Statement of the Chairman & Managing Director Sri. Kaushik...
Transcript of Statement of the Chairman & Managing Director Sri. Kaushik...
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Statement of the Chairman & Managing Director
Sri. Kaushik Mukherjee, I.A.S.,
at the 51st Annual General Meeting
held on 27th July 2010.
Dear shareholders,
It is my pleasure to welcome you all to the 51st Annual General Meeting of
your Corporation. At the outset, I am happy to inform you that our
Corporation has consolidated its financial position and registered an
operating profit of Rs. 9.80 crore during the year ended March 2010.
The Directors’ Report and the audited statements of accounts for the 51st
year ended 31st March 2010 have already been placed with you. I presume
you have had an opportunity to go through the report and hence I will take
the report as read.
However, I would like to take this opportunity to share with you some of
the salient aspects of the report.
ECONOMIC SCENARIO:
During the course of the year 2009-10, Indian economy exhibited clear
momentum in growth. As per the Central Statistical Organisation’s figure,
the GDP growth is estimated at 7.2 per cent with the industrial and service
sectors growing at 8.2 per cent and 8.7 per cent respectively. In the
agricultural sector, the impact of delayed and sub-normal monsoon
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reflected on the production and acreage data for kharif crops. Thus, the
production of foodgrains in the year 2009-10, is estimated at 218.19 million
tonnes which is lower as against 234.47 million tonnes in 2008-09. The
area coverage under total foodgrains during kharif 2009-2010 is 667.84
lakh hectare compared to 714.02 lakh hectare during kharif 2008-09, a
decline of 46.18 lakh hectare.
The cyclical slowdown in the industrial sector and the impact of the global
slow down during the year 2008 was partially arrested during the financial
year 2009-2010. The industrial growth for the entire fiscal, as measured
by Index of Industrial Production (IIP) stood at 10.4 per cent as against
2.8 per cent in 2008-09. Manufacturing sector, the main driver of industrial
growth was placed at 10.9 per cent as compared to 2.8 per cent in 2008-
09. Mining output and power generation also grew by 9.7 per cent and 6
per cent as against 2.6 per cent and 2.8 per cent respectively in the
previous fiscal.
In Karnataka, the growth in Gross State Domestic Product (GSDP), is
estimated at 5.5 per cent as compared to 4.5 per cent growth during
2008-09. The growth in GSDP of primary, secondary and tertiary
sectors is anticipated to be 0.1 per cent, 7.5 per cent and 6.2 per cent
respectively. The per capita income for the year 2009-10 is estimated
at Rs.32,411 as against Rs.31,041 for 2008-09 indicating growth of
4.4 per cent.
Against this background, KSFC has responded positively to the
requirements of the industrial and service sectors in Karnataka.
Corporation’s efforts during 2009-10 were directed towards customer
service, strengthening of recovery machinery, new business
development and close monitoring of NPA cases.
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FINANCIAL RESULTS :
During the year under review, the Corporation generated a gross revenue
of Rs. 209.00 crore on accrual basis as against Rs. 224.85 crore in
2008-09. Working of the Corporation for the year resulted in an operating
profit of Rs. 9.80 crore as against Rs. 8.25 crore in 2008-09. The net profit
for the year stands at Rs. 2.96 crore as compared to net loss of Rs. 39.84
crore for the year 2008-09.
MAJOR GOVERNMENT INITIATIVES IN KSFC :
Ø As part of restructuring programme, the State Government
approved the tripartite MoU of KSFC with SIDBI for a further period
of 5 years.
Ø The Government of Karnataka continued its One Time Settlement
scheme introduced during the year 2007-08 to help small borrowers
of KSFC to come out of the debt trap.
Ø Infused additional equity of Rs.110.00 crore by pass through
investments for improving the networth of the Corporation.
Ø Extended the interest subsidy scheme of GoK for first generation
SC Entrepreneurs to first generation ST entrepreneurs. Under
this scheme the net rate of interest after interest subsidy works to
4% p.a.
GOLDEN JUBILEE CELEBRATIONS BY THE
CORPORATION :
During the year 2009-10, the Corporation celebrated its Golden Jubilee on
12th of January 2010 at T.Chowdaiah Memorial Hall, Vyalikaval, Bangalore
for having completed 50 years of service in the cause of industrialisation in
Karnataka. Hon’ble Chief Minister of Karnataka Sri.B.S.Yeddyurappa was
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the chief guest at the function which was presided over by other dignatories
- Hon’ble Chairman of Karnataka Legislative Council, Hon’ble Minister for
Large and Medium Industries, Hon’ble Minister for Small Scale Industries
& Sericulture, Deputy Managing Director SIDBI, Chief Secretary of GoK,
Principal Secretary to Govt. & Chairman KSFC, Senior Officials of GoK,
distinguished past Chairmen and Managing Directors, Officers & employees
of KSFC.
On this occasion, of Commemorating 50 years of Corporation’s
contribution to the economy in specific and Nation / State at large, a
compendium of i l lustrat ive success stories of KSFC t i t led
“The Trailblazers”, was released by the Hon’ble Chief Minister of
Karnataka. The Corporation also identified a list of 30 noteworthy
clients, both past and present, in different sectors viz., Information
Technology, Biotechnology, Automobile, Engineering, Health care,
Hospitality, Construction, Food Processing, Textiles, Printing &
Publishing and other sectors and awarded them with medals and
meritorious certificates for their outstanding achievements in their
specialised fields. This list included today’s giants such as Infosys,
Biocon, Ace Designers and other distinguished clients. The awards
were presented by the Hon’ble Chief Minister of Karnataka.
SANCTIONS :
Sanctions of loans during the year 2009-10, under various schemes touched
Rs. 631.49 crore covering 1,461 cases as against Rs. 565.24 crore covering
1,420 cases during 2008-09. Cumulative sanctions reached Rs. 9,733.26
crore covering 1,62,106 cases as on 31-03-2010.
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FLOW OF ASSISTANCE :
a. Assistance to small-scale enterprises : During the year, the
Corporation sanctioned an amount of Rs. 287.67 crore to 892
small-scale enterprises. Cumulative assistance to small-scale
enterprises at the end of March 2010 stood at Rs. 5,009.59 crore
to 1,05,410 units.
b. Assistance to medium-scale enterprises : During the year, the
Corporation extended financial assistance to 10 medium-scale
enterprises amounting to Rs. 22.56 crore. The cumulative
assistance to medium-scale enterprises at the end of March 2010
stood at Rs. 883.94 crore to 1,662 units.
c. Assistance to transport : During the year, the Corporation
extended financial assistance to 69 cases amounting to Rs. 6.05
crore. The cumulative assistance to this sector stood at Rs. 738.59
crore to 40,431 cases.
d. Assistance to other sectors : During the year, assistance to other
sectors excluding SMEs and transport amounted to Rs. 315.21
crore to 490 cases. Cumulative assistance to other sectors stood
at Rs. 2,393.58 crore to 11,629 cases.
HEAD OFFICE & BRANCH OFFICE SANCTION :
During the year, loan sanctioned by head office amounted to Rs. 164.11
crore to 58 cases compared to previous years sanction of Rs.197.35 crore
to 65 cases. Loan sanctioned by branch offices amounted to Rs. 467.38
crore to 1,403 cases compared to Rs. 367.89 crore to 1,355 cases in the
previous year.
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INVESTMENT, VALUE OF OUTPUT AND
EMPLOYMENT :
The investment catalysed by the Corporation in 2009-10 is expected to be
Rs. 3,826.34 crore resulting in value of output to Rs. 3,011.49 crore and
generated employment to 9,722 persons.
DISBURSEMENT :
Disbursements made during the year touched Rs. 434.39 crore as against
Rs. 383.92 crore during the year 2008-09. Cumulative disbursements
reached Rs. 7,647.84 crore as on 31.03.2010.
RECOVERY :
The total recovery during the year stood at Rs. 554.94 crore as compared
to Rs. 501.22 crore made in the previous year. Recovery, in respect of
term loans, was Rs. 544.01 crore, leasing Rs. 0.21 crore and Rs. 10.72
crore in respect of financial services.
TREASURY ACTIVITY :
The process of recapitalisation of the Corporation through pass through
equity by the Government of Karnataka continued during the financial year
2009-10. The State Government routed a sum of Rs.110.00 crore of its
investment through the Corporation for investment in Krishna Bhagya Jala
Nigam Ltd. (Rs. 50.00 crore) and Cauvery Neeravari Nigam Ltd. (Rs. 60.00
crore). Apart from this, the Govt. of Karnataka released Rs. 8.34 crore as
equity support, towards settling of NPAs of small and tiny borrowers under
the Special OTS Scheme of Govt. of Karnataka and SIDBI converted the
loan in lieu of capital amounting to Rs. 9.17 crore into equity during the
year. As a result, the equity base of the Corporation got enhanced by
Rs. 127.52 crore and stood at Rs. 652.40 crore (including share application
money) by 31.3.2010 compared to Rs. 524.88 crore as on 31.3.2009.
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During the year, the Corporation availed a refinance of Rs. 200.00 crore
from SIDBI, and repaid Rs. 179.68 crore. The LoC outstanding of SIDBI,
which was at Rs. 891.56 crore as on 31.03.2009 increased to Rs. 911.87
crore by 31.03.2010. The interest cost on account of LoC reduced from
Rs. 79.26 crore for the year 2008-09 to Rs. 74.48 crore for the year
2009-10. The Corporation availed a rebate of Rs. 1.13 crore from SIDBI for
prompt payment of principal and interest installments.
The Corporation redeemed bonds worth Rs. 42.74 crore during the year
and raised Rs. 77.00 crore through issue of private placement bonds at a
coupon rate of 8.23 per cent, thereby the outstanding of the bonds increased
to Rs.646.97 crore as on 31.03.2010 from Rs. 612.71 crore as on
31.03.2009. The interest cost on bonds reduced from Rs. 66.29 crore for
the year 2008-09 to Rs. 51.68 crore for the year 2009-10.
The government guaranteed liability stood at Rs. 577.21 crore (including
the subsidy bonds of Rs. 49.42 crore ) by the year end. The Corporation
remitted a sum of Rs. 4.51 crore to the State treasury as guarantee
commission.
The total long-term liability of the Corporation, which was at Rs. 1,619.45
crore at the beginning of the year increased to Rs. 1,665.87 crore (including
the subsidy bonds issued on behalf of the GoK) by the year-end. The total
interest and financial expenses reduced from Rs. 163.84 crore for the
year 2008-09 to Rs. 137.06 crore for the year 2009-10.
OTHER FINANCIAL SERVICE ACTIVITIES:
Strategic alliances entered into with different organisations – UTI, HDFC,
LIC AMCs, LIC of India, IFFCO-TOKIO and IL & FS directed towards fee-
based activities to augment income generation have yielded results. Under
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the mutual funds activity, the Corporation mobilised an impressive business
of Rs. 976.45 crore during the year and earned an income of Rs. 15.70
lakhs. The Corporation has a strategic tie-up with IFFCO-TOKIO and LIC
of India for marketing general and life insurance products respectively and
mobilised a premium collection of Rs.35.29 lakhs and earned Rs.1.98
lakhs during the year under review. Similarly, the Corporation made
progress in its general insurance business and collected a premium of
Rs, 2.36 crore and earned an income of Rs.39.42 lakhs. Under monitoring
of IPOs, the Corporation earned a revenue of Rs. 8.75 lakhs. The
Corporation has also entered into MoU with Syndicate Bank and Vijaya
Bank to assist the banks in their resolution of cases under SARFAESI
Act and earned a revenue of Rs.1.55 lakhs. Steps are initiated on the
same lines by the Corporation to enter into MoU with HUDCO during the
year 2010-11.
INFRASTRUCTURE DEVELOPMENT ACTIVITY :
KSFC has ventured into diversification in infrastructure development activity
under the public / private participation model.
The Corporation is interacting / negotiating with various Government
Departments / Governmental Agencies / Registered Societies / Trusts,
etc., and exploring suitable infrastructure development projects on joint
venture basis. In respect of such joint venture projects, the Corporation
would take care of all the financial tie-ups for development of these
properties. The expected income out of different revenue models, will be
shared with the owners of the properties in appropriate ratio on mutually
agreeable terms, after studying economics / viability. The joint venture
proposals are in various stages of processing.
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Further, Corporation has been allotted 10 acres land in Harohalli industrial
area by the State Level Single Window Clearance Committee. It is proposed
to develop IT / BT / SME parks on this land. The concerned industrial area
are in various stages of acquisition / development by KIADB. The possession
of this plot is likely to be given by KIADB during 2010-11.
Karnataka Enterprise Solutions Ltd (KESOL), an SPV of KSFC with IL&FS
has been empanelled as “Transactional Advisor” for Infrastructure projects
of GoK. KESOL has received assignments from Government of Karnataka
for preparation of Pre-Feasibility studies for infrastructure projects. With
these developments, Corporation is hopeful of taking many more
assignments in infrastructure sector for Government of Karnataka.
NEW SCHEMES INTRODUCED DURING THE YEAR:
Line of Credit (LoC) for purchase of raw materials from
KSSIDC :
A new scheme in the form of Line of Credit to Micro, Small and Medium
Scale Industrial Enterprises was introduced during the year under review
to extend financial assistance towards purchase of raw materials from
KSSIDC. The objective of the scheme is to provide timely and adequate
working capital assistance in the form of Working Capital Term Loan
(WCTL) to MSMEs for purchase of raw materials from KSSIDC. The
minimum LoC amount is Rs. 5.00 lakhs and the maximum LoC amount is
Rs. 100.00 lakhs.
Scheme for financing of Energy Saving Projects (SESP) for
MSMEs under JICA line of credit of SIDBI :
During the year, a Line of Credit scheme was introduced for Energy Saving
Projects in the MSME sector in order to facilitate the flow of funds for the
investment in energy saving project. KSFC operated the scheme during
the year under review to promote energy saving MSMEs by providing
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financial assistance to them thereby contributing to environmental
improvement and economic development.
Scheme for financing of wine manufacturing industries :
Considering the market potential for financing wine manufacturing units, a
new scheme for financing wine manufacturing industries was introduced
during the year under review. The overall objective of the scheme is to
promote wine manufacturing units in MSME sector in the State of
Karnataka by providing financial assistance to them thereby helping the
farmers to get better market / price for their products.
Interest Subsidy Scheme for Scheduled Tribe Entrepreneurs:
During the year under review, the Interest Subsidy Scheme facility was
also extended to Scheduled Tribe entrepreneurs on the lines of the existing
scheme for Scheduled Caste entrepreneurs.
FUTURE OUTLOOK :
During the year, the Corporation has been successful in reducing its net
NPA to 3.45 per cent from 9.71 per cent in 2008-09. The task ahead is to
further reduce the NPA in the year 2010-11. Competitive lending rate, pro-
active policies and customer service shall be the key factors in the
operations of the Corporation. The efforts of the Corporation to make
interest rate market driven is expected to give fillip to your Corporation in
attracting more and more SMEs into its fold, strengthen its business
portfolio and improve its market share.
The Corporation has streamlined its operation, put in place several policies
to bring transparency in working systems through which the Corporation
is poised to cater to SMEs with new zeal.
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The Corporation is focussing on improved operational efficiency with
customer centric approach. The Corporation is also bringing out several
improvements / changes in Corporate Governance.
KSFC, completing yet another milestone, endeavours to upgrade its
services to customers by utilising its online with web portal services.
TARGETS FOR 2010-2011:
The Corporation for the year 2010-11, has set the following operational
targets:
Sanctions : Rs. 950.00 crore.
Disbursements : Rs. 715.00 crore.
Recovery : Rs. 565.00 crore.
Concerted efforts will be made to achieve the targets and to improve the
working results of the Corporation.
ACKNOWLEDGEMENTS :
I take this opportunity to place on record my special thanks and gratitude
to the Government of Karnataka for all the support extended for the
settlement of small loans and equity support.
I thank the Finance Department of Gok and Industries & Commerce, GoK
for their continued support and guidance. Likewise, I express my thanks
to the Govt. of India and the Reserve Bank of India for their guidance.
I am specially thankful to Small Industries Development Bank of India for
the timely refinance support and constant help and guidance in every
phase of the working of the Corporation.
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I would like to place on record my grateful thanks to Canara Bank, Syndicate
Bank, LIC of India, UTI-MF, IFFCO- Tokio and HDFC for their association
with KSFC and industry associations viz., KASSIA, AWAKE, BCIC &
FKCCI etc.
My sincere appreciation and thanks to the Commercial Banks, Apex Bank,
Co-operative Banks, KSSIDC, KIADB and KPTCL for their co-operation.
I place on record the invaluable service rendered by Sri. M. R. Sreenivasa
Murthy, I.A.S., during his tenure as Chairman of the Corporation.
I take this opportunity to acknowledge the contributions made by the out
going directors Sri.S.R.Hanchinamani, Dr. Rajkumar Khatri,I.A.S.,
Sri Ramesh G. Dharmaji and Smt.V.Kalyani during their tenures.
In particular, I thank all the clients of KSFC for reposing faith in the
Corporation, and continuing their relationship with KSFC, the shareholders
for their unstinted support and the investors in the bond issues of the
Corporation.
Let me take this opportunity to thank all the officers and staff of the
Corporation.
Thank you,
Date : 27th July 2010 Chairman & Managing Director
Place : Bangalore