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Introduction.

Arvind Mills was established in


1931. It was founded by the three
brothers Kasturbhai Lalbhai,
Narottambhai Lalbhai and
Chimanbhai Lalbhai one of the
leading families of Ahmedabad

Contd.
TYPE

PUBLIC ( NSE/BSE )

INDUSRY

TEXTILE

FOUNDED

1931

HEADQUATER

AHMEDABAD

KEY POEOPLE
PRODUCTS

SANJAY LALBHAI ( CEO/MD )


Arvind N. LALBHAI
DENIM, KNITS, KHKHIS

REVENUE

RS. 52.35 BILLION

NET INCOME

PROFITS RS. 4.36 BILLION

EMPLOYEE

25,620

WEBSITE

WWW.arvindmills.com

WORKING CAPITAL
Working capital means the funds (i.e.; capital) available and
used for day to day operations (i.e.; working) of an enterprise.
. It consists broadly of that portion of assets of a business
which are used in or related to its current operations.
It refers to funds which are used during an accounting period
to generate a current income of a type which is consistent
with major purpose of a firm existence.

CALCULATION
Net working capital represents the excess of current assets
over current liabilities.
The term current assets refers to assets which in the normal
course of business get converted into cash over a short period
usually not exceeding one year

Components of CURRENT ASSETS (rs. in crores)

Year

Inventory

Sundry Debtors

Cash and Bank Balances

Loans and Advances

Other CA

Total

2005-06

251.9

64.1

228.5

101.6

3.3

649.4

2006-07

239.9

74.5

230.7

58.5

2.5

606.1

2007-08

281.3

84.4

212.6

79.5

2.4

660.2

2008-09

311.6

96.2

120.3

63.5

14

605.6

2009-10

281.7

121.3

174.6

47.9

10.1

635.6

CALCULATION OF W.C.
Year

Current assets(in crores)

Current liabilities(in crores)

Working capital(in crores)

2005-06

649.4

285.3

364.1

2006-07

606.1

236.7

369.4

2007-08

660.3

256.8

403.5

2008-09

605.5

259.6

345.9

Working capital
410

403.5

400
390
377.5

380
370

369.4
364.1

360

Working capital

350

345.9

340
330
320
310
2005-06

2006-07

2007-08

2008-09

2009-10

CAPITAL BUDGETING
A company is considering an investment proposal to install
new machineries at cost of Rs 50000 amount. Life of
machinery is 5 years. No scrap value. Tax rate is 30 %. Slm for
depreciation. Cost of capital is 10%.
YEARS

PARTICULARS

10,000

10,692

12,769

13,462

20,385

All methods to be used for using this problem


YEARS

CIBDT

DEPRI

CFADBT

TAX

PAT

CFAT

10,000

10000

10,000

10,692

10000

692

208

484

10,484

12,769

10000

2769

381

1938

11,938

13,462

10000

3462

1039

2423

12,423

20,385

10000

10385

3116

7269

17269

= 4 + 50000 - 44845 * 1
62114 44845
= 4.30 YEARS

ANSWER
PAY BACK PERIOD
Year

Cumulative cfat

10,000

20,484

32.422

44,845

62,114

= 4 + 50000 - 44845 * 1
62114 44845
= 4.30 YEARS

ACCOUNTING RATE OF RETURN


Year

Pat

cfat

10,000

484

10,484

1938

11,938

2423

12,423

7269

17,269

ARR= PAT/N
INVST./2
= 12114/5
50000/2
= 9.69 %

NET PRESENT VALUE


Year

Pat

cfat

Pvif 5%

Pv inflow

10,000

0.909

9090

484

10,484

0.862

8659.78

1938

11,938

0.751

8965.44

2423

12,423

0.683

8484.05

17269

17,269

0.621

10724.05

NPV = CASH INFLOW CASH OUTFLOW

= 45924.18
- 50000

= (4075.82)

4.PROFITABILITY INDEX
PI = PV OF INFLOW

PV OF OUTFLOW

= 45924.18

50000
= .918

INTERNAL RATE OF RETURN


Year

Pat

cfat

Pvif 5%

Pv inflow

10,000

0.952

9509.98

484

10,484

0.907

10314.04

1938

11,938

0.864

10224.13

2423

12,423

0.823

13538.89

7269

17,269

0.784

Contd.
= 5 + 53106.41 50000 * 5
53104.41- 45924.18
= 7.1625..

Capital structure
The two principle sources of finance for a business firm are
equity and debt. What should be the ratio of equity and debt
in the capital structure is a question
The choice of a firms capital structure is a marketing problem
it is essentially concerned with how the firm decide to divide
its cash flow into two broad components.

a fixed component that is earmarked to meet the obligation


toward debt capital and a residual component that belongs to
equity shareholders.

CALCULATION:

For,2012 = 31.98cr/96.04cr= 0.33

For,2012 =31.97cr/92.26cr= 0.33


For,2010 =38.68cr/85.68cr=0.45
For,2009 =27.85cr/80.17cr=0.34

Conclusion:
Debt Equity Ratio 1:1 considered good for any company.

. The company has avg. 0.30 to 0.45 which is not very good. In 2008 it is
0.31 and it is increased to 0.45 in 2010, which is good.
But, in 2011 it decreased to 0.34, and in 2012 it again decreased by 0.01,
which is not good for any company and it means that companys debtors
are around 3 times higher than its equity

Dividend decison
The dividend policy of the firm determines what proportion of earnings is
paid to shareholders by way of dividends and what proportion is ploughed
back in the firm for reinvestment purposes.
. A firms dividend payout ratio obviously depends on how earnings are
measured. For the sake of simplicity, we look at the accounting measure of
earnings.
As we are aware that accounting earnings often diverge from economic
earnings and may not truly reflect a firms capacity to pay dividend.

Dates of last 5 dividend dates


No. of dividend date
1
2

3
4
5

12-8-2008
04-8-2009
03-8-2010
12-7-2011
19-7-2012

Face value of
shares

Dividend %

Dividend rs.

100
10
10
10
10

20
20
30
20
20

20
2
3
2
2

01/06/2012

01/04/2012

01/02/2012

01/12/2011

01/10/2011

01/08/2011

01/06/2011

01/04/2011

01/02/2011

01/12/2010

01/10/2010

01/08/2010

01/06/2010

01/04/2010

01/02/2010

01/12/2009

01/10/2009

01/08/2009

01/06/2009

01/04/2009

01/02/2009

01/12/2008

01/10/2008

01/08/2008

Dividend (Rs.)

20

18

16

14

12

10

8
Dividend (Rs.)

IMPACT OF DIVIDEND: Of five years.


Before 1 month
Open
1,600.00
1,400.00
1,200.00

1,000.00
800.00
600.00
400.00
200.00
0.00

Open

13-8-2008 to 13-9-2008:
after
Open
120

100

80

60
Open
40

20

3-7-2009 to 3-8-2009

Open
120

100

80

60
Open
40

20

5-8-2009 to 5-9-2009- after

Open
120

100

80

60
Open
40

20

2-7-2010 to 2-8-2010

Open
160
140
120
100

80
60
40
20
0

Open

4-8-2010 to 4-9-2010
after
Open
160
140
120
100
80
Open
60
40
20
0

11-7-2011 to 11-8-2011
before

Open
96
94
92
90
88
86
Open
84
82
80
78

13-8-2011 to 13-9-2011
after

Open
92
90
88
86
84
82
80
78
76
74

Open

18-7-2012 to 18-8-2012
before
Open
82
80
78
76
74

72
70
68
66
64
62

Open

20-8-2012 to 20-9-2012

after
Open
71
70
69
68
67

66
65
64
63
62
61

Open

Bibliography
http://www.sify.com/finance/stockpricequote/Arvind_Mills_LtdAML/ratios.html
http://www.sify.com/finance/stockpricequote/Arvind_Mills_LtdAML/fiiactivity.html
WWW. Sify.com/finance/equity/quote.php?
WWW.en.wikipedia.org
http://www.arvindmills.com/pdf/annaul_finacial_reporting/Annual
%20Report%20for%202009-2010-APL.pdf
http://www.sify.com/finance/equity/quotes/eqquotes.php?code=A
ML.B
WWW.businesstoday.infoday.in
http;//www.investopedia.com/university/financialstatements/finan
cialstatement8.aso