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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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