a study on the performanceof cement industry in the.docx final proj sri

7/26/2019 A Study on the Performanceof Cement Industry in the.docx Final Proj Sri

1/64

1

CHAPTERI

INTRODUCTION


2/64

2

1. INTRODUCTION TO THE STUDY

1.1OUTLINE OF THE STUDY

Cement Industry originated in India when the first plant commenced production in 1914 in

Porbandar, Gujarat. The industry has since been growing at a steady pace, but in the initial stage,

particularly during the period before Independence, the growth had been very slow. Since

indigenous production was not sufficient to meet the entire domestic demand, the Government

had to control its price and distribution statutorily. Large quantities of cement had to be imported

for meeting the deficit. Installed capacity more than doubled during the period 1980-90. It

increased from 27 million tonnes in 1980-81 to 62 million tonnes in 1989-90.

Encouraged by the positive response of the industry to the policy liberalization in the cementindustry, Government decontrolled the industry fully on 1st March 1989. With the Industrial

Policy Statement made by the Government on 24th July 1991, the cement industry stands

delicensed. It has also been listed as a priority industry in Schedule III of the Industry Policy

Statement making it eligible for automatic approval for foreign investment up to 51 per cent and

also for technical collaboration on normal terms of payment of royalty and lump sum know-how

fee.

Indian cement industry has thus been one of the pioneering industries in introducing policy

reforms. After the liberalization measures and globalization of Indian economy, the cement

industry has been growing rapidly at an average rate of 8 per cent except for a short period in

1991-92 when the industry faced demand recession. The country is now the second largest

producer of cement in the world. India has also started exporting large quantities of cement and

clinker.

According to latest research report Indian Cement Industry Forecast to 2012, produced by

RNCOS, cement production in India has grown at a brisk pace during the last few years. Despite

recession, Indian cement industry performed incredibly well amid recent boom in the

infrastructure and housing markets. In view of the upcoming massive infrastructure projects,

manufacturers are aggressively increasing their production capacities and the study foresees a

10.5 per cent CAGR growth in cement production during FY 2010-FY 2014.


3/64

3

1.1.1 NEED FOR THE STUDY

The study mainly focused on the impact of cement price fluctuation in the growth prospects of

cement industry. These study clearly identifies the volatility of stock price based on the cement

price .This study is mainly based on period of five years ,therefore from (January 2006-december

2010).The study also focus on identifying the factors which help in the selection of securities for

investment.

This study is mainly conducted to give suggestion to the investors about investing in cement

industry by analyzing their past performance and also to identify fluctuation in Indian capital

market.


4/64

4

1.1.2 SCOPE OF THE STUDY

The study provides a comprehensive overview of the cement industry in India covering the entire

value chain of the industry. The study gives a detailed analysis of the investment climate in each

segment highlighting the growth potential, competitive activity and the impact of government

policy and regulations. The study also analyses the expected demand for cement products until

the year 2010 emphasizing the need to address particularly the fast growing demand and also

analyses the performance of various cement industry from period 2006-2010.


5/64

5

1.1.3 OBJECTIVES OF THE STUDY

To find out the performance select cement companies in the Indian capital market To find out the beta value of each stock.

To find out their competitive advantage of each stock.

To find out the volatility of each stock.


6/64

6

1.1.4 RESEARCH METHODOLOGY

MEANING

It is the way scheme the research problem systematically. It may be understood as a science of

studying how research is done scientifically. In other words, it is the specification of the methods

and procedures for acquiring the information needed to structure or solve the problems. It is the

overall operational pattern or framework of the project that stipulates what information is to be

collected, from which sources and with what procedures.

RESEARCH DESIGN

The research design is Analytical Research. In this the researcher has to use facts or information

already available and analysis these to make critical evaluation of the material. It is used toestimate the future performance or to identify the effects of the problem.

SOURCE OF DATA

The source of data is in secondary in nature. Secondary data is those which have already

been collected by someone else and which already available.

Secondary data pertaining to this study was obtained from

company documents

financial statements of companies

Books, magazines

Reports of the company

News wires

Various websites.

RESEARCH TOOLS:

Ratio analysis.

Statistical analysis.


7/64

7

RATIO ANALYSIS

A ratio is a mathematical relationship between two or more items taken from the financial

statements. Ratio analysis is the process of computing, determining, and presenting the

relationship of items. Ratio analysis is helpful to management and outsiders to diagnose the

financial health of a business concern. It helps in measuring the profitability, solvency and

activity of a firm.

RATIOS USED IN THIS STUDY

Proprietory ratio

Proprietory ratio is the relationship between proprietors funds and total tangibl e assets. It

indicates the proportion of shareholders funds in the total assets. A high proprietory ratio

indicates less danger and risk to creditors in the event of winding up.

Shareholders funds

Proprietory ratio = ------------------------------

Total tangible assets

Gross profit ratio

This ratio expresses the relationship between gross profit and net sales. It indicates the

efficiency of production or trading operations. A high profit ratio is a sign of good

management as it implies that the cost of production is relatively low.

Gross profit

Gross profit ratio = --------------------------- *100

Sales

Net profit ratio

The ratio measures the relationship between net profit and net sales. It indicates the overall

operations of the firm. It shows what percentage of sales is left the owners after meeting all


8/64

8

costs. An increase in net profit ratio year after year is an indication of improving working

condition and vice versa.

Net profit

Net profit ratio = --------------------------- *100

Sales

Operating profit ratio

Operating ratio matches cost of goods sold and other operating expenses with sales. The ratio

shows the percentage of sales absorbed by the cost of goods and operating expenses. A lower

ratio is more favorable as it would leave a higher margin for operating profit. Operating

expenses include selling and distribution expenses and administration expenses.

Cost of goods sold + operating expensesOperating profit ratio = ---------------------------------------------------------- *100

Sales

Fixed asset turnover ratio

Fixed asset turnover ratio explains the relationship between sales and fixed assets. This ratio

indicates the sales generated by every rupee invested in fixed assets. A higher ratio is an

indicator of greater efficiency in utilization of fixed assets.

Sales

Fixed asset turnover ratio = -------------------------

Net fixed assets

Return on total asset

Return on total asset establishes the relationship between profits and capital employed. It is

most widely used to measure the overall profitability and efficiency of the business.

Net profit + Interest + TaxesReturn on total asset = ------------------------------------------- *100

Average capital employed


9/64

9

Dividend yield ratio

Dividend yield ratio is the relationship between dividends per share and the market value of

the shares. It is often expressed as a percentage. Its reciprocal is the Price Dividend ratio.

Dividend per share

Dividend yield ratio = ------------------------------

Market value per share

Earnings per share

Earnings per share are the amount of earnings per each outstanding share of a company's

stock. The portion of a company's profit allocated to each outstanding share of common

stock. Earnings per share serve as an indicator of a company's profitability.

Net Profit

Earnings per share = ----------------------------- *100

No. Of Share

Payout ratio

Payout ratio is the relationship between dividend per share and earnings per share. The

amount of earnings paid out in dividends to shareholders. Investors can use the payout ratio

to determine what companies are doing with their earnings.Dividend per share

Payout ratio = ------------------------------

Earnings per share

Current ratio

Current ratio is the relationship between current assets and current liabilities. A current ratio

of 2:1 is considered ideal. That is, for every one rupee of current liability there must be

current assets of Rs.2.

Current assets

Current ratio = ------------------------------

Current liabilities


10/64

10

PRICE EARTNING RATIO

The price per share in thenumerator is themarket price of a single share of the stock.

Theearnings per share in thedenominator depends on the type of P/E:

Here earnings per share is thenet income of the company for the most recent 12 month

period,divided by the number of shares issued. This is the most common meaning of "P/E"

if no other qualifier is specified. Monthly earning data for individual companies are not

available, so the previous four quarterly earnings reports are used andearnings per share are

updated quarterly. Note, each company chooses its ownfinancial year so the timing of

updates will vary from one to another.

"Trailing P/E from continued operations": Instead ofnet income, this usesoperating

earnings, which exclude earnings from discontinued operations, extraordinary items (e.g.,

one-off windfalls and write-downs), or accounting changes. Note, longer-term P/E data, such

as Shiller's, use net earnings.

"Forward P/E", "P/Ef", or "estimated P/E": Instead ofnet income, this uses estimated net

earnings over next 12 months. Estimates are typically derived as the mean of a select group

of analysts (note, selection criteria is rarely cited). In times of rapid economic dislocation,

such estimates become less relevant as the situation changes (e.g., new economic data is

published, and/or the basis of forecasts becomes obsolete) more quickly than analysts adjusttheir forecasts.
http://en.wikipedia.org/wiki/Numeratorhttp://en.wikipedia.org/wiki/Market_pricehttp://en.wikipedia.org/wiki/Earnings_per_sharehttp://en.wikipedia.org/wiki/Denominatorhttp://en.wikipedia.org/wiki/Earnings_per_sharehttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Trailing_twelve_monthshttp://en.wikipedia.org/wiki/Trailing_twelve_monthshttp://en.wikipedia.org/wiki/Earnings_per_sharehttp://en.wikipedia.org/wiki/Financial_yearhttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/w/index.php?title=Operating_earnings&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Operating_earnings&action=edit&redlink=1http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/w/index.php?title=Operating_earnings&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Operating_earnings&action=edit&redlink=1http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Financial_yearhttp://en.wikipedia.org/wiki/Earnings_per_sharehttp://en.wikipedia.org/wiki/Trailing_twelve_monthshttp://en.wikipedia.org/wiki/Trailing_twelve_monthshttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Earnings_per_sharehttp://en.wikipedia.org/wiki/Denominatorhttp://en.wikipedia.org/wiki/Earnings_per_sharehttp://en.wikipedia.org/wiki/Market_pricehttp://en.wikipedia.org/wiki/Numerator


11/64

11

Statistical analysis

Beta value calculation.

Beta value

The beta factor represents the movements of the price of a stock with the movement

of the market.

If the beta value = 1 is considered to be good and in tandem with movement of the

market

If it is > 1 means if 1% change in market return causes more than 1% change instock return

If it is


12/64

12

1.1.5 LIMITATIONS OF THE STUDY

The data is mainly secondary in nature. The main source of the data is the annual reportof the companies and from other database. So the figures and accuracy of findings and

suggestions are limited.

The study is limited to the period of five years data. So the accuracy is limited.

Only past proceedings are considered for the study. They dont guarantee in the future

performance growth.


13/64

13

1.2 INDUSTRY PROFILE

STOCK EXCHANGES IN INDIA:-

Stock exchanges provide an organized market for transactions in shares and other securities. Asof 2003, there are 23 stock exchanges in the country, 20 of them regional ones with allocated

areas of operation. Of the 9855 or so public companies that have listed their shares in stock

exchanges, around500 account for 99.6 per cent of the trading turnover, nearly all of which is on

the primary exchanges i.e. Bombay stock exchange and National stock exchange. The Bombay

stock exchange and National stock exchange together account for nearly 72 per cent of all capital

market activity in India. The other major exchanges are the Calcutta, Delhi, and Ahmadabad.

The remaining exchanges account for only 4 per cent of the Indian capital market activity.

BOMBAY STOCK EXCHANGE:-

The Bombay Stock Exchange(BSE) is astock exchange located onDalal Street,Mumbai and

is the oldest stock exchange inAsia.The equitymarket capitalization of the companies listed on

the BSE was US$1.63trillion as of December 2010, making it the 4th largest stock exchange in

Asia and the8th largest in the world.The BSE has the largest number of listed companies in the

world.

As of December 2010, there are over 5,034 listed Indian companies and over 7700 scrips on the

stock exchange, the Bombay Stock Exchange has a significant trading volume. The BSE

SENSEX,also called "BSE 30", is a widely used market index in India andAsia.Though many

other exchanges exist, BSE and theNational Stock Exchange of India account for the majority of

theequity trading in India. While both have similar total market capitalization (about USD 1.6

trillion), share volume in NSE is typically five times that of BSE.

History:-

The Bombay Stock Exchange is the oldest exchange in Asia. It traces its history to the 1850s,

when 4 Gujarati and 1 Parsi stockbroker would gather under banyan trees in front of Mumbai's

Town Hall. The location of these meetings changed many times, as the number of brokers
http://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Dalal_Streethttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/1000000000000_%28number%29http://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/Scripshttp://en.wikipedia.org/wiki/BSE_SENSEXhttp://en.wikipedia.org/wiki/BSE_SENSEXhttp://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Equity_tradinghttp://en.wikipedia.org/wiki/Equity_tradinghttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/BSE_SENSEXhttp://en.wikipedia.org/wiki/BSE_SENSEXhttp://en.wikipedia.org/wiki/Scripshttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/1000000000000_%28number%29http://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Dalal_Streethttp://en.wikipedia.org/wiki/Stock_exchange


14/64

14

constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an

official organization known as 'The Native Share & Stock Brokers Association'. In 1956, the

BSE became the first stock exchange to be recognized by the Indian Government under the

Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE SENSEX

in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the

BSE used this index to open its derivatives market, trading SENSEX futures contracts. The

development of SENSEX options along with equity derivatives followed in 2001 and 2002,

expanding the BSE's trading platform. Historically an open outcry floor trading exchange, the

Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange

only fifty days to make this transition. This automated, screen-based trading platform called BSE

On-line trading (BOLT) currently has a capacity of 8 million orders per day. The BSE has also

introduced the world's first centralized exchange-based internet trading system, BSEWEBx.co.into enable investors anywhere in the world to trade on the BSE platform .[5]The BSE is currently

housed inPhiroze Jeejeebhoy TowersatDalal Street,Fort area.

NATIONAL STOCK EXCHANGE:-

The National Stock Exchange(NSE) is astock exchangelocated atMumbai,India. It is the9th

largest stock exchange in the world by market capitalization and largest in India by daily

turnover and number of trades, for both equities and derivative trading. NSE has a marketcapitalization of around US$1.59trillionand over 1,552 listings as of December 2010. Though a

number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most

significant stock exchanges in India, and between them are responsible for the vast majority of

share transactions. The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY

(National Stock Exchange Fifty), an index of fifty major stocks weighted by market

capitalization.

NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies

and other financial intermediaries in India but its ownership and management operate as separate

entities. There are at least 2 foreign investors NYSE Euronext and Goldman Sachs who have

taken a stake in the NSE. As of 2006, the NSEVSATterminals, 2799 in total, cover more than

1500 cities across India. NSE is the third largest Stock Exchange in the world in terms of the
http://en.wikipedia.org/wiki/Bombay_Stock_Exchange#cite_note-4http://en.wikipedia.org/wiki/Bombay_Stock_Exchange#cite_note-4http://en.wikipedia.org/wiki/Bombay_Stock_Exchange#cite_note-4http://en.wikipedia.org/wiki/Phiroze_Jeejeebhoy_Towershttp://en.wikipedia.org/wiki/Phiroze_Jeejeebhoy_Towershttp://en.wikipedia.org/wiki/Phiroze_Jeejeebhoy_Towershttp://en.wikipedia.org/wiki/Dalal_Streethttp://en.wikipedia.org/wiki/Dalal_Streethttp://en.wikipedia.org/wiki/Dalal_Streethttp://en.wikipedia.org/wiki/Fort_%28Mumbai_precinct%29http://en.wikipedia.org/wiki/Fort_%28Mumbai_precinct%29http://en.wikipedia.org/wiki/Fort_%28Mumbai_precinct%29http://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/1000000000000_%28number%29http://en.wikipedia.org/wiki/1000000000000_%28number%29http://en.wikipedia.org/wiki/1000000000000_%28number%29http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/S%26P_CNX_Niftyhttp://en.wikipedia.org/wiki/S%26P_CNX_Niftyhttp://en.wikipedia.org/wiki/VSAThttp://en.wikipedia.org/wiki/VSAThttp://en.wikipedia.org/wiki/VSAThttp://en.wikipedia.org/wiki/VSAThttp://en.wikipedia.org/wiki/S%26P_CNX_Niftyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/1000000000000_%28number%29http://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/List_of_stock_exchangeshttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Fort_%28Mumbai_precinct%29http://en.wikipedia.org/wiki/Dalal_Streethttp://en.wikipedia.org/wiki/Phiroze_Jeejeebhoy_Towershttp://en.wikipedia.org/wiki/Bombay_Stock_Exchange#cite_note-4


15/64

15

number of trades in equities. It is the second fastest growingstock exchangein the world with a

recorded growth of 16.6%.

Origin:-

The National Stock Exchange of India was promoted by leading Financial institutions at the

behest of the Government of India, and was incorporated in November 1992 as a tax-paying

company. In April 1993, it was recognized as a stock exchangeunder the Securities Contracts

(Regulation) Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM)

segment in June 1994. TheCapital market(Equities)segment of the NSE commenced operations

in November 1994, while operations in theDerivativessegment commenced in June 2000.

Innovations:-

NSE pioneering efforts include:

Being the first national, anonymous, electronic limit order book (LOB) exchange to trade

securities in India. Since the success of the NSE, existent market and new market

structures have followed the "NSE" model.

Setting up the first clearing corporation "National Securities Clearing Corporation Ltd."

in India. NSCCL was a landmark in providing innovation on all spot equity market (andlater,derivatives market)trades in India.

Co-promoting and setting up of National Securities Depository Limited, first depository

in India[9]

Setting up ofS&P CNX Nifty.

NSE pioneered commencement of Internet Trading in February 2000, which led to the

wide popularization of the NSE in the broker community.

Being the first exchange that, in 1996, proposed exchange traded derivatives, particularly

on an equity index, in India. After four years of policy and regulatory debate and

formulation, the NSE was permitted to start trading equity derivatives

Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in

India.
http://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Financial_institutionshttp://en.wikipedia.org/wiki/Financial_institutionshttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/w/index.php?title=Securities_Contracts_%28Regulation%29_Act&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Securities_Contracts_%28Regulation%29_Act&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Securities_Contracts_%28Regulation%29_Act&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Debt_Market&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Debt_Market&action=edit&redlink=1http://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Derivativehttp://en.wikipedia.org/wiki/Derivativehttp://en.wikipedia.org/wiki/Derivativehttp://en.wikipedia.org/wiki/Derivatives_markethttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_India#cite_note-8http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India#cite_note-8http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India#cite_note-8http://en.wikipedia.org/wiki/S%26P_CNX_Niftyhttp://en.wikipedia.org/wiki/S%26P_CNX_Niftyhttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_India#cite_note-8http://en.wikipedia.org/wiki/Derivatives_markethttp://en.wikipedia.org/wiki/Derivativehttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/w/index.php?title=Debt_Market&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Securities_Contracts_%28Regulation%29_Act&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Securities_Contracts_%28Regulation%29_Act&action=edit&redlink=1http://en.wikipedia.org/wiki/Stock_exchangehttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Financial_institutionshttp://en.wikipedia.org/wiki/Stock_exchange


16/64

16

NSE has also launched the NSE-CNBC-TV18 media centre in association with CNBC-

TV18.

NSE.IT Limited, setup in 1999 , is a 100% subsidiary of the National Stock Exchange of

India. A Vertical Specialist Enterprise, NSE.IT offers end-to-end Information

Technology (IT) products, solutions and services.

NSE (National Stock Exchange) was the first exchange in the world to use satellite

communication technology for trading, using a client server based system called National

Exchange for Automated Trading (NEAT). For all trades entered into NEAT system,

there is uniform response time of less than one second.

Markets:-

Currently, NSE has the following major segments of the capital market:

Equity

Futures and Options

Retail Debt Market

Wholesale Debt Market

Currency futures

MUTUAL FUND STOCKS LENDING & BORROWING

August 2008 Currency derivatives were introduced in India with the launch of Currency Futures

in USD INR by NSE. Currently it has also launched currency futures in EURO, POUND &

YEN. Interest Rate Futures was introduced for the first time in India by NSE on 31 August 2009,

exactly after one year of the launch of Currency Futures.

NSE became the first stock exchange to get approval for Interest rate futures as recommended by

SEBI-RBI committee, on 31 August 2009, a futures contract based on 7% 10 Year GOI bond

(NOTIONAL) was launched with quarterly maturities.
http://en.wikipedia.org/wiki/CNBC-TV18http://en.wikipedia.org/wiki/CNBC-TV18http://en.wikipedia.org/wiki/CNBC-TV18http://en.wikipedia.org/wiki/CNBC-TV18


17/64

17

1.3 COMPANY PROFILE

A leading retail financial services player

Unicon Investment Solutions

UNICON is a financial services company which has emerged as a one-stop investment

solutions provider. It was founded in 2004 by two visionary and hard working

entrepreneurs, Mr. Gajendra Nagpal and Mr. Ram M. Gupta, who possess expertise in the

field of Finance. The company is headquartered in New Delhi, and has its Corporate office

in Mumbai with regional offices in Kolkata, Chennai, Hyderabad and Noida

UNICON is a professionally managed company led by a team with outstanding managerial

acumen and cumulative experience of more than 400 man years in the financial markets The

Company is supported by more than 4500 Uniconians and has an extensive network of over323 business offices in 152 cities across India.

With a customer base of over 200,000 the Unicon Group has an eye for the intricate financial

needs of its clients and caters to both their short term and long term financial needs

through a comprehensive bouquet of investment services. It has been founded with the aim of

providing world class investing experience to the investing community. These services range

from offline & online trading in equity, commodities and currency derivatives to debt markets

to corporate finance and portfolio management services. The company has a sizable presencein the distribution of 3rd party financial products like mutual funds, insurance products and

property broking. It also provides expert Advisory on Life Insurance, General Insurance,

Mutual Funds and IPOs. The distribution network is backed by in-house back office support

to provide prompt and efficient customer service

The Equity broking armUNICON Securities Pvt. Ltd offers personalized premium services

on the NSE, BSE & Derivatives market. The Commodity broking arm Unicon Commodities

Pvt. Ltd offers services in Commodity trading on NCDEX and MCX. The UNICON group

also has a PCG division providing investments solutions for High Net Worth Individuals. The

Corporate Advisory Services arm Unicon Capital Services (P) Ltd offers entire gamut of

Investment Banking services to corporate.


18/64

18

VISION OF THE COMPANY

To be a leading financial and commodities markets intermediary for individual and

institutional clients from India and Overseas.

The company will continually strive to raise their products and service standards by

intelligent application of Technology and process.

VALUES AND BELIEFS OF THE COMPANY

Understands and respect customer needs to consistently deliver total quality solutions

through constant skills up gradation.

Believes that the culture of the company helps to attract and retain the best talent.

Upholds uncompromising ethical standards and strives to maintain a distinctive identity

in public mind share through innovation and quality.

Committed to achieve profitable progress, consistently.

Freely share the investment experience of Unicon across all ages and strata of society to

encourage wise investments for a better future.

GUIDING POLICIES OF THE COMPANY

No proprietary trading.

Give only Research-based investment/trading advices.

Employees not permitted to trade.

No volume-based compensation to employees and hence no pressure sales.

Equal-opportunities employer.

PRODUCT AND SERVICES

Equities:

U n i c o n a member of NSE and BSE, has a network of over 300 branches in Indiaand abroad, rendering quality equity trading services. Unicon not only has a strong off line

presence but also provides automated online trading services. Unicon retail spread caters to the

need of individual investors. Trading in equities is made simple, safe and interesting with smart

advice from there search desk through daily alerts, market pointers, periodical research reports,

stock recommendations and customer meets organized frequently. The online trading system


19/64

19

allows customers to track the markets by setting up their own market watch, receiving research

tips, stock a lerts, real time charts and news and many m ore features enable the customer to

take informed decisions. The brokerage structure makes Unicon online trading all the more

attractive

0.03% for day trading (applicable on both sides)

0.30% for delivery

Futures and options:

The national stock exchange and the stock exchange, Mumbai have commenced trading

in derivatives market with index futures being the first instruments. Now both the

exchanges provide trading in index futures and options and stock futures and options. A

derivative in financial contract, between two or more ore parties, which is derived from thefuture value of an underlying asset. At any point of time there always will be available near

three months contract periods .For e.g.in the month of Jan.2006 one can enter into Jan, Feb

or Mar contracts. The last Thursday of each month is the expiry day for that months

contract. When one Contract expires, a new contract is introduced. For instance, on expiry of

Jan 2006 Contract, April contract shall get activated. Currently, settlements of all derivatives

trades are in cash. There is daily as well as final settlement. As long as the position is open, the

same will be mar ked to market at the daily settlement price, the difference will be credited

or debited accordingly the position and shall be brought forward to the next day at the

daily settlement price. Any position which remains open at the end of the final settlement

day (i.e., last Thursday) shall be closed out by the exchange at the final settlement price, which

will be the closing spot value of the underlying. There are four types of Members in the Futures

and Options Segment:

Trading members

Trading cum clearing members

Professional Clearing Member

Self Clearing Members


20/64

20

Depository:

A depository can be compared to a bank. It holds securities such as shares, debentures,

bonds, government securities, and units etc. of investors in electronic form. There are two

depositories in India, The National Securities Depository Limited (NSDL) and Central

Depository Services Limited (CDSL). An individual who decides to avail the depository

services can approach a Depository Participant (DP).Banks, Financial institutions, custodians,

brokers or any other entity eligible as per SEBI (Depositories and Participants) Regulations,

1996 can apply to the Depository to Become a Depositor Participant. As on

31st December2005 there were 221Depository Participants in India.

Commodity:

Unicon Commodities, a subsidiary of Unicon Financial Services Limited is mainlyengaged in the business of Commodities Futures Trading. Unicon Commodities is a member of:

National Multi Commodity Exchange of India limited (NMCE)

National Commodity and Derivative Exchange Limited (NCDEX)

Multi-Commodity Exchange (MCE)

India Pepper and Spice Trade Association (IPSTA)

Singapore Commodity Exchange (SICOM)

Dubai Gold Commodity Exchange (DGCX).

Portfolio management services

Unicon,a SEBI registered Portfolio Manager Offers discretionary portfolio Management

services. Unicon a team of experts who carefully take investment decisions based on the clients

objectives. The Portfolio Management team has a successful track record of more than10yearsin

the capital market. The team has access to Unicons strong Equity Research, and

Fundamental and Technical Analysis.


21/64

21

Personal Investment planning:

Trained Investment Planners at branches evaluate, investment needs of clients and offer

appropriate solutions

Online Trading:

Unicon as a SEBI registered Trading Member of NSE and BSE offers Internet trading.

To trade online the customer is provided with a user id, password and also a security token which

flashes a dynamic password number. This security token displays a new 6 digit number every 36

seconds.

To facilitate trading the following frontend screens have been made available:

Easy Trade

Insta Trade

Fast Trade

Super Trade

Insta Plus

The trading CV system is totally secured and is SSL (Secure Socket Layer) enabled. All

interactions on the trading system are encrypted using industry standard encryption algorithms.

Call & Trade:

Apart from Internet trading, the customers are also provided with the option of trading

through the Call & Trade facility. When the customer calls the Call & Trade number to transact,

he needs to authenticate his identity by providing the user id, and the dynamic password number

from his security token. Password is not required for Call & Trade transactions.


22/64

22

AMO:

Our customers can also place After Market Orders (AMO) on NSE & BSE from 7:30 PM

onwards on a Trading till 8:00 AM on the next Trading day. The accumulated orders will be

released to the Exchange for execution after the market opens on the next trading session. Market

orders cannot be placed in AMO. F&O orders are currently not accepted by us under AMO.

AMO provides the convenience to the customer to place limit orders without having to wait for

the market to open.

CHOOSE YOUR PLATFORM

You can choose trading platform that suits you best. Unicon offers three versions to meet

customer needs:

Silver

Gold and silver platforms are quite similar as they are both web based. In silver version the feeds

are updated every minute and not real-time as in the Gold platform. However one can click the

refresh button as many times to view the latest stock prices. There are no minimum brokerage

charges for this platform. A normal investor who does not engage in speculative transactions

may find the silver version most suited to his needs.

Gold

This platform is a web-based solution and the customer can login to the trading platform from

anywhere in the world. During market hours the stock prices are refreshed seamlessly and the

delay transmission would be a few seconds, which is mostly dependant on the bandwidth

connectivity used by the customer. In this, the trader will receive live quotes as the rates are

refreshed every second.

A minimum brokerage of Rs.300/- per month is required to be generated to avail this platform.

Those who are generally on the move and may not able to use their own computer for trading

generally use this platform. Since it is a web-based system, one can login from any where in the

world and take advantages of the price movement.


23/64

23

Platinum

The platinum version acts as a virtual dealersterminal providing live updates and confirmation.

The executable program is downloaded on the customers computer so that he can trade from the

comfort of his home/office. Stock prices are real-time and continuous system. This is generally

used by those who trade heavily intra-day and take very little delivery. Therefore the need for-

time prices orders entry like that of a dealer terminal coe handy to customers.


24/64

24

1.4 PRODUCT PROFILE

CEMENT INDUSTRY IN INDIA

India, being the second largest cement producer in the world after China with a totalcapacity of 151.2 Million Tonnes (MT), has got a huge cement industry. With the government of

India giving boost to various infrastructure projects, housing facilities and road networks, the

cement industry in India is currently growing at an enviable pace. More growth in the Indian

cement industry is expected in the coming years. It is also predicted that the cement production

in India would rise to 236.16 MT in FY11. It's also expected to rise to 262.61 MT in FY12.

The cement industry in India is dominated by around 20 companies, which account for

almost 70% of the total cement production in India. In the present year, the Indian cement

companies have produced 11 MT cement during April-September 2009. It took the total cement

production in FY09 to 231 MT.

INDUSTRY BACKGROUND

The history of the cement industry in India dates back to the 1889 when a Kolkata-based

company started manufacturing cement from Argillaceous. But the industry started getting the

organized shape in the early 1900s. In 1914, India Cement Company Ltd was established in

Porbandar with a capacity of 10,000 tons and production of 1000 installed. The World War I

gave the first initial thrust to the cement industry in India and the industry started growing at a

fast rate in terms of production, manufacturing units, and installed capacity. This stage was

referred to as the Nascent Stage of Indian Cement Industry. In 1927, Concrete Association of

India was set up to create public awareness on the utility of cement as well as to propagate

cement consumption.

The cement industry in India saw the price and distribution control system in the year

1956, established to ensure fair price model for consumers as well as manufacturers. Later in

1977, government authorized new manufacturing units (as well as existing units going for


25/64

25

capacity enhancement) to put a higher price tag for their products. A couple of years later;

government introduced a three-tier pricing system with different pricing on cement produced in

high, medium and low cost plants.

Cement industry, in any country, plays a major role in the growth of the nation. Cementindustry in India was under full control and supervision of the government. However, it got relief

at a large extent after the economic reform. But government interference, especially in the

pricing, is still evident in India. In spite of being the second largest cement producer in the world,

India falls in the list of lowest per capita consumption of cement with 125 kg. The reason behind

this is the poor rural people who mostly live in mud huts and cannot afford to have the

commodity. Despite the fact, the demand and supply of cement in India has grown up. In a fast

developing economy like India, there is always large possibility of expansion of cement industry.

NEW INVESTMENTS

Cement and gypsum products have received cumulative foreign direct investment (FDI) of US$

1,971.79 million between April 2000 and September 2010, according to the Department of

Industrial Policy and Promotion (DIPP).

Dalmia Bharat Enterprises plans to invest US$ 554.32 million to set up two greenfield

cement plants in Karnataka and Meghalaya.

Bharathi Cement plans to double its production capacity by the end of the current

financial year by expanding its plant in Andhra Pradesh, with an investment of US$

149.97 million.

Madras Cements Ltd is planning to invest US$ 178.4 million to increase the

manufacturing capacity of its Ariyalur plant in Tamil Nadu to 4.5 MT from 2 MT by

April 2011.

My Home Industries Limited (MHI), a 50:50 joint venture (JV) between the Hyderabad-based My Home Group and Ireland's building material major CRH Plc, plans to scale up

its cement production capacity from the existing 5 million tonne per annum (mtpa) to 15

mtpa by 2016. The company would undertake this capacity expansion at a cost of US$ 1

billion.


26/64

26

Shree Cement, plans to invest US$ 97.13 million this year to set up a 1.5 million MT

clinker and grinding unit in Rajasthan. Moreover, in June 2010, Shree Cement signed a

memorandum of understanding (MoU) with the Karnataka government to invest US$

423.6 million for setting up a cement unit and a power plant. US$ 317.7 million will be

used to set up a cement manufacturing unit with an annual capacity of 3 mtpa while the

balance will be for the 100 mega watt power plant.

Jaiprakash Associates plans to invest US$ 640 million to increase its cement capacity.

Swiss cement company Holcim plans to invest US$ 1 billion in setting up 2-3 greenfield

manufacturing plants in the country in the next five years to serve the rising domestic

demand. Holcim is present in the country through ACC and Ambuja Cements and holds

around 46 per cent stake in each company. While ACC operates 16 cement plants,

Ambuja Cements controls five plants in India. The Aditya Birla group is the largestcement-making group by capacity in the country and controls Grasim Industries and

Ultratech Cement.

GOVERNMENT INITIATIVES

The cement industry is pushing for increased use of cement in highway and road

construction. The Ministry of Road Transport and Highways has planned to invest US$ 354

billion in road infrastructure by 2012. Housing, infrastructure projects and the nascent trend ofconcrete roads would continue to accelerate the consumption of cement.

Increased infrastructure spending has been a key focus area. In the Union Budget 2010-

11, US$ 37.4 billion has been provided for infrastructure development.

The government has also increased budgetary allocation for roads by 13 per cent to US$

4.3 billion.

Gujarat plans to treble its cement production capacity in 3-5 years. Proposals have been

invited from cement companies such as ACC, ABG, Ambuja Cement, Emami, Indiabulls, Adani

group, Ultratech and L&T and the state hopes to raise its capacity from 20 million tonnes per

annum to 70 million tonne. The state will host the biennial Vibrant Gujarat Global Summit in


27/64

27

January 2011 and expects to witness investment proposals worth US$ 13.2 billion in the cement

sector.

MAJOR PLAYERS IN THE CEMENT INDUSTRY:

ACC.

AMBUJA CEMENTS.

GRASIM CEMENTS.

ULTRATECH CEMENTS.

ACC LTD:

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's

operations are spread throughout the country with 16 modern cement factories, more than 40

Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a workforce of

about 9,000 persons and a countrywide distribution network of over 9,000 dealers.

Since inception in 1936, the company has been a trendsetter and important benchmark forthe cement industry in many areas of cement and concrete technology. ACC has a unique track

record of innovative research, product development and specialized consultancy services. The

company's various manufacturing units are backed by a central technology support services

centre - the only one of its kind in the Indian cement industry.

ACC has rich experience in mining, being the largest user of limestone. As the largest

cement producer in India, it is one of the biggest customers of the domestic coal industry, of

Indian Railways, and a considerable user of the countrys road transport network services for

inward and outward movement of materials and products.

Among the first companies in India to include commitment to environmental protection

as one of its corporate objectives, the company installed sophisticated pollution control


28/64

28

equipment as far back as 1966, long before pollution control laws came into existence. Today

each of its cement plants has state-of-the art pollution control equipment and devices.

ACC plants, mines and townships visibly demonstrate successful endeavors in quarry

rehabilitation, water management techniques and greening activities. The company actively

promotes the use of alternative fuels and raw materials and offers total solutions for waste

management including testing, suggestions for reuse, recycling and co-processing.

ACC has taken purposeful steps in knowledge building. We run two institutes that offer

professional technical courses for engineering graduates and diploma holders which are relevant

to manufacturing sectors such as cement. The main beneficiaries are youth from remote and

backward areas of the country.

ACC has made significant contributions to the nation building process by way of quality

products, services and sharing expertise. Its commitment to sustainable development, its high

ethical standards in business dealings and its on-going efforts in community welfare programmes

have won it acclaim as a responsible corporate citizen. ACCs brand name is synonymous with

cement and enjoys a high level of equity in the Indian market. It is the only cement company that

figures in the list of Consumer Super Brands of India

CORPORATE SOCIAL RESPONSIBILITY :

off Today we define Corporate Social Responsibilityas the way a company

balances its economic, social and environmental objectives while addressing stakeholder

expectations and enhancing shareholder value.

But ACC has undertaken social volunteering practices almost from its inception, long

before the term corporatesocial responsibility was coined. The companys earliest initiatives in

community development date back to the 1940's in a village on the outskirts of Mumbai whilethe first formal Village Welfare Scheme was launched in 1952. The community living around

many of our factories comprises the weakest sections of rural and tribal India with no access to

basic amenities.


29/64

29

FEATURES OF ACC LTD:

All the cement plants of the company are equipped with advanced technological

facilities which make them completely environment friendly. The plants use some of the

sophisticated pollution control devices in various parts such as raw mills, power plants, cementkilns, coolers and other equipments. In addition, the mining technologies that have been

implemented in the cement plants of ACC Ltd are also based on environment safeguard norms.

In its endeavor towards greenery, the company has also started various types of

afforestation, horticulture and tree planting programs near its cement plants. It not only reduces

pollution but also helps conserve the mineral resources. The vacant spaces in the mines and the

cement plans are being utilized for the purpose of planting of trees. In some of the ACC Ltd.

Cement Plants in places like Chaibasa, Kymore, Jamul and Gagal, greenery has been added to

around 40% of the total area which is around 10% more than the normal norms that has been set.

The management of these plants has given stress on the green belt development programs.

Due to the high production as well as the dedicated effort towards maintaining ecological

balance and nature conservation, the company and its cement plans have been the recipient of a

number of prestigious awards like:

Indo German Greentech Environment Excellence Award

Vishwakarma Rashtriya Puraskar trophy for safety in mining

National Award for outstanding performance in rural and agricultural development

Indira Priyadarshini Vrikshamitra Award for extraordinary work in environment

protection

FICCI Award for pollution control

The ACC Ltd. Cement Plants consist of high quality Zero Water Discharge facilities whichhelp in proper water management. The water that is used in the plant for the process of industrial

cooling is recycled by the use of tanks, water ponds and cooling towers. Through this process,

the company has successful in water harvesting.


30/64

30

AMBUJA CEMENT:

Ambuja Cementswas set up in 1986. In the last decade the company has grown tenfold.

The total cement capacity of the company is 18.5 million tonnes.

Its plants are some of the most efficient in the world. With environment protection

measures that are on par with the finest in the developed world.

The company's most distinctive attribute, however, is its approach to the business.

Ambuja follows a unique homegrown philosophy of giving people the authority to set their own

targets, and the freedom to achieve their goals. This simple vision has created an environment

where there are no limits to excellence, no limits to efficiency. And has proved to be a powerful

engine of growth for the company.

As a result, Ambuja is the most profitable cement company in India, and one of the

lowest cost producer of cement in the world.

ENVIRONMENTAL POLICY:

Our environment policy is built around two simple truths. One, no cement plant can

flourish at the cost of the environment. As one of the countries largest producers of cement, witha large presence around the country, we have an obligation to protect the environment we

function in.

Also, as we discovered, being environmentally conscious, almost never interfered with

running a profitable business. In fact its quite the contrary.

Our efforts to achieve world standards in environment protection, for instance, have had

the happy outcome of substantially improving efficiency and profitability. The fact is, a cleanerenvironment isnt just better for the people, it reduces wear and tear on plants and machinery as

well. Thus directly contributing to the bottom line. Besides dust in cement plants is nothing but

cement itself, which we capture and bag.


31/64

31

Our approach has made us the one of the worlds most environment friendly cement

companies. And the most profitable.

Awards won by Gujarat Ambuja Cements:

National Award by the Prime Minister of India for outstanding pollution control

National Award by the Prime Minister of India for commitment to quality

Award by CAPEXIL for highest exports

Certification of ISO 9002 for quality

Certification of ISO 14000 for environmental systems

Award for corporate excellence from Harvard Business School Association.

GRASIM CEMENTS

Grasim Industries Limited, a flagship company of the Aditya Birla Group, ranks among

India's largest private sector companies, with consolidated net revenue of Rs.202 billion and a

consolidated net profit (before extraordinary items) of Rs.27.6 billion (FY2010).

Starting as a textiles manufacturer in 1948, today Grasim's businesses comprise viscosestaple fibre (VSF), cement, chemicals and textiles. Its core businesses are VSF and cement,

which contribute to over 90 per cent of its revenues and operating profits.

The Aditya Birla Group is the worlds largest producer of VSF, commanding a 21 per cent

global market share. Grasim, with an aggregate capacity of 333,975 tpa has a global market share

of 10 per cent. It is also the second largest producer of caustic soda (which is used in the

production of VSF) in India.

In cement, Grasim through its subsidiary UltraTech Cement Limited ("UltraTech") has a

capacity of 52 million tpa and is a leading player in India. In July 2004, Grasim acquired a

majority stake and management control in UltraTech. One of the largest of its kind in the cement

sector, this acquisition catapulted the Aditya Birla Group to the top of the league in India.


32/64

32

The amalgamation of Samruddhi Cement Limited (SCL) with UltraTech w.e.f. 1 July 2010

completed the restructuring of the cement business. Earlier, Grasim's cement business was

demerged into SCL.The merger has created the largest cement company in India, providing a

platform that will help in pursuing aggressive growth going forward.

Awards won by GRASIM Cements:

::Forbesmagazine ranks Grasim at 1,380 in its listing of the 'Forbes 2000 Best Companies'.

::Forbes magazine ranks Grasim among the fabulous 50 companies in Asia.

::Ranked 2nd for Best Corporate Governance Practices in Asia-Pacific by IR Global Rankings.

Also ranked best company in corporate governance practices in basic materials industry,

globally.

::Ranked as the Best Investor Relations Company - Building Materials in Asia by Institutional

Investors Magazine.

::Global Cement Award for the lowest injury incidence rate presented to Grasim South,

Reddipalayam.

::National Award for Quality Excellence in Indian Cement Industry presented to Grasim

Cement, Raipur.

ULTRATECH CEMENT:

UltraTech Cement Limited has an annual capacity of 52 million tonnes. It

manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cementand Portland Pozzalana Cement. It also manufactures ready mix concrete (RMC).

The company has 11 integrated plants, one white cement plant, one clinkerisation plant in

UAE, 15 grinding units11 in India, 2 in UAE, one in Bahrain and Bangladesh each and and

five terminalsfour in India and one inSri Lanka.
http://www.ultratechcement.com/about_us/making_its_mark.htmhttp://www.ultratechcement.com/about_us/making_its_mark.htm


33/64

33

UltraTech Cement is the countrys largest exporter of cement clinker. The export markets span

countries around the Indian Ocean, Africa, Europe and the Middle East.

UltraTech's subsidiaries are Dakshin Cements Limited, Harish Cements Limited, UltraTech

Ceylinco (P) Limited and UltraTech Cement Middle East Investments Limited.

UltraTech's subsidiaries are Dakshin Cements Limited, Harish Cements Limited, UltraTech

Ceylinco (P) Limited and UltraTech Cement Middle East Investments Limited.

UltraTech takes its responsibility to conserve the environment very seriously, and its eco-

friendly approach is evident across all spheres of its operations. Its major thrust has been to

identify alternatives to achieve set objectives and thereby reduce its carbon footprint. These are

done through:


34/64

34

2. REVIEW OF LITERATURE

Calendar Effects In The IndianStockMarket Jayen B. Patel, Adelphi University

We find two distinct calendar effects in returns for the Indian stock market. More specifically,

we find a November-December effect in which we document that mean returns for November

and December are significantly greater than those of the other ten months. We also identify a

March-to-May effect in which mean returns for the months March to May are significantly less

than those during the other nine months. We further demonstrate that these are two distinct

effects that are independent of each other.

Keywords: Indian stock market, calendar effects, efficient market hypothesis, emerging markets.

Comparative Performance of Volatility Forecasting Models in IndianMarkets S.S.S. Kumar

Volatility forecasting is an important area of research to financial markets and lot of effort has

been expended in improving volatility models since better forecasts translates into better pricing

of options and better risk management. In this direction, this paper attempts to evaluate the

ability of ten different statistical and econometric volatility forecasting models to the context of

Indian stock and forexmarkets. These competing models are evaluated on the basis of two

categories of evaluation measuressymmetric and asymmetric error statistics. Based on an out -of - sample forecasts and using a majority of evaluation measures Ire find that G.-I RCH 11. I,

and EW.1 L4methods will lead to Netter volatility forecasts in the Indian stock market and

G.4RCH (5, I) will achieve the same in the forex market the same models perform better on the

basis of ' asymmetric error statistics also.

Measuring PerformanceofIndian Mutual FundDeepak Agrawal,September 15, 2007

Since the development of the Indian capital Market and deregulations of the economy in 1992 it

has came a long way with lots of ups and downs. There have been structural changes in both

primary and secondary markets since 1992 scandal where the no seduce to the bottom and was

bravely survived in ICU. Mutual funds are key contributors to the globalization of financial

markets and one of the main sources of capital flows to emerging economies. Despite their

importance in emerging markets, little is known about their investment allocation and strategies.
http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=822867http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=822867http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=822867http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=822867


35/64

35

This article provides an overview of mutual fund activity in emerging markets. It describes their

size, asset allocation. This paper is a process to analyze the Indian Mutual Fund Industry pricing

mechanism with empirical studies on its valuation. It also analyzes data at both the fund-manager

and fund-investor levels. The study reveled that the performance is affected saving and

investment habits of the people at the second side the confidence and loyalty of the fund

Manager and rewards affects the performance of the MF industry in India.

THE NEXUS BETWEEN STOCK MARKET ANDECONOMIC ACTIVITIES P C Padhan

The recent development in time series techniques permits us to examine the Granger non-

causality test between time series variables using augmented levelsVAR model with integrated

and co integrated process developed by Toda and Yamamota (1995) and Dolado and Ltkepohl

(1996) (popularly known as TYDLmodel). The paper examines the causal nexus between stock

market and economic activity during post liberalization period in the context of India. The paper

applied TYDL model using monthly data from 1991:04 to 2005:03. Empirical findings support

the evidence of bi-directional Granger Causality between stock market and economic activity.

The implications are that a well-developed stock market could enhance economic activity and

vice-versa.

Analysis of the fundamental factors affecting the market price of shares constituting theIndian index: a study of SENSEXNiladri Das, J.K. Pattanayak

This paper examines the various research studies undertaken in the Indian and international

context highlighting the effect of various fundamental factors on the behavior of the stock

market. This paper tries to identify the critical variables which have a significant effect on stock

price movements and influence the entire market's movement. The 30 shares constituting the

Bombay Stock Exchange-Sensitivity Index (BSE-SENSEX or SENSEX) are used as proxies to

capture the entire stock market's movement. Appropriate statistical techniques have been used to

establish a meaningful relationship among various explanatory variables identified through the

empirical analysis considering the available research studies. The explanatory variables, which

act as major determinants of stock price movements, are condensed into a few critical factors by

factor analysis and the relevance of these factors in influencing stock market movements is

explained in detail. The analysis shows that higher earning power, Returns on Investment


36/64

36

(ROIs), growth possibility and favorable valuation have a positive impact on the share price and

stock market movement, while higher risk and volatility have a negative impact. These factors

can be used as major analytical tools by investors, corporations and brokers to make rational and

intelligent investment decisions.

The relationship between the Indian stock market and the stock markets of the U.S

Chatrath, Ramchander

This Paper examines the relationship between the Indian stock market and the stock markets of

the U.S. and other developed countries using daily data for the period 1992 to 2008. They used

the Bombay Stock Exchange National Index (BSENI) and the Dow Jones Industrial Average

(DJIA) as representative indexes for the Indian and U.S. markets, respectively. The authors

identify two major concerns in portfolio diversification studies. First, return comparisonsbetween countries are exposed to currency risk. Second, correlations between stock returns for

various countries must be stable over time in order to be able to employ past correlations as a

proxy in creating optimal portfolios. They find that the Indian stock market had low correlations

with the markets of the developed countries. Therefore, the Indian market offered diversification

benefits for investors in the developed countries for the period.

Diversification in an Emerging Market: A Closer Look at the Indian Stock

Market Jayen B. PatelWe find that the Indian stock market generated returns comparable to those of the U.S. stock

market during the period January 1991 to July 2005. We also find that the Indian stock market

produced returns substantially higher than U.S. equity returns during various sub-periods when

the U.S. market declined. We demonstrate that the Indian stock market presents important return

and diversification benefits to U.S. investors.

With the satellite system, trading that had previously been restricted to the exchange floor was

replaced by electronic systems linking traders throughout the country. Further, according to

Echeverri-Gent, the satellite system led to the result that Indias two largest stock exchanges

generated, respectively, the third and fifth largest trading volume in the world by the year 2010.

Additionally, since the early 1990s, the Indian economy has become increasingly more

integrated with the world economy.


37/64

37

How Sensex Index Affects MarketSourav Sharma

The BSE sensex, several times, especially when the figures went remarkably down affecting the

stock market exceptionally badly, drew scorn creating panic amongst investors and companies

alike. The revival phenomenon is still on, and unlike other nations, India is fast coping up with

the great recession; thanks to the innovative measures taken up by the RBI and the Government

of India. Sensex has always been one of the frenzied themes of discussion for the investors and

financial community. The fluctuations of the Indian stock market are depicted on the chart of

Sensex India. The sensex nifty comprise the calculations, price, and performance of 30 live stock

companies and 50 stock US companies respectively. Sensex index hems in some of the honchos

of different industrial segments right from telecommunication to banking and from real estate to

automobiles. Companies worth mentioning, which are listed in the BSE index, are ICICI Bank,

Infosys, DLF, Grasim Industries, HDFC, Hindalco Industries, Mahindra Limited, ONGC, Bharti

Airtel, Reliance Industries, Tata Group, Ranbaxy, to name a few.

Integration level of equity markets in APECs emerging countries: Are

emerging markets regionally or globally integrated?Cynthia Ho Szee Yah;Anh Thi

Quynh Dinh;2010

Supported by the investment barriers removal, financial deregulation and improved

macroeconomic policies during the last three decades, the process of financial integration in

those markets, emerging markets in general and emerging markets within Asia Pacific Economic

Cooperation (APEC) in particular, has been pro-actively accessed these days. Moreover, recent

trend in globalization in many APEC countries and especially in the emerging markets has

triggered a stronger financial integration progress across countries.

The relationship between Credit Ratings and Beta: -A quantitative study on

the Nordic marketAndreas stlund;Mikael Hyleen;2009

This study aims to investigate the relationship between systematic risk and credit ratings. The

systematic risk, frequently measured by beta, is an important consideration for both investors and

corporations.
http://www.essays.se/essay/f51011fa85/http://www.essays.se/essay/f51011fa85/http://www.essays.se/about/Cynthia+Ho+Szee+Yah/http://www.essays.se/about/Anh+Thi+Quynh+Dinh/http://www.essays.se/about/Anh+Thi+Quynh+Dinh/http://www.essays.se/essay/4cc76233b0/http://www.essays.se/essay/4cc76233b0/http://www.essays.se/about/Andreas+%C3%96stlund/http://www.essays.se/about/Andreas+%C3%96stlund/http://www.essays.se/about/Mikael+Hyleen/http://www.essays.se/about/Mikael+Hyleen/http://www.essays.se/about/Andreas+%C3%96stlund/http://www.essays.se/essay/4cc76233b0/http://www.essays.se/essay/4cc76233b0/http://www.essays.se/about/Anh+Thi+Quynh+Dinh/http://www.essays.se/about/Anh+Thi+Quynh+Dinh/http://www.essays.se/about/Cynthia+Ho+Szee+Yah/http://www.essays.se/essay/f51011fa85/http://www.essays.se/essay/f51011fa85/


38/64

38

Demutualization of stock exchanges: A case study: London Stock Exchange

and Hong Kong Stock Exchange Saadia Altaf;Ghenadie Cospormac;2009

The focus of this study is to evaluate the impact of corporate ownership structure on the overall

performance of stock exchanges. This study distinguishes in particular mutual versus

demutualized ownership.

Stock Market Anomalies: A Literature Review and Estimation of Calendar

affects on the S&P 500 indexMarcus Davidsson;2006

This thesis investigates the Day-of-the-week, Month-of-the-year and Quarter-of-the-year effects.

Historical data from the S&P 500 index between 1970- 2005 is analyzed. The purpose is toinvestigate if there is any evidence of increased returns (ROR) pattern related to seasonality

during this period.

Corporate Governance Effects on Firm Value and Stock Market

Performance: An EmpiricalNicolette C. Prugsamatz1

The little literature there is on Corporate Governance in emerging markets provides supporting

Evidence straddling short periods whilst addressing some areas of firm-level Corporate

Governance adherence. This paper seeks to study the effects of Corporate Governance adoption

on Firm Value and Stock Market Performance of 57 SET-Listed Thai Companies, drawing on

data from 2000 to2009. A mixed method approach was adopted which included the use

secondary data, an Index (Thai Gov-Index), and Text Content Analysis to measure firm-level

Corporate Governance of the selected companies. That firm-level Corporate Governance can

serve as a value driver, for both the firm and its shareholders, is to a certain extent justified by

what the study findings infer, even though findings of all positive associations appeared to be

weak.
http://www.essays.se/essay/c6569ccb21/http://www.essays.se/essay/c6569ccb21/http://www.essays.se/essay/c6569ccb21/http://www.essays.se/about/Saadia+Altaf/http://www.essays.se/about/Ghenadie+Cospormac/http://www.essays.se/essay/eb94026e2a/http://www.essays.se/essay/eb94026e2a/http://www.essays.se/about/Marcus+Davidsson/http://www.essays.se/about/Marcus+Davidsson/http://www.essays.se/essay/eb94026e2a/http://www.essays.se/essay/eb94026e2a/http://www.essays.se/about/Ghenadie+Cospormac/http://www.essays.se/about/Saadia+Altaf/http://www.essays.se/essay/c6569ccb21/http://www.essays.se/essay/c6569ccb21/


39/64

39

Value-based management, EVA and stock price performance in Canada

George Athanassakos Richard

The study finds that value-based management methods are widely used in Canada, with the

likelihood of usage being higher for larger companies with younger and more educated

executives with an accounting/finance background. The statistical analysis that follows the

tabulation of survey results indicates companies that used EVA had a better stock price

performance than those not using EVA. Moreover, our legit regression analysis shows that

companies with better stock market performance exhibited higher likelihood of using EVA.

The determinants of stock market development in the Middle-Eastern and

North African region Samy Ben Naceur, Samir GhazouaniIt is found that saving rate, financial intermediary, stock market liquidity and the

Stabilization variable are the important determinants of stock market development. In addition, it

is found that financial intermediaries and stock markets are complements rather than substitutes

in the growth process.

The impact of M&A transactions from private equity and hedge funds

Empirical evidence from Austria and Switzerland Gerhard WortcheConsidering the wealth effects of the different types of investors, the findings of this Paper

support the necessity of special regulations for FIs such as private equity and hedge funds. This

is due to the fact that lower performance is linked to the disgraceful business conduct of an FI

who is oriented toward short-term profit at the cost of the target company and their stakeholders.


40/64

40

CHAPTERIIIDATA

ANALYSICS

AND

INTERPRETATION


41/64

41

DATA ANALYSIS AND INTREPRETATION

3.1 GROWTH ANALYSIS

Table No. 3.1

SALES FIGURE

Rupees in corers

COMPANY FY 07 FY 08 FY 09 FY 10 FY 11

ACC 5950.37 7271.07 7483.14 8187.73 7874.34

AMBUJA 6326.43 6695.22 6712.89 7214.18 7640.38

GRASIM 6756.11 8880.54 10629.76 11132.6 8833.77

ULTRATECH 3363.16 4939.7 5634.52 6547.19 7170.12

Fig No. 3.1INTERPRETATION:

From the above table, Ultratech and Ambuja sales increased consistently from 2007 to 2011.

Acc and Grasim sales increased till 2010 and it declined in 2011.

0

2000

4000

6000

8000

10000

12000

ACC AMBUJA GRASIME ULTRATECH

SALES

FY 07

FY 08

FY 09

FY 10

FY 11


42/64

42

3.2 PROFITABILITY ANALYSIS

TABLE NO. 3.2.1

EBIT

Rupees in crores

Fig. No. 3.2.1

INTERPRETATION

From the above table, Ultratech has stable growth in EBIT from the year 2007 to 2011. Grasim

has highest EBIT Rs 3634(rs in crores) in the year 2009.

0

500

1000

1500

2000

2500

3000

3500

4000

ACC AMBUJA GRASIM ULTRATECH

EBIT

FY 07

FY 08

FY 09

FY 10

FY 11


ACC 1937.97 2311.15 2036.12 2703.75 1847.06

AMBUJA 2272.23 3018.17 2252.32 2104.38 2074.7

GRASIM 1577.79 2635.04 3631.14 2798.59 3280.55

ULTRATECH 586.2 1485.05 1826.17 1818.55 2100.35


43/64

43

Table No. 3.2.2

PROFIT AFTER TAX

Rupees in crores

Fig. No. 3.2.2

INTERPRETATION:

From the above table, Ultratech PAT had stable improvement from 2007 to 2011, in the year

2007 it was 229 and in the year 2011 it was 1093. Acc & Ambuja are decline when compare inthe year 2007 & 2011.

0

500

1000

1500

2000

2500


PAT

FY 07

FY 08

FY 09

FY 10

FY 11


ACC 1247.38 1438.44 1212.77 1609.97 1159.31

AMBUJA 1503.25 1769.1 1402.27 1224.77 1266.88

GRASIM 863.21 1535.81 2232.6 1647.96 2092.1

ULTRATECH 229.76 782.28 1007.61 977.02 1093.24


44/64

44

Table No. 3.2.3

RETURN ON TOTAL ASSETS

Return On Total Asserts = Net Profit +Interest+Tax / Average Capital Employed *100

Fig No. 3.2.3

INTERPRETATION:

From the above table, Acc & Ambuja is having highest return on total asset so it utilizes

maximum its available resource.

0

0.1

0.2

0.3

0.4


RETURN ON TOTAL ASSETS

FY 07

FY 08

FY 09

FY 10

FY 11


ACC 0.315 0.323 0.224 0.244 0.160

AMBUJA 0.345 0.354 0.235 0.183 0.171

GRASIM 0.124 0.167 0.181 0.128 0.256

ULTRATECH 0.092 0.234 0.227 0.170 0.142


45/64

45

Table No. 3.2.4

EARNINGS PER SHARE (EPS)

EarningPer Share = Net profit/Number of shares *100

Fig No. 3.2.4

INTERPRETATION:

From the above table, it is clear that Grasim is having the highest earning per share and the

Ambuja is having the lowest EPS. Ultratech having stable growth.


ACC 65.78 76.67 64.62 85.58 56.66

AMBUJA 9.91 11.62 9.21 8 8.26

GRASIM 94.16 167.53 223.35 179.96 228.19

ULTRATECH 18.47 62.84 80.94 78.48 87.82

0

50

100

150

200

250


EPS

FY 07

FY 08

FY 09

FY 10

FY 11


46/64

46

Table No. 3.2.5

PRICE EARNING RATIO

Price Earning Ratio = Market Value Per Share / Earnings Per Share

Fig No.3.2.5

INTERPRETATION:

From the above table, Ultratech in the year 2007 PE ratio is 8.33 and in the year 2011 it was

52.96. Ultratech has maximum PE ratio it is fallow by Acc, Ambuja, and Grasim. Which means

Ultratech is the costliest share to hold and Acc is the cheapest stock.

0

10

20

30

40

50

60


PRICE EARNING RATIO

FY 07

FY 08

FY 09

FY 10

FY 11


ACC 14.1814 11.4702 9.9591 12.9594 14.2262

AMBUJA 13.1228 16.4036 10.1411 20.4819 12.5289

GRASIM 9.3821 16.1214 9.4121 12.5747 24.7883

ULTRATECH 8.3349 11.8351 7.7157 10.5549 52.9643


47/64

47

Table No.3.2.6

GROSS PROFIT RATIO

Gross Profit Ratio = Gross Profit / Sales * 100

Fig No.3.2.6

INTERPRETATION:

From the above table, Ambuja and Grasim is having the highest GP ratio high and shows that

both company having good management. Ultratech has continuous improvement from 2007 to

2011.


ACC 27.1296 26.016 24.3593 30.9069 22.1961

AMBUJA 31.9932 46.7494 27.5509 27.3408 24.996

GRASIM 20.8421 27.1491 29.5492 23.4704 33.3403

ULTRATECH 7.7949 10.7811 23.5319 25.4162 23.4175

0

10

20

30

40

50


GROSS PROFIT RATIO

FY 07

FY 08

FY 09

FY 10

FY 11


48/64

48

Table No.3.2.7

NET PROFIT RATIO

Net Profit Ratio = Net Profit / Sales * 100

Fig No.3.2.7

INTERPRETATION:

From the above table, Ambuja NP ratio was 27.34in the year 2008. Ultratech is having stabilityPE ratio. Grasim highest PE ratio in the 2011.

0

5

10

15

20

25

30


NET PROFIT RATIO

FY 07

FY 08

FY 09

FY 10

FY 11


ACC 19.0456 18.2908 14.6116 18.2517 13.0098

AMBUJA 21.4059 27.3445 19.7784 15.6927 15.2496

GRASIM 11.3091 15.9155 17.668 13.5859 23.4662

ULTRATECH 6.0698 14.2639 16.0288 13.6447 14.1444


49/64

49

Table No.3.2.8

OPERATING PROFIT RATIO

Operating Profit Ratio = Cost Of Goods Sold + Operating Profit / Sales * 100

Fig No.3.2.8

INTERPRETATION:

From the above table, Grasim has highest Operating profit ratio 30 in the year 2011.it is followed

by Grasim, Acc and Ambuja.

0

5

10

15

20

25

30

35


OPERATING PROFIT RATIO

FY 07

FY 08

FY 09

FY 10

FY 11


ACC 26.1338 24.6888 21.4848 29.1526 19.4791

AMBUJA 30.7744 31.7346 25.1645 24.7809 22.4484

GRASIM 18.6615 24.6683 26.6129 31.1116 30.0747

ULTRATECH 14.8366 25.9582 27.4806 24.3449 25.5868


50/64

50

Table No.3.2.9

DIVIDEND PAYOUT RATIO

Dividend Payout Ratio = Dividend Per share / Earnings Per Share

Fig No.3.2.9

INTERPRETATION:

From the above table, Ambuja cements had the maximum Dividend Payout ratio for past five

financial years. Ultratech, Grasim and Acc has lowest Dividend Payout ratio.

0

20

40

60

80

100

120

140

160

180


DIVIDEND PAYOUT RATIO

FY 07

FY 08

FY 09

FY 10

FY 11


ACC 22.8032 26.0859 30.9502 26.8754 51.123

AMBUJA 166.4984 150.6024 119.4354 150 157.3849

GRASIM 21.2404 16.4149 13.4318 16.6889 13.1469

ULTRATECH 9.4748 6.3654 6.1774 6.371 6.8322


51/64

51

3.3 SOLVENCY ANALYSIS

Table No. 3.3.1

CURRENT RATIO

Current Ratio = Current Asserts / Current Liabilities

.Fig No. 3.3.1

INTERPRETATION:

From the above table, Ambuja and Grasim have Current ratio above 1% except in the year 2010.

Acc and Ultratech having below 1% Current ratio which shows liabilities are higher than current

asset.


ACC 0.95 0.87 0.89 0.67 0.68

AMBUJA 1.08 1.03 1.26 0.89 1.07

GRASIM 1.09 1.16 1.08 0.99 1.03

ULTRATECH 0.68 0.73 0.72 0.69 0.69

0

0.2

0.4

0.6

0.8

1

1.2

1.4


CURRENT RATIO

FY 07

FY 08

FY 09

FY 10

FY 11


52/64

52

Table No.3.3.2

PROPRIETORY RATIO

Proprietory Ratio = Total Assert / Share Holders Fund

Fig No.3.3.2

INTERPRETATION:

From the above table, Ultratech haves highest Proprietory ratio followed by Grasim. Higher

Propritory ratio indicates less danger & risk to creditors in the event of winding up.


ACC 1.245364 1.073786 1.097816 1.094232 1.080968

AMBUJA 1.247838 1.070889 1.050886 1.025607 1.008872

GRASIM 1.397358 1.473762 1.393316 1.358209 1.145216

ULTRATECH 2.398316 1.895027 1.645349 1.59455 1.348154

0

0.5

1

1.5

2

2.5


PROPRIETORY RATIO

FY 07

FY 08

FY 09

FY 10

FY 11


53/64

53

Table No.3.3.3

FIXED ASSERT TURNOVER RATIO

Fixed Assert Turnover Ratio = Sales Turnover / Fixed Assert * 100

Fig No.2.3.3

INTERPRETATION:

From the above table, Grasim Fixed Asset Turnover ratio is 142 higher in the year 2011. Acc &

Ambuja are decreasing last three year.

0

50

100

150


FIXED ASSERT TURNOVER RATIO

FY 07

FY 08

FY 09

FY 10

FY 11


ACC 63.467 67.936 62.529 55.685 48.594

AMBUJA 72.249 57.978 53.064 51.204 44.818

GRASIM 60.957 65.471 63.666 52.036 142.703

ULTRATECH 40.477 53.421 57.227 46.258 47.8713


54/64

54

Table No. 3.4.

BETA VALUE OF STOCK

Fig No.2.4.5

Interpretation:

The table indicates that Grasim was having a lowest Beta Value 0.74, which means Grasim is

the most sta

a study on the performanceof cement industry in the.docx final proj sri

Documents