Deepa B C

A STUDY ON CREDIT DEFAULT RISK AND ITS INFLUENCE ON PROFITABILITY OF
CONFIDENT DENTAL EQUIPMENT LIMITED

Dissertation submitted in partial fulfillment of the requirements for the
Award of the Degree of
Master of Business Administration
Of
Bangalore University
By
DEEPA B.C
Reg: 15KXCMD020
Under the guidance of:
INTERNAL GUIDE EXTERNAL GUIDE
Mr. VIJAY J Mr.VENKOBRAYAN
ASSISTANT PROFESSOR. HR MANAGER OF
Department of MBA, Surana College. Confident Dental Equipment Limited.
Bangalore Bidadi
SURANA COLLEGE PG DEPARTMENTS
No. #CA-17, Outer Ring Road, Kengeri Satellite Town

Bangalore-560060
2016-2017
DECLARATION BY THE STUDENT
I hereby declare that A STUDY ON CREDIT DEFAULT RISK AND ITS INLUANCE
ON PROFITABILITY OF CONFIDENT DENTAL EQUIPMENT LIMITED is the result of
the project work carried out by me under the guidance Mr. VIJAY J,
Assistant professor, Department of MBA Surana College in partial
fulfillment for the award of Masters Degree in Business
Administration by Bangalore University.
I also declare that this project is the outcome of my own efforts and that
it has not been submitted to any other university or Institute for the
award of any other degree or Diploma or Certificate.
Place: Bangalore DEEPA B.C

Date: 15KXCMD020
ACKNOWLEDGEMENT
I am greatly indebted to faculty of SURANA COLLEGE for their encouragement

and help to complete the Dissertation Project successfully and make me feel
confident. Where it has been a great learning experience in terms of gaining
exposure into the market and knowing how actually a business can be developed
and run.
I would like to express a sense of gratitude to Dr. G.P. SUDHAKAR, the director
for the support and encouragement
I immensely grateful to Mr. VENKOBRAYAN and all the member of
CONFIDENT DENTAL EQUIPMENT LIMITED, and particularly of the company for
giving me the permission to do the Project in the organization for allowing me a

privilege to accomplish my data collection regarding my Dissertation.
Its great privilege to convey my sincere thanks to my Guide Mr. VIJAY J
Assistants professor was very inspiring and encouraging. I express my thanks for
proving me comprehensive inputs required for completion of this project. Finally I
have great pleasure in extending my sincere thanks and gratitude to all those who
have directly or indirectly assisted me in the completing the project his valuable
guidance and throughout the project
Place: Bangalore DEEPA B.C
Date: 15KXCMD020
GUIDE CERTIFICATE
This is to certify that the case study titled A STUDY ON CREDIT DEFAULT
RISK AND ITS INFLUENCE ON PROFITABILITY OF CONFIDENT DENTAL
EQUIPMENT LIMITED is record of an original work done and submitted by
SANJAY H P, Surana college- PG Department, during 2017 to
Bangalore University, Bangalore for the award of degree of Master of
Business Administration is a record of work carried out by him under
my guidance.
Place: Bangalore ___________________

Date: Mr. VIJAY J
Assistant professor
ABSTRACT:-
The project deals in credit default risk and its influence on profitability. Credit
management is one of the most important aspects of the organization, as it deals with
the management of the outstanding. The profit of the company mainly depends on the
accounts receivables. Therefore it needs a careful analysis and proper management.
Debtors occupy an important position in the structure of current assets of a firm. They
are the outcome of rapid growth of trade credit granted by the firms to their customers.
Trade credit is the most prominent force of modern business. It is considered as a
marketing tool acting as a bridge for the movement of goods through production and
distribution stages to customers.
Till few years back, confident dental equipment limited had a very strict policy of selling
against advance payments. That was an era of controlled credit. However, with an
increasing domestic and international competition, confident could no longer afford this
policy, in order to maintain its premium position. Further in order to capture a greater
amount of market share, it was compelled to go by the industry norms and thus it
ushered into the new era of credit sales. This resulted in credit sales going up
significantly. A credit limit was sanctioned to every customer. The customers were
required to pay the outstanding amount on the due date.
Table of Contents
CHAPTER-1 ................................................................................................................................... 1
INTRODUCTION:- ........................................................................................................................ 1
1.1 INDUSTRY PROFILE:- ....................................................................................................... 1
1.2 THEORETICAL BACKGROUND OF THE STUDY:- ...................................................... 2
2. REVIEW OF LITERATURE AND RESEARCH DESIGN .................................................... 17
2.1 Literature review:- .......................................................................................................... 17
2.2 STATEMENT OF PROBLEM:- ........................................................................................ 25
2.3 OBJECTIVES OF THE STUDY:- ..................................................................................... 25
2.4 RESEARCH DESIGN OF THE STUDY ........................................................................... 25
2.5 DATA COLLECTION METHOD ..................................................................................... 26
2.6 SCOPE OF THE STUDY ................................................................................................... 26
2.7 LIMITATIONS:- ................................................................................................................ 27
3. COMPANY PROFILE:- ........................................................................................................... 28
3.1 PROFILE OF THE RESPONDENT:- ................................................................................ 47
4 DATA ANALYSIS AND INTERPRETATION:- ................................................................ 48
5. SUMMARY OF FINDINGS, CONCLUSIONS AND SUGGESTIONS ............................. 78
5.1 SUMMARY OF FINDINGS:-............................................................................................ 78
5.2 SUMMARY OF CONCLUSION:- ................................................................................ 80
5.3 SUMMARY OF SUGGESTIONS ..................................................................................... 81
LIST OF TABLES:-
Table 1 COMPANY PROFILE:- .................................................................................................. 28

Table 2 ANNUAL SALES OF CONFIDENT DENTAL EQUIPMENT LIMITED:- ................ 32
Table 3 Due for more than six months and ................................................................................... 59
Table 4 Due for less than six months ............................................................................................ 61
Table 5 TRADE RECEIVABLES OF THE COMPANY:-.......................................................... 63
Table 6 BAD DEBTS OF THE COMPANY:- ............................................................................. 65
Table 7 BAD DEBTS RECOVERY:- .......................................................................................... 67
Table 8. Do you purchase product on credit based from confident dental equipment limited? 68
. Table 9 1. Purchasing products on credit based. Will it use full for business?........................ 69
Table 10 3. Is it possible to lead your business without making purchase on credit based ....... 70
Table 11 4. Rate the credit facility provided by the company. .................................................. 71
Table 12 5. Do you make delay payment or default on payment?............................................. 72
Table 13 6. What is the reason for making delay payment or default on payment? .................. 73
Table 14 7. How affine you purchased products on credit based? ............................................ 74
Table 15 If the companies stop doing sales on credit, it will effect on customer relationship with
company do you agree with this statement. ................................................................................ 75
Table 16 9. If the company giving discount on payment if you pay with in the credit period.
Will it useful for you? ................................................................................................................... 76
Table 17 10. Do you want to extend the credit period by the company? ................................. 77
TABLE OF GRAPH:-
graph 1 ANNUAL SALES OF CONFIDENT DENTAL EQUIPMENT LIMITED:- ................ 33
Graph 2 LOCAL SALES:-............................................................................................................ 34
Graph 3 EXPORT SALES:- ......................................................................................................... 35
Graph 4 Due for more than six months and .................................................................................. 60
Graph 5 Due for less than six months .......................................................................................... 62
graph 6 TRADE RECEIVABLES OF THE COMPANY:-.......................................................... 64
Graph 7 BAD DEBTS OF THE COMPANY:- ............................................................................ 66
Graph 8 1. Do you purchase product on credit based from confident dental equipment limited?
68
Graph 91. Purchasing products on credit based. Will it use full for business?........................ 69
graph 10 3. Is it possible to lead your business without making purchase on credit based ....... 70
Graph 11 4. Rate the credit facility provided by the company. .............................................. 71
Graph 12 5. Do you make delay payment or default on payment? ......................................... 72
Graph 13 6. What is the reason for making delay payment or default on payment? .............. 73
Graph 14 7. How affine you purchased products on credit based? ......................................... 74
Graph 15 If the companies stop doing sales on credit, it will effect on customer relationship with
company do you agree with this statement. ................................................................................ 75
Graph 16 9. If the company giving discount on payment if you pay with in the credit period.
Will it useful for you? ................................................................................................................... 76
Graph 17 10. Do you want to extend the credit period by the company? ................................. 77
A STUDY ON CREDIT DEFUALT RISK AND ITS INFLUANCE ON
PROFITABILITY OF CONFIDENT DENTALMEQUIPMENT LIMITED
CHAPTER-1
INTRODUCTION:-
1.1 INDUSTRY PROFILE:-
Dental and Medical science is growing at fast pace to provide to the requirement of the country,
to provide health for all. The Govt. is dedicated to improve the overall health of the people and
also increase life expectation. There are more than 1.25 lakhs Dental professionals in India, 292
Dental Organizations, and 5000 Dental Research laboratory. The patient to bed relation in our
country is far below global principles. As such there is a abundant scope for production of dental
and medical equipment.
SURANA PG DEPARTMENT Page 1

It is a spot that apart from corporations here's no local maker who creates quality medical and
dental care equipment on an enormous scale. Confident Tooth Equipments is the sole company
in India achieved of obtaining these necessities.
Our new stock at Bidadi is the major facility in oral and medical Equipment industry. This
manufacturing plant is completely built and prepared for creation of finest quality equipment
which is accepted internationally. The entire equipment set up, car paint shop, design section, in
house tests facilities, and documentation center for numerous kinds of certifications can be
found. All of the facilities are unique in character which is rarely available in virtually any of the
present day global factories. Our target is to meet up with the global standard to be able to export
the Oral Equipment in a major way to developed and under-developed countries.
Confident Dental Instruments Ltd., an ISO 9001:2008 Accredited Company is the mind child of
any Post Graduate Dentistry Plastic surgeon, Dr. B. Subhaschandra Shetty, and M.D.S.
1.2 THEORETICAL BACKGROUND OF THE STUDY:-
Credit default risk is generated when an enterprise, having granted credit, accepts, in lieu of cash,
a written or implied promise to pay in the future for delivery of its goods or services. In todays
business environment, competitive pressures, customer preferences and promotional selling leads
the management of most enterprises to offer credit.
Credit default risk often constitutes a significant portion of assets. Controlling the
accounts receivables process demands the development of policies that are compatible with an
enterprises profits, liquidity and market share. Since the accounts receivables policy has a broad
impact, it must be managed carefully and assessed frequently.
Credit tread policy development is subject to internal and external business constraints
and requires careful evaluation of the policies potential impact on sales volume, cash

management objectives and procedures, direct and indirect cost of receivables management and
customer relations.
Once an account receivables policy is implemented, it should be reassessed at least

annually, since policy changes could be required to adjust for changing internal and external
conditions, such as changing business objectives, varying competitive industry standards,
fluctuating interest and
foreign exchange rates, inflation, rapidly increasing credit volume, technological advances and
globe trade pattern trends.
Receivable is a permanent investment and is an ever-rolling account. The finance

manager has to determine the level of this account suitable so that there will be an easy flow of
working capital. The management should see that debtors turn fast. If the debtors turnover
velocity is high then the firm can minimize borrowings for working capital. Accounts receivable
management is a decision making process, which takes into account the creation of debtors, and
minimizing the cost of borrowings of working capital due to locking of funds in account
receivables on credit tread.
Impact of credit default risk and its influence on business

Financial Impact:
Improved return on receivables.
Increased cash flow.
Generates investment opportunities.
Increase collection of effectiveness.
Reduce receivable delinquencies.
Reduced operation costs.
Reduce administration costs.
Early intervention turns marginal accounts into profitable accounts.
Customized receivables service based on invoice amount.
Productivity gain.

Strategic Impact (Long Term)

Focus on core business.
Better use of internal revenue.
Best in class capabilities utilized.
Tactical Impact (Short Term)
Reducing/controlling operating cost.
Reallocation of capital funds.
Tapping into new resources.

Accounts Receivables flow chart
CSD
Order processing
Order confirmation
Billing and dispatch
Consolidation of sales data
Provision for Credit Monthly schedule

Bad debts Controller Of receivables
System update
Customer
Master
Receipt
ing
Required legal Follow up of outstanding
Steps amounts
Payments End of
Proceed to the day
Suspend Documents
Subsequent
Collections
Dispatches Payment
Defaulted

REPAYMENT POLICY FORMULATION
The refund process begins with the enterprises judgment to spread out credit period and
finishes when payment is received from customers for the goods or services provided.
Its difficult that repayment of credit, gathering and funding rules accompaniment selling,
sales and production policies and, therefore, be compatible with the enterprises overall
objectives. To achieve this goal, the chief executive officer should involve senior managers from
all appropriate departments in developing the accounts receivables policy, since the various
departments within an enterprise could have vested ante rests and, possibly, conflicting
objectives; assign one senior manager to be responsible for the groups policy determination; and
review and approve the policies that the group has formulated.
Specific level of accounts receivable responsibility and right should be allocated through
the enterprise. Description by title is the efficient method of identifying levels of credit
responsibility, with senior managers usually assigned to approve higher credit risks. The policies
should be clearly communicated in writing to planning, production, credit and sales staff (and
any other staff affected by the policies) to ensure effective accounts receivable management and
credible, consistent customer contacts.
CREDIT POLICY
An enterprises credit policy is a major, controllable element that has a significant

influence on sales demand and profits. The many factors that comprise credit policy should be
analyzed before the decision is made whether or not to offer credit or to make changes to current
policy. Factors that could constrain or influence credit policy include: ability to finance the credit
policy. Costs of financing receivables by means of internal or external credit facilities should be
estimated to determine which approach is feasible for the enterprise.

The development of the enterprises credit policy requires that specific decisions be made
regarding several variables that establish the terms of sale and the acceptable level of credit
default risk. The variables are:
Credit standards
Credit period
Credit terms
Cash discount and surcharges
Credit limits
Credit instruments
Payment methods
When implementing or varying the credit policy by changing any one, or all, of the above
variables, management must assess the impact on net income, calculate the probability of
achieving the planned results, and determine the additional level of risk assumed. In particular,
any relaxation of credit policy should be considered only after very careful evaluation of the
impact of the change by top management, because it is extremely difficult to revert to more
stringent policies without experiencing adverse effects on customer relations and sales.
`Credit Standards
A firm has a wide range of choice in choosing the credit standards. A firm has to
decide what standard should be applied in accepting or rejecting an account for credit granting.
At one end of the spectrum it may decide not to extend credit to any customer, however strong
his credit rating may be. At other end it may decide to grant credit to all customers irrespective
of their credit rating. Between these two extreme positions lie several possibilities, often the
more practical ones. This gives ample scope for the Credit manager/ Finance manager to play a
critical role.
In general liberal credit standards tend to push sales up by attracting more customers.
This is, however accompanied by a higher incidence of bad debt loss, a large investment in

receivables and a higher cost of collection. Stiff credit standards have the opposite effect. They
tend to depress sales, reduce the incidence of bad debt losses, decrease the investment in
receivables and lower the collection cost.
Credit Period
The period of credit is the distance of period of credit is settled (for example, from date
of invoice to date of due), and is normally established according to an industry standard. The
credit period has straight effect of the charge of funding receivables and on gathering possibility.
An enterprise may elect to deviate from the industry standards for one or more reasons: to obtain
a competitive advantage, to reflect the enterprises classification of customer quality, or to longer-
term economic or business changes.
The date when payment is deemed to be received should be defined. It may be based on
the envelope postmark date, the remittance processing date, or the date funds are received.
Customers should be clearly advised of the payment receipt date.
Credit Terms
Credit terms are normally specified on the contractual documents, or on the customer
invoice or statement. Frequently used payment terms include the following: cash before delivery
(CBD) or Cash on delivery (COD) may be required when the buyer has been classified as a poor
credit risk. In case of an unknown or one-time buyer, credit cheque may be required when the
order is placed, or before the goods or services are delivered.
Cash terms permit the buyer a payment period of about 5 to 10 days and maybe used for
high turnover or perishable goods.
Invoice terms often a net due date and a discount due date that maybe calculated from
various starting dates such as the invoice, delivery or client acceptance dates. The term maybe

quoted, for example, as 2/10, net 30 meaning a payment discount of 2% is given if the bill is
funded within 10 days. Full payment is mandatory next 10 days but within 30 days.
Periodic statements are normally issued monthly. The statement terms may be similar to
invoice terms and include discounts and interest charges for late payment. All invoice
transactions are listed up to a cut-off date and payment is due by a specified date in the following
period.
Credit discounts and surcharges
Cash discount policies may be established for a number of reasons: to conform to the
industry norm, to stimulate sales, or to expedite receipt of cash. To be an effective collection
tool, the discount rate must be established at a rate of interest higher than that at which the
customer is able to borrow. Consideration should be given to the implications of customers
taking a discount to which they are not entitled.
A surcharge, or late payment charge, can be used to encourage prompt payment and to
equalize treatment for customers who pay on time versus those who delay payment.
Credit Limit
Credit limit categories should be established to codify the total credit that may be granted
to customers in each credit quality classification. To ensure that credit limits remain appropriate,
given business or other major changes, they should be regularly reviewed. Periodic credit
worthiness reassessment can be simplified by automatically reassigning customers to a higher
credit limit level after a specified period of satisfactory payment experience.
Credit factors, assigned by the credit grantor and weighted by relative importance, can be
used to calculate a single numerical value that could be used to assign distinctive credit limits
and payment periods to different customers. The credit score must always be tempered by

informed management judgment because the accept-reject decision implicitly includes economic
trade-offs: to minimize rejection of an acceptable credit customer (with loss of future business)
versus to accept a poor credit risk (and resulting debt losses).
Credit Instruments
Credit instruments are written payment contracts agreed to by the enterprise and its
customers. Instruments range from simple invoices to formal credit arrangements that are
selected to reduce credit risk. When selecting an instrument to be used, the enterprise should
consider industry standards, market norms and buyer risks.
The enterprise may choose different instruments at different times depending on the
product or services sold, the customers geographical location, or customer quality classification.
The ability to use different instruments provides flexibility when dealing with significant or
sensitive customers and orders. Compliance with relevant consumer protection legislation may
require detailed disclosure to the buyer of credit instrument terms.
The following are the 4 major credit instrument:
Open Account
Promissory notes
Conditional sales contracts
documentary credits
Payment Methods
The management of the enterprise selling the goods or services should advice its
customers of acceptable payment methods, including advance payments, cash, cheque, credit
card or electronic fund transfer. The implications associated with each method should be
assessed carefully before determining which payment vehicles to allow. For example, electronic

funds transfer (EFT) speeds cash flow and reduces collection risk because funds are immediately
withdrawn from the customers account and credited to the seller account. However, there are
initial development and on-going operational costs, and some enterprises may not find this
process cost effective.
Factors to consider when determining possible payment methods are: provisions of the
Federal Currency Act concerning legal tender; standard trade practices; cost of processing; cash
flow implications and impact on collection risk.
Currency hedging may be a major factor for industries involved in foreign transactions,
and the policy related to hedging should be in writing.
CREDIT ANALYSIS:-
Besides establishing credit standards, a firm should develop procedures for valuating credit
applicants. The second aspect of credit policies of the firm is credit analysis and investigation.
Two basic steps are involved in the credit investigation process.
Obtaining credit information.

Analysis of credit information.
It is on the basis of credit analysis that the decisions to grant credit to a customer as well as
the quantum of credit would be taken
Obtaining credit information
The first step in credit analysis is obtaining credit information on which to base the
evolution of the customer the sources of information, broadly speaking are:
Internal
External

Internal
Usually firms require their customer to fill various forms and documents giving the
details of the financial operations. They are also required to furnish trade references with which
firms can have contacts to judge the suitability of the customer for credit. This type of
information is obtained from internal sources of credit information another internal sources of
credit information is derived from the records of the firms contemplating an extension of credit
facility . it is likely that a particular customer or applicant may have enjoyed credit facility in the
past in the case that firm would have information on the behavior of the applicants in terms of
the historical payment pattern this type of information may not be adequate and may therefore
have to be supplemented by information from other sources.
External
The availability of the information from the external sources to assess the credit
worthiness of the customers depends on the development of the institutional facilities and
industry practices. in India, the external sources of credit information have not as developed as in
the industrially advanced countries of the world. Depending upon the availability of the
following external sources may be employed to collect the information.
Financial Statements
The external sources of credit information is the published financial statement that is the
balance sheet and the profit and loss account. The financial statement contains very useful
information they throw light on an applicants financial viability, liquidity profitability and debt
capacity. Although the financial statement do not directly reveal the past payment period of the
applicant they are very helpful in assessing the overall financial position of a firm which is
significantly determines its credit standings.

Bank References
Another useful source of credit information are the banks of the firm, which is
contemplating the extension of credit the modus operatic here, is that the firms banker collects
the necessary information from the applicants bank. Alternatively, the applicant may be required
to ask his banker to provide necessary information either directly to the firm or to its bank.
Trade References
These refer to the collection of information from firms with whom the applicant has
dealings and who on their experience would vouch for the applicant.
Credit Bureau Reports
Finally, specialists credit bureau from organizations specializing in supplying credit

information can also be utilized.
Analysis of Credit Information
Once the information has been collected from different sources, it should be analyzed to
determine the credit worthiness of the applicant. Although there are no established procedures to
analyses the information, the firm should device one to suit its needs. The analysis should cover
two aspects:
A. Quantitative
B. Qualitative

Quantitative
The assessment of the quantitative aspect is based on the factual information available
from the financial statements, the past records of the firm, and so on. The first step involved in
this type of assessment is to prepare an ageing schedule of the accounts payable of the applicant
as well as calculate the average age of the accounts payable. This exercise will give an insight
into the past payment pattern of the customer. Another step in analyzing the credit information is
through a ratio analysis of the liquidity, profitability and debt capacity of the applicant. These
ratios should be compared with the industry average; moreover, rend analysis over a period of
time would reveal the financial strength of the customer.
Qualitative
The qualitative assessment should be supplemented by a qualitative/subjective

interpretation of the applicant credit worthiness. The subjective judgment would cover aspects
relating to the quality of management. Here, the reference from other suppliers, bank references
and specialist bureau reports would form the basis for the conclusions to be drawn. In the
ultimate analysis, therefore, the decision whether to extend credit to the applicant and what
amount to extend will depend upon the subjective interpretation of this credit standing.
COSTS
The main types of costs related with the delay of credit on financial records of payment
receivable are:
1. Cost of Collection
2. Cost of Capital
3. Cost of Delinquency
4. Cost of Default

Cost of Collection:-
Collection costs are administrative costs incurred in collecting the receivables from the
customers to whom credit sales have been made. Included in the category of costs are (i)
additional expenses on the creation and maintenance of a credit department with staff,
accounting records, stationary, postage and other related items; (ii) expenses involved in
acquiring credit information either through outside specialist agencies or by the staff of the firm
itself. These expenses would not be incurred if they do not sell on credit.
Capital Cost
The increased level of accounts receivable is an investment in assets, they have to be

financed thereby involving a cost. There is a time lag between the sale of goods to, and payment
by, the customers. Meanwhile, the firm has to pay employees and suppliers of raw materials,
thereby implying that the firm should arrange for additional capital to support credit sales, which
alternatively could be profitability employed elsewhere, is, therefore, a part of the cost of
extending credit or receivables.
Delinquency cost
This cost arises out of the failure of the customers to meet their obligations when
payment on credit sales becomes due after the expiry of the credit period. Such costs are called
delinquency cost. The important components of this cast are:
1. Blocking up of funds for an extended period.
2. Cost associated with steps that have to be initiated to collect the over dues, such as,
reminders and other collection efforts, legal charges, where necessary, and so on.

Default Cost
Finally, the firm may not be able to recover the over dues because of the inability of the
customers. Such debts are treated as bad debts and have to be written off as they can not be
realized, such casts are known as default casts associate with credit sales and accounts receivable

CHAPTER 2
2. REVIEW OF LITERATURE AND RESEARCH DESIGN

2.1 Literature review:-
1. Darrell Duffie and Kenneth J. Singleton, Book Review of Credit Risk: Pricing,
Measurement, and Management-(2003), Princeton University Press, 396 pages
Credit risk is the key job for risk professionals and market controllers. Finance institutions,
regulators and central banking companies do not agree with the fact how to evaluate credit risk
and, more especially, how to compute the perfect capital that is essential for protecting different
partners that talk about this risk. Requesting banking institutions to keep too much capital in
reserve to repay credit risk can be considered a way to obtain market distortion in risk
management action. Each one of these issues arise partly because credit risk is not well
comprehended. Therefore the contribution of Duffie and Singleton will be welcomed by the
academics, regulators, and professionals who talk to it. The booklet has thirteen chapters, three
appendices (two on affine functions), a thorough set of sources, and an index (writers and
things). It addresses all things related to credit risk. The primary emphasis is modeling credit
risk: calculating stock portfolio credit risk and rates different securities subjected to credit risk.
The give attention to credit risk management is less important. The e book includes with great
clearness the relevant subject areas of credit risk. It shows the strong educational competence of
the writers. This is really the best research on credit risk in the marketplace. I would recommend
the e book to academics and pros, and also for the coaching of credit risk at Experts and PhD
levels in fund and economics.
2. Maria Psillaki*, Ioannis E Tsolas1, and Dimitris Margaritis

Evaluation of credit risk based on firm performance
In this newspaper we research whether specialized efficiency can be an important ex-ante

predictor of business failing. We use examples of French textiles, real wood, and R&D

companies to acquire efficiency estimations for individual organizations in each industry. These
efficiency measures derive from a directional technology distance function made empirically
using non-parametric Data Envelopment Evaluation (DEA) methods. We summarize the result of
efficiency on the probability of default in terms of the franchise value hypothesis which claims
that better businesses will be less likely to are unsuccessful. Estimating probit and logit
regression models we find that efficiency has significant explanatory ability in predicting the
probability of default in addition to the result of standard financial indications. Our empirical
evaluation also demonstrates caution must exercised with all the solvency percentage as an
former mate ante predictor of business failure.
3. Philippe Jorion, or Gaiyan ZhangPaul Merage School of Business University of

California at Irvine, Good and Bad Credit Contagion Evidence from Credit Default
Swaps Irvine, CA 92697-3125
This study observes the data assignment result of credit measures through the industry, as taken
in the Credit Default Swaps (CDS) and stock markets. Optimistic associations through CDS
extents suggest leading poison possessions, whereas positive connections indicate competition
things. We find solid indication of leading infection effects for Chapter 11 liquidations and
rivalry effect for Chapter 7 liquidations. We also introduce a purely unanticipated occasion,
which is a huge hedge in a companys CDS assortment, and determine that this evidence to the
stoutest indication of credit contagion through the industry. These outcomes have significant
consequences for the building of portfolios with credit-sensitive implements
4. Edward Altman*, Andrea Resti** and Andrea Sironi Default Recovery Rates in
Credit Risk Modeling: A Review of the Literature and Empirical
EvidenceDecember 2003
Data from many countries lately suggests that guarantee values and restoration rates on corporate
and business defaults can be volatile and, additionally, that they have a tendency to decrease just

when the amount of defaults rises in economical downturns. This website link between
restoration rates and default rates has customarily been neglected by credit risk models, as almost
all of them centered on default risk and implemented static reduction assumptions, dealing with
the restoration rate either as a regular parameter or as a stochastic adjustable independent from
the likelihood of default. This traditional give attention to default research has been partially
reversed by the recent significant upsurge in the amount of studies focused on the main topic of
restoration rate estimation and the partnership between default and restoration rates. This
newspaper presents an in depth review of just how credit risk models, developed over the last
thirty years, treat the restoration rate and, more specifically, its romance with the likelihood of
default of your obligor. Recent empirical research concerning this problem is also offered and
discussed
5. Diana Bonfim, Banco de Portugal Credit risk drivers: evaluating the contribution
of firm level information and of macroeconomic dynamics (2013)
Knowing why some businesses delinquencies, while some do not, is an important issue for the
assessment of financial balance. In this domain, it could be interesting to understand if credit risk
is run mostly by idiosyncratic company characteristics or by organized factors, which
simultaneously impact all firms. In order to empirically examine the determinants of loan
standard, we get started by checking out the backlinks between credit risk and macroeconomic
innovations at an aggregate degree. The outcomes obtained appear to be to confirm the
hypothesis that in periods of financial growth, which are sometimes combined with strong credit
development,
there may be some tendency towards extreme risk-taking, even though the imbalance created
such intervals only become apparent when economical growth decreases. Following the
analyzing the determinants of credit risk at an aggregate level, we focus our attention with an
comprehensive dataset with complete financial information for more than 30. 000 companies.
The results obtained claim that default probabilities are pretentious by several firm-specific
features, such as their financial composition, profitability and smooth, as well as by their recent
sales performance or their investment policy

6. Maik Dierkes a, Carsten Erner a, Thomas Langer a, Lars Norden b, Business credit
information sharing and default risk of private firms a Finance Center Mnster,
University of Mnster, 48143 Mnster, Germany b Rotterdam School of Management,
Erasmus University, 3000 DR Rotterdam, the Netherlands
All of us investigate whether and how business credit information writing really helps to better
examine the default risk of private firms. Exclusive organizations stand for an excellent testing
ground because they are smaller, more informationally opaque, riskier, plus more dependent on
trade credit and bank loans than public firms. Based on a representative panel dataset that
comprises private businesses from all major industrial sectors, we find that business credit
information sharing greatly increases the quality of default predictions. The enhance is more
robust for elderly organizations and those with limited liability, and is determined by the sharing
of firms' payment history and the number of businesses protected by the local credit bureau
office. The value of soft business credit information is higher for smaller and less isolated firms.
Furthermore, in space and industry analyses we show that the higher the value of business credit
information the lower the realized default rates. Our study highlights the channel through which
business credit information sharing brings value and the factors that influence its durability.
7. Kilonzo Jennifer Mbula1, Dr. Memba S.F.2, Dr. Njeru A3 Effect of Accounts
Receivable on Financial Performance of Firms Funded By Government Venture
Capital in Kenya (2013) pages 12-25
This kind of study sought to set up the result of medical data receivable management on financial
performance of organizations financed by Government venture capital in Kenya. The study
reviewed both theoretical and empirical literary works on accounts receivable management.
From your review of related literature, an extensive conceptual structure of argument of the
relationship between accounts receivable management and firm financial performance was
formulated. Centered on the conceptual platform, a questionnaire was developed and used to
acquire primary data for the independent variables while a list survey sheet was used to

accumulate supplementary data for the type variable. Out of seventy two respondents, fifty-one
responded, being 71%. Both descriptive and inferential analyses were done. Statistical package
for sociable sciences (SPSS) version 20. 0 utilized as the statistical tool for research of the
research. Analyses for variant (ANOVA) and regression analysis were used to test the
hypothesis. The results show there exists a positive relationship between accounts receivables
and financial performance of businesses funded by federal government venture capital in Kenya
(0. 038).
8. John Mbatia Kibebo EFFECT OF CREDIT RISK ON THE FINANCIAL

PERFORMANCE OF CEMENT INDUSTRY IN KENYA-D63 / 71072/2014
The entire objective of this research was going to set up the effects of credit risk on the financial
performance of cement businesses in Kenya. This was achieved by taking a look at the impact of
credit risk publicity rate, default rate, and recovery rate on the return on asset of cement
businesses in Kenya. Cross-sectional survey design used to acquire the data from the field. The
researcher carried out a census survey where all the listed cement organizations and regulated by
the Capital Markets Authority as at the time of the study were trained in. Descriptive statistics
and inferential analysis of the info were done using measures of central tendency and Pearson
relationship analysis. This study activated and actualized better understanding of credit risk
result on cement firms' performance. Secondary data collected from the cement firms' quarterly
reports for the period 2009 to 2014 was used in this research. The data collected from the twelve-
monthly report was analyzed using the multiple regression analysis. The regression output was
obtained using statistical package for interpersonal sciences. In the model, the dependent variable
come back on asset was used as an indicator of financial performance while the independent
variables credit risk exposure rate, default rate, and recovery rate were used as credit associated
risk indicators. The findings of the study showed that there is a significant relationship between
financial performance and credit risk. The dependent and the individual variables in the research
indicated a relationship with credit risk exposure rate and default rate exhibiting a positive
relationship with the return on property while recovery rate displaying a negative relationship

with come back on asset. The regression results shows that exposure rate have a higher
significant impact on return on asset than the default rate.
9. In Nairobi County, Kenya David Ndege Muriuki The effect of credit policy on
profitability of manufacturing small and medium sized enterprises-(2014) pages 20-
37
It should be appreciated that SMEs and mostly processing SMEs that deal with value
addition are incredibly important in conditions of career, wealth creation, and resolving many
other social problems that can come with unemployment and slower monetary growth. However
many problems face SMEs and because of this most SMEs fail before three years after their start.
Given this high failure rate, it becomes essential to study the impact of credit plan on financial
returns of manufacturing SMEs. This is to assemble more insights that can ensure that SME
survive, grow and play their expected role in monetary growth and development. Consequently,
this study searched for to look for the effect of credit coverage on profitability of making SMEs
in Nairobi Region. The study adopted a descriptive research design. The target population was
all the manufacturing in Nairobi County from which 55 SMEs were sampled. The study used
secondary data which was extracted from SMEs financial statement for five years from 2009 to
2013. Multiple regression research was used to examine data. The significance of the results was
examined using t-test, z testing and the ANOVA. The study found that credit policy is positively
related to manufacturing SMEs success with a coefficient of correlation of 0. 83 and coefficient
of dedication of 0. 69. Credit rating policy was also available to have strong positive relationship
with growth in sales as shown by coefficient of correlation of 0. 896 and L square of 0. 804.

10. Samoei Richard Kipkoech PhD Student Jomo Kenyatta University of Agriculture and
Technology, Kenya,P.O. Effect of Credit Management on Firm Profitability
Evidence Savings and Credit Co-Operatives in Kenya BOX 4842-30100 Eldoret,
Kenya
The objective of this study is to measure the effects of credit management (CM) on the firm's
profitability. The study used explanatory research design to establish origin effects of credit
management on the firm earnings. The analysis targeted all the Sacco's within Uasin Gishu
County. The study utilized structured questionnaires as the instruments for data collection. Data
was analyzed and presented with the help of statistical package for sociable sciences (SPSS),
which provided descriptive and inferential statistics. The findings mentioned that credit debt
collection, credit risk assessment, credit granting decision, credit debts collection and credit
insurance plan play an natural part in bettering firm success. Thus management wants to
established sound credit management to stop late payment by debtors hence an increase in
profitability. It is also functional for the organization of SACCOs to warrant an effective credit
policy and also give pledge to the shareholders on the SACCOs aptitude to happen its financial
obligations as when due either in favorable or unfavorable economical conditions. The study
public a strong support for the argument that credit granting decision influences steady
profitability at a higher rate and thus management should be willing to put into practice it in
order to increase financial viability. SACCOs should ensure that bills are paid in time so that
they cannot face financial constraints due those slow debts.
11. THE IMPACT OF TRADE CREDIT MANAGEMENT ON FIRMS

PERFORMANCE (CASE STUDY- GUINNESS GHANA BREWERY LIMITED)
(Aboagye Kwarteng Amaning. Adjei Boahen George. Amponfi Osei Kofi Bismark.
Abena Gyankoma. Alhassan Abdulai Jeduah-(2013)
An efficient credit management system reduces the amount of capital tired up with debtors and
minimizes bad debts. Good credit management system is vital to business cash flow and success
and ensures effective business operation. The study investigated the impact of financial

management of trade credit on firms performance; using Guinness Ghana brewery limited
(GGBL) as case study. The choice of the topic was influenced by the impact of short term
financial management of trade credit on profitability of companies. Secondary data was used for
the study. It noted that, average collection period of 39.6 days was maintained by GGBL over the
period. Average payment period was also 96.2 days, which was encouraging. This means that,
supplies made to GGBL on credit were utilized to turn over sales cycle three times before
payments were eventually made to suppliers. The performance in terms of profitability
evidenced by ROE (Return On Equity), was 36% and OPM (Operating Profit Margin) was
12.4%. This goes to highlight the importance the impact of efficient credit management have on
profitability of firms. The study further observed that ACP and APP were positively related to
profit margin (OPM), but negatively related to return on equity. The study was observed to be
consistent with other studies conducted by Poutziouris, Michaelas and Soufani (2005) The
recommendations made include; Policy makers should have the interest in promoting efficient
management of working capital to facilitate performance management. Top management of
every firm should manage their trade credits prudently in order to remain profitable and
competitive.
12. RISKS MANAGEMENT: NEW LITERATURE REVIEW Ennouri W
The complexity of the industrial activities and the important mass of flows crossing the supply
chain promotes the emergence of risks that must be considered in the decision process. For this
reason, we have developed this paper to clarify the basics of risk management through a short
new suggestion of literature review for risk management. Our justification of this attempt is that
this area is the most discussed in our days and it is impossible to present all definition of the risk
concept, we have tried to collect the most recent studies in this paper

2.2 STATEMENT OF PROBLEM:-
Poor management of credit sales is being reflected by liquidity and profitability position.
Many firms are consequently operating below capacity because of their in ability to recover
credit sales also to settle creditors for credit purchases as at when due. The fact may give rise to
liquidity crisis and the business is further discouraged from taking advantage of such profitability
of the company. Specific problems of study are;
a. How improper evaluation of credit applicant can be eliminated.

b. Poor and ineffective credit sales can be reduced.
c. How to reduce high cost of allowing credit facility to the customer
2.3 OBJECTIVES OF THE STUDY:-
To study the receivables and trend of managing the receivables.

To determine the effectiveness of management of receivables.
To determine the amount of receivables due.
To know the optimum credit period.
To study in detail the practical approach followed in granting various types of advances.
To study the recovery pattern of receivables.
To know the cash and fund management.
2.4 RESEARCH DESIGN OF THE STUDY
The study is descriptive in nature since the research will help to discover the association between
profitability and trade credit. A simple random sampling technique will use to come up with a
sample of 20 customers from the confidant dental equipment limited

SAMPLING UNIT:-
A sampling unit is a set of elements considered for sampling process. The sample unit in this
project consists of customer of confident dental equipment limited.
SAMPLE SIZE:-
The survey is estimated to be conducted among 20 units.
2.5 DATA COLLECTION METHOD:-
Primary data:-
Questionnaire method will be used to interviewing the finance manager of Confident Dental
Equipment limited
Secondary data:-
Account receivable and payables data available with confident dental equipment limited
Balance sheet and annual reports of company.
Document of sales order and credit sales and credit period
Accounts of repayments for analyze
2.6 SCOPE OF THE STUDY
The scope and significance of the study are as follows:

The study was carried out at Confidant Dental Equipment Limited, Bidadi
The study is confined to analyzing the components of accounts receivables.
The findings and suggestions from this study will help the organization to frame a suitable
financial strategy for the better operation of the organization.

2.7 LIMITATIONS:-
The study is limited up to 10 major customers to whom credit was extended.

The study is based on the data collected for only 2 years.
The study included collection of data through interaction with officials and the findings were
based on the premise that the respondents have given correct information.
The questionnaires are given to the finance manager of the confident dental equipment limited.
And analyze the result of research.

CHAPTER-3
3. COMPANY PROFILE:-
Table 1 COMPANY PROFILE:-
Name of the Company Confident Dental Equipments Limited

P.B.No.7939 Pete Channappa Indl.Estate,
Regd Office & works: Kamakshipalya, Magadi Road, Bangalore-
1. 560 079
2. Date of Incorporation 28.03.1988
3. Paid Up Capital /Resource Rs. 39.70 Crores
4. Investment in Plant & Machinery Rs. 146.92 Lakhs
5. No. of Branch Offices 14 (Fourteen)
6. Total Employees Strength 450 500
VAT Registration Number (TIN) 29520122431

7.
Income Tax Permanent A/c. No. AAACC9198C
8.
MSE Regn. No. 290201201091
9.
a).DG S & D Registration No. Not Renewed
10. b).NSIC Regn. NSIC/KAR/GP/RS/KT/C-103/2009
Directorate of Industries U.P.Kanpur D.I.U.P.S.P.S. HQ. KNP, Bangalore, Regn.

11. Stores Purchase Programme No.37516, Dt.23/7/2001
12. Import & Export Code No. 0788018850
Central Excise
13. a) Reg. No.
b) E. C. Code No. : AAACC 9198CXM001
1). Dr. B. Subhshchandra BDS,MDS
Name of the Shetty,

Directors 2). Mrs. M. Poornima B.A.

14. & S.Shetty,
Qualification
3). Dr. M. Saphal Shetty, BDS,MDS
4). Mr. M. Rakshith Shetty, BE (Medical Electronics)
Certified For : ISO 9001:2008 Quality Management System

By TUV Rheinland (India)
15.
Product Certification: Certified by Bureau of Indian Standards (BIS)

Dental X-rays of 70 KV and Atomic Energy Regulatory of India (AERB).
Rating
Confident dental equipment limited is incorporated on 28/march/1988 with the capital of

39.70 crores. And they have invested 146.92 lakhs for plant and machineries
Dr. Shetty started this Organization in the year 1978 with a vision to provide quality Dental
Equipment to the Indian Dental Surgeons. Dr. Shetty toiled hard in the initial years as in those
years technology of manufacturing Dental Equipment was in a primitive stage. He was the first
Indian Manufacturer who introduced Sit Down Dentistry for Indian Dentists. It took more than
10 years for him to make a mark in the field of Manufacture of Dental Equipment. In the year
1988, Confident Dental Equipment, a Partnership Concern became the Private Limited
Company. In the 2002 year the Confident Dental Equipments Ltd become public limited
company. since then the Company, Confident Dental Equipments Ltd. never looked back and the
company manufactures wide range of Highly Sophisticated Dental Clinical, Laboratory and
Medical Equipment.
The company diversified its activity in the year 1995 started the manufacture of Medical
Equipment like Electro Hydraulic OT table& OT Light, ICU Bed & are rated has best in the
Indian market and also an import substitute.

It has the unique distinction as the first Dental & Medical Equipment Manufacturing Company to
be awarded ISO 9001:2008 for Quality Management System from TUV, Rheinlander, Germany
for Design Development & Manufacture of Dental Chair Mount Units, Dental Clinical &
Laboratory Equipment, Operation Theatre Table, Operation Theatre Lights and Hospital
Furniture
VISION
To provide quality dental and medical Equipments to Healthcare industry. And to have global
presence. Achieving customer satisfaction by adopting a system founded on business ethics,
values and the philosophy of quality from concept to actualization
MISSION
To be the frontrunner in providing Quality dental and medical Equipments and services by
focusing on quality, productivity and cost effectiveness and by creating an ethos that encourages
team spirit and where each individuals contribution is recognized and valued.

OUR MANAGEMENT
MANAGING DIRECTOR
MANAGING DIRECTOR
Dr. B. Subhshchandra Shetty, BDS,MDS
A special note: When I started Confident Dental Equipments, it was my desire to offer quality
products, best price, value for money.
DIRECTOR
Mr. M.Rakshith Shetty, BE (Medical Electronics)
DIRECTOR
Dr. M.Saphal Shetty, BDS, MDS
GENERAL MANAGER
Mr.B Arun Kumar Shetty

GENERAL MANAGER
Mr. B. Prakash Chandra Shetty

Table 2 ANNUAL SALES OF CONFIDENT DENTAL EQUIPMENT LIMITED:-
YEAR Local Exports Total

Rs. In Lakhs Rs. In Lakhs Rs. In Lakhs
2010-2011 6211.52 42.38 6253.90
2011-2012 6554.27 77.14 7325.70
2012-2013 6968.68 90.63 7059.32
2013-2014 7326.51 50.04 7826.94
2014-2015 8553.03 124.46 8677.50
2015-2016 7743.27 40.98 7784.26
ANALYSIS:- :- From the above table shows that the annual sales of confident dental equipment
limited , and its clearly tells about the export sales and local sales of the company. In this table
there is sales data from 2010 to 2016.

graph 1 ANNUAL SALES OF CONFIDENT DENTAL EQUIPMENT LIMITED:-
INTERPRETATION:- :- From the above table, it is showing that the total sales of the company
and it clearly saying that their local sales is more than the export sales in 2012 the export sales is
increase drastically, and it again decrease in 2013 . Likewise it varies from year to year. In case
of local sales from 2011 to 2016 it increase year by year, from this information we can
understand that they get more profit from local business, and they are majorly focused on local
sales.
.
TOTAL LOCAL AND EXPORTED SALES (2011-2016)
Graph 2 LOCAL SALES:-
ANALYSIS:- The above graph shows the information about the local sales of the
company from the 5 years, its shows the increasing level of every year, but in the
year of 2016th the sales is decrees in local market, but its not a big changes in
sales.

Graph 3 EXPORT SALES:-
ANALYSIS:- from the above graph we can analyze, that the export sales of the
company, the export sales of 2011 is in normal stage , but when it comes to 2012
and 2014 the sales increase highly, but in the year of 2011, 2013, 2016, and 2016
its decrease and we have not seen any development in export sales.

Quality policy:-
We at Confident Dental Equipments Ltd. are committed to achieve customer satisfaction by

providing state of art dental and medical equipment and quality service.
We shall excel in the market by achieving quality, economy in products, and service by ensuring
quality in design, defect prevention and waste elimination.
We shall adopt scientific approach for effective training of employees and improve work culture.
We shall continually improve the effectiveness of quality management system and contribute to
the development of the organization and its associates.
CDEL has established the quality policy that is appropriate to the purpose of the organization
and is with a vision of organizations future. It includes a commitment to comply with
requirements and continually improve the effectiveness of the quality management system. This
policy provides a framework for establishing and reviewing quality objectives, management with
due delegation to important personnel, ensure that the organizations quality policy is
communicated and understood within the organization. The Management review committee
reviews the policy at appropriate time for its continuing suitability.
With its sophisticated manufacturing facilities; strong quality focus, with an established
Integrated management system (IMS) quality system, which includes ISO 9001: 2008
modernized production processes and outstanding after-sales support, Confident has earned a
reputation for consistent, reliable product performance. It has a proven track record of excellence
on special developmental projects.
In its endeavor to manufacture world-class Dental & Medical products, Confident has
implemented qualityinitiative in its manufacturing plant. These initiatives, aimed at providing the
highest standards of products and services to its customers, include 5S techniques, and all-
focused plan of total quality management

CERTIFICATION:-
We are ISO 9001:2008 certified company.
It has the unique distinction as the first Dental & Medical Equipment Manufacturing Company to
be awarded ISO 9001:2008 for Quality Management System from TUV, Rheinland, Germany
for Design Development & Manufacture of Dental Chair Mount Units, Dental Clinical &
Laboratory Equipment, Operation Theatre Table, Operation Theatre Lights and Hospital
Furniture.
Dental X-Rays (65KV & 70 KV)
Certified by Bureau of Indian Standards (BIS) for IS 7620- pt 1(1986)

Certified by Atomic Energy Regulatory Board of India for Radiation Safety (AERB)
Business profile
In our endeavor to provide the best, we have diligently expanded Confident Dental Group.
The product grouping and management of Confident Dental Equipments Ltd. is structure based
on technology and disciplines:
This strategic business-unit concept, through which different departments and divisions are led
by independent heads, enables specific responsibilities and commitments to be maximized across
the various levels of the organization. This makes it possible for us to offer the most cost-
effective, high-quality dental and medical equipment products.
These provide an effective marketing network to the Confident Products of manufacture, as also
for trading items throughout India. The Confident make of Dental Items have been widely
accepted by the large number of Dental and Medical Institutions (with Dental Departments). As
on date our Company has achieved the unique distinction of having equipped many
Dental/Medical Institutions both in the private and public sectors.

PRODUCT PORTFOLIO
Our organization is counted amid the reputed manufacturers, suppliers and exporters of a range
of Dental and Medical Products. All our products are made.
Using quality raw material and furnished with the latest accessories and software. We offer all
our equipment and products in different models and variations. These are actively used by the
Dental & Medical professionals operating in universities and government institutions, along with
research centers and departments apart from defense department. Our products are largely in
demand in both public and private Dental & Medical sectors.
Prominent features:
Advanced technology
Precision engineered
Ease of operation
Long service life
Sophisticated working mechanism through software & applications
VALUE CHAIN
Today the group has emerged with the following companies

Confident Dental Equipments Ltd., Providing state of the art dental & Medical
equipment for both dental & Medical clinical Hospitals.
Confident Sales India Pvt. Ltd. Providing the entire range of imported Dental
consumables, instruments, and equipment.
Confident Dental Laboratory With facilities like CADCAM to carry out crown and
bridge a state of art milling center from Sirona, Germany. We cater to all laboratory
needs as well as provide training for dental technicians who intend to establish

laboratories anywhere in the country. We provide turnkey equipment, material and

training under one roof.
Confident Electronic Pvt. LtdCarry out R & D and manufacture indigenous electronic
parts required for Dental & Medical Equipments.
Surgident Corporation: Manufacturers and importers of necessary spare parts for
servicing of Dental & Medical Equipments. Placing high priority on service employ large
number of people as Resident Technicians who are well equipped to offer complete
Service support
BUSINESS NETWORK:-
Confident dental equipment limited has many show rooms and service centers are at the
following places.
New delhi
Mumbai
West Mumbai
Chennai
Hyderabad
Pondichery
Chandigarh
Kochin
Kolkata
Lucknow
Ahmedabad
Amritsar
Jaipur
Bhopal
Jammu & Kashmir
These provided an effective marketing network for confident group of companies. Confident
made dental and medical items have been widely accepted by a larger number of dental and

medical institution. As on date confident has achieved the unique distinction of having equipped
many dental/medical institution both in the private and public sectors.
FUTURE PLANS:-
The company has an ambition to start a chain of franchisee dental laboratory throughout the
country. In addition to the companys contribution in the field of manufacture of dental clinical
and laboratory equipment, the company is planning to enter dental Hi-tech treatment area by
planning to start a chain of dental specialty hospital throughout India. The company has already
started its first dental specialty hospital in Bangalore, which will be replicated in other major
cities also within next two years. With this confident will be serving the dental fraternity in all
the areas, viz. equipment, laboratory & clinical facility.
The company is presently working for obtaining CE, ISO 13485 certifications. Plans are
underway for obtaining EN ISO 14001 EMS and FDA certifications.

EQUIPMENTS AND PRODUCTS OF CONFIDENT DENTAL EQUIPMENT LIMITED:-
DENTAL EQUIPMENTS:-
Electrically operated fully programmable dental chair mount unit in 4 models.
Dental X-Ray unit with chair, wall, and wheel mounting Particular.
High and low vacuum motorized suction.

Dental aerator air compressor.
Pulse welder
Pulp tester
Surgical cautery
Sterilization equipments:-

o Glass bead sterilizer.

o Hot air sterilizer.
o Autoclave.
o Needle burner.
o Ultra violet cabinet
DENTAL LABORATORY EQUIPMENTS:-

Acrylizer with digital programming
Circular saw
Dew ax furnace hiheat small (chamber size: 125*100*250 mm)
DE waxing bath
Electro polisher with 2 tanks with titanium electrodes
Lab airotor
Laser pin setter
Mechanical press
Micro surveyor cum milling machine
Milling kit 0 degree
Milling kit 4 degree
Mighty lab micro motor
Motor driven casting machine CASTER

Palatal trimmer poly trim

Plaster dispenser big
Plaster dispenser small
Pneumatic chisel
Polishing lathe 2800 rpm
Sand blaster santer
Sand blaster with 0.75 hp Min. noise compressor
Single disc model trimmer carborandum rough
Single disc model trimmer diamond disc
Double disc model trimmer one diamond 7 one carborandum
Spindle grinder with demco spindle spinder
Steam cleaner steamer
Supreme lab micromotor
Vacuums mixer with vibrator cuumyx
Vibrator big
Wax pot molten
Working lamp with 5 times magnification
Pre-clinical work station 2 or 4 working place
Prosthetic lab table with 4 working place
MEDICAL EQUIPMENT:-
Electro hydraulic O.T table (top sliding)
Electro hydraulic O.T table
Hydraulic O.T table
Electro O.T table
Electrically operated gynecological chair
Electrically operated I.C.U Bed
Patient/home care bed
Dialysis/blood bank chair

O.T light (LED / Halogen)

Attachments to O.T table
o Arm board
o Lateral
o Universal lateral support
o Anesthetic screen frame
o Knee crutches
o Shoulder support
o Kidney elevator
o Raised arm board
o General purpose head rest
o Knee rest
o Cassette holder
o Cassette tray with adjustable rods
o Lateral cassette holder
o Douche tray (hanging type)
o Hand surgery board
o Pelvic rest
o Stainless steel stand
OVERSEAS PRINCIPALS:-
1. M/s. nakanishi dental manufacturing co. ltd. Japan

2. M/s. planmeca Oy, Finland
3. M/s. EMS, Switzerland
4. M/s. werther international, spa, Italy
5. M/s linak A/S Denmark
6. M/s cattani, Italy
7. M/s new life radiology, Italy
8. M/s liarre, Italy

9. M/s hatakayema dental manufacturing co. ltd. japan

10. M/s carlo de georgi srl, Italy
11. M/s filli manfredi spa, Italy
12. M/s durr dental, Germani
13. M/s balu X imaging SRL, Italy
MARKET OVERVIEW
Some of confidants esteemed customers
A) DEFENSE:-
a) A.F.D.C., tyag rai marg, new Delhi
b) C.M.D.C., Delhi cantt
c) Air force station, race course road, new Delhi
d) Air force station, M.I. room, sector 25, Noida
e) A.F.D.C., Ghaziabad
f) M.D.C., chandimandir.
g) C.M.D.C., (SC) pune
h) M.D.C., ambala unit
i) Military dental center. Hyderabad
j) Military dental center, secundrabad
k) Military dental center, Maharashtra
l) A.F.M.S. depot, luck now
m) Sainik dent chikitsa Kendra, welington
B) GOVERNMENT INSTITUTIONS:-
a. Maulana Azad medical college, Delhi
b. A.I.I.M.S., Ansari nagar, Delhi
c. G.T.B hospital, shehdare, Delhi
d. Neharu homeopathic hospital defence colony, Delhi
e. Safdarjung hospital, ring road, delhi

f. Sanjay Gandhi hospital, mangol puri, Delhi

g. Civil hospital, rajpura road. Delhi
h. INHS Ashwiuni, Mumbai
i. CMSO general hospital, godhra
j. Government dental college, Srinagar.
k. Director of health service, Jammu
l. General hospital, Bapunagar.
m. A.F.M.S., Calcutta
C) PRIVATE COLLEGE:-
a) V.S dental college. Bangalore , Karnataka
b) Ambedkar dental college. Bangalore, Karnataka
c) NSVK denal college, bangaore, Karnataka
d) Krishnadevaraya dental college, Bangalore, Karnataka
e) Bangalore institute of dental scinces, Bangalore, Karnataka
f) R V dental college, Bangalore. Karnataka
g) Syamala reddy dental college, Bangalore, Karnataka
h) K.L.E society dental college, Bangalore, Karnataka
i) K.L.E.societys dental college, Belgium, Karnataka
j) Kasturba medical college, Mani pal, Karnataka
k) Kasturba medical college, Mangalore, Karnataka
l) S.D.M. dental college. Dharwad , Karnataka
m) P,M, Nadagowda dental college, Bagalkot, Karnataka
n) S.J.M. Dental college, chitradurge, Karnataka
o) Bapuji dental college, davangere, Karnataka
p) Hassanamba dental college, Hassan, Karnataka
q) J,S,S. dental college, Mysore, Karnataka
r) H.K.E. Sociys dental college. Gulbarga, Karnataka
s) A.M.E. Dental college , Raichur, Karnataka
t) H.K.D.E.TS dental college

3.1 PROFILE OF THE RESPONDENT:-
The respondents of this research are customers of confident dental equipment

limited. Sample size is 20 out of 100 customers. The breakup of 20 respondents is
in to 3 groups. 7 respondents are defence customers. 7 respondents are government
institutions, 6 respondents are private dental college, and data collected through
telephonic interview from the customers data is collected through structured
questionnaires. Data from both the customers who are purchasing products on
credit based, and who are not taking credit facility on sales.

CHAPTER 4
4 DATA ANALYSIS AND INTERPRETATION:-
Trade credit arises when a firm sells its products or services on credit and dos not receive cash
immediately. It is an essential marketing tool, acting as a bridge for the movement of goods
through production and distribution stages to consumers. Trade credit creates Accounts
Receivables or Trade debtors (also referred to as Book Debts in India) that the firm is expected
to collect it in the near future.
A typical manufacturing company has receivables to total asset ratio in the region of 20%
to 25%. This represents a considerable investment of funds and so the management of this asset
can have a significant effect on the profit performance of the company.
Receivables balance as shown in the balance sheet of the company relates to sales made
on credit for which payment has not yet received. They arise from the sale of goods and services
on credit basis. Sales on credit depend upon the nature of business. To increase the sales volume,
generally the credit facility will be offered to the customers which result in investment in
receivables to maximize return on capital employed. The balance in receivables account is
determined by the number of customers, length of credit, amount of credit allowed to each
customer etc.
To achieve growth in sales and to meet competition in the industry, a firm may resort to
credit sales. Firms offer credit to customer to attract more business, and the increased turnover
will result in increased profit to the firm. The market in which the firm is doing business is the
ultimate determinant in credit sales and receivables balances.
This project involves a comprehensive study about the receivables management and the
practices followed generally in confident dental equipment Limited. The study of
receivables is done by realizing: -
Techniques of payment & Collection

Credit Terms
Credit Policy
Control of Accounts Receivables
TECHNIQUES OF PAYMENTS & COLLECTION
Confident dental equipment Limited adopts a variety of payment & collection techniques.
Customers can adopt any one of the method of payment as per their convenience. The following
are the modes of payments & collection:
Channel financing scheme:
This is a new concept of clubbing the collection mode applicable for key distributors coupled
with funding them. This is a mix of OD facility and Internet banking. This is a unique
arrangement with Karnataka Bank exclusively for the selected Distributors of confidant
This scheme provides:
Additional liquidity for distributor.

Extended credit period.
But still can pay confident on time.
Based on B2B model through Overdraft facility.
The information obtained from the customers is entered into the customer master, which
contains all the details relating to a particular customer. So whenever any customer applies for
credit, the same information can be obtained from the customer master.

Lock boxes:
The use of lock boxes speeds the collecting, processing, depositing and reporting of
payments received through the mail. A lock box is a special post office box to which companys
customers are instructed to mail payments. The box is checked several times daily by the
processing operation, which is usually operated by bank. Upon receipt, cheques are immediately
entered into cheque clearing process to be converted into funds for the company.
Electronic funds transfer:
A faster method of collecting funds is to require that payments be made electronically

rather than with a paper cheque. In this system payment is made by transferring funds directly
from payers bank account to receipts account. This makes the funds immediately available and
also eliminates the cost of handling paper cheques.
Preauthorized cheques:
Preauthorized cheques are pre-printed, unsigned cheques. For fixed repetitive

payments, companies authorize their creditors to draw cheques on their accounts. The creditor
sends the preauthorized cheques to the bank, which then deposits the funds into creditors
account.
This practice of taking preauthorized cheques from the customers is also followed by
Confident dental equipment limited where in the customers have to deposit blank have
preauthorized cheques with the company in certain transactions.

Deposit concentration:
Because it is difficult to control funds in many different banks, most receipt

management systems provide for transferring funds electronically into one or more large
accounts. Central accounts can be more closely managed
CREDIT POLICY
Like every firm, confident dental equipment limited also has established its own credit policy for
proper management of debtors, otherwise it will lead to more outstanding balances in debtors
account and the risk of bad debts will also arise. The important dimensions of confidants credit
policy are:
Credit Period
The payments are to be made against delivery of the goods.
100% payments are received from new customers in advance.
A credit period of 30days, 60days, 90days and 120 days is followed based on the
products and the worthiness of the buyers and also on the bargaining power of the project
engineers.
For frequent customers processing is done in 7-8 days.
There are also certain incentive schemes available for the customers.
Lengthening of credit period pushes sales up by inducing existing customers to purchase more
and attracting additional customers. This is, however, accompanied by larger investment in
debtors and a higher incidence of bad debt loss. Shortening of credit period would have opposite
influences: it tends to lower sales, decreases investment in debtors and reduce the incidence of
bad debt loss.
The credit period allowed by confidants to each customer depends upon:

The group to which the company belongs to.

Nature of business.
Volume of sale generated by the company.
Credit rating of the company.
Cash Discount
Firms generally offer cash discount to induce customers to make prompt payments. The
percentage discount and the period during which it is available are reflected in the credit terms.
Liberalizing the cash discount policy may mean that the discount percentage is increased
and/or the discount period are lengthened. Such an action tends to enhance sales (because the
discount is regarded as price reduction), reduce the average collection period (as customers pay
promptly), and increase the cost of discount.
Confident Dental Equipment Limited extends cash discounts only to customers who
generate large volume of sales and are prompt in payment. This is also done only on their
insistence. Confident has a reserve; therefore it does not feel the need to extend cash discount for
the purpose of early payment.
Collection Efforts
The collection programme of the firm aimed at timely collection of receivables may
consist of the following:
Monitoring the state of receivables

Dispatch of letters to customers whose due date is approaching
Telegraphic and telephonic advice to customer around the due date
Threat of legal action to overdue accounts
Legal action against overdue accounts

The following precautions are taken by Confident for prompt collection of debts and accurate
maintenance of customer accounts.
Invoices are sent out immediately after delivery of goods.

Checks are carried out to ensure that invoices are accurate.
The investigation of queries and complaints and, if appropriate, the issue of credit notes are
carried out promptly.
CONTROL OF ACCOUNTS RECEIVABLES
There is a time lag between provision of goods and services and the receipt of cash for
them. This time lag can result in a firms working capital requirements from banks. Any increase
in time lag, will cause serious liquidity problems and sometimes can cause insolvency of the
firm.
Economic conditions of business can influence the type and amount of credit to be
offered to the customers. In boom periods, when the demand is more for the product, risk can be
minimized by enticing new customers into business. In case of recession, the business has to
sustain with existing market and simultaneously minimizing the credit risk.
Role of Credit Control Department

In general, the functions of credit control department are as follows:
Keeping the sales ledger up-to-date.

Dealing with customer queries.
Reporting to sales staff about new enquiries.
Giving references about customers to third Parties.
Checking out the customers credit worthiness.
Advising on payment terms.

Credit Cycle
The credit control functions jobs occupy a number of stages of the order cycle (from customer
order to invoice dispatch) and the collection cycle (from invoice dispatch to the receipt of cash),
which together make up the credit cycle.
Establish credit status: for new customers who request a credit extension. Before credit is
granted one should satisfy about the following: does the customer deserve credit? Is it a
suitable risk? What is known about the customer? Can the customer pay? Will it be profitable
to extend credit?
Check credit limit: if the order is fairly routine, and there is no problem with credit status,
then credit control staff examines their records or at least the sales ledger records to see if the
new order will cause the customer to exceed the credit limit. There are a number of possible
responses, as follows:
Authorization: If the credit demanded is within the credit limit, and there are no reasons to
suspect any problems, then the request will be authorized.
Referral: it is possible that the credit demanded will exceed the limit offered in the agreement.
The firm can simply refuse the request for credit, at the risk of damaging the business
relationship. However, credit limits are therefore a reason to protect the businesss profitability
and liquidity.
The firm can offer a revised credit limit. For example, the customer may be a solvent, a regular
payee, therefore a low risk. The company might be able to offer a higher limit to this customer.
The firm can contact the customer, the request that some of the outstanding debt has to be paid
off before further credit is advanced.
Issuing the delivery note, invoicing and so on is not the job of the credit control
department, but the credit control department will need to have access to information such as
invoice details to do its job effectively.
Settlement: The credit control department takes over the collection cycle, although the final
payment is ultimately received by the accounts department. It involves receiving overdue
debts and chasing them.

Stages in Credit Cycle
Customer places order
Cash received Establish credit

status
Check credit
Telephone calls limit
Issue delivery
note
Reminder letters
Goods delivered
Statement sent
Invoice raised
Customer receives
invoice

The following are the statements prepared by the credit control department in order to
keep the check on the payments and the over dues:
Ageing files.
Classification of receivables into current and non current accounts.
Quarterly accounts receivables.
AGEING FILES
The ageing schedule classifies outstanding accounts receivables at a given point of time
into different age brackets.
The actual ageing schedule of the firm is compared with some standard ageing schedule
to determine whether accounts receivable are in control. A problem is indicated if the actual
ageing schedule shows a greater proportion of receivables, compared with the standard ageing
schedule, in the higher age group. Most businesses prepare an accounts receivable aging
schedule at the end of each month. Analyzing your accounts receivable aging schedule may help
you identify potential cash flow problems.
The aging schedule can be used to identify the customers that are extending the time it
takes to collect your accounts receivable. If the bulk of the overdue amount in receivables is
attributable to one customer, then steps can be taken to see that this customers account is
collected promptly. Overdue amounts attributable to a number of customers may signal that your
business needs to tighten its credit policy towards new and existing customers.
The aging schedule also identifies any recent changes in the accounts making up your total
accounts receivable balance .Business. However, if the makeup of your accounts receivable
changes, when compared to the previous month, you should be able to spot the change instantly.
? The accounts receivable aging schedule can help you spot the problems in accounts receivable,
and provide the necessary answers early enough to protect your business from cash flow
problems. The older the accounts receivable the less likely the money will ever be collect

The typical accounts receivable aging schedule consists of the following columns:
1. Column 1 lists the customer code that has been fixed by the company.
2. Column 2 lists the group numbers i.e. the market that the company belongs to.
3. Column 3 lists the name of each customer with an accounts receivable balance.
4. Column 4 lists the invoice number.
5. Column 5 lists the invoice date i.e. the date on which the invoice was issued.
6. Column 6 lists the due date i.e. the date on which the credit is due.
7. Column 7 lists the total amount due from the customers listed in Column 1.
8. Column 8 is the current column. Listed in this column are the amounts due from customers
for sales made during the current month.
9. Column 9 shows the unpaid amount due from customers for sales made in the previous
month. These are the customers with accounts 1 to 30 days past due.
10. Column 10 lists the amounts due from customers for sales made two months prior. These are
customers with accounts 31 to 60 days past due.
11. Column 11 lists the amount due from customers with accounts over 60 days past due.
12. Column 12 lists the total number of days overdue.

CLASSIFICATION OF RECEIVABLES INTO CURRENT & NON

CURRENT ACCOUNTS
An aging schedule is first found. From these ageing schedules the receivables are divided
into current and noncurrent accounts. Those who are overdue less than they are termed as
current, over due by <= 180 days they are OD between 0-180 and those greater than 180 days
from the due date OD >180. These are termed as noncurrent accounts as they are major overdue.
Aging as on due date is classified as
1. Current where the aging days are <=0
2. Noncurrent where the days are <=180 days (OD 0-180)
where the days are >= 180 days (>180 OD)
Non-current is both the OD 0-180 & OD >=180. These are the receivables overdue
The current OD is those accounts that are currently enjoying the credit as on the particular
quarter.
% current is the =current / grand total
By using this we can find out how many accounts are with the credit period and those
who are contributing to the over dues for the particular quarter.

Collection of dues
Table 3 Due for more than six months and
Year Due for more than six months
2012 125,434,789
2013 117,827,128
2014 104,595,273
2015 165,939,515
2016 99,379,155
ANALYSIS:- The table can describe the date of dues from more than six months. The company
give credit facility an sales, and it provide 45 to 90 days for repayment from the customers, but
the customers are fail to return the amount within the credit period provided by the company,
that dues they is decrease from every year, and its good improvement in dues collection from
the customer.

Graph 4 Due for more than six months and
INTERPRETATION:- From the above table we can interpret the dues for more than six
months. Here we can analyze the customers are not repay on time the amount an credit purchase
from the company, they are taking much time to repayment.

Table 4 Due for less than six months
Year Due for less than six months
2012 110,905,542
2013 217,838,508
2014 162,254,033
2015 164,829,200
2016 143,501,814
ANALYSIS:- from the table we can analyze the dues for less than six months. The company
collects the due amount on credit sales within six months. But the customers are not paid an
time,

Graph 5 Due for less than six months
INTERPRETATION:- From the above graph we can be interpret. That the dues for less than
six months, the company providing credit facility on sales, and the given the 45 to 90 days for
repayment that amount, the customers are fail to pay within that credit period. They take more
time to repay the amount, from this graph we can analyze the in the year of 2012 the due amount
is more than the other years. But all this dues for less than six months.

YEARLY ACCOUNTS RECEIVABLES

Once an ageing schedule is prepared every year/month for each customer, a statement
indicating yearly receivables payable at every year is prepared. This is used to find out the
payment pattern of the customers. This indicates the customers who are not prompt in their
payments and take more than the time allotted to them to make the payments. They also show the
customers who are prompt in their payments. Therefore, this statement helps the company to
decide on either tightening or loosening the credit to each customer. This is a tool which is used
by the company to take immediate action, where needed.
Table 5 TRADE RECEIVABLES OF THE COMPANY:-
YEAR TREAD RECEIVABLES
2011 228,062,680
2012 259,021,375
2013 280,081,162
2014 322,433,782
2015 330,768,751
2016 242,880,969
ANALYSIS:- From the above table we can be analyze that trade receivable of the company.

graph 6 TRADE RECEIVABLES OF THE COMPANY:-
INTERPRETATION:- From the above graph we can interpret. That the amount received on
sales form the customers. In the year of 2014 and 2015 the receivables in more, and from the
year of 2011 to 2015 it increase continually. And in the year of 2016 it decrease from
330,768,751 to 242,880,969 lacks.

Table 6 BAD DEBTS OF THE COMPANY:-
YEAR BAD DEBTS
2011 7,475,288
2012 6,247,414
2013 5,362,654
2014 4,968,272
2015 4,703,881
2016 6,824,374
ANALYSIS:- From the above table we can analyze. That the bad debts of the company, in the
year of 2011 the bad debts is more and it follows in the year of 2016 and 2012. bad debts is lose
for the company because the customers are not paid the amount to the company on sales. And
its varies by year to year.

Graph 7 BAD DEBTS OF THE COMPANY:-
INTERPRETATION:- from above graph we can interpret. That in the year of 2011 the bad
debts is 7,475,288 and its decrease to 6,247,414 in the year of 2012. And it decrease from
4.703.881 in the year of 2015. Its a good development in reducing the amount of bad debts. But
it again increase to 6,824,374, in the year of 2016,

Table 7 BAD DEBTS RECOVERY:-
YEAR RECOVERY OF BAD DEBTS
2011 1,30,510
2012 1,54,768
2013 4,07,994
2014 4,54,087
2015 5,135,035
ANALYSIS:- From the above table we can analyze. That the bad debts recovered by the
company. The confidant dental equipment limited recovers the bad debts amount in the year of
2011 is just 1,30,510, and it increase year by year. In the year of 2016 it increases to 5,135,035.
Here we could see the development in recovering the bad debts amount from their customers.

QUESTIONNAIRES:-
1. Do you purchase product on credit based from confident dental equipment limited?
Particular Number of responses Result in percentage
Yes 14 70%
No 6 30%
Table 8. Do you purchase product on credit based from confident dental equipment limited?
Data analysis:- From the above table we can analyze. That the 70% of the customers purchasing
the product an credit based. And 30% of the customers purchase the products on cash. Here the
customers who purchased product o credit based is more than the purchased on the cash.
Graph 8 1. Do you purchase product on credit based from confident dental equipment limited?
INTERPRETATION:- From the above graph we can interpret. That 70% of the customers
purchase product on credit based, and 30 % of the customer they buying products on cash, by
this information we can understand most of the customers required the credit facility on sales.

2. Purchasing products on credit based. Will it use full for business?
Yes 13 65%
No 7 35%
. Table 9 1. Purchasing products on credit based. Will it use full for business ?
ANALYSIS:- from the above we can analyze. That 65% of the customers saying that purchasing
product on credit basis is useful for business. And 35% of the customers they saying that it is not
use full.
Graph 91. Purchasing products on credit based. Will it use full for business?
INTERPRETATION:- From the above graph we can interpret. That most of the
customers purchase product on credit based because it is use full for leading business, and they
cant pay the amount on spot, so they take same time to make repayment. But 35% of the
customers saying that it is not use full because they can pay cash on time of purchasing.

3. Is it possible to lead your business without making purchase on credit based?
Possible 4 20%
Not possible 12 60%
Both 4 20%
Table 10 3. Is it possible to lead your business without making purchase on credit based
ANALYSIS:- From the above table we can analyze. That 20% of the customers saying that is
possible. And 60% of the customers saying it is not possible. And 20% of the customers saying
in may be possible or not possible,
graph 10 3. Is it possible to lead your business without making purchase on credit based
INTERPRETATION:- From the above graph we can interpret. That the 60% of the customers
cant lead their business without credit purchase because they have to distribute that products to
their customer and they collect money from them. Then only they are able to pay that amount to
confident dental equipment company, but 20% of the customers they lead their business without
credit purchase. And another 20% of the customer saying that its can be possible or may not be
possible.

4. Rate the credit facility provided by the company.
Particular Number of responses Result in percentsge
Good 11 55%
Bad 0 0%
Extremely good 5 25%
Average 4 20%
Table 11 4. Rate the credit facility provided by the company.
ANALYSIS:- from the above table we can be analyze. That the 55% of the customers feels the,
that credit facility provided by the company is good. 25% of the customers telling is extremely
good. And another customers feels is average.
Graph 11 4. Rate the credit facility provided by the company.
INTERPRETATION:- From the this study we can understand. That company giving good
credit facility to their customers.
From the above graph we can be interpret. That customers opinion about the credit facility
provided by the confident dental equipment limited. 55% of the customer feels its good, and
another 25 % of the customer feels it is extremely good. And 20% of the customers saying it is
average.

5. Do you make delay payment or default on payment?
Yes 11 55%
No 9 45%
Table 12 5. Do you make delay payment or default on payment?
ANALYSIS:- from the above table we can be analyze. That 55% of the customer make delay on
payment. And 45 % of the customers make payment an time.
Graph 12 5. Do you make delay payment or default on payment?
INERPRETATION:- From the above table we can interpret. That the customers making delay
payment on credit sales, because the company involve in export business by the time it might be
happen. And 45% of the customers the paid within the credit period because they order the
products online and when the distributer deliver the product, by time they have paid the amount

6. What is the reason for making delay payment or default on payment?

a) Payment to unknown address c) Money problem
b) Inefficient in business. d) Loss in business
Payment to unknown address 5 25%
Money problem 6 30%
Inefficient in business 5 25%
Loss in business 4 20%
Table 13 6. What is the reason for making delay payment or default on payment?
ANALYSIS:- From the above table we can analyze. That the 30% customer defaulting on
payment because of money problem. And 25% of customers defaulting because of payment to
unknown address and inefficient of business, and 10% of the customers defaulting by loss of
business.
7
6
5 30%
4 25% 25%
Result in percentage
3 20%
2 Number of responses
1
0
Payment to unknown address
Money problem
Inefficient in business
Loss in business
Graph 13 6. What is the reason for making delay payment or default on payment?
INTERPRETATION:- from the above graph we can interpret .that the reasons for delay or
defaulting on credit payment. By this study we can find the reasons for defaulting is money
problem is the major reason. And payment to unknown address because, some time it is happen
because now a days the business transactions are made through online, and inefficient in
business . Another problem is loss in business.

7. How affine you purchased products on credit based?
Every time 10 50%
Rarely 2 10%
When is required 4 20%
Never 4 20%
Table 14 7. How affine you purchased products on credit based?
ANALYSIS:- from the table we can analyze. That 50% of the customers purchase product on
credit based. 10% of the customer purchase rarely on credit based, 20% of the customer purchase
on credit when they required. 20% of the customer they never purchase on credit based.
Graph 14 7. How affine you purchased products on credit based?
INTERPRETATION:- From the above graph we can be interpret. That most the customers are
purchased the product on credit based every time, because they cant pay the amount on time.
And most of the customer they buy on bases of credit, because that customer require few product
so that they buy the product on credit rarely. And some 20% of the customers purchase on credit
when they required. And 20% of the customer they never purchase on credit .

8. If the companies stop doing sales on credit, it will effect on customer relationship with
company do you agree with this statement.
Agree 16 80%
Disagree 4 20%
Strongly agree 0 0%
Strongly disagree 0 0%
Table 15 If the companies stop doing sales on credit, it will effect on customer relationship with company do you agree with this statement.
ANALYSIS:- From the above table we can analyze. That 80 % of the customers agree with this
statement. And 20% of the customers disagree with this statement. By this study we can
understand the importance of the credit sales.
Graph 15 If the companies stop doing sales on credit, it will effect on customer relationship with company do you agree with this statement.
INTERPRETATION:- From the above graph we can interpret. That most of the customers
needed credit facility from the company, if the company stops giving credit facility to the
costumers its effects on their business because of this reason 80% of the customers agree with
this statement. And another 20% of the customer they disagree with this statement because they
are not addict to the credit facility.

9. If the company giving discount on payment if you pay with in the credit period. Will it
useful for you?
Useful 7 35%
Not useful 0 0%
Little useful 4 20%
Extremely useful 9 45%
Table 16 9. If the company giving discount on payment if you pay with in the credit period. Will it useful for you?
ANALYSIS:- From the above graph we can analyze. That 80% and of the costumer wants few
more discount on payment. And 20% of the customers they saying that it is little useful. And
nobody were saying isnt useful.
Graph 16 9. If the company giving discount on payment if you pay with in the credit period. Will it useful for you ?
INTERPRETATION:- From the above graph we can interpret. That 45% of the customer they
saying that discount on payment its extremely useful. And 35% of the customer saying it is
useful. By this statement we can understand the customers pay on time on the credit purchase for
getting discount on payment. By this the company can avoid credit default on credit sales.

10. Do you want to extend the credit period by the company?
Yes 14 70%
No 6 30%
Table 17 10. Do you want to extend the credit period by the company?
ANALYSIS:- From the above table we can analyze. That 70% of the customer wants to extend
credit period by the company, and another 30% of the of the customer replies no for extend oif
time.
no
30%
yes
70%
Graph 17 10. Do you want to extend the credit period by the company?
INTERPRETATION:- from the above graph we can interpret. That if the company extend the
time period of credit repayment, the 70% customers utilizing this advantage effectively, by
extending the credit period company can avoid default risk on credit payment. And 30% of the
customers they are dont want any extending of credit period. Because they are not purchase on
credit based.

CHAPTER 5
5. SUMMARY OF FINDINGS, CONCLUSIONS AND SUGGESTIONS
5.1 SUMMARY OF FINDINGS:-
The finance department of Confident Dental Equipment Limited. is further divided according to
their functions, namely; credit management, collection control, cash management, etc.
As Confident Dental Equipment Limited. Serves in export and local markets, the credit
management of these markets is allotted to different groups.
At Confident Dental Equipment Limited. as the companys groups serves different markets,
each group has its own credit policies and terms on which they conduct their business.
The ageing files are used as the database for the preparation of other reports.
Confident Dental Equipment Limited. Has a tie up with Karnataka bank for the purpose of
collecting the payments from the customers. The Karnataka bank does the collection from the
customers on behalf of Confident Dental Equipment Limited. India. The Karnataka bank
matches the invoices against collections and sends the files to the company.
For the purpose of making payments, Confident Dental Equipment Limited. has an alliance
with Karnataka bank.
Confident Dental Equipment Limited. India has an online order processing system called olops
(online order processing system). When any order is placed with the company it is entered in the
loops. When the order is processed, an invoice is generated. As loops and accounts receivable
module are inter-related, the information is transferred to the accounts receivable i.e., the A/R
module.

Confident Dental Equipment Limited. also provides its customers the facility of finance called
the channel financing scheme. This is a new concept of clubbing the collection mode applicable
for key distributors coupled with funding them. This is a mix of OD facility and Internet
banking. This is a unique arrangement with Karnataka Bank exclusively for the selected
Distributors of Confident Dental Equipment Limited.
After the credit granting decision is made, Confident Dental Equipment Limited. sets different
targets for different customers based on their resources, the payment history, billing pattern and
references of business group

5.2 SUMMARY OF CONCLUSION:-

After being in the industry for decades, confident has created for itself a list of prestigious
customers and the list is still growing. Confident attracts customers through its innovations and
goodwill. Based on this, over a period of time confident has achieved an optimal reserve fund.
This fund helps confident when receivables are not received on time. Confident has deposits
from the customers.
Since the collection function is outsourced to Karnataka Bank, confident does not depend
on the receivables for its functioning. The reserve created serves the purpose.
Thus, the credit default risks have very less impact on the profitability of CONFIDENT
DENTAL EQUIPMENT LIMITED.

5.3 SUMMARY OF SUGGESTIONS
Regular checks should be conducted to keep a track of the amounts that are outstanding beyond
the due date.
Records of customers who have crossed the target limit should be maintained.
The co-ordination between the sales personnel and the credit management executives should
improve in order to avoid disputes between the customers and the company.
The collection files should be updated on time in order to avoid delay in judgments.
Regular conciliation of customers account with the statement of accounts in the company should
be done to avoid disputes with the customers.
The credit and collection policies should be clearly communicated to all the customers to avoid
misunderstandings.
Cash discounts should be offered to customers, who are consistently delaying in payments, to
ensure faster payments
Customers who are identified as high-risk accounts should not be approved without security, in
the form of pre-authorized cheques.
Customers credit limit should be checked before finalizing any further deals.
The company should follow a standard procedure to assess the credit worthiness of new
customers.
The company can controls the default by extending credit period

BIBLIOGRAPHY:-
Referencesshouldbeindicatedinyourdissertationinthefollowingformat:
Books:-
1. Anthony Saunders and Linda Allen.(2002). CREDIT RISK MEASUREMENTS
Published by John Wiley & Sons, Inc., New York
2. Navneet Arora a, PriyankGandhi b, FrancisA.Longstaff b.(2011) Counterparty credit risk
and the credit default swap market
Journals:-
3. Darrell Duffie and Kenneth J. Singleton 2003, Credit Risk: Pricing, Measurement, and
Management Princeton University Press, 396 pages
4. Philippe Jorion And Gaiyan Zhang (July 2016) Good and Bad Credit Contagion Evidence
from Credit Default Swaps Forthcoming, Journal of Financial Economics.
Websites:-
1. Confident dental equipment limited, viewed on 03/06/2017 in the M of website,
http://www.confident.org.com

ANNEXURES
15KXCMD020 DEEPA B.C
By MBA

ANNEXURE
PROGRESS REPORT-2
Sl. Particulars
No.
1 Name of the Student DEEPA B.C
2 Registration Number 15KXCMD020
3 Name of College Guide MR.VIJAY J
4 Name and contact no of the Co- MR. PRAKASH SETTY
Guide/External Guide (Corporate)
Ph no:-08028023000 / 3001
5 Title of the Case Study A STUDY ON CREDIT DEFAULT RISK AND ITS
INFLUENCE ON PROFITABILITY OF
6 Name and Address of the Confident dental equipment limited.
Company/Organization where case
study undertaken with Date of starting Plot no.17-H, sector 1, phase 2,
Live case study
Bidadi industrial area, Bidadi-562109
Ramanagara Tq & dist. Karnataka state
Ph no: +91 8028023000/3001

7 Progress report : The progress for the second week is I have submitted
my synopsis by taking help of the internal guide.
And I have visited to the confident dental equipment
company to meet Mr. prakash setty. And I got some
information about the industry and their products.
After that I have read some articles which are related
to credit default risk, and then I understood objectives
and need of the study.
And my external guide Mr. PRAKASH shetty
suggested sources of secondary data. And they gave
details about their customers.
I have visited towww.confidental.org website to know
more about the company and their products.
Date:
Signature of the candidate:- signature of the college guide:

PROGRESS REPORT-3
Sl. No. Particulars
1 Name of the Student DEEPA B.C
2 Registration Number 15KXCMD020
3 Name of College Guide MR. VIJAY J
4 Name and contact no of the Co- MR. PRAKASH SHETTY

Guide/External Guide (Corporate)
Ph no:-08028023000 / 3001
5 Title of the Case Study A STUDY ON CREDIT DEFAULT RISK AND ITS
INFLUENCE ON PROFITABILITY OF
6 Name and Address of the Confident dental equipment limited.
Company/Organization where case
study undertaken with Date of Plot no.17-H, sector 1, phase 2,
starting Live case study
Bidadi industrial area, Bidadi-562109
Ramanagara Tq & dist. Karnataka state
Ph. no: +91 8028023000/3001

7 Progress report :
As I am studying about the "credit default risk and
its influence on profitability of Confident Dental
Equipment limited. And I am gathering information
by the help of HR. manager and finance manager in
the company. Hereby I am going to identify and
collecting data about their customers and their
business details in company to analysis credit default
details.
I am complicating 3rd chapter and I stared doing
4th chapter with the help of external and internal
guides.
Date:
Signature of the candidate: signature of the college guide:


BALANCE SHEET AS AT 31 ST MARCH 2013 AND 2016

BALANCE SHEET AS AT 31ST MARCH 2011 TO 216
amount Rs
Note no 2016 2015 2014 2013
EQUITY AND LIABILITIES
1. Shareholder,s funds
(a) share capital 1 2,202,000 2,202,000 22,02,200 22,02,000
(b) reserves and surplus 2 534.998,871 533.140,796 547,218,676 543,093,816
(c) money rereceived against share warrents
2. share application money pending allotment
3. noncurrent laibilities
(a) long term borrowings 3 162,071,092 238,301,626 311,684,130 276,407,787
(b)deferred tax laibilities (net) 36,286
(c) other long term laibilities 4 4,846,794 6,050,391 3,997,413 4,691,555
(d) long term provisions 5 14,,668,581 13,484,543 11,465,201 8,194.51
4. current laibilities
(a) short term borrowings 6 175.957.179 179,984,883 154,037,045 133,492,405
(b) trade payables 7 213,578.15 222,602,233 206,155,518 177,287,848
(c) other current liabilities 8 128,083,452 112,207,570 173,636,181 113,781,230
(d)short term provisions 9 1,570,220 1,423,260 _ 529,93
TOTAL 1,237,921,340 1,309,397,302 1,410,694,164 1,259,719,832
ASSETS AND NON CURRENT ASSETS
1. (a) ficed assets
(!) tragible assets 10 571.116,195 615,58,848 641,454,315 285,211,387
(!!) intangible assets 10 306 301,284 227,299 246,619
(!!!) capital work in progress 10,908,917 13,276,636 55,549,530 375,135,055
(!v) intangible assets under development
(b) non current investments 11 11,350 11,350 11350 11,350
(c) deferred tax assets (net) 7,045,818 7,980,743 1,461,177 _
(d)long tern loans and advances 12 10,020,451 28,894,862 25,349,552 18,076,201
(e) other non current assets 13 87,985,428 66,253,848 611,820,267 65,787,800
2. current assets
(a) current investments
(b)investories 14 182,552,047 142,565,891 196,116,164 155,304,411
(c) trade receivables 15 242,880,969 330,768,715 322,433,782 280,081,162
(d) cash and cash equivalents 16 32,734,72 24,505.33 35,579.36 18,741,721
(e) short term loans and advances 17 52.470,004 48,217,838 38,896,040 42,303,724
(f) other current assets 18 40,195,131 31,051,955 31,795,362 18,820,402
TOTAL 1,237,921,340 1,309,397,302 1,410,694,164 1,259,719,832


PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 31ST MARCH 2013 TO 2016
amount Rs
Note no 2016 2015 2014 2013
revenue from operations 20 776,333,569 859,299,038 782,694,751 705,932,544
other income 21 96,618,449 27,648,325 17,229,089 12,853,499
total revenue 785952419 886,947,363 799,923,840 718,786,043
expenses:-
cost of materials consumed 22 309699452 322,512,506 367,152,142 302,459,983
purchase of stock in trade 53680646 57,124,981 44.714,127 80,186,186
chages in finished goods ,w-i-p 23 24076434 33.360,584 -22,819,995 -18,837,846
employee benefits expenses 24 128963312 122,631,169 111,726,950 106,70,323
financial cost 25 58530093 96,055,671 58,677,372 16,343,023
depreciation and amortization expense 10 57242538 77,918,883 47,103,953 27,563,953
other expenses 26 198439049 223,727,969 190,444,894 163,701,172
total expenses 782478655 906,331,762 796,999,444 678,166,794
profit before exceptional & exptraordinary items & tax 3473764 -19,384,399 2.924,396 40,619,250
exceptional items _
profit before extraordinary items and tax 3473764 -19,384,399 2.924,396 40,619,250
extraordinary items _
profi before tax 3473764 -19,384,399 2.924,396 40,619,250
tax expense:-
(1) current tax 680,764 -1,250,975 13,890,700
(2) deferred tax laibility withdrawn 934,925 -18,133,424 -1,500,463 -1,250,975
profit /loss for the period from continuing operations 1,858,074 4,424,859 27,979,525
prodit /loss from discontinuing operations _ _ _
tax epense of discontinuing operations _ _ _
profit /loss from discontinuing operations _ _ _
profit/loss for the period 1.358,074 -18,133,424 4,424,859 27,979,525
earnings per equity shares
(1) basic 844 -8,235 2,009 12,706
(2) diluted 844 -8,235 2,009 12.706


QUESTIONNAIRES:-
1. Do you purchase product on credit based from confident dental equipment limited?
a) Yes b)no
2. Purchasing products on credit based. Will it use full for business?
A) Yes b) no
3. Is it possible to lead your business without making purchase on credit based?
A) possible b) not possible c) both
4. Rate the credit facility provided by the company
a) Good b)bad c)extremely good d) average
5. Do you make delay payment or default on payment?
A) yes b) no
6. What is the reason for making delay payment or default on payment?
c) Payment to unknown address c) Money problem

d) Inefficient in business. d) Loss in business
7. How affine you purchased products on credit based?
a) Every time c) when is required

b) Never d) rarely
8. If the companies stop doing sales on credit, it will effect on customer relationship with
company do you agree with this statement.
a) agree b) disagree c) strongly agree d) strongly disagree
9. If the company giving discount on payment if you pay with in the credit period. Will it
useful for you?
a) useful b) not useful c) little useful d) extremely useful
10. Do you want to extend the credit period by the company?
a) Yes b) no

Deepa B C

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A STUDY ON CREDIT DEFAULT RISK AND ITS INFLUENCE ON PROFITABILITY OF

CONFIDENT DENTAL EQUIPMENT LIMITED

SURANA COLLEGE PG DEPARTMENTS

No. #CA-17, Outer Ring Road, Kengeri Satellite Town

Place: Bangalore DEEPA B.C

I am greatly indebted to faculty of SURANA COLLEGE for their encouragement

giving me the permission to do the Project in the organization for allowing me a

Place: Bangalore ___________________

Table 1 COMPANY PROFILE:- .................................................................................................. 28

1.1 INDUSTRY PROFILE:-

SURANA PG DEPARTMENT Page 1

1.2 THEORETICAL BACKGROUND OF THE STUDY:-

SURANA PG DEPARTMENT Page 2

Once an account receivables policy is implemented, it should be reassessed at least

Receivable is a permanent investment and is an ever-rolling account. The finance

Impact of credit default risk and its influence on business

SURANA PG DEPARTMENT Page 3

Strategic Impact (Long Term)

SURANA PG DEPARTMENT Page 4

Accounts Receivables flow chart

Billing and dispatch

Consolidation of sales data

Provision for Credit Monthly schedule

SURANA PG DEPARTMENT Page 5

REPAYMENT POLICY FORMULATION

An enterprises credit policy is a major, controllable element that has a significant

SURANA PG DEPARTMENT Page 6

SURANA PG DEPARTMENT Page 7

SURANA PG DEPARTMENT Page 8

Credit discounts and surcharges

SURANA PG DEPARTMENT Page 9

The following are the 4 major credit instrument:

SURANA PG DEPARTMENT Page 10

Obtaining credit information.

Obtaining credit information

SURANA PG DEPARTMENT Page 11

SURANA PG DEPARTMENT Page 12

Credit Bureau Reports

Finally, specialists credit bureau from organizations specializing in supplying credit

Analysis of Credit Information

SURANA PG DEPARTMENT Page 13

The qualitative assessment should be supplemented by a qualitative/subjective

SURANA PG DEPARTMENT Page 14

The increased level of accounts receivable is an investment in assets, they have to be

SURANA PG DEPARTMENT Page 15

SURANA PG DEPARTMENT Page 16

2. REVIEW OF LITERATURE AND RESEARCH DESIGN

2. Maria Psillaki*, Ioannis E Tsolas1, and Dimitris Margaritis

In this newspaper we research whether specialized efficiency can be an important ex-ante

SURANA PG DEPARTMENT Page 17

3. Philippe Jorion, or Gaiyan ZhangPaul Merage School of Business University of

SURANA PG DEPARTMENT Page 18

SURANA PG DEPARTMENT Page 19

SURANA PG DEPARTMENT Page 20

8. John Mbatia Kibebo EFFECT OF CREDIT RISK ON THE FINANCIAL

SURANA PG DEPARTMENT Page 21

SURANA PG DEPARTMENT Page 22

11. THE IMPACT OF TRADE CREDIT MANAGEMENT ON FIRMS

SURANA PG DEPARTMENT Page 23

12. RISKS MANAGEMENT: NEW LITERATURE REVIEW Ennouri W

SURANA PG DEPARTMENT Page 24

2.2 STATEMENT OF PROBLEM:-

a. How improper evaluation of credit applicant can be eliminated.