Term paper of financial management

SUBMITTED TO: --

SUBMITTED BY: -- HARISH KUMAR

ROLL.NO :--

COURSE NO. : -- MGT517

CLASS : -- M.B.A. (financial management)

TOPIC : -- CAPITAL STRUCTURE OF BIRLA

CEMENT, HP
AND BAJAJ ALLIANZ

ACKNOWLEDGEMENT

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The successful completion of any task would be incomplete without mentioning
the people who have made it possible. So it`s with the gratitude that I
acknowledge the help, which crowned my efforts with success.
Life is a process of accumulating and discharging debts, not all of those can be
measured. We cannot hope to discharge them with simple words of thanks but
we can certainly acknowledge them.
I owe my gratitude to MISS.Ashu Kakkar, LSM for his constant guidance
and support.
I would also like to thank the various department officials and staff who not
only provided me with required opportunity but also extended their valuable
time and I have no words to express my gratefulness to them.
Last but not the least I am very much indebted to my family and friends for their
warm encouragement and moral support in conducting this project work.

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 Contents

INTRODUCTION TO CAPITAL STRUCTURE 4

PATTERNS OF CAPITAL STRUCTURE 5
DETERMINENTS OF CAPITAL STRUCTURE 5
BAJAJ ALLIANZ LIFE INSURANCE CO. LTD 7
Balance Sheet of Bajaj Allianz (in crores) 8
Analysis of capital structure of Bajaj Allianz 9
DEBT-EQUITY RATIO 10
HEWLETT-PACKARD (HP) 11
BALANCE SHEET OF HP (IN CRORES) 12
ANALYSIS OF CAPITAL STRUCTURE OF HP 13
DEBT-EQUITY RATIO 14
BIRLA CORPORATION LIMITED 15
BIRLA CEMENT 16
BALANCE SHEET OF BIRLA CEMENT (IN 17
CRORES)
ANALYSIS OF CAPITAL STRUCTURE OF 18
BIRLA
DEBT-EQUITY RATIO 19
BIBLIOGRAPHY 20

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 INTRODUCTION TO CAPITAL
STRUCTURE

In order to run and manage a company, funds are needed.

Right from the promotional stage up to end, finances play an
important role in a company’s life. If funds are inadequate, the
business suffers and if the funds are not properly managed, the
entire organisation suffers. It is, therefore, necessary that
correct estimate of the current and future need of capital be
made to have an optimum capital structure which shall help the
organisation to run its work smoothly and without any stress.
Estimation of capital requirements is necessary, but the
formation of a capital structure is important. According to
Gerestenberg, ‘Capital structure of a company refers to the
composition or make-up of its capitalisation and it includes all
long term capital resources like: loans, reserves, shares and
bonds.’
The capital structure is made up of debt and equity securities
and refers to a permanent financing of a firm. It is composed of
long term debt, preference share capital and shareholder’s
funds.
The terms, capitalisation and capital structure do not mean the
same. Capitalisation refers to the total amount of securities by
a company while capital structure refers to the kinds of
securities and the proportionate amounts that make up
capitalisation. Moreover, capitalisation is a quantitative aspect
of the financial planning of an enterprise, whereas capital
structure is concerned with the qualitative aspect.
For raising long term finances, a company can issue three types
of securities viz. Equity shares, Preference shares and
Debentures. A decision about the proportion among these
types of securities refers to the capital structure of an
enterprise.
Some authors on financial management define capital structure
in a broad sense so as to include even the proportion of short
term debt. In fact, they refer to capital structure as financial
structure. Financial structure means the entire liabilities side of
the balance sheet. ‘Thus, financial structure, generally, is
composed of a specific percentage of short-term debt, long
term debt and shareholder’s funds.’

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 PATTERNS OF CAPITAL STRUCTURE

The capital structure of a new company may consist of any of

the following forms:
i) Equity shares only

ii) Equity and Preference shares

iii)Equity shares and Debentures

iv)Equity shares, Preference shares and Debentures.

DETERMINENTS OF CAPITAL STRUCTURE

The following are the important determinants or factors which
determine the capital structure of a business enterprise:
1) Cost of fixed assets: The fixed capital of a business
enterprise is invested in fixed assets. The fixed assets are
not fixed in value; in fact, their value may record an
increase or decrease in course of time. They are fixed in
the sense that without them the business cannot be
carried on. Further, they remain in business for a longer
time. Hence, while making an assessment of the capital
requirement the cost of fixed assets are kept in mind.

2) Size of the business enterprise: The capital structure

of a business enterprise is also influenced by the size of

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 business enterprise. It may be small, medium or large. A
large-sized business enterprise requires much more
capital as compared to a small-sized business enterprise.

3) Nature of the business organization: The capital

structure of a business enterprise is also influenced by
nature of business organisation. It may be manufacturing,
financing, trading or public utility type.

4) Retaining control of the business enterprise: The

capital of the business enterprise is also influenced by the
intention of the promoters of having effective control. This
is also a very important factor in deciding the capital
structure. For this purpose they raise a large amount of
money by issuing debentures and preference shares which
hardly enjoy any voting rights.

5) Legal requirements: One has to comply with the

provisions of the law in regard to the issue of different
types of securities. For example, in India banking
companies are not allowed by the Banking Companies Act
to issue any type of securities except shares.

6) Period of finance: Period of finance, i.e., short, medium

or long term is also another factor which determines the
capital structure of a business enterprise. For example,
short-term finances are raised through borrowings as
compared to long-term finance which is raised through
issue of shares, stocks etc.

7) The purpose of financing: The purpose of financing

should also be kept in mind in determining the capital
structure of a business enterprise. The funds may be
required either for betterment expenditure or for some
productive purposes. The betterment expenditure, being
non-productive, may be incurred out of funds raised by
issue of shares or from retained profits. On the contrary,
funds for productive purposes may be raised through
borrowings.

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 8) Elasticity of capital structure: The capital structure of
a business enterprise should be quite elastic so as to meet
the future requirements of the capital also. For this
purpose the amount of authorized capital should be fixed
at a higher level as compared to present needs.

9) Money market conditions: Money market conditions

also influence the capital structure of a business
enterprise. In case of boom period it is advisable to issue
shares which can fetch higher premium due to large
profits. On the contrary, during the depression period it is
advisable to issue debentures on account of lower rate of
interest.

10) Requirements of the potential investors: The

capital structure of a business enterprise is also affected
by the requirement of the potential investors. Different
classes of investors go for different types of securities.
Investors who are interested in the stability and safety and
regularity of income prefer debentures and preference
shares. On the contrary, investors who prefer to take risk
so as to have higher income and also prefer shares to take
part in the management or stocks.

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BAJAJ ALLIANZ LIFE INSURANCE CO. LTD

Bajaj Allianz Life Insurance Co Ltd is a unique joint venture

among the global giants Allianz Group and Bajaj Auto. Allianz
Groups world ranking establishes it among the top insurance
companies in the world. Bajaj is the biggest two and three
wheeler manufacturer in the world. Bajaj Allianz Life Insurance
Company boasts of a nationwide presence with 876 offices
and over 4 million satisfied customers.
Major plans offered by Bajaj Allianz Life Insurance are as
follows:

Individuals Plans

 Unit Gain Insurances

 Term Care Plans
 Lifetime Care Insurance Policy
 Business Insurance Policies
 Savings And Security Policies For You And Your Family
 Rural Insurance Plan.

Group Insurance Schemes

 Insurance For Employee-Employer Groups

 Insurance For Non-Employer - Employee Groups
 Employees Deposit Linked Insurance
 New Group Superannuation Scheme

 New Group Gratuity Care Scheme

Bajaj Allianz India offers convenient premium payment and

receipt options. The payments can be direct through cheques,
DD's or directly from your accounts or through credit card. The
premiums can also be paid online.

Bajaj Allianz General Insurance received the Insurance

Regulatory and Development authority (IRDA) certificate of
Registration on 2nd May, 2001 to conduct General Insurance
business (including Health Insurance business) in India. The

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Company has an authorized and paid up capital of Rs 110
corers.

Balance Sheet of Bajaj Allianz (in

crores)
Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 101.18 101.18 144.68 144.68
Equity Share Capital 101.18 101.18 144.68 144.68
Share Application
0.00 0.00 0.00 0.00
Money
Preference Share
0.00 0.00 0.00 0.00
Capital
Reserves 4,669.55 5,433.14 1,442.91 1,725.01
Revaluation Reserves 0.00 0.00 0.00 0.00
Net worth 4,770.73 5,534.32 1,587.59 1,869.69
Secured Loans 0.02 22.46 6.95 0.00
Unsecured Loans 1,467.13 1,602.97 1,327.39 1,570.00
Total Debt 1,467.15 1,625.43 1,334.34 1,570.00
Total Liabilities 6,237.88 7,159.75 2,921.93 3,439.69

Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 2,894.22 3,178.54 2,994.68 3,350.20
Less: Accum.
1,761.22 1,904.94 1,726.07 1,807.91
Depreciation
Net Block 1,133.00 1,273.60 1,268.61 1,542.29
Capital Work in
43.33 107.62 34.74 106.48
Progress
Investments 5,856.97 6,447.53 1,857.14 1,808.52
Inventories 272.93 309.70 349.61 338.84
Sundry Debtors 301.55 529.83 275.31 358.65
Cash and Bank
80.84 62.16 54.74 135.68
Balance
Total Current Assets 655.32 901.69 679.66 833.17
Loans and Advances 2,282.98 2,925.24 1,099.68 1,567.09
Fixed Deposits 1.25 21.32 1.33 1.19
Total CA, Loans &
2,939.55 3,848.25 1,780.67 2,401.45
Advances

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Deffered Credit 0.00 0.00 0.00 0.00
Current Liabilities 1,419.08 1,683.46 1,185.19 1,378.20
Provisions 2,315.89 2,833.79 834.04 1,224.15
Total CL & Provisions 3,734.97 4,517.25 2,019.23 2,602.35
Net Current Assets -795.42 -669.00 -238.56 -200.90
Miscellaneous
0.00 0.00 0.00 183.30
Expenses
Total Assets 6,237.88 7,159.75 2,921.93 3,439.69

Contingent Liabilities 719.06 811.66 1,129.29 924.96

Book Value (Rs) 471.49 546.96 109.73 129.23

Analysis of capital structure of Bajaj

Allianz
In 2006,
Total equity capital = 4770.73
Total Debt = 1467.15
Total capital = 6237.38
Hence, Proportion of equity = 76.4% and
Proportion of debt = 23.6%

In 2007,
Total equity capital = 5443.32
Total Debt = 1625.43
Total capital = 7068.75
Hence, Proportion of equity = 77% and
Proportion of debt = 23%

In 2008,
Total equity capital = 1587.59
Total Debt = 1334.39
Total capital = 2921.93
Hence, Proportion of equity = 54.3% and
Proportion of debt = 45.6%

In 2009,
Total equity capital = 1869.69
Total Debt = 1570.00

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 Total capital = 3439.69
Hence, Proportion of equity = 54.36% and
Proportion of debt = 45.64%

In 2006 and 2007, the proportion of equity used by the

company is 77% and 23% of debt is used by the firm.
Similarly, in 2008 and 2009, the proportion of debt and equity
used are 54.3% and 45.6% respectively.
Hence, we can easily analyse that there is a reduction in the
proportion of the equity share in the capital structure of the
Bajaj Allianz.

NOTE: Reserves and Surplus have been used as a part of

equity.

DEBT-EQUITY RATIO

Year Total Debt Total Equity Debt- Equity

ratio
2006 1467.15 4770.73 0.307
2007 1625.43 5443.22 0.298
2008 1334.39 1587.59 0.841
2009 1570.00 1869.69 0.837

INTERPRETATION: A high debt-equity ratio indicates that the

claims of outsiders are greater than those of owner’s. A ratio of
1:1 is considered to be a good for a firm. Here, in 2008 and
2009 the debt-equity ratio is approaching to 1 and is therefore,
satisfactory.

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HEWLETT-PACKARD (HP)
Hewlett-Packard Company commonly referred to as HP, is an
American multinational information technology corporation
headquartered in Palo Alto, California, USA. HP is one of the
world's largest information technology companies and operates
in nearly every country. HP specializes in developing and
manufacturing computing, data storage, and networking
hardware, designing software and delivering services. Major
product lines include personal computing devices, enterprise
servers, related storage devices, as well as a diverse range of
printers and other imaging products. HP markets its products to
households, small to medium size businesses and enterprises
both directly, via online distribution, consumer-electronics and
office-supply retailers, software partners and major technology
vendors.
HP posted net revenue in 2009 was $115 billion, with
approximately $40 billion coming from services. In 2006, the

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intense competition between HP and IBM tipped in HP's favor,
with HP posting revenue of US$91.7 billion compared to
US$91.4 billion for IBM; the gap between the companies
widened to $21 billion in 2009. In 2007, HP's revenue was $104
billion making HP the first IT Company in history to report
revenues exceeding $100 billion. In 2008 HP retained its global
leadership position in inkjet, laser, large format and multi-
function printers market. Also HP became globally in IT services
as reported by IDC & Gartner
Major company changes include a spin-off of part of its
business as Agilent Technologies in 1999, its merger with
Compaq in 2002, and the acquisition of EDS in 2008, which led
to combined revenues of US$ 118.4 Billion in 2008 and a
Fortune 500 ranking of 9 in 2009. In November 2009, HP
announced the acquisition of 3Com.On April 28, 2010, HP
announced the buyout of Palm for $1.2 billion.

BALANCE SHEET OF HP (IN CRORES)

Mar'05 Mar '06 Mar '07 Mar '08 Mar '09

12mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 3.81 3.81 3.81 3.81 3.81
Equity Share Capital 3.81 3.81 3.81 3.81 3.81
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 10.55 10.75 10.79 6.75 6.15
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Net worth 14.36 14.56 14.60 10.56 9.96
Secured Loans 12.85 11.83 9.14 11.13 14.33
Unsecured Loans 0.41 1.34 1.34 1.42 1.47
Total Debt 13.26 13.17 10.48 12.55 15.80
Total Liabilities 27.62 27.73 25.08 23.11 25.76

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Application Of Funds
Gross Block 39.17 39.55 39.89 40.01 40.02
Less: Accum. Depreciation 20.24 21.82 23.41 25.01 26.60
Net Block 18.93 17.73 16.48 15.00 13.42
Capital Work in Progress 0.00 0.00 0.07 0.00 0.00
Investments 0.00 0.00 0.00 0.00 0.00
Inventories 17.80 18.03 19.17 14.22 12.73
Sundry Debtors 4.92 7.72 6.92 4.08 3.11
Cash and Bank Balance 1.09 1.49 1.41 1.71 1.68
Total Current Assets 23.81 27.24 27.50 20.01 17.52
Loans and Advances 2.50 2.27 2.42 2.82 2.49
Fixed Deposits 1.18 0.00 0.00 0.00 0.00
Total CA, Loans &
Advances
27.49 29.51 29.92 22.83 20.01
Deferred Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 16.80 17.47 19.13 12.73 6.26
Provisions 2.00 2.04 2.27 2.00 1.41
Total CL & Provisions 18.80 19.51 21.40 14.73 7.67
Net Current Assets 8.69 10.00 8.52 8.10 12.34
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 27.62 27.73 25.07 23.10 25.76
Contingent Liabilities 0.36 0.00 0.00 0.00 0.00
Book Value (Rs) 37.69 38.21 38.31 27.73 26.14

ANALYSIS OF CAPITAL STRUCTURE OF

HP
In 2005,
Total equity capital = 44.36
Total Debt = 13.26
Total capital = 57.62
Hence, Proportion of equity = 76.9% and
Proportion of debt = 23.1%

In 2006,
Total equity capital = 14.56
Total Debt = 13.17
Total capital = 27.73
Hence, Proportion of equity = 52.6% and
Proportion of debt = 46.4%

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In 2007,
Total equity capital = 14.60
Total Debt = 10.48
Total capital = 25.08
Hence, Proportion of equity = 58.3% and
Proportion of debt = 41.7%

In 2008,
Total equity capital = 10.56
Total Debt = 12.55
Total capital = 23.11
Hence, Proportion of equity = 45.6% and
Proportion of debt = 54.4%

In 2009,
Total equity capital = 9.96
Total Debt = 15.80
Total capital = 25.76
Hence, Proportion of equity = 38.6% and
Proportion of debt = 61.4%
From the analysis of the capital structure of the last five year,
we can easily conclude that the proportion of the equity from
capital structure shows gradual decrease. Similarly, there is an
increase in the proportion of debt in the capital structure.
However, in 2007 there is an increase in the proportion of
equity and decrease in the proportion in the capital structure is
noticed.

NOTE: Reserves and Surplus have been used as a part of

equity

DEBT-EQUITY RATIO

Year Total Debt Total Equity Debt-Equity

ratio
2005 13.26 44.36 0.29
2006 13.17 14.56 0.90
2007 10.48 14.60 0.71
2008 12.55 10.56 1.18
2009 15.80 9.96 1.5

INTERPRETATION: A high debt-equity ratio indicates that the

claims of outsiders are greater than those of owner’s. A ratio of
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1:1 is considered to be a good for a firm. Here, in 2006 and
2007 the debt-equity ratio is near to 1 and is therefore,
satisfactory.
But, in 2008 and 2009 the debt-equity ratio is greater than 1
and is considered to be a good for the firm.

BIRLA CORPORATION LIMITED

Birla Corporation limited is the flagship Company of the M.P.

Birla Group, incorporated as Birla Jute Manufacturing Company
Limited in 1919. It was Late Mr. Madhav Prasad Birla who gave
shape to it. As Chairman of the Company, Mr. Madhav Prasad
Birla transformed it from a manufacturer of jute goods to a
leading multi-product corporation with widespread activities.
Under the Chairmanship of Mrs. Priyamvada Birla, the Company
crossed the Rs. 1300 corer turnover marks and the name was
changed to Birla Corporation Limited in 1998. After the demise
of Mrs. Priyamvada Birla, the company continued to
Consolidate in terms of profitability, competitiveness and
growth under the leadership of Mr. Rajendra S. Lodha, late
Chairman of the M.P. Birla Group. Under his leadership, the
Company posted its best ever results in the years ended
31.3.2006, 31.3.2007 and 31.3.2008. The Company continued
to record impressive growth in 2008-09 and 2009-10, under the

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chairmanship of Mr. H.V.Lodha.

Birla Corporation Limited has products ranging from cement to

jute goods, PVC floor covering, as well as auto trims (jute felt-
based car interiors).

Installed Capacity and Production of Birla

Corporation Ltd.
Product Installed Production
Capacity (2009-2010) (2009-2010)
Cement 6.07 Mill. Tons. 5.69 Mill. Tons.
Jute Goods 38000 M T 27,300 MT
PVC Floor 48.60 lakh sq. Meters 1.09 lakh sq.
Covering mtrs.
Auto Trim 7.80 lakh Pcs 0.64 lakh Pcs
Parts
Iron & Steel 3,750 tons 1,078 tons
Casting

BIRLA CEMENT

Birla Cement Works and Chanderia Cement Works are units of

Birla Corporation Limited which is a multi-product, multi-
interest Rs.2000 Corer plus conglomerate. The plants have
access to the latest technology and infrastructure and are rated
amongst the most advanced in the country. The plants have a
manufacturing capacity of 2.5 Million Tonnes per Annum.

The cement is marketed under the brand names of Birla

Cement Samrat, Birla Cement Khajuroha, Birla
Cement Chetak, Birla Cement and Birla Premium Cement,
bringing the product under the common brand of Birla Cement

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while retaining the niche identity of Samrat for blended cement.

The Product and Brand names are as follows :-

Units Products BIS Brand

Specifications names
Birla Cement Portland IS 1489 (Part - I) Birla
Works Pozzolana 43 Gr - IS 8043 Cement
Chanderia Cement (PPC) 53 Gr - IS 12269 Samrat
Cement Ordinary Birla
Works Portland Cement
Cement (OPC) - Chetak
43 Gr, 53 Gr
Satna PPC IS 1489 (Part - I) Birla
Cement OPC (43 Gr.) IS 8043 Cement
Works Samrat
Birla Vikas Birla
Cement Cement
Khajuraho
Raebareli PPC IS 1489 (Part - I) Birla
Cement Cement
Works Samrat
Durgapur Portland Slag IS 455 Birla
Cement Cement (PSC) Cement
Works Birla
Premium

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 BALANCE SHEET OF BIRLA CEMENT (IN CRORES

Mar'0 Mar
Mar '06 Mar '07 Mar '08
5 '09
12mt 12
12 mths 12 mths12 mths
hs mths
Sources Of Funds
Total Share Capital 77.01 77.01 77.01 77.01 77.01
Equity Share Capital 77.01 77.01 77.01 77.01 77.01
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
225.4 1,202.4
Reserves 297.71 580.08 919.53
7 8
Revaluation Reserves 10.31 9.52 8.73 8.44 8.22
312.7 1,287.7
Net worth 384.24 665.82 1,004.98
9 1
172.3
Secured Loans 205.50 211.24 206.01 219.40
9
Unsecured Loans 33.28 25.49 27.80 21.49 8.36
205.6
Total Debt 230.99 239.04 227.50 227.76
7
518.4 1,515.4
Total Liabilities 615.23 904.86 1,232.48
6 7

Application Of Funds
876.2 1,354.2
Gross Block 1,098.07 1,154.35 1,173.44
2 0
Less: Accum. 578.0
597.84 635.21 672.64 694.15
Depreciation 7
298.1
Net Block 500.23 519.14 500.80 660.05
5
126.0
Capital Work in Progress 33.90 25.74 149.11 141.86
3
110.2
Investments 175.31 420.08 634.00 552.29
0
102.9
Inventories 105.72 142.59 200.45 192.88
5
Sundry Debtors 56.22 22.48 27.22 31.71 20.00
Cash and Bank Balance 13.12 25.00 24.96 28.94 38.73
172.2
Total Current Assets 153.20 194.77 261.10 251.61
9
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 101.3
Loans and Advances 137.43 297.89 473.54 175.73
8
Fixed Deposits 15.95 34.23 9.43 2.42 280.99
Total CA, Loans & 289.6
Advances
324.86 502.09 737.06 708.33
2
Deferred Credit 0.00 0.00 0.00 0.00 0.00
298.6
Current Liabilities 377.15 370.42 435.43 480.15
3
Provisions 13.22 44.89 192.15 353.07 66.90
311.8
Total CL & Provisions 422.04 562.57 788.50 547.05
5
Net Current Assets -22.23 -97.18 -60.48 -51.44 161.28
Miscellaneous Expenses 6.30 2.96 0.38 0.00 0.00
518.4 1,515.4
Total Assets 615.22 904.86 1,232.47
5 8
120.4
Contingent Liabilities 60.60 122.07 92.46 237.54
6
Book Value (Rs) 39.28 48.66 85.33 129.41 166.16

ANALYSIS OF CAPITAL STRUCTURE OF

BIRLA
In 2005,
Total equity capital = 302.48
Total Debt = 205.67
Total capital = 508.15
Hence, Proportion of equity = 59.5% and
Proportion of debt = 40.5%

In 2006,
Total equity capital = 374.72
Total Debt = 230.99
Total capital = 605.71
Hence, Proportion of equity =61.9% and
Proportion of debt = 38.1%

In 2007,
Total equity capital = 657.09
Total Debt = 239.04

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 Total capital = 896.13
Hence, Proportion of equity = 73.4% and
Proportion of debt = 26.6%

In 2008,
Total equity capital = 996.54
Total Debt = 227.50
Total capital = 1224.04
Hence, Proportion of equity = 81.5% and
Proportion of debt = 18.5%

In 2009,
Total equity capital = 1279.49
Total Debt = 227.76
Total capital = 1507.25
Hence, Proportion of equity = 84.8% and
Proportion of debt = 15.2%

From the analysis of the capital structure of the last five year,
we can easily conclude that the proportion of the equity in
capital structure shows constant increase. Similarly, there is a
decrease in the proportion of debt in the capital structure.
Thus, the company is using more and more equity in their
capital structure

NOTE: Reserves and Surplus have been used as a part of

equity

DEBT-EQUITY RATIO

Year Total Debt Total Equity Debt-Equity

ratio
2005 205.67 302.48 0.67
2006 230.99 374.72 0.62
2007 239.04 657.09 0.36
2008 227.50 996.54 0.22
2009 227.76 1279.49 0.17

INTERPRETATION: A high debt-equity ratio indicates that the

claims of outsiders are greater than those of owner’s. A ratio of
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1:1 is considered to be a good for a firm. Here, in 2007, 2008
and 2009 the debt-equity ratios are very low i.e.,0.36, 0.22 and
0.17 and are not considered to be favourable because it
indicates that the firm has not been able to use low cost
outsiders funds to magnify their earnings.

BIBLIOGRAPHY
WEBSITES

• www.moneycontrol.com
• www.proqest.com
• www.google.com
• www.hp.com
• www.bajajallianzlifeinsurance.co.in
• www.birlacement.com

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