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Capital Strutur of FMCG &automobile Sector
Capital Strutur of FMCG &automobile Sector
ASSIGNMENT
OF FINANCIAL MANAGEMENT ON STUDY OF CAPITAL STRUCTURE OF INDIAN COMPANIES : FMCG SECTOR & AUTOMOBILE SECTOR
SUBMITTED TO: JIMMY KAPADIA SUBMITTED BY: SANDIP DANKHARA (15) SALAHUDDIN SAIYED (31) JITHIN PONATHIL (35) ARJAN PARMAR (40) DHAVAL PATEL (58)
INDEX
1. FMCG SECTOR....................................................3-10
1.1. Introduction.......3 1.2. Top 10 FMCG Companies.......4 1.3. Capital structure of top 10 fmcg companies.....9
2. AUTOMOBILE SECTOR..11-18
2.1. Introduction11 2.2. Top 10 Automobile companies..12 2.3. Capital structure of top 10 Automobile companies ...17
FMCG industry:
FMCG industry, alternatively called as CPG (Consumer packaged goods) industry. Primarily deals with the production, distribution and marketing of consumer packaged goods. The Fast Moving Consumer Goods (FMCG) are those consumables which are normally consumed by the consumers at a regular interval. Some of the prime activities of FMCG industry are selling, marketing, financing, purchasing, etc. The industry also engaged in operations, supply chain, production and general management. Some of the merits of FMCG industry, which made this industry as a potential one are low operational cost, strong distribution networks, presence of renowned FMCG companies. Population growth is another factor which is responsible behind the success of this industry. FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against FMCG products is also very high. The competition among FMCG manufacturers is also growing and as a result of this, investment in FMCG industry is also increasing, specifically in India, where FMCG industry is regarded as the fourth largest sector with total market size of US$13.1 billion.
Rank 1 2 3 4 5 6 7 8 9 10
Companys name Hindustan Unilever Ltd.(HUL) Dabur India Godrej Consumer Colgate Palmolive Marico Godrej industries Gillette India Procter & Gamble Hygiene and Health Care(P&G) Emami Bajaj corp.
Dabur (Dabur India Ltd.) (Devanagari: ) derived from Daktar Burman) is India's largest Ayurvedic medicine manufacturer. Dabur's Ayurvedic Specialities Division has over 260 medicines for treating a range of ailments and body conditions-from common cold to chronic paralysis.
Gillette India
Gillette India is a leading company in the personal grooming segment. It offers a range of products including shaving systems, safety razor blades, shaving preparation products, etc. It also trades in oral care products and alkaline batteries.
Marico
Marico is a fledgling Indian group providing consumer products and services in the areas of Health and Beauty based in Mumbai. During 2009-10, the company generated a Turnover of about Rs.26.6 billion (USD 600 Million), in respect of its food, hair care and skin care related activities. Marico's own manufacturing facilities are located at Goa, Kanjikode, Jalgaon, Pondicherry, Dehradun, Baddi, Paonta Sahib and Daman.
Colgate-Palmolive Company
Colgate-Palmolive Company is an American multinational consumer products company focused on the production, distribution and provision of household, health care and personal products, such as soaps, detergents, and oral hygiene products (including toothpaste and toothbrushes). Under its "Hill's" brand, it is also a manufacturer of veterinary products. The company's corporate offices are on Park Avenue in Midtown Manhattan, New York City.
Emami Limited
Emami Limited is an Indian producer of fast moving consumer goods (FMCG), such as cosmetics and health and baby products. The company is based inKolkata. In 2008 the company announced that it intended to offer baby care products. The company's health products unit offers tonics for colds and coughs as well as nutraceuticals.
Godrej Industries
Godrej Industries is one of the India's leading manufacturer of oleochemicals and makes more than a hundred chemicals for use in over two dozen industries. It also manufactures edible oils, vanaspati and bakery fats. Besides, it operates real estate. With global reach spreading across 40 countries. Godrej Industries (Chemicals Division) exports its products to more than 60 countries and headquartered inMumbai, India.
Equity Capital: This refers to money put up and owned by the shareholders (owners). Typically, equity capital consists of two types: 1.) Contributed capital: which is the money that was originally invested in the business in exchange for shares of stock or ownership and 2.) Retained earnings: Which represents profits from past years that have been kept by the company and used to strengthen the balance sheet or fund growth, acquisitions, or expansion.
Debt Capital: The debt capital in a company's capital structure refers to borrowed money that is at work in the business. The safest type is generally considered long-term bonds because the company has years, if not decades, to come up with the principal, while paying interest only in the meantime.
Name of Company
Debt Capital
2010-11 0 253.35 272.49 0.05 552.49 554.22 0 0 223.87 0 185.647
(In crore)
2008-09 0 106.07 12.4 4.59 376.92 547.61 0 0 253.25 0 130.084 421.95 138.98 62.89 4.69 308.53 600.96 0 0 440.08 0 197.808 2007-08 88.53 16.69 134.59 4.69 305.59 435.67 0 0 35.19 0 102.095 2006-07 72.6 19.54 112.86 4.28 167.25 467.69 0 0 23.17 0 86.739 Average 116.616 106.926 119.046 3.66 342.156 521.23 0 0 195.112 0 140.4746
2009-10
HUL Dabur India Godrej consumer Colgate Marico Godrej industries Gillette India P&G Emami Bajaj corp. Average
10
1000 900 800 700 600 Rs.(Cr) 500 400 300 200 100 0 2010-11 2009-10
FMCG sector
2008-09 Year
2007-08
2006-07
Here, the average Debt-Equity ratio is 0.23:1 of the Equity Capital which shows far less proportion of Debt capital as compared to Equity capital in the FMCG industry. The long term fund requirement of FMCG industry is less compared to the Automobile industry. The reason behind it may be: Less initial investment requirement, Less costly machinery for production, Short conversion cycle, Short collection period.
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12
Rank 1 2 3 4 5 6 7 8 9 10
Companys name Maruti Suzuki India Limited Tata Motors Mahindra & Mahindra Limited Hero Motocorp Limited Bajaj Auto Hindustan Motors TVS Motors Ashok Leyland LML Force Motors
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Hindustan Motors
Hindustan Motors is an Indian automaker based in Kolkata, West Bengal, India. It is part of the Birla Technical Services industrial group. The company was the largest car manufacturer in India before the rise of Maruti Udyog. It is the producer of the Ambassador car, widely used as a taxicab and as a government limousine. This car is based on the Morris Oxford, a British car that dates back to 1954. One of the original three car manufacturers in India, founded in 1942 by Mr. B.M. Birla, it was a leader in car sales until the 1980s, when the industry was opened up from protection. Manoj Jha was the Managing Director and R.Yeshwanth. Mr.Manoj Jha stepped down from the post on 21st February '2012 . It began in Port Okha near Gujarat, and in 1948, moved to West Bengal. The Place is now Called Hindmotor.
15
Ashok Leyland
Ashok Leyland is a commercial vehicle manufacturing company based in Chennai, India. Founded in 1948, the company is one of India's leading manufacturers of commercial vehicles, such as trucks and buses, as well as emergency and military vehicles. Operating six plants, Ashok Leyland also makes spare parts and engines for industrial and marine applications. It sells about 60,000 vehicles and about 7,000 engines annually. It is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle (M&HCV) segment with a market share of 28% (200708). With passenger transportation options ranging from 19 seaters to 80 seaters, Ashok Leyland is a market leader in the bus segment.The company claims to carry over 60 million passengers a day, more people than the entire Indian rail network. In the trucks segment Ashok Leyland primarily concentrates on the 16 ton to 25 ton range of trucks. However Ashok Leyland has presence in the entire truck range starting from 7.5 tons to 49 tons. The joint venture announced with Nissan Motors of Japan would improve its presence in the Light Commercial Vehicle (LCV) segment (<7.5 tons).
LML
LML (formerly Lohia Machines Ltd) is an Indian scooter and motorcycle manufacturer based in Kanpur, Uttar Pradesh. Incorporated as Lohia Machines Private Limited in 1978, the company was engaged in manufacture of synthetic yarn manufacturing machines in technical collaboration with ARCT, France. In 1978, it became a public limited company and diversified into processing synthetic yarn.
Force Motors
Force Motors is an Indian manufacturer of three-wheelers, multi-utility and cross country vehicles, light commercial vehicles, tractors, buses and now heavy commercial vehicles. It was originally named Firodia Tempo Ltd. and later after partial acquisition by Bajaj Auto as Bajaj Tempo Ltd. The company was founded in 1958 by N.K.Firodia. Abhay N. Firodia is the Chairman and Prasan Firodia is Managing Director. Force Motors started production of the Hanseat three-wheeler in collaboration with German Vidal & Sohn Tempo Werke and went on to establish a presence in the light commercial vehicles field with the Matador, the proverbial LCV (light commercial vehicle) in India. Through the 1980s and 1990s, and especially in the last five years with a major product development effort, Force Motors has introduced new light commercial vehicles, a facelifted series ofTempo Trax utility vehicles, new state-of-the-art tractors, and a new range of three-wheelers.
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The company which mainly operates in commercial vehicle segment, entered into Personal Vehicle segment on 19/08/2011 and launched its first SUV named Force-One [2] . Amitabh Bachhan, the Indian film industry icon, is the Brand Ambassador for this product.[3] The company manufactures trucks at Pithampur, the industrial hub of Madhya Pradesh in Indore in a joint venture, Man Force Trucks Pvt. Ltd, with MAN AG of Germany.[4] MAN Force trucks are exported overseas to countries such as Sri Lanka, Indonesia, and certain African nations; markets where a low selling price is essential.
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Name of Company
Debt Capital (In crore) 2010-11 2009-10 821.4 16,625.91 2,880.15 66.03 1,338.58 95.84 1,003.29 2,280.45 140.18 147.83 2539.966 2008-09 698.9 13,165.56 4,052.76 78.49 1,570.00 129.02 905.98 1,961.98 141.99 160.92 2286.56 2007-08 900.2 6,280.52 2,587.06 132 1,334.34 126.09 666.34 887.5 129.99 365.91 1340.995 2006-07 630.8 4,009.14 1,636.00 165.17 1,625.43 187.52 633.56 640.4 112.38 249.32 988.972 Average 672.12 11195.98 2712.252 386.57 1238.7 134.412 798.918 1685.704 140.316 234.698 1919.967
Maruti Suzuki in. ltd. TATA Motors Mahindra & Mahindra ltd. Hero Motocorp ltd. Bajaj Auto Hindustan Motors TVS Motors Ashok Leyland LML Force Motors Average
309.3 15,898.75 2,405.29 1,491.16 325.15 133.59 785.42 2,658.19 177.04 249.51 2443.34
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Automobile sector
2009-10
2008-09 Year
2007-08
2006-07
Here, the Equity capital is tends to increase every year and Debt capital tends to increase initially but then decrease. Also Equity is increasing at faster rate compared to the Debt capital. The average Debt-Equity Ratio of the sector is 0.50:1 which more than the FMCG sector is.
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Form of Capital Equity Capital(FMCG) Growth Rate of Equity(FMCG) Equity Capital ( Automobile) Growth Rate of Equity(Automobile) Debt-Equity Ratio(FMCG) Debt-Equity Ratio(Automobile)
Average(Cr) 614.22
3,862.08
0.23:1 0.50:1
Equity Comparison
6000 5000 4000 Rs.(Cr) 3000 2000 1000 0 2010-11 2009-10 2008-09 2007-08 2006-07 Year Equity Capital(FMCG) Equity Capital(Autom obile)
Interpretation: Here, it is clear from the chart that Equity capital in the FMCG sector is higher as compare to the Automobile sector and the rate of growth is also faster as compared to the Automobile sector. But in the financial Year both the sector tends to increase Equity at the same rate with slight difference.
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Form of Capital Debt Capital(FMCG) Growth Rate of Debt(FMCG) Debt Capital (Automobile) Growth Rate of Debt(Automobile) Debt-Equity Ratio(FMCG) Debt-Equity Ratio(Automobile)
Average(Cr) 140.4746
1919.967
0.23:1 0.50:1
Debt Comparison
Interpretation:From the above graph we can conclude that the debt equity ratio of automobile sector is more as compared to the FMCG sector, it is but obvious because in the automobile sector huge initial investment has to be incurred on the acquisition of the raw material so as to meet the high demand while in FMCG sector their is short operation cycle compared to the automobile sector and also less initial capital investment is required so we can say that because of this reason the debt equity ratio of automobile sector is more than the FMCG sector.
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FINDINGS:We hereby found that the average debt capital in automobile sector for the last five years is Rs. 1919.97 crores while in FMCG sector the average debt capital of the last five years is Rs. 140.47 crores which is very much lower than the automobile sector. Also the average equity capital of the automobile sector is higher than the FMCG sector the average equity capital of automobile sector is Rs. 3862.08 crores while that of the FMCG sector average equity capital is just rupees 614.22 crores. The debt equity ratio of FMCG sector is 0.23:1 and that of the automobile sector is 0.50:1. So, we can say that automobile sector has the high leverage compared to the FMCG sector.
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CONCLUSION:From the above findings and calculations done we can conclude that the automobile sector has the capital structure with high equity and debt ratio. The reason behind such a difference between the two sectors is may be due to their difference in their operating cycle and also their investment pattern.
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Bibliography
WEBSITE BOOKS FINANCIAL MANAGEMENT BY I.M.PANDEY http://money.rediff.com/ http://www.moneycontrol.com/ http://en.wikipedia.org/
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B&A Ltd Bajaj Hindusthan Ltd. Bajaj Hindusthan Sugar & Inds. Ltd Balrampur Chini Mills Ltd. Bambino Agro Inds. Ltd BCL Industries & Infrastructures LtD Beeyu Overseas Ltd Belapur Industries Ltd Bio Whitegold Farms Ltd
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Camson Bio Technologies Ltd CCL Products (India) Ltd. Chaman Lal Setia Exports Ltd Chordia Food Products Ltd Colgate-Palmolive (India) Ltd
Dabur India Ltd Darshan Oils Ltd DCM Shriram Inds. Ltd DFM Foods Ltd Dhampur Sugar Mills Ltd. Dhampure Specialty Sugars Ltd Dharani Sugars & Chemicals Ltd Dhunseri Tea & Inds. Ltd Diana Tea Company Ltd Dollex Industries Ltd.
Eastern Sugar & Inds. Ltd EID-Parry (India) Ltd. Emami Ltd Empee Distilleries Ltd Empee Sugars & Chemicals Ltd.
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Flex Foods Ltd Foods & Inns Ltd Freshtrop Fruits Ltd
Gayatri Sugars Ltd GlaxoSmithKline Consumer Healthcare Ltd GMR Industries Ltd Godfrey Phillips India Limited Godrej Consumer Products Limited Gokul Refoils and Solvent Ltd Goodricke Group Ltd GRM Overseas Ltd Gujarat Ambuja Exports Ltd Gujarat Aqua Inds. Ltd
Harrisons Malayalam Ltd Hatsun Agro Products Ltd Henkel India Ltd Heritage Foods (India) Ltd. Highland Industries Ltd Hillock Agro Foods (India) Ltd Himalya International Ltd Hind Industries Ltd
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IB Infotech Enterprises Ltd Indage Restaurants and Leisure Ltd Indian Extractions Ltd Indian Sucrose Ltd Indo Biotech Foods Ltd ITC Limited IVP Ltd
Jay Shree Tea & Inds. Ltd Jayant Agro-Organics Ltd Jeypore Sugar Company Ltd. JK Sugar Ltd Joonktollee Tea & Industries Ltd JVL Agro Industries Ltd
Kashipur Sugar Mills Ltd. Kesar Enterprises Ltd KLRF Ltd Kohinoor Foods Ltd Kothari Fermentation & Biochem Ltd Kothari Products Ltd KRBL Ltd
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Ledo Tea Company Ltd Longview Tea Company Ltd Lotte India Corpn. Ltd. Lotus Chocolate Company Ltd
Madhur Industries Ltd Madhusudan Industries Ltd Mahaan Foods Ltd Marico Ltd Mawana Sugars Ltd. [Merged] Mihijam Vanaspati Ltd Milkfood Ltd Modern Dairies Ltd Mohan Meakin Ltd Moneshi Agro Industries Ltd Mount Everest Mineral Water Ltd Muller & Phipps (India) Ltd. Murli Industries Limited
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Neelamalai Agro Inds. Ltd NEPC Agro Foods Ltd Nestle India Ltd Nijjer Agro Foods Ltd Nirma Ltd
Parry Agro Inds. Ltd Piccadily Agro Inds. Ltd Piccadily Sugar & Allied Inds. Ltd Pioneer Agro Extracts Ltd Ponni Sugars (Erode) Ltd Poona Dal & Oil Inds. Ltd Prime Industries Ltd Procter & Gamble Hygiene and Health Care Limited Prudential Sugar Corpn. Ltd
Radico Khaitan Limited Rajshree Sugars & Chemicals Ltd Rana Sugars Ltd Rasoi Ltd Rasoya Proteins Ltd. Rattan Vanaspati Ltd
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Ravalgaon Sugar Farm Ltd Rei Agro Ltd Riga Sugar Company Ltd Riverdale Foods Ltd RT Exports Ltd RTCL Ltd Ruchi Infrastructure Ltd Ruchi Soya Inds. Ltd
Saboo Sodium Chloro Ltd Sakthi Sugars Ltd Sampre Nutritions Ltd Sanwaria Agro Oils Ltd SBEC Sugar Ltd Shree Vaani Sugars & Inds. Ltd Simbhaoli Sugars Ltd Simran Farms Ltd Sir Shadi Lal Enterprises Ltd Sita Shree Food Products Ltd SKM Egg Products Export (India) Ltd Spectrum Foods Ltd Srinivasa Hatcheries Ltd Sunil Agro Foods Ltd Super Bakers (India) Ltd
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Tasty Bite Eatables Ltd Tata Coffee Ltd Tata Tea Limited Temptation Foods Ltd Terai Tea Company Ltd Tezpore Tea Company Ltd Thiru Arooran Sugars Ltd Triveni Engineering & Inds. Ltd Tyroon Tea Company Ltd
Ugar Sugar Works Ltd Umang Dairies Ltd Unique Organics Ltd United Breweries Limited United Spirits Limited Upper Ganges Sugar & Inds. Ltd
Vadilal Enterprises Ltd Venky'S (India) Ltd Venus Sugar Ltd Vijay Solvex Ltd Vimal Oil & Foods Ltd Vishnu Sugar Mills Ltd Volga Air Technics Ltd.
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W Warren Tea Ltd Weikfield Products Company India Private Limited Wellwin Industry Ltd. Z Zicom Electronic Security Systems Ltd. Zydus Wellness Ltd
LIST OF AUTOMOBILE COMPANIES OF INDIA:A Accel Frontline Ltd Amara Raja Batteries Ltd Amtek Auto Ltd Amtek India Ltd ANG Auto Ltd Apollo Tyres Limited Ashok Leyland Limited Atul Auto Ltd Auto Pins (India) Ltd. Autoline Industries Ltd Autolite (India) Ltd Automobile Corpn. Of Goa Ltd Automotive Axles Ltd Automotive Stampings & Assemblies Ltd
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B Bajaj Auto Ltd Banco Products (India) Ltd. Bharat Forge Limited Bharat Gears Ltd Bharat Seats Ltd Bosch Chassis Systems India Ltd Bosch Limited Brakes Auto (India) Ltd C Ceat Limited Ceekay Daikin Ltd Clutch Auto Ltd Coventry Coil-O-Matic (Haryana) Ltd D Daewoo Motors India Ltd. Delta Magnets Ltd Denso India Ltd DIC India Ltd. E Eicher Motors Limited Enkei Castalloy Ltd Escorts Limited
F
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Force Motors Ltd G Gabriel India Ltd Gajra Bevel Gears Ltd GG Automotive Gears Ltd. Goodyear India Limited GS Auto International Ltd H Halonix Ltd Harita Seating Systems Ltd Hella India Lighting Ltd Hero Honda Motors Limited Hindustan Composites Ltd Hindustan Hardy Spicer Ltd Hindustan Motors Limited HMT Ltd I Igarashi Motors India Ltd India Nippon Electricals Ltd IP Rings Ltd IST Ltd J Jagan Lamps Ltd Jai Parabolic Springs Ltd Jamna Auto Inds. Ltd
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Jay Bharat Maruti Ltd Jay Ushin Ltd JBM Auto Ltd JK Tyre & Industries Limited
K
KAR Mobiles Ltd. KEW Industries Ltd KIC Metaliks Ltd Kinetic Engineering Ltd. Kinetic Motor Company Ltd Konkan Tyres Ltd
L
LML Ltd. Lumax Auto Technologies Ltd Lumax Automotive Systems Ltd Lumax Industries Ltd
M
Machino Plastics Ltd Magicut Tools Ltd Maharashtra Scooters Ltd Mahindra & Mahindra Limited Mahindra Composites Ltd Majestic Auto Ltd Maruti Suzuki India Ltd Minda Industries Ltd
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Modi Rubber Ltd Motherson Sumi Systems Ltd MRF Limited Munjal Auto Inds. Ltd Munjal Showa Ltd
O
PAE Ltd Porwal Auto Components Ltd Precision Pipes & Profiles Co Ltd Pricol Ltd Punjab Tractors Ltd
R
Rane (Madras) Ltd Rane Brake Linings Ltd Rane Engine Valve Ltd Raunaq Automotive Components Ltd Remsons Industries Ltd Rico Auto Inds. Ltd
S
Samkrg Pistons & Rings Ltd Scooters India Ltd Setco Automotive Ltd Shivam Autotech Ltd
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Sibar Auto Parts Ltd SKF India Limited Sona Koyo Steering Systems Limited Spectra Industries Ltd Standard Batteries Ltd. Steel Strips Wheels Ltd Subros Ltd Sundaram Brake Linings Ltd. Sundaram-Clayton Limited Sundram Fasteners Ltd Suprajit Engineering Ltd Swaraj Mazda Ltd
T
Talbros Automotive Components Ltd Tata Motors Limited Triton Valves Ltd Tube Investments Of India Ltd Tudor India Ltd TVS Motor Company Limited
U
Ucal Fuel Systems Ltd V VST Tillers Tractors Ltd VST Tillers Tractors Ltd. Vybra Automet Ltd
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