Capital structure


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Capital structure

  1. 1. Capital Structure of<br />Vs<br />1<br />Mandar Joshi<br />
  2. 2. CAPITAL STRUCTURE<br />A company&apos;s reasonable, proportional use of debt and equity to support its assets is a key indicator of balance sheet strength.<br />A healthy capital structure that reflects a low level of debt and a corresponding high level of equity is a very positive sign of investment quality.<br />A company&apos;s capitalization describes the composition of a company&apos;s permanent or long-term capital, which consists of a combination of debt and equity.<br />2<br />Mandar Joshi<br />
  3. 3. 3<br />Mandar Joshi<br />
  4. 4. Established in 1945,<br />Tata Motors Limited is India’s largest automobile company, with revenues of Rs. 35651.48 crores (USD 8.8 billion) in 2007-08. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world’s fourth largest truck manufacturer, and the world’s second largest bus manufacturer. <br />The company’s 23,000 employees are guided by the vision to be “best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.”<br />Tata Motors’ presence indeed cuts across the length and breadth of India.  Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. <br />4<br />Mandar Joshi<br />
  5. 5. The foundation of the company’s growth over the last 50 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer-desired offerings through leading edge R&D. With over 2,500 engineers and scientists, the company’s Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The company today has R&D centres in Pune, Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK<br />5<br />Mandar Joshi<br />
  6. 6. TATA’s SHAREHOLDING<br /><ul><li>Indian Promoters : 33.7%
  7. 7. Foreign collaborators : 0.0%
  8. 8. Indian inst/Mutual Fund : 14.2%
  9. 9. FIIs/GDR : 32.8%
  10. 10. Free float : 19.3%
  11. 11. Shareholders : 221,403
  12. 12. Listed on BSE: 500570 (scrip no.)</li></ul> NSE: TATA Motors<br /> NYSE: TTM<br />6<br />Mandar Joshi<br />
  13. 13. TATA MOTORS BOARD OF DIRECTORS<br />Chairman – Mr. Ratan N Tata<br />Managing Director – Mr. Ravi Kant<br />Exec. Director – Mr. P M Telang<br />Director – Mr. N A Soonawala<br />Director – Mr. J JIrani<br />Director – Mr. V R Mehta<br />Director – Mr. R Gopalakrishnan<br />Director – Mr. N NWadia<br />Director – Mr. S M Palia<br />Director – Mr. R A Mashelkar<br />7<br />Mandar Joshi<br />
  14. 14. OVERVIEW<br />Maruti Suzuki India Limited is a publicly listed automaker in India. It is a leading four-wheeler automobile manufacturer in South Asia. Suzuki Motor Corporation of Japan holds a majority stake in the company. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India. On 17 September 2007, MarutiUdyog was renamed to Maruti Suzuki India Limited. <br />Headquarter - Gurgaon.<br />8<br />Mandar Joshi<br />
  15. 15. 9<br />Mandar Joshi<br />
  16. 16. 10<br />Mandar Joshi<br />
  17. 17. MARUTI SUZUKI BOARD OF DIRECTORS<br />Chairman – Mr. R. C. Bhargava<br />M. D. & CEO – Mr. Shinzo Nakanishi<br />Director – Mr. Manvinder Singh Banga<br />Director – Mr. AmalGanguli<br />Director – Mr. D.S. Brar<br />Director – Mr. Keiichi Asai<br />Director – Mr. Osamu Suzuki<br />Director – Mr. ShujiOishi<br />Director – Ms. PallaviShroff<br />Director – Mr. Kenichi Ayukawa<br />Director – Mr. Tsuneo Ohashi<br />11<br />Mandar Joshi<br />
  18. 18. BALANCE SHEETTATA MOTORSAs at 31st march 2008<br />12<br />Mandar Joshi<br />
  19. 19. 13<br />Mandar Joshi<br />
  20. 20. 14<br />Mandar Joshi<br />
  21. 21. BALANCE SHEETMaruti Suzuki India LimitedAs at 31st March, 2008<br />15<br />Mandar Joshi<br />
  22. 22. 16<br />Mandar Joshi<br />
  23. 23. 17<br />Mandar Joshi<br />
  24. 24. RATIO ANALYSIStata<br />18<br />Mandar Joshi<br />
  25. 25. Interpretation over ratios<br />Debt to equity ratio is 0.80 in 2008 & 0.58 in 2007which shows co. is more dependent on debt in 2008 and also it can generate more returns due to leverage.<br />ROCE compares earnings with capital invested in the company. If it decreases, not a good sign. It is reduced from 17% to 14%.<br />Interest coverage ratio shows the strength of company in making the payment of interest regularly out of the total income. As ratio shows Co. is more efficient in paying its debt in 2008.<br />19<br />Mandar Joshi<br />
  26. 26. Proprietary ratio shows the general financial strength of the company. Low proprietary ratio will include greater risk to the creditors. It is 51% in 2008 & 58% in 2007.In 2008 it create risk for creditor, It is a test of creditworthiness.<br />Return on Investment shows the return on shareholders fund higher the ratio means shareholders are more benefited. It is decreased here which is not good for company.<br />20<br />Mandar Joshi<br />
  27. 27. RATIO ANALYSISmaruti<br />21<br />Mandar Joshi<br />
  28. 28. Interpretation over ratios<br />The company has reduced its ratio means the company is more dependent on its own fund and does not want to take any risks. It must try to increase the debt portion in order to gain leverage and maximize returns.<br />This measure narrows the focus to gain a better understanding of a company&apos;s ability to generate returns from its available capital base. Increase in ROCE is good sign from investors point of view.<br />22<br />Mandar Joshi<br />
  29. 29. The interest coverage ratioindicates the extent of which earnings are available to meet interest payments. As it is increased in 2008 at 42.54 from 30.04 in 2007.<br />Proprietary ratio indicates the general financial position of the business concern. Higher the ratio, better is the long-term solvency position of the company.<br />Return on Investment shows the earning or return on shareholder fund. Higher the ratio means shareholder are more benefited. It is 33% in 2008 & 29% in 2007.<br />23<br />Mandar Joshi<br />
  30. 30. Current market position MARUTI<br />24<br />Mandar Joshi<br />
  31. 31. Today’s market condition<br />BSE: 532500 | NSE: MARUTI  <br /> BSE NSE <br /> Open 835 827.5 <br /> Day High 837.4 837.9 <br /> Day Low 815.2 816.5 Previous Close 829.45 831.65 52-Week high 889 944.5 <br /> 52-Week low 428.4 433 Market Cap (Rs cr) 23922.58 23922.57<br />25<br />Mandar Joshi<br />
  32. 32. Current market position TATA<br />26<br />Mandar Joshi<br />
  33. 33. Today’s market condition<br />BSE: 500570 | NSE: TATAMOTORS  <br /> BSE NSE <br /> Open 270.3 273 <br /> Day High 274.3 274.95 Day Low 264.3 264.2 Previous Close 272.5 271.35 52-Week high 693.4 765.5 <br /> 52-Week low 122 124.8 Market Cap (Rs cr) 13811.26 14027.26<br />27<br />Mandar Joshi<br />
  34. 34. CONCLUSION<br />Maruti won&apos;t cut price to take on Tata.<br />In Capital Structure ratio the Debt Equity is more for Tata, So Tata is taking some risk to increase its returns for share holders by taking more debt.<br />The Reserve & Surplus of Maruti Suzuki is much more than Tata Motors and also due to this reason their percentage increase from last years is 23% compare to Tata it’s 14% only.<br />28<br />Mandar Joshi<br />
  35. 35. Buy Tata’s share, because it is underperforming due to its declining profit & sales figures in the last few years (because of heavy capital expenditure in some projects and foreign acquisitions, its cash outflow was much more than inflows).<br />29<br />Mandar Joshi<br />
  36. 36. WEBLIOGRAPHY<br /><br /><br /><br /><br /><br /><br /><br />30<br />Mandar Joshi<br />
  37. 37. 31<br />Mandar Joshi<br />