It Fin Repaired)

8/8/2019 It Fin Repaired)

http://slidepdf.com/reader/full/it-fin-repaired 1/97

- 1 -

Bhagwan Mahavir College Of Business Administration

INTRODUCTIONOF

TOPIC



- 2 -


Introduction of Fundamental Analysis

Fundamental analysis is the cornerstone of investing. In fact, some would say that you aren't

really investing if you aren't performing fundamental analysis. Because the subject is so broad,

however, it's tough to know where to start. There are an endless number of investment strategies

that are very different from each other, yet almost all use the fundamentals.

The goal of this tutorial is to provide a foundation for understanding fundamental analysis. It's

geared primarily at new investors who don't know a balance sheet from an income statement.

While you may not be a "stock-picker extraordinaire" by the end of this tutorial, you will have a

much more solid grasp of the language and concepts behind security analysis and be able to use

this to further your knowledge in other areas without feeling totally lost.

The biggest part of fundamental analysis involves delving into the financial statements. Also

known as quantitative analysis, this involves looking at revenue, expenses, assets, liabilities and

all the other financial aspects of a company. Fundamental analysts look at this information to

gain insight on a company's future performance. A good part of this tutorial will be spent

learning about the balance sheet, income statement, cash flow statement and how they all fit

together.

But there is more than just number crunching when it comes to analyzing a company. This is

where qualitative analysis comes in - the breakdown of all the intangible, difficult-to-measure

aspects of a company. Finally, we'll wrap up the tutorial with an intro on valuation and point you

in the direction of additional tutorials you might be interested in.

(Also, although it's not required, you might find it helpful to read our Investing 101 tutorial, as

well as our tutorial on Stock Basics , before starting.)

Ready? Let's dive into things with our first section, what is it?



- 3 -


What is Fundamental Analysis?

Fundamental Analysis is the study of the basic factors affecting a company¶s operation and its

future profitability. By evaluating these factors, fundamental analysis attempts to derive the

intrinsic value (or the true underlying value) of a company¶s stock.

This includes a study of the above mentioned factors (the economy, the sector in which the

company operates the company¶s investments, its profitability, etc.), as well as an analysis of the

company¶s financials: The profit and loss account, the balance sheet, and the cash flow

statements.

Fundamental Analysis does not take into consideration any past price movement of the stock.



- 4 -


RESEARCH

METHODOLOGY



- 5 -


REASEARCH METHODOLOGY

Objective of the Project

Primary Objective:-

To find out the fair valuation of It industries scripts for year 2008-09

Secondary Objective:-

To study the performance of economy & its impact on It industries.

To study the current performance of It industries industry & its future prospects.

To analyze company & its performance.



- 6 -


Source of the Project

Every project should be done scientifically and to have that system a proper methodology should

be followed to have the proper, logical, rational, systematically analysis of data. So every should

go through the method which can provide optimum result to the leader.

The methods which can be followed to have the perfection in the project are given below:

Primary Sources

When any authorized organization or an investigator or an enumerator collect the data

for the 1st time himself or with help of an institution or an expert than the data collected

are called primary Data.

So data for the analysis is collected from Primary Sources.

Secondary Sources

When an authorized organization or an investigator uses the data already collected by some other

authorized agency or investigator, then such data become secondary data for the user

organization or investigation. Secondary Data are by a large variable from publications or

periodical of authorized agencies or institutions.

The main sources of data collected for this project is Secondary Source. In that also most of data

is collected from the websites.

To study and analyze the external environmental factor (macro) like ³Economy as a whole´.

To select a sector, which is most promising i.e. here is It sector is selected.

To study various scripts their balance-sheet, Profit & Loss A/C, Annual A/c etc. in as in-depth

manner by means of ratio analysis to find out sustainability and profitability of a specific

company.



- 7 -


To study through various other tools like current news about the company etc in order to get a

complete idea of fundamental analysis of IT sector in particular.

To analysis of technical charts of the company.

Providing final conclusion so as to the fundamental & General analysis of IT sector.

Limitation of the Project

To common limitation of the project is that the project is based on future and as we know that the

future is always uncertain, the project predicts all about the future but the preceding the future is

one limitation because of the uncertainty of the future.

In project the ratio analysis & common size statement is calculated but the calculation is also one

limitation. There can be problem of choosing technique for calculation. Manpower can also be a

problem because of limitation of man.

The input by using which the project is made is secondary data & no primary data is used in

making the project. So, there can be fault in secondary data or can be problem in obtaining the

secondary data.

The return or profit has to earn from the stock market, which also belong to certain limitation

like there are different trend in stock market or speculative transaction etc, which can affect the

probability of investors.

This project refers to invest in share of particular company. The company management also one

limitation.

Finally, there is limitation of analysis, which is ration analysis, common size statement and

which are subjective & different people will understand or interpret it differently.



- 8 -


INTRODUCTION

OF

ARIHANT CAPITAL

MARKET LIMITED



- 9 -


ABOUT ARIHANT CAPITAL MARKETS LIMITED

Arihant Capital Markets Limited is one of the leading financial services companies in India. We

provide a gamut of products and services including securities and commodities broking,

investment planning, wealth management and merchant banking to a substantial and diversified

clientele that includes individuals, corporations and financial institutions.

We are committed to giving our customers the best services and holding to our core values which

always place our client's interests first. These values are reflected in our Business Principles,

which emphasize integrity, commitment to excellence, innovation and teamwork.

We have presence in 20 states with over 300 offices across the nation. Clients turn to Arihant for

its complete platform of financial services combined with excellent execution.

We have a dedicated institutional team, which caters to mutual fund houses, insurance

companies and almost all the banks active in the capital market segment.

Our goal is to create wealth for our retail and corporate customers through sound financial advice

and appropriate investment strategies.



- 11 -


VISION, PHILOSOPHY, MOTTO ,ASPIRE

Our Vision

³to be a leader in setting standards for quality, investor satisfaction and to enhance the wealth of

our investors´

Our Business Philosophy

y Integrity and transparency in all transactions.

y Providing investment solutions based on quality and unbiased research.

y Providing personalized services to all investors, institutions, business associates.

y Achieving success through client's growth.

y Making financial services more affordable

What we aspire

To be the pre-eminent and most trusted provider of financial services.

The values to which we aspire can be summarised in 5 principles:

y Integrity

y Client commitment

y

Strive for profitabilityy Excellence

y Innovation



- 12 -


Our Motto

³Our motto is to make our customer smile - To have complete harmony between Quality-in-

Process and continuous improvement to deliver exceptional service that will delight our

Customers and Clients´

Our history

Arihant Capital Markets Limited was established in 1994 by Mr. Ashok Kumar Jain, a Chartered

Accountant. Arihant has followed a consistent growth path and has established itself as one of

the leading broking houses of the country with the support and confidence of its clients,

investors, employees and associates. We pride ourselves on our independence and continuous

service since inception.

Since inception, Arihant is dedicated to creating wealth for clients and over a period of time we

have built a reputation for quality service. We have also refined ourselves as an investment

advisor and are poised to provide complete investment management solutions to our valued

clientele.



- 13 -




- 14 -


OVERVIEW

Our success is defined by the success of our clients´

Arihant has developed a diverse and robust portfolio of financial services to help our customers

manage their money in the way that benefits them most.

With more than 500 professionals and staff working in 90 plus cities, Arihant has the resources

and nationwide reach to ensure the highest level of personalized service.

Our fundamental mission is to provide our clients everything they need to do better ² as

realizing their strategic visions is our shared objective. Our service achieves these goals by

putting clients at the center of everything we do. Our client-centric approach, ethical and

transparent business practices, research-based advice, implementation of cutting-edge technology

and keeping up-to-date to the ever changing world of finance has helped our clients grow with

the surging Indian economy over the years.



- 15 -




- 16 -


Our associations

Arihant Capital Markets Limited is listed on the Bombay Stock Exchange since 1993 and since

then the company has grown in leaps and bounds.

We are members of the leading stock exchanges of India:

y National Stock Exchange ( NSE)

y Bombay Stock Exchange Limited (BSE)

We are a depository participant with:

y National Securities Depositories Limited ( NSDL)

y Central Depository Services Ltd. (CDSL)

We are members of leading commodities exchanges in India:

y National Commodities Exchange ( NCDEX)

y Multi Commodities Exchange (MCX)

We are registered with the SEBI for Portfolio Management Services (PMS) and

are a Category - I Merchant Banker.



- 17 -


SERVICES PROVIDED BY ARIHANT

Arihant, provides variety of services which have been proved user friendly and customer

oriented services. That includes

y Equity ( NSE and BSE)

y Derivatives

y Online Trading ( NSE, BSE, F&O, IPO)

y Commodities ( NCDEX, MCX)

y Depository ( NSDL, CDSL)

y Mutual Funds and IPO

y H NI Services (PCG and PMS)

COMPANY PROFILE

ARIHANT CAPITAL MARKET LTD. ADDRESS

E/5, Ratlam Kothi Area

Indore

452001

Tel:(0731) 251 9610-11-12, 3048915

Fax: (0731)251 9817

www.Arihantcapital.com



- 18 -


KEY EXECUTIVES

Mr.Ashok.jain

chairman

Mr.Ashish.Maheshwari

Director

Mr.Anita.Gandhi

Head-institutional-business

Mr.Ashok.Lunawat

President-Research

Mr.Arpit.Agrawal

CEO-Head PMS

Mr.Rakesh.Garg

COO



- 19 -


2.1 INVESTMENT

Introduction of Investment.

Introduction of Capital Market.



- 21 -


(C) Financial Investment :

It involves the investment of funds in various assets, such as Stock, Bonds, Real Estate and

Mortgages etc. Investment is the employment of funds with the aim of achieving additional

income or growth in value. It involves the commitment of resources which have been saved or

put away from current consumption in the future investment involves long term commitment of

funds and waiting for a reward in the future.

Importance Of Investment

Incresses in life Expectancy

Incressing Rate of Taxation

Interest Rates

Inflation

Income

Investment Channels



- 22 -


Investment Process

(Step-1) Framing of Investment Policy

o Determination of Investment amount

o Determination of Protfolioi Objectives

o Identification of Potential Investment Assets

o Allocation of wealth to Assets Cutegories

(Step-2) Valuation of Investment

o Valuation of Stocks

o Valuation of Debentures

o Valuation of Bonds

o Valuation of Other Assets

(Step-3) Investment Analysis

o Equity Analysis

o Screening of Industries

o Analysis of Industries

o Quantitative Analysis Of Stocks

(A) Debentures and Bonds Analysis

o Analysis Of Yield Structure

o Consideration Of Debentures

o Quntitative Analysis Of Debenturs

(B) Other Assets Analysis

o Quntitative Analysis

o Qualitative Analysis



- 23 -


(Step-4) Portfolio Construction

o Determination Of Diversification level

o Consideration Of Investment Timing

o Selection Of Investment Assets

o Allocation Of Funds to Assets

o Evaluation Of Protfolio For Feedback

Modeals Of Investment

There are different types of Securities conferring sets of rights on the investors and different sets

of condition under which these rights can be exercised. The various avenues for investment

ranging from less-risk to high-risk investment opportunity consist of both security and non-

security forms of investment. All securities forms given below are marketable.

(A) Security Forms Of Investment (Marketable)

a. Corporate Forms Of Investment

o Convertible

o Non- Convertible

b. Public Sector Bonds

o Taxable

o Tax Free

c. Preference Share

d. Equity Share

o New Issue

o Right Issues

o Bonus Issue



- 24 -


(B) Non - Security Forms Of Investment (Non-Marketable)

a. National Saving Scheme

b. National Saving Certificates

c. Provident Fund

o Statutory Provident Fund

o Recognized Provident Fund

o Un-Recognized Provident Fund

o Public Provident Fund

d. Corporate Fixed Deposits

o Public Sector

o Private Sector

e. Life Insurance Policies

f. Unit Scheme Of Unit Trust Of India

g. Post Office Saving Bank Account

o Recurring Deposits

o Time Deposits

o Monthly income scheme

o Social Security Certificate

h. Others

o Rahat Patras or Relief Funds

o India Vikas Patras

o Deposits in Banks

(i) Recuring Deposits

(ii) Time Deposits



- 25 -


2.2 CAPITAL MARKET

CONCEPT :

Capital market is the markets for funds which have a long or indefine maturity i.e. It deal with

long term funds. Generally capital market supplies long term and medium term securities and

funds, which have a maturity period of above one year. Capital market generates the funds from

the saver and transfer to user. Generally it done with ordinary share, stocks, debentures and

bonds of corporations and securities of the government .They do so by converting financial

assets into productive physical assets.

Capital market provides a market mechanism for those who have savings and to those who need

funds for productive investments. It diverts resources from wasteful and unproductive channels

to productive investment.



- 26 -


MEANING OF CAPITAL MARKET

³Capital market refers to the market for rising of financial resources by the business

enterprises, firms, government, semi- government bodies, public sector units and other

organization.´

Capital market is an organized market for long term funds required for meeting long term needs

of business enterprises. It converts savings into profitable investments for industrial

development.

Capital market is a wide term used to comprise all operation in the new issues market and stock

market. New issues made by the companies constitute the Primary marker. While trading in the

existing securities relates to the secondary market. While we can only buy in the Primary market,

we can buy and sell securities in the secondary market. Market comprises some who demand and

other who supply these resources.



- 27 -


THE CAPITAL SHARE MARKET

The origination of the Indian securities market may be traced back to 1875, when 22 enterprising

brokers under a Banyan tree established the Bombay Stock Exchange (BSE). Over the last 125

years, the Indian securities market has evolved continuously to become one of the most dynamic,

modern and efficient securities markets in Asia. Today, Indian markets conform to international

standards both in terms of structure and in terms of operating efficiency.

Structure and Size of the Markets

Corporation of the exchanges assumes the counter-party risk of each member and guarantees

settlement through a fine-tuned risk management system and an innovative method of online

position monitoring. It also ensures the financial settlement of trades on the appointed day andtime irrespective of default by members to deliver the required funds and/or securities with the

help of a settlement guarantee fund. Today India has two national exchanges, the Bombay Stock

Exchange (BSE) and the National Stock Exchange ( NSE). Each has fully electronic trading

platforms with around 9400 participating broking outfits. Foreign brokers account for 29 of

these. There are some 9600 companies listed on the respective exchanges with a combined

market capitalization near $125.5bn. Any market that has experienced this sort of growth has an

equally substantial demand for highly efficient settlement procedures. In India 99.9% of the

trades, according to the National Securities Depository, are settled in dematerialized form in a

T+2 rolling settlement environments. In addition, trades are guaranteed by the National Clearing

Corporation of India Ltd ( NSCCL) and Bank of India Shareholding Ltd (BOISL), Clearing

Corporation houses of NSE and BSE respectively. The main functions of the Clearing

Corporation are to work out (a) what counter parties owe and (b) what counter parties are due to

receive on the settlement date. Furthermore, each exchange has a Settlement Guarantee Fund to

meet with any unpredictable situation and a negligible trade failure of 0.003%.



- 28 -


INDIA¶S SECURITIES MARKET

A Brief History

³Th

e capital market is one of th

e most exciting sectors in th

e financial system, marking animportant contribution to economic development.´

Asia Focus was launched by the Unit Trust of India (UTI) in London in 1986. The success of

this initiative ensured that this fund was followed by numerous others. Indian companies are now

also allowed to raise equity capital in the international market through the issue of GDRs. Today,

there are 498 Foreign Institutional Investors who hold 1325 sub-accounts with a net investment

of approximately $15bn. India¶s regulator, the Securities Exchange Board of India (SEBI) is

playing more of a development role rather than being merely a watchdog. Transparency,

competitiveness and equal opportunity to all market participants has been the driving philosophy

behind all the development and regulatory initiatives of SEBI. This makes the market place

attractive for foreign and domestic investors. With SEBI recognizing the benefits of, and actively

campaigning for the adoption of Straight through Processing as the market standard, the market

is making significant progress towards the goal of executing and settling the transactions without

any human intervention ± the so called STP nirvana. Successful implementation of STP will

considerably reduce the transaction processing cost in the market, eliminating the manual work

involved in transaction processing. Other aspects of the market such as the increasing

sophistication and range of tradable financial products add to the attractiveness of the market as a

whole. The availability of derivative products including index futures, index options, individual

stock futures and individual stock options re-enforces the overall attractiveness of this market to

foreign and domestic investors. The derivatives market in only two years has shown spectacular

growth. Compared to last financial year the annual turnover grew by over 300%. As if further

evidence was needed of India¶s willingness to embrace change, the availability of Internet

trading and dual fungibles of American Depository Receipts (ADRs) and Global Depository

Receipts (GDRs) provides a clear indication of the vibrancy and dynamism of the Indian

securities market.



- 29 -


CHART OF CAPITAL MARKET

CAPITAL MARKET

INDUSTRIAL GOVERNMENT LONG TERM

SECURITIES SECURITIES LOANS

MARKET MARKET MARKET

Primary Market

Secondary Market



- 30 -


TYPES OF SECURITIES MARKET

The securities market can be divided in to three part:

1.) Industrial securities market

2.) Government securities market

3.) Long term loans market

INDUSTRIAL SECURITIES MARKET

The industrial securities market consists of two complementary parts i.e. the New Issue Market,

and Secondary Market.

It is a market for industrial securities namely:

(i) Equity shares or ordinary shares or common stock.

(ii) Preference shares

(iii) Debenture or Bonds.

The corporate sector raises their capital through these above three types of securities. This is the physical or tangible asset through which the market functions.

Company raises it capital in the primary market though:



- 31 -


1) Primary Market :

Primary market is the market for those securities which are issued first time in the market for the

public. The New Issue Market deals with new securities i.e. securities which were not previously

availably and are offered to the investing public for the first time. Primary market is a market for

New issues or New financial claims. Hence, it is called New Issue Market. The market,

therefore, derives its name from the fact that it makes available a New Block of Securities for

public subscription. In the Primary market, borrowers exchange new financial securities for long

term funds. It facilitates capital formulation.

Companies raise ite capital in the primary market though:

(i) Public Issue

(ii) Right Issue

(iii)Primary placement/subscription

The most popular method of raising capital is sale of securities to the public by new companies is

called Public Issue. Right Issue means, when existing company first offered. The security to

existing shareholders on a Pre ±emptive bases, while company want to raise additional capital is

called capital is called Right Issue. Private placement imagine private sale of securities to small

group investors.

2) Secondary Market :

Secondary market is the market for those securities which have already been available in the

market and listed on a stock exchange. The main benefit of Secondary market is securities sold

and purchased continuously among investors without involvement of company. This market

consists of all stock exchange recognized by the Government of India. The stock exchange in

India are regulated under the securities contracts (Regulation) Act, 1956.



- 32 -


Meaning

List of Different Sectors

Introduction about IT Sector



- 33 -


Meaning

The manufacturer of the some products is come together and establishes of homogeneous groups

and this group is called an industry which is particular sector. There are many companies or scrip

that manufacturer the same products provide services are comes and specified under the

particular name that is called sector.

There are many sectors in which many types of scrip are listed.

3.2 List Of Different Sector

Aluminium

Auto Ancillaries

Auto Mobiles

Banking

Beverages, Food & Tobacco

Cement

Consumer Products

Cigarettes

Energy Sources

Engineering

Hotels

Investment & Finance

Media

Paints

Petrochemicals

Pharmaceuticals

Power

Retailing

Shipping

Information Technology (IT)

Steel

Telecom

Textiles



- 34 -


Aluminium :

The most commercially mined aluminium ore is bauxite, as it has the highest content of the base

metal. The primary aluminium production process consists of three stages. First is mining of

bauxite, followed by refining of bauxite to alumina and finally smelting of alumina toaluminium. India has the fifth largest bauxite reserves with deposits of about 3 bn tonnes or 5%

of world deposits. India¶s share in world aluminium capacity rests at about 3%.

Auto Ancillaries :

The fortunes of the auto ancillary sector are closely linked to those of the auto sector. Demand

swings in any of the segments (cars, two-wheelers, commercial vehicles) have an impact on auto

ancillary demand. Demand is derived from original equipment manufacturers (OEM) as well asthe replacement market. Out of the total revenues, engine parts account for 31% of the total

revenues of the industry.

Automobiles :

The Indian automobile segment can be divided into several segments viz. two-wheelers

(motorcycles, geared and ungeared scooters and mopeds), three wheelers, commercial vehicles

(light, medium and heavy), passenger cars, utility vehicles (UVs) and tractors.

Banking :

The Indian banking sector has been well shielded by the central bank and has managed to sail

through most of the crisis with relative ease. Further with the economic buoyancy the world over

showing signs of cooling off, the investment cycle has also been wavering. Having said that, the

latent demand for credit (both from the food and non food segments) and structural reforms have

paved the way for a change in the dynamics of the sector itself.

Beverages, Food and Tobacco :

India is the world's second largest producer of fruits, vegetables and milk. A large coastline and

a huge cattle population ensure abundant supply of meat, poultry and fish.



- 35 -


Cement :

The Indian cement industry with a total capacity of about 200 m tonnes (MT) in FY09 is the

second largest market after China. Although consolidation has taken place in the Indian cement

industry with the top five players controlling almost 60% of the capacity, the balance capacity

still remains pretty fragmented.

Construction :

India is on the verge of witnessing a sustained investment in infrastructure build up. With

construction component accounting for 42% of the total investment in infrastructure, the

construction industry has been witness to a strong growth wave powered by large spends in

housing, road, ports, water supply and airports development. The Planning Commission of India

has proposed an investment of around US$ 500 bn in the Eleventh five-year plan (2007-2012),which is nearly 2.3 times more than the previous five-year plan.

Consumer Products :

The consumer products sector mainly consists of personal care (oral care, hair care, soaps,

cosmetics and toiletries) and household care (fabric wash and household cleaners).

Energy Sources :

There are two stages in the energy value chain, upstream (exploration and production) and

downstream (refining and marketing). After extracting crude oil from the reserves, it is processed

to yield various petroleum products, which are then marketed.

Engineering :

Engineering is a diverse industry with a number of segments. A company from this sector can be

a power equipment manufacturer (like transformers and boilers), execution specialist or a niche

player (like providing environment friendly solutions). It can be an electrical, non-electrical

machinery and static equipment manufacturer too.



- 36 -


Hotels :

The travel and hospitality industry continues to be the sector, which has largely profited from the

fast growing economy of India. Though FY09 had been tough year with tourist inflow declining

by 4% YoY on account of economic slowdown and terror attacks, it has grown at a CAGR of

13% in the past 5 years.

Investment & Finance :

With the country¶s largest development financial institutions (DFIs) like ICICI and IDBI having

been converted into banking entities, the term DFI has lost its relevance in the country.

Institutions that today have replaced them in playing a vital role in long-term financing and

project financing are the NBFCs, which have their relative specializations,

Media :

India continues to be in the throes of an entertainment revolution spawned by economic

liberalisation. The industry comprises of print, electronic, radio, internet and outdoor segments.

The size of the print segment is about Rs 173 bn, while the radio and internet segments are about

Rs 8.4 bn and Rs 6.2 bn respectively. Advertising revenue will continue to be the industry's

growth driver .

Paints :

The market size of the Indian paints sector has been pegged at Rs 170 bn in value terms and is

very fragmented. While in value terms, the industry grew by 17% to 18% in FY09, in volume

terms, the growth stood at 9% YoY, the lowest in the last five years. The per capita consumption

of paints in India stands at 0.5 kg per annum as compared to 1.6 kgs in China and 22 kgs in the

developed economies. India's share in the world paint market is just 0.6%.



- 37 -


Petrochemicals :

Petrochemicals, as the name suggests, are chemicals obtained from the cracking of petroleum

feedstock. Petrochemicals are used in many manufacturing fields. The industry is built on small

number of basic commodity chemicals, also known as building blocks such as ethylene,

propylene, butadiene, benzene, toluene and xylene.

Pharmaceuticals :

The Indian Pharmaceutical industry is highly fragmented with about 24,000 players (around 330

in the organised sector). The top ten companies make up for more than a third of the market. The

revenues generated by the industry are approximately US$ 7.6 bn and have grown at an average

rate of 10% over last five years. The Indian pharma industry accounts for about 1% of the

world's pharma industry in value terms and 8% in volume terms.

Power :

With the coming of Electricity Act 2003, the power sector, which was highly regulated with lot

of licensing requirements, is in the throes of a long awaited change. The licensing requirements

have been reduced, as the generation company will be free to enter distribution business and

vice-a-versa.

Retail :

Currently, India is the fifth largest retail market in the world. In India, organised retail trade

accounts for merely 5% of the total retail trade and is expected to grow at the rate of 30% to

40%. However, during the medium term, the growth rate in this sector has slowed down to 7% to

10% owing to economic slowdown.

Shipping :

Shipping is a global industry and its prospects are closely tied to the level of economic activity in

the world. A higher level of economic growth would generally lead to higher demand for industrial raw materials, which in turn will boost imports and exports. The shipping market is

cyclical in nature and freight rates generally tend to be volatile.



- 38 -


Information Technology (IT) :

IT spending in the US has grown unabated during the last few years. As per IDC (a global

technology research agency) and NASSCOM (India¶s industry body for the tech sector),

revenues of the Indian IT industry have grown by 33% to US$ 64 bn in FY08. The IT-BPO

industry has estimated to have grown at a CAGR of 31% since FY04, much faster than the global

IT services industry. The Indian domestic market for technology is also growing as robustly as

the export of IT services from India.

Steel :

India is currently the fifth largest steel-producing nation in the world with production of over 54

million tonnes (MT). However, it has a very low per capita consumption of steel of around 46

kgs as against an average of 198 kgs of the world. This wide gap in relative steel consumption

indicates that the potential ahead for India to raise its steel consumption is high

Telecom :

Although India's teledensity has improved from under 4% in March 2001 to over 36% by the end

of March 2009, we are still way behind other developing nations. Cellular telephony has

emerged as the fastest growing segment in the Indian telecom industry. The mobile subscriber

base (GSM and CDMA combined) has grown from under 2 m at the end of F

Y00 to touch 391 mat the end of March 2009 (compounded annual growth of searly 80% during this nine year

period).

Textiles :

US and European markets dominate the global textile trade, accounting for 64% of clothing and

39% of the textile market. With the dismantling of quotas, global textile trade is expected to

grow (as per McKinsey estimates) to US$ 650 bn by 2010 (3-year CAGR of 10%). However, as

against expectations, in the post-quota regime, the resurgence in exports to the now unregulated

markets took off rather slowly.



- 39 -


Introduction About IT Sector

IT industry in India is one of the fastest growing industries. Indian IT industry has built up

valuable brand equity for itself in the global markets. IT industry in India comprises of software

industry and information technology enabled services (ITES), which also includes business

process outsourcing (BPO) industry. India is considered as a pioneer in software development

and a favorite destination for IT-enabled services.

The origin of IT industry in India can be traced to 1974, when the mainframe manufacturer,

Burroughs, asked its India sales agent, Tata Consultancy Services (TCS), to export programmers

for installing system software for a U.S. client. The IT industry originated under unfavorable

conditions. Local markets were absent and government policy toward private enterprise was

hostile. The industry was begun by Bombay-based conglomerates which entered the business by

supplying programmers to global IT firms located overseas.

During that time Indian economy was state-controlled and the state remained hostile to the

software industry through the 1970s. Import tariffs were high (135% on hardware and 100% on

software) and software was not considered an "industry", so that exporters were ineligible for

bank finance. Government policy towards IT sector changed when Rajiv Gandhi became Prime

Minister in 1984. His New Computer Policy ( NCP-1984) consisted of a package of reduced

import tariffs on hardware and software (reduced to 60%), recognition of software exports as a

"delicensed industry", i.e., henceforth eligible for bank finance and freed from license-permit raj,

permission for foreign firms to set up wholly-owned, export-dedicated units and a project to set

up a chain of software parks that would offer infrastructure at below-market costs. These policies

laid the foundation for the development of a world-class IT industry in India.

Today, Indian IT companies such as Tata Consultancy Services (TCS), Wipro, Infosys, HCL et

al are renowned in the global market for their IT prowess.



- 40 -


In the last few years Indian IT industry has seen tremendous growth. Destinations such as

Bangalore, Hyderabad and Gurgaon have evolved into global IT hubs. Several IT parks have

come up at Bangalore, Hyderabad, Chennai, Pune, Gurgaon etc.

IT spending in the US has grown unabated during the last few years. As per IDC (a global

technology research agency) and NASSCOM (India¶s industry body for the tech sector),

revenues of the Indian IT industry have grown by 33% to US$ 64 bn in FY08. The IT-BPO

industry has estimated to have grown at a CAGR of 31% since FY04, much faster than the global

IT services industry. The Indian domestic market for technology is also growing as robustly as

the export of IT services from India.

India¶s IT industry can be divided into five main components, viz. software products, IT

services, engineering and R&D services, ITES (IT-enabled services) and hardware. Export

revenues continue to drive growth. Amongst the export revenues, project-based services

accounted for more than 50% of the Indian IT services exports. Multi-year annuity based

outsourcing agreements are expected to increase going forward. However, the majority share of

the project based revenues is going to continue on the back of custom application development

and application management.



- 41 -


Sector structure/Market size :

The Indian information technology industry has played a key role in putting India on the global

map. Thanks to the success of the IT industry, India is now a power to reckon with. According to

the National Association of Software and Service Companies ( NASSCOM), the apex body for

software services in India, the revenue of the information technology sector has risen from 1.2

per cent of the gross domestic product (GDP) in FY 1997-98 to an estimated 5.8 per cent in FY

2008-09.

Further, the industry body expects the sector to grow between 4 per cent and 7 per cent during

2009-10 and return to over 10 per cent growth next year.

India's IT growth in the world is primarily dominated by IT software and services such as

Custom Application Development and Maintenance (CADM), System Integration, IT

Consulting, Application Management, Software testing, and Web services.

As per NASSCOM's latest findings :

Indian IT-BPO sector grew by 12 per cent in FY 2009 to reach US$ 71.7 billion in aggregate

revenue (including hardware). Of this, the software and services segment accounted for US$ 59.6

billion.

IT-BPO exports (including hardware exports) grew by 16 per cent fromU

S$ 40.9 billion inF

Y2007-08 to US$ 47.3 billion in FY 2008-09.

Moreover, according to a study by Springboard Research, the Indian IT services market is

estimated to remain the fastest growing in the Asia-Pacific region with a CAGR of 18.6 per cent.

At present, there are 60 million Internet users in the country. According to Manufacturer¶s

Association of IT (MAIT), the number of active Internet entities rose to 8.6 million by March

2009 from 7.2 million units in March 2008.

MAIT has outlined 'Goal 511', an ambitious target that talks about 500 million Internet users,

100 million broadband connections, and 100 million connected devices by 2012.

A latest study by MAIT estimated that the total PC sale in India is likely to grow by 7 per cent in

2009-10, with total sales expected to cross 7.3 million units.



- 42 -


Outsourcing

According to NASSCOM, software and services exports (including exports of IT services, BPO,

engineering services and R&D and software products) reached US$ 47 billion in FY 2008-09,

contributing nearly 78 per cent to the total software and services revenue of US$ 59.6 billion.

India continues to be the most preferred destination for companies looking to offshore their IT

and back-office functions. It also retains its low-cost advantage and is among the most

financially attractive locations when viewed in combination with the business environment it

offers and the availability of skilled people, according to global management consultancy AT

Kearney.

Some big deals in the outsourcing space include :

Tata Consultancy Services is understood to have bagged a US$ 248.75 million software

implementation contract from the Cardiff City Council, UK.

Etisalat DB, formerly known as Swan Telecom, has outsourced implementation of its software

applications and IT infrastructure to Tech Mahindra as part of a US$ 400 million deal spread

over the next 10 years.



- 43 -


Economic Analysis

Company Analysis

Industry Analysis



- 44 -


Economic Analysis :

The economy of India is the twelfth largest economy in the world by nominal value and the

fourth largest by purchasing power parity (PPP). In the 1990s, following economic reform from

the socialist-inspired economy of post-independence India, the country began to experience rapid

economic growth, as markets opened for international competition and investment. In the 21st

century, India is an emerging economic power with vast human and natural resources, and a

huge knowledge base. Economists predict that by 2020, India will be among the leading

economies of the world.

India was under social democratic-based policies from 1947 to 1991. The economy was

characterized by extensive regulation, protectionism, and public ownership, leading to pervasive

corruption and slow growth. Since 1991, continuing economic liberalization has moved the

economy towards a market-based system. A revival of economic reforms and better economic

policy in 2000s accelerated India's economic growth rate. By 2008, India had established itself as

the world's second-fastest growing major economy. However, the year 2009 saw a significant

slowdown in India's official GDP growth rate to 6.1% as well as the return of a large projected

fiscal deficit of 10.3% of GDP which would be among the highest in the world.

India's large service industry accounts for 62.6% of the country's GDP while the industrial and

agricultural sector contribute 20% and 17.5% respectively. Agriculture is the predominant

occupation in India, accounting for about 52% of employment. The service sector makes up a

further 34% and industrial sector around 14%. The labor force totals half a billion workers.

Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes,

cattle, water buffalo, sheep, goats, poultry and fish. Major industries include

telecommunications, textiles, chemicals, food processing, steel, transportation equipment,cement, mining, petroleum, machinery, information technology enabled services and software.

India's per capita income (nominal) is $1032, ranked 143th in the world, while its per capita

(PPP) of US$2,932 is ranked 130th. Previously a closed economy, India's trade has grown fast.

India currently accounts for 1.5% of World trade as of 2007 according to the WTO. According to



- 45 -


the World Trade Statistics of the WTO in 2006, India's total merchandise trade (counting exports

and imports) was valued at $294 billion in 2006 and India's services trade inclusive of export and

import was $143 billion. Thus, India's global economic engagement in 2006 covering both

merchandise and services trade was of the order of $437 billion, up by a record 72% from a level

of $253 billion in 2004. India's trade has reached a still relatively moderate share 24% of GDP in

2006, up from 6% in 1985.

Despite robust economic growth, India continues to face many major problems. The recent

economic development has widened the economic inequality across the country. Despite

sustained high economic growth rate, approximately 80% of its population lives on less than $2 a

day (PPP). Even though the arrival of Green Revolution brought end to famines in India, 40% of

children under the age of three are underweight and a third of all men and women suffer from

chronic energy deficiency.

INDIAN GDP GROWTH RATEThe latest reviews of the India GDP growth rate are as under -

y For the first quarter of 2007-08 GDP posted a growth of 9.3% and stood at Rs 7,23,132

crore, as compared to the consequent quarter of previous fiscal year

y In the quarter of April-June economy of India grew at 9.3%. The progress was triggered

by construction, manufacturing, services and agriculture industriesy For the week concluded July 28, 2007, the yearly inflation rate was 4.45%

y Balance of Payments in India is predicted to remain contended

y Merchandise Exports registered steady growth

y Manufacturing posted 11.95 expansion



- 46 -


The trend for India¶s GDP growth rate are given below

1960-1980 - 3.5%1980-1990 - 5.4%1990-2000 - 4.4%2000-2009 - 6.4%

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

1 2 3 4 5 6

Series1

Series2

Series3



- 47 -


Contribution of different sectors in GDP

Below are the contributions of different sectors in the India¶s GDP for 1990-1991

Agriculture: 32%Service Sector: 41%Industry: 27%

Below are the contributions of different sectors in the India¶s GDP for 2005-

2006

Agriculture: 20%Service Sector: 54%Industry: 26%

Agriculture

20%

Service Sector

54%

Industry

26%

Agriculture

32%

Service Sector

41%

Industry

27%



- 48 -


Below are the contributions of different sectors in the India¶s GDP for 2007-

2008

Agriculture: 17%Service Sector: 54%

Industry: 29%

The service sector contributes more than half of India¶s GDP. Earlier agriculture was the maincontributor to the GDP. To improve the GDP and boost the economy, the government has taken

various steps like implementation of FDI policies, SEZ¶s and NRI investments.

In 2007, agriculture contributed around 16.6% of the GDP. Even though its share has been

declining, agriculture plays a major role in the India¶s socio economic development. Industry

contributes around 27.6% of the GDP (2007 est). The services sector contributed to 55% of the

GDP in 2007. The IT industry contributed around 7% of the GDP in 2008 which was 4.8% in

2005-06. Remittances from overseas Indian migrants were around $27 billion or around 3% of

the GDP of India¶s economy in 2006.

Agriculture

17%

Service Sector54%

Industry

29%



- 49 -


India GDP growth rate in 2009

According to International Monetary Fund (IMF) economic growth rate of India is predicted to

dip by 6.9 per cent in the fiscal year 2009. IMF has further stated that this relegation is

unavoidable because the Asian nations are not fully impervious to the global financial crisis and

its consequent negative effects.

MF's World Economic Outlook (WEO), released in Washington on October 8, 2008, explains

the slopping of GDP growth rate in the last three years. In 2007 GDP growth rate was 9.3 per

cent while in 2008 it dipped to 7.8 per cent and would end up at 6.9 percent in 2009

The weak financial market is incapable of attracting investors¶ attention. India has also suffered a

major setback in the year 2005-07 according to IMF, when the worldwide stock markets slipped

radically

The GDP growth rate slowed down to 6.1% in 2009. In 2006, the country¶s trade contributed to

around 24% of the GDP from 6% in 1985. According to Goldman Sachs, India¶s GDP in current

prices may overtake France and Italy by 2020, Russia, Germany and UK by 2025 and Japan by

2035. It is also predicted that Indian economy will be the third largest after US and China by

2035



- 50 -


Inflation in India

In financial year 2007-08, average inflation in India was around 4.66 percent. This rate was

lower than average inflation of financial year 2006-07. In 2007-08, fiscal high prices of food

items were primary cause behind high rates of inflation. That high rate of inflation had to be

controlled by banning a number of necessary commodities as well as various financial steps.

High prices of oil were responsible for proportionately high rate of inflation in 2008-09.

According to the 2008 Economic Survey Report, India¶s inflation rate was targeted by the

Reserve Bank of India (RBI) to be 4.1%, down from a rate of 5.77% in 2007. Inflation rates for

many investment goods have decreased dramatically in recent years. The price of basic goods

such as lentils, vegetables, fruits and poultry were expected to slow their rise. The price of

various manufactured goods also fell in 2007, and this contributed to a reduced inflation rate

Indeed, by July 2008, the key Indian Inflation Rate, theWholesale Price Index, has risen

above 11%, its highest rate in 13 years. This is more than 6% higher than a year earlier

and almost three times the RBI¶s target of 4.1%.

Inflation has climbed steadily during the year, reaching 8.75% at the end of May. There was an

alarming increase in June, when the figure jumped to 11%. This was driven in part by areduction in government fuel subsidies, which have lifted gasoline prices by an average 10%.

In recent years India has also made progress in expanding their investment base in the

United States of America.

When a few years back India was struggling to meet the quickly-changing demands of the

global marketplace, today, it has joined the ranks of countries whose economies are on the

upswing. India's UB has bought breweries in the US while companies such as Dr. Reddy's

Laboratories and Ranbaxy have bought pharmaceutical manufacturing units in the US. In the IT

sector, Tata Infotech, Satyam, Infosys and WIPRO have large operations based in the US. Wipro

India announced, November 12th, that it had entered into a definitive agreement to acquire the

global energy practice of American Management Systems for an aggregate consideration of $26



- 51 -


million, payable in cash. The move strengthens Wipro's end-to-end IT solutions capability in the

energy and utilities market.

India Exports

In 2007, India's exports stood at $140.8 billion, making it the 26th-largest export economy in the

world. The country's exports have grown steadily in the past few year.

decades, ever since foreign direct investment (FDI) was allowed on a large scale, and most of the

state-run industries were privatized. Most of these changes have occured since the economic

reforms India implemented in 1991.

Below is a table illustrating the volume of exports India has seen between 2004 and 2008:

Exports: $140.8 billion (2007)

Year Exports Rank % Change Date of info.

2004 $57,240,000,000 31 28.63 % 2003 est.

2005 $69,180,000,000 33 20.86 % 2004 est.

2006 $76,230,000,000 33 10.19 % 2005 est.

2007 $112,000,000,000 29 46.92 % 2006 est.

2008 $140,800,000,000 26 25.71 % 2007 est.



- 52 -


Company Analysis :

List Of IT Companies



- 53 -


Computers Hardware:

Accel Trans

Cerebra Integr

CMC

Compuage Info.

Computer Point

D-Link India

HCL Infosystems

Moser Baer

ORG Informatics

Redington India

Smartlink Netwr.

VXL Instruments

Computers Software ± Large :

HCL Technologies

Infosys Tech

.Mphasis

Oracle Fin.Serv.

Patni Computer

Polaris Soft

Satyam Computer TCS

Tech Mahindra

Wipro



- 54 -


Computers Software ± Medium/Small :

3i Infotech

ABM Knowledge

Accel Frontline

Accentia Tech.

Aftek

Allied Digital

Asit C Mehta Fin

ASM Technologies

Aurionoro Sol.

Axis IT&T

BLS Infotech

Blue Star Info.

Bombay Talkies

Combridge Sol.

Cat Tech.

Compulink Sys.

Core Projects

Cranes Software

Cybermate Info.

Datamatics Glob.

eClerx Services

Edserv Softsys.

Excel Infoways

FCS Software

Financial Tech.

Firstobj. Tech.

Firstsour. Solu.

Four Soft

G-Tech Info.

Genesys Intl.

Geodesic

Geometric

Gl Engg. Sol.

Glodyne Techno.

GSS America

Hexaware Tech.

Hinduja Global

HOV Services

IK F Technolog.

Info-Drive Soft.

Infotech Enterp.

Intelvisn.Soft.

Intra Infotech

IT People

Kale Consultants

Kernex Microsys.

KLG Systel

KPIT Infosys.

LGS Global

Mastek

Master Multi-Tec

Megasoft

Melstar Info.

Micro Techno.

Mindtree

Net 4 India

NIIT Tech.

Northgate Tech.

Nucleus Soft.

Omnitech Info.

Onward Tech.

Powersoft GSL

Prithvi Info.

Quintegra Soln.

R S Software (I)

R Systems Intl.

Ramco Systems

Ranklin Sol.

Religare Techno

Rolta India

Sankhya Infotech

Sasken Comm. Tec.

Silvlin Animat.

Softpro Systems

Softsol India

Sonata Software

Sterling Intl

Subex

Take Solutions

Tanla Solutions

Tata Elxsi

Teledata Info.

Thinksoft Global

Tricom India

Usha Mart. Edu.

Virinchi Tech.

Visesh Infotec.

Vishal Info.Tec.

Visu Intl.

Zen Technologies



- 55 -


Computers Software ± Converts :

Avance Tech.

Concur.(I)Infra.

Globsys Infotech

Helios Matheson

ICSA (India)

Mascon Global

SJ Corp

Spanco Ltd.

Vakrangee Soft.

Computers Education :

Aptech

Birla Shloka

Comp-U-Learn

Educomo Sol.

Everonn Education

Jetking Infotrai

NIIT

SQL Star Intl.



- 56 -


Company Profile :

TCS

Tata Consultancy Services Limited (TCS) is a software services and consulting company

headquartered in Mumbai, India. TCS is the largest provider of information technology and

business process outsourcing services in India. The company is listed on the National Stock

Exchange and Bombay Stock Exchange of India.

It began as the "Tata Computer Centre", a division of the Tata Group whose main business was

to provide computer services to other group companies. F C Kohli was the first general manager.

JRD Tata was the first chairman, followed by Nani Palkhivala.

Tata Consultancy Services was established in the year 1968 and is a pioneer in the Indian IT

industry. Despite unfavourable government regulations like the Licence Raj the company

succeeded in establishing the Indian IT Industry.

TCS has development centres and/or regional offices in the following Indian cities: Ahmedabad,

Bangalore, Bhubaneswar, Chennai, Coimbatore, Delhi, Gandhinagar, Goa, Gurgaon, Guwahati,

Hyderabad, Jamshedpur, Kochi, Kolkata, Lucknow, Mumbai, Patna, Pune, Thiruvananthapuram

and Vadodara.



- 57 -


KEY Officials

Chairman Ratan N Tata

Vice Chairman (

Non-executive) S Ramadorai

Executive Director & CFO S Mahalingam

Managing Director & CEO N Chandrasekaran

Executive Director Phiroz Vanderavala

Director Aman Mehta

Vice President & CS Suprakash Mukhopadhyay

Director Laura M Cha

Ron Sommer

V Thyagarajan

Clayton M Christensen

Naresh Chandra

Additional Director Vijay Kelkar

Ishaat Hussain

Industry Software services

Listing NSE, BSE

Website TCS.com



- 58 -


PROFIT & LOSS A/C

(Rs. in Million)

Particulars Mar 2009 Mar 2008 Mar 2007

Operating Income 224040.00 185337.20 149399.70

Less :Inter divisional transfers 0 0 0Less: Excise 0 0 0

Net Sales 224040.00 185337.20 149399.70

EXPE NDITURE :

Stock Adjustments -17.30 0.40 27.80

Raw Materials Consumed 526.70 451.30 215.00

Power & Fuel Cost 1643.40 1355.70 938.90

Employee Cost 116635.40 94019.70 73140.50

Cost of Software developments 4785.30 5370.00 3608.20

Operating Expenses 26578.20 22795.90 19899.60

General and Administration Expenses 12784.10 10496.40 8138.80Selling and Marketing Expenses 213.50 276.30 310.50

Miscellaneous Expenses 8143.50 370.40 110.70

Expenses Capitalised 0 0 0

Total Expenditure 171292.80 135136.10 106390.00

PBIDT (Excl OI) 52747.20 50201.10 43009.70

Other Income 2898.70 4459.50 2165.50

Operating Profit 55645.90 54660.60 45175.20

Interest 74.40 34.20 34.30

PBDT 55571.50 54626.40 45140.90

Depreciation 4174.60 4587.80 3434.10

Profit Before Taxation & Exceptional Items 51396.90 50038.60 41706.80Exceptional Income / Expenses 0 0 0

Profit Before Tax 51396.90 50038.60 41706.80

Provision for Tax 4434.80 4951.00 4133.90

PAT 46962.10 45087.60 37572.90

Adj to Profit After Tax 0.00 0.00 0.00

Profit Balance B/F 73748.90 49199.90 28333.00

Appropriations 120711.00 94287.50 65905.90

Equity Dividend (%) 1400.00 1400.00 1150.00

Earnings Per Share (Rs.) 47.92 46.07 38.39

Book Value (Rs.) 136.38 111.43 82.35



- 59 -


Balance Sheet

(Rs. in Million)


SOURCES OF FUNDS 1978.60 1978.60 978.60

Share Capital 132483.90 108069.50 79611.30Total Reserve 134462.50 110048.10 80589.90

Shareholder's Funds 326.30 92.70 417.60

Secured Loans 77.40 89.80 89.80

Unsecured Loans 403.70 182.50 507.40

Total Debts 1978.60 1978.60 978.60

APPLICATIO N OF FUNDS :

Gross Block 43592.40 32406.40 23153.60

Less: Accumulated Depreciation 16901.60 13001.10 8547.50

Less: Impairment of Assets 0 0 0

Net Block 26690.80 19405.30 14606.10

Lease Adjustment A/c 0 0 0Capital Work in Progress 6851.30 8897.40 7578.50

Pre-operative Expenses pending 0 0 0

Assets in transit 0 0 0

Investments 59360.30 45093.30 32520.40

Current Assets, Loans & Advances

Inventories 169.50 171.90 120.60

Sundry Debtors 37177.30 37470.10 27998.00

Cash and Bank 16052.60 5275.20 5571.40

Other Current Assets 8173.50 8712.50 5243.90

Loans and Advances 30898.50 21666.00 13133.90

Total Current Assets 0 64583.20 46823.90

Less : Current Liabilities and Provisions 35011.30 24041.80 16395.00

Current Liabilities 14502.30 11874.40 9050.50

Provisions 49513.60 35916.20 25445.50

Total Current Liabilities 42957.80 37379.50 26622.30

Net Current Assets 0 0 0

Miscellaneous Expenses not written off -994.00 -544.90 -230.00

Deferred Tax Assets / Liabilities 134866.20 110230.60 81097.30

Total Assets 0 22227.10 22535.10

Contingent Liabilities 35011.30 24041.80 16395.00



- 60 -


PERFOMANCE CHART OF TCS



- 61 -


Wipro

Wipro Technologies Limited is a information technology services corporation headquartered in

Bangalore, India. According to the 2008-09 revenue Wipro is the second largest IT services

company in India and employs more than 98,391 people worldwide as of 2009.[2] It has interests

varying from information technology, consumer care, lighting, engineering and healthcare

businesses.

Wipro (an acronym of "Western India Vegetable Products") started as a vegetable oil trading

company in 1947 from an old mill at Amalner, Maharashtra, India founded by Azim Premji's

father.

2006 - Wipro acquires Enabler to enter Niche Retail market .

2007 - Wipro acquires US's Infocrossing for 600mn .

2009 - Wipro acquires Gallagher Financial Systems to enter mortgage loan origination space.

Wipro stops Semiconductor IP Solutions and closes NewLogic Sophia-Antipolis R&D, France .



- 62 -


KEY Officials

Chairman & Managing Director Azim H Premji

Director N Vaghul

B C Prabhakar

Jagdish N Sheth

Ashok Ganguly

P M Sinha

Bill Owens

Company Secretary V Ramachandran

CFO & Director Suresh C Senapaty

Joint CEO, IT Bus. & Director Suresh Vaswani

Girish S Paranjpe

Industry IT Servicess

Listing BSE: 507685 NYSE: WIT

Website Wipro.com



- 63 -


PROFIT & LOSS A/C

(Rs. in Million)

Particulars Mar 2009 Mar 2008 Mar 2007Operating Income 216128.00 176581.00 137585.00

Less :Inter divisional transfers 0 0 0

Less: Excise 1055.00 1655.00 746.00

Net Sales 215073.00 174926.00 136839.00

EXPE NDITURE :

Stock Adjustments 0 0 0

Raw Materials Consumed 33767.00 29523.00 18890.00

Power & Fuel Cost 0 0 0

Employee Cost 92422.00 74079.00 57645.00

Cost of Software developments 0 0.00 0.00


General and Administration Expenses 89.00 23.00 46.00

Selling and Marketing Expenses 5522.00 5321.00 4274.00

Miscellaneous Expenses 42027.00 25826.00 22034.00



PBIDT (Excl OI) 38640.00 37156.00 32745.00

Other Income 4144.00 3269.00 2687.00


Interest 1968.00 1168.00 72.00

PBDT 40816.00 39257.00 35360.00Depreciation 5337.00 4560.00 3598.00

Profit Before Taxation & Exceptional Items 35479.00 34697.00 31762.00

Exceptional Income / Expenses 0 0 0



PAT 29738.00 30633.00 28421.00

Adj to Profit After Tax 0 0 0

Profit Balance B/F 0 0 0

Appropriations 29738.00 30633.00 28421.00

Equity Dividend (%) 200.00 300.00 300.00

Earnings Per Share (Rs.) 20.30 20.96 19.48Book Value (Rs.) 85.42 79.05 63.86



- 64 -


Balance Sheet

(Rs. in Million)

Particulars Mar 2009 Mar 2008 Mar 2007SOURCES OF FUNDS

Share Capital 2930.00 3463.00 2918.00

Total Reserve 122204.00 112604.00 90251.00


Secured Loans 0 40.00 232.00

Unsecured Loans 50139.00 38184.00 2148.00

Total Debts 50139.00 38224.00 2380.00


Gross Block 31796.00 22822.00 16459.00


Less: Impairment of Assets 0 0 0 Net Block 31796.00 22822.00 16459.00

Lease Adjustment A/c 0 0 0

Capital Work in Progress 13118.00 13350.00 9895.00



Investments 68845.00 45001.00 43487.00


Inventories 4597.00 4481.00 2404.00

Sundry Debtors 42992.00 36466.00 25439.00

Cash and Bank 44092.00 37321.00 18492.00

Other Current Assets 0 0 0



Less : Current Liabilities and Provisions


Provisions 17067.00 13807.00 7652.00


Net Current Assets 60952.00 72641.00 25277.00

Miscellaneous Expenses not written off 0 0 0


Total Assets 175288.00 154331.00 95584.00Contingent Liabilities 0 4084.00 5955.00



- 65 -


PERFOMANCE CHATR OFWIPRO



- 66 -


Infosys

Infosys Technologies Limited is an information technology services company headquartered in

Bangalore, India. Infosys is the second largest IT company in India with 105,453 professionals

(including subsidiaries) as of Nov 9, 2009. It has offices in 22 countries and development centers

in India, China, Australia, UK, Canada and Japan.

Infosys was founded on July 2, 1981 in Pune by N R Narayana Murthy and six others: Nandan

Nilekani, N. S. Raghavan, Kris Gopalakrishnan, S. D. Shibulal, K. Dinesh and Ashok Arora,

with N. S. Raghavan officially being the first employee of the company. Murthy started the

company by borrowing I NR 10,000 from his wife Sudha Murthy. The company was

incorporated as "Infosys Consultants Pvt Ltd.", with Raghavan's house in Model Colony, north-

central Bengaluru as the registered office.

In 2002, the Wharton Business School of the University of Pennsylvania and Infosys started the

Wharton Infosys Business Transformation Award. This technology award recognizes enterprises

and individuals who have transformed their businesses and the society leveraging information

technology. Past winners include Samsung, Amazon.com, Capital One, RBS and I NG Direct.

Infosys also has the largest training center for a private sector organization in Asia. The training

center is located in Mysore, Karnataka. It currently accommodates 4,500 trainees each year. In

2009 a new training center has been opened which accommodates 10,000 trainee software

professionals. This new center is also located in Mysore.



- 67 -


KEY Officials

Chairman & Chief Mentor N R Narayana Murthy

Managing Director & CEO S Gopalakrishnan

Director Deepak M Satwalekar

Marti G Subrahmanyam

Omkar Goswami

Rama Bijapurkar

Claude Smadja

Sridar A Iyengar

David L Boyles

Jeffrey S Lehman

K Dinesh

T V Mohandas Pai

Srinath Batni

Company Secretary Parvatheesam K

Additional Director K V Kamathi

Director & COO S D Shibulal

Industry Software services

Listing BSE: 500209

NASDAQ: I NFY

Website Infosys.com



- 68 -


PROFIT & LOSS A/C

(Rs. in Million)


Operating Income 202640.00 156480.00 131490.00

Less :Inter divisional transfers 0 0 0Less: Excise 0 0 0

Net Sales 202640.00 156480.00 131490.00

EXPE NDITURE :

Stock Adjustments 0 0 0

Raw Materials Consumed 0 0 0

Power & Fuel Cost 1250.00 1060.00 880.00

Employee Cost 98150.00 77600.00 62060.00

Cost of Software developments 15370.00 12680.00 11340.00


General and Administration Expenses 7610.00 6810.00 5995.30

Selling and Marketing Expenses 440.00 430.00 630.00Miscellaneous Expenses 4720.00 650.00 524.70



PBIDT (Excl OI) 65360.00 49620.00 42240.00

Other Income 8740.00 6850.00 3750.00


Interest 20.00 10.00 10.00

PBDT 74080.00 56460.00 45980.00

Depreciation 6940.00 5460.00 4690.00

Profit Before Taxation & Exceptional Items 67140.00 51000.00 41290.00

Exceptional Income / Expenses 0 0 0



PAT 58190.00 44700.00 37770.00

Adj to Profit After Tax -10.00 0.00 -50.00

Profit Balance B/F 66420.00 48440.00 21950.00

Appropriations 124600.00 93140.00 59730.00

Equity Dividend (%) 470.00 665.00 230.00

Earnings Per Share (Rs.) 101.73 78.15 66.14

Book Value (Rs.) 311.35 235.84 195.14



- 69 -


Balance Sheet

(Rs. in Million)


SOURCES OF FUNDS

Share Capital 2860.00 2860.00 2860.00Total Reserve 175230.00 132040.00 108760.00


Secured Loans 0 0 0

Unsecured Loans 0 0 0

Total Debts 0.00 0.00 0.00


Gross Block 59860.00 45080.00 38890.00


Less: Impairment of Assets 0 0 0

Net Block 37990.00 26710.00 21500.00

Lease Adjustment A/c 0 0 0Capital Work in Progress 6150.00 12600.00 9570.00



Investments 10050.00 9640.00 8390.00


Inventories 0 0 0

Sundry Debtors 33900.00 30930.00 22920.00

Cash and Bank 90390.00 64290.00 54700.00

Other Current Assets 7660.00 6850.00 4060.00



Less : Current Liabilities and Provisions


Provisions 17980.00 22480.00 6620.00


Net Current Assets 122880.00 84960.00 71370.00

Miscellaneous Expenses not written off 0 0 0


Total Assets 178090.00 134900.00 111620.00

SOURCES OF FUNDS



- 70 -


PERFOMANCE CHART OF INFOSYS



- 71 -


Industry Analysis

Top 10 IT Sector Company

Rank Names Sales (2008-09)(in Rs mill)

1 TCS LIMITED 97,272

2 WIPRO LIMITED 82,330

3 I NFOSYS TECH NOLOGIES LIMITED 71,297

4 SATYAM COMPUTER SER VICES LIMITED 35,209

5 I-FLEX SOLUTIO NS LIMITED 11,386

6 TATA I NFOTECH LIMITED 9,7437 CMC LIMITED 8,074

8 MPHASIS BFL LIMITED 7,657

9 MASTEK LIMITED 5,670

10 NIIT LIMITED 3,984

The Indian software industry is set to keep up is growth rate despite the slowdown in the

economy. The National Association of Software and Services Companies ( Nasscom) has forecast

a strong outlook for FY08-09 strong with software and services revenue seen growing by 21-24

per cent. The software and services exports are set to hit the $50 billion-mark.

The software and services exports segment grew by 29 per cent (in USD) to register revenues of

$40.4 billion in FY07-08, up from $31.4 billion in FY06-07. The domestic segment grew by 26

per cent (in I NR) to register revenues of $ 11.6 billion in FY07-08. According to the latest

Nasscom rankings, Tata Consultancy Services Ltd., Infosys Technologies Ltd. and Wipro

Technologies Ltd are the top 3 revenue generators in India. Check out the top ten players in the

Indian IT industry.



- 72 -


1.Tata Consultancy Services

Founded in 1968, TCS is one of India's largest corporate houses. It is also India's largest ITemployer with a staff strength of 111,000 employees.

The company began as a division of the Tata Group, called the Tata Computer Centre. Its main

business was to offer computer services to other group companies. Soon the company was spun

off as Tata Consultancy Services after it realised the huge potential of the booming IT services.

The company posted a consolidated net profit of Rs 1,290.61 crore (Rs 12.90 billion) for the first

quarter ended June 30, 2008, an increase of 7.3 per cent compared to the year-ago period.

Its annual sales worldwide stands at $5.7 billion for the fiscal year ending March 2008. During

the year 2007-08,

TCS' consolidated revenues grew by 22 per cent to Rs 22,863 crore ($5.7 billion). S. Ramadorai,

is the chief executive officer and managing director of TCS.

TCS is IDC-Dataquest IT best employer in IT services in 2007. TCS also topped DataQuest

DQTop 20 list of IT service providers in 2007.



- 73 -


Financial Position :


Net Sales (Rs. in Million) 224040.00 185337.20 149399.70

GPM(%) 24.80 29.47 30.21

NPM(%) 20.96 24.33 25.15

EPS(Rs) 47.92 46.07 38.39

DPS(Rs) 14.00 14.00 11.50

Book NAV/Share(Rs) 136.38 111.43 82.35

P/E RATIO 11.24 17.60 32.14

Share Capital (Rs. in Million) 1978.60 1978.60 978.60

Total Reserve 132483.90 108069.50 79611.30


Secured Loans 326.30 92.70 417.60

Unsecured Loans 77.40 89.80 89.80

Total Debts 403.70 182.50 507.40



- 74 -


2. Wipro

What started off as a hydrogenated cooking fat company, Wipro is today is a $5 billion revenue

generating IT, BPO and R&D services organisation with presence in over 50 countries

.

Premji started Wipro with the 'idea of building an organisation which was deeply committed to

values, in the firm belief that success in business would be its inevitable, eventual outcome'. The

company has over 72,000 employees.

Wipro's revenues grew by 33 per cent to Rs 19,957 crore (Rs 200 billion) for the year ended

March 31, 2008. The net profit grew by 12 per cent to Rs. 3,283 crore (Rs. 32.83 billion). The

revenues of the combined IT businesses was $4.3 billion with 43 percent YoY growth.

Wipro was the only Indian company to be ranked among the top 10 global outsourcing providers

in IAOP's 2006 Global Outsourcing 100 listing. Wipro has also won the International Institute

for Software Testing's Software Testing Best Practice Award.



- 75 -





GPM(%) 18.89 22.23 25.70

NPM(%) 13.76 17.35 20.66

EPS(Rs) 20.30 20.96 19.48

DPS(Rs) 4.00 6.00 6.00

Book NAV/Share(Rs) 85.42 79.05 63.86

P/E RATIO 12.11 20.61 28.71


Total Reserve 122204.00 112604.00 90251.00


Secured Loans 0 40.00 232.00

Unsecured Loans 50139.00 38184.00 2148.00

Total Debts 50139.00 38224.00 2380.00



- 76 -


3. Infosys

Infosys Technologies Ltd was started in 1981 by seven people with $250. Today, the company

boasts of revenues of over $ 4 billion and 94,379 employees.

Under the leadership of N R Narayana Murthy, the company has become a global brand. The

company is now headed by Kris Gopalakrishnan. The income for the quarter ended June 30 2008

was Rs 4,854 crore (Rs 48.54 billion). The net profit stood at Rs 1,302 crore (Rs 13.02 billion).

Forbes magazine named Infosys in its list of Global High Performers. Waters magazine rated

Infosys as the Best Outsourcing Partner. The Banker magazine conferred two Banker

Technology Awards on Infosys to acclaim its work in wholesale and capital markets in two

categories - Payments and Treasury Services, and Offshoring and Outsourcing.

The International Association of Outsourcing Professionals (IAOP) ranked Infosys at No. 3 in its

'2008 Global Outsourcing 100'.



- 77 -





GPM(%) 36.56 36.08 34.97

NPM(%) 28.72 28.57 28.72

EPS(Rs) 101.73 78.15 66.14

DPS(Rs) 23.50 33.25 11.50

Book NAV/Share(Rs) 311.35 235.84 195.14

P/E RATIO 13.01 18.42 30.52


Total Reserve 175230.00 132040.00 108760.00


Total Debts 0.00 0.00 0.00



- 78 -


CHATER-7



- 79 -


1. NET SALES TO GROSS PROFIT

Company

Name Mar 2009

(%) Mar 2008

(%) Mar 2007

(%) Average

(%) Rank

TCS 24.80 29.47 30.21 28.16 2

Wipro 13.76 17.35 20.66 22.27 3

Infosys 36.56 36.08 34.97 35.87 1

CHART:

INTERPRETATION:

Gross profit is the result of the relationship between prices, sales volume and costs. A high ratio

of GP to sales is a sign of good management as it implies that the cost of production of the firm

is relatively low from the above chart ranking can be given as under:

First: Infosys indicates a good increasing growth rate. This is very good for the investment point

of view.

Second: TCS has maintained consistence ratio, so it can be given the second position easily.

Third: Wipro has also maintained the consistence growth apart from last year, so it can be

placed at a third position.

35.87

22.27

28.16

Infosys

Wipro

TCS



- 80 -


2. NET SALES TO NET PROFIT

Company

Name Mar 2009

(%) Mar 2008

(%) Mar 2007

(%) Average

(%) Rank

TCS 20.96 24.33 25.15 23.48 2

Wipro 13.76 17.35 20.66 17.26 3

Infosys 28.72 28.57 28.72 28.67 1

CHART:

INTERPRETATION:

A high NP margin would ensure adequate return to the owners as well as enable a firm to

withstand adverse economic condition when selling pricing is declining, cost of production is

rising and demand of the product is falling. From the above chart ranking can be given as under:

First: Infosys comes at the first position even though ratio is high in the last year 2009, so over

all average net profit is higher then other two companies.

Second: TCS is given the second place because it net profit ratio is also high other than Wipro

company.

Third: Wipro¶s net profit ratio is low compare to Infosys and TCS, so it can be given third rank.

28.67

17.26

23.48

Infosys

Wipro

TCS



- 81 -


3. EARNING PER SHARE

Net Income

Earning Per Share = ----------------

No. of Equity share Outstanding

Company

Name

Mar 2009

(Rs.)

Mar 2008

(Rs.)

Mar 2007

(Rs.)

Average

(Rs.)

Rank

TCS 47.92 46.07 38.39 44.13 2 Wipro 20.30 20.96 19.48 20.25 3

Infosys 101.73 78.15 66.14 82.00 1

CHART:

82

20.25

44.13

Infosys

Wipro

TCS



- 82 -


INTERPRETATION:

This ratio measures the profit available to the equity share holders on a per share basis, that is,

the amount that they can get on every share held From the above chart ranking can be as under:

First: From the above chart we can easily placed Infosys on the top most position because its

average ratio is very higher when compared to other two companies.

Second: TCS has made a considerable high average ratio than Wipro. So it can be put on second

position.

Third: Wipro stands at third position because its average ratio is low as compared to Infosys &

TCS.



- 83 -


4. DIVIDEND PER SHARE

Dividend Paid to Equity shareholder¶s

Dividend Per Share = ------------------------------------------------

No of Equity Share Outstanding

Company Name Mar 2009(Rs.)

Mar 2008(Rs.)

Mar 2007(Rs.)

Average(Rs.)

Rank

TCS 14.00 14.00 11.50 13.17 2

Wipro 4.00 6.00 6.00 5.33 3

Infosys 23.50 33.25 11.50 22.75 1

CHART:

22.75

5.33

13.17

Infosys

Wipro

TCS



- 84 -


INTERPRETATION:

This ratio measures the relationship between the earnings belonging to the ordinary share holders

and the dividend pay to them. From the above chart ranking can be given as under:

First: As it can be easily seen from above chart Infosys¶s ratio stand first in comparison with

other companies in all the two years and hence it is rated first.

Second: TCS¶s ratio is also higher in all the three years when compared to Wipro. So it can be

put on second place.

Third: Wipro¶s ratio is lower than the other two company. So it can be put on third place.



- 85 -


5 .BOOK VALUE& MARKET PRICE

Company Name

Mar 2009(Rs.)

Mar 2008(Rs.)

Mar 2007(Rs.)

Average(Rs.)

CURRE NTMAR.PRICE

(31/12/2009)

Rank

TCS 136.38 111.43 82.35 110.05 750.25 2

Wipro 85.42 79.05 63.86 76.11 680.00 3

Infosys 311.35 235.84 195.14 247.44 2601.10 1

CHART:

INTERPRETATION:

The relationship between market price of the share and Book Value is a popular measure fro

Investors. From the above chart ranking can be given as under:

First: It can be easily seen from the above comparison that the Infosys is having best average

Book Value from last three years. And current market price of share is also higher than other two

company So it gives the first rank.

Second: TCS can be placed on the second position as it average Book Value And current

market price of share is higher than the Wipro.

Third: Wipro¶s average Book Value And current market price of share is lower than the other

two companies. Hence it is placed on third position.

247.44

76.11

110.05

Infosys

Wipro

TCS



- 86 -


5. PRICE EARNING RATIO

Company

Name Mar 2009 Mar 2008 Mar 2007 Rank

TCS 11.24 17.60 32.14 1

Wipro 12.11 20.61 28.71 2

Infosys 13.01 18.42 30.52 3

CHART:

INTERPRETATION:

The relationship between market price of the share and earning per share is a popular measure of the price earning per share. From the above chart ranking can be given as under:

First: It can be easily seen from the above comparison that the TCS having low price earning

per ratio In last year in 2009 i.e. 11.24. So it gives the first rank.

Second: Wipro can be placed on the second position as it price earning per share is higher than

the TCS.

Third: Infosys¶s ratio is higer than the other companies.Hence it is placed on third position.

0

5

10

15

20

25

30

35

TCS WIPRO INFOSYS

2009

2008

2007



- 87 -


7. Debt Equity Ratio:-

Long Term Debts

Debt Equity ratio = --------------------------

Shareholder¶s Fund

TCS

Company Name Mar 2009 Mar 2008 Mar 2007

Total Debts 403.70 182.50 507.40

Shareholder's Funds

134462.50 110048.10 80589.90

Debt Equity

Ratio (%)

0.0030 0.0017 0.0063

Wipro


Total Debts 50139.00 38224.00 2380.00

Shareholder's

Funds

125149.00 116107.00 93204.00

Debt Equity

Ratio (%)

0.4006 0.3292 0.0255

Infosys


Total Debts 0.00 0.00 0.00

Shareholder's

Funds

178090.00 134900.00 111620.00

Debt Equity

Ratio (%)

0.00 0.00 0.00



- 88 -


CHART:

INTERPRETATION:

The relationship between borrowed funds and owners capital is a popular measure of the long

term financial solvency of firm. A high ratio shows a large share of financing by the creditors of

the firm, a low ratio implies a smaller claim of creditors. From the above chart ranking can be

given as under:

First: Wipro can be easily given the first rank. Here the proportion of shareholders firms are

more as compared to that of the borrowed capital, which is a indicator in comparison to other

two company.

Second: TCS can be placed on the second position as it Debt Equity ratio is low.

Third: Infosys¶s Debt Equity Ratio is Zero (0), hence it is placed on third position.

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

TCS WIPRO INFOSYS

2009

2008

2007



- 89 -


CHATER-8



- 90 -


FINDINGS

The objective of my project ends in this step. This will indicate to the investors, creditors and

share holders each of the companies overall operating efficiency and performance that will help

them to make the most efficient into decision. This project has yielded me the result in following

aspects.

- Scrips which are becoming sick have to be disposed off immediately.

- Scrips which are overpriced and good of sale orders with the necessary margin of

profit on capital appreciation.

- Scrips which are under priced and good for buy orders.

- Scrips which have uncertain trend and have to be held with neither buy or sell orders.

On the basis of the study undertaken by me under this project, the interpretation of fundamental

Analysis of company wise and allocation the ranking of company as under.



- 91 -


Ranking of the company

RANK: - 1: Infosys Technologies Limited.

From the interpretation, I have found out that the over all performance of Infosys is very strong

and efficient. The financial position is comparatively very good and better than other two

companies. As we can see from the final comparison charts that, it is the company, which has

maintained its stability in the terms of Earning Per Share, turnover, profitability, per share prices

etc. Earning per share of the company is also very high than other two company. Its Debt Equity

Ratio is never than other two companies. Besides, it has better future prospects than the other

two companies so Infosys Technologies Limited is give first rank.

RANK: - 2 : Tata Consultancy Services Ltd.

From the interpretation & analysis of the TCS., it can be said that the financial position of the

company in terms of its profitability, liquidity and turnover is a strong and efficient than the

other company i.e Wipro. It has good net profit ratio during the last Three years than Wipro. The

net profit ratio of the company is very good that is 23.48. It has also lower debt portion than

Wipro in its capital structure. In this point of view company¶s financial position is strong and

hence is placed on second position after Infosys Technologies Limited.

RANK: - 3: Wipro Ltd.

The Wipro Ltd. stands at the third position after TCS. The debt equity ratio of the company are

higher than Infosys and TCS. Company has also lower Net profit ratio than the Infosys and TCS.

So company¶s financial position is slight weak than the Infosys and TCS. So it is rated as third

position.



- 92 -


Intra company comparison

Particulars TCS Wipro Infosys

1. GROSS PROFIT 2 3 12. NET PROFIT 2 3 1

3. EPS (RS) 2 3 1

4. DPS (RS) 2 3 1

5. Book Value (RS) 2 3 1

6. Price Earning Ratio 1 2 3

7. Debt Equity Ratio 2 1 3

Final RankingTCS Wipro Infosys

2 3 1



- 93 -


SUGGETIONS

SUGGESTIVE GUIDELINES FOR LONG TERM INVESTORS:

y The investor should know how to analyze the share prices of the company & pickup the

undervalued shares.

y Before investing he should undertake a deep study on the Net sales, net profit in relation to

Debt Equity Ratio and should attempt to forecast for the coming years.

y He should not rely on tips form friends, family, brokers or they buy and sell merely on

bunches this is usually one of the fastest ways to lose a bundle in the market.

y If they follow the market trends connately then they can deliver excellent returns.

y He should not invest his money in one or two company because if the companies¶ prices

decline, he will have to bear a huge loss.



- 96 -


CHATER-9



Magazines & News Papers

Capital Market-2009

Economic Times

Websites

WWW. NSEindia.com

WWW.BSEindia.com

WWW.Arihantcapital.com

WWW.mintlive.com

WWW.Moneycontrol.com

WWW.Capitalmarket.com

Books:

D Financial Management

By I.M. Pandey

D Financial Management

By Khan & Jain

It Fin Repaired)

Documents

Transcript of It Fin Repaired)