SUMMER INTERNSHIP PROJECT On CORPORATE FINANCE DEPARTMENT IN

FORBES & COMPANY LIMITED

SUBMITTED BY AMRITA FURTADO ROLL NO. 11012

e-MBA FINANCE BATCH 2011 2013

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AC NO!LED"EMENT
I am grateful to Mr. C.A. Karnik, Director HR of Forbes Com!an" #imite$ an$ Mr. A%it &os'i ( Manager HR# for gi)ing me t'is *on$erful o!!ortunit" to $o m" summer interns'i! for a !erio$ of t*o mont's. I am t'ankful to m" mentor Mr.+ina" Agra*al, Manager ( ,anking -reasur" an$ Mr. .an%a" Als'i, .enior Manager Finance Accounts for t'eir continuous su!!ort an$ gui$ance *'ic' 'el!e$ me in e/ecuting m" $uties.

I *oul$ like to t'ank Mr., D 0'a$ge ( 1/ecuti)e ( Cor!orate Accounts an$ Mr. ,.0. Pe$nekar Com!uter for co(o!eration t'e" e/ten$e$ to me *'ile I *orke$ for t'e !ro%ect an$ use$ t'e facilities. #ast but not t'e least2 I t'ank M1- Institute of Management for its career $efining gui$ance t'roug'out m" M,A.

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CERTIFICATE

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INDE$
Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 5ee$ an$ &ustification Intro$uction Com!an" ,ackgroun$ an$ Information .tu$" an$ Anal"sis Com!an" +isit #earning Conclusion Future ,ibliogra!'" Topics Page No. 6 7 8 19 41 44 4: 4: 4:

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o -o un$erstan$ t'e functioning cor!orate in t'e finance $e!artment of a com!an" o -o un$erstan$ an$ anal";e t'e balance s'eet of t'e com!an" as !er t'eir Annual Re!ort 3911 (13 o -o stu$" t'e )arious !ro$ucts an$ in)estment o!tions in Forbes Com!an" #t$.

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-'e interns'i! *as carrie$ out at Forbes an$ Com!an" #t$ at its finance $e!artment in <orli, for t'e tenure form 1 st &une 3913 to 16t' &ul" 3913. During t'e interns'i! I anal";e$ t'e balance s'eet of t'e com!an" as !er t'eir Annual Re!ort 3919 (11. .tu$" of )arious in)estment o!tions un$ertaken b" t'e com!an" *as also un$ertaken *'ic' 'a)e been elaborate$ later in t'e re!ort. Along *it' t'ese res!onsibilities, I 'a$ to finis' t'e $ail" *ork allotte$ to me.

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Forbes Com!an" #imite$ is one of t'e ol$est com!anies of t'e *orl$ t'at is still in business. -'e com!an" traces its origin to t'e "ear 1878 *'en &o'n Forbes of Aber$eens'ire, .cotlan$ starte$ 'is business in In$ia. It=s t'e 3n$ ol$est registere$ com!an" in In$ia an$ t'e >t' ol$est registere$ com!an" in t'e *orl$ *it' $i)erse interests in Manufacturing, -ra$ing an$ .'i!!ing ser)ices.

?)er t'e "ears, t'e management of t'e com!an" mo)e$ from t'e Forbes Famil" to t'e Cam!bells to t'e -ata 0rou! an$ no* finall" to t'e *ell kno*n .'a!oor%i Pallon%i 0rou!2 lea$ers in infrastructure, construction an$ real estate businesses, amongst man" ot'ers.

Forbes Co. #t$. is engage$ in t'e engineering, real estate, !ersonal *ear an$ s'i!!ing an$ logistics business. It o!erates t'roug' t'ree $i)isions@ 1ngineering, .'i!!ing an$ #ogistics, an$ -ransaction Management .olutions. -'e 1ngineering $i)ision manufactures t'rea$ing tools, carbi$e tools, s!ring locke$ *as'er an$ a range of !recision cutting tools un$er t'e bran$ name of -?-1M. -'e .'i!!ing an$ #ogistics $i)ision offers total integrate$ logistics solutions, inclu$ing freig't management, liner agenc", $oor to $oor logistics, an$ multimo$al trans!ort o!erations. -'e -ransaction Management .olutions $i)ision !ro)i$es transaction !rocessing solutions, ser)ices an$ net*orks t'at 'el! organi;ations 'an$le large transaction )olumes effecti)el" an$ efficientl" t'roug' t'e com!an"As *'oll" o*ne$ subsi$iar" Forbes -ec'nos"s #t$. In all t'e com!an" 'as 39 subsi$iar" com!anies $e!en$ing u!on t'e line of business.

Forbes Com!an" #imite$ 'as a tra$ition of e/cellence an$ total customer $elig't as its singular aim.
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-'e com!an", liste$ on t'e ,omba" .tock 1/c'ange, 'as an eminent ,oar$ of Directors an$ t'e $a" to $a" affairs of t'e com!an" are manage$ b" a senate of e/!erience$ !ersons. -'e &ourne" of Forbes Com!an" #t$.

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S)'%4 &n% An&94(*( C-23&n4 An&94(*( B&(e% On ).e Ann'&9 Re3-/) 2011-12

For a com!arati)e anal"sis of t'e com!an" Income statement figures of t'e com!an" 'a)e been acEuire$ ranging from financial "ears 399B to 3913.
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Cear o)er "ear, Forbes Com!an" #t$ 'as been able to gro* re)enues from 1:.8, to 18.8,. Most im!ressi)el", t'e com!an" 'as been able to re$uce t'e !ercentage of sales $e)ote$ to selling, general an$ a$ministrati)e costs from :3.94F to 4>.>>F. -'is *as a $ri)er t'at le$ to a bottom line gro*t' from 49>.4M to 636.1M. It also can be obser)e$ t'at on account of t'e merger an$ restructuring t'at took !lace in t'e com!an" bet*een 399B (3919 t'e o!erating income of t'e com!an" *as affecte$ *'ic' s'o*s a negati)e figure of Rs.318.> million. -'e com!an" follo*e$ t'e !rinci!le of concentrating on its core acti)ities an$ setting of its non(core acti)ities. As a ste! to t'is $irection certain assets 'a)e been sol$ *'ic' in turn 'a)e generate$ re)enues t'at 'a)e been !loug'e$ back into t'e com!an" to be utili;e$ for its *orking ca!ital reEuirements.

It can be obser)e$ t'at in t'e "ear 399B t'e earnings from continuing o!erations are Rs. (61:.1 million. Post t'at, t'e com!an" 'as manage$ to get !ositi)e earnings *'ic' 'a)e stea$il" rising "ear after "ear. -'is 'as been accom!lis'e$ as t'e com!an" $eci$e$ to set off its acti)ities b" concentrating on its main acti)ities.

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-'e Com!an" 'a$ un$ertaken legal an$ financial restructuring of its businesses, *'ic' 'as starte$ s'o*ing !ositi)e results. -'e losses of G :7.:8crores in FC 399>(399B 'a$, gra$uall", come $o*n to a small !rofit of G 9.79crores in FC 3919(3911 an$ t'is "ear it 'as im!ro)e$ furt'er to G :.84crores. -'is 'as been ac'ie)e$ *it' im!ro)ement in t'e o!erating !erformance of all t'e business segments in *'ic' t'e Com!an" is o!erating. It is also im!ortant to note t'at, unlike in t'e !ast "ears, t'e re!orte$ !rofit is *it'out e/tra(or$inar" income items
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suc' as, $i)i$en$ from an" of t'e subsi$iar" com!anies or !rofit from sale H bu"back of s'ares or !rofit from sale of !ro!ert", an$ $es!ite bearing t'e costs associate$ *it' t'e infusion of fun$s in )arious &+s an$ subsi$iaries, *'ic' are making losses.

<it' t'e relentless focus on economical unit reali;ations, strict cost control, efficient *orking ca!ital management, etc., t'e generate$ cas' 'a$ 'el!e$ fun$ing t'e in)estments in &+s an$ subsi$iaries as *ell as bringing $o*n its $ebt le)el significantl" from G 1:>.B3crores in Marc' 399B to G 146.:4crores in Marc' 3913 *'ic' resulte$ in a re$uction in interest costs, $es!ite a !erio$ of increasing interest rates, from 17.:7crores in 399>(399B to G 13.6:crores in 3911(3913. ConseEuentl", t'e Com!an"=s cre$it rating from bot' CRI.I# an$ ICRA 'as stea$il" im!ro)e$ e)er" "ear from AI J.tableK in 399B, to AA( J.tableK in 3919 b" CRI.I# an$ AI J*it' !ositi)e outlookK b" ICRA Jbot' of *'ic' continue at same le)elsK.

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,elo* are some of t'e financial instruments t'at t'e com!an" $eals *it' for t'eir fun$ing o!erations@( 1: COMMERCIAL PAPERS D1FI5I-I?5 Commercial !a!ers are unsecure$, negotiable, s'ort(term in)estments usuall" for a !erio$ of B9 an$ 1>9 $a"s *it' a fi/e$ maturit". -'e" are also kno*n as usance !romissor" notes. Commercial !a!er is a mone" market securit" sol$ b" banks an$ cor!orations. Cou can in)est in t'ese s'ort(term unsecure$
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!romissor" notes issue$ b" cor!orations an$ foreign go)ernments for man" large, cre$it*ort'" issuers. Commercial !a!er is a lo*(cost alternati)e to bank loans. It is a )er" safe in)estment an$ can be use$ for in)entor" !urc'ases or *orking ca!ital. ?,&1C-I+1 -o !ro)i$e an influ/ of fun$s for a s'ort($uration at a $iscounte$ cost to t'e com!an" for meeting *orking ca!ital nee$s an$ t'e likes. F1A-DR1. o Issue$ at a $iscount to t'e face )alue. o Re$eemable at !ar o maturit". o -ra$eable an$ transferable securities. o 5ot liste$ on t'e stock e/c'ange. o Ciel$ is calculate$ as ActualH 476 $a"s. o Com!ulsoril" to be issue$ in $emat mo$e. o FIMMDA ie Fi/e$ Income Mone" Market an$ Deri)ati)es Association of In$ia. o Cannot be un$er*ritten or co(acce!te$.

!HO CAN ISSUE COMMERCIAL PAPERS; A cor!orate *oul$ be eligible to issue CP !ro)i$e$ t'e tangible net *ort' of t'e com!an", as !er t'e latest au$ite$ balance s'eet, is not less t'an Rs. :crore com!an" 'as been sanctione$ *orking ca!ital limit b" bankHs or all(In$ia financial institutionHs2 an$ t'e borro*able account of t'e com!an" is classifie$ as a .tan$ar$ Asset b" t'e financing bankHsH institutionHs.
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IS THERE ANY RATN" RE<UIREMENT FOR ISSUANCE OF CP=; IF SO !HAT IS IT; Ces. All eligible !artici!ants s'all obtain t'e cre$it rating for issuance of Commercial Pa!er eit'er from Cre$it Rating Information .er)ices of In$ia #t$. JCRI.I#K or t'e In)estment Information an$ Cre$it Rating Agenc" of In$ia #t$. JICRAK or t'e Cre$it Anal"sis an$ Researc' #t$. JCAR1K or t'e FI-CH Ratings In$ia P)t. #t$. or suc' ot'er cre$it rating agenc" JCRAK as ma" be s!ecifie$ b" t'e Reser)e ,ank of In$ia from time to time, for t'e !ur!ose. -'e minimum cre$it rating s'all be A(3 [As per rating symbol and definition prescribed by Securities and Exchange Board of India (SEBI)]. -'e issuers s'all ensure at t'e time of issuance of CP t'at t'e rating so obtaine$ is current an$ 'as not fallen $ue for re)ie*. IMPORTANT THIN"S TO BE EPT IN MIND !HILE ISSUIN" CP=( CP=s s'oul$ be issue$ for maturities bet*een a min of 8 $a"s an$ a ma/imum of 1 "ear from t'e $ate of issue. -'e maturit" $ate of t'e CP s'oul$ not go be"on$ t'e $ate to *'ic' t'e cre$it rating of t'e issuer is )ali$. -'e aggregate amount of CP from an issuer *oul$ be as a!!ro)e$ b" t'e ,oar$ of $irectors or as in$icate$ b" t'e Cre$it rating agenc" for t'e s!ecifie$ rating, *'ic'e)er is lo*er. CP=s can be issue$ in $enominations of Rs.6 lak's or multi!les t'ereof. -'e total amount of CP !ro!ose$ to be issue$ s'oul$ be raise$ *it'in a !erio$ of t*o *eeks from t'e $ate on *'ic' t'e issuer o!ens t'e issue for subscri!tion.
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CP ma" be issue$ on a single $ate or in !arts on $ifferent $ates !ro)i$e$ t'at in t'e latter case, eac' CP s'all 'a)e t'e same maturit" $ate. Furt'er, e)er" issue of CP, inclu$ing rene*al, s'all be treate$ as a fres' issue. ?nl" a sc'e$ule$ bank can act as an IPA for issuance of CP. CP is al*a"s issue$ at a $iscount to t'e face )alue as ma" be $etermine$ b" t'e issuer. Rating fees is bet*een 9.96F (9.36F of t'e rating amount. R-9e &n% Re(3-n(*8*9*)*e( -+ ).e I(('e/>I(('*n6 &n% P&4*n6 A6en) &n% C/e%*) R&)*n6 A6en,4. Issuer@ a. 1)er" issuer must a!!oint an IPA for issuance of CP. b. -'e issuer s'oul$ $isclose to t'e !otential in)estors its financial !osition as !er t'e stan$ar$ market !ractice. c. After t'e e/c'ange of $eal confirmation bet*een t'e in)estor an$ t'e issuer, issuing com!an" s'all issue !'"sical certificates to t'e in)estor or arrange for cre$iting t'e CP to t'e in)estorAs account *it' a $e!ositor". In)estors s'all be gi)en a co!" of IPA certificate to t'e effect t'at t'e issuer 'as a )ali$ agreement *it' t'e IPA an$ $ocuments are in or$er J.c'e$ule II gi)en in t'e Master Circular(0ui$elines for Issue of Commercial Pa!er $ate$ &ul" 1, 3911 an$ u!$ate$ from time to( timeK. Issuing an$ Pa"ing Agent a. IPA *oul$ ensure t'at issuer 'as t'e minimum cre$it rating as sti!ulate$ b" t'e R,I an$ amount mobili;e$ t'roug' issuance of CP is
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*it'in t'e Euantum in$icate$ b" CRA for t'e s!ecifie$ rating or as a!!ro)e$ b" its ,oar$ of Directors, *'ic'e)er is lo*er. b. IPA 'as to )erif" all t'e $ocuments submitte$ b" t'e issuer )i;., co!" of boar$ resolution, signatures of aut'ori;e$ e/ecutants J*'en CP in !'"sical formK an$ issue a certificate t'at $ocuments are in or$er. It s'oul$ also certif" t'at it 'as a )ali$ agreement *it' t'e issuer J.c'e$ule II gi)en in t'e Master Circular(0ui$elines for Issue of Commercial Pa!er $ate$ &ul" 1, 3911 an$ u!$ate$ from time to( timeK. c. Certifie$ co!ies of original $ocuments )erifie$ b" t'e IPA s'oul$ be 'el$ in t'e custo$" of IPA.

PR?C1.. ?F I..DA5C1 Cre$it rating is to be acEuire$ b" t'e com!an". -'is rating is acEuire$ un$er an" of t'e belo* : categories. aK .tan$alone CP rating J*it'out an" bank backu!K. bK Against *orking ca!ital CP rating cK Against structure$ obligation CP rating. $K .'ort term $ebt raising.

Com!an" a!!oints an IPA agent .IPA o!ens 3 accounts CP allotment account an$ CP re$em!tion account *it' 5.D#. R-A is a!!ointe$ b" t'e com!an". A tri !art" agreement is ma$e bet*een t'e com!an", R-A an$ $e!ositor" J5.D# or C.D#K

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CP is t'en issue$ eit'er $irectl" or b" a!!ointing an arranger. In case of arranger a letter of offer on t'e com!an"=s letter 'ea$ is gi)en basis on *'ic' t'e market "iel$ at *'ic' t'e CP *oul$ be !lace$. Post negotiating t'e market "iel$, t'e arranger closes t'e $eal *it' t'e a!!ro)al of t'e com!an" an$ in)estor. ?nce t'e $eal is close$ $eal confirmationH contract note is !re!are$ on t'e com!an"=s letter'ea$. Com!an"=s sen$ t'e letter of offer $eal confirmation to t'e in)estor *'o signs an$ ackno*le$ges confirmation of CP !lacement. ?n confirmation of CP !lacement com!an" gets I.I5 b" submitting letter of intent !rescribe$ b" 5.D#. I.I5 is normall" create$ in 1(3 *orking $a"s.

A$)antages of Commercial Pa!ers@( 1K It is Euick an$ cost effecti)e *a" of raising *orking ca!ital. 3K ,est *a" to t'e com!an" to take t'e a$)antage of s'ort term interest fluctuations in t'e market 4K It !ro)i$es t'e e/it o!tion to t'e in)estors to Euit t'e in)estment. :K -'e" are c'ea!er t'an a bank loan. 6K As commercial !a!ers are reEuire$ to be rate$, goo$ rating re$uces t'e cost of ca!ital for t'e com!an". 7K It is unsecure$ an$ t'us $oes not create an" liens on assets of t'e com!an". 8K It 'as a *i$e range of maturit"

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>K It is e/em!t from fe$eral .1C an$ .tate securities registration reEuirements.

Disa$)antages of Commercial Pa!ers@( 1K It Is A)ailable ?nl" -o A Fe* .electe$ ,lue C'i! An$ Profitable Com!anies. 3K ," Issuing Commercial Pa!er, -'e Cre$it A)ailable From -'e ,anks Ma" 0et Re$uce$. 4K Issue ?f Commercial Pa!er Is +er" Closel" Regulate$ ," -'e Rbi 0ui$elines.

2: BAN "UARANTEES
Definition A bank guarantee is a commercial instrument in t'e nature of a contract, inten$e$ bet*een t*o !arties, to secure com!liance *it' t'e contract. It is an off(s'oot of t'e main contract bet*een t*o !arties. A bank guarantee is a guarantee ma$e b" a bank on be'alf of a customer Jusuall" an establis'e$ cor!orate customerK s'oul$ it fail to $eli)er t'e !a"ment, essentiall" making t'e bank a co(signer for one of its customerAs !urc'ases.

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Ho* $o bank guarantees 'el! in commercial contractsL 0uarantees are im!ortant instruments use$ to minimi;e t'e risks t'at are in)ol)e$ in commercial contracts. For t'e enforcement of or$inar" guarantees, as construe$ $e!en$ence of t'e guarantee on t'e main contract ma" lea$ to unnecessar" $is!utes an$ litigation, arising from t'e main contract. -'ese $is!utes ma" 'a)e a material effect on t'e guarantee, t'ereb" blocking fun$s in litigation. Hence, t'ere *as a nee$ for an inno)ati)e instrument *'ic' *oul$ enable t'e guarantee to ser)e its original !ur!ose2 namel", !ro)i$ing a form of securit". -'e bank guarantee is one suc' inno)ati)e financial instrument *'ereb", if t'e beneficiar" !ercei)es t'at t'ere 'as been a breac' of contract b" t'e ot'er !art", 'e can encas' t'e guarantee an$ a)ail of t'e amount imme$iatel", *it'out 'a)ing to un$ergo t'e 'assles of litigation. -'us, t'e rele)ance of a bank guarantee ac'ie)es rele)ance. Ho* can a beneficiar" restrain t'e in)ocation of a bank guaranteeL -'e in)ocation of a bank guarantee b" t'e beneficiar" can be restraine$ b" an in%unction un$er t'e Ci)il Proce$ure Co$e, 1B9>, or t'e .!ecific Relief Act, 1B74. Ho*e)er, t'e normal consi$erations, *'ic' a!!l" in granting an in%unction, *ill not a!!l" in cases of a bank guarantee. Courts are usuall" reluctant to grant an in%unction against a bank guarantee. If a bank guarantee 'as to be restraine$, it 'as to satisf" t'e follo*ing con$itions@ Frau$2 Irretrie)able in%ustice or in%ur" Risk Mitigants to be follo*e$ in case of bank guaranteesL Car)e out ,0 limits out of total ,0 limits for issuing abo)e t"!e of ,0s Percentage of limits to be car)e$ out base$ on client ratings
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I$entifie$ in t'e s"stem as D?<AR guarantees -ake Mone time in$emnit"N from client or M#etter of Dn$ertaking *it' &0M a!!ro)alN 0uarantees are not close$ till t'e time $isc'arge is recei)e$ from t'e beneficiaries Commission gets c'arge$ till closure in t'e s"stem Communicate t'is to clients in *riting in a$)ance

?-H1R A.P1C-. I5+?CA-I?5 ?F ,A5K 0DARA5-11 o Pa"able on Deman$ b" sim!le letter o Re!utation Risk for bank if not !ai$ on $eman$ o -enor of ,0 o D!to 19 "ears as !er R,I o Recentl" R,I 'as left it free to banks to $eci$e o Refer CA#

<'at is t'e $ifference bet*een a bank guarantee an$ a usual guaranteeL Follo*ing are some !oints of $ifference bet*een a bank guarantee an$ a usual guarantee@ 1. A usual guarantee is go)erne$ b" .ec. 137 of t'e In$ian Contract Act, 1>83. A bank guarantee is not $irectl" go)erne$ b" .ec. 137.
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3. An or$inar" guarantee is a tri(!artite J4 !artiesK agreement in)ol)ing t'e suret", t'e $ebtor an$ t'e cre$itor. ,ut a bank guarantee is a contract in)ol)ing t*o !arties i.e. t'e bank an$ t'e beneficiar". 4. In an or$inar" guarantee, t'e contract bet*een t'e suret" an$ t'e cre$itor arises as a subsi$iar" to t'e contract bet*een t'e cre$itor an$ t'e !rinci!al $ebtor. -'e bank guarantee is in$e!en$ent of t'e main contract. :. In an or$inar" guarantee, t'e inter se $is!utes bet*een t'e $ebtor an$ t'e cre$itor 'a)e a material effect u!on t'e suret"As liabilit". Ho*e)er, t'e bank guarantee is in$e!en$ent of t'e $is!utes, arising e/ contract Jarising out of t'e contractK. 6. An or$inar" guarantee $oes not 'a)e an" time limit before *'ic' t'e $ebt 'as to be claime$. ,ank guarantees generall" 'a)e a s!ecific time *it'in *'ic' t'e" are functional.

B&n5 "'&/&n)ee( P/-,e((*n6

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3: Le))e/ -+ C/e%*) -/ LC=(

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Definition #C is a !a"ment mec'anism *'ereb" a ,ank acting at t'e reEuest of t'e customer, un$ertakes to !a" a beneficiar" b" a gi)en $ate on !resentation of cre$it com!liance $ocuments A #etter of Cre$it !romises !a"ment to "our com!an"=s su!!lier, so long as "our su!!lier !erforms accor$ing to "our or$er as s!ecifie$ on t'e #etter of Cre$it. A #etter of Cre$it essentiall" substitutes t'e cre$it of a t'ir$ !art", usuall" a bank or finance institution, for t'at of a borro*er. -'is ser)es t'ree !ur!oses@ Cre$it Cour su!!lier gains assurance t'at it can no* s'i! to "ou on an o!en account, instea$ of $eman$ing -H- !a"ments !rior to s'i!ment. D!on s'i!ment, t'e su!!lier *ill !resent s'i!!ing $ocuments an$ reEuest !a"ment $irectl" from International -ra$e Finance, not "our com!an". 0uarantee$ Performance -'e #etter of Cre$it guarantees "ou t'at t'e su!!lier must !erform, an$ !erform on time, before it can ask to be !ai$. If t'e or$er is incom!lete or late or 'as an" number of )arious $iscre!ancies, "our com!an" 'as t'e o!tion to re%ect t'e s'i!ment an$ refuse to !a". 0ro*t' #etters of Cre$it allo* "ou to buil$ relations'i!s *it' ne* su!!liers an$ obtain t'e cre$it nee$e$ to allo* "our com!an" to kee! u! *it' t'e gro*ing $eman$ for "our !ro$uct.

!.4 Le))e/ O+ C/e%*);

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Le))e/ O+ C/e%*) P/-,e(( F9-?

A$)antages of #etter of Cre$it

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A$)antage to ,u"er o 1nsure t'at bu"er recei)es goo$s *it'in $eli)er" time o ,u"er assure$ of goo$s are s'i!!e$ before !a"ment o Assures timelines to !lan t'e business !rocess o Pro)i$es clarit" on terms an$ con$itions

A$)antage to .eller o .ecure$ !a"ments in case of cre$it com!liant $ocuments o ?!ening ,ank cannot refuse !a"ment if cre$it terms are com!lie$ o 1/!orter can $etermine t'e $ate of recei!t of !a"ment o Facilitates !ost s'i!ment finance t'roug' negotiation o Pa"ment res!onsibilit" is on t'e bank rat'er t'an bu"er

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En)*)*e( In7-97e% In Le))e/ O+ C/e%*)

Documents ReEuire$ For #C

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#etter of Cre$it ?!erations

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@: B'4e/( C/e%*)
Cre$it e/ten$e$ b" ,ankHFI situate$ outsi$e In$ia to im!orter or to im!orter=s bank. It can also be calle$ a loan arrange$ b" Im!orter. ?nl" for !a"ment of im!orts into In$ia ?nl" after im!ort 'as taken !lace an$ ,ill of 1ntr" is !ro$uce$ as !roof Maturit" of #oan u! to one "ear for Ra* Material an$ less t'an 4 "ears for Ca!ital 0oo$s Ma/imum Amount@ D.D.39 millio9971 !er transaction 1/!orter gets !a"ments imme$iatel" Pricing@ Ma/imum 7m #I399 b!s

1/!ort Finance o Pre(s'i!ment Finance o Post(s'i!ment Finance o Pre(.'i!ment Finance also kno*n as 1/!ort Packing Cre$it o Can be a$)ance$ in Ru!ee or Foreign Currenc" o .!ecial *orking ca!ital facilit" for e/!orters o .!ecific Cre$it #imits sanctione$ to facilitate tra$e transactions o Co)ers *orking ca!ital reEuire$ for !urc'ase, !rocessing, manufacturing !acking of goo$s
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o A)ailable for a !erio$ u!to 1>9 $a"s but can be e/ten$e$ u!to a ma/imum !erio$ of 389 $a"s *it' !enal interest, $e!en$ing u!on t'e genuiness to banks satisfactor" o 0ets con)erte$ into Post .'i!ment Finance on $is!atc' of 0oo$s o Interest rate ca! as fi/e$ b" R,I@ o For I5R@ 5o ca! o For PCFC@ 7m #I399 b!s o Pre s'i!ment cre$it can be eit'er or$er base$ or a running account base$ o Running account facilit" can be gi)en to e/!orters 'a)ing goo$ track recor$ onl" an$ to be mentione$ in CA# o 1/!orters ma" take t'e 1C0C !olic" for insurance co)erage

Post .'i!ment Finance o .!ecial *orking ca!ital facilit" for 1/!orters o Finance in t'e form 1/!ort ,ills o Purc'aseHDiscountingH5egotiation o A$)ance Against ,ill .ent on Collection o Kee!s t'e business c"cle running till t'e reali;ation of e/!ort !rocee$s o A)ailable for a !erio$ 1>9 $a"s for eac' transaction from t'e $ate of s'i!ment
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o Interest c'arge$ till t'e 1/!ort ,ills are reali;e$ o If Pre .'i!ment cre$it is taken on or$er base$ t'en after s'i!ment, it s'oul$ be con)erte$ into Post s'i!ment finance o In case of a running aHc ,!re s'i!ment cre$it is liEui$ate$ on a First(In(First(?ut basis

P/-,e(( F9-? -+ P/e &n% P-() S.*32en) F*n&n,e

All t'e abo)e in)estment o!tions *ere carrie$ out *it' t'e belo* set of banks formerl" kno*n as Consortium ,anks. In eac' bank a fun$ base$ an$ non(fin$ base$ limit *as fi/e$.

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Consortium banks ,anks .tan$ar$ C'artere$ ,ank ID,I ,ank Pun%ab 5ational ,ank HDFC bank Ces bank D,. bank

-otal fun$ base$@ 48lacs a!!ro/ 5on fun$ base$@ 69lacs a!!ro/

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F-/8e( F&,)-/4 A*(*)

-'e factor" of Forbes Com!an" #t$ t'at *as )isite$ b" me *as locate$ in C'an$i)ali, Mumbai. -'e factor" in com!arison to ot'er factories *as )er" green *'ic' s'o*e$ t'at t'e" lai$ em!'asis on greener". -'e infrastructure *as goo$ *it' some of t'e latest mac'ines from .iemens for instance. -'e factor" *orkers *ere all men from t'e mec'anical engineering backgroun$. -'e staff *as Euite frien$l" *it' immense kno*le$ge of t'e !rocesses an$ t'e tools an$ mac'ines use$. ?nce t'e finis'e$ !ro$uct *as ma$e, t'e" *ere manuall" c'ecke$ an$ t'e $efecte$ !ieces *ere later $iscar$e$ an$ rec"cle$. -'e accounting !ractice follo*e$ in case of in)entor" management *as FIF? basis. -'e factor" 'a$ t'e belo* $e!artments as un$er@( Precision -ools Di)ision Precision -ools, a $i)ision of Forbes, began its %ourne" *it' t'e manufacturing of .!ring #ock <as'ers an$ e/!an$e$ its ca!abilities to manufacture a range of !recision cutting tools un$er t'e bran$ name of M-?-1MN. -'e $i)ision 'as 4 !lants -*o in Mumbai an$ one in Aurangaba$ J499miles from MumbaiK an$ em!lo"s more t'an 699 !eo!le. -'e" offer t'e follo*ing range of !ro$ucts@
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-'rea$ing -ools o Hig' .!ee$ .teel Performance -a!s o Carbon .teel -a!s o Hig' .!ee$ .teel Dies an$ Die 5uts o Carbon .teel Dies an$ Die 5uts -a!s Hig'

Carbi$e -ools o .Euare an$ ,all 5ose 1n$ Mills o Drills o -ungsten Carbi$e Rotar" ,urrs .!ring #ocke$ <as'er Accessories

-'eir !ro$ucts are sol$ to some of t'e esteeme$ clients in In$ia an$ abroa$. Currentl" *e are e/!orting to more t'an 43 countries *it' !resence in Mi$$le 1ast, .out' 1ast Asia, 1uro!e, #atin an$ Central America. <e 'a)e a strong $istribution net*ork of more t'an 1699 $ealers in In$ia *it' 8 branc' offices across t'e countr". -'e" commit t'emsel)es to t'e en'ancement of customer satisfaction an$ maintaining global market !resence b" $e)elo!ment, manufacturing an$ marketing of e/cellent !ro$ucts. -'is in)ol)es continual im!ro)ement of !rocesses, !artici!ation of em!lo"ees an$ su!!liers.
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-o conclu$e t'e factor" *as a )er" *ell eEui!!e$ *it' a!!ro!riate safet" measures an$ *ell Eualifie$ e/!erience$ *orkmen *'o *orke$ at t'e factor" for more t'an 16 "ears.

MY LEARNIN"
o For running an" business *e nee$ to concentrate on t'e firms= core business or acti)ities. o .ubsi$iar" businesses t'at are non(!rofit making s'oul$ be set off or sol$ off, t'e !rofit of *'ic' coul$ be utili;e$ for t'e firms *orking ca!ital reEuirements. o In)est in assets an$ !ro%ects t'at "iel$ a return greater t'an t'e minimum acce!table 'ur$le rate. -'e 'ur$le rate s'oul$ be 'ig'er for riskier !ro%ects an$ s'oul$ reflect t'e financing mi/ use$Oo*ners= fun$s JeEuit"K or borro*e$ mone" J$ebtK. Returns on !ro%ects s'oul$ be measure$ base$ on cas' flo*s generate$ an$ t'e timing of t'ese cas' flo*s2 t'e" s'oul$ also consi$er bot' !ositi)e an$ negati)e si$e effects of t'ese !ro%ects. o <'en making in)estment, financing an$ $i)i$en$ $ecisions, cor!orate finance is single(min$e$ about t'e ultimate ob%ecti)e, *'ic' is assume$ to be ma/imi;ing t'e )alue of t'e business.

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C-n,9'(*-n
Alt'oug' t'e e/!erience is Euantitati)e in its focus, t'ere is a significant com!onent of creati)e t'inking in)ol)e$ in coming u! *it' solutions to t'e financial !roblems businesses to encounter. It is no coinci$ence t'at financial markets remain bree$ing groun$s for inno)ation an$ c'ange.

A Pee3 In)- ).e F')'/e

Ha)ing been in t'e in)estment, retail an$ cor!orate banking fiel$, I *oul$ lo)e to e/!lore t'e com!liance an$ risk management section in banking. As *e 'a)e seen no*, banks are use$ as an effecti)e )e'icle for illegal mone". Kee!ing a c'eck on suc' anti( mone" laun$ering acti)ities is t'e nee$ of t'e 'our an$ one of t'e *a"s in *'ic' I as a citi;en of In$ia coul$ contribute in minimi;ing black mone".
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Hence *oul$ like to be em!lo"e$ in a Com!liance $e!artment of a ,ank or Financial Insitution.

BIBLIO"RAPHY .))31>>???.+-/8e(.,-.*n>en6*nee/*n6..)2 .))31>>???.)-)e2-+-/8e(.,-2>&8-')'(..)2 Ann'&9 Re3-/) -+ F-/8e( & C-23&n4 L*2*)e% 2011-12

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