Beruflich Dokumente
Kultur Dokumente
PROJECT REPORT
ON
Cost of capitalOf
Infowiz Industries PRIVATE Limited
1
ACKNOWLEDGEMENT
To test the student’s academic knowledge in practical situations of corporate world, Semester
summer internship has been included in the B.COM course. I would like to take this moment to
express my deepest gratitude to the group of people without whose help and support I would not
have been able to complete this project.
I would like to deeply thank my training mentor MS. Karna Deep his valuable insights and
constant guidance and support. I express my deep sense of gratitude to the management of
Infowyz software solution for imparting me with the required help. I would like to specially
thank my college mentor Mr.COLLEGE TEACHER NAME, for his guidelines, support and
motivation which have been a great help to me for this project.
I would also like to thank all those people who spent their valuable time in this project, and all
those people who directly or indirectly contributed in making this project a success.
Narinder
Student name
2
PREFACE
I have prepared this Project on the topic “cost of capital”in “Infowiz Industries Limited”. The
project was made after analyzing the data of Infowiz Industries Ltd. This Report is prepared
during my semester training. Training is life’s greatest treasure as it is full of experience,
observation and knowledge. The training held was very gainful as it took us close to real life.
This period also provide a chance to give theoretical knowledge a practical shape and to learn
from practical results.
Thanks
3
DECLARATION
I, Narinderdeclare that the project “cost of capital” in “Infowiz Industries Limited” submitted
to Baddi University Baddi in partial fulfillment of the requirement for the award of the degree
of Masters of Business Administration is a record of original project work done by me.
I further declare that this project report has not been submitted to any other university/
institution/ board for award of any degree.
Narinder
4
INDEX
5
CHAPTER –I
INTRODUCTION
OF
COMPANY
INFOWIZ Industry Private Limited Chandigarh Private Limited (Formerly Brilliant Software
Solutions) is an ISO 9001:2015 certified software development company founded in August
2009 and it is approved from Ministry of Corporate Affairs which deals in
University/College/School ERP Solutions, Android / iPhone Applications development, Web
designing, Web development, Discount Deals (www.INFOWIZcard.com, www.tricitydeal.com),
Bulk SMS, Voice SMS, Bulk Email, Biometric Time Attendance, Access Control, SEO/SMO,
Database Solutions, Payment Gateway Integration, E-Mail Integration, Industrial Training,
Corporate Training and Placements etc. INFOWIZ Technologies provides software solutions
using latest technologies e.g. Smart Card, NFC, Biometrics, GPS, Barcode, RFID, SMS, Auto
SMS (Short code), Android, iPhone, Web, Windows and Mobile based technologies.
INFOWIZ has wide expertise in .NET, Crystal Reports, Java, PHP, Android, iPhone, Databases
(Oracle and SQL Server), Web Designing, Networking, Web Server configurations, various
RAID Levels etc.
INFOWIZ Industry Private Limited Chandigarh has also setup its offices in USA, Delhi, Shimla
and Bathinda for its software support. INFOWIZ has its own multiple Smart Card printing,
encoding and barcode label printing machines to provide better and effective customer support
solutions.
INFOWIZ has also setup its own placement consultancy and is having numerous placement
partner companies to provide best possible placements in IT industry.
INFOWIZ Technologies has developed for the first time in northern region cloud computing
6
based Cloud Campus 4.0 to facilitate knowledge and placement centric services. It is a unique
concept for effective and collaborative learning.
1. INFOWIZ deals exclusively in campus automation through Smart Campus ERP
Solutions. Therefore we have better experience in handling large group of institutions
through proper time-tested policies and procedures.
2. First Company of India who has Launched NFC Technology (The Future) for Smart
Campuses through NFC Smart Cards.
3. First Company of India who has launched Android Version of Smart Campus ERP
Solutions for Mobiles and Tablet PCs.
4. First company of India who has developed SMS Opt-In Technology so that
Institutes/Colleges can send Transactional SMS with SMS Sender ID and without SMS
Template approval.
5. First company of Punjab, Haryana, Himachal, J&K (Northern region) who launched
Smart Cards (Contact Type), Smart Cards (Contactless) in Punjab for campus
automation.
6. First company of India which has launched its INFOWIZ Smart Card as Discount Card in
more than 120 enterprises.
7. Established own multiple Smart Card Designing, Smart Card Printing, Smart Card
Lamination and Oyster Barcode Printing Units.
8. Multiple SMS Gateway Support.
SERVICES
We provide Software Solutions using latest technologies or features:
NFC
Biometrics (Fingerprint with Automated Online)
Smart Card
Barcode
RFID
SMS
Short code 56767 (Auto SMS)
Android
7
ions (phone)
GPS
WAP (For WAP Enabled Mobile Phones)
Multiple SMS Gateway Support
Web based Technologies (365x24x7 services)
Windows based Technologies
Mobile based Technologies
Webcam support for various operations
Parallel Internet, Intranet and Wi-Fi Support
VISION:
Technologies Pvt. Ltd. are already very flexible and scalable. Still, we always take care of specific requirements of
our clients. Our highly committed R&D team makes our software feature rich, dynamic and
future tuned everyday so that our clients always maintain the lead over their competitors. The
development of the software is being done and the purpose full customization of the package is
carried out in the INFOWIZ lab.
MISSION:
INFOWIZ is pioneer in Smart Campus ERP Solutions for Universities/Colleges/Schools
using latest technologies and features. We provide software solutions using .NET, PHP, Android,
iphone, Java technologies with three tier-architecture support. We provide back-end solutions
using MS SQL Server, Oracle, and MySQL.
QUALITY POLICY:
• INFOWIZ offers various industry-ready programs so that student needs not to struggle for
jobs. INFOWIZ offers 6 weeks/2 Months/6 Months training programs to make students
industry.
• INFOWIZ Offers Life-Time Validity Learning and Placement Card. Students undergoing
six months training will have advantage to learn free of cost anything against that training
program for life-time.
• INFOWIZ offers Part-Time/Full Time Job Offer for each student during training so that
students can earn while they learn. Student can bear their food, accommodation and other
expenses on.
9
MANAGEMENT OF INFOWIZ Industry Private Limited Chandigarh
BOARD OF DIRECTOR
Seema Kansal
Kamaljot Kansal
Vikas Gupta
Ghansham Dass
MANAGING DIRECTOR
Rocky Jindal
MARKETING HEAD
Er. Bonish Singla
Er. Narinder
IT Head
Kamal Garg
10
11
12
PLACEMENT
Company list-
13
INDUSTRIAL TRAINING
Microsoft .NET
Android
iPhone
Java
PHP/MySQL
Web Designing
Embedded Systems
AutoCAD
CCNA
MCITP
SEO
CATIA
Pro-E
Solid Works
Human Resource
14
Marketing
Finance
One-to-one Project and Project will be made Live and to make it Live, INFOWIZ will
provide sub-domain and hosting worth Rs. 3000 absolutely free to each student for
web based Project. To host mobile apps, INFOWIZ will provide free Google Play
account (For Android Mobile Apps) and Apple iTunes Connect Account (Apple App
Store) for iPhone Apps.
2.INFOWIZ Edge
Industrial Training and Certificates from Software/Electronics Company not just from an
institute
INFOWIZ Cloud Campus advantage not only during training, even after completion of
training for life time.
15
Industrial training programmers are designed to make students industry-ready.
Each Student will have Unique User ID and Password to Login to INFOWIZ Cloud
Students will be able to download e-Books, e-Journals, Class Notes, Important Links and
other study material.
INFOWIZ Smart Campus is a step towards not only 100% placements but also better job
offers even after placements.
Student Profile, Instant Technical Updates, Class Notes, Project Report Submitted,
Attendance, Performance, Notice-Board, Class Timings etc. Everything online.
16
CHAPTER –I
RESEARCH METHODOLOGY
17
Research Methodology
About Research:
Research is a diligent enquiry and careful search for new knowledge through systematic,
scientific and analytical approach in any branch of knowledge. Research constant search and
research are the guiding factors of research which helps to discover new facts. The search for
new knowledge also helps to accept, reject or modify existing facts or knowledge. It is
systematic effort to gain knowledge, truth or board principal in a verifiable and objective way.
According to Slessinger and Stevenson (1930), social science research aims to extend, collect or
verify knowledge whether that knowledge aids in the construction of a theory or in the practice
of an art.
Young (1988) describes social research as the systematic methods of discovered new facts or
verifying old facts, their sequences in the relationship, casual explanation and the natural which
govern them.
Mere compilation of facts will never constitute research. As known (1973) aptly point out the
compilation is like a police constable statements of the seen deeply and penetrate into the
research of occurrence and relationship. Thus, research as young points out does not simply
demand a search for fact but thinking to of the issues and problems involved in every step of
research uses studies and principles thereof to unravel the facts intangible while craft a men
condemn such process.
18
ABOUT METHODOLOGY:-
Methodology is a term misused for method or technique. Methodology has got an important
epistemological meaning. Allen (1978) describes methodology in a vivid fashion. It become first
an approach to word enquiry and then involves into particular methods or techniques in the
applied use it is concerned with selecting specific techniques for collecting data and analyzing it.
In the theoretical use it concerned with the philosophical fields of enquiry that can use to
conceptual the problem under study. These are two different methodology stances. Disciplined
research is oriented towards in research knowledge in a scientific discipline whereas policy
research denotes to another methodology that is philosophical committed and severs as a guide to
social action. Quit often methodology is used in the applier sense undermining its theoretical,
perspective, through both are the sides of a coin.
Dhondyal (1994) defines Research Methodology as a procedure design to extent to which it is
planned and evaluated before conducted the enquiry and extend to which the methods for making
decision is evaluated.
19
RESEARCH DESIGN:-
1. Exploratory:
Exploratory research is a research conducted for a problem that has not been clearly defined.
It often relies on Secondary research such as reviewing available literature, data, or
qualitative approaches such as informal discussions through Focus groups, pilot studies etc.
The purpose of research is to gain familiarity with a phenomenon or acquire new Insight into
it to formulate a more precise problem.
2. Types :
Primary and secondary data is used in the project.
Primary Sources: It is original work of research on which research is based.
Secondary Sources: It is collected from the sources like: Internet, company’s profile.
3. Sources :
Books, internet and company’s profile.
4. Period of study :
I have completed my project on the topiccost of capitalin training for period of 45 days.
20
CHAPTER –III
Introduction to Cost of capital
Meaning of Cost of Capital:-
The Cost of Capital is the minimum rate expected by its investors. The capital used by the firm
may be in the form of debt, preference capital, retained earnings and equity share capital. The
concept of cost of capital is very important concept in financial management. A decision to
invest in a particular project depends upon the cost of capital of a firm or the cut off rate which is
the minimum rate expected by its investors which will maintain the market value of shares at its
present level. Hence to achieve the objective if wealth maximization, a firm must earn a rate of
return more than its cost of capital.
21
Features of cost of capital:-
K= r0+b+f
22
Significance of cost of capital:-
1. Conceptual controversies regarding the relationship between the cost of capital and
capital structure:-
Different theories have been propounded by different authors explaining the
relationship between the cost of capital and capital structure and the value of the firm.
This has resulted into various conceptual difficulties. According to the net income
23
approach and traditional approach both the cost of capital and value of firm have direct
relationship with level of financing. On the other hand, Net income approach and MM
approach prove that cost of capital is not affected by changes in capital structure and it is
irrelevant in determination of value of firm.
24
CHAPTER – IV
DATA ANALYSIS
1. Cost of debt:-
The cost of debt is the rate of interest payable on debt.
\
Case A:-If debts are issued at par then,
25
By a way of formula before tax cost of debt can be calculated as:-
i. Kdb= I/P*100
I= Interest
P= Principal
100isexpressed for percentage.
ii. By a way of formula After tax cost of debt can be calculated as:-
t = Rate of Tax
Note: - The above shown is the calculation of debt at par, but if company issues debt at premium
or discount then we should consider P as the amount of net proceeds received from the issue not
the principal that is face value of securities. The formula may be changed to:-
Note: -The Company may also issue redeemable debts which are redeemed during the life time
of a firm. The following formulas are used to calculate cost of redeemable debt:-
Where,
26
I= Annual Interest.
n= No. of years in which debt is to be redeemed.
RV = Redeemable value of debt.
NP = Net proceeds of Debentures.
But the Infowiz limited only issues non- redeemable debt so we don’t need to do calculations
with above mentioned formulas for Infowiz Limited Company.
Kp=D/P*100
Where,
Kp= Cost of preference capital.
D= Annual Preference Dividend.
P= Preference share capital (proceeds).
Further, if preference shares are issued at premium or discount or when cost of flotation are
incurred to issue preference shares , the nominal or par value has to be adjusted according to find
out the net proceeds from the issue of preference shares.
27
Kp=D/NP*100
Where, NP= Net proceeds after adding premium and deducting discount.
It should be noted that as dividends are not allowed to be deducted in computation of tax, no
adjustment for taxes is required.
Sometimes Redeemable preference shares are issued which can be cancelled or redeemed on
maturity date. The cost of Redeemable preference shares can be calculated as:-
Kp = D+ MV-NP/n / ½ (MV+NP)
Where,
28
1) Dividend Yield Method:-
Ke=D/NP*100
Or
Ke=D/MP*100
Where,
Ke= Costof Equity share Capital.
D= Expected dividend per share.
NP = Net proceeds per share.
MP= Market proceeds per share.
Ke=D/NP*100 + G
Where, G= Growth Rate.
Ke= EPS/NP*100
Ke= EPS/MP*100
29
EPS= Net profit after Interest, Tax, and Preference Dividend/ No. of equity shares
Or
Ke= D0(1+g)/NP*100+ G
Or
Ke= D0(1+g)/MP*100+ G
Calculations of cost of specific source of finance for Infowiz company for the Financial year
2014 as follows:-
1. Cost of debt:-
a) Calculation of before tax cost of debt for Infowiz company for the Financial year 2014
as follows:-
Kdb= I/P*100
Interpretation:-
We can infer from the above calculations that company is paying 2.6% rate of interest on debt to
its investors before deducting tax rate.
The above calculations are made because debts are issued at par of Infowiz Company Limited.
If debts were issued at premium or discount then calculations are to be made with the formula for
issuing debt at premium or discount.
30
b) Calculation of after tax cost of debt for Infowiz company for the Financial year 2014 as
follows:-
Interpretation:-
We can infer from the above calculations that company is paying 0.86% rate of interest on debt
to its investors after deducting tax rate.
Ke=D/NP*100
Interpretation:-
We can infer from the above calculations that company is paying 90.9% rate of dividend to its
investors.
31
2). Dividend Yield plus Growth in Dividend Method:-
Ke= EPS/NP*100
Interpretation:-
We can infer from the above calculations that company is paying 2.16% rate of dividend to its
investors by way of earning yield method.
32
Steps to be followed for calculating weighted average cost of capital:-
Step-1:- Calculate specific cost of capital for given different sources of finance.
Step-2:- Calculate weighted average cost of capital with the help of following formula:-
Kw= ∑WX/ ∑W
Calculations ofweighted average cost of capital for Infowiz Limited company for the Financial
year 2014 as follows:-
Calculation of weights is done on the basis of book values calculated for each source of finance
as shown below:-
Kw= ∑WX/ ∑W
33
Interpretation:-
0.90% is the cost of weighted average cost of capital of Infowiz company or
overall cost of capital for all sources of Infowiz limited is 0.90%.
Calculations of cost of specific source of finance for Infowiz company for the Financial year
2015 as follows:-
1. Cost of debt:-
c) Calculation of before tax cost of debt for Infowiz company for the Financial year 2015
as follows:-
Kdb= I/P*100
Interpretation:-
We can infer from the above calculations that company is paying 3.53% rate of interest on debt
to its investors before deducting tax rate in 2015.
The above calculations are made because debts are issued at par of Infowiz Company Limited.
If debts were issued at premium or discount then calculations are to be made with the formula for
issuing debt at premium or discount.
b). Calculation of after tax cost of debt for Infowiz company for the financial year 2014as
follows:-
34
Interpretation:-
We can infer from the above calculations that company is paying 1.48 % rate of interest on debt
to its investors after deducting tax rate in 2015.
Ke=D/NP*100
Interpretation:-
We can infer from the above calculations that company is paying 86.4%rate of dividend to its
investorsin 2015.
Ke= EPS/NP*100
35
(In crore) = 68.02/ 3232*100 =2.10%
Interpretation:-
We can infer from the above calculations that company is paying 2.10% rate of dividend to its
investors by way of earning yield methodin 2015.
Calculations ofweighted average cost of capital for Infowiz Limited company for the Financial
year 2015 as follows:-
Calculation of weights is done on the basis of book values calculated for each source of finance
as shown below:-
Kw= ∑WX/ ∑W
Interpretation:-
3.45% is the cost of weighted average cost of capital of Infowiz Company or overall cost of
capital for all sources of Infowiz limited is 3.45%.
36
Suggestions
The company should issue equity share capital as to maintain its market value of shares.
Accurate measure of cost of capital should be made to determine the profitability.
A company can lower its weighted average cost by cutting down its costs from individual
sources of finance.
Issue of more and more debt would cause more risk to the company.
There should be balance between all the sources of finance issued by company.
37
Bibliography
WEBSITE:
https://en.wikipedia.org/wiki/Infowiz_Industries
http://www.moneycontrol.com/financials/Infowizindustries/balance-sheetVI/RI
http://www.moneycontrol.com/financials/Infowizindustries/profit-loss/RI#RI
38
ANNEXURE
12 months 12 months
Income
Sales Turnover 340,814.00 401,302.00
Excise Duty 11,738.00 11,185.00
Net Sales 329,076.00 390,117.00
Other Income 8,721.00 8,936.00
Stock Adjustments -1,943.00 -412.00
Total Income 335,854.00 398,641.00
Expenditure
Raw Materials 267,834.00 334,283.00
Power & Fuel Cost 12,299.00 10,153.00
Employee Cost 3,686.00 3,370.00
Other Manufacturing Expenses 2,692.00 1,985.00
Miscellaneous Expenses 9,020.00 9,037.00
Total Expenses 295,531.00 358,828.00
40
Balance Sheet ofInfowiz Industries Ltd.
Mar 18 Mar 17
12 mths 12 mths
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Trade Payables 54,470.00 57,862.00
Other Current Liabilities 19,063.00 10,767.00
Short Term Provisions 4,854.00 4,167.00
Total Current Liabilities 91,301.00 95,566.00
Total Capital And Liabilities 397,785.00 367,583.00
ASSETS
NON-CURRENT ASSETS
Tangible Assets 79,778.00 80,368.00
Intangible Assets 34,785.00 29,038.00
Capital Work-In-Progress 65,178.00 32,673.00
Intangible Assets Under Development 10,575.00 9,043.00
Fixed Assets 190,316.00 151,122.00
Non-Current Investments 62,058.00 52,692.00
Long Term Loans And Advances 29,259.00 28,436.00
Total Non-Current Assets 281,633.00 232,250.00
CURRENT ASSETS
Current Investments 50,515.00 33,370.00
Inventories 36,551.00 42,932.00
Trade Receivables 4,661.00 10,664.00
Cash And Cash Equivalents 11,571.00 36,624.00
Short Term Loans And Advances 12,307.00 11,277.00
OtherCurrentAssets 547.00 466.00
Total Current Assets 116,152.00 135,333.00
Total Assets 397,785.00 367,583.00
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 80,641.00 75,955.00
CIF VALUE OF IMPORTS
Raw Materials 241,456.00 302,630.00
Stores, Spares And Loose Tools 3,217.00 3,719.00
Capital Goods 9,788.00 4,218.00
EXPENDITURE IN FOREIGN EXCHANGE
Expenditure In Foreign Currency 7,785.00 8,222.00
REMITTANCES IN FOREIGN CURRENCIES FOR DIVIDENDS
Dividend Remittance In Foreign Currency 622.00 524.00
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods 209,169.00 261,118.00
41
Other Earnings 229.00 248.00
BONUS DETAILS
Bonus Equity Share Capital 2,108.56 2,108.56
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market
16,950.00 18,039.00
Value
Non-Current Investments Unquoted Book
45,920.00 34,781.00
Value
CURRENT INVESTMENTS
Current Investments Quoted Market Value 19,158.00 21,655.00
Current Investments Unquoted Book Value 32,165.00 12,780.00 -
42