...tmentMBA Education & Careers Eco Fundas for you What is Disinvestment? Quick Fact government also hands over management control to private parties, it is termed ‘privatisation’. Ever since India launched the New Economic Policy (NEP) in July 1991, disinvestment has been an important policy area. Also, in recent years the issue of disinvestment has come to the fore due to the large scale fiscal deficit that the government has been running up. While presenting this year’s Union Budget, Finance Minister P. Chidambaram proposed estimated divestment proceeds of 40,000 crore for 2013-14, even when the Economic Survey released a few days before the Budget, had suggested that the Government should try to raise at least 25,000 crore every year by divesting its stake in state-run companies to meet the burgeoning fiscal deficit. The Rangarajan Committee expressed the view that in the case of PSUs for which the first sale is yet to be made or where the track record is yet to be established, two methods are recommended: (a) the method of sale by fixing a predetermined share price, and (b) the method of sale through auction among a pre-determined clientele (by way of shortlisting through tenders) as two acceptable and transparent processes for divestiture. In addition, it also identified a third method of transfer of controlling interest in an enterprise to a specific firm or person. It noted that all these methods have their merits and demerits; provide better quality services; reduce...
Words: 1137 - Pages: 5
...DISINVESTMENT OF BHEL LTD INTRODUCTION:- Bharat heavy electrical limited is an integrated power plant equipment manufacturer and one of the largest engineering and manufacturing companies in india in relation to turnover. It was established in 1964. The company has been earning profits continuously since 1971-72 and paying dividends since 1976-77. Its related to design, engineering, manufacture,construction,testing,commissioning and servicing a variety of products and services for the main sectors of the economy mainly Power, Transmission,Industry, Transportation(Railway), renewable energy, Oil and Gas and Defence. It has 15 manufacturing divisions and more than 150 project sites across india. It contributes 59% in india’s total installed generating capacity. It has its branches in over 75 countries globally. DISINVESTMENT OF BHEL LTD:- * The government holds 67.72% holdings in BHEL Ltd. * The annual turnover target of the Ministry Of Disinvestment for the current financial year from disinvestment is around 40000 crores. * So the government has decided to sell 5% of its stake holdings to the public, which is expected to generate a revenue of about 4500 crores. * But the disinvestment has been currently put on hold due to the present market conditions. * The government wants to provide financial support and want to improve the efficiency of the enterprise. The company had some debts which is showed in the balance sheet. So in order to minimize those...
Words: 592 - Pages: 3
...Disinvestment and Privatisation in India Assessment and Options1 R Nagaraj2,3 Ownership reform in public sector enterprises (PSEs) initiated since 1991 has as yet been quantitatively modest. It is perhaps too early to judge the effects of these initiatives on their financial performance. While the slow pace of the reform can be perceived as an opportunity, there is perhaps merit in carefully reviewing the policy in light of economic theory, and comparative experience. As the bulk of the public investments are in industries with economies of scale and scope (with externalities that in principle invite considerable regulation), this study suggests an alternative institutional arrangement for improving PSEs’ financial performance: mutual stock holding among complementary enterprises tied around a public sector bank to minimise problems of soft budget constraint, dysfunctional legislative and bureaucratic interference, and to encourage close interaction between banks and firms to promote long term economic development. Introduction: Employing about 19 million persons, public sector currently contributes about a quarter of India’s measured domestic output. Administrative departments (including defense) account for about 2/5th of it, the rest comes from a few departmental enterprises (like railways and postal services), and a large number of varied non-departmental enterprises producing a range of goods and services. These include, close to 250 public sector enterprises (PSEs) owned...
Words: 10771 - Pages: 44
...Reasons for disinvestments: Financial Reasons 1. Cash related – a. Need for cash - for better reinvestment opportunities b. Voluntary liquidation to avoiding any substantial investments need to run the business on a profitable and sustainable business 2. Performance related – c. Unsatisfactory profit level on assets being divested d. Selling off assets and fringe activities to focus efforts on core competencies e. Rationalization of resources to achieve cost reductions and avoid duplication or uneconomic scale of operations f. Project nearing end of profitable life g. Corporate sales and profit growth objectives not met h. PV of cash flows for disinvestment than PV of cash flows from retention or expansion of business 3. Financial Environment i. Increasing interest rates pushing up financing costs eg Air India j. Increasing rate of inflation which cannot be compensated for by price increases Non Financial Reasons 1. Market Related a. Declining industry with permanent reduction in customer demand to an inadequate level b. Market share continuously declining, inability to penetrate new markets c. Business location badly situated in relation to markets and distribution means d. Risk and uncertainties related to business growing e. Competition increase to severe level 2. Management Related a. Inadequate management knowledge b. Lack of any specific competence ...
Words: 352 - Pages: 2
...Manmohan Singh. "The response has been a mixed one but the UPA had tried to evolve a consensus," he said. The cabinet had in November last year approved 51 percent FDI in multi-brand retail but had to put it on hold due to opposition from political parties, including UPA ally Trinamool Congress. Sharma also reiterated that foreign retailers planning to enter the multi-brand segment would have to invest a minimum of USD 100 million with 50 percent of it in rural areas. Related Stories • 49% FDI in civil aviation allowed; industry welcomes • Cabinet allows disinvestment in 4 PSUs; to raise Rs 15,000 crore • Broadcast sector reform: FDI upto 74% to be allowed • FDI in retail to boost mall space demand: Realtors • Govt permits foreign investment in power trading exchanges • Major decisions to dispel policy paralysis notion: India Inc • FDI decisions to boost growth, generate employment: PM • UK-India business body hails FDI move • FDI sensitive, but to India's benefit: UK Inc • Corporate America, media hail India's 'big bang' reforms • Corporate America, media hail India's 'big bang' reforms • Govt's big-ticket reforms: FDI in multi-brand...
Words: 707 - Pages: 3
...JEEV SEWA SANSTHAN GROUP OF INSTITUTION FOR WOMEN FACULTY OF MANAGEMENT PGDM-1 2012-2013 INDIAN FINANCIAL SYSTEM TOPIC- FINANCIAL MARKET SUBMITTED TO: SUBMITTED BY: Miss Ankita Rajdev Nisha Kumari Garima Jain Kohila Chouhan Laxmi Nandwani Sanchita Vishwakarma Neha Satwani ACKNOWLEDGEMENT Guidance, help and encouragement are the essential requirement for successful completion of assignment. We own our gratitude to all those who have helped us in the preparation of this assignment. We express our deepest gratitude to our assignment guide Ms. ANKITA RAJDEV, Asst. professor for her valuable guidance and help in completion of this assignment. We feel obliged to all the respondents, friend and other who have shared their valuable time and opinion, for making significant contribution directly or indirectly in the assignment. INDEX S.no. | Topic | Page no. | 1 | INTRODUCTION TO FINANCIAL MARKET | 4-5 | 2 | MONEY MARKET | 5-6 | 3 | CAPITAL MARKET | 6-8 | 4 | PRIMARY CAPITAL MARKET | 8 | 5 | SECONDARY CAPITAL MARKET | 8-9 | Financial Markets Introduction Financial markets are a mechanism enabling participants to deal in financial claims. The markets also provide a facility in which their demands and requirements interact to set a price...
Words: 1560 - Pages: 7
...Ad-valorem duties: These are the duties determined as a certain percentage of the price of the product. Appropriation bill: This Bill is like a green signal enabling the withdrawal of money from the Consolidated Fund to pay off expenses. These are instruments that Parliament clears after the demand for grants has been voted by the Lok Sabha. Aggregate demand: It is the sum of all demand in an economy. This can be computed by adding the expenditure on consumer goods and services, investment, and not exports (total exports minus total imports). Aggregate supply: It is the total value of the goods and services produced in a country, plus the value of imported goods less the value of exports. Budget: Just what is this annual rigmarole called the Union Budget? Put simply, the annual Union Budget is an estimate of the Government of India's revenue and expenditure for the end of a particular fiscal year, which usually runs from April 1 to March 31. The Union Budget is the most comprehensive exhibit of the government's finances, in which revenues from all sources and outlays to all activities are consolidated. The budget also contains estimates of government's accounts for the next fiscal, called budgeted estimates. Ironically enough, you won't find the term "budget" anywhere in the Constitution! Under Article 112, a statement of estimated receipts and expenditure, called the "Annual Financial Statement", has to be laid before Parliament for each financial year. This Annual Financial...
Words: 1757 - Pages: 8
...Reading Material - AFM Project A Project is a set of inter related activities leading to a complete tangible or intangible product or service. e.g construction of a building / dam / ship, launching of a new product, conducting national elections, state level professional admission process, setting up a new plant A project in business refers to an organized program of activity carried out to meet a definite goal. In business it may be to launch a new product, set up a new plant, increase existing capacities etc. Projects may be ; New projects, Modernisation projects, Expansion projects, Diversification projects, Other miscellaneous projects. Project Appraisal: Project Appraisal is the process by which a financial institution makes an independent and objective assessment of the various aspects of the investment proposition for arriving at a financing decision. There are four broad aspects of appraisal: 1. Technical feasibility – Analysing the technical aspects of the projects like technical process. Design, size, technology used, availability of resources like labour, raw materials, packing materials etc.,availability of utilities like electricity, water, fuel etc, installed fixed assets and their capacities etc. 2. Financial feasibility – Analysing the financial aspects of the projects w.r.t cost of project, sources of finance, evaluation of revenues and returns on investments and their adequacy. 3. Economic feasibility – Analysing whether the resources commited...
Words: 7835 - Pages: 32
...MERCHANT BANKING Prof Faye N Salins Merchant Bankers act as a link between corporate bodies who intend on raising funds and investors who are interested in investing in securities. It helps corporates establish new companies, expand, diversify, merge, commission projects etc. Apart from that, merchant banking was the necessity of banks themselves which were in need of non-fund based income so as to improve their profitability margins by all means in the changed economic scenario. Merchant Banking is known by different names in different places. In the USA, it is known as “Investment Banking”. In the UK it is known as “accepting and clearing houses”. Definitions of Merchant Banking 1) A Merchant Bank is a bank or financial institution that handles all the tasks related to incorporation of a company as well as marketing corporate and other securities. 2) Merchant Banking is an institution engaged in the business of issue management either by making arrangement regarding selling, buying or subscribing to securities or acting as manager, consultant, advisors or rending corporate advisory services in relation to issue management. 3) As per SEBI, Merchant Bank mostly provide advisory services, issue management, portfolio management and underwriting services, which require less capital but generate more income (non-interest income). 4) As per the Ministry of Finance; any person who is engaged in the...
Words: 1708 - Pages: 7
... | | | |What exactly is the Fiscal Deficit? | |The fiscal deficit is the difference between the government's total expenditure and its total receipts (excluding borrowing). | |The elements of the fiscal deficit are (a) the revenue deficit, which is the difference between the government’s current (or | |revenue) expenditure and total current receipts (that is, excluding borrowing) and (b) capital expenditure. The fiscal deficit | |can be financed by borrowing from the Reserve Bank of India (which is also called deficit financing or money creation) and | |market borrowing (from the money market, that is mainly from banks). | | | |Does a Fiscal Deficit Necessarily Lead to Inflation? | |No. Two arguments are generally given in order to link a high fiscal deficit to inflation. The first argument is based on the | |fact that the part of the fiscal deficit which is financed by borrowing from the RBI leads to an increase in the money stock. | |Some people hold...
Words: 1015 - Pages: 5
...The Kelkar Committee Report’s Report Dr Vijay Kelkar along with his associates Indira Rajaraman and Sanjiv Misra came out with what they called it as the Roadmap for Fiscal Consolidation in September 2012. First of all many viewers watching business channels and overhearing about this latest buzz would not even know the proper definition of Fiscal Consolidation. Going by just the name, it seems as if it has something to do with collating various components associated with something called fiscal. Simply speaking Fiscal actually refers to government’s financial matters. It includes both revenues (especially from taxes) and expenditures. Whereas Fiscal Consolidation refers to a government policy intended to reduce deficits and accumulation of debts. The Kelkar committee seems to have been working hard from quite some time to actually relate government’s financial measures with realistic market scenarios. When a government's total expenditures exceed the revenue that it generates (excluding money from borrowings) then it is referred to as Fiscal Deficit. The committee expects India’s fiscal deficit in FY 2012‐13 to be around 6% of the Gross Domestic Product (market value of final goods and services produced within in country in a given period) which comes out to be around INR 108 Billion. The current account deficit (it occurs when a country's total imports of goods, services and tr...
Words: 1807 - Pages: 8
...Apartheid” an Afrikaner name given to the segregation of blacks from whites during the National Party rule. Although Apartheid initially began in approximately 1948 it was not entirely new for the white minority to have supreme power. However, at that point in time it was not considered to be of such a severe nature that would warrant international concern. Due to the fact that South Africa had taken on an anti-communist stance was probably why they did not face more direct scrutiny. In 1952, when there was a great separation between the Indians, concerns started to arise. This was brought to the matter of the UN from India who considered it to be an in house dilemma and felt that South Africa should handle this concern themselves. From that...
Words: 748 - Pages: 3
...1 What are navratan companies in india? LIST OF NAVRATNA PSEs 1. Bharat Heavy Electricals Ltd. 2. Bharat Petroleum Corporation Ltd. 3. Gas Authority of India Ltd. 4. Hindustan Petroleum Corporation Ltd. 5. Indian Oil Corporation Ltd. 6. Mahanagar Telephone Nigam Ltd. 7. National Thermal Power Corporation Ltd. 8. Oil & Natural Gas Corporation Ltd. 9. Steel Authority of India Ltd. 2 Listed companies in this navratan Bhel,bpcl,gail,hpcl,ioc,mtnl,ntpc,ongc,sail 3 List of companies planned for disinvestments in psu The government may now look at disinvestment in public sector undertakings (PSUs) across the services sector. “Besides loss-making units, even profit-making PSUs can be completely or partially disinvested,” says a policy paper initiated by the department of economic affairs of the ministry of finance. The paper has listed out 28 PSUs in the services sector for disinvestment, including Bharat Sanchar Nigam (BSNL), Engineers India (EIL) and MMTC, which are awaiting Cabinet nod for disinvestment. The list includes five PSUs under the commerce ministry (PEC Ltd, EIL, State Trading Corp, MMTC and India Trade Promotion Organisation). The shipping ministry has an equal number of PSUs in the list —- Shipping Corp, Dredging Corp, Cochin Shipyard, Mazagaon Dock and Hindustan Shipyard. The railway Ministry has four —- Indian Railways Catering and Tourism Corp, Central Warehousing Corporation, IRCON International, and RITES. The communications...
Words: 7556 - Pages: 31
...Globalization is the new buzzword that has come to dominate the world since the nineties of the last century and India also became a part of the process when we opened up our economy to the rest of the world in 1991. In early 1990s the Indian economy had witnessed dramatic policy changes. The idea behind the new economic model known as Liberalization, Privatization and Globalization in India (LPG), was to make the Indian economy one of the fastest growing economies in the world. Globalization has brought many jobs and large sums of investment to India. India 's economy has been growing at exceptional rates for the past several years and many new opportunities have opened up for India. Yet, India does remain quite poor. Globalization means to open up the market for everyone. It is related mainly with the business and economy. Globalization has converted the entire world into a global village. Investors are free to enter the market of any country without having any bondage. Some of the key points which can help us in knowing more about Globalization are: There is an International market for companies and for consumers there is a wider range of products to choose from and the increase in flow of investments from developed countries to developing countries, which can be used for economic reconstruction. It has put an end to the “Licence Raj” – a period during which companies produced substandard products with impunity and we general public had to be contended with these. For...
Words: 419 - Pages: 2
...for the Course) (TERM PAPER) School: LSB Department: Management Name of the faculty Member: Rajbir Singh Sethi Course No.: MGT 511 Course Title: Business Environment Class : BBA Section 1813 Batch 2010 Max. Marks :25 Date of Allotment :31/1/2011 Date of Submission:18/4/2011 . |Roll No. |Objectives of Academic Activity |Topic |Model* | |R1813 A01 |To enable students develop the |Disinvestment of PSU's |Analytical | | |Analytical skills by going through | | | | |the various practices going on in | |5 Marks-Viva | | |the field of Business & its | | | | |environment. | |5 marks- Review of | | | | |Term Paper | | | | ...
Words: 640 - Pages: 3
