1. TOPIC: COST OF CAPITAL
Submitted towards the partial fulfillment of the requirement for the
degree of
MASTERS OF BUSINESS ADMINISTRATION
MBA Batch 2012 – 2014
Submitted to: Submitted by:
Dr. DHEERAJ SHARMA Harkirat Brar(120425709)
MBA 1st
Year Section F
SCHOOL OF MANAGEMENT
STUDIES
PUNJABI UNIVERSITY, PATIALA
2. Tata Motors pvt. ltd
Balance Sheet of Tata Motors ------------------- in Rs. Cr. -------------------
Mar '12 Mar '11
12 mths 12 mths
Sources Of Funds
Total Share Capital 39.94 39.94
Equity Share Capital 39.94 39.94
Share Application Money 0.00 0.00
Preference Share Capital 0.00 0.00
Reserves 4,249.89 2,916.12
Revaluation Reserves 0.00 0.00
Networth 4,289.83 2,956.06
Secured Loans 994.85 1,458.45
Unsecured Loans 0.00 32.71
Total Debt 994.85 1,491.16
Total Liabilities 5,284.68 4,447.22
Mar '12 Mar '11
12 mths 12 mths
Application Of Funds
-------------
-- in Rs.
Cr. --------
-----------
3. Gross Block 6,308.26 5,538.46
Less: Accum. Depreciation 2,522.75 1,458.18
Net Block 3,785.51 4,080.28
Capital Work in Progress 193.95 125.14
Investments 3,964.26 5,128.75
Inventories 675.57 524.93
Sundry Debtors 272.31 130.59
Cash and Bank Balance 56.10 47.75
Total Current Assets 1,003.98 703.27
Loans and Advances 926.99 783.48
Fixed Deposits 20.72 23.77
Total CA, Loans & Advances 1,951.69 1,510.52
Deffered Credit 0.00 0.00
Current Liabilities 3,520.66 5,316.40
Provisions 1,090.07 1,081.07
Total CL & Provisions 4,610.73 6,397.47
Net Current Assets
-
2,659.04
-4,886.95
Miscellaneous Expenses 0.00 0.00
Total Assets 5,284.68 4,447.22
4. Contingent Liabilities 252.62 131.90
Book Value (Rs) 214.83 148.03
Profit & Loss account of Tata Motors
Mar '12 Mar '11
12 mths 12 mths
Income
Sales Turnover 25,252.98 20,787.27
Excise Duty 1,666.18 1,420.30
Net Sales 23,586.80 19,366.97
Other Income 347.46 238.27
Stock Adjustments 94.03 27.00
Total Income 24,028.29 19,632.24
Expenditure
Raw Materials 17,485.65 14,236.45
Power & Fuel Cost 112.66 100.47
Employee Cost 735.52 618.95
Other Manufacturing Expenses 51.62 409.89
Selling and Admin Expenses 1,257.84 1,090.72
Miscellaneous Expenses 389.52 340.42
Preoperative Exp Capitalised 0.00 0.00
5. Total Expenses 20,032.81 16,796.90
Mar '12 Mar '11
12 mths 12 mths
Operating Profit 3,648.02 2,597.07
PBDIT 3,995.48 2,835.34
Interest 33.43 28.20
Depreciation 1,097.34 402.38
Other Written Off 0.00 0.00
Profit Before Tax 2,864.71 2,404.76
Extra-ordinary items 0.00 0.00
PBT (Post Extra-ord Items) 2,864.71 2,404.76
Tax 486.58 476.86
Reported Net Profit 2,378.13 1,927.90
Total Value Addition 2,547.16 2,560.45
Preference Dividend 0.00 0.00
Equity Dividend 898.59 2,096.72
Corporate Dividend Tax 145.77 340.14
Per share data (annualised)
Shares in issue (lakhs) 1,996.88 1,996.88
Earnings Per Share (Rs) 119.09 96.55
6. Equity Dividend (%) 2,250.00 5,250.00
Book Value (Rs) 214.83 148.03
a) Cost of Debt(2012)
= interest/secured +unsecured loans
= 33.43 cr/994 cr *100
=3.36%
Cost of Debt(2011)
=28.28/1491.16*100
=1.9%
b) (1) Cost of equity capital:
Ke(2012)=D/N.P
=39.94/898.59*100
=4.44%
Ke(2011)=39.94/2096.72*100
=1.90%
(2)Earning yield method:
Ke(2012)=EPS/MPS
=119.09/1200*100
=9.9%
Ke(2011)=96.55/1200*100
=8.04%
7. Interpretation:
Cost of debt of Tata Motors in 2012 is more than as compared in 2011.
Cost of equity of this company in 2012 is more than in 2011.
Balance Sheet of General
motors
------------------- in Rs. Cr. -------------------
Mar '12 Mar '11
12 mths 12 mths
Sources Of Funds
Total Share Capital 289.37 289.37
Equity Share Capital 289.37 289.37
Share Application Money 0.00 0.00
Preference Share Capital 0.00 0.00
Reserves 5,751.70 4,620.85
Revaluation Reserves 0.00 0.00
Networth 6,041.07 4,910.22
Secured Loans 0.00 23.53
Unsecured Loans 97.48 301.62
Total Debt 97.48 325.15
Total Liabilities 6,138.55 5,235.37
Mar '12 Mar '11
12 mths 12 mths
Application Of Funds
Gross Block 3,425.94 3,395.16
Less: Accum. Depreciation 1,914.33 1,912.45
Net Block 1,511.61 1,482.71
Capital Work in Progress 343.15 149.34
Investments 4,882.81 4,795.20
Inventories 678.53 547.28
Sundry Debtors 423.20 362.76
8. Cash and Bank Balance 446.49 155.45
Total Current Assets 1,548.22 1,065.49
Loans and Advances 1,744.82 3,891.66
Fixed Deposits 1,208.36 401.04
Total CA, Loans & Advances 4,501.40 5,358.19
Deffered Credit 0.00 0.00
Current Liabilities 2,925.53 2,624.35
Provisions 2,174.89 3,925.72
Total CL & Provisions 5,100.42 6,550.07
Net Current Assets -599.02
-
1,191.88
Miscellaneous Expenses 0.00 0.00
Total Assets 6,138.55 5,235.37
Contingent Liabilities 1,445.67 959.66
Book Value (Rs) 208.77 169.69
Profit
and
loss
account
Mar'12 Mar'11 Mar'10
12
Months
12
Months
12
Months
Sales Turnover 20,475.74 17,386.51 12,420.95
Excise Duty 959.09 934.71 607.70
NET SALES 19,516.65 16,451.80 11,813.25
Other Income 0.00 0.00 0.00
TOTAL INCOME 19,872.38 16,859.96 11,964.37
Manufacturing
Expenses
175.61 148.38 127.89
Material Consumed 14,486.09 11,882.51 8,139.51
9. Personal Expenses 541.04 494.33 411.76
Selling Expenses 270.53 445.98 381.59
Administrative
Expenses
356.90 242.61 264.88
Expenses Capitalised -49.43 -16.66 -15.67
Provisions Made 0.00 0.00 0.00
TOTAL
EXPENDITURE
15,780.74 13,197.15 9,309.96
Operating Profit 3,735.91 3,254.65 2,503.29
EBITDA 4,091.64 3,662.81 2,654.41
Depreciation 145.62 122.84 136.45
Other Write-offs 2.14 2.14 0.00
EBIT 3,943.88 3,537.83 2,517.96
Interest 22.24 1.69 5.98
EBT 3,921.64 3,536.14 2,511.98
Taxes 1,022.12 1,011.02 710.12
Profit and Loss for
the Year
2,899.52 2,525.12 1,801.86
Non Recurring Items 57.93 767.84 -128.62
Other Non Cash
Adjustments
46.60 46.77 26.87
Other Adjustments 0.00 0.00 2.62
REPORTED PAT 3,004.05 3,339.73 1,702.73
Preference Dividend 0.00 0.00 0.00
Equity Dividend 1,302.15 1,157.47 578.73
Equity Dividend (%) 449.99 399.99 400.00
Shares in Issue
(Lakhs)
2,893.67 2,893.67 1,446.84
EPS - Annualised
(Rs)
103.81 115.42 117.69
10. Period Instrument Issued
Capital
From To (Rs. cr) Shares (nos) Face Value
2011 2012
Equity
Share
289.37 289367020 10
2010 2011
Equity
Share
289.37 289367020 10
Calculation of Cost of Capital
a)Cost of Debt(2012)
= interest/secured +unsecured loans
= 22.24/97.48*100
=22.81%
Cost of Debt(2011)
=1.69/325.15*100
=0.52%
b)(1) Cost of equity capital:
Ke(2012)=D/N.P
=1302.15/289.37*100
=4.5%
