EVA Excellence

Enterprising on Eva Excellence - An Empirical Study

on Select Companies in India

R.Kanthakrishnan and S.Jeyaraj

Abstract- The article titled “ENTERPRISING ON EVA

EXCELLENCE - An empirical study on select companies

in India” is intended to provide an insight into the role of

Economic Value Added concept as a performance

measurement/management tool in the Indian context.

There has been a remarkable turnaround of the Indian

corporate sector over the past few years. The BSE Sensex,

which is the benchmark of Indian corporate sector and the

economic barometer of the country, has surged from 10000

points in the beginning of 2006 to 18000 plus in the end of

2007 within a short period of less than two years. In this

context, a study on the performance of Indian companies in

terms of EVA was carried out in order to ascertain level of

value creation to the stake holders. This article is based on

an empirical study carried out on the select twenty

companies from various sectors like IT, FMCG,

A u t o m o b i l e , I n f r a s t r u c t u r e , M a c h i n e r y ,

Telecommunication, Steel, Cement and Pharmaceuticals.

The companies selected for the study are the leading

companies in their respective sectors. The article focuses

on the importance of EVA as an improved measure of

corporate performance over the traditional performance

indicators like PAT, ROI, ROCE, EPS, etc.

1. INTRODUCTION

In the presen t g loba l i sed marke t

e n v i r o n m e n t a n d i n c r e a s e d d y n a m i c

competitiveness, organizations all over the

world are adopting new strategies to gain

improved performance and to manage costs. To

monitor the effectiveness and efficiency of

activities, performance measures are required.

Over the past decades, evaluation of corporate

performance receives considerable attention.

One of the most basic and fundamental premise

of a business entity is the obligation to maximize

shareholders value in the long run. The interest of

the stakeholders and society are best-served

when the scarce resources are put to their most

productive uses. It is growingly realized that for

creating value, it is not enough to earn profit.

There is a need to earn enough profit to exceed

cost of capital. Generally, the financial

performance of a business segment/unit is

ascertained by measuring the cost of capital

within each division and then calculating the

operating return earned by that capital employed.

However, the stakeholders of the company would

like to know whether operating performance of

the company has added value to their wealth.

Traditionally, Net Profit and Return on

Investment (ROI) are the key performance

measures of business enterprises, which are

derived from the financial statements. There are

many companies which are reporting attractive

operating results in the financial statements, but

the real economic efficiency of a company is not

reflected there. Value creation is the core

objective of the stakeholders of a company. It is

widely recognized that earning profit is not

sufficient. The ability to generate profit is no

longer a test of profit adequacy. Ability to

generate economic value addition is the only test

of profit adequacy. Any surplus generated from

operating activities over and above the Cost of

Capital is termed as EVA. It is a corporate surplus

that should be shared by the employees,

management and shareholders. In the present

paper an attempt has been made to study the

performance of twenty select companies in India

in terms of EVA to ascertain the nature and extent

of value creation to shareholders.

The study confines to twenty select

companies in India belonging to different

2. SCOPE OFTHE STUDY:

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COLLEGE SADHANA Journal for Bloomers of Research, Vol. 3, No. 1, AUGUST 2010–

industries based on their EVA. The study

pertains to the financial year 2006-2007.

The study is undertaken in order:

The data used for the study have been taken

from the Annual Reports of the respective

companies available on their web sites. The study

confines to only twenty companies in India. The

analysis is based on past data and does not

ensure/predict the future performance.

The present study is based on secondary

data. The required secondary data were collected

from the Annual Reports of the select companies

for the year 2006-2007, various journals,

magazines, newspapers, books, various thesis

and dissertations and from web sites.

The sample size is twenty companies

selected from different industries like IT, FMCG,

Automobile , Infrastructure, Machinery,

Telecommunication, Steel , Cement and

Pharmaceuticals based on the significance of the

sectors and growth of the companies using a

combination of Judgmental Sampling and

Convenience Sampling.

The study covers the period of one year

2006-2007.

3. OBJECTIVES OFTHE STUDY:

4. LIMITATIONS OFTHE STUDY

5. COLLECTION OFDATA

6. SAMPLING DESIGN AND SAMPLING

METHOD

7. PERIOD OFSTUDY

�

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To understand the concept of EVA as

i m p r o v e d t o o l s o f p e r f o r m a n c e

measurement.

To compute and analyse EVA of select

companies.

To evaluate the performance of select

companies by comparing EVA to Capital

Employed (CE).

To draw findings based on the study.

8 . T R A D I T I O N A L M E T H O D S O F

PERFORMANCE MEASUREMENT

9 . P I T FA L L S O F T R A D I T I O N A L

METHODS

Many management systems based on

archaic metrics and accounting conventions are

quite adept at discouraging, if not destroying

value. These systems were designed primarily as

reporting and control systems for lenders and

subsequently adopted by managers as variance

measurement tools in the centralized command

and control organizations more suited to less

turbulent environment of yesteryears. Over the

past decades, research in the field of accounting

and capital markets has been increasingly

focusing on the subject of measuring value

creation. Efforts have been made to empirically

examine the value-relevance of profitability

measure namely the Operating Income.

The first basic measure of performance is

considered as “Profit” - the accounting measure

of performance. However, it is said that profit is

an opinion and not the fact. EPS do not explain

the performance in reality. PAT is the base of EPS

which considers only the cost of debt but not a

vital cost component i.e. cost of equity. Price-

Earning Ratio (PER) is dependent on EPS, which

suffers from the same limitation. The important

limitation of conventional measures such as ROI,

ROE and ROA is inherent in the measurement of

accounting profit. As per current accounting

practices, while most of the assets are recorded in

the balance sheet at their historical cost, revenues

and expenses (excluding depreciation) are

recognized in the profit and loss account at their

current value. Therefore, the accounting rate of

returns does not reflect the true return from an

investment and tends to be biased downwards in

the initial years and upwards in the later years.

Further, accounting measures ignore the

cost of equity and consider only the cost of

borrowing. As a result, it ignores the risk

inherent in the project and fails to highlight

60


whether the return is commensurate with the risk

of the underlying assets. This may lead to

selecting projects having attractive rate of return,

which will end up with destroying value of the

firm as the cost of capital is higher than the

benchmark return fixed by the management.

Thus, the traditional methods fail to reveal the

true economic performance and results of the

organizations.

“EVA is based on something we have

known for a long time: what we call profits, the

money left to service equity, is usually not profit

at all. Until a business returns a profit that is

greater than its cost of capital, it operates at a loss.

Never mind that it pays taxes as if it had a genuine

profit. The enterprise still returns less to the

economy than it devours in resources ….Until

then it does not create wealth; it destroys it”.

- Peter F Drucker

The term EVA is the acronym for Economic

Value Added and is a registered trade mark of

Stern Stewart & Co. of USA. EVA is defined as

“Excess profit of a firm after charging cost of

capital”. In other words, any profit caused over

and above the cost of capital is EVA.

Maximization of shareholders wealth is linked to

this surplus profit. EVA is regarded as a

comprehensive measure of performance and is an

indication of value creation and is calculated by

deducting the cost of capital from NOPAT (Net

Operating Profit After Tax). Thus, EVA is

considered as the true measure of corporate

surplus or effectiveness which should be shared by

the shareholders, management and employees.

EVA is the Net Operating Profit After Tax

(NOPAT) less the charge on economic capital

employed. In order to compute EVA, the

following parameters are required:

- Profit After Tax: It is available from the

Profit and Loss Account of the relevant

financial year.

10. EVA-AN OVERVIEW

11. REQUIREMENTS FOR CALCULATING

EVA

- Interest on Long Term Borrowing: It is

available in the Profit and Loss Account of

the relevant financial year.

- Tax Rate : It can be taken from the relevant

FinanceAct.

- Share Capital: It is available in the Balance

Sheet of the relevant financial year.

- Long Term Debt: It is available in the

Balance Sheet of the relevant financial year.

- Total Assets: It is available in the Balance

Sheet of the relevant financial year.

- Net Worth: It can be ascertained from the

Balance Sheet of the relevant financial year

by adding Share Capital and Reserves and

surplus and deducting intangible assets and

miscellaneous expenditure not written off.

- Capital Employed: It can be ascertained

from the Balance Sheet of the relevant

financial year by adding Net Worth and

Long Term Debt.

- Cost of Debt: It can be ascertained by

dividing the Interest on Long Term

Borrowing by the Long Term Debt.

- Cost of Equity: It can be calculated by

different methods like Dividend Yield

method, Dividend Growth method and

CAPM method.

NOPAT = (Profit After Tax + Non-

Recurring Expenses + Revenue Expenditure on

R&D + Interest Expense + Provision for Taxes) -

Non-recurring Income - R&D Amortization -

Cash Operating Taxes.

Cash Operating Taxes = (Provision for

Taxes + Tax benefit of Non-Recurring Expenses

+ Tax Benefit of Interest Expense - Tax on non-

Recurring Income).

Economic Capital = Net Fixed Assets +

Investments + Current Assets - (NIBCLs +

Miscellaneous Expenditure Not Written Off +

Intangible Assets + Cumulative Non-Recurring

Losses + Capitalized Expenditure on R&D) -

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R.Kanthakrishnan and S.Jeyaraj - Enterprising on Eva Excellence - An Empirical Study


Revaluation Reserve - Cumulative Non-

Recurrent Gains.

The process of EVA calculation can be

classified into three major steps as follows:

This step starts with taking up Profits

Before Interest and Taxes (PBIT) and making key

adjustments for accounting distortions for

converting accruals into cash and reclassifying

some expenses as investments by capitalizing

them in the Balance Sheet and finally subtracting

the cash operating taxes so as to arrive at NOPAT.

This step starts with getting the invested

book capital from the balance sheet followed by

making adjustments for converting accounting

accruals to cash and finally making adjustments

to recognize off-balance sheet sources. The

resultant figure is the Economic Capital.

It is calculated by multiplying the Cost of

Debt and Cost of Equity by their respective

proportions of invested capital. The proportion

of debt and equity depends on the total amount of

each and this information can be taken from the

Balance Sheet.

Having completed the above steps, all the

elements to perform the final calculation of EVA

are available. EVA is the subtraction of capital

charge from NOPAT. The capital charge is the

economic capital multiplied by WACC (a

percentage).

While financial strategy is often narrowly

interpreted as an exercise in cost of capital

minimization, in practice, the determinants of

financial policy must support enterprise value

maximization. Certainly, the firm's cost of

capital and any resulting impact on firm value is

one important element, but financial strategy

12. STEPS IN EVACALCULATION

1. Calculating NOPAT

2. Calculating Economic Capital

3. Calculating Weighted Average

Cost of Capital (WACC)

13. EVAAND STRATEGY

must also support the company's business

strategy and consider financial flexibility,

agency issues, flotation costs and clientele

considerations.

The after tax cost of debt is well below the

expected return on equity, reduce the weighted

average cost of capital and increasing value.

However, debt reduces financial flexibility,

especially in turbulent times and this may lead to

foregone opportunity. While debt increases

current operations value, future growth value can

be constrained, risking a sub-optimization of

total enterprise value.

EVA is much more than just a measure of

performance. It is the framework for a complete

f i n a n c i a l m a n a g e m e n t a n d i n c e n t i v e

compensation system that can guide every

decision a company makes from boardroom to

the shop floor; that can transform a corporate

culture; that can improve the working lives of

everyone in an organization by making them

more successful and that can help them produce

greater wealth for shareholders, customers and

themselves. The benefits of EVA are discussed

below :

EVA is a strong tool for business planning.

It explains the cash surplus generated by the

company which can be ascertained by interested

groups. A company should earn better than the

opportunity cost of capital.

EVA is a good guidance for investors. EVA

theory represents a framework on which

investors may determine whether a business

enterprise is worth investing in resources.

Investors like EVA because it is a running score

showing how well managers are performing their

basic task of creating wealth.

EVA can be used effectively for valuation

of goodwill and shares. Valuation is an important

issue in corporate financial decision particularly

in mergers and acquisitions. EVA eventually

helps to explain the ability of company to

14. BENEFITS OFEVA

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generate clear surplus. EVAspread of a company

vis-à-vis EVA spread of the market leader

explains the super profit. For valuation of

goodwill and share, the company may

benchmark EVA spread because it is possible to

link EVA to valuation of goodwill and shares.

Goodwill can be assumed as the excess of EVA

spread enjoyed by a company over the

benchmark company multiplied by average

capital employed. Alternatively, discounted

value of average EVAcan be taken as goodwill.

EVA enables formulation of EVA-linked

employee compensation plan. EVA can be

wide ly used as a base for execut ive

compensation. It has been widely recognized

that EVA linked employee compensation is the

best way to set accountability towards

shareholders and protecting and improving

shareholders value. Management should be

rewarded when the shareholders are rewarded.

EVA incentive compensation plan is to be based

on a specific formula which rewards managers

for continuous EVA improvements and is

consistent with long term value creation strategy.

EVA can be effectively linked to Bonus

System. Instead of using EVAas base for bonus in

a unit, bonus should be linked to EVA of the

company. This avoids situation wherein some

business units might have generated EVA but

company as a whole had negative EVA.

Similarly, EVA can be used as indicator of value

addition for issue of sweat equity.

EVA is based on past accounting

information derived from financial statements.

Some studies reveal that market may place higher

reliance on audited accounting earnings than the

unaudited EVAmetric.

EVA can be biased against low return start-

up investments and can favour businesses with

heavily depreciated assets as a result of the

adjustments made to compute EVA. EVA

15. LIMITATIONS OFEVA

approach can penalize companies that invest in

assets with long term returns. In calculating

EVA, intangible assets are not considered. In the

current scenario, intangible assets play a crucial

role in creating value and decide a firm's future

growth potential. EVA calculations are difficult.

Subjectivity is involved in calculating both

NOPAT and WACC for a firm's divisions or

products.

The present economic age calls for

companies to have closer linkage between the

operating performance and wealth maximization

for the stakeholders. This requires strategic

thinking to create and sustain economic value by

concentrating on the improvement of the future

growth value. In India, there are two ways that

EVA has been embraced by the corporate sector.

Some companies like TCS, have implemented

EVA as a performance measurement and

evaluation system linked with incentive. A

number of companies like Infosys, Satyam,

Dr.Reddy's Laboratories, Hindustan Lever and

Hero Honda report EVA as addit ional

information in their annual reports. During

recent years, EVA growth has been found in

sectors like IT, Cement, Steel, FMCG,

Automobile, etc.

The sample companies for the study have

been selected from among the different sectors

such as Information Technology, Fast Moving

C o n s u m e r G o o d s , A u t o m o b i l e s ,

Telecommunication, Machinery, Infrastructure,

Steel, Cement and Pharmaceuticals. As a first

step, the PBIT, NOPAT, Economic Capital and

WA C C o f t h e s e l e c t c o m p a n i e s a r e

derived/calculated based on the financial

statements of the respective companies, as shown

in Table 1.

16. EVAIN THE INDIAN CONTEXT

17. SELECT COMPANIES FOR THE

STUDY

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Table 2. Comparative Analysis of ROI, ROCE, EVA and EVA to CE of twenty select companies

Sl No Company Name ROI ROCE EVA EVA/CE EVA EVA/CE

RankRank

1 TCS 0.37 0.53 3901.14 0.42 3 3

2 Wipro 0.23 0.33 2299.70 0.23 6 6

3 Infosys 0.29 0.34 707.46 0.06 14 19

4 Satyam 0.23 0.27 53.68 0.01 20 20

5 HLL 0.25 0.67 1307.55 0.47 10 2

6 ITC 0.26 0.38 1573.00 0.15 9 13

7 Nestle India 0.40 1.19 279.70 0.69 19 1

8 Hero Honda 0.29 0.47 676.00 0.26 15 5

9 Tata Motors 0.14 0.23 1934.02 0.13 8 15

10 Maruti Udyog 0.23 0.31 1095.43 0.14 12 14

11 BHEL 0.16 0.40 2056.36 0.22 7 7

12 L& T 0.13 0.24 2354.87 0.18 5 11

Table 1. PBIT, NOPAT, Economic Capital and WACC of Select Companies (Rs. In Crores)

Sl.No. Company PBIT NOPAT Economic Capital WACC (Ratio)

1 TCS Ltd 4927.73 4428.08 8572.01 0.06

2 Wipro Ltd 3311.20 2972.10 9037.40 0.07

3 Infosys Technologies Ltd 3756.00 3453.00 11162.00 0.25

4 Satyam Computers Ltd 1580.84 1405.83 5803.15 0.23

5 Hindustan Lever Ltd 1872.41 1622.38 2796.09 0.11

6 ITC Ltd 4069.41 3034.77 11425.80 0.13

7 Nestle India 480.96 321.48 405.16 0.10

8 Hero Honda Ltd 1247.61 806.92 2764.81 0.06

9 Tata Motors Ltd 3493.95 2853.95 15635.86 0.06

10 Maruti Udyog Ltd 2356.70 1782.70 7848.20 0.09

11 Bharat Heavy Electricals Ltd 3779.40 2894.21 8877.59 0.09

12 Larsen & Toubro Ltd 3166.89 2735.55 13975.12 0.03

13 BhartiAirtel Ltd 4927.23 4673.01 17205.15 0.08

14 SteelAuthority of India Ltd 9851.49 8147.37 23402.08 0.16

15 Tata Steel Ltd 6724.21 4930.30 41638.39 0.02

16 Ultra Tech Cements Ltd 1253.02 1197.19 3902.67 0.07

17 India Cements Ltd 641.76 637.10 4294.46 0.08

18 Ranbaxy Laboratories Ltd 754.67 1452.23 6738.54 0.03

19 Dr.Reddy's Laboratories Ltd 1413.81 1384.11 4760.99 0.17

20 Lupin Pharmaceuticals Ltd 444.67 392.54 1840.79 0.06

18. CALCULATION of ROI, ROCE, EVA

and EVAto CE

The following table shows the ROI, ROCE,

EVA and EVA to CE. Since the select twenty

companies are from different sectors, an external

benchmark is necessary for meaningful

comparison, for which the ratio of EVA to CE has

been calculated for the select companies and a

comparative analysis of EVA and EVA to CE

among the select companies are made as given in

Table 2. In order to maintain consistency in

computation, the Cost of Equity (Ke) has been

calculated using “Dividend-Growth Model” for

all the companies.

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13 BhartiAirtel 0.18 0.29 3267.83 0.20 4 8

14 SAIL 0.28 0.45 4445.01 0.20 1 8

15 Tata Steel 0.14 0.17 4096.12 0.10 2 17

16 Ultratech 0.27 0.38 924.88 0.28 13 4

17 India Cements 0.13 0.15 295.05 0.07 17 18

18 Ranbaxy 0.09 0.12 1265.65 0.19 11 10

19 Dr Reddy's 0.26 0.30 591.44 0.13 16 16

20 Lupin 0.20 0.26 292.05 0.17 18 12

19. COMPARATIVEANALYSIS

A comparative analysis of EVA to CE,

which is considered as an

for the present study, as presented in Table 2.,

reveals the following:

1. TCS has the EVA/CE ratio of 42%, which

may be due to its comparable ROI (37%)

and lowest WACC (6%) among the IT

companies.

2. WIPRO Ltd. has EVA/CE ratio of 23%.

This may be due to the same rate of ROI and

better WACC (7%).

3. Infosys Technologies Ltd. has the EVA/CE

ratio of 6%, even though its ROI is almost

5 times more (29%). This may be mainly due

to the absence of debt content in the capital

structure, which has pushed up the WACC,

which consists of cost of equity only.

4. Satyam Computers Ltd. has the EVA/CE

r a t i o o f 1 % , t h o u g h i t s R O I i s

disproportionately higher (23%). This

may be basically due to low debt content in

the capital structure and higher cost of

borrowing.

5. Hindustan Lever Ltd. has EVA/CE ratio of

47%, which could have been due to its

operating performance (ROI - 25%) and

lower cost of equity.

6. ITC Ltd. has the EVA/CE ratio of 15% even

though it has a better ROI (26%). This may

be higher equity content in the capital

structure and higher cost of equity.

External Benchmark

7. Nestle India Ltd. has the highest ratio (69%)

of the benchmark (EVA/CE). This may be

due to the high operating performance

(ROI - 40%) and low cost of debt.

8. Hero Honda Ltd. has EVA/CE ratio of 26%,

which may be due to closer ROI (29%) and

l o w e r WA C C a m o n g A u t o m o b i l e

companies.

9. Tata Motors Ltd. has the EVA/CE ratio of

13%, which is close to its ROI (14%).

10. Maruti Udyog Ltd. has the EVA/CE ratio of

14%, inspite of its much higher ROI (23%).

This may be due to higher cost of equity.

11. BHEL Ltd. has EVA/CE ratio of 22% which

may be due to considerable ROI (16%) and

a mix of higher debt (70%) content in the

capital structure and lower cost of debt

(8%).

12. Larsen & Toubro Ltd. has the EVA/CE ratio

of 18%, though its ROI is 13%. This may be

due to higher debt content and lower

WACC.

13. Bharti Airtel Ltd. has EVA/CE ratio of 20%

which slightly higher than it's ROI (17%)

and lower than its ROCE (29%). This may

be due to high debt content in the capital

structure and low cost of debt.

14. SAIL Ltd. has the EVA/CE ratio of 20%.

This is lesser than its ROI (28%) which may

be due to a mix of higher equity content

(47%) in the capital structure and higher

cost of equity (25%)

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15. Tata Steel Ltd. has the EVA/CE ratio of

10%, though it has a slightly better ROI

(13%).

16. Ultra Tech Cements Ltd. has EVA/CE ratio

of 28%, which may be due to similar ROI

ratio (27%) and high levered Debt-Equity

ratio.

17. India Cements Ltd. has the EVA/CE ratio of

7% though it has a better ROI (13%), which

may be due to its slightly higher WACC.

18. Ranbaxy Laboratories Ltd. has the EVA/CE

ratio of 19%, inspite of its ROI being 9%.

This may be due to higher proportion of

debt and lower WACC.

19. Dr.Reddy's Laboratories has the EVA/CE

ratio of 13%, in spite of its much better ROI

(26%). This may be due to higher cost of

equity and debt.

20. Lupin Pharmaceuticals Ltd. has the

EVA/CE ratio of 17%, which is slightly

lower than its ROI (20%).

Thus, in an overall analysis of the twenty

select companies, Nestle India Ltd. stands first in

terms of EVAto CE (69%) followed by Hindustan

Lever Ltd. (47%) in the second place and Tata

Consultancy Services Ltd. (42%) in the third

place. Satyam Computers Ltd. stands last with

the EVAto CE ratio of 1%.

The present study reveals that all the twenty

companies have positive EVA Further, since

EVAare in absolute figures, comparison has been

made keeping EVA to CE ratio as external

benchmark, which have revealed the following:

Three companies (Nestle India, Hindustan

Lever and Tata Consultancy Services) have the

EVA to CE ratio of more than 40%, indicating an

of value creation.

Six companies (Ultratech, Wipro, Bharti

Airtel, Hero Honda, SAIL and BHEL) have the

EVA to CE ratio ranging between 20% and 40%,

indicating of value creation.

20. FINDINGS

excellent level

effective level

Eight companies (Tata Motors, Maruti

Udyog, ITC, L&T, Tata Steel, Ranbaxy,

Dr.Reddy's and Lupin) have the EVA to CE ratio

ranging between 10% and 20%, indicating

of value creation.

Three companies (Infosys, Satyam and

India Cements) have the EVA to CE ratio below

10%, even though their operating performance

measured in terms of ROI and ROCE are much

better. These companies have to adopt a

combination of strategies such as injecting more

debt content in the capital structure, switching

over to low cost of debt and improving the

operating performance through better asset

utilization in order to improve their EVA.

EVA has the advantage of being

conceptually simple and easy to explain to non-

financial managers, since it starts with familiar

operating profits and simply deducts a charge for

the capital invested in the company as a whole, in

a business unit, or even in a single plant, office or

assembly line. By assessing a charge for using

capital, EVA makes managers care about

managing assets as well as income, and helps

them properly assess the tradeoffs between the

two. This broader, more complete view of the

economics of a business can make dramatic

differences.

The popularity of EVA stems from the fact

that it is the operating measure that truly drives

shareholder wealth, which is the difference

between what the capital investors put into a

business and the value they could get by selling

their claims. It is based on the economic principle

that shareholder wealth will increase only if the

organization is able to generate surplus over its

cost of capital. The number of companies

adopting EVA is increasing rapidly. There are

more than 500 organizations throughout the

world who have adapted EVA as a corporate

philosophy. Multinational companies like Coca-

Cola and Baush & Lamb are very successful in

implementing EVAas a new tool for performance

considerable level

21. CONCLUSION

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appraisal as well as value creation. Many

companies in India have also begun to realize the

need to concentrate on EVA as a benchmark to

create value for shareholders as there is a greater

incentive and compulsion to focus on value

creation in the globalised environment of today.

Hence, EVAcan be computed and reflected in the

Financial Statements by all corporate enterprises

as mandatory information, since it is a better

performance indicator of value creation.

REFERENCES

[1] Gopathy V, “Economic Value added Concept vis-à-

vis Corporate Governance”, The Management

Accountant -August, 2005.

[2] Indian Management journal,August, 2002.

[3] Khan and Jain, “Financial Management”,

IV Edition, Tata McGraw Hill Publishing Company,

New Delhi 2004.

[4] Niranjan Swain, Chandrasekhar Mishra, Economic

Value Added - Concepts & Cases, The ICFAI

University, Hyderabad, 2002.

[5] Saxena.V.K and C.D.Vashist, Management

Accounting - Performance Management, Sultan

Chand Dropadi Devi Education Foundation,

New Delhi.

[6] Pande, I.M., Financial management, Vikas

Publishing House, New Delhi, 2002.

[7] Shankari L, “EVA in Pharma Industry in India”, The

Accounting World (ICFAI University Press),

October 2007.

[8] Siddhartha Sankar Saha, The Accounting World

(ICFAI University Press) -August 2005, “Economic

Value Added - A new tool for Corporate

PerformanceAppraisal”.

[9] Siddhartha Sarkar, “Invisible Value : The case of

measuring organizational Intellectual Capital”, The

ManagementAccountant - March 2006,

[10] “The Analyst” journals of ICFAI, (Jan. 2005,

Feb. 2006, Dec. 2006)

[11] www.eva.com

[12] www.investopedia.com/university/eva

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EVA Excellence

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