JSPM’s Rajarshi Shahu College of...

IJRIM Volume 6, Issue 1 (January, 2016) (ISSN 2231-4334) International Journal of Research in IT & Management (IMPACT FACTOR – 4.961)

International Journal of Research in IT & Management Email id: [email protected],http://www.euroasiapub.org 80

ANALYSIS OF CONSISTENT PERFORMANCE IN INCOME, EXPENSES AND PROFIT ITEMS:

A STUDY OF BSE THIRTY COMPANIES

Dr. Adinath B. Kuchanur

Professor

Department of Management (MBA)

JSPM’s Rajarshi Shahu College of Engineering,

Tathawade, Pune-411033, Maharashtra

Abstract

Indian economy is characterized as having different sectors namely agriculture, automobile,

power, information and technology, pharmacy, banking, etc. which contribute their own share

to Gross Domestic Production (GDP). These sectors vary in respect of their scale of operations,

from region to region and from state to state. These sectors play a key role in the overall

economic development as they use a variety of resources for various economic activities by

investing huge funds. In India, Bombay Stock Exchange (BSE) 30 Companies among all

companies listed are the integral part of Indian financial system and they may be labeled as

superpowers and frontrunners of Indian economy. BSE 30s have demonstrated their resilience

as they stood to the testimony of the crisis in the recent past. In general, the companies invest

huge funds including borrowed one at higher costs. The economic activities are to be carried on

viably and consistently since there exists a cut throat competition in the market. The main

objective of the companies is to earn income by striking a healthy balance between income and

expenses. This article analyzes the income, expenses and profit items of BSE 30s for the period

from 2011 to 2015. The objective of the study is to analyze the consistency in performance of

BSE 30s with regard to their total income, total expenses and profit items and to award an

overall rank based on the average t-Test score of all ranks secured for each of them. The

consistency in performance is assessed with the help of two-tailed t-Test 5-1 (n-1), 0.05 (5%) =

2.776. The analysis reveals that Tata Consultancy Services (out of BSE 30s) has emerged as the

most consistent overall performer in respect of total income, total expenses and profit items

during the study period. The main limitation of this study is that the stakeholders may or may

not consider the consistency in performance of BSE 30s while dealing with them including

buying and selling of their securities since BSE 30s do not represent the whole Indian financial

market.

KEYWORDS: Total Income, Total Expenses, Net Profit, Earnings Per Share, Equity Dividend (%),

Book Value Per Share.



I. Introduction

All the three sectors-Agriculture, Industry and Service play a very significant role in socio-

economic development in the country through their constituents like food processors,

automobiles, banks, insurers, information and technology units, pharmaceutical companies, etc.

Among them, BSE 30s are believed to have dominated their respective sectors in terms of their

size of operations, annual turnovers, income generation, employment opportunities, market

capitalization, etc. BSE 30s are the frontrunners in the Indian financial system as they enjoy

large scale operations which evolve income generation, incurring expenses and profit making.

Hence, there is a need for BSE 30s to carry on their activities feasibly and consistently whereas

other Companies also pose a cut throat competition in the market. Generally, all entities strive

to generate higher income by incurring lesser expenses at the same time. However, they need to

maintain a consistency in performance with regard to their operations to ensure perpetuity for

their long-term survival and their ability to override the crisis. Moreover, BSE 30s with

inconsistent performance invite problems. Theoretically, the economic cycle influences on all

business activities. The financial risk and the business risk assume different intensities at each

stage of business cycle that would affect the funds and incomes of BSE 30s. The abrupt decline

in business and income may affect BSE 30s badly affecting net profit, earning per share, equity

dividend and book value of shares. There is a need to test empirically whether or not BSE 30s

can sustain themselves during the adversity. It is accompanied through measuring the

consistency in their performance in key operating dimensions. The present study is conducted

on the premise that a BSE 30 Company with consistent performance in its operations can have a

perpetual life amidst the critical times such as recession. It is, therefore, imperative that a BSE

30 Company should earn steady income, incur few expenses and generate adequate profits.

i) A glimpse of BSE 30 Companies

Bombay Stock Exchange (BSE) commenced its operations in 1875 and BSE Sensex is considered

as a key for making various decisions by the stakeholders. BSE Sensex is made up of 30 stocks of

renowned companies which have higher “Free-float market capitalization” out of all stocks

listed on BSE. In other words, these companies in fact dominated their respective fields like

automobile, information & technology, banking, pharmaceutical, etc. They carry on trade and

commerce on large scale basis and generate huge amount of profit by striking a balance

between income and expenses in order to keep intact their promises made to the stakeholders.

For calculating BSE Sensex, the 1978-79 is considered as the base year with base value of 100

index points. This is often denoted by the notation of 1978-79=100. The calculation of BSE

Sensex involves dividing the Free-float market capitalization of 30 companies in the Index by a



number called the Index. The "Free-float Market Capitalization" methodology of index

construction is regarded as an industry best practice globally. All major index providers like

MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float methodology.

ii) Understanding Free-float Methodology

Free-float Methodology refers to an index construction methodology that takes into

consideration only the free-float market capitalization of a company for the purpose of index

calculation and assigning weight to stocks in Index. Free-float market capitalization is defined as

that proportion of total shares issued by the company that are readily available for trading in

the market. It generally excludes promoters' holding, government holding, strategic holding and

other locked-in shares that will not come to the market for trading in the normal course. In

other words, the market capitalization of each company in a Free-float index is reduced to the

extent of its readily available shares in the market. BSE Sensex becomes the third index in India

to be based on the globally accepted Free-float Methodology.

Table1- A glimpse of BSE 30 Companies

S. No BSE 30s Sector S. No BSE 30s Sector

1 Axis Bank Banking 16 ITC Cigarettes

2 Bajaj Auto Automobiles 17 Larsen Infrastructures

3 Bharti Airtel Telecommunications 18 Lupin Pharmaceuticals

4 BHEL Infrastructure-General 19 M & M Automobiles

5 Cipla Pharmaceuticals 20 Maruti Suzuki Automobiles

3 Coal India Mining & Minerals 21 NTPC Power

7 Dr. Reddy Pharmaceuticals 22 ONGC Oil Drilling &

Exploration

8 GAIL Oil Drilling & Exploration 23 Reliance Refineries

9 HDFC Finance-Housing 24 SBI Banking

10 HDFC Bank Banking 25 Sun Pharma Pharmaceuticals

11 Hero Motocorp Automobiles 26 Tata Motors Automobiles

12 Hindalco Aluminum 27 Tata Steel Steel

13 HUL Personal Care 28 TCS Computers-

Software

14 ICICI Banking 29 Vedanta Mining & Minerals

15 Infosys Computers-Software 30 Wipro Computer Software

II. Review of literature

The considerable numbers of studies that approach the performance issue at microeconomic

level prove the special importance of financial management aspects, on the improvement of

which depend the obtained results and the companies’ competiveness. In the case of economic



agents, various methods may be used to study performance. One way to study company

performance is regression analysis, which allows the modeling the functional form of

dependence between various economic and financial indicators. Modeling economic

performance aims to increase efficiency by improving interventions in an adaptive learning

cycle (Campbell et al., 2001). Kohli and Chawla (2006) studied the profitability trends in

banks on the basis of interest income, interest expenditure, non-interest income, non-interest

expenditure, operating expenditure, deposits and advances and total assets. Profitability at

microeconomic level has been studied depending also on indicators such as current ratio, liquid

ratio, receivables turnover ratio and working capital to total asset (Singh and Pandey, 2008).

The indicators involved in the regression analysis of economic performance are numerous.

Models developed to study the impact caused by the allocation and use of capital within the firm

tie performance to the contribution of various resources to the increase of efficiency, expressed

in terms of profitability (Dumbravă, 2010). Recent literature analyzes the profitability of

companies from various countries and economy sectors through indicators like net operating

profitability (NOP) (Raheman et al., 2010). For Romania, a few econometric performance

analysis models have been used for companies listed on the Bucharest Stock Exchange. These

emphasize the correlation between intangible assets and company performance expressed by

annual average market price, price/earnings ratio and earnings per share (Purcărea and

Stancu, 2011). Public Sector Banks have on many counts shown better performance than SBI

Group. PNB out of four PSBs and ICICI out of four PvtSBs have demonstrated more consistency

in performance with regard to their sources and applications of funds (Adinath B. K, 2011). A

Wealth Creation Study (2006-2011) conducted by Motilal Oswal a Stock Broking Company in

its 16th Annual Study revealed that RIL was the biggest wealth creator among BSE 30s followed

by TCS, SBI and Infosys.

III. Research gaps

What matters most for BSE 30s’ long-term success is not only the size of income, expenses and

profit but the consistency in their operations as the case may be. A BSE 30 with high average

income with inconsistency in generation of income overtime is not the desired one. Similarly, a

BSE 30 with lower incidence of cost would not be a good indicator if its performance is not

consistent overtime. In this context, the present study is conducted as gap filler as it not only

analyzes the trends in operations of BSE 30s but also examines their consistency in

performance with regard to the operations.



IV. Scope of the study

BSE 30s are well known in the Indian economy and capital market for their unprecedented

trade and commerce as tough norms and regulations have been in place to protect the interest

of stakeholders and thus they are able to be perpetual in nature. They have been operating

perpetually over the decades and have edge over the entities of advanced countries in respect of

compliances like reporting to the regulators namely BSE and SEBI from time to time by adopting

rigid policies and rendering hi-tech services at affordable costs. BSE 30s are characterized as

Public and Private Sectors providing essential services to the nation and play a key role in

nation building efforts. Nevertheless, they differ in many respects of trade and commerce such

as manufacturing, buying and selling, rendering services, etc. These activities lead to income

generation, incurring on various expenses and further earning profit from their operations.

Hence, the present study is an effort to analyze the BSE 30 companies out of all listed on BSE

and to make a comparison among them in respect of their sustainability. The present study

guides the stakeholders to surmise well whether they should take into account the enduring

consistent performance of BSE 30s while dealing with a BSE 30 company.

V. Objectives of the study

The following objectives have been set for this study:

i) To analyze the consistent performance of BSE 30 companies and

ii) To rank these BSE 30 companies based on the average t-Test scores.

VI. Limitation of the study

The limitation of this study is that the stakeholders may or may not consider the consistent

performance of BSE 30 companies while dealing with a stock since these companies do not

delineate the whole Indian financial and control the entire Indian financial system. Moreover,

these companies are overseen, regulated and controlled by the regulators namely BSE, SEBI,

IRDA, RBI, Ministry of Company Affairs, Finance Ministry, etc.

VII. Methodology used in the study

An attempt is made to analyze the consistent performance of BSE 30s in respect of their total

income, total expenses and profit items in this study and to make a comparison among the BSE

30s the details of which are as follows.



Table 2 Total income, Total expenses and Profit items

S. No Items analyzed

1 Total income includes Interest earned, Sales, Other income, etc.

2 Total expenses include Interest expended, Purchases, Manufacturing

expenses, Employee cost, Selling and Distribution cost, Depreciation,

Miscellaneous expenses, etc

3 Profit items include Net profit, Earnings per share, Equity dividend,

Book value

It is important to note that the Sensex of BSE 30s is the most sought after in the financial

markets. The secondary data collected from websites of respective BSE 30s and Money Control

for the last five-year period i.e. from 2011 to 2015 is used. The same is presented in the form of

tables and analyzed with the help of statistical tools namely Average, Standard Deviation (SD),

Coefficient of Variation (CV) and t-Test. The two-tailed t-Test 5-1, 0.05 (5%) = ± 2.776 is used

for testing the consistency in performance of BSE 30s with regard to each item and for ranking

each BSE 30s. It is important to note that the values of average and t-Test are shown in brackets

against each BSE 30 wherever it is necessary. The consistency in performance deviates from one

BSE 30 to others due to their structure, life span, operations, etc. These factors lead to a

variation in performance of BSE 30s from time to time. The analysis enables us to understand as

to which BSE 30 has demonstrated the greater consistency in its performance in respect of

items identified for this study as the consistency in performance is a stronger indicator of a BSE

30s resilience to withstand the business cycles. Bombay Stock Exchange (BSE) 30 Companies

(Henceforth for the shake of brevity they are called “BSE 30s”)

VIII. Hypotheses

In view of the objectives of the study, the hypotheses are designed for the present study include;

HO = “BSE 30s have demonstrated a consistent performance in their operations” and

HA = “BSE 30s have not demonstrated a consistent performance in their operations”.

IX. Analysis and Interpretation

The total income and total expenses and profit items are analyzed. This analysis covers (1)

Analysis of Total Income, (2) Analysis of Total Expenses and (3) Analysis of Profit Items such as

i) Net Profit, ii) Earnings Per Share, iii) Equity Dividend and Book Value.

1. Analysis of total income of BSE 30s

i. Total income of BSE 30s: BSE 30s are engaged in trade and commerce like sales and

purchases, manufacturing, borrowing and lending, services as their economic activities and thus

they generate various forms of incomes say revenue, interest, fees, etc. For example, banks lend

funds in the form of loans and advances and investments in various investment schemes as per



the prevailing norms. They receive periodic interest from borrowers of funds and investment

clienteles as per schedule. It is obvious that the higher the loans, advances or investments, the

higher is the interest income and vice versa. The data pertaining to total income of the BSE 30s

from 2011 to 2015 is given in Table 3.

Table 3 Total income (Rs in Crore)

Rank Name of BSE

30s

As on 31st, March Total Average S. D C. V t-Test

2011 2012 2013 2014 2015

1 GAIL 33110 41328 48344 59378 57434 239593 47919 11009 22.97 (0.02)

2 Bharti Airtel 38339 42229 46814 50565 60689 238636 47727 8592 18.00 (0.04)

3 ICICI 32622 41045 48421 54606 61267 237962 47592 11223 23.58 (0.05)

4 TCS 29769 41543 50657 67788 78573 268330 53666 19665 36.64 0.28

5 Tata Motors 47719 54919 46581 37210 38651 225080 45016 7233 16.07 (0.43)

6 HDFC Bank 24263 32530 41917 49055 57466 205232 41046 13122 31.97 (0.54)

7 BHEL 43395 50068 49430 39667 31741 214301 42860 7570 17.66 (0.69)

8.5 Infosys 26532 33567 39063 46917 51049 197128 39426 9899 25.11 (0.88)

8.5 Maruti Suzuki 37183 36545 44377 44505 51258 213868 42774 6075 14.20 (0.88)

10 L & T 45919 55104 64110 58958 59936 284027 56805 6878 12.11 1.27

11 M & M 24214 33025 41168 41554 39806 179768 35954 7413 20.62 (1.64)

12 Axis Bank 19787 27415 33734 38046 43844 162826 32565 9333 28.66 (1.66)

13 Tata Steel 30746 35552 38832 42512 45004 192646 38529 5642 14.64 (1.70)

14 Wipro 27013 32865 34570 40368 43963 178779 35756 6611 18.49 (1.87)

15 Vedanta 8020 6785 2784 30780 34245 82614 16523 14775 89.42 (2.14)

16 NTPC 57407 64831 70460 74708 75362 342768 68554 7516 10.96 2.72

17 ITC 22309 26065 31086 34474 38265 152200 30440 6387 20.98 (2.77)

18 SBI 96325 120873 135692 154904 174973 682766 136553 30322 22.21 2.92

19 HUL 20506 22385 27057 29035 32030 131012 26202 4737 18.08 (4.62)

20 HDFC 12878 17354 21148 24198 27471 103049 20610 5714 27.73 (4.81)

21 ONGC 71759 84200 88465 90499 88405 423328 84666 7571 8.94 4.83

22 Hindalco 24207 27213 26905 29256 34762 142342 28468 3950 13.87 (4.97)

23 RIL 254465 336968 371612 398641 335854 1697540 339508 54267 15.98 5.37

24 Hero Motocorp 19608 23944 24166 25713 27953 121384 24277 3062 12.61 (7.78)

25 Coal India 5491 9501 11438 16429 14549 57407 11481 4293 37.39 (8.53)

26 Sun Pharma 3300 4141 2679 145 7911 18176 3635 2817 77.49 (15.79)

27 Lupin 4512 5521 7328 9431 10104 36896 7379 2414 32.71 (16.87)

28 Bajaj Auto 17782 20097 20769 20875 21912 101435 20287 1543 7.61 (18.02)

29 Dr. Reddy 5424 6822 8676 9994 10263 41179 8236 2080 25.25 (19.17)

30 Cipla 6561 7115 8722 9819 10629 42846 8569 1730 20.19 (22.85)

Table 3 reveals that RIL has earned the highest average total income whereas Sun Pharma has

generated the lowest average total income among all the BSE 30s.

HO = “BSE 30s have demonstrated a consistent performance in earning total income”

Table 3 presents that there is a consistent performance in total income earned by seventeen out

of BSE 30s and GAIL, Bharti Airtel and ICICI have topped and stood at 1st, 2nd and 3rd

respectively in the ranking list whereas Bajaj Auto, Dr, Reddy and Cipla, have demonstrated the



most inconsistent performance with the last three ranks respectively. Thus, the hypothesis is

accepted in the case of seventeen of BSE 30s that secured the t-Test values < ± 2.776 and

rejected in the case of remaining BSE 30s.

2. Analysis of Total expenses

i. Total expenses of BSE 30s: BSE 30s do incur expenses to generate income in the course of

their economic activities. Such expenses include purchases, employee costs, administrative and

selling and distribution costs, miscellaneous costs etc. For instance, banks pay interest

periodically to depositors and lenders of funds. The quantum of interest expense depends on

the size of deposits mobilized and funds borrowed. A bank which has accepted more deposits

and borrowed hefty funds will have to incur a huge interest expense. Thus, interest expense is a

major item of expenses for banks. The data of total expenses of BSE 30s is presented in Table 4.

Table 4 Total expenses (Rs in Crore)

Rank BSE 30s As on 31st, March

Total Average S. D C. V t-Test 2011 2012 2013 2014 2015

1 Maruti Suzuki 33036 33205 39335 38586 43714 187876 37575 4514 12.01 (0.11)

2 ICICI 27471 34580 40096 44796 50092 197034 39407 8796 22.32 0.15

3 TCS 20511 27473 34120 43139 52550 177792 35558 12650 35.57 (0.20)

4 GAIL 27137 35080 41110 51434 51814 206575 41315 10637 25.75 0.30

5 HDFC Bank 20337 27363 35191 40577 47250 170718 34144 10617 31.09 (0.37)

6 ONGC 28158 30684 39446 39816 39482 177586 35517 5638 15.87 (0.46)

7 Tata Motors 42778 50753 43201 34828 38411 209970 41994 5979 14.24 0.65

8 BHEL 33789 38895 38919 33532 28422 173556 34711 4387 12.64 (0.77)

9 M & M 20208 28680 35819 36062 34448 155218 31044 6756 21.76 (1.04)

10 Axis Bank 16398 23173 28554 31829 36486 136440 27288 7784 28.52 (1.39)

11 Bharti Airtel 24677 27960 31880 33620 36065 154203 30841 4538 14.72 (1.60)

12 Larsen 38799 47428 55598 49822 50808 242455 48491 6179 12.74 1.68

13 Infosys 16971 21193 25750 31814 33338 129066 25813 6931 26.85 (1.77)

14 Vedanta 3465 3860 2110 26781 29610 65827 13165 13772 104.61 (1.81)

15 Tata Steel 18088 22617 27478 29049 32521 129754 25951 5658 21.80 (2.14)

16 NTPC 43090 48315 48590 54242 57494 251730 50346 5616 11.15 2.18

17 Wipro 20571 25595 26311 29648 32265 134390 26878 4428 16.47 (2.53)

18 SBI 88954 109166 121587 144013 161871 625591 125118 28647 22.90 3.04

19 Hindalco 21108 23904 23736 26035 31041 125823 25165 3721 14.79 (3.47)

20 RIL 213287 297157 332827 358828 295531 1497630 299526 54965 18.35 4.76

21 HUL 17348 18696 21838 23710 25539 107131 21426 3405 15.89 (4.89)

22 ITC 14317 16391 19520 20912 23248 94388 18878 3558 18.85 (5.40)

23 HDFC 7991 11667 14551 16725 18817 69751 13950 4256 30.51 (5.67)

24 Hero Motocorp 16812 20054 20446 21727 24073 103113 20623 2646 12.83 (6.60)

25 Sun Pharma 1782 2339 1930 2826 8258 17134 3427 2731 79.69 (12.69)

26 Bajaj Auto 13310 15903 16338 16063 17553 79167 15833 1552 9.80 (14.34)

27 Cipla 5149 5384 6374 7549 8520 32976 6595 1433 21.73 (21.97)

28 Dr. Reddy 4198 5302 6549 7081 7649 30779 6156 1396 22.69 (22.86)

29 Lupin 3536 4356 5421 6103 6550 25966 5193 1242 23.91 (26.49)

30 Coal India 557 515 719 743 645 3180 636 99 15.58 (377.89)

Analysis of interest expense reveals (Table 4) that Coal India has incurred the lowest average

total expenses but RIL incurred the highest average total expenses among BSE 30s.



HO = “BSE 30s have demonstrated a consistent performance in incurring total expenses”

Table 4 portrays that there is consistent performance in total expenses incurred by the

seventeen of BSE 30s and Maruti Suzuki, ICICI and TCS have secured the first three ranks

respectively. On other hand, Dr. Reddy, Lupin and Coal India, have demonstrated the most

inconsistency in the performance and thus bagged the last three ranks respectively. This

hypothesis is proved in the case of the seventeen out of BSE 30s as their t-Test values are < ±

2.776 and disproved in respect of remaining BSE 30s.

3. Analysis of profit items of BSE 30s

i. Net profit: The main motto of every business is to earn profit from its economic activities. Similarly, BSE 30s also strive to generate profit from their activities. Thus, the profit is a prerequisite for any companies’ perpetuity. For example, a bank has to strike a healthy balance between its incomes and expenses so as to earn profits from its banking operations. The higher the income as well as the lesser the expenses, the higher would be the net profits and vice versa. The data relating to net profit of BSE 30s are shown in Table 5.

Table 5 Net profit (Rs in Crore)



1 Wipro 4844 4685 5650 7387 8193 30760 6152 1566 25.45 (0.01)

2 Tata Steel 6866 6696 5063 6412 6439 31476 6295 714 11.34 0.19

3 HDFC Bank 3926 5167 6726 8478 10216 34514 6903 2518 36.48 0.29

4 Bharti Airtel 7717 5730 5096 6600 13201 38344 7669 3245 42.31 0.46

5 BHEL 6011 7040 6615 3461 1419 24546 4909 2395 48.78 (0.52)

6 Axis Bank 3388 4242 5179 6218 7358 26386 5277 1570 29.75 (0.56)

7 ITC 4988 6162 7418 8785 9608 36961 7392 1880 25.44 0.65

8 ICICI 5151 6465 8325 9810 11175 40928 8186 2437 29.78 0.83

9 Coal India 4696 8065 9794 15009 13383 50947 10189 4131 40.54 0.97

10 HDFC 3535 4123 4848 5440 5990 23936 4787 986 20.59 (1.40)

11 Infosys 6443 8470 9116 10194 12164 46387 9277 2114 22.79 1.47

12 TCS 7570 10976 12786 18475 19257 69064 13813 4986 36.10 1.53

13 SBI 7370 11707 14105 10891 13102 57175 11435 2588 22.63 2.04

14 Larsen 3958 4457 4911 5493 5056 23874 4775 588 12.31 (2.36)

15 Tata Motors 1812 1242 302 335 (4739) (1049) (210) 2611 (1244.97) (2.44)

16 NTPC 9103 9224 12619 10975 10291 52211 10442 1443 13.82 2.97

17.5 Sun Pharma 1384 1697 517 (2829) (1474) (705) (141) 1945 (1380.05) (3.24)

17.5 HUL 2306 2691 3797 3867 4315 16977 3395 853 25.13 (3.24)

19 Vedanta 3433 1680 121 1076 1927 8237 1647 1217 73.87 (3.71)

20 Maruti Suzuki 2289 1635 2392 2783 3711 12810 2562 764 29.80 (4.72)

21 GAIL 3561 3654 4022 4375 3039 18652 3730 503 13.49 (4.83)

22 ONGC 18924 25123 20926 22095 17733 104800 20960 2880 13.74 5.14

23 Lupin 810 804 1260 2324 2397 7596 1519 791 52.04 (5.87)

24 M & M 2662 2879 3353 3758 3321 15973 3195 431 13.48 (6.89)

25 Hindalco 2137 2237 1699 1413 925 8412 1682 539 32.02 (8.32)

26 Dr. Reddy 893 912 1266 1933 1679 6684 1337 462 34.58 (10.44)

27 RIL 20286 20040 21003 21984 22719 106032 21206 1134 5.35 13.27

28 Bajaj Auto 3340 3004 3044 3243 2813 15444 3089 207 6.72 (14.82)

29 Hero Motocorp 1928 2378 2118 2109 2386 10919 2184 196 8.98 (20.29)

30 Cipla 960 1124 1507 1388 1181 6161 1232 217 17.60 (22.73)



Table 5 shows that the average net profit of RIL is the highest whereas Sun Pharma has the

lowest average negative net profit (Rs -141 crores) during the study period.

HO =“BSE 30s have demonstrated a consistent performance in generating net profit”

Fifteen out of BSE 30s have exhibited the consistent performance in earning net profits since

their t-Test values < ± 2.776 but that is not the case with the remaining BSE 30s. Wipro, Tata

Steel and HDFC Bank have obtained the first three ranks respectively while Bajaj Auto, Hero

Motocorp and Cipla, could secure the last three ranks respectively.

ii. Earnings per share (EPS): EPS plays a crucial role in deciding the healthy financial status of

an organiztion. The distributable profits belong to the equity shareholders who bear the burden

of any eventuality. It is essential to arrive at EPS by dividing such distributable profits by the

number of outstanding equity shares. EPS is a key indicator of entity’s performance in a year

since a soaring EPS enables an entity to declare higher dividend to its shareholders as well as

pushes up the market price of its shares. Hence, the shareholders of BSE 30s smartly eye on the

distributable profits year-on-year basis as well as they are worried of the creation of wealth for

them by their BSE 30s. Hence, EPS has its own significance from the view point of shareholders.

The data relating to EPS of the BSE 30s are portrayed in Table 6.

Table 6 Earnings per share (Amount in rupees)



1 BHEL 122.80 28.76 27.03 14.14 5.80 198.53 39.71 47.40 119.39 (0.20)

2 ICICI 44.73 56.09 72.17 84.95 19.28 277.22 55.44 25.36 45.75 0.25

3 HDFC Bank 84.40 22.02 28.27 35.34 40.76 210.79 42.16 24.65 58.48 (0.28)

4 M & M 43.36 46.89 54.61 61.02 53.47 259.35 51.87 6.91 13.32 0.42

5 TCS 38.62 55.97 65.23 94.17 98.31 352.30 70.46 25.44 36.11 0.84

6 Lupin 18.15 18.01 28.16 51.84 53.34 169.50 33.90 17.56 51.80 (0.86)

7 Dr. Reddy 52.78 53.81 74.51 113.62 98.57 393.29 78.66 27.03 34.37 1.10

8 Axis Bank 82.54 102.67 110.68 132.33 31.04 459.26 91.85 38.39 41.79 1.12

9 SBI 116.07 174.46 206.20 145.88 17.55 660.16 132.03 72.20 54.69 1.15

10 Maruti Suzuki 79.21 56.60 79.19 92.13 122.85 429.98 86.00 24.25 28.20 1.53

11 Larsen 65.01 72.77 79.80 59.26 54.39 331.23 66.25 10.21 15.42 1.69

12 Tata Steel 71.58 68.95 52.13 66.02 66.30 324.98 65.00 7.54 11.60 2.12

13 Vedanta 39.50 19.33 1.39 3.63 6.50 70.35 14.07 15.82 112.46 (2.21)

14 Tata Motors 28.55 3.91 0.95 1.04 (14.72) 19.73 3.95 15.58 394.88 (2.89)

15 Infosys 112.22 147.50 158.75 178.40 105.91 702.78 140.56 30.88 21.97 2.96

16 HDFC 24.10 27.91 31.35 34.86 38.04 156.26 31.25 5.51 17.63 (3.22)

17 Sun Pharma 13.36 16.39 4.99 (13.66) (7.12) 13.96 2.79 12.95 463.66 (3.57)

18 Bharti Airtel 20.32 15.09 13.42 16.51 33.02 98.36 19.67 7.88 40.08 (3.72)

19 Wipro 19.73 19.05 22.94 29.95 33.18 124.85 24.97 6.30 25.24 (3.81)

20 RIL 61.97 61.26 65.05 68.02 70.21 326.51 65.30 3.84 5.88 4.25

21 GAIL 28.07 28.80 31.71 34.49 23.96 147.03 29.41 3.97 13.49 (4.94)

22 Coal India 7.43 12.77 15.51 23.76 21.19 80.66 16.13 6.54 40.55 (5.02)

23 Hero Motocorp 96.55 119.09 106.07 105.62 119.47 546.80 109.36 9.82 8.98 6.15

24 ONGC 22.12 29.36 24.46 25.83 20.73 122.50 24.50 3.36 13.73 (7.28)



25 Bajaj Auto 115.42 103.81 105.18 112.08 97.24 533.73 106.75 7.16 6.71 8.06

26 HUL 10.68 12.45 17.56 17.88 19.95 78.52 15.70 3.94 25.08 (8.45)

27 Cipla 11.96 14.00 18.77 17.29 14.71 76.73 15.35 2.70 17.60 (12.46)

28 Hindalco 11.16 11.68 8.88 6.85 4.48 43.05 8.61 3.01 34.92 (13.43)

29 ITC 6.45 7.88 9.39 11.05 11.99 46.76 9.35 2.26 24.17 (17.54)

30 NTPC 11.04 11.19 15.30 13.31 12.48 63.32 12.66 1.75 13.80 (20.80)

Table 6 portrays that average earnings per share of Infosys is the highest whereas Sun Pharma

has the lowest average earnings per share.

HO =“BSE 30s have demonstrated a consistent performance in earnings per share”

Table 6 presents that there is a consistent performance in earnings per share of thirteen BSE

30s since their t- Test values < ± 2.776 and the said hypothesis is invalidated for the remaining

BSE 30s. BHEL, ICICI and HDFC Bank managed to secure the first three ranks respectively

whereas Hindalco, ITC and NTPC got the last three ranks respectively.

iii. Equity dividend: Out of distributable profits, some portion is retained in the business for

various purposes. The remaining amount of distributable profit is distributed among the equity

shareholders as equity dividend every year subject to profit earned by an entity. Equity

dividend is first declared and paid to the shareholders when the profits are sufficient to do so.

The information relating to equity dividend declared and paid by BSE 30s is presented in Table

7.

Table 7 Equity dividend (In percentage)

Rank Name of BSE

30s

As on 31st, March Total Average S. D C. V t-Test

2011 2012 2013 2014 2015

1 ITC 445 450 525 600 625 2645 529 83.02 15.69 0.01

2 HDFC 450 550 625 700 750 3075 615 119.37 19.41 0.73

3 Wipro 300 300 350 400 600 1950 390 124.50 31.92 (1.11)

4 TCS 1400 2500 2200 3200 7900 17200 3440 2575.46 74.87 1.13

5 HUL 650 750 1850 1300 1500 6050 1210 506.71 41.88 1.35

6 Sun Pharma 350 425 500 150 300 1725 345 132.76 38.48 (1.38)

7 Vedanta 350 400 10 325 410 1495 299 165.32 55.29 (1.39)

8 Bajaj Auto 400 450 450 500 500 2300 460 41.83 9.09 (1.63)

9 Maruti Suzuki 150 150 160 240 500 1200 240 150.17 62.57 (1.92)

10 Hero Motocorp 5250 2250 3000 3253 3000 16753 3351 1126.33 33.62 2.51

11 HDFC Bank 165 215 275 343 400 1398 280 94.58 33.84 (2.63)

12 BHEL 312 320 270 142 58 1101 220 115.41 52.41 (2.67)

13 Lupin 150 160 200 300 375 1185 237 97.31 41.06 (2.99)

14 Infosys 1200 940 840 1260 1190 5430 1086 184.34 16.97 3.03

15 Dr. Reddy 225 275 300 360 400 1560 312 69.16 22.17 (3.12)

16 Larsen 725 825 925 713 813 4000 800 86.15 10.77 3.16

17 Coal India 39 100 140 290 207 776 155 97.00 62.50 (3.84)

18 SBI 300 350 415 300 350 1715 343 47.38 13.81 (3.90)

19 Tata Motors 200 200 100 100 0 600 120 83.67 69.72 (4.88)

20 ICICI 140 165 200 230 250 985 197 45.22 22.96 (7.32)

21 Axis Bank 140 160 180 200 230 910 182 34.93 19.19 (9.91)

22 M & M 230 250 260 280 240 1260 252 19.24 7.63 (14.35)



23 Hindalco 150 155 140 100 100 645 129 27.02 20.94 (14.77)

24 Bharti Airtel 20 20 20 36 77 173 35 24.69 71.37 (19.98)

25 Tata Steel 120 120 80 100 80 500 100 20.00 20.00 (21.40)

26 Cipla 140 100 100 100 100 540 108 17.89 16.56 (23.48)

27 GAIL 75 87 96 104 60 422 84 17.39 20.60 (25.51)

28 NTPC 38 40 58 58 25 218 44 13.93 31.96 (34.76)

29 ONGC 175 195 190 190 190 940 188 7.58 4.03 (44.84)

30 RIL 80 85 90 95 100 450 90 7.91 8.78 (55.40)

It may be inferred from Table 7 that the average equity dividend paid by TCS to its equity

shareholders is the highest whereas Bharti Airtel paid the lowest average equity dividend to its

shareholders.

HO =“BSE 30s have demonstrated a consistent performance in paying equity dividend”

Twelve BSE 30s have demonstrated the consistent performance in paying equity dividend to

their shareholders since their t-Test values < ± 2.776 but that is not the case with the remaining

BSE 30s. ITC, HDFC and Wipro bagged the first three ranks respectively for their consistent

performance whereas NTPC, ONGC and RIL could secure the last three ranks respectively.

iv. Book value of shares: A portion of distributable profits is retained in the business for

various purposes. Hence, it remains in the business as long as it is not spent for the purposes

intended. Thus, an entity gradually starts creating wealth once it has been well positioned in the

industry by catering to the needs of its stakeholders. The so created wealth wholly belongs to

the entity itself and it leads to increase in the book value per share. The book value of shares is

calculated by dividing the net worth of an entity by the number of its equity shares outstanding.

The higher the book value the higher is the market price of shares and vice versa. The book

value demonstrates the entity’s financial strength. The data pertaining to the book value per

share of BSE 30s is portrayed in Table 8.



Table 8 Book value per share (Amount in rupees)



1 Bajaj Auto 169.69 208.77 273.08 332.04 369.50 1353.08 270.62 83.02 30.68 (0.06)

2 HDFC Bank 545.46 127.52 152.20 181.23 247.39 1253.80 250.76 170.73 68.09 (0.15)

3 Hero Motocorp 148.03 214.83 250.70 280.43 327.58 1221.57 244.31 67.86 27.77 (0.47)

4 M & M 163.82 194.71 238.58 272.46 309.85 1179.42 235.88 58.53 24.81 (0.69)

5 BHEL 411.71 103.67 124.38 135.02 139.26 914.04 182.81 128.70 70.40 (0.72)

6 ICICI 478.31 524.01 578.21 633.92 138.72 2353.17 470.63 194.49 41.33 1.00

7 Axis Bank 462.77 551.99 707.50 813.47 188.47 2724.20 544.84 241.04 44.24 1.12

8 Tata Motors 314.98 61.77 59.91 59.51 46.10 542.27 108.45 115.62 106.61 (1.45)

9 SBI 1023.40 1251.05 1445.60 1584.34 172.04 5476.43 1095.29 557.61 50.91 1.47

10 TCS 99.53 126.49 165.86 224.90 231.87 848.65 169.73 58.56 34.50 (1.81)

11 Dr. Reddy 355.69 396.19 458.29 548.41 624.13 2382.71 476.54 109.93 23.07 1.82

12 Infosys 426.73 518.21 627.95 736.64 418.54 2728.07 545.61 136.29 24.98 1.98

13.5 L & T 358.45 411.53 473.24 362.95 398.78 2004.95 400.99 46.35 11.56 2.70

13.5 GAIL 151.78 170.48 191.00 213.42 229.56 956.24 191.25 31.42 16.43 (2.70)

15 Maruti Suzuki 479.99 525.68 615.03 694.45 784.70 3099.85 619.97 123.69 19.95 2.78

16 Lupin 70.68 83.61 108.30 155.65 200.84 619.08 123.82 53.91 43.54 (2.82)

17 RIL 446.25 498.21 544.22 609.78 668.05 2766.51 553.30 87.94 15.89 3.15

18 HDFC 118.05 128.76 160.57 179.14 196.67 783.19 156.64 33.13 21.15 (3.60)

19 Tata Steel 487.55 514.81 568.46 629.60 686.40 2886.82 577.36 81.66 14.14 3.69

20 Bharti Airtel 116.50 130.16 142.58 166.92 195.80 751.96 150.39 31.44 20.91 (4.00)

21 ONGC 113.97 132.03 145.47 159.81 169.02 720.30 144.06 21.93 15.22 (6.02)

22 Cipla 82.25 93.92 110.35 125.57 138.00 550.09 110.02 22.67 20.60 (7.32)

23 Sun Pharma 64.51 76.07 75.21 35.77 109.78 361.34 72.27 26.56 36.76 (7.67)

24 Wipro 86.86 99.04 98.38 119.03 140.22 543.53 108.71 21.08 19.39 (7.94)

25 Vedanta 133.34 148.58 149.85 113.59 114.87 660.23 132.05 17.52 13.27 (8.22)

26 Hindalco 155.10 164.44 174.61 177.92 180.37 852.44 170.49 10.53 6.17 (10.02)

27 NTPC 82.34 88.89 97.49 104.08 99.03 471.83 94.37 8.67 9.18 (20.96)

28 ITC 20.55 23.97 28.14 32.95 38.28 143.89 28.78 7.05 24.50 (35.06)

29 Coal India 28.21 30.97 32.48 26.04 26.49 144.19 28.84 2.81 9.74 (88.01)

30 HUL 12.31 16.25 12.36 15.15 17.21 73.28 14.66 2.24 15.29 (116.63)

Table 8 indicates that the average book value per share of SBI is the highest while the same is

the lowest in the case of HUL.

HO =“BSE 30s have demonstrated a consistent performance in creating book value per

share”

Table 8 reveals that there is a consistent performance in book value per share of fourteen BSE

30s as their t-Test values <± 2.776 but, the said hypothesis is rejected in the case of other BSE

30s.

B. Overall ranking of banks based on average t-Test scores

In the preceding discussion, each BSE 30s is rated against total income, total expenses and profit

items on the basis of their consistency in performance. The BSE 30s with the least t-Test scores

have earned the highest performance rating (ranks) and vice versa. In furtherance of the inquiry

into the consistency in performance, an overall rank matrix is constructed to accord the final



performance ratings to the BSE 30s on the basis of their average t-Test scores of ranks obtained

as above. The lower the number of rank earned, the better is the overall performance of a BSE

30s and vice versa. The details are presented in Table 9.

Table 9 Overall ranking of BSE 30s based on average t-Test scores

Rank BSE 30s Total

income Total

Expenses Net

profit EPS

Equity dividend

Book value

Total score

Average t-Test Value

1 TCS 0.28 (0.20) 1.53 0.84 1.13 (1.81) 1.78 0.30

2 Maruti Suzuki (0.88) (0.11) (4.72) 1.53 (1.92) 2.78 (3.32) (0.55)

3 HDFC Bank (0.54) (0.37) 0.29 (0.28) (2.63) (0.15) (3.67) (0.61)

4 ICICI (0.05) 0.15 0.83 0.25 (7.32) 1.00 (5.13) (0.85)

5 BHEL (0.69) (0.77) (0.52) (0.20) (2.67) (0.72) (5.57) (0.93)

6 SBI 2.92 3.04 2.04 1.15 (3.90) 1.47 6.71 1.12

7 Infosys (0.88) (1.77) 1.47 2.96 3.03 1.98 6.80 1.13

8 L & T 1.27 1.68 (2.36) 1.69 3.16 2.70 8.13 1.36

9 Axis Bank (1.66) (1.39) (0.56) 1.12 (9.91) 1.12 (11.29) (1.88)

10 Tata Motors (0.43) 0.65 (2.44) (2.89) (4.88) (1.45) (11.43) (1.91)

11 Wipro (1.87) (2.53) (0.01) (3.81) (1.11) (7.94) (17.26) (2.88)

12 HDFC (4.81) (5.67) (1.40) (3.22) 0.73 (3.60) (17.97) (3.00)

13 Tata Steel (1.70) (2.14) 0.19 2.12 (21.40) 3.69 (19.24) (3.21)

14 Vedanta (2.14) (1.81) (3.71) (2.21) (1.39) (8.22) (19.47) (3.24)

15 M & M (1.64) (1.04) (6.89) 0.42 (14.35) (0.69) (24.19) (4.03)

16 RIL 5.37 4.76 13.27 4.25 (55.40) 3.15 (24.61) (4.10)

17 Hero Motocorp (7.78) (6.60) (20.29) 6.15 2.51 (0.47) (26.48) (4.41)

18 Bharti Airtel (0.04) (1.60) 0.46 (3.72) (19.98) (4.00) (28.87) (4.81)

19 GAIL (0.02) 0.30 (4.83) (4.94) (25.51) (2.70) (37.70) (6.28)

20 Bajaj Auto (18.02) (14.34) (14.82) 8.06 (1.63) (0.06) (40.80) (6.80)

21 Sun Pharma (15.79) (12.69) (3.24) (3.57) (1.38) (7.67) (44.33) (7.39)

22 ONGC 4.83 (0.46) 5.14 (7.28) (44.84) (6.02) (48.63) (8.10)

23 Dr. Reddy (19.17) (22.86) (10.44) 1.10 (3.12) 1.82 (52.68) (8.78)

24 Hindalco (4.97) (3.47) (8.32) (13.43) (14.77) (10.02) (54.99) (9.16)

25 Lupin (16.87) (26.49) (5.87) (0.86) (2.99) (2.82) (55.90) (9.32)

26 ITC (2.77) (5.40) 0.65 (17.54) 0.01 (35.06) (60.10) (10.02)

27 NTPC 2.72 2.18 2.97 (20.80) (34.76) (20.96) (68.65) (11.44)

28 Cipla (22.85) (21.97) (22.73) (12.46) (23.48) (7.32) (110.81) (18.47)

29 HUL (4.62) (4.89) (3.24) (8.45) 1.35 (116.63) (136.50) (22.75)

30 Coal India (8.53) (377.89) 0.97 (5.02) (3.84) (88.01) (482.32) (80.39)

Table 9 reveals that TCS has demonstrated the most consistency in its performance with regard

to total income, total expenses and profit items identified for this study by securing the overall

first rank among all the BSE 30s. On the other hand, Coal India has exhibited the least

consistency in its overall performance since it has succeeded in securing the overall thirtieth

rank. In terms of consistency in overall performance, the BSE 30s have been ranked in the order

from one to thirty as portrayed in Table 9.



X. Suggestions

The preceding discussion throws light on how the BSE 30s which have performed better in the

selected indicators could not maintain consistency in those areas of performance. In the volatile

environment, a consistency in BSE 30s’ performance holds key to their sustainability. Therefore,

BSE 30s have to perform consistently by striking a happy balance between the associated

incomes and expenses. The BSE 30s can afford to pay the dividend to shareholders and create

the book value of shares provided they have earned higher income. All along, the BSE 30s also

face challenges posed by business cycles that can affect their business. The study has found that

the majority of BSE 30s have demonstrated inconsistency in performance in one or the other

areas during the study period. BSE 30s are prone to invite difficulties for themselves during the

financial crisis. On the other hand, BSE 30s that have demonstrated a consistent performance

can show resilience during the difficult times. Hence, a consistency in performance their

operations is a key to their perpetual sustenance during crisis. BSE 30s need to be consistent

rather than zigzag in generating income and incurring expenses. A steady and consistent

performance helps them survive any crisis and achieve the desired goals. In addition, the efforts

are to be made in maintaining a consistent growth in EPS with view to create a higher book

value of shares subsequently leading to rise in market value of business. Above all, the

depositors and shareholders need to deal with those BSE 30s that have ensured consistency in

their performance. Such BSE 30s would ensure the safety of stakeholders during the economic

turbulence in particular.

XI. Conclusion

During the course of business, BSE 30s need to exhibit a consistency in performance so as to

troubleshoot the impact of crisis. The study finds that the majority of BSE 30s have

demonstrated inconsistency in their performance in total income, total expenses and profit

items. A steady and consistent performance can ensure a perpetual sustenance and help

overcome the problems. The stakeholders can protect their interest by dealing with those BSE

30s that have demonstrated a consistency in their performance.



References Journals

1. Adinath B. K (2011) “Consistent Growth for Perpetual Sustenance: A Study of Select Banks” Indian Journal of Finance, September 5 (9), pp 4-18.

2. A Wealth Creation Study (2011) conducted by Motilal Oswal a Stock Broking Company in its 16th Annual Study, December, Page no: 3.

3. Campbell B.M., et al (2001) “Assessing the Performance of Natural Resource System”,

Conservation Ecology, vol.5.

4. Dumbravă M (2010) “Analysis of the Firm’s Performance: Methods and Models” Economic Publishing House, Bucharest.

5. Kohli H and Chawla A. S (2006) “Profitability Trends in Commercial Banks- A Study of

Selected Commercial Banks” Indian Management Studies Journal, 10; 2006: 51-70.

6. Purcărea I. I and Stancu I (2008) “The Influence of R & D Policy on Performance of the Companies Listed with Bucharest Stock Exchange (through Intangible Assets)” Theoretical and Applied Economics, AGER, Vol. 11.

7. Raheman A et al (2010) “Working Capital Management and Corporate Performance of

Manufacturing Sector in Pakistan” International Research Journal of Finance and Economics, Issue 47.

8. Singh J. P and Pandey S (2008) “Impact of Working Capital Management in the

Profitability of Hindalco Industries Limited” ICFAI University Journal of Financial Economics, Vol. 6 (4), pp. 62-69.

Websites 1. Respective BSE 30s 2. www.moneycontrol.com 3. www.sebi.org

http://www.moneycontrol.com/

http://www.sebi.org/

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