OBJECTIVES OF CORPORATE FINANCE:
Major objectives of Corporates Finance by Indian Corporates are as follows:-
1. There are two main objectives of Management decision marking in Corporates finance in India are:
1.1) Maximisation of Earning before intrest and taxes(EBIT).
1.2) Earning per sahre (EPS).
2. Maximisation of spread between Return on assets(ROA) and Weight average cost of capital(WACC).
3.There is no significant difference in the EVA as a corporate finance objective followed by the firms in public and private sectors.
4. The spread between cash flow return on investment (CFROI) and the WACC, that is, cash value added (CVA) is the third most important objective (54 per cent) of corporate finance management for large firms based on market capitalisation.
5.Yet another important objective is the maximisation of market capitalisation.The MVA (market value added) objective is more likely to be followed by public sector firms than private sector units.
6.The overwhelming majority of corporates (70 per cent) consider maximising per cent return on investment in assets as the most important.
EMERGING ROLES OF FINANCE MANAGER IN INDIA:
Reflecting the emerging economic and financial environment in the post liberalisation era since the early nineties, the role/job of finance managers in India has become more important, complex and demanding. The key challenges are in the areas are as follows:
1. Financial Structure: As the economy grow the complexities incrase for the finance managers, there is growing needs of adopting different financial planning for the companies.
2. Foreign exchange management: As the volatility increase in the currency market force finance managers to adopt different techniques to manage the quick fluctutation of currency values.Now days a tools od hedging in currency market is used by managers in order to manage there companies foreign exchange.
3.Investors communications: As the complexities increases there is growing need to communicate enough to the investors by the finance managers in order to retain the in the company.
4.Management control: Now a days, finance managers are also taking part of major finance decision of the company beacuse unless the correct budgeting is not hapenning no besiness is beign getting sucess.
5.Investment Planning: Finance manager has to make investment plannig before he/she has to take any major investment decision.he should take into consideration each and every aspect related to the company in project report,so that any future financial crises would not arise.
The main elements of the changed economic and financial environment are the
following:
1.Considerable relaxation in industrial licensing framework in terms of the modifications in the Industries Development (Regulations) Act.
2.Abolition of the Monopolies and Restrictive and Trade Practices (MRTP) Act and its replacement by the Competition Act.
3.Repeal of Foreign Exchange Regulation Act (FERA) and enactment of a liberalised Foreign Exchange Management Act (FEMA).
4.Abolition of Capital Issues (Control) Act and the setting-up of the Securities and Exchange Board of India (SEBI) under the SEBI Act for the regulation and development of the securities market and the protection of investors.
5.Enactment of the Insurance Regulatory and Development Authority (IRDA) Act and the setting-up of the IRDA for the regulation of the insurance sector and the consequent dismantling of the monopoly of LIC and GIC and its subsidiaries.
6. Emergence of the capital market at the centre-stage of the financing system and the disappearance of the erstwhile development/public financial/term lending institution from the Indian financial scene.
7. Emergence of a highly articulate and sophisticated money market.
8. Globalisation, convertibility of rupee, liberalised foreign investments in India, Indian foreign investment abroad.
9.Market-determined interest rate, emergence of highly innovative financial instruments .
10.Growth of mutual funds; credit rating, other financial services.
11. Rigorous prudential norms, credit risk management framework for banks and financial institutions.
12. Access to Euro-issues, American Depository Receipts (ADRs).
13. Privatisation/disinvestment of public sector undertakings.
Major objectives of Corporates Finance by Indian Corporates are as follows:-
1. There are two main objectives of Management decision marking in Corporates finance in India are:
1.1) Maximisation of Earning before intrest and taxes(EBIT).
1.2) Earning per sahre (EPS).
2. Maximisation of spread between Return on assets(ROA) and Weight average cost of capital(WACC).
3.There is no significant difference in the EVA as a corporate finance objective followed by the firms in public and private sectors.
4. The spread between cash flow return on investment (CFROI) and the WACC, that is, cash value added (CVA) is the third most important objective (54 per cent) of corporate finance management for large firms based on market capitalisation.
5.Yet another important objective is the maximisation of market capitalisation.The MVA (market value added) objective is more likely to be followed by public sector firms than private sector units.
6.The overwhelming majority of corporates (70 per cent) consider maximising per cent return on investment in assets as the most important.
EMERGING ROLES OF FINANCE MANAGER IN INDIA:
Reflecting the emerging economic and financial environment in the post liberalisation era since the early nineties, the role/job of finance managers in India has become more important, complex and demanding. The key challenges are in the areas are as follows:
1. Financial Structure: As the economy grow the complexities incrase for the finance managers, there is growing needs of adopting different financial planning for the companies.
2. Foreign exchange management: As the volatility increase in the currency market force finance managers to adopt different techniques to manage the quick fluctutation of currency values.Now days a tools od hedging in currency market is used by managers in order to manage there companies foreign exchange.
3.Investors communications: As the complexities increases there is growing need to communicate enough to the investors by the finance managers in order to retain the in the company.
4.Management control: Now a days, finance managers are also taking part of major finance decision of the company beacuse unless the correct budgeting is not hapenning no besiness is beign getting sucess.
5.Investment Planning: Finance manager has to make investment plannig before he/she has to take any major investment decision.he should take into consideration each and every aspect related to the company in project report,so that any future financial crises would not arise.
The main elements of the changed economic and financial environment are the
following:
1.Considerable relaxation in industrial licensing framework in terms of the modifications in the Industries Development (Regulations) Act.
2.Abolition of the Monopolies and Restrictive and Trade Practices (MRTP) Act and its replacement by the Competition Act.
3.Repeal of Foreign Exchange Regulation Act (FERA) and enactment of a liberalised Foreign Exchange Management Act (FEMA).
4.Abolition of Capital Issues (Control) Act and the setting-up of the Securities and Exchange Board of India (SEBI) under the SEBI Act for the regulation and development of the securities market and the protection of investors.
5.Enactment of the Insurance Regulatory and Development Authority (IRDA) Act and the setting-up of the IRDA for the regulation of the insurance sector and the consequent dismantling of the monopoly of LIC and GIC and its subsidiaries.
6. Emergence of the capital market at the centre-stage of the financing system and the disappearance of the erstwhile development/public financial/term lending institution from the Indian financial scene.
7. Emergence of a highly articulate and sophisticated money market.
8. Globalisation, convertibility of rupee, liberalised foreign investments in India, Indian foreign investment abroad.
9.Market-determined interest rate, emergence of highly innovative financial instruments .
10.Growth of mutual funds; credit rating, other financial services.
11. Rigorous prudential norms, credit risk management framework for banks and financial institutions.
12. Access to Euro-issues, American Depository Receipts (ADRs).
13. Privatisation/disinvestment of public sector undertakings.
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