Small Scale Industries Project

1

INTRODUCTION

1.1 SMALL SCALE INDUSTRIES 1.1.1 Preview The development of modern small-scale industries has been one one of the the most most sign signif ific ican antt and and char charac acte teri rist stic ic feat featur ures es of indu indust stri rial al deve develo lopm pmen entt in Indi India. a. The The most most sign signif ific ican antt aspe aspect ct of smal smalll indu indust stry ry development is that this sector has simulated economic activity of a far reaching magnitude and created sense of confidence among huge number of small entrepreneurs. Its adaptability semi-urban and rural environment where infrastructure is under developed and capacity to attract small savings and direct them to productive channels, the small industries sector has been recognized, in successive 5 year plans as an effective instrument in the development of backward and rural areas. Apart from its economic aspects, it also justifies in generation of large employment opportunity at comparatively low investment, removal of poverty, attainment of self reliance, reduction in disp dispar ariti ities es in inco income me,, weal wealth th and and cons consum umpt ptio ion n stan standa dard rd and and regi region onal al imbalance that the country has set out to accomplish. 1.1.2 Small Scale Industries - Definition Industrial undertaking, in which the investment in fixed assets in plant and machinery, excluding land and building, whether held on ownership terms or on lease lease or on hire purchase purchase,, does not exceed exceed Rs.1 Crore Crore (One crore). The conven conventio tional nal definit definition ion includ includes es cottag cottage e and handi handicra craft ft industries, industries, which employ employ traditiona traditionall labour labour intensive intensive methods to produce produce traditional products, largely in village households. The small-scale sector has registered an impressive growth in recent years.

2

The priority priority sector sector includ includes es S.S.I S.S.I (with (with sub target targets s for tiny tiny units), Retail traders, Professions & Self employed, Government sponsored programmes for SC/ST, Education, Housing Advances under D.R.I. 1.1.3 Plan outlays The approved approved outlays outlays for the schemes of small industries industries development organization and allied institutions for the 7 th 5 year plan was Rs.170 crores excluding the scheme relating to self employment for educated unemployed youth.

1.1.4 Policy and planning Policy measures for promoting and strengthening of small ente enterp rpri rise ses s have have been been anno announ unce ced d on 6 th augu august st,, 91 in whic which h spec specia iall emphasis has been laid on infrastructure facilities, marketing, promotion of entrepreneurship and simplification of rules and procedures.

1.1.5 ASSET CLASSIFICATION

All the advance account account is to be classified into four categories categories namely, 

Standard asset



Substandard asset



Double asset



Loss asset

STANDARD ASSET

An asset which is not an NPA, which carries not more than normal credit risk attached to a business, is termed as a standard asset.

2

The priority priority sector sector includ includes es S.S.I S.S.I (with (with sub target targets s for tiny tiny units), Retail traders, Professions & Self employed, Government sponsored programmes for SC/ST, Education, Housing Advances under D.R.I. 1.1.3 Plan outlays The approved approved outlays outlays for the schemes of small industries industries development organization and allied institutions for the 7 th 5 year plan was Rs.170 crores excluding the scheme relating to self employment for educated unemployed youth.

1.1.4 Policy and planning Policy measures for promoting and strengthening of small ente enterp rpri rise ses s have have been been anno announ unce ced d on 6 th augu august st,, 91 in whic which h spec specia iall emphasis has been laid on infrastructure facilities, marketing, promotion of entrepreneurship and simplification of rules and procedures.

1.1.5 ASSET CLASSIFICATION

All the advance account account is to be classified into four categories categories namely, 

Standard asset



Substandard asset



Double asset



Loss asset

STANDARD ASSET

An asset which is not an NPA, which carries not more than normal credit risk attached to a business, is termed as a standard asset.

3

SUBSTANDARD ASSET

It is the loan asset which has been classified as NPA for a period not exceeding two years.

DOUBLE ASSET

At present, a credit facility which has remained as NPA for a period exceeding two years years is to be treated as a doubtful asset. Doubtful assets are further classified as doubtful I, doubtful II, doubtful III assets depending upon their age.

LOAN ASSET

A loss asset is one where loss has been identified by the bank or internal or external auditors or by the RBI inspection but the amount has not been written off, wholly or partly.

1.1.6 THE TREND IN HOW CREDIT IS SANCTIONED This deals with how the bank scrutinizes and sanctions the loan application for an existing small-scale unit. The bank sanctions loan only after they are satisfied with the firm’s performance in the following categories.

1. Past Performance: The firm has to fill in the details of the turnover, net profit and retained and profi profitt for the past past three three years. years.

Also Also to be includ included ed is the monthly monthly

turnover for the twelve months of the last financial year.

4

2. Arrears in statutory payments: The firm should have no arrears in payment of income tax, sales tax, provident fund, employees state Insurance Corporation and any other such items 3. Details of existing fixed assets 4. Projections of performance, profitability and repayment: This projection in other words represents the trading upto 5 years. The bank expects an increasing growth rate in the sales, gross profit and net profit of the firm. 5. Cash Flow statement: The cash flow statement shows the various sources and uses of the cash by the firm. This helps to show the bank the various other sources from which the firm gets cash inflow and the uses of the cash for various purchase of fixed and current assets. The cash flow statement helps to show if the working capital loan has been used for any purpose other than the acquisition of current assets and meeting current liability.

Similar to the

trading and profit and loss account, the projection of cash flow statement should be shown for 5 years. 6. Projected Balance Sheet: The balance sheet shows the financial strength and weakness of a unit as on a particular day. Here also the projection should be made for 5 years. Since the bank has been dealing with the applicant for the past years,

5

they are mainly interested in the financial performance of the firm’s activities. Apart from the financial performance the bank also checks on the following factors.

6

1.2 NON-PERFORMING ASSETS – OVERVIEW “All sales are actually a gift until the proceeds have been collected” Prof. M.Bertoneh

In the year 1991, the Government of India had appointed a high level committee under the chairmanship of Shri.M.Narasimham, popularly called Narasimham committee, to examine all aspects relating to the structures, organization, function and procedures of the financial system. The committee had, inter alia made recommendation in regard to proper system of recognition of income, classification of asset and provisioning for bad debts on a prudential basis.

The Reserve Bank of India, in tune with the internationally accepted accounting norms and as per the Narasimham committee recommendations, introduced new guidelines for Income recognition, asset classification and provisioning norms operative from the financial year 199293.

With the introduction of the new norms from the year 199293, the concept of performing and Non-performing assets has been introduced.

7

1.2.1 WHAT IS NPA? An asset, which ceases to yield income to the bank, is a Nonperforming asset (NPA). Income in any loan account should be recognized only when there is actual cash recovery and not merely when it is accrued.

Availability of security or net worth of borrower/ guarantor should not be taken into consideration fro the purpose of treating an advance as NPA or otherwise. Only the record of recovery as reflected in banks books should be the criteria.

Non-performing assets cause “Double jeopardy” to banks because we cannot book any income by way of interest, exchange, fee, commission etc. unless there is cash recovery or realization. On the other hand, we are required to make provision on such NPA’s based on their age and value of security.

For a bank in general, an asset is to be classified as NPA, if the payments (principal and interest) remain unpaid for more than 90 days. Any NPA would migrate from substandard to doubtful category after 12 months. It would get classified as loss asset if it is irrecoverable or only marginally collectible.

1.2.2 MANAGEMENT OF NPA’s The quality and performance of advances have a direct bearing on the profitability and viability of banks. Despite an efficient credit appraisal and disbursement mechanism, problems can still arise due to various factors. The essential component of sound NPA management system is quick

8

identifica identification tion of Non-perform Non-performing ing advances advances,, their containme containment nt at minimum minimum levels and ensuring that their impingement on the financials is minimum.

1.2.3 CAUSES FOR NPA

The issue of Non-performing asset has come to occupy the centre stage in the discussion on India’s financial sector reforms and the international rating agencies have added to the concerns of the international financial community and the multilateral agencies. The high level of NPA’s has exhibited the fundamental weakness of the banks. Some of the causative factors for the loan accounts turning NPA’s are as follows:

1) Ofte Often n lend lendin ing g is not not link linked ed to prod produc uctt sale sale.. The The prob proble lem m is compounded by directed lending where banks are required to extend credit to meet targets stipulated by the government, often disregarding the viability of loans.

2) Divers Diversion ion of funds funds for expans expansion ion / moderni modernizat zation ion / setting setting up of new projects / helping or promoting associate concerns.

3) Extern External al factors factors like raw material materials s shortage shortage,, raw materi material al price escalation, power shortage etc.

4)

Busi Busine ness ss fail failur ures es lik like prod produc uctt fail failin ing g to capt captur ure e mark market et,, inefficient management, strike/ strained labour relations, wrong technology, technical problems, product obsolescence etc.

5)

Changes Changes in the the macro macro environm environment ent like like recession, recession, infras infrastruct tructural ural bottlenecks, sluggish growth in the economy etc.

9

6)

Lack Lack of of finan financi cial al aut auton onom omy y

7) Time / Cost Cost over over run while implement implementing ing the the project project

1.3 PROFILE OF UCO BANK

UCO Bank was incorporated on 6 th January 1943 with its head office at kolkata. UCO Bank has a large network of 1713 branches across length and breadth of the country. The bank’s first overseas branch was open opened ed in Rang Rangoo oon n in 1947 1947,, now now a prom promin inen entt pres presen ence ce in 4 over overse seas as canters.

Infact, the domestic domestic branch network of the bank encompasses all

the states and Union territories, except Lakshadweep and is supported by 11 service branches covering all major metros.

The bank has 8 specialized S.S.I. branches, 2 International banking branches and one industrial finance branch. Out of which more than 845 stand computerized. The bank also has 168 extension counters across the country. The bank ranks 8 th of total business of nationalized banks as of March 2003&2004.

UCO Bank, Erode Branch, was established in the year 1976. it comes under the control of Tiruchirapalli Regional office. 34 employees serve for this branch with per employee business of 95 lakhs. The net profit of this branch as on 31.03.2003 was Rs.435 cr.

10

1.3.1 STEPS TAKEN BY UCO BANK, ERODE BRANCH TO RECOVER NPA

The amount of NPA, NPA, which stood at Rs.81 lakhs in the the year 200001, has been brought down to Rs.38 lakhs as on 31.03.2003. This branch brought about this spectacular reduction by following the steps described here under:

1) Inca Incase se of subs substa tand ndar ard d asse assets ts,, borr borrow ower ers s are are cont contac acte ted d personally for recovery of unrealized interest and overdue Inst Instal allm lmen ents ts and and is foll follow owed ed by mont monthl hly y cont contac actt with with Borrowers.

2) Incase Incase of substand substandard ard assets, assets, if viability viability is establi established shed,, relief package Within RBI parameter, are undertaken.

3) Seri Seriou ous s and and toug tough h acti action on,, if nece necess ssar ary, y, incl includ udin ing g lega legall action for recovery initiated without delay.

4) The branch branch keeps keeps upto upto date date record record of assets assets charged charged to to the bank indicating their location, so that execution of decree is not delayed for want of details.

5) Loca Locall enqu enquiri iries es are are made made abou aboutt the the asse assets ts of guar guaran anto tors rs and and the the repo report rts s are are prep prepar ared ed.. Such Such enqu enquir irie ies s crea create te pressure on the borrowers to settle the dues.

6) “Niptan

Yojna”,

a

special

settlement

scheme,

was

formulated by the bank and launched on 1999. According to this scheme, simple interest which is not less than 10%, alone will be charged on the outstanding amount.

11

CHAPTER 2 2.1) REVIEW OF LITERATURE

Literature review is the ability to carry out the previous work in a particular topic done by others. Generally it is not important to carry out a literature review; still it is carried out in order to find more details about a project work. It helps to place our work in the context of what have already been done, allowing comparisons to be made and providing a frame work for further research. It has been defined as “a critical summary and assessment of the range of existing materials dealing with knowledge and understanding in a given field” The importance of review for a project work is wider, since there is no such previous work or any study in this topic, the researcher cannot be able to apply this method. Further the present study of management technique for controlling NPA and its input helps the bank to determine the factors for causes of NPA and ways and means to control it. It also leads to further future study for the bank in the same topic and for the researcher for his academic completion of his project work.

12

CHAPTER 3 3.1 OBJECTIVE OF THE STUDY 3.1.1

Primary objective 1) The main objective of this project is to study the performance appraisal and Corrective measures to tackle NPA 2) The study will also expose some suggestions to shape the asset to push it to the Performing status

3.1.2

Secondary objective 1) This study will also reveal how NPA affect banks efficiency of operation and of course, their profitability 2) To study the NPA position of UCO Bank, Erode branch

3.2 Scope of the study The project has the objective of analysing the critical factors relating to NPA, restructuring strategies and to suggest effective measures to counter the NPA, in the coming years. Now-a-days banks face the problem of bad recovery of loans and advances. Their assets have become Non-performing as they cease to yield income. This affects their efficiency of operation and their profit. This study aims to know about the causes and effects of NPA particularly in S.S.I. and to suggest measures to overcome the level of NPA. The primary purpose of this project is to reduce and control the NPA’s in S.S.I. sector. This study will able to help the bank for tuning the asset to performing status.

13

3.3 LIMITATIONS

The study is done in the face of the following limitations: 

Difficulty in procuring adequate number of loan application forms, hence the sample size being small.



Certain information & data which cannot be accessed or published



Certain financial data has not been furnished by the units in the loan application form

The drawbacks are faced because the study is done by respecting the basic policy of any banking institution - maintaining secrecy and honouring clients trust of the bank.

14

SUGGESTIONS 

The “Asset Reconstruction Company”, recommended by the Narasimham Committee, can be set up. The asset reconstruction company would take over the bad assets from the banks at a discount; follow up the loans and effect recovery. The banks can concentrate on productive lending and strengthening of their overall performance.



Debt Recovery Tribunals were setup by the Government to facilitate speedy recovery of bank dues. The DRT are to try suits of the value of over Rs.10 lakhs. However, so far DRT do not appear to have made much impact on the recovery performance of the banks. For instance, in the case of the State Bank of India, of the 4000 pending cases in 6 DRT s in 1996, only 150 cases came up for hearing, and actual recovery was effected only in 10 to 15 cases. The functioning of the DRT s should be made effective. The number of DRT s should be increased adequately.



The firms have a good debt repayment track. But some units have taken extra effort of repaying long term loans without maintaining any reserves.

The need for adequate reserves should be

explained to these units. 

Although the firms are gradually reducing their selling and administration expenses, their exist the need to bring down the costs to more economical level. This can be done by the firms using the facilities and infrastructure provided by various small scale co-operatives and organizations like SIDCO etc.



The Government of India, Ministry of Finance, Ministry of Law and the industrial heads have to sit together and device war strategies to combat the NPA problem.

The law must be sharpened and

15

implementation made more easy & effective to recover the overdues.

16

CHAPTER 4 RESEARCH METHODOLOGY 4.1 RESEARCH DESIGN The role of research in several fields of applied economics whether related to business or to the economy as a whole, has greatly increased in modern times. The increasingly complex nature of business and government has focused attention on the use of the research in solving operational problems. Research as an aid to economic policy, has gained added importance, both for government and business. Research has its special significance in solving various operational and planning problems of business and industry. Research methodology involves the way the project study was carried out. The methodology is the procedure or systematic approach to achieve the task. Research methodology may be understood as the science of studying how research is done scientifically. Here the study involves various steps that are generally adopted for approaching research problem along with the logic or reason behind them. Research methodology in common parlance refers to the search for knowledge . But a statistical survey or research means the research for knowledge through application of statistical methods.

17

CHAPTER 5

DATA ANALYSIS AND INTREPRETATION 5.1 CALCULATION OF PERCENTAGE ANALYSIS 5.1) Percentage analysis for Profit Margin

Particulars Below 10% Above 10% Total

No. of Respondents 25 10 35

Percentage 71 29 100

Interpretation:

It shows 25 of 35 respondents are under Profit margin ranging

5-10%, 10 of 29 respondents are above 10% Profit margin. Chart No.5.1 Percentage analysis for Profit Management 80 70 60 50

No. of Respondents

40

Percentage

30 20 10 0 Below 10%

Above 10%

18

5.2) Percentage analysis for Quality Standard & Service

Particulars Excellent Good Better Poor Total

No. of Respondents 15 20 0 0 35

Percentage 43 57 0 0 100

Interpretation:

It shows 15 of 35 respondents are Excellent in Quality and 20 of 35 respondents are Good.

19

Chart No.5.2

Percentage analysis for Quality & Service 60 40

No. of Respondents

20 0 t n e l l e c x E

Percentage d o o G

r e t t B e

r o o P

20

5.3) Percentage analysis for kind of equipments

Particulars Sophisticated Latest Total



Interpretation:

It shows 16 of 35 respondents have Sophisticated equipments and 19 of 35 respondents are Latest Equipments.

Chart No.5.3

Percentage analysis for kind of Equipment 60 50 40

No. of Respondents

30

Percentage

20 10 0 Sophisti cated

Latest

21

5.4) Percentage analysis for Professionalism

Particulars Expert Trained Adequate Poor Total



Interpretation:

It shows 15 of 35 respondents have Expert and 20 of 35 respondents are Trained.

22

Chart No.5.4

Percentage analysis for Professionalism 60 50 40 No. of Respondents

30

Percentage

20 10 0

t d e r e p n i a E x T r

t e a u e q d A

o r o P

23

5.5) Percentage analysis for Mode of Payment

Particulars Spot Cash Credit Total



Interpretation:

It shows that 35 of 35 respondents allow credit.

24

Chart No.5.5

Percentage analysis for Mode of Payment 120 100 80 No. of Respondents

60

Percentage

40 20 0 Spot Cash

Credit

25

5.6) Percentage analysis for Credit Period

Particulars 1 Month 1 ½ Months 2 Months 3 Months & Above Total


Percentage 11 17 43 29 100

Interpretation:

It shows 4 of 35 respondents allow credit period of 1 month, 6 of 35 respondents within 1 ½ Months, 15 of 35 respondents were within 2 months and 10 of 35 respondents ensure payment period of 3 months. Chart No.5.6

Percentage analysis for Credit Period 50 45 40 35 30 No. of Respondents

25

Percentage

20 15 10 5 0 1 Month

1 1/2 2 Months 3 Months Months & Above

26

5.7) Percentage analysis for need of technical assistance

Particulars Yes No Total



Interpretation:

It shows 19 of 35 respondents need technical assistants and 16 of 35 respondents no need technical assistance.

27

Chart No.5.7

Percentage analysis for need of technical assistance 60 50 40 No. of Respondents

30

Percentage

20 10 0 Yes

No

28

5.8.1) Percentage analysis for Service from Other Company




Interpretation:

It shows 24 of 35 respondent’s need services from other company 11 of 35 respondents are no need services from other company

Chart No.5.8.1

Percentage analysis for Service from Other Company 80 70 60 50 No. of Respondents

40

Percentage

30 20 10 0 Yes

No

5.8.2) Problem in getting service from other company

29

Particulars Unavailability Improper delivery Price Others Total



Interpretation:

It shows 5 of 35 respondent’s were getting problem in Unavailability from other company, 10 of 35 respondents were of Improper delivery, 9 of 35 respondents were getting problem in price.

Chart No.5.8.2

Problem in getting service from other company 45 40 35 30 25

No. of Respondents

20

Percentage

15 10 5 0

y i t y l e r i v b i l l a i d e a r v e a o p U n r p I m

i c e r P

r s e h t O

30

5.9) Percentage analysis for Marketing Communication

Particulars Sales Promotion Advertisement Public Relations Direct Marketing Total



Interpretation:

It shows 14 of 35 respondent’s were interested in Sales Promotion, 18 of 35 respondents were interested in Public relation, 2 of 35 respondents were interested in Advertisement, 1 of 35 respondents was interested in Direct Marketing. Chart No.5.9

Percentage analysis for Marketing Communication 60

50

40

30

20

10

0

t s i n g i o n e n o n t t i t o e m k l a m i s e a r t r o r R e M P e c t v i l c b l e s r e A d P u D i S a

No. of Respondents Percentage

31

5.10) Percentage analysis for Problem in Selling

Particulars Supply Quality Very less Margin Total

No. of Respondents 14 21 0 35

Percentage 40 60 0 100

Interpretation:

It shows 14 of 35 respondent’s were getting problem regarding supply, 21 of 35 respondents were getting problem regarding quality.

32

Chart No.5.10

Percentage analysis forProblem in Selling 70 60 50 40


30 20 10 0 Supply

Quality

Very less Margin

33

5.11.1) Percentage level of satisfaction on Price

Particulars Highly Satisfied Satisfied Dissatisfied Highly Dissatisfied Total



Interpretation:

It shows 3 of 35 respondent’s were Highly Satisfied in the price, 32 of 35 respondents were satisfied in the price.

34

Chart No.5.11.1

Percentage level of satisfacton on Price 100 90 80 70 60 No. of Respondents

50

Percentage

40 30 20 10 0

f i e i s t a S y l h i g H

d f i e i e i e f s f i t i s i s a t s a a t s s i S i s D D l y h g i H

35

5.11.2) Percentage level of satisfaction on Service




Interpretation:

It shows 22 of 35 respondent’s were Highly Satisfied in their service, 13 of 35 respondents were satisfied in their service.

36

Chart No.5.11.2

Percentage level of satisfacton on Service 70 60 50 40


30 20 10 0

f i e s i a t S l y h g H i

d d f i e i e i e f s f i s i t i s a t a t a s s S i s i s D D l y h g H i

37

5.11.3) Percentage level of satisfaction on Availability




Interpretation:

It shows 15 of 35 respondent’s were Highly Satisfied in availability of product, 20 of 35 respondents were satisfied in availability of product.

Chart No.5.11.3

Percentage level of satisfacton on Availability 60

50

40 No. of Respondents Percentage

30

20

10

0

f i e i s t a S l y h i g H

f i e i s f i e a t t i s i s t s a a s i s S i s D D y l h i g H

38

5.11.4) Percentage level of satisfaction on Maintenance




Interpretation:

It shows 22 of 35 respondent’s were Highly Satisfied in maintenance, 13 of 35 respondents were satisfied in maintenance. Chart No.5.11.4

Percentage level of satisfacton o n Maintenance 70 60 50 No. of Respondents Percentage

40 30 20 10 0 1

2

3

4

39

5.11.5) Percentage level of satisfaction on Transport




Interpretation:

It shows 7 of 35 respondent’s were Highly Satisfied in transporting, 28 of 35 respondents were satisfied in transporting.

Chart No.5.11.5

Percentage level of satisfacton on Transports 90 80 70 60 50

No. of Respondents

40

Percentage

30 20 10 0

f i e s i a t S l y h g i H

d f i e i e i e f s f i t i s a t t i s a s a s i s S i s D D l y h g i H

40

5.12.1) Percentage analysis for Line of Management




Interpretation:

It shows 22 of 35 respondent’s were satisfied in Line of Management, 13 of 35 respondents were not satisfied in Line of Management.

41

Chart No.5.12.1

Percentage analysis for Line of Management 70 60 50 40

No. of Respondents

30

Percentage

20 10 0 Yes

No

42

5.12.2) Percentage analysis for Problem evolved in the concern

Particulars Lack of Discipline Strained Labour relation Others Total

No. of Respondents 7 6

Percentage 54 46

0 35

0 100

Interpretation:

It shows 7 of 13 respondent’s has lack of discipline, 6 of 13 respondents has strained labour relation.

43

Chart No.5.12.2

Percentage analysis for problem evolved in the Concern 60

50

40 No. of Respo ndents Percentage

30

20

10

0 Lack of Discipline

Strained Labour relation

Others

44

5.13) Percentage analysis for relationship with customer




Interpretation:

It shows 18 of 35 respondent’s were highly satisfied in cordial relationship with their customer, 17 of 35 respondents were satisfied in cordial relationship with their customer.

45

Chart No.5.13

Percentage analysis for relationship w ith customer 60

50

40 No. of Respondents

30

Percentage

20

10

0

f i e i s t a y S l h g H i

d f i e i e i e f s f i t i s t i s a t s a a s s i S i s D D l y h g i H

46

5.14) Percentage analysis for Factors that affect the growth of the business

Particulars Product Obsolescence Infrastructural bottlenecks Change in environment Poor Work Culture Total

No. of Respondents 6 9

Percentage 17 26

9

26

11 35

31 100

Interpretation:

It shows 6 of 35 respondent’s has product obsolescence, 9 of 35 respondents has Infrastructural bottlenecks, 9 of 35 respondents has change in environment and 11 of 35 respondents has poor work culture. Chart No.5.14

Percentage analysis for factors that affect the grow th of the business 35

30

25

20 No. of Respondents Percentage 15

10

5

0

e c n t e c c u s e d l o o r s P b O

l a r s u t k c c e u r n t e s l t t a r f o n I b

t n n i e e m g n n o a r v h i C n e

e r u t l u C k r o W r o o P

47

5.15) Percentage analysis for Competition




Interpretation:

It shows 35 of 35 respondent’s were threat of perception about competition.

Chart No.5.15

Percentage analysis for Competition 120 100 80 No. of Respondents

60

Percentage

40 20 0 Yes

No

5.16) Percentage analysis for Financial Stress

48




Interpretation:

It shows 26 of 35 respondent’s were facing financial stress, 9 of 35 respondents were not facing financial stress. Chart No.5.16

Percentage analysis for Financial Stress 80 70 60 50 No. of Respondents

40

Percentage

30 20 10 0 Yes

No

5.17.1) Percentage analysis for Plan Schedule

49




Interpretation:

It shows 19 of 35 respondent’s were doing their business in plan schedule, 16 of 35 respondents were not scheduled properly.

Chart No.5.17.1

Percentage analysis for Plan Schedule 60 50 40 No. of Respondents

30

Percentage

20 10 0 Yes

No

5.17.2) Percentage analysis for Task identity

Particulars

No. of Respondents

Percentage

50

Fully 80% & above Partially Often not possible Total

1 7 11 0 35

5 37 58 0 100

Interpretation:

It shows 1 of 16 respondent’s was accomplish all their duties fully, 7 of 16 respondents were accomplish only 80% & above, 11 of 16 respondent’s were partially accomplish their duties. Chart No.5.17.2

Percentage analysis for Task identity 70

60

50

40 No. of Respondents Percentage 30

20

10

0 F ully

80 % & above

Partially Often not possible

51

5.18) Percentage analysis for Operating Cost

Particulars Upto 50000 50000-1 lakhs 1-2 lakhs 2 lakhs & above Total



Interpretation:

It shows 1 of 35 respondent has operating cost upto 50000, 10 of 35 respondents were their operating cost range above 50000 to 1 lakh, 12 of 35 respondents were their operating cost range above 1 lakh to 2 lakhs, 12 of 35 respondents were their operating cost range above 2 lakhs & above.

52

Chart No.5.18 Percentage analysis for Operating Cost 40 35 30 25 No. of Respondents

20

Percentage

15 10 5 0 Upto 50000

50000-1 1-2 lakh 2 lakhs lakh & above

53

5.19) Percentage analysis for Net Sales




Interpretation:

It shows 13 of 35 respondent’s were exceeds sales over total production, 22 of 35 respondents were not exceeds sales over total production.

Chart No.5.19

Percentage analysis for Net Sales 70 60 50 40


30 20 10 0 Yes

No

54

CROSS TABULATIONS: Table No.5.20

Credit * Profit Margin Cross tabulation PROFIT MARGIN

CREDIT

1.0

Count % within

2.0

Profit Margin Count % within

3.0


4.0

Profit Margin Count % within Profit Margin Count

Total

% within

Below

Above

10%

10% 0

4 16.0%

TOTAL

4 11.4%

4

2

6

16.0%

20.0%

17.1%

11

4

15

44.0%

40.0%

42.9%

6

4

10

24.0%

40.0%

28.6%

25

10

35

100.0%

100.0% 100.0%

Profit Margin From the above table it is observed that 44.0% of below 10% profit margin respondents gives credit period upto 2 months and 40.0% of above 10% profit margin respondents gives credit period

Table No.5.21 Equipment * Profit Margin Cross tabulation

55

PROFIT MARGIN

EQUIPMENT 1.0

Count % within

2.0


Total


Below

Above

10% 13

10% 3

TOTAL

16

52.0%

30.0%

45.7%

12

7

19

48.0%

70.0%

54.3%

25

10

35

100.0%

100.0% 100.0%

Profit Margin

From the above table it is observed that 52.0% of below 10% Profit Margin respondents says that the Company used for process are Sophiscated Equipments and 70.0% of above 10% profit margin respondents says that Company used for process are latest Equipments.

56

Table No.5.22

Technical Assistance * Profit Margin Cross tabulation

PROFIT MARGIN

TECH

1.0

Count % within

2.0


Total


Below

Above

10% 11

10% 8

TOTAL

19

44.0%

80.0%

54.3%

14

2

16

56.0%

20.0%

45.7%

25

10

35

100.0%

100.0% 100.0%

Profit Margin

It is identified that the above table 56.0% of below 10% Profit Margin respondents that they need not technical assistance and 80.0% of above 10% Profit Martin respondents that they need technical assistance.

57

CHAPTER 6

6.1 FINDINGS 

Most of the Companies having Profit Margin of below 10%.



By using Cross tabulation it was found that Companies using latest equipments receives profit margin above 10%.



By Using Cross tabulation it was found that Companies need technical assistance.



Every Company prefers only credit for mode of payment.



By using Cross tabulation it was found that credit period allowed to customer should extended to 2 months.



Many Companies needed Technical assistance.



Many

Companies

need

Advertisement

for

Marketing

Communication. 

Most of the Company was over capitalized.



Most of the Company was satisfactory in the line of management.



Most of the Company was satisfied in relationship with their customer.



Many Companies Face the Financial Stress in the business.



Many Companies do not follow the plan schedule.

58

6.2 SUGGESTION



The “Asset Reconstruction Company”, recommended by the Narasimham

Committee, can

be

set

up.

The

asset

reconstruction company would take over the bad assets from the banks at a discount; follow up the loans and effect recovery. The banks can concentrate on productive lending and strengthening of their overall performance.



Debt Recovery Tribunals were setup by the Government to facilitate speedy recovery of bank dues. The DRT are to try suits of the value of over Rs.10 lakhs. However, so far DRT do not appear to have made much impact on the recovery performance of the banks. For instance, in the case of the State Bank of India, of the 4000 pending cases in 6 DRT s in 1996, only 150 cases came up for hearing, and actual recovery was effected only in 10 to 15 cases. The functioning of the DRT s should be made effective. The number of DRT s should be increased adequately.



The firms have a good debt repayment track. But some units have taken extra effort of repaying long term loans without maintaining any reserves.

The need for adequate reserves

should be explained to these units.

59



Although the firms are gradually reducing their selling and administration expenses, they exists the need to bring down the costs to more economical level. This can be done by the firms using the facilities and infrastructure provided by various small scale co-operatives and organizations like SIDCO etc.



The Government of India, Ministry of Finance, Ministry of Law and the industrial heads have to sit together and device war strategies to combat the NPA problem. The law must be sharpened and implementation made more easy & effective to recover the overdue.



It is imperative that awareness about NPA and how it affects the bank from recycling of fund and the problems in the case of non-performing asset to be created among the investors.

 Number

of articles could be published by the bank on

management of NPA



Borrowers can be contacted personally for recovery of unrealized interest and overdue installments.

60

6.3 CONCLUSION

The bank has been able to maintain a successful, investment programme in SSI units, by ensuring that their portfolio of SSI units has a good financial management record and their ratio’s being above the set standards in management. It is observed as a result of the study that most of the firms are overcapitalized and ways for reducing these cost and it should be suggested.

This study also contains NPA’S & the ways and means to prevent an account falling into substandard category. The acceptability of new clients is done after proper scrutiny of their economic, industrial and other factors as a corrective measure to improve the system.

The researcher earnestly hopes that the study will help the banks to reduce the NPA in SSI sector in forth coming years.

61

APPENDIX 1 EVOLUTION OF MANAGEMENT TECHNIQUE FOR CONTROLLING NPA OF SSI UNITS INTERVIEW SCHEDULE

1) Name of the Industry

:

2) Name of the respondent: 3) Total experience ___________ Years 4) Turnover in Rs.________

(Roundoff to nearest value)

5) Growth ________ % p.a. (Over last 3 years) 6) What is your profit margin? a) Below 5%

b) 5-10%

c) Above 10%\

7) Application of quality standards at prompt service __________ a) Excellent

b) Good

c) Better

d) Poor

8) Equipments used for process are ___________ a) Sophisticated

b) Latest

c) Unsophisticated

9) How do you rate the professional competence and knowledge? a) Expert

b) Trained

c) Adequate

d) Poor

RECEIVABLES

10) What mode will you prefer for payment? a) Spot cash

b) Credit

11) If credit, credit period you prefer? a) 1 month

b) 1 ½ Months

c) 2 months

d) 6 months & above

AVAILABILITY OF TECHNICAL ASSISTANCE

12) Do you need technical assistances? a) Yes

b) No

13) If Yes, Please mention in which area ___________ 14) Are you getting services of any other Company? a) Yes

b) No

15) If Yes, problem in getting service from other Company? a) Unavailability c) Price

b) Improper delivery d) Others

62

MARKETING

16) What kind of marketing communication do you believe? a) Sales Promotion

b) Public relation

c) Advertisement

d) Others

17) What are the problems in selling? a) Problem regarding supply

b) Problem regarding quality

c) Very less margin

18) Please choose your satisfaction with your industry in following factors Factors

Highly

Satisfied

Dissatisfied

Highly dissatisfied

Satisfied Price Service Availability Maintenance Transport LINE OF MANAGEMENT

19) Are the line of management in your concern is satisfactory? a) Yes

b) No

20) If No, what kind of problem evolved in your concern? a) Lack of discipline

b) Strained labour relation

c) Others 21) Whether the cordial relationship with your customer is a) Highly satisfactory c) Dissatisfactory

b) Satisfactory d) Highly dissatisfied

63

GROWTH OF BUSINESS

22) The factors that affect the growth of your business a) Product obsolescence c) Change in environment

b) Infrastructural bottlenecks d) Poor work culture

23) Whether there is threat of perception about competition? a) Yes

b) No

24) Is there any financial stress that you face currently? a) Yes

b) No

25) If Yes, Please mention the reason for lack of financial autonomy

TASK IDENTITY

26) Do you go by Plan Schedule? a) Yes

b) No

27) If Yes, do you accomplish all your duties a) Fully

b) 80% & above

c) Partially

d) Often not possible

28) Operating Cost a) Upto 50,000 c) 1- 2 Lakhs

b) 50,000- 1 Lakh d) 2 Lakhs & above

29) Is the net sale of your concern exceeds Total Production? a) Yes

b) No

30) Mention any shortcomings observed or encountered in your concern?

Small Scale Industries Project

Recommend Documents