corporate fds are the important way of tapping the debt market.critically analy

corporate fds are the important way of tapping the debt
market.critically analyze any five recently launched fds
explaining their differences benefits and limitations

Question Posted / varun narula

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corporate fds are the important way of tapping the debt market.critically analyze any five recently..

Answer / neeraj

A.5 Yes, corporate FD’s are important and easy method of
getting un-secured loans for Corporates.

This is an effective means to get funds with low
administrative cost at current yield.

We analyse the following 5 FD’s.

1) J K Paper Ltd.
2) Ansal Buildwell Ltd.
3) Escorts Ltd.
4) Shriram Pistons & Rings Ltd.
5) Triveni Engineering & Industries.

The comparison for Annual yield are given below :

NAME OF CO. ANNUAL YIELD(%)

1) J K Paper Ltd. 7.71
2) Ansal Buildwell Ltd. 11.57
3) Escorts Ltd. 8.77
4) Shriram Pistons & Rings Ltd. 7.22
5) Triveni Engineering & Industries. 8.77

Highest Interest is offered by Ansal Buildwell and lowest
by Shirram Pistons & Rings Ltd.

Now we evaluate the figures of the companies after
comparitive study.

NAME OF CO. Secured Loan (Crores) Un-Secured
Loans (Crores)
First Yr Sec Yr First Yr Second Yr

1) J K Paper Ltd. 383.55 452.49 55.64 58.18
2) Ansal Buildwell Ltd. 33.9 29.78 3.96 4.05
3) Escorts Ltd. 440 480 277 335
4) Shriram Pistons & Rings Ltd. 51.04 87.68 15.2
13.39
5) Triveni Engineering & Industries. 282 386
18.34 23.87

In 3 cases namely , J K Paper Ltd, Escorts Ltd and Treveni
Engineering & Industries both the secured and un-secured
loans have increased . Where as in Ansal Buildwell there is
rise in un-secured loan and fall in secured loan this is un-
usual . This is probably due to higher capital intensive
Construction Business.

In the case of Shriram Pistons & Rings Ltd , the secured
credit is rising and the un-secured loan has been reduced.
This is because of Shriram Pistons & Rings preferring
lower interest cost secured credit to costlier un-secured
loan.