The document discusses Tata Consultancy Services (TCS), the largest Indian IT services company. It provides an introduction to TCS, describing it as an Indian multinational company and subsidiary of Tata Group that operates in 46 countries. It then discusses TCS's products and services, operations in various countries and cities, financial details such as revenue and profits, and the number of employees. Finally, it explains the concept of cost of capital and provides the calculation of TCS's weighted average cost of capital.

1. COST OF CAPITAL-
TCS
SUBMITTED TO SUBMITTED BY
DR SHALINI AGGARWAL VIVEK TYAGI BM016282
SHUBHAM JAIN BM016238
SHREYA GUPTA BM016233
UTSAV GOEL BM016287

2. TATA CONSULTANCY SERVICES-
INTRODUCTION
 TCS IS AN INDIAN MULTINATIONAL INFORMATION TECHNOLOGY SERVICES,
CONSULTING AND BUSINESS SOLUTION COMPANY HEADQUARTER MUMBAI,
MAHARASHTRA
 SUBSIDIARY GROUP OF TATA AND OPERATIONS IN 46 COUNTRIES .IT IS A
LARGEST INDIAN COMPNY BY MARKET CAPITALISATION $80BILLION
 IN 2015 TCS IS RANKED 64TH OVERALL IN FORBES WORLD’S MOST INNOVATIVE
COMPANY RANKING MAKING IT FIRST INDIAN COMPANY IT IS THE WORLD’S 10
LARGEST IT SERVISE PROVIDER

3. TATA CONSULTANCY SERVICES-
INTRODUCTION
 IT IS THE WORLD’S 10TH LARGES IT SERVICES PROVIDER MEASURED BY THE
REVENUE
 PLACED AMONG BIG 4 MOST VALUABLE IT SERVICES PROVIDER WORLDWIDE.
 AS OF DECEMBER 2015,IT IS RANKED 10TH ON THE FORTUNE INDIA 500 LIST

4. PRODUCTS AND SERVICES
 TCS AND ITS 67 SUBSIDIARIES PROVIDE A WIDE RANGE OF IT SECTOR
RELATED PRODUCTS LIKE
 APPLICATION DEVELOPMENT ,
 BUSINESS PROCESS OUTSOURCING ,
 CAPCITY PLANNING,
 ENTERPRISE SOFTWARE
 HARDWARE SIZING
 PAYMENT PROCESSING
 SOFTWARE MANAGEMENT
 TECHNOLOGY EDUCTAION SERIVCES

5. TCS OPERATIONS
 TCS HAS 289 OFFICES ACROSS 46 COUNTRIES AND 147 DELIVERY CENTERS IN
21 COUNTRIES. AT THE SAME DATA TCS HAD A TOTAL OF 58 SUBSIDIARY
COMPANIES.
 TATA CONSULTANCY SERVICES, HYDERABAD.
 THE TATA CONSULTANCY SERVICES CAMPUS IN LUCKNOW. TATA CONSULTANCY
SERVICES ON GROSUENOR SQUARE, LONDON.
 REVENUE- US $16.54 BILLION (2016) OPERATING INCOME- US $4.38
BILLION (2016)
 PROFIT- US $3.70 BILLION (2016) TOTAL ASSETS- US $130.16 BILLION (2016)
 TOTAL EQUITY- US $110.10 BILLION (2016) NO. OF EMPLOYEES- 371.519 (SEP
2016)

6. COST OF CAPITAL
 IT REFERS TO THE OPPORTUNITY COST OF MAKING A SPECIFIC
INVESTMENT.
 IT IS A RATE OF RETURN THAT COULD HAVE BEEN RETURN BY PUTTING
THE SAME MONEY IN THE DIFFERENT INVESTMENT WITH EQUAL RISK.
 IT IS THE RATE OF RETURN REQUIRED TO PERSUADE THE INVESTOR TO
MAKE A GIVEN INVESTMENT.

7. HOW IT WORKS-COST OF CAPITAL
• COST OF CAPITAL IS DETERMINED BY THE MARKET AND REPRESENTS THE DEGREE
OF PERCEIVED RISK BY INVESTOR.
• WHEN GIVEN THE CHOICE BETWEEN TWO INVESTMENTS OF EQUAL RISK,
INVESTORS WILL GENERALLY CHOOSE THE ONE PROVIDING THE HIGHER RETURN.
• A COMPANY’S OVERALL COST OF CAPITAL IS A MIXTURE OF RETURNS NEEDED TO
COMPENSATE ALL CREDITORS AND STAKEHOLDERS. THIS IS CALLED THE
WEIGHTED AVERAGE COST OF CAPITAL AND REFERS TO THE WEIGHTED AVERAGE
COST OF THE COMPANY’S DEBT AND EQUITY

8. WHY IT MATTERS –COST OF CAPITAL
 COST OF CAPITAL IS AN IMPORTANT COMPONENT OF BUSINESS
VALUATION WORK, BECAUSE AN INVESTOR EXPECTS HIS OR HER
INVESTMENT TO GROW BY AT LEAST TO THE COST HE OR SHE HAS
INVESTED.
 COST OF CAPITAL CAN BE USED AS A DISCOUNT RATE TO CALCULATE THE
FAIR VALUE OF AN INVESTMENT CASH FLOW.
 COST OF CAPITAL IS DEPENDENT ON THE USE OF FUNDS NOT ON THE
SOURCE OF FUNDS.

9. TCS COST OF CAPITAL
 COST OF CAPITAL=COST OF EQUITY SHARE+COST OF PREFERENCE SHARE+COST
OF DEBTS
 COST OF DEBTS= INTEREST (1-TAX)
NET PROCEED
= 19.83(1-0.23)
(82.53+112.96)
=7%

10. TCS COST OF CAPITAL
 COST OF EQUITY
=DIVIDEND INCOME + GROWTH RATE
MARKET PRICE/SHARE
=11.26 +0.14
1
=11.40%

11. TCS COST OF CAPITAL
 COST OF PREFERNCE SHARE
=DIVIDEND+(MARKET VALUE-NET PROCEED)
N
½(MARKET VALUE +NET PROCEED)
=11.26+(1/5)
½(1)
=22.92%
COST OF CAPITAL TCS=7%+11.40%+22.92% =41.32%