Submitted by: Pooja Ankit Bhagat Ankit Kakkar Siddhanth Munjal

Started in late Fifties as a Government company. One of the important engineering Its product includes:

companies in india

Chemicals Paper Cement Fertilizers etc

Company started with a paid up capital of Rs. 10 million in

1959

 In year 2009, it has a paid up capital of 180 million and

reserves of Rs. 459.6 million. Company sales have shown an increasing trend inspite of number of difficulties such as recessionary conditions, power cuts etc. Net profit has increased from Rs. 17.1 million in fiscal year 2000 to Rs. 43.5 million in fiscal year 2008. Sales and profits of the company have shown a cyclical behaviour over the last decade.

 Its

need was felt because the market was fast growing and the company has at times reached its existing capacities. was expected that its new plant will cause an increase in firms fixed cost.

It

Very Conservative Financing Policies Financed its growth through budgetary support from the government in the form of equity capital and internally generated firms. It being a profitable company government may agree to allow to come up with an IPO.

 To analyse the interaction

risk. Understanding the operating conditions and risk that have a bearing on firms capital structure. From the relevant facts of the case it is argued that a low debt equity ratio might prove to be risky for a firm with high operating risk Concept of the operating and financial risk is illustrated with the help of break- even analysis and EPS analysis .

between operating risk and financial