“ASTUDYON CAPITAL STRUCTURE”

With reference to
AMARAJA BATTERIES
PVT LTD

A project report submitted to

VIKRAMA SIMHAPURI UNIVERSITY
NELLORE
In partial fulfillment of the requirements for the award of degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by
VIGRAHALA SAILAJA

(Reg.No.210100001010)
Under the guidance of

Dr.G SAI SRAVANTHI, M.B.A ,Ph.D.,

Professor

VIKRAMA SIMHAPURI UNIVERSITY

KAKUTUR-NELLORE-524320-A.P
2021-2023
 VIKRAMA SIMHAPURI UNIVERSITY
DEPARTMENT OF BUSINESS MANAGEMENT

CERTIFICATE

This is to certify that the project entitled “ A STUDY ON CAPITAL

STRUCTURE ON AMARAJA BATTERIES PVT LTD”is a confide work done
and submitted by VIGRAHALA SAILAJA (Reg.no. 210100001010) in partial
fulfillment of the requirements for the award of the degree of “MASTER OF
BUSINESS ADMINISTRATION”. It is a record of independent research work
undertaken by him, under my supervision and guidance during the academic
year 2021-2023.

PROJECTGUIDE HEAD OF THE DEPARTMENT

Dr.G. SAI SRAVANTHI M.B.A Ph.D. Dr. PC REDDY M.B.A. Ph.D.

Assistant Professor, Assistant Professor,
Department of Business Management Department of Business Management,

Vikrama Simhapuri University, Vikrama Simhapuri University,

Nellore. Nellore.
 DECLARATION

I’m , VIGRAHALA SAILAJA a student of Department of business

management, Vikrama Simhapuri University College, Nellore, I would like to declare that the
project titled “A STUDY ON CAPITAL STRUCTURE ON AMARAJA BATTERIES PVT
LTD.” I was done in partial fulfillment of Master of Business Administration degree course of
the Vikrama Simhapuri University. The project submitted by me is true to the best of my
knowledge and belief.

PLACE:
DATE:

VIGRAHALA SAILAJA

(Reg.No:210100001010)
 ACKNOWLEDGEMENT

I take this opportunity to express my heart full gratitude to various personalities for the successful
completion of my project.
I thank Prof. G.M. SUNDARAVALLI, Vice-chancellor, Dr.P.RAMACHANDRA REDDY,
Registrar and Prof.G. VIJAYA ANANDA KUMAR BABU, principal of Vikrama Simhapuri
University for their support.

I am also thankful to our beloved

Dr.G.SAISRAVANTHI, professor for her valuable adviceand continuous
encouragement during the course of my study in this college. I would like to convey
my thanks to all other faculty members.

I thank my FACULTY MEMBERS Dr.P.CHENCHU REDDY, Dr J VIJETHA ,

Dr.SUJA.S.NAIR, Ms.M.GAYATHRI ANUPAMA. Department of Business
Management, Vikrama Simhapuri University for supporting in this project.

My parent's needs Special mention she refer their constant support and lovein my
life.
I also thank my friends and well-wishers, who have provided their hearted support to me in this
exercise.

VIGRAHALA SAILAJA
(Reg.No.210100001010)
 TABLE OF CONTENTS

CHAPTERS TITLE PAGE NO

INTRODUCTION
INDUSTRY PROFILE 06-35
CHAPTER-I
COMPANY PROFILE
PRODUCT PROFILE

REVIEW OF LITERATURE 36-38

CHAPTER-II

RESERCH
METHODOLOGY

CHAPTER-III NEED FOR THE STUDY

SCOPE OF THE STUDY 39-44
OBJECTIVES OF THE
STUDY
LIMITATIONS OF THE
STUDY

DATA ANALYSIS
CHAPTER-IV &
45-63
INTERPRETATION

FINDINGS
CHAPTER-V SUGGESTIONS
64-67
CONCLUSION

ANNEXURE
BIBLIOGRAPHY 68-78
CHAPTER-VI
CAPITAL STRUCTURE

CHAPTER 1
INTRODUCTION
INDUSTRY PROFILE
COMPANY PROFILE
PRODUCT PROFILE

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1.1 INTRODUCTION
The various means of financing represent the financial structure of an enterprise the
financial structure of an enterprise is shown by left hand side (liabilities plus equity) of the
balance sheet. Traditionally, short-term borrowings are excluded form the list of methods of
financing of the firm’s capital expenditure, and therefore, the long-term claims such as
debentures long-term debt, preference share capital and equity share capital including
reserves and surpluses (i.e., retained earnings) are said to form the capital structure of the
enterprises. Therefore, the composition or proportion of usage of long-term sources of
capital structure can prosper in short run but face considerable difficulties in raising funds
and in economizing the use of their find in the long run.
Every company will have to plan its capital structure initially at the time of its
promotion and subsequently whenever funds have to be raised to finance investments. The
capital structure decision is a significant managerial decision is a significant managerial
decision as it influences the share holder’s return and risk. Consequently the market value of
the share is affected by the capital structure decision.
Capital structure refers to a company’s outstanding debt and equity. It allows a firm to
understand what kind of funding the company uses to finance its overall activities and
growth. In other words, it shows the proportions of debt and equity (common or preferred) in
the funding. The purpose of capital structure is to provide an overview of the level of the
company’s risk. As a rule of thumb, the higher the proportion of debt financing a company
has, the higher its exposure to risk will be.
The various means of financing represent the financial structure of an enterprise the
financial structure of an enterprise is shown by left hand side (liabilities plus equity) of the
balance sheet. Traditionally, short-term borrowings are excluded form the list of methods of
financing of the firm’s capital expenditure, and therefore, the long-term claims such as
debentures long-term debt, preference share capital and equity share capital including
reserves and surpluses (i.e., retained earnings) are said to form the capital structure of the
enterprises. Therefore, the composition or proportion of usage of long-term sources of

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CAPITAL STRUCTURE

capital structure can prosper in short run but face considerable difficulties in raising funds
and in economizing the use of their find in the long run.
Every company will have to plan its capital structure initially at the time of its
promotion and subsequently whenever funds have to be raised to finance investments. The
capital structure decision is a significant managerial decision is a significant managerial
decision as it influences the share holder’s return and risk. Consequently the market value of
the share is affected by the capital structure decision.

APPROPRIATE OR OPTIMUM CAPITAL STRUCTURE:

To minimize the cost of capital and to maximize the value of shares the firm’s
management seeks to establish optimum capital structure with proper combination of debt
and equity.
The capital structure is said to be optimum when marginal real cost of each available
sources of financing the identical. With an optimum debt and equity mix, the cost of capital
is minimum and the market price per share us maximum. The use of debt in capital structure
is known as financial leverage. It has both benefits as well as costs, while the principal
attraction of debt is the tax benefit, its cost is financial distress, includes a broad spectrum of
problems ranging from relatively Minot liquidity shortage to extreme case of bankruptcy.
The problem of financial distress will magnify with an increase in financial leverage.
Beyond a certain point, the expected cost of financial distress will outweigh the tax benefit.
A firm is thus concerned with a trade- of between risk and return emanating from the use of
debt.
Feature of appropriate capital structure:
A sound of appropriate capital structure should have the following features.
1. Profitability
2. Solvency
3. Flexibility
4. Capacity
5. Control
Goals of Capital Structure:
1. Determining the proper mix of debt and equity securities that maximizes the value of
the common stock on per share basis.
2. Taking advantage of favorable financial leverage.

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3. Taking advantage of leverage offered by corporate taxes.

4. Avoiding a recited high risk structure, are some goals of the capital structure
management.
Financial Leverage – Its Impact on Share Holders Earnings
The use of fixed charges sources of funds, such as debt and preference capital.
Along with the owners equity in the capital structure, is described as financial leverage or
trading equity. The financial process of using borrowed funds to produce gain for the
residual owners is also termed as Trading on equity.
The primary motive of a company in using financial leverage is to magnify the
shareholders earnings under favorable economic conditions. The role of financial leverage in
magnifying the earnings of shareholders is based on the assumption that the fixed financial
charges can be obtained at a cost lower than the company rate of return on its asses.
Financial leverage may be favourable to unfavoruable. Favorable financial occurs
sheen the earnings per share increases due to the use of debt in capital structure. On the other
hand unfavorable leverage occurs when a firm does not earn as much as the funds cost.
Financial leverage not only tends to magnify shareholder’s return under favorable conditions,
but also exposes them to financial risk.
The financial leverage magnifies the shareholders earnings.The variability of EBIT to
fluctuate within wider rage with dent in the capital structure, i.e., with more debt, EPS raise
and fall in EBIT.
There are two types of risk of financial leverage.
1. Operating risk
2. Financial risk
‘Marshal’ distinguished operating and financial risk in his words as follows. Let us
suppose that two men carrying on similar business, the one working with his own, the other
with borrowed capital. There is one set of risks common to both, which may be described as
the trade risk engaged in business. But there is another set of risks the burden of which has to
borne by the man working either borrowed capital and not by another.

OPERATING RISK:
The operating risk is an unavoidable risk. The operating risk can be defined as the variability
of EBIT. The environment in which a firm operates determines the variability of EBIT. The
variability of EBIT is again determined by in two elements.

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1. Variability of sales.
2. Variability of expenses

FINANCIAL RISK:
The variability of EBIT increase with more financial leverage. The variability in EBIT and
EPS caused financial leverage is known as financial risk. The firm’s degree of operating risk
can be differing with respect to financial risk when they finance their assets differently. A
firm has no financial risk, if it finances its assets from equity only. But when debt is used the
firm adds financial risk. Thus, financial risk is an avoidable risk, if the firm decides not to
use any debt in its capital structure.

SOURCES OF FINANCE:
The sources from which capital is raise may be classified into two categories.
1. External Sources:
External sources are Equity share capital, Preference Share. Debt Capital.
2. Internal Sources:
Internal sources are retained earnings, and undistributed profits of the shareholders.
CAPITAL STRUCTURE THEORIES:
An optimum capital structure would be obtained at that combination of debt and
equity that maximizes the total value of the firm or maximize the weighted average cost
capital.

Net Income Approach:

The Net income approach suggested by Durand. According to this approach, the capital
structure decision is relevant to valuation of firm. This approach is based on the conclusion
that is based on the assumption that the use of debt does not change the risk perception of the
investor. As such, the interest rate on debt (Kd) and the equity capitalization rate (Ke) remain
constant to debt. Therefore increased use of debt results in higher market value of share and
as a result, lower overall cost of capital (Ko). This can be measured through the formula.
Ko = Net Operating Earnings
Total Value of Firm

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Ke- Ko+ (Ko-Kd) D/V

Where D = Market Value of the Firm.
V = total value of the firm
The assumption if N I approach us that Ke and Kd are constant and Kd is less than Ke.
Therefore Ko will decrease as d/v increase. Ko will approach Ke when D/V = 1.

Ke

Ko

Kd

Thus the net income approach concludes that there exists an optimum capital
structure, which is reached when the cost of capital is lowest. We can graph the relationship
between various factors (Ko, Kd, Ke) with the degree of leverage (D/V). The degree of
leverage is plotted along the X-axis, while the percentage rate for Ke, Kd and Ko on the Y-
axis. It is clear from the figure that the cost of capital will decline with leverage. However,
there is a critical point beyond which the cost of capital. It may start raising because of
increasing in the cost of debt and equity.
NET OPERATING INCOME APPROACH:
According to this approach the market value of firm is not attached by capital
structure changes. The market value of the firm is found our capitalizing the net operating
income at the overall or the weighted average cost of capital, which is constant. Ke can be
defined as follows.

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WACC = Ke*E/V+Kd*D/V
It shows that, if Ko and Kd are constant, Ke would increase linearly with debt –
equity ratio, D/S, thus there is no single point or range where the capital structure is optimum.
The NOI approach is graphically shown as in fig.

COST OF CAPITAL:

Ke

Ko

Kd

It is clear from the figure that as low cost of debt is used, its advantages are offset by
increased cost of equity in such a way that the cost of capital remains constant. It is also clear
that beyond a high level of leverage, the cost of debt may increase. In such a case of equity
will have to fall to keep the cost of capital function horizontal.
\

TRADITIONAL VIEW:
The traditional view is also known as ‘Intermediate approach’. It is a compromise between
the net income approach and net operating income approach. According to this view the
value of the firm can be increased or a judicious mix of debt and equity capital can reduce the
cost of capital. The relational behind this view is that debt is relatively cheaper sources of
funds are compared to ordinary shares. The statements that debt funds are cheaper than
equity funds carries the clear implication that the cost of debt, plus the increased cost of

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equity, together on a weighted basis, will be less than the cost of equity which existed on
equity before debt financing.
Ezra Solomon has divided the manner in which the overall cost of capital reaches in to three
– stages.
1. In the first stage the value of the firm ‘V’ increases or the overall list of capital falls
with increasing leverage.
2. In the second stage, increases in leverage have a negligible effect on the value or the
cost of capital of the firm. At this stage the value of the firm will be maximum or the
cost of capital is minimum.
3. In the third state, the value of the firm decrease with leverage or the cost of capital
increases with leverage.
The overall effect of these three stages is to suggest that the cost of capital is a
function of leverage. It decline with leverage and after reaching a minimum point or range
starts raising.The relationship between cost of capital and leverages is graphically shown in
figure.
It is clear from the overall cost of capital, Ko is saucer shaped with horizontal range.
This implies that there is a range of capital structure in which the cost of capital is minimized.
In the figure the cost of capital is shown to be U-shaped. Under such a situation there
is appoint at which the cost of capital would be minimum. This precise point defines the
optimum capital structure.

MODIGLIANI – MILLER APPROACH:

Modigliani – Miller (MM) in their article titled. “The cost of capital, Corporation
Finance and Theory of investment”, published in 1958, in American Economic Review, have
restored and amplified the net operating income position. They concluded that the total
market value of a firm and the cost of capital are independent of the capital structure. In their
view, with every degree of leverage, the advantage of low cost of debt is exactly offset by
enough increase in the cost of equity (Ke) remains constant the therefore the cost of equity
increases linearly with leverage.

Number of theories including Ezra Solomon, have criticized the traditional view, and
they have pointed out that laws which allow the deduction of interest payment before taxes

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can result in a higher total value of a company that makes use of favorable financial
leverage. Modigliani and Miller, too, agreed with statements in their article of 1963.

FACTORS INFLUENCING FINANCIAL STRUCTURE:

Capital structure refers to the composition of long term sources of finance. It is
always better that the capital structure should be balances with a sufficient equity cushion to
absorb the shocks of he business cycle and to offer flexibility. The following factors
influence the financial structure.

COST OF CAPITAL:
Debt is usually least expensive because, this is no tax imposition on the portion of
earnings which are paid as interest on debt capital. “The impact of financing decisions as the
overall cost of capital should be evaluated and the criteria should be minimize the overall cost
of capital or to maximize the value of the firm”.
GROWTH RATE:
Fast growing firms must really more heavily on external capital, rapidly growing trends to
use somewhat more debt than companies of slower growth.
SALES STABILITY:
Sales stability and debt ratio are directly related with greater stability in sales and earnings.
A firm can incur the fixed charges of debt with less risk than it can when its sales are subject
to periodic decline. In the later instance it will have difficulty in meeting its obligations.
ASSETS STRUCTURE:
Assets structure influences the sources of financing in several ways, firms with long lived
assets, especially when demand for their output is relatively assured, use long-term mortgage
debt extensively. Firms whose assets are mostly receivable and inventory whose value is
depend on the continued profitability of the individuals firm – rely less on long- term debt
financing and more on short-term funds.
LENDERS ATTITUDE:
Regardless of management’s analysis of the proper leverage factors for their firms, lender
attitude are frequently important indetermination of financial structure. In majority of cases
the corporation discusses its financial structure with lender and gives much weight to their
advices.

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LEVERAGE EFFECT ON EARNINGS PER SHARE (EPS):

The use of fixed cost sources of finance, such as best and performance capital to finance the
assets of the company is known as financial leverage or trading equity. If the assets financed
by the debt yield a return greater than the cost of debt, the earning per share increases,
without increases in owner’s investment. Because of its effect on EPS, financial leverage is
one of the important considerations is planning the capital structure of the company.
FINANCIAL RISK:
The risk attached to the use of leverage is called financial risk. Financial risk is added with
the use increased variability in shareholders earnings and the threat of insolvency. This risk
can be avoided by not taking debt into capital, but shareholders may be derived of the benefit
of expected increase in EPS. Therefore a company should employ debt to the extent financial
risk does not exceed the benefit of increase in EPS.
CASH FLOWS:
One of the features of a sound capital structure is conservatism. Conservatism relates to the
fixed charges created by the use of debt or preference capital in the capital structure and the
firm’s ability generate cash to meet these fixed charges. Whenever a company thinks of
raising additional debt, it should analyze its expected future cash flows to meet the fixed
charges.
FLEXIBILITY:
Flexibility is one of the important considerations as for as capital structure is concerned. The
company should be able to raise funds, without undue delay and cost, whenever need to
finance the profitable investment arises. It should also be in a position to redeem its
preference capital or debt whenever warranted by the future conditions. So the financial plan
should be so flexible to change the composition of capital as situation warns.
SIZE OF THE COMPANY:
Size of the business operation may also influence the capital structure because small
companies may find great difficulty in raising long-term funds. Ever if they get long term
loans, they may be at high interest rates. Small companies therefore depend on share capital
and earnings for their long-term funds.A large company has relative flexibilit6y in designing
its capital structure. It can obtained loans at easy terms.

MARKETABILITY AND TIMING:

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Marketability may no influence the initial capital structure, but it is an important

consideration to decide about the appropriate timing of security issue. Due to changing
market conditions the company has to decide whether to rise with common shares issues or
with a debt issue.

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1.2 INDUSTRY PROFILE

Industry Overview:
The total Indian storage battery market is approximately estimated at US$ 500
Million with the automotive battery segment contributing 60 to 65 percent of the
overall market value. In terms of volumes, the overall consumption of automotive
batteries could, be around 6.3 million units with the OE segment comprising around
1.2 to 1.3 million units per annum, according to an interview with the Executive Vice
President of ARBL that was published on the website chennaibest.com. The late
1990s also saw a surge in the sales of the passenger car segment for around 2 years
due to certain factors like the software boom, lowering of interest rates, etc. - which
increased the overall sales of batteries. The automotive sector did not see any
significant growth during the early part of the new millennium and is slowly showing
signs of growth during this financial year. This factor also adds to the demand in the
aftermarket as more number of cars was sold around 2 to 3 years back which is
generally the life of a lead acid battery. The replacement automotive battery market is
expected to grow at a healthy rate in the coming years.

Role of Technology
With the advent of newer more advanced technologies, the consumer is getting
the best of both worlds; a superior product at an affordable price. ARBL sells its
automotive battery under the brand name Amaron which is the country's first Zero
Maintenance Free Automotive battery while the competitors had only maintenance
ftee batteries that needed topping up of distilled water. Today, all the leading
manufacturers are also offering a similar product with focus shifting towards offering
a technologically superior product. Amaron was also the first to talk about what goes
into making a great product. It spoke of having silver inside which is used as an alloy
mix that actually increases the battery life and this was the first attempt by any battery
manufacturer to educate the consumers.

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FuddyDuddy Category to Creative Advertisement of the Year

The interest level shown by any car owner to a battery revolves around only
when the car fails to start. Amaron therefore realized the need to make the consumer
think about automotive batteries, because thinking before a purchase will definitely
lead to a comparison among the brands available in the market.

Amaron thus went ahead with its "Chicken Leg" media campaign that created a
storm in the advertising industry and made people look to this relatively new player in
the battery industry. Over the years, the creative bent of all its campaigns starting from
the media blitz, to below-the-line campaigns have been towards educating the
consumer about a battery.

The lead shown by ARBL was quickly followed by the others, with Exide
Industries sponsoring a cricket series in India for the first time with the campaign
"India moves on Exide" becoming a major success.

All this action in the automotive battery industry did not go unnoticed. An
automotive battery manufacturer (Amaron) for the first time was in the same league as
mega ad spenders like Coca Cola, Times of India, and others and won the Creative
Advertiser of the Year, which was a shot in the arm for the entire automotive battery
industry.
Distribution
For the success of any aftermarket product, availability of the same is as
important as the product quality and competitive pricing which go a long way in
increasing the visibility and creating a, network across markets. Here again, the
leading automotive battery manufacturers became aggressive in extending their reach
to the nooks and corners of the country and also moved away from the traditional
distribution network and instead appointed dealers and distributors who were the first
timers to the battery business like service outlets of some of the automobile majors
like Maruti, Hyundai, Telco, Ashok Leyland, Hindustan Motors etc, roadside
mechanics and lube shops etc., which went a long way in increasing the reach and

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visibility. There has been certain uniqueness that has been brought into the businessby
establishing exclusive outlets with some flashy names like "Pitstops" and "Terminals"
which was never seen earlier in this industry. All this, resulted in takingthe smaller/
regional manufacturers head on and helped in building better brand recall and
awareness among the end users.
Global Scenario:
Global Opportunities for Advanced Battery Technologies in Automotive
Applications, 1998 to 2008 is a multi client report designed specifically to provide
subscribes with an accurate and independent assessment of emerging opportunities in
the automotive battery industry. In addition to providing invaluable information and
insights into developments in starting, lighting, and ignition (SLI) technology, the
report focuses specifically on opportunities emerging from electric vehicles and
hybrid electric vehicles.
The report provides material suppliers, advanced battery companies,
automotive original equipment manufacturers, investors, and others with an excellent
resource to build soil, strategic plans and respond to competitive forces, emerging
technologies, and . evolving market needs. Specifically, the report assists subscribers
in growing their business by providing the following:
Features :
Identification of the issues and timing for large scale commercial
implementation of advanced battery technology in the global automotive industry.
 Unbiased global scenario forecasts of commercial systems to 2003 and 2008.
 Forecast of material requirements for advanced batteries.
 Profiles of companies those are active in this field.
Benefits :
Identification of emerging business opportunities for advanced batteries
 New SLI technologies
 HEVs
 EVs
 Competitive intelligence for use in bench marking

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 A resource for screening potential merger and acquisition candidates

The business:
Revenues for the global battery market reached an estimated $30 billion in
1998.SLI and related secondary battery applications represent approximately one-half
of the overall revenues and are mostly utilized in automotive applications. High-
performance secondary batteries used in such applications as portable electronics
represent approximately 15% of the overall battery market. These high-performance
secondary batteries have the fastest growth rates, at over 10% a year. Primary batteries
represent the remaining one-third of battery industry revenues.

A battery is an electro chemical device in which the free energy of chemical

reaction is converted in to the electrical energy. The chemical energy contained in the
active materials is converted electrical by means of electrochemical oxidation
reduction reactions.

HOW BATTERY WORKS:

When you place the key in your car's ignition and turn the ignition switch "ON"
a signal sent to the battery. Upon receiving the signal, the battery takes energy that it
has been strong in chemicals form and releases it as electricity power is used to crank
the engine. The battery also release energy to power the car's light and others
accessories. It is the only device, which can store electrical energy in the form of
chemical energy, and science it is called as a storage battery.

SEALED MAINTENANCE FREE (SMF) BATTERY:

Sealed maintenance free (SMF) batteries technologies are leading the battery
industry in the recent years in automobile'and industry battery sector around the globe.
SMF batteries come under the rechargeable battery category so it can be used a
number of times the life of a battery. SMF batteries are more economical than
cadmium batteries. These batteries are more compact then the wet type batteries. It
can be at any position, these batteries are very popular for portable power
requirements and space constraint applications. The replacement market, on the other

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hand, is much longer. The replacement market is characterized by the presence oflarge
unorganized sector, which constitutes around 55-60% of the total replacement market.

INDUSTRIAL BATTERIES:
Industrial batteries can be basically classified into two main categories:
 AUTOMOTIVE BATTERIES
 STATIONARY BATTERIES

\The automotive batteries are used in electric vehicles and forklifts. The
stationary batteries used in Telecom, Railway and power industries have Registered a
growth in excess of 20% and this trend in likely to be continuing in the next 5 years.
The industrial segment is highly technology is an important factor land is vital
for brand reference. The total demand for the industrial battery segment is met by
indigenous production with a small saves of about 10% of by imports. The demand for
industrial has grown slowly and steadily.
RECYCLING OF BATTERIES:
Battery acid is recycled neutralizing it into water of converting it to sodium
soleplate for laundry manufacturing. Cleaning the battery cases, melting the plastics
and reforming it into pellets recycle plastic. Lead, which makes up 50% of every
battery, is melted, poured into slabs and purified.

PROSPECTUS OF SMFI VRLA BATTERIESD IN INDIA:

The following factors are influencing demand of VRLA technology batteries.
 Entry of multinationals in telecom industry.
 DOT'S policy decision to upgrade the overall technology base.
 Constraints in the use of conventional battery in radio
TELECOM:
The government policy to increase the capacity from 10 million lines by 2000
increased the demand for storage batteries considerably. The value added services like
radio paging and cellular will increase the demand for storage batteries in future
considerably.
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RAILWAY:
In railways, the demand estimate is based on the annual post production which
comes to 2500 numbers by railways itself and 1000 numbers more by variousother
segments, plus replacements demand and annual requirements for railway
electrification.

POWER SECTOR:
In power sector the estimated 90 private power projects which are expected to
produce 40000 MV with approximate capital outlay of Rs. 1, 40,000 crores would
keep the industry figured brighter in the coming years. The demand for VRLA
batteries is increased due to its performance over the conventional batteries. So it is
more acceptable to the consumers.

VALUE REGULATED LEAD ACID BATTERIES:

In the recent years in automobiles and industry battery sector around the globe
VA batteries have become the preferred choice in various applications such as
uninterrupted power supply, emergency lights, security systems and weighting scales.
VRLA batteries are leak- proof, explosion resistant and having life duration of 15-20
years. These batteries withstand the environment conditions due to high technology, in
built in the batteries. Each cell is housed in a power coated steel tray making them
convenient to transport and installation. So transit damages are minimized in case of
batteries.

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1.3 COMPANY PROFILE

Amara Raja Batteries Ltd:
Amara Raja Batteries Ltd is established by Mr. Rama Chandra N. Galla & the
Chairman of Amara Raja Batteries LTD;. He is a post graduate engineer with over 16
years experience in power systems as an electrical engineer in Nuclear and
conventional source power generating stations across the USA. Mr. Galla went to
USA after obtaining degrees from S.V. University, Tirupati &Roorkee University. He
holds an M.S. Degree in system science from Michigan state university.
RamachandraGalla worked in various capacities such as Sr. Electrical Engineer,
Electrical Project Engineer, and Sr. Electrical Project Engineer for Sergeant & Lundy,
Chicago, USA. He was involved in various Nuclear power plant projects.
Amara Raja is having a technological Joint Venture with Johnson Controls INC
(JCI), USA in the year 1991 who owns 26% stake in the company. JCI is a Leading
battery manufacture in USA. Johnson Controls is a Fortune 500 company and also the
largest manufacturer of lead acid batteries in North America and a leading global
supplier to major automobile manufacturers and industrial customers.

Amara Raja has its Registered Office and Head Office at Karakambadi near
Tirupati in A.P. Karakambadi is located at an approximate distance of 12 kms from
Tirupati. The manufacturing campus at Karakambadi is one of the most beautifully
landscaped campuses and boasts of state of the art manufacturing facilities.

Amara Raja has demonstrated its commitment to offer optimum system

solution of the highest quality and has become the largest supplier of standby power
systems to core India utilities such as the Indian Railways, Department of
Telecommunications, Electricity Boards and major power generation's companies.
Extensible plans have been charted out for the future, where in the company
undertakes to become the most preferred supplier for power back-up systems.

Amara Raja has offered time tested world-class technology and processes
developed on international standards be it high integrity VRLA systems like

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powerstack and power plus or the recently launched high performance UPS battery -
KOMBA T & AMARON HI-LIFE automotive batteries that are the products of the
collaborative batteries efforts of engineers Johnson controls Inc. ARBL comprises of
two major divisions viz.,
I. Industrial Battery Division (IBD)
II. Automotive Battery Division (ABD)

INDUSTRIAL BATTERY DIVISION (IBD)

Amara Raja has become the benchmark in the manufacture of Industrial
batteries. India as one of the largest and fastest growing markets for Industrial
batteries in the world and Amara Raja is leading in the front with an 80% market share
for standby VRLA batteries. It is also having the facility for producing plastic
components required for Industrial batteries. ARBL is the first company in India to
manufacture VRLA batteries (SMF). The company has set-up Rs.1920 Lakhs plant in
18 acres in Karakambadi village, ReniguntaMandal. The project site is notified under
'B' category.

Capacity: The capacity of IBD is 75 million ah.

Customer Base: Telecom:
 Our Batteries power almost half of BSNL I MTNL exchanges.
 70% of the Private Basic Service providers' exchanges (Siemens)
 More than 70% of the Cellular service providers' exchange (Nokia,
 Ericson)
Telecom customers include:
 All ITI (Indian Technology Institutions) plants for In-house and switch
requirements.
 BSNL MTNL
 All NT Switch OEMs viz., Lucent, Alcatel, Siemens, Nokia, Ericsson etc.,
 All C-DOT switch OEMs viz. BEL, BHEL, CGL, UTL, etc.
 All private Basic and Cellular service providers And all Network Integrators

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Power Control:
We provide Back-Up critical installations in Power generating Units and
provide back-up power for transmission and distribution sub-stations like:
1. Raichur Thermal Power station
2. North Chennai Thermal Power station
3. ARBL is an approved vendor for NTPC (National Thermal Power Corporation
Ltd)/ NHPC (National Hydro Power Corporation) and Power Grid Corporation.

Oil & Gas

ARBL provides integrated solutions for renewable energy back-up power for
ONGC's offshore platforms. The island of Lakshadweep is powered through Amara
Raja Power Systems. Also provide back-up power for low power transmitters for
Doordarshan.

Motive Power
ARBL is the country's first manufacturer of maintenance-free traction batteries
used in Forklifts and Pallet trucks.

Our customers:
APC (American Power Control), Siemens (All type of power Supply Products)
Eg: Switch Boards, Alstom (Power Projects) E.g.: Metro Line Delhi, Compton
Greaves etc (Power Products).

Defense
ARBL introduced new technologies for back-up power in Defense, Police and
Paramilitary communication systems.
UPS & EPABX:
ARBL is the preferred suppliers for all leading UPS back-up manufacturerslike
APC, Numeric (India), DB Power, APLab, and Electronics & Controls etc. Our . UPS
batteries are the fastest growing battery brand since its launch in July 2002 with a

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nation-wide footprint of Sales and Service points and over 300, 000 batteries in use at
over 10,000 customer sites.
Railways
ARBL pioneered the use of maintenance-free batteries in the Indian Railways.
Over 50 % of Indian Railways' II and III Tier self-generation Air-conditioned coaches
are powered by ARBL. Over 40% of Railway's Signaling and Telecom power supply
solutions are provided by ARBL.
Competitors
The major competitors for Amara Raja Batteries products are Exide Industries Ltd.,
Hyderabad Batteries LTD., and GNB.
AUTOMOTIVE BATTERY DIVISION (ABD)
ARBL has inaugurated its automotive plant at Karakambadi in Tirupati on
September 24th 2001 this plant is part of the most completely integrated battery
manufacturing facility in India with all critical components, including plastics sourced
in house from existing facilities in site. In this project Amara Raja strategic alliance
partners Johnson controls, USA have closely worked with their Indian components
required for automotive batteries.
CAPACITY:
With an existing production capacity of 5 lakh units of automotive batteries the
new Greenfield plant will now be able to produce 3.5 million Batteries per annum.
This is the first phase in the enhancement of Amara Raja production which the
company has invested Rs.75 crores. In the next phase at an additional cost of Rs.25
Crores. -Production capacity will increase to 5 million units estimated to complete
around I year. After that ARBL will become the single largest facility for battery
manufacture in Asia.
PRODUCTS: Some of the products of ABD are
1. Amaron Highlife
2. Amaron Harvest
3. Amaron Shield
4. Amaron Hi-way

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CUSTOMERS
ARBL has prestigious OEM (Original Equipment manufacture) clients like
FORD general motors, Daewoo motors, Mercedes Benz Daimler CHRYSLER,
MarutiUdyog ltd premier Auto Ltd., and recently acquired a preferential supplier
alliance with Ashok Leyland, Hindustan motors, Telco, Mahindra & Mahindra and
Swaraz Mazda, Hyundai.
COMPETITORS:
 Exuded
 Prestolite
 AMCO
 Hyderabad Batteries Ltd;

Brief about the Promoters

Dr. Ramachandra N. Galla, a Non-Resident Indian now settled in India is the
main promoter. He is a post graduate engineer with over 16 years experience in power
systems as an electrical engineer in Nuclear and conventional source power generating
stations across the USA. Mr. Galla went to USA after obtaining degrees from S.V.
University, Tirupati&Roorkee University. He holds an M'.S. Degree in system science
from Michigan state university. After his return to India, he promoted along with
Andhra Pradesh Electronics Development Corporation (APEDC). A Rs. 2 crores unit -
Amara Raja Power Systems Ltd. - for the manufacture of uninterrupted power supply
systems (UPS), Battery Chargers, D.C. power supplies & static inverters. For the year
ending 315E March, 1990 this unit achieved a sales turnover of Rs. 192 lakhs and
earned cash profit of Rs. 14 1s.
AMARA RAJA GROUP OF COMPANIES:
 AMARA RAJA BATTERIES LIMITED (ARBL), karakambadi, Tirupathi.
 AMARA RAJA POWER SYSTEMS PVT.LTD (ARPSPL), Karakambadi,
Tirupathi.
 MANGAL PRECISION PRODUCTS PVT LTD (MPPL), karakambadi,
Tirupathi.

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 MANUAL PRECISION PRODUCTS PVT LTD (MPPL), petamitta, chittoor.

 AMARA RAJA ELECTRONICS PVT. LTD (AREPL), Dighavamagham,
Chittoor.
 GALLA FOODS LTD.
BACKGROUND AND INCEPTION OF THE COMPANY
Amara Raja Batteries Limited (ARBL) Company incorporated under
thecompany's act, 1956 in 13th February 1985 and converted into public limited
company on 6th September 1990.

ARBL, an amara raja-Johnson controls company is the India's leading

automotive and industrial battery manufacturer. The company is the technology leader
and is one of the largest manufactures of lead acid batteries for both industrialand
automotive applications in the Indian storage industry with brands like moron and
power zone in its kitty
ARBL is the first company in India to manufacture VRLA (value regulated
lead acid) Batteries. The main objective of the company is manufacturing of
goodquality of SEALED MAINTENANCE FREE lead acid batteries (SMF). The
company was set up with Rs.1920 lakhs in 18 acres area near Karakambadi village,
ReniguntaMandal. The project site is notified Under "B" category.

The company has the clear-cut policy of direct selling without any.
intermediate. So they have set up six branches and are operated by
corporateoperations office located in Chennai. The company has virtual monopoly in
higherA.H (Amp Hour) rating market its product VRLA. It is also having the facility
for Industrial and Automotive Batteries.
Mr. GallaRamachandra Naidu, Chairman who is an NRI having engineering
background promoted AMARA RAJA BATTERIES LTD. In 1985 at
KarakambadiVillage near Tirupathi. He also seeded MANGAL PRECISION
PRODUCTS Ltd. in 1990 at Karakambadi Village near Chittoor and AMARA RAJA
ELECTRONICS Ltd. in 2000 at Diguvamagham village near Chittoor. Before
embarking on this venture he worked as senior project engineer with MIS Sergeant&

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Lundy, USA (power consultants) for about 20 years. Prior to this, he worked as an
Electrical Engineer for US Steel Corporation for about 3 years.

In 1989, ARBL has entered into Industrial Battery market with Technical
alliance with GNB Batteries, USA to promote advanced Maintenance Free Valve
Regulated Lead Acid (MF-VRLA) batteries prior to setting its own facilities ARBL
Imported the product in semi-Knocked down condition. In September 1990, it was
converted into a public limited company and it's IPO (Initial Public Offer) in January
1991 aggregating Rs.59.5Million. It was formed to manufacture Maintenance-free,
sealed lead acid batteries in which commercial production commenced from May
1992. Despite its initial technical support from GNB Batteries, during the financial
year 1998 ARBL ceded a 23.7% stake to Johnson Controls Inc. USA, at a premium of
Rs.75 per share to cement a financial and technical tie-up to foray into Automotive
Batteries. Besides having overall control of the company as the chairman
Mr.R.N.Galla. His son, Mr. JayadevGalla, who is acting as a managing director of the
company, has worked earlier with GNB Battery Technologies, USA as an
International Sales Executive.
VISION, MISSION AND QUALITY POLICY
Group Vision;
By 2025, We will be a Top 500 global group redefining businesses to deliver
High Social Impact , by anticipating future trends, building preferred brands and
leveraging talent & technology.

Group mission;
Mission, mantra, way of thinking, philosophy, what we live for... call it what
you want, you'll find it below
"To transform our spheres of influence and to enrich the quality of life by
building Institutions that provide better access to better opportunities, goods and
services to more people all time..."

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Introduce latest generation technologies:

 Adapt these technologies to suit the operating environment
 Develop and manufacture globally competitive, customer-focused products of
world-class quality.
 Responsibly introduce these products into relevant markets.
 Provide world-class customer support.
Group Quality policy;
Our aim is to achieve total customer satisfaction through the collective
commitment of our employees in design manufacture, integrate and market reliable
power supplies, batteries, allied products and services.

To accomplish above, we will focus on;

1. Establishing superior specifications for our products and processes,
2. Employing state of the art technologies and robust design principles.
3. Striving for continual improvements and in process and quality.
4. Implementing methods and technology to monitor quality levels.
5. .provide prompt sales services

We believe that the commitment of employees is primary for our quality goals. We
train motivate and involve employees at every level to achieve our aim.

AMARA RAJA BATTERIES LTD'S STRENGTHS:

 Proven technology from GNB and Johnson Control Inc being a pioneer
 Strong and well organized customer base.
 Full-organized infrastructure in place.
 Manufacturing facilities perceived as a benchmark in India.
 Complete range of VRLA batteries.
 Proven field performance in all user segments. >>Approved vendor status in
major user segment.

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1.4 PRODUCT PROFILE

Automotive Battery Products :
Four-wheelers:
1. Amaron hi-way
Amaron hi-way truck batteries-lasts long, really long.
Amaron hi-way truck batteries, brought to you by Amara Raja Batteries
Limited (ARBL), the largest manufacturer of Stand by VRLA Industrial Batteries in
the Indian.

2.Amaron pro hi-life

Amaron PRO hi-life batteries design features and benefits
Longest life - thanks to the reformulated Advanta paste recipe.
Zero maintenance - high heat technology, premium silver alloys for a low-corrosion
and no top-ups experience.
Highest cranking power - largest intercell welds, 19mm lugs.
3. Amaron shield
Amaron shield - power Infinite
The new Amaron shield, with an unheard of 24 months warranty. A product of
Amara Raja Batteries Limited, Amaron shield is a result of a partnership between the
Amara Raja Group and Johnson Control Inc, USA, the global leader in interior
experience, building efficiency and power solutions.

Amaron shield design features and benefits Long life - the robust plate design
and a ribbed container provide extra strength and improved resistance to
corrosion.Ultra low maintenance - the special hybrid alloy system minimizes water
loss, making the battery ultra low maintenance and ensuring longer life.Ready to
install - factory charged, wet shipped and equipped with T3
terminals.Chargeacceptance - the unique paste formulation provides for quick
charging between power failures.
4. Amarongo:
Amaron go batteries design features and benefits;

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Long life - thanks to the reformulated adyanta paste recipe.

Maintenance free - High heat technology, premium silver allays for a low-
corrosionand no top-ups experience.
Factory fresh – wet shipped and ready to fit.
5. Amaraon Fresh
6. Amaraon Optima
Optima yellow top ; deep cycle batteries for extreme applications.
Optima blue top for twice the life of traditional marine and RV Batteries
Optima red top ; the battery that withstands the most vibrations
Area of Operation:
Regional:
Leading battery manufacturer Amara Raja Batteries Limited -launched Amaron
pit shop in Kakinada and Rajamundry today. With these the totalnumber of pit shops
in Andhra Pradesh will grow to 14. The complete range of Amaron automotive
batteries, the most popular product from ARBL, will be available at the pit shop.
Amaron pit shop is an innovative concept pioneered by Amara Raja in the automotive
battery industry.

National:
The Company currently has a pan-India sales and service network with 152
franchisees, 120 pit shops and over 15000 active retailers.

Ownership pattern:
Shareholding of promoter and promoter group
Promoters - 52.1
Mutual Funds /UTI / Banks - 13.9
Foreign Institutional Investors - 4.2
Bodies Corporate -5.7
Individuals -17.4
Other -6.8

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Competitor's information:
EXIDE:
The Company was incorporated as Associated Battery Makers (Eastern) Ltd.,
on 31st January, 1947 under the Companies Act, 1913 to purchase all or any of the
assets of the business of manufacturers, buyers and sellers of and dealers in and
repairers of electrical and chemical appliances and goods carried on by the Chloride
Electric Storage Company (India) Ltd, in India , since 1916 with a view thereto to
enter into and carry into effect (either with or without modification) an agreement
which had already been prepared and was expressed to be made between the Chloride
Electric Storage Co (India) Ltd on the one part and the Company of the other part. The
Company manufactures the widest range of storage batteries in the world from 2.5 Ah
to 20,400 Ah capacities, covering the broadest spectrum of applications.

The Company has six factories strategically located across the country - two in
Maharashtra, one in West Bengal, two in TamilNadu and one in Haryana. The
Company's predecessor carried on their operations as import house from 1916 under
the name Chloride Electrical Storage Company. Thereafter, the Company started
manufacturing storage batteries in the country and have grown to become one of the
largest manufacturer and exporter of batteries in the sub-continent today. Exide
separated from its UK-based parent, Chloride Group Plc., in 1989, after the latter
divested its ownership in favour of a gaup of Indian shareholders. The Company has
grown steadily, modernized its manufacturing processes and taken initiatives on the
service front. Constant innovations have helped the Company to produce the world's
largest range of industrial batteries extending from 2.5 Ah to 15000 Ah and covering
various technology configurations.
BOSCH:
Founded in 1951,bosch limited is indias largest auto component manufacturer
and also one of the largest indo-German company in India. The company generated
net sales of Rs.32365 crores in 2010. The bosch group holds close to 70% stake in
bosch limited.

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Bosch limited has a strong nationwide service net work which spans across
1000 towns and cities with over 4000 authorized representatives to ensure wide spread
availability of both products and services. The company headquartered in Bangalore
with manufacturing facilities at Bangalore, nagantapura (near Bangalore),Nasik, jaipur
and goa.
Infrastructural Facilities
 World-class integrated facility
 Oxide manufacture to finished battery dispatch in one complex
 Automation at every possible process and in all critical areas
 Fully furnished in-house plastic injection molding
 Ultra modem Sheet metal fabrication facility with CNC machines robotic
welding equipment
 Test facilities to check the raw material to Parts Per Billion Level
 Fully fledged calibration & chemical labs to correct instruments & check
material purity
ACHIEVEMENTS AND CREDENCIALS
 Best Telecom equipment Manufacturer Award 2009 by BSNL
 Quality Excellence Award for the year 2009 by INDUS Towers
 Amaron® is the preferred supplier to Daimler Chrysler, Ford and General
Motors
 Automotive Product of the year 2000 by Overdrive
 Excellence in Environmental Management in 2002 by AP Pollution Control
Board
 Creative Advertiser of the year '02 by ABBY
 Ford "World Excellence Award"

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BOARD OF DIRECTORS:

Dr. Ramachandra N Galla Non Executive Chairman

Mr. JayadevGalla Managing Director
Mr. Ravi Bhamidipati Executive Director
Mr. Shu Qing Yang Non Executive Director
Mr. Craig W Rigby Non Executive Director
Mr. Raymond J Brown Non Executive Independent Director
Mr. P. LakshmanaRao Non Executive Independent Director
Mr. NagarjunValluripalli Non Executive Independent Director
Mr. N. Sri Vishnu Raju Non Executive Independent Director
Mr. T.R.Narayanaswamy Non Executive Independent Director

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CHAPTER 2
REVIEW OF LITERATURE

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2. REVIEW OF LITERATURE

 In corporate finance, works of Modigliani and Miller (1958; 1963) about capital
structure irrelevance and tax shield advantage paved way for the development of
alternative theories and a series of empirical research on capital structure. The
alternative theories include the trade-off theory, the pecking order/asymmetric
information theory and the agency theory. All these theories have been subjected to
extensive empirical testing in the context of developed countries, particularly USA (se
Harris and Reviv, 1991 for a review). A few studies report international comparison
of capital structure determinants (Wald, 1999; Rajan and Zingales, 1995). There are
some studies that provide evidence on the capital structure determinants from the
emerging markets of South-east Asia (Pandey, 2001; Pandey et. al., 2000; Annuar and
Shamsher, 1993; Ariff, 1998). The focus of corporate finance empirical literature has
been to identify some “stylised” factors that determine capital structure.

 Modiglini and Miler Now a days most of literature review and article have examined
and expanded from the famous theory of Modiglini and Miller theory of capital
structure. Start with the theory published in 1958 under assumption that in a perfect
market the value of the firm is unaffected by its choice of capital structure. Therefore
the total value of the firm is stable regardless of debt to equity ratio. To give support
under this assumption imagine that two firm with the same operation of business but
different in capital structure. Where firm U is unlevered,the total value of its equity
(EU) is the same as the total value of the firm (VU) . Additionally where the firm L is
levered, thus the total value of the firm L is equal to the value of the debt less value of
the equity of the firm L. As a result the total value for both company will be the same.

 Titman and Wassels (1988) refer there are plenty of authors have suggested that
leverage ratio may be related to the firm size. They proved that direct bankruptcy
costs seem to constitute a larger proportion of a firm's value as that value decreases.
The large firm tends to be more diversified and less prone to bankruptcy. As a result ,
large firm should be more highly leverages

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 Groth and Anderson (1997) stated that “understanding capital structure and its
practical implications is important to the professional manager regardless of
functional area of expertise. The seminal work in the area of capital structure earned
the researchers Nobel Prizes”.

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CHAPTER 3

RESEARCH METHODOLOGY

1. NEED FOR THE STUDY

2. OBJECTIVES OF THE STUDY
3. RESEARCH METHODOLOGY
4. SCOPE OF THE STUDY
5. LIMITATIONS OF THE STUDY

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3. RESEARCH METHODOLOGY

3.1 NEED FOR THE STUDY

 The study is on internal financing pattern of the Capital Structure, which deals with
determining the size of Capital Structure made to achieve long term operating
goals.Therefore, an analysis is to be made to know the reasons & find out the
measures to be taken to make the organization more successful.

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3.2OBJECTIVES OF THE STUDY

 Study is to evaluate the Capital Structure and its performance.

 To Study the capital structure of Amara Raja Batteries Ltd through EBIT-EPS
analysis.
 Study debt/equity ratio of Amara Raja Batteries Ltd for 2016-17 to 2020-21.

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3.3 RESEARCH METHODOLOGY

 Research involves getting tools, ideas from texts, journals, books, records, and
websites. The collection of data is an important aspect of Research.

Secondary data:
 The data which is collected from the published sources that is for the first time is
called secondary data. The secondary data for the study is collected from the annual
reports of Amara Raja Batteries Ltdfrom 2016-17 to 2020-21.

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3.4 SCOPE OF THE STUDY

An extensive study is done on the investment made by Amara Raja Batteries Ltd, on
its Capital Structure &its adequacy, and the factors determining that investment.
Also the study concentrates on the liquidity position of the firm, and a brief study is
made on the techniques used by firms for the management of its Current Assets and
the sources through which the finance for Capital Structure is availed for the firm.

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3.5LIMITATIONS OF THE STUDY

 Considering the information provided by the company to be true And the correct
the study works conducted
 Study is being done for the period of 5 finanical years only.
 Study is only on Capital structure management.The information available in the
Balance Sheets has been taken from the published Annual Reports,

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CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

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4. DATA ANALYSIS AND INTERPRETATIONS

The following are the tool used for analysis of data:
 Ratio Techniques
 Earning per share analysis
 Cost of Capital
 Valuation of firm under Net Income Approach

THE RATIO TECHNIQUES:

Ratio analysis is the process of determining and interpreting numerical relationship
based on financial statements. A ratio is a statistical yardstick that provided a measure of
relationship can be percent or as quotient. Such ratios may be calculated in respect of
different items of the same period drawn from the same or different items of the same period
drawn from the same or different items of the same period drawn from the same or different
statements. Such analysis is called vertical analysis. Since it reflects the relationship or
items at a given movement or time it could be called a static type of analysis. It reflects the
change that has been taken place during the period under review. It is known as the trend
analysis.

Some writers have contend that there are as man as 239 ratios. It is futile to calculate
a large number of ratios as possible at a minimum the standards for these selected ratios are
also determined so that they measure the significance of each ratio calculated.

Financial ratios may be classified in various ways. The customary and convenient
classification will be profitability ratios, activity ratios and capital structure ratios.

DEBT EQUITY RATIO:

Debt equity ratio indicates the relationship describing the lenders contribution for each rupee
of the owner’s contribution is called debt -equity ratio. Debt equity ratio is directly computed
by dividing total debt by net worth. Lower the debt – equity ratio higher the degree of
protection. A debt – equity ratio higher the degree of protection.A debt – equity ratio of 2:1
is considered ideal.
DEBT EQUITY RATIO = Total Debt

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Net Worth

YEARS Debt Equity Debt Equity Ratio

2016-17 36052.53 17690.27 2.03

2017-18 39548.16 21140.61 1.87

2018-19 21985.92 20686.48 1.06

2019-20 25386.04 19376.87 1.31

2020-21 25714.55 22548.41 1.14

Graph :

Debt Equity Ratio

2.5

2.03
2 1.87

1.5
1.31
1.14
1.06
1

0.5

0
2016-17 2017-18 2018-19 2019-20 2020-21

Interpretation :
The proportion of debt over equities increasing year by year it has reached beyond the
standard. Organization should take some preventive actions to overcome this difficulty.

PROPRIETARY RATIO :

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A variant of debt to equity ratio is the proprietary ratio which shows the relationship between
shareholders funds total funds of the firm. This ratio is worked out as under. The idle ratio for
the proprietary ratio is 1:3 i.e., one third of the total liabilities should be outsiders funds.It
focuses the attention on the general financial strength of the business enterprise.

Proprietary Ratio = Shareholders Funds

Total Assets

YEARS Shareholders funds Total Assests Proprietary Ratio

2016-17 17690.27 53742.80 0.32

2017-18 21140.61 60688.77 0.34

2018-19 20686.48 94111.05 0.21

2019-20 19376.87 90560.57 0.21

2020-21 22548.41 101814.81 0.22

Graph :

Proprietary Ratio
0.4

0.35 0.34
0.32
0.3

0.25
0.21 0.21 0.22
0.2

0.15

0.1

0.05

0
2016-17 2017-18 2018-19 2019-20 2020-21

Interpretation:
The proportion of proprietary ratio is decreasing year by year and it has reached beyond the
standard. Organization should take some preventive actions to over come this difficulty.
EARNING PER SHARE ANALYSIS :

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EPS analysis is method to study the affect of leverage essentially involved the
comparison of alternatives method of financing under various assumption of EBIT a firm has
choice to raise funds for financing its investments proposals from different sources.

Particulars 2016-17 2017-18 2018-19 2019-20 2020-21

EBIT 1311.9 972.4 736.8 612.7 1242.6

Less: Interest 252.6 226.9 578.6 604.2 549.0

EBT 886.6 552.4 -41.7 -213.3 414.2

Less: Tax 300.4 138.2 -2.2 -82.3 27.2

PAT 579.4 420.3 -39.5 -131.0 387.0

No of Shares 3976.4 3976.4 3976.4 3976.4 3976.4

Earnings Per 14.57 10.57 -0.99 -3.29 9.73

Share

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Graph :

Earnings Per Share

20

15 14.57

10.57
9.73
10

0
2016-17 2017-18 2018-19 2019-20 2020-21
-0.99

-5 -3.29

Interpretation :
The above graph show that the earning per share is fluctuating year by year it was it was
verifying from 14.57 to- 3.29 during the study period it is having highest value of 14.57 in the
year 2016-17 and lowest value shows that the company is not having sufficient funds to
satisfy the expected returns of the share holders.

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COST OF EQUITY :
The minimum rate of return or return would necessary to attract funds form equity
shareholders is the cost of equity. In other world the requited rate or return as per expectation
of the shareholders it the cost of equity. How to measure it? The earning yield which id
obtained by dividing earning per share by market value per share is indicator of the cost of
shares it can be represented by Ke. It can be calculated by the following formula.

COST OF EQUITY (Ke) = Dividend X 100

Share Capital

YEARS Dividend Share Capital Cost Of Equity %

2016-17 569.3 3976.36 14.31

2017-18 410.6 3976.36 10.32

2018-19 0 3976.36 0

2019-20 0 3976.36 0

2020-21 376.9 3976.36 9.47

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Graph :

Cost Of Equity %
16
14.31
14

12
10.32
10 9.47

2
0 0
0
2016-17 2017-18 2018-19 2019-20 2020-21

Interpretation :
The above chart shows that except in the year 2016-17 the cost of equity remains same i.e.,
14.31% during the study period in 2018&2019 the value was 0%. It includes that the
company is not giving constant dividend to the shareholders.

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COST OF DEBT :
For any debt to raise the company has to bear the cost of interest payable to the under that is a
person bank or any financial institution. It is represented by annual interest rate on such a
loan as for tax purposes in other words interest is treated as expense for arriving the profit of
the firm to be taken at calculated as under.

COST OF DEBT (Kd) = (1-T) I

YEARS Tax Rate % Interest Rate Cost Of Debt

2016-17 33 19.25 12.89

2017-18 25 23.33 17.49

2018-19 0 78.52 78.52

2019-20 0 98.61 98.61

2020-21 6.5 44.18 41.30

Graph :

Cost Of Debt
120

98.61
100

78.52
80

60
41.3
40

20 17.49
12.89

0
2016-17 2017-18 2018-19 2019-20 2020-21

Interpretation :
The cost of debt is increasing from 2016-17 to 2020-21.The highest ratio shows that the
company is paying more interest than compared to the lowest ratios. It is due to the increase
in creditors of that corresponding year are increased.

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COST OF RETAINED EARNINGS :

Undistributed funds belonging to shareholders these must be employed in such a way
to earn the retained rate of return. To shareholders as in the firm can be reel industry it on
their behalf of one more point to be kept in the mind is that the tax extent to which current
earnings are retained the share holders tax liabilities are reduced. There fore share holders in
high tax brokerage of dividends by the company which gives them tax free income when
bonus share are issued as well as future higher dividends due to retain earnings being
reinvesting the company. It can be calculating by using following formula.

COST OF RETAINED EARNINGS (R) = Ke (1-T) (1-B)

YEARS Ke Tax rate Brokerage Cost Of Retained

Earnings
2016-17 14.31 33 0 9.58

2017-18 10.32 25 0 7.74

2018-19 0 0 0 0

2019-20 0 0 0 0

2020-21 9.47 6.5 0 8.85

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Graph :

Cost Of Retained Earnings

12

10 9.58
8.85000000000001

8 7.74

0 0
0
2016-17 2017-18 2018-19 2019-20 2020-21

Interpretation :
The cost of retained earnings is fluctuating during the study period. The company is having
the highest value of 7.3 in the year 2016-17 and the lowest value of 0 in the years 2020&21.

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VALUE OF EQUITY :
Equity value is the value of a company available to owners or
shareholders. It is the enterprise value plus all cash and cash equivalents, short
and long term investments, less all short –term debt, long debt and minority
interests.

VALUE OF EQUITY (E) = NET INCOME

COST OF EQUITY

YEARS Net Income Cost Of Equity VALUE OF

EQUITY
2016-17 1311.9 14.31 9167.71

2017-18 972.4 10.32 9422.24

2018-19 736.8 0 0

2019-20 612.7 0 0

2020-21 1242.6 9.47 13121.43

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Graph:

VALUE OF EQUITY
14000 13121.43

12000

9422.24000000001
100009167.70999999999

8000

6000

4000

2000
0 0
0
2016-17 2017-18 2018-19 2019-20 2020-21

Interpretation:
The value of equity is decresing in years 2018-19 &2019-20 it came to normal position in
2016-17.

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CAPITAL STRUCTURE

VALUE OF DEBT :

Debt instruments include mortgage assets, bank loans, short term or long term, debentures,
commercial papers and a wide variety of interest bearing financial instruments debt.

VALUE OF DEBT (D) = INTEREST

COST OF DEBT

YEARS Interest Cost Of Debt Value Of Debt

2016-17 252.6 12.89 1959.65

2017-18 226.9 17.49 1297.31

2018-19 578.6 78.52 736.88

2019-20 604.2 98.61 612.71

2020-21 549.0 41.30 1329.29

Graph:

Value Of Debt
2500

1959.65
2000

1500 1329.29
1297.31

1000
736.88
612.71
500

0
2016-17 2017-18 2018-19 2019-20 2020-21

Interpretation:
The value of equity is increasing percentages in years 2016-17 &2020-21 it came to normal
position in 2017-18.

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VALUE OF THE FIRM :

The Net income approach suggested by Durand According to this approach the capital
structure decision is relevant to valuation of firm. This approach is based on the conclusion
that the firm can lower it is cost of capital by using debt. This is based on the assumption that
the use of debt does not change the risk perception of the investor. As such, the interest rate
on debt (Kd) and the equity capitalization rate (Ke) remain constant to debt. Therefore
increased use of debt results in higher market value of share and as result, lower overall cost
of capital (Ko).This can be measured through the formula.

VALUE OF THE FIRM = VALUE OF EQUITY+VALUE OF DEBT

(OR)
V = E+D

Years Value Of Equity Value Of Debt VALUE OF

THE FIRM
2016-17 9167.71 1959.65 11127.36
2017-18 9422.24 1297.31 10719.55
2018-19 0 736.88 736.88
2019-20 0 612.71 612.71
2020-21 13121.43 1329.29 14450.72

Graph :

VALUE OF THE FIRM

16000
14450.72
14000
12000 11127.36 10719.55
10000
8000
6000
4000
2000 736.88 612.71
0
2016-17 2017-18 2018-19 2019-20 2020-21

Interpretation :
The value of the firm is in 2016-17&2020-21 increased and it is fluctuating and
decreasing year by year and in 2016&21.

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COST OF CAPITAL:
Cost of capital plays an important role in building the capital structure Cost Capital is
defined as ‘Inspirational terms cost of capital is the discount rate for evaluating an
investment project and is defined as minimum rate of return that’s firm must earn on its
investment for the market value of the firm to remain un – changed’.

Net Operating Earnings

Ko = ---------------------------- X 100
Total value of firm

YEARS Net operating Value of the Cost of capital %

income firm
2016-17 1311.9 11127.36 11.78

2017-18 972.4 10719.55 9.07

2018-19 736.8 736.88 1

2019-20 612.7 612.71 1

2020-21 1242.6 14450.72 8.59

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Graph :

Cost of capital %
14

11.78
12

10 9.07
8.59
8

2 1 1

0
2016-17 2017-18 2018-19 2019-20 2020-21

Interpretation :
The cost of equity is 1 in 2017& 18, and remaining years were 11.78 % on share capital
expect in 2020.

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WEIGHTED AVERAGE COST OF CAPITAL :

Weighted Cost Of Capital (WACC) is a calculation of a firm’s cost of capital in
which each category of capital is proportionately weighted.All soures of
capital,including equity shares,preferred shares,bonds and anyother long-term
debt,are included in WACC.

WACC = COST OF EQUITY* EQUITY WEIGHT+ COST OF DEBT*

DEBT WEIGHT

WACC = Ke*E/V+Kd*D/V

Years COST EQUITY COST OF DEBT WACC

OF WEIGH DEBT WEIGHT
EQUITY T
2016-17 14.31 0.823 12.89 17.61 14.04

2017-18 10.32 0.878 17.49 12.10 11.17

2018-19 0 0 78.52 1 78.52

2019-20 0 0 98.61 1 98.61

2020-21 9.47 9.08 41.30 9.19 46.18

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Graph :

WACC
120

98.61
100

78.52
80

60
46.18
40

20 14.04 11.17

0
2016-17 2017-18 2018-19 2019-20 2020-21

Interpretation :

The weighted average cost of capital is fluctuating year by year. i.e., the overall cost of
capital is very less in the year 2020 and very high in 2016&22.Due to more debt the
organization is liable to control the cost.

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CHAPTER 5
FINDINGS
SUGGESTIONS
CONCLUSION

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5.1 FINDINGS
 The company’s earning per share is fluctuating year by year. In the study period
company in the year 2016-21 is 14.73 in the year 2016& 13 EPS is decreased and
it is the least share negative and the company earning per share increased 9.73 to
in the year 2020-21.
 In debt equity ratio debtors are increased year by year from 2017 up to 2018 than
in the year 2019 decreased to approximately 41 percent than it takes increasing
like past years.
 The cost of equity in the study period except in the year 2019.I found that the
company had not paid dividend to the share holders in 2020 &2021.
 The cost of retained is at the year starting 2009-10 is 9.58 and it be decreased step
by step upto 2016&21 than again it increased in 2018. Here I found that the
company does not maintain standard performance.
 The cost of Debt Company having more from 2016&2017 and it decreased in the
year 2018-19 and again it takes continually like past years.
 The value of thefirm in the study periods in2016-17&2020-21ishigh.
 The firm’s cost of capital is very high 2020-21.
 Weightedaveragecostofcapitalveryhighin2019-20&2020-21.
I founded that the company was paying high interest to creditors because of
increasing debt for company.

It is found that the company is not having maintain standard ratios

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5.2 SUGGESTIONS

 The earnings per share is fluctuating year by year, the management should
concentrate to build optimum capital structure to maximize the earnings per share.
 The debt promotion is more than the idle ratio 2:1. The debt equity ratio is going
beyond the idle ratio during the study period, therefore the management should think
over their capital structure and its suitability of their objectives.
 The management should relay more on internal funds than external funds which
makes the company strong financial solvency.
 The proportions of debt funds are increasing rapidly than the increment of owner’s
funds.
 The firm is investing most of the debt funds in improving the fixed assets. It will be
suggestible to continue the same to have a financial soundness.

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5.3 CONCLUSIONS

The following conclusions are arrived at based on the observations made on the present
study:-
 Except of the first year of the study of period, funds were utilized for financing the
capital structure requirements.
This various Ratio like debt equity ratio, proprietary ratio, earning per share, indicating that
the over all financial position of the AMARA RAJA BATTERIES LTD is not satisfactory.
However there is scope for improving and in the area of cash management and capital
structure management.

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CAPITAL STRUCTURE

CHAPTER 6
ANNEXURE
BIBILOGRAPHY

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CAPITAL STRUCTURE

ANNEXURE

Profit and Loss Accountfor the year ended March 31, 2016-17.
(Amount in Rupees)

Particulars Year Ended Year Ended

31-03-2016 31-03-2017
INCOME
Sales – Gross 26,057,500,000 19,443,140,000
Less: Excise duty Collected 2,383,940,000 1,832,610,000
Net Sales 23,673,560,000 17,610,530,000
Other Income 151,850,000 77,760,000
TOTAL 23,825,410,000 17,688,290,000
EXPENDITURE
Cost of material consumed 14,993,380,000 11,787,140,000
Purchase of stock in trade 840,020,000 74,140,000
Change in inventories of finished product, work-
121,690,000 283,140,000
in-process and stock in trade
Employee benefits expenses 1,002,640,000 884,590,000
Finance cost 40,590,000 30,580,000
Depreciation and amortization 464,730,000 417,120,000
Other expenses 3,175,910,000 2,574,040,000
TOTAL 20,638,960,000 15,484,470,000
Profit Before Taxation 3,186,450,000 2,203,820,000
Less Tax expenses
Current ax 1,030,210,000 731,390,000
Deferred tax(income)/expenses 14,670,000 11,420,000
Earlier years(excess)/short provision 9,060,000 2,890,000
Profit for the year 2,150,630,000 1,480,960,000
Basic Earnings Per Equity Share 25.18 17.34

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CAPITAL STRUCTURE

BALANCE SHEET asat March 31, 2016-17

(Amount in Rupees)
Particulars As at 31-03-2016 As at 31-03-2017
SOURCES OF FUNDS
Shareholders' Funds
Share capital 170,810,000 170,810,000
Reserves and surplus 8,063,880,00 6,288,460,000
0
8,234,690,000 6,459,270,000
Noncurrent liabilities
Long term borrowings 784,720,000 701,020,000

Deferred tax liabilities 219,600,000 204,930,000

Long term provisions 146,180,000 104,170,000
1,150,500,000 1,010,120,000
Current liabilities
Short term borrowings 56,040,000 200,100,000
Trade payables 888,500.000 1,053,790,000
Other current liabilities 1,124,560,000 967,930,000
Short term provisions 2,060,880,000 1,467,990,000
4,129,980,000 3,689,810,000
Total 13,515,170,000 11,159,200,000
Assets
Noncurrent assets
Fixed asset
Tangible asset 3,524,800,000 3,132,810,000
Intangible asset 20,920,000 18,060,000
Capital work in process 310,650,000 369,570,000
3,860,950,000 3,526,280,000
Noncurrent investment 160,760,000 160,760,000
Long term loans and 122,850,000 145,180,000
advances
Other noncurrent assets 1,110,000 2,370,000
4,145,670,000 3,834,590,000
Current assets
Inventories 2,666,170,000 2,846,970,000
Trade receivables 3,196,830,000 3,056,620,000
Cash and bank balance 2,292,200,000 451,180,000
Short term loans and 1,182,700,000 946,740,0000
advances
Other current assets 31,600,000 23,100,000
9,369,500,000 7,324,610,000
Total 13,515,170,000 11,159,200,000

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Profit and Loss Account for the year ended March 31, 2017-18
(Amount in Rupees)
Particulars Year Ended Year Ended
31-03-2017 31-03-2018
INCOME
Sales of product 32,957,450,000 25,978,360,000
Less: Excise duty Collected 3,495,720,000 2,383,940,000
Net Sales 29,461,730,000 23,594,420,000
Sale of Services 137,020,000 38,960,000
Other operating revenue 15,210,000 11,300,000
Net revenue from operations 29,613,960,000 23,644,680,000
Other income 465,510,000 279,710,000
TOTAL 30,079,470,000 23,924,390,000
EXPENDITURE
Cost of material consumed 17,638,940,000 15,132,080,000
Purchase of stock in trade 2,632,540,000 840,020,000
Change in inventories of finished product, work-
320,890,000 98,150,000
in-process and stock in trade
Employee benefits expenses 1,266,230,000 1,002,640,000
Finance cost 9,980,000 24,470,000
Depreciation and amortization 660,920,000 464,730,000
Other expenses 3,882,010,000 3,175,850,000
TOTAL 25,769,730,000 20,737,940,000
Profit Before Taxation 4,309,740,000 3,186,450,000
Less Exceptional items 91,570,000 -
Less Tax expenses
Current ax 1,377,970,000 1,030,210,000
Deferred tax(income)/expenses 24,510,000 14,670,000
Earlier years(excess)/short provision 2,340,000 9,060,000
Profit for the year 2,867,050,000 2,150,630,000
Basic Earnings Per Equity Share 16.78 12.59

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 CAPITAL STRUCTURE

BALANCE SHEETas at March 31, 2017-18

(Amount in Rupees)
Particulars As at 31-03-2017 As at 31-03-2018
SOURCES OF FUNDS
Shareholders' Funds
Share capital 170,810,000 170,810,000
Reserves and surplus 10,427,330,000 8,063,880,000
10,598,140,000 8,234,690,000
Noncurrent liabilities
Long term borrowings 773,130,000 784,720,000
Deferred tax liabilities 195,090,000 219,600,000
Long term provisions 376,410,000 146,180,000
1,334,630,000 1,150,500,000
Current liabilities
Short term borrowings 98,630,000 56,040,000
Trade payables 1,362,840,000 876,330,000
Other current liabilities 1,807,260,000 1,136,730,000
Short term provisions 2,493,200,000 2,060,880,000
1,888,508,475 1,568,304,581
5,761,930,000 4,129,980,000
Total 17,704,700,000 13,515,170,00
Assets
Noncurrent assets
Fixed asset
Tangible asset 3,554,970,000 3,524,800,000
Intangible asset 33,690,000 20,920,000
Capital work in process 1,024,970,000 310,650,000
Intangible asset under development 4,840,0000 4,580,000
4,618,470,000 3,860,950,000
Noncurrent investment 160,760,000 160,760,000
Long term loans and advances 353,520,000 96,410,000
Other noncurrent assets 3,430,000 1,110,000
5,136,180,000 4,119,230,000
Current assets
Inventories 2,928,580,000 2,666,170,000
Trade receivables 3,806,770,000 3,196,830,000
Cash and bank balance 4,107,900,000 2,291,900,000
Short term loans and advances 1,656,780,000 1,209,440,000
Other current assets 68,490,000 31,600,000
12,568,520,000 9,395,940,000
Total 17,704,700,000 13,515,170,00

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Profit and Loss Accountfor the year ended March 31, 2018-19
Particulars Year Ended Year Ended
31-03-2018 31-03-2019
INCOME
Sales of product 38,041,270,000 32,949,370,000
Less: Excise duty Collected 4,005,150,000 3,512,450,000
Net Sales 34,036,120,000 29,436,920,000
Sale of Services 309,320,000 137,020,000
Other operating revenue 21,150,000 15,210,000
Net revenue from operations 34,366,590,000 29,589,150,000
Other income 455,140,000 465,510,000
TOTAL 34,821,730,000 30,054,660,000
EXPENDITURE
Cost of material consumed 21,011,950,000 17,603,120,000
Purchase of stock in trade 2,113,690,000 2,632,540,000
Change in inventories of finished product,
( 292,100,000) (320,890,000)
work-in-process and stock in trade
Employee benefits expenses 1,583,160,000 1,262,300,000
Finance cost 7,180,000 2,690,000
Depreciation and amortization
expenses[includes impairment loss of Rs 645,710,000 660,920,000
nil(pay Rs 75.52 million)]
Other expenses 4,346,600,000 3,904,240,000
TOTAL 29,416,190,000 25,744,920,000
Profit Before Exceptional Items And Tax 5,405,540,000 4,309,740,000
Less: Exceptional items(net) 38,840,000 91,570,000
Profit before tax 5,366,700,000 4,218,170,000
Less : Tax expense - -
Current Tax 1,580,000,000 1,377,970,000
Deferred Tax(credit)/expense 106,230,000 (24,510,000)
Earlier years (excess)/short
6,110,000 (2,340,000)
provision
Profit for the year 3,674,360,000 2,867,050,000
Basic and diluted earnings per equity share of
21.51 16.78
Rs 1 each
(Amount in Rupees)

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CAPITAL STRUCTURE

BALANCE SHEET as at March 31, 2018-19

(Amount in Rupees)
Particulars As at 31-03-2018 As at 31-03-2019
SOURCES OF FUNDS
Shareholders' Funds
Share capital 170,810,000 170,810,000
Reserves and surplus 13,456,000,000 10,427,000,000
13,627,000,000 10,598,000,000
Non-Current Liabilities
Long-term borrowings 759,470,000 773,130,000
Long-term provisions 369,570,000 376,410,000
Deferred tax liability 301,330,000 195,090,000
1,430,370,000 1,344,630,000
Current Liabilities
Short-term borrowings 83,830,000 98,630,000
Trade payables 1,277,790,000 1,362,840,000
Other current liabilities 2,156,680,000 1,807,260,000
Short-term provisions 2,818,730,000 2,493,200,000
6,337,030,000 5,761,930,000
TOTAL 21,394,410,000 17,704,700,000
Assets
Fixed assets
Current Investments 7,678,640,000 4,618,470,000
Non- Current Investments 160,760,000 160,760,000
Long-term loans and 567,690,000 353,520,000
advances
8,408,310,000 5,136,180,000
Current assets
Inventories 3,350,080,000 2,928,580,000
Trades receivables 4,527,890,000 3,806,770,000
Cash and bank balances 2,945,670,000 4,107,900,000
Short-term loans and 2,119,300,000 1,656,780,000
advances
Other current assets 43,160,000 68,490,000
12,986,100,000 12,568,520,000
TOTAL 21,394,410,000 17,704,700,000

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CAPITAL STRUCTURE

Profit and Loss Accountfor the year ended March 31, 2019-20

(Amount in Rupees)

Particulars Year Ended Year Ended

31-03-2019 31-03-2020
INCOME
Sales of product 46,039,980,000 38,041,270,000
Less: Excise duty Collected 4,258,380,000 4,005,150,000
Net Sales 41,781,600,000 34,036,120,000
Sale of Services 314,840,000 309,320,000
Other operating revenue 16,850,000 21,150,000
Net revenue from operations 42,113,290,000 34,366,590,000
Other income 422,990,000 455,140,000
TOTAL 42,536,280,000 34,821,730,000
EXPENDITURE
Cost of material consumed 21,011,950,00
25,494,490,000
0
Purchase of stock in trade 2,746,490,000 2,113,690,000
Change in inventories of finished product, work-in-
( 479,950,000) (292,100,000)
process and stock in trade
Employee benefits expenses 1,950,930,000 1,583,160,000
Finance cost 2,410,000 7,180,000
Depreciation and amortization expenses 1,339,920,000 645,710,000
Other expenses 5,310,400,000 4,346,600,000
TOTAL 36,364,870,000 29,416,190,000
Profit Before Exceptional Items And Tax 6,171,410,000 5,405,540,000
Less: Exceptional items(net) 72,790,000 38,840,000
Profit before tax 6,098,620,000 5,366,700,000
Less : Tax expense - -
Current Tax 1,910,000 1,580,000
Deferred Tax(credit)/expense 67,160,000 (106,230,000)
Earlier years (excess)/short provision 12,840,000 (6,110,000)
Profit for the year 4,108,620,000 3,674,360,000
Basic and diluted earnings per equity share of Rs 1
24.05 21.51
each

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CAPITAL STRUCTURE

BALANCE SHEET as at March 31, 2019-20

(Amount in Rupees)
Particulars
As at 31-03-2019 As at 31-03-2020
SOURCES OF FUNDS
Shareholders’ funds
Share capital 170,810,000 170,810,000
Reserve and surplus 16,824,900,000 13,456,200,000

16,995,710,00 13,627,010,000
0
Non-current liabilities
Long-term borrowings 741,380,000 759,470,000
Deferred tax liabilities (net) 368,480,000 301,330,000
Long-term provisions 443,060,000 369,570,000
1,552,920,000 1,430,370,000
Current liabilities
Short-term borrowings - 83,830,000
Trade payables 1,520,800,000 1,277,790,000
Other current liabilities 2,615,690,000 2,156,680,000
Short-term provisions 1,195,720,000 1,259,780,000
5,332,210,000 4,778,080,000
Total 23,880,840,00 19,835,460,000
0
Assets
Non-current assets
Fixed assets
Tangible assets 9,398,930,000 6,198,940,000
Intangible assets 43,690,000 32,960,000
Capital work-in-progress 861,680,000 1,443,600,000
Intangible assets under development 1,520,000 3,140,000
10,305,820,000 7,678,640,000
Non-current investments 160,760,000 160,760,000
Long-term loans and advances 654,700,000 567,690,000
Other non-current assets 0,700,000 1,220,000
11,121,980,00 8,408,310,000
0
Current assets
Inventories 4,181,330,000 3,350,080,000
Trade receivables 5,541,020,000 4,527,890,000
Cash and bank balances 2,221,710,000 2,945,670,000
Short-term loans and advances 740,820,000 560,350,000
Other current assets 73,980,000 43,160,000
12,758,860,00 11,427,150,000
0
Total 23,880,840,00 19,835,460,000
0

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Profit and loss Account for the year ended March 31, 2020-21

(Amounts in Rupees)
Particulars Year Ended Year Ended
31-03-2020 31-03-2021
Revenue from operations 52,417,610,000 46,371,670,000
(gross)
Less: excise duty 5,510,930,000 4,258,380,000
Revenue from operations (Net) 46,906,680,000 42,113,290,000
Other income 456,850,000 422,990,000
Total Revenue 47,363,530,000 42,536,280,000
Expenses
Cost of materials consumed 27,421,380,000 25,494,670,000
Purchase of stock – in- trade 3,254,510,000 2,746,490,000
(Traded goods)
Changes in inventories of (1,031,200,000) (479,950,000)
finished goods, Work-in-
progress and stock-in-trade
Employee benefits expense 2,430,020,000 1,950,930,000
Finance costs(into) 4,850,000 2,410,000
Depreciation and amortization 1,398,670,000 1,339,920,000
expense
Other expenses 6,663,370,000 5,383,190,000
Total Expenses 40,141,600,000 36,437,660,000
Profit before tax 7,221,930,000 6,098,620,000
Tax expense
Current tax expense 2,115,000,000 1,910,000,000
Taxation of earlier years (7,440,000) 12,840,000
Deferred tax 219,920,000 67,160,000
Net tax Expense 2,327,480,000 1,990,000,000
Profit for the year 4,894,450,000 4,108,620,000
Earnings per share (of Rs,1/-
each)
Basic and diluted (Rs.) 28.65 24.05

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CAPITAL STRUCTURE

BALANCE SHEET As at March 31, 2020-21

(Amount in Rupees)
Particulars As at 31-03-2020 As at 31-03-2021
Equity & Liabilities
Share holders’ funds
Share capital 170,810,000 170,810,000
Reserves and surplus 20,845,610,000 16,824,900,000
21,016,420,000 16,995,710,000
Non-current liabilities
Long-term borrowings 724,720,000 741,380,000
Deferred tax liabilities(Net) 588,400,000 368,480,000
Long term provisions 460,150,000 443,060,000
1,773,270,000 1,552,920,000
Current liabilities
Trade payables
Total outstanding dues of Micro & 14,420,000 6,940,000
Small enterprises
Total outstanding Dues of creditors 3,286,210,000 2,602,140,000
other than Micro & Small Enterprises
Other current liabilities 2,470,550,000 1,509,430,000
Short-term provisions 522,410,000 1,195,720,000
6,293,590,000 5,314,230,000
TOTAL 29,083,280,000 23,862,860,000
ASSETS
Non currents assets
Fixed assets
Tangible assets 13,122,660,000 9,398,930,000
In-tangible assets 40,630,000 430,690,000
Capital work-in –Progress 1,197,420,000 861,680,000

In-tangible assets under developments 1,720,000 1,520,000

14,362,430,000 10,305,820,000
Non-current Investments 160,760,000 160,760,000
Long term loans & advances 479,280,000 701,700,000
15,002,470,000 11,168,280,000
Current Assets
Inventories 6,016,480,000 4,181,330,000
Trade receivables 5,921,460,000 5,541,020,000
Cash & cash equivalents 1,502,580,000 2,221,710,000
Short term loans & advances 527,750,000 660,810,000
Other current assets 112,540,000 89,710,000
14,080,810,000 12,694,580,000
TOTAL 29,083,280,000 23,862,860,000

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CAPITAL STRUCTURE

BIBLOGRAPHY

 Prasanna Chandra, financial Management, Tata Mc Graw-Hill Publishing Co. Ltd.

New Delhi, Edition, 2004.

 Company magazines and company internal reports

 I.M.PANDAY 2005 Financial Management 9th edition vikas

WEB-SITES

 www.arbl.com

 www.amararaja.co.in

 www.google.com

 www.wikipedia.com

 www.finance.com

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