PREFACE

“EXPERIENCE IS THE BEST TEACHER.” A very good and appropriate proverb

said by someone very well fits for each and every MBA student who is going to face the
real world after completing his MBA.
Summer Training and summer project which is mandatory for each and every MBA helps
them a lot to practice many things which they are learning theoretically. Summer project
helps them in applying their theoretical knowledge practically. It gives them an exposure
to the real working of the industry.

Today in the era of cut throat competition, it has become very important for any person to
be a master in the field they are. There are many existing fields across the world to
become a master, but one has to choose only one field in which he thinks he can go
further deep. If he chooses one field to go deep, other field are automatically subdued.

The same way I have choosen financial management as my area of study in which I have
chosen Capital structure of company as my area of study and project work.

For any planning of making hotels, roads, houses the STCTURE of it is important. It
clears our idea of what we want to do and in which direction? Because COMPANY
WITHOUT STRUCTURE IS LIKE A SHIP WITHOUT RUDDER . For any export
oriented company like KPTL the structure of capital is the most important.

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 ACKNOWLEDGEMENT

I thank Mr. D.B.PATEL (CEO) for granting our request for summer training in his organization.
We also thank our project guide, Mr. Bajrang Maheswari (DGM Finance and Company
Secretary) Mr. Ashish Jain (DY manager), and Mr. Sanjay Patel (sr. manager), Mr. Devang Patel
(officer), Mr. Vikas j. shah (Dy. Manager) and Mr. Parth v. modi (Dy. Manager) for providing
necessary information in their respective work areas and also the other staff members of finance
and account department of KPTL, who helped us in applying all the theoretical aspects
practically and made our learning more interesting.

I am also thankful to Gujarat University for prescribing submission of a summer project report as
a part of summer training as a compulsory component of first year management program.

I sincerely thank my professors who helped me and give me the opportunity to work on this
project.

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 EXECUTIVE SUMMERY

Our Financial Analysis project is on “KALPATARU POWER TRANSMISSION

LIMITED”. Main objective of this project is to know the financial strengths and
weaknesses of KPTL. In addition to these annual reports of KPTL I have also used
various Books and Web based information to cover the current trends of the company and
its competitors, as well as the whole industry.

I found that the KPTL is doing well in general. Most of the graphs and Ratios are
supporting us to say KPTL a good company. KPTL is consistently going ahead.

It is engaged in the business of designing, fabricating/galvanizing & supplying Towers

and construction and commissioning of extra high voltage transmission lines (up to
800kv) on a Turnkey / EPC basis in India and overseas.

Company's turnover stood at Rs. 1,913.62 cores (USD 376 million) as against Rs.
1,768.20 criers (USD 347 million) in the previous year which shows a growth of 8% for
the year.

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 INDEX

No Sub No. Particulars. Page No.

Preface
Acknowledgement
Executive summary

1 Introduction of company
1.1 Name and detail of the company
1.2 Group of Company
1.3 Listing on stock exchange

2 Industry scenario

3 Company profile
3.1 Mission statement
3.2 About the company
3.3 Trunkey transmission line project
3.4 Divisions
3.5 Recent news

4 Research methodology

5 Capital structure
5.1 Introduction
5.2 Capital structure of company
5.3 Dividend decision
5.4 Leverage analysis
5.5 Cost of equity and debt
5.6 Theories of capital structure
• NI Approach
• NOI Approach
5.7 Designing capital structure
5.8 Ratio analysis

6 Recommendations and suggestions

7 Bibiliography

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 CHAPTER - 1

IN T R O D U C T I O N

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1.1 NAME AND DETAIL OF COMPANY

It was established in the year 1969 by Mr. Mofatraj P. Munot, a first generation
entrepreneur. The Group employs over 4,000 people. Kalpataru borrows its name from
the ancient Indian mythological tree - the Kalpa-Vruksha -beneath which all wishes
are fulfilled. The group's flagship company, Kalpataru Ltd. is a leading real estate
developer with premium residential and commercial complexes in Mumbai and Pune.

Pioneering the concept of creating lifestyle living, it has built more than 75 landmark
edifices in the last 39 years. With a team of 1,000 dedicated, Kalpataru has created an
incomparable brand and reputation for itself in the Property Development and Real
Estate industry .

Its pride at being one of the largest Property Groups in India, with development of over
1.5 Million sq.f at any point of time.

.
Every Kalpataru project reflects a "no compromise" attitude; one that manifests in the
architecture, engineering and construction of every project; from towering structures to
expansive complexes, Kalpataru has proven its commitment and expertise in every
segment of property development.

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The residential complexes are replete with landscaped gardens, swimming pools,
gymnasium, and squash courts, clubhouses and several innovative amenities.

In an age where architecture is mainly utilitarian, Kalpataru endeavors to combine the

functional with the aesthetic and maintains the highest standards of quality right down to
the last detail. Kalpataru Power Transmission Limited is one of the leading companies in
the field of Turnkey projects for EHV Transmission Lines up to and including 800 KV in
India and Overseas. As an EPC contractor, scope of work includes design, testing,
fabrication, galvanizing of towers and construction activities from survey, civil works/
foundation, erection to stringing and commissioning of EHV lines, besides procurement
of items such as conductors, insulators, hardware accessories etc. it’s also participates in
Substation projects on a partnership basis.

Located at Gandhinagar Gujarat, in Western India, Kalpataru Power Transmission is a

public listed company with a turnover of USD 350 Million (Rs. 17.5 Billion) and
annual production of 80,000 MTs till 2007-08. The company has a net worth of over
USD 200 Million and an order booking of over Rs 30 Billion (USD 600 Million). The
company has also attained distinction of crossing the USD 800 Million (Rs. 40 Billion)
market capitalizations. On a combined basis (with JMC Projects), the consolidated
turnover is poised to cross Rs 32 Billion (USD 640 Million) by March, 2009.

It is a part of the diversified Kalpataru Group which has a presence in Real Estate /
Property Development, Civil Contracting, International Trading and Consumer Goods &
Services. The Kalpataru group holds over 63% of the equity.

Kalpataru Power has two large Fabrication Plants with an annual installed capacity of
108,000 MTs (with a capacity addition of 24,000 MTs in Oct, 2008) one of the largest in
the world and is equipped with modern machineries (including 16 CNC machines) and
automated temperature controlled Galvanizing Baths, besides its own state-of-the-art
Testing Station and R & D Centre. It was the first company in 1994 in the Indian
transmission industry to be ISO 9001 certified.

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About 650,000+ MTs of towers and substation structures have already been designed,
manufactured and supplied over the last few years of which over 175,000 MTs has been
exported. Over 250 Tower Tests of 132-500KV have been carried out successfully,
including 125 nos. at our own Testing Station, which is one of the largest facilities of its
kind in the world.

Besides workmen at the plant & construction sites, the Company employs over 1,400
Managers and Staff. Also, a full-fledged Design / Engineering Department with over 35
qualified design engineers using PLS Tower, i-tower, STADD, PLSCADD, BOCAD,
AUTOCAD faculties.

The Construction division has completed over 8,000+ kms of turnkey projects in India
for various clients such as the Power Grid Corporation of India and various State
Electricity Boards (SEBs) of Gujarat, Karnataka, Maharashtra, Rajasthan, Andhra
Pradesh, Rajasthan, Orissa, Tamilnadu, and Madhya Pradesh.

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1.2DETAIL OF GROUP COMPANIES

SUBSIDIARIES OF KPTL

SHREE SHUBHAM LOGISTICS LIMITED

Shree Shubham Logistics Limited was incorporated in January, 2007, and subsequently
converted into a Public Limited company in April, 2007. SSLL is a subsidiary of
Kalpataru Power Transmission Limited (KPTL). KPTL holds around 80% stake in the
company.

SSLL is created to serve the needs of Agri and Non-Agri Commodity Storage in best
practice ambient and temperature-controlled warehouses across major markets in North,
South and West India.

The main objectives of SSLL is to offer end-to-end logistics solutions with a pan-India
presence, to all the commodity stake holders in the agricultural and non-agricultural
segment including, but not limited to warehousing, cold storage services, and third party
logistics (3PL), across the country.

Present investment of company in SSLL is Rs. 16 crores in equity shares and Rs. 12.50
crores in preference share capital. SSLL is an 80% subsidiary of our company.

JMC Projects (India) Ltd. (JMC):

During reporting period JMC has reported strong consolidated revenue of Rs. 1,311.95
crores (USD 257 million) an annualized rise of 43% as against Rs. 918.47 crores (USD
180 million) in previous reporting period. Profit before tax as well as profit after tax
stood at Rs. 52.04 crores and Rs. 36.81 crores as against Rs. 47.51 crores and Rs. 30.57
crores respectively, reflecting a good performance.

JMC has an order book exceeding Rs. 2,200 crores (USD 432 million). Your company
has strengthened JMC in terms of its capital base, business profile (through

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diversification) and improved financial discipline which will enable the company to
achieve rapid growth. The company has invested Rs. 95.30 crores in JMC and hold
53.02% Stake in JMC.

Amber Real Estate Ltd. (Amber):

Amber Real Estate Ltd. decided to explore opportunity in the field of construction of IT
Parks, Software Technology Park etc. that company has 100% stake in Amber, to make
an entry by building IT Parks/ Software Technology Parks across the country. Amber is
in the initial stage of developing an IT Park in Mumbai. our company has invested Rs.
0.99 crores towards equity capital in this company.

1.3 Listing on Stock Exchange

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Kalpataru Power Transmission Limited is a Public Listed Company with its shares listed

The Mumbai Stock Exchange Code 522287

The National Stock Exchange of India
KALPATPOWR
Ltd.
ISIN No. (Dematerialised Shares) INE220B01014

The Promoter Group

Kalpataru Group holds 63.68% of the equity share capital of the company with the
remaining shares held by over 12,000 shareholders.

The Share Transfer Registrar of the company is:

Physical Mode & Depository Mode

Intime Spectrum Registry Pvt. Ltd.

211, Sudarshan Complex,
Near Mithakhali Under Bridge,
Navrangpura,
AHMEDABAD - 380 009
Tel. & Fax : 91 - 79 - 2646 5179

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 CHAPTER – 2

INDUSTRY SCENARIO

INDUSTRY SCENARIO

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I nstalled capacity as of January 2008 stood at 128 GW; the average plant load factor
(PLF) as of April–January 2008 was 75.6 per cent. In 2007-08 (until January), energy
shortage was 9.3 per cent while peak shortage was 13.9 per cent. The demand for
electricity is expected to grow by 6–7 per cent over the medium term. To meet the
demand growth, the government has planned a capacity augmentation of around 70 GW
in the Eleventh Plan (2007–2012).

POWER SECTOR SCENARIO

The Ministry of Power has set a goal - Mission 2012: Power for All. A comprehensive
Blueprint for Power Sector development has been prepared encompassing an integrated
strategy for the sector development with objectives of sufficient power to achieve GDP
growth rate of 8%, Reliable of power, Quality power, Optimum power cost, and
Commercial viability of power industry and Power for all.

Strategies :

Power Generation Strategy with focus on low cost generation, optimization of capacity
utilization, controlling the input cost, optimization of fuel mix, Technology up gradation
and utilization of Non Conventional energy sources

Transmission Strategy with focus on development of National Grid including Interstate

connections, Technology upgradation & optimization of transmission cost.

Distribution strategy to achieve Distribution Reforms with focus on System

upgradation, loss reduction, theft control, consumer service orientation, quality power
supply commercialization, Decentralized distributed generation and supply for rural
areas.

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Regulation Strategy aimed at protecting Consumer interests and making the sector
commercially viable.
Financing Strategy to generate resources for required growth of the power sector.

Communication Strategy for political consensus with media support to enhance the
genera; public awareness.

 The Government of India has an ambitious mission of ‘POWER FOR ALL BY

2012’

Overview
 This mission would require that our installed generation capacity should be at
least 2, 00,000 MW by 2012 from the present level of 1, 14,000 MW. To be able
to reach this power to the entire country an expansion of the regional transmission
network and inter regional capacity to transmit power would be essential. The
latter is required because resources are unevenly distributed in the country and
power needs to be carried great distances to areas where load centre exist.
 Certain provisions in the Electricity Act 2003 such as open access to the
transmission and distribution network, recognition of power trading as a distinct
activity, the liberal definition of a captive generating plant and provision for
supply in rural areas are expected to introduce and encourage competition in the
electricity sector. It is expected that all the above measures on the generation,
transmission and distribution front would result in formation of a robust
electricity grid in the country.

 The total Installed generating capacity in the country is over 1.35,000 MW and
the total number of consumers is over 144 million. Apart from an extensive
transmission system network at 500 kV HVDC ,400kV 220 kV, 132 kV and 66
kV which has developed to transmit the Power from the generating station to the
grid substations, a vast network or sub transmission in distribution system has
also come up for the utilization of the power by the ultimate consumers.

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  However, due to lack of adequate investment on T&D works, the T&D losses
have been consistently on higher side, and reached to the level of 32.86% in the
year 2000-01.The reduction of these losses was essential to bring economic
viability to the State Utilities.
 High technical losses in the system are primarily due to inadequate investments
over the years for system improvement works, which has resulted in unplanned
extensions of the distribution lines, overloading of the system elements like
transformers and conductors, and lack of adequate reactive power support.
 The commercial losses are mainly due to low metering efficiency, theft &
pilferages. This may be eliminated by improving metering efficiency, proper
energy accounting & auditing and improved billing & collection efficiency.
Fixing of accountability of the personnel / feeder managers may help considerably
in reduction of AT&C loss.
 With the initiative of the Government of India and of the States, the Accelerated
Power Development & Reform Program (APDRP) was launched in 2001, for the
strengthening of Sub Transmission and Distribution network and reduction in
AT&C losses.
 The main objective of the program was to bring Aggregate Technical &
Commercial (AT&C) losses below 15% in five years in urban and in high-density
areas. The APDRP program is being restructured by the Government of India, so
that the desired level of 15% AT&C loss could be achieved by the end of 11th
plan.

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Rural Electricity involves supply of energy for two types of programmes:

a. Production oriented activities like minor irrigation, rural industries etc.;

b. Electrification of villages.

While the emphasis is laid on exploration of ground water potential and energisation of
pump sets/tube wells, which has a bearing on agricultural production, the accent in
respect of areas covered under the Revised Minimum Needs Program (RMNP), is on
village electrification.

Accelerated Power Development and Reform Projects (APDRP) have been

encouraged to reduce the transmission and distribution losses. This scheme has been
successful in reducing the aggregate technical and commercial losses in 213 towns. Now
the government has increased the coverage of APDRP scheme to all district headquarters
and towns with more than 50,000 populations. The government has increased the
budgetary support for this scheme from Rs 650 crores in FY07 to Rs 800 crores in FY08.
The companies like ICSA (India), which gets the project under this scheme would be
benefited. To encourage rural electrification, the FM has increased the allocation of funds
under Rajiv Gandhi Grameen Vidyutikaran Yojana from Rs 3000 crores to Rs 3983
crores.

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 CHAPTER - 3

COMPANY PROFILE
3.1 MISSION STATEMENT
The Kalpataru Group's credo of "No Compromise" embodies strong commitment to
highest standards of excellence and ethics.
It encourages innovation and people development, which in turn lead to superior quality
products and services and result in maximum customer satisfaction.

3.2 ABOUT THE COMPANY

“Standing tall. Looking ahead.”
“Kalpavruksha”. The embodiment of realization beneath which one's every wish would
be fulfilled. The resourceful tree of knowledge that has a significant presence in
mythology. It is this tree that governs the functional and philosophical ideologies at
Kalpataru, a synonym of the word Kalpavruksha.

Founded in 1969 by Mr. Mofatraj Munot, the first generation entrepreneur, Kalpataru
group has today forayed into diverse arenas, setting unmatched benchmarks for quality
and ingenuity in its ambit of operation. Like the mythological tree, it has spread its roots
far and wide, encompassing the areas of Real Estate and Property Development, Property
Management, Power Transmission Towers, Plastic Processing, and Office Supplies.

The group's hallmark however is its flagship company - Kalpataru Properties Pvt. Ltd. It
was one of the largest Civil Contracting firms in the Middle East, based in the UAE
during the period 1974 - 1982, employing over 7,000 people. With a battery of 800
dedicated professionals, 75 landmark constructions and turnover of over USD 200
million, Kalpataru has made significant progress in the construction industry.
 3.3BASIC DETAILS OF THE COMPANY

KALPATARU POWER TRANSMISSION LTD.

K alpataru Power Transmission is one of World's leading companies in the

design, testing, fabrication, erection and construction of transmission lines and
substation structures on a turnkey basis across India and Overseas.

Kalpataru Power Transmission Limited is one of the leading companies in the

field of Turnkey projects for EHV Transmission Lines up to and including 800 KV in
India and Overseas. As an EPC contractor, company’s scope of work includes design,
testing, fabrication, galvanizing of towers and construction activities from survey, civil
works/ foundation, erection to stringing and commissioning of EHV lines, besides
procurement of items such as conductors, insulators, hardware accessories etc. It also
participates in Substation projects on a partnership basis. It also provide EPC services for
Distribution Projects of 11/33 kV and also construct cross country Pipelines, besides
Telecom Towers. Located at Gandhinagar Gujarat, in Western India, Kalpataru Power
transmission is a public listed company with a turnover of USD 365 Million (Rs. 15
Billion) and annual production was in excess of 72,000 MTs. The company has a net
worth of over USD 100 Million and an order backlog of over Rs.20 Billion.

Kalpataru Power has two large Fabrication Plants with an annual installed capacity
of 84,000 MTs one of the largest in the world and is equipped with modern
machineries (including 7 CNC machines) and automated temperature controlled
Galvanizing Baths, besides its own state-of-the-art Testing Station and R & D
Centre. It was the first company in 1994 in the Indian transmission industry to be
ISO 9001 certified. About 500,000 + MTs of towers and substation structures have
already been designed, manufactured and supplied over the last few years of
which over 150,000 MTs has been exported. Over 225 Tower Tests of 132-500
KV have been carried out successfully, including 100 nos. at it’s own Testing
Station, which is one of the largest facilities of its kind in the world.
 Besides workmen at the plant & construction sites, the Company employs over
1,000 Managers and Staff. Also, a full-fledged Design / Engineering Department with
over 35 qualified design engineers using PLS Tower, I-tower, STADD, PLSCADD,
BOCAD, AUTOCAD facilities. Its Construction division has completed over 8,000+kms
of turnkey projects in India for various clients such as the Power Grid Corporation of
India and various State Electricity Boards (SEBs) of Gujarat, Karnataka, Maharashtra,
Rajasthan, Andhra Pradesh, Rajasthan, Orissa, TamilNadu and Madhya Pradesh.

COUSTMERS (INDIA)

Across
 India:-
♦ Power Grid Corporation of India (PGCI)
♦ State Electricity Boards (SEBs) of Gujarat, Maharashtra, Rajasthan,
Andhra
Pradesh, Tamil Nadu, Madhya Pradesh, West Bengal, UP.

 Pre- qualified for all domestic and international tenders.

 Qualified bids over 20 countries.
 Has ‘Trading House’ status and received various Awards for Meritorious
performance in Exports from Engineering Exports Promotion Council (EEPC)
and Ministry of Commerce, Government of India.