Preeti FM Project

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FINANCIAL MANAGEMENTPROJECT

Company ONGC

Submitted to Prof. Ramesh

Submitted byPreeti MorlaFPB1012/053Section- B


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Contents

01.Ascertain sales, gross profit, EBITDA, EBIT, PBT, PAT and CFAT. ................................................. 4

02. Ascertain beta of the equity share of the company. ............................................................................. 4

03. Ascertain the market price of the equity share for past 30days ............................................................ 5

04. Ascertain the market price of the equity share with 52 week high and low for all three years. ........... 5

05. Ascertain Working Capital i.e., current assets - current liabilities for all three years. ........................... 6

06. What is Working Capital Management, ascertain the methods of Working Capital Management

followed by your company? ..................................................................................................................... 6

Methods of working capital management ............................................................................................. 7

Debtors Management ........................................................................................................................... 7

Short term financing ............................................................................................................................ 7

Factors influencing Working Capital are .............................................................................................. 7

Methods of Working Capital Management: .......................................................................................... 7

Dimensions of Working Capital Management: ..................................................................................... 8

07. Ascertain the amount invested in capital budget for the above period. ................................................. 8

08. If you know sales and pat you can take investment decisions or capital budgeting decisions.

Comment in a paragraph.......................................................................................................................... 8

09. What is time value of money? ............................................................................................................ 9

Present and Future Values:................................................................................................................... 9

10. Which method of capital budgeting is the best method to evaluate a project? .................................... 10

Net Present Value (NPV) ................................................................................................................... 10

11. Return is a factor of risk, elaborate and also explain CAPM model? ................................................. 11

Types of Risk..................................................................................................................................... 11

Capital Asset Pricing Model CAPM:............................................................................................... 12

12. Ascertain dividend paid by your company for the past three years. ................................................... 12

13. Ascertain the source of finance of your company and list the sources. .............................................. 13

14. Find the debt equity ratio of your company and comment on the financial leverage of your company.

.............................................................................................................................................................. 13

15.Write a note on angels, VC and PE companies. ................................................................................. 13

Angel investor................................................................................................................................... 13

Venture capital................................................................................................................................... 14


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Private Equity .................................................................................................................................... 15

16. How beta is different from standard deviation ?................................................................................ 16

Beta ................................................................................................................................................... 16

Standard deviation ............................................................................................................................. 17

Difference between Beta and Standard deviation................................................................................ 17

17. Check whether your company has inter corporate deposit, if so understand the legal provisions for the

same. ..................................................................................................................................................... 17

18. As your company is listed in the NSE find out the procedure for listing in NSE? ............................. 17

Listing Procedure............................................................................................................................... 17

Submission of Memorandum and Articles of Association ............................................................... 17

Approval of draft prospectus .......................................................................................................... 18

Submission of Application ............................................................................................................. 19

Submission of Application (For Issuers listing on NSE for the first time)........................................ 19

Submission of Application (Listing of further Issues by Issuers already listed on NSE) .................. 19

Listing Fees ................................................................................................................................... 19

Submission of Application (Security Deposit) ................................................................................. 21

Submission of Application (Supporting Documents) ...................................................................... 22

19. Ascertain what is risk free rate of return for 2011in India, check RBI and GOI web sites to find out.

.............................................................................................................................................................. 23

20. Is your company making use of financial leverage operating leverage and combined leverage,illustrate. ............................................................................................................................................... 24

Leverage............................................................................................................................................ 24

Operating leverage............................................................................................................................. 25

Financial leverage .............................................................................................................................. 25

Combined leverage ............................................................................................................................ 25

21. Check whether your companys debt instrument is listed, if listed is it traded. ............................. 25

22. Ratio analysis............................................................................................................................. 26

23. If term loan or cash credit is availed by your company then collect the details of the same such asamount, rate of interest, period of re payment etc. .................................................................................. 26

24. Ascertain EPS of the company and find out PE ratio. .................................................................. 27

25. Go through annual report, directors report, auditors report and understand the comments made

by them, check is there any critical comments made by the auditors of the company. ............................ 27

26. Take Cash flow before tax of your company and ascertain C- FAT, for two years. ....................... 27


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01.Ascertain sales, gross profit, EBITDA, EBIT, PBT, PAT and CFAT.Rs in million

Year 2009-10 2008-09 2007-08

Gross Sales 619832 650494 615426

Excise duty 56752 59174 61106

Net sales 563080 591320 554320

Less: COGS ( Change in stock+Purchases+ Direct expenses) 167026 213028 202408

Gross Profit 396054 378292 351912

Add: Non operating transactions -20466 -57950 -37122

EBITDA 375588 320342 314790

Less: Ammortization 89407 67320 47580

EBITD 286181 253022 267210

Depletion 45302 42148 36776

Depreciation 12312 14491 14060

Impairment -433 -3110 -437

Less: Total 57181 53529 50399

PBIT 229000 199493 216811

Interest -20839 -40314 -35535

PBT 249839 239807 252346Tax 82163 78544 85330

PAT 167676 161263 167016

PAT 167676 161263 167016

CFAT 269395 243074 228656

02.Ascertain beta of the equity share of the company.

Beta= Co-Variance (SENSEX, stock)/ Variance (SENSEX)Beta of ONGC= 0.62


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03.Ascertain the market price of the equity share for past 30days

Date Open Price Close Price Average Price

14-Feb-11 281.15 279.45 279.68

11-Feb-11 272.1 277.05 270.41

10-Feb-11 274 273.6 275.04

9-Feb-11 283.55 274.3 280.98

8-Feb-11 300 282.05 285.93

7-Feb-11 1200 1194.55 1198.56

4-Feb-11 1195.55 1191.7 1201.23

3-Feb-11 1183 1195.4 1189.74

2-Feb-11 1184.4 1181.6 1192.18

1-Feb-11 1191 1176.75 1181.32

31-Jan-11 1143.2 1177.8 1183.68

28-Jan-11 1124.95 1132.9 1131.31

27-Jan-11 1139 1113.8 1122.06

25-Jan-11 1142.1 1130.45 1131.57

24-Jan-11 1118 1138.25 1128.74

21-Jan-11 1132 1105.55 1114.92

20-Jan-11 1145.1 1134.3 1134.43

19-Jan-11 1171.1 1158.85 1169.85

18-Jan-11 1170.35 1170.45 1166.48

17-Jan-11 1175.1 1170.1 1171.69

14-Jan-11 1207 1179.05 1192.05

13-Jan-11 1185 1201.5 1196.85

12-Jan-11 1190 1186.65 1175.98

11-Jan-11 1177 1184.8 1190.25

10-Jan-11 1202 1174.35 1185.34

7-Jan-11 1225.15 1205.85 1216.67

6-Jan-11 1269.4 1227.3 1234.31

5-Jan-11 1288.9 1266.15 1269.73

4-Jan-11 1295.35 1287.05 1289.94

3-Jan-11 1304 1292.8 1293.22

04.Ascertain the market price of the equity share with 52 week high and low

for all three years.


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For year 2009

Particulars Price Traded quantity Turnover in Lacs Dates

Open 1177.00 317627 3771.72 04-Jan-10

High 1472.60 1020640 14867.11 28-Sep-10

Low 996.00 1125110 11355.48 22-Apr-10

Close 1288.20 766409 9904.18 31-Dec-10

For year 2009


Open 667.00 1161119 7905.01 01-Jan-09

High 1277.65 456876 5751.17 15-Oct-09

Low 587.8 1569268 10066.40 16-Jan-09

Close 1178.00 727549 8571.16 31-Dec-09

For year 2008


Open 1240.00 925453 11545.03 01-Jan-08

High 1356.00 3510337 47136.28 04-Jan-08

Low 538.15 4354160 25967.54 27-Oct-08

Close 667.10 1326857 8823.45 31-Dec-08

05. Ascertain Working Capital i.e., current assets - current liabilities for all

three years.

Working Capital= Current asset- Current liability

Particulars 2009-10 2008-09 2007-08

Current asset 537713 546000 498331

Current liability 194999 211051 176083

Working capital 342714 334949 322248

06. What is Working Capital Management, ascertain the methods of WorkingCapital Management followed by your company?

Working capital management is an integral part of overall financial management. The management of

short term assets and short term source of finance is known as working capital management. Working

capital management involves analysis of risk and return. Working Capital Management therefore, aim at


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striking a balance such that there is an optimum amount of Current Assets. In general the higher the Net

Working Capital, the lower is the risk, as also the profitability and Vice-versa.

Methods of working capital management

Decisions relating to working capital and short term financing are referred to as working capital

management. These involve managing the relationship between a firm's short-term assets and itsshort-term liabilities.

The goal of working capital management is to ensure that the firm is able to continue its

operations and that it has sufficient cash flow to satisfy both maturing short-term debt and

upcoming operational expenses

Debtors Management

Identify the appropriate credit policy, i.e. credit terms which will attract customers, such that any

impact on cash flows and the cash conversion cycle will be offset by increased revenue and

hence Return on Capital (orvice versa)

Short term financing

Identify the appropriate source of financing, given the cash conversion cycle: the inventory is ideally

financed by credit granted by the supplier; however, it may be necessary to utilize a bank loan (or

overdraft), or to "convert debtors to cash" through "factoring".

Factors influencing Working Capital are

y Nature of the businessy Manufacturing Cycle & Time lag in Production & Salesy Sales Volume & Turnover of Working Capitaly Credit Policy (Terms of Sales & Purchases)y Production policyy Seasonal Fluctuationsy Operating Efficiencyy Growth & Expansiony Price Level Changes & Adjustments

Methods of Working Capital Management:

y Operating Cycle Methody Estimating Current Assets & Current Liabilities Methody Cash Forecasting Methody Projected Balance Sheet Methody Profit & Loss Adjustment Method


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Dimensions of Working Capital Management:

07.Ascertain the amount invested in capital budget for the above period.

Investments for year 2010 is 57720 Millions



08. If you know sales and pat you can take investment decisions or capital

budgeting decisions. Comment in a paragraph.

Investment Decisions or Capital Budgeting decisions cannot be based on sales & PAT, The

decision should be taken by considering CFAT(Cash flow after tax). Here cash flow is important

in every organization in for to take such an important decisions and cash plays an important role

in every organizational decisions


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10. Which method of capital budgeting is the best method to evaluate a

project?

Capital budgeting (or investment appraisal) is the planning process used to determine whether anorganizations long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget formajor capital, or investment, expenditures.

Capital Budgeting is the process of identifying, evaluating, and implementing a firmsinvestment opportunities. It seeks to identify investments that will enhance a firms competitiveadvantage and increase shareholder wealth.

The typical capital budgeting decision involves a large up-front investment followed by a seriesof smaller cash inflows. Poor capital budgeting decisions can ultimately result in companybankruptcy.

The most important and commonly used methods are:

y Urgency Methody Pay-Back Period Methody Unadjusted Return on Investment Methody Present Value Methody Internal Rate Of Return Methody Net Present Value methody Terminal Value Methody Benefit-Cost Ratio Methody Equivalent Annual Cost Method

Net Present Value (NPV)

This method is also called Excess Present Method Value (EPV) method or Net Gain Method or

Investors method. This is the best method of evaluating the investment proposals and is just a

variation of present value method. As such it is a type of present value calculation, which is

designed to overcome the disadvantages of IRR. This method is used when management has

already determined a minimum rate of return (cut-off rate) as their policy. All cash flows (Cash

out flows & Cash in-flows) are discounted at a given rate and their present values are

ascertained. If all out flows are made in the initial year, their present values will be equal toinitial investment outlay. Present values of cash out flows are then deducted from the present

value of the cash inflows.

NPV obtained may be equal to zero, more than zero (+ve) or less than zero (-ve). A project is

approved only when such present values of cash inflows are equal to or more than the present

value of cash out flows (i.e. initial investment at zero period of time). Thus NPV should be


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positive for the approval of a project or it should be equal to zero. If NPV is negative the project

will be treated as worthless and is to be out right rejected. Even NPV method can be used to rank

the various proposals which are mutually exclusive. As a general rule, higher the amount of NPV

greater worthiness of the project will be. Amongst the various alternative investment proposals

having the same cost, the best one will be one which provides highest NPV.

11.Return is a factor of risk, elaborate and also explain CAPM model?

There are basically three types of core investments: cash (or cash equivalents), bonds, and

stocks.

Return on Investment always have a risk factor. Some investments are certainly more "risky"

than others, but no investment is risk free. Trying to avoid risk by not investing at all can be the

riskiest move of all. That would be like standing at the curb, never setting foot into the street.

You'll never be able to get to your destination if you don't accept some risk. In investing, just like

crossing that street, you carefully consider the situation, accept a comfortable level of risk, and

proceed to where you're going. Risk can never be eliminated, but it can be managed. Let's take a

look at the different types of risk, how different asset categories perform, and the ways and

means to help manage risk.

Types of Risk

"Risk" can be translated as loss of principal. However, there are many kinds of risk. Let's take alook at some of them:

y Capital Risk: Losing your invested monies.y Inflationary Risk: Investment's rate of return doesn't keep pace with inflation rate.y Interest Rate Risk: A drop in an investment's interest rate.y Market Risk: Selling an investment at an unfavourable price.y Liquidity Risk: Limitations on the availability of funds for a specific period of time.y Legislative Risk: Changes in tax laws may make certain investments less advantageous.y Default Risk: The failure of the institution where an investment is made.

The Ways to Manage RiskThere are a number of strategies that can help limit risk while offering the potential of higherreturns.

y Diversification:Investing in a variety of investments, or simply following the old adage "Don't put all

your eggs in one basket." With a portfolio spread among several different investments,

you benefit when each type is doing well, and also limit exposure when one or more

investment is performing poorly.


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y Asset Allocation:Building upon the diversification concept, with asset allocation you create a customized

portfolio consisting of several asset categories (cash, stocks, bonds) rather than individual

securities. Changing economic conditions affect various types of assets differently;

consequently, each asset category's return may partially offset the others'.

y Dollar Cost Averaging:Systematically investing a fixed dollar amount at regular time intervals. When this

disciplined program is adhered to and market fluctuations are ignored, it attempts to

"smooth out" the ups and downs of the market over the long haul. Dollar cost averaging,

however, cannot guarantee a positive return in a declining market and you must consider

your ability to continue investing on a regular basis under all market conditions.

Capital Asset Pricing Model CAPM:

The CAPM says that the expected return of a security or a portfolio equals the rate on a risk-free

security plus a risk premium. If this expected return does not meet or beat the required return,then the investment should not be undertaken. The security market line plots the results of the

CAPM for all different risks (betas). Using the CAPM model and the following assumptions, we

can compute the expected return of a stock. We can say its a model that describes the

relationship between risk and expected return and that is used in the pricing of risky securities.

The general idea behind CAPM is that investors need to be compensated in two ways: time value

of money and risk.

12.Ascertain dividend paid by your company for the past three years.

Rs in Million

2009-10 2008-09 2007-08

Dividend 70583 68444 68444

Interim dividend 38500 38500 38500

Proposed final dividend 32083 29944 29944


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13.Ascertain the source of finance of your company and list the sources.

y Shareholders fundo Share capitalo Reserves & surplus

y Loan fundso Unsecured loan (foreign currency loan from banks)

y Deferred tax liability (NET)/ deferred govt granty Liability for abandonment cost

14. Find the debt equity ratio of your company and comment on the financial

leverage of your company.

Debt Equity Ratio= Total Debt / Total Equity

Total Debt = Secured Loans + Unsecured Loans

Total Debt 52.37

Total Equity 872826

Debt Equity Ratio 0.00006

Debt equity ratio= 0.00006:1

The Interpretation:

ONGC has only 0.00006 of Debt and $ 1 in Equity to meet this obligation.

15.Write a note on angels, VC and PE companies.

Angel investor

An angel investor or angel (also known as a business angel or informal investor) is an affluentindividual who provides capital for a business start-up, usually in exchange for convertible debtor ownership equity. A small but increasing number of angel investors organize themselves intoangel groups or angel networks to share research and pool their investment capital.

Business Angels are private investors who invest in unquoted small and medium sizedbusinesses. They are often businessmen and women who have sold their business. They provide


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not only finance but experience and business skills. Business Angels invest in the early stage ofbusiness development filling, in part, the equity gap.

Parameters Business Angels

Personal Entrepreneurs

Money Invested Own moneyFirms funded Small, early stage

Due diligence done Minimal

Location of inv. Of concern

Contract used Simple

Monitoring after inv. Active, hands-on

Involvement in mgt Important

Exiting the firm Of lesser concern

Angels typically invest their own funds, unlike venture capitalists, who manage the pooledmoney of others in a professionally-managed fund. Although typically reflecting the investment

judgment of an individual, the actual entity that provides the funding may be a trust, business,limited liability company, investment fund, etc. The Harvard report by William R. Kerr, JoshLerner, and Antoinette Schoar tables evidence that angel-funded startup companies are lesslikely to fail than companies that rely on other forms of initial financing.

Angel capital fills the gap in start-up financing between "friends and family" who provide seedfunding, and venture capital. Angel investment is a common second round of financing for high-growth start-ups, and accounts in total for almost as much money invested annually as all venturecapital funds combined.

Angel investments bear extremely high risk and are usually subject to dilution from future

investment rounds. As such, they require a very high return on investment because a large percentage of angel investments are lost completely when early stage companies fail,professional angel investors seek investments that have the potential to return at least 10 or moretimes their original investment within 5 years, through a defined exit strategy, such as plans foran initial public offering or an acquisition. Current 'best practices' suggest that angels might dobetter setting their sights even higher, looking for companies that will have at least the potentialto provide a 20x-30x return over a five- to seven-year holding period. After taking into accountthe need to cover failed investments and the multi-year holding time for even the successfulones, however, the actual effective internal rate of return for a typical successful portfolio ofangel investments is, in reality, typically as 'low' as 20-30%. While the investor's need for highrates of return on any given investment can thus make angel financing an expensive source of

funds, cheaper sources of capital, such as bank financing, are usually not available for mostearly-stage ventures, which may be too small or young to qualify for traditional loans.

Venture capital

Venture capital is money put into an enterprise which may all be lost if the enterprise fails. A businessman starting up a new business will invest venture capital of his own, but he will probably need extra funding from a source other than his own pocket. However, the term


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'venture capital' is more specifically associated with putting money, usually in return for anequity stake, into a new business, a management buy-out or a major expansion scheme.

The institution that puts in the money recognizes the gamble inherent in the funding. There is aserious risk of losing the entire investment, and it might take a long time before any profits and

returns materialize. But there is also the prospect of very high profits and a substantial return onthe investment. A venture capitalist will require a high expected rate of return on investments, tocompensate for the high risk.

A venture capital organization will not want to retain its investment in a business indefinitely,and when it considers putting money into a business venture, it will also consider its "exit", thatis, how it will be able to pull out of the business eventually (after five to seven years, say) andrealize its profits.

When a company's directors look for help from a venture capital institution, they must recognizethat:

The institution will want an equity stake in the company It will need convincing that the company can be successful It may want to have a representative appointed to the company's board, to look after its

interests.

The directors of the company must then contact venture capital organizations, to try and find oneor more which would be willing to offer finance. A venture capital organization will only givefunds to a company that it believes can succeed, and before it will make any definite offer, it willwant from the company management:

A business plan Details of how much finance is needed and how it will be used The most recent trading figures of the company, a balance sheet, a cash flow forecast and

a profit forecast Details of the management team, with evidence of a wide range of management skills Details of major shareholders Details of the company's current banking arrangements and any other sources of finance Any sales literature or publicity material that the company has issued.

A high percentage of requests for venture capital are rejected on an initial screening, and only asmall percentage of all requests survive both this screening and further investigation and result inactual investments.

Private Equity

Equity capital that is not quoted on a public exchange. Private equity consists of investors andfunds that make investments directly into private companies or conduct buyouts of publiccompanies that result in a delisting of public equity. Capital for private equity is raised fromretail and institutional investors, and can be used to fund new technologies, expand working


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capital within an owned company, make acquisitions, or to strengthen a balance sheet.

The majority of private equity consists of institutional investors and accredited investors who cancommit large sums of money for long periods of time. Private equity investments often demandlong holding periods to allow for a turnaround of a distressed company or a liquidity event such

as an IPO or sale to a public company.

The size of the private equity market has grown steadily since the 1970s. Private equity firmswill sometimes pool funds together to take very large public companies private. Many privateequity firms conduct what are known as leveraged buyouts (LBOs), where large amounts of debtare issued to fund a large purchase. Private equity firms will then try to improve the financialresults and prospects of the company in the hope of reselling the company to another firm orcashing out via an IPO.

Private equity refers to a type of investment aimed at gaining significant, or even complete,control of a company in the hopes of earning a high return. As the name implies, private equityfunds invest in assets that either are not owned publicly or that are publicly owned but the privateequity buyer plans to take private. Though the money used to fund these investments comes fromprivate markets, private equity firms invest in both privately and publicly held companies. Theprivate equity industry has evolved substantially over the past decade or so. The basic principlehas remained constant: a group of investors buy out a company and use that company's earningsto pay themselves back. What has changed are the sheer numbers of recent private equity deals.In the past ten years, the record for the most expensive buyout has been broken and re-brokenseveral times. Private equity firms have been acquiring companies left and right, payingsometimes shockingly high premiums over these companies' market values. As a result, takeovertargets are demanding exorbitant prices for their outstanding shares; with the massive buyoutsthat have made headlines around the world, companies now expect a certain premium over their

current value.

16. How beta is different from standard deviation ?

Beta

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to themarket as a whole. Beta is used in the capital asset pricing model (CAPM), a model thatcalculates the expected return of an asset based on its beta and expected market returns. Beta ofan asset is a measure of the market risks in that assets returns. It indicates to what extent thereturns from that asset will deviate from the expected returns due to market movements i.e. due

to market risks. Beta of an asset is defined as covariance of that assets returns and marketreturns divided by variance of market return.

Beta is calculated using regression analysis, and you can think of beta as the tendency of asecurity's returns to respond to swings in the market. A beta of 1 indicates that the security'sprice will move with the market. A beta of less than 1 means that the security will be less volatilethan the market. A beta of greater than 1 indicates that the security's price will be more volatile


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than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than themarket.

Standard deviation

A measure of the dispersion of a set of data from its mean. The more spread apart the data, thehigher the deviation. Standard deviation is calculated as the square root of variance. In finance,standard deviation is applied to the annual rate of return of an investment to measure theinvestment's volatility. Standard deviation is also known as historical volatility and is used byinvestors as a gauge for the amount of expected volatility.In other words;This is a measure of the difference between data and its mean. It is also a measure of a security'svolatility. Standard deviation represents historical volatility which helps determine the amount ofexpected volatility.

DifferencebetweenBeta and Standard deviation

Beta measures volatility based on a security's correlation with the market as a whole, whereas

standard deviation determines volatility based on its historical pattern.

17. Check whether your company has inter corporate deposit, if so

understand the legal provisions for the same.

No, the company dont have any inter corporate deposit because it has not revealed it anywhere.

18. As your company is listed in the NSE find out the procedure for listing in

NSE?

An Issuer has to take various steps prior to making an application for listing its securities on theNSE. These steps are essential to ensure the compliance of certain requirements by the Issuerbefore listing its securities on the NSE. The various steps to be taken include:

y Submission of Memorandum and Articles of Associationy Approval of draft prospectusy Submission of Applicationy Listing conditions and requirements

Listing Procedure

Submission of Memorandum and Articles ofAssociation

Rule 19(2) (a) of the Securities Contracts (Regulation) Rules, 1957 requires that the Articles ofAssociation of the Issuer wanting to list its securities must contain provisions as given hereunder.


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The Articles of Association of an Issuer shall contain the following provisions namely:

y That there shall be no forfeiture of unclaimed dividends before the claim becomes barredby law;

y That a common form of transfer shall be used;y That fully paid shares shall be free from all lien and that in the case of partly paid shares

the issuer's lien shall be restricted to moneys called or payable at a fixed time in respectof such shares;

y That registration of transfer shall not be refused on the ground of the transferor beingeither alone or jointly with any other person or persons indebted to the issuer on anyaccount whatsoever;

y That any amount paid up in advance of calls on any share may carry interest but shall notin respect thereof confer a right to dividend or to participate in profits;

y That option or right to call of shares shall not be given to any person except with thesanction of the issuer in general meetings.

y Permission for sub-division/consolidation of share certificate.Note: The Relevant Authority may take exception to any provision contained in the Articles ofAssociation of an Issuer which may be deemed undesirable or unreasonable in the case of a public company and may require inclusion of specific provisions deemed to be desirable andnecessary.

If the Issuer's Articles of Association is not in conformity with the provisions as stated above, theIssuer has to make amendments to the Articles of Association. However, the securities of anIssuer may be admitted for listing on the NSE on an undertaking by the Issuer that theamendments necessary in the Articles of Association to bring Articles of Association in

conformity with Rule 19(2)(a) of the Securities Contract (Regulation) Rules, 1957 shall be madein the next annual general meeting and in the meantime the Issuer shall act strictly in accordancewith prevalent provisions of Securities Contract (Regulation) Act, 1957 and other statutes.

It is to be noted that any provision in the Articles of Association which is not in tune with soundcorporate practice has to be removed by amending the Articles of Association.

Approval of draft prospectus

The Issuer shall file the draft prospectus and application forms with NSE. The draft prospectusshould have been prepared in accordance with the statutes, notifications, circulars, guidelines,

etc. governing preparation and issue of prospectus prevailing at the relevant time. The Issuersmay particularly bear in mind the provisions of Companies Act, Securities Contracts(Regulation) Act, the SEBI Act and the relevant subordinate legislations thereto. NSE willperuse the draft prospectus only from the point of view of checking whether the draft prospectusis in accordance with the listing requirements, and therefore any approval given by NSE inrespect of the draft prospectus should not be construed as approval under any laws, rules,notifications, circulars, guidelines etc. The Issuer should also submit the SEBI acknowledgmentcard or letter indicating observations on draft prospectus or letter of offer by SEBI.


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Submission ofApplication

For Issuers listing on NSE for the first time Listing of further Issues by Issuers already listed on NSE Listing Fees Security deposit (for new & fresh issues and when NSE is the Regional Stock Exchange)

Supporting documents

Submission ofApplication (For Issuers listing on NSE for the first time)

Issuers desiring to list existing/new securities on the NSE shall make application for admissionof their securities to dealings on the NSE in the forms prescribed in this regard as per detailsgiven hereunder or in such other form or forms as the Relevant Authority may from time to timeprescribe in addition thereto or in modification or substitution thereof.

Appendix 'A' - Clauses of Articles of Association.Appendix 'B'- Application Letter for Listing.Appendix 'C-1' - Listing Application providing pre-issue details of securities.Appendix 'C-2' - Listing Application providing post-issue details of securities.Appendix 'D'- Checklist for supporting documents ( as applicable to the issuer)Appendix 'E' - Schedule of DistributionAppendix 'F'- Listing Agreement

Submission ofApplication (Listing of further Issues by Issuers already listed on NSE)

Issuers whose securities are already listed on the NSE shall apply for admission to listing on theNSE of any further issue of securities made by them. The application for admission shall bemade in the forms prescribed in this regard or in such other form or forms as the RelevantAuthority may from time to time prescribe in addition thereto or in modification or substitutionthereof.

Appendix 'E' - Schedule of DistributionAppendix 'G'- Application Letter for Listing of further issues.Appendix 'H' - Listing Application providing details of securities.Appendix 'I' - Checklist for supporting documents submitted (as applicable)

Listing Fees

The listing fees depend on the paid up share capital of your Company:

Particulars Amount (Rs.)

Initial Listing Fees 25,000

Annual Listing Fees (based on paid up share, bond and/or debenture and/or debt capitaletc.)

U pto Rs. 1 Crore 10,000

Above Rs. 1 Crore and upto Rs.5 Crores 15,000


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Above Rs. 50 Crores and upto Rs.100 Crores 1,30,000

Above Rs. 100 Crore and upto Rs.150 Crores 1,50,000






Above Rs. 400 Crore and upto Rs.450 Crores 3,25,000Above Rs. 450 Crore and upto Rs.500 Crores 3,75,000

Companies which have a paid up share, bond and/ or debenture and/or debt capital, etc. of morethan Rs.500 crores will have to pay minimum fees of Rs.3,75,000 and an additional listing feesof Rs.2,500 for every increase of Rs.5 crores or part thereof in the paid up share, bond and/ ordebenture and/or debt capital, etc.

Companies which have a paid up share, bond and/ or debenture and/or debt capital, etc. of morethan Rs.1,000 crores will have to pay minimum fees of Rs.6,30,000 and an additional listing feesof Rs.2,750 for every increase of Rs.5 crores or part thereof in the paid up share, bond and/ or

debenture and/or debt capital, etc.

Listing Fees - Mutual Fund

The listing fees depend on the paid up unit capital of your Scheme:

Particulars Amount (Rs.)

Initial Listing Fees -

Listing Fees where the tenure of the Scheme is upto six months (based on the Unit capital

of the Scheme in crores)0-100 16,000

100-300 29,000

300-500 47,000

500-1000 78,000

Maximum fees 125,000


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Where the tenure of the scheme is more than six months, the listing fee as applicable formultiples of six months as given in the above table shall be levied.

Please draw your Cheques/Demand Drafts favouring National Stock Exchange of IndiaLimited payable at Mumbai.

Submission of Application (Security Deposit)

(Payable only for new and fresh issues and only when NSE is the Regional StockExchange)

The Relevant Authority shall not grant admission to dealings of securities of an Issuerwhich is not listed or of any new (original or further) issue of securities of an Issuerexcepting Mutual Funds, which is listed on the NSE unless the Issuer deposits and keepsdeposited with the NSE (in cases where the securities are offered for subscription, whetherthrough the issue of a prospectus, letter of offer or otherwise, and NSE is the RegionalStock Exchange for the Issuer) an amount calculated at 1% of the amount of securitiesoffered for subscription to the public and or to the holders of existing securities of theIssuer, as the case may be for ensuring compliance by the Issuer within the prescribed orstipulated period of all requirements and conditions hereinafter mentioned and shall berefundable or forfeitable in the manner hereinafter stated:

y The Issuer shall comply with all prevailing requirements of law including allrequirements of and under any notifications, directives and guidelines issued by theCentral Government, SEBI or any statutory body or local authority or any body orauthority acting under the authority or direction of the Central Government and all prevailing listing requirements and conditions of the NSE and of each recognizedStock Exchange where the Issuer has applied for permission for admission to dealingsof the securities, within the prescribed or stipulated period;

y If the Issuer has complied with all the aforesaid requirements and conditions including,wherever applicable, its obligation under Section 73 (or any statutory modification orre-enactment thereof) of the Companies Act, 1956 and obligations arising therefrom,within the prescribed or stipulated period, and on obtaining a No Objection Certificatefrom SEBI and submitting it to NSE , NSE shall refund to the Issuer the said depositwithout interest within fifteen days from the expiry of the prescribed or stipulatedperiod;

y If on expiry of the prescribed or stipulated period or the extended period referred tohereafter, the Issuer has not complied with all the aforesaid requirements andconditions, the said deposit shall be forfeited by the NSE, at its discretion, andthereupon the same shall vest in the NSE. Provided the forfeiture shall not release theIssuer of its obligation to comply with the aforesaid requirements and conditions;

If the Issuer is unable to complete compliance of the aforesaid requirements and conditionswithin the prescribed or stipulated period, the NSE, at its discretion and if the Issuer has


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shown sufficient cause, but without prejudice to the obligations of the Issuer under thelaws in force to comply with any such requirements and conditions within the prescribedor stipulated period, may not forfeit the said deposit but may allow such further time to theIssuer as the NSE may deem fit; provided that

oThe Issuer has at least ten days prior to expiry of the prescribed or stipulatedperiod applied in writing for extension of time to the NSE stating the reasons fornon-compliance, and

o The Issuer, having been allowed further time by the NSE, has before expiry ofthe prescribed or stipulated period, published in a manner required by the NSE,the fact of such extension having been allowed; provided further that where the NSE has not allowed extension in writing before expiry of the prescribed orstipulated period, the request for extension shall be deemed to have been refused; provided also that any such extension shall not release the Issuer of itsobligations to comply with the aforesaid requirements and conditions.

50% of the above mentioned security deposit should be paid to the NSE in cash. Thebalance amount can be provided by way of a bank guarantee, in the format prescribed by oracceptable to NSE. The amount to be paid in cash is limited to Rs.3 crores.

Submission ofApplication (Supporting Documents)

Issuers applying for admission of their securities to dealings on the NSE shall submit to theNSE the following:

Documents and Information

The documents and information prescribed in Appendix D or Appendix I (as the casemay be) to this Regulation or such other documents and information as the RelevantAuthority may from time to time prescribe, in addition thereto or in modification orsubstitution thereof together with any other documents and information which theRelevant Authority may require in any particular case;

Distribution SchedulesDistribution Schedules duly completed in respect of each class and kind of security inthe form prescribed in Appendix E (Table I, II & III) to this Regulation or in such otherform or forms as the Relevant Authority may from time to time prescribe in additionthereto or in modification or substitution thereof.


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19.Ascertain what is risk free rate of return for 2011in India, check RBI and

GOI web sites to find out.

The risk-free interest rate is the theoretical rate of return of an investment with zero risk,including default risk. The risk-free rate represents the interest an investor would expect from anabsolutely risk-free investment over a given period of time. The risk-free rate of return is one ofthe most basic components of modern finance and many of its most famous theories the capitalasset pricing model (CAPM), modern portfolio theory (MPT) and the Black-Scholes model usethe risk-free rate as the primary component from which other valuations are derived. The risk-free asset only applies in theory, but its actual safety rarely comes into question until events fallfar beyond the normal daily volatile markets. Although its easy to take shots at theories thathave a risk-free asset as their base, there are limited options to use as a proxy.

In theory, the risk-free rate is the minimum return an investor expects for any investment becausehe or she will not accept additional risk unless the potential rate of return is greater than the risk-free rate.whereas, In practice the risk-free rate does not exist because even the safest

investments carry a very small amount of risk. Thus, the interest rate on a three-month U.S.Treasury bill is often used as the risk-free rate

The T-Bill Base

The risk-free rate is an important building block for MPT. As referenced in Figure 1, the risk-

free rate is the base of the line where the lowest return can be found with the least amount of

risk.

Risk-free assets under MPT, while theoretical, typically are represented by Treasury bills (T-

bills), which have the following characteristics:

y T-bills are assumed to have zero default risk because they represent and are backed bythe good faith of the U.S. government. (Read Why do commercial bills have higheryields than T-bills? to learn more.)

y T-bills are sold at auction in a weekly competitive bidding process and are sold at adiscount from par. (Read Bond Market Pricing Conventions for more on how prices aredetermined.)

y They dont pay traditional interest payments like their cousins, the Treasury notes andTreasury bonds.

y Theyre sold in various maturities in denominations.y They can be purchased by individuals directly from the government.

Because there are limited options to use instead of the United States T-bill, it helps to have a

grasp of other areas of risk that can have indirect effects on risk-free assumptions.

India may sell 91-day t-bills at 7.25 pct-poll


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India's central bank may sell 91-day t-bills at 7.25 percent and 182-day bills at 7.5 percent,

according to the median estimate of 15 respondents in a Reuters poll. For the 91-day bills, the

highest yield forecast was 7.3 percent and the lowest was 7.18 percent, while for the 182-day

bills they were at 7.55 percent and 7.22 percent, respectively. The central bank is auctioning 50

billion rupees of 91-day treasury bills and 15 billion rupees of 182-day treasury bills on

Wednesday. The last auction cut-offs were 7.23 percent for 91-day bills and 7.45 percent for

182-day bills.

20. Is your company making use of financial leverage operating leverage and

combined leverage, illustrate.

LeverageAccording to Solomon Ezra, Leverage is the ratio of the rate of return and share holders equity

and the rate of return on capitalization

The use of various financial instruments or borrowed capital, such as margin, to increasethe potential return of an investment.

The amount of debt used to finance a firm's assets. A firm with significantly more debtthan equity is considered to be highly leveraged.

Leverage is most commonly used in real estate transactions through the use of mortgages to

purchase a home.

Most companies use debt to finance operations. By doing so, a company increases its leverage

because it can invest in business operations without increasing its equity. For example, if acompany formed with an investment of $5 million from investors, the equity in the company is

$5 million - this is the money the company uses to operate. If the company uses debt

financing by borrowing $20 million, the company now has $25 million to invest in business

operations and more opportunity to increase value for shareholders.

Leverage helps both the investor and the firm to invest or operate. However, it comes with

greater risk. If an investor uses leverage to make an investment and the investment moves against

the investor, his or her loss is much greater than it would've been if the investment had not been

leveraged - leverage magnifies both gains and losses. In the business world, a company can use

leverage to try to generate shareholder wealth, but if it fails to do so, the interest expense and

credit risk of default destroys shareholder value.

Leverage is of 3 types:

Financial leverage Operating leverage


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Combined leverageOperating leverage

According to John Hampton, Operating leverage exist when changes in revenues produce

greater changes in EBIT. Operating leverage is an attempt to estimate the percentage change inoperating income EBIT for a one percent change in revenue.

Financial leverage

According to John Hampton, Financial leverage exists whenever a firm has debts or othersources of funds that carry fixed charges. Financial leverage tries to estimate the percentage

change in net income for a one percent change in operating income.

Combined leverage

The mixture of the operating and the financial leverage would give combined or total leveragewhich will clarify the combined effect of operating and financial leverage. It estimates thepercentage change in net income for a one percent change in revenue.

21.Check whether your companys debt instrument is listed, if listed is it traded.Yes, debt instruments like commercial paper and bonds are listed and is traded as well.


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22.Ratio analysis Ratio's Formula 2009-10 2008-09 2007-08

Gross Profit Ratio

Gross Profit / Net Sales * 100 Gross profit 396054 378292 351912

(Gross Profit = Sales - COGS) Net Sales 563080 591320 554320

Gross Profit Ratio 70.3 64.0 63.5

Net Profit Ratio

Net Profit(PAT) / Net Sales * 100 Net profit 167676 161263 16701

Net sales 563080 591320 55

Net Profit Ratio 29.8 27.3 30.1

Current Ratio

Current Assets / Current Liabilities Current Assets 464097.62 476975.3 434925

Current Liabilities 194999 211051 176083

Current Ratio 2.38 2.26 2.47

Quick Ratio

Liquid Assets / Current Liabilities Liquid Assets 269098.6 276476.8 308145.3

Liquid Assets = Current Assets -

Inventory Current Liabilities 194999 211051 176083Quick Ratio 1.38 1.31 1.75

Debt Equity Ratio

Total Debt / Total Equity Total Debt 52.37 236.21 706.17

Total Debt = Secured Loans +Unsecured Loans Total Equity 872826 787354 706174

Total Equity = Equity Capital +R&S Debt Equity Ratio 0.00006 0.0003 0.001

Net profit to equity

PAT 167676 161263 167016

(PAT/Equity)*100 Total Equity 872826 787354 706174

Net profit to equity 19.2 20.5 23.7

23.If term loan or cash credit is availed by your company then collect the detailsof the same such as amount, rate of interest, period of re payment etc.

Yes, term loan is availed by ONGC which are

Secured loan Amount Un-Secured loan Amount

Rupee term loans from Foreign currency loan (long term) 9325.8

Banks 3334.26 Sales tax deferment loan 2742.62 Financial institutions 372.13 Non-recourse deferred loan 934.26 Others 1009.62 Short term loan- commercial paper 10900Other loan 8407

Non-convertible redeemed bonds 23

Period of repayment- 1 year


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24.Ascertain EPS of the company and find out PE ratio.Ratio's Formula 2009-10 2008-09 2007-08

EarningsPer Share

Net Earnings 167676 161263 16

Net Earnings / No. ofShares No. of Shares 21389973211 21387665782 21387629658

Earnings Per Share 78.39 75.4 78.09

Net profit

to equity

PAT 167676 161263 167016

(PAT/Equity)*100 Total Equity 872826 787354 706174

Net profit to equity 19.2 20.5 23.7

25.Go through annual report, directors report, auditors report andunderstand the comments made by them, check is there any criticalcomments made by the auditors of the company.

y Oil & gas investments in 2009 declined by 19% compared to 2008 as in volatile marketconditions majority of companies revisited their capital expenditure plans, many projectswere slashed and cautious approach became the strategy world over. In case the pricesremain low it will discourage the industry from making big moves.

y World over oil field depletion, declining discovery rates, insufficient new projects andwaning investment in E&P project is a real concern which may bring in complications forthe industry in future.

yTurnover in comparison to 2008 has decreased by 6%

26. Take Cash flow before tax of your company and ascertain C- FAT,for two years.

Rs in million

Year 2009-10 2008-09

Gross Sales 619832 650494Excise duty 56752 59174

Net sales 563080 591320

Less: COGS ( Change in stock+Purchases+ Direct expenses) 167026 213028

Gross Profit 396054 378292

Add: Non operating transactions -20466 -57950


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EBITDA 375588 320342

Less: Ammortization 89407 67320

EBITD 286181 253022

Depletion 45302 42148

Depreciation 12312 14491

Impairment -433 -3110

Less: Total 57181 53529

PBIT 229000 199493

Interest -20839 -40314

PBT 249839 239807

Cash flow before tax 351558 321618


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Sources

Financial Management- By Dr. S.P. Gupta

http://nseindia.com

http://en.wikipedia.org/wiki/Angel_investor

http://www.investopedia.com/terms/p/privateequity.asp

http://www.wikinvest.com/concept/Private_Equity

http://bseindia.com/about/abindices/betavalues.asp

http://www.nseindia.com/content/equities/eq_listprocedure.htm