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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
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Capital Structure refers to thecombination or mix of debt and equitywhich a company uses to finance its long
term operations Restructuring capital means reallocating
it for various motives
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To enhance liquidity
To lower the cost of capital
To reduce risk
To avoid loss of control
To improve shareholder value
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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)
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Cholamandalam DBS Finance Ltd is thejoint venture of Murugappa Group andDBS Bank, Singapore
Non deposit taking NBFC since November
1, 2006
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Poor liquidity Increase in cost of funds
Reduction in the volume of business
Reduction in corporate mortgage financeportfolio
Challenging economic environment
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Debt Equity Ratio
4.435.38
9.86 9.66
11.83
0
2
4
6
8
10
12
14
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Debt Equity Ratio
Net Profit Margin(%)
15.86 16.02
7.616.65
3.81
0
2
4
68
10
12
14
16
18
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Net Profit Margin(%)
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Interest Cover
1.86
1.61
1.41
1.81
1.21
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Interest Cover
Total Debt to Owners Fund
4.435.38
9.86 9.66
11.83
0
24
6
8
10
12
14
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Total Debt to Owners Fund
contd..
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Net loss of Rs 27.73 crores for the threemonths ended December 31, 2008 ascompared 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......
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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%)
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Shareholders approval on March 5, 2009 Got approval on 20th April under section
78,100 to103 of The Companiesact,1956
Finally restructured on May 11, 2009
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Capital Reduction The special provision of Rs. 323.53 Cr. Is made
a) To make provision for the standard assets, foran amount no exeeding Rs. 200Cr.
b) To write off the bad debts/loan losses/othernon recoverable assets, for an amount notexceeding Rs. 100 Cr.
c) Provision for the doubtful receivables, for anamount not exceeding Rs. 23.53 Cr.
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Infuse a capital of Rs. 300 Cr, in the formof fully convertible cumulative preferenceshares
Exit from personal loan business
Concentrating on vehicle financing, homeequity, corporate mortgage
To create provision for standard assetsfor an amount not exceeding Rs. 200 Cr.
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The company could get back to normaldisbursement in the last quarter of thefinancial result
The liquidity position has substantiallyimproved
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Improvement in the credit rating
Constantly enhanced shareholders value
Improvement in future profitability
Increase in the EPS
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Annual report of Cholamandalam DBSFinance Ltd
Wikipedia.com
Moneycontrol.com
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