COST OF CAPITAL

AND
UNLISTED COMPANIES

Bhargav shaker(091113)
Lovaman shukla
Meenakshi taly
Pinkash
Sandeep
shilpy
 COST OF CAPITAL
Cost of capital represents the rate of return that the
firm must pay to the fund suppliers, who have provided
the capital. In other words, cost of capital is the
weighted average cost of various sources of finance
used by the firm.
The sources are equity,preferance,long-term debt and
short-term debt
 SIGNIFICANCE OF COST OF
CAPITAL
Evaluating investment decision
 Designing Debt policy
 Performance Appraisal
 Components of cost of capital

Cost of Debt Preference capital Cost of Equity Capital

 What is Unlisted
UNLISTED COMPANY company
• •E.g..
A company whose shares are not on the
official list of shares traded in any stock market.
  LISTED Vs UNLISTED COS
LISTED COMPANIES UNLISTED COMPANIES
• registered with stock • No registration with
exchange(eg.-NSE,BSE) stock exchange
• Raises capital through • Raises capital by issuing
(IPO) by issuing shares bonds,debentures,vent
• risk free to invest in ure capital, loans etc.
listed company • High risk involved to
invest in unlisted
company
LIMITATIONS OF UNLISTED COS

• Difficult to Estimate Risks.

• Historical information may not be indicative

of the future.

• Market information similar companies may

be difficult to obtain.

• Difficult to find a buyer for an unlisted

shares.
 GODAVARI SUGAR
GODAVARI SUGAR LTD LTD

INTRODUCTION
The Godavari sugar mills ltd was incorporated in 1939, has been
demerged to Godavari biorefinares ltd in 2009, which was
promoted by late shri. Karamshibhai Jethabhai Somaiya .it is one
of the top 10 sugar mills among 500 sugar companies in
india,godavari biorefinaries ltd manufactures more than 20
products, some of them
 PRODUCTS

SUGAR

INTERMEDIARIES ETHANOL

CHEMICALS ENERGY
 SOURCE OF FUND RISING
• IDBI agreed to sanction a loan of INR 400 million in 2001.

• Credit facilities from Andhra Bank for INR 190 million.

• LOI was given by SBI for INR 150 million.

 Sales data
PERFORMANCE OF COS
CONCLUSION
• Cost of capital is a central concept in financial
management linking the investment and the
financing decision.

• Hence it should be calculated correctly and

used properly in investment evaluation.