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CONTENTS


SI.n                    Contents            Page no
o
1      Executive Summary                    1-4

2      Introduction to the capital market   5-14

3      Company Profile                      15-37

       Theoretical Framework

4      Fundamental analysis                 38

4.1    Economic Analysis                    39-46

4.2    Industry Analysis                    47-51

4.3    Company analysis                     52-59

5      Technical analysis                   60-76

6      Findings                             77-78

7      Recommendations                      79
8      Conclusions                          80
9      Bibliography                         81




                      BABASAB PATIL
                          -1-
Executive Summary

Project Title : Fundamental Analysis and Technical Analysis of Unitech
                    Ltd.


Company and Place: KARVY Stock Broking Ltd. Dharwad


Research Process:
KARVY Stock Broking Ltd. Is a premier financial services provider & ranked top five in
the country. Recently the capital market crashed because of many reasons investors lost
heavy amount But fundamental & Macro factors Indian market is good. Stability in
market is not there currently therefore some of the investor who lost money in market
crash, so many of them are shaky to enter into market again. Therefore getting investor
confidence is more important which will happen when the market stabilizes. So for that
matter broking firms should provide proper guidance to their investors for facilitating
their decision making in investments.


Research Objectives:
Main Objective: To know the future increase and decrease of stock price in selected
company stocks through Fundamental And Technical Analysis.


Sub Objectives:

    To understand how best we can use this analysis is to meet the financial goal of
       the investors.


    To understand the effect of Industry specific factors on the stock prices through
       Industry Analysis.


    To know which securities to be bought and when to be bought.


    To know which securities to be sold and when to sell.


    To provide investors with a basket of securities to be stay invested to have a sound
       portfolio.

                                  BABASAB PATIL
                                      -2-
Research Plan:
The data collected for the study is secondary data. The data I have used for the study is
   1. Historical shares value of the stocks collected from www.nseindia.com
   2. The balance sheet and Income statement got from companies web site.
   3. Some of the information about the industry is collected from the web site.


The Measurement Techniques
The following techniques are used for the study.
1. The bar chart
2. Candlestick charting
3. Point & figure chart
4. Moving average.
5. Exponential moving average (EMA)
6. The relative strength index (RSI)
7. Oscillators (ROC, RSI, MACD,STOCHASTICS)


Analysis: Using MS-Excel


Findings:
General:

    One of the most important areas for any investor to look when researching a
       company is the financial statement. Financial reports are required by law and are
       published both quarterly and annually.

    Management discussion give investors a better understanding of what the
       company does and usually points out some key areas where they did well.

    Audited financial reports have much more credibility than unaudited ones.

    The income statement takes into account some non-cash items such as
       depreciation. The cash-flow statement strips away all non-cash items and tells you
       how much actual money the company generated.




                                    BABASAB PATIL
                                        -3-
For Stock:

    First, the projected MPS of the stock next three years are Rs.231.05, Rs.286.03
       and Rs.352.68.
    Short term support for scrip: 265-275; Next support has been established at
       150-165.
    Long term target by technical analysis is 620-40 but this is unlikely to happen in
       the medium term because short term trend has been bearish and long term trend
       has been flat and undergoing long consolidation

For market:
    Short term support or intermediate support: 4500-4600; next long term support
       lies at3100-3150
    Resistance for Nifty is at present is at 6000
    Short term and intermediate trend has been bearish and long term trend is still
       bullish.
    Long term nifty target is a 6980- 7020.



Recommendations:

      Long term investors can include Unitech, because the growth rates and earnings
       are good compared to others stocks. Therefore investors can include this in their
       portfolio to earn the higher return on their investment.
    The Long term investors should buy the stocks fair value found out by the
       fundamental analysis.
    Short term investors should look on various support and resistance of stocks to
       buy or sell and make profit.




Conclusion:
    Stock market or capital market provides the industry with a lot of capital needed
       by the industry, which leads to the growth of the industry and economy as a
       whole; hence the stock market plays an important role in the development of the
       industry.

                                      BABASAB PATIL
                                          -4-
 Some times Using Technical and fundamental analysis individually leads to
   incorrect results hence both Fundamental and technical analysis should be used at
   a time to get the desired result.
 Fundamental analysts study everything from the overall economy and industry
   conditions, to the financial condition and management of companies before
   deciding on any particular stock.
 Technical analyst’s look for peaks, bottoms, trends, patterns and other factors
   affecting a stock's price movement and then make buy/sell decisions based on
   those factors.




                                BABASAB PATIL
                                    -5-
INTRODUCTION TO CAPITAL MARKETS


Introduction to Capital Markets
Transfer of resources from those with idle resources to others who have a productive need
for them is perhaps most efficiently achieved through the securities markets. Stated
formally, securities markets provide channels for allocation of savings to investments and
thereby decouple these two activities. As a result, the savers and investors are not
constrained by their individual abilities, but by the economy’s abilities to invest and save
respectively, which inevitably enhances savings and investment in the economy.


Market Segments
The securities market has two interdependent and inseparable segments, the new issues
(primary market) and the stock (secondary) market. The primary market provides the
channel for sale of new securities while the secondary market deals in securities
previously issued. The price signals, which subsume all information about the issuer and
his business including associated risk, generated in the secondary market, help the
primary market in allocation of funds. The issuers of securities issue (create and sell) new
securities in the primary market to raise funds for investment and/or to discharge some
obligation. They do so either through public issues or private placement. There are two
major types of issuers who issue securities. The corporate entities issue mainly debt and
equity instruments (shares, debentures, etc.), while the governments (central and state
governments) issue debt securities (dated securities, treasury bills).


The secondary market enables participants who hold securities to adjust their holdings in
response to changes in their assessment of risk and return. They also sell securities for
cash to meet their liquidity needs. A variant of secondary market is the forward market,
where securities are traded for future delivery and payment. Pure forward is out side the
formal market. The versions of forward in formal market are futures and options. In
futures market, standardized securities are traded for future delivery and settlement.
These futures can be on a basket of securities like an index or an individual security. In


case of options, securities are traded for conditional future delivery. There are two types
of options – a put option permits the owner to sell a security to the writer of options at a
predetermined price while a call option permits the owner to purchase a security from the
                                    BABASAB PATIL
                                        -6-
writer of the option at a predetermined price. These options can also be on individual
stocks or basket of stocks like index. Two exchanges, namely NSE and BSE provide
trading of derivatives of securities.


Products and Participants
Savings are linked to investments by a variety of intermediaries through a range of
complex financial products called “securities” which is defined in the Securities Contracts
(Regulation) Act, 1956. Which includes shares, scrip’s, stocks, bonds, debentures,
debenture stock, or other marketable securities of like nature in or of any incorporate
company or body corporate, government securities, derivatives of securities, units of
collective investment scheme, security receipts, interest and rights in securities, or any
other instruments so declared by the central government These demand for and supply of
securities and funds determine, under competitive market conditions in goods and
securities market, the prices of securities.


Securities Market and Economic Growth
A well functioning securities market is conducive to sustained economic growth. There
have been a number of studies, starting from World Bank and IMF to various scholars,
which have established robust relationship not only one way, but also the both ways,
between the development in the securities market and the economic growth.
The securities market fosters economic growth to the extent that it-
   •   Augments the quantities of real savings and capital formation from any given
       level of national income,
   •   Increases net capital inflow from abroad,
   •   Raises the productivity of investment by improving allocation of investible funds,
       and (d) Reduces the cost of capital.




                                        BABASAB PATIL
                                            -7-
International Linkage
The securities market facilitates the internationalization of an economy by linking it with
the rest of the world. This linkage assists through the inflow of capital in the form of
portfolio investment. Moreover, a strong domestic stock market performance forms the


basis for well performing domestic corporate to raise capital in the international market.
This implies that the domestic economy is opened up to international competitive
pressures, which help to raise efficiency. It is also very likely that existence of a domestic
securities market will deter capital outflow by providing attractive investment
opportunities within domestic economy.


There are also other developmental benefits associated with the existence of a securities
market.
   •   The securities market provides a fast-rate breeding ground for the skills and
       judgment needed for entrepreneurship, risk bearing, portfolio selection and
       management.
   •   An active securities market serves as an ‘engine’ of general financial development
       and may, in particular, accelerate the integration of informal financial systems
       with the institutional financial sector. Securities directly displace traditional assets
       such as gold and stocks of produce or, indirectly, may provide portfolio assets for
       unit trusts, pension funds and similar FIIs that raise savings from the traditional
       sector.
   •   The existence of securities market enhances the scope, and provides institutional
       mechanisms, for the operation of monetary and financial policy


A Profile of Indian Securities Market
The past decade in many ways has been remarkable for securities market in India. It has
grown exponentially as measured in terms of amount raised from the market, number of
stock exchanges and other intermediaries, the number of listed stocks, market
capitalization, trading volumes and turnover on stock exchanges, and investor population.
The market has witnessed fundamental institutional changes resulting in drastic reduction
in transaction costs and significant improvements in efficiency, transparency and safety.




                                    BABASAB PATIL
                                        -8-
Securities and Exchange Board of India (SEBI)
With the objectives of improving market efficiency, enhancing transparency, checking
unfair trade practices and bringing the Indian market up to international standards, a
package of reforms consisting of measures to liberalize, regulate and develop the
securities market was introduced during the 1990s. This has changed corporate securities
market beyond recognition in this decade. The practice of allocation of resources among
different competing entities as well as its terms by a central authority was discontinued.
The secondary market overcame the geographical barriers by moving to screen-based
trading. Trades enjoy counterparty guarantee.


Bombay Stock Exchange (BSE)
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich
heritage. Popularly known as "BSE", it was established as "The Native Share & Stock
Brokers Association" in 1875. It is the first stock exchange in the country to obtain
permanent recognition in 1956 from the Government of India under the Securities
Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the
development of the Indian capital market is widely recognized and its index, SENSEX, is
tracked worldwide. With Demutualisation, the trading rights and ownership rights have
been de-linked effectively addressing concerns regarding perceived and real conflicts of
interest. The Exchange is professionally managed under the overall direction of the Board
of Directors. The Board comprises eminent professionals, representatives of Trading
Members and the Managing Director of the Exchange.


The Exchange has a nation-wide reach with a presence in 417 cities and towns of India.
The systems and processes of the Exchange are designed to safeguard market integrity
and enhance transparency in operations. During the year 2004-2005, the trading volumes
on the Exchange showed robust growth. The Exchange provides an efficient and
transparent market for trading in equity, debt instruments and derivatives. The BSE's On
Line Trading System (BOLT) is a proprietary system of the Exchange and is BS
7799-2-2002 certified. The surveillance and clearing & settlement functions of the
Exchange are ISO 9001:2000 certified.




                                   BABASAB PATIL
                                       -9-
BSE as a brand is synonymous with capital markets in India. The BSE SENSEX is the
benchmark equity index that reflects the robustness of the economy and finance. At par
with international standards,
   •   First in India to introduce Equity Derivatives
   •   First in India to launch a Free Float Index
   •   First in India to launch US$ version of BSE Sensex


   First in India to launch Exchange Enabled Internet Trading Platform
   •   First in India to obtain ISO certification for Surveillance, Clearing & Settlement
   •   'BSE On-Line Trading System’ (BOLT) has been awarded the globally
        recognized the Information Security Management System standard
   •   First to have an exclusive facility for financial training
   •   Moved from Open Outcry to Electronic Trading within just 50 days
   •   An equally important accomplishment of BSE is the launch of a nationwide
       investor awareness campaign - Safe Investing in the Stock Market -
   •   In 2002, the name The Stock Exchange, Mumbai, was changed to BSE.


National Stock Exchange (NSE)
The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FII’s) to provide access
to investors from all across the country on an equal footing. Based on the
recommendations, NSE was promoted by leading Financial Institutions at the behest of
the Government of India and was incorporated in November 1992 as a tax-paying
company unlike other stock exchanges in the country


On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,
1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment commenced operations in
November 1994 and operations in Derivatives segment commenced in June 2000.




                                    BABASAB PATIL
                                        - 10 -
NSE has been promoted by leading financial institutions, banks, insurance companies and
other financial intermediaries. NSE is one of the first de-mutualised stock exchanges in
the country, where the ownership and management of the Exchange is completely
divorced from the right to trade on it. Though the impetus for its establishment came from
policy makers in the country, it has been set up as a public limited company, owned by
the       leading        institutional       investors        in          the      country.
The NSE model however, does not preclude, but in fact accommodates involvement,
support and contribution of trading members in a variety of ways. Its Board comprises of
senior executives from promoter institutions, eminent professionals in the fields of law,
economics, accountancy, finance, taxation, etc, public representatives.

NSE Milestones
       Nov-92    Incorporation
       Apr-93    Recognition as a stock exchange
       May-93    Formulation of business plan
       Jun-94    Wholesale Debt Market segment goes live
       Nov-94    Capital Market (Equities) segment goes live
       Mar-95    Establishment of Investor Grievance Cell
       Apr-95    Establishment of NSCCL, the first Clearing Corporation
       Jun-95    Introduction of centralised insurance cover for all trading members
        Jul-95   Establishment of Investor Protection Fund
       Oct-95    Became largest stock exchange in the country
       Apr-96    Commencement of clearing and settlement by NSCCL
       Apr-96    Launch of S&P CNX Nifty
       Jun-96    Establishment of Settlement Guarantee Fund
                 Setting up of National Securities Depository Limited, first depository in India, co-
       Nov-96    promoted by NSE
       Nov-96    Best IT Usage award by Computer Society of India
       Dec-96    Commencement of trading/settlement in dematerialised securities
       Dec-96    Dataquest award for Top IT User
       Dec-96    Launch of CNX Nifty Junior
       Feb-97    Regional clearing facility goes live
       Nov-97    Best IT Usage award by Computer Society of India
       May-98    Promotion of joint venture, India Index Services & Products Limited (IISL)
       May-98    Launch of NSE's Web-site: www.nse.co.in
        Jul-98   Launch of NSE's Certification Programme in Financial Market
       Aug-98    CYBER CORPORATE OF THE YEAR 1998 award
       Feb-99    Launch of Automated Lending and Borrowing Mechanism
       Apr-99    CHIP Web Award by CHIP magazine
       Oct-99    Setting up of NSE.IT
        Jan-00   Launch of NSE Research Initiative
       Feb-00    Commencement of Internet Trading
       Jun-00    Commencement of Derivatives Trading (Index Futures)

                                   BABASAB PATIL
                                       - 11 -
Sep-00 Launch of 'Zero Coupon Yield Curve'
               Launch of Broker Plaza by Dotex International, a joint venture between NSE.IT Ltd.
       Nov-00 and i-flex Solutions Ltd.
       Dec-00 Commencement of WAP trading
       Jun-01 Commencement of trading in Index Options
        Jul-01 Commencement of trading in Options on Individual Securities
       Nov-01 Commencement of trading in Futures on Individual Securities
       Dec-01 Launch of NSE VaR for Government Securities
        Jan-02 Launch of Exchange Traded Funds (ETFs)
               NSE wins the Wharton-Infosys Business Transformation Award in the Organization-
       May-02 wide Transformation category
       Oct-02 Launch of NSE Government Securities Index
        Jan-03 Commencement of trading in Retail Debt Market
       Jun-03 Launch of Interest Rate Futures
       Aug-03 Launch of Futures & options in CNXIT Index
       Jun-04 Launch of STP Interoperability
       Aug-04 Launch of NSE’s electronic interface for listed companies
       Mar-05 ‘India Innovation Award’ by EMPI Business School, New Delhi
       Jun-05 Launch of Futures & options in BANK Nifty Index
       Dec-06 'Derivative Exchange of the Year', by Asia Risk magazine
        Jan-07 Launch of NSE – CNBC TV 18 media centre
       Mar-07 NSE, CRISIL announce launch of IndiaBondWatch.com
       Jun-07 NSE launches derivatives on Nifty Junior & CNX 100
       Oct-07 NSE launches derivatives on Nifty Midcap 50
        Jan-08 Introduction of Mini Nifty derivative contracts on 1st January 2008
       Mar-08 Introduction of long term option contracts on S&P CNX Nifty Index

Depository System
The Depositories Act, 1996 was passed with the objective of ensuring free transferability
of securities with speed, accuracy and security. It does so by
   •   Making securities of public limited companies freely transferable subject to
       certain exceptions
   •   Dematerializing the securities in the depository mode
   •   Providing for maintenance of ownership records in a book entry form.


In order to streamline both the stages of settlement process, the Act envisages transfer
ownership of securities electronically by book entry without making the securities move
from person to person. The Act has made the securities of all public limited companies
freely transferable, restricting the company's right to use discretion in effecting the
transfer of securities, and the transfer deed and other procedural requirements under the




                                    BABASAB PATIL
                                        - 12 -
Companies Act have been dispensed with. Two depositories, viz., NSDL and CDSL, have
come up to provide instantaneous electronic transfer of securities.




Capital Market Intermediaries
There are several institutions, which facilitate the smooth functioning of the securities
market. They enable the issuers of securities to interact with the investors in the primary
as well as the secondary arena.
        •   Merchant Bankers
        •   Credit Rating Agencies
        •   R& T Agents - Registrars to Issue
        •   Stock Brokers
        •   Custodians
        •   Mutual Funds
        •   Depositories
        •   Depository Participants

Players (investors) in securities market

    •   Individual investors
    •   Institutional investors
    •   FII’s
    •   Mutual fund investor

Capital Market Instruments
The changes in the regulatory framework of the capital market and fiscal policies have
also resulted in newer kinds of financial instruments (securities) being introduced in the
market. Also, a lot of financial innovation by companies who are now permitted to
undertake treasury operations, has resulted in newer kinds of instruments - all of which
can be traded – being introduced. The variations in all these instruments depend on the
tenure, the nature of security, the interest rate, the collateral security offered and the
trading features, etc.
    •   Debentures
    •   Bonds
    •   Preference Shares

                                      BABASAB PATIL
                                          - 13 -
•   Equity Shares
   •   Government securities
Capital Market Processes
There are various processes that Issuers of securities follow or utilize in order to tap the
savers for raising resources. Some of the commonly used processes and methods are
described below.
   •   Initial Public Offering (IPO)
   •   Private Placement
   •   Preferential Offer/Rights Issue
   •   Internet Broking


Dependence on Securities Market
Three main sets of entities depend on securities market. While the Corporates and
governments raise resources from the securities market to meet their obligations, the
households invest their savings in securities. While the corporate sector and governments
together raised a sum of Rs. 226,911 crore during 2001-02, the household sector invested
4.3% of their financial savings through the securities market during 2000-01.


Corporate Sector
The 1990s witnessed emergence of the securities market as a major source of finance for
trade and industry. The share of capital market based instruments in resources raised
externally increased to 53% in 1993-94, but declined thereafter to 31% by 2000-01.


Governments
Along with increase in fiscal deficits of the governments, the dependence on market
borrowings to finance fiscal deficits has increased over the years. The state governments
and the central government financed about 14% and 18% respectively of their fiscal
deficit by market borrowings during 1990-91. In percentage terms, dependence of the
state governments on market borrowing did not increase much during the decade
1991-2002. In case of central government, it increased to 69.4% by 2001-02.




                                    BABASAB PATIL
                                        - 14 -
Household
According to the RBI data, the household sector accounted for 84.8 % of gross domestic
savings in Fixed income investment instruments during 2006-07; which has increased in
comparison to 83.9% in 2005-06. In fiscal 2006-07, the household sector has invested
55.7 % of financial savings in deposits, 24.2 % in insurance/provident funds, 4.9 % in
small savings, and 6.5 % in securities market including government securities , units of
mutual funds and other securities.


Investor population and profile
According to the SEBI-NCAER survey of Indian investors conducted in early 1999, an
estimated 12.8 million, or 7.6% of all Indian households representing 19 million
individuals had directly invested in equity shares and/or debentures as at the end of
financial year 1998-99. The investor households increased at a compound growth rate of
22% between 1985-86 and 1998-99. About 35% of investor households became investors
in equity shares prior to 1991, while 47% of the investors entered the market between
1991 and 1995 and 17% after 1995. More than 156 million or 92% of all Indian
households were non-investor households who did not have any investments in
equity/debentures. Low per capita income, apprehension of loss of capital, and economic
insecurity, which are all inter-related factors, significantly influenced the investment
attitude of the households. The lack of awareness about securities market and absence of
a dependable infrastructure and distribution network coupled with aversion to risk
inhibited non-investor households from investing in the securities market.




                                     BABASAB PATIL
                                         - 15 -
About KARVY
The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks among the top
player in almost all the fields it operates. Karvy Computer share Limited is India’s largest
Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate,
managing over 2 crore accounts. Karvy Stock Brokers Limited, member of National
Stock Exchange of India and the Bombay Stock Exchange, ranks among the top 5 stock
brokers in India. With over 6, 00,000 active accounts, it ranks among the top 5 Depositary
Participant in India, registered with NSDL and CDSL. Karvy COM trade, Member of
NCDEX and MCX ranks among the top 3 commodity brokers in the country. Karvy
Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5
insurance agent in the country. Registered with AMFI as a corporate Agent, Karvy is also
among the top Mutual Fund mobilizer with over Rs. 5,000 crores under management.
Karvy Realty Services, which started in 2006, has quickly established itself as a broker
who adds value, in the realty sector. Karvy Global offers niche off shoring services to
clients in the US.
Karvy has 575 offices over 375 locations across India and overseas at Dubai and New
York. Over 9,000 highly qualified people staff Karvy.


Karvy – Early Days
Karvy the name comes from the names of the directors:


K - Mr. V. Kutumba Rao
A - Mr. K Ajay Kumar
R - Mr. M S Ramakrishna
V - Mr. Vikram Singh
Y - Mr. M Yugandhar


The birth of Karvy was on a modest scale in 1979. It began with the vision and enterprise
of a small group of practicing Chartered Accountants who founded the flagship company
…Karvy Consultants Limited. Karvy started with consulting and financial accounting
automation, and carved inroads into the field of registry and share accounting by 1985.
Since then, Karvy have utilized its experience and superlative expertise to go from
strength to strength…to better its services, to provide new ones, to innovate, diversify and


                                    BABASAB PATIL
                                        - 16 -
in the process, evolved Karvy as one of India’s premier integrated financial service
enterprise.


GROWTH AND DEVELOPMENT OF KARVY
Over the last 20 years Karvy has traveled the success route, towards building a reputation
as an integrated financial services provider, offering a wide spectrum of services. And
Karvy have made this journey by taking the route of quality service, path breaking
innovations in service, versatility in service and finally…totality in service. Karvy’s
highly qualified manpower, cutting-edge technology, comprehensive infrastructure and
total customer-focus has secured for Karvy the position of an emerging financial services
giant enjoying the confidence and support of an enviable clientele across diverse fields in
the financial world.
Karvy’s values and vision of attaining total competence in its servicing has served as the
building block for creating a great financial enterprise, which stands solid on its fortresses
of financial strength - its various companies.
With the experience of years of holistic financial servicing behind it and years of
complete expertise in the industry to look forward to, Karvy have now emerged as a
premier integrated financial services provider.
And today, Karvy can look with pride at the fruits of its mastery and experience
comprehensive financial services that are competently segregated to service and manage a
diverse range of customer requirements.




                                    BABASAB PATIL
                                        - 17 -
KARVY-Milestones




AT PRESENT STATUS OF KARVY

Presently Karvy is a member of National Stock Exchange (NSE), the Bombay Stock
Exchange (BSE), and The Hyderabad Stock Exchange (HSE). Market analysis and
market predictions are done by professional management team.


KARVY is covering the entire spectrum of financial services such as Stock Broking
Services, Advisory Services, Stock broking, Depository Participants, Distribution of
financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking,
Commodities Broking, Personal Finance Advisory Services, Merchant Banking &
Corporate Finance, placement of equity, IPOs, among others.
It is the largest mobiliser of funds as per PRIME DATABASE. It is among the top 5
stock brokers in India (4% of NSE volumes). India's No. 1 Registrar & Securities
Transfer Agents (Ranked as “The Most Admired Registrar" by MARG). Among the top 3
Depository Participants. Largest Network of Branches & Business Associates. First ISO -
9002 Certified Registrar in India. Among top 10 Investment bankers. Largest Distributor
of Financial Products are --
Every 50th Indian is serviced by KARVY Every 20th trade in stock market is done
through KARVY. Every 6th Investor in India invests through KARVY India's No.1
Registrars and Transfer agent : KARVY Every 10th Demat Account is held at KARVY.



                                  BABASAB PATIL
                                      - 18 -
ORGANISATION STRUCTURE OF KARVY



                                  LEVEL-I


                                    Board of


                           CMD, MD, & other Directors




      Karvy                                      Karvy
                        Karvy                                Karvy Global
      Stock                                    Investor
                     Consultants                               Service
     Broking                                    Service
                       Limited                                 Limited
     Limited                                    Limited




                                               Karvy          Karvy
               Karvy
  Karvy                                     Insurance      Commodities
           Computershare
   Inc.                                      Broking      Broking Private
            Pvt. Limited
                                              Private        Limited
                                              Limited




                              Karvy Regional
                              HQs / Branches




                       BABASAB PATIL
                           - 19 -
Level-II


                Regional Branch Head

                                                   ISO CELL




          Operations          Support
                                                        Branches
          Divisions          Functions




                                         ACCOUNTS
  RIS

                                          SYSTEM
  FPD

                                           HRD
BROKING

                                           ADMN,
  DP
                                        PURCHASE,
                                         & STORES




                                                     BRANCHES




   Operations                           Support
   Divisions                           Functions




                       BABASAB PATIL
                           - 20 -
STUDY OF COMPANY PROFILE WITH RESPECT TO
                             Mc KINSEY’S 7S MODEL




STRATEGY:
In modern times the word strategy has found its way into the management field. In the
context of a business concern, strategy indicates specific program of action for achieving
the organization objectives by employing the firm’s resources efficiently and
economically. It involves preparing oneself for meeting unforeseen factor. It is also
concerned with meeting the challenges posed by the policies and actions of other
competitors in the market.


Quality Policy
To achieve and retain leadership, Karvy shall aim for complete customer satisfaction, by
combining its human and technological resources, to provide superior quality financial
services. In the process, Karvy will strive to exceed Customer's expectations.


Quality Objectives are to:
   •   Build in-house processes that will ensure transparent and harmonious
       relationships with its clients and investors to provide high quality of services.
   •   Establish a partner relationship with its investor service agents and vendors that
       will help in keeping up its commitments to the customers.

                                    BABASAB PATIL
                                        - 21 -
•     Provide high quality of work life for all its employees and equip them with
         adequate knowledge & skills so as to respond to customer's needs.
   •     Continue to uphold the values of honesty & integrity and strive to establish
         unparalleled standards in business ethics.
   •     Use state-of-the art information technology in developing new and innovative
         financial products and services to meet the changing needs of investors and
         clients.
   •     Strive to be a reliable source of value-added financial products and services and
         constantly guide the individuals and institutions in making a judicious choice of
         same.
   •     Strive to keep all stake-holders (shareholders, clients, investors, employees,
         suppliers and regulatory authorities) proud and satisfied.


STRUCTURE:

Board of Directors
Mr. C Parthasarathy (Chairman and Managing Director), Mr. M Yugandhar (Managing
Director ), Mr. M S Ramakrishna (Director ), Mr. Prasad V Potluri (Director), William
Stuart    Crosby     (Chairman    –    Karvy    Computer     share    Pvt   Ltd.),   Chandra
Balaraman(Director– Karvy Computer share Pvt Ltd.), Mark Davis(Director– Karvy
Computer share Pvt Ltd.), Mr. Uday Raval(Director - Karvy Inc. )
Karvy’s organization structure can be viewed as accomplishing departments Operations
Divisions and Support Function Division.
Below the Operations Divisions there are sub divisions namely Registry and Investor
Services (RIS), Depository Participant (DP), Broking Services, Financial Product
Distribution (FPD).


Below the Support Functions, there are sub divisions namely Accounts, System, Human
Resource Development, and Administration, Purchase & Stores.
These department heads controls the day-to-day affairs of the company.                 These
department heads are directly reports to the director. Board of Directors directly appoints
department heads. The departmental heads does locations of responsibilities among
various positions.



                                      BABASAB PATIL
                                          - 22 -
In Karvy Departments are inter related. Majority of decisions are taken by the top
management. While taking important decision the department managers are also
consulted and their suggestions are also considered.        Hence Participative style of
management is followed in Karvy.


SYSTEM:
KARVY covers the entire spectrum of financial services such as Stock broking,
Depository Participants, Distribution of financial products - mutual funds, bonds, fixed
deposit, equities, Insurance Broking, Commodities Broking, Personal Finance Advisory
Services, Merchant Banking & Corporate Finance, placement of equity, IPOs.


A link called ‘Resource Center’, devoted solely to research. Karvy’s highly skilled
research team, comprising of technical analysts as well as fundamental specialists, secure
result-oriented information on market trends, market analysis and market predictions.
This crucial information is given as a constant feedback to its customers, through daily
reports delivered thrice daily; The Pre-session Report, where market scenario for the day
is predicted, The Mid-session Report, timed to arrive during lunch break, where the
market forecast for the rest of the day is given and The Post-session Report, the final
report for the day, where the market and the report itself is reviewed. To add to this
repository of information, Karvy publish a monthly magazine The Finapolis, which
analyzes the latest stock market trends and takes a close look at the various investment
options, and products available in the market, while a weekly report, called Karvy Bazaar
Baatein, gives more information on the immediate trends in the stock market. In addition,
its specific industry reports give comprehensive information on various industries.


Karvy’s Stock Broking services are widely networked across India, with the number of
trading terminals providing retail stock broking facilities. To empower the investor
further Karvy have made serious efforts to ensure that its research calls are disseminated
systematically to all our stock broking clients through various delivery channels like
email, chat, SMS, phone calls etc.


STYLE:
An activity like forecasting and planning are made by top level managers. Major policies
and plans are made by top management and it is implemented and administered by
                                     BABASAB PATIL
                                         - 23 -
employees. In the organization the style of informal communication and meetings with
employees has created workers to a friendly environment.


STAFF:
The term staff refers to manpower planning, recruitment, performance appraisal,
motivation and morale.


SKILLS:
The managers and workers in each department are skilled to the extent of functions they
perform. Directors of the company are skilled in every activities and disciplines of
organization.
A 1600 team of highly qualified and dedicated professionals drawn from the best of
academic and professional backgrounds are committed to maintaining high levels of
client service delivery. This has propelled Karvy to a position among the top distributors
for equity and debt issues with an estimated market share of 15% in terms of applications
mobilized, besides being established as the leading procurer in all public issues.
A link called ‘Resource Center’, devoted solely to research. Karvy’s highly skilled
research team, comprising of technical analysts as well as fundamental specialists, secure
result-oriented information on market trends, market analysis and market predictions.
Achievements
   •   Largest mobiliser of funds as per PRIME DATABASE
   •   Among the top 5 stock brokers in India (4% of NSE volumes)
   •   India's No. 1 Registrar & Securities Transfer Agents (Ranked as " The Most
       Admired Registrar" by MARG)
   •   A Category- I -Merchant banker.
   •   Among the to top 3 Depository Participants
   •   Largest Network of Branches & Business Associates
   •   First ISO - 9002 Certified Registrar in India
   •   Among top 10 Investment bankers
   •   Largest Distributor of Financial Products
   •   Full Fledged IT driven operations
   •   Handled the largest- ever Public Issue - IDBI
   •   Handled over 500 Public issues as Registrars.

                                    BABASAB PATIL
                                        - 24 -
•   Handling the Reliance Account which accounts for nearly 10 million account
      holders

Major issues managed as arrangers

  •   Kerala State Electricity Board.
  •   Power Finance Corporation
  •   A.P. Water Resources Development Corporation.
  •   A.P. Roads Development Corporation.
  •   A.P. State Electricity Board.
  •   Haldia Petrochemicals Ltd.

Major issues managed as Co-Managers

  •   IndusInd Bank Ltd
  •   ICICI Bonds – March 97
  •   ICICI Bonds – Dec 97
  •   ICICI Safety Bonds March 98
  •   ICICI Safety Bonds – April 98. July 98, Oct 98, Dec 98, Jan 99.
  •   The Jammu and Kashmir Bank Ltd

Major issue handled as Registrars to Issues

  •   IDBI Equity
  •   Morgan Stanley Mutual Fund
  •   Bank of Baroda
  •   Bank of Punjab Ltd
  •   Corporation Bank
  •   IndusInd Bank Ltd
  •   Jammu and Kashmir Bank Ltd
  •   Housing and Urban Development Corporation (HUDCO) Ltd
  •   Madras Refineries Ltd
  •   Tamil Nadu Newsprint & Paper Ltd
  •   BPL Ltd
  •   Birla 3M Ltd


                                   BABASAB PATIL
                                       - 25 -
•   Essar Shipping Ltd
   •   Essar Steels Ltd.
   •   Hindustan Petroleum Corporation Ltd.
   •   Infosys Technologies Ltd.
   •   Jindal Vijayanagar Steels Ltd.
   •   Nagarjuna Fertilizers & Chemicals Ltd.
   •   Rajshree Polyfil Ltd.

Karvy Securities Ltd.

Karvy has secured over Rs. 500 crore in the following debt issues.

   •   Andhra Pradesh Road Development Corporation Ltd
   •   ICICI Bonds ( Private Placement)
   •   ICICI Bonds – 96
   •   ICICI Bonds – 97- I
   •   ICICI Bonds – 97 – II
   •   ICICI Safety Bonds March 98.
   •   IDBI Bonds 96.
   •   IDBI Flexi Bonds I
   •   IDBI Flexi Bonds II
   •   IDBI Flexi Bonds III
   •   Kerala State Electricity Board
   •   Krishna Bhagya Jala Nigam Ltd
   •   Power Finance Corporation Ltd
   •   Andhra Pradesh Water Resources Development Corporation
   •   Andhra Pradesh State Electricity Board

SHARED VALUES:
Employees at each level of organization are conscious about delivering customer value
for his money. Each and every employee understands the mission and vision of the
company. Employees of company are committed towards the quality aspects in service.
The employees of Karvy themselves put forward in fulfilling the organizational principles
for betterment of organization.



                                   BABASAB PATIL
                                       - 26 -
STUDY OF FUNCTIONAL DEPARTMENTS OF KARVY


In Karvy the functions are mainly divided into two parts namely Operational Functions
and the Supporting Functions.


OPERATING FUNCTIONS:

Registry and Investor Services (RIS) in which Karvy carry out functions as Registrar &
transfer Agent (RTA), and Registrar to the Issues. Financial Product Distribution
(FPD), Here financial products include Mutual Funds, Fixed income securities, bonds,
fixed deposits, Tax-saving Products, Insurance, etc. Stock Broking Services and
Depository Participant (DP), which are explained in Service Profile of the Karvy group
of companies.


SUPPORTING FUNCTIONS:



                   Administration - Purchase and Stores Department


                                        HOD


                                  Assistant HOD


                                  Administration
                                     Team




Responsibilities
   •   To ensure preventive breakdown of equipment/accessories including computer
       hardware
   •   To ensure speedy breakdown maintenance
   •   To ensure that the maintenance status of all equipment/ accessories is entered in
       the service
   •   To ensure that the maintenance is carried out efficiently



                                   BABASAB PATIL
                                       - 27 -
Maintenance includes preventive, breakdown and general maintenance. Preventive
maintenance shall be done as per the prefixed time schedule by the subcontractors for the
purpose. The administration incharge shall make necessary arrangements for this purpose.
In Breakdown / General maintenance admi9nistration team receive information
regarding any breakdown or general repairs. On receipt of the same, the administrative
team shall maintain a record of all maintenance done.


The Procedure involves identification of subcontractors which will be done through
Newspaper, advertisements, word of mouth. Both the parties meet to their requirements
and enter into agreement. Subcontractors are appointed for providing services Preventive
maintenance, Breakdown maintenance, Courier services and any other services.


2.62 Accounts Department


Finance operations in Karvy are centralized at the Head Office Account. Periodic fund
requirement at the regional level will be sort as and when required. But all cheques and
such instruments would be signed by the local regional manager.




                                   BABASAB PATIL
                                       - 28 -
System Administration Department



                                 Dy. General Manager


                                      Dy.Manager


                                     Asst. Manager



In this department the functions include Trouble shooting, desktop queries, Network
problems, Software and Hardware problems, Installation of new systems, creating new
networks.


Human resource Department
The human resource Department (HRD) caters to the entire recruitment and employee
upbringing in the company. The HR functions and practices, which are practiced at the
Karvy, are:
Manpower Planning: The departmental heads are entrusted with the responsibility of
assessing the present and the future manpower requirement in their departments.
Manpower planning is being done in the company in order to secure a confidence and
capability
Recruitment: Advertising in newspaper and other media, private employment agencies,
personal contacts, colleges and universities are the sources used by Karvy.

Training: The personnel department gives training for all new employees.

Performance Appraisal: The HOD of the department, to which the employees belongs,
presents a report of the employees, to be appraised. In addition to that other managers to
whom the employee is associated is also evaluating the performance of the employee.

Motivation: The Company provides both extrinsic and intrinsic motivation to the
employees. Extrinsic motivation is considered with external motivators which employees
get through pay, promotion, fringe benefits, holiday’s etc. Intrinsic motivation is
concerned with the feeling of having accomplished something worthwhile i.e. the
satisfaction one gets after doing one’s work well, praise, responsibility, recognition,

                                   BABASAB PATIL
                                       - 29 -
participation are the examples. Job rotation is undertaken to reduce the monitoring and
burden of the employees.

Morale: For improving employee’s morale positive measures like job rotation, building
responsibility into job etc are introduced. Both upward and downward communication
takes place within the company. Participation is the key to commitment.




                                  BABASAB PATIL
                                      - 30 -
SERVICE PROFILE OF THE
                      KARVY GROUP OF COMPANIES


Karvy Stock Broking Limited




Member - National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and the
Hyderabad Stock Exchange (HSE). Karvy Stock Broking Limited, one of the
cornerstones of the Karvy edifice, flows freely towards attaining diverse goals of the
customer through varied services.


Stock Broking Services
It is an undisputed fact that the stock market is unpredictable and yet enjoys a high
success rate as a wealth management and wealth accumulation option. The difference
between unpredictability and a safety anchor in the market is provided by in-depth
knowledge of market functioning and changing trends, planning with foresight and
choosing one & other options with care. Karvy offer trading on a vast platform; National
Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange. Karvy’s
highly skilled research team, comprising of technical analysts as well as fundamental
specialists, secure result-oriented information on market trends, market analysis and
market predictions. This crucial information is given as a constant feedback to its
customers, through daily reports delivered thrice daily; The Pre-session Report, where
market scenario for the day is predicted, The Mid-session Report, timed to arrive during
lunch break, where the market forecast for the rest of the day is given and The Post-
session Report, the final report for the day, where the market and the report itself is
reviewed. To add to this repository of information, Karvy publish a monthly magazine
The Finapolis, which analyzes the latest stock market trends and takes a close look at the
various investment options, and products available in the market, while a weekly report,
called Karvy Bazaar Baatein, gives more information on the immediate trends in the stock
market. In addition, it’s specific industry reports give comprehensive information on



                                    BABASAB PATIL
                                        - 31 -
various industries. Karvy’s Stock Broking services are widely networked across India,
with the number of trading terminals providing retail stock broking facilities.


To empower the investor further Karvy have made serious efforts to ensure that its
research calls are disseminated systematically to all our stock broking clients through
various delivery channels like email, chat, SMS, phone calls etc.


Depository Participants
The onset of the technology revolution in financial services Industry saw the emergence
of Karvy as an electronic custodian registered with National Securities Depository Ltd
(NSDL) and Central Securities Depository Ltd (CSDL) in 1998. Karvy set standards
enabling further comfort to the investor by promoting paperless trading across the country
and emerged as the top 3
Depository Participants in the country in terms of customer serviced. Offering a wide
trading platform with a dual membership at both NSDL and CDSL, Karvy have
established live DPMs, Internet access to accounts and an easier transaction process in
order to offer more convenience to individual and corporate investors. A wide national
network makes its efficiencies accessible to all.


Distribution of Financial Products
A 1600 team of highly qualified and dedicated professionals drawn from the best of
academic and professional backgrounds are committed to maintaining high levels of
client service delivery. This has propelled Karvy to a position among the top distributors
for equity and debt issues with an estimated market share of 15% in terms of applications
mobilized, besides being established as the leading procurer in all public issues.
Advisory Services
Under its retail brand ‘Karvy – the Finapolis', it delivers advisory services to a cross-
section of customers. The service is backed by a team of dedicated and expert
professionals with varied experience and background in handling investment portfolios.
They are continually engaged in designing the right investment portfolio for each
customer according to individual needs and budget considerations with a comprehensive
support system that focuses on trading customers' portfolios and providing valuable
inputs, monitoring and managing the portfolio through varied technological initiatives.


                                    BABASAB PATIL
                                        - 32 -
‘Karvy - the Finapolis', covers the latest of market news, trends, investment schemes and
research-based opinions from experts in various financial fields.


Mutual Fund Services
Karvy has attained a position of immense strength as a provider of across-the-board
transfer agency services to AMCs, Distributors and Investors. Nearly 40% of the top-
notch AMCs including prestigious clients like Deutsche AMC and UTI swear by the
quality and range of services that Karvy offers. Besides providing the entire back office
processing, Karvy provides the link between various Mutual Funds and the investor,
including services to the distributor, the prime channel in this operation. Carrying the
‘limitless' ideology forward, Karvy has explored new dimensions in every aspect of
Mutual Fund servicing right from volume management, cost effective pricing, delivery in
the least turnaround time, efficient back-office and front-office operations to customized
service.


Karvy has been with the AMCs every step of the way, helping them serve their investors
better by offering them a diverse and customized range of services. The ‘first to market'
approach that is Karvy’s anthem has earned the reputation of an innovative service
provider with a visionary bent of mind.


Karvy’s service enhancements such as ‘Karvy Converz', a full-fledged call center, a top-
line website (www.karvymfs.com), the ‘m-investor' and many more, creating a galaxy of
customer advantages.


Karvy Consultants Limited




                             As the flagship company of the Karvy Group, Karvy
Consultants Limited has always remained at the helm of organizational affairs, pioneering
business policies, work ethic and channels of progress. Today, Karvy service over 6 lakhs
customer accounts in this business spread across over 250 cities/towns in India and are
ranked amongst the largest Depository Participants in the country. With a growing
secondary market presence, Karvy have transferred this business to Karvy Stock Broking
Limited (KSBL), Karvy’s associate and a member of NSE, BSE and HSE.
                                   BABASAB PATIL
                                       - 33 -
Karvy Investor Service




Merchant Banking
Recognized as a leading merchant banker in the country, Karvy registered with SEBI as a
Category I merchant banker. This reputation was built by capitalizing on opportunities in
corporate consolidations, mergers and acquisitions and corporate restructuring. Karvy’s
quality professional team and our work-oriented dedication have propelled it to offer
value-added corporate financial services and act as a professional navigator for long term
growth of its clients, who include leading corporates, State Governments, foreign
institutional investors, public and private sector companies and banks, in Indian and
global                                       markets.
Its financial advice and assistance in restructuring, divestitures, acquisitions, de-mergers,
spin-offs, joint ventures, privatization and takeover defense mechanisms have elevated its
relationship with the client to one based on unshakable trust and confidence.


Karvy Global Services Limited




The specialist Business Process Outsourcing unit of the Karvy Group. Here Karvy offer
several delivery models on the understanding that business needs are unique and therefore
only a customized service could possibly fit the bill. Be it in re-engineering and managing
processes or delivering new efficiencies, Karvy’s service meets up to the most stringent
of international standards. Karvy’s outsourcing models are designed for the global
customer and are backed by sound corporate and operations philosophies, and domain
expertise. Providing productivity improvements, operational cost control, cost savings,
improved accountability and a whole gamut of other advantages. Karvy’s wide market
coverage includes Banking, Financial and Insurance Services (BFIS), Retail and
Merchandising, Leisure and Entertainment, Energy and Utility and Healthcare.



                                    BABASAB PATIL
                                        - 34 -
BABASAB PATIL
    - 35 -
Karvy Computershare Pvt. Limited




Karvy have traversed wide spaces to tie up with the world’s largest transfer agent, the
leading Australian company, Computershare Limited. The company that services more
than 75 million shareholders across 7000 corporate clients and makes its presence felt in
over 12 countries across 5 continents has entered into a 50-50 joint venture with Karvy.
Excellence has to be the order of the day when two companies with such similar
ideologies of growth, vision and competence, get together.


Issue Registry
Karvy has emerged as the largest transaction-processing house for the Indian Corporate
sector. With an experience of handling over 700 issues, Karvy today, has the ability to
execute voluminous transactions and hard-core expertise in technology applications have
gained the No.1 slot in the business. Karvy is the first Registry Company to receive ISO
9002 certification in India that stands testimony to its stature.


It is actively coordinating with both the main depositories to develop special models to
enable the customer to access depository (NSDL, CDSL) services during an IPO.




                                     BABASAB PATIL
                                         - 36 -
Karvy Insurance Broking Private Limited




At Karvy Insurance Broking Pvt. Ltd., it provide both life and non-life insurance products
to retail individuals, high net-worth clients and corporates. With the opening up of the
insurance sector and with a large number of private players in the business, Karvy is in a
position to provide tailor made policies for different segments of customers. With Indian
markets seeing a sea change, both in terms of investment pattern and attitude of investors,
insurance is no more seen as only a tax saving product but also as an investment product.
By setting up a separate entity, Karvy would be positioned to provide the best of the
products      available      in     this      business     to     its     customers.


Karvy’s wide national network, spanning the length and breadth of India, further supports
these advantages. Further, personalized service is provided here by a dedicated team
committed in giving hassle-free service to the clients.


Karvy Commodities Broking Private Limited




At Karvy Commodities, Karvy is focused on taking commodities trading to new
dimensions of reliability and profitability. Karvy has made commodities trading, an
essentially age-old practice, into a sophisticated and scientific investment option.
Here Karvy enable trade in all goods and products of agricultural and mineral origin that
include lucrative commodities like gold and silver and popular items like oil, pulses and
cotton       through        a       well-systematized       trading       platform.
Regular trading workshops and seminars are conducted to hone trading strategies to
perfection. Karvy’s commitment to excel in this sector stems from the immense
importance that commodity broking has to a cross-section of investors – farmers,
exporters, importers, manufacturers and the Government of India itself.


                                    BABASAB PATIL
                                        - 37 -
Karvy Inc.




With its growing ambitions of reaching out to investors across the shores of this country,
Karvy’s has set up Karvy Inc. in the US located in New York to provide various financial
products and information on Indian equities to potential Foreign Institutional Investors
(FIIs) in the region. This entity soon would be ACC registered and would also become a
member of various important stock exchanges in the US. This entity would extensively
facilitate various businesses of Karvy viz., stock broking (Indian equities), research and
investment by (Qualified Institutional Buyer) QIBs in Indian markets for both secondary
and primary offerings, outsourcing of various assignments for the multiple streams of
business in Karvy Global Services Ltd (KGSL).




                                   BABASAB PATIL
                                       - 38 -
THEROTICAL FRAMEWORK

FUNDAMENTAL ANALYSIS:

Fundamental analysis is the examination of the underlying forces that affect the well
being of the economy, industry groups, and companies. The goal is to derive the
forecasted earning growths for future price movements.

       Fundamental analysis is the method of evaluating securities by attempting to
measure the intrinsic value of a particular stock. It is the study of everything from the
overall economy and industry conditions, to the financial condition and management of
specific companies (i.e., using real data to evaluate a stock’s value). The method utilizes
items such as revenues, earnings, return on equity and profit margins to determine a
company’s underlying value and potential for future growth.


       One of the major assumptions under fundamental analysis is that, even though
things get mis priced in the market from time to time, the price of an asset will eventually
gravitate toward its true value. This seems to be a reasonable bet considering the long
upward march of quality stocks in general despite regular setbacks and periods of
irrational exuberance. The key strategy for the fundamentalist is to buy when prices are at
or below this intrinsic value and sell when they got overpriced.

Fundamental analysis consists of:

   •   For the national economy we focus on economic data to assess the present and
       future growth of the economy.
   •   At the industry level, there might be an examination of supply and demand
       forces for the products offered.
   •   At the company level, may involve examination of financial data, management,
       business concept and competition.




                                    BABASAB PATIL
                                        - 39 -
Economy analysis

The economy is the overall economic environment in which all firms operate. The key
variables used to describe the state of economy are:

   •     World economy

   •     Asian economy

   •     Indian economy

            1. Growth rate of GDP

            2. Industry growth rate

            3. Agriculture and monsoons

            4. Savings and investment

            5. Inflation

            6. Interest rates

            7. Balance of payments

            8. Infrastructure



World economy
According to the recent statistics, the world GDP (comprising 180 economies) has
reached at a sum of US $ 46,747 Billions. Top 15 contributors to the world GDP are
USA, Japan, Germany, China, UK, France, Italy, Canada, Spain, Brazil, Russia, Korea,
India,                      Mexico                     and                      Australia.


Percentage share of USA to the total world GDP is 28.3. While both the emerging
economies such as India and China have a share of 1.82 and 5.41 respectively.


Find next page the top 15 contributors to the world GDP.


                                     BABASAB PATIL
                                         - 40 -
Asian Economy
Asian Economies have brought tremendous success in the recent years. Economic growth
rate in China crossed a two-digit number, while economic growth in India’s Economy is
near to 10 percent. Apart from those two emerging Asian Economic giants, economies
such as Philippines, Indonesia and Malaysia are growing at a faster pace. Find below
various economic indicators on the Asian Economies.

GDP growth projections among various Asian Economies over years are as follows:

GDP Growth Projection on Asian Economies

Country Name              2007      2008
Japan                     2.3       1.9
Hong Kong SAR             5.5       5
Korea                     4.4       4.4
Singapore                 5.5       5.7
China                     10        9.5
India                     8.4       7.8
Indonesia                 6         6.3
Malaysia                  5.5       5.8
Philippines               5.8       5.8
Thailand                  4.5       4.8


The output over the world increased by 4.4% in the year 2005. The largest contributors of
the world output were India, China and Russia. The Gross World Product (in purchasing

                                   BABASAB PATIL
                                       - 41 -
power parity) as to the 2005 estimated data has reached at $ 60.71 trillions with a real
growth rate of 4.7%.


The services sector contributes a largest share to the world GDP. As to the 2004 estimated
data, the services sector accounted for 64% followed by industries at 32% and Agriculture
4%.
The level of exports and imports over the world has reached at $10.33 trillion and 10.3
trillions f.o.b. as to 2004 estimation.


World inflation:
Inflation, which can be simply stated to be a state of economic activities with rising price
level and falling purchasing power of money, has become global phenomenon. Fast rising
oil prices over the world has pressurized the general price level in countries of the world.
Present world economy is experiencing higher economic growth with some inflationary
pressure.
The stabilized countries have the inflation level ranging between 1-3% and the
developing countries have inflation between 3-6%.


Indian economy:
Indian primary sector
Agriculture is the mainstay of Indian economy because of its high share in employment
and livelihood creation notwithstanding its reduced contribution to the nation’s GDP. The
share of agriculture in the gross domestic product has registered a steady decline from
36.4 per cent in 1982-83 to 17 per cent in 2007-08. Yet this sector continues to support
more than half a billion people providing employment to 52 per cent of the workforce. It
is also an important source of raw material and demand for many industrial products,
particularly fertilizers, pesticides, agricultural implements and a variety of consumer
goods. This is first time after green revolution that the India has become dependent in
satisfying its own food need. Growth pattern of Indian agriculture has been so irregular,
because of over dependency on the monsoon. This year we could achieve dismal growth
of 2.5%.India is expecting its agriculture to grow at least 4% (CAGR) in the 11th plan to
have sustainable and consistent growth of overall GDP.
Industrial sector (secondary sector)


                                      BABASAB PATIL
                                          - 42 -
Industrial growth in India has been inspired by the LPG in 1991. in the 10th plan we
could achive growth rate of 8-9%. At present industry sector is contributing 28% to
country’s GDP. Though at present India is experiencing slowdown in growth of industry
production, the long term growth of 8-10% is still intact. The first eight months of the
current fiscal, till November 2007, witnessed a moderate slowdown in the growth of the
industrial sector. The slowdown has mainly been on account of the manufacturing sector.
The mining and quarrying sector grew at a faster pace, while the growth in electricity
remained unchanged from April- November 2006. Nonetheless, the 9.2 per cent growth
achieved during April-November 2007 by the industrial sector, when seen against the
backdrop of the robust growth during the preceding four years, suggests that the
buoyancy in this sector has continued, albeit with a degree of moderation. Two important
changes have occurred in the growth pattern of the use-based industrial categories:
First, capital goods have grown at an accelerated pace, over a high base attained in the
previous years, which augurs well for the required industria capacity addition. Secondly,
the consumer durables basket that forms part of the Index of Industrial Production (IIP)
showed a negative growth during the period, thereby forcing a visible decline in the
growth of the total consumer goods basket, despite reasonable growth in the non-
durables.


Dimension of Indian Economy

                                  GDP Composition


                                    17%
                                                 28%
                                                                                Manufacturing
                                                                                Service
                                                                                Agriculture

                                       55%



Gross domestic product: measure of the total production of final goods and services in
the economy during a specified period usually a year. Higher the growth rate, the other
things being equal, the more favorable it is for the stock market.



                                    BABASAB PATIL
                                        - 43 -
The growth rate of GDP is more important indicator of the performance of the economy.
The average growth rate of Indian economy during 1950-1980 was around 3.5% in real
terms. In 1980 it was 5% and 6.2% in 2004. At present it is 8.7 and estimated to cross
9%.




Industrial growth rate: stock market analysts mainly focus on the industrial sector.
Higher the growth rate, more favorable is the things for stock market. The industrial
sector witnessed a slowdown in the first nine months of the current financial year. The
growth of 9 per cent during April-December 2007, when viewed against the back drop of
the robust growth witnessed in the preceding four years, suggests that there is a certain
degree of moderation in the momentum of the industrial sector. At the product group
level, the moderation in growth has been selective. Industries like chemicals, food
products, leather, jute textiles, wood products and miscellaneous manufacturing products
witnessed acceleration in growth, while basic metals, machinery and equipments, rubber,
plastic and petroleum products and beverages and tobacco recorded lower but strong
growth during April-December 2007.

Agriculture and monsoons: agriculture accounts for about a quarter of the Indian
economy and has important linkages both direct and indirect with the industry. There has
been a loss of dynamism in the agriculture and allied sectors in recent years. A gradual
degradation of natural resources through overuse and inappropriate use of chemical
fertilizers has affected the soil quality resulting in stagnation in the yield levels. Public
investment in agriculture has declined and this sector has not been able to attract private
investment because of lower/unattractive returns.

  Savings and investment: A notable feature of the recent GDP growth has been a
sharply rising trend in gross domestic investment and saving, with the former rising by


                                    BABASAB PATIL
                                        - 44 -
13.1 per cent of GDP and the latter by 11.3 per cent of GDP over five years till 2006-07.
The average investment ratio for the Tenth Five Year Plan at 31.4 per cent was higher
than that for the Ninth Five Year Plan, while the average saving rate was also 31.4 per
cent of GDP higher than the average ratio of 23.6 per cent during the Ninth Five Year
Plan.

Money supply: For policy purposes for 2007-08, the RBI assumed a real GDP growth of
8.5 per cent with inflation close to 5 per cent, and targeted the monetary expansion in the
range of 17-17.5 per cent and credit expansion in the range of 20 to 24 per cent as
consistent with envisaged growth and inflation.




Interest rates: interest rates affect the cost of financing to the firms. Higher the interest
rates, higher will be the cost and if lower, lower the cost and more will be the
profitability. Below table shows that interest rates are decreasing year after year which is
a good sign for the growth.


Year                          Interest(bank) rates %
                              p.a.
April 1997                    11
April 1998                    10
March 1999                    8
March 2001                    7
April 2003                    6




                                     BABASAB PATIL
                                         - 45 -
Inflation: The Wholesale Price Index (WPI), which is available on a weekly basis,
continues to be the most popular measure of headline inflation in India.




Balance of payments: The strength, resilience and stability of the country’s external
sector is reflected by various indicators. These include a steady accretion to reserves,
moderate levels of current account deficit, changing composition of capital inflows,
flexibility in exchange rates, sustainable external debt levels with elongated maturity
profile and an increase in capital inflows. The current account has followed an inverted
“U” shaped pattern during the period from 2001-02 to 2006-07, rising to a surplus of over
2 per cent of GDP in 2003-04. Thereafter it has returned close to its post-1990s reform
average, with a current account deficit of 1.2 per cent in 2005-06 and 1.1 per cent of GDP
in 2006-07.Capital inflows, as a proportion of GDP, have been on a clear uptrend during
the six years (2001-02 to 2006-07) of this decade. They reached a high of 5.1 per cent of
GDP in 2006-07 after a somewhat modest growth rate of 3.1 per cent in 2005-06.The net
result of these two trends has been a gradual rise in reserve increase to reach 4 percent of
GDP in 2006-07 (Figure 6.1). With capital inflows exceeding financing requirements,
foreign exchange reserve increase was of the order of US$ 15.1 billion in 2005-06 and
US$ 36.6 billion in 2006-07 (Table 6.2). As a proportion of GDP, external debt was 17.2
per cent and 17.9 per cent in 2005-06 and 2006-07 respectively.




                                    BABASAB PATIL
                                        - 46 -
Infrastructure: with the rapid growth of the economy in recent years the importance and
the urgency of removing infrastructure constraints have increased. Traditionally, power,
railways, roads, ports, airports and telecommunications were the exclusive domain of the
government. Policy has changed gradually over the past two decades under the pressure
of rising gaps between demand and supply of infrastructure and deteriorating quality of
assets.




                                   BABASAB PATIL
                                       - 47 -
Industry Analysis
Growth of Construction Industry:
Since the beginning of economic reforms in 1991, the Indian economy has recorded a
compounded annual growth rate (CAGR) of over 6.7%. That is impressive in itself, and
makes India the second fastest growing large economy in the world — bettered only by
China. More significant is the orbit change in India’s GDP growth since 2003-04. With
9.4% growth in 2006-07 following 9% growth in 2005-06, India’s CAGR since 2003-04
has exceeded 8.6%. There is a wide consensus among economists, policy-makers and
industry that India can now sustain a CAGR of around 8.5% for the foreseeable future.
Indeed, the general feeling is that with more investments in physical infrastructure, it is
quite feasible for the country to achieve double-digit growth by 2011-12 — the terminal
year of the Eleventh Five Year Plan. This strong economic growth, along with the
demographic impetus of a growing population in the working-age category, is creating a
massive demand supply mismatch across the real estate sector. The sheer increase in the
‘need for built-up space’ is opening up several opportunities for developers — be it for
constructing residential properties, creating commercial space for offices or retail, setting
up of SEZs, or developing entertainment zones.


Current situation of Constructions
The turnover of the construction industry witnessed 57% growth on Year of Year(YoY)
basis to reach Rs150,933m in December 2007. This is because investments planned in the
infrastructure both by government and private sector, booming housing construction and
expansion in corporate production facilities, is likely to fast forward the growth in the
Indian construction industry. Aggregate operating profit increased by 35% to
Rs22,186.55m. The other income of the industry was Rs8,481.04m. The depreciation
increased to Rs2,048.49m. The net profit increased by 83% to reach Rs19,819.89m on
YoY basis.
The overall cost for the construction industry as the percentage of sales is 90.27% from
Rs87 billion in December 2006 to Rs1,35 billion in December 2007. The cost of raw
materials to the total sales is 37.82% during December 2007. The staff costs and other
operating expenses are 7.34% and 8.04% of the total sales, as compared to the
corresponding quarter of the previous year. Depreciation and tax decreased but the
interest rate was high.


                                    BABASAB PATIL
                                        - 48 -
Inversement
Real estate investments account for about 60% of the total construction investments.
Demand-supply gap for residential housing, favorable demographics, rising affordability
levels, availability of financing options as well as fiscal benefits available on availing of
home loan are the key drivers supporting the demand for residential construction. In
addition to this, demand for office space from IT/BPO segment is expected to continue
due to emergence of India as a preferred outsourcing destination. Also, boom in
organized retail is expected to result in huge demand for real estate construction.
According to industry estimates, the Indian real estate industry is expected to grow at a
compounded rate of 33% between FY05 to FY10, mainly driven by the residential
segment.


Regulations:
Construction Industry in India According to the 11th five-year plan (2007-12), the core
infrastructure sector, comprising power, roads, highways, railways, ports, airports, mining
and irrigation, will require massive investments to the tune of US$490 billion over the
next five years to sustain current 9-10% GDP growth per annum. The construction
industry accounts for 40-50% of the plan outlays and contributes about 20%, nearly
US$59.4 billion to the national GDP. It employs around 31m people, second only to the
agriculture sector. The industry has witnessed a sustained growth of 30% per annum
during the last four years and is poised to grow at 55% in the current fiscal 2007-08,
outperforming even the growth of IT and biotech industry in the knowledge sector.
Jawaharlal Nehru National Urban Renewal Mission, with an outlay of approximately
Rs1,200 billion, is one of the most ambitious projects currently underway in the nation for
strengthening the urban infrastructure.

While the government announced the withdrawal of tax benefits under Section 80 IA of
the Income Tax Act, there is a lot of confusion regarding its interpretation. While some
companies are of the opinion that they can no more claim benefits under this section (i.e.
they will have to pay taxes at marginal rate), others feel that the benefit has been
withdrawn only on the subcontracted work i.e. they can still claim tax benefits on self-
executed projects.




                                    BABASAB PATIL
                                        - 49 -
Budget 2008-09
India is on the verge of witnessing a sustained investment phase in infrastructure buildup.
With a slew of announcements in housing, road, port and airport development, we are
seemingly on a path of sustained higher economic growth on the back of improvement in
infrastructure construction in the country. From a policy perspective, there has been a
growing consensus that a private-public partnership is required to remove difficulties
concerning the development of infrastructure in the country. A substantial chunk of the
abovementioned investment target is likely to come from the private sector.


Budget measures
    The general CENVAT rate has been reduced to 14% from 16%.
    Allocation for National Highway Development Programme (NHDP) has been
       enhanced to Rs 12,966 crore in 2008-09 from Rs 10,867 crore bn in 2007-08.
    The budget has given special attention to development of roads in North Eastern
       region where 180 kms of roads will be completed in 2007-08 and 300 kms of road
       is being targetted for completion in 2008-09.
    The corpus of Rural Infrastructure Development Fund (RIDF-XIV) has been
       raised to Rs14,000 crore, with a separate window for rural roads.
    The budget has also given considerable thrust to irrigation project where the
       outlay for 2008-09 has been increased to Rs 20,000 crore from Rs 11,000 crore in
       2007-08.
    The government is setting up 14 irrigation projects with initial capital of Rs 100
       crore to fund long-gestation major and medium irrigation projects.


Budget Impact
    The Bharat Nirman and water irrigation programmes will benefit companies
       involved in road construction and BOT irrigation projects.
    Reduction of CENVAT is also a big positive for the sector as it indicates
       government’s commitment towards the Goods and Service Tax Act.
Company Impact
Companies like Jain Irrigation and Madhucon Projects will benefit from increased outlay
in irrigation spending.




                                   BABASAB PATIL
                                       - 50 -
Industry Wish list
Builders’ Association of India
    Alter existing customs duty structure on imported steel bars and rods – fix the
       duty at 5% without levy of special additional duty and countervailing duty
    Extend existing structure of import duty, countervailing duty and special duty on
       cement for another year, to discourage domestic manufacturers from hiking prices
    Project exporters who have executed projects abroad to be allowed to import
       equipment purchased abroad at 5% duty instead of current 50%
    Scrap 2% TDS on construction companies as margins are wafer thin at 4-5%.
       Allow companies to pay advance tax instead




                                  BABASAB PATIL
                                      - 51 -
PORTER’S FIVE FORCE MODEL
Supply              Past 2-3 years have seen a substantial increase in the number of
                    contractors and builders, especially in the housing and road
                    construction segment.

Demand              Demand exceeds supply by a large margin. Demand for quality
                    infrastructure construction is mainly emanating from the housing,
                    transportation and urban development segments.

Barriers to entry   Low for road and housing construction. However, high working
                    capital requirements can create growth problems for companies with
                    weak financial muscle.

Bargaining power Low. Due to the rapid increase in the number of contractors and
of suppliers     construction service providers, margins have been stagnant despite
                 strong growth in volumes.

Bargaining power Low. The country still lacks adequate infrastructure facilities and
of customers     citizens have to pay for using public services.

Competition         Very high across segments like road construction, housing and urban
                    infrastructure development. Relatively less in airport and port
                    development.




                                  BABASAB PATIL
                                      - 52 -
COMPANY ANALYSIS
Established in 1971, Unitech today is India’s leading real estate company with a market
capitalization of around US$ 10 billion. From being a National Capital Region (NCR)
focused real estate developer, Unitech is fast establishing a pan India presence. It is
already a market leader in NCR and Kolkata and endeavors to attain leadership in every
market that it operates in. Unitech has the most diversified product mix comprising
residential, commercial, Information Technology (IT) parks, Retail, Amusement parks
and Hotels. It is known for the quality of its product and is the first real estate developer
to have been certified ISO 9001:2000 certificate in North India.


Future expansion plans
As of 31 March 2007, the Company has 22 major ongoing residential projects. The total
residential space offering from on-going projects is over 25 million square feet. Of these
22 major projects, nine are in Gurgaon, five in Greater Noida, six in Kolkata and one each
in Lucknow and Bangalore.


Ongoing Projects
Project                Location        Type
Close(North)           Gurgaon          Multi-Storied
Close(South)           Gurgaon          Multi-Storied
Uniworld Spa           Gurgaon         Multi-Storied
Fresco                 Gurgaon         Multi-Storied
Uniworld Garden         Gurgaon         Multi-Storied
Espace                  Gurgaon         Villa
Harmony                Gurgaon         Multi-Storied
Escape                 Gurgaon         Multi-Storied
Uniworld City          Gurgaon         Multi-Storied
Horizon Greater        Noida            Multi-Storied
Habitat Greater        Noida            Multi-Storied
Heights Greater        Noida            Multi-Storied
Cascades Greater        Noida           Multi-Storied
Verve Greater          Noida           Multi-Storied
Garden                 Kolkata         Multi-Storied
Air                     Kolkata        Multi-Storied
                                     BABASAB PATIL
                                         - 53 -
Downtown              Kolkata        Multi-Storied
Heights               Kolkata        Multi-Storied
Cascades              Kolkata        Multi-Storied
Horizon               Kolkata        Multi-Storied
South City            Lucknow        Multi-Storied
Heritage Estate       Bangalore      Multi-Storied
Upcoming Township Projects
Project Location Type
Unitech Grande        Noida          Multi-Storied
Uniworld Resorts      Gurgaon        Villa & Multi-Storied
Gateway               Kolkata        Multi-Storied
Uniworld City Greater Noida          Multi-Storied
Oasis                 Chennai        Villa & Multi-Storied
Oasis                 Hyderabad      Villa & Multi-Storied



Risk factors:
In the course of its business, Unitech is exposed to a wide variety of risks. The company
is pursuing a strategy of high growth through entry into new markets. Though the
company has, in the recent past, significantly scaled up its internal as well as external
resources in keeping with its strategy, it remains to be seen if the company can manage
this growth effectively. Demand for real estate especially residential real estate is
sensitive to interest rate movements. Interest rats have been rising in the recent past
owing to a Reserve Bank of India’s credit tightening policy. This could adversely affect
company’s business plans considering that residential segment constitutes a significant
portion of company’s business. Also, recent curbs by RBI and the Government of India to
reduce credit flow to real estate sector may affect company’s plans. Rise in cost of raw
materials could impact company’s performance. While the prices of cement and steel are
beyond company’s control, we have been leveraging the bargaining power of scale to
manage the cost of other materials through consolidated purchase of those materials. Real
estate business in India being highly regulated by Governments at various levels, several
regulatory   approvals, permits, licenses etc. are required to be obtained from the
Government from time to time for our projects. Any delay in obtaining such approvals
can affect the timely execution of our projects. While there remain a number of risks to


                                  BABASAB PATIL
                                      - 54 -
our business, due to Unitech’s experience of over two decades in real estate development,
its relatively low average cost of the land bank, its capital efficiency and its innovative
methods of turning around cash flows, we believe that the company will continue to
generate healthy shareholder returns for the future. Therefore, Unitech’s outlook for
2007-08 remains positive.
Financial performance analysis:


           Ratios          Industry         2007       2006      2005
 Current Ratio                 1.74           0.95       0.48      0.43
 Quick Ratio                   1.46           0.93       0.46       0.4
 Inventory Turnover Ratio     14.23          32.16      16.45     15.78
 Debt Equity Ratio             1.85           3.11       3.06      1.86
 Operating Profit Ratio       23.49          56.83      19.41      9.73
 Return On Equity             28.46          84.72      31.01      17.2
 P/E                          29.02          31.97      50.04     13.99
 Price to Book Value Ratio     7.26          16.37      18.35      2.63
 Dividend Payout Ratio        13.34           4.13      152.1    127.47
 Earning Yield                 3.46           3.13          2      7.15
 Dividend Yield                0.47           0.13       0.04      1.19
 Total Asset Turnover
 Ratio                         0.88           0.22       0.58       0.93
 Capital Turnover Ratio        2.31           0.91       2.36       2.66
 Gross Profit Margin          21.84          56.64      18.94       9.31
 Net Profit Margin            12.78          39.22      10.32       5.67

Interpretation:
Liquidity ratios:


     Ratios                               Industry              Company
     Current Ratio                          1.74                 0.95
     Quick Ratio                            1.46                 0.93

   Though company’s current ratio is increasing year by year still it is lesser than
   industry average. But as the company has got ability to use capital more efficiently,
   this ratio gives it more leverage in terms of earnings. So it can be justifiable.




                                     BABASAB PATIL
                                         - 55 -
Turnover ratios:
 Ratios                            Industry            Company
 Total Asset Turnover Ratio              0.88              0.36
 Capital Turnover Ratio                  2.31              0.54
 Inventory Turnover Ratio               14.23             32.16

   Inventory turnover ratio is exceptionally good compared to industry. Inventory
   turnover ratios are improving year by year. Asset and Capital Turnover Ratios are
   lower than industry, because company has not yet realized good from its newly
   restructured capital .


Leverage ratios:
 Ratios                            Industry            Company
 Debt Equity Ratio                      1.85              3.11

   Company is in the comfortable zone. So that it can still use more Financial Leverage
   in future.
Profitability ratios:
 Ratios                            Industry            Company
      Operating Profit Ratio            23.49             56.83
       Gross Profit Margin              21.84             56.64
        Net Profit Margin               12.78             39.22

   All profitability ratios for the company are exceptionally good and they are more than
   double the industrial average. Perhaps this could be possible because of its volume,
   very good companies business strategies and mainly because of high project
   execution expertise that the company has got over the year.


Valuation ratios:
 Ratios                            Industry            Company
                P/E                     29.02             31.97
    Price to Book Value Ratio            7.26             16.37
     Dividend Payout Ratio              13.34              4.13
           Earning Yield                 3.46              3.13
          Dividend Yield                 0.47              0.13

    P/E of company is higher than industry average; it is because of the company brand
   and almost de-risked business operations and company’s higher earning ratios.


                                  BABASAB PATIL
                                      - 56 -
Coming to Price to BV ratio company higher ratio than industry average which is
   substantiable from the companies past financial track record point of view. The DY
   and EY for scrip is lower than industry average, because of lower proportion of
   dividend payout owing to companies high growth potential.
Summary:
   So I can conclude company’s scrip is over valued.

Note:

Adjustment factor for P/E:
I have considered only Historical P/E but not the Weighted P/E ratio. Because Constant
Growth Dividend Model can not be applied for the company. ( because there is no
consistent dividend pay out).




                                 BABASAB PATIL
                                     - 57 -
Period & months        2007/03 2006/03 2005/03 2004/03 2003/03
INCOME
                       2,441.7
Net Operating Income         4   653.13   509.33   373.95   235.63
EXPENSES
Material Consumption     78.97    61.07    55.68    20.14    25.45
Manufacturing
Expenses                853.98    396.1   359.62   298.87   174.36
Personnel Expenses       65.62    31.11    15.95    10.38     8.71
Selling Expenses         13.13    10.62     8.35      4.3     0.91
Administrative
Expenses                 42.35     27.4    20.15    14.71     8.45


                       1,054.0
Cost of Sales                4   526.29   459.75    348.4   217.88

                       1,387.6
Reported PBDIT               9   126.84    49.57    25.56    17.75
Other Recurring
Income                   65.66    21.45    17.41      8.1    12.01
                       1,453.3
Adjusted PBDIT               5   148.29    66.98    33.66    24.55
Depreciation              4.54      3.1     2.14     1.69     1.84
Other Write-offs             0        0        0        0        0
                       1,448.8
Adjusted PBIT                1   145.19    64.84    31.97    22.71
Financial Expenses      193.71    37.14    21.92     9.54    12.01
                       1,255.1
Adjusted PBT                 1   108.05    42.92    22.43     10.7
Tax Charges             361.27    38.48    13.46     6.46     4.61
Adjusted PAT            893.84    69.57    29.47    15.98      6.1
Non-recurring Items      89.72     0.07     0.45    -1.91     4.52
Other Non-cash
Adjustments               0.44    -0.51    -1.05      2.5     0.02
REPORTED PAT            983.56    69.64    29.92    14.07    10.61
No. of shares            81.17     1.25     1.25     1.25     1.25

EPS                      12.12    55.71    23.94    11.26     8.49




                             BABASAB PATIL
                                 - 58 -
Estimated EPS:

Period & months                    2008      2009      2010 CAGR
INCOME
                                 3150.5    4065.2    5245.3
Net Operating Income                  9         2         7      1.29
EXPENSES
Material Consumption              98.29    122.33    152.25      1.24
                                 1048.4    1287.1    1580.2
Manufacturing Expenses                2         4         2      1.23
Personnel Expenses                90.21    124.02    170.49      1.37
Selling Expenses                  24.27     44.85     82.90      1.85
Administrative Expenses           56.83     76.26    102.33      1.34


                                 1318.0    1654.6    2088.2
Cost of Sales                         2         0         0      1.25

                                 1832.5    2410.6    3157.1
Reported PBDIT                        7         2         7
Other Recurring Income            75.91     87.75    101.44      1.16
                                 1908.4    2498.3    3258.6
Adjusted PBDIT                        7         6         1      1.57
Depreciation                       5.17      5.89      6.71      1.14

                                 1903.3    2492.4    3251.9
Adjusted PBIT                         0         7         0
Financial Expenses               292.50    441.68    666.93      1.51
                                 1610.8    2050.7    2584.9
Adjusted PBT                          0         9         7
Tax Charges                      469.65    610.55    793.71      1.30
                                 1141.1    1440.2    1791.2
Adjusted PAT                          5         5         6
Non-recurring Items               31.65     11.17      3.94      0.35
Other Non-cash Adjustments         0.11      0.03      0.01      0.24
                                 1172.9    1451.4    1795.2
REPORTED PAT                          0         4         0
No. of shares                     81.17     81.17     81.17

EPS                               14.45     17.88      22.12
Adjusted EPS(factor is
1/2)*                               7.22      8.94     11.06

Note: recently company has issued 1:1 bonus, so the adjustment factor of ½ is considered
for calculation of expected EPS and Book Value.




                                  BABASAB PATIL
                                      - 59 -
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report
Fundamental analysis and technical analysis of unitech project report

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Fundamental analysis and technical analysis of unitech project report

  • 1. CONTENTS SI.n Contents Page no o 1 Executive Summary 1-4 2 Introduction to the capital market 5-14 3 Company Profile 15-37 Theoretical Framework 4 Fundamental analysis 38 4.1 Economic Analysis 39-46 4.2 Industry Analysis 47-51 4.3 Company analysis 52-59 5 Technical analysis 60-76 6 Findings 77-78 7 Recommendations 79 8 Conclusions 80 9 Bibliography 81 BABASAB PATIL -1-
  • 2. Executive Summary Project Title : Fundamental Analysis and Technical Analysis of Unitech Ltd. Company and Place: KARVY Stock Broking Ltd. Dharwad Research Process: KARVY Stock Broking Ltd. Is a premier financial services provider & ranked top five in the country. Recently the capital market crashed because of many reasons investors lost heavy amount But fundamental & Macro factors Indian market is good. Stability in market is not there currently therefore some of the investor who lost money in market crash, so many of them are shaky to enter into market again. Therefore getting investor confidence is more important which will happen when the market stabilizes. So for that matter broking firms should provide proper guidance to their investors for facilitating their decision making in investments. Research Objectives: Main Objective: To know the future increase and decrease of stock price in selected company stocks through Fundamental And Technical Analysis. Sub Objectives:  To understand how best we can use this analysis is to meet the financial goal of the investors.  To understand the effect of Industry specific factors on the stock prices through Industry Analysis.  To know which securities to be bought and when to be bought.  To know which securities to be sold and when to sell.  To provide investors with a basket of securities to be stay invested to have a sound portfolio. BABASAB PATIL -2-
  • 3. Research Plan: The data collected for the study is secondary data. The data I have used for the study is 1. Historical shares value of the stocks collected from www.nseindia.com 2. The balance sheet and Income statement got from companies web site. 3. Some of the information about the industry is collected from the web site. The Measurement Techniques The following techniques are used for the study. 1. The bar chart 2. Candlestick charting 3. Point & figure chart 4. Moving average. 5. Exponential moving average (EMA) 6. The relative strength index (RSI) 7. Oscillators (ROC, RSI, MACD,STOCHASTICS) Analysis: Using MS-Excel Findings: General:  One of the most important areas for any investor to look when researching a company is the financial statement. Financial reports are required by law and are published both quarterly and annually.  Management discussion give investors a better understanding of what the company does and usually points out some key areas where they did well.  Audited financial reports have much more credibility than unaudited ones.  The income statement takes into account some non-cash items such as depreciation. The cash-flow statement strips away all non-cash items and tells you how much actual money the company generated. BABASAB PATIL -3-
  • 4. For Stock:  First, the projected MPS of the stock next three years are Rs.231.05, Rs.286.03 and Rs.352.68.  Short term support for scrip: 265-275; Next support has been established at 150-165.  Long term target by technical analysis is 620-40 but this is unlikely to happen in the medium term because short term trend has been bearish and long term trend has been flat and undergoing long consolidation For market:  Short term support or intermediate support: 4500-4600; next long term support lies at3100-3150  Resistance for Nifty is at present is at 6000  Short term and intermediate trend has been bearish and long term trend is still bullish.  Long term nifty target is a 6980- 7020. Recommendations:  Long term investors can include Unitech, because the growth rates and earnings are good compared to others stocks. Therefore investors can include this in their portfolio to earn the higher return on their investment.  The Long term investors should buy the stocks fair value found out by the fundamental analysis.  Short term investors should look on various support and resistance of stocks to buy or sell and make profit. Conclusion:  Stock market or capital market provides the industry with a lot of capital needed by the industry, which leads to the growth of the industry and economy as a whole; hence the stock market plays an important role in the development of the industry. BABASAB PATIL -4-
  • 5.  Some times Using Technical and fundamental analysis individually leads to incorrect results hence both Fundamental and technical analysis should be used at a time to get the desired result.  Fundamental analysts study everything from the overall economy and industry conditions, to the financial condition and management of companies before deciding on any particular stock.  Technical analyst’s look for peaks, bottoms, trends, patterns and other factors affecting a stock's price movement and then make buy/sell decisions based on those factors. BABASAB PATIL -5-
  • 6. INTRODUCTION TO CAPITAL MARKETS Introduction to Capital Markets Transfer of resources from those with idle resources to others who have a productive need for them is perhaps most efficiently achieved through the securities markets. Stated formally, securities markets provide channels for allocation of savings to investments and thereby decouple these two activities. As a result, the savers and investors are not constrained by their individual abilities, but by the economy’s abilities to invest and save respectively, which inevitably enhances savings and investment in the economy. Market Segments The securities market has two interdependent and inseparable segments, the new issues (primary market) and the stock (secondary) market. The primary market provides the channel for sale of new securities while the secondary market deals in securities previously issued. The price signals, which subsume all information about the issuer and his business including associated risk, generated in the secondary market, help the primary market in allocation of funds. The issuers of securities issue (create and sell) new securities in the primary market to raise funds for investment and/or to discharge some obligation. They do so either through public issues or private placement. There are two major types of issuers who issue securities. The corporate entities issue mainly debt and equity instruments (shares, debentures, etc.), while the governments (central and state governments) issue debt securities (dated securities, treasury bills). The secondary market enables participants who hold securities to adjust their holdings in response to changes in their assessment of risk and return. They also sell securities for cash to meet their liquidity needs. A variant of secondary market is the forward market, where securities are traded for future delivery and payment. Pure forward is out side the formal market. The versions of forward in formal market are futures and options. In futures market, standardized securities are traded for future delivery and settlement. These futures can be on a basket of securities like an index or an individual security. In case of options, securities are traded for conditional future delivery. There are two types of options – a put option permits the owner to sell a security to the writer of options at a predetermined price while a call option permits the owner to purchase a security from the BABASAB PATIL -6-
  • 7. writer of the option at a predetermined price. These options can also be on individual stocks or basket of stocks like index. Two exchanges, namely NSE and BSE provide trading of derivatives of securities. Products and Participants Savings are linked to investments by a variety of intermediaries through a range of complex financial products called “securities” which is defined in the Securities Contracts (Regulation) Act, 1956. Which includes shares, scrip’s, stocks, bonds, debentures, debenture stock, or other marketable securities of like nature in or of any incorporate company or body corporate, government securities, derivatives of securities, units of collective investment scheme, security receipts, interest and rights in securities, or any other instruments so declared by the central government These demand for and supply of securities and funds determine, under competitive market conditions in goods and securities market, the prices of securities. Securities Market and Economic Growth A well functioning securities market is conducive to sustained economic growth. There have been a number of studies, starting from World Bank and IMF to various scholars, which have established robust relationship not only one way, but also the both ways, between the development in the securities market and the economic growth. The securities market fosters economic growth to the extent that it- • Augments the quantities of real savings and capital formation from any given level of national income, • Increases net capital inflow from abroad, • Raises the productivity of investment by improving allocation of investible funds, and (d) Reduces the cost of capital. BABASAB PATIL -7-
  • 8. International Linkage The securities market facilitates the internationalization of an economy by linking it with the rest of the world. This linkage assists through the inflow of capital in the form of portfolio investment. Moreover, a strong domestic stock market performance forms the basis for well performing domestic corporate to raise capital in the international market. This implies that the domestic economy is opened up to international competitive pressures, which help to raise efficiency. It is also very likely that existence of a domestic securities market will deter capital outflow by providing attractive investment opportunities within domestic economy. There are also other developmental benefits associated with the existence of a securities market. • The securities market provides a fast-rate breeding ground for the skills and judgment needed for entrepreneurship, risk bearing, portfolio selection and management. • An active securities market serves as an ‘engine’ of general financial development and may, in particular, accelerate the integration of informal financial systems with the institutional financial sector. Securities directly displace traditional assets such as gold and stocks of produce or, indirectly, may provide portfolio assets for unit trusts, pension funds and similar FIIs that raise savings from the traditional sector. • The existence of securities market enhances the scope, and provides institutional mechanisms, for the operation of monetary and financial policy A Profile of Indian Securities Market The past decade in many ways has been remarkable for securities market in India. It has grown exponentially as measured in terms of amount raised from the market, number of stock exchanges and other intermediaries, the number of listed stocks, market capitalization, trading volumes and turnover on stock exchanges, and investor population. The market has witnessed fundamental institutional changes resulting in drastic reduction in transaction costs and significant improvements in efficiency, transparency and safety. BABASAB PATIL -8-
  • 9. Securities and Exchange Board of India (SEBI) With the objectives of improving market efficiency, enhancing transparency, checking unfair trade practices and bringing the Indian market up to international standards, a package of reforms consisting of measures to liberalize, regulate and develop the securities market was introduced during the 1990s. This has changed corporate securities market beyond recognition in this decade. The practice of allocation of resources among different competing entities as well as its terms by a central authority was discontinued. The secondary market overcame the geographical barriers by moving to screen-based trading. Trades enjoy counterparty guarantee. Bombay Stock Exchange (BSE) Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. With Demutualisation, the trading rights and ownership rights have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth. The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified. BABASAB PATIL -9-
  • 10. BSE as a brand is synonymous with capital markets in India. The BSE SENSEX is the benchmark equity index that reflects the robustness of the economy and finance. At par with international standards, • First in India to introduce Equity Derivatives • First in India to launch a Free Float Index • First in India to launch US$ version of BSE Sensex First in India to launch Exchange Enabled Internet Trading Platform • First in India to obtain ISO certification for Surveillance, Clearing & Settlement • 'BSE On-Line Trading System’ (BOLT) has been awarded the globally recognized the Information Security Management System standard • First to have an exclusive facility for financial training • Moved from Open Outcry to Electronic Trading within just 50 days • An equally important accomplishment of BSE is the launch of a nationwide investor awareness campaign - Safe Investing in the Stock Market - • In 2002, the name The Stock Exchange, Mumbai, was changed to BSE. National Stock Exchange (NSE) The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FII’s) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000. BABASAB PATIL - 10 -
  • 11. NSE has been promoted by leading financial institutions, banks, insurance companies and other financial intermediaries. NSE is one of the first de-mutualised stock exchanges in the country, where the ownership and management of the Exchange is completely divorced from the right to trade on it. Though the impetus for its establishment came from policy makers in the country, it has been set up as a public limited company, owned by the leading institutional investors in the country. The NSE model however, does not preclude, but in fact accommodates involvement, support and contribution of trading members in a variety of ways. Its Board comprises of senior executives from promoter institutions, eminent professionals in the fields of law, economics, accountancy, finance, taxation, etc, public representatives. NSE Milestones Nov-92 Incorporation Apr-93 Recognition as a stock exchange May-93 Formulation of business plan Jun-94 Wholesale Debt Market segment goes live Nov-94 Capital Market (Equities) segment goes live Mar-95 Establishment of Investor Grievance Cell Apr-95 Establishment of NSCCL, the first Clearing Corporation Jun-95 Introduction of centralised insurance cover for all trading members Jul-95 Establishment of Investor Protection Fund Oct-95 Became largest stock exchange in the country Apr-96 Commencement of clearing and settlement by NSCCL Apr-96 Launch of S&P CNX Nifty Jun-96 Establishment of Settlement Guarantee Fund Setting up of National Securities Depository Limited, first depository in India, co- Nov-96 promoted by NSE Nov-96 Best IT Usage award by Computer Society of India Dec-96 Commencement of trading/settlement in dematerialised securities Dec-96 Dataquest award for Top IT User Dec-96 Launch of CNX Nifty Junior Feb-97 Regional clearing facility goes live Nov-97 Best IT Usage award by Computer Society of India May-98 Promotion of joint venture, India Index Services & Products Limited (IISL) May-98 Launch of NSE's Web-site: www.nse.co.in Jul-98 Launch of NSE's Certification Programme in Financial Market Aug-98 CYBER CORPORATE OF THE YEAR 1998 award Feb-99 Launch of Automated Lending and Borrowing Mechanism Apr-99 CHIP Web Award by CHIP magazine Oct-99 Setting up of NSE.IT Jan-00 Launch of NSE Research Initiative Feb-00 Commencement of Internet Trading Jun-00 Commencement of Derivatives Trading (Index Futures) BABASAB PATIL - 11 -
  • 12. Sep-00 Launch of 'Zero Coupon Yield Curve' Launch of Broker Plaza by Dotex International, a joint venture between NSE.IT Ltd. Nov-00 and i-flex Solutions Ltd. Dec-00 Commencement of WAP trading Jun-01 Commencement of trading in Index Options Jul-01 Commencement of trading in Options on Individual Securities Nov-01 Commencement of trading in Futures on Individual Securities Dec-01 Launch of NSE VaR for Government Securities Jan-02 Launch of Exchange Traded Funds (ETFs) NSE wins the Wharton-Infosys Business Transformation Award in the Organization- May-02 wide Transformation category Oct-02 Launch of NSE Government Securities Index Jan-03 Commencement of trading in Retail Debt Market Jun-03 Launch of Interest Rate Futures Aug-03 Launch of Futures & options in CNXIT Index Jun-04 Launch of STP Interoperability Aug-04 Launch of NSE’s electronic interface for listed companies Mar-05 ‘India Innovation Award’ by EMPI Business School, New Delhi Jun-05 Launch of Futures & options in BANK Nifty Index Dec-06 'Derivative Exchange of the Year', by Asia Risk magazine Jan-07 Launch of NSE – CNBC TV 18 media centre Mar-07 NSE, CRISIL announce launch of IndiaBondWatch.com Jun-07 NSE launches derivatives on Nifty Junior & CNX 100 Oct-07 NSE launches derivatives on Nifty Midcap 50 Jan-08 Introduction of Mini Nifty derivative contracts on 1st January 2008 Mar-08 Introduction of long term option contracts on S&P CNX Nifty Index Depository System The Depositories Act, 1996 was passed with the objective of ensuring free transferability of securities with speed, accuracy and security. It does so by • Making securities of public limited companies freely transferable subject to certain exceptions • Dematerializing the securities in the depository mode • Providing for maintenance of ownership records in a book entry form. In order to streamline both the stages of settlement process, the Act envisages transfer ownership of securities electronically by book entry without making the securities move from person to person. The Act has made the securities of all public limited companies freely transferable, restricting the company's right to use discretion in effecting the transfer of securities, and the transfer deed and other procedural requirements under the BABASAB PATIL - 12 -
  • 13. Companies Act have been dispensed with. Two depositories, viz., NSDL and CDSL, have come up to provide instantaneous electronic transfer of securities. Capital Market Intermediaries There are several institutions, which facilitate the smooth functioning of the securities market. They enable the issuers of securities to interact with the investors in the primary as well as the secondary arena. • Merchant Bankers • Credit Rating Agencies • R& T Agents - Registrars to Issue • Stock Brokers • Custodians • Mutual Funds • Depositories • Depository Participants Players (investors) in securities market • Individual investors • Institutional investors • FII’s • Mutual fund investor Capital Market Instruments The changes in the regulatory framework of the capital market and fiscal policies have also resulted in newer kinds of financial instruments (securities) being introduced in the market. Also, a lot of financial innovation by companies who are now permitted to undertake treasury operations, has resulted in newer kinds of instruments - all of which can be traded – being introduced. The variations in all these instruments depend on the tenure, the nature of security, the interest rate, the collateral security offered and the trading features, etc. • Debentures • Bonds • Preference Shares BABASAB PATIL - 13 -
  • 14. Equity Shares • Government securities Capital Market Processes There are various processes that Issuers of securities follow or utilize in order to tap the savers for raising resources. Some of the commonly used processes and methods are described below. • Initial Public Offering (IPO) • Private Placement • Preferential Offer/Rights Issue • Internet Broking Dependence on Securities Market Three main sets of entities depend on securities market. While the Corporates and governments raise resources from the securities market to meet their obligations, the households invest their savings in securities. While the corporate sector and governments together raised a sum of Rs. 226,911 crore during 2001-02, the household sector invested 4.3% of their financial savings through the securities market during 2000-01. Corporate Sector The 1990s witnessed emergence of the securities market as a major source of finance for trade and industry. The share of capital market based instruments in resources raised externally increased to 53% in 1993-94, but declined thereafter to 31% by 2000-01. Governments Along with increase in fiscal deficits of the governments, the dependence on market borrowings to finance fiscal deficits has increased over the years. The state governments and the central government financed about 14% and 18% respectively of their fiscal deficit by market borrowings during 1990-91. In percentage terms, dependence of the state governments on market borrowing did not increase much during the decade 1991-2002. In case of central government, it increased to 69.4% by 2001-02. BABASAB PATIL - 14 -
  • 15. Household According to the RBI data, the household sector accounted for 84.8 % of gross domestic savings in Fixed income investment instruments during 2006-07; which has increased in comparison to 83.9% in 2005-06. In fiscal 2006-07, the household sector has invested 55.7 % of financial savings in deposits, 24.2 % in insurance/provident funds, 4.9 % in small savings, and 6.5 % in securities market including government securities , units of mutual funds and other securities. Investor population and profile According to the SEBI-NCAER survey of Indian investors conducted in early 1999, an estimated 12.8 million, or 7.6% of all Indian households representing 19 million individuals had directly invested in equity shares and/or debentures as at the end of financial year 1998-99. The investor households increased at a compound growth rate of 22% between 1985-86 and 1998-99. About 35% of investor households became investors in equity shares prior to 1991, while 47% of the investors entered the market between 1991 and 1995 and 17% after 1995. More than 156 million or 92% of all Indian households were non-investor households who did not have any investments in equity/debentures. Low per capita income, apprehension of loss of capital, and economic insecurity, which are all inter-related factors, significantly influenced the investment attitude of the households. The lack of awareness about securities market and absence of a dependable infrastructure and distribution network coupled with aversion to risk inhibited non-investor households from investing in the securities market. BABASAB PATIL - 15 -
  • 16. About KARVY The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks among the top player in almost all the fields it operates. Karvy Computer share Limited is India’s largest Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate, managing over 2 crore accounts. Karvy Stock Brokers Limited, member of National Stock Exchange of India and the Bombay Stock Exchange, ranks among the top 5 stock brokers in India. With over 6, 00,000 active accounts, it ranks among the top 5 Depositary Participant in India, registered with NSDL and CDSL. Karvy COM trade, Member of NCDEX and MCX ranks among the top 3 commodity brokers in the country. Karvy Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5 insurance agent in the country. Registered with AMFI as a corporate Agent, Karvy is also among the top Mutual Fund mobilizer with over Rs. 5,000 crores under management. Karvy Realty Services, which started in 2006, has quickly established itself as a broker who adds value, in the realty sector. Karvy Global offers niche off shoring services to clients in the US. Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York. Over 9,000 highly qualified people staff Karvy. Karvy – Early Days Karvy the name comes from the names of the directors: K - Mr. V. Kutumba Rao A - Mr. K Ajay Kumar R - Mr. M S Ramakrishna V - Mr. Vikram Singh Y - Mr. M Yugandhar The birth of Karvy was on a modest scale in 1979. It began with the vision and enterprise of a small group of practicing Chartered Accountants who founded the flagship company …Karvy Consultants Limited. Karvy started with consulting and financial accounting automation, and carved inroads into the field of registry and share accounting by 1985. Since then, Karvy have utilized its experience and superlative expertise to go from strength to strength…to better its services, to provide new ones, to innovate, diversify and BABASAB PATIL - 16 -
  • 17. in the process, evolved Karvy as one of India’s premier integrated financial service enterprise. GROWTH AND DEVELOPMENT OF KARVY Over the last 20 years Karvy has traveled the success route, towards building a reputation as an integrated financial services provider, offering a wide spectrum of services. And Karvy have made this journey by taking the route of quality service, path breaking innovations in service, versatility in service and finally…totality in service. Karvy’s highly qualified manpower, cutting-edge technology, comprehensive infrastructure and total customer-focus has secured for Karvy the position of an emerging financial services giant enjoying the confidence and support of an enviable clientele across diverse fields in the financial world. Karvy’s values and vision of attaining total competence in its servicing has served as the building block for creating a great financial enterprise, which stands solid on its fortresses of financial strength - its various companies. With the experience of years of holistic financial servicing behind it and years of complete expertise in the industry to look forward to, Karvy have now emerged as a premier integrated financial services provider. And today, Karvy can look with pride at the fruits of its mastery and experience comprehensive financial services that are competently segregated to service and manage a diverse range of customer requirements. BABASAB PATIL - 17 -
  • 18. KARVY-Milestones AT PRESENT STATUS OF KARVY Presently Karvy is a member of National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and The Hyderabad Stock Exchange (HSE). Market analysis and market predictions are done by professional management team. KARVY is covering the entire spectrum of financial services such as Stock Broking Services, Advisory Services, Stock broking, Depository Participants, Distribution of financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant Banking & Corporate Finance, placement of equity, IPOs, among others. It is the largest mobiliser of funds as per PRIME DATABASE. It is among the top 5 stock brokers in India (4% of NSE volumes). India's No. 1 Registrar & Securities Transfer Agents (Ranked as “The Most Admired Registrar" by MARG). Among the top 3 Depository Participants. Largest Network of Branches & Business Associates. First ISO - 9002 Certified Registrar in India. Among top 10 Investment bankers. Largest Distributor of Financial Products are -- Every 50th Indian is serviced by KARVY Every 20th trade in stock market is done through KARVY. Every 6th Investor in India invests through KARVY India's No.1 Registrars and Transfer agent : KARVY Every 10th Demat Account is held at KARVY. BABASAB PATIL - 18 -
  • 19. ORGANISATION STRUCTURE OF KARVY LEVEL-I Board of CMD, MD, & other Directors Karvy Karvy Karvy Karvy Global Stock Investor Consultants Service Broking Service Limited Limited Limited Limited Karvy Karvy Karvy Karvy Insurance Commodities Computershare Inc. Broking Broking Private Pvt. Limited Private Limited Limited Karvy Regional HQs / Branches BABASAB PATIL - 19 -
  • 20. Level-II Regional Branch Head ISO CELL Operations Support Branches Divisions Functions ACCOUNTS RIS SYSTEM FPD HRD BROKING ADMN, DP PURCHASE, & STORES BRANCHES Operations Support Divisions Functions BABASAB PATIL - 20 -
  • 21. STUDY OF COMPANY PROFILE WITH RESPECT TO Mc KINSEY’S 7S MODEL STRATEGY: In modern times the word strategy has found its way into the management field. In the context of a business concern, strategy indicates specific program of action for achieving the organization objectives by employing the firm’s resources efficiently and economically. It involves preparing oneself for meeting unforeseen factor. It is also concerned with meeting the challenges posed by the policies and actions of other competitors in the market. Quality Policy To achieve and retain leadership, Karvy shall aim for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, Karvy will strive to exceed Customer's expectations. Quality Objectives are to: • Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services. • Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers. BABASAB PATIL - 21 -
  • 22. Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer's needs. • Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in business ethics. • Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients. • Strive to be a reliable source of value-added financial products and services and constantly guide the individuals and institutions in making a judicious choice of same. • Strive to keep all stake-holders (shareholders, clients, investors, employees, suppliers and regulatory authorities) proud and satisfied. STRUCTURE: Board of Directors Mr. C Parthasarathy (Chairman and Managing Director), Mr. M Yugandhar (Managing Director ), Mr. M S Ramakrishna (Director ), Mr. Prasad V Potluri (Director), William Stuart Crosby (Chairman – Karvy Computer share Pvt Ltd.), Chandra Balaraman(Director– Karvy Computer share Pvt Ltd.), Mark Davis(Director– Karvy Computer share Pvt Ltd.), Mr. Uday Raval(Director - Karvy Inc. ) Karvy’s organization structure can be viewed as accomplishing departments Operations Divisions and Support Function Division. Below the Operations Divisions there are sub divisions namely Registry and Investor Services (RIS), Depository Participant (DP), Broking Services, Financial Product Distribution (FPD). Below the Support Functions, there are sub divisions namely Accounts, System, Human Resource Development, and Administration, Purchase & Stores. These department heads controls the day-to-day affairs of the company. These department heads are directly reports to the director. Board of Directors directly appoints department heads. The departmental heads does locations of responsibilities among various positions. BABASAB PATIL - 22 -
  • 23. In Karvy Departments are inter related. Majority of decisions are taken by the top management. While taking important decision the department managers are also consulted and their suggestions are also considered. Hence Participative style of management is followed in Karvy. SYSTEM: KARVY covers the entire spectrum of financial services such as Stock broking, Depository Participants, Distribution of financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant Banking & Corporate Finance, placement of equity, IPOs. A link called ‘Resource Center’, devoted solely to research. Karvy’s highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-oriented information on market trends, market analysis and market predictions. This crucial information is given as a constant feedback to its customers, through daily reports delivered thrice daily; The Pre-session Report, where market scenario for the day is predicted, The Mid-session Report, timed to arrive during lunch break, where the market forecast for the rest of the day is given and The Post-session Report, the final report for the day, where the market and the report itself is reviewed. To add to this repository of information, Karvy publish a monthly magazine The Finapolis, which analyzes the latest stock market trends and takes a close look at the various investment options, and products available in the market, while a weekly report, called Karvy Bazaar Baatein, gives more information on the immediate trends in the stock market. In addition, its specific industry reports give comprehensive information on various industries. Karvy’s Stock Broking services are widely networked across India, with the number of trading terminals providing retail stock broking facilities. To empower the investor further Karvy have made serious efforts to ensure that its research calls are disseminated systematically to all our stock broking clients through various delivery channels like email, chat, SMS, phone calls etc. STYLE: An activity like forecasting and planning are made by top level managers. Major policies and plans are made by top management and it is implemented and administered by BABASAB PATIL - 23 -
  • 24. employees. In the organization the style of informal communication and meetings with employees has created workers to a friendly environment. STAFF: The term staff refers to manpower planning, recruitment, performance appraisal, motivation and morale. SKILLS: The managers and workers in each department are skilled to the extent of functions they perform. Directors of the company are skilled in every activities and disciplines of organization. A 1600 team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. This has propelled Karvy to a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized, besides being established as the leading procurer in all public issues. A link called ‘Resource Center’, devoted solely to research. Karvy’s highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-oriented information on market trends, market analysis and market predictions. Achievements • Largest mobiliser of funds as per PRIME DATABASE • Among the top 5 stock brokers in India (4% of NSE volumes) • India's No. 1 Registrar & Securities Transfer Agents (Ranked as " The Most Admired Registrar" by MARG) • A Category- I -Merchant banker. • Among the to top 3 Depository Participants • Largest Network of Branches & Business Associates • First ISO - 9002 Certified Registrar in India • Among top 10 Investment bankers • Largest Distributor of Financial Products • Full Fledged IT driven operations • Handled the largest- ever Public Issue - IDBI • Handled over 500 Public issues as Registrars. BABASAB PATIL - 24 -
  • 25. Handling the Reliance Account which accounts for nearly 10 million account holders Major issues managed as arrangers • Kerala State Electricity Board. • Power Finance Corporation • A.P. Water Resources Development Corporation. • A.P. Roads Development Corporation. • A.P. State Electricity Board. • Haldia Petrochemicals Ltd. Major issues managed as Co-Managers • IndusInd Bank Ltd • ICICI Bonds – March 97 • ICICI Bonds – Dec 97 • ICICI Safety Bonds March 98 • ICICI Safety Bonds – April 98. July 98, Oct 98, Dec 98, Jan 99. • The Jammu and Kashmir Bank Ltd Major issue handled as Registrars to Issues • IDBI Equity • Morgan Stanley Mutual Fund • Bank of Baroda • Bank of Punjab Ltd • Corporation Bank • IndusInd Bank Ltd • Jammu and Kashmir Bank Ltd • Housing and Urban Development Corporation (HUDCO) Ltd • Madras Refineries Ltd • Tamil Nadu Newsprint & Paper Ltd • BPL Ltd • Birla 3M Ltd BABASAB PATIL - 25 -
  • 26. Essar Shipping Ltd • Essar Steels Ltd. • Hindustan Petroleum Corporation Ltd. • Infosys Technologies Ltd. • Jindal Vijayanagar Steels Ltd. • Nagarjuna Fertilizers & Chemicals Ltd. • Rajshree Polyfil Ltd. Karvy Securities Ltd. Karvy has secured over Rs. 500 crore in the following debt issues. • Andhra Pradesh Road Development Corporation Ltd • ICICI Bonds ( Private Placement) • ICICI Bonds – 96 • ICICI Bonds – 97- I • ICICI Bonds – 97 – II • ICICI Safety Bonds March 98. • IDBI Bonds 96. • IDBI Flexi Bonds I • IDBI Flexi Bonds II • IDBI Flexi Bonds III • Kerala State Electricity Board • Krishna Bhagya Jala Nigam Ltd • Power Finance Corporation Ltd • Andhra Pradesh Water Resources Development Corporation • Andhra Pradesh State Electricity Board SHARED VALUES: Employees at each level of organization are conscious about delivering customer value for his money. Each and every employee understands the mission and vision of the company. Employees of company are committed towards the quality aspects in service. The employees of Karvy themselves put forward in fulfilling the organizational principles for betterment of organization. BABASAB PATIL - 26 -
  • 27. STUDY OF FUNCTIONAL DEPARTMENTS OF KARVY In Karvy the functions are mainly divided into two parts namely Operational Functions and the Supporting Functions. OPERATING FUNCTIONS: Registry and Investor Services (RIS) in which Karvy carry out functions as Registrar & transfer Agent (RTA), and Registrar to the Issues. Financial Product Distribution (FPD), Here financial products include Mutual Funds, Fixed income securities, bonds, fixed deposits, Tax-saving Products, Insurance, etc. Stock Broking Services and Depository Participant (DP), which are explained in Service Profile of the Karvy group of companies. SUPPORTING FUNCTIONS: Administration - Purchase and Stores Department HOD Assistant HOD Administration Team Responsibilities • To ensure preventive breakdown of equipment/accessories including computer hardware • To ensure speedy breakdown maintenance • To ensure that the maintenance status of all equipment/ accessories is entered in the service • To ensure that the maintenance is carried out efficiently BABASAB PATIL - 27 -
  • 28. Maintenance includes preventive, breakdown and general maintenance. Preventive maintenance shall be done as per the prefixed time schedule by the subcontractors for the purpose. The administration incharge shall make necessary arrangements for this purpose. In Breakdown / General maintenance admi9nistration team receive information regarding any breakdown or general repairs. On receipt of the same, the administrative team shall maintain a record of all maintenance done. The Procedure involves identification of subcontractors which will be done through Newspaper, advertisements, word of mouth. Both the parties meet to their requirements and enter into agreement. Subcontractors are appointed for providing services Preventive maintenance, Breakdown maintenance, Courier services and any other services. 2.62 Accounts Department Finance operations in Karvy are centralized at the Head Office Account. Periodic fund requirement at the regional level will be sort as and when required. But all cheques and such instruments would be signed by the local regional manager. BABASAB PATIL - 28 -
  • 29. System Administration Department Dy. General Manager Dy.Manager Asst. Manager In this department the functions include Trouble shooting, desktop queries, Network problems, Software and Hardware problems, Installation of new systems, creating new networks. Human resource Department The human resource Department (HRD) caters to the entire recruitment and employee upbringing in the company. The HR functions and practices, which are practiced at the Karvy, are: Manpower Planning: The departmental heads are entrusted with the responsibility of assessing the present and the future manpower requirement in their departments. Manpower planning is being done in the company in order to secure a confidence and capability Recruitment: Advertising in newspaper and other media, private employment agencies, personal contacts, colleges and universities are the sources used by Karvy. Training: The personnel department gives training for all new employees. Performance Appraisal: The HOD of the department, to which the employees belongs, presents a report of the employees, to be appraised. In addition to that other managers to whom the employee is associated is also evaluating the performance of the employee. Motivation: The Company provides both extrinsic and intrinsic motivation to the employees. Extrinsic motivation is considered with external motivators which employees get through pay, promotion, fringe benefits, holiday’s etc. Intrinsic motivation is concerned with the feeling of having accomplished something worthwhile i.e. the satisfaction one gets after doing one’s work well, praise, responsibility, recognition, BABASAB PATIL - 29 -
  • 30. participation are the examples. Job rotation is undertaken to reduce the monitoring and burden of the employees. Morale: For improving employee’s morale positive measures like job rotation, building responsibility into job etc are introduced. Both upward and downward communication takes place within the company. Participation is the key to commitment. BABASAB PATIL - 30 -
  • 31. SERVICE PROFILE OF THE KARVY GROUP OF COMPANIES Karvy Stock Broking Limited Member - National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and the Hyderabad Stock Exchange (HSE). Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows freely towards attaining diverse goals of the customer through varied services. Stock Broking Services It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate as a wealth management and wealth accumulation option. The difference between unpredictability and a safety anchor in the market is provided by in-depth knowledge of market functioning and changing trends, planning with foresight and choosing one & other options with care. Karvy offer trading on a vast platform; National Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange. Karvy’s highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-oriented information on market trends, market analysis and market predictions. This crucial information is given as a constant feedback to its customers, through daily reports delivered thrice daily; The Pre-session Report, where market scenario for the day is predicted, The Mid-session Report, timed to arrive during lunch break, where the market forecast for the rest of the day is given and The Post- session Report, the final report for the day, where the market and the report itself is reviewed. To add to this repository of information, Karvy publish a monthly magazine The Finapolis, which analyzes the latest stock market trends and takes a close look at the various investment options, and products available in the market, while a weekly report, called Karvy Bazaar Baatein, gives more information on the immediate trends in the stock market. In addition, it’s specific industry reports give comprehensive information on BABASAB PATIL - 31 -
  • 32. various industries. Karvy’s Stock Broking services are widely networked across India, with the number of trading terminals providing retail stock broking facilities. To empower the investor further Karvy have made serious efforts to ensure that its research calls are disseminated systematically to all our stock broking clients through various delivery channels like email, chat, SMS, phone calls etc. Depository Participants The onset of the technology revolution in financial services Industry saw the emergence of Karvy as an electronic custodian registered with National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in 1998. Karvy set standards enabling further comfort to the investor by promoting paperless trading across the country and emerged as the top 3 Depository Participants in the country in terms of customer serviced. Offering a wide trading platform with a dual membership at both NSDL and CDSL, Karvy have established live DPMs, Internet access to accounts and an easier transaction process in order to offer more convenience to individual and corporate investors. A wide national network makes its efficiencies accessible to all. Distribution of Financial Products A 1600 team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. This has propelled Karvy to a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized, besides being established as the leading procurer in all public issues. Advisory Services Under its retail brand ‘Karvy – the Finapolis', it delivers advisory services to a cross- section of customers. The service is backed by a team of dedicated and expert professionals with varied experience and background in handling investment portfolios. They are continually engaged in designing the right investment portfolio for each customer according to individual needs and budget considerations with a comprehensive support system that focuses on trading customers' portfolios and providing valuable inputs, monitoring and managing the portfolio through varied technological initiatives. BABASAB PATIL - 32 -
  • 33. ‘Karvy - the Finapolis', covers the latest of market news, trends, investment schemes and research-based opinions from experts in various financial fields. Mutual Fund Services Karvy has attained a position of immense strength as a provider of across-the-board transfer agency services to AMCs, Distributors and Investors. Nearly 40% of the top- notch AMCs including prestigious clients like Deutsche AMC and UTI swear by the quality and range of services that Karvy offers. Besides providing the entire back office processing, Karvy provides the link between various Mutual Funds and the investor, including services to the distributor, the prime channel in this operation. Carrying the ‘limitless' ideology forward, Karvy has explored new dimensions in every aspect of Mutual Fund servicing right from volume management, cost effective pricing, delivery in the least turnaround time, efficient back-office and front-office operations to customized service. Karvy has been with the AMCs every step of the way, helping them serve their investors better by offering them a diverse and customized range of services. The ‘first to market' approach that is Karvy’s anthem has earned the reputation of an innovative service provider with a visionary bent of mind. Karvy’s service enhancements such as ‘Karvy Converz', a full-fledged call center, a top- line website (www.karvymfs.com), the ‘m-investor' and many more, creating a galaxy of customer advantages. Karvy Consultants Limited As the flagship company of the Karvy Group, Karvy Consultants Limited has always remained at the helm of organizational affairs, pioneering business policies, work ethic and channels of progress. Today, Karvy service over 6 lakhs customer accounts in this business spread across over 250 cities/towns in India and are ranked amongst the largest Depository Participants in the country. With a growing secondary market presence, Karvy have transferred this business to Karvy Stock Broking Limited (KSBL), Karvy’s associate and a member of NSE, BSE and HSE. BABASAB PATIL - 33 -
  • 34. Karvy Investor Service Merchant Banking Recognized as a leading merchant banker in the country, Karvy registered with SEBI as a Category I merchant banker. This reputation was built by capitalizing on opportunities in corporate consolidations, mergers and acquisitions and corporate restructuring. Karvy’s quality professional team and our work-oriented dedication have propelled it to offer value-added corporate financial services and act as a professional navigator for long term growth of its clients, who include leading corporates, State Governments, foreign institutional investors, public and private sector companies and banks, in Indian and global markets. Its financial advice and assistance in restructuring, divestitures, acquisitions, de-mergers, spin-offs, joint ventures, privatization and takeover defense mechanisms have elevated its relationship with the client to one based on unshakable trust and confidence. Karvy Global Services Limited The specialist Business Process Outsourcing unit of the Karvy Group. Here Karvy offer several delivery models on the understanding that business needs are unique and therefore only a customized service could possibly fit the bill. Be it in re-engineering and managing processes or delivering new efficiencies, Karvy’s service meets up to the most stringent of international standards. Karvy’s outsourcing models are designed for the global customer and are backed by sound corporate and operations philosophies, and domain expertise. Providing productivity improvements, operational cost control, cost savings, improved accountability and a whole gamut of other advantages. Karvy’s wide market coverage includes Banking, Financial and Insurance Services (BFIS), Retail and Merchandising, Leisure and Entertainment, Energy and Utility and Healthcare. BABASAB PATIL - 34 -
  • 35. BABASAB PATIL - 35 -
  • 36. Karvy Computershare Pvt. Limited Karvy have traversed wide spaces to tie up with the world’s largest transfer agent, the leading Australian company, Computershare Limited. The company that services more than 75 million shareholders across 7000 corporate clients and makes its presence felt in over 12 countries across 5 continents has entered into a 50-50 joint venture with Karvy. Excellence has to be the order of the day when two companies with such similar ideologies of growth, vision and competence, get together. Issue Registry Karvy has emerged as the largest transaction-processing house for the Indian Corporate sector. With an experience of handling over 700 issues, Karvy today, has the ability to execute voluminous transactions and hard-core expertise in technology applications have gained the No.1 slot in the business. Karvy is the first Registry Company to receive ISO 9002 certification in India that stands testimony to its stature. It is actively coordinating with both the main depositories to develop special models to enable the customer to access depository (NSDL, CDSL) services during an IPO. BABASAB PATIL - 36 -
  • 37. Karvy Insurance Broking Private Limited At Karvy Insurance Broking Pvt. Ltd., it provide both life and non-life insurance products to retail individuals, high net-worth clients and corporates. With the opening up of the insurance sector and with a large number of private players in the business, Karvy is in a position to provide tailor made policies for different segments of customers. With Indian markets seeing a sea change, both in terms of investment pattern and attitude of investors, insurance is no more seen as only a tax saving product but also as an investment product. By setting up a separate entity, Karvy would be positioned to provide the best of the products available in this business to its customers. Karvy’s wide national network, spanning the length and breadth of India, further supports these advantages. Further, personalized service is provided here by a dedicated team committed in giving hassle-free service to the clients. Karvy Commodities Broking Private Limited At Karvy Commodities, Karvy is focused on taking commodities trading to new dimensions of reliability and profitability. Karvy has made commodities trading, an essentially age-old practice, into a sophisticated and scientific investment option. Here Karvy enable trade in all goods and products of agricultural and mineral origin that include lucrative commodities like gold and silver and popular items like oil, pulses and cotton through a well-systematized trading platform. Regular trading workshops and seminars are conducted to hone trading strategies to perfection. Karvy’s commitment to excel in this sector stems from the immense importance that commodity broking has to a cross-section of investors – farmers, exporters, importers, manufacturers and the Government of India itself. BABASAB PATIL - 37 -
  • 38. Karvy Inc. With its growing ambitions of reaching out to investors across the shores of this country, Karvy’s has set up Karvy Inc. in the US located in New York to provide various financial products and information on Indian equities to potential Foreign Institutional Investors (FIIs) in the region. This entity soon would be ACC registered and would also become a member of various important stock exchanges in the US. This entity would extensively facilitate various businesses of Karvy viz., stock broking (Indian equities), research and investment by (Qualified Institutional Buyer) QIBs in Indian markets for both secondary and primary offerings, outsourcing of various assignments for the multiple streams of business in Karvy Global Services Ltd (KGSL). BABASAB PATIL - 38 -
  • 39. THEROTICAL FRAMEWORK FUNDAMENTAL ANALYSIS: Fundamental analysis is the examination of the underlying forces that affect the well being of the economy, industry groups, and companies. The goal is to derive the forecasted earning growths for future price movements. Fundamental analysis is the method of evaluating securities by attempting to measure the intrinsic value of a particular stock. It is the study of everything from the overall economy and industry conditions, to the financial condition and management of specific companies (i.e., using real data to evaluate a stock’s value). The method utilizes items such as revenues, earnings, return on equity and profit margins to determine a company’s underlying value and potential for future growth. One of the major assumptions under fundamental analysis is that, even though things get mis priced in the market from time to time, the price of an asset will eventually gravitate toward its true value. This seems to be a reasonable bet considering the long upward march of quality stocks in general despite regular setbacks and periods of irrational exuberance. The key strategy for the fundamentalist is to buy when prices are at or below this intrinsic value and sell when they got overpriced. Fundamental analysis consists of: • For the national economy we focus on economic data to assess the present and future growth of the economy. • At the industry level, there might be an examination of supply and demand forces for the products offered. • At the company level, may involve examination of financial data, management, business concept and competition. BABASAB PATIL - 39 -
  • 40. Economy analysis The economy is the overall economic environment in which all firms operate. The key variables used to describe the state of economy are: • World economy • Asian economy • Indian economy 1. Growth rate of GDP 2. Industry growth rate 3. Agriculture and monsoons 4. Savings and investment 5. Inflation 6. Interest rates 7. Balance of payments 8. Infrastructure World economy According to the recent statistics, the world GDP (comprising 180 economies) has reached at a sum of US $ 46,747 Billions. Top 15 contributors to the world GDP are USA, Japan, Germany, China, UK, France, Italy, Canada, Spain, Brazil, Russia, Korea, India, Mexico and Australia. Percentage share of USA to the total world GDP is 28.3. While both the emerging economies such as India and China have a share of 1.82 and 5.41 respectively. Find next page the top 15 contributors to the world GDP. BABASAB PATIL - 40 -
  • 41. Asian Economy Asian Economies have brought tremendous success in the recent years. Economic growth rate in China crossed a two-digit number, while economic growth in India’s Economy is near to 10 percent. Apart from those two emerging Asian Economic giants, economies such as Philippines, Indonesia and Malaysia are growing at a faster pace. Find below various economic indicators on the Asian Economies. GDP growth projections among various Asian Economies over years are as follows: GDP Growth Projection on Asian Economies Country Name 2007 2008 Japan 2.3 1.9 Hong Kong SAR 5.5 5 Korea 4.4 4.4 Singapore 5.5 5.7 China 10 9.5 India 8.4 7.8 Indonesia 6 6.3 Malaysia 5.5 5.8 Philippines 5.8 5.8 Thailand 4.5 4.8 The output over the world increased by 4.4% in the year 2005. The largest contributors of the world output were India, China and Russia. The Gross World Product (in purchasing BABASAB PATIL - 41 -
  • 42. power parity) as to the 2005 estimated data has reached at $ 60.71 trillions with a real growth rate of 4.7%. The services sector contributes a largest share to the world GDP. As to the 2004 estimated data, the services sector accounted for 64% followed by industries at 32% and Agriculture 4%. The level of exports and imports over the world has reached at $10.33 trillion and 10.3 trillions f.o.b. as to 2004 estimation. World inflation: Inflation, which can be simply stated to be a state of economic activities with rising price level and falling purchasing power of money, has become global phenomenon. Fast rising oil prices over the world has pressurized the general price level in countries of the world. Present world economy is experiencing higher economic growth with some inflationary pressure. The stabilized countries have the inflation level ranging between 1-3% and the developing countries have inflation between 3-6%. Indian economy: Indian primary sector Agriculture is the mainstay of Indian economy because of its high share in employment and livelihood creation notwithstanding its reduced contribution to the nation’s GDP. The share of agriculture in the gross domestic product has registered a steady decline from 36.4 per cent in 1982-83 to 17 per cent in 2007-08. Yet this sector continues to support more than half a billion people providing employment to 52 per cent of the workforce. It is also an important source of raw material and demand for many industrial products, particularly fertilizers, pesticides, agricultural implements and a variety of consumer goods. This is first time after green revolution that the India has become dependent in satisfying its own food need. Growth pattern of Indian agriculture has been so irregular, because of over dependency on the monsoon. This year we could achieve dismal growth of 2.5%.India is expecting its agriculture to grow at least 4% (CAGR) in the 11th plan to have sustainable and consistent growth of overall GDP. Industrial sector (secondary sector) BABASAB PATIL - 42 -
  • 43. Industrial growth in India has been inspired by the LPG in 1991. in the 10th plan we could achive growth rate of 8-9%. At present industry sector is contributing 28% to country’s GDP. Though at present India is experiencing slowdown in growth of industry production, the long term growth of 8-10% is still intact. The first eight months of the current fiscal, till November 2007, witnessed a moderate slowdown in the growth of the industrial sector. The slowdown has mainly been on account of the manufacturing sector. The mining and quarrying sector grew at a faster pace, while the growth in electricity remained unchanged from April- November 2006. Nonetheless, the 9.2 per cent growth achieved during April-November 2007 by the industrial sector, when seen against the backdrop of the robust growth during the preceding four years, suggests that the buoyancy in this sector has continued, albeit with a degree of moderation. Two important changes have occurred in the growth pattern of the use-based industrial categories: First, capital goods have grown at an accelerated pace, over a high base attained in the previous years, which augurs well for the required industria capacity addition. Secondly, the consumer durables basket that forms part of the Index of Industrial Production (IIP) showed a negative growth during the period, thereby forcing a visible decline in the growth of the total consumer goods basket, despite reasonable growth in the non- durables. Dimension of Indian Economy GDP Composition 17% 28% Manufacturing Service Agriculture 55% Gross domestic product: measure of the total production of final goods and services in the economy during a specified period usually a year. Higher the growth rate, the other things being equal, the more favorable it is for the stock market. BABASAB PATIL - 43 -
  • 44. The growth rate of GDP is more important indicator of the performance of the economy. The average growth rate of Indian economy during 1950-1980 was around 3.5% in real terms. In 1980 it was 5% and 6.2% in 2004. At present it is 8.7 and estimated to cross 9%. Industrial growth rate: stock market analysts mainly focus on the industrial sector. Higher the growth rate, more favorable is the things for stock market. The industrial sector witnessed a slowdown in the first nine months of the current financial year. The growth of 9 per cent during April-December 2007, when viewed against the back drop of the robust growth witnessed in the preceding four years, suggests that there is a certain degree of moderation in the momentum of the industrial sector. At the product group level, the moderation in growth has been selective. Industries like chemicals, food products, leather, jute textiles, wood products and miscellaneous manufacturing products witnessed acceleration in growth, while basic metals, machinery and equipments, rubber, plastic and petroleum products and beverages and tobacco recorded lower but strong growth during April-December 2007. Agriculture and monsoons: agriculture accounts for about a quarter of the Indian economy and has important linkages both direct and indirect with the industry. There has been a loss of dynamism in the agriculture and allied sectors in recent years. A gradual degradation of natural resources through overuse and inappropriate use of chemical fertilizers has affected the soil quality resulting in stagnation in the yield levels. Public investment in agriculture has declined and this sector has not been able to attract private investment because of lower/unattractive returns. Savings and investment: A notable feature of the recent GDP growth has been a sharply rising trend in gross domestic investment and saving, with the former rising by BABASAB PATIL - 44 -
  • 45. 13.1 per cent of GDP and the latter by 11.3 per cent of GDP over five years till 2006-07. The average investment ratio for the Tenth Five Year Plan at 31.4 per cent was higher than that for the Ninth Five Year Plan, while the average saving rate was also 31.4 per cent of GDP higher than the average ratio of 23.6 per cent during the Ninth Five Year Plan. Money supply: For policy purposes for 2007-08, the RBI assumed a real GDP growth of 8.5 per cent with inflation close to 5 per cent, and targeted the monetary expansion in the range of 17-17.5 per cent and credit expansion in the range of 20 to 24 per cent as consistent with envisaged growth and inflation. Interest rates: interest rates affect the cost of financing to the firms. Higher the interest rates, higher will be the cost and if lower, lower the cost and more will be the profitability. Below table shows that interest rates are decreasing year after year which is a good sign for the growth. Year Interest(bank) rates % p.a. April 1997 11 April 1998 10 March 1999 8 March 2001 7 April 2003 6 BABASAB PATIL - 45 -
  • 46. Inflation: The Wholesale Price Index (WPI), which is available on a weekly basis, continues to be the most popular measure of headline inflation in India. Balance of payments: The strength, resilience and stability of the country’s external sector is reflected by various indicators. These include a steady accretion to reserves, moderate levels of current account deficit, changing composition of capital inflows, flexibility in exchange rates, sustainable external debt levels with elongated maturity profile and an increase in capital inflows. The current account has followed an inverted “U” shaped pattern during the period from 2001-02 to 2006-07, rising to a surplus of over 2 per cent of GDP in 2003-04. Thereafter it has returned close to its post-1990s reform average, with a current account deficit of 1.2 per cent in 2005-06 and 1.1 per cent of GDP in 2006-07.Capital inflows, as a proportion of GDP, have been on a clear uptrend during the six years (2001-02 to 2006-07) of this decade. They reached a high of 5.1 per cent of GDP in 2006-07 after a somewhat modest growth rate of 3.1 per cent in 2005-06.The net result of these two trends has been a gradual rise in reserve increase to reach 4 percent of GDP in 2006-07 (Figure 6.1). With capital inflows exceeding financing requirements, foreign exchange reserve increase was of the order of US$ 15.1 billion in 2005-06 and US$ 36.6 billion in 2006-07 (Table 6.2). As a proportion of GDP, external debt was 17.2 per cent and 17.9 per cent in 2005-06 and 2006-07 respectively. BABASAB PATIL - 46 -
  • 47. Infrastructure: with the rapid growth of the economy in recent years the importance and the urgency of removing infrastructure constraints have increased. Traditionally, power, railways, roads, ports, airports and telecommunications were the exclusive domain of the government. Policy has changed gradually over the past two decades under the pressure of rising gaps between demand and supply of infrastructure and deteriorating quality of assets. BABASAB PATIL - 47 -
  • 48. Industry Analysis Growth of Construction Industry: Since the beginning of economic reforms in 1991, the Indian economy has recorded a compounded annual growth rate (CAGR) of over 6.7%. That is impressive in itself, and makes India the second fastest growing large economy in the world — bettered only by China. More significant is the orbit change in India’s GDP growth since 2003-04. With 9.4% growth in 2006-07 following 9% growth in 2005-06, India’s CAGR since 2003-04 has exceeded 8.6%. There is a wide consensus among economists, policy-makers and industry that India can now sustain a CAGR of around 8.5% for the foreseeable future. Indeed, the general feeling is that with more investments in physical infrastructure, it is quite feasible for the country to achieve double-digit growth by 2011-12 — the terminal year of the Eleventh Five Year Plan. This strong economic growth, along with the demographic impetus of a growing population in the working-age category, is creating a massive demand supply mismatch across the real estate sector. The sheer increase in the ‘need for built-up space’ is opening up several opportunities for developers — be it for constructing residential properties, creating commercial space for offices or retail, setting up of SEZs, or developing entertainment zones. Current situation of Constructions The turnover of the construction industry witnessed 57% growth on Year of Year(YoY) basis to reach Rs150,933m in December 2007. This is because investments planned in the infrastructure both by government and private sector, booming housing construction and expansion in corporate production facilities, is likely to fast forward the growth in the Indian construction industry. Aggregate operating profit increased by 35% to Rs22,186.55m. The other income of the industry was Rs8,481.04m. The depreciation increased to Rs2,048.49m. The net profit increased by 83% to reach Rs19,819.89m on YoY basis. The overall cost for the construction industry as the percentage of sales is 90.27% from Rs87 billion in December 2006 to Rs1,35 billion in December 2007. The cost of raw materials to the total sales is 37.82% during December 2007. The staff costs and other operating expenses are 7.34% and 8.04% of the total sales, as compared to the corresponding quarter of the previous year. Depreciation and tax decreased but the interest rate was high. BABASAB PATIL - 48 -
  • 49. Inversement Real estate investments account for about 60% of the total construction investments. Demand-supply gap for residential housing, favorable demographics, rising affordability levels, availability of financing options as well as fiscal benefits available on availing of home loan are the key drivers supporting the demand for residential construction. In addition to this, demand for office space from IT/BPO segment is expected to continue due to emergence of India as a preferred outsourcing destination. Also, boom in organized retail is expected to result in huge demand for real estate construction. According to industry estimates, the Indian real estate industry is expected to grow at a compounded rate of 33% between FY05 to FY10, mainly driven by the residential segment. Regulations: Construction Industry in India According to the 11th five-year plan (2007-12), the core infrastructure sector, comprising power, roads, highways, railways, ports, airports, mining and irrigation, will require massive investments to the tune of US$490 billion over the next five years to sustain current 9-10% GDP growth per annum. The construction industry accounts for 40-50% of the plan outlays and contributes about 20%, nearly US$59.4 billion to the national GDP. It employs around 31m people, second only to the agriculture sector. The industry has witnessed a sustained growth of 30% per annum during the last four years and is poised to grow at 55% in the current fiscal 2007-08, outperforming even the growth of IT and biotech industry in the knowledge sector. Jawaharlal Nehru National Urban Renewal Mission, with an outlay of approximately Rs1,200 billion, is one of the most ambitious projects currently underway in the nation for strengthening the urban infrastructure. While the government announced the withdrawal of tax benefits under Section 80 IA of the Income Tax Act, there is a lot of confusion regarding its interpretation. While some companies are of the opinion that they can no more claim benefits under this section (i.e. they will have to pay taxes at marginal rate), others feel that the benefit has been withdrawn only on the subcontracted work i.e. they can still claim tax benefits on self- executed projects. BABASAB PATIL - 49 -
  • 50. Budget 2008-09 India is on the verge of witnessing a sustained investment phase in infrastructure buildup. With a slew of announcements in housing, road, port and airport development, we are seemingly on a path of sustained higher economic growth on the back of improvement in infrastructure construction in the country. From a policy perspective, there has been a growing consensus that a private-public partnership is required to remove difficulties concerning the development of infrastructure in the country. A substantial chunk of the abovementioned investment target is likely to come from the private sector. Budget measures  The general CENVAT rate has been reduced to 14% from 16%.  Allocation for National Highway Development Programme (NHDP) has been enhanced to Rs 12,966 crore in 2008-09 from Rs 10,867 crore bn in 2007-08.  The budget has given special attention to development of roads in North Eastern region where 180 kms of roads will be completed in 2007-08 and 300 kms of road is being targetted for completion in 2008-09.  The corpus of Rural Infrastructure Development Fund (RIDF-XIV) has been raised to Rs14,000 crore, with a separate window for rural roads.  The budget has also given considerable thrust to irrigation project where the outlay for 2008-09 has been increased to Rs 20,000 crore from Rs 11,000 crore in 2007-08.  The government is setting up 14 irrigation projects with initial capital of Rs 100 crore to fund long-gestation major and medium irrigation projects. Budget Impact  The Bharat Nirman and water irrigation programmes will benefit companies involved in road construction and BOT irrigation projects.  Reduction of CENVAT is also a big positive for the sector as it indicates government’s commitment towards the Goods and Service Tax Act. Company Impact Companies like Jain Irrigation and Madhucon Projects will benefit from increased outlay in irrigation spending. BABASAB PATIL - 50 -
  • 51. Industry Wish list Builders’ Association of India  Alter existing customs duty structure on imported steel bars and rods – fix the duty at 5% without levy of special additional duty and countervailing duty  Extend existing structure of import duty, countervailing duty and special duty on cement for another year, to discourage domestic manufacturers from hiking prices  Project exporters who have executed projects abroad to be allowed to import equipment purchased abroad at 5% duty instead of current 50%  Scrap 2% TDS on construction companies as margins are wafer thin at 4-5%. Allow companies to pay advance tax instead BABASAB PATIL - 51 -
  • 52. PORTER’S FIVE FORCE MODEL Supply Past 2-3 years have seen a substantial increase in the number of contractors and builders, especially in the housing and road construction segment. Demand Demand exceeds supply by a large margin. Demand for quality infrastructure construction is mainly emanating from the housing, transportation and urban development segments. Barriers to entry Low for road and housing construction. However, high working capital requirements can create growth problems for companies with weak financial muscle. Bargaining power Low. Due to the rapid increase in the number of contractors and of suppliers construction service providers, margins have been stagnant despite strong growth in volumes. Bargaining power Low. The country still lacks adequate infrastructure facilities and of customers citizens have to pay for using public services. Competition Very high across segments like road construction, housing and urban infrastructure development. Relatively less in airport and port development. BABASAB PATIL - 52 -
  • 53. COMPANY ANALYSIS Established in 1971, Unitech today is India’s leading real estate company with a market capitalization of around US$ 10 billion. From being a National Capital Region (NCR) focused real estate developer, Unitech is fast establishing a pan India presence. It is already a market leader in NCR and Kolkata and endeavors to attain leadership in every market that it operates in. Unitech has the most diversified product mix comprising residential, commercial, Information Technology (IT) parks, Retail, Amusement parks and Hotels. It is known for the quality of its product and is the first real estate developer to have been certified ISO 9001:2000 certificate in North India. Future expansion plans As of 31 March 2007, the Company has 22 major ongoing residential projects. The total residential space offering from on-going projects is over 25 million square feet. Of these 22 major projects, nine are in Gurgaon, five in Greater Noida, six in Kolkata and one each in Lucknow and Bangalore. Ongoing Projects Project Location Type Close(North) Gurgaon Multi-Storied Close(South) Gurgaon Multi-Storied Uniworld Spa Gurgaon Multi-Storied Fresco Gurgaon Multi-Storied Uniworld Garden Gurgaon Multi-Storied Espace Gurgaon Villa Harmony Gurgaon Multi-Storied Escape Gurgaon Multi-Storied Uniworld City Gurgaon Multi-Storied Horizon Greater Noida Multi-Storied Habitat Greater Noida Multi-Storied Heights Greater Noida Multi-Storied Cascades Greater Noida Multi-Storied Verve Greater Noida Multi-Storied Garden Kolkata Multi-Storied Air Kolkata Multi-Storied BABASAB PATIL - 53 -
  • 54. Downtown Kolkata Multi-Storied Heights Kolkata Multi-Storied Cascades Kolkata Multi-Storied Horizon Kolkata Multi-Storied South City Lucknow Multi-Storied Heritage Estate Bangalore Multi-Storied Upcoming Township Projects Project Location Type Unitech Grande Noida Multi-Storied Uniworld Resorts Gurgaon Villa & Multi-Storied Gateway Kolkata Multi-Storied Uniworld City Greater Noida Multi-Storied Oasis Chennai Villa & Multi-Storied Oasis Hyderabad Villa & Multi-Storied Risk factors: In the course of its business, Unitech is exposed to a wide variety of risks. The company is pursuing a strategy of high growth through entry into new markets. Though the company has, in the recent past, significantly scaled up its internal as well as external resources in keeping with its strategy, it remains to be seen if the company can manage this growth effectively. Demand for real estate especially residential real estate is sensitive to interest rate movements. Interest rats have been rising in the recent past owing to a Reserve Bank of India’s credit tightening policy. This could adversely affect company’s business plans considering that residential segment constitutes a significant portion of company’s business. Also, recent curbs by RBI and the Government of India to reduce credit flow to real estate sector may affect company’s plans. Rise in cost of raw materials could impact company’s performance. While the prices of cement and steel are beyond company’s control, we have been leveraging the bargaining power of scale to manage the cost of other materials through consolidated purchase of those materials. Real estate business in India being highly regulated by Governments at various levels, several regulatory approvals, permits, licenses etc. are required to be obtained from the Government from time to time for our projects. Any delay in obtaining such approvals can affect the timely execution of our projects. While there remain a number of risks to BABASAB PATIL - 54 -
  • 55. our business, due to Unitech’s experience of over two decades in real estate development, its relatively low average cost of the land bank, its capital efficiency and its innovative methods of turning around cash flows, we believe that the company will continue to generate healthy shareholder returns for the future. Therefore, Unitech’s outlook for 2007-08 remains positive. Financial performance analysis: Ratios Industry 2007 2006 2005 Current Ratio 1.74 0.95 0.48 0.43 Quick Ratio 1.46 0.93 0.46 0.4 Inventory Turnover Ratio 14.23 32.16 16.45 15.78 Debt Equity Ratio 1.85 3.11 3.06 1.86 Operating Profit Ratio 23.49 56.83 19.41 9.73 Return On Equity 28.46 84.72 31.01 17.2 P/E 29.02 31.97 50.04 13.99 Price to Book Value Ratio 7.26 16.37 18.35 2.63 Dividend Payout Ratio 13.34 4.13 152.1 127.47 Earning Yield 3.46 3.13 2 7.15 Dividend Yield 0.47 0.13 0.04 1.19 Total Asset Turnover Ratio 0.88 0.22 0.58 0.93 Capital Turnover Ratio 2.31 0.91 2.36 2.66 Gross Profit Margin 21.84 56.64 18.94 9.31 Net Profit Margin 12.78 39.22 10.32 5.67 Interpretation: Liquidity ratios: Ratios Industry Company Current Ratio 1.74 0.95 Quick Ratio 1.46 0.93 Though company’s current ratio is increasing year by year still it is lesser than industry average. But as the company has got ability to use capital more efficiently, this ratio gives it more leverage in terms of earnings. So it can be justifiable. BABASAB PATIL - 55 -
  • 56. Turnover ratios: Ratios Industry Company Total Asset Turnover Ratio 0.88 0.36 Capital Turnover Ratio 2.31 0.54 Inventory Turnover Ratio 14.23 32.16 Inventory turnover ratio is exceptionally good compared to industry. Inventory turnover ratios are improving year by year. Asset and Capital Turnover Ratios are lower than industry, because company has not yet realized good from its newly restructured capital . Leverage ratios: Ratios Industry Company Debt Equity Ratio 1.85 3.11 Company is in the comfortable zone. So that it can still use more Financial Leverage in future. Profitability ratios: Ratios Industry Company Operating Profit Ratio 23.49 56.83 Gross Profit Margin 21.84 56.64 Net Profit Margin 12.78 39.22 All profitability ratios for the company are exceptionally good and they are more than double the industrial average. Perhaps this could be possible because of its volume, very good companies business strategies and mainly because of high project execution expertise that the company has got over the year. Valuation ratios: Ratios Industry Company P/E 29.02 31.97 Price to Book Value Ratio 7.26 16.37 Dividend Payout Ratio 13.34 4.13 Earning Yield 3.46 3.13 Dividend Yield 0.47 0.13 P/E of company is higher than industry average; it is because of the company brand and almost de-risked business operations and company’s higher earning ratios. BABASAB PATIL - 56 -
  • 57. Coming to Price to BV ratio company higher ratio than industry average which is substantiable from the companies past financial track record point of view. The DY and EY for scrip is lower than industry average, because of lower proportion of dividend payout owing to companies high growth potential. Summary: So I can conclude company’s scrip is over valued. Note: Adjustment factor for P/E: I have considered only Historical P/E but not the Weighted P/E ratio. Because Constant Growth Dividend Model can not be applied for the company. ( because there is no consistent dividend pay out). BABASAB PATIL - 57 -
  • 58. Period & months 2007/03 2006/03 2005/03 2004/03 2003/03 INCOME 2,441.7 Net Operating Income 4 653.13 509.33 373.95 235.63 EXPENSES Material Consumption 78.97 61.07 55.68 20.14 25.45 Manufacturing Expenses 853.98 396.1 359.62 298.87 174.36 Personnel Expenses 65.62 31.11 15.95 10.38 8.71 Selling Expenses 13.13 10.62 8.35 4.3 0.91 Administrative Expenses 42.35 27.4 20.15 14.71 8.45 1,054.0 Cost of Sales 4 526.29 459.75 348.4 217.88 1,387.6 Reported PBDIT 9 126.84 49.57 25.56 17.75 Other Recurring Income 65.66 21.45 17.41 8.1 12.01 1,453.3 Adjusted PBDIT 5 148.29 66.98 33.66 24.55 Depreciation 4.54 3.1 2.14 1.69 1.84 Other Write-offs 0 0 0 0 0 1,448.8 Adjusted PBIT 1 145.19 64.84 31.97 22.71 Financial Expenses 193.71 37.14 21.92 9.54 12.01 1,255.1 Adjusted PBT 1 108.05 42.92 22.43 10.7 Tax Charges 361.27 38.48 13.46 6.46 4.61 Adjusted PAT 893.84 69.57 29.47 15.98 6.1 Non-recurring Items 89.72 0.07 0.45 -1.91 4.52 Other Non-cash Adjustments 0.44 -0.51 -1.05 2.5 0.02 REPORTED PAT 983.56 69.64 29.92 14.07 10.61 No. of shares 81.17 1.25 1.25 1.25 1.25 EPS 12.12 55.71 23.94 11.26 8.49 BABASAB PATIL - 58 -
  • 59. Estimated EPS: Period & months 2008 2009 2010 CAGR INCOME 3150.5 4065.2 5245.3 Net Operating Income 9 2 7 1.29 EXPENSES Material Consumption 98.29 122.33 152.25 1.24 1048.4 1287.1 1580.2 Manufacturing Expenses 2 4 2 1.23 Personnel Expenses 90.21 124.02 170.49 1.37 Selling Expenses 24.27 44.85 82.90 1.85 Administrative Expenses 56.83 76.26 102.33 1.34 1318.0 1654.6 2088.2 Cost of Sales 2 0 0 1.25 1832.5 2410.6 3157.1 Reported PBDIT 7 2 7 Other Recurring Income 75.91 87.75 101.44 1.16 1908.4 2498.3 3258.6 Adjusted PBDIT 7 6 1 1.57 Depreciation 5.17 5.89 6.71 1.14 1903.3 2492.4 3251.9 Adjusted PBIT 0 7 0 Financial Expenses 292.50 441.68 666.93 1.51 1610.8 2050.7 2584.9 Adjusted PBT 0 9 7 Tax Charges 469.65 610.55 793.71 1.30 1141.1 1440.2 1791.2 Adjusted PAT 5 5 6 Non-recurring Items 31.65 11.17 3.94 0.35 Other Non-cash Adjustments 0.11 0.03 0.01 0.24 1172.9 1451.4 1795.2 REPORTED PAT 0 4 0 No. of shares 81.17 81.17 81.17 EPS 14.45 17.88 22.12 Adjusted EPS(factor is 1/2)* 7.22 8.94 11.06 Note: recently company has issued 1:1 bonus, so the adjustment factor of ½ is considered for calculation of expected EPS and Book Value. BABASAB PATIL - 59 -