PROJECT SYNOPSIS

Course: PGCHRM Batch 32

Name of the Faculty: Dr. Trilochan Tripathy
Subject: Corporate Finance (CFTH21-2)
Capital Structure Analysis of PB Fintech Ltd (Policybazaar)

Submitted By: Group 11

GROUP MEMBERS

Mr. Sachindra Pandi 122757

Ms. Sohini Guha 122761
Mr. Ashish Kumar Jha 122808
Ms. Shwetha Verma 122823
Ms. Anusha Vaithiyam Chandrasekaran 122854
Brief background of the Company: PB Fintech Ltd. is India’s largest online
platform for insurance and lending products leveraging the power of technology,
data, and innovation, according to Frost & Sullivan. They launched Policybazaar
and Paisabazaar platforms in 2008 and 2014 respectively, to address the large and
highly underpenetrated online insurance and lending markets. PolicyBazaar not
only helps in buying the insurance policy but it also assists in renewal or
cancellation of insurance policy.

The idea of PolicyBazaar came in mind of Yash Dahiya when his father had been
cheated of a few lakh rupees by insurance agents. PolicyBazaar was founded by
Yash Dahiya (CEO), Alok Bansal (CFO) and Rahul Agrawal (CTO) in year 2008.
PolicyBazaar is headquartered in Gurugram, Haryana.

Brief background of the Industry: Fintech, or financial technology, is the term

used to describe any technology that delivers financial services through software,
such as online banking, mobile payment apps, or even cryptocurrency. In India, the
2016 demonetization drive pulled in a lot of significance for the fintech industry.
The Indian government’s move towards Digital India and to turn India into a
cashless economy with financial inclusion led to growth of the industry. Since then,
there have been many more government initiatives to support the industry like the
Inter-Ministerial Steering Committee on Fintech (IMSC) and Joint Working Groups
on Fintech (JWG).

Problem Statement: Analysing the capital structure of PB Fintech.

Rationale behind the selection of the proposed project:  India is amongst the
fastest growing Fintech markets in the world with the highest FinTech adoption
rate globally (87%). It also has the highest expected RoI on Fintech projects
globally (29%). Thus, we wanted to explore this particular industry. PB Fintech
launched IPO between 1st to 3rd November 2021. On 7th June 2022, PB Fintech
shares crashed by over 15% as CEO Yashish Dahiya announced plans of selling 37.69
lakh equity shares via bulk deals on the stock exchange. As a result, there has been
some controversy surrounding the news and the future growth and profitability of
the company.

Objective of the Project

The basic objective is understand the success of the company in this industry
wherein we wanted to know the capital structure of the company by assessing
their standing/ranking in the industry, performance, stand of the Investors with
ROI and Clients at large which is driving their passion to improve on their products
and services. [Policy Bazaar had only Objective : bringing transparency in
insurance.]

With the Capital Structure, we also wanted to understand the financial objectives
of PB Fintech to its Investors and commitment to its customers. [We will be
assessing its Investors stake, Commitment to Investors on ROI, Growth
Revenues/Earnings, Ensuring Cash flow, Future Investments/Diversification etc.,
Scope of the Project: Capital structure relates to how much money or capital is
supporting a business, financing its assets, and funding its operations. It also shows
company acquisitions and capital expenditures that can influence the business’s
bottom line as well as describes the amount of debt a company uses as opposed to
equity, and it is often measured with the ratio of debt to equity. The more debt a
company has, the more it has to pay creditors for the use of those funds.

The capital structure also looks at how a firm finances their general operations,
research and development by making use of various sources of funds. Financial
debts appear in the form of bond issues or long-term bonds. Equity is classified as
preferred stock, retained earnings or common stock. Factors determining capital
structure are trading on equity, flexibility of financial plan, degree of control,
choice of investors, capital market condition, cost of financing, period of
financing, sizes of a company, Stability of sales and more.

Sources of Data: We would be referring to the company's financial statement from

the period 2017-2021 as well as other financial data in the public domain. The
company has been selected on the basis of availability of complete records for 4
years. 

Working Methodology: To determine the company’s capital structure, we’ll be

calculating the percentage of the total funding that each component represents.
By analyzing a company’s financial statements, we should be able to compile a list
of all the capital components on the books. Taking into account all capital
components that contribute to the overall capital structure, we’ll calculate the
percentage of the total capitalization represented by each capital component. And
digging deeper, we wish to uncover the company’s leverage which is described by
the ratio of debt financing to equity financing. Understanding a corporation’s
capital structure is necessary to determine which of the many available options is
the most fiscally responsible to pursue. Financing with equity versus debt has
different capital costs and, as such, will have significantly different long-term
effects on the health of a corporation’s finances.

Steps planned in determining the Capital Structure are as follows:

1. To identify all of the corporation’s capital components by examining the most

recent financial statements. Compile a list of all debt and equity, including
retained earnings, common shares, debt financing and contributions.
2. Next, calculate the sum total of all debt and equity you have identified. This
figure should equal the sum total of all the corporation’s assets.
3. To take each component of the corporate structure and divide it by the sum
total of all components, as calculated in step 2. These calculated figures
represent what each source of capital’s percentage is relative to the sum total
of the corporate structure.

These percentages can be used to monitor what mix of debt versus equity a
company currently holds on its books.