□

STUDY ON THE CREDIT MANAGEMENT ASPECT OF

KERALA FINANCIAL CORPORATION

Project report

Submitted to University of Kerala in partial fulfilment of the requirement for

INTEGRATED B.Com LLB DEGREE COURSE

Submitted by:
Name of the Student Candidate Code
AMITHA B T 47120555008
VAISHNAVI P S 47120555058

Under the guidance of

MRS. SAJITHA
Assistant Professor,
Department of commerce
CSI Institute of Legal Studies

CSI INSTITUTE OF LEGAL STUDIES

CHERUVARAKONAM
 DECLARATION

We hereby declare that the project report entitled “A STUDY ON THE CREDIT
MANAGEMENT ASPECT OF KERALA FINANCIA CORPORATION” Submitted to
the University of Kerala is a partial fulfilment of the INTEGRATED B.Com LLB DEGREE
COURSE is a bonafide work carried out by us

Amitha B T

Vaishnavi P S

Place: Trivandrum

Date:

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 ACKNOWLEDGEMENT
First and foremost we thank the almighty who gave us the strength and graces to endower
this task.

I would like to express our deepest gratitude to our project supervisor, Mr. BIJU for their
invaluable guidance and support throughout the research process. Their expertise and
dedication were instrumental in shaping this project.

We express our heartfelt and sincere thanks to Mrs. SAJITHA project guide for her constant
encouragement, co-operation and valuable suggestions and help given us in completing this
project.

We extent our sincere thanks to college Management, Principal Dr. BEJOY M S RAJ, and
our sincere thanks to Head of the Department and our teachers for their valuable support and
encouragement throughout the completion of the project.

We thank all our friends and well-wishers for their valuable support and guidance. We
express our gratitude to our parents for their motivation during the tenure of the study.

We convey heartily thanks to everyone who had participated in the survey for giving
valuable information for the completion of the work

AMITHA B T

VAISHNAVI P S

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 CONTENTS

CHAPTER 1 -INTRODUCTION
1.1 INTRODUCTION...................................................................................................7
1.2 SIGNIFICANCE OF STUDY.................................................................................8
1.3 STATEMENT OF PROBLEM................................................................................10
1.4 OBJECTIVE OF THE STUDY...............................................................................11
1.5 RESEARCH METHODOLOGY ...........................................................................11
1.6 LIMITATIONS........................................................................................................14
1.7 CHAPTERISATION...............................................................................................14

CHAPTER 2- REVIEW OF LITERATURE

2.1 REVIEW OF
LITERATURE………………………………………………………………………...17

CHAPTER 3 – SUBJECT DETAILS

3.1 INDUSTRY PROFILE..............................................................................................20
3.2 COMPANY PROFILE...............................................................................................22
3.3 ELIGIBLE SECTORS...............................................................................................24
3.4 ELIGIBLE
ACTIVITIES………………………………………………………..………………..…25
3.5 ELIGIBLE BORROWERS……………………………………………………..,.....32
3.6 VARIOUS LOANS SCHEMES IN KERALA FINANCIAL CORPORATION.......33
3.7 KERALA FINANCIAL CORPORATION SPECIAL
SCHEMES.......................................................................................................................36
3.8 INDUSTRY/SECTORAL EXPOSURE
CAP………………………………………………………………………...…………..38
3.9 SECURITY AND
MARGIN……………………………………………………………………....……....40

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CHAPTER.4- THEORITICAL FRAME WORK

4.1 CREDIT MANAGEMENT.................................................................................45

4.2 PRINCIPLES OF CREDIT MANAGEMENT....................................................48
4.3 OBJECTIVES OF CREDIT MANAGEMENT...................................................51
4.4 ASPECT OF CREDIT POLICY...........................................................................53
4.5 DETERMINATION OF CREDIT POLICY.........................................................55

CHAPTER 5 - ANALYSIS AND INTERPRETATION

5.1 STATISTICAL TOOLS AND TECHNIQUES......................................................65
5.2 RATIO ANALYSIS...............................................................................................76
5.3 CASH FLOW STATEMENT.................................................................................83

CHAPTER 6 – FINDINGS
6.1 FINDINGS...........................................................................................................88

CHAPTER 6 – DISCUSSION
7.1 DISCUSSION......................................................................................................91
7.2 EXPLANATION OF THE NEW PROPOSED SYSTEM...................................95
7.3 NEW MODEL.....................................................................................................101

CHAPTER 7 – SUGGESTION
8.1 SUGGESTION....................................................................................................104
8.2 CONCLUSION....................................................................................................107

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 CHAPTER 1

INTRODUCTION

6
1.1 INTRODUCTION

BUSINESS FINANACE

Business finance refers to money and credit employed in business. It involves

procurement and utilization of funds so that business firms may be able to carry out

their operations effectively and efficiently. The following characteristics of business

finance will make its meaning clearer:-

(i) Business finance includes all types of funds used in business.

(ii) Business finance is needed in all types of organisations large or small, manufacturing or
trading.

(iii) The amount of business finance differs from one business firm to another

depending upon its nature and size. It also varies from time to time.

(iv) Business finance involves estimation of funds. It is concerned with raising funds

from different sources as well as investment of funds for different purposes.

Need and Importance

Business finance is required for the establishment of every business organisation.

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With the growth in activities, financial needs also grow. Funds are required for the

purchase of land and building, machinery and other fixed assets. Besides this, money

is also needed to meet day-today expenses e.g. purchase of raw material, payment of

wages and salaries, electricity bills, telephone bills etc. You are aware that production

Continues in anticipation of demand. Expenses continue to be incurred until the goods

are sold and money is recovered. Money is required to bridge the time gap between

production and sales. Besides producers, may be necessary to change the office set up

in order to install computers. Renovation of facilities can be taken up only when

Adequate funds are available

1.2 SIGNIFICANCE OF THE STUDY

NON BANKING FINANCIAL INSTITUTIONS

The financial sector in any economy consists of several intermediaries. Apart from banking
entities, there are investment intermediaries (such as mutual funds, hedge funds, pension funds,
and so on), risk transfer entities (such as insurance companies) information and analysis
providers (such as rating agencies, financial advisers, etc), investment banks, portfolio
managers and son.

All such entities that offer financial services other than banking, may be broadly called non-
banking financial institution. What is banking? banking is commonly understood to mean
taking the deposits withdrawable on demand or notice that is, banks can hold people's deposits
and promise to pay them on demand. There are variety of other entities that may accept deposit
- hence, acceptance of deposits is not the essence of banking

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In India, the term “non banking financial companies " acquires a new meaning, and huge
significance .The meaning of the term is such entities which are not banks, and yet carry
lending activities almost at par with banks. They may also accept deposit – however, these
deposit are term deposit and not call deposit.

The significance of non banking financial companies in India lies in the massive capabilities
of NFBSS - short of acceptance of call deposit and remittance function ,NFBCs can virtually
do everything that a bank can. compared to this disability, the ease of entry and lightness of
regulation applicable to NFBCs makes its tremendous focus of interest, particularly for foreign
investors wanting to enter India's financial

sector

For instance, it is possible to hold 100% foreign ownership of NFBCs, while in the case of
banks, there are serious caps

It is possible to either start an NFBC or buy on of the 17000-odd companies many of which
are formed for sale. On the other hand, getting a banking license requires a real penance

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1.3 STATEMENT OF THE PROBLEM

Financial sector plays an indispensable role in the overall development of a country. The most
important constituent of this sector is the financial institutions, which act as a conduit for the
transfer of resources from net savers to net borrowers, that is, from those who spend less than
their earnings to those who spend more than their earnings. The financial institutions have
traditionally been the major source of long-term funds for the economy. These institutions
provide a variety of financial products and services to fulfil the varied needs of the commercial
sector. Besides, they provide assistance to new enterprises, small and medium firms as well as
to the industries

established in backward areas. Thus, they have helped in reducing regional disparities by
inducing widespread industrial development. The Government of India, in order to provide
adequate supply of credit to various sectors of the economy, has evolved a well developed
structure of financial institutions in the country. These financial institutions can be broadly
categorised into All India institutions and State level institutions, depending upon the
geographical coverage of their operations. At the national level, they provide long and medium
term loans at reasonable rates of interest. They subscribe to the debenture issues of companies,
underwrite public issue of shares, guarantee loans and deferred payments, etc. Though, the
State level institutions are mainly concerned with the development of medium and small scale
enterprises, but they provide the same type of financial assistance as the national level
institutions.

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1.4 OBJECTIVES OF THE STUDY

1. Study on credit management system in the organisation

2. Critical aspect of the present receivables management system employed by the

company.

3. Study in the inconsistency in the profitability of the organisation

4. Suggestion and recommendations so as to accommodate a better credit management

system in the organisation

1.5 RESEARCH METHODOLOGY

RESEARCH

Research could be defined as the careful investigation or inquiry especially through the search
of new facts in any branch of knowledge.

1.5.1 Nature of Research

The research is of descriptive in nature as we are going deep into the

entrusted topic “credit management in Kerala Financial Corporation”.

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1.5.2. Data is collected mainly from two sources.

A)Primary data:

Data which is primarily collected or fresh hand data is called so. Here we are

collecting data through direct contact with the respondents i.e; customers by enquiring

them on various related facts.

B)Secondary data:

It refers to already published data. The collected from KFC annual report,

financial magazines, viz: investor India, Outlook, journals as well as e-data (google).

1.5.3. Sample Design & Population

Population consists of the last 5 year data regarding credit

management in Kerala Financial Corporation

1.5.4. Tools for Analysis

Ratio analysis , percentage analysis, cash flow are used as the main

tool for analysis.

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1.6 LIMITATIONS OF THE STUDY

1. The major limitation of the study is that only one organisation is taken in to
consideration, comparison with other organization is not done
2. Historical aspects is given much importance

3. Only last five years data are taken in to consideration

4. The limitation of time constraint existed

1.7 CHAPTERISATION

The report deals with chapters as follows.

CHAPTER.1 - Introduction to the study

Objectives, Scope, Research methodology, statement of the problem, limitation

of the study, chapterisation.

CHAPTER.2 - Review of Literature

Deals with reviewed literature by the researcher.

CHAPTER.3 – Industry profile and company profile

deals with details about company profile and industry profile

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CHAPTER.4- theoretical frame work

deals with subject details

CHAPTER.5 - Analysis and Interpretation

Analysis and interpretation of the data collected.

CHAPTER.6 - Findings

CHAPTER7- Discussions

CHAPTER8- Suggestion and Conclusion of the study

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 CHAPTER 2

REVIEW OF LITERATURE AND REFERENCES

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2.1 REVIEW OF LITERATURE

1. Joy, O.M (1978) debt owed to the firm by customers arising from sale of goods or services
in ordinary course of business."

2. Robert N. Anthony, "Accounts receivables are amounts owed to the business enterprise,
usually by its customers. Sometimes it is broken down into trade accounts receivables; the
former refers to amounts owed by customers, and the latter refers to amounts owed by
employees and others".

3. Prasanna Chandra "The balance in the receivables accounts would be; average daily credit
sales x average collection period."

4. Joseph L. Wood is of the opinion, "The purpose of any commercial enterprise Is the earning
of profit, credit in itself is utilized to increase sale, but sales must return a profit."

5. R.K. Mishra "The first of these principles relate to the allocation of authority pertaining to
credit and collections of some specific management. The second principle puts stress on
the selection of proper credit terms. The third principles emphasizes a through credit
investigation before a decision on granting a credit is taken. And the last principle touches
upon the establishment of sound collection policies and procedures."

6. C.R. Cook "For these reasons the credit and collection function should be placed under the
direct supervision of the individuals who are responsible for the firm's financial position."

7. Edward T. Curtis "There are other who suggest that business firms should strictly enforce
upon their sales departments the principles that sales are insolate until the value thereof is
realised

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8. R.J. Chambers "the reasonability to administer credit and collections policies may be
assigned either to a financial executive or to a marketing executive or to both of them
jointly depending upon the organizational structure and the objectives of the firm.

9. "Two very important considerations involved in incurring additional credit risk are: the
market for a company's product and its capacity to satisfy that market. If the demand for
the seller's product is greater than its capacity to produce, then it would be more selective
in granting credit to its customers. Conversely, if the supply of the product exceeds the
demand, the seller would be more likely to lower credit standards with resulting greater
risk."

10. Martin H. Seiden "Credit period is the duration of time for which trade credit is extended.
During this time the overdue amount must be paid by the customers."

11. Theodore N. Beckman, "Cash discount is a premium on payment of debts before due date
and not a compensation for the so called prompt payment,

12. N.K. Agarwal, 'we market out or products through established dealers. If sometimes
payment is not received within the credit period, it is just not possible to deny discount as
it would spoil business relations.'

13. Van Home, "There is the cost of additional investment in receivables, resulting from
increased sales and a slower average collection period.

14. I.M. Pandey has cited three Cs of credit termed as character, capacity and condition that
estimate the likelihood of default and its effect on the firm’s management credit standards.
Two more Cs have been added to the three Cs of I.M. Pandey, namely; capital and
collateral.

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15. R.K. Mishra States, "A collection policy should always emphasize promptness, regulating
and systematization in collection efforts. It will have a psychological effect upon the
customers, in that; it will make them realize the obligation of the seller towards the
obligations granted. "

16. Hubert H. Humphrey,” I do not feel that we should allow a shortage of funds to prevent
cities from financing needed projects.”

17. Abilash Viswanathan, “ study the topic receivable management and financial
Reconstruction” in KERALA FINANCIAL CORPORATION.

18. Rathod Amith K; a study of performance of Gujrath State Financial Corporation.

19. 20. Sandeep Arora; financial project report on currency derivative

20. Robert Frost (1874-1963); A bank is a place where they lend you an umbrella in fair
weather and ask for it back when it begins to rain.

21. Santhi Somaraj (2009); financial project report on KSIE based on ratio analysis

22. Jigar J. Soni (2009); A project report on ”Comparative Analysis On Non Performing Assets
Of Private And Public Sector Banks”

23. J . Ramakrishna Yadav (2008) ; A project report A Study On Ratio Analysis With Reference
To Genting Lanco Power India Private Limited

24. Shivali Kamal(2010) a financial project report on “Analysis of Indian cement Industry &
Financial performance of ACC CEMENT LIMITED”

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 CHAPTER 3

COMPANY PROFILE

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3.1 INDUSTRY PROFILE

NATIONAL LEVEL INSTITUTIONS

A wide variety of financial institutions have been set up at the national level. They cater to the
diverse financial requirements of the entrepreneurs. They include all India development banks
like IDBI, SIDBI, IFCI Ltd, IIBI; specialised financial institutions like IVCF, ICICI Venture
Funds Ltd, TFCI ; investment institutions like LIC, GIC,UTI; etc.

1. All-India Development Banks (AIDBs) :- Includes those development banks which

provide institutional credit to not only large and medium enterprises but also help in
promotion and development of small scale industrial units.
 Industrial Development Bank of India (IDBI)
 Industrial Finance Corporation of India Ltd (IFCI Ltd)
 Small Industries Development Bank of India (SIDBI)

2. Specialised Financial Institutions (SFIs):- are the institutions which have been set up to
serve the increasing financial needs of commerce and trade in the area of venture
capital, credit rating and leasing, etc.
 IFCI Venture Capital Funds Ltd (IVCF)
 ICICI Venture Funds Ltd

3. Investment Institutions:- are the most popular form of financial intermediaries, which
particularly catering to the needs of small savers and investors. They deploy their assets
largely in marketable securities.
 Life Insurance Corporation of India (LIC)
 Unit Trust of India (UTI)
 General Insurance Corporation of India (GIC)

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STATE LEVEL FINANCIAL CORPORATIONS

Several financial institutions have been set up at the State level which supplement the financial
assistance provided by the all India institutions. They act as a catalyst for promotion of
investment and industrial development in the respective States. They broadly consist of 'State
financial corporations' and 'State industrial development corporations'.

 State Financial Corporations (SFCs) :- are the State-level financial institutions which
play a crucial role in the development of small and medium enterprises in the concerned
States. They provide financial assistance in the form of term loans, direct subscription
to equity/debentures, guarantees, discounting of bills of exchange and seed/ special
capital, etc. SFCs have been set up with the objective of catalysing higher investment,
generating greater employment and widening the ownership base of industries. They
have also started providing assistance to newer types of business activities like
floriculture, tissue culture, poultry farming, commercial complexes and services related
to engineering, marketing, etc. There are 18 State Financial Corporations (SFCs) in the
country

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3.2 COMPANY PROFILE

KERALA FINANCIAL CORPORATION

Travancore Cochin Financial Corporation was established on 01.12.1953, under the State
Financial Corporations Act, 1951. This was later renamed as Kerala Financial Corporation
(KFC) consequent to the reorganization of states in 1956. KFC has its headquarters at
Thiruvananthapuram. For nearly 25 years, KFC functioned only with two district offices at
Kozhikode and Ernakulam. The growing volume of business necessitated opening up of more
offices. Now KFC has 16 branch offices and 2 large credit branch (LCB) in the entire district.
There are Zonal offices of KFC at Kozhikode, Ernakulam and Thiruvananthapuram. The
Corporation is the first PSU in Kerala and first SFC in India to initiate Corporate Social
Responsibility activity. KFC - A Developmental Financing Institution and Industrial Facilitator
100% Committed to Kerala for the Industrial Development.

The provisions of SFC’s Act 1951 as amended in 2000 control and guide the functions of
Corporations. The main objective of KFC is the rapid industrialization of the state by extending
financial assistance to Micro, Small and Medium Enterprises in manufacturing and service
sector. SFC’s Act empowers KFC to formulate suitable loan schemes for setting up of new
units and for the expansion / modernization /diversification of existing units in both
manufacturing and service sectors since inception KFC has disbursed over Rs. 3000 Crores to
more than 40,000 projects, spread over the length and breadth of the State.

The Corporation has now emerged as a financial supermarket giving the customers a wide
range of products and services. The Corporation is one of the best State Financial Corporations
in the country with a competent tech savvy team of professional at the core of services. All
along our constant endeavour has been to bring a sharper focus on the requirements of our
customers and to provide the highest levels of service. KFC now means more than short-term
loans. Corporation also provides Working Capital finance and Short Term Finance apart from
schemes focused at the weaker sections of the society. Modernization schemes for SSIs,
Special schemes for Resorts, Hospitals, and TV Serial Production etc are some of the
innovative schemes introduced to suit changing customer requirements. KFC has also set up

22
KFC Consultancy Division with a view to render excellent Consultancy Services to our Clients
as a Total Solution provider. KFC has also has made a small beginning to nurture and develop
a new managerial cadre that can dream, envision and create a new future by starting the KFC
Training Division. They offer training programmes, which are at par, with the programmes
offered by any institutions of advanced learning in India.

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3.3 ELIGIBLE SECTORS

The Kerala Financial Corporation finance the loan requirements of micro ,small and medium
enterprises. The sectors eligible for corporation’s support will include broadly the following

 Manufacturing sector : All manufacturing activities including processing and

preservation .

 Service sector : Transport, Marketing, IT Parks, Hospitals, Pathological Laboratories

Medical Equipment ,Professional like Doctors And Architects ,Etc

 Hospitality sector : Hotels, Lodges, Restaurants, Convention Centre/Seminar Hall,

Tourist Resort, Amusement Park, Etc., as the need for this sector is being increasingly
felt as a promotional support for state industrial /business growth.

 Marketing : Commercial Complex, Construction Of Godown, Input Suppliers/Venders,

Stockist: as they provide important backward and forward linkage

 Micro-finance institution : Well run MFIs : as funding them in an indirect mode of

assisting self - help groups and promoting finance inclusion

 Infrastructure : Basic requirement that form the engines of economic growth (inspire
the setting up or development of industrial area , industrial estate, IT park, Roads, etc.
Training institute etc

 Power sector : Power generation /distribution including alternate sources of power like
windmills and solar energy as they provide pollution- free additional powers as also
help tax-saving plans

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 TABLE 3.1 MAXIMUM FINANCIL ASSISTANCE GIVEN TO A UNIT

particulars Cap (Rs.in crores)

for a unit For group

private/public Limited 20 30
companies/corporation/co-operative
society
partnership firm/proprietary concerns 8 12
and trusts

3.4 ELIGIBLE ACTIVITIES:

1. All new and existing units taking up industrial or infrastructural activities are eligible.
2. The corporation provides financial assistance to both new and existing entities. A new
entity is one newly set up or proposed to be set up. An existing entity is one which has
already been established and is engaged in commercial operation, with or without
financial assistance from the corporation.
3. 2.3 The following types of activities, MSMEs, Infrastructure Projects, State
Government Priority sector industries and Large Enterprises are inter alia covered:

(a) Hotels, Resorts, Restaurants, Homestays, House Boats, Cafeteria, Catering

Services, Amusement Parks and Other Tourism related activities.

(b) Hospitals, Nursing Homes, Diagnostic Centres, Health Clinics, Veterinary clinics,

Etc

(c) Renewable Energy, Solar Energy and Wind Energy Projects.

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(d) IT/ ICT/ ITES enabled as well as Logistic Services.

(e) Infrastructure facilities such as Industrial Parks/ Estates (including modernization/

refurbishing), power projects - both conventional and non-conventional, Common

Effluent Treatment Plants, Road construction benefiting industries, etc.

(f) Agro-Industries, Warehouses, Godown, Container Freight Terminals, Cold-Storage

facilities, etc.

(g) Malls, showrooms, Shopping/ Commercial Complexes, Display/ Exhibition/

Convention Centres, Business Incubation Centres, Auditorium, Multiplexes, etc.

(h) Transport sector including agencies that Manage Taxi/ Bus/ Truck and other

contract carriers.

(i) Funding of Contractors

(j) Qualified professionals for setting up their Offices/ Shops/ Transport Needs.

(k) Petrol/ Diesel/ Gas Filling Stations, Vehicle Servicing Centres, Workshops, etc.

(l) Fisheries and Aquaculture

(m) Sericulture and Horticulture

(n) Acquisition of existing concerns

(0) Acquisition of units taken over by KFC through R, Section 29 of FCs Act,

SARFAESI, etc.

(p) Revival of potentially viable sick units.

(q) Electrical charging stations.

(r) Acquisition of machinery/ equipment, DG sets, computers, etc. for industrial

purposes on a standalone basis.

(s) Skill Training and educational activities directly linked to industrial activities.

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(t) Any other activity permitted under the State Financial Corporations' (SCs) Act,

1951.

(u) Non-Fund Based limits

(v) Priority Sector identified as per Kerala Industrial Policy-2023 as below:

 Aerospace and Defence

 Artificial Intelligence, Robotics and Other Breakthrough Technologies
Ayurveda
 Biotechnology & Life Sciences
 Design
 Electric Vehicles
 Electronic System Design & Manufacturing
 Engineering Research & Development
 Food Technologies
 Graphene
 High Value-Added Rubber Products
 High-tech Farming and Value-Added Plantation Produce
 Logistics & Packaging
 Maritime Sector
 Medical Equipment
 Nano Technology
 Pharmaceuticals
 Recycling & Waste Management
 Renewable Energy
 Retail Sector
 Tourism & Hospitality
 3D Printing

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(w) Infrastructure projects. As per RBI Master Circular - Prudential norms on Income
Recognition, Asset Classification and Provisioning pertaining to Advances, dated
01.04.2022, Project loans for the infrastructure sector are defined as any term loan
which has been extended to set up an economic venture in a sector included in the
Harmonized Master List of Infrastructure sub-sectors issued by the Department of
Economic Affairs, Ministry of Finance, Government of India, from time to time. As per
the Department of Economic Affairs, Ministry of Finance, Government of India
notification dated 24.08.2020, the master List of Infrastructure Sub-sectors is as
follows:

Sl. No: Category Infrastructure sub-sectors

1 Transport and Logistics  Roads and bridges
 Ports
 Shipyards
 Inland Waterways
 Airport
 Railway track including electrical &
signaling system, tunnels, viaducts,
bridges
 Railway rolling stock along with
workshop and associated
maintenance facilities
 Railway terminal infrastructure
including stations and adjoining
commercial Infrastructure
 Urban Public Transport (except
rolling stock in case of urban road
transport)
 Logistics Infrastructure

28
  Bulk Material Transportation
Pipelines

2 Energy  Electricity Generation

 Electricity Transmission
 Electricity Distribution
 Oil/ Gas/ Liquefied Natural Gas
(LNG) storage facility

3 Water and Sanitation  Solid waste management

 Water treatment plants
 Sewage collection, treatment and
disposal system
 Irrigation (dams, channels,
embankments, etc.)
 Storm Water Drainage System

4 Communication  Telecommunication (fixed network)

 Telecommunication towers
 Telecommunication & Telecom
Services

5 Social and Commercial  Education Institutions (capital

Infrastructure stock)
 Sports Infrastructure
 Hospitals (capital stock)
 Tourism infrastructure viz. (i) three-
star or higher category classified
hotels located outside cities with

29
 population of more than 1 million,
(ii) ropeways and cable cars
 Common infrastructure for
Industrial Parks and other parks with
industrial activity such as food
parks, textile parks, Special
Economic Zones, tourism facilities
and agriculture markets Post-harvest
storage infrastructure for agriculture
and horticultural produce including
cold storage
 Terminal markets
 Soil-testing laboratories
 Cold chain
 Affordable housing
 Affordable rental housing complex

4. The eligible activities shown in para 3 are broadly classified into the following sectors:
a) Manufacturing sector - all manufacturing activities including processing and
preservation
b) service sector - pathological laboratories, medical equipment, LoC to
contractors and MSMEs, house boats, hotels, lodges, restaurants, convention
centers, seminar halls, tourist resorts, amusement parks, multiplexes, cinema
theatres, development of industrial areas, training institutions, wind mills and
solar energy furnishing of shopping complexes, Godown, input
suppliers/vendors, contractors etc.
c) Commercial Real Estate (CRE sector) - Residential apartment or flat
complexes, villas, commercial spaces/shopping complexes, shopping malls etc
d) Infrastructure sector - Projects as defined in the Government of Indian
notification dated 24.08.2020

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Classification of enterprises:

Category Criteria regarding classification

Micro-Enterprise Where investment in Plant & Machinery or

Equipment does not exceed Rs.1 crore and
turnover does not exceed Rs.5 crore.

Small-Enterprise Where investment in Plant & Machinery or

Equipment does not exceed Rs.10 crore and
turnover does not exceed Rs.50 crore.

Medium-Enterprise Where investment in Plant and machinery or

Equipment does not exceed Rs.50 crore and
turnover does not exceed Rs.250 crore.

The criteria for the classification of an MSME as per the MSMED Act 2006 (amended in 2020)
are as follows:

The investment in Plant and Machinery or Equipment shall mean the Written Down Value
(WDV) at the end of the Financial Year. Export of goods or services or both, shall be excluded
while calculating the turnover of any enterprise for MSME classification.

Ministry of Micro, Small and Medium Enterprises vide Office Memorandum (OM)
No.5/2(2)/2021-E/P&G/Policy dated July 2, 2021, has decided to include Retail and Wholesale
trade as MSMEs for the limited purpose of Priority Sector Lending, provided they are
registered on Udyam Registration Portal.

PAN is mandatory for all units. GSTIN is mandatory for units providing Services and having
a turnover above Rs.20 lakh. For units dealing with Goods and having turnover above Rs.40
lakh, GSTIN is mandatory. For MSMEs, Udhyam Registration/ Mini Udhyam Registration
shall be obtained.

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3.5 ELIGIBLE BORROWERS:

The Corporation provides financial assistance to customers having the following constitutional
framework. They are broadly classified into two categories as given below:

Category 'A' Entities (a) Public Limited Companies

(b) Private Limited Companies
(c) Government-Owned Companies
(d) Corporations Established by Law
(e) Registered Co-operative Societies
(f) Body Corporates
Category 'B' Entities (a) Limited Liability Partnerships
(b) Partnership Firms
(c) Proprietary Concerns
(d) Registered Private and Public Trusts
(e) Societies, including Charitable Societies
(f) One Person Companies
(g) Producer Companies
(h) Co-owner/ Co-borrower

As a prudent practice and step toward risk mitigation, Partnership Firms, Proprietary Concerns,
One Person Companies and Co-owner/ Co-borrower entities shall be encouraged to adopt a
corporate culture by establishing a Public Limited Company/ Private Limited Company.

Category 'B' Entities shall be allowed time even after sanction/ disbursement to convert them
into Category 'A' Entities which will give them better growth prospects and market
acceptability. However, financially viable proposals shall not be denied assistance for want of
such conversion.

32
3.6 VARIOUS LOAN SCHEMES IN KERALA FINANCIAL CORPORATION

Schemes for Lending:

The objective is to meet the requirements of all the target groups by offering them need-based
financial assistance. It will be the endeavor not to deny assistance to the worthwhile bankable
project from the target group merely for want of a standard product/ scheme.

Depending on the activity, industry, sector, purpose and type of client, the parameters
applicable will vary. Based on these the Corporation has various schemes for lending, which
are given below.

Scheme Scheme Name

No

1 Term Loan for Industrial Activities

2 Working Capital Revolving Fund Loan for units in both Manufacturing and
Service sectors

3 Working Capital Term Loan including SWS for units in both Manufacturing
And Service sectors

4 KFC Working Capital Loan Scheme (under KFC-CUB Arrangement)

5 Special Working Capital Assistance to Hotels

6 Special Working Capital Assistance without collateral to Hotels

33
7 Special Revolving Fund Loan for existing customers

8 Financing Construction Activities & Housing Projects

9 Short Term Loan

10 Scheme for Modernization, Renovation, Upgradation, Expansion and

Diversification of Existing Industrial Units/ Hotels/ Hospitals, etc
11 Chief Minister's Entrepreneurship Development Programme (CMEDP)
Edition II

12 Assisting MSME units located at Industrial Estates

13 Revival of potentially viable sick/ NPA/ stressed units.

14 Asset-backed MSME revitalizing loan scheme

15 Startup Kerala Loan Schemes

16 Letter of Guarantee Scheme

17 LoC schemes

18 KFC Agro-based MSME Loan Scheme (KAMS)

19 Scheme for assisting traditional fishermen to process Mechanized deep-sea

fishing vessels

34
The eligibility criteria and salient features of above the schemes are enclosed with this
document.

35
3.7 KERALA FINANCIAL CORPORATION SPCIAL SCHEMES

1. Scheme of Energy Saving Projects

In view of the growing need for energy saving and importance of conservation, the Corporation
has formulated a special scheme to promote energy saving measures in SMEs by providing
financial assistance for the implementation of energy saving device/projects . As per the
scheme Energy Management Centre (EMC) has to recommended the proposal for
consideration. The effective interest rate under the scheme is kept at 5% P.A and no processing
fee will be charged. An upper loan limit of Rs 200 lakh has been fixed for such support

2. Assistance to Micro Enterprises

The corporation supports Micro Enterprise mainly to help the first generation enterprise with
confessional rates of interest of 7%. The upper limit for finance is Rs 25 lakhs

3. Credit Delivery In Cluster

The MSME sector in Kerala is highly diversified in terms of industry segments and geological
terrain. A large segment of MSMEs operate in cluster which have developed at a certain
different geographical location due to various factors like historical availability of certain skill
craftsmanship in the location, proximity of raw material or customer, etc. MSME located in
the clusters have similar characteristics and face similar challenges. Corporation credit linked
interventions involve providing financial assistance to MSME units in clusters through special
dispensation using customized products and process keeping view their needs and
requirements

36
 4. Customer Relation and Consultancy Service

Business Development Department and Consultancy Division offers arrange of services to the
customers who are interested in setting up units in different parts of Kerala . Guidance in the
form of Assistance in Project planning, Liaison with other organization, etc are provided .
Customer Relation Managers, at the Branch and the Head office, provide the client with
excellent escort services making the process simple and hassle free .KFC also take up agency
services for mutual fund, insurance, credit rating etc through SBI Mutual Fund, LIC Mutual
Fund, New India Assurance Company Ltd , CRISIL & SMERA

37
3.8 Industry/ Sectoral Exposure Cap

The Corporation shall provide financial assistance to all eligible viable activities in a
diversified manner to reduce the level of risks. The sector exposure shall be fixed by the
Executive Committee. The exposure cap fixed by the Corporation for various sectors is given
below. These caps are for the Corporation as a whole.

Sector Sub Sector Exposure Cap(%)

Manufacturing Manufacturing/ Processing Industries and No upper cap

Infrastructure Projects

Service Classified hotel without bar and 5-star 5.00

hotels

Service Classified Hotel with Bar 15.00

Service Unclassified Hotel, resort, Lodge, Hostel, 10.00

Restaurant, Bakery, etc
Service Hospital, Medical Services 5.00

Service Auditorium, Convention Centre, 2.50

Kalyanamandapam
Service Multiplex, Cinema Theater 2.00

Service Contractor Loan 25.00

Service Other Service Sectors 5.50

38
LOC-GBDS LOC only for GBDS 20.00

CRE Commercial Real Estate (CRE) 10.00

The sectoral exposure of each loan shall be spelt out in the Appraisal Note. The proposed loan
also should be included in the sectoral exposure. It shall be ensured that the resultant exposure
is within the total exposure cap for that sector. The exposure will include the current principal
outstanding in that sector and the amount of undisbursed commitment to the sector.

At any point in time, if the Corporation desires to restrict financial assistance to a particular
sector, MDLC is authorized to make an appropriate decision regarding the same, even if the
exposure is within the respective cap.

The Risk Management Department at the Head Office shall monitor the exposure to various
sectors quarterly and a consolidated report regarding sectoral risk, exposure cap, etc. shall be
placed to the Risk Management Committee of the Board.

39
3.9 Security and Margin

For the purpose of coverage of financial assistance, assets at their current/ market value, cannot
be considered as their value could depreciate with time. To account for indicative depreciations,
margins to be adopted for fixing value to be considered for security purposes is given in this
section in a tabular form.

Item Margin (%) Value to be taken as

security (%)

Land including land NIL 100

development/Landscaping/Gardening

Building / Building Renovation 15 85

Plant & machinery and equipment 15 85
including erection, electrification

Second-hand imported and 50 50

reconditioned machinery
Other second-hand machinery 50 50
Moulds & Dies 25 75
Tools/ Accessories/ Fittings 75 25
Furniture/ Fixtures/ shelf
i. For Hotel Sector
ii. For Other Projects 25 75
75 25
Technical know-how

40
 i. Developed by the Promoter
and has patented/ copyright 75 25
been hypothecated with the
Corporation and entered into a
non-disclosure agreement
ii. others 100 NIL
Computer & accessories including 50 50
erection, electrification

Software

i. Developed by the Promoter

and has patented/ copyright
50 50
has been hypothecated with
the Corporation and entered
into a non-disclosure
agreement
ii. others
100 NIL

Interior decoration 75 25

Office equipment and furniture 75 25

Medical Diagnostic equipment which 50 50

is part of a hospital (the life of the
items should cover the loan period)

Diagnostic and testing equipment/ lab 50 50

equipment

41
Furnishing/ curtains/ and decorative 100 NIL
items

Crockery, cutlery and vessels 75 25

Vehicles including extra fittings cost 50 50

of the body, essential tools and
excluding insurance, Road tax etc.

DG set, Lift 30 70

Firefighting equipment, Air 70 30

Conditioners etc.

Cost of optical fibre lines 100 NIL

Gymnasium equipment 50 50

Reference books 100 NIL

Kitchen equipment including erection 50 50

and electrification

Fixed Deposit/ Gold/ guaranteed NIL 100

Surrender Value of IRDAI approved
Insurance policies

42
While calculating security value, preliminary expenses, other intangible expenses, deposits
with the Electricity Board, Margin Money for Working Capital etc. are not to be taken.

All values are to be considered after applicable depreciation as per Valuation Policy.

43
 CHAPTER 4

CREDIT MANAGEMENT ASPECTS

44
4.1 CREDIT MANAGEMENT

Management of trade credit is commonly known as Management of Receivables. Receivables

are one of the three primary components of working capital, the other being inventory and
cash, the other being inventory and cash. Receivables occupy second important place after
inventories and there by constitute a substantial portion of current assets in several firms. The
capital invested in receivables is almost of the same amount as that invested in cash and
inventories. Receivables thus, form about one third of current assets in India. Trade credit is
an important market tool. As, it acts like a bridge for mobilization of goods from production
to distribution stages in the field of marketing. Receivables provide protection to sales from
competitions. It acts no less than a magnet in attracting potential customers to buy the product
at terms and conditions favourable to them as well as to the firm. Receivables management
demands due consideration not financial executive not only because cost and risk are
associated with this investment but also for the reason that each rupee can contribute to firm's
net worth.

MEANING AND DEFINITION:

When goods and services are sold under an agreement permitting the customer to pay for them
at a later date, the amount due from the customer is recorded as accounts receivables; So,
receivables are assets accounts representing amounts owed to the firm as a result of the credit
sale of goods and services in the ordinary course of business. The value of these claims is
carried on to the assets side of the balance sheet under titles such as accounts receivable, trade
receivables or customer receivables. This term can be defined as "debt owed to the firm by
customers arising from sale of goods or services in ordinary course of business."

1. According to Robert N. Anthony, "Accounts receivables are amounts owed to the

business enterprise, usually by its customers. Sometimes it is broken down into trade
accounts receivables; the former refers to amounts owed by customers, and the latter
refers to amounts owed by employees and others".

45
2. Generally, when a concern does not receive cash payment in respect of ordinary sale of
its products or services immediately in order to allow them a reasonable period of time
to pay for the goods they have received. The firm is said to have granted trade credit.
Trade credit thus, gives rise to certain receivables or book debts expected to be collected
by the firm in the near future. In other words, sale of goods on credit converts finished
goods of a selling firm into receivables or book debts, on their maturity these
receivables are realized and cash is generated
3. According to Prasanna Chandra, "The balance in the receivables accounts would be;
average daily credit sales x average collection period." 3 The book debts or receivable
arising out of credit has three dimensions:
 It involves an element of risk, which should be carefully assessed. Unlike cash
sales credit sales are not risk less as the cash payment remains unreceived.
 It is based on economics value. The economic value in goods and services
passes to the buyer immediately when the sale is made in return for an
equivalent economic value expected by the seller from him to be received later
on.
 It implies futurity, as the payment for the goods and services received by the
buyer is made by him to the firm on a future date.

The customer who represent the firm's claim or assets, from whom receivables or
book-debts are to be collected in the near future, are known as debtors or trade debtors.
A receivable originally comes into existence at the very instance when the sale is
affected. But the funds generated as a result of these ales can be of no use until the
receivables are actually collected in the normal course of the business. Receivables may
be represented by acceptance; bills or notes and the like due from others at an assignable
date in the due course of the business. As sale of goods is a contract, receivables too
get affected in accordance with the law of contract e.g. Both the parties (buyer and
seller) must have the capacity to contract, proper consideration and mutual assent must
be present to pass the title of goods and above all contract of sale to be enforceable
must be in writing. Moreover, extensive care is needed to be exercised for

46
 differentiating true sales form what may appear to be as sales like bailment, sales
contracts, consignments etc. Receivables, as are forms of investment in any enterprise
manufacturing and selling goods on credit basis, large sums of funds are tied up in trade
debtors. Hence, a great deal of careful analysis and proper management is exercised for
effective and efficient management of Receivables to ensure a positive contribution
towards increase in turnover and profits. When goods and services are sold under an
agreement permitting the customer to pay for them at a later date, the amount due from
the customer is recorded as accounts receivables; so, receivables are assets accounts
representing amounts owed to the firm as a result of the credit sale of goods and services
in the ordinary course of business. The value of these claims is carried on to the assets
side of the balance sheet under titles such as accounts receivable, trade receivables or
customer receivables.
4. This term can be defined as "debt owed Joseph L. Wood is of the opinion, "The purpose
of any commercial enterprise is the earning of profit, credit in itself is utilized to
increase sale, but sales must return a profit."

The primary objective of management or receivables should not be limited to

expansion of sales but should involve maximization of overall returns on investments.
So, receivables management should not be confined to mere collection or receivables
with in the shortest possible period but is required to focus due attention to the benefit-
cost trade-off relating to numerous receivables management. In order to add
profitability, soundness and effectiveness to receivables management, an enterprise
must make it a point to follow certain well-established and duly recognized principles
of credit management. "The first of these principles relate to the allocation of authority
pertaining to credit and collections of some specific management. The second principle
puts stress on the selection of proper credit terms. The third principles emphasizes a
through credit investigation before a decision on granting a credit is taken. And the last
principle touches upon the establishment of sound collection policies and procedures."

47
4.2 PRINCIPLES OF CREDIT MANAGEMENT

In the light of this quotation the principles of receivables management can be stated
as:

a) Allocation or Authority

The determination of sound and effective credit collection policies management. The
efficiency of a credit management in formulation and exestuation of credit and
collection policies largely depends upon the location of credit department in the
organizational structure f the concern. The aspect of authority allocation can be viewed
under two concepts. As per the first concept, it is placed under the direct responsibility
of chief finance officer for it being a function primarily financed by nature. Further,
credit and collection policies lay direct influence on the solvency of the firm. "For these
reasons the credit and collection function should be placed under the direct supervision
of the individuals who are responsible for the firm's financial position." "There are other
who suggest that business firms should strictly enforce upon their sales departments
the principles that sales are insolate until the value thereof is realized. Those favouring
this aspect plead to place the authority of allocation under the direct charge of the
marketing executive or the sales department. To conclude "the reasonability to
administer credit and collections policies may be as signed either to a financial
executive or to a marketing executive or to both of them jointly depending upon the
organizational structure and the objectives of the firm.

b) Selection of Proper Credit Terms

The receivables management of an enterprise is required to determine the terms and

conditions on the basis of which trade credit can be sanctioned to the customers are of

48
vital importance for an enterprise. As the nature of the credit policy of an enterprise is
decided on the basis of components of credit policy. These components include; credit
period, cash discount and cash discount period. In practice, the credit policy of firms,
vary within the range of lenient and stringent. A firm that tends to grant long period
credits and its debtors include even those customers whose financial position is
doubtful. Such a firm is said to be following lenient credit policy. Contrary to this, a
firm providing credit sales for a relatively short period of time that too on highly
selective basis only to those customers who are financially strong and have proven their
credit worthiness is said to be following stringent credit policy.

c) Credit Investigation

A firm if desires to maintain effective and efficient receivables management of

receivables must undertake a thorough investigation before deciding to grant credit toa
customer. The investigation is required to be carried on with respect to the
creditworthiness and financial soundness of the debtors, so as to prevent the receivables
for falling into the category of bad debts later on at the time of collection. Credit
investigation is not only carried on beforehand. But in the case of firms practicing
liberal credit policy such investigation may be required to be conducted when debtors
fails to make payments of receivables due on him even after the expiry of credit sale so
as to save doubtful debts from becoming bad debts.

d) Sound Collection Policies and Procedures

Receivables management is linked with a good degree of risk. As a few debtors are
slow payers and some are non-payers. How-so-ever efficient and effective a receivables
management may be the element of risk cannot be avoided altogether but can be
minimized to a great extent, it is for this reason the essence of sound collection policies
and procedures arises. A sound collection policy aims at accelerating collection form

49
slow payer and reducing bad debts losses. As a good collection polices ensures prompt
and regular collection by adopting collection procedures in a clear-cut sequence.

50
4.3 OBJECTIVES OF CREDIT MANAGEMENT:

The objective of receivables management is to promote sales and profit until that is
reached where the return on investment in further finding of receivable is less than the
cost of funds raised to finance that additional credit (i.e., cost of capital). The primary
aim of receivables management vet in minimizing the value of the firm while
maintaining a reasonable balance between risk (in the form of liquidity) and
profitability. The main purpose of maintain receivables is not sales maximization not is
for minimization of risk involved by way of bad debts. Had the main objective being
growth of sales, the concern, would have opened credit sales for all sort of customers.
Contrary to this, if the aim had been minimization of risk of bad debts, the firm would
not have made any credit sale at all. That means a firm should indulge in sales
expansion by way of receivables only until the extent to which the risk remains within
an acceptably manageable limit. All in all, the basic target of management of
receivables is to enhance the overall return on the optimum level of investment made
by the firm in receivables. The optimum investment is determined by comparing the
benefits to be derived from a particular level of investment with the cost of maintaining
that level. The costs involve not only the funds tied up in receivables, but also losses
from accounts that do not pay. The latter arises from extending credit too leniently. A
brief inference of objectives of management of receivables may be given as under: -

a. To attain not maximum possible but optimum volume of sales.

b. To exercise control over the cost of credit and maintain it on a minimum possible
level.
c. To keep investments at an optimum level in the form or receivables.
d. To plan and maintain a short average collection period.

Granting of credit and its proper and effective management is not possible without
involvement of any cost. These costs are credit administrative expenses bad debts
losses, opportunity costs etc. As mentioned before these costs cannot be possibly

51
eliminated altogether but should essentially be regulated and controlled.
Elimination of such costs simply mean reducing the cost of zero i.e. no credit grant
is permitted to the debtors. In that case firm would no doubt escape form incurring
there costs yet the other face of coin would reflect that the profits foregone on
account of expected rise in sales volume made on credit amounts much more than
the costs eliminated. Thus, a firm would fail to materialize the objective of
increasing overall return of investment. The period goal of receivables management
is to strike a golden mean among risk, liquidity and profitability turns out to be
effective marketing tool. As it helps in capturing sales volume by winning new
customers besides retaining to old ones.

52
4.4 ASPECT OF CREDIT POLICY

The discharge of the credit function in a company embraces a number of activities for
which the policies have to be clearly laid down. Such a step will ensure consistency in
credit decisions and actions. A credit policy thus, establishes guidelines that govern
grant or reject credit to a customer, what should be the level of credit granted to a
customer etc. A credit policy can be said to have a direct effect on the volume of
investment a company desires to make in receivables. A company falls prey of many
factors pertaining to its credit policy. In addition to specific industrial attributes like the
trend of industry, pattern of demand, pace of technology changes, factors like financial
strength of a company, marketing organization, growth of its product etc. also influence
the credit policy of an enterprise. Certain considerations demand greater attention while
formulating the credit policy like a product of lower price should be sold to customer
bearing greater credit risk. Credit of smaller amounts results, in greater turnover of
credit collection. New customers should be least favoured for large credit sales. The
profit margin of a company has direct relationship with the degree or risk. They are said
to be inter-woven. Since, every increase in profit margin would be counterbalanced by
increase in the element of risk. As observed by Harry Gross, "Two very important
considerations involved in incurring additional credit risk are: the market for a
company's product and its capacity to satisfy that market. If the demand for the seller's
product is greater than its capacity to produce, then it would be more selective in
granting credit to its customers. Conversely, if the supply of the product exceeds the
demand, the seller would be more likely to lower credit standards with resulting greater
risk." Such a conditions would appear in case of a company having excess capacity
coupled with high profitability and increased sales volume. Credit policy of every
company is at large influenced by two conflicting objectives irrespective of the native
and type of company. They are liquidity and profitability. Liquidity can be directly
linked to book debts. Liquidity position of a firm can be easily improved without
affecting profitability by reducing the duration of the period for which the credit is
granted and further by collecting the realized value of receivables as soon as they fails

53
due. To improve profitability one can resort to lenient credit policy as a booster of sales,
but the implications are: -

1. Changes of extending credit to those with week credit rating.

2. Unduly long credit terms.
3. Tendency to expand credit to suit customer's needs; and
4. Lack of attention to over dues accounts.

54
4.5 DETERMINATION OF CREDIT POLICY:

The evaluation of a change in a firm's credit policy involves analysis of:

1. Opportunity cost of lost contribution

2. Credit administration cost and risk of bad-debt losses.

Above Figure shows that contrary relationship that exists between the two costs. If
a company adopts stringent credit policy, there occurs considerable reduction in the
level of profitability (shown by curve AB) by the liquidity position stands
story(represented by CD Curve). However, the firm losses in terms of contribution
due to higher opportunity cost resulting form lost sales. Yet, the credit
administrative cost &risk of bad debt losses are quite low. Contrary to this, a
company resorting to liberal credit policy has it profitability curve AB rising above
liquidity curve CD disclosing that its profitability level is quiet high but the problem
of liquidity becomes evident as a result of heavy investment in receivables due to
increased sales. Besides this, the opportunity costs of such a firm declines as the
firm raptures lost contribution. But the credit administrative costs increase as more
accounts are to be handled and also there is rise in risk of bad debt losses. The point
E in the figure denotes the state of equilibrium between profitability curve (AB)
and Liquidity curve (CD) depicting that the operating profits are maximum. So,
point E provides the firm with an appropriate credit policy determined by trade off
between opportunity costs and credit administrative cost and bad debt losses.

As a matter of fact, point E may not necessarily be representative of optimum credit

policy. Optimum credit policy does not mean the point at which balance between
liquidity and profitability can be maintained. Instead, an optimum credit policy is
one that maximizes the firm's is achieved when marginal rate of return i.e.
incremental rate of return on investment becomes equal to marginal cost of capital

55
i.e. incremental cost of funds used to record of the orders and payments. There are
two important components of credit terms which are detailed below:-
(A) Credit period and
(B) Cash discount terms

(A) Credit period

According to Martin H. Seiden, "Credit period is the duration of time for which
trade credit is extended. During this time the overdue amount must be paid by
the customers." The credit period lays its multi-faced effect on many aspects
the volume of investment in receivables; its indirect influence can be seen on
the net worth of the company. A long period credit term may boost sales but it‘s
also increase investment in receivables and lowers the quality of trade credit.
While determining a credit period a company is bound to take into consideration
various factors like buyer's rate of stock turnover, competitors approach, the
nature of commodity, margin of profit and availability of funds etc. The period
of credit diners form industry to industry. In practice, the firms of same industry
grant varied credit period to different individuals. as most of such firms decide
upon the period of credit to be allowed to a customer on the basis of his financial
position in addition to the nature of commodity, quality involved in transaction,
the difference in the economic status of customer that may considerably
influence the credit period. The general way of expressing credit period of a
firm is to coin it in terms of net date that is, if a firm's credit terms are "Net30",
it means that the customer is expected to repay his credit obligation within
30days. Generally, a free credit period granted, to pay for the goods purchased
on accounts tends to be tailored in relation to the period required for the business
and in turn, to resale the goods and to collect payments for them. A firm may
tighten its credit period if it confronts fault cases too often and fears occurrence
of bad debt losses. On the other side, it may lengthen the credit period for
enhancing operating profit through sales expansion. Anyhow, the net operating

56
 profit would increase only if the cost of extending credit period will be less than
the incremental operating profit. But the increase in sales alone with extended
credit period would increase the investment in receivables too because of the
following two reasons: -
(i) Incremental sales result into incremental receivables,
(ii) The average collection period will get extended, as the customers will
be granted more time to repay credit obligation.

(B) Cash Discount Terms

The cash discount is granted by the firm to its debtors, in order to induce them
to make the payment earlier than the expiry of credit period allowed to them.
Granting discount means reduction in prices entitled to the debtors so as to
encourage them for early payment before the time stipulated to the i.e. the credit
period. According to Theodore N. Beckman, "Cash discount is a premium on
payment of debts before due date and not a compensation for the so called
prompt payment,'*2 Grant of cash discount beneficial to the debtor is profitable
to the creditor as well. A customer of the firm i.e. debtor would be realized from
his obligation to pay Soon that too at discounted prices. On the other hand, it
increases the turnover rate of working capital and enables the creditor firm to
operate a greater volume of working capital. It also prevents debtors from using
trade credit as a source of working capital. Cash discount is expressed is a
percentage of sales. A cash discount term is accompanied by (a) the rate of cash
discount, (b) the cash discount period, and (c) the net credit period. For instance,
a credit term may be given as "1/10 Net 30" that mean a debtor is granted 1
percent discount if settles his accounts with the creditor before the tenth day
starting from a day after the date of invoice. But in case the debtor does not opt
for discount the is bound to terminate his obligation within the credit period of
thirty days. Change in cash discount can either have positive or negative

57
implication and at times both. Any increase in cash discount would directly
increase the volume of credits sale. As the cash discount reduces the price of
commodity for sale. So, the demand for the product ultimately increase leading
to more sales. On the other hand, cash discount lures the debtors for prompt
payment so that they can relish the discount facility available to them. This in
turn reduces the average collection period and bad debt expenses thereby,
brining about a decline in the level of investment in receivables. Ultimately the
profits would increase. Increase in discount rate can negatively affect the profit
margin per unit of sale due to reduction of prices. A situation exactly reverse of
the one stated above will occur in case of decline in cash discount. As pointed
out by N.K. Agarwal, 'we market out or products through established dealers. If
sometimes payment is not received within the credit period, it is just not
possible to deny discount as it would spoil business relations.'*3 Yet, the
management of business enterprises should always take note of the point that
cash discount, as a percentage of invoice prices, must not be high as to have an
uneconomic bearing on the financial position of the concern. It should be seen
in this connection that terms of sales include net credit period so that cash
discount may continue to retain its significance and might be prevented from
being treated by the buyers just like quantity discount. To make cash discount
an effective tool of credit control, a business enterprise should also see that is
allowed to only those customers who make payments at due date. And finally,
the credit terms of an enterprise on the receipt of securities while granting credit
to its customers. Credit sales may be got secured by being furnished with
instruments such as trade acceptance, promissory notes or bank guarantees.

Credit Standards

Credit standards refers to the minimum criteria adopted by a firm for the
purpose of short listing its customers for extension of credit during a period of
time. Credit rating, credit reference, average payments periods a quantitative

58
basis for establishing and enforcing credit standards. The nature of credit
standard followed by a firm can be directly linked to changes in sales and
receivables. In the opinion of
Van Home, "There is the cost of additional investment in receivables,
resulting from increased sales and a slower average collection period. 114 A
liberal
credit standard always tends to push up the sales by luring customers into
dealings. The firm, as a consequence would have to expand receivables
investment along with sustaining costs of administering credit and bad-debt
losses. As a more liberal extension of credit may cause certain customers to the
less conscientious in paying their bills on time. Contrary, to these strict credit
standards would mean extending credit to financially sound customers only.
This saves the firm from bad debt losses and the firm has to spend lesser by a
way of administrative credit cost. But, this reduces investment in receivables
besides depressing sales. In this way profit sacrificed by the firm on account of
losing sales amounts more than the cost saved by the firm.

Prudently, a firm should opt for lowering its credit standard only up to that level
where profitability arising through expansion in sales exceeds the various costs
associated with it. That way, optimum credit standards can be determined and
maintained by inducing trade off between incremental returns and incremental
costs.

Analysis of Customers

The quality of firm's customers largely depends upon credit standards. The
quality of customers can be discussed under too main aspects; average
collection period and default rate.

59
(i) Average Collection Period: It is the time taken by customers bearing
credit obligation in materializing payment. It is represented in terms of
the number of days, for which the credit sales remains outstanding. A
longer collection period always enlarges the investment in receivables.

(ii) Default Rate: This can be expressed in terms of debt-losses to the

proportion of uncontrolled receivables. Default rate signifies the default
risk i.e. profitability of customers failure to pay back their credit
obligation.

I.M. Pandey 15 has cited three Cs of credit termed as character, capacity and
condition that estimate the likelihood of default and its effect on the firms'
management credit standards. Two more Cs have been added35 to the three Cs
of
I.M. Pandey, namely; capital and collateral. All the five Cs of credit are
discussed below in brief.

(iii) Character: Character means reputation of debtor for honest and fair
dealings. It refers to the free will or desire of a debtor of a firm to pay the amount
of receivables within the stipulated time i.e. credit period. In practice, the moral
of customer is considered important in valuation of credit. The character of
customer losses its importance if the receivable is secured by way of appropriate
and adequate security.

(iv) Capacity: Capacity refers to the experience of the customers and his
demonstrate ability to operate successfully. It is the capacity particularly
financial ability of a customer to borrow from other sources in orders discharges
his obligations to honor contract of the firm.

60
(v) Capital: Capital refers to the financial standing of a customer. Capital acts
as a guarantee of the customers' capacity to pay. But, it should be noted that a
customer may be capable of paying by means of borrowing even if his capital
holding are scarce.

(vi) Collateral: Collaterals are the assets that a customer readily offers to the
creditor(i.e. firm granting credit) as a security, which should be possessed by
the firm in the event of non-payment by the customer. A firm should be
particular with regards to the real worth of assets offered to it as collateral
security

(vii) Conditions: Conditions refer to the prevailing economic and other

conditions, which can place their favourable or unfavourable impact on the
ability of customer to pay.

A firm must ensure that its customers have completely and accurately furnished
with the above stated information. As a matter of precaution a firm should carry
out credit investigation on its own level. This involves two basic steps:

 The first step involves obtaining credit information from internal and
external source. Internal sources includes filling up various documents
(pertaining to the financial details of the credit applicants) and records
(that fulfil formalities related with extension of credit) of a concern. The
external sources of information are financial statements, bank
references, sales representative’s report, past experience of the concern
etc.
 The second step involves analysis of credit information obtained in
respect of the applicant for deciding the grant of credit as well as its
quantum. A concern is free to adopt any procedure that suits its needs

61
 and full fill the desired requirements, as there are no established
procedures for analysis of information. But, it must be born in mind that
the analysis procedure shall be competent enough to suit both the
qualitative and quantitative aspects of the applicant. Qualitative aspect
refers to customer's character, goodwill and credit worthiness. While the
quantitative aspect is based on the factual information available from
the applicants finances statements, his past record sand the like factors.
As a matter of fact the ultimate decision of credit extension and the
volume of credit depend upon the subjective interpretations of his credit
standing.

No doubt, credit investigation involves cost. So, it shall be conducts as per

the requirements of the situations. But the fact cannot be ignored that a
credit decision taken in the absence of adequate and proper investigation to
save costs related with such investigation proves much more costly due to
bad debts, excessive collection costs etc. Thus, credit investigation is
justified on such grounds. A firm can thereby, gainfully empty such
information in classifying the customers in accordance with their credit-
worthiness and estimate the probable default risk. This shall also be referred
to while formulating the credit standards of business enterprises.

Collection Policy

Collection policy refers to the procedures adopted by a firm (creditor) collect

the amount of from its debtors when such amount becomes due after the expiry
of credit period. R.K. Mishra States, "A collection policy should always
emphasize promptness, regulating and systematization in collection efforts. It
will have a psychological effect upon the customers, in that; it will make them
realize the obligation of the seller towards the obligations granted. "16 The
requirements of collection policy arises on account of the defaulters i.e. the
customers not making the payments of receivables in time. As a few turnouts to
be slow payers and some other non-payers. A collection policy shall be

62
formulated with a whole and sole aim of accelerating collection from bad-debt
losses by ensuring prompt and regular collections. Regular collection on one
hand indicates collection efficiency through control of bad debts and collection
costs as well as by inducing velocity to working capital turnover. On the other
hand it keeps debtors alert in respect of prompt payments of their dues. A credit
policy is needed to be framed in context of various considerations like short-
term operations, determinations of level of authority, control procedures etc.
Credit policy of an enterprise shall be reviewed and evaluated periodically and
if necessary amendments shall be made to suit the changing requirements of the
business. It should be designed in such a way that it co-ordinates activities of
concerns departments to achieve the overall objective of the
businessenterprises.1 finally, poor implementation of good credit policy will not
produce optimal results. finance the investment. The incremental rate of return
is obtained by dividing incremental investment in receivables. While the
incremental cost of funds, is the rate of return expected by firm granting the
credit. This rate of return is not equal to borrowing rate. As in case of firm
following loose credit policy, higher rate of return means higher risk of invest
in A/c's receivables due to slow paying and defaulting accounts. To sum up, in
order to achieve the goal of maximizing the value of the firm the evaluation of
investment in receivables accounts should involve the following four steps:

1. Estimation of incremental operating profit,

2. Estimation of incremental investment in accounts receivables,
3. Estimation of the incremental rate of return of investment,
4. Comparison of incremental rate of return with the required rate of return.

The reality, it is rather a different task to establish an optimum credit policy as

the best combination of variables of credit policy is quite difficult to obtain.
Theimportant variables of credit policy should be identified before establishing

63
an optimum credit policy. The three important decisions variables of credit
policy are:

1. Credit terms,
2. Credit standards,
3. Collection policy.

Credit Terms

Credit terms refer to the stipulations recognized by the firms for making credit
sale of the goods to its buyers. In other words, credit terms literally mean the
terms of payments of the receivables. A firm is required to consider various
aspects of credit customers, approval of credit period, acceptance of sales
discounts, provisions regarding the instruments of security for credit to be
accepted are a few considerations which need due care and attention like the
selection of credit customers can be made on the basis of firms, capacity to
absorb the bad debt losses during a given period of time. However, a firm may
opt for determining the credit terms in accordance with the established practices
in the light of its needs. The amount of funds tied up in the receivables is directly
related to the limits of credit granted to customers. These limits should never be
ascertained on the basis of the subjects own requirements, they should be based
upon the debt paying power of customers and his ledger

64
 CHAPTER 5

ANALYSIS AND INTERPRETATION

65
5.1 STATISTICAL TOOLS AND TECHNIQUES

Facts and figures about any phenomenon are called ‘statistics ’. Statistics is the body of
methods of obtaining and analyzing data in order to base decisions on them. Itis a brand of
scientific method used in dealing with phenomena that can be described numerically either by
counts or by measurements. Thus the work statistics refers either by counts or by
measurements. Thus the work statistics refers either to quantitative information or to the
method dealing with quantitative information. The methods by which statistical data are
analyzed are called statistical methods. Although the term is sometimes used more closely to
cover the subject statistics as a whole. Statistical methods are applicable a very large number
of fields. Statistics is widely employed as a tool in the analysis of problems in natural, physical
and social science.

The statistical tools and techniques are used by the researcher for the purpose of analysis of
data. Tools and techniques used are given below:

 Bar diagrams-are the most convincing and appealing ways in which statistical results
may be present is through diagrams and graphs. There are numerous ways in which
data can be graphically represented. Bar diagrams are commonly used for data analysis.
There are different types of bar diagrams. Those used by the researcher as follows:

 Sub divided bar diagrams: these diagrams are used to represent various parts of
the whole. While constructing such a diagram, the various competences in each
bar should be In the same order. To distinguish between the different
components, it is useful to use different shades of colors. Index or key should
begiven explaining these differences.

 Multiple bar diagrams: in a multiple bar diagrams two or more sets of

interrelated data are represented. Since more than one phenomenon is
represented, different shades, colours, dots or crossings are used to distinguish

66
 between the bars. Wherever the comparison between two or more related
variables is made, multiple bar diagrams are preferred

DATA ANALYSIS
The following tables and data shows the result of the analysis done by the researcher from the
data collected. Analysis is done by using the tools and techniques explained previously.

TABLE OF ANALYSIS OF THE RECEIPTS OF APPLICATION

Year Application Application Application Application

received no received amount sanctioned no sanctioned
amount
2017-18 749 78491 669 72493
2018-19 957 174054 885 164495
2019-20 2458 316541 2111 165788
2020-21 4391 532203 4192 414649
2021-22 5786 670921 5497 287679

CHART SHOWING ANALYSIS OF THE RECEIPTS OF APPLICATION

67
 ANALYSIS OF THE RECEIPTS OF APPLICATION
700000
600000
500000
400000
300000
200000
100000
0
application application application application
received no received amount sanctioned no sanctioned
amount
2017-18 749 78491 669 72493
2018-19 957 174054 885 164495
2019-20 2458 316541 2111 165788
2020-2021 4391 532203 4192 414649
2021-22 5786 670921 5497 287679

From the above table and chart it is seen that the number of applications received each year
from 2016-2017 has been shown increasing trend as well as the loan amount’s requirement fell
significantly from 2016 to 2021 after which the loan requirement has tremendously increased.
Highest number of applications received and the highest amount sanctioned is in the year 2020-
2021

TABLE OF ANALYSIS OF DISBURSEMENTS BY THE FIRM

Year Application Application Application Application Disbursement

received no received sanctioned no sanctioned amount
amount amount

68
 2017-18 749 78491 669 72493 60023
2018-19 957 174054 885 164495 81579
2019-20 2458 316541 2111 165788 144615
2020-21 4391 532203 4192 414649 370921
2021-22 5786 670921 5497 287679 217520

CHART SHOWING ANALYSIS OF DISBURSEMENTS BY THE FIRM

ANALYSIS OF THE DISBURSEMENTS BY THE FIRM

700000
600000
500000
400000
300000
200000
100000
0
application application application application disbursement
received no received sanctioned no sanctioned amount
amount amount
2017-18 749 957 2458 4391 5786
2018-19 78491 174054 316541 532203 670921
2019-20 669 885 2111 4192 5497
2020-21 72493 164495 165788 414649 287679
2021-22 60023 81579 144615 370921 217520

The amount of disbursements made during 2017-18 to 2021-22 shows it increasing trend in
loan disbursals. The highest amount disbursed is during 2021-22. KFC has increased disbursals
amount significantly after the 2017-18 .

69
 PERCENTAGE OF RECOVERY TO DISBURSMENT

Year Disbursement Recovery Percentage Of

RecoveryTo
Disbursement

2017-18 60023 94467 157.38 %

2018-19 81579 90000 110.32 %
2019-20 144615 108209 74.82 %
2020-21 370921 285129 76.87 %
2021-22 217520 243047 111.73 %

CHART SHOWING COMPARISION OF RECOVERY AND DISBURSMENT

COMPARISION OF RECOVERY AND DISBURSMENT

400000 370921
350000

300000 285129
243047
250000 217520
200000
144615
150000
108209
94467
100000 8157990000
60023
50000

0
2017-18 2018-19 2019-20 2020-21 2021-22

Disbursement Recovery

KFC disburses almost 70% amount of loan requirement. The recovery of the same is a hefty
task for KFC because each year more loans are sanctioned and more amounts are dispersed.

70
By looking at the pattern of the percentage of recovery to disbursements shows that a
tremendous effort from KFC which yielded 204 percentage recovery after which the recovery
percentage shows a steep declining trend. This means that each year KFC has to borrow more
funds. The recovery of an year also includes the disbursals from previous years. From the about
table can understand that the recovery efforts have not yielded much of a success

ANALYSIS OF BORROWINGS TO LOANS AND ADVANCES

YEAR BORROWINGS LOANS AND RATIO OF

(in lakhs) ADVANCES BORROWINGS TO
(in lakhs) LOANS AND
ADVANCES
2017-18 216626.54 245179.02 0.88
2018-19 226399.15 268401.01 0.84
2019-20 302798.38 335190.04 0.90
2020-21 426918.02 462112.51 0.92
2021-22 430886.71 475071.41 0.90

CHART SHOWING RELATION OF BORROWINGS AND LOANS &ADVANCES

Chart showing relation of borrowingsand loans &

advances

500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
2017-18 2018-19 2019-20 2020-21 2021-22

BORROWINGS LOANS AND ADVANCES

71
ANALYSIS OF INTEREST RECEIVABLES ON LOANS AND ADVANCESOF THE
COMPANY

INTEREST ON PERCENTAGE OF
LOANS AND INTEREST ON
ADVANCES LOANS AND
ADVANCES
36557 14.91
40475 15.08
38694 11.54
45988 10.01
48508 10.21

CHART SHOWING INTEREST RECEIVABLES ON LOANS AND ADVANCES OF THE

COMPANY

INTEREST RECEIVABLES ON LOANS AND

ADVANCES OF THE COMPANY

500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
2017-18 2018-19 2019-20 2020-21 2021-22

LOANS AND ADVANCES INTEREST ON LOANS AND ADVANCES

72
 INTEREST RECEIVABLES ON LOANS AND
ADVANCES OF THE COMPANY

500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
2017-18 2018-19 2019-20 2020-21 2021-22

LOANS AND ADVANCES INTEREST ON LOANS AND ADVANCES

From the analysis of the above table and chart the loans and advances given by the corporation
goes on increasing. The highest amount of interest collections was in the year 2018-19 which
constituted 15.08% of interest collections as to loans and advances in the same year and the
highest percentage of interest collected in 2018-19. For the past 5 years an average of 15.33%
is the interest collections each year. The highest amount of loans and advances given out by
the company was in the year 2020-21 which amounts to 475071.41 lakhs. The performance of
KFC in terms of interest collections has not been that much satisfactory when compared to the
amount of loans and advances given out each year.

PERCENTAGE OF BAD AND DOUBTFUL DEBTS TO LOANS AND ADVANCES

YEAR LOANS AND BAD AND PERCENTAGE

ADVANCES DOUBTFUL BAD AND
DEBTS DOUBTFUL
DEBTS TO LOANS
AND ADVANCES

73
 2017-18 245179.02
2018-19 268401.01
2019-20 335190.04
2020-21 462112.51
2021-22 475071.41

The percentage of bad and doubtful debts of sanctioned loans and advances showing
decreasing tendency. The percentage of bad and doubtful debts comes down every financial
year. The average percentage of bad and doubtful debts is 18.58 percentages. The highest
percentage was in the year 2006-07. The lowest was in the year 2010-11. In the last three years
percentage of bad and doubtful debts goes decreasing. It means that KFC take lot of effort to
collect the debts

ANALYSIS OF LOANS& ADVANCES AND NPA OF THE COMPANY

YEAR LOANS AND PERCENTAGE

ADVANCES NPA

2017-18 245179.02 2.03 %

2018-19 268401.01 1.82 %
2019-20 335190.04 1.45 %
2020-21 462112.51 1.48 %
2021-22 475071.41 1.28 %

74
 ANALYSIS OF PROFITABILITY

YEAR NET PROFIT

2017-18 1504
2018-19 2665
2019-20 3007
2020-21 1283
2021-22 3501

CHART SHOWING ANALYSIS OF NET PROFIT

ANALYSIS OF NET PROFIT

4000
3500
3000
2500
2000
1500
1000
500
0
2017-18 2018-19 2019-20 2020-21 2021-22

NET PROFIT

A crucial part of an organisation is the profit making capacity. KFC is a non banking financial
company so profit making is difficult task. For the last years the company reported profits
totalling to almost 12 crore. This was on account of increasing amounts receivables in the
company. The profitability of the company in the year 2018-19 and followed by 3007 lakh

75
profits in the year 2019-20 and the company earned a profit of 3501 crore in the current
financial year 2021-22.

5.2 RATIO ANALYSIS

The Balance Sheet and the Statement of Income are essential, but they are only the starting
point for successful financial management. Apply Ratio Analysis to Financial Statements to
analyze the success, failure, and progress of your business.

Ratio Analysis enables the business owner/manager to spot trends in a business and to compare
its performance and condition with the average performance of similar businesses in the same
industry. To do this compare your ratios with the average of businesses similar to yours and
compare your own ratios for several successive years, watching especially for any un
favourable trends that may be starting. Ratio analysis may provide the all-important early
warning indications that allow you to solve your business problems before your business is
destroyed by them.

Balance Sheet Ratio Analysis

Important Balance Sheet Ratios measure liquidity and solvency (a business's ability to pay its
bills as they come due) and leverage (the extent to which the business is dependent on creditors'
funding). They include the following ratios:

Liquidity Ratios

These ratios indicate the ease of turning assets into cash. They include the Current Ratio, Quick
Ratio, and Working Capital.

Current Ratios

The Current Ratio is one of the best known measures of financial strength. It is figured as
shown below:

Current Ratio = Total Current Assets / Total Current Liabilities

76
The main question this ratio addresses is: "Does your business have enough current assets to
meet the payment schedule of its current debts with a margin of safety for possible losses in
current assets, such as inventory shrinkage or collectable accounts? "A generally acceptable
current ratio is 2 to 1. But whether or not a specific ratio is satisfactory depends on the nature
of the business and the characteristics of its current assets and liabilities. The minimum
acceptable current ratio is obviously 1:1, but thatrelationship is usually playing it too close for
comfort.

If you feel your business's current ratio is too low, you may be able to raise it by:

 Paying some debts.

 Increasing your current assets from loans or other borrowings with a maturityof more
than one year.
 Converting non-current assets into current assets.
 Increasing your current assets from new equity contributions.
 Putting profits back into the business.

Quick Ratios

The Quick Ratio is sometimes called the "acid-test" ratio and is one of the best measures of
liquidity. It is figured as shown below:

Quick Ratio = Cash + Government Securities + Receivables / Total Current Liabilities

The Quick Ratio is a much more exacting measure than the Current Ratio. By excluding
inventories, it concentrates on the really liquid assets, with value that is fairly certain. It helps
answer the question: "If all sales revenues should disappear, could my business meet its current
obligations with the readily convertible `quick' funds on hand? "

An acid-test of 1:1 is considered satisfactory unless the majority of your "quick assets" are in
accounts receivable, and the pattern of accounts receivable collection lags behind the schedule
for paying current liabilities

77
Working Capital

Working Capital is more a measure of cash flow than a ratio. The result of this calculation
must be a positive number. It is calculated as shown below:

Working Capital = Total Current Assets - Total Current Liabilities

Bankers look at Net Working Capital over time to determine a company's ability to weather
financial crises. Loans are often tied to minimum working capital requirements.

A general observation about these three Liquidity Ratios is that the higher they are the better,
especially if you are relying to any significant extent on creditor money to finance assets.

Leverage Ratio

This Debt/Worth or Leverage Ratio indicates the extent to which the business is reliant on debt
financing (creditor money versus owner's equity):

Debt/Worth Ratio = Total Liabilities / Net Worth

Generally, the higher this ratio, the more risky a creditor will perceive its exposure inyour
business, making it correspondingly harder to obtain credit.

Income Statement Ratio Analysis

Return on Assets Ratio

This measures how efficiently profits are being generated from the assets employed in the
business when compared with the ratios of firms in a similar business. A low ratio in
comparison with industry averages indicates an inefficient use of business assets. The Return
on Assets Ratio is calculated as follows:

Return on Assets = Net Profit Before Tax / Total Assets

Return on Investment (ROI) Ratio

78
The ROI is perhaps the most important ratio of all. It is the percentage of return on funds
invested in the business by its owners. In short, this ratio tells the owner whether or not all the
effort put into the business has been worthwhile. If the ROI is less than the rate of return on an
alternative, risk-free investment such as a bank savings account, the owner may be wiser to
sell the company, put the money in such a savings instrument, and avoid the daily struggles of
small business management. The ROI is calculated as follows:

Return on Investment = Net Profit before Tax / Net Worth

These Liquidity, Leverage, Profitability, and Management Ratios allow the businessowner to
identify trends in a business and to compare its progress with the performance of others through
data published by various sources. The owner may thus determine the business's relative
strengths and weaknesses.

DATA ANALYSIS

TABLE SHOWING CURRENT RATIO OF KFC FOR THE PAST 5 YEARS

YEAR CURRENT ASSET CURRENT RATIO= CURRENT

LIABILITY ASSET/CURRENT
LIABILITY
2017-18 72069.85 55153.74 1.30
2018-19 81751.44 569318.93 0.14
2019-20 193055.72 127733.99 1.51
2020-21 135963.39 76410.45 1.77
2021-22 217823.15 380073.08 0.57

ANALYSIS

79
The Higher the ratio of working capital (current assets-current liabilities), the higher will be
the liquidity of the business. Thus working capital can be considered as the measure of
liquidity.

The current ratio was 1.30 in the year 2017-08, which was below ideal. It decrease to 0.14 in
2018-19.it was 1.51 in 2019-20. The ratio was 1.77 in 2020-21 which was a great increase and
highest among the 5 years and was also not a comfortable ratio and again decreased to 0.57 in
2021-22 financial year.

As mentioned above current ratio is used to measure the liquidity position of the concern and
thus reflects the short term solvency of the concern.

INTERPRETATION

 The conclusion drawn only on the basis of current ratio is illusory.

 In the year 2006-2007, the concern has a good liquidity position which was slightly
above the ideal.
 Compared to 2006-07, the ratio shows a decline from 1.60 to 0.79 .In the balance sheet
of KFC it shows that overall current assets and overall current liability also increases.
But increase in current liability is more than increase in current assets that's why the
current ratio increases even though there is increase in current assets. Current liability
increases in the year 2007-08.
 In the year 2008-09,there is large increase in current assets than current liability when
compared to the previous years. That might be the reason behind increase in current
ratio in the year 2008-09 The financial restructuring which took in the year 2008-09
where the company removedRs.105 crores of bad debt from its accounts. Which
resulted in the increasing of current ratio The current ratio was low in the last two year
than that of2008-09 .This might be due to decrease in cash or bank balances of that
years when compared to the 2008-09 financial year.

80
 TABLE SHOWING RETURN OF ASSET RATIO OF KFC FOR THE PAST 5 YEARS

YEAR NET PROFIT TOTAL ASSET RATIO

BEFORE TAX
2017-18 1,503.79 2,81,492.90 0.005
2018-19 2,664.99 2,94,994.11 0.009
2019-20 3,006.66 3,86,040.37 0.007
2020-21 1,282.99 5,34,178.97 0.002
2021-22 3,501.06 5,66,408.65 0.006

ANALYSIS

The return of asset ratio was 0.005 in the year 2017-18. It became 0.009 in the next year. This
decreases to 0.007 in 2019-20. In 2020-21 it come down to 0.002. In the year2021-22 the ratio
increased to 0.006

INTERPRETATION

Here in the balance sheet of KFC it is showed clearly that the amount of return of asset to the
total asset shows increasing tendency in the last two years. It is highest in the year 0.009 and
lowest in the year 2020-21. As this ratio adds significance in case of a manufacturing concern,
it is not that important in case of a service industry.

This measures how efficiently profits are being generated from the assets employed in the
business. A low ratio indicates an inefficient use of business assets.

TABLE SHOWING RETURN OF INVESTMENT OF KFC FOR THEPAST 5 YEARS

YEAR NET PROFIT NET WORTH RATIO

BEFORE TAX

81
 2017-18 1,503.79 44,108.34 0.03
2018-19 2,664.99 45,741.34 0.05
2019-20 3,006.66 58474.50 0.05
2020-21 1,282.99 67834.76 0.01
2021-22 3,501.06 69402.63 0.05

ANALYSIS

The return of investment ratio was 0.03 in the year 2017-18.It became 0.05 in the next 2 year.
This decreases to 0.01 in 2020-21. In 2021-22 it come up to 0.5.

INTERPRETATION

Here in the balance sheet of KFC it is showed clearly that the amount of return of asset to the
total asset shows increasing tendency in the last two years. It is highest in the years 0.05 and
lowest in the year 2020-21.

The ROI is perhaps the most important ratio of all. It is the percentage of return on funds
invested in the business by its owners. In short, this ratio tells the owner whether or not all the
effort put into the business has been worthwhile.

If the ROI is less than the rate of return on an alternative, risk-free investment such a sa bank
savings account, the owner may be wiser to sell the company, put the money in such a savings
instrument, and avoid the daily struggles of small business management

82
5.3 CASH FLOW STATEMENT

Cash flow is the movement of money into or out of a business, project, or financial product. It
is usually measured during a specified, finite period of time. Measurement of cash flow can be
used for calculating other parameters that give information on a company's value and situation.
Cash flow can e.g. be used for calculating parameters:

 to determine a project's rate of return or value. The time of cash flows into and out of
projects are used as inputs in financial models such as internal rate of return and net
present value.
 to determine problems with a business's liquidity. Being profitable does not necessarily
mean being liquid. A company can fail because of a shortage of cash even while
profitable.
 as an alternative measure of a business's profits when it is believed that accrual
accounting concepts do not represent economic realities. For example, a company may
be notionally profitable but generating little operational cash (as may be the case for a
company that barters its products rather than selling for cash). In such a case, the
company may be deriving additional operating cash by issuing shares or raising
additional debt finance.
 cash flow can be used to evaluate the 'quality' of income generated by accrual
accounting. When net income is composed of large non-cash items it is considered low
quality.
 to evaluate the risks within a financial product, e.g. matching cash requirements,
evaluating default risk, re-investment requirements, etc.

Cash flow is a generic term used differently depending on the context. It may be
defined by users for their own purposes. It can refer to actual past flows or projected
future flows. It can refer to the total of all flows involved or a subset of those flows.
Subset terms include net cash flow, operating cash flow and free cash flow.

83
SL. PARTICULARS 2020-21 2021-22
NO
1 CASH FLOW FROM
OPERATING ACTIVITIES
Net profit before taxes 1,282.98 3,006.67
Interest received on Fixed (2,083.65)
Deposits (1,110.68)
Depreciation on fixed assets 283.12 199.08
Provision for Non Performing 1,618.13
Assets/Other Assets -
Share Issue Expenses 1.02 -
Premium on Forward Contract (297.67) -
Interest and other costs of Non- 9,690.24
SLR Bond 9,405.33
Adjustment for changes in
operating assets and liabilities
Increase in Loans and Advances (1,26,922.46) (23,382.10)
Increase in borrowings from 1,34,802.16
Banks 56,549.21
Decrease in Other Current assets 39,599.90 (41,936.37)
Decrease in Other Non-Current (51,439.88)
assets (681.25)
Increase in Current liabilities 13,715.03 841.65
Increase in Other Non Current 129.35
Liabilities (64.74)
Less: Income tax paid (700.00) (2,115.00)
Net cash from operating activities 19,678.27 711.80

84
2 CASH FLOW FROM
INVESTING ACTIVITIES
Purchase of fixed assets (154.20) (644.66)
Sale of Fixed Assets 4.16 -
Investment in KIFM Ltd (1.02) -
Net cash used in investing (151.06)
activities (644.66)
3 CASH FLOW FROM
FINANCING ACTIVITIES
Money received against Share 9,000.00
Capital 11,000.00
Share Issue Expenses (1.02) -
Issue of Non SLR Bond 25,000.00 25,000.00
Redemption of Non-SLR Bond (35,682.50) (5,150.00)
Interest and other costs of Non- (0.10)
SLR Bond (9,405.33)
Interest Received on Fixed 2,083.65
Deposits 1,110.68
Net Investment in NCD (5,993.74) -
Proceeds from NCD 709.09 -
Net Deposit with Banks (12,251.54) (5,600.00)
Dividend and Dividend Tax paid - (136.53)
Net cash used in financing (17,136.16)
activities 16,818.82
Net increase in cash and cash (7,299.09)
equivalents 16,885.97
Cash and cash equivalents at the 17,375.67
beginning of the year 489.70
Cash and cash equivalents at 10,076.58
the end of the year 17,375.67

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From the analysis of cash flow statements of 2020-21 to 2021-22 it shows that there
has been a reasonable increase in the interest and revenue receipts to the extent of 61%.
Which shows operational efficiency of KFC has been improved. The next year a
nominal amount increase in the total amount, it shows operational efficiency of KFC
come down comparing to the previous year. It is the interest received from investing
activities has decreased in 2021-22 years. The net cash from financing activities
increased in the financial year 2021-22. The cash or cash equivalent at the end of
financial year goes on increasing

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CHAPTER 6

FINDINGS

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6.1 MAJOR FINDINGS

After the analysis of the data, research has identified the following flaws with the credit
management of the institution.

 The researcher found that the percentage of loan sanction increased and the
application sanctioned amount is increased. the number of applications has also
increased by almost during the project period. This implies that the company
has been giving out loan amounts of higher denomination.

 The major portion of recovery amount is the principal outstanding, the principle
outstanding increased and the total interest outstanding increased. The total
recovery amount increased during the project period.

 During the project period the borrowing of KFC is increased and the amount of
loans and advances given by the KFC is increased. This implies KFC raise fund
for lending other than the borrowings from outside agencies.

 The pattern of the percentage of recovery to disbursements shows that there was
a tremendous effort from KFC which help to increase percentage of recovery.

 The percentage of bad and doubtful debts to the loans and advances decreased.
This implies KFC made tremendous effort to avoid the bad debts

 NPA percent has lowered to almost 1.88

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 The trend of Loans and Advances shows an increasing trend in extending credit
by KFC which in turn reflects in increased borrowings by KFC from external
sources.

 The return of investment ratio and the return of asset ratio shows inconsistency
because of inconsistency in profitability and revenue

 The analysis of cash flow statements shows that interest payments have
increased but the receipt of interests have not made much of an improvement.

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CHAPTER 7

DISCUSSION

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7.1 DISCUSSION

Credit is a tool that allows a corporation to borrow money from organizations to finance its
operations, or to loan money to customers. There are many credit management problems a
corporation may face including having too much debt, not paying debt and not collecting debt.
A corporation must implement strategies to manage its credit effectively, or it could face
financial and operational problems including downsizing or closure.

Incurring huge expenses on legal and collection procedures, not receiving payments on time,
incurring huge bad debts, difficulties in meeting operational expenses and unable to meet the
interest on borrowings of the firm, dissatisfaction of customers etc. are the problems identified
with the existing system of the institution. The main problem lies in the fact that by the time
the firm reacts to those mishaps it will be too late and hence the firm has to bear huge bad debts
and losses at the end.

To develop a new system, the working pattern of the existing system was studied and this is
pictorially represented in figure 6.1. In the existing system, institutions and since the loans
without giving much importance to project appraisal or industry study. After the loans have
been dispersed the institution waits till the repayment of the first installment and by the time
the default in payment occurs the debtors turn over period might have gone above six months
when the institution notices the default in payment, he takes another 20 days to notify the
customer to make the repayment within a month. Again if the repayment is not done within the
specified time limit, the institution takes legal action against the customer. This result either in
the collection of the installment or may be added to the bad debts. Such a system results in
time loss, increasing expenses on receivables and also bad debts.

To do away with these flaws, it is almost necessary that a new efficient system be introduced
in the firm. The researcher has proposed a new system of receivables management for the
institution and this is pictorially represented in figure 6.2. The important point here is that the
new system starts working right from the first time itself when applications for loans and
advances received. The firm first scrutinises the applications and contacts at the study on the
projects of the clients. Based on this, decisions are made as whether to sanction it or not; and

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if sanctioned how much is to be sanctioned. Disbursements are made accordingly to the
different units (SSI and non-SSI units. As soon as the disbursements are made the well-
equipped follow-up system starts working, right from the first month and then consecutively.
The customers are provided with awareness on their projects (technical knowledge and
innovation) and on how to meet the needs of the credit provisions provided to them. Efforts
are made to study the problem of the clients and accordingly changes are made in the
repayment procedures, such as extension of credit period, reduction in interest rates etc. This
can help the customers in making prompt payments. Providing festival discounts also can
encourage the customers. Following the above steps and making calculative reductions in legal
and collection costs will help the firm in increasing savings. All these will lead to timely
collections from the customers.

This new system proposed by the researcher will bring tremendous results to the institution
and also will help to reap profits

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FIGURE 6.1

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94
7.2 EXPLANATION OF THE NEW PROPOSED SYSTEM

New Financial services offered by other financing companies can be integrated into the system
they are Factoring and Credit Insurance.

7.2.1 FACTORING

Factoring is a financial transaction whereby a business job sells its accounts

receivable (i.e., invoices) to a third party (called a factor) at a discount in exchange for
immediate money with which to finance continued business. Factoring differs from a bank loan
in three main ways. First, the emphasis is on the value of the receivables (essentially a financial
asset), not the firm’s credit worthiness. Secondly, factoring is not a loan – it is the purchase of
a financial asset (the receivable). Finally, a bank loan involves two parties whereas factoring
involves three.

It is different from forfaiting only in the sense that forfaiting is a transactionbased operation
involving exporters in which the firm sells one of its transactions, while factoring is a Financial
Transaction that involves the Sale of any portion of the firm's Receivables.

Factoring is a word often misused synonymously with invoice discounting - factoring is the
sale of receivables, whereas invoice discounting is borrowing where the receivable is used as
collateral.

The three parties directly involved are: the one who sells the receivable, the debtor, and the
factor. The receivable is essentially a financial asset associated with the debtor's liability to pay
money owed to the seller (usually for work performed or goods sold). The seller then sells one
or more of its invoices (the receivables) at a discount to the third party, the specialized financial
organization (aka the factor), to obtain cash. The sale of the receivables essentially transfers
ownership of the receivables to the factor, indicating the factor obtains all of the rights and
risks associated with the receivables. Accordingly, the factor obtains the right to receive the
payments made by the debtor for the invoice amount and must bear the loss if the debtor does

95
not pay the invoice amount. Usually, the account debtor is notified of the sale of the receivable,
and the factor bills the debtor and makes all collections. Critical to the factoring transaction,
the seller should never collect the payments made by the account debtor, otherwise the seller
could potentially risk further advances from the factor.

There are three principal parts to the factoring transaction;

6.1 The advance, a percentage of the invoice face value that is paid to the seller upon
submission,
6.2 The reserve, the remainder of the total invoice amount held until the payment by the
account debtor is made and
6.3 The fee, the cost associated with the transaction which is deducted from the reserve
prior to it being paid back the seller.

Sometimes the factor charges the seller a service charge, as well as interest based on how long
the factor must wait to receive payments from the debtor. The factor also estimates the amount
that may not be collected due to non-payment, and makes accommodation for this when
determining the amount that will be given to the seller. The factor's overall profit is the
difference between the price it paid for the invoice and the money received from the debtor,
less the amount lost due to non-payment.

(A) Different types of Factoring

o Disclosed and Undisclosed

o Recourse and Non-recourse

A single factoring company may not offer all these services.

Disclosed

In disclosed factoring client's customers are notified of the factoring agreement. Disclosed type
can either be recourse or non-recourse

Undisclosed

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In undisclosed factoring, client's customers are not notified of the factoring arrangement. Sales
ledger administration and collection of debts are undertaken by the client himself. Client has
to pay the amount to the factor irrespective of whether customer has paid or not. But in
disclosed type factor may or may not be responsible for the collection of debts depending on
whether it is recourse or non-recourse.

Recourse factoring

In recourse factoring, client undertakes to collect the debts from the customer. If the customer
doesn’t pay the amount on maturity, factor will recover the amount from the client. This is the
most common type of factoring. Recourse factoring is offered at a lower interest rate since the
risk by the factor is low. Balance amount is paid to client when the customer pays the factor.

Non-recourse factoring

In non-recourse factoring, factor undertakes to collect the debts from the customer. Balance
amount is paid to client at the end of the credit period or when the customer pays the factor
whichever comes first. The advantage of non-recourse factoring is that continuous factoring
will eliminate the need for credit and collection departments in the organization.

Factoring Companies in India

 Canbank Factors Limited

 SBI Factors and Commercial Services Pvt. Ltd
 The Hongkong and Shanghai Banking Corporation Ltd
 Foremost Factors Limited
 Global Trade Finance Limited
 Export Credit Guarantee Corporation of India Ltd
 Citibank NA, India
 Small Industries Development Bank of India (SIDBI)
 Standard Chartered Ban

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7.2.2 CREDIT INSURANCE

Credit insurance is a term used to describe both business credit insurance (a.k.a. trade credit
insurance) and consumer credit insurance, e.g., credit life insurance, credit disability insurance
(a.k.a. credit accident and health insurance), and credit unemployment insurance,

The easy way to differentiate between these two types of insurance is:

 Business credit insurance is credit insurance that businesses purchase to insure payment
of credit extended by the business (their accounts receivable).
 Consumer credit insurance is credit insurance that consumers purchase to insure
payment of credit extended to the consumer (insurance pays lender or finance
company).

Credit insurance or trade credit insurance (also known as business credit insurance) is an
insurance policy and risk management product that covers the payment risk resulting from the
delivery of goods or services. Trade credit insurance usually covers a portfolio of buyers and
pays an agreed percentage of an invoice or receivable that remains unpaid as a result of
protracted default, insolvency or bankruptcy. Trade credit insurance is purchased by business
entities to insure their accounts receivable from loss due to the insolvency of the debtors. This
product is not available to individuals.

The costs (called a "premium") for this are usually charged monthly, and are calculated as a
percentage of sales of that month or as a percentage of all outstanding receivables.

Trade credit insurance insures the payment risk of companies, not of individuals. Policy holders
require a credit limit on each of their buyers for the sales to that buyer to be insured. The
premium rate is usually low and reflects the average credit risk of the insured portfolio of
buyers.

In addition, credit insurance can also cover single transactions or trade with only one buyer.

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Credit insurance takes care of the risk of payment of the organizations and not of the
individuals. To get insured, the holders of the policy should have a credit limit on each of the
buyers. For Credit insurance, the rate of premium is kept low. It combines both Credit Life
Insurance and Trade Credit Insurance.

Credit insurance involves trade with a single buyer. The concept of this insurance was first
incepted in the nineteenth century. During the time of first and second World Wars, the idea
was conceived in the Western Europe. The various companies that were developed during this
time offered credit insurance to the individuals.

If the borrower of the loan dies or gets disabled then the insurance will pay the loan off. Trade
Credit Insurance covers the risk of the payment during the time of delivery of services and
goods. Private individuals are not provided with the facilities of this product.

Premium is charged monthly against the issuance of the credit insurance. This insurance is a
business driven by broker, who helps in the creation of market competition among the policy
holders for better premium and policy wordings.

Credit Insurance is the best way to manage credit risk in a cost effective way for any
organization. It provides financial assistance during the time of any credit risks and overdue
payments during domestic trade or exports. Before granting covers for the insurance various
terms and conditions need to be fulfilled.

Credit insurance is one of the important types of insurance that covers risk against the
following:

 Trade Receivables
 Portfolio
 Business-to-Business Transactions
 Short Term Credit Risk

Credit insurance offers a number of benefits, which are available in the form of

 Risk Mitigation

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 Efficient collection of debts
 Complements credit management of the seller
 Enables development of new markets against protection provided
 Expert since buyers are analyzed for credit worthiness

The major Credit Insurance providers in India are ICICI Lombard and The New India
Assurance.

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7.3 NEW MODEL

KFC has to create a special task force or specialised project appraisal team whom are well
equipped with the latest analysing technologies/softwares, expert panel from different
industries, dedicated team to find out the latest innovations in the industry etc. This specialised
project appraisal team has to deeply investigate into the projects profitability and scope factors
in the existing industry. The team has to thoroughly study the future scope for this project and
also make sure that the products that the new unit is going to produce will be competitive
enough.

When a loan application comes to KFC the same has to be forwarded to this task force who
will analyse the project and will give out their suggestions and recommendations on the
received application. Based on a report of this task force the loan approving officer has to set
up a date on which the proposed project’s promoter will be called upon and will be discussed
with the recommendations of the appraisal committee.

The research also proposes that every month one day should be kept for serving this purpose.
That day the panel should be present to express their views and opinions on that project which
will have to be discussed over and suggestions from industry experts will be sought.

This will ensure that the loans given out from KFC will be profitable business.

If no favourable responses received from the defaulter, a notice in the registered post should
be posted to the defaulter.

Within two weeks, if the defaulter doesn't pay a legal notice should be sent to the defaulter. If
the defaulter makes payment it will go into the collections, otherwise a debt collection agency
should be given the contract of KFC to collect all the debts pertaining to that financial year.

101
Research also proposes integration of factoring and credit insurance into the KFC's receivable
management system.

Factoring is the new service offered by the financial institutions which can be used by KFC to
sell its receivables and thereby receive partial amount of debt to be received and the remaining
amount which will be given to KFC by the factoring company within a stipulated period of
time mentioned in the contract.

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CHAPTER 8

SUGGESTION

103
8.1 SUGGESTION

In light of the analysis and results, the researcher puts forward the following
recommendations:

 The institution is recommended to set up an advanced project appraisal

team which can advise the firm in granting loans to eligible people. The
project appraisal team will also act as a screening process where projects
which have scope and innovativeness will be selected for loan
disbursement. This will help the firm also smoother recovery of the
principal and interest and thereby maintain a smooth flowing in its
operations.

 The researcher also recommends having tie ups with factoring companies
which will ensure that the firm collection of its debts upto 70% success.
Factoring is also a method to collect those bad debts which otherwise have
to be written off. As factoring comes at a price which is lesser compared to
the actual debt being written off.

 KFC should cut down on its loan approvals or disbursements for at least
two years and try to recover those debts which are otherwise going to be
written off. Also KFC should rewrite its guidelines on loan policies, which
will ensure that particular types of customers who have credit rating or has
a good past credit record.

104
 Provide motivational credits, by waiving the interests and increasing credit
period, which would help to reduce arrears. Customers who have been
making their payments on time should also be given relaxation in terms of
interest payments or some lowered percentage of interest for the next loan
he's going to take.

 KFC should also try to market its financial services for people who are very
relevant in industry or business which are very successful and are growing.

 Innovation project have to encouraged  Work in progress has to be

thoroughly monitored to ensure no misleading of funds occurs.

 A bench-marking strategy needs to be adopted.

 NRIs have the capacity to pay the allotted credits than the general public.
While sanctioning and recovering the loans, no discount offers should be
provided to them.

 KFC should also try to advertise more and make the general public are
aware of the good financial services provided by KFC so that KFC will
have more loan applications from the public from its screening can be done

105
 so as to 80 maintain a good level of business while keeping the bad debts
at a minimal percentage.

 The legal and collection department should be strengthened

106
8.2 CONCLUSION

The project has been completed within the framework of the objectives of the study. Researcher
has analysed the collected data and this has helped to identify the strengths and merits
prevailing in the existing credit management system of the firm.

The firm is leading profitably, through the new system. By the new system the firm can reduce
its expenses on receivables, motivate customers to make prompt payments, get timely
collections, reduce bad debts and losses can make its operating needs. The new system can
improve the efficiency of credit management by almost 70%. Researcher has also given his
findings and recommendations which substantiate the new system

107
REFERENCES

REFFERED TEXTBOOKS

 Joy, O.M.: Introduction to Financial Management (Madras: Institute for Financial

Management and Research, 1978), P.210

 Robert N. Anthony: Management Accounting, Op. Cit., P.291

 Prasanna Chandra: Financial Management, Op. Cit., P.291

 Harry Gross: Financing for Small & Medium sized Business, Op. Cit., P.80

 Joseph L. Wood: Business Finance Hand Book, "Credit & Collection" in Doris Lillian
(Ed.), (New York: Prentice Hall, 1953), P.243

 R.K. Mishra: Problems of Working Capital Op. Cit, P.94

 C.R. Cook: Credit Policies-Impact on Sales & Profit Cost & Management,(Hamilton,
Ontario, Canada, Volume 37, October, 1963, P.387

 Edward T. Curtis: Credit Department Organization & Operations, (New York: American
Management Association Inc., Research Study No. 34, 1959), PP.14-17

 R.J. Chambers: Financing Management (Sydney: The Law Book Co., Ltd.,
1967),PP.273-274

 Harry Gross: Op. Cit., P.84

108
  Martin H. Seiden: The Quality of Trade Credit, (New York: National Bureau of
Economic Research, 1964), P.39

 Beckman, T.N.: Op. Cit., P.208

 Agarwal, N.K.: Management of Working Capital, Op. Cit., P.54

 James C. Van Home: Op. Cit., PP.116-117

 I.M. Pandey: Op. Cit., P.381

 R.K. Mishra: Op. Cit., P.99

 Hubert H. Humphrey (1965-69) Lyndon B. Johnson

 Abilash Viswanathan; Financial Restructuring and Receivables management, P.66

 Rathod Amith K; a study on Gujrath State Financial Corporation, P.21

 Sandeep Arora; financial project report, P.4221 Robert Frost (1874-1963) unpublished
article

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 https://www.business-standard.com/article/economy-policy/credianalysis-3-years-on-alook-
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