Saturday, August 27, 2011

Liabilities Management in Special Situations

The FAPCCI organized a Interactive Session on - ‘Liabilities Management in Special Situations’ today evening at FAPCCI. Mr. A.S. Rao, Regional Director, Reserve Bank of India was inaugurated the session.

Ms. Pramila Rani, General Manager (SME), Andhra Bank, Mr. Sridhar Ramachandran, Director, Brescon Corporate Advisors Limited, Mumbai, Mr V.S. Raju, President, FAPCCI, Mr. Devendra Surana, Senior Vice President, Mr. Srinivas Ayyadevara, Vice President, Mr. Lakshmikanth Inani, Co-Chairman, Banking, Finance and Insurance Committee, FAPCCI, Mr. M.V. Rajeshwara Rao, Secretary General from FAPCCI and eminent economists, industrialists across the state have participated at the round table on Liabilities Management.

Mr. A.S. Rao is said in his chief guest address is Liabilities Management Involves in adequately meeting Solvency / Liquidity requirements, Controlling and diversify risk, Reduce mismatches in cash-flows, Establish Strategic Directions, Add Value Creation/ Risk adjusted ROC, Capital Allocation and helps in Sustainable business growth even in ‘Economic Down-Cycles’ and Better ability to leverage ‘Economic Up-Cycles”.

MS. Pramila Rani said that the industrialists should have optimum equity for the implementation or restructure of the company. Reasonable cost management is plays a vital role in special situations likes up and downs of the company.

Mr V.S. Raju said that Indian business houses now have grown into large, multinational behemoths competing with companies in the west that have been ruling business landscape of the world since decades. Key enabler to this multi fold growth of Indian business houses has been access to money both from India and abroad. Money has been raised both as Equity and Debt in order to fuel the growth of scale of operations. Naturally, liabilities on the books of businesses have grown in an unprecedented way. However, much more importance is given to managing the assets of the business and not much has been put into “Liabilities Management.” Managing the liabilities on the balance sheet, such that the Assets keep growing in a profitable and sustainable way is Liabilities Management.

The Advantage of Liabilities Management would be Better Credit quality enhancing Banker confidence leading to greater and expeditious access to debt capital, Sustainable business growth even in ‘Economic Down-Cycles’, Better ability to leverage ‘Economic Up-Cycles” and Investor confidence leading to better business valuation and access to share capital.

Mr. Lakshmikanth Inani said that the Liabilities Management is a tool that enables corporate managements to take business decisions in a more informed framework with an eye on the risks that corporate is exposed to. It is an integrated approach to financial management, requiring simultaneous decisions about the types of amounts of financial assets and liabilities - both mix and volume - with the complexities of the financial markets in which the institution operates.

He also said that implementing assets and liability management systems is sure to enhance the productivity of the employees, who are managing the assets and the liabilities in a company. Moreover the management can get timely reminders and reports regarding the assets and liabilities which will definitely help them in taking some critical decisions regarding their business. There are many companies / firms that are using assets and liability management systems and they also manage the assets and liabilities of other companies.

Mr. Sridhar Ramachandran has given a presentation on ‘Liabilities Management in Special Situations’ at the session.

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