Академический Документы
Профессиональный Документы
Культура Документы
ON
“FINANCIAL PERFORMANCE AND WORKING CAPITAL
MANAGEMENT”
OF KALPATARU POWER TRANSMISSION LIMTED”
1
PREFACE
As a part of the course curriculum, an MBA(Master of business
administration) students are required to undergo for a summer training.
The objective behind preparing this summer training is to relate the
management subjects taught in the classroom to their practical
application.
“Practice makes man perfect.” A very good and appropriate proverb said
by someone very well fits for each and every MBA student who is going
to face the real world after completing MBA.
Summer training and summer project which is mandatory for each and
every MBA student helps them a lot to practice many things which they
are learning theoretically. Summer project helps them in applying their
theoretical knowledge practically. It gives them an exposure to the real
working of the industry.
Today in the era of the cut throat competition, it has become very
important for any person to be a master in the field they are. There are
many existing fields across the world to become a master, but one has to
choose only one field in which she thinks she can go further deep. If she
chooses one field to go deep, other field are automatically subdue.
2
EXECUTIVE SUMMARY
3
ACKNOWLEDGEMENT
I would like to thank Mr. Kamal Kishore Jain (Director finance and
chief Financial officer) for giving me an opportunity of taking internship
at “Kalpataru power Transmission Limited” (KPTL).
Mr. Shreyan Shah (VP) and Mr. Amrit Jain (AGM Finance) for
sparing valuable time to monitor my work and progress. He has been a
constant source of inspiration throughout the internship.
I am also grateful to my Professor Akhil Mathur (HOD) and Ms.
Aarti Khanchandani (Assistant Professor) Department of
Management, lachoo memorial college of science and Technology,
jodhpur for their continuous mentoring and feedback.
I would also like to thanks to Mr. Satvik Trivedi, AGM (Human
Resource), KPTL for providing me this valuable opportunity to learn
one of the elite organizations in the best possible environment.
Moreover, I would like to thank the employee at KPTL, Gandhinagar for
their constant guidance and help to learn various aspect of the corporate
world.
Khushboo lohiya
Lachoo memorial college of science and Technology, Jodhpur
4
Index
5
INDUSTRY PROFILE
Power generation
Electricity generation is the process of generating electric power from
other sources of primary energy. During the 1820s and early 1930s, the
fundamental principles of electricity generation were discovered by
British Scientist Michael Faraday. The basic method is still used today ;
Electricity is generated by the movement of a loop of wire, or disc of
copper between the poles of a magnet. Electricity is most often
generated at power station by electromechanical generators primarily
driven by heat engines fuelled by chemical combustion or nuclear
fission but also by other means such as the kinetic energy of flowing
water and wind.
Power transmission
Electric power transmission is the bulk movement of electrical energy
from a generating site, such as power plant, to an electrical substation.
The interconnected lines which facilitate this movement are known as a
transmission network.
The combined transmission and distribution network is known as the
“power grid” in North America, or just “the grid”. In the United
Kingdom, the network is known as the “National Grid”.
6
A wide area synchronous grid, also known as an “Interconnection” in
North America, directly connects a large number of generators
delivering AC power with same relative frequency, to a large number of
consumers.
For Example, there are 4 major interconnections in North America (the
western interconnection, the eastern interconnection, the Quebec
interconnection and the electric reliability council of Texas [ERCOT]
grid), and one large grid for most of Continental Europe.
Earlier, the transmission and distribution lines were owned by the same
company, but starting in the 1990s, many countries have been liberalized
the regulation of the electricity market in the ways that have led to the
separation of regulation of the electricity transmission business from the
distribution business.
Power distribution
An electric power distribution system in the final stage in the delivery of
electric power, it carries electricity from the transmission system to
individual consumers. Distribution substations connect to the
transmission system and lower the transmission voltage to medium
voltage ranging between 2kv and 35kv with the use of transforms.
Primary distribution lines carry this medium voltage power to
distribution transformers located near the customer’s premises.
Distribution transformers again lower the voltage to the utilization
voltage of household appliances and typically feed several customers
through secondary distribution lines at this voltage. Commercial and
residential customers are connected to the secondary distribution lines
through service drops. Customers demanding a much larger amount of
power may be connected directly to the primary distribution level or the
sub-transmission level.
7
Company profile
K = Knowledge
A = Action
L = Loyalty
P = Positive attitude
A = Achievement
T = Trust
A = Affirmative
R = Responsibility
U = Unity
Background
The Company was incorporated in the State of Gujarat on April 23,
1981 as H.T. Power Structure Private Limited under the Companies
Act. The name of the Company was changed to H.T. Power Structure
Limited by way of a shareholders resolution dated November 22,
1993 and a fresh certificate of incorporation consequent on change of
name was issued by the Registrar of Companies, Gujarat on
December 20,1993. The name of the Company was changed to
Kalpataru Power Transmission Limited by way of a shareholders
resolution dated December 20, 1993 and a fresh certificate of
incorporation consequent on change of name was issued by the
Registrar of Companies, Gujarat on January 4, 1994. The Company
made its initial public offering in December 1994 and its shares are
currently listed on the BSE Limited and the National Stock Exchange
8
of India Limited. KPTL is one of the Kalpataru Group of companies,
which also has interests in, among others, real estate and property
development businesses in India. The Group also has interests in civil
contracting and infrastructure services businesses in India, through
JMC, of which KPTL owns 67.19% equity stake and in Agri-
warehousing and allied activities, through Shree Shubham Logistics
Limited (SSLL), of which KPTL owns 71.52% equity stake as on 31
March 2017. JMC constructs factories and buildings, as well as
infrastructure projects, such as roads, flyovers and metro stations. For
the year ended March 31, 2017, JMC had Net Sales of Rs. 2328
crores. As of March 31, 2017 JMC had an order book position of
approx. Rs. 7000 crores. Company has three production units, 2 at
Gandhinagar, Gujarat and 1 at Raipur, Chhattisgarh. Company has
various project offices in India and overseas. Brief summary of the
business/ activities and its line of business Kalpataru Power
Transmission Limited (KPTL) is a leading diversified global EPC
player in power transmission & distribution (T&D) sector and also
operates in oil & gas pipeline, railways, infrastructure development,
civil contracting & Agri-logistics and warehousing business. Over the
years, it has expanded its footprints in 40 countries across the globe
including India, Africa, Middle East, SAARC, USA, Europe, Canada,
Australia, North America, Rwanda, Egypt, Zambia, CIS region and
Far East. As on 31st March, 2017, the Company has consolidated
order book of INR 16,000 crore and standalone order book of INR
9,000 crore.
9
Awards and Recognition
2017
Power Grid Corporation of India Limited (PGCIL), one of the major
client of KPTL declared awards for 2017 and KPTL received “Best
Performance award - 2017” for early completion of 765 kV D/C
Wardha-Nizamabad Line and “Runners up award - 2017” for
maximum capitalization in Transmission line category. 2016-2017
Your Company has received Certificate of Honour in the category of
Leading RE Developers – Biomass at Renewable Energy India
awards – 2016.
2016
Raipur plant of KPTL has been selected for ‘Silver Certificate of
Merits -2016’ for India Manufacturing Excellence Award by Frost &
Sullivan for the consecutive 2nd year. 2016 Company awarded status
of ‘Three Star Export House Certificate’ under Foreign Trade Policy
2015-16
Company was awarded following awards by PGCIL:
a. ‘Best Transmission Line EPC player in the Country’
b. Runner up in ‘Maximum volume of work in 2015/16 on PGCIL
Projects’
c. ‘Best safety norms on PGCIL Projects’
2015-16
Company has received Certificate of Conformity of the Factory
Production Control for the construction product “Structural Steel
Transmission Line Towers” in compliance with Regulation
305/2011/EU of the European Parliament and of the Council of 9
March 2011 (the Construction Products Regulation or CPR) from
SGS United Kingdom Limited.
2015-16
10
Company has received Certificate of Appreciation from Ministry of
Energy and Coal Industry of Ukraine for successful completion of
“750 kV Rivne NPP – Kiev Substation Transmission Line” project,
one of the biggest projects of its type constructed in Ukraine which
was completed at least nine months ahead of scheduled date.
2015
KPTL’s project Satpura–Ashta Transmission Line undertaken for
M.P. Power Transmission Co. Ltd. awarded 8th INDIA POWER
AWARDS 2015 for its valued contribution to Energy Sector
2015
Raipur Plant of company has participated in India Manufacturing
Excellence Awards (IMEA), 2015 conceptualized by Frost & Sullivan
and received the silver certificate.
2014
Jhajjar KT Transco P. Ltd. has been selected for Silver Shield for
Early Completion of Transmission Project for the year 2011-12 by
Central Electricity Authority under Comprehensive Award Scheme of
Ministry of Power. 2013 SSLL awarded trophy by CII – Supply chain
and logistics excellence (SCALE) Award-2013 for its exemplary
performance in Agri Sector.
2013
KPTL, UAE got recognition from Health Authority-Abu Dhabi for
the successful implementation of “Working in heat program” at our
various sites for last four years. 2012 KPTL awarded trophy for the
3rd highest volume of Export containers at ICD Khodiyaar,
Ahmedabad by CONCOR for 2012-13 (2470 Containers).
2011
11
Received Runner up of the 2011 Corporate Social Responsibility
Award in recognition of exemplary success in voluntarily improving
the quality of life for the local community and society at large by
IPLOCA for Infra Division.
2010
Received certificate of honour (3 million safe hours) from Gujarat
Safety Council in association with Dir. of Industrial Safety & Health,
Govt. of Gujarat for year 2010.
2007
NDTV Profit Awards - Kalpataru Power Transmission Ltd., has been
adjudged “The Best emerging value creator” (Mid-Size Companies)
runner up for Outlook Money 2007 Business Today - Kalpataru
Power Transmission Ltd. has been listed in “India's most investor-
friendly companies” 2007 Business Today - Business Today rates
Kalpataru Power Transmission Ltd as “Fastest growing Mid-Cap
Company of India”
2006-07
D&B- ECGC Indian Exporters Excellence Award - Kalpataru Power
Transmission Ltd has been awarded as the “Top Exporter in the
Engineering Goods Sector”.
2002-03, 2001-02, 1998-99, 1995-96
Engineering Export Promotion Council - Kalpataru Power
Transmission Ltd has been awarded a “Certificate of Export
Excellence”.
2000-01, 1999-00, 1997-98
Container Corporation of India Limited, Sabarmati (Ahmedabad)-
Kalpataru Power Transmission Ltd has been awarded the certificate
for “Exporting maximum number of Containers”.
12
Business Segments
Engineering, Procurement and Construction Services (EPC)
1. Transmission & Distribution Division
As an industry leader in the power transmission business, KPTL
provides end-to-end solution ranging from in-house designs, testing,
procurement and fabrication to erection, installing and
commissioning of transmission lines. With state-of-the-art testing
facility and a production capacity of more than 1,80,000 MT of
transmission towers, KPTL is among the trusted names in the
industry. The Company has installed over 18,000 kms of transmission
lines and supplied over 1.60 million tons of towers across the globe
supported by its strong and dedicated human resource pool of more
than 2200 professionals. During the year 2016-17, the Company
strengthened its leadership position in the Indian market by
displaying on-time project execution and maintaining highest safety
standards. Continuous expansion into overseas markets to diversify
and de-risk its business led to addition in new market(s) during the
year. Share of international orders is 52% of the overall order book
as on 31 March 2017. By choosing international projects, which are
normally funded by global multi-lateral funding agencies such as
World Bank, International Monetary Fund (IMF), African
Development Bank, Asian Development Bank, etc., the Company
significantly reduces its credit risk. The Company has expanded its
manufacturing capacity to over 180,000 MT per annum by setting up
a green-field tower manufacturing plant of 55,000 MT at Raipur,
Chhattisgarh. This plant would support domestic operations by
providing cost synergies due to close proximity with project locations
and raw material sources. Also, existing two plants at Gandhinagar,
Gujarat, shall focus on international orders, which being closer to
ports, bring operational efficiency in serving international projects.
13
2. Civil Construction (JMC projects (India) Ltd.)
JMC Projects India Limited (JMC), a subsidiary of Kalpataru Power
Transmission Limited (KPTL), is a leading contracting company that
undertakes Civil & Structural works for Factories and Buildings, Roads
and Bridges, Power Plants, Water pipelines, Rail and Metro
Infrastructure projects in India and abroad. Incorporated in 1982, it
has a professionally qualified workforce of over 3,200 people. The
Company is one of the fastest growing Indian Constructions
Company and has a strong order book of over INR 7,000 crore as on
31.03.2017. The Company has expanded its footprints outside India
by pocketing its first road EPC contract in Ethiopia in Africa. Company
has also bagged its second road project in Ethiopia and also a water
pipeline project in Sri Lanka. The Company plans to leverage on
strong global understanding of its parent company and strengthen its
international portfolio going forward.
14
4. Railways Infrastructure
A High Growing portion of the Company’s business, KPTL diversified
into railway EPC business which leverages on with KPTL’s skills for
track electrification and JMC Projects for its civil infrastructure work.
The Company offers an entire range of services including tracklaying,
signaling & telecommunication, and overhead electrifications works
on turnkey basis in railway infrastructure projects globally and is
geared up for various more such bids across geographies. The
Company is executing an international turnkey project in Bangladesh.
15
Ltd (KSTPL) under DBFOT model in a record time of 15 months. KSTPL
is currently operating at almost 100% availability. The Company has
successfully secured another Build, Own, Operate and Maintain
(BOOM) Project , a 327 Km 400 kV D/c line (2nd) with quad moose
conductor for initial concession period of 25 years and with provision
for extension for 10 years through its wholly owned subsidiary
Alipurduar Transmission Limited. Company has obtained Financial
Closure and Construction of transmission line has now commenced.
7. Road BOOT
JMC Projects (I) Ltd. is executing four Road BOOT Projects, all
projects are operational on full toll and full length basis.
16
Board of directors
Mr. Mofatraj P. Munot, Chairman
He is the promoter and chairman of Kalpataru Power Transmission
Ltd. He also serves as the Chairman of Kalpataru Ltd., the flagship
real estate arm of the Group. He has a vast industry experience of
close to five decades in Real Estate and Property Development, Civil
Contracting and EPC across the industry spectrum. He founded the
Kalpataru Group in 1969 and has been the guiding force behind the
Group’s stellar success.
18
Mr. K. V. Mani, Director, Independent Director
He is a seasoned professional in Transmission & Distribution business
with more than four decades of unparalleled experience in
Construction, Project Management and Overseas Marketing. He has
been associated with the Company for over a decade and has served
as the Managing Director from 2001 to 2009.
Since June 2009, he has served the Company as a Non-Executive
Director and from January 2014 he has been serving as an
Independent Director.
He holds a degree in Engineering and is a MBA from IMD,
Switzerland.
20
Financial Performance of KPTL
21
FINANCIAL PERFORMANCE HIGHLIGHTS OF KPTL
1. Net Sales
Net Sales = Total sales – excise duty
Net Sales
5000
4500
4000
3500
3000
2500 rs. Cr.
2000 change
1500
1000
500
0
2011-12 2012-13 2013-14 2014-15 2015-16
INTERPRETATION
From above chart, we can say that sales was growing till
2014-15 after it starts declining in 2015-16.
As we can see that, current sales of KPTL is 1.44 times of
a year ended on march-11. Sales of KPTL were increased
from Rs 3092.2 in 2011-12 cr. to 4471.4 cr. in year 2015-
16.
22
2. PBDIT
PBDIT = Net Sales – Operating expenses
PBDIT
500
450
400
350
300
250 rs. Cr.
200 change
150
100
50
0
2011-12 2012-13 2013-14 2014-15 2015-16
INTERPRETATION
From the above chart, we can say that profit before
depreciation, interest and tax is increase year by year . The
reason for it is decrease in value of raw material which has
increase the PBDIT of KPTL.
23
3. PBDT
PBDT = PBDIT – Interest
PBDT
450
400
350
300
250
rs. Cr.
200
change
150
100
50
0
2011-12 2012-13 2013-14 2014-15 2015-16
INTERPRETATION
From the above graph we can say that KPTL’S PBDT is
decreasing in 2012-13 .After this year PBDT is increased.
24
4. PAT
PAT = PBT – Tax
PAT
250
200
150
rs. Cr.
100 change
50
0
2011-12 2012-13 2013-14 2014-15 2015-16
INTERPRETATION
From the above graph we can say that PAT is decreases from
164.9 cr. in 2011-12 to 137.6 cr. in 2012-13 and after 2012-13 ,
company catch the string of upward rising .
25
5. Net Worth
Net Worth = Share Capital + Reserve & Surplus
Net Worth
2500
2000
1500
rs. Cr.
1000 change
500
0
2011-12 2012-13 2013-14 2014-15 2015-16
INTERPRETATION
Net worth is an internal sources of funds, which use in the
expansion of the industry.
The company has a policy to declared a steady rate of dividend,
as result Net worth of company was stood at Rs. 2258.3 cr. in
2015-16 as compared to Rs.1953.9 cr. in 2013-14.
26
6. Order Book
Order book
9000
8000
7000
6000
5000
rs. Cr.
4000
change
3000
2000
1000
0
2011-12 2012-13 2013-14 2014-15 2015-16
INTERPRETATION
From the above chart we can say that KPTL has order
book of Rs.8000+crores which saw almost 60% increase
from the last year which was around Rs.8300crores at the
end of 2015-16. This saw company future prospect and
growth story.
27
7. Earning per share
140
120
100
80
rs. Cr.
60 change
40
20
0
2011-12 2012-13 2013-14 2014-15 2015-16
INTERPRETATION
Earning per share means profit available to each equity
share. It shows the good parameter for investment in a
company.
EPS of company stood at Rs 9 cr. in 2012-13 as compared
to Rs.10.7 cr. in 2011-12, which saw a sharp decrease in a
profit available to each equity share .
28
8. Book value
Book Value
160
140
120
100
80 rs. Cr.
change
60
40
20
0
2011-12 2012-13 2013-14 2014-15 2015-16
INTERPRETATION
Book value per share means price of share as per the book of the
accounts of the company.
Book value per share of KPTL was Rs. 134.9 cr. in 2014-15,
which was Rs. 127.3 cr. in 2013-14 .
29
9. Production capacity
Production capacity
200000
180000
160000
140000
120000
100000 rs. Cr.
80000 change
60000
40000
20000
0
2011-12 2012-13 2013-14 2014-15 2015-16
INTERPRETATION
KPTL has 2 fabrication units and the production capacity of
these plants is around 151712 MT per year , which was increase
from 127331MTs in last year . company had added 24381 MT
capacity in 2012-13 .
30
WORKING CAPITAL MANAGEMENT
Definition
Working capital management involves relationship between short
term assets and its short term liabilities. The goal of working capital
management is to ensure that a firm is able to continue its operations
and that it has sufficient ability to satisfy both maturing short term
debt and its upcoming operational expenses. The management of
working capital involves managing inventories, accounts receivable
and payable, and cash.
Firms need cash to pay their day to day activities. They have to pay
wages, pay for raw materials, pay bills and so on. The money
available to them to do this is known as the firm’s capital
management. The main source of working capital is the current assets
as these are the short term assets that the firm can use to generate
cash. However, the firm also has the current liabilities and so these
have to be taken account of when working out how much working
capital a firm has at its disposal.
31
working capital refers to the difference between current assets and
current liabilities.
Ordinarily, working capital can be classified as fixed / permanent or
flexible / variable parts. The minimum level of investment in current
assets regularly employed in business is, called fixed or permanent
working capital and the extra working capital needed to support the
changing business activities is called variable or fluctuating working
capital.
Sometimes working capital is also referred as operating cycle, it is a
valuation of the amount of liquidity a business or organization has for
running and building of the business. Generally speaking, companies
with higher amounts of working capital are better positioned for
success. They have the liquid assets needed to extend their operations
as desired.
Working capital can be expressed as a positive or negative number.
When a company has more debts then current assets, it has negative
working capital. When current assets outweigh debts, a company has
positive working capital.
32
basis, have fast inventory turnovers, and can generate cash quickly
don’t necessarily need as much working capital.
Thus the need of working capital arises from the prevalence of credit
in business transactions, need to fund manufacturing and support and
to account for the variations in the supply of raw material and demand
for finished goods.
The length of the operating cycle of a manufacturing firm is sum of:-
Inventory Conversion Period (ICP)
Debtors Conversion Period (DCP)
Raw Material Conversion Period (RMCP)
Work-In-Progress Conversion Period (WIPCP)
Finished Goods Conversion Period (FGCP)
The total of inventory conversion period and debtor’s
conversion period is referred as Gross Operating Cycle
(GOC).
Creditor’s Deferral Period (CDP)
The difference between operating cycle and payables is Net
Operating Cycle (NOC).
Cash Conversion Cycle (CCC) is net time interval between
cash collections from sale of the product and cash payments for
resources acquired by the firm.
33
RMCP (2014-15) = (21070/442225)*365
=17.39 days
Work in progress conversion period (WIPCP): once
materials are issued to production, it again involves time gap
between issue of materials and production of finished product.
This time gap is called work in progress conversion period.
WIPCP (2015-16) = (average WIP / sales)*365
= (6274/436458)*365
=6.97 days
Finished goods conversion period (FGCP): the company
produces according to the demand in the market. Till the
demand for finished product materializes, the product would
remain in the store (factory). This period is termed as finished
goods conversion period.
FGCP (2015-16) = (average finished goods / sales)*365
= (13282/436458)*365
= 11.10 days
FGCP (2014-15) = (15821/442225)*365
= 13.05 days
Debtor’s Conversion period (DCP): the company because of
the competitive or other reasons extend the credit facilities for
its customers. This time gap between sales and realisation of
cash is known as collection period from debtors.
DCP (2015-16) = (average debtors / purchases)*365
= (238430/436485)*365
= 199.39 days
DCP (2014-15) = (220801/442225)*365
= 182.24 days
Creditor’s (payables) Deferrals period (CDP): the company
receives credit in the purchase of raw materials from suppliers.
34
It refers to the average time taken for payment to suppliers from
the date of purchase.
CDP (2015-16) = (average creditors / purchases)*365
= (142668/436485)*365
=120.69 days
Statement of Operating Cycle of KPTL
(Figures in days)
Particulars 2015-16 2014-15
RMCP 16.47 17.39
WIPCP 5.24 6.97
FGCP 11.10 13.05
DCP 199.39 182.24
Gross operating 232.2 219.65
Cycle
Less: CDP 120.69 113.39
Net operating Cycle 111.51 106.25
35
4. To ensure smooth working of the units without any
production held-ups due to paucity of funds.
5. To ensure easy and cheapest availability of resources at the
time of growth and expansion activities.
36
7. Business cycles: Business cycle refers to the alternate
expansion and contraction in general business activities. In a
period of boom when the business is prosperous, there is need
for larger amount of working capital due to increase in sales and
rise in prices of raw materials. The contrary happens in the
period of depression.
8. Profit margin: A high rate of profit margin due to quality of
products or good marketing management or monopoly power in
the market, reduces the working capital requirements of the
firm, as profit earned in cash is a source of working capital.
37
favourable terms, as it provides good security for the
unsecured loans.
5. Adequate working capital has psychological effect on the
directors and executives of the firm as it motivates them to
work vigorously. It creates an environment of security,
confidence, high morale and increases overall efficiency of
the business.
6. It promotes profits of speculative nature by stock piling it
results in liberal dividend policy but the management has to
face the difficulties in future when there are no speculative
profits.
It may also be defined as, that part of firm’s current assets which is
financed with long term funds. The Net Working Capital may either
be positive or negative.
39
Components of Working Capital
Current Assets:
Inventories
Sundry Debtors
Bills Receivables
Cash and Bank Balances
Short term Investment
Advances
Current Liabilities:
Sundry Creditors
Bills Payable
Creditors for Outstanding Expenses
Provision for Taxation
Other provisions of liabilities payable within a period
of 12 months.
40
Working Capital Financing
As KPTL is engaged into production and export of power
transmission, it requires huge amount of Working Capital for doing
day to day operations smoothly without any interruption.
Method l:
Method II:
Method III:
In Brief MPBF:
Method I: 0.75(CA-CL)
Method II: 0.75(CA) - CL
Method III: 0.75(CA-CCA) – CL
42
Drawing Power (DP)
Drawing Power is the Amount of working capital funds the borrower
is allowed to draw from the working capital limit allotted to him.
Because the working capital limit is usually allotted to a borrower
against security of stock and book debts, the amount of fund a
borrower is allowed to draw is calculated by considering the total
value of stock plus total value of book debts for the month after
deducting the margin. For this purpose the borrower must regularly
submit stock and book debts Statement and Statement of Trade
Creditors.
Stocks 100
On the above criteria, bank decides the fund base limit For
KPTL.
44
Vendor Financing
KPTL has to pay interest @10% (Approx) for 90 days (which is lower
than cash credit interest).
1. HDFC Bank
2. HSBC Bank
3. DEUTSCHE Bank
45
Packing Credit
As per Reserve Bank by the instruction of Government, no exporter
shall suffer for want of funds for exports. Government promotes all
exporters to earn foreign exchange and extend maximum support to
encourage exports.
46
Different Stages of Pre Shipment Finance:
47
Pre Shipment Credit in Foreign Currency (PCFC)
Bill Of Exchange
This approach allows the issuer of the bill to receive cash before the
actual due date associated with the bill.
48
Commercial Paper
49
4) Earmarking Certificate:
In this type of CP, company has to give statements of Drawing
Power available to company (amount of CP). Company has to
freeze the fund equals to amount of CP in Banks of the company,
till Maturity of CP. After maturity company can unfreeze the
amount.
The objective of issuing this type of CP is that if company is not
able to repay the amount the bank can withdraw the amount from
Company’s Account.
5) KPTL has to appoint issuing and paying agent for issue of CP.
Independent Practitioner Association of KPTL is Indian Bank
(Gandhinagar). Each and Every Transaction of CP has to be done
through IPA (Issuing and Paying Agent).
6) While issuing and redemption of CP, KPTL has to inform the
following entities:
Reserve Bank of India.
IPA (Indian Bank)
NSDL IPA: Monitoring and controlling the depository of CP
in D’mat Account.
Documents Required:
1. CP in D’mat Form
2. IPA Certificate on Letter Head of IPA.
3. Letter of Earmarking. (Specify investor’s name, Name,
Amount, Tenor & issue Date)
4. Certified True copy of Credit Rating letter.
50
Working Capital Demand Loan
In KPTL Banks are providing short term loan at lower interest rate as
compared cash credit rate.
Generally short term loans are available for 90 days or 180 days.
Time period for this loan is depended on economic scenario, as during
that time period interest rate is fixed.
51
Buyer’s Credit
Steps involved:
1. The customer will import the goods either under LC, collections
or open account.
2. The customer requests the Buyer’s Credit Arranger to arrange
the credit before the due date of the bill.
3. Arrange to request overseas bank branches to provide a buyer’s
credit offer letter in the name of the importer. Best rate of
interest is quoted is quoted to the importer.
4. Overseas bank to fund importer’s bank for the required amount.
5. Importer’s bank to make import bill payment by utilizing the
amount credited (if the borrowing currency is different from the
currency of imports then a cross currency contract is utilized to
effect the import payment).
6. Importer’s bank will recover the required amount from the
importer and remit the same to overseas bank on due date.
7. It helps importer in working capital management.
52
Cost involved:
53
Non-Fund Based Working capital Financing
1. Letter of Credit.
2. Letter of Guarantee / Bank Guarantee.
Letter of Credit
54
transactions between a supplier in one country and a customer in
another.
Step1: Buyer and Seller conclude the sales contract and agreed
to use an LC as the method of payment.
55
Step8: If issuing bank is satisfied with all the documents then it
make payment to the advising bank and advising bank will make
payment to the seller.
56
Bank Guarantee
In the situations, where a customer fails to pay the money, the bank
must pay the amount within three working days.
57
beneficiary. This type of bank guarantee is more time
consuming and expensive too.
2. Confirmed Guarantee:
3. Tender Bond:
4. Performance bond:
This mode of guarantee is used where the applicant calls for the
provision of a sum of money at an early stage of the contract
and an recover the amount paid in advance, or a part thereof, if
the applicant fails to fulfil the agreement.
6. Payment Guarantee:
58
the debtor fails to make the payment, then after written
declaration the beneficiary can easily obtain his money from the
guaranteeing bank.
9. Rental Guarantee:
59
Kalpataru Power Transmission Limited needs Bank Guarantee as
every stage of Tender Process.
60
Observations & Learnings
61
ANNEXURE
Income
7291.74
Revenue from operations- gross
18.13
Other Income
7309.87
Total Income
Expenses:
2714.01
Cost of materials consumed
143.84
(Increase) / Decrease in Stocks
106.85
Excise Duty on Sale of Goods
2259.40
Erection, Sub-contracting & other project expenses
551.76
Employee Benefits Expense
414.03
Financial cost
186.16
Depreciation and amortization Expenses
725.99
Other expenses
7102.04
Total Expenses
207.83
Profit Before Tax and Extra Ordinary Items and share of Profit/(Loss) of Joint
Ventures
-36.58
Share of Profit/(Loss) of Joint Ventures
171.25
Profit Before Tax and Extra Ordinary Items
-
Extra Ordinary Items
171.25
Profit Before Tax
95.44
Tax Expense
75.81
Net Profit for the year
62
Standalone Balance Sheet
Equity
30.69
(a) Equity Share Capital
2184.21
(b) Other Equity
2214.90
LIABILITIES
Non-Current Liabilities
Current Liabilities
5244.91
Total
63
ASSETS
Non-current Assets
535.10
(a) Property, Plant and Equipments
4.12
(b) Capital work in progress
--
(c) Investment Property
3.34
(d) Other Intangible assets
Current Assets
424.40
(a) Inventories
5244.91
Total
64
65