A Comparative staudy of Capital structure across industries and across companies

Industry: Pharmaceuticals and medicines

Debt to equity Industry Average Major Indian Pharmaceutical compnies and their capital structure
2006-07 2007-08 2008-09 Company name 2007-08 2008-09 2009-10 2010-11
0.338 0.28 0.305 Sun pharmaceutical 0.03 0.03 0.02 0.04
GlaxoSmithKline 0 0 0 0
Cipla 0.15 0.22 0 0.09
Cadila 0.8 1.06 0.67 0.51
Dr. Reddy 0.44 0.57 0.39 0.59
Industry: Motor vehicles and other transport equipments
Debt to Equity Industry Average Major Indian Automobile compnies and their capital structure
2006-07 2007-08 2008-09 Company Name 2007-08 2008-09 2009-10 2010-11
0.34 0.36 0.42 Maruti 0.11 0.07 0.07 0.02
0.8 1.06 1.12 0.8
1.34 6.73 4.29 1.72
Mahindra and Mahindra 0.6 0.77 0.33 0.23
Industry: Cement and cement product
Debt to Equity Industry average Major Indian cement Companies and their capital structure
2006-07 2007-08 2008-09 Company Name 2007-08 2008-09 2009-10 2010-11
0.79 0.64 0.64 Ultratech 0.65 0.59 0.35 0.39
Ambuja 0.07 0.05 0.03 0.01
ACC 0.07 0.1 0.08 0.08
Shree Cement 1.94 1.89 1.19 1.09
Madras Cement 1.71 1.95 1.65 1.61
Industry:Construction
Debt to Equity Industry average Major Indian Construction companies and their capital structure
2006-07 2007-08 2008-09 Company name 2007-08 2008-09 2009-10 2010-11
0.5 0.37 0.45 Unitech 3.79 2.69 0.62 0.6
GMR Infra 0.09 0.07 0.44 0.33
Jaypee Infra NA NA 0.21 1.33
DLF 0.74 0.78 0.99 1.09
Aashiyana Housing 0.01 0.01 0.06 0
Industry: Software Industry Major Indian Software industries and their capital Structure
2006-07 2007-08 2008-09 Company Name 2007-08 2008-09 2009-10 2020-11
0.05 0.11 0.12 TCS 0.01 0.01 0.01 0.01
Infosys 0 0 0 0
HCL 0.01 0.15 0.28 0.18
Small D/E signifies that the software
industry on an avg requires very less
investment in real or capital assets
and hence require less capital,
making them able to finance their
projects completely by equity
Tata Motors
Mahindra Satyam 0 0 0.02 0.01
Industry: Sugar Major Indian Sugar industries and their capital Structure
2006-07 2007-08 2008-09 Company name 2007-08 2008-09 2009-10 2020-11
0.87 1.23 1.27 EID Parry 1.51 1.44 1.59 1.38
Shree Renuka Sugars 1.48 1.06 1.89 2.77
Bajaj Hindusthan 3.66 1.95 2.22 3.05
Balrampur Chini 1.5 1.4 0.87 1.55
Small D/E signifies that the software
industry on an avg requires very less
investment in real or capital assets
and hence require less capital,
making them able to finance their
projects completely by equity
A Comparative staudy of Capital structure across industries and across companies
2011-12
0.02
0
0
0.78 After 2009 Cadila strategically decided to reduce fixed cost bearing debt funds
0.65
2011-12
0.07
0.57 Standalone
1.18 Consolidated
0.26
2011-12
0.3 Concious efforts from managers of ultra tech to reduce debt component by paying out short term loans
0.01 Ambuja finances itself through equity and very short term loans
0.07 We can see that the ACC management strives for a fixed D/E ratio
0.93
1.03
2011-12
0.26
0.38
1.15 Jaypee Infra is a young company and hence the debt cover is very high, so it can enjoy high D/E
0.83 Economic downturn has less effect on realty construction
0.04 Due to less capital required for housing construction debt is low, this seems to be a concious decision by management because housing construction company can easily enjoy leverage
2011-12
0.01
0
0.11
Post 2008, the civil construction has come down due to low investment in capital formation in India, which resulted in
less debt cover for civil constructors and hence less debt
Cipla is incresing equity at a constant rate but the debt fluctuates freely, hence no order of debt to equity ratio
GSK and Sun have a pecking order for minimum debt. The debt these companies take are also short term
debts. The long term debt equity ratio is 0 always.
Constant ratio of debt to equity targetting a fixed debt equity ratio
Due to economic slowdown in India and less expenditure in infrastructure the D/E ratio has gone down
even for compnies once enjoying high D/E ratios. This is because there interest coverage has decreased
owing to poor performance hence contraing leverage
Maruti Suzuki has an stable business in India which is they are not expanding by
acquring other companies, hence they target a low and stable debt equity ratio
M&M has acquired an industry avg debt to equity ratio
During 2008-2010 Tata motors was in expansion phase and hence required a lot of short
term debt, increasing ita debt equity ratios. Jaguar landrover was acquired in 2008. This
also shows that whenever Tata motors have a requirement of short term capital, they go
for loan (pecking order theory)
0.01
2011-12
1.77
4.63
1.9
1.42
The companys with biggest market capital enjoy the maximum leverage benefits as it is easier for them to
raise debt than the small companies who are majorly funded by equity
Concious efforts from managers of ultra tech to reduce debt component by paying out short term loans
Due to less capital required for housing construction debt is low, this seems to be a concious decision by management because housing construction company can easily enjoy leverage
Post 2008, the civil construction has come down due to low investment in capital formation in India, which resulted in
less debt cover for civil constructors and hence less debt
Cipla is incresing equity at a constant rate but the debt fluctuates freely, hence no order of debt to equity ratio
GSK and Sun have a pecking order for minimum debt. The debt these companies take are also short term
debts. The long term debt equity ratio is 0 always.
Constant ratio of debt to equity targetting a fixed debt equity ratio
Due to economic slowdown in India and less expenditure in infrastructure the D/E ratio has gone down
even for compnies once enjoying high D/E ratios. This is because there interest coverage has decreased
owing to poor performance hence contraing leverage
During 2008-2010 Tata motors was in expansion phase and hence required a lot of short
term debt, increasing ita debt equity ratios. Jaguar landrover was acquired in 2008. This
also shows that whenever Tata motors have a requirement of short term capital, they go
for loan (pecking order theory)
The companys with biggest market capital enjoy the maximum leverage benefits as it is easier for them to
raise debt than the small companies who are majorly funded by equity
INDUSTRY : CONSTRUCTION
Cash Flow
Sr 2013 2012 2011 2010
1 GMR 3783.1 3185.5 2107.6 1682.6
2 L&T 10.77 173.41 51.42 698.76
3 IVRCL 145.04 117.92 210.29 219.48
4 Gammon India 332.95 661.26 571.33 555.95
5 JP Associates 2827.3 2860.6 6818.6 8485.2
6 Hindustan Construction 1234.8 966.79 672.63 298.93
7 Punj Lyod 755.03 896.8 1147.7 526.64
8 DLF 953.48 931.75 873.81 835.41
INDUSTRY : PHARMACEUTICAL
Sr 2013 2012 2011 2010
1 cipla 143.01 90.46 95.97 62.06
2 Glaxosmithklyne 137.67 374.36 2003 1734
3 Sun Pharma 2069.1 1752.7 810.49 672.2
4 Dr. Reddy 2017.1 1606.1 575.1 660
5 Wockhart 1050 689.66 470.1 314.1
6 Torrent Pharma 687.41 760.8 604.79 510.45
2009 2008 2007 2006 2005 2004
2466.52 894.48999 1300.04004 675.75 450.940002 NA
3.96000004 0.49000001 31.6700001 1.20000005 1.01999998 9.99999978
174.94 659.090027 297.700012 418.23999 453.160004 126.510002
611.81 383.670013 250.289993 319.070007 75.3899994 29.4400005
3921.41 2462.1499 1822.94995 1847.02002 821.799988 266.51001
219.12 338 267.910004 1011.15002 96.3600006 49.1699982
699.2 634.700012 995.539978 112.160004 43.18 54.04
1096.15 2068.56006 242.770004 110.480003 19.7999992 19.1000004
2009 2008 2007 2006 2005 2004
53.39 79.6999969 132.279999 NA NA NA
956.580017 154.970001 35.7700005 47.7200012 71.5299988 77.4000015
1657.3 1243.31 1386.01 1532.43994 1180.89001 94.5400009
562.3 744.700012 1861.01001 979.619995 935.5 449.559998
212.16 377.26001 973.179993 713.929993 735.47998 153.039993
350.43 153.839996 20.7700005 85.8499985 157.75 35.5