Académique Documents
Professionnel Documents
Culture Documents
ON
INVESTMENT ANALYSIS
IN
PHOENIX MOTORS PVT LTD
BY
J.SUCHARITHA
H.T.NO.098070157
UNDER THE GUIDENCE OF
Mr. K. VISHWANATH, MBA. PHD,
&
Mr. SRINIVAS MBA.PHD,
qubacollege
(Affiliated to OUSMANIA UNIVERSITY)
THURKAYAMJAL VILLAGE
1
CERTIFICATE
carried out by Dr.K. Vishwanath under my Guidance. This has not been
Degree Certificate.
Dr.K.Vishwanath
2
DECLARATION
Institution for the Award of any Degree Certificate or published any time
before.
3
ACKNOWLEDGEMENTS
AND Mr. M.V.V.SUBBA RAO C.G.M. F&A and P.MOHAN RAO accounts
organization.
encouraged and inspired me carrying out this project. I would like to say thanks
INDEX
4
CHAPTER-1 PAGE. NO.
Abstract
Introduction
Need of than study
Important of Investment Decision
Objective of than study
Research methodology
Limitation
CHAPTER-2
Company profile
Literature review
CHAPTER-3
CHAPTER-4
CHAPTER-5
Findings
Conclusion
Suggestions
Bibliography
CHAPTER-1
5
INTRODUCTION
objective.
the top management‘s duty to make situation and feasibility analysis o that
which focuses not on the credit status accompany, but on cash flows that will
Invest analysis being has its origins in the natural resource and
and transpiration sectors by the privatization o product markets and need for
manufacturing scale, and by the privatization of product markets and need for
It is obvious that the firm mist have a systematic procedure for making
6
investment decisions. In view to the significance of investment decisions, the
expected flow of benefits over a series of the years. The long-assets are those
that affect the firm’s operations beyond the one-year period. The firm
expenditures and benefits, and there fore they should also be evaluated an
investment decision.
7
Capital investment, representing the growing edge of a business, is
future.
2. The affect the risk of the firm; it is difficult to reverse capital investment
Organization.
project.
8
To summarize and offer suggestion for the better investment proposal.
Research methodology:
1.Primary data
2.Secondary data
Primary Data:
The primary data needed for the study is gathered through interviews
with concerned officers and staff, either individually or collectively, sum of the
department of SCCL.
Secondary Data:
The Secondary data needed for the study was collected from published
sources such as, pamphlets pf annual reports, returns and internal records,
9
Further the data needed for the study was also needed:
LIMITATIONS:
1. Since the procedure and policies of the will not allow disclosing
2. The project period of the study those 8 weeks is not enough to conduct
10
CHAPTER-2
Industry Profile
INDUSTRY PROFILE
the motorcycle created the self-propelled bicycle. The first commercial design
11
was three-wheeler built by Edward Butler in Great Britain in1884. This
steer able front wheels and connected by a drive chain to the rear wheel. The
This led to road tests and competition between manufacturers. Tourist Trophy
(TT) races were held on the Isle of Main in 1907 as reliability or endurances
“Who invented the first motorcycle?” may seem like a simple question, but the
answer is quite complicated. Two wheelers owe their decent to the safety
bicycle i.e., bicycle with front and rear wheels of the same size, with a pedal
crank mechanism to drive the rear wheel. Those bicycles in turn, descended
12
The high-wheelers descende3d from an early type of
push bike with our pedals, propelled by the rider’s feet pushing again the
ground these appeared around 1800, used iron-branded wagon wheels and
were called “bone-crushers”, both for their jarring ride and their tendency to
mostly of wood; the wheels were of the iron branded wooden-spooked wagon
FURTHER DEVELOPMENTS:
to get the machines running with our having to worry about them falling over.
The next notable two wheelers was the Miller of 1892, the first successful two-
wheeler though was the Hilder brand and Wolf Muller. Patentsed in Munich
in1894 in the French firm of DeDion-button built and engine that was to make
the mass production and common use of motorcycles possible. The first
13
motorcycle with electric start and a fully modern electric system, the Hendee
special from the Indian motorcycle company astounded the industry in 1931.
Before World War I, IMC was the largest motorcycle manufacturer in the world
INCREASING POPULARITY:
In 1916, the Indian Motorcycle Company introduced the model H racer and
Europe used motorcycle principally for dispatching. After the war, it enjoyed a
sport vogue until the great depression began in 1929. After the World War II.
INDIAN CONTEXT
to two wheelers in the world. It stands next only to Japan and China in terms
country. Until 1958, API and Enfield were the sole producers.
14
The tow-wheelers market was opened to foreign
competition in the mid-80’s. And then the market leaders-Escorts and Enfield-
were caught unaware by the onslaught of the 100cc bikes of the four Indo-
Japanese joint ventures. With the availability of fuel-efficient low power bikes,
80s. TVS Suzuki and Hero Honda brought in the first two stroke engine
when the government prohibited new entries and strictly controlled capacity
expansion. The industry saw a sudden growth in the 80s. The industry
1990.
a production loss of 0.4mm vehicles. Baring Hero Honda, all the major
CONCLUSION:
15
The two wheelers market has had a perceptible shift from
a buyer market to a sellers market with a variety of choices, players will have
As income grow and people feel the need to own a private means of
two wheelers segment in the coming future. The Asian continent is the largest
user of two-wheeler in the world. This is due to poor road infrastructure and
low per capital income, respectively policy on car industry. This is due to
16
the motorcycle segment with around 47% the market share during FY 2000-
01. The company has emerged the most as one of the most successful
players, much ahead of its competitor an account of its superior and reliable
17
COMPANY PROFILE
industry. A four-stroke revolution, that was ushered in when the HERO Group
with motorcycles that set benchmark for fuel-efficiency and pollution control.
During the 80s, Hero Honda became first company in India to prove that it
18
was possible to drive a vehicle without polluting the roads. The company
introduced new generation motorcycles that set industry benchmarks for fuel
thrift and low emission. A legendary ‘Fill it – Shut it- Forget it’ campaign
captured the imagination of commuters across India, and Hero Honda sold
roads today. These are almost as many as the number of people in Finland,
since inception; and today, every second motorcycle sold in the country is a
Hero Honda. Every 30 seconds, someone in India buys Hero Honda’s top –
selling motorcycle- Splendor. This festive season, the company sold half a
history.
Haryana. These plants together are capable of churning out 3.9 million bikes
per year. A third state of the art manufacturing facility at Hardwar in Uttranchal
spans over 3000 customer touch points. These comprise a mix of dealerships,
service and spare points, spare parts stockiest and authorized representatives
relationship with customers. It’s unique CRM initiative – Hero Honda Passport
Program, one of the largest programs of this kind in the world, has over 3
19
million members on its roster. The program has not only helped Hero Honda
understand its customers and deliver value at different price points, but has
it’s its position in the market place. The company believes that changing
rural India will add millions of new families to the economic mainstream. This
would provide the growth ballast that would sustain Hero Honda in the years
succinctly points out, “We pioneered India’s motorcycle industry, and it’s
our responsibility now to take the industry to the next level. We’ll do all
BOARD OF DIRECTORS
20
(Alternate Director to Mr. Takashi
Nagai)
Non-executive & Independent
9 Mr. Pradeep Dinodia Director
Non-executive & Independent
10 Gen.(Retd.) Ved Prakash Malik Director
Non-executive & Independent
11 Mr. Analjit Singh Director
Non-executive & Independent
12 Dr. Pritam Singh Director
Non-executive & Independent
13 Ms. Shobhana Bhartia Director
Non-executive & Independent
14 Mr. Sunil Bharti Mittal Director
Non-executive & Independent
15. Mr. Meleveetil Damodaran Director
Non-executive & Independent
16. Mr. Arun Nath Maira Director
INITIATIVES:
Honda, our goal is not only to sell you a bike, but also to help you every step
21
inseparable balance between the economic concerns and the environmental
and valuable aspect the customer is sensitive about it. Today companies are
strongly working for the reduction at time that is taken to serve customer
Many international companies have come and established joint ventures, own
HERO HONDA
“DESH KI DHADKAN”
Making Headlines:
Japan.
project OM.
22
PRODUCTS:
1. PLEASURE
2. CBZ XTREME
3. PASSION /PASSION PLUS
4. KARIZMA
5. GLAMOUR
6. CD-DAWN
7. ACHIEVER
8. HUNK
23
Details of Products (as on oct.08)
24
CBZ 149.2 cc Rs. 60,430
25
Achiever 149.1 Rs.57,029
touch and transform the lives of our customers by giving them a mode of
that would enhance their efficiency at work, enable them to share moments of
26
In a scenario where the customers had a few choices out vision
was to offer bikes with the highest quality at a reasonable price, to meet our
Motor Company, Japan, and all our business associates, shareholders and
employees.
while retaining the values that have been like a beacon in this journey thus far.
2008 NDTV Profit Business Leadership Award 2008 - Hero Honda Wins the Coveted
27
Asian Retail Congress Award for Retail Excellence (Strategies and Solutions of
Automobile category
NDTV Profit Car India & Bike India Awards - Bike Manufacturer of the year
2007 The NDTV Profit Car India & Bike India Awards 2007 in the following category:
Overall "Bike of the Year" - CBZ X-treme
Awards 2006.
2006 Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian Two
Wheeler Company)
One of the 8 Indian companies to enter the Forbes top 200 list of world’s most
reputed companies.
28
No. 1 in automobile industry by TNS Corporate Social Responsibility Award.
Best in its class awards for each category by TNS Total Customer Satisfaction
Awards 2006:
Splendor Plus (Executive)
CD Deluxe (Entry)
Survey 2006.
Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian Two
Wheeler Company).
Top Indian company in the Automobile - Two Wheeler sector by Dun & Bradstreet -
Hero Honda Splendor rated as India's most preferred two-wheeler brand at the
Certificate of Export Excellence for outstanding export performance during 2003-04 for two-
wheeler & three- wheelers - Complete (Non SSI) by Engineering Export Promotion Council.
The NDTV Profit Car India & Bike India Awards 2006 in the following category:
Bike Maker of the Year
29
in the 'Automobiles' category.
ICWAI National Award for Excellence (Second) in Cost Management 2004 in the
10th Motilal Oswal Wealth Creator Award for as the most consistent wealth creator for
Adjudged as the Best Value Creator - Large Size Companies 2003-04 by The Outlook
Money.
Excellence.
ICSI National Award for Excellence in Corporate Governance 2004 by The Institute of
Winner of the Review 200 - Asia’s Leading Companies Award (4th Rank amongst the
30
Company of the Year of ET Awards for Corporate Excellence.
Ranked 4th in 'Overall Best Managed Company' category, ranked 3rd in 'Best
Winner of the Review 200 - Asia’s Leading Companies Award (9th Rank amongst the
Year Event
1983 Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed
31
Shareholders Agreement signed
1984 Hero Honda Motors Ltd. incorporated
1985 First motorcycle "CD 100" rolled out
1987 100,000th motorcycle produced
1989 New motorcycle model - "Sleek" introduced
1991 New motorcycle model - "CD 100 SS" introduced
by DNV Holland
Splendor declared 'World No. 1' - largest selling single two-wheeler model
32
5,000,000th motorcycle produced
2002 New motorcycle model - "Dawn" introduced
mark
Splendor has emerged as the World's largest selling model for the third
Hero Honda became the World No. 1 Company for the third consecutive
year.
33
First Scooter model from Hero Honda - "Pleasure" introduced
2006 Hero Honda is the World No. 1 for the 5th year in a row
VENKATESHWARA MOTORS
the C.E.O .the first hero Honda motorcycle was delivered from showroom on
27th November 1985. To date they have delivered 32676 Hero Honda
motorcycles. They were appointed as dealers for Majestic Auto Ltd. And
delivered the first moped during May 1986, Majestic Auto Ltd.was renamed as
collective responsibility of sales, service and spares assists him. The service
34
Implementing corrective steps after analyzing the feedback decisions from top
management.
services to the customers. It has been well trained and efficient for the
customer satisfaction.
Key features:
instance.
Schemes:
35
The hero Honda passport is a ‘customer relationship program’
instituted specially for you. Upon enrolling for the program you obtain a hero
exclusive rewards. Hats more you also become eligible for the hero Honda
winner of the month draw, which could win you a hero Honda splendor, or a
hero Honda passport. However it is the actual user of the motorcycle who
To obtain the hero Honda passport, you also have to fill up the
hero Honda application section of the profile form. The profile form is available
at all hero Honda authorized dealerships in addition, you will have to pay the
requisite enrolment fee, and attach two passport sized photographs with the
form. Your personalized hero Honda passport will be processed and delivered
service center for service, repairs, accessories or spares, carry your hero
36
You can accumulate points against the purchase of spares,
will be given on free services, referrals and loyalty visits. You must ask your
dealer to stamp the points earned by you, on your hero Honda passport.
Once you start accumulating points, you become eligible for benefits and
Exclusive rewards and surprise gifts from hero Honda motors limited.
37
CHAPTER-3
INTRODUCTION
in the modern times. It involves decisions to commit the firm’s funds to long--
be defined as the firm’s decision to invest its current funds most effectively in
38
the long-term assets in anticipation of an expended flow of benefits over a
series of years. The log –term assets are those that affect the firm are
investment decisions.
DECISIONS:
39
Show the implicated of net present value (NPV) and internal rate
following phases.
OF INVESTMENT IMPLEMENTATION
OF OF CAPATIAL
MAKING
PERFORMANCE
OPPORTUNITIES INVESTMENT
40 BUDGET
REVIEW
Identification of investment opportunities:
sales, which serves as the basis for setting production targets. This information,
opportunities.
proposal form. Generally, most of the proposals, before they reach the capital
budgeting committee or some body, which assembles them, are rated through
41
several persons. The proposal is viewed from different angles. It also helps in
Replacement investments.
3.DECISION MAKING
decision-making. Under this system executive are vested with the power to
expenditure action. Projects involving larger out lays are included in the capital
ensure that the funds position of the firm satisfactory at the time of
implementation.
42
5.IMPLEMENTATION:
project within the defined time – frame and cost limits is helpful for
6.Performance Review:
43
Performance review, or post – completion audit, is a feed back device. It
stabilized.
1.It throws light on how realistic were the assumptions underlying the
project.
decisional making.
reasons.
44
1.Expansion of existing business.
existing operations. For example, the SCCL may increase its plant capacity to
operating efficiently reduce costs. Cost savings will reflect in the increased
profits, but the firm’s revenue may remain unchanged. Assets become outdated
and absolute with technological changes. The firm must decide to replace those
assets with new assets that operate more assets and therefore, are also called
45
How ever replacement decisions that involve substantial modernization
Independent investments
Contingent investments
production.
Independent investment:
with each other. For example, a heavy engineering company may have be
Contingent investment:
46
may have to invest in houses, roads hospitals, schools, etc. and the total
Evaluation criteria:
They have the effect of increasing the capacity, efficiency, span of the
47
1.Traditional techniques or non-discounted cash flow techniques he
Pay back periods one of the most popular and widely recognized
that period required, to recover the original cash outflow invested in a project.
original cash exactly invested in a project. The cash flow after taxes is used to
using cumulative cash flow methods. The first methods can be applied when
the cash flow steam of each year is equal. Annuity in all the years or project
life, i.e., unitary cash flow for all the years. In this situation the following
OR
48
Payback period = -----------------------------------------
This second methods is applied when, the cash flow after taxes are
unique or not uniform over the project life period. In this situation, pay back
process goes up to the period where cumulative cash flow equal to the actual.
49
Cost investment in calculating payback period is very less as compared
to sophisticated methods.
investment, as it does not consider all cash in flows yielded by the movement.
(ARR)
50
1.Weather it is clearly mentioned as accounting rat of returning it
ii) If ARR is given in the problem. Only one of the above methods can be used
Accept—Reject rule:
51
Reject: cal ARR< predetermined ARR or cut off rate.
1.The most significant merit of ARR is, it very simple to understand and easy to
calculated.
3.It takes into accounts all profits of the project life period.
It does not differentiate between the sizes of the investment required for
each project.
52
It does not take into consideration any benefits, which can accurse to the
investment.
If feels that 10 percent rate of return for 10 years is more beneficial than
shareholders.
rejection.
Technique:
all the deficiencies of the traditional methods and consider all benefits and cost
accounting during the project’s entire life period. Modern techniques can be
53
The net present value method is one the discounted cash flow methods.
It is also know as discounted benefits cost ration methods. NPV can be defined
calculating present value of cash flows using cost of capital as and appropriate
rate of discount and subtracts value of cash out flows from the present value of
cash flow and finds the net present value, which may be positive or higher then
Finding out net present value by subtracting present value of cachet flower
Accept—Reject rule:
NPV.
Accept: NPV>Zero
Reject: NPV<Zero
54
Advantage of NPV methods:
It uses are cash inflows occurring over the entire life period of the project
methods.
In case of project involving different cashoutlys NPV method may not give
dependable results.
It does not give satisfactory results when comparing two projects with
different life period. Generally a project having a shorter economies life would
55
This method advocated by jock dears, takes into accounts the magnitude
IRR is that rate at which the sums of discounted cash inflow DCF equal
the sum of discounted cash out flow. It is the rate at which the net present value
of the investment is zero .it is called internal rate of turn because it depends
mainly on the out lay and proceeds associated with the project and not on any
following names.
Yield on investment.
which the present value of cash inflows equal to the present value of cash
outflows. It takes into account the magnitude and timing of cash flows. In case
of NPV methods, the discount rate is the required rate of return and that is
56
this method the evaluation select any discount rate to capital is taken as first
trial. If calculated present value of the cash inflow is higher then the present
value cash inflows than evaluator has to try at higher rate on the other hand if
the present value of cash flows is lower than the present value of cash out
flows than evaluator has to try lower discounting factors. This process will be
repeated till the present value of cash inflows equal to the present value of cash
out flows. Generally IRR may lie between two discounting factors; in that case
analysis has to use interpolation formula for IRR. The formula is as follows:
LDPV - OI
IRR = LDF % + D F --- -------------------
LDPV-HDPV
(OR)
C-O
IRR = A+ --------- X (B-A)
C-D
57
Where,
A= Discounted factors of low trial.
ACCEPT—REJECT RULE:
58
ACCEPT—REJECT RULE:
CHAPTER-4
Merits of IRR:
invested in the projects could be repaid out of the cash inflows arising
Demerits of IRR:
not logical.
It may not give trustful results in case of unequal project life UN equal cash
59
Cost of capital-concept:
rate of 7% interest. Here he had sacrificed 7% interest for not having invested
in the bank.
1.Firms point:
capital. For example confirm raised Rs. 50 Lakhs though the issue of 10%
debentures for justifying this issue, a minimum rate of returns it has to earn is
10 percent.
The cost of capital is the minimum required rate of return. The hurdle or
target rate of the cut-off rate or any discounting rate used to value cash flows.
Lakhs as initial investment and provides cash flows for a period of 5 years. So
60
for the conversion of future 5 years cash flows into present value cost of capital
needed.
Cost of capital represented the rate of return that the firm must pay to
the fund supplies. Who have protected the capital? In other words, cost of
capital is the weighted average cost of various sources of finance used by the
firm. The sources are equity, performance long-term debt and short-term debt.
NON-DCF CRITERIA
The pay back period (PB) is one of the most popular and widely
the number of years required to recover the original cash out lay invested in
project.
If the project generates constant annual inflows, the pay back period can
INITIAL INVESTMENT Co
61
Co: Initial investment
In case of UN equal cash inflows, the pay back period can be found out
by adding up the cash inflows until the total is equal to the initial cash outlay.
ratio of average after tax profit divided by the average investment. The average
depreciated constantly.
AVERAGE INCOME
AVERAGE INVESTMENT
62
DCF CRITERIA:
The NPV present value NPV method is the classic economic method
recognizes the time value at different time periods differ in value and are
Ci C2 C3 Co
n Ci
NPV =
∑ -------------
i=o (I+K)i
63
WHERE,
The internal rate of return IRR method is another discounted cash flow
technique which takes account of the magnitude and thing of cash flows, other
terms used to describe the IRR method are yield on an investment, marginal
efficiency of capital, rate of return over cost, time- adjusted rate of internal
n Cfi SV +WC
64
WHERE,
SV& WC = Salvage value and working capital at the end of the year.
(OR)
(A-B)
65
WHERE
proposals is the benefit cost (B/C) ratio or profitability index (PI) profitability
index is the ratio of the present valued of cash inflows at the required rate of
PV OF CASH INFLOW
PI = ---------------------------------
choice, only the costs of two or more alternative choice are considered treating
66
the benefits as identical. This approach is used when the acquisition of how to
minimize the costs for undertaking an activity at a given discount rates in case
the benefits and operating costs are given, one case minimize the capital cost to
PROJECT PLANNING:
Project planning is spared over a period of time and is not a one shot activity.
It’s identification
It’ implementation
The time taken for the entire process is the gestation period of the
begins when we are seriously trying to over come certain problems. They may
67
CONTENTS OF THE PROJECT REPORT:
1.Raw material
6Building
7.Production capacity
8.Work schedule
1Cost of land
2Cost of building
7.Preliminary expenses
9.Preoperative expenses
68
Financial Viability Analysis General:
hiring of HEMM. The financial viability of the project as worked out taking
into account the latest capital and the prevailing debt equity ration of 3.68:1.
DEPRECAION:
calculated on a straight line basis considering the normal useful life of each and
every item separately and allowing 5% scrap value in the of plant & machinery
and vehicles. The depreciation cost per tonne of coal works out to Rs.126.96 as
against the depreciation cost of Rs.66.89 considered in original FR. The annual
PROFITABILITY ANALYSIS:
The financial viability of the project is evaluated both at 100% and 85%
capacity utilization under two variants, viz., and SCCL debt-equity ration of
69
SL.N PARTICUL SCCL DE RATIO OF NATIONAL DE
level
1 Production 20 17 20 17
production
3 Avg. sale 395.17 335.89 395.17 335.89
realizations
4 Profit & Loss -52.66 -44.77 -26.14 22.22
(Rs)
Financial IRR:
cost together with sales realization, the internal ration of return is worked out at
Sensitivity Analysis:
table 15.2 indicates. The project is vulnerable for escalation in costs. The
70
project yields a return of 6.42% with the total cost escalation by 10% over base
case.
0
Particulars Financial Economic figure
in the
Base case 499.26 428.70
(4.02) (9.17)
1. With a 10% increase in fixed cost 523.51 428.70
(2.67) (8.04)
2. With a 10% increase in variable 522.39 449.22
(0.63) (6.42)
brackets are IRR
Break-even production:
71
1.While stimulating the extractable reserves care ha been to reduce the quantity
2. Is provided to divert the nalah’s along the periphery of the blocks. Adequate
protection in the form of bund will be made against the diverted nalah’s.
The working relating to financial viability has also been updated taking
the various norms and costs prevailing in the third quarter. The summary of the
72
No Particulars FR As per UCE
4 Avg. sales realization Rs./T 312.20 312.20 395.17 395.17 395.17 395.17
5 Profit & loss Rs./T +24.31 -12.14 -52.66 -104.15 -26.14 -72.96
The above table indicates that the project yields project yields negative IRR
on Equity at both SCCL debt equity ration and 1:1 debt equity ratio.
M.Cum. Rs In
Crores
73
1 0.500 34.700 7.569 34.029
2 1.000 69.400 1.0336 54.708
74
160
140
120
100 YEARS
80
OBR COST RUPEES IN
60 CRORES
40
20
0
1 2 3 4 5 6 7 8
Interpretation:
From the above table represented the OBR can change in year wise.
From the first year slightly increased and decreased but the last year OBR can
be decreased why because the sales were increased. So finally when sales were
Statement showing the calculating of financial IRR at 100% performance level at Debt equity ratio of 3.68:1
Year Output Capital cash Out flows Total inflow Cash Total Net cash
Million Out flow Operating cost For sales inflow for inflow flow
75
tones outflow sales
PS-1 81 81 -81
PS-11 343 343 -343
1 2499 2499 -2499
2 3322 3322 -3322
3 3.500 6863 6863 -6863
4 7.000 59447 2162 8109 2675 2675 -5434
5 10.000 11425 3491 14916 3822 3822 -11094
6 10.000 9624 4215 11136 3822 3822 -7317
7 16.000 1300 4407 5707 6115 6115 408
8 20.000 991 5087 6078 7644 7644 1566
9 20.000 384 5131 5515 7944 7944 2429
10 30.000 1554 5198 6752 11916 11916 5164
11 30.000 1142 5198 6340 11916 11916 5576
12 30.000 1207 5198 6405 11916 11916 5511
13 30.000 823 5198 6021 11916 11916 5895
14 30.000 1637 5198 6835 11916 11916 5081
15 30.000 2399 5198 7597 11916 11916 4319
16 22.500 3047 5182 8229 8937 8937 708
17 20.000 5758 5177 10935 7944 7944 -2991
18 20.000 3485 5177 8662 7944 7944 -718
19 20.000 1544 5177 6721 7944 7944 1223
20 20.000 1244 5177 6421 7944 7944 1523
21 20.000 1317 5177 6494 7944 7944 1450
22 20000 635 5177 5812 7944 7944 2132
23 20.000 1461 517 6642 7944 7944 1302
24 20.000 617 5177 5794 7944 7944 2150
25 20.000 961 5177 6138 7944 7944 1806
Sidle value -10672 -10672 -10672
TOTAL 469.00 58242 107456 165698 183952 183952 18254
Financial IRR = 3.46% NPV at 12% = -10363
76
Interpretation:
From the above table represented the IRR at 100% and performance
level at debt equity ratio of 3:68:1 in this table we find the when the output is
increased in million tones the cash inflow was also increased at the same time
CHAPTER-5
FINDINGS
1.Original feasibility report was prepared and the present updating is made with
reference to the cost prevailing in the last quarter. The time lag between the two
2.The building in cost index now considered is 600 in a place of 400 adopted
original f FR
77
3.The land cost of HEMM and another ancillary machinery is updated based on
4.the budgetary prices obtained from BEML for major HEMM and CMPDIL
5.The ruling debt equity ratio of 3.68:1 is adopted in the place of 2.32:1.
The interest on loan capital is worked out on average principle in the in present
7.As a result of above changes the capital cost of the project has gone
CONCLUSION
compare the project economies with other SCCL and as well as CIL
projects and take the investment decision. In 1:1 debt equity ratio the
project is viability as project yield financial IRR of 3.91% the project was
78
forwarded for appraisal and sanctioned by government of India for Rs
403.67 crores. At the present debt equity ratio of SCCL is 3.68:1 is adverse
compare to the 2.32:1, the interest burden is high there by projecting yield
only 3.46% IRR which less than the designated IRR. In spite of this project
Gap between the supply and demand of coal especially in southern reason.
Economic viability of the project based on the border pricing method etc.
SUGGESTION
From the above conclusion drawn the following suggestion are proposed
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Company should meet its credit obligations regularly more amount should
Revision of selling price of coal / tones is essential and when the cost inputs
are increased other wise the project will incur losses when are executed.
fluctuate.
BIBLOGRAPHY
TEXT BOOK
“Tata McGraw HILL, Publication company Ltd New Delhi, page no:
234--235.
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3.“M Y KHAN” Financial Services, (4 th edition), McGraw HILL
Delhi pageno:67-68.
WEBSITES
Www. pearsoned.co.in/charlesthorngren
Www. Tatamcgrawhill.com
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