Debt and equity are the two important sources of finance for the firms. Basically, capital structure of the firm revolves around the judicious mix of the debt and equity. Upon Debt and equity mix much research has been done and many have designed the capital structure in a very different manner. Capital structure theory can be said as the manner in which a company or organization finance its economic activities. Basically, capital structure of a firm is the combination of equity and debt. It is a very important decision for every organization or business house. This decision revolves around a question “How to make an optimal capital’s structure for the firm?” and what are the factors that influence the decision. Because the capital structure decision ultimately affects the management, investors and lenders. So, it becomes very crucial for the firms. Earlier many researchers have made investigation on the capital structure determinants but still there are loopholes to be filled up. The theory of Capital Structure began with the phenomenal work made by Modigliani and Miller (1958, 1963). It stirred the academic world to pour more thoughts into that and many interesting works came out. Capital structure refers to the way a firm chooses to finance its assets and investments through some combination of equity, debt, or internal funds. It is in the best interests of a company to find the optimal ratio of debt to equity to reduce their risk of insolvency, continue to be successful and ultimately remain or to become profitable. DETERMINANTS OF CAPITAL STRUCTURE: The capital structure of a concern depends upon a large number of factors such as leverage or trading on equity, growth of the company, nature and size of business, the idea of retaining control, flexibility of capital structure, requirements of investors, cost of floatation of new securities, timing of issue, corporate tax rate and the legal requirements. It is not possible to rank hem because all such factors are of different important and the influence of individual factors of a firm change over a period of time. 1. Financial Leverage or Trading on Equity: Financial leverage is one of the important considerations in planning the capital structure of a company. One common method of examining the impact of leverage is to analyse the relationship between Earnings Per Share (EPS) and EBIT. The companies with high level of leverage can make profitable use of the high degree of leverage to increase return on the shareholders' equity. 2. Growth and Stability of Sales: The capital structure of a firm is highly influenced by the growth and stability of its sales. If the sales of a firm are expected to remain fairly stable, it can raise a higher level of debt. Stability of sales ensures that the firm will not face any difficulty in meeting its fixed commitments of interest payment and repayments of debt. Similarly, the rate of growth in sales also affects the capital structure decision. 3. Cost o

1. ADVANCE CORPORATE
FINANCE ASSIGNMENT
I. CAPITAL STRUCTURE
Debt and equity are the two important sources of finance for the firms. Basically,
capital structure of the firm revolves around the judicious mix of the debt and equity.
Upon Debt and equity mix much research has been done and many have designed the
capital structure in a very different manner.
Capital structure theory can be said as the manner in which a company or organization
finance its economic activities. Basically, capital structure of a firm is the combination
of equity and debt. It is a very important decision for every organization or business
house. This decision revolves around a question “How to make an optimal capital’s
structure for the firm?” and what are the factors that influence the decision. Because
the capital structure decision ultimately affects the management, investors and lenders.
So, it becomes very crucial for the firms. Earlier many researchers have made
investigation on the capital structure determinants but still there are loopholes to be
filled up. The theory of Capital Structure began with the phenomenal work made by
Modigliani and Miller (1958, 1963). It stirredthe academic world to pour more
thoughts into that and many interesting works came out.
Capital structure refers to the way a firm chooses to finance its assets and investments
through some combination of equity, debt, or internal funds. It is in the best interests
of a company to find the optimal ratio of debt to equity to reduce their risk of
insolvency, continue to be successful and ultimately remain or to become profitable.

2. DETERMINANTS OF CAPITAL STRUCTURE:
The capital structure of a concern depends upon a large number of factors such
as leverage or trading on equity, growth of the company, nature and size of business,
the idea of retaining control, flexibility of capital structure, requirements of investors,
cost of floatation of new securities, timing of issue, corporate tax rate and the legal
requirements. It is not possible to rank hem because all such factors are of different
important and the influence of individual factors of a firm change over a period of
time.
1. Financial Leverage or Trading on Equity: Financial leverage is one of the
important considerations in planning the capital structure of a company. One
common method of examining the impact of leverage is to analyse the
relationship between Earnings Per Share (EPS) and EBIT. The companies with
high level of leverage can make profitable use of the high degree of leverage to
increase return on the shareholders' equity.

3. 2. Growth and Stability of Sales: The capital structure of a firm is highly influenced
by the growth and stability of its sales. If the sales of a firm are expected to
remain fairly stable, it can raise a higher level of debt. Stability of sales ensures
that the firm will not face any difficulty in meeting its fixed commitments of
interest payment and repayments of debt. Similarly, the rate of growth in sales
also affects the capital structure decision.
3. Cost of Capital: Cost of capital refers to the minimum return expected by its
suppliers. The expected return depends on the degree of risk assumed by
investors. Measuring the costs of various sources of funds is a complex subject
and needs a separate treatment. Needless to say, it is desirable to minimize the
cost of capital.
4. Risk: There are two types of risk that are to be considered while planning the
capital structure of a firm viz (I) business risk and (ii) financial risk. Business
risk refers to the variability to earnings before interest and taxes. Internal risk is
caused due to improper products mix non availability of raw materials,
incompetence to face competition and absence of strategic management.
External business risk arises due to change in operating conditions caused by
conditions thrust upon the firm which are beyond its control.
5. Cash Flow: Conservation does not mean employing no debt or a small amount
of debt. Debt financial implies burden of fixed charge due to the fixed payment
of interest and the principal. A firm which shall be able to generate larger and
stable cash inflows can employ more debt in its capital structure as compared
to the one which has unstable and lesser ability to generate cash inflow.
6. Nature and Size of a Firm: The nature and size of a firm also influence its
capital structure. Public utility concerns may employ more of debt because of
stability and regularity of their earnings. A concern which cannot provide
stable earnings due to the nature of its business will have to rely mainly on
equity capital. Small companies, therefore, have to depend on owned capital
and retained earnings for their long-term funds.
7. Control: Debt financing may create other problems, such as, too much
restrictions imposed upon imposed upon by lenders or suppliers of finance and

4. a complete loss of control by way of liquidation of the company. In case of
equity shares, the control of the existing shareholder is diluted in favour of the
new shareholders. Preference shareholders and debenture holders do not have
the voting right and hence debt financing is recommended.
8. Flexibility: The capital structure of a firm is flexible if it has no difficulty in
changing its capitalisation or sources of funds. Whenever needed the company
should be able to raise funds without undue delay and cost to finance the
profitable investments. The company should also be in a position to redeem its
preference capital or debt whenever warranted by future conditions.
9. Requirement of Investors: The requirements of investors are another factor that
influence the capital structure of a firm. It is necessary to meet the requirements
of both institutional as well as private investors when debt financing is used.
Investors are generally classified under three kinds, i.e., bold investors, cautions
investors and less cautions investor.
10.Capital Market Conditions (Timing): Capital Market Conditions do no remain
the same for ever sometimes there may be depression while at other times there
may be boom in the market is depressed and there are pessimistic business
conditions, the company should not issue equity shares as investors would prefer
safety.
11.Marketability: Marketability may not influence the initial capital structure very
much but it is an important consideration in deciding the appropriate timing of
security issues. At one time, the market favours debenture issues and at another
time, it may readily accept ordinary share issues. Due to the changing market
sentiments, the company has to decide whether to raise funds through common
shares or debt. During boom period in the share market, it might not be possible
for the company to issue debentures successfully so it should keep its debt
capacity unutilised and issue ordinary shares to raise finances.
12.Inflation: Another factor to consider in the financing decision is inflation. By
using debt financing during periods of high inflation, we will repay the debt with
dollars that are worth less. As expectations of inflation increase, the rate of
borrowing will increase since creditors must be compensated for a loss in value.

5. Since inflation is a major driving force behind interest rates, the financing
decision should be cognizant of inflationary trends.
13.Floatation Costs: Floatation costs are incurred when the funds are raised.
Generally, the cost of floating a debt is less than the cost of floating an equity
issue. This may encourage a company to use debt rather than issue ordinary
shares. If the owner’s capital is increased by retaining the earnings, no floatation
costs are incurred. Floatation cost generally is not a very important factor
influencing the capital structure of a company except in the case of small
companies.
14.Legal Considerations: At the time of evaluation of different proposed capital
structure, the financial manager should also take into account the legal and
regulatory framework. For example, in case of the redemption period of
debenture is more than 18 months, then credit rating is required as per SEBI
guidelines. Moreover, approval from SEBI is required for raising funds from
capital market whereas; no such approval is required- if the firm avails loans
from financial institutions. All these and other regulatory provisions must be
taken into account at the time of deciding and selecting a capital structure for the
firm.

6. TATA MOTORS LIMITED
Founded by Jamshedji Tata in 1868, the Tata
group is a global enterprise, headquartered in
India, comprising over 100 independent
operating companies. The group operates in
more than 100countries acrosssix continents,
with a mission 'To improve the quality of life
of the communities we serve globally,
through long-term stakeholder value creation
based on Leadership with Trust'. Tata Motors
Group, a USD 42 billion organisation, is a leading automobile manufacturer with a
portfolio that includes a wide range of cars, sports vehicles, trucks, buses and
defence vehicles. Our marque can be found on and off-road in over 175 countries
around the globe.

7. PATTERN OF CAPITAL STRUCTURE OF TATA MOTORS
DURING PAST 5 YEARS
Period Instrument Authorized
capital
Issued
Capital
Paid up
From To Rs (Cr) Rs (Cr) Shares Face
Value
Capital
2020 2021 Equity Share 1000 765.91 3,828,810,661 2 765.76
2019 2020 Equity Share 1000 719.64 3,597,476,790 2 719.50
2018 2019 Equity Share 1000 679.32 3,395,851,065 2 679.17
2017 2018 Equity Share 1000 679.32 3,395,851,065 2 679.17
2016 2017 Equity Share 900 679.32 3,395,850,719 2 679.17
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2020-2021 2019-2020 2018-2019 2017-2018 2018-2017
Chart Title
Authorized Capital Issued Capital

8. CONCLUSION:
The above represents the Capital structure of Tata Motors Limited. The value of the
equity of Tata Motors Limited shows a declining trend and was same from 2016-2017,
2017 -2018 and 2018-2019. From 2019- 2020 it stared increasing. The net worth of
Tata Motors limited was 765.76Cr in 2020-2021
Capital structure refers to the specific mix of debt and equity used to finance a
company's assets and operations. From a corporate perspective, equity represents a
more expensive, permanent source of capital with greater financial flexibility. A
company's capital structure is helpful in understanding its current financial health, risk
profile and compatibility with specific investment or acquisition strategies
II. DIVIDEND PATTERN
Dividend refers to a reward, cash or otherwise, that a company gives to its
shareholders. Dividends can be issued in various forms, such as cash payment, stocks
or any other form. A company’s dividend is decided by its board of directors and it
requires the shareholders’ approval. However, it is not obligatory for a company to
pay dividend. Dividend is usually a part of the profit that the company shares with its
shareholders.
After paying its creditors, a company can use part or whole of the residual profits to
reward its shareholders as dividends. However, when firms face cash shortage or
when it needs cash for reinvestments, it can also skip paying dividends. When a
company announces dividend, it also fixes a record date and all shareholders who are
registered as of that date become eligible to get dividend pay-out in proportion to their
shareholding. The company usually mails the cheques to shareholders within in a
week or so. Stocks are normally bought or sold with dividend until two business days
ahead of the record date and then they turn ex-dividend. A recent study found that

9. dividend-paying firms in India fell from 24 per cent in 2001 to almost 16 per cent in
2009 before rising to 19 per cent in 2010.
A dividend's value is determined on a per-share basis and is to be paid equally to all
shareholders of the same class (common, preferred, etc.). The payment must be
approved by the Board of Directors. When a dividend is declared, it will then be paid
on a certain date, known as the payable date.
DIVIDEND PATTERN OF TATA MOTOS
Announcement
Date
Ex- Date Dividend Type Dividend (%) Dividend (Rs)
30.05.2016 18.07.2016 Final 10 0.20
29.05.2014 09.07.2014 Final 100 2.00
29.05.2013 30.07.2013 Final 100 2.00
29.05.2012 18.07.2012 Final 200 4.00
26.05.2011 19.07.2011 Final 200 20.00

10. CONCLUSION:
Above represents the Dividend Pattern of Tata Motors. Rs.0.2000 per share (10%)
Dividend during 30.05.16 to 09.07.2014. Rs.2.0000 per share (100%) Dividend during
29.05.14 to 09.07.2014 and 29.05.2013 to 18.07. 2012.Recommended a dividend of
Rs. 4/- per Ordinary share (200%) and Rs. 4.10 per 'A' Ordinary share (205%), both of
face value of Rs. 2/- each (post-split) for FY 2011-12.
It saw an increasing trench in FY 2011 and 2012 and then started declining 2013
onwards to 2016 and now.

11. III. CSR REPORTING ON HOW MUCH AMOUNT SPENT
ON DIFFERENT CSR ACTIVITIES.
CSR ACTIVITES BY TATA MOTORS
Vinod Kulkarni Head - CSR Mumbai, Maharashtra, India Automotive. At Tata
Motors, our CSR efforts are focused on improving the quality of life of
underprivileged communities neighbouring our business operations. Our interventions
focus on health, education, employability and environment, impacting over 5,80,000
lives in India. Tata Motors is committed to sustainable development, where business
goes hand in hand with societal wellbeing and environmental consciousness.
CSR ACTIVITES
AROGYA VIDYADHANAM KAUSHALYA VASUNDHARA AMRUTDHARA AADHAAR SEVA

12. Tata Motors spends Rs. 24 Cr towards Corporate Social Responsibility (CSR) in 2020-21
It is indeed most gratifying that our programmes are benefitting the most deserving
sections of the population, including more than 45% of SC/ST.
The total CSR spend for FY20-21 was Rs. 23.99 crores and positively impact over 7.5
lakh lives. All projects undertaken by Tata Motors have a one-year timeline i.e.,
relevant for that particular year.
Tata Motors – leading automobile brand, has released its 7th Corporate Social
Responsibility (CSR) Report for FY 2020-21.
Despite experiencing extraordinary business downturn over the past years and
continuous losses, the company continued its commitment to serve the national
interest by allocating unprecedented funds for Corporate Social Responsibility.
“In parallel, our flagship programmes to address some of India’s most pressing
developmental challenges in the areas of Health (Aarogya), Education
(Vidyadhanam), Employability (Kaushalya) and Environment (Vasudhara), positively
impact over 7.5 lakh lives. It is indeed most gratifying that our programmes are
benefitting the most deserving sections of the population, including more than 45% of
SC/ST.”, the report said.

13. Tata Motors has delinked its CSR programmes and budgeting from the being
applicable solelyas per section135(5) of the Companies Act, 2013 and hence the
Company continued to support all CSR activities despite a loss during the year due to
the harsh impact on industry during Covid-19, especially in Q1 FY21 even as its Total
CSR obligation for the year was NIL.
Neither was the any surplus arising out of the CSR projects or programs or activities
of the previous financial years, amount required to be set off for the financial year.
The total spend for FY20-21 was Rs. 23.99 crores. All projects undertaken by Tata
Motors have a one-year timeline i.e., relevant for that particular year.

14. All CSR initiatives are harmonised pan-India through a Common Minimum
Programme across locations, while at the same time the Company has built agility and
flexibility into its CSR initiatives via Location-specific Projects.
The CSR programmes of Tata Motors are aligned to the Tata Group’s focus areas,
national and international priorities.
This section provides an insight into the CSR Policy of Tata Motors, its CSR
programme framework, comprising pan India Common Minimum Programmes and
Location-specific initiatives, which are aligned with SGDs and are in consonance with
Schedule VII of The Companies Act, 2013.
The twin approach of a Common Minimum Programme and Location specific
initiatives allows Tata Motors to offer ubiquity as well as innovation in its CSR
initiatives.

15. The CSR Mission of Tata Motors, “To be a responsible corporate citizen by driving
inclusive growth with social equity, strengthening sustainable development and an
active participant in nation building process” and its commitment to global priorities is
translated into practice via six programme areas, underpinned by its philosophy of
“More from Less
for More” (meaning thereby that our CSR programme reach out to a larger section of
communities by the efficient use of available resources to create both effective and
sustainable impact).