Quantitative approach for theory of constraints in manufacturing
Cf final ppt
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2. Flow of the presentation Indian oil and gas industry Profile of the concerned organizations And their dividend policies in brief Introduction of “event study” Discussion of the event study results Discriminant Analysis
3. Oil and Gas industry India has total reserves (proved & indicated) of 1,201 million metric tonnes (MMT) of crude oil and 1,437 billion cubic metres (BCM) of natural gas as on April 1, 2010. Growth rate was 2.2% for the 2009-10 financial year. Total dividend payout by the industry was Rs 178 Billion.
4. Industry profile Public Sector Undertakings (PSU's): ONGC - Oil & Natural Gas Corp (exploration and production) OIL - Oil India Limited (exploration & production) IOC - Indian Oil Corporation (refining & marketing) BPCL - Bharat Petroleum Corporation Ltd (refining and marketing) HPCL - Hindustan Petroleum (refining & marketing) GSPC - Gujarat State Petroleum Corp Private Oil & Gas companies in India RIL - Reliance Industries Limited (Indian Oil & gas company) ESSAR (Indian Oil & Gas company) Cairns Energy India BG energy Niko (upstream exploration & production) Shell Oil BP Total (downstream exploration & production, chemicals)
14. HPCL Capital Structure HPCL Mar '10 Sources Of Funds in RS. Cr Total Share Capital 339.01 Equity Share Capital 339.01 Share Application Money 0 Preference Share Capital 0 Reserves 11,218.96 Revaluation Reserves 0.00 Equity 11,557.97 Secured Loans 1,375.88 Unsecured Loans 19,926.49 Total Debt 21,302.37
19. Event study An Event study is a statistical method to assess the impact of an event on the value of a firm. Here we take dividend payout as an event.
23. Economical model Most appropriate model is Capital Asset Pricing Model(CAPM). Re = Rf + B(Rm – Rf) Rm = Average market return Rf = risk free return B = Sensitivity of the asset returns to the market returns.
29. Methodology Step 1. a) Test market model b) if found significant use Paired T-Test Step 2. a) if market model is not capable in explaining the behavior of the security, use CAPM model. b) impact analysis by expected actual(returns)
31. Step 1.b) Regression model says that market returns are significantly influencing the security returns. Market model is able to explain the variation in the security returns. We decided to go with “Market Model” Model E(Re) = -0007+ .562(Rm)
34. Step 2 Regression model is not able to explain behavior of the security returns by market returns. So we decided to use CAPM model. Model E(Re) = 7.14 + 5.44*1.06 ( annual) E(Re) = 12.906 % (annual)
35. Impact Impact = Actual return( 15 days)-Expected return( 15 days) =(-0.03432) -.57 = -.6075 There is negative impact by dividend payout.
41. Discriminant analysis Objective:- 1. To evaluate the dividend payout decision. 2. To identify the variables, which affect the dividend payout decision. Sample size = 88 companies from various industries.
