Managing Procgdfductivity of Corporate Capital - Samreen
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Transcript of Managing Procgdfductivity of Corporate Capital - Samreen
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7/27/2019 Managing Procgdfductivity of Corporate Capital - Samreen
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Managing Productivity of
Corporate Capital
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CORPORATE CAPITAL
The companys capital consists of:
Equity shares
Preference share
Loans
Bonds and Debentures
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contd
In the most ideal situation, where a business
has very little risk of defaulting on a debt
obligation, the amount of corporate capital
would be close to the amount of the firm's
shareholder's equity
In the event of financial difficulties, any
losses sustained would initially impact the
firm's corporate capital before it would
impact other senior stakeholders
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CAPITAL PRODUCTIVITY
Capital productivity is measured as real
output per unit of capital services.
It is an extent to which capital assets is
used to provide goods and services.
An increase in capital productivity means
that
a unit of capital is producing more output
than in the previous year the same amount of output is being
produced for fewer capital inputs.
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500 %
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MANAGING GOOD PRODUCTIVITY
Often it is an organization's financial strategy
and its capital productivity framework.
Companies should assess whether their
current capital investments align with market
norms and predictions.
Failure to align will lead to diminished share
price and overall organizational value.
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FOCUSING ON CAPITAL
Capital is the lifeblood of every fast-growth
business.
A strong grasp of Capital Agenda must inform
all of your important business decisions. A company while assessing its Capital Agenda
must ask itself the following questions:
Should you restructure your business?
Is now the time to sell some of its assets?
How can you seize the premium acquisition
opportunities?
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CAPITALAGENDA
PRESERVING
OPTIMIZING
RAISING
INVESTING
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INVESTING CAPITAL
Investors in your organization want to
know why: why this transaction, why at
this price and why now Complicating matters, differing
stakeholders increasingly bring differing
expectations of investments and returns.
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FOCUS
Acquisition and alliances
Planning and structuring transactions to
optimize stakeholder return
Asset valuations
Cost- and tax-efficient structures
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PRESERVING CAPITAL
A fast-growth company needs to preservecapital.
It needs to continuously evaluate the balancesheet, strategy and markets and look forstrengths and weaknesses.
It should seek opportunities, identify risks andguard against value erosion.
Its ability to access liquidity, manage andrelease cash, control costs and engage withkey stakeholders is essential to preservingcapital.
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FOCUS
Stress and distress e.g., liquidity issues and
turnaround plan
Customer and supplier analysis
Preserving tax assets and minimizing costs
Refinancing and restructuring debt, equity and other
obligations
Dealing with stakeholder relationships and pressure
Dispute resolution
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OPTIMIZING CAPITAL
Companies need a tight grip on the
drivers of efficient capital allocation.
Greater operational efficiency can releaseexcess cash and working capital.
More companies are taking an active
approach to business asset management.
Such rigor can uncover poor capital
deployment, leading to better capital
preservation and allocation.
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FOCUS
Optimizing asset portfolio
Delivery of synergies and effective integration
Improving working capital and releasing cash
Optimizing capital structure
Optimizing tax and corporate structure
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RAISING CAPITAL
Companies need to keep their capital needs under
constant review.
A companys ability to raise capital quickly and
effectively is integral to its growth potential and
financial well-being.
Even if the balance sheet appears strong, external
shocks can delay the journey to market leadership.
Review business through the lens of the investment
and lending communities.
Reduce your cost of capital.
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FOCUS
Fundraising (equity and debt): IPO readiness, right
issues, PE, private placement and capital markets
Optimizing funding structures
Asset divestment
Infrastructure projects
Cost- and tax-efficient structures
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CAPITAL PLANNING
- A Living Process
It should evolve with the marketplace
Not just in the annual assessments
Should be monitored with Intentional
regularity
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CONCLUSION
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Thank You
Pranay Bajekal
Naushad Ahmed
Samreen Kazi
Shahbaz Khan
Tameer Hussain Syed