CLASS ASSESSMENT-1

Subject code: FINM 542

Subject name: Corporate finance-I

Name of faculty: Mr. Vishal Goyal
Class: MBA Q2143

GROUP- 1
REGISTRATION NUMBER NAME ROLL NUMBER

12105748 NANDITA RQ2143A03

12107784 ATUL SINGH RQ2143B51
12108018 RITIKA AZAD RQ2143B54
12107070 MUKESH SINGH NEGI RQ2143B34
12107299 GAURAV SHARMA RQ2143B38
 Annexure-V- Cover Page for Academic Tasks

Couse Code: FINM52 Course Title: CORPORATE FINANACE-1

Course Instructor: Mr. Vishal Goyal

Academic Task No.: 1 Academic Task Title: CA

Date of Allotment: Date of Submission: 25/09/2021

Student Roll No: RQ2143B34 Student Registration No: 12107070

Evaluation Parameters:

Learning Outcomes: Understand the different financial Decisions.

Declaration:

Student’s Signature: Mukesh Singh Negi

Evaluator’s comments (For Instructor’s use only)

General Observations Suggestions for Best part of assignment

Improvement

Evaluator’s Signature and Date:

Marks Obtained: Max. Marks:
 INTRODUCTION

FINANCIAL DECISION
Financial decisions are the decisions that managers take with
regard to the finances of a company. These are crucial
decisions for the financial well-being of the company. These
decisions can be in terms of acquisition of assets, financing and
raising funds, day-to-day capital and expenditure management,
etc. Financial decisions therefore affect both the assets and
liabilities of a company.

FINANCIAL DECISION

INVESTMENT LIQUIDITY FINANCING DIVIDEND

DECISION DECISION DECISION DECISION
• INVESTMENT DECISION- Investment decisions are
decisions that relate to the investment in different types of
assets, instruments, securities, etc. Managers decide how to
invest the company’s funds in different asset classes,
depending on the needs of the organization. As each
company has scarce financial resources, it is crucial to decide
which asset to invest in first. Managers must make the tough
call of postponing investing in some assets that are not strictly
necessary at present or that may not give the desired return.
Investment decision can be long-term (capital budgeting
decision) or Short-term (working capital decision).

• LIQUIDITY DECISION- It is very important to maintain a

liquidity position of a firm to avoid insolvency. A liquidity
management strategy means your business has a plan for
meeting its short-term and immediate cash obligations without
experiencing significant losses. It means your company is
managing its assets, including cash to meet all liabilities, cover
all expenses and maintain financial stability.
FINANCING DECISION- Financing decisions are
decisions that are made to ensure the financing of the
company. Financing Decision is focused on the borrowing and
allocation of funds required for the investment decisions of the
firm. It is a continuous and ongoing process, as each company
regularly needs funding. The financing decision comes from
two sources from where the funds can be raised – first is from
the company’s own money, such as the share capital, retained
earnings. Second is from the borrowing funds from the outside
the corporate in the form debenture, loan, bond, etc. The
objective of the financial decision is to balance an optimum
capital structure.

DIVIDENT DECISION- The term dividend refers to that part

of profits of a company which is distributed by it among its
shareholders.It is the reward of shareholders for investments made
by them in the share capital of the company.In Dividend decision a
company decides whether all the profit are to be distributed,to
retain all the profits in business or to keep a part of profits in the
business and distribute others among shareholders.
 ABOUT THE COMPANY

3M India Ltd is the flagship listed company of 3M

Company USA in India. 3M Company USA holds 75%
equity stake in the company and is a diversified
technology and science company with a global
presence in Industrial; Health Care; Consumer;
Safety and Graphics; and Energy businesses and is
among the leading manufacturers of products for
many of the markets it serves. Most of its products
involve expertise in technology product development
manufacturing and marketing and are subject to
competition from products manufactured and sold by
other technologically oriented companies. 3M India
has manufacturing facilities at Ahmedabad Bengaluru
Pune and has the Corporate Office and Customer
Innovation Center (R&D Center) in Bengaluru. The
company manages its operations in five (5) operating
business segments: Industrial; Health Care;
Consumer; Safety and Graphics; and Energy. The
company's five business segments bring together
common or related 3M technologies enhancing the
development of innovative products and services and
providing for efficient sharing of business resources.
3M products are sold through numerous distribution
channels including directly to users and through
numerous wholesalers retailers converters
distributors and dealers in a wide variety of trades in
many countries around the world.
 NEWS(12th FEB,2021)
3M India to consolidate its Pune facilities at
Ranjangaon

3M India plans to consolidate its Pune manufacturing facilities

at Ranjangaon.The company said it has taken the decision to
consolidate its Pune plants into a single facility at Ranjangaon,
Pune and discontinue production at its Pimpri facility during the
quarter October-December 2021. These actions will enable 3M
to operate more efficiently, simplify supply chains, leverage
scale, and enhance customer support. At present,the Pimpri
facility is owned and managed by 3M Electro & Communication
India Private Ltd, a 100 per cent subsidiary of 3M India Ltd.

At present,the Pimpry facility is owned by 3M India but on feb

2021,they have decided to shutdown the production at Pimpry
and merge their Pune plants into a single facility at
Ranjangaon, Pune and they are ensuring that this will help 3M
to operate more efficiently,ease supply chains and also
increase the customer support. So basically, this news will
come under the Investment Decision as in investment decision
company decides how the funds of a firm are to be invested so
that they will get the good returns and in this news also 3M are
investing at Ranjangaon facility and also expecting that this will
help them to get good returns in the future.

Source-The Hindu
 NEWS(21ST MARCH,2013)
The 3M India promoters decided to shed stake
in the company through offer-for-sale route

3M Company, the promoter company incorporated in Delaware,

has set the floor price for the sale at Rs 3,300 a share.

It plans to sell 1.13 lakh equity shares (1.3 per cent equity) of
3M India through offer-for-sale route provided by the BSE and
the NSE.

3M Company plans to dilute its stake in the Indian arm to meet

the minimum public shareholding criteria.

On 21st of march 2013, 3M decided to sell their 1.13 lakh equity

shares which is 1.3% equity of 3M India at 3,300 a share
thorugh offer-for-sale route provided by the Bombay Stock
Exchange(BSE) and National Stock Exchange(NSE).So clearly
this news will come under the Financing Decision as in
financing decision we focused on raising and allocating of funds
and in the news 3M raising funds by selling their equity shares.

Source-The Hindu
 NEWS(16th of July 2021)
Castrol (India) keen to get collaboration with
3M on stream.

With drop in maximum COVID-19 cases, infection across the

country and normal businesses are again trying to setdutheir
foot in the markets. Castrol(India) is looking forward to restart
expansion of its vehicle products business in collaboration
with 3M India Pvt Ltd.
3M India collaboration with Castrol (India) is for bringing
market leading vehicle product to the automotive aftermarket
including shampoo, glass cleaner, cream wax, dashboard and
tyre dressers across the country.

Managing Director (MD of 3M India Sandeep Sangwan,

informed that as crisis of COVID-19 is decreasing, business of
3M India will be back on track and will run at full power.
As of Now, Castrol’s volume growth is largely led by the
automotive segment which forms around 80 percent of its total
mix while balance comes from industrial and other sectors.
Within automotive, around 60-65 percent of the volume is
on account of personal mobility and the rest is taken care of
by CVs and other categories.

3M(India) is global leader in car innovation ,after collaborating

with Castrol(India) they can look forward for technological
expertise, Marketing and distribution strength of the company.
This collaboration of 3M(India) and Castrol(India) will lead
them into the $200 million vehicle market in India, a move
which aligns with Castrol’s approach to developing and
embracing new business models in the ever evolving
automotive landscape.

This explained news item I found that its comes under

Investment Decision of Financial Decision.

Financial decision is yet another important function which a

financial manager must perform. It is important to make wise
decisions about when where and how should a business
acquire funds .Funds can be acquire through many ways
and channels .Broadly speaking a correct ratio of an equity
debt has to be maintained .This mix of equity capital and
debt is known as firm’s capital structure.

A sound financial structure is said to be one which aims at

maximizing shareholders return with minimum risak .In such a
scenario the market value of the firm will maximize and hence
an optimum capital structure would be achieved .Other than
equity and debt there are several other tools which are used
in deciding a firms capital structure .
Investment decision not only involves allocating capital to
long term assets but also involves decisions of using funds
which are obtained by selling those assets which become
less profitable and less productive. It wise decisions to
decompose depreciated assets which are not adding value
and utilize those funds in securing other beneficial assets. An
opportunity cost of capital needs to be calculating while
dissolving such assets. The correct cut off rate is calculated
by using this opportunity cost of the required rate of return
(RRR).
Since the future is uncertain therefore there are difficulties in
calculation of expected return. Along with uncertainty comes
the risk factor which has to be taken into consideration. This
risk factor plays a very significant role in calculating the
expected return of the prospective investment.
Therefore,qwhile considering investment proposal it is
important to take into consideration both expected return and
the risk involved

Source-autocarpro
 NEWS(16th of July 2021)
Coronavirus impact : 3M India Rallies 20% as
demand for masks, sanitizers spikes

Share of 3m India Extended their rally to the third straight

session on 5th of March 2020 after reports that the sale of face
masks sanitizer and gloves have soared in the country amid
the coronavirus fears.

Share price nearly jumped to 21 percent to an intraday high

of 24,348 on March against Rs 20137.30 on March 2.

Some chemist shops that have stocks of masks available

with them have jacked up prices, selling items that were
available earlier for Rs 150 at Rs 300, stated a report.

3M India, a subsidiary of 3M Corporation, manufactures

over 8,000 products including personal healthcare and
safety products such as face masks and sanitizers.

There was steady demand of hand sanitizers and masks in the

months of January and February since the outbreak of
coronavirus but ever since a case was reported in Delhi, there
Has been a sudden spike in demand,
“There was steady demand of hand sanitizers and masks in
the past two months since the outbreak of coronavirus but
ever since a case was reported in Delhi, there has been a
sudden spike in demand,” a salesperson who asked not to be
identified told PTI.

As per the described news article due to impact of COVID-19

sudden change in sale of boosts the profits of the company,
which results in profit generation, that’s why it falls under
Profit allocation or Dividend Decision.

Earning profit or a positive return is a common aim of all the

businesses. But the key function a financial manger performs
in case of profitability is to decide whether to distribute all the
profits to the shareholder or retain all the profits or distribute
part of the profits to the shareholder and retain the other half
in the business.
It’s the financial manager’s responsibility to decide a
optimum dividend policy which maximizes the market value
of the firm. Hence an optimum dividend Payout ratio is
calculated. It is a common practice to pay regular dividends
in case of profitability Another way is to issue bonus shares
to existing shareholders.

Source-Busniess wire
 NEWS(28TH MAY 2021)

3M India consolidated net profit rises

17.24% in the March 2021 quarter
3M India's net profit increased 17.24 percent to Rs 70.47
crore in the quarter ended March 2021, compared to Rs
60.11 crore in the preceding quarter. In the quarter ending
March 2021, sales increased by 22.89 percent to Rs 827.21
crore, up from Rs 673.15 crore in the preceding quarter.
Net profit fell 49.60 percent to Rs 162.38 crore in the fiscal
year ended March 2021, compared to Rs 322.17 crore in
the preceding fiscal year ending March 2020. Sales fell
12.78 percent to Rs 2604.83 crore in the fiscal year ending
March 2021, compared to Rs 2986.55 crore the previous
year.

Particulars Quarter Ended Year Ended

? Mar. 2021 Mar. 2020 % Var. Mar. 2021 Mar. 2020 % Var.

Sales 827.21 673.15 23 2604.83 2986.55 -13

OPM % 12.38 11.34 - 9.96 15.06 -

PBDT 109.30 87.87 24 281.77 491.90 -43

PBT 94.88 71.97 32 219.92 432.57 -49

NP 70.47 60.11 17 162.38 322.17 -50

In the given news 3M is talking about the profit they received in

March quarter so this news will fall under the dividend function
because in dividend function company investigate how much
profit is produced by the firm, how much of it is to be distributed
to shareholders as dividend after taxes, and how much of it
should be kept in the business.
Source-India InFolines
3000% returns in 15 years! This stock has quietly made
investors crorepati(September 25th 2021)

The stock has risen from Rs 634.20 on june 29,2005 to Rs 19,122.75 as

of Monday’s closing, compounding at a 25.47 percent annual growth
rate. The stock has increased by 2,915 percent in absolute terms!
Because the company’s US-Based parent, 3M, controls 75 percent of
the stock, there is only a 25 percent float accessible to indian investors.
The firm, which is headquartered in Bengaluru, has four production sites
in India: two in pune and one each in Bengaluru and ahemdabad. It has
two research and development centres in Bengaluru and Gurgaon.
Safety and Industrial, transportation and electronics (70%)
and healthcare(15%) are the company’s four main segments.
Scotch Brite, a well-known brand of abrasive goods in india, is a
household name. Despite the company’s multibagger gains over the
previous 15 years, few stock investors are familiar with the listed MNC
behind the well-known brand. The 32-year-old company offers a wide
range of products in areas such
as automotive,consumer,medical,safety,hygiene,energy,electronics,and
airspace and aviation maintenance,among others.

So this a headline which was published on september25th 2021.The

news is all about the profit 3M company is doing from last 15 years and
giving a huge amount of returns back to their investors because of US-
based parent ,3M,controls .This company has four sites in India two in
pune and each in Bengaluru and Ahemdabad.The four main segments
of company’s are healthcar,transportation,electronics and
industrial.So,basically this will come under dividend functions as it is
clearly mentioned in the news that 3M is continuously growing in India
and giving handsome returns back to the investors.

Source-Businesstoday
3M India reports consolidated net profit of Rs 30.10
crore in the June 2021 Quarter (June 12,2021)

Net profit of 3M India reported to Rs 30.10 crore in the quarter ended

June 2021 as against net loss of Rs 42.52 crore during the previous
quarter ended June 2020. Sales rose 114.88% to Rs 743.87 crore in
the quarter ended June 2021 as against Rs 346.18 crore during the
previous quarter ended June 2020 .

Particulars Quarter Ended

? Jun. 2021Jun. 2020% Var.
Sales 743.87 346.18 115
OPM % 6.44 -13.98 -
PBDT 55.28 -42.81 LP
PBT 40.51 -57.84 LP
NP 30.10 -42.52 LP

So in the month of June 3M India reported to gain 30.10 cr. As it clearly

visible from the data that their sales increased by 115% from 342cr to
744cr.This news falls under the category of finance's dividend choice, as
the dividend function refers to how much profit is made by the firm, how
much of it is to be paid to shareholders as dividend after paying taxes,
and how much of it should be maintained in the business. In addition,
the dividend function is carried out with the overarching goal of
maximising shareholder value in mind.
This function is critical for the company's future growth. This will be a
crucial role for the company's financial independence.

Source-India infoline
3M INDIA TO PUT RS.590 CR. IN
COMMUNICATION ARM(May 30th 2018)

On Wednesday, 3M India's board of directors accepted a

proposal for a 590 crore investment in 3M Electro &
Communication India Pvt Ltd's whole issued and outstanding
equity capital (five lakh shares of ten each). This related-party
transaction, however, will be subject to additional due diligence.
The US-based 3M Company owns 3M Electro &
Communication. For the fiscal year 2017, 3M India made a
profit of 240.76 crore on revenues of 2,457.85 crore.
In this it is shown that 3M India limited company is investing in
communication apartment. The amount that is to be investment
is Rs 590 cr. They are investing for their future aspects and
also for the enhancement of company.
So, this data falls under the heading of financial investment
decisions. Investment decisions refer to how a company's
money is invested in various assets in order to obtain the
highest possible return for its owners. When money is
committed over a lengthy period of time, long-term investment
choices, also known as capital budgeting, are made.

Source-The hindu Businesslines

3M INDIA Q4 PATS JUMPS 16% YOY
(MAY 28,2021)
EBITDA progressed 23.6% to Rs 110 crore within the fourth quarter as
against Rs 89 crore detailed within the same
period final year. Benefit some time recently assess in Q4 FY21 stood at
Rs 95 crore, up by 31.9% from Rs 72 crore in Q4 FY20. The company
recorded 49.7% drop in solidified net benefit to Rs 162 crore on
12.8% drop in deals to Rs 2,605 crore in FY21 over FY20. Ramesh
Ramadurai, overseeing executive of 3M India, said We conveyed broad-
based growth over most of our conclusion markets within the Jan-Mar
2021 quarter, maintaining the successive enhancements since FY Q2
2020-21. Due to the solid request bounce back as well as supply
chain interferences, we experienced taken a
toll weights in crude materials and coordination costs. During the
quarter, we reported activities to solidify our fabricating impression in
Pune, which can move forward our operational efficiencies
and client service. The overseeing executive assist said that the spike in
COVID-19 cases within the moment wave has hindered the consecutive
development force.

So in this news 3M has compared their Q4 data of 2020 with Q4

2021,and they have found this that 3M got the profit(EBITDA) of 23.6%
to Rs 110 crore within the fourth quarter as against Rs 89 crore detailed
witin the same period final year and they have also get a benefit of Rs
95cr,(up by 31.9%)from Rs.72cr in Q4FY20.So according to me this
news will come under the dividend function because they got the good
returns in this Quarter.
.

Source-Business Today
 27th of JULY 2018

3M India gets nod to invest in communication arm

As we can derive from the 3M company history and Growth of the

company ,their operating strategy and ease of doing business at Global
level with maintaining their position in the global market .This image
makes this company different, that’s the only reason they are into
business for this all long time. Whereas, 3M India Pvt Ltd is a subsidiary
company of the 3M but despite that its Indian subsidiary doing extremely
well in the Indian market as well as in Asian market also.

After being this long time in the market company has also earned the
trust of their shareholders and Investors , who have faith in the company
and Invest their money for growth in the company, which also makes
company to work even more hard to retain their shareholder and
investors for longer period of time .

That’s the reason shareholders of 3M Pvt Ltd gave approval to the

company’s proposal to invest in 3M Electro& Communication.

Company has also decided that it will not invest more than 590 Crore,
they would only invest in the entire issued and outstanding equity share
capital, where value of share will be 10₹ each for five lakh of equity
shares.

3M Electro & Communication is a subsidiary of 3M Company, US, while

3M India is the arm of 3M Co, US. Shares of 3M India slipped 0.28 per
cent at ₹23,609.80.
After reading this news article the question here is why company is
investing this much hefty amount in Electro and Communication? So
here the Answer is .
There could be a multiple reason but what I could think of are :-
1- Remote access- Investment in technology lets your employees
work remotely, and it increases productivity by 20%.
2- Competitive Edge- used data from customers, products, sales,
and marketing to reduce the time needed to launch new marketing
from eight weeks to one week.
3- Better Interaction with Customers- The customers are getting
smart. They’re in love with technology and you need to be at the
same level to interact with them and to connect with them.
4- Speed- It helps with automation by reducing manual and labour-
intensive work. It Simplifies tasks and processes. Updating old
system is a need of the time.
5- Productivity- Investment in technology at the right time doesn’t
just improve speed but it improves employee productivity and
makes your business more efficient.

What I Conclude from this news is 3M is a global company and if they

want to maintain their position and want to be the best in the market
they are ready to invest in Electrocommunication Technology. And I also
think they should Invest because Technology has the potential to turn
the tables. It is a game-changer. Invest in tech based on your business
needs. One step at a time will push your business in the right direction in
no time.

Source-The Economic Times