A project report On

analysis of loan facility availed by polymers ltd. sah

Research project submitted towards partial fulfillment of M.B.A programme

PACIFIC INSTITUE OF MANAGEMENT (Approved by AICTE, affiliated to Rajasthan technical university,kota)

Guided by: submitted by

ACKNOWLEDGEMENT
As in the todays competitive world the managers come across many problems in their day to day managing work, to get an competitive advantage and to understand the competitive world in a better way, according to the Rajasthan technical university syllabus we the students of M.B.A programme have got an opportunity to undergo summer training in the desired specialization area. Myself as the student of pacific institute of management, I am very thankful to SAH POLYMERS LTD,UDAIPUR for [Type a quote from the allowing me to do my summer training in their document or the summary of an esteemed organization thankfully acknowledge my debtinteresting point. You can to MR. HAKIM.S.TIDIWALA,MANAGING DIRECTOR position the text box anywhere and MR. in the document. Use the Text LALIT BOLYA,our SUPERVISOR during training Box Tools fullto change the for his tab hearted cooperation and guidance in completion of my pull quote text formatting of the box.] summer training. I feel pleasure to show my gratitude to our director sir, DR. BHAGWATI PRAKASH SHARMA sir, and our mentor MR. KANTIMOHAN sir in cooperating us and enlightening our knowledge in making this project a success I express my deep appreciation and thanks to all the staff of SAH POLYMERS LTD., for the extraordinary warmth hospitality and cooperation extended to me.

At last I would like to thank all those who helped me directly or indirectly in making this summer training fruitful. THANKING YOU (AMMAR MOTI)

Indian Plastic Processing Industry

Looking forward to Good Times Polymer demand in India @ 14-15% p

The Indian plastics processing industry is highly fragmented and small and tiny players constitute majority of the units. Injection moulders dominate the Indian plastics processing sector. Polyethylene bag and sheet producers dominate the extrusion segment, highlights the Organisation of Plastics Processors of India. India ranks 8th in the world in total plastic consumption. However, Indian per capita consumption is 4kg, against the world average of around 20kg. The consumption of recycled plastic constitutes approx. 30% of total consumption. India is expected to be

the 3rd largest consumer of plastics after US and China by 2010 (expected polymer consumptions then - USA 38.9 MMT; China 31.3 MMT and India 12.5 MMT). Demand for plastic polymers in the next 5 years is expected to grow at CAGR of 15%. Polythene and Polypropylene will continue to dominate polymer demand in India. Demand of all polymers in India is expected to reach 12 million tonnes by 2011. Indian Petrochemical Industry is facing intense competition from the Middle East countries where price of feedstock ranges between one-fifth to one-tenth the prices prevailing in international markets. Market Moves Capacity Addition Reliance Industries Ltd. Indian Petrochemicals Corporation Ltd. Gas Authority of India Ltd. Haldia Petrochemicals Ltd. Chemplast Sanmar Ltd. DSCL New Projects Indian Oil Corporation Ltd. Gas Authority of India Ltd. Oil & Natural Gas Corporation/Mangalore Refinery and Petrochemicals Ltd Current Issues The key issues impacting the growth of the Indian Plastics Processing Industry are: High level of excise duty and VAT compared to similar products manufactured from other raw materials like aluminium, steel etc. Presence of a large grey market. Lack of an organised and proper solid waste management leading to

ban on usage of many plastic products. Lack of quality infrastructure like power, roads, ports e

Overview of

SAH POLYMERS LTD.

SAH POLYMERS LTD., can be introduced as the oldest pioneer manufacturers of woven sacks and fabrics in the lake city of rajasthan i.e. udaipur.it is in this field from more than last 15 years, during which its performance has been found to be excellent and innovative as per their customers because they have been updating their technical skills regularly resulting into a state of the art ultra modern processing unit of woven sacks and fabrics. They are engaged in production of goods as per the specifications of their customers with material of reliance industries ltd. Under the guidance of highly educated and

vast experience technical staff. Due to their prompt service and timely delivery they have been able to maintain very cordial business relations with their valued customers. Although they do not possess any international quality certification like ISO 9000 but they definitely maintain the norms and standards prevalent in the industry as per legal requirements. They are wholesale suppliers of HDPE/PP bags of both laminated and unlaminated varieties and also supply bags with HM/LDPE LINNERS stitched alongwith their bags to all segments of industry such as fertilizers,minerals,chemical,paper,cemnet,cattle feed, food products,metal,salt,textiles,furniture,pesticides.medical products etc. No doubt they are one of the leaders in production and supply of woven sacks and fabrics of vast varieties in Rajasthan. Their goods are demanded by industries in other states like Madhya Pradesh, Gujarat, haryana etc and also through third parties their products are exported.

Introduction to

SAH POLYMERS LTD

1. PREAMBLE : SAH POLYMERS LIMITED (SPL) a public limited company incorporated on 20.04.1992 in the state of Rajasthan is engaged in the manufacture of HDPE/PP woven fabrics and sacks. It is having its registered office and manufacturing facilities at E-260-261, Mewar Industrial

Area, Madri, Udaipur - 313 003. 2. BOARD OF DIRECTORS : The Board of Directors of the Company consists of the following persons:

(a) Mr. Hakim S. Tiddiwala (b) Mr. Abbas Ali Bandookwala (c) Mr. Ramesh Chandra Soni (d) Mr. Asad Daud
A.

Mr. Hakim S. Tidiwala aged 49years is a young, enthusiastic, energetic and dynamic industrialist. After completing graduation in commerce discipline he went to Kuwait in 1980 and remained there till Gulf war broke out and returned to India in 1990. He is Managing Director of this Company since 1998. Mr. Abbas Ali Bandookwala aged 49 years is young, enthusiastic, energetic and dynamic businessman. After post graduation, in 1982 he joined his parental business and was exposed to basics of the business. To further update knowledge and experience he went to Dubai and set up his own business of import and export plastic goods, electronics etc. He continued there till 1996 and therefter he returned to India and rejoined his parental business.

B.

Mr. Bandookwala has travelled throughout the world to explore new avenues of business such as products, export etc. and is an active social worker. 3. MANAGEMENT :

The day to day functions of the Company are looked after by Mr. Hakim S. Tidiwala, the Managing Director of the Company under the supervision, guidance and control of the Board of Directors of the Company. The Managing Director is assisted by a qualified team of personnel at all level of functions such as production, marketing etc. The staff of the organization is regularly imparted proper training and acquainted with the latest development in their respective fields. 4. PRODUCTS : HDPE/PP woven fabrics/sacks with lamination or without lamination with mash 9*9 to 14*14 with varying weight and sizes printed in three colors as per the requirements of the customers meant for packing of the cement, Fertilizers, textiles, Food Grains, chemicals, salt etc. For cement special bags with valve stitching for auto lock. 5. RAW MATERIALS :

The basic raw materials to manufacture HDPE/PP woven fabrics and sacks are HDPE, PP and master batches and pigments etc. These materials are easily available indigenously in abundance and there is no scarcity of the materials. In the last couple of years many new plants for the manufacture of HDPE/PP etc. have come into existence. In India these materials are manufactured by Reliance Industries Limited Gas Authority of India Limited Haldia Petrochemcials Limited Indian Petro Chemicals Limited The materials can however be imported and there are no restriction whatsoever on these. As per the present ImportExport Policy of India 2004-2009, these materials are not under negative list i.e. these can be imported freely. 6. MANUFACTURING PROCESS : To manufacture HDPE/PP woven fabrics/sacks, basic raw

materials are HDPE/PP granules. These materials premixed with master batches are fed into the hopper and with the help of the heaters, the material is melted. The melted material with the help of screw & barrel is forwarded further

and is taken out in the form of film. The film is slitted into desired width to form the final tape and these are stretched in oven. This enables the tape to get maximum strength and withstand extra pressure when the bag is filled. circular weaving loom where the The tape is winded on the winder. The winded tape is then loaded onto automatic fabric is woven. The fabric is cut to desired length with the help of heat cutting machines and the bottom is stitched to form the final bag. 7. MARKETING : HDPE/PP woven fabrics and sacks are mainly used for the packing of Cement, Fertilizers, Soapstone and Grains. The consumption of the HDPE/PP woven fabrics and sacks are increasing gradually and replacing the conventional means of packaging such as gunny bags, cloth etc. owing to lower cost, easy availability of the raw materials, transportation and strength. The Company directly sells goods to the end consumers. There is good demand of HDPE/PP woven fabrics and sacks in view of the presence of the big cement, fertilizers and chemical plants in the vicinity of Udaipur and the existing

plants are expanding their existing capacity. In view of this the Company does not see any problem in marketing the increased production.

8. EXPORT : The Company is not presently exporting its products directly but through third parties our products being exported.

9. LIST OF MAJOR CUSTOMERS Grasim Industries Limited Banswara syntax Limited Rajasthan Textile Mills. Mahalaxmi Agencies, Pali Monet Ispat and Power Limited, Raipur Craft steel Private Limited Aravali IFCI Limited Rajasthan Spinning and Weaving Mills Limited and its allied units.

Shree Cements Limited Andhra Cements Limited Birla Cement Shree Rajasthan Synthetics Limited Sangam Spinners Limited Nitin Spinners Limited Wolkem India Limited Hindustan Zinc Limited Rajaram & Sons, Mandsaur Udaipur Phosphates & Fertilizers Ltd. Harshvardhan Fertilizers and Chemicals Limited Western Drugs limited Wolkem India Limited Sulex Phosphate Limited

10.COMPETITORS : The major consumers of the HDPE/PP woven fabrics/sacks such as cement industries, fertilizers, soapstone etc. Are located near to our manufacturing facilities. There are five units of the same products in Udaipur but demand is such that have not yet felt any competition and do not expect in

future since more cement plants of higher capacities are under installation.

11.GOVERNMENT POLICIES: The Government policies with regard to HDPE/PP fabrics and sacks is very conducive. There is virtually no restrictions of the government.

12.PLANT AND MACHINERY : The Company has best of machinery available in India and adopts latest state of art technology for manufacturing of the woven fabrics and sacks. The details of machineries are as under : (a) Starlinger Limited (b) Tape line 75 mm Kolsite Tape line 90 mm Lohia

(c) (d) (e) machine

Loom HDN 6 Shuttle

- 5 Nos

(Lohia Starlinger Limited) Loom LSLM 6 shuttle - 32 Nos. ( On line four colour printing Lohia Starlinger Limited )

(f) Three colour printing machine - 1 No. (g) 3 Nos. (h) 1 No. (i) stitching and bailing machines (j) DG set 320 KVA (k) (l) UPS DG Set 180 KVA Single colour printing machine Double colour printing machine -

What is loan?

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same amount. The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial funding. institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of

Types of loan

Secured See also: Loan guarantee A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan. A subsidized loan is a loan that will not gain interest before you begin to pay it. It is known to be used at multiple colleges. A unsubsidized loan is a loan that gains interest the day of disbursement. A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security a lien on the title to the house until the mortgage is paid off in full. If the borrower defaults on the loan, the bank

would have the legal right to repossess the house and sell it, to recover sums owing to it. In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer. A type of loan especially used in limited

partnership agreements is the recourse note. A stock hedge loan is a special type of securities lending whereby the stock of a borrower is hedged by the lender against loss, using options or other hedging strategies to reduce lender risk. A pre-settlement loan is a non-recourse debt, this is when a monetary loan is given based on the merit and awardable amount in a lawsuit case. Only certain types of lawsuit cases are eligible for a pre-settlement loan. This is considered a secured non-recourse debt due to the fact that if the case

reaches a verdict in favor of the defendant the loan is forgiven.

Unsecured Unsecured loans are monetary loans that are not secured against the borrower's assets. These may be available from financial institutions under many different guises or marketing packages:

credit card debt personal loans bank overdrafts credit facilities or lines of credit corporate bonds (may be secured or unsecured)

The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.

Demand Demand loans are short term loans that are atypical in that they do not have fixed dates for repayment and carry a floating interest rate which varies according to the prime rate. They can be "called" for repayment by the lending institution at any time. Demand loans may be unsecured or secured.

Target markets Personal or commercial Loans can also be subcategorized according to whether the debtor is an individual person (consumer) or a business. Common personal loans include mortgage loans, car loans, home equity lines of credit, credit cards, installment loans and payday loans. The credit score of the borrower is a major component in and underwriting and interest rates (APR) of these loans. The monthly payments of personal loans can be decreased by selecting longer payment terms, but overall interest paid increases as well. For car loans in the U.S., the average term was about 60 months in 2009.[2]

Loans to businesses are similar to the above, but also include commercial rating. mortgages and corporate bonds. Underwriting is not based upon credit score but rather credit

Loan payment The most typical loan payment type is the fully amortizing payment in which each monthly rate has the same value overtime. The fixed monthly payment P for a loan of L for n months and a monthly interest rate c is:

Terms of Secured loan provided by UCO bank

UCO TRADER

It is a loan for financing working capital and Term Loan needs of Retail and Wholesale trading activities other than Export. Retail and Wholesale trade in various types of commodities (not services) excluding those items which are specifically prohibited/restricted by the Bank, are financed through this scheme. Fund based Advance is granted by way of Cash Credit against stock as well as Book debt and Term Loan for acquisition of fixed assets to run the trade and business. Eligibility

Existing enterprises engaged in business for at least 2 years and earning profit during the last 2 years. New trading unit started by existing UCO Trader borrowers or their close relatives/ allied/associate/connected concern under certain terms New trading units as well as units which have not completed two years can be financed maximum upto Rs.10 lac under certain terms Quantum of loan Minimum Rs. 1 Lac and Maximum Rs 200 Lac Within fund based limit of Rs. 200 lac, term loan up to Rs. 25 lac can also be sanctioned for acquisition of fixed assets. Repayment period of Term Loan not to exceed 60 months. Besides the above quantum of fund based limit, NFB limit by way of Inland LC/Bank Guarantee if needed, may be issued maximum up to 50% of FB working capital limit. Salient features Margin

No margin is required for Cash Credit in case of existing units & 20/25% for new units while computing drawing power Margin for Term Loan, LC & BG is 25% Application is simple; Balance Sheet is not required for limit up to Rs 10 lac and not compulsory for limit below Rs 50 lac subject to certain conditions.

Security

Primary-Hypothecation of stocks and book debt.

Collateral-100% for Cash Credit (against stocks only ) and Term Loan, 125% for Cash Credit(against stocks and debtors.

Processing Charges- 0.50% of fund based limit, 0.25% of Non-Fund based limit.

RESEARCH DESIGN
Research design: A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy inh procedure The study was conducted on the basis of list of respondents who were targeted for questions. Their preferences were collected and were able to cover almost all aspects of capital structure of the company. Types of data: The task of data collection begins after a research problem has been defined and research design has been chalked

out. While deciding about the methods of data collection to be used for study, the researcher should keep in mind the two types of data viz. primary and secondary. The researcher should decide the sort of data he/she would be using for the study.

Primary data: Primary data are those which are collected a fresh and for the first time and thus happen to be original.

Secondary data: Secondary data are those which have already been collected by someone else and which have been already been passed through the statistical process.

Sources of data:

Sources of data are the various sources from where the data is collected to be analyzed which are; 1)interviews 2)books 3)internet 4)past records 5)projects prepared earlier

Sources of darta for this project: Primary data- throufh questionnaire and internet Secondary data- through internet and company recot Research design:a research design is simply the framework or paln for a study that is used as guideline collecting and analysing the data.it is the blue print that is followed in completing a study.

TYPES OF RESEARCH:1) EXPLORATORY RESEARCH 2) DESCRIPTIVE RESEARCH

RESEARCH METHODOLOGY
Sample size Sampling unit 30 Company employees

Research design

descriptive

Data collection method

Primary secondary

and

Research instrument Type of questions

questionnaire Close ended

QUESTIONNAIRE
Name:Age:Gender:-

q.1)at what level of company do you work? a.) top level b.)middle level c.)lower level

q.2)which type of loan facility is better for a company? a)secured b)unsecured

q.3)the reason why company resorted to bank loan only? a.)easy documentation b.)better EMI c.)low interest rate d.)lower down payment

q.4)is it advisable for company to take loan on all assets of the company? a.)yes b.)no c)may be

q.5)how would you rate the procedural formalities of public sector banks? a.)easy b.)lengthy c.)complicated

q.6)are the yearly profits earned by the company adequate to repay its principal and interest amount in time? a.)yes b.)no

q.7)are the investments made by the company adequate for repayment of loans taken by the company? a.) yes b.)no

q.8)how would you rate the loan recovery procedure of the bank? a.)highly flexible b.)reasonable flexible c.)low flexible d.)rigid

q.9)should the company introduce preference capital and debentures in its capital structure in future for raising long term fund instead of taking loan from bank.? a.)yes b.)no

q.10)debt collection policy of the company is significant enough to raise money from debtors in time for repayment of loan principal and interest amount? a.)yes b.)no

60 50 40 30 20 10 0 top level m iddlelevel 16 30

54

Colum 1 n

lower level

above graph we can see that: 16% employees work at top level 30% employees work at middle level 54% employees work at lower level

100 90 80 70 60 50 40 30 20 10 0

89

C olum 1 n

11

secured

un secured

In the above graph we can see that: 89% preffered secured loan for a company 11% preffered unsecured loan for a company

14%

10% eas y d m tation ocu en b etter E MI lower interes t ra te lower down p aym ent

31%

45%

In the above graph we can see that: The reason why company resorted to bank loan only according to employees was: 45% said better EMI 31%said lower interest rate 14% said lower down payment 10% said easy documentation

17%

2 0%

yes no m be ay

63%

In the above graph we can see that: 63% employees told that it is not advisable for company to take loan on all assets of the company While 20% said yes And 17% said may be

50 45 40 35 30 25 20 15 10 5 0 eas y 20

46

33

C olum 1 n

leng thy

com plicated

In the above graph we can see that: 46% employees said that procedural formalities in public sector banks are lengthy. 33% employees said that procedural formalities in public sector banks are complicated 20% employees said that procedural formalities in public sector banks are easy

70 60 50 40 30 20 10 0

70

30

3-D C olum 1 n

yes

no

in the above graph we can see that: 70% employees think that the yearly profits earned by the company are adequate for repayment of principal and interest amount in time. 30% employees think that the yearly profits earned by the company are not adequate for repayment of principal and interest amount in time.

53 52 51 50 C olum 1 n 49 48 47 46 yes no 48 52

In the above graph we can see that: 52% employees think that investments made by the company are adequate for repayment of loans taken by it. 48% employees think that investments made by the company are not adequate for repayment of loans taken by it.

4 5 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 0
hi gh re as on ab le

41

2 8 1 8 1 3 Colum 1 n

In the above graph we can see that: 41% employees said that loan recovery procedure of bank is low flexible. 28% employees said that loan recovery procedure of bank is reasonable flexible 18% employees said that loan recovery procedure of bank is rigid 13% employees said that loan recovery procedure of bank is highly flexible.

rig id

lo w

60 50

5 6

43 40 30 20 10 0

3-DColum 1 n

yes

no

in the above graph we can see that: 46% employees suggest that company must introduce preference shares and debentures in its capital structure 33% employees suggest that company must not introduce preference shares and debentures in its capital structure in future to raise long term finance

6 0 5 0 4 0

56

33 3 0 2 0 1 0 0 10 3 Colum 1 -D n

y es

no

m be ay

In the above graph we can see that: 56% employees said that the debt collection policy of company is significant to raise money from debtors in time for repayment of principal and interest amount of loan While 33% said no And 10% said may be.

Findings and conclusions

1.

More employees work at lower and middle level than at top level it means trained and skilled managerial personnel is less.

2. More employees are of an opinion that secured loans are better for a company than unsecured loans. 3. More employees stated that better EMI and lower down payment are chief reasons for company to resort to bank loan only. 4. More than half of the respondents are of the opinion that company must not take loan on all of its assets.it is very risky and may cause severe consequences in future in case of losses. 5. More employees are of an opinion that procedural formalities for loans in public sector banks are lengthy and complicated.that is the reason that for working capital loans the company resorted to private banks.
6.

A large part of respondents agree that the yearly profits earned by the company are adequate for repayment of principal and interest amount of loan in time.this is because the company has no accumulated losses and cash losses in the previous years.

7. More than half of the respondents are of agree that the investments made by the company are adequate to assist in repayment of loan amount.
8.

More employees rated loan recovery procedure of bank as low flexible while some rated it as reasonable flexible.this means the company is not on safe side as far as loan repayment is not made timely.

9. Near about half of the respondents suggested that the company must introduce preference and debenture capital in its capital structure for raising finance in future, as it is more secure than taking loan from a bank. 10. More employees are of an opinion that the debt collection policy of the company is significant enough to raise money from debtors to ensure timely payment of loan dues.

Suggestions and recommendations

1. The company must introduce more of skilled managerial personnel in its organization structure for better management of finance and other areas.
2.

The company must not take more loans on its assets in future,as it has already taken loan on all assets of the company which is not secure.

3. The company must ensure better retaining of yearly profits to assist in timely reapayment of loans. 4. In future before taking loan the company must carefully assess the loan recovery procedure of bank,which must be reasonabaly flexible enough . 5. The company can introduce preference and debenture capital in its capital structure to raise long term finance in future,as it would be a better option than bank loan. 6. The company can make more investments and strengthen its debt collection policy in order to ensure timely payment of its loan dues. 7. The company can resort to private banks for future loan requirements as the documentation process is less complicated and loan recovery procedure is more flexible in private banks than public sector banks

Bibliography
Websites reffered:www.wikipedia.org www.ucobank.com www.google.com