FINANCIAL MANAGEMENT-1

ASSIGNMENT
Name : M.KARTHIKEYAN
Roll No.: 10AC16

EVA Calculation for the financial year 2004-2005:

Step1 : Net Operating Profit After Tax (NOPAT)
NOPAT= Rs. 2681.90 lacs
Step 2: Total capital structure:
Total capital structure = Net working capital + Net fixed Assets.
Net working Capital = Rs. 26738.68 lacs
Net fixed assets = Rs.17843.26 lacs
Total capital structure = Rs.44581.94 lacs
Step 3: Cost of Overall Capital.
Ko = WeKe +WpKp +WrKr + WdKd
Ke = (D1/P0)*g
g = (D1-D0)/D0;
D1= Rs.1.8002; Do = Rs. 1.8002 ; Po = 76.95 (Taken from www. nseindia.com);
Ke = 0.0233
Kd = Interest(1- tax)/ sale value ;
Interest = Rs 4930.20 lacs. ; Sale value = Secured loans + Un Secured loans
Secured loans = Rs.38193.16 lacs ; Un Secured loans = Rs.20301.47 lacs;
Tax for the year financial year 2004-2005 is 35.875%
Kd = 0.0540
Ke = Kr;
We = Equity capital / Total capital structure ;
Equity capital = Rs.2944.11 lacs ; Total capital structure = Rs.1064.83 lacs. ;
We = 2.7648
Wr = Retained Earnings / Total capital structure ;
Retained Earnings = Rs34753.63 lacs. ; Total capital structure = Rs. 1064.83 lacs
Wr = 32.6377
Wd = Total Debt / Total Capital Structure ;
Total debt = Rs.58494.63 ; Total capital structure = Rs. 1064.83 lacs
Wd = 54.933;
Substitute all the values in the Ko equation, we get
Ko = 3.791182
Cost of funds = Ko * Total Capital structure ;
Cost of funds = 3.791182 * 1064.83
= Rs. 4036.964 lacs
Step 4: EVA
EVA = NOPAT – Cost of funds
= 2681.90 – 4036.964
EVA= Rs.(1355.064) lacs
EVA is not Created
EVA ratio = NOPAT / Cost of funds
= 2681.90 / 4036.964
EVA ratio = 0.6643
EVA Calculation for the financial year 2005-2006:
Step1 : Net Operating Profit After Tax (NOPAT)
NOPAT= Rs. 2617.48 lacs
Step 2: Total capital structure:
Total capital structure = Net working capital + Net fixed Assets.
Net working Capital = Rs. 55087.02 lacs.
Net fixed assets = Rs.18455.83 lacs
Total capital structure = Rs.73542.85 lacs.
Step 3: Cost of Overall Capital.
Ko = WeKe +WpKp +WrKr + WdKd
Ke = (D1/P0)*g
g = (D1-D0)/D0;
D1= Rs.2.0006; Do = Rs. 1.8002; Po = 223.75 (Taken from www. nseindia.com);
Ke = 0.1202
Kd = Interest(1- tax)/ sale value ;
Interest = Rs.4922.53 lacs. ; Sale value = Secured loans + Un Secured loans
Secured loans = Rs.36895.38 lacs ; Un Secured loans = Rs.46528.83 lacs;
Tax for the year financial year 2004-2005 is 36.5925%
Kd = 0.0374
Ke = Kr;
We = Equity capital / Total capital structure ;
Equity capital = Rs.2944.11 lacs ; Total capital structure = Rs. 73542.85 lacs. ;
We = 0.0400
Wr = Retained Earnings / Total capital structure ;
Retained Earnings = Rs.36699.73 ; Total capital structure = Rs73542.85 lacs.
Wr = 0.4990
Wd = Total Debt / Total Capital Structure ;
Total debt = Rs.83424.21 lacs ; Total capital structure = Rs. 73542.85 lacs.
Wd = 1.13436;
Substitute all the values in the Ko equation, we get
Ko = 0.1071
Cost of funds = Ko * Total Capital structure ;
Cost of funds = 0.1071 *73542.85
= Rs. 7876.439 lacs
Step 4: EVA
EVA = NOPAT – Cost of funds
= 2617.48 – 7876.439
EVA= Rs.(5258.959) lacs
EVA is not Created
EVA ratio = NOPAT / Cost of funds
= 2617.48 / 7876.439
EVA ratio = 0.3323
EVA Calculation for the financial year 2006-2007:
Step1 : Net Operating Profit After Tax (NOPAT)
NOPAT= Rs. 39354.51 lacs.
Step 2: Total capital structure:
Total capital structure = Net working capital + Net fixed Assets.
Net working Capital = Rs.79357.86 lacs..
Net fixed assets = Rs.17877.30 lacs.
Total capital structure = Rs.97235.16 lacs..
Step 3: Cost of Overall Capital.
Ko = WeKe +WpKp +WrKr + WdKd
Ke = (D1/P0)*g
g = (D1-D0)/D0;
D1= Rs2.4999; Do = Rs.2.0006; Po = 139.10 (Taken from www. nseindia.com);
Ke = 0.2674
Kd = Interest(1- tax)/ sale value ;
Interest = Rs.4114.99 lacs.. ; Sale value = Secured loans + Un Secured loans
Secured loans = Rs 40493.17 lacs. ; Un Secured loans = Rs. 45253.66 lacs.;
Tax for the year financial year 2004-2005 is 33.66%
Kd = 0.0318
Ke = Kr;
We = Equity capital / Total capital structure ;
Equity capital = Rs.2944.11 lacs ; Total capital structure = Rs.97235.16 lacs. ;
We = 0.0302
Wr = Retained Earnings / Total capital structure ;
Retained Earnings = Rs75193.13 lacs ; Total capital structure = Rs. 97235.16 lacs.
Wr = 0.7733
Wd = Total Debt / Total Capital Structure ;
Total debt = Rs.85746.83 lacs ; Total capital structure = Rs. 97235.16 lacs.
Wd = 0.8818;
Substitute all the values in the Ko equation, we get
Ko = 0.2427
Cost of funds = Ko * Total Capital structure ;
Cost of funds = 0.2427* 97235.16
= Rs. 23598.973 lacs

Step 4: EVA
EVA = NOPAT – Cost of funds
= 39354.51 – 23598.973
EVA= Rs.15755.537 lacs
EVA is Created
EVA ratio = NOPAT / Cost of funds
= 39354.51 / 23598.973
EVA ratio = 1.667
EVA Calculation for the financial year 2007-2008:
Step1 : Net Operating Profit After Tax (NOPAT)
NOPAT= Rs. 7341.13 lacs.
Step 2: Total capital structure:
Total capital structure = Net working capital + Net fixed Assets.
Net working Capital = Rs. 89426.34 lacs.
Net fixed assets = Rs.17020.41 lacs.
Total capital structure = Rs 106446.75 lacs.
Step 3: Cost of Overall Capital.
Ko = WeKe +WpKp +WrKr + WdKd
Ke = (D1/P0)*g
g = (D1-D0)/D0;
D1= Rs.2.999; Do = Rs 2.4999; Po = 220.10 (Taken from www. nseindia.com);
Ke = 0.2132
Kd = Interest(1- tax)/ sale value ;
Interest = Rs2627.37 lacs. ; Sale value = Secured loans + Un Secured loans
Secured loans = Rs 42918.06 lacs ; Un Secured loans = Rs. 4777.65 lacs;
Tax for the year financial year 2004-2005 is 33.99%
Kd = 0.01933
Ke = Kr;
We = Equity capital / Total capital structure ;
Equity capital = Rs.2944.11 lacs ; Total capital structure = Rs.106446.75 lacs. ;
We = 0.02765
Wr = Retained Earnings / Total capital structure ;
Retained Earnings = Rs.81500.94 lacs; Total capital structure = Rs. 106446.75 lacs.
Wr = 0.7656
Wd = Total Debt / Total Capital Structure ;
Total debt = Rs.89695.71 lacs ; Total capital structure = Rs. 106446.75 lacs.
Wd = 0.8426;
Substitute all the values in the Ko equation, we get
Ko = 0.1852
Cost of funds = Ko * Total Capital structure ;
Cost of funds =0.1852 * 106446.75
= Rs. 19713.938 lacs

Step 4: EVA
EVA = NOPAT – Cost of funds
= 7341.13– 19713.938
EVA= Rs. (12372.808)
EVA is not Created
EVA ratio = NOPAT / Cost of funds
=7341.13/ 19713.938
EVA ratio = 0.3723
EVA Calculation for the financial year 2008-2009:
Step1 : Net Operating Profit After Tax (NOPAT)
NOPAT= Rs.9328.45 lacs.
Step 2: Total capital structure:
Total capital structure = Net working capital + Net fixed Assets.
Net working Capital = Rs.37582.99 lacs.
Net fixed assets = Rs.15935.98 lacs.
Total capital structure = Rs 54541.19 lacs.
Step 3: Cost of Overall Capital.
Ko = WeKe +WpKp +WrKr + WdKd
Ke = (D1/P0)*g
g = (D1-D0)/D0;
D1= Rs2.999; Do = Rs. 2.999; Po = 140.40 (Taken from www. nseindia.com);
Ke = 0.16273
Kd = Interest(1- tax)/ sale value ;
Interest = Rs.6065.64 lacs. ; Sale value = Secured loans + Un Secured loans
Secured loans = Rs. 23228.56 lacs ; Un Secured loans = Rs. 8746.60 lacs;
Tax for the year financial year 2004-2005 is 33.99%
Kd = 0.1251
Ke = Kr;
We = Equity capital / Total capital structure ;
Equity capital = Rs 2944.11 ; Total capital structure = Rs. 54541.19 lacs. ;
We = 0.0539
Wr = Retained Earnings / Total capital structure ;
Retained Earnings = Rs. 89796.07 lacs ; Total capital structure = Rs. 54541.19 lacs.
Wr = 1.6463
Wd = Total Debt / Total Capital Structure ;
Total debt = Rs.31975.16 lacs ; Total capital structure = Rs. 54541.19 lacs.
Wd = 0.58625;
Substitute all the values in the Ko equation, we get
Ko = 0.16273
Cost of funds = Ko * Total Capital structure ;
Cost of funds = 0.16272 * 54541.19
= Rs. 8875.4878 lacs
Step 4: EVA
EVA = NOPAT – Cost of funds
= 9328.45 – 8875.4878
EVA= Rs.452.9622
EVA is Created
EVA ratio = NOPAT / Cost of funds
= 9328.45/ 8875.4878
EVA ratio = 1.0510