Download - industry profile for capital market
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1. INDUSTRY PROFILE
A capital market is a market for securities (debt or equity), where business
enterprises (companies) and governments can raise long-term funds. It is defined as a market in
which money is provided for periods longer than a year, as the raising of short-term funds takes
place on other markets (e.g., the money market).
INDIAN STOCK BROKING INDUSTRY
The Indian broking industry is one of the oldest trading industries that have been around
even before the establishment of the BSE in 1875. Despite passing through a number of changes
in the post liberalization period, the industry has found its way towards sustainable growth.
In 1860, the exchange flourished with 60 brokers. In fact the 'Share Mania' in India
began when the American Civil War broke and the cotton supply from the US to Europe
stopped. Further the brokers increased to 250. At the end of the war in 1874, the market found a
place in a street (now called Dalal Street).
Pre-Independence Scenario - Establishment of Different Stock Exchanges
1875 "The Native Share and Stock Brokers' Association" (also known as "The Bombay
Stock Exchange") was established in Bombay
1894 Establishment of "The Ahmadabad Share and Stock Brokers' Association"
1908 "The Calcutta Stock Exchange Association" was formed
1920 Madras witnessed boom and business at "The Madras Stock Exchange" was
transacted with 100 brokers.
1923 When recession followed, number of brokers came down to 3 and the Exchange
was closed down
http://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Security_%28finance%29http://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Equity_%28finance%29http://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Governmenthttp://en.wikipedia.org/wiki/Money_markethttp://en.wikipedia.org/wiki/Money_markethttp://en.wikipedia.org/wiki/Governmenthttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Equity_%28finance%29http://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Security_%28finance%29http://en.wikipedia.org/wiki/Market -
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1937 Re-organization and set up of the Madras Stock Exchange Limited (Pvt.) Limited
led by improvement in stock market activities in South India with establishment
of new textile mills and plantation companies
1944 Establishment of "The Hyderabad Stock Exchange Limited"
1947 "Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and
Shares Exchange Limited" were established and later on merged into "The Delhi
Stock Exchange Association Limited"
Post Independence Scenario
The depression witnessed after the Independence led to closure of a lot of exchanges in
the country. Lahore Stock Exchange was closed down after the partition of India, and later on
merged with the Delhi Stock Exchange. Bangalore Stock Exchange Limited was registered in
1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable state
till 1957 when they applied for recognition under Securities Contracts (Regulations) Act, 1956.
The Exchanges that were recognized under the Act were:
1. Bombay2. Calcutta3. Madras4. Ahmadabad5. Delhi6.
Hyderabad
7. Bangalore8. Indore
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The Equity Broking Industry in India has several unique features like it is more than a
century old, dynamic, forward looking, and good service providers, well conversant, highly
innovative and even adaptable. The regulations and reforms been laid down in the Equity
Market has resulted in rapid growth and development. Basically, the growth in the equity
market is largely due to the effective intermediaries. The Broking Houses not only act as an
intermediate link for the Equity Market but also for the Commodity Market, Foreign Currency
Exchange Market, and many more. The Broking Houses has also made an impact on the
Foreign Investors to invest in India to certain extent. In the last decade, the Indian brokerage
industry has undergone a dramatic transformation. From being made of close groups, the
broking industry today is one of the most transparent and compliance oriented businesses. Long
settlement cycles and large scale bad deliveries are a thing of the past with the advent of T+2
settlement cycle and dematerialization. Large and fixed commissions have been replaced by
wafer thin margins, with competition driving down the brokerage fee, in some cases, to a few
basis points. There have also been major changes in the way business is conducted. Technology
has emerged as the key driver of business and investment advice has become research based. At
the same time, adherence to regulation and compliance has vastly increased. The scope of
services have enhanced from being equity products to a wide range of financial services.
Investor protection has assumed significance,.
Major Players in the Region
Religare Securities ICICI Direct India Infoline Security Pvt. Ltd. HDFC Securities India bulls Kotak Securities Fortune Equity Brokers India Ltd Sharekhan Securities Motilal Oswal Anand Rathi Securities
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Financial Markets
The financial markets have been classified as cash market, derivatives market, debt
market and commodities market. Cash market, also known as spot market, is the most sought
after amongst investors. Majority of the broking firms are dealing in the cash market, followed
by derivative and commodities. 27% firms are dealing only in the cash market, whereas 35% are
into cash and derivatives. Almost 20% firms trade in cash, derivatives and commodities market.
Firms that are into cash, derivatives and debt are 7%. On the other hand, firms into cash and
commodities are 3%, cash & debt market and commodities alone are 2%. 4% firms trade in all
the markets.
In the cash market, around 34% firms trade at NSE, 14% at BSE and 52% trade at both
exchanges. In the equity derivative market, 48% of the sampled broking houses are members of
NSE and 7% trade at BSE, while 45% of the operate in both stock exchanges. Around 43% of
the broking houses operating in the debt market, trade at both exchanges with 31% and 26%
firms uniquely at NSE and BSE respectively.
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Of the brokers operating in the commodities market, 57% firms operate at NCDEX and MCX.
Around 20% and 21% firms are solely in NCDEX and MCX respectively, whereas 2% firms
trade in NCDEX, MCX and NMCE.
Products
The survey also revealed that in the past couple of years, apart from trading, the firms
have started offering various investment related value added services. The sustained growth of
the economy in the past couple of years has resulted in broking firms offering many diversified
services related to IPOs, mutual funds, company research etc. However, the core trading activity
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is still the predominant form of business, forming 90% of the firms in the sample. 67% firms are
engaged in offering IPO related services. The broking industry seems to have capitalized on the
growth of the mutual fund industry, which was pegged at 40% in 2006. More than 50% of the
sample broking houses deal in mutual fund investment services. The average growth in assets
under management in the last two years is almost 48%. Company research is another lucrative
area where the broking firms offer their services; more than 33% of the firms are engaged in
providing company research services. Additionally, a host of other value added services such as
fundamental and technical analysis, investment banking, arbitrage etc are offered by the firms at
different levels.
Of the total sample of broking houses providing trading services, 52% are based in the West,
followed by 25% from North, 13% from South and 10% from the East. Around 50% of the
firms offering IPO related services are based in the West as compared to 27% in North, 13% in
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South and 10% in East. In providing mutual funds services, the Western region was dominant
amounting to 49% followed by 27% from North; The South and the East are almost at par with
13% and 11% respectively.
2. COMPANY PROFILE
A.BACKGROUND AND INCEPTIONFortune Group which comprises the holding company Fortune Financial Services (India)
Limited and its wholly-owned subsidiaries, is engaged in providing a range of Financial Services
right from Equities and Derivatives trading, Equity Research, Commodities Trading, Portfolio
Management Services, Distribution of Mutual Funds, IPO & Insurance products and also
Investment banking services. Fortune Financial Services (India) Limited was incorporated in the
year 1991 by Mr. J. T. Poonja, Chairman and Mr. Nimish C Shah, Vice Chairman and Managing
Director.
Founded 14-june-1991
headquarters Mumbai, Maharashtra
Key people J.T. Poonja, chairman and Nimish.C.Shah, managing director
industry Finance - general
Products/services Investment Banking & Corporate Advisory, Broking, Distribution
Services
revenue 4000lacs
Total assets 19878lacs
The main activities of the company are conducted through Fortune Financial Services which is
also the holding company & its wholly owned subsidiaries. A brief snapshot of all the
companies is outlined as under.
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M/s Fortune Financial Services (India) Ltd.
M/s. Fortune Financial Services (India) Ltd. is listed on the Bombay Stock Exchange Ltd and is
SEBI registered Category I Merchant Banker. It has recently got approval from SEBI to launch
its Portfolio Management Services (PMS). FFSIL has four business verticals viz. Fortune Equity
Brokers (India) Limited, Fortune Commodities & Derivatives (India) Ltd., Fortune Credit
Capital Ltd. and Fortune Financial India Insurance Brokers Limited.
M/s. Fortune Equity Brokers (India) Ltd.
It offers broking services in the Cash and Future & Option Segments of the National Stock
Exchange of India Ltd and the Bombay Stock Exchange Limited. It is also a Depository
Participant of Central Depository Services (India) Ltd.
M/s. Fortune Commodities & Derivatives (India) Ltd.
It is engaged in the business of commodities broking. It is having memberships with the MCX
and NCDEX, two leading Indian Commodities Exchanges.
M/s. Fortune Credit Capital Ltd.
It is formed for the purpose of financing, lending to the clients. The Company has received
license from RBI for NBFC operations.
M/s. Fortune Financial India Insurance Brokers Limited.
It is formed for the purpose of providing insurance broking and related products and services.
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ORGANIZATIONAL STRUCTURE OF FORTUNE GROUP
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B.Fortune Equity Brokers (India) Ltd.Fortune Equity Brokers (India) Ltd. is 100% subsidiary company of M/s. Fortune Financial
Services (India) Ltd. It offers broking services in the Cash and Future & Option Segments of the
National Stock Exchange of India Ltd and Bombay Stock Exchange Limited. It is also a
Depository Participant of Central Depository Services (India) Ltd.
The services provided by this entity include:
Equity segment
Fortune ventured into stock broking arena as an institutional broker and has focused on helping
clients maintain healthy portfolios through sound, fundamental and technical analysis. Fortune
offers customized solutions for clients based on their short, medium and long term investment
needs, for institutional, HNI and retail clients with personalized services to facilitate the
execution of buy and sell orders in a flawless and efficient manner on both BSE & NSE
segments
Derivatives segment
Fortune provides trading calls and various hedging and risk management strategies for trading in
the derivatives segment.
Depository
Fortune provides flexible and cost-effective depository services which include online account
management or limited power of attorney to speed up settlement pay-in-process.
Internet trading (Equity & Commodity)
Fortune provides user-friendly solutions for trading through www.fortunetrade.com, payment
gateway with major banks like HDFC and AXIS to live streaming quotes and intra-day calls.
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IPOs, Mutual Funds & Bonds
AMFI registered mutual fund distributors and is also engaged in the distribution of IPOs. Tailor
made solutions are provide to each & every investment preferences.
C. VISION, MISSION and QUALITY POLICY
Vision: Fortune practices customer centric approach to be the leading broking firm. The
company vision is
1. To be the top most company for providing investment advisory and financial planningservices in India.
2. To be a leading investment intermediary for transaction through both online and offlinemedium.
Mission: To educate and empower the individual investor to make investment decisions
through quality advice and superior service.
Superior service for
Integrity Transparency Professionalism Client driven approach Long-term relationship Broad outlook
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D. AREA OF OPERATION
As on 30th September, 2009, we are operational from the following 163 locations across India
North
Delhi (7), Ludhiana (14), Srinagar, Amritsar (5), Chandigarh (6), Panchkula (2), Varanasi,
Meerut, Jalandhar (4), Mohali, Greater Nodia, Jaipur (8), Kota, Jodhpur (2), Karnal (2), Jammu
South
Hyderabad (8), Bangalore (5), Mangalore, Belgaum (9), Mysore (4), Cochin (6), Raichur (2),
Mandya, Prakasham Dist (AP), Udupi
West
Mumbai (10), Pune (26), Ahmadabad (9), Surat, Goa, Baroda (12), Nagpur, Latur, Navi
Mumbai, Thane
East
Kolkata (4)
E. OWNERSHIP PATTERN
Fortune Financial Services (India) Ltd.
Share Holding
Pattern as on :
31/12/2010 30/09/2010 30/06/2010
Face Value 10.00 10.00 10.00
No. Of
Shares
% Holding No. Of
Shares
% Holding No. Of
Shares
%
Holding
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PROMOTER'S HOLDING
Indian Promoters 5823738 52.47 5823738 52.47 5823738 52.47
Sub Total 5823738 52.47 5823738 52.47 5823738 52.47
NON PROMOTER'S HOLDING
Institutional Investors
FII's 497552 4.48 497552 4.48 497552 4.48
Sub Total 497552 4.48 497552 4.48 497552 4.48
Other Investors
Private Corporate
Bodies
586189 5.28 599385 5.40 299408 2.70
Sub Total 4004579 36.08 4017875 36.20 3717898 33.49
General Public 774131 6.97 760835 6.85 1060812 9.56
Grand Total 11100000 100.00 11100000 100.00 11100000 100.00
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F. COMPETITORS INFORMATION
Last Price Market Cap.
(Rs. cr.)
Sales
Turnover
Net Profit Total Assets
India Infoline 118.55 3,380.26 571.50 103.59 1,049.99
India bulls 106.35 3,295.66 2,003.09 99.45 10,392.97
Edelweiss Cap 427.05 3,204.48 191.39 26.37 1,865.28
Motilal Oswal F 175.50 2,510.82 57.26 45.31 433.49
HSBC Invest 223.55 1,573.75 24.31 -15.21 667.45
Network 18 107.40 1,225.52 94.50 -19.41 862.11
Future Capital 186.60 1,185.43 132.44 9.31 1,216.75
Geojit BNP 35.10 787.99 140.56 14.39 276.06
Delta Corp 37.50 626.85 42.73 8.31 356.87
Nalwa Sons Inv 1,088.25 558.94 14.78 11.26 270.90
Fortune Fin Ser 121.55 134.92 5.79 2.32 79.95
G. INFRASTRUCTURE FACILITY:
Credit and Risk Management Investor Service Centers Investor Service Desk Compliance team
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Retail Relationship Management Online trading
H. MILESTONES OF FORTUNE GROUP
1991
Mr. J.T. Poonja and Mr. Nimish C. Shah incorporated Fortune Financial Services (India) Private
Limitedas a Non-Banking Financial Company (NBFC). Besides core investment banking and
corporate advisory services, Fortune's also focused on fund based activities such as lease, hire
purchase, bill discounting and inter-corporate loans
1993
Fortune became a SEBI registered Category - I Merchant Banker.
1995
Fortune made an Initial Public Offering (IPO)
1999
Fortune Financial became the 1st Indian company to go in for a buyback of its shares,
subsequent to the guidelines for Buyback of shares coming into effect from Jan 1999. Fortune
offered to buy back 25% of its paid-up capital of Rs.549 lacs at an offer price of Rs.10/- each per
share as against the average quoted market price of Rs.5.65 per share. An amount of Rs.114 lacs
was reduced from the share capital consequent to the buyback
Successfully completed the second buyback and reduced Rs. 47 lacs from the share capital
2000
Acquired Corporate Membership of Bombay Stock Exchange Limited (BSE)
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2001
Fortune completed the private placement of equity shares of Popular Entertainment Network
Limited and clickforcotton.com, India's first cotton exchange portal
2005
Fortune was associated with ECB/FCCB overseas fund raising for its Indian mid-sized corporate
clients in excess of $250 million. Commenced F&O operations on the National Stock Exchange
(NSE)
2006-
Commenced DP Services
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I. WORK FLOW MODEL
1
2 3
7
6
5
4
Support
Pre trade ContractsDepository
Uploading file
on hi-tech and
assigning
brokerage
Communi
cation to
customer
on
account
Punching,
checking
of form,
activation
of clients
Filled
account
opening
form & other
documents is
sent to
depository
Customer
acquisition
Online
Setting risk
limitsSelfinitiated
Tele-
callers
Margin call
Offline
Stock acc
Post trade
Accounts/banking
Clients
accounts
maintained
by accounts
Generate net trade
obligation statement
printing and dispatch
of contracts notes
Pay in and pay
out of delivery
based
transactions
Trade
execution
Contracts Settlement Trade
Research
Online
dial a
trade
Derivatives &
commodities
research
Publishing
Offline -
dealerClients
Branches/franchisees
Self
initiation
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J. FORTUNES FUTURE BUSINESS OUTLOOK
Over the next two years, fortune plans to bulk up its services into a full services financial
services company.
Stock broking- Channel dealing and broking business into retail specific, HNI specific and
corporate specific
- Providing fund management expertise to HNI and corporate clients- Develop and strengthen futures & options and commodity business- Franchise network focusing on retail (broking and distribution of all products)
Investment banking and corporate advisory services- Strengthen equity and debt platform for Indian and international capital markets- IPO/rights issue/open offers/buy backs/selling & placement to Indian
funds/M&A
-
Advisory services and selling issues to international investors Distribution services
- Branches/franchise/direct clients- Savings products (mutual funds, IPOs, P.O. schemes, RBI schemes, GOI savings
schemes etc.,
- Insurance Support
- Provide in-house research capabilities;- Strong marketing team- Provide Depository Services- Provide Real Time Back office support
leads to more mandates
and increased
market share
provide a
one stop shop
to meet all
client needs
Distribution
services
Stock broking
Investment
banking &
advisory
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3. McKENSYS 7S FRAME WORK
The McKinsey 7S model was named after a consulting company, McKinsey and Company,
which has conducted applied research in business and industry ( Pascale & Athos, 1981; Peters
& Waterman, 1982). All of the authors worked as consultants at McKinsey and Company; in the
1980s, they used the model to analyse over 70 large organisations. The McKinsey 7S Framework
was created as a recognisable and easily remembered model in business. The seven variables,
which the authors term "levers", all begin with the letter "S":
HARD ELEMENTS
SOFT ELEMENTS
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The Mc Kinsey 7s Model is a widely discussed framework for viewing the
interrelationship of strategy formulation and implementation.
It helps to focus managers attention on the importance of linking the strategy to a variety ofactivities that can affect the implementations of that strategy.
Originally developed as a way of thinking more broadly about the problems of organizingeffectively, the 7s framework provides a tool for judging the do ability of strategies.
The model starts on the premise that an organization is not just a structure, but consists of
seven elements. These seven variables include structure, strategy, systems, skills, style, staff and
shared values. These seven elements are further divided into three hard elements- strategy,
structures, and systems, and four soft elements- shared values, skills, staff, and style. The hard
elements are classified as such because they can be empirically measured, and the soft elements
are classified as such because they lie below the surface and do not lend themselves for
evaluation so readily. The shape of the model (as shown in figure) was also designed to illustrate
the interdependency of the variables. This is illustrated by the model also being termed as the
"Managerial Molecule".
STRUCTURE
Structure is defined as the skeleton of the organization or the organizational chart. The
designing of an organizational structure is the critical task of the management. The operation at
Fortune is carried out through various departments
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STRATEGY
The strategy is the plan or course of action in allocating resources to achieve identified
goals over time. Fortune aims at improving its customer base by providing integrated financial
services to all the customers. Most prominent part of Fortunes growth strategy is focus on in-
house research to cater to different segments of clients and meet their rising expectations.
Fortune believes in-house research is not only an essential part of business requirement it also
gives control over quality of input and relative advantage in this intense business
environment..Today fortunes client base has increased to 73% in capital market and the branch
and franchise network to 186 from 49 in the previous year.
SYSTEMS
The systems are the routine processes and procedures followed within the organization. It
includes production planning g and control system, capital budgeting systems etc.
In Fortune the core operations include
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- Customer Acquisition: - the offline method of acquisition of customers through the brokers isfollowed for this purpose.
- Research: - the research is done mainly at the head office in Mumbai. The fundamentalanalysis of the different companies through balance sheet analysis, profit and loss statement
and the technical analysis with regards to the various sectors, the volatility in these sectors is
also done at the head office.
- Dealing: - the dealing system refers to the actual trading activities that are done throughadvice. The orders are placed according to the needs of the investors. The volume generated
through these activities forms the core revenue for the company.
- Back office Operations: - the back office acts as the backbone for all the activities of Fortune.This system handles all operations involving cheque processing, contract notes, IS (Delivery
Instruction Slip) etc.
- Risk and Compliance: - this part of the support operations handles the risk associated. Thesoftware needed for these operations handles this and makes sure that all the norms are met
in any form of the transaction.
STYLE
The way in which key managers behave in achieving organizational goals is considered
to be the style variable; this variable is thought to encompass the cultural style of the
organization. Democratic style has been followed in fortune which allows individual department
to take necessary decisions. The style of operation that is followed towards the customer is much
focused and it is aimed to give utmost attention to the customer. Personalized care is taken to
satisfy with any of the problems faced by the clients.
SKILLS
The skill refers to the capabilities of the staff within the organization as a whole. The
company has the skill needed to carry out the companys strategy like:
- Good and specialized knowledge about the products.
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- High level of specialization in communication.- Ability to convert people into customer.
STAFF
The term staff refers to the way organization introduce young recruits in to the main
stream of their activities and the manner in which they manage their careers in the new interns
develop employees and shape basic value.
The employees in all the departments are given training for 6 months where they will be given
all the necessary skill that is needed for their respective jobs. The efficiency of the existing
employees is also measured to know the growth and their relative position in the organization.
There are 1600 employees all over the country.
SHARED VALUES
The shared values, originally termed as super ordinate goals, refer to the significant
meanings or guiding concepts that organizational members share. Shared values are considered
to be the foundation of ethics, community and culture. When peoples values are met and
matched, they feel a sense of satisfaction, harmony, or rapport. When their values are not met or
matched, people often feel dissatisfied, incongruent, or violated.
- Customer - personalized attention is the key.- Integrity - highest ethical standards are used in all the transactions.- Mutual Respecttrust in working relationship.- Quality Advicescientific approach in quantifying the risk.
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4. SWOT ANALYSIS
Brief about SWOT analysis
It is a tool that identifies the strengths, weaknesses, opportunities and threats of an
organization. The method of SWOT analysis is to take the information from an environmental
analysis and separate into external (opportunities and threats) and internal issues (strengths and
weakness). Once the identification of SWOT is done, it determines what may assist the firm in
accomplishing its objectives, and what obstacles must be overcome or minimized to achieve
desired results.
Strengths:
Experience of more than decades of trust and credibility in the Indian stock market. Strong industry focus leading to innovative and informed strategic advisory services. Deep understanding of Indian mid market corporate clients. Debt free group. Comprehensive range of financial services for HNIs & retail investors. Non-exclusive working relationship with leading international investments banks. Dedicated research team for technical and fundamental analysis. A well equipped customer team, which will assist a new comer in the matters relating to
transactions, billing, De-mat and other technical queries
Weakness:
Highly risk oriented business. Slight entry level of investors. Lacks in advertising. Concentrated much on HNIs and corporate clients which ignores small investors.
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Opportunities:
Booming financial market both country wide and worldwide. Increase in varied domestic assignmentsfollow on issues, buyback program, open
offers, IPOs.
Strong momentum in franchise in the last two years. Overseas fund raising of approximately US$ 500 million in the last 18 months. Critical mass and experience across the globe. All factors which aid to the well functioning of the capital market will pave the way to
the expansion of most of the brokerage firms.
Threats:
Unexpected changes in the capital market such as rules and regulations etc. Increasing competition in the industry. Fast changing in technology. Increasing number in the defaulters and threat of security in terminals.
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5. ANALYSIS OF FINANCIAL STATEMENTS
Balance Sheet of Fortune Financial
Services------------------- in Rs. Cr. -------------------
Mar '06 Mar '07 Mar '08 Mar '09 Mar
'10
12 mths 12 mths 12 mths 12 mths 12
mths
Sources Of Funds
Total Share Capital 3.88 7.77 10.00 10.00 11.10
Equity Share Capital 3.88 7.77 10.00 10.00 11.10
Share Application Money 0.00 0.00 0.00 0.00 0.88
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 7.02 8.51 33.57 43.12 67.32
Net worth 10.90 16.28 43.57 53.12 79.30
Secured Loans 3.70 4.79 9.32 0.00 0.00
Unsecured Loans 0.00 4.45 1.47 0.00 0.66
Total Debt 3.70 9.24 10.79 0.00 0.66
Total Liabilities 14.60 25.52 54.36 53.12 79.96
Mar '06 Mar '07 Mar '08 Mar '09 Mar
'10
12 mths 12 mths 12 mths 12 mths 12
mths
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Application Of Funds
Gross Block 4.98 4.67 5.23 9.19 1.18
Less: Accum. Depreciation 2.15 2.36 2.81 8.87 0.74
Net Block 2.83 2.31 2.42 0.32 0.44
Capital Work in Progress 0.00 0.01 0.00 0.02 0.00
Investments 3.08 4.50 6.43 38.84 55.86
Inventories 0.06 0.00 0.00 0.00 0.00
Sundry Debtors 0.70 0.72 7.10 1.68 1.73
Cash and Bank Balance 10.28 2.45 0.36 2.30 1.28
Total Current Assets 11.04 3.17 7.46 3.98 3.01
Loans and Advances 1.71 5.70 8.59 15.35 17.37
Fixed Deposits 0.00 21.20 45.28 8.26 12.32
Total CA, Loans & Advances 12.75 30.07 61.33 27.59 32.70
Current Liabilities 2.89 7.06 8.02 1.63 0.27
Provisions 1.15 4.32 7.80 12.02 8.80
Total CL & Provisions 4.04 11.38 15.82 13.65 9.07
Net Current Assets 8.71 18.69 45.51 13.94 23.63
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.02
Total Assets 14.62 25.51 54.36 53.12 79.95
Contingent Liabilities 0.00 0.01 0.00 0.00 24.29
Book Value (Rs) 28.09 20.95 43.57 53.12 70.65
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Fixed Assets Turnover Ratio 1.87 12.59 -23.80 -- --
Total Assets Turnover Ratio 0.38 0.66 0.31 0.66 --
Earnings Per Share 5.71 8.13 7.01 12.51 2.09
An eye on important Ratios
CURRENT RATIO
March 09 March 10 Ideal Ratio
Current Ratio 2.02 :1 3.61:1 2:1
Current ratio is an indication of a company's ability to meet short-term debt obligations; the
higher the ratio, the more liquid the company is.
We can see that in the year 2009 the ratio is 2.02:1 which means their ratio was slightly more
than the ideal ratio. This also indicates that the companys short term financial strength is good.
In the year 2010 their current ratio has increased to 3.6:1 which is very much higher than the
ideal ratio 2:1 this shows that the company has purchased a fairly large amount of current assets
in that year and it also shows their short term financial strength is very strong.
QUICK RATIO
March 2009 March 2010 ideal ratio
Quick Ratio 2.02:1 3.60:1 1:1
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Quick ratio is a measure of a company's liquidity and ability to meet its obligations. Quickratio,
often referred to as acid-test ratio, is obtained by subtracting inventories from current assets and
then dividing by current liabilities. Quick ratio tells us the amount of easily convertible assets for
every unit of current liability
In the year 2010 the companys quick ratio is 3.06:1 as against 2.02:1 in the year 2009. Their
financial strength has increases in the year 2010. This means they have purchased a fairly large
amount of easily convertible assets
DEBT EQUITY RATIO
March 2009 March 2010 Ideal match
Debt Equity Ratio -- 0.01:1 2:1
Debt equity ratio is a measure of a company's financial leverage. Debt/equity ratio is equal to
long-term debt divided by common shareholders' equity. In other words it means how much
money a company should safely be able to borrow over long periods of time.
The debt equity ratio in the year 2009 is nil which means there has been no debt in that year. But
in the year 2010 the ratio is 0.01 which is very less than the ideal ratio of 2:1. It is important to
realize that if the ratio is greater than 1, the majority ofassets are financed through debt. If it is
smaller than 1, assets are primarily financed through equity. The companys ratio is 0.01 which
less than 1 hence we can say that majority of the companys assets are financed through equity.
INTEREST COVERAGE RATIO
March 2009 March 2010
Interest coverage ratio 4.59 23.29
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Interest coverage ratio is calculated to know a company's ability to meet its interest payments on
outstanding debt. There is no specific ideal ratio for interest coverage ratio but we know that the
lower the interest coverage ratio, the larger the debt burden is on the company. In the year 2009
the companys ratio is 4.59 which are not high as compared to 2010. Hence in the year 2009 the
interest burden was high. Where-as in the year-2010 companys ratio is 23.29 which is high.
Hence we can say that the company was able to service its loan amount without burdening much.
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