Professional Documents
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Infrastructure Industry
Infrastructure Industry in India have been experiencing a rapid growth in
its different sectors with the development of urbanization and increasing
involvement of foreign investments in this field. The Indian government has
taken initiatives to develop the infrastructure sector, with major
emphasis on construction, engineering, IT, entertainment, textiles, food,
and utility to name some.
Industry Analysis has been done with the help of SWOT analysis and
have undergone with the comparative analysis of HCC ltd one of the leading
LlOYD along with the help of ratio analysis. The fundamental aspect consists
Chapter
No. Name of the concept Page No.
Introduction 1
VII Bibliography 81
CHAPTER I - INTRODUCTION
INTRODUCTION
India is a developing country. Nowadays many people are interested to
invest in financial markets especially on equities to get high returns, and to
save tax in honest way. Equities are playing a major role in contribution of
capital to the business from the beginning. Since the introduction of shares
concept, large numbers of investors are showing interest to invest in stock
market.
The price of a security represents a consensus. It is the price at which one person agrees
to buy and another agrees to sell. The price at which an investor is willing to buy or sell
depends primarily on his expectations. If he expects the security's price to rise, he will
buy it; if the investor expects the price to fall, he will sell it. These simple statements
are the cause of a major challenge in forecasting security prices, because they refer to
human expectations. As we all know firsthand, humans expectations are neither easily
quantifiable nor predictable. If prices are based on investor expectations, then knowing
what a security should sell for (i.e., fundamental analysis) becomes less important than
knowing what other investors expect it to sell for. That's not to say that knowing what a
security should sell for isn't important--it is. But there is usually a fairly strong
consensus of a stock's future earnings that the average investor cannot disprove
Fundamental analysis and technical analysis can co-exist in peace and complement
each other. Since all the investors in the stock market want to make the maximum
profits possible, they just cannot afford to ignore either fundamental or technical
analysis.
NEED OF THE STUDY
To start any business capital plays major role. Capital can be acquired in
two ways by issuing shares or by taking debt from financial institutions or
borrowing money from financial institutions. The owners of the company
have to pay regular interest and principal amount at the end.
where to start.
Fundamental analysis helps to assess the fair market value of equity shares
dividend potential.
. The project is based on tools like fundamental analysis and ratio analysis.
stocks.
METHODOLOGY
analyzing and interpreting the data to diagnose the problem and react to
the opportunity in such a way where the costs can be minimized and the
conclusion.
The methodology used in the study for the completion of the project and
The sample of the stocks for the purpose of collecting secondary data has
been selected on the basis of Random Sampling. The stocks are chosen in
stocks chosen. The stocks are chosen from the automobile sector.
The sample size for the number of stocks is taken as 5 for
LIMITATIONS
for investors.
analysis.
• Detailed study of the topic was not possible due to limited size of the
project.
• There was a constraint with regard to time allocation for the research
years.
carefully understand and analyze all these factors. There are basically two
performance of the firm that issued the stock. If the company is healthy and
can demonstrate strength and growth, the value of the stock will increase.
When values increase then prices follow and returns on an investment will
increase. However, just to keep the savvy investor on their toes, the mix is
complicated by the risk factors involved. Fundamental analysis examines all
the dimensions of risk exposure and the probabilities of return, and merges
FUNDAMENTAL ANALYSIS
environmental and other relevant factors and statistics that will affect the
the stock price is correctly valued. The term simply refers to the analysis of
movements.
investment he has.
The fundamental analysis is to appraise the intrinsic value of a security. It
insists that no one should purchase or sell a share on the basis of tips and
rumors. The fundamental approach calls upon the investors to make his buy
the company, about the industry, and the economy. It is also known as
scenario, industry position and the company expectations and is also known
FUNDAMENTAL ANALYSIS
environmental and other relevant factors and statistics that will affect the
the stock price is correctly valued. The term simply refers to the analysis of
movements.
investment he has.
insists that no one should purchase or sell a share on the basis of tips and
rumors. The fundamental approach calls upon the investors to make his buy
the company, about the industry, and the economy. It is also known as
scenario, industry position and the company expectations and is also known
1. Economic analysis
2. Industry analysis
3. Company analysis
1. ECONOMIC ANALYSIS
the economy grows rapidly, the industry can also be expected to show rapid
growth and vice versa. When the level of economic activity is low, stock
prices are low, and when the level of economic activity is high, stock prices
are high reflecting the prosperous outlook for sales and profits of the firms.
Gross Domestic Product (GDP): GDP indicates the rate of growth of the
and services and net exports of goods and services. The growth rate of
economy points out the prospects for the industrial sector and the return
investors can expect from investment in shares. The higher growth rate is
corporate bodies. Savings are distributed over various assets like equity
shares, deposits, mutual funds, real estate and bullion. The savings and
Inflation: Along with the growth of GDP, if the inflation rate also increases,
then the real growth would be very little. The effects of inflation on capital
Interest rates: The interest rate affects the cost of financing to the firms.
A decrease in interest rate implies lower cost of finance for firms and more
profitability. More money is available at a lower interest rate for the brokers
who are doing business with borrowed money. Availability of cheap funds
boost the production. Banking and financial sectors also should be sound
2. INDUSTRY ANALYSIS
not decline as much as in other industries. This identification of economic and industry specific factors influencing
share prices will help investors to identify the shares that fit individual expectations
Industry Life Cycle: The industry life cycle theory is generally attributed
to Julius Grodensky. The life cycle of the industry is separated into four well
defined stages.
promising in this stage and the technology of the product is low. The
surviving firms from the pioneering stage. The companies that have
products. The companies have stable growth rate in this stage and
moderate and the rate of growth would be more or less equal to the
industrial growth rate or the gross domestic product growth rate.
the events that take place in the maturity stage of the industry.
• Decline stage: demand for the particular product and the earnings
investing in the shares of the low growth industry even in the boom
erosion of capital.
determines the demand for the particular product, its profitability and the
the local as well as the multinational competition counts much. If too many
firms are present in the organized sector, the competition would be severe.
The competition would lead to a decline in the price of the product. The
opportunity and threat for an industry. Every investor should carry out a
SWOT analysis for the chosen industry. Take for instance, increase in
and entry of multinationals in the industry is a threat. In this way the factors
information related to the company and evaluates the present and future
values of the stock. The risk and return associated with the purchase of the
companies is large, only few companies control the major market share.
The competitiveness of the company can be studied with the help of the
following;
will be misleading.
Investors generally prefer size and growth in sales because the larger
size companies may be able to withstand the business cycle rather
more stable earnings. The fall in the market share indicates the
declining trend of company, even if the sales are stable. Hence the
stability of sales should be compared with its market share and the
Earnings of the company: Sales alone do not increase the earnings but
the costs and expenses of the company also influence the earnings.
company’s sales might have increased but its earnings per share may
decline due to rise in costs. Hence, the investor should not only depend on
Historical financial statement helps to predict the future and the current
information aids to analyze the present status of the company. The two
main statements used in the analysis are Balance sheet and Profit and Loss
Account.
prepare every year for their shareholders. It is like a financial snapshot, the
end, listing the company's current assets and liabilities. It helps to study the
company with excessive debt component in its capital structure. From the
balance sheet, liquidity position of the company can also be assessed with
relevant financial data. Financial ratios are calculated from the balance
sheet and profit and loss account. The relationship can be either expressed
turnover ratios, and leverage ratios. Profitability ratios are the most popular
ratios since investors prefer to measure the present profit performance and
use this information to forecast the future strength of the company. The
most often used profitability ratios are return on assets, price earnings
multiplier, price to book value, price to cash flow, and price to sales,
dividend yield, return on equity, present value of cash flows, and profit
margins.
ROA is computed as the product of the net profit margin and the total asset
turnover ratios.
This ratio indicates the firm's strategic success. Companies can have one of
successfully pursuing either of these strategies, but how ROA rises will
depend on the company's strategy. ROA should rise with a successful cost
expands into new markets, increasing its market share. The company may
margin.
crore in men, machines, land and material is made to generate Rs. 25 lakhs
of net profit, then the ROI is 25%. The computation of return on investment
is as follows:
As this ratio reveals how well the resources of a firm are being used, higher
the ratio, better are the results. The return on shareholder’s investment
should be compared with the return of other similar firms in the same
investments in the firm are attractive or not as the investors would like to
c) Return on Equity
actually earning. The return on equity tells the investor how much the
invested rupee is earning from the company. The higher the number, the
owner's
The ratio is more meaningful to the equity shareholders who are invested to
know profits earned by the company and those profits which can be made
This ratio determines what the company is earning for every share. For
many investors, earnings are the most important tool. EPS is calculated by
dividing the earnings (net profit) by the total number of equity shares.
The EPS is a good measure of profitability and when compared with EPS of
form of dividend per share. The dividend per share gives the amount of
cash flow from the company to the owners and is calculated as follows:
outstanding
From the profits of each company a cash flow called dividend is distributed
among its shareholders. This is the continuous stream of cash flow to the
owners of shares, apart from the price differentials (capital gains) in the
market. The return to the shareholders, in the form of dividend, out of the
company's profit is measured through the payout ratio. The payout ratio is
computed as follows:
Payout Ratio = (Dividend per share / Earnings per share) * 100
The percentage of payout ratio can also be used to compute the percentage
of retained earnings. The profits available for distribution are either paid as
when dividends are not declared, the entire profit is ploughed back into the
g) Dividend Yield
Dividend yield is computed by relating the dividend per share to the market
price of the share. The market place provides opportunities for the investor
to buy the company's share at any point of time. The price at which the
share has been bought from the market is the actual cost of the investment
price. Dividend yield relates the actual cost to the cash flows received from
100
Hence, a high dividend yield implies that the share has been under priced in
the market. On the other hand a low dividend yield need not be interpreted
as overvaluation of shares. A company that does not pay out dividends will
not have a dividend yield and the real measure of the market price will be
in terms of earnings per share and not through the dividend payments.
The P/E multiplier or the price earnings ratio relates the current market
price of the share to the earnings per share. This is computed as follows:
not to buy shares in a particular company. Many investors prefer to buy the
company's shares at a low P/E ratio since the general interpretation is that
the market is undervaluing the share and there will be a correction in the
market price sooner or later. A very high P/E ratio on the other hand implies
that the company's shares are overvalued and the investor can benefit by
i) Debt-to-Equity Ratio
Debt-Equity ratio is used to measure the claims of outsiders and the owners
of owners and the outsiders against the firm’s assets. The purpose is to get
FINANCIAL MARKETS
Finance is the pre-requisite for modern business and financial institutions
play a vital role in the economic system. It is through financial markets and
pricing, basic regulations on trading, costs and fees and market forces
taken place in the financial market. Hence financial markets are pervasive
The capital market is a market for financial assets which have a long or
indefinite maturity. Generally, it deals with long term securities which have
channels through which the savings of the community are made available
deals with those securities which are issued to the public for the first time.
The market, therefore, makes available a new block of securities for public
companies either for cash or for consideration other than cash. The best
example could be Initial Public Offering (IPO) where a firm offers shares to
securities are traded. In other words, securities which have already passed
through new issue market are traded in this market. Generally, such
and regular market for buying and selling of securities. This market consists
Money Market
Money markets are the markets for short-term, highly liquid debt
which return relatively low interest rate that is most appropriate for
bill market.
Derivatives Market
The derivatives market is the financial market for derivatives, financial
instruments like futures contracts or options, which are derived from other
derived from one or more underlying assets. The derivative itself is merely
• Forwards: Forwards are the oldest of all the derivatives. A forward contract
asset for cash at a certain date in future at a predetermined price specified in that
an organized exchange.
(option writer) to another party (option holder). The contract offers the buyer
the right, but not the obligation, to buy (call) or sell (put) a security or other
financial asset at an agreed-upon price (the strike price) during a certain period
of time or on a specific date (exercise date). Call options give the option to buy
at certain price, so the buyer would want the stock to go up. Put options give the
option to sell at a certain price, so the buyer would want the stock to go down.
• Swaps: It is yet another exciting trading instrument. Infact, it is the combination
from the fluctuations in the market – either currency market or interest rate
It is a market in which participants are able to buy, sell, exchange and speculate on
central banks, investment management firms, hedge funds, and retail forex brokers and
investors. The forex market is considered to be the largest financial market in the
of currencies. Because the currency markets are large and liquid, they are believed to be
the most efficient financial markets. It is important to realize that the foreign exchange
Commodities Market
nearly 100 primary commodities. Commodities are split into two types: hard
that must be mined or extracted (gold, rubber, oil, etc.), whereas soft
commodities are agricultural products or livestock (corn, wheat, coffee,
India Financial market is one of the oldest in the world and is considered to be the
fastest growing and best among all the markets of the emerging economies.
The history of Indian capital markets dates back 200 years toward the end of the 18th
century when India was under the rule of the East India Company. The development of
the capital market in India concentrated around Mumbai where no less than 200 to 250
securities brokers were active during the second half of the 19th century.
The financial market in India today is more developed than many other sectors because
it was organized long before with the securities exchanges of Mumbai, Ahmadabad and
By the early 1960s the total number of securities exchanges in India rose to eight,
including Mumbai, Ahmadabad and Kolkata apart from Madras, Kanpur, Delhi,
Bangalore and Pune. Today there are 21 regional securities exchanges in India in
addition to the centralized NSE (National Stock Exchange) and OTCEI (Over the
into many industry segments, which were dominated by the state controlled
1990s. Thereafter when the Indian economy began liberalizing and the
controls began to be dismantled or eased out; the securities markets
witnessed a flurry of IPO’s that were launched. This resulted in many new
has been the role played by its securities markets in assisting and fuelling
that growth with money rose within the economy. This was in marked
economies of East Asia that witnessed huge doses of FDI (Foreign Direct
this phase in India much of the organized sector has been affected by high
decided to offload part of their equity were also helped by the well-
The launch of the NSE (National Stock Exchange) and the OTCEI (Over the
India was meant to usher in an easier and more transparent form of trading
in securities. The NSE was conceived as the market for trading in the
securities of companies from the large-scale sector and the OTCEI for those
from the small-scale sector. While the NSE has not just done well to grow
and evolve into the virtual backbone of capital markets in India the OTCEI
struggled and is yet to show any sign of growth and development. The
integration of IT into the capital market infrastructure has been particularly
smooth in India due to the country’s world class IT industry. This has
standards and as a result the country has been able to capitalize on its high
The regulating authority for capital markets in India is the SEBI (Securities
and Exchange Board of India). SEBI came into prominence in the 1990s
market forces to advance their vested interests. After this initial phase of
rules enable the capital market to function more efficiently and impartially.
SEBI is the regulator for the securities market in India. It is the apex body to develop
and regulate the stock market in India It was formed officially by the Government of
India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. Chaired by C
complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices
statutory and autonomous regulatory board with defined responsibilities, to cover both
development & regulation of the market, and independent powers has been set up.
registration norms, the eligibility criteria, the code of obligations and the
Another significant event is the approval of trading in stock indices (like S&P
CNX Nifty & Sensex) in 2000. A market Index is a convenient and effective
options;
• It can be used for passive fund management as in case of Index
Funds.
national level, and also to diversify the trading products, so that there is an
real landmark.
the markets electronic and paperless rolling settlement on T+2 bases). SEBI
company stocks or other securities. The members may act either as agents
The record keeping is central but trade is linked to such physical place
A very common name for all traders in the stock market, BSE, stands for Bombay
Stock Exchange. It is the oldest market not only in the country, but also in Asia. In
the early days, BSE was known as "The Native Share & Stock Brokers Association."
It was established in the year 1875 and became the first stock exchange in the
In the past and even now, it plays a pivotal role in the development of the country's
capital market. This is recognized worldwide and its index, SENSEX, is also tracked
Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).
BSE Vision
The vision of the Bombay Stock Exchange is to "Emerge as the premier Indian stock
Managing Director. The Board is an inclusive one and is shaped to benefit from the
The Board exercises complete control and formulates larger policy issues. The day-
to-day operations of BSE are managed by the Managing Director and its school of
BSE Network
The Exchange reaches physically to 417 cities and towns in the country. The
with transparency. It provides an efficient market for the trading in equity, debt
instruments and derivatives. Its online trading system, popularly known as BOLT, is
BSE Facts
BSE as a brand is synonymous with capital markets in India. The BSE SENSEX is the
benchmark equity index that reflects the robustness of the economy and finance. It was the –
• First in India to obtain ISO certification for Surveillance, Clearing & Settlement
• 'BSE On-Line Trading System’ (BOLT) has been awarded the globally
BS7799-2:2002.
BSE with its long history of capital market development is fully geared to continue its
contributions to further the growth of the securities markets of the country, thus helping India
The National Stock Exchange of India Limited has genesis in the report of the
High Powered Study Group on Establishment of New Stock Exchanges, which recommended
investors from all across the country on an equal footing. Based on the recommendations, NSE
was promoted by leading Financial Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax-paying company unlike other stock Exchange in the
country.
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in
April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June
1994. The Capital Market (Equities) segment commenced operations in November 1994 and
NSE GROUP
clearing and settlement of securities, to promote and maintain the short and
NSE.IT Ltd.
It is also a wholly owned subsidiary of NSE and is its IT arm. This arm of the NSE is
uniquely positioned to provide products, services and solutions for the securities
industry. NSE.IT primarily focuses on in the area of trading, broker front-end and
back-office, clearing and settlement, web-based, insurance, etc. Along with this, it
It is a joint venture between NSE and CRISIL Ltd. to provide a variety of indices and
index related services and products for the Indian Capital markets. It was set up in
May 1998. IISL has a consulting and licensing agreement with the Standard and
Poor's (S&P), world's leading provider of investible equity indices, for co-branding
equity indices.
NSE joined hands with IDBI and UTI to promote dematerialization of securities. This
NSE Facts
• It is one of the largest interactive VSAT based stock exchanges in the world.
• The NSE- network is the largest private wide area network in India and the
• Presently more than 9000 users are trading on the real time-online NSE
application.
Today, NSE is one of the largest exchanges in the world and still forging ahead. At NSE, we are
constantly working towards creating a more transparent, vibrant and innovative capital market.
OTCEI was incorporated in 1990 as a section 25 company under the companies Act
Contracts Regulation Act, 1956. The exchange was set up to aid enterprising
promotes in raising finance for new projects in a cost effective manner and to
provide investors with a transparent and efficient mode of trading Modeled along
the lines of the NASDAQ market of USA, OTCEI introduced many novel concepts to
companies, market making and scrip less trading. As a measure of success of these
efforts, the Exchange today has 115 listings and has assisted in providing capital for
enterprises that have gone on to build successful brands for themselves like VIP
and the government’s IT tasks Force, as well as rising interest in IT, Pharmaceutical,
Biotechnology and Media shares have repeatedly emphasized the need for a
companies not only expand existing operations but also set up new units. The key
issue for these companies is raising timely, cost effective and long term capital to
sustain their operations and enhance growth. Such companies, particularly those
that have been in operation for a short time, are unable to raise funds through the
traditional financing methods, because they have not yet been evaluated by the
financial world.
CHAPTER IV - COMPANY PROFILE
Company:
Sharekhan is a firm which is working under SSKI (S. S. Kantilal Ishwarlal) Ltd.
SSKI was founded in 1922. SSKI is One of India’s Oldest Brokerage Houses
Having Eight Decades of Experience into:-
Institutional Broking
Investment Banking
Retail Broking
It is one of the Founding members of the Stock Exchange, Mumbai and Pioneer
Institutional Broker.
SSKI Retail Broking:-
SSKI Entered into Retail Broking in 1985. Share khan is the Retail Broking Arm
of the BIG 80 Years old organization i.e. of SSKI and “Sharekhan” is the Brand
Name given to its Retail Business. SSKI carries out its Retail Broking Activities
underSharekhan Brand Name.
Sharekhan is One of India’s Leading Broking Houses. They Provides you a
Complete Life-Cycle of Investment Solutions in Equities, Derivatives,
Commodities & Depository Services.
Sharekhan is having its retail presence across India through –
Sharekhan Branches & Franchisees
&
www.sharekhan.com
Sharekhan Outlets act as Full Service Investment Solutions Provider, providing
you wide range of services like –
Online Trading
Depository Services
IPO Services
Country Head
Cluster Head
Regional Head
Branch Head
City SalesM anager
Dealer
Sales Executives
……1........
.…2…
……3…….
……4…..
Trainee
D-mat Account
Trading Account
Bank Link
Dial-N-Trade
For doing a trading of shares everyone need D-mat A/C. In his D-mat A/C one can
kept his shares. Then Sharekhan provides a Trading A/C Through this trading
account, a Sharekhan customer can directly transfer his funds from his savings
account i.e. from bank account to Sharekhan to his trading account without any
paper work. He can buy and sell shares from the website and also view the market
prices of the shares he trades on the terminal.
Sharekhan.com allows trading at present only on NSE. BSE trading will be
shortly available. To open an account a customer requires filling up a form
consisting of 12 agreements, a passport size photograph, a residential proof, a
photo id proof and a cheque drawn of respective amount in favor of S. S. Kantilal
Ishwarlal securities Pvt. Ltd. & from 22 March , 2007 cheque is drawn in favor of
Sharekhan LTD. it self.
After opening an account with Sharekhan, a customer will be given User id, Membership
password and trading password, which will enable him to access his account and trade.
Research and in-depth knowledge of markets provide better than speculations or reacting to rumors.
Research team provides knowledge to their customers about market condition.
In morning they provide “Eagle Eye” which tells about how the market will
be in whole day.
In afternoon they provide “High Noon” which tells that up to that time how
was the market and what about the remaining time what will be the
After the market they analyze the market summery of the whole day and
Mobile-N-Trade facility: -
Now Sharekhan is providing the facility that their customers can do trading with the help of their
mobile handset. For tat purpose they have to pay some extra charge to activate that facility.
Customers:
In now days each and every person is the customer of Sharekhan.
All the Business Man, Shopkeepers, Young Generation i.e. students ,
Adults,Housewife and the person who have money and likes to take risk are the
potential customer of the Sharekhan. The person who likes to invest their money in
share market is also the customer of Sharekhan.
But mostly the customers are divided into two types depending
upon the transactions they do or money they invest in the share market. They
are
Investoror Traders.The investors are those who Invest their money in the market
once when they have money in excess after fulfilling their needs and wants and the traders are those
who daily do the share transactions as their business and called as Intraday transaction and the
previous is called as Delivery transaction.
Competitors:
Sharekhan is one of the major player in on line Trading. In Mumbai the
main competitors of Sharekhan are ICICI Direct, India bulls, Kotak Securities,
1. Religare Enterprises
3. ICICI DIRECT
4. INDIA BULLS
5. RELIANCE MONEY
6. Kotak Securities
7. MOTILAL OSWAL
Environment:
Technology:
Electronic Contract Note (ECN) :
We are providing the facility of Electronic Contract Note to our clients on their
registered Email Id. The same can also be accessed on this website under Services
menu.
We once again reiterate our commitment for providing state-of-the-art technology
and services to our customers so as to add ease and convenience in their day-to-day
trading.
Distinct Feature of Equity Back-office on Net :
Sauda Details : You can view your day-to-day transaction details such as Order
No, Trade No, Quantity, Market Rate, Amount etc. To view the same, you need to provide the
transaction date. Alternatively, you can also view your transactions by giving a date range in the
Global Report - I Menu - Sauda (Cash) option.
Terminology:
Terminology is the study of terms and their use — ofwor ds and compound
words
An Asset Management Company is the fund house or the company that manages
the money.
The mutual fund is a trust registered under the Indian Trust Act. It is initiated by a
sponsor. A sponsor is a person who acts alone or with a corporate to establish a
mutual fund. The sponsor then appoints an AMC to manage the investment,
marketing, accounting and other functions pertaining to the fund.
NAV
The Net Asset Value is the price of a unit of a fund. When a fund comes out with an NFO, it is priced
Rs 10. Later, depending on the value of the investments, this price could rise or fall.
Load
This is a fee that is charged when you buy or sell the units of a fund.
When you buy the units of a fund, you pay a percentage of it as a fee. This is
known as the entry load.
Let's say you are investing Rs 10,000 and the entry load is 2%. That means you
pay Rs 200 as the entry load and Rs 9,800 is invested in the fund.
Now, let's assume you are selling the units of your fund. And the Rs 10,000 you
invested initially is now Rs 15,000. Let's further assume the exit load is 2%. So
you pay Rs 300 and get back Rs 14,700.
Generally, if funds charge an entry load, they will not charge an exit load. Or vice
versa. Only one of the loads is charged. The load is a percentage of the NAV.
Portfolio
This is the term given to all the investments made by the fund as well as the
Let's assume a very small mutual fund has an initial investment of 1,000 units and
each unit is worth Rs 10. Hence, the total amount with the fund is Rs 10,000. This
is referred to as the corpus. Later, some other investors invest Rs 2,000. Now the
corpus will be Rs 12,000 (Rs 10,000 + Rs 2,000).
The total amount invested (Rs 12,000) is called the corpus or the total amount
of money invested in the fund.
AUM
Assets Under Management is the total value of all the investments currently being
managed by the fund.
Let's say the corpus is Rs 12,000 but, due to a rise in the price of the shares it has
invested in, the value of the units has increased. So the Rs 12,000 invested is now
worth Rs 15,000. This figure is referred to as AUM.
Diversified equity mutual fund
ELSS
Equity Linked Saving Schemes are diversified equity mutual funds with a tax
To avail of the tax benefit, your money must be locked up for at least three
years.
Balanced fund
A fund that invests in both equity (shares) and debt (fixed return investments) is
Debt fund
These are funds that invest in fixed return investments like bonds. A liquid fund is one that invests in
money market instruments, these are fixed return investments of a very short tenure.
NFO
A New Fund Offering is the term given to a new mutual fund scheme.
SIP
A Systematic Investment Plan refers to periodic investing in a mutual fund. Every
month or every three months, the investor will have to commit to putting in a fixed
amount. This will go towards the purchase of units.
Let's say that every month you commit to investing, say, Rs 1,000 in your fund. At
the end of a year, you would have invested Rs 12,000.
If the NAV on the day you invest in the first month is Rs 20, you will get 50 units.
The next month, the NAV is Rs 25. You will get 40 units.
The following month, the NAV is Rs 18. You will get 55.56 units.
So, after three months, you would have 145.56 units. On an average, you would
have paid around Rs 21 per unit. This is because, when the NAV is high, you get
fewer units per Rs 1,000. When the NAV falls, you get more units per Rs 1,000.
SWOT Analysis:
Strengths
research.
Weakness
market.
Opportunities
market.
Threats
fluctuating.
CHAPTER V
a. Economy analysis
b. Industry analysis
c. Company analysis
Fundamental Analysis
statistics.
1. ECONOMY ANALYSIS
Economic analysis is the analysis of forces operating the overall economy a country.
of an economy.
Economy of India
India gross domestic product (GDP) means the total value of all the services and
goods that are manufactured within the borders of the country within the specified
period of time.
The Indian economy is the twelfth biggest in the whole world for it has the GDP of
US$ 1.09 trillion in 2007. The economy of India is the second major growing
economy in the whole world for it has the GDP growing at the rate of 9.4% in 2006-
2007.
Government has set the target of constructing 20km of national highways on daily
basis and to trigger these changes projects have been undertaken via public private
partnerships (PPPs). The FM increase the allotment of road transport to Rs.19, 894
crore against the previous Rs.17, 520 crore for 2010-11. In an attempt to revise and
enlarge the railway network, he also allocated Rs.16, 752 crore while presenting the
union budget.
Restoration of Infrastructure Bonds after a period of 5 years was also in the Budget
2010 agenda. It is one of the best tax saving schemes and keeping this in
consideration the FM has proposed an extra limit of Rs.20, 000/- for investing in
Infrastructure Bonds.
Intrest rate
TAX SHELTER
Tax incentives for infrastructure
One aspect of the new Direct Tax Code is a new tax incentive scheme for the
infrastructure sector for areas including generation of power, development of
railways, ports and airports and construction of oil pipelines. This is a welcome
change that will help stimulate the development of infrastructure within India and
help lay down the basis for strong economic growth. Infrastructure development
To further support construction of new homes, the tax breaks available under
Section 80-IA of the Income Tax Act should be extended to include housing
development. Given the huge shortfall in housing units in the country, one way of
clusters complete with amenities such as roads, schools, parks, hospitals, retail
such as street lighting, solid waste management etc.; industrial parks and SEZ’s;
roads and bridges; civic amenities like electricity, water supply, sewerage,
INFRASTRUCTURAL FACILITIES
Infrastructure Facilities
Quality and availability of infrastructure facilities are the most critical factor
determining the
due attention to this fact and have focused on upgrading India’s infrastructure
facilities to
international standards. Much of these efforts have already translated into visible
signs of
still a lot that remains to be done and our present survey shows that the perception
about the
overall state of the Indian infrastructure facilities amongst foreign investors is not
very
encouraging. As captured in the present survey, the following section contains the
observations
of the foreign direct investors, on the prevailing state of facilities in India in the
fields of roads
and highways, ports, airports, railways, telecom, bandwidth, power and water.
Rank Facility
1 Telecom
2 Bandwidth
3 Railways
4 Airports
5 Ports
6 Water
8 Power
FICCI Foreign
Direct Investment Survey - 2010
Industry Analysis(infrastructure)
Over view
Over the past four years,the indian economy consistently recordedgrowth rates in
excess of 8.5% per annaum resulting in rapidly increasing infrastructure
spending.total infrastructure spending is expected to increase from us$ 24 billion in
2005 to us$ 47 billion in 2009 .
Total investment requirement in the infrastructure sector over the next five
years is us$ 445 billion.
The industrial life cycle is a term used for classifying industry life over time. Industry
life cycle classification generally groups industries into one of four stages: pioneer,
growth, maturity and decline. In the pioneer phase, the product has not been widely
accepted or adopted. Business strategies are developing, and there is high risk of
failure. However, successful companies can grow at extraordinary rates. The Indian
infrastructure sector has passed this stage quite successfully. The industry is
growing rapidly, often at an accelerating rate of sales and earnings growth.
Swot analysis
Study the factors which may have an impact on business or industry either
in a positive or in a negative way.
Strengths
• Employment and training opportunities in the field of construction.
• Private sector housing boom and commercial building demands.
• Construction of the multi building projects on the feasible locations in the
country.
• Good structured national network facilities the boom of construction industry.
• Low cost well-educated and skilled labour force is now widely available across
the country.
• Sufficient availability of raw materials and natural resources in the country is
supportive for the industry .
• Real estate development is on high and it is attracting the focus of the
industry towards construction.
Weaknesses
• Chances of natural dis advantages are there.
• Distance between construction lprojects reduces business efficiency.
• Training itself has become a challenge.
• Changing skills requirements and an ageing work force may accentuate the
skills gap.
• Improve in long term career prospects is highly required to encourage staff
retention and new entrants.
• External allocation of large contracts becomes difficult.
• Lack of clearly define processes and procedures for construction and its
management.
• Huge amount of money needed to be invested in this industry.
Opportunities
• Continuous private sector housing boom will create more construction
opportunities.
• Public sectorprojects through public private partnerships will bring further
opportunities.
• Developing supply chain through involvement in large projects is likely to
enhance the chances in construction.
• Renewable energy projects will offer opportunities to develop skills and
capacity in new markets.
• More flexible training delivery techniques are now available.
• Financial supports like loan and insurance and growth in income of people is
in support of construction industry.
• Historical cultural heritages like TAZ MAHAL encourage and provide a
creative plat form for the industry.
• Remote areas in the country are easily accessible and plenty of land is
available in the country.
•
Threats
• Long term market instability and uncertainty may damage the opportunities
and prevent the expansion of training and development facilities.
• Current economic situation may have an adverse impact on construction
industry.
• Political and security conditions in the region and late legislative enforcement
measures are always threats to any industry in india.
• Lack of political willingness and support on promoting new strategies.
• Natural abnormal casualties such as earth quake and floods are uncertain
and can prevent the construction boom.
• In efficient accessibility in planning and concerning the infrastructure and
signs.
3. COMPANY ANALYSIS
The company analysis shows the long-term strenght of the company that what is the financial
position of the company in the market, where it stands among its competitors and who are the
key drivers of the company, what are the future plans of the company, what are the policies of
government towards the company and how the stake of the company divested among different
groups of people.
Larsen&toubro
• Larsen & Toubro:
It is India's biggest construction organization. Supported by its equally
proficient allied sectors, the Engineering, Construction and Contracts Division
of L&T provides EPC solutions on concept and expenses which could be
incurred while performing engineering and infrastructure projects on large
scale. L&T's ECC department carry out large scale projects entailing ground-
breaking design and wide-ranging construction services ranging from
procurement, furnishing, fitting, testing and commissioning. L&T is known for
its excellence and timely deliverance. With an annual turnover of Rs 25,000
crore, L&T has more 12,000 skilled professional working for it.
Dlf
DLF's chief business is to develop housing, marketable and retail properties.
Currently it has undertaken the development of 70 million sq ft of housing projects
which it intends to finish in the next three years. DLF has joined hands with Delhi
Development Authority to develop townships in Amritsar, Pune, Gurgaon, Mumbai,
Chennai and Goa. DLF has been the construction company behind different malls in
Hyderabad, Delhi, Bangalore, Mumbai, Amritsar, Ludhiana, Kochi and Chennai. The
company is also developing 50-75 hotels along with Hilton Hotels and infrastructure
and SEZ in India in collaboration with Laing O'Rourke (UK).
GAMMON INDIA
With an annual turnover of more than Rs 7,010 crore, Gammon India is famously
known as 'Builders to the Nation'. It is the one and only construction firm in India to
get an ISO 9001 authorization for its operational sectors in civil engineering and has
successfully carried out diverse civil engineering operations some of which include
constructing one of the longest river bridge in Asia at Patna across the Ganges and
the longest bridge in India across river Jadukata.
Punj Lloyd
Punj Lloyd: Crowned as 'all-terrain specialists', Punj Lloyd is one of the biggest
Indian engineering construction firms. The company performs its operations in Asia
Pacific, China, Middle East, Europe, Africa, South Asia and Caspian. It provides
services ranging from engineering to project administration, innovative designs to
construction, to eminent clients like Petroleum Development Oman, British
Petroleum, Pertamina, Shell, ADNOC, Cairn Energy, etc.
Balance Sheet of Larsen ------------------- in Rs. Cr. -------------------
and Toubro
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Sources Of Funds
Total Share Capital 27.48 56.65 58.47 117.14 120.44
Equity Share Capital 27.48 56.65 58.47 117.14 120.44
Share Application Money 0.00 0.00 0.00 0.00 25.09
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
4,583.3
Reserves 5,683.85 9,470.71 12,317.96 18,142.82
2
Revaluation Reserves 29.37 27.93 25.90 24.59 23.29
4,640.1
Networth 5,768.43 9,555.08 12,459.69 18,311.64
7
Secured Loans 465.79 245.40 308.53 1,102.38 955.73
Unsecured Loans 987.78 1,832.35 3,275.46 5,453.65 5,845.10
1,453.5
Total Debt 2,077.75 3,583.99 6,556.03 6,800.83
7
6,093.7
Total Liabilities 7,846.18 13,139.07 19,015.72 25,112.47
4
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Application Of Funds
2,300.6
Gross Block 2,876.30 4,188.91 5,575.00 7,235.78
8
Less: Accum. Depreciation 982.22 1,122.83 1,242.47 1,421.39 1,727.68
1,318.4
Net Block 1,753.47 2,946.44 4,153.61 5,508.10
6
Capital Work in Progress 286.06 471.22 699.00 1,040.99 857.66
1,919.5
Investments 3,104.44 6,922.26 8,263.72 13,705.35
2
2,210.2
Inventories 3,001.14 4,305.91 5,805.05 1,415.37
7
4,814.1
Sundry Debtors 5,504.64 7,365.01 10,055.52 11,163.70
6
Cash and Bank Balance 398.71 993.68 779.86 693.13 1,104.89
7,423.1
Total Current Assets 9,499.46 12,450.78 16,553.70 13,683.96
4
2,061.5
Loans and Advances 2,449.14 3,861.10 7,198.85 12,662.55
0
Fixed Deposits 184.49 100.75 184.60 82.16 326.98
9,669.1
Total CA, Loans & Advances 12,049.35 16,496.48 23,834.71 26,673.49
3
Deffered Credit 0.00 0.00 0.00 0.00 0.00
6,106.0
Current Liabilities 8,362.01 11,892.75 15,211.04 19,443.77
4
1,015.3
Provisions 1,180.13 2,035.42 3,066.53 2,188.36
7
7,121.4
Total CL & Provisions 9,542.14 13,928.17 18,277.57 21,632.13
1
2,547.7
Net Current Assets 2,507.21 2,568.31 5,557.14 5,041.36
2
Miscellaneous Expenses 21.98 9.84 3.06 0.26 0.00
6,093.7
Total Assets 7,846.18 13,139.07 19,015.72 25,112.47
4
Income
15,030.8
Sales Turnover 17,983.37 25,280.49 34,249.85 37,187.50
1
Excise Duty 253.86 338.08 334.38 393.31 317.31
14,776.9
Net Sales 17,645.29 24,946.11 33,856.54 36,870.19
5
Other Income 527.52 459.80 616.69 1,612.58 2,321.67
Stock Adjustments -103.24 121.76 746.17 105.11 -422.99
15,201.2
Total Income 18,226.85 26,308.97 35,574.23 38,768.87
3
Expenditure
Raw Materials 4,510.78 5,320.98 8,256.46 9,316.38 9,593.53
Power & Fuel Cost 221.50 308.13 365.25 456.39 334.08
Employee Cost 890.03 1,258.21 1,535.44 1,998.02 2,379.14
Other Manufacturing Expenses 6,647.70 7,451.07 10,632.83 15,659.17 16,913.31
Selling and Admin Expenses 996.59 1,222.80 1,393.80 1,844.83 1,854.23
Miscellaneous Expenses 125.00 166.15 280.69 569.32 325.58
Preoperative Exp Capitalised -1.89 -3.30 -11.42 -24.48 -36.25
13,389.7
Total Expenses 15,724.04 22,453.05 29,819.63 31,363.62
1
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Sources Of Funds
Total Share Capital 25.63 25.63 25.63 25.63 30.33
Equity Share Capital 25.63 25.63 25.63 25.63 30.33
Share Application Money 0.00 0.00 15.19 15.19 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 864.19 878.45 963.24 964.03 1,486.85
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Networth 889.82 904.08 1,004.06 1,004.85 1,517.18
Secured Loans 197.32 482.48 520.75 904.10 963.03
1,100.5
Unsecured Loans 1,068.58 1,324.11 1,417.70 1,551.67
2
1,297.8
Total Debt 1,551.06 1,844.86 2,321.80 2,514.70
4
2,187.6
Total Liabilities 2,455.14 2,848.92 3,326.65 4,031.88
6
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Application Of Funds
Gross Block 772.81 1,101.19 1,409.73 1,682.83 1,814.18
Less: Accum. Depreciation 280.74 355.03 456.63 554.65 664.49
Net Block 492.07 746.16 953.10 1,128.18 1,149.69
Capital Work in Progress 107.43 151.27 67.50 46.44 34.85
Investments 126.47 228.64 295.54 365.50 408.69
1,098.7
Inventories 1,738.61 2,143.87 2,776.64 3,565.22
2
Sundry Debtors 2.80 0.54 4.45 4.71 2.65
Cash and Bank Balance 378.74 89.01 249.54 145.13 176.28
1,480.2
Total Current Assets 1,828.16 2,397.86 2,926.48 3,744.15
6
Loans and Advances 208.11 366.41 305.42 568.79 920.65
Fixed Deposits 627.26 119.36 14.81 8.74 12.04
2,315.6
Total CA, Loans & Advances 2,313.93 2,718.09 3,504.01 4,676.84
3
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 816.71 937.15 1,138.75 1,552.40 2,047.24
Provisions 37.24 47.71 46.56 165.08 190.95
Total CL & Provisions 853.95 984.86 1,185.31 1,717.48 2,238.19
1,461.6
Net Current Assets 1,329.07 1,532.78 1,786.53 2,438.65
8
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
2,187.6
Total Assets 2,455.14 2,848.92 3,326.65 4,031.88
5
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Sources Of Funds
Total Share Capital 52.22 52.25 60.69 60.70 66.42
Equity Share Capital 52.22 52.25 60.69 60.70 66.42
Share Application Money 0.00 0.00 25.40 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
1,002.8
Reserves 1,046.19 2,353.88 2,548.26 3,510.65
1
Revaluation Reserves 8.53 5.77 0.00 0.00 0.00
1,063.5
Networth 1,104.21 2,439.97 2,608.96 3,577.07
6
Secured Loans 346.01 943.14 1,114.84 2,369.88 3,030.70
Unsecured Loans 62.94 575.50 252.80 567.97 472.30
Total Debt 408.95 1,518.64 1,367.64 2,937.85 3,503.00
1,472.5
Total Liabilities 2,622.85 3,807.61 5,546.81 7,080.07
1
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Application Of Funds
Gross Block 763.88 1,221.70 989.43 1,072.28 1,179.98
Less: Accum. Depreciation 302.38 370.48 0.00 0.00 0.00
Net Block 461.50 851.22 989.43 1,072.28 1,179.98
Capital Work in Progress 81.96 4.03 92.85 123.65 134.38
Investments 124.41 317.80 727.76 993.35 676.27
Inventories 626.19 978.24 1,505.15 2,950.29 3,506.09
Sundry Debtors 378.48 561.51 963.97 1,523.56 1,497.58
Cash and Bank Balance 70.42 115.30 214.42 358.93 181.24
1,075.0
Total Current Assets 1,655.05 2,683.54 4,832.78 5,184.91
9
Loans and Advances 207.75 671.81 826.59 1,189.71 2,075.96
Fixed Deposits 2.86 222.60 0.00 0.00 0.00
1,285.7
Total CA, Loans & Advances 2,549.46 3,510.13 6,022.49 7,260.87
0
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 460.45 1,069.91 1,439.87 2,518.64 2,024.27
Provisions 20.60 29.74 72.68 146.31 147.17
Total CL & Provisions 481.05 1,099.65 1,512.55 2,664.95 2,171.44
Net Current Assets 804.65 1,449.81 1,997.58 3,357.54 5,089.43
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
1,472.5
Total Assets 2,622.86 3,807.62 5,546.82 7,080.06
2
Punj Lloyd
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Income
1,368.2
Sales Turnover 2,238.85 4,511.10 6,919.87 7,116.70
1
Excise Duty 0.00 0.00 0.00 0.00 0.00
1,368.2
Net Sales 2,238.85 4,511.10 6,919.87 7,116.70
1
Other Income 22.62 60.46 30.66 35.75 424.90
Stock Adjustments -0.06 -0.03 0.00 0.00 0.00
1,390.7
Total Income 2,299.28 4,541.76 6,955.62 7,541.60
7
Expenditure
Raw Materials 448.71 587.82 1,625.36 2,381.76 3,253.24
Power & Fuel Cost 52.40 127.12 0.00 0.00 0.00
Employee Cost 138.63 236.56 358.53 574.59 704.62
Other Manufacturing Expenses 343.16 575.35 1,504.38 2,390.15 1,895.51
Selling and Admin Expenses 150.93 353.54 0.00 19.93 0.00
Miscellaneous Expenses 22.40 31.25 485.87 780.65 879.06
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
1,156.2
Total Expenses 1,911.64 3,974.14 6,147.08 6,732.43
3
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Sources Of Funds
Total Share Capital 17.69 17.69 17.69 122.69 25.83
Equity Share Capital 17.69 17.69 17.69 17.69 25.83
Share Application Money 0.00 0.00 0.00 4.02 20.35
Preference Share Capital 0.00 0.00 0.00 105.00 0.00
Reserves 840.80 879.78 961.31 1,208.36 1,656.29
Revaluation Reserves 67.34 252.80 249.66 245.57 242.43
Networth 925.83 1,150.27 1,228.66 1,580.64 1,944.90
Secured Loans 144.00 230.32 243.99 325.25 488.55
Unsecured Loans 26.58 141.17 133.07 647.02 806.01
Total Debt 170.58 371.49 377.06 972.27 1,294.56
1,096.4
Total Liabilities 1,521.76 1,605.72 2,552.91 3,239.46
1
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Application Of Funds
Gross Block 542.01 896.21 1,026.83 1,275.01 1,478.80
Less: Accum. Depreciation 172.27 205.10 253.57 326.98 394.45
Net Block 369.74 691.11 773.26 948.03 1,084.35
Capital Work in Progress 7.32 10.37 18.19 35.38 84.64
Investments 116.18 150.44 160.78 220.61 197.84
Inventories 470.59 529.00 704.98 1,011.10 1,309.15
Sundry Debtors 238.01 303.35 517.15 1,343.70 1,763.68
Cash and Bank Balance 42.99 35.76 37.99 35.26 55.70
Total Current Assets 751.59 868.11 1,260.12 2,390.06 3,128.53
Loans and Advances 335.36 555.78 515.94 1,176.71 1,408.52
Fixed Deposits 91.28 60.23 0.10 16.10 16.78
1,178.2
Total CA, Loans & Advances 1,484.12 1,776.16 3,582.87 4,553.83
3
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 533.20 698.71 950.14 1,941.59 2,362.82
Provisions 41.85 115.57 172.53 292.39 318.38
Total CL & Provisions 575.05 814.28 1,122.67 2,233.98 2,681.20
Net Current Assets 603.18 669.84 653.49 1,348.89 1,872.63
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
1,096.4
Total Assets 1,521.76 1,605.72 2,552.91 3,239.46
2
Income
Sales Turnover 1,470.8 1,851.69 2,344.91 3,703.86 4,551.24
9
Excise Duty 0.00 0.00 0.00 46.00 66.14
1,470.8
Net Sales 1,851.69 2,344.91 3,657.86 4,485.10
9
Other Income 28.17 47.79 25.83 91.36 65.69
Stock Adjustments 121.85 56.30 190.37 40.37 -32.02
1,620.9
Total Income 1,955.78 2,561.11 3,789.59 4,518.77
1
Expenditure
Raw Materials 0.00 0.00 0.00 348.12 437.89
Power & Fuel Cost 67.96 77.09 1.07 1.27 1.77
Employee Cost 26.41 29.59 30.32 43.97 60.47
1,270.7
Other Manufacturing Expenses 1,566.72 2,242.69 2,937.84 3,490.37
8
Selling and Admin Expenses 35.41 51.89 31.60 26.00 33.70
Miscellaneous Expenses 4.81 3.63 16.39 10.63 24.53
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
1,405.3
Total Expenses 1,728.92 2,322.07 3,367.83 4,048.73
7
Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
YEA
RS
2006
2007
2008
2009
2010
INTERPRET
ATION