Amara Raja Batteries LTD Tirupathi: Narayana Engineering College

A STUDY ON CAPITAL BUDGETING
WITH REFERENCE TO
AMARA RAJA BATTERIES LTD
TIRUPATHI
DEPARTMENT OF MANAGEMENT STUDIES
NARAYANA ENGINEERING COLLEGE

BY
A.BHUVANESWARI
(19711E0003)
UNDER THE GUIDANCE OF
Dr.GANGINENI.DHANANJHAY,
B.Tech,MBA,FDP(IIMA).
CONTENTS
❖ TITLE PAGE
❖ INTRODUCTION
❖ CAPITAL BUDGETING
❖ INDUSTRY PROFILE
❖ COMPANY PROFILE
❖ THEORETICAL FRAMEWORK
❖ NEEDS OF THE STUDY
❖ SCOPE OF THE STUDY
❖ OBJECTIVES OF THE STUDY
❖ RESEARCH METHODOLOGY
❖ LIMITATION OF THE STUDY
INTRODUCTION
Capital budgeting is the process of making investment

decision in capital expenditure.
A capital expenditure may be defined as an expenditure
the benefits of which are expected to be received over
period of time exceeding one year.
CAPITAL BUDGETING
Capital budgeting is made up of two words

'capital' and 'budgeting. ' In this context, capital
expenditure is the spending of funds for large
expenditures like purchasing fixed assets and
equipment, repairs to fixed assets or equipment,
research and development, expansion and the like.
KEY POINTS :
● Capital budgeting is the process by which investors determine the value of a
potential investment project.
● The three most common approaches to project selection are payback period
(PB), internal rate of return (IRR), and net present value (NPV).
● The payback period determines how long it would take a company to see
enough in cash flows to recover the original investment.
● The internal rate of return is the expected return on a project—if the rate is
higher than the cost of capital, it's a good project.
● The net present value shows how profitable a project will be versus
alternatives and is perhaps the most effective of the three methods.
INDUSTRY PROFILE
A battery is an electrochemical device in which the

free energy of a chemical reaction is converted into a
electrical energy. The chemical energy contained in the
active materials is converted in to electrical energy by
means of electrochemical oxidation-reduction reactions.
lights and other accessories.
How a Battery works?
When you place a key in your car’s ignition and turn the
ignition switch to “ON”, a signal is sent to the cars battery. Upon
receiving this signal the car battery takes energy which has been
stored in chemical form and releases it as electricity. This electric
power is used to crank the engine. The battery also releases
energy to power the car’s lights and other accessories.
COMPANY PROFILE
Amara Raja Batteries Limited is a Public incorporated

on 13 February 1985. It is classified as Non-govt. company
and is registered at Registrar of Companies, Hyderabad. Its
authorized share capital is Rs. 200,000,000 and its paid up
capital is Rs. 170,800,000.It is involved in Manufacture of
accumulators, primary cells and primary batteries
Directors of Amara Raja Batteries Limited are Narayanaswamy
Tharmapuram Ramachandran, Bhairavi Tushar Jani, Galla
Ramachandra Naidu, Galla Jayadev, Sri vishnu Raju Nandyala,
Nagarjun Valluripalli, Raymond Joseph Brown, Shu Qing Yang, Raphael
John Shemanski, Trent Moore Nevill, Marc David Andraca, Claudio
Morfe, .
Amara Raja Batteries Limited's Corporate Identification Number is

(CIN) L31402AP1985PLC005305 and its registration number is 5305.Its
Email address is [email protected] and its registered address is
RENIGUNTA, CUDDAPAH ROAD,KARAKAMBADI,TIRUPATI
THEORETICAL BACKGROUND
DEFINITIONS:
Charles T.Horngren has defined Capital Budgeting as “Capital

Budgeting is long term planning for making and financing proposed
capital outlays:”
The methods of appraising capital expenditure proposals can be

classified in to two broad categories:
1) traditional or undiscounted cash flow techniques

2) discounted or time adjusted cash flow techniques
TRADITIONAL OR NON DISCOUNTED TECHNIQUES
1) Payback period or “pay off” or “pay out” method

2) Improvement in traditional to pay back period method
3) Rate of return method or accounting method
THE ADJUSTED METHODS OR DISCOUNTED METHODS:
4) Net present value method (NPV)

5) Internal rate of return method(IRR)
6) Profitability index or benefit cost ratio methods
NEEDS OF THE STUDY
⮚ Long term goals.

⮚ Involvement of large amount of funds.
⮚ Irreversible decision.
⮚ Monitoring & controlling the expenditure.
⮚ Difficulties of investment decision.
⮚ Maximization of wealth.
SCOPE OF THE STUDY
⮚ The scope of the study includes for the period of

five years.
⮚ This study helps to understand the practical usage
of capital budgeting in the evaluation of project.
⮚ The study offers conclusions derived and gives
suitable suggestions for the efficient utilization of
capital expenditure decisions .
OBJECTIVES OF THE STUDY
Evaluating
Evaluating
the project
the projects
proposals
Profitable
Expenditure
Further data needed for the
study was collected from:-
❖ Collection of required data

from annual records of the
company.
❖ Reference from text books.
❖ Journals relating to financial
management.
LIMITATIONS OF THE STUDY
❖ The time constraint was one of the major

problems.
❖ The lack of information sources for the
analysis part.
❖ Uncertainty and risk pose the biggest
limitations to the techniques of capital
budgeting.
Thank you

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A STUDY ON CAPITAL BUDGETING

NARAYANA ENGINEERING COLLEGE

Capital budgeting is the process of making investment

Capital budgeting is made up of two words

A battery is an electrochemical device in which the

Amara Raja Batteries Limited is a Public incorporated

Amara Raja Batteries Limited's Corporate Identification Number is

Charles T.Horngren has defined Capital Budgeting as “Capital

The methods of appraising capital expenditure proposals can be

1) traditional or undiscounted cash flow techniques

1) Payback period or “pay off” or “pay out” method

4) Net present value method (NPV)

⮚ Long term goals.

⮚ The scope of the study includes for the period of

❖ Collection of required data

❖ The time constraint was one of the major

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