Financial policy BY Swadesh Patnaik Dpika pattnayak pgdm 1st year AWDI

The policy of a company which governs all financial related problems like fixing share value ,arranging funds for investment, repaying loans and arranging funds for investment, price of its product, income, expenditure etc together is it’s financial policy.

Financial policy

Objectives-The first step in planning is setting of objectives. What is the main purpose of planning ? What should be the size of business, nature of business that all comes under objectives.

Goal-The term ‘goal’ represents the target in specific quantitative terms to be achieved in specific period of time.

Strategies- The next task involves laying down strategies . It is the course of action to be followed.

Steps in planning financial policy

To forecast growth and interest rates I have chosen Asian Paints Ltd, whose share value is continuously suffering from huge loss from last couple of days.

Frocasting intrest rates

4750.00 pre close open High Low Close-6.75 -0.14 4756.75 4761.00 4700 4723.45 4752.00

To sell shares at a target price of RS 4200 to stop loss of 4750

To issue bonds for a fixed period to get more money.

Hiring of new machinery and to adopt new technology to improve the quality of paints

Establishing new brands and providing better quality products according to the demand of the coustomers.

A part of net profit should be kept reserved for

future.

Steps to overcome losses

In the 1990 there was strong desire by the company to expand

Need for strengthening the need

Set up 30th manufacturing plant in India with a total investment of $million.

Launch in September 1994 in India with wide media advertising.

HISTORY OF KELLOGGS IN INDIA

Products offered in India cornflakes, wheat flakes, basmati rice flakes, basmati rice flakes

April 1995,25% decline in sales in comparison to last month.

Despite offering quality products and being supported by the technical,managersand financial resources of its parent,kelloggs products failed in Indian market.

FACTS

Overconfidence and ignorance of cultural aspects of India.

Unable to understand of Indian consumers behavior and habits.

Premium pricing policy.Unable to understand taste of Indian

coustomers.

Reasons for failure in the market

Improved in its pricing policy. Change in its positioning. Pay attention to Indian culture and tests. Continued to have Image of premium brand

RECOMENDATIONS

We found that the main reasons for its failure in India due to westernization of its products

and high price.

The indinization of its products helped the company to penetrate the market.

The reduction in price also helped Kellogg's improved its standing in the market.

CONCLUSION

Inflation is that state in which the prices of goods and services rise on the one hand and value of money falls on the other .When money circulation exceeds the value of goods and services the state of inflation takes place in economy. Avg inflation2013 (11.62)% till now.

Inflation

AVG INFLATION FOR LAST FIVE YEARS

YEARS GROWTH RATE2009 10.83%2010 12.11%2011 8.87%2012 9.30%2013 11.62%

Se-ries1

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

Series1Series2Series3

Bank rate policy-When central bank increases the bank rate it increases the cost of borrowing as well as reduces commercial bank borrowing from central bank. Thus flow of money is checked and inflation is checked.

CRR-To control inflation the central bank raises the CRR which reduces the lending capacity of the commercial banks to the public .This process halts the rise in price to some extent.

Tools for controlling Inflation

Open market operation-This refers to sale and purchase of govt securities and bonds by central bank. To control inflation central bank sells those govt securities to the public through the banks. This results in transfer of a part of the bank deposit to central bank account and reduces credit creation capacity of commercial banks.

Repo, Reverse Repo-It is the rate at which commercial banks borrow money from the central bank and reverse happens in Reverse Repo.