TEAM: Amity School of Business

RELAXIS FINANCE

AXIS BANK RELIANCE CAPITAL

SYNERGISTIC ADVANTAGES OF MERGER

     

RISK RISK OVERVIEW POST MERGE SYNERGY

   FOR RELIANCE

CAPITALFOR AXIS BANK

COMPETITION RISK

Indian non-banking financial companies, life and non-life insurance companies, both in the public and private sector, mutual funds, broking houses, mortgage lenders, depository participants and other financial services providers.

WORKING WITH A BANK

PROVIDES AN EDGE OVER THE COMPETITORS

NEW ARRAY OF ACTIVITIES ADD

ON TO THE COMPETITIVE

STRENGTH AND EXPERTISE

      

CREDIT RISK

Default or failure on the part of Borrowers, credit risk is a loss as a result of non- recovery of funds lent both on principal and interest counts.

BETTER MANAGEMENT OF NON PERFORMING ASSETS THROUGH CROSS CHECKS AND HEDGING

CREDIT RISK

      

LIQUIDITY AND INTEREST RATE

RISK

The Company is exposed to liquidity risk principally, as a result of lending to its customers for periods which may differ from those of its funding sources.

The Company may be adversely impacted by volatility in interest rates in India which could cause its margins to decline and profitability to shrink.

THE FIRM WOULD BE ABLE TO MUTUALLY REDRESS THE ISSUE

THROUGH

       

OPERATIONAL RISK

Company may encounter operational and control difficulties when commencing businesses in new markets.

BROADENED HORIZON OF EXPERTISE IS AVAILABLE

       

REGULATORY RISK

As a non-deposit taking NBFC, the Company is subject to regulations by Indian governmental authorities, including the Reserve Bank of India

DEPOSIT MAKING FIRM AS A PART WOULD ENABLE THE FIRM TO BE

BANKING FINANCIAL

INSTITUTION

FINANCIAL INSTITUTIONAL CONGLOMERATE

WOULD BE FORMED

OTHER MAJOR ADVANTAGES

       

ADVANTAGE THROUGH

OVERVIEW POST MERGE SYNERGY

    FOR RELIANCE CAPITAL FOR AXIS BANK

CONSUMER BASE

Retail lending institutions (Banks) larger retail

customer base and NBFC's would have corporate

clients

CROSS EXCHANGE OF CONSUMER DATABASE,

NBFC PART WOULD BENEFIT MORE.

WORK UPON CORPORATE CLINETS,

THAT WOULD BE MORE PROFITABLE

       

PROFITABILITY

Opening of new avenues where the firm has not yet

tapped the available potential.

ENABLE INCREASE IN PROFITABILITY

       

OPERATIONSArray of activities that the

firm's did not cater too.EXPANSION OF OPERATIONS IN ORDER TO

INCREASE PROFITABILITY.

       

ECONOMIES OF SCALE

Cost Reduction due to increase in number of

activity.

OVERHEAD COSTS ARE SPREAD OUT TO INCREASING NUMBER OF ACTIVITIES.

FASTER GROWTH Opens up new marketsTHE COMBINED EFFORTS WOULD ENABLE THE FIRM TO UNEARTH POTENTIAL CLIENTALE ND

FURTHER GROW THEIR BUSINESS.

RELAXIS FINANCE : THE NEW AGE FINANCIAL INSTITUTION

(NBFC + BANK)

CONGENERIC MERGER.

A MULTI DIMENSIONAL MERGER MODEL TO INTEGRATE AND ENCOURGAE UNITED WORKING.

BENEFITS ARE MULTIPLE.

Benefits to Reliance capital and AXIS Bank

1)Reliance capital is a NBFC and hence to enter into profitable

retail banking sector, this MERGER is crucial.

2 ) Lack of financial knowledge of customers of banks.

3) Investment Banking.

4)Resultant higher Credit rating.

5)Better growth opportunity in Market price

6)Better customer service

Benefits to Customers

1) Customers will have access to a better investment avenues.

2) Single Roof and Single Window Service

3) Common Account system

4) Decreased cost for customers. 

ORGANIZATIONAL STRUCTURE (NEW)

RELIANCE CAPITAL AXIS BANK

INTRINSIC VALUE OF RELIANCE CAPITAL   

 AMOUNT (IN CRORES)

ASSETS   

Net Block 79.02Capital Work in Progress 110.03

Investments 11,166.66Total CA, Loans &

Advances 15183.27   TOTAL ASSETS 26538.98   LIABILITIES     

Total CL & Provisions 1097.69Total Debt 18483.02

   TOTAL LIABLITIES 19580.71      TOTAL ASSEST - TOTAL LIABILITIES 6958.27   NUMBER OF SHARES 24.698   INTRINSIC VALUE 281.7341485   

INTRINSIC VALUE OF AXIS BANK   

 AMOUNT (IN CRORES)

ASSETSTotal Assets 242713.37

   TOTAL ASSETS 242713.37   

LIABILITIES  

   TOTAL LIABLITIES 2,23,714.54      

TOTAL ASSEST - TOTAL LIABILITIES 18,998.83      

NUMBER OF SHARES 41.054      INTRINSIC VALUE 462.7765869   

INTRINSIC VALUE CALCULATION

PARTICULARSRELIANCE CAPITAL

AXIS BANK REMARKS

       

NUMBER OF SHARES

24.698 41.054 IN CRORES

       

       

INTRINSIC VALUE 281.7341485462.776586

9IN RUPEES

       

NEW COMPANY SHARES

1 1.60(FOR EVERY ONE SHARE HELD IN THE

COMPANY)

       

CONSIDERING THE GROWTH EXPECTATION FOR RELIANCE CAPITAL THE SWAP RATIO COULD BE REVISED TO

       

NEW COMPANY SHARES

1 1(FOR EVERY ONE SHARE HELD IN THE

COMPANY)

STRENGTHS WEAKNESSES

Mix of Expertise Larger

Customer base Improved

Earning

Loss of individuality

Confusion among employees

Clash of organizational goals

OPPORTUNITY THREATS

Further expansion

New financial products

Global reach Market

capitalization

Government intervention

Will create a bubble in the market