GE CAPITAL: A LEGEND

Often the best measure of an enterprise's growth or decline lies in its ability to adapt to change. The history of GE Capital spans many shifts in the nation's social, economic and political environment. Founded in the depths of the epression in !"## as a captive

finance company to help consumers purchase GE appliances, GE Capital of today bears little resemblance to its forerunners, GE Contracts and GE Credit. $owever, then as now, the company is committed to see%ing creative ways to meet its customers' needs. &hen George F. 'osher, founder and president of GE Contracts Corporation, proposed setting up a financing company to provide customer credit, it was in response to economic and social conditions. Credit was rarely used, and hard to obtain for the average consumer. 'osher's innovative idea served as the catalyst for the company's future growth and performance. uring &orld &ar (( when GE switched from consumer to defense production, the focus of the Contracts Corporation changed, and the

company was replaced by GE Credit Corporation, an investment company authori)ed to lend money and deal in commercial paper. The postwar era was a period of unprecedented e*pansion. &ith a rise in the standard of living, a population e*plosion, and e*traordinary development of new products, optimism became the prevailing national mood, bringing a change in social attitudes. The stigma of +being in debt+ disappeared, the demand for consumer credit s%yroc%eted, and by !"," GE Capital had grown in si)e to ,- sales offices with .!// million in annual sales. The nation saw dramatic changes in its social, political and economic structures in the !"0/'s. 1ensing the shift in attitudes, GE Capital shed its traditional financing role and began to diversify into consumer, commercial and industrial mar%ets. The company en2oyed remar%able growth3 the %ey to its success being not only in its commitment to service and 4uality products, but to its highly fle*ible, productive and dedicated wor%force. 5ttracted to 1tamford because of its favorable business environment, GE Capital moved its administrative office and several hundred employees from 'anhattan to a new building on 6ong 7idge 7oad in !"8/. 5nd, in !"9:, with over !,!// employees wor%ing in 1tamford, the company

completed a second building ne*t door. Throughout the !"9/'s GE Capital e*perienced accelerated diversification and growth, e*panding its scope to include -/ separate businesses. (n !"98 the company changed name from GE Credit to GE Capital, reflecting its new position as a ma2or provider of a variety of financial products to 5merican business.From its modest beginnings in !"## financing consumer credit for GE products with .: million in customer receivables and a pre;war pea% of ,#employees, to the present, with over .00 billion in receivables and nearly "/,/// employees, the company's performance has been spectacular. (n creating money for business, GE Capital's investments affect many segments of society. <eople may be unaware, for e*ample, that their department store credit

card is li%ely to be issued by GE Capital, or that their mortgage insurance is underwritten by the firm. 'any airplanes they fly in are owned by GE Capital and leased to the airlines3 GE Capital also owns and leases oil tan%ers, locomotives, truc%s and personal and fleet automobiles. GE Capital continues to fulfill its leadership role in providing financial fle*ibility to business.

GE Capital 1ervices is a global diversified financial services company with -9 distinct businesses. &ith assets of =1 .#// billion, GE Capital 1ervices had net earning of =1 .#.9 billion and achieved a -#.,> return on e4uity in !""9. (ts businesses are in the areas of E4uipment 'anagement, Consumer 1ervices, 'id;'ar%et Financing, 1peciali)ed Financing and 1pecialty (nsurance and include global operations in Europe, 5sia and 6atin 5merica. GE Capital 1ervices (ndia was established in October !""# as a wholly owned subsidiary of GE Capital 1ervices. (t is one of the largest capitali)ed financial services companies with a combined and estimated

asset base of 7s. #,,// crore ?7s.#, bn@ and a credit rating of 555 ?1O@ by C7(1(6 and uff A <helps ?highest safety@.

OVERVIEW

The ma2or businesses in (ndia areB !. Consumer Finance -. Commercial E4uipment Finance ?including truc% financing@ #. Commercial Finance :. Cusiness <rocess 'anagement 1ervices

1. CONSUMER FINANCE

Countrywide Consumer Financial 1ervices provides diverse consumer

finance products and services, and is the only consumer finance company in (ndia to offer competitive and cost;efficient pricing and consumer finance programmes. 5s (ndiaDs Eumber ! financing company, Countrywide has established a strong retail franchisee with over ## offices and a

networ% of over #,,// dealers across (ndia. Countrywide has tie;ups with -/ leading manufacturers in the country and finances a range of white goods, brown goods, office e4uipments, two wheelers automobiles, used cards, furniture, 2ewellery and travel loans. Countrywide also offers a range of institutional products to meet the needs of a cross;section of corporate clients. Countrywide was the first company in (ndia to offer an (nterest;free 0;monthF!-; month (nstalment 6oan <rogramme, a ealer FinancingF(nventory

programme and a =ni4ue <artnership <rogramme with dealers and customers that has resulted in innovative consumer finance solutions that meet the mar%et needs.

GE Capital Busin ss P!"# ss s Mana$ % nt S !&i# s handles the technology and processing needs of 1C( Cards in (ndia which leverages the brand e4uity, customer relationship and unparalleled networ% of 1C( with GE CapitalDs technology, processes, ris% management, retail mar%eting and service capabilities to offer card products that are value; for;money supported by world class 4uality and service. Currently, the 1C( Card, is a classic Gisa credit card, is available in over #/ cities across

(ndia. <rimarily targetted at first;time users, the 1C( Card offers a value proposition of a utility card that is easy to get, convenient, safe, easy to use, widely accessible, and e*tensively accepted. There are several significant benefits and value;added promotions offered on the 1C( Card including the ability to withdraw cash against the 1C( Card from 1C( branches across ,8 locations in (ndia.

'. C"%% !#ial E(uip% nt Finan# GE Capital T!ansp"!tati"n Finan#ial S !&i# s , commenced operations in (ndia in !""8 with the ac4uisition of a leading non;ban%ing finance company in (ndia. (t provides innovative financial solutions for the transportation segment with a networ% of over !, branches and strong alliances with leading truc% manufacturers. (t has recently ventured into the construction and mining e4uipment financing business and is well positioned to emerge as a dominant participant in this segment with its focus on funding the e4uipment needs of large captive users as well as medium si)e contractors and construction companies.

).C"%% !#ial Finan#

Commercial Finance offers a range of financial services, which include Corporate Finance, (nfrastructure Finance, 5c4uisition Finance, <rivate E4uity and 1yndication 1ervices for a broad cross;section of (ndian industry. The C"!p"!at Finan# business focuses on providing finance to corporates to meet their wor%ing capital needs, capital e*penditure plans, pro2ect finance and general corporate re4uirements. In*!ast!u#tu! Finan# provides structured finance to the power and

telecom sectors. Commercial Finance also provides

In& st% nt Supp"!t for e4uity investment and 5c4uisition Finance through loans against e4uity;lin%ed debt instruments such as Convertible Conds, 7edeemable <referred 1toc%s, Optionally Convertible 6oans. The P!i&at E(uit+ business focusses on helping closely;held unlisted companies who are significantly e*panding their businesses by raising the necessary funds through private placement of e4uity. S+n,i#ati"n S !&i# s offer advisory restructuring, placement and distributionof corporate finance products across a wide segment of institutional and retail investors. ebentures, and E4uity Collateralised

). Busin ss P!"# ss Mana$ % nt S !&i# s

GE Capital (nternational 1ervices was established as a wholly;owned

subsidiary in October !""0 to assist client organisations ma*imise speed and efficiency of current internal and e*ternal processes with a cost, 4uality and service advantage. The business currently offers world class business process management services and bac% office support to meet

the diverse needs of its international and domestic customers. (t provides bac% office processing services to GE companies in 5merica, Europe and 5sia <acific. The focus is to develop Centres of E*cellence in Transaction <rocessing, 5ccounting 1ervices and Call Centres to service both GE and non;GE companies world;wide. (t has established its first world class remote processing centre in Gurgaon ?near elhi@ and is in

the process of setting up another world class facility at $yderabad ?5ndhra <radesh@ to cater to the e*pansion of its remote processing services business. 5lso established a ecision 1cience Centre in Cangalore

that is responsible for developing predictive tools and models for all aspects of customer management.

GE CAPITAL INDIA

GE has been in (ndia since !"/-, when it installed (ndiaDs first hydro power plant in 'ysore. (n !"#/, (GE ?(nternational General Electric@ was set up for sales of GE products and services by GE businesses not represented in (ndia. Today, ma2ority of GE's businesses world;wide have a presence in (ndia ;; aircraft engines, broadcasting, capital services, industrial systems, lighting, medical systems, plastics, power systems and transportation systems ;; either through a 2oint venture, a wholly;owned subsidiary, a strategic alliance or a business development and customer support presence. Today, over !/,/// people are part of the GE (ndia family who are integral participants in GEDs global system. GE Elfun, a community service organisation of :/,/// GE employees and retirees in more than "/ communities worldwide, has launched chapters in elhi and Cangalore. (n three years' time, GE will celebrate a century of its presence in (ndia, during which time, it has become a significant participant in a wide range of %ey services, technology and manufacturing industries.

GE Capital, with assets of more than =1 .#8/ billion, is a global, diversified financial services company grouped into si* %ey operating segments comprised of -: businesses. 5 wholly owned subsidiary of General Electric Company, GE Capital, based in 1tamford, Connecticut, provides a variety of consumer services, such as credit cards and life and auto insurance3 mid;mar%et financing3 speciali)ed financing3 specialty insurance3 e4uipment management, and speciali)ed services, to businesses and individuals in :8 countries around the world. GE is a diversified services, technology and manufacturing company with operations

worldwide. GE Capital's services consist ofB

C"nsu% ! S !&i# s

GE Capital Card 1ervices is a leading provider of private;label credit card servicing and inventory financing.

GE Capital Global Consumer Finance ?GCF@ delivers credit and insurance products and services to retailers, auto dealers and consumers in ## countries worldwide.

GE Financial 5ssurance provides financial security solutions that help consumers create and preserve personal wealth, protect assets, and enhance their lifestyles.

E-UIPMENT MANAGEMENT SERVICES

'odular 1pace sells, rents, leases and finances customi)ed mobile and modular building solutions for construction, commercial, health care, education, industry and government mar%ets.

T(< ?Transport (nternational <ool@ provides leasing, renting, buying, selling and financing of over;the;road trailers, as well as intermodal and storage e4uipment.

<ens%e Truc% 6easing provides full;service leasing, contract maintenance, and commercial and consumer truc% rentals, as well as supply chain management.

GE Capital 7ail 1ervices provides rail cars and services to business worldwide, offering the industry's most diverse fleet and fle*ible leasing solutions.

GE Capital 7ail 1ervices provides rail cars and services to business worldwide, offering the industry's most diverse fleet and fle*ible leasing solutions.

GE Capital 5viation 1ervices is one of the world's largest aircraft leasing companies with a full range of aircraft fleet and financing solutions.

GE 5merican Communications ?5mericom@ is a global provider of satellite communications solutions for the delivery of video and digital content.

GE Capital (T 1olutions is an industry leader in the design, creation, and management of (T infrastructure for business.

Mi,,l

Ma!. t Finan#in$

GE Capital Commercial E4uipment Financing provides e4uipment financing and asset management solutions to growing companies.

GE Capital Gendor Financial 1ervices delivers financial solutions and services to e4uipment manufacturers, distributors, dealers and their end users.

GE European E4uipment Finance ?EEF@ is a leading provider of e4uipment finance in Europe.

Sp #iali/ , Finan#in$ GE Commercial Finance provides innovative financing solutions primarily for non;investment grade companies. GE E4uity is the private e4uity arm of GE, and offers innovative deal structures, which includes the use of preferred stoc%, convertible debt, subordinated debt, and common stoc%.

GE Capital 1tructured Finance Group is a provider of innovative financial products for clients in and the global energy, industrial

telecommunications, sectors.

transportation

diversified

GE Capital 7eal Estate finances and invests in a broad range of commercial and multi;family residential properties.

Sp #ialt+ Insu!an# E7C provides ris% transfer to insurance companies, Fortune !/// companies, self;insurers, healthcare providers, e;Cusinesses,

associations and other groups. GE Capital 'ortgage (nsurance allows consumers to obtain low; down;payment mortgages;while protecting lenders and investors against the ris%s of default.

Financial Guaranty (nsurance Company ?FG(C@, a GE Capital Company, provides financial guarantees for debt securities to state

and local governments, school districts, special districts and other public entities.

In*"!%ati"n S !&i# s is a global leader in business;to;business electronic commerce solutions and manages the world's largest electronic trading community of more than !//,/// trading partners. (ts global networ% solutions include E ( and messaging services, (nternet and intranet services and a full suite of applications that help streamline supply chain management processes. GE(1 combines the power of electronic commerce with business process consulting, systems

integration, community management and customer support. Li$0tin$ is a leading supplier of lighting products for global consumer, commercial and industrial mar%ets. <roducts include

incandescent, fluorescent, high;intensity discharge, halogen and holiday lamps, along with portable lighting fi*tures, lamp components and 4uart) products. GE also manufactures outdoor lighting fi*tures, residential wiring devices and commercial lighting controls.

M ,i#al S+st %s is a world leader in medical diagnostic imaging technology, services and health care productivity. <roducts include computed tomography ?CT@ scanners, *;ray e4uipment magnetic resonance imaging ?'7@ systems, nuclear medicine cameras, ultrasound systems, patient monitoring devices, and mammography systems. (ts global operations include sales, service, engineering and manufacturing

organi)ations in more than !// countries. NBC is a global media company with broadly diverse holdings. ECC owns and operates the ECC Television Eetwor% as well as thirteen television stations. (n the =nited 1tates, ECC owns CECC, operates '1ECC in partnership with 'icrosoft, and maintains e4uity interests in 5rts A Entertainment and The $istory Channel. ECC also has an e4uity sta%e in 7ainbow <rogramming $oldings, a leading media company with a wide array of entertainment and sports cable channels. (nternationally, ECC owns and operates CECCB 5 1ervice of ECC and partnership with ow Hones in

ow Hones A Company in Europe and 5sia. (n partnership

with Eational Geographic and Fo*FCs%yC, the networ% owns and operates the Eational Geographic Channel in Europe and 5sia. ECC holds e4uity sta%es in CEET, Tal% City, iGillage, Telescan,

$oover's and -:F8 'edia. 1everal of ECC's (nternet assets have merged with 1nap.com, a growing (nternet portal, and IOO'.com, (nc, to form the seventh;largest (nternet site and the first publicly traded (nternet company integrated with a ma2or broadcaster. The new company, to be called ECC (nternet ?ECCi@, will use 1nap.com as its umbrella consumer brand, integrating broadcast, portal, and e;commerce services. Plasti#s is a world leader in versatile, high;performance engineered plastics used in the computer, electronics, data storage, office e4uipment, automotive, building and construction, and other industries. GE <lastics components include GE 1ilicones, GE 1uperabrasives, GE Electromaterials, GE 1pecialty Chemicals and <olymerland, a wholly owned distribution subsidiary. <ower 1ystems is a world leader in the design, manufacture and service of gas, steam and hydroelectric turbines and generators for power production, pipeline and industrial applications. <ower 1ystems also provides nuclear fuels and services. Euovo <ignone, GE's (talian manufacturing affiliate, also produces turbines, pumps,

compressors and related e4uipment. GE<1' customers can be found in !!" countries around the world. T!ansp"!tati"n S+st %s manufactures more than half of the diesel freight locomotives in Eorth 5merica, and its locomotives operate in 8, countries worldwide. Other products include passenger locomotives, diesel engines for marine and stationary mar%ets, electrical propulsion and control systems for rapid transit cars, motori)ed electric wheel systems for large mining truc%s and advanced railway signaling and control systems.

OB1ECTIVE GE Capital is a world leader in all aspects. Ce it products or services ,it has grown into a giant after collecting e*perience from all these years. GE has been in e*istence for more than a !// years. 5nd even so the most surprising and the most admirable thing about the company is that it has maintained its position as number one. This is a great thing which one and all companies in the world should learn. ( personally had %nown this for a few years now and since ( the time had heard that , ( desired to wor% for and with the company. This desire dragged me to GE Capital and ( was encouraged by this desire to wor% in a 2ob that is closely related to a very broad sub2ect called Finance. The main ob2ective in my pro2ect was that ( find out how the entire system called F5CTO7(EG wor%s. This is e*plained in a detailed fashion in the depth of the pro2ect report. 5nother main ob2ective was to observe the wor%ing of the department store giant H C <EEEJ. Cut this was restricted to only the credit it gives to its customers. 5ll this is e*plained in a better way in the report.

0at is *a#t"!in$2 Factoring is a financial term which is defined as a contract between the supplier of goods or services and the factor under which , a@ The supplier and his customer i,e the debtor other than those for the sale of goods bought primarily for their personal use , family or household. b@ The Factor is to perform at least two of the following functions i@ ii@ iii@ iv@ c@ Finance for the supplier including loans and advances 'aintenance of accounts Collections of accounts <rotection against default in payment by debtors.

Eotice of the assignment of the receivables to be given to the debtors.

5 Factor provides # basic services to the clients

!@

1ales ledger administration and credit management.

-@

Credit collection and protection against default and bad debt losses.

#@

Financial accommodation against the assigned boo% debt

5lthough factoring provides short term financial accommodation to the client , it differs from other types of short term credit in the following manner B;

!@

Factoring involves sale of the boo% debts thus the client obtains advanced cash against the e*pected debt collection and does not incur a debt

-@

Factoring provides fle*ibility to the client. $e can obtain cash either immediately on the due date or from time to time as and when he needs cash. 1uch fle*ibility are not available from formal source of credit.

#@

Factoring is a uni4ue mechanism that not only provides credit to the client but also underta%es the total management of client's boo% debts.

Factoring facility can be classified in four categoriesB ; !@ -@ #@ :@ Full services non;recourse factoring. Full service recourse factoring. Cul% or agency factoring. Eon;notification factoring.

!@

Full service non;recourse factoring.

=nder this method, boo% debts are purchased by the factor assuming !//> credit ris%. The full amounts of invoices have to be paid to the client in the event of debt becoming bad. $e also advances cash upto 9/;"/ > of the boo% debts immediately to the client. Customers are re4uired to ma%e payment directly to the factor.

-@

Cul% or agency factoring

(n this method of factoring , the client is not protected against the ris% of bad debts . $e has no indemnity against unsettled or uncollected debts. (f the factor has advance funds against boo% debts on which a customer subse4uently defaults the client will have to refund the money. 'ost countries practice recourse factoring since it is not easy to obtain credit information and the cost of bad debt protection is very high.

#@

Full service recourse factoring

This type of factoring is basically used as a method of financing boo% debts. under it the client continues to administer credit and operate sales ledger .the factor finances the group debts against bul% either on recourse or with out recourse. This sort of factoring became popular with development of mini computers mar%ets where mar%eting and credit management was not a problem but the firms needed temporary financial accommodation.

:@

Eon;notification factoring

(n this type of factoring , customers, customers are not informed about the factoring agreements it involves the factor %eeping the accounts , ledger in the name of a sales company to which the client sells his boo% debts.it is with this company that the factor deals with the cients customers .

5t GE Capital, they are into the factoring loop with a department store ma2or in the =1 called the HC <EEEJ 1TO7E1. HC <EEEJ had strategised a scheme a few years ago and had decided to give credit to its customers, which wor%ed out to be a huge success. Cut it had a problem. (t soon reali)ed that all was good as long as they were giving credit to the customers, but when it came to the collection part, they had huge problem. They began to understand that they had to spend more to maintain the records for the credit the credit that they had given to their customers but more so, they had a bigger problem that e*isted and which they had created for themselves. The problem, was collections of the debts. They identified that they had to set up a new department altogether to see to it that they recover all the credit that the

customers had ta%en. Eow this was e*pensive. 1o they thought of a very thoughtful idea. They thought about factoring. 5nd then came GE Capital into the picture. 1o what GE Capital does is that it has set up a call center in Gurgaon in (ndia. This on one hand is providing employment to a lot of people and on the other hand they had the best services being offered to the people of the =nited 1tates. They act on behalf of the HC <enny stores as collectors and collect the money from customers all over the =1. They follow all the norms that a collecting agency has to follow and also they follow the different laws of different states in the =nited 1tates. 1o all GE does is that it acts as a collecting agent for HC <enny stores, which in the financial terms is also called as Factoring. The same services are also given to other departmental stores li%e &al;'art, etc.thus the main wor% ( did at GE Capital was to call the clients of HC <enny at the =nited 1tates and tell them all the details that they wanted to %now about their account and also tell them after an analysis that they had to pay certain amount of money which was the amount due on their card. There are a lot of screens that we had to refer to, because the details of the account of the customer were spread all over the screens.

T$E 6E57E(EG

5t GE Capital, ( got to learn a lot about a lot of things. The company is very strict at following its core principles li%e Galues, (ntegrity etc. we had an induction programme where a whole day was dedicated for each of the principles. &e were informed about all the values we had to possess, all the integrity we should have and also all the integrity we should follow. ( also learnt how to behave in an organisation. (t is a totally different world compared to the usual college life. ( had ta%en some time to adapt myself to such an atmosphere. ( had a very good time there and all the people there were 4uite supportive. They believe in helping others in all possible ways. They call it boundrylessness. (t means thay one employee should not refrain from helping others. They should help the felof employees or collegues as much as possible. This was all about the moral things that ( had learnt there. 5s far as my learning to the respect of my specialisation is concerned ,( learnt a lot about factoring and also how does a credit card system in a departmental store in the =1 run, which still a new concept in (ndia. 5ll that is e*plained in detail inside the pro2ect report.

Cut overall , it was the greatest e*perience in my life to wor% for the number ! company in the world. 5nd ( than% god for that and also pray for further such good opportunities.

CONTENTS

!@ -@ #@ :@ ,@ 0@ 8@

5c%nowledgement Ob2ective 5bout GE as a parent company 5bout GE Capital 1ervices 6imited?GEC(1@ 5bout Factoring The wor%ing of the company 6earning from the e*perience