Manappuram Finance Ltd on Friday termed as speculative reviews
that its promoter V P Nandakumar is looking to promote his stake in the corporation or is on the verge of doing so.
The gold loan business enterprise, in a stock alternate statement, stated its management reiterates there’s no reality in latest memories of a speculative nature performing inside the media to the impact that the employer’s promoter is trying to promote his stake inside the agency or is on the verge of doing so.
Earlier, reviews counseled that HDFC Bank, IDFC Bank, and Edelweiss Group had been inside the race to shop for the Thrissur (Kerala) situated non-banking finance business enterprise.
As at March-cease 2017, the enterprise had 4,148 branches across 27 states/UTs with belongings under management (AUM) of Rs. 13,723 crore and a workforce of 22,112. Over the last two years, the organization has varied into new commercial enterprise areas like microfinance, automobile and housing finance, and SME lending.
In February 2015, Manappuram Finance had acquired Asirvad Microfinance Pvt. Ltd. With AUM a touch brief of Rs.300 crore. Overall, non-gold companies contributed 18.52 in keeping with a cent of the overall business as of March 31, 2017. The NBFC stocks have been buying and selling down via 2.06 in line with cent at Rs 116.35 at the BSE.
Structured trade finance (STF), a type of debt finance, is used as an alternative to conventional lending. This form of finance is utilized regularly in developing countries, as well as, in relation to cross border transactions. The objective is to encourage trade by making use of non-standard security. STF is generally used in high-value transactions in bilateral trading relationships. As a more complicated type of finance, STF is commonly related to commodity trading.
Within the commodity sector, STF products are most prevalent. It is used by producers, processors, traders, as well as, end-users. These financial arrangements are tailored by banking organizations to meet the precise needs of the clients. STF products are primarily working capital financing, warehouse financing, and pre-export financing. There are also some institutions that extend reserve-based lending, as well as, finance the conversion of raw materials into products, along with other customized finance products. In order to promote trading activities, STF products are extended across the supply chain.
STF structures are sponsored by limited recourse trade finance lines. The structure aims at offering better security mechanism and to act as an enhancement on the position of the borrower when viewed in isolation.
How Has Technological Advancements Complemented STF?
Trade credit insurance, bank assurances, letters of credit, factoring and forfeiting are some of the STF products that have been positively affected by the latest technological advancements. These products have changed due to the recent developments. The massive progress in communication and information domains have also helped the banking institutions to track the physical risks and events in the supply chain between the exporter and the importer.
Why are STF Facilities Used?
Structured trade finance products are used so that the risks related to trading in a specific country and different jurisdictions can be mitigated. Any transaction together with STF products help to add resilience to the trade and the same cannot be said when looking at financing the individual elements of a trade. Moreover, it allows for lengthening the payment time, strategizing procurement, diversifying funding and enhancing the ability for clients to boost the facility sizes.
What makes STF extremely attractive is that the borrower’s strength in the transaction is not scrutinized as closely as compared to a vanilla loan. Here, the focus is more on the structure and the underlying cash flows. Another reason for STF’s popularity is that the transactions are not reflected in the balance sheet of a company and the presence of this financing option has helped several importers to maintain flexible credit terms with exporters.
In recent years, structured trade finance products coupled with the recent advances in technology are considered as the fundamental reasons for the increasing volumes of international trade.
Invoice finance (IF) is not considered a credible source of finance among some business owners because of its relatively high cost and onerous terms. Is this perception justified? I will argue it is not with the introduction of single invoice finance.
What is invoice denies promoter sale finance?
It is the sale of a company’s sales ledger for cash providing an ongoing source of cash as invoices are issued to customers by the company. The company might retain the collection of cash or transfer this and the associated credit risk, to the funder.
Some conventional IF facilities can impose numerous types of fees and charges, and require security and a commitment from the company to sell its entire sales ledger to the finance company.
Some companies offer a refreshing financial alternative, offering to buy just a single invoice and charging as few as just one fee and generally offering a more flexible funding alternative.
What is single invoice finance?
As its name suggests, it is the purchase of one invoice for cash from a company. The company does not need to sell any further invoices so single invoice finance can be used by companies to raise cash as they need it. Also, they might not need to provide security such as a debenture or a personal guarantee.
Single or multiple IF are effective tools for cash management because they liquidate illiquid assets i.e., they convert debtors into cash. The cash realized can be reinvested by the company in profitable projects or used to pay back expensive debt.
Some borrowers might argue that on an annualized basis, the cost of invoice finance is high compared to a conventional loan. That comparison is like comparing apples to oranges because the two financing instruments work differently. A loan is a continuous source of finance whereas single invoice finance is discrete – providing finance for up to 90 days or less. Annualisation of the cost of invoice finance is not therefore consistent with its use.
Though the interest rate on a loan might look relatively attractive, the cost of arranging and administering it must also be factored in, such as the arrangement, commitment, non-utilisation, and exit fees, plus servicing charges and legal costs of documentation. There might also be costs to pursue and recover bad debts or to pay for credit protection. Invoice finance has its own arrangement and administration costs that might be more or less than a bank loan.
Invoice finance is, therefore, a credible alternative to a loan because:
- it converts a company’s debtors into cash that may then be reinvested to potentially generate a positive return for the company.
- the company can transfer debtor credit risk.
- it avoids using up a bank’s limited credit capacity for a company and
- it diversifies the company’s sources of funds so reducing its reliance on the banking sector.
- companies can use it to raise cash as needed
- security might not be needed