CONTENT

1) RATIONALE OF STUDY 2) SELECTION OF INDUSTRY AND COMPANY 3) RESEARCH METHODOLOGY 4) LITERATURE REVIEW 5) RESEARCH OBJECTIVES 6) HYPOTHESIS 7) SIGNIFICANCE OF STUDY 8) LIMITATIONS OF STUDY 9) CHAPTER PLAN 10) REFENCES

1. RATIONALE OF THE STUDY In early seventies Indian economy was under the shadow of socialism and which had emphasizing the investment in the key and heavy industries through creation of public sector enterprise funded by central Govt. or state government. India was facing, foreign exchange shortage due to year low level of export. The importance of Indian corporate sector during seventies was very nominal. During the span of ten years from 1981-90 the contribution and importance of corporate sector in the Indian economy had been increased. During such time period total 4688 No. of issues were brought in the market and collected Rs. 19047 crores. The constructive Indian investors mind is revealed in this era also as 40% fund were raised through equity shares and 60% fund were raised by the debenture (fixed interest becoming seventies) during such time period. The policy initiatives for various industries were played important role. India becomes preferred nation for investment during this decade in different upcoming segment like steel, pharma, figure and capital goods. P.V. Narsimha Rao had taken the command of Indian economy in 1991 and removed the restrictions on production, investment and on the Indian corporate sector. Liberalization, privatization and Globalization Govt. just made drastic change in almost every industry and attempt had been made to industry competitive. On the other hand the importance and role of SEBI for capital market and role of RBI for foreign Direct Investment had been widen which creates transparency in the management or government of Indian corporate. All these efforts convert or enhance the confidence of small investors to the Indian corporate sector. This results into positive response to 7459 issues in the primary market out of which 95% issues raises fund through equity shares. At the end of eight years of LPG policies implementation Indian capital market could raised Rs. 115769 crores in total through public issue and private placement. After ten years of LPG implementation Indian corporate sector entered in the most important growth stage. The profitability and efficiencies of the PSU and other govt owned units were at rock bottom and become headache for the central Govt. The capital of the government had been eroded due to heavy loss of those units which lead to disinvestment and privatization of several business unit / industry. During 2009 to
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2011 time period Indian investor becomes more optimistic as well as policy of Central government (100% FDI) in corporate sector attracts the investment of Rs. 210564 crores out of which 90%amount has been raised by Indian company through issue of equity shares and nearly 5% by Preference Shares. Specifically after 2005 the Indian economy and governments attitude was moved towards capitalism rather than socialism results into highest capital formation. Indian corporate sector is now in the phase of growth even after the world economic crisis. Indian corporate sector is contributing highest to the central government tax collection for direct taxes and indirect taxes as well as it are accounted for nearly 45% employment generator in the country. Indian corporate sector has received recognisation in last twenty years during which the confidence and investment of small investors in Indian capital market has been raised. Hence it is time to examine the performance of key industries of Indian corporate. The said study is an attempt to evaluate financial performance of some industries having impact on GDP and employment of the country. The study has covered five major sector viz. Steel, Pharmacy, Cement, Auto and textile. The combination of four industries counted for more the 18% of total revenue of excise duty to the central government. The performance of Indian Corporate sector provides insight towards the future trend of Foreign Direct Investment and investment by FII in the country. The impact of the polices of the government on the selected industry can be examined.

2. SELECTION OF INDUSTRY AND COMPANY Steel Industry Indian steel industry is the highest producer of direct reduced iron or sponge iron in the world with 21 million MT. productions in 2008-10. Growth of Steel industry is affecting positively on the other industries like, Infrastructure, Construction, Automobiles and Heavy Machinery industries. Indian steel industry is manufacturer of 62.8 million MT crude steel which is fifth highest in the world. The steel industry is playing very important role in the development of Indian economy. The current consumption of steel is rising at the rate of 9.3% in 2008-09 which indicates huge future demand. Steel
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industry had attracted new investment of $229 million in 2008-9. The sector will witness growth due to high demand of steel and liberal government policy for steel industry and development of property projects and oil and natural gas extraction work. Total assets in the steel industry had been grown @19.5%. In the study the financial performance of Steel authority of India, Tata Steel, JSW steel, Essar Steel and Sesa Goa steel company has been evaluated . All these companies are top four market share holder of the industry. The combine market share of all the four companies together is more the 40%.The profitability of the steel industry as per CIMA data is raising at the rate of 29.7% which is decent growth.

Pharmaceutical Sector India having more than 1200 US Food and Drug Controller approved pharmaceutical plants. Indian pharmacy sector is growing at 11.7% which is third largest market in the world in value and 14th in value. Indian pharma sector is producing 8% drugs of the world. Export of the Pharma products from India has been doubled and reached to 52 billion $ in 2009-10. India has been recognizing as pharma hub by world pharma giants like Abbot Pharma, Merks Pharma and Glaxo Smith Beechem and has taken over many Indian firms to strengthen their production capacity and launching new products. Indian pharma sector has competitive advantage in the form of low production cost as to USA and other developing countries. The cost producing drugs in India is lesser by 35% as to cost of producing drugs in USA. Indian pharma sector has attracted foreign direct investment to the extent of $1822.6 million in last ten years. The Indian government is giving emphasis on the research development which makes sector attractive. Not only this but the approval time for pharma plant in India very low as compared to other countries. Indian pharmacy sector dominated by Indian and as well as foreign multinationals. In the study selected companies are Dr. Reddy Laboratory, Cipla Ltd, Torrent Pharma, Arbindo Pharma as well as world largest vaccination company GSK. The combine market share of all five companies is just more than 16%. The industry has registered an exceptional growth in Profit after Tax at 53.6% which results into growth of net worth to the extent of 19.9% in the year 2009-10. Indian government has made positive policy for the industry and has reduced import duty for
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various machineries for pharmacy plants as well as special tax free zone declaration has been done in Uttrakahnd and Himachal Pradesh result into lower cost of production. The Indian government has made agreement with other countries for technical collaboration for pharmacy industry. Indian hospitality market is growing tremendously which gives fuel to this industry to greater extent. The industry having highest fixed assets leverage amongst the other industry as per CIMA report.

Textiles: The Indian Textile industry is growing at CAGR @ 11.1%. Indian textile industry has witness growth specifically after release of quota system by World Trade Organisation. Indian Textile industry is enjoying competitive advantage of low labour cost, availability of raw material in plenty and huge demand from domestic sector. In India textile export is contributing to the extent of 45%. Export of textile products and readymade garment has been growing at 6.3% in last four years. In last five years the average income of the Indian rural consumer has been increased at 15% which is key factor for the high domestic demand. The government of India has removed ceiling for the Foreign Direct Investment to greater extent resulting into $129 million Foreign Direct Investment in the country in last four years. Indian textile companies are still operated as family business results into lack of the professionalism and lower profitability and efficiency. The industry has witnessed growth in sales at 15.4% in 2009-10. Due to tradition of the industry the Net working capital cycle is increasing in last five years from 87 days to 97 days in 2009-10. In the study five companies Jindal Cottex, Bombay Dying, Vardhman Spinning, Grasim Industries and Raymonds has been selected. All the companies are pioneer business activity of the such industrial group in early eighties but showing reduction in efficiency and profitability as compare to other diversified business. Cement: Indian cement industry is in top gear since last two years. Due to heavy demand of housing and infrastructure set up in the country the cement industry is growing @10.6% (CAGR) at present. The cement industry is passing through the stage of growth or expansion as the industry is planning to expand capacity to the extent of 92.3
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MT during the year 2009-10. The cement industry is to be treated as most important industry as it has provided employment to more than 140000 people in the country directly. The sector attracts foreign direct investment to the extent of $1.9 billion in last ten years span. Governments various plans for construction of road and dedicated fright corridors across the nation have increased the demand of the cement tremendously. Per capita consumption of the cement in India is very low. Cheap labour and positive government support and changed demographics of the country can be treated as growth drivers of the industry. In research study he financial performance of Ultra Tech cement, Binani Cement, Associated Cement Company, India Cement and Ambuja cement has been done. The combine market share of all five companies is more than one third of the market. ACC and Ambuja Cement having highest market share in the industry. Indian Cement industry is following strict environmental norms which results into ecofrinedly units of Cement Company. 93% cement mixture and production plants are ecofrinedly in India. Industry has registered growth of net worth in 2009-10 @ 13.5% which indicate reasonable or satisfactory level of ploughing back of profit. It is also evident from the trend of Debt Equity Ratio of the industry. Ratio of the industry is reducing constantly in last six years from 2.69 in 2004-05 to 0.56 in 20092010. Thus the investment of actual owners has been raised tremendously. The industry has achieved decent growth of the Profit after Tax @16.5% during 2009-10.

Automobile Sector: Indian auto expo received world attention since last four years. Sales of Indian automobile sector are growing at @ 10.7%. The contribution of automobile sector in export is expected to grow from $ 8 million to $10 million by 2015. Vehicle production touched the figure of 14 million units during the year 2009-10. Indian is leveraging upon the low cost of production and high research and development expenditure at present. The sector attracts $4710 million foreign direct investment in the country in last ten years. Out of total inflow of foreign direct investment sector contributes to the extent of 4%. By the end of 2000 India was counted as the growing market of family car and mid size sedan car but due to accelerating GDP rate and high income of the upper class the demand of luxurious car and sedan has been increase. Not only this but under the
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principle of decentralized production system country been treated as Auto hub for small car which is exported to U.K and USA market. Easy finance option, High Income of middle class and low production cost is considered to be growth drivers of the industry. Growth rate of Automobile industry for Profit after tax in 2009-10 is observed at 93. % after registering loss of 33.4% in 2008-09. In the present study Tata Motors, Hindustan Motors, Ashok Leyland, Maruti Suzuki and Swaraz Mazda. The Tata Motors and Maruti Suzuki is capturing just more than half of the passage cars market and Tata Motors have highest market share in commercial vehicles which is near to 60% as per CMIE data. The performance of the market leader is examined in said study which gives insight towards the future direction.

3. RESEARCH METHODOLOGY Research Methodology provides information about the manner in which research has been carried out. Research Methodology is describes the procedure followed by the researcher. The said research is a critical evaluation of Indian companies in last five years. The attempt of evaluation of the Indian companies from different sectors has been done in the said research work. The performance has been evaluated from the view point of profitability, Liquidity, ability to pay debt and efficiency in utilisation of the resources of the companies. An attempt is made to examine comprehensive financial status of selected companies of selected industries..

OBSERVATIONS Analysis of this study is based on accounting and Stastical tools. Accounting tools includes selected Profitability, Liquidity, Solvency and Efficiency ratios. Stastical analysis helps to known the average trend of different aspects, Standard deviation, consistency of all these dimension, their degree of dependency relationship with other factors is also investigated. Since the title of this study is a comparative performance evaluation of Indian corporate, keeping in mind this title which company and industry has better status is also examined.

AUTOMOBILES Automobiles sector has maintained adequate working capital ratio. The liquidity of the industry is also satisfactory. The total assets net worth ratio of the industry is shown satisfactory status. The ability of the firm to pay interest is on outside debt is higher in all the sample companies. Profitability with reference to sales is very lower across the industry but return to shareholders is moderate. The efficiency ratios of private sector companies show an increasing trend. CEMENT INDUSTRY Cement industry has maintained very high amount of working capital as to other sectors which results into adequate liquidity. Owners contribution in the business has shown increasing trend in last five years across the industry. Net margin of the industry is significant and Ultratech Cement has having highest net profit ratio in the industry. Return from shareholders view point is highly satisfactory in the industry. The Efficiency ratio indicates that the total Assets and fixed assets are adequately utilised by all the company. TEXTILE INDUSTRY The investment in current asset is exceptionally very high in the textile industry results into very high level of liquidity. The high liquidity result into lower profitability as the net profit margin of the industry is very nominal. Shareholders of Raymonds and Grasim get the highest return in the industry. Operating or efficiency of the industry is satisfactory as Total Assets Turnover Ratio and Fixed Assets Turnover ratio are satisfactory. STEEL The investment in the working capital is very low in the industry result in to lower liquidity. The contribution of the owners capital is satisfactory in all the all companies other than Essar Steel. The overall margin of the company with reference to sales is satisfactory. The performance of Tata steel and SAIL is remarkable with reference to

Return on Equity Shareholders fund. Working capital has been utilised satisfactory by the industry.

4. Literature Review
Raiyani J.R., Dr. Bat asana R.B. (2011) is of opinion that Textile industry requires higher investment in the working capital as to other sector which has direct negative impact on the earning available to equity shareholders. The efficiency of the textile industry to utilise fixed assets is also poor. Harinath Reddy S (2004) study attempts to understand the relationship between credit period given by companies and their actual performance in terms of sales and profitability. He has also attempted to find average level of other key financial parameters connected to working capital management. Having laid the emphasis on Indian pharmaceutical companies, he concludes that leading companies have employed greater working capital for enhancing profitability. The study also revealed that Days Sales Outstanding had gone up in the sample companies. The Pharma companies achieve greater sales and profitability by relaxed credit policy. Shanmugasundaram G (2008) examines inter-industry variation of capital structure in pharmaceutical industry in India. The study proves that intra industry variation in the capital structure for Indian Pharmaceutical companies is perfectly proving conventional capital structure theory. The higher the proportion of fixed assets to the total asset and the higher the growth rate of asset results into higher is the industry debt equity ratio. The regression analysis indicates that proportion of fixed assets to the total asset has shown positive and insignificant relationship in the transition period. The overall industry
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picture indicates that Indian companies are shifting from high debt to high equity over the period of time. Indian multinational pharmaceutical companies who has not utilised outside fund could reduces interest costs and increases shareholder profitability. Panigrahi Ashok Kumar (2010) examining the capital structure of Indian corporate with the help of 300 Indian private sector companies having different 20 sectors. The study indicates that there is a clear cut impact of liberalisation on capital structure of Indian companies. Majority of Indian companies are utilizing debt for medium term requirement of loan. The Government regulated prices at which firm can issue equity, rate of interest which could offer on the bonds, permissible debt equity ratio as a benchmark for issue of bonds, etc. has created significant impact on capital structure. It revealed that the subsidized institutional finance is the most attractive

source of finance either through financial institutions or through nationalized banks which usually meant maximum debt equity ratio and leverage such debt which help in creating shareholder value creation. The flexibility in the capital structure helps to generate higher profitability. The state government polices and use of technology applied affects the capital requirement and profitability. The study indicates that size, age, location, place, even market segment plays important role in determination of capital structure. 5. Research Objectives 1. To Examine Liquidity status of the selected companies. 2. To Examine Solvency status in the selected companies. 3. To Examine Profitability status in the selected companies. 4. To Examine Efficiency status in the selected companies. 5. To Examine Liquidity status of the selected Industries.
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6. To Examine Solvency status in the selected Industries. 7. To Examine Profitability status in the selected Industries. 8. To Examine Efficiency status in the selected Industries. 9. To examine Comparative financial status of selected Companies. 10. To examine comparative financial status of selected Industries.

6. HYPOTHESIS 1. H0: The Liquidity status of selected companies is non identical. H1: The Liquidity status of selected companies is identical 2. H0: The Solvency status of selected companies is non identical. H1: The Solvency status of selected companies is identical. 3. H0: The Profitability status of selected companies is non identical H1: The Profitability status of selected companies is identical 4. H0: The Efficiency status of selected companies is non identical H1: The Efficiency status of selected companies is identical 5. H0: The Liquidity status of selected Industry is non identical H1: The Liquidity status of selected Industry is identical 6. H0: The Solvency status of selected Industry is non identical H1: The Solvency status of selected Industry is identical 7. H0: The Profitability status of selected Industry is non identical H1: The Profitability status of selected Industry is identical 8. H0: The efficiency status of selected Industry is non identical H1: The efficiency status of selected Industry is identical 9. H0: The financial status of selected companies is non identical H1: The financial status of selected companies is identical 10. H0: The financial status of selected industry is identical H1: The financial status of selected industry is identical

In this study an attempt is made to examine financial performance status of Indian corporate to justify the undertaken study four different aspects liquidity, solvency,
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profitability and efficiency are measured through ratio analysis. For financial investigation of these four aspects Stastical tools like average, Standard Deviation, Co-efficient of Variance, Mathematical Regression Analysis and other techniques are used. The study cover time span of five years from 2007 to 2011.

7. SIGNIFICANCE OF STUDY The study provides in depth analysis of the companys financial position which enables the bankers and creditors to understand to take a decision of lending money or goods. Inter firm and Intra firm comparison can give guidance to the retail investors to invest in the specific industry and company. The study focuses on the managements ability to manage the Profitability and Liquidity. It can provide a decision making frame work for the government to determine any policy for the benefit of specific industry which has been examined in the study. Controlling of operating activities of the organisation and borrowing can be done very easily by the Management of sampled companies. It can provide decision making frame work to the respective company and Industry on the basis of trend of various ratios. 8. LIMITATIONS OF STUDY In this study only Textile, Pharma, Automobiles, Cement and Steel five industries are selected. At the same time the constraint only five companies are considered for this study. Several accounting techniques can be used but in this study analysis is confined to ratio analysis only. More ever in ratio analysis selected ratios pertaining to Liquidity, Solvency, Profitability and Efficiency are used. Stastical analysis is confined to mean, standard deviation. Coefficient of variance, and Multiple Regression analysis. Further only five financial years are used. The collection of data is confined to secondary data only.

9. CHAPTER PLAN
Following is the chapter plan for the entire research work
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Chapter -1 Deals with historical back ground of Indian Corporate Sector and its contribution in Indian Economy and Problem Statement. Chapter -2 provides the detail of the methodology used for research work. Chapter -3 shows the review of literature on the subject and the empirical studies undertaken at international level and at domestic level. Chapter -4 Data presentation and its analysis through accounting and Stastical tools are undertaken for all selected companies of respective company. Chapter -5 is prepared to understand comparison of element wise financial performance and overall performance of selected companies and industries. Chapter-6 covers findings and suggestion of the study.

10. REFERENCES: 1. Shanmugasundaram G (2008), Intra- Industry Variations of Capital Structure in Pharmaceutical Industry In India, International Research Journal of Finance and Economics, ISSN 1450-2887 Issue 16 (2008) pp162-173. 2. Raiyani J.R., Dr. Bat asana R.B. (2011), A Study on Financial Health of Textile Industry in India: A Z Score Approach, Indian Journal of Finance, January, 2011 pp 9-16. 3. Panigrahi Ashok Kumar (2010), Capital Structure of Indian Corporate:: Changing Trends, Asian Journal of Management

Research, ISSN 2229-3795, pp-283-298. 4. Harinath Reddy S (2000) Working Capital Management in small scale industries, Finance India, Vol. XXII No I, March 2006, pp 163177.

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