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Icici bank

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Dheeraj Wadhwani
Dheeraj Wadhwani

Here are the three options I would consider if I were in Shane's shoes, from most to least recommended: 1. Stock selling: This allows ABC Steel to raise the full $200 million needed upfront without taking on debt. As the steel market is booming and demand for the company's products is high, investors would likely be interested in the IPO. While an IPO does involve risks and regulatory hurdles, it provides the capital needed without interest costs or repayment obligations. 2. Taking a loan: If the interest rates are reasonable given ABC Steel's strong credit rating and growth prospects, a loan could work. Though rates are high now, profits in a few years could easily cover loan payments. The new plant

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ICICI Bank Established in 1994, ICICI Bank is today the second largest bank in India and among the top 150 in the world. In less than a decade, the bank has become a universal bank offering a well diversified portfolio of financial services. It currently has assets of over US$ 79 billion and a market capitalization of US$ 9 billion and services over 14 million customers through a network of about 950 branches, 3300 ATM's and a 3200 seat call center (as of 2007). The hallmark of this exponential growth is ICICI Banks unwavering focus on technology. Key Business Drivers ICICI Bank was set up when the process of deregulation and liberalization had just begun in India and the Reserve Bank of India (Indias central bank) had paved the way for private players in the banking sector, which at that time was dominated by state-owned and foreign banks. Serving the majority of the countrys populace, state owned banks had a large branch network, with minimal or no automation and little focus on service. Foreign banks, on the other hand, deployed high-end technology, had innovative product offerings, but had a very small branch network that serviced only corporate and individuals with high net-worth. Sensing an untapped opportunity, ICICI Bank decided to target Indias burgeoning middle class and corporate's by offering a high level of customer service and efficiency that rivaled the foreign banks, on a much larger scale, at a lower cost. A crucial aspect of this strategy was the emphasis on technology. ICICI Bank positioned itself as technology-savvy customer friendly bank
CASE STUDY COST SAVING PROPOSAL Swastik Limited manufacturers of special purpose machine tools have two divisions which are periodically assisted by teams of visiting consultants. The management is worried about the study increase of expenses in this regard over the years. An analysis of the last year expenses reveals the following: Consultants Remuneration Rs. 250000 Travel and Conveyance Rs. 150000 Accommodation expenses Rs. 600000 Boarding Charges Rs. 200000 Special Allowances Rs. 50000 The management estimates accommodation expenses to increase by Rs. 200000 annually. As part of cost reduction drive Swastik Limited is proposing to construct a consultancy centre to take care of the accommodation requirements of the consultants. This centre will additionally save the company Rs. 50000 in boarding charges and Rs. 200000 cost of executive training program hitherto conducted outside the company premises every year. The following details are available regarding the construction and maintenance of the new centre. a) Land at a cost of Rs. 800000 already owned by the company will be used. b) Construction Rs. 1500000 including special furnishing. c) Cost of annual maintenance Rs. 150000 d) Construction cost will be written off (at a uniform rate) over five years being the useful life. Assuming that the write off of the construction cost as aforesaid will be accepted for tax purposes, that the rate of tax will be 35% and that the desired rate of return is 15%. You are required to analyze the feasibility of the proposal and make recommendations.
Case Study Shane, an employee at a top investment bank, was sipping coffee at his desk when the phone rang. On the call was his client, John, the CEO of ABC Steel. Shane, Investment Banker John, CEO of ABC Steel Shane: Hey John, how are you? John: Im fine, thank you. How are you? Shane: Im doing good. I hear things are going great for ABC Steel. John: Oh yeah, things are great the economy is booming and theres a lot of demand for our products. Shane: Wow! Thats nice to hear. I also hear you bagged a big contract. John: Yeah, and we need to build a new production facility soon. But we have a problem Shane: Tell me about it. John: Well, we need $200 million dollars to fund this new project Shane: And you want to know how you can raise this money, right? John: Right. We spoke to the bank, but man those interest rates are ridiculous! Shane: I know. But there are other options you know. John: Thats why I called. I was wondering if you could help us. Shane: Sure, John. Let me do some homework and get back to you. Ill call you tomorrow morning? John: Sounds perfect. Thanks Shane! Shanes Options Shane thought about Johns funding requirements. He made a list of all funding options for Johns company and filtered the list down to three.
Taking a Loan ABC Steel has a good credit rating. So getting a loan from any bank would be easy. But the rates of interest are quite high. Also, the new plant will generate revenue only after a few years. This would make immediate repayment difficult, adding to the debt burden. But after few year growth would be 35% to 40%. Saving Money ABC could save a percentage of the profits and build a plant after few years. However, John couldnt wait that long because this would make it difficult for ABC Steel to meet the demand for steel in the near future. Stock selling John could raise capital by offering company stocks to the public. Since the steel market is booming, a lot of investors would buy ABCs shares. But the challenge is to manage the risks and complications involved in the IPO process, government regulations and market uncertainties. If you were in Shanes shoes, what option would you consider and why?

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Icici bank

  • 1. ICICI Bank Established in 1994, ICICI Bank is today the second largest bank in India and among the top 150 in the world. In less than a decade, the bank has become a universal bank offering a well diversified portfolio of financial services. It currently has assets of over US$ 79 billion and a market capitalization of US$ 9 billion and services over 14 million customers through a network of about 950 branches, 3300 ATM's and a 3200 seat call center (as of 2007). The hallmark of this exponential growth is ICICI Banks unwavering focus on technology. Key Business Drivers ICICI Bank was set up when the process of deregulation and liberalization had just begun in India and the Reserve Bank of India (Indias central bank) had paved the way for private players in the banking sector, which at that time was dominated by state-owned and foreign banks. Serving the majority of the countrys populace, state owned banks had a large branch network, with minimal or no automation and little focus on service. Foreign banks, on the other hand, deployed high-end technology, had innovative product offerings, but had a very small branch network that serviced only corporate and individuals with high net-worth. Sensing an untapped opportunity, ICICI Bank decided to target Indias burgeoning middle class and corporate's by offering a high level of customer service and efficiency that rivaled the foreign banks, on a much larger scale, at a lower cost. A crucial aspect of this strategy was the emphasis on technology. ICICI Bank positioned itself as technology-savvy customer friendly bank
  • 2. CASE STUDY COST SAVING PROPOSAL Swastik Limited manufacturers of special purpose machine tools have two divisions which are periodically assisted by teams of visiting consultants. The management is worried about the study increase of expenses in this regard over the years. An analysis of the last year expenses reveals the following: Consultants Remuneration Rs. 250000 Travel and Conveyance Rs. 150000 Accommodation expenses Rs. 600000 Boarding Charges Rs. 200000 Special Allowances Rs. 50000 The management estimates accommodation expenses to increase by Rs. 200000 annually. As part of cost reduction drive Swastik Limited is proposing to construct a consultancy centre to take care of the accommodation requirements of the consultants. This centre will additionally save the company Rs. 50000 in boarding charges and Rs. 200000 cost of executive training program hitherto conducted outside the company premises every year. The following details are available regarding the construction and maintenance of the new centre. a) Land at a cost of Rs. 800000 already owned by the company will be used. b) Construction Rs. 1500000 including special furnishing. c) Cost of annual maintenance Rs. 150000 d) Construction cost will be written off (at a uniform rate) over five years being the useful life. Assuming that the write off of the construction cost as aforesaid will be accepted for tax purposes, that the rate of tax will be 35% and that the desired rate of return is 15%. You are required to analyze the feasibility of the proposal and make recommendations.
  • 3. Case Study Shane, an employee at a top investment bank, was sipping coffee at his desk when the phone rang. On the call was his client, John, the CEO of ABC Steel. Shane, Investment Banker John, CEO of ABC Steel Shane: Hey John, how are you? John: Im fine, thank you. How are you? Shane: Im doing good. I hear things are going great for ABC Steel. John: Oh yeah, things are great the economy is booming and theres a lot of demand for our products. Shane: Wow! Thats nice to hear. I also hear you bagged a big contract. John: Yeah, and we need to build a new production facility soon. But we have a problem Shane: Tell me about it. John: Well, we need $200 million dollars to fund this new project Shane: And you want to know how you can raise this money, right? John: Right. We spoke to the bank, but man those interest rates are ridiculous! Shane: I know. But there are other options you know. John: Thats why I called. I was wondering if you could help us. Shane: Sure, John. Let me do some homework and get back to you. Ill call you tomorrow morning? John: Sounds perfect. Thanks Shane! Shanes Options Shane thought about Johns funding requirements. He made a list of all funding options for Johns company and filtered the list down to three.
  • 4. Taking a Loan ABC Steel has a good credit rating. So getting a loan from any bank would be easy. But the rates of interest are quite high. Also, the new plant will generate revenue only after a few years. This would make immediate repayment difficult, adding to the debt burden. But after few year growth would be 35% to 40%. Saving Money ABC could save a percentage of the profits and build a plant after few years. However, John couldnt wait that long because this would make it difficult for ABC Steel to meet the demand for steel in the near future. Stock selling John could raise capital by offering company stocks to the public. Since the steel market is booming, a lot of investors would buy ABCs shares. But the challenge is to manage the risks and complications involved in the IPO process, government regulations and market uncertainties. If you were in Shanes shoes, what option would you consider and why?