Project Appraisal Procedure at Karnataka State Financial Corporation, Bangalore

Karnataka State Financial Corporation, Bangalore
PART- A INTRODUCTION:
Finance is the lifeblood of all types of economic activity. It is so indispensable that no one can neglect nor ignore the importance of finance. Finance is defined as distribution of and purchase of liability and equity claims issued for the purpose of generating revenue producing assets its management of monetary affairs of the company it includes determining what has to be made for raising money on best term available and what has to be made for allocating available funds to the best use.
Finance is the administration of economic activity it includes banking money and credit for different type and classes. All major business decisions made financial implications no matter whether an organization is small or big newly started or existing business needs finance. If decision relating to money or funds fails it may result in failure in whole of business organization.
Finance function is a comprehensive activity which includes not only sources but also cost associated with their resources duration of requirement and proper utilization of funds.
Global Scenario of Finance: In recent years the financial sector in most of the countries around the world has undergone major changes. Deregulation, liberalization and technological innovations, allow financial institution to a larger variety of products and services, making the traditional frontiers between banking, securities and insurances sectors more. In practice, the financial sector is in a process rapid transformation. Reforms are continuing as part of the overall structural reform aimed at improving the productivity and efficiency of the economy. The role of an integrated financial infrastructure is to stimulate and sustain economic growth.
The US$28 billion Indian financial sector has grown at around 15 percent and displayed stability for the last several years, even when other markets in the Asian region were facing a crisis. This stability was ensured through the resilience that has been built into the system over time. The financial sector has kept pace with the growing need of
P.G. Dept. of Management Studies, PESITM, Shivamogga
corporate and other borrowers. Banks capital market participants and insurers have developed a wide range of product and service to suit varied customer requirements.
Indian Financial System: The world system stands for a set of bodily organs like composition or concurring function, a scheme of classification and a method of organization. Finance holds the key to all human activity. Finance is the study of money, its nature, creation, behaviors, regulation and administration. So all those activities dealing in finance are organized in the know as the financial system or financial sector.
The evolution of the financial system in India has been interlinked with the growth of the macro economics. The financial system has travelled up and down from barter financial system greatly influenced by the spread of urban society and above all the advent of large-scale industrialization in the second half of the nineteenth century, altered the expansions of the railways and especially with the revolutionalisation of information technology.
In India, the evolution of financial system reflected its political, social and economic need and aspiration. Government has played a large role in the creation and broad basing of the financial system depending in the country. The government has exerted its influence over the flow of credit control and direction. It is also big borrower as well as regulator of the financial system.
The growth path of financial system can be divided into three distinct phases the first phases are characterized by active state intervention with all view to build up the institutional infrastructure. Developing countries are in a hurry to catch up with modern banking and development in money and capital markets and they cant afford to wait for the spontaneous and autonomous growth of the financial system to take place.
The financial system is closely connected or interlinked institutions agents practices, market transactions claims and liabilities in an financial system is concerned about money, audit and finance some of the terms are related but some different form each other.
Money refers to current medium exchange. Finance is monetary resources comprising debt and ownership funds of state company. Credit or loan is a sum of money to be returned normally with interest. Currency and exchange form an essential part of financial system.
Scope of the Financial Function: a) Estimation of the financial requirements: Estimating the financial requirements is the first and the foremost task and long term financial needs of the concern. This calls for preparation of the financial plan for present as well as for future. The amount required for purchasing fixed assets as well as needs of funds for working capital have to be estimated.
b) Deciding the capital structure: The term capital structure refers to the kind and proportion of deferent securities for raising funds. After deciding the quantum of funds required it should be decided as to which type of securities should be raised further while deciding about the capital structure due consideration.
c) Selecting a source of finance: Once the capital structure is decided an appropriate source of finance is selected the various sources of finance include share capital, debenture, financial institution, commercial banks and public deposited etc.
d) Selection pattern of investment: Once the funds have been procured the decision about investment pattern that is to be taken. A decision has to be taken as to type of assets that are to be purchased first funds may be invested in fixed assets and an appropriate portion may be kept for the purpose of working capital.
e) Proper cash management: Requirement at different times and then make arrangements for acquiring cash.
f) Implementing financial control: An efficient system of financial management necessitates the of various control device generally such as ROI, Budgetary Control, Break Even Analysis, Cost Control and Ratio Analysis.
g) Proper use of surpluses: The utilization of profit or surpluses is also an important factor in financial management. A judicious use of surplus is essential for expansion and diversification plans and also in protecting the interest of share holders.
Objective of the Financial Function: The primary objective of the finance function is to arrange for required funds for the business from time to time
a) Acquiring sufficient funds: The basic objective of finance function is to asses or estimates the financial requirements of an enterprises and then finding our suitable sources for revising them.
b) Proper utilization of funds Though selecting the source and rising of funds is most important objective of the finance function. The proper utilization of such funds is even more critical, the funds should be utilized in such a way that maximum benefit is derived from them.
c) Increasing profitability The planning and control of finance function aims at increasing profitability of the concern. It is a fact that money generated money sufficient fund will have to be invested in order to increases profitability.
d) Maximizing concern value: Finance function also aims at maximizing the value of the firm usually a concerns value is linked with profitability.
Pattern of Fund Requirement: A firm basically needs three types of funds they are: I. Short term finance II. Medium term finance III. Long term finance
Classification of Various Sources of Finance Short Term Investment a) Call money/ call notice: This is the barrowing and landing money for short term ranging from 1 to 14 days, if the money is lent for a day is called call money. It is called because of the money that is lent is to repaid the next day together with agreed interest. If it is for a period of more than a day and less than 14 days it is called as notice money.
b) Commercial paper: It is another short term instrument introduced in a domestic money market. This was a towards disintermediation. It is an unsecured promissory note issued by the company either directly or through bank or merchant bank.
c) Treasury bills: It was introduced in the year of 1986. This is the most liquid instrument available in Indian market. Treasury Bills are issued by the central govt., to meet its short term needs.
d) Commercial bills: One of the ways of raising working finance is by way of discounting bills as own by the supplier on his customer in course of his routine trade activities. The unique feature of these commercial bills is that could be subjected to further rounds of discounting by bank holding their bills of their funds.
e) Certificate of deposits: RBI introduced this in 1989 with the objective of broad basing the money market. It is the marketable receipt of funds deposited in bank for a period at a specified rate of interest. P.G. Dept. of Management Studies, PESITM, Shivamogga 5
Medium and long term finance: a) Equity shares: Equity shares are commonly referred to common stock or ordinary share. It is an instrument issued by the company to mobilize the capital companies issues them in new issue market. The equity shareholders enjoy special powers of voting and can become director of a company.
b) Preference shares: The characteristics of preference shares are hybrid in nature like bonds their claims on the company income are ltd., and they received the fixed dividend in event of liquidation of company their claims on assets of firms are also fixed.
c) Debentures: The private sector companies generally issue debentures as a long term promissory note for raising loan capital. The company promises to pay interest and principal as stipulated bond is an alternative form of debentures in India.
d) Retained earnings: Retained earnings refer to creation of reserves out of profit and the utilization of accumulated profit or reserves for meeting the finance requirements of business. It is also called as internal source of finance.
e) Public deposits: It is usually raised by a company from general public as means of borrowings assuring them a fixed % interest for a specific period of time.
Classification of Financial Market: There are different way of classifying financial market ways of classifying are on the basis of:
1) Type of Financial Claim: The debt market is the financial market is the financial market for fixed claims or debt instruments and the equity market is the financial market for residual claims or equity instrument. P.G. Dept. of Management Studies, PESITM, Shivamogga 6
2) Financial market by maturity of claims: The market for short-term fiancial claims is referred to as the money market and the market for long term financial claims is called as capital market.
3) Primary market and secondary market: The third way to classify financial markets is based on whether the claims represent new issues or outstanding issuers. The market where investor trade outstanding securities is called secondary market.
4) Cash spot market and forward market: Yet another way to classify financial market is by the timing of delivery. A cash or spot market is one where the delivery occurs immediately and a forward or future market is one where the delivery at a predetermine time in future.
5) Exchange trade market and over the counter market: The fifth way to classify financial markets is by the nature of its organizational structure an exchange-traded market is characterized by a centralized organization with standardized procedures. An over the counter market is a decentralized procedures. An over the counter market is a decentralized market with customized procedures.
Recent trends in Indian financial system: With a view to bringing the interest rates nearer to the free markets rates, the government has taken the following steps: 1. The interest rate on company deposits is freed. 2. The interest rate on 365 days treasury bills determined by aucations and they are expected to reflect the free markets rates. 3. The coupon rate on government loans been revised updates so as to be market oriented. 4. The interest rate on debentures is allowed to be fixed by companies depending upon the market rate. 5. The maximum rate of interest payable on bank deposits above one year.
Major players in Financial Sector: a) Industrial Development Bank of India (IDBI): The IDBI, which was established in 1964 under the act of parliament, is the principal financial institution for providing credit and other facilities for development of industry, co-ordinate working of institutions engaged in financing, promoting or developing industrial units and assisting development of such institutions. IDBI has been providing direct financial assistance to large and medium industrial units and helping small and medium industrial concerns through banks and state level financial corporations. Now it is converted into banking sector.
b) Industrial Finance Corporation of India (IFCI): The government of India has set up the IFCI in 1948 under the special act. At the time of independence in 1947, India's capital market was relatively under-developed. Although there was significant demand for new capital, there was a dearth of providers. Merchant bankers and underwriting firms were almost non-existent. And commercial banks were not equipped to provide long-term industrial finance in any significant manner.
It is against this backdrop that the government established The Industrial Finance Corporation of India (IFCI) on July 1, 1948, as the first Development Financial Institution in the country to cater to the long-term finance needs of the industrial sector. The newlyestablished DFI was provided access to low-cost funds through the central bank's Statutory Liquidity Ratio which in turn enabled it to provide loans and advances to corporate borrowers at concessional rates.
c) Small Industries Development Bank of India (SIDBI): SIDBI has been established in 1989 to function as an apex bank for tiny and small scale industries. It is an independent financial institution aimed to aid the growth and development of micro, small and medium scale enterprises in India. It was incorporated initially as a wholly owned subsidiary of Industrial Development Bank of India. Current shareholding is widely spread among various state owned banks, insurance companies and financial institutions. Beginning as a refinancing agency to banks and state level financial institutions for their credit to small industries, it has expanded it's activities, including direct credit to the SME through 100 branches in all major industrial clusters in P.G. Dept. of Management Studies, PESITM, Shivamogga 8
India. Besides, it has been playing the development role in several ways such as support to micro-finance institutions for capacity building and onlending. Recently it has opened 7 branches christened as Micro Finance branches, aimed especially at dispensing loans up to Rs. 5.00 lakh.
d) Industrial Credit and Investment Corporation of India (ICICI) The Industrial Credit and Investment Corporation of India was sponsored by a mission from the world bank for the purpose of developing small and medium industries in the private sector. It was registered in january1995 under the Indian companies act. Its issued capital has been subscribed by Indian banks, insurance companies and individuals and corporations of the Indian banks, insurance companies and individuals and corporations of the United States, the British eastern exchange banks and general public in India.
The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. In 1994, ICICI established Banking Corporation as a banking subsidiary. Formerly known as Industrial Credit and Investment Corporation of India, ICICI Banking Corporation was later renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans etc. e) State Financial Corporations (SFCs): SFCs form a unique set of institutions established to assist and develop industrialization in the state of India. For the purpose of assisting the financial help to small and medium sized industries, the government of India desired to set up state financial corporations.
Evolution of State Financial Corporation (SFC): The Indian Financial sector today comprises an impressive network of financial institutions and wide range of financial instruments. Functionally there are two types of financial institutions in the Indian market, namely developmental institutions and investment institutions. P.G. Dept. of Management Studies, PESITM, Shivamogga 9
Developmental institutions include industrial finance corporation of India (IFCI), Industrial Reconstruction Bank of India (IRBI), State Finance and Development Corporation. In the category of investment institutions comes the Unit Trust of India (UTI), Life Insurance Corporation (LIC), State Level bodies like State Industrial Investment Corporation.
The Idea of developmental banks has its origin in the urge in the backward and under developed countries to achieve quick economic growth. Under this urge, a developmental bank was conceived as an instrument for promoting all round development, since they undertake both banking function as well as developmental functions.
The establishment of Industrial Finance Corporation of India (IFCI) though bridged serious gap in institutional finance for large-scale industrial units, the problem of term finance for medium and small-scale units was left unsolved. The need for stabling a similar institution at the state level was left unsolved. The need for establishing a similar institution at the state level was initially felt as device to bridge the nexus. Hence the SFCs came into existence to look into this problem as regional development banks over a period of years. SFCs form a unique set of institutions established to assist and develop industrialization in the state of India. The activities of IFCI were statutorily restricted to large scale-sector. The Indian socio-economic environment with certain under-developed feature constantly stressed the urgent need for the development of medium and smallscale industries. Establishment of regional development banks has been important means to meet this end.
Their sources of funds are issue of bonds and debentures in the market, fixed deposits from the public, borrowing from RBI, IDBI, state governments etc. These funds are deployed mostly as loans and advances to the various medium and small enterprises, investment in government securities, corporate share, debentures etc. These bodies are to assist in particular small-scale industries, units in backward areas. There are 18 SFCs operating in India they are P.G. Dept. of Management Studies, PESITM, Shivamogga 10
Assam financial corporation Bihar state financial corporation Delhi financial corporation Gujarat financial corporation Haryana financial corporation Himachal financial corporation Jammu Kashmir financial corporation Karnataka state financial corporation Kerala financial corporation Madya Pradesh financial corporation Maharashtra state financial corporation Orissa state financial corporation Punjab financial corporation Rajasthan financial corporation Tamil nadu industrial investment corporation limited Objectives of SFCs The SFCs have been authorized under section 25 of the SFCs Act to carry on the following kinds of business. Granting of loans or advances to or the subscribing to debentures of industrial concern repayable within a period not exceeding 20 years from the date on which they are granted or subscribed as the case may be. Under writing of the issues of stocks, shares, bonds or debentures by industrial concerns. Guaranteeing on such terms and conditions as may be agreed upon raised by industrial concerns that are repayable within a period not exceeding 20 years capital are floated in the public market. Generally doing of all such acts and things as may be incidental to or consequential upon the exercises of their powers or the discharge of their duties under the act.
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COMPANY PROFILE
2a. Background And Inception Of The Company: The Karnataka state financial corporation, which prior to November 1, 1973, was known as t he Mysore Financial Corporation, was established on March 30, 1959. Then the Government of Mysore established the KSFC by notification No. FD 28bis 59 DATED 30th March 1959.
KSFC has decentralized system of working. Term loan up to Rs. 25 lakhs are sanctioned at the head offices and loan jointly with KSIDC/commercial banks for projects whose cost is less than Rs, 20 crores.
Today, while the state economy is making rapid strides in the global market, KSFC is moving in tandem as a pioneering and responsive financial institution. KSFC is fine tuned to fulfill the plans and aspiration of entrepreneurs by extending all possible assistance. Amendments to the SFCS Act provide for wide ranging scope of assistance and operational flexibility, keeping this in view KSFC has re-engineered itself to ensure utmost customers satisfaction with new energy, trust and speed.
KSFC extends lease finance assistance and hire purchase assistance for acquisition of machinery/equipment/transport vehicle. KSFC has a merchant banking department and is approved as a category merchant banker by the Security Exchange Board of India (SEBI) And this department takes up fees based activities like the management of public issues, under writing of shares, project report preparation, deferred payment guarantee, loan syndication, bill discounting etc. the fund based activities like subscription to the non convertible debentures, factorings services are also considered.
In the 45 years of existence, KSFC has controlled most for the growth of SSIs, backward area development and promotion of first generation entrepreneurs. Its achievements in these areas are unparalleled. Since inception, KSFC has assisted more than 154000 units with cumulative sanctions of over Rs. 7184 crores out of which more than 50 % are towards SSIs, KSFC on ISO 9001:2000 certified organization is proud to have played a major role in the industrial development of the state. It is also the privilege
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of KSFC to have assisted many industries that are internationally recognized like INFOSYS & BIOCON.
2b. Nature of Business Carried: The business carried by this institution is generally related with providing the term loans to MSME sector. It not only provides lending facilities but also it deposits the funds. This financial institution works mainly over long term financial loans to medium enterprises.
KSFC extends lease financial assistance and hire purchase assistance for acquisition of machinery, equipment and transport vehicles. This department takes up the management of the public issues, under writing of shares, project report preparation, deferred payment guarantee, loan syndication, bill discounting etc. the fund based activities like subscription to the non convertible debentures, factorings services are also considered. KSFCS assistance covers almost all types of industrial and service sectors. As per SFCs Act, the following activities are eligible for financial assistance. Manufacturing, preservation or processing of goods. Mining or developing of mines. Hotel industry Acquisition of transport vehicle. Generation or distribution of electricity or any other form of power. Maintenance, repairs, testing or servicing of machinery or power. Setting up or development of an industrial area or industrial estate. Finishing or providing shore facilities for fishing or maintenance thereof. Providing weigh bridge facilities. Providing engineering, technical, financial management, marketing or other services or facilities for industry. Providing medical, health or other allied services. Providing hardware or software services relating to information technology, telecommunication or electronics including satellite and audio or visual cable communication.
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Construction activity. Development, maintenance and construction of roads. Providing commercial complex facilities and community centers. Floriculture. Tissue culture, poultry, breeding and hatcheries. Service industry. Research and development activities. Setting up of medical stores. Setting up of vocational training centers for importing technical knowledge to entrepreneurs and running the units efficiently and produce quality goods. Setting up of entertainment industries including production of films. Such other activities approved by SIDBI from time to time. The main purpose of the organization is to extent adequate and timely financial assistance to all the SMEs in the area of industries, services, infrastructure and health care, hospitality, technical know-hows, software, transport etc.. for creation of the fixed assets and current assets through various products mix.
2c. Vision, Mission, and Quality Policy: Vision: Vision KSFC is to be premier financial in the country, by providing effective and efficient service to all sectors of people under one roof. Its vision is all for one and one for all.
Mission: KSFC is committed to continually nurture, develop and service the SME sector through need based products and services.
Quality Policy: Customer satisfaction through professional management and team work.
Quality objective: To effectively identify and assist the entrepreneurs in establishing successful business enterprises. P.G. Dept. of Management Studies, PESITM, Shivamogga 14
To provide financial and related services on a continuous basis. To continually upgrade our product and services. To motivate and involve employees to achieve the set of organisational growth targets. To encourage the employees to upgrade and enhance the knowledge and skill through effective training and development. To transform the organisation to a customer centric institution.
2d. Products/Service Profile: Following are the various product and services of the KSFC: National Equity Fund Scheme:Objective: The objective of the scheme is to provide equity type of support to entrepreneurs. Assistance from NEF helps the small scale units in strengthening their equity base and thereby improving their acceptability for term financing.
Eligible borrowers: new and existing projects in tiny and small scale sector, undertaking expansion, modernisation. Technology up gradation, diversification, sick units etc. Limits: Total cost of the not to exceed Rs. 50.00 lakhs Revised Technology Development and Modernization:Objective: The objective of the scheme is to encourage the existing SSI to modernize their production facilities in order to improve productivity, quality etc., and compete successfully in domestic and international market, providing assistance for purchasing of capital equipment, acquisition of technical know-hows, improvement in packaging etc.
Eligible borrowers: sole proprietorships, co-operative societies, private limited companies.
Limits: project outlay not exceed Rs. 100.00 lakhs
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Acquisition Of ISO 9000 Series Certification:Objective: The purpose of assistance will be towards meeting the expenses on consultancy, documentation, audit, certification fee etc.
Eligible borrowers: Existing industrial concern in the SSI sector having a good report of the past performance and sound financial position.
1. Have been in operation for a period of at least two years. 2. Have earned profit and declared dividend during the preceding two financial year. 3. Not be in default to institution/banks in payment of their dues. Technology Upgradation For Textile Industry-A: Objective: To provide encouragement for textile industries (including units in cotton ginning and pressing sector) in the small scale industrial sector for technology up gradation and to modernize their production facilities.
Eligibility Criteria: New units and existing units with or without expansion.
Eligibility Borrowers: Sole proprietary concerns, partnerships, co-operative societies, private and public limited companies. technology Upgradation for Textile Industry-B: Objective: This scheme is similar to the one given in detail under A above. However this scheme meant for non-small scale industrial unites in textile industry for taking up technology up gradation and modernization of their production facilities.
Eligibility criteria: co-operative societies, private and public limited companies. Entrepreneurs are advised to refer to the booklet of technology up gradation fund scheme brought out by the Government of India for the further details and also the machineries eligible for coverage under this scheme.
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Assistance for Marketing Related Activities: Objective: To provide financial assistance to small and medium scale unites to undertake various activities necessary to increase their scale in domestic and foreign markets and/or to create physical marketing infrastructure.
Eligible criteria: The assistance under this scheme is provided for undertaking various market related activities such as: Market research Preparation of strategic marketing plan Advertising, branding, breading, broadcasting catalogues preparation, production of audio-visual aids etc. Establishment of permanent exhibitions or trade centres Training of personnel in marketing skills Establishing sales offices or showrooms abroad.
Eligible Borrowers: Existing units with a good track record and sound financial position are eligible for assistance.
Limits: Minimum limit is Rs. 5 lakhs and maximum limit is Rs. 50 lakhs. Assistance for Marketing Enterprises: Objectives: The objective of the scheme is to assist entrepreneurs to set up sales outlets or renovation, expansion of existing sales outlets for marketing products irrespective of whether it is a product of a small scale industry or not.
Eligible borrowers: The loan amount will be restricted to 75% of the cost of the land. Building, equipment, interiors technology. And also stock of the goods subject to minimum of Rs.50.00 lakhs and maximum of Rs. 50.00 lakhs. Rental discounting scheme: Objective: To provide financial assistance on the strength of the rent earned by non-residential properties located within the city and municipal limits of Bangalore,
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Mangalore, Hubli, Dharwad, Gulbarga, Shimoga, Bhadravathi, Mysore and Belgaum subject to gross rent earned of not less than Rs. 25000 per month. Financing Existing Assets And Enterprises: Objective: To extend financial assistance for taking over of existing assets/enterprises.
Eligible borrowers: Existing enterprises engaged in the activities eligible for assistance from the Corporation and in existence for a minimum period of 2 years with good track record.
Eligible Criteria: Plant and machinery-Machinery of a reputed make with a minimum residual life of 10 years as assessed by the technical officers of the Corporation supported by Chartered Engineers certificate. Land chnology, with or without & Building- Industrial/commercial properties located at prominent places within municipal limits with a minimum of 29 years residual life, subject to certification by the technical officers of the Corporation. Nature & extent of finance-Financial assistance will be in the form of term loan not exceeding 70% of the estimated value of the asset being considered for finance. Minimum limit of the scheme will be Rs. 10.00 lakhs. Interest Subsidy Scheme of GOK: Objective: To encourage small and medium scale entrepreneurs and to upgrade the technology and modernize their existing production facilities the Government of Karnataka has come up with an interest subsidy scheme. This scheme is applicable to the units financed by KSFC and KSSIIDC only. The scheme is operating from 18th October 2000. Eligible Criteria: Unit should be in operation at least for a period of three years and should not be in default in payment to the institution or banks. Textile and tannery units which do not avail the interest subsidy scheme under the Government of Indias scheme are also eligible. P.G. Dept. of Management Studies, PESITM, Shivamogga 18
Credit Linked Capital Subsidy Scheme (CLCSS): Objective: The objective of the scheme is to facilitate technology up gradation of SSI units in specified products/sectors by providing 15% capital subsidy for induction of proven technologies approved under the scheme. Maximum limit is 15.00 lakhs.
Eligible criteria: Proprietary concerns, partnerships, co-operative societies, private and public limited company in SSI sector.
Existing SSI units registered with the state directorate of industries who upgrade with the state of art technology are eligible. New SSI units which are registered with the state Directorate of industries and who set up proposed facility with the appropriate eligible and proven technology duly approved by GTAB are also eligible. Cases covered under RTDMS of SIDBI are also eligible for capital subsidy under the proposed scheme. Corporate Loan Scheme: Objective: The objective of the scheme is to extend short term loans to existing successful units who require urgent working capital funds either to meet the gap in the working capital requirements or funds required for executing the rush of orders. This loan is also to consider for developing/expanding new markets and opening LC for purchase of new equipments till a term loan is sanctioned and released by the financial institutions.
Eligible Criteria: Existing units eligible for financial assistance from KSFC under the SFCs Act, 1951 are eligible to be covered under the scheme. However corporate loan is restricted normally to the manufacturing sector. General Scheme: Objective: To extend financial assistance for new enterprises to establish SSIs/MSIs/Service units and for expansion, modernization, diversification etc., by the existing units.
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Eligible Criteria: Projects which are eligible to be financed as per the SFCs Act, the details of which are given under the first part of the brochure are covered under General Scheme of the Corporation. Assistance to Entertainment Industry: Objective: the objective of the scheme is to provide financial assistance for the construction / purchase of cinema house multiplexes, production of starting TV serials and feature films as well as software for vision media publicity to be set up/produced/film within Karnataka. Assistance to Construction Activity: Objective: To provide financial assistance for construction group Housing, Commercial complex, Software Parks, Roads, Flyovers, Bridges etc.
Eligible Borrowers: Firm/company shall been in existence for at least 5 years and proven profit for the last 3 years with no default to any bank/financial institutions. And net worth of the company should not exceed Rs.20 corers . Foreign Letter Of Credit (FLC): Objective: KSFC has been operating this scheme for opening foreign letter of credit for importing the capital goods through commercial bank exclusively for our borrowers since 1995. Insurance: Objective: KSFC has entered into a strategic alliance with IFFCO-TOKIO General Insurance Company to market the Non-Life Insurance Products. These would enable the clients of KSFC to have the credit and the insurance in less than one roof. The premium tariffs applicable are same to the other insurance companies and at no extra service charges. An exclusive insurance Cell with trained staffs is operating at head office. Assistance For Qualified Professionals: Objective: KSFC has been operated in this scheme for setting up of business enterprises, private practices and consultancy services in their line of expertise.
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Eligible borrowers: Management professionals: ACA/ICWA/ACS/CFS/MBA/M.Com graduates. Accounting professional: ACA/AICWA/Certificate of practice issued by Commissioner of the income tax/sales tax. Medical professional: Bachelor degree in any branch of medicine. Architects and medicine: Bachelor degree in any branch of engineering.
New Schemes: 1. line of credit (LOC) for purchase of raw materials from KSSIDC : The objective is to provide timely adequate working capital term loan to MSME s for purchasing raw materials. The maximum Loc amount is Rs 100.00 lakhs and minimum LoC amount is 5.00 lakhs.
2. Scheme for financing of Energy Saving Projects (SESP) for MSME s under JICA line of credit of SIDBI : This facilitates the flow of funds for the investment in energy saving projects. KSFC operated the scheme to promote MSME sector by providing financial assistance to them there by contributing to environmental improvement and economic development.
3. Scheme for financing wine manufacturing industries : The objective is to promote provide financial assistance to wine manufacturing industries in the state of Karnataka their by helping farmers to get better markets and price for their products. 4. Interest Subsidy Scheme for scheduled tribe entrepreneurs: This facility was extended on the lines of existing scheme for scheduled caste entrepreneurs. Other Financial Service Activities: Mutual Fund products Insurance business Monitoring of IPOs Acting as Corporate Resolution Agency P.G. Dept. of Management Studies, PESITM, Shivamogga 21
Infrastructure Development Activity: As part of the new initiative and diversification process KSFC has decided to take up infrastructure development projects with public / private participation.
The corporation is interacting with various government departments and government agencies and exploring suitable infrastructure projects on joint venture basis. The expected incomes will be shared by the owners in mutually agreed ratios.
Mofpi Scheme: The ministry of Food Processing Industry scheme was introduced for sanctioning grant or subsidy in the form of financial assistance to food processing industries.
Micro Finance: KSFC supports Micro Financial Institutions (MFIs) across the state as a poverty alleviation program. This has helped many petty and tiny business to flourish.
2e. Area of Operation-Global/National/Regional: The area of operation covers the entire State of Karnataka. KSFC has branches in all the district head quarters. In Bangalore it has three branches in Jayanagar, Rajajinagar, and M.G, road. These units all over the Karnataka are categorized into 2 types i.e. A Group and B Group. A grade branches are Bangalore, Belgaum, Bellary, Hubbli, Gulbarga, Hassan, Kolar, Mysore, Mandya, Mangalore, Tumkur, Udupi B grade branches are Bagalkot, Bidar, Bijapur, Chamarajanagar, Chickmagalur, Chitradurga, Davangere, Gadag, Haveri, Karwar, Koppal, Madikeri, Raichur, Shimoga. The industrial units / service sector established or to be established within the State are only eligible for assistance. The Branch Offices of the corporation are adequately delegated with powers of sanction and disbursement. Generally, requirements of financial assistance upto Rs. 500.00 lakhs are handled by the concerned Branch Office itself. If the requirements of loan are more than Rs. 500.00 lakhs, the entrepreneurs will have to approach Head Office.
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PIC: AREA OF OPERATIONS 2f. Ownership Pattern: Since this is the financial institution of the Government, the ownership is generally with Government. The majority of shares of KSFC are held by government of Karnataka and Small Industrial Development Bank of India. Government of Karnataka hold 92.41% of shares and SIDBI hold 7.54% shares. Remaining shares in the hands of Insurance Companies, Public Sector banks, Co-operative societies and banks and other parties i.e. .05% shares.
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Share Holdings Composition of the Shareholdings of the Corporation Sl. No. 01 Government of Karnataka Under section 4(3) (a) Under section 4(5) Total 02 SIDBI under section 4(3)(b) Special capital issued U/S 4A Total 03 04 05 Insurance Company U/S 4(3)(c) Public sector Bank U/S 4(3)(c) Co-operative Societies and Banks U/S 4(3)(d) 06 Other parties U/S 4(3)(d) Total 935 50905753 0.94 50905.75 0.00% 100% Particulars No. Of Shares 45376515 537388 1127500 47041403 3210385 627500 3837885 16100 7900 1530 Paid up Equity 45376.52 537.39 1127.50 47041.40 3210.39 627.50 3837.89 16.10 7.90 1.53 0.03% 0.02% 0.00% 7.54% 92.41% Percentage Holding
2g. Achievements: KSFC has completed 50 years of operation. It has contributed significantly for the growth of small scale industry and development of backward areas in the state. It has extended financial assistance to rural, cottage industry, artisans, SC/ST entrepreneurs and other economically weaker section of the society under special loan scheme.
1. Institution is able to lend 75% of the Peenya Enterprises INFOSYs. 2. BIOCON, ACE DESINGER,BPL were one time customer of KSFC. 3. Its is an ISO-9001 2000 certified institute. 4. KSFC has ventured into diversification in infrastructure development activity with the public/private participation model. 5. KSFC has provided the financial assistance of around Rs.9000 crores to more than 1.6 lakhs to small and medium scale industries. 6. Establishment of women entrepreneur guidance cell for guidance and escort service of the women entrepreneur.
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7. Premier position among all SFCs of the country with regard to sanction, disbursements and recovery. 8. KSFC has received a commendation from IDBI as one of the best SFCs of the country.
2h. Competitors Information: KSFC is a basically a development bank catered to the needs of SSI & SMEs. Due to changing economic scenario the corporation is facing stiff competition. As far as interest rates are concern, which are governed by RBI & SIDBI, an aggressive approach is adopted by ICICI, HDFC and by their attractive interest rate, the number of customer for KSFC has been reduced.
Following are the main competitors of KSFC: i. Karnataka State Industrial Investment Development Corporation Limited (KSIIDC). ii. iii. iv. v. Small Industrial Development Bank of India. Commercial Bank ICICI, HDFC, HSBC, UTI etc. Corporative bank. Some foreign lending banks.
2i. Work Flow Model Entrepreneurs approach to EG cell of KSFC. EG cell provides information to the customer about the loan sanctioning procedure and requirements in KSFC and collects all required document from loanee. After getting that information they send a copy to screening committee along with the observation of legal department. The screening committee scrutinizes the document submitted by the loanee and legal department verify all the legal matters affecting the interest of the corporation. After verifying the documents the proposal is cleared by screening committee then it sent to EG Cell. EG Cell passes the relevant documents to Appraisal section. Appraisal section interacts with the clients and collects further detailed information specific to the project. After detail study the loan is sanctioned and then the file is sent to Disbursement section for disbursement of loan amount.
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Disbursement section sends information to Account department regarding disbursement made and Recovery department. Recovery Department collects the recovery payments from lonee. It also coordinates with the legal department and takes their help as and when it required. Recovery department is also linked with the financial department, they transfer the amount to account department which is collected from lonee. This is how an fully operational units comes into existence.
Entrepreneur
Screening Committee
E.G. Cell
Legal Dept.
Appraisal Section
Account Dept.
Disbursement
Recovery Dept.
Assisted Unit
Pic--Work flow model
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McKENSEYS 7S MODULE:
The 7S model is better known as Mckensys 7S. There are two persons who developed this model, Tom Peters and Robert Waterman. They published the books : Structure is not organization , The art of Japanese Management and In search of Excellence. The model stars on the premise that an organization is just not structure but consists of 7 elements. The Mckensys 7S model is a widely discussed framework for viewing the interrelationship of strategy formulation and implementation. It helps to focus managers attention on the importance of linking the chosen strategy to variety of activities that can affect the implementation of that strategy. These 7 elements are distinguished in so called hard Ss i.e Strategy, Structure, Systems and soft Ss i.e Style , Staff, Skills and Shared values. The 7Smodel is a valuable tool to initiate change processes and to give them direction. A helpful application is to determine the current state of each element and to compare this with the ideal state.
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Structure: It is like skeleton for the whole organization. It prescribes the formal relationships among various positions and activities. Arrangement about reporting relationships , how an organization member is to communicate with other members, what roles he has to perform , what rules and procedures exist to guide the various activities performed by members of all the parts of the organization structure.
The structure of the KSFC is well designed and the tasks and authorities are systematically distributed. The basic structural form is decentralization. The organization is having a super A grade branches ,A and B grade branches. The corporation is headed by Managing Directors. The MD is guided by Board of Directors and Chairman in policy making and strategic management decision. In that, super A grade branches and zonal branches are headed by managers. The power of administration is given to the authority of respective branches within some constraints. The KSFC has purely a democratic way of function.
Systems: A system in the 7-S framework refers to all the rules , regulations and procedure both formal then compliment the organizational structure. In other words, it is equivalent of the term infrastructure. Its procedures, capital budgeting systems , requirement, training and development system, planning and budgeting system , performance evaluation systems etc. often changes in the strategy may be implemented with some changes in system rather than in the organization structure. There are several departments in the company which look after the work confined to that particular department in changing the procedures, fulfilling of the requirements etc effectively and efficiently. They are;
Public Grievance Cell department Entrepreneurial Guidance department Business development and Credit research department Credits department Management information services department Internal audit department
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Recovery department Sick units monitoring department Insurance department Sec-29 department PAT department Library Assets reconstruction department
Style: This is the leadership approach of top management and company s overall operating approach. Style impacts the norm people follow and how they work and interact with each other and with customers.
The company is having a democratic or participative style of management . it believes in teamwork. For each task teams are being constituted to attain specific goals. It believes that quality can be achieved by providing quality financial and related services on a continuous basis. The employees are well delegated and they discharge utmost interest for the organization. There will be periodical meetings. The Board and Executive committee meetings are conducted once in a month.
The company s staff has different skills for their own works. Highly qualified professionals in the company have major skills like technical, finance , economical , marketing and public relationship skills. There are various training programs organized by KSFC , in house and outside to update the employees with latest techniques. It includes programs like communication skills, computer skills , projects concepts , secretarial skills etc.
Staff: Staffing is the process of acquiring human resources for the organization and assuring that they have the potential to contribute to the achievement of the organizations goals. Various positions in the company require different contributions and thud have the implication that different people are needed to fit these various roles. Certain positions require people with special skills, special knowledge and also different types of
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personalities. It is essential that the company recruits , selects and develops the right people for mix of role requirements.
There are about 38 branches including the head office in which all together 1181 employees in the corporation , out of them 365 are class A officers , 691 are of class B assistance and clerical staff and 125 are of class C subordinate staff.
The company also looks for the development of the staff skills. There are various training programs are organized by KSFC, in-house and outside. The corporation has 8 in-house need based training programmers which were conducted covering 468 employees. 61 employees were deputed to external training programs during the year 2008-09 which shows that the corporation wants to make each and every employee highly skilled and talented so that they can compete with other competitors.
Skill: Skills are considered as one of the most crucial attributes or capabilities of an organization. The term skills includes those characteristics which most people use to describe a company. Organization has strengths in number of areas but their key strengths or dominant skills are few. These are developed over a period of time and are a result of the interaction of people in the organization, top management systems, the external environment influences, etc hence, when organization make a strategic shift it becomes necessary consciously build new skills.
The company staffs have different skills for their own works. Highly qualified professionals in the company have major skills like technical, finance, economical, marketing, and public skill.
Strategy: The integrated vision and direction of the company, as well as the manner in which it derives, articulates, communicates and implements that vision and direction is called a strategy. It can also be defined as the choice of direction and action that adopts to achieve its objectives in a competitive situation. It is the first step that a company has to take in leading its organization to the ladder of success.
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KSFC is one of the pioneers in this industry of providing long term loan to small and medium scale industries. As a part of its marketing strategy it makes its advertising through newspaper, leading channels and focus over the quality certificate (ISO 90012000). The following can be the strategies used by the KSFC to compete with its rivals:
Group assignment over some project Job rotation Under supervision works Budgeting, Roadmap and Strategic planning collecting inputs from external environment.
Shared Values It refers to the core or fundamental values that are widely shared in the organization and serve as guiding principles that are important. These values have great meaning because they focus attention and provide a broader sense of purpose. They also give a strong basis of stability to an organization in rapidly changing environment by providing a basic meaning to people working in organization. Shared value is satisfying entrepreneurs first. Mission of KSFC is Committed to continually nature , develop and service the small sectors through need based products and services. The value that the company upholds most is customers satisfaction.
The company looks for the satisfaction of the customers who are generally the entrepreneurs. The institution focus over there demands and wants. They also come up with various schemes like national equity finance , technological developments and modernization funds, single window and tourist related activities . These schemes are there for the purpose of attracting entrepreneurs and to feel satisfactions by the institutions.
Functional Departments: Entrepreneurial Guidance Department: The main functions of EG Department is provide information to the customer about the loan sanctioning procedure in KSFC and collect all required document from
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loanee for sanctioning the loan. There are five members working in EG Department they are: AGM, two managers, one assistance and one personal assistance. If the EG Department requires additional information on a technical project they obtained from specialists and collect the necessary details & examine before placing the project clearance committee meeting. The following documents are collected.
i. ii. iii. iv. v.
Project report/project profile Bio data & net worth statement of promoters/partner/director(as per Performa ) PRC/DTGD/pmt registration/ industrial registration or any other approval Constitution details such as partnership deed MOA,AOA by law Location document like sales deed land allotment land conversation letter KSSIDA shed/ PVT shed lease agreement
vi.
Single window clearance letter if power requirement is more than 250 KVA and project is an MSI
vii.
Financial statement of the concern and associate concern for min period of 3 years (previous)
They also collect the information relating to the project like: a. Estimate/specification, plan & approval from competent authority b. Machinery quotation. c. Marketing tie up(marketing arrangements/job order/assurance letter) d. Collateral security detail
Credit Department: Credit department one of the important departments of KSFC. It involves 20 people and it divided into different teams. Each team contains finance department, technical department, marketing department, and legal department. Finance department checks the past years financial performance and current financial status, and also studies the financial viabilities, technical department collects the information about location, raw materials, transportation, power, building, plant and machinery etc. and also studies technical feasibility, marketing department checks the present and future demand for the company product etc. Each team handles the individual cases, and the team which handles the particular cases should perform the activity of disbursement.
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When the credit department gets the file from EG Cell they check the background of the proprietors i.e. knowledge, experience, financial strength etc., technical feasibility of firm / organization and it also value the land and building, plant and machinery to avoid the over or undervaluation of asset. Credit department takes 20 days to check these documents for new cases, 15 days for additional loan, and 40 to 45 days for big cases. During this activity extensive discussion with promoter are held.
It sanctions 75% of the total loan amount and remaining 25% should be borne by the promoters. The corporation may also insist additional security by the promoters at the time of sanctioning the loan i.e. land and building or any fixed property or proprietor personal property etc.
Credit department divides projects into 4 categories. They are Thrust sector, Normal sector, Restricted sector and Prohibited sector. Normally 13% per annum rate of interest is charged. If the organization is ISO certified it provides 0.5% reduction in interest rate. After sanctioning it passes a copy of document to account department, legal department, recovery department or related branches if the firm is outside Bangalore. Legal Department: In a Financial Institute Legal department is very important as they involve in binding the legal requirements to securities. Security is nothing but fixed asset i.e. lands, buildings or machines etc. Legal department attends to all legal matters affecting the interest of the corporation. The legal documents are kept as record for the purpose of lending. To serve the purpose of operational flexibility legal activity is decentralized. Every department is provided with a legal officer. It is to avoid the delay. In appraisal department legal person scrutinizes the submitted document before the loan is sanctioned. Even the Recovery Department has a legal wing. It involves panel of advocates. With their help KSFC takes any suitable legal action at the time of defaults or changes on project or changes in promoter or changes in securities. Legal personnel accompany the
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technical team in visiting the land. Legal departments clear the file for the sanctioning of the loans based on security undertaken by it. Debt Recovery Tribunal deals with the cases of non recoveries. Recovery Department (RD): Collection of amount due is called as recovery. The corporation lends money to industrial concerns for establishment, expansion, modernization, diversification of the projects while sanctioning the loan based on the certain assumptions, the repayment period generally spread to 7-8 years with a moratorium period of 1-2 years for sound viable projects. The repayment period can extend up to 20 years for sound viable projects. Interest payments are the expenses and plough back requirements. Therefore, recovery of money is one of the major sources of funds for the corporation. The health of the corporation is judged by the extent of recovery that it can affect. The role of recovery personnel is to tender full complement of services to the loanee throughout the curing of loan. Recovery officer acts as an intermediary between the loanee and the corporation in keeps the pulse of the venture and the sorting out the various problems face by the industrial units and suggests proper remedial measures to come out of the problem. He would also help the loanee in getting other facilities available from various government organizations corporate bodies, banks etc. He keeps a close watch of the venture throughout the period of recovery. For tackling chronically default units, tackling sickness in assisted units, tackling wilful and deliberate defaulting units etc. It has also evolved guidelines and procedures for taking over and disposal of units under sec 29 of SFCs Act for filling petition under sec of KPM (R) Act 1979, for invoking of personal guarantee of borrowers/sureties. All these have been communicated by means of circulars from time to time to all the field officers. Head Office has two Deputy General Managers to look after the recovery works for Bangalore other than Bangalore Cases. Treasury Department: Mobilization of the fund and serving the debt is the main function of treasury department. Treasury department mobilizes the fund through different sources. The main sources of funds can be classified into two types such as: P.G. Dept. of Management Studies, PESITM, Shivamogga 34
a) External Source. b) Internal Source.
a) External Source: Following are the important external sources such as:
Share Capital: KSFC has Rs 500 crore authorized capital, the paid up capital of the company is Rs. 105 crore. The majority of the shares are held by the government and SIDBI.
Refinance: Refinance is nothing but loan provided by the SIDBI. It is the major source of finance to KSFC.SIDBI finance the 55% of each disbursement made by KSFC. KSFC should repay the loan amount sanctioned by SIDBI within 8 years. The rate of interest will be fixed on the basis of market situation.
Bonds: There are two types of Bonds i.e. S.L.R. Bond and Private Placement Bond. S.L.R. bond is one of the main sources of finance to treasury departments. S.L.R. bond is a long term bond issued by R.B.I. and the rate of interest also fixed by R.B.I. The duration of bond is 10 years. Private Placement Bond issued by the government, the duration of bond is 5 to 8 years. It provides only call option not put option.
Fixed Deposit (F.D.): KSFC is also eligible to raise the fund by general public in the form of F.D. The bonds issued by the KSFC are guaranteed by the government. But KSFC not much concentrated on this source because it involves long procedure and time consuming.
Other Source: The other sources like line of credit given by bank. KSFC gets finance by pledging the loan asset. KSFC gives least preference to this source because KSFC charged fixed rate of interest to its customer but banks charge fixed and floating rate of interest. b) Internal Source: It is nothing but interest recovered by recovery department. Recovery in terms of capital and interest. It is a major source of funds for KSFC and the profit and loss of the firm depends on recovery performance.
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SWOT ANALYSIS
The overall evaluation of companys Strength, Weakness, Opportunities and threats called SWOT analysis. This analysis helps the firm in realizing its strengths and building upon them in order to overcome its weakness so that it can take advantage of the opportunities to manage the threats.
Strengths: It is the resource or capacity of the organization that can be used effectively to achieve its objectives. The KSFCs strengths are : 1. KSFC is a client friendly and provides need based policies in the area of credits , recoveries and one time settlement. 2. KSFC is ISO 9001-2000 certified organization , which highlights that the corporation gives prime importance to quality of services. 3. Variety of new schemes in the product line. 4. Repayment period is very flexible 5. One of the major strength is the presence of highly expertise and qualified people 6. KSFC maintains good industrial relations and also morale. 7. Public sector: science the KSFC is a government undertaking it can relay on government for its funds in case of shortage 8. Network : KSFC has its branch in all districts of Karnataka and it gives strength to access to reach every nook and corner. 9. KSFC has got well diversified activities which not only deals with the lending function but also with functions with leasig , hire purchase , insurance and financial assistance to small and medium scale industries Weaknesses These are the companies negative aspects which stand as obstacles during achievement of the future goals. These aspects are carefully handled by every company to be in safe mode. It is limitation, fault or defect in the organization that will keep it from achieving its objectives. The weakness of the organization are as follows: 1. Customers and the people at the concern perceiving the legal procedures and persons who scrutinize them as interference and not as a contingent protection. 2. Support of other financial institutions is being reduced these days. The institutions like IDBI, SIDBI etc are working directly and providing services P.G. Dept. of Management Studies, PESITM, Shivamogga 36
3. Comparatively higher interest rates. 4. Incase of certain schemes, it takes long procedures Opportunities It is any favorable situation in the organizations environment. It is usually a trend or change of some kind or an overlooked need that its position by supplying it KSFC can focus on: 1. KSFC can take the opportunity of serving for the development of small and medium scale industry when commercial banks fail to perform faster. 2. The organization can improve its marketing activities to create demand by undertaking creative and attractive advertisement activities in the modes like online, televisions , news paper , magazines etc. 3. Development of infrastructure. 4. Indian economy is growing at a faster rate owing to the faster development of small scale and medium scale industry. This serve as an opportunity for KSFC. 5. To generate funds for investing in different avenues, it can accept the deposits from public in large extent. 6. Since the concern is enforced with a credit research department in future, the corporation has the opportunities to come up with new credit schemes with attractive norms. Threats It is an unfavorable situation in the organizations environment that is potentially damaging to its strategy. The threats may be a barrier, a constraint or anything external that might cause problems , damage or injury. 1. Many commercial banks have set their branches in SSIs area, which provide funds at lower interest rates can be a big threat for organization. 2. Multinational banks are coming up with new innovative ideas for increasing the loan amount like that of pre draft loan for the prompt customer. 3. SIDBI, Co-operative banks are gearing up for term loan financing to capital SMEs. 4. Private banks like ICICI, HDFC are aggressive in financing loans by reducing their processing time in their corporate financing
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Profit and Loss Account for the Year ended 31st March 2010 (Rs in lakhs) PARTICULAR Year Ended 31-03-2008 INCOME: Interest income Other Income Total EXPENDITURE: Interest And Other Financial Expenses Personnel Expenses Administrative expenses Bad Debt written off Provision towards Contingencies/Expenses Depreciation Provision For NPAs Total Profit before tax Add: dividend payable withdrawn Less: Provision for Fringe Benefit Tax Less: Provision For Wealth Tax Less: Provision For Income Tax Previous Year Profit After Tax Add/Less: Loss Brought Forward Deficit carried to Balance Sheet 13634.01 3383.73 808.97 313.39 1875.56 76.11 0.00 20191.77 6329.70 41.00 8.50 63.46 6216.74 621674 60891.24 53874.50 16384.22 4027.95 889.29 219.34 358.04 148.33 4374.88 26402.05 -3917.39 0.00 58.00 8.70 0.00 -3984.09 (53874.50) -57858.59 1306.49 4152.50 880.53 1050.96 621.00 186.94 0.00 20598.42 301.61 4.96 0.00 8.50 1.92 296.15 (57858.59) -5756244 26521.47 22484.56 20900.03 18984.75 7536.72 Year Ended 31-03-2009 16923.76 5560.96 Year Ended 31-03-2010 18214.48 2685.55
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KARNATAKA STATE FINANCIAL CORPORATION Balance Sheet as at 31st March 2010 (Rs in lakhs) As at Particulars CAPITAL AND LIABILITIES: Share capital Loan pending conversion to Share Capital Reserve fund and other Reserves Term Borrowing Current Liabilities and Provisions Total PROPERTY AND ASSETS: Cash and Bank Balances Investments Loan and advances Fixed assets Current assets Profit and Loss Account Balance 4995.99 15371.17 105734.63 6155.17 22937.62 53874.50 6498.37 35275.56 107268.86 6094.41 17214.15 57858.59 6979.35 52879.37 111629.19 6011.58 11710.90 57562.44 27467.55 917.69 5640.69 156142.19 18900.97 209069.08 52488.06 917.69 5566.71 161945.34 9292.14 230209.94 65340.09 0.00 5492.73 166586.73 9453.41 246772.83 31-03-08 As at 31-03-09 As at 31-03-2010
Total
209069.08
230209.94
246772.83
During the year2009-2010 under review, the corporation generated a gross revenue of Rs. 209.00 crore on accrual basis as against Rs. 224.84 crore in 2008-09.
In current year the gross revenue of the KSFC is decreased because of recession and poor recovery. In 2008-2009 KSFC incur a net loss of Rs. 39.17 crore because of provisions made during the year.
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Interest income as a % on Working fund: Year 2007-2008 2008-2009 2009-2010 Interest Income 18984.75 16923.76 18214.48 Working Fund 133668.24 130981.38 130319.44 Percentage (%) 14.20 12.92 13.97
Interest income as a % on working capital can be calculated by dividing the interest income from working fund (Cash and bank balance, Loans and advances, Current asset). Current year it is 13.97% when compared to previous year it is increased because of increase in interest income. Current Ratio: Year 2007-2008 2008-2009 2009-2010 Current asset 22937.62 17214.15 11710.90 Current liability 18900.97 9292.14 9453.41 Ratio (%) 1.21:1 1.85:1 1.23:1
Current ratio can be calculated by dividing current asset by current liability. The Current ratio in the current year is 1.23:1 which is less than the previous year because of decrease in current asset and increase in current liability. Debt Equity ratio: Year 2007-2008 2008-2009 2009-2010 Debt 156142.19 161945.34 166586.73 Equity 27467.55 52488.06 65340.09 Ratio 5.68:1 3.09:1 2.55:1
Debt Equity ratio can be calculated by dividing total debt from total equity. The ideal ratio is 2:1. Current year is 2.55:1, and it is more than ideal ratio because KSFC borrow 55% of each loan amount from SIDBI. But when compare to previous year it is decreased because of increase in Equity.
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Liquidity ratio: Year 2007-2008 2008-2009 2009-2010 Liquid asset 27933.61 23712.52 18690.25 Liquid liability 18900.97 9292.14 9453.41 1.48:1 2.55:1 1.97:1 Ratio
Liquid ratio can be calculated by dividing the liquid asset from liquid liability. Current year liquid ratio is 1.97:1, it is more than ideal ratio (1:1) and less than the previous year because of increase in current liability and decrease in current asset.
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LEARNING EXPERIENCE
Learning is synonymous to experience. This is because every human being learns hence only out of experience and experience is the way of life. In life, a person enhances his / her knowledge only when exposed to real conditions in a systematic manner.
I had been to Karnataka state financial corporation (KSFC) on 1/1/2010 for summer project, which was for a period of 10 weeks period. The main objective of this project is better understanding of practical implication of the conceptual learning which we studied in classroom. This project has helped me to gain the knowledge about various functional departments of the organization like Entrepreneur Guidance Cell, Credit department, Legal Department, Recovery Department and Treasury Department and it gives me a practical knowledge about the functioning of an organization.
I observe the importance of management functions such as planning, organizing, staffing, directing and controlling in the organization. I understood the importance of communication and how it plays major role in the organization.
I also came to know that co-ordination among various departments plays an important role to achieve the goals of an organization. In KSFC there is a good coordination amongst various departments which was responsible for efficient functioning of this industry. Each department was functioning according to a set of objective to achieve the goals.
I also observed that the management style of working here is basically participative i.e. though all the policies and procedure are decided by the management committee and for any suggestion to be followed for the further improvements are most welcome. Suggestion are also taken from the employees, this indicate that it was also participative in its approach.
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PART - B GENERAL INTRODUCTION:

Appraisal means critical evaluation of the project for calculating its worth. The dictionary meaning of appraisal is to estimate the worth or values of something. Basically project appraisal is about finding out whether the project is technically feasible and financially viable.
DFIs follow certain approaches of project appraisal, apart from that of commercial bank and other financial institutions. From this its evident that there is no standardization in approach towards project appraisal. While broadly the same sets of factors are taken into consideration, the weight age given to individual factors varies from case to case and institution.
The consideration for credit appraisal are type of organization, activity of the firm, size of the firm, nature of the product, market potential etc. Apart from profitability, it is equally necessary to determine the economic significance. Projects which offer the extensive employment opportunities reduce regional imbalance, earn foreign exchange etc are performed.
Project appraisal is one of the major functions for a lending institution because the institution depends upon the interest earned by lending the money. Some institutions follow the shorter procedures in project appraisal and some follow the elaborate procedures.
KSFC categorized the project on the basis of different aspects, such as: Based on project content like construction project, IT projects, product development projects, RD projects Logistic projects etc.
Based on initiating or participating organization such as internal projects, departmental projects cross unit projects, etc.
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Based on complexity it can be classified as simple projects, complex projects and programs etc. Statement of the Problem:Capital is a scarce resource, hence it should be optimally utilized and therefore rational allocation of this resource is of utmost importance. The available capital should be used in a manner that is consistent with the overall socio economic objective of organization. Credit is the life line of the business. Many business lack access to capital and money markets and approach DFIs for term finance. Hence, it is necessary for any financial institute to know the feasibility of the project before lending the money.
The main objective of establishing KSFC was to provide term loan assistance to tiny, small and medium enterprises mainly for the purpose of acquisition of fixed assets. As the commercial banks were selective in providing working capital facilities to newly set up units, the corporation took active role to provide working capital also. Hence, projects should be appraised using different appraisal techniques. The project is about a detailed study of such an appraisal system. Hence the project is titled A Study on Project Appraisal at KSFC.
Need for the Study:Industrial projects are appraised by different institutions for a variety of reasons. SFCs and other financial institution appraise projects to determine whether it is worthwhile to make investments in them and or to extend the loan. Government and allied agencies may appraise projects with a view to find out whether they should be given tax exemption, subsides, guarantees or other incentives. The purpose of appraisal thus varies from one appraising agency to another. While the object of appraisal may differ, the general principles of appraisal are almost the same.
Objectives of the Study: To understand the conceptual background of project appraisal. To study the project appraisal system and procedure at KSFC. To study the categories of loan proposal appraised at KSFC. To analyse and interpret the data obtained to make suitable suggestion.
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Scope of the Study:The scope of studying the project appraisal covers the system and operations at KSFC. The study aims to cover the spectrum of how the projects are appraised by KSFC for new business venture as well as existing enterprises and the way they asses the viability of the project by studying the project. The area of the study of project appraisal in KSFC covers several areas of importance. They are Different loan schemes of KSFC. Project eligible for assistance from KSFC. KSFC services towards customer. Procedures followed to sanction loan. Category wise sanction performance.
Research Methodology:Research methodology is a method to solve the research problem systematically. It involves gathering data and uses statistical technique interpretation and drawing conclusions about the research data. It is a blue print which is followed to complete the study. (It is similar to builder blue print to building a house.)
In the present study descriptive method of research is under taken. The main purpose of descriptive research is to describe the state of view as it exists at present. Hear the researcher has observed various departments and its functions interrelationship process and various other transactions undertaken in processing prospective clients in KSFC. Descriptive research helps in drawing definite conclusions. With the help of descriptive research few insights were drawn and conclusion given at the end based on observation.
Descriptive research does not establish a cause and effect relationship. In this study effort being made to describe the characteristic of operation, process and appraising system pertaining to Micro, Small and Medium projects financed by KSFC.
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Sources of data:Primary Data:Primary data may be described as those data that have been observed by the researches for the first time. Primary data are collected from interviews, discussions, observation for the specific purpose of the research.
Secondary Data:Secondary data includes information generated from companies previous records, annual report of the companies, manuals provided by the company, books and articles, magazines, news papers etc. Which are already existing and prepared for some other purpose.
Tools and Techniques: The collected data has been tabulated, analyzed and shown in way of graphs, diagrams and interpretation. Personal interview and discussion have been carried at informally with the officials of KSFC. The system and practices are described, identified wherever required.
Limitations of the study: The collection of data for analysis is restricted to KSFC head office only. The finding so obtained cannot be compared with the other commercial bank since they are not universally applicable. The study is limited by time constraint. The study is limited by the exposure and experience of their researcher.
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PROJECT APPRAISAL AT KSFC:

A long standing experience has enabled KSFC to have its own methods and standards for appraising a project. The appraisal department has been divided into two groups. Each group has been allotted certain industries, which enables them to have indepth knowledge and specialization in these industries. The efficiency with which projects of different industries have been appraised is the result of this arrangement.
The process of appraisal is carried out in phased manner as explained in following paragraphs. Entrepreneur approaches the EG cell: The Entrepreneur Guidance Cell is the link between KSFC and the entrepreneurs. It guides the entrepreneur who approaches it. He comes to know about different schemes and clauses which are suitable for him or he may have an idea about the project already in his mind. In either case EG cell will issue a form, which should be filled up by the entrepreneurs and returned back to EG cell. This form contains basic details of the project like the product, the amount applied for, the organization and like. The EG cell then checks the EG form; if found correct and complete with all the enclosures, it will forward the same to screening committee. Approval of the project by screening committee: Screening committee consists of top officials including Executive Directors. Also it consists of legal, technical and financial experts. All will give their opinions about the project in the meeting, which should be attended by the entrepreneur in person. Depending upon the nature of the project the committee may ask for additional securities or the promoters equity or such other conditions. All these conditions are conveyed to the entrepreneur in the meeting. After clarifying some basic functions like type of security, amount to be bought in by promoters or partners etc., the committee will approve the project in principle and ask the EG cell to issue the application form along with the list of documents to be submitted while returning filled up application form.
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Getting the filled in application form and its verification: The entrepreneur then fills up the application form along with necessary details. He submits the form with the documents required. An amount of half- percent of proposed loan will be collected as processing fee. The EG cell then verifies the details provided by the entrepreneur. It will check the documents provided by the applicant to make sure that the necessary document are submitted. The case then will be forwarded to ADM department for appraisal. Then starts the work of appraising the project in detail.
The concerned team of ADM department will appraise the project. As already mentioned, the project is appraised on following factors:
Background of the entrepreneur Technical appraisal Commercial appraisal Financial appraisal Legal appraisal
Background of the entrepreneur: As explained earlier, if the entrepreneur has a sound experience in the field, preference is given by KSFC, but first generation entrepreneur is also given preference if they have sound technical knowledge. The following particulars of the entrepreneur are examined in detail-name, age, educational qualification, experience etc. net worth, stakes in other firms by the entrepreneur, special and technical qualifications of the entrepreneur etc. This is an important step in appraisal processes because background is unique to each entrepreneur.
Technical appraisal: Technical appraisal of project is essential to ensure that necessary physical facilities required for production will be available and best possible alternative is selected to produce them. It includes the study of manufacturing process, technical arrangements, size of the plant, product mix, selection and procurement of plant and machinery, plant
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layout, etc., schedule of project implementation and location of the project with reference to availability of various inputs required for production. The technical appraisal includes the following: Location: Study of location includes selection of general location like city, town, village etc. and also a particular size within the general location. It may be decided keeping in view the relative importance of various requirements of production like proximity to raw material, proximity to market, availability of labour, utilities such as water, power, fuel etc., The team of technical experts will visit the unit for inspection of building if it already exists. It will also examine the area and location and the unit, type of buildings, facilities like water, power, road etc. The entrepreneur should get permission from municipality or any other concerned legal authority for constructing the building and the KPTCL letter for power supply is obtained. Technical process/technologies: If the product can be manufactured by using alternative raw materials with alternative processes, naturally a comparative study should be done to choose the most suitable process. The selection of the process depends upon the quality of production, required quality of the product required, its end-use, and availability of particular raw material and cost of process. If the product is to be manufactured by a particular process for the first time in the country, necessary study should be done about the success of the process in other countries and it should be ensured that arrangement for using the proposed technology is satisfactory. The technical team will also verify other factors to make sure that the project will not fail technically. Design and engineering: While checking the design and engineering aspects of plan and building it should be seen that plant layout is satisfactory and provision has been made for storage of raw materials and finished product is sufficient for future expansion.
Arrangements must have been made for standby equipment, critical spare parts, tools, internal handling and effluent treatment. Where trademarks or patents have been obtained, care should be taken to see that there is no infringement. P.G. Dept. of Management Studies, PESITM, Shivamogga 49
Product mix / product range: Product- mix or product range may be decided according to market requirements. KSFC check is the plant should have flexibility to change product-mix according to changes in the market conditions; if such flexibility needs additional to investment, its impact on the viability of the project may be studied. If the project has to face tough competition in the market or the demand for the product changes according to fashion or extra amount required for the additional facilities is not heavy, it may be worthwhile to have such additional facilities or at least to keep provision to install such additional facilities, whenever required in future. Selection of the plant and machinery: Selection of plant and machinery is done according to manufacturing process and size of the unit. Different stages of manufacturing process should have proper balance of capacity. KSFC has got a list of registered suppliers of machinery. If the supplier insists the unit to purchase required machineries from these suppliers chosen by entrepreneur is a reputed one then there is no problem. This is to make sure that the estimated production with these machines will be materialized. Plant layout: The efficiency of a manufacturing operation also depends on the layout of the plant and machinery. Plant layout may be done in such a way that minimum time is taken in handling equipment, raw material, consumable goods in process and finished goods. Plant layout helps in specifying the construction of buildings required for the plant and preparing building plants. If the manufacturing process requires air conditioning / air cooling, humidity control, dust control etc. necessary care may be taken while preparing building plants. It may be ensured during projects implementation that constructional of building and installation of machinery is done according to building plans and layout. 1. Choice of technical process and appropriate technology. 2. Technical collaboration arrangement, if any 3. Size and scale of operations. 4. Selection of plant and machinery. 5. Location aspects of the project and availability of infrastructure facility. 6. Plant layout and factory building. P.G. Dept. of Management Studies, PESITM, Shivamogga 50
7. Project design and networking analysis for the assessment of project implementation schedule.
Financial appraisal: The purpose of financial appraisal is to find out the financial viability of the project. The financial institutions that finance the projects are concerned with the successful operation of the unit. For this it should be confirmed that the project generates enough cash surplus to meet all the contractual obligations
The financial appraisal helps to find out the risk associated with financing the project. The team visits the unit and collects the information about profit expected along with probable sales, the cost of raw materials, cost of labour and such other aspects. Depending upon the information given by the entrepreneur and information collected on their own, financial experts will prepare several financial estimation like projected cash flow statement, important ratios like B.E.A, DER, DSCR etc.
Projected Balance-sheet: This is prepared on the basis of profitability estimates and cash flow estimates.
The position of share capital, term loans, sundry creditors, bank borrowings, current assets etc. are ascertained at the end of each year, according to the movements shown in cash flow and profitability estimates. Fixed asset are taken after deducting depreciation provided in profitability estimates. Preliminary expenses are taken after deducting the amount, which is already written off from the expected profit of the unit. Cumulative surplus shown in profitability and estimates balance shown in cash estimates represents the position of cash and bank balance. Balance sheet is a snap shot of to confirm where the total of its assets side will be equal to the total of its liability side. On the basis of financial projections, the financial institutions use the following ratios. These ratios included:
Debt-equity ratio: It is the ratio between the contribution by owners and financial institutions. The financial institution insists for minimum contribution from the promoters to ensure that
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they take necessary interest in running the unit successfully. The corporation adopts norms as per the guidelines issued by the SIDBI from time to time. For loans up to Rs.10 lakhs--------up to 3:1 For loan above Rs.10 lakhs--------up to 2:1
Total Debt D.E. R. = Equity Debt-service coverage ratio: This is the ratio calculated to find the firms ability to generate surplus cash generation and profitability of the project. For this purpose Average DSCR ranging between 1.5:1 and 2:1 is accepted as reasonable. DSCR for projects below 1.5:1 will be accepted in extremely deserving cases. The formula used for calculation:
PAT+D+I DSCR= L+I PAT- Profit after tax D- Depreciation
I- Interest rate charged L- Loan repayment installment OR
Net operating income DSCR= Total debt services Break-even analysis: The break-even point is a point which helps us to recover the production cost. This cost of production can be fixed and variable cost. Sometimes division of cost may be difficult. A certain amount of fixed cost has to be incurred by unit the semi fixed cost may not vary materially with the level of output. This fixed and semi fixed cost include salaries and wages, repairs and maintenance, administrative cost fixed portion of selling
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expenses, fixed royalty and know-how payments, interest on loan, depreciation on straight line method.
Variable cost varies with the levels of production. This includes raw materials, outside purchases, packing, power, fuel, interest on working capital and other variable expenses.
Fixed cost Break- even point= (Sales- variable cost) Or Fixed cost Break-even point= Contribution Break-even point can be called as bread earning point as a unit ears profits from sales above the breakeven point. While appraising a project, the breakeven point should be expressed in terms of percentage of installed capacity to know the margin of safety in the capacity.
Productivity ratios: Capital employed to value of output/sales Capital employed to net value added Investment per worker Productivity per worker
Profitability ratios: Percentage of raw material to value of output Percentage of wages and salaries to value of output Percentage of interest to value of output Percentage of operating profit sales Percentage of profit after tax to equity
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Internal Rate of Return statement Internal Rate of Returns (IRR) method is another cash flow technique which takes account the magnitude and timing of cash flows. Other term used to describe the IRR method are yield of an investments, marginal efficiency of capital, rate of return over cost, time adjusted rate of return and so on.
The internal rate of return can be defined as that rate which equates the recent value of cash inflow with present value of cash inflow with the present value of cash outflow of an investment. In other words, it is the rate at which the net present value of the investment is zero.
Profitability estimates: Profitability estimates are estimates of expected sales realization and expenses to
be incurred by the unit. Excess of sales realization over expenses indicates the expected profit of the unit. Verification of the profitability estimates is highly essential for the proper appraisal of a term loan proposal. Mere checking of arithmetical calculation of various figures is not sufficient. The basis of various figures should be ascertained and checked to satisfy that profits shown in profitability estimates are realistic. Various items included in profitability estimates can be verified according to checklists given below: Sales realization Raw-materials and consumable stores Utilities(power, fuel, water etc) Repairs and maintenance Wages and salaries Rent and salaries Administrative expenses Depreciation Selling expenses Interest on term loans Interest on bank borrowings Profit
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Cash Flow Statement Cash flow statements are prepared to ensure that the unit will have necessary cash with it and it will not face liquidity problems. The cash flow statement includes sources of funds and their deployment. While profitability estimates are prepared only from the year in which the unit is likely to commence production, cash flow statement are necessary for the construction period also to ensure availability of cash according to requirement of the project.
Loan repayment schedule: All term loans except those financed under rehabilitation scheme are required to repay within a maximum of 8 years including moratorium period. Normally the term loans are required to be repaid in monthly instalment in smaller cases and quarterly instalment for bigger cases. The interest on the loan balance is called on quarterly basis. However the compounding of interest is calculated on monthly basis as well as quarterly basis depending upon scheme and type of loan.
Commercial / Market appraisal: The step in project analysis is to estimate the potential size of the market for the product proposed to be manufactured or service planned to be offered and get idea about the market share that is likely to be manufactured.
The expert assisting each team carries it out. Generally the appraising team has the knowledge about demand, supply, competition, profit margin etc. of a particular industry. Hence it can easily judge the market potential for the proposed product. If the product to be manufactured is new or unique, then special market survey is carried out. The report of the same is included in project report.
Steps in the market analysis: Situation analysis and specification of objectives Collection of secondary information Conduct of market survey Characterization of the market Demand forecasting
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Market planning Situation analysis and specification of objectives: This involves through understanding of the current factors and future changes that may occur in the selected business and in the manufacture of the product for the selection project to be success. Collection of secondary information: This is the data collected for some other purpose but may be useful in the current analysis of the market for the product. This involves data from journals, magazines, newspaper, websites and government organization. Conducting market survey: The market survey basically is a sample survey in which a sample of the product is given to the customer and his views are elicited based on which the success of the product is determined.
The second type of the market survey is thought questionnaire in which a few questions are asked and the views are elicited. The important thing to be remembered is to have a clear idea about the target population. Characterization of the product: Based on the information gathered from the secondary and the primary sources the characteristics of the market may be analyzed in terms of the following factors or the characters. Effective demand in the past and the present. Break down of demand. Methods of distribution and salary promotion. Supply and competition. Price. Consumers.
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Demand forecasting: The demand for the product may be forecasted either through the subjective or through the objective methods.
Subjective method: Delphi method Jury method
Objective method: Census method Statistical method Chain command Cause and effect model Economical model Lead indicator Analysis based on secondary data
Market planning: Market planning is most important aspect in market demand analysis. A suitable
market plan should be developed to reach a desired level of market penetration. It should cover distribution, pricing, promotion, and service.
Legal appraisal: KSFC works to make sure that the loan is secured and the documents are authentic. For this it needs various legal documents from the entrepreneur. A list of documents to be given by the entrepreneur is issued at the time of issuing application. Further, during the process of appraisal, the team depending upon the nature of the project, will ask necessary additional security documents. The legal experts will check the documents given for their authenticity. The legal appraisal will be complete after all documents are verified.
Thus the appraisal is carried out in a detailed manner. The stringent procedure is to make sure that entrepreneur has real interest in the project and the loan is given for the good purpose. The primary objective of industrial development is always kept in focus while appraising the project.
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KSFC insists for more documents and margin to make sure that project becomes a success and also to safeguard its interest in the project. In case of default on the part of the entrepreneur it should be able to recover the loan amount by liquidating the pledged assets. The method of credit appraisal in KSFC is evolved out of its experience over the year and is always be scrutinized for improvement.
Ecological appraisal: In recent years, environment concerns have assumed a great deal of significance and rightly so. Ecological analysis should be done particularly for major projects, which have significant ecological implications like power plants and irrigation schemes, and environmental polluting industries (like bulk drugs, chemical and leather processing).
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ANALYSIS OF THE PROJECT APPRAISAL PROCEDURE IN KSFC:

Table 1: Showing the performance of KSFC during last 5 years (Amount Rs in lakhs) Sl. No. Year No of Projects 1 2 3 4 5 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 1161 1326 1195 1420 1461 Sanctioned Amount 31620.50 42452.94 36815.07 56524.31 63148.75 Disbursement Recovery Amount 19986.09 31039.30 30312.62 38391.55 43438.52 Amount 54158.34 48163.73 56114.02 50122.44 55494.09
Source: KSFC record.

70000 60000 50000 40000 30000 20000 10000 0 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
No of Projects Sanctioned Amount Disbursement Amount Recovery Amount
Analysis: The table represents the performance of KSFC during last 5 years in terms of projects sanctioned in numbers, sanctioned amount, disbursement amount and the recovery amount during last 5 years. The number of project sanctioned during the year 2009-2010 is 1461 which is the highest comparing to last 5 year.
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The sanctioned amount during the year 2009-2010 is Rs 63148.75 lakhs which is the highest sanctioned. The disbursement amount during the year 2009-2010 is Rs. 43438.52 lakhs which is the highest disbursed amount followed by Rs. 31039.30 lakh in the year 2006-2007. The recovery amount during the year 2009-2010 is Rs. 55494.09 lakhs recovered in the last 5 years and Rs. 56657.24 lakhs which is the highest amount recovered during the year 2004-2005
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Table 2: Constitution-wise Classification of Loan Sanctioned during the years 2007-2008, 2008-2009,2009-2010. (Amount Rs in lakhs)
Sanction (gross) Sl. No. 1 1 Type of Constitution 2 Public ltd Companies 2 Private ltd Companies 3 Cooperative Societies 4 Partnership Concerns 5 Joint Hindu Family 6 Proprietary Concerns TOTAL Source: KSFC record 1195 715 3 420 14962.30 (40.64%) 150.00 (.41%) 14766.06 (40.11%) 36815.07 836 4 485 17639.73 (31.38%) 488.00 (.86%) 21420.53 (37.90%) 1420 56524.31 1468 63156.75 877 24679.93 1 35.00 485 21545.32 6 48 No. 3 3 2007-2008 Amount 4 575.00 (1.56%) 6179.21 (16.78%) 182.50 (.50%) 8 76 No. 5 11 6 2733.50 (4.86%) 13938.05 (24.66%) 304.50 (.54%) 3 575.00 88 15673.00 2008-2009 Amount 2009-2010 No. 7 7 Amount 8 640.50
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25000
20000
15000
10000
5000
Public ltd Companies
Private ltd Companies
Co-operative Societies
Partnership Concerns
Joint Hindu Family
Proprietary Concerns
2007-08 No. 2008-09 Amount
2007-08 Amount 2009-10 No.
2008-09 No. 2009-10 Amount
Analysis In the above table we can observe that in the year of 2007-2008 KSFC was more concentrating on Partnership concerns, because in the year 2007-2008 the highest sanction was made for partnership concerns i.e. 40.64%, followed by proprietary concern i.e. 40.11% But in the year 2009-2010 the highest loan sanctioned for proprietary concern i.e. 24679.93 lakhs, followed by partnership concerns.
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Table 3: Constitution-wise Classification of Loan Disbursed during the years, 2007-2008, 20082009, 2009-2010. (Amount Rs in lakhs)
Disbursements Sl. No. Type of constitution 2007-2008 Amount 1 Public ltd Companies 297.72 (.98%) 2 Private ltd Companies 5697.56 (18.50%) 3 Co-operative Societies 101.35 (0.33%) 4 Partnership Concerns 12218.21 (40.61%) 5 Joint Hindu Family 98.66 (0.33%) 6 Proprietary Concerns 11899.12 (39.25%) TOTAL 30312.62 2008-2009 Amount 960.35 (2.50%) 8744.30 (22.78%) 301.65 (0.78%) 13408.63 (34.93%) 265.24 (0.69%) 14711.38 (38.32%) 38391.55 43438.52 17911.27 227.78 16221.30 57.00 7530.67 2009-2010 Amount 1490.50
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18000 16000 14000 12000 10000 8000 6000 4000 2000 0
Joint Hindu Family
2007-08 Amount
2008-09 Amount
2009-10 Amount
Analysis In the year 2007-2008 highest amount of disbursement was made on partnership concern, followed by proprietary concerns and least for Joint Hindu Family. In the year 2008-2009 highest amount of disbursement was made on proprietary concerns, followed by partnership concerns and least is Joint Hindu Family. In the year 2009-2010 the highest amount of disbursement is for proprietary concerns, followed by partnership concerns and least is for co-operative societies.
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Table 4: Representing sector-wise classification of loans Sanctioned (Amount Rs in lakhs) Sanctions Sl. No. Sector 2008-2009 No. Amount 2009-2010 No. Amount Since inception Up to 31-03-2009 No. 1 1 2 2 SRTOs Small scale sector a) Tiny sector b) Ancillaries c) Other SSI units 3 Others Total Source: KSFC record 3 28 896 680 5 211 455 4 192.70 5 66 6 573.54 7 37319 Amount 8 66914.17 423054.15 148496.77 2355.47 272201.91 263903.95 753872.27
25583.13 860 12590.47 664 328 2
27280.55 92529 14822.67 56542 17.50 388
12664.66 194 28936.26 478
12440.38 35599 30452.83 12293
1379 54712.09 1404 58306.52 142141
450000 400000 350000 300000 250000 200000 150000 100000 50000 0
SRTOs
Small scale sector
a) Tiny sector
b) Ancillaries
c) Other SSI units
Others
2007-08 No. 2008-09 Amount
2007-08 Amount 2009-10 No.
2008-09 No. 2009-10 Amount
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Analysis
In this table we can see the sector wise classification of loans has been sanctioned. In the year 2008-2009 the total amount of Rs 54712.09 lakh has been sanctioned for various sectors. Major portion of the sanction is in the other sector that is Rs 28936.26 lakh is being allotted, for SRTOs Rs 192.70 lakh and for small scale sector Rs. 25583.13 lakh. In the year 2009-2010 the total amount of Rs 58306.52 lakh has been sanctioned for various sectors. Major portion of the sanction is in the Small scale sector that is Rs. 27280.55 lakh, Other Rs. 30452.83 lakhs. and small scale sector Rs. 12440.38 lakh. In 2009-2010 the numbers of sanctions were 1404 and in the year 2008-2009 the numbers of sanctions were 1379.
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Table 5: Representing Sector-Wise Classification Loan disbursed (Amount Rs in lakhs) Disbursement Sl. No. Sector 2008-2009 Amount 2009-2010 Amount Since inception Up to 31-03-2009 Amount 1 1 2 2 SRTO Small scale sector a) Tiny sector b) Ancillaries c) Other SSI units 3 Others 3 166.74 17809.68 7454.44 46.50 10308.74 20415.13 4 420.65 21965.10 11643.47 13.50 10303.13 210507.77 5 64945.34 414446.34 145879.88 2330.06 266566.40 2335724.53
Source: KSFC record.
2500000
2000000
1500000
1000000
500000
Joint Hindu Family
2007-08 Amount
2008-09 Amount
2009-10 Amount
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Analysis
In the above table we can see the sector wise classification loan has been disbursement. In the year 2008-2009 the total amount disbursed is Rs. 38391.55 lakh. In this a portion of Rs 17809.68 lakh has been given to Small Scale Sectors, Rs. 166.74 lakh has been given to SRTOs and Rs. 20415.13 lakh to other sectors. In the year 2009-2010 the total amount disbursed is Rs.43438.52 lakh. In this a portion of Rs 21965.10 lakh has been given to Small Scale Sectors, Rs. 420.65 lakh has been given to SRTOs and Rs.210507.77 lakh to other sectors.
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Table 6: Representing Size-Wise Analysis of Loan Sanctions (Gross) (Amount Rs in lakhs) Sl. No. 1 1 2 3 4 5 6 7 8 9 2 Up to Rs 0.5 lakh Rs 0.5 - 2.00 lakh Rs 2.00 - 5.00 lakh Rs 5.00 - 7.50 lakh Rs 7.50 - 10.00 lakh Rs 10.00 - 20.00 lakh Rs 20.00 - 30.00 lakh Rs 30.00 - 45.00 lakh Above Rs 45.00 lakh 3 12 121 78 213 383 208 121 284 Size of loan No. 4 25.50 604.05 535.45 2110.51 6355.99 5628.86 4443.40 36820.55 2007-2008 Amount 5 2 41 56 104 205 188 164 701 No. 2009-2010 Amount 6 30.00 231.00 349.09 950.32 2547.32 3696.52 4035.95 51308.55
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60000
50000
40000
30000
20000
10000
Rs 7.50 - 10.00 lakh
Rs 0.5 - 2.00 lakh
Up to Rs 0.5 lakh
Rs 10.00 - 20.00 lakh
Rs 20.00 - 30.00 lakh
Rs 30.00 - 45.00 lakh
Rs 2.00 - 5.00 lakh
2008-09 No.
2008-09 Amount
2009-10 No.
2009-10 Amount
Analysis In the year 2008-2009 the total amount sanctioned is Rs. 56524.31 lakh. The numbers of projects sanctioned were 1420, in that 383 projects are sanctioned between Rs. 10.00 lakh to Rs 20.00 lakhs followed by 284 projects sanctioned above Rs. 45 lakhs, and 213 projects are sanctioned between Rs. 7.50 lakhs to Rs. 10.00 lakhs. In the year 2009-2010 the total amount sanctioned is Rs. 63148.75 lakh. The numbers of projects sanctioned were 1461, in that 701 projects are sanctioned above Rs. 45 lakhs followed by 205 projects sanctioned between Rs.10.00 lakhs to Rs.20.00 lakhs, and 188 projects are sanctioned between Rs. 20.00 lakhs to Rs. 30.00 lakhs.
Above Rs 45.00 lakh
Rs 5.00 - 7.50 lakh
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Table 7: Representing Project Cost-Wise Classification of Loan (Amount Rs in lakhs) Gross Sanctions Sl. No. 1 2 3 4 5 6 7 Up to Rs 0.5 lakh Rs 0.5 to 2.00 lakh Rs 2.00 to 5.00 lakh Rs 5.00 to 10.00 lakh Rs 10.00 to 20.00 lakh Rs 20.00 to 50.00 lakh Above Rs 50 lakh 23 144 281 486 486 Project Cost No 57.85 778.50 2808.96 9822.18 43056.82 2008-2009 Amount 47 150 295 453 516 No 660.30 795.25 2926.34 9201.36 49565.50 2009-2010 Amount
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50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0
Up to Rs 0.5 Rs 0.5 - 2.00 lakh lakh
Rs 2.00 5.00 lakh
Rs 5.00 7.50 lakh
Rs 7.50 10.00 lakh
Rs 10.00 20.00 lakh
Rs 20.00 30.00 lakh
2008-09 No.
2008-09 Amount
2009-10 No.
2009-10 Amount
Analysis This table represents the projects cost wise classification of loans. In the year 2008-2009 the total gross sanction is Rs. 56524.31 lakh. In that 486 number of projects cost above Rs. 50 lakhs and 486 number of projects cost between Rs.20.00 to Rs. 50.00 lakhs. In the year 2009-2010 the total gross sanction is Rs. 63148.75 lakhs. In that 453 number of projects cost between Rs. 20.00 to Rs. 50.00 lakhs and 516 number of projects costs above Rs.50 lakhs.
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Table 8: Zone Wise sanction and disbursement for the year 2009-2010 (Amount Rs in lakhs) Sl. No. 1 2 3 4 5 6 7 8 Zone / District Bangalore zone (Urban) Bangalore zone (Rural) Mysore zone Hubli zone Davangere zone Gulbarga zone Belgaum zone Mangalore zone GRAND TOTAL Source: KSFC Record.
18000 16000 14000 12000 10000 8000 6000 4000 2000 0 Bangalore zone (Urban) Mysore zone Davangere zone Belgaum zone
Sanctions 17521.07 9227.25 7579.60 6287.51 5597.05 2051.75 3818.08 4442.00 56524.31
Disbursement 12480.33 5105.68 6286.40 3918.21 4018.34 1323.23 1861.61 3397.75 38391.55
Sanctions
Disbursement
Analysis This table shows the zone wise sanction and disbursement for the year 20092010.There are 8 zones in Karnataka state. The total amounts of sanctions are Rs.63148.80 lakhs and disbursement of Rs. 43438.52 lakhs from all the zones. Bangalore Zone (Urban) is the highest amount of sanction and disbursement. P.G. Dept. of Management Studies, PESITM, Shivamogga 73
Findings:
The following are the findings of the report: In last five years highest number of projects were in the year 2009-2010 for about 1461 projects, least in the year 2005-2006 for about 1161 projects. In last five years highest sanctioned and disbursement were in the year 2009-2010 about Rs. 63148.75 lakhs and Rs. 43438.52 lakhs respectively. In last five years the recovery was highest in the year 2007-2008 about Rs. 56114.02 lakhs. We can see more amount of sanctions in the year 2009-2010 that is Rs. 63156.75 lakhs, and the number of sanction is also more that is 1468. In the year of 2006-2007 and 2007-2008 KSFC more concentrate on Partnership concern and sanctioned more amount for that sector i.e. Rs. 17759.47, Rs. 14962.30 respectively. But in the year 2008-09 they concentrate on proprietary concern and sanction more amount to this sector i.e. Rs. 21420.50. The disbursement made during the year 2009-2010 is Rs 43438.52,is highest. Compare to last three years we can see Rs. 32624.65 lakhs which is the highest sanctions done for new projects. We can see that rehabilitation work is done in2008-2009, which is Rs. 68 lakhs. Comparatively more loan are sanctioned to new projects than expansion or modernization of existed business. If many reason the existing are not approaching KSFC for additional loan If we see the sector wise classification then 860 numbers of small scale sectors are sanctioned in the year 2009-2010 which is the highest number in the year compare to other sectors. But the firm sanctioned high amount for other sectors that is Rs. 30452.83 lakhs. SRTOs and Ancillaries unites are not approaching KSFC for loan. We can see highest amount disbursed for other sectors that is Rs. 210507.77 lakhs. P.G. Dept. of Management Studies, PESITM, Shivamogga 74
In size wise sanctions 701 numbers are sanctioned to Above Rs. 45 lakh and 205 numbers are sanctioned between Rs. 10.00 lakhs to 20.00 lakhs and worth Rs. 2547.32 lakhs. Project Cost-Wise Classification of Loan 453 numbers are sanctioned between Rs. 20.00 to Rs. 50.00 lakhs and above Rs 50 lakhs, worth Rs 49565.50 lakhs. In the year 2009-2010 the sanctions and disbursement were highest in Bangalore zone (urban) about Rs. 22407.80 lakhs and Rs. 13915.87 lakhs. In the year 2008-2009 the sanctions and disbursement were least in Gulbarga zone about Rs. 2416.50 lakhs and Rs. 1661.87 lakhs respectively
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SUGGESTIONS:
After analyzing both primary and secondary data we can suggest: KSFC has to concentrate more on development of backward and rural areas. Rehabilitation cases need to be given more emphasis to reduce bad portfolios. Since a consistent growth is not observed on sanction, disbursements and recovery, focused efforts may be made to achieve consistency in growth. Corporation has to speed up releasing of funds and ensure that the sanctioned amount is fully utilized. This enhances current interest demand which helps in better recovery performance. KSFC needs to concentrate on its existing customer to avail loan for their establishments and provide some benefits to their existing customers who are making prompt payment of interest and loan amount. Rate of interest should be reduced to encourage more customers and to be more competitive in the market. KSFC needs liberalize their policy to attract the small sectors like SRTOs and Ancillaries and exploit the growing auto industry. Sensitivity analysis and NPV methods could be adopted for effective appraisal of the project. To make the terms and conditions in general and interest rate structure in particular more competitive as compared to other players. To popularize scheme to everyone. KSFC has to focus its attention on innovative projects to cope with the changing business conditions. Though higher proportion of finance seems to be for service sectors, even small industries should be given encouragement in the form of providing financial assistance.
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CONCLUSION AND RECOMMENDATIONS:

As part of the curriculum, this project report has been prepared within the objective of understanding the project appraisal procedure of KSFC.KSFC is continuously striving to provide better services to its customers.
For the purpose of project appraisal, KSFC has a separate department. Considering all applications received from the entrepreneurs all the aspects like technical, marketing, financial and economical aspects. This department consists of efficient, hard working and technically sound personnel. While appraising the projects the appraisal department carry out detailed analysis of all the aspects collecting information from the customers, internal and external sources. The proposal will be cleared ensuring that , it meets all the lending polices requirements and viable financially.
KSFC is spread over Karnataka extending financial service to small-sector, rural artisans, tiny sectors, women entrepreneurs and other disadvantaged groups. The corporation must concentrate on unique and innovative projects in order to compare with large domestic and foreign banks. Corporation has to take up fee based activity, this helps to increase their profits.
A good project appraisal system is the heart of the organization like KSFC. KSFC is one of the best financing corporations in assisting the SSI and non SSIs in term finance. From past fifty years, KSFC is successfully functioning. Due to the economic reforms, liberalization, globalization, there are lots of developments and changes in financial sectors. These have to be effectively incorporated in the light of severe competition among the foreign banks, nationalized banks and other financial institutions.
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ANNEXURE ANALYSIS AND INTERPRETATION OF CASE STUDY

Company Address : : Bhramha Rubber Industries Pvt. Ltd. Plot No.98 &99 8th main, 3rd phase, Peenya industrial area, Bangalore Constitution : Private Sector Private Company
Project: The proposed project is about expansion of the existing unit. Presently, the company is engaged in manufacturing and selling of tyre retreading materials such as precured tread rubber, conventional tread rubber, rubber envelop, bonding gum etc. The company has also started manufacturing of solid tyres, specially for the export market. The company is mainly exporting 90% of its product to US and Europe. In order to meet the demand the company intends to expand the production facility. The existing space is not enough for proposed expansion, therefore, the promoters have acquired two acres of land from KIADB at Sompura Industrial Area. The promoters intend to construct about 20000 sqft building for proposed expantion and to acquire additional plant and machinery in the first phase of expantion. Hence the company has approached the corporation for additional term loan assistance of Rs.650.00 lakhs towards acquisition of additional plant and machinery. The cost of the proposed expansion is estimated at Rs.980.00 lakhs.
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1. Background: Promoters background: The details of the directors and their share holding in the company is as follows:
NAME Sri Mihir Arora Smt. Inchara Arora
AGE 35 58
% OF THE SHARE HOLDING 31.71 17.14
Sri Mihir Arorav is the managing director of the company. The other director is Smt. Inchara Arora his mother. Sri Mihir Arora took over the company after the death of his father. He is a chemical engineer having about 11 years of experience in this line of activity. Smt. Inchara Arora is also the director of the company and involved in the affairs of the company since 1991.
Financial standing: The promoters have submitted the audited financial results of the company for the past 3 years. The details of which are as follows: (Rs. In lakhs) 31/03/2008 Sales &other income Net profit/Loss Depreciation Cash Generated 1621.20 10.50 10.69 21.19 31/03/2009 3439.55 29.74 19.49 49.23 31/03/2010 2596.61 25.47 28.19 53.66
From the above statement it can be seen that, the company is being managed on the profitable lines. However, the sales during 2009-10 have reduced to Rs.2596.61 lakhs as compared to the sales of Rs.3439.55 lakhs during 2008-09. It is reported that the sales were reduced mainly due to recession in the world economy. The company has submitted financial statement for the 6 month time period ended 30-9-2010 and the company has achieved a sales turnover of Rs. 1971.10 lakhs. Hence, the promoters are confident of achieving the projected sales.
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Bankers opinion: The Company is maintaining its current account and enjoying OD facility in bank. The banker gave opinion that the account is categorized as standard. The company is serving food services to the public and it has maintained good reputation in the society. Licenses and certificates: The Company has submitted all the necessary proofs of having memorandum of information, income tax clearance certificate, and certificate of registration. And it has also obtained a rating as per CRISIL is SE-2B which indicates high performance capability and moderate financial strength. As per the policy of the Corporation, this rating can be considered as bankable project, but not eligible for interest rate reduction.
2. Technical Appraisal: Location, Land and Building: The unit is located at plot No.98 & 99,8th main, 3rd phase of the Peenya industrial area, Bangalore. And now in order to construct the proposed plant the promoters have acquired two acres of land from KIADB at Sompura Industrial Area. The promoters intend to construct about 20000 sqft building for proposed expansion. Plant and machinery: The Company is purchasing the machineries and other plant and machineries from reputed manufacturers. The total cost of proposed and acquired plant and machineries work out Rs. 185.00 lakhs. Power: The Company for its Peenya unit has got sanctioned power of 400 KVA power for its expansion project at Sompura Industrial Area. The Company will approach KPTCL for the required additional power. Man power: The Company is having exiting manpower of 300 persons, which includes office & administration, marketing, production, skilled and unskilled lobours. The company will be recruiting 200 people for the expansion programme. Water: The unit requires water for production mainly for cooling purpose and for the human consumption. The required water will be provided by KIADB. Transportation: The unit is located in Sompura Industrial Area adjacent to NH-4 and is well connected to highway and Nidagunda railway station.
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3. Financial Appraisal: The project cost and funding pattern to the project goes as follows:
SI.NO 1. 2. 3. 4. 5. 6. Land Cost Building cost
Project details
Amount(lakhs) 125.00 185.00 580.00 12.70 15.00 63.00 980.00
Plant and machinery Indigenous(new) Miscellaneous Fixed Asset Deposits Additional working capital margin Total Cost of Project
1%
2% 6% 13%
19%
59%
Land Cost Plant and machinery Indigenous(new) Deposits
Building cost Miscellaneous Fixed Asset Additional working capital margin
ANALYSIS: The details of land have been worked out at Rs. 125.00 lakhs for acquiring two acres of land from KIADB at Sompura Industrial Area. The promoters intends to construct about 20000 sqft building costing Rs. 185.00 lakhs The details of plant and machinery have been worked at Rs. 580.00 lakhs The deposits of Rs. 15.00 lakhs towards KIADB and other
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Means of Finance: SI. No 1. Details DEBT: Term loan from KSFC Sum EQUITY: Equity Share Capital Interest free U.S loan from promoter Internal Accruals Sum TOTAL 205.00 80.00 45.00 330.00 980.00 650.00 650.00 Amount(lakhs)
8%
5%
21%
66%
Term loan from KSFC Interest free U.S loan from promoter
Equity Share Capital Internal Accruals
ANALYSIS: The project cost is funded by a term loan of Rs. 650.00 lakhs from KSFC and Equity of Rs. 330.00 lakhs consisting of Rs. 205.00 lakhs by means of share capital and Rs. 80.00 lakhs through interest free unsecured loans and Rs. 45.00 lakhs through internal accruals.
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Financial & profitability indicators a. Promoters contribution b. Debt-equity ratio-Project c. Debt-equity ratio-Overall d. Debt-service coverage ratio e. Security margin
Minimum prescribed 22.50% 2.00:1.00 2.00:1.00 1.50:1.00 25.00%
Actually provided
25.50% 1.97:1.00 1.31:1.00 1.67:1.00 26.96%
4. Allocation of loan amount: The loan amount should be utilized for the following (Rs. In lakhs) Towards acquisition of land Towards contingency on building and civil works Towards indigenous plant and machinery Total 92.00 135.00 423.00 650.00
5. Repayment: The proposed loan of Rs. 650.00 lakhs should be repaid in 26 quarterly installment as noted below 1st Quarterly installment of Rs. 12,00,000.00 each Next 8 Quarterly installment of Rs. 20,00,000.00 each Next 8 Quarterly installment of Rs. 26,00,000.00 each Last 9 Quarterly installment of Rs. 30,00,000.00 each
6. First Investment Clause Before drawing the first installment of loan the following should be produced 1. First Investment Clause 2. Proof of clear to title to the properties offered as security to the satisfaction of corporation. 3. Building plane duly approved by the chief inspector of factories and Boilers and by KIADB.
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4. Proof of having increased the authorized share capital of the company to Rs. 240.00 lakhs. 5. An upfront fee at % should be payable on the total loan amount of Rs. 650,00,000 sanctioned either at the time of executing the legal document or before seeking the 1st release. 6. Income tax returns filed proof of the director. 7. Proof of having owned the properties declared in the networth statement of the director.
7. Market Analysis: The company is in existence since 1971 and is one of the pioneers in manufacturing and selling of the tyre retreading materials such as procured tread rubber, conventional tread rubber, rubber envelop, bonding gum etc. The company has also started manufacturing of solid tyres, specially for the export market. The company is mainly exporting 90% of its products to US and Europe. The company is having established market in India and abroad and it is opened that there is no difficulty in marketing the products.
8. Management Analysis: The unit is successfully managed by Sri Mihir Arora and Smt Inchara Arora who are the managing directors of the company. Sri Mihir Arora took over the management of the company, he is a chemical engineer having about 11 years of experience in this line of activity. Smt Inchara Arora is also the director of the company and involved in the affairs of the company since 1991.
9. Legal Analysis: The documents in respect of the properties being offered as security are being scrutinized by the legal officer of the department. Legal clearance to be obtained before release of loan.
Status of Government Consent: a. The unit has been allotted permanent SSI registration number by the Department of Industries and commerce. b. The land has been allotted by KIADB on lease-cum-sale basis. P.G. Dept. of Management Studies, PESITM, Shivamogga 84
c. Building plan approval by KIADB has to be sanctioned. d. Power required to the extent of 1000 KVA is yet to be sanctioned by KEB. e. N.O.C from Karnataka State Pollution control Board has to be obtained.
Analysis of Balance sheet Particulars A) Gross Block Less- Depreciation Net Block B) Capital W-i-P C) Investments D) Current Assets, Loans and Advances E) Current Liabilities : Secured loans from banks Sundry creditors Others TOTAL F) NET WORKING CAPITAL(D E) G) NET TANGIBLE ASSETS(A+B+C+F) H) LONG TERM LOANS 176.00 332.8 58.54 567.36 66.10 0.00 590.19 90.60 680.88 45.50 0.00 535.66 216.34 752.00 29.93 2008-2009 58.28 10.68 47.60 0.21 633.46 2009-2010 47.60 10.55 58.15 0.21 726.37 2010-2011 58.15 19.49 38.66 0.21 781.93
113.90
158.35
150.21
31.65 82.25
46.36 111.99
12.73 137.48
I) NET WORTH Analysis of Profit and Loss Account 2008-2009 2009-2010 2010-2011
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SALES JOB CHARGES NET PROFIT/LOSS DEPRICIATION CASH GENERATED
1519.19 102.01 10.50 10.69 21.19
389.34 50.21 29.74 19.49 49.23
2489.27 107.34 25.47 28.19 53.66
2008-2009 DEBT EQUITY RATIO CURRENT RATIO 0.38:1.00 1.12:1.00
2009-2010 0.41:1.00 1.07:1.00
2010-2011 0.09:1.00 1.04:1.00
Conclusion: In the light of the above, it is recommended that M/S Super Rubber Industries Pvt. Ltd. May be sanctioned an additional term loan of Rs. 650.00 Lakhs for the expansion of their existing small scale Industries engaged in the manufacturing of Rubber Moulded Goods at Plot No. 98 & 99A, 1st Stage, Sompura Industrial Area. Near Dobaspet, Bangalore subject to the terms and conditions stipulated in the sanction order in addition to the other usual terms and condition.
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BIBLIOGRAPHY
Manuals
Karnataka State Financial Corporation. a) Annual Report 2009-2010. b) Products and Services. c) Operational Statistics.
Books
S. N. Murthy, U. Bhojanna Prasanna Chandra
Web sites
www.ksfc.in
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Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

Karnataka State Financial Corporation, Bangalore

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

Karnataka State Financial Corporation, Bangalore

Karnataka State Financial Corporation, Bangalore

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

Karnataka State Financial Corporation, Bangalore

Eligible borrowers: sole proprietorships, co-operative societies, private limited companies.

Limits: project outlay not exceed Rs. 100.00 lakhs

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

Pic--Work flow model

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

i. ii. iii. iv. v.

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore

P.G. Dept. of Management Studies, PESITM, Shivamogga

Karnataka State Financial Corporation, Bangalore