Method of finance used by Chow Tai Fook and roles played by HSBC Assignment

Method of finance used by Chow Tai Fook and roles played by HSBC - Assignment Example Gold loans amounted to HK$ 2060.8 million, HK$ 2189.2 million and HK$ 3931.6 million for the financial years 2009, 2010 2011 respectively. Loans or advances from related parties which are due amounted to HK$ 4726.8 million, HK$ 4639.8 million and HK$ 7833.3 million for financial years 2009, 2010 and 2011 respectively. The unsecured bank borrowings of CTF primarily serve the purpose of financing working capital, purchase of materials, etc. CTFE guarantees some of these Honk Kong unsecured bank borrowings. Secured bank borrowings of CTF are totally guaranteed by CTFE and certain assets owned by related companies are held as security of these loans. The bank borrowings carry a variable interest rates ranging from 0.30 % to 1.25% per annum over HIBOR or 90-110 % of the PBOC lending rate benchmark per annum. The figures show that there was a significant increase in bank borrowings in the FY2011, primarily due to increase in inventory because of the expansion efforts of the company. Gold l oans include both secured and unsecured short term gold related facilities provided by major financial institutions of the world. The interest rates of gold loans are quite low ranging from 1.25% to 3.5% per annum. There was a significant increase in gold loans in the FY2011 attributed to the fact of increase in gold inventories and business expansion. Regarding advances from related parties, they are unsecured; carrying no interest charges and is repayable on demand. The related parties include the CTFE group and close family members of a director of the Company and an entity having common director of the Company. Until recently, CTF have made a global offering of 1,050,000,000 shares to raise its... This study will begin with the presentation of Chow Tai Fook Jewellery Group Limited. Chow Tai Fook is a leading brand worldwide engaged in different types of business which include property development, transportation, hotel, casino, jewelry, etc. It is an enterprise based in Hong Kong based. The brand name ‘Chow Tai Fook’ is most common Chinese speaking people. Since its foundation, Chow Tai Fook or CTF is a leader in its market segment and enjoys the top position in market share of PRC, as well as Hong Kong and Macau. CTF possess a very wide range of jewellery products with its main focus on producing high-end luxury jewellery items along with gem-set jewellery, platinum jewellery, watches, etc. The retail network of CTF is quite extensive with its points of sale (POS) of jewellery and watches spread all across PRC, Hong Kong and Macau, thus maximizing its exposure and taking sales to new heights every year. Authenticity and trustworthiness are the two main key aspect s on which the brand of CTF is recognized. CTF uses a vertically integrated model which is quite effective in having a good control over the entire business process. Hong Kong Shanghai Banking Corporation Limited or HSBC is one of the largest banks in the world and provide financial services globally across the world. HSBC is primarily involved in four global businesses. They are: a. Retail Banking and Wealth Management b. Commercial Banking c. Investment Banking and d. Global Private Banking.