Project Report (17MBA407) on

“A STUDY ON CAPITAL BUDGETING AT TVS MOTOR COMPANY,

HOSUR”
BY
T.Ravi Reddy
1AZ17MBA50
Submitted to

VISVESVARAYA TECHNOLOGICAL UNIVERSITY, BELAGAVI

In partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION
Under the guidance of

INTERNAL GUIDE EXTERNAL GUIDE

Mallika B K Mr. Prakashchandra
Assistant Professor, Senior HR ,
Department of MBA,AIT TVS motor company

Department of MBA
Acharya Institute of Technology,
Soldevanahalli, Hesaragatta Main Road,
Bengaluru
March 2019
 ACKNOWLEDGEMENTS

I wish to express my sincere thanks to our respected Principal, Dr. Prakash M R,

beloved Dean-Academics, Dr. Devarajaiah R M, and deep sense of gratitude to
Dr. M M Bagali, HOD, Acharya Institute of Technology, Bengaluru for their kind
support and encouragement in completion of the Internship Report.

I would like to thank MALLIKA B K, Professor, Department of MBA,

Acharya Institute of Technology, Bengaluru and external guide Mr PRAKESH
CHANDRA, Senior Officer HR TVS MOTORS ,Hosur who gave me golden
opportunity to do this wonderful Project in the esteemed organization, which
helped me to learn various concepts

Finally, I express my sincere thanks to my Parents, Friends and all the Staff of
MBA department of AIT for their valuable suggestions in completing this
Project Report.

Place: Bangalore T.RAVI REDDY

Date: 08/04/2019 SN:1AZ17MBA50
 TABLE OF CONTENTS

CHAPTER TITLE PAGE NO.

EXECUTIVE SUMMARY
INTRODUCTION
1.1 Introduction about internship 3
1.2 Industry profile 3-6
1.3 Company profile 6-7
1.4 Promoters, Vision, Mission & Quality Policy 7
Chapter 1 1.5 Product/ Services profiles 7
1.6 Infrastructure facilities 8
1.7 Competitors information 9
1.8 SWOT analysis 9-10
1.9 Future growth and prospects 10-12
1.10 Financial statement 13-20
CONCEPTUAL BACKGROUND AND
REVIEW OF LITERATURE
Chapter 2
2.1 Theoretical background of the study 22-26
2.2 Review of literature 27-30
RESEARCH DESIGN
3.1 Statement of the problem 32
3.2 Need for the study 32
3.3 Objectives 32
Chapter 3 3.4 Scope of the study 32
3.5 Research methodology 32-33
3.6 Hypothesis 33
3.7 Limitations 34
3.8 Chapter scheme 35
ANALYSIS AND INTERPRETATION
Chapter 4
4.1 Data analysis and interpretation 36-52
 FINDIINGS, CONCLUSION AND
SUGGESTIONS
Chapter 5 5.1 Summary of findings 54
5.2 Suggestions/ Recommendation 55
5.3 Conclusion 55
Bibliography 56-57
Annexure 58-62

LIST OF TABLES
Table No. Particulars Page No.
1.1 Table showing Balance sheet 13-15
1.2 Table showing Profit and loss 16-17
4.1 Table showing Net present value 37
4.2 Table showing Payback period 39
4.3 Table showing Account rate of return 40
4.4 Table showing Cash flow statement 41
4.5 Table showing Return on net worth 45
4.6 Table showing Return on capital and employed 46
4.7 Table showing Return on asset 47
4.8 Table showing Cash earnings rent ion ration 49
4.9 Table showing Valuation of ratio 50
4.10 Table showing Retention ratio 51
 LIST OF FIGURES AND GRAPH

Graph No. Particulars Page No.

1.1 Graph showing Noncurrent liabilities 17
1.2 Graph showing Current liabilities 18
1.3 Graph showing Total net current liabilities 19
1.4 Graph showing Current assets 20
4.1 Graph showing Net present value 38
4.2 Graph showing Pay back period 39
4.3 Graph showing accounting rate of return 40
4.4 Graph showing net cash flow from operating activities 41
4.5 Graph showing net used in investing activities 42
4.6 Graph showing net cash used in investing activities 43
4.7 Graph showing net used for financing activities 44
4.8 Graph showing return on net worth and equity 45
4.9 Graph showing return on capital and employed 47
4.10 Graph showing return on assets 48
4.11 Graph showing cash earning retention ratio 49
4.12 Graph showing valuation ratio 50
4.13 Graph showing retention ratio 52
 Executive summary

The summer project that do is to get an experience of how the corporate world function and
how the theory is different from the practical aspects of the industry. For the same purpose
got an opportunity for my project at TVS motors located at Hosur.

The first chapter of the project report, the basic information regarding the industry like
industry major players, industry competitiveness and their products The second chapter
consist data regarding company profile, like vision, mission, quality policy and its products.
Information collected from both primary and secondary sources. Third chapter tells about the
conceptual background it comprises information regarding capital budgeting, and its various
technique like NPV, ARR, PBP and IRR etc. and literature review. in while chapter four will
give information about research design like type research methodology used, method used
for data collection and also limitation. Chapter fourth comprises data analysis and
interpretation in which financial statement of the company is analyzed by using various ratios.
And last chapter will tells about findings ,suggestion and conclusion regarding the project.

1
 CHAPTER-1
INTRODUCTION

2
 CHAPTER 1

1.1 INTRODUCTION TO PROJECT:

The project report at TVS motor company, Hosur on the topic capital budgeting has
been done for a period of six weeks. The report is first to have the theoretical insight
about the techniques of capital budgeting and how practically these techniques can be
applied to the manufacturing sector like TVS Motor company before making the
investment in any proposals. Capital budgeting is a tool for maximizing a company's
future profits since most companies are able to manage only a limited number of large
projects at any one time.

1.2 INDUSTRY PROFILE

Capital planning is the apparatus for amplifying an organization future benefit since most of
the organizations can oversee just a set no of vast activities at one time industry profile in
1991 by the Dr.Manmohan singh vehicle business is growing rapidly in India.As of now,
India is the second biggest maker of bikes. Just China and Japan are in accordance with the
clearance of two-wheeled vehicles and bikes. In 2005-2006, the yearly generation of bikes in
India was 7600801 units.

The pattern of responsibility for wheeled vehicles is in charge of India's novel decent variety.
The most critical part of numerous pieces of India is poor open transport. Moreover, bicycles
have a lot of adaptability and versatility for the Indian family.

Bajaj Auto began exchanging the imported Vespa bike in 1948. In the interim, Automobile
Products of India (APII) began delivering bikes in the nation in the mid 50s. Until 1958, the
API and Enfield were the bike creator in India. Be that as it may, Bajaj marked a specialized
organization with Piaggio in Italy during the 1960s to deliver bikes. The understanding
finished in 1971.

The state of bike makers was not extraordinary. Until the mid-80s, just three noteworthy bike
producers in India were Rajdoot, Escorts, and Enfield. In the mid-80s a two-wheeled bicycle
was opened to outside makers. The business, which originally observed a delicate ride,
confronted an extreme outside challenge.

3
Cruiser organizations, for example, Yamaha, Honda and Kawasaki have set up a slows down
in association with different bicycles in India. Escorts, Rajdot, and organizations confronted
overwhelming challenge from the little 100 CC Japanese innovation cruisers. The bicycle
fabricated by Hero Honda is the main organization that produces four-stroke cruisers around
then.

In the mid-80s, the presentation of the Variomatic Gearless Scooter in a joint effort with
Kinetic Honda. The bike turned out to be mainstream with the more youthful age, particularly
for individuals who were hard to use with bikes outfitted. The presentation of bikes made
another segment for individuals like ladies and teenagers who did not utilize bikes or gearless
bikes to drive. Numerous organizations, for example, Kinetc, TVS, and Hero turned out to be
an enormous notoriety with individuals who needed a straightforward engine motor.

The difference in government arrangement claimed by the Kyoto Protocol and the Kyoto
Protocol saw two stroke bi-cycles wiped out from generation. There are at present around 10
bicycles in the nation, including Bajaj, Hero, Hero Honda, Honda, Indus, Kinetic, Royal
Enfield, Suzuki, TVS, and Yamaha.

The most recent pattern in the bike showcase is the presentation of electric vehicles from
makers, for example, Indus and Hero. These can be energized from helpful home power
stations. The main burden is the speed, which is constrained to around 25 miles for every
hour.

As of now, the bike advertise is requesting higher volume motors. Already, the 100 E
bicycles were more eco-friendly. In any case, the market is quickly developing. As found in
the development, Bajaj presented the Pulsar with double twin sparkle start (DTSI) innovation
with 150, 180 and 200 cc motors.

India's bike autos are prepared for the following bicycles. It meets the restoration of the
retro brands and the test of the BS VI as new partners

This is a fascinating year for the Indian bicycle industry.

Because of the streets being gotten in the coming months, decades-old bike brand Java has
seen restoration. Another conventional bike brand, Lambretta, likewise returns it two years
after the fact. Plainly, the individuals who are setting off to the retro are the most current
approach to continue existing players in front of the additional outstanding mile.

4
As it goes to the present market, it appears to have hit Bull's-Eye, which is an extraordinary
method to pull in javascript premiums. The Czech bike brand has left the scene for a long
time, yet it is sufficient to get the adrenaline surge in purchasers as it is rebooting in the new
symbol.

Jawa Vs Enfield?

Java has its market head Royal Enfield on its radar, yet its most recent 650 cc. Created with
potential clients with twin contributions - Interceptor and Continental GT. How does Royal
Enfield stop Java? Responding to million dollar question in the main portion of 2019.

The two players pull back all stops to connect with purchasers bigly. It has been around for a
long time for Royal Enfield and is a fruitful player delivering in excess of 70,000 cruisers
consistently.

Anyway these are as yet the soonest days, and there are numerous brands promising to just
moon the moon at the outset. New purchasers of India additionally have a wide scope of
discernments and different models. Regardless of whether it's 650 cc twins from Royal
Enfield or Java, the genuine proportion of their prosperity can be crushed by their clients
before the finish of 2019.

Lambretta to return

Lamberta isn't the top infamous and it endeavors to be diverse when the power symbol begins
at the 2020 Delhi Auto Expo. As an occupant of the bike scene, as Java, there is no issue for
the brand repositioning.

Nonetheless, both Vespa and Lambretta are striving to own a solid expression with their
electric bikes. All things considered, the present more youthful age is worried about natural
and clean outflows. In the event that they have confidence in these electric bikes, it's Vespa or
Lambretta, the best versatility alternatives, and after that the force to take the story forward.

Forging partnerships

Past the Retro topic, Harley plans to build up its Asia nearness in 2018, which happens in a
mid-able bike space. Since Harley is known to be the best way to help volumes in business
sectors like India and ASEAN, Harley plans to create 250 cc-500 cc bicycles with a
neighborhood accomplice.

5
His new mid-run cruiser run must guarantee that Harley additionally hits with the clients who
are as yet searching for an extensive tone (Harley) DNA with the client. Harley's desires will
in the long run have the capacity to have something increasingly moderate and still marked.

Bajaj likewise has an effective association with KTM in Austria, which represents 48 percent.
The Chakan plant close Pune is the creation place for low-elevation KTM cruisers (125 cc-
400 cc), which is transported the nation over.

TVS and BMW Motorroad have likewise dispensed medium-sized bikes, and it is a fantastic
amusement for Indian bicycle producers. Accomplices are unquestionably eager to take their
attach to the following dimension, with most models and TVS assuming a major job in the
BMW tie-up.

Honda is relied upon to grow its abilities in Gujarat by 1.20 million units by 2020. The
organization is developing at an abrupt speed since its division with Hero eight years prior
and now four plants are on six million cruisers and bikes.

On the off chance that Hero keeps on being a noteworthy player, Honda is relied upon to
enable its BSI period to control its worldwide capacities and at last rise at the most elevated
amount. The new pull of war will rise in India's bike throughout the following decade. There
are Suzuki and Yamaha striving to expand their essence. These are absolutely fascinating
occasions.

1.3 COMPANY PROFILE

The TVS Group was first presented in 1911 by Mr. Television. Sundaram Iyengar
established. The TVS assemble has a solid nearness in the production of bicycles, auto
parts, and PC peripherals. In 2016-17, the TVS Motor Company was the third biggest car
maker in India, with more than 13,000 ($ 2 billion) income. The main organization of
TVS Group is the yearly limit of 3 million units every year and 4 million vehicles every
year. TVS Motor Company is the 2th biggest exporter in India with fares to 60 nations.

The main dispatch of the TVS Motor Company was in August 2006 with 50 cc. The
sulked TVS was 50. It's 100 cc. The principal Indian organization to present Indo-
Japanese. Business creation of cruisers began in 1984. It was additionally the principal
Indian organization to dispatch nearby participation in India in 1994. It's developing
quickly since it began to end up one of India's driving bike makers.

6
TVS Motor Company Limited (TVS Motor), an individual from the TVS Group, is the
biggest gathering based on size and exchange, with more than 3 crore (30 million) clients
riding a TVS bicycle

1.4 PROMOTORS:

 Sundaram clayton ltd

 Insurance companys
 Financial instituions

Vision :

TVS Motor Driven by the customer :

TVS motor will be responsive to customer requirements consonant with its core competence
and profitability. TVS motor will provide total customer satisfaction by giving the customer
the right product, at the right price , at the right time

Mission:

We are committed to being a highly profitable, socially responsible, and leading

manufacturer of high value for money, environmentally friendly, life time personal
transportation products under the TVS brand , for customers predominantly in Asian markets
and to provide fulfilment and prosperity for employees, dealers and suppliers.

QUALITY POLICY:

The company began its TQM journey in the year 1987. During 2002 the company won
the internationally coveted Deming Application Prize; it was the first two wheeler
company in the world to get that prize.

1.5 Product /services profile:

Tvs motars Organization restricted is occupied with assembling of bike mono parts three
with assembling of bike and embllishments incorporates Jupiter Scooty Getup and wego and
100 XL very hard core.

 Motorcycles:(Apache series , Radeon, victor, star city+, sport)

 Scooters: ( Ntorq, Jupiter, wego, scooty zest 110, scooty pep+)

7
  Mopeds: (XL 100, XL 100 comfort and XL 100heavy duty, xl high touch start).

1.6 Infrastructure facilities:

Manufacturing Excellence

:
Begin 7 vehicles in a solitary day - Product magnificence makes this possibility:
In the core of the new item launcher, the creation group permits dream development
in front of innovative work.
Five mainstays of the TQM were directed:
The executives standard depends on five mainstays of TQM (Total Quality
Management), in light of complete worker association, day by day the board, and
kaizen (propelled improvement).
Absolute Employee Involvement:
The Total Employee Involvement Program guarantees that obligation regarding the
organization's execution is in charge of all dimensions of representatives. It furnishes
all workers with the chance to take part in dynamic exercises and different
enhancements regular.
Every day Work Management:
Every day work the executives Defines and regulates key procedures, guaranteeing
they meet set objectives, distinguishing abnormalities and keeping their repeat.
Cross-Functional Teams (CFT), Supervisory Improvement Teams (SIT) energizes
consistent upgrades in all parts of TVS engine work utilizing quality control zones
(QCC) and counseling plans.
Five columns start with approach the executives, which is utilized to achieve the
yearly dynamic targets. There are typically no three organization expectations, which
come after point by point work out, which are intermittently doled out and explored.
The organization conducts complete scope of preparing programs, using the inward
aptitudes and advocate everywhere throughout the world. Projects for all workers at
all dimensions.
The Inspiration Moment :
When we won the Deming title in 2002, we are the world's solitary bike producer to
win the honor. Be that as it may, we keep on being supportive of the nature of kyzien
standards (Japanese for constant improvement) and TQM (absolute quality

8
administration).

9
 TVS Motor Company Limited (TVS Motor) - The individuals from the TVS
assemble are the gathering's biggest organization as far as size and business.

1.7 COMPETITORS

 Bajaj Auto Limited

 Hero Motor Corp (Hero Honda)
 Yamaha
 Suzuki
 Harley Davidson
 Royal Enfield

1.8 SWOT ANALYSIS

Strength:

 One of the Indian players in tremendous brand value and bicycles

 Excellent R and D, and different items in every classification
 Best Distribution and Good Service Centers
 The TVS Group has more than 40,000 workers and has in excess of 15 million clients
 Integrate itself with popular brand envoys
 'scooty' is the second name for the bike area

Weakness:

• The nonattendance of premium bicycle section

• Lack of committed worldwide promoting structures
• Lack of experience giving deals backing to economically fueled bicycles

Opportunities:

• Motor Vehicle Division is a standout amongst the most developing ventures

• Fare of bicycles implies constrained worldwide markets

Threats

• Strong challenge from Indian and global brands

10
 • Dependence on government approaches and rising fuel costs
• Affects offers of good open transportation bicycles

1.9 FUTURE GROWTH AND PROSPECTUS

In the second from last quarter finished December, TVS Motors detailed a net benefit of Rs
132.67 crore, as the automobile business was experiencing tension because of interruptions
and product costs. 10.4% in benefit The organization had posted a net benefit of Rs 120.21
crore in 2015. Esteem Added Profit. Absolute pay for the December quarter remained at Rs
3,239.55 against Rs 3,151.12 crore in the year-back period.

TVS Motor's Chief Financial Officer SG Murali T.S. Narasimhan has helped the TVS and its
future ventures. The organization's piece of the overall industry is around Rs. Raising to Rs
18 and Rs 350 crore in the pending financial year.

Demonitation happened toward the beginning of November, however net benefits developed
after expense (PAT); We have great deals amid the bubbly season and the pipeline is sensible.
Charging proceeded until November. And all brands were doing admirably when it came to
spending showcasing exercises.

In the initial a half year, We have grown up to 20 percent and proceed with it in the bubbly
season. We had the capacity to record great development in November thus our Q3 execution
is surprisingly better.

The effect of the fiasco was seen just in the second half, a month and a half after the
celebration's deal started. The initial two weeks of January were repressed. Indications of
development have been seen after Pongal and Shankaranthi celebrations, yet these are still
early days. Money supply steadily increments and the Ribbon plant likewise improves, and
the emotions are great. Come back to development in February or March. The monetary
allowance can likewise help create development dependent on measures taken by the
administration.

Toward the start of the year, we have a 18 percent piece of the overall industry in under 3
years and state we have a 15 percent focus for FY17. The organization had a net benefit of
15.5 percent in the December quarter. Piece of the overall industry.

11
 In the 2017-18 bike and cruiser fragments we will begin the host new items.

With respect to the BMW adventure, the venture is in advancement and won't be deferred on
dispatch vehicles. In 2017-18, there were around 300-350 crores in 2017-18. (Around Rs 400
crore in 2016-17). They utilize these three units to upgrade limit by as of now four million
units. Necessities for one year from now. What's more, limit extension, the organization will
contribute a few new items

TVS M/otor - Business Leader:

Televisions make Amung the best bike creators in India and the best five bicycles in
Asia.

TVS Motor - Global Overview:

TVS Motor has abroad productive tasks particularly in Asian markets, in view of the skill
created in assembling, innovation and advertising areas. This weight is to accomplish a
noteworthy offer of the all out exchange universal exchange.

TVS Motor - at the forefront:

TVS Motor Technology is building up its innovation edge through consistent benchmarking
against universal pioneers.

TVS Motor - resolved to add up to quality:

TVS Motor focused on self-looking at the organization forever by receiving TVM as a way
of life. The TVS Motor trusts the significance of the procedure. Individuals and ventures are
assessed by their last outcome and assessment process.

TVS Motor - Human Factor:

TVS drivers sort out and trust that its prosperity relies upon the responsibility and
advancement of its kin. There is a constant exertion through the advancement of precise
preparing and arranging experts to improve representative abilities and to build work
fulfillment. TVS Motor makes a functioning domain where each worker can accomplish most
extreme self-realization. TVS Motor backings and empowers the auto-recharging process for
all workers

12
TVS Motor - Responsible Corporate Citizen:

TVS guarantees workers' insurance and condition, including the improvement of trust and
encompassing networks in the mix of all business exercises of engine security, wellbeing and
natural components. TVS Motor takes a stab at long haul associations with its clients,
representatives, wholesalers, and providers with certainty and common trust.

Technique - Motion in Innovation:

We are dependably at the cutting edge of bringing new and applicable innovation - in front of
bend dependent on client desires.

The majority of our developments are clear outcomes from our activity regarding purchasers.
Where the story starts.

Coming back to our innovative work lab, this short thought develops into a machine - it
satisfies the market needs and surpasses desires.

Center is given to incredible administration and experience, which remembers the vehicle, the
rich style of character and different angles.

Type of Vehicle Fuel economy Convenience

Motorcycle High Low

Scooter Low High

TVS AMT High High

Awards

 "Bike of the Year" CNBC-TV18 Autocar Auto Awards 2006

 "Bike of the Year" OVERDRIVE Awards 2006
 "Bike Of The Year" Business Standard Motoring Awards 2006
 "Indigenous design of the year" OVERDRIVE Awards 2006
 ."Design of The Year 2006 - Two Wheelers" BBC Top Gear Design Awards 2006

13
 1.10 Financial statements

Table 1.1: Table showing balance sheet

BALANCE SHEET OF 2 YEARS:

2018 2017

EQUITIES AND LIABLITIES

SHARE HOLDER FUNDS

EQUITY SHARE CAPITAL 47.51 47.51

TOTAL SHARE CAPITAL 47.51 47.51

RESERVERS AND SURPLUS 2360.82 1889.29

TOTAL RESERVE AND SURPLUS 2360.82 1889.29

TOTAL SHARE HOLDERS FUNDS 2408.33 1936.80

TOTAL SHARE HOLDERS FUNDS 2408.33 1936.80

NON CURRENT LIABLITIES

LONG TERM BORROWINGS 468.76 494.23

DEFERRED TAX LIABLITY 125.70 175.67

LONG TERM PROVISIONS 50.80 39.90

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TOTAL NON CURRENT LIABLITIES 645.26 709.89

CUURENT LIABLITIES

SHORT TERM BORROWINGS 616.38 264.23

TRADE PAYABLES 1859.36 1543.71

OTHER CURRENT LIABLITIES 312.47 449.47

SHORT TERM PROVISIONS 62.87 58.47

TOTAL CURRENT LIABLITIES 2581.08 2315.88

TOTAL CAPITAL AND LIABLITIES 5904.67 4962.57

ASSETS

NON CURRENT ASSETS

TANGIBLE ASSETS 1930.64 1545.93

INTANGIBLE ASSETS 53.23 46.92

CAPITAL WORK IN PROGRESS 62.28 30.96

FIXED ASSETS 2046.15 1623.81

NON CURRENT INVESTMENTS 1587.90 1184.57

15
LONG TERM LOANS AND ADVANCES 0.12 136.65

OTHER NON CURRENT ASSETS 83.61 0.00

TOTAL NON CURRENT ASSETS 3717.28 2945.03

CURRENT ASSETS

INVENTORIES 966.65 825.97

TRADE RECIVABLES 723.77 578.69

CASH AND CASH EQUIVALENTS 8.51 32.84

SHORT TERM LOANS AND ADVANCES 0.00 521.91

OTHER CURRENT ASSETS 487.66 58.13

TOTAL CURRENT ASSETS 2186.89 2017.54

TOTAL ASSETS 5904.67 4962.57

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Table 1.2: Table showing profit and loss account

PROFIT AND LOSS ACCOUNT :

2018 2017

INCOME

REVENUE FROM OPERATIONS 13063.82 12904.50

LESS:EXCISE/SERVICE 1054.75 988.25

REVENUE FROM OPERATIONS 12009.07 11106.25

OTHER OPERATING REVENUES 126.24 137.62

TOTAL OPERATING REVENUES 12135.31 11243.87

OTHER INCOME 173.37 51.31

TOTAL REVENUE 12308.68 11295.18

EXPENSES

COST OF MATERIAL CONSUMED 8620.88 7703.54

PURCHASE OF STOCKS 291.22 251.42

CHANGES IN INVESTMENT OF FG WIP AND STOCK -58.73 70.53

IN TRADE

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EMPLOYEE BENFIT EXPENSES 745.64 664.23

FINANCE COSTS 43.95 46.24

DEPRICATION AND AMORTISATION EXPENSES 287.81 189.84

OTHER EXPENSES 1679.23 1803.42

TOTAL EXPENSES 11610.00 10729.21

Graph 1.1 Graph showing non Current Liabilities

Comparison of Non Current Liabilities

Total Non-Current Liabilities

715.46
709.89
720

700
680
660
645.26 640.43
640 620.26
620
600
580
560

2018 2017 2016 2015 2014

Total Non-Current Liabilities

Interpretation :

From the above graph we can see that the total non current liabilities have come down
drastically decreased for the current financial year of 2018. It was highest in the year 2016.

Graph 1.2: Graph showing current Liablities

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Comparison of Current Liabilities

Total Current Liabilities

2,851.08
3,000.00

2,315.88 2,243.38
2,500.00

2,000.00
1,529.16
1,500.00 1,254.17

1,000.00

500.00

0.00
2018 2017 2016 2015 2014

Total Current Liabilities

Interpretation :

From the above graph we can see that the total current liabilities has increased to
almost double from the pas 4 years of total current liabilities. It was the lowest in the
financial year of 2014.

19
Graph 1.3: Graph showing Total Non-current Liablities

Total Non current Assets

Total Non-Current Assets

3,717.78
4,000.00

3,500.00
2,945.03
3,000.00 2,575.18
2,500.00 2,155.98
1,989.76
2,000.00
1,500.00
1,000.00
500.00
0.00

2018 2017 2016 2015 2014

Total Non-Current Assets

Interpretation :

From the above graph we can see that the total non current assets have been on an increasing
note from the last 5 financial years. For the past 3 years it has been almost constant.

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Graph 1.4: Graph showing Current Assets:

Comparison of Current Assets

Total Current Assets

2,500.00 2,186.89
2,017.54 2,029.02
2,000.00

1,408.72
1,500.00
1,129.51

1,000.00

500.00

0.00
2018 2017 2016 2015 2014

Total Current Assets

Interpretation

From the above graph we can see that the total current assets have been fluctuating
throughout the past 5 years. It stood highest for the previous financial year of 2016.

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 CHAPTER-2

THEORETICAL BACKGROUND AND LITERATURE REVIEW

22
 CHAPTER 2

2.1CONCEPTUAL BACKGROUND AND LITERATURE REVIEW

Capital spending plan is a procedure that organizations can use to assess and use potential
costs or ventures. Bigger Costs Buying new gear, remaking existing hardware, purchasing
conveyance vehicles, building increments to structures, and so forth. The biggest sum spent
on these plans is known as the capital expense.

The capital spending plan as a rule includes the quantity of years that each undertaking will
consider the future bookkeeping advantage computation, the present estimation of income,
the income withdrawal in the wake of considering the income, the estimation of the income
after some time. Early money capital, chance evaluation, and different elements.

Capital Budgeting Techniques

Capital spending plans require most organizations to put resources into capital consumption
on long haul ventures and to put resources into capital speculation on different undertakings.
Capital is commonly constrained to its accessibility since venture ventures are separately
assessed utilizing quantitative investigation and subjective data. Most Capital Budget
Analysis utilizes money inflows and money surges as opposed to figuring total compensation
utilizing a store base. A few organizations improve income figuring for net gain and
deterioration and renting. Others see all the more explicitly for future fixes or redesigns of
money outpourings, working costs, premium and hardware for the assessed money inflows
from customers, low costs, resources and deals esteem, and speculation.

The cabin group is wanting to purchase $ 150,000 for pontoon rentals. The gadget remains
for a long time and has a $ 5,000 shortage toward an incredible finish. Yearly money inflows
are relied upon to be $ 250,000 and the yearly money outpouring is assessed at $ 200,000.

Payback technique

Installment estimates the organization's takeover time to recuperate its underlying venture
cash. This idea can be portrayed as the time span to make a money comparable to
contributing and take the arrangement to pay back the organization. It is determined by part
capital from net yearly money streams. Net yearly money streams can be utilized if the net
yearly money streams are not the equivalent.

23
For the Cottage Gang, the cash payback period is three years. It was calculated by dividing
the $150,000 capital investment by the $50,000 net annual cash flow ($250,000 inflows ‐
$200,000 outflows)

The lower reimbursement period, the organization will before long pull back its money
venture. The money reimbursement period is reliant on the organization's criteria that are
great or poor or assess plans. A few organizations have various explicit rules for various
years, however others must be not exactly the helpful existence of the property.

In the event that net yearly money streams are extraordinary, aggregate net yearly money
streams are utilized to decide the discount time frame. The Turtles Cange is arranging a
$ 150,000 expense and yearly money inflow in the initial seven years of the undertaking:
$ 30,000 in the year, $ 50,000 in the year, $ 55,000 for the year, $ 60,000 for four, $ 60,000
out of five years, $ 60,000 in the year six and $ seven in the seven years 40,000, at that point
its money reimbursement period is 3.25 years. See the precedent underneath.

The money reimbursement period is anything but difficult to compute yet isn't the main
measure to pick speculation plans. This strategy disregards the distinction in income time and
undertaking varieties in the task. The income of the two ventures can be a similar generally
speaking however the income time is altogether different.

For instance, LJM had $ 3,000, $ 4,000, $ 7,000, $ 1,500, and $ 1,500 money streams and
envision that the undertaking had MEM $ 6,000, $ 5,000, $ 3,000, $ 2,000 and $ 1,000

24
money streams. The two plans cost $ 14,000 and have a 3.0 year restitution, however money
streams are altogether different. Thus, two plans may have a similar restitution period,
however an arrangement surpasses five years of reimbursement period and the last one year.

Net present value

It is essential to consider the time estimation of cash while assessing plans with various costs,
diverse money streams, and different administration life. Consider limited income systems,
for example, Net Present Value Method, Cash Flow Time and Amount. To utilize the net
current esteem strategy, you have to realize the income, money outpourings and the
organization's required rate on its venture. The required rate is the markdown rate utilized in
the net current esteem count. For the accompanying models, money streams are required to
be gotten toward the finish of the term.

Utilizing information for the house posse and getting 12% of the interest sum, the net present
esteem is $ 80,452. Yearly net money streams and funds are determined through limits
through 12% limited things. Cabin packs have break even with net money streams of
$ 50,000 ($ 250,000 money receipt $ 200,000 working expense), bringing about the present
estimation of net money streams determined utilizing the present estimation of seven years of
1 year. Utilizing a 12% rebate rate, the factor is 4.5638 and the present estimation of net
money streams is $ 228,190.

Toward the finish of seven years (the life of the advantage), the estimation of the security is
once acknowledged, so its present esteem is $ 2,262, with the present estimation of 1 table
factor for seven periods and the 12% markdown rate determined by multiple times the
estimation of $ 5,000. Since $ 150,000 as of now exists in the present dollars (estimation of
1.0000), it doesn't need to be limited.

To figure the Net Present Value (NPV), speculation is deducted from the present estimation
of the complete money inflow of $ 230,452. See precedents that pursue. As the net present
esteem (NPV) is certain, the required rate is met.

On the off chance that net money streams are not the equivalent, the money streams of every
period must be determined on a different individual esteem. The money related number
cruncher or spreadsheet can be utilized to compute the present esteem. Expecting a similar

25
venture data for the house pack speculation, with the exception of net money streams, its
present esteem figurings are condensed underneath.

Income is the contrast between the distinction between NPV (seven years or $ 350,000
$ 50,000 every year) and unequal money streams ($ 350,000 unevenly spread more than
seven years) under equivalent money.

The Return of Most Companies is the expense of their capital. The expense of the capital is
the rate at which the organization gets capital (cash) from its banks and financial specialists.
In the event that dangers happen while anticipating money streams later on, a few
organizations will add a hazard factor to the expense of funding to adjust for vulnerabilities in
the task and, in this way, in real money streams.

Most organizations have more arranging recommendations than designs for cash. An
assortment of capital and distinctive NPVs are required. Contrasted with designs for
conceivable power, organizations utilize a beneficial list. The record partitions current
venture money streams from the required capital. For the cabin pack, the productive list of
the arrangement with equivalent income is 1.54, and the rewarding list of the venture with
uneven income is 1.56.

Internal rate of return

Inner rate return likewise utilizes current esteem ideas. Inside Rate Return (IRR) decides the
yield of the focused on capital arrangement, where net current esteem is equivalent to zero
where the present estimation of net money inflows squares with speculation. In the event that
the IRR is higher than the organization's necessity, the arrangement might be acknowledged.
Two stages are required to decide the inside rate return.

Right off the bat, the inner rate of return factor is determined by isolating the proposed
speculation sum from net yearly money inflows. At that point, the factor is that the quantity
of years will be found at the present current estimation of 1 table utilizing venture
administration life. Interior rate return is the rebate rate that is close to the factor. An
arrangement for Knightsbridge,

Inc. has $ 50,000 net inflow in its multi year life and $ 200,000 task cost. By partitioning
money streams to the expense of task venture, a 4.00 point ($ 200,000 ÷ $ 50,000) is found.

26
The seven-year line (which has a seven-year life) is seen at 4.00 at the present estimation of 1
table and the interior rate of 16% is resolved.

Annual rate of return method

Three past capital planning techniques depend on money streams. Home loan based arranged
overall gain to compute the normal benefit of the venture. The annualized rate of the year
looks at the organization's required cost. On the off chance that the yearly rate return is higher
than the required rate, the arrangement will be acknowledged. The higher the rate of return,
the higher the arrangement.

Yearly rate returns are rate by isolating the normal yearly net gain from normal venture. The
normal speculation is generally determined by partitioning the begin and venture book
esteems and isolating by two.

Assam The Cottage Gang is relied upon to put $ 150,000 in yearly net gain for $ 150,000 and
the protection estimation of $ 5,000. The proposed arrangement is 7.2% every year ($ 5,572
overall gain ÷ $ 77,500 normal speculation) for the year.

Yearly income ought not be utilized in capital planning choices, as its outcomes might
misdirect. It utilizes the collection premise of bookkeeping and does not utilize genuine
money streams or cash time esteem.

In past parts pragmatic investigation of Capital Budgeting practices to assess venture

proposition in the corporate segment in India. Correlation, wherever conceivable, is done
through practices and techniques in outside nations.

It ought to be noticed that dependent on this sort of study, ends ought to be taken as a more
extensive sign. Nonetheless, the aftereffects of this investigation demonstrate that huge scale
organizations in India know the requirement for all around structured spending choices.

27
2.2 LITERATURE REVIEW

Atexon and Cole, 2005: In the previous five decades, numerous scientists have pulled in and
central investigations present numerous hypotheses (for instance, Markovitz, 1952;
Modigliani and Miller, 1958; Markowitz, 1959; Miller and Modigliani, 1961; , 1970; Black
and Scholes, 1973; Ross, 1976; Roll, 1977; Myers, 1977; Myers, 1984; Jensen, 1986; Ritta
Allow, 1991; Graham and Harvey, 2001; Myers, 2003;

Bornholet, 2013: However, because of globalization, ecological changes and strategic

progressed innovative improvements, recently created hypotheses and models today don't
have any significant bearing and a large number of them condemn and practice their training.

Wassenhov, 1995: An intriguing precedent represented by Brownne, de Jong and Koedizzak

(2004), is that Nobel Prize winning ideas, for example, the Capital Property Pricing Model
and Capital Structural Theories are lauded and educated in homerooms, however at what
degree these praised thoughts are to some degree obscure in their approach to corporate board
rooms " (Page 72) Radayika capital planning techniques for diminishing the aggressiveness
of cutting edge generation innovation and receiving increasingly about the preclusions and
has been censured by Western establishments.

Kursite, 2011: Several examination researchers center around their crucial grants and their
execution of the speculation hypothesis spending plan (e.g., Mookiezy and Henderson, 1987;
Arnold and Hatzopoloss, 2000; Graham and Harvey, 2001; Cooper, Morgan, Redman and
Smith, 2002 ; Brown and others., 2004; Kersey, 2011).

Emmanuel, Harris, and Comecach: practical conditions working firms must react to
change to endure, endure, and develop in business sectors (Ghahremani, Agai and Abedzad,
2012). Much changes in capital speculation choices that incorporate expansive wholes of
cash over a more drawn out timeframe (e.g., Peterson and Fabazzi, 2002, Cooper et al., 2002;
Dayanand, Irons, Harrison, Herbon and Roland, 2002) and these choices make overseeing
vital changes and long haul corporates It is essential to spare execution.

Capital speculation choice acquisitions, venture of new offices, new item advancement,
appropriation of new innovation, and usage of new business procedures or a blend of these
(Emanuel et al., 2010)

28
Capital spending venture choices are basic for survival and long haul accomplishment
because of numerous variables and are regularly named as vulnerability.

Hakka, 2006 worldwide monetary emergency mirrors this reality. A standout amongst the
most powerless issues looked by analysts, how to distinguish, catch, and assess the
vulnerability related with long haul ventures

Hakka, 2006, wellsprings of vulnerability from the 2006 common (income estimation,
inexact mistake, number and so forth) are progressively puzzling (venture choices,
alternatives given by speculation openings, venture opportunity costs, and so forth.)

Segelod, 1997: The choice to put resources into capital speculation is because of the high
measure of subsidizing, which is reasonable in basic leadership. Used to recognize
speculation openings, techniques, routine systems and strategies used to survey exactness of
the undertaking to assess the arrangement and control the venture plan in explicit speculation
recommendations, for example, the Capital Budget.

Dickerson, 1963: Complex strategies are utilized relying upon the hypothesis of vulnerability
and different possibilities (Singh, Jain and Yadav, 2012; Zhang, Huang and Tang, 2011;
Kerstite, 2011; Bock because of venture spending plans and truck, 2011; Byrne and Davis,
2005; Cooper et al., 2002; Arnold and Hatzopollos, 2000; Mao, 1970

Verbeten, 2006: In the period of full-scale globalization and vicious challenge (Verma,
Gupta and Batra, 2009), propelled improvements in innovation, other macroeconomic
components and statistic factors have imbued capital planning rehearses

Slope, 2008: In the realm of geo-political, social and monetary vulnerabilities, the procedure
of progress of vital monetary administration requires an amendment of fundamental
speculations (e.g., successful market thought, fama, 1970) all through the customary limits of
budgetary administration

Kester and Robins, 2011: Through constrained credit and different sources in the present
dubious and testing monetary condition, the gainfulness and achievement of proposed capital
speculations should be assessed legitimately and to convey restricted capital up until this
point

29
Diggerson, 1963: The quantity of methodologies utilized by organizations to assess
speculation plans. Nonetheless, there is an issue in setting up a hypothetical model and
applying that design as training (for example Arnold and Hatzopoloss, 2000;

Young, Ashby, Boz and Grayson, 2002, p.220: Some hypotheses recently created don't
have any significant bearing today. Over the most recent two decades corporate practices are
not reliable with authoritative practices, almost certainly they are not quite the same as
speculations. This investigation gives orderly audit on the writing of capital planning
rehearses distributed over the most recent two decades. By utilizing the convention to manage
the class procedure, for the most part by the attentiveness of the commentator, the stage, the
full straightforwardness of the stage, and the watchfulness of what (and what)

Atril, 2009: Over the most recent twenty years (1993-2013), the spending hypothesis is
characterized by many expanded applications dependent on the hazard and vulnerability
brought about by worldwide monetary, innovative and propelled scholastic changes, for
example, expansion chance, financing cost and hazard rate trade. Capital spending plan is
spine for monetary administration. The cutting edge money related administration hypothesis
by and large accept the amplification of the abundance of the association's proprietor

Easterby-Smith et al., 2002Another vital philosophical thought is the possibility of

epistemology. It will ask about worthy learning in a specific field

Blakey, 2007: Knowledge can be accomplished through literary examination with substance
modes. Subsequently, it as of now gives a wide scope of artistic holes, which definitely think
about free enterprise strategies and fundamentally analyze writing. This exploration takes on
a nitty gritty technique on learning hypothesis to address inquire about inquiries. The fact of
the matter isn't autonomous of individual reasoning, thus all examination discoveries can not
compare to each other

Miles and Huberman's (1984): A proposed strategy including capacity, decrease,

presentations and ends has been taken. Contingent upon the set criteria, 363 research papers
were dropped to 201 and they broke down the coding technique.

The net present esteem is the contrast between the sum contributed and the present estimation
of future income (Alan, 2004). Charles et al (2009) audits that the NPV strategy ascertains

30
the normal money related advantage or loss of the arrangement and computes the limited
future money inflows and the arrival return required for the present advance required.

Colin (2006): NPV is a more straightforward approach to recoup the advantage of elective
value hazard interests in exchange securities.

The arrival on plan is more than coming back from value chance interests in securities
exchanged on the monetary markets, the NPV is sure, the present estimation of net inflow
inflows lower than the venture's underlying speculation capital. Conversely, if the arrival rate
is low, the NPV is negative (Colin, 2006). It demonstrates that a positive NPV must be
endorsed for speculation, yet it demonstrates that negative NPV venture ought to be rejected
(Colin, 2006).

Kashyap (2006): The key contributions of the NPV figuring incorporate the loan cost or
markdown rate that thinks about the present qualities of future money streams. At the point
when the investors have a higher rebate rate than the income necessity and along these same
lines have a positive NPV, investors expect extra advantage with the present esteem
equivalent to NPV (Kashyap, 2006).

(Palin, 2006): Another venture spending technique is like the NPV system in utilizing IRR
cash time esteem, however results in the appropriate response communicated in rate (Pauline,
2006). The IRR speaks to the rebate rate that prompts zero net current esteem where the
present estimation of money inflows levels with money surges

Charles et al (2009): The IRR technique ascertains the limited rate, while the present
estimation of contributed imminent money inflows levels with the present estimation of
expected money surges. That is, the rebate rate offered by NRV = £ 0 is IRR.

(Alan, 2004): The Payback Period is utilized to anticipate the time allotment it takes to
recover the normal net money inflows from venture. As per Alan (2004), this strategy is
especially helpless to an extensive number of firms, and particularly if the loan fees are
especially high and/or firms face income issues. This strategy estimates the time taken to
recover the first money streams from the net money income stream from the capital

31
CHAPTER-3

RESEARCH DESIGN

32
 CHAPTER 3

RESEARCH DESIGN

Title of the study :

“A study on Capital Budgeting at TVS Motors”

3.1Statement of the Problem :

Capital planning is a well ordered proceduring that business used to decide the benefits of a
speculation venture the choice of wheather to acknowledgment our everyday and ventures
extends as a major aspects of an organization speculation side of the arrival that such a is
regarded satisfactory are worthy is explicit to the organization just as te undertaking.

3.2 NEED FOR THE STUDY

Capital Planning is critical on the grounds that it makes responsibility and another was to put
its assets in a undertaking without understanding the hazard and return involved would be
considered as mindful by its vary own investors for the more if an individual as no chance to
get of exempting the viability and its speculation choices chances are that business will have
minimal possibility of getting by in the aggressive commercial center.

3.3 Objectives of the study:

 To evaluate the cash inflows and out flows of the company

 To determine the average rate of return
 To analyze the company’s investment decisions by Applying capital
budgeting techniques
 To determine the net cash available for the investment purpose.

3.4 Scope of the study :

The study has been conducted from information over a period of 5 years from
financial year 2014 to 2018

33
3.5 RESEARCH METHODOLOGY :

The method I used for research methodology was

 Primary Data

 Secondary data

PRIMARY DATA:

The primary data is the data which is collected fresh and first hand and for the first time
which is originals nature. Primary data can collect through personal interview questionnaire
etc. To support the secondary data

SECONDARY DATA:

The secondary data for the project regarding investment and various investment analysis were
collected from websites, textbooks and magazines.

Sources of data collection:

Company yearly Reports.

Company audited financial statements.

Tools used
Following techniques are used to make decision regarding capital budgeting.
 Payback period.
 Accounting rate of return.
 Net present value.
 Internal rate of return.

3.6 Limitations

 A strong unwillingness on the part of the company officials, to participate and aid the
research.

34
  The study was limited to the geographical region of Bangalore

 The study is limited only to one company TVS Motors.

3.7 HYPOTHESES:

H0: there is no significant generation of value for the share holders

H1: there is significant of value for the share holders

35
3.8 CHAPER SCHEME:

Chapter 1: INTRODUCTION

It contains information of capital budgeting and industry profile background of the company
and promoter’s, vision and mission & quality policy competitors of the TVS and future
growth and prospectus and the financial statements of the company.

Chapter 2: CONCEPTUAL BAK GROUND AND REVIEW OF LITERATURE

It contains the information about the Theoretical background and review of literature.

Chapter 3: RESEARCH DESIGN

It contains the information related to the statement of the problem, need for the study, data
collection and tools, objectives of the study and research methodology, limitations and
chapter schemes.

Chapter 4: ANALYSIS AND INTERPRETATION

It the showing the comparison of net present value and payback period and accounting rate of
return for the five years and various tables and graphs of the company.

Chapter 5: FINDINGS AND SUGGEDTION AND CONCLUSION

It contains the findings suggestion and conclusion of the capital budugeting , bibliography.

36
 CHAPTER-4

DATA ANALAYSIS INTERPRETATION

37
 CHAPTER 4

4.1 DATA ANALYSIS AND INTERPRETATION

Table No. 4.1

Table showing Comparison of NET PRESENT VALUE for five years from 2014 to 2018

Year 2018 2017 2016 2015 2014

Initial Investment 2,408.33 1,936.80 1,645.36 1,415.28 1,224.67

Net Cash Flow per annum -96.89 25.49 -77.61 65.57 173.38

NPV -2144.33 -2,339.33 -1434.36 -1236.28 -752.67

38
Graph No. 4.1

Graphs showing Comparison of NET PRESENT VALUE for five years from 2014 to 2018

NPV
0
2018 2017 2016 2015 2014

-500

-752.67
-1000

-1236.28
-1500
-1434.36

-2000

-2144.33
-2500-2,339.33
NPV

Analysis and Interpretation :

From the above graph we can see that the NPV has been fluctuating over the past five
financial years. It stood at about -2144.33 for the current financial year as compared to the
previous financial years figure of about -2339.33.

The NPV is negative for two years where the company is not able to get the cash inflows out
of the fund invested.

39
Table no.4. 2

Table showing comparision of Pay Back period for five years from 2014 to 2018

YEAR 2018 2017 2016 2015 2014

Cost of 850000 615000 585000 568000 515000
machinery
Annual cash 185000 165000 145000 136000 127000
flow
PBP 4.59 3.72 4.0 4.17 4.05

Graph no. 4.2

Graph showing comparision of Pay Back period for five years from 2014 to 2018

Chart Title
1200000

1000000

800000

600000

400000

200000

2014 2015 2016 2017 2018

cost of machineannual cash flowPBP

Analysis and Interpretation : From the above graph we can see that the PBP has been
fluctuating over the past five financial years. It stood at about 4.59 for the current financial
year as compared to the previous financial years figure of about 4.05

40
Table no. 4.3

Table showing Comparison of accounting rate of return for five years 2014 to 2018

YEAR 2018 2017 2016 2015 2014

Average accounting profit 662.59 558.08 489.28 347.83 261.63

Average investment 748.12 519.52 493.27 259.84 98.49

ARR 0.88 1.07 0.99 1.33 2.65

Graph no 4.3

Graph showing the comparison of accounting rate of return for five years from 2014 to 2018

ARR
3
2.65
2.5

1.51.33

1.07 0.99
1 0.88

0.5

0
2018 2017 2016 2015 2014

ARR

Interpretation :

From the above graph we can see that the Accounting rate of return figures have come
down from 2.65 in the financial year of 2014 to about 0.88 for the current financial year of
2018.

41
Table no 4.4

Table is showing comparision of cash flow statement for five years 2014 to 2018

YEAR 2018 2017 2016 2015 2014

Net Profit/Loss Before 698.68 565.97 456.16 348.45 162.79

Extraordinary Items And Tax

Net CashFlow From Operating 723.93 845.65 84.84 523.79 418.12

Activities

Net Cash Used In Investing -748.12 -519.52 -493.27 -259.84 -98.49

Activities

Net Cash Used From Financing -72.70 -300.64 330.82 -198.38 -146.25
Activities

Net Inc/Dec In Cash And Cash -96.89 25.49 -77.61 65.57 173.38
Equivalents

Cash And Cash Equivalents Begin -131.95 2.85 80.46 14.89 -207.65
of Year

Cash And Cash Equivalents End Of -228.84 28.34 2.85 80.46 -34.27
Year

42
Graph no 4.5

Graph showing the comparison of Net CashFlow From Operating Activitiesfor five years
from 2014 to 2018

Net CashFlow From Operating Activities

900 845.65

800 723.93

700

600 523.79

500 418.12

400

300

200
84.84
100

0
2018 2017 2016 2015 2014

Net CashFlow From Operating Activities

Interpretation :

From the above graph we can see that the net cashlfow from operating activites has
increased which stood at its lowest in the financial year of 2016. Then onwards, it started to
increase and stands at 723.93 for the current finance year of 2018.

43
Graph no.4. 6

Graph is showing comparision net cash used in investing activities for five years 2014 to
2018

Net Cash Used In Investing Activities

0
2018 2017 2016 2015 2014
-100 -98.49
-200
-259.84
-300
-400

-500 -493.27
-519.52
-600

-700
-748.12
-800
Net Cash Used In Investing Activities

Interpretation :

From the above graph we can see that the net cash used in investing activities has
been almost nill for the past 2 financial years. It was highest in the financial year of 2014.

44
Graph no.4. 7

Graph is showing comparision of net cash used from financing activities for five years 2014
to 2018

Net Cash Used From Financing Activities

400 330.82

300

200

100

0 2018 2017 2016 2015 2014

-100 -72.7
-146.25
-200 -198.38
-300
-300.64
-400

Net Cash Used From Financing Activities

Interpretation :

From the above graph we can see that the net cash used from financing activites has
seen a lot of fluctuation over the last 5 financial years. It was positive in the financial year of
2016 and it came to a negative value for the financial year of 2018.

45
Table no. 4.5

Table is showing comparision of return on net worth for five years from 2014 to 2018

Year 2018 2017 2016 2015 2014

Return on Networth / Equity (%) 30.02 32.25 31.16 27.38 25.96

Net income 12308.68 11295.18 10130.83 7992.06 7088.84

Shareholder equity 2408.33 1936.80 1645.36 1415.28 1224.67

Return on Networth / Equity = Net Income / Shareholders equity

Groph no.4.8

Graph is showing return on net worth and equity for five years from 2014 to 2018

Return on Networth / Equity (%)

35 32.25
31.16
30.02
30 27.38
25.96

25

20

15

10

0
2018 2017 2016 2015 2014

Return on Networth / Equity (%)

Interpretation :From the above graph we can see that the return on networth or equity
percentage has stood at 30.02 for the current financial year of 2018.

46
Table no. 4.6

Table is showing comparision of return on capital and employed for five years from 2014to
2018

Year 2018 2017 2016 2015 2014

Return on Capital Employed (%) 18.27 16.32 14.73 12.85 6.22

Net operating profit 12009.07 11106.25 9916.57 7854.45 6965.40

Capital employed 2408.33 1936.80 1645.36 1415.28 1224.67

Return on Capital Employed = Net Operating Profit / (Total assets – Current

Liabilities)

Graph 4. 9

Graph is showing the comparision of return on capital and employed for five years 2014 to
2018

Return on Capital Employed (%)

18.27
20
16.32
18
14.73
16
12.85
14
12
10
8
6 6.22
4
2
0

20182017201620152014

Return on Capital Employed (%)

Interpretation :

From the above graph we can see that the return on capital employed percentage has
seen an increasing trend and stands almost at triple for the financial year of 2018.

47
Table no.4.7

Table is showing comparision of return on assets for five years from 2014 to 2018

Year 2018 2017 2016 2015 2014

Return on Assets (%) 9.45 8.70 7.55 7.33 3.71

Net income 12308.68 11295.18 10130.83 7992.06 7088.84

Total assets 5904.67 4962.57 4604.20 3564.70 3119.27

Return on Assets = Net Income / Total Assets

Graph no.4.10

Graph is showing the return on assets for five years 2014 to 2018

Return on Assets (%)

9.45
10
8.7
9

8 7.55 7.33
7
6
5
4

3.71

3
2
1
0

2018 2017 2016 2015 2014

Return on Assets (%)

Interpretation :

From the above graph we can see that the return on assets percentage has been
increasing after the financial year of 2014. It is the highest in the financial years 2018.

48
Table no. 4.8

Table is showing comparision of cash earnings rention ratio for five years 2014 to 2018

Year 2018 2017 2016 2015 2014

Cash earnings retention ratio 19.18 16.72 15.77 17.11 16.60

Retained earnings 2360.82 1889.29 1597.85 1367.77 1177.16

Net income 12308.68 11295.18 10130.83 7992.06 7088.84

Cash Earnings Retention Ratio = Retained Earnings / Net Income

Graph no. 4.11

Graph is showing comparision of cash earnings retention ratio for five years 2014 to 2018

Cash Earnings Retention Ratio (%)

25

20 19.18
16.72 17.11 16.6
15.77
15

10

0
2018 2017 2016 2015 2014

Cash Earnings Retention Ratio (%)

Interpretation :

From the above graph we can see that the cash earnings retention ratio percentage has
been almost constant over the last 4 financial years from 2014 to 2018. However it increased
for the current financial year and stood highest.

49
Table no. 4.9

table is showing comparision of valuation ratio for five years 2014 to 2018

Valuation Ratios

Year 2018 2017 2016 2015 2014

Market capital 0.39 0.42 0.47 0.60 0.68

Net operating revenue 12009.07 11106.25 9916.57 7854.45 6965.40

Capital 47.51 47.51 47.51 47.51 47.51

MarketCap/Net Operating Revenue = Revenue generated by real estate - Operating

expenses

Graph no. 4.12

Graph is showing comparision of valuation ratio for five years 2014 to 2018

MarketCap/Net Operating Revenue (X)

0.8
0.7 0.68
0.6
0.6
0.5 0.47
0.4 0.42
0.39
0.3

0.2
0.1
0

2018 2017 2016 2015 2014

MarketCap/Net Operating Revenue (X)

Interpretation :From the above graph we can see that the market cap or net operating revenue
has been steadily increasing for the last 5 financial years and for the current financial year of
2018 it has stood at about 0.39.

50
Table no.4.10

Table is showing comparision of retention ratio for five years 2014 to 2018

Year 2018 2017 2016 2015 2014

Retention Ratios (%) 78.71 72.51 74.04 74.57 50.85

Graph no 4.13

Graph showing the comparison of Retention Ratios (%) for five years from 2014 to 2018

Retention Ratios (%)

90
78.71
80 74.04 74.57
72.51
70
60
50.85
50
40
30
20
10
0

2018 2017 2016 2015 2014

Retention Ratios (%)

Interpretation :

From the above graph we can see that the retention ratio percentage has been showing
a slight fluctuating trend over the past five financial years and for the current financial year of
2018 it is about 78.71.

51
 CHAPTER-5
FINDINGS,SUGESSTIONS& CONCLUSIONS

52
 CHAPTER 5

FINDING AND SUGGESTIONS

5.1 FINDINGS:

1. Speculation put resources into property is recouped amid a brief timeframe, and
the offer is suitable for an organization
2. Paid benefit is useful for the organization The review rate to come back to 2018 is
56.94%. The capital returns the expense of their costs. ARR has a standard rate.
3. Since the net present esteem is sure, the venture will in the long run be practical
by the organization
4. The reimbursement time frame gives some data about the danger of venture. Be
that as it may, the solid choice does not give the criteria to demonstrate whether
speculation will build the estimation of the organizations.
5. The capital spending technique gives crude liquidity of liquidity yet overlooks the
danger of money streams, cash time valuation and future income past the
expansion time frame.
6. This technique likewise needs to evaluate the expense of money to ascertain
recompense yet disregard money streams over the limited reimbursement time
frame
7. Net present esteem estimation of the capital spending states that the speculation
can expand the estimation of the firm, however the expense of the capital expense
is required to compute the net present esteem.
8. The inner rate of return procedure for the capital spending plan may not be
esteemed - augmenting the choice utilized when contrasted with one another's
individual tasks.

53
5.2 SUGGESTIONS

• The exhortation made for the organization is that the accompanying counsel ought to
be embraced in the organization's every day exercises.
• This is a valid justification to receive the NPV strategy in settling on a budgetary
choice since it depends on the present esteem. Supplanted PBP
• The organization must have a decent match between various offices.
• It is important to keep up an arrangement of book books that can enable you to settle
on a superior choice.
• The organization must have a similar procedure to compute the venture choice,
generally befuddling it.
• Cost components ought to be viewed as when choosing what is ideal, for example,
work costs, bookkeeping costs, and so forth.

5.3 CONCLUSION

The spending plan is one of the key procedures for budgetary administration to assess the
proficiency of the undertaking. So purchasing new hardware, beginning business, extending,
changing the oldness of old apparatus. The cutting edge approach is more successful than the
customary technique on the grounds that the advanced strategy is thinking about the time
estimation of cash. The Capital Budget has its own impediment however its favorable
circumstances spread its unfriendly impacts with its utilization. In any case, in India, the
capital spending procedure can not be utilized legitimately at the dimension of institutional
and administrative administration.

Subsequent to considering this theme, I comprehend the hugeness of the spending plan. I
figure capital aptitudes can be used in government organization ventures like corporate and
open organization administrations, open transportation administrations.

I for one figure the open dislikes to utilize this strategy later on because of absence of
information. Capital spending plans can be utilized from local dimensions to MNCs and this
sentence can express the significance of the capital spending plan.

54
 BIBLIOGRAPHY

Reference:

1. Klammer, Thomas P. ”Empirical Evidence of the Adoption of Sophisticated Capital

Budgeting Techniques,” The Journal of Business, July 1972, 387-397.
2. Klammer, Thomas P. and Michael C. Walker, “The Continuing Increase in the Use
of Sophisticated Capital Budgeting Techniques, “California Management Review,
fall 1984, 137-148
3. Fremgen, James, “Capital Budgeting Practices: A Survey,” Management Accounting
, May 1973, 19-25
4. Petty, J. William Petty, David P. Scott, and Monroe M. Bird, “The Capital
Expenditure Decision-Making Process of Large Corporations,”The Engineering
Economist, Spring 1975, 159-171
5. Gitman, Lawrence G. and Forrester, John R. Jr.,”A Survey of Capital Budgeting
Techniques Used by Major U.S. Firms”, Financial Management, Fall 1977, pg 66-71
6. Kim, Suk H. and Farragher, Edward J,”Current Capital Budgeting
Practices,”Management Accounting, June 1981, pg. 26-30
7. Ross Marc, Capital Budgeting Practices of Twelve Large Manufacturers, Financial
Management (winter 1986) vol. 15, issue 4, pp 15-22
8. Wong K A, Farragher E J and Leung R K C, Capital Investment Practices: A Survey
of Large Corporations in Malaysia, Singapore and Hong Kong, Asia Pacific Journal
of Management, January 1987, pp 112-123
9. Block Stanley; Capital budgeting techniques used by small business firms in the
1990s, The Engineering Economist, Summer 1997, v42 n4 p289(14)
10. Jog Vijay M and Srivastava Ashwani K., Capital budgeting practices in corporate
Canada, Financial Practice & Education, Fall/Winter 1995, pp 37-43

Text Books

 See Porterfield, J,T,S., Investment Decisions and capital costs, Prentice – hall,1965
 Bierman, H. and Smidit, S., The capital Budgeting Decision ,macmillan,1975,p.73
 Brely, and Myers ,S., Principles of corporate finance ,McGraw Hill,1991,p.8.
 Copeland =, T.E.and Weston ,J.F., Financial Theory and corporate Policy , Addision-
weseley, 1983,p.32.
 Gordon, Myron, Pay off period and rate of profit, Journal of business, XXVIII,No. 4,
pp.253-60
 See rangaraian, c. and Msmpilly, paul, 1971.

Web Sites:
 WWW.investopedia.com
 www.principlesofaccounting.com
 www.enterpenure.com
 www.encyclopedia.com
 ANNEXURE

Balance sheet – 5 years comparison

2018 2017 2016 2015 2014

EQUITIES AND
LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 47.51 47.51 47.51 47.51 47.51

Total Share Capital 47.51 47.51 47.51 47.51 47.51

Reserves and Surplus 2,360.82 1,889.29 1,597.85 1,367.77 1,177.16

Total Reserves and Surplus 2,360.82 1,889.29 1,597.85 1,367.77 1,177.16

Total Shareholders Funds 2,408.33 1,936.80 1,645.36 1,415.28 1,224.67

NON-CURRENT LIABILITIES

Long Term Borrowings 468.76 494.23 518.98 442.41 494.14

Deferred Tax Liabilities [Net] 125.70 175.67 152.75 124.68 93.12

Long Term Provisions 50.80 39.99 43.73 53.17 53.17

Total Non-Current Liabilities 645.26 709.89 715.46 620.26 640.43

CURRENT LIABILITIES

Short Term Borrowings 616.38 264.23 399.76 33.47 51.72

Trade Payables 1,859.36 1,543.71 1,263.82 998.91 822.80

Other Current Liabilities 312.47 449.47 474.77 428.82 326.23

Short Term Provisions 62.87 58.47 105.03 67.96 53.42

Total Current Liabilities 2,851.08 2,315.88 2,243.38 1,529.16 1,254.17

Total Capital And Liabilities 5,904.67 4,962.57 4,604.20 3,564.70 3,119.27

ASSETS

NON-CURRENT ASSETS

Tangible Assets 1,930.64 1,545.93 1,294.93 1,105.94 1,006.85

Intangible Assets 53.23 46.92 34.70 19.77 4.63

Capital Work-In-Progress 62.28 30.96 89.36 48.08 36.09

Fixed Assets 2,046.15 1,623.81 1,418.99 1,173.79 1,047.57

Non-Current Investments 1,587.90 1,184.57 1,012.46 895.92 868.84

Long Term Loans And Advances 0.12 136.65 143.73 86.27 73.35
Other Non-Current Assets 83.61 0.00 0.00 0.00 0.00

Total Non-Current Assets 3,717.78 2,945.03 2,575.18 2,155.98 1,989.76

CURRENT ASSETS

Inventories 966.95 825.97 819.68 548.15 509.66

Trade Receivables 723.77 578.69 503.86 334.12 300.52

Cash And Cash Equivalents 8.51 32.84 5.39 82.57 17.45

Short Term Loans And Advances 0.00 521.91 632.78 364.31 178.44

OtherCurrentAssets 487.66 58.13 67.31 79.57 123.44

Total Current Assets 2,186.89 2,017.54 2,029.02 1,408.72 1,129.51

Total Assets 5,904.67 4,962.57 4,604.20 3,564.70 3,119.27

Profit and Loss A/c – 5 years comparison

2018 2017 2016 2015 2014

INCOME

Revenue From Operations 13,063.82 12,094.50 10,632.21 8,544.69 7,633.28

[Gross]

Less: Excise/Sevice Tax/Other 1,054.75 988.25 715.64 690.24 667.88

Levies

Revenue From Operations 12,009.07 11,106.25 9,916.57 7,854.45 6,965.40

[Net]

Other Operating Revenues 126.24 137.62 181.65 107.40 99.60

Total Operating Revenues 12,135.31 11,243.87 10,098.22 7,961.85 7,065.00

Other Income 173.37 51.31 32.61 30.21 23.84

Total Revenue 12,308.68 11,295.18 10,130.83 7,992.06 7,088.84

EXPENSES

Cost Of Materials Consumed 8,620.88 7,703.54 7,162.32 5,418.82 4,912.32

Purchase Of Stock-In Trade 291.22 251.41 226.88 244.35 151.49

Changes In Inventories Of -58.73 70.53 -92.07 9.65 32.70

FG,WIP And Stock-In Trade

Employee Benefit Expenses 745.64 664.23 585.42 476.11 407.13

Finance Costs 43.95 46.24 27.42 25.40 48.04

Depreciation And Amortisation 287.81 189.84 153.33 131.65 130.41

Expenses

Other Expenses 1,679.23 1,803.42 1,611.37 1,334.82 1,152.33

Total Expenses 11,610.00 10,729.21 9,674.67 7,640.80 6,834.42