Beruflich Dokumente
Kultur Dokumente
R VENKATESH
CHIEF MANAGER & FACULTY
STATE BANK ACADEMY
GURGAON
INTRODUCTION
Share Capital Retained Earnings Debentures Term Loans, DPGs Public Deposits
Equity Preference
IV] Financing the Proposition
- Long Term Sources
The aggregate amount of finance raised for
financing a project is referred to as Capital,
comprising two components – (a) Owned
Capital and (b) Borrowed Capital.
The other sources of long term funds are:
(a) Capital Subsidy applicable to projects
coming up in certain notified backward areas,
and (b) Interest free sales tax loans offered by
State Governments.
IV] Financing the Proposition
- Financial Leverage
After considering availability of long terms
sources of finance, the promoter will decide
about a suitable financial structure for the
Company.
It will depend upon the financial leverage
envisaged in the combination of sources of
finance under the two categories, viz., Owned
Capital and Borrowed Capital.
Few projects can be financed entirely by
IV] Financing the Proposition
- Financial Leverage
The divergent interests of debt and equity are
brought into alignment by the concept of Debt
/ Equity gearing which determines the level of
debt that can be supported by a given
quantum of equity.
For this purpose, Debt means Funded Debt
including all term liabilities and equity will
include Share Capital and retained earnings, if
available.
IV] Financing the Proposition
- Return on Investment
1. PROPOSAL
Nature of proposal;
Purpose : New project, expansion, modernisation, diversification or for any other approved purpose
2. BRIEF HISTORY
Brief account of corporate history; MA & AA; Regd. address; Present organisational set up with BoD; Qualifications, experience and background;
Line of activities, Financial position, etc., of Associate Concerns; Overall structure of inter-corporate investments
3. PAST PERFORMANCE
Summary of Company's past performance in terms of licensed / installed / operating capacities, sales, operating profit and Net Profit for
the past 3 years; Capacity utilisation; Sales & profitability; Dividend policy; Capital expenditure programmes implemented by the Company
during the past 3 years and how they were financed; Company's management-labour relations
5. PROJECT
(a) Description of the project (Modernisation, expansion, diversification or a new venture) ; Standing, experience and reliability of
outside agency who prepared the Project Report; (b) Collaboration Arrangement (Technical or Financial); (c) Technical Feasibility covering
suitability of technology, size & location of plant, technical arrangements & mfg. process (d) Financial Feasibility covering Cost of Project & Means of Finance
7. PRODUCTION FACTORS
(a) Mfg. Process - Basis of selection & justification; (b) Raw Materials - Imported / Indigenous, Names of main suppliers, Pattern of unit prices & fluctuation;
(c) Utilities & Essential Services - Requirements of power, fuel, water, transport, railway siding with comments on adequacy of arrangements, treatment
and disposal of effluents; (d) Operating Organisation - Experience and expertise of Managerial / Technical personnel, other staff required
9. MARKETING
(a) Sales prospects and underlying assumptions, demand projections on the basis of past consumption, total supply position, general condition of industry
(b) Selling Price - Trend to see whether stable, Govt. price controls, quota systems, etc.; (c) Propsects for exports - Export obligations;
(d) Marketing Organisation - Adequacy, Distributors / Selling Agents, Terms of arrangement, remuneration, competence, Asso. Concerns - Siphoning of profits