Academic Year 2021-22

Finance Area Elective Course for BM Seniors (Term IV)

“Capital Expenditure, Planning & Control” - CAPEX (3 Credits)
The Course Outline (For Complete Details Refer Page Numbers 2 to 6)
Part A (Basic Details)

Name of the Course Capital Expenditure, Planning & Control

Course Instructor Sabyasachi Sengupta (ssengupta@xlri.ac.in)
Academic Associate Itika Ganguli (itika@xlri.ac.in)
Area Finance
Program BM (2020-22 Batch) – 2nd Year
Term IV (AY 2021-22)
Type of Course Elective Course
Number of Credits 3 (Three Credits)
Number of Classroom Contact Hours 30 Hours
Course Pre Requisites (if any) None
Course Textbook “PROJECTS” (By Prasanna Chandra)
Course Handout to be provided YES
Number of Sessions to be conducted by Guest Faculty One
Name of Guest Faculty Dr. Poornima Dore

Part B (About the Course)

Course Description Refer Page Number 2

Course Learning Objectives Refer Page Number 2
Who is this course suitable for? Refer Page Number 2

Part C (AOL – Learning Goal Mapping at the Course Level)

The degree of achievement that would be expected would range from “Intermediate” to “Advanced”. This
elective course would primarily and essentially focus on one learning goal only, namely, DECISION MAKING
ABILITY. The said learning goal would be suitably tested across all three evaluation components of this
elective course.
Part D (Session Plan)
Kindly refer to page numbers 4 & 5 for the “detail session plan”.

Part E (Details of Evaluation Components)

Kindly refer to page number 3 for the “details of evaluation components”.

Part F (Course Policies)

Attendance Norms As per Institute Policy

Class Participation Norms Not Applicable

Norms regarding Submission of Assignment The final date of submission would be mutually decided by
students & the faculty member AND students are required to
adhere to such mutually agreed deadline

All Disciplinary & Other Related Norms As per Institute Policy (Refer Student Manual for details)
 Academic Year 2021-22 (Term IV)
Finance Area Elective Course for BM Seniors on
Capital Expenditure, Planning & Control (CAPEX)

The Course Outline

The Focus of the Entire Course

This course would be conducted in such a manner so as to ensure that the focus is more on
practical aspects of CAPEX activity rather than on theories and academic inputs. In other words,
the course has been specially designed to be highly practically oriented in order to ensure that the
students undergoing this course would be well equipped to handle any real life CAPEX situation on
their own which they may encounter in their career at a later date.
It needs to be remembered that CAPEX is an elective course in the domain of Corporate Finance.
Now, in general, any elective course in the domain of Corporate Finance would invariably have
very strong interfaces with Accounting, Costing and Basic Financial Management Concepts
(CAPEX being no exception to this general rule). Those students who would opt for this course with
the hope of obtaining high quality academic inputs would be utterly disappointed because that is
certainly NOT the focus area of the CAPEX Course AT ALL. CAPEX (as a course) would
essentially focus on “Project Finance in Practice”. In other words, a majority of the concepts dealt
with in this particular course might had already been covered in various core courses with your
batch and this course would ONLY ensure that the students become adequately and appropriately
equipped to put those concepts into practice in an effective manner after developing a reasonable
degree of appreciation about the practical realities encompassing the commercial world.

Course Objectives
a) To provide necessary inputs to students in form of concepts, theories and financial
management tools and techniques related to capital expenditure decisions.
b) To aid the students in developing an integrated approach to capital expenditure
decision making process primarily emphasizing on sound concepts and their
managerial implications.
c) To focus heavily on the practical and financial aspects of capital expenditure
decisions, which would equip the students to apply their skills and knowledge
effectively in the future while dealing with capital expenditure decisions.
d) To provide necessary inputs on various facets of working capital management
practices essentially stressing on the concepts of dynamics of working capital,
estimating working capital requirements and working capital financing policies.
Study Material

The course material (to be distributed in class from time to time) comprises theories,
practical problems (wherever applicable) and case studies. It may be noted that the
topics covered in various sections of the handouts may be considered as the syllabus of
the above elective course for all practical purposes. Although the CAPEX handouts
(along with the handwritten exercise book where you may be maintaining the class
notes) would finally translate into pretty exhaustive course material by their very nature,
the students may still be advised to refer to the following suggested readings (as and
when the need arises).

Suggested Readings
A) Brealey & Myers (Principles of Corporate Finance) (Relevant Portions Only)
B) Van Horne (Financial Management & Policy) (Relevant Portions Only)
C) Prasanna Chandra (Projects) (Relevant Portions Only)

Pattern of Evaluation

The Component Weightage (%)

30%
Mid Term Examination (Open Book Examination)
(Based on inputs provided across module nos. I to IV)
Mid Term Exam would be scheduled immediately after the 10th Session

Developing a Complete Project Report 30%

(Take Home Assignment – A Group Exercise)

End Term Examination (Open Book Examination) 40%

(Based on entire syllabus but stressing more on Module V to XII)

TOTAL 100%

Grading Pattern
Marks 00-29 30-37 38-44 45-52 53-59 60-67 68-76 77-84 85-100
Grade F D D+ C C+ B B+ A A+

The Course Flow & Coverage (CAPEX)

Session No Module No The Module Broad Coverage

1 to 5 I The Fundamentals A Study of CAPEX Cash Flow Stream &

Elementary Basics Introducing Project Evaluation Techniques
(Conceptual Clarification)
(5 Sessions)
Evaluating CAPEX Proposals (Mini Cases)
(Case Based Approach for Clarifying Concepts)

6 II The Fundamentals A Re-look at IRR method and Pay Back Method

Intermediate Level of Investment Appraisal
(Conceptual Clarification)

7 III The Denominator Selecting the most appropriate discounting factor

(Conceptual Clarification)

8, 9 & 10 IV The Numerator Components of Project Cost

(Practical Insight)
(3 Sessions)
Financial Forecasting Techniques
(The Concepts – Tricks of the Trade)

A Class Exercise on Developing Meaningful &

Reliable Financial Forecasts
(A Case Analysis Exercise)

11 V Risk Analysis Risk Analysis Exercise in CAPEX Decision

(Basic Concepts) Making Process - Practical Insight
(Conceptual Clarification)

12 & 13 VI Risk Analysis Risk Analysis in Project Financing Deals

(The Realities) (The Real Life Scenario)
(2 Sessions)
Assessing & Monitoring Project Risks
(Financiers Viewpoint – What happens in reality)

Session No Module No The Module Broad Coverage

14 VII A GUEST Social Cost-Benefit Analysis in Projects

LECTURE (A Guest Lecture by Dr. Poornima Dore)

15 & 16 VIII Working Capital Dynamics of Working Capital

Management Issues Estimating Working Capital Requirement
(2 Sessions) (Conceptual Clarification)
Various Committee Recommendations
(An Overview)
Evaluating Working Capital Financing Proposals
(Practical Insight)
Related Issues in Working Capital Management
(A Few Mini Cases)

17 IX Leasing Concepts Various Facets of Leasing Arrangement

(Conceptual Clarification)

18 X Project Financing Project Financing & Capital Rationing Problem

(Practical Aspects) Project IRR vs. Equity IRR (A Clarification)
Infrastructure Financing (Important Features)
(Concepts & Practice)

19 XI Taxation Interfaces How applicable tax regulations monitor and

govern Capital Expenditure Decisions
(An Overview)

20 XII Miscellaneous M&A Decisions versus CAPEX Decisions

AND (Various Interfaces – Similarities & Dissimilarities)
Wrap Up
Practical Difficulties in CAPEX Decisions
(A Case for Conceptual Clarification)
Important Note (Additional Points)

 The CAPEX Assignment (comprising the Take Home Assignment)

would be highly demanding by its very nature and this Group
Project would promise substantial learning value provided the
same is sincerely and methodically done by students.

 The take home assignment (namely “Developing a Complete

Project Report”) would be based on a real life CAPEX Problem
and once this Project Report is submitted to the concerned faculty
member, the same would be followed by an individual viva-voce
exercise of the concerned group members. The evaluation of this
component would only be released once the viva-voce exercise is
adequately and appropriately conducted by the concerned faculty
member. Hence, it may be noted that, so far this particular
assignment is concerned, the faculty may do differential grading
among the students pertaining to the same group provided the
performance in the viva-voce calls for such differential grading.

 The assignment pertaining to the CAPEX course would be pretty

time consuming. In general, each CAPEX student would have to
devote 50 hours (approximately) time for developing and creating
the PROJECT REPORT.