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ESTABLISHMENTS BY KSFC
CHAPTER 1
CHAPTER 1
INTRODUCTION
INTRODUCTION
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All these financial institutions are started to fulfill the requirement of financial needs
of all types of industries. These financial institutions offered short term, medium term and
long term financial assistance to the industries. In the industrial policy resolutions of 1948,
1956, 1977 thrust was given for the development of small-scale and medium scale industries.
In order to bring the balanced regional development in the country and to concentrate towards
the industrially backward areas government of India started the State Financial Corporations
in the states with the help of state governments in order to concentrate on regions, which are
industrially backward.
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India's financial services sector will enjoy generally strong growth during coming
years, driven by rising personal incomes, corporate restructuring, financial sector
liberalization and the growth of a more consumer-oriented, credit-oriented culture. This
should lead to increasing demand for financial products, including consumer loans (especially
for cars and homes), as well as for insurance and pension products. India's financial services
sector is expected to enjoy generally strong growth during coming years, driven by rising
personal incomes, corporate restructuring, financial sector liberalization and the growth of a
more consumer-oriented, credit-oriented culture. This is expected to lead to increasing
demand for financial products, including consumer loans (especially for cars and homes), as
well as for insurance and pension products.
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CHAPTER 2
CHAPTER 2
RESEARCH
RESEARCHDESIGN
DESIGN
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2.0 INTRODUCTION:
In this chapter researcher has clearly mentioned the overall research design which done to
analyze the firm data and to interpret the results to meet the objectives of the study. With the
help of complete research methodology and statistical tools.
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2.6 METHODOLOGY:
Methodology is a way to systematically solve the research problem. It may be
understood as a science of studying how research is done scientifically. In it we study the
various steps that are generally adopted by a research in studying his research problem along
with the logic behind them. Methodology refers to methods adopted to carry out the research
and steps adopted to solve the problem by finding solution.
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Secondary data will be collected from the existing records, company manual, published
sources like annual reports, periodicals, statements, journals, etc.
Data analysis will be done on the secondary data includes annual report, financial
report of the company etc.
Analyses and evaluation of the data:
The data collected from various sources has been analyzed interpreted and tabulated.
Appropriate graphs diagrams are used with the assistance of suitable yardstick.
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pioneer of the ratio analysis. It used for assessing the current and long term financial
soundness of a business concern and is also used for analyzing the various aspects of
operational efficiency and the degree of profitability of a concern.
Types of ratio analysis
Static analysis:It is a type of analysis which analyses the single years financial statements.
Dynamic analysis:Dynamic or trend analysis is a type of analysis which analyses the financial statements of
two or more years.
Procedure for ratio analysis
Restructuring, classification, grouping or re-arrangement of the data found in the financial
statements in a form suitable for analysis.
Calculation of required ratios from the restructured or classified data.
Comparison of the computed ratios with the standard established. (The standard may
either be budgetary standard or historical standard).
Interpretation of the comparisons.
Functions of ratio analysis
Ratio analysis measures the firms ability to meet the current obligation.
Analysis shows the proportions of debt and equity in financing the firms assets.
Analyses of ratios reflect the firms efficiency in utilizing the assets.
Ratio analysis measures overall performance and effectiveness of the firm.
It will determine the financial strength in future.
This technique attracts the investors. As the investors are interested on their return on
investment
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Current assets
Cash in hand
Cash at bank
Bills receivables
Sundry debtors
Inventories
Readily marketable securities (short term investments)
Prepaid expenses
O/s income
Current liabilities
Bills payable
Sundry creditors
Bank overdraft
Cash credit
Short term loans and advances
O/s expenses
Incomes received in advance
Provision for income tax
Unclaimed dividend
Proposed dividend
Quick ratio: Quick ratio refers to the relationship between the quick assets (current assets
excluding inventories and prepaid expenses) and quick liabilities (current liabilities
excluding bank over draft and cash credit). The ideal quick ratio is 1:1
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Absolute liquid ratio: It is the ratio which expresses the relationship between absolute
liquid assets and current liabilities. The ideal absolute liquid ratio is 1:2. Here absolute
liquid assets refer to cash in hand, cash at bank and readily marketable securities.
Leverage ratios, capital structure ratios, solvency ratios or long terms solvency ratios
Leverage ratios are the ratios which measures the interests of the owners and creditors in
an enterprise. The principal leverage ratios are as follows: Debt-equity Ratio
Debt-equity ratio is the ratio which expresses the relationship between the long term
liabilities and the owners fund. The ideal ratio is 2:1
Proprietary ratio
The ratio shows the relationship between net worth or equity and total assets (tangible
assets). The ideal ratio is 0.5:1
Solvency ratio
This ratio expresses the relationship between the total assets and total liabilities of a
concern. There is no ideal ratio is established. The higher the ratio, higher is the long term
solvency.
Fixed assets to net worth ratio
This ratio expresses the relationship between the fixed assets and net worth. The ideal
ratio is 2:3
Current assets to net worth ratio
This ratio expresses the relationship between the current assets and net worth. There is no
ideal ratio established.
Current liabilities to net worth ratio
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This ratio expresses the relationship between the current liabilities and net worth. The
ideal ratio is 1:3
Capital gearing ratio
It is the ratio which expresses the relationship between the fixed interest bearing
securities/shares and the equity shares. If fixed return bearing securities are higher than
equity shares then it is said that the concern is highly geared.
Fixed assets ratio
Fixed assets ratio is the ratio between the fixed assets & capital employed. The ideal ratio
is 2:3
Profitability ratios based on capital employed or investments
Return on total assets ratio
This ratio expresses the relationship between the net profit and the total assets. The ideal
ratio is 10%.
Return on investment ratio
It represents the relationship between the profit and the capital employed. There is no
ideal ratio established.
Return on equity ratio/ net profit to net worth ratio
This ratio expresses the relationship between the net profit and all types of share capital
minus losses. The ideal ratio is 13%
Earnings per share
EPS refers to the relationship between the profit available to the equity share holders and
the number of equity shares.
Operating profit ratio
Operating profit ratio is the ratio between the operating profit (EBDIT) and the revenue
from
service. The ideal operating profit ratio is 10%. It is an indicating factor which
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Gross profit ratio is the ratio between the gross profit and the net revenue from services.
The ideal gross profit ratio is 25% to30%. The rate of gross profit must be sufficient to
cover all the operating expenses.
Net profit ratio
Net profit ratio is the ratio between the net profit (EAT) and the net revenue from
services. The rate of net profit indicates the profitability of the concern.
Some of the data which are confidential to the corporation which is not possible to be
used
Ratios are calculated on the past financial statements and thus forecast for the future
Unable to obtain the current status i.e. the current financial years financial details, because
it is being processed yet
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BIBLIOGRAPHY
ANNEXURE
CHAPTER 3
CHAPTER 3
COMPANY
COMPANYPROFILE
PROFILE
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To provide financial assistance in the form of term loan to tiny, small and medium scale
industries in Karnataka.
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KSFC is a fast track term lending financial institution, which extends lease,
financial assistance and hire purchase assistance for acquisition of machinery. It has a
merchant banking department approved as a category-1 merchant banker by the securities
exchange board of India and it looks after management of public issues, under writing of
shares, project report preparation, deferred payment guarantee, and loan syndication.
enterprises and it is constructed from granting loans to concern whose paid up capital and
reserves together exceed Rs.12 crores. Their aggregate contingent liabilities arising from
guarantee and underwriting arrangement should not ordinarily exceed twice their paid up
capital and reserves, which can extend up to Rs.12 crores with the prior approval of the
government.
Karnataka state financial corporation provides different types of assistance such as
1. Granting loans and advances for period not exceeding 20 years.
2. Subscribing to debenture payable written 20 years.
KSFC is also authorized to act as the agent of government both a central and state level with
any financial institution like IDBI, IFCI etc, in matter connected with grant of loan or advice
subscription.
3.4 ACHIEVEMENTS:
1. Computerization of head office and branch office for better customer service.
2. Establishing of women entrepreneurs guidance cell for guidance and escort service of
women entrepreneurs.
3. Introduction of loan assistance scheme for getting ISO 9000 certification.
4. Premier position among all SFCs of the country with regard to sanctions, disbursements
and recovery.
5. Sanctions during the year under various schemes touched Rs.368.15 crores covering 1195
cases as against Rs. 424.53 crores covering 1326 cases in 2006-07 and Rs.316.20 crores
covering 1161 cases in 2005-06. Cumulative sanctions reached Rs. 8536.53 crores
covering 159225 cases as on 31.3 2008
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Promoted by entrepreneurs of SC, ST, OBC and weaker sections of the society
Operational highlights
The operational, administrative and financial restructuring interventions put in place have
yielded positive results and the corporation recorded credible performance in 2007-2008.
Consistent efforts in the improvement of assets quality have yielded positive results with
the non-performing assets declining to 33% from 24% as on 31.3.2008.
A separate department was created for taking up infrastructure development projects with
public/private participation.
Credit risk analysis was introduced to improve the quality of appraisal and thereby curtail
the instances of projects becoming NPAs.
Quality policy:
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KSFC endeavours to create satisfied customer through adequate and timely financial
assistants and guidance. This shall be achieved through professional management and
teamwork
Quality objectives:
To provide quality financial service on a continuous basis to the satisfaction of customers.
To ensure customers satisfaction through teamwork and professional management.
To motivate and involve employees to achieve the set organization growth target.
Mission:
KSFC is committed to nurture, develop and service the small medium
enterprise sector through need based product and services
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software
or
hardware
service
relating
to
information
technology,
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function the loan. Zonal offices will look after 4 to 5 branch office. This structure has helped
the organization to provide customer services effective monitoring and business throughout
the state.
The corporation has effective system and practice of organization planning and
control. Adequate power has been developed to branch manager. Branches have the authority
of function the loan up to Rs.25 lakhs. The zonal manager is give sufficient freedom to take
decision regarding operations of branch and their customer. The five-year plane will be
prepared by the head office along with annual business plane and resources forecast.
Business opportunities.
Credits departments:
His department deals with appraisals, disbursements and monitoring. Once the
application is submitted by, the entrepreneurs after duly filling in the same application will be
scrutinized by the EG department for forwarded to credits department for further processing.
Internal audit department:
The most important function of this department is to examine the financial
statement, records and related operations to determine adherence to generally accepted
accounting principles (GAAP) management policies and statutory regulation. The purpose for
analyzing the operation is to convey the management the results of the audit the problems and
the weaknesses, which have been, identify during auditing as to enable the management to
take appropriate measures.
Legal department:
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This department attends all the legal matters affecting the interest of the
corporation. The basic function of this department is to appraise the projects legally which the
entrepreneurs submit for getting loan.
Finance and accounts department:
This department is responsible for maintaining various accounts, ledger, cashbook
and other books of account, income tax, failing of statutory returns and statements.
Business development and credit research department:
This department undertakes mainly research on marketing aspects based on
various factors. It also helps the management to take suitable decisions with regard to the
policy of sanctions. The activities of the department are as follows:
Performing sect oral study regarding new areas.
Preparation of district profiles.
Identification of sectors with substantial growth potential among the existing portfolio.
Analysis of high default ratio Industries and study the reason for the same.
Evaluation of different schemes of KSFC and suggest changes if necessary.
Publishing the KSFC newsletters.
Industrial Revival Group (erstwhile Sick Units Monitoring Cell)
The cell, which has been formed for rehabilitation of potentiality viable sick units,
conduct in depth, studies regarding cases referred and assesses the eligibility for
rehabilitation assistance.
Information Technology department:
It is aiding the management information department. The main objective of this
department is to provide the information about the latest technology available in hardware
and software in the information industry, to different departments. The in-house software
required by this department.
Personnel department:
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This department deals with personnel related issues. For any organization to run its
operations smoothly, it needs capable, efficient, initiative and hardworking people who
execute the thoughts and aspirations in a result-oriented manner. The main functions of this
department are recruitment, training, welfare and compensation management.
Hire purchase and leasing department:
This department is in charge of leasing and hire purchase activities of the
corporation. This department was started with the introduction of the scheme Equipment
leasing scheme it is a fund based activities managed at the head office. KSFC is the first
state financial corporation to start this scheme.
Treasury department:
It has been given importance from the year 1990 onwards because of the new
challenges faced by KSFC in mobilizing its funds in the area of liberalization, privatization
and globalization (LPG).The main sources of funds was refinancing from IDBI. The various
function of treasury department is estimation of funds for lowest for possible cost.
Recovery department:
This department will look after the recovery of loan disposed to clients. Once the
full amount of loan is disbursed, the responsibility of recovering of the loan will be
transferred to the recovery department. Managers based on the area in which the industry is
located, take up this recovery department.
Strategies followed by recovery invoice for effective leasing recovery:
1. Visit to the place of business.
2. Visit to the office of other term lending institutions.
3. Frequent correspondence with the default unit.
4. Review meetings.
5. Phase of implementation of the project.
6. Study of financial statements.
7. Repayment position.
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year under review. Similarly, the corporation made progress in its general insurance business
and collected a premium of Rs. 2.29 crores and commission 27lakhs.
Monitoring of IPO
The corporation is a recognized financial institution SEBI for acting as monitoring
agency for public issues exceeding Rs. 500 crores. During the year, the corporation took up
the issue monitoring assignments of two more companies a part from the existing the three
companies and earned revenue of Rs. 21 lakhs under this activity
Consulting services
The corporation entered into a MoU with HDMC for providing technical valuation
and certification of the works done by the contractors of HDMC. The corporation
executed the assignments provided by HDMC in this regard and is hopeful of getting
similar assignments from BBMP, MMP etc.
SPV with IL and FS
During the previous year the corporation launched a special purpose vehicle with
IL and FS for taking up services such as project evaluation, business model validation and
similar customer centric financial services. During the year, the corporation completed the
registration of the company with registrar of companies in the name of M/s Karnataka
enterprises solutions Ltd (K-eSol Ltd).
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If the requirements of the funds for a project are substantial and cannot be extended by
the Corporation alone, then the requirement of loan of such projects can be met in
consortium with other financial institutions.
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7. Industrial Estates, IT Parks, ready built office space, Training Institutions, God owns, and
Warehouses.
8. Group Housing Sector.
9. Construction and purchase of commercial complex.
10. Development / maintenance and construction of road
11. Qualified Professionals (Management, Accounting, Medical Professionals, Architects &
Engineers, Veterinary clinics).
12. Rehabilitation of sick units.
4. AREA OF OPERATION:
The Corporation extends financial assistance for an enterprise in the State of Karnataka
with its network of 29 branches covering all the districts of the State.
KSFC extends loans to industrial units/ services sector established/to be established in
the state of Karnataka industrial concerns having registered office outside the state of
Karnataka can also avail financial assistance provided in the place of business is in Karnataka
and they agree to shift their registered office to the state of Karnataka.
5. APPLICATION FORMS FOR LOAN:
Loan application forms are issued after the proposal is cleared in the Project Clearance
Committee (PCC) meeting. For loans proposals up to Rs.50.00 lakhs Branch Offices will
issue the application forms. For the loans proposals above Rs.50.00 lakhs, loan applications
are issued at Head Office.
6. TIME FRAME FOR PROCESSING SANCTIONS:
New loans up to Rs.35.00 lakhs 21 days Branch office
New loans up to Rs.60.00 lakhs 30 days Branch office
New loans up to Rs.75.00 lakhs 45 days Branch office
New loans up to Rs.500.00 lakhs 60 days Head Office
7. A) PRIMARY SECURITY:
The primary security for loan will be the assets financed i.e., land, building & machinery.
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If working capital loan is provided, the inventories in the form of raw materials, work in
process, finished goods besides bills & book debts are to be pledged / hypothecated.
b) COLLATERAL SECURITY:
All loans are to be backed by collaterals in the form of commercial or residential properties
located in the State of Karnataka or Fixed Deposits or NSCs. Residential properties of third
parties as collateral are discouraged. Assets free of encumbrance charged to the Corporation
will be further charged. In case of corporate loan, in the absence of adequate security in the
form of primary assets, collateral security to the extent of 100% of the loan amount is
insisted in respect of existing units assisted by the Corporation and in respect of other units,
collateral security will be 150% of the loan amount.
Note: The primary & collateral are to be by way of simple mortgage at jurisdictional SRO.
8. DISBURSEMENT OF LOAN:
Loans are disbursed after the promoter brings in stipulated equity / contribution from his
side as stipulated in the terms of sanction & after properties are mortgaged / hypothecated
as per terms of loan & guarantee deeds executed. The extent of disbursement will be in
proportion to the investment made on land, building & machinery. The release towards
machinery will be either after issuing a commitment letter to machinery supplier & after
inspecting machinery & factory site of entrepreneur. Up-front fee is payable at 0.5% of loan
+ applicable service tax, before disbursement.
9. LOAN REPAYMENT:
The loans are normally repayable in 5 to 7 years with a moratorium of 1 to 2 years
depending on DSCR. The repayment will be in monthly / quarterly instalments.
10. PUBLIC GRIEVANCE REDRESSAL:
To redress the grievances of the entrepreneurs, Public Grievance Readdresses Committees
have been set up under the chairmanship of Executive Directors. All grievances will be
heard in 30 days. Acknowledgments however, will be given within 7 days of receipt of the
grievance.
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11. HELPLINE:
The Corporation has brought out 'Products & Services' brochure. The brochure gives details
of the activities of KSFC, financial services available, various schemes of the Corporation
and procedures for availing the financial assistance. For further information/ details visit
our website
ISO certification
The corporation has obtained the ISO 9001:2000 certifications to the revised
standards from M/s. Bureau of Indian standards (BIS). The head office is following the
quality management system procedures as per the ISO standards. All the documents are
updated, necessary revisions made in the quality system procedures with continual
improvement in all the areas. Quality audits and management review meetings, surveillance
audits are conducted successfully.
Sanctions
Sanctions during the year under various schemes touched Rs.368.15 crores covering 1195
cases as against Rs. 424.53 crores covering 1326 cases in 2006-07 and Rs.316.20 crores
covering 1161 cases in 2005-06. Cumulative sanctions reached Rs. 8536.53 crores covering
159225 cases as on 31.3 2008
SIZEWISE SANCTIONS in 2007-2008
(Amt in lakhs)
SL. NO.
Sanctions
No
Amt
% to the Total
1
2
Sl. No.
3
1
2
Up to Rs.10 lakhs
20
15.32
SIZEWISE SANCTIONS:2008-09
2
(Rs. In crore)
10 lakhs - 45 lakhs
119.29
Sanctions
Amount
66 No.
45 lakhs - 150 lakhs
500 lakhs
Above300
Rs. lakhs
10.00lakhs
to Rs. 45.00 lakhs
109.43
32.86
26 424
4
29
23.55
712
No.
Amt
16.90
4.16
55.23
% to the total
32.40
23.77
No.
Amt.
32.75
2.43
29.86
5.80
164.28
0.67
50.14
29.06
29.72
8.93
6.40
67.70
1.00
18.39
368.15
100.00
100.00
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12
11
95
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237
169.63
16.69
30.01
28
62.41
1.97
11.04
10
42.79
0.70
7.57
93.38
0.64
16.52
1420
565.24
100.00
100.00
6
Total
SIZEWISE SANCTIONS:2009-2010
(Rs. In crore)
Sl. No.
Sanctions
NO.
Amount
% to the total
No.
Amt.
203
15.61
13.89
2.47
557
102.80
38.13
16.28
552
216.77
37.78
1
2
Rs. 45.00 lakhs
3
34.33
Rs. 150.00 lakhs
Above Rs. 150.00 lakhs to
91
126.54
6.23
20.04
43
97.83
2.94
15.49
15
71.94
1.03
11.39
4
Rs. 300.00 lakhs
Above Rs. 300.00 lakhs to
5
Rs. 500.00 lakhs
Above Rs. 500.00 lakhs
6
1461
Total
631.49
100.00
100.00
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Sanctions (effective)
Disbursements
No.
Sector
2007-08
2007-08
2008
Since inception up
to
31-12-2008
No.
Amt
No.
Amt
Amt
Amt
SRTOs
26
172.85
37234
66205.31
154.87
64357.95
SS sectors
759
16270.67
90909
377199.46
16572.84
374676.56
a. Tiny sector
600
9884.57
55220
126844.83
9791.43
126781.97
b. Ancillaries
48.50
384
2312.47
0.00
1940.06
c. Other SSIs
157
6337.60
35305
248042.16
6781.41
245954.53
Others
360
18904.25
11433
214077.59
13584.91
194251.63
Total
1145
35347.77
139576
657482.36
30312.62
633286.14
Sector
2008-09
2008-09
Since inception
up
to 31-3-2009
No.
Amt
No.
Amt
Amt
Amt
SRTOs
28
192.70
37257
66360.10
154.87
64524.69
SS sectors
896
25583.13
91736
399621.10
16572.84
392486.24
a. Tiny sector
680
12590.47
55927
135613.92
9791.43
134236.41
b. Ancillaries
328.00
388
2607.97
0.00
1986.56
c. Other SSIs
211
12664.66
35421
261399.21
6781.41
256263.27
Others
455
28936.28
11854
23459.21
13584.91
214666.78
Total
1379
54712.09
140847
705440.41
30312.62
671677.69
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Sector
2009-10
2009-10
Since inception
up to31-3-2010
No.
Amt
No.
Amt
Amt
Amt
SRTOs
66
573.54
37319
66914.17
420.65
64945.34
SS sectors
860
27280.55
92529
423054.15
21960.10
414446.34
a. Tiny sector
664
14822.67.67
56542
148496.77
11643.47
145879.88
b. Ancillaries
328.00
388
2355.47
13.50
2000.06
c. Other SSIs
194
12440.38
35599
272201.91
10303.13
266566.40
Others
478
30452.83
12293
263903.95
21057.77
235724.53
Total
1404
58306.92
142141
753872.27
43438.52
715116.21
INDUSTRY
Hotel/ restaurant
Food
Non-metallic products
Engineering
Miscellaneous mfg
Printing and publishing
Industrial estate
Chemicals
Textiles and readymade
161.54
59.07
31.84
27.27
21.55
18.42
8.82
8.2
7.37
43.88
16.04
8.65
7.41
5.85
5
2.4
2.23
2
Transport
Others
Total
6.45
17.62
368.15
1.75
4.79
10
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Rs. In crores
Amount
% to the
total
Page
INDUSTRYWISE SANCTIONS-2008-09
(Rs. in crore)
Sl. No.
Industry
Amount
244.11
43.19
Engineering
40.14
7.10
Food
101.73
18.00
Miscellaneous manufacturing
36.90
6.53
Non-metallic Products
56.98
10.08
12.84
2.27
9.13
1.61
Chemicals
8.48
1.50
Industrial Estate
2.22
0.39
10
13.15
2.33
11
Others
39.56
7.00
565.24
100.00
Total
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% to the total
Page
Industry
Amount
% to The total
286.38
45.35
Food
95.14
15.07
Engineering
68.71
10.88
Non-Metallic Products
43.79
6.93
Miscellaneous Manufacturing
43.61
6.90
Basic Metal
21.05
3.33
15.73
2.49
14.25
2.26
5.04
0.80
10
Chemicals
4.43
0.70
11
14.32
2.27
19.04
3.02
631.49
100.00
12
Others
Tota
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Sanctions:
Sanctions of loans during the year 2009-10, under various schemes touched Rs. 631.49 crore
covering 1,461 cases as against Rs. 565.24 crore covering 1,420 cases during 2008-09.
Cumulative sanctions reached Rs. 9,733.26 crore covering 1, 62,106 cases as on 31-03-2010.
Disbursement:
Disbursements made during the year touched Rs. 434.39 crore as against Rs. 383.92 crore
during the year 2008-09. Cumulative disbursements reached Rs. 7,647.84 crore as on
31.03.2010.
Recovery:
The total recovery during the year stood at Rs. 554.94 crore as compared to Rs. 501.22 crore
made in the previous year. Recovery in respect of term loans was Rs. 544.01 crore, leasing
0.21crore and Rs. 10.72 crore in respect of financial services.
New industrial policy GOK (2001-06)
The new industrial policy of the government of Karnataka for a period of 5yrs has come
into force with effect from 1-4-2001 and will be in force till 31-3-2006. For details,
entrepreneurs are advised to refer to the booklet on new industrial policy brought out by the
department of industries and commerce, government of Karnataka.
For the purpose of incentives concessions on new investment made in Industrial sector
or after 1-4-2001, year state has been classified in to 4 zones, namely
RKIMCS, Bangalore
39
Page
Developed area
Zone-A
Developing areas
Zone-B
Backward areas
Zone-C
specialized
industrial
RKIMCS, Bangalore
40
Page
CHAPTER 4
CHAPTER 4
ANALYSIS
ANALYSISAND
AND
INTERPRETATION
INTERPRETATION
RKIMCS, Bangalore
41
Page
4.1 TABLE SHOWING SANCTIONS PATTERN DURING THE LAST EIGHT YEARS
Amt in lakhs
YEAR
SANCTIONS
1.
2002-03
33303.98
2.
2003-04
29969.76
3.
2004-05
24175.95
4.
2005-06
31620.50
5.
2006-07
42452.94
6.
2007-08
36815.00
7.
2008-09
56524.00
8.
2009-10
63149.00
RKIMCS, Bangalore
42
Page
YEAR
DISBURSEMENTS
1.
2002-03
26124.91
2.
2003-04
24286.44
3.
2004-05
23983.49
4.
2005-06
19985.66
5.
2006-07
31039.30
6.
2007-08
30319.30
7.
2008-09
38319.00
8.
2009-10
43439.00
RKIMCS, Bangalore
43
Page
YEAR
RECOVERY
1.
2002-03
46695.10
2.
2003-04
52822.52
3.
2004-05
55894.67
4.
2005-06
53420.65
5.
2006-07
50274.00
6.
2007-08
56114.00
7.
2008-09
50122.00
8.
2009-10
55494.00
RKIMCS, Bangalore
44
Page
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
C. assets
15419.72
17544.8
23509.44
34517.42
19612.14
22937.62
17214.15
C.liabilities
16518.47
11219.28
18577.85
12417.41
7571.07
18900.97
9292.14
9453.41
0.9335
1.5638
1.2654
2.7799
2.590
1.21356
1.8525
1.2388
Ratio
RKIMCS, Bangalore
45
2008-09
2009-10
11710.90
Page
Inference:
According to this analysis there is fluctuation in the ratios year by year. This resulted in the
simultaneous variations in the proportion of current liabilities and current assets. In the year
2005-06and 2006-07, the ratios are up to the ideal level. But again it is reduced. KSFC has to
increase its efficiency to meet its current obligations out of its current assets.
RKIMCS, Bangalore
46
Page
2002-03
2003-04
2004-05
2005-06
2006-07
Debt capital
197621.43
183410.48
176086.89
177726.52
Equity capital
12892.55
12892.55
12892.55
Ratio
15.3283
14.226
13.658
RKIMCS, Bangalore
47
2007-08
2008-2009
2009-2010
166147.80
157059.88
157059.88
166147.80
12892.55
12892.55
33108.24
58054.77
70737.82
13.7852
12.887
4.743
2.705
2.348
Page
Inference:
The debt-equity ratio is not at all in the ideal position. The ratio is far off from the ideal
position. It is largely depending on the term borrowings so, its long term solvency rate is
risky. The concern is to offer the return only to the fixed extent as equity dividend is
negligible due to its part in the overall capital. But during the previous year it is coming down
RKIMCS, Bangalore
48
Page
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-2009
2009-2010
Net profit
-13774.34
87.31
274.37
526.17
1295.37
6216.74
-3984.09
29615
Total assets
166354.86
146932.03
147241.37
142720.56
126520.87
155194.58
166541.87
197551.8
Ratios
-8.28%
0.06%
0.2%
0.37%
1.02%
4.005%
-2.9422
14.9910
RKIMCS, Bangalore
49
Page
Interference:
The above ratio is one of the predominant ratios to measure the profitable capacity or its
potentiality to make profit with the input of its fixed assets. It is considered as the magic eye
for the management. The concern failed to achieve the ideal ratio for seven years. Only in the
previous year it is nearer to the ideal ratio i.e., 14%
RKIMCS, Bangalore
50
Page
Amt in lakhs.
Years
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
Profit
-9297.79
-101.03
79.40
565.17
1339.56
6329.70
-3917.34
301.61
Capital employed
210088.98
195878.03
188554.44
190194.07
178615.34
184527.43
157249.73
188098.39
Ratio
-4.42
-0.052
0.042
0.3
0.75
3.43
-2.300
0.160
RKIMCS, Bangalore
51
Page
Inference:
After analysing the return on the capital employed it is found out that even though the
concern was in loss in the beginning (2002-03), it started earning profit later. As there is no
standard ratio, in this (2007-2008) earning cannot be said as ideal ratio because the rate of
earning on this criteria is only 3.43%
RKIMCS, Bangalore
52
Page
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-2009
2009-2010
Net Profit
-13774.34
87.31
274.37
526.17
1295.37
6216.74
-3984.09
2961.50
Net worth
12892.55
12892.55
12892.55
12892.55
12892.55
33108.24
58054.77
70737.82
Ratio
-106
0.677
2.128
4.08
10.05
18.77
-0.6862
0.04186
RKIMCS, Bangalore
53
Page
Inference:
This ratio is indicating the productivity of the share holders fund. In the year 2002-03, there
was a huge loss but later the loss ratio was reduced by increasing the operational efficiency
and better managerial efficiency.
RKIMCS, Bangalore
54
Page
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
SANCTIONS
33303.98
29969.76
24175.95
31620.50
42452.94
36815.00
56524.00
63149
CAPITAL
210088.98
195878.03
188554.44
190194.07
178615.34
184527.43
157249.73
188098.39
0.15852
0.153002
0.1282
0.1662
0.2377
0.19950
0.3594
0.3357
EMPLOYED
RATIOS
RKIMCS, Bangalore
55
Page
Inference:
The sanction to capital employed ratio in the year 2002-03, 2003-04 indicates that long term
capital have been utilized well it also indicates there is neither over capitalization nor under
capitalization. It serves as a guide in the proper administration of capital. In the later year
2006-07 here, the ratio between sanction and disbursement is directly correlated.2008-09 and
2009-2010 sanction to capital employed ratio is respectively 0.394 and 0.3357.
RKIMCS, Bangalore
56
Page
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
DISBURSEMENTS
26124.91
24286.44
23983.49
19985.66
31039.30
30313.00
50122.00
43439.00
SANCTION
33303.98
29969.76
24175.95
31620.50
42452.94
36815.00
56524.00
63149.00
0.9920
0.6320
0.7311
0.8233
0.8867
0.6878
RATIOS
0.7844
0.8103
RKIMCS, Bangalore
57
Page
Inference:
During the year 2002-03, 2003-04 the ratio is neither to ideal state. In the year 2004-05 it is
ideal but in latter stages it is declined but in 2007-08,2008-09 ideal stag againbut in 20092010, It declined and it shows the outflow of fund through sanction is good.
RKIMCS, Bangalore
58
Page
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
RECOVERY
46695.10
52822.52
55894.67
53420.65
50274.00
56114.00
38392.00
55494.00
SANCTION
33303.98
29969.76
24175.95
31620.50
42452.94
36815.00
56524.00
63149.00
RATIOS
1.4201
1.7625
2.312
1.6894
1.1842
1.5242
0.67921
0.87877
RKIMCS, Bangalore
59
Page
Inference:
The corporation recovery performance is excellent year by year in 2004-05 it is more
improved up to the mark. The inflow of cash in this year is too good; if NPA is neglected in
the recovery the inflow is good. In the year 2005-06 and 2006-07 again it decreased then
slowly it start increased in the year 2007-08 and decreased in the year 2008-09 but later it
increased in the year 2009-2010 due to the sanctions made.
RKIMCS, Bangalore
60
Page
YEAR
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
GROSS PROFIT
-9297.79
-101.03
79.40
564.17
1339.56
6329.70
-3917.34
301.61
PROPRIETORS FUND
12892.55
12892.55
12892.55
12892.55
12892.55
12892.55
12892.55
12892.55
RATIOS
-0.7211
-0.0078
-0.0061
0.0437
0.1039
0.4909
-0.30384
0.0233
RKIMCS, Bangalore
61
Page
RKIMCS, Bangalore
62
Page
CHAPTER 5
CHAPTER 5
FINDINGS,
FINDINGS,SUGGESTION
SUGGESTIONAND
AND
CONCLUSIONS
CONCLUSIONS
RKIMCS, Bangalore
63
Page
EFFECTIVENESS OF SANCTIONING, DISBURSEMENTS AND RECOVERY OF LOANS TO THE INDUSTRIAL ESTABLISHMENTS BY KSFC
Ratios
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
No.
1
Current ratio
0.9335
1.5638
1.2654
2.7799
2.590
1.4779
1.8525
1.2388
Debt-Equity ratio
15.3283
14.226
13.658
13.7852
12.887
4.743
2.705
2.348
-8.28
0.06
0.2
0.37
1.02
4.005
-2.9422
14.9910
-4.42
-0.052
0.042
0.3
0.75
3.43
-2.300
0.160
-106
0.677
2.128
4.08
10.05
18.77
-0.6262
0.04186
Sanction to capital
0.15852
0.153002
0.1282
0.1662
0.2377
0.19950
0.3594
0.3357
0.7844
0.8103
0.9920
0.6320
0.7311
0.8233
0.8867
0.6878
employed ratio
7
Disbursement to sanction
ratio
1.4201
1.7625
2.312
1.6894
1.1842
1.5242
0.6792
0.87877
-0.7211
-0.0078
-0.0061
0.0437
0.1039
0.4909
-0.30384
0.0233
ratio
RKIMCS, Bangalore
Page 64
Summary of Findings
During the years 2002-03, 03-04 and 04-05 KSFC failed to maintain the standard ratio
level i.e., 2:1 but later the corporation started stabilizing it.
The financial structure of the corporation is weak as the stake of the long term creditors is
too high. It is running mainly in the borrowed funds.
There is a poor return on capital employed at any point of time. It is incurring losses
during the years 2002-03, 03-04. But later there is a development but it is not up to the
mark.
Recently during the years 2006-07 and 07-08 the corporation started earning the profit to
the considerable level when compared to preceding years. Now the corporation is
reaching the ideal level.
In 2003-2004 The disbursements is reduced, the recovery was good during this year. The
outstanding receivable was decrees during the year. The NPA % has reduced, which is
desirable for the company.
The gap between the sanctioned limits of loans and the extent of utilization are
minimized.
The bank is planning properly to recover the over dues, as this is the first step towards
rehabilitation.
No loans are given without securities and securities. The securities received by the
customers are properly valued before lending any loans.
The sanctioned loans to the borrowers are disbursed to them in at least 2-3 instalments so
that they do not appeal for additional loans.
RKIMCS, Bangalore
65
Page
SUGGESTIONS:
The corporation has to take steps to cut down its cost of recovery and other related
expenditures during the operations
The long term solvency position of the corporation is under severe threat. It has to keep
construct its fixed assets to have hold on the future uncertainties.
KSFC can enlarge its financial assistance to the fast growing and high earning industries
and business establishments as it reduces the bad debts.
The short term liquidity position is excellent so, the corporation can utilize that for the
short term assistance. It improves the fund rotation and cash cycle.
The managerial efficiency is up to the required standard but the strategic level programs
and policies need to be changed slightly in such a way to increase the earning by
decreasing the bad debts and operating costs.
RKIMCS, Bangalore
66
Page
CONCLUSION:
Various ratios have been analyzed; this helps to know the current financial status of the
corporation. With this information, it is possible to predict the future of the concern in
some crucial criteria.
Karnataka State Financial Corporation has made favourable progress during the preceding
three years i.e., 2005 to 2007
The overall performance of the corporation is satisfactory as its operational efficiency and
managerial efficiency are showing the positive symbol of the growth.
To conclude, it can be stated that the corporation is bound to have very prosperous years
in future as it is keep developing and growing frequently even in the current recession
period.
RKIMCS, Bangalore
67
Page
BIBLIOGRAPHY
BIBLIOGRAPHY
RKIMCS, Bangalore
68
Page
BIBLIOGRAPHY
AUTHOR
PUBLICATION
YEAR OFPUBLISHED
EDITION
Prasanna Chandra
Financial management
Himalaya publication
2008
6th
I M Pandey
Financial management
2008
9th
B.S.Raman
Management accounting
Himalaya publication
2006
6th
Khan jain
Financial management
2005
4th
R.M.Srivastava
Financial management
Himalaya publishing
1998
2nd
policy
house
NEWS PAPERS:
The Hindu
Times of India
Deccan Herald
WEBSITES:
www.ksfc.in
www.indiastat.com
ARTICLE, REPORT:
Cost recovery
Authors:Mehta,Dinesh,Pathak, Pushpa Source: Habitat International; Dec1998
RKIMCS, Bangalore
69
Page
ANNEXURE
ANNEXURE
RKIMCS, Bangalore
70
Page
OPERATIONS AT A GLANCE
(Amt in crores)
Particulars
2004-05
2005-06
2006-07
2007-08
Since
inception
97.84
97.84
97.84
97.84
1244
1161
1326
1195
159225
242.87
316.20
424.53
368.15
8536.53
779
788
795
103595
131.79
165.00
178.53
173.05
4459.42
240.34
199.86
310.39
303.13
6829.53
Loans outstanding
1455.74
1342.28
1320.71
1264.58
Recoveries
582.17
555.06
502.74
561.14
Percentage of NPA
37%
46%
33%
24%
Income
217.95
210.50
195.71
265.21
Expenditure
217.16
204.50
182.31
201.92
Operating profit
7.76
8.56
17.32
31.66
Gross sanctions:
a. Number
b. Amount
Assistance to SSIs
a. Number
b. Amount
Disbursements
RKIMCS, Bangalore
71
875
Page
Schedule
As on
As on
As on
As on
As on
31-3-2010
31-3-2009
31-03-2008
31-03-2007
31-03-2006
Share capital
65240.09
52488.06
27467.55
12467.55
12467.55
0.00
917.69
917.69
917.69
917.69
5492.73
5566.71
5640.69
425.00
425.00
166586.60
161945.34
156142.19
165230.10
176808.83
9453.41
9292.14
18900.97
7571.77
12417.41
246772.83
230209.94
209069.08
186612.11
203036.48
4995.99
4871.07
11563.87
6979.35
6498.37
52879.37
35271072
15371.17
369.91
331.86
111629.19
107268.86
105734.63
105790.61
107049.43
6011.58
6094.41
6155.17
748.21
821.85
11710.90
17214.15
22937.62
14741.07
22953.55
57562.44
57858.59
53874.50
60091.24
60315.92
246772.83
230209.94
209069.08
186612.11
203036.48
capital
Reserve
fund
and
other
reserves
Term borrowings
current
liabilities
and
provisions
TOTAL
PROPERTIES ND ASSETS
Cash and bank balances
Investments
Loans and advances
Fixed assets
Current assets
F
G
H
I
J
TOTAL
RKIMCS, Bangalore
72
Page
Schedule
As on
As on
As on
31-03-2005
31-03-2004
31-03-2003
Share capital
12467.55
12467.55
12467.55
917.69
917.69
917.69
425.00
425.00
425.00
Term borrowings
175169.20
182492.79
196703.74
18577.85
11219.28
16518.47
207557.29
207522.31
12401.70
4655.88
3131.35
444.06
515.50
793.21
122265.73
127505.27
147942.17
Current assets
1022.14
1366.46
2199.76
11107.74
12888.92
12288.37
60315.91
60590.28
60677.59
TOTAL
227032.45
PROPERTIES ND ASSETS
TOTAL
207557.28
207522.31
227032.45
RKIMCS, Bangalore
73
Page
PARTICULARS
INCOME
Interest income
Other income
K
L
TOTAL
18214.48
2685.55
20900.03
Year ended
Year ended
31-03-2006
31-3-2009
31-03-2008
31-03-2007
16923.76
5560.90
18984.75
7536.72
16721.70
2849.70
22484.66
28621.47
18671.40
17394.87
3621.19
21016.06
EXPENDITURE
Interest and other financial
expanse.
13706.49
16384.22
13634.01
14110.66
16780.62
4152.50
4027.95
3383.73
2856.76
2581.67
Personnel expenses
880.53
889.29
808.97
827.89
758.22
1050.96
219.34
413.39
355.81
155.81
621
358.04
1875.56
0.00
0.00
186.94
148.33
76.11
80.72
174.57
0.00
2O181.77
18231.84
20450.89
1339.56
44.19
0.00
0.00
247.05
823.64
565.17
39.00
0.00
0.00
157.82
368.35
Administrative expenses
Bad debts written off
Provisions towards
Contingencies
Depreciation
TOTAL
20598.42
4374.8
26402.05
301.61
-3917.39
41.00
4.96
0.00
8.50
1.92
0.00
58.0
8.70
0.00
8.50
63.466329.7
0.00
0.00
--6031592
296.15
-57858.59
-57562.4
-3984.09
53874.50
-60091.21
6216.74
-60315.92
1295.37
526.17
57858.59
-53784.50
-60091.24
-60315.92
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008(Amt in lakhs)
RKIMCS, Bangalore
74
Page
PARTICULARS
Schedule
Year ended
Year ended
Year ended
31-03-2005
31-03-2004
31-03-2003
INCOME
Interest income
20531.47
20798.22
18104.98
Other income
1264.50
2399.55
1833.68
TOTAL
21795.97
23197.77
19938.66
17670.37
18740.43
23889.30
Personnel expenses
2584.28
2280.32
2532.31
Administrative expenses
764.85
766.49
784.40
340.80
792.35
1193.32
EXPENDITURE
0.00
0.00
0.00
Depreciation
356.28
719.21
837.12
21716.58
23298.80
29236.45
79.40
-101.03
-9297.79
0.00
0.00
0.00
17.93
0.00
0.00
0.00
0.00
0.00
177.04
188.34
-4476.55
274.37
87.31
--13774.34
0.00
0.00
0.00
0.00
0.00
0.00
- 60590.28
-60677.59
-46903.25
TOTAL
Profit before tax
Less: provision for fringe benefits
Less: provision for wealth tax
Less: provision for income tax prior yrs
Add: last years excess provision
-60315.91
RKIMCS, Bangalore
75
-60590.28
-60677.59
Page