Informatics Publishing Limited

C. D. Balaji ¹, S. Praveen Kumar ¹, R. Arasu ², K. Suresh Kumar ¹

Affiliations
1 Department of Management Studies, Panimalar Engineering College, Chennai, IN
2 Department of Management Studies, Velammal Engineering College, Chennai, IN

Abstract

The Indian telecom industry is the second fastest growing in the world next only to China in terms of subscriber additions. The intense competition witnessed among players has resulted in price wars resulting in lower revenues and further the huge license fee imposed by the government has had a severe negative impact on the operating margins of the industry players. In this challenging scenario, the authors felt the need to analyse the financial position of one the leading players in the industry by employing the tool of leverage analysis. The company's EBIT growth has been moderate. All the three leverages has shown a marked increase during the study period. The interest expense to total debt ratio and concomitantly, the interest expense to total expenditure has also increased during the period of study. Variable costs as percentage of fixed costs has declined while variable costs as percentage of revenue has been stable. It was suggested that the company considered for the discussion and in general all telecom companies need to revisit their business model and focus on earning higher share of revenues through providing a comprehensive suite of value added services. Consistent efforts need to be taken on revenue generation and cost control in order to improve earnings visibility. Measures need to be taken to retire high cost debt in a phased manner so as to improve the liquidity and solvency position of the organizations.

Keywords

Operating Leverage, Financial Leverage, Combined Leverage, Fixed Costs, Variable Costs

Full Text

     

C. D. Balaji ¹, S. Praveen Kumar ¹, R. Arasu ², K. Suresh Kumar ¹

Affiliations
1 Department of Management Studies, Panimalar Engineering College, Chennai, IN
2 Department of Management Studies, Velammal Engineering College, Chennai, IN

Abstract

The insurance sector in India is on a high growth trajectory and has been growing at an attractive pace in the post liberalization era. Though insurance penetration has increased from 1.4% in 1999 to 4.7% currently, it also points out the huge potential that is waiting to be tapped. The liberalization of the sector in the year 1999, opened up the flood gates of competition. The intense competition has led to paradigm changes in the industry in terms of product offerings, introduction of riders, emergence of new distribution channels etc., The industry for a long time had been relying on the agency channel for garnering business. However the need for remaining competitive, reaching out to customers in different demographic segments and the imperative of faster growth have led insurers to innovate with regard to distribution channels also. In this context, a new emerging channel is malassurance, which is the distribution of insurance through malls. With the organised retail sector expanding at a rapid pace, there has been a phenomenal increase in the construction of malls. The rising foot falls in malls has motivated Future Generali Life Insurance Co., to tap the potential of this emerging trend and distribute insurance through malls. This paper discusses the concept of malassurance, the performance and potential of malassurance, the current scenario and also the measures taken by the company to make it successful.

Keywords

Insurance, Customer Acquisition, Innnovative Distribution Channels, Malls, Mallassurance

Full Text

     

C. D. Balaji ¹, S. Praveen Kumar ², R. Arasu ³

Affiliations
1 Department of Management Studies, Panimalar Engineering College Chennai, IN
2 Department of Management Studies, Panimalar Engineering College, Chennai, IN
3 Department of Management Studies, Velammal Engineering College, Chennai, IN

Abstract

One of the important decisions that a finance manager has to take is the capital structure decision. The decision relating to the financing of capital needs to be taken considering a wide variety of factors and the interplay between these factors. Among the sectors in the Indian economy, the Indian pharmaceutical sector has been witnessing steady growth with many of the Indian pharma companies becoming preferred partners for contract manufacturing and also for research and development. Many of the Indian pharma firms have been active in the international space in terms of licensing arrangements and mergers and acquisitions. Among the pharma firms operating in India, Sun Pharma, Biocon and Glaxo Smithkline have reported consistent growth of profits. Therefore this study was undertaken to analyse the changes in the capital structure and growth in firm value. The study is analytical in nature and is based on secondary data. Data for the purpose of the study was sourced from the published annual reports of the companies for the period 2008-09 to 2012-13. On a comparative basis, GlaxoSmithkline has the lowest debt burden and therefore has a lower interest outflow. The company has been able to earn higher returns to the equity shareholders of the company. SunPharma has a higher proportion of debt in its capital structure when compared to the other two companies, however, because of the higher profit earning capacity it is in a comfortable position with regard to debt repayment capacity. Considering the high profitability and very low proportion of debt in its capital structure, GlaxoSmithKline can consider opting for borrowing in its future fund raising plans in order to benefit from leverage.

Keywords

Capital Structure, Leverage, Profits, EPS, Interest.

Full Text