Analysis

of
CAPITAL STRUCTURE
Of
It industry
Group Number :11
Abhishek Aggarwal(003)
Akash Aggarwal(009)
Faraz Shahid(035)
Sanjay Bhati(091)
 Capital Structure

The capital structure of a firm is the

mix of different securities issued by
the firm to finance its operations.
 Sources of capital

• Ordinary shares (common stock)

• Preference shares (preferred stock)
• Debts
 IT INDUSTRY IN INDIA
The Indian information technology (IT) industry has played
a major role in placing India on the international map. The
industry is mainly governed by IT software and facilities for
instance System Integration, Software experiments, Custom
Application Development and Maintenance (CADM),
network services and IT Solutions. According to Nasscom's
findings Indian IT-BPO industry expanded by 12% during
the Fiscal year 2009 and attained aggregate returns of US$
71.6 billion. Out of the derived revenue US$ 59.6 billion
was solely earned by the software and services division.
Moreover, the industry witnessed an increase of around US$
7 million in FY 2008-09 i.e. US$ 47.3 billion against US$
40.9 billion accrued in FY 2008-09
Future of Indian IT Industry

The Indian IT sector persists to be one of the flourishing

sectors of India , indicating a speedy expansion in the
coming years. As per NASSCOM, the Indian IT exports are
anticipated to attain US$ 175 billion by 2020 out of which
the domestic sector will account for US$ 50 billion in
earnings. 

In total the export and domestic IT sector are expected to

attain profits amounting to US$ 225 billion.
analysis of CAPITAL
STRUCTURE
 Contact

INFOSYS

Headquarters Bangalore Area, India

Information Technology
Industry
and Services
Company Size 110,561 employees
Founder Chair person Mr Narayan Murthi
Founded 1981
 INFOSYS
Infosys(Rs in Crores) 2005 2006 2007 2008 2009
Equity share capital 135.5 138 286 286 286
secured Debts 0 0 0 0 0
unsecured debts 0 0 0 0.00 0.00
Total 135.5 138 286 286 286
           
Capital Structure (in percentage)          
Equit Mix 100 100 100 100 100
Debt Mix 0 0 0 0 0
           
Beta 1.2 1.2 1.2 1.2 1.2
Rf 6 6 6 6 6
Rm 68.03 14.31 11.72 23.89 -36.19
           
Cost ofEquity 80.436 15.972 12.864 27.468 -44.628
Cost of Debt 0   0 0 0
Weigthed Average cost of Capital 80.436 15.972 12.864 27.468 -44.628
SONATA SOFTWARE
Year of Inception : 1986

Year of Incorporation : 1994

President & MD : Mr. B. Ramaswamy

EVP & COO : Mr. P. Srikar Reddy

Employee Strength : 2,710 employees

 SONATA SOFTWARE
Sonata Software
(Rs in Crores) 2005 2006 2007 2008 2009
Equity share capital 10.52 10.52 10.52 10.52 10.52
secured Debts 0 0 0 0 0
unsecured debts 0 0 0 0 0
Total 92.55 10.52 10.52 10.52 10.52
           
Capital Structure (in percentage)          
Equit Mix 100 100 100 100 100
Debt Mix 0 0 0 0 0
           
Beta 1.2 1.2 1.2 1.2 1.2
Rf 6 6 6 6 6
Rm 68.03 14.31 11.72 23.89 -36.19
           
Cost ofEquity 80.436 15.972 12.864 27.468 -44.628
Cost of Debt 0 0 0 0 0

Weigthed Average cost of Capital 80.436 15.972 12.864 27.468 -44.628

BLUESTAR INFOTECH

Headquarters Mumbai, India

Information Technology a
Industry
nd Services
10,001 or more
Company Size
employees
Founded 1983
 BLUESTAR INFOTECH
Blue star infotech(Rs in Crores) 2005 2006 2007 2008 2009
Equity share capital 10 10 10 10 10
secured Debts 0.07 0.04      
unsecured debts         1.00
Total 10.07 10.04 10 10 11
           
Capital Structure (in percentage)          
Equit Mix 99.30487 99.60159 100 100 90.909091
Debt Mix 0.695134 0.398406 0 0 9.0909091
           
Beta 1 1 1 1 1
Rf 6 6 6 6 6
Rm 68.03 14.31 11.72 23.89 -36.19
           
Cost ofEquity 68.03 14.31 11.72 23.89 -36.19
Cost of Debt 12.36 12 5.03 9.023 5.8

Weigthed Average cost of Capital 67.64302 14.3008 11.72 23.89 -32.37273

 HCL
• Revenue            USD 5 Billion
• Employees         58,000 (2009)
• Founded in 1976
• Founded By Mr.Shiv Nadar
HCL TECHNOLOGIES
HCL Technologies (Rs in Crores) 2005 2006 2007 2008 2009
Equity share capital 63.84 64.69 132.74 133.27 134.05
secured Debts 96.42 13.17 40.77 25.24 123.81
unsecured debts 0.27 0.21 0.17 0.09 389.92
Total 160.53 78.07 173.68 158.6 647.78
           
Capital Structure (in percentage)          
Equit Mix 39.7682676 82.86153 76.42791 84.029 20.69375
Debt Mix 60.2317324 17.13847 23.57209 15.971 79.30625
           
Beta 1.09 1.09 1.09 1.09 1.09
Rf 6 6 6 6 6
Rm 68.03 14.31 11.72 23.89 -36.19
           
Cost ofEquity 73.6127 15.0579 12.2348 25.5001 -39.9871
Cost of Debt 11.97 13.3 10.03 9.842 6.88
Weigthed Average cost of Capital 36.4842339 14.75662 11.71508 22.99935 -2.81856
 TCS

Headquarters Bombay Area, India

Information Technology
Industry
and Services
Company Size 120,000 employees
Founded 1968
 TCS
TCS (Rs in Crores) 2005 2006 2007 2008 2009
Equity share capital 197.86 197.86 97.86 48.93 48.01
secured debts 32.63 9.27 41.76 26.52 111.01
Unsecured debts 7.74 8.98 8.98 8.98 9.73
Total 238.23 216.11 148.6 84.43 168.75
           
Capital Structure (in percentage)          
Equit Mix 83.05419 91.55523 65.85464 57.95333 48.93
Debt Mix 16.94581 8.444773 34.14536 42.04667 51.07
           
Beta 0.89 0.89 0.89 0.89 0.89
Rf 6 6 6 6 6
Rm 59 37.4 31.12 29.7 37.1
           
Cost ofEquity 53.17 33.946 28.3568 27.093 33.679
Cost of Debt 8.6 12.64 6.75 18.7 18.42

Weigthed Average cost of Capital 44.17449 31.09001 18.69732 15.77992 16.573206

 MAHINDRA SATYAM

Mahbūbnagar Area,
Headquarters
India
Information Technology
Industry
and Services
Type Public Ltd Company
Status Operating
Company Size 52,865 employees
Founded 1987
 MAHINDRA SATYAM
Mahindra Satyam (Rs in Crores) 2005 2006 2007 2008 2009
Equity share capital 134.1 133.44 64.89 63.85 63.25
secured Debts 23.67 13.79 12.57 9.87 7.3
unsecured debts 0 0 0 0.00 0.00
Total 157.77 147.23 77.46 73.72 70.55
           
Capital Structure (in percentage)          
Equit Mix 84.02256 86.04591 81.89046 86.08602 89.41193
Debt Mix 15.97744 13.95409 18.10954 13.91398 10.58807
           
Beta 0.24 0.24 0.24 0.24 0.24
Rf 6 6 6 6 6
Rm 68.03 14.31 11.72 23.89 -36.19
           
Cost ofEquity 20.8872 7.9944 7.3728 10.2936 -4.1256
Cost of Debt 1.02739 0.77001 2.1638 5.5184 2.5095
Weigthed Average cost of Capital 17.71411 6.986302 6.429474 9.62918 -3.42307
 NIIT TECHNOLOGIES
Headquarters Delhi Area, India
Information Technology
Industry
and Services
Company Size 3,644 employees
Founded 1981
NIIT TECHNOLOGIES
NIIT Ltd (Rs in Crores) 2005 2006 2007 2008 2009
Equity share capital 38.65 38.65 39.1 58.7 58.73
secured Debts 53.9 41.78 26.66 16.66 58.73
unsecured debts - 2 - - -
Total 92.55 82.43 65.76 75.36 117.46
           
Capital Structure (in percentage)          
Equit Mix 41.76121 46.88827 59.45864 77.8927813 50
Debt Mix 58.23879 53.11173 40.54136 22.1072187 50
           
Beta 1.2 1.2 1.2 1.2 1.2
Rf 6 6 6 6 6
Rm 68.03 14.31 11.72 23.89 -36.19
           
Cost ofEquity 80.436 15.972 12.864 27.468 -44.628
Cost of Debt 8.94 7.2 8.21 8.94 1.5

Weigthed Average cost of Capital 38.79759 11.31304 10.9772 23.3719745 -21.564

 Mphasis
Headquarters Bangalore Area, India
Information Technology 
Industry
and Services
Company Size 35000 employees
Founded 1998
 MphasiS
Mphasis (Rs in Crores) 2005 2006 2007 2008 2009
Equity share capital 161.02 164.08 208.93 208.73 209.58
secured Debts          
unsecured debts 1.55 1.31 4.61 4.74 2.98
Total 162.57 165.39 213.54 213.47 212.56
           
Capital Structure (in percentage)          
Equit Mix 99.04656 99.20793 97.84115 97.77955 98.5980429
Debt Mix 0.953435 0.792067 2.158846 2.220453 1.40195709
           
Beta 0.97 0.97 0.97 0.97 0.97
Rf 0.06 0.06 0.06 0.06 6
Rm 68.03 14.31 11.72 23.89 -36.19
           
Cost ofEquity 65.9909 13.8825 11.3702 23.1751 -34.9243
Cost of Debt 328.3871 110.687 12.8692 21.04121 4.67156747
Weigthed Average cost of Capital 68.49268 14.64926 11.40256 23.12772 -34.3691829
 PCS

Headquarters Bombay Area, India

Information Technology
Industry
and Services
Company Size 14,290 employees
Founded 1978
 PCS
PCS (Rs in Crores) 2005 2006 2007 2008 2009
Equity share capital 25 27.56 27.66 27.8 25.62
secured Debts 2.86 3.18 3.06 2.38 1.75
unsecured debts - - - - -
Total 27.86 30.74 30.72 30.18 27.37
           
Capital Structure (in percentage)          
Equit Mix 89.73439 89.65517 90.03906 92.11398 93.6061381
Debt Mix 10.26561 10.34483 9.960938 7.886017 6.39386189
           
Beta 2.3 2.3 2.3 2.3 2.3
Rf 6 6 6 6 6
Rm 68.03 14.31 11.72 23.89 -36.19
           
Cost of Equity 148.669 25.113 19.156 47.147 -91.037
Cost of Debt 1.664336 1.283019 2.901961 2.894958 3.70285714

Weigthed Average cost of Capital 133.5781 22.64783 17.53695 43.65728 -84.9794644

  

WIPRO INFOTECH

Headquarters Bangalore Area, India

Information Technology
Industry
and Services
Company Size Around 96,000
 WIPRO INFOTECH
Wipro (Rs in Crores) 2005 2006 2007 2008 2009
Equity share capital 140.71 285.15 291.8 292.3 293
secured Debts 21.59 45.06 0 4  
unsecured debts 40.5 5.1 23.2 3,818.40 5,013.90
Total 202.8 335.31 529.8 4114.7 5306.9
           
Capital Structure (in percentage)          
Equit Mix 69.38363 85.04071 55.07739 7.103799 5.521114
Debt Mix 30.61637 14.95929 44.92261 92.8962 94.47889
           
Beta 0.79 0.79 0.79 0.79 0.79
Rf 6 6 6 6 6
Rm 68.03 14.31 11.72 23.89 -36.19
           
Cost ofEquity 55.0037 12.5649 10.5188 20.1331 -27.3301
Cost of Debt 8.970849 6.240032 3.02521 3.055672 3.925088

Weigthed Average cost of Capital 44.38786 15.99185 7.152484 4.268818 2.199454

 INDUSTRIAL AVERAGE FOR 2009
CAPITAL
STRUCTURE(
RS IN BLUE STAR MAHINDRA NIIT SONATA INDUSTRIAL INDUSTRIAL
CRORE) INFOTECH HCL SATYAM INFOSYS MPHASIS TECHNOLOGY PCS SOFTWARE TCS WIPRO TOTAL AVERAGE

Equity share
capital 10 134.05 63.25 286 209.58 58.73 25.62 10.52 48.01 293 1138.76 113.876

secured Debts   123.81 7.3 0   58.73 1.75 0 111.01   302.6 30.26

unsecured
debts 1.00 389.92 0.00 0.00 2.98 - - 0.00 9.73 5,013.90 5417.53 541.753
Total 11 647.78 70.55 286 212.56 117.46 27.37 10.52 168.75 5306.9 6858.89 685.889
                       

Capital
Structure (In
percentage)                      
Equit Mix 90.90909 20.69375 89.41193 100 98.59804 50 93.60614 100 48.93 5.521114 697.6701 69.76701
Debt Mix 9.090909 79.30625 10.58807 0 1.401957 50 6.393862 0 51.07 94.47889 302.3299 30.23299
                       

Cost ofEquity -36.19 -39.9871 -4.1256 -44.628 -34.9243 -44.628 -91.037 -44.628 -31.5491 -27.3301 -399.027 -39.9027

Cost of Debt 5.8 6.88 2.5095 0 4.671567 1.5 3.702857 0 0.1842 3.925088 29.17321 2.917321

Weigthed
Average cost of
Capital -32.3727 -2.81856 -3.42307 -44.628 -34.3692 -21.564 -84.9795 -44.628 -15.3429 2.199454 -281.926 -28.1926
 FINDINGS
• There is Intra-Industry variation in the capital structure of
the company.
• The Companies prefers less to Long term debts .
Thank You