Anda di halaman 1dari 59

7 : Summary, Conclusion and Recommendations

221

Chapter 7: Summary, Conclusion and Recommendations

An empirical study of the practices of the Capital Budgeting for evaluation of investment
proposals in the corporate sector in India has been made in the preceding chapters.
Comparison, wherever possible, has been made with the practices and procedures in the
foreign countries. It has to be noted that conclusions based upon a study of this type have
to be taken as indicative of broad trends only. However, the results of this study do
indicate that majority of large scale companies in India are aware of the need for a well
formulated capital budgeting decisions. It is proposed to review the important findings of
this study and venture to outline some suggestions and recommendations for the benefit
of academicians, industry as well as for post doctoral research.
An in-depth analysis has been carried out to observe the trend and insight into factors that
influence capital budgeting decisions. The results of the survey and its analysis have been
provided in chapter 5.
The companies in India do have specific amount of average size of annual capital budget
and all project size requires formal quantitative analysis. However, such analysis and use
of capital budgeting method differ on the basis of nature and size of a particular project
under consideration. Surprisingly, the companies under study in India seem to be
planning one year in advance only but here also the period of planning is different for
different projects. This may be due to volatile business environment. The authority to take
final capital budgeting decision rests with the chief finance officer and top management
officials of all the organizations under study.
One of the objectives of this study is to determine the types of capital investments
undertaken and the methods of appraisal used. The responding firms ranked pay back
period as the most important technique followed by internal rate return and net present
value. Thus, pay back period method (59.3%) still continues to be the most favoured
technique though it ignores time value of money and also the cash flow beyond pay back
period followed by IRR. But almost all the companys are using now multiple techniques
222

for evaluating their capital budgeting proposals. In this research study, the companys
prefer IRR and NPV with the PBP method. The investment in the new projects being
strategic decisions in nature IRR, PBP and NPV are the most preferred techniques while
for expansion, replacement, modernization, etc. PBP is favoured by the respondents.
Another objective of this study is to analyze the problems faced to estimate the cash flows
associated with each capital investment accurately. The cash flow estimation is
considered as the most difficult task in capital budgeting decisions. This can be
understood from the responses of the respondents of the present study. Many respondents
have replied that items like expenses incurred on R&D, market survey, test marketing,
interest on borrowings, depreciation, income taxes etc. have been included in the cash
flows which requires to be excluded actually. In fact, many of them might have been
intending to convey that they include it in the project cost. Even the firms are using
different inflation adjustment methods for their investment appraisal.
One of the objectives of this research is to analyze how Risk and Uncertainty in the
future estimates in investment projects is being taken care of. Sensitivity analysis is
considered as the most important technique while scenario analysis is considered as the
second important technique for assessing risk. The other more sophisticated techniques
like Decision tree, Monte Carlo simulation, Certainty equivalent, Probability analysis,
Beta analysis has got very low ratings that means these techniques are rarely used in
practice by firms in India.
The researcher wanted to assess suitability of Discounted Cash Flow (DCF) Techniques
in India and the preferences between Net Present Value (NPV) and Internal Rate of
Return (IRR) methods. All the companies responded to my study are using DCF
techniques either IRR or NPV or both which indicates that now these techniques are very
well accepted and used by finance officials of the organizations. With reference to this
Porwal (1976) in his study has mentioned, As long term planning under the present
conditions is not quite possible in India, the use of DCF methods do not seem to be
efficacious. However, it needs to be mentioned that as conditions improve, it would be
desirable for Indian companies to apply theoretically correct techniques in a larger
measure. Prasanna Chandra (1975) in his study conducted on 20 companies made the
223

following observations. The most commonly used method for evaluating the investments
of small size is payback period method.For investments of large size, the average rate
of return is commonly used as the principle criterion and the payback period is used as a
supplementary criterion. DCF techniques, though not commonly used, are gaining
importance, particularly in the evaluation of large investments. It appears that now
though the government restrictions are minimized on business but firms are always
working under highly volatile environment. Still no respondents in my study is using only
pay back period method at the same time no organizations are using single technique for
evaluating capital budgeting proposals. Though Pay back period is still a popular
technique, it is always used with some other DCF techniques which are in most of the
cases IRR or NPV. The suitability of DCF techniques even depends on how professional
the organization is. But all the respondents in my study appreciate and use the suitability
of these techniques. In capital budgeting literature, two widely discussed methods for
appraisal of capital investments are the NPV and IRR methods. There is good amount of
controversy exist regarding the superiority of one method over the other. Many authors
argue that the NPV method leads to correct decision (Bierman and Smidt S, 1980). On the
other hand Merret A J and Sykes A (1966) prefer the yield method. In some situations the
NPV and yield methods give contradictory results. Babu C P (1984) explains the reasons
for this phenomenon-in capital investment appraisal using the yield like yield to
maturity in bonds, or as a growth rate of an investment is misleading, and is responsible
for the contradictions that exist between the NPV and yield methods. He further says
that as the NPV criterion is compatible with the objective of the firm, the yields can be
used in such a manner so as to give the same results as that of NPV. The respondents of
my study prefer both the techniques but IRR (40.7%) seems to be given more importance
by them in comparison to NPV (33.3%) as it gives some rate for comparison. When they
were asked to mention frequency of the use of different capital budgeting techniques the
NPV (59.3%) got more preference than IRR (55.5%). Thus, it can be concluded that both
the techniques goes side by side when it comes to selecting one over the other. The
respondents of my study prefer both the techniques but IRR seems to be more favoured
by them as it gives some rate for comparison, however, there is a negligible difference
between the preference for both the techniques i.e. NPV and IRR. The uses of DCF
techniques require determining the minimum acceptable rate of return for using it as a
224

discount rate. The study reveals that weighted average cost of capital (55.6%) is
maximum in use for using it as a discount rate. And the preferred methods of estimating
cost of equity are CAPM (capital asset pricing model) and dividend yield plus growth rate
followed by cost of debt plus risk premium. The use of present market values of debtequity is more preferred (46.67%) while calculating WACC. Generally, the companies do
not prefer to use different discount rates for different sizes of investment. The maximum
number of companies (70.4%) do prefer to categorize projects into different risk classes
and they feel that fluctuations in expected return as a major risk factor followed by
changes in economic, social and political factors. Sensitivity analysis (81.4%) is
considered as the important technique for assessing risk followed by scenario analysis
(62.9%). There is no major switch in techniques by the companies for investment
appraisal. Almost three fifth of the firms place a limit on the size of its annual capital
budget. There are many reasons responsible for it but the main reason is investment
decisions important for whole group and require central control (38.9%) followed by the
another reason i.e. management wants to control areas of activity and mix of products.
The companies do accept non-economic projects due to many reasons viz., health and
safety, legislation, social and environmental reasons etc. The most of the firms prefer to
go for post audits of their major capital expenditures. The CFOs and Board of Directors
are involved for approving almost all capital budgeting projects in all organizations.
Further, An effort has been made to develop a relationship between the independent variables;
Plant and machinery and sales to explain the variation in the dependent variable as operating
income of the company. The analysis has been carried out with the help of regression analysis.
The period covered in the study is last five financial years (2003-2007). The summarized results
of analysis for each company are provided in the chapter 6.
It is clear from the results obtained that, in most cases the R2 for almost 90 % of the
companies is around 95 %. Thus, it can be said that capital budgeting decisions leading to
investment in plant and machinery and sales together influence almost 95 % variation in
the operating income of a company. Thus, our findings, through the above analysis it can
be stated that proper usage of capital budgeting techniques lead to accurate decision for

225

investment in fixed assets especially plant and machinery and hence better operating
income that the better capital budgeting.
Limitations of the study:
It is important to acknowledge and discuss some of the limitations of the study.
The survey was limited to the large scale listed firms only. The capital budgeting
practices of listed firms may not be representative of all firms in India. The survey
questionnaires used in this study were inherently limited in scope which is based upon
stringent underlying assumptions about market conditions and firm behavior. Such an
approach implies a level of universality that may not exist. Further research is needed to
discover whether there are significant cultural and institutional issues related to corporate
financial policies and practices that are unique to India. The results of the study are
compared with the results of previous surveys in the U.S. and other countries of the AsiaPacific region. However, such comparisons among the countries must be approached
cautiously because the surveys were conducted at different times and during different
economic conditions. While the survey was mailed to the CFO, the responses were the
opinion of one individual and thus may not fully reflect the firms position. It is possible
that this person may not be the best to assess the capital budgeting process if he/she is far
removed from capital management. There is also potential concern about a non-response
bias. In an attempt to limit this limitation, five personalized mailings were sent over a
period of one year. Further, the companies participated in survey will be given a copy of
results. While the survey technique is not without flaws, it has been generally accepted as
a reasonable proxy given the time and personal constraints in large scale companies.
Suggestions/Scope for Further Research study:
Due to the limited scope of the present study, a large number of research issues are not
attempted but are felt in the course of the study. Some of them are as follows.
1. The results of this study reveal a number of subjective factors used by managers to
evaluate proposed investments. So the human side of Capital budgeting would be an
interesting focus for further research.
226

2. There is a need to link the survey responses across different areas of financial
management. For example, It would be interesting to know is there a link between use
of a particular capital budgeting method and use of a particular source of finance or
use of a particular method of determining discount rate.
3. As these decisions affect the long term future survival and growth of the organization,
it would also be interesting to study whether the capital budgeting decision makers are
getting any special incentives or otherwise for taking such decision which generate
desired results.
4. Though the conditions in India have improved significantly after economic reforms,
there is a need to study the impact of taxation and government policies on capital
budgeting decisions of firms in India.
5. One of the unexplored areas still is the relationship between the capital budgeting
techniques and the strategic and corporate planning procedures used. Future research
will also be needed to understand why organizations have selected capital budgeting
practices and the extent to which selection and use of capital budgeting practices
matters in the efficiency and viability of a particular investment proposal and their
business as a whole.
6. There is a need to investigate how firms deal with some typical problems of the
capital budgeting decision process in specialized areas such as high technology and
social expenditures because there is a great uncertainty about the cash flows
associated with high technology projects and the benefits from a social project may
only be indirectly associated with identifiable cash flows.
Thus from all the discussions in the preceding pages, I can safely predict that the trend to
adopt and use theoretically superior techniques for capital budgeting decisions will
continue at an accelerating pace and at the same time organization will modify these
practices looking to their changing requirements and will also start using some value
management tools like EVA (economic value added), VIR (value improvement ratio),
SVA (shareholder value analysis), Real Options etc. There will be significant increase in
the use of multiple evaluation techniques with the rapid use of computers. The increased
227

sophistication and availability of easily used computer technology is occurring. Therefore


it is simple and less costly to apply refined risk analysis and management science
techniques. The effect of a change of a single assumption could take hours to recompute
before the advent of electronic spreadsheets. Today, analyzing a change in assumption
requires a couple of keystrokes and few seconds to accomplish the results. Let us hope
that the findings of this study will lead to reviewing capital budgeting practices of their
firms by Indian companies.

228

BIBLIOGRAPHY

BOOKS
ARTICLES
WEB SITES

229

BIBLIOGRAPHY :

BOOKS

Abdelsamad Moustafa H., A Guide to Capital Expenditure Analysis, amacom A


division of American Management Association
Bierman H and Smidts: The Capital Budgeting Decision. Macmillian Publishing,
New York.
Brealey Richard A. and Myers Stewart C., Principles of Corporate Finance(6th
ed.), Tata McGraw-Hill Publishing Company Limited
Brett Trueman (1986): The Relationship Between the level of Capital
Expenditure and Firm Value, Journal of financial and Quantitative analysis,
Vol.21, No.2, June
Brigham Eugene F. and Ehrhardt Michael C., Financial Management(Theory and
Practice) 10th ed.,Thomson South-Western
Brigham Eugene F. and Houston Joel F., Fundamentals of Financial Management
(10th ed.),Thomson South-Western
Chandra Prasanna, Financial Management (Theory and Practice) 5th ed., Tata
McGraw-Hill Publishing Company Limited,2001
Emery Douglas R. and Finnerty John D., Corporate Financial Management
(International Edition), Prentice-Hall International, Inc.
George M. McCabe and George N. Sanderson (1984) : Abandonment Value in
Capital Budgeting: Another View, Management Accounting, January
Gitman Lawrence J., Principles of Managerial Finance,10th ed., PEARSON
Education, pg. 403
Goyal V.K., Cost of Capital Measurement in Indian Industries, Deep & Deep
Publications
Horngren, Charles T.:Cost Accounting-A Managerial Emphasis, Prentice Hall,
India, Third edition, 1973, pg. 468
Jain P K & Khan M Y, Financial Management (4th ed),Tata McGraw-Hill
Publishing Company Ltd, pg 10.25
Kee R. and Feltus O. (1982): The Role of Abandonment Value in the Investment
Decision, Management Accounting, August
230

Kulkarni P. V. and Sathyaprasad B. G., Financial Management, 9th Revised


Edition, Himalaya Publishing House
Lasher William R., Practical Financial Management(2nd edition), South-Western
College Publishing, pg. 333
Levin Richards I. and Rubin David S., Statistics for Management (7th ed),
Prentice Hall of India Private Limited, 2004
Lumby Steve & Jones Chris, Fundamentals of Investment Appraisal, Thomson
Learning,2001
Maheshwari Dr SN, Financial Management, Sultan Chand & Sons, pg D.253
McMENAMIN JIM, Financial Management (An Introduction), OXFORD
University Press, pg. 408-409
Merrett & Sykes Allen, Capital Budgeting and Company Finance, Longmans,
Green and Co. Ltd, 1966
Murthy G. (1985): Capital Investment Decisions in Indian Industry, Himalayan
Publishing House, Bombay
Pandey I M: Financial Management [9th ed.], Vikas Publishing House Pvt Ltd,
Patel Bhavesh M. (1989): Financial Policies and Practices followed by giant
companies in India Thesis submitted to Sardar Patel University
Porwal L.S. and Bansal S.C. (1982): Financial Goals of Capital Expenditure
Planning and Control, The Chartered Accountant, June
Porwal L.S.:Capital Budgeting in India, Sultan Chand & Sons
Rockley L.E.,Capital Investment Decisions: a manual for profit planning,
Business Books Limited, London
Rustagi R.P., Fundamentals of Financial Management (2nd ed.), Galgotia
Publishing Company
Sahu Dr Promod Kumar, Capital Budgeting in Corporate Sector, Discovery
Publishing House
Seitz Neil & Ellison:Capital Budgeting And Long-term Financing Decisions
[Third Edition], Harcourt Brace College Publishers
Srivastava R.M., Essentials of Business Finance, 7th Revised Edition, Himalaya
231

Publishing House
Suk H. Kim and Trevor Crick (1984): How Non-US MNCs Practice Capital
Budgeting, Management Accounting, January
Thorne Henry C. & Piekarski Julian A.: Techniques for Capital Expenditure
Analysis, Marcel Dekker, Inc.
Van Horne James C. and Wachowicz, Jr. John M., Fundamentals of Financial
Management (Tenth Ed.), Prentice Hall of India Private Limited, 1999
Van Horne James C. and Wachowicz, Jr. John M.,Fundamentals of Financial
Management (Eleventh Ed.), Prentice Hall of India Private Limited, 2002,pg.
147, 378
Van Horne, J.C., Financial Management and Policy, Prentice-Hall of India, 1974,
p.74
Wilkes F.M., Capital Budgeting Techniques [2nd ed], A Wiley Interscience
Publication, John Wiley & Sons

232

ARTICLES

Aggarwal Raj, Corporate Use of Sophisticated Capital Budgeting Techniques: A


Strategic Perspective and A Critique of Survey Results, INTERFACES, Vol. 10,
No. 2, April 1980, pg. 31-34
Akalu Mehari Mekonnen and Turner, Investment Appraisal Process: A Case of
Chemical Companies, ERIM Report Series Research in Management, December
2001, ERS-2001-78-ORG
Akalu Mehari Mekonnen and Turner, The Practice of Investment Appraisal: An
Empirical Enquiry, ERIM Report Series Research in Management, December
2001, ERS-2001-77-ORG
Akalu Mehari Mekonnen; Evaluating the capacity of standard investment appraisal
methods, Tinbergen Institute Discussion Paper, 30 July 2002
Anand Manoj; Corporate Finance Practices in India: A Survey; Vikalpa; Vol. 27,
No. 4, October-December 2002, pp. 29-56
Andy Neely, Mike Bourne, Chris Adams, Herman R. Heyns,New View of Capital
Planning, (10/1/2003) CFO Project Volume 2
Arnold Glen C. and Hatzopoulos Panos D., The theory-practice gap in capital
budgeting: Evidence from the United Kingdom, Journal of Business Finance &
Accounting, 27(5) & (6), June/July 2000, 0306-686X, pp 603-626
Arsiraphongphisit Oraluck, Kester George W., Skully Michael T., Financial
Policies and Practices of Listed Firms in Thailand: Capital Structure, Capital
Budgeting, Cost of Capital, and Dividends
Babu C Prabhakara (1984): The yield method in capital investment appraisalcertain observations and suggestions. P U Management Review, Vol. VII, (1&2),
Jan-Dec.pg.3 1
Bailes Jack C. and Nielsen James F.; Using decision trees to manage capital
budgeting risk, MANAGEMENT accounting quarterly, winter 2001, pp 14-17
Barber Joel R., Florida International University, Cost of capital with Floatation
Costs, Journal of Business & Economics
Bauer Daniel & Richardson, Is that expense justified?
233

Beaves Robert G., A comment on Interpreting Rates of Return: A modified Rateof-Return Approach, Financial Practice & Education, pp 136-137
Beranek William, The Weighted Average Cost of Capital and Shareholder Wealth
Maximization, Journal of Financial and Quantitative Analysis, March 1977, pg.
17-31
Bernhard Richard H., Some New Capital Budgeting Theorems: comment, Journal
of Financial and Quantitative Analysis, December 1978, pg. 825-829
Bhalla V K, Creating Wealth- Corporate Financial Strategy and Decision Making,
Journal of Management Research
Bierman H J (1993), Capital Budgeting in 1992:A Survey, Financial Management,
Vol.22,p.24
Binder John J. and Chaput Scott J., A positive analysis of corporate capital
budgeting practices, Review of quantitative finance and accounting, 6(1996):pp
245-257
Block Stanley (2000), Integrating Traditional Capital Budgeting Concepts Into An
International Decision-Making Environment, Engineering Economist; 2000, Vol.
45 Issue 4, p309, 17p
Block Stanley; Are there any differences in capital budgeting procedures between
industries? An empirical study, The Engineering Economist, 50, pp 55-67
Block Stanley; Capital budgeting techniques used by small business firms in the
1990s, The Engineering Economist, Summer 1997, v42 n4 p289(14)
Block Stanley; Integrating traditional capital budgeting concepts into an
international decision-making environment, The Engineering Economist, 2000,
volume 45, Number 4, pp 309-325
Bradford Garnett L. and Miller Stephen E.; An analysis of alternative NPV capital
investment decision models, working paper, October 1998
Bunch Beverly S., Current practices and issues in capital budgeting and reporting,
Public Budgeting & Finance, Summer 1996, pp 7-25
Canada, J.R. and N.P.Miller, Review of surveys on capital investment evaluation
techniques,The Engineering Economist, Vol.30, No.2,1984, pp.193-200

234

Chadwell-Hatfield Dr Patricia, Goitein Dr Bernard, Horvath Dr. Philip, Webster


Dr. Allen; Financial Criteria, Capital Budgeting Techniques, and Risk Analysis of
Manufacturing Firms, Journal of Applied Business Research, Winter 1996/1997,
Volume 13, Number 1, pp 95-104
Chandra Prasanna, Capital Budgeting in Indian Industries, February 1973, pg 1115
Chandra Prasanna, Capital Budgeting: Overall Corporate Considerations,
Decision, Jan.-March 1985, pg 27-29
Chen Shimin, Dodd James and Zhu Zhiwei, An empirical study of the use of
payback method: Opportunistic behavior or efficient choice, Journal of
Accounting and Finance Research-Fall, 2004,pp 40-53
Chen Theodore, Capital budgeting,
Publishing,March 2006, pg 41

Financial

Management,

Caspian

Chris Lamoureux, Capital Budgeting The Process, January 18, 2000


Cooper, Morgan, Redman and Smith; Capital budgeting models: Theory Vs.
Practice; Business Forum, Vol. 26, Nos. 1,2, pp. 15-19
Cotter James F., Marcum Bill, and Martin Dale R.; A cure for outdated capital
budgeting techniques, The Journal of Corporate Accounting & Finance,
March/April 2003, pp 71-80
Dean Joel, Better Management of Capital Expenditures Through Research, The
Journal of finance, pg. 119-128, A paper presented at a meeting of the American
Finance Association in Chicago on December 28, 1952
Dhankar R S (1995), An Appraisal of Capital Budgeting Decision Mechanism in
Indian Corporates, Management Review, July-December, pp. 22-34
Drury C,Braund S and Tayles M (1993), A survey of Management Accounting
Practices in UK Manufacturing Companies, ACCA Research Paper 32, Chartered
Association of Certiifed Accountants
Drury Colin and Tayles Mike, UK capital budgeting practices: some additional
survey evidence, European journal of finance 2,pp 371-388 (1996)
Dun Gifford, Jr.; How CFOs really Practice finance, MIT Sloan Management
Review, Winter 2001,pp 16-17

235

Eagle David and Kiefer Dean, Comparing capital projects with unequal lives:
Inflation and technology issues, pp148-153
Farrell Michael, Financial Engineering in Project Management, Project
Management Journal, March 2002, pp. 27-36
Fremgen, J.M.,Capital Budgeting, Management Accounting, Vol.54,May
1973,pp.19-25
Froot Kenneth A., Stein Jeremy C., Risk Management, Capital Budgeting and
Capital Structure Policy Financial Institutions: An Integrated Approach, NBER
Working Paper Series, Working Paper 5403, January 1996
Gifford Dun, Jr. How CFOs Really Practice Finance, MIT Sloan Management
Review, Winter 2001
Gitman, Lawrence G. and Forrester, John R. Jr.,A Survey of Capital Budgeting
Techniques Used by Major U.S. Firms, Financial Management, Fall 1977, pg 6671
Goswami D. K., Capital Budgeting Techniques in Investment Decisions, SBI
Monthly Review, March 1990, 109-123
Graham John and Harvey Campbell (2002), How do CFOS Make Capital
Budgeting and Capital Structure Decisions?, Journal of Applied Corporate
Finance, Vol 15, No 1 SPRING 2002, pp 8-23
Graham John R. and Harvey Campbell R.(2001); The theory and practice of
corporate finance: Evidence from the field, Journal of Financial Economics, Vol
60, Nos 2&3, pp187-243
Gupta Sanjeev, Batra Roopali and Sharma Manisha,Capital Budgeting Practices
in Punjab-based Companies, The Icfai Journal of APPLIED FINANCE, February
2007, Vol. 13, No.2, pp. 57-70
Harel Arie & Harpaz Giora, Project valuation with time-varying cash flows:A
Bayesian approach, The Engineering Economist, 50:337-359
Hermes, N. & Smid, P. & Yao, L.(2006),Capital Budgetting Practices: A
comparative Study of the Netherlands and China, University of Groningen,
Research Institute SOM (Systems, Organisations and Management) in its series
Research Report with number 06E02

236

Hogaboam Liliya S. and Shook Steven R., Capital budgeting practices in the U.S.
forest products industry: A reappraisal, Forest Products Journal, December
2004,Vol.54, No. 12, pp 149-158
Hoots Mike, Finance for FMs, Capital Planning and Budgeting, Buildings,
October 2005, pg 46-50
Howe Keith M., Capital Budgeting and Search: An Overview, The Journal of
Financial Research, Vol. 1, No. 1, Winter, 1978, pg. 23-33
Hsu Christine, Capital budgeting analysis in wholly owned subsidiaries, Journal of
Financial and Strategic Decisions, volume 13, Number 1, Spring 2000
Jagannathan Ravi and Meler Iwan; Do we need CAPM for capital budgeting?;
Financial Management, Winter 2002, pp 55-77
Jain Dr. P. K. and Prof. Yadav Surendra S. (2000), Capital budgeting practices in
corporate enterprises: A comparative study of India, Singapore and Thailand,
Management and Accounting Research, January-March 2000, pg. 25-63
Jain P K and Kumar M (1998), Comparative Capital Budgeting Practices:The
Indian Context, Management and Change, January-June, pp. 151-171
Jain P.K., Jain S.K. and Tarde S.M., Capital budgeting practices of private
corporate sector in India-some empirical evidence, The Management Accountant,
November 1995, pg 813-820
Jog Vijay M and Srivastava Ashwani K., Capital budgeting practices in corporate
Canada, Financial Practice & Education, Fall/Winter 1995, pp 37-43
Karim Mir Nazmul and Manickavasagam V., Implications of Cost of Capital and
financial leverage on Selected Industrial Units of Bangladesh,The Management
Accountant, December 2003, pg. 896-903
Katrekar Sanjay S., Capital budgeting decisions in a capital rationing scenario, The
Management Accountant, April 1997, pg 300-307
Kelly John W. and Fischer James R., An Analysis of Alternative Ner Present
Value Capital Investment Decision Models, WP102798, October 1998
Kester George W and Chang Rosita P (1999), Capital Budgeting Practices in the
Asia-Pacific Region:Australia, Hong Kong, Indonesia, Malaysia, Philippines and
Singapore, Financial Practice and Education, Vol 9, No.1, pp 25-33

237

Kester, George W, and Tsui Kai Chong, Capital budgeting practices of listed firms
in Singapore, Singapore Management Review, 2001, pp 9-23
Kim, S.H. and E.J. Farragher,Current capital budgeting practices,Management
Accounting, Vol. 62, June 1981, pp.26-29
Kim, Suk H. and Farragher, Edward J,Current
Practices,Management Accounting, June 1981, pg. 26-30

Capital

Budgeting

Klammer, Thomas P. Empirical Evidence of the Adoption of Sophisticated


Capital Budgeting Techniques, The Journal of Business, July 1972, 387-397.
Klammer, Thomas P. and Michael C. Walker, The Continuing Increase in the Use
of Sophisticated Capital Budgeting Techniques, California Management Review,
fall 1984, 137-148
Klammer, Thomas, Koch Bruce and Wilner Neil, Journal of Management
Accounting Research, Fall 1991, pg. 113-130
Laitenberger Jorg and Loffler Andreas, Capital Budgeting in Arbitrage-Free
Markets, http://www.wiwi.uni-hannover.de/finanzierung/
Lazaridis Ioannis T., Capital budgeting practices: A survey in the firms in Cyprus,
Journal of small business management 2004 42(4), pp. 427-433
Lerner Eugene M. and Rappaport Alfred, Limit DCF in Capital budgeting,
Horvard Business Review, September-October 1968, pg 133-139
Liljeblom Eva and Vaihekoski Mika; INVESTMENT EVALUATION
METHODS AND REQUIRED RATE OF RETURN IN FINNISH PUBLICLY
LISTED COMPANIES, January 8, 2004
Linder Stefan, Fifty years of Research on Accuracy of Capital Expenditure Project
Estimates: A Review of the Findings and their Validity, Doctoral work at Centre
for Research in Controllership and Management, Germany, April 2005
Lord Beverley R., Shanahan Yvonne P, and Boyd Jennifer R, Capital Budgeting in
New Zealand Local authorities: An Examination of Practice, Paper Accepted for
Presentation at the Fourth Asia Pacific Interdisciplinary Research in Accounting
Conference, Singapore, 4-6 July 2004
Maccarrone, Paolo; Organizing the capital budgeting process in large firms;
Management Decision, London:1996, Vol.34, Iss. 6; pg. 43-56

238

Mao James C. T., Survey of Capital Budgeting: Theory and Practice, The Journal
of Finance, pg, 349-360
Madhani Pankaj M, RO-Based Capital Budgeting: A Dynamic Approach in New
Economy, The ICFAI Journal of Applied Finance, November 2008, Vol. 14, No.
11, pg 48-67
McDonald Robert L, The Role of Real Options in Capital Budgeting: Theory and
Practice, Journalof Applied Corporate Finance, Spring 2006,Vol. 18, No. 2, pg.
28-39
Madhani Pankaj M, RO-Based Capital Budgeting: A Dynamic Approach in New
Economy, The Icfai Journal of APPLIED FINANCE, November 2008, Vol. 14,
No. 11, pg. 48-67
Meier, Christofides, and Salkin; Capital budgeting under uncertainty-An integrated
approach using contingent claims analysis and integer programming; Operations
Research, Vol. 49, No. 2, March-April 2001,pp 196-206
Mikael Collan and Stefan Lngstrm, Flexibility in Investments: Exploratory
Survey on How Finnish Companies Deal with Flexibility in Capital Budgeting,
TUCS Technical Report No 453, April 2002
Mills Roger W., Measuring the Use of Capital Budgeting Techniques with the
Postal Questionnaire: A UK Perspective, INTERFACES 18: 5 September-October
1988, pg. 81-87
Mogul Samir S.; APV The Preferred DCF Approach; The Chartered Accountant,
July 2002, pp. 110-118
Moore James S. and Reichert Alan K., An Analysis of the Financial Management
Techniques Currently Employed by Large U.S. Corporations, Journal of business
Finance & Accounting 10, 4 (1983), pg. 623-645
Pablo Fernandez; Valuing Companies by Cash Flow Discounting: Ten Methods
and Nine Theories; The ICFAI Journal of APPLIED FINANCE, Vol. 10, No. 1,
January 2004
Pawlina Grzegorz and Kort Peter M., Strategic capital budgeting: asset
replacement under market uncertainty, OR Spectrum (2003)25:443-479,
DOI:10,1007/s00291-003-0137-3
Payne Janet D., Heath Carrington Will, and Gale Lewis R.; Comparative Financial
Practice in the US and Canada: Capital Budgeting and Risk Assessment
Techniques, Financial Practice and Education, Spring/Summer 1999, pg. 16-24

239

Petry Glenn H and Sprow James (1993), The Theory of Finance in 1990s, The
Quarterly Review of Economics and Finance, pp 359-381
Petty, J. William Petty, David P. Scott, and Monroe M. Bird, The Capital
Expenditure Decision-Making Process of Large Corporations,The Engineering
Economist, Spring 1975, 159-171
Pike Richard and Roberts Brian, Investment hurdle rates and the cost of capital,
Management Accounting, May 1980, pg 26-28
Pike Richard, A longitudinal survey on capital budgeting practices, Journal of
Business Finance & Accounting, 23(1), January 1996, 0306-686X, pp.79-92
Pohlman Randolph A., Santiago Emmanuel S., and Markel Lynn F.; Cash Flow
Estimation Practices of Large Firms, Financial Management, summer 1988, 71-79
Porwal L.S., Capital Budgeting Techniques and Profitability an empirical study,
Indian Management, May 1976, pg 9-13
Prabhakara Babu C. and Sharma Aradhana; Capital budgeting Practices in Indian
Industry, ASCI Journal of Management, Volume 25, 1996
Rao Cherukuri U (1996); Capital budget practices: A comparative study of India
and select South East Asian Countries, ASCI Journal of Management, Volume 25,
pp 30-46
Ross Marc, Capital Budgeting Practices of Twelve Large Manufacturers,
Financial Management (winter 1986) vol. 15, issue 4, pp 15-22
Ryan Patricia A. & Ryan Glenn P.; Capital Budgeting Practices of the Fortune
1000: How Have Things Changed?, Journal of Business and Management,
Volume 8, Number 4, Winter 2002.
Sara, Investment is a good thing, Management Accounting, September 1980, pg 48
Schall L.D., Sundem G.L., Geijsbeek W.R.; Aurvey and Analysis of Capital
Budgeting Methods, Journal of Finance, March 1978
Segelod Esbj rn, THE CAPITAL BUDGETING MANUAL
Segelod Esbjorn, A Note on the Survey of Practice in Divisionalized Groups,
Uppsala University, Sweden, February 1996

Soldofsky, Robert M.:The What, Why and How of Capital Budgeting for smaller
Businesses, Article reprinted in Frontiers of Financial Management by Serraino,
240

Singhvi and Soldofsky, South Western Publishing Co., Cincinnati, Ohio,


1971,pg.21
Stein Jeremy C., Rational Capital Budgeting in an Irrational World, NBER
Working Paper Series, Working Paper 5496, March 1996
Stulz Rene M., Whats wrong with modern capital budgeting?, Financial Practice
& Education,pp7-11
Volkman David A., A CONSISTENT YIELD-BASED CAPITAL BUDGETING
METHOD, Journal Of Financial And Strategic Decisions; Volume 10 Number 3
Fall 1997, pp 75-88
Whitmore G.A. and Darkazanli S., A Linear Risk Constraint in Capital Budgeting,
MANAGEMENT SCIENCE, Vol. 18, No. 4, Part I, December 1971, pg. B-155 to
B-157
Yoon Yeomin and Choi Youngna; Net present value and modified internal rate of
return: The relationship; The international journal of finance
Yvonne Shanahan and Beverley Lord, Management accounting in the corporate
sector: recent research, Chartered Accountant Journal

241

WEBSITES

Contino Diana S., Proposing the capital in capital budgets,


www.nursingmanagement.com , accessed on 16.07.2007
www.prenhall.com/divisions/bp/app/cfldeme/CB/CapitalBudgeting.html; Mathis
Rock, Corporate Finance Live, Capital Budgeting, 4/1/03
www.ioma.com, Eight questions that root out corporate fat during the capital
budgeting process, The Controllers Report, ISSUE 2004-03, March 2004
www.ioma.com, IOMAs Report on financial analysis, planning and reporting,
ISSUE 03-01, March 2001
www.ioma.com, IOMAs Report on financial analysis, planning and reporting,
ISSUE 02-12, December 2002
www.ioma.com, IRR and NPV remain chief capital budgeting tools, IOMAs Report
on financial Planning & Reporting, January 2003
http://en.wikipedia.org/wiki/Economic_value_added, accessed on 23.01.2008

242

ANNEXURE I : QUESTIONNAIRE

QUESTIONNAIRE FOR RESEARCH STUDY ON

A COMPARATIVE STUDY OF CORPORATE CAPITAL BUDGETING


PRACTICES IN SELECTED INDIAN FIRMS
Special Notes:

1.

Information provided by you will be kept strictly confidential. It will be used


absolutely for academic purpose only.

2.

For most of the questions choice answers are provided. Please either,

a. tick mark the appropriate answer, or


b. Select yes/no, or
c. assign rank(s) in priority order.

3.

At a few places you may be required to write down some of your


observations/opinions.

4.

Kindly send the duly filled in questionnaire to the address given below:

Ms Kamini Shah
Senior Lecturer (Finance)
SEMCOM College,
Opp. Shastri Ground
Vallabh Vidyanagar 388 120
Gujarat (India)

Email id: kamini_phd@yahoo.co.in


Contact No. 02692-235624 (O)
98252-71629 (M)

243

SECTION A
1.

Do you / your company use any capital budgeting methods like payback period
(PBP), Net present value (NPV), Internal rate of return (IRR) etc for evaluating
investment decision ?

Yes

No

If No, please skip section A and proceed to Section B.

2.

What is the average size of your companys annual capital budget ?


Please ;
Average size (Rs. in Lacs)

3.

Less than or Equal to Rs. 100

101-500

501-1000

1001-5000

Above 5000

What project size requires a formal quantitative analysis in your company?

Size (Rs.)
No specific amount

0 to Rs. 50,000

50,001 to 1,00,000

1,00,001 to 5,00,000

5,00,001 to 10,00,000

10,00,001 to 50,00,000

Greater than 50,00,000

244

4.

In your company, capital expenditure budgets are prepared for,


Please ;
1 year ahead
2 years ahead
3 yeas ahead
4 years ahead
More than 4 years ahead

5.

Please indicate the relative importance of each of the following quantitative


techniques used in your firm to rank proposed capital investments and to decide
whether or not they should be accepted for inclusion in the capital budget (on a
scale of 1 to 5, where 1 = not used, 2=unimportant, 3=somewhat important,
4=important and 5=very important).

Evaluation Technique

Internal Rate of Return (IRR)


Payback Period (PBP)
Net Present Value (NPV)
Accounting Rate of Return (ARR)
Profitability Index (PI)
Other [pl. specify]

245

6.

Please ; the capital budgeting technique used by you for evaluating various
investment decisions. You may tick multiple techniques if used.

Investment Decision

ARR

1.

New Project

2.

Expansion of existing operation

3.

Merger / Acquisition

4.

Replacement of Assets

5.

Leasing of Assets

6.

Modernization

7.

Process or Product improvement

IRR

NPV

PBP

Others

Any other
8.

(please specify) such as canteen,


housing colony , staff welfare
scheme etc.

7.

What is the frequency of use of following investment analysis techniques?

Evaluation

Always

Often

Sometimes

Rarely

Never

Technique

[100%]

[75%]

[50%]

[25%]

[0%]

Internal Rate of Return


(IRR)
Payback Period (PBP)
Net Present Value
(NPV)
Accounting Rate of
Return (ARR)
Profitability Index (PI)
Other [pl. specify]

246

8.

Where your firm uses more than one technique for appraising major investments,
please indicate the relative importance attached to each technique by entering
against the items listed below: 1 for the item to which you attach most importance;
2 for the next most important item; and so on. Please do not enter rankings against
techniques that are not used by your firm.
Evaluation Technique
Internal Rate of Return (IRR)
Payback Period (PBP)
Net Present Value (NPV)
Accounting Rate of Return (ARR)
Profitability Index (PI)
Other [pl. specify]

9.

Do you use any cut-off points to evaluate the viability of major capital
investments?

PBP

0-2 years

ARR

NPV/IRR

11-15%

0-10%

2-4 years

4-6 years

6-10 years

16-20%

21-30%

31%

11-15%

247

16-20%

21-30%

30% or
more

10. In estimating the cash flows, how do you treat the following items?

Cash flow item

Included / excluded

Current market value or acquisition value of an


existing resource to be used in the project (e.g. land)
Expenses incurred prior to deciding on going ahead
with the project like R&D, market survey, test
marketing, etc.
Interest on borrowings
Working capital including changes over the life of
the project
Salvage/realizable value from the project at the end
Depreciation
Income tax (Before/After Income tax)
Any other cash flow(s) pl. specify

11.

What are the inflation adjustment methods used for investment appraisal
by your firm?
Please ;
Specify cash flow in constant prices and apply a real rate of return
All cash flows expressed in inflated price terms and discounted at the
market rate of return
Considered at risk analysis or sensitivity analysis
No adjustment
Other[pl. specify]

248

12.

Which rate of discount(s), do you use in your capital budgeting analysis?


Please ;

13.

[a]

Cost of Capital (Weighted average cost of capital)

[b]

Term lending rate of financial institutions

[d]

Arbitrary cut-off rate fixed by the management

[e]

Any other (Please specify)

If you use the cost of capital as the discount rate, how do you estimate the cost of
equity and cost of retained earnings? Please ;

Capital Asset Pricing Model

[CAPM, based upon the firms estimated beta]


Dividend yield plus growth rate

[Discounted Cash Flow method]

Cost of debt plus risk premium


Other [Specify]

14.

Do you use different discount rates for different sizes of investment/for different
types of projects?

Yes

15.

No

If your company is using the Weighted Average Cost of Capital [WACC] for
evaluating the capital budgeting project then how do you define the weights?
Please ;

A long term target of debt equity ratio

The present market values of debt-equity

Balance sheet ratios of debt-equity

249

16.

Do you categorize projects in to different risk classes such as low risk, moderate
risk and high risk? If yes, how do you decide an appropriate class of risk for each
project?
......................................................................................................................
......................................................................................................................

17.

18.

According to you, What type of risk is involved in such investments?

Fluctuations in expected return

Non-recoverable

Changes in economic, social and political factors

Fear of obsolescence

Please indicate the relative importance of each of the following techniques used in
your firm to assess risk (on a scale of 1 to 5, where 1=not used, 2=unimportant,
3=somewhat important, 4=important and 5=very important).

Evaluation Technique

Sensitivity Analysis
Scenario Analysis
Decision tree
Monte Carlo simulation
By adjusting the future cash flows
By certainty equivalent approach
By adjusting the discount rate
Subjective assessment
Probability analysis
Shorten Payback period
Beta analysis
Any other (Please specify)

250

19. Do you review various projects under capital budgeting at different hierarchical
levels? If yes:

Size of investment [Rs. In Lacs]

Management levels CFO, Management


Committee, CEO, Board

Less than or Equal to Rs. 100


101-500
501-1000
1001-5000
Above 5000

20.

Between non-discounted cashflow methods like payback period and discounted


cashflow methods like NPV and IRR, which method is preferred by you? Why?
......................................................................................................................
......................................................................................................................

21.

If your preference is for discounted cash flow methods then between NPV and
IRR which method is preferred by you? Why?
......................................................................................................................
......................................................................................................................

22.

Has there been a major switch in techniques used over the last 5 years?

Yes

23.

No

Does your firm place a limit on the size of its annual capital budget?
Yes

No

If yes, What are the reasons of capital reasoning?


......................................................................................................................
......................................................................................................................
251

24.

Are there specific capital expenditure ceilings placed on operating units which
sometimes lead to the rejection of viable projects?
Please ;
Investment decisions important for whole group and
require central control
Management wants to control cash, because of a shortage
of funds
Management wants to control areas of activity and mix of
products

Shortage of other key resources


Other

25.

What are the considerations for the acceptance of non-economic projects?


Please ;

26.

Health and Safety

Legislation

R & D/Strategically necessary

Social/Environmental

Repair/Maintenance

Other

Which are the factors deciding capital budgeting method in your company?
Please ;
Finance Theory

Experience and Competency

Informal Rule of Thumb

Importance of the Project

Easy to Understand

Familiarity of Top Management

252

27.

Does your company conduct post audits of major capital expenditure?


Please ;
Always [100%]

Often [approx. 75%]

Sometimes/on major projects [approx. 50%]

Rarely [approx. 25%]

Never [0%]

SECTION B
28.

What are the reasons for not using any appraisal method for capital budgeting?
......................................................................................................................
......................................................................................................................

SECTION C (Details of the respondent)

Name

....................................

Designation

.....................................

Work Experience with the present company

Have you attended any Management Programmes/courses?

Yes

(pl. give details)

No

.................................................................................................................................
About the company :
1.

Name of the company

.................................

2.

Year of Establishment

.................................

3.

Nature of business

..................................

4.

Whether Public or Private sector?

..................................

Thank you for your co-operation


253

ANNEXURE II : COMPANY PROFILES


1. Alembic Ltd.

Alembic Ltd., one of India's leading pharmaceutical companies, was incorporated in


1919. It traces its origin from Alembic Chemical Works Co. Ltd. which was set up in
Vadodara for the manufacture of tinctures, alcohol and pharmaceuticals. The company
manufactures and markets active pharmaceutical ingredients (API), bulk pharma
chemicals, formulations, herbal netraceuticals and veterinary products.
Alembic has plants at Vadodara and Panchmahal in Gujarat and at Solan in Himachal
Pradesh. It has launched a research services division, BioArc Research Solutions, to deal
in outsourced research project of pharma majors.
Indian promoters of the company hold more than 60 percent equity stake in the company,
institutional investors hold more than 10 percent and the Indian public hold more than 20
percent.
2.Arvind Mills Ltd.
The Lalbhai brothers incorporated Arvind Mills in the year 1931. It is now the Flagship
Company of the Lalbhai Group. Currently Mr. Arvind N Lalbhai is the Chairman of the
company. The promoters of the company hold about 34% while the institutional investors
hold about 40% and individuals hold about 21% of the equity.
The company has two main products viz. Fabrics and Garments. The Garments division is
further divided into the Garment Exports Division with Shirts Division and Jeans
Division and the Arvind Brands division. The Arvind Brands manages its own brands
Flying Machine, Newport and Ruf & Tuf in Jeans and Excalibur in Shirts. The company
has licenses from reputed International brands like Arrow, Lee, Wrangler and Tommy
Hilfiger for the Indian market.

254

The Registered office of the company is in Ahmedabad (Gujarat) and its manufacturing
units are in Khatrej, Santej (Mahesana) and Ahmadabad in Gujarat and Bangalore in
Karnatak.
Arvind Ltd is a nominated supplier of fabrics to Nike Golf, Marks & Spencer, Arnold
Palmer, Eddie Bauer, Calvin Klein and Columbia Sportswear.
3. Astrazeneca Pharma India Ltd.
Astrazeneca Pharma India (AZPIL) is the 90 per cent owned manufacturing and
marketing subsidiary of Astra Pharmaceuticals AB, Sweden. Astra Pharmaceuticals AB,
Sweden is held by Astrazeneca AB, Sweden. Astrazeneca AB, Sweden is ultimately held
by Astrazeneca plc, United Kingdom.
AZIPL is mandated to discover new chemical entities for treating infectious diseases like
tuberculosis. The company has an R&D facility to discover new drugs as well as a
process R&D facility at its campus in Bangalore.
Astrazeneca Pharma India (AZPIL) is Astrazeneca plc, United Kingdom's publicly-traded manufacturing and marketing entity. As on 31 December 2006, the company had
897 employees. It's products span seven therapeutic healthcare segments. These include
cardiovascular, critical care, maternal healthcare, oncology, gastrointestinal and
respiratory.
AZPIL's manufacturing facility is spread over 69 acres at Yelahanka--Bangalore. It
conforms to the World Health Organization's cGMP (current Good Manufacturing
Practices) norms and is an ISO 14001 certified company. In 2006, the plant was
accredited by the Japanese FDA to export Terbutaline Sulphate (used to treat patients
suffering from asthma and bronchitis).

255

4. Atlas Copco (India) Ltd.


Atlas Copco (India) Ltd. is a world leading provider of industrial productivity solutions
the products and services ranges from compressed air and gas equipment, industrial
tools and assembly systems, to relate after market and rental. Atlas Copco (India) Ltd.
represents both the Atlas Copco and Chicago Pneumatic brands for CT, CMT and IT.
Atlas Copco is an international industrial group with its head office in Stockholm ,
Sweden. In 2004, the group had revenues of approximately Sek 7BUSD and about
27,000 employees.

5.Bajaj Hindusthan Ltd.


Bajaj Hindusthan Ltd is the largest sugar manufacturers in India with an annual turnover
of Rs.1,618.6 crore. A part of the renowned `Bajaj Group', the company was incorporated
in 1931 by late Jamnalal Bajaj under the name of `The Hindusthan Sugar Mills Ltd'. More
than 50 years later, in 1988, it was re--named as `Bajaj Hindusthan Ltd.'
The company, which started its operations with a 400 TCD unit at Lakhimpur, Uttar
Pradesh in 1932, today boasts to have India's largest sugarcane crushing capacity of
89,000 TCD. This capacity is spread over nine plants, most of which are located in
northern Uttar Pradesh, a sugarcane rich area with high recovery rate.
The company plans to equip eight of its plants with power co--generation facilities with
an aggregate capacity of 90 Mw. Besides, the company is also planning to utilise bagasse
for the manufacture of particle board (PB) and medium density fibre broads (MDF),
which are widely used as substitutes for wood and timber. It is setting up three plants -one of PB with a capacity of 50,000 m3 per annum and two of MDF, each with a capacity
of 80,000 m3 per annum under its wholly owned subsidiary, Eco--tec Products Ltd.

256

The company has promoted a portal, E-sugarindia, which aims at providing timely and
accurate information for sugar trading and has been facilitating spot and future trading in
sugar for the last five years. The governments has granted recognition to E-sugarindia to
conduct futures trading in sugar only till 31 May 2007.
6. Berger Paints India Ltd.
Owned by the Dhingra group, Berger Paints India Limited was incorporated in the year
1923. The company was originally formed by Mr. Hadfield and the Dhingra Group took
over it in 1991. Currently Mr. G. S. Dhingra is the Vice-Chairman and Mr. Subir Bose is
the Managing Director of the company. The promoter of the company hold about 74
percent of the equity capital while institutional investors hold about 10 percent and
individuals hold about 14 percent stake in the company.
The company is engaged in the business of manufacturing and marketing of paints &
varnishes in India. Its product range includes synthetic enamel, interior & exterior wall
coatings, wood finish and acrylic emulsions. Enamels are marketed in the brand name of
Luxol Hi Synthetic, Luxol Satin, Luxol Lustre etc. Weathercoat Longlife, Weathercoat
Smooth 100% Acrylic are popular brands of exterior wall coatings. The company has
launched Berger Lewis Color Bank, which is based on computerised paint technology,
having a range of shades.
The registered office of Berger Paints is at in Kolkata and the manufacturing facilities of
the company are situated in West Bengal, Goa, UP, Pondicherry and Jammu & Kashmir.
7. Cadbury India Ltd.
Cadbury India Limited, incorporated in 1948 is the wholly owned Indian subsidiary of the
UK based Cadbury Schweppes Plc. which is a global confectionary & beverages
company. It was originally known as Cadbury-Fry (India) Private Limited and was
renamed in 1989 as Cadbury India Limited. Its registered office is in Mumbai.
It operates in India in the segments of chocolates, Sugar confectionery and food drinks.
Its leading brands in the chocolate segment are Cadburys Dairy Milk, Fruit & Nut,
257

Crackle, Temptations, 5 Star, Perk and Celebration gift boxes. In the Sugar confectionery
segment its popular brands are Cadbury Dairy Milk Eclairs and Halls. In the food drinks
segment its popular brands are Bournvita, Drinking Chocolate and Cocoa Powder. It has
also diversified into the snacking segment with its Cadbury Bytes.
Its manufacturing plants are located in Thane & Induri in Maharashtra, Malanpur in
Madhya Pradesh, and Baddi in Himachal Pradesh.

8. EIMCO ELECON (India) LIMITED


EIMCO ELECON (India) LIMITED was incorporated in the year 1974 and was
promoted by Environtech Corporation, USA and Elecon Engineering Company Limited,
in India.
Eimco Elecon enjoys an overwhelming lead in the manufacture and supply of mining and
tunneling machines for the metalliferous, coal and civil tunneling industries and subsurface construction projects. While supplying over 1200 such machines in India, they
have contributed immensely towards the mechanization of underground activities.
Eimco Elecon is owned by Sandvik AB, Elecon Group & The Indian Public.
Sandvik construction and mining division - a major share holder and technical
collaborator of Eimco Elecon is a global leader in excavation, cutting and drilling tool
technology. Eimco Elecon manufactures tunneling and mining machines for underground
coal and metal mines. Eimco Elecon markets in India excavation technology, designed
and manufacturing by Sandvik mining and construction group and provides related
services to increase productivity in mining.
EIMCO ELECON produces a wide range of underground mining machinery. Its range of
products include Electro Hydraulic Side Dump Loaders, Load Haul Dumpers, Air
Powered Rocker Showel Loaders, Coal Hauler and Low Profile Dump Trucks. Eimco
Elecon also manufactures Blasthole Drills, Hydraulic Cylinders and Air Motors.

258

The company is also awarded ISO-9001 Certificate by TUV Management Service GmbH
for Design, Development, manufacturing, Installation and Servicing of Mining and
Construction Machines, Hydraulic Cylinders and Accessories.
9. Elecon Engineering Company Ltd
The Company was established in 1951, in Vallabh Vidyanagar, Gujarat, India, pioneered the
manufacture of material handling equipment in India. During these four decades, Elecon has
designed and implemented several landmark projects in India as well as abroad.
From a modest start of design and manufacture of Elevators and Conveyors from which
incidentally, the company derives its corporate identity. viz. "Elecon". It has grown over the
years to be known as a pioneer of the concept of mechanized way of Bulk Material Handling
Equipment in India. Elecon has, made its presence felt through consistent and satisfactory
performance of its equipment in such core sectors as fertilizer, cement, coal/power generation,
chemical, steel plant and port mechanization etc., across the country.
Elecon is the first company in India to have manufactured sophisticated equipment for
Bulk Material Handling. Its product range includes design, engineering, manufacture,
supply, erection and commission of:

Wagon tipplers

Bucket wheel stacker/reclaimers

Barrel-type blender reclaimers

Fertilizer reclaiming scrapers

Limestone pre-homegenizing and blending plants

Single and twin bucket wheel bridge-type reclaimers

Crawler-mounted trippers

Stationary and shift able conveying systems for open cast lignite mines
259

Integrated coal handling plants for power stations

Underground mining conveyors

Open-cast conveying systems

Ferrous and non-ferrous foundry products

Helical, spiral bevel helical, planetary and worm reduction gear units and
couplings.

A separate Gear division manufactures

Helical gears

Spiral bevel and Helical gears

Planetary gears

Worm reduction gears units

Couplings, and

Gear boxes for highly specialized and precision applications

Elecon has expertise in providing customised gear boxes for Steel Mills, High Speed
Turbines, Sugar Mills, Marine vessels, Coast Guard Ships, Plastic Extrusions, Antena
Drives and for Satellites in the Indian Space Programme.

10. Gujarat Alkalies & Chemicals Limited (GACL)

Incorporated in 1973 Gujarat Alkalies & Chemicals Limited was co-promoted by Gujarat
Industrial Investment Corporation Limited (GIIC), a wholly owned company of the
Government of Gujarat.
260

The promoters' holds about 37 per cent of the total equity of the company while
institutional investors hold around 23 per cent and individuals hold about 26 percent.
Currently Mr. S. G. Mankad is the Chairman and Mr. P.K. Taneja is the MD of the
company.
GACL has integrated manufacturing installations for Caustic Soda, Chlorine, Hydrogen
Gas, Hydrochloric Acid, Chloromethanes, Hydrogen Peroxide, Phosphoric Acid,
Potassium Hydroxide, Potassium Carbonate, Sodium Cyanide, Sodium Ferrocyanide. The
products of the company are classified into Caustic Soda Group, Caustic Potash Group,
Chloromethane Group, Sodium Group, Hydrogen Peroxide Group, Phosphoric Acid
Group etc.
The registered office of GACL is at Vadodara and has two manufacturing units at
Vadodara and Dahej, in Gujarat. It has a well-established nationwide network of dealer
and exports its products to USA, Europe, Australia, Africa, Far & Middle East countries,
China & South Asian Markets.

11. GlaxoSmithKline Consumer Healthcare Ltd


GlaxoSmithKline Consumer Healthcare Ltd is the second largest listed dairy products
company in India with an annual turnover of Rs.1,270 crore. It operates in a niche
segment, malted milk foods and commands a huge market share of 74.5 per cent (2006-07) followed by Cadbury India (17.2 per cent). Incorporated in 1958, the company is an
Indian associate of GlaxoSmithKline plc U.K. It was formerly known as Smithkline
Beecham Consumer Healthcare Ltd and got re--christened in April 2002, following the
global merger of its parent company, erstwhile SmithKline Beecham with Glaxo
Wellcome plc in December 2000.
The company's product portfolio is grouped under three heads; viz nutritional, vending
and over the counter (OTC) products.

261

The company has an installed capacity to manufacture 94,060 tonnes of malted milk
products per annum, spread over three facilities located at Nabha (Punjab), Rajmundry
(Andhra Pradesh) and Sonepat (Haryana). It has a strong marketing and distribution
network comprising over 1,800 wholesalers and over four lakh retail outlets across
India.
Some of its famous brands are Crocin (paracetamol), Eno (antacid) and Iodex (balm).

12. GMM Pfaudler Limited (GMM)


GMM Pfaudler (GMM) was incorporated on Nov. 17, 1962, as a private company and
converted into a public company on Sep. 09 1963. The company is a manufacturer of and
dealer in various types of structural steel works, industrial machinery and glass lined
chemical vessels. GMM also manufactures wiped film evaporators, agitated nutche
filters, mixing systems and polytetrafluoroethylene (PTFE)-lined equipment. It has
supplied over 9000 reactors for different corrosive processes to suit clients` specific
needs, glass-lined stainless steel reactors and lab reactors.

GMM Pfaudler`s fluoro polymer division manufactures various PTFE products, such as
teflon envelope gaskets, nozzle liners and bushes, and control system pipes internally
lined by isostatically molded PTFE liners. Its filters and filter-dryers are utilized in the
inorganic and organic chemical, fine chemical and Pharmaceutical industries.

The company`s client list includes Alembic, Hoechst Schering Agrevo, Bayer India,
Cheminova India, Chemplast Sanmar, Cipla, Colour-Chem, Gharda Chemicals, GE
Plastics India, Glaxo India, Hindustan Inks and Resins, Indian Organic Chemicals and
many more. In December 2007, the Company incorporated a wholly owned subsidiary,
GMM Mavag AG. GMM is based at Gujarat, India.

262

GMM Pfaudler has a state of the art plant spread over 20 acres at Karamsad Gujarat, 450
Kms north of Mumbai. GMM Pfaudler is the largest manufacturer of Glass-lined
equipment in India. We also manufacture Wiped Film Evaporators, Agitated Nutche
Filters, Hi efficiency Mixing systems, PTFE lined equipment and much more.
GMM Pfaudler a truly world-class organization with ISO9001 certified processes is
accredited by ASME & TUV for U Stamp & ADM - HP 0 respectively.

13. Gujarat Narmada Valley Fertilizers Company Ltd. (GNFC)


The Government of Gujarat and the Gujarat State Fertilizer Company Ltd. jointly
incorporated Gujarat Narmada Valley Fertilizers Company Ltd. (GNFC) in 1976.
Currently Mr. S. G. Mankad is the Chairman of the company. The promoters hold about
44% of the total equity shares in the company, while institutional investors hold above
24% and individuals hold about 28%.
The business activities of GNFC include Fertilizers, Chemicals and Information
Technology. The fertilizer division manufactures, imports and trades in Urea, Ammonium
Nitrophosphate, Calcium Ammonium Nitrate, Diammonium Phosphate, Muriate of
Potash etc. The chemical division manufactures chemical and petrochemical such as
Methanol, Acetic Acid, Formic Acid, Methyl Formate, Ammonium Nitrate, Nitric Acid,
Calcium Carbonate and Catsol.
The GNFC IT Division provides services such as Infotower, which is an IT Infrastructure
for setting up IT operations, be it Software Developments or IT Enabled Services IT
market. GNFC provides satellite based communication network services using VSAT
technology. The Network Solutions provided by GNFC include the installing,
commissioning and maintenance of LAN/WAN. The company's ISP Services provide EMail, Web Services, News groups, lnternet Chat, Virtual Private Network, Server
Collocation, Corporate Intranet etc. The GIS Services available with the company include
Map Creation and Maintenance, Digital Photogrammetry, Digital Image Processing, GIS
263

for Hydrography, Dynamic Terrain Visualization etc. GNFC also has the license to
provide Internet Gateway Service.
The registered office of GNFC is at Bharuch (Gujarat). It has a variety of Technology
Partners such as Linde AG (Germany), Texaco (USA), BASF (Germany), Haldor Topsoe
(Denmark), Snamprogetti (Italy), ICI (UK), Kemira OY (Finland), Plinke (Germany),
Toyo Engineering (Japan), Du Pont (USA) etc.
14. Grasim Industries Ltd.
Incorporated in the year 1947, Grasim Industries Ltd. is a flagship company of the Aditya
Birla Group. It diversified its business into the manufacturing of Viscose Staple Fiber
(VSF), Chemicals, Sponge iron, Cement and textiles.

The promoters hold the 25% of the equity while institutional investors hold about 43% of
the total share capital of the company. Individual investors hold a significant share of
about 13%. Currently Mr. Kumar Mangalam Birla is the Chairman of the company.
Grasim's products include viscose staple fibre (VSF), grey cement and white cement,
sponge iron, chemicals and textiles. Viscose Staple Fibre (VSF) is a man-made,
biodegradable fibre, which is widely used to manufacture fabrics for both woven and
knitted garments. Cement produced by the company are oil well cement, cement and
clinker. These have brand names like Birla Plus, Birla Super and Birla Ready Mix
concrete. .
The registered office of the company is in Nagda (M. P). The manufacturing plants of the
company are spread throughout the country. The cement plants are located in
Raipur(Chhatisgarh), Reddipalayam(TN), Shambhupura (Rajasthan), Batinda (Punjab),
Jawad (MP), Jodhpur (Rajasthan), Malkhed (Karnataka). The sponge iron plant is in
Raigad (Maharastra). And the chemical and textile plants are in Ujjain and Malanpur in
MP, Harihar (Karanataka) and Bhiwani (Haryana).
The registered office of the company is in Nagda (M. P)
264

15. Hipolin Limited :


Hipolin Limited is a detergent manufacturing company. Other product range include
dental hygiene products, Toilet soaps etc. They have over 700 agents and distributors, and
their products are even being exported to Russia, Ukraine, UAE and Africa. Their
manufacturing facilities comprise a 40,000 Sq.Mt. plant involved exclusively in the
manufacture of detergents (low- foam powders for industrial use and high- foam
formulations for domestic consumption), with built up area of 5900 Sq. Mt
Hipolin have developed & can manufacture any detergent powder in latest Pouch Packing
machine as per our customer's specifications, brand & packaging.
Manufacturing facility for toothpaste & toothbrush or any cosmetics as per customer's
need is spread over 3585 Sq. Mt. & the built up area on same is 1206 Sq. Mt. with fully
automatic

plant.

Infrastructure

includes

continuous

power

&

water

supply,

demineralization water plant, effluent water treatment plant etc.


16 J. B. Chemicals & Pharmaceuticals Ltd.
J. B. Chemicals & Pharmaceuticals Ltd. (JBCPL) is one of Indias fastest growing,
professionally managed, global pharmaceutical companies manufacturing a wide range of
innovative specialty medicines for domestic and international markets. A flagship
company of the Unique Group, it is also known to many as Unique.
Its product portfolio consists of pharmaceutical specialties in various dosage forms,
herbal remedies, diagnostics, generic drugs, active pharmaceutical ingredients (APIs).
Some of the products within these categories enjoy leadership positions in the Indian and
foreign markets.
J B Chemical & Pharmaceuticals Ltd. is a customer driven, financially sound company,
consistently enhancing value for its shareholders by rewarding them with healthy
dividends year after year. Headquartered in Mumbai, it has a large global presence with
operations in over 50 countries across the globe.
265

52% of the Companys revenue comes from exports to USA, Europe, Latin America,
Africa, SE Asia. To further enhance its strength in foreign markets, JBCPL has also
entered into joint venture and strategic tie ups with key partners in USA etc.
17. KSB Pumps Ltd.
KSB Pumps Ltd., India was established in 1960 and is global leader in manufacturing
large and small pumps, valves etc.
KSB Pumps is Efficient, economically and reliably in applications that range from
building services to industrial processes, water engineering, mining and energy
technology. KSB pumps and valves provide and distribute water to private, public and
industrial buildings. They solve heating and air-conditioning problems. Chemical,
petrochemical and many other companies use them to transport aggressive, corrosive,
explosive, solids-laden and viscous liquids. KSB products deal with industrial and
municipal waste water. And they stand up to every temperature and pressure that power
generation can throw at them.
18. Larsen and Toubro
Larsen and Toubro, founded by two Danish engineers, Mr.Henning Holck Larsen and
Soren Kristian Toubro as a partnership firm in 1938, was incorporated as a company in
1946. It is one of the flagship company of Larsen & Toubro Group & the largest
engineering & construction conglomerate in Asia.
L&T carries out its diversified activities through its different divisions viz, ConstructionECC, Engineering & Construction-Projects, Heavy Engineering-Manufacture, Electrical
& Electronics, Information Technology and Machinery & Industrial Products division.
The ECC (engineering construction & contracts) division of L&T is the largest division
of the company. It constructs all kinds of buildings, provides infrastructural facilities,
takes up hydropower & irrigation projects, constructs thermal & non conventional power
plants & offers electrification services to major industries.

266

The heavy engineering division supplies equipment to Process plant industries, Defence,
Nuclear, Power & Aerospace sectors. The
Powai(Mumbai), Hazira(Surat) &

equipment plants are situated at

Ronali(Vadodra). The Electricals & Electronics

Division manufactures low voltage switchboards at their Faridabad & Powai plants. IT
division offers software solutions to various industries. The Machinery & Industrial
Products division manufactures construction & mining equipment, welding machineries,
metal cutting tools, rubber processing &

plastic processing machinery, crushing

equipments & paper machineries.


L&T has no identifiable promoter group. As on September 2005, the

Institutional

Investors hold 54.83 percent whereas the Indian Public holds

23.44 percent. The

remaining is held by others. The company is headed by the

Chairman cum MD

Mr.A.M.Naik.

19. LANXESS India Private Ltd.


The erstwhile ABS Plastics Limited now LANXESS ABS Limited (the Company)
played a pioneering role in developing the market for the versatile engineering
thermoplastic material Acrylonitrile Butadiene Styrene (ABS) in India, when it started
its operation in 1978 by manufacturing and marketing ABS polymer under the brand
name of ABSOLAC. Since then the company has been continuously growing through a
planned process of aggressive market development and consolidation, technology
updation and capacity build up. The company also set up Indias first modern and
dedicated Styrene Acrylonytrile (SAN) plant in 1993, with technical know-how from M/s
JSR, Japan for manufacture of various grades of ABSOLAN SAN.
Some of the prominent clients of LANXESS ABS include Samsung, LG, Videocon, BPL,
Ford, Hero Honda, Cello, Lexi and Bajaj.
LANXESS India Private Ltd. (which is 100% subsidiary of LANXESS AG Germany)
acquired 89,63,564 equity shares of Rs.10/- each in Bayer ABS Ltd (BABS) constituting

267

50.97% of paid-up capital of the paid up share capital of Bayer ABS Limited from Bayer
Industries Private Ltd and became a holding Company of the Company.

20. Oil and Natural Gas Company Limited (ONGC)


To focus on core business of Exploration & Production, ONGC has set strategic
objectives of:

Doubling reserves (i.e. accreting 6 billion tonnes of O+OEG).

Improving average recovery from 28 per cent to 40 per cent.

Tie-up 20 MMTPA of equity Hydrocarbon from abroad.

ONGC ranks as the Numero Uno Oil & Gas Exploration & Production (E&P) Company
in Asia, as per Platts 250 Global Energy Companies List for the year 2007. ONGC ranks
23rd Leading Global Energy Major amongst the Top 250 Energy Majors of the World in
the Platts List based on outstanding performance in respect of Assets, Revenues, Profits
and Return on Invested Capital (RIOC) for the year 2007.
ONGC is the only fullyintegrated petroleum company in India, operating along the
entire hydrocarbon value chain:

Holds largest share of hydrocarbon acreages in India.

Contributes over 78 per cent of Indians oil and gas production.

About one tenth of Indian refining capacity.

Created a record of sorts by turning Mangalore Refinery and Petrochemicals


Limited around from being a stretcher case for referral to BIFR to the BSE Top
30, within a year.

Interests in LNG and product transportation business.

268

ONGC owns and operates more than 15000 kilometers of pipelines in India, including
nearly 3800 kilometers of sub-sea pipelines. No other company in India, operates even 50
per cent of this route length.

21. Panacea Biotec Limited :


Panacea Biotec is a research based health management company involved in research,
manufacturing and marketing. It controlled a 1.6 per cent share of the Indian drugs &
pharmaceuticals market in 2006--07. The company was established in 1993 after the
merger of Panacea Drug (formed in 1984) and Radicura Pharma (formed in 1988). The
Chairman of the company is Mr. Soshil Kumar Jain and the promoters of the company are
the Jain family who hold 65 per cent stake in the company.
The company has two main businesses, namely vaccines and formulations. The vaccines
business contributed the bulk -- 78.9 per cent of gross turnover, while the formulations
business contributed 21 per cent of gross turnover in 2006--07. Its R&D segment
contributed a mere 0.1 per cent in 2006--07.
The company has been supplying oral polio vaccines to UNICEF over the last seven
years. In 2006--07, it started supplying Recombinant Hepatitis B Vaccine to UNICEF.
Sales to UNICEF grew from Rs.65.8 crore in 2000 to Rs.641.6 crore in 2006--07.
Panacea's

research

activities

are

concentrated

around

vaccine

development,

biopharmaceuticals, drug delivery projects and drug discovery. It has four R&D centres -Laksh (Mohali, Punjab); Sampann (Lalru, Punjab); Vaccine & Biological research centre
(Delhi) and Biopharmaceutical R&D centre. On 11 February 2008, it opened its fifth
R&D facility -- GRAND dedicated towards advanced drug delivery systems at Navi
Mumbai.
The company's manufacturing facilities are located at New Delhi, Lalru in Punjab and
Baddi in Himachal Pradesh. All these facilities are WHO cGMP compliant. These

269

facilities manufacture tablets, capsules (including soft gelatin), ointments (transgel


formulation) liquids, herbal formulations and vaccines.

22. Siemens Ltd.


Werner Von Siemens founded Siemens in Berlin in 1847. In India Siemens Ltd. was
incorporated in the year 1957. Here it is in the field of electrical and electronics
engineering. It deals in business segments like Energy, Healthcare, Industry, Information
& Communication, Lighting and Transportation.
The promoters hold above 55 per cent stake in Siemens Ltd., and institutional investors
also hold about 27 percent while individuals hold just about 14 per cent. Currently Mr.
Deepak S. Pareekh is the Chairman of the company.
In the Energy sector, it offers expertise in areas from power plants to meters and in the
Industry sector it builds airports, and also produces contactors. In Transportation the
company delivers complete high-speed trains, right down to safety relays, whereas in
Lighting, it illuminates large stadiums and also manufacture small light bulbs. In
Healthcare the company executes complete solutions for hospitals, and also makes
hearing aids. In the Communication segment, it provides a complete spectrum of products
from large public networks to mobile phones. Some of the products manufactured/traded
by the company are switchgears, electric motors, generators, control boards, X-ray
equipment, electromedical equipment, measuring and control instruments, accessories etc.
The registered office of Siemens Ltd. is situated at Mumbai. The plant locations of the
company are at Aurangabad, Kalwa and Nasik in Maharashtra, at Vadodara in Gujarat,
and Verna in Goa.

270

23. Sun Pharmaceuticals Limited :


Sun Pharmaceuticals commenced operations in 1983 in two states namely -- West Bengal
and Bihar. It was listed on the Indian bourses in 1994. With a market capitalisation of
Rs.22,467.8 crore on 18 February 2008, the company ranks first among the 239 listed
drugs & pharmaceutical companies.
The company manufactures formulations and active pharmaceutical ingredient's (API's)
for both the domestic as well as the international market. Almost 63.2 per cent of the
company's formulation's gross sales emanated from the domestic market in 2006--07.
Exports of formulations and bulk accounted for 10.3 per cent and 18.5 per cent of gross
sales respectively. USA is Sun's largest export market.
The company has one of the highest R& D spends in the country. It set up its first
research center, Sun Pharma Advanced Research Center (SPARC) in 1993 in Baroda,
Gujarat -- India to develop generics that adhere to international development standards.
The laboratories at SPARC are equipped to carry out organic synthesis, develop
formulations, biotechnology, pharmacokinetics (studies that track the absorption,
distribution, metabolism and excretion (ADME) ) and bioequivalence studies. It set up a
second research center in Mumbai, spread over 50,000 sq ft of floor area, to develop
generics for the developed markets.

24. Tata Steel Limited


Tata Steel is the largest private sector steel producing company in India. It manufactures
steel through the blast furnace or basic oxygen furnace route. It commenced commercial
production in 1911. Tata Steel enjoyed a 10.4 per cent share in 2005--06 in the domestic
steel market.
The company sources its raw materials, viz, iron ore, coal and limestone from its captive
mines. Its iron ore mines are located at Naomundi and Joda--Bamnipal in Jharkhand and

271

Sukhinda in Orissa. West Bokaro Colliery at Jharkhand and Birshibpur in Orissa are two
of its important coal mines.
The company's steel plant having a capacity of around five million tonnes is located at
Jamshedpur in Jharkhand. Additionally, the company has a production facility in
Jamshedpur which manufactures welded steel tubes. The company also has a ferro
chrome plant in Orissa, bearings plant in West Bengal and wire manufacturing facilities
in Maharashtra and Karnataka
Tata Steel acquired Europe's second largest steel producer, Corus in April 2007 for USD
13.8 billion. This acquisition makes Tata Steel the world's fifth largest steel producer. The
company is targeting a 30 million tonne capacity by 2015.

25. Transpek Industries Limited


Transpek Industry Limited was set up in 1965 initially for manufacturing Transparent
Acrylic Sheets. There lies the origin of the word "Transpek". Since then the Company has
grown to become one of the leading manufacturers and exporters of a range of chemicals
servicing the requirements of customers from a diverse range of industries - Textiles,
Pharmaceuticals, Agrochemicals, Polymers, etc. Since inception, Transpek has evolved as
a First Time manufacturer of several products in India and also pioneered the
development of the market for the same.
Over a decade of presence in the international market, Transpek has earned for itself a
name for being a quality supplier. With its expertise in handling Chlorine and Sulphur,
Transpek has indigenously developed process for chlorinated chemicals like Thionyl
Chloride and Chloro Acetyl Chloride. Today the capacity for Thionyl Chloride at
Transpek is

272

26. Vadilal Enterprises Limited:


Vadial Enterprises Limited is one of the leading manufactures of Ice Cream in India with
the brand name Vadilal since 1920. Vadilal Group is also engaged in Process Foods,
Real Estate & Constructions, Chemicals & Super Specialty Gases & Forex Business.
Vadilal Industries is the flagship company of the Group having primary interest in Ice
Cream and Processed Foods. Vadilal enjoys one fourth of Indian Ice-Cream market share.
Own largest cold chain strengthens the distribution network across the country the largest
outside Europe.

27. Voltamp Transformers Ltd., Vadodara


Voltamp Transformers Ltd. was initially incorporated as Private Limited Company and
established in year 1963 in Vadodara a city 400 km North of Mumbai (INDIA).
The Company has installed facility to manufacture Oil filled Power and Distribution
Transformers up to 50 MVA, 132 KV Class, Resin Impregnated Dry type Transformers
up to 5 MVA, 22 KV Class (In Technical collaboration with MORA, GERMANY) and
Cast Resin Dry type Transformers up to 12.5 MVA, 33 KV Class (In Technical
collaboration with HTT, GERMANY). There are total four Sheds one each for Oil filled
Power Transformers, Oil filled Distribution Transformers, Resin Impregnated Dry type
Transformers and Cast Resin Dry type Transformers . The factory is spread over 6 acres
of land and has a built up area of 10,000 sq. mtr. The total installed capacity is around
4000 MVA per annum.
The turnover of the GROUP for the year ended 31.03.2007 was about Rs. 400 Crores. 70
% of the present annual sales is from Project Business. Most of Projects Transformers
orders are through leading consultants of International repute like Engineers India Ltd.,
Davy Power Gas, Uhde India Ltd., Chemtex Engg. Ltd., Dalal Consultants Ltd., Bechtel,
Mecon, Development Consultants Ltd., Fichtner Consulting Engineers Pvt. Ltd.

273

The Company had been given the accreditation of ISO 9001 : 2000. M/s. ISOQAR are the
certifying body for the above accreditation.

28. Wipro Limited


Wipro Limited was incorporated in 1945 as an oil factory. Later in 1980s Wipro entered
the Infotech sector. It is a flagship company of the Wipro Group providing IT services,
product engineering, technology infrastructure services, Business Process Outsourcing
and consulting services and solutions.
The Indian promoters hold more than 80 percent of the total share capital of the company
while the Indian public holds about 7 percent and institutional investors hold about 6
percent. Currently Mr. Azim H. Premji is the chairman and Managing Director of the
company.
Wipro's has clients across a spectrum of industries such as consumer electronics, finance,
Government, insurance, manufacturing, media & entertainment, mobile devices, Telecom
- equipment vendors and service providers, travel & transportation etc. To these clients
the company offers services such as application development, deployment &
maintenance, business intelligence, business consulting, CRM, data warehousing,
enterprise application services and security, industrial automation, space communications,
technology consulting, network management, testing services, system design, Web
services, wireless networks, software application development and maintenance etc. The
company also provides consultancy services like security governance, e-governance etc.
Wipro has its headquarter in Bangalore, besides it has 54 development centers and 30
offices spread over North America, Europe, Middle East and Asia Pacific.

274

ANNEXURE III : Sales of Companies Under Study


Rs. Crore (Non-Annualised)

Company

Mar 2003

Mar 2004

Mar 2005

Mar 2006

Mar 2007

12 mths

12 mths

12 mths

12 mths

12 mths

Alembic Limited

566.98

614.7

572.98

666.45

722.58

Arvind Mills Ltd

1551.97

1457.85

1702.53

1623.39

1850.47

196.11

210.89

246.42

293.68

324.2

439.32

618.91

800.42

620.45

458.27

527.62

892.39

1531.4

Berger Paints Limited

669.64

771.24

949.9

1121.83

1326.78

Cadbury India Limited

827.25

885.28

1006.02

1149.97

82.13

84.62

97.88

92.14

97.17

Elecon Engg. Limited

181.78

187.7

322.57

507.74

841.92

Glaxosmithkline Pharma. Ltd

911.71

987.82

1092.28

1237.2

58.49

67

90.53

114.54

128.48

1466.38

1555.05

1897.76

2284.5

2961.32

Grasim Industires Limited

5426.8

6136.2

7211.85

7661.08

9624.18

Gujarat Alkalies Limited

763.32

812.46

1048.22

1095.21

1232.66

19.2

22.94

15.58

25.42

23.79

J B Chemicals Limited

299.04

320.98

377.27

480.99

547.1

KSB Pumps Limited

262.66

332.44

397.45

452.02

512.1

8776.29

9894.52

13378.1

15029.03

17971.31

395.04

472.58

477.48

572.97

35283.51

33086.16

46850.37

49797.47

59686.9

287.33

273.57

339.16

548.68

842.95

1511

1915.55

2925.18

4794.71

8058.26

Sun Pharma Limited

789.83

892.89

1044.37

1353.02

1722.14

TATA Steel Limited

9788.49

11917.88

15867.62

17132.94

19771.19

Transpek Limited

44.88

61.67

74.15

86.1

88.92

Vadilal Enterprises Limited

97.39

115.45

112.48

117.28

126.46

133.51

211.57

300.15

485.08

5192.69

7278.44

10264.1

13758.5

Astrazeneca Pharma Ltd


Atlas Copco Limited
Bajaj Hindusthan Limited

EIMCO Elecon Limited

GMM Pfaudler Limited


GNFC Limited

Hipolin Limited

L&T Limited
Lanxess ABS Limited
ONGC Limited
Panacea Biotech Limited
Siemens Limited

Voltamp Limited
Wipro Limited

4050.03

275

ANNEXURE IV : Gross Fixed Assets (GFA) of Companies Under Study


Rs. Crore (Non-Annualised)

Company

Mar 2003

Mar 2004

Mar 2005

Mar 2006

Mar 2007

12 mths

12 mths

12 mths

12 mths

12 mths

Alembic Limited

363.28

439.17

501.62

527.15

565.29

Arvind Mills Ltd

2046.71

2080.83

2213.4

2271.83

2888.66

Astrazeneca Pharma Ltd

64.66

68.13

74.3

79.37

Atlas Copco Limited

75.06

189.87

198.99

219.67

Bajaj Hindusthan Limited

334.08

586.96

1278.64

2508.43

3202.25

Berger Paints Limited

134.65

157.34

200.46

237.31

258.65

Cadbury India Limited

335.59

371.1

425.04

512.39

46.54

64.79

76.1

88.23

87.99

Elecon Engg. Limited

147.57

150.35

173.24

213.38

251.11

Glaxosmithkline Pharma. Ltd

491.22

504.64

517.74

528.23

38.62

40.29

48.75

50.34

51.96

GNFC Limited

2096.5

2090.57

2128.22

2177.95

2702

Grasim Industires Limited

5600.2

5807.19

6056.71

6420.52

7977.65

1607.82

1614.13

1669.21

1869.23

2024.18

9.89

9.94

10.06

10.58

10.42

143.55

184.86

197.58

219.6

305.77

138.8

148.37

154.64

181.74

209.95

6304.99

1983.9

2100.89

2582.13

3340.59

250.49

263.12

276.65

283.49

58477.74

66192.61

97655.28

81249.08

89832.12

Panacea Biotech Limited

128.11

148.22

191.3

304.78

506.39

Siemens Limited

552.49

552.33

559.37

801.46

963.43

Sun Pharma Limited

407.73

536.15

659.99

775.06

870.61

TATA Steel Limited

12393.79

13269.47

14957.73

16470.71

18426.52

Transpek Limited

65.49

72.54

64.71

78.02

92.63

Vadilal Enterprises Limited

25.65

30.31

31.92

32.21

35.26

11.81

15.14

18.09

24.25

1473.39

2013.73

2976.9

4225.4

EIMCO Elecon Limited

GMM Pfaudler Limited

Gujarat Alkalies Limited


Hipolin Limited
J B Chemicals Limited
KSB Pumps Limited
L&T Limited
Lanxess ABS Limited
ONGC Limited

Voltamp Limited
Wipro Limited

1256.55

276

ANNEXURE V : Plant and Machinery of Companies Under Study


Rs. Crore (Non-Annualised)

Company

Mar 2003

Mar 2004

Mar 2005

Mar 2006

Mar 2007

12 mths

12 mths

12 mths

12 mths

12 mths

Alembic Limited

307.72

377.97

383.37

393.19

381.2

Arvind Mills Ltd

1274.92

1306.39

1369.72

1458.36

1415.07

Astrazeneca Pharma Ltd

39.44

41.93

45.11

44.28

Atlas Copco Limited

40.62

36.94

37.72

35.01

212.41

327.15

501.54

967.36

2019.93

Berger Paints Limited

72.01

81.94

101.93

126.76

141.64

Cadbury India Limited

263.14

277.33

306.87

332.01

39.99

56.93

66.4

78.3

78.5

Elecon Engg. Limited

115.96

119.18

138.94

165.39

201.22

Glaxosmithkline Pharma. Ltd

302.79

306.36

283.05

290.89

24.35

24.88

32.25

33.13

34.79

GNFC Limited

1958.42

1945.24

1924.54

1991.55

2451.9

Grasim Industires Limited

4538.67

4711.04

4858.76

5046.04

5520.45

Gujarat Alkalies Limited

1508.08

1513.07

1535.28

1575.2

1800.55

6.98

7.04

7.09

7.27

7.05

79.94

107.75

112.16

119.25

162.62

KSB Pumps Limited

104.81

110.37

118.33

126.63

154.28

L&T Limited

4491.8

1006.06

1298.76

1442.27

1806.86

Lanxess ABS Limited

206.39

209.71

228.5

235.79

54636.3

62120.38

89194.72

72824.98

78775.52

35.76

77.41

89.18

112.05

219.56

224.63

241.51

237.34

295.63

410.06

Sun Pharma Limited

201.4

293.75

381.43

481.32

571.27

TATA Steel Limited

10923.64

11202.27

11673.64

13531.96

13943.32

Transpek Limited

58.02

61.89

48.93

59.78

71.52

Vadilal Enterprises Limited

22.82

27.23

28.81

29.01

32.16

7.02

9.81

11.28

12.89

731.86

950.26

1345.2

1765.3

Bajaj Hindusthan Limited

EIMCO Elecon Limited

GMM Pfaudler Limited

Hipolin Limited
J B Chemicals Limited

ONGC Limited
Panacea Biotech Limited
Siemens Limited

Voltamp Limited
Wipro Limited

681.55

277

ANNEXURE VI : Profit After Tax (PAT) of Companies Under Study


Rs. Crore (Non-Annualised)

Company

Mar 2003

Mar 2004

Mar 2005

Mar 2006

Mar 2007

12 mths

12 mths

12 mths

12 mths

12 mths

Alembic Limited

31.52

31.26

52.04

78.52

70.68

Arvind Mills Ltd

129.33

96.75

127.35

127.16

119.56

Astrazeneca Pharma Ltd

24.51

25.75

43.06

48.74

Atlas Copco Limited

33.77

23.1

50.56

72.04

6.21

28.35

61.02

140.44

191.44

Berger Paints Limited

33.42

44.03

52.12

70.29

83.07

Cadbury India Limited

45.65

46.21

45.96

68.81

EIMCO Elecon Limited

4.97

7.42

8.75

8.24

8.68

Elecon Engg. Limited

1.73

2.17

9.79

27.92

54.89

76.35

73.16

107.15

126.93

2.37

6.21

7.61

12.22

12.09

84.72

116.91

224.02

294.72

326.47

367.58

779.26

885.71

863.21

1535.81

28.04

63.15

144.28

197.97

186.56

0.21

0.35

0.48

0.34

0.03

J B Chemicals Limited

48.54

51.04

59.15

70.93

71.02

KSB Pumps Limited

18.28

30.65

37.75

50.55

L&T Limited

433.1

532.75

983.85

1011.6

Lanxess ABS Limited

25.34

38.83

16.28

27.08

10529.32

8664.43

12983.05

14430.78

15642.92

21.42

16.45

30.07

60.94

146.81

Siemens Limited

139.38

151.37

254.75

360.11

596.54

Sun Pharma Limited

231.41

240.6

306.46

461.29

628.93

TATA Steel Limited

1012.31

1746.22

3474.16

3506.38

4222.15

-3.1

2.55

5.13

5.02

4.65

-0.02

-0.92

0.4

0.27

0.29

9.97

14.97

23.02

39.56

914.88

1494.82

2020.5

2842.1

Bajaj Hindusthan Limited

Glaxosmithkline Pharma. Ltd


GMM Pfaudler Limited
GNFC Limited
Grasim Industires Limited
Gujarat Alkalies Limited
Hipolin Limited

ONGC Limited
Panacea Biotech Limited

Transpek Limited
Vadilal Enterprises Limited
Voltamp Limited
Wipro Limited

813.23

278

1402.23

ANNEXURE VII : Total Assets of Companies Under Study


Rs. Crore (Non-Annualised)

Company
Alembic Limited

Mar 2003

Mar 2004

Mar 2005

Mar 2006

Mar 2007

12 mths

12 mths

12 mths

12 mths

12 mths

67.12

71.76

98.44

107.48

137.69

526.15

564.53

638.77

705.15

919.44

94.3

130.02

164.49

161.3

141.43

707.6

747.45

1097.93

1254.06

508.84

575.99

660.53

703.9

13261.54

13933.92

16695.61

19257.36

230.69

389.68

412.17

534.23

EIMCO Elecon Limited

197.4

246.8

340.47

537.49

745.31

Elecon Engg. Limited

39.41

42.43

46.54

48.88

52.51

11524.06

8952.33

11003.24

13214.11

17388.32

6606.89

7308.79

8094.34

8855.59

11260.87

GNFC Limited

145.89

167.44

178.79

243.06

Grasim Industires Limited

211.09

239.82

279.49

347.7

Gujarat Alkalies Limited

277.81

365.4

320.27

385.85

Hipolin Limited

4067.5

5286.49

6664.11

9508.3

13327.2

69025.7

80321.77

94942.76

114334.39

136872.52

88.49

84.23

80.04

95.07

103.82

250.45

369.39

572.98

1295.35

3412.44

Lanxess ABS Limited

294.68

357.9

412.83

507.35

706.36

ONGC Limited

2654.8

2957.74

3239.41

3674.54

3787.49

1587.98

1557.05

1472.27

1651.82

1829.53

1549.6

1945.3

2825.58

4430.86

5800.32

Sun Pharma Limited

871.6

1436.66

3229.5

3606.72

3871.55

TATA Steel Limited

2105.31

2112.94

2311.96

2496.3

3384.88

303.7

357.32

436.2

528.14

632.16

296.29

441.77

473.86

1016.51

1041.36

17

17.3

16.86

16.04

14.93

60.44

92.66

121.33

170.7

Arvind Mills Limited


Astrazeneca Pharma Ltd
Atlas Copco Limited
Bajaj Hindusthan Limited
Berger Paints Limited
Cadbury India Limited

Glaxosmithkline Pharma. Ltd


GMM Pfaudler Limited

J B Chemicals Limited
KSB Pumps Limited
L&T Limited

Panacea Biotech Limited


Siemens Limited

Transpek Limited
Vadilal Enterprises Limited
Voltamp Limited
Wipro Limited

279

32095.71

Anda mungkin juga menyukai