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2774 items in total found

Working Papers | 1991

Market Valuation Model Under Differential Taxes, Inflation, Recurring Investments and Flotation Costs

Ragunathan V and Jayanth R. Varma

The extent literature on valuation identifies several important variables affecting the value of a firm. These include, corporate and personal taxes, reinvestments, leverage, dividend policy, and inflation. But, most of the papers have focussed only on a small number of these variables at a time and constructed comparatively simple valuation models designed to answer relatively limited questions in valuation theory. However, the fact remains that the above variables interact in quite complex ways, and it is necessary to have a comprehensive valuation model which captures most of the complexities and subtleties of real world corporate finance. This paper is an attempt at developing such a model. The model is capable of supporting both the Gordon and MM type assumptions about the investment policy of the firm. It allows for personal taxes with differential tax rates for dividends, interest and capital gains. The model also takes into account flotation costs on debt and equity. Further, unlike other models which define capital gains as the increase in the book value which in turn equals retained earnings, this model interprets capital gains as the increase in the market value of the share. Finally, the model is modified to take into account Lintner's concern about inflation eroding the real value of the firm's assets, particularly, net monetary working capital. The paper also numerically depicts the impact of manifold taxes on valuation and the complex interactions of different variables in influencing the firm value.

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Working Papers | 1991

A Valuation Model for Indeterminate Convertibles

Jayanth R. Varma

Many issues of convertible debentures in India in recent years provide for a mandatory conversion of the debentures into an unspecified number of shares at an unspecified time; the conversion ratio (i.e., the number of shares per debenture) is to be determined by the Controller of Capital Issues (CCI). There are serious problems in arriving at a rational value for these "indeterminate convertibles". Even if the investor can make some estimate of the likely conversion terms, there is no valuation model available to arrive at a price. This paper applies the general theory of derivative securities (Cox, Ingersoll and Ross, 1985) to obtain a valuation model for these instruments. The model shows that the naive valuation model which sets the value of the debenture equal to the current stock price times the expected conversion ratio is likely to be a significant overestimate of the price. It also shows that changes in the stock price lead to less than proportionate changes in the debenture price unlike in the case of pre-specified conversion terms. Similarly, the CAPM beta of the debenture would be significantly lower than that of the share. While the model does not obviate the need for obtaining estimates of unobservable parameters related to the market expectations about the likely conversion ratio, the qualitative insights given by the model are quite useful. The model is successful in explaining some of the empirical patterns and anomalies that have been observed in ongoing empirical research into the market prices of these debentures.

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Working Papers | 1991

Protection to Domestic Industry: An Empirical Investigation

Aggarwal Ashok K

Recently there has been widespread debate on impact of protection on performance of domestic industry. It has been argued that protection to the Indian Industry during the last 40 years has resulted in poor performance of the industry in terms of productivity, technological development, low competitiveness because of poor quality of products at very high prices. Could we not have grown at the same rate as some of the Newly Industrialized Countries (NICs) by following the more open policy towards foreign capital and exports rather than following import-substitution path? This empirical study attempts to answer some of the questions posed above. This study examines the extent of protection to the domestic industry for the period 1974-78 (1970s) and 1982-84 (1980s). International average unit values and domestic prices of the industry are used to find the implicit and effective protection. It also examines the impact of protection on relative performance by using three different performance parameters. To study the distortionary effects on production technology it examines the relationship between protection and physical capital intensity. The main findings of the study are: (i) that protection has increased in the 1980s as compared to 1970s (ii) there is no conclusive evidence about the impact of protection on the performance variables over the two periods (iii) poor performance of Indian exports could not be attributed to the poor price competitiveness of our exports (iv) there is no evidence of distortionary effects of protection on the production technology.

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Working Papers | 1991

Dilemmas of renewable Energy: The Case of the Solar Cooker Programme in Gujarat, India

Moorthy Ravi C

This article presents a set of measures for evaluating a social development programme such as the non-conventional energy programme. The specific case discussed and evaluated here is that of the solar cooker programme. Subsequently, the attempt is to identify key decision areas and raise some questions which may help focus better on the marketing problems confronting the programme.

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Working Papers | 1991

Seed Replacement Practices

Gurdev Singh and Asokan S R

One important reason for low demand for quality seeds is the reportedly low seed replacement rate especially in case of non-hybrids. To investigate the reasons for such practices followed by the farmers is the main objective of this pilot study conducted in Faridkot district of Punjab. The study revealed that contrary to the belief a majority of farmers replace seed of all major crops within four years. In fact, the replacement was reported quicker than the perceived recommended replacement schedule in almost all crops. Even the perceived replacement schedule was much shorter than four years. In some crops majority of them replaced seed every year. However, the seed used by the farmers was rarely of standard quality (certified/labelled). Non-availability of quality seed of crops like cotton was the main reason for use of substandard seed. This may be the factor behind low expected yield as the reason for replacement which often occurs quicker than expected.

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Working Papers | 1991

Strategic Planning Practices of Small Scale Enterprises

Ramachandran K

Although there is some evidence to suggest that small scale enterprises also make strategic plans, there is still a lot of suspicion about its usefulness for small firms. The basic question is that given their level of operations and resource structure what kind of planning is possible in small firms. This study covering 117 small scale enterprises located in Ahmedabad attempts to answer some of the questions related to strategic planning practices of such firms. It is observed that most of the firms do undertake analysis of the constituents of the environment such as suppliers of materials, customers and implications of government policy changes. They also undertake analysis of their own strengths and weaknesses. Their planning horizon, however is limited to six months. It appears that considering their limited level of operations, and need to respond to environmental forces rather quickly, there is need to have speed and flexibility in planning and it may be because of this reason, at least partly that their plans are for short periods. Also there could be lack of awareness of the usefulness and importance of systematic planning. The paper also reports findings on the sources of information, frequency of review and related matters.

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Working Papers | 1991

Existence of Efficient and Egalitarian Efficient Tax Allocations

Lahiri Somdeb

In this paper, we study an optimal tax allocation problem where the utility of each agent depends on his own income as well as on the income of the other tax payers. The objective of the government is seen as maximizing tax incidence without subjecting the tax payers to too much hardship (sacrifice). In this framework we prove the existence of efficient tax allocations and subsequently we go on to establish the existence of egalitarian-efficient (i.e. equal sacrifice and efficient) tax allocations, under mild assumptions.

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Working Papers | 1991

A Performance Appraisal of Human Resource Development Function in Indian Organisations: A Preliminary Survey

T. V. Rao

The HRD function has gained a lot of momentum in the last decade. An earlier survey conducted in 1984 indicated that a number of HRD sub-system were being initiated in Indian industry. A detailed questionnaire was developed covering 94 different activities or tasks the HRD staff or those in-charge could undertake in any organization. This questionnaire was administered to 61 HRD staff form public sector and private sector organizations. The questionnaire assessed how well each of the 94 activities/tasks are being performed as perceived by the respondents. Their assessment indicates there are more similarities than differences in the way the HRD function is being performed in both public and private sector organizations. The study also indicates that conducting human process research, mobilising unions and associations to play a role in HRD and effective monitoring of HRD implementation are perceived as being performed inadequately in these organizations. Overall, while HRD function has caught up, it has a long way to go to be near "excellence".

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Working Papers | 1991

Estimates of Fixed Capital Stock in Registered Manufacturing Sector in India

Aggarwal Ashok K

The main objective of the paper is to provide estimates of fixed capital stock in large organized manufacturing industries in India. Various theoretical as well as empirical issues which have a bearing on the measurement of capital stock have been discussed in the paper. The study provides the details of measuring capital stock keeping in mind the limitations of the available data. The study provide a time series of subsequent improvements in the methodology and estimation have also been suggested.

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Working Papers | 1991

Why Does Poverty Persist in Regions of High Biodiversity?: A Case for Indigenous Property Right System

Anil K. Gupta

The extent of rural poverty has been noted to be unusually high in the Vavilov centres of genetic diversity. Be it rice in Orissa, India or potato in Peru, the cultivator preserving genes for diversity are unable to benefit from newer technologies. The regions of specialized cultivation with mono crop or very low level of diversity and low risk conditions provide markets for mass consumption of external manufactured inputs. Paradoxically, this is possible precisely because genes for resistance to diseases/pests are available from high risk gene diverse environments. In view of the recent upsurge of global interest in indigenous knowledge system, it is necessary to analyse ethical, scientific, political, economic, ecological and cultural implications of extortion of surplus from biodiverse regions. Paper addresses following questions: (a)What are the institutional, organizational and public administration aspects of high deprivation among people managing high biodiversity? (b) If biodiversity is sustained through cultural diversity, is modem concept of state in a capitalistic society inherently unsuitable for cultural pluralism? (c) If cultural diversity implies different images of good life, how does one compensate a non-demanding, non-articulate but disadvantaged community maintaining biodiversity? (d)Should one do pediree analysis of major commercial hybrids and other seeds, trace the sites of genetic sources and attribute proportionate profits to these communities/societies? Should insistence of intellectual property right by western society be accepted by developing countries so that claim for indigenous property rights (IPR) could be exercised? (e) In what forms and through which fiscal and organizational instruments, the compensations be routed back to the preservers of biodiversity? (f) How should public resource transfer and budgetary mechanisms be designed so that people living in biodiverse regions have incentives to stay on instead of migrating out? (g)If biodiversity in perhaps majority of niches can be maintained only through (and not without) human interference (selection pressure, cultural or ritual compulsions for different types of tasks/cultivars), how should conservation policies be designed in a culturally compatible manner? (h) What are the ethical dilemma that scientists working on IPRs face while earning individual career and professional rewards and doing advocacy for the communities whose lifestyles continually deteriorate in the meanwhile? (i) What are the legal possibilities for codifying claims of different communities over IPRs and value adding recombinations of genes preserved through IPRs. The paper provides argument for changing the nature of discourse. The existing epistemology relies excessively on the language of such elites whose own record of sharing their rent with providers of knowledge is not very honourable? I argue that such a code of conduct should be developed which disqualifies such professionals/scientists from participating in the debate on IPRs who have not demonstrated some way of sharing rents with the providers of knowledge. I believe that valid and authentic institutions for protecting IPRs will emerge only if the nature and arena of discourse is radically altered. The paper is divided in six parts. In first part-I, I present discussion on diversiy and deprivation. Part-2 deals with Cultural diversity and rise of modern bureaucratic state. In part 3, I describe ways of compensating local communities and individual farmers for preserving diversity through breeding, selection and institutional development. In part-4, legal, organizational and fiscal instruments for routing compensation for preservers of bio-diversity are detailed. Part- 5 includes arguments on the need for redefining Indian position on intellectual property rights. In part-6, the ethical dilemma in conducting discourse on bio-diversity are mentioned and paper is summed up in the end.

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