Wednesday, August 26, 2020

buy custom The Effects of the Media on Students essay

purchase custom The Effects of the Media on Students article MTV has made it feasible for youngsters to tune in to in excess of ten thousand hours of exciting music. This is increased as the youngsters spent incalculable hours looking at MTV. Our media has uncovered kids and adolescents to arousing pictures just as savage scenes. Such impact is what is driving understudies to participate in brutality exercises since that is the data that they expend day by day and that is fundamentally what they invest a large portion of their energy thinking about. Youngsters tend to incorporate what they have watched others doing and that is the explanation this training gets its way in secondary schools and universities. Our reality has become a startling planet as a result of the extraordinary presentation to brutality. Everybody has partaken in wrecking the honesty of our youngsters who are understudies in this schools where savagery, shooting and tormenting is the thing to take care of. One of the conditions which confer viciousness in understudies is the media. Its very clear that what is in the core of an individual is the thing that comes out and whatever one thinks about is the thing that they will wind up doing. For these explanation the psyches of the youngsters are overpowered with brutal scenes and on the grounds that what is in the heart is the thing that approaches that is the explanation they are dynamic members of viciousness at schools. In spite of the fact that the media individuals deny that this isnot a definitive truth then the inquiry remains where do our youngsters take in brutality from? Probably the hardest the truth is that the communicate is intended to influence the lives of individuals along these lines their no chance they can say that what they air has a little impact in the viciousness being seen at our schools (Elliott, Hamburg Williams 1998). The media influences our public activities and the savagery that is being communicated on the TV gives our family and society to an extremely huge expand. Viciousness is one of the basic parts of the films that are shot. Its the duty of everybody to take a stab at diminishing the viciousness that we find in our general public. Basing on the measures of brutality that youngsters are presented to its simple to anticipate the conduct that follows. It ought not be a stun to numerous that our schools have become viciousness grounds since that is the main spot where understudies can put to rehearse what they have seen on the TV. Around two conspicuous specialists connected the savagery and hostility in understudies to the media. Logical exploration that has been as of late done demonstrate that the over the top brutality on the TV has discovered it approaches to the road. An examination that was carried on kids for around five years showed that animosity and viciousness in youngsters with their folks or at school is identified with the savagery the kids watch on the TV. Further examinations that were directed with various analysts showed that the TV propensities that youngsters secure at age eight impact their conduct through adolescence just as youthful. Along these lines, the more vicious scenes that kids lean toward at grade three the more forceful their conduct become. Consequently clinician presumed that the impacts of the media on kids is aggregate. Twenty years down the line after the exploration that was done the pattern despite everything takes course (Benbenishty Astor, 2005). Its clear through the exploration that has been directed that kids who watch savage scenes at age eight are bound to participate in rough activities at their later age or even partake in kid maltreatment before age thirty. In this manner its essential to comprehend that inordinate presentation to broadcast viciousness is the primary driver of the brutality in our general public. Its obvious that savagery that is broadcast on the TV influences the adolescents be it young ladies or young men at whatever insight and financial level. The faculties of youths and young people are ambushed by the pictures they watch on MTV. In this way its significant for something to be done so as to lessen the savagery in our media before our general public looses its ability to read a compass as the youngsters participate in brutality or fall casualties of viciousness at our learning establishments. Purchase custom The Effects of the Media on Students exposition

Saturday, August 22, 2020

Mahindra project report Essay

After solid endeavors of our Management, the understudies of Kohinoor Management School got this regarded chance to have an Industrial visit to a lofty organization like Mahindra and Mahindra Ltd. We welcome the endeavors of the administration of KMS and M&M for executing this fruitful Industrial outing. Prologue to Mahindra: Mahindra and Mahindra Limited is the lead organization of the Mahindra Group, a worldwide combination situated in Mumbai, India. The organization was set up in 1945 in Ludhiana as Mahindra by siblings K.C. Mahindra and J.C. Mahindra. Mahindra and Mahindra is a significant car maker of tractors, utility vehicles, traveler vehicles, pickups, business vehicles; its tractors are sold on six mainlands. It has obtained plants in China and the United Kingdom, and has three get together plants in the USA. M&M has a worldwide nearness and its items are sent out to a few nations. Its worldwide subsidiariesâ include Mahindra Europe Srl. situated in Italy, Mahindra USA Inc., Mahindra South Africa and Mahindra (China) Tractor Co. Ltd. M&M is one of the main tractor marks on the planet by volume. It is additionally the biggest maker of tractors in India with continued market initiative of more than 25 years. It plans, creates, makes, and markets tractors just as homestead actualizes. The Journey Begins†¦. We arrived at the Mahindra plant at Kandivali, Mumbai. We made a beeline for the Conference room and were informed about the Company by an introduction on the initiative and the whole gathering of M&M followed by the Q and A Session which went on for 60 minutes. The distinctions were done in all honesty Mr. Shirish Tawde, the Deputy General Manager (DGM) of the Company. Going with him were Mr. Kishor Sonawane (Manger †Business Excellence), Rajendra Sawant (Sr. Chief Business Excellence), Mr. Mahesh Dalvi (Manager †Business Excellence, Sector Sustainability). With such dignitaries clarifying us the universe of M&M, we were similarly as thankful. This plant predominantly bargains in assembling of Tractors and Farm Equipments. The plant is one of the most seasoned assembling plants in the creation of tractors in India. After decades in driving the tractor division M&M have enhanced into the underlying foundations of cultivating and have situated themselves in the Farm Sector. Subsequent to being informed through the presentation of M&M plant, we were going to investigate the India’s most Prestigious Companies. We were isolated into 2 gatherings of 15 individuals in order to have singular consideration . We visited 3 units of the plant directly from assessment of motor parts, amassing of motor and fundamental assembling of tractors. They produce 2,00,000 tractors every year. The FES contributes 35% piece of the overall industry. Hands on way to deal with Production (where hypothesis meets commonsense): Each Group was taken independently and clarified working of the plant. A ton of hypothesis is found out is class with respect to how the assembling units center around Total Productivity, Total Quality, Zero Defect, etc†¦but by a wide margin this was theâ first hands on understanding on how does a Manufacturing unit or plant works. Here we are clarified about how the get together line producing process works. This area of the plant manages the establishment of the principle motor of the tractor. In this image we are acquainted with how the stations work in co-appointment to get ideal outcomes. In the photos beneath, the understudies are taken through a total channel of stations on the get together station and the chief clarifying every one of this entangled procedure. The slack or lead time is determined and every one at each station attempts to enhance it in order to lessen the time impact in collecting every motor. The units where tractors are made in sequential construction systems follow Total Quality Management (TQM) and Total Productivity Management (TPM). Each sub-unit adds to the creation. They stay away from material taking care of misfortunes with pulleys and fork-lifts. Every one of these methods increase the value of the creation. In fact there is nothing unexpected they improve their quality and diminish time with ever unit of creation of tractor. Here, we are demonstrated how the last tractors are set up Understudies Opinion: Kohinoor Management School gave us the Golden Opportunity to visit the Mahindra and Mahindra plant at Kandivali. It was an extraordinary encounter to know the association inside. They are fruitful enough to adjust between Business Excellence and Individual Dignity. Their principle center around ranch tech thriving is the thing that like me a great deal, as horticulture is the base of the Indian Economy. - Pratibha Shinde. Visit to the M and M was an eye-opener. The excursion unfurled different part of the tractor division. Beginning from the stray pieces, the motor, to the huge structure which shapes the foundation of the Indian homesteads and rural part. The additions or the detract from the visit were mind blowing. The utilization of Japanese innovation in the mechanical production system, the bit by bit process format, the arrangement B; the vision of continually remaining ahead were the experiences. Loads of the board mantras were shown and instilled. An incredible learning and a respect to see the attack of the GREAT INDIAN TRACTOR DIVISION. - Yogendra Joshi. It was my first Industrial visit to any assembling plant and delighted in all of it. To be a piece of such a regarded association and viewing all their procedure was a fascinating encounter all things considered. - Shraddha Salunke In the interest of all the Management and the understudies we accept this open door to thank the whole group of Mahindra and Mahindra for giving us the viable data and well as great neighborliness. We take second to offer our welcome to the whole Mahindra and Mahindra group.

Tuesday, August 11, 2020

Earlybird Venture Capital

Earlybird Venture Capital In Berlin we meet Ciarán OLeary who is a partner at the venture capital firm Earlybird. Before being a venture capitalist Ciarán was working in banking, private equity, and as an entrepreneur.Ciarán shares some further insights on the due diligence process of Earlybird, the investment focus of Earlybird, and gives some valuable advice to entrepreneurs.Interviewer: Hi. Today we are in Berlin with Ciarán from EarlyBird. Ciarán, whow are you and what do you do?Ciarán: I’m Ciarán, I’m a venture capitalist at a firm called EarlyBird. I’m a partner there. We invest in early stage internet companies mainly in Berlin in the sense that it is slightly north of 50%. But we also invest all across Europe.Interviewer: What did you do before you started working in the VC industry?Ciarán: I probably have the worst possible background you can have as a VC. For a year before I became a VC I tried myself as an entrepreneur, wasn’t very successful, I think that’s the good part. The bad part is before that I was at a very large private equity house, and before that I was at an investment bank working on big transactions. And it turns out that venture capital, working with entrepreneurs, is really not about transactions, it’s about relationships. So I literally think that I may be seen not because of what I did but despite of what I did. But, hey, I’m here.Interviewer: So if somebody would like to start working at venture capital fund, don’t go with the IB / PE route but more go to the entrepreneurial route.Ciarán: Definitely. I think if you had to do something like that, you’d rather go to a consultant firm where you just think more holistically about things, but doing operational things, working for a startup, trying yourself as an entrepreneur, it makes you just appreciate so much more the difficulties and the mechanics of how things actually work. And it’s important, because if you’re working with entrepreneurs and you want to be the sounding board and advisor and you’ve got no idea how things work, then it’s something you can address, and there’s lots of very successful venture capitalists like Fred Wilson and a couple of others that were never entrepreneurs, but it is a weakness you need to manage and be aware of.Interviewer: You need to understand what the entrepreneurs are doing in order to assess the OPs.Ciarán: And I think that’s why when you start off as a VC the key thing to do is to just suck up everything, spend lots of time at the companies, don’t try and be too smart, respect the entrepreneurs and really really learn learn learn, and then you can gradually become a useful VC.Interviewer: Ciarán, tell us a little bit more about EarlyBird. Where is this VC fund coming from? You told us the regional focus in Western Europe and mainly in Germany. On the other hand, what is your business model focus?Ciarán: We’ve changed significantly since we were born. When EarlyBird was born I was still at high school . So it was a German fund based at Munich and Hamburg and invested in pretty much all across technology, actually even invested in the US for a while. And then a couple of years ago it came up with this new strategy that we would really focus on Europe and a couple of key hubs. So Berlin and Western Europe is the real focus for us. But we also just raised an emerging markets fund. We’ve a separate team that invests in Turkey and CE, so literally all of Europe now is what we want to do. In terms of our DNA we’re very much focused on companies that create platforms, communities, networks, marketplaces that are connecting nodes, and by connecting lots of nodes they’re making industries better, more efficient, taking out the middle man, these kinds of things.What we’re not so good at is pure e-commerce, such as buying stuff and selling it at a margin. We’re not so good at hardware unless it’s a commodity thing, and the intelligence is in the internet or software piece. I thi nk another thing is that, with very few exceptions, we really like to back European companies, but that have a global potential from day one. So not models that used to scale country by country and region by region. You can do that and there’s very successful companies doing that, but our focus and our skill set is more to identify products that can go globally very quickly and help them do that. And then we just round up how we invest it, we’ll do anything from a couple of hundred thousand at seed stage, our sweet spot is still the series A, we will invest like 1.5 to three or four million at most. And the occasional series B where we will join with five to seven, maybe at most ten million. But we’re lifetime investors, so once we’re in and we like the company we will invest up to 15 or 20 million over all rounds until we run out of money.Interviewer: The platform, the investments that you’re doing, do you have some kind of specific expertise that help people or companies scale maybe more efficient, maybe you have some kind of specific marketing knowledge or something like this?Ciarán: Absolutely. We’re thinking very hard about how do we become the best product for an entrepreneur. Money is one part, but then it needs lots of other things around it. I think that the strongest asset we have is the community of people on our portfolios. We were very fortunate that we have lot of amazing entrepreneurs and lots of amazing companies, and they have lots of amazing employees, and we’re now building tools to help connect these employees across companies, around marketing, around product, around design, around sales, around organization, and we also have workshops, master classes, we’ve got a HR database, that kind of stuff. So one thing is utilizing the assets we already have. The other thing is that because we’re a little bit specialized on these platforms and marketplaces and communities, the more you see, the more investments you make, the more mistakes you make, you get to transfer knowledge, that’s something we do. The other thing that we do is we actually just brought on board Konstantin Guericke, and he’s one of the co-founders of LinkedIn, and he’s based in Palo Alto. We don’t invest there, but he helps our European companies do business development, hiring there, open stores, if a company moves there he may take the board seat to work with them closely there. So real, credible presence in the US. And last year I think we had a pretty strong track record of co-investing, syndicating with a lot of the larger and high quality US VCs. So we bring that to the table that we’re connected to this global community. I think that that can help our companies get out. At the end of the day though it’s always down to the entrepreneur. We can only catalyze and help.Interviewer: Ciarán, if you would try to explain to an entrepreneur how is your investment process working. So once you apply, send your business plan or ge t an intro from a friend of yours, etc., what is the typical process on your side maybe that they didn’t even see?Ciarán: The first thing is I would say definitely don’t send a business plan. And, ideally, don’t even have a business plan. I think especially in Europe where we used to think that early stage entrepreneurs write a hundred page Word document, all these things and trying to kind of… Don’t. Show us your product, show us your team, of course you’re going to have some slides, ideally one, maybe ten, but keep it short, let the team and the products speak of itself. Can be a very early, alpha version, whatever, it can be close beta that kind of stuff, but we’ll get much more excited about that than like, “Ah, this makes a lot of sense.” So I think it should be tangible.The other thing is that of course we have e-mail address, and we read every email there, it can take a while but we get back to everything. But the world has all these tool s that empower literally everybody quickly to get to anybody else in the world. So to get an introduction it does help, because it also helps us to say if this guy is willing to do this introduction then obviously, you know.The other thing is, again, I don’t like this part of being a VC and I feel sometimes very bad. We just get so many emails, we’re so hammered that sometimes I can be very slow to respond. And it is absolutely okay â€" and it’s not good, I’m not be doing my job properly by not doing that â€" but when I don’t respond within a week or whatever it’s totally okay to re-ping me again and be like, Hey, I just wanted to float this. Oh, yes. Sorry.And the other thing is I would say that it’s okay as an entrepreneur â€" I think in Europe it used to be like an entrepreneur is a very slick, business driven person â€" and the reality is that the best entrepreneurs are rough, quirky, maniacs, don’t have a linear profile, so it’s totally okay to be a bit like t hat, don’t try to be somebody else than who you are. We like working with whacky, crazy people.Interviewer: In relation to the investment process, what are the typical thing that you look at?Ciarán: There’s a couple of hard things and soft things. The first thing is purely mathematically, because our fund size is the way it is, we need to be involved in companies that if they are highly successful they can become companies that are worth a lot, so more than a billion, uncapped upside. The other thing that we look for is do they have the DNA to at least have a fair chance of doing that? I know everybody says it but it’s just the team. And often it’s the team, but yeah it’s also just the core founder in many cases, just the one crazy guy, so we look at that.The other thing is we just look at your level of disruption. Are you just like another cosmetic layer, are you fixing something that many other people can fix quickly, or are you really bringing a meaningful amount of di sruption to the market.Another important thing is do you have befits of scale, so the larger you get are you creating defensible network effects, are you creating defensible structure and these kind of things. And then the other things is, is there a semi-capital, efficient, meaningful way to get there? So once things are working out, it’s okay to pile on money like there is no tomorrow to create this global category leader, but as a VC you don’t want to spend 10% of your fund. That’s why with biotech it doesn’t work for us. So I think also that there are these logical points in the business where you’re like, oh, with the A round we can actually get to where you should be at the B round. Usually of course it doesn’t happen, there’s delays, whatever, but there is that.And then there is other aspect which I think is really important, and it is the human aspect. It’s a very intense relationship, it really can be day and night, very emotional, so do we connect on a pers onal level? We don’t have to be enthusiastic friends, but we need to be able to work together through good times and through bad times. And so getting a good feeling for that is very important.And in terms of process, time-wise, it can be anything from two days up to a couple of months, depending on whether we still need to get to know each other better, we have this big unsolved thing we need to just work out, how well do we know the people that we’re working with, maybe we know them already. But usually what we find is that it’s beneficial to the entrepreneur and to the VC is you have at least three or four in-depth, personal, face to face meeting, maybe at a dinner and a beer, and really figure things out. But I think on average it’s like two to three meetings before we decide if we want to make an investment, and that can be anywhere from two to maybe four weeks. And then once we decide we want to invest, it’s just mechanics.Interviewer: Ciarán, we always try to give some advice to first-time entrepreneurs, what are some key points that you learned over the years?Ciarán: One is be encouraged from people. Laugh at what you’re doing when they say it’s not going to work. No great idea started off by everybody saying, oh that makes a lot of sense. So if you keep hearing that you should probably be worried. The other thing is that sharing your idea, especially in Germany, it’s very particular in Germany, there’s lots of like, ‘Oh I am in stealth mode’. Unless you’re a natural stealth fighter, that makes very little sense. The benefits you get by telling people about your idea, getting their feedback, seeing how they react, way outweighs the risk of â€" I mean what is the probability of somebody saying oh that sounds good I’m going to do it? It’s like zero. And what kind of idiot is that, they’re probably not going to be very good at it. So get lots and lots of feedback.And then the other thing is that start trying, start building things really really early. Form a thesis around a minimal, viable product, form a thesis around who it should work for. I guess it’s a whole startup movement, but just get going and don’t worry too much about nailing every aspect, because nearly all great companies if you look at how they started and you look at what they’re today, it’s like how did they ever so, yeah.Interviewer: Yeah. Reid Hoffman made a great quote on that: if you are not embarrassed of your product, you did not ship it early enough.Ciarán: Yeah, exactly, that’s true. And then it’s a rollercoaster ride, there’s lots of ups and down, even the best companies. I think Amazon raised their first seed round from like 50 angels and everybody just gave a small amount of money. So just because you’re having difficulties at the beginning and you’re getting negative feedback doesn’t mean you’re the next 100 billion dollar company. So I wouldn’t worry about it.Interviewer: Thank you very much Ciarà ¡n. If you are looking for a great investment, maybe check out Ciarán at EarlyBird.

Saturday, May 23, 2020

What Is the Correct Pronunciation of February

While Feb-RU-ary is still considered the standard pronunciation, most dictionaries recognize the pronunciation of February without the first r (Feb-U-ary) as an acceptable variant. Varying Opinions on Pronouncing February Not everyone is so tolerant. In his Big Book of Beastly Mispronunciations (2005), purist Charles Harrington Elster defends the traditional and cultivated pronunciation. February, he says, is a different word and a different month, with a peculiar spelling, a peculiar pronunciation, and a very peculiar number of days, all of which adds up to the fact that we must treat the creature with particular respect. Yet in common speech, the shortest month has long been abused. In The New Schoolmaster, a one-act play that appeared in Sargents School Monthly in May 1858, Mr. Hardcase says of February that there is a prejudice in favor of an r at the beginning of the second syllable; but if you choose to drop it, wheres the harm? Why People Drop the R in February The loss of the first r in the pronunciation of February is (in part) the result of a process called dissimilation (or haplology), where one of two similar sounds in a word is sometimes changed or dropped to avoid the repetition of that sound. (A similar process sometimes occurs with the pronunciation of library.) More simply, as Kate Burridge points out in Weeds in the Garden of Words (2005), the standard pronunciation of February takes considerable effort, and in normal rapid speech were likely to drop the first r. Also, the pronunciation of January has probably contributed to the simplified pronunciation of February. There are, of course, many discrepancies between spelling and pronunciation in English. As David Crystal reminds us in The English Language, [S]peech came first, in the history of our species, and English spelling hasnt been a good guide to pronunciation for hundreds of years.

Tuesday, May 12, 2020

The Life Of Error, By Diane Ravitch - 856 Words

In Reign of Error, Diane Ravitch covers her opinions on American education in public schools. Along with this, she gives multiple solutions to the issues that started in the education system in the 1980 s by the federal government and are still having a consequence on America today. Ravitch focuses in on the ineffectiveness of educational reforms and legislation put in place for teachers and school districts. For example, she states, When evidence is lacking, we should not move forward with a sense of urgency. The reformers are putting the nation s children on a train that is headed for a cliff. (3-4) One of the fundamental points Ravitch makes is in the second chapter when she speaks about No Child Left Behind. I had heard of No Child Left Behind before, but not in the amount of detail that is provided in this book. First, Ravitch starts by saying that 100% proficiency is an unrealistic goal. Furthermore, I agree that teachers being punished for their classroom not receiving this go al is unfair. Next, she goes on to explain that schools are spending hundreds of millions of dollars on tests and testing materials. Even after all of this money had been spent, good results were still not being seen. Through this evidence, we can clearly say that something isn t quite right. Lastly, in the second chapter, she mentions Barack Obama s Race to the Top competition. Through this competition, states had to be willing to adopt new common standards and tests, being the CommonShow MoreRelatedThe School Of Charter Schools Essay1634 Words   |  7 Pageshigher achievement† and that when â€Å"schools compete, all students gain.† What is some evidence of the achievement effects of charter schools? To what does Ravitch attribute the positive effects? Can these positive effects be achieved by public schools? Did competition between private and public schools improve both, as was the intention? (p. 295) †¢ Ravitch mentions that reformers erroneously â€Å"imagine that it is easy to create a successful school† and that â€Å"the lessons of a successful school are obviousRead MoreIn The Midst Of Worrying About The Consequences Our Economy,1840 Words   |  8 Pagesmore women great things do occur. However, perhaps this was not the right person for the job. Using the film â€Å"Freedom Writer†, the documentaries â€Å"Good Morning Mission Hill† and â€Å"SelectED†, and lastly the books â€Å"You’re Not Listening† and â€Å"Reign Of Error† I will inform Secretary DeVos on issues within the education system. 1. Two of the many principle themes in urban education are privatization and standardized testing. Both are equally important to DeVos’s understanding of urban education becauseRead MoreAmerican Education System Is Failing2359 Words   |  10 Pagesin Shanghai-China. â€Å"One in four U.S students did not reach the PISA baseline level 2 of mathematics proficiency. At this level, ‘students begin to demonstrate the skills that will that will enable them to participate effectively and productively in life’, according to the PISA report† (DeWeese public education is failing). America spends inconsiderable amount of money on education to ensure that students have the resources they need in order to succeed. The U.S leads in two categories, amount of moneyRead MoreThe Importance Of Education1813 Words   |  8 Pagesmany students are simply focused on grades rather than obtaining information. If a student takes a class and receives an â€Å"A† in the course, but doesn’t retain any of the information presented, then this student has virtually gained no advantages to life as a result from the class. Although the student may feel as if they are being successful because of a high letter mark in the course. This is a result of outside pressure on students to be the best and obtain high grade point averages. This same system

Wednesday, May 6, 2020

Class Classifications Free Essays

The following essay is based on the movie Elysium which conveys a futuristic view of humanity’s evolution whereby Earth’s wealthiest fled the planet to preserve their way of life leaving the financially unstable and the sickly behind. Social inequality In the film Elysium Is constructed by depicting a dyspepsia society (Elysium 2013) This can be evidenced through the Imagery, architecture, agricultural landscape, language, Ideas, values and norms portrayed In the movie (Giddiness, A 2009). Social Inequality In the film Elysium is constructed by depicting a dyspepsia society. We will write a custom essay sample on Class Classifications or any similar topic only for you Order Now Elysium explores sociological themes such as class issues, poverty, immigration, over population, healthcare and exploitation, social inequality, mobility. Social inequality is depicted on earth whereby its citizens were classified as a minority group and were limited to their social status and class stratification (Elysium 2013). First we consider material inequality which was evident in the movie due to disparities of income, property and wealth. Secondly, inequality associated with employment and the labor market and thirdly, inequality arising from the lack of healthcare resources and education yester. Social mobility Is the movement of an Individual or a group in a social position to upper or lower classes In the means of health status, literacy and better standard of living through migration to Elysium as asylum seekers to escape their socio- economic level as refugees (Dodd, J. J 2010). Attributes such as age, gender, race or ethnicity further distinguish people in terms of class and status in context of femininity and hegemonic masculinity, depicting the dominant social position of men and women in Elysium and on earth on how gender in terms of employment are resent on earth as well. Most importantly how all these pieces of popular culture is reflective to the current Australian society in their similarities and disparities. Social mobility is essential to the plot of the movie as most of the citizens on earth aspire to a higher social class for a better standard of living (Dodd,J. J 2010). Social inequality is constructed in the film In the film by depicting a dyspepsia society. This Is evidenced through the Imagery of earth, the architecture of buildings In ruins, landscape, language, Ideas and norms. The infrastructure on earth Is dilapidated, not maintained and cared for, the environment Is a barren wasteland with high levels of pollution from industrial outlets. Earth was mainly used for the manufacturing of droid’s where the lead character was employed for assembling them. Droid’s were utilized to police and keep order on the vastly populated earth. Lack of educational facilities on Earth affected children who became â€Å"dreamers† for a better world with an inevitable future of despair (Elysium 2013). The work force on these druid factories wowed the disparities of status in the employment hierarchy. John Carlyle the CEO of Marlene, had a separate office whereas the employees and supervisors were on the floor. The CEO only Intervened when there was adherence in production. The character portrayed emotional detachment to the employees treating them as If they were mere objects. (Western, M Baxter, J 2007). In Elysium, the environment had a very sterile and futuristic look, well planned and Idyllic to the citizens. Everything on earth Is In despair and decline, the rich on the other hand have every resource available to them in their paradise in space. The landscape is beautifully maintained, two worlds is evident and the introduction of the movie constructs this accurately for the viewer’s portraying the severe inequality in the social class stratification. On Elysium the privileged strive to preserve their prestige lifestyle whilst on Earth the citizens are left to fend for themselves to struggle amongst overpopulation, poverty, low healthcare standards. (Garage, B 2002). Australia is an egalitarian society, however social inequality exists to quite a large extend. There are numerous inequalities present in the Australian society which has a propensity to divide the community into different groupings (Heinlein, J, Passim, A Passim-linseed, A 2014). According to (Garage, B 2002) Mar’s approach has been extremely useful in understanding inequality in Australia today. However, the revised approach from Erik Olin Wright argues that importance of education in the twentieth century led to groups arising whose economic roles were determined by educational qualification and expertise rather than work done with hands (Garage, B 2002). Inequality in Australia is largely dependent on differentiation of social classes. The working class represents the largest class in the workforce and the capitalist class the smallest portion of the workforce. (Heinlein, J, Passim, A Passim-linseed, A 2014). In (Dodd, J. J. 2010) the possibility of upward social mobility is strengthened through belief in one’s own life and these ideas are re-in forced through movies and the American culture. Social mobility can be understood as the â€Å"movement of individuals and groups between different class positions as a result of changes in occupation, lath or income†. Giddiness, Dunedin, Applesauce, 2007). Material inequality of the labor force and poor work management led to the main character Matt Damon being lethally exposed to radiation. He was given a bottle of pills but no proper medical care. Matt Damson’s character was exploited by the capitalist class for capital gain and once he was no longer able to contribute to the work force he became a liability and let go. As a result of, the main character had no choice but to go through intergenerational mobility, a change in class position. Social interaction is drastically sacking on earth, there is no face to face interaction. The robots act as authority figures and do not react in relation with the citizens. They follow standards of conduct and behave accordingly, showing no emotions which are key elements of social interaction (Furze, B, Saw, P, Bryn, R Lie, J 2008). The belief of a possible upward social mobility is are reinforced in the movie and in the modern Australian society. Upward social mobility is central to the plot and the outcome of the story in Elysium. According to Marx, class is defined as where a person stands in regards to reduction (Capital Industry) whereby the democratic society of Elysium act as the â€Å"bourgeoisie† who own the means of production and dictate to the residents on earth who are the â€Å"proletariat’s† and perform labor intensive and manual tasks. Both the bourgeoisie and proletariat’s had opposing interests leading to hostility and conflict. In Elysium the opposing interests between the capitalist and working class led to hostility and conflict. The working class became impoverished and disadvantaged which led to a revolution for upward social mobility to improve their circumstances Garage, B 2002). Another very key issue that was portrayed in the movie was the concept of ethnicity, looking at Australia which has a complicated history where Just under a quarter of its population are first generation migrants. It is a multi-cultural cultures of people residing together which made them feel a sense of belonging towards one another based on cultural similarities like language spoken, religion, food and lifestyle patterns. On Elysium the residents were indifferent, all vastly wealthy and are almost white compared to earth. They built hierarchies and lassie people into categories mostly on the basis of class and status. Since they were wealthy they believed they were far more superior and smarter to the lower class thus forcing them to seek refuge on earth to perish or survive the atrocious conditions on earth. Popup,J 2002) States that Australia is an immigrant society. Continual immigration has attributed to the affluent society that we have present today. Assimilation due to the increasing number of immigrants in the Australian Society meant disappearance of many characteristics which differentiated individuals room each other. Popup, J 2002). Since Earth being a manufacturing and industrialized society, the idea of masculinity was interpreted and men were usually bread winners as hard labor was required. Femininity was constructed as the women on Earth were utilized in domestic duties and offered health care services to the sick and injured (School, S, Buskin,J Long, J 2002. On Elysium feminism in regards to gender plays a pivotal role where Jodie Foster who plays the role of Secretary of Defense shows no tolerance to refugee/ asylum seekers and orders execution even before they reach Elysium (School, S, Buskin,J Long, J 2002). However, the CEO and the president are male in gender which portrays patriarchy depicting a male dominance hierarchy in governance (Bolton, T, Bonnet, K, Jones, P, Lawson, T, Skinner, D Stonewort, M 2002). The citizens on earth who strives to migrate into Elysium were a minority group which was further distinguished into small groups, in context with ‘mechanical solidarity Druthers stated that † what holds these small groups together is a ‘shared collective† where there is not much differences in the beliefs of the society once they expanded (Day, G 2006). It was the sameness of status that the citizens had which made them work together as a unit through understanding each other’s values and norms (Day, G 2006). Staying on earth was not out of free will. It was taken away from the lower class thus they were treated like slaves. Women were perceived as a minority group in context with class stratification whereby they did not have equal privileges in the society. It is understandable that social inequality does exist in the current Australian society however, the lower classes have the opportunity to halogen the set social order and improve their class status through upward social mobility. Education plays a significant factor as the well learnt can strive for high income earning positions that will contribute to their personal and capital wealth. In Australia, education is available to people of all classes and there is no barrier to it. Thus, the opportunities and privileges previously available to the higher social class can now be attained by an individual from a lower class allowing them to be socially mobile and to better their lifestyle. Class and ethnicity play a significant role in the rent Australian society as it distinguishes individuals. Individuals in the same social class may not experience the same status as modern societies are more complex and can be stratified in several ways. How to cite Class Classifications, Papers

Sunday, May 3, 2020

Small and Medium Enterprise free essay sample

INTODUCTION Small and medium enterprise(SME’s) in India have a very important place in the Indian economy. Their contribution in terms of production, export, export, employment generation and all round growth of the country is well known. The role of SME sector in the nation building is well recognized not only in India, but also across the globe. The industrial engines of Japan, china, US, Germany and Taiwan are also driven by the SME sector. Finance/credit is the most critical component in any business process. Any industrial sector cannot work to its full capacity without adequate flow of funds. The SME sector is working with low capacity utilization, which, however, has now improved from 33. 34% to around 52% percent. Still these remain a vast scope for enhancing growth and employment generation. SME’s occupy a place of strategic importance in the Indian economy. however since the early 1990s, Indian SMEs have been exposed to intense competition due to the accelerated process of globalization. Therefore, the survival as well as growth of SMEs is under strain. However, globalization has also brought, in its wake, newer opportunities for SME’s. SMALL AND MEDIUM ENTERPRISE There is no universal definition of SME (small and medium enterprise) different countries follow different definition for the SME sector. Some use the criteria of turnover; some use the number of employees whereas in certain countries, investment in the enterprise is used to define an SME. In India, the definition of SME’s has always been based on the productive plant and machinery. Currently, a unit having gross investment in productive plant and machinery of up to Rs. 1 crore is classified as an SME enterprise. In certain sector such as drugs and pharmaceuticals, hosiery, stationary, hand tools, etc, this limit has been raised to Rs. 5 crore in the past few years. This move has given a fillip to the potential for growth in this sector. SMES HAVE CERTAIN COMMON CHARACTERISTICS, SOME OF WHICH ARE HILIGHTED BELOW: (a) Born out of individual initiatives skills SME startups tend to evolve along a single entrepreneur or a small group of entrepreneurs; in many cases; leveraging on a skill set. There are other SMEs being set up purely as a means of earning livelihood. These include many trading and retail establishments while most countries continue SMEs to manufacturing services, others adopt a broader definition and include retailing as well. (b) Greater operational flexibility The direct involvement of owner(s), coupled with flat hierarchical structures and less number of people ensure that there is greater operational flexibility. Decision making such as changes in price mix or product mix in response to market conditions is faster. (c) Low cost of production SMEs have lower overheads. This translates to lower cost of production, at least up to limited volumes. d) High propensity to adopt technology Traditionally SMEs have shown a propensity of being able to adopt and internalize the technology being used by them. (e) High capacity to innovate export: SMEs skill in innovation, improvisation and reverse engineering are legendary. By being able to meet niche requirements, they are also able to capture export markets where volumes are not huge. ( f) High employment orientation: SMEs are usually the prime drives of jobs, in some cases creating up to 80%. Jobs SMEs tend to be labour intensive per se and are able to generate more jobs for every unit of investment, compared to their bigger counterparts. g) Utilization of locally available human material resources SMEs provide jobs locally and hence utilize manpower available locally. Since it is available for them to transport materials over long distances, they often improvise with materials which are available locally. (h) Reduction of regional imbalances Unlike large industries where divisibility of operations is more difficult, SMEs enjoy the flexibility of location. Thus, any country, SMEs can be found spread virtually right across, even through some specific location s emerge as ‘clusters’ for units of a similar kind. Nevertheless, the spread of SMEs is a fact, which enhances their attraction from a national or regional policy. SIGNIFICANCE OF SMEs SMEs are considered the engine of economic growth in both developed and developing countries, as they: †¢Provide low cost employment since the unit cost of persons employed is lower for SMEs than for large-size units. †¢Assist in regional and local development since SMEs accelerate rural industrialization by linking it with the more organized urban sector. †¢Help achieve fair and equitable distribution of wealth by regional dispersion of economic activities. Contribute significantly to export revenues because of the low-cost labour intensive nature of its products. †¢Have a positive effect on the trade balance since SMEs generally use indigenous raw materials. †¢Assist in fostering a self-help and entrepreneurial culture by bringing together skills and capital through various lending and skill enhancement schemes. †¢Impart the resilience to withstand economic upheavals and maintain a reasonable growth rate since being indigenous is the key to sustainability and self-sufficiency. IMPORTANCE OF SMEs IN VARIOUS ECONOMIES OF WORLD Small and medium enterprise has always the engine of growth for every country, in developing as well as in transition economies. Their role in building a solid industrial base can be gauged from that they represent over 80 percent of industrial enterprises of most developing countries. They along with micro enterprises have been identified as high potential sector for employment generation and sources of livelihood to millions of people in Asian, African and Latin American countries. There is a popular misconception that small and medium enterprises do not ount for much in developed countries. Facts, however, reveal that they are almost as dominant in the economies of the most developed countries as in the least developed countries. In the EU, SMEs comprise approximately 99% of all firms and employ between them about 65 million people. Around 99 percent of seven million units in Japan – one of the most industrially advanced nations of the world – are small and medium en terprises. They account for about 80% of total employment of around 55 million persons. Around 52% of the Japanese total exports emerge from this sector. Similarly, small and medium enterprises constitute around 99% of all businesses, employ over half of the workforce and generate 54% of the sales revenues in USA. . The following Table reflects the contribution of SMEs in some of the developed economies. COUNTRYCONTRIBUTION IN TERMS OF INCRIMENTAL SHARE IN EMPLOYMENT MANUFACTURING UNIT OUTPUT USA 67% 61% JAPAN 80% 72% FRANCE 53% 80% KOREA 74% 61% CONTRIBUTION OF SME’s IN INDIA In the Indian context, primarily the concept of Small Scale Industry has been in vogue and the medium enterprise definition is of more recent origin. An SSI is defined on the basis of limit of historical value of investment in plant machinery, which at present is up to Rs. 10 million. However, in respect of some specified items, this investment limit has been hiked to Rs. 50 million. For the recently announced Small and Medium Enterprises Fund, the GoI has approved the limit of investment in plant and machinery above Rs. 10 million and up to Rs. 100 million for defining a unit as a Medium Enterprise. Amongst the developing countries, India has been the first to display special consideration to SSIs and basic focus has been to make economical use of capital and absorb the abundant labour supply in the country. Over the years, the SME sector in India has continued to remain an important sector of the economy with its noteworthy contribution to the ?Gross domestic product ?Industrial production ?Employment generation ?Export earning As a record, over the last three decades, SME’ shave emerged as one or the most vibrant sector of the economy, accounting for about 95 % of the industrial unit in the country; 39. 2% of the value addition in manufacturing; 34. 03 of the national export; and 6. 81% of the GDP. Contribution of Indian SSIs Over the years, the SSI sector in India has continued to remain an important sector of the economy with its noteworthy contribution to the gross domestic product, industrial production, employment generation and exports. As per the Third All India Census of SSIs (2001-02), there were 10. 52 million SSI units in the country, of which 1. 37 were registered and 9. 15 unregistered units. For the year ended March 2004, the said number increased to 11. 2 million, providing employment to 27. 40 million persons and contributing an output of over Rs. 3,480 billion in FY2004. (a) Performance of Small Scale Sector YearNo. of units (million nos. )Production (Billion Rs. ) (at current prices)Employment (Million nos. )Exports (Billion Rs. ) (at current prices) 1993-942. 382416. 4813. 93253. 07 1994-952. 572988. 8614. 65290. 68 1995-962. 653626. 5615. 26364. 70 1996-972. 804118. 5816. 00392. 70 1997-982. 944626. 4116. 72444. 42 1998-993. 085206. 5017. 15489. 79 1999-003. 215728. 8717. 85542. 00 2000-013. 376454. 9618. 6599. 78 The Tenth Five Year Plan for the Indian economy has set a target of 8 percent growth per annum in GDP and to bring down the poverty ratio to 11 percent over the next decade. The Plan has also noted that achieving and sustaining such ambitious growth targets would require adequate attention to small and medium enterprises which have great potential to offer wage employment. In order to pursue the growth with employment agenda, heavy reliance is placed on the SME sector. % of SSI in total exports (2003-2004) Product% of SSI in total exports Sports goods Readymade garments Woolen garments, knitwear Processed foods Marine products Leather products Plastic products Cosmetic, basic chemicals pharmaceutical products Engineering goods100 90 35 65 29 80 45 55 30 MAJOR PROBLEM FACED BY SME’s IN INDIA Major problems/challenges faced by SME sector in India are: †¢Availability of collateral free loans †¢Cost of loans †¢Delayed payments †¢Marketing †¢Challenges emanating from WTO related issues †¢Sickness 1. Collateral The limit for collateral free loans to tiny sector is Rs. 0. 5million and that for other SSI units was Rs. . 1 million. This limit has since been raised to Rs. 0. 5 million for other SSI units also. Many small-scale entrepreneurs are facing difficulties in providing collateral security as per the requirements of the financing banks. The limit of 0. 5 million has been further increased to Rs. 1. 5 million in respect of SSI units with good track record and financial position. The problem is addr essed to a certain extent with the introduction of the Credit Guarantee Fund Trust Scheme under which collateral free loans up to a limit of Rs. 2. million are guaranteed. 2. Cost of Loans The high cost of borrowings was a major constraint affecting the growth of the sector. The Bank Rate changes by the RBI combined with CRR and repo rate charges have emerged as signaling devices for interest rate changes. The reduction in Bank rate announced in the last Monetary and Credit Policy or outside the policy from time to time has resulted in a consequential reduction in the lending rates. Banks have now the flexibility to offer lending rates on a fixed rate or on a floating rate. The reduction in interest rates and the offer of floating rates will help the SSI units to procure funds at lower costs than what was prevailing in earlier years. 3. Delayed Payments Considerable delay in settlement of dues/payment of bills by the large-scale buyers to the SSI units adversely affected the recycling of funds and business operation of SSI units. Though the Government has enacted the Delayed Payments Act, many of the SSI units are reluctant to pursue cases against major buyers. The Act since amended in 1998 has made it compulsory that the payment of SSI suppliers should be made within 120 days. To improve the plight of SSI entrepreneurs due to delayed payments, steps for strengthening and popularizing factoring services, without recourse to the SSI suppliers may have to be thought of seriously. The banks have also been advised about sub-allotting overall limits to the large borrowers specifically for meeting the payment obligations in respect of purchases from SSI. It is expected that these measures will improve the situation of delayed payments. 4. Marketing Marketing remains the most critical area for the SSI Sector as some of the units are very small and so is their output individually. Adopting consortium approach could best solve the marketing problems of the SSI sector? Besides finance for marketing related activities, the Development Institutions/SSI Associations, etc could make dissemination of requisite information on demand pattern, futuristic trend, etc. available. 5. Challenges emanating from the WTO To face the challenges emanating from the WTO agreement, SSI units irrespective of their size need technology up-gradation and modernization. Awareness about the implications of WTO agreement has to be created. The preparation for competitiveness needs to be done by the Government as well as entrepreneurs and the corporate. The Government should provide good infrastructure and create level playing field for the industry. Considering the fund constraints with SSI Sector Government has introduced the credit linked capital subsidy scheme for Technology up gradation of Small Scale Industries under which 12% back ended capital subsidy would be admissible on the loans advanced to the SSIs by banks/financial institutions for technology up gradation in certain select sectors. . Sickness Growing incidence of sickness of SSIs is yet another area of concern. When the sickness prolongs it leads to the closure of units and unemployment. Lately mortality of the SSI units has been showing increasing trend. This has wider implications including locking of funds of the lending institutions, loss of scarce material resources and loss of employment. The number of sick SSI units as a percentage to the total nu mber of SSI units is around 10. The number of units identified as potentially viable as a percentage to total sick SSI units is around 8. The causes of sickness are both internal and external. The major causes are limited financial resources, lack of organizational, financial and management skills and expertise, diversion of funds, diversification/expansion before stabilization, non-availability of power supply shortage of raw materials, marketing difficulties, delayed and inadequate credit, globalization and liberalization of the economy, obsolete technology, inadequate infrastructure, etc. With a view to ensuring that potentially viable sick SSI units are provided with the timely and adequate assistance by all agencies concerned, there are State Level Inter Institutional Committees (SLIIC) constituted in each state involving State Government, Financial institutions, commercial banks and SIDBI. SSI Associations are also invited to the meetings of this committee. A sub-committee of SLIIC has also been set up in each state to examine the individual cases referred to it for rehabilitation. To address the incidence of growing sickness in the sector RBI has recently issued a complete set of revised guidelines drawn up on the basis of the recommendations of a Working Group constituted by it for the purpose. 7. LACKOF TECHNOLOGICAL ADVANCEMENT UPGRADATION: to compete on the international scale, reasonable economies of scale and continuous investment in technology up gradation have become a necessity. Technology is key element contributing to productivity quality, competitiveness and market acceptability of products the very rapid rate of technology advancement requires the learning and application updated technology in design and manufacture of products for retaining an international competitive edge and in this major respect SME’s are lagging behind and are suffering severely mainly because of the low capital base and salability of the operation. 8. REACH OF NATIONALIZED BANK These are limited by informational biases and as per the current survey by the FICCI the present network of the specialized SME bank branches across the country is sufficient to cater less than 5% of the total SSI units in the country that stands at around 3. 75 million units. That has resulted into private and cooperative banks better off despite their higher rates because of the relative absence of days-functionalities in them. Specialized FI’s are the best off in this regard like SIDBI to cater needs of the industry. STEPS FOR SMOOTHING OF SME LENDING BY BANKS n order to ensure working of the small and medium enterprise, the following steps could be taken as remedial measures by the bank to boost the growth of the SME’s and to meet their financial problems. 1. COLLATERAL Existence of collateral that can be offered to bank could, therefore, look at collateral when pursuing the question of SME lending. It can also be stated that the borrower ‘s willingness to acc ept a collateralized loan contract offering lower interest( relative to unsecured loans) will be inversely related to its default risk. However, not all SME’s would be able to offer collateral to banks. Hence, reserve bank of India (RBI) allows banks, with a good track record and financial position on SSI units, to dispencre with a good tack record and financial position on SSI units, to dispence with collateral requirements for loans up to Rs. 25 lakhs. 2. RELATIONSHIP the length of the relationship of a bank and its SME customer is also important factor in reducing information asymmetry , as an established relationship helps to creates economies of scale in information asymmetry, as an established relationship helps to create economies of scale in information production. A relationship between a sme and a bank of considerable duration allows the bank to build up a good picture of the SME, the industry within it operates and the caliber of the people running the business. The closer the relationship, the better are the signals received by the bank regarding managerial attributes and business prospects. 3. QUALITY OF INFORMATION: SME’s are required to provide accurate and qualitative information to the banks for them to understand a reliable risk assessment. Accurate risk assessment obviously relies upon good information regarding the sme and its prospects. Hence it is suggested that bank should make efforts to encourage SME’s to improve the quality of information provide. 4. CUSTOMER CONSIDERATION: the SME market is somewhat different to the corporate market in that corporate customers generally have a wide range of financing options to choose from and are not as dependent on the bank financing as in the case with SME’s can take necessary steps, with the aid of public initiative pressure on the case of SME lending. GOVERNMENT INITIATIVE FOR IMPROVEMENT OF SME IN INDIA 1. ESTABLISHMENT OF SIDBI There exists a well-structured institutional set up both in the public and private sectors to cater to the credit needs of SMEs. The Small Industries Development Bank of India (SIDBI) was set up in April 1990, as the principal financial institution for financing and development of SSIs and coordination of institutions engaged in similar activities. A fair code of practices has been adopted by the Bank in its day-today operations while functioning as an apex financial institution for the sector. Four basic objectives are set out in the SIDBI Charter. They are: †¢Financing †¢Promotion Development †¢Co-ordination Development outlook The major issues confronting SSIs are identified to be: †¢Technology obsolescence †¢Managerial inadequacies †¢Delayed Payments †¢Poor Quality †¢Incidence of Sickness †¢Lack of Appropriate Infrastructure and †¢Lack of Marketing Network †¢Lack of technological advancement †¢Reach of nationalized bank 2. SME RATING AGENCY OF INDIA LIMITED(SMERA) SMERA is a joint initiative by SIDBI, Dun Bradstreet Information Services India Private Limited (DB), Credit Information Bureau (India) Limited (CIBIL and several leading banks in the country. SMERA is the countrys first rating agency that focuses primarily on the Indian SME segment. SMERAs primary objective is to provide ratings that are comprehensive, transparent and reliable. This would facilitate greater and easier flow of credit from the banking sector to SMEs. WHAT IS SME RATING †¢SMERA Rating is an independent third-party comprehensive assessment of the overall condition of the SME, conducted by SME Rating Agency of India Limited †¢It takes into account the financial condition and several qualitative factors that have bearing on credit worthiness of the SME SMERA Rating consists of 2 parts, a Composite Appraisal/Condition indicator and a size indicator †¢SMERA Rating categorizes SMEs based on size, so as to enable fair evaluation of each SME amongst its peers An SME unit having SMERA Rating would enhance its market standing amongst trading partners and prospective customers BENEFITS 1. Wide Recognition and Acceptance 2. MOU with Banks 3. Favorable bor rowing terms 4. Faster Access to Credit 5. Lower Rating Fees 6. D-U-N-S NO 7. SMERA: An initiative of leaders 8. Fair evaluation amongst peers 9. Benefits to SME SSI Units 0. Benefits to Banks 11. Industry-benchmarked ratings 3. SMALL ENTERPRISE FINANCIAL CENTERS (SEFC) In another policy measure, the existing branches of SIDBI in select cluster have been designated as SEFC that would now take up co-financing of term loan requirement of SSI along with bank branches. Further, the expertise of SIDBI in appraisal of credit requirement of SSI could also be leaver aged by the commercial banks. 4. SME FUND SIDBI is also currently operating a Rs. 10000s crores SME fund for making available adequate and timely credit to SME’S. he fund is operational since April1,2004 and is envisaged to be utilized over the next, two years i. e. financial year 2005 and 2006. direct assistance from fund is extended by SIDBI at an interest rate of 2% below the bank’s PLR i. e. 9. 5% 5. CREDIT LI NKED CAPITAL SUBSIDY SCHEME (CLCSS) the government of India has launched the credit linked capital subsidy scheme (CLCSS) , which aims at facilitating technology up-gradation of SME’s in specified products/sub-sector. INDIA: WORLD BANK TO SUPPORT SMALL AND MEDIUM ENTERPRISES WASHINGTON – To support the development of India’s small and medium enterprises (SMEs) sector, the World Bank approved a US$120 million loan to the Small Industries Development Bank of India (SIDBI), backed by a Government of India guarantee. This loan is aimed at improving SME access to finance and business development services, thereby fostering SME growth, competitiveness and employment creation. The Project is designed to improve SMEs access to finance and development, and it includes the following three components: I) Credit facility: The credit facility will primarily address the financing constraints faced by commercial banks, and hence, enable SME clients to access longer term funds needed for capital formation and technological up-gradation. II) Risk Sharing Facility: The objective of the risk sharing facility is to immediately accelerate commercial banks’ lending to SMEs, through the setting up of an commercially viable, self sustaining guarantee facility that will provide partial credit risk cover to banks for their SME lending. III) Policy and Institutional Development Technical Assistance: This component will help address the medium term policy, regulatory and institutional constraints that hamper the efficiency of the SME credit market in India. The technical assistance will be financed through proposed grants from the Department for International Development (DFID), and cost sharing by local counter parties. â€Å"This project is an important step towards ensuring that small and medium enterprises have a fair shot at accessing financing and other services, which are critical to their competitiveness,† says Michael Carter, the World Bank’s Country Director for India. Moreover, the project will also help the private sector realize its full potential as an engine of growth and poverty reduction in India. † The US$120 million loan from the International Bank for Reconstruction and Development (IBRD) is a fixed spread loan, repayable in 15 years (including a five year grace period). The al l inclusive cost of this loan is around LIBOR+40 basis points. STEPS TAKEN BY RESERVE BANK OF INDIA Policy Package for Stepping up Credit to Small and Medium Enterprises Announcements made by the Union Finance Minister The Honble Finance Minister, Government of India has announced certain measures in the Parliament on August 10, 2005 for stepping up credit to small and medium enterprises (copy of the policy package enclosed), which are required to be implemented by all public sector banks. Accordingly, banks may take action as under: 1. Policy Package for stepping up credit to Small and Medium Enterprises 2. From SSI to SME: Defining the New Paradigm 3. Measures to increase the quantum of credit to SMEs at the right price 4. Outreach of Formal Credit: Opening of New Accounts . Nursing the Sick Units Back to Health: Debt Restructuring 6 Credit Guarantee Fund Trust Scheme for Small Industries (CGTSI) 8. Cluster based approach 9. Setting up of Watchdogs: Monitoring and Review 1. Policy Package for stepping up credit to Small and Medium Enterprises The small-scale industries (SSI) produce about 8000 products, contribute 40% of the industrial output and offer the largest employment after agriculture. Th e sector, therefore, presents an opportunity to the nation to harness local competitive advantages for achieving global dominance. In recognition of these aspects, the National Common Minimum Programmed makes the following declarations for accelerating the development of small-scale sector. Household and artesian manufacturing will be given greater technological, investment and marketing support. Small–scale industry will be freed from Inspector Raj and given full credit, technological and marketing support. Infrastructure up gradation in major industrial clusters will receive urgent attention. 2. from SSI to SME: Defining the New Paradigm 2. 1 Government policy as well as credit policy has so far concentrated on manufacturing units in the small-scale sector. The lowering of trade barriers across the globe has increased the minimum viable scale of enterprises. The size of the unit and technology employed for firms to be globally competitive is now of a higher order. The definition of small-scale sector needs to be revisited and the policy should consider inclusion of services and trade sectors within its ambit. In keeping with global practice,. there is also a need to broaden the current concept of the sector and include the medium enterprises in a composite sector of Small and Medium Enterprises (SMEs). A comprehensive legislation, which would enable the paradigm shift from small-scale industry to small and medium enterprises under consideration of Parliament. The Reserve Bank of India, had meanwhile set up an Internal Group which has recommended: Current SSI/tiny industries definition may continue. Units with investment in plant and machinery in excess of SSI limit and up to Rs. 10 crore may be treated as Medium Enterprises (ME). The definition may be reviewed after enactment of the Small and Medium Enterprises Development Bill. Only SSI financing will be included in Priority Sector. 2. 2 It is proposed to accept the recommendation with regard to the credit facilities being offered by the banking sector and accordingly request the Reserve Bank of India to advise the banks to frame a policy for enhancing the flow of credit to both small and medium enterprises, within the overall framework of credit policy of banks to small and medium enterprises. 2. 3. The challenges being faced by the small and medium scale sector may be briefly set out as follows- a. Small and Medium Enterprises (SME), particularly the tiny segment of the small enterprises has inadequate access to finance due to lack of financial information and non-formal business practices. SMEs also lack access to private equity and venture capital and have a very limited access to secondary market instruments. b. SMEs face fragmented markets in respect of their inputs as well as products and are vulnerable to market fluctuations. c. SMEs lack easy access to inter-state and international markets. d. The access of SMEs to technology and product innovations is also limited. There is lack of awareness of global best practices. e. SMEs face considerable delays in the settlement of dues/payment of bills by the large-scale buyers. With the deregulation of the financial sector, the ability of the banks to service the credit requirements of the SME sector depends on the underlying transaction costs, efficient recovery processes and available security. There is an immediate need for the banking sector to focus on credit and finance requirements of SMEs. 3. Measures to increase the quantum of credit to SMEs at the right price 3. Public Sector Banks will be advised to fix their own targets for funding SMEs in order to achieve a minimum 20% year on year growth in credit to SMEs. The objective is to double the flow of credit from Rs. 67,600 crore in 2004-05 to Rs. 135,200 crore to the SME sector by 2009-10, i. e. within a period of 5 years. 3. 2 Public Sector Banks will be advised to follow a transparent rating system with cost of credit being linked to the credit rating of the enterprise. 3. 3 SIDBI in association with Credit Information Bureau(India) Ltd. (CIBIL)will expedite setting up a credit rating agency. . 4 SIDBI in association with Indian Banks’ Association (IBA) would collect and poo common data on risk in each identified cluster and develop an IT-enabled application, appraisal and monitoring system for small (including tiny) enterprises. This would help reduce transaction cost as well as improve credit flow to small (including tiny) enterprises in the clusters. 3. 5 The National Small Industries Corporation has recently introduced a Credit Rating Scheme for encouraging SSI units to get them credit rated by reputed credit rating agencies. Public Sector Banks will be advised to consider these ratings appropriately and as per availability, and structure their rates suitably. 3. 6 SIDBI has developed a Credit Appraisal Rating Tool (CART) as well as a Risk Assessment Model (RAM) and a comprehensive rating model for risk assessment of credit proposals for SMEs. Public sector banks will be advised to take advantage of these models as appropriate and reduce their transaction costs. 4. Outreach of Formal Credit: Opening of New Accounts The commercial banks (including regional rural banks) with over 67,000 branches will make concerted efforts to provide credit cover on an average to at least 5 new tiny, small and medium enterprises at each of their semi urban/urban branches per year 5. Nursing the Sick Units Back to Health: Debt Restructuring Reserve Bank will issue detailed guidelines relating to debt restructuring mechanism so as to ensure restructuring of debt of all eligible small and medium enterprises at terms which are not less favorable than the Corporate Debt Restructuring (CDR) mechanism in the banking sector. The restructuring would follow upon a request to that effect from the borrowing unit. All accounts, except those classified as ‘loss assets’ will be eligible for restructuring, provided the industrial units are viable or potentially viable. Based on the Reserve Bank’s guidelines, banks may formulate, with the approval of their Boards of Directors, more liberal policies relating to restructuring of accounts. Until the banks formulate their own policies, Reserve Bank’s guidelines will be operative. A one-time settlement scheme to apply to small-scale NPA accounts in the books of the banks as on March 31, 2004 will be introduced. The scheme will be in force up to March 31, 2006. 6. Facilitative Measures Reserve Bank had issued a detailed master circular on March 2005 on the time to be taken for disposing of loan applications of SSI units, the limit up to which banks are obliged to grant collateral-free and composite loans, norms for computation of working capital credit limits to SSI units, opening of at least one specialized SSI branch in each district, etc. Taking these guidelines as indicative minimum, banks will formulate a comprehensive and more liberal policy relating to advances to SME sector. Until the banks formulate such a policy, the extant instructions of Reserve Bank will be applicable to advances granted or to be granted by banks to SME units. 7. Credit Guarantee Fund Trust Scheme for Small Industries (CGTSI) At present, Member Lending Institutions (MLIs), like banks, are provided guarantee cover of 75% of the amount of default by CGTSI,I respect of term loan and/or working capital facilities up to Rs. 5 lakh extended by the MLIs to new and existing SSI units/IT/software units/small scale service business enterprises (SSSBEs), without collateral security and/or third party guarantee. One-time guarantee fee of 2. 5% and annual service fee of 0. 75% of the credit facility sanctioned are currently charged by CGTSI from the MLIs. In order to reduce the cost of guarantee to the weaker segments of the borrowers, particularly tiny units, the CGTSI will be advised to reduce the one-time guarantee fee from 2. 5% to 1. 5% for all (i) loans up to Rs. lakh, (ii) eligible women entrepreneurs, and (iii) eligible borrowers located in the North Eastern regions (Sikkim) and Jammu Kashmir. Further, public sector banks will be encouraged to absorb the annual service fee in excess of 0. 25% in respect of guarantee for all (i) loans up to Rs. 2 lakh, (ii) eligible women entrepreneurs, and (iii) eligible borrowers located in the North Eastern regions (Sikkim) and Jammu Kashmir. 8. Cluster based approach Cluster based approach for financing SME sector offers possibilities of reduction of transaction costs and mitigation of risk. About 388 clusters have already been identified. Cluster based approach now be treated as a thrust area. Banks will increasingly adopt the cluster-based approach for SME financing. To broaden the financing options for infrastructure development in clusters through public private partnership, SIDBI will formulate a scheme in consultation with the stakeholders. SIDBI has already initiated the process of establishing Small Enterprises Financial Centers in select clusters. Risk profile of each cluster would be studied by a professional credit rating agency and such risk profile reports would be made available to commercial banks. Each lead bank of a district will consider adoption of at least one cluster 9. Setting up of Watchdogs: Monitoring and Review The following supervisory arrangements will be ensured: a. The existing institutional arrangements for review of credit to SSI sector like the Standing Advisory Committee in Reserve Bank of India and cells at the banks’ head office level as well as at important regional centers will be made more rigorous and regular. They will also review the flow of credit to small (SSI) and medium enterprises. . At the Regional offices, the Reserve Bank will constitute empowered committees with the Regional Director of the Reserve Bank as the Chairman to review the progress in SME financing and rehabilitation of sick small (SSI) and medium units and to coordinate with other banks/financial institutions and the state governments in removing bottlenecks, if any, to ensure smooth flow of credit to the sector. The said Regional level committees may decide on the need to h ave similar committees at cluster/district levels. c. The banks will ensure specialized SME branches in identified clusters/centers with preponderance of small enterprises to enable the entrepreneurs to have easy access to the bank credit and to equip bank personnel to develop requisite expertise. The existing specialized SSI branches may be also be redesigned as SME branches. d. Boards of banks will be advised to review the progress in achieving the self-set targets as also rehabilitation and restructuring of SME accounts on a quarterly basis to ensure that the required emphasis is given to this sector. e. For wider dissemination and easy accessibility, the policy guidelines formulated by Boards of banks as well as instructions/guidelines issued by Reserve Bank will be displayed on the respective websites of Public Sector Banks as well as website of SIDBI. The banks would also be advised to prominently display all the facilities/schemes offered by them to the small entrepreneurs at each of their branches. ROLE OF BANKS IN THE DEVELOPMENT OF SMES After several decades, the focus on the small and medium enterprises has shifted from offering sops, to assessing their creditability and debt repayment capabilities. The government and RBI have announced policy packages to this effect and rating agencies have spurted to help banks and financial institutions make SME lending a profitable venture. The small and medium enterprise (SME) sector has come into sharp focus with a policy package announced by the government recently, envisaging public sector banks to fix their own targets for funding this sector in order to achieve a minimum 20 per cent year-on-year growth in credit to the sector. In addition, these banks are required to follow a transparent rating system with cost of credit linked to the credit rating of the enterprise. Further, the package requires commercial banks to make concerted efforts to provide credit cover on an average to at least five new tiny, small and medium enterprises per year. Though it appears to be a tall order for the banking sector, the guidelines have been embraced with enthusiasm. Several banks, including foreign banks like Citibank and Standard Chartered Bank have set up special cells and branches dedicated to SME lending. The SME sectors preferred by bankers for lending include bulk drugs, knitwear and auto-ancillary goods. Textiles, pharmaceutical companies, chemicals and dyes sectors also continue to find favour with banks as these businesses are thriving. Enterprises like gems and jewellery, seafood processing, sports good etc are not preferred, as banks have suffered huge non-performing assets on account of lending to these sectors over the past few years. However, the new government package is accompanied by reworked guidelines from the Reserve Bank of India on the debt restructuring mechanism for SMEs with outstanding of up to Rs 10 crore. This can help banks assess the SMEs, which they now perceive as untouchable. According to the RBI guidelines, banks could decide the acceptable viability benchmark, consistent with the unit becoming viable in seven years and the repayment period for restructured debt not exceeding 10 years. Accounts classified by banks as â€Å"loss assets† would not be eligible for restructuring. Additional finance would be treated as a ‘standard asset’ in all accounts up to a period of one year after the date when first payment of interest or of principal, whichever is earlier, was due. RBI has also asked banks to formulate a debt-restructuring scheme for SMEs. These guidelines are geared to help banks renew their focus on this sector. Crisil has stepped in to provide a rating service for the SME sector. According to this rating programmed, SMEs would be rated on a scale of one to eight, with scale one indicating the highest credit quality and the scale eight, hinting at default possibilities. The ratings assigned to SMEs would also function as a self-improvement tool for them. To top all initiatives, SBI, ICICI Bank and Standard Chartered Bank, have agreed to join hands with the Small Industries Development Bank of India (Sidbi) to float a rating agency for the SME segment. The rating agency, Small and Medium Enterprises Rating Agency (SMERA), inaugurated recently, will rate the company’s overall strength, unlike most rating agencies whose core business are to rate debt instruments. While Sidbi will have largest share of 22 per cent followed by SBI, ICICI Bank and international credit Information Company Dun Bradstreet, which would be at 10-13 per cent. Five other public sector banks hold about 28 per cent. These are Punjab National Bank, Bank of Baroda, Bank of India, Canara Bank and Union Bank of India. Credit Information Bureau of India (Cibil) is also likely to join the company shortly. Most small and medium companies rely on extremely expensive funds sourced from the unorganized financial sector. Part reason why bank credit is denied to many small units, despite repayment capacity not being suspect, is that lenders often do not have the capability to assess their risk. Rating agencies are a step in this direction. With a brand new government package, reworked guidelines for lending by the RBI and the facility of rating enterprises not just for their creditability and debt repayments, banks can now refocus on the SME sector. INSTRUMENTS OF SME FINANCING In spite of various initiatives taken by the Government, banks and FIs, SMEs face certain challenges, which are universal in nature. These problems relate to the issue of collaterals, cost of loans, delay in receivables, obsolete technology, marketing, etc. In order to address the above problems in the Indian context, some innovative instruments of financing have been introduced and institutional set up created. Some of the major initiatives include Credit Guarantee Fund Trust for Small Industries . Government of India, in association with SIDBI, has set up a Credit Guarantee Fund Trust for Small Industries (CGTSI) to implement the guarantee scheme. The corpus of the Trust is proposed to be enhanced from the present level of Rs. 7 billion to Rs. 25 billion. The main objective of the Trust is to facilitate hassle free credit to the SSI sector and encourage banks to shift from security based lending to merit based lending. SSI loans upto Rs. 2. million are eligible to be covered under the scheme and CGTSI has so far extended guarantees to member lending institutions for around 18,000 units in the last three years of its operations, covering a loan amount of Rs. 3 billion. The CGTSI contemplates to triple its business in the current year, as compared to the previous year. Some new guaranteeing techniques like mutual credit guarantee scheme on the lines of similar schemes in Italy and other European countries are also being develope d. Risk Sharing Facility While the CGTSI extends guarantee cover for the loans up to Rs. 2. million, there is a need for offering guarantees for loans extended by banks beyond the above limit. Under a World Bank led Project on Financing and Development of SMEs, a possibility of introducing a Risk Sharing Facility for the SME sector is being examined, wherein the risk in lending by banks to SMEs could be shared on pari passu basis between the originating banks and the suggested entity. Of course, the facility would be available at a cost. This mechanism, as and when in place, would mitigate the credit risks of the banks and upscale SME financing. Venture Capital Funding With regard to new sources of financing, many countries are considering liberalizing the rules regarding venture capital investments. In India also, various measures have been taken in this direction. SIDBI, along with some other institutions, has taken a lead in promoting venture capital funding in the country. The B ank has contributed in setting up of 16 State level / Regional level funds; set up a National Fund for Software and IT Industry with a corpus of Rs. 1 billion and recently launched a new SME Growth Fund of Rs. 1 billion corpus. This Fund would focus on units in pharma, biotech, light engineering, software and other KBIs. The SME Growth Fund corpus is contemplated to be enhanced to Rs. 5 billion. Micro Credit Realizing the potential of micro finance in stimulating economic growth, SIDBI has laid emphasis on increasing the capacity of the sector to handle credit and growth in the disbursements of micro finance. SIDBI Foundation for Micro Credit, presently functioning as a Department of SIDBI, has sanctioned an aggregate financial assistance of Rs. 710 million in FY2004. The cumulative number of beneficiaries assisted under the programmer in the last 4 years aggregated over 1 million, mostly women. The outstanding portfolio under the programmed as at end-March 2004 is likely to be increased from a level of Rs. 910 million to Rs. 2 billion by the end of this year. Small and Medium Enterprises Fund The most important amongst the sectoral initiatives taken by the GoI and SIDBI is launching of an SME Fund of Rs. 100 billion, with a view to giving impetus to the fund flow to the SME sector. SIDBI has been advised to structure the Fund and its operations have commenced with effect from April 2004. Under the Fund, assistance is being provided to SMEs at an interest rate of 200 basis points below the Bank’s PLR. Direct assistance is being extended to SMEs through SIDBI’s own offices at 9. 5 percent rate of interest as also by way of providing refinance to the primary lending institutions. Refinance to SFCs is available in the interest rate band of 7. 5 percent to 8 percent. The SME Fund provides for routing of assistance, besides SFCs, through commercial banks as well. The Fund, besides up scaling the flow of assistance to SMEs, addresses the issue of cross sector parity in the cost of loans. Setting up of a Dedicated Credit Rating Agency for SMEs In order to address the demand side issues of credit and provide comfort to the bank officials, initiatives have been taken to support the mechanisms of information sharing and credit rating. With a view to providing credit enhancement and comfort to the bank officials at the field level in their taking bona fide credit decisions, SIDBI has decided to launch a dedicated credit rating agency for SMEs in association with leading public sector banks. The Bank is in dialogue with select public sector banks and credit rating agencies for this purpose and the proposed entity is likely to commence its operations during the current year. Portfolio Purchase Scheme / Asset Securitisation With a view to widening the scope of assistance to SMEs, the process of asset securitisation offers opportunities to purchase the SME portfolio from originators and channels funds to the sector. The portfolio so purchased can be either retained by the purchaser or sold to the investors in the capital markets t hrough structuring of suitable instruments. The Government of India has recently permitted SIDBI to undertake business through asset securitisation.. IDENTIFICATION CLASSIFICATION OF SOURCES OF FUNDS IN INDIA FOR SME DEVELOPMENT India has nearly 3 million SMEs, which account for almost 50 percent industrial output and 42 percent of India’s total export. They constitute the most important employment generating sector and an effective tool for balanced regional development. They account for 50 percent of private sector employment and 30-40 percent of value addition in manufacturing. They produce a diverse range of products (about 8000) including consumer items, and capital and intermediate goods. As the nations integrate into a global village, these SMEs will have to respond accordingly, and thus deserves special attention. To enable SMEs to overcome their technological backwardness and to have easier access to new technologies, they need to be given an environment where they have easier access to funds. This report identifies the various sources of funds available for SME development (scale up, innovation or R, diversification or new initiatives, start ups) and their applicability: 1. Equity funds 2. Venture capital 3. Strategic investors 4. Financial Institutions 5. Non-Banking financial companies A detailed report on the Institutions providing the funds consists of:- 1. Client / opportunities the institution be suited to : a. Size of investment/s pool b. Current exposure c. Mode of financing 2. Size of investments per deal (range): 3. Payback a. Tenure b. Rates of return 4. Collateral expected 5. Invested selection criterion 6. SWOT analysis of the entity – external and internal issues A grid has been prepared which differentiates between institutes (investors) on the basis of investee selection criteria, average size range of investments, pool of funds, recommendations and opportunities offered. INSTITUTIONAL FINANCE FOR SMALL MEDIUM ENTERPRISE (SME’s) The following agencies through their various schemes provide finance to small-scale industries sector under the overall policies and guidelines evolved by reserve bank of India. At national level: 1. Small industries development bank of India 2 National bank for agriculture and rural development 3 National small industries corporation 4. Khadi and village industries commission 5. Nationalized banks 6. Development commissioner, small-scale industries (DCSSI) At state level 1. State financial corporation (SFC’s) . State industrial development corporation (SIDC’s)- infrastructure/finance. 3. State cooperative banks 4. Khadi village industries board. At regional district level: 1. Regional rural banks (RRB) 2. District central cooperative banks. 3. Primary cooperative banks 4. Branches of sate level institution nationalized banks about 65000 in number 5. Khadi village industries commission 6. District ind ustries center (DIC) PRODUCTS OFFERED BY ING VYSYA BANK ING Vysya Bank has a track record of serving SME Customers for over 75 years. They understand how much of hard work goes into establishing a successful SME and that establishing and running a successful business takes hard work, money and planning. ING Vysya Bank looks not only at their customer’s immediate banking requirement, but also the long-term needs of their business as it expands. ING Vysya bank approach is to make banking easy, timely and reliable so that you could focus on your business safe in the knowledge that we would be there to take care of all your banking requirements. Their solutions are designed to meet customer’s varying needs. They offer a complete range of banking services to small medium sized corporate such as Business Accounts, Working capital, Cash Management Services, Trade Finance, Other Non Funded Facilities and Term Loans for Business Expansion for your business. In addition we also offer specific structured products to SSIs, Traders, Distributors and other SME customers. PRODUCT PROFILE FUND BASED ?BUSINESS LOAN TRADE ?MPOWER-RENT ?LOAN/OD AGAINST NSC, LIC POLICIES ETC ?SECURED OVERDRAFT AGAINST GOI/RBI BONDS ?MPOWER- BAL BILL DISCOUNTING BILL DISCOUNTED – CLEAN DOCUMENTARY NON-FUND BASED ?BANK GUARANTEES ?INLAND LETTER OF CREDIT 1. BUSINESS LOAN TRADE The purpose of the loan is to provide necessary working capital and term loan/ composite loan to the small medium enterprise engaged in trading, small businesses and services activities with simplified procedures, processes, appraisal and concessional pricing. This specific product does not cover SSI and manufacturing units. ELIGIBLE BORRO WERS: †¢Individuals †¢Self employed persons, women entrepreneurs, agri-businessmen, etc. HUF, limited companies †¢Proprietorship concern/ partnership concerns. ELIGIBLE ACTIVITIES †¢Retail Traders And Small Business †¢Professional including practicing doctors/ consultancy units/ travel agency. †¢ Wholesale distributor and dealers/ stockiest, commission’s agents. †¢Jeweler shops, nursing homes †¢Transport operators (only for working capital) THE KEY FACTOR NEED TO BE CONSIDERED FOR CREDIT DECISION: †¢Track record of the business – experience of at least 3 years. †¢Acceptable level of trade activities and its consistency. †¢Market reputation Past banking transaction †¢Risk coverage by way of adequate securities for proposed exposure. †¢Overall financial standing of business. †¢Credit need of stock in trade and credit sale. FACILITIES UNDER WHICH THE CREDIT CAN BE GIVEN ARE: †¢Secured overdraft. †¢Term loan VALIDITY OF FACILITY OR TENURE: †¢Secured overdraft – 2 years †¢Term loan – 4 years EXPOSURE OF FACILITY: †¢Minimum limit- no limit for existing customers and minimum of rs. 5 lakhs for new customers. †¢Maximum limit – 25 lakh RATE OF INTEREST TO BE CHARGED: †¢Secured overdraft – IVRR+ . 25% Term loan – IVRR + . 50% PROCESSING AND DOCUMENTATION CHARGES: †¢Secured overdraft . 50% p. a of the loan amount †¢Term loan . 50% of the loan amount QUANTUM AND MARGIN: †¢Secured overdraft – 20% of the gross projected sales or 3 times of the promoters net owned funds in the business which ever is less. †¢Term loan – margin of 25% is kept on the total projected coast. †¢Bank guarantee limits- a minimum margin of 20% by way of deposits. SECURITY: †¢Primary security – hypothecation of stock and book debts in such a way that 125% of limit sanctioned is covered. Co llateral security – equitable mortgage of the immovable landed properties other than agricultural land, in such a way that 125% of the limit sanctioned is covered. Market value of the properties as determined by the bank’s approved value. And in case of liquid securities such as life insurance policies and government securities should cover 100% of credit exposure. CASE STUDY ON BLT In order to understand the working of the business loan trade a case is taken. To ensure the credit worthiness of the customer with which bank is dealing, bank requires various kinds of documents. Audited balance sheet of last two years and there profit loss account, in this case we have audited balance sheet and profit loss account of 2005-2006 2006-2007 †¢Provisional balance sheet of current year in this case we have provisional balance sheet of 2007-2008 †¢And 1 year projected balance sheet, in this case we have provisional balance sheet of 2008-2009 †¢Photocopy of prop erty to be mortgaged †¢Copy of income tax/sales tax return. †¢Net worth statement of proprietor CASE DETAIL NAME ABC (P) Ltd. ADDRESS- B11, SEC- 22, Noida -201301 CONSTITUTION- Company YEAR OF ESTABLISHMENT- 28th July 1993 LIMIT REQUIRED- 50 Lacs MANAGED BY- Mr. S. P. Singhal, Mr. R. P. Singhal After studying the above mentioned documents closely we come out with following information: †¢Value of mortgaged property – 69 lakhs †¢Business premises – owned †¢Reputation of business – satisfactory †¢Conduct of business – sound †¢Net worth of promoters – 1. Mr. S. P. Singhal – 90 lakhs 2. Mr. R. P. Singhal – 32 lakh †¢Leverage (TOL/ TNW) 2. MPOWER-RENT Owners of the properties who have leased their properties to the eligible tenants are granted ‘term loan’, under this scheme. By discounting/ scrutinizing the lease rentals receivables. Product features and relative operative instruction are mentioned in this chapter. ELIGIBLE BORROWERS †¢Individuals †¢Sole proprietorship concerns †¢Partnership firms †¢Public private limited companies †¢Trusts †¢Registered bodies like educational institutions †¢Association of persons owning properties ELIGIBLE PROPERTIES Commercial properties situated in prime locality in metro and urban areas with unencumbered, clear and marketable title and with easy marketability. †¢Original title deeds should be available. †¢Approval from appropriate authorities for construction and various other approvals should be available. †¢Value of property should be at least 125%/150% of the loan amount, depending upon the tenor of loan. PURPOSE OF LOAN †¢Investment by promoters and their friends and relatives in enterprises byway of subordinate unsecured loans. †¢Repayment of high cost borrowings Meeting gaps in working capital requirement of their business. †¢Capital investment †¢Any other purpose acceptable to the bank, but not for any speculative purpose. NATURE OF CREDIT FACILITYES †¢Term loan repayable through EMIs MINIMUM MAXIMUM FINANCE †¢Minimum: 25 lakh EXTENT OF FINANCE †¢Loan amount will be calculated on the basis of net monthly rent by deducting the following items from the gross monthly rent. a)TDS at the prevailing rates. b)Actual expenses such as taxes, insurance, maintenance etc. subject to a minimum of 5% of the rent. If the rent payable is split up into actual rent and amenities charges, both these amounts can be reckoned to compute the eligible loan amount. †¢Advance rent/security deposits received from t he tenant need not be deducted from the rent receivable provided the lease period is more than the currency of the loan. †¢The loan amount will be arrived at based on the net monthly rent, rate of interest, and period. †¢Suitable downward adjustments have to be made to the actual rent payable to ensure that the fair market rent is considered to compute the eligible loan amount. SECURITY †¢Charge over the leased property by way of simple/ equitable mortgage. †¢Hypothecation of lease rental †¢Collateral security is linked to the period of loan as mentioned below: a)Up to six years: 125% b)Above six years: 150% GUARANTEE †¢Personal guarantee of partners/ promoter directors of the borrowing firm/ company †¢Third party guarantee, if available, preferably of legal heirs in case of individuals. GENERAL GUIDELINES Borrower †¢Credit investigation report should be prepared †¢Borrower/ group companies should not be defaulter to any bank. The following documents should be obtained: 1. Loan application 2. IT/ wealth tax return, assets liabilities statement of individual and promoter 3. Financial statement of the firm / companies / institutions/ association of person for the last two years. 4. Details of other business / income of the landlord. Tenant (lessee) †¢Well-known multinational public sector undertaking including their sub sidiaries, banks. All India financial institutions, national international airlines, insurance companies, central government offices without insisting on there financial statements. Entertain well- reputed companies only in the private sector without insisting on details verification of their financials. †¢New companies promoted by high net worth individuals. Lease agreement †¢The minimum lease period (lock-in-period) should be three years, where the building is constructed exclusively to suit the requirement of the tenant. The same may be relaxed in other cases. †¢Lease agreement should not be modified without the bank’s approval. LOAN DOCUMENTS TO BE OBTAINED †¢Term loan agreement †¢Hypothecation of lease rentals in bank’s favor Guarantee agreement in respect of personal guarantee/ third party guarantee if applicable. †¢Tripartite agreement or irrevocable power of attorney in favor of the bank or direct payment of rent to the bank. â₠¬ ¢Mortgage documents †¢Board resolution in case of corporate borrowers. †¢Original lease deed between lessor and lease. Original lease deed may be returned to the borrower in exceptional cases, by retaining a certified true copy for the bank’s records. †¢Any other document as per legal advice or as specified by the bank in futures. 3. LOAN/OD AGAINST NSC, LIC POLICIES INTRODUCTION Investment made in securities like RBI relief bond, National saving certificate (NSC’s), kisan vikas patras (KVS) and Insurance policies of LIC and other private Insurance companies has lock-in period before which the securities cannot be pre-closed by the investor but they can avail loans from banks against the same. Keeping in view the opportunity available, this scheme envisages grant of secured overdraft facility / misc. loan for business and other purposes against the security of NSC’s, KVP’s, insurance policies standing in the name of individuals/ partnership firms / companies / trusts etc. ELGIBLE BORROWERS †¢Sole proprietorship concerns †¢Partnership firms †¢Public private limited companies †¢Trusts †¢Registered bodies like educational institutions †¢Societies and association of persons SECURITIES ACCEPTABLE NSCs / KVPs /Insurance policies in the name of proprietor, partner, director, Trustees, member firms, companies, their family members and close relatives. PURPOSE OF THE LOAN 1. Investment by promoters and their friends and relatives in enterprises by way of subordinated unsecured loans to strengthen their capital base. 2. Repayment of high cost borrowing. 3. Meeting the gaps In working capital requirements due to mismatches in cash flows. 4. Capital investment 5. Any other purpose acceptable to the bank but not for speculative purpose. NATURE OF CREDIT FACILITY Overdraft/misc loan against the security of NSCs, KVPs, and insurance policies. MINIMUM MAXIMUM FINANCE 1. Minimum – Rs. 2. 00 lacs 2. Maximum – Rs 1. 00 crore per borrower. EXTENT OF FINANCE NSCs / KVPs 1. 90% of the face value in respect of NSC/ KVP of more than 2 years old. 2. 75% of the face value in respect of NSC/KVP more than 1 year old and up to 2 years. 3. NSCs/ KVPs aged 1 year and below should not be considered. . Interest accrued should not be reckoned for calculation of eligible loan amount. Insurance policies 1. 90% of the surrender value SECURITY 1. Personal guarantee of the security holder 2. The insurance policies shall be assigned to the bank/NSCs and KVPs be transferred in the name of the bank. VALDITY PERIOD OF THE LIMIT Secured overdraft (SOD) 1 . 2 years from the date of sanction or due date of NSC/ KVP/ Insurance policy whichever is earlier. Term loan 1. 4 years from the date of sanction or due date of NSC/KVP/Insurance policy whichever is earlier. RATE OF INTEREST AMOUNT OF OD/TL FACILITY RATE OF INTEREST Rs. lacs up to Rs. 30 LacsIVRR minus 2. 0% p. a Above Rs. 30 lacs up to Rs. 40 LacsIVRR minus 2. 50% p. a Above Rs. 40 lacs up to Rs. 50 LacsIVRR minus 2. 75% p. a Above Rs. 50 lacsIVRR minus 3. 0% p. a PROCESSING CHARGES 1. Processing charges shall be 0. 10% for the fresh sanction made and 0. 05% for every renewal thereafter 2. Regional head, SBU will have the discretion to waive the processing charges. 4. SECURED OVERDRAFT AGAINST GOI/RBI BONDS INTRODUCTION â€Å"Govt. of India – RBI relief bond† is issued by the reserve bank of India to individuals, joint holders, minors and HUF without an option for pre-closure by the investors. Bonds are not issued in the name of companies, trusts etc. the tenor of the bond are not issued in the name of companies, trust etc. the tenor of the bond is five years. Under this scheme, finance is extended to sole proprietorship concerns, partnership firms, companies against the bond standing in the individual name of the proprietors/partners/director etc. this scheme does not cover the finance made direct to the investor, which falls under the purview of retail SBU. ELGIBLE BORROWERS 1. Sole proprietorship concern 2. Partnership firms 3. Public private limited companies 4. Trusts 5. Registered bodies like educational institutions, societies and associations of persons. BONDS ACCETABLE 1. RBI bonds should be in the names of proprietor, partner, director, trustees, members, their family members and close relatives. 2. Proper linkage should exist between the bondholder and the borrower. The bondholder can be made as co-borrower. The bondholders can be made as co-borrower to get the bond transferred in the name of bank. 3. All the series of RBI relief bond are acceptable viz. 8. 50%, 9%, 10%, and in both the form i. e. in physical and in bond ledger account with any bank or any institution. . Bonds issued from 2003 are not acceptable, since they cannot be transferred. 5. Before taking up the proposal, branches should verify the bonds being offered to ensure that loans can be availed against the same that the same are transferable in the name of the bank. PURPOSE OF LOAN 1. To provide funds for investment by promoters and friends and relatives in enterprise by way of subordinated unsecured loans to strengthen their capital base. 2. For repayment of high cost borrowing. 3. To meet gaps in working capital requirements due to mismatches in cash flows. 4. For capital investment. 5. Any other purpose acceptable to the bank, but not for any speculative purpose whatsoever. NATURE OF CREDIT FAC