COST OF CAPITALAND

UNLISTED COMPANIES

Bhargav shaker(091113)Lovaman shuklaMeenakshi talyPinkashSandeep shilpy

COST OF CAPITAL

Cost of capital represents the rate of return that the firm must pay to the fund suppliers, who have provided 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,preferance,long-term debt and short-term debt

SIGNIFICANCE OF COST OF CAPITAL

Investment evaluation Debt policy Performance appraisal

Components of cost of capital

Cost of Debt Preference capital Cost of Equity Capital

What is Unlisted company

• E.g..

UNLISTED COMPANY• A company whose shares are not on the

official list of shares traded in any stock market.

LISTED Vs UNLISTED COS

LISTED COMPANIES UNLISTED COMPANIES

• No registration with stock exchange

• Raises capital by issuing bonds,debentures,venture capital, loans etc.

• High risk involved to invest in unlisted company

• registered with stock exchange(eg.-NSE,BSE)

• Raises capital through (IPO) by issuing shares

• risk free to invest in listed company

LIMITATIONS OF UNLISTED COS

• Difficult to Estimate Risks.

• Historical information may not be indicative of the future.

• Market information similar companies may be difficult to obtain.

• Difficult to find a buyer for an unlisted shares.

GODAVARI SUGAR LTDGODAVARI SUGAR LTD

INTRODUCTION

The Godavari sugar mills ltd was incorporated in 1939, has been demerged to Godavari biorefinares ltd in 2009, which was promoted by late shri. Karamshibhai Jethabhai Somaiya .it is one of the top 10 sugar mills among 500 sugar companies in india,godavari biorefinaries ltd manufactures more than 20 products, some of them

PRODUCTS

SUGAR

ETHANOL

ENERGYCHEMICALS

INTERMEDIARIES

SOURCE OF FUND RISING

• IDBI agreed to sanction a loan of INR 400 million in 2001.

• Credit facilities from Andhra Bank for INR 190 million.

• LOI was given by SBI for INR 150 million.

Sales data

PERFORMANCE OF COS

CONCLUSION

• Cost of capital is a central concept in financial management linking the investment and the financing decision.

• Hence it should be calculated correctly and used properly in investment evaluation.