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June 2019
1
Shriram City—News Letter - Breeze – 1st AUGUST 2021
AUGUST 2021
MONEY WHEN YOU NEED IT MOST
Nothing is impossible unless nothing is impossible unless you think it is. - paramahansa yogananda
29 August National Sports Day
National Sports Day
is celebrated
on 29 August every year to honour the birthday of
Dhyan Chand a field hockey player.
National Sports Day is also known as
Rashtriya Khel Divas.
June 2019
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
AUGUST 2021
MONEY WHEN YOU NEED IT MOST
Introduction: Micro Small and Medium Enterprises (MSME) sector is one of
the catalysts of growth for the country’s economy and occupies a key
position in country’s industrial growth and success. It contributes about 8%
of India’s GDP, 45% of manufacturing output, 40% of our country’s export
apart from catering large job market. MSME are rightly called “Growth
engine of Indian economy” and present a significant business opportunity
for NBFCs like us, banks, and other financial institutions. India has
approximately 6.3 crore MSMEs. . Registered micro-enterprises stood at 28
lakh (93%), followed by small enterprises at 1.78 lakh (6%) and midsized
enterprises at 24,657 (1%) as on 28-Jul-2021.
Classification of MSME by RBI in nutshell
RBI, vide its circular dated 02nd
July 2020 reclassified an enterprise as a
Micro, Small or Medium enterprise on the basis of the following criteria,
namely:
(i) A micro enterprise, where the investment in plant and machinery or
equipment does not exceed one crore rupees and turnover does not
exceed five crore rupees;
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
(ii) A small enterprise, where the investment in plant and machinery or
equipment does not exceed ten crore rupees and turnover does not
exceed fifty crore rupees; and
(iii) A medium enterprise, where the investment in plant and machinery or
equipment does not exceed fifty crore rupees and turnover does not
exceed two hundred and fifty crore rupees.
Our Position:
We are one of the India's leading NBFCs, incorporated in 1986, a part of
Shriram Group, is providing specialized services in retail & Micro Small &
Medium Enterprise (MSME) lending. Since this is thrust area for our
company, it is suggested that we keep in mind the following points in
pursuing our goal of healthy asset growth in MSME segment. This is
particularly so when we consider that MSME are engaged in wide range of
activities , with low capital base in most of the cases , varied experiences
of the promoters, different holding pattern , technology development etc.
Business people need finance, largely, for the following reasons
1. To increase their stock of raw material or to meet its price fluctuation
2. To meet Overheads
3. To Buy new equipments to add in the production cycle
4. To expand the existing business or add a new line of existing business.
Points to remember while processing SME loans Sourcing
applications
a) Direct or Through DSA / Agent
If it is “Direct”, verify whether the applicant has got any earlier business
connections with SCUF in the form of availing TW / Gold Loan / PL / FW loan
etc. to understand our business experience with the applicant like adhering
repayment schedule, no. of cheque bouncing, settled / closure and
foreclosure status of loan a/c.
b) If it is through DSA / Agent, verify his / her earlier references & such
loan’s repayments.
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
“Selection of Borrower” is to follow “direct visit” to applicant’s business place
& to have discussion with the applicant on the following aspects:
1
A. Is there any scope to us to lend – satisfying ourselves that applicant
really needs finance to run the business. This largely depends on difference
between volume of purchase and sales figures in rupee terms or difference
between payments and realization in terms of aging in trading period.
B. Age and experience – The applicant should not be more than 50 years
of age and he should have a reasonable years of experience
C. Business knowledge – if the business is already in existence under the
supervision of the applicant or if, by virtue of experience gained else-
where, starts own entity and in such cases, judge applicant’s business skills
and satisfy ourselves about ability & knowledge on understanding the nu-
ances of the trade.
D. Satisfy ourselves about the business model: This relates to our
understanding on his business methods right from sourcing of raw materials
till selling & realization of money.
E. Business monitoring capacity: Satisfying ourselves that the applicant has
direct or complete control over business operations including monitoring
right from stock, Cash, manpower, maintaining books of account, if any,.
The applicant should not entirely depend on others, even to explain his
business or trading methods & expected to have in depth knowledge on
business and adaptability to sail through the changing market scenario.
F. Infrastructure availability: Satisfying ourselves about the ownership of
business place (own or rental or leased), sufficient area to operate, proximity
to market, avenues to market the product/ service, adequate power if the
unit is power dependent, adequate availability of skilled / unskilled man
power, if the business / trade is manpower dependent, transit facilities ..etc.
G. Profit margin: Satisfying & understanding ourselves on applicant’s
reasonable net business earnings after absorbing all business and personal
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
expenses. There may be instances where the volume of purchases and sales
would have been huge but the profit margin would have been very
meagre and the applicant has to put in lot of efforts to secure & sustain that
business link which would be risky from our angle. Satisfying ourselves that
business profits gained over a period of time is re-used or ploughed back
into the business in the form of any asset creation or stock or used for
business expansion.
H. Seasonality of the business: If applicant’s business model is seasonal or
very rare or scarce in requirement, we need to risk and zero-in off-season
demand & supply of the product / service while granting loan.
I. Understanding of applicant’s monthly transactions in Credit & Cash
purchases with that of Cash sales & Credit sales which facilitates us to judge
the need & the quantum of loan requirement. The only difference between
cash and credit transactions is the timing of the payment. A cash
transaction is a transaction where payment is settled immediately. On the
other hand, payment for a credit transaction is settled at a later date.
To elaborate on this, understand the Credit period (No. of days or aging)
availed / allowed by the applicant to make and receive payments
between:
1.Cash Purchase and Cash Sales (CP to CS)
2.Cash Purchase and Credit sales (CP to Cr.S)
3.Credit Purchase and Cash Sales (Cr.P to CS)
4.Credit Purchase and Credit Sales (Cr.P to Cr.S)
2
In the first scenario, CP to CS, usually, need for finance may not be there
unless applicant wanted to do more number / volume of transactions /
business to earn more.
In the 2nd
scenario, applicant will have to shell out initially to secure / source
the raw material or finished product and allow credit period (in days) to the
customers to get back payment. In this case, applicant will be in need of
working capital to tide over the difference in days between these two
periods and this will be one of the tools to determine applicant’s working
capital need.
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
In the 3rd scenario, applicant gets credit period, (for ex. 15 days / 30 days/
45 days / 60 days) to repay to suppliers whereas able to realize cash within
the credit period. In this case, applicant will be cash rich and may not
require funds.
In the 4th case, the difference in credit period between purchase and sales
is to be understood. Say for ex. If Applicant enjoys 7 days credit in
purchases and gives 15 days credit period to buyers, we need to fund for 7
days “purchase” to applicant. If it is vice-versa, it is to be treated as that of
3rd category of applicant.
J. Availability of financial statements
The main purpose of studying financial statement is to ascertain the
FINANCIAL HEALTH of the applicant’s concern / firm / company. It allows
various interested parties involved in the business like management, poten-
tial investors, lenders, government and other analysts to make an evalua-
tion of the various aspects of applicant’s performance from their point of
view and to show interest towards business development. Maintaining prop-
er books and accounts indicates disciplined way of trading and envisages
business forecast, expansion and change in the line of business activity &
strategy, working pattern, for capital infusion etc. Profit and Loss a/c and
Balance sheet play an important role in any form of business.
P&L and B/S show whether the business is profitably run continuously for a
period of not less than 3 years and also applicant’s “Net Worth” (tangible
and intangible) etc. These two statements largely depict the overall
business trend of the applicant as at the closing date (31st March) of that
particular year. Applying various ratios on Turnover, Profit, Capital, sales and
purchases figures will throw away more lights on the performance of the
business
K. Bank account operations: It is another important tool to judge the level
of accounted business transactions. Normally most of MSME businesses are
reluctant to route their entire transactions through banks and they will be
comfortable to deal in cash. Though most of the Loan applications referred
to us normally fall under this category, we can rely on bank transactions to
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
know about applicant’s other liabilities like EMIs to housing, other financiers,
number of cheque bounces etc. to determine applicant’s monthly fixed
commitments and integrity. If applicant maintains current a/c, CC or OD a/
c and declares that all transactions are routed only through bank,
applicant’s 6 month’s average Credit balance may be compared to vali-
date 6 month’s “Sales” figure.
L. Cash flow statement
A cash flow statement is a financial statement that provides aggregate
data regarding all cash inflows into business from its ongoing operations
and also from external sources and also includes all cash outflows that pay
for business & investment activities during a given period. A cash flow
statement is one of the vital financial statements to measure business
strength,
profitability and to prepare a long term business strategy. Cash Flow
Statement, if prepared meticulously and precisely, is more reliable or
dependable than any other financial statements as it displays cash position
of the business. By virtue of increasing NPA figures, even banks, nowadays,
started giving prominence to preparing and analyzing Cash flow
statements of its borrowers to curtail “performing” asset becoming
“Non-performing”. In the absence of financial statements like Trading, P&L
and Balance Sheet, preparation of Cash flow statement is the best way to
determine the loan component. A simple method to prepare a cash flow
statement is:
1. Arrive monthly business income including income from other sources
like agricultural income, rental or lease income, Royalty, advance
received from suppliers etc.
2. Arrive at monthly business expenses including family expenses and
payment to other EMIs
3. The difference between the two, if it is surplus (income > Expenses), we
can, to some extent, conclude that applicant has surplus income to meet
any additional EMI payment and if it is deficit (Income < Expenses), it is to
be concluded that applicant will struggle to meet EMI commitments in
the near future.
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
AUGUST 2021
MONEY WHEN YOU NEED IT MOST
4. Applicant’s stock holding pattern is to be assessed and on an average
2 / 3 months stock value can be fixed as loan component provided,
applicant’s cash flow surplus satisfies or more than our EMI.
5. Debt-to-Income (DTI) – DTI is the measurement of a borrower’s monthly
debt service as a percentage of monthly income. A borrower with a DTI of
36% or less is considered to be of prime credit quality.
6. Debt to service (DTS) - DTS is the measurement of a borrower’s yearly
debt service as a percentage of savings. A borrower with a DTS of 20% or
less is considered to be of prime credit quality.
M. Competition
Understand the level of competition prevalent in the line of business in that
area and also decide on whether the applicant is fit enough to compete in
the trade and be able to face the challenge.
N. Income from other sources
Understand applicant’s other activities other than business and is able to
generate any revenue to the business which will be a needy cushion to
manage the business cycle in a better way provided it should not result in
huge cash flow at a future date. Ex. Agricultural income, Rental income,
co-borrower’s salary income etc.,
O. Succession Plans
Irrespective of the age of the applicant, we need to satisfy ourselves about
the business continuity plan of the applicant, what is the arrangements to
carry on the business in his/ her absence, whether other family members are
also in & know the business etc.,
P. Risks involved:
1. Credit risk: Non Payment of principle and interest as per agreed terms
and diverting the loan amount to other non-business purposes lead to credit
risk.
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
2. Operational risk: In adequate system and procedures to arrest the slip-
pages, indiscipline, and mismanagement of funds or accounts are termed
as “Operational risks”.
To mitigate all the risks, it is advisable to insist on adequate insurance cover
apart from collateral security and third party guarantee.
Q. General
1. KYC
2. Market Survey
3. Fixing Geographical limit to deal with
4. How big is your market area
5. Other NBFCs in your location
6. Verification with suppliers
7. Growth Potential
8. Local market feed back
9. Compliance of Statutory / Legal compliances like Pollution control
board approval / FSSAI clearance etc.
10. CIBIL – score card > 500
11. 3 years Income tax returns
12. GST returns
13. Delinquency history – A borrower with a delinquency history of 30
days or less is considered to be of prime credit quality.
14. CAM report- Standardized with built in check points
15. McKenzie report recommendation
16. Field Inspection report by competent person. Due diligence on the
borrower /guarantor /firm is an important process. Market report on the
borrower is critical
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
17. SWOT Analysis (Success / Weakness / Opportunities / Threats) of
business
18. Security
a. Legal opinion
b. Engineer’s valuation report
c. Knowing the Topography of security
d. Make own assessment of realistic market value of se
curity to decide on LTV – not to depend entirely on
valuation report
R. Applicants who are in Negative list:
1. Politicians and people have relative as Politicians
2. Collection agents / Verification agents and their employees
3. Securities service
4. Class IV Govt. employees like Peon, Sweepers, Helpers and ward
boy
5. Lawyers / Policemen including RPF / CRPF and BSF
6. Journalists & Employees from Media Industry
7. Owners and employees of Chit Funds / Nidhi companies
8. Private Financiers
9. Film Industry Professionals
10. Small time cable operators
11. Multilevel marketing agents
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
12. DSA owners and his employees
13. Travel Agents NOT approved by IATA
14. Manufacturers / Dealers of Liquor
S. Complete note on assessment
T. Recommendation of loan with complete set of documents with proper
prior approval for any deviation from competent authority
U. Compliance of sanction terms
V. Make a periodical post sanction visit to business place/ talking to the
borrower to take stock of business & recovery prospects.
W. Assessing and Informing recovery strains, if noticed, to higher-ups for
close monitoring of follow-up measures.
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
कुछ नशा तिरंगे की आन का है ! \\
कुछ नशा मातृभूमम की शान का है !!
हम लहराएंगे हर जगह ये तिरंगा !
नशा ये महंदुस्तान की शान है !!
जय हिंद जय भारत
INDEPENDENCE DAY PICTURES FROM
UTTARPRADESH ZONAL OFFICE.
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
TOKYO OLYMPICS 2020
The much awaited Tokyo Olympics 2020 was successfully conducted in Tokyo, Japan between 23rd July and 8th August amidst lot of uncertainties on account of COVID 19. The magnificent international sporting event was to have been conducted last year itself but had to be postponed to the current year.
Highlights
Number of nations participated ----205
Number of events ---339 in 33 sports
Top performer in terms of achievement ---------- USA
Medal Position – Top 5 performing countries
Where does India stand in TOKYO Olympics 2020 We are extremely happy to record the impressive performance of our Indian team who were able to secure 7 medals including 1 gold which is an improvement over London Olympics 2012 where we could secure 6 medals. India ranked 48 in the order of medal position. Detailed below are the achievements of the individuals/team
Rank Country Gold Silver Bonze Total
1 USA 39 41 33 113
2 China 38 32 18 88
3 Japan 27 14 17 58
4 GB 22 21 22 65
5 ROC 20 28 23 71
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
No Name Medal Sport/Event Remarks
1 Sri Neeraj Chopra Gold Javeline throw He is just 23 and is the first to win a medal in athletics since the country started participating in 1920 Olympics in Antwerp. Great achievement indeed. He is in the rolls of Indian army.
2 Ms Mirabhai Chanu
Silver Weight lifting
She participated in women 49 category and secured the coveted position. She has won medals in commonwealth games as well. She is a Padma Shri awardee.
3 Sri RaviKumar Dahiya
Silver Wrestling He participated in Men 57kg category free style and won the laurel amidst stiff competition. Hard work and determination are hall marks of success
4 Ms PV Sindhu Bonze Badminton She could secure the medal with confidence and aggression having lost the semi-final. She is a final example of hard work and dedication. She has secured 2 medals (2016& 2020) so far which is a record. She is Padma Bhushan awardee. Great going
5 Men’s hockey team
Bronze Hockey It is remarkable that the Indian team could fight back and earn their medal after 41years. Hockey used to be Indian favourite game but lost somewhere. It is the sheer practice, enhancing the standard to higher level, team work etc helped us gain the glory today . Let us keep it up
7 Sri Bajrang punia
Bronze Wrestling Men’s 65kgs free style. Again tough competition and challenge yet .He could raise the bar on the d day. He has also secured medals in other world games previously. Consistency is the hall mark of successful sports persons.
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
In the final analysis, it is seen that India could improve the medal tally but what is important to remember the preparations and practice made by each sports person particularly in the uncertain COVID times. It is a great achievement and some of them are from humble backgrounds. We should also recognize the efforts made by other sports persons who have lost by a whisker, as winning or losing is part of the game. They have put in their best efforts, reached various stages yet lost out to somebody who might have put in superior performance on the day of reckoning. We congratulate the losers as well. It is to be recognized that winners would have received tremendous support from the family , friends, society, government, coach, mentor etc over a period of time but ultimately the strategy, execution , concentration , not giving room to negative emotions, complete fitness ,reading the mind of the competitor and adjusting to the every move holds the key. It is not easy but winners have exhibited such qualities. Well Done the Winners. We join the countrymen in congratulating the winners with all sincerity.
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Shriram City—News Letter - Breeze – 1st AUGUST 2021
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MONEY WHEN YOU NEED IT MOST
Communication Address:
Editorial Committee, (News Letter—Breeze)
Shriram City Union Finance
144, Santhome High Road, Chennai—600 004
Phone: 044 43925300
Email: [email protected]
Editorial Committee
Shri K.Subramaniam CO, Mylapore
Smt M.Subhashree BSC, Santhome
Shri N.R. Sivakumar SFPS,Santhome
Don’t wait for time
MAKE IT…
Don’t wait for money
EARN IT…
Don’t wait for the path
FIND IT…
Don’t wait for opportunity
CREATE IT…
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