pgdm ii finance

7/29/2019 Pgdm II Finance

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ELECTIVES IN FINANCE

STRATEGIC CORPORATE FINANCE

Context:

This course is concerned with the decision-making in the finance sub-system of the enterprise,such that the short-term and long-term needs of the enterprise are effectively met. The

enterprise needs to be financially efficient, viable and sustainable. This necessitates looking into

the enterprise and the finance function in a larger perspective facing key challenges posed by

the global markets.

Objectives:

At the end of the course the student should be able to

a) Understand the strategic element involved in financial decision-making;

b) Effectively and efficiently manage the both sides of balance sheet, i.e. financing and

investing;

c) Look alternative ways for growing the organization through mergers and acquisitions.

Content outline

1. Financial Environment

Determining financial objectives within the strategic planning process, identify key stakeholdersof organizations and the interests of each stakeholder group, corporate social responsibility, itsrelationship to the objective of maximising shareholder wealth, agency theory and its relevance

to financial managers, the professional, regulatory and legal framework relevant to financialmanagement.

2. Managing the Left-Hand Side of the Balance Sheet

The Cost of Capital: Calculation Pitfalls, Market Risk Premium, Towards a Better Beta, TheRiskless Rate, The Cost of Debt, WACC and Hurdle Rates; Issues in designing the capitalstructure; low vs. high debt, Alternative sources of financing; Corporate Debt Restructuring:CDR System and its objectives, Standing Forum, Core Group, Empowered Group, CDR Cell,Monitoring Mechanism, CDR Performance.

3. Managing the Right-Hand Side of the Balance Sheet

Strategic resource allocation decision, measures of investment choice: NPV, IRR, PaybackPeriod, etc.; Strategic working capital management, Managing Cash.

4. Dividends and Buybacks

How dividends and buybacks create value, need for a dividend policy, drafting a buybackprogram.


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MANAGEMENT CONTROL SYSTEMS

Context:

An understanding of decision and control subsystem of the organisation is necessary for any

Finance professional. These systems receive information primarily from the operating

subsystem. A substantial part of this information looks at the operations from the point of view

of costs and benefits and is used for decisions aimed at maintaining and improving the

effectiveness of operations.

Objectives:

At the end of this course the student should be able to

1. Collect information from operating systems

2. Analyse problems and issues regarding operational effectiveness

3. Make proposals for aiding decision-making.

Content outline:

1.Introduction to cost behaviour and cost volume relationship: Variable and fixed costs; cost

volume profit analysis: linear & non linear.

2.Variation of cost behaviour: cost drivers and cost behaviours; Management's influence on cost

behaviour; Measurement of Cost behaviour.

3. Cost Systems: Job Cost Systems: overhead application; Process costing; variable and

absorption costing; cost Systems under new manufacturing environment; Activity Based

Costing.

4.Profit centres; Transfer pricing: problems of transfer pricing, Responsibility Accounting


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5.Management Control in decentralised organisations.

6.Costing & Product/Service Pricing.

Recommended Bppks

Text Books

1. Horngren T, Sundern G. Introduction to Management Accounting. New DelhiPrentice Hall of India.2007, Pp.xi, 823

2. Horngren T, Et. Al. Cost Accounting- A Managerial Approach. New Delhi. Prentice Hall of

India.2006, PP. xxvii, 8683. Kaplan, R. Atkinson, A. Advanced Management Accounting. New Delhi. Prentice Hall ofIndia.2006, PP. xviii, 798

4. Khan, M.Y. Jain, P.K. Cost Accounting and Financial Management. New Delhi. TataMcGraw-Hill Publishing Company.2008, PP.xvi, 1200

Reference Books

1. Anthony, R.N. Govindarajan, V. Management Control Systems. New Delhi. Tata Mcgraw-Hill Publishing Company Limited. 2007, PP.xii, 851

2. Sekhar, R.C. Management Control Systems: Text and Cases .New Delhi. Tata Mcgraw-Hill Publishing Company Limited.2006, PP.xx, 431

3. Pherwani, G. Management Control Systems. Mumbai .Himalaya Publishing House.2000, PP.192

4. Merchant, K.A. Modern Management Control Systems: Text & Cases. New Delhi.Pearson Education Asia. 2002, PP.220

5.Icfai.Management Control Systems. Hyderabad. Icfai Center For Management

Research.2008,Pp.270

6.Pherwani, G. Management Control Systems .Mumbai. Himalaya Publishing

House.2000,Pp.192


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PROJECT FINANCE

Context

With a fluid global environment and increasing pace of innovation and technological changes,

enterprises have to undertake modernisation and upgradation more frequently than in the past.

Not only this, there can be standalone new projects too, right from pipelines to refineries and

electric-generating facilities, hydroelectric projects and so on. This calls for deploying funds on a

one-time basis and monitoring their utilisation towards the desired end.

Objectives

Students should be able to:

1. Define the principles of searching, screening, defining and evaluating projects;

2. Ensuring financial feasibilities of the project and satisfying their funding requirements;

3. Understanding different kinds of projects risks and their mitigation;

4. Describe and meet the requirements of financing institutions and regulatory institutions.

Content Outline

1. An Overview of Project Finance

Introduction to project finance, project life cycle and its impact on the feasibility Project

identification Different types of needs leading to different types of projects under BMRED

(Balancing, Modernization, Replacement, Expansion and Diversification) Considerations

involved in decision under each of these types Macro parameters in project selection

Different considerations for project under private, public and joint sectors Project formulation:

preparation of project profile, Structuring Projects: Description of a Typical Project Finance

Transaction.

2. Project appraisal

Different types of appraisal Technical, economic, organizational and managerial, commercial

and financial Projected Financial Statements Financial techniques for project appraisal and

feasibility discounted cash flow and non-discounted cash flow methods Social cost benefit

analysis and economic rate of return Non-financial justification of projects.

3. Project Risk Analysis

Risk Analysis in Capital Investment Decisions What is Risk Types of Risk Measurement of

Risk Method of Incorporating Risk into Capital Budgeting Monte Carlo Simulation Deal

structuring through risk identification, assessment & mitigation Managing Project Risks: How

risk management creates value in project finance.


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4. Project Financing

Pattern of financing Sources of finance Impact of taxation Public loans Small savings

Surplus of public enterprises Deficit financing Foreign aid Public sector project financing

Syndication Leverage Leases Various debt instruments and innovative Structures Equator

principles securitizing project loans PPP Models of Project Finance PPP models from

Supply and Service Contracts Management Agreements Leasing, DBO, BOT, BOO,

Privatization Infrastructure Project Financing.

5. Special Issues

Project Financial Closure - The role of credit ratings in project finance transactions The role of

Private Equity and Venture Capital Public Private Partnerships.

Recommended Books

1. Prasanna Chandra, Projects, Planning,Analysis, Selection, Financing, Implementation

and Review- Tata Mc Graw Hill Publishing.

2. Fabozzi,F., and P.Nevitt, 2000, Project Financing, Euromoney Publications (London,

UK).

3. Finnerty, J.D., Project Finance: Asset-Based Financing Engineering, John Wiley & Sons

(New York,NY).

4. Bhavesh M Patel, Project Management: Strategic Financial Planning, Evaluation and

Control, Vikas Publishing House.

5. D.P.Sarda, Project Finance: Appraisal & Follow-up, ABD Publishers.

6. S. Choudhury -Project Management - -Tata Mc Graw Hill Publishing.

7. Gopalkrishnan, P./Moorthy, V.E.R, Text Book Of Project Management, Macmillan India

Limited.

8. Joy, P.K. Total Project Management: The Indian Context, Macmillan India Limited.

9. Young, T.L., Project Management Manual:Planning Projects, Leading Projects,

Implementing Projects, Global Business Press.

10. Krishnamurthi, S. Project Finance: Policies, Procedures and Practice, Vinod Law

Publications.


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TAX AND REGULATORY ENVIRONMENT

Context

With liberalisation and deregulation, business organisation finds the tax and regulatoryenvironment changing rapidly in the direction of flexibility coupled with greater accountability. Afinance professional now has to give greater attention to the environmental interface whiletaking any major decision in the finance area. Hence an understanding of fundamental factorsin the tax and regulatory environment becomes essential.

Objectives

At the end of the course, the student should be able to

1. describe major issues having tax and regulatory dimensions2. define provisions of tax and relevant regulations applicable to a given enterprise3. analyse consequences of different choices present within the taxation and regulation

matrix.4. evaluate different strategies in terms of taxation and regulations

Content outline

Section 1: Taxation

1. Scope and application of Income Tax Act, Basic concepts and their definitions under theAct.

2. Concept of income, Capital receipts, Revenue receipts, Capital asset, residential status,Agricultural income

3. Profits and gains of business, meaning of business, profession and vocation, generalprinciples of assessing business income, scheme of deductions and allowances,limitation on certain expenditures, provisions relating to exports and research anddevelopment

4. Capital gains, meaning of transfer, conversion of assets, computation of capital gains5. Income from salaries, allowances and perquisites, deductions and tax rebates

Section 2: Companies Act

1. Meaning and nature of company, implications of separate legal entity, classification ofcompanies into different categories


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2. Provisions concerning management, Memorandum of Association, Articles ofassociation, Board of Directors, powers and responsibilities of working directors issuesconcerning Corporate Governance.

3. Provisions regarding share capital, public issues, allotment, reduction4. Provisions regarding borrowing powers, debentures, public deposits5. Provisions regarding mergers, acquisitions and amalgamations.

6. Analysis of recent cases.

Recommended BooksTexts Books

1. Singhania, V. Students Guide to Income Tax. New Delhi. Taxmann Allied Services (P)Ltd. 2010, PP.xx,1000

2. Singhania, V.K. Singhania, M. Students Guide to Income Tax Including Service Tax NewDelhi. Taxmann Allied Services (P) Ltd. 2009, PP.860

Reference1. Ramaiya, A. Guide to The Companies Act. Appendices Part 1 & Part 2. Nagpur.

Wadhwa & Co.2001, PP.ccxxii, 2336, 2072. Taxmann's Income Tax Act .New Delhi. Taxmann Publication Pvt. Ltd.2010.Pp.12823. Singhania, V.K. Direct Taxes Ready Reckoner 2010-11 & 2011-12.New Delhi. Taxmann

Publication Ltd.2010,Pp.2484. Mehta, N.V. Income-Tax Ready Reckoner 2010-2011.Mumbai.Shree Kuber Publishing

House.2010,Pp.3445. Datey, V. S.Indirect Taxes: Law And Practice 2009.New Delhi. Taxmann Publication

Pvt. Ltd.2009,Pp.8906. Nag, C.K. Karmakar, , C. Direct And Indirect Tax Laws And Practice. New Delhi. New

Central Book Agency.2008,Pp.Xxv, 7247. Jain, R K. Central Excise Law Manual 2008-09:With Service Tax Ready Reckoner. New

Delhi. Centax Publications Pvt. Ltd.2008,Pp.Xxiii, 1100


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BANKING

Objective: To have an overview about the evolution ofBanking, Laws related to Banking, classification ofdeposits and deployments offunds, Financial sector reforms and financial products, International tradeand finance, Ancillary services, Risk management and new delivery channels, Capital markets, Merchant

Banking and Mutual funds. Foreign exchange and derivatives.

Content Outline:

1.Evolution of Banking, functions of a Bank, RBI Act, Formation of RBI, Banking Regulation Act,Nationalization of banks ,Banker/customer, Relationship, Types customers, obligation of Banker,classification deposits, KYC norms.

2. Ancillary services -Collection ofbills, cheques, clearing house operations,DD,MT,TT,BPO, safe deposit locker, safe custody, pension payment, collection ofdirect taxes andindirect taxes. Merchant Banking and allied activities, Mutual funds/Capital market operations

3. Financial sector reforms, base norms ,Income recognition, asset classification, provisioning norms,capital adequacy.

4. Employment of funds-fund based and non-fund based. Working capital finance, Pledge,hypothecation, bill . finance. Tandon committee and chore committee norms, Guarantees and letter ofcredits .priority sector advances and micro credit and self help groups. Direct

and indirect finance of agriculture. Analysis of balance sheet, ratio analysis, term lending, credit rating,risk analysis and project appraisal.

5. International trade and finance, Exim policy, methods of payment, documents credit UCP 600,URC 22, pre-shipment and post shipment finance, Incoterm nostro/vostro Accounts, forex rates,derivatives, export /Import documentation .ECGC etc.

6.Risk management,, assets and liability . management, Integrated risk Management. Frauds In banksPreventive vigilance.

7.New financial products and new delivery channels. Banking technology, payment, core bankingsolution, NEFT, RTGS,ATM, Debit and Credit cards.

8.HRD and HRM in Banks Changing face of personal. in Banks.


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9.Risk based supervision inspection and audit in Banks. Operational risk

management; in Banks.

10.Legal aspects of Banking operation, Banking related laws and commercial laws.

Reference Books:

Merchant Banking By Verma JC

Merchant Banking By Machi Raju.

pgdm ii finance

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