An Analysis Of Fund Raising Finance Essay

August 27, 2017 Nursing

The largest lodging finance company in India and recognized by National Housing Bank is known as LIC Housing Finance Limited ( LICHFL ) , holding web of six regional offices, 126 marketing units across India and overseas representative offices in Dubai and Kuwait. The Company was promoted by Life Insurance Corporation on 19th June 1989. The chief aim of the company is supplying long term finance to persons for purchase / building / fix and redevelopment of new / bing flats / houses. The Company besides provides finance on bing belongings for concern / personal demands and gives loans to professionals for purchase / building of Clinics / Nursing Homes / Diagnostic Centres / Office Space and besides for purchase of equipments. A

A During the twelvemonth 1989, the company had introduced assorted strategies like, Griha Prakash a general strategy, Griha Tara under which it accepts merely Bima Sandesh Plan as Life Insurance Corporation, Griha Shobha for Non Resident Indians ( NRI ) and Griha Lakshmi for people to hold a 2nd house. In the twelvemonth of 1994, LICHFL ‘s position was converted to Public Limited Company from Private Limited Company. The company had decided to transport out fund based and one-fund based activities during the period of 1996 via debt securitization, rental and hire purchase, leasing of belongingss and giving warrant to co-operate organic structures. In the period of 2001, the company had launched its new strategy called Griha Vikas. In 2002, LICHFL had signed a title of assignment to take over single lodging loan portfolio of Citibank. The company had unveiled a new undertaking for aged people called LICHFL Care Homes in the twelvemonth 2003. LICHFL had successfully concluded its inaugural offering of Global Depository Shares ( GDS ) in the twelvemonth 2004 and besides the company had introduced flexi-fixed strategy offering fixed rate of involvement for first five old ages and variable thereafter. A

A In October of the twelvemonth 2005, the company had started offering of ‘New Griha Laxmi ‘ lodging loans against the security of certain sanctioned fiscal assets like Bank Fixed Deposits, National Savings Certificates and Life Insurance Policies. In the twelvemonth of 2006, the company had introduced new Griha Jestha for senior citizens for purchasing unit of LICHFL Care Homes Limited. First clip since its origin, the company had launched maiden Fixed Deposit Scheme in May of the twelvemonth 2007, LICHFL decided to raise resources from single depositors via an attractive Fixed Deposit strategy. The Company had formed three new entirely owned subordinates in 2007-08 to pull off its involvements in fiscal services, venture fund and plus direction. In February of the twelvemonth 2008, LICHFL had launched contrary mortage for senior citizens above 60 old ages of age. In the same twelvemonth, the company had launched a new venture capital fund for real property undertakings. CRISIL assigns AAA ( so ) /Stable evaluation to Series A1, A2 to the company in June 2008.A

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A The Company is processing with the vision of to be the best lodging finance company in the state and besides with the mission of Provide secured lodging finance at an low-cost cost, maximising stockholders ‘ value with higher client sensitiveness.

Beginnings OF Fundss

Year

Mar 10A

Mar 09A

A A SOURCES OF Fundss:

A

A

A Share Capital

95.00

85.00

A Militias Total

3,292.68

2,149.10

A A Total Shareholders Fundss

3,387.68

2,234.10

A Secured Loans

31,014.98

23,523.95

A Unsecured Loans

3,743.17

1,897.71

A Total Loan Fundss

34,758.15

25,421.66

Break up of Secured Loans

( Rs in Crs )

Year

Mar 10

Non Convertible Unsecured bonds

17,053.40

Term Loans Institutions

2,309.98

Term Loans Banks

11,651.60

Break up of Unsecured Loans

( Rs in Crs )

Year

Mar 10

Unsecured bonds / Chemical bonds

2,444.99

Loans from Institutions

156.81

Commercial Paper

815.18

Sum DEPOSITS

326.19

Fixed Deposits

326.19

PUBLIC DEPOSIT SCHEME

LIC Housing Finance Limited has started the Public Deposit Scheme from 10th May, 2007 onwards. The Deposits accepted under Accumulative Option and Non-Cumulative Option. The footings of the sedimentations are 1 twelvemonth, 18 months, 2 old ages, 3 old ages & A ; 5 old ages in both the strategies.

In 2007-08 15.7 Crs was raised.The public sedimentations increased to 161.78 Crs in 2009 and to 326.19 Crs by Mar 2010.

Fundss Flow

Year

Mar 10

Beginnings of financess

Cash net income

667.7

Increase in equity

10

Increase in other networth

623.8

Increase in loan financess

9336.49

Entire Inflow

10637.99

Major FINANCIAL INSTRUMENTS

The major Money Market Financial Instruments used to raise financess are as follows:

1.Commercial Paper

Issued by corporates, Bankss and fiscal houses

Secured by 3rd party warrant

Primary issue through private arrangement

Held by corporates, Bankss, common financess, insurance companies, and so on

Important beginning of working capital finance in developed economic systems

Competition to traditional on the job finance loans given by Bankss

Rate offered depends on fiscal place of issuer and surety

Banks and fiscal houses as the largest issuers of CP ‘s

The growing of Asset Backed Commercial Paper

Underliing assets as collateral

More volatile involvement rates in secondary markets

CP ‘s sold at a price reduction to confront value

Not really widespread usage of CP ‘s in India

Minimum adulthood of 7 yearss

2.Certificates of Deposits

Issued by Bankss

Unbarred instruments

Held by corporates, other Bankss, common financess

Highly of import instruments in developed economic systems

Initially developed to acquire around bank sedimentation involvement rate limitations

Rate offered depends on fiscal place of issuer

Longer adulthood Cadmium ‘s besides allowed in India

Merely to O.K. non-bank fiscal establishments

Banks can non publish CD ‘s with adulthood greater than 1 twelvemonth

Same modesty demand as for bank sedimentations

Procedure OF FUND RAISING

Fund elevation

The Company raised financess aggregating to Rs.17,004.35 crore through term

loans from Bankss, Non-Convertible Debentures ( NCD ) , upper grade II Bonds,

commercial paper, NHB refinance and Public Deposit. The Company ‘s NCD & A ;

Upper Tier II subordinate Bond issue and bank loans were rated ‘AAA/Stable ‘

and Public Deposit was rated as FAAA/STABLE by CRISIL. The Company

mobilised Rs.658 crore by private arrangement of equity through Qualified

Institutional Placement.

Qualified Institutional Placement

To run into the turning demands, the Company raised financess through a Qualified

Institutional Placement ( QIP ) of 10 million equity portions amounting to

Rs.658 crore

Beginnings of Fundss

Share Capital

Militias Total

Capital Markets in India

Government Securities Market

Equity Markets

Corporate Unsecured bond Market

Primary Issues in Equity Markets

Raising larger sums of capital

An extra beginning of capital

Repute effects

Updated information for determination devising

Equity as dearly-won beginning of financess

Issues of equity by a company infrequent

Primary Issues in Equity Markets

Chiefly public issue

IPO – Initial Public Offer

Shareholding Pattern

( AS ONA Jun A 2010 )

Shares

[ % ]

Foreign

30,674,836.00

32.31

Institutions

17,441,560.00

18.37

Govt Keeping

23,755.00

0.03

Non Promoter Corp. Hold.

3,236,185.00

3.41

Promoters

34,688,499.00

36.54

Public & A ; Others

8,867,765.00

9.34

Sums

94,932,600.00

100.00

Market Data ( As on September 02, 2010 )

Price ( Rs )

1203.6

52 W H/L ( Rs )

1310.8 / 626.1

Lat. EPS ( Rs )

79.04

Lat. P/E

15.2277

Mkt. Cap. ( Rs Cr )

11425.8

Lat.Eqty ( Rs Cr )

94.93

Lat. BV ( Rs )

356.85

Div. Yield ( % )

1.2463

Break up of Share Capital

( Rs in Crs )

Year

Mar 10

Equity Authorised

150.00

Equity Issued

95.00

Equity Subscribed

95.00

Equity Called Up

94.93

Equity Forfeited

0.07

Equity Paid Up

95.00

Discriminatory issue of Shares

On 23rd Sep 2009 the company allotted 10000000 portions at a premium of Rs.648 per portion to QIP ‘s.

Corporate Unsecured bond Market

Non-Convertible Debentures ( NCD )

Typical Investors in Corporate Debt

Chiefly subscribed by big investors

Typically for really big issues

Bad High giving up bonds

New Companies, Leveraged Buyout Transactions, Ratings Downgrades

upper tier II Bonds

Mentality for 2010-11

Raising financess through loans at attractive rate of involvement and footings.

Bankers of LIC Housing Finance

Andhara Bank

Axis Bank

Corporation bank

HDFC Bank Ltd

State Bank Of India

Union Bank Of India

Summary

The cost of financess has been increasing continuously, but outputs have besides gone up. Around 95 % of the outstanding single loans comprised drifting rate loans. This enabled LICHF to keep Net Interest Margin by sporadically go throughing on the consequence of alterations in its ain adoption cost to clients. It has now passed on the diminution in involvement rates to its clients.

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