Under the Guidance of: Submitted By:

NAME : MIS RENUKA NAME : MOHINDER PRATAP SINGH

ROLL NO. - CUN110550043

M.B.A(GENERAL)

www.chitkara.edu.in

DECLARATION

I here by declare that the words which is being presented in this project report in partial fulfillment of the requirement of the degree of Master of Business Administration (M.B.A) in the field of Finance is an authentic record of our work carried out under the able guidance of Ms. Renuka Sharma

Date:

ACKNOWLEDGEMENT

I have a great pleasure in acknowledging the help from all those who have favored me with giving shape to the present project. Heartiest thanks to our Project leader and guide Ms. Renuka Sharma for her help and support throughout the project.

It’s not only duty but a matter of joy and pleasure to once again convey my thanks .

Date:

PREFACE

This report presents the research, findings and recommendations .The objective was to manufacture the highest quality, most reliable replacement parts and accessories and ensuring the availability of the parts.

CONTENTS

CHAPTER-1

1. Industry profile……………………………………………………………………

2. Introduction to Crompton greaves ………………………………………3. Background, History & Management……………………………………………

4. Obligations…………………………………………………………………………5. Awards ……………………………………………………………….6. Company’s Relative Position……………………………………………………..

7. Listing Details …………………………………………………………………….

8. Organisation structure…………………………....................................9. Relative Position ……………………………………………………….10. Company is listed ……………………………………………………...11. Improtant facts ………………………………………………………...

CHAPTER-2

12. Analysis and Interpretation of Change in Share Price ……………………….

13. Beta value of the company……………………………………………..14. Standard Deviation of the company……………………………………………15. Coefficient of variation…………………………………………………………..16. Profitability of the company…………………………………………………….17. Capital Structure of the Company……………………………………………...18. Dividend Policy of the Company………………………………………………..19. liquidity position………………………………………………………………….20. Inventory position………………………………………………………………...21. Securities of the company………………………………………………………..22. IPO issues…………………………………………………………………………23. Comparative study……………………………………………………………….

24. News relevant to the company………………………………………………….25. Bibliography and referances……………………………………………………

26. Glossary………………………………………………………………………....

27. Annexure ……………………………………………………….

Industry Profile

INDUSTRY PROFILE

INTRODUCTION

For the last sixty-eight years, Crompton Greaves (CG) has become synonymous with electricity in India. In fact, the first unit of electricity was generated on a "Crompton Dynamo" at Calcutta in 1899. A pioneering leader since 1937 in the management and application of electrical energy, Crompton Greaves, today, is India's largest private sector enterprise, extensively engaged in designing, manufacturing and marketing high technology electrical products and services related to power generation, transmission, distribution as well as executing turnkey projects. The company is customer centric in its focus and it is the single largest source for a wide variety of electrical equipments and products. Further, the company is emerging as a first choice global supplier for high quality electrical equipments

HISTORY :

Col. R.E.B. Crompton founded R.E.B. Crompton & Company in 1878. The company was merged with F. A. Parkinson in 1927 to form Crompton Parkinson Ltd. Greaves Cotton and Company, established by James Greaves in 1859, was appointed as their concessionaire in India.

In 1937, Crompton Parkinson established Crompton Parkinson Works Ltd. in Bombay as a wholly owned subsidiary. In collaboration with Greaves Cotton, it also established a sales organization, Greaves Cotton & Crompton Parkinson Ltd. In 1947, just before India’s independence ,Lala Karam Chand Thapar an Indian Industrialist, bough Greaves Cotton, when the company was put up for sale. With this acquisition, Karam Chand Thapar gained control of several associated companies such as Crompton Parkinson Works, Greaves Cotton & Crompton Parkinson Company.

The name Crompton Greaves Limited was adopted on 2nd August 1966, following a court-directed amalgamation of Greaves Cotton and Cromption Parkinson Ltd. Over the years , the company has evolved into one of India’s largest private sector enterprise.

Crompton Greaves is a part of US$ 4billion Avantha Group and is headquatered in a self owned landmark building at Worli, Mumbai.

ACHIEVEMENTS & RECOGNITIONS

Crompton Greaves boasts technology portfolio that includes Transformers, Switchgears, Motors, and a wide range of consumer products with many firsts to its credit such as: 

The manufacturer of the largest rating of power transformer (320 MVA) to leave Indian shores;

The manufacturer of the largest Static Var Compensation (Statcom) system for wind-farm applications;

The first Indian company to introduce Polycrete insulation technology for medium-voltage outdoor dry type-voltage apparatus;

The first Indian company to develop silicon-free electrical stampings, and to introduce low-voltage induction motors with silicon-free electrical stampings;

The first company to develop brushless DC motors for fans used in Indian Railways. First ISMS - Infomation Security Management System certification in Engineering

sector.

POWER SYSTEM

TYPE PUBLIC SECTOR

TRADE AS BSC:500093NSC:  CROMPGREAV

INDUSTRY ELECTRICAL

FOUNDED 1878

HEARDQUARTERS MUMBAI (INDIA)

KEY PEOPLE GAUTAM THAPAR (CHAIRMAN)LAUREN DEMORTIER (CEO)

PRODUCTS TRANSFORMERS, HT & LT MOTORS, DC MOTORS & RAILWAY SIGNALING.

REVENUE5,352.74 crore (US$1.18 billion)

PARENTS AVANTHA GROUP

WEBSITE www.cgglobal.com

CROMPTON GREAVES

BACKGROUND :

Industry Name - Electric Equipment –General

House Name - Avantha Group

Collaborative Country Name - N.A

Joint Sector Name - N.A

Year of Incorporation - 1937

Year of Commercial Production - N.A

Face Value - 2.0

MANAGEMENT :

Name Designation

G Thapar Chairman / Chair Person

Laurent Demortier Managing Director & CEO

O Goswami Ind. Non-Executive Director

S Prabhu Ind. Non-Executive Director

S P Talwar Ind. Non-Executive Director

S M Trehan Non Executive Vice Chairman

S Bayman Ind. Non-Executive Director

S Labroo Ind. Non-Executive Director

M Pudumjee Ind. Non-Executive Director

V von Massow Ind. Non-Executive Director

OBLIGATIONS

Towards customers and dealers:- To provide prompt, courteous and efficient service and quality products at competitive prices.

Towards suppliers:- To ensure prompt dealings with integrity, impartiality and courtesy and help promote ancillary industries.

Towards employees: - To develop their capabilities and facilitate their advancement through appropriate training and career planning. To have fair dealings with recognised representatives of employees in pursuance of healthy industrial relations practices and sound personnel policies

Sudhir Mohan Trehan is Executive Chairman of Avantha Power & Infrastructure Limited and Vice Chairman of Crompton Greaves Limited.

He joined Crompton Greaves Limited in 1972 and, over the years, has held several positions of responsibility. He was appointed Managing Director of the company in 2000 and, on his retirement in June 2011, was named Vice Chairman. He is a member of the Avantha Management Board, which formulates strategy at the Group level. He is also Chairman of the Board of Governors at Thapar University.

PRODUCTS & SERVICES :

1.Power Systems

Transformers and Reactors Switchgear products-MV/HV/EHV/UHV Instrument Transformers-MV/HV/EHV/UHV Power Quality Solutions T&D Systems/Engineering Solutions Protection Control & Automation Services for Power Systems Transformer & Switchgear Components LV Switches & Panel Products

2. Industrial Systems

Motors- High/ Low voltage AC & DC Generators/ Alternators Traction Motors/ Alternators/Control Electrics FHP/Commercial Motors Railway Signaling & Coach Applications Drives & Automation Stampings and Laminations Services for Industrial Systems

3. Consumer Products

Fans Appliances Lighting Pumps Home Automation Integrated Solution Systems Wiring accessories

ORGANISATION STURUCTURE

CCCCE

CEO – GAUTAM THAPAR

CFO- B.HARIHARAN

BALLARPUR INDUSTRIES

CROMPTON GREAVES

CEO

cCEO

CG POWER-DP

CFO-MADHAV ACHARYA

CG POWER-MK

LEGAL SECRETARY & HUMAN RESOURCES

CONSUMER PRODUCTS & EXPORTS

RESEARCH & DEVELOPMENT

Avantha Group

The group was started by Lala Karam Chand Thapar, and after his death in 1963 run by third son. L.M.Thapar. from independence till the 1980s the Thapar Group was one of the top 10 business houses in India.

The new identity, Avantha , was launched worldwide on 15th November,2007.

Awards

Received National Award for Best Research and Development Efforts in 2007. Received Best Product Competition Award for Dream Transformer from Electrama 2008. Received Golden Peacock Innovative Product / Service Award-2007. Received Golden Peacock Award 08-09 for NAPOKRETE based Instrument

Transformer- Current Transformer & Voltage Transformer. Received NABL Accreditation for 5 of its labs & 1 calibration lab.

Listing Details:

Key Dates

Year Ending Month Mar

AGM Date (Month) Jul

Book Closure Date (Month) Jul

Listing Information

Face Value Of Equity Shares 2

Market Lot Of Equity Shares 1

BSE Code 500093

NSE Code CROMPGREAV

BSE Group A

Crompton Greaves is amongst the top 10 transformer manufacturer in the world, and one of the very few companies worldwide that designs and manufactures such a wide and diverse range of Power and Distribution Transformers as well as Reactors from 160kVA to 600MVA, and 11kV to 765kV Class, conforming to IEC, ANSI, IS, BS and other International Standards.

Crompton Greaves has three strategic business areas :

1.) Power Systems   : It includes Transformers, Switchgear, Circuit Breakers, Vacuum Interrupters, Network Protection & Control Gear, as well as Design, Execution and Servicing of Turnkey T&D as well as Sub-Station Projects and Solutions including complete end to end Renewable projects. This is the largest business of CG, which is now well and firmly established throughout the world. It is a high value, high turnover business with a strong global footprint, and contributes to approx 70 per cent of CG‟s consolidated revenue. Its facilities are located in different parts of Belgium, Canada, Hungary, India, Indonesia, Ireland, France, UK and USA.

2.) Industrial Systems : It is engaged in the business of providing solutions through the supply of power conversion equipments of a wide spectrum of High and Low Tension rotating machines (motors and alternators), inverters & converters, stampings, as well as railway transportation and signaling equipments. Industrial Systems has a very strong market presence and market leadership position in most segments in India. It also caters to overseas markets through its facilities in Hungary and exports from India. Its product portfolio includes motors ranging from 20W to 25MW and generators ranging from 1KVA to 70MVA; and CG is the largest manufacturer of Low Tension motors in India offering a range of motors in various standard and customized configurations to respond to the exacting demands of the industry.

3.) Consumer Products   :   One of CG‟s fastest growing businesses; CG manufactures and markets a wide spectrum of products ranging from fans, light sources and luminaires, pumps and household appliances, such as geysers, mixer grinders, toasters, irons and electric lanterns. This business is the second largest SBU of CG.. It also enjoys a substantial brand presence and goodwill in India

.ACHIEVEMENTS & RECOGNITIONS :

Crompton Greaves boasts technology portfolio that includes Transformers, Switchgears, Motors, and a wide range of consumer products with many firsts to its credit such as: 

The manufacturer of the largest rating of power transformer (320 MVA) to leave Indian shores;

The manufacturer of the largest Static Var Compensation (Statcom) system for wind-farm applications;

The first Indian company to introduce Polycrete insulation technology for medium-voltage outdoor dry type-voltage apparatus;

The first Indian company to develop silicon-free electrical stampings, and to introduce low-voltage induction motors with silicon-free electrical stampings;

The first company to develop brushless DC motors for fans used in Indian Railways. First ISMS - Infomation Security Management System certification in Engineering

sector.

Company’s Relative Position in that Industry

CROMPTON GREAVES the 3rd highest ranked Indian company among its competators. Its

main competator are Siemens, ABB, Crompton greaves, Havells India, Techno electric, HBL

Power. Siemens is the highest ranked company in India with the totel assets of rupees in crs

3,816. ABB is the 2nd highest company with 2,423(rs in crs) total assets. Crompton greaves

stands on 3rd position with assets of rs 2,317(crs).

Whether company is listed or not?

Yes, the company is listed on NSE by the name of CROMPGREAV and the current market price

is Rs. 123.15.

The company is also listed on BSE by the name of 500093 and the current market price is Rs.

128.60

Top 6 Companies

Name Last

Price

Market Cap. Sales

Turnover

Net Profit Totel Assets

Siemens 789.85 26,878.19 11,941.91 845.43 3,816.18

ABB 825.15 17,485.62 7,370.27 184.54 2,423.72

CromptonGreave

s133.20 8,544.67 5,951.47 694.33 2,317.48

Havells India 546.70 6,821.44 2,898.90 242.05 1,474.43

Techno Electric 215.95 1,232.88 679.74 100.75 696.44

HBL Power 16.35 413.66 994.95 16.45 1,226.33

Siemens

ABB

Crompton Greaves

Havells India

Techno electric

HBL Power

Important facts about that company

Crompton greaves has two major domestic competitors, Siemens and ABB. Both are

state-controlled, like Crompton greaves.

Crompton Greaves is based on the four pillars of care, innovation, passion and trust.

Revenue:- 5,352.74 crore (US$1.18 billion)

Parents:- AVANTHA GROUP.

Analysis and Interpretation of Change

in Share Price of the Company in last

five years

INTERPRATATION OF 2007

02/Jan/0

7

23/Jan/0

7

13/Feb/0

7

06/Mar/

07

27/Mar/

07

17/Apr/0

7

08/May

/07

29/May

/07

19/Jun/0

7

10/Jul/0

7

31/Jul/0

7

21/Aug/0

7

11/Sep/0

7

02/Oct/

07

23/Oct/

07

13/Nov/0

7

04/Dec/

07

25/Dec/

070

50100150200250300350400450500

share

share

02/Jan/0

7

30/Jan/0

7

27/Feb/0

7

27/Mar/

07

24/Apr/0

7

22/May

/07

19/Jun/0

7

17/Jul/0

7

14/Aug/0

7

11/Sep/0

7

09/Oct/

07

06/Nov/0

7

04/Dec/

070

5000

10000

15000

20000

25000

sensex

sensex

At starting of the year 2007, share price of Crompton greaves corporation Rs.227.

At the end of the year closing price of the share was Rs 400.

Throughout the year share of Crompton greaves corporation had tremendous growth.

Between the month of January to November share price fluctuated between Rs 227 to

450.

After November it had gone down from Rs 450 to Rs 400 and reached at the end of

December Rs 400.

INTERPRATATION OF 2008

01/Jan/0

8

22/Jan/0

8

12/Feb/0

8

04/Mar/

08

25/Mar/

08

15/Apr/0

8

06/May

/08

27/May

/08

17/Jun/0

8

08/Jul/0

8

29/Jul/0

8

19/Aug/0

8

09/Sep/0

8

30/Sep/0

8

21/Oct/

08

11/Nov/0

8

02/Dec/

08

23/Dec/

080

50100150200250300350400450

share

share

02/Jan/0

8

25/Jan/0

8

17/Feb/0

8

11/Mar/

08

03/Apr/0

8

26/Apr/0

8

19/May

/08

11/Jun/0

8

04/Jul/0

8

27/Jul/0

8

19/Aug/0

8

11/Sep/0

8

04/Oct/

08

27/Oct/

08

19/Nov/0

8

12/Dec/

080

5000

10000

15000

20000

25000

sensex

sensex

In the year 2008 we can see the trend it was down word. So we can say that the share

price of the share decreased throughout the year.

Starting of 2008 share price was near around Rs400 but end of the it was only Rs150.

The main reason behind the falling of share Crompton greaves Corporation was

Recession. Because that time the stock market crash and felled down from Rs 20000 to

Rs 10000.

Recession came in January and February but its affect remained remain throughout the

year.

INTERPRATATION OF 2009

01/Jan/0

9

22/Jan/0

9

12/Feb/0

9

05/Mar/

09

26/Mar/

09

16/Apr/0

9

07/May

/09

28/May

/09

18/Jun/0

9

09/Jul/0

9

30/Jul/0

9

20/Aug/0

9

10/Sep/0

9

01/Oct/

09

22/Oct/

09

12/Nov/0

9

03/Dec/

09

24/Dec/

090

50100150200250300350400450

share

share

01/Jan/0

9

23/Jan/0

9

14/Feb/0

9

08/Mar/

09

30/Mar/

09

21/Apr/0

9

13/May

/09

04/Jun/0

9

26/Jun/0

9

18/Jul/0

9

09/Aug/0

9

31/Aug/0

9

22/Sep/0

9

14/Oct/

09

05/Nov/0

9

27/Nov/0

9

19/Dec/

090

2000400060008000

100001200014000160001800020000

sensex

sensex

In the year 2009 trend line fluctuated a lot. The starting 6 month share price on Crompton

greaves Oil Corporation near around same.

By the Mid of June share price follow the upward trend and mid of the October it was

reached at peak Approximately Rs.420

In 2009 company came out from recession and gain the position same as in 2007.

INTERPRATATION OF 2010

04/Jan/1

0

26/Jan/1

0

17/Feb/1

0

11/Mar/

10

02/Apr/1

0

24/Apr/1

0

16/May

/10

07/Jun/1

0

29/Jun/1

0

21/Jul/1

0

12/Aug/1

0

03/Sep/1

0

25/Sep/1

0

17/Oct/

10

08/Nov/1

0

30/Nov/1

0

22/Dec/

100

50

100

150

200

250

300

350

400

450

500

Series1

04/Jan/1

0

27/Jan/1

0

19/Feb/1

0

14/Mar/

10

06/Apr/1

0

29/Apr/1

0

22/May

/10

14/Jun/1

0

07/Jul/1

0

30/Jul/1

0

22/Aug/1

0

14/Sep/1

0

07/Oct/

10

30/Oct/

10

22/Nov/1

0

15/Dec/

100

5000

10000

15000

20000

25000

sensex

sensex

In 2010 share price on Jan was 440. On 4 Mar share price came down to rs 240 from rs 450. Till the end of the year share price reached to rs 300. Sensex was constantly increasing in 2010.

INTERPRATATION OF 2011

03/Jan/1

1

25/Jan/1

1

16/Feb/1

1

10/Mar/

11

01/Apr/1

1

23/Apr/1

1

15/May

/11

06/Jun/1

1

28/Jun/1

1

20/Jul/1

1

11/Aug/1

1

02/Sep/1

1

24/Sep/1

1

16/Oct/

11

07/Nov/1

1

29/Nov/1

1

21/Dec/

110

50

100

150

200

250

300

350

Series1

03/Jan/1

1

26/Jan/1

1

18/Feb/1

1

13/Mar/

11

05/Apr/1

1

28/Apr/1

1

21/May

/11

13/Jun/1

1

06/Jul/1

1

29/Jul/1

1

21/Aug/1

1

13/Sep/1

1

06/Oct/

11

29/Oct/

11

21/Nov/1

1

14/Dec/

110

5000

10000

15000

20000

25000

sensex

sensex

Throughout the year 2011 the trend of closing price of share fluctuated between Rs 350

to Rs 250.

At the starting of the year share price was Rs 310 and end of the year it decreased from

Rs 310 to Rs 125.

Last six month the trend line show price of share continuously felled down.

The Sensex felled down throughout the year from 20000 to 15000.

In 2011 from month of January to July share price of company kept on fluctuating

between Rs 300 and Rs 250.

In the month of July share price of company came down to Rs 165 from Rs 240.

INTERPRATATION OF 2012

02/Jan/1

2

06/Jan/1

2

10/Jan/1

2

14/Jan/1

2

18/Jan/1

2

22/Jan/1

2

26/Jan/1

2

30/Jan/1

2

03/Feb/1

2

07/Feb/1

2

11/Feb/1

2

15/Feb/1

2

19/Feb/1

2

23/Feb/1

2

27/Feb/1

20

20

40

60

80

100

120

140

160

180

Series1

02/Jan/1

2

06/Jan/1

2

10/Jan/1

2

14/Jan/1

2

18/Jan/1

2

22/Jan/1

2

26/Jan/1

2

30/Jan/1

2

03/Feb/1

2

07/Feb/1

2

11/Feb/1

2

15/Feb/1

2

19/Feb/1

2

23/Feb/1

2

27/Feb/1

21400014500150001550016000165001700017500180001850019000

sensex

sensex

Here we took out the data of Two month. Starting of the January closing share price of

Crompton greaves Corporation was Rs 122.

End of January it was Rs138 and in February 20 it was Rs 160 and again came down to

Rs 140 on 27 February.

BETA VALUE OF THE CROMPTON GREAVES

Year Beta Value

2007 5.630787

2008 5.5755677

2009 5.3577739

2010 5.7623676

2011 5.2386133

2012 4.9505727

Overall Beta Value (2007-2012) 5.3788928

The Beta value of the year 2007 is 5.630787. So its mean the value of our stock is

positively correlated with the closing stock value of BSE.

In the year 2010 the value of Beta was 5.7623676. It’s mean between return on share price

and stock market price perfect positive correlation.

In the year 2008, 2009, 2011 the value of beta 5.5755677, 5.3577739, 5.2386133

respectively.

Overall 2007 to 2012 the value of beta in positively, It is 5.3788928, which shows the

positive correlation between return on the value of share and return on the stock market.

Current year the value of beta is positive, it is just 5.3788928.

STANTARD DEVIATION OF THE CROMPTON GREAVES

Year Standard Deviation

2007 1.948457

2008 1.891682

2009 1.914582

2010 1.992221

2011 1.834382

Overall 1.911061

It shows how much variation exists from the average (mean, or expected value). A low standard deviation indicates that the data points tend to be very close to the mean, whereas high standard deviation indicates that the data points are spread out over a large range of values.

The SD in 2007 was 1.948457 which was low. Then in 2008, at the time recession, the value down went to 1.891682. Then after it the SD slowly started declining and in 2011, it came to 1.834382

which is quite low which means that the expected value is nearly around to market value of share.

Overall S.D value of last five years is 1.911061.

COEFFICIENT OF VARIATION OF THE CROMPTON GREAVES

Year Coefficient of Variation

2007 0.01259

2008 0.016377

2009 0.034651

2010 0.005818

2011 0.019682

 

The coefficient of variation allows you to determine how much volatility (risk) you are assuming in comparison to the amount of return you can expect from your investment. In simple language, the lower the ratio of standard deviation to mean return, the better your risk-return tradeoff.

In year 2007 the COV was around 41 Then in 2008 it gets doubled to 82 which means the risk involved was very high during

this period Then COV started declining and in 2011 it came down to 12, so nowadays the risk

involved in these shares are quite low as compared to its previous conditions.

Capital Structure of the Crompton greaves Corporation for last five years:-

From To AUTHORIZED

CAPITAL

ISSUED

CAPITAL

SHARES(NOS) FACE

VALUE

CAPITAL INSTRUMENT

2010 2011 276 128.31 641491536 2 128.3 EQUITY

SHARE

2009 2010 260 128.31 641491536 2 128.3 EQUITY

SHARE

2008 2009 125 73.31 366566592 2 73.31 EQUITY

SHARE

2007 2008 125 73.31 366566592 2 73.31 EQUITY

SHARE

Proportion of Equity-Preference

The company has not allotted any preference shares so this ratio cannot be determined.

Proportion of Equity-Preference-Debt

As company has not allotted any preference shares so this ratio cannot be determined also.

A measure of a company’s financial leverage calculated by dividing its total liabilities by stockholder’s equity. It indicates what proportion of equity and debt the company is using to finance its assets.

In 2007 the company’s debt/equity ratio was 1.19 which means more than 2/3rd portion of the company’s finance was debt and remaining was equity. But the company reduced it and in 2011, it was 0.51. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. The data shows that the company is not aggressive in financing its growth with debt.

ANALYZE THE RELATIONSHIP BETWEEN INTEREST

PAYMENT AND PROFITABILITY OF THE COMPANY FOR

LAST FIVE YEARS

Profitability of the firm calculated through Profitability ratio.

2011 2010 2009 2008 2007

Profit Before

Interest And

Tax Margin

(%)

13.91 14.79 15.02 11.18 8.86

Gross Profit

Margin (%) 13.99 14.94 15.17 11.27 9.67

Net Profit

Margin (%) 11.33 11.32 8.40 7.92 5.62

Operating

Profit

Margin (%)

15.32 15.90 16.14 12.30 10.07

Return On

Net Worth

(%)

30.32 35.27 32.35 34.27 29.18

Gross profit = Net sales - Cost of goods sold.

Operating Profit = Gross Profit - Total operating expenses EBIT = Revenue – Operating expenses (OPEX) + Non-operating income Net income = Gross profit – Total operating expenses – taxes – interest.

Gross Profit Margin

Gross profit is what is left after the cost of goods sold have been subtracted from net sales. Company’s gross margin is a very important measure of its profitability, because it looks at your company’s major inflows and outflows of money. In general, company’s gross profit margin ratio should be stable.

So here the company’s gross profit margin is highly fluctuating as it goes at 7.80 in 2008 from 0.20 in 2007. Then due to effect of recession it decreases to -6.89 in 2009. After it, it started increasing and in 2011 its value was 1.39.

Operating Profit Margin

The operating profit margin is an indicator of your company’s earning power from its current operations. This is the core source of your company’s cash flow, and an increase in the operating profit margin from one period to the next is considered a sign of a healthy, growing company. In general, the operating profit margin is an indicator of management skill and operating efficiency. It measures the company’s ability to turn sales into pre-tax profits. It is a ratio that can be used to compare our company’s competitive position to others in the same industry.

So here the company’s operating profit in 2007 was 3.19 then it grew to 11.31 in 2008. Due to effects of recession, it declined to -3.63 in 2009. By company’s management skills, it again grew and the value in 2011 was 4.13.

Net Profit Margin

The net profit margin indicates the earnings per unit of Rupee. So the company’s net profit mhargin in 2007 was 10.68 and then it grew to 14.00 in 2008. It fell down to 2.09 in 2009 due to effects of recession. Again it started growing and in 2011 its value was 12.04 which means that on every 1 Rupee spent, the company earned 12.04 paise on it.

LIQUIDITY POSITION OF CROMPTON GREAVES

Net Current Assets position

(Rs Crore)

Mar ' 11 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07

Current assets, loans & advances

2,654.34 2,467.13 2,282.64 1,670.97 1,468.57

Less : current liabilities & provisions

2,041.49 1,930.53 1,776.26 1,362.30 1,092.73

Total net current assets 612.85 536.60 506.38 308.67 375.84

Miscellaneous expenses not written

0.00 0.00 0.00 0.00 0.00

Total 2,317.48 1,791.50 1,791.50 1,018.30 944.33

Liquidity Position = Cash + available revolving credits - short term debt - current portion of long term debt

The liquidity position of the company is quite high and has been increasing since 2007. In 2007 the company’s total assets were worth of Rs 1299.16 cr. In 2011 it has been increased to worth

of Rs 3899.85 cr. Which is 3 times from the past five years. There are various factors for this high growth in liquidity position of the company.

The company has increased its inventories in 5 years to the worth of Rs 1359.88 cr. Cash & bank balance, total current assets has also increased. The fixed deposits in year 2008 were quite high(Rs304.58 cr. as compared to Rs27.04 cr. In 2007) but due to recession they decreased to again at the level of Rs 52.31 cr. Then again they gets increased to Rs 156.02 cr. in 2011. So this shows that the company believes in high cash reserves but also they pay prominent amount of dividends .As per by the data, the company also reduced its miscellaneous expenses to Rs 0.00 by the year 2009 and till 2011 they were nil. So this also helped company to increase the liquidity position of the company.

DIVIDEND POLICY OF THE CROMPTON GREAVES FOR

LAST FIVE YEARS

C.G declare dividend three times in a year. And in months of jan, mar & oct. In 2011 they

declared dividend 110% . In 2010, 2009, 2008 & 2007 they declared dividend were 110%,

105%, 95% & 85%. C.G has consistently increased his dividend declaration from 2007 to 2001.

The company has a good dividend track report and has consistently

declared dividends for the last 5 years.

Dividend paid by Crompton greaves in last five year.

Year Month Dividend(%)

2012 Jan 10

2011 Oct 40

2011 Mar 30

2011 Jan 40

2010 Oct 40

2010 Jan 70

2009 Oct 40

2009 Mar 25

2009 Jan 40

2008 Oct 35

2008 Mar 20

2008 Jan 40

2007 Oct 40

2007 Mar 20

2007 Jan 25

The company believes in paying high dividends to its shareholders. Generally, higher dividend increases the market value of the share and vice versa. Shareholders preferred current dividend to future income so, dividend is considered as an important factor which determines the shareholders’ wealth. This is normally true in case of salaried individuals, retired pensioners and others with limited incomes. Dividend has information content and the payment of dividend indicates that the company has a good earning capacity. The wealth of the shareholders is greatly influenced mainly by five variables viz., Growth in Sales, Improvement of Profit Margin, Capital Investment Decisions (both working capital and fixed capital), Capital Structure Decisions, Cost of Capital (Dividend on Equity, Interest on Debt) etc.

As far as the dividend paying companies are concerned, there is a significant impact of dividend policy on shareholders’ wealth in Organic Chemical Companies. Whereas, as far as the Inorganic Chemical Companies are concerned, the shareholder’s wealth is not influenced by the dividend payout.

By analyzing the data we can see that the company increases its dividends percentage by every year. In 2007, it was 100% and in 2011 it was 175%. So the investor who invested Rs 100 in company in 2010, the company gave him Rs 175 on it which is quite handsome income.

IPO ISSUES MADE BY CROMPTON GREAVES

Exit Crompton Greaves on rally: PN Vijay

Vijay told CNBC-TV18, "The worst may probably be over because of the strong actions been taken

by the management but I am not brave enough to buy that stock because the environment for

Crompton is still quite complex and they are in businesses where the costs are high, the margins are

very low."

Buy Crompton Greaves; target of Rs 218: Maximus SecuritiesMaximus Securities is bullish on Crompton Greavesand has recommended buy rating on the stock with a target of Rs 218 in its February 2, 2012 research report."Crompton Greaves reported consolidated net profit of Rs 77 crore for quarter ended December 2011 against Rs 233 crore in the same period a year ago. Net sales were at Rs 3,027 crore as compared to Rs 2,397 crore in the same period last fiscal. Despite having reported a growth of close to 26% in consolidated revenues during Q3 of FY12 YoY, the EBITDA margins of the company fell by more than 800 basis points during the period while net profit was lower by 67% in Q3 FY12 from the year-ago period. Execution of certain projects at near zero margins, in the power sector, crippled the operating margins of Crompton Greaves"

Sell short-term positions if Nifty goes below 5330: Sukhani

Technical analyst Sudarshan Sukhani, s2analytics.com believes, the ideal Nifty strategy traders

could opt for today would be, to take buy if Nifty breaks out above 5,430 levels. One can sell

short-term positions, if it goes below 5,330 levels, he added.

Accumulate Crompton Greaves; target of Rs 152: PLilladher

Prabhudas Lilladher is bullish on Crompton Greavesand has recommended accumulate rating on the stock with a target of Rs 152 in its February 1, 2012 research report."Crompton Greaves, consolidated sales were up 26% YoY at Rs30bn, ahead of our estimate of Rs27bn. Sales for the subsidiaries was up 40% YoY, partly driven by favourable currency.

EBITDA margin was down 820bps YoY to 6.2%, lower than our estimate of 9.2%. About 500bps impact on margins was due to termination of one of the orders in the US (Euro ~50m) as it was a very low margin order and cost over runs in few orders and about 300bps impact was on account of fluctuation in the RM cost. 

Reduce Crompton Greaves; target of Rs 147: KRChokseyKRChoksey is bearish on Crompton Greaves and has recommended reduce rating on the stock with a target of Rs 147 in its February 2, 2012 research report."Crompton Greaves (CG) registered strong net sales growth of 26.3% on a YoY basis as net sales increased to Rs 3,028 cr. Operating profit margins declined by 815 bps to 6.5% as CG closed a 50 mn Euro negligible margin order. Consequently, net profits decreased sharply by 66.9% to Rs 77.1 cr. Order backlog at the end of the Q3FY12 stands at Rs 8,183 cr, 0.7x TTM sales. For the quarter, CG registered strong order inflow worth 3,401 cr vs 2,052 cr in Q3FY11 on back of strong order flows in power systems segment."

Crompton Greaves may go below December lows: Jai BalaCrompton Greaves may go below December lows, says Jai Bala of cashthechaos.com.Bala told CNBC-TV18, "In Crompton Greaves I think the long-term correction is not over and the medium-term picture still looks bleak. There is a good possibility that it might go back slightly below the December lows and I think it has even small chance of clocking double-digits."He further added, "If you see the stock print below Rs 130 today, I think its good shorting opportunity and you can place the stoploss slightly above Rs 145 and you can expect Rs 110-105 in the short-term."

Sell Crompton Greaves, says SukhaniSudarshan Sukhani of s2analytics.com is of the view that one can sell Crompton Greaves .Sukhani told CNBC-TV18, "I would sell Crompton Greaves. Yesterday's intraday patterns are all bearish. The decline had started before these results came in, nothing has changed. So it is a short sell. In a choppy market like the one we are likely to have there will be a lot of selling ideas possible where you can take small profits and make money. Don't look for big moves.

Crompton Greave Dec '11 sales at Rs 1,624.46 croreCrompton Greaves has reported a sales turnover of Rs 1,624.46 crore and a net profit of Rs 126.65 crore for the quarter ended Dec '11.For the quarter ended Dec 2010 the sales turnover was Rs 1,398.59 crore and net profit was Rs 176.03 crore.Quarterly Results of Crompton Greaves -------- in Rs. Cr. --------

Dec '10 Sep '11 Dec '11Sales Turnover 1,398.59 1,451.47 1,624.46Other Income 22.13 16.82 13.51

Total Income 1,420.72 1,468.29 1,637.97Total Expenses 1,170.52 1,290.07 1,449.17Operating Profit 228.07 161.40 175.29Profit On Sale Of Assets -- -- --Profit On Sale Of Investments -- -- --Gain/Loss On Foreign Exchange -- -- --VRS Adjustment -- -- --Other Extraordinary Income/Expenses -- -- --Total Extraordinary Income/Expenses -- -- --Tax On Extraordinary Items -- -- --Net Extra Ordinary Income/Expenses -- -- --Gross Profit 250.20 178.22 188.80Interest 2.32 0.05 -2.36PBDT 247.88 178.17 191.16Depreciation 21.11 26.71 16.90Depreciation On Revaluation Of Assets -- -- --PBT 226.77 151.46 174.26Tax 50.74 39.14 47.61Net Profit 176.03 112.32 126.65Prior Years Income/Expenses -- -- --Depreciation for Previous Years Written Back/ Provided

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Dividend -- -- --Dividend Tax -- -- --Dividend (%) -- -- --Earnings Per Share 2.74 1.75 1.97Book Value -- -- --Equity 128.30 128.30 128.30Reserves -- -- --Face Value 2.00 2.00 2.