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Leasing

G.L.Shekar
NIE, Mysore

MEANING
Hertz rent a car!
Written or implied contract by which an owner (the lessor
) of a specific asset (such as a parcel of land, building,
equipment, or machinery) grants a second party (the
lessee) the right to its exclusive possession and use for a
specific period and under specified conditions, in return
for specified periodic rental or lease payments.
Leasing is a process by which a firm can obtain the use
of a certain fixed assets for which it must pay a series of
contractual, periodic, tax deductible payments

The lessee is the receiver of the services or the


assets under the lease contract and the lessor is
the owner of the assets.
The relationship between the tenant and the
landlord is called a tenancy, and can be for a
fixed or an indefinite period of time (called the
term of the lease).
The consideration for the lease is called rent.

Advantages
The burden and cost of potential obsolescence on
the lessor
Leasing on a short-term basis is more desirable than
an acquisition of assets in a rapidly changing field
Suitable for a firm that needs assets for a specified
period that is substantially less than the useful life of
these assets
Leasing is more flexible than ownership because it is
less permanent and makes adjustments possible
when the lease expires

A company is able to obtain advantage in its financial


position
Firms which are either small or have uncertain records
of earnings are able to obtain the use of assets
through leasing
A company with limited financial resources gets the
assets on lease for its expansion programmes
By leasing fixed assets, a company can use the funds
which would otherwise be tied up in fixed capital
Leasing offers certain tax benefits

Some Leasing Companies in India

Sundaram Finance
Cholamandalam
Bajaj Finance
Mannapuram Finance
First Leasing
Sakti Finance
Kotak Mahindra

Portfolio Management

Meaning
The process of managing the assets of a mutual
fund, including choosing and monitoring
appropriate investments and allocating funds
accordingly.
The art and science of making decisions about
investment mix and policy, matching investments
to objectives, asset allocation for individuals and
institutions, and balancing risk against
performance.

Objectives of PM

Stable Current Return


Once investment safety is guaranteed, the portfolio
should yield a steady current income. The current
returns should at least match the opportunity cost of
the funds of the investor.
Marketability
A good portfolio consists of investment, which can
be marketed without difficulty.
If there are too many unlisted or inactive shares in
your portfolio, you will face problems in encasing
them, and switching from one investment to another.

Tax Planning
A good portfolio should enable its owner to
enjoy a favorable tax shelter (income tax,
capital gains tax, and gift tax)
Appreciation in the value of capital

A good portfolio should appreciate in value in


order to protect the investor from any erosion in
purchasing power due to inflation.

Liquidity
The portfolio should ensure that there are enough
funds available at short notice to take care of the
investors liquidity requirements.
Safety of the investment
minimize the overall risk or bring it to an acceptable
level by developing a balanced and efficient portfolio.

What is Portfolio Management Services?

Portfolio Management Services (PMS) is an


investment portfolio in stocks, fixed income,
debt, cash, structured products and other
individual securities, managed by a professional
money manager that can potentially be tailored
to meet specific investment objectives.
PMS can be offered only by entities having
specific SEBI registration for rendering portfolio
management services.
Currently in India PMS is offered primarily by
asset management companies (AMCs) and
brokerage houses.

PMS in India

PMS in India

HSBC Global Asset Management


HDFC Asset Management (INR 500 Billion)
Axis Asset Management Company
Reliance Capital Asset Management (INR 1000 Billion)
SBI Funds Management
ICICI Prudential Asset Management (INR 600 Billion)
Franklin Templeton Asset Management
Birla Sun Life Asset Management (INR 500 Billion)

The Securities and Exchange Board of


India (frequently abbreviated SEBI) is the regulator
for the securities market in India. It was established
on 12 April 1992 through the SEBI Act, 1992.
HQ at Mumbai
SEBI is managed by a) Chairman, nominated by
central government. b) Two members, i.e. officers of
central ministry. c) One member from the RBI and
d) remaining five members, nominated by the
central government,

Functions and responsibilities

SEBI has to be responsive to the needs of three


groups, which constitute the market:
the issuers of securities
the investors
the market intermediaries

SEBI has three functions rolled into one body:


quasi-legislative, quasi-judicial and quasiexecutive. It drafts regulations in its legislative
capacity, it conducts investigation and
enforcement action in its executive function and it
passes rulings and orders in its judicial capacity.

Powers of SEBI
1. to approve bylaws of stock exchanges.
2. to require the stock exchange to amend their bylaws.
3. inspect the books of accounts and call for periodical returns from
recognized stock exchanges.
4. inspect the books of accounts of a financial intermediaries.
5. compel certain companies to list their shares in one or more stock
exchanges.
6. levy fees and other charges on the intermediaries for performing its
functions.
7. grant license to any person for the purpose of dealing in certain areas.
8. delegate powers exercisable by it.
9. prosecute and judge directly the violation of certain provisions of the
companies Act.
10.power to impose monetary penalties.

The End

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