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FACTORS

EFFECTING
CAPITAL
STRUCTURE OF
TATA MOTORS
Capital structure

 The objective of any company is to mix the


permanent sources of funds used by it in a
manner that will maximize the company
market price. The Proper mix of funds is
referred to as the optimal capital structure.

 Whenever the company needs to raise


finance, it involves a capital structure
decision because it has to decide the
amount of finance to be raised as well as the
sources from which it is to be raised.

Factors Affecting the Capital
Structure
 Leverage
 The use of fixed charges sources of funds such as
Preference shares, Debentures and term loans along
with Equity capital in the capital structure is
described as financial leverage or trading on equity.

 Other factors that to be considered-


 Cost of capital
 Cash flow Projections of the company
 Size of the Company
 Dilution of Control
 Floatation Costs

COMPANY PROFILE

 Tata is the leader in commercial vehicles in


each segment, and among the top three in
passenger vehicles with winning products in
the compact, midsize car and utility vehicle
segments.
 The company is the world’s fourth largest
truck manufacturer, and the world’s second
largest bus manufacturer.
 Tata Motors Limited is India’s largest
automobile company, with revenues of Rs.
35651.48 crores (USD 8.8 billion) in 2007-08.
CAPITAL STRUCTURE OF TATA
MOTORS
Financial Year 2006-07
 Figure (in
Crores)

Ø Authorized Capital: 450


Ø Issued Capital:
385
Ø Paid-up Capital: 385
Ø Share Premium:
1936.4
Ø Cash Dividend:
578.07
Ø Nominal Value/ Face Value is Rs. 10 per
share.
FACTORS AFFECTING THE CAPITAL
STRUCTURE OF TATA MOTORS
 Growth and stability of sales
 Competitive structure/ stability of profit
margin
 Cash flow ability

 Cost of capital

 Control

 Size of the company

 Floatation cost

 Development of capital market

 Growth opportunities

 Level of economic development



CONCLUSION
 We can conclude that the factors affecting the
Capital Structure of Tata Motors are Cash flow
ability, Cost of capital, Development of capital
market,
 Growth opportunities, Level of economic
development.