business studies financial management. contents case study learning objectives financial planning...

Business Studies Financial Management

Financial Management Contents

Case StudyCase Study

Learning Objectives

Financial Planning

Financial Decision

s

Capital Structur

eConcept and Objectives

of Financial management

Case Study

Tata Motors - Financing the Acquisition of Jaguar and Land Rover

Tata Motors is a part of Tata Group, an India based business giant with a presence in over 80 countries and a work force of around 290,000 people. The Tata Group comprised 98 companies of which 27 were publicly listed.

Financial Management

Case Study


In June 2008, Tata Motors acquired Jaguar and Land Rover (JLR) from the US-based Ford Motors for 2.3 billion U.S Dollar.


Case Study


Initially, Tata Motors had proposed to secure funds through three simultaneous rights issues, but when they announced the right issue the price of shares was reduced from 417.80 to 374.55


Case Study


Then to finance the acquisition, Tata Motors raised a bridge loan of 3 billion U S dollars from a consortium of banks.


Case Study


When JLR was acquired, Tata Motors was of the view that both Jaguar and Land Rover would be able to generate funds for the working capital internally. But it was in vain due to adverse market conditions.


Case Study


Consequently, the company finds it difficult to repay the bridge loan and need to find additional source to keep the operations of JLR going.


Case Study


To provide working capital, the company arranged funds through a rights issue, sales of stakes in other subsidiaries and raising some long-term debt.

Owned Fund

Shares and Stock

Borrowed FundLoans and debentures

Do you know how these can be managed in business?

The following Discussion will take you there.


Concept and Objectives of Financial ManagementFinancial decisions

Financial Planning

Capital Structure

Fixed and Working Capital

After studying this chapter, you should be able to understand the meaning and Importance of:

Learning ObjectiveFinancial Management

Business Finance

The requirements of funds by business to carry out its various activities are called business finance. No business can function unless its activities are financed properly in time. The key factor behind the success of every single process will depends on the free flow of Finance there for, is called the lifeblood of every business activity.


Concept and Importance


Financial Management is concerned with optimal procurement as well as usage of finance. It aims at reducing the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds. It also aims at ensuring availability of enough funds whenever required as well as avoiding idle finance.

Financial DecisionsFinancial Management

In a financial context, it means the selection of best financing alternative or best investment alternative. Financial decision-making is concerned with three broad areas like Investment, Financing and Dividend decisions.

A firm’s resources are scarce in comparison to the uses to which they can be put. A firm, therefore, has to choose where to invest these resources. The investment decision, therefore, relates to how the firm’s funds are invested in different assets.

Investment DecisionsFinancial Decisions

Investment Decisions

Long Term

Short Term

Capital Budgeting

Working Capital

Management

Infl

uen

cin

g

Facto

rs

Factors influencing

Finance Decisions

Factors influencing Investment Decisions

Financial Decisions

Cash flows of the project

Rate of return

Investment criteria

business studies financial management. contents case study learning objectives financial planning...

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