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PRESENTED BY: PARTHA PRATIM DAS ARNABA TANAYA PATRA RAKESH KUMAR SWAIN
SPECIAL FOCUS
Foreign portfolio investment Foreign currency convertible bonds External commercial borrowings Indian depository receipts Foreign bonds Foreign venture capital investments
INTRODUCTION
Globalization Financial liberalization:1. Prior to 1970s 2. Early 1970s 3. The fall of Berlin wall
BENEFITS OF FPI
Three broad ways:-
1. Inflow of FPI
2. Can induce financial resource 3. Affects the economy
FIIs much less active due to prolonged lock in period for the primary market.
discount
5. It is basically issued by Corporate body
CONTINUED
It can be secured and unsecured securities It can be traded both in part and in full It can be converted into Indian shares Right to convert FCCB into equity shares can
CONTINUED
1. 2. 1. Minimum Average Maturity of FCCB:3 years borrowings up to US $20 million 5 years borrowings exceeding US $20 million RBI guidelines provides that:funds received through FCCB should be parked abroad till the actual requirement arises in India.
FCCB MARKET & ANALYSIS OF FCCB ISSUED * Recent study conducted by India Brand Equity
Foundation:1. India Inc biggest issuer of FCCB in the AsiaPacific region 2. Taiwanese companies second largest to India Inc
CONTINUED
* In total 30 FCCB issues in the Asia-Pacific
region out of which: 1. 15 from India 2. 06 from Taiwan 3. Rest others * Tata Motors limited has raised over US $400 million = Rs2215.56 crores at issue * Reliance Energy Limited has two series of FCCB issued US $120 and US $178 million
REGULATORS OF ECB
1. The Department of Economic Affairs 2. Ministry of Finance 3. Government of India with support of Reserve Bank of India
ROUTES OF ECBs
There two routes as follows:1. Automatic route 2. Approval route
BASES OF COMPARISON
1) Eligibility criteria
2) Recognized lenders
CONTINUED
It has net tangible assets of at least Indian rupee three crore in each of the preceding three full years (of twelve months each) A. Which is not more than fifty per cent and are held in monetary assets If more than fifty per cent. of the net tangible assets are held in monetary assets:1. The issuer has made firm commitments to utilize such excess monetary assets in its business or project
CONTINUED
Track record of distributable profits in terms of section 205 of the Companies Act, 1956:A. At least three out of the immediately preceding five years: Extraordinary items shall not be considered for calculating distributable profits. It has a net worth of at least INR one crore in each of the preceding three full years (of twelve months each)
CONTINUED
The aggregate of the proposed issue and all previous issues made in the same financial year in terms of issue size does not exceed five times. Its pre-issue net worth as per the audited balance sheet of the preceding financial year. If it has changed its name within the last one year:A. At least fifty per cent. of the revenue for the preceding one full year has been earned by it from the activity indicated by the new name.
WHAT IS BOND?
Unforciable situation
PARAMETERS
1. Incorporated and established in any country outside India. 2. Willing to invest in VCF or VCU in India as per SEBIs regulation. 3. Registered with SEBI as a FVCI.
CONCLUSION
Economic development Imposing significant fiscal cost on economy Ensuring attractiveness for the investors