INSTITUTE FOR INTERNATIONAL

AND INFORMATION TECHNOLOGY

MODULE NAME
Management of Financial Services



LEASE FINANCING
PGPM 2012-2014






SUBMITEDTo: SUBMITED BY:
Mr. Satish K. Kapoor PUSHPA








Executive Summary
The paper is based on Management of Lease financing, we described about the lease financing
and gave the authors literature review about the lease financial after that we did describe about
the major lease operations in India then describe of AVIS Company and their performance in
India. We evaluate the taxation rules and legal issues for lease financial in India and evaluate
about the major barrier for lease in India after that we conclude all point and gave the conclusion
on lease financial.



























INTRODUCTION OF LEASE FINANCING

Lease funding signifies purchase of resources through lease. . Renting has expanded as a big
market in the USA and UK and distribute to other nations during the existing millennium. In
Indian, the idea was developed in 1973 when the First Renting Company was set up in Madras
and the 80's have seen a fast development of this business. Lease as a idea includes a agreement
whereby the possession, funding and high chance of any devices or resource are divided and
distributed by two or more events. Thus, the smaller may fund and lessee may agree to the threat
through the use of it while a third celebration may own it. A lease deal is a professional
agreement whereby an devices proprietor or Producer provides to the devices customer the right
to use the devices in come back for accommodations.


LITERATURE REVIEW

(Sharpe and Nguyen, 1995) find that firms facing high cost of external funds can economize on
the cost of funding by leasing. (Krishnan and Moyer, 1994) find that leasing reduces bankruptcy
costs than borrowing, and it becomes attractive financing option as bankruptcy potential of a
firm increases. (Alan and Thomson, 2002) suggest that debt and leases are substitutes. (Lasfer
and Lewis, 1998) show the substitutability of debt and lease contracts driven by taxes for large
companies. Main motives against leasing were sufficient supply of alternative financing
possibilities, high costs of leasing and the preference of entrepreneurs to possess legal ownership
of the assets. This is consistent with the pecking order theory of optimum capital structure
(Myers and Majluf, 1984). By (Theurl, 2010), who found that for German firms, leasing is the
second most important form of external finance after bank loans.









MAJOR LEASING OPERATIONS IN INDIA

Position Native indian is the leading International Car Rental Company in the country has
launched Position Rental, an working lease service for the Native indian business sector. All
services offered in Position Rental have been designed by the Company keeping in mind the
unique requirements of the Native indian business.
The flagship product of Position Rental is the unique Red Rug Rental which for the first time in
Native indian offers a comprehensive and high quality working lease solution. Besides the Red
Rug Rental, Position Native indian will also offer other services like Premium Rental, Navy
Consultancy & Navy Management, so that Position have major leasing operations in Native
indian.

Avis Car Rental Company

Position Native indian is a partnership between The Oberoi Team & Position Budget Team. The
company is recognized the world over as a strong, famous and truly global brand and industry
management in top quality and reliability of solutions, catering to the objectives of all business,
business & enjoyment tourists.
As India's major car hire support agency we have has been present in the country for over 12
years. Our navy includes more than 1500 premium cars across Native indian and an established
network increasing across 42 ideally located rental stations in 19 places.
With solutions like Rent a Car, Driver Generate, Operating rental and Self Generate among other
solutions to both regular customers, as well as The Native indian Corporate Position Native
indian is able to meet ALL temporary and long lasting flexibility needs of the top business
clients in Native indian. Thus becoming a one-stop-shop for all car hire needs, guaranteeing
Safety, Quality, Appropriate Service delivery & customer delight remain some of our important
standards.

Performance
Position has been present in Indian for over 12 decades and is an innovator in the industry in
quality and stability of services. The organization's investment in technology, procedures and
systems enables it to provide an unrivaled worldwide encounter. Position Budget Group declared
that the organization process improvement effort Efficiency Quality is in its fifth year this month
and has assisted generate more than $275 million in yearly price benefits. Efficiency Quality is
designed to make vehicle lease procedures more efficient and consistent, reduce costs, improve
the customer lease encounter and boost worker spirits. In five decades, the benefits from
performance excellence have balanced out inflationary price improves, produced step-by-step
income to be spent back into Position and assisted the organization achieve record results, the
organization revealed.



Taxation and legal issues in India

The development prospective of renting market in Indian has been restricted by ineffective and
unclear tax atmosphere for renting dealings which led to difficult working circumstances for the
lessors. Several lawful and taxes relevant problems that have restricted the development in the
industry and keep succeed are:

Discrepancy in the therapy of devaluation for renting dealings - tax advantage due to
devaluation under fund rents is available to lessor in contrast to bookkeeping therapy where it is
available to the lessee.
Subjectivity on part of the tax regulators with regards to the allocation of taxes advantage
on devaluation to the lessors.
levy of an extra level of VAT on renting dealings vis-a-vis a seek the services of purchase
deal
Lease accommodations being topic to double taxes - VAT and Support Tax.
disallowances in declaring feedback tax credit on various elements of tax such as VAT,
Support Tax and Main Sales Tax
Disallowances in declaring set off for Life Time RTO Tax enforced by various declares
which makes the inter-state activity of development devices unviable.
The expected effects of the suggested IASB conventional under which rents will be
shown on the stability piece of the lessees. (ICRA Control Talking to Services Limited, 2011)


Major barriers of lease in India:

High interest rate on lease product or property
Double tax Vat and service tax
Uncertainty of regulation and legal issue
Un-stability of political party
Indian Mind-set and culture
High level of Corruption
Low support to growing and new business by the government


Potential areas for future growth: - Native indian is already the Tenth biggest economic
system worldwide and is expected to increase to 4th in the next several years. Indias renting
industry is small in terms of new business volume, it positions outside the top 50 worldwide, So
there is great opportunity for the development of the industry overall, with upper development
reports at 25-30%, although from a low base. Leasing transmission of the loans industry is
currently no higher than 2-3%, which means that there is tremendous prospective to get business
as Native indian companies become more aware of the advantages of increasing capital off
balance piece as provided by renting. Native indian retrieved from the international financial
trouble ahead of most other countries, but rising prices captured up with it prior to elsewhere.
Although the RBI claims highly against recognizing high rising prices as the new normal, the
Native indian government is constantly on the battle to control it, and in these conditions, the
advantages of the set costs provided by renting over a variable-rate loan also look progressively
attractive, so that the prospective area for upcoming development is that renting finance will
grow later on.
CONCLUSION
After the above discussion about the lease finance we conclude that lease financial service is
rapidly increasing in the Indian market because as business man people want to hire assent or
property on lease for business purpose so it helps to business for grow ahead because if people
have no sufficient finance so that time lease finance helps to business person to grow a business
so that over all lease finance rapidly increasing in the Indian market and growing the business in
India.
REFRENCES & BILIOGRAPHY

Auto Rental News (2014) Avis Budget Groups Performance Excellence Initiative Celebrates 5
Years (Online) (cited on 1
st
, mar, 2014), Available From <URL:
http://www.autorentalnews.com/systemmessage/notfound.aspx?aspxerrorpath=/channel/rental-
operations/news/story/2012/07/avis-budget-/default.aspx>


ICRA Management Consulting Services Limited, (2011) Leasing in India- Poised for Growth
(Online) , (cited on 1
st
, Mar, 2014), Available From <URL:
http://www.imacs.in/store/banking_finance/Leasing_Poised%20for%20Growth_IMaCS.pdf>

Avis.co.in (?) AVIS (Online) (Cited on 3
rd
, Mar, 2014), Available Fromk <URL:
http://www.avis.co.in/about_us.html>
Agrawal N.K. & P.L. Joshi, Accounting for Leases, the Chartered Accountant Aug.,
1983, page 92-97. 237
Ghosh T.P., Leasing: A financing decision, the Chartered Accountant, June 1987,
page 996-967.
Mukhopadhyay D., Lease Financing- An Overview, the Management Accountant,
May 1995, page 354-356.
Ramanujam K.M., R. Thennsyhi, Accounting for Leases, the Management
Accountant, Nov., 1995, page 850-852.