INTRODUCTION TO PROJECT

Savings form an important part of the economy of any nation. With the savings invested in
various options available to the people, the money acts as the driver for growth of the
country. Indian financial scene too presents a plethora of avenues to the investors. Though
certainly not the best or deepest of markets in the world, it has reasonable options for an
ordinary man to invest his savings.
Investment benefits both economy and the society. It is an outgrowth of economic
development and the maturation of modern capitalism. For the economy as a whole,
aggregate investment sanctioned in the current period is a major factor in determining
aggregate demand and, hence, the level of employment. In the long term, current
investment determines the economys future productive capacity and, ultimately, a growth
in the standard of living. By increasing personal wealth, investing can contribute to higher
overall economic growth and prosperity. The process of investing helps to create financial
markets where companies can raise capital. This too, contributes to greater economic
growth and prosperity. Specific types of investments provide other benefits to society as
well.

INVESTMENTS
The dictionary meaning of investment is to commit money in order to earn a
financial return or to make use of the money for future benefits or advantages. People
commit money to investments with an expectation to increase their future wealth by
investing money to spend in future years. For example, if you invest Rs. 1000 today and
earn 10 %over the next year, you will have Rs.1100 one year from today.
An investment can be described as perfect if it satisfies all the needs of all investors.
So, the starting point in searching for the perfect investment would be to examine investor
needs. If all those needs are met by the investment, then that investment can be termed the
perfect investment. Most investors and advisors spend a great deal of time understanding
1

the merits of the thousands of investments available in India. Little time, however, is spent
understanding the needs of the investor and ensuring that the most appropriate investments
are selected for him.
The Investment Needs of an Investor
By and large, most investors have eight common needs from their investments:
1. Security of Original Capital;
2. Wealth Accumulation;
3. Comfort Factor;
4. Tax Efficiency;
5. Life Cover;
6. Income;
7. Simplicity;
8. Ease of Withdrawal;
9. Communication.
Security of original capital: The chance of losing some capital has been a primary need.
This is perhaps the strongest need among investors in India, who have suffered regularly
due to failures of the financial system.
Wealth accumulation: This is largely a factor of investment performance, including both
short-term performance of an investment and long-term performance of a portfolio. Wealth
accumulation is the ultimate measure of the success of an investment decision.
Comfort factor: This refers to the peace of mind associated with an investment. Avoiding
discomfort is probably a greater need than receiving comfort. Reputation plays an important
part in delivering the comfort factor.
Tax efficiency: Legitimate reduction in the amount of tax payable is an important part of
the Indian psyche. Every rupee saved in taxes goes towards wealth accumulation.
2

Life Cover: Many investors look for investments that offer good return with adequate life
cover to manage the situations in case of any eventualities.
Income: This refers to money distributed at intervals by an investment, which are usually
used by the investor for meeting regular expenses. Income needs tend to be fairly constant
because they are related to lifestyle and are well understood by investors.
Simplicity: Investment instruments are complex, but investors need to understand what is
being done with their money. A planner should also deliver simplicity to investors.
Ease of withdrawal: This refers to the ability to invest long term but withdraw funds when
desired. This is strongly linked to a sense of ownership. It is normally triggered by a need to
spend capital, change investments or cater to changes in other needs. Access to a long-term
investment at short notice can only be had at a substantial cost.
Communication: This refers to informing and educating investors about the purpose and
progress of their investments. The need to communicate increases when investments are
threatened.

Security of original capital is more important when performance falls.

Performance is more important when investments are performing well.

Failures engender a desire for an increase in the comfort factor.

Perfect investment would have been achieved if all the above-mentioned needs had
been met to satisfaction. But there is always a trade-off involved in making investments. As
long as the investment strategy matches the needs of investor according to the priority
assigned to them, he should be happy.
The Ideal Investment strategy should be a customized one for each investor
depending on his risk-return profile, his satisfaction level, his income, and his expectations.
Accurate planning gives accurate results. And for that there must be an efficient and
trustworthy roadmap to achieve the ultimate goal of wealth maximization.
3

CHOOSING THE RIGHT INVESTMENT OPTIONS

After understanding the concept of investment, the investors would like to know
how to go about the task of investment, how much to invest at any moment and when to
buy or sell the securities, This depends on investment process as investment policy,
investment analysis, valuation of securities, portfolio construction and portfolio evaluation
and revision. Every investor tries to derive maximum economic advantage from his
investment activity.
For evaluating an investment avenues are based upon the rate of return, risk and
uncertainty, capital appreciation, marketability, tax advantage and convenience of
investment. The following Table should give the clear picture relating to the investors
investment decisions in various financial market instruments. The choice of the best
investment options will depend on personal circumstances as well as general market
conditions. For example, a good investment for a long-term retirement plan may not be a
good investment for higher education expenses. In most cases, the right investment is a
balance of three things: Liquidity, Safety and Return.

INVESTMENT OPTIONS IN INDIA

CORPORATE PROFILE
The group is called the Saraswati Industrial Syndicate Limited (SIS). It was started in
1933 with the establishment of Saraswati Sugar Mills. This incidentally now happens to be
one of the biggest industries in the country with the cane crushing capacity of above 1,20,000
quintals PD. Over the years, three more units namely the INDIAN SUGAR & GENERAL
ENGINEERING CORPORATION (ISGEC), ISGEC JOHN THOMPSON (IJT) and UP
STEELS (UPS) were added.
Today the annul turnover of ISGEC for each year exceeds us $ 24 million & group
turnover of saraswati industrial syndicate limited exceeds us $ 100 million.
The group includes over 5000 people, which include engineers, technicians &
skilled craftsmen. Many of the have undertaken advanced training in the UK, USA, ITALY,
CANADA, AUSTRALIA, GERMANY & RUSSIA.
The etiqirieefinning group was launched in 1946 with the establishment of the Indian sugar
& general engineering corporation (ISGEC). It manufactures a variety of heavy engineering
goods for varied application.

ISGEC John Thompson (IJT) located at Noida supplies boilers &

associated equipment on turnkey basis.

In 1960, ISGEC collaborated with John Thompson from a joint

company by the name of ISGEC JOHN THOMPSON.

UP steels (UPS) was acquired in 1981 & merged later the parent
company. As a foundry established in 1966 with the technical know-how from the Japans
Kobe steels, UP steels has its main plant in Muzaffarnagar (UP) about 100 km. from
north of DELHI. it manufactures sophisticated Alloy/Steel castings both, hand & machine
molded as well as Alloy iron & Steel ingots.

The company was promoted by late Sh. D.D. puri and presently being

chaired by Mr. Ranjit Puri (chairman & managing director). The company is a public
limited company.

BOARD OF DIRECTORS:

MR.RANJIT PURI

MANAGING DIRECTOR

MR. ADITYA PURI

MANAGING DIRECTOR

MR. C.R. THOMPSON

DIRECTOR

MR. TAHIR HASAN

DIRECTOR

MR. SUJATA VARADARAJAN

DIRECTOR

MR. VINOD K. NAGPAL

DIRECTOR

AUDIT COMMITTEE:

MR. TAHIR HASAN- MEMBER

MR. VINOD K. NAGPAL -CHAIRMAN

MR..ADITYA PURI-MEMBER

PRESIDENT & COMPANY SECRETARY:

MR. S.K. KHORANA

BANKERS:

STATE BANK OF PATIALA

STANDARD CHARTERED BANK

STATE BANK OF TRAVANCORE

STATE BANK OF INDORE

STATE BANK OF HYDERABAD

7

PUNJAB NATOINAL BANK

CORPORATION BANK

INDIAN OVERSEAS BANK

EXIM BANK

HBSE BANK

ICICI BANK

STATE BANK OF MYSORE

ABN AMRO BANK

REGISTER OFFICE:
YAMUNANAGAR, HARYANA

UNITS:

INDIAN SUGAR & GENERAL ENGINEERING CORPORATIO

ISGEC JOHN THOMPSON

UTTAR PRADESH STEELS

INDIAN SUGAR AND GENERAL ENGINEERING

CORPORATION

THE COMPANY
ISGEC is the heavy engineering unit of Saraswati industrial syndicate limited. It was
established in 1946 & is located at Yamunanagar, Haryana, about 198 km. from Delhi.
ISGEC is famous worldwide for the manufacture of Pressure Vessels, Gas
Containers and Heat Exchangers & Presses.

OUR MISSION
TO BE MARKET LEADER THROUGH QUALITY, TECHNOLOGY AND
EMPLOYEE INVOLVEMENT

APPROVAL

ISGEC has been approved by Lloyds register of quality assurance as

an ISO-9001 company.

ISGEC is authorized by American society of mechanical engineers for

the use of ASME 'U' & 'S' code stamps.

Lloyds register as Class-1 manufacture of fusion welded Pressure

Vessels up to 200mm thickness approves ISGEC.
9

Engineers India ltd approves ISGEC. For manufactured of heat

exchangers up to maximum tube thickness of 300mm.

Engineers India ltd approves ISGEC. for manufactured of Vessels &

columns in carbon & alloy steel up to 150 mm thickness & in Clad steel up to 132 mm
thickness.

PRODUCT RANGE
Diversity of product range is the stimulus on which ISGEC thrives. They manufacture:

Process Plant Equipment including Pressure Vessels, columns, towers, reactors,

regenerators, shell & tube heat exchangers, autoclaves, etc. for fertilizers, refineries,
petrochemicals &

other chemical industries in various material of construction

including carbon steel, clad steel duplex stainless steel & non ferrous materials.

Containers for chlorine & other liquefiable gases. ISGEC has manufactured more
than 50000 containers & are the largest manufacturer of containers in the world.

Boilers pressure parts for water tube boilers including boiler drums, super heaters,
economizers, panel & manifolds,

Heavy duty mechanical presses (up to 1000) & hydraulic presses (3000 tones) for
sheet metal & other applications for automobile, railways & various other industries.

Sheet plant equipment & sugar machinery.

high quality grey iron & alloy casting (weight tones single piece) for the
chemical industry, dye & intermediate dye industry & soda ash plants ,
compressors manufacture, machine tool manufactures.

10

pumps &

PRESSURE VESSELS & HEAT EXCHANGERS

- Shell & Tube Heat Exchangers
- Pressure Vessels
- Boiler Drums
- Reactors
- Columns & Towers
- Boiler Pressure Parts
- Galvanizing Baths or Kettles
- Fume Hoods
PRESSES
- Straight Side Presses - Mechanical
- Straight Side Presses-Hydraulic
- 'C' Frame Presses - Mechanical

BOILERS
- Dump Grate Boilers
- Travelling Grate Boilers
Atmospheric
Fluidised

Bed

Combustion Boilers (AFBC)

- Circulating Fluidised Bed Combustion
Boilers (CFBC)
- Oil / Gas Fired Boilers
- Waste Heat Recovery Boilers
- Deaerators
- Spares

STEEL CASTINGS
- Hydro Turbine Castings
- Gas Turbine Castings
- Steam Turbine Castings
- Valve Castings
- Mn Steel Castings
- Ni - Hard Castings
11

Pump Castings
General Castings
Sugar Mill Castings
Cement Mill Castings
S.G. Iron Castings

SUGAR PLANTS AND MACHINERY

- Complete Cane Sugar Plants
- High Performance Cane Mills
- Process House Equipment
- Bagasse Fired Boilers
- Spares

IRON CASTINGS
- Castings for Pump and Compressor
Industry
- Castings for Chemical & Dye Stuff
Industry
- Castings for Soda Ash Industry
- Castings for Tool & Dies Industry
- Castings for Machine Tools Industry
- Castings for Steel Plant Industry
- Castings for Sugar Industry

LIQUIFIED GAS CONTAINER

- Model 'A'
- Model 'B'
- Model 'C'
- Model 'D' (approved by DOT, USA)
12

CONTRACT MANUFACTURING
Custom
Job
Work
(Heavy Engineering Equipment as
per Client's Designs

and Drawings)

13

INFRASTRUCTURE

ISGEC has employed over 2000 people which includes about 500

qualified &

experienced engineers/supervisors apart from skilled works men.

ISGEC has well equipped factory, covering an area of about 25 hectares including
covered production area of more than 50000 square meters spread over 11 production
bays.

There are overhead cranes in all the bays with maximum crane lifting capacity of 150
tons.

Extensive facilities for hot & cold working, welding, heat treatment & testing help to
ensure that compliance to quality standards.

More than 150 sophisticated machines & machine tools are installed in various
production bays.

More than 150 welding machines are under operation.

ISGEC COLLABORATIONS
Working continuously towards further excellence in technology, ISGEC entered into
technical collaboration with internationally well-known companies.
Some of the companies are shown below:1955

A.F.CRAIG & CO., UK

1960

JOHN THOMPSONS, UK

SUGAR MACHINERY
INDUSTRIAL BOILERS &
PRESSURE VESSELS

1963

KAWASAKI, JAPAN

CEMENT MACHINERY
14

1964

FARRELL, USA

SUGAR MILLS

1966

JOHN SHAW & SONS

HYDRAULIC PRESS

1968

BRONX, UK

PLATE BENDING &

LEVELING MACHINES

1967

NE INTERNATIONAL

PULVERIZED FUEL

COMBUSTION, UK
1980

BOILER, ROD MILLS

ROVETTA, ITALY

MECHANICAL PRESS

SOME OF OUR INTERNATIONAL CLIENTS

PHUNG HIEP CANE SUGAR FACTORY, VIETNAM

LAMSON SUGAR FACTORY, VIETNAM

BINH DUONG SUGAR CORPORATION, VIETNAM

BANGLADESH SUGAR & FOOD INDUSTRY CORPORATION, BANGLADESH

BIEN HOA SUGAR JOINT STOCK COMPANY, VIETNAM

GULA PADANG TERAP, MALAYSIA

SUGAR CORPORATION OF UGANDA LTD., UGANDA

SOUTH NYANZA SUGAR CO., KENYA

KHANH HOA CANE SUGAR FACTORY, VIETNAM

BISCOM, PHILIPPINES

DANAO DEVELOPMENT CORPORATION, PHILIPPINES

DON PEDRO SUGARS, PHILIPPINES

FLETCHER SMITH LTD., UK

15

FIRST FARMERS SUGARS, PHILIPPINES

GUYANA SUGAR CORPORATION, GUYANA

LOPEZ SUGAR CORPORATION, PHILIPPINES

PENA FRANCIA SUGARS, PHILIPPINES

FAUJI SUGAR MILLS, PAKISTAN

SARTAJ SUGAR MILLS, PAKISTAN

BIRGANJ SUGAR FACTORY, NEPAL

CARONI (1975) LTD., TRINIDAD

NILE SUGAR COMPANY, SUDAN

ZAMBIA SUGAR, ZAMBIA

MUMIAS SUGAR, KENYA

LINDE, GERMANY

SOME OF OUR INDIAN CLIENTS

SARASWATI SUGAR MILLS, HARYANA, INDIA

MAWANA SUGAR WORKS, UTTAR PRADESH, INDIA

DAYA SUGARS, UTTAR PRADESH, INDIA

NAGAR TALUKA SSK LTD., MAHARASHTRA, INDIA

BABASAHEB AMBEDKAR SSK LTD., MAHARASHTRA, INDIA

BAPUJI RAO DESHMUKH SSK LTD., MAHARASHTRA, INDIA

KEDARESHWAR SSSK LTD., MAHARASHTRA, INDIA

CHOPDA SSSK LTD., MAHARASHTRA, INDIA

16

GAYATRI SUGAR COMPLEX, ANDHRA PRADESH, INDIA

RIGA SUGAR MILLS LTD., BIHAR, INDIA

RAMGARH CHINI MILLS LTD., UTTAR PRADESH, INDIA

TITAWI SUGAR COMPLEX, UTTAR PRADESH, INDIA

TIKAULA SUGAR MILLS LTD., UTTAR PRADESH, INDIA

PRABHULINGESHWAR SUGAR WORKS LTD., KARNATAKA, INDIA

GEM SUGARS LTD., KARNATAKA, INDIA

MAGNA AGRO INDUSTRIES LTD., LUCKNOW, INDIA

KOTHARI SUGARS & CHEMICALS LTD., TAMIL NADU, INDIA

17

ORGANISATIONAL STRUCTURE

The chart of the organization structure of ISGEC showed the various hierarchal levels of
the organization. Organization is divided into various departments managed by different
general manager of the concerned department.

18

ISGEC
(YNR)

IJT
NEW DELHI

SARASWATI
INDUSTRIAL
SYNDICATE
LTD.

U.P.STEELS
MUZZAFFAR
NAGAR

SARASWAI
SUGAR MILL
(YNR)

ISGEC JOHN THOMPSON (IJT)

IJT is located at Delhi. It supplies boiler & associated equipments on turnkey basis. In
1960 ISGEC collaborated with john Thompson, U.K., to from a joint company by the
name of ISGEC JOHN THOMPSON.

U.P. STEELS (UPS)

This was acquired in 1981 & merged with parent company. As a foundry establishment in
1966 technical know-how from Japans Kobe steels, UPS has its main plant sit
19

muzzafarnagar (U.P.). It manufactures sophisticated alloy steel/steel castings both hand &
machine rounded as well as alloy iron castings steel ingots
U.P. steel has obtained the prestigious Lloyds certification & is now on the Lloyds
register international list of class-1 founder for manufacture of casting in different grades
of steel.

ISGEC
The etiqirieefinning group was launched with establishment of ISC-FC. It was founded in
1946 as a public limited company under the company act, 1956. It manufactures a variety
of heavy engineering for varied applications.
I conducted my project study at ISGEC (works), Yamuna Nagar. So, here I am
going to, describe the things in context of ISGEC (works), Yamuna Nagar only.

SARASWATI SUGAR MILL

It was the first unit being established in 1933. It introduced massive modernization
program that leads to increase in the capacity from 8000 to 9600 tones-cane-crushed per
day. It was undertaken at the cost of rs.30 crores. SSM secured a prestigious order of 10
lack tones of sugar, exports are expected to be substantially lower this year because world
price are fallen. It is one of leading manufacturing sugar company in India.

20

SWOT ANALYSIS

STRENGTHS

Producing high quality products comparable with the international standards as

awarded by ISO-9001.

Efficient labour is available at cheaper rate.

Services & cooperation of the staff & the workmen is really appreciating.

Their products are in use in 41 countries around the world.

Company is discharging their social obligations as well.

Administration is very strong.

WEAKNESS

Not linked with port or airport so freight is high.

Not & industrial belt.

Educated & skilled professional does not want to stay in this belt.

21

SEGMENT ANALYSIS AND REVIEW:

a)

Manufacturing of heavy capital goods:

These include Presses Vessels, Hydraulic and Mechanical Presses and Castings. The
manufacturing facilities are located at Yamunanagar (Haryana) and Muzaffarnagar
(U.P.).We have bought a land in Dahej (Gujarat) for another manufacturing unit and hope
to get it operational by the end of calendar year 2007. The pressure vessels business grew
because of a boom in Oil, Gas and Petroleum sectors.
During the period under review, we exported pressure vessels to KNPC Kuwait,
Petrofac Sharjah, Petroleum development Oman, and Japan Gas Corporation Japan.
Efforts are being made to get ourselves approved from more consultant and end users so
as to increase our exports. The new facility at Dahej will manufacture Pressure vessels
heavier than what we are manufacturing at present.
The Presses business equipment mainly to the automobile sector saw increased
turnover because of the expansion of automobile sector.
a) Engineering, procurement and Construction Business:
In this line of business, your company engineers, procures and setup boiler units and
sugar plants. It also undertakes to commission these plants and take guarantees for their
performance and efficiency.
This work is done out of its office in Noida (U.P.). The boiler business mainly
supplies to process industries like Sugar, Cement, Paper etc. With the boom in economy,
Division also saw increased sales. The Business for Circulating Fluidized Bed
Combustion boiler with technology from foster Wheeler, our technology provider, saw a
very significant increase. The sugar machinery business also boomed mainly because of a
large number of sugar plant in U.P.

22

OUTLOOKS AND THREATS

The boom in the Indian economy should lead to a high demand for capital good.
Moreover, company is making continuous effort to increase export. Therefore, an
increase in the turnover in the coming year is expected. However we are facing increased
competition from new suppliers. Indian as well as overseas (particularly Chinese), in all
the segments mentioned above consequently margin are expected to be under pressure.
Exports are becoming increasingly competitive and weakening of dollar may have an
adverse effect on companys export. In certain areas for instance, presses and boiler,
keeping abreast with oversea technology is a major concern. Raw material price continue
to be very volatile and could lead to large fluctuation in the bottom line. Human resources
continue to remain scarce and their costs are also rising significantly.

FUNCTIONS OF DIFFERENT DEPARTMENTS

FUNCTION OF PURCHASE DEPARTMENT

Receipt of purchase requisition issued by the indicator, giving details of specific

material, quality required, delivery & test guarantee certificate duly signed by
authorized person.

Dealing hand in the purchase department is to check the correctness of purchase

requisition for followings:

Specification given in the purchase requisition.

Authorized person signs purchase requisition.

Proper sanction reference is given

To release the order if the item is under:

Rate contract
23

Price listed

Repeat orders

Otherwise float the enquiry to various suppliers.

To receive the quotation if not receive by the due date then issue reminder for
submission of quotation.

To prepare comparison of various quotation & to take up the suppliers in case of

deviation in commercial terms.

To send quotation for technical comments to indenter.

To negotiate with various suppliers.

By calling them to discuss across the table in case of high value orders.

Through fax or over phone in case of value orders.

To prepare purchase order in terms or quotation/negotiation had with supplier.

To get order technically authenticated.

To get commercially cleared from audit department.

To post orders to suppliers & undue copies to:

Indenter for the information about clearance of indent.

Stores to check the material in terms of purchase order at the time or receipt of
material.

Accounts department to release the payment as and when advised by the purchase
department.

24

To check whether supplier had made the supply in time as specified in the purchase
order. if not:

To issue reminders.

To take up over phones/through fax.

To repute expedite for expediting the material.

To continue follow up till the material is dispatched. in case supplier fails to supply
the material & then take up other supplier.

To ensure dispatch of material.

To go through dispatch documents thoroughly & check in terms of purchase order

commercially.

In case payment is to be made directly after receipt & approval of material by G.R.
(good receipt) voucher is received along with the documents.

After receipt of material in stores the storekeeper checks it physically. In case of any
storage/excess/breakage a report is sent to buying department for taking up with
insurance authority or supplier suitably for getting replacement /claim for loss.

After inspection of material by the quality control department a report showing

acceptance/rejection/rework by supplier in the works is issued & then the stores issue
SRV.

In case material is accepted, SRV is send to the accounts department for checking. In
case of rejection SRV is send to buying department for further take up with supplier
for getting replacement.

To take up with supplier till the replacement is received or approved.

To issue payment advice to accounts for releasing the payment in case of direct
payment.
25

In case of any advance/program payment is to be made in terms of purchase order,

buying department issue buying advice to the accounts department for the same to
release payment.

FUNCTIONS OF COMMERCIAL DEPARTMENT

INDIAN SUGAR AND GENERAL ENGINEERING CORPORATION has commercial
department as separate department work-study of commercial department is done
through interview method. Main functions of commercial department are:

Bankers Guarantee

Indemnity Bond

MODVAT (modify value added)

Invoice & Credit Management

BANKERS GUARANTEE
Bankers guarantee is given for:

Advance payment.

For contract performance.

Warranty- guarantees performance.

Against free issue of material supplied by the buyer.

1. ADVANCE PAYMENT
26

Bankers guarantee is given for advance payment. In this:

Amount of guarantee is equal to advance received.

Security as per terms of order (generally it is 5% to 10%)

Performance guarantee as per terms of order (generally it is 10% to

20%)

Validity period as specified in the bank guarantee.

Banker guarantee will be discharged in case of advance payment after goods are being
discharged.

2. FOR CONTRACT PERFORMANCE

Banker guarantee is given for contract performance also.

Security as per terms of order (generally it is 5% to 10%)

Performance guarantee as per terms of order (generally it is 10% to 15

Validity period as specified in the bank guarantee.

Banker guarantee will be discharged after performance of the contract.

3. WARRANTY - GUARANTEE PERFORMANCE

THIS GUARANTEE IS FOR PERFORMANCE OF THE EQUIPMENT supplied by the
seller. Warranty- guarantee performance is valid till warranty period. Claim period
will also be provided in certain guarantee which is approximately 1 to 6 months. The
buyer also has right to lodge claim with seller's bank against bankers guarantee in
27

case sellers is unable to fulfill the contractual obligation with in validity specified in
the guarantee.

4. AGAINST FREE ISSUE OF MATERIALS SUPPLIED BY THE

BUYER
In bankers guarantee three parties are involved:

Seller: seller is a person who gives guarantee.

Bank of seller: who stands security for the buyer?

Buyer: in whose favour guarantee is given.

INDEMNITY BOND
In indemnity bond, only two parties are involves seller & buyer. It is a type of document
which is prepared by seller & issued to buyer. There is no third party in indemnity bond. On
indemnity bond document indemnity bond no. , indemnity bond value, validity date, date of
issue is mentioned. It is generally for one to six months.

MODVAT
MODVAT (modify value added) is basically a duty collecting procedure which at the same
time aims at allowing relief to a manufacturer on the duty element borne by him in respect of
the raw material used by him.
The administration of the MODVAT scheme is regulate under section AA (rule 57A to 57J)
& section AAA (rules 57K to 57P) of the central excise rules 1944.

INPUTS
WHAT ARE PRE REQUISITIES?

It should be use for manufacture of excisable goods.

28

It should be duty paid.

It should come to X-factory.

One should file a declaration with A.C. so that one can avail MODVAT.

WHAT ARE FORMALITIES?

Goods received must be entered RG 23 A part I register.

Central excise duty credit should be taken RG 23 A part II register.

ON WHAT DOCUMENTS ONE CAN TAKE MODVAT CREDIT?

Duplicate copy of invoice.

Triplicate copy of bill of entry for imported goods.

Duplicate copy of challan under rule 57(F) 4.

In case of loss of duplicate invoice in transit, one can avail MODVAT on original
copy of invoice with the permission of A.C.

29

HOW TO USE INPUTS?

Inputs to use for manufacture of excise able goods.

Inputs can be sent for job work, processing etc.

Inputs can export without payment of duty as such.

Inputs can be used as such on payment of duty after intimation to A.C.

HOW TO USE CREDIT TAKEN ON INPUTS?

Credit is to be used for clearing of excisable goods.

Credit is to be used for clearing waste & by products.

Credit is to be used on amount lying in credit & it can be refunded in case it can not
be utilized on account of export.

CAPITAL GOODS
WHAT ARE PRE-REQUISITIES?

Capital goods should be specified.

Declaration to A.C.

Goods must be used in the factory.

30

WHAT ARE FORMALITIES?

Intimation to superintendent for receipt of capital goods.

RG 23 C parts I & II to be maintained.

USE OF MODVATED CAPITAL GOODS.

For use in factory of manufacturer.

It can be sent for repair, testing & re-processing.

It can be sold as such.

USE OF CREDIT

For clearance of excisable goods.

INVOICE AND CREDIT MANAGEMENT

Under this two documents are prepared:

Dispatch Instructions

This document is prepared by engineering department. It is prepared before 15 days of

dispatching goods. Three copies of dispatch instructions are prepared.
Original Copy

Dispatch Department

2nd Copy

Commercial Department

3rd Copy

Office Copy
31

Challan

This document is prepared at the time of dispatch of goods. It is prepared by dispatch

department. 4 copies of challan are prepared.
Original Copy

Gate Keeper

2nd Copy

Clients Copy

3rd Copy

Accounts Copy

4th Copy

Dispatch Department

WORK STUDY OF FINANCE AND ACCOUNTS DEPARTMENT

STORE ACCOUNTING
1. Payment of suppliers
a) Receipt of SRV (store receipt voucher) from stores.
b) Checking of SRV with the terms of purchase order.
c) Checking of SRV is done by:
i)

Account clerk

ii) Assistant accountant

iii) Final authority (accounts officers)
d) Feeding of SRV in computer.
e) Receipt of payment request from the buying department in case of direct payment.

32

f) Preparation of supplier other than direct payment.

g) Payments to supplier other than direct payment i.e. advance payment:
i)

Against performer invoice

ii)

Against delivery
iii.)

Clean advance

iv.)

From branch offices

v.)

Against bank guarantee

2. Balance sheet work

a)

Adjustment of supplier balances at the request of purchase department.

b)

Reconciliation of MODVAT account maintained in financial accounts vis--vis excise

records i.e. Rrg-23 a Part II & RG-23 C Part II

c)

Preparation of list of suppliers along with outstanding amounts i.e.

Local Suppliers

Foreign Suppliers

d)

Security of suppliers balances & adjustments thereof.

e)

Tally of store ledger with financial ledgers.

ESTABLISHMENT ACCOUNTING
Routine Work
33

a)

Checking & making payments of salaries to:

Staff

Workers

Casual labors

Trainees

Apprentices

Contract labour

b)

Making payments under various schemes namely:

Conveyance reimbursement

Medical reimbursement

LTC (leave travel concession) reimbursement

Pension

Newspaper, magazines & professional books reimbursement

Leave encashment

c)

Checking of bonds & making payment there of.

d)

Checking & making payments of incentives to the employees along with salary.

e)

Preparing & filling half yearly ESI return.

f)

Preparing & filing monthly provident fund return.

g)

Depositing ESI & provident fund to the govt a/c.

34

h)

Maintaining records of investment made by the employees after considering these

investments, deducting tax from the emoluments of the employees.

i)

Feeding of all the earnings & investments into the computer & preparing TDS (tax
deducted at source) certificate & then issue the employees.

j)

Filing & preparing annual TDS (salaries) return.

Depositing TDS in respect of salary of employees.

k)

Making

loan

payments

under

various

schemes

namely

scooter

car loan, furniture loan, pension loan, cycle loan, special loan & ensuring

loan,

the terms

of the schemes.
l)

Depositing the school fees of children of certain employees.

m)

Depositing the life insurance premium in respect of certain employees.

n)

Depositing installments of loans taken by employees from urban bank & yamuna
syndicate Ltd.

Balance sheet work

Preparing list relating to establishment section.

Security of amounts laying outstanding in various accounts of employees & making

adjustments thereof.

OTHERS
Inter Unit Accounting

Preparing & passing of vouchers on the basis of advices received from/sent to other
units & head office.

35

Preparing reconciliation statements of accounts with the other units.

Scrutinizing the outstanding entries & making adjustments thereof.

1.

Checking of T.A. bills of employees monthly stock statement

2.

liaison with banks regarding:

Filing & preparing monthly stock statement.

Filing & preparing of QIS (quarterly information system) reports & half yearly report
under chore committee.

3.

maintaining & controlling imprested accounts of the employees

4.

passing of fixed assets voucher

5.

Getting physical verification of fixed assets done & passing adjustment entries.

6.

Preparation of details for sales tax assessment.

7.

Preparing various MIS (management information system) reports which include

projected cash flow statement as well as actual cash flow statement, investment
reports, profitability reports & other reports as per various offices of the company.

8.

Preparing bank reconciliation statement on monthly basis.

9.

Preparation & finalization of balance sheet & profit & loss account.

36

QUALITY SHOP
ISGEC is an ISO-9001 company. The most basic question that comes to our mind is

the

concept of quality.
QUALITY
A product can be said to have good quality if the following abilities are balanced while
designing and producing it.

Suitability

Durability

Dependability

Safe workability

Affordability

Appear ability

INSPECTION
When a product is manufactured it would be necessary to check the product for all
specification requirements before releasing it to the market so that the product so released
meets all requirements and the customer accepts it.
QUALITY CONTROL
Every manufacturing process has several stages. No product can be manufactured in a single
stage. Each stage involves the manufacturing of a part or in part of the final product of the
quality of all parts meets requirements of the product as a whole would meet the
requirements. So a manufacturer should check quality of various parts of the Product before
37

assembling them or making the product so that latter does not suffer from deficiencies.
Checking the quality of raw material during each stage of production and taking immediate
steps in case of deviations is quality control.

QUALITY PLANNING
Quality planning is done with the help of following documents.

Quality Assurance Plan (QAP)

Quality procedure for inspection

Manufacturing drawing

Customer purchase order

QAP describes the inspection checkpoints during the various stages of manufacturing. The
reference documents and records for various check points and also the various Stages
and the hold points.
Quality procedure for inspection at various stages describes the methodology of inspection
and control of product quality at various stages. Manufacturing drawing describes the
product quality requirements in terms of specification, dimensional visual
performance, characteristics etc.
PURPOSE
To prepare the plan for the quality process for products, which are being manufacturing in the
division?
SCOPE
Products manufacturing against orders received in the division.

38

IMPORTANT FEATURES OF ISO SERIES

ISO 9000 is a system of standard of quality management.

ISO 9001, quality management is a system is a series of standards developed by the

International Organization for Standards (ISO) in Geneva, Switzerland.

There are five standards in the ISO-series, ISO-9000 to 9004. ISO-9000, ISO-9001,
ISO-9002, ISO-9003 is applicable to contractual situations. ISO-9004 is for nonContractual cases and used for internal management purposes.
ISO-9000: it is the contour map, furnishing the guidelines for selection and use of
ISO standard series.
ISO-9001: models for quality assurance in design / development, production, installation and
servicing.
ISO-9002: models for quality assurance in production and installation.
ISO-9003: models for quality assurance in final inspection.
ISO-9004: quality management and quality system element guides.
As per the parts of ISO 9000 commitments to continuous improvement of the standards are
reviewing over a period of five years.
NEED FOR ISO 9000 CERTIFICATION
Customers all over the world like to confidence in manufacturers. Capability to design
develops, produce and service. Industries are facing competition to get this certification.

39

ISO 9000 is the only credibility passport, which certifies that a company meets Informations
standards in designing, developing, producing, installing and servicing the product it
supplies.
ISO 9000 is based on the philosophy that an integrated, systematic and planned
Approach only can ensure quality.
ISGEC POLICIES TO GET ISO 9000

Adherence to quality policy i.e. material produced or sold must be of good

Quality

A person would be totally responsible for quality

Decision of main inspector can be cancelled by some deputed officer i.e.

Division manager.

There is an inspector at every shop in ISGEC.

The ways of formulas of quality are not supplied for the site work there

Should be planning for this type of work.

Quality should be posted for.

Adult.

Fix fighting.

Safety.

Factory act.

40

OBJECTIVES OF STUDY

To study various investment alternatives provided by HDFC Bank

To study the reasons for preference of a particular alternative

To study whether the investors are satisfied by the investment they have made

SPECIFIC OBJECTIVE OF STUDY

To identify investor perception of various investment alternatives

The investors objective behind investment

The risk tolerance of the investors

The time horizon preferred by investors for investment

41

RESEARCH METHODOLOGY

Research Methodology
Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying how research is done scientifically. In it we study the
various steps, the research process that are generally adopted to study the research problem
and basic logics behind them. The basic steps in this research are shown in the chart below

The Research Process

Define the research problem and its

objectives
Review concepts and theories

Research design including sample

design
Collection of data survey

Analysis of data

Interpretation and report writing

42

The research consisted of two stages. In the first stage, a survey was conducted to collect the
data about the people. The second stage involved analysis of the data collected in the first
stage.

The methodology adopted in this study is basically analysis and interpretation. Analysis of
investment and fixed deposits occur at ISGEC. The statement for fixed deposits has been
collected from the finance department of the company. The data were arranged, that is
various items of annual reports after appropriate reshuffling were arranged to represent the
form suitable for analysis and interpretation. No definite procedure of step is followed for
arranging data. Generally each case involves a different procedure. However, the items are
rearranged in such a way that all items needed for calculating the total fixed deposits easily
available in the company.

The structure of FDs measures the relationship between items in a set of financial statements
at a particular date. Financial Analysis is basically concerned with interrelation of different
items at a particular point of time that is the date of financial statement. Thus, for this project,
structural FDs for successive period are calculated in order to see the trend in the
relationship of different items during the period of study. Though, significant structural FDs
can be calculated from various standpoints, the classification by functions has been taken up
for the purpose of study. The FDs have been compared to the standards, norms of the FDs in
the industry and secondly, a horizontal analysis has been carried out suitable conclusions
have been drawn, but these views, ideas and opinions are based on the analysis, comparison
and the study of the trend.

43

RESEARCH DESIGN

For analyzing the financial statement of SML ltd. Descriptive research design has been
taken as the research has got very specific objective, clear-cut data requirements. The
research design in this case is a comparative design throwing light on all points and
prepared keeping in view objective of the study and the resources available. In this
attention is on the following:

Formulating the objective of the study (what the study is about and why it is
being made?).

Designing the methods of data collection.

Selecting the sample (here it is how much material will be needed).

Collecting the data (where can the required data be found and with what
time period data should be related?).

DATA ANALYSIS AND INTERPRETATION

Once the data has been collected it should be analyzed very carefully. Data should be
converted in to the short form with the help of coding, tabulation, and drawing graphs.

PREPARATION OF REPORT
Finally the report will be prepared on the basis of the above research methodology.

44

METHODS OF DATA COLLECTION

Collection of data is the most important step in every investigation. It is basic for any
analysis and source is chosen depending upon the time, resources, and purpose of
investigation.
There are two types of data:
1. Primary data
2. Secondary data

Primary data collection

The data collected through primary means is based upon the personal discussion with
the officers working under the finance department.

Secondary data collection

Secondary data collection is mainly based upon:

Annual reports of ISGEC

Websites:
www.isgec.com

Other documents and files of ISGEC.

45

LIMITATIONS OF THE STUDY

The survey was conducted in Chandigarh and adjoining areas. The standard of living,
per capita income of people, earning style, etc. of this region is different from other
areas. Therefore, the inferences drawn from the survey cant be generalized.

Another major limitation was unwillingness of respondents to reveal information.

Due to lack of sufficient time and hesitation to reveal information regarding their
investments, it was a difficult task to extract information from them.

Time limit of six weeks were not enough .

Lack of support from the staff of reliance money.

46

FIXED DEPOSITS
A Fixed deposit is an investment account comprising a single deposit, for a fixed term at a
guaranteed fixed rate of interest. It can he used for both short and long term investment
purposes. A fixed deposit account allows depositing money for a set period of time, thereby
earning you a higher rate of interest in return. Fixed deposits also give a higher rate of
interest than a savings bank account.

NEED OF FIXED DEPOSITS

Fixed deposit is one of the oldest & most common methods of Investing. FDs look great
because you get a decent risk-adjusted return and the principal is protected. Fixed deposits
help to secure the hard earned money for a long duration. Fixed deposit is a financial
instrument to deposit the money for a fixed duration ranging from 15 days to 5 years.
However we need to remember that FDs are safe only as long as they are parked in large
bank. Now a day, the banks & financial market is becoming very competitive.
It is required to check up on the different types of FDs scheme available before making any
fixed deposit investments, Banks offer various types of fixed deposits in India to their
customers. Some banks offer a fixed deposit schemes which offer more savings & over draft
facility
A regular fixed deposit can earn someone an interest: up to 8.75% and senior citizens who
opt for such a fixed deposit scheme are eligible for an additional 0.5 % increase.

BENEFITS OF FIXED DEPOSITS

With fixed deposits or FDs as they are popularly known a person can invest an amount for a
fixed duration. The banks provide interest rates depending on this loan amount and the tenure
of deposit.
47

The option to withdraw the deposit at any time before maturity without any difficulty

Fixed deposit is secure form of investment that means your money would be 100%
safe.

We can avail loans up to 85% of the principal

Variable deposit periods ranging from 6 months to 120 months

We get interest once in 6 months

A minimum opening deposit of Rs. 1000.00 is required. Deposit can he made in multiples of
Rs.100/We can choose how frequently we want to receive our interest payments:

Maturity

Yearly

Half yearly

Quarterly

Monthly

The banks may not always tell you the full story. Therefore it is important for us to go deep
into any fixed deposit Rate of .interest and make the right choice.
BENEFITS
Safety:
FDs have conventionally been the premier choice for investors with a low risk appetite;
assured returns is the key factor which attracts investors towards deposits. Stick to FDs of the
highest credit rating i.e. those with a AAA rating even if their rates seem modest vis--vis
those offered by company deposits. The fixed deposit of reputed banks and financial
48

institutions regulated by RBI (Reserve hank of India) the banking regulator in India is very
secure and considered as one of the safest investment methods.
Regular Income:
Fixed deposits earn fixed interest rates for their entire tenure, which is usually compounded
quarterly. So, those who want an income on a regular basis can invest into fixed deposits and
use the interest rate as their income. This makes a fixed deposit very popular way of
investing money for retirees
Saves Tax:
With the directives of the income tax department stating that investment in fixed deposits up
to a maximum of Rs.l00000 for 5 years are eligible for tax deductions under section 80C of
income tax act fixed deposit have again become popular. Fixed deposit save tax and give
high returns on invested money.
Liquidity
Find out how your FD times on the pre-mature encashment front i.e. how easily can your
investment be liquidated Also enquire about the penalty clauses, e.g. do you suffer a loss of
interest and or principal amount. Compare how various fixed deposits rank on this parameter
and pick the best deal: thereby try to minimize the impact of illiquidity which is typically
associated with fixed deposits.
PRECAUTIONS
The precaution one should take while making such investments:
Company Fixed Deposits:
Company fixed deposits are not considered as safe as fixed deposits from leading banks and
financial institutions regulated by the RBI. So, if a company runs into losses or goes bankrupt
the money invested into its fixed deposit can be lost. To lure investors, such companies offer

49

a fixed deposit sit interest rate which is much higher than those offered by banks. Before
investing in any company fixed deposit it is advised to check the credentials of the company
Premature ending of Fixed Deposits:
Banks will impose a penalty if you break your fixed deposit before the maturity period. Make
sure you get the facts right about this thing. How the bank calculates this penalty and whatll
charge will it levy when you break a fixed deposit should he noted carefully.
Fixed deposits are loan arrangements where a specific amount of funds is placed on deposit
under the name of the account holder. The money placed on deposit earns a fixed rate of
interest according to the terms and conditions that govern the account. The actual amount of
the fixed rate can be influenced by such factors at the type of currency involved in the
deposit, the duration set in place for the deposit and the location where the deposit is made.
The most unusual characteristic of a fixed deposit is that the funds cannot be withdrawn for a
specified period of time. In most cases, fixed deposits carry duration of five years. During
that time, the money remains in the account and cannot he withdrawn for any reason.
Individuals, corporate entities, and even non-profit organizations that wish to set aside funds
and limit their access to the funds or a period of time often find that fixed deposits are a
simple way to accomplish this goal. As an added benefit, the monies in the account will earn
a fixed rate of interest regardless of any fluctuation in interest rates that apply to other types
of accounts.
However, both these benefits can also turn into disadvantages under certain circumstances.
Because the money cannot he withdrawn until the duration is complete. The funds cannot be
used ever in emergency situations. Changes in the going interest rate may also rise to a point
above and beyond the interest rate applied to existing deposits. This means account holders
are actually earning less interest with fixed deposits than with other types of loans and
accounts.
While the interest rate on fixed deposits cannot be changed, there is sometimes a way to
work around the issue obtaining use of funds in an emergency situation. At times, the lending
institution where the fixed deposit is placed may be willing to extend a separate loan to the
50

account holder, using the fixed account as collateral. While not ideal, this can at least make it
possible to deal with the current financial crunch.
Fixed deposits are credible way to make a return on investment that is somewhat higher than
a standard savings account. The use of fixed deposits can also be helpful when working with
various types of currency. By establishing what is known as a Foreign Currency Fixed
Deposit or FCFD. It is possible to choose the type of currency involved in the deposit and
lock in a rate of interest. If the choice of currency is a good one, this means the investor can
enjoy a healthy fixed deposit currency rate for the duration of the deposit and earn more than
with a standard fixed deposit strategy. However, going with an FCFD does contain a slightly
higher amount of risk, since the funds deposited must be converted to the currency of choice
and then converted back when the deposit is fulfilled. If the currency did not fare well in the
interim, there is some chance of obtaining a loss, due to the changes in the rate of exchange
from the time the fixed deposit was activated until the time the deposit is considered
complete.

ABOUT FIXED DEPOSIT INVESTMENTS

Traditionally, bank deposits have been the favorite investment avenue for Indians. Close to
20 per cent of household savings are invested in bank deposits. And not without reason. Bank
deposits continue to hold fort. Even today % total investment divided into two forms which
are shown below:
.Table 1: Percentage or savings as investment in India
BASIS

Investment in the form Investment in the other

of fixed deposit

form

Percentage of savings as 20%

80%

investment in India

51

Source self constructed

Bank deposits do not have the excitement surrounding other investment avenues like
equity shares or real estate investments. But bank deposits serve the purpose of
preserving capital which is the most wanted at certain times.

Bank deposits are most sought after for this purpose. They give a stable and fixed
return on the invested money. Traditionally, the interest rate is fixed during the tenure
of the fixed deposit. Some banks now a day have gone for the reduction in existing
bank deposits too, when the market interest rates come down.

The income comes to us the form of interest for the deposit amount; the principal
(initial amount invested) is returned back to us at the time of maturity. There are
options to receive the interest on a monthly/quarterly / half-yearly or yearly basis. In
case we do not need the interest to come to us during the term of the deposit, we can
opt for the cumulative deposit option, where the interest is credited to the deposit and
earns additional interest. Interest is generally compounded on a quarterly basis.

The historical average return from fixed deposit in India is approximately 8% for
long-term deposits (5 years). The high and lows have been in the range of 13% to
4%.

As regards Capital appreciation, it does not apply to bank fixed deposits. Only the
principal invested is returned back at the time of maturity.

Talking about the risk involved, the main reason for investment in bank deposits is
the safety of the principal. The capital (only up to Rs 1.00.000/- though) has the
highest safety compared to any other investment as it is guaranteed by the Deposit
Insurance & Credit Guarantee Scheme of India. All banks operating in India are
covered under this scheme.

52

More than this guarantee, the close monitoring that RBI has on all banks in India is a
big advantage to the safety of the investors in fixed deposits.

The risk faced when investing in bank deposits is the interest rate risk. This is
associated with the lost opportunity to invest in an instrument that has a higher
return. Getting out of a fixed deposit can be costly (up to 1% of the principal) when
we exit prematurely. So we may have to forgo potential earnings when the interest
rate has risen only by about 1%.

The highest risk faced with fixed deposits is the effect of inflation. The real return
after adjusting for inflation is very less or sometimes negative for fixed deposits of
banks. This is a big burden, particularly for retired people, who have invested their
retirement proceeds to get regular income. Their income may be regular and steady
but the moneys worth keeps going down during the tenure of the fixed deposit.

As per the liquidity factor is concerned, bank deposits have good liquidity. They can
be closed and the principal got back within a few hours in some banks to a couple of
days in others.

The other option is to take a loan on the fixed deposit. Banks lend up to 90% of the
principal of the deposit. Interest charged for this is only about 1 to 2% and only for
the period that we have used the cash (The feature works like an over-draft against
the fixed deposit).

Talking about the tax treatment, bank fixed deposits are not tax efficient. The interest
is taxed. Also there is no benefit from making the investment.

There are the 5 years bank deposits (tax saving) that give benefit under section 80C
of the IT Act. But the benefits such as partial withdrawal or closure, and loan facility
are not available. The deposit rates are also lower compared to the normal fixed
deposits. This effectively negates the tax saved.

53

The bank deposit primarily serves us to preserve capital. Banks now-a-days have
added a lot of additional benefits to the traditionally benign service. Retired people
could make the best use of this avenue for securing a fixed and steady income.

54

REASONS AS TO WHY PEOPLE INVEST IN

FIXED DEPOSITS:
LOW RISK

Banks deposit come with very low default risk and offer security
of your capital. The real risk to these products is in the form of
inflation. This is because if interest rates are low, the post
inflation returns on FDs may be negligible or even negative

CAPITAL

Your deposit of up to 1 lakh in any bank is protected under RBIs

GUARANTEE

Deposit Guarantee Scheme. This means if you place your deposit

in a bank that defaults , you will get up to Rs 1 lakh of your
money in the deposit

FIXED

Interest rate on banks deposits is fixed for the entire tenure of the

RETURNS

deposit. FDs of different tenures carry different interest rates.

Generally , higher the tenure , higher is the rate

LIQUIDITY

You can invest in a FD for as little as a month too. Thus it

provides ample liquidity as you can place yours surplus for the
short term. Besides, banks deposits can be prematurely
withdrawn. However, you will need to pay a penalty of 1 per cent
of the interest rate.
With high interest rates at present, FD returns have become
attractive. For a longer tenure deposit (two or three years), you
can even get a rate of around eight to nine per cent per annum.
How ever, rates vary from banks to banks

55

CHOOSING THE RIGHT FIXED DEPOSIT

Before going for a fixed deposit, we need to consider a few things. Different banks have
different FD features as well as interest rates and tenure. Therefore, before investing in a FD,
it is required to compare the features of the FDs offered by different banks. First, decide the
amount that is intended to invest in FDs .The next thing that to decide is the deposit period.
Once it is decided, then compare the rate of interest offered by various banks on the given
deposit amount and period. However the rate of interest is not the only considering factor,
there are other factors to consider before investing in fixed deposits. One can avail the option
of premature withdrawal of the deposit amount. Different banks may have different rules on
the premature withdrawal. So, we need to consider those too.

ABOUT COMPANY FIXED DEPOSIT

Company Fixed Deposit market in India has an interesting phase of evolution. It basically
grew out of the need of Corporate Sector for raising short term finance and requirements of
small investors to earn superior returns as compared to returns offered by the Banks. The
concept of company fixed deposits was started in India in 1964 by Bajaj Capital Ltd. by
launching first ever Company Fixed Deposit of Oberoi Group - East India Hotels Ltd.(now
EIH Ltd.).The success of East India Hotels prompted others private and public sector
companies which started accepting deposits from public.
Since then company deposit market has grown by leaps and bounds. Today, company deposit
market has grown to approximately Rs.25, 000 crores. Hundreds of top companies belonging
to reputed industrial houses like Tata, Birla, Escorts, Godrej etc. and government companies
like HUDCO are accepting deposits from public. The number of depositors has increased to
around 5 million.
The benefits of company deposit are numerous like superior returns from reputed companies,
fixed and assured returns, premature encashment, simplicity of transactions, TDS benefits,
wide choice, all these features have made company deposits a preferred instrument
of investment.
56

FEATURES:

Company Fixed Deposits are non transferable that means there is no fear of FD
receipt being stolen. In case it falls into wrong hands, it cannot be misused. The FD
holder in such a case should write to the company which shall issue duplicate deposit
receipt upon execution of an indemnity and cancel the previous one.

No income tax is deducted at source if the interest income is up to Rs 5000/-in one

financial year. One can spread his investment in more than one company, so that
interest from one company does not exceed Rs. 5000/-

Further, advantage of investing in company fixed deposits is that one can analyze the
company before investing in it because companies accepting deposits are oldestablished reputed companies with proven track records.

It is also important that company fixed deposit should be made for short term, i.e.,
tenure should be for 1-3 years depending upon the rate of interest. This will help the
investor to switch to other company if need be

Recently, nomination facility has been introduced in company fixed deposits.

WHERE NOT TO INVEST

Companies which pay a rate of interest higher than 14%

Companies which are not paying regular dividends to their shareholders. New
companies belonging to first generation of promoters which have yet to prove their
credit worthiness.

It is best to avoid private limited companies, and partnership firms and other unincorporated bodies. Such companies are under no obligation to publish their balance
sheets working results and it is, therefore, very difficult to judge their performance.

Companies whose balance sheets show accumulated losses.

Companies with a poor liquidity position and below investment grade rating.
57

HOW TO CHOOSE A COMPANY FOR MAKING DEPOSIT

There are many companies operating in Company Deposit market. Investors, however, have
to be careful while selecting a company for investing their hard earned money. Following is a
checklist for selecting good companies:

PERIOD OF DEPOSIT
Ideally the investment should be for 1 to 3 years depending upon the rate of interest.

PERIODIC REVIEW OF THE COMPANIES

The performance of the companies should be reviewed at maturity i.e., whether to renew or
reshuffle the deposit. A watch should also be kept over the companies by checking their share
prices, annual reports and other news reported in the commercial columns of daily papers.

LIMITS ON RAISING COMPANY DEPOSITS

Manufacturing companies are permitted to mobilize deposits as indicated below:
a. Up to 25% of their net worth from their public; and
b. Up to 10% of their net worth from the share-holders and others.

GUIDELINES TO INVEST IN FIXED DEPOSIT

1. Check the premature withdrawal penalty before investing.
Try and invest the money in a tenure within which you will not need the money. But
definitely check on the charges applicable in case you need to withdraw in an emergency.

58

2. Check the frequency of compounding of the deposit, when comparing two deposit
offerings.
A rate which might seem higher upfront might have a lower return if it is not compounded as
frequently. For example; Bank X offers a one year deposit at the rate of 9% compounded half
yearly which results in an yield of 9.2%. While Bank Y offers a one year deposit at the
same rate of 9% but compounded quarterly which results in a yield of 9.3%? You will earn
more interest on fixed deposits at Bank Y because your return is compounded annually.

3. Split your Fixed Deposit investments to avoid TDS deduction.

If the interest earned is more than Rs. 10,000 in a single branch in one calendar year then
TDS would be deducted. By splitting your deposits across various banks or branches you
can avoid this deduction.

4. Always appoint a nominee.

When you open a fixed deposit appoint a nominee. It is essential for a quick and hassle free
transfer of accounts. The nomination facility enables the bank to release the deposit amount
to the nominee without insistence on a succession certificate or probate of the will from your
legal heirs.

5. Take interest payouts based on your requirements

Most banks have many interest payout options; choose the one which suits your requirements
best for example if you are retired person you could go in for monthly payments of interest.

59

FIXED DEPOSIT IN
ISGEC HEAVY ENGINEERING LIMITED
COMPARISON WITH DIFFERENT COMPANIES

INTEREST RATE
S
NO.

COMPANY NAME

MIN.AMT 12M

24M

36M

APOLLO HOSPITAL ENTE. LTD

25000

8.00

8.25

8.75

JAI PRAKASH ASSO. LTD.

20000

10.50 10.50 11.00

ANSAL PROP. LTD & INFRA LTD.

50000

11.50 12.00 12.25

FUTURE PLOYSETRS LTD

20000

9.00

9.50

10.00

J.K.PAPER LTD

10000

8.00

8.25

08.50

GATI LTD

21000

9.50

9.50

10.00

JK LAKSHMI CEMENT LTD

20000

8.00

8.50

8.50

GUJRAT APPOLLO EQUIPMENT LTD

100000

09.00 09.50 10.00

FENNER INDIA LTD

20000

8.00

08.25 08.50

10

ISGEC HEAVY ENGINEERING LTD

50000

6.00

7.00

60

09.00

COMPARISON WITH DIFFERENT BANKS

INTEREST RATE
1 Year to < 2 Years to < 3 Years to < More than
2 years
3 years
5 years
5

S.No.

Bank

Allahabad Bank

8.75%

8.50%

8.50%

8.00%

SBI

8.75%

9.25%

8.25%

8.50%

Axis Bank

9.25%

8.50%

8.50%

8.50%

Bank of Baroda

9.35%

9.00%

8.50%

8.50%

Bank of India

9.25%

8.25%

8.25%

7.00%

ICICI

9.25%

9.25%

8.75%

8.75%

Canara Bank

9.10%

9.25%

8.75%

8.75%

Central Bank of India

9.25%

8.75%

8.50%

8.50%

Dena Bank

9.00%

9.00%

9.00%

8.75%

10

HDFC Bank

8.50%

9.25%

8.25%

8.25%

61

PROCEDURE TO MAKE A FIXED DEPOSIT RECEIPT

This can be divided into 2 parts i.e.:

Fresh deposit

Renewal deposits

SERVICES AT A FIXED DEPOSIT DEPARTMENT

1. Front office services

2. Back office services

Acceptance of applications / request forms

Verify completeness of the application

Provide receipt
application form

Data capture

Deposit of Cheques / demand drafts

Query handling

FD information center

Postal return management

Communication to investors on FD maturity

Receipt for the closure/maturity payments

Quality checking of data entered at front

office

Update FDR system

62

on

submission

of

FD

3. Query handling

Generate FDR & register

Generate interest warrants monthly,

quarterly, half-yearly arid annual

Generate interest warrant register

Printing of FDR /interest warrants/maturity

payment

Affix revenue stamp on FDR and sign across

the same

Data for interest / brokerage/maturity

payment to be sent to bank

Change in address & bank details

Change in status (minor to major)

Change in name of FD holder

Request for
nomination

Request for duplicate FDR

Request for issue of duplicate interest warrant

Request for premature withdrawal of FD

Request for duplicate TDS certificate

Request for change in mode of interest

payment

Request for remittance of interest

Request for renewal of FD

Receipt of corporate documents

63

nomination

change

in

4.
Banking
reconciliation

Non receipt of interest on FDR

Non receipt of TDS certificate

Revalidation of interest warrant

Revalidation of brokerage incentive warrant

Loss of FDR issued before maturity

Loss of FD (already matured)

Transmission of FD

Receipt of interest / brokerage warrant for

change in bank details

Receipt of Interest / brokerage warrant for

change in Name

Receipt of form 15H / 150 / 15 AA for tax

exemption

Receipt of copy of PAN / Form 60 /61

Debit reconciliations of FDs

Bank data and processed data are captured in

reconciliation format

Segregating the information such as

Cheques issued but not encashed

Cheques issued and paid

Bank charges

Cross credits

Amount funded

Closing balance
64

5. Analytical reports

Reconciliation of FDS accounts

Credit reconciliations of FDs

FD subscription reconciliations are done to

ensure that the credit has come for each
purchase processed

Maturity statement for deposits

Notice of maturity letters for FDA

Existing FDR register

Analytical FD register

Interest accrued but not due (cumulative

deposit)

Unclaimed depositors report

Existing 15H / 15G submitted report

No tax register for a period

Mailing list generation

Triggers to client to inform the interest

payable

Other customized MIS as desired by Client

65

ANALYSIS OF THE FIXED DEPOSIT

AT ISGEC

(AMOUNT RS LACS)

COMMENTS
These depict the fixed deposit at the month end , we can see an consistent trend over the
period of time which is an excellent sign for the company that the deposits are consistent at a
steady pace and it also shows the satisfacetion level of the investors with company.

66

(AMOUNT RS LACS)

COMMENTS
This graph again shows that over the period of 3 years from 2008-09 onwards to 2010-11
onwards there has been an increase in the average fixed deposits for the 3 years. In 2008-09 it
stood at 4521 lacs while it increased drastically to 7446 lacs in 2010-11.
This again is an excellent sign for the company and shows about the goodwill of the
company among its investors.

67

(AMOUNT RS LACS)

COMMENTS
This data is for the time period from may 11 to apr 12. This is to show the amount of deposits
which the company have renewed in these month. There is varitaion in the renewal amounts,
in some months its very high and in some months its very low. This is basically related to the
past fixed deposit rates offered by the compan. In the month of greater renewal for example
nov 11 we can say that all those fixed deposit which matured in this month we deposited at a
very high rate at the time of deposit by the investor. Which is the reason why there is so
much flucuations.

68

(AMOUNT RS LACS)

COMMENTS
Premature payments means the payment which the investor takes before the date of maturity.
We see that the amount of premature payments is very less because very less premature
payment is taken by the investor, often in case of emergency this is done so. Below is the
graph which depits what are the reasons for the premature payments.

69

COMMENTS
If we see the reasons because of which premature payment takes place then they can be
broadly be divided as for

Domestic needs

Plot purchase

Marriage

Medical treatment

From the above mentioned reasons the maximum reason due to which the premature
payment takes place is due to the domestic needs of the family. The second main reason why
people take premature payment is to purchase a plot and lastly due to marriage, very few
people take it because of construction or medical treatment.

70

COMMENTS
Payment due is basically what amount that is due in that particular month as a whole and
renewal as a % of payment due means that how much % is renewed in terms of the payment
that is due. So when we see the above shown graph then it is clearly shown that a very high
% of renewal takes place in realtion to the payment which is a very good sign for the
company, that the investors have faith in the company and are ready to re invest there money
in the company.

71

(AMOUNT RS LACS)

COMMENTS
This graph depits the fresh deposits that are made in comparision to the payments which are
made to the investors, this graph is a true indicator to show the trust of old as well as new
investors on the company. We see that the amount of fresh deposit that comes in is much
greater than the amount of payment that is made to the investors. Which is a very good sign
for the company as well.

72

(AMOUNT RS LACS)

COMMENTS
. When we see the trend over the past 3 years for the amount of fresh deposit that is coming
in to the amount of payments that have been made then we will see that more and more
investors prefer to find it safe to keep their money in the company and hence rather than
taking payments they prefer to re invest the amount in the company. This is a favorable sign
for the company that it gets to deal with the same old trusted investors as well.

73

FINDINGS OF STUDY
1.

As we see last year 2011-12 the fixed deposits at the month end was in decreasing
trend .This shows not pay a good return to the investors.

2.

Over the period of 3 years from 2008-09 onwards to 2010-11 onwards there has been
an increase in the average fixed deposits for the 3 years. In 2008-09 it stood at 4521
lacs while it increased drastically to 7446 lacs in 2010-11.
This again is an excellent sign for the company and shows about the goodwill
of the company among its investors.

3.

This data is for the time period from may 11 to apr 12. In the month of greater
renewal for example nov 11 we can say that all those fixed deposit which matured in
this month we deposited at a very high rate at the time of deposit by the investor.
Which shows good sign of the company.

4.

We see that the amount of premature payments is very less because very less
premature payment is taken by the investor, often in case of emergency this is done
so.

5.

If we see the reasons because of which premature payment takes place then they can
be broadly be divided as for
o Domestic needs
o Plot purchase
o Marriage
o Medical treatment

From the above mentioned reasons the maximum reason due to which the
premature payment takes place is due to the domestic needs of the family. The second
74

main reason why people take premature payment is to purchase a plot and lastly due
to marriage, very few people take it because of construction or medical treatment.
6.

Payment due is basically what amount that is due in that particular month as a whole
and renewal as a % of payment due means that how much % is renewed in terms of
the payment that is due. So when we see the above shown graph then it is clearly
shown that a very high % of renewal takes place in realtion to the payment which is a
very good sign for the company, that the investors have faith in the company and are
ready to re invest there money in the company

7.

Wesee that the amount of fresh deposit that comes in is much greater than the amount
of payment that is made to the investors. Which is a very good sign for the company
as well

8.

When we see the trend over the past 3 years for the amount of fresh deposit that is
coming in to the amount of payments that have been made then we will see that more
and more investors prefer to find it safe to keep their money in the company and
hence rather than taking payments they prefer to re invest the amount in the company.
This is a favorable sign for the company that it gets to deal with the same old trusted
investors as well.

9.

If we compare with different companies presently ISGEC is lag behind in terms of

giving returns to the investors.Head of FD department says that low return is not a
bad position of a co. because co. have sufficient funds to pay the bebts and this is
good for any company,At that time there is no need to receive money from investors.

10.

In last if we compare returns with banks ICICI bank give 8.75%(more than 5 year
time period) interest to the investors which is higher than other banks.On the other
hand Bank Of Baroda pays 9.35% (for one to two year) to the investors which is
higher than other banks.

75

CONCLUSION
ISGEC is a cash rich company
It has an immense base of investors
The investors have full faith in the company
The goodwill of the company is very strong
The company is able to pay back its investors on time
The interest rate offered by the company is reasonable compared to other companies and
banks on the whole
The company has a good past record of offering a great rate of interest to the investors
The company takes care of its investors and makes sure that they never face any
difficulty.

76

RECOMMENDATIONS
On the basis of my work in the fixed deposit department I have a few recommendations for
the department.
There is huge amount of paper work that is involved in the department though the paper
work is important but it should be minimized as possible
Certain pending work which pile on till the end must be completed on a day to day basis
so that they do not become a burden on the month end
Rather than manual filling of the fixed deposit form there must be customized filling of
form at the front desk, which makes the data processing even faster.

77

BIBLIOGRAPHY
Gupta shashi k. & Sharma R.K. Financial Management.
Khan M.Y. & Jain P.K. Financial Management
Maheshwari S.N. Management Accounting & Financial control
I.M. Pandey: Financial Management; New Delhi, Vikas Publications; Eighth Edition
Prasanna Chandra: Financial Management, Theory and Practices
Khan and Jain; Financial Management; New Delhi, Tata Mc Graw Hill Publications;
1993
R.K. Sharma; Management Accounting and Business Finance; New Delhi, Kalyani
Publication; 1993
S.P. Gupta; Statistical Methods

JOURNALS
Journals of ISGEC

WEB SITES
www.google.co.in
www.enwikipedia.org
www.isgec.com

78

QUESTIONNAIRE
1. How much FD is at present done at end of the month
a) 1000

b) 2000

c) 3000

d) more than 3000

2. In which the investment pattern customer like to invest ?

a) F.D.

b) Mutual fund

c) Insurance

d) Stock (shares)

e) Any others
3. What is the Average of the Fixed Deposit for the last years ?
a) 2008-09

b) 2009-2010

c) 2010-2011
4. How much of FD are renewed for the years ?
a) 2011

b) 2012

5. How much of FD are premature paid for the years ?

a) 2011

b) 2012

6. What is the reasons for premature payment of FDRs ?

a) Domestic needs

b) Marriage

c) Plot purchase

d) Medical Treatment

79

7. What is the percentage of renewal for the current year ?

________________________________________________
8. What is the percentage of fresh deposit and payment for the last years?
a) Fresh deposit

b) Payment

9. What is the average fresh deposit and payment monthwise for the last three years?
a) 2008-2009

b) 2009-2010

c)2010-2011

80