CHAPTER-I

INTRODUCTION TO PROJECT
BUDGET
A budget is an estimation of revenue and expenses over a specified future period of time;
it is compiled and re-evaluated on a periodic basis. a budget is an internal tool used by management
and is often not required for reporting by external parties.

CAPITAL BUDGETING
Capital budgeting is the process by which a company determines whether projects are
worth pursuing. A project is worth pursuing if it increases the value of the company, also known
as investment appraisal.

According to Charles T. Horngreen “Capital budgeting is long term planning for making
and financing proposed capital outlays.”

The search for a reliable method of project appraisal dates back to decades. The issue not
only continues to be a matter of concern for academicians and managers but is also becoming
equally significant for shareholders and other investors of the organization. There are number of
tools available to determine the extent of profitability of a project but some of these methods are
not taking care of the continuous changes taking place in business environment where shareholders
value (wealth) maximizing is becoming a very important decision-making criterion. Further, these
methods sometimes fail to address the basic problems of investment appraisal while some of these
methods require complex decision-making processes or it may require too much application of
computers. Thus, the choice of appropriate capital expenditure appraisal method is becoming a
difficult task for project managers, which requires critical analysis of various tools. Finance
experts propose various options to address the basic problems of investment management. My
literature review reveals that the traditional discounted cash flow techniques (DCF) are most
commonly used technique (Payback Period) by many firms. Many organizations are greatly using
modern discounted techniques at the same time some scholars are proposing to use techniques
such as Monte Carlo simulations, real options etc. but all these techniques have been criticized for
its own limitations also. For instance, traditional methods lack strategic vision. DCF techniques
do not help in appraising all types of projects at all the stages of project implementation which
leads to selecting many projects on intuitions, experience and rule of thumb.
INDUSTRY PROFILE
Information Technology (IT) is a phenomenon that has dramatically changed the daily
lives of individuals, the modes of business operations as well as the market competitiveness.
IT comprises of design, development, implementation and management of computer-based
information systems, particularly software applications and computer hardware. Today, it has
grown to cover most aspects of computing and technology. The Information Technology-
enabled Services (ITES) industry provides services that are delivered over telecom or data
network to a range of external business areas. Examples of such Business Process Outsourcing
(BPO) include customer service, web-content development, back office management and
network consultancy etc. Therefore, IT acts as a facilitator, an enabler and also assumes the
role of custodian. It facilitates large volumes of information to be stored, processed and/or
transferred at lightning speed. Only few selected specialized companies in the world are
engaged in IT business but most corporations and institutions use information technology to
enable functions (like better communication between staff, suppliers, customers, asset
management etc.) that drive their business. The constant upgrade in IT, along with increasing
global competition, is adding complexity of several orders of scale to the related business and
trade.

Information technology (IT) industry in India has played a key role in putting India on the
global map. IT industry in India has been one of the most significant growth contributors for
the Indian economy. The industry has played a significant role in transforming India’s image
from a slow-moving bureaucratic economy to a land of innovative entrepreneurs and a global
player in providing world class technology solutions and business services. The Information
Technology Industry of India dates back to 1967 when the Tata Group in collaboration with
Burroughs set up the first software zone, SEEPZ in Mumbai. In 1973 SEEPZ became the first
software export zone which saw 80% of the software export in the 1980s the industry has
helped India transform from a rural and agriculture-based economy to a knowledge-based
economy. Information Technology has made possible information access at gigabit speeds. It
has made tremendous impact on the lives of millions of people who are poor, marginalized and
living in rural and far flung topographies. Internet has made revolutionary changes with
possibilities of e-government measures like e-health, e-education, e-agriculture, etc. Today,
whether its filing Income Tax returns or applying for passports online or railway e-ticketing, it
just need few clicks
of the mouse. India’s IT potential is on a steady march towards global competitiveness,
improving defence capabilities and meeting up energy and environmental challenges amongst
others. IT-ITES sector in India.

The global sourcing market in India continues to grow at a higher pace compared to the
IT-BPM industry. India is the leading sourcing destination across the world, accounting for
approximately 55 per cent market share of the US$ 185-190 billion global services sourcing
business in 2017-18. Indian IT & ITES companies have set up over 1,000 global delivery
centres in about 80 countries across the world. India has become the digital capabilities hub of
the world with around 75 per cent of global digital talent present in the country.

THE INDIAN IT INDUSTRY

As mentioned above, The IT industry in India came into existence in the year 1974.
It was the time when mainframe manufacturer Burroughs asked Tata Consultancy Services
(TCS) to export programmers for installing system software for a U.S. client. The IT
industry was formed in a very unusual market condition. During this government was more
focused towards the agriculture sector rather the service sector. The IT industry started its
roots from Mumbai based businessmen. They started their operations by sending software
programmers to global IT firms located abroad and making money from this. During that
time Indian economy was state-controlled and the state remained hostile to the software
industry through the 1970s. Import tariffs were high (135% on hardware and 100% on
software) and software was not considered an "industry", so that exporters were ineligible
for bank finance. Government policy towards IT sector changed when Rajiv Gandhi became
Prime Minister in 1984. His New Computer Policy (NCP-1984) consisted of a package of
reduced import tariffs on hardware and software (reduced to 60%), recognition of software
exports as a "delicensed industry", i.e., henceforth eligible for bank finance and freed from
license-permit raj, permission for foreign firms to set up wholly owned, export-dedicated
units and a project to set up a chain of software parks that would offer infrastructure at below
market costs. These policies laid the foundation for the development of a world-class IT
industry in India. The industry structure in the IT sector has four major categories.

➢ IT Software
➢ IT services
 ➢ BPO & IT enabled services
➢ Hardware

The industry remains one of the highest contributors of employment and foreign exchange
to the country. The key drivers of the robust growth include verticals such as Banking and
Financial Services companies, Pharma and Legal Services. It is useful to understand the
structure of the Indian IT Industry, and the place that the IT software, IT services, ITES
&BPO, hardware segment has within it.

➢ IT Software

Software products are among the most highly exported products from India. The software
industry in India originated in the 1970s and grew at a significant pace in the last ten years.
Also, a number of software product firms have grown over the last decade from a little over
100 in 2000 to nearly 2400 in 2013. The revenue from the software product segment
currently stands at 2.2 billion.

➢ IT services

IT services constitute a major part of the IT industry of India. IT services include client,
server and web-based services. Opportunities in the IT services sector exist in the areas of
consulting services, management services, internet services and application maintenance.
The Indian IT services market grew 7.1% to reach $7.7 billion in 2014 helped by higher
demand for cloud infrastructure and cloud-hosted applications and a renewed focus on
infrastructure projects.

➢ BPO & IT enabled services

The services which make extensive use of information and telecommunication technologies
are categorized as IT enabled services. The IT enabled services is the most important

contributor to the growth of the IT industry of India. In India, Business Process Outsourcing
(BPO) is the fastest growing segment of the ITES (Information Technology Enabled
Services) industry. Factors such as economy of scale, business risk mitigation, cost
advantage, utilization improvement and superior competency have all lead to the growth of
the Indian BPO industry. Business process outsourcing in India, which started around the
mid-90s, has now grown by leaps and bounds. India is now the world's favoured market for
BPO companies, among other competitors, such as, Australia, China, Philippines and
Ireland. The BPO boom in India is credited to cheap labour costs and India's huge talent
pool of skilled, English-speaking professionals. The BPO industry provides employment to
around 0.7 million people across the country. The yearly revenue amounts to around $11
billion.

➢ Hardware

The overall size of Indian ICT hardware market, which comprises printers, servers and
computers among others, stood at US$15.87 billion, showing a growth of 23.98% over the
previous year. The biggest driver of this growth has been Phablets, which has registered a
humongous growth of 527% over last year to do 50.8 mn sales and is expected to grow by
around 65% in the next fiscal years. Today, Indian IT companies such as Tata Consultancy
Services (TCS), Wipro, Infosys, HCL etc are renowned in the global market for their IT
prowess. These companies played a bigger role in transforming India into the world's largest
sourcing destination for the information technology (IT) industry, accounting for
approximately 67 per cent of the US$ 124-130 billion market. The industry employs about
10 million workforces. More importantly, the industry has led the economic transformation
of the country and altered the perception of India in the global economy. India's cost
competitiveness in providing IT services, which is approximately 3-4 times cheaper than
the US, continues to be the mainstay of its unique selling proposition (USP) in the global
sourcing market. However, India is also gaining prominence in terms of intellectual capital
with several global IT firms setting up their innovation centres in India.

TOP 10 MAJOR IT HUBS IN INDIA:

1) Bangalore
Popularly known as the capital of the Silicon Valley of India is currently leading in
Information Technology Industries in India.

2) Hyderabad
Hyderabad called as Cyberabad, which has good infrastructure and good government
support is also a good technology base in India. The Government of AP Has built a separate
township for IT Industry called the HITEC City

3) Chennai
It is the second largest exporter of software next to Bangalore. It has the largest operations
for India. Top IT companies like TCS, Infosys, Wipro, Cognizant, Patni, L&T infotech and
many other IT companies have major operations in IT corridor, Ambattur and other places
in Chennai.

4) Pune
Pune is already a well-established IT destination, and has been giving the likes of Bangalore
and Hyderabad very tough competition. The burgeoning IT industry in areas like Kharadi,
Hinjewadi, Magarpatta and Tathawade are drawing massive amounts of information
technology business into the city.

5) Coimbatore
It is the Manchester of South India. Coimbatore has a well-developed infrastructure for the
Information Technology (IT) industry. The city, which is known for its strengths in the
manufacturing units, has sector-specific special economic zones for IT and ITES.
6) NCR (National Capital Region)
The National Capital Region of India comprising Delhi, Gurgaon, Faridabad, Noida,
Greater Noida and Ghaziabad are having ambitious projects and are trying to do every
possible thing for this purpose.

7) Mumbai
Popularly known as the commercial, entertainment, financial capital of India, this is one city
that has seen tremendous growth in IT and BPO industry. TCS, Patni, LnT Infotech, I- Flex
WNS and other companies are headquartered here.

8) Kolkata

Kolkata is a major IT hub in eastern India. All major IT companies are present here. The city
has tremendous potential for growth in this sector with upcoming areas like Rajarhat.

9) Trivandrum

Trivandrum is the capital of Kerala. GOK provides a good platform for IT development in
the city with India's largest IT park Technopark and dedicated Technocity.

10) Jaipur

This rapidly growing industrial hub houses a lot of IT/ITES and BPO giants. Genpact,
Connexions IT services, Deutsche Bank and EXL BPO, Infosys, Tech Mahindra, and Wipro
are here. There are plans to build the largest IT SEZ in India by Mahindra under the
Mahindra World City. With global companies looking to make their way into the Indian IT
sector, there are a tremendous number of Indian IT Companies which have impacted the
industry in a big way.

INDIAN IT MARKET LEADERS

The TCS share price in the past 3 months has increased from Rs. 2558.60 to Rs. 3139.25
which is basically more than 22% increase in just 3 months.
Wipro in the past 1 year has increased from Rs. 247 to Rs. 286.65 which is more than
15 % increase. It also reached a high of Rs. 331.95 which basically shows the positive
sentiment in the market.
 Infosys has risen from Rs. 931.40 to Rs. 1162.60 in the past one year. The share price
of this company has grown by more than 24% annually with a very optimistic response from
the market.

TATA Consultancy
Tata Consultancy Services (TCS) is an IT services, consulting and business solutions
organization that delivers real results to global businesses, ensuring a level of certainty no other
firm can match. TCS offers a consulting-led, integrated portfolio of IT, BPO, infrastructure,
engineering and assurance services. This is delivered through its unique Global Network
Delivery Model TM, recognized as the benchmark of excellence in software development. A
part of the Tata group, India's largest industrial conglomerate, TCS has over 394,998 of the
world's best-trained consultants in 46 countries. The company is India's first listed IT company
to reach the US$ 100 billion market capitalization mark.

INFOSYS
Established in 1981, Infosys Ltd is today one of the largest IT companies in India and
the world. The company provides business information technology (IT) services comprising
application development and maintenance, independent validation, infrastructure management,
engineering services comprising product engineering and life cycle solutions and business
process management. Its revenues reached Rs 19,128 crore (US$ 2.85 billion) in Q1 FY19.

WIPRO
Wipro Limited is a global leader in information technology, consulting and business
process services. It harnesses the power of cognitive computing, hyper-automation, robotics,
cloud, analytics and emerging technologies to help its clients adapt to the digital world and
make them successful. A company recognized globally for its comprehensive portfolio of
services, strong commitment to sustainability and good corporate citizenship, it has over
160,000 dedicated employees serving clients across six continents.

Top companies in the Indian IT industry Segment

Company Name IT - Software
TCS, Infosys, Wipro, HCL Technologies, Tech Mahindra
ITES - BPO

Eclerx Services, ISmart Global ,3i Infotech

IT - Hardware

HCL Infosystem, Zenith Computers, Smart link Networking

IT - Education

Aptech, NIIT, Educomp Solution

Performance & Contribution towards Exports by IT-ITeS Industry

➢ Revenue
➢ Exports
➢ Domestic

REVENUE
As shown in figure 1, Indian IT-ITES industry revenue is estimated at USD 151.0 billion in
FY2017-18 as compared to USD 141.0 billion in FY2016-17, registering an increase of around
7.0%. The overall industry’s growth of this sector over the last five years is given in the table
below.
Source: NASSCOM SR-2018, E: Estimate

Year/ 2013- 2014- 2015- 2016- 2017- CAGR %(2013-

Description 14 15 16 17 18(E) 18)
Exports 87.3 97.8 107.8 117.0 126.0 10.49
Domestic 19.0 21.0 21.7 24.0 25.0 5.42
Total 106.3 118.8 129.5 141.0 151.0 9.55
 Figure 1: Indian IT-ITES industry revenue

As per figure 2, the IT Services exports accounts for the largest share of 57% of about US$
86.0 Billion; ER&D and software products has emerged as the second largest segment with
21.8% share followed by BPO exports contributing 21.2%.

Figure 2: Revenue share of various segments in IT/ITES Sector (in %) Source: NASSCOM
SR-2018
EXPORTS
As shown in figure 3, IT-ITES exports are estimated as US$ 126.0 billion in FY2017-18,
growing by 7.7% over FY2016-17. A combination of solutions around disruptive technologies
such as SMAC (Social media, mobility, analytics and cloud), artificial intelligence, embedded
systems etc. have become the life-force of the industry.
IT Services is the fastest growing segment within the Indian IT-ITES sector. This segment is
estimated to generate exports revenues of the order of US$ 69.3 billion in year 2017-18 as
compared to US$ 66.0 billion in year 2016-17.
ITES/BPO segment has been reinventing itself in the past few years and is expected to
generate export revenue of the order of ~US$ 28.4 billion in year 2017-18 as compared to US$
26 billion in year 2016-17.
Engineering R&D and Product Development has registered a growth of about 12% in the
exports, which is estimated to reach US$ 28.3 billion in year 2017-18 from the level of

US$ 25.0 billion in year 2016-17.

Year/ Segment 2013- 14 2014-15 2015-16 2016 -17 2017- 18 CAGR

(E) % (2013-18)
IT Service 49.2 55.3 61.0 66.0 69.3 10.07
ITES-BPO 20.4 22.5 24.4 26.0 28.4 9.19
Software 17.7 20.0 22.4 25.0 28.3 13.09
Products,
Engineering
Services, R&D
Total IT-ITES 87.3 97.8 107.8 117.0 126.0 10.32

Source: NASSCOM SR-2018, E: Estimated

 Figure 3: Export of various segments in IT/ITES Sector

Source: NASSCOM SR-2018, E: Estimated

DOMESTIC MARKET

The Size of the domestic market is become significant now in the IT/ITeS Sector,
though it largely remains export driven. As shown in figure 4, Domestic IT-ITeS revenue
(excluding hardware) is estimated to reach INR 1738 billion in FY2017-18, as compared
to INR 1608 billion in FY2016-17, a y-o-y growth of ~8.7%. In FY 2018, India’s
domestic IT- BPM market is likely to grow 7.9% Y-o-Y to reach US$ 41 billion (~₹
273750 crore), excluding e-Commerce as compared to US$ 38 billion in 2016-17. Rapid
digitization is expected to further catalyse growth. Domestic IT-BPM industry is also
seeing continued growth as various government initiatives encourage technology usage
(push factor) and Indian enterprises across industries are rapidly implementing digital
technologies to adapt to a changing competitive landscape and the ever-demanding
customer. Domestic IT Services sector is the largest segment with close to 40.5% share,
expected to reach ₹. 113600 crores in year 2017-18 as compared to ₹ 100500 crores in
year 2016-17 with a estimated growth of about 13.1% in INR terms.
 The IT-ITES industry domestic revenue growth trend over the past 5 years is as under:
Year/ Segment 2013- 14 2014- 2015- 2016- 2017- CAGR
15 16 17 18(E) %(2013-18)
IT Service 72721.6 81662 89562 100500 113600 11.37
ITES-BPO 19593.8 21490 23364 26800 26800 8.90
Software Products 22468.8 25788 27907 33500 33500 10.32
Engineering Services
Total IT-ITES 114784.2 128940 140833 160800 173800 10.75
Source: NASSCOM SR-2018, E: Estimated

Figure 4: Domestic Revenue of various segments in IT/ITeS

Sector Source: NASSCOM SR-2018, E: Estimated

SIGNIFICANCE OF IT INDUSTRY
Strong Growth Opportunities
The IT BPM sector in the country grew at a CAGR of 11.14 % to US $ 154 billion in
FY17 from US $ 74 billion in FY10, which is 3 to 4 times higher than the global IT-BPM
growth. It is anticipated that the size of the industry will increase to US$ 350 billion by
2025.
Leading sourcing destination

India is a well-known sourcing destination across the world, accounting for about 55 %
market share global services sourcing business. India has a share of about 38 % in the
overall Business Process Management (BPM) sourcing market.

Largest pool of Ready to Hire Talents

India’s highly qualified talent pool of technical graduates is one of the largest in the
world, easing its emergence as a preferred destination for outsourcing, computer
science/information technology contributing for the biggest chunk of India’s fresh
engineering talent pool, exceeding 98% of the colleges offering this stream.

Most Lucrative sector for Investments

The Information Technology sector ranks 3rd in the country’s total Foreign Direct
Investment share and contributes to about 37 % of total Private Equity and Venture
investments in India. The computer software and hardware industry in India attracted
cumulative Foreign. Direct Investment (FDI) inflows worth US$ 29.825 billion between
April 2000 and September 2017, according to report released by the Department of
Industrial Policy and Promotion (DIPP).

Export and Employment Growth

Indian IT exports are forecasted to increase at 7 to 8 %. IT-BPM sector accounts for
largest contribution in total Indian services export, which accounts for 45 %.

Large Contribution to the Indian Economy

The country’s IT industry contributed around 7.7 % to India’s Gross Domestic Product.
IT industry has given jobs to about 3.9 million people in India of which more than
170,000 were added in Financial Year17.The industry is expected to add 130,000 to
150,000 jobs in FY18 and over 100,000 jobs in FY19. IT industry is accelerating the
growth of start-ups in the country, with the presence of more than 4,750 start-ups in India.
MARKET SIZE

India’s IT & ITES industry grew to US$ 167 billion in 2017-18. Exports from the
industry increased to US$ 126 billion in FY18 while domestic revenues (including
hardware) advanced to US$ 41 billion.
Spending on Information Technology in India is expected to grow over 9 per cent to reach
US$
87.1 billion in 2018.Revenue from digital segment is expected to comprise 38 per cent of
the forecasted US$ 350 billion industry revenue by 2025.

INVESTMENTS/ DEVELOPMENTS
Indian IT's core competencies and strengths have attracted significant investments
from major countries. The computer software and hardware sector in India attracted
cumulative Foreign Direct Investment (FDI) inflows worth US$ 32.23 billion between
April 2000 to June 2018, according to data released by the Department of Industrial Policy
and Promotion (DIPP). Leading Indian IT firms like Infosys, Wipro, TCS and Tech
Mahindra, are diversifying their offerings and showcasing leading ideas in blockchain,
artificial intelligence to clients using innovation hubs, research and development centres,
in order to create differentiated offerings. Some of the major developments in the Indian
IT and ITES sector are as follows:

NASSCOM has launched an online platform which is aimed at up-skilling over 2 million
technology professionals and skilling another 2 million potential employees and students.

Revenue growth in the BFSI vertical stood at 10.3 per cent y-o-y in the first quarter of 2018-
19. As of March 2018, there were over 1,140 GICs operating out of India.

Private Equity (PE)/Venture Capital (VC) investments in India's IT & ITES sector reached
US$
7.6 billion during April-December 2017.

India is the world's largest sourcing destination, accounting for approximately 55 per cent
of the US$ 185-190 billion market in 2017-18. India’s highly qualified talent pool of
technical graduates is one of the largest in the world and the country has a low-cost
advantage by being
5-6 times inexpensive than US. Revenue of India’s IT industry reached US$ 167 billion
and exports stood at US$ 126 billion in 2017-18. Export revenue from digital segment
forms about 20 per cent of the industry’s total export revenue.

Total export revenue of the industry is expected to grow 7-9 per cent year-on-year to US$
135- 137 billion in FY19. However, IT services exports are projected to add US$ 10
billion in FY19 to reach US$ 126 billion by the end of the year. Further, India’s IT-BPM
sector is expected to expand to US$ 350 billion by 2025 and BPM is expected to account
for US$ 50-55 billion out of the total revenue. Moreover, revenue from the digital
segment is expected to form 38 per cent of the total industry revenue by 2025. IT industry
employs nearly 3.97 million people in

India of which 105,000 were added in FY18. The industry added around 105,000 jobs in
FY18 and is expected to add over 250,000 new jobs in 2019. Hardware exports from
India are expected to grow at 7-8 per cent in FY19.

The computer software and hardware sector in India attracted cumulative Foreign Direct
Investment (FDI) inflows worth US$ 32.23 billion between April 2000 and June 2018
and ranks second in inflow of FDI, as per data released by the Department of Industrial
Policy and Promotion (DIPP). The Government of India has extended tax holidays to the
IT sector for software technology parks of India (STPI) and Special Economic Zones
(SEZs). Further, the country is providing procedural ease and single window clearance
for setting up facilities.

Also, the government has identified Information Technology as one of the 12 champion
service sectors for which an action plan is being developed. It will set up a Rs 5,000 crore
(US$ 745.82 million) fund for realizing the potential of these champion service sectors.
GOVERNMENT INITIATIVES

Some of the major initiatives taken by the government to promote IT and ITES
sector in India are as follows:

The government has identified Information Technology as one of 12 champion service

sectors for which an action plan is being developed. Also, the government has set up a
Rs 5,000 crore (US$ 745.82 million) fund for realizing the potential of these champion
service sectors.

As a part of Union Budget 2018-19, NITI Aayog is going to set up a national level
programme that will enable efforts in AI^ and will help in leveraging AI^ technology for
development works in the country.

EXPERT’S VIEWS

Motilal Oswal
“IT has made an exceptional comeback in the past 3 to 4 months, considering the fact
that it weakened for most of 2017-18. This quarter too holds promise for the industry.”
This is what Gautam Duggad, Head of Research, Motilal Oswal, thinks. There are many
positives like attractive valuations, solid free cash flow generation, strong balance sheets
and depreciating rupee against the dollar. These are the major tailwinds for the sector.

The Nifty IT index has grown 8 % in the first quarter of this year.
Duggad said that they are anticipating that in a structurally adverse environment for IT,
the current year 2018 could give a cyclical rescue. Given the current valuations, there is
still some space for IT companies to keep doing well because they are still trading in the
15 to 16 range (P/E ratio).

TCS is available at around Rs 19 to 19.5 one year forward. Technology is making a big
comeback after seven to eight quarters of slow growth. They are also anticipating a
double- digit profit growth.

Duggad anticipates IT giant Infosys to give a guidance of 6 to 8 % growth. Duggad added

that when it comes to IT, the past two quarters have shown a slight improvement in
revenue momentum which they anticipate to go on in the fourth quarter as well.

The expert is going with mid-level companies within the IT sector. He is betting that they
are anticipated to continue to outperform the tier I pack notably. The market has seen
major management changes over the past two years in a lot of these tier-II IT companies.

NASSCOM OPTIMISTIC ABOUT IT INDUSTRY

Information technology body NASSCOM anticipates the IT sector to increase at

7 at 9% in the financial year 2018-19.

Indian IT industry’s export revenues will increase to $135-137 billion from the $126
billion anticipated for the 2018-19. The industry body had forecasted 7 to 8% growth for
the previous financial year.

NASSCOM President R Chandrashekhar said that the possibility for growth is much
higher and will be unlocked by supportive government policies that remove barriers.
Domestic revenues are anticipated to grow 10 to 12 % to $28-29 billion in the financial
year 2018-19.

Starting in a slow mode, the 2017-18 financial year saw an encouraging growth in the
second half as the financial year is anticipated to close with revenues of $167 billion.

NASSCOM chairman Roy has shown hope that the IT sector may add 100,000 new jobs
during Financial Year 2019, which is 50 % lower than what it had forecasted for FY18,
attributing the job loss in IT industry to the hiring of techies in other industry verticals.

Chandrashekhar further added that headwinds are very much there. However, some
unpredictability eased off.
The sector is facing multiple headwinds, but the overall industry continues to grow in
customer base and domestic needs. The general global trend is upward, but the impact
on the industry is translating over a tenure as some challenges impact overall good results
Roy said that it is a great milestone for the software and services industry to cross $150
billion tripling in size in less than a decade. The growth of the B2B start-up industry also
represents a unique opportunity for our country to build innovative solutions for India and
rest of the world. From small digital pilots to POCs with product players, we are seeing
industrialization of digital as the wave ahead.

The stated goal to reach a $1 trillion digital economy by 2022, for which we would need
growth across all industries, established and new age companies, technology service
companies and product companies, consumer internet as well as the more adoption of
digital across enterprise, government, and MSME in India. Ghosh said that NASSCOM
was working with the government on reskilling IT professionals while improving
employment opportunities.

FUTURE GROWTH

India is the topmost offshoring destination for IT companies across the world.
Having proven its capabilities in delivering both on-shore and off-shore services to global
clients, emerging technologies now offer an entire new gamut of opportunities for top IT
firms in India. Export revenue of the industry is expected to grow 7-9 per cent year-on-
year to US$ 135-137 billion in FY19. The industry is expected to grow to US$ 350 billion
by 2025 and BPM is expected to account for US$ 50-55 billion out of the total revenue.

The prediction, which was put out at the annual summit of the NASSCOM, is in line with
the 7.8% revenue growth it anticipated in the six months to the end of March 2018.

India’s $154-billion information technology sector has been lashed by a broader

slowdown in technology spending, while unreliability looms over work visa rules in the
US, the biggest market for Indian software services firms.

US President Donald Trump has, however, so far not made any drastic changes to the H-
1B visa programme, frequently used by Indian IT companies to bring engineers and
developers to the US.

Executives at the summit in Hyderabad, fast rising as a competitor to traditional

information technology hub Bengaluru were positive the industry could weather the
present uncertainty by moving from low-profit businesses such as server maintenance to
more sophisticated work such as artificial intelligence (AI).

Experts believe that there is still some instability and it is not clear how few of the known
doubts will play out. However, Financial Year 2019 is likely to be a better year, based on
their present assessment.

Major companies such as Infosys and Wipro have announced better earnings in the
January- March quarter and information technology executives in Hyderabad also
showed positivity about a continued recovery as the industry diversifies into more
lucrative digital segments such as cloud computing and big data.

TCS company officials were particularly happy about artificial intelligence. Krishnan said
TCS was already embedding Artificial Intelligence in its offerings.

However, finding fresh talent to work on Artificial Intelligence driven solutions could be
a key limitation.

INDUSTRY SCOPE
With the improved market conditions for the IT sector and more available
opportunities for the companies in this segment, there is growth expected in this sector.

If the companies will post better quarterly results then the market will also respond
positively. All this shows a positive future roadmap for the investors as well as the Indian
IT industry.

India's IT industry contributed around 7.9% to the country's GDP. The industry added
around 1,05,000 jobs in FY18 and is expected to add over 100,000 jobs in FY19. IT
industry is fueling the growth of start-ups in India, with the presence of more than
5,200 start-ups in India.

The IT sector in India expanded at a CAGR of 10.71% to US$ 167 billion in FY18
from US$ 74 billion in FY10. It is estimated that the size of the industry will grow to
US$ 350 billion by 2025.

Indian IT companies had a decent year in terms of financial performance, driven by

factors like such as digitisation, and non-linear growth models. Indian IT firms
continue to move up the value chain by providing more end-to-end solutions and
engaging more closely with clients. The drive towards digital technologies, internal
cost optimisation to improve profitability continued in FY18.

India's IT industry can be divided into six main components, viz. Software Products,
IT services, Engineering and R&D services, ITES/BPO (IT-enabled services/Business
Process Outsourcing), Hardware, and e-commerce. The Indian IT sector will benefit
significantly from the government's schemes like Digital India, make in India, and
Start Up India.

The Indian software sector's value proposition is unmatched in the world. Entry level
wages remain 8x-10x lower than in developed nations. India is the leading sourcing
destination across the world, accounting for approximately 55% market share of the
US$ 185-190 billion global services sourcing business in 2017-18. India acquired a
share of around 38% in the overall Business Process Management (BPM) sourcing
market.

Increasing competition, pressure on billing rates of traditional services and increasing

commoditization of lower-end services are among the key reasons forcing the Indian
software industry to make a fast move up in the software value chain. The new digital
technologies like social media, mobility, analytics, and cloud computing (SMAC) has
permanently changed the way Indian IT firms do business.

India's highly qualified talent pool of technical graduates is one of the largest in the
world, facilitating its emergence as a preferred destination for outsourcing, computer
science/information technology accounts for the biggest chunk of India' fresh
engineering talent pool, with more than 98% of the colleges offering this stream.
ACHIEVEMENTS
Following are the achievements of the government during 2017-18:

• About 200 Indian IT firms are present in around 80 countries.

• IT exports from India are expected to reach highest ever mark of US$ 126 billion
in 2017-18.
• Highest ever revenue was generated by Indian IT firms at US$ 167 billion in 2017-18.

FINANCIAL YEAR 18

The Indian IT/ITES industry earned revenue of US$ 167 billion during FY18. Out of
this, exports accounted about 81% of the industry's revenue.

Business Process Management (BPM) segment contributed around 19.2% in Indian

IT sector revenues. The total market size of this segment stood at US$ 32 billion during
FY18.

The USA accounts for about 62% of the export revenue followed by the UK and
Continental Europe, with 17% and 11% respectively. Other regions such as Asia
Pacific are catching up, with a contribution of 8%.

Export revenue of the IT industry grew to US$ 126 billion in FY18 from US$ 117
billion in FY17. It is further expected to increase 7-9% YoY, to US$ 135-137 billion
in FY19.

Export of IT services has been the major contributor, accounting for 55.6% of total
IT exports (including hardware) during FY18. ITES and Software products accounted
for 22.2% of total IT exports during FY18, respectively.

FUTURE PROSPECTS:

As per IBEF, the Indian IT industry is expected to maintain a growth of 7% - 9% in

FY19. It also expects that the Indian IT industry is likely to achieve a revenue target
of US$ 350 billion by 2025.

Technologies, such as telemedicine, health, remote monitoring solutions and clinical

information systems, would continue to boost demand for IT service across the globe.
IT sophistication in the utilities segment and the need for standardization of the
process are expected to drive demand. Digitization of content and increased
connectivity is leading to a rise in IT adoption by media.

Emerging protectionist policies in the developed world are expected to affect the
Indian IT companies. Due to US restrictions on visas as well as rising visa costs, most
Indian IT companies have subcontracted onsite jobs to local employees in the US and
have begun hiring locals. This has adversely affected margins of Indian IT companies.

Indian IT companies have adopted the global delivery model. They are setting up
development centres in Latin America, South East Asia and Eastern European
countries to take advantage of low cost and also cater to the local market. In the US,
such centres will help mitigate the risks of the new immigration bill and increase the
probability of winning projects in highly regulated sectors such as healthcare,
government services, utilities etc.

ADM services, which used to provide major chunk of revenues to the domestic IT
players, has been severely affected due to the falling billing rates. Hence, the
companies have venturing into high value services such as the new digital services.
Large Indian companies like Infosys, TCS, Wipro, Tech Mahindra, HCL
Technologies, and Mindtree will benefit the most from this trend.

Billing rates are expected to remain under pressure due to commoditization of

traditional services. Therefore, companies are expected to preserve their margins
through effective cost containment measures like shifting more wore work offshore,
improving employee utilization and increasing the use of automation software.

COMPANY PROFILE:
Hypogene Technologies is the growing IT Firm into the software development also
providing the educational Services and Solutions. The company was founded in 2015 by
Karthick Nambi. They have a motto of "Tomorrow In Design" and "AI Next”. They
invest in future for the betterment of mankind. Hypogene Technologies involved in various
field covering state of the art technologies like Artificial Intelligence, Deep Learning,
Machine learning, Augmented reality etc. They also offer Internship, Technology Training,
Workshops and Seminars.
 Hypogene Technologies are mainly involved in two categories of Operations, they are
following

SOFTWARE DEVELOPMENT
EDUCATIONAL SERVICES
In the educational sector Hypogene providing various services and solutions. At Hypogene
we conceptualize, design and deploy various solutions for educational institutions, students
and professionals.

They serve the education sector at many levels right from student level having project support,
various training, etc to design, development and deployment of complete institutional
management software, methods and business process restructuring.

SOFTWARE DEVELOPMENT
Hypogene Technologies mainly focusing on AI Development, they also are concentrating in
few other programming application developments.

➢ AI-Python Development
➢ Java Application development
➢ Mobile Application Development
➢ Web Development

AI-PYTHON DEVELOPMENT

Artificial intelligence (AI) is the simulation of human intelligence processes by machines,

especially computer systems. These processes include learning (the acquisition of information
and rules for using the information), reasoning (using rules to reach approximate or definite
conclusions) and self-correction. Particular applications of AI include expert systems, speech
recognition and machine vision.

Hypogene Technologies mainly focusing in artificial intelligence and its based solutions they
already developed many projects based on machine learning and deep learning concepts also
started doing a lot of experiments in the field of artificial intelligence.

In future Hypogene Technologies have planned to create society for Artificial intelligence.
Artificial intelligence is one of the major emerging technology in future to enhance the
machines performance. It has three levels of progressions likely Machine Learning, Deep
Learning, Neural Network.
AI NEXT- AUTONOMOUS CAR DRIVING
Hypogene currently working in various projects in artificial intelligence particularly in
Autonomous car driving and few other confidential projects through these prospects
Hypogene will become strong force IN AI. They are targeting in 2020 to launch their new
applications to the industry.

JAVA APPLICATION DEVELOPMENT

Java is an object-oriented computer programming language, which is class-based, concurrent

and also for general purpose. The cornerstone of the design - it is one of the few programming
platforms that has very little implementation dependencies. Java was developed by erstwhile
Sun Microsystems which is presently merged with Oracle Corporation. Java can be best
described as a set of multiple computer software and specifications, which can provide
systems for application software development for use in cross platform environment as well.

The Write-Once-Run-Anywhere or WORA allows developers in Java Development services

teams across the world to run all codes or applications to run on any platform without the
need for recompilation. Mostly based on C and C++ syntaxes, the language has fewer low
level facilities like them. We use Java-card, Java-ME, Java-SE and EE for all our Java
development services. Mostly Java-ME is used for developing applications aimed at PDAs,
handheld devices, Smartphone’s, Set-top boxes and others. The EE and SE are mainly used
by developers for desktop PCs, servers and various APIs among many others.

Google Android Operating system uses Java, but not the class libraries; however, Java SDK
is available for developing, designing and using applications Android specific usage. Similar
SDK are available for another mobile handheld or Smartphone usage also. Java is one of the
most successful and user-friendly programming platforms that can easily run in JVM or Java
Virtual machine, without any restrictions due to the computer architecture. Java is now one
of the most preferred programming platforms for developing a variety of apps for mobiles,
smartphones or other handheld devices.

It is also one of the favorite platforms for creating corporate specific tooling. This is due to its
ability of leveraging existing java infrastructure and building interconnected and highly
intelligent tools. At our Java development services, we also build web services, messaging
services and configurable our custom designed software tools. They include content
management systems, BPM, application servers, databases and so on to cater to your specific
or broad-spectrum needs.

TYPES OF APPLICATIONS THAT RUN ON JAVA

1. Desktop GUI Applications:

Java provides GUI development through various means like Abstract Windowing Toolkit
(AWT), Swing and JavaFX. While AWT contains a number of pre-constructed components
such as menu, button, list, and numerous third-party components, Swing, a GUI widget
toolkit, additionally provides certain advanced components like trees, tables, scroll panes,
tabbed panel and lists. JavaFX, a set of graphics and media packages, provides Swing
interoperability, 3D graphic features and self-contained deployment model which facilitates
quick scripting of Java applets and applications.

2. Mobile Applications:

Java Platform, Micro Edition (Java ME or J2ME) is a cross-platform framework to build

applications that run across all Java supported devices, including feature phones and smart
phones. Further, applications for Android, one of the most popular mobile operating systems,
are usually scripted in Java using the Android Software Development Kit (SDK) or other
environments.

3. Embedded Systems:

Embedded systems, ranging from tiny chips to specialized computers, are components of
larger electromechanical systems performing dedicated tasks. Several devices, such as SIM
cards, blue-ray disk players, utility meters and televisions, use embedded Java technologies.
According to Oracle, 100% of Blu-ray Disc Players and 125 million TV devices employ Java.

4. Web Applications:

Java provides support for web applications through Servlets, Struts or JSPs. The easy
programming and higher security offered by the programming language has allowed a large
number of government applications for health, social security, education and insurance to be
based on Java. Java also finds application in development of eCommerce web applications
using open-source eCommerce platforms, such as Broadleaf.
5. Web Servers and Application Servers:

The Java ecosystem today contains multiple Java web servers and application servers. While
Apache Tomcat, Simple, Rimfaxe Web Server (RWS) and Project Jigsaw dominate the web
server space, WebLogic, WebSphere, and Jboss EAP dominate commercial application server
space.

6. Enterprise Applications:

Java Enterprise Edition (Java EE) is a popular platform that provides API and runtime
environment for scripting and running enterprise software, including network applications
and web-services. Oracle claims Java is running in 97% of enterprise computers. The higher
performance guarantee and faster computing in Java has resulted in high frequency trading
systems like Murex to be scripted in the language. It is also the backbone for a variety of
banking applications which have Java running from front user end to back server end.

7. Scientific Applications:

Java is the choice of many software developers for writing applications involving scientific
calculations and mathematical operations. These programs are generally considered to be fast
and secure, have a higher degree of portability and low maintenance. Applications like
MATLAB use Java both for interacting user interface and as part of the core system.

MOBILE APPLICATION DEVELOPMENT

Mobile application development is the procedure involved in writing software for devices

such as smartphones and tablets. Developers write mobile apps to take advantage of certain

devices' specific features, such as the iPhone's accelerometer. When developers build an

application natively for a device, it means that the code is specific to that device's processor.

Hypogene Technologies have developing the applications in both platforms likely Android

and iOS. Upcoming days Hypogene Technologies have plan to launch their two own
applications namely “offery” “fishing Man” in the play store and few more application

projects under progresses

WEB DEVELOPMENT

Website development is rapidly growing around the globe as a tool of business development.
But, many of us do not know what importance does a website holds in growth of a business.
The life of today is majorly based on computers. Everything that we see around has a deep-
rooted link to online networks. If we are in an office, there is no chance that a day goes without
web surfing in order to keep the wheel of company running

We see a lot of start-ups struggling to establish their foot in the market. However, it is a bitter
truth that many of them fail to catch as much targeted audience as they expect in the first
place. What brings them down? It is majorly because they underestimate the capability of a
developed website to earn business for them. Website development for business purposes can
prove quite fruitful. Let’s look at some of the important reasons why a website is important
for business growth.

CREATIVITY IS KEY

Hypogene Technologies had vast experience in the field of web designing; in this case
creativity plays the vital role because the creative designing and placing will attract the
consumers or clients. It creates kind of impression within the client. Till now they have
developed more than 100 web sites

EDUCATIONAL SERVICES
They serve the education sector at many levels right from student level having project support,
various training, etc to design, development and deployment of complete institutional
management software, methods and business process restructuring.

Internship
Job Fairs
Technology training
Workshop and faculty Training
INTERNSHIP

Hypogene providing the internship opportunity for the engineering graduates especially final
year graduate in more than 25 domains namely Artificial Intelligence, Ethical Hacking,
Networking, IOT, App Development, Web Development, Python Programming and Java
programming et cetera. In Hypogene there are two categories of internships they are
conducting one is paid internship and other one is internship with stipend, in paid internship
students will pay minimum amount to the company and they can learn whatever technology
they want within a specific period of time it is good opportunity for the students to learn
whatever technology they are interested from the basics. So many students are benefited
through this paid internship.

JOBFAIRS
A job fair is also referred commonly as a career fair or career expo. It is a fair or exposition
for employers, recruiters and schools to meet with prospective job seekers. Expos usually
include company or organization tables or booths where resumes can be collected and
business cards can be exchanged. In the college setting, job fairs are commonly used for entry
level job recruiting. Often sponsored by career centres, job fairs provide a convenient location
for students to meet employers and perform first interviews. Many companies that attend these
job fairs also recruit through the online platforms that the colleges offer. Online job fairs offer
the same convenience online. Because of the tough economy at the end of first decade of
2000, an increasing number of senior citizens are attending job fairs to apply for jobs. After
having applied online to positions many more senior citizens are also trying their luck with
in-person job fairs. Job fairs are good places to meet many company representatives from
corporations of all industries and sizes during a short period of time. Every job fair has a set
of similar, basic elements or processes that require your attention. Job fair networking can be
generally described as the process of interacting with, obtaining contact details of, and getting
to know corporate recruiters.

WHY SHOULD I GO TO A CAREERS FAIR?

One of the main reasons why you should go to a careers fair is for research. If you are unsure
of where you want to work, or what you want to work as in later life, the companies at careers
fairs provide huge amounts of information and experience about different sectors. Simply
asking people what it is like in a certain profession or within a certain company will allow
you to get a bigger picture of what it is like to work in that area, allowing you to make an
informed choice about your career path.

If you have already decided where you want to work, then a careers fair is still extremely
useful for networking with the staff. When you do apply for a particular company, it can be a
great advantage to know someone there who can help guide you through the application
process. Recruitment, especially at the top firms such as the big 4 and magic circle firms, is
often dependent on who you know, and so connecting on LinkedIn with them afterwards is a
good idea. Be sure to get their permission to do so at the careers fair beforehand.

TECNOLOGY TRAINING
Information Technology is a really essential component of nearly every company in this
world. Having appropriate Information Technology training ensures that you have the ability
to distinguish yourself from the major competitors and hence achieve a competitive edge over
them.

Effective IT training includes giving in-house workshops or training sessions, many schools
and universities also organize such workshops to teach pupils the best information technology
skills. Information Technology training means helping supervisors and firms adapt to
different business processes and changing conditions. Such training concentrates on the ways
that emerging new technologies influence how business is conducted on a high level or large
scale. IT training classes help provide knowledge and information concerning the use of
technology in various IT areas, which leads to making rapid informed decisions, yield gain
for your organization, enhanced customer satisfaction and ensures success of your
organization within this enhanced competitive world. Some of the roles that professional are
interested in the area of IT in acquiring training are mainly

Management such as MIS (Management Information System), PM (Project Management)

etc..
• System Administration
• Business Intelligence
• Service Operations
• IT Development
• DBA (Database Administration)
• Pictures and Documents
• Word processing

There are several Microsoft training and programming languages classes available. Various
training courses are given in the most popular programming languages like C, C++, Java
classes, PHP, Microsoft visual studio classes etc... Additionally; Database management
training is a component of Information Technology which helps build your skills and
comprehension of information management, such as: MySQL, Oracle etc. Cisco training
courses provide you detailed knowledge on Cisco Networking Technologies.

IMPORTANCE OF INFORMATION TECHNOLOGY TRAINING

The technology section of any organization ought to know about the changes which are
happening on daily basis in different technological areas to be able to sustain and survive
competitions. The objective of IT training is to prepare a company to effectively manage its
data and resources. Proper Information Technology training can boost efficiency and
productivity of the employees of the firm.

IT training in the areas of computing such as getting training on how best to control the flow
of information by utilizing new technologies and computer systems may have significant
effect on the provider’s and its employee’s performance. IT training in the areas of
management like ERP (Enterprise Resource Planning) or SAP that’s the most recent data
integration module may increase efficiency and effectiveness of their firm. Besides that, the
main relevance of IT training is increased clients satisfaction and customer loyalty, as clients
are always interested in receiving fast, fast services and deliverables.

HYPOGENE DOMAINS
They are providing technology training under following domains
Artificial Intelligence, Android, Cryptography, Cloud computing,
Embedded systems, VLSI, PLC, Python, C, C++, Java, MATLAB,
DOT NET, AWS, AZURE, INTERNET OF THINGS (IOT)
Raspberry Pi, Hadoop, Bigdata
WORKSHOP AND FACULTY TRAINING
A workshop is a period of discussion or practical work on a particular subject in which a
group of people share their knowledge or experience. Hypogene Technologies have
organising workshops in all emerging technologies.

We have been providing hands-on workshops in various domains especially AI and VLSI to
students and faculty to train them with technology use and keep them in page with the latest
development in the industry.

SIGNIFICANCE OF HYPOGENE TECHNOLOGIES

Individual attention and customized training programs designed to help students and professional
gain the maximum knowledge and confidence.
Hands on training with industry standard protocols to impart skills necessary to operate and
achieve excellence in the industry
Personality development training and mentoring along with the selected technical course to
increase candidate employability.
Post training placement support. Candidates who eventually excel at their programs will get
placement assistance in their chosen field of study.

KEY OFFERINGS
Real time work experience with real time projects
Brainstorming opportunities with creative people

Not instructors but mentors!

A fun filled, long lasting, and new age learning experience.

OBJECTIVE OF STUDY
The overall objective of the study is to examine in detail the capital budgeting practices being
adopted by Indian companies in the turbulent and risk prone business environment. The
specific objectives of the study are:

1. To study the corporate practices regarding the capital budgeting techniques or methods
used for evaluating an investment proposal.

2. To study the criticality in terms of level of difficulty, importance and riskiness of different
stages of capital budgeting process, and the factors affecting capital budgeting techniques
which are being applied by the companies.

3. To investigate the corporate practices concerning cost of capital and cost of equity capital.

4. To analyse the different sources of risk, their adjustments by companies, and the corporate
practices regarding the capital budgeting techniques incorporating risk.

5. To identify the non-financial and other factors considered by the companies and their
relative importance while evaluating projects. 6. To study the impact of different variables on
the selection of capital budgeting technique and risk handling techniques used by different
companies.
NEED OF STUDY
The investments are made properly through evaluating the proposals by capital budgeting.
So, it needs special care, the profitability of a business concern depends upon the level of
investment made for long period.

Research in this area needs special attention particularly when a number of changes have
taken place in the economic and business environment, both in domestic as well as in global
markets since the last few years,

Which have had a considerable impact on the investment scenario that has become very
risky. This may as well influence the investment appraisal techniques especially risk
techniques employed by companies for evaluating their investment proposals.

Capital Budgeting decisions affects the long-term growth & survival of business, these
decisions have long term implication for the enterprises because the effect of
investment decision extend in to the future
These decisions involve large investment in various long-term asset, thus planned after
careful evaluation of various project
Involve risk & uncertainty associated with the future cash flow of the project, since the
actual cash flow may not match expected cash flow the rate of earning may fluctuate
& the firm may become more risky
Decision once taken cannot be easily reversible without incurring heavy losses, these
decisions are very important for any organization
SCOPE OF STUDY
This study highlights the review of capital budgeting and capital expenditure management
of the company.

Capital expenditure decisions require careful planning and control. Such long-term planning
and control of capital expenditure is called capital budgeting.

The study also helps to understand how the company estimates the future project cost.

The study also helps to understand the analysis of the alternative proposal and the decision
whether or not to commit funds to a particular investment proposal whose benefit or to be
released over a period of time longer than one year.

The capital budgeting is based on some tools namely payback period, average rate of
interest, net present value, profitability index, and interest rate of return
LIMITATION OF STUDY
The respondents were CFOs, Director Finance etc. who are knowledgeable people, but had
hectic and busy time schedules. As a consequence, they had to be persuaded repeatedly to
spare their time to fill the questionnaire.

Many of the company personnel reluctantly filled up the questionnaire, and in a few cases
did not supply complete information. ·

Subjectivity in the responses, especially in questions relating to personal opinions, is also

feared.

Uncertainty and risk pose the biggest limitation to the techniques of capital budgeting.
STATEMENT OF PROBLEM

This study which is an appraisal of capital budgeting, is to find out how the various

appraistatals appraise as capital budgeting decisions. For every organization, the usefulness

of financial statement enhance decision making. Information provided should be current

and meaningful.

The continuing inflation of recent year has led to an increasing awareness of some of the

disadvantage of historical cost accounting. The following problems associated against the

capital budgeting decision in government parastatals.

i. The inability to provide current information for decision making.

ii. Limitation of capital evaluation models and appraising investment.

iii. Lack of infrastructure facilities militate the production and service of organization.

However, this is costly and after ignored in practical.

Management should undertake this activity as it can contribute favourably to the firms over

all returns risk and value.

 CHAPTER 2
REVIEW OF LITERATURE
1) CAPITAL BUDGETING PRACTICES IN INDIAN COMPANIES
Roopali Batra a, Satish Verma b a Department of Management, I.K. Gujral Punjab Technical
University, Kapurthala, Punjab, India b RBI Chair, Centre for Research in Rural and
Industrial Development (CRRID), Chandigarh, India Received 21 July 2014; revised 22
June 2015; accepted 13 February 2017

ABSTRACT

The volatility of the global economy, changing business practices, and academic
developments have created a need to re-examine Indian corporate capital budgeting
practices. Our research is based on a sample of 77 Indian companies listed on the Bombay
Stock Exchange. Results reveal that corporate practitioners largely follow the capital
budgeting practices proposed by academic theory. Discounted cash flow techniques of net
present value and internal rate of return and risk adjusted sensitivity analysis are most
popular. Weighted average cost of capital as cost of capital is most favoured. Nevertheless,
the theory-practice gap remains in adoption of specialised techniques of real options,
modified internal rate of return (MIRR), and simulation. Nonfinancial criteria are also given
due consideration in project selection.

2) THE PRACTICE AND FACTORS DETERMINING THE SELECTION OF

CAPITAL BUDGETING METHODS

evidence from the field Tomasz Wnuk-Pela a Lodz University, Lodz, Poland 19th
International Scientific Conference; Economics and Management 2014, ICEM 2014, 23-25
April 2014, Riga, Latvia

ABSTRACT
The paper aimed to explore, in the form of a questionnaire on the sample of 100 companies
operating in Poland the extent of use of capital budgeting methods and also factors
determining their selection. The empirical study enabled to partly positively verify H1,
meaning that majority of the companies use methods recommended in textbooks: NPV
(53%), sensitivity analysis (54%), scenario analysis (61%) and formalization of investment
appraisal (81%). The study results also enabled to partly positively verify H2, and showed
statistically significant positive influence on capital budgeting methods selection of such
factors as: large size of company’s capital expenditure budget, foreign ownership and
company size. The author believes that the study will bridge the gap in the MA literature
and researchers will use its results to question current ideas and develop new theories. The
results may also help practitioners to identify areas where recommended methods have not
been implemented and their use could be beneficial for the company due to the fact that they
facilitate activities which create value.

3) CAPITAL BUDGETING THEORY AND PRACTICE: A REVIEW AND

AGENDA FOR FUTURE RESEARCH
Lingesiya Kengatharan1 1Department of Financial Management, University of Jaffna, Sri
Lanka. Correspondence: Lingesiya Kengatharan, Department of Financial Management,
University of Jaffna, Sri Lanka. Received: December 21, 2015 Accepted: January 14, 2016
Available online: February 4, 2016

ABSTRACT

The main purpose of this research was to delineate unearth lacunae in the extant capital
budgeting theory and practice during the last two decades and ipso facto become
springboard for future scholarships. Web of science search and iCat search were used to
locate research papers published during the last twenty years. Four criteria have been applied
in selection of research papers: be an empirical study, published in English language,
appeared in peer reviewed journal and full text research papers. These papers were collected
from multiple databases including OneFile (GALE), Scifres ScienceDirect (Elsevier),
Informa - Taylor & Francis (Crossruff), Wiley (Crossruff), Business (JSTOR), Arts &
Sciences (JSTOR), ProQuest, MEDLINE (NLM), and Wiley Online Library. Search
parameters covered capital budgeting, capital budgeting decision, capital budgeting theory,
capital budgeting practices, capital budgeting methods, capital budgeting models, capital
budgeting tools, capital budgeting techniques, capital budgeting process and investment
decision. Thematic text analyses have been explored to analyses them. Recent studies lent
credence on the use of more sophisticated capital budgeting techniques along with many
capital budgeting tools for incorporating risk. Notwithstanding, it drew a distinction between
developed and developing countries. Moreover, factors impinging on choice of capital
budgeting practice were identified, and bereft of behavioural finance and event study
methodological approach were highlighted. More extensive studies are imperative to build
robust knowledge of capital budgeting theory and practice in the chaotic environment. This
research was well thought out in its design and contributed by stating the known and
unknown arena of capital budgeting during the last two decades. This scholarship facilitates
to academics, practitioners, policy makers, and stakeholders of the company.
 CHAPTER-3
RESEARCH METHODOLOGY
MEANING OF RESEARCH

Research Methodology is a way to find out the result of a given problem on a specific matter
or problem that is also referred as research problem. In Methodology, researcher uses
different criteria for solving/searching the given research problem. Different sources use
different type of methods for solving the problem. If we think about the word
“Methodology”, it is the way of searching or solving the research problem. (Industrial
Research Institute, 2010).

According to Goddard & Melville (2004), “answering unanswered questions or exploring

which currently not exist is a research”.

The Advanced Learner’s Dictionary of current English lays down the meaning of research
as” a careful investigation or inquiry especially through search for new facts in any branch
of knowledge”.

Redmen & Mory (2009), define research as “a systematized effort to gain new knowledge”.

In Research Methodology, researcher always tries to search the given question

systematically in our own way and find out all the answers till conclusion. If research does
not work systematically on problem, there would be less possibility to find out the final
result. For finding or exploring research questions, a researcher faces lot of problems that
can be effectively resolved with using correct research methodology (Industrial Research
Institute, 2010).

RESEACH DESIGN

According to David J Luck and Ronald S Rubin, “A research design is the determination
and statement of the general research approach or strategy adopted for the particular project.
It is the heart of planning. If the design adheres to the research objective, it will ensure that
the client’s need will be served”.

In This Research, I have used Descriptive Research, because it provides an accurate

portrayal of characteristics of a particular individual, situation, or group. This method,
means of discovering new meaning, describing what exists, determining the frequency with
which something occurs, and categorizing information
DESCRIPTIVE RESEARCH DESIGN:

Descriptive research methods are used when the researcher wants to describe specific
behavior as it occurs in the environment. There are a variety of descriptive research methods
available, and once again, the nature of the question that needs to be answered drives which
method is used. Traditionally, descriptive research involves three main
categories: observation, case studies, and surveys. Let's take a closer look at each of these
individually.

SOURCES OF DATA

There are two types of data are primary and secondary data.

PRIMARY DATA

Data that has been collected from first-hand-experience is known as primary data. Primary
data has not been published yet and is more reliable, authentic and objective. Primary data
has not been changed or altered by human beings; therefore its validity is greater than
secondary data.

SECONDARY DATA

Data collected from a source that has already been published in any form is called as
secondary data. The review of literature in nay research is based on secondary data. MNostly
from books, journals and periodical

QUESTIONNAIRE DESIGN & DEVELOPMENT

Questionnaire is defined as ”It is a set of questions on a form, submitted to a number of

people in order to collect statistical information .In this questionnaire LIKERT SCALE is
used and six demo graphical factors are used.

The problem which prevails in the organization is found out by the researcher and objective
fixation is done on the basis of the problem identified. The objective which is fixed is the
base for the project title. The journal is selected with reference the project title. The journal
is read thoroughly and the variables are identified then the questionnaire is design on the
basic of the variables identified.
POPULATION

A population can be defined as including all people or items with the characteristics one
wish to understand. (Prof. Cuddapah Ramanaiah)

The number of employees Handling the Capital Budgeting in the Hypogene Technologies
also who willing to involve in this research. The survey questionnaire has to made for these
employees.

SAMPLE DESIGN

CENSUS

Census is a Collection of data from the whole population rather than a just sample I was did
this Research based on the census analysis because it will helps to do this Research in a most
efficient manner .

TOOLS FOR DATA COLLECTION

In this Research, I have used a well-structured questionnaire as a tool for data collection.

QUESTIONNAIRE

Questionnaire is defined as “It is a set of questions on a form, submitted to a number of

people in order to collect statistical information.

In this questionnaire LIKERT SCALE is used and six demo graphical factors are used

STATISTICAL TOOLS USED

There are various Statistical tools are used they are Data analysis are Percentage analysis,
Factors, Chi- square and ANOVA. The Data collected were analyzed using SPSS 16.0.

PERCENTAGE ANALYSIS

Percentage analysis, are used to represent the results graphically from the questionnaire. It
can be represented to bar charts and pie charts.
CHI-SQUARE

In probability theory and statistics, the chi-square distribution (also chi-square or)
distribution with k degree of freedom is the distribution of a sum of the squares of k
independent standard normal random variables. It is one of the most widely used probability
distributions in inferential statistics, e.g., in hypothesis testing or in construction of
confidence intervals. When there is a need to contrast it with the no central chi-square
distribution, this distribution is sometimes called as central chi-squared distribution.

CLUSTER ANALYSIS

Cluster analysis or clustering is the task or grouping a set of objects in such a way that
objects in the same group (called cluster) are more similar (in some sense or another) to each
other than to those groups (clusters).

Cluster analysis itself is not one specific algorithm, but the general task to be solved. It can
be achieved by various algorithms that differ significantly in their notion of what constitutes
a cluster and how to efficiently find them.

ANOVA

It is a statistical method for making simultaneous comparisons between two or more means;
a statistical method that yields values that can be tested to determine whether a significant
relation exists between variables.