“A Study on Fundamental Analysis of Indian

Infrastructure Industry”
Dr S.M.Tariq Zafar*

Dr Adeel Maqbool**
Dr D.S. Chobey***

Abstract

The present status of Construction industry in growing India is more concerned of solving
the consumer complaints, resolve disputes, along with challenges of outdated land and
property ownership regulations, infrastructural bottlenecks, and a shortage of civil
engineers. Despite all these hurdles the Indian construction industry recorded 12 percent
consistent year-on-year growth during 2000-2005, and is expected to grow at 25-30% during
2005-2010. The key promoters and motivators of this growth are government investment in
infrastructure creation and real estate demand in the residential and industrial sectors. This
study is an attempt to analyze the various factors of the industry like cost structure &
profitability, government policy, competition & research and development and economic
factors like foreign exchange position, inflation, interest rate, deficit slowdown & taxation
whether its impact is on the fundamental of the company or not. It also aims to know which
construction company is better in growth, performance and how customers get to know about
the better construction company for investment. Based on various variables an analysis was
made and comparison was drawn amongst the sample of companies taken for the study. Also,
an attempt was made to evaluate the future prospect of those companies in India.

Key Words: Investors; EPS; OPM; NPM; DER; ROA; PE; DPS; DPO; CR; ROI; PE;B.S E;
ANOVA; M&HCV; GC; LCV; FY; PC; GVW; CAGR;CV; ANOVA;
About the Authors
*Dr S.M.Tariq Zafar is M.Com, PGDMM and PhD in Social Sector Investment. Have
ample experience of seventeen years including industry working as Professor (Finance) and
H.O.D at Dehrdoon Institute of Technology, Dehradun. His areas of interest are: Financial
Management, Working capital, Financial Market and Institution Can be reached at:
smtz2007@gmail.com
**Dr. D.S. Chaubey is M.B.A and PhD in Marketing Management. Presently he is working
with Omkaranada Institute of Management and Technology, Rishikesh. His areas of interest
are: Marketing Management; Management; Sales and Distribution Management. Can be
contacted at chaubeyds@gmail.com
**Dr. Shruti Nagar is MCom, MBA, PhD (finance) and Editor of Pragyaan: Journal of
Management. Presently working as Asst. Professor at IMS, Makkawala Greens, Dehradoon
Acknowledgment: I solemnly accept full responsibility for any remaining mistakes; I wish to
thank Dipiti Sarki for true support and guidance in all regards.

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Objective and Methodology:

This study is an effort to analyze the various factors of the industry like cost structure &
profitability, government policy, competition, labour & R&D and economic factors like
foreign exchange position, inflation, interest rate, deficit slowdown & taxation whether it
impact on the fundamentals of the company or not. The core objective of this study is to
evaluate the past performance and the expected future performance of companies, to analyze
the profitability position of the companies and to analyze the various ratios of the past five
years (2004-2008) of sample companies. The present study adopts analytical and descriptive
research design with convenience sampling based on the secondary data collected from the
annual reports and the balance sheet, published by the companies’ respective websites and
www.money.rediff.com, www.moneycontrol.com, www.bseindia.com, www.google.com.
Five Indian construction companies are chosen as sample size of the study, listed on the
Bombay Stock Exchange (BSE).
Tools for analysis:
Ratio Analysis: Ratios have been calculated for past five years for the purpose of analysis.
Ratios being designed are named as: Earning Per Share (EPS), Operating Profit Margin
(OPM), Net Profit Margin (NPM), Debt Equity Ratio (DER), Return on Assets (ROA), Price
Earning Ratio (PE),Dividend Per Share(DPS),Dividend Pay Out(DPO),Current Ratio(CR),
Return On Investment(ROI),Price Earning Ratio(PE)
Analysis of Variance (ANOVA): The statistical tool that is used for testing hypothesis and
interpreting the results is one-way Analysis of Variance (ANOVA).

INTRODUCTION
After independence the need for industrial and infrastructural developments in India laid the
foundation stone of construction, architectural and engineering services. Later on it became
the second largest economic activity next to agriculture. It accounts for about 11% of India’s
GDP and play essential role in nation’s infrastructure and industrial development. The
evolution of Indian Construction Industry was almost similar to the construction industry
evolution in other part of the developing world. The period from 1950 to mid 60’s witnessed
the government playing an active role in the development of these services and most of
construction activities during this period were carried out by state owned enterprises and
supported by government departments. In the first five-year plan, construction of civil works
was allotted nearly 50 per cent of the total capital outlay. Realizing the importance and global
competition Planning Commission has envisaged an outlay of about Rs. 14,000 bn during
eleventh five year plan for infrastructure development in the country. This total investment
would ultimately translate into an effective construction investment of about Rs. 10,000 bn in
next 4-5 years. In addition to this the industry will witness order inflow above Rs. 1,500 bn
on the back of investments planned by various manufacturing sectors. Matching the pace
Real Estate segment also have plan to invest above Rs. 1,000 bn over next five year. In India
Construction has accounted for around 40 per cent of the development investment during the
past 50 years.

With its backward and forward linkages with various other industries like cement, steel bricks
etc. catalyses employment generation in the country and has generated employment for about
33 million people (Around 16 per cent of the nation's working population depends on
construction for its livelihood) and created assets worth over Rs 20,000 crore. Generally the
construction activity involved in different segments differs from segment to segment and
broadly it can be classified into three segments - Core Infrastructure, Industrial and Real
Estate. Core infrastructure segments involve large scale construction projects in different
sectors like roads, rails, ports, irrigation, power etc. Industrial construction is contributed by
expansion projects from various manufacturing sectors. Real estate involves constructions of
residential, commercial, malls/multiplexes etc. Though construction industry is highly

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fragmented in India and has large number of unorganized player’s it has contributed about
8.5% to the country’s GDP in FY 08. It is observed that over past few years, growth of the
construction industry is at par with nation’s economic growth rate. The multiplier factor
between growth rates of construction and GDP has been about 1.5X-1.6X. Over past 3 years,
construction as a percentage of GDP has increased from 8.0% in FY 06 to 8.5% in FY 08. It
contributes more than 6.3 per cent to the nation's GDP and 78 per cent to the gross capital
formation. The share of the Indian construction sector in total gross capital formation (GCF)
came down from 60 per cent in 1970-71 to 34 per cent in 1990-91. Thereafter, it increased to
48 per cent in 1993-94 and stood at 44 per cent in 1999-2000. In the 21st century, there has
been an increase in the share of the construction sector in GDP and capital formation. GDP
from Construction at factor cost (at current prices) increased to Rs. 174571 crores (12.02% of
the total GDP) in 2004-05 from Rs. 116238 crores (10.39% of the total GDP) in 2000-01.
Total sales of construction industry have reached Rs. 42885.38 crores in 2004 05 from Rs.
21451.9 crores in 2000-01. Total capital expenditure of state and central govt. will be
touching Rs. 8,62,687crores in 2011-12 from Rs. 1,43,587 crores (1999 2000).

The Indian construction industry operates on the basis of contractual agreements which also
include subcontracting. It comprises 200 firms in the corporate sector. In addition to these
firms, there are about 1, 20,000 class A contractors registered with various government
construction bodies. Contract mainly depends on the magnitude and nature of work, special
design needs, and annual requirements of funds and complexities of job. In India and other
part of the world to a great extent construction industry is dependent on the investments in
infrastructure, industrial and real estate sector. Government infrastructure spending,
scheduling of proposed expansion projects by manufacturing sectors and some
macroeconomic factors which govern investments in real estate sector play major role in this
industry. In 1954 the first professional consultancy company, National Industrial
Development Corporation (NIDC), was set up in the public sector. Subsequently, many
architectural, design engineering and construction companies were set up in the public sector
(Indian Railways Construction Limited (IRCON), National Buildings Construction
Corporation (NBCC), Rail India Transportation and Engineering Services (RITES),
Engineers India Limited (EIL), etc. and private sector (M N Dastur and Co., Hindustan
Construction Company (HCC), Ansals, etc. In the late 1960s government started encouraging
foreign collaborations in these services. The Guidelines for Foreign Collaboration, first
issued in 1968, stated that local consultant would be the prime contractor in such
collaboration.

The Indian economy has witnessed considerable progress in the past few decades and
construction industry plays a major role in the economic growth of a nation and occupies a
pivotal position in the nation’s development plans and has witnessed healthy growth which is
highly correlated with the economic growth of the economy. The current size of the
construction industry in India is estimated at $ 70.8bn, of which the 87 key players account
for nearly one third, while the rest is distributed amongst the 25,000 plus smaller players.
Most of the infrastructure development sectors moved forward, but not to the required extent
of increasing growth rate up to the tune of 8 to 10 per cent. Budgetary sources are limited and
cannot raise many resources. For speedy growth in mother of employment “construction
industry” GOI found Public Private Partnerships (PPP) approach as best suited for resource
generation. Matching the global pace the government has approved 37 infra projects worth
Rs.70, 000 crore between August 08 & January 09. It has also allocated Rs.40, 900 crore for
Bharat Nirman Scheme The corpus Of Rural Infrastructure Development Fund was increased
to Rs.14, 000 crore in 2008-09. IIFCL has given permission to raise Rs.10000 crore from
market by March 09. It will be also given permission to raise Rs.30, 000 crore more if
required. The Centre has been given in-principle approval under PPP mode projects worth
Rs.67, 700 crore. To balance the nation development and employment, better construction
management is required for optimizing resources and maximizing productivity and
efficiency.

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LITERATURE REVIEW

Globally a survey of literature reveled that a large numbers of study and research have been
carried out extensively in the field of Fundamental Analysis by the learned researchers and
they highlighted important facts which became paramount in this arena. Generally there are
very scant studies emphasizing fundamental analysis of the construction sector and large
number of these studies and researches has been carried out in advance countries. The critical
revelations of these studies shows that no constructive and systematic study has yet been
made to test the relevant validity of these important concepts in the context of the industrial
undertakings operating in developing and under-develop nations and thus the present study
seeks to make a humble initiative in these respects. John Colnan (1994), in his study provides
some brief pointers on what information to look for and how to make sense of what is
available, Mark P Bauman (1996) the study verified its descriptive validity regarding the
mapping of accounting numbers into stock prices. This paper identified three major issues
associated with practical implementation of the model, the prediction of future profitability,
the length of appropriate forecast horizon, and the determination of the appropriate discount
rate. Jim Berg (1999) examined that fundamental analysis looks at the fundamental issues
that drive the value of a particular company. He also outlined more about what fundamental
analysis is and how it could be used. Cristina Abad, Sten A. Thore, Joaquina Laffarga (1998)
study reveled a predictive information link tying current financial data to future earnings, and
a valuation link tying future earnings to firm value. Jon Lynch in his study explored and
explains the difference between the fundamental and technical analysis- the two most
common methods adopted to conduct research on the performance of stock markets. Frank
Shostak (1999) explains that the stock market doesn't have a life of its own. The success or
failure of investment in stocks depends ultimately on the same factors that determine success
or failure of any business. Kotrappa (2000) slacked that the success of a corporation greatly
depends upon sound Financing. When the original financing has been sound, a co-operation
has less fear for the future, provided it is given by a competent management. However, the
choice between debt and equity sources of capital for a corporate borrower is greatly
influenced by these factors.1) Taxes on Corporate Incomes 2) Inflation 3) Controlling Interest
4) Capital Market Reforms. Dominic Crag (2002) examines the practice of fundamental
analysis. Financial trading from the aspect of security selection, there are two main
methodologies used, namely, fundamental analysis and technical analysis, B. Vanstone, G.
Finnie, and C. Tan (2004) examine financial trading from the aspect of security selection. In
practice, it is unrealistic for a financial trader to participate in the full market of tradable
securities, and a selection mechanism must be employed to reduce the number of possible
securities competing for investment capital. Larson and Holz (2005) reveled that fundamental
analysis studies reasons of price changes at the macroeconomic level and represents analysis
of economic and political conditions in countries or separate industries. The school of
fundamental analysis appeared together with development of applied economic science.
Chung Yan Yee and Charles Yeah (2006) suggest that there is no significant correlation
between firm size and profitability. Large firms, which are endowed with greater resources
and prowess, are not guaranteed to be more profitable. You-Shyang Chen (2007) study
explain the forecasts revenue growth rate (RGR) of firms in stock trading systems using
rough set theory. It is very important instrument for investors that correctly predict future
growing firms from data of fundamental analysis in trading systems, because of the more
accurate prediction, the more gain profit. Ehab Mohamed; Mohamed Azim (2007) examines
the speed of adjusting market-to-book ratio can fairly be used to examine the issue of
transparency and concluded that the disclosed financial information can fairly be used in the
course of fundamental analysis in the Egyptian stock market, Hiroshi Morita and Necmi
Avkiran (2008) study reveled that Simultaneous Multi-Dimensional Benchmarking as an
Investment Tool Fundamental analysis or financial ratio analysis fails to capture the benefits
of a simultaneous multi-dimensional benchmarking relative to a company’s peers. Jeffrey J.
Quirin, Kevin T. Berry & David O'Brien (2008) study explain that most fundamental analysis
studies have focused on fundamentals selected by a data-driven approach on large samples of
firms from numerous industries. The results demonstrate a significant relationship between a
number of the fundamentals with both the market value of equity and cumulative stock

4
return. The results also suggest that the fundamentals provide incremental information
beyond earnings, change in earnings, and book value of equity when explaining equity values
and stock returns. Manual Garcia (2008) provides evidence on the extent to which the quality
of human resources is related to the value of accounting variables that are used in
fundamental analysis due to their perceived usefulness as proxies for investors' expectations
on the firm's future profitability and growth in both, earnings and shareholders' equity.

FUNDAMENTAL ANALYSIS & INTERPRETATION

In present study five companies have been analyzed in the field of construction sector at the
bases of fundamental analysis. In fundamental analysis we find out the comparative balance
sheet, profit & loss account of each company. Five companies as given below:
 Unitech Ltd.
 Acrow India Ltd.
 Ansal Housing & Construction Ltd.
 DS Kulkarni Developers Ltd.
 Hindustan Construction Company Ltd.
1. Operating Profit Margin (OPM)
Operating profit margin indicates how effective a company is at controlling the costs and
expenses associated with their normal business operation. This ratio is found out using the
following formulae and expressed in percentage terms.
Operating Profit Margin = Operating profit* 100
Total revenues
The operating profit margin position of sample companies is depicted in Table 1 and
discussed below:
TABLE 1: Operating Profit Margin of sample companies
ACROW
YEAR UNITECH INDIA ANSAL DS KULKARNI HCC
2004 6.8351 3.1662 13.5181 20.1292 15.5675
2005 9.7323 -8.8028 15.1435 17.9056 11.1472
2006 19.4203 6.4873 22.7698 131.1208 12.7016
2007 56.8320 18.7569 30.3989 120.5998 14.4994
2008 51.6774 33.5635 33.9668 73.9170 15.6644
AVERAGE 28.8994 10.6342 23.1594 72.7345 13.9160
Source: Computed using MS-Excel spread sheets from the data available in
money.rediff.com
As it could be observed in the table, among all sample companies, DS Kulkarni Developers
Ltd. sustained the highest operating profit margin amongst all other companies during the
study period followed by Unitech Ltd., which has registered a reasonably higher margin
during the period of review. OPM of DS Kulkarni Developers Ltd. i.e. 72.7345 is more than
others. Acrow India Ltd. has the lowest OPM i.e. 10.6342. Thus it reveals that DS Kulkarni
Developers Ltd. is the most efficient company in terms of operating profit margin.

5
Hypothesis Testing
Ho: OPM position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not differ
significantly.
Ha: OPM position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
TABLE 2: One-way ANOVA for Operating Profit Margin
Source Sum of Mean 5% F –
of Variation Squares df Square F limit
Between Groups 12539.411 4 3134.853 4.151 2.87
Within Groups 15102.436 20 755.122
Total 27641.848 24
Source: One-way ANOVA has been calculated by SPSS.

Inference: Since the calculated value of F is 4.151 which is more than the table value of 2.87
(CV >TV at 5% significance level), the null hypothesis is rejected and hence it is concluded
that the operating profit margin position of Unitech Ltd., Acrow India Ltd., Ansal Housing &
Construction Ltd., DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd.
does differ significantly
2. Net Profit Margin (NPM)
Net profit margin indicates how much a company is able to earn after all direct and indirect
expenses to every rupee of revenue. This ratio is calculated using the following formula and
expressed in percentage terms.
Net Profit Margin = Net profit * 100
Total revenues
The net profit margin position of sample companies is depicted in Table 3 and discussed
below:
TABLE 3: Net Profit Margin of sample companies
ACROW
YEAR UNITECH INDIA ANSAL DS KULKARNI HCC
2004 4.4310 3.4300 4.8382 4.7942 3.6509
2005 5.6662 -7.7464 7.6344 10.5293 4.9096
2006 10.5859 5.6962 17.5348 110.1440 8.2698
2007 40.2991 8.3240 22.5617 115.8866 1.9866
2008 41.4309 25.6906 23.5374 53.4148 4.0717
AVERAGE 20.4826 7.0788 15.2213 58.9538 4.5777
SOURCE: Computed using MS-Excel spread sheets from the data available in
money.rediff.com
As shown in table, DS Kulkarni Developers Ltd. has outperformed all the other companies in
terms of Net Profit Margin. Where the NPM of DS Kulkarni Developers Ltd. i.e. 58.9538 is
substantially higher than that of other companies at every year during the study period. On an
average Hindustan Construction Company Ltd. generated NPM of 4.5777 which is lowest
among the five companies. Thus analysis reveals that DS Kulkarni Developers Ltd. was the
most efficient company in terms of Net Profit Margin.

6
Hypothesis testing
Ho: NPM position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not differ
significantly.
Ha: NPM position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
TABLE 4: One-way ANOVA for Net Profit Margin

Source Sum of Mean 5% F –

of Variation Squares df Square F limit
Between Groups 9686.473 4 2421.618 3.594 2.87
Within Groups 13475.584 20 673.779
Total 23162.057 24
Source: One-way ANOVA has been calculated by SPSS.
Inference: Since the calculated value of F is 3.594 which is more than the table value of 2.87
(CV >TV at 5% significance level), the null hypothesis is rejected and hence it is concluded
that the net profit margin of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction
Ltd., DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
3. Earning Per Share (EPS)
Earning per share is the measure of the company’s ability to generate after tax profits per
share held by the investors. This ratio is computed with the help of the following formula and
expressed in percentage terms.
Earning Per Share = Earnings after taxes and preferred dividends * 100
Total number of equity shares outstanding
The Earning per share position of sample companies is depicted in Table 5 and discussed
below:
TABLE 5: Earning Per Share of sample companies
ACROW
YEAR UNITECH INDIA ANSAL DS KULKARNI HCC
2004 13.2687 2.0312 2.6206 1.2818 -17.8186
2005 23.1101 -6.875 4.7641 3.3090 32.2808
2006 55.3651 5.625 14.2758 15.9909 4.8702
2007 12.1228 11.7187 25.5834 15.9810 1.4345
2008 6.3466 29.0625 31.5064 15.9141 4.2446
AVERAGE 22.0427 8.3125 15.7501 10.4954 5.0023
SOURCE: Computed using MS-Excel spread sheets from the data available in
money.rediff.com
As shown in the table, the average EPS of Unitech Ltd. is greater than all other companies
during the entire study period. EPS of Unitech Ltd. was substantially higher than Acrow India
Ltd., Ansal Housing & Construction Ltd., DS Kulkarni Developers Ltd. and Hindustan
Construction Company Ltd. in an average. On an average Unitech Ltd. earned EPS of
22.0427 followed by Ansal Housing & Construction Ltd. (15.7501), DS Kulkarni Developers
Ltd. (10.4954), Acrow India Ltd. (8.3125), and lastly Hindustan Construction Company Ltd.
(5.0023). Thus the analysis reveals that Unitech Ltd. was the most efficient company in
generating earning per share.

7
Hypothesis testing
Ho: EPS position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd., DS
Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not differ
significantly.
Ha: EPS position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd., DS
Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
TABLE 6: One-way ANOVA for Earning Per Share

Source Sum of Mean 5% F –

of Variation Squares df Square F limit
Between Groups 896.172 4 224.043 1.019 2.87
Within Groups 4397.406 20 219.870
Total 5293.578 24
Source: One-way ANOVA has been calculated by SPSS.

Inference: Since the calculated value of F is 1.019 which is less than the table value of 2.87
(CV < TV at 5% significance level), the null hypothesis is accepted and hence it is concluded
that the earning per share ratio of Unitech Ltd., Acrow India Ltd., Ansal Housing &
Construction Ltd., DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd.
does not differ significantly.

4. Dividend Per Share (DPS)

Dividend per share is similar to earnings per share. DPS shows how much the shareholders
were actually paid by the way of dividends. The DPS found out by the following formula and
expressed in percentage terms.
Dividend Per Share = Dividends paid * 100
Total number of equity shares outstanding
The dividend per share position of sample companies is depicted in Table 7 and discussed
below:
TABLE 7: Dividend Per Share of sample companies
ACROW
YEAR UNITECH INDIA ANSAL DS KULKARNI HCC
2004 3.0028 0.9375 0 0.7 4.9990
2005 4.0038 0 1.0091 0.7 6.0008
2006 12.9964 0.9375 1.4968 4 0.7000
2007 0.4999 2.5 1.8013 1.9999 0.7500
2008 0.2499 3.4375 1.9976 1.9999 0.8
AVERAGE 4.1506 1.5625 1.2609 1.8799 2.6500
SOURCE: Computed using MS-Excel spread sheets from the data available in
money.rediff.com
As shown in the table, DPS of Unitech Ltd. was substantially higher than Acrow India ltd.,
Ansal Housing & Construction Ltd., DS Kulkarni Developers Ltd. and Hindustan
Construction Company Ltd. in an average. On an average Unitech Ltd. earned DPS of 4.1506
followed by Hindustan Construction Company Ltd (2.6500), DS Kulkarni Developers Ltd.
(1.8799), Acrow India ltd. (1.5625), and lastly Ansal Housing & Construction Ltd. (1.2609).
Thus the analysis reveals that Unitech Ltd. was the most efficient company in generating
dividend per share.

8
Hypothesis testing
Ho: DPS position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd., DS
Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not differ
significantly.
Ha: DPS position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd., DS
Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
TABLE 8: One-way ANOVA for Dividend Per Share

Source Sum of Mean 5% F –

of Variation Squares df Square F limit
Between Groups 26.736 4 6.684 .873 2.87
Within Groups 153.180 20 7.659
Total 179.916 24
Source: One-way ANOVA has been calculated by SPSS.

Inference: Since the calculated value of F is .873 which is less than the table value of 2.87
(CV < TV at 5% significance level), the null hypothesis is accepted and hence it is concluded
that the dividend per share ratio of Unitech Ltd., Acrow India Ltd., Ansal Housing &
Construction Ltd., DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd.
does not differ significantly.

5. Dividend Payout Ratio (DPR)

Dividend payout ratio is the measure of the dividend paid by the company rather than
retained by the company. The ratio is computed by the following formula and ex pressed in
percentage terms.
Dividend Payout Ratio = Dividend per share * 100
Earning per share
The dividend payout ratio of sample companies is depicted in Table 9 and discussed below:
TABLE 9: Dividend Payout Ratio of sample companies
ACROW
YEAR UNITECH INDIA ANSAL DS KULKARNI HCC
2004 22.6312 46.1538 0 54.6099 28.0549
2005 17.3250 0 21.1822 21.1538 18.5895
2006 23.4741 16.6666 10.4854 25.0142 14.375
2007 4.1239 21.3333 7.0409 12.5142 52.2850
2008 3.9386 11.8279 6.3403 12.5669 18.8471
AVERAGE 14.2986 19.1963 9.0097 25.1718 26.4303
SOURCE: Computed using MS-Excel spread sheets from the data available in
money.rediff.com
As shown in the table, the average DPR of Hindustan Construction Company Ltd. is greater
than all other companies during the entire study period. DPR of Hindustan Construction
Company Ltd. was substantially higher than Unitech Ltd., Acrow India Ltd., Ansal Housing
& Construction Ltd. and DS Kulkarni Developers Ltd. in an average. On an average
Hindustan Construction Company Ltd. earned DPR of 26.4303 followed by DS Kulkarni
Developers Ltd. (25.1718), Acrow India Ltd. (19.1963), Unitech Ltd (14.2986) and lastly
Ansal Housing & Construction Ltd. (9.0097). Thus the analysis reveals that Hindustan
Construction Company Ltd. was the most efficient company in generating dividend payout.

9
Hypothesis testing
Ho: DPR position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not differ
significantly.
Ha: DPR position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
TABLE 10: One-way ANOVA for Dividend Payout Ratio

Source Sum of Mean 5% F –

of Variation Squares df Square F limit
Between Groups 1075.440 4 268.860 1.374 2.87
Within Groups 3913.915 20 195.696
Total 4989.355 24
Source: One-way ANOVA has been calculated by SPSS.

Inference: Since the calculated value of F is 1.374 which is less than the table value of 2.87
(CV < TV at 5% significance level), the null hypothesis is accepted and hence it is concluded
that the dividend payout ratio of Unitech Ltd., Acrow India Ltd., Ansal Housing &
Construction Ltd., DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd.
does not differ significantly.

6. Price Earning Ratio (PER)

The price earning ratio highlights the connection between the price and recent company’s
performance. This ratio moves either side only when price and profit get disconnected. The
ratio is calculated by the following formula and is expressed in terms of times.
Price Earning Ratio = Share price at given time
Earning per share
The price earning ratio of sample companies is depicted in Table 11 and discussed below:
TABLE 11: Price Earning Ratio of sample companies
ACROW
YEAR UNITECH INDIA ANSAL DS KULKARNI HCC
2004 6.4098 15.7784 1.7819 6.4751 5.9965
2005 14.5974 -9.3818 9.4140 8.9752 14.8307
2006 50.3105 16.5066 23.1055 19.5048 35.5526
2007 31.9519 15.7141 10.5458 17.0201 62.3546
2008 43.5111 7.6369 4.9989 10.2173 31.0977
AVERAGE 29.3561 9.2508 9.9692 12.4385 29.9664
SOURCE: Computed using MS-Excel spread sheets from the data available in
money.rediff.com
As shown in the table, the average PER of Hindustan Construction Company Ltd. is greater
than all other companies during the entire study period. PER of Hindustan Construction
Company Ltd. was substantially higher than Unitech Ltd., Acrow India Ltd., Ansal Housing
& Construction Ltd. and DS Kulkarni Developers Ltd. in an average. On an average
Hindustan Construction Company Ltd. earned PER of 29.9664 followed by Unitech Ltd.
(29.3561), DS Kulkarni Developers Ltd. (12.4385), Ansal Housing & Construction Ltd.

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(9.9692) and lastly Acrow India Ltd. (9.2508). Thus the analysis reveals that Hindustan
Construction Company Ltd. was the highly efficient company in generating price earning.
Hypothesis testing
Ho: PER position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd., DS
Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not differ
significantly.
Ha: PER position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd., DS
Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
TABLE 12: One-way ANOVA for Price Earning Ratio

Source Sum of Mean 5% F –

of Variation Squares df Square F limit
Between Groups 2219.677 4 554.919 2.674 2.87
Within Groups 4150.827 20 207.541
Total 6370.504 24
Source: One-way ANOVA has been calculated by SPSS.

Inference: Since the calculated value of F is 2.674 which is less than the table value of 2.87
(CV < TV at 5% significance level), the null hypothesis is accepted and hence it is concluded
that the price earning ratio of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction
Ltd., DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not
differ significantly

7. Return On Net Worth (RONW)

Return on net worth of a company measures the ability of the management of the company to
generate adequate returns for the capital invested. The ratio is calculated by the following
formula and is expressed in percentage terms.
Return On Net Worth = Net profit * 100
Net worth
The return on net worth of sample companies is depicted in Table 13 and discussed below:
TABLE 13: Return On Net Worth of sample companies
ACROW
YEAR UNITECH INDIA ANSAL DS KULKARNI HCC
2004 10.9960 1.7060 6.4287 7.3783 21.7693
2005 16.5947 -6.1281 10.7312 16.6361 20.9694
2006 30.7918 4.8714 23.6836 51.0595 14.0253
2007 84.7545 9.4458 29.4502 12.7276 4.0660
2008 48.0590 19.4764 25.7956 9.7181 10.9994
AVERAGE 38.2392 5.8743 19.2178 19.5039 14.3659
SOURCE: Computed using MS-Excel spread sheets from the data available in
money.rediff.com
As shown in the table, the average RONW of Unitech Ltd. is greater than all other companies
during the entire study period. RONW of Unitech Ltd. was substantially higher than Acrow
India Ltd., Ansal Housing & Construction Ltd., DS Kulkarni Developers Ltd. and Hindustan
Construction Company Ltd. in an average. On an average Unitech Ltd. earned RONW of
38.2392 followed by DS Kulkarni Developers Ltd. (19.5039), Ansal Housing & Construction

11
Ltd. (19.2178), Hindustan Construction Company Ltd. (14.3659) and lastly Acrow India Ltd.
(5.8743). Thus the analysis reveals that Unitech Ltd. was the most efficient company in
generating return on net worth.
Hypothesis testing
Ho: RONW position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not differ
significantly.
Ha: RONW position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
TABLE 14: One-way ANOVA for Return On Net Worth

Source Sum of Mean 5% F –

of Variation Squares df Square F limit
Between Groups 2816.198 4 704.049 2.428 2.87
Within Groups 5798.589 20 289.929
Total 8614.787 24
Source: One-Way ANOVA has been calculated by SPSS.

Inference: Since the calculated value of F is 2.428 which is less than the table value of 2.87
(CV < TV at 5% significance level), the null hypothesis is accepted and hence it is concluded
that the return on net worth of Unitech Ltd., Acrow India Ltd., Ansal Housing &
Construction Ltd., DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd.
does not differ significantly.
8. Current Ratio (CR)
Current Ratio is the measure of current assets to current liabilities of the company. The ratio
is computed by the following formula and is expressed in terms of times.
Current Ratio = Current assets
Current liabilities
The current ratio of sample companies is depicted in Table 15 and discussed below:
TABLE 15: Current Ratio of sample companies
ACROW
YEAR UNITECH INDIA ANSAL DS KULKARNI HCC
2004 0.4361 1.0963 1.8340 2.1869 1.3525
2005 0.4252 1.1234 1.6128 3.7270 1.2414
2006 0.4761 1.1804 1.3997 2.0854 2.7116
2007 0.9456 2.0679 1.6852 3.0756 2.3495
2008 1.2383 2.4689 2.1198 3.3970 2.2931
AVERAGE 0.7042 1.5874 1.7303 2.8944 1.9896
SOURCE: Computed using MS-Excel spread sheets from the data available in
money.rediff.com
As shown in the table, the average CR of DS Kulkarni Developers Ltd. is greater than all
other companies during the entire study period. CR of DS Kulkarni Developers Ltd. was
substantially higher than Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.
and Hindustan Construction Company Ltd. in an average. On an average DS Kulkarni
Developers Ltd. earned CR of 2.8944 followed by Hindustan Construction Company Ltd.

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(1.9896), Ansal Housing & Construction Ltd. (1.7303), Acrow India Ltd. (1.5874) and lastly
Unitech Ltd. (0.7042). Thus the analysis reveals that DS Kulkarni Developers Ltd. was the
most efficient company in generating current ratio.
Hypothesis testing
Ho: CR position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd., DS
Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not differ
significantly.
Ha: CR position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd., DS
Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
TABLE 16: One-way ANOVA for Current Ratio

Source Sum of Mean 5% F –

of Variation Squares df Square F limit
Between Groups 12.413 4 3.103 9.844 2.87
Within Groups 6.305 20 .315
Total 18.718 24
Source: One-Way ANOVA has been calculated by SPSS.

Inference: Since the calculated value of F is 9.844 which is more than the table value of 2.87
(CV > TV at 5% significance level), the null hypothesis is rejected and hence it is concluded
that the current ratio of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
9. Debt Equity Ratio (DER)
Debt equity shows how much a company is leveraged (in debt) by comparing what is owed to
and what is owned. The ratio is calculated by the following formula and is expressed in terms
of times.
Debt Equity Ratio = Total liabilities
Total equity
The debt equity ratio of sample companies is depicted in Table 17 and discussed below:
TABLE 17: Debt Equity Ratio of sample companies
ACROW
YEAR UNITECH INDIA ANSAL DS KULKARNI HCC
2004 0.8736 0.1246 1.4006 1.9487 2.5597
2005 1.8619 0.2130 1.1656 2.8692 1.2059
2006 3.0585 0.2165 1.1038 3.0246 1.4585
2007 3.1051 0.2103 1.6578 0.4755 1.7156
2008 3.7864 0.1958 1.2343 0.7609 1.8656
AVERAGE 2.5371 0.1920 1.3124 1.8158 1.7611
SOURCE: Computed using MS-Excel spread sheets from the data available in
money.rediff.com
As shown in the table, the average DER of Unitech Ltd. is greater than all other companies
during the entire study period. DER of Unitech Ltd. was substantially higher than Acrow
India Ltd., Ansal Housing & Construction Ltd., DS Kulkarni Developers Ltd. and Hindustan
Construction Company Ltd. in an average. On an average Unitech Ltd. earned DER of 2.5371

13
followed by DS Kulkarni Developers Ltd. (1.8158), Hindustan Construction Company Ltd.
(1.7611), Ansal Housing & Construction Ltd. (1.3124) and lastly Acrow India Ltd. (0.1920).
Thus the analysis reveals that Unitech Ltd. was the most efficient company in generating debt
equity.
Hypothesis testing
Ho: DER position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not differ
significantly.
Ha: DER position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
TABLE 18: One-way ANOVA for Debt Equity Ratio

Source Sum of Mean 5% F –

of Variation Squares df Square F limit
Between Groups 14.933 4 3.733 6.155 2.87
Within Groups 12.131 20 .607
Total 27.064 24
Source: One-Way ANOVA has been calculated by SPSS.

Inference: Since the calculated value of F is 6.155 which is more than the table value of 2.87
(CV > TV at 5% significance level), the null hypothesis is rejected and hence it is concluded
that the debt equity ratio of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction
Ltd., DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
10. Fixed Asset Turnover Ratio
Fixed asset turnover is the ratio of sales to the value of fixed assets. It indicates how well the
business is using its fixed assets to generate sales. The ratio is calculated by the following
formula and is expressed in terms of times.
Fixed Asset Turnover Ratio = Sales
Fixed assets
The fixed asset turnover ratio of sample companies is depicted in Table 19 and discussed
below:

TABLE 19: Fixed Asset Turnover Ratio of sample companies

ACROW
YEAR UNITECH INDIA ANSAL DS KULKARNI HCC
2004 9.0457 0.3775 2.3126 11.4922 1.9298
2005 10.0228 0.5736 2.5219 11.9251 2.3959
2006 7.8529 0.6288 4.3099 4.8396 2.5711

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2007 25.0722 1.1294 6.1623 35.2361 2.1409
2008 21.2212 0.8080 6.4615 49.8622 2.1867
AVERAGE 14.6430 0.7035 6.4615 22.6711 2.2449
SOURCE: Computed using MS-Excel spread sheets from the data available in
money.rediff.com
As shown in the table, the average FATR of DS Kulkarni Developers Ltd. is greater than all
other companies during the entire study period. FTAR of DS Kulkarni Developers Ltd. was
substantially higher than Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
and Hindustan Construction Company Ltd. in an average. On an average DS Kulkarni
Developers Ltd. earned FTAR of 22.6711 followed by Unitech Ltd. (14.6430), Ansal
Housing & Construction Ltd. (6.4615), Hindustan Construction Company Ltd. (2.2449) and
lastly Acrow India Ltd. (0.7035). Thus the analysis reveals that DS Kulkarni Developers Ltd.
was the most efficient company in generating fixed asset turnover.
Hypothesis testing
Ho: FATR position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does not differ
significantly.
Ha: FATR position of Unitech Ltd., Acrow India Ltd., Ansal Housing & Construction Ltd.,
DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd. does differ
significantly.
TABLE 20: One-way ANOVA for Fixed Asset Turnover Ratio

Source Sum of Mean 5% F –

of Variation Squares df Square F limit
Between Groups 1773.818 4 443.455 5.150 2.87
Within Groups 1722.271 20 86.114
Total 3496.089 24
Source: One-Way ANOVA has been calculated by SPSS.

Inference: Since the calculated value of F is 5.150 which is more than the table value of 2.87
(CV > TV at 5% significance level), the null hypothesis is rejected and hence it is concluded
that the Fixed Asset Turnover of Unitech Ltd., Acrow India Ltd., Ansal Housing &
Construction Ltd., DS Kulkarni Developers Ltd. and Hindustan Construction Company Ltd.
does differ significantly.

FINDINGS & CONCLUSION

 The study reveled that on an average basis, mean operating profit margin (OPM) of
DS Kulkarni Developers Ltd. is (72.7345) the highest followed by Unitech Ltd.
(28.8994), Ansal Housing & Construction Ltd. (23.1594), Hindustan Construction
Company Ltd. (13.9160) and Acrow India Ltd. (10.6342). Further, on the basis of
study it is found that DS Kulkarni Developers Ltd. did better in share market when
compared to other four sample companies.

15
  Generally average of net profit margin over the past 5-10 years can give a better idea
of the historical growth. In this study it is found that on an average basis, mean net
profit margin (NPM) of DS Kulkarni Developers Ltd. is (58.9538) the highest
followed by Unitech Ltd. (20.4826), Ansal Housing & Construction Ltd. (15.2213),
Acrow India Ltd. (7.0788) and. Hindustan Construction Company Ltd. (4.5777).

 The study reveled that on an average basis, mean earning per share (EPS) of Unitech
Ltd. is (22.0427) the highest, outperformed other companies in terms of Earning per
share and lies on the top position followed by Ansal Housing & Construction Ltd.
(15.7501), DS Kulkarni Developers Ltd. (10.4954), Acrow India Ltd. (8.3125) and.
Hindustan Construction Company Ltd. (5.0023). Further, it is found that Unitech Ltd.
the most efficient company in controlling indirect expenses when compared to other
sample companies.

 The study reveled that on an average basis, mean dividend per share (DPS) of Unitech
Ltd. is (4.1506) the highest followed by Hindustan Construction Company Ltd.
(2.6500), DS Kulkarni Developers Ltd. (1.8799), Acrow India Ltd. (1.5625) and
Ansal Housing & Construction Ltd. (1.2609).

 The study reveled that Hindustan Construction Company Ltd. is the most efficient
company in controlling indirect expenses. On an average basis, mean dividend payout
ratio (DPR) of Hindustan Construction Company Ltd. is (26.4303) the highest
followed by DS Kulkarni Developers Ltd. (25.1718), Acrow India Ltd. (19.1963),
Unitech Ltd. (14.2986) and Ansal Housing & Construction Ltd. (9.0097).

 The study reveled that on an average basis, mean price earning ratio (PER) of
Hindustan Construction Company Ltd. is (29.9664) the highest followed by Unitech
Ltd.( 29.3561), DS Kulkarni Developers Ltd. (12.4385), Ansal Housing &
Construction Ltd. (9.9692) and Acrow India Ltd. (9.2508).

 The study reveled that on an average basis; mean return on net worth of Unitech Ltd.
is (38.2392) the highest, outperformed other companies in terms of Return on Net
Worth and lies on the top position, followed by DS Kulkarni Developers Ltd.
(19.5039), Ansal Housing & Construction Ltd. (19.2178), Hindustan Construction
Company Ltd. (14.3659) and Acrow India Ltd. (5.8743).

 The study reveled that on an average basis; mean current ratio (CR) of DS Kulkarni
Developers Ltd. is (2.8944) the highest and lies on the top position followed by
Hindustan Construction Company Ltd. (1.9896), Ansal Housing & Construction Ltd.
(1.7303), Acrow India Ltd. (1.5874) and Unitech Ltd. (0.7042).

 The study reveled that on an average basis, mean debt equity ratio (DER) of Unitech
Ltd. is (2.5371) the highest followed by DS Kulkarni Developers Ltd. (1.8158),
Hindustan Construction Company Ltd. (1.7611), Ansal Housing & Construction Ltd.
(1.3124) and Acrow India Ltd. (0.1920). To maintain positive result companies have
to be careful in its debt equity ratio as investor prefer to invest in safe mode where
they get return especially in equity.

 The study reveled that on an average basis, mean fixed asset turnover ratio of DS
Kulkarni Developers Ltd. is (22.6711) the highest, outperformed other sample
companies in terms of Fixed Asset Turnover Ratio and lies on the top position
followed by Unitech Ltd. (14.6430), Ansal Housing & Construction Ltd. (6.4615),
Hindustan Construction Company Ltd. (2.2449) and Acrow India Ltd. (0.7035).

Finally the study that conclude that there is no particular company in the sample of
companies excluding Unitech Ltd. and DS Kulkarni Developers Ltd., which has shown

16
consistent growth in the construction industry. The rest of the companies had grown but they
were not consistent in their overall variables (average) of five years (2004-2008). According
to the ratios that have been calculated in the study, all the companies are average in their
growth pattern in their own perspective and in their industrial sector.

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Declaration

Dear \Sir \ Madam

17
With deep regard and faith in your jurisdiction I “Dr S.M.Tariq Zafar “submitting research
paper, title” “A Study on Fundamental Analysis of Indian Infrastructure Industry” In
your esteemed research journal. It is a joint effort of Dr S.M.Tariq Zafar, Dr Adeel Maqbool,
and Dr D.S. Chobey We hereby solemnly declare that research work is original in all regard
and has not been submitted to any journal for publication.

In Absence of Acknowledgement and further information author have a complete right of his
paper and can present \ submit to any journal for publication.

18