CLASS: M.B.A.
11N/ 467
St. JOSEPH’S COLLEGE (AUTONOMOUS) TIRUCHIRAPPALLI – 620 002
SEMESTER EXAMINATIONS – NOVEMBER 2011
TIME: 3 Hrs.
MAXIMUM MARKS: 100
SEM
SET
PAPER CODE
TITLE OF THE PAPER
III
2010
10PBA3312
RETAIL BANKING
SECTION – A
Answer all the questions:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
10 x 3 = 20
Define Merchant Banking.
What do you mean by minimum subscription in IPO?
What is a bought out deal?
Write short notes on the ICRA rating symbols for equity.
What do you mean by “best efforts” loan syndication?
Briefly explain the regulations on the minimum capital requirements for merchant bankers in
India, with reference to public offer.
How an offer for sale differs from public issue?
Differentiate Hire purchase from a lease (Any Three differences)
What is a Kite Bill (or) A recommendation Bill?
What are the functions that can be performed by a full-fledged ATM?
SECTION – B
Answer all the questions:
11.
a.
b.
12.
a.
b.
5 x 10 = 50
Highlight the importance of financial markets in terms of the functions they perform. Do
you think there should be a proper regulatory mechanism to control them? Why?
OR
Enumerate the factors that have resulted in the growth of merchant banking Industry in
India. Make out a list of the important functions performed by them.
List down the pre-issue and post issue activities that have to be carried out by the lead
managers to an IPO, in the order they happen.
OR
Write down the specific roles of the following intermediaries in an IPO. (i) Registrars to
the issue (ii) Bankers to the issue
13.
a.
b.
Company A is contemplating the purchase of company B. Company A has 2,00,000
shares outstanding with `25 market value per share while company B has 1,00,000 shares
selling at `18.75. The EPS are `3.125 for company A and `2.5 for company B. Assuming
that the two managements have agreed that the shareholders of company B are to receive
company A’s shares in exchange for their shares (i) in proportion to the relative EPs of
the two firms or (ii) 0.9 shares of company A for one share of company B (share
exchange ratio of 9.1), Illustrate the impact of merger on the EPSC (Earnings per share of
the combined firm). Also compute the EPS after merger on the assumption that the
anticipated growth in earnings is 8% for company A and 14% for company B for a period
of three years.
OR
Prospective Limited is contemplating taking over the business of Pure Limited. The
summarised balance sheet of pure limited as on 31st March was as follows:
Amount
Amount
Liabilities
Assets
(In Lakhs)
(In Lakhs)
Eq. Sh. Capital (50l
500 Fixed Assets
Rs.10)
General Reserve
250 Land & Buildings
300
Profit & Loss Account
120 Plant & Machinery
580
13% Debentures
100 Current Assets
Current Liabilities
30 Inventories
70
Debtors
35
Bank
15
1000
1000
Additional Information:
1) Current assets are taken over at their book value but fixed
under
Land and Buildings
Rs.500 lakhs
Plant and Machinery
Rs.500 lakhs
Payment for Goodwill
Rs.50 lakhs
2) Purchase consideration is to be paid as Rs.130 lakhs in cash,
debentures and other liabilities and the
balance in terms of
Ltd.
3) Expected benefits [FCFF] accruing to prospective Ltd. are
assets are revalued as
to pay for 13%
shares of prospective
as follows:
[Rs. in Lakhs]
Year I Year II Year III Year IV
Year V
Rs.200 Rs.300 Rs.260 Rs.200
Rs.100
Further it is estimated that the FCFF are expected to grow at
years.
4) Cost of capital for the purpose of analysis is to be 15%.
Suggest whether prospective Ltd. is likely to benefit taking
14.
a.
b.
15.
a.
5% per annum after 5
over pure Ltd.
Compare leasing with other forms of financing and bring out the specific advantages that
leasing has over the other forms of financing. Is there any negativities attached to leasing
as a source of finance?
OR
From the given facts relating to MIS leasing Ltd. Calculate the annual rentals under the
following rental structure for the 6 year period.
(a) Equated
(4)
(b) Stepped up (annual Increase of 12%)
(6)
Investment cost
100 lakhs
Primary lease term
3 years
Residual value
Nil
Before tax expected rate of return- 22% per annum
Assume that the lease can be renewed for an additional period of 3 years (secondary
lease period). The lease rental for the secondary period will be 5% of the rental charged
during the primary period.
Explain the mechanism involved in factoring highlighting the functions of a factor at
each stage. What are the difficulties faced by factors in India currently?
OR
b.
Present a concise report on any five of the venture capital funds currently operating in
India.
SECTION – C
16. Case Study:
1 x 20 = 20
Concrete Builders Ltd. approaches you to advise on the method of financing their decision to
invest in a crane to be used in their construction business. The terms of leasing and borrowing are
given below.
- The cost of the crane is `10,00,000
- Method of depreciation – straight line
- Life of the Asset, 5 years with Nil scrap value.
- Least rent – Rs.2,20,000 per year to be paid in advance every year.
Terms of Borrowing:
- Rate of Interest – 14%
- Repayment to be in equal instalments, each instalment due at the beginning of the year.
Rate of Taxation - 50%
What would be your advise?
**************