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Transcript of Final_interim - Rohan
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Index
Topics Page No.
1. Abstract 22. Introduction 4
2.1 Purpose 52.2 Description Of The Project 52.3 Objective2.4 Methodology2.5 Literature Survey
666
3. Overview Of Indian Steel Industry 74. Profile of Tata Steel 11
4.1 Brief Profile 124.2 Tata Steel: Bearings Division 13
5. Credit Monitoring Assessment 145.1 Theoretical Study 15
5.1.1 Credit Monitoring Assessment 156. Schedule 16
7. Limitations of the Study 18
8. References 20
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1.
Abstract
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Abstract
The project titled Credit Monitoring Assessment is about understanding what Credit
Monitoring Assessment is all about. Why do companies do it & how they do it? Categories and
types of credits and the overall process of credit. Thus it can also be said that Credit Monitoring
Assessment is a process to ascertain the risks associated with the extension of the credit facility.
The project deals with understanding the process of making a credit appraisal note which is used
for credit analysis. It is the method by which one calculates the creditworthiness of a business or
organization. The audited financial statements such as profit and loss accounts, balance sheet,
auditors report, annual reports etc are analyzed which helps in making credit monitoring
arrangement (CMA) which comprises of five forms which contains different aspects like
operating statement, particulars of existing credit, complete analysis of various items of last
years balance sheet, current years estimates and following years projections. On the basis of
details of current assets and current liabilities the calculation of the maximum limit of credit is
done. CMA is a part of the credit appraisal note. Different types of ratios such as current ratio,
liquidity ratio, Debt-Service Coverage Ratio (DSCR), performance ratios etc are calculated andconsidered and are very important for taking important funding decisions.
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2. Introduction
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2.1 Purpose
The project is on Credit Monitoring Assessment at Tata Steel for the Bearings Division. The
project deals with analyzing the credit worthiness of the clients and a detailed credit monitoring
analysis will be done for the same. A detailed credit appraisal note will help the company for
future assessments for the current financial year and a forecasting would be done for the next
financial year.
2.2 Description of the project
(1) To Understand the current corporate clients & working of
Tata Steel Company
Existing client details can be collected through the Tata Steel Company database which
will help to know them. Once that is known a detailed understanding of the products
supplied to them, the market share, the supply year-wise can be easily known which will
help in making the credit appraisal note.
(2) Collecting Data of Corporate Clients & Tata Steel
Data is collected mostly from the Tata Steel Database and the internet which helps to
know the clients that are targeted and particular aspects such as turnover/revenue,
quantity of different products supplied, profits generated & Demand of the Company.
(3) Preparing Credit Monitoring assessment(CMA)
After gathering information about the clients through various means such as annual report,
data available through other public domain a credit monitoring assessment will be done.
Following are some of the terms/concepts that would be implemented/ learnt:
Profit and Loss Account analysis
Balance Sheet Analysis
Various CMA Forms
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Assessments of Limits
Assumptions of Profitability
Projected Financials(Includes Various Financial Ratios)
(4) SWOT Analysis:
Analysis of Tata Steel Clients would be done-strengths, weaknesses, opportunities and
threats.
2.3 Objective of the project
Understanding the working of Tata Steel (Bearings Division).
Carrying out financial analysis
Understanding how to do credit analysis and applying the same.
2.4 Methodology
The research problem solutions are done firstly by finding relevant data from secondary researchfor data and the methodology carried is financial data analysis and credit risk analysis fromwhich assessment can be done and necessary financial ratios can be extracted which will help the
company to know the credit worthiness
SOURCE OF DATA COLLECTION:The secondary data from the following modes:
Annual reports
Data through internet sources
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2.5 Literature Survey
A large number of research is done from secondary sources such as internet. Various books are
referred to understand the working of corporate organizations, necessary methods of
understanding audited financial data, how to carry out credit monitoring arrangement etc.
Details of all the referred data is mentioned in references.
3. Overview of
Indian SteelIndustry
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The establishment of Tata Iron & Steel Company (TISCO) in 1907 was the starting point of
modern Indian steel industry. Afterwards a few more steel companies were established namely
Mysore Iron & Steel Company, (later renamed Vivesvaraya Iron & Steel Ltd.) in 1923; Steel
Corporation of Bengal (later renamed Martin Burn Ltd and Indian Iron & Steel Ltd) in 1923. All
these companies were in the private sector.
At the time of independence, India had a small Iron & Steel industry with production of about a
million tonnes (mt). In due course, the government was mainly focusing on developing basic
steel industry, where crude steel constituted a major part of the total steel production. Many
public sector units were established and thus public sector had a dominant share in steel
production till early 1990s.
Liberalisation of Indian Steel Industry:
The important policy measures, which have been taken for the growth anddevelopment of the Indian iron and steel sector are as under:
In the new industrial policy announced in July, 1991, iron and steel industry amongothers, was removed from the list of industries reserved for the public sector and alsoexempted from the provisions of compulsory licensing under the Industries(Development and Regulation) Act, 1951.
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therefore has likelihood of recording growth in the days to come and may very well spruce upglobal steel demand in a world reliant on China to show the way.
World crude steel production for the 62 countries reporting to the International
Iron and Steel Institute stands at 763.0 million tonnes for the first nine months of 2004 (i.e. Janto Sept). This is 8.7% higher than the corresponding period of 2003. The world production ofcrude steel in 2003 was 965 million metric tonnes, which was almost 7% higher than that of theprevious year. China continued to remain the largest consumer (262.48 million metric tonnes) aswell as the largest producer (220.1 million metric tonnes) of crude steel. India was the 8th largestproducer of crude steel in 2003 with a production of 31.8 million metric tonnes.
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4. Profile
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4.1 Brief Profile of Tata Steel
Tata Steel, formerly known as TISCO and Tata Iron and Steel Company Limited, is the world's
seventh largest steel company, with an annual crude steel capacity of 31 million tonnes. It is the
largest private sector steel company in India in terms of domestic production. Currently ranked
410th on Fortune Global 500, it is based in Jamshedpur, Jharkhand, India. It is part of Tata
Group of companies. Tata Steel is also India's second-largest and second-most profitable
company in private sector with consolidated revenues of 132,110 crore (US$29.33 billion) and
net profit of over 12,350 crore (US$2.74 billion) during the year ended March 31, 2008. Tata
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steel is the 8th most valuable brand according to an annual survey conducted by Brand Finance
and The Economic Times in 2010.
The Tata Steel Group has always believed that mutual benefit of countries, corporations and
communities is the most effective route to growth. Tata Steel has not limited its operations and
businesses within India but has built an imposing presence around the globe as well. With the
acquisition of Corus (now Tata Steel Europe) in 2007 leading to commencement of Tata Steel's
European operations, the Company today is the tenth largest steel producer in the world with an
employee strength of above 81,000 across five continents. During the financial year 2009-10, the
Group recorded deliveries of 24 million tonnes against 28 million tonnes in the previous year, the
decline being a reflection of the global economic slowdown mainly in the UK and European
operations. The Company has always had significant impact on the economic development in
India and now seeks to strengthen its position of pre-eminence in international domain by
continuing to lead by example of responsibility and trust.
4.2 Tata Steel: Bearings Division
Over the years, a highly performance-driven approach has helped Tata Bearings achieve an
influential and crucial position in its target industry segment. Tata Bearings Division of Tata
Steel Limited is one of India's largest quality bearing manufacturers, with a production capacity
of 30 million bearing numbers. It is the only bearings manufacturer in India to win the TPM
Award (2004) from Japan Institute of Plant Maintenance, Tokyo.
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The company is foremost in the manufacturing of a wide variety of bearings and auto assemblies
and the product range includes:
Ball Bearings
Tapered Roller Bearings
Magneto Bearings
Double Row Angular Contact Bearings
Clutch Release Assemblies
Fan Support Assemblies
Cylindrical Roller Bearings (under development)
Tata Bearings was one of the first to start the concepts of ship to line and JIT delivery and it is
presently extending such facilities to customers in different segments.
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5. Credit Monitoring
Assessment
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5.1 Theoretical Study
A detailed study /knowledge of various aspects was required before actually starting the project
which have helped in understanding and executing each and every step in the project, thus a few
of the things that were learnt in the introductory stage are mentioned below
5.1.1 Credit Monitoring Assessment
The Credit Monitoring Assessment is carried out on customers by banks, other companies credit
rating agencies and credit reference agencies. The purpose of the analysis is same in each case to
judge the liquidity of the company. This involves a study of business, its markets and market
position, its management and its financial situation.
Source: Glenlake/Fitroy, Credit Risk Management, The Fitzrov Dearborn publications
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Business
Environme
nt
Nature Of
Customer
s Business
Cash Flow Profits Assets
and
Existing
Business
Strength
Liquidity
&
financial
Financial
security
Ability to repay
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6. Schedule
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Schedule
March 4th , 2011
Submission of Initial information Report
March 10th, 2011
Submission of Project Proposal
April 8th, 2011
Submission of Interim Report
May 6th, 2011
Submission of Project Report
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7. Limitations Of TheStudy
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LIMITATIONS
The research is confined to State of Karnataka only.
Limited data resources because of company confidentiality.
Data collected through Company Profile may be inadequate.
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8. References
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www.tatasteel.com
Tata Steel Database
Annual reports
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