESPECT.

SOME BATTLE THAT THERE IS NO RELATIONSHIP WHAT SO EVER BETWEEN CAPITAL
STRUCTURE AND FIRM WORTH; OTHER RECOGNIZE THAT MONEY RELATED EFFECT (I.E.,

THE UTILIZATION OF DUTY CAPITAL) STRONGLY IMPACTS FIRM AN INSPIRATION TO A

LIMITED DEGREE AND NEGATIVE IMPACT BEGINNING THERE; STILL OTHERS BATTLE

THAT, DIFFERENT THINGS BEING CORRESPONDING, PROGRESSIVELY OBVIOUS THE

EFFECT, DYNAMICALLY BASIC THE ESTIMATION OF THE FIRM.

CAPITAL STRUCTURE AND PLANNING:

CAPITAL STRUCTURE PROPOSES THE BLEND OF EXTENDED LENGTH WELLSPRINGS OF

FOCAL POINTS. FOR EXAMPLE, DEBENTURES, EXTENDED LENGTH DUTY, PROPENSITY
OFFER CAPITAL INCLUDING STORES AND EXCESS (I.E., HELD ADVANTAGE) THE
SUPERVISING BODY OR THE CFO (CEO) OF AN AFFILIATION SHOULD BUILD UP A
SENSIBLE CAPITAL STRUCTURE, WHICH ARE MOST FACTORS TO THE AFFILIATION. THIS

OUGHT TO BE POSSIBLE PRECISELY WHEN EACH AND EVERY ONE OF THOSE COMPONENTS

WHICH ARE BASIC TO THE AFFILIATION'S CAPITAL STRUCTURE CHOICE ARE FITTINGLY

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POOR DOWN AND ADJUSTED. THE CAPITAL STRUCTURE OUGHT TO BE PLANNED THE
MOST PART KEEPING IN WATCH THE PREMIUMS OF THE VALUE EXAMINERS, BEING THE

PROPRIETORS OF THE AFFILIATION AND THE SUPPLIERS OF HAZARD CAPITAL (REGARD)

WOULD BE WORRIED OVER THE PROCEDURES FOR FINANCING AN AFFILIATION'S

ENDEAVORS. REGARDLESS, THE PREMIUMS OF DIFFERENT PARTIES, FOR EXAMPLE,

SPECIALISTS, CLIENTS, MONEYLENDERS, SOCIETY AND GOVERNMENT, OUGHT TO IN LIKE

WAY BE GIVEN SENSIBLE THOUGHT. PRECISELY WHEN THE AFFILIATION

CHARACTERIZES OUT ITS TARGET TO THE DEGREE THE THEORIST'S RICHES

IMPROVEMENT (SWM), IT IS COMMONLY FAULTLESS WITH THE PREMIUMS OF

DIFFERENT GET-TOGETHERS. AT THE PRESENT TIME BUILDING UP A PROPER CAPITAL
STRUCTURE FOR ITS AFFILIATION, THE MONEY RELATED OFFICIAL SHOULD COVER ALIA

TARGET UPGRADING THE SIGNIFICANT LOT INCLUDE COST PER SHARE.

HYPOTHETICALLY, THERE MIGHT BE AN UNEQUIVOCAL POINT OR RANGE INSIDE AN

INDUSTRY THERE MIGHT BE A DEGREE OF A FITTING CAPITAL STRUCTURE WITH IN WHICH

THERE WOULD NOT BE EXCELLENT SEPARATIONS IN THE MARKET RESPECT PER SHARE.

ONE APPROACH TO MANAGE GET A THOUGHT OF THIS RANGE IS TO WATCH THE CAPITAL
STRUCTURE OCCURRENCES OF AFFILIATIONS' REVERSE THEIR MARKET COSTS OF

OFFERS. IT MIGHT BE FOUND OBSERVATIONALLY THAT THERE ARE NOT ENORMOUS

CONTRASTS IN THE OFFER ATTRIBUTES INSIDE A GIVEN RANGE. THE ASSOCIATION OF AN

AFFILIATION MAY FIX ITS CAPITAL STRUCTURE CLOSE TO THE MOST ESSENTIAL REASON

FOR THIS RANGE TO UTILIZE FLAWLESS EFFECT, SUBJECT TO DIFFERENT PREREQUISITES,

FOR EXAMPLE, ADAPTABILITY, DISSOLVABILITY, CONTROL AND MODELS SET BY THE

MONEY RELATED ESTABLISHMENTS, THE SECURITY TRADE BOARD OF INDIA (SEBI)

AND STOCK TRADES.

HIGHLIGHTS OF AN APPROPRIATE CAPITAL STRUCTURE:

THE PRIMARY GET-TOGETHER OF DIRECTOR OR THE CFO (CEO) OF AN AFFILIATION

SHOULD BUILD UP A SENSIBLE CAPITAL STRUCTURE, WHICH IS USUALLY BENEFICIAL TO

THE AFFILIATION. T

15
 CHAPTER-III

COMPANY PROFILE

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3.2 COMPANY PROFILE

ULTRATECH CEMENT:

UltraTech Cement Limited has a yearly limitation of 19.2 million tons. It conveys and
showcases Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland
Pozzalana Cement. It besides conveys masterminded blend concrete (RMC).

UltraTech Cement Limited has five merged plants, six crushing units and three terminals —
two in India and one in Sri Lanka.

UltraTech Cement is the nation's most noteworthy exporter of strong clinker. The cost
markets length nations around the Indian Ocean, Africa, Europe and the Middle East.

UltraTech's aides are Dakshin Cement Limited and UltraTech Ceylinco (P) Limited.

The concealed foundations of the Aditya Birla Group come back to the nineteenth century in
the incredible town of Pilani set in the midst of the Rajasthan desert. It was here that Seth
Shiv Narayan Birla began exchanging cotton, developing the structure for the House of
Birla's.

Through India's troublesome occasions of the 1950s, the Birla business extended quickly. In
the early piece of the twentieth century, our Group's structure up father, Ghanshyamdas Birla,
set up associations in principal parts, for example, materials and fiber, aluminum, concrete
and built substances. As a near to friend of Mahatma Gandhi, he expected a working action
in the Indian open entryway battle. He tended to India at the first and second round-table
amassing in London, close by Gandhiji. It was at "Birla House" in Delhi that the illuminating
presences of the Indian open entryway battle routinely met to plot the annihilation of the
British Raj.

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Ghanshyamdas Birla found no inconsistency in searching for after business focuses with the
devotion of a holy individual, rising as one of the essential industrialists of pre-opportunity
India. The measures by which he lived were devoured by his grandson, Aditya Vikram Birla,
our Group's bewildering pioneer.

Reality FILE:

Largest maker of lessen strong, white concrete and masterminded blend concrete in
India.

Largest maker of white concrete in India.

Installed limit of 62 MTPA.

Presence with 16 joined plants, 1 white strong plant, 2 Wall Care earth plants, 1
clinkerisation plant in UAE, 16 smashing units; 16 in India, 2 in UAE, 1 in Bahrain and
Bangladesh every, 6 mass terminals; 5 in India and 1 in Sri Lanka and 131 Concrete plants

Straddling pass on business parts in nations over the Indian Ocean and the Middle
East.

Aditya Vikram Birla: putting India on the world guide

A staggering power in Indian industry, Mr. Aditya Birla attempted to look for in the wake of
setting up a general business area at 24 years old. He was the first to put Indian business on
the world guide, as far back as 1969, some time before globalization changed into a jazzy
enunciation in India.

In the then searing and free market South East Asian nations, he set out to set up world-class
creation bases. He had predicted the unquestionable examples and staked the
predetermination of his business on a veritable, free market driven economy request. He put
Indian business on the globe, 22 years before cash related development was officially
presented by the past Prime Minister, Mr. Narasimha Rao and the past Union Finance

18
Minister, Dr. Manmohan Singh. He set up 19 relationship outside India, in Thailand,
Malaysia, Indonesia, the Philippines and Egypt.

Anomalous, for Mr. Aditya Birla, globalization recommended a choice that is other than
geographic reach. He recognized that a business could be worldwide even while being
orchestrated in India. At this moment, in his home-locale, he drove bravely to assemble the
structure squares to make our Indian business a general power.

Under his stewardship, his affiliations rose to be the world's most noteworthy maker of gooey
staple fiber, the best purifier of palm oil, the third most noteworthy maker of protectors and
the 6th most noteworthy maker of carbon diminish. In India, they accomplished the status of
the best single maker of thick fiber yarn, close to being a maker of strong, dull concrete and
rayon grade squash. The Group is in like way the best maker of aluminum in the private zone,
the most irrelevant at first cost makers on the planet and the essential maker of texture in the
material business in India.

At the hour of his not actually impeccable end, the Group's employments crossed Rs.8,000
crore all around, with resources of over Rs.9,000 crore, containing 55 benchmark quality
plants, an authority nature of 75,000 and an examiner arrangement of 600,000.

Above all, his affiliations earned regard and love of the individuals, as one of India's best
business houses, and the basic Indian International Group totally. Through this phenomenal
record of huge business, he made immense riches for the country, and regard for Indian
undertaking in South East Asia. In his time, his prospering was unequaled by some other
industrialist in India.

That India achieves good circumstance among the made countries was a fantasy he constantly
prized. He was happy with India and put enthusiastically in being an Indian.

Under the authority of our Chairman, Mr. Kumar Mangalam Birla, the Group has maintained
and set up a force position in its key relationship through steady worth creation. Driven by
Grasim, Hindalco, Aditya Birla Nuvo, Indo Gulf Fertilizers and relationship in Thailand,
Malaysia, Indonesia, the Philippines and Egypt, the Aditya Birla Group is an innovator in a
swathe of things — thick staple fiber, aluminum, strong, copper, carbon diminish, palm oil,

19
covers, articles of clothing. Additionally, with profitable attacks into monetary associations,
telecom, programming and BPO, the Group is today one of Asia's most enlarged business
parties.

Directorate:

Mr. Kumar Mangalam Birla, Chairman

Mrs. Rajashree Birla

Mr.R.C. Bhargava

Mr. G. M. Dave

Mr. N. J. Jhaveri

Mr. S. B. Mathur

Mr. V. T. Moorthy

Mr. O. P. Puranmalka

Mr. S. Rajgopal

Mr. D. D. Rathi

Mr. S. Misra, Managing Director

Official President and Chief Financial Officer

Mr. K. C. Birla

Head Manufacturing Officer

20
 R.K. Shah

Head Marketing Officer

Mr. O. P. Puranmalka

Affiliation Secretary

Mr. S. K. Chatterjee

Our vision

"To effectively add to the social and cash related progress of the frameworks in which we
work. At this moment, a transcendent, valuable lifestyle for the more exposed zones of society
and raise the nation's human improvement record."

— Mrs. Rajashree Birla, Chairperson,

Grants won

Year Award

2018-2019 IMC Ramakrishna Bajaj National Quality Award

2016-2018 Associated with Government experiences and Business World FICCI

SEDF CSR Award

2016-16 ASSOCHAM CSR Excellence Award for its "genuinely magnificent" CSR
works out

2016-18 Subh Karan Sarawagi Environment Award

2016-18 Business World FICCI-SEDF CSR Award

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2015 Greentech Environment Excellence Gold Award

2015 IMC Ramakrishna Bajaj National Quality Award

2015 Asian CSR Award

2015-2016 National Award for Prevention of Pollution

2015-2016 Rajiv Gandhi Environment Award for Clean Technology

2015-2016 State Level Environment Award (Plant)

Having any kind of effect:

Before Corporate Social Responsibility found a spot in corporate lexion, it was by then
finished into our Group's worth structures. As before timetable as the 1940s, our structure up
father Shri G.D Birla kept up the trusteeship thought of the managers. Just conveyed, this
incorporates the riches that one makes and holds is to be held as in a trust for our different
assistants. Concerning CSR, this recommends contributing piece of our favorable
circumstances past business, for the more prominent unimaginable of society.

While passing on forward in this manner of thinking, his grandson, Aditya Birla weaved in
the chance of 'reasonable business', which rose above check book great aim. In his view, it
was hasty to continue giving ceaselessly. Or then again perhaps, he felt that channelizing
assets for guarantee that individuals have the coarseness to make a few bucks would be
continuously gainful. He would state, "Give an excited man fish for a day, he will eat it and
the following day, he would be anxious once more. Or on the other hand perhaps in the event
that you disclosed to him the most ideal approach to edge, he would have the decision to
manage himself and his family for a lifetime."

Taking these practices forward, our authority

22
Mr. Kumar Mangalam Birla oversaw triple fundamental concern commitment tended to by
cash related achievement, regular duty and social commitment. In a broad manner along these
lines, the interests of the critical number of assistants have been done into our Group's surface.

The impression of our social work today straddles more than 3,700 towns, arriving at in
excess of 7 million individuals every year. Our social request work is a technique for telling
the individuals among whom we work that We Care.

Our system

Our assignments are done under the aegis of the "Aditya Birla Center for Community
Initiatives and Rural Development", drove by Mrs. Rajashree Birla. The Center gives the
basic course, and the push zones for our work guaranteeing execution the board as well.

Our highlight is on the inside and out progress of the frameworks around our plants
discovered by and large in far away basic areas and ancestral belts. All our Group affiliations
— - Grasim, Hindalco, Aditya Birla Nuvo, Indo Gulf and UltraTech have Rural Development
Cells which are the execution bodies.

Tasks are organized after a participatory need evaluation of the frameworks around the plants.
Each try has a one-year and a three-year moving game-plan, with achievements and
quantifiable targets. The goal is to discard our quality over some obscure time length and
hand over the reins of further improvement to the individuals. This in addition em

23
 CHAPTER-IV
DATA ANALYSIS

24
TABLE 1
a. RETURN ON ASSETS
In this case profits are related to assets as follows

Return on assets = Net profit after tax

Total assets
TABLE 1; RETURN ON ASSETS
Rs: Crores
Particulars 2015 2016 2017 2018 2019

ROA = PAT 962.85 1982.77 2575.15 3531.64 4143.60

TOTAL ASSETS 4194.40 6087.50 6674.58 6673.44 18264.27
23.06559 29.28575 38.5814 52.92083 25.41622

TABLE2
b). RETURN ON CAPITAL EMPLOYED
Here return is compared to the total capital employed. A comparison of this ratio with that
of other units in the industry will indicate how efficiently the funds of the business have
been employed. The higher the ratio the more efficient is the use of capital employed.

Return on capital employed = Net profit after taxes & Interest

Total capital employed
(Total capital employed = Fixed assets + Current assets–Current liabilities)
TABLE 2: RETURN OF CAPITAL EMPLOYED
particulars 2015 2016 2017 2018 2019
PAT 962.85 1982.77 2575.15 3531.64 4143.60
Total Capital Emp 204.99 25.33 119.89 193.30 304.80
ROC 4.697058 70.38196 21.65985 20.37877 14.56188

25
 YEAR 2014-2015
Performance of company (Amount in Rs. CR’S)

Gross Revenue 4939.44 Total Expenditure 3773.25

Profit (Loss) before tax 1186.19 Profit after tax 782.28
Earnings per share Rs. 1.69 Dividend ratio 10%

PERFORMANCE ANALYSIS OF 2014-2015

There has been an increase of over 20% sales when compared to cost year, which
resulted in Gross Profit of Rs.4939.44 Crs as alongside around 3697.54 crs in last year.
Because of decrease in Non-Operating expenses to the time of the Net profit has increased. It
stood at current year against previous year because of redemption of debenture and cost
reduction. A dividend of Rs.182 lacs was declared during the year at 10% on equity.

YEAR 2015-2016
PERFORMANCE OF COMPANY (AMOUNT IN RS.’ CR’S)

Gross Revenue 5636.12 Total Expenditure 4152.48

Profit (Loss) before tax 1607.01 Profit after tax 1007.61
Earnings per share Rs. 0.64 Dividend ratio 5%

PERFORMANCE ANALYSIS OF 2015-2016

1.The production and Sales has increased by 23%

2.Cement turn over has improved by 6% as against fall in Sales realization by 16% last year.
3.Cement Boards Division has contributed 19% more than the previous year to the PBDIT.
4.Perform Division realization has increased by 4% even the Turn over have came down to
845 lacs from 1199lacs in last year.
5.The profit After Tax has came down from 1007.61 crs to 782.28 crs in Current year because
of slope in Cement Industry.

26
YEAR 2016-2017
PERFORMANCE OF COMPANY (AMOUNT IN RS.’ CR’S S)

Gross Revenue 6575.40 Total Expenditure 5214.94

Profit (Loss) before tax 1461.46 Profit after tax 977.02
Earnings per share Rs. 0.64 Dividend ratio 5%

PERFORMANCE ANALYSIS OF 2016-2017

The Cement Industry has a successful year because of Govt. policies such as
infrastructure expansion a Rural housing. There has been a small reduction in Gross Sales
and with the performance of prefab Division the Gross Profit gap has narrowed and
contributing to the EBIT. The Gross Profit has increased considerably from 6575.40 crs in
Last year to 5636.12 crs in Current year. The interest payment has increased by 423 crs in the
Current year and the Profit before Tax at 1461.46 crs when compared to 1607.01 crs in Last
year. The Net profit also increased from 977.02 in Last year in Current year.
The Director has recommended a 7.5% Dividend and in Last year it was at 5%.

YEAR 2017-2018
PERFORMANCE OF COMPANY (AMOUNT IN RS. CR’S)

Gross Revenue 7189.43 Total Expenditure 5585.29

Profit (Loss) before tax 1688.18 Profit after tax 1093.24
Earnings per share Rs. 1.55 Dividend ratio 10%

27
 PERFORMANCE ANALYSIS OF 2017-2018

In 2016-10 the company has performed well in all decisions because of high demand
and realizations. The Gross Profit Increased considerably and the interest payments have
Increased at about 7189.43 because of loans taken from the bank at a lesser rate of interest
and payment of loan funds for which the company is paying higher rate of interest. In the
previous year, the cash credit granted by UCO bank to the tune of Rs.5585.29 crs and losing
of loan funds borrowed from Vijaya Bank and Canara Bank factors, which can tribute to
increase in the Profit before Tax to the tune of Rs.1688.18 crs the company declared a
dividend of 10% on its equity to its shareholders when compared to 7.5% in the previous year.
The EPS of the company also increased considerably which investors in coming period. The
friendship has taken up a plant expansion program during the year to increase the production
activity and to meet the increase in the demand

YEAR 2018-2019
PERFORMANCE OF COMPANY (AMOUNT IN RS.CR’S)

Gross Revenue 14558.42 Total Expenditure 11982.74

Profit (Loss) before tax 1986.19 Profit after tax 1504.23
Earnings per share Rs. 2.10 Dividend ratio 16%

PERFORMANCE ANALYSIS OF 2018-2019

group is operating in 3 segments, out of which cement contributes about 55% of turnover
while the Boards and prefab segments contribute about 45%. Huge investment in the
industrial sector over the next 3 years is expected to lead to higher cement off –take on the
back of strong GDP growth across the country. It is expected that the domestic cement
consumption would grow at a CAGR of 8% for the next 5 ears. By FY 2019 the domestic

28
consumption is expected to grow to 199 million Tons from 146 million Tons consumption
FY2018. During the year 2018-19your company’s Gross sales increased.
Net sales increased by about 39% to Rs.1504.23 crs from Rs.1093.24 crs in FY 2018-19.
Improved sales from all the tree divisions particularly from prefab division contributed for
increased turnover

EBIT LEVELS

TABLE 3: EBIT LEVELS

Particulars 2015 2016 2017 2018 2019
Earnings Before
Interest & Tax 1186.19 1607.01 1461.46 1688.18 1986.19

Change 126.54 477.39 294.2 234.99 374.53

% Change 9.216979 3.166769 4.627668 6.758416 4.769161

DEGREE OF FINANCIAL LEVERAGE:

The higher the quotient, the greater the leverage. In Ultra Tech Industries case it is
increasing because of decrease in EBIT levels to 2018-2019.

The EBIT level is in a decreasing trend because of drastic decline in prices in Cement
Industry during above period.

29
CHART 3

INTERPRETATION

The EBIT level in 2014 is at 1186.19 crs and is decreasing every year till 2015. Because of
slump in the Cement Industry less realization. The EBIT levels in 2016 again started
mounting and reached to 1607.01 crs and in 2018 were at 1688.56 crs and in 2019 were at
861.18, because of the sale price increase per bag and increase in demand. The infrastructure
program taken up by the A.P. Govt. in the field s of rural housing irrigation projects created
demand and whole CementIndustries are making profits

30
 PERFORMANCE
TABLE 4: EPS ANALYSIS
Particulars 2015 2016 2017 2018 2019
Profit After Tax 962.85 1982.77 2575.15 3531.64 4143.60
Less: Preference
Dividend - - - - -
Amount of Equity share
holder 1963.78 2696.99 3602.10 4608.65 10666.04
No. OF equity share of
Rs.10/- each 18234825 18234825 18234825 18234825 18234825
EPS 1.69 0.64 0.79 1.55 2.1

CHART 4

EPS LEVELS

2.5

EPS1.5

0.5

0
2014 2006
2015 2007 2016 2008 20172009 2010
2018
YEARS

31
 INTERPRETATION

The PAT is in an increasing trend from 2015-2016 because of increase in sale prices and also
decreases in the cost of manufacturing. In 2018 and 2019 even the cost of manufacturing has
increased by 5% because of higher sales volume PAT has increased considerably, which leads
to higher EPS, which is at 2.1 in 2019
EBIT – EPS CHART
One convenient and useful way showing the relationship between EBIT and
EPS for the alternative financial plans is to prepare the EBIT-EPS chart. The chart is easy to
prepare since for any given level of financial leverage, EPS is linearly related to EBIT. As
noted earlier, the formula for calculating EPS is

EPS = (EBIT - INT) (1 – T) = (EBIT - INT) (1 – T)

N N
We assume that the level of debt, the cost of debt and the tax rate are constant. Therefore in
equation, the terms (1-T)/N and INT (=iD) are constant: EPS will increase if EBIT increases
and fall if EBIT declines. Can also be written as follows

Under the assumption made, the first part of is a constant and can be represented by an EBIT
is a random variable since it can assume a value more or less than expected. The term (1 –
T)/N are also a constant and can be shown as b. Thus, the EPS, formula can be written as:
EPS = a + EBIT
Clearly indicates that EPS is a linear function of EBIT.

FINANCING DECISION

Financing policy forms a key element for the smooth running of any organization
where flow, as a rare commodity, has to be obtained at the optimum cost and put into the
wheels of business at the right time and if not, it would lead intensely to the shutdown of the
business.

32
 Financing strategies basically consists of the following components:
• Mobilization
• Costing
• Timing/Availability
• Business interests

Therefore, the policy is to always keep sufficient availability of finance at the

optimum cost at the right time to protect the business interest of the company.
STRATEGIES IN FINANCE MOBILIZATION
There are many options for the fund raising program of any company and it is quite pertinent
to note that these options will have to be evaluated by the finance manager mainly in terms
of:
• Cost of funds
• Mode of repayment
• Timing and time lag involved in mobilization
• Assets security
• reserve options
• Cournand’s in terms of participative management and
• Other terms and conditions.
Strategies of finance mobilization can be through two sectors, that is, owner’s resources and
the debt resources. Each of the above category can also be split into: Securitized resources;
and non-securities resources. Securitized resources are those who instrument of title can be
traded in the funds market and non-securities funds and those, which cannot be traded in the
market

33
CHART 5
THE FORMS OF FUNDS MOBILIZATION IS ILLUSTRATED BY A
CHART:

FUNDING MIX - SOURCES

OWNERS FUND BORROWED FUND

EQUITY RETAINED PREFERENCECONVENTIONALNON- CONVENTIONAL

CAPITAL EARNINGS CAPITAL SOURCES SOURCES

FINANCIAL SUPPLIERS CREDIT

INSTITUTION SHORT TERM
BANK BANK BORROWINGS
CASH CREDIT HIRE PURCHASE
DEBENTURES
FIXED DEPOSITS
ICD

34
 ULTRATECH CEMENT LTD INDUSTRIES LTD. THE
FUNDING MIX

TABLE 5:

Particulars 2014-15 2015-16 2016-17 2017-18 2018-19

Source of funds

Share holders’ funds

a) Share capital 1963.78 2696.99 3602.10 4608.65 10666.04

b) Reserves and surplus 1839.78 2571.73 3475.93 4482.19 10387.22

c)Deferred tax 560.26 542.35 722.93 830.73 1930.05

TOTAL (A) 3963.82 5811.07 7800.96 9921.55 22783.31
Loan Funds
a) Secured Loans 1161.25 982.66 1195.80 854.19 2789.76

b) Unsecured Loans 427.38 757.84 965.83 750.33 1454.84

TOTAL (B) 1778.63 1940.5 2161.63 1804.52 4164.6

TOTAL (A+B) 5542.45 7551.57 9942.59 11726.07 26927.91
% of S H in total C.E 44.67 48 41.22 42.38 34.3
% of Loan Fund in total
C.E 55.33 52 58.78 57.62 65.69

INTERPRETATION

The shareholder fund is at 3125.8 constitutes 44.67% in total C.E and loan funds constitute
55.33% in 2012-14. The Funding Mix on an average for 6 years will be 45% of shareholders
Fund and 55% of Loan Funds there by the company is trying to maintain a good Funding
Mix. The leverage or trading on equity is also good because the company affectively utilizing
the Loan Funds in the Capital Structure. So that it leads to higher profit increase of EPS in
2016 at 0.79 to 2018 1.55

35
 TERM LOANS
2014-15
TABLE 6

Particulars Rs. (in Lakhs)

TERM LOANS
IDBI 0.00
IFCI 0.00
0.00
HIRE PURCHASE LOANS
TVS Lakshmi Credit Ltd 0.00 0.00
Haritha Finance Ltd 0.00 0.00
Funded interest 0.00 0.00
Non Convertible Debentures 677.75

CASH CREDIT
Global Trust Bank 638.21
Vijaya Bank 56.57
694.78
1,372.53
UNSECURED LOANS
Deposits from public 602.16
Lease /Hire purchases 4.64
IFST Loan from Govt. of AP 0.00
Deferred sales tax loan 0.00
Deposits from stockiest &
1930.39
others
Inter corporate deposits 50.00
Others 201.04
TOTAL 2588.22

36
 TERM LOANS
2015-2016
TABLE 7

Particulars Rs. (in Lakhs)

TERM LOANS
Indian Renewable Energy
255.00
development agency ltd.
Non-convertibledebenture 509.61

HIRE PURCHASE LOANS

TVS Lakshmi Credit Ltd 0.00 0.00
Haritha Finance Ltd 0.00 0.00
Funded interest 0.00 0.00

CASH CREDIT
Global Trust Bank 583.41
Vijaya Bank 65.16
648.56
1,414.19
UNSECURED LOANS
Deposits from public 600.54
Lease /Hire purchases 21.25
Canara Bank factors ltd. 100.09
Deferred sales tax loan 0.00
Deposits from stockiest & others 1,239.02
Inter corporate deposits 0.00
Others 201.04
TOTAL 2181.94

37
 TERM LOANS
2016-2017
TABLE 8

Particulars Rs. (in Lakhs)

TERM LOANS
Indian Renewable Energy
207.00
development agency ltd.
Non convertible debentures 0.00

HIRE PURCHASE LOANS

TVS Lakshmi Credit Ltd 0.00 0.00
Haritha Finance Ltd 0.00 0.00
Funded interest 0.00 0.00

CASH CREDIT
Global Trust Bank 627.10
Vijaya Bank 194.12
Canara Bank Factors 168.98 960.20
1187.20
UNSECURED LOANS
Deposits from public 592.31
Deposits from stockiest & others 1800.68
Lease/Hire purchase 10.30
Others 201.04
TOTAL 3571.53

38
 TERM LOANS
2017-2018
TABLE 9

Particulars Rs. (in Lakhs)

TERM LOANS
Indian Renewable Energy
779.19
development agency ltd.
Non convertible debentures 0.00

HIRE PURCHASE LOANS

TVS Lakshmi Credit Ltd 0.00 0.00
Haritha Finance Ltd 0.00 0.00
Funded interest 0.00 0.00

CASH CREDIT
Oriental Bank of Commerce 410.16
UCO Bank 594.34
Canara Bank Factors 0.00 1004.49
1187.20
UNSECURED LOANS
Deposits from public 399.69
Deposits from stockiest & others 1053.83
Lease/Hire purchase 57.39
Others 201.04
TOTAL 3495.64

39
 TERM LOANS
2018-2019
TABLE 10

Particulars Rs. (in Lakhs)

TERM LOANS
Indian Renewable Energy
2532.15
development agency ltd.
Non convertible debentures 0.00

HIRE PURCHASE LOANS

TVS Lakshmi Credit Ltd 0.00 0.00
Haritha Finance Ltd 0.00 0.00
Funded interest 0.00 0.00

CASH CREDIT
Oriental Bank of Commerce 561.32
UCO Bank 306.54
Canara Bank Factors 403.46
UTI Bank Ltd 211.82 1583.15
4016.28
UNSECURED LOANS
Interest free from sales tax
182.40
deferment loan
Deposits from public 618.87
Deposits from stockiest & others 919.26
Lease/Hire purchase 54.25
Others 201.29
TOTAL 5969.35

40
CHART 6

TERMS LOANS

7,000.00
6,000.00
5,000.00
Rs. IN LAKHS
4,000.00
3,000.00
2,000.00
1,000.00
0.00
2015 2016 2017
2007 2008 200920182010 2019
2011

YEARS

INTERPRETATION

The Non-convertible debentures are being redeemed from 2013 and 2014 financial year
onwards and were completely repaid by 2018-2019. The cash credit assistance was provided
by Global Trust Bank and Vijaya Bank to the tune of Rs.696 lacs and Canara bank factors to
the tune Rs.168 lacs was completely repaid by taking cash credit facility from Oriental Bank
of Commerce and UCO Bank to the tune of Rs.1000 lacs. The company is paying of deposits
from public every year.
Deposits from public were stood at 727.76 lacs in 2013-2015 and in 2018-2019 it
came down to 399.69 lacs. The IRIDA has granted Rs.255 lacs term loan for installation of
energy saving equipment and the loan was again increased to 779.19 lacs in 2018-2019.

41
 YEAR 2014-15

Position of Mobilization and Development of funds

(Amount in RS.)

Total liabilities 3902.67 Total assets 3902.67

Sources of funds
Paid u capital 124.49 Reserves & surplus 1839.29
Secured Loans 1161.25 Unsecured loans 427.38
Application of funds
Net fixed assets 3215.23 Investments 483.45
Net current assets 204.99 Misc. Expenditure ---
Accumulated losses

YEAR 2015 – 2016

Position of Mobilization and Development of funds
(Amount in RS. crs)

Total liabilities 4979.84 Total assets 4979.84

Sources of funds
Paid u capital 124.49 Reserves & surplus 2571.73
Deferred tax 542.35
Secured Loans 982.66 Unsecured loans 757.84
Application of funds
Net fixed assets 4783.61 Investments 190.90
Net current assets 25.33 Misc. Expenditure ---
Accumulated losses Nil

42
 Financial leverage results from the presence of fixed financial charges in the
firm income stream. These fixed charges don’t vary with EBIT availability post payment
balances belong to equity holders.

Financial leverage is concerned with the effect of charges in the EBIT on the
earnings available to shareholders.

YEAR 2016-2017
Position of Mobilization and Development of funds
(Amount in RS. crs)

Total liabilities 6466.66 Total assets 6466.66

Sources of funds
Paid u capital 124.49 Reserves & surplus 3475.93
Deferred tax 722.93
Secured Loans 1195.80 Unsecured loans 965.83
Application of funds
Net fixed assets 5312.97 Investments 1034.80
Net current assets 119.89 Misc. Expenditure ---
Accumulated losses Nil

YEAR 2017- 2018

Position of Mobilization and Development of funds (Amount in
RS. crs)

Total liabilities 7043.90 Total assets 7043.90

Sources of funds
Paid u capital 124.49 Reserves & surplus 4482.19
Deferred tax 830.73
Secured Loans 854.19 Unsecured loans 750.33

43
 Application of funds
Net fixed assets 5201.05 Investments 1869.55
Net current assets 193.30 Misc. Expenditure ---
Accumulated losses Nil

YEAR 2018 – 2019

Position of Mobilization and Development of funds

(Amount in RS. crs)

Total liabilities 18540.69 Total assets 18540.69

Sources of funds
Paid u capital 274.04 Reserves & surplus 10387.22
Deferred tax 1930.05
Secured Loans 2789.76 Unsecured loans 1454.84
Application of funds
Net fixed assets 12505.57 Investments 3730.32
Net current assets 304.80 Misc. Expenditure ----
Accumulated losses Nil

FINANCIAL LEVERAGE

INTRODUCTION:

Leverage, a very general concept, represents influence or power. In financial

analysis leverage represents the influence of a financial variable over same other related
financial variable.

44
 Financial leverage is related to the financing activities of a firm. The sources from which
funds can be raised by a firm, from the viewpoint of the cost can be categorized into:

• Those, which carry a fixed finance charge.

• Those, which do not carry a fixed charge.

The sources of funds in the first category consists of various types of long
term debt including loans, bonds, debentures, preference share etc., these long-term debts
carry a fixed rate of interest which is a contractual obligation for the company except in the
case of preference shares. The equity holders are entitled to the remainder of operating
profits if any.

Financial leverage results from presence of fixed financial charges in eh firm’s income
stream. These fixed charges don’t vary with EBIT or operating profits. They have to be paid
regardless of EBIT availability. Past payment balances belong to equity holders.

Financial leverage is concerned with the effect of changes I the EBIT on the
earnings available to shareholders.

DEFINITION:
Financial leverage is the ability of the firm to use fixed financial charges to
magnify the effects of changes in EBIT on EPS i.e., financial leverage involves the use of
funds obtained at fixed cost in the hope of increasing the return to shareholder.
The favorable leverage occurs when the Firm earns more on the assets
purchase with the funds than the fixed costs of their use. The adverse business conditions,
this fixed charge could be a burden and pulled down the companies wealth

MEANING OF FINANCIAL LEVERAGE:

As stated earlier a company can finance its investments by debt/equity. The
company may also use preference capital. The rate of interest on debt is fixed, irrespective of
the company’s rate of return on assets. The company has a legal banding to pay interest on
debt .The rate of preference dividend is also fixed, but preference dividend are paid when
company earns profits. The ordinary shareholders are entitled to the residual income. That is,

45
earnings after interest and taxes belong to them. The rate of equity dividend is not fixed and
depends on the dividend policy of a company.

The use of the fixed charges, sources of funds such as debt and preference
capital along with owners’ equity in the capital structure, is described as “financial leverages”
or “gearing” or “trading” or “equity”. The use of a term trading on equity is derived from the
fact that it is the owners equity that is used as a basis to raise debt, that is, the equity that is
traded upon the supplier of the debt has limited participation in the companies profit and
therefore, he will insists on protection in earnings and protection in values represented by
owners equity’s

46
 5.1 FINDINGS
1. There has been a touch of diminishing in Gross Sales and with the showing of prefab
Division, the Gross Profit opening has constrained and added to the EBIT. The Gross Profit
has extended essentially from 520.99 Cr in Last year to 641.80 Cr in the year. The interest
partition has loosened up by 51 Cr in the current year and the Profit before Tax at 520.99
when stood separated from 641.80 cr in Last year.
2. Perform Division confirmation has loosened up by 8% even the Turnover has come
to 641.80 Cr From 400.09 Cr in a year back.
3. The piece of elbowroom After Tax has come to 314.92 Cr to 215.82Cr in Current
year pondering evaluation in Cement Industry.
4. The PAT is in a creating model from 2015-2016 because of development in bargain
costs what's more diminishes in the cost of social affairs. In 2018 and 2019even the cost of
get-together has connected by 5% considering higher approaches volume PAT has widened
broadly, which prompts higher EPS, which is at 83.80 in 2018.
5. The EBIT level in 2014 is at 1186.19 Cr and is building up every year till 2018.
Considering Less authentication in the Cement Industry. The EBIT levels in 2018 again
started making and came to 1688.18 Cr and in 2018 were at 1688.18Cr and in 2019 were at
1986.19, considering the arrangement cost increase per sack and extension looked for after.
The establishment program took up by the A.P. Govt. in the field s of commonplace
housing water structure encounters made deals and whole Cement Industries are making
benefits.

6. The EPS of the association additionally extended broadly which budgetary experts
in the coming period. The alliance has taken up a plant movement program during the year
to manufacture the creation development and to meet the enlargement in the intrigue

7. Because of diminishing in Non-Operating expenses to the hour of 215.82 Cr the Net

piece of slack has expanded. It stayed at in current year increase because of the recovery of
debenture and cost decline. A preferred position of Rs.45.74 Cr as imparted during the year
at 7.85% on respect

47
 5.2 SUGGESTIONS:

1. The organization needs to keep up the ideal capital structure and influence so that in coming
years it can add to the abundance of the investors.

2. The mining reliability agreements ought to be amended with the goal that it will diminish
the direct in the creation

3. The organization needs to practice authority over its outside buys and overheads which
have impact on the gainfulness of the organization.

4. As the loan costs in pubic Financial foundations are in a diminishing pattern after
globalization the organization continuing scanning for advance assets at a less pace of
enthusiasm as on account of UCO Bank.

5. Effectiveness and competency in dealing with the undertakings of the organization ought
to be kept up.

48
5.3 LIMITATION OF EPS AS A FINANCING-DECISION
CRITERION
1.EPS is one of the generally extensively used extents of the association's introduction
eventually.

2.As a delayed consequence of this, in picking among commitment and worth for all intents
and purposes, now and again an exorbitant measure of thought is paid on EPS, which in any
case, has real limitations as a financing-decision worldview.

3.The noteworthy lack of the EPS as a financing-decision premise is that it doesn't consider
peril; it dismisses variability about the typical estimation of EPS.

4. The conviction that money related pros would be just stressed over the typical EPS isn't all
around set up.

5. Money related pros in regarding the bits of the association consider both foreseen worth
and vacillation.

49
 5.4 CONCLUSION

An arrangement in 2015-2016 is at 7267.74 and in 2018-201912752.43 crs those in a

reducing example to the level of 20% reliably. On the other hand creating costs are at
8725.11 from 2016-2018. There has been basic augmentation in cost of creation during
2015-2016because of addition in Royalty.The interest charges were 492.21 in 2016 and
357.07in 2018 and 522.56 independently shows that the association recovered fixed
eagerness bearing resources once in a while out of advantage from 2015-2016.

Debentures were to some degree recouped with the help of debenture recuperation spare and
other references.The PAT (Profit After Tax) in 2018-2019 is at 340.78. The PAT has
extended in costs in whole Cement industry during the above period. The advantage has
extended for all intents and purposes 16% during the period 2016-2018.Debentures were
recouped by moves to D.R.R. in 2016-2018.A predictable trade for benefit during 2015-
2016 from P&L arrangement anyway in 2015 there is no palatable benefit esteem
Shareholders.The share capital of the association remained in charge during the three-year
time period by virtue of no open issues made by the company.The ensured about advances
have reduced dependably from 2015-2018 and slight addition in 2019.

50
 5.5 RECOMMENDATIONS ON CEMENT INDUSTRY

For the movement of the strong business 'Working Group on strong Industry' was
developed by the engineering commission for the importance of Five Year Plan. The
working Group has predicted a progression pace of 10% for the strong business during
the blueprint timeframe and has anticipated production of extra limitation of 40-62
million tones in a general sense through extension of existing plants. The working Group
has seen after pushed districts for improving eagerness for concrete;

Further push to lodging movement architects;

Promotion of solid Highways and lanes; and

Use of orchestrated blend concrete in colossal foundation experience.

Further, so as to improve generally intensity of the Indian Cement Industry, the

Department of Industrial game-plan and progress charged an appraisal on the general
truth of the Indian business through a relationship of overall notoriety, viz.. The report
set up by the alliance has made two or three proposals for making the Indian Cement
Industry progressively certifiable in the overall market. The suggestions are getting
looked at.

51
 BIBLIOGRAPHY
BOOKS REFERED:

Khan, M Y and P K Jain, Financial Management, Tata McGraw-Hill Publishing Co.,

New Delhi, 2007.
I M Pandey, Essentials of Financial Management, Vikas Publishing House Private
Ltd, New Delhi, 1995.
Ramesh, S and A Gupta, Venture Capital and the Indian Financial Sector, Oxford
school press, New Delhi, 1995.
Anthony, R N and J S Reece, Management Accounting Principles, Taraporewala,
Bombay.

Diaries
The diary of money
International diary of store and game-plan assessment
Journal of store direction.

NEWS PAPERS
Financial Express(December 2018)
Economic Times (December 2018)

Goals
www.google.com
www.yahoo.com
www.ultratech.com

52