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CAPITAL

RESTRUCTURING
Date: 28th JULY09 By -

Group: Bill Gates


Hima Bindu Agastya
Manikandan.C
Salini Cherakula
Sana Sadique
Seshu Pinnamaneni
Sonam Jagga
 Capital Structure refers to the
combination or mix of debt and equity
which a company uses to finance its long
term operations
 Restructuring capital means reallocating
it for various motives
 To enhance liquidity
 To lower the cost of capital
 To reduce risk
 To avoid loss of control
 To improve shareholder value
 Ventura textiles limited(2006)
 NPC(Nuclear Power Corporation)(Feb 5, 2007)
 UCO (May 4, 2008)
 Tata Teleservices (Dec. 14,2008)
 Hindalco (March 15, 2009)
 UBI (March 29,2009)
 Cholamandalam DBS(May 11, 2009 )
 Air India(July 25,2009)
 Cholamandalam DBS Finance Ltd is the
joint venture of Murugappa Group and
DBS Bank, Singapore
 Non deposit taking NBFC since November
1, 2006
 Poor liquidity
 Increase in cost of funds
 Reduction in the volume of business
 Reduction in corporate mortgage finance
portfolio
 Challenging economic environment
Debt Equity Ratio

14
11.83
12
9.86 9.66
10
8
5.38
6 4.43
4
2
0
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

Debt Equity Ratio

Net Profit Margin(%)

18 15.86 16.02
16
14
12
10
7.61
8 6.65
6 3.81
4
2
0
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

Net Profit Margin(%)


contd…..
Interest Cover

2 1.86 1.81
1.8 1.61
1.6 1.41
1.4 1.21
1.2
1
0.8
0.6
0.4
0.2
0
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

Interest Cover

Total Debt to Owners Fund

14
11.83
12
9.86 9.66
10
8
5.38
6 4.43
4
2
0
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

Total Debt to Owners Fund


 Net loss of Rs 27.73 crores for the three
months ended December 31, 2008 as
compared to the net profit of Rs. 20.25 Cr
last year
 To infuse equity (Rs.300 Cr.)
 CRISIL ratings had gone down from FAA+
to FAA

contd......
 PBT had gone down compared to 2008
Lead to drop in EPS
 No dividend payout for the current
financial year
 Drop in the capital adequacy ratio (15%
to 12%)
 Shareholders’ approval on March 5, 2009
 Got approval on 20th April under section
78,100 to103 of “The Companies
act”,1956
 Finally restructured on May 11, 2009
 Capital Reduction
 The special provision of Rs. 323.53 Cr. Is made
a) To make provision for the standard assets, for
an amount no exeeding Rs. 200Cr.
b) To write off the bad debts/loan losses/other
non recoverable assets, for an amount not
exceeding Rs. 100 Cr.
c) Provision for the doubtful receivables, for an
amount not exceeding Rs. 23.53 Cr.
 Infuse a capital of Rs. 300 Cr, in the form
of fully convertible cumulative preference
shares
 Exit from personal loan business
 Concentrating on vehicle financing, home
equity, corporate mortgage
 To create provision for standard assets
for an amount not exceeding Rs. 200 Cr.
 The company could get back to normal
disbursement in the last quarter of the
financial result
 The liquidity position has substantially
improved
 Improvement in the credit rating
 Constantly enhanced shareholders’ value
 Improvement in future profitability
 Increase in the EPS
 Annual report of Cholamandalam DBS
Finance Ltd
 Wikipedia.com
 Moneycontrol.com