Financial Management

Rishiraj Dasgupta

Learning Objective
To have an overview and reasonable knowledge about the various aspects of Financial Management from primarily Corporate Finance perspective.

Todays Agenda
Forms of Business Organisations Investment and Corporate Finance Financial Institutes and Markets Financial Instruments

Forms of Business Organisation

Sole Proprietorship Firm: Unlimited Liability, profit belongs to owners, No separate Legal entity Partnership Firm: Unlimited Liability, profit belongs to partners, No separate Legal entity Private an Public Limited Companies: Concept of Limited Liability, Profits and Funds belong to the company, Share and Face value, Percentage ownership o the share holders Others (LLP, Cooperative Societies etc)

Forms of Business Organisation

Promoter and Public Share-holders in a Public Limited Company List of Public Share Holders:
Foreign Institutional Investors Domestic Financial Institutes Indian Corporate Bodies Misc Institutional Investors (Trusts, and Societies) Retail (including HUF)

Investment and Corporate Finance

Corporate Side of Financial Management

Needs of Business Organisations Corporate financial structure: Debt and Equity Various activity drivers: Profit, Revenue, Assets Services required: Raising Equity and Debt, Investing Surplus funds, Hedging Risk, Protecting Assets

Investment Finance
Investment Side of Financial Management Who needs this service: Corporate Various instruments for Raising Funds : D & E Investing surplus funds in Debt Securities and Equity securities Hedging the Risk with Derivative Products Protecting the Assets with Insurance

Objectives of the Companies in Capital Market

Raising Resources Investment

Financial Institutions
Commercial Banks, Cooperative Banks Insurance Companies Mutual Funds Provident / Pension Funds NBFCs : Credit, Lease Financing, Investments Stock Exchanges and Auxiliary Institutions Commodity Exchanges and Auxiliary Institutions

Financial Markets: Capital and Money Market

Capital Market
Where Corporate and Govt. Bodies can raise resource in terms of Equity or Debt from Public or Institutions: Bank to Clients Long Term Loans Stock Market Primary and Secondary Bond and Debenture Market - Primary and Secondary Derivative Market : Hedging or Speculation on Shares, Bonds and commodities using Derivative Products

Money Market
Where Corporate and Govt. Bodies can raise resource in terms of Debt from another Institution Banks to Public Short Term Lending activity Corporate to Corporate ICDs, CPs, CDs Bank to Bank Call Money Govt to Bank Repo and Reverse Repo T-Bills: (less than one year Govt debts)

Financial Instruments of Investment

Instruments for L.T. Investment

Post Office Risk Free Investments Term Deposits Bonds Debentures Equity Share Mutual Funds / Pension Funds Bullions Derivatives: Forwards, Futures and Options

Regulatory Framework
Companies Act 1956 SEBI Guidelines IRDA Direct and Indirect Taxes Foreign Exchange Management Act

THANK YOU