PROJECT REPORT 1
SHARES
Introduction to Shares :
Section 2(46) of the Companies Act, 1956 defines the term share –
“a share in the share capital of the company and includes stock except
where a distinction between stock and share is expressed or implied.”
Shares are regarded as goods in India. Section 82 of the Companies Act,
1956 deals with nature of Shares. A share of any member in a company is a
movable property transferable in the manner provided by the Articles of
Association of the company. Also Sale of goods Act 1930 while defining the
term Goods includes Shares and stock.
Different kind of Shares available under the Companies Act, 1956 :
a) Equity Share Capital-
Equity share capital means all share capital which is not preference
share capital. Thus a share capital which doesn’t satisfy the meaning of
the preference share capital in point b) below is equity share capital.
Different types of Equity Share Capital :
i) with voting rights, or
ii) with differential rights as to dividend, voting or otherwise.
b) Preference Share Capital-
Preference share is the one which fulfills both the following conditions :
i) with respect to dividend, it carries a preferential right to be paid
a fixed amount or an amount calculated at a fixed rate, which
may be either free of or subject to income tax.
ii) With respect to capital, it carries on a winding up, or repayment
of capital a preferential right to be repaid the amount of the
capital paid up or deemed to have been paid up whether or not
there is preferential right to the repayment of either or both of
the following amounts viz :
1) any money remaining unpaid, in respect of the amount
specified in a) above up to the date of winding up or
repayment of capital and
2) any fixed premium on any fixed scale specified with the
Memorandum of association or Articles of association of the
Company.
The different types of preference shares are:
1) Cumulative and Non-cumulative Preference shares.
2) Redeemable and irredeemable preference shares.
3) Participating and non participating.
I have selected the following three companies :
1) INFOSYS TECHNOLOGIES LTD.
2) BHARAT FORGE LIMITED
3) TATA STEEL LIMITED
INFOSYS TECHNOLOGIES LTD.
Introduction :
Pioneering a new generation of Strategic Offshore Outsourcing
Infosys Technologies Ltd. (NASDAQ: INFY) provides consulting and IT services
to clients globally - as partners to conceptualize and realize technology
driven business transformation initiatives. With over 58,000 employees
worldwide, we use a low-risk Global Delivery Model (GDM) to accelerate
schedules with a high degree of time and cost predictability.
As one of the pioneers in strategic offshore outsourcing of software services,
Infosys has leveraged the global trend of offshore outsourcing. Even as many
software outsourcing companies were blamed for diverting global jobs to
cheaper offshore outsourcing destinations like India and China, Infosys was
recently applauded by Wired magazine for its unique offshore outsourcing
strategy — it singled out Infosys for turning the outsourcing myth around and
bringing jobs back to the US.
Infosys provides end-to-end business solutions that leverage technology. We
provide solutions for a dynamic environment where business and technology
strategies converge. Our approach focuses on new ways of business
combining IT innovation and adoption while also leveraging an organization's
current IT assets. We work with large global corporations and new
generation technology companies - to build new products or services and to
implement prudent business and technology strategies in today's dynamic
digital environment.
Share Capital :
The Share capital of the Infosys Technologies Limited consists of Equity
shares only.
Details of Dividend declared/recommended by the Company :
The company paid an interim dividend of Rs. 6.50 per share (130% on the
par value of Rs. 5/- per share). The Board has recommended a final dividend
of Rs. 8.50 per share (170% on the par value of Rs. 5/- per share) and a
silver jublee dividend special dividend of Rs. 30.00 per share (600% on the
par value of Rs. 5/- per share) aggregating to Rs. 45.00 per share (900% on
the par value of Rs. 5/- per share). The total dividend amount is Rs. 1,238
crore for the Financial Year 2005-2006.
Earnings per share :
Particulars FY 2005-06 FY 2004-05
Basic EPS (Rs.) 88.67 70.95
Diluted EPS (Rs.) 86.20 69.10
Rate of Return :
Formula :
(Market price as on 15.05.06 – Market price as on 15.05.05) + Dividend
Market price as on 15.05.05
(3249.80 – 2084.40) + 45 X 100 = 58.02 %
2084.40
BHARAT FORGE LIMITED
Introduction :
Bharat Forge Ltd., the flagship company of the US $ 1.5 billion Kalyani
Group, is a 'Full Service Supplier' of engine & chassis components. It is the
largest exporter of auto components from India and leading chassis
component manufacturer in the world.
With manufacturing facilities spread over 9 locations and 6 countries - two
in India, three in Germany, one in Sweden, one in Scotland, one in North
America and one in China, the company manufactures a wide range of
safety and critical components for passenger cars, commercial vehicles and
diesel engines. The company also manufactures specialized components for
the railway, construction equipment, oil & gas and other industries. It is
capable of producing large volume parts in both steel and aluminium.
Bharat Forge has built up a strong capability in design and engineering,
including a full fledged product testing and validation facility, which gives
Bharat Forge a Full Service Supply Capability - from product
conceptualization to designing to manufacturing and product testing &
validation.
Share Capital :
The Share capital of the Bharat Forge Limited consists of Equity shares and
Preference shares.
Details of Dividend declared/recommended by the Company :
The Board of directors recommended a dividend of Rs. 3.00 per equity share
(150% on the par value of Rs. 2 per share)
Earnings per share :
Particulars FY 2005-06 FY 2004-05
Basic EPS (Rs.) 9.50 7.93
Diluted EPS (Rs.) 9.05 7.93
Rate of Return :
Formula :
(Market price as on 15.05.06 – Market price as on 15.05.05) + Dividend
Market price as on 15.05.05
(424 – 275.60*) + 3 X 100 = 54.93 %
275.60 *
* On 27th July 2005 as per approval of members of the company on 30th
March 2005 each equity share of Rs. 10 each was sub divided in to 5 equity
shares of Rs. 2 each, hence the market value of one equity share as on
15.05.2005 of Rs. 1378 has been divided by 5 for the sake of comparability.
TATA STEEL LIMITED
Introduction :
Established in 1907, Tata Steel is Asia's first and India's largest private sector
steel company. Tata Steel is among the lowest cost producers of steel in the
world and one of the few select steel companies in the world that is EVA+
(Economic Value Added).
Its captive raw material resources and the state-of-the-art 5 MTPA (million
tonne per annum) plant at Jamshedpur, in Jharkhand State, India give it a
competitive edge. Determined to be a major global steel player, Tata Steel
has recently included in its fold NatSteel, Asia (2 MTPA) and Millennium
Steel (1.7 MTPA) creating a manufacturing network in eight markets in South
East Asia and Pacific rim countries. Soon the Jamshedpur plant will expand
its capacity from 5 MTPA to 7 MTPA by 2008. The Company plans to enhance
its capacity, manifold through organic growth and investments. The
Company's wire manufacturing unit in Sri Lanka is known as Lanka Special
Steel, while the joint venture in Thailand for limestone mining is known as
Sila Eastern.
Tata Steel's products are targeted at the quality conscious auto sector and
the burgeoning construction industry. With wire manufacturing facilities in
India, Sri Lanka and Thailand, the Company plans to emerge as a major
global player in the wire business.
While the Company is focused in the pursuit of its operational goals, it is
also committed to being a good corporate citizen. Tata Steel extends
support to the economically underprivileged not by charity but by
strengthening and empowering them with expertise and knowledge. Its
community outreach programmes covers the Tata Steel managed city of
Jamshedpur and over 600 villages in and around its manufacturing and raw
materials operations.
Share Capital :
The Share capital of the Tata Steel Limited consists of Equity shares and
Preference shares.
Details of Dividend declared/recommended by the Company :
The Board, for the year ended 31st March, 2006 has recommended a dividend
Rs. 13.00 per equity share (130% on the par value of Rs. 10 per share)
Earnings per share :
Particulars FY 2005-06 FY 2004-05
Basic EPS (Rs.) 63.35 62.77
Diluted EPS (Rs.) 63.35 62.77
Rate of Return :
Formula :
(Market price as on 15.05.06 – Market price as on 15.05.05) + Dividend
Market price as on 15.05.05
(648 – 363.80) + 13 X 100 = 81.69 %
363.80
Comparative Analysis of the above companies :
Particulars Infosys Bharat Tata Steel
Technologies Forge Ltd. Ltd.
Ltd.
Face Value per share Rs. 5 Rs. 2 Rs. 10
Rate of dividend 900% 150% 130%
Rate of Return 58.02% 54.93% 81.69%
Market Price as on 15.05.06 Rs. 3249.80 Rs. 424.00 Rs. 648.00
Conclusion :
The aim of the shareholder is to maximize the wealth, therefore considering
the above comparision and the rate of return one would invest in Tata steel
Limited as the rate of return is on higher side. Also one may prefer to invest
in other two companies also since the rate of return is more than 50% in
those companies.