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Allama Iqbal Open University IslamabadAllama Iqbal Open University Islamabad

CORPORATE FINANCE (8524)

Topic: Financial Planning Process in a Corporation Submitted To:

Mr. Shahbaz Noor Submitted By:

Mudassar AfzalRoll No.

AR523807Class:

MBA (B&F) 4th Semester

Financial Planning Process

The process of determining a company's financial needs or goals for the future and how to achieve them. Corporate financial planning involves deciding what investments and activities would be most appropriate under both the company's individual and broader economic circumstances.A company’s financial plan is essential for growth and increasing profitability.

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Financial Planning Process

Planning in business is very important. It provides a guide for the overall operation of the business. financial planning provides a structure to the way finances are handled within the organization or company.

Financial planning manages the flow of cash in and out of the business. Essentially, it’s impossible for an organization to function and be financially stable without financial planning.

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Components of FPP

There are only 3 major components in the Financial Planning process:

Current Resources (CR) Investment Options (IO) Financial Goals (FG)

Financial Planning: CR + IO = FG

1. Write Goals and Specific

2. Identify time-specific goals Short -Term Goals (Upto 01 Year) Medium–Term Goals (Upto 05 Year) Long–Term Goals (After 05 Year )3. Priority4. Identify the types of resources needed to

achieve these objectives5. Analysis of Current Financial Situation Cash Flow Statement Net Worth Budgeting

Steps for setting Financial GoalsSteps for setting Financial Goals

Case Study Case Study

National Transmission and Despatch CompanyLimited

IntroductionNational Transmission & Despatch Company (NTDC) Limited was incorporated on 6th November, 1998 and commenced commercial operation on 24th December, 1998. It was organized to take over all the properties, rights and assets obligations and liabilities of 220 KV and 500 KV Grid Stations and Transmission Lines/Network owned by Pakistan Water and Power Development Authority (WAPDA). NTDC operates and maintains twelve 500 KV and Twenty Nine 220 KV Grid Stations, 5077 km of 500 KV transmission line and 7359 km of 220 KV transmission line in Pakistan.

Projects

220KV GIS Grid Station at Ghazi Road LHR, along with 02 Nos

220 KV T/Lines (KfW Finance)

500 KV New Lahore

220 KV Gujarat

220 Kv Chishtian Grid Station & Allied T/Lines

220KV GIS Shalamar Substation & 220KV T/Lines

220 KV GIS Islamabad University

220 kV T.T Singh Grid station

220kv Okara Grid station

500 kV New Lahore GRID STATION

500 kV New Lahore Grid Station Capital Cost Estimates:

Local : 5502 MillionForeign 7022 MillionTotal 12524 Million

Annual Operating CostLocal: 1261.86 MillionForeign: 7.02 MillionTotal: 1268.88 Million

500 kV New Lahore Grid Station Financial Plan :Equity: -

Debt:Local : 10975 MillionForeign : 13342 Million Total : 24317 MillionInterest Rate:Local : 10.56% P/AForeign : 12:00% P/ARepayment Period: 20 Years

500 kV New Lahore Grid Station Financial Analysis:

Annual Income: (Rs. In Million ) NTDC UOSC Value)

UOSC (Use of System Charges) Value : 1587.79

Unit Cost Rs./kWh (net) = 0.183

ConclusionPlanning in business is very important. It provides a guide for the overall operation of the business. Likewise, financial planning provides a structure to the way finances are handled within the organization or company. Financial planning manages the flow of cash in and out of the business. Essentially, it’s impossible for an organization to function and be financially stable without financial planning.

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