Financial terms regarding my m.phil.syllabus

1. PRESENTATION OF
FINANCIAL MANAGEMENT
FOR
THE TOPIC OF
FINANCIAL TERMS
Prepared by : Vishal D. Patel
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2. FINANCIAL TERMS
BUY BACK
FINANCIAL SERVICES
LEASING
MUTUAL FUNDS
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3. Buy Back of Shares
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4.  What Does Buyback Mean?
 The repurchase of outstanding shares
(repurchase) by a company
 to reduce the number of shares in the
market
 Companies will buy back shares either to
increase the value of shares still available
(reducing supply), or
 to eliminate any threats by shareholders
who may be looking for a controlling stake
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5. Why companies buyback
Unused cash
Tax gains
Market perception
Exit option
Escape monitoring of accounts and legal contracts
Increase promoters stake
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6. Ways of Buyback
1. Book building method
2. Open market
3. Dutch method
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7. Valuation of buy back
 Average closing price (which is a weighted
average for volume) for a period immediately
before to the buyback announcement
In the 2nd, shareholders are invited to sell some
or all of their shares within a set price range
Generally, the price is fixed at a mark up over
and above the average price of the last 12-18
months
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8. Legal aspects
Indian Companies Act 1956, Section 77A, SEBI
(Buy Back of Securities) Regulations, 1998
are applicable
A special resolution has to be passed in
general meeting of the shareholders If the
buyback is more than 10% of the total paid up
capital
Buyback should not exceed 25% of the total
paid-up capital and free reserves
The company should not make any further
issue of securities within 2 years, except
bonus, conversion of warrants
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9. FINANCIAL SERVICES
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10. INTRODUCTION
 Financial services refer to services
provided by the finance industry.
 these organizations are banks, credit
card companies, insurance companies,
consumer finance companies, stock
brokerages, investment funds and some
government sponsored enterprises.
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12. LEASING
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13. Definition
 A lease is a contractual arrangement
 in which a party owning an asset (lessor)
 provide the asset for use to another party
(lessee)
 for a agreed period of time
 in consideration of a periodic payment
(rentals).
 At the end of the contract (lease period ),
the asset reverts back to the lessor,
 unless there is a provision for the renewal
of the contract
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14. Essential Elements
Parties to the contract
 Essentially two parties : lessor and lessee
 Both can be individuals, partnerships, joint
stock companies
 Joint lessor and lessee , where amount is
enormous
 Contract may involve lease financiers , who
refinance lessor
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15.  Asset
 The asset is the subject matter of the contract
 Asset must be of lessee's choice , suitable for his business
needs.
 Term of lease
 The time period for which lease remain operational
 A definite time period is required otherwise , it will be legally
inoperative
 The period may stretch over the entire economic life of the
asset
 Lease rentals
 So structured as to compensate the lessor for the investment
made in the asset
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16.  Classification basis :
■ The lease transaction can differ on the basis of:
 The extent to which risk and reward of ownership are
transferred
 Risk refers to possibility of loss for under utilization or
technological obsolescence of the equipment
 Reward mean cash flow generated from the usage of equipment
and residual value
 No. of parties to the transaction
 A Domicile of lessor and lessee
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17. Types of leasing:
o Finance lease and operating lease
o Sales and lease back and direct lease
o Single investor lease and leveraged lease
o Domestic lease and international lease
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18. MUTUAL FUNDS
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19. What is Mutual Fund?
 A money-managing systems that are introduced to
professionally invest money collected from the public.
 The Asset Management Companies (AMCs) manage
different types of mutual fund schemes
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20. 4 phases in the Indian Mutual Funds investment
First Phase - 1964- -1987
Second Phase - 1987-1993
(Entry of Public Sector Funds)
Third Phase - 1993-2003
(Entry of Private Sector Funds)
Fourth Phase - since February 2003
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21. CATAGORIES :
 Closed-end mutual funds :-A closed-end mutual
fund bears a number of shares which are
issued to the public by an initial public
offering (IPO).
 Open end mutual funds:-Open end funds are
managed by mutual fund houses for raising
money from shareholders and they invest in a
group of assets.
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22. Top mutual funds in
India
 Reliance Mutual Fund
 HDFC Equity Fund
 ICICI Prudential Fund
 SBI Mutual Fund
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