Corporate finance deals with the capital structure of a corporation, including its funding and the
actions that management takes to increase the value of the company. Corporate finance also includes the
tools and analysis utilized to prioritize and distribute financial resources.
The ultimate purpose of corporate finance is to maximize the value of a business through planning and
implementation of resources while balancing risk and profitability.
Every decision made in a business has financial implications, and any decision that involves the use of
money is a corporate financial decision. Defined broadly, everything that a business does fits under the
rubric of corporate finance. It is, in fact, unfortunate that we even call the subject corporate
finance, because it suggests to many observers a focus on how large corporations make financial
decisions and seems to exclude small and private businesses from its purview. A more appropriate title
for this discipline would be Business Finance, because the basic principles remain the same, whether one
looks at large, publicly traded firms or small, privately run businesses. All businesses have to invest
their resources wisely, find the right kind and mix of financing to fund these investments, and return
cash to the owners if there are not enough good investments.
- Preparation of Project Report
Project report preparation is very important because it provide very useful information for better
business decision. It works like a written plan for forward work. It includes the aim of business
project. It also includes the total written budget of project. We have to prepare it systematic way.
- Preparation of CMA data for bank loans
CMA Data holds immense importance in the loan application and approval process. Lenders rely on this
information to assess the viability of granting a loan and determining the terms and conditions
associated with it. By analyzing CMA Data, lenders gain insights into the borrower’s financial
health, business operations, and repayment capability, allowing them to make informed lending decisions.
- Private placement of shares, Inter-Corporate Deposit, Terms loans, working capital limits,
etc
- Private placement
A company can make a private placement of its securities to a maximum of 50 people in a financial year,
or a higher number as prescribed by rules. Shareholders must approve the offer or invitation to
subscribe to securities by passing a Special Resolution for each offer or invitation
The Companies Act of 2013 limits the amount a company can lend, guarantee, or secure a loan or security
to another body corporate. The maximum amount is 60% of the company's paid-up share capital, securities
premium account, and free reserves, or 100% of its free reserves and securities premium account,
whichever is greater. A board resolution approved by all directors present at a meeting is usually
enough to approve a loan if the total inter-corporate loans are within the limit. However, a company can
exceed the limit if it has a special resolution passed in a general meeting authorizing it to do so.
- Inter-corporate deposits (ICD)
An ICD is an unsecured loan that one corporate extends to another. The ICD market allows companies
with excess funds to lend to other companies
A working capital loan is not taken for the expansion of a business; it is taken for the exclusive
purpose of conducting business operations on a daily basis. This means it covers the expenses of human
resources and the expenses of existing capital.
A term loan is a loan taken for personal or business purposes by a bank or non-banking financial company
(NBFC). The loan comes with a fixed loan amount and repayment tenure. The repayments must be made in the
form of equated monthly instalments. The interest rate for such a loan may either be fixed or floating.
- External Credit Borrowings (ECBs)
External Commercial Borrowings (ECBs) are commercial loans that eligible Indian entities can raise from
recognized non-resident lenders in foreign currency or in rupees. ECBs are governed by the Foreign
Exchange Management Act (FEMA) Notification No. 3R & 8.