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GE CAPITAL: A LEGEND
Often the best measure of an enterprise's growth or decline lies in
its ability to adapt to change. The history of GE Capital spans many shifts
in the nation's social, economic and political environment.
Founded in the depths of the epression in !"## as a captive
finance company to help consumers purchase GE appliances, GE Capital of
today bears little resemblance to its forerunners, GE Contracts and GE
Credit. $owever, then as now, the company is committed to see%ing
creative ways to meet its customers' needs.
&hen George F. osher, founder and president of GE Contracts
Corporation, proposed setting up a financing company to provide customer
credit, it was in response to economic and social conditions. Credit was
rarely used, and hard to obtain for the average consumer. osher's
innovative idea served as the catalyst for the company's future growth
and performance.
uring &orld &ar (( when GE switched from consumer to defense
production, the focus of the Contracts Corporation changed, and the
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company was replaced by GE Credit Corporation, an investment company
authori)ed to lend money and deal in commercial paper.
The postwar era was a period of unprecedented e*pansion. &ith a rise in
the standard of living, a population e*plosion, and e*traordinary
development of new products, optimism became the prevailing national
mood, bringing a change in social attitudes. The stigma of +being in debt+
disappeared, the demand for consumer credit s%yroc%eted, and by !""
GE Capital had grown in si)e to - sales offices with !// million in
annual sales. The nation saw dramatic changes in its social, political and
economic structures in the !"0/'s. 1ensing the shift in attitudes, GE
Capital shed its traditional financing role and began to diversify into
consumer, commercial and industrial mar%ets. The company en2oyed
remar%able growth3 the %ey to its success being not only in its
commitment to service and 4uality products, but to its highly fle*ible,
productive and dedicated wor%force.
5ttracted to 1tamford because of its favorable business environment,
GE Capital moved its administrative office and several hundred employees
from anhattan to a new building on 6ong 7idge 7oad in !"8/. 5nd, in
!"9:, with over !,!// employees wor%ing in 1tamford, the company
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completed a second building ne*t door. Throughout the !"9/'s GE Capital
e*perienced accelerated diversification and growth, e*panding its scope
to include -/ separate businesses. (n !"98 the company changed name
from GE Credit to GE Capital, reflecting its new position as a ma2or
provider of a variety of financial products to 5merican business.From its
modest beginnings in !"## financing consumer credit for GE products
with : million in customer receivables and a pre;war pea% of #-
employees, to the
present, with over 00 billion in receivables and nearly "/,/// employees,
the company's performance has been spectacular. (n creating money for
business, GE Capital's investments affect many segments of society.
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card is li%ely to be issued by GE Capital, or that their mortgage insurance
is underwritten by the firm. any airplanes they fly in are owned by GE
Capital and leased to the airlines3 GE Capital also owns and leases oil
tan%ers, locomotives, truc%s and personal and fleet automobiles.
GE Capital continues to fulfill its leadership role in providing financial
fle*ibility to business.
GE Capital 1ervices is a global diversified financial services company with
-9 distinct businesses. &ith assets of =1 #// billion, GE Capital
1ervices had net earning of =1 #.9 billion and achieved a -#.> return
on e4uity in !""9. (ts businesses are in the areas of E4uipment
anagement, Consumer 1ervices, id;ar%et Financing, 1peciali)ed
Financing and 1pecialty (nsurance and include global operations in Europe,
5sia and 6atin 5merica.
GE Capital 1ervices (ndia was established in October !""# as a wholly
owned subsidiary of GE Capital 1ervices. (t is one of the largest
capitali)ed financial services companies with a combined and estimated
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asset base of 7s. #,// crore ?7s.# bn@ and a credit rating of 555 ?1O@
by C7(1(6 and uff A
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networ% of over #,// dealers across (ndia. Countrywide has tie;ups with
-/ leading manufacturers in the country and finances a range of white
goods, brown goods, office
e4uipments, two wheelers automobiles, used cards, furniture, 2ewellery
and travel loans. Countrywide also offers a range of institutional products
to meet the needs of a cross;section of corporate clients. Countrywide
was the first company in (ndia to offer an (nterest;free 0;month!-;
month (nstalment 6oan
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(ndia.
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).C"%%!#ial Finan#
Commercial Finance offers a range of financial services, which
include Corporate Finance, (nfrastructure Finance, 5c4uisition Finance,
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In&st%nt Supp"!tfor e4uity investment and 5c4uisition Finance
through loans against e4uity;lin%ed debt instruments such as Convertible
onds, 7edeemable
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the diverse needs of its international and domestic customers. (t
provides bac% office processing services to GE companies in 5merica,
Europe and 5sia
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GE has been in (ndia since !"/-, when it installed (ndiaDs first hydro
power plant in ysore. (n !"#/, (GE ?(nternational General Electric@ was
set up for sales of GE products and services by GE businesses not
represented in (ndia.
Today, ma2ority of GE's businesses world;wide have a presence in (ndia ;;
aircraft engines, broadcasting, capital services, industrial systems,
lighting, medical systems, plastics, power
systems and transportation systems ;; either through a 2oint venture, a
wholly;owned subsidiary, a strategic alliance or a business development
and customer support presence.
Today, over !/,/// people are part of the GE (ndia family who are
integral participants in GEDs global system.
GE Elfun, a community service organisation of :/,/// GE employees and
retirees in more than "/ communities worldwide, has launched chapters in
elhi and angalore.
(n three years' time, GE will celebrate a century of its presence in (ndia,
during which time, it has become a significant participant in a wide range
of %ey services, technology and manufacturing industries.
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GE Capital, with assets of more than =1 #8/ billion, is a global,
diversified financial services company grouped into si* %ey operating
segments comprised of -: businesses. 5 wholly owned subsidiary of
General Electric Company, GE Capital, based in 1tamford, Connecticut,
provides a variety of consumer services, such as credit cards and life and
auto insurance3 mid;mar%et financing3 speciali)ed financing3 specialty
insurance3 e4uipment management, and speciali)ed services, to businesses
and individuals in :8 countries around the world. GE is a diversified
services, technology and manufacturing company with operations
worldwide. GE Capital's services consist ofB
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C"nsu%! S!&i#s
GE Capital Card 1ervices is a leading provider of private;label
credit card servicing and inventory financing.
GE Capital Global Consumer Finance ?GCF@ delivers credit and
insurance products and services to retailers, auto dealers and
consumers in ## countries worldwide.
GE Financial 5ssurance provides financial security solutions that
help consumers create and preserve personal wealth, protect
assets, and enhance their lifestyles.
E-UIPMENT MANAGEMENT SERVICES
odular 1pace sells, rents, leases and finances customi)ed mobile
and modular building solutions for construction, commercial, health
care, education, industry and government mar%ets.
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T(< ?Transport (nternational
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GE Capital (T 1olutions is an industry leader in the design,
creation, and management of (T infrastructure for business.
Mi,,l Ma!t Finan#in$
GE Capital Commercial E4uipment Financing provides e4uipment
financing and asset management solutions to growing companies.
GE Capital endor Financial 1ervices delivers financial solutions and
services to e4uipment manufacturers, distributors, dealers and
their end users.
GE European E4uipment Finance ?EEF@ is a leading provider of
e4uipment finance in Europe.
Sp#iali/, Finan#in$
GE Commercial Finance provides innovative financing solutions
primarily for non;investment grade companies.
GE E4uity is the private e4uity arm of GE, and offers innovative
deal structures, which includes the use of preferred stoc%,
convertible debt, subordinated debt, and common stoc%.
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GE Capital 1tructured Finance Group is a provider of innovative
financial products for clients in the global energy,
telecommunications, transportation and diversified industrial
sectors.
GE Capital 7eal Estate finances and invests in a broad range of
commercial and multi;family residential properties.
Sp#ialt+ Insu!an#
E7C provides ris% transfer to insurance companies, Fortune !///
companies, self;insurers, healthcare providers, e;usinesses,
associations and other groups.
GE Capital ortgage (nsurance allows consumers to obtain low;
down;payment mortgages;while protecting lenders and investors
against the ris%s of default.
Financial Guaranty (nsurance Company ?FG(C@, a GE Capital
Company, provides financial guarantees for debt securities to state
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and local governments, school districts, special districts and other
public entities.
In*"!%ati"n S!&i#s is a global leader in business;to;business
electronic commerce solutions and manages the world's largest electronic
trading community of more than !//,/// trading partners. (ts global
networ% solutions include E( and messaging services, (nternet and
intranet services and a full suite of applications that help streamline
supply chain management processes. GE(1 combines the power of
electronic commerce with business process consulting, systems
integration, community management and customer support.
Li$0tin$ is a leading supplier of lighting products for global
consumer, commercial and industrial mar%ets.
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M,i#al S+st%s is a world leader in medical diagnostic imaging
technology, services and health care productivity.
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$oover's and -:8 edia. 1everal of C's (nternet assets have merged
with 1nap.com, a growing (nternet portal, and IOO.com, (nc, to form
the seventh;largest (nternet site and the first publicly traded (nternet
company integrated with a ma2or broadcaster. The new company, to be
called C (nternet ?Ci@, will use 1nap.com as its umbrella consumer
brand, integrating
broadcast, portal, and e;commerce services.
Plasti#s is a world leader in versatile, high;performance engineered
plastics used in the computer, electronics, data storage, office
e4uipment, automotive, building and construction, and other industries. GE
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compressors and related e4uipment. GE
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OBECTIVE
GE Capital is a world leader in all aspects. e it products or services ,it
has grown into a giant after collecting e*perience from all these years.
GE has been in e*istence for more than a !// years. 5nd even so the
most surprising and the most admirable thing about the company is that it
has maintained its position as number one. This is a great thing which one
and all companies in the world should learn. ( personally had %nown this
for a few years now and since ( the time had heard that , ( desired to
wor% for and with the company. This desire dragged me to GE Capital and
( was encouraged by this desire to wor% in a 2ob that is closely related to
a very broad sub2ect called Finance. The main ob2ective in my pro2ect was
that ( find out how the entire system called F5CTO7(Gwor%s. This is
e*plained in a detailed fashion in the depth of the pro2ect report.
5nother main ob2ective was to observe the wor%ing of the department
store giant H C
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0at is *a#t"!in$2
Factoring is a financial term which is defined as a contract between the
supplier of goods or services and the factor under which ,
a@ The supplier and his customer i,e the debtor other than those for
the sale of goods bought primarily for their personal use , family or
household.
b@ The Factor is to perform at least two of the following functions
i@ Finance for the supplier including loans and advances
ii@ aintenance of accounts
iii@ Collections of accounts
iv@
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-@ Credit collection and protection against default and bad debt
losses.
#@ Financial accommodation against the assigned boo% debt
5lthough factoring provides short term financial accommodation to the
client , it differs from other types of short term credit in the following
manner B;
!@ Factoring involves sale of the boo% debts thus the client obtains
advanced cash against the e*pected debt collection and does not
incur a debt
-@ Factoring provides fle*ibility to the client. $e can obtain cash
either immediately on the due date or from time to time as and
when he needs cash. 1uch fle*ibility are not available from formal
source of credit.
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#@ Factoring is a uni4ue mechanism that not only provides credit to
the client but also underta%es the total management of client's
boo% debts.
Factoring facility can be classified in four categoriesB ;
!@ Full services non;recourse factoring.
-@ Full service recourse factoring.
#@ ul% or agency factoring.
:@ on;notification factoring.
!@ Full service non;recourse factoring. B
=nder this method, boo% debts are purchased by the factor
assuming !//> credit ris%. The full amounts of invoices have to be paid to
the client in the event of debt becoming bad. $e also advances cash upto
9/;"/ > of the boo% debts immediately to the client. Customers are
re4uired to ma%e payment directly to the factor.
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-@ ul% or agency factoring :
(n this method of factoring , the client is not protected
against the ris% of bad debts .
$e has no indemnity against unsettled or uncollected debts. (f the factor
has advance funds against boo% debts on which a customer subse4uently
defaults the client will have to refund the money. ost countries practice
recourse factoring since it is not easy to obtain credit information and
the cost of bad debt protection is very high.
#@ Full service recourse factoring B
This type of factoring is basically used as a method of
financing boo% debts. under it the client continues to administer credit
and operate sales ledger .the factor finances the group debts against
bul% either on recourse or with out recourse. This sort of factoring
became popular with development of mini computers mar%ets where
mar%eting and credit management was not a problem but the firms
needed temporary financial accommodation.
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:@ on;notification factoring B
(n this type of factoring , customers, customers are not
informed about the factoring agreements it involves the factor %eeping
the accounts , ledger in the name of a sales company to which the client
sells his boo% debts.it is with this company that the factor deals with the
cients customers .
5t GE Capital, they are into the factoring loop with a department store
ma2or in the =1 called the HC
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customers had ta%en. ow this was e*pensive. 1o they thought of a very
thoughtful idea. They thought about factoring. 5nd then came GE Capital
into the picture. 1o what GE Capital does is that it has set up a call
center in Gurgaon in (ndia. This on one hand is providing employment to a
lot of people and on the other hand they had the best services being
offered to the people of the =nited 1tates. They act on behalf of the HC
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T$E 6E57(G B
5t GE Capital, ( got to learn a lot about a lot of things. The
company is very strict at following its core principles li%e alues,
(ntegrity etc. we had an induction programme where a whole day was
dedicated for each of the principles. &e were informed about all the
values we had to possess, all the integrity we should have and also all the
integrity we should follow. ( also learnt how to behave in an organisation.
(t is a totally different world compared to the usual college life. ( had
ta%en some time to adapt myself to such an atmosphere. ( had a very
good time there and all the people there were 4uite supportive. They
believe in helping others in all possible ways. They call it boundrylessness.
(t means thay one employee should not refrain from helping others. They
should help the felof employees or collegues as much as possible.
This was all about the moral things that ( had learnt there. 5s far
as my learning to the respect of my specialisation is concerned ,( learnt a
lot about factoring and also how does a credit card system in a
departmental store in the =1 run, which still a new concept in (ndia.
5ll that is e*plained in detail inside the pro2ect report.
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ut overall , it was the greatest e*perience in my life to wor% for the
number ! company in the world. 5nd ( than% god for that and also pray
for further such good opportunities.
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CONTENTS
!@ 5c%nowledgement
-@ Ob2ective
#@ 5bout GE as a parent company
:@ 5bout GE Capital 1ervices 6imited?GEC(1@
@ 5bout Factoring
0@ The wor%ing of the company
8@ 6earning from the e*perience
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