SAINTGITS INSTITUTE OF MANAGEMENT

FINANCIAL MANAGEMENT I
PROJECT PHASE III

SUBMITTED TO; SUBMITTED BY;

SUBRAMONIAM K KAILAS S NATH
SENIOR ASSISTANT PROFESSOR MBA 1921
SAINTGITS INSTITUTE OF MANGEMENT
EICHER LIMITED
As of today (2020-01-30), Eicher Motors's weighted average cost of capital is
7.82%. Eicher Motors's ROIC % is 45.03% (calculated using TTM income statement
data). Eicher Motors generates higher returns on investment than it costs the company to
raise the capital needed for that investment.
Finance 7.33
Costs
market price 20,289.30
EPS (Rs.) 808 720 613 493 367
g 21.578
d1 8653.32

COST OF CAPITAL

ke=23.004
kr=23.004
kd=0.00036

COMPUTATION OF WEIGHTED AVERAGE OF CAPITAL

Capital Amount Weight Specific Total Cost
Cost
Equity Share Capital 27.28 0.0037 23.004 0.8511
Reserves and 7,099.17 0.9693 23.004 22.29
Surplus
Long Term 1,978.38 0.2701 0.00036 0.000097
Borrowings
Total 7323.83 23.141

WACC=2314.1
INVESTMENTS BY EICHER LIMITED
Eicher Motors is planning to invest around Rs 8 billion in Royal Enfield and
another Rs 5 billion in its commercial vehicle business. After exiting from the
Eicher-Polaris joint venture, the company said its focus would be mainly on
two-wheelers.

The investments would be towards expanding capacity, new technology and

product development, said Siddhartha Lal, managing director and chief
executive officer, Eicher Motors.

Royal Enfield is planning to invest around Rs 8 billion to increase capacity at its

plant at Vallam Vadagal near Chennai and on product development.

After the announcement of results, Lal said that the phase II of expansion at
Vallam will be completed by the second half of next year.

By 2020, the plant will go on stream and add around 25,000 units per month.

The company is targeting at selling around 950,000 units in 2018-19, against

820,000 units last year.

INVESTMENT POLICIES
The RBI today allowed foreign investors to invest up to 49 per cent of the paid-
up capital in Eicher Motors.

Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors

(RFPIs) can now invest up to 49 per cent of the paid-up capital of Eicher
Motors under the Portfolio Investment Scheme (PIS), RBI said in a statement.

The company has passed resolutions at its Board and a special resolution by the
shareholders, agreeing for enhancing the limit for the purchase. Shares of Eicher
Motors today closed 1.51 per cent lower at Rs 15,811 apiece on BSE.