Motilal Oswal Financial Services Ltd Case Solution
They can increase quality of research reports by hiring qualified and experienced staff in their organization. They can also attract environmentally conscious customers by being green; for example they can be green by reducing the paper usage, they can send customers the portfolio statement to their email address rather than sending by post this will also results in decreasing the cost and increased margins.
The company can also launch SMS service, i.e. when the customers make transaction then they get automatic notification of transaction at the same time. Moreover, the motivated staff can be an advantage for the company, therefore the company should motivate its staff by reward system, and reward should be based on performance. These all suggestions will help the company to become better than its competitors.
- c) Should MOFSL go public? Discuss the top reasons why or why not and discuss how any concerns about your decisions are mitigated. What is your recommended issue size?
MOFSL should go for initial public offer because this will resolve the following ten issues as well as it will provide benefit to them.
- MOFSL is a private company and it finds it difficult to raise finance from its shareholders so as to invest in new technology.The issue will be resolved when company offer its share in public.
- Public image will improve and would attract more customers because the customers are dependent on public companies rather than private companies.
- In India, the labour laws allow issuing share to their employees in both companies public and private. Therefore,it will be easy to issue share option scheme to employees to motivate them.
- It will be easy to do merger because the valuation is readily available.
- It will be beneficial for the shareholders when the company liquidate as they will loss maximum of amount invested rather than unlimited loss in private company.
- Theresponsibilities will increase as compared to private company such asannual reports would be made every year, the corporate governance will be followed and much more.
- By going public, the company will not be run by some stakeholder, howeverproper board of director will be appointed and would beaccountable to shareholders.
- By issuing equity, the debt will be low and gearing ratio will also be low, this will result in supplier and creditor being dependent on the company.
- IPO gives the company more opportunities, equity convertible debt and cheaper bank loans.
- IPO attracts and retains better management and employees through liquid equity protection.
The maximum MOFSL can issue share allowed by laws and regulation in the India, therefore my recommendation is to issue all share allowed by law to gain above benefits.
d)IPOs are usually under-priced. Recommend the level of expected under-pricing for MOFSL?
The pricing of IPO is less than market price, which is also known asunder-pricing. The pricing of IPO is very critical aspect and has a direct impact on the success and failure of the IPO issue. There are many factors to be considered while pricing an IPO. The price is low enough to generate the interest in the market and high enough to raise sufficient capital for the MOFSL…………………..
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