DESERTATION

Submitted by: SEEMA GUPTA UIM (UTTARANCHAL INSTITUTE OF MANAGEMENT)

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DESERTATION
LIST OF CONTENTS Preface Executive Summary Acknowledgement Certificate Objectives of the Report Introduction to Banking Banking system in India Guide lines of R.B.I. Chronology of Banks in India Future of Banking About Standard Chartered Bank Banking Profile of SCB SCB Structure Over View Operations in IPC Operation in Internal services Risk Management System Credit Risk Management Introduction to Managing Credit Risk Introduction to Cash flow Analysis Introduction to Ratio analysis Introduction to Credit Scoring Models Introduction to Financial Services of SCB Introduction to Small & Medium Enterprises Banking of SCB Customers of SCB banking Workings on Petroleum Company & It's Analysis Workings on Metals Company & It's Analysis Workings on Motors Company & It's Analysis Conclusion Bibliography 1 2 3 4 5 6-7 8 - 10 11 - 12 13 - 16 17 13 - 15 16 17 23 - 30 31 - 57 58 - 64 65 - 66 67- 69 70 71 - 74 75 76 - 80 81 - 85 86 87 - 103 109 - 129 130 - 159 160 - 162 163

PREFACE
As a part of MBF program, a student has to peruse a project duly approved by the Director of the institute. I had privileged of undertaking the project on the study and critical analysis of the Operation Procedures of consumer banking and Analysis of financial statements and of the customers of SME banking and measuring the credit risks at Standard Chartered Bank, 10 Parliament Street, New Delhi - 110001 during the period (15th April To 15 June). It encompasses the entire operation unit in Delhi & consists of three Departments namely:-

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DESERTATION
 ITEM PROCESSING CENTRE  INTERNAL SERVICES  SME BANKING My project is divided into five Chapters and they are given as under. 1) Chapter one of this study contains, concepts of banking and importance of the subject in present scenario. 2) Chapter two deals with Introduction of Standard Chartered Bank which consists history as well as the present scenario of the bank. 3) Chapter three deals with the Banking operations of item processing centre of Slandered Chartered Bank. 4) Chapter four deals with the Banking Operations of internal services of Slandered Chartered Bank 5) Chapter five deals with Introduction of SME Banking and of Management of credit risk. 6) Chapter six deals with the analysis of Financial Statements and measuring risk 7) Chapter seven deals with the Conclusion and the Bibliography Part.

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It lists the various activities handled by IPC. thereafter I was moved to SME Banking to learn the processing's of that department. I was exposed to theoretical as well as practical learning. During my stint.DESERTATION EXECUTIVE SUMMARY I have done my summer internship in Standard Chartered Bank. My project starts with an overview of the banking sector and the profile and History of STANADRD CHARTERED. In the first section of summer training I was in operation department. I have devoted around one month in Item Processing Centre and Internal Services and around one month in SME Banking. 4 . A loss of any document can cause us lots of problem and hence we have to be very cautious about the same. The project contains the workflow of the operation unit of standard chartered.

I would like to Express my Sincerest thanks to Prof. ARUN OBEROI ( Head--IPC) . J. MR.Chaterjee. With profound sense of gratitude and regards I convey my sincere thanks to Mr. Aman Agarwal.DESERTATION ACKNOWLEDGEMENT The summer training project in STANDARD CHARTERED bank was a very wonderful experience for me.Agarwal And Prof. I got a good exposure of the industry. both in theoretical as well as practical ground.D. Prashant (SME s). Yamini Agrawal. 5 . This project is a sincere effort to have an in-depth knowledge of various "Banking operations and credit risk management of SME ". he/she is always guided and helped by someone. Mr.I would also like to express my sincerest thanks to Miss. but also helping and guiding me through out in this project. Pushpendra Raghav. Deepak Bansal and all the faculty members of IIF for guiding me with their knowledge and guidance throughout my project work and also very graceful to all my IIF colleagues for their helpful nature. Prof. No matter what one achieves in life. Miss Rachna (SMEs ) and all colleagues of standards chartered bank for not only giving me an opportunity to pursue the project. Mr.

4) To review the significance of process normalization towards saving Processing time & enhancing productivity/ Output. 3) To review the analysis of Financial Statements of Small & Medium Enterprises to minimize Credit Risk. I had covered the below-mentioned objectives: 1) To Review & Analyze the work process in operation unit in a bank. INTRODUCTION TO BANKING 6 . 2) To understand the importance of the backend operation unit. .DESERTATION OBJECTIVE OF THE PROJECT During the course of my project.

DESERTATION BANKING SYSTEM After the nationalization of Banks. A number of recon mediations of two Narasimham committees have been implemented.7 percent of the total net profit of commercial banking sector in India. The numbers of foreign banks operating in India has increased significantly and their share of total assets has also increased. Nationalized Banks are also attempting to get on the path of automation. The main challenges facing the banking sector is the deployment of funds in quality assets and the management of revenues and costs. In the year 2001 estimated foreign bank account for 14. Year 1992 was the golden period of Indian Banking system due to the scam-tainted stock market. Large proportion of household saving moved into the banking system. There is a continuous reforms and modernization is in process. there are several challenges confronting the banking sector. modernizing backroom operation in the banks and competition pave the path of growth of Indian banking. increasing adoption of technology. overall credit recovery system still exist. Foreign Banks are focusing on corporate and on the middle class consumer and providing them better service. 7 . which recorded an annual growth of 20 percent in deposit But along with the continuous growth and modernization. This competition forced older and nationalized banks to revitalize their operations. The problem of NPA (non. the near monopoly of public sector banks faced the competition by the more customer-focused private sector entrants. In spite tangible progress and the contribution of Narasimham I and Narasimham committee reports the banking sector in India suffering from systemic and structural problem. continuous mergers in the banking. Strong Banks will acquire the weaker banks.performing assets). By the mid-1990.

After this first bank. At present the banking system can be classified in following categories: 1. and bank of Madras in 1843.DESERTATION BANKING SYSTEM IN INDIA The modern banking system in India started with establishment of the first joint stock bank The General Bank of India in the year 1786. Later on more banks were nationalized. At present the numbers of nationalized banks are 20. PUBLIC SECTOR BANKS Reserve Bank of India State Bank of India and its 7 associate Banks Nationalized Banks (20 in number) Regional Rural Banks sponsored by Public sector Banks PRIVATE SECTOR BANKS Old Generation Private Banks New Generation Private Banks Foreign Banks in India Scheduled Co-operative Banks Non Scheduled Banks 2. Several Foreign banks were allowed to operate as per the guidelines of RBI. 4. CO-OPERATIVE SECTOR BANKS State Co-operative Banks Central Co-operative Banks Primary agriculture Credit Societies Land Development Banks Urban Co-operative Banks State Land Development Banks DEVELOPMENT BANKS Industrial Finance Corporation of India (IFCI) 8 . On July 19. Bank of India etc were established after independence. 3. Bank of Hindustan and Bengal Bank came to existence. These banks were independent units and called Presidency banks. These three banks were amalgamated in 1920 and new bank Imperial Bank of India was established. In the mid of 19th century East India Company established three banks The Bank of Bengal in 1809. 1969 14 major banks were nationalized. Canara Bank. Indian Bank. Several new banks as Punjab National Bank. After Independence the Imperial Bank of India was nationalized with a new name State Bank of India by passing State Bank of India act 1955. The Reserve Bank of India as a Central bank was nationalized in the year 1935 by an act the Reserve bank of India act passed in the parliament. The Bank of Bombay in 1840. Bank of Baroda.

providing more faster information. The Banking Regulations Act 1949. Guidelines of RBI The RBI issued guidelines regarding the formation and functioning of private sector banks in January 1993. These banks were more automated. The shares of banks are required to be listed on Stock Exchanges. At the end of 1990 banks were saddled with NPA (Non Performing Assets) as bad and recoverable debts touched to Rs.75. This all lead to a serious crisis of unrecoverable debt. Private Sector Banks are required to be registered as Public limited Companies in India. 9 . Government used banks to provide credit and loan to weaker sections. 000 crores. All the banks have to follow the guidelines of RBI. The guidelines are as follows: The Banks shall be governed by the provisions of The Reserve Bank of India Act 1934. Today Private Indian Banks as well as Nationalized Banks offering better services and attempting to get on to the path of comprehensive automation. and other relevant statuaries. Preference will be given to those banks whose headquarters are proposed to be located in a center which does not have headquarters of any other bank. kept flexible working hours and introduced 24 hrs ATM's.DESERTATION Industrial Development bank of India (IDBI) Industrial Credit & Investment corporation of India (ICICI) Industrial Investment Bank of India (IIBI) Small Industries Development Bank of India (SIDBI) National Bank for Agriculture & Rural Development (NABARD) Export-Import Bank of India SCICI Ltd All the types of banks have a centralized control of RBI. Foreign Banks in India started to lure customers by good services.

Promoter's contribution as determined by the RBI capital adequacy of 8% of the risk weighted assets. monopolization of economic power. efficient and low cost financial intermediation services. Non Residential Indians are allowed to have primary equity in a new banking company to the extent of 40%. computer. result in up gradation of technology in the banking sector. In the case of a foreign banking company or a finance company acting as a technical collaboration or a co-promoter. the Government has now allowed the entry of Private Banks. The banks will be free to open Branches anywhere once they satisfy the capital adequacy and prudential accounting norms. are financially viable and do not resort to unfair means like preemption and concentration of credit. Single borrower and group borrower exposure limits in force priority sector lending Export Credit Loan policy within overall policy guidelines laid down by RBI. The new bank will not be allowed to have as its Director any person who is already a Director in a banking company. 10 . The bank will be subject to prudential norms in respect of banking operations. With the recommendations of Narasimham Committee. The bank will be required to adhere` to the following: Minimum paid-up capital of Rs. The banks would be require to use the modern infrastructural facilities in office equipments. cross holding with industrial groups etc. The banks will not be allowed to have investments in subsidiaries. mutual funds and portfolio investments in other companies in excess of 20% of the bank's own paid-up capital and reserve. equity participation is restricted to 20%.DESERTATION Maximum voting rights of an individual shareholder will be limited to 1% of total voting rights. telecommunications etc. The RBI will grant approvals for entry of private sector banks provide such banks offer competitive. and other policies as laid down by RBI.1 billion. accounting policies.

1991 : : : : : The Reserve Bank of India is Nationalized and made a Central Bank in India by an act of Parliament. (Now Foreign Exchange Management Act) Currency notes in denomination of Rs. 1978 November 19. Rs. Life Insurance Companies were Nationalized. R. : Fourteen major banks were nationalized by Mrs.5 percent.10.100 crores subscribed entirely by the R. 1991 November. Government of India introduced 9 % Tax free relief bonds. 1964 July 6. 1949 September 4.75.I devalued the rupee downward by 17. 1966 July 19.1000. National Housing Bank was set up with a share capital of Rs. Government of India Launched Indira Vikas Patra.B.5000 and Rs. IDBI was set up.7. Narsimham committee on reforming the financial system submitted its 11 . The Government of India planned to seek loan from World Bank. First time the Rupee was devalued by 36.I.38 percent. The Foreign Exchange Regulation Act came into existence. one Dollar became Rs.DESERTATION CHRONOLOGY OF BANKS IN INDIA January 1.B.1969 1973 January 11.50 from Rs. Indira Gandhi the then Prime : : : : : : : Minister of India. 1986 1987 April 1988 July 1 and 3. to mobilize resources for meeting draught related expenditure. 1951 1956 July 3. 000 were withdrawn from circulation.4. M.

Khan committee on the harmonization of the role and operations of development of Financial Institutions and Banks submitted its recommendation to move towards universal banking. Oriental Bank of Commerce became the first Nationalized bank to access the August. The Nationalized banks are allowed to strengthen their capital base to contribute to their capital up to 49 percent in the capital market. Guidelines to Bank for financing of equities and investment in shares were 12 December 7. 1994 July 15. 1996 May 9. UTI Bank became the first private sector bank to start its operation. 1994 October 1995 July. 1993 March. FERA was amended and subsequently repealed and replaced by Foreign Exchange Regulation Act 1993. 1993 September. 1997. Banks having a minimum net worth of Rs. 2000 : . RBI issued guidelines on Prudential norms.H.1994 : : determined one.DESERTATION report suggesting phased reduction of SLR to 25 percent in three years and March. : Process of convertibility is started and Rupee is made convertible on the trade : : : account. Full convertibility was taken by making the Rupee convertible on the current account.24 crore capitals. 1997 : April 24. New Bank of India was merged into Punjab National Bank.500 crore and satisfying other criteria regarding capital adequacy were allowed to enter insurance business through a joint venture. 1995 and 8 percent by march 1996. The financial companies are required to apply for registration with RBI by July 8.387. Dual Exchange rate system was instituted under liberated rate management. 1998 : August 9. : Banks are allowed to fix their own interest rates on domestic term deposits with maturity of two years. 1992 January 8. 1994 October. 1993 March. The S. : Amendment in Banking Companies Act 1970 enabled the Nationalized bank to tap the capital market. 1993 January. 1994 June 13. 1992 : CRR to 10 percent in four year.H. 1997 : : capital market to raise Rs. enabling orderly transition from a managed floated regime to a market April. 2000 : November 10. : Guidelines for setting up private sector banks are issued.Khan to examine the harmonization of role and operations of development of Financial Institutions and Banks. RBI introduced Risk-Assets-Ratio for Banks as a Capital adequacy measure. : RBI issued new norms for Non Banking Finance companies to improve their financial health and viability. RBI constituted a working group under the Chairmanship of S. Banks should achieve minimum capital adequacy ratio 6 percent on their risk weighted assets and off Balance Sheet exposures by march31. : The insurance regulatory authority was set up to privatize the insurance sector.

These stipulate a minimum initial paid-up capital of Rs.DESERTATION issued.200 crore (to be raised to Rs.3000 crore within three years o commencement of business) with a April 19. FUTURE OF BANKING 13 . 2001 April 28. Banks were allowed to invest unto 5 percent of its total outstanding January 3. 2001 : domestic credit in capital market. 2001 : : minimum 40 percent as contribution from its promoter. RBI clarifies approach to universal banking for term lending and reframing institutions. Banks permitted to formulate Fixed Deposit Schemes specifically for senior citizen offering higher and fixed rate of interest. Revised guidelines for licensing of new banks in private sector were issued.

The event has been endorsed by Dr. retail and rural financial services. Aviva Life Insurance and SDG Software Technologies. ICICI Bank. insurance. Bank of Baroda.DESERTATION India Banking Summit. PSI Data Systems. ABOUT STANDARD CHARTERED BANK 14 . Opening this year's event. risk management. capital markets. SunTec. Prime Minister of India. Chief Executives from ING Vyasa Bank. wealth management. Yes Bank. and commercial banking. Bank of India and the Reserve Bank of India. community. HDFC Bank. It brings together over 150 senior executives to evaluate the latest developments in banking technology. and the Development Bank join the World Bank and Polaris Software Lab to explore new growth opportunities in retail banking. rural. Red Hat. Bank of Maharashtra. Carreker Corporation. IDBI Bank. and IT to discuss growth opportunities in retail. Manmohan Singh. an international conference examining the future of banking and financial services in India will bring together leaders in the field of banking. Kodak Investment Banking. and regulation. Bank of America. The program also features participation from Citigroup. and sponsored by Intellect Suite by Polaris. The summit will be held in Mumbai from Tuesday 7th December until Wednesday 8th December 2004 at the Renaissance Mumbai Hotel and Convention Centre.

James Wilson. Today Standard chartered is still one of the three banks which print Hong Kong's bank notes. who had emigrated to the Cape Province of South Africa and had become a successful merchant. Asia and Africa and to reap the handsome profits to be made from financing that trade. still one of the world's pre-eminent publications. Nine years later. and Malaysia and even during the siege of Making in the South Africa. the Chartered Bank is the older having been founded in 1853 following the grant of a Royal Charter from Queen Victoria. The Chartered Bank opened its first branches in 1858 in Calcutta and Mumbai. Zimbabwe. Of the two banks. Australia and China. a privilege it continued to exercise until the end of the 19 t h century. The early years Standard chartered is named after two banks that merged in 1969. John Paterson. Over the following decades both the Standard Bank and Chartered Bank printed bank notes in a variety of countries including China. Both banks were keen to capitalize on the huge expansion of the trade between Europe. in 1862. They were originally known as the Standard Bank of British South Africa and the Chartered Bank of India. The moving force behind the Chartered Bank was a Scot. In 1861the Singapore agency was upgraded to a branch which helped provide finance for the rapidly developing rubber and tin industry in Malaysia. A branch opened in Shanghai in that summer beginning Standard Chartered unbroken presence in china. have always been overwhelmingly international. South Africa. James Wilson went on to start The Economist. who made his fortune in London making hats.DESERTATION Standard chartered is the world's leading emerging markets banks headquartered in London. The following year the Chartered Bank opened a branch in Hong Kong and an agency was opened in Singapore. Standard Chartered in the 1990s 15 . the Standard Bank was founded by a group of businessmen led by another Scot. Its businesses however. In 1862 the Chartered Bank was authorized to issue bank notes in Singapore. This is the summary of the main events in the history of Standard Chartered and some of the organizations with which it merged.

United Kingdom.000 people in over 500 offices in more than 50 countries primarily in countries in the Asia Pacific Region. With this purchase Standard Chartered now offers full banking services in Columbia. Standard Chartered acquired the global finance trade business of Union Bank of Switzerland. Standard Chartered also opened a new subsidiary. 16 . In 1998 Standard Chartered concluded the purchase of a controlling interest in Banco Exterior de Los Andes (Extebandes). Africa. Standard Chartered Nigeria Limited in Lagos. Peru and Venezuela. In 1999. an Andean Region bank involved primarily in trade finance. Standard Chartered Today Today Standard Chartered is the world's leading emerging market bank employing 30. Cambodia and Iran in 1992. where it has a strong and established presence and where it sees its future growth.DESERTATION Even within this period of apparent retrenchment Standard Chartered expanded its network. South Asia. personal loans. deposit taking and wealth management services to individuals and small to medium sized enterprises. Standard Chartered is listed on both the London Stock Exchange and the stock exchange of Hong Kong and is in the top 25 FTSE100 companies. and the Americas. reopening in Vietnam in 1990. It is one of the world's most reputed international banks. mortgages. These acquisitions demonstrate Standard Chartered firm committed to the emerging markets. The new Millennium has brought with it two of the largest Acquisition in the history of bank with the purchase of Grindlays bank from the ANZ Group and the acquisition of the Chase Consumer Banking operation in Hong Kong in 2000. and agreed terms to acquire 89 percent of the share capital of Metropolitan Bank of the Lebanon. The Middle East. This acquisition makes Standard Chartered one of the leading clearer of dollar payments in the USA. acquired 75 percent of the equity of Nakornthon Bank. Standard Chartered now has an office in every country in the Asia Pacific Region with the exception of North Korea. Tanzania in 1993 and Myanmar in 1995. It serves both consumer and Wholesale banking customers. Consumer Banking provides Credit cards. With the opening of branches in Macau and Taiwan in 1983 and 1985 plus a representative office in Laos (1996). with a management team comprising 70 nationalities. by Market Capitalization. Wholesale banking provides corporate and institutional clients with services in trade finance. Thailand.

The Bank combines deep local knowledge with global capability. BANKING PROFILE OF SCB SCB has some different types of banking:- Priority Banking Personal Banking Door Step Banking Retail Services Additional Services 17 . custody. foreign exchange. Standard Chartered is well established in growth markets and aims to be the right partner for its customers. debt capital markets. and corporate finance.DESERTATION cash management. lending. The bank is trusted across its network for its standard of governance and its commitment to making a difference in the communities in which it operates.

DESERTATION SCB STRUCTURE OVERVIEW Standard Chartered Bank Consumer Banking Whole Sale Banking Service Delivery BIU Service Shared Distribut -ion Sales Service quality Metro Ops Central Ops Account Services Internal Services Item Processing Centre rvices Liabilities Operation Asset Operation Disbursement Unit Safe Custody 18 .

DESERTATION 19 .

act.I. a specified local branch of the 'State Bank of India' or its subsidiaries is used for this purpose. derives the power of setting up and managing clearing house from section 58(2) (p) of R.Serial number of the instruments. MICR band consists of .I. For the above purpose.I. where R. drawn in any bank in favor of another branch or its customers and the subsequent settlement of the amounts due between banks on account of such exchange of these instruments.Outward clearing is a process wherein each member bank of the clearing house delivers cheques for realization instruments..City drawn cheques. In case of Indian banks. .Bank code.B. I. drafts etc. drawn on the other banks. . 2) OUTWARD CLEARING: .. which is used for the settlement of inter-bank dues. INWARD CLEARING CLEARING MECHANISM MICR CLEARING: MICR Clearing concept is basically introduced by R.I. 20 . 'RESERVE BANKS OF INDIA' is the intermediary between various banks R.e. Clearing can be grouped under two heads: 1) INWARD CLEARING: Inward clearing is a process wherein each member bank receives payments. In case. all banks maintain an account with R.B. does not maintain a clearing house.B.B.I.DESERTATION CLEARING INTRODUCTION Clearing is a way adopted by the banking system to enable the exchange of negotiable instruments like cheques.B.

B. the hard copy as well as the soft copy of the input statement has been picked up. the inward clearing instruments.I.B. This program has two entries:  CR .Credit to ICCS (IPC cost center).I.Items that have been posted (90 Q). STEP 3: After merging they generate a report of the total number of items and the value.DESERTATION . The step by step procedure of clearing : STEP 1: From R.Clearing Settlement. tallies with the report. NEXT AT SINGAPORE:STEP 4: After uploading at Singapore.Branch code.B. This program simultaneously generates reports for.Transaction code. . 21 . . the input forms.Inward Clearing computer surpass. the support team runs a program which debits the customer accounts.Debit to customer. The file is uploaded to the host for processing and posing of the debits into the customer accounts. Similarly from the S. .. DR .Amount. STEP 2: I.I. the floppy and the reports has been picked up. This program pass. . clearing house.T personnel is handed over that floppy and tapes from the clearing house through ICSMERGE. in the listing of the R.

it will captioned in clearing differences.DESERTATION . .V.B.I.Rays.e. STEP 10: Now Inward Balancing takes place like below: + Total auto posted items (90Q). STEP 9: Total value of Inward Clearing received from the R.will be scanned by U. that cheque would be considered as > INR 10. + Manual posted rejected items (90V).000/.Posted items.Any unauthorized signature. XS0090V.Items that have not been posted (90 V). If any differences found.Cheque has crossing stamp of the presenting bank.Total of XS14.Have signature or not.Rejected items by items sequence numbers.will be done. STEP 7: Technical verification having checking of six different entries: . If any point is missed.Having payers name. 22 rejected items. > INR 50.B.Cheque is postdated/ outdated/ having no date.I.  XS0090Q. STEP 8: Signature Verification of those cheques having amount: . STEP 6: Three reports generated here:   XS0014 . Report will be ticked back against the cheques. . NEXT AT IPC CENTRE:STEP 5: R. .Late posting (i. are reported for finance. .000/. manual posting transaction). -items with hard hold (XS 14) The reports downloaded to local "IPC control D-ID". .

Drafts sent to total.I. Differences if any.The cheques are in lot and arranged in lots with the listing attached to it .B. + GL payments. The transaction refers to the concerned branch.B. INTER-BANK INWARD CLEARING : 1.B. Posted transaction total. Then GL has been generated. Cheques will be addlisted "presenting bank" lot-wise and verified against the total of the listing. 6. Checking and verification of entries takes place with the sheet. Verification of signature is done on CT-Dos. = Total = Total IC as per R.DESERTATION + XS14 (Returned un-posted items). Settlement . + CRS (Returned un-posted items).B. 23 R. + CDDTV. All customer cheques will be posted manually through transfer withdrawal option in CT-Dos and high-value posted journal is a check to any wrong posting by the teller. At the time of posting. Then high-value limex report has been generated. 3.I. CLEARANCES OF HIGH VALUE CHEQUES:The high-value cheques will be collected from the R. Then totaling of the following:1. 5. 2. Posting of pay-order through CT-Dos. Verification of the technical error. 4.I. Schedule. Cheques and lists are collected from R.Inward clearing of highvalue cheques are completely manual as against HICR Inward-Clearing. 2. 3. 4. Then technical verification takes place. Un-posted returned total.I. the details of the cheques have been matched to identify any wrong position. at the proper given time . Signature verification of the Bank officer.

24 . Then cheques are segregated into:* Local cheques. * Dollar cheque. * Outstation cheques. * Transfer cheque.One accepted at the counter.The cheque is not post-dated.One accepted at the cheque collection boxes. In the meanwhile. . in the Technical Verification. * High amount cheque. . * Discrepancies cheques. the NC and BC cheques are segregated.Beneficiary details are same as the account number. The instruments having high-value > 6 lacs have been reported to senior officials according to "money laundry guidelines". clerk checks that: .DESERTATION OUTWARD CLEARING: This department receives outward clearing cheques and deposit slip from the customers from branches or boxes. Clerk reviews the instruments to see if there are any doubtful deposits. # Two sets of cheques are received here: . While clearing.

-to. The duly encode cheques will be checked against the total of various deposit slips. Now the cheques are batched together separately for MICR and payable at par cheques .DESERTATION . Simultaneously MSA OCCS credit voucher will be totaled.-to.Dr.IPC cost centre .OCCS -to.Then total of each batch note down. the entries that has been passed are . 2) Non MICR clearing. Then the 'block ticket" at the end of the day are prepared through the machine for the sum of total of all the batches. To credit the GL a/c of the bank. Then the cheques are posted through CT-Dos. Then balancing takes place.Cr. and then 25 . Then all cheques encoded by outward clearing houses.Any deposit slip having any discrepancy are considered as rejected items finally returned to concerned branch. Two types of balancing are there: 1) MICR clearing.Respective GL a/c.

DESERTATION 26 .

DESERTATION O UT PUT CO NT RO L F IN A N C IA L C H E C K IN G N O N– F I N A N C IA L T R A N S A C T IO N S • C A S H TR A N S A C T IO • S C C O U N T L A S NA • A M E N D M E N TS O N • TR A N S F E R HOGA N TR A N S A C T IO N S • N • A L L T H E V O U C H E R S A M E N D M E N T S O– C T A N D IN S T R U C T IO N D O S • R A B O V E TE L L E R L IM IT S E S T R A IN T S M U S T B E A U TH O R IS E D B Y C O M P E TE N T P E R S O N . ( T S M /B M ) 27 .

DESERTATION REPO RTS • • • • • • • • • • • • • • XC 00 8 -1 XC 00 8 -2 CR 02 90 DR 02 90 DR 01 0 CR 01 1 DR 02 6 XS 0 03 1B XS 0 00 8 XS 0 01 3 CR 00 3 -T G LB S C 01 9 G LB S C 02 0 G LB S C 01 0 28 .

DESERTATION C A S H T R A N S A C T IO N S C A S H D E P O S ICT A S H W IT H D R A W L S • T O C U S T O M E R• B Y C H E Q U E ACCO UNT • THR O UG H C ASH • T O C R E D I T C A R W IT H D R A W A L S L IP D • AGA • T O P S G L A C C O U N T INS T C R E D IT C AR D • A G A INS T ID 29 .

30 . • If t h ru A – A T M a s h TM C D e p o s it E n ve l o p e w it h c o p y o f J P e n c lo s e d .DESERTATION C A S H D E P O S IT T O C M A /C • T x nR s 2 5 0 0 -0a0 n d a b o v e . • A lt e ra t io n s o n t h e d e p o s it s lip t o b e a u t h e n t ic a t e d . • A m o u n t s in w o rd s & fig u r e s t o t a lly . . / • P A N /G IR N o to b e m e n tio n e d o n c a s h d e p o s it s a b o v e 5 0 k . • P o s t in g in t o c o rr e c t a c c o u n t a n d w it h c o rr e c t a m o u n t . If n o t a v a ila b le F o rm 6 0 d u ly fille d u p t o b e a n n e x e d .

DESERTATION C A S H D E P O S IT IN C R . C A R D • A ll C a s h d e p o s its to b e c h e c ke d irre s p e c tiv e o f a m o u n t. • T a lly C re d it C a rd A /c N o w ith in p u t c a rd n o . • S ta te m e n t C o u n te rf o il a tta c h e d 31 .

32 .DESERTATION C AS H D E P O S IT T O P S G L •A ll Tra ns a c tio ns irre s pe c tiv e o f a mo u nt. •A m o u nt a n d Ac c o u nt N u m be r to be ta llie d.

• C o r r e c t A /c N o . R -0/ T . V e r i fi c a tio n of ci fo rT xn > = s. = <R s 5 0 0 0 . R s. . 5 0 0 0 a n d xn . N 33 .DESERTATION C A S H W IT H D R A W A L B Y CHEQUE • T xnR s 5 0 0 0 a n d a b o ve . 5 0 0 0 -0i 0 n o t d o n e b y f/ T S M /B M • T xn > = s 5 0 0 0 -0U /V S c a n . A m o u n t a n d C h e q u eu m b e r i n p u t. 0/ p e r fo rm e d . • D a te C fh e q u e l i d o Va • B e a r e r In s tr u m e n t • A l te r a ti o n s a u th e n ti ca te d • R u b b e r S ta m p – i n dn ivin u a l fo r o d a c c o u n ts • C a s h R e ce i p t A c k n o w l e d g e m e n t o n r e ve r s ceh o q u e ef . R . -0/ • R e p e r fo rm a n S eg .a0n/ d fo rxn> = . 0 T .

• A /c N o . C h e q u e on H a n d W r itte n /S ta m p e d • N o t Is s u e d to N o n – In d iv id u a l A /c 34 . C u s to m e r Id e n tif ie d b y b r a n c h s ta ff d u ly s ig n e d o n th e r e v e r s e ..DESERTATION C a s h W it h d r a w a l S lip /C o u n t e r C heque • R e q u is itio n S lip /L e tte r h e ld • ID D o c u m e n ts o b ta in e d .

• C h e c k th e c o r re c t a m o u n t p o s te d . • C a s h A d v a n c e S lip p u t th ru a m a n u a l im p rin te r/P O S 35 .DESERTATION C r e d i t C a r d A d v a n c e S l ip • A ll T ra n s a c tio n s irre s p e c tiv e o f a m o u n t.

DESERTATION C a s h P a y m e n t A g a in s t I D •R e c e ip t A c k n o w le d g e d b y ID H o ld e r •S w ift/IT T M a sa u theo r is b y P a y m e n ts sag ed •ID D o c u m e n ts o b ta in e d •A m o u n t a s p e r in s tr u c tio n 36 .

G B P a n d E U R O P A F ( 2 c o p ie s ) m u s t b e a tta c h ed to th e v o u c h ers F o r m –A4 a n d F E M A d e c la r a tio n m u s t b e o b ta in e d ddu/s taf illepde d p a n d s ig n e ly m u E n s u r e th a t F C Y le g is p o s te d N e c e s s a ry d o c u m o p y of P a s s p or t/C D F / C o p y o f V is a /C o py of A ir T r a v e l – C e n ts T ic k e t/ P u r p o s e of T r av e l m u s t b e o b ta in e d F o r m -2 ( 2 c o p ie s ) a n d d o c u m e n ts a s a b o v e m u s t boeu c h ers a te d f ro m th e v A s e p ar a n d b e h a n d e d ov e r to th e pe rs o n d o in g r ecso nc ilia tio n o f F C Y A / c E n s u r e r e c e ip t of F C Y ac k n ow le d g e d by c m & is n c as h in e n t c er tif ic a t e e s u e d m c as e o f F C Y T C /C u r r e n c y pu rc h a s e . t 1 0 E C P a n d 1 0 S M G . 37 . A ny b r a n c h c a n d e a l in F C Y h ow ev e r th e F C Yosac c ou nth c een o n ly b e p te d in t r a C a t A b r a nc 1 7Pss. –he In m o s t o f th e c as e s a ll th e b r a n c h e s w h ic p or s tc the eL/s aYle leing F C Y h e e iv C in th e ir b r a nc h a n d f o r F C Y le g th e y s e n d m a s s a g e to 1 0 E C P b r a n c h .DESERTATION F o re ig n C u rre n c y T ra n s a c tio n U S D /G B P /E U R O • • • • • • • • • • • • • F C Y C a s h D e p o s it T C D e p o s it F C Y C a s h W ith d r aw a l T C S a le C u rre n cy U S D.

DESERTATION T r a n s f e r T r a n s a c t io n s T yp e s R emember • A / c t o A / c T ra n syf e r –B • If A / c t o T rfdco n e o n L e t t e r A/ C h e q /u L e t t e r e t c . At ra n s a c t io n s m u s t b e ll • S a la ry T r a n s f e r checked • C h a rg e s R e v e rs a l • R e v e rs a l o f C h a rg e s fr o m • D D / P O Is s u a n c e w a i v e r A / c (P S G L ) c a n o n ly • T D Is s u a n c e (Q A O )/ T D b ea u t h o risbey d B M . A ll B re a k s t ra n s a c t io n s m u s t b e c h e c k e d • Q u ic k A / c O p e n in g F o rm m u s t b e s e p a ra t e d f ro m t h e v o u c h e rs a ft e r c h e c k in g a n d s e n t to A C S 38 . e – It m u s t abuet h o risbe d t h e y B M .

0 / b o v es. 5 0 0 0 0 / R fo r > a n d =R<s 5 0 0 0 -.u e e o n t h e a ry n a m d ) R u b b e r S ta m p p la c e d o n s i g n . 0A R f a u t h o ri sbeyd T S M /B M C h e c k fo r a ) D a teCohf e q u e li d va b ) A lte ra ti o n s a u t h e n ti c a te d c ) A /c T i t le m a tc h e s w i t h b e n e fi c i c h e q .n dni vci a s e l o f n o n -i i d u a A /c e ) N D S S ta m a udt u oyri s e d p hl f)C h e q u e c o r re c t l y i n p u t no 39 .DESERTATION A /c to A /c T r a n C feer qbuye sh • T x n =R s 5 0 0 0 0 / > . • S i g n a tu re– P e r fo rm a n cTex n =R s. 5 0 0 0 -0i 0 /n o t .

• A llo w e d o n ly if t h e r e is c o m m o n A / c h o ld e r b e t w e e n D e b it & C r e d it A / c h o ld e r .DESERTATION A / c t o A /r. • N o t h ir d P a r t y t r a n s f e r s a llo w e d o n le t t e r . bu by • D ia r y n o t e in d ic a t in g c a ll b a c k t o c m . • A ll t r a n s a c t io n s a r e r e q u ir e d t o b e che cke d.cf b y L e tt e r T • M u s t a e t h o r is e dt h e T S M / B M . 40 .

41 .DESERTATION D D / P O Is s u a n c e • • • • T x n a b o vRe s 5 0 0 0 to/ b e c h e c k e d . -0 A lte r a tio n s a u th e n tic a te d D D /P O n u m b e r a n d a /c n o lo a d e d c o r r e c tly R e c e ip t a c k n o w le d g eadu b yo c m e o r th ris d re p r e s e n ta tiv e • If c m h a s p r o vcid e q uae a in s t is s u a n c e o f h d ag D D /P O it m u s t b e c a n c e lle d b y d e b it o r c ro s s e d f o r c a n c e lla tio n a f te r c h e c k in g fo r s to p p a y m e n ts b y th e T S M . s .

DESERTATION

A c c o u n t C lo s u r e
DD A CD A
• A ll tr a n s a c t io n s m u s t b e c h e c k er d .s h R s. 5 0 0 0 0 / • T h e o ld -. • S ig ne p e r f o r m a onrc > R s. r f e= • S ig r e p e r fo rm a n ce e q u i r e d . n not r 5 0 0 0- 0 / = < 5 0 0-0a 0n0d/ f o r & • A l te r a ti o n s a u th e n ti ca te d . h ig h e r a m t s aif tnhoot r isbey d u • C r e d i t to A /c o f s a m e a c c o u n t TS M/B M. • C h e q u e o k / D e b it C a r d ta k e nh o l d e r . Bo b a c k a n d d e s tr o y e d . ( p r o p •e r N o th ir d p a r ty c r e d i ts a l l o w e d . r e m a r k s g iv e n ) • N o c a s h p a ym e n ts i f th e • S ig n a t u r e s o f a l l a c c o u n t h o ldeel rasti. o n s h ip a m o u n t ( a c r o s s a l l r s. • If c o m p a n y a c c o u n t B o a r d C D A a c c o u n ts ) eRxc e e d s R e s o lu t io n a t ta c h e d . B R m u s t0 b0e0- 0n/ c l u s i ve o f i n te r e s t 2 i s ig n e d abt y a twt o u th o r is e d le s a a c c r u e d . T h is is IT r e q u i r e m e n t r e p r e s e n ta t iv e w h o a r e n o t a n d m u s t b e a d h e r e d to s tr ic tly. s ig n a t o r y t o c lo s u r e l e tte r . • O n ly a r tia H U F a n d P r o p r ie t o r in K n P r o p r i e t o r s h i p f ir m c a n s ig n th e c lo s u r e i n s t r u c tio n n o t th e P O A h o ld e r. • N o T h ir d p a r ty p a y o u t b e m a d e f o r proc ee ds .

42

DESERTATION

N o n F in a n c ia l T ra n s a c tio n s
• • • • • • I s s u a n c e o fCO T C B e o k . he qu o S to p P a y m e n ts . P la c e m e n t / r e m o v a l o f H o ld s / L ie n s . A m e n d m e n t s in D e b it / A T M C a r d S t a t u s . A m e n d m e n t s a t id / a c c o u n t le v e l. N e w A c c o u n t s e tu p

43

DESERTATION

A c c o u n t C lo s u r e
DD A CD A
• A ll tr a n s a c t io n s m u s t b e c h e c k er d .s h R s. 5 0 0 0 0 / • T h e o ld -. • S ig ne p e r f o r m a onrc > R s. r f e= • S ig r e p e r fo rm a n ce e q u i r e d . n not r 5 0 0 0- 0 / = < 5 0 0-0a 0n0d/ f o r & • A l te r a ti o n s a u th e n ti ca te d . h ig h e r a m t s aif tnhoot r isbey d u • C r e d i t to A /c o f s a m e a c c o u n t TS M/B M. • C h e q u e o k / D e b it C a r d ta k e nh o l d e r . Bo b a c k a n d d e s tr o y e d . ( p r o p •e r N o th ir d p a r ty c r e d i ts a l l o w e d . r e m a r k s g iv e n ) • N o c a s h p a ym e n ts i f th e • S ig n a t u r e s o f a l l a c c o u n t h o ldeel rasti. o n s h ip a m o u n t ( a c r o s s a l l r s. • If c o m p a n y a c c o u n t B o a r d C D A a c c o u n ts ) eRxc e e d s R e s o lu t io n a t ta c h e d . B R m u s t0 b0e0- 0n/ c l u s i ve o f i n te r e s t 2 i s ig n e d abt y a twt o u th o r is e d le s a a c c r u e d . T h is is IT r e q u i r e m e n t r e p r e s e n ta t iv e w h o a r e n o t a n d m u s t b e a d h e r e d to s tr ic tly. s ig n a t o r y t o c lo s u r e l e tte r . • O n ly a r tia H U F a n d P r o p r ie t o r in K n P r o p r i e t o r s h i p f ir m c a n s ig n th e c lo s u r e i n s t r u c tio n n o t th e P O A h o ld e r. • N o T h ir d p a r ty p a y o u t b e m a d e f o r proc ee ds .

44

• M u s t b e t h o r isbeyd T S M / B M . • R e q u is itio n s lip / c u s t o m e r le t te r o b ta in e d . au 45 .DESERTATION O T C h e q u eo o k s Is s u a n c e C B • Is s u e d o n ly t o in d iv id u a l a c c o u n t s .

DESERTATION S to p P a y m e n t s • • • • A ll tr a n s a c tio n s to b e c h e c k e d . D a te & T im e o f re c e ip t m e n tio n e d o n th e in s tru c tio n . S ig n a tu re s V e rif ie d . N • C h a r g e s ta k e n a n d if w a iv e d th e n d u ly a u th o r is e d . • C h e q u eo a n d A /c n o c o r r e c tly lo a d e d . • T h e g a p b e tw e e n r e c e ip t a n d p o s tin g tim e s h o u ld b e r e a s o n a b le . C u s to m e r L e tte r . 46 .

• D e ta i l s o f h o l d a r e m e n ti o n e d o n th e re v e r s e o f h o l d v o u c h e r s . • A c c o u n t O p e n i n g F o r m fo r L A S . 47 .DESERTATION O th e r N o n F inTaxnncsia l • A l l t r a n s a c ti o n s to b e c h e c k e d . r e m o v a l o f H o l d 6 0 / 2 0 e tc . • C u s to m e r I D d o c s o b ta i n e d w h e–rae sv e n a a s eli coaf b le i r cpp D e b i t/ A T M c a r d a c ti v a t i o n . • C u s to m e r I n s tr u c ti o n / D i aa ru th o rte/seodp lyy o f o r d e r s y n i cd u o f r e g u l a to r y b o d i e s . l 2 r bs e u • A p p r o p r i a te H o l d p l a c e d . • I f n o t i n i ti a te d b y c m a si g n – o ff e c i fth e l ByMi n c a s e S p b y ic a l o f c h a n g e o f A R M c o d e a p p ro v a l b y re g io n a l he a d / A R M c o d e o w n e r a tta c h e d . • P l a c e m e n t/ R e m o v a l o f H o adu th0o mi sey dtBbM .

txn le 5 th a n • In c a s e th e ID c o u ld n o t b e o b ta ian u th o r dbiaydth n oB M th a t e d a is e ry e te th e ID d o c s w o u ld b e o b ta in e d i n d u e c o u rs vo m cuhset rs e a tta c h e d to e u b. U n c la im e d a c c o u n t s • U n c l a im e d A /c c a n o n ly b e c l o s e d a n d a fr e sfte ra c c o u n t i s o p e n e d a h o b ta in i n g K Y C d o cs . 48 .0 0 .DESERTATION T r a n s a c tio n o n D o r m a n t A /c & U n c la im e d A /c • ID a n d A d d r e s s o f th e c u s to m e r to b e ve r i fi e d in s u c h c a s e s . • B M c a n w a i ve o b ta i n in g ID d o cs . • M a i l to A C S fo r d e fe r ra l fo r o b ta in in g ID d oto th M u s t b e a tta c h e d cs . T h e s a m e m u s t b e c le a r l y u c tioonta te d o n th e in s tr ann . • H o l d 6 0 m u s t b e m a r k e d in c a s e o f d e fe r r a l. • ID p r o o f n o t r e q u i re d if th e c u s to m e r is m n sin ta ti n ig g( Sa/B o th e r tra a a c in n n o r C /A ) a c c o u n t ( s ) u n d e r th e s a m e ID A N D l o s e da c c o u n t is b e in g c th w h e r e th ea m o u n t in vo lve d i s R ss s0 0 . i f h e /s h c u is to m tis rfie a sth a t th e e s sa e hd b e e n id e n tifie d . • S ig n a tu re s m u s t b e ve r ifie d b y T S M /B M . c o u l d n o t b e o b r p a yo u t c a n b e m a d e b y P O o n ly a n d th e P O m u s t b e s e n t th ru c o u r ie r /r e g is te re d p o s t a t th e a d d r e s s r e co r d e d i n o u r s ys te m . • C o p ie s o f ID d o c s o f a ll a c c ou uth o h o eigde rs to rie s ta k e n a n d a n t riss l d n a / a n n o ta te d w i th “ O r i g in a l S e e n ” b y th e T S M / M S S /B M . • In c a s e o f D o rm a n t A /c c lo s u r e w h e r e th e ID tapinoe od f. e vo u c h e r s .

• I f n o t i n i ti a te d b y c m a s i g n– S ff ebcyi fit c a l lB Mi n c a se op he y o f c h a n g e o f A R M c o d e a p p ro v a l b y re g io n a l he a d / A R M c o d e o w n e r a tta c h e d . • C u s to m e r I D d o c s o b ta i n e d w h e a es v ienr ca apspeli c a b le –r of D e b i t / A T M c a r d a c ti v a ti o n . • A c c o u n t O p e n i n g F o r m fo r L A S .DESERTATION O th e r N o n F inTaxnn cs i a l • A l l tr a n s a c ti o n s to b e c h e c k e d . r e m o v a l o f H o l d 6 0 / 2 0 e tc . 49 . • P l a c e m e n t/ R e m o v a l o f H oal d t2 0o rm suysdtB b e. • C u s to m e r I n s tr u c ti o n / D i a r ythnoorti/es eo du yy o f o r d e r s u c dp l o f r e g u l a to r y b o d i e s . • D e t a i l s o f h o l d a r e m e n ti o n e d o n th e re v e r s e o f h o l d v o u c h e r s . u h i be M • A p p r o p r i a te H o l d p l a c e d .

who fails to constraints to an organization should be relieved. . At present Sama Shodhan processed only local cheques not outstation cheques.' can be saved and again it will directly minimize the cost and maximize the profit. But there are limitations with this package. Standard Chartered as a model has a well-defined banking structure and gives satisfactory business to its clients. its family would definitely see a better future.Sama Shodhan should be upgraded to enhance the efficiency and support outstation cheques also. If Laser-printer will be introduced here. then the bank may have to face a bigger problem. As far as my views are concerned.  Expenditure Analysis : Absenting is a disease to a flourishing company hence such employees. So any queries occurs. It runs over 88 branches all over the country. then we have to search the overall records processed cheques manually to answer and if any cheques are misplaced or damaged intentionally or unintentionally. It will double the efficiency of this firm as well as across all branches. It cannot provide further details of the cheques which had been processed. so that it works as a safe-guard for future problems. The software which is being used here directly or indirectly hampering the work-efficiency and minimizes profit. at least '10 hrs. Cost minimization and profit maximization is the main and common aim for any organization. 50 .Automation of simple jobs: Technology Up gradation. each day. They use to get their ledger through ink-jet. It has created a name for itself in the banking sector. It should be replaced by advanced software as soon as possible.  Solution : Shama Shodhan can be advanced by having an option for outstation cheques.Use of Dot-Matrix printer should be replaced by "Laser Printer ". It simply reduces the efficiency of this organization. The key areas of concern are: . It works a safe guard for coming problems if any and works as a cousin for this bank. . Moreover I have observed some drawbacks in the short span in this department. As we know. I strongly believe that if these are done away with in the Standard Chartered.the main problem area of this department is the outdated software package being used across all the branches for business. It will save "30-45 minutes" of each employee employed as a clerk here. Out-station cheques are processed through CT-Dos.DESERTATION SUGGESTIONS Standard Chartered Bank has over the years maintained its services and relationship.

In my point of view. Here. the above points of considered favorably will definitely prove as leverages to this organization and will be 100% helpful in the growth of this firm. they are doing should be slightly change. So my opinion is. 1 or 2 employees remain absent throughout the week but the operation is going on without any hindrances. In clearance department what I felt is the job of a clerk need much concentration because of a single mistake can resulted into financial loss may be Lakhs or Crores.  Proper Utilization of Resources : For any firm. But they are actually working in a disturbed environment they are not able to pay much attention and concentration as required and lastly differences occurs which takes a long time to solve. It definitely increase their efficiency to work. Then only the firm will properly utilize its resources and proper management can only prove economic for this. So an enthusiastic environment should provide there so that they simply enjoy their work. It effects the growth of the firm adversely.  Employees Satisfaction level : As far as my views are concerned. as I noticed in 2 weeks that each day. Manpower is the biggest resources.  Securitisation of risk : Securitisation of risk should be there which actually lacking here. manpower is more than enough but the way. 51 . Clerks should be separated by small cabins then only they can pay much concentration and finally it will helpful for bank as it minimizes the chances of risk and financial loss and can some time also. the no.DESERTATION  Excess of employees in department : In my view. the employees satisfaction is one of the most important factor and what I found here is that Employees are not working with enthusiasm but working under pressure of work load. of employees are more than required. Work-distribution and time management should be modified.

DESERTATION 52 .

DESERTATION ... credit interest rate. commodity price. equity price. I RISK MANAGEMENT SYSTEM RBI Guidelines 1) Introduction Banks in process of financial intermediation are conforme3ed with various kinds of financial and non financial risks viz. foreign exchange rate. At organizational level. monitoring & controlling risks Well laid out procedures . regulatory. 53 . The board should set a risk limits by assessing the bank’s risk & risk bearing capacity. over all risk management should be assigned to an independent risk management committee or executive committee of the top executives that reports to the boards of director. liquidity. effective control & comprehensive risk reporting framework • Separate risk management framework • 2) Periodical review and evaluation Risk management structure • A major issue in establishing an appropriate risk management organization structure is choosing between a centralized & decentralized structure. legal. reputation. These risks are highly interdependent and events one area of risks can have ramification of risks for a range of other risks categories. operational. The broad parameters of risks management system should encompass: • • • • • • Organizational structure Comprehensive risk management approach Risk management policies Guidelines & other parameters Strong MIS for controlling . etc.

The proposals should also be subjected to detail appraisal and rating framework those factors in financial and non-financial parameters of issuers. etc.e. as any loan proposals.DESERTATION 3) Credit Risk The management of credit risk should receive the top management’s attention and the process should encompass: • • Measurement of risk through credit rating Quantifying the risks through estimating expected loan losses i. 54 . sensitivity to external developments. in addition to market risk. The proposals for investments should also be subjected to the same degree of credit risk analysis. is inherent in investment banking. the amount of loan losses that bank would experience over a chosen time • • Risk pricing on a scientific basis Management Instruments of credit risk management • Credit approving authority • • • • • 4) Prudential limit Risk Rating Risk Pricing Controlling the risk through effective Loan Review Mechanism and Portfolio Portfolio Management Loan Review Mechanism Credit risk & investment banking Significant magnitude of credit risk.

procedures. past experience. foreign exchange rate. management quality. medium risk and low risk. equity price and commodity price has become relatively more important. etc as a part of overall credit to individual customer relationship and subject to the same credit appraisal. The policies should 55 . options. limits and monitoring procedures. etc. operating efficiency. prudential risk limits. Market risk takes the form of • • • • Liquidity Risk Interest rate Risk Foreign exchange rate(forex) risk Commodity Price Risk and • Equity Price Risk 8) Market Risk Management The Boards should clearly articulate market risk management policies. 7) Market Risk Market risk arising from adverse changes in market variables. 6) Inter-bank Exposure and Country Risk A suitable framework should be evolved to provide a centralized overview on the aggregate exposure on other banks. such as interest rate. swaps.DESERTATION 5) Credit Risk in Off-balance Sheet Exposure Banks should evolve adequate framework for managing their exposure in off-balance sheet products like forex forward contracts. review mechanisms and reporting and auditing systems. Banks should classify their off-balance sheet into three broad categories-full risk. Bank-wise exposure limits could be set on the basis of assessment of financial performance.

DESERTATION address the bank’s exposure on a consolidated basis and clearly articulate the risk measurement systems that capture all material sources risk and assess the effects on the bank. and complex support systems. Deregulation of interest rates has. middle. (b) Clear-Cut and well-defined division of responsibility between front. exposed them to the adverse impact of interest rate risk. either spot or forward. high degree of structural changes. The net Interest Income (NII) or net Interest Margin (NIM) of banks is dependent on the movement of interest rates. 11) Capital for market Risk The base Committee on banking supervision (BCBS) had issued comprehensive guidelines to provide an explicit capital cushion for the prices risk to which banks are exposed. 9) Interest Rate Risk (IRR) The management of Interest rate Risk should be one of the critical components of market risk management in banks.open positions and gaps. in an individual foreign currency. and back offices. 10) Foreign Exchange (Forex) Risk Forex risk is the risk that a bank may suffer losses as a result of adverse exchange rate movements during a period in which it has an open position. 12) Operational risk Managing operational risk is becoming an important feature of sound risk management practices in modern financial market in the wake of phenomenal increase in the volume of transactions. 56 . however. or a combination of the two. particularly those arising from their trading activities. Forex risk Management Measures (a) Set appropriate limits.

Such banks take into account both qualitative and quantitative factors to access economic capital. it will take 25 years to recoup 100% of the loss. valuable time and efforts are wasted. if the bank net interest margin is 4% annually. and it is credit officer’s responsibility to peruse that business by making sound credit decisions.. In turn if the bank is confident of repayment based of additional findings. not including related overheads costs. the analyst must always evaluate repayment potential from all alternative sources. the appropriate pricing consideration are issued & monitored. Thus the core of credit analysis is evaluating the borrower's ability to repay debt. This requires more judgments than technical skills.DESERTATION 13) Risk Aggregation and capital Allocation Most of internally active banks have developed internal processes and techniques to assess and evaluate their own capital needs in the light of their risk profiles and business plans. unless credit analysis standards are clearly defined. not to mention the bottom line consequences of reaching the wrong deci8sion. Since lenders are in business of taking risks. Reviewing financial statement may yield preliminary findings. why banks are are so concerned about losing money / briefly stated. The loan officer must understand the information. Further. not merely crunch the numbers. 57 . If a loan officer determines that the borrowing firms expectations exceeds its repayments ability. does this mean all possible repayments sources are exhausted? Since the key is to increase profitability through sound credit judgment. CREDIT RISK MANAGEMENT Credit risk management today Banks are in the business of making loans. the analyst must always evaluate repayment judgment. Other wise the loan will probably be lost to a better prepared competitor. but these fail to assess the numerous variables that must be weighed. The net effect is future profits of the banks due to a meticulous credit investigation. a bank can never price an individual loan at a loss even if the probability of default decreases. For ex.

avg. On way to do this is to assign a risk rating (above average. Further we must understand how much information is enough.. & below avg. To calculate risks. In other words.DESERTATION Critical risk assumption plays a critical role in finalizing lending decision. comprehensive information is needed.) to all facts. identifying what is and is not significant is critical to reliable credit judgment. The important components of this model should be:1) Management 2) Management / Administration 3) Bank Relationship 4) Financial Reporting 5) Intention (purpose) Components of credit risk i) ii) iii) Personal or consumer risks Corporate or company risks Sovereign or country risks 58 .’ Weights of importance will then assigned to details regardless of a positive or a negative rating.

Gross debt service ratios are the customer’s total annual accommodations expenses (mortgage. and large commercial and industrial lending. maybe. the loan officer can give an immediate answer. A credit-scoring system is a quantities model that uses observed characteristics of the applicant to calculate a “score” representing the applicant’s probability of default (versus repayment). It also provides insights into the credit risk evaluation process from the perspective of a credit officer evaluating a loan application. etc…) divide by annual gross income. A maybe occurs in borderline cases or when the loan officer is uncertain of the classification of certain input information. condominium. FIs often combine the various factors affecting the ability and willingness to make loan repayments into a single credit score. Total Debt ratios is the customer‘s total annual accommodation expenses plus all other debt service payments divided by annual gross income. real estate taxes. Credit scoring systems are developed by using borrower characteristics (e. lease. If the FI uses a scoring system. mid-market commercial and industrial lending..and the reasons for that answer. management fees. income. Risk State Lending Because of the importance of residential mortgages to banks. consumer and small business lending. credit unions. savings institutions. The credit scoring model weights each characteristics to identify a boundary number (score) or range such that if past loan customer had an overall credit score (derived from the weighted characteristics) greater than the boundary number they defaulted on the loan. residential mortgage loan applications are among the most standardized of all credit applications. or no.yes.DESERTATION Managing Credit Risk This section describes credit analysis for real estate lending. loan repayment history) for some past period. A loan customer listing the following information on the loan application receives the following points: 59 . Two ratios are very useful in determining a customer’s ability to maintain mortgage payments: the GDS (gross debt service) and the TDS (total debt service) ratios. and insurance companies. A credit scoring system allows an FI to reduce the ambiguity and turnaround time and increases the Transparency of the credit approval process. age.g.

however. Thus. Credit analysis of a mid-market corporate customer differ from that of a small business because. the TDS score. they typically have sales revenues from $5 million to $ 100 million a year. Relations with FI IV. Major credit cards V. often without the borrower ever meeting the loan officer. Individual consumer loans are scored like mortgage. Credit History X.DESERTATION I. Annual gross income II. Although definition of mid-market corporate varies. Mid-market Commercial and Industrial Lending In recent years. and so on. Residence VII. But do not have ready access to deep and liquid capital markets. no mortgage consumer loans focus on the individual ability to repay. Length of Residence VIII. credit-scoring models for such loans would put more weight on personal characteristics such as annual gross income. Five C’s of credit: 60 . Unlike mortgage loan for which the focus is on the property. TDS III. Total score XI. its main focus is on the business itself. mid-market commercial and industrial lending has offered some of the most profitable opportunities for credit granting Fis. while still accessing the character of the firms management. Consumer (Individual) and small business Lending The techniques used for mortgage loan credit analysis are very similar to those applied to individual and small business loans. Job Stability IX. have a recognizable corporate structure (unlike many small businesses). Age VI.

increase in a liability. When evaluating the cash flow statement. Cash receipts include any transaction that result in an increase in cash assets (i. an applicant specific level of credit substantiates these business needs by presenting historical audited financial statements and projections of future needs. Although stand-alone accounting ratios are used for determining the size of the credit facility. and capital (sometimes referred to as the five Cs of credit).  Measures of capacity and conditions  Measures of character and condition  Measures of conditions  Measures of capital and Collateral. the account officer must understand the customer character. the analyst may find relative ratio more informative when determining how the applicants business is changing over time. investing. and increase in an equity account). Historical financial statement analysis can be useful in determining whether cash floe and profit projections are plausible on the basis of history of the applicant and in highlighting the applicant’s risks. Cash flow Analysis FI's require corporate loan applicants to provide cash flow information.. which provides the FIs with relevant information about the applicant's cash receipts and disbursements that are compared with the principal and interest payments on the loan. decrease in a non cash asset.DESERTATION To analyze the loan applicant's credit risk. The cash flow statement reconciles changes in the cash account over some period according to three cash flow activities: operating. Ratio Analysis In addition to cash flow information. FI's ant to see that the loan applicant can pay back the loan with cash flows produced from the applicants operations. Cash Disbursements include any transactions that result in a decrease in cash assets. and financial activities. Hundreds of ratios could be calculated 61 . Financial ratios are useful when performing financial statement analysis on a mid-market corporate applicant. collateral.e. receipt of income. capacity.

Liquidity ratios Current ratio = Current assets Current Liabilities Quick ratio (acid-test ratio) = Cash + Cash Equivalents + Receivables Current liabilities Liquidity provides the defensive cash and near-cash resources for firms to meet claims for payment. Sales Sales Sales Inventory X 365 Accounts receivables X 365 62 .DESERTATION from any set of accounting statements. The following are a few that most credit analysts find useful. Assets Management ratios Number of days sales in receivables = Credit sales Number of days in inventory = Cost of goods sold Sales to working Capital = Working capital Sales to fixed assets = Fixed Assets Sales to total Assets = Total assets The asset management ratio gives the account officer clues to how well applicant uses its assets relative to its past performance and the performance of the industry. Liquidity ratios express the variability of liquid resources relative to potential claims.

Debt solvency ratio give the account manager an idea of the extent to which the applicant finances its assets with debt verses equity.DESERTATION Debt & Solvency Ratio Debt asset ratio= Short Term Libilities+Long Term liabilities Total Assets Fixed Charge Coverage Ratio=Earning Available To meet Fixed Charges Fixed Charges Cash Flow to Debt Ratio= Debt Where EBIT represents Earning before income &tax. EBIT + Depreciation Profitability Ratio Gross margin = Sales Operating Profit Margin = Sales Return on Assets = Return on Equity = Total Equity Dividend Payout = EAT 63 Dividend EAT EAT Operating Profit Gross profit Average Total Assets .

a statistical technique quantifies or scores the default risks probability or default risk classification. the higher is the profitability of the firm. Financial Services of SCB 64 . Credit Scoring Models Credit scoring models use data on observed borrower characteristics either to calculate profitability of default or to sort borrowers into different default risks classes selecting & combining different borrowers economic & financials Characteristics. the FI manager must identify objective economy & financial measures of risks for any particular class of borrower. it also has the limitations that require care and judgments in its use. For all Dividend payout Ratios. or net income. an FI manager may be able to: • Numerically Establish which factor is important in explaining default risks • Evaluate the relative degree or importance of these factors • • • Improve the pricing of default risks Screen high risk loan applicants Calculate any reserve needed to me expected future To employ credit scoring models in this manner.For these companies it is difficult to construct a meaningful set of industry averages. the higher the value of the ratio.DESERTATION Where EAT represents earning after tax. Cautions with Ratio Analysis While ratio analysis provides useful information about loan applicant's financial conditions. For example many firms operate in more than one industry . After data are identified.

The constitution of the target is:• Individual comprising of Professional or Business • • • Proprietorship or HUF Partnership firm & Private Ltd. Companies BFS facilities generally structured as multiple products or single products facility depending upon customer requirement. o Limit set-up in various TP systems o Revaluation of security periodically and monitoring the exposure levels across various credit lines. Where the credit line extends to the customer is for multiple products and / or against multiple securities. specifying any preconditions. Small & medium enterprises (SME) engaged in services or manufacturing by offerings a range or multiple product proposition to the target segment.DESERTATION Business Financial address the complete financial needs of Professionals. Assest/SCB/2003/12 and Asset/SCB/2003/15. This involves documenting the limits available against various credit lines. the operational activities are centralized at CLC. Professional Firms. specifying the security information. The process of Overdrafts Facility against single products & loans backed by property of INR 5M or less are decentralized. 1  Sourcing BFS facilities are relationship based and the sourcing will be done By the business financial manager )BFM) in each cities The BFM will conduct interview or do a site visit At the customer trading address/ production site to understand and obtain basic information on the  65 . Chennai for the following purposes: o Preparing and documenting the banking Arrangement letter (LOBA) as per the approved terms of the credit approval. Extend and type of security required. Companies Public Ltd. o Evaluate the eligible operating credit limits based on valuation of securities and lodgment of the same. o Review of documentation received after acceptance of facility received from customer based on the condition set out for the facility. and has been detailed in Asset Circular Nos.

 The application Cum AOF will be obtained at the time of Customer requesting the credit facility even though the customer may have an existing current account with SCB. business operation  Purpose : New application/ renewal/ increase/structure/review/Amount Pricing/Risk Rating/ Total Credit facilities  Facilities description: Amount. total credit facilities. pricing. a detailed limit Application Will be prepared which will broadly include the following :  Customer Profile: ownership. manager.  Net Worth: Financial Analysis & personal Finance Statements of Guarantor / Borrower  Operational Sheet : Description & Valuation of security / collateral . 66 . terms & conditions of the facility .DESERTATION owner. nature of business. LTV & any Deviation. This will be documented in a fast sheet or basic information report. risk rating. The following Information will be obtained  Nature of facility requested  Limit account  Borrower details  Security holder details  Guarantor details  Relationship with SCB 2 • Approvals Based on the basic information of the customer of the customer obtained through the interview & the Financials . banking relationship. management .

BFS or to the delegated lending authority  For proposal outside senior manager's authority.Credit CB.DESERTATION Prior to Submission for Approval . will be retained the Original LA & send a scanned copy of the LA to Officer CLC for preparing the LOBA 3) • Acceptance of Letter of Banking Arrangement (LOBA) Once the approved LA is sent by CLC . BFS and approved by head. The LOBA is delivered to the customer & on customer acceptance collects the documents including the securing documents as stipulated in LOBA • A credit file will be created by the BFM & the documents will be sent to CLC by courier with an e-mail confirmation sent to officer. the LA will be Supported by Business head. Credit. BFM will check the applicants & guarantors profile from the following database :  RBI lists of Willful Defaulters  Search on register of companies( ROC) books for all registered business  Dedup against Hogan & RLS • All Limit application (LA) initiated by BFM will be Supported by Regional Manager (RM) put approval to Senior Manager . 67 . the officer CLC refuse the LA approvals condition & prepares the LOBA giving the following details:  Sanctioned Limit  Products Cap ( inner limits)  Interest rates  Documentation  Security & margin  Pre Condition ( if any) • • LOBA is sent to the concerned BFM by e-mail with a copy to manager CLC. A hard copy is signed by the manager CLC after review of the sanctioned terms & condition. The BFM will review the sanctioned terms & send to LOBA.  For proposal referred to group credit .

00 . Exporters Importers Traders. OEM's. etc. SME enjoys bank Finance of less than 15% of total credit outstanding of banks. Broadly all entities with turn over of Rs.00 Crore come under SME. distributors.150. For Standard Charted Bank. Quick Overview SME Characteristics • • Closely held owner managed • • • Not highly capitalized Comprises mainly of small and mid sized Manufactures.Rs. • • • SME contributes more than 40% of Industry output of India.5. but lower services level Economic Environment 68 .property liquid assets Geographically dispersed Low financial transparency due to historical tax issue.DESERTATION Small & Medium Enterprises Banking Definition of "SME" varies from bank to bank. Significant personal wealth of promoters. COMPETITION • • Entrenched Nationalized banks & Aggressive Private Banks • Wide Spread branch network Relatively liberal credit policies . dealers.

working capital expenditure financing • Transaction Banking needs viz. Trade. Exports) > 15% • Stable currency outlook CUSTOMERS NEEDS • Facilities for regular / one off business needs i. Cash.e. Treasury services SME SECTOR IS VITAL TO THE ECONOMY 69 .10% Sharp growth in international trade (esp.DESERTATION • • Significant growth in industrial and services sectors >10% • SME growth Rate (last 2 yrs) .

DESERTATION SME Sector in India Accounts For 95% of all Industrial units 40% of all industrial outputs 45% of Industrial Environment 35% of Exports Prime Driver of a new Employment Customer of SME Banking CONDITIONS • • • Turn over <= INR 1000Mn Min. 3 Years in Business Profit Making in the Previous 70 .

i.DESERTATION PRODUCTS OFFERED Following Products are offered to multi-product customers. Fixed deposits.e. property commercials . customers with annual turn over of > US$1Mn. 71 • They offer their products by keeping collaterals such as RBI bonds. SME Banking has launched the business installment loans product offered to small establishments with turn over less than USD 1M. it should be more than 5 years. India millennium deposits.Creditor turnover residential mutual funds. • FUND BASED  Over Draft  Term Loan  WC Demand Loan (INR / FCY )  Export Credit ( INR / FCY)  Domestic Bill Discounting  OD against Credit Card Receivables • NON FUND NBASED  Letters of Credit  Guarantees  Co acceptance of Bills  LC confirmation •     TRANSACTION BKG Trade Services Inward / Outward Remittances Fixed Deposits ITTS In January 2005. Criteria followed by SME Banking • Age of should be more than 3 years. in case of professionals. • • Companies with a Turn over criteria of less than 92 crores falls in SMEs Working Capital Cycle will be = Debtors + Stock turn over .

e. BAJRANG PETROLEUM BALANCE SEET AS ON 31ST MARCH. Letter Of credit depends on customer maximum for 180 days.DESERTATION • They required 3years audited financials and calculating this MFA report is generated in which different ratios occur And MPBF( MAXIMUM PERMISSEBLE BANK FINANCE ) is calculated by preparing one page summary according to which bank finally decides whether to finance the company or not. I have got the opportunity to analyze the financial statements And Measure the credit risks of three companies who had approached standard charted bank for loans. Inter coverage ratio i. 10% is earned of cash collaterals or marketable securities. PBIT/ Interest should be Greater than 1. • They charge 2% of sectionals limit. Gearing Ratio i. Those Companies are:-  M/S BAJRANG PETROLEUM  RANJIT METALS  WESTERN INDIAN MOTORS COMPANY M/S. • Term loan can be provided Maximum For 5 Years and minimum for 3 years.2001 72 . • • • • Over draft can be provided for 1 year. Secured loans / Equity should be less than 3%.5%.e.

314.804.00 1.003. In Rs.400.DESERTATION Liabilities CAPITAL ACCOUNT Balance as per ledger Add:Net profit during the year 179.) 460.00 CASH & BANK BALANCES: Bank Balance 212.015. In Rs.00 SECURED LOANS: (As per Annexure-A) UNSECURED LOANS: (As per Annexure-B) CURRENT LIABILITIES : (As per Annexure-C) 2.00 Cash inHand 58.000.005.48 6.09 4.) 4.38 M/S.00 (Amt.498.90 CURRENT ASSETS .568.661.616. LOANS & ADVANCES:Closing Stock (As Certified & valued by Prop.) Sundry Debtors (As per Annexure-F) Security Deposits SAIL – Bokaro Loans & Advances (As per Annexure-G) 2.000.00 OTHER LIABILITIES: (As per Annexure-D) 258.314.191.00 10.81 Assets FIXED ASSETS: (As per Annexure-E) (Amt.00 Total Rs …… 10.548. BAJRANG PETROLEUM TRADING AND PROFIT & LISS ACCOUNT FOR 73 .00 1.38 2.553.307.455.310.001.38 10.804.524.238.886.579.753.00 270.568.

00 71.053.00 21. To Conveyance Exp.00 17.00 41.053.701.83 1.661.00 3.00 14.855.00 27.50 1.000.DESERTATION THE YEAR ENDED 31ST MARCH.50 2.) 1. To Bank Charges To Postage & Telephone Exp To Audit Fees To Printing & Stationary Exp. 2001 Particulars To Opening Stock To Purchases To Freight & Cartage To Gross Profit C/D Total Rs……… To Salary To Office Exp. To Depreciation To Net Profit Trfd To Prop Capital Account Total Rs…… Amount (Rs.00 1.00 102.659.000. To Insurance Exp.459. Income Amount (Rs.568.) 100.080. To Fee & Taxes Exp.836. To traveling Exp.50 246.260.048.00 1.001.040.287.700.005. By Gross Profit B/D Misc.00 15.93 1.900.593.93 102.00 30. Interest To Advertisements To Business Promotion Exp.678.00 63.50 179.310.287.898.09 1.605. To Accounting Charges To Electricity Expenses To Repair & Maintenance Exp.817.000.315. 1.93 Particulars By sales By Closing Stock Total Rs…….034.316.00 15.701.005.288.771. To staff Welfare Exp.51 136.933.316.00 26.000.288.00 368.00 1.597..93 Total Rs…….00 74 .047.176.56 97.00 5.

810.50 1317494. LOANS & ADVANCES:Closing Stock (As Certified & valued by Prop.81 -------------- OTHER LIABILITIES: -------------------------------------------------- Total Rs …….81 2774468. During the Year CURRENT ASSETS .000.50 ------------(Amt.00 2747.00 1340451. In Rs. In Rs.00 Canara Bank Punjab National Bank Cash in Hand Loans & Advances 3.50 1260568.00 10990. Madhu Agrawal Car Loan From City Bank Sundry Creditors Expenses Payable: Audit Fee Cash & Bank Balances 55000.57 Total Rs……… 3209.217. BAJRANG PETROLEUM BALANCE SEET AS ON 31ST MARCH.57 75 .(Advance) UNSECURED LOANS: Mrs.DESERTATION M/S.00 29.50 8242.00 Add:Net profit during the year SECURED LOANS: (As per Annexure-A) 15417.145.334.00 43.00 92951.00 18057.57 398.500. 3209 217.00 2759051.) Sundry Debtors Reliance India Ltd.) 215.150.00 172.50 4900.) Assets FIXED ASSETS: Car a/c as per Ledger Less: Depreciation during the year Fax Machine As per ledger Less: Dep.00 124.28 159313.000.2002 Liabilities CAPITAL ACCOUNT Balance as per ledger (Amt.

Interest To Advertisements To Legal Expenses To Insurance Exp. Income Amount (Rs.57 Particulars By sales By Closing Stock Total Rs…….00 1260568.) 60384.57 76 .00 9000.708.57 46800. 2002 Particulars To Opening Stock To Purchases To Freight & Cartage To Gross Profit C/D Total Rs……… To Salary To Office Exp.57 17.00 15417. To Bank Charges To Postage & Telephone Exp To Audit Fees To Printing & Stationary Exp.00 ---------26991. To Depreciation To Net Profit Trfd To Prop Capital Account Total Rs…… Amount (Rs.00 410290.57 17708396.) 16447828.57 204807.DESERTATION M/S.00 ----------------------------4924.00 14092.. 204.00 17032. By Gross Profit B/D Misc. To Accounting Charges To Electricity Expenses To General expenses To traveling Exp.807.915. To Conveyance Exp.00 3150.81 204807 Total Rs…….00 45747. To Fee & Taxes Exp.00 3322.99 ------------725.00 13598.00 204807.00 4290. To staff Welfare Exp.396. BAJRANG PETROLEUM TRADING AND PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH.00 6980.00 3270.

Actual and % Thousands Date Prepared: Page 1 Statement Date 3/31/2001 3/31/2002 Months Covered 12 12 Analyst Monika Monika Source Currency: INR Target Currency: INR Segment Type: Company Account CURRENT ASSETS Cash and Bank Deposits 1.4 455 4.DESERTATION Projected Balance Sheet:STANDARD CHARTERED BANK Petroleum Company (petroleumc) SCB ISIC Code: 3530 6/11/2005 Detailed Balance Sheet .003 58.742 6.9 259 3.314 100.4 Other Op Current Assets 30 0. Cur Liabilities TOTAL CURRENT LIABILITIES 159 5.028 94.3 CURRENT LIABILITIES Due to Banks(O/D.002 19.5 77 .208 100.989 1.8 270 2.3 2.5 3.340 (1.4 9.006 19.340 41.T/R etc) Trade Creditors Provisions: Other Current Other Op.4 6.0 10.4 180 5.1 172 5.9 1.0 2.9 2.6 461 4.260 39.499 6.578 TOTAL CURRENT ASSETS 3.736) - 15.5 180 5.8 2.0 286 8.5 FIXED ASSETS Plant & Machinery Motor Vehicles Gross Fixed Assets TOTAL FIXED ASSETS TOTAL TANGIBLE ASSETS WORKING CAPITAL NET WORKING ASSETS NET CASH ASSETS 8 0.6 Trade Debtors (Gross) 398 12.016 9.0 127 4.281 31.6 461 4.2 6 0.572 1.853 95.2 Stock: Trading 1.4 1.

7 148 4.6 434 13.4 4.736 55.0 93 2.455 23.Ordinary 2.000 2.4 10.578 44.7 78 .DESERTATION TERM LIABILITIES Hire Purchase Loans(1 Year+) Loans from Subs (1 Year+) Loans from Assoc.314 100.774 86.9 55 1.774 86.5 TOTAL EQUITY 2.(1 Year+) Loans from Dir/Shareholders (1 Yr+) TOTAL TERM LIABILITIES TOTAL LIABILITIES EQUITY Share Capital .5 NET WORTH 2.4 1.208 100.7 455 4. Co.578 44.5 1.000 9.5 EFFECTIVE EQUITY 2.774 86.8 5.0 4.774 86.4 4.4 4.5 TOTAL LIABS & NET WORTH 3.578 44.6 9.578 44.

8) (99.2) 15 0.7) 547 0.0 (98. Pension) Expense (5) Total Admin/Other Operating Expenses (163) (1.3 (5) (71) (0.448 (16.2 (179) 100.2) (27) (740) (0.315 (98.3) Employee Benefit (Incl.4) 179 0.3) Other Expenses (62) (0.243) 100.0 100.4) Advertising Wages & Salaries (47) (0.287 1.2 1.Actual and % Thousands Statement Date Months Covered Analyst Source Currency: INR 3/31/2001 Date Prepared: Page 2 3/31/2002 12 12 Monika Monika Target Currency: INR PROFIT & LOSS STATEMENT Sales (Net of Returns/Duties) Cost of Sales GROSS PROFIT(LOSS) 16.028) 205 1.5 (368) (0.4) (1) (247) (0.3 Interest Expense NET PROFIT (LOSS) AFTER TAX (27) (0.0) NET OPERATING PROFIT (LOSS) BEFORE INTEREST & TAXES 42 0.7) ADMIN/OTHER OPERATING EXPENSES Auditors Remuneration (3) Depreciation (46) (0.DESERTATION STANDARD CHARTERED BANK Petroleum Company (petroleumc) SCB ISIC Code: 3530 6/11/2005 Detailed Profit & Loss Statement .1) (389) (0.1 - - PROFIT (LOSS) DISTRIBUTION Distribution to Benefactors/Partners (15) PROFIT RETAINED - 79 .

028) (742) 857 (98.315 (5.605) 94.913) (4.710 (99.835) 80 Date Prepared: Page 3 .203) (5) (1) (247) (27) (280) (4.288) (368) (179) (547) (6. Pension) Expense Cash Paid for Operating Costs GROSS CASH FROM OPERATIONS Other Expenses Chg in Other Op Current Assets Chg in Other Op.288) (6.483) (389) (1.548) 259 (127) (1.805) (6.DESERTATION STANDARD CHARTERED BANK Petroleum Company (petroleumc) SCB ISIC Code: 3530 6/11/2005 Detailed Cash Flow Thousands Statement Date Months Covered Analyst Sales (Net of Returns/Duties) Chg in Trade Debtors (Gross) Cash Collected From Sales Cost of Sales Chg in Stock: Trading Chg in Trade Creditors Cash Paid to Suppliers CASH FROM TRADING ACTIVITIES Auditors Remuneration Advertising Wages & Salaries Employee Benefit (Incl. Cur Liabilities Chg in Provisions: Other Current Other Income (Expense) & Taxes Paid NET CASH AFTER OPERATIONS NET CASH AFTER OPERATIONS Interest Expense Distribution to Benefactors/Partners Cash Paid for Dividends & Interest CASH AFTER FINANCING COSTS Current Portion Long Term Debt 3/31/2001 12 Monika 3/31/2002 12 Monika 100.

T/R etc) Chg in Long Term Debt Chg in Loans from Subs (1 Year+) Chg in Loans from Assoc.006 (93) 1.117 (1.DESERTATION CASH AFTER DEBT AMORTISATION Chg in Plant & Machinery Chg in Motor Vehicles Depreciation Chg in Other Fixed Assets Cash Paid for Plant and Investments FINANCING SURPLUS (REQS) Chg in Due to Banks (O/D. Co.340 270 (6.835) 2 (283) (71) (352) (352) (7.070) 81 .187) 2.804 6.000 1.000 400 1. (1 Year+) Chg in Loans from Dir/Shareholders (1 Yr+) Chg in Equity Total External Financing CASH AFTER FINANCING Add: Cash and Bank Deposits ENDING CASH & EQUIVALENTS 1.

91 1.DESERTATION STANDARD CHARTERED BANK Petroleum Company (petroleumc) SCB ISIC Code: 3530 6/11/2005 Detailed Ratios Thousands Statement Date Months Covered Analyst 3/31/2001 12 Monika LIQUIDITY RATIOS Stock Turn Period (Days) 28 Gross Trade Debtor Collection Period (Days) 9 Net Trade Debtor Collection Period (Days) 9 Net Debtor Collection Period (Days) 9 Trade Creditors Pmt Period (Days) 4 Net Cash Cycle Period (Days) 34 Total ST Debt Coverage Cash Coverage (11.50) DEBT MANAGEMENT RATIOS Leverage Ratio Gearing NPBIT: Interest Net Cash after Operations: Interest Interest on Avg.26 0.99 0.47 1.03 35.06 2.44 1.09 0.16 0.25 0.31 1.18 82 .18 0.74 5.56 7 22 22 22 4 25 (2.49 (17.54 0.25 0.55 0.09 0.006 93 0.65) 3/31/2002 12 Monika Date Prepared: Page 4 1. Financial Debt (%) Short Term Debt Long Term Debt PROFITABILITY RATIOS (%) Net Profit Margin Operating Efficiency Return on Equity Return on Assets (Geared) Return on Assets (Un-geared) Gross Profit Margin NPBIT to Sales NPBT to Sales 0.09) 29.74 3.30 1.28 0.03 1.

18 Sales: Fixed Assets 91.00 Average Tax Rate (%) Other Cur Assets/Tot Cur Assets (%) 0.39 217.093.851) (2. Cap Spending Expected Capital Spending Avg.221.33 221.51 1.256) 509.00 16.89 (4.60 9.DESERTATION GROWTH RATIOS (%) Sales Growth Net Profit Growth Total Asset Growth Total Liabilities Growth Gross Profit Growth Sustainable Growth OTHER RATIOS Current Ratio 10.80 - 83 .02 7.59 Liquid Ratio 6.66 527.73 281 281 989 989 N/A 100.13 Effective Tax Rate Capital Spending Avg.89 1.00 2. Expected Cap Spending Def Tax + Tax Payable/Tax Exp (%) N/A Dividend Payout Rate 100.38 Sales: Total Assets 5.99 Other Cur Liabilities/Tot Cur Liabilities (%) Other Fixed Assets/Tot Fixed Assets (%) Other Term Liabilities/Tot Term Liabilities (%) Other Income/Net Income Aft Tax (%) Investments/Total Assets (%) Gross Cash Flow less Interest & Dividends (annualized) Free Cash Flow (annualized) 3.

14 0.578 Productivity % 0.13) 0.48) 5.New Capital Structure .09 0.25 84 .208 10.05 0.29 0.13) Channel Finance & Supply Chain Gearing Ratio 0.18 (3.53 8.New Cash Flow Ratio 2 (%) .43 Stock Turn Period 28 7 Net Profit Margin % 0.73 0.New Liquidity .New Middle Market Gearing Ratio Net Profit Margin (%) Cash Ratio (%) Trading Stock Turn Period EBITDA to Interest Cash Flow Ratio Asset Turnover Debt Service Coverage (%) Sale Growth (%) Cash Flow Ratio 2 (%) 2.16 0.43 0.578 0.37 (6.06 3.09 1.68 (1.314 Net Worth 2.16 4.13 9.09 0.774 0.New Pre-tax Profitability .12 0.05 0.578 0.89 (6.44 0.774 4.68 N/A (1.13) 3.DESERTATION STANDARD CHARTERED BANK Petroleum Company (petroleumc) SCB ISIC Code: 3530 6/11/2005 Detailed Ratios Thousands Statement Date Months Covered Analyst 3/31/2001 3/31/2002 12 12 Monika Monika Date Prepared: Page 5 CREDIT GRADING DATA Large Corporate Total Equity Leverage (Total Liabilities to Total Assets) Net Profit Margin Cash to Total Debt Debt to EBITDA EBITDA to Interest .10) 4.66 0.56 0.86 0.23 28 7 3.25 1.774 0.New Debt Service Coverage (%) .26 2.18 Total Tangible Assets 3.26 1.New Size Factor (Total Equity) .18 468.37 509.New Net Cash Ratio .

DESERTATION STANDARD CHARTERED BANK Petroleum Company (petroleumc) SCB ISIC Code: 3530 6/11/2005 Detailed Ratios Thousands Statement Date 3/31/2001 3/31/2002 Months Covered 12 12 Analyst Monika Monika FINANCIAL SUMMARY FOR BCA FRONT SHEET DATA Total Sales 16.89 1.578 Total Debt 93 2.835) Contingent Liabilities Total Provision for Employee Benefits (Including Pension) REPAYMENT SOURCE DATA PROFITABILITY Total Sales Gross Profit Net Profit after Tax Change in Sales (%) Gross Profit Margin (%) EBITDA to Sales (%) NPBT to Sales (%) 16.03 0.25 Net Cash After Operations (6.44 Debt to EBITDA 1.288) CADA (6.448 100.18 Date Prepared: Page 6 NET WORKING CASH CYCLE Stock Turn Period (SDOH) Trade Debtors Period (DDOH) Trade Creditors Period (CDOH) Net Working Cash Cycle Period 28 9 4 34 7 22 4 25 85 .62 0.06 3.774 4.25 1.448 205 15 100.28 0.287 179 509.315 Operating Profit 42 547 Extraordinary Expenses Net Profit after Tax 15 179 EBITDA 88 618 Net Worth 2.54 0.315 1.006 Gearing 0.09 0.

03 1.578 Revaluation Reserve Total Assets 3.26 0.49 3.09) (7.314 Leverage (Total Liabilities to Total Assets) 0.578 Sales to Fixed Assets 91.14 0.835) (17.00 100.208 10.56 1.60 Capex to Depreciation Ratio 3.56 Dividend Payout Ratio 100.96 DEBT PROTECTION Gearing Interest Cover Debt to EBITDA EBITDA to Interest Maturing Debt Obligations S/T Maturing Debt Obligations M/T Debt Service Cover Ratio Subordinated Debt Annual Operating Leases Contingent Liabilities 0.774 4.187) LONG TERM ASSET/LIABILITY MANAGEMENT Net Fixed Assets 180 461 Long-Term Debt+ Equity 2.44 1.835) (6.867 4.18) - CAPITAL PROTECTION Tangible Net Worth 2.006 (12.06 3.00 86 .25 1.288) (6.68 2.DESERTATION DEBT SERVICE CAPACITY Net Cash after Operations Cash after Financing Costs Cash after Debt Amortisation Net Cash after Operations/Interest Financing Surplus/Deficit (6.38 217.

835) (11.006 0. Profit before Interest& Taxes/Sales (%) 0.315 Gross Profit (Loss) 205 1.65) Net Op.578 2.44 1.55 ISIC: Nature of Business 3530 Mining 2.56 4.287 Net Operating Profit (Loss) Before Interest & Tax 42 547 Net Operating Profit (Loss) Before Tax 15 179 Profit Retained CAPITAL STRUCTURE Total Equity Net Worth Total Debt Gearing NPBIT: Interest OTHERS Sales Growth 509.89 Sustainable Growth Net Cash Cycle Period 34 25 Total ST Debt Coverage (2.26 0.774 93 0.50) 3/31/2001 3/31/2002 12 12 Monika Monika Date Prepared: Page 7 Segment Type: Company Account 87 .03 1.DESERTATION STANDARD CHARTERED BANK Petroleum Company (petroleumc) SCB ISIC Code: 3530 6/11/2005 Financial Summary Ratios Thousands Statement Date Months Covered Analyst Source Currency: INR Target Currency: INR LIQUIDITY Cash After Financing Costs Cash Coverage PROFITABILITY Sales (Net of Returns/Duties) 16.578 4.774 2.49 (6.448 100.

As the sale of this company is increasing so the company is in the need of fund.5 even after taking lots of debt from the outside. If we parallel look on the ratio of EBIT & Interest of the Company. The performance of the company is very impressive as its sale is increased by more than 500%. It all shows that as [Type text] Page 105 . As the demand in the market is increasing & reputation of Company is also good. As the company's capital is also increased from Rs. Sales Gross Profit PAT : : : Increased by more than 500% Increased by more than 600% Increased by more than 1000% So we can say that there is a good reputation of the products of the company in the market and due to which its profit & sale are increasing tremendously. There is a drastic increase in the total asset of the company & it has been able to increases it from 3 crore to 10 crore.To Rs. the company is funding money into the business on the basis of its sale.[DESERTATION] Analysis of Financial Statements Bajrang Petroleum Company approached Standard Chartered Bank for a loan of Rs. & Gross profit by more than 600%.which helped the company to increase its assets.for 6 years. it is more than 1.4400238/.2000000/. It all shows the efficiency of the corporation in the market as it has been able to face the tough competition & increased its profit year by year.2759051/. Comment on various ratios : Company's leverage ratio & the gearing are tremendously increased because of the need of the fund. Analysis: If we analyze the P&L a/c of the company.

The reason for this could be that corporation might have given the more credit facility to their in order to increases the sales of the corporation.49.09 to 0.Creditors payment period 25 = 7 + 22 . 2002-03 respectively.56 . This all has an effect on the operations of the firm.80% For 2002-03 . In 2003 ratio 10. Production Increased. If we see the position on the current ratio of the company.18 which increases the sale of the company. The effect of this increase is that stock turn over period of the company is decreased from 28 days to 7 days which is a good sign of the company. 2.59 to 3. the ratio has been decreased from 10. then finally Net Profit increased. 2001-02. Then it increased from 9 days to 22 days with the tremendous increases in the sale.[DESERTATION] funds were increased.72 for financials years 200001.02% for the financial year 2000-01. It all shows the utilization of assets in a more efficient way. debtors etc. [Type text] Page 106 . I f we look to the debtors collection period of the corporation. then Sales Increased.1. there is improvement almost most of the assets. 0. Net profit margin of the company is increased from 0. 2:1 is considered to be a removable one. If we comment on the other ratios of the company. So if the profit increased with the increase in the interest expenses then the ratio of EBIT & Interest remained more than one. The all over impact of this is that cash conversion cycle of the corporation is decreased from 34 days to 25 days which increases the profitability of the corporation.59 was very high which shows that lots of funds of a company are locked into the stocks. Company is performing so well in the market that its sales / total assets ratio is increased from 91% to 217%.4 The Gearing Ratio of the company is 0. Because if this period increases then the corporation's need for external financing will be increase which will carry some cost. As it is clear from the statements that sale is increased by more than 500%.Which is less than 3 and the Interest coverage ratio is 1.00 which is favorable to this. Cash Conversion Cycle = Inventory turnover days + Debtors turnover days .

So the bank can sanction the loan of Rs. Management of the company is also very efficient and the company is having the experience in the same business for more than 5 years. There is also the stability of the business of the company. The company is so efficient that it liberalized its credit policy which increased its debtor's turnover period and also helped to increase its sale to more than 50%. the company is also able to maintain EBITD/interest ratio of more than 1. So after looking on all the sides of the company. It shows that for every Rs. If we see the record of the last 3 years.1 interest liability.[DESERTATION] OVERALL ANALYSIS If we do the overall analysis of the company then we can say that the demand for the products in the market is rising year by year due to which the company is also able to increase its debt.00.000 [Rs.000@ 13%] easily because its EBITD is more than Rs. the company has enough cash to repay. If we look towards the EBITD of the company for the last 2 years then we find that there is an increase of more than 1000% or ten times. we can say that if the company grows with the same pace or even at a slightly lower pace.2.2.5 lacs last year.20 lacks@ 13% RANJIT METALS INDUSTRIES [Type text] Page 107 .20 lacks to the firm @ not more than 13%.60. the company will be able to pay the interest installments of Rs. So after taking into consideration all these factors we can say that the bank can sanction the loan of Rs.

35 105704.10 8494.49 Other Current Liabilities (As per annexure ‘E’ enclosed) 974058.20 Other Creditors (As per annexure ‘C’ enclosed) Expenses Payable (As per annexure ‘D’ enclosed) 4816896.80 92222.72 1389782. P.00 352133. P.00 9633116. Loans & Adv.13 233263.53 180270.00 24668860.[DESERTATION] Balance Sheet As At 31st March 2001 Liabilities Amount Assets Rs.00 Stock in Hand Loans & Advances Loans & Advances (As per annexure ‘H’ enclosed) Interest Accrued on FDR Modvat Credit Recoverable TDS Bank Interest Cash & Bank Balances Cash in hand Bank STDR.21 Fixed Assets (As per annexure ‘F’ attached) Secured Loans The Federal Bank Ltd ICICI Bank Ltd City Bank Loan Unsecured Loans (As per annexure ‘A’ enclosed) Current Liabilities & Provisions Sundry Creditors (As per annexure ‘B’ enclosed) 10085752.54 45000.00 5062.24 1134659.00 Security Deposit With DVB Deposit With Excise Dept.The Federal Bank Ltd 11762925.00 769115.03 100998. 707918. Sales Tex Deposit Security Deposit .Rent Current Assets.90 24668860. Sundry Debtors (As per annexure ‘G’ enclosed) 2939488.15 Amount Rs.80 42481. Sh.49 RANJIT METALS INDUSTRIES [Type text] Page 108 . Kamal jain Capital A/C 3956226.00 1254.

05 To Business Promotion 75804.00 To Rent 90000.29 4084939.82 197141.02 To Net Profit 189783.00 To Freight & Other Expenses 263912. 144915.00 To Security Services Charges 11910.00 By Other Income To Bank Charges 150909.78 To Depreciation A/C 176906.00 To interest 1600345.00 11762925. P.68 To insurance 45942.00 To Subscription & Memberships 3300.00 To Commission On Cons.11 RANJIT METALS INDUSTRIES Balance Sheet As At 31st March 2002 [Type text] Page 109 .00 To Mobile & Telephone Expenses.92 To General Expenses 51029. 57913272.00 3887797.79 (Transferred in Prop. Capital A/C) 4084939.00 To Accountancy Charges 55000.65 To Electricity & Water Expenses 107163.00 To traveling Expenses.32 To Office Repair & Maintenance 35775.00 69676197.00 By Sales To Purchase 54117622.00 To Salary 543000.82 69676197. P.00 By Gross Profit B/D To Audit Fees 5400.[DESERTATION] Trading and Profit & Loss Account For the year ended 31-05-2001 Particulars Amount Particulars Rs.00 To printing & Stationery 2234.19 To Vehicle Repair & Maintenance 42515. To Opening Stock 11670777. Sale 340542.18 By Closing Stock To Gross Profit C/D 3887797.56 To Legal & Professional Charges 20400.11 Amount Rs.70 To Charity & Donation 13130. 115019.

95 Provision & Expenses Payable (As Per annexure ‘E’ enclosed) 316655.00 Amount Rs.09 60726.21 73006.00 26339216.64 26339216. Assets Fixed Assets (As per annexure ‘F’ attached) Amount Rs.59 9503775.00 Security Deposit Rent Current Assets. Sundry Debtors Stock in Hand Loans & Advances Loans & Advances (As per annexure ‘H’ enclosed) Interest Accrued on FDR Modvat Credit Recoverable TDS Bank Interest Cash & Bank Balances Cash in hand Bank STDR.44 1345782.3 Add: Net Profit for the year 3859546.The Federal Bank Ltd 105704.00 1254.00 42481.00 979945.15 Other Creditors (As per annexure ‘C’ enclosed) Other Current Liabilities (As per annexure ‘E’ enclosed) 221615. Kamal jain Capital A/C Less: Drawing 3932552. P.24 RANJIT METALS INDUSTRIES Trading and Profit & Loss Account For the year ended 31-05-2002 [Type text] Page 110 .24 26339216.[DESERTATION] Liabilities Sh.00 544031. Sales Tex Deposit Unsecured Loans (As per annexure ‘A’ enclosed) Current Liabilities & Provisions Sundry Creditors (As per annexure ‘B’ enclosed) 8684633.00 12764911.00 214920.24 10360. 565408.28 1367212.35 4050835.50 45000.21 191289. P.41 1056322.47 Security Deposit Deposit With DVB Deposit With Excise Dept.26 Secured Loans The Federal Bank Ltd ICICI Bank Ltd 8623907. Loans & Adv.36 10663371.25 194213.

59 30692.30 3796796.96 149.00 296507. Sale To Conveyance To Depreciation To Diwali Expenses.71 104966.00 164816.00 142510.30 9503775.26 3906721.00 85826.00 40524.00 90000.03 47000.84 191289. P. 11762925.00 159139.00 76846627.38 206700.00 76846627. To Electricity & Water Expenses To Fees & Taxes To Freight & Other Expenses To General Expenses To interest To Legal & Professional Charges To Medical Expenses To Mobile & Telephone Expenses.00 47050. To News Paper & Periodicals To Office Repair & Maintenance To printing & Stationery To Rent To Salary To Staff Welfare To Vehicle Repair & Maintenance To Traveling Expenses To Loss on Con. 67342852.00 32589.67 10000.00 20900.46 109925. Capital A/C) Amount Rs. P.30 79000.46 Projected Balance Sheet:STANDARD CHARTERED BANK METAL COMPANY (METALCOMPA) SCB ISIC Code: 3710 [Type text] Date Page 111 .00 1102.00 6600. Sale To Net Profit (Transferred in Prop.00 576450.97 1082356.00 54218.00 15795.80 3796796.46 Particulars By Sales By Closing Stock Amount Rs.[DESERTATION] Particulars To Opening Stock To Purchase To Gross Profit C/D To Accountancy Charges To Audit Fees To Bank Charges To Business Promotion Expenses.00 By Gross Profit B/D By Other Income To Legal & Professional Charges 3906721.00 23181.00 61286905.00 576000. To Commission On Cons.05 329657.

7 23.6 1.288 84.764 48.7 20.5 10. Cos.817 19.7 Trade Creditors 4.339 100.504 36.1 2.1 1. T/R etc) 10.056 4.0 26.8 547 2.9 565 2.051 16.390 5.1 18 0.633 39.712 84.579 (8. (1 Year+) 1.803 7.042) 24 CURRENT LIABILITIES Due to Banks (O/D.5 11.140 4.3 TOTAL LIABILITIES 20.230 5.0 684 708 5.[DESERTATION] Prepared: 6/11/2005 Detailed Balance Sheet .9 1.730 6.6 1.2 Loans from Assoc.4 317 1.3 TERM LIABILITIES Hire Purchase Loans (1 Year+) 413 1.7 61 0.668 100.407 5.940 11.881 79.946) 4.960 97.5 Creditors: Sundry 2.663 40.582 6.346 5. Cur Liabilities 974 3.9 FIXED ASSETS Loose Plant/Furniture/Fittings Motor Vehicles Gross Fixed Assets TOTAL FIXED ASSETS TOTAL TANGIBLE ASSETS WORKING CAPITAL NET WORKING ASSETS NET CASH ASSETS 0.9 8.1 TOTAL TERM LIABILITIES 1.1 24.1 25.9 221 0.1 2.0 9.893 11.1 708 2. Current Assets TOTAL CURRENT ASSETS 1.3 1.774 97.909 76.0 1.8 Provisions: Other Current 92 0.624 32.6 194 0.7 9.1 12.2 Other Op.763 47.9 565 2.605 (7.0 TOTAL CURRENT LIABILITIES 18.0 22.6 EQUITY [Type text] Page 112 .Actual and % Page 1 Thousands Statement Date Months Covered Audit Method Analyst Source Currency: INR 3/31/2003 12 3/31/2004 12 Unqualif'd Unqualif'd Auditor Monika Monika Target Currency: INR Segment Type: Consolidated Accounts CURRENT ASSETS Cash and Bank Deposits Trade Debtors (Gross) Stock: Trading Other Op Current Assets Other Non-Op.086 40.8 194 0.

956 16.051 15.051 15.051 15.0 [Type text] Page 113 .0 4.Ordinary TOTAL EQUITY NET WORTH EFFECTIVE EQUITY TOTAL LIABS & NET WORTH 3.4 24.[DESERTATION] Share Capital .0 4.4 3.339 100.956 16.668 100.0 4.051 15.4 3.0 4.956 16.0 26.4 3.956 16.

3) (143) (0.888 6.3) (63.7) (1.1) Total Admin/Other Operating Expenses (2.797 5.0 67.570)(2.1 1.8 100.343 Cost of Sales (54.790 3.4) ADMIN/OTHER OPERATING EXPENSES Auditors Remuneration (5) (7) Depreciation (177) (0.3 PROFIT (LOSS) DISTRIBUTION Distribution to Benefactors/Partners (190) PROFIT RETAINED - [Type text] Page 114 .[DESERTATION] STANDARD CHARTERED BANK METAL COMPANY (METALCOMPA) SCB ISIC Code: 3710 6/11/2005 Detailed Profit & Loss Statement .9 Interest Expense NET PROFIT (LOSS) AFTER TAX (1.822)(2.913 100.7) Wages & Salaries (543) (0.1 3.9) NET OPERATING PROFIT (LOSS) BEFORE INTEREST & TAXES 1.085 7.273 1.7 OTHER OPERATING INCOME Other Operating Income 197 0.2 3.9) (576) (0.0) (2.6 110 0.634)(3.546) GROSS PROFIT (LOSS) FROM TRADING 3.Actual and % Thousands Statement Date Months Covered Audit Method 3/31/2003 12 3/31/2004 12 Unqualif'd Date Prepared: Page 2 Unqualif'd Auditor Analyst Monika Monika Source Currency: INR Target Currency: INR PROFIT & LOSS STATEMENT Sales (Net of Returns/Duties) 57.9) Financial Expenses (86) (0.0 (94.907 5.025) (93.6) 190 0.600)(2.3 191 (191) 0.2) Other Expenses (1.082)(1.8) (1.3 GROSS PROFIT (LOSS) 4.295) (4.

259 5.771 (7) (576) (86) (669) 8.102 110 (1.478 (1. Cur Liabilities Chg in Provisions: Other Current Other Income (Expense) & Taxes Paid NET CASH AFTER OPERATIONS NET CASH AFTER OPERATIONS Interest Expense Distribution to Benefactors/Partners Cash Paid for Dividends & Interest CASH AFTER FINANCING COSTS 3/31/2003 3/31/2004 12 12 Monika Monika 67.212 (63.478 3.546) 2.082) (191) (1.131) 64.205 Date Prepared: Page 3 [Type text] Page 115 .[DESERTATION] STANDARD CHARTERED BANK METAL COMPANY (METALCOMPA) SCB ISIC Code: 3710 6/11/2005 Detailed Cash Flow Thousands Statement Date Months Covered Analyst Sales (Net of Returns/Duties) Chg in Trade Debtors (Gross) Cash Collected From Sales Cost of Sales Chg in Stock: Trading Chg in Trade Creditors Cash Paid to Suppliers CASH FROM TRADING ACTIVITIES Auditors Remuneration Wages & Salaries Financial Expenses Cash Paid for Operating Costs GROSS CASH FROM OPERATIONS Other Operating Income Other Expenses Chg in Creditors: Sundry Chg in Other Op Current Assets Chg in Other Op.822) (2.343 (3.719) (500) 82 225 (4.273) 2.441) 8.846 (55.624) 3.

763) 442 1.[DESERTATION] Current Portion Long Term Debt CASH AFTER DEBT AMORTISATION Chg in Loose Plant/Furniture/Fittings Chg in Motor Vehicles Depreciation FINANCING SURPLUS (REQS) Chg in Due to Banks (O/D. (1 Year+) Chg in Equity Total External Financing CASH AFTER FINANCING Add: Cash and Bank Deposits ENDING CASH & EQUIVALENTS 2.462) (352) (44) 95 (1. T/R etc) Chg in Long Term Debt Chg in Loans from Assoc.205 (1.582 [Type text] Page 116 . Co.140 1.205 6 137 (143) 2.

086 8.24 5.71 3.14 NPBIT: Interest 1.26 6.71 0.28 [Type text] Page 117 .28 3.80 0.65 2. Financial Debt (%) 15.09 0.624 Long Term Debt 413 61 PROFITABILITY RATIOS (%) Net Profit Margin Operating Efficiency Return on Equity Return on Assets (Geared) Return on Assets (Un-geared) Gross Profit Margin NPBIT to Sales NPBT to Sales 0.28 Short Term Debt 10.[DESERTATION] STANDARD CHARTERED BANK METAL COMPANY (METALCOMPA) SCB ISIC Code: 3710 Prepared: 6/11/2005 Detailed Ratios Thousands Statement Date Months Covered Analyst 3/31/2003 3/31/2004 12 12 Monika Monika Date Page 4 LIQUIDITY RATIOS Stock Turn Period (Days) Gross Trade Debtor Collection Period (Days) Net Trade Debtor Collection Period (Days) Net Debtor Collection Period (Days) Trade Creditors Pmt Period (Days) Net Cash Cycle Period (Days) Total ST Debt Coverage Cash Coverage 79 61 61 61 33 108 55 69 69 69 61 63 0.21 Interest on Avg.91 4.64 1.89 0.33 0.24 11.73 DEBT MANAGEMENT RATIOS Leverage Ratio 5.83 5.50 Gearing 2.33 3.77 7.12 1.18 Net Cash after Operations: Interest 3.96 4.36 2.73 4.

53 6.34) - - [Type text] Page 118 .27 Liquid Ratio 0.19 2.77 7.00 Average Tax Rate (%) Other Cur Assets/Tot Cur Assets (%) 5.23 0.68 Investments/Total Assets (%) Gross Cash Flow less Interest & Dividends (annualized) Free Cash Flow (annualized) 1.28 0.65 Sales: Fixed Assets 81.59 7.15 Other Fixed Assets/Tot Fixed Assets (%) Other Term Liabilities/Tot Term Liabilities (%) Other Income/Net Income Aft Tax (%) 103.80 Sales: Total Assets 2.94 Other Cur Liabilities/Tot Cur Liabilities (%) 5.46 5.[DESERTATION] GROWTH RATIOS (%) Sales Growth Net Profit Growth Total Asset Growth Total Liabilities Growth Gross Profit Growth Sustainable Growth OTHER RATIOS Current Ratio 1.78 119.763 16.06 57.61 (2.56 (143) 258 258 N/A 100. Capital Spending Expected Capital Spending Avg.00 7.35 Effective Tax Rate Capital Spending Avg.020 1. Expected Capital Spending Def Tax + Tax Payable/Tax Exp (%) N/A Dividend Payout Rate 100.

23 3.38 0.56 1.New Size Factor (Total Equity) .61 16.13 1.15 0.31 0.33 5.58 55 1.16 4.48 Stock Turn Period 79 Net Profit Margin % 0.35 2.03 79 1.New Debt Service Coverage (%) .40 6.051 0.28 Page 119 3.28 7.63 0.16 0.New Pre-tax Profitability .38 55 0.051 0.48 0.85 0.63 Channel Finance & Supply Chain Gearing Ratio 0.New Capital Structure .34 2.34 1.04 1.84 0.956 0.New Middle Market Gearing Ratio Net Profit Margin (%) Cash Ratio (%) Trading Stock Turn Period EBITDA to Interest Cash Flow Ratio Asset Turnover Debt Service Coverage(%) Sale Growth (%) Cash Flow Ratio 2 (%) 0.76 0.New Liquidity .76 4.23 N/A 2.956 0.28 1.33 [Type text] .28 0.New Cash Flow Ratio 2 (%) .33 6.New Net Cash Ratio .03 2.[DESERTATION] STANDARD CHARTERED BANK METAL COMPANY (METALCOMPA) SCB ISIC Code: 3710 6/11/2005 Detailed Ratios Thousands Statement Date Months Covered Analyst 3/31/2003 12 Monika 3/31/2004 12 Monika Date Prepared: Page 5 CREDIT GRADING DATA Large Corporate Total Equity Leverage (Total Liabilities to Total Assets) Net Profit Margin Cash to Total Debt Debt to EBITDA EBITDA to Interest .31 0.61 1.

[DESERTATION]
Total Tangible Assets Net Worth Productivity % 24,668 26,339 3,956 4,051 0.94 0.86 Date Prepared: Page 6

STANDARD CHARTERED BANK METAL COMPANY (METALCOMPA) SCB ISIC Code: 3710 6/11/2005 Detailed Ratios Thousands Statement Date 3/31/2003 3/31/2004 Months Covered 12 12 Analyst Monika Monika FINANCIAL SUMMARY FOR BCA FRONT SHEET DATA Total Sales 57,913 67,343 Operating Profit 1,790 1,273 Extraordinary Expenses Net Profit after Tax 190 191 EBITDA 1,967 1,416 Net Worth 3,956 4,051 Total Debt 10,499 8,685 Gearing 2.65 2.14 Debt to EBITDA 5.34 6.13 Net Cash After Operations 3,478 CADA 2,205 Contingent Liabilities Total Provision for Employee Benefits (Including Pension) REPAYMENT SOURCE DATA PROFITABILITY Total Sales Gross Profit Net Profit after Tax Change in Sales (%) Gross Profit Margin (%) EBITDA to Sales (%) NPBT to Sales (%) 57,913 67,343 4,085 3,907 190 191 16.28 6.71 5.64 3.40 2.10 0.33 0.28

NET WORKING CASH CYCLE Stock Turn Period (SDOH) Trade Debtors Period (DDOH) [Type text] 79 61 55 69 Page 120

[DESERTATION]
Trade Creditors Period (CDOH) Net Working Cash Cycle Period DEBT SERVICE CAPACITY Net Cash After Operations Cash After Financing Costs Cash After Debt Amortisation Net Cash After Operations/Interest Financing Surplus/Deficit 3,478 2,205 2,205 3.21 2,205 33 108 61 63

LONG TERM ASSET/LIABILITY MANAGEMENT Net Fixed Assets Long-Term Debt+ Equity Sales to Fixed Assets Capex to Depreciation Ratio DEBT PROTECTION Gearing Interest Cover Debt to EBITDA EBITDA to Interest Maturing Debt Obligations S/T Maturing Debt Obligations M/T Debt Service Cover Ratio Subordinated Debt Annual Operating Leases 2.65 2.14 1.12 1.18 5.34 6.13 1.23 1.31 10,086 8,624 7.49 708 565 4,369 4,112 81.80 119.19 (1.00)

Contingent Liabilities CAPITAL PROTECTION Tangible Net Worth Revaluation Reserve Total Assets Leverage (Total Liabilities to Total Assets) Dividend Payout Ratio

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3,956 4,051 24,668 26,339 0.84 0.85 100.00 100.00

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[DESERTATION]

STANDARD CHARTERED BANK METAL COMPANY (METALCOMPA) SCB ISIC Code: 3710 6/11/2005 Financial Summary Ratios Thousands Statement Date Months Covered Analyst Source Currency: INR Target Currency: INR LIQUIDITY Cash After Financing Costs Cash Coverage PROFITABILITY Sales (Net of Returns/Duties) 57,913 67,343 Gross Profit (Loss) 4,085 3,907 Net Oper Profit (Loss) Before Interest & Tax 1,790 1,273 Net Oper Profit (Loss) Before Tax 190 191 Profit Retained CAPITAL STRUCTURE Total Equity Net Worth Total Debt Gearing NPBIT: Interest OTHERS Sales Growth 16.28 Sustainable Growth Net Cash Cycle Period 108 63 Total ST Debt Coverage 0.36 Net Oper Profit before Interest &Taxes/Sales (%) 3.09 1.89 ISIC: 3710 3,956 4,051 3,956 4,051 10,499 8,685 2.65 2.14 1.12 1.18 2,205 2.73 3/31/2003 12

Date Prepared: Page 7

3/31/2004 12 Monika Monika Segment Type: Consolidated Accounts

Nature of Business Manufacturing Please see the Financial Summary Text report on the Consultant tab for more summary information.

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6 lacks from the interest item. labour. The company's decreased by around Rs.[DESERTATION] Analysis of Ranjit Metal Industries Ranjit Metal Industry approached Standard Chartered Bank for a loan of Rs. 1) The P&L a/c of the company for the 2 years shows the increase in the sales % the gross profit is decreased due to the increase in COGS could be increased the cost of the goods Due to because of the increase in the prices of the the but sold.6 lacks which means that the debts. 3) From the analysis of the P&L and balance sheet we can say that the sales of company are increased during the year because of the increasing in the metal in the country.50 lacks for 7 years. The impact of this is directly seen liquidity position. If we analyze properly then we will find that the company internal expenses are company in able to repay a part of its has saved around Rs. Company is also able to increase its [Type text] Page 128 . the demand of the balance sheet as the debtors are increased. the reduction on the gross profit. raw material or any other input item in the market. competitive environment the company couldn't increase the selling prices which result in 2) The gross profit of the company is decreased but finally the company is able to increase the net profit.

selling from 79 of the the 2) Due to the increasing demand in the market and the company's aggressive strategies company. [Type text] Page 129 .[DESERTATION] COMMENTS ON THE VARIOUS RATIOS 1) The Gearing ratio of the company is increased which is a good indicator that company's dependence on the outsider's liabilities has been decreased. 1.1 interest company has Re. 4) If we analyze some other ratios of the company then we can say that the ratios of the company are also improved from 2003 to 2004.32% to 0. which is also a good indicator. This factor also plays the increase in the sales. Company is also able to increase its tangible assets and net worth also as shown in the balance sheet of the company. Like EBITD to interest ratio is increased from 1.31 to pay that interest. This helped the company to improve its profits because the longer the cash conversion cycle. Increment of creditor paid period is also a good sign as the company can use this credit facility in a productive manner. material helped the company a lot to decrease its stock turn period days to 55 days which is a good indicator of the bright future company is saving 24 days in order to sale. It shows that the process the raw to finished goods to a very important role in 3) Company is able to increase net profit margin from 0.31 which shows that the company's ability to pay the interest is increased.23 to 1.28% due to the increase in the cost of goods sold and some increase in the operating expenses. the greater the need for external financing and that financing has a cost. Company is also able to improve its cash cycle period from 108 days to 63 days.This ratio shows that for the every Re.

The Gearing Ratio of the company is 0. If the bank allowed the company a loan of Rs. 2001-02. Company is also having a strong competitive advantage and the demand for the metal products is increasing in the future.9(financial score+ non financial score).86. it is eligible for the loan.02% For 2002-03 . 0. 50.24 for financials years 2000-01.Which is less than 3 and the Interest coverage ratio is 1.6.50 lacks @ 13%.13 lacks.3% for the financial year 2000-01.[DESERTATION] OVERALL ANALYSIS In the overall analysis of the company.07 . [Type text] Page 130 . industry segment prospects are stable and the management of the company is also with good talent. then we can conclude that overall position of the company is good and we can sanction the loan to the company. 56.000 per year. Because the company's EBITD of the last two years is more than Rs. 5. In this case we can the increasing graph of the company in the future.2. then we can analyze that the company will easily be able to repay the interest of Rs. 2002-03 respectively. on the basis of the weighted score of the company. As the company is in the same business for the last 8 years.

21 9.Y Amount (Rs) 52.69.952.513.62 7.02 10. Sundry Debtors 3. In Current a/c 2.90. Fixed Deposits (Including Accrued interest) B. Advances recoverable in cash or in Kind or for which value to be Recovered 2.38. Balance with Schedule Banks in 1. loans. Current Assets 1.5 1 37. Cash in Hand(Including Cheques in hand Rs.) 89.7 0 61.000.C. & Advances A.39.C.27.71.05.23.044.Y Amount(rs.21 2.81.38 119. Sundry Creditors (a) For Goods Supplied (b) For Others 2.69 Nil [Type text] Page 131 .65.[DESERTATION] Western Indian motors Balance Sheet As on 31st March 2001 Liabilities Partners* capital Account Partners* Current Account Secured Loans F. Loans & Advances 1.32 16.27.625.33.67.00 16.240.84.57.07. Security Deposits F.68 9.87 Assets Fixed Assets Investments Current Assets .911.747.00 12.91 Unsecured Loans From Relative & Friends Current Liabilities & Provisions (A) Current Liabilities 1.00 21.864. Advance payments for which value has still to be given 3.46.48 Nil 103. 1010681.477. Cash & Bank Balances 1.044.24) 2.948. Inventories Stock in Trade (As valued & Certified By the partners) 2.466. Other Liabilities (B) Provisions 46.383.028.

00 9949. To Advertisement & Publicity To Bank Charges & commission To Bonus To Charity & donation To Claims To Demonstration And Car Expenses To Electricity Charges To contribution to Employees Family pension fund To Contribution to ESI To Contribution to link deposit assurance To Employees Gratuity To General trade expenses To Interest charges To Legal & professional Charges To News paper & periodical To Office Vehicle & Expenses To Printing & stationary To postage and Telegram To Rent And House tax To Insurance & Subscription & taxes To Railway Freight & Octopi To Staff welfare & expenses [Type text] Amount 2387285.00 177453.00 441600.26 405522.00 8700.15.00 37389.56.00 29427.25 46666.0 0 ( Total RS ) 308.00 Page 132 Amount 5469165.731.00 257485.37 445669. from trading Account By work shop service By rent receipt By commission By incentive receipt 400839.00 103967.00 13311.00 69736.00 57506.50 56531. Work Shop Work shop mag.00 52122.00 132532.0 0 Western Indian Motors Company Profit And Loss A/C for Year ended on 31st March 2001 Particulars To salaries & wages Management STORES Siemens Deptt.40 Particulars By Gross profit Ltd.00 152341.[DESERTATION] ( Total RS) 308.56.00 3412563.00 4321.00 55851.00 24043.731.00 NIL .00 269294.05 883158.

00 40. loans.02 97.48 Nil 1.) 96.00 13.21.11.57 Page 133 .00 90.62.50 18000.05 10658.873.000.000.00 395559.95.548.544.80 95543.998.93 Assets Fixed Assets Investments Current Assets .68.227.C.597.C.000.00 831985.06 Western Indian motors Balance Sheet As on 31st March 2002 Liabilities Partners* capital Account Partners* Current Account Secured Loans [Type text] F.65.998.[DESERTATION] To telephone and trunk call To traveling and conveyance To computer accounting charges To computer services charges To depreciation To bad debts To sales promotion expenses To sales campaign expenses To hire purchase charges To sales incentive To turn over tax To profit c/d Total 733901.31.02 96152.00 349437.Y Amount (Rs) 52.68.00 13.Y Amount (Rs.84.00 49240.06 Total 97.18 86. & Advances F.

65.123.334. 1010681.59.538.) 44.416. Advances recoverable in cash or in Kind or for which value to be Recovered 2.266.[DESERTATION] A. Other Liabilities (B) Provisions ( Total RS) 4.28 21. Sundry Debtors 3.670.76.336.26 19.595. Sundry Creditors (a) For Goods Supplied (b) For Others 2. Fixed Deposits (Including Accrued interest) B.741.00 23.60.334.24) 2. Current Assets 1.95.64. Balance with Schedule Banks in 1. Inventories Stock in Trade (As valued & Certified By the partners) 2. Advance payments for which value has still to be given 3.24 34.63 7.00 Page 134 .98 1.98 ( Total RS ) 4.) Particulars By Gross profit Ltd.28.43. from Amount(Rs.96.13.78.60.00 142.26 116.44.57 3.313. Loans & Advances 1.98 Nil Western Indian motors Company Profit And Loss A/C for Year ended on 31st March 2002 Particulars To salaries & wages [Type text] Amount(Rs.76.45 2. Security Deposits 11.38.14.200. Cash & Bank Balances 1. In Current a/c 2. Cash in Hand(Including Cheques in hand Rs.56.656.287.76 Unsecured Loans From Relative & Friends Current Liabilities & Provisions (A) Current Liabilities 1.

00 NIL 106050.00 38832.00 4100.00 131636.00 114397.00 18000.00 49.00 584891.00 4.70.00 154312.23.500.00 9945.00 338316.645.00 48066.90 167245.00 53240.800.173.00 278035.70 .00 27185. To Advertisement & Publicity To Bank Charges & commission To Bonus To Charity & Donation To Claims To Demonstration And Car Expenses To Electricity Charges To contribution to Employees Family pension fund To Contribution to ESI To Contribution to link deposit assurance To Employees Gratuity To General trade expenses To Interest charges To Legal & professional Charges To News paper & periodical To Office Vehicle & Expenses To Printing & stationary To postage and Telegram To Rent And House tax To Insurance & Subscription & taxes To Railway Freight & Octopi To Staff welfare & expenses To telephone and trunk call To traveling and conveyance To computer accounting charges To computer services charges To depreciation To bad debts To sales promotion expenses To sales campaign expenses To hire purchase charges To sales incentive To turn over tax [Type text] trading Account By work shop service By rent receipt By commission By incentive receipt 2570179.600.00 16976.00 72513.35 91940.64 341789.00 783227.00 10798.00 94695.00 3.41.[DESERTATION] Management STORES Siemens Deptt.658.17.00 10951.00 154312.00 18230.00 Nil 8379.00 166924.00 27185.15 17.00 Page 135 5.00 15. Work Shop Work shop mag.00 127047.

Current Assets 1.873.24) 2.409.000.59.[DESERTATION] To profit c/d Total 16.3.64.77 Western Indian motors Balance Sheet As on 31st March 2003 Liabilities Partners* capital Account Partners* Current Account Secured Loans F.77 Total 86.81.538.00 13521.63 8. Cash & Bank Balances 1.00 Page 136 [Type text] . Fixed Deposits (Including Accrued interest) B.56. Balance with Schedule Banks in 1.313.57 5.48 Nil 199.18 78.416.45 346. & Advances A.96.81.) 106.28 33. Cash in Hand(Including Cheques in hand Rs. Advances recoverable in cash or in Kind or for which value to be Recovered 2.544.95.C.676.548.62.14 86.38.00 34.409.227.287. In Current a/c 2.C. Inventories Stock in Trade (As valued & Certified By the partners) 2. Security Deposits F.Y Amount (Rs.Y Amount (Rs) 53.84.741. loans.93 Assets Fixed Assets Investments Current Assets .57 1.65.266. Loans & Advances 1.81. Sundry Debtors 3. 1010681.

76 123.600.44.645.98 Nil Profit And Loss A/C for Year ended on 31st March 2003 Particulars To salaries & wages Management STORES Siemens Deptt.28. Work Shop Work shop mag.00 341.12.00 Page 137 .) 43. Sundry Creditors (a) For Goods Supplied (b) For Others 2.15 1223.12.00 432.595.670.00 4400. from trading Account By work shop service By rent receipt By commission By incentive receipt Amount(Rs.00 34513.123.339.336.43.00 10045.65.00 145924.200.1 2 ( Total RS ) 4.) Particulars By Gross profit Ltd.90 117245.339.26 17.70 2470179. Other Liabilities (B) Provisions ( Total RS) 4.12 10.00 258035.00 46066.00 367316.656.24 3195.14.13.173. To Advertisement & Publicity To Bank Charges & commission To Bonus To Charity & Donation To Claims To Demonstration And Car Expenses To Electricity Charges To contribution to Employees Family pension fund To Contribution to ESI To Contribution to link deposit assurance [Type text] Amount(Rs.65.800.00 96795.00 110.00 124397.26 111.[DESERTATION] Unsecured Loans From Relative & Friends Current Liabilities & Provisions (A) Current Liabilities 1. Advance payments for which value has still to be given 3.

676.00 133312.00 133336.00 NIL 104450.14 [Type text] Page 138 .64 241789.00 53233.00 134047.758.00 584891.00 3.35 92340.00 Nil 8339.00 19000.00 24485.00 144312.00 33185.00 1141.00 12430.[DESERTATION] To Employees Gratuity To General trade expenses To Interest charges To Legal & professional Charges To News paper & periodical To Office Vehicle & Expenses To Printing & stationary To postage and Telegram To Rent And House tax To Insurance & Subscription & taxes To Railway Freight & Octopi To Staff welfare & expenses To telephone and trunk call To traveling and conveyance To computer accounting charges To computer services charges To depreciation To bad debts To sales promotion expenses To sales campaign expenses To hire purchase charges To sales incentive To turn over tax To profit c/d 11151.00 10888.00 789227.00 16922.00 38552.00 50000.

2 9. Mat.663 18.5 6.2 1.2 Creditors: Sundry 13.0 2.0 30.2 9.0 Stock: Trading 19.056 4.613 24.3 Trade Creditors 13.8 70.7 21.556 26.134 10.808 (5.0 WORKING CAPITAL NET WORKING ASSETS NET CASH ASSETS (1.873) 20.991 29.856 100.1 CURRENT LIABILITIES Due to Banks (O/D.185 20.245 - 33.457 100.960 83.4 Curr.977 79.667 5.6 7.4 11.865 FIXED ASSETS Motor Vehicles 9.4 73.604 5.957 Other Op.245 29. Hire Purchase Commit 140 0.1 TOTAL TANGIBLE ASSETS 51.7 [Type text] Page 139 .651 (2.965) (1.343) (886) 11.446 TOTAL CURRENT LIABILITIES 43.8 10.8 22.720 38.196 29.399 TOTAL CURRENT ASSETS 41.9 4.0 3.5 2.3 11.9 29.5 17.4 Trade Debtors (Gross) 14.587 80.870 19.857 37.684 20.3 14.[DESERTATION] STANDARD CHARTERED BANK Western Indian state motors (westernInd) SCB ISIC Code: 7114 6/11/2005 Detailed Balance Sheet .870 19.746 26.681 15.T/R etc) 7.684 20.7 5.983) 17.059 15.4 4.661 100.3 8.3 8.369 Other Op Current Assets 2.8 37.912 9. Cur Liabilities 8.7 14.873 1.5 8.959 15.0 2.320 7.991 TOTAL FIXED ASSETS 9.Actual and % Thousands Statement Date Months Covered Analyst Source Currency: INR 3/31/2002 12 3/31/2003 12 3/31/2004 12 Date Prepared: Page 1 Monika Monika Monika Target Currency: INR Segment Type: Other CURRENT ASSETS Cash and Bank Deposits 5.439 11.460 84.677 28.5 39.8 14.751 38.0 47.

899 22.587 13.206 3.206 77.074 86.856 100.1 1.897 11.8 6.0 47.8 6.4 NET WORTH 5.661 100.560 88.Ordinary 5.0 22.5 6.5 6.4 TOTAL LIABS & NET WORTH 51.9 TOTAL LIABILITIES 45.114 2.0 30.100 4.897 11.5 6.957 EQUITY Share Capital .4 1.5 41.899 22.587 13.897 11.587 13.3 1.897 11.6 [Type text] Page 140 .8 6.457 100.5 6.899 TOTAL EQUITY 5.899 22.587 13.1 1.3 3.4 EFFECTIVE EQUITY 5.9 TOTAL TERM LIABILITIES 2.[DESERTATION] TERM LIABILITIES Loans from Dir/Shareholders (1 Yr+) 2.2 23.114 2.8 6.100 4.

2 446 0.214 1.2) (2.768 5.2 4.186 2.986) (2.326 4.4 9.8 OTHER OPERATING INCOME Commission Received 2.1) (188.0 (97.294 4.226)(3.379 1.5) Other SG&A Expense (4.4 2.193) (2.1) (2.2) 100.461 (205.1) Page 141 .5 4.0 193.6) GROSS PROFIT (LOSS) 6.862 (97.299 2.4) (7.1 3.251 1.0 2.444) 4.469 2.254 GROSS PROFIT (LOSS) 9.2 100.[DESERTATION] STANDARD CHARTERED BANK Western Indian state motors (westernInd) SCB ISIC Code: 7114 6/11/2005 Detailed Profit & Loss Statement .496)(6.5) (883) (0.5) (3.2 (504) (0. Expenses (7.100 1.4) NET OPERATING PROFIT (LOSS) BEFORE INTEREST & TAXES 2.4) (783) (0.386) 100.1) (3.3 8.2 Total Other Operating Income 3.2 442 Other Operating Income 430 0.8 1.412 1.6 ADMIN/OTHER OPERATING EXPENSES Depreciation (775) (0.554)(3.0) (3.1 Interest Expense [Type text] (1.393) 100.4 1.075 2.0 2.2) Wages & Salaries (2.682 8.0 (95.9 5.8) Bad Debts Written Off (349) (0.Actual and % Thousands Statement Date Months Covered Analyst Monika Source Currency: INR 3/31/2002 12 3/31/2003 12 Monika Target Currency: INR 3/31/2004 12 Monika Date Prepared: Page 2 PROFIT & LOSS STATEMENT Sales (Net of Returns/Duties) Cost of Sales FROM TRADING 211.2 441 0.387)(1.4) (832) (0.5) 2.518 Rent Received 442 0.428 4.570)(2.9) (6.104)(0.258)(1.872 (96.143) Total Admin/Other Oper.5 0.

620) (812) 4.444) 5.363 (349) (2.943) (548) (2.387) (2.412 441 446 (1.518 442 2.[DESERTATION] NET PROFIT (LOSS) AFTER TAX 996 0.544 (188.331) PROFIT RETAINED - STANDARD CHARTERED BANK Western Indian state motors (westernInd) SCB ISIC Code: 7114 6/11/2005 Detailed Cash Flow Thousands Statement Date Months Covered Analyst Sales (Net of Returns/Duties) Chg in Trade Debtors (Gross) Cash Collected From Sales Cost of Sales Chg in Stock: Trading Chg in Trade Creditors Cash Paid to Suppliers CASH FROM TRADING ACTIVITIES Bad Debts Written Off Wages & Salaries Other SG&A Expense Cash Paid for Operating Costs GROSS CASH FROM OPERATIONS Commission Received Rent Received Other Operating Income Chg in Creditors: Sundry Chg in Other Op Current Assets Chg in Other Op.682 1.393) (96.180) 11.5 1.524 3.570) (3.294 344 205 (993) 3.682) - PROFIT (LOSS) DISTRIBUTION Transfers to/from (+) Rev Reserves (996) (1. Cur Liabilities Other Income (Expense) & Taxes Paid [Type text] 3/31/2003 12 Date Prepared: Page 3 3/31/2004 12 Monika Monika 193.827 499 (9.682 112.650 1.722) (5.331 0.862 100.143) (6.810 Page 142 .312 10.872 (3.672 190.986) (3.181) 8.370) (102.7 1.590 3.564) (182.7 (1.713) 1.

956 693 (783) (90) (90) 7.912 [Type text] Page 143 .370) (8.331) (641) (923) (1. T/R etc) Chg in Loans from Dir/Shareholders (1 Yr+) Chg in Equity Admits to Profit & Loss Total Chg in Capital Total External Financing CASH AFTER FINANCING Add: Cash and Bank Deposits ENDING CASH & EQUIVALENTS 778 778 (883) (883) (105) (140) (140) (245) 186 (832) (646) (646) (891) 704 690 (1.996) (986) 92 312 (1.956 7.320 2.814) 5.460 8.134 3. Hire Purchase Commit Current Portion Long Term Debt CASH AFTER DEBT AMORTISATION Chg in Motor Vehicles Depreciation Chg in Other Fixed Assets Cash Paid for Plant and Investments FINANCING SURPLUS (REQS) Chg in Due to Banks (O/D.866 (6.682) (1.320 8. Mat.460 (504) (504) 7.[DESERTATION] NET CASH AFTER OPERATIONS NET CASH AFTER OPERATIONS Interest Expense Cash Paid for Dividends & Interest CASH AFTER FINANCING COSTS Curr.274) (408) 3.

08 4.76 39 22 22 22 18 44 3.69 1.663 3.90 13.08 0.69 3.89 1.51 0.79 3/31/2002 Date Prepared: Page 4 3/31/2003 3/31/2004 12 12 Monika 12 Monika DEBT MANAGEMENT RATIOS Leverage Ratio Gearing NPBIT: Interest Net Cash after Operations: Interest Interest on Avg.94 4.17 1.82 1.90 20.[DESERTATION] STANDARD CHARTERED BANK Western Indian state motors (westernInd) SCB ISIC Code: 7114 6/11/2005 Detailed Ratios Thousands Statement Date Months Covered Analyst Monika LIQUIDITY RATIOS Stock Turn Period (Days) Gross Trade Debtor Collection Period (Days) Net Trade Debtor Collection Period (Days) Net Debtor Collection Period (Days) Trade Creditors Pmt Period (Days) Net Cash Cycle Period (Days) Total ST Debt Coverage Cash Coverage 35 25 25 25 24 36 28 34 34 34 28 34 0.88 10.38 5.65 2.54 8.14 0.79 4.08 2.79 9.47 0.667 - PROFITABILITY RATIOS (%) Net Profit Margin Operating Efficiency Return on Equity Return on Assets (Geared) Return on Assets (Un-geared) Gross Profit Margin NPBIT to Sales NPBT to Sales 0. Financial Debt (%) Short Term Debt Long Term Debt 7.90 16.63 8.47 0.24 4.45 7.67 [Type text] Page 144 .39 2.47 3.099 6.21 2.76 1.99 0.87 0.73 1.24 1.37 1.67 6.44 24.42 16.32 2.34 16.

96 Liquid Ratio 0.38) (9.07 3.27 Effective Tax Rate Capital Spending (186) (693) Avg.54 13.67) (19.98) 20.99 252.95 0.22 Sales: Total Assets 4.86 10.51 Sales: Fixed Assets 21.54 Other Fixed Assets/Tot Fixed Assets (%) Other Term Liabilities/Tot Term Liabilities (%) (8.91 Investments/Total Assets (%) Gross Cash Flow less Interest & Dividends (annualized) 707 4. Expected Cap Spending 11 (1.94 6.63 (7.34 (47.926) Def Tax + Tax Payable/Tax Exp (%) N/A N/A N/A Dividend Payout Rate Average Tax Rate (%) Other Cur Assets/Tot Cur Assets (%) 4.97 Other Cur Liabilities/Tot Cur Liabilities (%) 18.32 25.26) (41.85) (9.146 Free Cash Flow (annualized) 542 2.96 0.61 19.862) Avg.60 0.97) 26.42 20.249 [Type text] Page 145 .37 (35.41 322.23 Other Income/Net Income Aft Tax (%) 326.11 4.32) 33. Cap Spending Expected Cap Spending 11 (3.50 0.[DESERTATION] GROWTH RATIOS (%) Sales Growth Net Profit Growth Total Asset Growth Total Liabilities Growth Gross Profit Growth Sustainable Growth OTHER RATIOS Current Ratio 0.02 11.03) 32.

[DESERTATION]
STANDARD CHARTERED BANK Western Indian state motors (westernInd) SCB ISIC Code: 7114 6/11/2005 Detailed Ratios Thousands Statement Date Months Covered Analyst Monika CREDIT GRADING DATA Large Corporate Total Equity Leverage (Total Liabilities to Total Assets) Net Profit Margin Cash to Total Debt Debt to EBITDA EBITDA to Interest - New Net Cash Ratio - New Pre-tax Profitability - New Size Factor (Total Equity) - New Capital Structure - New Liquidity - New Debt Service Coverage (%) - New Cash Flow Ratio 2 (%) - New Middle Market Gearing Ratio Net Profit Margin (%) Cash Ratio (%) Trading Stock Turn Period EBITDA to Interest Cash Flow Ratio Asset Turnover Debt Service Coverage (%) Sale Growth (%) Cash Flow Ratio 2 (%) 0.20 0.47 11.81 35 2.60 N/A 4.11 0.52 0.21 0.09 0.69 1.67 8.31 12.80 28 39 3.45 5.89 0.02 0.18 4.07 3.27 0.46 0.50 (8.32) (47.97) 0.61 4.46 0.21 28 0.09 39 Page 146 5,897 0.89 0.47 2.82 2.60 5,897 0.11 0.22 0.52 6,587 0.86 0.69 0.09 2.84 3.45 0.02 0.01 6,587 0.14 0.25 0.46 0.61 6,899 0.78 1.67 5.07 0.56 5.89 0.35 0.02 6,899 0.22 1.48 0.50 4.46 3/31/2002

Date Prepared: Page 5 3/31/2003 3/31/2004

12

12 Monika

12 Monika

Channel Finance & Supply Chain Gearing Ratio 0.20 Stock Turn Period 35 [Type text]

[DESERTATION]
Net Profit Margin % Total Tangible Assets Net Worth Productivity % 0.47 0.69 1.67 51,457 47,661 30,856 5,897 6,587 6,899 1.07 1.23 2.55 Date Prepared: Page 6

STANDARD CHARTERED BANK Western Indian state motors (westernInd) SCB ISIC Code: 7114 6/11/2005 Detailed Ratios Thousands Statement Date Months Covered Analyst 3/31/2002 Monika

3/31/2003 3/31/2004 12 12 12 Monika Monika

FINANCIAL SUMMARY FOR BCA FRONT SHEET DATA Total Sales 211,461 193,862 100,872 Operating Profit 2,100 2,214 2,186 Extraordinary Expenses Net Profit after Tax 996 1,331 1,682 EBITDA 2,875 3,046 2,969 Net Worth 5,897 6,587 6,899 Total Debt 8,099 8,663 1,667 Gearing 1.37 1.32 0.24 Debt to EBITDA 2.82 2.84 0.56 Net Cash after Operations 778 8,460 CADA (245) 7,956 Contingent Liabilities Total Provision for Employee Benefits (Including Pension) REPAYMENT SOURCE DATA Total Sales Gross Profit Net Profit after Tax Change in Sales (%) Gross Profit Margin (%) EBITDA to Sales (%) NPBT to Sales (%) PROFITABILITY 211,461 193,862 100,872 9,326 9,768 8,682 996 1,331 1,682 (8.32) (47.97) 2.87 2.82 4.39 1.36 1.57 2.94 0.47 0.69 1.67

NET WORKING CASH CYCLE

[Type text]

Page 147

[DESERTATION]
Stock Turn Period (SDOH) Trade Debtors Period (DDOH) Trade Creditors Period (CDOH) Net Working Cash Cycle Period 35 25 24 36 28 34 28 34 39 22 18 44

DEBT SERVICE CAPACITY Net Cash after Operations Cash after Financing Costs Cash after Debt Amortisation Net Cash after Operations/Interest Financing Surplus/Deficit 778 (105) (245) 0.88 (891) 8,460 7,956 7,956 16.79 7,866

LONG TERM ASSET/LIABILITY MANAGEMENT Net Fixed Assets Long-Term Debt+ Equity Sales to Fixed Assets Capex to Depreciation Ratio DEBT PROTECTION Gearing Interest Cover Debt to EBITDA EBITDA to Interest Maturing Debt Obligations S/T Maturing Debt Obligations M/T Debt Service Cover Ratio Subordinated Debt Annual Operating Leases Contingent Liabilities 1.37 1.90 2.82 2.60 8,099 1.32 2.51 2.84 3.45 8,663 1.80 0.24 4.34 0.56 5.89 1,667 9.23 9,870 5,897 21.42 9,684 6,587 20.02 (0.22) 8,991 6,899 11.22 (0.89)

CAPITAL PROTECTION Tangible Net Worth Revaluation Reserve Total Assets Leverage (Total Liabilities to Total Assets) Dividend Payout Ratio 5,897 6,587 6,899 51,457 47,661 30,856 0.89 0.86 0.78 -

[Type text]

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Profit before Interest& Taxes/Sales (%) ISIC: Nature of Business [Type text] (8.14 2.51 6.768 8.899 6.34 (105) 7.37 1.32 25.899 1.862 100.34 32.897 8.587 6.99 1.214 2.24 4.23 36 34 44 0.667 0.32 2.872 Gross Profit (Loss) 9.100 2.90 6.682 Net Oper Profit (Loss) Before Interest & Tax 2.97) 20.[DESERTATION] STANDARD CHARTERED BANK Western Indian state motors (westernInd) SCB ISIC Code: 7114 6/11/2005 Financial Summary Ratios Thousands Statement Date Months Covered Analyst Source Currency: INR Monika Target Currency: INR LIQUIDITY Cash after Financing Costs Cash Coverage PROFITABILITY Sales (Net of Returns/Duties) 211.587 8.326 9.663 1.32) (47.79 3/31/2002 3/31/2003 12 12 Monika 12 Monika Date Prepared: Page 7 3/31/2004 Segment Type: Other .682 Profit Retained CAPITAL STRUCTURE Total Equity Net Worth Total Debt Gearing NPBIT: Interest OTHERS Sales Growth Sustainable Growth Net Cash Cycle Period Total ST Debt Coverage Net Op.461 193.76 16.331 1.08 3.897 5.956 0.099 1.90 0.17 7114 Trading Page 149 5.186 Net Oper Profit (Loss) Before Tax 996 1.

[Type text] Page 150 .7%. There is an increase in the management and operation efficiency of the company because the company is able to decrease the cost of sales which helps the corporation to increase its Gross profit. So if the company increases its sales with the induction of the new technologies and adoption of aggressive marketing strategies.7 to 1.  Company’s current ratio & the Quick ratio are below 1 which is not good for any company. But if we analyze the sales part of the company. Any company can face this situation in getting a short term loan from the market.5 to . then it will adversely affect the company. It shows that the company's dependency on the outsiders is decreasing progressively & the company is becoming self-dependent.4%. which shows the strong collection technique of the company.[DESERTATION] ANALYSIS The motor sector of this company is on demand but there is a tough competition in the market. Comments of various ratios  If we see the figures of the company's profit in the percentage form. If we analyze the situation closely we find that the NPAT/Sales of the company have kept on increasing year by year from . then the prospects of the company could brighten in the future. A look at the P &L account of the Corporation shows that there is a constant decrease in the sales of the Company. it is not showing good performance. then we can say that there is a positive trend as the net Profit & the gross profit of company are increasing year by year. The bad-debts of the company are also removed during the year 2004. A number of multi-national companies are coming to India with new technologies and innovative techniques which makes very difficult for an Indian company to sustain in the market. but even after that the Company is able to maintain its NPAT. because if it keeps on increasing in the same pace. The Company’s gross profit has also increased in the same way from 2.  There is high decrease in Debt equity ratio & the Gearing ratio of the company which is a very good indicator for a company.8 to 4.

34 which is a positive for the company. It shows that for every one rupee of Interest liability.4.  When we come on the Cash Conversion cycle of the company. Or we can say that this company is trying to increase its sales by providing the lenient (loose) credit policy or facility to its customers. [Type text] Page 151 . If we see the cash flow statement then we will find that company has been able to repay a major portion of its due to Bank or debt which helped the company in reducing its interest expenses. which is not a good sign for the company because the company has to be dependent on outsider's financing which carries an additional cost . It shows that lots of money of this company is locked in the form of debts & the stock.90 -> 2.54 -> 4.The above ratios directly shows that Company can repay a major portion of its debt.[DESERTATION] A glance towards the NPBIT/Interest shows that it has increased from 1.The reason for this is an increment in the stockturnover period & the debtor-turnover period. the company is having Rs. we see that it has increased.34. which means that the company can easily bear the interest payment . After analyzing it we can say that due to the lack of proper advertising of the company its sales is not increasing & on the other side its debtor & stock period is also not increasing.

[Type text] Page 152 . As the Corporation gearing ratio & the debt to EDITDA is decreasing year by year which shows the sign of the corporation self dependency. then it can definitely increase its sale which will directly increase the profit of the corporation. If we see the company’s condition & the market condition then we can say that if company will launch its new products in the market. If company comes with the new technology. the sales of the company are decreasing. In that case a lender can believe or trust the Corporation for the security of its interest because corporation liabilities are also decreasing. so company need to adopt some innovative & aggressive techniques to face this situation. As lots of multinational company had entered into the market. If we se the overall picture & compare the corporation with the industry.[DESERTATION] OVERALL ANALYSIS If we analyze the whole situation of the company. as due to lots of Competitive pressure in the market. then we can say that Corporation is able to control on its cost department or cost of sales but the main problem with the corporation at this stage is to face the stringent Competition in the market. The corporation approached the bank for a loan of Rs.1 crore to purchase the new updated machines to enhance the productivity & production of the innovative products. then we will find that. talented employees then the company could rise in the future as it is clear from the annual report of the company that the % of the Net profit & the Gross Profit of the company is increased.

1.5%) .000 and there are the chances that its value will increase in the future. then we can sanction a part of the requirement of the corporation. we see. the bank can recover its loan with the sale of its machinery & the personal property of the customers.70 lakhs @14 % per annum (PLR + 1. it has been able to repay a major portion of its debt without any default. then we can say that the corporation will easily be able to repay its interest installment of Rs. 0.000 as its EBITDA/INT. 200203 respectively. The value of the property is Rs.60.it is near to Rs.70 lacks with 30 % margin at the rate of 14 % or 1. 2001-02.9.36. even after the decrease in the Sales of the corporation.5% above PLR because there are fewer risks associated with it. If The bank sanctions Rs.21 lacks in last 3 years. And if we analyze the credit of the corporation. So now finally we can say that bank can sanction the loan of Rs. The Gearing Ratio of the company is 0. If the same crisis happens in the near future. As the Corporation is offering the collateral of new machines & some personnel property. 2.[DESERTATION] If we see the past 3 years record of the corporation in term of EBI TDA/ Interest .60% For 2002-03 .Which is less than 3 and the Interest coverage ratio is 1.01% for the financial year 2000-01. 00.32 for financials years 2000-01.22 lakhs in the 3 years. is more than Rs..30. [Type text] Page 153 .09 .

particularly in semi-urban and upcountry areas and meeting the large volumes of granular transactions. In addition to sectors like the auto ancillary. the sector is witnessing a new dawn. etc are already making their presence felt in the international vendor markets. garment exports and pharma. While the sector is attractive in terms of its potential. These are challenges of credit risk evaluation based on inadequate financial information. [Type text] Page 154 . consolidating various policy initiatives in a single nodal authority and developing a comprehensive credit guarantee scheme for small businesses. To remove these. banks have to overcome several challenges in servicing the SME banking requirement. In this context. It has SME sector is Vital to the economy . SMEs are fast adopting international best practices. there are several issues that we need to tackle. This sectors accounts for 95% of industrial units The SME sector is vital to the Indian economy. However. high cost of setting up wide distribution architecture. focusing on productivity and are at the leading edge when it comes to innovation and entering new global markets. This sector accounts for 95 percent of industrial units. ITES. With liberalization. These include revamping the policy framework in the context of the new global paradigm. around 40 percent of the industrial output and 35 percent of the country's exports. SMEs in emerging sectors such as BPO. It runs over 78 Branches all over the country. SMEs face hurdles in their growth process.[DESERTATION] CONCLUSION Standard Chartered Bank over the years maintained its services and relationship. the union budget has given importance to stimulating growth in the SME sector.

commercial banks are to spearhead the financial system in India and continue to foster accelerated economic development and growth with merit. domestic or foreign can stimulate competition.SMEs are exporting to retail chains (Walmart. legal and political in the recovery of bank loans and advances. there are also additional avenues such as the Indonext platform. Pfizer). auto majors (Ford. Gap) . To reach the international standard s of capital adequacy . Therefore. the SME Growth Fund recently announced in the budget. Besides. and is becoming increasingly demanding in terms of value and service levels. the banking sector has contributed to the process of economic development by serving as a major source of credit to all section of the economy. We can conclude that the commercial banks are likely to remain the dominate institution for some time. the SME customer now requires complex and sophisticated banking products. Apart from performing the key function of providing liquidity and payment services to the real sector and managing bulk of the financial intermediation process. To fund this growth. be it the house hold. Banks can be made more efficient by improving their management system. industry. The entry of new private banks. SME exports are on the rise . risk management and accounting practices the right talent at appropriate levels of management needs to be inducted laterally and banks should have the necessary freedom to do so. This will provide the much-needed capital market window for growth. Banks have to gradually rise to provide services in response to market requirement. better trained and highly motivated staff and less government interference. as business organization in pursuit of excellence and sound financial performance. on their end.[DESERTATION] SMEs. Better management requires new lending polices. With globalization and increasing competition. government or the weaker section of the society. There are several impediments including statuary. will provide debt-funding support. convenience and reduction in cost of transactions. are seeking efficiency in banking transactions. GM) and pharma MNCs (GSK. In spite of competition. [Type text] Page 155 . better loan recovery procedures. restructure of borrower accounts should be left to individual bank decision subject to full transparency then only the banks can perform better. Avetis. more sophisticated information system.

standardchartered. Standard Chartered Bank over the years maintained its services and relationship.[DESERTATION] As I have analyzed three companies in my project report. The bank should properly analyze the customers profile on some other grounds also to minimize credit risk.com  www.default. It has created a name for itself. If a loan turns into NPA then it can create a big trouble for the company.com [Type text] Page 156 . It runs over 78 Branches all over the country. I came to know there are some chances of improvement. As far as my views are concerned BIBLIOGRAPHY BOOKS AND NOTES    Process notes of different departments Brochures of different SCB Products Six Sigma for Managers by author GREG BRUF   Study material from the Bank Reserve bank of India Guidelines Booklet  Presentations from Employees WEBSITES  www.

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