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Fundamental Analysis of script under hotel industry
Nov 24, 2014
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Globally, the travel, tourism and hospitality industry is one of the largest service
industries in terms of revenue generation and foreign exchange earnings, contributing
over 9% to global GDP. It is also one of the largest employment generators in the world.
An estimated 235 million people work directly or in related sectors, accounting for more
than 8% of global employment.
The Hotel Industry comprises a major part of the Tourism industry. Historically viewed
as an industry providing a luxury service valuable to the economy only as a foreign
exchange earner, the industry today contributes directly to employment (directly
employing around 0.15 million people), and indirectly facilitates tourism and commerce.
The industry had witnessed a slowdown in 2009 on account of the global financial
meltdown. Low business and consumer confidence along with other concerns such as
availability of credit, exchange rate fluctuation, H1N1 virus, terrorist attacks, etc
aggravated the situation. Nevertheless, the industry witnessed a revival in the last quarter
of 2009, largely led by recovery in Asia and the Middle East.
India is one of the fastest growing tourism markets in the world today. Various policy
measures undertaken by the Government have aided the Indian travel, tourism and
hospitality industry’s growth. Concerted efforts by both the private and public sectors
will enable us position India as a global brand to take advantage of the burgeoning global
travel trade and the vast untapped potential of India as a major tourist destination.
Industry characteristics
Major characteristics of the Indian hospitality industry are:
High seasonality
The Indian hotel industry normally experiences high demand during October–April,
followed which the monsoon months entail low demand. Usually the December and
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March quarters bring in 60% of the year’s turnover for India’s hoteliers. However, this
trend is seeing a change over the recent few years. Hotels have introduced various
offerings to improve performance (occupancy) during the lean months. These include
targeting the conferencing segment and offering lucrative packages during the lean
period.
Labour intensive
Quality of manpower is important in the hospitality industry. The industry provides
employment to skilled, semi-skilled, and unskilled labour directly and indirectly. In India,
the average employee-to-room ratio at 1.6 (2008-09), is much higher than that for hotels
across the world. The ratio stands at 1.7 for five-star hotels and at 1.9 and 1.6 for the
four-star and three-star categories respectively. Hotel owners in India tend to “over-spec”
their hotels, leading to higher manpower requirement. With the entry of branded
international hotels in the Indian industry across different categories, Indian hotel
companies need to become more manpower efficient and reconsider their staffing
requirements.
Fragmented
The Indian hotel industry is highly fragmented with a large number of small and
unorganized players accounting for a lion’s share. The major players in the organised
segment include The Taj, Oberoi, ITC Hotels, and East India Hotels. The fragmented
nature of the Indian hospitality industry is reflected in the Herfindahl Index of
Concentration, which was at 0.062 in FY07.
Classification of hotels
The Ministry of Tourism has formulated a voluntary scheme for classification of
operational hotels into different categories, to provide contemporary standards of
facilities and services at hotels. Based on the approval from the Ministry of Tourism,
hotels in India can divided into two categories:
1) classified hotels
2) unclassified hotels
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Classified hotels
Hotels are classified based on the number of facilities and services provided by them.
Hotels classified under the Ministry of Tourism enjoy different kinds of benefits such as
tax incentives, interest subsidies, and import benefits. Due to lengthy and complex
processes for such classification, a significant portion of the hotels in India still remain
unclassified. The Ministry of Tourism classifies hotels as follows:
Star category hotels
Heritage hotels
Licensed units
Star category hotels
Within this category, hotels are classified as five-star deluxe, five-star, four-star, three-
star, two-star and one-star.
Heritage hotels
These hotels operate from forts, palaces, castles, jungles, river lodges and heritage
buildings. The categories within heritage classification include heritage grand, heritage
classic and heritage basic.
Licensed units
Hotels/establishments, which have acquired approval/license from the Ministry of
Tourism to provide boarding and lodging facilities and are not classified as heritage or
star hotels, fall in this category. These include government-approved service apartments,
timesharing resorts, and bed and breakfast establishments.
Unclassified hotels
Branded players
This segment mainly represents the branded budget hotels in the country, which bridge
the gap between expensive luxury hotels and inexpensive lodges across the country.
Budget hotels are reasonably priced and offer limited luxury and decent services.
Increased demand and healthy occupancy have fuelled growth of budget hotels. These
hotels use various cost control measures to maintain lower average room rates without
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compromising on service quality. Ginger Hotels, ITC Fortune, Hometel, and Ibis are
some of the popular budget hotels.
Other smaller players
These are small hotels, motels and lodges that are spread across the country. This
segment is highly unorganised and low prices are their unique selling point.
List of players in the industry
Indian Hotels Company Ltd.
Mahindra Holidays & resorts India Ltd.
TAJGVK Hotels & Resorts Ltd.
Oberoi Group of Hotels
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The Park Group of Hotels
Welcome Heritage Group of Hotels
ITC Welcome group of Hotels
1. INDIAN HOTEL COMPANY LTD.
The Indian Hotels Company Limited (IHCL) and its subsidiaries are collectively known
as Taj Hotels Resorts and Palaces and is recognised as one of Asia's largest and finest
hotel company. Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, the
company opened its first property, The Taj Mahal Palace Hotel, Bombay in 1903. The
Taj, a symbol of Indian hospitality, completed its centenary year in 2003.
Taj Hotels Resorts and Palaces comprises 66 hotels in 42 locations across India with an
additional 16 international hotels in the Maldives, Malaysia, Australia, UK, USA,
Bhutan, Sri Lanka, Africa and the Middle East. .
Spanning the length and breadth of the country, gracing important industrial towns and
cities, beaches, hill stations, historical and pilgrim centres and wildlife destinations, each
Taj hotel offers the luxury of service, the apogee of Indian hospitality, vantage locations,
modern amenities and business facilities. .
IHCL operate in the luxury, premium, mid-market and value segments of the market
through the following: .
Taj (luxury full-service hotels, resorts and palaces) is our flagship brand for the world’s
most discerning travelers seeking authentic experiences given that luxury is a way of life
to which they are accustomed. Spanning world-renowned landmarks, modern business
hotels, idyllic beach resorts, authentic Rajput palaces and rustic safari lodges, each Taj
hotel reinterprets the tradition of hospitality in a refreshingly modern way to create
unique experiences and lifelong memories. .
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Taj also encompasses a unique set of iconic properties rooted in history and tradition that
deliver truly unforgettable experiences. A collection of outstanding properties with strong
heritage as hotels or palaces which offer something more than great physical product and
exceptional service. This group is defined by the emotional and unique equity of its
iconic properties that are authentic, non- replicable with great potential to create
memoriesandstories.
Taj Exotica is our resort and spa brand found in the most exotic and relaxing locales of
the world. The properties are defined by the privacy and intimacy they provide. The
hotels are clearly differentiated by their product philosophy and service design. They are
centered around high end accommodation, intimacy and an environment that allows its
guest unrivalled comfort and privacy. They are defined by a sensibility of intimate design
and by their varied and eclectic culinary experiences, impeccable service and authentic
Indian Spa sanctuaries. .
Taj Safaris are wildlife lodges that allow travelers to experience the unparalleled beauty
of the Indian jungle amidst luxurious surroundings. They offer India’s first and only
wildlife luxury lodge circuit. Taj Safaris provide guests with the ultimate, interpretive,
wild life experience based on a proven sustainable ecotourism model.
Vivanta by Taj Hotels & Resorts span options for the work-hard-play-hard traveller
across metropolitan cities, other commercially important centres as well as some of the
best-loved vacation spots. .
Stylish & sophisticated, Vivanta by Taj delivers premium hotel experiences with
imagination, energy & efficiency. It's the flavour of contemporary luxury, laced with cool
informality and the charming Taj hospitality. Created for the cosmopolitan global
traveller and bon vivant, Vivanta by Taj Hotels & Resorts create experiences that will
amuse, invigorate & inspire you. .
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Vivanta revels in a spirit that presents the normal with an unexpected twist. Experiences
which make you pause & appreciate the hidden beauty in life! .
The Gateway Hotel (upscale/mid-market full service hotels and resorts) is a pan-India
network of hotels and resorts that offers business and leisure travelers a hotel designed,
keeping the modern nomad in mind. At the Gateway Hotel, we believe in keeping things
simple. This is why, our hotels are divided into 7 simple zones- Stay, Hangout, Meet,
Work, Workout, Unwind and Explore. .
Ginger (economy hotels) is IHCL’s revolutionary concept in hospitality for the value
segment. Intelligently designed facilities, consistency and affordability are hallmarks of
this brand targeted at travelers who value simplicity and self-service. .
CORPORATE SUSTAINABILITY AND SOCIAL RESPONSBILITY
As a part of Tatas; India’s premier business house; we; at Taj Hotels, have always
believed in society and environment being integral stakeholders in our business along
with our shareholders, customers, vendors and others. Over the last decade, the
movement towards ecologically sound tourism has gained urgency and importance across
the globe and we recognize that responsible practices in vogue are as diverse as the
geographies.
We promote corporate citizenship through our strategic public-private partnerships which
encourage building livelihoods of less-advantaged youth and women. The causes we
promote include reducing malnutrition, promoting indigenous artisans and craftsmen and
enhancing employability of identified target groups by sharing our core competencies as
a leading hospitality company. We encourage training and development of differently
abled youth. .
We believe in continuous learning and sharing and would be delighted to have your
thoughts and suggestions.
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2. MAHINDRA HOLIDAYS & RESORTS INDIA LTD.
Our Company was incorporated in September, 1996 in Chennai as Mahindra Holidays &
Resorts India Private Limited. The status of our Company was changed to a public
limited company by a special resolution of the members passed at a shareholders’
meeting held on January 29, 1998. The fresh certificate of incorporation consequent on
change of name was granted to our Company on April 17, 1998 .
An agreement dated August 27, 2006, was executed between our Company and
Ashtamudi Resorts Private Limited wherein the entire share capital of Ashtamudi Resorts
Private Limited was purchased by our Company. Our Board of Directors gave approval
to amalgamate Ashtamudi Resorts Private Limited, our wholly-owned subsidiary with
our Company. The High Courts of Madras and Kerala approved the amalgamation of
Ashtamudi Resorts Private Limited with our Company with effect from July 1, 2007, by
orders dated February 19, 2008 and February 7, 2008, respectively.
Management:
Mahindra
Holidays &
Resorts
India Ltd.,
(MHRIL) a
part of the
Name Designation
A K Nanda Chairman & Non-Exe.Director
Cyrus J Guzder Director
P S Doraiswamy Chief Financial Officer
Peter Martin Head - Resort Operations
Rajiv Balakrishnan
Co.Secretary & Compl. Officer
Rajiv Balakrishnan
Secretary
Rajiv Sawhney Chief Executive Officer
Rama Bijapurkar
Director
Ramesh Ramanathan
CEO
Ramesh Ramanathan
Managing Director
Rohit Khattar Director
Sridar A Iyengar Director
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Infrastructure Sector of the Mahindra Group, brings to the industry values such as
Reliability, Trust and Customer Satisfaction. Started in 1996, the company’s flagship
brand ‘Club Mahindra Holidays’, today has a fast growing customer base of over 79,000
members and 23 beautiful Resorts at some of the most exotic spots in India and abroad.
Mission: Good Living. Happy Families.
Vision: We will be Asia’s No.1 Company in Holidays & Leisure Services for the
Urban Family.
We will achieve this through customer centric practices that ensure Service Excellence,
Innovation & Employee Pride.
We will create wealth for the Stakeholders and be a Responsible Corporate Citizen.
Global Trot with Club Mahindra:
A Club Mahindra membership gets you access to over 4600+ resorts across over 90
countries. Holidaying abroad is made extremely economical – a simple nominal exchange
fee paid for in Indian rupees gets you holiday accommodation for the entire family.
National Network:
Club Mahindra has established a nationwide reach by setting up a network of offices. It
has 9 offices spread across the country with a team of over 200 marketing and support
executives who are specifically trained on service
Activities
Club Mahindra endeavors to make holidays enjoyable. The company trains latent talent
across resort to form a team of ‘Champs’, who work on creating a 'comeback value' based
on 'experiences.' Activities are designed specifically to cater to all ages. The ability to
anticipate customer needs and delivering them has been a major strength of the company.
The range of activities span adventure sports, watersports, camping, treks, indoor family
games and hobby programs for children and adults. Apart from those above, specific
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recreational facilities that include a fully equipped gymnasium, swimming pool, and
ayurvedic center form part of Club Mahindra’s resorts.
Member Relation Center:
A dedicated, well trained team of holiday consultants work out of the ‘state of the art’
Member Relations Center at Chennai. A local call number provides easy and direct
access to the Call Centre seven days a week.
Personalized Services:
The service in all the resorts is professional and highly personalized. From choice of food
(a variety of restaurants are available for guests to choose from), Holiday activities (all
seasons and all ages) and personal touch in dealing with guests (eg. recognize names and
to understand and serve specific requirements), Club Mahindra benchmarks expectations
and redefines entitlements.
3. INTRODUCTION OF THE TAJGVK HOTELS & RESORTS LTD.
The Company was incorporated in 1902 and it opened its first hotel, The Taj Mahal
Palace & Tower, Mumbai, in 1903. The Company then undertook major expansion of
The Taj Mahal Palace & Tower, Mumbai by constructing an adjacent tower block and
increasing the number of rooms from 225 to 565 rooms. With the completion of its initial
public offering in the early 1970s, the Company began a long term programme of
geographic expansion and development of new tourist destinations in India which led to
its emergence as a leading hotel chain in India. From the 1970s to the present day, the Taj
Group has played an important role in launching several of India's key tourist
destinations, working in close association with the Indian Government. The Taj Group
has a philosophy of service excellence which entails providing consistently high levels of
personalized service and innovative means of improving service quality.
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The Taj Group has been active in converting former royal palaces in India into world
class luxury hotels such as the Taj Lake Palace in Udaipur, the Rambagh Palace in Jaipur
and Umaid Bhawan Palace in Jodhpur. In 1974, the Taj Group opened India's first
international five star deluxe beach resort, the Vivanta by Taj - Fort Aguada, Goa. The
Taj Group also began its business in metropolitan hotels in the 1970s, opening the five-
star deluxe hotel Taj Coromandel in Chennai in 1974, acquiring an equity interest and
operating contract for the Vivanta by Taj - President, a business hotel in Mumbai, in
1977, and opening the Taj Mahal Hotel in Delhi in 1978 .
In 1980, the Taj Group took its first step internationally by opening its first hotel outside
India, the Taj Sheba Hotel in Sana'a, Yemen and in the late 1980s, acquired interests in
the Crown Plaza, London, St. James Court, London and 51 Buckingham Gate Luxury
Suites and Apartments in London .
In 1984, the Taj Group acquired under a license agreement each of The Taj West End,
Bangalore, Vivanta by Taj - Connemara, Chennai and Savoy Hotel, Ooty, with which the
Taj Group made its foray into Bangalore .
With the opening of the five star deluxe hotel Taj Bengal in Kolkata in 1989; the Taj
Group became the only hotel chain with a presence in the five major metropolitan cities
of Mumbai, Delhi, Kolkatta, Bangalore and Chennai. Concurrently with the expansion of
its luxury hotel chain in the major metropolitan cities, the Taj Group also expanded its
business hotels division in the major metropolitan and large secondary cities in India.
During the 1990s, the Taj Group continued to expand its geographic and market coverage
in India. It developed specialized operations (such as wildlife lodges) and consolidated its
position in established markets through the upgrading of existing properties and
development of new properties. Taj Kerala Hotels & Resorts Limited was set up in the
early 1990s along with the Kerala Tourism Development Corporation. In 1998 the Taj
Group opened the Vivanta by Taj - Bentota which strengthened the Taj Group's market
position in Sri Lanka. In 2000, the launch of the 56 acre Taj Exotica, Goa and the Vivanta
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by Taj - Hari Mahal, Jodhpur were completed. .
In 2000, the Taj Group entered into a partnership with the GVK Reddy Group to set up
Taj GVK Hotels and Resorts Limited and thereby obtained a prominent position in the
market in the southern business city of Hyderabad, holding three hotels and a major share
of the market. In 2001, the Taj Group took on the management contract of Taj Palace
Hotel, Dubai, and has established itself as an up-market hotel in the Middle East region.
The Taj Exotica Resort & Spa, Maldives launched the Taj Group into the premium
luxury hotel market and since its opening in July 2002, has won several international
awards. The Taj Group also obtained licenses to manage and operate two leisure hotels;
the Rawal-Kot, Jaisalmer and Usha Kiran Palace, Gwalior in October 2002. .
In September 2002, the Taj Group acquired an equity interest in the former Regent Hotel
in Bandra which gave the Taj Group access to the midtown and North Mumbai market.
The hotel has since been renamed as the Taj Lands End, Mumbai. .
In 2003, the Company celebrated the centenary of the opening of its Flagship hotel, the
Taj Mahal Palace & Tower, Mumbai. .
In 2004 the Taj Group opened Wellington Mews, its first luxury serviced apartment in
Mumbai. In the same year, the Taj Group also launched the first of its "value-for-money"
hotels in Bangalore branded 'Ginger', which division has 11 hotels in various locations in
India and is owned through its wholly owned subsidiary. .
In 2005 the Company acquired on lease The Pierre, a renowned hotel in New York City,
to enter the luxury end of the developed hotel markets internationally. The Company
entered into a management contract for Taj Exotica in Palm Island Jumeirah in Dubai to
expand its existing presence in the United Arab Emirates. .
The Company enhanced its position as an operator of converted palaces by entering into a
management contract for Umaid Bhawan Palace, Jodhpur in the princely state of
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Rajasthan in India. The Company, through a subsidiary, acquired the erstwhile ‘W’ hotel
in Sydney, Australia in February 2006 and renamed it as ‘Blue, Woolloomooloo Bay’. To
expand its presence in the US market, the Company acquired in early 2007 Ritz Carlton
in Boston and Taj Campton Place in San Francisco. .
Hotels operated by the Taj Group internationally are located in US, Australia, Dubai,
Maldives, Malaysia, Sri Lanka, the United Kingdom, Yemen and Zambia. .
Scheme of Amalgamation:
On October 12, 2006, the Board of Directors of the Company approved the Scheme,
under Sections 391 to 394 of the Companies Act for the for the amalgamation of Indian
Resorts Hotel Limited, Gateway Hotels and Getaway Resorts Limited, Kuteeram Resorts
Private Limited, Asia Pacific Hotels Limited, Taj Lands End Limited (Transferor
Companies) with the Company. The Scheme was approved by the respective High
Courts.
The Transferor Companies and the Company were engaged in the leisure and business
hotels as part of the Taj group of hotels. A consolidation of the Transferor Companies
and the Company was therefore expected to lead to greater synergy in operations, a more
efficient utilization of capital and create a stronger base for future growth of business in
general and the Company in particular. The amalgamation was expected to result in
administrative rationalization, organizational efficiencies, and optimal utilization of
resources.
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INTRODUCTION OF ANGEL BROKING
In a short span of 18 years since inception, The Angel Group has emerged as one of the 5
retail stock broking houses in India, having membership BSE, NSE and the two leading
commodity exchanges in the country i.e. NCDEX and MCX. Angel Broking Ltd is also
registered as a depository participant with CDSL.
The group is promoted by Mr. Dinesh Thakkar, who started this enterprise as a small sub-
broker in 1987 with staff strength of 3 personnel. As on date, the group is managed by a
team of 1589 + direct employees and a nation wide network comprising 12 Regional
Centers , 58 branches, 2014 + registered sub brokers and business associates and 5552+
active trading terminals which cater to the requirements of 162085 + retail clients.
At Angel, It habitually generate value added features without the cost burden being
passed onto the clients as we strongly believe that better understanding of clients needs
and wants is our top priority. Our e-broking facility is one such effort, which gives you a
platform to access state of art trading facility at the click of a button.
MANAGEMENT
Professional and highly experienced people headed by Mr. Dinesh Thakkar manage the
group. He has 14 years experience in the field of stock broking. He is well supported by
Mr.Mukesh R. Gandhi , a 19 years veteran in stock markets & Mr. Lalit Thakkar with 10
years experience in the field of equities research team and dependable operation team.
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MISSION STATEMENT :
The main mission statement of Angel broking Ltd. Is to be on the top in and around
Rajkot and SAURASTRA peninsula with the help of retail, bulk business within three
years.
For FY 2009-10 will be on Bulk business from existing sub-brokers of competitors by
giving those competitive pricing, better connectivity and Post trading Back-up software
in post centralized and direct billing era.
VISION STATEMENT :
To provide best value for money to investor through innovative products, trading or
investment strategies, state of the art technology and personalized services.
CORE COMPETENCE:
Top quality research & portfolio advisory services for equities
Retail focused research products
Robust internet trading facility
Commodities research & broking services
Depository services through CDSL
Web based 24 x 7 back office software
Good understanding the sub-broker and retail customer needs
Professional work culture with a personal touch
Cost effective processes
State-of-the-art technology
Streaming quotes & real time charts for BSE/NSE [cash / derivatives]
BUSINESS NETWORK:
Regional Offices
(1) Ahmedabad
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(7) Kolkata
(2) Bangalore
(8) Mumbai
(3) Chennai
(9) New Delhi
(4) Hyderabad
(10) Pune
(5) Indore
(11) Rajkot
(6) Jaipur
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(12) Surat
PRODUCT OFFERED BY ANGEL:
Angel Broking Ltd. Provides its best services by its products which represent the whole
image of the mind of clients and those products are:
OFFLINE
The Off-Line account is trading account through which one can buy and sell through
his/her telephone or by personal visit at Angel shop.
This facility is for those who are not comfortable with computer and want to trade.
ONLINE
The Online trading facilities provided by Angel is basically divided into three types i.e.
Angel Diet, Angel Anywhere, and Angel Trade.
ANGEL
OnlineOffline
Angel Diet Angel Angel
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Angel-DIET
Application based ideal for traders
User friendly & simple navigation
Robust & Speedier execution of trade
5 segment BSE, NSE, F&O, MCX, and NCDEX
Angel Trade
Browser based for investors
No installation required
Advantage of mobility
Trading as simple as internet surfing
5 segment BSE, NSE, F&O, MCX, and NCDEX
Angel Anywhere
Application based ideal for traders using technical tools
Intraday / Historical charts with various indicators
3 segment BSE, NSE, Derivatives
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Research methodology is a way to systematically solve the research problem. The
research methodology using for find out the solution of the research problem is analytical
research methodology and some extend descriptive research methodology.
Statement of the problem:
“FUNDAMENTAL ANALYSIS OF SCRIPT UNDER HOTEL INDUSTRY”
Research Design
There are three main types of research design
1. Exploratory design
In exploratory design the emphasis is on discovery of new ideas. The main objective of
this design is to generate new idea. The two ways of doing exploratory design is the focus
group interview & the case studies.
2. Descriptive studies
When a researcher is interested in knowing the characteristics of certain group such as
age, gender, education level, occupation, income, descriptive may be necessary.
Descriptive studies are factual and are very simple.
3. Causal design
As the name implies a causal design investigates the cause and effect relationship
between two or more variables. The two types of the causal designs are:
a) Natural experiments
b) Controlled experiments
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The study report “Fundamental Analysis on script under Hotel Sector” is consider the
descriptive research design.
Sources of Data:
Secondary Data
The sources of secondary data for solve the problems are:-
Company Annual Report
Books
Internet-Websites
Economic survey
Objectives of the study:
1. To analyze the present scenario of the hotel industry.
2. To study the present situation of the Indian economy.
3. Analyze the information collected on sales, profit, earning per share, etc.
4. To do ratio analysis of the selected companies and make necessary comments on it so as
to provide complete idea and core ideology of the company.
5. To help to investor in decision to invest in different hotel companies.
6. To complete the task as a part of B.B.A. programme.
Scope of the study:
The scope of the study is limited to analysis of only three companies which is taken into
the study. So, other company is not included in this project.
To analyse the hotel companies and evaluate the best for the investment.
Significance of the company:
a) After the complete study regarding Hotel industry in India, the investors can get idea
about the:
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Safety of the investment
Stability of current returns
Appreciation in the value of capital
Systematic investment plan
b) To evaluation the different Hotel companies and their performance
Limitations of the Project
1. As the data available to me has been taken from the secondary sources (like internet). It is
not sure that collected data are accurate and complete.
2. Because of the time limitation, it may be possible that some important data are left out.
3. Due to lack of experience and knowledge of the Hotel industry it can’t be said that the
projection has been made totally correct and accurate.
4. As the time available was very less, so fundamental analysis has been done only of Three
companies. This may led to misinterpretation of the industry.
5. Today’s stock market is totally running on the investors perception so the conclusion
derived on the basis if fundamental analysis would not viable in long run.
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What is Fundamental Analysis?
Fundamental analysis is the study of economic, industry, and company conditions in an
effort to determine the value of a company's stock. Fundamental analysis typically
focuses on key statistics in a company's financial statements to determine if the stock
price is correctly valued.”
The main principle of fundamental analysis is to find profitable companies to invest in by
comparing revenues, sales, management, etc. Fundamentals include earnings report,
dividends, sales, inventories, profit margins, P/E ratio, market share , etc. Those looking
to invest in a company will be the most likely to use fundamental analysis. T
Weaknesses of Fundamental Analysis
Time Constraints
Fundamental analysis may offer excellent insights, but it can be extraordinarily time-
consuming. Time-consuming models often produce valuations that are contradictory to
the current price prevailing on Wall Street. When this happens, the analyst basically
claims that the whole street has got it wrong. This is not to say that there are not
misunderstood companies out there, but it is quite brash to imply that the market price,
and hence Wall Street, is wrong.
Industry/Company Specific
Valuation techniques vary depending on the industry group and specifics of each
company. For this reason, a different technique and model is required for different
industries and different companies. This can get quite time-consuming, which can limit
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the amount of research that can be performed. A subscription-based model may work
great for an Internet Service Provider (ISP), but is not likely to be the best model to value
an oil company.
Subjectivity
Fair value is based on assumptions. Any changes to growth or multiplier assumptions can
greatly alter the ultimate valuation. Fundamental analysts are generally aware of this and
use sensitivity analysis to present a base-case valuation, a best-case valuation and a
worst-case valuation. However, even on a worst-case valuation, most models are almost
always bullish, the only question is how much so. The chart below shows how stubbornly
bullish many fundamental analysts can be.
Steps to fundamental Analysis:
The most common way that fundamental analysis is done in is in three steps:
1. Economic Analysis:-
The first step to this type of analysis includes looking at the macroeconomic
situation. This includes GDP, growth rates, inflation, interest rates, exchange rates,
productivity and energy prices.
2. Industry Analysis: -
The next step taken in analysis in this category is looking at the industry as a
whole. This includes total sales, price levels, competition and their effects, foreign
competition as well as any entrances or exits from the industry.
3. Company Analysis:-
Last in this process of studying the fundamentals includes looking at the company
individually. This includes looking at unit sales, prices, new products, earnings and any
chance of debt or equity occurring.
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The purpose of analyze economic condition of the country in fundamental
analysis to assess the general economic situation both within the country and inter
nationally.
The economy is like the tide and the various industry groups and individual
companies are like boats. When economy expands most industry groups and companies
benefits and grows. When the economy decline, most sectors and companies usually
suffer. The stock market does not operate in a vacuum it is an integral part of ht whole
economy of a country, more so in a free economy that of United States and to some
extent in mixed economy like ours.
To gain an insight into the complexities of stock market. One needs to develop a
sound economic understanding and be able to interpret the impact of important economic
indicators on stock markets.
The following are some important factors which should be taken into account while
doing fundamental analysis:
Economic Growth
Per capita income
Industrial Production
Inflation
Interest Rates
Budgetary Deficit
Domestic Savings and Investment
Tax Rates
Infrastructure
Introduction of Indian Economy:
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The economic history of India since Indus Valley Civilization to 1700 AD can be
categorized under this phase. During Indus Valley Civilization Indian economy was very
well developed. It had very good trade relations with other parts of world, which is
evident from the coins of various civilizations found at the site of Indus valley.
Before the advent of East India Company, each village in India was a self sufficient
entity. Each village was economically independent as all the economic needs were
fulfilled with in the village. Then came the phase of Colonization. The arrival of East
India Company in India ruined the Indian economy. There was a two-way depletion of
resources. British used to buy raw materials from India at cheaper rates and finished
goods were sold at higher than normal price in Indian markets. During this phase India's
share of world income declined from 22.3% in 1700 AD to 3.8% in 1952. After India got
independence from this colonial rule in 1947, the process of rebuilding the economy
started. If on one hand agriculture received the immediate attention on the other side
industrial sector was developed at a fast pace to provide employment opportunities to the
growing population and to keep pace with the developments in the world. Since then
Indian economy has come a long way. The Gross Domestic Product (GDP) at factor cost,
which was 2.3 % in 1951-52 reached 8.2% in financial year 2010-11.
1. GDP:
India’s travel and tourism industry directly and indirectly is expected to account for
around 8.6% of the country’s GDP in 2010. The direct contribution of the travel and
tourism industry is expected to be around 3.1% of total GDP.
2. Per capita income
Per capita income at current prices rose by 17.28 per cent in 2010-11 against Rs 40,141
in the previous fiscal, according to figures released by Central Statistical Organization.
Notwithstanding the rise in per capita income, it still stands much below the international
standards. A person with an annual income of Rs 29,382 ranks 50,411,696th in the world.
30
On the
other
hand,
India
also
houses
the most
number
of
billionaires in Asia-36, ahead of economic powerhouse Japan, according to Forbes
magazine.
4. Inflation
Inflation is no stranger to the Indian economy. In fact, till the early nineties Indians were
used to double-digit inflation and its attendant consequences. But, since the mid-nineties
controlling inflation has become a priority for policy framers.The natural fallout of this
has been that we, as a nation, have become virtually intolerant to inflation. While
inflation till the early nineties was primarily caused by domestic factors (supply
2005-06 2006-07 2007-08 2008-09 2009-10 2010-110
2
4
6
8
10
12
GDP GROWTH RATE(%)
GDP GROWTH RATE
31
2005-06 2006-07 2007-08 2008-09 2009-10 2010-110
2
4
6
8
10
12
INFLATION(%)
usually was unable to meet demand, resulting in the classical definition of inflation of too
much money chasing too few goods), today the situation has changed significantly.
Inflation today is caused more by global rather than by domestic factors. Naturally, as the
Indian economy undergoes structural changes, the causes of domestic inflation too have
undergone tectonic changes.
Needless to emphasise, causes of today's inflation are complicated. However, it is indeed
intriguing that the policy response even to this day unfortunately has been fixated on the
traditional anti-inflation instruments of the pre-liberalisation era.
5. Interest Rates
A low interest rate of is a must for economic development. the finance minister assured
the industry that interest rates would be brought down in India the target interest appears
to be the inflation rate plus 3%.thus,if inflation settles at 5%, the interest rate should be
approximately 8%.
6. Foreign Exchange Reserves
The level of foreign exchange reserves has steadily increased from US$ 5.8 billion as at
end-March 1991 to US$ 113.0 billion by end-March 2004 and further to US$ 151.6
billion by end- March 2006. It stood at US$ 297.3 billion as at 2010-11. Although both
32
US dollar and Euro are intervention currencies, the foreign exchange reserves are
denominated and expressed in US dollar only.
7. Budgetary Deficit
A budget deficit arises out of an imbalance between the receipts and payments of the
Government. Huge budget deficits have a variety of harmful consequences. Another
adverse consequence of a huge budget deficit is the build-up of the ‘national debt’.
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
-2
-1
0
1
2
3
4
5
6
7
GROSS FISCAL DEFICITREVENUE DEFICITPRIMARY DEFICIT
8. Industrial production
With 7.3 per the manufacturing sector recorded a lower growth of 9.8 per cent during
April-November 2010 as compared with 11.8 per cent during April-November2010.
Mining sector recorded a growth of 4.9 per cent as compared with 4.2per cent, while the
electricity sector moderated to 7.0 per cent as compared cent during April-November
2010.
The moderation in manufacturing sector growth was due to decelerated/negative growth
of eleven out of the seventeen manufacturing industry groups for 49.3 per cent weight in
the IIP These, among others, included 'machinery and equipment', 'basic metal and alloy
industries', 'rubber, plastic, petroleum and coal products', 'cotton textiles', 'non-metallic
mineral products', and 'transport equipment and parts'. 'Metal products and parts' group
33
recorded a decline due to the performance of tin metal containers, welded link chains and
razor blades. The 'leather and leather and fur products' group, however, made a
turnaround to register positive growth during the period. In terms of use-based
classification, the capital and intermediate goods sectors recorded double-digit growth
during April-November 2010.
9. Infrastructure
Different constituents of infrastructure have shown improvement in the current financial
year. In the power sector, power generation and plant load factor are on course to achieve
their annual targets. In the transport sector, the total earnings of the railways have shown
an increase close to 11% during April-September 2010, while passenger traffic handled at
domestic air terminals grew by about 28% during April-August 2010. An ambitious
National Highway Development Programme (NHDP), involving a total investment of
Rs.220,000 crore up to 2012, has been established. In telecommunications, telephone
connections have increased by 65% while cell phone connections have grown by 53%
during April-August 2010. India Post launched its first aircraft, with a 15 tonne load
capacity, in August 2010. Needless to say, India must make enormous investments in its
social and economic infrastructure in the near future. The Planning Commission has
estimated that the total investment in infrastructure in the 11th Five Year Plan must
increase from 4.5% to around 8% of the GDP. Under the governing rules of fiscal
management in the FRBM regime, budgetary deficits are being strictly monitored,
restricting the scope for unlimited fiscal expansion. Hence, the solution to the challenge
of infrastructure is partly located in public-private partnerships, which not only bridge the
gap in resources but also bring in private sector expertise and efficiency in the operation
and maintenance of assets. During a decade of experience with PPPs in India, The
Government of India has taken several initiatives like viability gap funding, Public
Private Partnership Appraisal Committee (PPPAC) and India Infrastructure Finance
Company Ltd. (IIFCL) to promote PPPs.
34
The purpose of industry analysis is to review prevailing conditions within specific
industry and its segments. The company's industry obviously influences the outlook for
the company. Even the best stocks can post mediocre returns if they are in an industry
that is struggling.
“It is often said that a weak stock in a strong industry is preferable to a strong stock in a
weak industry.”
To assess the industry group potential, an investor would want to consider the overall
growth rate, market size, and its importance to economy. While the individual company
is still important, its industry group is likely to exert as much as, or more, influence on
the stock price. When stock move the usually move as groups; there are very few lone
guns out there. An understanding of the industry sector involved, including the maturity
of the sector and any cyclical effects that the overall economies have on it, is also
necessary.
SWOT Analysis
STRENGTHS
A very wide variety of hotels is present in the country.
35
There are international players in the market such as Taj and Oberoi &International
Chains
A manpower cost in the Indian hotel industry is one of the lowest in the world.
India offers a readymade tourist destination with the resources
Natural and cultural diversity
Demand-supply gap
Government support
WEAKNESSES
The cost of land in India is high at 50% of total project cost as against 15% abroad.
The hotel industry in India is heavily staffed.
High tax structure in the industry makes the industry worse off than it’s international.
Only 97,000 hotel rooms are available in India today.
Only limited value added services
Slow implementation
OPPORTUNITIES
Demand between the national and the inbound tourists can be easily managed due to
difference in the period of holidays.
In the long-term the hotel industry in India has latent potential for growth.
Unique experience in heritage hotels.
Rising income.
THREATS
Guest houses replace the hotels.
Political turbulence in the area reduces tourist traffic and thus the business of the hotels
Changing trends in the west demand similar changes in India
The economic conditions of a country have a direct impact on the earnings in hotel
industry.
Lack of training man power in the hotel industry.
Fluctuations in international tourist arrivals.
36
Increasing competition
Porters Five Forces Model
Bargaining power of suppliers
The term 'suppliers' comprises all sources for inputs that are needed in
order to provide goods or services.
The high class hotels are operating by few hotel chains like-TAJ,EIH,ITC&THE LEELA
PALACE so they have a control over the industry.
There are no substitutes for spas and five star hotels.
The hotels customers are fragmented, so they have to reduce their bargaining power to
attract the customers.
The Taj, ITC& Oberoi are having various rates and tariffs. Because they are having their
own brand image.
The hotel chains are operating different services like Spas, Boatels, Resorts, City Centers,
Heritage HOTELS, etc.
Bargaining power of customers
Similarly, the bargaining power of customers determines how much customers can
impose pressure on margins and volumes.
The hotel industry is one of the most invested in its fixed assets. So they are trying to
recover their amount quickly.
The suppliers are providing better information about them to attract the customers’ .Here
the buyers are highly informed.
If the hotel price changes are moderate, the Customers have low margins and are price-
sensitive.
Some unseasoned timings the hotels are offering discounts and incentives to reduce the
bargaining power of buyers.
37
Threat of new entrants
The competition in an industry will be the higher; the easier it is for other companies to
enter this industry. In such a situation, new entrants could change major determinants of
the market environment (e.g. market shares, prices, customer loyalty) at any time. There
is always a latent pressure for reaction and adjustment for existing players in this
industry.
The foreign hotel chains are tied up with Indian hotels to reduce the initial cost and using
the latter’s brand name.
Brand loyalty of customers like TAJ, ITC, and LEELA PALACE affects the new
entrants.
Access to raw materials and Distribution channels are controlled by Existing players like
TAJ, ITC, and LEELA PALACE.
The cost of land in India is high at 50% of total project cost as against 15% abroad. This
acts as a major deterrent to the Indian hotel industry.
In India the expenditure tax, luxury tax and sales tax inflate the hotel bill by over 30%.
Effective tax in the South East Asian countries works out to only 4-5%.
Threat of substitutes
A threat from substitutes exists if there are alternative products with lower prices of better
performance parameters for the same purpose. They could potentially attract a significant
proportion of market volume and hence reduce the potential sales volume for existing
players. This category also relates to complementary products.
Brand loyalty of customers (TAJ, ITC, LEELA PALACE, etc,) is dominating the
substitutes.
The hotel relationship with customer and costs also the reasons to switching to
substitutes.
The price variation of same class hotel services from various brands is one of the reasons
to choose a substitute.
The present demand and supply of hotel rooms is one of the reasons to choose a
substitute.
38
Competitive power of rivalry players
This force describes the intensity of competition between existing players (companies) in
an industry. High competitive pressure results in pressure on prices, margins, and hence,
on profitability for every single company in the industry.
The top competitors in hotel industry are having the same services like five star, spas,
boatels and motels, heritage hotels and palaces.
The healthy competition among the all players is helping to increase the industry growth.
Intense in metro cities, slowly picking up in secondary cities
Measures undertaken by the government
Various policy measures undertaken by the Ministry of Tourism and tax incentives have
also aided growth of the hospitality industry; some of them include:
Allowance of 100% FDI in the hotel industry (including construction of hotels, resorts,
and recreational facilities) through the automatic route
Introduction of ‘Medical Visa’ for tourists coming into the country for medical treatment
Issuance of visa-on-arrival for tourists from select countries, which include Japan, New
Zealand, and Finland
Promotion of rural tourism by the Ministry of Tourism in collaboration with the United
Nations Development Programme
Elimination of customs duty for import of raw materials, equipment, liquor etc
Capital subsidy programme for budget hotels
Exemption of Fringe Benefit Tax on crèches, employee sports, and guest house facilities
Five-year income tax holidays for 2-4 star hotels established in specified districts having
UNESCO-declared 'World Heritage Sites'.
Tourism Policy 2002
The first major step GoI took towards development of the tourism industry was launch of
the “Tourism Policy” in 2002. The Tourism Policy is based on a multi-pronged approach,
39
which includes speedy implementation of tourism projects, development of integrated
tourism circuits, special capacity building in the hospitality sector, and new marketing
strategies. This policy was built around seven key areas:
Challenges
Various challenges/issues faced by the domestic travel and tourism industry in India:
Lack of proper infrastructure
Human resources
Service levels
Lack of adequate marketing and promotion
40
Taxation
Security
Regulatory issues
Lack of proper infrastructure
Infrastructure needs for the travel and tourism industry range from physical infrastructure
such as ports of entry to modes of transport to urban infrastructure such as access roads,
electricity, water supply, sewerage and telecommunication. The sectors related to the
travel and tourism industry include airlines, surface transport, accommodation (hotels),
and infrastructure and facilitation systems, among others.
Human resource
Availability of skilled manpower is a major challenge faced by the travel and tourism
industry, one of the largest employment generators in the country. To sustain growth in
the travel and tourism industry, trained manpower/ workforce is required at every level
— managerial, supervisory, skilled or semi-skilled. Challenges faced at each level are
different. At mid and senior management levels, the industry faces talent crunch and at
the front-line staff level, although human resources are adequate, a boom in other service
industries such as banking, retail, airline and BPO have resulted in shortage of manpower
at this level for the travel and tourism industry. Thus, we have a demand-supply
mismatch with respect to manpower in the travel & tourism and hospitality sector in
India. A study conducted by Ministry of Tourism suggests that existing supply of human
resources do not cater to even 40% of the demand. Thus, the industry has no alternative
but to fill the void with untrained resources. Such a high proportion of untrained
manpower would adversely affect quality of services offered to the tourists.
Attrition, shortage of tourism training infrastructure, qualified trainers, and lack of proper
strategies and policies for human resource development also affect the industry. The
industry needs to address these problems at the earliest.
Service level
41
In addition to tour operators and hotel staff, tourists interact with persons from different
backgrounds, occupations and experience. Such people include staff at bus/railway
station, immigration staff at airports, taxi/coach operators, ticketing/ travel agencies,
small hotels, dhabas/roadside eateries, staff at heritage sites, and tour guides, among
others. The degree of service offered by these various stakeholders has a significant
impact on determining the tourist’s overall experience of India as a tourist destination.
The government has taken initiatives to promote responsible tourism by sensitising key
stakeholders of the tourism industry through training and orientation, to develop a sense
of responsibility towards tourists and inspire confidence of foreign tourists in India as a
preferred destination. One such major initiative is the “Atithi Devo Bhava” campaign.
More such efforts are required to improve the degree of service across various operators.
Marketing and promotion
Marketing and promotion of India as a major tourist destination is critical for the industry
to achieve its potential. Lack of adequate budgetary support for promotion and marketing,
compared with competing tourist destinations, is a major reason for India lagging behind
as a tourist destination. Marketing under the “Incredible India” campaign helped place
India as a good tourist destination on the global tourism map. Indian tourism products are
promoted primarily by the Ministry of Tourism with the involvement of state
governments through the State Tourism Development Corporations. Newer tourism
concepts, which include cruise tourism, adventure tourism, agri tourism or rural tourism,
are emerging in India and these require support to develop and flourish. Hence, greater
marketing push for these different products is required. To remain competitive in the
fiercely competitive field, India needs to change its traditional marketing approach to a
more competitive and modern approach. There is a need to develop a unique market
position and the brand positioning statement should capture the essence of the country’s
tourism products: i.e., they should be able to convey an image of the product to a
potential customer.
Taxation
42
Travel and tourism in India is a high-taxed industry, which makes India expensive as a
tourist destination. This is affecting the growth of the industry in India and India is losing
out to other low-cost destinations. Inbound tourism is the one most affected. Various
taxes are levied across the entire industry right from tour operators, transporters, airline
industry to hotels and these include service tax, luxury tax, tax on transportation, tax on
aviation turbine fuel (airline industry), and various taxes on transportation. In addition,
these tax rates tend to vary across different states in the country.
Security
Security has been a major problem as well for growth of tourism for a number of years.
Terrorist attacks or political unrest in different parts of the country have adversely
affected sentiments of foreign tourists. Terror attacks at Mumbai in November 2008 dealt
a strong blow to tourism in the country. The terror attacks raised concerns of safety. In
addition, insurgency in different parts of the country also mars India’s image as a safe
destination. Following the terror attacks in Mumbai, security at tourist spots, airports and
hotels has been beefed up to regain confidence of tourists. However, the government
needs to take a proactive approach in addressing these issues and in averting the potential
impact on the industry.
Cyber crime is another major challenge the travel industry faces. Use of Internet in the
travel and tourism industry has increased rapidly in recent years and has emerged as one
of major segments for online spends. However, some of the biggest frauds have been
detected in this segment and the issue of online security has assumed significant
importance. While the online travel industry has registered robust growth, major concerns
relating to security of online transactions persist. The industry needs to take measures to
make the process of online bookings more secure and transparent and also needs to create
awareness regarding this.
Regulatory issues
For inbound international tourists, visa procedures are seen as a hindrance. A number of
countries competing with India for tourists provide visa on arrival. India should provide
43
visa on arrival for more countries or for certain categories of tourists for a specific
duration.
A number of projects in the tourism infrastructure segment and in the hotels industry are
delayed due to non-attainment of licenses and approvals on time. The government
recently cleared the long-standing proposal for single window clearance for hotel projects
to hasten the process of infrastructure development. Implementation of this proposal
would help development of tourism and hospitality infrastructure in the country. There is
a greater need for speedier clearances and approvals for all projects related to the
industry.
44
RATIO ANALYSIS
INTRODUCTION TO THE RATIO ANANLYSIS
The relationship of these two figure expressed mathematically is called a ratio.
The ratio reefers to the numerical or quantities relationship between two variables or
times. A ratio is calculated by dividing one item of the relationship with the other. The
ratio analysis is one of the most useful and common methods of analyzing financial
statement. Ratio enables the mass of data to be summarized and simplified. Ratio analysis
is an instrument for diagnosis of the financial health of an enterprise.
MEANING OF RATIO:-
A ratio is only a comparison of the numerator with the denominator. The tern
ratio reefers to the numerical or quantitative relationship between two figures and
obtained by dividing the former by the latter.
Ratio analysis is an important and age old technique of financial analysis. The
data given in financial statements ratio are relative form of financial data and very useful
45
techniques to cheek upon the efficiency of a firm. Some ratio indicates the trend or
progress or downfall of the firm.
IMPORTANCE OF RATIO:
Ratio analysis of firm’s financial statement is of interest to a number of parties mainly.
Shareholders, creditor, financial executives etc. shareholders are interested with earning
capacity of the firm: creditors are interested in knowing the ability of firm to meet
financial obligation and financial executives are concerned with evolving analytical tools
that will measures and compare costs, efficiency liquidity and profitability with a view to
making intelligent decisions.
1)CURRENT RATIO:
Company name MAR'08 MAR'09 MAR'10
IHCL 3.18 5.56 5.48
MHRIL 7.77 7.07 5.17
TAJGVK 1.22 0.83 0.79
46
IHCL MHRIL TAJGVK0
1
2
3
4
5
6
7
8
9
3.18
7.77
1.22
5.56
7.07
0.830000000000001
5.485.17
0.79
MAR'08MAR'09MAR'10
INTERPRETATION:
The ideal foam of the current ratio is the 1:1. Here, the MHRIL has the highest current ratio in compare to other company. MHRIL and IHCL has the good ratio but TAJGVK has not good Current ratio. IHCL has highest ratio of 5.48 in 2010
2) QUICK RATIO:
Company name MAR'08 MAR'09 MAR'10
IHCL 3.09 5.44 5.40
MHRIL 7.71 7.00 5.15
TAJGVK 1.33 0.71 0.70
47
IHCL MHRIL TAJGVK0
1
2
3
4
5
6
7
8
9
3.09
7.71
1.33
5.44
7
0.710000000000001
5.4 5.15
0.700000000000001
MAR'08MAR'09MAR'10
INTERPRETATION:
Here, IHCL and MHRIL have good quick ratio. But TAJGVK has low ratio. So, TAJGVK has not good liquidiy condition in compare to IHCL & MHRIL. IHCL has the higest ratio of 5.4 in year 2010. And TAJGVK has the lowest ratio of 0.7 in year 2010.
3) RECIEVABLE DAYS:
Company name MAR'08 MAR'09 MAR'10
IHCL 27.47 27.06 27.66
MHRIL 321.90 412.11 434.38
TAJGVK 8.07 9.01 10.55
48
IHCL MHRIL TAJGVK0
50
100
150
200
250
300
350
400
450
500
27.47
321.9
8.0727.06
412.11
9.0127.66
434.38
10.55
MAR'08MAR'09MAR'10
INTERPRETATION:
Here, MHRIL has the highest receivable day of 434.38 days in year 2010 which is not good for the company. And TAJGVK has lowest receivable day of 10.55 in year 2010 which is good condition for the company. IHCL has also low receivable days.
4) PROFIT MARGIN:
Company name MAR'08 MAR'09 MAR'10
IHCL 26.24 20.28 17.46
MHRIL 26.07 25.47 29.21
TAJGVK 31.81 27.97 24.48
49
IHCL MHRIL TAJGVK0
5
10
15
20
25
30
35
MAR'08MAR'09MAR'10
INTERPRETATION:
Profit margin of the MHRIL is in good condition in year 2010 in compare to other company. IHCL has low profit margin in compare to other companies. TAJGVK has also good profit margin.
5) RETURN ON EQUITY:
Company name MAR'08 MAR'09 MAR'10
IHCL 19.81 9.25 5.34
MHRIL 75.14 49.47 36.98
TAJGVK 33.99 21.09 12.94
50
IHCL MHRIL TAJGVK0
10
20
30
40
50
60
70
80
19.81
75.14
33.99
9.25
49.47
21.09
5.34
36.98
12.94
MAR'08MAR'09MAR'10
INTERPRETATION:
MHRIL get the highest return on equity in three financial year in compare to other two company. MHRIL get highest return on equity of 75.14 in year 2010. But IHCL has the lowest return on equity of 5.34 which is bad condition for the company in compare to other company.
6) EARNING PER SHARE:
Company name MAR'08 MAR'09 MAR'10
IHCL 6.26 3.24 2.12
MHRIL 10.55 10.84 14.15
TAJGVK 11.23 8.42 5.78
51
IHCL MHRIL TAJGVK0
2
4
6
8
10
12
14
16
6.26
10.5511.23
3.24
10.84
8.42
2.12
14.15
5.78
MAR'08MAR'09MAR'10
INTERPRETATION:
Here, MHRIL has the highest earning per share of Rs. 14.15 in year 2010 which is good condition for the company. IHCL has the lowest earning per share of Rs. 2.12 which is not good condition for the company.
7) DEBT EQUITY RATIO:
Company name
MAR'08
MAR'09 MAR'10
IHCL 0.55 0.58 0.78
MHRIL 3.61 3.34 1.86
TAJGVK 0.36 0.43 0.47
52
IHCL MHRIL TAJGVK0
0.5
1
1.5
2
2.5
3
3.5
4
0.55
3.61
0.360.58
3.34
0.43
0.78
1.86
0.47
MAR'08MAR'09MAR'10
INTERPRETATION:
Here, debt equity ratio of MHRIL is 1.86 which is lower than the last year. But other company has not good condition in compare to last year figure. IHCL has Debt equity ratio of 0.78. And TAJGVK has not good debt equity ratio.
8) BOOK VALUE:
Company nameMAR'0
8MAR'0
9MAR'1
0
IHCL 33.42 42.12 37.16
MHRIL 18.22 25.72 52.75
TAJGVK 36.86 42.96 46.44
53
IHCL MHRIL TAJGVK0
10
20
30
40
50
60
33.42
18.22
36.86
42.12
25.72
42.96
37.16
52.75
46.44
MAR'08MAR'09MAR'10
INTERPRETATION:
Here, MHRIL has the highest book value of Rs.52.57 in year 2010, that is more than the last year which shows the good condition for the company. TAJGVK has also make good condition in book value of the share, that is Rs.44.44 which is higher than last year.
9) DIVIDEND PER SHARE:
Company nameMAR'0
8MAR'0
9MAR'1
0
IHCL 1.90 1.20 1.00
MHRIL 3.00 3.00 4.00
TAJGVK 3.20 2.00 2.00
54
IHCL MHRIL TAJGVK0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
1.9
33.2
1.2
3
2
1
4
2MAR'08MAR'09MAR'10
INTERPRETATION:
Here, MHRIL paid the highest dividend of Rs. 4 in year 2010 which shows that investor can get highest return on their investment. IHCL paid lowest dividend of Rs.1 in year 2010 which is not good for the investors. Investor wants the highest return on their investment.
10) DIVIDEND PAYOUT RATIO:
Company name
MAR'08
MAR'09 MAR'10
IHCL 0.30 0.37 0.47
MHRIL 0.28 0.28 0.28
TAJGVK 0.28 0.24 0.35
55
IHCL MHRIL TAJGVK0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0.30.28 0.28
0.37
0.28
0.24
0.47
0.28
0.35
MAR'08MAR'09MAR'10
INTERPRETATION:
Here, has the constant dividend payout ratio of 0.28. IHCL has the highest dividend payout ratio of 0.47 in year 2010. All three company has good dividend payout ratio. TAJGVK has the second highest Dividend payout ratio of 0.35.
56
TREND ANALYSIS:
1) NET SALES:
COMPANY NAME
MAR'08 MAR'09 MAR'10
Rs.(in crore) (%) Rs.(in crore) (%) Rs.(in crore) (%)
IHCL 1,764.51 - 1,619.57 -8.21 1,473.29 -9.03
MHRIL 352.73 - 393.06 11.43 468.75 19.26
TAJGVK 257.49 - 237.48 -7.77 228.25 -3.89
INDIA HOTELS MAHINDRA HOLIDAY TAJGVK
-15
-10
-5
0
5
10
15
20
25
-8.21
11.43
-7.77-9.03
19.26
-3.89
MAR'08MAR'09MAR'10
INTERPRETATION:
From the above figure, Mahindra Holidays & Resort Ltd have maintain the
growth in Net Sales. This was increased 19.26% in the year 2010.
But other companies was not maintain the growth. So, Mahindra Holidays &
Resort Ltd is profitable company.
57
2) NET PROFIT:
COMPANY NAME
MAR'08 MAR'09 MAR'10
Rs.(in crore) (%) Rs.(in crore) (%) Rs.(in crore) (%)
IHCL 377.46 - 234.03 -38 153.10 -34.58
MHRIL 82.52 - 81.24 1.55 117.84 45.05
TAJGVK 70.42 - 52.77 -25.06 36.27 -31.27
INDIA HOTELS MAHINDRA HOLIDAY TAJGVK
-50
-40
-30
-20
-10
0
10
20
30
40
50
-38
-1.55
-25.06
-34.58
45.05
-31.27
MAR'08MAR'09MAR'10
INTERPRETATION:
From the above figure, Mahindra Holidays & Resort Ltd have maintain the
growth in Net Profit. This was increased 45.05% in the year 2010.
But other companies was not maintain the growth. So, Mahindra Holidays &
Resort Ltd is profitable company.
3) DIVIDEND PER SHARE
58
COMPANY NAME
MAR'08 MAR'09 MAR'10
Rs. (%) Rs. (%) Rs. (%)
IHCL 1.90 - 1.20 -36.84 1 -16.67
MHRIL 3 - 3 0 4 33.33
TAJGVK 1.60 - 1.40 -12.5 1.30 -7.14
INDIA HOTELS MAHINDRA HOLIDAY TAJGVK
-50
-40
-30
-20
-10
0
10
20
30
40
-36.84
0
-12.5-16.67
33.33
-7.14
MAR'08MAR'09MAR'10
INTERPRETATION:
From the above figure, Mahindra Holidays & Resort Ltd have maintain the
growth in dividend per share. This was increased 33.33% in the year 2010.
But other companies was not maintain the growth. So, Mahindra Holidays &
Resort Ltd is good deal for investors who wants high return on investment.
4) PROFIT BEFORE TAX:
59
COMPANY NAME
MAR'08 MAR'09 MAR'10
Rs.(in crore) (%) Rs.(in crore) (%) Rs.(in crore) (%)
IHCL 586.89 - 386.74 -34.10 166.71 -56.89
MHRIL 128 - 129.73 1.35 176.82 36.30
TAJGVK 107.74 - 82.78 -23.17 55.43 -33.04
INDIA HOTELS MAHINDRA HOLIDAY TAJGVK
-80
-60
-40
-20
0
20
40
60
-34.1
1.35
-23.17
-56.89
36.3
-33.04
MAR'08MAR'09MAR'10
INTERPRETATION:
From the above figure, Mahindra Holidays & Resort Ltd have maintain the
growth in Profit Before Tax. This was increased 36.3% in the year 2010.
But other companies was not maintain the growth. So, Mahindra Holidays &
Resort Ltd is profitable company.
60
Indian economic is the growing economic. It maintain the growth at 6% to 9%.
So, the business has the chances for growth.
There is big chance for development in future for hotel sector.
Hotel industry has the demand for the domestic as well as the international tourist.
So, the future of the industry is very bright.
Mahindra Holidays& Resorts India Ltd, is the good company by analyzing the
different ratios. Other two companies is not financially sound as per ratio
analysis.
Mahindra Holidays& Resorts India Ltd, is the good company by analyzing the
Net profit, Profit before tax, Net sales, Dividend per share. Other two companies
is not financially sound as per Trend analysis.
61
SUGGESTIONS FOR INVESTORS
Hotel companies have lots of room to grow; so invest in theses type of industries helps
the investors at long time.
Investors has to invest their money in reputed companies.
Do not invest in inactive shares generally it is difficult to encash them.
Before investing we should undertake a deeps study on the net sales, net profits in
relations to equity capital employed & should attempt to forecast for the coming years.
Do not invest in unlisted shares.
The investors should analyze the price movement.
Economic performance is greatly affected to the performance of the industries of the
country, so investors should know economic performance of the country while investing.
If investors follow the market trends then they can deliver high returns & also they
should have reduced the risks.
Investors should note the daily Profit and Loss.
62
Mahindra Holidays & Resorts Ltd. shows good position of most of the ratios which is
good sign for the company and will enjoy rapid growth. Mahindra Holidays & Resorts
Ltd. has more numbers of strong point rather than weak points.
Mahindra Holidays & Resorts Ltd earning is very high and dividend paid is also very
high so it indicates good sign for the company, and investors to invest.
Remaining two is not in good condition because positions of the ratios are not so good.
Indian Hotels Companies Ltd’s profit is highest compare to other companies. Even
Mahindra Holidays & Resorts Ltd also have very good profit earned during 2010 so the
both the companies having good condition as far as profit is concerned.
Mahindra Holidays & Resorts Ltd and TAJGVK both have good earning per share so
both indicates good sign for investors while Indian Hotels Companies Ltd’s have not so
good condition compare to above mentioned companies.
Mahindra Holidays & Resorts Ltd has declared highest dividend to the share holders. So,
it is good to invest money from the investor’s point of view.
So, according to findings and suggestions, we can bring out the final conclusion that
overall Hotel Industry is good for investing. And Mahindra Holidays & Resorts Ltd is
good deal for investors to invest money.
63
Full foam of Abbreviations:
BSE: Bombay Stock Exchange
C.E.O.: Chief Executive Officer
CDSL: Central Depository of Securities Ltd.
F&O: Future & Option
FII: Foreign Indirect Investment
FDI: Foreign Direct Investment
GOI: Government of India
GDP: Gros Domestic Product
IHCL: Indian Hotels Company Ltd
MCX: Metal Commodity Exchange
MHRIL: Mahindra Hotels & Resorts India Ltd.
NSE: National Stock Exchange
TAJGVK: TAJGVK Hotels & Resorts Ltd.
U.K.: United Kingdom
U.S.: United States
64
INDIAN HOTELS COMPANY LTD.
Profit & loss A/c
Mar'10 Mar'09 Mar'08
12 Months 12 Months 12 Months
INCOME:
Sales Turnover 1,473.29 1,619.57 1,764.51Excise Duty 0.00 0.00 0.00NET SALES 1,473.29 1,619.57 1,764.51
Other Income 0.00 0.00 0.00TOTAL INCOME 1,539.30 1,734.16 1,830.11EXPENDITURE:
Manufacturing Expenses 350.32 349.49 366.63Material Consumed 0.00 0.00 0.00Personal Expenses 359.56 389.80 304.56Selling Expenses 63.55 74.01 66.84
Administrative Expenses 328.01 327.86 329.83Expenses Capitalised -8.46 -10.41 -11.42Provisions Made 0.00 0.00 0.00
TOTAL EXPENDITURE 1,092.98 1,130.75 1,056.44Operating Profit 380.31 488.82 708.07EBITDA 446.32 603.41 773.67
Depreciation 104.14 94.46 85.48Other Write-offs 0.00 0.00 0.00EBIT 342.18 508.95 688.19Interest 175.47 122.21 101.30
EBT 166.71 386.74 586.89Taxes 62.46 124.58 198.91Profit and Loss for the Year 104.25 262.16 387.98
Non Recurring Items 51.54 -24.44 -6.42Other Non Cash Adjustments -2.69 -3.69 -4.10Other Adjustments 0.00 0.00 0.00REPORTED PAT 153.10 234.03 377.46
KEY ITEMSPreference Dividend 0.00 0.00 0.00Equity Dividend 72.35 86.81 114.54
Equity Dividend (%) 100.00 120.00 189.98Shares in Issue (Lakhs) 7,234.73 7,234.05 6,028.51EPS - Annualised (Rs) 2.12 3.24 6.26
65
INDIAN HOTELS COMPANY LTD
Balance sheet
Particulars Mar'10 Mar'09 Mar'08
Liabilities 12 Months 12 Months 12 Months
Share Capital 72.35 72.34 80.26
Reserves & Surplus 2,620.97 2,975.29 1,956.29
Net Worth 2,693.32 3,047.63 2,036.55
Secured Loans 1,752.77 1,598.02 755.58
Unsecured Loans 897.78 168.45 378.60
TOTAL LIABILITIES 5,343.87 4,814.10 3,170.73
AssetsGross Block 2,408.32 2,362.23 2,072.16
(-) Acc. Depreciation 847.06 776.83 700.56
Net Block 1,561.26 1,585.40 1,371.60
Capital Work in Progress. 370.12 215.10 265.45
Investments. 2,445.63 2,026.88 977.58
Inventories 31.25 38.91 32.85
Sundry Debtors 121.62 101.70 138.41
Cash And Bank 447.12 23.44 74.43
Loans And Advances 1,653.17 1,486.23 935.19
Total Current Assets 2,253.16 1,650.28 1,180.88
Current Liabilities 586.67 510.89 579.50
Provisions 700.10 153.40 46.73
Total Current Liabilities 1,286.77 664.29 626.23
NET CURRENT ASSETS 966.39 985.99 554.65
Misc. Expenses 0.47 0.73 1.45
TOTAL ASSETS (A+B+C+D+E) 5,343.87 4,814.10 3,170.73
66
MAHINDRA HOLIDAYS AND RESORTS INDIA LTD.
Profit & loss A/c
Mar'10 Mar'09 Mar'08
12 Months 12 Months 12 MonthsINCOME:Sales Turnover 468.75 393.06 352.73Excise Duty 0.00 0.00 0.00NET SALES 468.75 393.06 352.73Other Income 0.00 0.00 0.00TOTAL INCOME 515.95 441.81 375.04EXPENDITURE:Manufacturing Expenses 15.60 11.10 8.19
Material Consumed 0.00 0.00 0.00Personal Expenses 73.56 60.84 47.38Selling Expenses 135.94 131.41 115.56Administrative Expenses 90.37 85.01 61.32Expenses Capitalised 0.00 0.00 0.00Provisions Made 0.00 0.00 0.00TOTAL EXPENDITURE 315.47 288.37 232.44Operating Profit 153.28 104.70 120.29
EBITDA 200.47 153.44 142.60Depreciation 19.10 16.69 11.30Other Write-offs 0.00 0.00 0.00EBIT 181.37 136.76 131.29Interest 4.55 7.03 3.30EBT 176.82 129.73 128.00Taxes 58.88 48.49 45.47Profit and Loss for the Year 117.94 81.24 82.52
Non Recurring Items -0.1 2.17 -2.00Other Non Cash Adjustments 0.00 0.00 0.00Other Adjustments 0.00 0.00 0.00REPORTED PAT 117.84 83.41 80.52KEY ITEMSPreference Dividend 0.00 0.00 0.00
Equity Dividend 33.69 23.50 13.97Equity Dividend (%) 40.45 30.52 18.28Shares in Issue (Lakhs) 842.30 783.34 733.55EPS - Annualised (Rs) 13.99 10.65 10.98
67
MAHINDRA HOLIDAYS AND RESORTS INDIA LTD.
Balance Sheet
Particulars Mar'10 Mar'09 Mar'08
Liabilities 12 Months 12 Months 12 Months
Share Capital 83.29 76.98 76.45
Reserves & Surplus 356.04 120.97 65.11
Net Worth 439.32 197.95 141.56
Secured Loans 10.02 24.69 20.06
Unsecured Loans 805.01 636.83 478.89
TOTAL LIABILITIES 1,254.35 859.48 640.52
Assets
Gross Block 489.22 422.15 273.37
(-) Acc. Depreciation 82.49 63.97 47.89
Net Block 406.74 358.18 225.49
Capital Work in Progress. 97.87 51.22 45.00
Investments. 227.16 0.64 0.24
Inventories 2.97 5.24 3.45
Sundry Debtors 631.54 484.17 403.42
Cash And Bank 24.41 31.97 6.79
Loans And Advances 82.11 74.15 57.89
Total Current Assets 741.03 595.52 471.55
Current Liabilities 177.47 114.29 84.69
Provisions 40.97 31.80 17.06
Total Current Liabilities 218.44 146.08 101.76
NET CURRENT ASSETS 522.59 449.44 369.79
Misc. Expenses 0.00 0.00 0.00
TOTAL ASSETS (A+B+C+D+E) 1,254.35 859.48 640.52
68
TAJGVK HOTELS AND RESORTS LTD.
Profit & loss A/c
Mar'10 Mar'09 Mar'08
INCOME:Sales Turnover 228.25 237.48 257.49Excise Duty 0.00 0.00 0.00NET SALES 228.25 237.48 257.49Other Income 0.00 0.00 0.00TOTAL INCOME 229.30 238.58 258.34EXPENDITURE:Manufacturing Expenses 56.60 50.41 23.12Material Consumed 0.00 0.00 21.18Personal Expenses 30.02 41.08 35.19Selling Expenses 9.03 8.59 8.81Administrative Expenses 46.38 50.83 45.46Expenses Capitalised 0.00 -15.38 0.00Provisions Made 0.00 0.00 0.00TOTAL EXPENDITURE 142.04 135.52 133.77Operating Profit 86.22 101.97 123.72EBITDA 87.26 103.06 124.58Depreciation 19.61 13.65 11.48Other Write-offs 0.00 0.00 0.92EBIT 67.65 89.41 112.18Interest 12.22 6.63 4.43EBT 55.43 82.78 107.74Taxes 18.69 28.92 37.87Profit and Loss for the Year 36.74 53.86 69.87Non Recurring Items -0.1 -0.8 0.02Other Non Cash Adjustments -0.3 2.42 0.53Other Adjustments 0.00 -2.70 0.00REPORTED PAT 36.27 52.77 70.42KEY ITEMSPreference Dividend 0.00 0.00 0.00Equity Dividend 12.54 12.54 20.06
Equity Dividend (%) 100.00 100.00 160.00
Shares in Issue (Lakhs) 627.01 627.01 627.01EPS - Annualised (Rs) 5.78 8.42 11.23
69
TAJGVK HOTELS AND RESORTS LTD.
Balance Sheet
Mar'10 Mar'09 Mar'08INCOME:Sales Turnover 228.25 237.48 257.49Excise Duty 0.00 0.00 0.00NET SALES 228.25 237.48 257.49Other Income 0.00 0.00 0.00TOTAL INCOME 229.30 238.58 258.34EXPENDITURE:Manufacturing Expenses 56.60 50.41 23.12Material Consumed 0.00 0.00 21.18Personal Expenses 30.02 41.08 35.19Selling Expenses 9.03 8.59 8.81Administrative Expenses 46.38 50.83 45.46Expenses Capitalised 0.00 -15.38 0.00Provisions Made 0.00 0.00 0.00TOTAL EXPENDITURE 142.04 135.52 133.77Operating Profit 86.22 101.97 123.72EBITDA 87.26 103.06 124.58Depreciation 19.61 13.65 11.48Other Write-offs 0.00 0.00 0.92EBIT 67.65 89.41 112.18Interest 12.22 6.63 4.43EBT 55.43 82.78 107.74Taxes 18.69 28.92 37.87Profit and Loss for the Year 36.74 53.86 69.87Non Recurring Items -0.1 -0.8 0.02Other Non Cash Adjustments -0.3 2.42 0.53Other Adjustments 0.00 -2.70 0.00REPORTED PAT 36.27 52.77 70.42KEY ITEMSPreference Dividend 0.00 0.00 0.00Equity Dividend 12.54 12.54 20.06Equity Dividend (%) 100.00 100.00 160.00Shares in Issue (Lakhs) 627.01 627.01 627.01EPS - Annualised (Rs) 5.78 8.42 11.23
70
WEBSITES:
www.bseindia.com/
www.Moneycontrol.com/
71
www.google.com/
BOOKS:
Management Accounting
-R.S. N. Pillai and Bagvati (S.Chand)
.
Other Document: Annual report of the company Economic servey Report
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