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    Financial Re-Engineering

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    Financial Re-Engineering

    Uploaded by

    manish_khatri
    6K views22 pages
    Its a ppt project report is also shared in scribd only

    Original Title

    FINANCIAL RE-ENGINEERING

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    Its a ppt project report is also shared in scribd only

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    6K views22 pages

    Financial Re-Engineering

    Uploaded by

    manish_khatri
    Its a ppt project report is also shared in scribd only

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 22
    At a glance
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    The key takeaways are that re-engineering is the radical redesign of business processes and organizational structure to achieve significant performance improvements, and financial re-engineering specifically involves changing products, systems, people, brands, and technology with financial restructuring.

    Re-engineering is the radical redesign of business processes and organisational structure in order to achieve significant improvements in performance. Financial re-engineering is changing products, systems, people, brands and technology with financial restructuring and requantification of qualitative business variables.

    The objectives of financial re-engineering include facilitating new budget frameworks, improving financial data capture efficiency and accuracy, reducing cost centers, and identifying key process controls. The benefits include ease of access, analysis, decision making, reporting, risk management and continuous improvement.

    FINANCIAL RE-ENGINEERING

    Presentation By:-
    MANISH KHATRI
    What is Re-engineering ?

    Re-engineering is the radical


    redesign of business processes and
    organisational structure in order to
    achieve significant improvements in
    performance, such as productivity,
    cost reduction, cycle time, and
    quality.
    Financial Re-engineering

    Financial Re-engineering is the recementing or


    changing of products, systems, people, brands
    and technology which has to be done with
    financial restructuring and financial
    requantification of every qualitative business
    variable.
    Objectives of Financial Re-engineering
    • Facilitation of the New Budget Framework.
    • Improve the efficiency and accuracy of financial data
    capture.
    • Reduce the number of cost centre’s in the General
    Ledger.
    • Introduce structures to facilitate future introduction of
    project costing.
    • Identification, review and improvement of key
    process controls.
    Benefits of Financial Re-engineering

    • Ease of Access Benefit.


    • Ease of Analysis Benefit.
    • Better Decision Making Benefit.
    • Research Reporting Benefit.
    • Risk Management Benefit.
    • Continuous Improvement Benefit.
    Holistic Approach to Innovative
    Financial Engineering
    • Benchmarking of the earning-expectations.
    • Product and process choices.
    • Funding structure (variations, costs and flexibility).
    • Fund-deployment strategies.
    • Monitoring and assessment systems.
    • Programmes and policies to reward various
    stakeholders.
    • Satisfaction of the shareholders.
    • Perpetual sustenance of the financial and real growth
    of the business enterprise .
    Holistic Approach to Innovative
    Financial Engineering
    Various Forms of Financial Re-engineering

    • Financial Restructuring
    • Corporate Restructuring
    –Mergers /Acquisitions
    –Divestitures
    –Demergers
    Financial Restructuring

    Financial Restructuring is a
    process to re-arrange, re-build or
    construct or form a new financial
    structure.

    9
    Corporate Restructuring

    Corporate Restructuring is a
    conscious effort to restructure
    policies, programmes, products,
    processes and people, to serve the
    redefined purpose on a sustainable
    basis.
    Merger
    A transaction where two firms agree to
    integrate their operations on a relatively
    coequal basis because they have
    resources and capabilities that together
    may create a stronger competitive
    advantage.
    Acquisition

    A transaction where one firm buys


    another firm with the intent of more
    effectively using a core competence by
    making the acquired firm a subsidiary
    within its portfolio of businesses.
    Reasons for Acquisitions
    • Increased market power.
    • Overcome entry barriers.
    • Cost of new product development.
    • Increased speed to market.
    • Lower risk compared to developing new
    products.
    • Increased diversification.
    • Avoid excessive competition.
    About Novelis
     Novelis is globally positioned and operating in 11
    countries with approximately 12,900 employees.
     The world’s leader in producing (19%) flat-rolled
    aluminum products.
     No. 1 in rolled products producers in Europe, South
    America and Asia.
     No. 2 in rolled products producers in South America.
     World leader in the recycling of used aluminum
    beverage cans.

    • the world
     The company caters to markets like:
    • Building and construction.
    • Cans and closures.
    • Flexible and semi-rigid packaging.
    • Printing and Lithography.
    • Specialty Consumer and Industrial.
    • Automotive and Transportation.
    • Distribution Services.
    • Technology sales.

    06/20/09 Template copyright 2005 www.brainybetty.com 15


    About Hindalco
     It is the flagship company of the Aditya Birla Group.
     Based in Mumbai, India.
     One of the most cost-efficient aluminum producers
    globally.
     Hindalco’s Stock Traded on-
    • Bombay Stock Exchange.
    • National Stock Exchange.
    • Luxembourg Stock Exchange.

    06/20/09 Template copyright 2005 www.brainybetty.com 16


    Synergy: Reason behind merger
    • The combination of Hindalco and Novelis will establish a
    global integrated aluminum producer with low-cost alumina
    and aluminum production facilities combined with high-end
    aluminum rolled product capabilities .
    • Present leaders in their respective markets.
    • Novelis was to procure raw material from the market, which it
    converts into value-added products at the most reasonable
    prices.
    • Hindalco’s motive was to cover the major market share that
    Novelis possesses.
    • Provide a strong platform for sustainable growth and ongoing
    success..

    17
    Risk Associated
    • Novelis has a high amount of debt.
    • Hindalco will gain but Novelis will be at
    a loss.
    • Hindalco is getting a ready-made market.
    • The performance of the two companies
    may be completely opposite to each
    other.
    The Deal
    • Hindalco has acquired Novelis in an all-cash transaction
    at approximately US$6 billion, including approximately
    US $2.40 billion of debt.
    • AV Metals — the A V Birla group's will infuse US$ 3.5
    billion to finance Hindalco's proposed acquisition.
    • AV Metals will take loans worth US$ 2.8 billion from
    three financial institutions, namely UBS, ABN Amro and
    Bank of America.
    • Essel Mining & Industries, a closely held company of the
    group, will bring in US$ 300 million while Hindalco will
    mobilize US$ 450 million from its treasury operations.
    The Outcome
    • The Novelis acquisition will give immediate scale and a
    global footprint.
    • Overseas operations already account for nearly 30 per
    cent of the group's revenue now and the Novelis
    acquisition would increase it to 40 per cent in three years.
    • The acquisition will help Hindalco to shorten the learning
    curve for technology.
    • The group would now have operations in 14 countries.
    • The group would become the world's largest player in the
    downstream aluminum.
    Recommendation
    • Growth of M & A activity in the commodities sector was
    due to some factors.
    • Hindalco should have before acquiring the company seen
    whether the operations of the other company is going in
    the feasible direction.
    • The deal showed losses at the earlier stage, it proved to be
    of strategic value in the long run.
    • For Hindalco, technology and process leadership, cost-
    effective manpower and ready market will help
    rationalize the cost structures and balance the pressure on
    the bottom lines
    THANK YOU

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