ADVANCED FINANCIAL MANAGEMENT

Presented by: Group No.:8

Name Roll No.Prajesh Hegde 18Jaydeep Goswami 19Mihir Jani 20Priya Kariya 23Rohan Mangalure 30Harsh Mehta 34Poonam Mhatre 35

AGENDA

1. Sources of foreign currency finance & its importance to corporate.

2. Long term financing option for the company.3. Indian financial systems relatively less

affected by the worldwide recession as compared to European & American countries.

Sources of foreign currency finance & its importance to corporates

1. Foreign Direct Investment (FDI)2. Foreign Institutional Investor (FII) 3. Foreign AID4. Current a/c Items In Balance Of Payment A/c

Foreign Direct Investment (FDI)• Foreign direct investment (FDI) or foreign investment

refers to the net inflows of investment.• There are two types of FDI: inward foreign direct

investment and outward foreign direct investment.

Period FDI Inflow FDI Outflow Net Inflow

1960-69 $ 42.18 bn $ 5.13 bn + $ 37.04 bn

1970-79 $ 122.72 bn $ 40.79 bn + $ 81.93 bn

1980-89 $ 206.27 bn $ 329.23 bn - $ 122.96 bn

1990-99 $ 950.47 bn $ 907.34 bn + $ 43.13 bn

2000-07 $ 1,629.05 bn $ 1,421.31 bn + $ 207.74 bn

Total $ 2,950.69 bn $ 2,703.81 bn + $ 246.88 bn

Foreign Institutional Investor (FII)

• Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets.

• Numerous institutional investors act as intermediaries between lenders and borrowers.

Foreign AID

• In international relations, aid (also known as international aid, overseas aid, or foreign aid) is a voluntary transfer of resources from one country to another, given at least partly with the objective of benefiting the recipient country.

Current a/c Items In Balance Of Payment A/c

• current account is one of the two primary components of the balance of payments, the other being the capital account.

• A current account surplus increases a country's net foreign assets by the corresponding amount, and a current account deficit does the reverse.

• The balance of trade is the difference between a nation's exports of goods and services and its imports of goods and services.

Long term financing options for the company

• Purpose of long term finance– To Finance fixed assets– To finance the permanent part of working capital– Expansion of Companies– Increasing Facilities– Construction Projects on a big Scale– Provide Capital for funding the Operations. This

helps in adjusting the cash flow.

Sources of Long Term Financing

Shares Debentures Public Deposits Retained earnings Term loans from banks Loan from financial institutions

Indian Financial System relatively less affected by the worldwide recession as compared to

European and American countries

• The collapse of Lehman Brothers and other Wall Street icons lead to growing recession which affected the US, the European Union (EU) and Japan.

• The basic cause of the crisis was largely an unregulated environment, mortgage lending to subprime borrowers.

Impact on Indian Economy

• A weakening of demand in the US affected our IT and Business Process Outsourcing (BPO) sector and the loss of opportunities for young persons seeking employment at lucrative salaries abroad.

• To lift the economy out of the recession the Government announced a package of Rs 35,000 crores in the first instance on December 7, 2008.

Impact on Indian Economy Cont’

• The main areas to benefit were the following:a) Housingb) Textilesc) Infrastructured) Exportse) Small and Medium Enterprises (SMEs)