29 August National Sports Day - scufhoftp.scufsanthome.com

June 2019

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Shriram City—News Letter - Breeze – 1st AUGUST 2021

AUGUST 2021

MONEY WHEN YOU NEED IT MOST

Nothing is impossible unless nothing is impossible unless you think it is. - paramahansa yogananda

29 August National Sports Day

National Sports Day

is celebrated

on 29 August every year to honour the birthday of

Dhyan Chand a field hockey player.

National Sports Day is also known as

Rashtriya Khel Divas.

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Introduction: Micro Small and Medium Enterprises (MSME) sector is one of

the catalysts of growth for the country’s economy and occupies a key

position in country’s industrial growth and success. It contributes about 8%

of India’s GDP, 45% of manufacturing output, 40% of our country’s export

apart from catering large job market. MSME are rightly called “Growth

engine of Indian economy” and present a significant business opportunity

for NBFCs like us, banks, and other financial institutions. India has

approximately 6.3 crore MSMEs. . Registered micro-enterprises stood at 28

lakh (93%), followed by small enterprises at 1.78 lakh (6%) and midsized

enterprises at 24,657 (1%) as on 28-Jul-2021.

Classification of MSME by RBI in nutshell

RBI, vide its circular dated 02nd

July 2020 reclassified an enterprise as a

Micro, Small or Medium enterprise on the basis of the following criteria,

namely:

(i) A micro enterprise, where the investment in plant and machinery or

equipment does not exceed one crore rupees and turnover does not

exceed five crore rupees;

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(ii) A small enterprise, where the investment in plant and machinery or

equipment does not exceed ten crore rupees and turnover does not

exceed fifty crore rupees; and

(iii) A medium enterprise, where the investment in plant and machinery or

equipment does not exceed fifty crore rupees and turnover does not

exceed two hundred and fifty crore rupees.

Our Position:

We are one of the India's leading NBFCs, incorporated in 1986, a part of

Shriram Group, is providing specialized services in retail & Micro Small &

Medium Enterprise (MSME) lending. Since this is thrust area for our

company, it is suggested that we keep in mind the following points in

pursuing our goal of healthy asset growth in MSME segment. This is

particularly so when we consider that MSME are engaged in wide range of

activities , with low capital base in most of the cases , varied experiences

of the promoters, different holding pattern , technology development etc.

Business people need finance, largely, for the following reasons

1. To increase their stock of raw material or to meet its price fluctuation

2. To meet Overheads

3. To Buy new equipments to add in the production cycle

4. To expand the existing business or add a new line of existing business.

Points to remember while processing SME loans Sourcing

applications

a) Direct or Through DSA / Agent

If it is “Direct”, verify whether the applicant has got any earlier business

connections with SCUF in the form of availing TW / Gold Loan / PL / FW loan

etc. to understand our business experience with the applicant like adhering

repayment schedule, no. of cheque bouncing, settled / closure and

foreclosure status of loan a/c.

b) If it is through DSA / Agent, verify his / her earlier references & such

loan’s repayments.

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“Selection of Borrower” is to follow “direct visit” to applicant’s business place

& to have discussion with the applicant on the following aspects:

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A. Is there any scope to us to lend – satisfying ourselves that applicant

really needs finance to run the business. This largely depends on difference

between volume of purchase and sales figures in rupee terms or difference

between payments and realization in terms of aging in trading period.

B. Age and experience – The applicant should not be more than 50 years

of age and he should have a reasonable years of experience

C. Business knowledge – if the business is already in existence under the

supervision of the applicant or if, by virtue of experience gained else-

where, starts own entity and in such cases, judge applicant’s business skills

and satisfy ourselves about ability & knowledge on understanding the nu-

ances of the trade.

D. Satisfy ourselves about the business model: This relates to our

understanding on his business methods right from sourcing of raw materials

till selling & realization of money.

E. Business monitoring capacity: Satisfying ourselves that the applicant has

direct or complete control over business operations including monitoring

right from stock, Cash, manpower, maintaining books of account, if any,.

The applicant should not entirely depend on others, even to explain his

business or trading methods & expected to have in depth knowledge on

business and adaptability to sail through the changing market scenario.

F. Infrastructure availability: Satisfying ourselves about the ownership of

business place (own or rental or leased), sufficient area to operate, proximity

to market, avenues to market the product/ service, adequate power if the

unit is power dependent, adequate availability of skilled / unskilled man

power, if the business / trade is manpower dependent, transit facilities ..etc.

G. Profit margin: Satisfying & understanding ourselves on applicant’s

reasonable net business earnings after absorbing all business and personal

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expenses. There may be instances where the volume of purchases and sales

would have been huge but the profit margin would have been very

meagre and the applicant has to put in lot of efforts to secure & sustain that

business link which would be risky from our angle. Satisfying ourselves that

business profits gained over a period of time is re-used or ploughed back

into the business in the form of any asset creation or stock or used for

business expansion.

H. Seasonality of the business: If applicant’s business model is seasonal or

very rare or scarce in requirement, we need to risk and zero-in off-season

demand & supply of the product / service while granting loan.

I. Understanding of applicant’s monthly transactions in Credit & Cash

purchases with that of Cash sales & Credit sales which facilitates us to judge

the need & the quantum of loan requirement. The only difference between

cash and credit transactions is the timing of the payment. A cash

transaction is a transaction where payment is settled immediately. On the

other hand, payment for a credit transaction is settled at a later date.

To elaborate on this, understand the Credit period (No. of days or aging)

availed / allowed by the applicant to make and receive payments

between:

1.Cash Purchase and Cash Sales (CP to CS)

2.Cash Purchase and Credit sales (CP to Cr.S)

3.Credit Purchase and Cash Sales (Cr.P to CS)

4.Credit Purchase and Credit Sales (Cr.P to Cr.S)

2

In the first scenario, CP to CS, usually, need for finance may not be there

unless applicant wanted to do more number / volume of transactions /

business to earn more.

In the 2nd

scenario, applicant will have to shell out initially to secure / source

the raw material or finished product and allow credit period (in days) to the

customers to get back payment. In this case, applicant will be in need of

working capital to tide over the difference in days between these two

periods and this will be one of the tools to determine applicant’s working

capital need.

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In the 3rd scenario, applicant gets credit period, (for ex. 15 days / 30 days/

45 days / 60 days) to repay to suppliers whereas able to realize cash within

the credit period. In this case, applicant will be cash rich and may not

require funds.

In the 4th case, the difference in credit period between purchase and sales

is to be understood. Say for ex. If Applicant enjoys 7 days credit in

purchases and gives 15 days credit period to buyers, we need to fund for 7

days “purchase” to applicant. If it is vice-versa, it is to be treated as that of

3rd category of applicant.

J. Availability of financial statements

The main purpose of studying financial statement is to ascertain the

FINANCIAL HEALTH of the applicant’s concern / firm / company. It allows

various interested parties involved in the business like management, poten-

tial investors, lenders, government and other analysts to make an evalua-

tion of the various aspects of applicant’s performance from their point of

view and to show interest towards business development. Maintaining prop-

er books and accounts indicates disciplined way of trading and envisages

business forecast, expansion and change in the line of business activity &

strategy, working pattern, for capital infusion etc. Profit and Loss a/c and

Balance sheet play an important role in any form of business.

P&L and B/S show whether the business is profitably run continuously for a

period of not less than 3 years and also applicant’s “Net Worth” (tangible

and intangible) etc. These two statements largely depict the overall

business trend of the applicant as at the closing date (31st March) of that

particular year. Applying various ratios on Turnover, Profit, Capital, sales and

purchases figures will throw away more lights on the performance of the

business

K. Bank account operations: It is another important tool to judge the level

of accounted business transactions. Normally most of MSME businesses are

reluctant to route their entire transactions through banks and they will be

comfortable to deal in cash. Though most of the Loan applications referred

to us normally fall under this category, we can rely on bank transactions to

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know about applicant’s other liabilities like EMIs to housing, other financiers,

number of cheque bounces etc. to determine applicant’s monthly fixed

commitments and integrity. If applicant maintains current a/c, CC or OD a/

c and declares that all transactions are routed only through bank,

applicant’s 6 month’s average Credit balance may be compared to vali-

date 6 month’s “Sales” figure.

L. Cash flow statement

A cash flow statement is a financial statement that provides aggregate

data regarding all cash inflows into business from its ongoing operations

and also from external sources and also includes all cash outflows that pay

for business & investment activities during a given period. A cash flow

statement is one of the vital financial statements to measure business

strength,

profitability and to prepare a long term business strategy. Cash Flow

Statement, if prepared meticulously and precisely, is more reliable or

dependable than any other financial statements as it displays cash position

of the business. By virtue of increasing NPA figures, even banks, nowadays,

started giving prominence to preparing and analyzing Cash flow

statements of its borrowers to curtail “performing” asset becoming

“Non-performing”. In the absence of financial statements like Trading, P&L

and Balance Sheet, preparation of Cash flow statement is the best way to

determine the loan component. A simple method to prepare a cash flow

statement is:

1. Arrive monthly business income including income from other sources

like agricultural income, rental or lease income, Royalty, advance

received from suppliers etc.

2. Arrive at monthly business expenses including family expenses and

payment to other EMIs

3. The difference between the two, if it is surplus (income > Expenses), we

can, to some extent, conclude that applicant has surplus income to meet

any additional EMI payment and if it is deficit (Income < Expenses), it is to

be concluded that applicant will struggle to meet EMI commitments in

the near future.

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4. Applicant’s stock holding pattern is to be assessed and on an average

2 / 3 months stock value can be fixed as loan component provided,

applicant’s cash flow surplus satisfies or more than our EMI.

5. Debt-to-Income (DTI) – DTI is the measurement of a borrower’s monthly

debt service as a percentage of monthly income. A borrower with a DTI of

36% or less is considered to be of prime credit quality.

6. Debt to service (DTS) - DTS is the measurement of a borrower’s yearly

debt service as a percentage of savings. A borrower with a DTS of 20% or

less is considered to be of prime credit quality.

M. Competition

Understand the level of competition prevalent in the line of business in that

area and also decide on whether the applicant is fit enough to compete in

the trade and be able to face the challenge.

N. Income from other sources

Understand applicant’s other activities other than business and is able to

generate any revenue to the business which will be a needy cushion to

manage the business cycle in a better way provided it should not result in

huge cash flow at a future date. Ex. Agricultural income, Rental income,

co-borrower’s salary income etc.,

O. Succession Plans

Irrespective of the age of the applicant, we need to satisfy ourselves about

the business continuity plan of the applicant, what is the arrangements to

carry on the business in his/ her absence, whether other family members are

also in & know the business etc.,

P. Risks involved:

1. Credit risk: Non Payment of principle and interest as per agreed terms

and diverting the loan amount to other non-business purposes lead to credit

risk.

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2. Operational risk: In adequate system and procedures to arrest the slip-

pages, indiscipline, and mismanagement of funds or accounts are termed

as “Operational risks”.

To mitigate all the risks, it is advisable to insist on adequate insurance cover

apart from collateral security and third party guarantee.

Q. General

1. KYC

2. Market Survey

3. Fixing Geographical limit to deal with

4. How big is your market area

5. Other NBFCs in your location

6. Verification with suppliers

7. Growth Potential

8. Local market feed back

9. Compliance of Statutory / Legal compliances like Pollution control

board approval / FSSAI clearance etc.

10. CIBIL – score card > 500

11. 3 years Income tax returns

12. GST returns

13. Delinquency history – A borrower with a delinquency history of 30

days or less is considered to be of prime credit quality.

14. CAM report- Standardized with built in check points

15. McKenzie report recommendation

16. Field Inspection report by competent person. Due diligence on the

borrower /guarantor /firm is an important process. Market report on the

borrower is critical

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17. SWOT Analysis (Success / Weakness / Opportunities / Threats) of

business

18. Security

a. Legal opinion

b. Engineer’s valuation report

c. Knowing the Topography of security

d. Make own assessment of realistic market value of se

curity to decide on LTV – not to depend entirely on

valuation report

R. Applicants who are in Negative list:

1. Politicians and people have relative as Politicians

2. Collection agents / Verification agents and their employees

3. Securities service

4. Class IV Govt. employees like Peon, Sweepers, Helpers and ward

boy

5. Lawyers / Policemen including RPF / CRPF and BSF

6. Journalists & Employees from Media Industry

7. Owners and employees of Chit Funds / Nidhi companies

8. Private Financiers

9. Film Industry Professionals

10. Small time cable operators

11. Multilevel marketing agents

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12. DSA owners and his employees

13. Travel Agents NOT approved by IATA

14. Manufacturers / Dealers of Liquor

S. Complete note on assessment

T. Recommendation of loan with complete set of documents with proper

prior approval for any deviation from competent authority

U. Compliance of sanction terms

V. Make a periodical post sanction visit to business place/ talking to the

borrower to take stock of business & recovery prospects.

W. Assessing and Informing recovery strains, if noticed, to higher-ups for

close monitoring of follow-up measures.

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कुछ नशा तिरंगे की आन का है ! \\

कुछ नशा मातृभूमम की शान का है !!

हम लहराएंगे हर जगह ये तिरंगा !

नशा ये महंदुस्तान की शान है !!

जय हिंद जय भारत

INDEPENDENCE DAY PICTURES FROM

UTTARPRADESH ZONAL OFFICE.

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TOKYO OLYMPICS 2020

The much awaited Tokyo Olympics 2020 was successfully conducted in Tokyo, Japan between 23rd July and 8th August amidst lot of uncertainties on account of COVID 19. The magnificent international sporting event was to have been conducted last year itself but had to be postponed to the current year.

Highlights

Number of nations participated ----205

Number of events ---339 in 33 sports

Top performer in terms of achievement ---------- USA

Medal Position – Top 5 performing countries

Where does India stand in TOKYO Olympics 2020 We are extremely happy to record the impressive performance of our Indian team who were able to secure 7 medals including 1 gold which is an improvement over London Olympics 2012 where we could secure 6 medals. India ranked 48 in the order of medal position. Detailed below are the achievements of the individuals/team

Rank Country Gold Silver Bonze Total

1 USA 39 41 33 113

2 China 38 32 18 88

3 Japan 27 14 17 58

4 GB 22 21 22 65

5 ROC 20 28 23 71

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No Name Medal Sport/Event Remarks

1 Sri Neeraj Chopra Gold Javeline throw He is just 23 and is the first to win a medal in athletics since the country started participating in 1920 Olympics in Antwerp. Great achievement indeed. He is in the rolls of Indian army.

2 Ms Mirabhai Chanu

Silver Weight lifting

She participated in women 49 category and secured the coveted position. She has won medals in commonwealth games as well. She is a Padma Shri awardee.

3 Sri RaviKumar Dahiya

Silver Wrestling He participated in Men 57kg category free style and won the laurel amidst stiff competition. Hard work and determination are hall marks of success

4 Ms PV Sindhu Bonze Badminton She could secure the medal with confidence and aggression having lost the semi-final. She is a final example of hard work and dedication. She has secured 2 medals (2016& 2020) so far which is a record. She is Padma Bhushan awardee. Great going

5 Men’s hockey team

Bronze Hockey It is remarkable that the Indian team could fight back and earn their medal after 41years. Hockey used to be Indian favourite game but lost somewhere. It is the sheer practice, enhancing the standard to higher level, team work etc helped us gain the glory today . Let us keep it up

7 Sri Bajrang punia

Bronze Wrestling Men’s 65kgs free style. Again tough competition and challenge yet .He could raise the bar on the d day. He has also secured medals in other world games previously. Consistency is the hall mark of successful sports persons.

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In the final analysis, it is seen that India could improve the medal tally but what is important to remember the preparations and practice made by each sports person particularly in the uncertain COVID times. It is a great achievement and some of them are from humble backgrounds. We should also recognize the efforts made by other sports persons who have lost by a whisker, as winning or losing is part of the game. They have put in their best efforts, reached various stages yet lost out to somebody who might have put in superior performance on the day of reckoning. We congratulate the losers as well. It is to be recognized that winners would have received tremendous support from the family , friends, society, government, coach, mentor etc over a period of time but ultimately the strategy, execution , concentration , not giving room to negative emotions, complete fitness ,reading the mind of the competitor and adjusting to the every move holds the key. It is not easy but winners have exhibited such qualities. Well Done the Winners. We join the countrymen in congratulating the winners with all sincerity.

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Communication Address:

Editorial Committee, (News Letter—Breeze)

Shriram City Union Finance

144, Santhome High Road, Chennai—600 004

Phone: 044 43925300

Email: [email protected]

Editorial Committee

Shri K.Subramaniam CO, Mylapore

Smt M.Subhashree BSC, Santhome

Shri N.R. Sivakumar SFPS,Santhome

Don’t wait for time

MAKE IT…

Don’t wait for money

EARN IT…

Don’t wait for the path

FIND IT…

Don’t wait for opportunity

CREATE IT…

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29 August National Sports Day - scufhoftp.scufsanthome.com