external financing

8/14/2019 External Financing

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xternal FinancingBy Group 5

Ashmitha N. S

Ravi Agarwal

Shweta Raghavan

Shweta RammohanSarvesha Kulkarni

Saket Kandeliya

Vibish Parekh


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External Financing Internal Financing

Obtained from financialinstitutions

Obtained from own funds andprofits

Expensive to the firm Less expensive to the firm

SOURCES:Loans Bank, mortgageFactoring debtsDebenturesOverdrafts

SOURCES:Owners fundsSelling personal assetsProfitsReduce working capital


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WAYS OF EXTERNAL FINANCING

Equity

Debt


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Reasonsfor External Financing

Expansion

Diversification

M & A


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RELIANCE POWER LIMITED

Established to develop, construct and operate powerprojects in the domestic and international markets

January 15, 2008 - India's IPO record created

The company attracted $27.5 billion of bids on the firstday of its IPO

Reliance Power debuted on the stock markets onFebruary 11, 2008

Reflection of investors confidence- The upper cut offprice for the bid was Rs. 450


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-Reliance Power IPO A good bet for investors

IPO was priced in the Rs 405-450 band

Issue-10.1% of Reliance Powers total equity

Value of the company- Rs 110,000 crore


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Company Profile Review

Financial stability during tough liquidity conditionsshow good management competency

Cash in the books adequate to fund the current

projects without further Equity dilutionSurplus coal reserves could add significant value in

the future

R-Power has the potential to earn Rs 4,000 Cr fromcarbon credit sale


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TATA STEEL Ltd

Established in 1907

6th largest steel producer in the world

Annual crude steel production capacity of 30million tonnes per annum

Paid up capital of 6203.45 Crs

23% growth in sales in 2008-09


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&Tata Steel GDR

Largest ever Indian GDR offering in the LondonStock Exchange

$500 million raised

Issued 65.41 million GDRs at $7.644 each Total paid up capital post issue is Rs. 8593.45 Crs.

Equity dilution of 7.4%

The deal was managed by JPMorgan ,Goldman

Sachs UBS and Citigroup


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Objects of the issue

Expansion of Jamshedpur plant

Development of overseas mines

Acquisitions of iron ore and coking coal mines

abroadGreen field projects at Jharkhand and Chattisgarh


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&GDR Market Reactions


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hare Prices cont.... Date Open High Low Close 14-07-2009 345 360 345 358.2 15-07-2009 361 382.45 361 380.2 16-07-2009 386 404.3 380 385.1 17-07-2009 388.1 396.9 386.1 392.75 20-07-2009 398 401 387.4 391.1 21-07-2009 387.95 414.7 377 411.75 22-07-2009 415 424 394.05 398.3 23-07-2009 406.1 418.25 403 414.75 24-07-2009 420 442 419.3 439.9 27-07-2009 440 459.6 435 457.35 28-07-2009 459 471.85 448.3 468.95 29-07-2009 467 470.3 426.55 441.9


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Benefits

Marks a significant milestone in the company's capitalraising journey

Demonstrates the investors interest in the Company'sstrategic direction

GDR offering has attracted demand from very goodquality investors which enabled the company toincrease the offering size from USD 400 million toUSD 500 million

Help in capitalizing the Balance Sheet

Enable deployment in highly attractive projects- likethe ongoing expansion of Jamshedpur in India andoverseas mining projects


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Subhiksha

Pushing the accelerator instead ofbrakes


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Company Profile

Founded in 1997 by R Subramanian.

Business: Discounted Retail

1997: 10 stores

1999: 19 stores2000: 50 stores

2003: 140 stores


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2004: Source of funding Rs.160 Crs of Equity Rs. 220 Crs of Debt

Rs. 125 Crs Bridge Loan

2007: 670 stores

2008: 1650 stores

Cont..


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Outcome

Stores doubled from 672 to 1320

Revenue increased from Rs 833 Crs to Rs 2305Crs

Profit increased from Rs. 11 Crs to Rs. 39 Crs


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Used Working Capital for Expansion

Collapse of stock market

Used 125 Cr of bridge loan for expansion

Default in vendors payment

Feb 2009 stores were zero


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conclusion


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external financing

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