Tata Steel ltd calculated its Economic Value Added (EVA) for two periods ending March 2011 and November 2011. Key details: - NOPAT for period ending March 2011 was Rs. 6,056.61 crore - Cost of operating capital employed for same period was Rs. 3,671.438 crore - Resulting EVA for period ending March 2011 was Rs. 2,385.17 crore - NOPAT for period ending November 2011 was also Rs. 6,056.61 crore - However, cost of operating capital employed increased to Rs. 6,487.224 crore - Consequently, EVA for period ending November 2011 was negative at Rs.

1. Tata Steel ltd
Calculation of EVA
31-03- 26-11-
2011 2011
PE ratio 6.27 3.3
Ke 0.1594896 0.3030303 Tax rate(%)
(Rs in crore) rate 30
Calculation of NOPAT surcharge 2.25
EC @ 2% 0.645
SHEC @
Particular amt amt 1% 0.3225
EBIT 9776.85 33.2175
less:Non-operating income 707.69
Operating EBIT 9069.16
less:
Tax @ 30% 2720.75
surcharge @7.5% 204.06
Education cess @2% 58.50
SHEC @1% 29.25
3012.55
NOPAT 6056.61
Calculation of operating capital employed
Particular amt
Share capital 959.41
share warrant 178.20
Reserve & surplus 45807.02
Hybrid securities 1500.00
Secured loan 2009.20
Unsecured loan 26291.94
Total capital employed 76745.77
Less:Non operating capital employed 44676.20
Operating capital 32069.57
Calculation of cost of operating capital employed
Particular amt % amt %
Hybrid securities 118.205 7.880335 118.205 7.880335
Interest on loan 1180.741 4.172063 1180.741 4.1720627

2. Cost of Equity 7487.182 15.94896 14225.65 30.30303
Cost of total capital employed 8786.128 15524.59
Cost of operating capital employed 3671.438 6487.224
Calculation of EVA
amt amt
NOPAT 6056.61 6056.61
Cost of operating capital employed 3671.438 6487.224
EVA 2385.17 -430.61