SYNOPSIS ONA STUDY ON CAPITAL STRUCTURE AT KARNATAKA POWER CORPORATION LIMITED Dissertation Submitted In Partial Fulfillment of the Requirements for the Award of the Degree OfMASTER OF BUSINESS ADMINISTRATIONOf BANGALORE UNIVERSITY

By RAPALLI.SURENDRA BABUReg. No. 12UHCMA074Under The Guidance Of Dr .R. RANGANATHEAST WEST COLLEGE OF MANAGEMENT#63, off Magadi road, Vishwaneedam post, Bangalore-5600912014LITERATURE REVIEW The ultimate objective of every company is to increase firms performance which in fact, associated with firms strategic decisions. Decisions regarding choice ofleverageare one of the strategic decisions; firms often take this type of decisions to increase their performance.Capital structureis the composition of the liability of a firm or particularly is the proportional participation of the numerous financing sources. Such as the equity, and debt it included the short term andlong term debtBrealey and Myers (1992), Weston & Brigham (2000) and Gitman (1997).Modigliani and Miller (1958) argued thatcapital structureits theories andrelationship withfirms performance has been creating issue in accounting and corporate financeliterature. They further argued that under preventive assumptions of capital marketcapital structureis unsuitable in determining firm performance or value. According to this intention, firm value is not the combination of the securities it issue but it is determined by real assets.1. According to Franco ModiglianiandMerton Miller:"Forms the basis for modern thinking on capital structure, though it is generally viewed as a purely theoretical result since it disregards many important factors in the capital structure process. The theorem states that, in a perfect market, how a firm is financed is irrelevant to its value. This result provides the base with which to examine real world reasons why capital structureisrelevant, that is, a company's value is affected by the capital structure it employs. Some other reasons includeagency costs,taxes, andinformation asymmetry. This analysis can then be extended to look at whether there is in fact an optimal capital structure: the one which maximizes the value of the firm.2. According to James c. Van Horse: "The mix of a firm's permanent long term financing represented by debt, preferred stock, and common stock equity". 3. According to Prasanna Chandra: "The composition of a firm's financing consists of equity, preference, and debt".

4. According to Gerstenbeg: "Capital structure of a company refers to the composition or make-up of its capitalization and it includes all long-term capital resources viz: loans, reserves, shares and bonds".5. According to Jean Murray: Thecapital structureof a business is the mix of types of debt and equity the company has on its balance sheet. Thecapitalor ownership of a business can be evaluated by knowing how much of the ownership is in debt and how much in equity. The company's debt might include both short-term debt and long-term debt (such as mortgages), and equity, including common stock, preferred shares, and retained earnings.

NEED FOR THE STUDY It's very necessary that companies should have optimal capital structure that can maximize the price of the companys stocks. Companies can choose a mix of financing options to finance its assets but it is very necessary that they are choose the financing options that maximize its overall value. For an equity investor, a strong balance sheet is an important consideration for investing in a companys stock and capital structure is one of the important measures of evaluating the strength of the balance sheet which reflects the important of capital structure

OBJECTIVES To analysis, capital structure of (KPCL) Karnataka power corporation limited. To analyze the earning per share of (KPCL) Karnataka power corporation limited. To find out the optimal capital structure of the company. To know the profitability of the company. To know about the capital efficiency of the company.

HYPOTHESIS: Hypothesis test on earning per share of KPCL. H1-There is no effective from earning per share of KPCL. Hypothesis test on profitability of the company. H0-There is a more profitability of the company.

SCOPE OF THE STUDYThe projects deals with the capital Structure as general and how the capital structure aids in various important finding and provides useful information for decision making. The project is an attempt to seek an insight into the aspects that are involved in the capital structuring and financial decisions of the company. The study is confined to understand and analyze the changes in earning per share, dividend policy, and managerial decisions due to the changes in capital structure of (KPCL) Karnataka power corporation limited.

METHODOLOGYThe nature of the study of this project will be Descriptive study. In Descriptive study, one has to use facts or informations which are already available and analyze these to make critical evaluation of the material. The objective of this research is to generate new ideas.

DATA COLLECTIONPrimary dataA primary data has been collected through interview schedule with executives and also with employees of Karnataka power corporation limited (finance department)Secondary dataSecondary data analysis saves time that would otherwise be spent collecting data and, particularly in the case ofquantitative data, provides larger and higher-qualitydatabasesthat would be unfeasible for any individual researcher to collect on their own Secondary data: published data and the data collected in the past is called secondary data. By using company journals, reports and documents. By using the Annual reports of the company. By using company website.

I. PLAN OF ANALYSIS Data will be analysis through charts, graph and table.

II. CHAPTER SCHEMEChapter One:IntroductionChapter Two: Profile of the OrganizationsChapter Three: Research and DesignChapter Four: Data analysis and InterpretationChapter Five : Summary of Findings, Conclusions and Suggestions.

SIGNATURE OF THE STUDENT SIGNATURE OF THE GUIDE

Reg No.12UHCMA074 Dr.RANGANATHA (Assistant Professor)