SOURCES OF FUNDING DABUR

Group 2 Sec. M

AVNI KANT RAI

SHURMILA SEN ROY

SACHIN R.

NIVEDITA RAJU

TIRTHANKAR S.

AAMITOJ MONGA

SOURCES USED

3%

1%

37%

41%

0%3%

6%

9%

Proportion Of Funding Sources Used

Share Cap

Share warrants & Outstandings

Total Reserve

Shareholder's Funds

Minority Interest

Secured Loans

Unsecured Loans

Total Debts

Share Capital

Share capital (or capital stock in US English) refers to the portion of a company's equity that has

been obtained by trading stock to a shareholder for cash.

In its strict sense, as used in accounting, share capital comprises the nominal values of all shares

issued (that is, the sum of their par values, as printed on the share certificates). If the allocation

price of shares is greater than their par value, e.g. as in a rights issue, the shares are said to sold

at a premium (called share premium, additional paid-in capital or paid-in capital in excess of

par). Commonly, the share capital is the total of the aforementioned nominal share capital and

the premium share capital.

Various Sources Used:

1. EQUITY AUTHORISED

The number of stock units that a publicly traded company can issue as stated in its articles of

incorporation, or as agreed upon by shareholder vote. Authorized share capital is often not fully

used by management in order to leave room for future issuance of additional stock in case the

company needs to raise capital quickly. Another reason to keep shares in the company treasury is

to retain a controlling interest in the company.

Also be called "authorized stock," "authorized shares" or "authorized capital stock."

In case of our company DaburEquity - Authorised 207.00 for the year ended 2013-14.

86.5 86.76

174.07 174.21 174.29 174.38

00

50

100

150

200

2009 2010 2011 2012 2013 2014

Share Capital

Amount Raised

Advantages

1. Authorised capital, you can increase the capital of promoters/issue shares.

2. Banks prefer to give loan depending on the authorised capital. The ideal debt equity ratio is

2:1. So if you increase the authorised capital, you will get the loans in the above proportion.

Disadvantages

1. Certain costs are incurred at the ROC for increasing the share capital.

2. EQUITY ISSUED

Issued (share) capital is the amount of nominal value of share held by the shareholders. It is the

face value of the shares that have been issued to the shareholders. Issued share capital and share

premium represent the amount invested by the shareholders in the company. It is also known as

the subscribed capital or subscribed share capital.

In case of dabur issued capital is 174.38 for the year ended 2013-14.

Advantage

1. Company can refund the applications if the subscription is more than issued share capital.

Disadvantage

1. It limits a company’s share subscription to the extent to which the capital is issued as

shares.

1. EQUITY SUBSCRIBED

cribed share capital is that part of issued share capital for which investors have subscribed. It

means when a company issues a part of its authorized share capital, investors may or may not

subscribe for all shares. The part of issued share capital which is subscribed by investors is

known as subscribed share capital.

In case of Dabur subscribed capital is 174.38 for the year ended 2013-14.

This shows that all the issued capital was duly subscribed, in due course of time.

EQUITY CALLED UP

Called up share capital is the total amount of issued capital for which the shareholders are

required to pay. This may be less than the subscribed capital as the company may ask

shareholders to pay by instalments. Paid up share capital is the amount of share capital paid by

the shareholders.

In case of Dabur subscribed capital is 174.38 for the year ended 2013-14.

This shows that all the calls that the company made was duly paid up by the customers and there

were no calls in arrears.

EQUITY PAID UP

he amount of a company's capital that has been funded by shareholders. Paid-up capital can be

less than a company's total capital because a company may not issue all of the shares that it has

been authorized to sell. Paid-up capital can also reflect how a company depends on equity

financing.

Paid-up capital is money that a company has received from the sale of its shares, and

represents money that is not borrowed. A company that is fully paid-up has sold all available

shares, and thus cannot increase its capital unless it borrows money through debt or is authorized

to sell more shares.

Paid up share capital in case Daburis 174.38 for th year ended 2013- 2014.

SHARE WARRANT and OUTSTANDING

A share warrant is a bearer document of title to shares and can be issued only by public limited

companies and that to against fully paid up shares only.

A share warrant cannot be issued by a private company, because the share warrant states that its

bearer is entitled to a number of shares mentioned there in. It is a negotiable document and is

easily transferable by mere delivery to another person. The holder of the share warrant is entitled

to receive dividend as decided by the company.

A share warrant is accompanied by attached coupons for the payment of future dividends

Daburholds 88.92 as share warrants in their capital structure.

There are three parts of a share warrant:

(1) The counter foil.

(2) Share Warrant proper.

(3) The dividend coupons.

Total Reserve

Sum of all deposits that a depository institution (bank, building society, credit union, finance

company, insurance company) is allowed to take into account as a part of its legal reserve

requirements. It includes cash in vault, adjusted for cash in transit to or from the central bank,

and current reserve account balance with the central bank.

Various Sources Used:

Securities Premium or share premium

Excess amount received by a firm over the par value of its shares. This amount forms a part of

the non-distributable reserves of the firm which usually can be used only for purposes specified

under corporate legislation. Also called paid-in surplus.

Purpose

Share premium is a non-distributable reserve. The company can use it only for the purposes that

are defined in the bylaws of that company. It cannot be used for purposes not defined in the

company’s laws. Usually the companies are not allowed to use the share premium for payment of

dividends to the shareholders and to set off the operating losses.

704.7 833.41102.23

1438.9

1854.7

2400.8

0

500

1000

1500

2000

2500

3000

2009 2010 2011 2012 2013 2014

Total Reserve

Amount Raised

Advantages:

Share premium can usually be used for paying equity related expenses such as underwriter’s

fees.

It can also be used to issue bonus shares to the shareholders.

The costs and expenses relating to issuance of new shares can also be paid from the share

premium.

Amount Raised: 37.95 INR.

Capital Reserve

A reserve which is created out of the capital profit is known as capital reserve. It is not created

out of the profit earned in normal course of the business. Capital reserve is created out of the

profit earned from some specific transactions of capital nature. Capital reserve is not available

for the distribution to the shareholders. The examples of capital profit from which capital reserve

is created are as follows:

Profit on sale of fixed assets

Profit on sale of investment

Profit on revaluation of assets and liabilities

Premium on issue of shares and debentures

Profit on re-issue of forfeited shares

Discount on redemption of debentures

Profit on purchase of an existing business

Objectives And Advantages

Capital reserve helps in making the organization financially strong.

Capital reserve helps in writing off the capital losses arising from the sale of fixed assets,

shares and debentures.

Capital reserve helps in the issue of fully paid bonus shares to the existing shareholders.

Disadvantages

Capital reserve is not available for the distribution to shareholders.

Capital reserve does not give any indication of operating efficiency of the business.

Capital reserve does not help in making the management responsible to sale old assets at

satisfactory price.

Amount Raised: 21.59 INR.

General Reserves

When any amount is kept separate by a company out of its profit for future purpose then that is called as

general reserves. In other words the general reserves are the retained earnings of a company which are

kept aside out of company’s profits to meet future known or unknown obligations. General reserves are

the part of Profit and Loss Appropriation Account.

In other words the general reserve is a free reserve which can be utilized for any purpose after fulfilling

certain conditions.

On the basis of above definitions general reserve may be utilized for following purposes:-

To settle any unknown future contingencies

To increase the working capital

To strengthen the financial position of the company

To pay dividends to shareholders more than specified limits

General reserves kept to offset some specific future losses.

General reserves include the money kept aside for litigation or revaluation.

General reserves are shown in liabilities side of balance sheet.

Amount Raised: 180.82 INR.

EXCHANGE FLUCTUATION RESERVE

These are assets held by central banks and monetary authorities, usually in different reserve

currencies, mostly the United States dollar, and to a lesser extent the Euro, the Pound sterling,

and the Japanese yen, and used to back its liabilities, e.g., the local currency issued, and the

various bank reserves deposited with the central bank, by the government or financial

institutions.

PURPOSE

Official international reserves assets allow a central bank to purchase the domestic currency,

which is considered a liability for the central bank (since it prints the money or fiat currency as

IOUs). Thus, the quantity of foreign exchange reserves can change as a central bank implements

monetary policy, but this dynamic should be analyzed generally in the context of the level of

capital mobility, the exchange rate regime and other factors.

ADVANTAGE

Price stability

Economic stability and prosperity

DISADVANTAGE

Imports of other countries unemployment and inflation rates

Increase in precious metal reserves.

Potential influence of precious metal producers

Amount Raised: -140.62 INR.

SPECIAL RESERVES

In many countries, you are allowed to use tax depreciation rates for book depreciation. However,

the person reading the balance sheet should still be able to recognize that a different approach

was used. For this purpose, book depreciation is carried out according to the appropriate

requirements, and the depreciation allowed by tax law, which exceeds book depreciation, is

shown as special reserves on the liabilities side of the balance sheet.

PURPOSE

The "special reserves" component allows you to show the difference between book depreciation

and tax depreciation in a derived depreciation area. You can use the values from this derived

depreciation area to create special depreciation reserves for the balance sheet.

Advantages

To stabilize the share's market value.

Legal Requirement for creating special reserves.

Payment of Company Expenditures on Time.

Security of All Types of Financial Risks.

Everything may be in Reserves.

DISADVANTAGES

Special reserve makes the information of financial statement false and inaccurate.

It maybe the strong cause of losing trust and confidence of the shareholders and

outsiders.

Amount Raised: Statutory Reserves 14.93

STATUTORY RESERVES

Statutory reserves are the amount of liquid assets that firms must hold in order to remain solvent

and attain partial protection against a substantial investment loss.

PURPOSE

Statutory reserves lead insurance companies to lose some potential profits as they are unable to

invest these funds into mutual funds or other forms of high yield investments.

ADVANTAGE

Holding statutory reserves reduces the risk of insurance.

DISADVANTAGES

Statutory reserves lead insurance companies to lose some potential profits as they are

unable to invest these funds into mutual funds or other forms of high yield investments.

Amount Raised: Special Reserve 3.14

Other Reserves

Other reserves record the cumulative amount in respect of options granted but not exercised to

acquire shares in a company, less, where applicable, the cost of shares purchased to satisfy share

options exercised.

Purpose or Reason for using that particular source:

Other reserves includes the amount which represents the difference between the nominal value

and issue price of the shares issued arising from a company's rights issue completed in a period

of time.

Advantages

Records the cumulative amount in respect of options granted but not exercised to acquire shares

in a company. Amount Raised: Other Reserves 6.09

Revaluation reserve

An accounting term used when a company has to enter a line item on their balance sheet due to a

revaluation performed on an asset. It arises when the value of an asset becomes greater than the

value at which it was previously carried on the balance sheet, increasing shareholders’ funds.

Purpose or Reason for using that particular source:

Revaluation reserve is used when the revaluation finds the current and probable future value of

the asset is higher than the recorded historic cost of the same asset.

Advantages:

o It records the surplus created when assets are revalued.

Disadvantages:

Because of this revaluation reserves typically are not counted as capital that can be

leveraged for financial institutions, such as a banks, contractual provisions.

Amount Raised: Reserve excluding Revaluation Reserve 2400.80

Shareholder's Funds

Shareholders' funds refers to the amount of equity in a company, which belongs to the

shareholders. The amount of shareholders' funds yields an approximation of theoretically how

much the shareholders would receive if a business were to liquidate.

Purpose or Reason for using that particular source:

Shareholders equity has a major use as it comes from two main sources. The first and original

source is the money that was originally invested in the company, along with any additional

investments made thereafter. The second comes from retained earnings which the company is

able to accumulate over time through its operations.

Advantages:

Shareholders’ funds keeps a track on the following accounts:

Common stock

Preferred stock

Retained earnings

Treasury stock

Disadvantages:

The items within shareholders' funds (share capital, reserves and retained profit) are

usually of little importance, although the amount of distributable reserves might matter to

shareholders if it is too low, and (even more rarely) to creditors if it is too high.

Amount Raised: Shareholder's Funds 2664.10

Minority Interest A significant but non-controlling ownership of less than 50% of a company's voting shares by

either an investor or another company.

A non-current liability that can be found on a parent company's balance sheet that represents the

proportion of its subsidiaries owned by minority shareholders.

Purpose or Reason for using that particular source:

In accounting terms, if a company owns a minority interest in another company but only has a

minority passive position (i.e. it is unable to exert influence), then all that is recorded from this

investment are the dividends received from the minority interest. If the company has a minority

active position (i.e. it is able to exert influence), then both dividends and a percent of income are

recorded on the company's books.

Advantages:

Minority interest is reported on the consolidated income statement as a share of profit

belonging to minority shareholders.

Disadvantages:

It is no longer acceptable to report minority interest in the mezzanine section of the

balance sheet.

Some investors have expressed concern that the minority interest line items cause

significant uncertainty for the assessment of value, leverage and liquidity.

A key concern of investors is that they cannot be sure what part of the reported cash

position is owned by a 100% subsidiary and what part is owned by a 51% subsidiary.

Amount Raised: Minority Interest 7.77

Secured Loans

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as

collateral for the loan, which then becomes a secured debt owed to the creditor who gives the

loan. The debt is thus secured against the collateral — in the event that the borrower defaults, the

creditor takes possession of the asset used as collateral and may sell it to regain some or all of the

amount originally loaned to the borrower, for example, foreclosure of a home. From the

creditor's perspective this is a category of debt in which a lender has been granted a portion of

the bundle of rights to specified property. If the sale of the collateral does not raise enough

money to pay off the debt, the creditor can often obtain a deficiency judgment against the

borrower for the remaining amount. The opposite of secured debt/loan is unsecured debt, which

is not connected to any specific piece of property and instead the creditor may only satisfy the

debt against the borrower rather than the borrower's collateral and the borrower. Generally

speaking, secured debt may attract lower interest rates than unsecured debt due to the added

security for the lender; however, credit history, ability to repay, and expected returns for the

lender are also factors affecting rates.

90.8 70.2

376.5 403.4

539.1

194.9

0

100

200

300

400

500

600

2009 2010 2011 2012 2013 2014

Secured Loans

Amount Raised

Term Loans

Term loans are the standard commercial loan, often used to pay for a major investment in the

business or an acquisition. The loans often have fixed interest rates, with monthly or quarterly

repayment schedules and a set maturity date.

Bankers tend to classify term loans into two categories:

Intermediate-term loans: This kind of loans usually run less than three years, and are

generally repaid in monthly instalments (sometimes with balloon payments) from a

business's cash flow.

Long-term loans: This type of loans can run for as long as 10 or 20 years and include

additional requirements such as collateral and limits on the amount of additional financial

commitments the business may take on.

Benefits

Term loans are often the best option for established small businesses. If your financial

statements are sound and you're willing to make a substantial down payment, you can receive

financing with minimal monthly payments and total loan costs. The loans are best used for

construction, major capital improvements, large capital investments, such as machinery, working

capital and purchases of existing businesses.

Drawbacks

Term loans require collateral and a relatively rigorous approval process but can help reduce risk

by minimizing costs. Before deciding to finance equipment, borrowers should be sure they can

they make full use of ownership-related benefits, such as depreciation, and should compare the

cost with that leasing.

Also note that when it comes to loans more than $100,000, you need a complete set of financial

statements and must undergo a complete financial analysis by the lending institution.

Banks consider the following "five C's" when making decisions about term loans:

Character: How have you managed other loans (business and personal)? What is your business

experience.

Credit capacity: The bank will conduct a full credit analysis, including a detailed review of

financial statements and personal finances to assess your ability to repay.

Collateral: This is the primary source of repayment. Expect the bank to want this source to be

larger than the amount you're borrowing.

Capital: The bank does not want to be left holding the bag. So what assets do you own that can

be quickly turned into cash if necessary? The bank wants to know what you own outside of the

business -- bonds, stocks or apartment buildings -- that might be an alternate repayment source.

Comfort/confidence with the business plan: How accurate are the revenue and expense

projections? Expect the bank to make a detailed judgment.

Amount Raised: 194.92

Unsecured Loans

A loan that is issued and supported only by the borrower's creditworthiness, rather than by a type of

collateral. An unsecured loan is one that is obtained without the use of property as collateral for the loan.

Borrowers generally must have high credit ratings to be approved for an unsecured loan.

Other Unsecured Short Term Loans

A loan in which the borrowed money provides the mechanism through which the loan is repaid.

Banks lend unsecured, short-term funds in three basic ways: through single-payment notes, lines

of credit, and revolving credit agreements.

PURPOSE

These loans are intended merely to carry the firm through seasonal peaks in financing needs that

are due primarily to buildups of inventory and accounts receivable.

DISADVANTAGE

Because an unsecured loan is not guaranteed by any type of property, these loans are bigger risks

for lenders and, as such, typically have higher interest rates than secured loans (such as a

mortgage).

131.9 109.1

918.5851.5

322.5 379.5

0

200

400

600

800

1000

2009 2010 2011 2012 2013 2014

Unsecured Loans

Amount Raised

ADVANTAGE

An unsecured loan may be a good option for individuals who do not have enough equity in their

homes to be approved for a home equity loan.

Amount Raised: Other Unsecured Loan 379.10

SOURCES NOT USED

Share capital

EQUITY SHARES FORFEITED

A share in a company that the owner loses (forfeits) by failing to meet the purchase

requirements. Requirements may include paying any allotment or call money owed, or avoiding

selling or transferring shares during a restricted period. When a share is forfeited, the shareholder

no longer owes any remaining balance, surrenders any potential capital gain on the shares and

the shares become the property of the issuing company. The issuing company can re-issue

forfeited shares at par, a premium or a discount as determined by the board of directors.

Advantages

This enables the company to forfeit the application money without issue of shares against

them.

This increases the balance of capital reserve of the company.

PREFERENCE CAPITAL PAID UP

A preference share that can be converted into common shares at a set conversion price.

Preference or preferred shares entitle a holder to a prior claim on any dividend paid by the

company before payment to ordinary shares. Buying stocks always poses the risk of losing

money, but avoiding stocks altogether means missing out on the opportunity to make good

profits. There is one security, however, that may help solve this dilemma for some investors:

convertible preferred shares give the assurance of a fixed rate of return plus the opportunity

for capital appreciation. Here we review what these securities are, how they work and how to

determine when a conversion is profitable.

Advantages

This is preferred over and above the equity share capital , and company is liable to give

only specified amount of dividend on them.

Disadvantage

The company has to return the cash to preference share holder first as compared to equity

share during winding up of the company.

CONVERTIBLE PREFERENCE SHARES

These shares are corporate fixed-income securities that the investor can choose to turn into a

certain number of shares of the company's common stock after a predetermined time span or on a

specific date. The fixed-income component offers a steady income stream and some protection

of the investors' capital. However, the option to convert these securities into stock gives the

investor the opportunity to gain from a rise in the share price.

Advantages

Company can retain the shares and investment in either form , so that it need not return

rather convert them with promising more percentage of interest .

Disadvantage

Company will have to divide the profit amongst more number of share holders and

division would be according to the profit earned.

NON CONVERTIBLE PREFRENCE SHARES

These are those preference shares which do not contain nay clause to convert into equity shares. These shares cannot be converted into equity shares after the maturity of preference shares.

Dabur doesn’t contain any amount of non convertible preference shares in there capital

structure.

RESERVES

Investment Fluctuation Reserve(

Reserves built up within many accumulation-style superannuation funds, for the purpose of

smoothing the year-to-year returns credited to member accounts.

\\

Investment reserves are established by not distributing some of the investment income when

fund earnings are high. They are then used to top up the rates credited to member accounts

when earnings are low. In this way, the rate credited to members on a year-to-year basis is

not absolutely dependent on the market cycle. The Superannuation Industry (Supervision)

legislation permits such reserves to be maintained, provided trustees establish and follow a

strategy for their prudential management.

Hedging Reserve

The hedging reserve records gains or losses on cash flow hedges that are recognized initially in equity.

Purpose or Reason for using that particular source:

Hedge reserve is created for Cash Flow hedges where a decision is made by entities to

protect their cash flows of future. Since it would be an unrealized money (movements in the

value of hedges), it is shown through Hedge reserve. Like any other reserve, the value of the

underlying asset is increased, and a corresponding reserve is created.

Advantages:

Records gains or losses on cash flow hedges.

Disadvantages:

Unrealized money is shown through Hedge reserve. Hence, not always trackable.

Link for references:

http://www.caclubindia.com/forum/hedge-reserve

Contingency Reserve(

A company's retained earnings that are not reinvested but set aside to protect against future

losses. A company may set up a reserve for contingencies when it is performing well to guard

against the risk that it may eventually perform poorly. A reserve for contingencies allows a

company to maintain its operations smoothly even when it has suffered an operating loss.

Purpose:

To face any unforeseeable risk or future incidence in the company.

Advantage

Increase companies financial vulnerability

Secures from future risk.

Investment in the company increases

Extension of the company.

Disadvantage

The profit earned stays with company not distributed to shareholders.

Revenue Reserve

The portion of a business' profits retained by the company for investment in future growth, and

are not redistributed to the shareholders through regular or special dividends.

Types of Revenue Reserve

There are two types of revenue reserve:

a) General Reserve

A reserve which is created out of the profit not for a specific purpose is known as general

reserve. General reserve is used for general purpose as per the discretion of the management.

Usually, general reserve is used for strengthening the financial position and meeting future

contingencies and losses.

b) Specific Reserve

A reserve which is created out of the profit for a particular purpose is known as specific reserve.

Such reserve cannot be utilized for any purpose other than specified. Specific reserve is created

by debiting the profit and loss appropriation account. It can be invested in outside securities. It

serves for a specific purpose as to equalize dividend or to redeem a fixed liability or to replace a

fixed assets or to conduct a research and development work.

The following are the important types of specific reserve:

Dividend equalization fund

Sinking fund

Research and development fund

SECURED LOANS:

Non-Convertible Debentures (NCD)

Debentures are long-term financial instruments which acknowledge a debt obligation towards

the issuer. This type of debentures can not be converted in to equity shares.

Further there are two types of debenture

Secured NCD: Debentures which are backed by assets of the issuer.

Unsecured NCD: Debentures which are not backed by any kind of assets of the issuer.

Why Used:

Because comapny has to pay higher interest rates to the investors at the maturity of the NCDs.

Otherwise it will be very difficult to attract the investors.

Advantages:

High interest rates, in recent years NCDs offer 11-12% rate of interest.

It can be sold in secondry capital market, depending on the difference between current

rate of interest and the rate of interest on which it was issued investor can earn profit or

loss.

Disadvantages:

There is some risk involved in this type of investment instrument, such as the company

can default on the future payment and if it is unsecured NCD, an investor does not have

any recourse.

Tax implications:- The capital gains have different taxability. Short term capital gains

which arises by selling NCD before one year is taxed as per the income slab of individual

holding the instrument. Any gains which arises by selling NCD after one year and before

maturity is taxable as long term capital gains. The applicable tax rate is 10.30% without

indexation since cost indexation benefit is not available in case of bonds and debentures.

Packing Credit – Bank

PACKING CREDIT is any loan or advance granted or any other credit provided by a bank to an exporter

for financing the purchase, processing, manufacturing or packing of goods prior to shipment, on the basis

of letter of credit opened in his favor or in favor of some other person, by an overseas buyer or a

confirmed and irrevocable order for the export of goods from the producing country or any other evidence

of an order for export from that country having been placed on the exporter or some other person, unless

lodgment of export orders or letter of credit with the bank has been waived.

Pre shipment finance is normally provided by the commercial banks. As in the case of many

other advances the bank takes into consideration a number of factors before making the

necessary other advances to exporters viz., (1) honesty, integrity and capital of the borrower, (2)

exporter’s experience in the line, (3) security offered, (4) the margin of interest (5) the bank’s

experience about the exporter to ensure that his name does not appear on the caution list of the

Reserve Bank.

The security can be provided in the following forms:

Letter of credit

Confirmed order as evidence of having received an order

Relevant policy issued by the Export Credit Guarantee Corporation and

Personal bond in the case of party(ies) already known to the banker

Why Used

This type of funding source is used by export firms since Dabur is not a exporting firm it does

not use this source.

Advantages:

The credit helps you cover production costs like raw materials and wages for employees.

Packing credit provides you with an extended and flexible finance period most commonly

90 days prior to the shipment date.

You can structure the credit terms as per the suitability of your business.

It becomes easier to attract new business by proffering more viable terms to trading

partners.

Packing credit avails for you the cash flow during the process of packing goods and while

waiting for shipment.

Interest rates are in between 11-12%.

Interest rates are also in accord with the international interest rates.

banks have been allowed to extend Pre-shipment Credit in Foreign Currency (PCFC) at

rates linked to LIBOR (London Inter-bank Offer Rates).

Cash Credit Bank

Cash credit is an arrangement under which a customer of a bank or financial institution is

allowed an advance up to certain limit against credit granted by bank. That means a loan may be

granted say for Rs. 1 Lakh however the customer/borrower of the loan may take the amount of

loan to the extent required by him but not exceeding the limit of Rs. 1 Lakhs.

Why used:

The purpose for which loan is required is essential to ascertain, as for different purposes different

types of loan can be taken. Eg. In case the loan is required to purchase fixed assets like plant and

machinery, term loan must be taken as plant and machinery are long term assets it will take time

in repayment of the loan and repayment can be done in EMI’s (Equated Monthly Installments).

Whereas a loan required for working capital needs a long term loan is not required as repayment

does not require long period, hence cash credit may be availed.

Advantages

Purchase Power and Ease of Purchase.

Protection of Purchases.

Building a Credit Line

Emergencies

Disadvantages:

Higher interest rates.

Sometimes this facility can distort the annual budget.

Overdrafts – Bank

A credit agreement made with a financial institution that permits an account holder to use or

withdraw more than they have in their account, without exceeding a specified maximum negative

balance. Establishing an overdraft facility with a bank can help an individual or small business

with short term cash flow problems, although the negative balance typically needs to be repaid

within a month.

Banks offer overdraft facility to individuals against assets such as property, securities and life

insurance policies. The individuals have to pay interest on the amount depending on the period.

Advantages

Interest rates is dependent on the assets kept as collateral.

The interest rate is also dependent on the time period.

Best possible way to face any emergency.

Disadvantages:

Banks charge one percent more than the rate payable on the fixed deposits for the

overdraft against fixed deposits.

High risk factor involved.

Inter Corporate & Security Deposit

This comes under the Sec. 372A of Companies act 2013, guarantees and securities i.e

guarantees provided and securities given by the company in connection with the loan given :-

By any person to anybody corporate

Anybody corporate to any person

For the purpose of 372A guarantees at least one party i.e lender or borrower must be body

corporate otherwise 372A will not apply.

For the purpose of Sec. 372A inter corporate guarantee or securities should be in connection

with the loan. In respect of other type of guarantee like performance guarantee Sec. 372A

will not be applicable.

In respect to corporate guarantee and security provided a company has to comply the

provision of this section and also take care of the provision of Sec. 295(1)(d)/(e)., if and

when applicable.

Purpose:-

The companies enter in this inter-corporate securities and deposit market in order to reconcile

the temporary money mismatch.

Term Loans – Institutions

Also referred to as a Term B Loan or an institutional term loan.

Also referred to as a Term B Loan or an institutional term loan. A term loan made by

institutional investors whose primary goals are maximizing the long-term total returns on

their investments. TLBs typically mature within six to seven years and have a small

repayment schedule (usually about 1.0% of the principal amount of the loan per year, payable

quarterly) during the term of the loan, with the remainder due on the maturity date. TLBs

may provide that the Term B Lenders have the right not to accept prepayments of the loans.

They may also have a prepayment penalty of between 1.0% and 2.0% if repaid within the

first year. Interest rate margins on TLBs are typically higher than the interest rate margin on

the initial Term Loan A (TLA) and any revolving credit loan under the same loan agreement,

Same loan agreement.

Key Features:

Though the features are not same for all the Institutional term loans but overall generic features

of this type of funding are as follows:

Size: Deals of less than USD 100m to USD 200m

Interest Rates: Floating interest rates.

Tenor: It can range from 2 to 7 years.\

Ratings: Ratings done by two agencies required for two debentures.

Security: Generally secured on ‘Pari-Passu’ basis with other landers.

Amortisation: Nil or Minimal ammortisation.

Advantages:

Benefit of Tax:

Cheaper Source of Finance

No Dilution of Control

No Dilution in Share of Profits

Benefit of Financial Leverage

Disciplinary Effect

Disadvantages:

Rigid Obligation

Enlarge Leverage Ratios

Restrictive Covenants

Bad for Low Inflationary Conditions

Working capital loans-Bank

A working capital loan is money borrowed from a bank to pay for the day-to-day business of

producing and selling goods and services.

Purpose

A working capital loan is not used to buy long term assets or investments. Instead it's used to clear up accounts payable, wages.

Advantages:

Absolutely no pledge of personal assets

Loans for bad credit

Loans for poor FICO scores

Simple paperwork

Renewable working capital options available

Bridge Loan

A short-term loan that is used until a person or company secures permanent financing or

removes an existing obligation. This type of financing allows the user to meet current

obligations by providing immediate cash flow. The loans are short-term (up to one year)

with relatively high interest rates and are backed by some form of collateral such as real

estate or inventory.

Purpose:

Bridge loans are often used for commercial real estate purchases to quickly close on a

property, retrieve real estate from foreclosure, or take advantage of a short-term opportunity

in order to secure long-term financing. Bridge loans on a property are typically paid back

when the property is sold, refinanced with a traditional lender, the borrower's

creditworthiness improves, the property is improved or completed, or there is a specific

improvement or change that allows a permanent or subsequent round of mortgage financing

to occur. The timing issue may arise from project phases with different cash needs and risk

profiles as much as ability to secure funding.

Benefits of Bridge Loan Financing

The financing they provide is strictly short-term. Most other loans are geared towards long-term

expenditures such as mortgage and college tuition. Those expenses require the borrower to pay

the loan off over a long period of time. The longer the loan lasts, the more likely it is the

borrower will suffer from some form of financial hardship that will make repaying the loan

difficult. This, in turn, can compound the borrower's financial problems as penalty fees rise and

the borrower struggles to get more funds to cover the mounting debt. Bridge loans, on the other

hand, are designed to be repaid in full by the time long-term form of financing is secured.

This dovetails into another major benefit of bridge loan financing--the ability to choose

repayment options. Borrowers can choose to repay the bridge loan before the permanent

financing is secure or after. In the former case, the payments are structured in a way that allow

the borrower to repay the loan in full over a certain limited period of time. If the borrower makes

all the payments on time, his or her credit rating will improve significantly, allowing them to

qualify for long-term loans they would otherwise be ineligible for. In the later case, the portion

of the permanent funding is used to repay the bridge loan in full.

Drawbacks

The biggest benefit of bridge loan financing is also it's biggest drawback. Because the borrower

has to repay the loan quickly than he or she would a more long-term loan, the payments will be

larger. This isn't an issue if the borrower has enough money to make all the payment, but if the

borrower doesn't, he or she will have even harder time paying it back. Because of the length of

their loan, the lenders are less likely to be flexible when it comes to late payments. They will

charge larger fees and penalties, making it all that much harder for the borrower to repay the

bridge loan.

The borrower can get around that by choosing to have the loan repaid once permanent financing

is secured, but that has it's own drawback. For every month the loan isn't repaid, it gathers

interest. This means that the actual payment will wind up larger (sometimes significantly so)

than what the borrower would have paid if he or she made payments during the loan's actual

term.

External Commercial Borrowings

External Commercial Borrowings (ECB) refer to commercial loans [in the form of bank

loans, buyers’ credit, suppliers’ credit, securitised instruments (e.g. floating rate notes and

fixed rate bonds)] availed from non-resident lenders with minimum average maturity of 3

years.

ECB can be accessed under two routes:

(i) Automatic Route outlined in Paragraph I (A)

(ii) Approval Route outlined in paragraph I (B).

ECB for investment in real sector –industrial sector, especially infrastructure sector-in India,

are under Automatic Route, i.e. do not require RBI/Government approval. In case of doubt as

regards eligibility to access Automatic Route, applicants may take recourse to the Approval

Route.

Purpose:

Government Permits the ECB as an additional source of financing for expanding the

existing capacity and as well as for fresh investments.

There is also emphasis on small and medium scale enterprises.

Benefits:

The ECB funding helps in many purposes such as paying suppliers in foreign

countries.

The cost of funds borrowed from external sources at times is cheaper than

domestic funds.

The borrower can diversify the investor base.

UNSECURED LOANS

Public deposits

Public deposits are an important source of financing the medium-term and long-term

requirements of a company. The term 'public deposit' implies any money received by a company

through the deposits or loans collected from the public. The public includes the general public,

employees and shareholders of the company but excludes the money received in the form of

shares and debentures.

In India, this method of raising finance has gained a lot of importance because of the several

advantages relating to public deposits:-

It is an easier method of mobilising funds, especially during periods of credit squeeze.

The administrative cost of deposits for the company is lower than that involved in the

issue of shares and debentures. The procedure of inviting public deposits is also simpler

and involve lesser formalities.

The rate of interest payable by the company on public deposits is lower than the interest

on loans from banks and other financial institutions. Such an interest is a tax deductible

expense.

It helps the company to borrow funds from a larger segment of public and thus reduces

the dependence of the company upon financial institutions.

It also enables the company to create contact with a large number of investors.

It ensures the availability of funds for a longer duration and provides flexibility to the

financial structure of the company. There is no risk of over-capitalisation and the deposits

can be repaid when they are not required.

There is no dilution of shareholders' control as the depositors have no voting rights and

cannot interfere with the internal management of the company.

But this mode of financing through public deposits has its own limitations:-

As the public deposits are more likely to be affected by the uncertain conditions in the

economy, the depositors’ response may vary accordingly. They may also tend to

withdraw their deposits if the company is not performing well.

Public deposits with the companies may cause a diversion of resources into non-priority

and undesirable areas.

Professional investors may not like to invest in such deposits as there is no or less chance

for capital appreciation.

As public deposits are unsecured, the depositors may have to bear the risk of loss of

money in the event of failure of the company.

Their widespread use restricts the growth of a healthy capital market. They also tend to

distort the interest rate pattern of the economy and may result in the dearth of sound

industrial securities.

Loans and Advances against subsidiaries

The term ‘loan’ refers to the amount borrowed by one person from another. The amount is in the

nature of loan and refers to the sum paid to the borrower. Thus. from the view point of borrower,

it is ‘borrowing’ and from the view point of bank, it is ‘lending’. Loan may be regarded as ‘credit

’granted where the money is disbursed and its recovery is made on a later date. It is a debt for the

borrower. While granting loans, credit is given for a definite purpose and for a predetermined

period. Interest is charged on the loan at agreed rate and intervals of Payment. ‘Advance’ on the

other hand, is a ‘credit facility’ granted by the bank. Banks grant advances largely for short-term

purposes, such as purchase of goods traded in and meeting other short-term trading liabilities.

There is a sense of debt in loan, whereas an advance is a facility being availed of by the

borrower. However, like loans, advances are also to be repaid. Thus a credit facility- repayable in

instalments over a period is termed as loan while a credit facility repayable within one year may

be known as advances.

Inter Corporate Deposits

Inter-corporate deposits are deposits made by one company with another company, and usually

carry a term of six months. The three types of inter-corporate deposits are: three month deposits,

six month deposits, and call deposits.

Three month deposits are the most popular type of inter-corporate deposits. These deposits are

generally considered by the borrowers to solve problems of short-term capital inadequacy. This

type of short-term cash problem may develop due to various issues, including tax payment,

excessive raw material import, breakdown in production, payment of dividends, delay in

collection, and excessive expenditure of capital.

The annual rate of interest given for three month deposits is 12%. Six month deposits are usually

made with first class borrowers, and the term for such deposits is six months.

The annual interest rate assigned for this type of deposit is 15%. The concept of call deposit is

different from the previous two deposits. On giving a one day notice, this deposit can be

withdrawn by the lender. The annual interest rate on call deposits is around 10%.

Advantages

The biggest advantage of inter-corporate deposits is that the transaction is free from bureaucratic and

legal hassles. The business world otherwise is regulated by a number of rules and regulations.

The existence of the inter-corporate deposits market shows that the corporate world can be regulated

without rules.

Disadvantages

The market of inter-corporate deposits maintains secrecy. The brokers in this market never reveal their

lists of lenders and borrowers, because they believe that if proper secrecy is not maintained the rate of

interest can fall abruptly.

The market of inter-corporate deposits depends crucially on personal contacts. The decisions of lending in

this market are largely governed by personal contacts.

'FOREIGN CURRENCY CONVERTIBLE BOND - FCCB'

A type of convertible bond issued in a currency different than the issuer's domestic currency. In

other words, the money being raised by the issuing company is in the form of a foreign currency.

A convertible bond is a mix between a debt and equity instrument. It acts like a bond by making

regular coupon and principal payments, but these bonds also give the bondholder the option to

convert the bond into stock.

Advantages

These types of bonds are attractive to both investors and issuers. The investors receive the safety of

guaranteed payments on the bond and are also able to take advantage of any large price appreciation in

the company's stock. (Bondholders take advantage of this appreciation by means warrants attached to the

bonds, which are activated when the price of the stock reaches a certain point.) Due to the equity side of

the bond, which adds value, the coupon payments on the bond are lower for the company, thereby

reducing its debt-financing costs.

Security Deposit

In deposit terminology, the term Security Deposit refers to an amount of money paid in advance

and held in reserve in the event of the depositor failing on a contractual obligation. It is used by

banks to secure credit cards for questionable borrowers as well a substantial security deposit

when you open your Internet merchant account. Security Deposits are also commonly provided

by tenants to help protect the landlord in a real estate lease.

Security Deposit Example:

For example, a Security Deposit will often be put down on a new lease of a property or home.

The Security Deposit would consist of an advance amount of money which is required by the

leaser of the property from the tenant in order to cover any expenses the landlord might incur

after the lease was up, and the tenant moved out. These expenses would consist of repairs to

damages done to the property which would not be considered normal “wear and tear.” The

Security Deposit is not considered rent and in some states is illegal to use for the last month’s

rent. Some states have a limit on the amount of Security Deposit a landlord may charge.

UNSECURED SHORT TERM LOANS

A loan in which the borrowed money provides the mechanism through which the loan is repaid.

Banks lend unsecured, short-term funds in three basic ways: through single-payment notes, lines

of credit, and revolving credit agreements.

PURPOSE

These loans are intended merely to carry the firm through seasonal peaks in financing needs that

are due primarily to buildups of inventory and accounts receivable.

DISADVANTAGE

Because an unsecured loan is not guaranteed by any type of property, these loans are bigger risks

for lenders and, as such, typically have higher interest rates than secured loans (such as a

mortgage).

ADVANTAGE

An unsecured loan may be a good option for individuals who do not have enough equity in their

homes to be approved for a home equity loan.

GOVERNMENT LOANS

A mortgage loan insured or backed by the Department of Veterans Affairs, the

Rural Housing Service, or the Federal Housing Administration.

PURPOSE

A government loan is a loan subsidized by the government, which protects lenders against

defaults on payments, thus making it a lot easier for lenders to offer potential borrowers lower

interest rates. Its primary aim is to make home ownership affordable to lower income households

and first-time buyers.

ADVANTAGE

Low interest rates.

Fast approvals.

DISADVANTAGE

Cannot write off debt.

More Red Tape: Government agencies are held to a standard by the public

and lawmakers, so they are usually more thorough with their loan

application processes. When applying for a government loan, you will

probably be met with more steps, more paperwork, and tighter requirements

in order to be approved. The government has to be 100% assured that you

are eligible for the loan before releasing any funds.

SHORT TERM LOANS

A short term loan is a loan that must be repaid or refinanced within one year. Short-term loans

are recorded on a balance sheet as current liabilities

ADVANTAGES

They are quick and easy to apply for. You can apply for them online in just minutes.

You will receive your money the same day you apply - sometimes in as little as one hour.

You can apply for up to $1000.

DISADVANTAGES

Short term loans come with fees and high interest rates. If you fall behind on a short term loan

you may end up paying more money in fees and interest than the total amount you originally

borrowed.

Dividend History of Dabur

For the year ending March 2014, Dabur India has declared an equity dividend of 175.00% amounting to Rs 1.75 per share. At the current

share price of Rs 229.35 this results in a dividend yield of 0.76%.

The company has a good dividend track report and has consistently declared dividends for the last 5 years.

* As per the Profit & Loss account

Announcement

Date

Effective

Date

Dividend

Type

Dividend

(%)

Remarks

08-09-14 19-09-14 Interim 125.00 Rs.1.2500 per share(125%)Interim Dividend

29-04-14 27-06-14 Final 100.00 Rs.1.0000 per share(100%)Final Dividend

14-10-13 05-11-13 Interim 75.00 Rs.0.7500 per share(75%)Interim Dividend

30-04-13 21-06-13 Final 85.00 Rs.0.8500 per share(85%)Final Dividend

12-10-12 31-10-12 Interim 65.00 Rs.0.6500 per share(65%)Interim Dividend

30-04-12 27-06-12 Final 75.00 -

14-10-11 04-11-11 Interim 55.00 -

27-04-11 29-06-11 Final 65.00 -

13-10-10 02-11-10 Interim 50.00 -

18-06-10 03-08-10 Final 125.00 -

14-10-09 30-10-09 Interim 75.00 -

29-04-09 29-06-09 Final 100.00 -

13-01-09 02-02-09 Interim 75.00 -

30-04-08 19-06-08 Final 75.00 AGM

10-10-07 29-10-07 Interim 75.00 -

05-03-07 16-03-07 Interim 75.00 -

09-10-06 03-11-06 Interim 100.00 -

25-04-06 21-06-06 Final 100.00 AGM

29-09-05 28-10-05 Interim 150.00 -

28-04-05 29-06-05 Final 150.00 AGM

01-10-04 02-11-04 Interim 100.00 -

05-05-04 15-06-04 Final 140.00 AGM & Scheme of Arrangement

Reference: http://monetarysection.com/dictionary/definition-of-subscribed-

share-capital

Subs

REF: http://www.investopedia.com/terms/p/paidupcapital.asp

T

REF:

https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=10&c

ad=rja&uact=8&ved=0CEgQFjAJ&url=https%3A%2F%2Faccountancyxii.fi

les.wordpress.com%2F2012%2F09%2Fmeaning.doc&ei=1H1oVMGDG46zu

ATk5ICQDg&usg=AFQjCNGz7nZun7PitOvtRDt4JHA-ZycK4w

(Read more: http://www.businessdictionary.com/definition/share-

premium.html#ixzz3JFAuRAFd&http://www.readyratios.com/reference/acco

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(http://accountlearning.blogspot.in/2010/07/capital-reserve-its-objectives.html

)

http://en.wikipedia.org/

http://www.marketskeptics.com/

http://help.sap.com/

http://accountlearning.blogspot.in/

http://www.investopedia.com/terms/s/statutory-reserves.asp

http://en.wikipedia.org/wiki/Statutory_reserve

http://www.investopedia.com/terms/r/revaluationreserves.asp

http://moneyterms.co.uk/shareholders-funds/

http://en.wikipedia.org/wiki/Minority_interest

(http://www.entrepreneur.com/article/52728)

http://www.finweb.com/loans

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190718.asp#.VGW9xj_IDRY )

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