FINANCIAL ENGINEERING
IDEA OF FINANCE WITH SIMPLICITY OF ENGINEERING
Abstract: “In financial towns, financial engineering is a buzzword which has transformed the financial status. The idea of financial engineering is used to make financial advancement in a corporation which restructures the financial status of any business and corporation. It is a very powerful idea to resolve the financial problems using the engineering wonders. The basic concepts of financial engineering are to make the corporation and consumers satisfied with the help of capitalist economy and the engineering moral wonders to the overvaluation of assets and to underinvestment problems passing up to the positive net present value projects”.
Keywords: Finance and Economics, Asset Allocation/Management, Computational Finance/Trading System.
1. Introduction
Financial engineering is a multidisciplinary field involving financial theory, methods of engineering, tools of mathematics, and the practice of programming. Financial engineering is the concept where we try to merge the two different worlds of commerce and sciences-that is the bridge between finances and engineering-FINANCIAL ENGINEERING. Engineering wonders cannot work without the finances and the finances need the support of engineering. India is currently the world’s 2nd largest telecommunication market with a subscriber base of 1.183 billion and it ranks 3rd in the internet market. As the market of Android users increased in India. India stands 4th position in the app economy in the world. So for the development of the country, herein we try to bring more financial supports and profits with more use of engineering technology and less use of manpower.one of such implementations of plans has been done by the richest person of Asia-Mr. Mukesh Ambani. JIO from reliance is being linked as one of the biggest start-ups witnessed by the world with an underlying venture of 1.5 Lakh Crore.
2. HISTORY
The Reliance and Reliance companies brought a major change in the world of financial markets with the implementation of engineering techniques and software and created Jio.JIO is a telecommunication service provider that started in India IN 2015. The major stakeholder of Jio is the Reliance industries (99%). It is also referred to as “RELIANCE JIO”. Reliance JIO has a current market share of 13.71% in terms of wireless subscribers (4th largest service provider) according to the TRAI data of December 2017. Initially, JIO started by entering into the field of mobile phone manufacturing in partnership with INTEX. Later it started its own mobile phone manufacturing under the brand name of LYF.In 2016 it started providing its services to the employees of the company for the testing purpose. The company started providing very cheap internet packs as well as calling facilities such as VOLTE and Video calls to its customers.
2.1: STRATEGIES ADOPTED BY JIO TO CAPTURE THE INDIAN MARKET
The spotlight i.e. three-pronged on broadband networks, reasonable smartphones and data services, and the approachability of rich element and applications has endowed Jio to make an incorporated business procedure. Jio is equipped for offering an exceptional mix of telecom, rapid information, computerized trade, media, and payment services.
Jio Made a revolutnary step by decreasing the internet cost and providing free calling facilities both on high speed and rich quality. Which made it impossible for other telecommunication operators to sustain in the market by providing similar packages or around the same range.
2.2: OPERATIONAL STRATEGIES
The operational strategy was focused mainly on the five performance objectives such as quality, speed, dependability, flexibility, and cost.
Jio provides one of the largest network sources in India .it has very good connectivity in cities as well as other parts of the country. The speed has been the main focus of the company as it started providing only 4g services to the customers. Having a Major stake hold from the Indian government of the cellular towers, Jio has a vast reach to the customers. Its main plan is to capture the whole Indian market under the jio connection which will make the customers only depend upon jio , where cost is the major factor which is helping Jio to capture the market.
The project cost of establishing Jio has been of 1,40,000 cr. INR. Quarterly Reports of Jio states that it takes around 2,600 cr INR. From which the operational cost is around 660 cr INR to provide the services to its customers .as Jio has been supported with the financial support of Reliance Industries the operational cost is very low, if any company wanted to sustain in the current situation of jio, by providing same services with the same cost, the operational cost would be around 1,600 cr INR. Which would make it very hard to sustain the corporation in the market.
2.3: FUTURE PLAN’S
Jio has a plan where it is expecting around 50 cr users, using its services @200 INR per month for at least 16 Quarters before 2021, which will make a sum of 1,60,000 cr INR in which it will get its investment in return with profit.
2.4: LIMITATIONS
As per its current plan, if jio is unable to reach its goal before 2021, the company will be in huge loss. currently, it has 22.7 cr active users paying 154 INR per month, if jio remains in the same situation it will only get it’s 5% investment back which will lead the company in a total loss.
Even if it gets the users as per its expectations, there are chances of failure of the equipment used by the operator which are very costly to change or repair, which can also lead to the failure of the company
Future Scope:
Jio needs to maintain its working equipment in good condition so that it can at least be used for 20 years more.
3 : CONCLUSION
Hereby we can say that To Ensure that the investors have Maximum options for investing and corporates have endless choices of financing, there is much more advancement required in the field of financial engineering.
New Methods Should be introduced to ensure financial efficiency and to solve the issues of financing the individual corporation. Which can be done in Two ways :
(a)By restructuring existing products in the market.
(b)By Creating New Products Which are financially efficient.
Any Finance must have an engineering backbone to support the idea of the product and produce maximum profit efficiently to the corporates by implementing the idea of the development of Hybrid instruments which can best serve the investor’s requirement with lower risk and higher profit to both the investor’s as well as the corporates.
4 : Future Scope:
- Jio needs to offer much more attractive offers to the users so that users from other service providers comes into jio.
- Jio needs to maintain its working equipment in good condition so that it can at least be used for 20 years more.
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