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What is financial restructuring and its need?

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What is financial restructuring and its need?
posted Jun 20, 2017 by Purabi Sarkar

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Financial structure of a company comprises of:

  • Paid up equity and preference share capital
  • Reserves
  • Borrowings in the form of
  • Long term loans from financial institutions
  • Working capital from banks including loans through commercial papers
  • Debentures
  • Bonds
  • Credits from suppliers
  • Trade deposits
  • Public Deposits
  • Deposits and loans from directors, their relatives and business associates
  • Deposits from shareholders
  • GDRs, ADRs, FCCCBs
  • Funds raised through any other local instrument.

Need for financial restructuring

  1. Necessity for injecting more working capital to meet the market demand for the company’s products or services.
  2. When the company is unable to meet its current commitments
  3. When the company is unable to obtain further credit from suppliers of raw materials, consumable stores, brought – out components etc. and from other parties like those doing job work for the company.
  4. When the company is unable to utilize its full production capacity for lack of liquid funds.
answer Jun 21, 2017 by Sagar Sharma
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