OBJECTIVES OF THE STUDY

Primary objectives:

To study the capital budgeting with special references to the Hinduja foundries Chennai,
Ennore.

Secondary objectives:

To analysis and understand the financial status of the company to frame the capital
budgeting.
To understand the existing structure of capital budgeting and financing trend of
company.
To study the financial aspects of future expansion of Hinduja foundries.
To evaluate the financial investment associated with the replacement of existing asset
the purchase of new asset.
To study the techniques of capital budgeting for decision making.
 RESEARCH METHODOLOGY
Introduction
The term Research is composed of two words Re and Search which means to
search again. Research is conducted to search for again, Research is conducted to search for new
factor or to modify the existing facts.
Definition of research

Research is the process of systematically obtaining accurate answer to significant and

pertinent questions by the use of the scientific method of gathering and implementing
information.

Meaning of research methodology

Research methodology is a way to systematic solve problem. It may be understand as

sciences of studying as research is done scientifically. In this we study various steps that are
generally adopted by a researcher problem along with logic behind them.

Research methodology

To analyze the capital budgeting of HInduja foundries, Secondary data collected from the
annual report of company, was used along with other published material of the company for the
analysis of capital budgeting, the annual report of the years 2011-15 are considered. For
analysis of the capital budgeting of company .The ratios of capital budgeting, Techniques are
used. To make calculation much easier and logical, the data are approximate in the relevant
places.

Research type

The research is analytical in nature. Analytical means the researcher use fact and
information already available and the analysis and making the evaluation.

Research design

The research design is purely the framework or plans for a study that guides the
collection and analysis of data. It is a blueprint that is followed in completing study .It may be a
worthwhile to mention here that a research design is essentially the framework for study.
Research design of this study is analytical in nature.
DATA COLLECTION

The study involves only secondary data.

SECONDARY DATA

Secondary data were collected through annual report and balance sheets, and company
website in regard to the topic being dealt with the project.

TOOLS USED FOR ANALYSIS

PERCENTAGE ANALYSIS

NON-DISCOUNTEDCASH FLOW

Payback period
Accounting rate of return

DISCOUNTED CASH FLOW

Net present value

Internal rate of return
Profitability index

COMPARATIVE BALANCE SHEET

RATIO ANALYSIS

Debt-Equity Ratio
Fixed Asset Turnover Ratio
Earnings per share (EPS)
Total Asset Turnover Ratio

COMPARATIVE FINANCIAL STATEMENTS

Comparative financial statements are the statements which have been designed in way as
to provide time perspective to the consideration of various elements of financial position
embodied in such statements figures of two or more are placed side by side to facilitate
comparison.
 Comparative balance sheet as on two or more different assets can be used for comparing
assets and liabilities and find out any increase or decrease items. Such balances sheet is very
useful in studying the trends in an enterprise.

A comparative income statements will shows the absolute figures for two or more
periods. The absolute changes from one period to another and its desired changes in terms of
percentage. Since the figures for two or more periods are shown side by side. The reader can
quickly ascertain whether sales have been increased or decreased, whether data included in
comparative statements will be helpful in deriving meaningful conclusion.

RATIO ANALYSIS

Debt Equity Ratio:

It measure of the relative claims of creditors and owners against the assets of the firm.

Debt Equity Ratio= Long term liabilities

Equity
The term total debt includes all debts i.e. .long term short term mortgages. Bills, debentures
etc.., whereas the term net worth means equity shares capital reserves and surplus i.e.
proprietors fund or equity1:1 ratio is acceptable.
Fixed Asset Turnover Ratio

The ratio measures the efficiency in the utilization of fixed assets. This ratio indicates whether
the fixed assets are being fully unitized a high ratio is an index of the investment in fixed asset.
Normally standard ratio taken as five times
Fixed Asset turnover Ratio = Net sales_
Net fixed asset
Total asset turnover ratio:
The ratio indicates the sales generated per rupee of investment in total assets. Thus, it aims to
point out the efficiency or inefficiency in the used of total assets or capital employed. Increase in
ratio indicates that more revenue is generated per rupee of total investment in assets.
Total asset turnover ratio= Total sales
Total assets
Earnings per share:
The ratio indicates the amount of net income earned per share of stocks outstanding. In
other words, this is the amount of money each share of stock would receive if all of profits were
distributed to outstanding shares at the end of the year.
EPS= Net profit after tax and pref.dividend
No. of equity shares