P.G.

DEPARTMENT OF BUSINESS ADMINISTRATION

RANI CHANNAMMA UNIVERSITY, BELAGAVI.

Assignment On

LEASING


SUBJECT: MERCHANT BANKING & FINANCIAL SERVICE

Submitted To: Dr.N.M Rao

Submitted By: Mahantesh Balekundri
MBA IV
th

Semester

Roll .No.05
Rg No. MB121011






Tata Capital
Overview
Tata Capital Limited is a subsidiary of Tata Sons Limited. The Company is registered with
the Reserve Bank of India as a Systemically Important Non Deposit Accepting Core
Investment Company and offers through itself and its subsidiaries fund and fee-based
financial services to its customers.

Tata Capital Financial Services Limited ("TCFSL") is a subsidiary of Tata Capital Limited.
The Company is registered with the Reserve Bank of India as a Systemically Important Non
Deposit Accepting Non Banking Financial Company (NBFC) and offers fund and fee-based
financial services to its customers, under the Tata Capital brand.

A trusted and customer-centric, one-stop financial services provider, TCFSL caters to the
diverse needs of retail, corporate and institutional customers, across various areas of business
namely the Commercial Finance, Infrastructure Finance, Wealth Management, Consumer
Loans and distribution and marketing of Tata Cards.

TCFSL has over 100 branches spanning all critical markets in India.

We only do whats right for you

The Tatas are amongst the most respected business houses in the world. Tata Capital aims to
bring the trust and expertise of the Tatas to an economically and socially relevant sector like
financial services.

The essence of brand Tata Capital is encapsulated in our brand proposition We only do
whats right for you'. The proposition reflects our strong resolve to deliver financial solutions
that are right for our customers and the society at large.

Tata Capital seeks to build strong relationships with its customers and deliver superior and
consistent customer experience across all products and touch-points.

Offerings

Tata Capital's range of offerings caters to the diverse financial requirements of its retail,
corporate and institutional customers, directly or indirectly, through its subsidiaries.

Commercial
Finance
The Commercial Finance* business helps small, medium and large
corporates grow their business. Our range of offerings includes Term
Loans, Working Capital Loans, Channel Finance, Equipment Finance,
Lease Rental Discounting, Bill Discounting, Letter of Credit and Bank
Guarantee**.
Investment
Banking
Tata Securities Limited (TSL), a wholly-owned subsidiary of Tata Capital
Limited holds a Category | Merchant Banking license from the Securities
and Exchange Board of India (SEBI ) to carry out merchant banking
business. Our Investment banking business provides a broad range of
services, including equity capital markets transaction execution,
underwriting, mergers and acquisitions advisory, structured finance
advisory, private equity advisory and infrastructure advisory.
Private Equity
Tata Capital acts as Investment Manager to Private Equity Funds which
identify and invest into target companies with significant growth potential,
nurture them and exit profitable.
Infrastructure
Finance
The Infrastructure Finance* business caters to the specialized needs of the
infrastructure sector. Our range of offerings includes Equipment Finance,
Project Finance, Equipment Rentals, Working Capital Loans, Bill
Discounting/ Factoring, Refinance, Top Up Loans and Loan Syndication.
Securities
Tata Securities Limited, a wholly owned subsidiary of Tata Capital
Limited, offers, both institutional and retail customers, quality products
and services like equity trading and research.
Wealth
Management
Tata Capital Wealth Management offers a range of Investment Advisory
services and markets third party investment products like Portfolio
Management Services, Private Equity and Venture Capital Funds,
Structured Products, Mutual Funds, Fixed Deposits and Bonds.
Consumer
Loans
Our wide range of Consumer loans* such as Home Loans^, Auto Loans,
Personal Loans, Business Loans, Education Loans, Loans against
Property, Loans against Shares.
Tata Cards
The Tata Card# combines the convenience of a powerful credit card with a
rewarding membership to the Empower program. The credit card allows
customers to earn points and membership to the Empower program, India's
first multi-brand loyalty program, offering them the advantage of
redeeming these points across several loyalty partners.
Travel Related
Services
TC Travel and Services Limited, a wholly - owned subsidiary of Tata
Capital Limited, offers a wide range of services that includes airline
ticketing, Visa & passport facilitation, BOOKING HOTEL
accommodation, Cars-hire and surface transport.
Foreign
Exchange
Tata Capital Forex Limited, a wholly-owned subsidiary of Tata Capital
Limited offers travel related foreign exchange products such as travelers
cheques, foreign currency notes, foreign currency denominated pre-paid
travel cards, arrangement for inward money transfer service and other
associated travel related products.
Cleantech
Finance
Tata Capital Cleantech Limited (TCCL) is a joint venture between Tata
Capital Limited and International Finance Corporation (IFC), a member of
the World Bank Group. TCCL is a focused initiative to assist, via
financing and advisory services, companies that promote clean technology.
TCCL will focus on the key areas such as Energy Efficiency, Renewable
energy generation projects, such as wind power, small hydro power, solar
power, bio-mass and waste treatment, Water management projects and
Projects that aid carbon footprint reduction
Leasing
Services
The alliance of Tata Capital and Century Tokyo Leasing Corporation (TC-
Lease) brings you comprehensive & innovative solution-oriented financing
services by leveraging the combination of leasing, financing knowledge
and domain expertise.



Belgaum Branch
Plot No.219, Sunrise Square, Cts No.213-1st Floor, Saraf Colony, Khanapur Road, Tilakwadi
Belgaum, Belgaum 590006
Leasing Solutions by Tata Capital
The alliance of Tata Capital and Century Tokyo Leasing Corporation (TC-Lease) in leasing
business brings to you, comprehensive & innovative solution-oriented financing services by
leveraging the combination of leasing, financing knowledge and domain expertise
accumulated through its combined experience of diverse and changing businesses, processes
and global associations.

Macro economic factors, financial pressures and competitive environment create the need
forenhanced innovative options. Tata Capital Leasing Solutions offers tailor-made and
flexible solutions to cater to the financing needs of your business.

A pre-established credit line at Tata Capital allows you to acquire the equipment in minimal
turnaround time.

A lease can be structured to have variable payment terms to match your cash-flow needs as
well as a variant that suits the tax bracket of your company. You can also avail of maximum
flexibility, with a trade-in / return option.
Our leasing solutions provide further value-addition with options to avail interim finance for
technology-refreshes and for support equipments. To know more about the benefits of leasing
solutions, Tata Capital maintains a collaborative approach towards clients and business
relationships. The team works together with you to accomplish the best leasing solution for
your asset life-cycle management.










Key benefits of Leasing Solutions

Smart entities that look for newer and alternative methods of
doing business have correctlyidentified leasing as a strategic tool to minimize capital asset
expenditure, achieving a higher yield on their operating assets. Also, leasing enables funding
to supplement existing lines of credit, and the cash thus conserved can be used to meet other
operating needs.

Leasing solutions can offer:

Adaptability to the changing business environment
Quickest way to add / upgrade your machinery, systems or business infrastructure
Flexible customer-oriented rental streams
Upto 100% financing of the equipment cost
Possible cost benefits over outright purchase
A bridge-financing tool for unplanned and unbudgeted expenditure
Effective tax management
Ability to manage capital and expense budgets
Safeguard against obsolescence
Effective asset life-cycle management
Freedom to choose the brand / make / supplier of your equipment


Vendor Leasing Program

Accelerate your sales by providing enhanced services to your customers with Tata Capital
Leasing Solutions. Tata Capital Vendor Leasing Program is a win-win partnership designed
for manufacturers and resellers of equipments and their customers.

As a supplier of equipments, you can partner with Tata Capital and offer leasing solutions to
your customers, thus bringing flexible financing programs, better product life-
cyclemanagement and technology-refresh package in your spectrum of services. Tata
Capitals customized, creative and sensible lease structures are designed to match the budget
of your customers. Your customers can benefit from the immediate use of the asset today and
generate revenue from their business.


Problems

1. Unhealthy Competition:
The market for leasing has not grown with the same pace as the number of lessors. As a
result, there is over supply of lessors leading to competitor. With the leasing business
becoming more competitive, the margin of profit for lessors has dropped from four to five
percent to the present 2.5 to 3 percent. Bank subsidiaries and financial institutions have the
competitive edge over the private sector concerns because of cheap source of finance.
2. Lack of Qualified Personnel:
Leasing requires qualified and experienced people at the helm of its affairs. Leasing is a
specialized business and persons constituting its top management should have expertise in
accounting, finance, legal and decision areas. In India, the concept of leasing business is of
recent one and hence it is difficult to get right man to deal with leasing business. On account
of this, operations of leasing business are bound to suffer.
3. Tax Considerations:
Most people believe that lessees prefer leasing because of the tax benefits it offers. In reality,
it onlytransfers; the benefit i.e. the lessees tax shelter is lessors burden. The lease becomes
economically viable only when the transfers effective tax rate is low. In addition, taxes like
sales tax, wealth tax, additional tax, surcharge etc. add to the cost of leasing. Thus leasing
becomes more expensive form of financing than conventional mode of finance such as
hire purchase.
4. Stamp Duty:
The states treat a leasing transaction as a sale for the purpose of making them eligible to sales
tax. On the contrary, for stamp duty, the transaction is treated as a pure lease transaction.
Accordingly a heavy stamp duty is levied on lease documents. This adds to the burden of
leasing industry.
5. Delayed Payment and Bad Debts:
The problem of delayed payment of rents and bad debts add to the costs of lease. The lessor
does not take into consideration this aspect while fixing the rentals at the time of lease
agreement. These problems would disturb prospects of leasing business


The current problems of Indian leasing could be listed as follows, again without any
order of listing:
Asset-liability mismatch: Most non-banking finance companies in India had relied
extensively on public deposits -this was not a new development, as the RBI itself was
constantly encouraging and supporting the deposit-raising activities of NBFCs. If the
resulting asset-liability mismatch, to everybodys agreement, is the surest culprit of all
NBFC woes today, it must have been a sudden realization, because over all these years,
each Governor of the RBI has passed laudatory remarks on the deposit-mobilization by
NBFCs knowing fully well that most of these deposits were 1-year deposits while the
deployment of funds was mostly for longer tenures. It is only the contagion created by the
CRB-effect that most NBFCs have realized that they were sitting on gun-powder all these
years. The sudden brakes put by the RBI have only worsened the mismatch.
Generally-bad economic environment: Over past couple of years, the economy itself
has done pretty badly. The demand for capital equipment has been at one of the lowest
ebbs. Automobile sales have come down; corporate have found themselves in a general
cash crunch resulting into sticky loans.
Poor and premature credit decisions in the past: Most NBFCs have learnt a very hard
way to distinguish between a good credit prospect and a bad credit prospect. When a
credit decision goes wrong, it is trite that in retrospect, it invariably seems to be the
silliest mistake that ever could have been made, but what Indian leasing companies have
suffered are certainly problems of infancy. Credit decisions were based on a pure
financial view, with asset quality taking a back-seat.


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