DIVIDEND POLICY

The Dividend Policy is a money related choice that alludes to the extent of the
company's profit to be paid out to the shareholders.

The dividend policy of the organization balances the targets of edifying the
shareholders through dividends and retaining capital to invest in the expansion of
the company.

The Board considers the yearly dividend based on the Net Profit after Tax (PAT)
available for distribution as reported in the consolidated statutory financial
statements prepared in accordance with the applicable Accounting Standards. In
addition, the Board reviews the capital expenditure needs, cash requirements for
investments in capability enhancements and future non-organic growth initiatives.

The dividend is pronounced at the Annual General Meeting of the shareholders

which is based on the endorsement by the Board. The Board may likewise also
pronounce an Interim dividend for the advantage of the shareholders.

For the year ending March 2016, Adani Ports and Special Economic Zone has declared an equity
dividend of 55.00% amounting to Rs 1.1 per share. At the current share price of Rs 320.45 this results in
a dividend yield of 0.34%.

The company has a good dividend track report and has consistently declared dividends for the last 5
years.

PICTURE

From above we can see that the dividend paid has increased, that means the
company is making enough profits to sustain as well as they are investing in
the new projects that would bring them more cash inflows in the future.

Weighted Average Cost of Capital (WACC)

The investors when invest in the company only keep one thing in mind the
return that they would get or they expect out of it. WACC helps them to know
that approximately how much return they would get. It is the average of the
minimum after tax required rate of return which the company should earn for
its security holders. The security holders being equity shareholders,
preference shareholders and debt holders.
WACC = Wd x Kd (1-tax rate) + We x Ke + Wp x Kp
The advantage of computing WACC is that it helps you in calculating the net
present value as it acts as the discounting rate. It also represents the
average risk faced by the organization.
Major components in calculating WACC:
1. Weights:
It is the proportion that the securities hold in the total value of all the
securities that the company hold. The weights can be calculated based
on Book Value and the Market Value. The book value is taken from the
balance sheet which doesnt change often so it doesnt give that clear
picture because it doesnt change with the change in the market. On
the other hand, market values give you a clearer picture as the prices
are taken which are currently running in the market.

2. Cost of Securities:
The major cost that is calculated is the cost of equity (Ke). We normally
calculate it by using CAPM model.

CAPM = Rf + (Rm-Rf)

Rf is the risk-free return which is taken from the securities issued by

the government.

is the risk factor which shows the systematic risk. It is the measure of
sensitivity of share price to the movement of the market price.

Rm is the market return which is calculated taking the index prices and
Tech Mahindra being an IT company provides services to various
industries so Nifty index was preferred over Sector Index.

The next cost which is taken is cost of debt (Kd).

For WACC calculation the Kd is taken after the tax effect (Kd (1- tax
rate)). The tax effect is taken because interest is a tax deducted
expense and looking from companys point of view, tax gives them the
savings.

The tax rate is calculated based on provision of tax rather than tax
paid because provision of tax is the amount that the company is yet to
pay and it gives you the consistent tax rate.

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Capital Structure
The capital for a business means the source of funds which it uses to run
their daily operations. Capital structure mainly consists of Equity Share
Capital, Preference Share Capital and Debt Capital. The company has to take
decisions that how much and what type of capital to be used for the funding.

ADANI PORTS AND SEZ LTD.

Capital structure is defined as the proportion of debt and equity that a firms capital has. A firm
having only equity in its capital structure is supposed to have only business risk. Whereas if a
firm also as debt (cheaper source of finance) then it also has financial risk.
Firms actual capital structure changes with time, and for essentially two different reasons:
Deliberate actions: If the firms target is not met, then it may deliberately raise new finance in
a manner which shifts the actual structure.
Market actions: The firm could incur high incomes or losses that leads to significant changes
in book value equity as shown in its balance sheet. Such changes in market value of
debt/equity could result in large changes in its measured capital structure.
Major things that was found out while finding the capital structure:
Debt was the major source of capital for Adani Ports (maybe due to the MAT) usually it was
around 52.67% against industry which was averaging to 49.91%.
Equity was under 50% averaging to 47.33% for Adani port against industry that was
averaging to 50%
EPS was increasing on a YOY basis. It was maximum in 2016 majorly due to the increase in
D/E ratio and decrease in shareholders fund.
ROE was on a higher side on 2014 where the weighted equity was highest i.e. 51.01%

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 ROE/EPS COMPARISON

ROE EPS