NAME: ANAY BISWAS.

ENROLLMENT NO: A910801919064

DEPARTMENT: MBA SEMESTER: 3RD
FINANCE ASSIGNMENT

Q.1.Brief about the industries and nature of businesses.

1. ACC Ltd: India is the second-largest producer of cement in the world. It is a vital part of

its economy, employing more than a million people, directly or indirectly. India has a lot

of potential for development in the infrastructure and construction sector and the cement

sector is expected to largely benefit from it. A significant factor that aids the growth of

this sector is the ready availability of raw materials for making cement, such as limestone

and coal. Cement production reached 334.48 million tons in FY20. The sale of cement in

India stood at Rs 58,407 crore in FY20.

 ACC Limited (Formerly The Associated Cement Companies Limited) is one of the largest

producers of cement in India. It is a subsidiary of Lafarge Holcim. Founded in the year

1936; it is currently headquartered in Mumbai. Currently, its chairman is Mr. N S

Sekhsaria and their MD and CEO are Mr N Akhury. Their vision is, “To be one of the

most respected companies in India; recognized for challenging conventions and

delivering on our promise.” Their purpose, “To be a driving force in creating a

confident future for our people, our customers, our shareholders and our nation.”

2. Cipla Pharmaceuticals: India is the largest provider of generic drugs globally. Indian

pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of

generic demand in the US and 25% of all medicine in the UK. India enjoys an important

position in the global pharmaceuticals sector. The country also has a large pool of

scientists and engineers with a potential to steer the industry ahead to greater heights.

Indian pharmaceutical sector is expected to grow to US$ 100 billion, while medical

device market is expected to grow US$ 25 billion by 2025. Pharmaceuticals export from

India stood at US$ 20.70 billion in FY20. Pharmaceutical export include bulk drugs,

intermediates, drug formulations, biological, Ayush and herbal products and surgical.

India's biotechnology industry comprising biopharmaceuticals, bio-services, bio-

agriculture, bio-industry, and bioinformatics is expected grow at an average growth rate

of around 30 per cent a y-o-y to reach US$ 100 billion by 2025.

Cipla Limited is an Indian multinational pharmaceutical company, headquartered in

Mumbai, India. Cipla primarily develops medicines to treat respiratory, cardiovascular

disease, arthritis, diabetes, weight control and depression; other medical conditions. It
 was founded by Khwaja Abdul Hamied as 'The Chemical, Industrial & Pharmaceutical

Laboratories' in 1935 in Mumbai. The name of the Company was changed to 'Cipla

Limited' on 20 July 1984. As of 2019, Dr. Raju Mistry is being appointed as their Global

Chief People Officer. In July 2020, the company announced the introduction of Gilead

Sciences' Remdesivir under the brand name CIPREMI in India after reaching a voluntary

licensing agreement with parent company and DCGI approval for "restricted emergency

use" in COVID-19 treatment of critical confirmed patients.

3. Hindustan-Unilever Ltd (HUL) : Fast-moving consumer goods (FMCG) sector is

India’s fourth largest sector with household and personal care accounting for 50 per cent

of FMCG sales in India. Semi-urban and rural segments are growing at a rapid pace and

FMCG products account for 50 per cent of the total rural spending. The retail market in

India is estimated to reach US$ 1.1 trillion by 2020. FMCG industry is likely to grow at

9% to 10% in 2020, with semi-urban and rural areas contributing the most towards the

growth.

Hindustan Unilever Limited (HUL) is an Indian consumer goods company headquartered

in Mumbai, India. It is a subsidiary of Unilever, a British-Dutch company. Its products

include foods, beverages, cleaning agents, personal care products, water purifiers, and

other fast-moving consumer goods. HUL was established in 1931 as Hindustan Vanaspati

Manufacturing Co. and following a merger of constituent groups in 1956, it was renamed

Hindustan Lever Limited. The company was renamed in June 2007 as Hindustan

Unilever Limited. It is headquartered in Mumbai and Mr. Sanjiv Mehta is their current

CEO.
 Some of the famous brands under HUL are:

 Kwality Walls Ice Cream

 Surf Excel Detergents

 Lifebuoy soaps and hand washes

 Lakme beauty products.

4. Infosys Ltd.: The global sourcing market in India continues to grow at a higher pace

compared to the IT & BPM industry. India has become the digital capabilities hub of the

world with around 75 percent of global digital talent present in the country. The digital

economy is estimated to reach Rs 69, 89,000 crores by 2025.

Infosys Limited is an Indian multinational corporation that provides business consulting,

information technology, and outsourcing services. The company is headquartered men

Bangalore, Karnataka, India. They are one of the major IT companies; the others being

TCS, Wipro and HCL Tech. There were seven founders of Infosys, but the main brain

was Mr. Narayana Murthy who was the founder and CEO since its inception from 1981

to 2014. Currently Mr. Salil Parekh is the CEO of Infosys.

5. Maruti Suzuki India Limited (MSIL): A subsidiary of Suzuki Motor Corporation,

Japan, is India’s largest passenger car maker. Maruti Suzuki is credited with having

ushered in the automobile revolution in the country. The Company is engaged in the

business of manufacturing and sale of passenger vehicles in India. Making a small

beginning with the iconic Maruti 800 car, Maruti Suzuki today has a vast portfolio of 16

car models with over 150 variants. Maruti Suzuki’s product range extends ffrom entry-

level small cars like Alto 800, Alto K10 to the luxury sedan Ciaz. The Company has

manufacturing facilities in Gurgaon and Manesar in Haryana and a state of the art R&D
 center in Rohtak, Haryana. The Company, formerly known as Maruti Udyog Limited,

was incorporated as a joint venture between the Government of India and Suzuki Motor

Corporation, Japan in February 1981. Presently, Suzuki Motor Corp, oration owns equity

of 56.2%. The Company’s shares are traded on the National Stock Exchange (NSE) and

the Bombay Stock Exchange (BSE).

Q.2.Consolidated chart showing the figures of mean, variances, risks, and return for the

five companies from 2017 to 2019 (Tabulated Chart)

ACC HUL CIPLA

2017 2018 2019 2017 2018 2019 2017 2018 2019
s N2 7.660518 20.72766 10.68373 7.660518 20.72766 10.68373 7.660518 20.72766 10.68373
sN 2.767764 4.552764 3.268598 2.767764 4.552764 3.268598 2.767764 4.552764 3.268598
s S2 47.88526 72.70173 42.85336 19.88217 34.9871 27.15446 20.99712 84.93562 39.14907
sS 6.919917 8.526531 6.546248 4.458943 5.91499 5.210994 4.582261 9.216052 6.256922
bS 1.573998 1.360322 1.324724 0.791611 1.002455 0.317781 0.022307 0.360987 0.090939
rS 0.629553 0.726347 0.661446 0.49137 0.771589 0.199328 0.013474 0.178329 0.047506
r S2 0.396337 0.52758 0.437511 0.241445 0.59535 0.039732 0.000182 0.031801 0.002257
2
1-r S
0.603663 0.47242 0.562489 0.758555 0.40465 0.960268 0.999818 0.968199 0.997743
s s2 r S2 18.9787 38.35601 18.7488 4.800449 20.82956 1.078893 0.003812 2.701062 0.088354
s s2(1-r S2 ) 28.90656 34.34572 24.10455 15.08173 14.15755 26.07557 20.9933 82.23456 39.06072
 INFOSYS MARUTI
2017 2018 2019 2017 2018 2019
sN 2
7.660518 20.72766 10.68373 7.660518 20.72766 10.68373
sN 2.767764 4.552764 3.268598 2.767764 4.552764 3.268598
sS2 57.18741 22.25711 49.30486 21.75815 72.10762 79.86594
sS 7.562236 4.717744 7.021742 4.664563 8.49162 8.936775
bS 1.164968 0.610224 -0.99558 0.648458 1.311542 1.341914
rS 0.426376 0.588885 -0.46344 0.384769 0.70318 0.490801
r S
2
0.181797 0.346785 0.214775 0.148047 0.494462 0.240886
2
1-r S 0.818203 0.653215 0.785225 0.851953 0.505538 0.759114
ss r 2
S
2
10.39647 7.718432 10.58947 3.221234 35.65451 19.23856
ss (1-r ) 46.79094 14.53868 38.7154 18.53691 36.45311 60.62738
2
S
2

Q.3.Graphical Representations

YEAR vs TOTAL RISK

90
80
70
60
50
40
30
20
10
0
2017 2018 2019

ACC HUL CIPLA INFOSYS MARUTI

Figure 1: Showing the total risk of all the five companies from 2017 to 2019.
 YEAR vs SYSTEMATIC RISK
45
40
35
30
25
20
15
10
5
0
2017 2018 2019

ACC HUL CIPLA INFOSYS MARUTI

Figure 2: Showing the amount of systematic risk of all the five companies
The implication7 to 2019

YEAR vs COEFFICIENT OF DETERMINATION

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
2017 2018 2019

ACC HUL CIPLA INFOSYS MARUTI

Figure 3: Showing the Coefficient of determination of all the five companies

 YEAR vs UNSYSTEMATIC RISK
90
80
70
60
50
40
30
20
10
0
2017 2018 2019

ACC HUL CIPLA INFOSYS MARUTI

Figure 4: Showing the amount of unsystematic risk for all the five companiesies

Q.4.Implication of the findings

1. ACC:

 Standard deviations have increased from 6.9 in 2017 to 8.5 in 2018 and fallen

to 6.546 in 2019. This implies an increase of 23.2% from 2017 to 2018 and a

decrease of 22.9% from 2018 to 2019. So over the two year period, the

average variability seems to have remained more or less constant.

 Beta reduced from 1.58 in 2017 to 1.36 in 2018 and further to 1.32 in 2019.

Hence although stock return remains aggressive with respect to market return,

the degree of aggression has reduced.

 About 40% of the risk came from economy in 2017, while the figures for

2018 and 2019 are respectively about 53% and about 44%. This implies that

from 2017 to 2018 factors like changes in market, interest rate etc has
 contributed to increase in the risk. While the fluctuations were less from 2018

to 2019, therefore the proportion of systematic risk has reduced.

 In the similar way, about 60% of the risk came from the changes in firm

specific variables like consumer taste and preferences, changes in business

etc. While the figures for 2018 and 2019 are respectively about 47% and about

56%. This shows that when there are changes in the economy, there will be

changes in the firm and its businesses as well. Therefore we see that total risk

is divided into two parts: systematic risk and unsystematic risk. One goes

higher and the other falls and vice versa.

2. HUL:
 Standard deviations have increased from about 4.5 to 5.9 from 2017 to 2018

and fallen to about 5.2 in 2019. This implies an increase of about 31% and

then a reduction of about 12%. Therefore variability has decreased.

 Beta increased from 0.79 to about 1 from 2017 to 2018 and further fell to

about 0.2 in 2019. Therefore the volatility of the stock increased but again

decreased which implies that stock had become aggressive at first while

becoming defensive afterward.

 The proportion of systematic risk increased from about 24% to 59% from

2017 to 2018 while it fell drastically to just 3% in 2019. Similarly, the

proportion of unsystematic risk has reduced from 2017 to 2018 but

drastically increased to about 97% in 2019. Therefore we can say that there

were several changes in the economy as a whole from 2018 to 2019 which

led to such a huge change in risk proportion.

3. Cipla Pharmaceuticals:

 Standard deviateions have increased from about 4.6 to 9.2 from 2017 to 2018

and fallen to about 6.3 in 2019. This implies an increase of 100% from 2017

to 2018, but reduced by 31.5% in 2019. Therefore variability doubled at first

but decreased.

 Beta increased from about 0.02 to about 0.4 while falling to 0.09. Therefore

the stock remains very much defensive. Stock return is less volatile with

respect to market return.

 From 2017 to 2019 the proportion of systematic risk is almost negligible,

while the proportion of unsystematic risk is the highest. We can say that

although changes in the economy leads to changes in the micro framework

(firm, taste and preference of consumer etc), changes in the economy did not

have any effect on risk. Rather changes in the firm caused risk.

4. Infosys Ltd

 There is a decrease of about 38% in variability from 2017 to 2018 , while an

increase of about 49% from 2018 to 2019. So we can say that variability has

increased by 11% during the two years

 Beta decreased from about 1.16 to about 0.6 from 2017 to 2018. Thus the

aggressiveness of the stock had reduced and become defensive. Therefore

volatility has decreased. But we see that it became negative in 2019. However

this does not imply absence of risk. It implies that investment moves in the

opposite direction from the stock market.

  Proportion of systematic risk has increased during 2017 to 2018 but decreased

from 2018 to 2019. Similar conclusion can be drawn for the proportion of

unsystematic risk as well. Changes in the economy contribute to changes in

the firm as well. The firm has to keep itself in sync with the current economic

conditions.

5. Maruti:

 Variability in the stock has increased by 81% from 2017 to 2018 and only by

5% from 2018 to 2019.

 Beta increased from about 0.6 to 1.31 and further to 1.34. Therefore the stock

return is getting more volatile with respect to market return. Stock is

becoming aggressive.

 Proportion of systematic risk increased during 2017 to 2018 but fell during

2018 to 2019. Therefore the proportion of unsystematic risk decreased during

2017 to 2018 but increased during 2018 to 2019.

Q.5.Reasons for Variations over the years

In general the variations in the values of Beta , the proportion of systematic and

unsystematic risk is due to the changes in the market conditions and the changes in the

stock which is generated due to the changes in market conditions. The variations in the

case of ACC, HUL , Infosys and Maruti may be interlinked in the sense that when

economy is in a condition of danger , the demand for infrastructure , services , food and

consumer durables will definitely fluctuate. Similarly in case of inflation, prices will rise

and therefore demand will fall. Taking the case of automobiles, if the prices of fuel rises

then the demand for further automobiles will decrease as well. Again if the country
witnesses a health issue then although the demand for infrastructure, consumer durables

may not be significantly affected, but the demand of pharmaceuticals will surely rise.

People with health issues remains continue to take medicines which will not be a big

issue , but a new health problem demands more attention and therefore the

pharmaceutical industry will gear up to find the antidote. For example: the current Covid

pandemic situation.

Hence changes in values of risk and return entirely directly depends upon

macroeconomic variables which in turn causes fluctuations in firm specific variables

which will lead to changes in stock prices as well.