HINDUSTHAN COLLEGE OF ENGINEERING AND TECHNOLOGY

Approved by AICTE, New Delhi and Accredited with ‘A’ Grade by NAAC

(An Autonomous Institution, Affiliated to Anna University, Chennai)

Othakalmandabam Post, Coimbatore

DEPARTMENT OF MANAGEMENT SCIENCES

MASTER OF BUSINESS ADMINISTRATION

COURSE CODE & NAME: 16BA2202/ FINANCIAL MANAGEMENT

INTERNAL COMPONENT II
ASSIGNMENT II
(CAPITAL STRUCTURE EVALUATION)

SUBMITTED BY
NAME : BENJITH K EAPEN
REG NO : 19206014
BATCH : 2019-2021
DATE : 28/06/2020

EVALUATION CRITERIA MARKS

CALCULATIONS (3)

NOATAPSESERP )2(
TOTAL (5)

Faculty Name: Mrs.V.Kanimozhi Faculty Sign:

INTRODUCTION

Havells India Limited, is Indian electrical equipment company based

in Noida, India. In business since 1958, the company has products ranging
from home and kitchen appliances, lighting for domestic, commercial
and industrial applications, LED lighting, fans, modular switches and wiring
accessories, water heaters, industrial and domestic circuit protection
switchgear, industrial and domestic cables and wires, induction motors,
and capacitors among others. Havells India owns some brands like Havells,
Lloyd, Crabtree, Standard Electric and Promptech.

The company has 23 branches / representative offices with over 6,000

workers in over 50 countries. India's first Lloyd's exclusive outlet is acquired
by businessman Mr. Rajan Bansal. The store is situated in western part of
New Delhi, Paschim Vihar. As of 2016, it has 11 manufacturing plants
in India located at Haridwar, Baddi, Noida, Faridabad, Alwar, Neemrana,
and Bengaluru. In 2014, Havells was listed 125th among 1200 of India's
most trusted brands according to the Brand Trust Report 2014, a study
conducted by Trust Research Advisory.

HISTORY

In 1958, Qimat Rai Gupta dropped out of school and founded an electric
trading operation in the electric wholesale market of Old Delhi. With an
investment of Rs.10,000, he started Havell's Industries.[7] In 1971, Gupta
bought Havells brand from Haveli Ram Gandhi, and in next five years he
started the first manufacturing plant at Tilak Nagar, New Delhi of the
Rewireable Switches and Changeover Switches in his Kirti Nagar Plant,
near New Delhi. In next few years, Havells started to set up manufacturing
of the energy metres. Later, it acquired Towers and Transformers Ltd. and
turned it into a profitable manufacturing energy meters company in one
year.[citation needed] Later, the company entered MCBs manufacturing at Badli,
Delhi, in a joint venture with Geyer, Germany.

In 1974, the company started manufacturing of the Changeover Switches

plant at Sahibabad, Uttar Pradesh. In 1980, they started manufacturing
Control Gear Products at their Faridabad, Haryana plants. Later in the 1980s,
they acquired a manufacturing plant at Alwar, Rajasthan for Power Cables &
Wires. In that same year, they entered into a joint venture with Electrium,
UK for manufacturing Dorman Smith MCCB and Crabtree modular plate
switches. Acquired an electric control and switchboards at Noida for
manufacturing customised packaged solutions. Introduced high-end Ferraris
Meters in joint venture with DZG, Germany. Acquired controlling stake in
Duke Arnics Electronics (P) Limited engaged in manufacturing of electronic
metres—single-phase, three-phase, multi-function, tri-vectors and also
acquired controlling interest in an industry major-Standard Electricals Ltd
and also an acquired business of Havells Industries Ltd, MCCB of Crabtree
India Limited and merged ECS Limited in the company to consolidate its
area of core competence.

PRODUCT BASE
Havells India Ltd is a leading fast moving electrical goods company with
presence across India. Its product range includes Industrial & Domestic
Circuit Protection Switchgear Cables& Wires Motors Fans Power
Capacitors Luminaires for Domestic Commercial & Industrial applications
Modular Switches Water Heaters and Domestic Appliances covering the
entire gamut of household commercial and industrial electrical needs.
Havells owns prestigious brands like Havells Crabtree and Standard. The
company has 12 state-of-the-art manufacturing units in India located at
Haridwar Baddi Noida Sahibabad Faridabad Alwar and Neemrana. The
company has 43 branch offices. Havells India Ltd was incorporated as
Havell's Pvt Ltd in August 1983 and converted into a public limited
company in March 1992. The company started their operations by producing
miniature circuit-breakers and distribution boards in the year 1984. Then
they entered into a technical collaboration with Christian Geyer Germany to
manufacture miniature circuit-breakers in India. In the year 1991-92 the
company made additions to their facilities to manufacture plastic distribution
boards (PDBs) and earth-leakage circuit-breakers (ELCBs). In order to
manufacture ELCBs the company entered into technical collaboration with
Schiele Industriwerke Germany. In the year 1996 the company entered into
the manufacture of low tension power cables by acquiring an existing cable
manufacturing plant in Alwar Rajasthan which belongs to a sick unit from
Rajasthan State Industrial Development & Investment Corporation.In the
year 2000 the company acquired Standard Electricals Ltd and Duke Arnics
Electronics Ltd. The company sold their entire shareholding of A J Shehfar
& Co Ltd in the year 2003. The company also sold their entire shareholding
in Standard Electricals Ltd during the year 2003-04. In the same year the
company moved in to electrical consumer goods segment and set up a state-
of-the-art automatic plant for manufacturing Compact Fluorescent Lamps at
Faridabad in Haryana. During the year 2004-05 the company incorporated
Havell's (UK) Ltd in London. The company enhanced its installed capacity
of Domestic Switchgears Industrial Switchgears and Electrical Consumer
Durables by 12650000 Nos 222000 Nos and 2000000 Nos respectively.
With this expansion the total installed capacity of these products increased to
27300000 Nos 1335000 Nos and 13200000 Nos respectively. Also they
introduced a complete range of indoor and outdoor lighting fixtures under
the brand name Havells in the market.In the year 2005-06 the company
installed CCV Lines for making high voltage cables. Also they installed a
state-of-the-art automatic plant for manufacturing Compact Fluroescent
Lamps (CFL) at Haridwar in Uttarakhand and started their production from
January 2006. Also they installed a new plant to produce Fans and started
production in October 2005. In the same year Crabtree India Ltd was
amalgamated with the company.In the year 2006-07 the company set up a
new plant in Noida for Power Capacitors. This plant an installed capacity of
600000 KVAR per month and they commenced their production on
February 2007. These are designed and manufactured using S3 technology.
Also they increased the production capacity of Domestic Switchgear by
6000000 to 39600000 Nos. Industrial Switchgear by 800000 to 2600000
Nos. Electrical wire Accessories by 14000000 to 20000000 Nos Cables &
Wires by 230000 to 700000 Nos and Electrical Consumer Durables by
10000000 to 32400000 Nos.In the year 2007 the company incorporated a
wholly owned subsidiary with the name Havell's Holdings Limited in Isle of
Man. Also the company acquired SLI Lighting Products Inc. SLI Europe BV
and Lighthouse Investment Holdings Ltd on April 2007. The company
changed their name to Havells India Ltd (Apostrophe is removed from the
word Havell's) with effect from July 28 2007. In April 20 2007 Havell's
Netherlands B.V. a step subsidiary of the company completed the
acquisition of 'Sylvania'.In the year 2008 the company set up a fully
automatic plant for Havells Lafert Motors at Neemrana. They set up Global
Corporate office QRG Towers at Expressway Noida. Also they made
investment of Rs 50 crore in Global Center for Research and Innovation
(CRI).In the year 2009 the company set up a fully automatic second unit for
switchgear manufacturing at Baddi. They made Global consolidation of CFL
manufacturing plant at Neemrana for domestic and export purposes. They
launched India's first HPF CFL and first BEE 5-star Rated Fan.In the year
2010 the company set up second unit for Fan manufacturing at Haridwar.
They acquired 100% interest in Standard Electricals. They set up World's
First New Generation CMH Lamp Plant at Neemrana. They entered into
Electric Water Heaters business. Also they launched Havells brand in US &
Mexico.During the year 2009-10 the company acquired Seven Wonders
Holidays Pvt Ltd to facilitate the transfer of electrical business of Standard
Electricals Ltd. As per the scheme of arrangementthe electrical business of
erstwhile Standard Electricals Ltd (SEL) a company under the same
management was de-merged and transferred to Seven Wonders Holidays Ltd
a 100% subsidiary of the company. Also the name of Seven Wonders
Holidays Ltd was changed to Standard Electricals Ltd.In the year 2011 the
company launched a new range of Control Gear Cosmic Star series. They set
up a new Industrial Switchgear Plant in Sahibabad. They launched domestic
appliances. They entered into a joint venture agreement with Shanghai
Yaming Lighting China.During the year 2010-11 the company ventured into
'Home Comfort Products' with their foray into a new generation Electric
Water Heater business. They set up a state-of-the-art plant in collaboration
with Havells Sylvania Belgium for production of Ceramic Metal Halide
lamps.In September 2011 as per the scheme of amalgamation Standard
Electrical Ltd a 100% subsidiary of the company was amalgamated with the
company with effect from appointed date April 1 2011.In 2015 Havells India
Ltd has launched the country's first most energy efficient fan - ES 40. The
company has launched India's first brightest LED lamps range 'LUMENO' at
its lighting fixtures plant in Neemrana Rajasthan. The company also adds
first 'Made in India' MCB to its portfolio. The company has got hold of a 51
per cent stake in Promptec Renewable Energy Solutions at an enterprise
value of Rs 65 crore. The company has launched a world class range of
MCBs and RCCBs under EURO-II series in Odisha market. During the year
the company also launched world class products in Switchgear segment in
the Eastern Region and also inaugurated a new office in Haldwani
Uttarakhand.On 10 December 2015 Havells India Ltd. announced that it has
received intimation from its wholly owned subsidiary Havells Holdings
Limited that it proposes to enter into definitive agreement with Shanghai
Feilo Acoustics Co Ltd (Feilo) to divest 80% stake in Havells Sylvania
Malta BV subject to shareholders and related approvals. Feilo is a leading
listed company with key shareholding held by Inesa Limited a State Owned
Enterprise (SoE) of Shanghai Government. Havells Holding Limited Isle of
Man would continue to hold remaining with exit options in next 3-5 years.
Further Havells India proposes to divest 80% stake in its wholly owned
subsidiary Havells Exim Limited Hongkong. The combined equity value for
100% stake for both companies is Euro 186 million (about Rs 1340 crore)
subject to adjustments if any. Havells cumulative investment value stands at
Rs 980 crore.On 2 February 2016 Havells India announced the launch of its
first Made-in-India MCBs and RCCBs under EURO-II series in Uttar
Pradesh. These are the company's first MCBs and RCCBs that are designed
developed and manufactured in-house conforming to international standards.
On 14 February 2016 Havells India Limited announced various initiatives
and its preparedness for achieving next phase of growth. The company
announced that it would start offering products and solutions in the space of
solar energy; it will venture in the business of automation & control and
internet of things so that it could participate better in upcoming smart cities
projects and will widen its product offerings to garner larger market share
across all its business segments. On 6 May 2016 Havells India Limited
announced its foray into the fast growing segment of Integrated Automation
and Control Solutions under its premium brand Crabtree in association with
one of world's leading automation company HDL Automation. In June 2016
Havells India Limited announced its foray into a new product segment with
the launch of innovative and premium range of air purifiers in the domestic
market.On 9 November 2016 Havells India announced that it has further
strengthened its presence in the North East region with the launch of world's
most advanced Made in India range of water heaters under the Adonia brand
in the state of Mizoram that uses colour changing LED technology to
communicate different temperature levels.On 8 February 2017 Havells India
Limited announced its foray into personal grooming segment with the
launch of an array of high quality personal care product like Electric Shavers
Beard Trimmers Grooming kit - Precision nose and ear Trimmer Hair
Straighteners & Dryers Bikini Trimmer. The company also for the first time
in the country launched baby hair clippers.On 14 February 2017 Havells
India Limited announced the launch of many new variants of world-class
stylish fans to cater to today's contemporary homes. The company targets to
be a strong No 2 brand in fans in the southern Indian market.On 19 February
2017 Havells India Limited announced that its board of directors has
approved the acquisition of Lloyd Consumer Durable Business Division
(Lloyd Consumer). The acquisition is proposed to be executed at an
enterprise value of Rs 1600 crore on a debt free cash free basis subject to
closing adjustments. The company has signed an agreement with Lloyd
Electrical and Engineering Limited and Fedders Lloyd Corporation Limited
for acquiring Lloyd brand and the consumer durable business that is engaged
in sourcing assembling marketing and distribution of consumer durables
including airconditioners TVs washing machines and other household
appliances. The proforma revenues of consumer durable arm Lloyd
Consumer for 9 months ended 31 December 2016 stood at Rs 1242 crore
and EBDITA of Rs 75 crore.On 8 May 2017 Havells India Limited
announced the successful completion of its acquisition of Lloyd Consumer
Durable Business Division (Lloyd Consumer). The acquisition has been
executed at an enterprise value of Rs 1600 crore on a debt free cash free
basis. The company has financed the transaction through internal accruals
and cash balances. Havells has acquired the consumer business
infrastructure people distribution network including and not limited to
absolute exclusive ownership and right to all intellectual property of Brand
Lloyd logo trademark goodwill and attendant rights. Through this
acquisition Havells marks a foray into consumer durables industry.On 14
March 2018 Havells India Limited announced an agreement with South
Korean major Hyundai Electric & Energy Systems Co. Ltd for
manufacturing of Magnetic Contactor (MC). Under the agreement Hyundai
Electric will provide technology know-how and grant a license to
manufacture and market Magnetic Contactors under Havells brand. Havells
India would also manufacture MC for Hyundai Electric. As per the previous
MoU signed between both the companies in November 2017 Hyundai
Electric will supply low and medium voltage protection and switching
devices to Havells as Brand labeling and will also grant manufacturing
license for ranges of Magnetic Contactors (MC) and Molded Case Circuit
Breakers (MCCBs) to Havells. Also Havells will supply equipment such as
Miniature Circuit Breakers (MCBs) & Magnetic Contactors (MC) to
Hyundai Electric. Havells is leading player in Switchgear market.

CAPITAL STRUCTURE
meaning

The term ‘structure’ means the arrangement of the various

parts. So capital structure means the arrangement of capital
from different sources so that the long-term funds needed for
the business are raised.

Thus, capital structure refers to the proportions or combinations

of equity share capital, preference share capital, debentures,
long-term loans, retained earnings and other long-term sources
of funds in the total amount of capital which a firm should raise
to run its business.

What is capital structure

The capital structure is the particular combination of debt

and equity used by a company to finance its overall
operations and growth. Debt comes in the form of bond issues
or loans, while equity may come in the form of common
stock, preferred stock, or retained earnings. Short-term debt
such as working capital requirements is also considered to be
part of the capital structure.

KEY TAKEAWAYS
Capital structure is how a company funds its overall operations and
growth.

Debt consists of borrowed money that is due back to the

lender, commonly with interest expense.
Equity consists of ownership rights in the company,
without the need to pay back any investment.
The Debt-to-Equity (D/E) ratio is useful in
determining the riskiness of a company's borrowing
practices.
Understanding Capital Structure

Both debt and equity can be found on the balance sheet.

Company assets, also listed on the balance sheet, are
purchased with this debt and equity. Capital structure can
be a mixture of a company's long-term debt, short-term
debt, common stock, and preferred stock. A company's
proportion of short-term debt versus long-term debt is
considered when analyzing its capital structure.
When analysts refer to capital structure, they are most
likely referring to a firm's debt-to- equity (D/E) ratio,
which provides insight into how risky a company's
borrowing practices are. Usually, a company that is
heavily financed by debt has a more aggressive capital
structure and therefore poses greater risk to investors.
This risk, however, may be the primary source of the
firm's growth.
Debt is one of the two main ways a company can raise
money in the capital markets. Companies benefit from
debt because of its tax advantages; interest payments
made as a result of borrowing funds may be tax
deductible. Debt also allows a company or business to
retain ownership, unlike equity. Additionally, in times of
 low interest rates, debt is abundant and easy to access.
Equity allows outside investors to take partial ownership
in the company. Equity is more expensive than debt,
especially when interest rates are low. However, unlike
debt, equity does not need to be paid back. This is a
benefit to the company in the case of declining
earnings. On the other hand, equity represents a claim by
the owner on the future earnings of the company.
TYPES OF CAPITALIZATION STRUCTURES

Firms can either issue either more debt or equity to fund its
operations. By issuing equity, firms give up some ownership in
the company without the need to pay back investors; by issuing
debt, companies increase their leverage by needing to pay back
investors. A company's debt-to-equity ratio is a measure of risk
for investors.
Measures of Capital Structure

Companies that use more debt than equity to finance their assets
and fund operating activities have a high leverage ratio and an
aggressive capital structure. A company that pays for assets
with more equity than debt has a low leverage ratio and a
conservative capital structure. That said, a high leverage ratio
and an aggressive capital structure can also lead to higher
growth rates, whereas a conservative capital structure can lead
to lower growth rates.

Analysts use the debt-to-equity (D/E) ratio to compare capital

structure. It is calculated by dividing total liabilities by total
equity. Savvy companies have learned to incorporate both debt
and equity into their corporate strategies. At times, however,
companies may rely too heavily on external funding, and debt
in particular. Investors can monitor a firm's capital structure by
tracking the D/E ratio and comparing it against the company's
industry peers.

Importance of Capital Structure

Capital structure is vital for a firm as it determines the overall

stability of a firm. Here are some of the other factors that
highlight the importance of capital structure

A firm having a sound capital structure has a higher chance

of increasing the market price of the shares and securities
that it possesses. It will lead to a higher valuation in the
market.
A good capital structure ensures that the available funds are
used effectively. It prevents over or under capitalisation.
It helps the company in increasing its profits in the form of higher
returns to stakeholders.

A proper capital structure helps in maximising shareholder’s

capital while minimising the overall cost of the capital.
A good capital structure provides firms with the flexibility
of increasing or decreasing the debt capital as per the
situation.
Factors Determining Capital Structure

Following are the factors that play an important role in determining

the capital structure:

1. Costs of capital: It is the cost that is incurred in raising

capital from different fund sources. A firm or a business

should generate sufficient revenue so that the cost of capital
can be met and growth can be financed.
2. Degree of Control: The equity shareholders have more rights

in a company than the preference shareholders or the

debenture shareholders. The capital structure of a firm will
be determined by the type of shareholders and the limit of
their voting rights.
3. Trading on Equity: For a firm which uses more equity as a

source of finance to borrow new funds to increase returns.

Trading on equity is said to occur when the rate of return on
total capital is more than the rate of interest paid on
debentures or rate of interest on the new debt borrowed.
4. Government Policies: The capital structure is also impacted

by the rules and policies set by the government. Changes in

monetary and fiscal policies result in bringing about changes
in capital structure decisions.
BALANCE SHEET
A balance sheet is a financial statement that reports a
company's assets, liabilities and shareholders' equity at a
specific point in time, and provides a basis for computing rates
of return and evaluating its capital structure. It is a financial
statement that provides a snapshot of what a company owns and
owes, as well as the amount invested by shareholders.

The balance sheet is used alongside other important financial

statements such as the income statement and statement of cash
flows in conducting fundamental analysis or calculating
financial ratios.

Rs (in Crores)

Particulars Mar'20 Mar'19 Mar'18 Mar'17 Mar'16

Liabilities 12 12 12 12 12
Months Months Months Months Months

Share Capital 372.00 374.00 3382.00 372.00 371.75

Reserves & Surplus 69523.0 77508.0 78941.0 79396.0 78865.6

0 0 0 0 9

Net Worth 69895.0 77882.0 82323.0 79768.0 79237.4

0 0 0 0 4
Secured Loan 32448.0 37699.0 12949.0 22698.0 23121.9
0 0 0 0 4

Unsecured Loan .00 .00 17171.0 13859.0 7496.80

0 0

TOTAL LIABILITIES 102343. 115581. 112443. 116325. 109856.

00 00 00 00 18

Assets

Gross Block 49204.0 93401.0 73121.0 70046.0 65375.6

0 0 0 0 3

(-) Acc. Depreciation .00 52395.0 35945.0 33849.0 31522.6

0 0 0 5

Net Block 49204.0 41006.0 37176.0 36197.0 33852.9

0 0 0 0 8

Capital Work in Progress .00 15731.0 18369.0 17243.0 21157.5

0 0 0 4

Investments 62905.0 68582.0 68010.0 86085.0 101047.

0 0 0 0 23

Inventories 5689.00 7657.00 8149.00 5540.00 5228.66

Sundry Debtors 832.00 1966.00 1968.00 1529.00 1926.53

Cash and Bank 2193.00 3891.00 1594.00 1414.00 1890.89

Loans and Advances 18627.0 12034.0 11903.0 18176.0 17520.5

0 0 0 0 8

Total Current Assets 27341.0 25548.0 23614.0 26659.0 26566.6

0 0 0 0 6

Current Liabilities 35827.0 34158.0 33745.0 48969.0 71778.0

0 0 0 0 0

Provisions 1280.00 1128.00 981.00 890.00 990.23

Total Current Liabilities 37107.0 35286.0 34726.0 49859.0 72768.2

0 0 0 0 3

NET CURRENT - - - - -
ASSETS 9766.00 9738.00 11112.0 23200.0 46201.5
0 0 7

Misc. Expenses .00 .00 .00 .00 .00

TOTAL 102343. 115581. 112443. 116325. 109856.

ASSETS(A+B+C+D+E) 00 00 00 00 18

Rs (in Crores)
 EQUITY ANALYSIS FOR LAST 5 YEARS OF VEDANTA LTD

YEAR EQUITY SHARE NETWORTH

CAPITAL
(in crores)
(in crores)

2016 371.75 79237.44

2017 372.00 79768.00

2018 3382.00 82323.00

2019 374.00 77882.00

2020 372.00 69895.00

INTERPRETATION

From the above equity analysis table it can be interpreted that,

By comparing between these five years the equity share capital
is increased to higher and gradually decreased

NETWORTH OF VEDANTA LTD:

The networth of
Vedanta ltd
yearly wise is In
the year 2016:
79237.44 (in
crs)

In the year
2017:
79768.00
(in crs) In
the year
2018:
82323.00
(in crs) In
the year
2019:
77882.00
(in crs) In
the year
2020:
69895.00
(in crs)

DEBT ANALYSIS FOR 5 YEARS OF VEDANTA LTD :

The debt analysis can be analyzed by means of two parameters. They
are

⮚ Secured loans.

⮚ Unsecured loans.

SECURED LOANS:

A secured loan is a loan in which the borrower pledges some

asset as collateral for the loan, which then becomes a secured
debt owed to the creditor who gives the loan.

UNSECURED LOANS:

In finance, unsecured debt refers to any type of debt or general

obligation that is not protected by a guarantor, or collateralized
by a lien on specific assets of the borrower in the case of a
bankruptcy or liquidation or failure to meet the terms for
repayment