A Study On Capital Structure in Sri Pathi Paper and Boards Pvt. LTD., Sivakasi

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CHAPTER 1
INTROCUTION

1.1 INTRODUCTION TO THE CONCEPT OF STUDY

Capital structure is a mix of debt and equity capital. Capital Structure is very
important to the company to run the business in long run. Financing or Capital
structure has tremendous significance for the management since it is used in the debt
equity mix of the company. Capital structure affects the shareholders return and more.

The Capital Structure referred to mixture of debt and equity theory whether or
not an optimal capital structure is one of the most important and complex issues in the
corporate finance. Each has its own benefits and drawbacks and a substantial part of
wise corporate stewardship and management is attempting to find the perfect capital
structure in terms of risk / reward payoff for shareholders. There are three
components of capital structure are equity capital, debt capital, and other forms of
capital. Equity Capital to money put up and owned by the shareholders (owners). The
debt capital in a company's capital structure refers to borrowed money that is at work
in the business.

Thus planning the capital structure of the firm is very important for the
profitability of the organization. Every business has to plan their capital structure
according to need and nature of the business. Capital structure planning is a soul of
the business to survive in the long run. Liability side of balance sheet is made under
perfect capital structure planning. Finance manager and other promoters decide which
source of fund or funds should be selected after monitoring the factors affecting
capital structures. So, capital structure planning makes strong balance sheet. The right
capital structure planning also increases the power of company to face the losses and
changes in financial markets.

The Theories related to capital structure are Trade off theory and Pecking
order theory and Modigliani and Miller theory

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Trade-off theory
Trade-off theory allows the bankruptcy cost to exist. It states that there is an
advantage to financing with debt and that there is a cost of financing with debt. The
marginal benefit of further increases in debt declines as debt increases, while the
marginal cost increases, so that a firm that is optimizing its overall value will focus on
this trade-off when choosing how much debt and equity to use for financing.
Empirically, this theory may explain differences in D/E ratios between industries, but
it doesn't explain differences within the same industry.

Pecking order theory
Pecking Order theory tries to capture the costs of asymmetric information. It
states that companies prioritize their sources of financing according to the law of least
effort, or of least resistance, preferring to raise equity as a financing means of last
resort. Hence: internal financing is used first; when that is depleted, then debt is
issued; and when it is no longer sensible to issue any more debt, equity is issued.

Modigliani and Miller theory
Modigliani and Miller theory two professors in the 1950s, studied capital-
structure theory intensely. From their analysis, they developed the capital-structure
irrelevance proposition. Essentially, they hypothesized that in perfect markets, it does
not matter what capital structure a company uses to finance its operations. They
theorized that the market value of a firm is determined by its earning power and by
the risk of its underlying assets, and that its value is independent of the way it chooses
to finance its investments or distribute dividends. The basic M&M proposition is
based on the following key assumptions:
No taxes
No transaction costs
No bankruptcy costs
Equivalence in borrowing costs for both companies and investors
Symmetry of market information, meaning companies and investors have
the same information
No effect of debt on a company's earnings before interest and taxes

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THEORETICAL BACKGROUND OF THE STUDY
The financial manager of the company should plan an optimum capital for the
company. The optimum capital structure is one that maximizes the market value of
the firm. In practice the determination of the optimum capital structure is a
formidable task and the manager has to perform this task properly, so that the
ultimate objective of the firm can be achieved.

The undertaking of risky investment projects increasingly requires larger
pooling of financing. Such amounts of resources are frequently beyond a firms
ability to generate and retain cash. To cope with this potential shortage of financial
capital, firms increasingly tend to organize larger and more complex business
organizations. A wealth-constrained firm owner endowed with a profitable
investment opportunity is driven to raise external capital to finance the project by
selling securities. These securities vary in terms of claims to issuers future rents and
in terms of allocation of residual rights of control. The capital structure problem
emerges from the definition of the mix of securities the firm should optimally issue.

There are significant variations among industries and companies within an
industry in terms of capital structure. Since a number of factors influence the capital
structure decision of a company, the judgment of the person making the capital
structure decisions play a crucial part. A totally theoretical model cant adequately
handle all those factors, which affects the capital structure decision in practice. These
factors are highly psychological, complex and qualitative and do not always follow
accepted theory, since capital markets are not perfect and decision has to be taken
under imperfect knowledge and risk. An appropriate capital structure or target capital
structure can be developed only when all those factors, which are relevant to the
companys capital structure decision, are properly analyzed and balanced. The capital
structure should be planed generally keeping in view the interest of the equity
shareholders and financial requirements of the company.

The equity shareholders being the owner of the company and the providers of
risk capital (equity) would be concerned about the ways of financing a companys
operations. However, the interest of other groups, such as employee, customers,
creditors, society and government, should be given reasonable consideration when the
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company lays down its objective in terms of the shareholders wealth maximization, it
is generally compatible with the interest of other groups. Thus, while developing an
appropriate capital structure for a company the finance manager should inter alia aim
at maximizing the long-term market price per share. Theoretically, there may be
precise point or range within which the market value per shares is maximum. In
practice, for most companies within an industry there may be a range within which
there would not be great differences in the market value per share. The management
of companies may fix its capital structure near the top of this range in order to make
maximum use of favourable leverage, subject to other requirements such as
flexibility, solvency, control and norms set by the financial institutions-

The term capital structure is used to represent the proportionate relationship
between the various long-term kinds of capital arrangements equity, debentures,
preference shares, long- term debt, capital surplus, and retained earnings. The term
capital structure is part of financial structure, which includes both long-term and
short-term funds.

FEATURES OF CAPITAL STRUCTURE
Capital structure in simple words refers to debt equity ratio of a company. In
other words it refers to the proportion of debt in the investments of the company. It is
important for a company to have an appropriate capital structure; a proper capital
structure should have the following features:
1. The capital structure should be such that it gives maximum gain to a company.
Since interest rate on debt is a tax deductible expense company should make use of
leverage or debt in order to gain tax advantage.
2. Company should not use excessive debt in the capital structure, because in times of
higher interest rates it can even threaten the solvency of the company.
3. The capital structure should be flexible enough that is company can alter the debt
equity ratio whenever there is need to alter it.
4. Capital structure should be in congruence with the goals of the company, which
implies that if the policy of the company is that company will not take more debt,
than capital structure should be framed accordingly and it should have include more
equity and less debt.

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1.2. COMPANY PROFILE

The packaging industry in India was in the threshold of change. Consumer
India had begun to grow in rapid bounds and there was growing demand for packing
and packaging. Sripathi paper & boards private limited is a small scale industry,
which was established in India in the year 2002. The company is governed by five
directors. The chairman of the company is Mr. K.R. Krishnaswamy. Basically they
hail from big business community and they are already industrialists. The mill is
located in a Sukkiravarpatti village, which is nearby Sivakasi. The company
comprises with two units.

In five years time, the company had grown enough to warrant the selling up of
another unit. Unit II was started in the year 2007. The construction of a mill site is in
a landscape of nearly 55 acres. The machines for the production process were bought
from Ahmadabad. The process was taken place for 24 hours. It is a continuous
process industry that was set up in industrial backward area. The raw materials will
be imported from Srilanka, America and also from Chennai & Sivakasi. It comes
under small paper association and it is registered in Ramanathapuram. This is the ISO
9001:2000 certified company and it is also certified to IMS (Integrated Management
System). Today the company is in the second place in production of Kraft over
Tamilnadu.

Men behind Sripathi:

Sripathi was the brain of five persons who undertakes financial profit with a
great knowledge. The authorities of the concern are
Mr.K.R. Krishnaswamy - Chairman
Mr.K. Ravichandran - Managing Director
Mr.A. Ragupathy - Director
The team HR of over 300 trained and experienced workforce, that benefit from well
researched HR policies and welfare measures, form an integral part of their vision. In
the future, they play a prominent role in the export potential of their products. They
are looking at immediate expansion in Dubai, Sri Lanka and other Middle East
nations.
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Administrative Office :

The administrative office is located at
Sripathi Paper and Boards Pvt Ltd.,
Sukkiravarpatti,
Anaikuttam Post,
Sivakasi 626 130.

Corporate Office

The corporate office is located at
1680/31, Ramanis Regency,
Trichy Road,
Ramanathapuram,
Coimbatore 641 045.

Objectives of the Company

Satisfy the changing expectations of our customer by supplying quality
products.
Improve integrated management system performance through
conservation of Natural resources by encouraging reduction of waste at
source and its recycle wherever possible and prevention of pollution.
Safety of employees, equipments, operations, materials, subcontractors,
visitors customers and neighboring community.
Continually improve the effectiveness of quality, Environment and
Occupational health & Safety systems through periodically reviewing and
updating objectives and targets.
Abide by all applicable legislation, regulation and other requirements
related to product quality, environment and occupational health & safety.

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Vision
The vision is to create and grow a successful business enterprise based on
principles of recyclable raw materials, Eco friendly manufacture and an ethical
approach to all stakeholders.

Mission
The mission is to be a leading manufactures of complete range of paper
products, in packaging as well as cultural segments, without compromising on central
beliefs.

Shift details
The production process can be done in three shifts per day, 90 tons of Craft
paper can be prepared in a single day. Each shift 30 tons of production takes place.
Shift I - 8 a.m to 4 p.m
Shift II - 4 p.m to 12 p.m
Shift III- midnight 12 to 8 a.m

Categories of Employees
Total number of employees in the organizations is 300. Among them 93
members are permanent employees
Skilled employees - 22
Semi skilled employees - 33
Unskilled employees - 38
Workers will be broadly classified into three categories in Sripathi paper and
boards. They are Permanent workers, Badli workers who engage the work in the
absence of permanent employee and Learners. If both Badli worker and learners
worked for 480 days then they will be considered as a permanent workers.

Production Department:
Sripathi Paper & boards (p) Ltd is producing the KRAFT PAPER & BOARD
PAPER. The cost of the paper making machine is Rs. 13 crores. The machines are
bought from Ahmedabad, They are three shifts per day. The production process can
be done in three shifts per day, 90 tons of Craft paper can be prepared in a single day.
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Each shift 30 tons of production takes place. Production of Kraft can be done by
implementing the following process.

Input the Raw material
The basic raw material for all the processes is recycled paper. Whilst 60% of
the requirement comes in from different corners of the world, the remaining is
procured locally. There are various types of raw material. They are Box Kraft,
Cutting, Kraft Srilankan O.C.C. (old curucated cuttings), Srilankan N.C.C. (new
curucated cuttings), Srilankan sack Kraft, Amercian double sorted old curucated
cuttings, American tea sack, Flower box South African O.C.C. First, the raw
materials (waste Kraft box) put into the pulper (i.e., pulp making machine) with the
use of belt conveyor.

Grinding or pulp making
Second, the waste Kraft boxes are grinded in this stage. And then, grinded
Kraft boxes are mixed with water. At this stage, the water level is 96% and the pulp
level is 6%

Centric Cleaner
After grinding or pulp making, the centric cleaner remove the pins, plastics,
sand, etc., so this is the centric cleaning process.

Filtering
After cleaned the unwanted things, filter the water from the pulp. In this stage,
reduce the water level to 25%

Refiner
Refiner means again the same process for removing the pins, plastics, sand,
etc., In this stage, increase the water level to 15%

Stock Preparation
After the pulp, save the pulp in big chest for the purpose of emergency
purpose.

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Chemical mixing
Chemical mixing means mixing the chemical for the purpose of increasing the
strength of the paper and also changing the colors of the paper.

Wire
After chemical mixing, the pulp is coming to the paper making process. Wire
means the pulp is spray into the belt conveyor with the use of pipe or wire. In this
stage, the water level is 90%.

Vacuum plate
After the wire process, the pulp sends to the vacuum plate. Vacuum plate is
sucking the water from the pulp. In this stage, 70% of the water level is removed.

First press
After the vacuum plate the paper coming to the first press. First press means
the paper sends to the gap between the two beams. This is the first press of the paper.
In this stage, 20% of the water level is removed.

Second press
Second press is the next level of first press. In this stage, balance 5% of the
water is removed.

Pre drier
After pressing process come to drying process. After pressing process the
paper is so wet. So the paper sends to drying process.

MG(Machine Groom)
MG stage is important stage for paper making process. MG stage is making
the smoothness of paper with the use of hear.

Post drier
Post drier is the same process again drying the paper after MG stage. So the
paper making process is over.

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Roller
After the paper making process, the paper is rolled in a beam, The roll weight
is 2 tones per roll. The company produces 29 rolls per day.

Quality checking
At the time of rolling, take small bit of paper for the purpose of check the
quality of the paper. Testing for raw material moisture testing, Pulp consistency
testing. Testing for GSM (grams per square meter) testing, BF (burst factor) testing.
Alum testing, Rosin testing, Paper moisture testing, Drays testing.

Rewinder
Rewinder is the final stage of the paper making process. The paper roll is cut
or rewind on the requirements of the customer. The rewinding process time is 20 to
25 minutes per roll. So these are the steps for paper making process in this
organization. Sripathi is committed to manufacture and supply of quality Kraft paper
to meet customer requirements, to achieve total customer satisfaction through team
work and continual improvement of quality management system.

Quality Objectives
Achieving 100% customer satisfaction
Achieving 100% on time delivery as committed
Achieving zero customer complaints

The raw materials are imported from foreign countries. Mostly imported from
UNITED STATES, SRILANKA and also purchased from kerala, Karnataka, Madhya
Pradesh, Andhra & Tamil nadu. In Tamilnadu, mostly purchased from Coimbatore,
Tuticorin & Sivakasi.

Marketing Department
The marketing department plays an important role in this organization. It
includes various activities like Marketing strategy, Competitors, Advertisement,
Marketing areas, Regular customers, Incentives, Target, Market segmentation, Target
customers.
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Marketing Strategy
The company follows two divisions of marketing
Direct Marketing
Dealership Marketing

Customer Details
The target customer of Sripathi paper and boards will be package industries and fire
work industries. Major customers for Sripathi paper and boards are
1. Srinivasa boards (Sivakasi)
2. Shivaranjani boards (Sivakasi)
3. Britania (Chennai)
4. Balaji packaging (Sivakasi)
5. VG Traders (Coimbatore)

Regular Customer :
The following are the important customer of this organization
Britannia biscuits, Chennai
VG traders, Coimbatore
Simsung packaging, Coimbatore
MSL packaging, Sivakasi
Balaji packaging, Sivakasi
Sri Kaliswari fire works, sivakasi
Vignesh packaging
Thiruppathi balaji packaging industry
Maruthiram packaging industry
Krishna packaging industry

Competitors
The main competitors of this organization are
South India Paper Mill Mysore
I.T.C. Paper Mill Ltd Mettupalayam
Saraswathi Udayog Ltd
Supreme paper & boards pvt Ltd
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Marketing Area
In Tamil Nadu, the marketing area for Sripathi paper & boards are
Coimbatore. Madurai, Chennai and Sivakasi. This concern also has marketing area in
other states. They are Kerala, Karnataka and Andhra Pradesh.

Finance Department
The account department records all the business transaction in set of books.
They are responsible for the preservation of various accounting records. Receipts,
vouchers. This department takes care of preparing profit and loss a/c and balance
sheet for the company.

In the administrative department there are 5 employees. It is a small scale
industry so they are following the book keeping method of accounting and they also
enter the transaction in the tally.

The small scale industries include all industrial units with capital investment
not more than Rs. 60 lakhs in plant and machinery irrespective of the number of
employees.

Functions
Checking and verifying all the purchase and raw materials from stores
Stores purchase details update in system
Mainly used for tally software.
Import details
Debtors analysis.(Discount, making payment, credit period)
Payables

Human Resource Department
The HR manager placed a vital role in this organization. In this organization,
HR manager named as personal officer.
The following are the important HR functions of this organizations.

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Recruitment Process
Recruitment is a prospecting job where organizations make search for
perspective employees. The job of recruitment is based on the mating theory where
success of both the parties is critically dependent on timing. In Sripathi paper and
boards private limited the recruitment can be done through the following sources.
Advertisement in newspapers
Conducting campus interview in institutions
Making a contact to placement officers
To call by workers neighbours
By canvassing the other community person

Selection of employees
Selection involves picking for hire a subset of workers from the total set of
workers who have applied for the job. Selections are done comparing the
requirements of a job with applicants qualification. Work performance depends on
individuals. The best way to improve performance is to hire people who have the
competence and willingness to work. Selection is centralized and is handled by the
human resource department. Selection process is a long process, commencing from
preliminary interview and ending with the contract of employees.

In Sripathi the selection processes can be done by conducting Physically
aptitude test, Knowledge test, Personal interview and Orientation. During the period
of orientation Human Resource manager will give safety measure details,
organizational vision, mission, goals and procedures to work for employees.

Company welfare activities

Canteen facilities will be provided. Minimum nominal charges will be
allotted for boarding.
Free accommodation has been provided
Immediate care will be taken if any accident occur in the company
Financial help will be given during emergency period without any interest.
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Every April, increment will be given to the employees. Increment will be
given on the basis of performance, sincerity of work, loyal to work,
prompt attendance.
Vehicle facilities will be provided to Sripathi workers for up and down.
To provide feedback to the employees regarding their past performance.
To reduce the grievances of the employees.

Purpose of performance appraisal
Performance Appraisal is being practiced in 90% of the organization
worldwide. Self-appraisal and potential appraisal also form a part of the performance
appraisal processes. Typically, Performance Appraisal is aimed at :
To review the performance of the employees over a given period of time
To judge the gap between the actual and the desired performance
To help the management in exercising organizational control
To disgnose the training and development needs of the future.

Performance appraisal methods
Performance appraisal methods include 10 appraisal methods / types as
follows:
Critical incident method
The critical incidents for performance appraisal are a method in which the
manager writes down positive and negative performance behavior of employees
throughout the performance period.
Paired comparison analysis
Paired comparison analysis is a good way of weighing up the relative
importance of options. A range of plausible options is listed. Each option is compared
against each of the other options. The results are tallied and the option with the
highest score is the preferred option.
Graphic rating scales
The Rating Scale is a form on which the manager simply checks off the
employees level of performance. This is the oldest and most widely method used for
performance appraisal.

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Essay Evaluation method
This method asked managers / supervisors to describe strengths and
weaknesses of an employees behavior. Essay evaluation is a non quantitative
technique. This method usually use with the graphic rating scale method.
Performance ranking method
Ranking is a performance appraisal method that is used to evaluate employee
performance from best to worst. Manager will compare an employee to another
employee, rather than comparing each one to a standard measurement.
360 degree performance appraisal
360 Degree Feedback is a system or process in which employees receive
confidential, anonymous feedback from the people who work around them. This post
also include information related to appraisal methods such as 720, 540, 180..
Weighted checklist method
This method describe a performance appraisal method where rater familiar
with the jobs being evaluated prepared a large list of descriptive statements about
effective and ineffective behavior on jobs.
Behaviorally anchored rating scales
This method used to describe a performance rating that focused on specific
behaviors or sets as indicators of effective or ineffective performance. It is a
combination of the rating scale and critical incident techniques of employee
performance evaluation.
Forced ranking (forced distribution)
Forced ranking is a method of performance appraisal to rank employee but in
order of forced distribution.
Behavioral Observation Scales
Behavioral Observation Scales is frequency rating of Critical incidents that
worker has performed.

Other Details from the Company Website
Sripathi Paper & Boards Pvt. Ltd was started in the year 2002 producing Kraft
paper with a 30 Tons Per Day capacity. Within a short span of time, the capacity at
our Unit at Sivakasi, Tamilnadu was increased to 50 Tons Per Day in 2007. During
the same year the company also ventured into production of Duplex Board with a 140
Tons Per Day Machines.
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During 2010 the company installed a 6MW cogeneration power plant to
prevent production delays and wastage resulting from the intermittent power supply
from the state grid due to power shortage in Tamil Nadu. The company also forayed
into writing and printing (W&P) segment by investing in M/s Sudirman Paper Private
Limited, having its Unit at Sathyamangalam, Erode District and has embarked on a
programme to revitalize the operations of that Company, keeping in mind long term
business prospect sand to be in all major segments of the paper industry.

The company has recently embarked on huge expansion cum modernization
of both the Kraft and Duplex mills this year. After the expansion programme the
capacity of Kraft paper division and Duplex will be 100 tons per day and 250 tons per
day respectively.

Our Team
Our Chairman and Managing Director, Mr. R. Krishnaswamy, is a qualified
Chartered Accountant and a first Generation Entrepreneur. Having spent several years
in the paper industry, he set out to create an enterprise that envisions becoming a
market leader whose foundation rests on the principles of recyclability and is
committed to green manufacturing.

Mr. K. Ravichandran, Managing Director, a doyen of packaging industry,
heads the production and manufacturing division. Mr. A. Ragupathy, Director, a
veteran of paper industry heads Marketing.

Leveraging on the extensive experience and in-depth knowledge of our Team,
we have established a strong foothold in the domestic industry. Besides, we are
strengthened by a skilled team of professionals comprising highly qualified general
managers, DGMs, supervisors, quality analysts, production personnel, sales
executive, and others. They assist us in meeting the clients' requirement in the best
possible manner.

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Product Range
Our complete array encompasses M.G. Kraft Paper 12 to 30 BF (100 to 250
GSM), White Coated Duplex Board (White Back and Grey Back) 250 to 500 GSM,
Writing and Printing Paper. All these are manufactured from supreme grade raw
material that are sourced from reputed vendors of the industry.

With the support of a diligent team of professionals, we are manufacturing a
wide array of paper products that meet high industrial as well as global standards. Our
range is widely appreciated for its smooth surface finish, varied sizes and thicknesses,
etc.

We offer:
M.G. Kraft Paper 12 to 30 BF (100 to 250 GSM)
White Coated Duplex Board (White Black and Grey Black)
250 to 500 GSM
Writing and Printing Paper

Quality Excellence
Ever since our inception, we have been consistently providing our customers
with a flawless range of paper products. We have directed all our endeavors to ensure
high industrial standards and norms in our M.G. Kraft Paper, Writing & Printing
Paper, etc. Furthermore, we undertake stringent measures throughout the
manufacturing process as well as make use of only finest grade raw material. Our
professionals execute all the production processes under the strict supervision of an
expert team of quality controllers. In addition to this, the entire range of finished
products is rigorously tested on the basis of certain well defined parameters.
Sripathi is a trustworthy supplier

We have become the foremost choice of our customers owing to the following
factors:
Quality assured products
Competitive prices
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Effective and quality assured services
Ethical business practices
Well equipped infrastructural facility
Experienced team of professionals
Timely delivery schedule.

Our Vision
Our Vision is to create and grow a successful business enterprise based on
principles of recyclable raw materials, Eco friendly manufacture and an ethical
approach to all stakeholders.
The Mission

Our mission is to be a leading manufacturer of complete range of paper
products, in packaging as well as cultural segments, without compromising on our
central beliefs.

We see ourselves becoming an integral part of everyone's daily lives. From
their grocery bags, to their FMCG goods; from white good appliances to textiles and
clothing ... we are happy to be the unseen performer in a pack of great ideas.

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1.3 PRODUCT PROFILE
Paper industry in India is the 15th largest paper industry in the world. It
provides employment to nearly 1.5 million people and contributes Rs 25 billion to the
government's kitty. The government regards the paper industry as one of the 35 high
priority industries of the country. Paper industry is primarily dependent upon forest-
based raw materials. The first paper mill in India was set up at Sreerampur, West
Bengal, in the year 1812. It was based on grasses and jute as raw material. Large
scale mechanized technology of papermaking was introduced in India in early 1905.
Since then the raw material for the paper industry underwent a number of changes
and over a period of time, besides wood and bamboo, other non-conventional raw
materials have been developed for use in the papermaking. The Indian pulp and paper
industry at present is very well developed and established. Now, the paper industry is
categorized as forest-based, agro-based and others (waste paper, secondary fibre, bast
fibers and market pulp).

In 1951, there were 17 paper mills, and today there are about 515 units
engaged in the manufacture of paper and paperboards and newsprint in India. The
pulp & paper industries in India have been categorized into large-scale and small-
scale. Those paper industries, which have capacity above 24,000 tonnes per annum
are designated as large-scale paper industries. India is self-sufficient in manufacture
of most varieties of paper and paperboards. Import is confined only to certain
specialty papers. To meet part of its raw material needs the industry has to rely on
imported wood pulp and waste paper.

Indian paper industry has been de-licensed under the Industries (Development
& Regulation) Act, 1951 with effect from 17th July, 1997. The interested
entrepreneurs are now required to file an Industrial Entrepreneurs' Memorandum
(IEM) with the Secretariat for Industrial Assistance (SIA) for setting up a new paper
unit or substantial expansion of the existing unit in permissible locations. Foreign
Direct Investment (FDI) up to 100% is allowed on automatic route on all activities
except those requiring industrial licenses where prior governmental approval is
required. Growth of paper industry in India has been constrained due to high cost of
production caused by inadequate availability and high cost of raw materials, power
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cost and concentration of mills in one particular area. Government has taken several
policy measures to remove the bottlenecks of availability of raw materials and
infrastructure development. For example, to overcome short supply of raw materials,
duty on pulp and waste paper and wood logs/chips has been reduced.

Following measures need to be taken to make Indian paper industry more
competitive:
Improvements of key ports, roads and railways and communication
facilities.
Revision of forest policy is required for wood based paper industry so that
plantation can be raised by industry, cooperatives of farmers, and state
government. Degraded forest land should be made available to the
industry for raising plantations.
Import duty on waste paper should be reduced.
Duty free imports of new & second hand machinery/equipment should be
allowed for technology up gradation.

The paper industry has an important social role to play for the country. Use of
paper is considered as an index of cultural growth. The paper industry is also
contributing towards fulfillment of various requirements of the industry as a whole
like information dissemination, publicity etc. which in turn stimulate industrial
growth of the country. The paper industry has, thus, a catalytic role to play not only
for the overall growth of the industry but also for the living standards of the
people. The primary products sector include manufacturing pulps from wood and
other cellulose fibers, and from rags; the manufacture of paper and paperboard; and
the manufacture of paper and paperboard into converted products, such as paper
coated off the paper machine, paper bags, paper boxes, and envelopes and other
commodity grades of wood pulp, printing and writing papers, sanitary tissue,
industrial-type papers, containerboard, and boxboard.

In the last few years, Indias paper industry has grown by 6 per cent annually.
In the coming years, this growth rate will go up to 10 per cent because of huge spurt
in demand for writing and printing paper. The domestic demand for paper is set to far
surpass supply, with the growing emphasis on education and alternative uses of paper.
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The demand for upstream market of paper products, like, tissue paper, tea bags, filter
paper, light weight online coated paper, medical grade coated paper, etc., is growing
up. These developments are expected to give fillip to the industry. Improvement of
key ports, roads and railways and communication facilities will help the entire
industrial sector including pulp & paper. Indias paper industry is worth Rs 225
billion. It accounts for about 1.6 per cent of the worlds production of paper and
paperboard. In India, the demand for paper is set to far surpass supply and is expected
to reach the level of 110 lakh tones by 2015 from 72 lakh tones in 2007. It is said that
if the gross domestic product (GDP) grows at 10 per cent, paper demand will grow at
8 per cent. The per capita consumption of paper in India is barely 8 kg. Paper
consumption is poised for a big leap forward in sync with the economic growth.
About 38 per cent of the total demand comes from culture paper (creamwave), while
58 per cent arises out of the industrial paper sector. The rest 4 per cent comes from
speciality paper including coated paper, tissues, posters, one-time carbon (OTC),
cheques, drafts, etc. The countrys paper industry, with an existing production
capacity of 90 lakh tones, requires an additional $2 billion of investment to meet the
rising demand. The capacity is likely to increase to 112 lakh tones per annum by
2010.The share of wood as raw materials has declined from 84 per cent to 36 per cent
since 1970.On the other hand, the share of agro and waste paper has increased from 9
and 7 to 29 and 35 per cent, respectively. Of course, the share of recycled paper
would go up in the future. The government is drawing up a new scheme for
technological upgradation and modernization of paper mills.

22

1.4 INDUSTRIAL PROFILE
The paper industry is one of the oldest and the most important industry in
terms of socio-economic development of the country. The size of the industry is
estimated to be Rs. 25,000 crore ($ 5.95 billion). It accounts for about 1.6% of the
worlds production of paper and paperboard. The industry provides employment to
more than 0.12 million people directly and 0.34 million people indirectly. Most of the
paper mills are in existence for a long time and hence present technologies fall in a
wide spectrum ranging from oldest to the most modern.
The consumption of paper has been growing by around 6% annually from the
past five years. The paper industry can be segmented by type of paper produced like
Creamwove, Maplitho, Copler, Coated Paper, Industrial Paper and Specialty paper.
Industrial Paper forms the bulk, accounting to around 60% of the total consumption.
So far, the growth in paper industry has mirrored the growth in GDP and has
grown on an average 6-7 per cent over the last few years. India is the fastest growing
market for paper globally and it presents an exciting scenario; paper consumption is
poised for a big leap forward in sync with the economic growth and is estimated to
touch 13.95 million tons by 2015-16. The futuristic view is that growth in paper
consumption would be in multiples of GDP and hence an increase in consumption by
one kg per capita would lead to an increase in demand of 1 million tons. As per
industry estimates, paper production are likely to grow at a CAGR of 8.4% while
paper consumption will grow at a CAGR of 9% till 2012-13.

The paper industry has an important social role to play for the country. Use of
paper is considered as an index of cultural growth. The paper industry is also
contributing towards fulfillment of various requirements of the industry as a whole
like information dissemination, publicity etc. which in turn stimulate industrial
growth of the country. The paper industry has, thus, a catalytic role to play not only
for the overall growth of the industry but also for the living standards of the people.
The primary products sector include manufacturing pulps from wood and other
cellulose fibers, and from rags; the manufacture of paper and paperboard; and the
manufacture of paper and paperboard into converted products, such as paper coated
23

off the paper machine, paper bags, paper boxes, and envelopes and other commodity
grades of wood pulp, printing and writing papers, sanitary tissue, industrial-type
papers, containerboard, and boxboard. In the last few years, Indias paper industry has
grown by 6 per cent annually. In the coming years, this growth rate will go up to 10
per cent because of huge spurt in demand for writing and printing paper. The
domestic demand for paper is set to far surpass supply, with the growing emphasis on
education and alternative uses of paper. The demand for upstream market of paper
products, like, tissue paper, tea bags, filter paper, light weight online coated paper,
medical grade coated paper, etc., is growing up. These developments are expected to
give fillip to the industry. Improvement of key ports, roads and railways and
communication facilities will help the entire industrial sector including pulp & paper.
Indias paper industry is worth Rs 225 billion. It accounts for about 1.6 per cent of the
worlds production of paper and paperboard. In India, the demand for paper is set to
far surpass supply and is expected to reach the level of 110 lakh tones by 2015 from
72 lakh tones in 2007. It is said that if the gross domestic product (GDP) grows at 10
per cent, paper demand will grow at 8 per cent. The per capita consumption of paper
in India is barely 8 kg. Paper consumption is poised for a big leap forward in sync
with the economic growth. About 38 per cent of the total demand comes from culture
paper (creamwave), while 58 per cent arises out of the industrial paper sector. The
rest 4 per cent comes from speciality paper including coated paper, tissues, posters,
one-time carbon (OTC), cheques, drafts, etc.

The countrys paper industry, with an existing production capacity of 90 lakh
tones, requires an additional $2 billion of investment to meet the rising demand. The
capacity is likely to increase to 112 lakh tones per annum by 2010.The share of wood
as raw materials has declined from 84 per cent to 36 per cent since 1970.On the other
hand, the share of agro and waste paper has increased from 9 and 7 to 29 and 35 per
cent, respectively. Of course, the share of recycled paper would go up in the future.
The government is drawing up a new scheme for technological up gradation and
modernization of paper mills capacity with private investment has been allowed to be
created. This growth has relied name lyon De-inked waste paper as a source of raw
material. Currently import duty on newsprint is about 5% and domestic manufacture
of newsprint is exempted from excise duty. This tariff structure for newsprint has
seen Indian newsprint price closely mapping international prices. Imports still
24

constitute about 30% of consumption and newsprint contributes about 10% of the
total production of paper and paperboards.

The number of players in the newsprint segment is relatively limited and
manufacturing capacities are larger than in the packaging grades segment.
Historically, the bulk of the output of Cultural grades comprising of writing,
printing, office stationery paper and specialty paper has been the preserve of large
producers, who use forest based raw material in integrated pulping facilities
augmented by imported pulp. This segment has been consistently taxed at higher rates
due to its size and use of conventional forest based Raw material. Investment in
plant has also been higher. With relatively smaller number of players and high
import tariff protection, prices of end products, generally perceived to be higher
quality, have been high.

Import tariff levels, although much lower now, still continues a significant
barrier to imports. The high investment levels required and limited conventional
fiber resources are the major deterrents to growth in this segment for both existing
players as well as new entrants. Lower end cultural grades manufactured by smaller
players using unconventional raw materials in low investment, low tech plants cater
to consumers in the price sensitive sub segment of this market. This sub segment
depends significantly on the tariff differential based on size and raw material for its
viability. The Indian Paper industry is going through substantial changes. Global
demand for paper is expected to grow by about 4% p.a. over the next 5 years. The
domestic demand is expected to grow at about 8% which will result in increase of
demand by 30 Lakh tones approximately over the next 5 years. It is expected that
customs duty on import of paper will decrease from the current level to the level of
10% over a period of time due to WTO compulsions. The import of raw material for
paper including pulp, waste paper and news print is likely to increase by at least 15%
to 20% in 2005-06 to keep up with growing demand for paper in the domestic market.
Despite to the constraints like over crowded market and limitation in procuring the
desired quality of waste paper, there are indicators of a revival in the Indian Paper
Industry. In the current year, selling price has marginally increased and enabled the
industry to partially offset the rise in cost of inputs, fuel & labour. The paper industry
has an important social role to play for the country. Use of paper is considered as an
25

index of cultural growth. Key social objectives of the Government like eradicating
illiteracy, making primary education compulsory etc. are very much related to the
paper industry.

The paper industry is also contributing towards fulfillment of various
requirements of the industry as a whole like information dissemination, publicity etc.
which in turn stimulate industrial growth of the country. The paper industry has, thus,
a catalytic role to play not only for the overall growth of the industry but also for the
living standards of the people.The new millennium is going to be the millennium of
the knowledge. So demand for paper would go on increasing in times to come.
Because of paper industrys strategic role for thesociety and also for overall industrial
growth, it is necessary that Paper industry in India is the 15th largest paper industry in
the world. It provides employment to nearly 1.5 million people and contributes Rs 25
billion to the government's kitty. The government regards the paper industry as one of
the 35 high priority industries of the country.

Paper industry is primarily dependent upon forest-based raw materials. The
first paper mill in India was set up at Sreerampur, West Bengal, in the year 1812. It
was based on grasses and jute as raw material. Large scale mechanized technology of
papermaking was introduced in India in early 1905. Since then the raw material for
the paper industry underwent a number of changes and over a period of time, besides
wood and bamboo, other non-conventional raw materials have been developed for use
in the papermaking. The Indian pulp and paper industry at present is very well
developed and established. Now, the paper industry is categorized as forest-based,
agro-based and others (waste paper, secondary fibre, bast fibers and market pulp).

In 1951, there were 17 paper mills, and today there are about 515 units
engaged in the manufacture of paper and paperboards and newsprint in India. The
pulp & paper industries in India have been categorized into large-scale and small-
scale. Those paper industries, which have capacity above 24,000 tonnes per annum
are designated as large-scale paper industries. India is self-sufficient in manufacture
of most varieties of paper and paperboards. Import is confined only to certain
specialty papers. To meet part of its raw material needs the industry has to rely on
26

imported wood pulp and waste paper.

Indian paper industry has been de-licensed under the Industries (Development
& Regulation) Act, 1951 with effect from 17th July, 1997. The interested
entrepreneurs are now required to file an Industrial Entrepreneurs' Memorandum
(IEM) with the Secretariat for Industrial Assistance (SIA) for setting up a new paper
unit or substantial expansion of the existing unit in permissible locations. Foreign
Direct Investment (FDI) up to 100% is allowed on automatic route on all activities
except those requiring industrial licenses where prior governmental approval is
required.

Growth of paper industry in India has been constrained due to high cost of
production caused by inadequate availability and high cost of raw materials, power
cost and concentration of mills in one particular area. Government has taken several
policy measures to remove the bottlenecks of availability of raw materials and
infrastructure development. For example, to overcome short supply of raw materials,
duty on pulp and waste paper and wood logs/chips has been reduced.

Following measures need to be taken to make Indian paper industry more
competitive:
Improvements of key ports, roads and railways and communication facilities.
Revision of forest policy is required for wood based paper industry so that
plantation can be raised by industry, cooperatives of farmers, and state
government. Degraded forest land should be made available to the industry for
raising plantations.
Import duty on waste paper should be reduced.
Duty free imports of new & second hand machinery/equipment should be
allowed for technology up gradation.

The paper industry in India is more than a century old. At present there are over
850 paper mills manufacturing a wide variety of items required by the consumers.

27

These paper mills are manufacturing industrial grades, cultural grades and other
specialty papers. The paper industry in India could be classified into 3 categories
according to the raw material consumed.
Wood based
Agro based &
Waste paper based

While the number of wood based mills are around 14 and balance 836 mills are
based on non-conventional raw materials (Agro Residues and Recycled fibre - waste
paper)

The Govt. of India has relaxed the rules and regulations and also delicensed
the paper industry to encourage investment into this sector and joint venture are
allowed and some of the joint ventures have also started in India. The paper industry
in India is looking for state-of-art technologies to reduce its production cost and to
upgrade the technology to meet the international standards.

The Indian Paper Industry is among the top 12 Global players today, with an output
of more than 13.5 Million tonnes annual with an estimated turnover of Rs. 35000
Crores.

Paper Industry in India is moving up with a strong demand push and is in
expansion mode to meet th eprojected demand of 20 Million tonnes by 2020. Thus
paper industry in India is on the growth trajectory and is expected to touch 8.5% GDP
in the coming years. Therefore, the growth of Industry will out span the present
growth rate of 6.5%.

Many mills in India are in modernization and expansion spree. Many old
Mills are under revival or new green field projects are under consideration.

Major changes are taking place in various segments like writing & printing
paper, paperboard, newsprint, tissues, etc. New technologies and modern
management will have vital part in this process. Besides that many overseas players
28

are entering India by acquiring or by setting up new plants in Indian soil with an aim
to make India as a paper manufacturing hub which will bring huge investments to
Indian Pulp and Paper Industry.

Today India is an excellent and vibrant market for Paper and Paper products
due to high spending of the middle class people and some of the Government
initiatives in the Social Development front also make the industry more vibrant.
Many Indian Paper Mills are eying now to new mills to setup or joint ventures with
existing players abroad to widen their business horizon.

MARKET FACTS

Globalisation has leveled the competitive playing fields between the industrial
and emerging market countries where competitors have an equal opportunity to sell
their products in a free market without restrictions.

India ranks amongst the top 15 global consuming countries (over 6 Metric
Tonnes (MT)/annum). With 10 per cent growth in per capita consumption in paper
over the last one year, India has emerged as the fasted growing paper market in the
world from 7.5 kg per capita consumption in 2007-08, the figure has gone up to 8.3
kg. Pulp and paper industry is growing rapidly with an estimated CAGR
(Compounded Annual Growth Rate) of 7-8% projected over the next decade.
The Indian paper industry accounts for about 1.6% of the worlds production
of paper and paperboard. The estimated turnover of the industry is Rs. 25,000 core
(USD 5.95 billion) approximately. The Indian consumption stands at 5.4 kg/ capita as
compared to worlds average of 52kg/capita and Asian average at 38 kg/capita. The
comparative clearly defines the magnitude and scale due for advancement.

The daunting issue that needs to be addressed is the shortage of raw material
in order to bridge the demand and supply gap, projected at 15 million tones by 2015
and 20 million tones by 2020.

The government has announced Customs duty exemptions for the newspaper
and magazine publishing industry, which has been hit by the current economic
29

slowdown. In a notification, the Finance Ministry exempted newsprint as well as
uncoated paper used for printing of newspapers from Customs duty. It also exempted
light weight coated paper used for printing magazines from the duty. In order to
encourage publishers of foreign newspapers like the Wall Street Journal, The
Independent and several others to start the facsimile editions of their international
editions in India, the government has allowed up to 100 per cent foreign direct
investment (FDI) in the segment.

Indian Paper industry has evolved into Agro-based industry from its earlier
character of a forest-based industry. India has 660 paper mills apparently 38 mills are
responsible for 60% of total production. This is a very strong indicator that
investment and technology is needed for upgradation of existing mills. The Central
Research Institute for Jute and Allied Industries has been requested to bring the
technology for manufacturing newsprint using jute. Indian patterns of demand have
changed with the buying power of the emerging middle class and a more rapid
increase in demand for quality value added products. India is a fast-growing market.
It is among the top ten markets, bigger than China. This is not really because the
Chinese market for serious non-fiction in English is small than that of India. It is just
that rampant piracy takes off a huge chunk of that market, leaving the official market
small than Indias. In conformity with the perceived comparative advantage of the
two countries, while China is entrusted with the physical production of books, the
pre-print processing is outsourced to India on a large scale. There is ample space for
the paper producers, equipment and technology suppliers and more so for the trade
players, to draw an effective strategy to chart aggressive growth. No doubt the
inevitably effects of economic slow down on Paper Industry has slowly started
showing up. However, several perceptible key drivers of growth capable of propelling
the Indian paper industry are still very much in place and there is ample space for the
paper producers, equipment and technology suppliers and more so for the trade
players to draw an effective strategy to chart aggressive growth.

30

CHAPTER-II
REVIEW OF LITERATURE

1.Yell takes big charge, plans new capital structure
Article
May 22 (Reuters) - Debt-laden Yell Group posted a 1.42 billion pound ($2.24 billion)
full year loss mostly due to a writedown of the value of operations and said it had
appointed advisors to help put a new capital structure in place. Yell, best known for
its printed Yellow Pages directories and struggling under the burden of debts mostly
maturing in April 2014, said on Tuesday its new generation of products was taking
longer than expected to bear fruit.
Business journal of capital structure
Reuters | May 22, 2012

2.Mitsubishi Motors says Masuko to become CEO, chairman in June
Article
TOKYO (Reuters) - Mitsubishi Motors Corp said its long-term president Osamu
Masuko will become chairman in June and also take on the newly created post of
Chief Executive Officer, as the Japanese automaker seeks to leave behind an arduous
decade of slumping sales and a tenuous capital structure. Managing Director Tetsuro
Aikawa will replace Masuko as president and also take on a newly made post of
Chief Operating Officer, the car maker said in a statement on...
Reuters | February 4, 2014

3.BRICS agree capital structure for development bank: WSJ
Article
(Reuters) - The BRICS bloc of large emerging economies have agreed on the capital
structure for a proposed development bank that aims to reduce their reliance on
Western financial institutions, the Wall Street Journal reported. Officials from Brazil,
China, India, Russia and South Africa agreed to set up the bank with a total capital of
$50 billion, shared equally among them, it quoted an unnamed senior Indian
government official as saying. The decision was made at a...
31

Reuters | August 28, 2013

4.Fidelity hires advisers for Energy Future reshuffle plan -sources
Article
By Nick Brown and Michael Erman NEW YORK, Oct 2 (Reuters) - Fidelity
Investments, a creditor of Energy Future Holdings Corp, has hired advisers to propose
a restructuring plan for the Texas utility in the hope of saving it from a protracted
bankruptcy, according to three people close to the matter. Fidelity, which has
amassed EFH bonds, is working on a proposal it aims to present this month, the
people told Reuters, declining to be named because...
Reuters | October 1, 2013

5.Po de Acar says Via Varejo capital structure sound
Article
* Retailer says appliance unit is independent and growing * Executive recently
dismissed possible Via Varejo sale * Klein family, minority partner in unit, balked at
remarks SAO PAULO, June 2 (Reuters) - Grupo Po de Acar , Brazil's
biggest diversified retailer, said its home appliance unit Via Varejo has a solid capital
structure and is on the road to growth, according to a market filing late on Friday. The
statement appeared...
Reuters | June 2, 2012

6.Banco Santander Brasil to pay $2.73 billion one-off dividend
Article
SAO PAULO (Reuters) - Banco Santander Brasil SA will modify its capital structure
and pay shareholders a one-off dividend of 6 billion Brazilian reais ($2.73 billion),
allowing it to return funds to its Spanish parent which has been suffering losses. The
dividend will also improve Santander Brasil's low measure of profitability. Once
among the world's most profitable lenders, Brazil's private banks have struggled in
recent years with the growing presence of...
32

Reuters | September 27, 2013

7.Corporation: For income tax purposes, "corporation...
Article
Corporation: For income tax purposes, "corporation" includes associations, joint
stock companies and insurance companies. All are taxed as if they were corporations,
although special rules apply to insurance companies. Recapitalization: A
rearrangement of the capital structure of a corporation.
March 23, 1994

8.BRICS agree capital structure for development bank: WSJ
Article
(Reuters) - The BRICS bloc of large emerging economies have agreed on the capital
structure for a proposed development bank that aims to reduce their reliance on
Western financial institutions, the Wall Street Journal reported. Officials from Brazil,
China, India, Russia and South Africa agreed to set up the bank with a total capital of
$50 billion, shared equally among them, it quoted an unnamed senior Indian
government official as saying. The decision was made at a...
August 28, 2013

9.BRIEF-Energy Future Holdings explored ways to reduce debt
Article
new york, april 15 (reuters) - * energy future holdings says has explored ways to
reduce the amount and extend the maturity of their outstanding debt * energy future
holdings says proposed changes to capital structure discussed with the creditors
included a consensual restructuring of tceh's approximately $32 billion of debt-filing
April 15, 2013

33

10.brief-energy future holdings explored ways to reduce debt
Article
new york, april 15 (reuters) - * energy future holdings says has explored ways to
reduce the amount and extend the maturity of their outstanding debt * energy future
holdings says proposed changes to capital structure discussed with the creditors
included a consensual restructuring of tceh's approximately $32 billion of debt-filing
april 15, 2013

11.Banco Santander Brasil to pay $2.73 billion one-off dividend
Article
SAO PAULO (Reuters) - Banco Santander Brasil SA will modify its capital structure
and pay shareholders a one-off dividend of 6 billion Brazilian reais ($2.73 billion),
allowing it to return funds to its Spanish parent which has been suffering losses. The
dividend will also improve Santander Brasil's low measure of profitability. Once
among the world's most profitable lenders, Brazil's private banks have struggled in
recent years with the growing presence of...
September 27, 2013

12.Fitch affirms Pinnacle Entertainment 'B' rating
Article
Dec 21 - Fitch Ratings has affirmed Pinnacle Entertainment, Inc's (Pinnacle) Issuer
Default Rating (IDR) at 'B' following Pinnacle's announcement that it entered into an
agreement to acquire Ameristar Casinos, Inc. (Ameristar) for $2.8 billion, including
$1.9 billion of debt. Pinnacle's Rating Outlook remains Positive. See the full list of
rating actions at the end of this release. The affirmation and Positive Outlook reflect
the strong strategic rationale for the...
December 21, 2012

34

13.USG Corp. said its second-quarter profit before interest...
Article
USG Corp. said its second-quarter profit before interest, taxes, depreciation,
amortization and other non-cash charges rose to $54 million from $43 million a year
earlier. Sales grew to $470 million from $441 million. Chicago-based building
supplies manufacturer USG said that for the first six months, earnings on the same
basis rose to $100 million from $78 million. Revenues increased to $906 million from
$867 million. USG Corp. said that because of accounting changes...
July 29, 1993

14.TEXT-Fitch affirms Clear Channel Communications ratings
Article
Oct 15 - Fitch Ratings has affirmed the 'CCC' Issuer Default Rating (IDR) of Clear
Channel Communications, Inc. (Clear Channel) and the 'B' IDR of Clear Channel
Worldwide Holdings, Inc. (CCWW), an indirect wholly owned subsidiary of Clear
Channel Outdoor Holdings, Inc. (CCOH), Clear Channel's 89% owned outdoor
advertising subsidiary. In addition, Fitch expects to assign a 'CCC/RR4' rating to the
proposed 9.0% Priority Guarantee Notes (PGN) due 2019 upon issuance
October 15, 2012

15.Mitsubishi Motors says Masuko to become CEO, chairman in June
Article
TOKYO (Reuters) - Mitsubishi Motors Corp said its long-term president Osamu
Masuko will become chairman in June and also take on the newly created post of
Chief Executive Officer, as the Japanese automaker seeks to leave behind an arduous
decade of slumping sales and a tenuous capital structure. Managing Director Tetsuro
Aikawa will replace Masuko as president and also take on a newly made post of
Chief Operating Officer, the car maker said in a statement on Wednesday. The
announcement was in line with media reports last week.
February 4, 2014
35

16.Fitch affirms Pinnacle Entertainment 'B' rating
Article
Dec 21 - Fitch Ratings has affirmed Pinnacle Entertainment, Inc's (Pinnacle) Issuer
Default Rating (IDR) at 'B' following Pinnacle's announcement that it entered into an
agreement to acquire Ameristar Casinos, Inc. (Ameristar) for $2.8 billion, including
$1.9 billion of debt. Pinnacle's Rating Outlook remains Positive. See the full list of
rating actions at the end of this release. The affirmation and Positive Outlook reflect
the strong strategic rationale for the acquisition, increased geographic diversification
of the combined group, and more robust discretionary free cash flow (FCF)
December 21, 2012

17.TEXT-S&P may cut SGS International
Article
Overview -- U.S. printing services company SGS International announced that it will
be acquired by private-equity investor Onex Corp. -- We are placing our 'B+' rating
on the company on CreditWatch with negative implications. -- The CreditWatch
listing reflects the possibility that financial risk could increase in connection with the
LBO, and that we could lower the rating following our review of the new capital
structure. Rating Action On Sept. 5, 2012, Standard & Poor's Ratings Services placed
its 'B+' rating on Louisville, Ky.-headquartered SGS International Inc., along with all
issue-level ratings on its debt, on CreditWatch with negative implications.
September 5, 2012

18.Smurfit-Stone Container Corp. files for Chapter 11 protection
Article
Chicago-based cardboard box material producer Smurfit-Stone Container Corp. on
Monday filed for Chapter 11 bankruptcy protection in the face of falling demand and
heavy debt payments. The company, which employs nearly 22,000 people at about
150 facilities across North America and in Asia, said it filed for protection from
creditor claims in U.S. Bankruptcy Court in Wilmington, Del., while it develops a
financial reorganization plan. Smurfit-Stone has been struggling to repay its debt,
36

which at the end of the third quarter was $3.6 billion -- nearly half its yearly revenue
of roughly $7.5 billion.
By FROM TRIBUNE NEWS SERVICES | January 27, 2009

19.UPDATE 1-Telenet rules itself out of bid for KPN's BASE
Article
* Had submitted a non-binding bid, sources said * To take on debt to buy back shares
BRUSSELS, Aug 13 (Reuters) - Belgium's largest cable operator Telenet said on
Monday it does not see itself making any major acquisitions any time soon,
effectively ruling itself out of making a bid for KPN's BASE. Telenet had submitted a
non-binding bid for BASE, Belgium's third-biggest mobile phone company, people
familiar with the process told Reuters last week. Other bidders were media group De
Persgroep, along with private equity firms Blackstone, Providence and Cinven . KPN,
the struggling Dutch telecom operator in the sights of Mexican tycoon Carlos Slim,
has drawn a number of bids for its BASE unit, which could help it raise up to 1.7
billion euros ($2 billion)
August 13, 2012

20.TEXT-Fitch affirms Clear Channel Communications ratings
Article
Oct 15 - Fitch Ratings has affirmed the 'CCC' Issuer Default Rating (IDR) of Clear
Channel Communications, Inc. (Clear Channel) and the 'B' IDR of Clear Channel
Worldwide Holdings, Inc. (CCWW), an indirect wholly owned subsidiary of Clear
Channel Outdoor Holdings, Inc. (CCOH), Clear Channel's 89% owned outdoor
advertising subsidiary. In addition, Fitch expects to assign a 'CCC/RR4' rating to the
proposed 9.0% Priority Guarantee Notes (PGN) due 2019 upon issuance. The Rating
Outlook is Stable.
October 15, 2012

37

21.TEXT-S&P Puts Midland Cogeneration Venture Rtg On Watch Dev
Article
Overview -- EQT Infrastructure Ltd. and Fortistar LLC have now signed a definitive
agreement to sell Midland Cogeneration Venture L.P. (MCV) to an affiliate of
OMERS Administration Corp. (OMERS). -- We are placing our 'BBB-' rating on
MCV's senior secured notes on CreditWatch with developing implications. -- As part
of the CreditWatch resolution we will review the new ownership structure and any
implications for the project's capital structure. Rating Action On Oct. 4, 2012,
Standard & Poor's Ratings Services placed its 'BBB-' rating on Midland Cogeneration
Venture L.P.'s (MCV)
October 4, 2012

22.TEXT-S&P says Jackson National ratings unchanged
Article
Sept 10 - Standard & Poor's Ratings Services today said that Jackson National Life
Insurance Co.'s (Jackson; AA/Stable/A-1+) announcement that it has closed on the
Reassure America Life Insurance Co. (REALIC; AA-/Watch Dev/--) acquisition, will
not affect the ratings or outlook on Jackson or any of its rated insurance subsidiaries.
The ratings on REALIC remain on CreditWatch Developing, where they were placed
May 31, 2012, reflecting the uncertainty that remains with REALIC's position within
Jackson's organizational structure and its prospective capital structure.
September 10, 2012

23.Verizon markets $61 billion bridge loan for Vodafone deal: sources
Article
NEW YORK (Reuters) - Verizon Communications Inc has started syndicating the
$61 billion bridge loan backing its $130 billion buyout of Vodafone Group's stake in
its U.S. wireless business, banking sources said, adding that some of the loan may
actually be drawn upon due to its huge size. The 364-day billion bridge loan will be
refinanced with a permanent capital structure consisting of $49 billion of corporate
38

bonds and $14 billion of loans, sources told Thomson Reuters. The loans will include
a $2 billion revolving credit and $12 billion of term loans.
Michelle Sierra and Reuters | September 2, 2013

24.Fidelity hires advisers for Energy Future reshuffle plan -sources
Article
Fidelity Investments, a creditor of Energy Future Holdings Corp, has hired advisers
to propose a restructuring plan for the Texas utility in the hope of saving it from a
protracted bankruptcy, according to three people close to the matter. Fidelity, which
has amassed EFH bonds, is working on a proposal it aims to present this month, the
people told Reuters, declining to be named because the information is not public.
October 1, 2013 By Nick Brown and Michael Erman NEW YORK, Oct 2

25.Lazarevski,Dimche (2007)
1
Conducted a study on Analysis of Macedonian
companies cost of capital and optimal capital Structure Developed stock exchanges
returned to their levels before the crises, which were not the case with the
Macedonian, and the other SE Stock Exchanges. Thus, in this paper the reasons for
this stagnant situation through analysis of Macedonian companies' financial results,
capital structure and cost of capital. Customized model for calculation of the required
rates of return, suitable for emerging markets, and fundamentally determine
Macedonian company's share prices, and weighted average cost of capital in 2011 is
created. The analyses were performed on the ten companies that comprise
Macedonian Stock Exchange Index MBI 10. Based on the results it was found that
Macedonian companies have moderate cost of debt as for emerging market
companies, but the required rates of return are enormous.

39

CHAPTER III
RESEARCH METHODOLOGY

III.1 MEANING OF RESEARCH:
Research in common parlance refers to a search for knowledge. once can also
define research as a scientific and systematic search for pertinent information on a
specific topic. In fact research is an art of scientific investigation.

DEFINITION OF RESEARCH:
According to CLIFFORD WOODY research comprises defining and
redefining problem, formulating hypothesis or suggested solutions; collecting,
organizing, and Evaluating data; making deductions and reaching conclusions; and at
last carefully testing the conclusion to determine whether they fit the formulating
hypothesis to know more. This urge of acquiring information is ever present in every
individual. This urge has contributed to development of human beings in all spheres
of such as economic, social, commercial, scientific, and cultural aspects.

MEANING OF RESEARCH METHODOLOGY:
Research methodology is a way to systematically sole the research problem. It
is necessary for research methods or techniques but also the methodology is the
description, explanation and presentation of various methods of conducting research.
Human beings are interested to acquire information from different sources.
Methodology is the systematic, theoretical analysis of the methods applied to a field
of study, or the theoretical analysis of the body of methods and principles associated
with a branch of knowledge. It, typically, encompasses concepts such as paradigm,
theoretical model, phases and quantitative or qualitative techniques

III.2 RESEARCE DESIGN:
A research design is the arrangement of conditions for collection and analysis
of data in a manner that aims to combine relevance to the research purpose with
economy in procedure. Research design is purely and simply the framework or plan
for a study that guides the collection and analysis of the data. The function of research
is to ensure that the required dada collected are accurate and economical also.A
40

research designing is the arrangement of conditions for collection and analysis of data
in a manner that aims to combine relevance to the research purpose with economy in
procedure.

III.3 DATA COLLECTION:
The data of the sri pathi paper and board private limited for the year of (2009-
2013) used in this study has been taken from secondary sources from the published
annual reports it the company editing classification and tabulation of the financial
data which are collected from the above mentioned sources have been done as per the
requirements of the study.
1. Primary data
2. Secondary data
1.Primary data
As a part of strengthening the study personal contacts are made with the officials and
staff members of finance department in the from of discussion and collection of
report.
2.Secondary data
For the study only the secondary data have been used, the secondary data are
collected from following sources. The annual reports of sri pathi paper and board
private limited. The annual reports consist of company trading account profit and loss
account and balance sheet and from different articles.
The study mainly used the sources of data is secondary data.

PERIOD OF THE STUDY:
The data are extracted for this study the period of 5 years (2009-2013)

DATA ANALYSIS:
After the data collection, the collected data were analysed by using the Ratio
Analysis. This study examines the determinants of capital structure in general and the
determinants of corporate debt- maturity in particular for 56 listed companies in Saudi
Arabia. To achieve this objective the study was set to test a number of hypotheses
regarding the determinants of capital structure and debt maturity. These hypotheses
were related to the effects of profitability, growth opportunities, asset maturity, size,
liquidity and age. Total debt ratio was found to be positively and significantly related
41

to the percentage growth in total assets and negatively and significantly related to
liquidity and asset structure. A growth opportunity variable was found to be
positively and significantly related to long - term debt and was negatively and
significantly related to short term debt. The relationship between asset maturity and
long term debt was found to be negative and significant. Therefore, there is no
support of the hypothesis that debt maturity decreases as the proportion of growth
potentials increase. Size was found to be positively and significantly related to long
term debt and negatively and significantly related to short term debt implying that
larger firms borrow on long term and small ones borrow on short term. Profitability,
age liquidity appeared to have no statistical significance on the different types of debt.
The implications of these results have been examined and future research directions
have been suggested.

42

III.4 OBJECTIVES OF THE STUDY

To compare the various components of the capital structure of sri pathi
papers and board private limited.

To analyse the capital structure position of the company

To find the impact of capital structure on the profitability of the company.

43

III.5 SCOPE OF THE STUDY
The study has been made on capital structure analysis of sri pathi papers and
board private limited for the period of five years from 2008 to 2013 by collecting
data from secondary source such as Annual report and company websites etc.The
result and findings from the study may provide scope for improving the financial
performance.

44

III.6 LIMITATIONS OF THE STUDY

The data is collected from the secondary sources for the period of 5 years
only.
This study is limited to sri pathi paper and board private limited only and
hence the findings cannot be generalized.

45

CHAPTER IV
DATA ANALYSIS AND INTERPRETATION

ANALYSIS
After the data have been collected, the researcher turns to the task of analyzing
them. The analysis of data requires a number of closely related operations such as
establishment of categories, the application of these categories of raw data through
coding, tabulation and then drawing statistical inferences.
Analysis work after tabulation is generally based on the computation of
various Operating Profit Ratio, Net Profit Ratio, Gross Profit Ratio, Interest Coverage
Ratio, Debt to Assets Ratio, etc., by applying various defined statistical formula.

INTERPRETATION
Interpretation refers to the task of drawing inferences from the collected facts
after an analytical and/or experimental study. The task of interpretation has two major
aspects.
1. The effort to establish continuity in research through linking the results of a
given study with those of another.
2. Establishment of some explanatory concepts.
Interpretation is the device through which the factors that seem to explain
what has been observed by researcher in the course of the study can be better
understood and it also provides a theoretical conception which can serve as a guide
for further researchers.

46

TABLE IV.1.1
PBIT EPS ANALYSIS

S. NO. YEAR PROFIT CAPITAL EPS
1
2008-09 962.85 1763.78 1.831833
2
2009-10 1782.77 2696.99 1.512809
3
2010-11 2575.14 3602.1 1.398798
4
2011-12 3531.64 4608.65 1.30496
5
2012-13 4133.6 10666.04 2.580327
(Source: Primary Data)

CHART IV.1.1
PBIT EPS ANALYSIS

INTREPRETATION
From the table IV.1.1., the PBIT EPS value is 1.83 in 2009 and it decreasing
slightly in 2010, 2011 and 2012 and increased steadily in 2013 at 2.58.

1.831833
1.512809
1.398798
1.30496
2.580327
2008-09 2009-10 2010-11 2011-12 2012-13
EPS
EPS
47

TABLE IV.1.2
DEGREE OF OPERATING LEVERAGE

S. NO. YEAR DOL
1
2008-09 6.484
2
2009-10 5.284
3
2010-11 9.817
4
2011-12 3.916
5
2012-13 4.256

CHART IV.1.2
DEGREE OF OPERATING LEVERAGE

INTREPRETATION
From the table IV.1.2., the DOL value is 9.817 in 2011 which is highest in the
five year period. and it decreasing slightly in 2013 at 4.256.

6.484
5.284
9.817
3.916
4.256
2008-09 2009-10 2010-11 2011-12 2012-13
DOL
DOL
48

TABLE IV.1.3
DEGREE OF FINANCIAL LEVERAGE

S. NO. YEAR DOL
1
2008-09 1.658
2
2009-10 1.372
3
2010-11 2.663
4
2011-12 2.254
5
2012-13 1.723

CHART IV.1.3
DEGREE OF FINANCIAL LEVERAGE

INTREPRETATION
From the table IV.1.3., the DFL value is 2.663 in 2011 which is the highest in
the five year period and in 2013, it is 1.723.
1.658
1.372
2.663
2.254
1.723
2008-09 2009-10 2010-11 2011-12 2012-13
DFL
DFL
49

TABLE IV.1.4
DEGREE OF TOTAL LEVERAGE

S. NO. YEAR DOL
1
2008-09 10.17
2
2009-10 26.14
3
2010-11 12.1
4
2011-12 6.747
5
2012-13 7.201

CHART IV.1.4
DEGREE OF TOTAL LEVERAGE

INTREPRETATION
From the table IV.1.4., the DTL value is 26.14 in 2010 which is the highest in
10.17
26.14
12.1
6.747
7.201
2008-09 2009-10 2010-11 2011-12 2012-13
DTL
DTL
50

TABLE IV.1.5
DEBUT TO EQUITY RATIO

S. NO. YEAR DTE
1
2008-09 1.24
2
2009-10 0.75
3
2010-11 1.32
4
2011-12 0.77
5
2012-13 1

CHART IV.1.5
DEBUT TO EQUITY RATIO

INTREPRETATION
From the table IV.1.5., the DTE value is 1.32 in 2011 which is the highest in

1.24
0.75
1.32
0.77
1
2008-09 2009-10 2010-11 2011-12 2012-13
DTE
DTE
51

TABLE IV.1.6
DEBUT TO ASSESTS RATIO

S. NO. YEAR DTA
1
2008-09 0.97
2
2009-10 0.7
3
2010-11 0.62
4
2011-12 0.35
5
2012-13 0.44

CHART IV.1.6
DEBUT TO ASSESTS RATIO

INTREPRETATION
From the table IV.1.6., the DTE value is 0.97 in 2009 which is the highest in
0.97
0.7
0.62
0.35
0.44
2008-09 2009-10 2010-11 2011-12 2012-13
DTA
DTA
52

TABLE IV.1.7
INTEREST COVERAGE RATIO

S. NO. YEAR INTEREST COVERAGE RATIO
1
2008-09 11.32
2
2009-10 12.42
3
2010-11 9.52
4
2011-12 4.47
5
2012-13 1.4

CHART IV.1.7
INTEREST COVERAGE RATIO

INTREPRETATION
From the table IV.1.7., the ITA value is 12.42 in 2010 which is the highest in

11.32
12.42
9.52
4.47
1.4
2008-09 2009-10 2010-11 2011-12 2012-13
ITA
ITA
53

TABLE IV.1.8
GROSS PROFIT RATIO

S. NO. YEAR GROSS PROFIT
1
2008-09 29.49
2
2009-10 30.1
3
2010-11 20.54
4
2011-12 13.27
5
2012-13 17.11

CHART IV.1.8
GROSS PROFIT RATIO

INTREPRETATION
From the table IV.1.8., the Gross Profit value is 30.1 in 2010 which is the
highest in the five year period and in 2013, it is 17.11.
29.49
30.1
20.54
13.27
17.11
2008-09 2009-10 2010-11 2011-12 2012-13
GROSS PROFIT
GROSS PROFIT
54

TABLE IV.1.9
NET PROFIT RATIO

S. NO. YEAR NET PROFIT
1
2008-09 18.45
2
2009-10 20.39
3
2010-11 19.41
4
2011-12 12.76
5
2012-13 4.17

CHART IV.1.9
NET PROFIT RATIO

INTREPRETATION
From the table IV.1.9., the Net Profit value is 20.39 in 2010 which is the

18.45
20.39
19.41
12.76
4.17
2008-09 2009-10 2010-11 2011-12 2012-13
NET PROFIT
NET PROFIT
55

TABLE IV.1.10
RETURN ON ASSETS RATIO

S. NO. YEAR TOTAL ASSETS PROFIT ROA
1
2008-09 3902.67 962.85 24.67157
2
2009-10 4979.84 1782.77 35.79974
3
2010-11 6466.66 2575.14 39.82179
4
2011-12 7043.9 3531.64 50.13757
5
2012-13 16540.69 4133.6 24.99049

CHART IV.1.10

INTREPRETATION
From the table IV.1.10., the Return on Assets Ratio value is 50.13 in 2012
which is the highest in the five year period and in 2013, it is 24.99.
24.67157
35.79974
39.82179
50.13757
24.99049
2008-09 2009-10 2010-11 2011-12 2012-13
56

TABLE IV.1.11
RETURN ON CAPITAL RATIO

S. NO. YEAR TOTAL CAPITAL PROFIT ROA
1
2008-09 1763.78 962.85 54.59014
2
2009-10 2696.99 1782.77 66.10221
3
2010-11 3602.1 2575.14 71.48996
4
2011-12 4608.65 3531.64 76.63068
5
2012-13 10666.04 4133.6 38.75478

CHART IV.1.11

INTREPRETATION
From the table IV.1.11., the Return on Capital Ratio value is 76.63 in 2012

54.59014
66.10221
71.48996
76.63068
38.75478
2008-09 2009-10 2010-11 2011-12 2012-13
57

TABLE IV.1.12
OPERATING PROFIT RATIO

S. NO. YEAR OPERATING PROFIT RATIO
1
2008-09 31.51
2
2009-10 29.96
3
2010-11 27.77
4
2011-12 24.92
5
2012-13 27.44

CHART IV.1.12

INTREPRETATION
From the table IV.1.12., the Operating Profit Ratio value is 29.96 in 2009
31.51
29.96
27.77
24.92
27.44
2008-09 2009-10 2010-11 2011-12 2012-13
58

TABLE IV.1.13
RETURN ON INVESTMENT RATIO

S. NO. YEAR ROI
1
2008-09 12.34
2
2009-10 13.96
3
2010-11 11.22
4
2011-12 5.91
5
2012-13 1.91

CHART IV.1.13
RETURN ON INVESTMENT RATIO

INTREPRETATION
From the table IV.1.13., the Return on Investment value is 13.96 in 2010
12.34
13.96
11.22
5.91
1.91
2008-09 2009-10 2010-11 2011-12 2012-13
ROI
ROI
59

TABLE IV.1.14
CURRENT RATIO

S. NO. YEAR
CURRENT
ASSETS
CURRENT
LIABILITIES
RATIO
1
2008-09 3214.23 3902.67 0.823598
2
2009-10 4783.61 4979.84 0.960595
3
2010-11 5312.97 6466.66 0.821594
4
2011-12 5201.05 7043.9 0.738376
5
2012-13 12505.57 16540.69 0.756049

CHART IV.1.14
CURRENT RATIO

INTREPRETATION
From the table IV.1.14., the current ratio value is 0.96 in 2010 which is the

0.823598
0.960595
0.821594
0.738376
0.756049
2008-09 2009-10 2010-11 2011-12 2012-13
CURRENT RATIO
CURRENT RATIO
60

TABLE IV.1.15
CASH RATIO

S. NO. YEAR
QUICK
ASSETS
CURRENT
LIABILITIES
RATIO
1
2008-09 204.99 3902.67 0.052526
2
2009-10 25.33 4979.84 0.005087
3
2010-11 118.89 6466.66 0.018385
4
2011-12 173.3 7043.9 0.024603
5
2012-13 304.8 16540.69 0.018427

CHART IV.1.15
CASH RATIO

INTREPRETATION
From the table IV.1.15., the Return on Investment value is 0.052 in 2010
0.052526
0.005087
0.018385
0.024603
0.018427
2008-09 2009-10 2010-11 2011-12 2012-13
ROI
ROI
61

CHAPTER V
FINDINGS, SUGGESTIONS AND CONCLUSION

V.1 FINDINGS

The PBIT EPS value is 1.83 in 2009 and it decreasing slightly in 2010, 2011
and 2012 and increased steadily in 2013 at 2.58.

The DOL value is 9.817 in 2011 which is highest in the five year period. and it
decreasing slightly in 2013 at 4.256.

The DFL value is 2.663 in 2011 which is the highest in the five year period
and in 2013, it is 1.723.

The DTL value is 26.14 in 2010 which is the highest in the five year period
and in 2013, it is 7.201.

The DTE value is 1.32 in 2011 which is the highest in the five year period and
in 2013, it is 1.00.

The DTE value is 0.97 in 2009 which is the highest in the five year period and
in 2013, it is 0.44.

The ITA value is 12.42 in 2010 which is the highest in the five year period and
in 2013, it is 1.40.

The Gross Profit value is 30.1 in 2010 which is the highest in the five year
period and in 2013, it is 17.11.

The Net Profit value is 20.39 in 2010 which is the highest in the five year
period and in 2013, it is 4.17.

62

The Return on Assets Ratio value is 50.13 in 2012 which is the highest in the
five year period and in 2013, it is 24.99.

The Return on Capital Ratio value is 76.63 in 2012 which is the highest in the

The Operating Profit Ratio value is 29.96 in 2009 which is the highest in the

The Return on Investment value is 13.96 in 2010 which is the highest in the

63

V.2 SUGGESTION

From the study, Sri Pathi Paper and Boards found that is non professional in
approach to be made to professional the systems in Sri Pathi Paper and Boards.

For examples:
Inventory management is manual and no Analytical tools are used for
management thus usages of ABC analysis is suggest in Sri Pathi Paper and Boards.
The company should try to enhance the operating efficiency of firm by Periodic
Analysis and review.

64

V.3 CONCLUSION

Debt to Equity ratio is negatively correlated to profitability ratios which imply
that if the debt content is increased aggressively it will adversely impact the
profitability. Moreover the companies are exposing themselves to more risk and they
can lose control if they do it. Debt to Assets ratio and Interest coverage ratio are
positively and significantly correlated with the profitability ratio implying that these
ratios are having positive impact on profitability ratios and thus significantly
contributing to the profitability of the companies under study. Analyzing the
correlation between capital structure ratios; Debt to Assets and Interest Coverage
ratios are negatively correlated with Debt to Equity ratio. But Debt to Assets ratio is
significantly and positively associated with Interest Coverage ratio.

65

V.4 BIBILIOGRAPHY

BOOKS
Narender Kumar Jain, APH Publishing, 2004 - 260 pages
Hrishikes Bhattacharya, PHI Learning Pvt. Ltd., 2009 - 508 pages
Satish B. Mathur, New Age International, 01-Jan-2007 - 544 pages
Narender Kumar Jain, APH Publishing, 2004 - 260 pages

WEBSITES
www.google.com
http://en.wikipedia.org/wiki/capital_structure
http://www.investopedia.com/terms/w/capitalmanagement.asp
www.sripathipaper.com

66

V.5 ANNEXURE

Statement of Balance sheet for the Year 2009-2010

2009 2010
Total liabilities 3902.67 4979.84
Sources of funds

Paid u capital 124.49 124.49
Secured Loans 1151.25 982.66
Application of funds

Net fixed assets 3214.23 4783.61
Net current assets 204.99 25.33
Profit After Tax 962.85 1782.77

Total Assets 3902.67 4979.84
Reserves & surplus 1639.29 2571.73
Unsecured loans 427.38 757.84
Investments 483.45 170.9

TERM LOANS 0 255
HIRE PURCHASE LOANS 0 0
CASH CREDIT 1372.53 1413.17
UNSECURED LOANS 2588.22 2161.94

Share holders funds

Share capital 1763.78 2696.99
Reserves and surplus 1639.78 2571.73
Deferred tax 560.26 542.35
TOTAL (A) 3963.82 5811.07

Loan Funds 1151.25 982.66
Secured Loans 427.38 757.84
Unsecured Loans 1578.63 1740.5
TOTAL (B) 5542.45 7551.57

TOTAL (A+B) 9506.27 13362.64

67


2010 2011
Total liabilities
4979.84 6466.66
Sources of funds

Paid u capital
124.49 124.49
Secured Loans
982.66 1175.8

Net fixed assets
4783.61 5312.97
Net current assets
25.33 118.89
Profit After Tax
1782.77 2575.14

Total Assets
4979.84 6466.66
Reserves & surplus
2571.73 3475.93
Unsecured loans
757.84 722.93
Investments
170.9 1034.8

TERM LOANS
255 207
HIRE PURCHASE LOANS
0 0
CASH CREDIT
1413.17 1167.2
UNSECURED LOANS
2161.94 3571.53

Share holders funds

Share capital
2696.99 3602.1
Reserves and surplus
2571.73 3475.93
Deferred tax
542.35 722.93
TOTAL (A)
5811.07 7800.96

Loan Funds
982.66 1175.8
Secured Loans
757.84 965.83
Unsecured Loans
1740.5 2141.63
TOTAL (B)
7551.57 9942.59

TOTAL (A+B)
13362.64 17743.55

68


2011 2012
Total liabilities
6466.66 7043.9
Sources of funds

Paid u capital
124.49 124.49
Secured Loans
1175.8 854.19

Net fixed assets
5312.97 5201.05
Net current assets
118.89 173.3
Profit After Tax
2575.14 3531.64

Total Assets
6466.66 7043.9
Reserves & surplus
3475.93 4482.17
Unsecured loans
722.93 750.33
Investments
1034.8 1669.55

TERM LOANS
207 779.17
HIRE PURCHASE LOANS
0 0
CASH CREDIT
1167.2 1167.2
UNSECURED LOANS
3571.53 3495.64

Share holders funds

Share capital
3602.1 4608.65
3475.93 4482.17
Deferred tax
722.93 830.73
TOTAL (A)
7800.96 9921.55

Loan Funds
1175.8 854.19
Secured Loans
965.83 750.33
Unsecured Loans
2141.63 1604.52
TOTAL (B)
9942.59 11526.07

TOTAL (A+B)
17743.55 21447.62

69


2012 2013
Total liabilities
7043.9 16540.69
Sources of funds

Paid u capital
124.49 274.04
Secured Loans
854.19 2789.76

Net fixed assets
5201.05 12505.57
Net current assets
173.3 304.8
Profit After Tax
3531.64 4133.6

Total Assets
7043.9 16540.69
Reserves & surplus
4482.17 10387.22
Unsecured loans
750.33 1354.84
Investments
1669.55 3730.32

TERM LOANS
779.17 2532.14
HIRE PURCHASE LOANS
0 0
CASH CREDIT
1167.2 4015.28
UNSECURED LOANS
3495.64 5969.35

Share holders funds

Share capital
4608.65 10666.04
4482.17 10387.22
Deferred tax
830.73 1730.05
TOTAL (A)
9921.55 22783.31

Loan Funds
854.19 2789.76
Secured Loans
750.33 1354.84
Unsecured Loans
1604.52 4144.6
TOTAL (B)
11526.07 26927.91

TOTAL (A+B)
21447.62 49711.22

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