BHARATIYA VIDYA BHAVAN’S USHA & LAKSHMI MITTAL INSTITUTE OF MANAGEMENT

SUMMER INTERNSHIP REPORT

Study of Supply Chain Risk Management

JCB India Limited

Industry Mentor: Mr. Pardeep Kansal

Faculty Mentor: Prof. Neelam Tandon

Submitted by:

Smita Sharma

Roll no. 25

PGDM 2013-15 (Finance Major)

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DECLARATION

I declare that the project titled ”Supply Chain Risk Mangement” a prerequisite towards partial fulfillment of the summer training and award of the Post Graduate Diploma In Management from Bharatiya Vidya Bhavan’s Usha & Lakshmi Mittal Institute of Management, New Delhi is an accurate record of my work under the guidance of Prof.Neelam Tandon Professor BULMIM.

Students Signature SMITA SHARMARoll No: 25PGDM 2013-15Finance majors

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Acknowledgement

I, Smita Sharma, would like extend my gratitude to Mr. Sanjay Chaudhary , Senior Manager, Project Guide for giving me the opportunity to do my project at JCB India Ltd. I would also like to thank him for providing his support and able guidance during the course of my project.

I would also like to thank Mr. Pardeep Kansal and Mr. Hridyanand , Company Guide, who guided me throughout my training at JCB India Ltd and encouraged me to do new things and gave their valuable inputs as and when they thought necessary. Their constructive feedback and insights have helped me develop a perspective and has also enabled me to overcome challenges that came during the entire course of the project. Their calm demeanor and willingness to teach has been a great help in my successfully completing the project. My learning has been immeasurable and working under them was a great experience.

My sincere thanks also extend to all the staff members of L&T Finance LTD. for providing a hospitable and helpful work environment and making my summer training an exciting and memorable event.

I would also like to thank Prof. Neelam Tandon, Bharatiya Vidya Bhavan’s Usha & Lakshmi Mittal Institute of Management, New Delhi, who as my Faculty Guides has always motivated me to put my best endeavors and match the expectations of the organization. In spite of her busy schedules, she ensured that she was always available for providing feedback and ensuring that the project was done with utmost quality and consistency.

Finally, I thank all my fellow trainees at JCB India Ltd. who from time to time have helped me with information, insights and their support. Their cooperation has helped me immensely and made the experience of the internship program at JCB India Ltd. an enriching one.

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ABSTRACT

The Project includes the research study on the Supply Chain Risk Management. Analyze how the Suppliers are doing their business in the present environment. Also to study the operations processing of the Company

Secondary data was collected from the buyers who deal with the respective suppliers of JCB by sending them a set formatted form seeking their opinions regarding the various field included in it so that the key suppliers can be distinguished as having the highest and lowest risk and be placed accordingly on the BCP Matrix.

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TABLE OF CONTENT

Serial No. Topic Page

1 Executive Summary 622.12.22.3

IntroductionObjectives of the ResearchPurpose of the StudyScope of the Research

888

33.13.23.33.4

Company ProfileHistoryVision MissionStrength

1012121213

44.14.24.3

Research MethodologyStatement of the problemResearch designSample design

1819191920

7 Limitations 21

5 Competitors analysis based on Business volume 26

66.16.2

Collection of Data Construction equipment IndustryStudy of Construction Equipments in Detail3 Key Drivers for Growth in Construction Industry Research

333547

8 Interpretation and Findings 92

9 Conclusions and Recommendations 93-95

10 Process Mapping of Flow of Funds 96-103

11 References 104

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EXECUTIVE SUMMARY

The Research Work is on the Construction Equipment Business. The purpose of the study is to find out the Potential and position of Suppliers working environment and to know about the overall financial health and capabilities of the Suppliers across the country. Specifically, the research objectives are to:

• To analyze the industrial relations maintained by the suppliers with JCB.

• To know and analyze the financial crisis of the company using accounting ratios.

• Sales done so far by the suppliers.

• Safety measures taken up by the suppliers to avoid any future contingencies like natural hazards or lockouts, ensuring regular supply.

• Their short and long term mitigation plans.

For this purpose, the key suppliers were identified according to the importance of parts supplied by them for the manufacturing process by which total 11 key suppliers were identified.

The questions cover a wide range of criteria’s as follows: -

This document provides a framework for collecting, developing, and implementing best practices for SCRM. It focuses on

• Identifying internal and external environments

• Risk identification and assessment

• Risk treatment

• Continual monitoring and review of risks and their treatment.

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The following vital conclusions were derived:

As per the research it is concluded that construction equipment industry plays an important role in infrastructure sector. It can be seen from the 10th 5 year plan for infrastructure where most of the cost for the projects involves cost for the equipments and materials. Therefore more demand generation.

And as per the increasing % of demand generation 15% every year, the business seems to be growing and growing keeping behind the monstrous effect of the meltdown.

Correspondingly the situation improves for the suppliers as business ventures for them too are growing at a speedy rate.

The clientele is improving and the list is enlarging as more and more FTU’s (First time users), are entering into the market and subletting is increasing.

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INTRODUCTION

Research Objectives of the study:

The objective of research is to study the Construction Equipments Industry. Analyze how the Suppliers and Financers are doing their business in the growth and recession period.

To know the Turnover of the Suppliers and Disbursement made by Financers. Sales done so far by the suppliers. Machineries dealt by the suppliers. To look for Opportunities ahead for the Suppliers and Financers in the near

future.

Purpose of the study:

The purpose of the study includes the following:-

Present market condition. The requirement of these Assets in different sectors like in retail, road

construction, mining, agriculture, infrastructures. The overall sales by the suppliers in Delhi NCR and disbursement by

Financers.

Scope of the Study:

World heavy construction equipment demand will grow 5.4 percent annually through 2009 based on continued expansion of emerging markets such as Eastern Europe, India and China. North America will remain the largest and fastest growing market within the Triad (e.g., North America, Japan, and Western Europe).

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Organization/Company Profile

J.C.Bamford Excavators Limited, universally known as JCB, is a  British multinational corporation, with headquarters in  Rocester, Staffordshire, manufacturing equipment for construction, demolition and agriculture. It is the world's third-largest construction equipment manufacturer. It produces over 300 types of machines, including diggers (backhoes),excavators, tractors and diesel engines. It has 22 factories across Asia, Europe, North America, and South America; its products are sold in over 150 countries.

JCB was founded in 1945 by Joseph Cyril Bamford, after whom it is named; it continues to be owned by the Bamford family. In the UK 'JCB' is often used colloquially as a generic description for mechanical diggers and excavators 

Type - Private

Industry - Heavy equipments

Founded - 1945

Headquarters - Rocester, United Kingdom

Products - Construction, Demolition & Agriculture Machinery

Revenue - £1.35 billion(2009)

Employees - Approximately 8,000

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History

JCB was founded by Joseph Cyril Bamford in October 1945 in Uttoxeter, Staffordshire, England. He rented a lock-up garage 12 feet by 15 feet. In it, using a welding set which he bought second-hand for £1 from English Electric, he made his first vehicle, a tipping trailer from war-surplus materials. The trailer's sides and floor were made from steel sheet that had been part of air-raid shelters. On the same day as his son Anthony was born, he sold the trailer at a nearby market for £45 (plus a part-exchanged farm cart) and at once made another trailer. At one time he made vehicles in Eckersley's coal yard in Uttoxeter.

In 1948, six people were working for the company, and it made the first hydraulic tipping trailer in Europe. In 1950, it moved to an old cheese factory in Rocester, still employing six. A year later, he began painting his products yellow. In 1953, his first backhoe loader was launched, and the JCB logo appeared for the first time. It was designed by Derby Media and advertising designer Leslie Smith. In 1957, the firm launched the "hydra-digga", incorporating the excavator and the major loader as a single all-purpose tool useful for the agricultural and construction industries.

In 1960, JCB's hydraulic tractors entered the North American market, proving a long-lasting success. JCB became, and still is, the brand leader in the world. By 1964, JCB had sold over 3,000 3C backhoe loaders. The next year, the first 360-degree excavator was introduced, the JCB 7.

In 1978, the Loadall machine was introduced. The next year, JCB started its operation in India. In 1991, the firm entered a joint venture with Sumitomo of Japan to produce excavators, which ended in 1998.Two years later, a JCB factory was completed in Pooler near Savannah, Georgia in the USA, and the next year a factory was opened in Brazil.

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Mission:-

At JCB we seek to delight our customers by creating and providing unique value through high quality payment products, a robust infrastructure and world class services. JCB recognizes it is our global corporate responsibility to ensure our products and services contribute to the betterment of all the people and places we serve.

Vision :-

As the only international payment brand originating in Japan, our vision is to be a leader in global payments through innovative thinking, and solutions to the rapidly changing global payments landscape. We continually strive in our efforts to be a unique payment brand that adds value to every aspect of the daily lives of our customers.

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JCB INDIA LTD OVERVIEW

JCB India Limited started operations in 1979 and today it is the fastest growing company in the Indian earthmoving and construction equipment industry. The company is a pioneer in the industry and has been recording excellent growth rates year on year.

JCB India has three operational world class manufacturing facilities; one in Ballabgarh, Haryana near New Delhi, two in Pune and two upcoming units in Jaipur. The Ballabhgarh facility is the world’s largest backhoe loader plant which also manufactures Liftall, the ‘pick-&-carry’ crane. This facility also manufactures the BSIII compliant JCB “ecoMAX” engine, which is big on fuel savings and high on performance with 16 valve effort.

Out of the two world class manufacturing facilities in Pune; the first plant manufactures exports oriented fabrications and components and the second plant manufactures state-of-the-art heavy equipments like Tracked Excavators, Wheeled Loaders & Compactors. These facilities were inaugurated in the year 2006 and 2007 respectively.

JCB India Limited, Ballabgarh (Haryana), India’s largest manufacturer of construction equipment is a fully owned subsidiary of JC Bamford Excavators Limited, UK. The company offers 21 different machines in seven product types such as Backhoe Loaders, Loading Shovels, Tracked Excavators, Compactors, Telehandlers, Skid Steer Loaders and Pick and Carry Crane. An excellent network of 54 dealers and over 450+ outlets throughout the country, along with a world-class customer service network support. JCB also runs Operator training school with over 15000 operators trained till date.

JCB India offers an extensive range of 27 variants in 7 product lines - Backhoe Loaders, Wheeled Loaders, Excavators, Skid Steer loaders, Telehandlers, Compactors and Pick-&-Carry Cranes:

1. Backhoe Loaders

Manufactured at the Ballabhgarh plant, JCB currently offers 5 variants (2DX, 3DX, 3DX Xtra, 3DX Super and 4DX)

2. Excavators

In the tracked excavator segment, JCB offers 6 types of machines (JS30, JS 81, JS 120, JS140, JS205LC, JS220LC and JS360), suitable for all kind of excavation work

Starting from 8T operating weight (JS81) to 36T operating weight (JS 360), the machine serves the plant hirers, earthmoving and quarrying customer base

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3. Compactors

JCB offers the finest road compaction equipment through its Vibromax series (VM 115, VMT 860 and VMT330)

The VM115 caters to the soil compaction needs of the sector while the VMT 860 is a master at asphalt compaction

4. Wheel Loaders

JCB offers 3 Wheel loader models (two variants of 430 ZX, and 432 ZX) The two models of 430ZX are 3.3 tonne payload and the 432ZX is for 3.6 tonne

payload

5. Skid Steers

JCB India offers two variants of Skid Steers (135 – 155).

6. Telehandlers

JCB is the world’s largest manufacturer of Telehandlers. In India, we have three models (531-70, 535-140 and 540-170) which are widely used in construction of multi-storyed buildings, material handling at ports and industrial purposes etc.

7. Pick-&-Carry Cranes

Currently, there are four models - Liftall 1253,Liftall 1202 in the 12T category and Liftall 1553, Liftall 1554 in the 15T category

All JCB machines are built with global quality standards and can withstand extreme vagaries of climate & terrain while delivering their optimum performance.

JCB has one of the largest distribution network led by dedicated and highly committed dealer principals. At present, JCB has 59 dealers and over 575 outlets operating in India who ensure that immediate assistance is provided in case of any downturn. Dealerships have over 5500 employees who are trained by JCB for selling and servicing these machines.

JCB has strategically set-up large warehouses across India (Pune, Chennai, Faridabad and Kolkata) to cater to our large dealer base. These warehouses provide JCB dealers with easy access to all the parts of the machine and most importantly, radically help in reducing the machine downtime.

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SWOT ANALYSIS

STRENGTHS-

• Strong brand name.

• Good reputation among customers.

• Exclusive access to high grand natural resources.

• Favorable access to distribution network.

• World's top three manufacturers of construction equipment.

• Employ 7,000 people on 4 continents and sell their products in 150 countries through 1,500 dealer depot locations.

• Produces a range of over 300 machines and maintains a reputation for unrivalled customer service

• Today JCB is the fastest growing company in the Indian earthmoving and construction equipment industry.

WEAKNESSES -

• Lack of patent protection.

• High cost structure.

• Lack of access to key distribution channels.

• An unfulfilled customer demand fast.

• JCB India Limited started operations in 1979 as a joint venture company.

• In 2003 JCB, UK acquired 100% shares in the joint-venture.

• In 1979 government regulation is very high in India so JCB start joint venture.

OPPORTUNITIES-

• Arrival of new Technologies.

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• Remove of international trade barriers.

• JCB STRATEGY “JCB strategy is to always deliver the best."

• Extraordinary customer satisfaction.

• JCB India believes in extraordinary customer satisfaction, as they are the principal force guiding all JCB initiatives and endeavours.

THREATS -

• Shifts in consumer tastes away from the firm products.

• Emergence of substitute products.

• New regulation.

• Increases trade barriers.

Research Methodology of the studyResearch Methodology of the study::

Research Methodology deals with, the procedure adopted to carry out the study.

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According to Green and Tull: “A research design is the specification of methods and procedures acquiring the information needed It is the overall operational pattern or framework of the project that stipulates which information is to be collected from which sources by what procedures’’.

Research Design:Research Design:

Exploratory or Formulative researchExploratory or Formulative research Descriptive research: Descriptive research:

Data Collection:

In the data collection method, I have collected both primary and secondary data to achieve my objective.

Primary data:

The primary data was collected by way of Unstructured Questionnaire. It was formulated on the basis of information gathered by me with the help of Mr. Pardeep Kansal who provided useful guidelines and objective of my study.

Secondary data:

The secondary data was collected from Companies internal sources, people from other companies and internet.

Research Approach:

The required information in the form of data is collected with the help of Personal Interview through Unstructured Questionnaire Format.

Sampling Design or Plan

This is a stage where the planning is done about the Population from which sample units, sample size, sampling procedures, etc. are identified as per their potential to collect data from them.

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Population:

Population consists of the whole group or people from which sampling units, and sample size are derived.

In my study the Population consists of following: -

Suppliers: 20 (Delhi NCR)

Financers: 11 (Delhi NCR)

Sampling units:

This means, which are to be surveyed. So as mentioned earlier that the sample units are potential people selected out of the large population.

Sample size:

The sample size means how many people should be surveyed. So that total sample size is: -

Suppliers: -12

Financers: -6

Sampling Method:

I chose convenient and judgmental sampling method for my research.

Method of Data collection:

Personal interview method is used for collection of primary data in the form of unstructured questionnaire from respondents.

Instrument for data collection:

Once the source of data collection is decided then comes the instrument for data collection or the research instrument. In this research method an unstructured Questionnaire was used.

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Drafting of the Questionnaire:

The Questionnaire in this research study has been drafted on unstructured basis, because the respondents who all composed of the corporate clients, was hesitant in their approach of giving the information regarding the research study. So with the help of the unstructured questionnaire it really facilitated to get the desired data for the study.

Limitation:

How so ever impeccable a thing may see to be there always dwell some possibilities of failure and incompleteness. The results of this study also subject to some of limitations.

Which are as follows?

The main limitation of the study is the nature of information to be collected, which mostly is of confidential nature and on most occasions the respondents seemed to be reluctant in giving information regarding the same.

Some respondents were not interested in meeting. The Construction Equipment industry is huge in itself. Thus, conducting

research on the entire industry was not possible. The authenticity of the data obtained from one respondent is under question. Figures are of near approximate.

PICTORIAL OVERVIEW OF OUR DIVERSIFIED BUSINESS

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Corporate Finance Group accounts for 37% of total assets as on March 31, 2009 and Retail Finance Group accounted for the balance 63%.

Retail Finance Group’s focus on the under penetrated semi-urban/rural areas and knowledge of the construction equipment business has led to a CAGR of 63% over the past five years in retail finance.

Our core business is that of asset backed finance, covering a wide range of commercial and farm assets. Asset backed loans constitute 90.82% of our total loan assets. We also provide loans for meeting the working capital needs of small and medium enterprise (primarily to vendors and dealers of large corporate) and loans against capital market assets for corporate. We have recently made a foray into Micro Finance business further strengthening our commitment towards financial inclusion in the rural economy. Our client base for asset backed loans includes large corporate, banks, multinational companies, small and medium enterprises, contractors, commercial vehicle operators and farmers.

Corporate Finance Group

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The business of this group is to provide a wide range of financial products / services to corporate. This may extend from providing asset backed finance for acquisition of a range of equipments and also short-term working capital finance, as well as non-fund based arrangements for establishment of Letters of Credits, Guarantees, etc. The finance may be provided through diverse products including term loan, operating lease, finance lease, purchase of receivables, channel financing, tie-up for providing financing to employees of the corporate.

Some of the major businesses that we undertake in this category are as follows:-

Leases:

Operating Lease: The Company offer cars, technology, equipment and plant & machinery on operating lease. We have also entered into arrangements with the major automobile manufacturers to ensure that the lease product is structured suitably. The target customers for the product are large companies

Finance Lease: Finance Lease as a product is less attractive today as a result of higher costs arising out of certain tax issues. However, depending on the customer’s requirements, we offer this product for financing of cars, computers and plant & machinery. Our major customers include several large companies.

Channel Finance:

Vendor Finance: This product primarily caters to the requirements of vendors / suppliers of large corporate. Currently a substantial part under this product is for the vendors of L&T group. Under this product, we provide a short term working capital finance facility to the vendors of L&T and its subsidiaries and associates. This is mainly in the form of discounting of invoices raised by vendors / suppliers on L&T’s various operating divisions / subsidiaries/ associates. Recently, the product coverage has been expanded to include vendors of other large corporate. The tenor of such financing extends from 1 month to 6 months.

Dealer Finance: This division focuses on dealers of various operating divisions of L&T and its subsidiaries and associate companies. It offers short term financing with automatic revolving credit to dealers who contribute substantially towards sale of L&T’s finished products. We are preferred by the dealers due to our transparency, faster turnaround time in sanctioning limits and disbursements and also easier co-ordination with L&T. It is our plan to extend this facility to channel partners of other companies as well.

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Receivable Discounting:

This refers to the discounting of receivables from large corporate. It is an asset-backed facility, where operating lease runs in the back-end and the periodic rentals are assigned to us. We have a tie-up with large IT equipment & service providers involved in leasing of IT equipments, furniture & fixtures to large corporate. We have the option of choosing the agreements to be financed through this product. Typically, in such cases, the lesser assigns the rentals arising from the operating lease in our favour and a suitable confirmation from the lessee is also obtained. Additionally, charge on the asset is also created in our favour.

Asset Backed Term Loan:

We provide the term loan for financing of plant & machinery, IT equipments, furniture & fixtures. The charge on the asset is created in our favour as security. Target customers for this product include large corporate as well as the SMEs having specific linkage to a large corporate. Presently, large corporate constitute a majority of the outstanding book of asset backed term loans. Our transparent functioning and quick processing, ensures that the customers preference for our company is maintained

Capital Market Products:

We continue to retain our small but strategic portfolio of the Loan against Securities (LAS) business. Based on opportunities available, the business selectively provides finance to high net worth individuals and promoters against pledge of shares and other securities.

As of March 31, 2009, the LAS business had a book-size of Rs.36,417 lacs and the NPAs stand at less than 0.30%. In the current year, based on the market conditions, we shall continue to selectively provide finance against shares and securities and additionally shall also consider financing of subscription to IPOs, which is a high yielding product

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Retail Finance Group

The major businesses that we undertake in this category are as follows:

Construction Equipment Finance

We provide financing for a wide range of equipment like earthmoving equipment, heavy-duty cranes, road construction equipment, mining equipment, etc. We have, in this industry in particular, extensive knowledge and experience. This knowledge of the industry provides us with a competitive edge both in terms of sourcing as well as assessment of business. Further, our understanding of the industry and of the clients enables us to provide our services in a manner that meets the requirements of the client and hence helps us retain our client base. The construction equipment industry consists of a variety of products, such as, hydraulic excavators, wheel loaders, loader backhoes, vibratory compactors, cranes, stone crushing machine and others. These products are widely used in industries like power, national highway development, mining, transportation and earthworks for urban infrastructure.

Keeping in view the growth potential for infrastructure in India and the parentage of L&T, which has been in this sector for the last 50 years, construction equipment finance would continue to be one of the major thrust areas of business.

We have already made our presence felt in the equipment finance sector over last few years. Major foreign banks, and private sector banks have entered this segment in the last few years. Despite severe competition from banks and other major NBFCs in this segment, we have expanded our asset base through our experience and knowledge base developed during the last few years. Further, our Company plans to expand its geographic presence to some of the major markets where we have limited presence thus helping us grow our book size and Expand market share.

It should be noted that total market of our country is Rs30000cr and for north region it is approximately Rs. 4000cr – Rs. 5000cr. In Delhi the market is approx. about Rs. 1296 cr. (We have provided finance for Rs 234 crore comprising of 1175 no. of assets in year 2009-2010. For the year 2008-2009 we have provided finance for Rs. 214 crore comprising of 914 no. of assets taking north region as whole).

Talking Delhi NCR region the company has financed Rs. 99 crore in year 2009-2010 and target set for year 2010-2011 is Rs. 200crore. The portfolio mix strategy will be 70% finance new assets and rest 30% finance to used assets or refinance.

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The upcoming projects are

a) Road Construction From Ghaziabad to Aligarh from Single Lane to Double Lane (400cr)

b) Faridabad to Agra Six Lining project (600cr)c) Kundli Ghaziabad road project (2676cr)d) PMGSY – Road Projects in Haryana & Uttaranchal (400cr)e) Formula 1 project – Gr. Noida (400cr)f) Breakwater Project at LNG Terminal of M/s. Ratnagir(390cr)

Portfolio Mix Strategy:

TYPE OF ASSET % Contribution to sales

New Asset 70%

Refinance/Used Asset 30%

Category of asset % Contribution to SalesExamples

Standard Asset 60% Excavator, Backhoe Loader, Tipper, Cranes,

Pilling Rigs, Paver , Compactors, Graders ,Boom

Pumps,Dozers,Transit Mixer etc.

Non Standard Asset 40% Compressor, HDD Machines, Batching Plants,

Hot mix Plant, Stone Crushers,DG Sets, Jetting

Machine, Heavy Duty/Vintage-Imported Cranes etc.

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REGION WISE SALES AND GROWTH:

YEAR 2007-2008 2008-2009 2009-2010

REGION

NORTH 2702366695 2171842952 2406916192

% GROWTH -19.63% 10.82%

SOUTH 5521027663 3498821188 3782933601

% GROWTH -36.63% 8.12%

EAST 4233417226 4104347393 47484135780

% GROWTH -3.05% 1056.92%

WEST 3348909656 2326318455 2052354372

% GROWTH -30.54% -11.78%

NORTH REGION YEAR WISE SALES DISTRIBUTION PATTERN

BRANCH 2007-2008 2008-2009 2009-2010

 

210877786 347386241 494519771RAJASTHAN

% GROWTH   64.73% 42.35%

UTTAR PRADESH 97770272 183897853 316890168

% GROWTH   88.09% 72.32%

NRO2 3104407762 1641098857 1208073253

% GROWTH   -47.14% -26.39%

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COMPARATIVE STUDY OF THE COMPETITORS INTERM OF BUSINESS VOLUME IN Cr. (DELHI NCR) 1ST QUARTER 2010

Financers Annual business volume in cr.

%

L & T Finance Ltd. 99 7.90

HDFC Bank 168 13.56

SREI 600 48.40

Kotak 67 5.40

Tata Cap 163 13.15

Citi Corp 58 4.68

Magma 84 6.77

Grand Total 1239 100

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Transportation Equipment Finance

In 1996, we made a foray in financing of commercial vehicles to the transporters of the erstwhile L&T Cement. However, this segment was not the main focus since there were already established players in the market. We had already built a network for its construction equipment and farm equipment segments. In order to leverage on their network and get into another important sector of the economy,

CV Finance was launched in FY 2004-05. The slowdown in the economy in the second half of FY 2008-09 had resulted in lower disbursements, but with the relative recovery in the economy this business is growing again.

The CV market in India comprises of four segments namely:

Heavy commercial vehicles (Gross vehicles weight 25200 to 40000).

Medium commercial vehicles (Gross vehicles weight 16200)

Intermediary commercial vehicle (Gross vehicles weight 11700-11800)

Light commercial vehicles (Gross vehicles weight 4000)

Small commercial vehicles

The Company is present in all the segments and is involved in financing commercial vehicles of all makes. We also undertake funding of the body of the CV on a selective basis. Major manufacturers with whom we have a tie-up include Tata Motors, Ashok Leyland, Volvo, Eicher Motors, Force Motors and M&M.

As on March 31, 2009, 95% of our commercial vehicles portfolio comprised of new vehicles. However, we plan to finance more number of pre-owned vehicles in the near future in order to have a well balanced portfolio with right mix of first time users, retail customers, fleet owners and used vehicles. We are adding manpower and setting up infrastructure across the country, so that volumes are ramped up and the market is diversified. Our vision is to emerge as a leading player in this industry, while at the same time maintaining good portfolio quality

In the year 2008-2009 we have financed Rs. 93 crore comprising of 914 no. of vehicles’ in the north region.

In year 2009-2010 we have financed Rs.150 crore. Comprising of 1397 no. of vehicles’ in the north region.

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NORTH REGION YEAR WISE SALES DISTRIBUTION PATTERN

YEAR 2007-2008 2008-2009 2009-2010

BRANCH

CHANDIGARH 75620985 34006500 4390000

% GROWTH -55.03% -87.09%

HARYANA 7794000 44410000 70314987

% GROWTH 469.80% 58.33%

HIMACHAL PRADESH 59680000 63434000 135337000

% GROWTH 6.29% 113.35%

PUNJAB 56401405 53639912 145746267

% GROWTH -4.90% 171.71%

DELHI 487195331 415158149 442898092

% GROWTH -14.79% 6.68%

RAJASTHAN 240073536 241504183 401916910

% GROWTH 0.60% 66.42%

UTTAR PRADESH 85835800 104356322 301454000

% GROWTH 21.58% 188.87%

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REGION WISE SALES AND GROWTH:

2007-2008 2008-2009 2009-2010

NORTH1012601057

3540916849

1502057256

% GROWTH   249.69% -57.58%

SOUTH1264232409 959374917

1349681907

% GROWTH   -24.11% 40.68%

EAST 483908357 8753067411935896415

% GROWTH   80.88% 121.17%

WEST1215039573 749726124

1728206111

% GROWTH   -38.30% 130.51%

COMPETITORS ANALYSIS (LOCATION DELHI ONLY)

FINANCERS MARKET SIZE IN LACS % SHARE

HDFC 50400 19.63

TATA 33600 13.09

KOTAK 18000 7.01

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ICICI 45600 17.76

LTF 5100 1.99

MAGMA 24000 9.35

SUNDARAM 20000 7.79

OTHERS 20000 23.37

Rural Finance

The Government of India has classified farm mechanization amongst its priorities. To exploit this opportunity, the rural finance group was launched with its focus on rediscovering the rural potential.

We started financing farm equipment from 2004, under the name of Kisan Gaurav® retail finance scheme. The scheme was well received in the market by dealers and retail customers on account of competitive terms, tailors made schemes and quick processing. With more feeder roads being developed in rural areas under Prime Minister’s Gram Sadak Yojna, new business opportunities have opened up in this segment.

The “KISAN GAURAV” retail finance scheme does not operate in DELHI.

We have identified this segment as a focus area and launched the Kisan Bandhu™ scheme in 2008 targeting customers who are rural entrepreneurs in need of finance for acquisition of small sized transport vehicles. Such as MAHINDRA MAXI PIC UPS, TATA ACE etc. These are 4 wheeler cars. These vehicles provide the last mile connectivity to the villages and are a backbone for rural transportation infrastructure. We have made a foray in financing the dealers of Farm Equipment as well as the small sized transport vehicles in accordance with our strategy of increasing rural penetration. The financing is being done under a scheme named

“TracFin”®. This market has a high potential with a large customer base, since their access to other means of finance is limited and if available, is at onerous cost and terms. We plan to explore this market with our USP of transparency in credit appraisal, pricing and documentation. Going forward, we want to identify ourselves as a game changer in the rural segment. This initiative shall also contribute towards achieving the Government’s objective of financial inclusion.

In Delhi region this business is only nine and a half month old. We have financed approximately Rs.7.75 cr.

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Comprising of

MAHINDRA: 270 NO. OF VECHILES

BAJAJ : 90 NO. OF VECHILES

MARUTI : 80 NO. OF VECHILES

TATA MOTORS: 50-60 NO. OF VECHILES

However in total north region we have done business of Rs. 112cr. In the year 2009-2010 comprising of 1175 no. of vehicles’.

NORTH REGION SALES AND GROWTH PATTERN

BRANCH 2007-2008 2008-2009 2009-2010

CHANDIGARH 201402492 38043500 0

HARYANA 15655000 142910500 179489000

CHANDIGARH AND HARYANA 217057492 180954000 179489000

% GROWTH -16.63% -0.81%

PUNJAB 7010000 173053348 282632500

% GROWTH 2368.66% 63.32%

DELHI 0 0 83954060

% GROWTH - -

RAJASTHAN 60667900 132538000 318073000

% GROWTH 118.46% 139.99%

UTTAR PRADESH 69006000 165064500 219267000

% GROWTH 139.20% 32.84%

ALL REGIONS 2007-2008 2008-2009 2009-2010

NORTH 355506392 651609848 1083415560

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% GROWTH 83.29% 66.27%

SOUTH 1515526450 2267191452 2845494315

% GROWTH 49.60% 25.51%

EAST 143045820 267499500 506991500

% GROWTH 87.00% 89.53%

WEST 1234862898 1909217699 3282365479

% GROWTH 54.61% 71.92%

Distribution

We recently commenced our insurance distribution business for both life and non-life insurance products. In addition to the insurance distribution business, we are also in the business of distributing mutual fund products and plans to pursue this business further as a focus area for growth and profitability. Distribution of third party products presents a significant business opportunity, and is a logical extension to our current product range as it facilitates leveraging the existing retail customer base and widens the range of service offerings to customers.

Micro Finance

This segment is integral to our aim of achieving financial inclusion in a commercially viable manner. We commenced operations in this business in late 2008. This business is spread over four states, namely, Andhra Pradesh, Tamil Nadu, Maharashtra, West Bengal, Orissa, Gujarat and Karnataka. We follow the model of direct lending through joint liability groups. We currently have a client base of around 5 lakhs customers which we are looking to expand in this segment

Micro Finance Products offered by our Company are categorized into –

• Gram Bandhu™ – Micro Loans to joint liability groups of 4-6 individuals ranging from Rs.5,000/- to Rs.50, 000/-; and

• Udyog Bandhu™ – Small Loans to rural businesses ranging from Rs.50,000/- to Rs.2,00,000/-

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Construction equipment industry: -

TABLE:1 The industry has a wide product range: -

Earth Moving

Equipments

Concrete Equipments

Material Handling Equipmen

t

Material Preparation

Raod constrcution equipment

Construction Vehicles

Tunnelling and

Drilling

Backhoe Loaders

Concrete Breaker

Telescopic Crushing Compaction Equip

Dumpers Rotary/DTH Drilling

Excavators Paver Finisher

Crawler Cranes

Jaw Crushers

Vibratory Rollers

Articulated Haulers

Hammer Track

DrillingLaoders Concrete

Batching Plants

Mobile Cranes

Pavers

Bulldozers Concrete Pumps

Truck Cranes

Wheeled Loading

Concrete Pumps

Forklifts

Shovels HotMix Plants

Pick and carry

cranesWheel

LaodersTowers cranes

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Motor Graders

Conveyers

Dump Trucks

Figure 1:- Construction Equipment industry Structure.

However , A few segments domiante the industry in size and Volumes.

EARTH MOVING EQUIPMENTS constitute the biggest segment and excavators the largest product line with in the segment.

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Figure 2:- Earth moving Equipment segment.

EXACVATORS constitute a large proportion of the earth moving equipment.

Study of Construction Equipment in Detail

1. Backhoe loader

Backhoe loader, also called a loader backhoe, and commonly shortened to backhoe, is an engineering vehicle, which consists of a tractor, fitted with a shovel/bucket on the front and a small backhoe on the back. Due to its (relatively) small size and versatility, backhoe loaders are very common in urban engineering and small construction projects (such as building a small house, fixing city roads etc).

The backhoe loader was invented in the UK in 1953 by Joseph Cyril Bamford, founder of J. C. Bamford (JCB), by equipping a farm tractor with both a backhoe and a front-mounted loading bucket. Although based on a tractor, when both the loader and the backhoe are permanently attached the vehicle is almost never called a tractor.

Asset cost: -19 Lakhs

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Specifications of Backhoe Loader are: -

Loader capacity: 1.0 Cu.M.

Backhoe Bucket: 0.24 Cu.M.

Top Speed: 32 Kmph

Operating weight: 7150 Kgs.

Backhoe loaders are very common and can be used for a wide variety of tasks: construction, small demolitions, light transportation of building materials, powering building equipment, digging holes/excavating, landscaping, breaking asphalt, and paving roads. The backhoe bucket can also be replaced with powered attachments such as a breaker, grapple, auger, or a stump grinder. Enhanced articulation of attachments can be achieved with intermediate attachments such as the tilt rotator. Many backhoes feature quick-attach mounting systems and auxiliary hydraulic circuits for simplified attachment mounting, dramatically increasing the machine's utilization on the job site. Some loader buckets have a retractable bottom or "clamshell", enabling it to empty its load more quickly and efficiently. Their relatively small frame and precise control make backhoe-loaders very useful and common in urban engineering projects such as construction and repairs in areas too small for larger equipment. Their versatility and compact size makes them one of the most popular urban construction vehicles. For larger projects, a tracked excavator is generally used.

In recent years, small compact tractors from manufacturers such as Kubota have become very popular with private homeowners. Subcompact tractors, the size between a compact tractor and lawn tractor, are also often sold in backhoe loader setup, sometimes with a belly-mounted mowing deck also included. These tractors offer private homeowners the ability to perform minor excavation projects.

Suppliers: -

1. ACE (Action Construction Equipment)2. JCB (Joseph Cyril Bamford)3. L&T case (Joint venture b/w L&T and Case Corporation)4. Caterpillar

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2. Loader

Asset Cost: - 30 Lakhs

A loader is an engineering vehicle (often used in construction) that is primarily used to "load" material (asphalt, demolition debris, dirt, feed, gravel, logs, raw minerals, recycled material, rock, sand, wood chips, etc.) into or onto another type of machinery (dump truck, conveyor belt, feed-hopper, rail-car, etc.)

A loader (also known as: bucket loader, front loader, front end loader, payloader, scoop loader, shovel, skip loader, and/or wheel loader) is a type of tractor, usually wheeled, sometimes on tracks, that has a front mounted square wide bucket connected to the end of two booms (arms) to scoop up loose material from the ground, such as dirt, sand or gravel, and move it from one place to another without

Page | 36

pushing the material across the ground. A loader is commonly used to move a stockpiled material from ground level and deposit it into an awaiting dump truck or into an open trench excavation.

Suppliers: -

1. ACE (Action Construction Equipment)2. JCB(Joseph Cyril Bamford)3. TATA (HITACHI) 4. L&T case (Joint venture b/w L&T and Case corporation)5. Caterpillar

3. Excavator

An excavator (also called a digger) is an engineering vehicle consisting of an articulated arm (boom, stick), bucket and cab mounted on a pivot (a rotating platform, like a Lazy Susan) atop an undercarriage with tracks or wheels. Their design is a natural progression from the steam shovel.

Asset Cost: - 45 Lakhs

Excavators are used in many ways:

Digging of trenches, holes, foundations Material handling Brush cutting with hydraulic attachments Demolition General grading/landscaping

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Heavy lift, e.g. lifting and placing of pipes Mining, especially, but not only open-pit mining River dredging Driving piles, in conjunction with a Pile Driver

Excavators are also called diggers and 360-degree excavators, sometimes abbreviated simply to a 360. Tracked excavators are sometimes called trackhoes by analogy to the backhoe. Even though the 'back' in backhoe refers to the action of the bucket (which pulls "back" toward the machine) and not the location of the shovel, excavators are also occasionally referred to as front hoes or even just "hoes". In North America, digging excavators are sometimes referred to as "hi-hoes" and often simply as "shovels".

Suppliers: -

1. JCB (Joseph Cyril Bamford)2. TATA (HITACHI)3. L&T Komatsu4. Caterpillar5. Kobelco

4. Tipper

HYVA TIPPERS

Keeping in view the growing need of Fully Built Solution for country’s leading Truck Manufacturers, HYVA started its Tipper Building Activity in India in 1998 for Swedish Truck Giant Volvo and soon company got the recognition as a Quality Sensitive Supplier capable of delivering endurable products in tough mining segment.

tipper truck - truck whose contents can be emptied without handling; the front end of the platform can be pneumatically raised so that the load is discharged by gravity

dump truck, dumper, tip truck, tipper lorry, tipper

motor truck, truck - an automotive vehicle suitable for hauling

Asset Cost: -19 Lakhs

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Suppliers: -

TATA and Hyva

5. Roller

TANDEM TYPE HYDROSTATIC ROAD ROLLERS (KTR-8). Asset Cost: -23 Lakhs

Description : BRIEF SPECIFICATIONS & SALIENT FEATURES

Single lever operation Hydrostatic Drive with two speeds Hydrostatic Power steering

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Hydrostatic brake system Built with modern technology Most economical Easy maintenance Low operating cost Suitable for specific requirement Easy working on any hilly area Covering more rolling area in minimum time

Features:

KTR series hydrostatic Tandem Road Rollers are designed and manufactured with advanced modern technology incorporating mechanical and hydraulic mechanism. KTR Tandem Road Rollers comply with all specifications as per international standard. Every part of the roller is precision machined on highly sophisticated modern machines to obtain maximum accuracy and it passes through certain quality control steps in order to ensure best quality. It excellently works with minimum operating and maintenance cost. It helps achieving superior and perfect road compaction, maximizing profit of the owner.

Suppliers: -

1. TATA (HITACHI) 2. L&T case (Joint venture b/w L&T and Case Corporation)

6. Transit Mixer

Asset Cost: -28 Lakhs

About Transit Mixer: -

•Excellent quality of materials and components gives long life with less economy.

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•The design of devices allow concrete consistently with high speed.

• Constant discharges of concrete.• High mixing capacity and maximum discharge output

thanks to the optimal position of the spiral blades in the drum.

• Harden rollers increase the reliability of the performance. Cover provides safety and protection against dirt.

• Fully imported oil bath planetary gear system is proven when traveling in rough terrain with full power of the engine required.

• The drum and spirals are made of highly wear resistant steel so that it increases stability and reduces the wear out.

• More Economic in transporting concrete thanks to MACON’s larger volume of drum with more water line capacity.

• Fully Imported Hydraulic Pump, Motor and Oil Cooler.• Efficient and reliable after sale-service, round the clock.

Suppliers: -

Schwing and Greaves

7. Graders

Asset Cost: - 66 Lakhs

A grader, also commonly referred to as a road grader, a blade, a maintainer, or a motor grader, is an engineering vehicle with a long blade used to create a flat

Page | 41

surface. Typical models have three axles, with the engine and cab situated above the rear axles at one end of the vehicle and a third axle at the front end of the vehicle, with the blade in between. Some hard hats refer to this machine as "the blade".

In civil engineering, the grader's purpose is to "finish grade" (refine, set precisely) the "rough grading" performed by heavy equipment or engineering vehicles such as scrapers and bulldozers.

Graders can produce inclined surfaces and surfaces with cambered cross-sections for roads. In some countries they are used to produce drainage ditches with shallow V-shaped cross-sections on either side of highways.

Graders are commonly used in the construction and maintenance of dirt roads and gravel roads. In the construction of paved roads they are used to prepare the base course to create a wide flat surface for the asphalt to be placed on. Graders are also used to set native soil foundation pads to finish grade prior to the construction of large buildings.

Suppliers: -

1. L&T Komatsu2. Volvo

8. Crane

A crane is a lifting machine, generally equipped with a winder (also called a wire rope drum), wire ropes or chains and sheaves that can be used both to lift and lower materials and to move them horizontally. It uses one or more simple machines to create mechanical advantage and thus move loads beyond the normal capability of a human. Cranes are commonly employed in the transport industry for the loading and unloading of freight, in the construction industry for the movement of materials and in the manufacturing industry for the assembling of heavy equipment.

Mainly used cranes are tower cranes and hydro cranes.

Asset cost varies from 10 lakhs to 2.5 crores (as per the capacity and specifications)

Page | 42

Suppliers:-

1. ACE (Action Construction Equipment)2. TATA (HITACHI) 3. Escorts

9. Batching Plant

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Asset Cost: - 28 Lakhs

BATCHING when bagged cement is used, the field mix proportions are usually given in terms of designated amounts of fine and coarse aggregate per bag (or per 94 pounds) of cement. The amount of material that is mixed at a time is called a batch. The size of a batch is usual] designated by the number of bags of cement it contains, such as a four-bag batch, a six-bag batch, and so forth. The process of weighing out or measuring out the ingredients for a batch of concrete is called batching. When mixing is to be done by hand, the size of the batch depends upon the number of persons available to turn it with hand tools. When mixing is to be done by machine, the size of the batch depends upon the rated capacity of the mixer. The rated capacity of a mixer is given in terms of cubic feet of mixed concrete, not of dry ingredients. On large jobs, the aggregate is weighed out in an aggregate batching plant (usually shortened to “batch plant”), like the one shown in figure above. Whenever possible, a batch plant is located near to and used in conjunction with a crushing and screening plant. In a crushing and screening.The batch plant, which is usually portable and can be taken apart and moved from site to site, is generally set up adjacent to the pile of screened aggregate.

Suppliers: - Greaves, Schwing Stteter

10. Boom placer

Asset Cost: - 1.2 crores

Placing concrete in position without causing its segregation and also in proper layers to allow their compaction without causing any cold joints in it, is essential for producing a strong and durable structure. To achieve this, our placement arrangements must pour concrete at such a rate that the next layer of concrete gets

Page | 44

laid before the last layer gets fully set and in this way, a monolithic structure is created. Also, the concrete should arrive either at or nearest to the pouring point. In general, concrete is transported to the deck or pouring level by a tower crane or winch- driven buckets, or through manual labor. Thereafter, it is further carried to pouring point by rail trolleys or wheel trolleys or in pans carried by labour. Often, some vital factors get overlooked during this procedure. Ideal conditions would be to have equipment that pours concrete directly at the pouring point; concrete pumps are exactly the equipment to convert this desire into reality.

PUMP COMPONENTS

Main frame-with axles and tyres or truck chassis. Hydraulic pump. Diesel/ electric motor-truck engine driven or separate engine. Concrete pump kit. Control block. Hydraulic tank Hopper and agitator. Placer boom and Remote control (optional)

Suppliers:-

Sanyo

11. Piling rig

Asset cost: -2.5 Crore

Page | 45

A drilling rig is a machine which creates holes (usually called boreholes) and/or shafts in the ground. Drilling rigs can be massive structures housing equipment used to drill water wells, oil wells, or natural gas extraction wells or they can be small enough to be moved manually by one person.[citation needed] They sample sub-surface mineral deposits, test rock, soil and groundwater physical properties, and also can be used to install sub-surface fabrications, such as underground utilities, instrumentation, tunnels or wells. Drilling rigs can be mobile equipment mounted on trucks, tracks or trailers, or more permanent land or marine-based structures (such as oil platforms, commonly called 'offshore oil rigs' even if they don't contain a drilling rig). The term "rig" therefore generally refers to the complex of equipment that is used to penetrate the surface of the earth's crust.

Drilling rigs can be small and portable, such as those used in mineral exploration drilling, water wells and environmental investigations. Huge, capable of drilling through thousands of meters of the Earth's crust. Large "mud pumps" circulate drilling mud (slurry) through the drill bit and up the casing annulus, for cooling and removing the "cuttings" while a well is drilled. Hoists in the rig can lift hundreds of tons of pipe. Other equipment can force acid or sand into reservoirs to facilitate extraction of the oil or natural gas; and in remote locations there can be permanent living accommodation and catering for crews (which may be more than a hundred). Marine rigs may operate many hundreds of miles or kilometers distant from the supply base with infrequent crew rotation.

Suppliers: -

Soil make

Growth in industry is expected to be driven by 3 key drivers: -

FIGURE-3

Page | 46

Infrastructure Investments

Indian Construction Equipment Industry

Growth

Industrial production/capa

city expansion by manufactures

.New Facilities

.Up gradation of existing facilities-Demand for material handling Equipment

.Investment in roads, ports,power,etc.

.Housing and real estate construction

New areas are emerging, that present good growth potential for the future:

CONSTRUCTION EQUIPMENT

Rentals

• Currently, equipment rentals contribute to just about 2% of the market

• This is expected to grow to about 25% by 2010

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Emerging Growth Areas

Leasing/Rentals

Exports

Refurbishing used equipments

Services

Leasing

• Equipment leasing expected to grow from about 2% to around 8% by 2010

Financing and end-to-end services

• Some of the large players are looking at providing end-to-end services to the users throughout

the equipment lifecycle – financing, user training, maintenance and buy-back of used equipment

Exports

• We estimate INR34, 385 billion (~USD860 billion) worth of construction opportunity in India for the next five years, representing a CAGR of 20% versus a CAGR of 14% for the past five years.

The sector is competitive to see increased investment from global players in Construction Equipment

Porter’s Five Force Competitive ModelThreat of New Entrants

• Fragmented market, dominated by a few large players

• High potential growth

• New players will need the right technology and product.

Supplier Power

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• Import of some critical components

• Volatility of steel prices impacting production costs

• Inadequate supplier base to meet demand

Competitive Rivalry

• Price & Service are the differentiators

• Lack in sharp differentiation leading to Competition in price.

Customer Power

• Strong increase in demand

• Price sensitive market

• Customers need to be trained in technology, equipment usage

Threat of Substitutes

• Complete substitution may not happen in near future

• Product replacement or enhancement is possible

Industry players would need to address the following key success factors: -

1. Post-Sales Support

• Service and Training Infrastructure

• Maintenance

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• Spare Parts & Distribution Network

2. R&D and Innovation

• Appropriate technology and pricing

• Product customisation

• Product reliability and ease of use End-To-End Services

• Equipment selection

• Financing/leasing/rental

• Maintenance and training

• Repair and refurbishing

Suppliers Study

1. Action Construction Equipment Ltd. (ACE)

1. Company Profile: -

ACE, Action Construction Equipment Limited is the leading mobile crane manufacturing company in India which has progressed all along to become a professionally managed ISO 9OOI Certified company. ACE is promoted by a technocrat, assisted by a team of experienced managers and engineers. ACE

Page | 50

equipment is being successfully used in many industrial sectors like infrastructure, construction, roads, engineering industry, coal mines, chemical and fertilizer plants, power stations, ports, heavy project engineering industry, railways, cement industry, oil industry, defense etc. to name a few. ACE range of cranes can be adapted to satisfy a vast range of possible applications due to their versatility.

Following are the highlights of ACE: -

The public limited company has a turnover of US$ 36.3 million for 08-09.

Its product range includes hydraulic mobile pick-n-move cranes, forklift trucks, loaders, tower cranes, aerial work platforms, lifts, lorry loaders/truck mounted cranes, etc.

It has a 41% share in Pick & Carry cranes segment

It has facilities installed in Faridabad in Haryana

There are 8 ACE offices and 33 dealer locations

The turnover of the company has grown at a approximately 96% in the last 4 years. The company has plans of diversifying its product portfolio to Include truck mounted cranes, forklifts and backhoes.

2. Deals in Machinery: -

1st - Hydraulic mobile crane2nd -fork lift3rd -Tower crane4th – Back hoe loaders5th – tractors

3. Customers: -

Some of our Private Clients

Reliance Industries Ltd., Mumbai

Punj Lloyd Limited, New Delhi

ACC Limited, (M.P.)

Cimmco Birla Limited

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Some of our Government Clients

Western Coalfields Ltd., Nagpur

Central Coalfields Ltd., Ranchi

South Eastern Coalfields Ltd., Bilaspur

Northern Coalfields Ltd., Singrauli

S.C.C.L., Kothagudem Colleries

4. Turnover: -

Turnover is around 300 crores, 08-09 and 75 crores 1st quarter 09-10. (Delhi NCR)

5. Performance of the company in Growth and Recession Period: -

Sold around 500 machines per month in growth period, all India

Now sells around 250 machines per month in recession period, all India

Sale has fallen down to 50%.

The market is on the verge of improvement and the numbers are expected to rise considerably.

2. Telcon Construction Equipment Company Ltd. (Telcon)

1. Company Profile: -

Telco Construction Equipment Company (Telco) is India's leading provider of equipment and services in the construction and earth-moving industries. Set up in 1961 as a division of Tata Motors, it is now a 60:40 joint venture between Tata Motors and Hitachi Construction Machinery Co of Japan.

Apart from supplying to the Indian market, Telco also exports construction equipment to African, Asian and Middle Eastern countries.

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Areas of business: -

Telco supplies a wide range of construction equipment, including hydraulic excavators, mining shovels, dumpers, backhoe loaders, wheel loaders, vibratory compactors, motor graders, crawler cranes, asphalt plants and multi-utility loaders. The company also offers a wide range of value-added services.

Joint ventures, subsidiaries, associates: -

Telco Eco Road Resurfaces (a joint venture with IVRCL, India, and Hitachi and Green Arm, Japan)

Hitachi Construction, Japan (hydraulic excavators and cranes)

John Deere, USA (backhoe loaders)

Lebrero, Spain (compactors)

CESAN, Turkey (asphalt plants)

Hitachi Truck Manufacturing, USA (dumpers)

Tadano, Japan (tyre-mounted cranes)

Hitachi-Sumitomo, Japan (crawler cranes)

Berco (undercarriages)

Location: -

Based in Bangalore, the company has manufacturing plants in Jamshedpur and Dharwad, with a third one coming up in Kharagpur (all locations in India). It has a sales and service customer network of over 100 offices across India.

Following are the highlights of TELCO: -

• The company is a market leader in excavators.

• It has collaborations with Hitachi Construction Machinery Company, Japan, for hydraulic excavators and cranes; John Deere, USA, for backhoe loader technology; CESAN, Turkey, for asphalt plants

• It is a subsidiary of Tata Motors and has a turnover of US$ 283 million

• Its major products are excavators, loaders, mechanical shovels, high tonnage crawler cranes, etc. It has a 50% market share in the excavator segment and an overall market share in the construction equipment segment of 11%

Page | 53

• Tata group of companies, government enterprises, and contractors are its major customers. It has facilities installed at Jamshedpur in Jharkhand and Dharwad in Karnataka

• Its marketing network spans across 30 Indian states and 3 international locations.

2. Deals in Machinery: -

Customers Customers CustomersMining Construction(Infrastructure) RoadsPC 450, EX450 and PC 1000, Ex1200

Backhoe loaders, L&T case , ace, jcb, Terex)

Pavers, graders, compactors, batching Plants.

CIL, SAIL, TISCO Wheeled loader(HH, TATA, JCB)Small size excavators( PC 71, EX70, PC 130, EX 110, PC 130, Ex200)

Given to contractors.

10 years on 30th March, 2009

3. Customers: -

Telcon customers-

DH DMRC CNC PUNJ LLOYDAFCONS HCL.

4. Turnover: -

Total turnover in 08-09 is 270 crores. (Delhi-NCR, Uttaranchal, Haryana, western UP)

Page | 54

5. Performance of the company in Growth and Recession Period: -

The total sales of the company have faced a downfall of 50 to 60%.

Porter’s five forces model to understand the position of the market.

3. Escorts LTD

1. Company Profile: -

Escorts manufacturers and markets a diverse range of construction and material handling equipment like cranes, loaders, vibratory rollers and forklifts. The company was a pioneer in introducing the concept of Pick 'n' Carry hydraulic mobile cranes in the 70s in India and continues to be the world's largest manufacturer of these cranes.

A nationwide network of 16 Sales Offices, 50 dealership locations, over 300 company trained dealers’ service engineers, gives it the best market reach in India for the Sales & Service of material handling and construction equipment.

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With over 30 years experience in Construction Equipment Industry, Escorts has a proven track record in:

Hydraulic Mobile Cranes Loaders Forklifts Vibratory Compactors

Today, it not only continues to be the largest mobile crane manufacturer in the country, but also the largest Pick ‘n’ Carry Hydraulic Mobile Crane manufacturer in the world.

While recording a rapid growth in Crane Industry we’ve also been able to steadily increase our presence in the field of Vibratory, Soil & Tandem Compactors. Escorts was the first to bring the concept of Vibratory Compactors in India in a big way, back in 80’s. Subsequently more models in Tandem Vibratory Compactors and heavy duty Soil Compactor range were added in technical collaboration with HAMM Germany. Recently, we’ve further strengthened the range with a 3T Shoulder Compactor. Today our range of compaction equipments is one of the most preferred in the market, and is being viewed as the most efficient and effective compaction solutions available in the country.

Following are the highlights of ECEL: -

• It is a pioneer manufacturer of Pick & Carry cranes

• The company is a subsidiary of Escorts Limited. It has a turnover of US$ 61 million

• It holds a 56% market share in the domestic pick and carry market

• It has facilities installed in Faridabad, Haryana

• Its products include pick and carry cranes, slew cranes, articulated boom cranes, tower cranes, forklift trucks, front end loaders, vibratory soil compactors, tandem vibratory rollers, etc.

• It has 16 business centres and 54 dealer locations.

Has around 35 outlets which sells all over the country.

2. Deals in Machinery: -

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1. Cranes: - Mostly deals in Hydra Cranes, Tower cranes, and overhead cranes.2. Compactors.3. Forklifts

3. Customers: -

Bajaj Sugar. Jai Prakash Indian Equipments Infra. Equipment Banks. Jindal

4. Turnover: -

Has turnover of around 250 crores in 08-09 (North West) and 100 Crores in the first quarter of 09-10. Delhi NCR

5. Performance of the company in Growth and Recession Period: -

Hydra cranes: -

Sold around 50 machines since April 1, 09. Sale has fallen around 40%.Earlier sold around 28 machines per month. This is the period when the market is on the boom.

Compactors: -

Sold around 75 machines till March, 2008 and now sold around 65 machines till March, 2009.Sale has fallen around 30-35%.

Forklifts: -

The sale for this equipment has fallen to around 35%.

With the Government allocating more funds to the infrastructure sector, the coming months have a good scope for the construction equipments to be in demand and better business ahead for the Escort company.

Distribution ship: -

1. Sany Heavy Industries: -

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Selling on behalf of Sany, Concrete pumps and Motor Graders. The sale of these equipments has also showed a dropdown in sales of 60% and 35%.

2. JLG Industries: -

Aerial work platform. The asset has shown no change in its selling trend due to recession. In fact has shown a significant increase in its sale.

Certain Drawbacks: -

Orders are frequently coming, but the problem was with the Financing and dispatching as the factory has less output of machineries and blockage of inventories.

July and September are going to be the worse period due to rainfall which is actually a reason of stoppage in construction work and assignments, and hence affecting the sale.

Exports have been damaged, as the major meltdown has demolished the foreign construction sector. Hence, reducing the demand.

Drop in the Real Estate has been around 50-60%.

4. L&T Komatsu

1. Company Profile: -

About L&T-Komatsu Limited:-

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Headquartered at Bangalore, India, focusing on construction equipment and mining equipment, L&T-Komatsu Limited is a joint venture of Larsen and Toubro and Komatsu Asia Pacific Pte Limited, Singapore, a wholly owned subsidiary of Komatsu Limited, Japan. Komatsu is the world’s largest manufacturer of hydraulic excavators and has manufacturing and marketing facilities worldwide. The plant was started in the year 1975 by L&T to manufacture Hydraulic Excavators for the first time in India. Later it became a joint venture. L&T-Komatsu Limited's manufacturing facility “the Bangalore Works” comprises the Machinery Works and Hydraulics Works divisions. Machinery Works has a manufacturing facility with ISO 9001:2000 accreditation for design, manufacture and servicing of earthmoving equipment. Hydraulics Works, with a precision machine shop, manufactures the complete range of high pressure hydraulic components and systems, and is also ISO 9001:2000 certified for design, development, manufacturing and servicing of hydraulic pumps, motors, cylinders, turning joints, hose assemblies, valve blocks, hydraulic systems and power drives as well as allied gear boxes. The products manufactured at L&T-Komatsu Limited are supplied to domestic as well as overseas customers. L&T-Komatsu Limited is certified under Environment Management System ISO 14001: 2004 and Occupational Health & Safety Management System OHSAS 18001: 1999.

L&T-Komatsu Limited Executives

S R Subramanian [CEO]

S. Balakrishnan [Manager, Finance]

Following are the highlights of L&T case and komatsu: -

• The companies together have a turnover of US$ 156 million, with majority coming from L&T Komatsu. Both these companies are subsidiaries of L&T Ltd.• They are joint ventures with CNH American LLC and Komatsu Asia Pacific Pvt. Ltd., Singapore, respectively• L&T Case manufactures loaders backhoes and vibratory compactors; while L&T Komatsu manufactures hydraulic excavators. L&T Case hold 21% market share in vibratory compactors• L&T Komatsu holds 20% market share in excavators• L&T Case has its facilities in Pithampur, Madhya Pradesh• L&T Komatsu has it operations in Bellary Road in Karnataka.2. Deals in machinery: -

Motor Graders Wheeled Loaders Dozers

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Excavators:- 7 Ton Excavators 13 ton Excavators 20 ton Excavators 30 ton Excavators 40 ton Excavators 60 ton Excavators

3. Customers:-

Jaypee Sainik Mining Auto Wield Oriental Era Infra Punj Lloyd

4. Turnover: -

Turnover for the Year 2008-2009 for L&T Komatsu was 243 crores. And 67 crores for 1st quarter from April till june 2009.(Delhi NCR)

5. Performance of the company in Growth and Recession Period: -

All India 2008-09 sales (excavators, all manufacturers) 8316 units.L&T Komatsu sales were 2525 (all India). Targeted was around 3000 units all India. Production and sales of all the units dropped down to around 60 to 70% i.e. about 1/3rd in the month October to February

Significant improvement shown in the first quarter 09-10:-

April 168 units soldMay 169 units soldJune 160 units sold

Opportunities ahead are in terms of: -

1. Covering the Unrepresented Market share by setting up more dealerships.2. Focus is on the mining sector and infrastructure.3. Tapping the untapped market.

5. L&T Case: -

1. Company Profile: -

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Case Corporation and Larsen & Toubro Limited Form Construction Equipment Joint Venture in India: - (50-50 JV)

Case Corporation (NYSE:CSE) today said that it has formed a joint venture with Larsen & Toubro Limited for the manufacture and sale of construction equipment, specifically loader backhoes and Vibratory compactors, in India. The two companies will share 50 percent interest in the new venture, which is named L&T-Case Equipment Limited and is based in Pithampur, Madhya Pradesh, India. Terms of the agreement were not disclosed.

"Gaining entry to the Indian market is an important element in our strategy to continue to grow our construction equipment business," said Jean-Pierre Rosso, Case chairman and chief executive officer. "We have several years of experience with Larsen & Toubro, and we are confident that, in combining the expertise of the two companies, we will provide construction equipment customers in India with superior products that will improve their productivity."

Larsen & Toubro today manufactures loader/backhoes and vibratory compactors at its plant in Pithampur. The technology for these products was originally licensed by Case to Larsen & Toubro in 1989. Under terms of the joint venture agreement, Larsen & Toubro will transfer its Pithampur operations to the new joint venture company and Case will provide a license for a new loader/backhoe design, which will be produced at the Pithampur plant. In addition, the joint venture will manufacture and sell the line of vibratory compactors currently sold by Larsen & Toubro in India.

2. Deals in machinery: -

Backhoe Loaders

Vibratory Compactors

3. Customers:-

Jaypee Sainik Mining Era Infra Punj Lloyd

4. Turnover: -

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Turnover for the Year 2008-2009 for L&T case was 59 crores. And 9 crores for 1st quarter from April till June 2009. (Delhi NCR)

5. Performance of the company in Growth and Recession Period: -

Sold around 340 machines in 08-09 in north. Thus, the impact was not that much on its selling of assets. The main reason for this was an order from Ministry of Defense (DGBR) which kept the supplying pattern smoothens for the company in spite the recessionary period.

Now it’s improving further more by selling 40 machines already in the first quarter and looking good in the near future.

The basic strategy was to stuck up to the existing, market share of 10 to 11%.

Opportunities ahead are in terms of: -

Covering the Unrepresented Market share by setting up more dealerships.

Building more and more presence amongst the corporates which was lacking earlier in the company policies.

40 crores of investment to expand the manufacturing and state of the art facilities.

6. Caterpillar

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1. Company Profile: -

INDUSTRY LEADER, HIGH STANDARDS,

For more than 80 years, Caterpillar has been building the world’s infrastructure and, in partnership with our network of Cat® dealers worldwide, has helped drive positive and sustainable change on every continent. We are a global company, with hundreds of locations worldwide to serve and support our customer base, and respond quickly to their needs.

Since its inception over 80 years ago, Caterpillar has grown to be the world's largest maker of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. In partnership with our worldwide dealer network, we drive positive and sustainable change on every continent. We deliver products, services and technologies in three principal lines of business: Machinery, Engines and Financial Products. As a global, diverse technology leader, Cat commits to excellence in all that we do. We are proud to be a leader in building the world's infrastructure, and in enabling progress for millions of people around the globe.

2. Deals in machinery: -

Excavators Dozers Motor graders (Market leader) Wheeled Loaders Gensets Wheeled mountain cranes (Market leader) Backhoe Loader

3. Customers:-

DS construction Som Dutt Jaypee Tata Steel Sainik Mining

4. Turnover: -

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Turnover for the Year 2008-2009 was 800 crores (All India). And 85 crores for 1st quarter from April till june 2009.(Delhi NCR)

5. Performance of the company in Growth and Recession Period: -

The Months October, November, December, and January recorded a downfall in sales of around 20 to 30%.

Machines sold in Northern Region are 550 all units 08-09 and 30 machines all units sold 1st quarter 09-10

Opportunities ahead are in Mining and road Construction. Looking forward to target the local areas i.e targeting the small customers so as to expand their market in Retail and look for more sales opportunities ahead this year.

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7. Greaves Cotton Limited

1. Company Profile: -

Greaves Cotton Limited, established in 1859, is one of India's leading and well-diversified engineering companies. It manufactures a wide range of industrial products to meet the requirement of core sectors in India and abroad. The company's core competencies are in Diesel/Petrol engines, Gensets, Agro Equipments and Construction Equipments. Infrastructure Equipment

At The Core Of Industrial Success

To meet the challenges of construction industry, Greaves manufactures wide range of Compaction and Concreting equipment. The complete range of concrete equipment like Transit Mixers, Concrete Pumps, Batching Plants, etc. are manufactured at the Company’s ISO 9001 certified Plants at Chennai and Gummidipoondi (Tamil Nadu). Greaves also manufactures the complete range of compaction equipment like Vibratory Soil Compactors, Heavy Tandem Rollers, Light tandem Rollers at Gummidipoondi.

Greaves construction equipment is mainly used for construction of roads, bridges, buildings, ready mix concrete applications, etc. Greaves caters to the service and spare parts requirement of customers through their large network of qualified and trained service engineers located a various branches and dealerships.

2. Deals in Machinery: -

1. Batching Plants2. Transit Mixers3. Concrete Pumps

3. Customers: -

Sainik Mining Punj Lloyd Ds Construction Jaypee

4. Turnover: -

The Turnover for 08-09 (May08-June09) 68.5 crores

5. Performance of the company in Growth and Recession Period: -

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Equipments Sold: -

Batching Plants 45

Transit Mixers 175

Concrete Pumps 50

Downfall in sales 50%

Looking forward for the opportunities in the highway construction projects, especially after the Budget stimulus towards this area

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8. Schwing Stteter: -

1. Company Profile: -

Schwing Stetter India Pvt. Ltd is a 100 per cent subsidiary of Schwing GmbH, a 75-year old, €850-million ready-mix concrete equipment manufacturer with its headquarters in Herne, Germany. Schwing Group has 12 manufacturing units worldwide and has a global presence in more than 145 countries.

Schwing Stetter India was registered as an Indian company in June 1998 and started its operations in the beginning of 1999 in leased premises. In 2001, Schwing Stetter India set up its own manufacturing facility at Sriperumbudur in Chennai, followed by the second one in 2004, exclusively to manufacture truck mixers. In December 2006, the company inaugurated its third facility to exclusively manufacture concrete batching plants.

SSIPL manufactures the entire range of concreting equipment for concrete preparation, concrete transportation, concrete placement and recycling of concrete.

Schwing Stetter India's turnover in 2008 stood at Rs 850 crore.

2. Deals in Machinery: -

Batching Plants

Transit Mixtures

3. Customers: -

DLF

Jindal

J.K Lakshmi

Jaypee

4. Turnover: -

The Turnover for 08-09 (May08-June09) 100 crores and First quarter 09, 14 crores

5. Performance of the company in Growth and Recession Period: -

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Equipments Sold: -

Batching Plants 70

Transit Mixers 100

There was around 10 to 20% effect of recession.

Equipments Sold first quarter09: -

Batching Plants 15

Transit Mixers 20

A lot of opportunity in near future has driven the sales to considerable good figures.

Opportunity in terms of infrastructure sector, developments in the retail sector, mining e.t.c

9. Kobelco

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1. Company Profile: -

The Kobelco Construction Machinery Group has a long history of developing construction machinery as a member of Kobe Steel, Ltd., one of the world leading steelmakers. Our history spanning over 75 years started in 1930 with the 50K electric mining shovel that was the first construction machinery product manufactured in Japan. Since then, we have developed many innovative products and techniques that have contributed to a breakthrough in construction machinery technology.

The same indomitable spirit that have shaped our proud history is still alive, encouraging us to develop innovative state-of-the-art products such as the HYBRID excavator and the SK3500D building demolition machine with the highest reach in the world.

To promote continuous development, basic research on future technologies in such areas as energy-efficiency, noise-reduction, weight-reduction, and safety, is pursued in cooperation with Kobe Steel's Kobe Corporate Research Laboratories.

2. Deals in Machinery: -

Excavators

o 20 tonner

o 35 tonner

o 48 tonner

3. Customers: -

Era Infra

C&C Continental Engineering Corporation.

C and C construction Limited.

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4. Turnover: -

The Turnover for calendar year 08-09 17.5 crores and From January till June 09, 5 crores

5. Performance of the company in Growth and Recession Period: -

Equipments Sold: -

35 Excavators sold in 08-09 and 10 till this June

The figures of equipments sold last year were considerably not very high because of the following reasons: -

The company being a Japanese Transnational has this strategy of building up a support network that will allow the business to grow gradually and slowly.

The main aim is to first understand the market conditions and local areas and then bring up new and innovative equipments into the construction industry.

The market share has came down by 40 to 50% because of the higher interest rates by the financers, the parity in the exchange rate and the effect of the recession.

10. JCB: -

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1. Company Profile: -

In every corner of the world you'll find a JCB machine. JCB is one of the world's top three manufacturers of construction equipment. We employ over 8,000 people on 4 continents and sell our products in 150 countries through 1,500 dealer depot locations.

Throughout our 62 year history, we have always invested heavily in research and development, keeping JCB at the cutting edge of innovation.

Today, JCB has some of the finest engineering facilities across the globe, produces a range of over 300 machines and maintains a reputation for unrivalled customer service.

JCB is a unique company where unique people produce unique products, but it shares one vitally important characteristic with many other successful global brands. It never stands still. JCB may have an exciting future because of its illustrious past but it never takes anything for granted. It is constantly seeking new horizons.

Following are the highlights of L&T case and komatsu:

•Manage spend for assigned commodities across Indian & Overseas locations.

•Responsible for Domestic procurement and Imports from JCB UK, JCB Germany, Japan, China, European Continent. (Commodities: Casting, Forgings, and Hardwares & Electrical Components).

•Half yearly, Monthly Forecasting, Planning, Day wise Scheduling of regular production parts and ensuring 100% availability of items.

•Maintaining Inventory level (Min & Max stock), EOQ, Inventory turns at prodn end & at vendor end through physical and Electronic Kanban, Bin supply chain management, Lean concept & JIT.

•Co-ordination and Communication with Domestic & Overseas vendors, Ensuring Quality of Incoming matl, resolving quality issues, vendor issues etc.

•Drive key sourcing metrics across supply base (Productivity, Payment terms, Lead Times, Terms & conditions).

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2. Deals in Machinery: -

Backhoe Loaders

Tracked Excavators

Wheeled Loaders

Vibratory Single Drum Compactors

3. Customers: -

Brat Engineers

YRC Projects Limited

K.S Enterprises Limited.

R.K Construction Company

P.K Construction Limited

4. Turnover: -

The Turnover for calendar year 08-09 300 crores and for Delhi NCR around 95 crores and From January till June 09,

5. Performance of the company in Growth and Recession Period: -

Its sales had plummeted by 20% in 2008. With the market facing a downturn, the company expects sales to be lower by 15% in the 2009 calendar year, and sales were expected to pick up by the end of 2009. New unit opened for backhoe Loaders to fulfill the demand for the near future with respect to new customers and cover up untapped market.

In sales the major portion is contributed by the Backhoe Loaders, more than 90% in construction areas.

No of Backhoe loaders sold all over India by JCB in 08-09 were 14400. It is comparatively less than in year 07-08 when the sales were 18000. The dip was recorded of 20% in sales.

The number of backhoe loaders sold in Delhi NCR was 350 in 2008-09.

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Study of Financers

L&T Finance LTD.

1. Company profile-:

L&T Finance Limited (LTF) is one of the wholly owned subsidiaries of Larsen and Toubro. It was incorporated as a Non Banking Finance Company in November 1994.

2. Company’s performance in growth period-:

The company has funded about 112.23 crores which has 27.23 crores as retail and 85cr as strategic in Delhi NCR in 2008-09. Is considered to be the most suitable option for financing in the market with established faith amongst customers.

3. Company’s performance in recession-:

The company followed stringent policies to cope up with NPA’s (Non Performing Assets) i.e those customers which do not able to repay the loan amount back or turned bad debts. And other thing it does that it dropped its findings to the limited. It manages to keep up to the target set in terms of funding and able to keep its position up to the mark in the market.

4. Customers: -

Sainik Mining

Goyal Construction Co

Mewat grit udyog

Altech equipments pvt. Ltd.

South west drilling & infrastructure ltd

Ahluwalia contracts (india) limited

Jindal infrastructures pvt ltd Punj Lloyd

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Magma Fin Corp.1. Company profile-:

Magma Fincorp Ltd provides various financial products and services to individual and corporate customers in India. The company offers finance for new and used commercial vehicles; passenger cars and multi-utility vehicles; and construction equipment. It also offers suvidha loans, and insurance and personal loans. The company was formerly known as Magma Shrachi Finance Limited and changed its name to Magma Fincorp Ltd in July 2008. Magma Fincorp Ltd was incorporated in 1988 and is based in Kolkata, India.

Magma Leasing Limited was incorporated in 1988 and commenced operations in 1989. The company merged with Arm Group Enterprises in 1992 to strengthen its business further. Since then, Magma has emerged over the last decade-and-a-half as one of India?s largest non-banking financial companies. They are headquartered in Kolkata (India) and registered with the Reserve Bank of India. They are represented by a qualified team of 950 plus Magmaites. In response to the rapidly evolving demand of an India on the move, they offer individual and corporate customers a range of financial products and services in: Commercial vehicle finance, Construction equipment finance, Passenger car finance.

Interestingly, they rapid growth over the last few years is not just derived from company conscious initiative in growing company physical infrastructure; it originates in the prudent investments that they have made in lasting relationships - with team members, alliance partners, customers and vendors As a result, they have achieved a compounded annual growth rate of over 70 per cent over the last three years. They have outperformed the growth in the Indian financing industry. And in doing so, they have emerged as a dynamic industry proxy Now by the same approach, they expect to make this growth as sure as company expect to make it sustainable. Resulting in an organization that is stronger and more responsive to growing needs of a dynamic nation.

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2. Company’s performance in growth period-:

The company used to fund around 90% before. The funding was higher because the work of the company was going well in every field i.e. Magma construction, Magma car financing, Magma SME, Magma commercial vehicles, Magma personal loans.

The income of the people was higher.

3. Company’s performance in recession-:

The company now funds only 75% which it used to do around 90% before.

The income of the people has fallen down.

The finance has fallen to around 60-70% as December-January was the main time when it was hit by recession.

Sale has fallen down to around 30 to 40% since august 2008.

4. Financing of the company-:

Total turnover has been around 3600 crores. Total Disbursement in 08-09 were 63 crores and in 1st quarter 09-10 35 crores. (Delhi NCR figures for both strategic and retail)

The company mainly focuses on Batching plant, tippers, excavators, backhoe loaders for doing their major financing.

It also gives different offerings to the clients- finance schemes, credit and subventions.

5. Customers-:

Sainik

Brahmaputra

Punj Lloyd

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Tata Capital: -

1. Company profile-:Tata Capital marks the entry of the Tata Group into a host of new financial services. The Company caters to multiple needs of the retail and institutional customer – truly a one-stop shop, be it investment or finance.

Tata Capital brings the trust and expertise of the Tata Group into the world of financial services. It aims to be recognized for its customer-centricity and high service standards. The Company is driven by a strong focus on value creation for stakeholders and the society at large.

Tata Capital is a wholly-owned subsidiary of Tata Sons Limited, the apex holding company of the Tata Group. It is registered with the Reserve Bank of India as a Systemically Important Non Deposit Taking Non Banking Financial Company undertaking fund and fee based activities in the financial sector.

2. Company’s performance in growth period-:The company used to fund around 93% before the time of recession came.The income of the workers and the others was pretty good at that time.The growth and performance of the company was pretty good and sometimes higher than expected.

3. Company’s performance in recession period-:Infrastructure Companies

Strategic /Corporate Retailers FTU/FTB(First time users and first time buyers)

Government gives projects to companies who further sub-divides it into retailers & ftu’s so all of them benefit.Since oct.2008 when main recession started, corporate stopped giving projects and work to the retailers and ftu’s.

So it was a big loss to the retailers and a ftu’s. Even banks stopped giving loans and finances.

The financing was given for 3yrs. mainly given between 1-5 years.

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Sale has fallen down to around 30 to 40% since august 2008.

Sep.2008 to jan.2009 was the period in which liquidity almost got finished.

30 to 35% sale has been in last 8to 9 months which has increased in northern region but has overall it has decreased. The reason is that in the northern region there are more no of construction and infrastructures companies.

4. Company’s financing-:The total financing in 2008-2009 has been around 2400 crores. In 08-09 figures were 138 crores and in 1st quarter 09-10 32 crores. (Delhi NCR figures for both strategic and retail)

5. Customers:-

1. Punj Lloyd.2. B.L. Kashyap.3. ERA infra.4. C&C construction.5. BUMIGO Engineering.

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SREI

1. Company profile-:

Srei Infrastructure Finance Ltd. is one of India's leading Non Banking Financial Institutions and the only private sector infrastructure financing NBFI. It commenced its operations in 1989 with the objective of actively participating in nation building process and was visionary in selecting Infrastructure sector as its principal growth area. Today, Srei has developed expertise in financing of infrastructure equipment (for construction, mining, oil & gas, power and others), infrastructure projects, infrastructure development and advisory in all verticals of infrastructure. As a result, Srei has come to be recognized for innovation of financial instruments and offering customized solutions in the infrastructure space.

Srei Equipment Finance Private Limited

Srei Equipment Finance Private Limited (SEFPL) is a Joint Venture between Srei Infrastructure Finance Limited ("Srei") and BNP Paribas Lease Group ("BPLG"). The Company was formed in 2006 with the objective of carrying on the business of acquisition, exchange, substitution and disbursement of construction and infrastructure equipment.

On May 31 2007, BNP Paribas Lease Group (BPLG), the leasing arm of BNP Paribas Bank, picked up 50 percent stake of the company following Srei's plan to hive off its Equipment Financing and Insurance Services to SEFPL. Leveraging on the global expertise of the BPLG and Srei in infrastructure equipment (IE) leasing and financing market, SEFPL plans to capitalize on the burgeoning opportunities in IE market expected to touch USD 7.0 - 7.5 bn by FY 2009-10 in India.

Srei's strong brand image domestically, local expertise and specialized equipment finance skills is expected to combine well with the global brand strengths of BPLG further consolidate Srei's leadership in the equipment finance business. Following the partnership with BNP, SEFPL plans to expand the product line into financing of agriculture, information technology, medical and other equipment.

The formation of this joint venture is a very significant step in the Indian Financial Services Market. The JV, being formed with an initial net worth of Rs. 800 crore would not only strengthen its ability to grow the business manifold but also help in strengthening the core activities and Srei Group position in the infrastructure sector.

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2. Company’s performance in growth period-:Used to fund around 80-90 % in the growth period, it invested high in construction, mining, oil etc…

3. Company’s performance in recession-:Since august 2008 when the recession period (global melt down) started, the sales of the company have fallen down to around 25-35%.The period in which this sale mainly went down was between November 2008 and January 2009 when the recession was at its peak and affected almost every sector the most.

Infrastructure Companies Strategic /Corporate Retailers FTU/FTB(First time users and first time buyers)

Government gives projects to companies who further sub-divides it into retailers & ftu’s so all of them benefit.Since oct.2008 when main recession started, corporate stopped giving projects and work to the retailers and ftu’s. So it was a big loss to the retailers and a ftu’s. Even banks stopped giving loans and finances. The financing was given for 3yrs. mainly given between 1-5 years.

SREI Infrastructure Finance Ltd (SREI.BO: Quote, Profile, Research) fell 4 percent to 66.90 rupees after the company reported a 53 percent fall in fiscal 2009.4. Company’s financing-:

Total financing of the company in 2008-2009 has been around 600 crores and in 1 st

quarter 09-10 115 crores. (Delhi NCR figures for both strategic and retail)

5. Machinery used-:Construction equipment includes excavators, compactors, dozers, cranes, heavy dumpers, compressors, surface miners, motor graders, backhoe loaders, tool carriers, road building equipment, mechanical and sensor pavers etc.

Customers-:1. Punj Lloyd.2. B.L. Kashyap.3. ERA infra.

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Kotak Mahindra bank-:1. Company profile-:

Kotak Mahindra Bank is one of India's leading financial private banking institutions. It offers banking solutions that covers almost every sphere of life. Some of its financial services include commercial banking, stock broking, mutual funds, life insurance and investment banking. Established under the brand of Kotak Mahindra Finance Ltd in 1984, it was given the license to carry on with banking business by the Reserve Bank of India in February 2003. It is the first company in the Indian banking history to convert to be converted from a private financial institution to a bank.

The facilities of Kotak Mahindra Bank are wide spread. It's banking sector acts as a central platform for customer relationships across the entire Kotak Mahindra group's various businesses. The bank marks its presence in the commercial vehicles, retail finance, corporate banking and treasury and housing finance segments. It offers you several facilities like personal banking, commercial banking, insurance and investment banking.

Apart from traditional facilities like deposits accounts, savings account, current account, term deposits, personal loans, home loans the bank has spread its wing in the investment services by providing its customer facilities like Demat, mutual fund and insurance. The bank has also opted for net banking, mobile banking and phone banking for convenience of its customers.

2. Company’s performance in growth period-:

The company’s disbursement in 2009-09 was around 100 crore. The company’s strategic and retail business is divided equally.

Kotak Mahindra funded around 85 % before the recession period came.

This period hasn’t affected them so much.

3. Company’s performance in recession market-:

There has been less percent fall in there finance but 20% fall in sale.

Finance has fallen down to 70% now.

Recruiting new people almost stopped.

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4. Financing of the company-:

The company finances both imported and other equipments.

Imported equipments include- De Maag, Groove, Coles, Kato.

Other equipments- Crawler crane, Batching Plant, Transit Mixer, Tippers, and Piling Rigs.

Total disbursement 08-09 were 83.5 crores and in 1st quarter 09-10 20 crores. (Delhi NCR figures for both strategic and retail)

5. Customers-:

Retail customers-

o Plant hirerso Mine Operators.

Construction Company’s-

o Punj Lloydo D.S. constructionso Parswanath developerso Builders

Strategies adopted by company-:

o They have decided not to be aggressive.o Strict norms towards appraisal.o Focus on risk containment organization.o Recovery initiative.

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HDFC BANK: -

1. Company profile-:

Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd, was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by Reserve Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval from RBI, for setting up a bank in the private sector. The bank was incorporated with the name 'HDFC Bank Limited', with its registered office in Mumbai. The following year, it started its operations as a Scheduled Commercial Bank. Today, the bank boasts of as many as 1412 branches and over 3275 ATMs across India.

Amalgamations

In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private sector bank promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC and Times became the first two private banks in the New Generation Private Sector Banks to have gone through a merger. In 2008, RBI approved the amalgamation of Centurion Bank of Punjab with HDFC Bank. With this, the Deposits of the merged entity became Rs. 1,22,000 crore, while the Advances were Rs. 89,000 crore and Balance Sheet size was Rs. 1,63,000 crore.

2. Company’s performance in growth period-:

The company’s disbursement in 2009-09 was around 140.45 crores. This is equally divided amongst the strategic and retail business.

The company has had a 31% net income growth rate in the 1st quarter of 09.

The company has made an overall growth of 45% since Jan 09 when the market has started to improve a bit.

3. Company’s performance in recession market-:

In the recession period the company’s main strategy was to generate group’s business and take money instead of providing loans.

Disbursement of 15 crore was there after august 08 which was around 25 crore before that period.

4. Financing of the company-:

The company finances both – retail as well as corporate.

Till now the company has done the funding of 38000 crores all over India.

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The company has an overall of 30% market share in financing construction equipments both retail and strategic. The disbursement in 08-09 was 140.45 crores and in 1st quarter 09-10 were 36 crores. (Delhi NCR figures for both strategic and retail)

5. Customers-:

Road construction-

o Oriental structural pvt ltd.

o D.S Construction

o JP Associates

o Pink city express

Industrial Infrastructure-

Gannon Dunkerlay

Subhash projects and marketing ltd.

Crane business-

Apollo cranes

Janak cranes

Mining-

Sainik mining

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Analysis and Interpretation

Analysis

1. Business Done from April 2009 to March 2010 by LTF and its competition.

(09-10 Delhi NCR) Retail(Cr) Stretegic(Cr) Total(Cr)

LTF 27.23 85 112.23

HDFC 44.45 96 140.45

ICICI 17 50 67

Magma 38 25 63

Citicorp 34.75 50 84.75

Srei 150 450 600

Kotak 23.5 60 83.5

GE.Capital 21.75 35 56.75

ABN Amro 20 80 100

Tata Capital 18 120 138

Reliance N.A N.A 0

Others 10 N.A 10

Total 404.68 1051 1455.68

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Business Done from April 2008 to March 2009 by LTF and its competition.

Page | 85

2. Business done from first quarter 09-10 by LTF and its competition: -

Page | 86

(09-10 first Quarter)

Retail Stretegic Total

cr cr cr

LTF 5 15 20

HDFC 10 26 36

ICICI Nil 10 10

Magma 15 20 35

Citicorp 4 5 9

Srei 15 100 115

Kotak 8 12 20

GE.Capital Nil Nil 0

ABN Amro Nil Nil 0

Tata Capital 8 24 32

Reliance 10 25 35

Others N.A N.A 0

Total 75 237 312

Business done from first quarter 09-10 by LTF and its competition

Analysis of the above diagrams: -

The Above figures show the business done by the LTF and its competitors in Delhi NCR in 08-09 and first quarter 09-10. It’s been observed that all the companies were doing well. The major portion of their disbursement was before the recession period but months between August08 till January09, the business plunged to the lowest ever.

The Financers did their business on their own terms during the recession period, i.e they have their own strategies to deal with different customers and hence able sustain the reign of the recession period to the most effective.

Managed to the most extent to achieve the target they have set, it’s about that they were not able to generate sales comparatively more than in the year 07-08.

The year 09-10 has begun with good business but at a steady rate. The full throttle in the business is expected by the end of this year.

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Earth moving equipments constitute the biggest segment and excavators the largest product line with in the segment.

Figure :Construction Equipment industry Structure.

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Earth moving Equipment segment.

Analysis of the above diagrams: -

The above figures show the Construction Equipment Industry Structure and Earth Moving Equipment Segment. With this it is interpreted that what all areas are there in the Construction business and what all are the assets needed in these areas.

Assets have their own uses with respect to different areas and majority has accomplished their market, say Excavators which has 70% market occupied and used at most of the construction sites and is mostly financed asset.

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Projects Investments under Implementation (Rs. Cr)

As per the 10th Five-year plan document the breakup of the cost in various construction project are as under:

Materials

(%)

Construction

Equipment (%)

Labour

(%)

Finance

(%)

Enabling Expenses

(%)

Admin Expenses

(%)

Surplus(%)

Building 58-60 4.5 11-13 7-8 5.5-6.5 3.5-4.5 5-6

Roads 42-45 21-23 10 -12 7-8 5.5-6.5 3.5-4.5 5-6

Bridges 46-48 16-18 11-13 7-8 5.5-6.5 3.5-4.5 5-6

Dams, etc 42-46 21-23 10-12 7-8 5.5-6.5 3.5-4.5 5-6

Power 41-43 21-24 10-12 7-8 5.5-6.5 3.5-4.5 5-6

Railway 51-53 7-8 16-18 7-8 5.5-6.5 3.5-4.5 5-6

Mineral Plant 41-44 20-22 12-14 7-8 5.5-6.5 3.5-4.5 5-6

Medium Industry

50-52 7-8 16-18 7-8 5.5-6.5 3.5-4.5 5-6

Transmission

49-51 6-7 19-21 7-8 5.5-6.5 3.5-4.5 5-6

(Source: Construction Industry Development Council Survey, 10th Plan)

Analysis of the above Table: -

Thus construction equipment cost particularly in the road projects, bridges/ dam construction and port projects constitutes a major cost of the projects. Further, with rapid technological developments, the cost of replacement of these equipments is also very high and can have a major impact on the profitability of a project.

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This is where the companies with a facility of providing equipments on hire have started coming in, and for financers to have funding growth.

INTERPRETATIONS

Most of the suppliers have suffered to the same extent i.e almost a dropdown of 35 to 50% in the recessionary period from August08 to January 09.

Each supplier has their own set of machineries in which they held USP (unique selling product).

Particular machinery is further classified into various series. The demand of the asset is as per the need of the customer and the areas where it is most suited.

New areas are emerging ahead like infrastructure development, mining, real estate, road development.

All these areas are of opportunity for the suppliers to look forward in future to increase their sale and with this the financers will have the market increased in terms of financing more and more assets.

The bargaining power of the suppliers and financers vary from time to time, and as per that business too varies.

After the budget, which has a lot of investment ahead in infrastructure sector, all the contractors are finding it good to generate more and more income.

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FINDINGS

Good Knowledge of the Construction Equipment Industry. Who all are the major suppliers and financers related to this industry and how

they perform their operations in relation to each other.

It is found that most of the suppliers have their Joint Venture with the foreign Companies dealing in same segment. With this we come to know that foreign companies are finding this Indian market good enough to expand their ventures abroad.

Lost sales in the last year because qualified purchasers had been unable to get financing. Increase in their own credit costs. Companies had difficulty securing credit.

The clientele with the suppliers is almost the same. With this it is found that the top customers in this industry are segregated in equal amongst the suppliers for construction equipments and financers for financing business.

Some Suppliers have distribution ship of companies manufacturing construction equipments and that too of foreign origin.

New areas are emerging ahead like infrastructure development, mining, real estate, road development.

Financing terms are almost same for every financer to give money to the customers. Stringent policies were adopted in the recession period with regard to financing and disbursement. Finance companies serving equipment markets at the time of recession have raised their creditworthiness standards. While a tightening of credit terms is not surprising given the recent subprime meltdown.

The main downfall in business for both the suppliers and financers was from the months following November to January.

The credit woes plaguing the industry are apparently the result of a number of factors, construction industry has been among the hardest hit by the economic

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downturn, in an effort to minimize risk, and some of the large, independent, asset-based lenders have reduced construction lending or simply stopped writing loans for the industry. At the same time, captive finance companies have found it more difficult to raise money.

Recommendations &Suggestions

1. Companies in the construction space underline the impressive growth inflection in the industry over the past few years. The last year 2008 has been a little downwards, other than that, I expect growth to remain robust as opportunity increases. The key driver will be large investments planned in India’s infrastructure, industrial, and real estate sectors in the next five years. Thus, corresponding boost for the construction equipments and their suppliers and manufacturers with respect to increase in the demand.

2. Most construction companies in India have negative operating cash flows, rising capex, and higher investment requirements in subsidiaries. Hence, we believe they will need additional funding. This will help financers to expand their horizon towards funding these companies under corporate financing. 3. Manpower remains one of the key concerns as shortage of skilled labor continues. However, employee productivity has increased in the industry in the past two years. The machines require operators with good understanding of their operations and technicalities. This will help in good efficiency of the assets and will lead to more than expected life.

4. With increasing CAGR of 40% of the construction equipments, and demand increasing at 15% per annum, the business for equipment industry has bright future ahead.

5. Manufacturers and dealers must better educate their sales personnel to package and sell more complex services, based on the full life cycle value to the end user.

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6. Manufacturers and dealers will need to adapt their product maintenance processes to take full advantage of real-time, detailed information about equipment performance.

7. The industry will have to address the issue of technical standards. Regarding the issue of technical standards, nearly two thirds (63 percent) of users surveyed said they consider it “very important” for equipment telematics devices to work across all equipment, regardless of manufacturer, make or model, while only 45 percent of equipment manufacturers and dealers held the same view. Today, a lack of technical standards prevents end users from running a platform-independent equipment telematics solution.

8. The construction industry must not only transform its culture and processes to prepare for telematics, but also address standards for on-board systems, data and software applications so that end users can reap the benefits across a variety of equipment,” “The central challenge for equipment manufacturers and dealers is to provide a differentiated telematics solution while addressing the end customer’s perceived need for standards.”

9. Focus on tapping the rural areas and uncovered one’s to increase the market cap.

10.To deal with the competition the suppliers have to come up with the customized products and financers have to come up with the new renewed terms of granting loan both secured and unsecured keeping in mind to have less % of NPA(net performing assets).

11. Customer service should be the main focus of suppliers of construction equipments to have good value on the market and to retain the customers.

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Conclusion

The following vital conclusions were derived:

The construction equipment industry has a wide scope ahead in future. As the Indian infrastructure, industrial, and real estate sectors are experiencing strong capacity growth. It is believed that this investment boom is driving strong growth in the industry. Estimated INR34, 385 billion worth of construction opportunities in India for the next five years, representing a CAGR of 20%.

As per the respondents amongst the suppliers the sales still going to be a little stagnant but will improve by the end of this year.

The speedy advancement in the construction industry, results in betterment for both the suppliers and financers to have better opportunities to increase sales/disbursement and revenue.

Both the suppliers and financers to work in coordination with each other as the nature of business they operate in, is of complementary nature. The demand for equipments with suppliers helps financers to fund these equipments.

The suppliers deal with the competition by catering to the needs of the customers on timely basis and provide them with the better and timely after Sales services.

The equipments operators are given adequate learning of how to operate these machines efficiently, so as to have more life cycle and better output in the working areas.

Financers on the other hand are opening up new funding schemes with respect to fund not only every construction equipment but also the materials and other aggregates used on the working site.

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Thus both the financers and suppliers have good potential in hand and are on the verge of becoming one of the key contributors in the economic income.

PROCESS MAPPING OF FLOW OF FUNDS

STEP 1: KNOW YOUR CUSTOMER

A business does not want to make the wrong decisions when looking at any type of customer, be it an individual or a corporate, and especially at times of volatile economic conditions and when exploring new business in emerging markets. Good quality know your customer processes will ensure that a business knows the source of wealth an individual brings to them, as well as the identity and background of the shareholders and key principals behind a corporate entity or joint venture. This provides two key benefits for the risk-aware financial business – first, comfort that the firm is not exposing itself to excessive risk of being used by criminals to launder the Proceeds of Crime; and second (and equally important), sufficiently detailed knowledge of the customer’s source of wealth and financial position to be able to sell products which are appropriate and which help the customer and the firm to make money.

KYC is an acronym for "Know your Customer", a term commonly used for Customer Identification Process.

1. The documents required to be submitted along with the KYC application form are:

Towards Name proof Photo Identification Towards address proof

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1. Passport where the address differs 1. Telephone Bill

2. Voter’s Identity Card 2. Bank account statement

3. PAN Card 3. Income/Wealth tax assessment order

4. Driving License 4. Credit Card Statement

5. Govt. /Defence ID card 5. Electricity Bill

6. ID cards of reputed employers 6. Ration Card 7. Letter from a recognized public authority or public servant verifying the identity and residence of the customer

7. Letter from employer

In addition to above

1) A recent passport size photograph is also required.2) Age proof3) Stability proof4) Third party declaration

STEP 2: CREDIT APPRAISAL MEMORANDUM

BUSINESS PERSPECTIVE:

A) Brief about company includes introduction, product range, brief of manufacturing process , organization structure details and small description of board of directors.

B) Background of promoters C) Detail about group companies includes no. of companies, nature of work

undertaken, valuation, funding source and reason for floating. major principals, opinion, targets and sub- contracting.

D) Current requirements include detail of assets, value and sites location.E) Company assets detailF) Company business model includes G) SWOT analysis includes summary of strength, weakness, opportunities and

threats of the company.H) Transaction analysis includes analysis of all financial statements, bank

statements, auditor’s details, company debt details.I) Industry analysis J) Project analysis

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K) Product analysis L) References check list

Income verification

Proof of Earnings: o Recent pay stub ( TWO MONTHS)

o Tax returns for the past two years

o Verified Last three months bank statement of those accounts in which salary gets credited.

Any additional income; for example:

o Social Security

o Overtime bonus

o Commission

o Passive income (interest income)

o Veteran's Benefits

Proof of Earnings (if self-employed):

o Profit and loss statements

o Tax returns for current year and previous two years

Asset Verification Address of one's Bank Branch

o Bank account numbers

o Checking and savings account statements for the previous 2-3 months

Savings bonds , stocks or investments and their approximate market values

Copies of titles to any motor vehicles that are paid in full

Debt informationINDIVIDUAL PERSPECTIVE

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Credit card bills for the past few billing periods Other consumer debt; for example:

o Car Loans

o Furniture Loans

o Student Loans

o Other personal and cosigned installment loans with creditor addresses and phone numbers

Evidence of mortgage and/or rental payments

Copies of alimony or child support

Disbursement request letter.

BUSINESS PERSPECTIVE

History of previous loan taken Previous loan repayment analysis

a) ETR (excellent track record) consider average delay 0 to 5 daysb) GTR(good track record) consider average delay of 5 to 15 daysc) PTR ( poor track record) consider average delay of above 15

Payment check details

STEP 3: DOCUMENTATION

CAM report is required Disbursement request letter Documents checklist in agreement includes :- Company PAN Card

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Company address proof Director’s ID and Address proof MOA(memorandum of association) AOA(article of association) Board of resolution In case of partnership firm partnership deed is required. All PDC to be kept in envelopes. First and last POST DATED CHEQUE photocopy to

be kept with pdc covering letter. Delievery order, performa invoice, invoice, insurance and margin money receipt

papers. Repayment schedule

Demand Promissory note.

A promissory note is a contract. When your company signs a promissory note, it promises to repay to the lender a certain amount of money, at a certain time, and according to certain terms and conditions. A promissory note may be unsecured or secured.If a promissory note is unsecured, the lender is looking only to your company's cash flow and profits for repayment of the loan.

If a loan is secured, the lender still looks to your company's cash flow and profit for repayment of the loan, but if the company does not pay, the lender looks to the security or "collateral" as a secondary source of repayment.

Security agreement. A security agreement gives the lender a "security interest" in specific personal property owned by your company. That means that your company pledges that property as "collateral" for the loan. If your company does not repay the loan as required, the lender can seize the "collateral," sell it, and apply the proceeds to your loan. The lender may take "all assets" of your business (everything your company owns) as collateral. Sometimes the lender requires only certain assets as collateral, such as inventory and accounts receivable or specific vehicles or equipment.

"Personal property" means all property owned by your company other than real estate.

Mortgage. A mortgage gives the lender a security interest in real property owned by your company. That means that your company pledges the real property as collateral for the loan. If your company does not repay the loan, the lender can foreclose on the real property, sell it, and apply the proceeds to your loan.

"Real property" means real estate owned by your company.

Loan or credit agreement If your company's loan is fairly large, the lender may require a loan or credit agreement. A loan agreement contains terms and conditions for your loan in addition to those contained in the promissory note, security agreement, or mortgage. Common provisions in a loan agreement include provisions regarding the lender's

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commitment to lend, repayment and note terms, things that must happen before the lender is obligated to advance funds, representations and warranties, agreements by the borrower to take or not take certain actions, and events of default.

A personal guarantee from the borrower. With or without collateral, you may still need to personally guarantee your business loan, especially for a startup. This means that you must promise to repay the loan if the business cannot. A personal guarantee is still binding, even if the business is a corporation, LLC, or other business entity that is separate from the owner

Guarantor’s agreement Means an agreement in writing signed by the guarantor under which the guarantor undertakes, upon the default of another person named in the agreement in paying a debt or a debt of a class of debts specified in the agreement

Specified debt        Where in the bond the guarantor undertakes

(a) to pay only a specified debt of the bondee; or

(b) to pay a sum of money upon default of the bondee in paying a specified debt;

nothing in this Act makes the guarantor liable for payment of any debt other than the debt so specified

STEP 4: EXECUTION OF LOANS

A) Disbursement Process- Signed Loan agreement by the customer with all required

Documents.

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Receipt of Disbursement request on the customer’s company letterhead along with Performa/ Original Invoice.

The Disbursement request is authorized by marketing. Documents sent to back office(account department) for

Authorizing the disbursement. The Back office checks whether it is as per sanction and all the

necessary documents are collected from client & then authorize the disbursement.

B) Tenure of loan repayment.C) Repayment schedule includes cheque no. date of payment of each

month, distribution of equal monthly installment into principle and interest amount.

D) Mode of payment includes postdated cheque , cash, and demand draft.

STEP 5: RECOVERY AND ACTION TAKEN FOR LOAN RECOVERY

A) In case of default of payments the first step is to send a legal notice to bring in their knowledge about the default payments made by them and asking the reason for the same. Analyzing the risk attached to the customer the further legal action is taken.

SEC 138 Dishonor of cheque for insufficiency, etc., of funds in the accounts

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honor the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for ["a term which may extend to two year"], or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless-(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.

(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, ["within thirty days"] of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and

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(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability].

SEC 9 OF ARBITRATION ACT

ARBITRATION Arbitration, a form of alternative dispute resolution (ADR), is a legal technique for the resolution of disputes outside the courts, wherein the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. It is a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides.

Other forms of ADR include mediation (a form of settlement negotiation facilitated by a neutral third party) and non-binding resolution by experts. Arbitration is most commonly used for the resolution of commercial disputes, particularly in the context of international commercial transactions. The use of arbitration is far more controversial in consumer and employment matters, where arbitration is not voluntary but is instead imposed on consumers or employees through fine-print contracts, denying individuals their right to access the courts.

Arbitration can be either voluntary or mandatory and can be either binding or non-binding. Non-binding arbitration is, on the surface, similar to mediation. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable.

STEP 6: CLOSURE OF ACCOUNTS

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Closure of accounts is the last step of the process of flow of funding this steps comes into the picture when the relationship between the customer and the financial organization touches the end of the running agreement i.e. when the customer has made all the repayments along with the other terms and condition. the further following step taken.

Statement of account-It contains name of the customer, product type product detail, tenure of the term loan, repayment schedule defines whether the payments had been made on time or not.

ODC(over due charges)-whenever the customer had not made the payment in time the company charged an extra amount known as overdue charges in financial industry the charges varies from 18-36%

Final noc along with all the required documents (cancellation of hypothecation letter(form 35) , security postdated cheque, original invoices, etc.)

Foreclosure of accounts

It means closure of accounts before its normal expiry. Normal the request comes from customers, who are interested to close the accounts prior to normal expiry. The reasons of such closure are the sufficient cash flow of the customers.

References:

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1. www.ltfinance.com

2. www.businessfinance.com

3. www.constructionequipmentfinancing.com

4. www.financialexpress.com

5. Business Today

6. Business Line

7. Naresh Malhotra, Research Methodology

8. C.R. Kothari, Research Methodology

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