17-11-2012, 12:35 PM
Financial Analysis Of Different Sectors In Infra Structure Industry AT SREI EQUIPMENT FINANCE PVT.LTD.
Financial Analysis Of Different Sectors.docx (Size: 230.17 KB / Downloads: 42)
Non-Banking Financial Companies (NBFCs)
Non-banking financial companies (NBFCs) are fast emerging as an important segment of Indian financial system. It is an heterogeneous group of institutions (other than commercial and co-operative banks) performing financial intermediation in a variety of ways, like
• Accepting deposits,
• Making loans and advances,
• Leasing,
• Hire purchase, etc.
They raise funds from the public, directly or indirectly, and lend them to ultimate spenders. They advance loans to the various wholesale and retail traders, small-scale industries and self-employed persons. Thus, they have broadened and diversified the range of products and services offered by a financial sector. Gradually, they are being recognised as complementary to the banking sector due to their
• Customer-oriented services;
• Simplified procedures;
• Attractive rates of return on deposits;
• Flexibility and
• Timeliness in meeting the credit needs of specified sectors; etc.
The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the Reserve Bank of India Act, 1934 (Chapter III B) and the directions issued by it under the Act.
As per the RBI Act, a non-banking financial company is defined as:-
A non banking financial institution is a company which has as its principal business as the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner with the previous approval of the Central Government and by notification in the Official Gazette.
Under the Act, it is mandatory for a NBFC to get itself registered with the RBI as a deposit taking company. This registration authorises it to conduct its business as an NBFC. For the registration with the RBI, a company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution, should have a minimum net owned fund (NOF) of Rs 2 crores. The term 'NOF' means, owned funds (paid-up capital and free reserves, minus accumulated losses, deferred revenue expenditure and other intangible assets) less, (i) investments in shares of subsidiaries/companies in the same group/ all other NBFCs; and (ii) the book value of debentures/bonds/ outstanding loans and advances, including hire-purchase and lease finance made to, and deposits with, subsidiaries/ companies in the same group, in excess of 10% of the owned funds.
SREI EQUIPMENT FINANCE PVT.LTD. (SEFPL)
Company was originally incorporated as Srei Infrastructure Development Limited (‘SIDL’) on June13, 2006 as a wholly owned subsidiary of Srei Infrastructure Finance Limited (‘SIFL’) with an object ofcarrying, inter alia, the business of equipment financing and had obtained registration as a nondepositaccepting Non-Banking Financial Institution vide registration number N-05.06694 dated June12, 2007 from the Reserve Bank of India. Subsequent to change of name of the Company, it hasobtained registration as a non-deposit accepting Non-Banking Financial Institution (under theclassification ‘Asset Finance Company’) vide registration number N-05.06694 dated September 03,2008 from the Reserve Bank of India.
The name of SIDL was changed to Srei Infrastructure Development Finance Limited (‘SIDFL’) and afresh certificate of incorporation dated April 16, 2007 was obtained from the Registrar of Companies,Kolkata, West Bengal. Later, SIDFL was converted into a private limited company and the name of theCompany was changed to Srei Infrastructure Development Finance Private Limited (‘SIDFPL’) and afresh certificate of incorporation dated September 28, 2007 was obtained from the Registrar ofCompanies, Kolkata, West Bengal. Subsequently, the name of the Company was once again changedto Srei Equipment Finance Private Limited (SEFPL) and a fresh certificate of incorporation dated May30, 2008 was obtained from the Registrar of Companies, Kolkata, West Bengal.
Srei Infrastructure Finance Limited
Srei Infrastructure Finance Limited (‘SIFL’), the flagship company of Srei Group, is one of India’sleading private sector infrastructure equipment finance, project finance & project advisory anddevelopment Company and holds a substantial market share in the equipment finance sector.
SIFL was originally incorporated as ShriRadha Krishna Export Industries Limited, on 29th March,1985. The Company obtained the certificate of commencement of business on 9th April, 1985. TheCompany’s name was changed to Srei International Limited on 29th May, 1992 in order to reflectits focus on planned activities and other businesses and further changed to Srei InternationalFinance Limited w.e.f. 12th April, 1994 to reflect the focus on financial services. The name of theCompany was again changed to Srei Infrastructure Finance Ltd. in August 2004.
BNP PARIBAS LEASE GROUP
BNP Paribas Lease Group (BPLG) is a wholly owned subsidiary of BNP Paribas S.A. of France and isa well-established global leader in the equipment finance business having, inter alia, the largestmarket share in Europe with global balance sheet of Euro 20 Billion. BPLG has been in equipmentfinance business for 50 years and has direct presence in Austria, Belgium, France, Germany,Hungary, India, Italy, Netherlands, Poland, Portugal, Spain and the UK, and also has presencethrough BNP Paribas Group entities in Algeria, Greece, Morocco (BMCI Leasing), Turkey (TEBLeasing), Ukraine (ULC) and USA (Trinity Vendor Finance).
EXECUTIVE SUMMARY
It gives me great pleasure to present this project report on assessment of working capital finance
at SREI Equipment Finance Pvt. Ltd., Strategic Department, Delhi. The project was carried out
from20THJune 2012 to 3RD July 2012.
The main objective of the project was to ANALYSE THE FINANCIAL RATIOS OF THE TOP CORPORATES & SME.
Risk can be defined as an uncertainty about the future outcome of a decision. In the context of credit, it may be defined as uncertainty with regards to the compliance of the terms and conditions of the lending contract into by the bank and the party. Terms and conditions are with regards the period of lending, the interest rates of the lent amount, the repayments of the loans etc. Credit risk can be measured, though to a limited extent. Here, broadly, two things are taken into consideration:
1. The Ability and the Capacity to make the repayments of the loans and interest amount.
2. The Willingness on the part to make the payments.
The first one is easier to measure. This is because of the fact that the ability and the capacity can be gauged by the financial position of the party. If it is fairly good, the bank can give loan to the party. The second point is difficult to measure. This is because the willingness to pay depends on a great measure on the human nature, which may or may not be always stable and rationale. Thus we concentrate on the first point, which is the capacity to make the repayments, in our decision of whether to give loan to the party or not.
FINANCIAL STATEMENTS
A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as anaccount, although the term financial statement is also used, particularly by accountants.
A written report which quantitatively describes the financial health of a company. This includes an income statement and a balance sheet, and often also includes a cash flow statement. Financialstatements are usually compiled on a quarterly and annual basis.
For a business enterprise, all the relevant financial information, presented in a structured manner and in a form easy to understand, are called the financial statements. They typically include four basic financial statements, accompanied by a management discussion and analysis:
1. Statement of Financial Position: also referred to as a balance sheet, reports on a company's assets, liabilities, and ownership equity at a given point in time.
2. Statement of Comprehensive Income: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time. A Profit & Loss statement provides information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state.
3. Statement of Changes in Equity: explains the changes of the company's equity throughout the reporting period
4. Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities.
For large corporations, these statements are often complex and may include an extensive set of notes to the financial statementsand explanation of financial policies and management discussion and analysis. The notes typically describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements.
Purpose of financial statements
"The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions."Financial statements should be understandable, relevant, reliable and comparable. Reported assets, liabilities, equity, income and expenses are directly related to an organization's financial position.
Financial statements are intended to be understandable by readers who have "a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently."