CHAPTER -5 DATA COLLECTION & DATA ANALYSIS...

150

CHAPTER -5 DATA COLLECTION & DATA ANALYSIS

5.1 Industry Wise Analysis Of Share Holder Value Creation &

Measurement Of Consistency.

5.1.1 Automobile Industry

[A] (I) Ashok Leyland Ltd.

(II) Bharat Forge Ltd.

(III) Hero Honda Motors Ltd.

(IV) Mahindra & Mahindra Ltd.

(V) Tata Motors Ltd.

[B] Inter Company Comparison

[C] Measurement Of Consistency

5.1.2 Banking Industry

[A] (I) Bank Of Baroda

(II) Bank Of India

(III) Canara Bank

(IV) State Bank Of India

(V) Union Bank Of India



5.1.3 Capital Goods Industry

[A] (I) Elecon Engineering Ltd.(II) Gammon India Ltd.

(III) Larsen &Toubro Ltd.

(IV) Reliance Industries Ltd.

(V) Walchandnagar Industries Ltd



151

5.1.4 FMCG Industry

[A] (I) Colgate Palmolive India Ltd.

(II) Godrej Consumer Products Ltd.

(III) Hindustan Uniliver Ltd.

(IV) ITC Ltd.

(V) Nestle India Ltd.



5.1.5 Healthcare Industry

[A] (I) Apollo Hospitals Ltd.

(II) Cipla Ltd.

(III) Dr. Reddy’s Laboratories Ltd.

(IV) Lupin Ltd.

(V) Ranbaxy Laboratories Ltd.

[B] Inter Company Comparision


5.1.6 IT Industry

[A] (I) Financial Technologies Ltd.

(II) HCL Technologies Ltd.

(III) Infosys Ltd

(IV) Moser Baer Ltd.

(V) Wipro Ltd.



152

5.1.7 Metal Industry

[A] (I) Hindalco Industries Ltd.

(II) Ispat Industries Ltd.

(III) NACL Ltd.

(IV) SAIL Ltd.

(V) TISCO Ltd.



5.1.8 Oil &Gas Industry

[A] (I) BPCL

(II) HPCL

(III) IOCL

(IV) ONGC LTD.

(V) Reliance Industries Ltd.



5.1.9 Power Industry

[A] (I) ABB Ltd.(II) BHEL

(III) Neyveli Lignite Ltd.(IV) Siemens Ltd.(V) Tata Power Ltd.



153

5.1.10 Realty Industry

[A] (I) Anant Raj Industries Ltd.

(II) Ansal Properties Ltd.

(III) Mahindra Lifespace Developers Ltd.

(IV) Peninsula Land Ltd.

(V) Unitech Ltd.



5.2 Inter Industry Comparision

5.3 Multiple Regression Analysis

5.3.1 Model 1- Share Holder Value Creation 1 (Y1)

5.3.2 Model 2 – Share Holder Value Creation – 2 (Y2)

5.3.3 Model 3 – Total Share Holder Value Creation (Y3)

5.3.4 Model 4 – High Market Price – (Y4)

5.3.5 Model 5 – Low Market Price – Y5

5.4 Dividend and shareholder value creation

154

5.1 Industry wise analysis of share holder value creation &

measurement of consistency.

The measurement of created value by the company for share holders is very

important for investors either existing or potential investors. Indian corporate

functioning at domestic and international level and contributing significant share

for economic development of the nation. At the same how far investors have

reasonably good satisfaction level with the performance of the company. This study

is undertaken. So for this study 10 industries and 5 companies from each industry

are selected with data of 6 years. The following aspects are analyzed and explained.

1. Computation of shareholder value creation of each company during the

period of study.

2. Disclosures of minimum and maximum market prices shares of respective

companies to see the relationship of them with shareholder value creation.

3. Intercompany comparison for created shareholder value creation

4. Measurement of consistency of created shareholders value creation of each

company and industry.

5. Multiple regression analysis.

6. Dividend decision and shareholder value creation.

155


[A] (i) Ashok Leyland Ltd.

Year wise different share holder value creation & market price

Table 1

1 2 3 4 5 6 7 8

YEARINTRINSIC

VALUEPAID

UPMARKETVALUE

(2-3)V.C.

(4-2)V.C.

(4-3)V.C. MARKET PRICE

` VALUE PER SHARE (I) (II) TOTAL HIGH LOW` ` ` ` ` ` `

01-02 8.68 1.00 6.65 7.68 -2.03 5.65 9.54 4.07

02-03 8.07 1.00 9.81 7.07 1.74 8.81 12.28 7.90

03-04 8.60 1.00 19.00 7.60 10.40 18.00 31.05 9.70

04-05 9.66 1.00 21.73 8.66 12.07 20.73 29.20 17.00

05-06 11.50 1.00 28.60 10.50 17.10 27.60 43.00 20.55

06-07 14.13 1.00 41.24 13.13 27.11 40.24 53.95 30.30

AVG.V.C. 20.17

From table no.1, it is observed that, the intrinsic value is continuously increased

during the whole period of the study. In the year 01-02 it was 8.68 times and after

that it increases up to the last year which is `14.13 as against the paid up value of

`1. It can be said that the market capitalization of the company is also in positive

trend. The value creation-1 shows the positive results due to upward valuation of

the intrinsic value.

Value creation-2 shows negative results in the first year because in this year the

market value is lower than but afterwards it is in positive direction and therefore

the total value creation is also increase.

156

The market price shows positive effect except in the year 04-05. The variation

between high and low prices in the first year is 135% which is risky for the

investors, because the high difference shows the negative results, while in the

second year it decreases to 55.44% which shows sound position but in the last year

it is 78.05% which reflects ups and down position of the market.

(ii) Bharat Forge Ltd.


Table No. 2

1 2 3 4 5 6 7 8

YEARINTRINSIC

VALUEPAID

UPMARKETVALUE

(2-3)V.C.

(4-2)V.C.


` VALUE PER SHARE (I) (II) TOTAL HIGH LOW` ` ` ` ` ` `

01-02 8.78 2.00 15.12 6.78 6.34 13.12 25.85 9.12

02-03 8.50 2.00 36.24 6.50 27.74 34.24 54.53 21.81

03-04 12.90 2.00 104.27 10.90 91.37 102.27 170.53 48.19

04-05 22.16 2.00 178.90 20.16 156.74 176.90 311.20 109.97

05-06 52.31 2.00 330.25 50.31 277.94 328.25 485.00 240.20

06-07 59.57 2.00 347.93 57.57 288.36 345.93 468.90 221.00

AVG.V.C. 166.79

From the automobile industry, the Bharat Forge has excellent growth in the intrinsic

value against the paid up value of `2. The growth of intrinsic value is in positive

trend from the first year to the last year, it is almost about 7 times. (Table No.2)

The growth of market value per share is also in the positive direction, it is ` 15.12 in

the first year and so on it increases up to the last year. The value creation-1 shows

positive effect due to higher of intrinsic value. It is due to favorable economic

efficiency of the company.

157

value creation-2 shows positive results because market value is higher than the

intrinsic value in each year and therefore, the total value creation having an

excellent growth. It shows the company has good image in the market so the

investors are attracted to purchase the shares.

The variation between high and low market prices in the first year is 1.86 times,

while in the second year it is 1.50 times and in the last year it is 1.12 times. This is

the good situation for the investors.

(iii) Hero Honda Motors Ltd


Table No. 3

1 2 3 4 5 6 7 8

YEARINTRINSIC

VALUEPAID

UPMARKETVALUE

(2-3)V.C.

(4-2)V.C.


` VALUEPER

SHARE (I) (II) TOTAL HIGH LOW` ` ` ` ` ` `

01-02 33.83 2.00 216.61 31.83 182.78 214.61 402.00 116.00

02-03 42.54 2.00 280.18 40.54 237.64 278.18 387.75 187.00

03-04 57.02 2.00 334.11 55.02 277.09 332.11 543.70 180.01

04-05 74.78 2.00 485.56 72.78 410.78 483.56 613.95 310.00

05-06 100.61 2.00 713.92 98.61 613.31 711.92 950.00 480.10

06-07 123.69 2.00 747.47 121.69 623.78 745.47 950.00 629.10

AVG.V.C. 460.98

This is the second company which shows an excellent result in the automobile

industry. Its intrinsic value is in the first year is ` 33.83, which is increased about

four times during the last years as against the paid up value of `2. (Table No.3)

158

The market price per share is also shows good result. It is continuously in increasing

trend. The value creation-1 shows the positive effect because the intrinsic value is

showing good trend.

The value creation-2 is positive because the market value is higher than the intrinsic

value and therefore the total value creation is also in good condition which indicates

high level of management efficiency and positive image of the company in the mind

of the investors.

As it can be seen from the market prices, that in the initial year it is `402, which is

reduced in the next year to `387.75 but after from the following years it is

continuously increases. The variation between high and low prices in the initial year

is 2.46 times which reduces in the next year up to 1.07 times and in the last year it

declines to 0.51 times. This indicates favorable situation for the investors in the

market.

(iv) Mahindra & Mahindra Ltd


Table No. 4

1 2 3 4 5 6 7 8

YEAR

INTRINSICVALUE

`PAID

UPVALUE

`

MARKETVALUE

PERSHARE

`

(2-3)V.C.(I)`

(4-2)V.C.(II)`

(4-3)V.C.

TOTAL`

MARKETPRICE

HIGH LOW

` `01-02 129.64 10 92.84 119.64 (36.80) 82.84 73 25.45

02-03 131.89 10 100.01 121.89 (31.88) 90.01 63.33 39.38

03-04 152.18 10 272.8 142.18 120.62 262.8 252.95 49.75

04-05 171.35 10 475.35 161.35 304.00 465.35 286.9 180

05-06 123.856 10 397.3 113.856 273.44 387.3 651 210

06-07 148.525 10 733.96 138.525 585.44 723.96 1002 488

AVG.V.C. 335.38

159

From the table no.4, it can be observed that the intrinsic value is `129.64 during the

first financial year 01-02 which is continuously increased up to 04-05. After 04-05, the

intrinsic value is decreased in last two years.

As compared to the intrinsic value, the market value per share is continuously

increases. The value creation-1 is also increased during 04-05 but in the last two

years it is in decreasing trend, while value creation-2 is negative in first two years

because in these years the intrinsic value is higher than the market value. But from

the third year the value creation-2 is in increasing trend and therefore, the total value

creation is also increases.

The market price during the period of the study is in increasing trend up to the last

year. In the first year the variation between high and low market value is 1.86 times,

while in the second year it is 0.61 times. It shows that the company could able to

sustain the interest of the investors.

(V) Tata Motors Ltd


Table No. 5

1 2 3 4 5 6 7 8

YEAR INTRINSICVALUE

`

PAIDUP

VALUE`

MARKETVALUE

PERSHARE

`

(2-3)V.C.(I)`

(4-2)V.C.(II)`

(4-3)V.C.

TOTAL`

MARKET PRICE

HIGH LOW` `

01-02 77.08 10 71.93 67.08 (5.15) 61.93 147.53 55.84

02-03 78.34 10 146.15 68.34 67.81 136.15 166.93 112.88

03-04 101.17 10 304.81 91.17 203.64 294.81 548.74 143.01

04-05 113.14 10 436.93 103.14 323.79 426.93 368.75 239.64

05-06 144.36 10 544.11 134.36 399.75 534.11 908.98 387.25

06-07 177.98 10 838.17 167.98 660.19 828.17 959.81 626.24

AVG.V.C. 380.35

160

From the table no.6, it is observed that the internal value of share of Tata Motors Ltd

is `77.08 in the Financial year 2001-2002. So, it can be said that against the paid up

value of ` 10, it is increased by `67.08. After the year 2001-2002, it is also positively

increased up to the year 2006-2007 respectively that is `177. 98. Market Value per

share is ` 71.93 in the year 2001-2002 and it is also positively increased up to the

year 2006-2007.

Due to growth in intrinsic value, the value creation – I shows the positive effect and

it reflects that the economy efficiency of the company is sound but at the same time,

value creation -II shows negative result in the year 2001-2002. It means that

investors are not convinced to purchase the shares during that particular period and

therefore market capitalization is low than intrinsic value. But at the same time, the

traded market value was `147.53.

In the year 2001-2002, value creation-II is found to be negative. It means the image

of the company in the minds of investors is not favourable it shows that, investment

trend of the investors might be for other companies of same industry or for other

profitable industry, that is why there is a variation in market price from ` 55.84 to `

147.53.

From the year 2002-03 to 2006-2007 market capitalization is considerably

increased and therefore total value creation is also increases which shows that

company had convinced the investors. On the other hand year by year, the traded

market value is also in increasing trend and in the year 06-07 the highest traded

value was ` 959.81. At that price also they are attracted to buy the shares and in the

same year, it downs up to ` 626.24, then also investors had not sold their shares.

The growth of market value in the study of the 2nd year was 103.18% and at the end

of the total period of 6th years, it is total by 333.65% after ups and downs of middle

years. The investors, who had invested in the 1st year, they will get a high growth at

the end of the 6th year.

161

Graph -1

Automobile Industry [For 2001 - 02 to 2006-07]

S.NO. COMPANY NAME AVERAGE SHAREHOLDER RANK

VALUE CREATION

1 Ashok Leyland Ltd. 20.17 5

2 Bharat Forge Ltd. 166.79 4

3 Hero Honda Motors Ltd. 460.98 1

4 Mahindra & Mahindra Ltd. 335.38 3

5 Tata Motors Ltd. 380.35 2

Ashok Leyland Ltd. Bharat Forge Ltd. Hero Honda MotorsLtd.

Mahindra &Mahindra Ltd.

Tata Motors Ltd.

COMPANY NAME AVERAGE SHAREHOLDER VALUE CREATION

The trend of shareholders value creation (SVC) of selected companies within the

industry may not be uniform. The average share holders value creation of selected

162

companies of automobile industry is shown in graph no.1. Hero Honda Motors Ltd

had obtained 1st rank and having maximum SVC and Ashok Leyland Ltd had

obtained 5th rank and having minimum SVC.

This shows the effect of company’s performance and expectation of investors.

Wherever company had met the expectations of investors, their market value and

SVC also found to be higher and vice a versa.

[B] Inter company comparison

Year wise total share holder value creation in % of selected companies of

Automobile industry

Table No.6

PAID UP VALUEPER SHARE

` 1 ` 2 ` 2 ` 10 ` 10

YEAR ASHOKLEYLAND

BHARATFORGE

HEROHONDA

MAHINDRA&

MAHINDRA

TATAMOTORS

2001-02 565=00 656=00 10730=50 828=40 619=30

2002-03 881=00 1712=00 13909=00 900=10 1361=50

2003-04 1800=00 5113=50 16605=50 2628=00 2948=10

2004-05 2073=00 8845=00 24178=00 4653=50 4269=30

2005-06 2760=00 16412=50 35596=00 3873=00 5341=10

2006-07 4024=00 14418=00 37273=50 7239=60 8281=70

There are several factors which are having direct or indirect effect on share holder

value creation. But here share holder value creation has impact on market price.

Theoretically, it can be said that there is direct relation between share holder value

creation and market price of the shares. In the following analysis an attempt is made

to examine this relationship.

163

In automobile industry 5 companies are selected for the study period of 6 years for

share holder value creation. From the graph of this industry, it is revealed that 3

companies namely Ashok Leyland Ltd., Hero Honda Motors Ltd and Tata Motors Ltd.

Shows continuous high growth of share holder value creation during the period of

study. The market price also shows the same position as when total share holder

value creation increase, the market price also increase. It shows the perception of

the investors for investments in that particular companies are good. The other two

companies namely Bharat Forge Ltd and Mahindra & Mahindra Ltd. shows

fluctuation in shareholder value creation. In Bharat Forge Ltd. When share holder

value creation shows upward trend the market price also shows upward trend but

when in the last year of the study, the share holder value creation shows downward

trend and the market price was also having the same trend. In case of Mahindra &

Mahindra Ltd. There is one exception that even though the share holder value

creation decreases the market price shows increase results. Afterwards, in the last

year of the study when the share holder value creation increase the market price

was also increased.

[C] Measurement of consistency

Company wise mean, standard deviation, coefficient of variation and rank of

Automobile Industry

Table No. 7

S.NO NAME OF COMPANY MEAN (X)STANDARDDEVIATION

CO.EFFICIENTVARIATIONS

VALUE RANK VALUE RANK VALUE RANK1 Ashok Leyland Ltd 20.17 5 11.57 1 57.35 3

2 Bharat Forge Ltd 166.79 4 131.41 3 78.79 5

3 Hero Honda Motors Ltd 460.98 1 206.21 4 44.73 2

4 Mahindra & Mahindra Ltd 335.38 3 11.57 1 3.45 1

5 Tata Motors Ltd 380.35 2 256.48 5 67.43 4

164

The analysis of the industry done by mean, standard deviation, and co-efficient of

variation. In this industry 5 companies are selected and all the companies are ranked

by mean, standard deviation and co efficient of variation. The company which is

having the highest mean is having 1st rank and all other companies are having rank in

descending order while in standard deviation and co-efficient of variation, the lowest

value is given the 1st rank and all other companies are having rank in ascending order.

The observation reveals that (table No.7) the mean of Hero Honda Motors Ltd is the

highest so it shows 1st rank, Tata Motors Ltd shows 2nd rank, Mahindra & Mahindra

shows 3rd rank, Bharat Forge Ltd shows 4th rank and the Ashok Leyland Ltd shows the

last 5th rank.

The standard deviation shows the consistency and the volatility of the data. The low

standard deviation reveals that the return is more with less risk. From that point of

view Ashok Leyland Ltd and Mahindra & Mahindra Ltd shows 1st rank, while co-

efficient of variation is to be find out on the basis of average of standard deviation

and mean. The use of standard deviation is limited because it is having more

influence of mean. The value which is having nearer to mean is having low variation

and the value which is having distance value from the mean is having higher

variations. This type of limitation is removed by the use of and co-efficient of

variation according to that Mahindra & Mahindra is having the same position but

Ashok Leyland is having 2nd rank. By standard deviation Bharat Forge shows 3rd and

by co-efficient of variation it shows 5th rank, Hero Honda Motors shows 4th and 2nd

rank and Tata Motors shows 5th and 4th rank respectively.

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5.1.2 Banking industry

[A] (i) Bank of Baroda


Table No. 8

1 2 3 4 5 6 7 8

YEARINTRINSIC

VALUE`

PAIDUP

VALUE`

MARKETVALUE

PERSHARE

`

(2-3)V.C.(I)`

(4-2)V.C.(II)`

(4-3)V.C.

TOTAL`

MARKET PRICEHIGH LOW

` `

01-02 130.04 10.00 46.27 120.04 -83.77 36.27 64.10 30.10

02-03 149.04 10.00 59.68 139.04 -89.36 49.68 90.50 43.50

03-04 174.20 10.00 162.40 164.20 -11.80 152.40 269.60 78.00

04-05 191.07 10.00 190.39 181.07 -0.68 180.39 269.40 130.00

05-06 214.60 10.00 190.77 204.60 -23.83 180.77 274.00 170.50

06-07 236.64 10.00 236.79 226.64 0.15 226.79 296.05 175.75

AVG.V.C. 137.72

From table no.8, the internal value per share is continuously increased from 130.04

to 236.04.On the other hand the market capitalized value per share also shows the

same position i.e. it is also increased continuously from the first year to the last year

i.e. 46.27 to 236.79.The market value is also in the continuous increasing trend,

which is 64.1 in the first year and so on increase up to the last year i.e. 296.05. The

variation between high and low market is in the first year 30 while it is increased in

the third year up to 198.6. So it can be said that the confidence and attitude of

investors might be considered as unstable. But after that, the difference will be

reduced and it is 120.30 (296.05-175.75) in the last year. The value creation-1,

which is the difference between intrinsic value & Paid up value, shows positive in all

the years & it shows the positive effect.

166

The value creation-2 is the difference between market capitalized value & intrinsic

value, which is negative from the first year but it is positive in the last year. As

compare to the value creation-2, the total value creation shows positive effect which

shows the positive effect of the investors.

(ii) Bank of India


Table no.9

1 2 3 4 5 6 7 8

YEARINTRINSIC

VALUE`

PAID UPVALUE

`

MARKETVALUE

PER SHARE`

(2-3)V.C.(I)`

(4-2)V.C.(II)`

(4-3)V.C.

TOTAL`

MARKETPRICE

HIGH LOW` `

01-02 58.29 10.00 21.20 48.29 -37.09 11.20 26.00 10.15

02-03 72.53 10.00 31.26 62.53 -41.27 21.26 46.35 24.50

03-04 82.14 10.00 55.17 72.14 -26.97 45.17 80.90 38.40

04-05 91.46 10.00 67.59 81.46 -23.87 57.59 120.00 40.50

05-06 102.09 10.00 116.82 92.09 14.73 106.82 147.95 78.60

06-07 120.77 10.00 150.30 110.77 29.53 140.30 214.40 79.70

AVG.V.C. 63.72

From table no.9, the Bank Of India is showing positive intrinsic value as against the

paid up value of `10. It is increased by 48.29 and it is in increasing trend up to the

last year. It shows the good economic efficiency, while the market capitalized value

shows positive results. The value creation-1 shows good impact from the beginning

up to the end. There is a reverse situation in the value creation-2 it is negative in the

first four years and afterwards it shows positive results in the last two years. The

total value creation is the difference between market capitalized value and the paid

up value. Total value creation shows positive effect as the value creation-2 shows

negative result. The market value is the highest in the last year but the difference

167

between high and low market value is 34.7 (214.4- 79.7) which is the wide

difference as compare to the first years.

(iii) Canara Bank


Table no.10

1 2 3 4 5 6 7 8YEAR INTRINSIC

VALUEPAID UP MARKET

VALUE(2-3)V.C.

(4-2)V.C.

(4-3)V.C.

MARKET PRICE

`VALUE

`PER

SHARE (I) (II) TOTAL HIGH LOW` ` ` ` ` `

01-02 60.07 10.00 0.00 50.07 -60.07 -10.00 0.00 0.00

02-03 101.19 10.00 61.14 91.19 -40.05 51.14 76.10 40.00

03-04 128.09 10.00 119.35 118.09 -8.74 109.35 167.50 73.20

04-05 149.00 10.00 163.64 139.00 14.64 153.64 241.55 91.20

05-06 173.96 10.00 225.17 163.96 51.21 215.17 300.00 170.10

06-07 252.54 10.00 242.19 242.54 -10.35 232.19 319.90 165.10

AVG.V.C. 125.25

Canara Bank is having highest intrinsic value in the last observed year that is 252.54

against the paid up value of `10. same way market capitalized value is also highest

in the last year & it is 242.54. The economic efficiency of this bank is sound but the

investors are not having trust because as compare to the value creation-1, value

creation-2 shows negative results in the first initial years of the observation. After

that in the next two years it shows positive effect and at the last year of the

observation it is in the negative position.

The total value creation shows positive result because it is the difference between

market capitalized value and the paid up value. As against the paid up value per

share the market capitalized value is higher. As such the market value is high in the

last year comparing other years. So it can be said that the growth is in slower

168

direction. The noticeable point is that the difference between high and low value in

the first initial years is 36.1 which is in the last year 154.8.

(iv) State bank of India


Table no.11

1 2 3 4 5 6 7 8

YEARINTRINSIC

VALUEPAID

UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C.

TOTAL

MARKET PRICE

HIGH LOW` ` ` ` ` ` ` `

01-02 289.27 10.00 207.98 279.27 -81.29 197.98 249.75 131.95

02-03 326.87 10.00 250.81 316.87 -76.06 240.81 298.77 200.59

03-04 384.41 10.00 456.65 374.41 72.24 446.65 650.27 258.05

04-05 457.38 10.00 542.57 447.38 85.19 532.57 708.30 377.36

05-06 525.25 10.00 811.67 515.25 286.42 801.67 941.68 544.08

06-07 594.69 10.00 997.19 584.69 402.50 987.19 1300.83 645.51

AVG.V.C. 534.48

From the banking industry, the SBI has performed excellent. The intrinsic value is

continuously increased from the first year to the last year as against the paid up value

of `10. The growth of market capitalized value per share is excellent, because it is

207.98 in the first year and 997.19 in the last year which is having growth of

379.46%.

As the value creation-1 is the difference between intrinsic value and the paid up value

it is also having good results. Against the paid up value of `10, the SBI is able to earn

the high growth which shows good economic efficiency. As compare to the value

creation-1, value creation-2 shows negative impact in the in the first two years of the

observation but afterwards, it is also in increasing trend, because it is the positive

difference between market capitalized value and intrinsic value. In the first two years

169

of the observation the market value is lower than the intrinsic value but from the

third year the market capitalized value is higher than the intrinsic value. It shows

good image of bank as against in the mind of the investors as stated above, the total

value creation also having good impact due to the positive difference between market

capitalized value and the paid up value.

Now it can be seen from the observation that the highest market value from the high

market values is in the last year i.e. 1300.83. & the difference between high & low

market value is also minor.

(v) Union Bank of India

Year wise different share holders value creation & market price

Table no.12

1 2 3 4 5 6 7 8(2-3) (4-2) (4-3) MARKET PRICE

YEARINTRINSIC

VALUEPAID

UPMARKETVALUE V.C. V.C. V.C. HIGH LOW

VALUEPER

SHARE (I) (II) TOTAL` ` ` ` ` ` ` `

01-02 62.34 10.00 0.00 52.34 -62.34 -10.00 0.00 0.00

02-03 55.79 10.00 20.04 45.79 -35.75 10.04 29.00 13.55

03-04 67.09 10.00 42.70 57.09 -24.40 32.70 60.25 25.35

04-05 78.55 10.00 81.91 68.55 3.35 71.91 133.50 42.95

05-06 90.24 10.00 109.30 80.24 19.06 99.30 148.70 93.20

06-07 102.75 10.00 113.79 92.75 11.05 103.79 142.00 80.50

AVG.V.C. 51.29

170

Union Bank is showing good performance. Against the paid up value of `10 its intrinsic

value is 62.33. in the next years it is decreasing up to 55.79 but afterwards it shows

increase results till last year.

The market capitalized value is having increasing value. The value creation-1 shows the

positive effect while the value creation-2 is negative in the initial years but afterwards it

is positive and in growing stage. Therefore the total value creation is also having the

same position.

The market price is having good growth but the variation between the two values i.e.

high & low is increasing. In the 2nd year it is 16.55 but in the 3rd year it is 34.9 and in the

4th year it shows 90.55 while in the next commencing year it is 55.5 and in the last year

it is 61.5 which shows ups and downs in the market.

171

Graph -2

Banking Industry [For 2001 - 02 to 2006-07]


VALUE CREATION

1 Bank of Baroda 137.72 2

2 Bank of India 63.72 4

3 Canara Bank 125.25 3

4 State Bank of India 534.48 1

5 Union Bank of India 51.29 5

0

100

200

300

400

500

600

Bank of Baroda Bank of India Canara Bank State Bank of India Union Bank ofIndia


172

The trend of share holders value creation (SVC) of selected companies within the

industry are not similar. The average share holders value creation of selected

companies of banking industry is shown in graph no.2. State Bank of India had

obtained 1st rank and Bank of Baroda had obtained 2nd rank with maximum and

minimum share holder value creation respectively. This shows positive impact of

company on shareholders.

[B] Inter company comparison

Year wise total share holder value creation in % of selected companies of banking

industry

Table No. 13

PAID UPVALUE

PERSHARE

` 10 ` 10 ` 10 ` 10 ` 10

YEAR BANK OFBARODA

BANK OFINDIA

CANARABANK

STATE BANKOF INDIA

UNION BANKOF INDIA

2001-02 362=70 112=00 -100=00 828=40 -100=00

2002-03 496=80 212=60 511=40 900=10 100=40

2003-04 1524=00 451=70 16605=50 1093=50 327=00

2004-05 1803=90 575=90 24178=00 1536=40 719=10

2005-06 1807=70 1068=20 35596=00 2151=70 993=00

2006-07 2267=90 1403=00 37273=50 2321=90 1037=90

In banking industry 5 banks are selected for the study of share holder value creation.

From the 5 banks, two banks namely Bank of India and State Bank of India having

continuous increasing growth of share holder value creation and the market price

during the 6 years of the study. The share holder value creation in the Bank of

Baroda shows increase results from the years 2001-2002 to 2004-2005 but the

market price increase up to the year 2001-2002 to 2003-2004 but in the year 2004-

173

2005 there was minor downward in the results. In the year 2005-2006, the share

holder value creation was reduced and the market price was increase. In the year

2006-2007, the market price and share holder value creation both shows upward

trend. In Canara Bank and Union Bank the share holder value creation was negative

in the year 2001-2002 but afterwards it shows upward trend continuously.


Company wise mean, standard deviation, coefficient of variation and rank of

Banking Industry

Table No. 14



VALUE RANK VALUE RANK VALUE RANK1 Bank of Baroda 137.72 2 70.55 3 51.23 1

2 Bank of India 63.72 4 45.94 2 72.10 4

3 Canara Bank 125.25 3 85.99 4 68.65 3

4 State Bank of India 534.48 1 283.88 5 53.11 2

5 Union Bank of India 51.29 5 43.38 1 84.58 5

The analysis of the industry done by mean, standard deviation and co-efficient of

variation In this industry 5 companies are selected and all the companies are ranked


having the highest mean is having 1st rank and all other companies are having rank

in descending order while in standard deviation and co-efficient of variation the

lowest value is given the 1st rank and all other companies are having rank in

ascending order.

174

The observation reveals that the mean of S.B.I. is the highest so it shows 1st rank,

B.O.B. shows 2nd rank, Canara Bank shows 3rd rank, B.O.I. shows 4th rank and the

U.B.I. shows the last 5th rank.


standard deviation reveals that the return is more with less risk. From that point of

view U.B.I. shows 1st rank, while co-efficient of variation is to be finding out on the

basis of average of standard deviation and mean. The use of standard deviation is

limited because it is having more influence of mean. The value which is having

nearer to mean is having low variation and the value which is having distance value

from the mean is having higher variations. This type of limitation is removed by the

use of co-efficient of variation and according to that B.O.B. is having the 1st rank. By

standard deviation B.O.I is having 2nd rank and by co-efficient of variation 4th rank,

Canara Bank shows 4th and 3rd rank, S.B.I. shows 5th and 2nd rank and U.B.I. shows 1st

and the 5th rank respectively.

175


[A] (i) Elecon Engineering Ltd.


Table no.15

1 2 3 4 5 6 7 8MARKET (2-3) (4-2) (4-3) MARKET PRICE

YEAR INTRINSIC PAID UP VALUE V.C. V.C. V.C. HIGH LOWVALUE VALUE PER SHARE (I) (II) TOTAL

` ` ` ` ` ` ` `

01-02 20.57 2.00 2.56 18.57 -18.01 0.56 1.25 0.62

02-03 18.36 2.00 2.44 16.36 -15.92 0.44 1.52 0.47

03-04 20.15 2.00 5.10 18.15 -15.05 3.10 3.53 47.00

04-05 24.17 2.00 17.64 22.17 -6.53 15.64 12.73 1.58

05-06 35.16 2.00 126.04 33.16 90.89 124.04 95.20 11.33

06-07 60.67 2.00 287.30 58.67 226.63 285.30 159.27 362.05

AVG.V.C. 71.51

This company shows upward trend in the intrinsic value during the period of the

observation except in the 2nd and the 3rd year as against the paid up value per share

`2. The market capitalized value per share is increased except in the 2nd year of the

observation. The value creation-1 shows positive trend except in the 2nd year. The

value creation-2 shows negative results in the first four observed years as it is the

difference between market capitalized value and intrinsic value and it is higher than

the market value which shows investors are not attracted to purchase the shares. In

the last two observed years the total value creation is showing higher result and the

market price is higher as compare to the previous observed years. The company has

declared final dividend in the last three observed years at the rate of 10%, 25%, and

50% respectively

176

(ii) Gammon India Ltd.


Table no.16



` ` ` ` ` ` ` `

01-02 28.73 2.00 12.06 26.73 -16.67 10.06 16.80 9.85

02-03 30.86 2.00 19.06 28.86 -11.80 17.06 26.00 13.23

03-04 34.63 2.00 49.45 32.63 14.82 47.45 103.00 19.95

04-05 50.62 2.00 105.29 48.62 54.67 103.29 314.90 60.81

05-06 104.67 2.00 329.85 102.67 225.17 327.85 588.95 210.00

06-07 130.05 2.00 391.01 128.05 260.96 389.01 574.70 258.00

AVG.V.C. 149.12

This company is showing increasing position in the intrinsic value as well as in the

market capitalized value. Against the paid up value of `2 the average of intrinsic

value is ` 63.25 per share. The results of value creation-1 shows positive growth but

the value creation-2 shows negative in the first two years but afterwards it shows

positive results. In the year 04-05 the company has declared final dividend of 25%

and the same ratio is maintained in the year 05-06 while it is 30% in the year 06-07.

The company has paid the interim dividend of 20% and final dividend of 5% in the

year 07-08. In the year 01-02 the company had issued right shares in the ratio of 1:1

as against the paid up value of ` 10. The high market price was highest in the year

05-06 and it is ` 588.95. The total value creation shows positive impact of the

company.

177

(iii) Larsen & Toubro Ltd.


Table no.17


YEARINTRINSIC

VALUEPAID

UP VALUE V.C. V.C. V.C. HIGH LOW

VALUEPER

SHARE (I) (II) TOTAL` ` ` ` ` ` ` `

01-02 26.38 2.00 40.83 24.38 14.45 38.83 129.40 71.88

02-03 28.10 2.00 36.88 26.10 8.78 34.88 110.00 72.80

03-04 219.36 2.00 727.33 217.36 507.98 725.33 306.75 90.50

04-05 256.29 2.00 905.68 254.29 649.39 903.68 320.95 127.75

05-06 336.11 2.00 1489.03 334.11 1152.91 1487.03 654.10 229.75

06-07 203.30 2.00 1302.19 201.30 1098.88 1300.19 889.00 451.31

AVG.V.C. 748.32

The performance of this company is good as its intrinsic value is continuous

increases except in the last observed year that is 2006-07. As from the view point of

market capitalization in the first initial two observed years it is not good to attract

the investors but from the third observed year it shows positive result till the last

observed year. The value creation-1 shows and the value creation-2 both showing

positive growth and therefore the total value creation is also having similar growth.

It can be said that the economic efficiency of the company is very good and the

company is able to capture investors' interest. The company has declared 800%

final dividend in the year 04-05 and interim dividend by 500%. The growth of the

dividend is maintained in the next year that is 05-06 by 875% and 1100% in the

year 06-07. The company has issued bonus shares in the ratio of 1:1 in the year 06-

07. The high and low market prices are showing positive increasing trend.

178

(iv) Reliance industries Ltd.


Table no.18

1 2 3 4 5 6 7 8MARKET PRICE

YEARINTRINSIC

VALUEPAID

UPMARKETVALUE

(2-3)V.C.

(4-2)V.C.

(4-3)V.C. HIGH LOW

VALUE PER SHARE (I) (II) TOTAL` ` ` ` ` ` ` `

01-02 71.80 10.00 1793.95 61.80 1722.15 1783.95 227.70 158.20

02-03 75.97 10.00 1996.26 65.97 1920.28 1986.26 241.75 190.00

03-04 69.46 10.00 4029.14 59.46 3959.68 4019.14 817.00 212.00

04-05 75.99 10.00 7331.02 65.99 7255.03 7321.02 816.00 426.00

05-06 83.09 10.00 7661.34 73.09 7578.26 7651.34 705.90 471.00

06-07 90.54 10.00 7178.26 80.54 7087.72 7168.26 652.00 362.05

AVG.V.C. 4988.33

From the capital goods industry, the Reliance Industries has performed excellent.

This company shows the best result as compare to other companies. As against the

paid up value of `10 the intrinsic value of the company is continuously increased

except in the third year of the observation. The market capitalized value per share is

also having an excellent growth so it can be said that the investors’ are having good

impact on the company. As the market capitalized value is higher than the intrinsic

value, the value creation-2 is having positive increasing trend and therefore, the

total value creation is also having continuous increasing growth. The market price

per share is highest in the year 03-04. This company has declared final dividend of

32% in the year 04-05 and the same rate is pertaining in the year 05-06. The rate of

final dividend is increased up to 35% in the year 06—07.

179

(v) Walchandnagar industries ltd.


Table no.19


YEAR INTRINSICPAID


VALUE VALUEPER

SHARE (I) (II) TOTAL` ` ` ` ` ` ` `

01-02 142.99 2.00 6.93 140.99 -136.06 4.93 4.98 2.61

02-03 137.03 2.00 6.77 135.03 -130.27 4.77 5.33 2.66

03-04 132.19 2.00 10.71 130.19 -121.47 8.71 10.42 2.65

04-05 130.65 2.00 31.11 128.65 -99.53 29.11 33.25 5.43

05-06 132.23 2.00 101.43 130.23 -30.79 99.43 72.99 20.41

06-07 151.91 2.00 171.72 149.91 19.81 169.72 232.00 39.37

AVG.V.C. 52.78

The intrinsic value of this company is showing decreasing trend up to the 4th

observed year. In the first year of the observation it is `142.99 but after than it

decreases up to ` 130.65 in the year 04-05. In the last two years it shows positive

effect. Therefore, it can be said that the performance of the company is not sound.

The market capitalized value per share shows increasing trend except in the 2nd

year of the observation. The value creation-2 shows negative results in the first four

years of the observation because as against the market capitalized value the

intrinsic value is higher so it can be said that the investors are not ready to buy the

shares. The company has declared final dividend of 27.50% in the year 04-05 and it

is 30% in the year 05-06 while it is 45% in the year 06-07.

180

Graph -3

Capital Goods Industry [For 2001 - 02 to 2006-07]


VALUE CREATION

1 Elecon Engg. Ltd 71.51 4

2 Gammon India Ltd 149.12 3

3 L & T Ltd 748.32 2

4 Reliance Ind. Ltd 4988.33 1

5 Walchandnagar Ind. Ltd 52.78 5

0

1000

2000

3000

4000

5000

6000

Elecon Engg. Ltd Gammon India Ltd L & T Ltd Reliance Ind. Ltd Walchand Ind. Ltd


181

The share holder value creation of selected companies with in the industry are not

same. The average share holder value creation of selected companies of Capital

goods Industry is shown in Graph no.3. Reliance Industries Ltd had obtained 1st rank

and L & T Ltd had obtained 2nd rank with maximum and minimum share holder

value creation respectively. This shows the perception of the investors towards

these companies are positive.

(B) Inter Company comparison

Year wise total share holders value creation in % of selected companies of capital

goods industry

Table no.20

PAID UPVALUE

PERSHARE

` 2 ` 2 ` 2 ` 10 ` 2

YEAR ELECONENGG. LTD

GAMMONINDIA LTD

L & T LTD RELIANCEIND. LTD

WALCHANDNAGARLTD

2001-02 28=00 503=00 1941=50 17839=50 246=50

2002-03 22=00 853=00 1734=00 19862=60 238=50

2003-04 155=00 2372=50 36266=50 40191=40 435=50

2004-05 782=00 5164=50 45184=00 73210=20 1455=50

2005-06 6202=00 16392=50 74351=50 76513=50 4971=50

2006-07 14265=00 19450=50 65009=50 71682=60 8486=00

From the capital goods industry total 5 companies are selected for the observation

of share holder value creation for 6 years. Out of 5 companies, 2 companies namely

Elecon Engineering & Walchandnagar Ltd. Are having upward growth of share

holder value creation and the market price. In Gammon India Ltd the share holder

value creation shows continuous increase trend up to the whole period of the study

but the market price does not follow the same growth. The market price shows

increase results up to the year 2005-2006 but it goes down in the year 2006-2007.

182

In case of L&T Ltd the share holder value creation goes down in the year 2002-2003

and afterwards it increase up to the year 2005-2006 but in the year 2006-2007 it

goes down. The market price of L&T Ltd goes down in the year 2002-2003 but

afterwards it is in increasing trend. In case of Reliance Industries Ltd there is direct

relation between share holder value creation and market value. During the year

2001-2002 to 2005-2006 both shows continuous increase growth but in the year

2006-2007 both shows downward trend.


Company wise mean, standard deviation, co-efficient of variation and rank of Capital

goods Industry

Table no. 21



VALUE RANK VALUE RANK VALUE RANK

1 Elecon Engg. Ltd 71.51 4 105.16 2 147.05 5

2 Gammon India Ltd 149.12 3 152.04 3 101.96 3

3 L & T Ltd 748.32 2 560.84 4 74.95 2

4 Reliance Ind. Ltd 4988.33 1 2500.17 5 50.12 1

5Walchandnagar Ind.Ltd

52.78 5 61.84 1 117.18 4







ascending order.

183

The observation reveals that the mean of Reliance Ltd is the highest so it shows 1st

rank, L&T Ltd shows 2nd rank, Gammon India Ltd shows 3rd rank, Elecon Engg. Ltd

shows 4th rank and the walchandnagar Ltd shows the last 5th rank.


standard deviation reveals that the return is more with less risk while co-efficient of

variation is to be finding out on the basis of average of standard deviation and mean.

The use of standard deviation is limited because it is having more influence of mean.

The value which is having nearer to mean is having low variation and the value

which is having distance value from the mean is having higher variations. This type

of limitation is removed by the use of co-efficient of variation By the analysis of

standard deviation and co-efficient of variation the Elecon Eng. Ltd is having 2nd and

5th rank, Gammon India Ltd is having the same 3rd rank, L&T Ltd is having 4th and

2nd rank, Reliance Ind. Ltd is having 5th and 1st rank and walchandnagar is having 1st

and 4th rank respectively.

184

5.1.4 FMCG Industry

[A] (i) Colgate Palmolive India Ltd.


Table no. 22


YEAR PAID UP VALUE V.C. V.C. V.C. HIGH LOWINTRINSIC VALUE PER SHARE (I) (II) TOTAL

VALUE` ` ` ` ` ` ` `

01-02 18.21 10.00 160.97 8.21 142.76 150.97 184.70 137.00

02-03 20.22 10.00 134.72 10.22 114.49 124.72 166.80 120.00

03-04 17.97 10.00 141.59 7.97 123.62 131.59 174.40 120.10

04-05 18.11 10.00 152.74 8.11 134.64 142.74 210.10 101.15

05-06 19.93 10.00 269.08 9.93 249.15 259.08 436.25 179.10

06-07 20.63 10.00 373.48 10.63 352.86 363.48 463.90 275.15

AVG.V.C. 195.43

As compare to the paid up value per share the average intrinsic value is ` 19.17. The

growth of intrinsic value is increases but in the 3rd year it is in decreasing trend. The

value creation-1 shows ups and downs during the observed period which shows the

economic efficiency of the company is not sound. As from the market capitalized

value per share it can be seen that, it is continuously increase except in the 2nd year,

which shows that the interest of the investors are good. The total value creation is

also showing the same results. The market price is the highest that is ` 463.90 which

is in the last observed year. The company has not declared bonus shares during the

observed years but the company had declared interim dividend in the year 04-05 at

the rate of 15%. In the year 05-06 the company had declared 27.50%, 30% and

185

17.50% interim dividend while in the year 06-07 the interim dividend of 42.50%

and 32.50% has been declared by the company.

(ii) Godrej Consumer Products Ltd.


Table no. 23



` ` ` ` ` ` ` `

01-02 2.25 1.00 13.26 1.25 11.01 12.26 16.18 137.00

02-03 1.98 1.00 24.45 0.98 22.47 23.45 30.50 14.66

03-04 1.86 1.00 35.85 0.86 33.98 34.85 52.38 24.70

04-05 2.20 1.00 57.39 1.20 55.19 56.39 81.25 37.06

05-06 3.37 1.00 112.94 2.37 109.57 111.94 188.68 64.21

06-07 4.91 1.00 163.47 3.91 158.56 162.47 197.25 120.52

AVG.V.C. 66.89

The intrinsic value of the company is ` 2.25 in the first observed year but afterwards

up to three years it goes down and in the last two observed years it shows upward

situation. The market capitalized value per share is increases from the first year up

to the last year of the observation. The value creation-1 shows ups and downs due

to the fluctuating result of intrinsic value but the value creation-2 shows continuous

growing results because it is depends upon market capitalized value and intrinsic

value. As the market capitalized value per share is showing increasing growth, the

value creation-2 shows the same situation and it can be reflect from the total value

creation also. The market price was the highest in the last observed year. The

company has declared three interim dividend at the rate of 75% each and the final

186

dividend of 125% in the year 05-06. In the year 06-07 the company has declared

four interim dividends.

(iii) Hindustan Uniliver Ltd.


Table no. 24



` ` ` ` ` ` ` `

01-02 16.62 1.00 215.76 15.62 199.14 214.76 266.00 177.00

02-03 9.72 1.00 181.59 8.72 171.88 180.59 229.30 145.90

03-04 9.51 1.00 174.69 8.51 165.18 173.69 218.00 135.00

04-05 10.47 1.00 134.52 9.47 124.04 133.52 1705.00 104.00

05-06 12.34 1.00 176.17 11.34 163.83 175.17 278.40 126.30

06-07 6.61 1.00 234.45 5.61 227.84 233.45 296.00 166.00

AVG.V.C. 185.20

In this company the intrinsic value per share is decreases as against the paid up

value of `1. Therefore, value creation-1 is also having fluctuation during the six

observed years. Here, market capitalized value per share is also showing downward

situation up to the first four observed years but in the last two observed years it

shows upward results. As the value creation-2 is the difference between market

capitalized value and intrinsic value. It is also showing ups and downs during the

observation. The high market price is the highest in the year 06-07 and the lowest

market price is the highest in the first year of the observation. The company has

declared final dividend of 300% in the year 04-05 and the interim dividend of 250%

187

In the year 06-07, the company has declared interim dividend of 300% and the final

dividend of 250%

(iv) ITC Ltd.


Table no. 25



` ` ` ` ` ` ` `

01-02 17.99 1.00 72.84 16.99 54.85 71.84 59.27 38.33

02-03 21.68 1.00 64.81 20.68 43.13 63.81 48.33 37.00

03-04 25.88 1.00 86.02 24.88 60.14 85.02 79.01 41.27

04-05 31.81 1.00 112.59 30.81 80.78 111.59 94.46 48.80

05-06 24.13 1.00 127.61 23.13 103.48 126.61 200.00 88.14

06-07 27.74 1.00 177.83 26.74 150.09 176.83 212.70 140.15

AVG.V.C. 105.95

The intrinsic value of the ITC Limited is in good position. In the first financial year of

the observation it is ` 17.99 and it is increases up to the fourth observed year that is

04-05 at ` 31.81. In the last two observed years it is ` 24.13 and `27.74 respectively.

Therefore, it can be said that the company is having good economic efficiency. The

market capitalized value per share is the lowest in the 2nd observed year that is

`64.81 but then after it increases up to the last observed year. The value creation-1

is also having good situation during the years of the observation. The value creation-

2 and the total value creation is reflecting good impact of the company. The

company had declared bonus shares in the ratio of 1:2 in the year 05-06. In the year

04-05 the company has declared final dividend of 200% while 310% in the year 05-

06 and 265% in the year 06-07.

188

(v) Nestle India Ltd.


Table no. 26


YEARINTRINSI

CPAID


VALUE VALUEPER

SHARE (I) (II) TOTAL` ` ` ` ` ` ` `

01-02 30.00 10.00 515.63 20.00 485.63 505.63 575.00 470.00

02-03 34.74 10.00 530.08 24.74 495.33 520.08 579.95 455.55

03-04 33.13 10.00 587.89 23.13 554.77 577.89 720.00 500.30

04-05 36.73 10.00 571.74 26.73 535.01 561.74 686.00 500.00

05-06 40.33 10.00 859.15 30.33 818.81 849.15 1235.00 600.00

06-07 43.40 10.00 1062.66 33.40 1019.26 1052.66 1387.00 800.00

AVG.V.C. 677.86

As against the paid up value of `10 the intrinsic value of the company is showing an

excellent growth. The intrinsic value of the company was ` 30 in the first observed

year and it increases up to the last observed year that is ` 43.39. the market

capitalized value per share is showing tremendous growth in the last year of the

observation that is from `515.63 to ` 1062.66. The value creation-1 and the value

creation-2 is having positive trend so the total value creation is also showing

increasing trend. The market price was the highest in the last observed year that is

`1387 and the lowest market price was also highest in the last observed year and it

is `800. In the year 05-06, the company has declared interim dividend of 180% and

the final dividend of 95%. In the year 06-07, the company has declared 180%

interim dividend and 80% final dividend.

189

Graph - 4

FMCG Industry [For 2001 - 02 to 2006-07]


VALUE CREATION

1 Colgate Palmolive Ltd 195.43 2

2 Godrej Ind. Ltd 66.89 5

3 Hindustan Uniliver Ltd 185.20 3

4 ITC Ltd 105.95 4

5 Nestle Ltd 677.86 1

0

100

200

300

400

500

600

700

800

Colgate PalmoliveLtd

Godrej Ind. Ltd Hindustan UniliverLtd

ITC Ltd Nestle Ltd


190

The trend of share holder value creation of selected companies with in the industry

may not be uniform. The average share holder value creation of selected companies

of FMCG industry is shown in Graph No.4. The Nestle India Ltd shows 1st rank and

Colgate Palmolive (India) Ltd shows 2nd rank.


Year wise total share holders value creation in % of selected companies of FMCG

Industry

Table no. 27

PAID UPVALUE

PER SHARE

` 10 ` 1 ` 1 ` 1 ` 10

YEAR COLGATEPALMOLIVE

GODREJCONSUME`

HINDUSTANUNILEVER

ITC LTD NESTLEINDIA LTD

2001-02 1509=70 1226=00 21476=00 7184=00 5056=30

2002-03 1247=20 2345=00 18059=00 6381=00 5200=80

2003-04 1315=90 3485=00 17369=00 8502=00 5778=90

2004-05 1427=40 5639=00 13352=00 11159=00 5617=40

2005-06 2590=80 11194=00 17517=00 12661=00 8491=50

2006-07 3634=80 16247=00 23345=00 17683=00 10526=60

In this industry 5 companies are selected for the study of 6 years. In case of colgate

Palmolive India Ltd the total share holder value creation is decrease from the year

2002-2003 to 2004-2005 but from the year 2005-2006 onwards it is increases. The

market price was decrease in the year 2002-2003 and after that it increases

continuously up to the year 2006-2007. In Godrej Consumer Products Ltd the total

share holders value creation and the market price both in increasing trend. In

Hindustan Uniliver Ltd the total share holder value creation shows the downward

results up to the year 2004-2005 and after that it shows increasing trend. The

market price was also down up to the year 2003-2004 and from the next year it

shows tremendous increasing growth but afterwards it goes down. In ITC Ltd the

191

total share holder value creation decrease in the year 2002-2003 and at the same

time the market price was also decrease but the afterwards the total shareholder

value creation and the market price both are in increasing trend up to the year

2003-2004 and afterwards both were down in the year 2004-2005 and from the

year 2005-2006 it shows increasing trend.

[C] Measurement of Consistency

Company wise mean, standard deviation, co-efficient of variation and rank of FMCG

Industry

Table no. 28




1 Colgate Palmolive Ltd 195.43 2 87.68 4 44.86 4

2 Godrej Cons. Ltd 66.90 5 53.50 3 79.98 5

3 Hindustan UnileverLtd 185.20 3 31.96 1 17.26 1

4 ITC Ltd 105.95 4 38.43 2 36.27 3

5 Nestle India Ltd 677.86 1 203.24 5 29.98 2







ascending order.

The observation reveals that the mean of Nestle India Ltd is the highest so it shows

1st rank, Colgate Palmolive India Ltd shows 2nd rank, Hindustan Uniliver Ltd shows

192

3rd rank, ITC Ltd shows 4th rank and the Godrej Consumer Products Ltd shows the

last 5th rank.








standard deviation and co-efficient of variation the Colgate Palmolive Ltd is having

same 4th rank, Godrej Consumer products Ltd is having 3rd and 5th rank, Hindustan

Uniliver Ltd shows same 1st rank, ITC Ltd is having 2nd and 3rd rank and Nestle India

Ltd is having 5th and 2nd rank respectively.

193


[A] (i) Apollo Hospitals Ltd.


Table No.29


YEAR INTRINSICPAID

UPMARKETVALUE

(2-3)V.C.

(4-2)V.C.

(4-3)V.C. HIGH LOW

VALUE VALUEPER

SHARE (I) (II) TOTAL` ` ` ` ` ` ` `

01-02 58.60 10.00 93.66 48.60 35.06 83.66 152.50 54.00

02-03 55.21 10.00 115.46 45.21 60.25 105.46 175.40 92.00

03-04 60.99 10.00 148.38 50.99 87.39 138.38 197.80 90.95

04-05 78.00 10.00 234.97 68.00 156.97 224.97 364.00 169.10

05-06 128.99 10.00 404.81 118.99 275.82 394.81 589.00 318.10

06-07 145.73 10.00 444.14 135.73 298.41 434.14 577.00 340.00

AVG.V.C. 230.24

As against the paid up value of `10 the intrinsic value of Apollo Hospitals is `58.60

in the first year and `55.21 in the second year than after it is increases up to the last

observed year that is `145.73. Therefore, value creation-1 in the first observed year

that is ` 48.60 but in the second year it is ` 45.21 and in the last year it is ` 135.73.

The market capitalized value per share is ` 93.66 in the first observed year and after

that it increases up to the last year that is ` 440.14.The value creation-2 and the

total value creation is also showing upward situation. As from the result it is

revealed that the market price was highest in the year 05-06 that is ` 589. The

company had declared final dividend of 35% in the year 04-05 and 40% in the year

05-06 while 45% in the year 06-07.

194

(ii) Cipla Ltd.


Table No.30


YEAR INTRINSICPAID


VALUE VALUEPER

SHARE (I) (II) TOTAL` ` ` ` ` ` ` `

01-02 148.40 10.00 1100.20 138.40 951.80 1090.20 107.20 68.32

02-03 178.42 10.00 916.22 168.42 737.80 906.22 87.20 56.08

03-04 210.86 10.00 999.64 200.86 788.78 989.64 113.98 44.89

04-05 259.07 10.00 1307.20 249.07 1048.13 1297.20 128.80 77.70

05-06 330.71 10.00 1916.60 320.71 1585.89 1906.60 266.00 90.40

06-07 208.17 10.00 1226.85 198.17 1018.67 1216.85 304.72 178.00

AVG.V.C. 1234.45

The intrinsic value this company shows continuous high position except in the year

06-07. The average intrinsic value of the company is `222.60 against the paid up

value of `10. The value creation-1 and the value creation-2 both are having an

excellent result in the first five observed years but in the last observed year it is in

decreasing trend while the total value creation is showing continuous increased

position. The market price of the shares showing some fluctuation and it was the

highest in the last year of the observation that is `304.72. The company has declared

final dividend in the year 04-05, 05-06 and 06-07 at the rate of 150%, 175% and

100% respectively. The company has declared bonus shares in the ratio of 3:2.

195

(iii) Dr. Reddy’s Laboratories Ltd.


Table No.31


YEAR INTRINSICPAID


VALUE VALUEPER

SHARE (I) (II) TOTAL` ` ` ` ` ` ` `

01-02 76.21 2.00 344.32 74.21 268.12 342.32 574.85 216.00

02-03 94.45 2.00 358.60 92.45 264.15 356.60 574.95 337.50

03-04 107.01 2.00 451.99 105.01 344.98 449.99 735.00 404.00

04-05 108.42 2.00 312.94 106.42 204.52 310.94 501.45 326.25

05-06 117.97 2.00 361.43 115.97 243.46 359.43 756.50 306.50

06-07 104.18 2.00 273.86 102.18 169.68 271.86 877.00 579.00

AVG.V.C. 348.52

This company’s intrinsic value per share is showing fluctuation during the observed

period. The market capitalized value per share also showing the same result. The

value creation-1 is also having fluctuation during the study. The same position was

reflect by the showing the result of value creation-2. In the last observed year that is

06-07, it is noted at `169.69. The total value creation is also having ups and downs

because it is depends up on the value creation-1 and value creation-2. The market

price was the highest in the year in the year 06-07 at `877. The final dividend of

100% is declared by the company in three respective years that is 04-05, 05-06 and

06-07. The bonus shares has been declared by the company in the ratio of 1:1 in the

year 06-07.

196

(iv) Lupin Ltd.


Table No. 32



` ` ` ` ` ` ` `

01-02 84.57 10.00 65.23 74.57 -19.33 55.23 70.00 30.63

02-03 95.26 10.00 122.30 85.26 27.04 112.30 88.90 45.00

03-04 111.62 10.00 472.45 101.62 360.83 462.45 395.00 64.85

04-05 124.69 10.00 658.56 114.69 533.87 648.56 446.00 242.00

05-06 160.43 10.00 747.89 150.43 587.46 737.89 525.00 262.50

06-07 110.58 10.00 528.39 100.58 417.81 518.39 678.40 405.52

AVG.V.C. 422.47

This company is showing increasing result of its intrinsic value but in the last

observer year it shows decreasing result. The market capitalized value per share is

also having the same result, the value creation-1 is increases up to the first five

years but in the last year it decrease. The value creation-2 in the first observed year

showing negative result because the market capitalized value per share is higher

than the intrinsic value per share but after than it is increases up to the last

observed year. The total value creation is in fluctuating trend. The market price was

the highest in the last observed year that is ` 678.4 and the lowest market price was

also high in the last observed year. The final dividend at the rate of 65% has been

declared by the company in the year 04-05, 05-06 and 06-07. The bonus shares had

been declared by the company in the ratio of 1:1 in the year 06-07.

197

(v) Ranbaxy Laboratories Ltd.


Table No. 33



` ` ` ` ` ` ` `

01-02 50.49 5.00 197.92 45.49 147.44 192.92 282.50 128.75

02-03 62.57 5.00 282.65 57.57 220.09 277.65 346.40 237.25

03-04 67.50 5.00 449.29 62.50 381.79 444.29 576.13 309.80

04-05 63.83 5.00 521.90 58.83 458.07 516.90 650.00 430.00

05-06 63.06 5.00 457.94 58.06 394.88 452.94 573.90 340.05

06-07 68.04 5.00 398.66 63.04 330.62 393.66 530.00 305.50

AVG.V.C. 879.73

The intrinsic value of this company is showing continuous increasing trend during

the period of the study except in the year 04-05 and 05-06. Against the paid up value

of `5, the average intrinsic value of the company is ` 63.57.The market capitalized

value per share is increases up to the year 04-05 but then after it decreases in the

last two years of the observation. The value creation-1 increases up to the first four

years but after than two continuous years it goes down and in the last observed year

again it is increases. The value creation-2 is showing fluctuating position during the

period of the study due to the changing price level of market capitalized value. In the

last two observed years the total value creation is showing downward situation. The

market price was the highest in the year 04-05. The lowest market price was low in

the year 01-02 that is `128.75 and high in the year 04-05 ` 430. The company has

declared the final dividend of 100% and interim dividend of 50% in the year 03-04

while in the year 04-05, 05-06 and 06-07 the company has declared final dividend of

198

120% and interim dividend of 50%. In the year 02-03, the company had declared

the bonus shares in the ratio of 3:5.

199

Graph - 5

Healthcare Industry [For 2001 - 02 to 2006-07]


VALUE CREATION

1 Apollo Hospitals Ent Ltd. 230.24 5

2 Cipla Ltd 1234.45 1

3 Dr. Reddy’s Lab Ltd 348.52 4

4 Lupin Ltd 422.47 3

5 Ranbaxy laboratories Ltd. 879.73 2

0

200

400

600

800

1000

1200

1400

Apollo HospitalsEnt Ltd.

Cipla Ltd Dr. Reddy’s LabLtd

Lupin Ltd Ranbaxylaboratories Ltd.


200

The trend of share holder value creation of selected companies of Healthcare

Industry are shown in Graph No.5. Cipla Ltd had obtained 1st rank and Ranbaxy

Laboratories Ltd had obtained 2nd rank with maximum and minimum share holder

value creation.


Year wise total share holders value creation in % of selected companies of

Healthcare industry

Table no. 34

PAID UPVALUE PER

SHARE

` 10 ` 5 ` 10 ` 10 ` 2

APOLLOHOSPITALS

LTD

RANBAXYLAB. LTD

LUPIN LTD CIPLA LTD DR.REDDY’SLAB LTD.

2001-02 836=60 3858=40 21476=00 10902=00 17116=00

2002-03 1054=60 2345=00 5553=00 9062=20 17830=00

2003-04 1383=80 3485=50 8885=80 9896=40 22499=50

2004-05 2249=70 5639=00 10338=00 12972=00 15547=00

2005-06 3948=10 11194=00 9058=80 19066=00 17971=50

2006-07 4341=40 16247=00 7873=20 12168=50 13593=00

From the 5 companies selected in this industry, the growth of Apollo Hospitals Ltd

was excellent. The share holder value creation and the market price both were

having simultaneous increase growth up to 2004-2005 but in the year 2006-2007

the share holder value creation increase but the market price were decrease. In

Ranbaxy Laboratories, the share holder value creation and the market price both

were increase up to the year 2004-2005 but afterwards both were in decreasing

trend. In Lupin Ltd the share holder value creation and the market price both were

increase up to the year 2005-2006 but in the year 2006-2007 the share holder value

creation was showing downward trend. In Cipla Ltd the share holder value creation

201

shows fluctuating trend during the whole observed period. In the year 2006-2007

the market price shows the highest result during the whole observation. In Dr.

Reddy’s Laboratories Ltd the share holder value creation shows ups and downs

during the whole observed period but the market price shows continuous increase

growth except in the year 2004-2005.


Company wise mean, standard deviation, co-efficient of variation and rank of

Healthcare Industry

Table no. 35




1 Apollo Hospitals Ltd 230.24 5 137.95 3 59.92 4

2 Ranbaxy Lab. Ltd 379.73 3 110.95 2 29.22 3

3 Lupin Ltd 422.47 2 255.76 4 60.54 5

4 Cipla Ltd 1234.45 1 327.75 5 26.55 2

5 Dr. Reddy's Lab. Ltd 348.52 4 54.48 1 15.63 1







ascending order.

The observation reveals that the mean of Cipla Ltd is the highest so it shows 1st rank,

Lupin Ltd shows 2nd rank, Ranbaxy Laboratories Ltd shows 3rd rank, Dr. Reddy’s

202

Laboratories Ltd shows 4th rank and the Apollo Hospitals Ltd shows the last 5th

rank.








standard deviation and co-efficient of variation the Apollo Hospitals shows 3rd and

4th rank, Ranbaxy Laboratories shows 2nd and 3rd rank, Lupin Ltd shows 4th and 5th

rank, Cipla Ltd shows 5th and 2nd rank and Dr. Reddy’s Laboratories is given the

same 1st rank.

203

5.1.6 IT Industry

[A] (i) Financial Technologies Ltd.

Year wise different share holders value creation and market price

Table no.36



` ` ` ` ` ` ` `

01-02 2.60 2.00 3.22 0.60 0.62 1.22 78.95 7.50

02-03 5.74 2.00 7.53 3.74 1.79 5.53 87.65 9.75

03-04 13.66 2.00 15.08 11.66 1.42 13.08 99.95 10.25

04-05 31.51 2.00 34.74 29.51 3.23 32.74 335.00 43.65

05-06 34.32 2.00 45.68 32.32 11.35 43.68 1748.00 251.00

06-07 45.05 2.00 160.88 43.05 115.83 158.88 2247.40 988.05

AVG.V.C. 42.52

The intrinsic value of this company is showing continuous increasing situation. It

was `2.59 in the first observed year and after that it increases up to the last year of

the observation at `45.04. The market capitalized value per share is also having

continuous increasing trend. The value creation-1 and value creation-2 both are

having same growth level and it is reflecting from the total value creation also. The

market price was also highest in the year 06-07 at `2247.40. In the year 05-06, the

company has declared interim dividend of 40% and final dividend of 20%. In the

year 06-07, two interim dividend of 40% and the final dividend of 260%has been

declared by the company. The company has not declared any bonus shares or right

shares during the period of observation.

204

(ii) HCL Technologies Ltd.


Table no.37



` ` ` ` ` ` ` `

01-02 72.88 2.00 8.83 70.88 -64.05 6.83 25.54 9.05

02-03 80.21 2.00 11.00 78.21 -69.21 9.00 33.69 14.45

03-04 77.38 2.00 32.08 75.38 -45.30 30.08 163.00 15.41

04-05 89.65 2.00 71.63 87.65 -18.02 69.63 175.00 89.80

05-06 79.68 2.00 109.62 77.68 29.94 107.62 279.00 139.00

06-07 51.60 2.00 38.83 49.60 -12.78 36.83 192.00 115.65

AVG.V.C. 43.33

The Intrinsic Value per share is showing increase and decrease situation. The

intrinsic value in the first observed year is `72.88 but it is `51.60 in the last

observed year. The value creation-1 is `70.88 in the first observed year but it

decrease up to `49.60 in the last observed year. The market capitalized value per

share is `8.82 in the first observed year which increase up to year 05-06 and after

then it decrease in the last year that is 06-07. The value creation -2 is negative in the

first observed year up to first four years, in the fifth year of observation it increases

and in the last year of the observation it is again having negative result. The total

value creation is continuous increase except in the last observed year The company

has declared interim dividend in the year 04-05 at the rate of 200% while in two

year 05-06 two interim divined and final divined has been declared at the rate of

200%.In The year 06-07 final and interim both divined declared at the same rate of

200%. In the year 06-07, the company has declared bonus share in 1:1 ratio.

205

(iii) Infosys Ltd.


Table no.38


YEAR INTRINSICPAID


VALUE VALUEPER

SHARE (I) (II) TOTAL` ` ` ` ` ` ` `

01-02 314.34 5.00 3625.55 309.34 3311.20 3620.55 607.65 269.50

02-03 431.86 5.00 3856.92 426.86 3425.06 3851.92 609.13 366.89

03-04 488.21 5.00 4228.48 483.21 3740.27 4223.48 766.13 302.50

04-05 193.72 5.00 1710.93 188.72 1517.20 1705.93 1147.25 525.00

05-06 249.89 5.00 2481.28 244.89 2231.39 2476.28 1537.50 938.05

06-07 195.14 5.00 1827.48 190.14 1632.34 1822.48 2439.00 1225.00

AVG.V.C. 2950.10

The intrinsic value of the company shows ups and downs during the whole period of

the observation. It was the highest in the year 03-04, but then after in the next

observed year it goes down at `193.71. As compare to the intrinsic value, the

market capitalized value per share is very high. It was `4798.77 in the year 2001-02

but the growth of the value goes down during the observation. As in comparison of

value creation-1 the value creation-2 is showing high result and therefore the total

value creation is also showing good impact. The high market price was the highest

in the year 06-07 that is `2439. in the year 06-07 the company has declared final

dividend the rate of 770% and interim dividend of100%. The bonus shares are

declared by the company in the ratio of 1:1 in the year 06-07.

206

(iv) Moser Baer Ltd.

Year wise different share holders value creation and market priceTable no.39



` ` ` ` ` ` ` `

01-02 191.59 10.00 263.78 181.59 72.19 253.78 121.67 58.97

02-03 235.50 10.00 223.63 225.50 -11.87 213.63 100.67 45.75

03-04 176.21 10.00 192.73 166.21 16.52 182.73 208.67 78.67

04-05 180.51 10.00 218.80 170.51 38.29 208.80 220.00 103.33

05-06 179.79 10.00 214.50 169.79 34.71 204.50 169.33 124.60

06-07 187.89 10.00 244.27 177.89 56.39 234.27 266.00 108.00

AVG.V.C. 216.29

The intrinsic value per share of the company is having fluctuating growth as against

the paid up value of `10. The market capitalized value per share is showing

fluctuation during the period of observation. The value creation-1 is showing

fluctuation during the period of the study. The value creation-2 in the second

observed year is showing negative result because as compare to the market value

per share, the intrinsic value of the company in higher but then after it shows

increasing growth. The market value of the company in the year 06-07 was the

highest at ` 266. The final dividend is declared by the company in the year 04-05,

05-06 and 06-07 at the rate of 15%, 10%and 10% respectively. The company has

issued bonus share in the ratio of 1:2 in the year 07-08.

207

(v) Wipro Ltd.


Table no.40


YEAR INTRINSICPAID


VALUE VALUEPER

SHARE (I) (II) TOTAL` ` ` ` ` ` ` `

01-02 108.96 2.00 1454.32 106.96 1345.36 1452.32 327.50 127.22

02-03 143.21 2.00 1450.51 141.21 1307.30 1448.51 312.48 177.17

03-04 150.70 2.00 1241.97 148.70 1091.27 1239.97 310.17 131.88

04-05 69.56 2.00 608.89 67.56 539.33 606.89 388.50 200.00

05-06 45.08 2.00 402.63 43.08 357.55 400.63 573.00 285.55

06-07 63.88 2.00 532.34 61.88 468.46 530.34 690.00 383.00

AVG.V.C. 946.49

The intrinsic value of Wipro Limited shows high result up to first three observed

years but then after from the fourth observed year it goes down up to fifth year of

observation, while in the last observed year that is 06-07 it shows upward results.

The market capitalized value is also showing downward trend for the whole

observed period except in the year 06-07, the value creation-1 and the value

creation-2 is showing fluctuation in the result and therefore the total value creation

is also showing fluctuation during the whole period of the study. The high market

price and the low market price both are the highest in the year 06-07. The company

has declared final dividend of 1450% in the year 05-06, and final dividend of 250%

has been declared by the company while in the year 06-07, both final as well as

interim dividend of 250% has been declared by the company. The bonus share has

been issued in the year 04-05 and 05-06 in the ratio of 2:1 and1:1 respectively.

208

Graph - 6

IT Industry [For 2001 - 02 to 2006-07]


VALUE CREATION

1 Financial Technologies Ltd 42.52 5

2 HCL Technologies Ltd 43.33 4

3 Infosys Technologies Ltd 2950.10 1

4 Moser Baer Ltd 216.29 3

5 Wipro Ltd 946.49 2

0

500

1000

1500

2000

2500

3000

3500

FinancialTechnologies Ltd

HCL TechnologiesLtd

InfosysTechnologies Ltd

Moser Baer Ltd Wipro Ltd


209

The trend of average share holder value creation of selected companies of IT

industry is shown in Graph No.6. Infosys Ltd had obtained 1st rank and Wipro Ltd

had obtained 2nd rank with maximum and minimum share holder value creation.


Year wise total share holders value creation in % of selected companies of IT

Industry

Table no.41

PAID UPVALUE

PERSHARE

` 2 ` 2 ` 5 ` 10 ` 2

YEAR FINANCIALTECHNOLOGY

HCLTECHNOLOGY

INFOSYSTECHNOLOGY

MOSERBAER WIPRO LTD

2001-02 61=00 341=50 72411=00 2537=80 72616=00

2002-03 276=50 450=00 77038=40 2136=30 72425=50

2003-04 654=00 1504=00 84469=60 1827=30 61998=50

2004-05 1637=00 3481=50 34118=60 2088=00 30344=50

2005-06 2184=00 5381=00 49525=60 2045=00 20031=50

2006-07 7944=00 1841=50 36449=60 2342=70 26517=00

From the selected 5 companies of IT Industry, the Financial Technologies Ltd is

having an excellent growth. The share holder value creation and the market price

both were having direct relationship. Both were increase during the whole period of

the study. In HCL Technologies the share holder value creation and the market price

both were increase except in the year 2006-2007. In the year 2005-2006 the share

holder value creation and the market price both were highest. In Infosys Ltd the

growth of share holder value creation shows fluctuation but the market price shows

continuous increasing trend. In Moser Baer Ltd the growth of share holder value

creation was in downward trend but the market price shows increasing trend

except in the year 2002-2003 and 2005-2006. In Wipro Ltd the share holder value

210

creation shows downward trend up to the year 2005-2006 but in the year 2006-

2007 it shows increasing trend. The market price shows fluctuation during the

whole observed period.


Company wise mean, standard deviation, co-efficient of variation and rank of IT

Industry

Table no. 42




1Financial TechnologyLtd 42.52 5 54.13 3 127.30 5

2 HCL Technology Ltd 43.33 4 35.48 2 81.89 4

3 Infosys Ltd 2950.11 1 994.01 5 33.69 2

4 Moserbaer Ltd 216.29 3 22.57 1 10.44 1

5 Wipro Ltd 946.44 2 443.56 4 46.87 3







ascending order.

The observation reveals that the mean of Infosys Ltd is the highest so it shows 1st

rank, Wipro Ltd shows 2nd rank, Moser Baer Ltd shows 3rd rank, HCL Technologies

Ltd shows 4th rank and the Financial Technologies Ltd shows the last 5th rank.

211








standard deviation and co-efficient of variation the Financial Technologies shows 3rd

and 5th rank, HCL Technologies shows 2nd and 4th rank, Infosys Ltd shows 5th and 2nd

rank, Moser Baer shows the same 1st rank and the Wipro Ltd shows 4th and 3rd rank

respectively.

212


[A] (i) Hindalco industries Ltd.


Table no. 43



` ` ` ` ` ` ` `

01-02 76.78 1.00 72.09 75.78 -4.70 71.09 79.64 42.37

02-03 66.96 1.00 49.46 65.96 -17.50 48.46 66.45 40.09

03-04 74.16 1.00 100.41 73.16 26.26 99.41 128.37 46.80

04-05 82.63 1.00 120.82 81.63 38.18 119.82 127.00 61.92

05-06 97.46 1.00 141.75 96.46 44.29 140.75 169.10 91.04

06-07 119.03 1.00 191.91 118.03 72.89 190.91 228.26 113.72

AVG.V.C. 111.74

The intrinsic value of the company in the first observed year is `76.78; in the second

year it goes down to ` 66.96 and then after it is in continuous increase growth. The

Market capitalized value per share is ` 72.09 in the first observed year but in the

second year of the observation it decreases up to `49.46 and then after it is showing

continuous upward trend till the last year of observation. The value creation-1 has

the same growth as intrinsic value is having. The value creation-2 is negative in the

first two observed years and then after it increases up to the year 06-07. The market

price was the highest in the year 06-07. From the above discussion, it can be said

that the investors are having positive impression of the company. The company has

declared final dividend in the year 04-05, 05-06 and 06-07 at the rate of 165%,

213

200% and 220% respectively. The right shares have been issued by the company in

the ratio of 1:4 in the year 05-06.

(ii) Ispat Industries Ltd.


Table no. 44



` ` ` ` ` ` ` `

01-02 17.45 10.00 1.61 7.45 -15.84 -8.39 3.95 0.55

02-03 23.50 10.00 4.49 13.50 -19.01 -5.51 9.00 1.15

03-04 24.87 10.00 10.91 14.87 -13.96 0.91 20.77 4.00

04-05 41.23 10.00 14.77 31.23 -26.47 4.77 32.55 5.25

05-06 16.82 10.00 12.33 6.82 -4.49 2.33 32.55 9.90

06-07 24.14 10.00 13.24 14.14 -10.90 3.24 24.85 10.07

AVG.V.C. -0.44

As against the paid up value of `10, the in intrinsic value of the company in the first

year of the observation is ` 17.45 it increases up to the year 04-05 but in the year

05-06 it goes down up to `16.82 and in the year 06-07, It was `24.14. The market

capitalized value per share is increases up to the last observed year 06-07 at `66.82.

The value creation-1 shows ups and downs during the observation. The value

creation-2 is reported negative during the whole observation period. The total value

creation in the first two observed years were negative but then after it increases up

to last year. The market price is showing ups and downs during the observation

period. There is no information about the issue of right shares and the bonus shares.

214

(iii) NACL Ltd.


Table no.45



` ` ` ` ` ` ` `

01-02 50.04 10.00 57.28 40.04 7.24 47.28 94.00 37.00

02-03 51.36 10.00 94.15 41.36 42.80 84.15 131.00 67.00

03-04 58.30 10.00 135.12 48.30 76.82 125.12 205.25 72.05

04-05 72.91 10.00 164.18 62.91 91.26 154.18 209.00 103.00

05-06 91.46 10.00 193.35 81.46 101.90 183.35 311.00 135.00

06-07 119.43 10.00 229.22 109.43 109.78 219.22 334.95 185.00

AVG.V.C. 135.55

The Intrinsic value and the market capitalized value per share are showing good

result during the period of the observation. The value creation-1 and the value

creation-2both are having an excellent growth. It can be said that the economic

efficiency and the interest of investors about the company is in positive direction.

The high market value is also having continuous upward trend during the period of

observation. The company declared interim dividend of 20% in the year 04-05 and

final dividend at the rate of 20% has been declared in the year 05-06. In the year 06-

07, the final dividend and interim dividend of 30% has been declared by the

company. There are no information about right shares and bonus shares issued by

the company.

215

(iv) SAIL Ltd.


Table no. 46



` ` ` ` ` ` ` `

01-02 5.45 10.00 5.12 -4.55 -0.33 -4.88 6.70 3.95

02-03 4.82 10.00 8.57 -5.18 3.75 -1.43 13.30 4.80

03-04 11.28 10.00 32.29 1.28 21.01 22.29 61.40 8.75

04-05 24.24 10.00 46.05 14.24 21.81 36.05 70.30 20.00

05-06 29.99 10.00 57.21 19.99 27.23 47.21 86.60 41.80

06-07 41.60 10.00 85.79 31.60 44.19 75.79 122.00 61.00

AVG.V.C. 29.17

The value creation-1 shows negative result in the first two observed years because

against the paid up value of `10, the intrinsic value per share was less and from the

third observed year because it was positive. The value creation-2 was negative in

the first observed year because the market price was low as compare to the intrinsic

value per share. From the total value creation it can be said that in the first two

observed year it was negative but after that it showing positive result. The market

price was reported highest in the year 06-07 at `122. The company has declared

intrinsic dividend and final dividend in the year 05-06 at the rate of 15% and 18%,

while in the year 06-07, the interim and the final dividend of 12.50% and 7.50% had

been declared by the company. There are no information about bonus shares and

right shares.

216

(v) TISCO Ltd.


Table no. 47



` ` ` ` ` ` ` `

01-02 66.74 10.00 101.54 56.74 34.79 91.54 99.63 44.60

02-03 86.58 10.00 129.75 76.58 43.16 119.75 109.00 65.00

03-04 118.10 10.00 288.42 108.10 170.32 278.42 310.97 83.77

04-05 123.63 10.00 295.69 113.63 172.06 285.69 446.50 154.13

05-06 171.62 10.00 382.36 161.62 210.74 372.36 541.35 329.05

06-07 239.27 10.00 488.58 229.27 249.31 478.58 679.00 376.85

AVG.V.C. 271.06

Against the paid up value of `10, the intrinsic value is showing continuous increased

trend. Therefore value creation-1 is also showing an excellent result. The market

capitalized value per share is also showing continuous increasing results. Therefore,

value creation-2 is showing an excellent result. As value creation-1 and value

creation-2 both are showing upward trend so the total value creation is reported as

` 478.58 in the year 06-07, in the year 04-05 the final dividend of 100% has been

declared by the company. In the year 05-06 and 06-07 the final dividend of 130%

has been declared. In the year 04-05 the bonus shares are issued in the ratio of 1:2.

In the year 07-08, the right shares have been issued in the ratio 1:5.

217

Graph - 7

Metal Industry [For 2001 - 02 to 2006-07]


VALUE CREATION

1 Hindalco Industries Ltd 111.74 3

2 Ispat Industries Ltd -0.44 5

3 NALCO Ltd. 135.55 2

4 SAIL LTD 29.17 4

5 Tata Steel Ltd. 271.06 1

-50

0

50

100

150

200

250

300

HindalcoIndustries Ltd

Ispat IndustriesLtd

NALCO Ltd. SAIL LTD Tata Steel Ltd.


218

The trend of average share holder value creation of selected companies of Metal

industry is shown in Graph No.7. Tata Iron & Steel Co. Ltd had obtained 1st rank and

NACL had obtained 2nd rank with maximum and minimum share holder value

creation.


Year wise total share holders value creation in % of selected companies of MetalIndustry

Table no. 48

PAID UPVALUE PER

SHARE

` 1 ` 10 ` 10 ` 10 ` 10

YEAR HINDALCOINDUSTRY

NACLO ISPAT IND.LTD

SAIL TISCO

2001-02 7109=00 472=80 -83=90 -48=80 915=40

2002-03 4846=00 841=50 -55=10 -14=30 1197=50

2003-04 9941=00 1251=20 9=10 222=90 2784=20

2004-05 11982=00 1541=80 47=70 360=50 2856=90

2005-06 14075=00 1833=50 23=30 472=10 3723=60

2006-07 19091=00 2192=20 32=40 757=90 4785=80

In Metal industry 5 companies are selected for the observation. In Hindalco Ind. Ltd,

the growth of share holder value creation is showing upward trend except in the

year 2002-2003. At the same time, the market price of this company shows

fluctuating result during the period of the study. The share holder value creation

and the market price both were highest in the year 2006-2007. In NACL Ltd the

share holder value creation and the market price both were having continuous

increasing growth. The share holder value creation shows fluctuation but the

market price shows continuous increase results. In the last observed year the

market price was in downward trend. In Tisco Ltd the growth of share holder value

creation and the market price both were in increasing trend and both were highest

219

in the year 2006-2007. In SAIL Ltd also the growth of share holder value creation

and the market price both in upward trend and both were highest in the year 2006-

2007.


Company wise mean, standard deviation, co-efficient of variation and rank of Metal

Industry

Table no. 49




1 Hindalco Ind. Ltd 111.74 3 46.52 4 41.63 1

2 N A C L 135.55 2 57.99 3 42.78 2

3 Ispat Ind. Ltd -0.44 5 4.81 1 -1088.69 -

4 S A I L 29.17 4 27.96 2 95.84 4

5 Tisco Ltd 271.06 1 134.61 5 49.66 3







ascending order.

The observation reveals that the mean of TISCO Ltd is the highest so it shows 1st

rank, NACL Ltd shows 2nd rank, Hindalco Industries Ltd shows 3rd rank, SAIL Ltd

shows 4th rank and the Ispat Ltd shows the last 5th rank. The mean of Ispat

Industries is in negative.

220








standard deviation and co-efficient of variation the Hindalco Industries is given 4th

and the 2nd rank, NACL Ltd shows the same 3rd rank, SAIL Ltd shows 2nd and 5th

rank, TISCO Ltd shows 5th and 4th rank respectively. In Ispat Ltd by standard

deviation it shows 1st rank but in the calculation of co-efficient of variation it shows

negative result so it can be considered as irregular trend and it cannot show any

rank.

221

5.1.8 Oil & Gas industry

[A] (i) BPCL


Table no.50


YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C

TOTAL HIGH LOW` ` ` ` ` ` ` `

01-02 133.25 10.00 203.11 123.25 69.87 193.11 336.65 120.00

02-03 158.25 10.00 241.76 148.25 83.52 231.76 351.40 168.10

03-04 194.99 10.00 347.69 184.99 152.70 337.69 532.60 222.00

04-05 212.95 10.00 388.44 202.95 175.49 378.44 519.00 215.05

05-06 304.65 10.00 396.90 294.65 92.26 386.90 469.80 340.00

06-07 284.16 10.00 329.06 274.16 44.90 319.06 502.95 287.05

AVG.V.C. 307.83

The Intrinsic value of the company is showing continuous increase trend as against

the paid up value of `10. the market capitalized value per share is also showing

continuous increasing trend except in the year 06-07. The value creation-1 is

showing upward trend except in the last observed year. The value creation -2 is

increases up to the first four observed years but it was decreases in the last two

observed years. The market price was the highest in the year 03-04 and it was

`532.60. the company has declared interim dividend of 50% final dividend of 115%

in the year 04-05. The company has declared second interim dividend of 75% in the

year 05-06, and final dividend of 25% in the year 06-07. The company has declared

bonus shares in the ratio of 1:1in the year 2000-2001. There is no declaration of

right shares during the observed period.

222

(II) HPCL


Table no.51


YEAR

INTRINSIC

VALUE

PAIDUP

VALUE

MARKETVALUE

PER SHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 174.07 10.00 166.11 164.07 -7.96 156.11 338.75 94.50

02-03 197.12 10.00 267.72 187.12 70.60 257.72 329.60 40.09

03-04 228.47 10.00 374.46 218.47 145.99 364.46 542.45 269.40

04-05 249.04 10.00 352.44 239.04 103.40 342.44 538.50 225.55

05-06 257.74 10.00 317.30 247.74 59.56 307.30 348.00 283.30

06-07 283.19 10.00 283.56 273.19 0.37 273.56 361.00 206.00

AVG.V.C. 283.60

The intrinsic value of the company per share is showing continuous increasing trend

therefore, the value creation-1 is also showing continuous increasing trend. The

intrinsic value per share is `174.07 in the year 01-02 and it is increases up to

`283.18 in the last observed year. The market capitalized value per share is showing

fluctuation during the period of the study and therefore value creation-2 is also

showing fluctuation during the period of the observation. The value creation-2 is

reported as negative in the year 01-02 because in this year the intrinsic value is

higher than the market capitalized value. The highest market price was reported as

`542.45 in the year 03-04. In the year 04-05, the interim and the final dividend at

the rate of 50% and 160% has been declared by the company. In the year 05-06

final dividend of 100% was declared and in the year 06-07 final as well as interim

dividend of 30% and 60% were declared by the company.

223

(III) IOCL


Table no. 52


YEARINTRINSIC

VALUE

PAIDUP

VALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 194.77 10.00 149.93 184.77 -44.85 139.93 149.27 68.03

02-03 241.81 10.00 219.67 231.81 -22.14 209.67 176.67 124.10

03-04 196.69 10.00 349.28 186.69 152.59 339.28 558.35 156.40

04-05 222.18 10.00 441.36 212.18 219.17 431.36 580.25 275.05

05-06 250.38 10.00 479.30 240.38 228.92 469.30 599.00 390.00

06-07 297.09 10.00 468.67 287.09 171.58 458.67 622.00 310.00

AVG.V.C. 341.37

The intrinsic value of this company was having upward valuation except in the year

03-04 and 04-05. Therefore, the value creation-1 is also showing the same result

and it was down during the year 03-04 and 04-05. The market capitalized value per

share was increases but it was going down during the year 06-07. The value

creation-2 was reported as negative during the first two observed years as due to

the higher intrinsic value as compare to the market capitalized value per share. The

total value creation goes down in the year 06-07. The market price of the share was

reported as highest in the year 06-07 at ` 622. In the year 04-05, the company has

declared interim dividend and final dividend at the rate of 45% and 160%

respectively. In the year 05-06 the final dividend of 100%was declared and in the

year 06-07, the final and interim dividend both were declared at the rate of 130%

and 60% respectively.

224

(IV) ONGC Ltd


Table no. 53


YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 206.97 10.00 158.11 196.97 -48.86 148.11 190.90 80.00

02-03 249.72 10.00 353.87 239.72 104.15 343.87 270.67 185.33

03-04 280.54 10.00 600.18 270.54 319.64 590.18 663.33 233.33

04-05 324.80 10.00 773.72 314.80 448.91 763.72 626.63 348.17

05-06 375.85 10.00 1025.75 365.85 649.90 1015.75 900.67 536.67

06-07 287.11 10.00 817.23 277.11 530.12 807.23 1009.33 620.33

AVG.V.C 611.48

This company shows ups and downs during the period of observation. It was the

highest in the year 05-06 at ` 375.85. The value creation-1 is showing continuous

increase position except in the last observed year. The market capitalized value per

share was showing continuous high trend but in the last observed year it was goes

down. The value creation-2 was reported as negative in the year 01-02 because the

market capitalized value per share was less than the intrinsic value. It can be said

that the investors are not attracted during the beginning period of the company. The

market price has an excellent result because it was `190.90 in the year 01-02 and in

the year 06-07 it was 1009.33` There are two interim and one final dividend of

140% 200% and 100% respectively has been declared by the company. In the year

06-07, the interim dividend of 250% and final dividend of 200% has been declared.

225

In the year 06-07, the interim final dividend of 180% and 200% has been declared

respectively and bonus shares in the ratio of 1:2 had been declared.

(V) Reliance industries Ltd.


Table no. 54


YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 263.98 10.00 315.78 253.98 51.80 305.78 406.50 204.10

02-03 217.26 10.00 236.35 207.26 19.09 226.35 312.95 218.05

03-04 246.80 10.00 429.26 236.80 182.46 419.26 610.45 258.00

04-05 290.03 10.00 508.58 280.03 218.56 498.58 600.90 382.00

05-06 357.49 10.00 709.31 347.49 351.82 699.31 937.50 512.10

06-07 459.13 10.00 1151.25 449.13 692.12 1141.25 1445.00 791.05

AVG.V.C. 548.42

This company’s intrinsic value per share was reported as increased except in the

year 02-03 and 03-04. The market capitalized value per share was showing

continuous increase result except in the year 02-03 so it can be reflect that the

image of the company is good in the mind of investors. The value creation-1 goes

down during the year 02-03 and 03-04.

The value creation-2 and value creation both were reduces during the second

observed year. The market price was also lowest in the same year and it was highest

in the year 06-07. The final dividend has been declared by the company in

continuous three observed years at the rate of 52.50%, 75% and 100% respectively

226

in the year 04-05, 05-06 and 06-07. There were no issues of right shares and bonus

shares in the observed years.

227

Graph - 8

Oil & Gas Industry [For 2001 - 02 to 2006-07]


VALUE CREATION

1 BPCL 307.83 4

2 HPCL 283.60 5

3 IOC LTD 341.37 3

4 ONGC LTD 611.48 1

5 RELIANCE IND. LTD 548.42 2

0

100

200

300

400

500

600

700

BPCL HPCL IOC LTD ONGC LTD RELIANCE IND.LTD


228

The trend of average share holder value creation of selected companies of Oil & Gas

industry is shown in Graph No.8. ONGC Ltd had obtained 1st rank and Reliance

Industries Ltd. had obtained 2nd rank with maximum and minimum share holder

value creation.


Year wise total share holders value creation in % of selected companies of Oil & Gas

Industry

Table no.55

PAID UPVALUE PER

SHARE

` 10 ` 10 ` 10 ` 10 ` 10

YEAR B P C L H P C L I O C L O N G C RELIANCEIND. LTD

2001-02 1931=30 3387=50 1399=30 1481=00 3057=80

2002-03 2317=60 3296=00 2096=70 3438=70 2263=50

2003-04 3376=90 5424=50 3392=80 5901=80 4192=60

2004-05 3784=40 5385=00 4313=60 7637=20 4985=80

2005-06 3869=00 3480=00 4693=00 10157=50 6993=10

2006-07 3190=60 3610=00 4586=70 8072=30 11412=50

In this industry out of selected 5 companies the growth of BPCL shows upward

trend upto the year 2005-2006 of the share holder value creation. In the year 2006-

2007 it goes down. The market price of the same company shows upward trend up

to the year 2003-2004 but afterwards it goes down but in the year 2006-2007 it is

again in upward trend. In HPCL Ltd the growth of share holder value creation and

the market price both in upward trend and both were highest in the year 2003-

2004. The share holder value creation of IOCL Ltd shows continuous increase trend

except in the year 2006-2007. The market price of this company shows upward

trend throughout the whole period of the study but in the year 2006-2007 when the

229

share holder value creation was decrease the market price was increase. In ONGC

Ltd the share holder value creation was in upward trend except in the year 2006-

2007. At the same time the market price was high for the whole period of the study.

The Reliance Industries shows positive trend of share holder value creation except

in the year 2002-2003. The market price of this company shows fluctuation but in

the last year that is 2006-2007 it shows the highest results.

[C] Measurement of Consistency

Company wise mean, standard deviation, co-efficient of variation and rank of Oil &

Gas Industry

Table no. 56




1 Bharat Petro Corp.Ltd 307.83 4 72.11 2 23.43 1

2 Hindustan Petro Corp.Ltd

283.60 5 67.81 1 23.91 2

3 Indian Oil Corp.Ltd 341.37 3 172.75 3 50.61 4

4 Oil & Natural GasCo.Ltd 611.48 1 292.04 4 47.76 3

5 Reliance Ind. Ltd 548.42 2 304.41 5 55.51 5







ascending order.

230

The observation reveals that the mean of ONGC Ltd is the highest so it shows 1st

rank, Reliance Industries Ltd shows 2nd rank, IOCL shows 3rd rank, BPCL shows 4th

rank and the HPCL shows the last 5th rank.







of limitation is removed by the use of co-efficient of variation. By the analysis of

standard deviation and co-efficient of variation the BPCL is having 2nd and 1st rank,

HPCL is having 1st and 2nd rank, IOCL is having 3rd and 4th rank, ONGC is having 4th

and 3rd rank and Reliance Ltd is having the same 5th rank respectively.

231


[A] (i) ABB Ltd.


Table no. 57


YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 24.17 2.00 45.27 22.17 21.10 43.27 58.39 35.60

02-03 28.51 2.00 53.68 26.51 25.17 51.68 66.00 42.62

03-04 34.20 2.00 100.27 32.20 66.07 98.27 164.00 58.60

04-05 42.67 2.00 170.78 40.67 128.11 168.78 265.80 112.20

05-06 56.43 2.00 358.05 54.43 301.62 356.05 620.00 230.25

06-07 76.75 2.00 621.52 74.75 544.77 619.52 800.00 384.00

AVG.V.C. 222.93

As against the paid up value of `2, the intrinsic value per share of the company

shows continuous increasing result. The market capitalized value per share also

shows continuous high growth. The value creation-1 is the difference between

intrinsic values and paid up value, it is also showing upward trend. The value

creation-2 and total value creation both are having an excellent. The economic

efficiency of the company was reported well and the company is able to earn the

interest of the investors. The company has declared final dividend of 70% in the

year 05-06 and 80% in the year 06-07. The Company had not issue any bonus

shares or right shares during the period of observation.

232

(II) BHEL


Table no. 58


YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 172.43 10.00 153.86 162.43 -18.57 143.86 98.15 52.25

02-03 192.36 10.00 175.78 182.36 -16.58 165.78 113.13 72.00

03-04 215.64 10.00 396.31 205.64 180.67 386.31 320.70 110.88

04-05 246.24 10.00 629.47 236.24 383.24 619.47 441.50 187.50

05-06 298.31 10.00 1248.22 288.31 949.92 1238.22 1140.00 377.50

06-07 359.06 10.00 2231.20 349.06 1872.14 2221.20 1334.00 765.60

AVG.V.C. 795.81

The intrinsic value of the company shows continuous increase trend. The market

capitalized value per share was also having an increasing trend. The value creation-

1 is noted at in increasing trend because against the paid up value of `10, the

intrinsic value of the company was high. The value creation-2 was reported negative

in the first two observed years. In the first two observed years, as compare to

market capitalized value per share was high, so it can be said that the company is

not able to earn the interest of the investors in the beginning. From the third year of

the observation it is in increasing trend. The market value per share was ` 98.15 in

the year 01-02 but it was `1334 in the last observation year. The company is paying

interim dividend of 40% and final dividend of 45% in the year 05-06 while in the

year 06-0 the interim dividend of 85% and final dividend of 20% was declared.

233

(iii) Neyveli Lignite Ltd.


Table no. 59

1 2 3 4 5 6 7 8MARKET

PRICE

YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C.


01-02 30.17 10.00 11.43 20.17 -18.74 1.43 25.20 8.00

02-03 35.45 10.00 25.04 25.45 -10.41 15.04 37.65 16.80

03-04 40.68 10.00 47.05 30.68 6.37 37.05 85.00 26.00

04-05 45.74 10.00 57.94 35.74 12.20 47.94 81.60 38.05

05-06 47.63 10.00 76.27 37.63 28.64 66.27 89.90 65.10

06-07 49.53 10.00 63.44 39.53 13.91 53.44 100.25 46.55

AVG.V.C. 36.83

In this company also the intrinsic value per share was in continuous increasing

trend and it will be same in value creation-1 also. The market capitalized value was

also in upward trend but during the last year of the observation it is showing

decreasing trend. The value creation-2 was reported negative in the first two

observed years than after it is increases but in the last year of the observation it

goes down. The total value creation is `1.43 in the year 01-02, than after it is

increases up to `66.27 in the year 05-06 and after that it is decrease in the year 06-

07 at `53.44. The market price was reported at `100.25 in the year 06-07. In the

year 04-05, the interim dividend of 40% and final dividend of 50% was declared. In

the year 05-06, the interim dividend of 45% and final dividend of 100% were

declared. In the year 06-07, the final dividend of 190% was declared.

234

(iv) Siemens Ltd.


Table no. 60


YEARINTRINSIC

VALUE

PAIDUP

VALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 22.92 2.00 43.10 20.92 20.19 41.10 30.00 17.20

02-03 29.63 2.00 58.96 27.63 29.32 56.96 34.38 23.60

03-04 36.58 2.00 120.24 34.58 83.66 118.24 110.00 28.10

04-05 47.12 2.00 231.27 45.12 184.15 229.27 179.70 75.50

05-06 64.48 2.00 573.00 62.48 508.53 571.00 590.60 167.20

06-07 94.36 2.00 1073.45 92.36 979.09 1071.45 704.00 370.55

AVG.V.C. 348.00

Against the paid up value of `20, the intrinsic value of the company shows

continuous increasing trend. Therefore, value creation-1 is also in the same trend.

The value creation-1 was `20.92 in the last observed year. The market capitalized

value per share is also showing good results and therefore, the value creation-2 is

having upward trend. The value creation -2 was ` 20.19 in the first observed year

and `979.09 in The last observed year. The total value creation and the market price

per share both are showing good results. The company had declared interim

dividend at the rate of 6% in the year 04-05and in the year 05-06 two interim

dividend and final dividend were declared at the rate of 14%, 6% and 14%

respectively. There is no information about declaration of bonus shares as well as

right shares.

235

(v) Tata Power Ltd.


Table no. 61


YEARINTRINSIC

VALUE

PAIDUP

VALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 209.62 10.00 121.48 199.62 -88.14 111.48 154.70 90.00

02-03 234.95 10.00 110.98 224.95 -123.97 100.98 138.25 92.00

03-04 252.26 10.00 230.74 242.26 -21.52 220.74 428.00 113.10

04-05 256.26 10.00 325.85 246.26 69.58 315.85 425.00 212.60

05-06 277.81 10.00 433.02 267.81 155.21 423.02 605.55 325.00

06-07 302.38 10.00 534.89 292.38 232.51 524.89 640.00 390.00

AVG.V.C. 282.83

The intrinsic value is showing upward trend during the observed period. Therefore,

value creation-1 was also showing the same results. The market capitalized value

per share was having upward trend except in the second year of the observation.

The value creation-2 was reported as negative in the first three observed year but

after that it was having an increasing trend. The market price was highest in the

year 06-07 at `640. The final dividend of 70%, 75% and 85% were declared by the

company in the year 04-05, 05-06 and 06-07 respectively.

236

Graph - 9

Power Industry [For 2001 - 02 to 2006-07]


VALUE CREATION

1 ABB Ltd 222.93 4

2 BHEL 795.81 1

3 Neyveli Lignite Ltd 36.83 5

4 Siemens Ltd 348.00 2

5 Tata Power Ltd 282.83 3

0

100

200

300

400

500

600

700

800

900

ABB Ltd BHEL Neyveli LigniteLtd

Siemens Ltd Tata Power Ltd


237

The trend of average share holder value creation of selected companies of Power

Industry is shown in Graph No.9. BHEL had obtained 1st rank and Siemens Ltd. had

obtained 2nd rank with maximum and minimum share holder value creation.


Year wise total share holders value creation in % of selected companies of Power

Industry

Table no.62

PAID UPVALUE PER

SHARE

` 10 ` 10 ` 10 ` 10 ` 10

YEAR ABB LTD BHEL NEYVELILIGNITE

SIEMENSLTD

TATAPOWER LTD

2001-02 2163=50 1438=60 14=30 2055=00 1114=80

2002-03 2584=00 1657=80 150=40 2848=00 1009=80

2003-04 4913=50 3863=10 370=50 5912=00 2207=40

2004-05 8439=00 6194=70 479=40 11463=50 3158=50

2005-06 17802=50 12382=20 662=70 28550=00 4230=20

2006-07 30976=00 22212=00 534=40 53572=50 5248=90

In this industry the growth of ABB Ltd, BHEL Ltd and Siemens Ltd were excellent.

The growth of share holder value creation and the market price both in upward

trend and both were highest in the year 2006-2007 in all these 3 companies. It

shows the perception of the investors is very good in these types of companies. The

other two companies of the same industry namely Neyveli Lignite and Tata Power

Ltd are showing fluctuation in the results. In Neyveli Lignite Ltd the growth of share

holder value creation shows downward trend but the market price shows

fluctuation during the period of the study. In Tata Power Ltd the share holder value

creation shows continuous increase trend except in the year 2002-2003. The market

price is having fluctuation in the result. It goes down in the year 2002-2003 and

2004-2005 but afterwards it is in increasing trend.

238


Company wise mean, standard deviation, co-efficient of variation and rank of Power

Industry

Table no. 63




1 ABB Ltd 222.93 4 206.19 3 92.49 4

2 B H E L 795.81 1 735.78 5 92.46 3

3 Neyveli Lignite Ltd 36.86 5 22.34 1 60.60 2

4 Siemens Ltd 348.00 2 369.43 4 106.16 5

5 Tata Power Ltd 282.83 3 155.79 2 55.08 1







ascending order.

The observation reveals that the mean of BHEL Ltd is the highest so it shows 1st

rank, Reliance Ltd shows 2nd rank, Tata Power shows 3rd rank, ABB Ltd shows 4th

rank and the Neyveli Lignite shows the last 5th rank.






239



standard deviation and co-efficient of variation the ABB Ltd shows 3rd and 4th rank,

BHEL shows 5th and 3rd rank, Neyveli Lignite shows 1st and 2nd rank, Siemens Ltd

shows 4th and 5th rank and Tata Power Ltd shows 2nd and 1st rank respectively.

240


[A] (i) Anant Raj Industries Ltd.


Table no. 64


YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 2.14 2.00 0.58 0.14 -1.57 -1.42 0.71 0.50

02-03 2.27 2.00 0.80 0.27 -1.47 -1.20 138.00 0.35

03-04 2.25 2.00 57.02 0.25 54.77 55.02 1.29 0.39

04-05 2.28 2.00 1.50 0.28 -0.78 -0.50 3.56 0.60

05-06 8.28 2.00 48.48 6.28 40.20 46.48 138.70 3.12

06-07 47.55 2.00 123.60 45.55 76.04 121.60 294.98 117.32

AVG.V.C. 36.66

The intrinsic value of the company shows continuous increasing position except in the

second year of the observation. Against the paid up value of `2, the average intrinsic

value per share was `10.78. The market capitalized value per share was `0.58 in the

first observed year than after it was increasing up to `0.80 per share in the second

observed year and in the third observed year it goes down to `0.57. After third year it

was increasing up to last year that is `123.60.The value creation-1 has an average

growth. The value creation-1 was negative up to first two observed years but after that

it was having an excellent growth in the third observed year but after than it is

increases up to the last observed year. The total value creation was also having same

result. The market price was very low in the first observed year nut in the last

241

observed year it was `294.98. The company had declared final dividend at the rate of

25% in the year 06-07. There was no issue of any bonus shares or right shares.

(ii) Ansal properties Ltd.


Table no. 65


YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 39.28 5.00 4.09 34.28 -35.19 -0.91 1.67 0.93

02-03 43.02 5.00 5.42 38.02 -37.60 0.42 2.81 1.23

03-04 44.84 5.00 8.69 39.84 -36.14 3.69 7.82 1.53

04-05 45.27 5.00 27.73 40.27 -17.53 22.73 29.99 2.84

05-06 40.55 5.00 149.38 35.55 108.82 144.38 208.68 25.80

06-07 164.19 5.00 524.46 159.19 360.28 519.46 567.23 153.50

AVG.V.C. 114.96

The intrinsic value per share was `39.28 in the first observed year than after it

increases up to the year 04-05 at `45.27. In the year 05-06, it was goes down to `40.55

and in the year 06-07 it was `164.18. The market capitalized value per share was `4.09

in the first observed year than after it was increases up to the last observed year at

`524.46. The value creation-1 was increases up to the first four years of the

observation but in the fifth year of the observation it was `35.55 and in the year 06-07,

it was `159.19. the value creation-2 was negative up to first four observed years and

after that it was increases during the last two years of the observation. The market

value was lower in the first observed year and it was increased continuously during

242

the last year of the observation. The company has declared interim dividend of 7.50%

and final dividend of 10% in the year 04-05. In the year 05-06 and 06-07, the final

dividend of 20% and 5% respectively. In the year 06-07, the bonus shares were

declared in the ratio 1:1.

(iii) Mahindra Lifespace Developers Ltd.


Table no. 66


YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 63.97 10.00 18.36 53.97 -45.60 8.36 27.10 15.00

02-03 65.26 10.00 16.31 55.26 -48.95 6.31 25.10 10.45

03-04 68.48 10.00 20.39 58.48 -48.09 10.39 40.00 10.95

04-05 62.76 10.00 47.33 52.76 -15.43 37.33 150.40 19.00

05-06 62.13 10.00 264.72 52.13 202.59 254.72 535.00 112.50

06-07 192.93 10.00 616.77 182.93 423.83 606.77 1300.00 375.00

AVG.V.C. 153.98

The intrinsic value of the company was continues increased except in the year 04-05

and 05-06. The market capitalized value per share was also showing continuously

increasing trend. The value creation-1 is in increasing trend up to the observation but

in the next two years it goes down and in the last observed year it was showing

increasing trend. The Value creation-2 was negative in the first four observed years

and then after it increases in the last two observed years. The total value creation is

showing upward trend. The market price was `27.1 in the year 01-02 and it increases

243

up to `1300 in the year 06-07. The company has declared final dividend at rate of 10%

in the year 06-07. There is no information related to the issue of bonus shares and

right shares.

(iv) Peninsula Land Ltd.


Table no. 67

1 2 3 4 5 6 7 8MARKET

PRICE

YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 7.32 2.00 1.28 5.32 -6.05 -0.72 1.84 0.81

02-03 0.76 2.00 2.05 -1.24 1.29 0.05 3.50 1.20

03-04 -13.63 2.00 5.06 -15.63 18.69 3.06 11.48 1.24

04-05 -14.33 2.00 12.47 -16.33 26.80 10.47 33.05 6.20

05-06 4.29 2.00 27.31 2.29 23.02 25.31 132.25 22.80

06-07 17.27 2.00 98.22 15.27 80.95 96.22 193.37 57.17

AVG.V.C. 22.40

The intrinsic value of the company in the first observed year was `7.32 but in the

second year of the observation it was `0.76, after that in the next two years of the

observation, it is in negative and after two years of the observation it was in

increasing trend. The market capitalized value per share is having continuous

increasing trend. The value creation-1 is `5.32 in the year 01-02 and for the next three

years it shows negative results, after that in the last two observed years it is having

good growth. From the value creation-1, it can be said that the economic efficiency of

the company is very weak. The value cration-2 and the total value creation both were

244

negative in the first observed year but after that it is in increasing trend. The company

had declared final dividend at the rate of 25% in the year 06-07. There is no

information about issue of the any bonus shares or right shares.

(v) Unitech Ltd.


Table no. 68


YEARINTRINSIC

VALUEPAID UPVALUE

MARKETVALUE

PERSHARE

(2-3)V.C.(I)

(4-2)V.C.(II)

(4-3)V.C


01-02 20.90 2.00 8.21 18.90 -12.69 6.21 0.42 0.22

02-03 22.15 2.00 9.52 20.15 -12.63 7.52 0.45 0.28

03-04 24.13 2.00 14.34 22.13 -9.79 12.34 1.06 0.31

04-05 27.85 2.00 39.02 25.85 11.18 37.02 2.85 0.67

05-06 35.96 2.00 174.82 33.96 138.87 172.82 21.43 2.28

06-07 14.30 2.00 299.63 12.30 285.33 297.63 272.20 20.77

AVG.V.C. 88.92

The intrinsic value of the company per share was showing continuous increased trend.

The market capitalized value per share was also showing the same trend. The value

creation-1 is also having an increasing trend. The value creation-2 was reported as

negative in the first three years of the observation but after that it shows increased

result. The total value creation is showing continuous increasing trend. The market

price was reported as `0.42 in the year 01-02 and after that it increase up to `272.20

in the year 06-07. The company had declared the final dividend of 30%, 40% and 10 in

the year 04-05, 05-06 and 06-07 respectively. There is no information related to the

any bonus shares or right shares.

245

Graph - 10

Realty Industry [For 2001 - 02 to 2006-07]


VALUE CREATION

1 Anant Raj Industries Ltd 36.66 4

2 Ansal Prop. & Infra Ltd 114.96 2

3 Mahindra Lifespace Dev. 153.98 1

4 Peninsula Land Ltd 22.40 5

5 Unitech Ltd 88.92 3

0

20

40

60

80

100

120

140

160

180

Anant RajIndustries Ltd

Ansal Prop. &Infra Ltd

MahindraLifespace Dev.

Peninsula LandLtd

Unitech Ltd


The trend of average share holder value creation of selected companies of Realty

industry is shown in Graph No.10. Mahindra Life Space Developers Ltd had obtained

246

1st rank and Ansal Properties & Infra Ltd had obtained 2nd rank with maximum and

minimum share holder value creation.


Year wise total share holders value creation in % of selected companies of Realty

Industry

Table no. 69

PAID UPVALUE PER

SHARE

` 2 ` 5 ` 10 ` 2 ` 2

YEAR ANANT RAJIND. LTD

ANSALPROPERTIES

MAHINDRALIFE SPACE

PENINSULALAND

UNITECHLTD

2001-02 -71=00 -18=20 83=60 -36=00 310=50

2002-03 -60=00 8=40 63=10 2=50 376=00

2003-04 251=00 73=80 103=90 153=00 617=00

2004-05 -25=00 454=60 373=30 523=50 1851=00

2005-06 2324=00 2887=60 2547=20 1265=50 8641=00

2006-07 6080=00 10389=20 6067=70 4811=00 14881=50

In Realty industry total 5 companies are selected. In Anant Raj Industries Ltd the

growth of share holder value creation was in increasing trend except in the year

2003-2004. The market price of the company shows fluctuation during the whole

observed period. The market price was highest in the year 2006-2007 and at the

same time the market price was also high. In Ansal Properties Ltd the growths of

share holder value creation and the market price both in upward trend. In Mahindra

Lifespace Developers Ltd the growths of share holder value creation and the market

price both in upward trend. In Peninsula Land Ltd and Unitech Ltd the growths of

share holder value creation and the market price both in upward trend. The market

price was the highest in the year 2006-2007 in all these 5 companies.

247


Company wise mean, standard deviation, co-efficient of variation and rank of Realty

Industry

Table no. 70




1 Anant Raj Ind. Ltd 36.66 4 44.56 2 121.53 1

2 Ansal Properties Ltd 114.96 2 187.94 4 163.48 5

3 Mahinra Life Space Ltd 153.98 1 220.76 5 143.37 3

4 Peninsula Land Ltd 22.40 5 34.18 1 152.60 4

5 Unitech Ltd 88.93 3 110.02 3 123.72 2







ascending order.

The observation reveals that the mean of Mahindra Lifespace Developers Ltd is the

highest so it shows 1st rank, Ansal Properties Ltd shows 2nd rank, Unitech Ltd shows

3rd rank, Anant Raj Industries Ltd shows 4th rank and the Peninsula Land Ltd shows

the last 5th rank.





248




standard deviation and co-efficient of variation the Anant Raj Industries Ltd shows

2nd and 1st rank, Ansal Properties shows 4th and 5th rank, Mahindra Lifespace

Developers Ltd shows 5th and 3rd rank, Peninsula Land shows 1st and 4th rank and

Unitech Ltd shows 3rd and the 2nd rank respectively.

249

5.2 Inter Industry Comparison


Ranks on the basis of co-efficient of variation of all companies of Automobile

Industry

Table No. 71

S.NO. NAME OF INDUSTRY NAME OF COMPANY RANK

1 Automobile 1 Mahindra & Mahindra Ltd. 12 Hero Honda Motors Ltd. 143 Ashok Leyland Ltd. 254 Tata Motors Ltd. 295 Bharat Forge Ltd. 33

Basically, selected Indian Companies from this industry produces different products.

On examination of consistency of share holder value creation, there are no similar

results of selected companies. All companies have significant gap in their

performance. It is noticed that Mahindra company ltd. has 1st rank from the view

point of consistency amongst all selected companies of this study. The lowest rank

within the industry goes to Bharat Forge Ltd. i.e. 33rd rank. Three companies have

their ranks within first 30 companies.

The result of share holder value creation is found to be satisfactory.

From the view point of average shareholder value creation Hero Honda Motors Ltd

had obtained first rank while Ashok Leyland Ltd had obtained fifth rank with in the

industry but when comprehensive rank from the view point of consistency had

observed Mahindra & Mahindra Ltd had performed well.

250

5.2.2 Banking Industry

Ranks on the basis of co-efficient of variation of all companies of Banking Industry

Table no. 72

S.NO. NAME OF INDUSTRY NAME OF COMPANY RANK2 Banking 1 Bank of Baroda 21

2 Bank of India 313 Canara bank 304 State bank of India 225 Union bank of India 36

From the table no. 72, in this industry, out of selected 5 banks, all banks shows some

difference in their results. From the view point of consistency, the Bank of Baroda

shows 21st rank while State Bank of India shows the next rank i.e. 22nd rank. The

consistency of another two banks shows average rank. The performance of the

Union Bank of India shows less consistency as compare to the others and it is having

36th rank.

But when average shareholder value creation is measured State Bank of India had

established first rank with in the industry. While Bank of Baroda could manage to

acquire second rank with in the industry. In the reference of consistency Bank of

Baroda is found to be superior over State Bank of India.

251


Ranks on the basis of co-efficient of variation of all companies of Capital Goods

Industry

Table no. 73


3 Capital Goods 1 Elecon Engg. Ltd. 472 Gammon India Ltd. 40

3Reliance IndustriesLtd.

19

4 L & T Ltd. 32

5Walchandnagar Ind.Ltd.

42

From table no. 73, out of selected 5 companies, the Reliance Ltd. Is having 19th rank

which shows the level of consistency is good. The L & T Ltd. Is having 32nd rank

amongst first 50 companies. The other three companies namely Gammon India Ltd,

Walchandnagar Ind. Ltd and Elecon Engg. Ltd. Shows 40th, 42nd and 47th rank

respectively.

The results of the share holder value creation shows less consistency amongst the

companies of same industry.

When the average share holder value creation is measured than Reliance Ind. Ltd

had obtained 1st rank within the industry while L&T Ltd had obtained 2nd rank with

in the industry. So, from the view point of consistency and average share holder

value creation both companies are having similar results.

252

5.2.4 FMCG Industry

Ranks on the basis of co-efficient of variation of all companies of FMCG Industry

Table no. 74


4 FMCG 1 Hindustan Uniliver Ltd. 42 Nestle India Ltd. 9

3Colgate Palmolive IndiaLtd.

15

4 ITC Ltd. 115 Godrej Con. Prod. Ltd. 34

From table no. 74, out of selected 5 companies, the Hindustan Uniliver is having 4th

rank and Godrej Cons. Prod. Ltd. Is having 34th rank. The other 3 companies are

lying in between these two companies. The consistency of this industry is

maintained. The result of the share holder value creation shows satisfactory.

But when average share holder value creation is measured Nestle India Ltd had

obtained 1st rank within the industry. While Colgate Palmolive (I) Ltd had obtained

2nd rank. While from the view point of consistency Hindustan Uniliver Ltd is found

to be suprerior over Nestle India Ltd.

253


Ranks on the basis of co-efficient of variation of all companies of Healthcare

Industry

Table no. 75


5 Healthcare 1Dr. Reddy’s LaboratoryLtd.

3

2 Cipla Ltd. 73 Ranbaxy Lab. Ltd. 84 Apollo Hospitals Ltd. 265 Lupin Ltd. 27

From table no. 75, out of selected 5 companies, the Dr. Reddy’s Lab Ltd. Is having 3rd

rank, Cipla Ltd. Is having 7th rank but Apollo Hospitals and Lupin Ltd. Shows 26th

and 27th rank respectively. From the view point of consistency this industry shows

the best performance in share holder value creation.

The average share holder value creation shows that Cipla Ltd is having 1st rank

within the industry. While Ranbaxy Lab. Ltd is having 2nd rank with in the industry.

But from the view point of consistency Dr. Reddy’s Laboratories Ltd had performed

well in compare to the Cipla Ltd.

254

5.2.6 IT Industry

Ranks on the basis of co-efficient of variation of all companies of I.T Industry

Table no. 76


6 I.T Industry 1 Moserbaer Ltd. 22 Infosys Ltd. 103 Wipro Ltd. 164 HCL Technologies Ltd. 35

5Financial TechnologiesLtd.

45

From table no. 76, out of selected 5 companies, from the view point of consistency,

the Moser Baer shows 2nd rank and Infosys Ltd. Shows 10th rank. The Wipro Ltd.

Shows 16th rank. The other two companies of the same industry are found to be less

consistent. The HCL is having 35th rank and Financial Technologies is having 45th

rank amongst total selected 50 companies.

When the average share holder value creation is measured Infosys Technologies Ltd

is having 1st rank and Wipro Ltd is having 2nd rank with in the industry. But from

view point of consistency Moserbare Ltd is found to be superior over Infosys Ltd.

255


Ranks on the basis of co-efficient of variation of all companies of Metal Industry

Table no. 77


7 Metal 1 Hindalco Ind Ltd. 122 NACL Ltd. 133 TISCO Ltd. 184 SAIL Ltd. 395 Ispat Ltd. (Negative) ---

From table no. 77, out of selected 5 companies, the Hindalco Ind Ltd. shows 12th

rank and NACL shows 13th rank and TISCO shows 18th rank. The consistency of

these companies is found to be good. The SAIL is having 39th rank which shows less

consistency as compare to other companies. The Ispat Ltd. shows its result in

negative so it can’t be taken for analysis.

When the average share holder value creation is measured, TISCO is having 1st rank

and NACL is having 2nd rank with in the industry. From the view point of consistency

Hindalco Ltd is found superior in compare to NACL.

256

5.2.8 Oil and Gas Industry

Ranks on the basis of co-efficient of variation of all companies of Oil and Gas

Industry

Table no. 78


8 Oil and Gas 1 BPCL 52 HPCL 63 ONGC 174 Reliance Ind. Ltd. 245 IOCL 20

From table no. 78, out of selected 5 companies, BPCL is having 5th, HPCL is having

6th, ONGC is having 17th’ IOCL is having 20th and Reliance Ind. Ltd. is having 24th

rank. The performance of this industry is excellent. The consistency is maintained in

these companies. The shareholder value creation of these industry is found to be

satisfactory.

When the average share holder value creation is measured, ONGC Ltd is having 1st

rank and Reliance Ind. Ltd is having 2nd rank with in the industry. From the view

point of consistency BPCL & HPCL had performed well.

257


Ranks on the basis of co-efficient of variation of all companies of Power Industry

Table no. 79


9 Power 1 Tata Power Ltd. 232 Neyveli Lignite Ltd 283 BHEL 374 ABB Ltd 385 Siemens Ltd. 41

From table no. 79, out of selected 5 companies, Tata Power is having 23rd rank,

Neyveli Lignite shows 28th rank, BHEL is having 37th, ABB Ltd is having 38th while

Siemens Ltd. shows 41st rank. The consistency of these companies shows average

performance.

When the average share holder value creation is measured, BHEL is having 1st rank

and Siemens Ltd is having 2nd rank with in the industry. From the view point of

consistency Tata Power Ltd and Neyveli Lignite Ltd had performed well.

258


Ranks on the basis of co-efficient of variation of all companies of Realty Industry

Table no. 80


10 Realty 1 Anant Raj Ind. Ltd. 432 Unitech Ltd. 443 Mahindra Lifespace Ltd. 464 Peninsula Land 485 Ansal Properties Ltd 49

From table no. 80, out of selected 5 companies, Anant Raj Ind. Ltd. is having 43rd

rank, Unitech Ltd. is having 44th rank, Mahindra Lifespace Ltd. is having 46th rank,

Peninsula Land Ltd. is having 48th rank and Ansal Properties is having 49th rank. The

consistency of this industry is very weak. All companies are having rank after 40

amongst selected 50 companies. The result of share holder value creation is found

not to be satisfactory.

When the average share holder value creation is measured, Mahindra Life Space

Developers Ltd is having 1st rank and Ansal Properties Ltd is having 2nd rank with in

the industry. From the view point of consistency Anant Raj Indutries Ltd and

Unitech Ltd had performed well.

259

Findings :-

On investigation of consistency about share holder value creation for different

industries, it is found that companies within the industry do not have lower gap

amongst their ranks. It does not mean that companies of different industries could

manage to acquire required status.

During observation, it is found that all industries except Realty Industry have mix

trend in the context of consistency.

Realty Industry had shown disappointed performance, because all companies of this

industry has ranks 40 onwards. It shows that the degree of consistency of share

holder value creation is found to be weak in this industry.

The following are the probable reasons for not having uniform consistency for share

holder value creation.

1. Policy of the management.

2. Economic policy of the country.

3. Political factors.

4. International factors

5. Market share of the company.

6. Policy of the competitors.

7. Internal disputes of the company. Etc.

These kinds of issues are to be further investigated to arrive at final conclusion.

Time constraint does not allow undertaking these kind of investigation.

260

5.3 Multiple Regression Analysis :

5.3.1 Model 1 – Share Holder Value Creation 1 (Y1)

Table no. 81

Model Summary(b)

Model R R SquareAdjusted R

SquareStd. Error of the

EstimateDurbin-Watson

1 .717(a) .515 .489 74.64740 .556

a Predictors: (Constant), X15, X1, X5, X2, X3, X13, X14, X12, X9, X8, X10, X4, X11, X6,X7

b Dependent Variable: Y1

Table No. 82

ANOVA(b)

ModelSum of

Squaresdf

MeanSquare

F Sig.

1

Regression 1679067.958 15 111937.864 20.089 .000(a)

Residual 1582514.504 284 5572.234

Total 3261582.462 299



261

Table no. 83

Coefficients(a)

UnstandardizedCoefficients

StandardizedCoefficients t Sig.

Model B Std. Error Beta

1

(Constant) 64.778 5.386 12.026 .000

X1 -2.008E-06 .000 -.003 -.047 .963

X2 2.493E-04 .000 .123 2.335 .020

X3 1.463E-03 .009 .048 .158 .874

X4 -9.538E-03 .011 -.265 -.869 .386

X5 1.402E-03 .004 .458 .340 .734

X6 4.700E-03 .005 .775 .881 .379

X7 -2.568E-03 .002 -1.456 -1.216 .225

X8 1.089E-03 .002 .249 .440 .660

X9 -9.837E-03 .006 -.490 -1.786 .075

X10 1.367E-03 .002 .455 .755 .451

X11 -2.650E-03 .001 -.840 -2.867 .004

X12 1.912E-03 .001 .700 2.049 .041

X13 3.649E-05 .000 .045 .481 .631

X14 1.190E-02 .003 .870 3.896 .000

X15 2.496E-04 .002 .141 .148 .882

a Dependent Variable: Y1

Under this model Y1 is depended variable and X1, X2_ _ _X15 are independent

variables. For analysis purpose computerized multiple regression analysis is done.

where the following observations are noticed.

1. R2 value is found to be 0.515 which means that in the given situation all the

selected variables have significant impact of their changes on dependent

variable Y1. It means that 51.5% variation in Y1 is expected by the

independent variables. The value of P is 0.000 which is less than 0.05, so the

model is appropriate at 5% level of significance.

262

2. On investigation it is found that the value obtained by Durbin – Waston (DW)

test is 0.556 which is less than 1. Therefore, it can be said that, there is a

positive correlation between the independent variables.

3. X2, X11, X12 and X14 are not significant factors which are highly influenced

on Y1 because P value of these factors are 0.020, 0.004, 0.041 and 0.000

respectively which are less than 0.05.

5.3.2 Model 2 – Share Holder Value Creation – 2 (Y2)

Table no. 84

Model Summary(b)

Model RR

SquareAdjusted R



1 .155(a) .024 -.028 895.56123 .470



Table no. 85

ANOVA(b)

Model Sum of Squares df Mean Square F Sig.

1

Regression 5580882.571 15 372058.838 .464 .957(a)

Residual 227776498.506 284 802029.924

Total 233357381.077 299



263

Table no. 86

Coefficients(a)




1

(Constant) 356.061 64.621 5.510 .000

X1 1.494E-04 .001 .024 .289 .773

X2 5.712E-05 .001 .003 .045 .964

X3 -7.957E-02 .111 -.309 -.718 .473

X4 9.080E-02 .132 .299 .690 .491

X5 1.227E-02 .050 .474 .248 .804

X6 -1.762E-03 .064 -.034 -.028 .978

X7 -8.634E-03 .025 -.579 -.341 .734

X8 -8.513E-03 .030 -.230 -.287 .775

X9 -.105 .066 -.619-

1.589.113

X10 1.092E-02 .022 .430 .503 .615

X11 -4.675E-03 .011 -.175 -.422 .674

X12 2.500E-03 .011 .108 .223 .823

X13 6.949E-04 .001 .101 .764 .445

X14 5.900E-02 .037 .510 1.610 .108

X15 -5.004E-04 .020 -.034 -.025 .980


1. R2 value is 0.024 and the value of P is 0.957. The value of P is greater than

0.05 so the model is not appropriate.

264

5.3.3 Model 3 – Total Share Holder Value Creation (Y3)

Table no. 87

Model Summary(b)

Model RR

SquareAdjusted R



1 .154(a) .024 -.028 921.52020 .467



Table no. 88

ANOVA(b)


1

Regression 5869279.909 15 391285.327 .461 .958(a)

Residual 241172653.584 284 849199.484

Total 247041933.493 299



Table no. 89

Coefficients(a)




1

(Constant) 421.003 66.494 6.331 .000

X1 1.474E-04 .001 .023 .277 .782

X2 3.064E-04 .001 .017 .232 .816

X3 -7.812E-02 .114 -.295 -.685 .494

X4 8.126E-02 .135 .260 .600 .549

X5 1.371E-02 .051 .514 .269 .788

265

X6 2.892E-03 .066 .055 .044 .965

X7 -1.118E-02 .026 -.729 -.429 .668

X8 -7.446E-03 .031 -.195 -.244 .808

X9 -.115 .068 -.658-

1.689.092

X10 1.227E-02 .022 .469 .550 .583

X11 -7.326E-03 .011 -.267 -.642 .521

X12 4.411E-03 .012 .186 .383 .702

X13 7.318E-04 .001 .103 .782 .435

X14 7.089E-02 .038 .596 1.880 .061

X15 -2.562E-04 .021 -.017 -.012 .990


1. The value of R2 is found to be 0.024 while the value of P is 0.958 which is

greater than 0.05 so the model is not appropriate.

5.3.4 Model Y4 – High Market Price – (Y4)

Table no. 90

Model Summary

Model RR

SquareAdjusted R



1 .988(a) .976 .975 407.54871 1.231



266

Table no. 91

ANOVA(b)

Model Sum of Squares Df Mean Square F Sig.

1

Regression 1950441652.167 15 130029443.478 782.857 .000(a)

Residual 47171249.685 284 166095.950

Total 1997612901.852 299



Table No. 92

Coefficients(a)


StandardizedCoefficients

t Sig.

Model BStd.

ErrorBeta

1

(Constant) 233.146 29.407 7.928 .000

X1 -2.105E-04 .000 -.011 -.894 .372

X2 -8.475E-04 .001 -.017 -1.454 .147

X3 3.731E-02 .050 .050 .740 .460

X4 -.163 .060 -.183 -2.715 .007

X5 2.935E-02 .023 .387 1.302 .194

X6 3.552E-02 .029 .237 1.219 .224

X7 -2.576E-02 .012 -.590 -2.234 .026

X8 1.947E-02 .014 .180 1.441 .151

X9 5.598E-02 .030 .113 1.861 .064

X10 3.229E-02 .010 .434 3.269 .001

X11 9.404E-03 .005 .120 1.863 .063

X12 -4.809E-03 .005 -.071 -.944 .346

X13 3.697E-04 .000 .018 .893 .373

X14 3.282E-03 .017 .010 .197 .844

X15 1.635E-04 .009 .004 .018 .986


267



variable Y1. It means that 97.6 % variation in Y1 is expected by the





positive serial correlation between the independent variables.

3. X4, X7, and X8 are not significant factors which are highly influenced on Y1

because P value of these factors are 0.007, 0.026 and 0.001 respectively

which are less than 0.05.

5.3.5 Model 5 – Low Market Price – Y5

Table no. 93

Model Summary(b)

Model RR

SquareAdjusted R



1 .995(a) .990 .990 318.55569 1.290



Table no. 94

ANOVA(b)


1

Regression 2899863956.675 15 193324263.778 1905.091 .000(a)

Residual 28819674.331 284 101477.727

Total 2928683631.006 299



268

Table no. 95

Coefficients(a)




1

(Constant) 71.517 22.986 3.111 .002

X1 -3.903E-04 .000 -.017-

2.121.035

X2 -1.026E-03 .000 -.017-

2.251.025

X3 6.945E-02 .039 .076 1.762 .079

X4 -.244 .047 -.226-

5.206.000

X5 1.833E-02 .018 .200 1.040 .299

X6 6.113E-02 .023 .336 2.684 .008

X7 -1.729E-02 .009 -.327-

1.918.056

X8 3.122E-02 .011 .238 2.955 .003

X9 9.940E-02 .024 .165 4.228 .000

X10 3.701E-02 .008 .411 4.793 .000

X11 1.748E-02 .004 .185 4.431 .000

X12 -9.432E-03 .004 -.115-

2.369.018

X13 9.791E-05 .000 .004 .303 .762

X14 -3.534E-02 .013 -.086-

2.711.007

X15 -1.039E-02 .007 -.197-

1.445.150




variable Y1. It means that 99% variation in Y1 is expected by the



269



positive serial correlation between the independent variables.

3. X1, X2, X4, X6, X8, X9, X10, X11, X12 and X14 are not significant factors which

are highly influenced on Y5 because P value of these factors are 0.035, 0.025,

0.079, 0.000, 0.008, 0.003. 0.000, 0.000, 0.000. 0.018 and 0.007 respectively

which are less than 0.05.

5.4 Dividend And Shareholder Value Creation

Introduction :

There are several factors which are having effect on shareholder value creation. The

emergence of shareholder value creation is the result of composite effect of all these

influence factors. These factors are inclusive of earning capacity of the company,

financial solvency of the company, perception of the investors, role of speculators,

credit of management, future plan of the company, orders of the company,

transparency level of the company, credit rating of the company and many more

others. One of the significant factors is declaration and the payment of dividend.

There are investors, who are parking their funds with different objectives.

Objectives may be summarized as follows.

1. To acquire the benefit of capital appreciation.

2. To acquire the benefit of regular payment of dividend.

3. To undertake the speculation.

4. For long term investment purpose.

5. For short term investment purpose and many more.

In this study an attempt is made to know the impact of share holder value creation.

In this study, out of 50 companies, data of 30 companies of 3 years pertaining to

dividend payment is made available. An attempt is made to analyze this

information. The following table is prepared to know the status of impact of

dividend payment on share holder value creation.

270

Table no. 96

No. of

companies

No. of Years % of Positive

impact

% of Negative

impact

% of No

change

30 60 52% 30% 18%

On investigation, out of 60 samples, in case of 31 samples means more than 50%

investors are influenced. Hence, the rate of market capitalization is also significantly

increased when rate of dividend is increased by the selected company. Out of 50

companies, in case of 18 companies i.e. 30% companies have negative impact of

payment of dividend on shareholder value creation. It can be said that, there are two

views; these results are synchronizing with two different thoughts about payment

and non payment of dividend. According to these two theories, one theory said that

payment of dividend increases the market value of shares while according to

another theory non payment of dividend increases the market value of the equity

shares. These two are mainly depends upon the choice of the shareholders. From

the view point of small shareholders it can be said that they do not have a definite

investment policy because they are having very few shares of a company. The

interest of their investment is may be regular dividend or benefit of capital gain.

Another type is wealth investors which are very much interested in dividend policy

of the company. They prefer capital gains to regular dividend as because in that case

they will have to pay less tax. They are generally higher tax payers so they want that

the company should retain most of its earning with it and issue bonus shares. The

retired and old persons are interested in regular dividend income. They invest their

provident fund amount and savings with a view to getting regular income for

domestic need purpose. So they invest in shares of that companies which are paying

regular dividend. The institutional investors like banks, insurance companies, unit

trust etc. buy substantial shares of various companies and hold them for very long

time. They are interested in profitable investment and would prefer regular income.

so the interest of various groups of shareholders are different and it is difficult to

determine a definite dividend policy. The another parties linked with the company

271

like employees, creditors, society, customers etc and their interest demands that the

company should retain some part of its earnings. There is a lot of controversy with

regard to the influence of the dividend on share prices and on the value of the firm.

One school of thought believes that dividend is relevant and has no effect on the

valuation of the firm or on the value of the firm. The other school of thought believes

that dividend is relevant to the valuation of the firm as measured by market price of

the shares. For that purpose the model and thought of some authors are presented.

Prof. James E. Walter contends that the dividend is an active variable that affect the

price of the shares and value of the firm. The optimum dividend will be determined

by the relationship of internal rate of return (r) and the cost of the capital (k). The

growth firm in which r>k should retain their earnings with the firm instead of

distributing them as dividend. The reason behind that is the investment in another

plan which yield more profit. If r<k then the firm should distribute the earnings to

the shareholders. This would enable the shareholders to invest it elsewhere and

earn a higher return.

The model is Gordon’s model which is also based on relevance concept of dividend

policy. According to him, the market value of a share is equal to the present value of

dividends to be received by the shareholders. Like Walter, Gordon also contended

that dividend policy of the firm is relevant and affect the value of the firm. He says

that investors always prefer dividend as current income and not the dividend to be

obtained in the future, because the investors are rational and are risk averse, that is,

they do not like to take risk of uncertain future dividend.

The next model which is presented by Modigliani and Miller related to the

irrelevance of the dividend. MM approach put forward the hypothesis that dividend

is the passive variable and it does not affect the share valuation. They argue that,

given the investment decision of the firm, the dividend payout ratio is a small and it

does not affect the wealth of owners. They also argue that the value of the firm is

272

determining solely by earning power of the firm not the pattern of distribution of

earning that will influence the value of the shares.

To examine the relevance of Gordon Model in respect of dividend payment and

market value of the shares, an attempt is made to investigate relationship between

dividend and shareholder value creation.

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