Small Scale Industries Project

7/28/2019 Small Scale Industries Project

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INTRODUCTION

1.1 SMALL SCALE INDUSTRIES

1.1.1 Preview

The development of modern small-scale industries has been

one of the most significant and characteristic features of industrial

development in India. The most significant aspect of small industry

development is that this sector has simulated economic activity of a farreaching magnitude and created sense of confidence among huge number of

small entrepreneurs. Its adaptability semi-urban and rural environment where

infrastructure is under developed and capacity to attract small savings and

direct them to productive channels, the small industries sector has been

recognized, in successive 5 year plans as an effective instrument in the

development of backward and rural areas. Apart from its economic aspects, it

also justifies in generation of large employment opportunity at comparatively

low investment, removal of poverty, attainment of self reliance, reduction in

disparities in income, wealth and consumption standard and regional

imbalance that the country has set out to accomplish.

1.1.2 Small Scale Industries - Definition

Industrial undertaking, in which the investment in fixed assets in

plant and machinery, excluding land and building, whether held on ownershipterms or on lease or on hire purchase, does not exceed Rs.1 Crore (One

crore).

The conventional definition includes cottage and handicraft

industries, which employ traditional labour intensive methods to produce

traditionalproducts, largely in village households. The small-scale sector has

registered an impressive growth in recent years.


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The priority sector includes S.S.I (with sub targets for tiny

units), Retail traders, Professions & Self employed, Government sponsored

programmes for SC/ST, Education, Housing Advances under D.R.I.

1.1.3 Plan outlays

The approved outlays for the schemes of small industries

development organization and allied institutions for the 7 th 5 year plan was

Rs.170 crores excluding the scheme relating to self employment for educated

unemployed youth.

1.1.4 Policy and planning

Policy measures for promoting and strengthening of small

enterprises have been announced on 6th august, 91 in which special

emphasis has been laid on infrastructure facilities, marketing, promotion of

entrepreneurship and simplification of rules and procedures.

1.1.5 ASSET CLASSIFICATION

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

Standard asset

Substandard asset

Double asset

Loss asset

STANDARD ASSET

An asset which is not an NPA, which carries not more than normal

credit risk attached to a business, is termed as a standard asset.


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SUBSTANDARD ASSET

It is the loan asset which has been classified as NPA for a period not

exceeding two years.

DOUBLE ASSET

At present, a credit facility which has remained as NPA for a period

exceeding two years is to be treated as a doubtful asset. Doubtful assets are

further classified as doubtful I, doubtful II, doubtful III assets depending upontheir age.

LOAN ASSET

A loss asset is one where loss has been identified by the bank or

internal or external auditors or by the RBI inspection but the amount has not

been written off, wholly or partly.

1.1.6 THE TREND IN HOW CREDIT IS SANCTIONED

This deals with how the bank scrutinizes and sanctions the

loan application for an existing small-scale unit. The bank sanctions loan only

after they are satisfied with the firms performance in the following categories.

1. Past Performance:

The firm has to fill in the details of the turnover, net profit and retained

and profit for the past three years. Also to be included is the monthly

turnover for the twelve months of the last financial year.


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2. Arrears in statutory payments:

The firm should have no arrears in payment of income tax, sales tax,

provident fund, employees state Insurance Corporation and any other such

items

3. Details of existing fixed assets

4. Projections of performance, profitability and repayment:

This projection in other words represents the trading upto 5 years. The

bank expects an increasing growth rate in the sales, gross profit and net

profit of the firm.

5. Cash Flow statement:

The cash flow statement shows the various sources and uses of the

cash by the firm. This helps to show the bank the various other sources from

which the firm gets cash inflow and the uses of the cash for various purchase

of fixed and current assets. The cash flow statement helps to show if the

working capital loan has been used for any purpose other than the

acquisition of current assets and meeting current liability. Similar to the

trading and profit and loss account, the projection of cash flow statement

should be shown for 5 years.

6. Projected Balance Sheet:

The balance sheet shows the financial strength and weakness of a

unit as on a particular day. Here also the projection should be made for 5

years. Since the bank has been dealing with the applicant for the past years,


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they are mainly interested in the financial performance of the firms activities.

Apart from the financial performance the bank also checks on the following

factors.


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1.2 NON-PERFORMING ASSETS OVERVIEW

All sales are actually a gift until the proceeds have been collected

Prof. M.Bertoneh

In the year 1991, the Government of India had appointed a high

level committee under the chairmanship of Shri.M.Narasimham, popularly

called Narasimham committee, to examine all aspects relating to thestructures, organization, function and procedures of the financial system. The

committee had, inter alia made recommendation in regard to proper system

of recognition of income, classification of asset and provisioning for bad

debts on a prudential basis.

The Reserve Bank of India, in tune with the internationally

accepted accounting norms and as per the Narasimham committee

recommendations, introduced new guidelines for Income recognition, asset

classification and provisioning norms operative from the financial year 1992-

93.

With the introduction of the new norms from the year 1992-

93, the concept of performing and Non-performing assets has beenintroduced.


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1.2.1 WHAT IS NPA?

An asset, which ceases to yield income to the bank, is a Non-

performing asset (NPA). Income in any loan account should be recognized

only when there is actual cash recovery and not merely when it is accrued.

Availability of security or net worth of borrower/ guarantor

should not be taken into consideration fro the purpose of treating an advance

as NPA or otherwise. Only the record of recovery as reflected in banks books

should be the criteria.

Non-performing assets cause Double jeopardy to banks

because we cannot book any income by way of interest, exchange, fee,

commission etc. unless there is cash recovery or realization. On the other

hand, we are required to make provision on such NPAs based on their age

and value of security.

For a bank in general, an asset is to be classified as NPA, if the

payments (principal and interest) remain unpaid for more than 90 days. Any

NPA would migrate from substandard to doubtful category after 12 months. It

would get classified as loss asset if it is irrecoverable or only marginally

collectible.

1.2.2 MANAGEMENT OF NPAs

The quality and performance of advances have a direct bearing

on the profitability and viability of banks. Despite an efficient credit appraisal

and disbursement mechanism, problems can still arise due to various factors.

The essential component of sound NPA management system is quick


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identification of Non-performing advances, their containment at minimum

levels and ensuring that their impingement on the financials is minimum.

1.2.3 CAUSES FOR NPA

The issue of Non-performing asset has come to occupy the

centre stage in the discussion on Indias financial sector reforms and the

international rating agencies have added to the concerns of the international

financial community and the multilateral agencies. The high level of NPAs

has exhibited the fundamental weakness of the banks. Some of the causative

factors for the loan accounts turning NPAs are as follows:

1) Often lending is not linked to product sale. The problem is

compounded by directed lending where banks are required to

extend credit to meet targets stipulated by the government, often

disregarding the viability of loans.

2) Diversion of funds for expansion / modernization / setting up of

new projects / helping or promoting associate concerns.

3) External factors like raw materials shortage, raw material price

escalation, power shortage etc.

4) Business failures like product failing to capture market,

inefficient management, strike/ strained labour relations, wrong

technology, technical problems, product obsolescence etc.

5) Changes in the macro environment like recession, infrastructural

bottlenecks, sluggish growth in the economy etc.


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6) Lack of financial autonomy

7) Time / Cost over run while implementing the project

1.3 PROFILE OF UCO BANK

UCO Bank was incorporated on 6 th January 1943 with its head

office at kolkata. UCO Bank has a large network of 1713 branches across

length and breadth of the country. The banks first overseas branch was

opened in Rangoon in 1947, now a prominent presence in 4 overseas

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

the states and Union territories, except Lakshadweep and is supported by 11

service branches covering all major metros.

The bank has 8 specialized S.S.I. branches, 2 International

banking branches and one industrial finance branch. Out of which more than

845 stand computerized. The bank also has 168 extension counters across

the country. The bank ranks 8 th of total business of nationalized banks as of

March 2003&2004.

UCO Bank, Erode Branch, was established in the year 1976. it

comes under the control of Tiruchirapalli Regional office. 34 employees serve

for this branch with per employee business of 95 lakhs. The net profit of thisbranch as on 31.03.2003 was Rs.435 cr.


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1.3.1STEPS TAKEN BY UCO BANK, ERODE BRANCH

TO RECOVER NPA

The amount of NPA, which stood at Rs.81 lakhs in the year 2000-

01, has been brought down to Rs.38 lakhs as on 31.03.2003. This branch

brought about this spectacular reduction by following the steps described

here under:

1) Incase of substandard assets, borrowers are contacted

personally for recovery of unrealized interest and overdueInstallments and is followed by monthly contact with

Borrowers.

2) Incase of substandard assets, if viability is established, relief

package Within RBI parameter, are undertaken.

3) Serious and tough action, if necessary, including legal

action for recovery initiated without delay.

4) The branch keeps upto date record of assets charged to the

bank indicating their location, so that execution of decree is

not delayed for want of details.

5) Local enquiries are made about the assets of guarantors

and the reports are prepared. Such enquiries create

pressure on the borrowers to settle the dues.

6) Niptan Yojna, a special settlement scheme, was

formulated by the bank and launched on 1999. According to

this scheme, simple interest which is not less than 10%,

alone will be charged on the outstanding amount.


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CHAPTER 2

2.1) REVIEW OF LITERATURE

Literature review is the ability to carry out the previous work in a

particular topic done by others. Generally it is not important to carry out a

literature review; still it is carried out in order to find more details about a

project work.

It helps to place our work in the context of what have

already been done, allowing comparisons to be made and providing a

frame work for further research.

It has been defined as a critical summary and

assessment of the range of existing materials dealing with knowledge and

understanding in a given field

The importance of review for a project work is wider,

since there is no such previous work or any study in this topic, the

researcher cannot be able to apply this method.

Further the present study of management technique for

controlling NPA and its input helps the bank to determine the factors for

causes of NPA and ways and means to control it. It also leads to further

future study for the bank in the same topic and for the researcher for his

academic completion of his project work.


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CHAPTER 3

3.1 OBJECTIVE OF THE STUDY

3.1.1 Primary objective

1) The main objective of this project is to study the

performance appraisal and

Corrective measures to tackle NPA

2) The study will also expose some suggestions to shape

the asset to push it to the

Performing status

3.1.2 Secondary objective

1) This study will also reveal how NPA affect banks

efficiency of operation and of course, their profitability

2) To study the NPA position of UCO Bank, Erode branch

3.2 Scope of the study

The project has the objective of analysing the critical factors relating to

NPA, restructuring strategies and to suggest effective measures to counter

the NPA, in the coming years.

Now-a-days banks face the problem of bad recovery of loans and

advances. Their assets have become Non-performing as they cease to yield

income. This affects their efficiency of operation and their profit. This study

aims to know about the causes and effects of NPA particularly in S.S.I. and

to suggest measures to overcome the level of NPA. The primary purpose of

this project is to reduce and control the NPAs in S.S.I. sector. This study will

able to help the bank for tuning the asset to performing status.


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3.3 LIMITATIONS

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

Difficulty in procuring adequate number of loan application forms,

hence the sample size being small.

Certain information & data which cannot be accessed or published

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

application form

The drawbacks are faced because the study is done by respecting the

basic policy of any banking institution - maintaining secrecy and honouring

clients trust of the bank.


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SUGGESTIONS

The Asset Reconstruction Company, recommended by theNarasimham Committee, can be set up. The asset reconstruction

company would take over the bad assets from the banks at a

discount; follow up the loans and effect recovery. The banks can

concentrate on productive lending and strengthening of their

overall performance.

Debt Recovery Tribunals were setup by the Government to

facilitate speedy recovery of bank dues. The DRT are to try suits

of the value of over Rs.10 lakhs. However, so far DRT do not

appear to have made much impact on the recovery performance of

the banks. For instance, in the case of the State Bank of India, of

the 4000 pending cases in 6 DRT s in 1996, only 150 cases came

up for hearing, and actual recovery was effected only in 10 to 15

cases. The functioning of the DRT s should be made effective.

The number of DRT s should be increased adequately.

The firms have a good debt repayment track. But some units have

taken extra effort of repaying long term loans without maintaining

any reserves. The need for adequate reserves should be

explained to these units.

Although the firms are gradually reducing their selling and

administration expenses, their exist the need to bring down the

costs to more economical level. This can be done by the firms

using the facilities and infrastructure provided by various small

scale co-operatives and organizations like SIDCO etc.

The Government of India, Ministry of Finance, Ministry of Law and

the industrial heads have to sit together and device war strategies

to combat the NPA problem. The law must be sharpened and


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implementation made more easy & effective to recover the

overdues.


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CHAPTER 4

RESEARCH METHODOLOGY

4.1 RESEARCH DESIGN

The role of research in several fields of applied economics

whether related to business or to the economy as a whole, has greatly increased in

modern times. The increasingly complex nature of business and government has

focused attention on the use of the research in solving operational problems.

Research as an aid to economic policy, has gained added importance, both for

government and business. Research has its special significance in solving various

operational and planning problems of business and industry.

Research methodology involves the way the project study

was carried out. The methodology is the procedure or systematic approach to achieve

the task.

Research methodology may be understood as the science of

studying how research is done scientifically. Here the study involves various steps

that are generally adopted for approaching research problem along with the logic or

reason behind them.

Research methodology in common parlance refers to the

search for knowledge. But a statistical survey or research means the research for

knowledge through application of statistical methods.


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CHAPTER 5

DATA ANALYSIS AND INTREPRETATION

5.1 CALCULATION OF PERCENTAGE ANALYSIS

5.1) Percentage analysis for Profit Margin

Particulars No. of Respondents Percentage

Below 10% 25 71Above 10% 10 29

Total 35 100

Interpretation:

It shows 25 of 35 respondents are under Profit margin

ranging 5-10%, 10 of 29 respondents are above 10% Profit margin.

Chart No.5.1

Percentage analysis for Profit

Management

0

10

20

30

40

50

60

70

80

Below 10% Above 10%

No. of

Respondents

Percentage


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5.2) Percentage analysis for Quality Standard & Service


Excellent 15 43

Good 20 57

Better 0 0

Poor 0 0

Total 35 100

Interpretation:

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

35 respondents are Good.


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Chart No.5.2

Percentage analysis for Quality &

Service

0

20

40

60

Excelle

nt Good

Bette

rPo

or

No. of

Respondents

Percentage


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5.3) Percentage analysis for kind of equipments


Sophisticated 16 46

Latest 19 54

Total 35 100

Interpretation:

It shows 16 of 35 respondents have Sophisticated

equipments and 19 of 35 respondents are Latest Equipments.

Chart No.5.3

Percentage analysis for kind of

Equipment

0

10

20

30

40

50

60

Sophisticated Latest

No. ofRespondents

Percentage


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5.4) Percentage analysis for Professionalism


Expert 15 43

Trained 20 57

Adequate 0 0

Poor 0 0

Total 35 100

Interpretation:

It shows 15 of 35 respondents have Expert and 20 of 35

respondents are Trained.


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Chart No.5.4

Percentage analysis for

Professionalism

0

10

20

30

40

50

60

Expert

Trained

Adeq

uate

Poor

No. of Respondents

Percentage


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5.5) Percentage analysis for Mode of Payment


Spot Cash 0 0

Credit 35 100

Total 35 100

Interpretation:

It shows that 35 of 35 respondents allow credit.


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Chart No.5.5

Percentage analysis for Mode of

Payment

0

20

40

60

80

100

120

Spot Cash Credit

No. of Respondents

Percentage


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5.6) Percentage analysis for Credit Period


1 Month 4 11

1 Months 6 17

2 Months 15 43

3 Months & Above 10 29

Total 35 100

Interpretation:

It shows 4 of 35 respondents allow credit period of 1 month,

6 of 35 respondents within 1 Months, 15 of 35 respondents were

within 2 months and 10 of 35 respondents ensure payment period of 3

months.

Chart No.5.6

Percentage analysis for Credit Period

0

5

10

15

20

25

30

35

40

45

50

1 Month 1 1/2

Months

2 Months 3 Months

& Above

No. of Respondents

Percentage


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5.7) Percentage analysis for need of technical assistance


Yes 19 54

No 16 46

Total 35 100

Interpretation:

It shows 19 of 35 respondents need technical assistants and

16 of 35 respondents no need technical assistance.


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Chart No.5.7

Percentage analysis for need of

technical assistance

0

10

20

30

40

50

60

Yes No

No. of Respondents

Percentage


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5.8.1) Percentage analysis for Service from Other Company


Yes 24 69

No 11 31

Total 35 100

Interpretation:

It shows 24 of 35 respondents need services from other

company 11 of 35 respondents are no need services from other company

Chart No.5.8.1

5.8.2) Problem in getting service from other company

Percentage analysis for Service from

Other Company

0

10

20

30

40

50

60

70

80

Yes No

No. of Respondents

Percentage


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Unavailability 5 21

Improper delivery 10 42Price 9 37

Others 0 0

Total 35 100

Interpretation:

It shows 5 of 35 respondents were getting problem in

Unavailability from other company, 10 of 35 respondents were of

Improper delivery, 9 of 35 respondents were getting problem in price.

Chart No.5.8.2

Problem in getting service from other

company

0

5

10

15

20

25

30

35

40

45

Unavailab

ility

Improper

delivery

Price

Othe

rs

No. of Respondents

Percentage


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5.9) Percentage analysis for Marketing Communication


Sales Promotion 14 40

Advertisement 18 51

Public Relations 2 6

Direct Marketing 1 3

Total 35 100

Interpretation:

It shows 14 of 35 respondents were interested in Sales

Promotion, 18 of 35 respondents were interested in Public relation, 2 of

35 respondents were interested in Advertisement, 1 of 35 respondents

was interested in Direct Marketing.

Chart No.5.9

Percentage analysis for Marketing

Communication

0

10

20

30

40

50

60

Sale

sPromotion

Advertis

ement

Publi

cRelatio

ns

Dire

ctMarketin

g

No. of Respondents

Percentage


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5.10) Percentage analysis for Problem in Selling


Supply 14 40

Quality 21 60

Very less Margin 0 0

Total 35 100

Interpretation:

It shows 14 of 35 respondents were getting problem

regarding supply, 21 of 35 respondents were getting problem regarding

quality.


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Chart No.5.10

Percentage analysis forProblem in

Selling

0

10

20

30

40

50

60

70

Supply Quality Very less

Margin

No. of Respondents

Percentage


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5.11.1) Percentage level of satisfaction on Price


Highly Satisfied 3 9

Satisfied 32 91

Dissatisfied 0 0

Highly Dissatisfied 0 0

Total 35 100

Interpretation:

It shows 3 of 35 respondents were Highly Satisfied in the

price, 32 of 35 respondents were satisfied in the price.


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Chart No.5.11.1

Percentage level of satisfacton on

Price

0

10

20

30

40

50

60

70

80

90

100

HighlySatisfie

Satisfie

d

Dissa

tisfie

HighlyDissa

tisfie

No. of Respondents

Percentage


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5.11.2) Percentage level of satisfaction on Service



Satisfied 13 37

Dissatisfied 0 0


Total 35 100

Interpretation:

It shows 22 of 35 respondents were Highly Satisfied in

their service, 13 of 35 respondents were satisfied in their service.


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Chart No.5.11.2


Service

0

10

20

30

40

50

60

70

Highly

Satis

fie

Satis

fied

Dissa

tisfie

d

Highly

Dissa

tisfie

No. of Respondents

Percentage


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5.11.3) Percentage level of satisfaction on Availability



Satisfied 20 57

Dissatisfied 0 0


Total 35 100

Interpretation:


availability of product, 20 of 35 respondents were satisfied in availability

of product.

Chart No.5.11.3


Availability

0

10

20

30

40

50

60

HighlySatisfie

Satisfie

Dissa

tisfie

HighlyDissa

tis

No. of Respondents

Percentage


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5.11.4) Percentage level of satisfaction on Maintenance



Satisfied 13 37

Dissatisfied 0 0


Total 35 100

Interpretation:


maintenance, 13 of 35 respondents were satisfied in maintenance.

Chart No.5.11.4


Maintenance

0

10

20

30

40

50

60

70

1 2 3 4

No. ofRespondents

Percentage


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5.11.5) Percentage level of satisfaction on Transport



Satisfied 28 80

Dissatisfied 0 0


Total 35 100

Interpretation:


transporting, 28 of 35 respondents were satisfied in transporting.

Chart No.5.11.5


Transports

0

10

20

30

40

50

60

70

80

90

Highly

Satisfie

Satis

fied

Dissa

tisfie

HighlyDissa

tisfie

No. of Respondents

Percentage


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5.12.1) Percentage analysis for Line of Management


Yes 22 63

No 13 27

Total 35 100

Interpretation:

It shows 22 of 35 respondents were satisfied in Line of

Management, 13 of 35 respondents were not satisfied in Line of

Management.


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Chart No.5.12.1

Percentage analysis for Line of

Management

0

10

20

30

40

50

60

70

Yes No

No. of Respondents

Percentage


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5.12.2) Percentage analysis for Problem evolved in the concern


Lack of Discipline 7 54

Strained Labour

relation

6 46

Others 0 0

Total 35 100

Interpretation:

It shows 7 of 13 respondents has lack of discipline, 6 of 13

respondents has strained labour relation.


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Chart No.5.12.2

Percentage analysis for problem

evolved in the Concern

0

10

20

30

40

50

60

Lack of

Discipline

Strained

Labour

relation

Others

No. of Respondents

Percentage


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5.13) Percentage analysis for relationship with customer



Satisfied 17 49

Dissatisfied 0 0


Total 35 100

Interpretation:

It shows 18 of 35 respondents were highly satisfied in

cordial relationship with their customer, 17 of 35 respondents were

satisfied in cordial relationship with their customer.


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Chart No.5.13

Percentage analysis for relationship

with customer

0

10

20

30

40

50

60

Highly

Satisfie

Satis

fied

Dissa

tisfie

Highly

Dissa

tisfie

No. of Respondents

Percentage


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

business


Product Obsolescence 6 17

Infrastructural

bottlenecks

9 26

Change in

environment

9 26

Poor Work Culture 11 31

Total 35 100

Interpretation:

It shows 6 of 35 respondents has product obsolescence, 9 of

35 respondents has Infrastructural bottlenecks, 9 of 35 respondents has

change in environment and 11 of 35 respondents has poor work culture.

Chart No.5.14

Percentage analysis for factors that

affect the growth of the business

0

5

10

15

20

25

30

35

Product

Obsolescence

Infrastructural

bottlenecks

Changein

environment

PoorWorkCulture

No. of RespondentsPercentage


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5.15) Percentage analysis for Competition


Yes 35 100

No 0 0

Total 35 100

Interpretation:

It shows 35 of 35 respondents were threat of perception

about competition.

Chart No.5.15

5.16) Percentage analysis for Financial Stress

Percentage analysis for Competition

0

20

40

60

80

100

120

Yes No

No. of Respondents

Percentage


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Yes 26 74

No 9 26

Total 35 100

Interpretation:

It shows 26 of 35 respondents were facing financial stress,

9 of 35 respondents were not facing financial stress.

Chart No.5.16

5.17.1) Percentage analysis for Plan Schedule

Percentage analysis for Financial

Stress

0

10

20

30

40

50

60

70

80

Yes No

No. of Respondents

Percentage


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Yes 19 54

No 16 46Total 35 100

Interpretation:

It shows 19 of 35 respondents were doing their business in

plan schedule, 16 of 35 respondents were not scheduled properly.

Chart No.5.17.1

5.17.2) Percentage analysis for Task identity


Percentage analysis for Plan Schedule

0

10

20

30

40

50

60

Yes No

No. of Respondents

Percentage


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Fully 1 5

80% & above 7 37

Partially 11 58Often not possible 0 0

Total 35 100

Interpretation:

It shows 1 of 16 respondents was accomplish all their

duties fully, 7 of 16 respondents were accomplish only 80% & above, 11

of 16 respondents were partially accomplish their duties.

Chart No.5.17.2

Percentage analysis for Task identity

0

10

20

30

40

50

60

70

Fully 80% &

above

Partially Often not

possible

No. of Respondents

Percentage


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5.18) Percentage analysis for Operating Cost


Upto 50000 1 3

50000-1 lakhs 10 29

1-2 lakhs 12 34

2 lakhs & above 12 34

Total 35 100

Interpretation:

It shows 1 of 35 respondent has operating cost upto 50000,

10 of 35 respondents were their operating cost range above 50000 to 1

lakh, 12 of 35 respondents were their operating cost range above 1 lakh

to 2 lakhs, 12 of 35 respondents were their operating cost range above 2

lakhs & above.


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Chart No.5.18

Percentage analysis for Operating

Cost

0

5

10

15

20

25

30

35

40

Upto

50000

50000-1

lakh

1-2 lakh 2 lakhs

& above

No. of Respondents

Percentage


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5.19) Percentage analysis for Net Sales


Yes 13 37

No 22 63

Total 35 100

Interpretation:

It shows 13 of 35 respondents were exceeds sales over total

production, 22 of 35 respondents were not exceeds sales over total

production.

Chart No.5.19

Percentage analysis for Net Sales

0

10

20

30

40

50

60

70

Yes No

No. of Respondents

Percentage


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CROSS TABULATIONS:

Table No.5.20

Credit * Profit Margin Cross tabulation

PROFIT MARGIN TOTAL

Below

10%

Above

10%

CREDIT 1.0 Count

% within

Profit Margin

4

16.0%

0 4

11.4%

2.0 Count

% within

Profit Margin

4

16.0%

2

20.0%

6

17.1%

3.0 Count

% within

Profit Margin

11

44.0%

4

40.0%

15

42.9%

4.0 Count

% within

Profit Margin

6

24.0%

4

40.0%

10

28.6%

Total Count

% within

Profit Margin

25

100.0%

10

100.0%

35

100.0%

From the above table it is observed that 44.0% of below 10%

profit margin respondents gives credit period upto 2 months and 40.0%

of above 10% profit margin respondents gives credit period

Table No.5.21

Equipment * Profit Margin Cross tabulation


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PROFIT MARGIN TOTAL

Below

10%

Above

10%

EQUIPMENT 1.0 Count

% within

Profit Margin

13

52.0%

3

30.0%

16

45.7%

2.0 Count

% within

Profit Margin

12

48.0%

7

70.0%

19

54.3%

Total Count

% within

Profit Margin

25

100.0%

10

100.0%

35

100.0%

From the above table it is observed that 52.0% of below 10%

Profit Margin respondents says that the Company used for process are

Sophiscated Equipments and 70.0% of above 10% profit margin

respondents says that Company used for process are latest Equipments.


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Table No.5.22

Technical Assistance * Profit Margin Cross tabulation

PROFIT MARGIN TOTAL

Below

10%

Above

10%

TECH 1.0 Count

% within

Profit Margin

11

44.0%

8

80.0%

19

54.3%

2.0 Count

% within

Profit Margin

14

56.0%

2

20.0%

16

45.7%

Total Count

% within

Profit Margin

25

100.0%

10

100.0%

35

100.0%

It is identified that the above table 56.0% of below 10% Profit

Margin respondents that they need not technical assistance and 80.0% of

above 10% Profit Martin respondents that they need technical assistance.


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CHAPTER 6

6.1 FINDINGS

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

By using Cross tabulation it was found that Companies using

latest equipments receives profit margin above 10%.

By Using Cross tabulation it was found that Companies need

technical assistance.

Every Company prefers only credit for mode of payment.

By using Cross tabulation it was found that credit period allowed

to customer should extended to 2 months.

Many Companies needed Technical assistance.

Many Companies need Advertisement for MarketingCommunication.

Most of the Company was over capitalized.

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

Most of the Company was satisfied in relationship with their

customer.

Many Companies Face the Financial Stress in the business.

Many Companies do not follow the plan schedule.


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6.2 SUGGESTION

The Asset Reconstruction Company, recommended by the

Narasimham Committee, can be set up. The asset

reconstruction company would take over the bad assets from

the banks at a discount; follow up the loans and effect

recovery. The banks can concentrate on productive lending

and strengthening of their overall performance.

Debt Recovery Tribunals were setup by the Government to

facilitate speedy recovery of bank dues. The DRT are to try

suits of the value of over Rs.10 lakhs. However, so far DRT do

not appear to have made much impact on the recovery

performance of the banks. For instance, in the case of the State

Bank of India, of the 4000 pending cases in 6 DRT s in 1996,

only 150 cases came up for hearing, and actual recovery was

effected only in 10 to 15 cases. The functioning of the DRT s

should be made effective. The number of DRT s should be

increased adequately.

The firms have a good debt repayment track. But some units

have taken extra effort of repaying long term loans without

maintaining any reserves. The need for adequate reserves

should be explained to these units.


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Although the firms are gradually reducing their selling and

administration expenses, they exists the need to bring down the

costs to more economical level. This can be done by the firms

using the facilities and infrastructure provided by various small

scale co-operatives and organizations like SIDCO etc.

The Government of India, Ministry of Finance, Ministry of

Law and the industrial heads have to sit together and device

war strategies to combat the NPA problem. The law must be

sharpened and implementation made more easy & effective to

recover the overdue.

It is imperative that awareness about NPA and how it affects

the bank from recycling of fund and the problems in the case of

non-performing asset to be created among the investors.

Number of articles could be published by the bank on

management of NPA

Borrowers can be contacted personally for recovery of

unrealized interest and overdue installments.


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6.3 CONCLUSION

The bank has been able to maintain a successful, investmentprogramme in SSI units, by ensuring that their portfolio of SSI units has

a good financial management record and their ratios being above the set

standards in management. It is observed as a result of the study that

most of the firms are overcapitalized and ways for reducing these cost

and it should be suggested.

This study also contains NPAS & the ways and means to prevent

an account falling into substandard category. The acceptability of new

clients is done after proper scrutiny of their economic, industrial and

other factors as a corrective measure to improve the system.

The researcher earnestly hopes that the study will help the banks

to reduce the NPA in SSI sector in forth coming years.


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APPENDIX 1

EVOLUTION OF MANAGEMENT TECHNIQUE FOR CONTROLLING NPA

OF SSI UNITS

INTERVIEW SCHEDULE

1) Name of the Industry :

2) Name of the respondent:

3) Total experience ___________ Years

4) Turnover in Rs.________ (Roundoff to nearest value)

5) Growth ________ % p.a. (Over last 3 years)

6) What is your profit margin?a) Below 5% b) 5-10% c) Above 10%\

7) Application of quality standards at prompt service __________

a) Excellent b) Good c) Better d) Poor

8) Equipments used for process are ___________

a) Sophisticated b) Latest c) Unsophisticated

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

a) Expert b) Trained c) Adequate d) Poor

RECEIVABLES

10) What mode will you prefer for payment?

a) Spot cash b) Credit

11) If credit, credit period you prefer?

a) 1 month b) 1 Months

c) 2 months d) 6 months & above

AVAILABILITY OF TECHNICAL ASSISTANCE

12) Do you need technical assistances?

a) Yes b) No

13) If Yes, Please mention in which area ___________

14) Are you getting services of any other Company?

a) Yes b) No

15) If Yes, problem in getting service from other Company?

a) Unavailability b) Improper delivery

c) Price d) Others


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MARKETING

16) What kind of marketing communication do you believe?

a) Sales Promotion b) Public relation

c) Advertisement d) Others

17) What are the problems in selling?

a) Problem regarding supply b) Problem regarding quality

c) Very less margin

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

Factors Highly

Satisfied

Satisfied Dissatisfied Highly dissatisfied

Price

Service

Availability

Maintenance

Transport

LINE OF MANAGEMENT

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

a) Yes b) No

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

a) Lack of discipline b) Strained labour relation

c) Others

21) Whether the cordial relationship with your customer is

a) Highly satisfactory b) Satisfactory

c) Dissatisfactory d) Highly dissatisfied


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GROWTH OF BUSINESS

22) The factors that affect the growth of your business

a) Product obsolescence b) Infrastructural bottlenecks

c) Change in environment d) Poor work culture

23) Whether there is threat of perception about competition?

a) Yes b) No

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

a) Yes b) No

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

TASK IDENTITY

26) Do you go by Plan Schedule?

a) Yes b) No

27) If Yes, do you accomplish all your duties

a) Fully b) 80% & above

c) Partially d) Often not possible

28) Operating Cost

a) Upto 50,000 b) 50,000- 1 Lakh

c) 1- 2 Lakhs d) 2 Lakhs & above

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

a) Yes b) No

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


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BIBLIOGRAPHY

REPORTS

RBI BULLETINS 2002, 2003,2004

ANNUAL REPORT OF UCO BANK

WEBSITES

www.ucobank.com

www.ssiunits.com

www.rbiindia.org

www.ucoindia.com

BOOKS

C.R.KOTHARI (2002) Second edition Research Methodology methods

techniques
http://www.ucobank.com/http://www.ssiunits.com/http://www.rbiindia.org/http://www.ucoindia.com/http://www.ucobank.com/http://www.ssiunits.com/http://www.rbiindia.org/http://www.ucoindia.com/

Documents

Small Scale Industries Project