Group Number :11Abhishek Aggarwal(003)Akash Aggarwal(009)Faraz Shahid(035)Sanjay Bhati(091)

Analysis of

CAPITAL STRUCTUREOf

It industry

Capital Structure

The capital structure of a firm is the mix of different securities issued by

the firm to finance its operations.

Sources of capital

• Ordinary shares (common stock)• Preference shares (preferred stock)• Debts

IT INDUSTRY IN INDIA

The Indian information technology (IT) industry has played a major role in placing India on the international map. The industry is mainly governed by IT software and facilities for instance System Integration, Software experiments, Custom Application Development and Maintenance (CADM), network services and IT Solutions. According to Nasscom's findings Indian IT-BPO industry expanded by 12% during the Fiscal year 2009 and attained aggregate returns of US$ 71.6 billion. Out of the derived revenue US$ 59.6 billion was solely earned by the software and services division. Moreover, the industry witnessed an increase of around US$ 7 million in FY 2008-09 i.e. US$ 47.3 billion against US$ 40.9 billion accrued in FY 2008-09

Future of Indian IT Industry

The Indian IT sector persists to be one of the flourishing sectors of India , indicating a speedy expansion in the coming years. As per NASSCOM, the Indian IT exports are anticipated to attain US$ 175 billion by 2020 out of which the domestic sector will account for US$ 50 billion in earnings. 

In total the export and domestic IT sector are expected to attain profits amounting to US$ 225 billion.

analysis of CAPITAL STRUCTURE

Headquarters Bangalore Area, India

Industry Information Technology and Services

Company Size 110,561 employees

Founder Chair person Mr Narayan Murthi

Founded 1981

Contact

INFOSYS

INFOSYSInfosys(Rs in Crores) 2005 2006 2007 2008 2009

Equity share capital 135.5 138 286 286 286

secured Debts 0 0 0 0 0

unsecured debts 0 0 0 0.00 0.00

Total 135.5 138 286 286 286

Capital Structure (in percentage)

Equit Mix 100 100 100 100 100

Debt Mix 0 0 0 0 0

Beta 1.2 1.2 1.2 1.2 1.2

Rf 6 6 6 6 6

Rm 68.03 14.31 11.72 23.89 -36.19

Cost ofEquity 80.436 15.972 12.864 27.468 -44.628

Cost of Debt 0 0 0 0

Weigthed Average cost of Capital 80.436 15.972 12.864 27.468 -44.628

Year of Inception : 1986

Year of Incorporation : 1994

President & MD : Mr. B. Ramaswamy

EVP & COO : Mr. P. Srikar Reddy

Employee Strength : 2,710 employees

SONATA SOFTWARE

SONATA SOFTWARESonata Software

(Rs in Crores) 2005 2006 2007 2008 2009Equity share capital 10.52 10.52 10.52 10.52 10.52

secured Debts 0 0 0 0 0

unsecured debts 0 0 0 0 0

Total 92.55 10.52 10.52 10.52 10.52

Capital Structure (in percentage)

Equit Mix 100 100 100 100 100

Debt Mix 0 0 0 0 0

Beta 1.2 1.2 1.2 1.2 1.2

Rf 6 6 6 6 6

Rm 68.03 14.31 11.72 23.89 -36.19

Cost ofEquity 80.436 15.972 12.864 27.468 -44.628

Cost of Debt 0 0 0 0 0

Weigthed Average cost of Capital 80.436 15.972 12.864 27.468 -44.628

BLUESTAR INFOTECH

Headquarters Mumbai, India

Industry Information Technology and Services

Company Size 10,001 or more employees

Founded 1983

BLUESTAR INFOTECHBlue star infotech(Rs in Crores) 2005 2006 2007 2008 2009

Equity share capital 10 10 10 10 10

secured Debts 0.07 0.04

unsecured debts 1.00

Total 10.07 10.04 10 10 11

Capital Structure (in percentage)

Equit Mix 99.30487 99.60159 100 100 90.909091

Debt Mix 0.695134 0.398406 0 0 9.0909091

Beta 1 1 1 1 1

Rf 6 6 6 6 6

Rm 68.03 14.31 11.72 23.89 -36.19

Cost ofEquity 68.03 14.31 11.72 23.89 -36.19

Cost of Debt 12.36 12 5.03 9.023 5.8

Weigthed Average cost of Capital 67.64302 14.3008 11.72 23.89 -32.37273

HCL

• Revenue            USD 5 Billion• Employees         58,000 (2009)• Founded in 1976• Founded By Mr.Shiv Nadar

HCL TECHNOLOGIESHCL Technologies (Rs in Crores) 2005 2006 2007 2008 2009

Equity share capital 63.84 64.69 132.74 133.27 134.05

secured Debts 96.42 13.17 40.77 25.24 123.81

unsecured debts 0.27 0.21 0.17 0.09 389.92

Total 160.53 78.07 173.68 158.6 647.78

Capital Structure (in percentage)

Equit Mix 39.7682676 82.86153 76.42791 84.029 20.69375

Debt Mix 60.2317324 17.13847 23.57209 15.971 79.30625

Beta 1.09 1.09 1.09 1.09 1.09

Rf 6 6 6 6 6

Rm 68.03 14.31 11.72 23.89 -36.19

Cost ofEquity 73.6127 15.0579 12.2348 25.5001 -39.9871

Cost of Debt 11.97 13.3 10.03 9.842 6.88

Weigthed Average cost of Capital 36.4842339 14.75662 11.71508 22.99935 -2.81856

TCS

Headquarters Bombay Area, India

Industry Information Technology and Services

Company Size 120,000 employees

Founded 1968

TCSTCS (Rs in Crores) 2005 2006 2007 2008 2009Equity share capital 197.86 197.86 97.86 48.93 48.01

secured debts 32.63 9.27 41.76 26.52 111.01

Unsecured debts 7.74 8.98 8.98 8.98 9.73

Total 238.23 216.11 148.6 84.43 168.75

Capital Structure (in percentage)

Equit Mix 83.05419 91.55523 65.85464 57.95333 48.93

Debt Mix 16.94581 8.444773 34.14536 42.04667 51.07

Beta 0.89 0.89 0.89 0.89 0.89

Rf 6 6 6 6 6

Rm 59 37.4 31.12 29.7 37.1

Cost ofEquity 53.17 33.946 28.3568 27.093 33.679

Cost of Debt 8.6 12.64 6.75 18.7 18.42

Weigthed Average cost of Capital 44.17449 31.09001 18.69732 15.77992 16.573206

Headquarters Mahbūbnagar Area, India

Industry Information Technology and Services

Type Public Ltd Company

Status Operating

Company Size 52,865 employees

Founded 1987

MAHINDRA SATYAM

MAHINDRA SATYAMMahindra Satyam (Rs in Crores) 2005 2006 2007 2008 2009

Equity share capital 134.1 133.44 64.89 63.85 63.25

secured Debts 23.67 13.79 12.57 9.87 7.3

unsecured debts 0 0 0 0.00 0.00

Total 157.77 147.23 77.46 73.72 70.55

Capital Structure (in percentage)

Equit Mix 84.02256 86.04591 81.89046 86.08602 89.41193

Debt Mix 15.97744 13.95409 18.10954 13.91398 10.58807

Beta 0.24 0.24 0.24 0.24 0.24

Rf 6 6 6 6 6

Rm 68.03 14.31 11.72 23.89 -36.19

Cost ofEquity 20.8872 7.9944 7.3728 10.2936 -4.1256

Cost of Debt 1.02739 0.77001 2.1638 5.5184 2.5095

Weigthed Average cost of Capital 17.71411 6.986302 6.429474 9.62918 -3.42307

NIIT TECHNOLOGIES

Headquarters Delhi Area, India

Industry Information Technology and Services

Company Size 3,644 employees

Founded 1981

NIIT TECHNOLOGIESNIIT Ltd (Rs in Crores) 2005 2006 2007 2008 2009

Equity share capital 38.65 38.65 39.1 58.7 58.73

secured Debts 53.9 41.78 26.66 16.66 58.73

unsecured debts - 2 - - -

Total 92.55 82.43 65.76 75.36 117.46

Capital Structure (in percentage)

Equit Mix 41.76121 46.88827 59.45864 77.8927813 50

Debt Mix 58.23879 53.11173 40.54136 22.1072187 50

Beta 1.2 1.2 1.2 1.2 1.2

Rf 6 6 6 6 6

Rm 68.03 14.31 11.72 23.89 -36.19

Cost ofEquity 80.436 15.972 12.864 27.468 -44.628

Cost of Debt 8.94 7.2 8.21 8.94 1.5

Weigthed Average cost of Capital 38.79759 11.31304 10.9772 23.3719745 -21.564

Mphasis

Headquarters Bangalore Area, India

Industry Information Technology  and Services

Company Size 35000 employees

Founded 1998

MphasiS

Mphasis (Rs in Crores) 2005 2006 2007 2008 2009Equity share capital 161.02 164.08 208.93 208.73 209.58

secured Debts

unsecured debts 1.55 1.31 4.61 4.74 2.98

Total 162.57 165.39 213.54 213.47 212.56

Capital Structure (in percentage)

Equit Mix 99.04656 99.20793 97.84115 97.77955 98.5980429

Debt Mix 0.953435 0.792067 2.158846 2.220453 1.40195709

Beta 0.97 0.97 0.97 0.97 0.97

Rf 0.06 0.06 0.06 0.06 6

Rm 68.03 14.31 11.72 23.89 -36.19

Cost ofEquity 65.9909 13.8825 11.3702 23.1751 -34.9243

Cost of Debt 328.3871 110.687 12.8692 21.04121 4.67156747

Weigthed Average cost of Capital 68.49268 14.64926 11.40256 23.12772 -34.3691829

PCS

Headquarters Bombay Area, India

Industry Information Technology and Services

Company Size 14,290 employees

Founded 1978

PCSPCS (Rs in Crores) 2005 2006 2007 2008 2009Equity share capital 25 27.56 27.66 27.8 25.62

secured Debts 2.86 3.18 3.06 2.38 1.75

unsecured debts - - - - -

Total 27.86 30.74 30.72 30.18 27.37

Capital Structure (in percentage)

Equit Mix 89.73439 89.65517 90.03906 92.11398 93.6061381

Debt Mix 10.26561 10.34483 9.960938 7.886017 6.39386189

Beta 2.3 2.3 2.3 2.3 2.3

Rf 6 6 6 6 6

Rm 68.03 14.31 11.72 23.89 -36.19

Cost of Equity 148.669 25.113 19.156 47.147 -91.037

Cost of Debt 1.664336 1.283019 2.901961 2.894958 3.70285714

Weigthed Average cost of Capital 133.5781 22.64783 17.53695 43.65728 -84.9794644

Headquarters Bangalore Area, India

Industry Information Technology and Services

Company Size Around 96,000

 

WIPRO INFOTECH

WIPRO INFOTECHWipro (Rs in Crores) 2005 2006 2007 2008 2009

Equity share capital 140.71 285.15 291.8 292.3 293

secured Debts 21.59 45.06 0 4

unsecured debts 40.5 5.1 23.2 3,818.40 5,013.90

Total 202.8 335.31 529.8 4114.7 5306.9

Capital Structure (in percentage)

Equit Mix 69.38363 85.04071 55.07739 7.103799 5.521114

Debt Mix 30.61637 14.95929 44.92261 92.8962 94.47889

Beta 0.79 0.79 0.79 0.79 0.79

Rf 6 6 6 6 6

Rm 68.03 14.31 11.72 23.89 -36.19

Cost ofEquity 55.0037 12.5649 10.5188 20.1331 -27.3301

Cost of Debt 8.970849 6.240032 3.02521 3.055672 3.925088

Weigthed Average cost of Capital 44.38786 15.99185 7.152484 4.268818 2.199454

INDUSTRIAL AVERAGE FOR 2009CAPITAL

STRUCTURE(RS IN

CRORE)BLUE STAR INFOTECH HCL

MAHINDRA SATYAM INFOSYS MPHASIS

NIIT TECHNOLOGY PCS

SONATA SOFTWARE TCS WIPRO

INDUSTRIAL TOTAL

INDUSTRIAL AVERAGE

Equity share capital 10 134.05 63.25 286 209.58 58.73 25.62 10.52 48.01 293 1138.76 113.876

secured Debts 123.81 7.3 0 58.73 1.75 0 111.01 302.6 30.26

unsecured debts 1.00 389.92 0.00 0.00 2.98 - - 0.00 9.73 5,013.90 5417.53 541.753

Total 11 647.78 70.55 286 212.56 117.46 27.37 10.52 168.75 5306.9 6858.89 685.889

Capital Structure (In percentage)

Equit Mix 90.90909 20.69375 89.41193 100 98.59804 50 93.60614 100 48.93 5.521114 697.6701 69.76701

Debt Mix 9.090909 79.30625 10.58807 0 1.401957 50 6.393862 0 51.07 94.47889 302.3299 30.23299

Cost ofEquity -36.19 -39.9871 -4.1256 -44.628 -34.9243 -44.628 -91.037 -44.628 -31.5491 -27.3301 -399.027 -39.9027

Cost of Debt 5.8 6.88 2.5095 0 4.671567 1.5 3.702857 0 0.1842 3.925088 29.17321 2.917321

Weigthed Average cost of

Capital -32.3727 -2.81856 -3.42307 -44.628 -34.3692 -21.564 -84.9795 -44.628 -15.3429 2.199454 -281.926 -28.1926

FINDINGS

• There is Intra-Industry variation in the capital structure of the company.

• The Companies prefers less to Long term debts .

Thank You