LEASE

TYPES OF LEASE

Financial Lease Operating Lease Leveraged Lease Single Investor Lease Domestic Lease International Lease Sale & Lease Back Direct Lease

Why Lease???

Plausible ReasonsConvenience Benefits of Standardisation Better Utilisation of Tax Shields Fewer Restrictive Covenants Lower Cost of Obsolence Risk Expeditious Implementation

Contd

Dubious ReasonsHundred Percent Financing Circumvention of Certain Controls Favourable Financial Ratios

MECHANICS OF LEASING

Legal Aspects of Leasing

Contents of a Lease Agreement

Procedural Aspects

Sales Tax provisions Income Tax Provisions

Accounting Treatment

HIRE PURCHASE ARRANGEMENT

Choice between Leasing & Hire Purchase

LEASING IN INDIA

ADVANTAGES OF LEASING

Protects Against Leasing Faster and Cheaper Credit Enhance Liquidity Boon for Small Firms Absence of Restrictive Covenants Convenience and Flexibility Whole Financing Tax Benefits

DISADVANTAGES OF LEASINGDeprived of Ownership No Scope for Modernization Case of Default Costly

CASE

CASE

VENTURE CAPITAL

CHARACTERISTICS

Long Time Horizon Lack of Liquidity High Risk High Returns Equity Participation Participation in Management

METHODS

Seed Money FinancingFunds are provided for testing the Product & examining the commercial viability of the Product

D

Contd

Development FinancingAlso known as Expansion Financing Funds are provided to

Contd

Later Stage Financing

Contd

Turn AroundMainly for the sick inputs Financial Turn Around Management Turn Around

MODES

Equity Quasi Equity

INVESTMENT PROCESS

Deal Origination Screening Evaluation Deal Structuring Post Investment Activities and Exit

FACTORS DETERMINING INV

Management and Organization pattern Production Process Marketing and Sales Profitability

VALUATION METHODS

Conventional Valuation Method Present-Value Method Revenue Multiplier Method

EXIT MECHANISM

Sale of Share on Stock Exchange after Listing IPO/ Offer for Sale Strategic Sales Buy Back of Equity by Company Promoters Buy Back

COMPANY ACT

IT ACT

VENTURE CAPITAL IN INDIA

ADVANTAGES

Economy Oriented Investor Oriented Entrepreneur Oriented

DISADVANTAGES

ISSUES IN INDIA

Limitations on Structuring of VC Funds Problems in Raising of Funds Lack of Incentive to Investors Domestic VCFs via Offshore Funds Limitations on Industry Segments Limitations on Exit Mechanism Legal Framework

CASE

CASE