Economic Value-Added (EVA®) statement

Economic Value-Added is the surplus generated by an entity after meeting an equitable charge towards providers of capital. It is the post-tax return on capital employed (adjusted for the tax shield on debt) less the cost of capital employed. Companies which earn higher returns than cost of capital create value, and companies which earn lower returns than cost of capital are deemed harmful for shareholder value.

in Rupee Symbolcrore, except as otherwise stated

2011

2010

2009

2008

2007

Cost of capital

Return on risk-free investment (%)

7.66

7.20

7.00

8.00

8.00

Market premium (%)

5.00

5.00

7.00

7.00

7.00

Beta variant

0.71

0.68

0.74

0.76

0.99

Cost of equity (%)

11.21

10.60

12.18

13.32

14.97

Average debt / total capital (%)

Cost of debt – net of tax (%)

NA

NA

NA

NA

NA

Weighted Average Cost of Capital (WACC) (%)

11.21

10.60

12.18

13.32

14.97

Average capital employed

25,688

21,634

17,431

12,527

9,147

Economic Value-Added (EVA®)

Operating profits

8,102

6,910

6,421

4,640

3,877

Less : Tax

2,490

1,681

919

685

386

Cost of capital

2,880

2,293

2,123

1,669

1,369

Economic Value-Added

2,732

2,936

3,379

2,286

2,122

Enterprise value

Market value of equity

1,86,100

1,50,110

75,837

82,362

1,15,307

Add : Debt

Less : Cash and cash equivalents

16,810

15,819

10,993

8,307

6,033

Enterprise value

1,69,290

1,34,291

64,844

74,055

1,09,274

Return ratios

PAT / average capital employed (%)

26.6

28.7

34.3

37.2

42.2

EVA® / average capital employed (%)

10.6

13.6

19.4

18.2

23.2

Enterprise value / average capital employed (x)

6.6

6.2

3.7

5.9

11.9

Growth (%)

Operating profits

17.3

7.6

38.4

19.7

46.1

Average capital employed

18.7

24.1

39.1

37.0

48.1

EVA®

(6.9)

(13.1)

47.8

7.7

37.8

Market value of equity

24.0

97.9

(7.9)

(28.6)

40.4

Enterprise value

26.1

107.1

(12.4)

(32.2)

41.1

Notes : Cost of equity = return on risk-free investment + expected risk premium on equity investment adjusted for our beta variant in India.
  Figures above are based on IFRS financial statements. The data for year 2008 and 2007 is as per consolidated Indian GAAP.
  Cash and cash equivalents include investments in liquid mutual funds and certificate of deposits.