economic value added performance

7/30/2019 Economic Value Added Performance

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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976

6510(Online), Volume 3, Issue 2, May-August (2012)

EECCOONNOOMMIICC VVAALLUUEE AADDDDEEDD PPEERRFFOORRMMAANNCCEE OOFF BBSSEE--SSEENNSSEEXX

CCOOMMPPAANNIIEESS AAGGAAIINNSSTT IITTSS EEQQUUIITTYY CCAAPPIITTAALL

V.ANANDAVELPh.D Research Scholars, Department of Business Administration,

Annamalai University, Annamalai Nagar 608 002,Tamilnadu

Dr.A.SELVARASU

Professor, Department of Business Administration,

Annamalai University, Annamalai Nagar 608 002, Tamilnadu

ABSTRACT

This research paper studies BSE-SENSEX companies profile to demonstrate a direct

correlation between the investment in stakeholder relationships and corporate

performance. Economic Value Added (EVA) is now being considered as an important

management tool across the corporate world for measuring and rewarding

performance inside the companies. Most of the companies measure performance withaccounting profits which are often seriously biased measure of true profitability. EVA

is an unbiased measure of true profitability. Unlike accounting profits, EVA indicates

the value to what extent created by management or agent for shareholders. The paper

aims at analyzing BSE-SENSEX Companies performance through EVA. For this

purpose, EVA has been calculated.taking certain assumptions as to the cost of equity

and operational profit adjustments. However, the study concludes that Among the 30

companies ONGC and Reliance Industries EVA were topped. Further the three

companies EVA were negative during the period of the study in the BSE-SENSEXCompanies. So the companies should improve their profit which is enough to face

their cost of capital.

Key Words:Economic Value Added, Cost of equity

BSE-SENSEX Companies Economic Value Added Performance

INTERNATIONAL JOURNAL OF MANAGEMENT (IJM)

ISSN 0976 6367(Print)ISSN 0976 6375(Online)

Volume 3, Issue 2, May- August (2012), pp. 108-123

IAEME: www.iaeme.com/ijm.htmlJournal Impact Factor (2011): 1.5030 (Calculated by GISI)

www.jifactor.com

IJM I A E M E


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Statement of problem:BSE-SENSEX is one of the main indicators of the Indian economic growth and the

scrip is including the 30 top companies from all sectors in India. While a number of

studiesmade into the use and relevance of EVA for the Corporate Sector across the

world. Very little attention has been given hitherto is applicability to the BSE-

SENSEX Companies. The present study on EVA is a performance measure of 30

companies in BSE-SENSEX. It also be noted that the Indian companies has not so far

addressed itself to the need for analyzing its performance from the angle of

shareholders value addition. Becauseof EVA itself is a relatively new measure.

Objectives:The principal objective of this study is to evaluate the performance of BSE-SENSEX

Companies in India through the performance measure of EVA. The study covers the

following specific objectives:

1. To evaluate the economic value added performance of the BSE-SENSEXCompanies based on equity capital

2. To categories companies with its Equity capital and EVA to assess theassociation between group of Companies.

3. To measure the quantum of relationship between companies equity capital andEVATest of Hypothesis:

H0: There is no significant relation between equity investment and its EVA

H1: There is significant relation between equity investment and its EVA

Review of Literature

You Lee (1995), in his article he stated that the use of EVA as a corporateperformance measurement tool. His main research finding was that, within the context

of the JSE (Johannesburg Stock Exchange), EVA is at best marginally better than

measures such as ROA and ROE. Pretorius (1997) and Jansen (1998) both researched

EVA as an investment decision-making measure. Mohammad SalehJahur and Al

Nahian Riyadh (2002), the paper aims at analyzing banks' performance through EVA.

For this purpose, EVA has been calculated taking certain assumptions as to the cost of

equity and operational profit adjustments. A rank correlation coefficient between

EVA and different criteria indicates that ranking under Return on Asset, Net

Profit, "Profit per Employee and Deposit per Employee have close resemblancesto the ranking under EVA, whereas the ranking under Interest Income and Spread

does not match with the ranking under EVA. NarcyzRoztocki and Kim LaScola

Needy (University of Pittsburgh, 2005), the study concludes with a discussion of

possible changes to corporate strategies and business performance when the proposed

ABC-and-EVA system is implemented in a manufacturing company.


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The study approach is an exploration of possible relationship between equity capital

and economic value added performance of select companies. Thirty companies that

are included in the assessment of BSE-SENSEX have been classified based on its

equity capital and EVA. There are three stages of exploration have been done in order

to assess the Cost of capital and Debt; Weighted Average Cost of Capital; and

Economic Value Analysis. In addition, ranking of the companies have been identified

with respect to its value of EVA. On account of proving the performance of

companies, hypotheses have been set to test association as well as correlation between

various categories companies equity capital and its EVA.

Table 1: List of companiesincluded in the assessment of BSE-SENSEX

Sl. No.Companies

Name of Company Industry / Sector

1 Bajaj Auto Automobiles

2 BhartiAirtel Telecom

3 Bharat Heavy Electrical Electrical

4 Cipla Pharmaceutical

5 Coal India Mine

6 DLF Construction

7Housing Development Finance

Corporation Ltd.,Finance

8 HDFC Bank Banks

9 Hero Honda Motors Automobile

10 Hindalco Industries Aluminum

11 Hindustan Uni Lever FMCG / Diversified

12 ICICI Bank Banks

13 Infosys Technologies Software / Computers14 ITC Cigarettes

15 Jaiprakash Associates Construction

16 Jindal Steel & Power Steel

17 Larsen and Toubro Engineering


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22 Reliance Industries Refineries

23 State Bank of India Banks

24 Sterlite Industries India Metals

25 Sun Pharmaceuticals Pharmaceutical

26 Tata Motors Automobile

27 Tata Power Supply Co Power Generation

28 Tata Steel Steel

29 Tata Consultancy Services Software / Computers

30 Wipro Corporation Software and Computers

Sources: BSE SENSEX / 2010-2011

Tools of the study

Economic Value Added:

Economic Value Added is a tool widely used as a corporate performance

measurement in the current scenario and there has been a paradigm shift in setting

corporate objectives and performance measurement. This shift happened with thechanges in corporate mindset and the advent of professional management. It is now

well-recognized fact that the aim of every business entity should be to maximize

shareholders wealth and the activities of firm to achieve the objectives.

EVA is a term developed and used by a US based consulting firm named Stern

Stewart & Co. This measure is its registered trademark. It has done much to

popularize and implement this measure of residual income. But the concept of

residual income has been around for some time and many companies that are not

Stern-Stewart clients use this concept to measure and reward managers performance(Brealey and Myers 2000).

Economic Value Added is a measure of economic profit. It is calculated as the

difference between the Net Operating Profit after Tax and the opportunity cost of

invested Capital. This opportunity cost is determined by the weighted average cost of

Debt and Equity Capital ("WACC") and the amount of Capital employed.

NOPAT

Net

Operati

ng

ProfitCapital

Charges

EVA


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CALCULATION OF EVA

Net sales XXX

(-) Operating expenses XXX

Operating profit (EBIT) XXX

(-) Taxes XXX

Net Operating Profit after Tax (NOPAT) XXX

(-) Capital Charges (invested capital* cost of capital) XXX

Economic Value Added XXX

Weighted Average Cost of Capital:The Weighted Average Cost of Capital (WACC) represents to rate a company and is

expected to pay in financing its assets. The WACC calculates the companys cost of

capital by proportionately weighing the categories of capital, each of which would be

in the form or debt or equity. The WACC for a company is the minimum that the

company must earn on its assets to satisfy its owners and creditors.

Or

Where,

=Weight of debt (Proportion); = Cost of debt; = Tax

= Weight of preference Capital; = Cost of Preference Capital

= Weight of Common Share Capital; = Cost of Common Share Capital

= Weight of Retained Earnings; = Cost of Retained Earnings

COST OF CAPITAL CALCULATION:

Dividend Price Method or Dividend Yield Method:


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D1 = Expected dividend per share

NP= Net proceeds per share (in case of new issue)

MP= Market price per share (in case of existing shares)

CHI-SQUARE TEST OF ASSOCIATION

chi-square test or 2 test, is any statistical hypothesis test in which the sampling

distribution of the test statistic is a chi-squared distribution when the null hypothesis

is true, or any in which this is asymptotically true, meaning that the samplingdistribution (if the null hypothesis is true) can be made to approximate a chi-squared

distribution as closely as desired by making the sample size large enough.

Test statistics: Chi-square

Where,

=Expected Variable

= Observed Variable

Degrees of freedom = (No. of Rows 1) (No. of Column 1) = (r-1) (c-1)

Expected Frequencies = (Row Total Column Total)/ Grand Total

CORRELATION BETWEEN EQUITY CAPITAL AND ITS EVA

In statistics, dependence refers to any statistical relationship between two random

variables or two sets of data. Correlation refers to any of a broad class of statistical

relationships involving dependence.

DATA ANALYSIS AND INTERPRETATIONS:


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Table 2: CATEGORIES OF COMPANIES BASED ON EQUITY CAPITAL

AND EVA

Equity Capital

Row TotalBelow

250 Cr.

250 Cr.-

500 Cr.

Above

500 Cr.

EconomicValueAdd

ed

2007

Below 1000 Cr. 8 2 2 12

1000 Cr.-3000 Cr. 6 4 1 11

Above 3000 Cr. 1 1 5 7Column Total 15 7 8 30

2008

Below 1000 Cr. 8 2 2 12

1000 Cr.-3000 Cr. 5 5 2 12

Above 3000 Cr. 1 1 4 6

Column Total 14 8 8 30

2009

Below 1000 Cr. 5 3 2 10

1000 Cr.-3000 Cr. 7 2 2 11

Above 3000 Cr. 1 3 5 9


2010

Below 1000 Cr. 5 3 2 10

1000 Cr.-3000 Cr. 6 2 2 10

Above 3000 Cr. 1 4 5 10


2011

Below 1000 Cr. 2 4 1 7

1000 Cr.-3000 Cr. 7 2 3 12

Above 3000 Cr. 1 4 6 11


Source: Computed


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CATEGORIES OF COMPANIES BASED ON EQUITY CAPITAL AND EVA

Figure 2

In the BSE-SENSEX group around 30 companies have taken place and the Equity is the

major source for any business when the time of incorporation of the firm. Accordingly the

studies have been taken the equity as a base for classifying the companies in three sub

groups. They are, first set of companies equity range below 250 Cr, Second set of

companies equity range between 250 Cr to 500 Cr, and the third group range above 500 Cr.

In the year 2007 fifteen companies was coming under the First set of companies, sevencompanies in the second set, and the balance eight companies in the third set. In those

classifications, there was small change in the number of companies at every year in the set in

the following yearsand finally ten companies in each set.

Table 3: EVA-Based Frequencies Distribution of BSE-SENSEX Companies During the

period of the study:

EVA 2007 2008 2009 2010 2011

Negative 3 3 3 4 3

Below Rs.1000 Cr 8 7 7 6 4

Rs.1000 Cr - Rs.2000 Cr 6 5 6 5 7

Rs.2000 Cr - Rs.3000 Cr 4 7 5 5 5


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BSE-SENSEX Companies EVA During the Period of the Study

3 3 3

4

3

8

7 7

6

4

6

5

6

5

7

4

7

5 5 5

4

0

3

2

4

3

6

5

7 7

0

1

2

3

4

5

6

7

8

9

2007 2008 2009 2010 2011

Year

No.o

fCompanies

Neg at iv e Belo w Rs .1000 Cr Rs .1000 Cr - Rs .2000 Cr Rs .2000 Cr - Rs .3000 Cr Rs .3000 Cr - Rs .4000 Cr Abov e Rs .4000 Cr

Figure 3

The table 3 shows the EVA-Based Frequencies Distribution of BSE-SENSEX Companies

during the period of the study. In the study period three companies regularly shown the

negative EVA and in 2010 one company added with that negative EVA companies after thecompany has been recovered from the negative EVA.

EVA based performance framework not only provides a far more accurate report card on

corporate financial performance than conventional measures, but also has considerable

implications for companies on how to make strategic decisions and manage the healthier

financial performance in their pursuit of shareholder value.EVA created by the BSE-ENSEX

Companies during the period of the study period is showed in Appendix/Table 2.The table

shows that out of 30 companies, 26 companies have generated positive EVA during theperiod of the study and three companies show the negative EVA throughout the study period,

the companies are HDFC, HDFC Bank, and State Bank of India. Only in the year 2009-10

Jaiprakash Associates Ltd shows the Negative EVA and the remaining years shows the

Positive EVA. Due to high proportion of debt in the capital structure and insufficient profit

generation by the HDFC Bank, HDFC, and State Bank of India fails to create positive EVA.

However the number of companies that generated positive EVA(26 companies) during the

period of the study in the BSE-SENSEX. So the BSE-SENSEX included maximum sound

financial position companies except some companies.

It may observed from table 2 that ONGC Ltd., Reliance Industries Ltd., BhartiAirtel Ltd.,

Tata Consultancy Service Ltd., and Infosys Technologies Ltd., was the topper in the BSE-

SENSEX Companies as well as their financial position was good during the period of the

study.


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2 Coal India Mine 6316.36 2 2,062.70 14

3 Bajaj Auto Automobiles 4,604.73 3 1,298.93 19

4 Oil and Natural Gas Corp Refineries 2566.66 4 12,693.70 1

5 Reliance Industries Refineries 2192.77 5 12,407.60 2

6 BhartiAirtel Telecom 1897.92 6 6,928.26 3

7 ICICI Bank Banks 1078.4 7 2,357.25 12

8 Tata Steel Steel 777.812 8 3,426.30 9

9 State Bank of India Banks 612.506 9 -27,004.85 30

10 Tata Motors Automobile 498.05 10 942.36 23

11 ITC Cigarettes 457.23 11 2,698.88 11

12 Bharat Heavy Electrical Electrical 440.568 12 3,498.48 6

13 HDFC Bank Banks 404.434 13 -4,837.25 29

14 DLF Construction 333.054 14 2,896.09 10

15 Wipro CorporationSoftware and

Computers332.3 15 3,445.89 8

16 Jaiprakash Associates Construction 308.104 16 321.08 27

17 Infosys Technologies Software / Computers 286.4 17 4,778.18 5

18

Housing Development

Finance Corporation Ltd., Finance 280.392 18 -1,452.51 28

19 Mahindra and Mahindra Auto 265.258 19 1,275.46 20

20 Tata Power Supply Co Power Generation 222.948 20 346.47 26

21 Hindustan Uni Lever FMCG / Diversified 218.108 21 1,779.22 15

22 Sterlite Industries India Metals 179.86 22 737.35 25

23 Cipla Pharmaceutical 157.508 23 739.09 24

24 Hindalco Industries Aluminum 155.972 24 1,586.70 17

25 Maruti Suzuki India Automobile 144.5 25 1,699.07 16

26 Tata Consultancy Services Software / Computers 137.004 26 4,854.25 4

27 Sun Pharmaceuticals Pharmaceutical 102.188 27 945.65 22

28 Larsen and Toubro Engineering 94.894 28 2,213.17 13

29 Jindal Steel & Power Steel 46.564 29 1,330.14 18

30 Hero Honda Motors Automobile 39.94 30 1,084.05 21

Source: Computed

In the above table show the ranking position of a BSE SENSEX companies based on their

average equity and average EVA during the period of the study.2. Table 5: Chi-square and correlation result

Years

Result - I

Chi-square Test of Association

[calculated]

Result - II

Correlation

[r]


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The critical value of Chi-square =13.30 at =0.01 and df=4. Since calculated value of Chi-

square is less than the critical value during the period of study, the null hypothesis H0 is

accepted. Hence the study concludes that there is no significant relation between equity

investment and its EVA.

Since value ofris positive during the period of the study, therefore equity capital of company

and Economic value added are positively correlated. Hence we conclude that as the equity

capital of company increases, EVA also increase. Even the correlation is positive the

percentage of relation between EVA and Equity is poor during the period of the study.

3. Table 6: EVA to Equity ratio -Based Frequencies Distribution of BSE-SENSEX

Companies During the period of the study:

EVA to EquityCapital Ratio

2007 2008 2009 2010 2011

Below 2 7 6 8 9 8

2 to 10 15 17 14 13 14

Above 10 8 7 8 8 8

Sources: Computed

In the BSE SENSEX Companies minimum of 6 companies and maximum of 9 companies

EVA to equity ratio is below 2 in the study period. So they should improve their EVA in

forthcoming years. The second sets of companies coming in the range between the ratio 2 to

10 and minimum of 13 companies and maximum of 17 companies are under this range

during the course of study period, hence they should take steps to maintain the current EVA

level and further improvement. Third categories under the range of the ratio is above 10, in

this 8 companies are there except in 2008 this companies can increase their capital for the

further development of the companies.

CONCLUSION


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competition anticipated in the coming years thecompanies willreplace other performance

parameter measures with EVA.

The recognition of EVA concept in India shows, to some extent, diverse trend. A majority ofthe companies are still not prepared to employee the EVA technique to evaluate their

financial performance because of certain inherent difficulties associated with the

computation. In view of above facts, the competent authorities in India should issue

necessary guidelines for the computation of EVA and its practices in financial reporting, to

the appropriate bodies in India, so that it become obligatory for all companies to disclose

their EVA in their financial statement and to meet expectations of shareholders in the

country.

REFERENCE

1. Thenmozhie . M (1999), Economic Value Added as a measure of corporateperformance, The Indian Journal of Commerce, Vol. 52, No.4, PP.71-85.

2. Stern, Joel (2003), Work Shop on Value-based Management, organized by theASCI, Hyderabad, PP.21-22.

3. Ball, R. J., & P. Brown. (1968). An Empirical Evaluation of Accounting IncomeNumbers,Journal of Accounting Research, 6, pp. 159-178.

4. Beaver, W. H. (1968). The Information Content of Annual EarningsAnnouncements,Journal of Accounting Research, 6, pp. 67-92.

5. Bontis, N., Keow, W. C. C., & Richardson, S. (2000). Intellectual Capital andBusiness Performance in Malaysian Industries,Journal of Intellectual Capital, 1,

pp. 85-100.

6. Bontis, N., N. C. Dragonetti, K. Jacobsen, & G. Roos. (1999). The KnowledgeToolbox: A Review of the Tools Available to Measure and Manage Intangible

Resources,European Management Journal,.17, pp. 96-104.

7. Bradley, K. (1997). Intellectual Capital and The New Wealth of Nations,Business Strategy Review, 8, pp. 53-628. Bukh, P. N., Larsen, H. T., &Mouritsen, J. (2001). Constructing Intellectual

Capital Statements, Scandinavian Journal Management, 17, pp. 96-104.

9. Chauvin. K. W. & H. Mark. (1993). Advertising, R&D Expenditures and theMarket Value of the Firm, Financial Management, pp. 128-140.

10.Chen, Shimin& James L. Dodd. (1997). Economic Value Added (EVA): AnEmpirical Examination of A New Corporate Performance Measure?,Journal of

Managerial Issues, 6, pp. 318-333.11.Edvinsson, L. & Malone, M. (1997).Intellectual Capital: realizing yourcompanys true value by finding its hidden roots. New York: Harper Collins.

12.Greene, W. H. (2003).Econometric Analysis (5th ed). Prentice Hill Publishing.13.Lehn, K. & A. K. Makhija. (1996). EVA & MVA as performance measures and

signals for strategic change, Strategy and Leadership, 24, pp. 34-38.

14 Lev B (2001) Intangibles: Management Measurement and Reporting


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18.ODonnell, ORegan. P., Coates. B., Kennedy. T., Keary.B.,&Berkery. G.. (2003).How Interaction: The Critical Source of Intangible Value, Journal of

Intellectual Capital, 4, pp. 82-99.

19.Ohlson, J. (1995). Earning, Book Values, and Dividends in Equity Valuation,Contemporary Accounting Research, 11, pp. 661-687.

20.Roos J., Robert L. Edvinsson& N. Dragonetti. (1998). Intellectual Capital:Navigating in the New Business Landscape. New York University Press.

21.Stewart. Thomas A. (1997). Intellectual Capital: The New Wealth ofOrganizations. New York: Doubleday Dell Publishing Group.

22.Wooldridge, Jeffrey M. (2003). Introductory Econometrics: A Modern Approach(2nd ed). South-Western of Thomson Learning.

23.Wu, Chi-Ming & Firms Value Appraisal Group of EMBA. (2005). The EVA ofthe firms consist of TSEC Taiwan 50 index,Accounting Research Monthly, 230,pp. 32-51


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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 2, May-August (2012)

121

APPENDIX

Table 2: EVA of BSE-SENSEX Companies

Sl. No. Companies2007 2008 2009 2010 2011 Avg. of

EVA

Standard

DeviationEVA RANK EVA RANK EVA RANK EVA RANK EVA RANK

1 Bajaj Auto - - - - 758.56 23 1,746.16 17 2,119.28 14 1541.33 979.74

2 Bharat Heavy Electrical 2,380.82 10 2,653.28 8 2,849.58 10 4,089.85 7 5,518.86 5 3498.48 1305.40

3 BhartiAirtel 3,984.91 4 6,377.43 3 9,190.16 3 7,998.11 3 7,090.70 3 6928.26 1952.81

4 Cipla 569.27 21 526.29 24 944.49 21 901.99 21 753.39 24 739.09 189.11

5Coal India (Listing Date 04-11-

2010)- - - - - - - - 3,980.95 8 3980.95 1780.33

6 DLF 2,753.81 8 2,375.72 12 3,137.93 7 2,901.52 10 3,311.44 10 2896.08 361.27

7 HDFC Bank -926.3 27 -4,722.92 27 -7,023.79 28 -2,335.38 28 -9,177.86 29 -4837.25 3361.17

8 Hero Honda Motors 530.12 22 680.66 22 1,096.07 19 1,449.17 18 1,664.25 20 1084.05 484.68

9 HindalcoIndsutries 1,927.05 13 2,041.72 13 1,324.95 16 923.26 20 1,716.54 19 1586.70 460.54

10 Hindustan Uni Lever 1,248.67 17 1,533.28 15 2,254.57 13 1,926.47 16 1,933.12 17 1779.22 391.57

11Housing Development Finance

Corporation Ltd.,-525.38 26 -766.34 26 -2,153.16 27 -1,095.36 27 -2,722.33 28 -1452.51 943.57

12 ICICI Bank 1,933.53 12 2,598.48 10 1,922.77 14 2,126.62 14 3,204.84 11 2357.25 547.29

13 Infosys Technologies 3,213.70 7 4,292.41 5 5,752.80 4 5,245.05 5 5,386.94 7 4778.18 1027.38

14 ITC 2,273.98 11 2,614.18 9 2,760.70 11 3,633.75 8 2,211.76 13 2698.87 570.70

15 Jaiprakash Associates 387.58 24 535.72 23 683.27 24 -121.65 26 120.45 27 321.07 323.24

16 Jindal Steel & Power 674.2 19 1,385.37 17 1,631.66 15 1,072.87 19 1,886.58 18 1330.14 474.35

17 Larsen and Toubro 1,319.69 15 1,997.62 14 2,370.43 12 2,649.20 11 2,728.88 12 2213.16 575.67

18 Mahindra and Mahindra 758.7 18 829.29 21 819.28 22 1,949.34 15 2,020.71 15 1275.46 648.79


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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 6510(Online), Volume 3, Issue 2, May-August (2012)

122

19 Maruti Suzuki India 1,492.54 14 1,523.77 16 1,189.42 17 2,283.30 13 2,006.30 16 1699.07 438.42

20 N T P C Ltd 4,677.59 3 5,416.70 4 2,905.02 9 3,054.34 9 1,240.29 21 3458.79 1636.37

21 Oil and Natural Gas Corp 14,754.63 1 13,252.42 2 11,402.22 2 10,229.63 1 13,829.58 2 12693.70 1843.19

22 Reliance Industries 11,037.65 2 13,367.52 1 13,629.61 1 9,033.65 2 14,969.59 1 12407.60 2357.90

23 State Bank of India -9,205.82 28 -13,219.60 28 -15,966.85 29 -47,050.53 29 -49,581.44 30 -27004.85 19622.74

24 Sterlite Industries India 664.18 20 940.07 20 970.92 20 794.72 24 316.85 26 737.35 265.10

25 Sun Pharmaceuticals 469.08 23 999 19 1,154.04 18 889.01 22 1,217.10 22 945.65 295.92

26 Tata Consultancy Services 3,393.98 6 4,053.25 6 5,066.60 5 5,343.20 4 6,414.20 4 4854.25 1171.71

27 Tata Motors 1,282.37 16 1,307.10 18 154.56 26 820.23 23 1,147.54 23 942.36 481.22

28 Tata Power Supply Co 340.42 25 333.89 25 231.93 25 203.26 25 622.84 25 346.47 165.98

29 Tata Steel 3,513.61 5 2,471.20 11 3,098.24 8 2,582.74 12 5,465.71 6 3426.30 1214.32

30 Wipro Corporation 2,482.03 9 2,913.73 7 3,753.96 6 4,224.73 6 3,855.00 9 3445.89 721.30

Source: Computed

Table 3: Economic Value Added to Equity Capital Ratio

Sl.

NoCompany

2007 2008 2009 2010 2011

EVAEquity

Capital

EVA/E

CEVA

Equity

Capital

EVA/

ECEVA

Equity

Capital

EVA/

ECEVA

Equity

Capital

EVA/E

CEVA

Equity

Capital

EVA/E

C

1 Bajaj Auto 1,095.03 101.18 10.82 775.65 144.68 5.36 758.56 144.68 5.24 1,746.16 144.68 12.07 2,119.28 289.37 7.32

2 Bharat Heavy Electrical 2,380.82 244.76 9.73 2,653.28 489.52 5.42 2,849.58 489.52 5.82 4,089.85 489.52 8.35 5,518.86 489.52 11.27

3 BhartiAirtel 3,984.91 1,895.93 2.1 6,377.43 1,897.91 3.36 9,190.16 1,898.24 4.84 7,998.11 1,898.77 4.21 7,090.70 1,898.77 3.73

4 Cipla 569.27 155.46 3.66 526.29 155.46 3.39 944.49 155.46 6.08 901.99 160.58 5.62 753.39 160.58 4.69

5 Coal India 596.09 6,316.36 0.09 -1,195.99 6,316.36 -0.19 3,278.98 6,316.36 0.52 3,653.50 6,316.36 0.58 3,980.95 6,316.36 0.63

6 DLF 2,753.81 305.88 9 2,375.72 340.96 6.97 3,137.93 339.44 9.24 2,901.52 339.48 8.55 3,311.44 339.51 9.75

7 HDFC Bank -926.3 319.39 -2.9 -4,722.92 354.43 -13.33 -7,023.79 425.38 -16.51 -2,335.38 457.74 -5.10 -9,177.86 465.23 -19.73


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economic value added performance

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