FM II Project

Group 14
PraveenKumar J R PGP14057
Praveen
PGP14056
Rituraj Dhir
PGP14058

FM II - GROUP 14

Leverage Analysis
TVS Motors
Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

Mar'09

37794

21532

37355

32042

15153

9571

796185

716925

714152

628802

436311

367092

26163

11602

24907

19458

8801

3108

6.8313925
63

109.08897
84
1.2611111
65
137.57332
86

1.2216044
01

2.5263356
24

NA

1.6888785
08
2.0631414
18

1.0864197
01
2.7446607
92

3.1407087
01
NA

EBIT
EPS
Sales
Net
Income
Debt/Equ
ity
DOL
DFL
DTL

1.6617617
38
11.352146
78

(IndianRupee.inLakhs)

The degree of combined leverage has increased considerably over the years,
more so in the past year. Now their leveraged state is healthy. A 1% change in their
sales would incur them an increase of 11.35% in their EPS, which is a very good
sign .By maintaining, a high operating leverage they have considerably reduced their
business risk
Their capital structure also has been refined in 2014, moving from maintaining a
D/E ratio of 1 to eliminating debt.

FM II - GROUP 14

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

Mar'09

998290

755750

652430

584150

578860

374470

30

23

19

20

20

12

3875720

3322650

3168290

2630050

2292200

2150730

738740

565020

468510

484370

489800

297380

1.9280119
07
0.9580336
92

3.2504286
08
1.3007773
79

1.8471003
65

4.2280840
04

0.5711591
87
0.2801281
9
0.1599977
89

0.0620027
16
1.2131064
65
0.0752158
96

EBIT
EPS
Sales
Net
Income
Debt/Equi
ty
DOL
DFL
DTL

NA
1.1854843
91
NA

Wipro
(IndianRupee.inLakhs)

Wipro maintain a steady degree of leverage. Their increased recruitments of

personnel for the previous year has skewed their operating leverage. There is more
variable operating costs than fixed costs and hence the reduction of operating
leverage.
Their capital structure is pure equity and have maintained zero debts in the past 5
years. The shareholders have gained from no debt, as though they have maintained a
moderate leverage ratio, the EPS has increased as the payment of debts have not
eaten away the revenue

FM II - GROUP 14

EBIT
EPS
Sales

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

Mar'09

3214

3595

5792

7713

6718

8832

24385

25270

25397

25928

22825

23748

498

878

2933

4334

3627

5277

Net
Income
Debt/Equi
ty
DOL

3.0261332

75.854299

12.161258

1.0894620

DFL

4.0837862

1.8471333

1.2979118

1.3160996

DTL

12.358081

140.11300

15.784241

1.4338405

NA
1.3063240
NA

Taj GVK Hotels

(IndianRupee.inLakhs)

The DOL has decreased from '75.85 to 3.026' during the period 2013-2014. It shows
that with 1% increase in sales the operating profit is increasing by 3.173%, which is
not very good as compared to the previous year. The DFL has increased from '1.847
to 4.083' during the period 2013-2014. It shows that with 1% change in operating
profit the EPS is changing by 4.083% which is a good sign
The degree of combined/Total leverage has
decreased considerably over the years, more so in the past two years. Now their
leveraged state is unhealthy. A 1% change in their sales would incur them an increase
of 12.35% in their EPS, which is a not very good sign as compared to the previous
year. Their capital structure has been maintained at 1 in 2014, indicating 50% debt
and 50% equity.

FM II - GROUP 14

Monte Carlo

EBIT
EPS
Sales
Net
Income
Debt/Eq
uity
DOL
DFL
DTL

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

Mar '09

9319

7194

8336

25

21

28

50373

40241

37301

5538

4594

5192

1.17317306
7
0.64484033
6
0.75650931
5

1.73812714
6
1.82486865
1
3.17185374
1

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

(IndianRupee.inLakhs)

The DOL has increased from '-1.738 to 1.173' during the period 2013-2014. It shows
that with 1% increase in sales the operating profit is increasing by 1.173%, which is
good sign for the company. The DFL has decreased from '1.824 to 0.644' during the
period 2013-2014. It shows that with 1% change in operating profit the EPS is
changing by only 0.644% which needs to be improved.
The degree of combined/Total leverage has
decreased considerably over the years, more so in the past two years. Now their
leveraged state is unhealthy. A 1% change in their sales would incur them an increase
of 7.35% in their EPS, which is a not very good sign. Their capital structure also has
been refined in 2014, moving from maintaining a D/E ratio of 0 indicating no debt.

FM II - GROUP 14

Working Capital
Management
Analysis

Return

= (P1 P0)/P0 + D1/P0

= Capital Gain Yield + Dividend

Yield

FM II - GROUP 14

TAJ GVK HOTELS & RESORTS

Dividends Declared
Announcement
Date

Effective
Date

Dividend
Type

12-05-14

24-07-14

Final

10.00

Rs.0.2000 per share(10%)Dividend

30-04-13

23-07-13

Final

25.00

Rs.0.5000 per share(25%)Dividend

30-04-12

19-07-12

Final

75.00

28-04-11

20-07-11

Final

100.00

27-04-10

21-07-10

Final

100.00

04-05-09

20-07-09

Final

100.00

29-04-08

24-07-08

Final

160.00

AGM

25-04-07

19-07-07

Final

150.00

AGM

FM II - GROUP 14

Dividend (%)

Remarks

25-04-06

20-07-06

Final

100.00

AGM

26-04-05

21-07-05

Final

45.00

AGM

28-04-04

20-07-04

Final

15.00

AGM

14-01-04

29-01-04

Interim

15.00

23-04-03

22-05-03

Interim

20.00

23-04-02

19-06-02

Interim

15.00

23-05-02

19-06-02

Interim

15.00

28-07-01

31-08-01

Final

10.00

Source: Dion Global Solutions Limited

As is evident from the above line of dividend payments, the amount paid as dividend
in 2015 has considerably decreased from the 2008 levels. This is attributed to the
decreasing EBITDA.As the revenue decreases, so is the amount available to payout
the dividends
The managers tried to stabilize the dividend payout to constant levels from 2009,
which should have been the strategy adopted from the onset. But due to the
decreasing PAT, the levels were not sustainable and hence the dividends reduced

Capital Gains

FM II - GROUP 14

The decrease in dividend yield is not compensated through capital gains, instead it
is gone down the spiral as well.
Looking at this scenario, the large amounts of interim dividends paid out could
have been retained either as cash reserves or used to invest in other activities to
hedge the negative spiral they are in right now.

The Company has consistently declared dividends for the last 5 years. It still is paying
out paying dividends despite the decrease in revenues
Taj had one instance of stock split happening in 2005.The details are as follows

MONTE CARLO
Monte Carlo Fashions has no history of paying out dividends .They have very recently
listed themselves on the exchange

FM II - GROUP 14

But the shareholders have enjoyed good capital gains on their investments. Looking
at the recent stock performance, the companys performance has resulted in a steep
increase in the price
With an outlook of the performance continuing, the shareholders tend to gain in
terms of capital gains

WIPRO
Dividend Policy
Dividend Declared

FM II - GROUP 14

10

Announcement
Date

Effective
Date

Dividend
Type

Dividend

Remarks

(%)
07-01-15

22-01-15

Interim

250.00

Rs.5.0000 per share(250%)Interim

Dividend

17-04-14

21-07-14

Final

250.00

Rs.5.0000 per share(250%)Final

Dividend (B C Dates has been revised
from 01/07/2014 to 23/07/2014)

13-01-14

22-01-14

Interim

150.00

Rs.3.0000 per share(150%)Interim

Dividend

19-04-13

27-06-13

Final

250.00

Rs.5.0000 per share(250%)Final

Dividend

15-01-13

23-01-13

Interim

100.00

Rs.2.0000 per share(100%)Interim

Dividend

25-04-12

28-06-12

Final

200.00

10-01-12

24-01-12

Interim

100.00

27-04-11

29-06-11

Final

200.00

17-01-11

27-01-11

Interim

100.00

23-04-10

15-06-10

Final

300.00

(Revised from BC 01/07/2010 to

22/07/2010)

22-04-09

29-06-09

Final

200.00

21-04-08

27-06-08

Final

200.00

AGM

10-10-07

25-10-07

Interim

100.00

20-04-07

28-06-07

Final

14-03-07

26-03-07

Interim

250.00

19-04-06

29-06-06

Final

250.00

AGM

22-04-05

29-06-05

Final

250.00

AGM

16-04-04

06-05-04

Final

1,450.00

17-04-03

01-07-03

Final

50.00

AGM

19-04-02

28-06-02

Final

50.00

AGM

20-04-01

18-06-01

Final

25.00

50.00

AGM

The Board has also proposed a Final

Dividend of Rs 4 per share and an one
time dividend of Rs 25 per share.

of 1.2%.

FM II - GROUP 14

11

The company has a good dividend track report and has consistently declared
dividends for the last 5 years.
* Dividend Yield: (Dividend per share / Current Share Price)

Last Five Year Dividend Policy representation of Wipro.

D = Dividend
B = Bonus Issue
Wipro is a really lucrative opportunity to invest considering the steady dividend
payment rolled out and also considering they are growing in terms of revenue year on
year can make us forecast that the dividend payments are going to be on a steady
upward spiral in the coming years

FM II - GROUP 14

12

Last Five Year EBITDA, PBT and PAT representation of Wipro

The increase in EBITDA are welcoming signs, which signal solid dividend pay-outs in
the future
Also considering the increase in share price the shareholders stand to capitalize on a
combination of capital and dividend yields

FM II - GROUP 14

13

TVS MOTORS
Dividend Policy
Dividend Declared
Announcement
Date

Effective
Date

Dividend
Type

Dividend

Remarks

(%)
12-01-15

06-02-15

Interim

75.00

Rs.0.7500 per share(75%)Interim

Dividend

16-04-14

02-05-14

Interim

75.00

Rs.0.7500 per share(75%)Second

Interim Dividend

08-10-13

30-10-13

Interim

65.00

Rs.0.6500 per share(65%)Interim

Dividend

11-04-13

03-05-13

Interim

60.00

Rs.0.6000 per share(60%)Second

Interim Dividend

17-01-13

06-02-13

Interim

60.00

Rs.0.6000 per share(60%)Interim

Dividend

24-05-12

04-06-12

Interim

70.00

Second Interim Dividend

29-02-12

20-03-12

Interim

60.00

14-07-11

02-08-11

Interim

60.00

Second Interim Dividend

10-01-11

25-01-11

Interim

50.00

09-07-10

26-07-10

Interim

50.00

Second Interim Dividend

07-01-10

25-01-10

Interim

70.00

11-06-09

29-06-09

Interim

70.00

Interim Dividend for the year ended

31.03.2009.

02-07-08

06-08-08

Final

70.00

AGM

28-06-07

10-08-07

Final

15.00

10-10-06

27-10-06

Interim

70.00

19-06-06

03-07-06

Interim

60.00

Second Interim Dividend

14-10-05

31-10-05

Interim

70.00

20-05-05

03-06-05

Final

60.00

07-10-04

29-10-04

Interim

70.00

FM II - GROUP 14

14

12-04-04

29-04-04

Interim

70.00

Second Interim Dividend

14-10-03

30-10-03

Interim

60.00

13-05-03

13-06-03

Interim

70.00

Second Interim Dividend & AGM

25-09-02

23-10-02

Interim

50.00

29-06-02

12-09-02

Final

0.00

AGM & Nil Final Dividend

29-07-02

12-09-02

Final

0.00

AGM & Nil Final Dividend

06-02-02

22-02-02

Interim

90.00

30-07-01

29-08-01

Final

80.00

AGM

Dividend Yield: (Dividend per share / Current Share Price)

Last Five Year Dividend Policy representation of TVS Motors.

D = Dividend
B = Bonus Issue
The share price is on a solid upward spiral due to a combination of factors on the
basis of the companys performance. This has resulted in a potential for high capital
gains for the shareholders. Another thing to be looked out is they have also paid out
dividends on a regular basis and the dividend payments have been steady. So future
dividends pay-outs would be in the same range

FM II - GROUP 14

15

Last Five Year EBITDA, PBT and PAT representation of TVS Motors.
A steady revenue as observed above points that the shareholders would have a solid
payouts in terms of dividends
So TVS Motors is one where the shareholder stands to gain both in terms of
dividend yields and capital gains

FM II - GROUP 14

16

Working Capital Management

Analysis
Working Capital Management: Taj GVC
Taj GVC Operating & Cash Conversion Cycle
MarMar14
13 Mar-12
Average age of inventory

13.47

11.3

8.37

Average collection period

12.51

10.56

12.24

Operating cycle

25.98

21.86

20.61

Accounts payable period

49.07

43.45

43.41

Cash conversion cycle

-23.09

-21.59

-22.8

Table: Operating & Cash conversion cycle of Taj

Industry Operating & Cash Conversion Cycle

MarMar14
13 Mar-12
Average age of inventory

54.03

54.02

43.47

Average collection period

41.88

37.04

Operating cycle

47.68
101.7
1

95.9

80.51

Accounts payable period

58.65

55.38

58.36

Cash conversion cycle

43.06

40.52

22.15

Table: Operating & Cash conversion cycle of Industry

Operating Cycle:
The operating cycle of Taj is way below the industry standards. They hold their
inventory for a shorter time and also have a short collection period compared to its
industry peers. So their operating cycle is shorter, which gives them a competitive
advantage over their peers in the industry

FM II - GROUP 14

17

120
100
80
60
40
20
0
2014

2013
Company

2012
Industry

Figure 4: Comparison of Operating Cycle of Taj vs Industry

Cash conversion cycle:

Their payable period is shorter than the industry average, but with the respect to their
collection period, they have an extended period to hold on to their resources. They
dont pay their debts until they collect the receivables.
These parameters make Taj an outlier in their industry and gives them a clear
competitive advantage over their peers
50
40
30
20
10
0
2014
-10

2013

2012

-20
-30
Company

Industry

Figure: Comparison of Cash Conversion Cycle of Taj vs Industry

FM II - GROUP 14

18

Working Capital Management: Monte Carlo

Monte Carlo Operating & Cash Conversion Cycle
MarMar14
13 Mar-12
Average age of inventory

90.11

95.3

101.95

Average collection period

63.99
159.2
9

67.01

Operating cycle

59.18
149.2
9

Accounts payable period

53.52

Cash conversion cycle

95.77

44.2
115.0
9

168.96
21.24
147.72

Table: Operating & Cash conversion cycle of Monte Carlo

Industry Operating & Cash Conversion Cycle

MarMar14
13 Mar-12
Average age of inventory

80.01

83.56

86.5

Average collection period

58.6
142.1
6

57.53

Operating cycle

54.9
134.9
1

Accounts payable period

43.37

Cash conversion cycle

91.54

40.93
101.2
3

144.03
44.26
99.77

Table: Operating & Cash conversion cycle of Industry

Operating cycle:
The operating cycle is slightly higher than the industry average. This could be mainly
attributed to the fact they hold their inventory longer than their peers in the
industry .They should look to effectively manage their inventory and also try reducing
their collection period.

FM II - GROUP 14

19

180
160
140
120
100
80
60
40
20
0
2014

2013
Company

2012
Industry

Figure: Comparison of Operating Cycle of Monte Carlo vs Industry.

Cash conversion Cycle:

They have increased their payable period over the years to better manage their
working capital. They have come closer to the industry average, but still there is
scope to increase on this front by managing their inventory better
160
140
120
100
80
60
40
20
0
2014

2013
Company

2012
Industry

Figure: Comparison of Cash Conversion Cycle of Monte Carlo vs Industry

FM II - GROUP 14

20

Working Capital Management: Wipro

Wipro Operating & Cash Conversion Cycle
MarMar14
13 Mar-12
Average age of inventory

2.58

6.07

8.66

Average collection period

80.27

90.43

78.89

Operating cycle

82.85

96.5

87.55

Accounts payable period

83.3

79.1

68.21

Cash conversion cycle

-0.45

17.4

19.34

Table: Operating & Cash conversion cycle of Wipro

Industry Operating & Cash Conversion Cycle

MarMar14
13 Mar-12
Average age of inventory

2.19

4.01

4.58

Average collection period

84.19

90.58

85.5

Operating cycle

86.38

94.59

90.08

Accounts payable period

53.03

58.06

58.99

Cash conversion cycle

33.35

36.53

31.09

Table: Operating & Cash conversion cycle of Industry

Operating Cycle:
They are maintaining their operating close to the industry average. But, they could do
better by handling their inventory management better.

FM II - GROUP 14

21

100
95
90
85
80
75
2014

2013
Company

2012
Industry

Figure: Comparison of Operating Cycle of Wipro vs Industry.

Cash Conversion Cycle:

Their payable period exceeds the industry average. This puts them in position to hold
to their assets longer. They have increased this over the years to better manage their
working capital. They have managed their working really well compared to the
industry standards.
40
35
30
25
20
15
10
5
0
2014
-5

2013
Company

2012
Industry

Figure: Comparison of Cash Conversion Cycle of Wipro vs Industry.

FM II - GROUP 14

22

Working Capital Management: TVS Motors

TVS Operating & Cash Conversion Cycle
MarMar14
13 Mar-12
Average age of inventory

15.04

17.35

23.34

Average collection period

61.78

79.79

76.37

76.82

97.14

99.71

Accounts payable period

114.41

93.43

58.09

Cash conversion cycle

-37.59

3.71

41.62

Operating cycle

Table: Operating & Cash conversion cycle of TVS Motors

Industry Operating & Cash Conversion Cycle

MarMar14
13 Mar-12
Average age of inventory

41.91

52.44

47.86

Average collection period

113.49
165.9
3

100.71

Operating cycle

113.76
155.6
7

148.57

Accounts payable period

111.36

115.65

97.82

Cash conversion cycle

44.31

50.28

50.75

Table: Operating & Cash conversion cycle of Industry

Operating Cycle:

TVS should be one of those who handle their working capital efficiently in the
industry. Both their inventory period and ACP are well below the industry average
proving that they have managed their short term financing really well

FM II - GROUP 14

23

180
160
140
120
100
80
60
40
20
0
2014

2013
Company

2012
Industry

Figure: Comparison of Operating Cycle of TVS vs Industry.

Cash Conversion Cycle:

Their payable period is just above the industry average, which also makes their cash
conversion cycle lower than the industry average .This makes TVS motors an outlier
in their industry in terms of handling their working capital
60
40
20
0
2014

2013

2012

-20
-40
-60
Company

Industry

Figure: Comparison of Cash Conversion Cycle of TVS vs Industry.

FM II - GROUP 14

24