COST OF CAPITAL AND

UNLISTED COMPANIES

Bhargav shaker(091113) Lovaman shukla Meenakshi taly Pinkash Sandeep
shilpy

qCOST OF CAPITAL
C o st o f ca p i lre p re se n ts th e ra te o f re tu rn ta th a t th e fi m u st p a y to th e fu n d su p p l e rs, rm i w h o h a ve p ro vi e d th e ca p i l I o th e r d ta . n w o rd s, co st o f ca p i li th e w e i h te d ta s g a ve ra g e co st o f va ri u s so u rce s o f fi a n ce o n u se d b y th e fi . rm T h e so u rce s a re e q u i , p re fe ra n ce , l n g - te rm ty o d e b t a n d sh o rt-te rm d e b t

qSIGNIFICANCE OF COST OF CAPITAL

ü Investment evaluation ü Debt policy ü Performance appraisal

Components of cost of capital
Cost of Debt Preference capital Cost of Equity Capital

What is Unlisted company qU N LI T E D C O M PA N Y S
• E.g..m p a n y w h o se sh a re s a re n o t o n A co • th e o fficia llist o f sh a re s tra d e d in a n y
sto ck m a rke t.

qLISTED Vs UNLISTED COS
LISTED COMPANIES
 

UNLISTED

COMPANIES

• No registration with • registered with stock exchange stock exchange(eg.• Raises capital by NSE,BSE) issuing bonds,debenture • Raises capital s,venture capital, through (IPO) by loans etc. issuing shares • High risk involved • risk free to invest to invest in in listed company unlisted company

qLIMITATIONS 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 LTD GODAVARI SUGAR LTD
qINTRODUCTION
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

qPRODUCTS

qSOURCE 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. 

qSales data

qPERFORMANCE OF COS

qCONCLUSION
• 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. •