A project report

On

“analysis of loan facility

availed by sah

polymers ltd.”

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 today’s 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 allowing me to do my summer training in their esteemed organization thankfully acknowledge my debt to MR. HAKIM.S.TIDIWALA,MANAGING DIRECTOR and MR. LALIT BOLYA,our SUPERVISOR during training for his full hearted cooperation and guidance in completion of my 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.

[Type a quote from the document or the summary of an interesting point. You can position the text box anywhere in the document. Use the Text Box Tools tab to change the formatting of the pull quote text box.]

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.

B. 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.

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 Import-

Export 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.

The tape is winded on the winder. The winded tape is then

loaded onto automatic circular weaving loom where the

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) Tape line 90 mm – Lohia

Starlinger Limited

(b) Tape line 75 mm – Kolsite

(c) Loom HDN 6 Shuttle - 5 Nos

(Lohia Starlinger Limited)

(d) Loom LSLM 6 shuttle - 32 Nos. (

Lohia Starlinger Limited )

(e) On line four colour printing

machine

(f) Three colour printing machine - 1 No.

(g) Double colour printing machine -

3 Nos.

(h) Single colour printing machine –

1 No.

(i) stitching and bailing machines

(j) DG set – 320 KVA

(k) DG Set – 180 KVA

(l) UPS

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.

What is loan…?

Acting as a provider of loans is one of the principal tasks

for financial institutions. For other institutions, issuing

of debt contracts such as bonds is a typical source of

funding.

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

Types of loan

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 mortgages and corporate bonds.

Underwriting is not based upon credit score but rather credit

rating.

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: 

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

Terms of Secured loan provided by UCO bank

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 30

Sampling unit Company

employees

Research design descriptive

Data collection method Primary and

secondary

Research instrument questionnaire

Type of questions 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

above graph we can see that:

16% employees work at top level

30% employees work at middle level

54% employees work at lower level

In the above graph we can see that:

89% preffered secured loan for a company

11% preffered unsecured loan for a company

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

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

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

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.

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.

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.

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

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