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Term paper: Financial management

Companys name: CONTAINER CORPORATION OF INDIA Industry : LOGISTICS

Submitted by: Komal Sharma CUN 110550037 MBA/ Term 3/ Sec:A

Submitted to: Dr. Renuka Sharma Associate Professor (Finance)

Chitkara Business School Chitkara University, Punjab (March 2012)

DECLARATION

I hereby declare that the project work entitled CONTAINER CORPORATION OF INDIA submitted to the Chitkara University, is a record of an original work done by me under the guidance of Dr. Renuka Sharma, Associate Professor (Finance), Chitkara Business School. This project work is submitted in the partial fulfilment of the requirements for the award of the degree of Master of Business Administration. The results embodied in this report have not been submitted to any other University or Institute for the award of any degree or diploma.

KOMAL SHARMA CUN110550037

ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals and organizations. I would like to extend my sincere thanks to all of them. I am highly indebted to Dr. Renuka Sharma for their guidance and constant supervision as well as for providing necessary information regarding the project & also for their support in completing the project. I would like to express my gratitude towards my parents & member of Chitkara Business School, Chitkara University for their kind co-operation and encouragement which help me in completion of this project. I would like to express my special gratitude and thanks to industry persons for giving me such attention and time. My thanks and appreciations also go to my colleague in developing the project and people who have willingly helped me out with their abilities.

KOMAL SHARMA

INDEX

PART NO.
A.PART-I

CONTENTS
COMPANY OVERVIEW RELATIVE POSITION ORGANISATION STRUCTURE LISTED ON MANAGEMENT

PAGE NO. 6 8 9 10 12 14

B.PART-II ANALYSIS & INTERPRETATION OF VARIOUS FINANCIAL PRAMETERS BETA VALUE STANDARD DEVIATION CAPITAL STRUCTURE DIVIDEND POLICY LIQUIDITY IPO ISSUES CREDIT RATING NEWS INVENTORY POSITION COMPARISON C. BIBLIOGRAPHY GLOSSARY ANNEXURE

15 16 16 17 18 19 20 21 26 27 30 31 38

CONCOR (container corporation of India)


Industry profile:
The Indian Multimodal scene has witnessed the advent of multiple container train operators since 2006. Presently, there are 15 container train operators (besides CONCOR) who have signed Concession Agreements with Indian Railways for running of Container Trains for a period of 20 years, extendable by another10 years. Almost all the 15 players have commenced their train services. Some of these players have set up their own terminal facilities also. While the operations of the new entrants to the business started in a limited way by two operators in April, 2007, the number has now grown to 15 excluding CONCOR and the volumes being transported by these operators have continuously grown with the induction of new rakes. These operators have been using Goods Sheds/terminals of Indian Railways as well, for their operations. With the emergence of a number of new ports, viz., Mundra, Pipavav, Vizag, Tuticorin, Vallarpadam and a few other ports on the west coast, the hinterland connectivity in the country is expected to increase resulting in increased levels of hinterland penetration of container traffic in the years to come. With the changed external business environment, your company placed emphasis on providing total logistics and transport solutions to its customers by exploring the possibilities of expanding the presence of the company in all the segments of the transport value chain in the EXIM as well as Domestic segments. Possibilities have been explored for strategic alliances, both for the optimal utilization of infrastructure as well as for expansion into other segments of the value chain.

Background:
CONCOR - The Multimodal Logistics Professionals Ever since globalization transformed the transport sector, national boundaries have become permeable to penetration by trade, creating the need for flexible transport solutions. Intermodalism and containerization were the by-products of this era and were poised to metamorphosize transport of "general cargo", moving it 'seamlessly' through sea and land arteries. Forty years ago, the physical process of exporting or importing goods was arduous. Goods needed to be transported by lorry to the port, unloaded into a warehouse and then reloaded into the ship 'piece by piece'. Malcolm McLean's idea of containerization changed the basics of cargo transport by standardizing the dimensions of the container and simultaneously improving the productivity of ports by mechanizing handling of container-carrying 'cellular' ships and reducing their handling to a few hours only. Unitisation helped elimination of multiple handling of cargo and made transfers quick, cheap and easy. As containerization came to stand for 'cargo care', it grew by leaps and bounds the world over.

Indian Railway's strategic initiative to containerize cargo transport put India on the multi-modal map for the first time in 1966. Given the continental distances in India (almost 3000 km from North to South and East to West), rail transport could be the cheaper option for all cargo over medium and long distances, especially if the cost of inter-modal transfers could be reduced. Containerized multi-modal door-to-door transport provided the ideal solution to this problem. It was this idea that saw the Indian Railways entering the market for moving door-todoor domestic cargo in special DSO containers starting in 1966. Though the first ISO marine container had been handled in India at Cochin as early as 1973, it was in 1981 that the first ISO container was moved inland by the Indian Railways to India's first Inland Container Depot (ICD) at Bangaluru, also managed by the Indian Railways. Expansion of the network to 7 ICDs by 1988 saw increase in the handling of containers, and along the way, a strong view had emerged that there was a need to set up a separate proactive organization for promoting and managing the growth of containerization in India.

The company:
Container Corporation of India Ltd. (CONCOR), was incorporated in March 1988 under the Companies Act, and commenced operation from November 1989 taking over the existing network of 7 ICDs from the Indian Railways. From its humble beginning, it is now an undisputed market leader having the largest network of 61 ICDs/CFSs in India. In addition to providing inland transport by rail for containers, it has also expanded to cover management of Ports, air cargo complexes and establishing coldchain. It has and will continue to play the role of promoting containerization of India by virtue of its modern rail wagon fleet, customer friendly commercial practices and extensively used Information Technology. The company developed multimodal logistics support for Indias International and Domestic containerization and trade. Though rail is the main stay of our transportation plan, road services and also provided to cater to the need of door-to-door services, whether in the International or Domestic business. CONCOR is committed to providing responsive, cost effective, efficient and reliable logistics solution to its customers. It strives to be the first choice for its customers. CONCOR is a customer focused, performance driven, result oriented organization, focused on providing value for money to its customers.

Relative position:
As per ET survey of listed companies in India for 2009-10, CONCOR has been ranked No.161 in top 500 companies of India in terms of turnover and No.85 in terms of net profit respectively. In Transport & Logistics sector, CONCOR has been ranked No.3 in terms of turnover and No.1 in terms of net profit. Dun & Bradstreet has also ranked CONCOR among the Indias Top 500 Companies with ranking of No. 133 in total income, No. 65 in Net Profit listing and No. 79 in Net Worth listing.

Mission :
Our mission is to join with our community partners and stake holders to make Concor a company of outstanding quality. We do this by providing responsive, cost effective, efficient and reliable logistics solutions to our community partners and ensuring profitability and growth. We strive to be the first choice for our customers. We will be firmly committed to our social responsibilities and prove worthy of the trust reposed in us.

Objective:
We will be a customer focussed, performance driven, result oriented organisation, focussed on providing value for our money to our customers. We will strive to maximise productive utilisation of resources, deliver high quality of services and be recognised as setting the standards for excellence. We will constantly look for new and better ways to provide innovative services. We will aim to customer convenience and satisfaction, learn from our competitors and always strive for excellence. We will get measurable performance goals to support the objectives and mission of our organisation to achieve excellence in all areas of our business and operations by benchmarking ourselves with our competitors. We will follow highest standards of business ethics and add social value for the community at large by discharging social obligations as a responsible corporate entity. We will maintain absolute integrity, honesty, transparency and fair play in all our official dealings and strive to maintain high standards of morality in our personal life.

Organisation structure of the company:

The organisation structure of the company consists of the Chairman at the top position. The chairman is followed by the Managing Director. Next to M.D are the different Directors of International Marketing and Operations, P&S, Finance and Domestic.

It also consists of the different corporate offices in the North Central Region, Northern, Western, South Central, Central, Eastern and North West.

Listing and dematerialization of shares:


CONCORs shares are listed with the bourses i.e. Mumbai and National Stock Exchanges. The listing fees of both the stock exchanges have been paid. To facilitate dematerialization of shares by its shareholders, CONCOR has signed agreements with both the Depositories (NSDL & CDSL). As per SEBI guidelines, CONCORs shares have been placed under Compulsory Demat Mode. Out of 4,79,82,992 shares listed on the Stock Exchange 4,79,80,755 shares were in Demat mode as on 31st March, 2011. The market capitalization of the company was 15,599 crores as on 31st March, 2011 (as per closing price on NSE).

Industrial relations:
The employee relation perspectives in CONCOR are focused towards basic business needs, management of contract labour, legal perspectives and corporate sustainability. The approach towards industrial relations has been proactive, fair and transparent; ensuring better wages and social security to the employees. During the financial year the employee relations remained harmonious and no man days were lost.

Reservation policy:
CONCOR has been following the Presidential Directives and Guidelines issued by the Government of India from time to time regarding reservation for SCs, STs, OBCs, Physically Handicapped and Ex-Servicemen in letter and spirit. The representation of SCs, STs, OBCs and PHs in CONCOR is as under: Category Scheduled caste Scheduled tribes Other backward classes Physically handicapped Joined during 2010-11 07 03 15 01 No. of employees 169 43 249 19 % of total manpower 14.73 3.75 21.71 1.66

Special achievements:
1. Honble Prime Minister of India Shri Manmohan Singh conferred upon CONCOR the MOU Excellence Certificate for 2008-09 for excellent achievement in MOU targets on 15th December, 2010 at New Delhi 2. CONCOR received the 1st Northern India Multimodal Logistics Awards for ICD & Rail Operator of the Year during Conquest -2011 International Conference & EXPO held at New Delhi during January 2011. 3. M/s. CARE (Credit Analysis and Research Limited) has reaffirmed the credit rating of CARE AAA (Is) {Triple A (Issuer)}to CONCOR. The symbols of CARE AAA (Is) are
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considered to be of the best credit quality, offering highest safety for timely servicing of debt obligations. 4. As per ET survey of listed companies in India for 2009-10, CONCOR has been ranked No.161 in top 500 companies of India in terms of turnover and No.85 in terms of net profit respectively. In Transport & Logistics sector, CONCOR has been ranked No.3 in terms of turnover and No.1 in terms of net profit. 5. CONCOR received the first ever award called All India Maritime and Logistics Awards, 2010 (MALA) for Inland Container Depot Operator of the year from Exim India & Fairplay Exposition Group. The award was conferred during a function held in Mumbai. 6. CONCORs Inland Container Depot (ICD), Dadri has been selected for Annual Indian Maritime Awards 2010 for ICD of the year for high level of the reliability in customer service during the year 2009-10. 7. The company has been selected for conferring of Rolta Corporate Awards 2010 by Dun & Bradstreet for being the best Indian company under the Transport & Logistics sector. The award will be conferred on CONCOR in the last week of April in Mumbai. Dun & Bradstreet has also ranked CONCOR among the Indias Top 500 Companies with ranking of No. 133 in total income, No. 65 in Net Profit listing and No. 79 in Net Worth listing.

Corporate social responsibility (CSR):


Significant CSR activities were undertaken during the year. Details of some of the major activities are appended below: A Memorandum of Understanding (MOU) was signed with National Literacy Mission Authority, Department of School Education & Literacy, Ministry of Human Resource Development, Government of India for building Adult Education Centres in the Gram Panchayat and village. Specifically 65 Lacs were used in development of 20 such centres sponsored in Karnataka with coverage of an estimated 1,47,253 beneficiaries. MOU was signed with National Foundation for Communal Harmony (NFCH) to support the education of children affected by violence in different States. 30 Lacs were contributed to NFCH towards this for assisting over 366 children affected by ethnic/communal/terrorist violence in the districts of Kamrup (Assam), Kokrajhar (Assam), Ahmedabad (Gujarat) & Srinagar (Jammu & Kashmir).

Internal control systems:


CONCOR has in place well defined roles, responsibilities and authorities for employees at various levels. This coupled with robust internal MIS systems, ensures appropriate information flow to facilitate effective monitoring. Adherence to these processes is monitored through frequent internal audits. The company has an internal audit system that requires the internal audit firms to certify the appropriateness of internal controls in operation. The internal auditors are external firms directly reporting to the management at higher level, which also ensures their independence. Reports of the internal auditors are reviewed, compliances are ensured and the reports along with the compliances are put up to Audit Committee periodically.

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Board of directors:
During the financial year 2010-11, five meetings of the Board of Directors were held for transacting the businesses of the Company. Shri Vinay Mittal, Chairman / Railway Board, joined the Board of CONCOR w.e.f. 26.07.2011 as Part-time Chairman. Lt. Gen. (Retd.) Arvind Mahajan, Dr. (Professor) A.K. Bandyopadhyay and Dr. (Professor) Kausik Gupta joined the Board of CONCOR w.e.f. 13.05.2011 as Independent Directors. During the year and upto the date of this report, the directorship in the company are under: - Shri Vivek Sahai, Part-time Chairman (upto 30.06.2011) - Shri Vinay Mittal, Part-time Chairman (w.e.f. 26.07.2011) - Shri Anil Kumar Gupta, Managing Director - Shri Harpreet Singh, Director (Projects & Services) - Shri Yash Vardhan, Director (Intl. Mktg. & Ops.) - Smt. P.Alli Rani, Director (Finance) - Shri S.K. Das, Director - Shri S. Balachandran, Director (upto 31.12.2010) - Shri V. Sanjeevi, Director (upto 31.12.2010)13 - Prof. Janat Shah, Director (upto 31.12.2010) - Shri T.R. Doongaji, Director (upto 03.04.2011) - Lt. Gen. Arvind Mahajan (Retd.), Director - Dr. (Professor) A.K. Bandyopadhyay, Director - Dr. (Professor) Kausik Gupta, Director

Retirement of directors by rotation:


In terms of provisions of the Companies Act, 1956, Shri Anil Kumar Gupta, Shri Harpreet Singh and Smt. P. Alli Rani, Directors are liable to retire by rotation and being eligible, offer themselves for reappointment.

Code of conduct:
The Code of Conduct has been laid down for the Board Members and senior management. Based on the affirmation received from Board Members and Senior Management Personnel, it is hereby declared that all the members of the Board and Senior Management Personnel have affirmed compliance of Code of Conduct for the financial year ended on March 31, 2011.

Strategy to meet the challenges:


Against the backdrop of the outlook presented above, your company has formulated a three pronged strategy for maintaining its profitability in the face of the challenges of an increasingly competitive market. * Customer delights by way of efficient response and integrated multi modal services. * Increase in revenue by diversification and product differentiation

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* Management of costs by technological innovation Action plans for each of these categories in the short term less (than 2 years) medium term (2 to 5 years) and long term (more than 5 years) have been formulated.

Conclusion:
The Company acknowledges the commitment and dedication of all the employees, the support and understanding extended by the Indian Railways, Customs, Ports, Investors and above all the customers who have continued to patronize the services provided by the Company.

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Analysis and interpretation of various financial parameters:

Change in Share Price of the Company in last five years:

On the basis of long and medium term: We have taken the monthly share prices of the
company along with the benchmark in order to compute the changes in the share price of the company over the period of last five years. From the observations shown in the excel sheet, we can say: The share prices of the company were about of Rs. 2009 at the beginning of the year in Jan, 2007. This was reduced to Rs. 1882 in Feb, 2007. In Jan, 2008 the share price was about Rs.1771 which was reduced to Rs.564 in Nov, 2008 and Rs. 617 in Dec, 2008. At the beginning of Jan 2009, the share prices were about Rs.707 which was increased to Rs.1097 till the middle of the year in July, 2009. Till the end of the year 2009. The share prices of the company were increased to Rs.1309 in Dec, 2009. Jan 2010, started with a fall in the share prices of the company to Rs.1224 which got rose to Rs.1370 till the mid July, 2010. Dec started with a decrease in the share prices to Rs.1256. In Jan 2011, the share prices of the company were Rs.1205 which became Rs.1104 in July, 2011. Till the end in the Dec, 2011 the share prices were computed to be Rs.829. Recently the share price of the company is Rs.889 which has reduced from Rs.972 in Feb, 2012.

On the basis of short term: In order to calculate the changes on the daily basis, the
observations provided in the excel sheet shows us that there is always variations in the share prices of the company. The highest price over the five years is Rs.2129 and the lowest is up to Rs.620. However, there is an upward and downward trend in the share prices of the company on the daily basis but the volatility is not so much. A slow or minor change is noticed in the prices of the share prices of the company over the last five years.

The Beta Value of the company for a period of last 5 years: On the basis of daily observations of Short term: The Beta value of the company as per
calculated by the excel sheet shows that the Beta is 0.2111. This shows that the variability in the share prices of the company on the daily basis is less than the volatility of the benchmark. It shows that the shares of the company are less volatile and fluctuate less as compared to the benchmark of BSE.

On the basis of monthly observations of medium and long term: the beta value
calculated on the basis of the monthly observations of the company is 0.048939. In this even the beta value is less than the beta value of 1. This shows that the volatility of the share prices even on the basis of medium and short term basis shows that the share prices changes less as compared to the benchmark BSE which is more volatile in nature as compared to the company.

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The Risk involved in stock price movement through Standard Deviation and coefficient of variation:
The standard deviation and coefficient of variation shows the risk involved in the stock prices of the company.

On the basis of long term, medium term and short term: As per the standard
deviation and co variance calculated on the basis of the daily observations of the stock prices of the company. The standard deviation is calculated to be 0.000352. This shows that there is less risk involved in the stock prices of the company. A variance of less than 1 show that the variability in the share prices of the company is less and even the risk involved is less in the company. As per the covariance we can calculate that there is positive relation between the benchmark as well as the companys stock prices. This means that an increase in the share prices of the benchmark will lead to an increase in the companys share prices as well as vice versa. The co variance is calculated to be 7.44 which shows a positive relation in the companys stock prices with the benchmark leading to a same increase and decrease i.e. movement in the share prices over time.

Chart showing the changes in the share prices of Concor over time as compared to BSE:
25000

20000

15000 Share prices of Concor Share prices of BSE 10000

5000

The chart shows that the share prices of the benchmark i.e. BSE tends to be very volatile with large level of variation in its share prices over time. However, the share prices of Concor are very much stable with little variation in the stock prices over time.

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Chart showing the changes in the return of Concor and the BSE over the period of time:

Chart Title
8 7 6 Axis Title 5 4 3 2 1 0 Return of Concor, 2.948706309 Return of BSE, 4.243093635

Oct/11

Oct/07

Oct/08

Oct/09

Oct/10

Jan/07

Jan/08

Jan/09

Jan/10

Jan/11

Apr/07

Apr/08

Apr/09

Apr/10

This chart shows that the return of Concor is very much stable, only little fluctuations are noticed over time. Similarly, the return of the BSE benchmark is stable at approx. 4 .

Capital structure of the company for the last 5 years:


The company is following a conservative policy from the last five years. It is having no debt from the last five years. There is not even any preference share capital in the company from the last financial year.

Year

Equity capital

Preference capital

Debt

Debt equity ratio 0 0 0 0 0

Equity preference ratio 0 0 0 0 0

Apr/11

2007 2008 2009 2010 2011

64.99 129.98 129.98 129.98 129.98

0 0 0 0 0

0 0 0 0 0

Overall debt equity preference ratio 0 0 0 0 0

There is no change in the capital structure, with the Government of India continuing to hold 63.09% of the shares, the balance 36.91% being held by the public.
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Jan/12

Jul/07

Jul/09

Jul/10

Jul/11

Jul/08

Shareholding Pattern
Particulars No. of % Shares(Mn) Holdings 82.00 0.00 9.33 34.23 3.27 1.15 129.98 63.1 0.0 7.2 26.3 2.5 0.8 100

Total Promoter Holdings Total Govt Holding (Promoter + Non Promoter) Total Domestic Institutions (Banks/ FI + MF / UTI) Total Foreign Holdings (FII+NRI holdings) Total Non Promoter Corporate Holdings Total Public & Others (Individuals + HUF + Clearing members) Total

Dividend policy of the company:


The company is following a liberal dividend policy over the period of last five years. (in crores) 2011 201.48

Dividends 2007 Distributed 142.98

2008 168.98

2009 181.98

2010 181.98

Appropriations: As on 31.03.2011 Interim Dividend Proposed Final Dividend Corporate tax on dividend Transfer to general reserves Balance carried to Balance Sheet Earnings per share (Rs.) 97.49 103.99 33.06 87.59 553.82 67.39 As on 31.03.2011 77.99 103.99 30.52 78.67 495.52 60.52

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Dividend: Keeping in view the companys Capex requirements, the Board recommends a final dividend of 80% on the paid up share capital of `129.98 crores. An interim dividend @ 75% has already been paid. The total dividend payment for the year 2010-11 is 201.48 crores as compared to `181.98 crores (excluding dividend tax) for the FY 2009-10.

Dividend over time:

Year End 15-Feb-12 06-Sep-11 28-Jan-11 03-Sep-10 01-Feb-10 04-Sep-09 09-Feb-09 12-Aug-08 14-Feb-08 31-Jan-07

Dividend Per Share 7.5 8.0 7.5 8.0 6.0 8.0 6.0 7.5 11.0 11.0

Dividend (%) 75.0 80.0 75.0 80.0 60.0 80.0 60.0 75.0 110.0 110.0

Remark Interim Final Interim Final Interim Final Interim Final Interim Interim

Thus, the company is giving its shareholders with continuous dividend and it is also increasing over time. It has been increased from 181.98 in 2009-10 to 201.48 in 2010-2011. Thus, the liberal as well as stable dividend policy is followed by the company.

Liquidity position over time:


The liquidity position is usually connected with the cash which is held by the company over time. Liquidity means the ability of the company to pay its expenses in cash. Liquidity position is calculated by computing the Current Ratio of the company which is calculated by dividing the current assets of the company with its current liabilities.

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Years 2007 2008 2009 2010 2011

Current ratio 2.98 3.54 3.51 4.05 5.21

This shows that the current ratio has increased from 2.98 to 5.21 which mean that the company has large amount of current assets as compared to its current liabilities. The current assets are 5.21 times the current liabilities of the company. As a result, the liquidity position of the company is very high. However, there is always a fear of stock being held in large amount by the company as a result of which the current ratio appears to be high and the companys liquidity position appears to be excellent. In order to check the adequacy of the current ratio we take the liquidity of the past two years. The liquidity ratio is calculated by taking the liquid assets i.e. stock and any prepaid expenses deducted from current assets divided by the current liabilities. Years 2010 2011 Liquid ratio 4.498 4.658

Thus, the liquid ratio of the last two years also showed that the liquid ratio of the company i.e. the liquid assets of the company are about 4.658 times the current liabilities of the company. This shows that even the liquidity ratio has increased over two years from 4.5 to 4.7 which discloses the fact that the company has adequate amount of liquid assets with it to pay its expenses and current liabilities. Thus, we can conclude that the company is enjoying a good and effective as well as efficient liquidity position. Currently, the current ratio of company shows that the current assets of the company are approximately 5 times the current liabilities of the company and is also increasing over the passage of time with 2.98 five years before to the current position. As well as, the liquidity ratio is also increasing which is also efficient and adequate for the company to pay its current liabilities. Thus, the companys liquidity position is very efficient and adequate.

IPO issues of the company over past five years:


The company has not undergone any IPO issues over the past five years. In 2007, the company has an Equity Share capital of 64.98 crores. However, it was increased to 129.96 crores in 2008. Container Corporation Bonus Issue [with ratio of 1:1] has been recommended recently, which means shareholders of Container Corporation Limited whos names appear in the

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shareholders register of CONCOR as on the record date of the bonus issue, will get 1 bonus share for every 1 share that they hold in the company. AS AT 31.03.2011 AUTHORISED 20,00,00,000 Equity Shares of ` 10 each ISSUED, SUBSCRIBED AND PAID UP 12,99,82,794 (P.Yr : 12,99,82,794) Equity shares of 10/- each fully paid up (Includes 6,49,91,397 equity shares issued as fullypaid up Bonus Shares by capitalising General Reserves) TOTAL 200.00 AS AT 31.03.2010 200.00

129.98 129.98

129.98 129.98

Equity Capital Structure:


(Rs. in Cr) Year 2011 2010 2009 2008 2007 Authorised Issued Subscribed 129.98 129.98 129.98 64.99 64.99 Called Up 129.98 129.98 129.98 64.99 64.99 Less : Calls in Arrears 0.00 0.00 0.00 0.00 0.00 Forfeited Paid Up 0.00 0.00 0.00 0.00 0.00 129.98 129.98 129.98 64.99 64.99

200.00 129.98 200.00 129.98 200.00 129.98 200.00 100.00 64.99 64.99

Thus, we can say that there is no IPO issue by the company within 5 years. It had the share capital of 64.98 crores which was increased in 2008 to 129.98 crores by issuing bonus shares to its existing shareholders in the ratio of 1:1. Therefore, the increase in the share capital can be considered as the increase due to bonus shares issue and no IPO has been done by the company over the period of last five years.

The Credit Rating of various securities of the company:


Concor speeds up on getting a 'AAA' tag Container Corporation of India jumped 8.08% to Rs 1042.65 at 10:05 IST after credit rating agency, CARE assigned a 'AAA' rating to the company.
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Meanwhile, the BSE Sensex was up 101.92, or 0.70%, to 14,623.81. On BSE, 7268 shares were traded in the counter. The stock hit a high of Rs 1080 and a low of Rs 1000 so far during the day. Issuers with 'AAA' rating are considered to be of the best credit quality, offering highest safety of timely servicing of debt obligations. Such issuers carry minimal credit risk. The rating takes into account Container Corporation of India's position as the country's dominant container railroad player, majority ownership with the Government of India (GoI), zero-debt status, cash-rich balance sheet and comfortable profitability profile. The rating also factors in the company's wide network of terminals spread across the country and an established client base. Going forward, ability to maintain growth in turnover and sustain profitability margins, in light of competition from private players and slowdown in cargo traffic in the current economic situation, would be the key rating sensitivities. The Government of India holds 63.08% stake in Container Corporation of India which is known by its acronym Concor. Concor, a public sector undertaking under Ministry of Railways, is primarily engaged in container rail transportation business, inland container depot (ICD) operations, warehousing and road transportation. Concor also provides transit warehousing for Exim (export and import) cargo, bonded warehousing and provides air cargo facilities. Thus, we can conclude that M/s. CARE (Credit Analysis and Research Limited) has reaffirmed the credit rating of CARE AAA (Is) {Triple A (Issuer)}to CONCOR. The symbols of CARE AAA (Is) are considered to be of the best credit quality, offering highest safety for timely servicing of debt obligations.

Track the news relevant to the company in chronological order in last two years:

1.Container Corp Q3 net profit at Rs 201 cr

7.34 Pm | 22 Jan 2010 | Source: CNBC-TV18


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2. Container Corp warehouse, goods damaged due to fire 1 pm | 12 Apr 2010 | Source: Reuters 3. Sell Concar; target of Rs 1194: Angel 4.08 pm | 24 Jun 2010 | Source: Moneycontrol.com 4. Container Corp Q1 net profit down at Rs 194 cr 6.02 pm | 19 Jul 2010 | Source: Moneycontrol.com 5. Container Corporation Q1 net profit at Rs 194 cr

10.00 am | 20 Jul 2010 | Source: CNBC-TV18 6. Concor Sept qtr PAT seen at Rs 186.5 cr: Angel

3.14 pm | 06 Oct 2010 | Source: Moneycontrol.com 7. Concor Q2 net profit at Rs 207cr

8.26 am | 20 Oct 2010 | Source: Moneycontrol.com 8. Container Corporation of India reports Rs 944.18 crore turnover for quarter ended Sep 2010

11.14 Pm | 20 Oct 2010 | Source: Moneycontrol.com 9. Buy Container Corp; target of Rs 1500: Aditya Birla Money 6.10 pm | 10 Nov 2010 | Source: Moneycontrol.com 10.Transport Corp to invest Rs 300-500 mn in JV with Concor 8.39 am | 14 Dec 2010 | Source: Reuters 11. E-Tendering - Registration/ Training

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23.04.2011 12.Conference Call on Q4 earnings of FY 2010-11 06.04.2011 13.Introduction of E-tendering in CONCOR 31.03.2011 14.B.O.D Meeting Notice 31.03.2011 15.Container Corporation of India Ltd.,(CONCOR) invites Expressions of Interest for development & operations of perishable cargo business from Singur, Hooghly (West Bengal). 09.03.2011 16.INVITATION OF EXPRESSION OF INTEREST (EOI) FOR SETTING UP OF RAILLINKED CONTAINER TERMINAL BETWEEN SANJAN-BHILAD-VAPI RAILWAY STATION IN GUJARAT. 07.03.2011 17.Inauguration of CONCOR's 62nd Terminal PSCT Vallardpadam 25.02.2011 18.Expressions of Interest for development & operations of perishable cargo business from Bagdogra, Siliguri & New Jalpaiguri area 25.02.2011 19.Notice of Record date for Interim Dividend 24.01.2011

20.Expression of interest 08.08.2011 21 .EOI-development of warehouses at multi-modal logistics park, ahmedabad 10.08.2011 22.EOI for DEVELOPMENT OF CEMENT HUB AT MULTI-MODAL LOGISTICS PARK, KHODIYAR, AHMEDABAD 10.08.2011
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23.E-Filing at CONCOR-DRT - Public Notice 12.08.2011 24.Corrigendum to EOI-DEVELOPMENT OF WAREHOUSES AT MULTI-MODAL LOGISTICS PARK, AHMEDABAD 12.08.2011 25.Corrigendum-II to EOI for DEVELOPMENT OF CEMENT HUB AT MULTI-MODAL LOGISTICS PARK, KHODIYAR, AHMEDABAD 24.08.2011 26.Revised Public Tariff for EXIM reefer traffic wef 22.11.2011 23.11.2011 26.Engagement of business associates for promotion of domestic cargo logistics 30.11.2011 27.Invitation of Expression of Interest (EOI) Rail Linked Container and Freight Terminal between Ludhiana Gill - Quila Raipur Ahmedgarh Railway Stations in Punjab. The date of Submission has been extended from 21.12.2011 to 16.01.2012 vide Corrigendum dated 22.12.2011 02.12.2011 28.B.O.D Meeting Notice 13.01.2012 29.Conference Call on Q3 earnings of FY 2011-12 02.02.2012 30.Expression of interest for hiring of Office Space 10.02.2012

Analyse the relationship between Interest Payment and Profitability of the company for last five years:
Interest payment: From the past five years the company is having neither debenture nor any sort of secured or unsecured loan. Thus, the company is not supposed to give any
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kind of interest on any sort of debt. Therefore, the company is not liable for interest payment on any kind of loans.

Profitability: Profitability refers to the money or cash of the company which is invested in some beneficial investment in order to earn interest or benefits over the extra money which is held by the company. Profitability of a company can be calculated by the income which is received by the company from the outside sources i.e. the investments of the company due to which the idle cash reserves of the company are utilised and help the company to earn benefits over that money in the form of interest and income

As on 31.03.2011 Interest earned on: -Short Term Bank Deposits /ICDs (TDS ` 14.61Crore; Previous Year: 20.13 Crore) - Loans to Employees - Loan to Wholly Owned Subsidiary FHEL - (TDS ` 0.05 Crore; Previous Year: Nil Crore) - Loan to IRWO (Note No.13, Schedule 11) (TDS ` NIL Crore; Previous Year: ` 0.01 Crore) Dividend from JV Company Profit on Sale of Fixed Assets Excess provision written back (Note No.26, Schedule11) Miscellaneous Income Share in Profit of Business Arrangement (Note No.17 (b), Schedule11) TOTAL 145.85 1.03 0.49 0.01 5.30 0.08 27.66 21.64 202.06

As on 31.03.2010

147.31 0.78 0.02 0.30 0.01 15.74 15.78 0.11 180.05

Thus, we can derive a relation between the interest payment and profitability of the company. While the interest payment of the company is nil over the passage of five years due to the absence of debt i.e. the debentures as well as any type of secured and unsecured loan of the company. The company is free from any kind of obligation and is not supposed to pay any kind of interest to anyone. However, the profitability of the company is excellent. The company has invested its cash in various kinds of investment like investment in foreign ventures, joint ventures, subsidiaries as well as foreign subsidiaries. In addition to this, the company has also invested its money y advancing loans to its subsidiaries as well as its employees.

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In return to the amount, this is invested by this company in either investment or any loan advanced by the company. It receives some amount of interest which shows the profitability of the company. The interest received by the company has increased over time from 180.05 to 202.06 crore. This means that the company is earning about 200 crore as interest being earned by it on investments and the loans advanced by the company. Thus, after analysing it we can say that the company is earning a large amount from the interest which is earned by it. This means that the company is having a strong profitability. Whereas, the company is not liable to make any kind of interest payment as the company do not have any debt on its part. Therefore, the companys financial structure is very strong as the company has no interest payment and the profitability is adequate and well maintained up to 200 crore is being received as income from the money being invested by it in beneficial ventures and lan and advances of the company as well.

Analyse the Inventory position of the company in last five years:


INVENTORIES: The company being a service company does not have stock in trade. The inventory is represented by stores and spares kept by the company for maintenance of its own equipments.

However, the stores and spares which are maintained by the company undergo the following procedure: (a) The inventory of the company consisting of stores and spare parts has been physically verified by the management on test check basis. Even, the frequency of verification is reasonable. (b) The procedures of physical verification of inventories followed by the management are generally reasonable and adequate in relation to the size of the company and the nature of its business. (c) The company is maintaining proper records of inventory. However, the discrepancies noticed on verification between the physical stocks and the book records are not material.

As per the rules of the company the Stores and spare parts are valued at cost on weighted average basis. Provision for obsolescence is made, whenever required.

Inventories:
As at 31.03.2011 (As taken, valued & certified by the Management) Stores & Spare Parts (At Cost) (Note No.20, Schedule 11)
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(in crore) As at 31.03.2010 7.25

6.95

Less: Provision for Obsolete Stores

0.69

6.26 6.26

0.26 6.99 6.99

Thus, this shows that the inventory position of the company is adequate. As the company deals in services, there is no possibility of any kind of inventory in the company. However, the stores and spares which are held by the company are considered as the inventory being held by the company. The stores and spares as the inventory of the company are kept with the company with utmost care and cautiousness. The inventory undergoes proper test and verifications from time to time. However, the procedures for the verifications are very proper and up to date or advanced. The inventory stock has also been decreased over time from 6.99 in 2010 to 6.26 in 2011. This shows that the company has reduced its stock of the spares and stores with the passage of time and is having quite efficient as well as effective inventory position over the passage of time.

Make a comparative study on the basis of above parameters with the company in the same industry:
The major competitor of Concor is ABC India Limited. However, there are a large number of competitors of Concor like Agarwal Industrial Corporation Limited, Coastal Roadways Limited, All Cargo Logistics Limited and not to mention the ABC India Limited. ABC India Limited is an India- based company that offers complete logistics solutions. The companys tumkey projects include custom handling and transportation. It has a network of more than 150 locations all over India and the associated across the world. ABC India Limited has its own fleet of trucks, hydraulic trailers and prime movers that have a capacity to carry a single package of up to 800 megatons. ABC India Limited also earns more than 15000 cubic meters of storage space and advanced equipment to facilitate loading and unloading of customers cargo. The company has its own custom house agent license to facilitate the customs clearance of imported or exported cargo.

A comparative study of ABC Limited with Container Corporation of India:

Company Concor ABC India Ltd

Current price 889.60 158.55

Change EPS (%change) .90(.10%) 13.20 16.15(11.34%) 15.53

PE 67.39 10.21

Thus, we can analyse that the current price of our company is far much more as compared to the current price of the share of ABC India Limited. The current price of our company is Rs. 889.60 and the current price of ABC India Ltd. is 158.55. The share
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prices of the company are very stable with a little change of .10% over time. However, the changes and fluctuations in the share prices of the ABC India limited are very much intense to about 11.34% over the time. The EPS provided by our company is 13.20 which are relatively less as compared to the EPS of the competitor company i.e. 15.53. This means that the earning per share of the company is less than the other company i.e. the company is providing its shareholders with fewer earnings as compared to the competitor. In spite of this, the PE of our company i.e. the price earnings ratio of the company is very much better than provided by the competitor company. The company has PE of 67.39 which is far much better than 10.21 which is provided by the ABC India Limited. Therefore, we can conclude that in stock prices comparison, our company is far better than its nearest competitor. The company excels its competitor in current price as well as is less fluctuating than the other company. It has less EPS than its competitor but it has far better PE of 67.39 as comparison to its competitor in the same industry i.e. ABC India Limited.

Comparison of key ratios of the company:

Ratios Debt-Equity Ratio EPS Current ratio Inventory Long term debt equity ratio

Concor 0 67.42 5.21 6.26 0

ABC India Ltd. 1.6 10 1.5 623.3 1.0

Thus, we can analyse that the when we compared the key ratios of our company with the other company we can draw the following observations:

1. On the basis of Debt Equity Ratio, our company is not having any debt over the past five years which means that the company is not having any debt equity ratio or the debt equity ratio of the company is nil. Whereas as compared to the other company, it is having a debt equity ratio of 1.6 which means that the debt of the company is far much as compared to the equity of the company and is a risky company to deal with. 2. According to the Current ratio, the liquidity of the company is 5 times its current liabilities. However, the current ratio of the other company is 1.5 which means that our company is more liquid and able to pay its current liabilities as compared to the other.

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3. Our company is having better EPS than the other company and is better to satisfy the shareholders than the other company. 4. The competitor is having large amount of inventory whereas the inventory of our country is far less which ensures far better liquidity as compared to the other company.

5. At last, the company is not having any long term debt whereas the long term debt of the other company is 1.

Thus, on analysing our company with the other company of the same industry we can conclude that our company is having better liquidity and inventory position than the other company. The current ratio of the company is far more and the inventory with the company is far less than the other company. The company is not having any long term debt or loans whereas the other company is having the debt equity ratio of 1.6 and long term debt ratio of 1 which means that the other company is more risky as compared to our company. If we talk about the share prices of the company, the company is having more EPS, PE and is far much stable than the other company. Thus, in short we can say that as compared to the ABC India Limited Concor is better and more financially secured and strong and has a better financial structure than the compared company.

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Bibliography

The Reference materials used to prepare this report are as follows:

http://www.concorindia.com/index.asp http://www.indiainfoline.com/Markets/Company/Research/Daily-SharePrices/Container-Corporation-Of-India-Ltd/531344 http://www.wikipedia.com http://www.bseindia.com http://economictimes.indiatimes.com/container-corporation-of-indialtd/quotecompare/companyid-4764.cms Annual report of the company

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Glossary
Payout Ratio: The proportion of earnings available to common stockholders, which is paid out as DIVIDENDS. Price-earnings Ratio: The market price of a share divided by EARNINGS PER SHARE. This number, also known as the 'Multiple', or 'Multiplier', is often used by investors and analysts to determine the upward potential of a share by comparing its multiplier to that of the particular industry as a whole. The multiplicand can be the expected earnings per share. Public Issue: An invitation to the public at large to subscribe to shares or other securities of a company. A public issue entails numerous tasks such as organizing the syndicate of UNDERWRITERS, brokers and others, preparation of the PROSPECTUS and fulfilment of several formalities including, notably, prior approval from SEBI and the Registrar of Companies. P/E ratio can be as high as the anticipated growth rate of a company. Balance Sheet A statement of the financial position of an enterprise, as on a certain date, and in a certain format showing the type and amounts of the various ASSETS owned, LIABILITIES owed, and shareholder's funds. Beta: A measure of the volatility of a stock in relation to the market. More specifically, it is the index of SYSTEMATIC RISK, indicating the sensitivity of return on a security or a PORTFOLIO to return from the market. It is the slope of the regression line, known as the CHARACTERISTIC LINE, which shows the relationship of an ASSET with the market. For measuring market returns, a proxy such as a broad-based index is used. Thus, if b exceeds 1, the security is more volatile than the market, and is termed an 'Aggressive Security'. For example, a beta of 1.3 implies that a security's return will increase by 13 percent when the return from the market goes up by 10 percent. An asset whose beta is less than 1 is termed a 'defensive security'. Based on this, an aggressive growth strategy would be to invest in high beta stocks when the market is poised for an upswing; similarly, a switchover to low beta stocks is recommended when a downswing is imminent. Bond A long-term debt instrument on which the issuer pays interest periodically, known as 'Coupon'. Bonds are secured by COLLATERAL in the form of immovable property. While generally, bonds have a definite MATURITY, 'Perpetual Bonds' are securities without any maturity. In the U.S., the term DEBENTURES refers to long-term debt instruments which are not secured by specific collateral, so as to distinguish them from bonds.

Bonus Shares The issue of shares to the shareholders of a company, by capitalizing a part of the company's reserves. The decision to issue bonus shares, or stock DIVIDEND as in the U.S., may be in response to the need to signal an affirmation to the expectations of shareholders that the prospects of the company are bright; or it may be with the motive of bringing down the share price in absolute terms, in order to ensure continuing investor interest. Following a bonus issue, though the number of total shares increases, the
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proportional ownership of shareholders does not change. The magnitude of a bonus issue is determined by taking into account certain rules, laid down for the purpose. For example, the issue can be made out of free reserves created by genuine profits or by share PREMIUM collected in cash only. Also, the residual reserves, after the proposed capitalization, must be at least 40 percent of the increased PAID-UP CAPITAL. These and other guidelines must be satisfied by a company that is considering a bonus issue. Business Risk The risk of business failure, which stems from factors such as the cost structure of a venture (i.e., FIXED COST versus VARIABLE COST), intra-industry competition, and government policies. It is reflected in the variability of profits before interest and taxes. Blue Chip A share of a company that is financially very sound, with an impressive track record of earnings and DIVIDENDS, and which is highly regarded for its competent management, quality products and/or services. Examples in India are Hindustan Lever, Gujarat Ambuja Cements, and Reckitt & Colman among others. Contingent Liabilities The liabilities that may arise as a result of some future event which, though possible, is deemed unlikely; for example, a court judgement on a pending lawsuit may impose a financial payment on a company. Corporate Governance The manner in which a company is managed. The term, Corporate Governance connotes the importance of responsibility and accountability of a company's management to its shareholders and other stakeholders, viz., employees, suppliers, customers and the local community. Hence it calls for ethics, morals and good practices in running a company. Good corporate governance would be reflected in generally good performance, clean business practices, improved disclosure and sound policies relating to capital expenditure, financing and dividend payment, which will enhance shareholders' wealth. Cost of Capital The weighted average cost for long-term funds raised by a company from different sources such as term loans, DEBENTURES/BONDS, PREFERENCE SHARES, EQUITY SHARES and retained earnings. Credit Rating: The exercise of assessing the credit record, integrity and capability of a prospective borrower to meet debt obligations. Credit rating relates to companies, individuals and even countries. In the case of a company's debt instrument, such formal evaluation with the aid of quantitative and qualitative criteria, culminates in the assignment of a letter rating to the security. The instrument could be a DEBENTURE, FIXED DEPOSIT OR COMMERCIAL PAPER. The rating represents in rating agency's opinion at that time on the relative safety of timely payment of interest and principal associated with the particular debt obligation. This opinion rests on the agency's assessment of the willingness and capability of the issuer to meet the debt obligations. The methodology is to examine key factors like the business, the management, regulatory environment, competition and fundamental aspects including the financial position. A high credit rating can help in reducing the interest cost and also facilitate placement of the debt security. The rating agencies in India are Credit Rating and Information Services of India Limited (CRISIL), ICRA, and Credit Analysis and
32

Research (CARE). A recent development in India is the rating of fixed deposits of banks, STRUCTURED DEBT OBLIGATIONS and securitized debts. Moreover, performance ratings can now be obtained by real estate developers and LPG bottlers. It is expected that ratings will soon be extended to chit funds and MUTUAL FUNDS, Besides, a general credit rating service not linked to any debt issue may be availed of by a company. This service is already offered by Indian rating firms. CIRSIL, for example, calls it Credit Assessment. This rating can be used in negotiations with new bankers, for performance guarantees, etc. International rating agencies also undertake sovereign rating, i.e. of countries. Credit appraisal also covers individuals. This type of information is useful to consumer credit firms Current Assets: The assets which are expected to be converted into cash or consumed during the 'Operating Cycle' of a business. The operating cycle is the time taken for the sequence of events from the purchase of raw materials to the collection of cash from customers for goods sold. Hence, it is also known as the 'Cash Conversion Cycle'. However, if raw materials are bought on credit, then the cash conversion cycle is shorter than the operating cycle by the period of credit available. Examples of current assets are cash, short-term investments particularly MONEY MARKET securities, raw materials, work-in-process, finished goods, and ACCOUNTS RECEIVABLE. Current Liabilities: The claims against a company that will become due within a year. These are mainly LIABILITIES on account of purchase of materials or services rendered to the firm. Examples include accounts and PROMISSORY NOTES payable, as well as taxes and loan repayments falling due within the year. Current Ratio This ratio is a measure of a company's ability to pay its short-term debts as they become due. It is computed from a BALANCE SHEET by dividing CURRENT ASSETS by CURRENT LIABILITIES. In India, the general norms for this liquidity ratio is 1.33 Debenture A debt security issued by companies, having a certain MATURITY and bearing a stated COUPON RATE. Debentures may be unsecured or secured by ASSETS such as land and building of the issuing company. Debenture holders have a prior claim on the earnings (coupon) and ASSETS in the event of liquidation, as compared to PREFERENCE and equity shareholder` Debt-Equity Ratio This ratio is used to analyze FINANCIAL LEVERAGE. It is a structural ratio that gauges the level of debt financing, and is worked out by dividing total debt, shortterm and long-term, by NET WORTH. The denominator would comprise total equity of common stockholders and PREFERENCE capital. Depreciation An accounting process by which the cost of a FIXED ASSET, such as a building or machinery, is allocated as a periodic expense, spread over the depreciable life of the ASSET. The term also means the amount of expense determined by such a process.
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Sometimes, it is called AMORTIZATION when the ASSET is intangible or 'depletion' when the asset is a natural resource, such as minerals. There are different methods of depreciation such as the Straight Line Method and the Written Down Value (WDV) method. Dividend The payment made by a company to its shareholders. Legal and financial considerations have a bearing on the level of dividend to be paid. For instance, dividends may be paid out of profits alone; so also, a growing company needs funds to finance its expansion and hence may pay only a modest dividend, in order to conserve resources. Earnings Per Share (EPS) The net profits of a company expressed on a per (EQUITY) SHARE basis. It is arrived at by dividing the figure of profits after taxes and DIVIDENDS paid on PREFERENCE SHARES, if any, by the number of equity shares outstanding. Therefore, it does not reveal the potential impact of dilution in earnings on account of securities such as convertibles or warrants that may be outstanding. Moreover, an improvement in EPS does not necessarily indicate a more productive use of the total amount of funds available with a firm. Economic Value Added (EVA) A tool for evaluating and selecting stocks for investment, and also used as a measure of managerial performance. An American consultancy firm, Stern Stewart is credited with the development of this tool in the late eighties. It is calculated by subtracting the total cost of capital from the after-tax operating profits of a company. EVA = After-tax Operating Profits Total cost of capital Equity Share A security that represents ownership interest in a company. It is issued to those who have contributed capital in setting up an enterprise. Apart from a PUBLIC ISSUE, equity shares may originate through an issue of BONUS SHARES, CONVERTIBLE securities, WARRANTS, GDRS, etc. An alternative term that is sometimes used is 'COMMON STOCK' or simply, 'STOCK'. Forfeiture It means the deprivation of shares held by an investor, usually as a consequence of default in paying money, called upon allotment, to the company. As a result of a forfeiture, the investor ceases to be a shareholder insofar as the forfeited shares are concerned; however, he remains liable for the sum due. Index Fund This is a MUTUAL FUND whose PORTFOLIO mirrors a market index. The investments of such a fund are in the same stocks as those comprising the selected market index and in the same proportion as their weights in the index. Setting up the portfolio is called 'Indexing'. This innovation in the U.S. sprung up as a result of research findings that the Standard & Poor's 500-stock index (a proxy for a market portfolio) had outperformed many INSTITUTIONAL INVESTORS during 1960s and 1970s. Since the portfolio of an index fund replicates a certain index, the fund saves substantially on research and administrative expenses. The Index Equity Fund launched by the Unit Trust of India in May 1997 is based on stocks figuring in the SENSITIVE INDEX and the NSE-50 of the NATIONAL STOCK EXCHANGE.

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Listing: The grant of approval for dealings in a certain security (e.g., share or DEBENTURE) at a stock exchange. Consequently, companies must pay their respective exchanges, an annual listing fee. Mutual Fund: An organization that mobilizes the surpluses of savers and invests the same in different securities. Thus, an individual who owns a share in a mutual fund has a proportionate claim on the PORTFOLIO of investment vehicles held by the fund. In financial nomenclature, the term mutual fund refers to the 'Open-end' type of Investment Company which has no limit on the number of shares that it can issue. The Unit Trust of India's, Units 1964 scheme is a prime example. However, in common parlance, the term mutual fund refers to both the OPEN-END and CLOSED-END types of investment companies. Managing an open-end fund however, involves some distinct challenges. The portfolio manager must estimate the maximum possible demand for REDEMPTION and accordingly retain some liquid ASSETS. Moreover, daily calculation of the NAV requires a sophisticated information system. The SUBJECT-WISE LISTING mentions the different types of mutual funds that are explained elsewhere in this book which is linked to the PAID-UP CAPITAL. National Stock Exchange (NSE) It is a nationwide screen-based trading network using computers, satellite link and electronic media that facilitate transactions in securities by investors across India. Open-end Fund A mutual fund which continuously issues new shares or units to meet investors' demand. Simultaneously, it redeems shares for thse who want to sell. Hence, there is no limit on the number of shares that can be issued, and in fact, the number of shares outstanding keeps changing because of the continuous influx and exit of investors. Due to the constant changes in the aggregate portfolio value and the number of shares, the NET ASSET VALUE keeps changing. The purchase and sale prices for redeeming or selling shares are set at or around the net asset value. Synergy A notion of disproportionately higher financial benefits expected by combining complementary businesses, which would exceed the performances of the entities achieved separately. For example, the MERGER some years ago of the two electrical equipment giants in Europe, namely ASEA and Brown Boveri with individual strengths in marketing and R&D respectively, was effected to reap the benefit of synergy. Systematic Risk The portion of risk or variability that is caused by factors, which affect the returns on all securities. Major political, economic and social phenomena, for instance, would affect all stocks, which imply that systematic risk cannot be eliminated by DIVERSIFICATION. Therefore, it is also termed 'Undiversifiable RISK'. However, by diversifying internationally, an investor can reduce the level of systematic risk of a PORTFOLIO; the lack of coincidence between economic cycles of different countries helps to achieve this. Systematic risk of a financial ASSET is indicated by the BETA coefficient. It shows the sensitivity of return on a security or a portfolio to return from the market.

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Unsystematic Risk A risk that is unique to a firm or industry. The returns on an ASSET can be affected by occurrences such as a labour strike, changes in consumer preferences, or even wrong management decisions. The adverse impact of any such occurrence would be confined to one or a few firms. Therefore, these unsystematic variations occur independently of broad price movements in the market. By having a diversified PORTFOLIO, it is possible to neutralize unsystematic risk, which is also therefore termed, 'Diversifiable Risk'. Generally, firms which are less vulnerable to macroeconomic changes, as e.g., those manufacturing consumer non-durables (e.g., Hindustan Lever and Colgate) would have less SYSTEMATIC RISK and a higher degree of unsystematic risk. Capital employed: The value of all resources available to the company, typically comprising share capital, retained profits and reserves, long-term loans and deferred taxation. Viewed from the other side of the balance sheet, capital employed comprises fixed assets, investments and the net investment in working capital (current assets less current liabilities). In other words: the total long-term funds invested in or lent to the business and used by it in carrying out its operations. Cash flow: The movement of cash in and out of a business from day-to-day direct trading and other non-trading or indirect effects, such as capital expenditure, tax and dividend payments. Initial public offering: An Initial Public Offering (IPO being the Stock Exchange and corporate acronym) is the first sale of privately owned equity (stock or shares) in a company via the issue of shares to the public and other investing institutions. In other words an IPO is the first sale of stock by a private company to the public. IPOs typically involve small, young companies raising capital to finance growth. For investors IPO's can risky as it is difficult to predict the value of the stock (shares) when they open for trading. An IPO is effectively 'going public' or 'taking a co return on investment. Another fundamental financial and business performance measure.This term means different things to different people (often depending on perspective and what is actually being judged) so it's important to clarify understanding if interpretation has serious implications. Many business managers and owners use the term in a general sense as a means of assessing the merit of an investment or business decision. 'Return' generally means profit before tax, but clarify this with the person using the term - profit depends on various circumstances, not least the accounting conventions used in the business. In this sense most CEO's and business owners regard ROI as the ultimate measure of any business or any business proposition, after all it's what most business is aimed at producing - maximum return on investment, otherise you might as well put your money in a bank savings account. Return On Investment: Profits derived as a proportion of and directly attributable to cost or 'book value' of an asset, liability or activity, net of depreciation. In simple terms this the profit made from an investment. The 'investment' could be the value of a whole business (in which case the value is generally regarded as the company's total assets minus intangible assets, such as goodwill, trademarks, etc and liabilities, such as debt. N.B. A company's book value might be higher or lower than its market value); or the investment could relate to a part of a business, a new product, a new factory, a new piece of plant, or any activity or asset with a cost attached to it.
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The main point is that the term seeks to define the profit made from a business investment or business decision. Bear in mind that costs and profits can be ongoing and accumulating for several years, which needs to be taken into account when arriving at the correct figures. Working capital: Current assets less current liabilities, representing the required investment, continually circulating, to finance stock, debtors, and work in progress.

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Annexure
FINANCIAL RESULTS Particulars Income from operations Profit before depreciation & tax (PBDT) Profit before tax (PBT) Provision for tax Profit after tax (PAT) Profit available for appropriations APPROPRIATIONS: Interim Dividend Proposed Final Dividend Corporate tax on dividend Transfer to general reserves Balance carried to Balance Sheet Earnings per share (Rs.) 2010-11 3828.12 1203.50 1058.27 179.77 878.50 875.95 97.49 103.99 33.06 87.59 553.82 67.39 (` in crores) 2009-10 3705.68 1141.69 1006.59 219.92 786.67 786.69 77.99 103.99 30.52 78.67 495.52 60.52

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BALANCE SHEET AS AT 31ST MARCH 2011


SCHEDULE SOURCES OF FUNDS SHAREHOLDERS' FUNDS Share Capital Reserves & Surplus DEFERRED TAX LIABILITY (NET OF DEFERRED TAX ASSET) TOTAL APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation/Amortisation Net Block Add: Capital Works in progress (Including advances) INVESTMENTS CURRENT ASSETS, LOANS & ADVANCES (A) Current Assets (B) Loans & Advances LESS: CURRENT LIABILITIES & PROVISIONS (A) Current Liabilities (B) Provisions NET CURRENT ASSETS Significant Accounting Policies Notes on Accounts TOTAL AS AT 31.03.2011 (in Crore) AS AT 31.03.2010

129.98 4,847.83 4,977.81 228.56 5,206.37

129.98 4,206.42 4,336.40 210.90 4,547.30

3,286.15 959.13 2,327.02 319.14 2,646.16 243.96

2,988.86 825.00 2,163.86 206.43 2,370.29 240.54

2,392.69 474.27 2,866.96

2,092.54 479.84 2,572.38

396.64 154.07 550.71 2,316.25

489.94 145.97 635.91 1,936.47

5,206.37

4,547.30

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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2011

SCHEDULE

YEAR ENDED 31.03.2011

( In Crore) YEAR ENDED 31.03.2010 3,705.68 180.05 3,885.73 2,517.40 83.86 142.78 135.10 2,879.14 1,006.59 202.78 17.14 786.67 0.49 (0.47) 786.69

INCOME Income from Operations 3,828.12 Other income 202.06 TOTAL 4,030.18 EXPENDITURE Terminal and Other Service Charges 2,612.42 Employees Remuneration & Benefits 87.43 Administrative & Other Expenses 126.83 Depreciation/Amortisation 145.23 TOTAL 2,971.91 PROFIT BEFORE TAX 1,058.27 LESS: PROVISION FOR TAX Current Tax 162.11 Deferred Tax 17.66 PROFIT AFTER TAX 878.50 Add/(Less): Prior period adjustments (Net) 0.01 Add/(Less): Tax adjustments for earlier years (Net) (2.56) NET PROFIT 875.95

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