Accounting Information System 5

American Journal of Scientific Research ISSN 1450-223X Issue 4 (2009), pp36-44  © EuroJournals Publishing, Inc. 2009 http://www. eurojournals. com/ajsr. htm Accounting Information Systems (AIS) and Knowledge Management: A Case Study Zulkarnain Muhamad Sori Department of Accounting and Finance, Faculty of Economics and Management Universiti Putra Malaysia Abstract This study seeks to examine the use of Accounting Information Systems (AIS) by ZBMS Sdn. Bhd. , and it’s contribution to the knowledge management and strategic role of the organisation. ZBMS is a company that registered in Kuala Lumpur and operate in construction industry.The company used automated AIS known as ‘Contract Plus – Financial & Project Accounting’ package commercially developed by a private company (ZYXW). Wide variety of people that involve in the company’s operation within and outside the organisation uses accounting information generated by this system for decisionmaking. Ba sed on input provided by operational level managers, the Contract Plus software produces monthly projects’ income statements, balance sheets and statement of changes in financial position for the strategic and tactical managers to plan, control and make decision on the resources allocation.The role-played by AIS enhanced the organisations’ accounting functions, and add information value. The automated AIS speed up the process to generate financial statements and overcome human weaknesses in data processing. The system enhances management of resources and the process of monitoring, control and prediction of ZBMS business for better future. With the advent of AIS, the growth of tacit and explicit knowledge could be seen from the intensive training of personnel at the early stage of system implementation to the development and use of company’s own manual in training of new staff and assisting the job of existing staff.Given the benefit of AIS to ZBMS, this paper re commended that the source of data should be fully automated, and the existing system should be upgraded through computerise the pre-tendering and post-tendering of projects to enable AIS integration. Keywords: Accounting Information Systems, Knowledge Management, Accounting Functions, Information Value, Financial Statements 1. Introduction Accounting Information System (AIS) is vital to all organisations (Borthick and Clark, 1990; Curtis, 1995; Rahman et al. , 1988; Wilkinson, 1993; Wilkinson et al. 2000) and perhaps, every organisations either profit or non profit-oriented need to maintain the AISs (Wilkinson, 2000: 3-4). To better understand the term ‘Accounting Information System’, the three words constitute AIS would be elaborate separately. Firstly, literature documented that accounting could be identified into three components, namely information system, â€Å"language of business† and source of financial information (Wilkinson, 1993: 6-7). Secondly, inform ation is a valuable data processing that provides a basis for making decisions, taking action and fulfilling legal obligation.Finally, system is an integrated entity, Accounting Information Systems (AIS) and Knowledge Management: A Case Study 37 where the framework is focused on a set of objectives. The combination of the three words Accounting Information System indicate an integrated framework within an entity (such as a business firm) that employs physical resources (i. e. , materials, supplies, personnel, equipment, funds) to transform economic data into financial information for; (1) conducting the firm’s operations and activities, and (2) providing information concerning the entity to a variety of interested users.Indeed, the combination or interaction between human, technology and techniques would permit an organisation to administer its knowledge effectively (Bhatt, 2001; Thomas and Kleiner, 1995). Currently, the world and human life has been transformed from informat ion age to a knowledge age (Syed-Ikhsan and Rowland, 2004: 238; Thomas and Kleiner, 1995: 22), and knowledge has been recognised as the most valuable asset. In fact, knowledge is not impersonal like money and does not reside in a book, a data bank or a software program (Drucker, 1993).Drucker believed that knowledge is always embodied in a person, taught and learned by a person, used or misused by a person. As the world moving into knowledge era, this paper will examine how ZBMS Sdn. Bhd. manages its knowledge in order to remain competitive amongst the construction industry. Probst, Raub & Romhardt (1999, p. 1) stressed that companies must learn to manage their intellectual assets (i. e. knowledge) in order to survive and compete in the ‘knowledge society’. Indeed, knowledge management is concerned with the exploitation and development of the knowledge assets (Davenport et al. , 1998).This paper seeks to examine the Accounting Information Systems (AIS) used by a Malaysi an company named ZBMS Sdn. Bhd. The paper will highlight the users of the system and the way information adds value to the organisation. Also, the paper will investigate the way knowledge is managed through the process of creating, storing, disseminating and applying and how information system plays an important role throughout the process and the AIS contribution in the organisation’s strategic role. The remainder of the paper is organised as follows. The following section describes the background of ZBMS and the use of accounting information systems.The third section provides research findings on accounting information systems employed by ZBMS. The fourth section offer suggestions for future research. The final section concludes the paper and outlines the limitations of the study. 2. The Use of Accounting Information Systems in ZBMS ZBMS is a private limited company registered in Kuala Lumpur, Malaysia that operate in construction industry, where the main activities ranging from construction of infrastructure, building, power, waste water to property development as well as engineering, procurement, construction and commissioning (EPCC) in the oil & gas sector.The company used automated AIS known as ‘Contract Plus – Financial & Project Accounting’ package in their Finance Department, which was commercially developed by a private company (ZYXW). Contract Plus is a fully integrated business solution designed specifically for companies in the engineering and construction industry. The software will generate financial data to be analysed by the accountants and subsequently used by top level of management for strategic decision making, thus, these managers could identify future opportunities and limitations face by the company and industry (McCarthy, Minichiello and Curran, 1987: 243-244). . Findings As mentioned earlier in section 2, ZBMS is a company that operate in construction industry. The industry was identified as one of the most difficult to understand due to its complexity mixture of people, plant, materials, locations, technology, knowledge of the law as well as the design and valuation of work done, which are much subjectivity (Capon, 1990: 1). However, these challenges are under control with the advent of technology such as software development that allows systematic data 38 Zulkarnain Muhamad Sori processing.Therefore, it is important to understand the information flow in ZBMS in order to appreciate the usage of information within the organisation as shown in Figure 1-1 below. 3. 1. Users of AIS As shown in Figure 1-1, the finance personnel that reside at site project office (or called Project Accountants) and head office such as the Financial Accountants, Management Accountants and Finance Manager are the internal users of the system. Also, the management team that consists of Finance General Manager, Chief Operating Officer, Managing Director and Board of Directors are among the internal users of the system.On the other hand, the external users consist of government agency (i. e. Inland Revenue), external auditors and creditors. Indeed, wide variety of people within and outside the organisation uses accounting information for decision-making (Rahman and Halladay, 1988, Renau and Grabski, 1987). Figure 1. 1: Information Flow of ZBMS ZBMS HEAD OFFICE Management Team Inland Revenue ZBMS HEAD OFFICE External Auditors Finance Department Bankers Suppliers Site Office Design Team SubContractors Client 3. 2.Function of AIS The main function of AIS is to assign quantitative value of the past, present and future economics events. At ZBMS, AIS through its computerised accounting system (i. e. ZYXW-Contract Plus) produces the financial statements namely income statements, balance sheets and cash flow statement. The system will process the data and transform them into accounting information during input, processing and output stages that will be used by a wide variety of users such as inter nal and external users (see for example Wilkinson, 2000: 10-11).Wilkinson noted that an effective AIS performs several key functions throughout these three stages such as data collection, data maintenance, data Accounting Information Systems (AIS) and Knowledge Management: A Case Study 39 management; data control (including security) and information generation. Figure 1-2 summarised the transformation process of AIS. Figure 1. 2: Data Processing in Finance Department at ZBMS Input – Progress Billing Certificate, Subcontractors Progress Certificate, Suppliers’ Invoices Processor – ZYXW Accounting System Output – Financial StatementHuman Element – Finance Personnel 3. 3. Usage of Information Within AIS The construction projects undertaken by the company are divided according to the type of construction activities that comprised of five divisions, namely infrastructure, building, power, wastewater and oil and gas, where each project is treated as a se parate company. The number of projects undertaken by each division depends on the contracts being awarded to the company. As indicated by Figure 1-2, the sources of data originated from external parties such as client, subcontractors and suppliers.The Project Accountants will work closely with the Quantity Surveyors to come out with the appropriate information as illustrated below: Client – The client’s Quantity Surveyors (QSs) will evaluate work in progress (WIP) and come out with percentage of WIP to be agreed by both parties. Once agreed, Progress Billing Certificates (PBC) will be issued by Client’s QSs, which a copy of it will be sent to head office for data processing. Subcontractors – The ZBMS’s QSs will evaluate subcontractor’s WIP at site and come out with percentage of WIP to be agreed by both parties.Once agreed, Subcontractor Progress Certificate (SPC) will be issued by ZBMS’s QSs and verified by ZBMS’s Project Mana ger, which a copy of it will be sent to head office for data processing. Suppliers – QSs and Project Accountants will ensure that the materials and machineries are delivered in good condition at construction site before delivery orders are accepted. The delivery orders will be attached to supplier’s invoice and sent to Head Office for processing. 40 Figure 1. 3: Simplifies the AIS within ZBMS: Zulkarnain Muhamad Sori CLIENTSUBCONTRACTORS SUPPLIERS Site Valuation by Client Site Valuation by ZBMS Materials & machineries delivered Certified by Client Certified by ZBMS Materials & machineries delivered PBC SPC Invoices Verified & KeyPunched by Project Accountants Projects’ Accounts Receivables HQ Database (ZYXW) Head Office Maintenance Projects’ Accounts Payable Projects’ Fixed Assets Projects’ Cash Book Project Ledger Projects’ Trial Balance Projects’ Financial Statement Consolidated Consolidated General Ledger Consolidated Trial Balance Consolidated Financial StatementsThese documents will be verified and input into the system by Project Accountants. The projects’ data will be stored at Projects’ Account Receivables, Account Payables, Fixed Assets accordingly. Projects’ cashbook will be updated automatically after the data being entered to the projects’ Account Receivables and Account Payables. Any expenses incurred at head office will be stored at HQ Maintenance master file by Financial Accountant. The Contract Plus Accounting System software will process the data and produce financial statements of individual company’s projects onAccounting Information Systems (AIS) and Knowledge Management: A Case Study 41 monthly basis, which subsequently consolidated at group level. The process flow is shown in Figure 13 above. The automated AIS play an important role in the ZBMS’s operational level. As indicated by Rahman and Halladay (1988: 20), most modern organisationâ€⠄¢s operational control of financial resources depends largely on automated support. This is due to the financial statements are generated by the Contract Plus.As shown in Figure 1-4, projects financial statements are generated by the Project Accountants, while the Financial Accountant generates the consolidated financial statements. The Management Accountant uses the consolidated financial statements to prepare company’s Performance Report such as cash-flow forecasts and ratio analysis. Once the Finance Manager (operational level) approve the report, it will then be submitted to the Finance General Manager and Chief Operating Officer (tactical level) to assist them for planning, control and decision making.The Performance Report will provide the information regarding work in progress relevant information. Therefore, AIS plays very important role at operational and tactical level as the activities at these level depend heavily on the information generated by the AIS. Figure 1 . 4: Type of Information in ZBMS Strategic Board of Director, Managing Director Tactical Chief Operating Officer, General Manager (Finance) Finance Manager, Management Accountant, Financial Accountant, Project Accountant Operational Transaction Processing ZYXW Accounting System . 4. Value Added of AIS The role played by accounting functions has been enhanced with the development of AIS, which in turn contribute to the profession’s value added to organisation. In fact automated AIS employed by ZBMS expedite the process to generate financial statement and reduce the human errors compared to non-automated AIS, which add the existing value of accountants. AIS also provide information on both actual and budget data of the organisation that helps company’s management to plan and control business operation.Good management of resources and better control of cost, budgeting and forecasting enhance the well being of ZBMS to continually generated profits. The AIS also played a cr ucial role that contributes to ZBMS’s value added by providing internally generated inputs from financial statements. Rahman and Halladay (1988: 19) believed that viable strategic plan must have inputs based on history of organisation, the current assets and capabilities of the organisation, and the trends in operations of the organisation. 42 3. 5. Role of Knowledge Zulkarnain Muhamad SoriAt ZBMS, both tacit and explicit knowledge are used as shown by the extensive used of accounting information system to assist business decision-making. The ZBMS begins its computerised accounting system in 1997. During the transformation process from manual to computerised accounting system, all finance personnel were sent for comprehensive computer training. Table 1: Relationship of AIS at ZBMS and Knowledge Management System Knowledge Management System Creation of knowledge Creation of Knowledge Storing of Knowledge Disseminating of Knowledge Knowledge Conversion Explicit to Tacit Explici t to Tacit Tacit to Explicit Tacit to ExplicitDevelopment of Automated AIS Training by hands-on experience ZYXW implemented, staffs learned from vendor’s manual Staffs gaining experience; Problems and solution being recorded on paper Improvement on system; Internal manual that suits the ZBMS needs being produced; Widely used in the department; Assists learning process of new staffs Explicit to Tacit System constantly use in Finance Department to generate monthly financial statements Applying of Knowledge Explicit to Explicit As shown in Table 1, the staffs were given hands on experience on the ZYXW System.During the early stage of system implementation, finance personnel were given flexibility to explore the system due to limited experience on the software at that time, and most of the staffs depend largely on the manual provided by the vendor for trouble-shooting. At initial stage, two-way communications with the vendor were developed to solve problems arised. As the time go ing on, the personnel were encouraged to record the problems aroused. Problems that have been solved were recorded for future reference.Currently, the ZBMS Finance Department has its own ZYXW manual that suits with the department needs. The manual provides valuable information to new employees as well as to the existing personnel at Finance Department. Indeed, AIS provide the systematic recording, processing and generating of accounting information, and in the absence of AIS, information would be scattered, random and hard to access, which would become a barrier to the growth of knowledge. 3. 6. Strategic Role and AIS To analyse the AIS strategy in ZBMS, McFarlan Strategic Grid will be utilised. The McFarlan’s strategic grid would locate ZBMS to the appropriate category with respect to its information system strategy (Curtis, 1995: 61). Automated AIS is fundamental part of the strategic plan of ZBMS in 1997. It has been improved over the years of implementation and generates accurate and timely accounting information that contributes to a good decision-making. Realising the benefit brought by the AIS, the source of data must be fully automated. The existing system should be upgraded through computerise the pre-tendering and post-tendering of projects in the primary stages of the construction activities.When the system is upgraded, the ZYXW Contract Plus will integrate the two modules of pre- and post-tendering with the currently automated Financial and Project Accounting. Therefore, the most suitable position to locate AIS at ZBMS on the McFarlan Grid is on Factory Grid as shown in Figure 1-5 below. Accounting Information Systems (AIS) and Knowledge Management: A Case Study Figure 1. 5: ZBMS Location on McFarlan’s Strategic Grid 43 Low Current Dependence on AIS Support Turnaround High Factory –AIS at ZBMS Strategic Low Future Importance of AIS High 4. Direction for Future ResearchHaving mentioned the above opportunities and challenges to t he AIS, future research should investigate the AIS contribution on the organisation’s growth of knowledge. Though AIS would organise and structure the data input and knowledge, lack of understanding on the potential effect of human behaviour on the system such as human error, manipulation and work-style. In fact, Ponemon and Nagoda (1990) noted, â€Å"the most difficult problems often are caused, or are exacerbated, by those individuals who have erroneous expectations of the new system being implemented† (p. 1).The study would be fruitful with the use of questionnaire and interview survey. Perhaps, the survey should concentrate on a sample of senior managers of the top hundred companies listed on the Bursa Malaysia (Malaysian Stock Exchange), banks and regulatory bodies. These groups could contribute significantly due to their role as a decision maker in their respective organisations. Secondly, future research should also investigate the possibility to expand the use of AIS to the other areas that still did not use the system such as non-profit organisation and society.Indeed, the current level of usage shows that the benefit outweighs the investment cost. The successful implementation of AIS could save shareholder’s money and time. Finally, future research should explore issues on the information value generated by AIS to shareholders and stakeholders in making investment decisions. Case study approach on top companies would be appropriate methodology because the understanding on specific AIS model would be more valuable rather than using questionnaire and interview approach that assumes AIS across sampled organisation is identical. 5. ConclusionThis paper examines the use of Accounting Information Systems (AIS) by ZBMS Sdn. Bhd. The wide varieties of people that involve in the company’s operation get the benefits from the implementation of AIS and the use of Contract Plus software developed by ZYXW. The system assists the operati onal managers to come out with monthly reports for the top managerial level (i. e. tactical and strategic) plan, control and decide resources allocation. In addition, the paper showed that the AIS add value to information processed within the company. The automated AIS could speed up information process and overcome traditional human weaknesses.As a result, the system supports the resource management and help ZBMS pursue its projection of continuing business profit. The use of AIS indicate the growth of tacit and explicit knowledge, where personnel were trained intensively and experience and trouble shooting were 44 Zulkarnain Muhamad Sori recorded for future reference and training. Indeed, the successful implementation of an accounting information system can be described as a series of complex, interconnected activities necessitating participants to have technical and managerial skills to sort out prospective problems (Ponemon and Nagoda, 1990: 1).Note To keep the identity of the r espondent and it’s software developer anonymous, an imaginary name was used in this study i. e. ZBMS Sdn. Bhd. and ZYXW respectively. References [1] [2] Bhatt, G. D. (2001). Knowledge management in organisations: examining the interaction between technologies, techniques, and people. Journal of Knowledge Management, 5(1): 68-75. Borthick, A. F. ; Clark, R. L. (1990). Making accounting information systems work: An empirical investigation of the creative thinking paradigm. Journal of Information Systems, 4(3): 48-62. Capon, G.C. C. (1990). Construction Industry. London: The Institute of Chartered Accountants in England and Wales. Curtis, G. (1995). Business Information Systems: Analysis, Design and Practice. Wokingham: Addison-Wesley Publishing Company. Drucker McCarthy, D. J. , Minichiello, R. J. and Curran, J. R. (1987). Business Policy and Strategy: Concepts and Readings. Illinois: Irwin. Ponemon, L. A. and Nagoda, R. J. (1990). Perceptual Variation and the Implementation of Accounting Information Systems: An Empirical Investigation. Journal of Information System, 4(2): 1-14.Probst, Raub & Romhardt (1999) Rahman, M. and Halladay, M. (1988). Accounting Information Systems: Principles, Applications and Future Directions. New Jersey: Prentice Hall. Reneau, J. H. and Grabski, S. V. (1987). A Review of Research in Computer-Human Interaction and Individual Differences Within a Model for Research in Accounting Information Systems. Journal of Information Systems, 2(1): 33-53. Rowley, J. (1999). â€Å"What is knowledge management†. Library Management, 20 (8): 416-420. Syed-Ikhsan, S. O. S. (2004). â€Å"Benchmarking Knowledge Management in a Public Organisation in Malaysia.Benchmarking: An International Journal, 11 (3): 238-266. Thomas, V. and Kleiner, B. H. (1995). New developments in computer software. Industrial Management & Data Systems, 95(6): 22-26. Wilkinson, J. W. (1993). Accounting Information Systems: Essential Concepts and Applications. Secon d Edition. New York: John Wiley & Sons Inc. Wilkinson, J. W. , Cerullo, M. J. , Raval, V. and Wong-On-Wing, B. (2000). 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The Environment And Effect On Human Health Environmental Sciences Essay

Polychlorinated Biphenyls are a group of manmade chemicals. They make up a group of two hundred and nine person chlorinated biphenyl rings, known as congeners. In the concentrated signifier, PCBs are oily liquids, oily solids, and clear to yellow in colour. ( EPA, 2012 ) . They have no odor or gustatory sensation. ( EPA, 2012 ) . They are really stable mixtures that are immune to extreme temperature and force per unit area. They have a low grade of responsiveness. PCBs are non flammable, have high electrical opposition, and are good dielectrics. ( Barbalace, 2002 ) PCBs were seen as an industrial discovery, because of its chemical belongingss. Before their prohibition in 1979, Polychlorinated biphenyls entered the environment during their industry and us in the United States. The organic chemicals were foremost manufactured by Monsanto in 1929. Prior to their prohibition, PCBs were used in 100s of industrial and commercial applications, as electrical dielectrics. Uses for PCBS included transformers, electrical equipment, hydraulic fluids, oil based pigment, carbonless C paper, compressors, heat transportation systems, pigments, adhesives, liquid cooled electric motors, fluorescent bulbs, overseas telegram insularity, plastic, and the list goes on. ( EPA, 2012 ) . Domestic utilizations included cereal boxes and bread negligees. Because of its function in prevent fires and an detonation, the chemical was required by fire codification. PCBs were seen as the ideal dielectric for companies and consumers. The qualities that make PCBs wanted by consumers and companies are besides the 1s that make it risky to the environment and human wellness. PCBs ‘ high thermal and chemical opposition means they do non interrupt down easy when exposed to heat or chemical interventions doing it to be difficult to acquire out of the environment. Since they do non interrupt down they remain in the environment and go on to construct up. Today, the chemicals can still be released in the environment through spills, leaks, and improper disposal and storage. More than half of the PCBs produced during 1929-1979 have been released into the environment. ( Barbalace, 2012 ) . Although PCBs are no longer commercially manufactured or widely used, there are still ways people can be exposed to concentrated Polychlorinated Biphenyls. The most common exposures include through nutrient, surface dirts, imbibing and land H2O, indoor air, and in the workplace. PCBs are an organic pollutant. Companies that used the substance contaminated the environment through its utilizations and disposals. In 1935, the Monsanto Company purchased the Theodore Swann chemical company and began fabricating PCBs in the United States. Monsanto continued to bring forth PCBs at its Anniston works until 1971. ( Lyons, 2004 ) . During its 40 old ages of fabricating PCBs as an electrical dielectric, the Monsanto Company flushed 10s of 1000s of lbs of PCBs into nearby brook and buried 1000000s more lbs in a hillside landfill. ( Lyons, 2004 ) . The Monsanto Company was sued by 1000s of current and former occupants of Anniston, who claim the company was cognizant of the dangers posed by PCBs and actively schemed to conceal this information from the nearby populace. ( Firestone, 2002 ) . In 1966, Monsanto directors discovered fish near the waste sites turned belly side up spirting blood and tear uping tegument, within 10 seconds of the PCBs disposal. ( Firestone, 2002 ) . The company hid their findings. In 1969, fish were found with 7500 times the legal PCB degree. ( Grunwald, 2002 ) . Company records reveal the company ‘s determination that â€Å" there was no ground to travel to expensive extremes in restricting discharge organize the works † . ( Grunwald, 2002 ) . The company was ordered to pay $ 53 million in killing cost and agreed to a planetary colony affecting current and future instances in Alabama. ( Lyons, 2004 ) . There are legion known contaminated sites around the U.S. Among the most unsafe of these, A is the Hudson River Valley. In 1947-1977, General Electric ( GE ) began dumping PCB in the river. By the prohibition in 1979, an estimated 1.3 million lbs of the man-made chemical had entered the Hudson river. The Hudson River was contaminated with PCB pollution. Twenty old ages subsequently, functionaries still have to cover with the environmental consequence of PCBs in the bedrocks of the Hudson River. ( Mele, 1998 ) . PCBs are now found throughout the Hudson River ecosystem, in in deposit, H2O, and wildlife. ( Mele, 1998 ) . The spread of PCBs throughout the Hudson River and the nutrient concatenation has created one of the most widespread, risky waste jobs in the nation.A The EPA ordered the General Electric Company to pay 460 million dollars to dredge the PCBs it had dumped into the Hudson River. ( Grunwald, 2002 ) . The Environmental Protection Agency Prevention regulates PCBs through the Toxic Substances Control Act ( TSCA ) . The Act bans the usage, distribution, industry, and processing of PCBs. TSCA gives EPA the authorization to develop and implement ordinances refering the industry, usage, killing, and proper disposal of PCBs. ( EPA, 2012 ) . Through the environment, worlds came into contact with the chemical. Polychlorinated Biphenyls are linked to legion wellness jeopardy. It has an acute toxic affect. Skin annoyances can happen in people exposed to high degrees of PCBs. Studies in the workplace suggest that exposure to PCBs may besides do annoyance of the nose and lungs. PCBs are a likely human carcinogen. EPAA?s ordinances on cancer-causing chemicals use the term `probableA? when a chemical is known to do malignant neoplastic disease in animate beings and where there is grounds that suggests that it causes malignant neoplastic disease in worlds but which is non conclusive. Surveies of PCBs in worlds have found increased rates of malignant neoplastic disease patients that may be connected to the man-made chemical. PCBs are known to do a assortment of types of malignant neoplastic disease in rats, mice, and other survey animate beings. ( EPA, 2012 ) Polychlorinated Biphenyls are linked to developmental effects. Proper development of the nervous system is critical for early acquisition and can hold potentially important deductions for the wellness of persons throughout their life-times. ( EPA, 2012 ) . Womans exposed to PCBs before or during gestation can give birth to kids with important neurological and motor control jobs. These jobs include lowered IQ and hapless short-run memory. ( EPA, 2012 ) . PCBs disrupt endocrine map. PCBs with merely a few Cl atoms can mime the bodyA?s natural endocrines. PCBs are besides thought to play a function in decreased sperm figure, reformed sex variety meats, pubescence, and altered sex ratios of kids. PCBs with more Cl atoms act like dioxins in changing the metamorphosis of sex steroids in the organic structure, which change the normal degrees of estrogens and testosterone. PCBs besides upset the balance of thyroid endocrines, which may impact the growing, rational, and behavioural development. ( EPA, 2012 ) . PCBs are found throughout the environment, and it may be impossible to avoid coming into contact with Polychlorinated Biphenyls. Peoples can seek avoiding contact with contaminated dirts and deposits. ( Wisconsin, 2012 ) . Practice good hygiene wonts. Restrict their ingestion of sport-caught fish. Wash fruits and veggies before eating them. Besides, if any member of the family works with old electrical equipment be certain the equipment is decently maintained and the country is good ventilated. ( Wisconsin, 2012 ) . Polychlorinated Biphenyls are a chemical that will non travel off. The Environmental Protection Agency is seeking their best to free the environment of its effects. The features of the man-made drug cause it to be transported easy and difficult to interrupt down. The drug has caused damaged to the environment, and the people around the environment. Polychlorinated Biphenyls will hold a lifetime consequence on the environment and people. Beginnings Barbalace, Roberta C. â€Å" The Chemistry of Polychlorinated Biphenyls. â€Å" A : PCB, The Manmade Chemicals That Wo n't Travel Away ( EnvironmentalChemistry.com ) . N.p. , n.d. Web. 27 Aug. 2012. & lt ; hypertext transfer protocol: //environmentalchemistry.com/yogi/chemistry/pcb.html & gt ; . Environmental Protection Agency. â€Å" Polychlorinated Biphenyls. â€Å" A EPA. Environmental Protection Agency, n.d. Web. 7 Sept. 2012. & lt ; hypertext transfer protocol: //www.epa.gov/epawaste/hazard/tsd/pcbs/index.htm & gt ; . Firestone, David. â€Å" Alabama Jury Says Monsanto Polluted Town. â€Å" A The New York Times. N.p. , 23 Feb. 2002. Web. 7 Sept. 2012. & lt ; Alabama Jury Says Monsanto Polluted Town & gt ; . Grunwald, Michael. â€Å" Monsanto Held Liable For PCB Dumping. â€Å" A The Washington Post. Raw Food Info, 23 Feb. 2002. Web. 7 Sept. 2012. & lt ; Monsanto Held Liable For PCB Dumping & gt ; . Lyon, Steve. â€Å" PCB Pollution in Anniston, Alabama. † Reading.A Commonweal. Professor Raquel Pinderhughes. San Francisco State Unversity. Urban Studies and Environmental Programs, 2004. Web. 7 Sept. 2012. & lt ; hypertext transfer protocol: //www.commonweal.org/programs/brc/ppt-presentations/Anniston_AL_PCB.pdf & gt ; . â€Å" Human Health Hazards – PCBs and Your Health. â€Å" A Human Health Hazards – PCBs and Your Health. N.p. , n.d. Web. 7 Sept. 2012. & lt ; hypertext transfer protocol: //www.dhs.wisconsin.gov/eh/hlthhaz/fs/pcblink.htm & gt ; . The Hudson River PCB Story – A Toxic Heritage. Dir. Andy Mele. W. Alton Jones Foundation, 1998. Short Film.A The Hudson River PCB Story – A Toxic Heritage. Web. 7 Sept. 2012. & lt ; hypertext transfer protocol: //www.clearwater.org/pcb.html & gt ; . â€Å" What Are The Human Health Effects Of PCBs? â€Å" A What Are The Human Health Effects Of PCBs? A N.p. , n.d. Web. 7 Sept. 2012. & lt ; hypertext transfer protocol: //www.clearwater.org/news/pcbhealth.html & gt ; .

A Multinational state

Through this, each nation is granted with certain powers within the state. The positive side in this is that it is easier to regulate, since these nations manage themselves. However, it could lead to problems resulting to competition between these nations. They should be given proper delimitations to avoid further conflicts (Xhaferi, 1998). Another method to maintain peace in a multinational state is the secession or the withdrawal of a nation within the state. This is achieved by complete separation of the nations. An example would be the separation of Czechoslovakia where Slovakia has seceded thus leaving Czech Republic. The positive side of this secession is that the nations become completely separated. They become individual nations which is greatly different back when they are still merged with the other nations. The problem however, is that division of these nations would take them back to scratch, wherein they would have to work on becoming an individual nation. It is like starting a new country or nation from square one. This would require the attention of the whole nation wherein their cooperation is the biggest help in the success of their newly separated nation. They will also have to work on establishing their international relations (Xhaferi, 1998). There is also another method to maintain peace in a multi-national state. This involves public mobility which could lead to civil wars. This would force the nation to take action which would lead to the formation of federations or the initiation of secession. This would however be very costly as well as damaging for those who will engage in the civil war. A Multinational state Through this, each nation is granted with certain powers within the state. The positive side in this is that it is easier to regulate, since these nations manage themselves. However, it could lead to problems resulting to competition between these nations. They should be given proper delimitations to avoid further conflicts (Xhaferi, 1998). Another method to maintain peace in a multinational state is the secession or the withdrawal of a nation within the state. This is achieved by complete separation of the nations. An example would be the separation of Czechoslovakia where Slovakia has seceded thus leaving Czech Republic. The positive side of this secession is that the nations become completely separated. They become individual nations which is greatly different back when they are still merged with the other nations. The problem however, is that division of these nations would take them back to scratch, wherein they would have to work on becoming an individual nation. It is like starting a new country or nation from square one. This would require the attention of the whole nation wherein their cooperation is the biggest help in the success of their newly separated nation. They will also have to work on establishing their international relations (Xhaferi, 1998). There is also another method to maintain peace in a multi-national state. This involves public mobility which could lead to civil wars. This would force the nation to take action which would lead to the formation of federations or the initiation of secession. This would however be very costly as well as damaging for those who will engage in the civil war.

The Great Depression Article Example | Topics and Well Written Essays - 250 words

The Great Depression - Article Example After the 1929 stock market crash, there was scramble for liquidity which caused funds to flow back to America while Europe’s fragile economies crushed Spielvogel (416). According to Spielvogel (412), there were widespread structural failures among financial institutions which made banks more vulnerable. The worst hit banks were those tied to agriculture because most farmers defaulted when interest rates rose coupled with low crop prices. Farmers were also already in great debts and they owned over-mortgaged lands due to great increase in land prices in 1919. Other banks were failing to maintain adequate reserves and had resorted to making risky loans or investing more in stock market. However, they were not adequately prepared to absorb to absorb the shock of a great economic recession especially those that lent money to Latin America and Germany. Works cited Spielvogel Jackson. Western Civilization: Volume II: Since 1500. New York. Wadsworth Publishing Co. 2009.

Love (thats not a topic,thats reserve discount,) Essay

Love (thats not a topic,thats reserve discount,) - Essay Example It would ensure that the high number of cases of paddling in the state reduced to a lower level. In this case, the long term effect would be seen in an improved psychological state of students since they would not live in fear of the paddle. The bill was made law after it had passed all the process that bills go through before being considered a law. The bill was signed in the Senate and the House on the same date (27th may 2011). It was later sent to the governor’s office who signed it on the 17th June 2011. However, it became effective on 1st September 2011. If I was a member of the legislature, I would have voted for bill since corporal punishment is not the best alternative for disciplining errant students. It is an archaic way of instilling disciplines to students and does not play any role in their education. Furthermore, spanking or paddling causes pain to students and this may affect them psychologically instead of making them quit their bad

Film report Essay Example | Topics and Well Written Essays - 1250 words - 1

Film report - Essay Example It is therefore required after watching a film that one drafts a film report. This makes it critical to have an objective view of the film. Reflect on the themes and characters that are uniquely portrayed and try to relate them in the scenes or from how they were depicted. This is to say that you may look at the clothes worn by a character, how he/she communicates with other characters and so on. Understanding the context of the characters is usually of vital importance. One may evaluate the happenings in that time period; evaluate what the characters represent and also the symbolic scenes in that particular film. In the report, an argument is always put forward which forms a basis from which evident supporting reasons are sought. From the clearly supported argument, one can therefore relate the film with the occurrences in society for better understanding ourselves (Scott 17-27). From the films on Samurai and warfare, diverse themes come into the limelight. However it is evident that the ancient use of swords in early time’s warfare was of great significance. The theme of armor and weaponry fortifications and later on the changing strategies upon the introduction of firearms is clearly depicted in Samurai. Fighters in ancient times considered the double edged swords as an important weapon in war. In reference to these wars, the samurai sword is probably the finest edged weapon ever made. How and why it achieve this distinction from its unique metallurgy to its wide use in combat where one stroke always decided the victor. There are perhaps very few movies beyond the samurai based films that clearly show the connection between the Japanese culture and their weaponry. The fact that most of them have war themes also means that the art of war or defense was a crucial aspect of the people’s culture. Unlike some of the more recent films that seek to illuminate the life and times of the early Japanese, the samurai movies come out more

Why was Intel initially successful in DRAMs Assignment

Why was Intel initially successful in DRAMs - Assignment Example Dennard claims he went home and formulated the basic idea for DRAM within a few hours, as Mary Bellis explains, â€Å"Dennard and his team were working on early field-effect transistors and integrated circuits, and his attention to memory chips came from seeing another team's research with thin-film magnetic memory. Dennard claims he went home and within a few hours had gotten the basic ideas for the creation of DRAM.† Within two years after its release, Intel would become a world leader in DRAM technologies. Intel created the Memory Systems Operation to assemble the DRAM chips to standards required for sale to OEM’s (Original Equipment Manufacturers), who then put the chips into more sophisticated machines. This operation allowed Intel to distribute their technologies to a wider area. This strategy, in conjunction with offering replacement parts for mainframe computer memories, allowed them to gain more control over the market. Over ninety percent of Intel’s rev enue was brought in by their DRAM, which was the world’s largest selling semi-conductor. Always being the first into new markets, Intel used that strategy and the fact they were the first to release DRAM to heighten sales of the chips and create the success they did ( Lazonick 148-149). Intel’s business strategy was very aggressive and they knew how to play the market to maximize profits.

Customer Satisfaction and Loyalty of TESCO Essay

Customer Satisfaction and Loyalty of TESCO - Essay Example Tesco PLC is a public limited company in the retail industry and its headquarters is in the United Kingdom. Tesco is a general merchandise and British multinational grocery retailer. After Wal-Mart, it is the second largest retailer in terms of profit margins and is even the second largest retailer in terms of revenue growth in the world’s retail industry. Jack Cohen in 1919 invented the company as a chain of market stalls. The name of the brand ‘Tesco’ appeared in the shipment of tea that Cohen had purchased. The supermarket’s store that was about 500 in the 1990s is now approximately about 6350 located in various locations. Tesco expanded its business very rapidly and has a market share of about 30%. The countries in which the company has entered and is operating brilliantly are UK, USA, Thailand, Malaysia, Mainland China, Hungary, Czech Republic, Japan, Republic of Ireland, South Korea, Poland, Turkey, etc. The main idea behind the research study is to a nalyze the customer satisfaction and customer loyalty at Tesco. Customers are the most important factor behind the success or failure of a company. It is very much important that the organization takes effective measures to satisfy the customers and build a brand loyal customer base that would generate high revenues for the firm. Tesco through its market expansion strategy has become the market leader in UK retail industry. It has enhanced on its strengths and explored the possible opportunities and developed some innovative strategies to acquire the maximum percentage of the market share.

Writer's choice Essay Example | Topics and Well Written Essays - 1000 words - 4

Writer's choice - Essay Example Toyota is an example of a company that uses operations management in order to have an edge over its competitors. This paper will examine how Toyota has, over the years, implemented exceptional management skills to increase their competitive advantage, and how this has helped them expand their global reach. Toyota is a brand recognized worldwide by most individuals. This advantage is brought on by the fact that their products are cheaper as compared to others, and at the same time, the company provides products that everyone is comfortable with in terms of desires and needs. At the outset, Toyota and its success can be attributed to the fact that they continuously improve on their products and services. This is while also catering to the aspect of time. These two highly crucial aspects of operations can only be possible if there is involvement on the part of employees and consumers. There is a high level of employee participation in the company, which allows all parties to get involved in the creation of new and improved products and services for their consumers (Williams, 2011). Through their production and just-in-time production systems, Toyota places emphasis on high quality products at all possible low costs. For effective management operations, Toyota incorporates consumer services, which allow Toyota to start projects that their consumers want or desire. These services aid Toyota in solving some of its problems. Feedback from their consumers creates an avenue for Toyota to evaluate any and all issues that come up with regards to their automobiles, hence; addressing any future problems based on past experience. In the highly competitive automobile industry, it is vital for companies to improve customer relations, which endears most of their consumers to their brands. Toyota’s approach to effective operations management has

Ethics Essay Example | Topics and Well Written Essays - 500 words - 4

Ethics - Essay Example Thus, when studying western ethics, it is incredibly important to be able to understand not just one but several ethical codes. Three of the most important ethical codes are virtue theory, deontological ethics, and utilitarianism. Virtue theory is an ethical code that rests on the intrinsic virtues of an individual. This theory has, in some ways, a highly internalized locus of control, and in other ways an externalized one. This is because one can evaluate virtue either on the individual level (meeting one’s own expectations of virtue) or on a societal level (mirroring societal constructs of virtuous behavior). The most important thing about virtue theory is that it is almost completely unrelated to individual action taking (Crisp & Michael, 1997), focusing more on the internal character of a person than background or consequence of actions. Virtue ethics remind me of times in which I try to improve myself for no reason other than being a better person – holding doors open, for example. Deontological ethics differ greatly from virtue ethics on a number of levels. The fundamental idea of deontological ethics is that one must comport one’s self in a method that complies with a set of rules. The origins of these rules can change drastically from philosopher to philosopher, ranging from highly variable understandings of rules as basic obligations to uphold certain philosophical principles, to highly restrictive understanding of rules such as those in moral absolutism, in which certain actions are either considered unambiguously moral or amoral. This philosophy obviously seems prone to an externalized locus of control. This kind of philosophy reminds me of occasions when, as a child, I would behave in a certain way (eating my vegetables, for instance) out of an obligation without necessarily agreeing with that action. The final major mode of ethics discussed in this paper is utilitarian ethics.

History of education Essay Example for Free

History of education Essay Education is a topic that has been implemented on our generation more than ever before. However, it is not for the grades, degree or the income that education should be important to us. It is for the sake of learning and developing our character that education should be valued. When people go to school, they receive education and thus become educated, however, these people must keep in mind that a major portion of the world receives no form of formal education. Due to their good fortune, the educated people have responsibilities to the world. The first responsibility of an educated person is to help educate others. This may come in the form of teaching classes, tutoring, helping others or simply correcting errors. When we teach people we spread the value of education and share skills that are essential for survival. Other people are able to think rationally and evolve into a self dependent person through the knowledge they attain. Once people are educated, they are able to prevent others from taking advantage of them or cheating them. Through education, people are also able to use the resources they own efficiently and sparingly. Finally, education allows people from different nationalities and locations to communicate and work together in a beneficial harmony. The second responsibility of an educated person is to aim to advance to a better future. It is through evolution that we have become more intellectual and learned. For this process to be beneficial and continuous, we must use it and upgrade it through our use. In the past, communication was a problematic process, today; we have e-mail accounts, cell phones, chat sites, video chat sites and messengers for instant communication. Presently, global warming and oil depletion are major complications. If we are able to advance and address this problem, we would be using our education beneficially. There would be less violence over oil and the future would be a less worrisome place if global warming was tackled. However, this is just one amongst the billions of changes we could make, all to create a better future. The third responsibility of an educated person is to create or maintain stability and order in the world. Through stability and order, the world  becomes a much safer place where people share respect for each other and live in harmony. When there is order, people are insured of payments for their services. They are motivated to work-hard and use positive, instead of negative means to earn their income. Thus, through stability and order, ethics can also be implemented into people. Thus, the three main responsibilities of an educated person are to educate others, aim for a better future and create as well as maintain stability in the world. Through these goals, the world becomes a positive place and continues to flourish after each generation.

Media and Body Image - Essay Essay Example for Free

Media and Body Image Essay Essay How does the media influence our body image? In what forms, does the media influence our perceptions about our body? These were the two questions that I asked myself in order to do the research paper and the panel discussion. In my opinion, I would agree that the media does influence and promote women and men to believe that the cultures standards for body image are ideal. Hence, the phrases, thin is in and the perfect body are two examples of eye-catching headlines that I observed in many women magazines. I learned that the media influences us through television, fashion and health magazines, music videos, film, commercials, and various other advertisements. Sadly, as a result, this repeated exposure, the thin ideal, can lead many young girls in triggering eating disorders, depression, low self-esteem, stress, and suicide. After acquiring this relevant information, I decided to focus my research on what type of media influences elementary school children and the adolescent teenager. The three central types of media that I found that did indeed influence body image are: Fashion magazines, famous top-models and actresses, and teenage or young adult women in the music industry. According to the Seretean Center for Health Promotion, the term, body image has been coined to describe a persons inner sense of satisfaction or dissatisfaction with the physical appearance of her/his body. (From The Wellness Column, April 1, 1996.) In my research, I found that many young girls are dissatisfied with their bodies and many strive to look like the waif-thin models or actresses one sees on television or in fashion magazines. There was a lot of information and facts on body and image that I found on the Internet. However, one website, Just Think Foundation, supported my belief that the media, magazines in particular, do indeed influence young girls to be thin in order to be popular and beautiful in our society. For example, I was in alarmed to learn that eighty percent of 10-year-old American girls diet; more than five million Americans suffer from eating disorders and ninety percent of those are adolescent and young adult women; the number one magic wish for young girls age 11-17 is to be thinner; and between elementary and high school, the percentage of girls in the U.S. who are happy with the way I am drops from 60% to 29%. (from Just Think Foundation) These facts were  from the JTFs Body Image Project compiled by Jean Holzgang that is an awareness campaign on body image. In fashion magazines, many young girls see waif-thin models like Kate Moss who is one of many top models that sadly represents the perfect body image that young girls are striving towards. Unfortunately, many teen girls do not understand that looking exactly like their favorite supermodel is unrealistic. In fact, as for the supermodel photos, many are retouched before they are printed out, the fashion clothes are often duct-taped to enhance fit, many blemishes are covered or altered, there is at least two inches removed from the thighs, and the average fashion model weighs 23-25% less than the average woman. All this in order to create that ideal or perfect body image everyone is striving for and sadly dying for. This compulsion to be thin has led many young girls to have a negative body image that dangerously paves the way to eating disorders, such as Anorexia and Bulimia, in order for them to achieve their desire for thinness. In television and movies, many teen girls watch and observe these actresses, such as Calista Flockhart, Courtney Cox, Jennifer Aniston, Gweneth Paltrow, Lara Flynn Boyle, and many others who have seemed to have went from an average weight to a sickly, death look. This seems to be setting a dangerous trend for the American culture, particularly women and young girls. In fact, there are endless images of thin women on television, in movies, in women and mens magazines and in commercials. For instance, these Hollywood role models do have a great impact on young viewers and many parents are very worried that their daughters are trying to imitate their favorite stars. According to Adrienne Ressler, body-image specialist at the Renfrew Center in Coconut Creek, Fla., For adolescents, the ideal for the person they want to be when they grow up is either a movie star, TV actress or supermodel, and the emphasis is very much on external appearance. Our patients would die-and practically do-to look like Calista Flockhart. ( People, 10-18-99) In the music industry, the most popular media influence is the music video and the types of fashion trends the performer displays onstage. The most popular young adult performer is teen sensation Britney Spears. This pretty, young lady is only 17 years old and already has had a huge impact on the teen girls. For example, recently, Miss Spears was on the cover of Rolling Stone magazine and she stirred up controversy when it appeared to look like the singer had  breast enhancements or simply, breast implants. (In all fairness, I did not have a chance to view that cover of Rolling Stone.) Miss Spears has denied the bre ast implant allegation and is quoted as saying; her mother would kill her if she had such a operation. However, I read that many fans believe that she does look different from her first video, Baby One More Time, with her latest, Sometimes, in that her breasts do look like they were surgically enhanced. This rumor has a great deal of parents worried that their own daughters might want to emulate the teen pop idol because she is promoting the ideal image of a young girls body. Another example of a music video image is Victoria Beckham (Posh Spice) of the well-known Spice Girls. She was considered a head-turner because of her curvaceous good looks and designer clothes. So, know one would have thought of her as over-weight or too curvy, but at a recent Fashion party, many onlookers were stunned to see Beckhams jutting ribs and collarbones that fellow guests replied, She definitely looks like shes had a dramatic weight loss. (People, 10-18-99) These two examples plus the dozens of others I have read through my research, have allowed me to come to the conclusion that, many of Hollywoods mo st notable actresses and performers have become partners in the thin is in look in this industry. In my opinion, this is very disturbing and very dangerous for many young girls who look up to these women as Role models. In conclusion, I hope that T.V., magazines, music videos, commercials, retail stores and other mediums realize that there are women of all different shapes and sizes, there is a higher percentage of women that are usually an average size of 12 and there is evidence that a lesser percentage of women who are a size 2 to 4. Unfortunately, it is the size 2 to 4 women who are being recognized as the ideal body image in our society. Furthermore, I would rather have more women like Kate Winslet, Rosie ODonnell, Emme, and many other average women on the covers of popular magazines and in television. These are the true role models for me, the ones who promote healthy ways to lose weight, promote healthy ways to like yourself for who you are, and not promote the unhealthy body image that engrosses our mind

SREI India Financial and SWOT Analysis

SREI India Financial and SWOT Analysis OBJECTIVE OF THE PROJECT: To develop and understanding of the Non-Banking Financial Institutions (NBFIs) and their business operations in India. To do a detailed research on SREI Equipment Finance Private Limited, its market share and the SWOT analysis. To thoroughly review SREIs credit appraisal and credit management process. To understand the risk management process of the company. To gain a detailed knowledge of the parameters that affects various risks. To determine weightages and scores for designing and developing risk assessment model based on market forces for assessing SREIs Customers. METHODOLOGY: In order to achieve the said objectives, will be to go through the entire NBFs history, thrust areas; growth opportunities, present scenario. This will be the ongoing process and will be done using internet, news and books. To understand the functioning of SREI pertaining to credit risk management and appraisal process followed for financing large corporates (risk exposures more than Rs.5 crores). Factual data, credit appraisal memorandum prepared by the company and the credit risk policy of the company will be referred in this regard. Then comes the technical part of conducting Balance Sheet Analysis, Ratio Analysis and Cash Flow Analysis. To propose a statistical credit rating model, data have been collected from credit officers and the relationship managers in the institution. Financial ratios were used to measure the strength of the customer. Score model for assessing risk to convert responses to scores. Weighted average method applied to assign appropriate importance to various parameters. LIMITATIONS OF THE STUDY: The study will only be focusing on the LARGE CORPORATES (risk exposure more than Rs.5 crores) not the retail and SME sectors of SREI. Study is on the basis of first-hand information collected from employees/head of the division of the company that might be incorrect or biased. Duration of the internship imparts the pressure of covering this vast spectrum in a limit period of 14 weeks. The accuracy of the Risk Assessing Model depends on the accuracy of information provided by the customer. The risk rating model doesnt take into the consideration where in the company doesnt follow the rules norms strictly. The relationships with the customers are given more importance. INDUSTRY ANALYSIS: Structure of Indias Financial Services Industry: The RBI, the central banking and monetary authority of India, is the central regulatory and supervisory authority for the Indian financial system. SEBI and IRDA regulate the capital markets and insurance sector, respectively. A variety offinancial intermediaries in the public and private sectors participate in Indias financial sector, including the following: Commercial banks; NBFCs; Specialised financial institutions like NABARD, EXIM Bank, SIDBI and TFCI; Securities brokers; Investment banks; Insurance companies; Mutual funds; and Venture capital. NON-BANKING FINANCIALCOMPANIES: Non-banking financial companies (NBFCs) are fast emerging as an important segment of Indian financial system. It is an heterogeneous group of institutions (other than commercial and co-operative banks) performing financial intermediation in a variety of ways, like accepting deposits, making loans and advances, leasing, hire purchase, etc. They raise funds from the public, directly or indirectly, and lend them to ultimate spenders. They advance loans to the various wholesale and retail traders, small-scale industries and self-employed persons. Thus, they have broadened and diversified the range of products and services offered by a financial sector. Gradually, they are being recognized as complementary to the banking sector due to their customer-oriented services; simplified procedures; attractive rates of return on deposits; flexibility and timeliness in meeting the credit needs of specified sectors; etc. The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the Reserve Bank of India Act, 1934 (Chapter III B) and the directions issued by it under the Act. As per the RBI Act, a non-banking financial company is defined as:- (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; (iii) such other non-banking institution or class of such institutions, as the bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. NBFCs VsBANKING SECTOR IN INDIA: Non-Banking Finance Companies (NBFCs) are an integral part of the countrys financial system complementing theservices of commercial banks. The main reason attributed to the growth of NBFCs is the comprehensive regulation of thebanking system. Other factors include higher level of customer orientation, lesser pre/post sanction requirements andhigher rates of interest on deposits being offered by NBFCs. NBFCs have traditionally been extending credit across various parts of the country through their geographical presence,with NBFCs being a supplier of credit to segments such as equipment leasing, hire purchase, and consumer finance. Theseare areas which warrant infusion of financing due to the existing demand-supply gap. NBFCs have been a more flexiblesource of financing and have been able to disburse funds to a gamut of client, from the local common man to a varietyof corporate client. NBFCs are also able to accelerate the pace of decision making to disburse funds, customise andtailor their products according to the client needs and take on excess risks on their portfolio. NBFCs can be divided intodeposit taking NBFCs, i.e., which accept deposits from public and non-deposit taking NBFCs being those which do notaccept deposits from public. The activities carried out by NBFCs in India can be grouped as under The types of NBFCs registered with the RBI are:-  § Equipment leasing Company: is any financial institution whose principal business is that of leasing equipment or financing of such an activity.  § Hire-purchase Company:is any financial intermediary whose principal business relates to hire purchase transactions or financing of such transactions.  § Loan Company: means any financial institution whose principal business is that of providing finance, whether by making loans or advances or otherwise for any activity other than its own (excluding any equipment leasing or hire-purchase finance activity).  § Investment Company: is any financial intermediary whose principal business is that of buying and selling of securities. Now, these NBFCs have been reclassified into three categories:-  § Asset Finance Company (AFC)  § Investment Company (IC) and  § Loan Company (LC). Under this classification, AFC is defined as a financial institution whose principal business is that of financing the physical assets which support various productive/economic activities in the country. GOVERNMENT ROLE IN PROMOTING INFRASTRUCTURE FINANCE: Infrastructure is expected to be a key area of growth in a developing country like India. The Government has been activelypromoting the countrys infrastructure through a sustained focus on area like power, roads, ports and urbantransportation. Private sector participation through public private partnerships as well as privately funded projects isbeing encouraged in order to enable quick scale up of governments efforts and better management. As per PlanningCommissions estimates the investments in infrastructure during the Tenth Plan aggregated to Rs. 4, 52,900 crores whichis expected to increase to Rs. 11, 25,000 crores in the Eleventh Plan. The chart below describes the anticipated andestimated investments under the two plans respectively. PROJECTED INVESTMENT IN INFRASTRUCTURE in the 11th FIVE YEAR PLAN: COMPANY PROFILE: A started operation in 1989, Srei is a leading infrastructure focused private sector Non-Banking Financial Company (NBFC) in India. It is currently the only institution in India offering holistic infrastructure solutions financing, advisory services development. Milestones Achieved: 1989 Started operations and identified the infrastructure sector as its core Business area. 1992 Initial Public Offering with listing on all major stock exchanges. 1997 IFC, FMO DEG invested as strategic equity partners Promoters stake. 2002 Conceived Quippo, Indias first equipment bank. 2004 All India presence, currently 63 offices. 2005 First Indian NBFC to be listed on the London Stock Exchange. 2006 Geographical expansion into Russia; equity partners EBRD, DEG, FMO. 2007 Joint venture with BNP Paribas Lease Group, 100% subsidiary of BNP Paribas. 2008 Holistic Infrastructure Institution, financing, advisory services Development. Services: Ø Infrastructure Equipment Financing Leasing Ø Infrastructure Project: Financing, Advisory services and development Ø Insurance Broking Ø Venture Capital Ø Capital market Ø Sahaj e-village Ø Quippo Equipment Bank GROUP STRUCTURE: About Srei Equipment Finance Private Limited: Srei BNP Paribas (Registered name: Srei Equipment Finance Private Limited) is a 50:50 joint-venture between Srei Infrastructure Finance Limited, Indias leading and only private sector Non-Banking Financial Institution in the infrastructure space and BNP Paribas Leasing Solutions(BPLS), a wholly owned subsidiary of BNP Paribas, France. Srei BNP Paribas started its operation from January 01, 2008 with the infrastructure and construction equipment financing and insurance businesses and has further plans to expand its business to new verticals. Industry leader in the infrastructure and construction equipment financing, Srei BNP Paribas is aptly benefitting from the Indian expertise and insight of Srei and global leasing insight in diverse product classes of BNP Paribas. Srei BNP Paribas has deep insight on diverse equipment used in the infrastructure and construction sector and acts a valuable advisor to its customers. It has tied up with all the leading equipment manufacturers. Over the years, Srei BNP Paribas has been innovating new marketing programs bringing together the manufacturers and customers on a single platform, creating immense value and sharing this value with all the stake holders. Paison Ki Nilami and Srei BNP Paribas Partnership Week are two such prominent programs. Srei BNP Paribas has already started financing Technology Solutions (financing of IT equipment, software and services) and has effectively partnered with leading global IT vendors for financing their customers. It has also forayed into financing of new Equipment classes: Agriculture Equipment, Healthcare Equipment, Office Automation, and Equipment in Education sector etc. With its foray into new equipment classes, Srei BNP Paribas has become probably the one and only Company to offer complete Equipment Solutions. With a customer base of over 20,000, Srei BNP Paribas has grown from strength to strength enjoying a strong national presence with a network of 86 offices across India. VISION: To be the most inspiring global holistic infrastructure institution. MISSION: To be an Indian multinational company providing innovative integrated infrastructure solutions. CORE VALUES: Customer Partnership: At Srei, customer satisfaction is the benchmark for success. Srei delights its customers through a comprehensive range of financial services that are personalized, fast, reliable, convenient, quality driven, and yet cost effective. Integrity: Business integrity is a way of life at Srei. The company strongly stands by integrity in all its dealings and ensures strict adherence to the highest standards of business ethics. Passion for Excellence: Sreis passion for excellence is instrumental in positioning the company as the most innovative infrastructure solution provider in India. Respect for People: Srei acknowledges the fact that its people are its most valuable assets and accordingly provides the best possible work environment and treats them like family members. The company rewards excellence and initiative. Stakeholder Value enhancement: Srei is committed to earning the trust and confidence of all its stake holders. Its growth focus, the ability to constantly enlarge its product basket while controlling risk and reducing the cost of its services have resulted in enhanced value for its stakeholders. Professional Entrepreneurship: Sreis in depth knowledge of infrastructure financing business in India, coupled with its spirit of entrepreneurship, and helps the company to overcome the obstacles and complexities with professional expertise. MANUFACTURING PARTNERS: MARKET SHARE OF SREI BNP PARIBAS: Source: Company. MAJOR COMPETITORS: 1. MAGMA FINCORP LIMITED: Magma Fincorp Ltd (Magma) is a Kolkata based asset financing company. The company is engaged in financingof commercial vehicles, cars, construction equipment, tractors and utility vehicles.The companys target customers are mostly first time users and small entrepreneurs. The Company provides construction equipment finance across retail and strategic customer segments. In the retail segment, it focuses on first-time buyers and small customers. The Company has established contracts with large value vendors addressing multiple projects. It finances a range of construction equipment like excavators, backhoe loaders, compactors, compressors, cranes, tippers and drillers of prominent brands like JCB, Telcon, LT, Ingersoll-Rand, Caterpillar, ECEL, Escorts and Atlas Copco etc. Magma provides unsecured EMI-based loans to SMEs for working capital, business expansion and business maintenance. It has developed proprietary financial analysis tools to make safe credit assessments. The share of this segment is increasing in the total disbursements (5% in FY10). Going forward the company intends to maintain the proportion of these loans at 5% and would adopt a cautious approach while lending. In Commercial Vehicle Finance Segment, Magma provides loans on used commercial vehicles and construction equipment. Magma refinanced popular models of Tata Motors and Ashok Leyland. Magma Fincorp predominantly was engaged in financing of construction equipment and passenger cars, utility vehicles and commercial vehicles (CVs). These business verticals accounted for 90% of the companys disbursements in FY10. Recently the company has ventured into high-yield segments, viz; financing of used CVs, tractors and SME loans. Most of the loans disbursed are retail loans and have small ticket size except in the construction equipment segment. MFL has a concentrated focus on the under tapped semi urban and rural market to finance first time users, Small Road Transport operators, small contractors etc. 2. TATA CAPITAL: The Company was incorporated on March 8, 1991 and actively commenced business operations since September, 2007. The Company is a wholly owned subsidiary of Tata Sons Limited, the apex holding company of the Tatas. Their fund based businesses comprise Corporate Finance, Infrastructure Finance and Retail Finance fee based businesses comprise investment banking, broking and distribution, wealth management, private equity, treasury advisory, services relating to travel, forex and infrastructure. With the wide array of products and customized service, the commercial finance business, helps small, medium and large corporates grow their business. The companys team of handpicked professionals offers in-depth expertise to help customers keep pace with the changing marketplace and offer them appropriate solutions to meet their ever-growing financial needs. The companys management structure enables them to leverage relationships across lines of our businesses. Their product knowledge and multi-channel delivery model enhances the ability to cross-sell the companys services. TATA Capital is in the advanced stages of setting up institutional broking, insurance broking and rural finance businesses which would supplement the aforementioned lines of business. TATA Capital believes that the following are the key strengths: Unified financial services platform; Diversified and balanced mix of businesses; Experienced management team; Innovative solutions model; Respected brand; Controls, processes and risk management systems; and Access to capital. 3. LT FINANCE LIMITED: LT Finance Limited (LTF) is a subsidiary of Larsen and Toubro. It was incorporated as a Non-Banking Finance Company in November 1994. Through LTF, LT aims at making a strong foray in the ever-expanding financial services sector.LT Finance understands the intricacies of your business. We at LT Finance offer financing for your Construction Equipment in the form of term loans, working capital loan and operating lease facilities. In 1996, LT Finance had made a foray in financing of commercial vehicles. LT Finance offers financing Commercial Vehicles of all makes and sizes. We also undertake funding of the body for the Commercial Vehicles. LT Finance has an extensive network from where you can easily avail financing for your Commercial Vehicle. Advantages of partnering with LT Finance Presence in more than 70 locations Flexible repayment option Competitive interest rates Finance for used vehicles available Faster loan approval and disbursement A brief Comparison between SREI EQUIPMENT FINSNCE its Competitors: REASON FOR THE JOINT VENTURE WITH BNP PARIBAS LEGAL SOLUTIONS: Mr.HemantKanoria, Vice Chairman and Managing Director of SREI, termed this joint venture as a very significant step in the Indian Financial Services Market. â€Å"We are the largest player in the financing of infrastructure equipment and collaborating with BPLG will help in increasing our market share further and also expanding the product line into financing of agriculture, information technology, medical and other equipment.† Speaking at the occasion Mr. Bertrand Gousset, member of the Executive Committee of BPLG, in charge of Corporate Development, said, â€Å"We are delighted to be associated with the SREI group, who are the leaders in the financing of infrastructure equipment and provide a wide range of equipment finance products to large strategic clients as well as to retail customers, with pan-India coverage. This joint venture is very significant for us and we look forward to a long and prosperous association with them.† Mr. Sunil Kanoria said, â€Å"This joint venture signifies the coming together of two companies with the same shared values. Both SREI and BPLG are convinced that they are well positioned to build on the already strong platform established by SREI and that this will enable in reduction in cost of funds resulting in higher profitability.† Mr.Amoudru, CEO of BNP Paribas India and Head of Territory, said The acquisition of a 50% stake in this joint-venture with SREI a highly recognised firm in equipment and infrastructure financing further evidences the willingness of the BNP Paribas Group to expand its presence in India in activities where it has a strong expertise. It represents another substantial capital commitment from the Group- the largest so far- in this country and testifies our confidence in the long term prospects of the Indian economy. SWOT ANALYSIS: LITERATURE REVIEW: FLOW OF THE PROCESS AT SREI: CREDIT APPRAISAL: Credit Appraisal is a process to ascertain the risks associated with the extension of the credit facility. It is generally carried by the financial institutions which are involved in providing financial funding to its customers.These financial institutions appraise the technical feasibility, economic viability and bankability including creditworthiness of the prospective borrower. Credit appraisal starts from the time a prospective borrower walks into the branch and culminates in credit delivery and monitoring with the objective of ensuring and maintaining the quality of lending and managing credit risk within acceptable limits. Credit appraisal involves analysis of liquidity position/ financial soundness of the company. Although, the analysis also covers understanding growth trends in revenues and earnings, and profit margins, more emphasis is required to be placed on liquidity-both long term and short term. There are basically two types of proposals that are received by the companies for funds. The first types of proposals are financing against new and first hand assets to be purchased (EQUIK) and the other proposals are financing against pre owned assets (REQUIK). Asset finance is generally divided into three departments depending upon the risk exposure*: Retail: Aggregate risk exposure not exceeding Rs.1 crore. SME (Small Medium Enterprises): Aggregate risk exposure between Rs.1 5 crores. Strategic: Aggregate exposure more than Rs.5 crores. *NOTE: Risk exposure to a client is determined by the summation of Net Finance Amount for the approval(s) being considered, together with all existing exposures to the client all related concerns in aggregate and residual Net Finance Amounts under all previous valid approvals for the Client pending part or full disbursement. SOME IMPORTANT TERMINOLOGIES: ASSET FINANCE: Asset Finance category includes secured business loan in which the borrower pledges as collateral an asset used in the conduct of its business. Asset finance also includes business in which a client takes an asset on lease for use in the conduct of his business for a defined period with or without right of onward sub lease the asset. ASSET COST: In case of Equik, the invoice values of the Asset including all duties and taxes which are not refundable or adjustable under drawback or otherwise any scheme. Spares, consumables, accessories auxiliaries, consultancy fees, installation and erection charges, etc. shall not be considered as part of asset cost. In case of Requik, Asset cost will be determined by the lowest of: Present Intrinsic Value of Asset as determined through a process by an expert approved by SREI. Actual purchase price to be paid by the consumer Current Insured Declared Value. MARGIN: Margin means the clients contribution on the Asset Cost payable upfront or any amount deposited with us as Security Deposit in relation to the transaction before the disbursement or release of facility. AIRR: Internal Rate of Return (IRR) by definition is the rate of return at which the Net Present Value of the stream of payments (repayment of installments and interest by the customer vis-à  -vis the actual disbursement made by the company) become equal to zero. FIRR: Financial IRR (FIRR) shall mean the transaction IRR without factoring any benefit available to Srei BNPP in terms of normal MOU entered into by srei BNPP with concerned manufacturer. Management fees/ RTE/ Commitment Charges collected upfront, an extra credit period, subvention or other cash incentives extracted from the manufacturer over and above those available workings. YIELD: Yield means the rate of return to Srei-BNPP from the transaction, factoring all the benefits available to Srei-BNPP under normal MOU and otherwise from the manufacturers/vendors. ETR (Excellent Track Record): ETR means peak delay of not more than 30 days and average delay of not more than 15 days for payment of dues in all existing and past accounts of the proposed customer. GTR (Good track Record): GTR means peak delay of not more than 45 days and average delay of not more than 30 days for payment of dues in all existing and past accounts of the proposed customer. PTR (Poor track Record): PTR means peak delay more than 45 days and average delay of more than 30 days for payment of dues in all existing and past accounts of the proposed customer. ANALYSIS OF CREDIT APPRAISAL MEMORANDUM: Credit risk of each individual transaction is studied and managed from the five different perspectives: Customer credit worthiness Asset quality Asset deployment Collateral security Facility type Background of the proponent/ management: The identification of the borrower is done properly through scrutiny of his antecedents, experience, competence, integrity, initiative etc. This may be done by obtaining status reports from previous bankers. In case of corporate, the management structure, the background of the top management needs to be scrutinized. KYC guidelines as framed by RBI are adopted by the company. Commercial Appraisal: The nature of the product, demand for the same, the existing and perceived competition in the segment, ability of the proponents to withstand the same, government policies governing the industry etc. need to be taken into consideration. Technical Appraisal: Technical appraisal of the project needs to be carried out for industrial activity proposals beyond the cut off limits prescribed from time to time. Such appraisal may be carried out in house by technical officers. Financial Appraisal: Apart from ascertaining the need based character of the limits requested for, the financial health of the proponents, ability to absorb unanticipated financial costs need to be looked into which would include scrutiny of the cost of the project, means of financing, financial projections etc. important performance indicators like profitability ratios, debt equity ratio, operating profit margin etc. need to be within acceptable parameters for that industries/ activities. INTRODUCTION TO RISK: The interpretation of the word risk will determine the approach to risk management. The word risk is interpreted in three distinct senses namely risk as hazard, risk as opportunity and risk as uncertainty. Risk as hazard is the most commonly used meaning of risk and it means likely financial losses arising from negative events such as control failures, bad publicity and loss of reputation. Risk management in this context would mean eliminating possibilities of losses from such negative events by putting in place adequate control systems. Risk as an opportunity means, taking risks and earning adequate returns on them. This implies the trade-off between risk and return. Here risk management, becomes risk optimization meaning maximizing the upside potential and minimizing the downside. Here capacity and ability to manage risk is used to increase shareholders value and achieve a competitive advantage. Risk, as uncertainty is basically a statistical concept, which assumes a normal distribution for future outcomes. Here risk management means narrowing the difference between the expected outcomes and actual results. Banks and other similar financial institutions need to manage the risk inherent in the entire portfolio as well as the risk in individual credits or transactions. The effective management of risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organization. In simple words, risk is the possibility of losses associated with decrease in the credit quality of borrowers. In a financial institution, loss may stem from default due to inability or unwillingness of a customer to meet his commitments in relation to lending, trading, settlement and other financial transactions. A default reduces the present value of the loan and consequently the value of the banks business. Thus, it is imperative that these institutions have a robust risk management. MODEL BUILDING: Need for Study: A Risk Assessment Model (RAM) is necessary to avoid the limitations associated with a simplistic and broad classification of applicants into a good or bad category The comapny currently uses a judgemental risk assessing model. Grading System for Standardization of Risk: The grades (symbols, numbers, alphabets, and descriptive terms) used in the internal credit-risk grading system represent, without any ambiguity, the default risks associated with an exposure. The grading system will enable comparisons of risks for purposes of analysis and top management decision-making. The grading system is therefore, be flexible and should accommodate the refinement SREI India Financial and SWOT Analysis SREI India Financial and SWOT Analysis OBJECTIVE OF THE PROJECT: To develop and understanding of the Non-Banking Financial Institutions (NBFIs) and their business operations in India. To do a detailed research on SREI Equipment Finance Private Limited, its market share and the SWOT analysis. To thoroughly review SREIs credit appraisal and credit management process. To understand the risk management process of the company. To gain a detailed knowledge of the parameters that affects various risks. To determine weightages and scores for designing and developing risk assessment model based on market forces for assessing SREIs Customers. METHODOLOGY: In order to achieve the said objectives, will be to go through the entire NBFs history, thrust areas; growth opportunities, present scenario. This will be the ongoing process and will be done using internet, news and books. To understand the functioning of SREI pertaining to credit risk management and appraisal process followed for financing large corporates (risk exposures more than Rs.5 crores). Factual data, credit appraisal memorandum prepared by the company and the credit risk policy of the company will be referred in this regard. Then comes the technical part of conducting Balance Sheet Analysis, Ratio Analysis and Cash Flow Analysis. To propose a statistical credit rating model, data have been collected from credit officers and the relationship managers in the institution. Financial ratios were used to measure the strength of the customer. Score model for assessing risk to convert responses to scores. Weighted average method applied to assign appropriate importance to various parameters. LIMITATIONS OF THE STUDY: The study will only be focusing on the LARGE CORPORATES (risk exposure more than Rs.5 crores) not the retail and SME sectors of SREI. Study is on the basis of first-hand information collected from employees/head of the division of the company that might be incorrect or biased. Duration of the internship imparts the pressure of covering this vast spectrum in a limit period of 14 weeks. The accuracy of the Risk Assessing Model depends on the accuracy of information provided by the customer. The risk rating model doesnt take into the consideration where in the company doesnt follow the rules norms strictly. The relationships with the customers are given more importance. INDUSTRY ANALYSIS: Structure of Indias Financial Services Industry: The RBI, the central banking and monetary authority of India, is the central regulatory and supervisory authority for the Indian financial system. SEBI and IRDA regulate the capital markets and insurance sector, respectively. A variety offinancial intermediaries in the public and private sectors participate in Indias financial sector, including the following: Commercial banks; NBFCs; Specialised financial institutions like NABARD, EXIM Bank, SIDBI and TFCI; Securities brokers; Investment banks; Insurance companies; Mutual funds; and Venture capital. NON-BANKING FINANCIALCOMPANIES: Non-banking financial companies (NBFCs) are fast emerging as an important segment of Indian financial system. It is an heterogeneous group of institutions (other than commercial and co-operative banks) performing financial intermediation in a variety of ways, like accepting deposits, making loans and advances, leasing, hire purchase, etc. They raise funds from the public, directly or indirectly, and lend them to ultimate spenders. They advance loans to the various wholesale and retail traders, small-scale industries and self-employed persons. Thus, they have broadened and diversified the range of products and services offered by a financial sector. Gradually, they are being recognized as complementary to the banking sector due to their customer-oriented services; simplified procedures; attractive rates of return on deposits; flexibility and timeliness in meeting the credit needs of specified sectors; etc. The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the Reserve Bank of India Act, 1934 (Chapter III B) and the directions issued by it under the Act. As per the RBI Act, a non-banking financial company is defined as:- (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; (iii) such other non-banking institution or class of such institutions, as the bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. NBFCs VsBANKING SECTOR IN INDIA: Non-Banking Finance Companies (NBFCs) are an integral part of the countrys financial system complementing theservices of commercial banks. The main reason attributed to the growth of NBFCs is the comprehensive regulation of thebanking system. Other factors include higher level of customer orientation, lesser pre/post sanction requirements andhigher rates of interest on deposits being offered by NBFCs. NBFCs have traditionally been extending credit across various parts of the country through their geographical presence,with NBFCs being a supplier of credit to segments such as equipment leasing, hire purchase, and consumer finance. Theseare areas which warrant infusion of financing due to the existing demand-supply gap. NBFCs have been a more flexiblesource of financing and have been able to disburse funds to a gamut of client, from the local common man to a varietyof corporate client. NBFCs are also able to accelerate the pace of decision making to disburse funds, customise andtailor their products according to the client needs and take on excess risks on their portfolio. NBFCs can be divided intodeposit taking NBFCs, i.e., which accept deposits from public and non-deposit taking NBFCs being those which do notaccept deposits from public. The activities carried out by NBFCs in India can be grouped as under The types of NBFCs registered with the RBI are:-  § Equipment leasing Company: is any financial institution whose principal business is that of leasing equipment or financing of such an activity.  § Hire-purchase Company:is any financial intermediary whose principal business relates to hire purchase transactions or financing of such transactions.  § Loan Company: means any financial institution whose principal business is that of providing finance, whether by making loans or advances or otherwise for any activity other than its own (excluding any equipment leasing or hire-purchase finance activity).  § Investment Company: is any financial intermediary whose principal business is that of buying and selling of securities. Now, these NBFCs have been reclassified into three categories:-  § Asset Finance Company (AFC)  § Investment Company (IC) and  § Loan Company (LC). Under this classification, AFC is defined as a financial institution whose principal business is that of financing the physical assets which support various productive/economic activities in the country. GOVERNMENT ROLE IN PROMOTING INFRASTRUCTURE FINANCE: Infrastructure is expected to be a key area of growth in a developing country like India. The Government has been activelypromoting the countrys infrastructure through a sustained focus on area like power, roads, ports and urbantransportation. Private sector participation through public private partnerships as well as privately funded projects isbeing encouraged in order to enable quick scale up of governments efforts and better management. As per PlanningCommissions estimates the investments in infrastructure during the Tenth Plan aggregated to Rs. 4, 52,900 crores whichis expected to increase to Rs. 11, 25,000 crores in the Eleventh Plan. The chart below describes the anticipated andestimated investments under the two plans respectively. PROJECTED INVESTMENT IN INFRASTRUCTURE in the 11th FIVE YEAR PLAN: COMPANY PROFILE: A started operation in 1989, Srei is a leading infrastructure focused private sector Non-Banking Financial Company (NBFC) in India. It is currently the only institution in India offering holistic infrastructure solutions financing, advisory services development. Milestones Achieved: 1989 Started operations and identified the infrastructure sector as its core Business area. 1992 Initial Public Offering with listing on all major stock exchanges. 1997 IFC, FMO DEG invested as strategic equity partners Promoters stake. 2002 Conceived Quippo, Indias first equipment bank. 2004 All India presence, currently 63 offices. 2005 First Indian NBFC to be listed on the London Stock Exchange. 2006 Geographical expansion into Russia; equity partners EBRD, DEG, FMO. 2007 Joint venture with BNP Paribas Lease Group, 100% subsidiary of BNP Paribas. 2008 Holistic Infrastructure Institution, financing, advisory services Development. Services: Ø Infrastructure Equipment Financing Leasing Ø Infrastructure Project: Financing, Advisory services and development Ø Insurance Broking Ø Venture Capital Ø Capital market Ø Sahaj e-village Ø Quippo Equipment Bank GROUP STRUCTURE: About Srei Equipment Finance Private Limited: Srei BNP Paribas (Registered name: Srei Equipment Finance Private Limited) is a 50:50 joint-venture between Srei Infrastructure Finance Limited, Indias leading and only private sector Non-Banking Financial Institution in the infrastructure space and BNP Paribas Leasing Solutions(BPLS), a wholly owned subsidiary of BNP Paribas, France. Srei BNP Paribas started its operation from January 01, 2008 with the infrastructure and construction equipment financing and insurance businesses and has further plans to expand its business to new verticals. Industry leader in the infrastructure and construction equipment financing, Srei BNP Paribas is aptly benefitting from the Indian expertise and insight of Srei and global leasing insight in diverse product classes of BNP Paribas. Srei BNP Paribas has deep insight on diverse equipment used in the infrastructure and construction sector and acts a valuable advisor to its customers. It has tied up with all the leading equipment manufacturers. Over the years, Srei BNP Paribas has been innovating new marketing programs bringing together the manufacturers and customers on a single platform, creating immense value and sharing this value with all the stake holders. Paison Ki Nilami and Srei BNP Paribas Partnership Week are two such prominent programs. Srei BNP Paribas has already started financing Technology Solutions (financing of IT equipment, software and services) and has effectively partnered with leading global IT vendors for financing their customers. It has also forayed into financing of new Equipment classes: Agriculture Equipment, Healthcare Equipment, Office Automation, and Equipment in Education sector etc. With its foray into new equipment classes, Srei BNP Paribas has become probably the one and only Company to offer complete Equipment Solutions. With a customer base of over 20,000, Srei BNP Paribas has grown from strength to strength enjoying a strong national presence with a network of 86 offices across India. VISION: To be the most inspiring global holistic infrastructure institution. MISSION: To be an Indian multinational company providing innovative integrated infrastructure solutions. CORE VALUES: Customer Partnership: At Srei, customer satisfaction is the benchmark for success. Srei delights its customers through a comprehensive range of financial services that are personalized, fast, reliable, convenient, quality driven, and yet cost effective. Integrity: Business integrity is a way of life at Srei. The company strongly stands by integrity in all its dealings and ensures strict adherence to the highest standards of business ethics. Passion for Excellence: Sreis passion for excellence is instrumental in positioning the company as the most innovative infrastructure solution provider in India. Respect for People: Srei acknowledges the fact that its people are its most valuable assets and accordingly provides the best possible work environment and treats them like family members. The company rewards excellence and initiative. Stakeholder Value enhancement: Srei is committed to earning the trust and confidence of all its stake holders. Its growth focus, the ability to constantly enlarge its product basket while controlling risk and reducing the cost of its services have resulted in enhanced value for its stakeholders. Professional Entrepreneurship: Sreis in depth knowledge of infrastructure financing business in India, coupled with its spirit of entrepreneurship, and helps the company to overcome the obstacles and complexities with professional expertise. MANUFACTURING PARTNERS: MARKET SHARE OF SREI BNP PARIBAS: Source: Company. MAJOR COMPETITORS: 1. MAGMA FINCORP LIMITED: Magma Fincorp Ltd (Magma) is a Kolkata based asset financing company. The company is engaged in financingof commercial vehicles, cars, construction equipment, tractors and utility vehicles.The companys target customers are mostly first time users and small entrepreneurs. The Company provides construction equipment finance across retail and strategic customer segments. In the retail segment, it focuses on first-time buyers and small customers. The Company has established contracts with large value vendors addressing multiple projects. It finances a range of construction equipment like excavators, backhoe loaders, compactors, compressors, cranes, tippers and drillers of prominent brands like JCB, Telcon, LT, Ingersoll-Rand, Caterpillar, ECEL, Escorts and Atlas Copco etc. Magma provides unsecured EMI-based loans to SMEs for working capital, business expansion and business maintenance. It has developed proprietary financial analysis tools to make safe credit assessments. The share of this segment is increasing in the total disbursements (5% in FY10). Going forward the company intends to maintain the proportion of these loans at 5% and would adopt a cautious approach while lending. In Commercial Vehicle Finance Segment, Magma provides loans on used commercial vehicles and construction equipment. Magma refinanced popular models of Tata Motors and Ashok Leyland. Magma Fincorp predominantly was engaged in financing of construction equipment and passenger cars, utility vehicles and commercial vehicles (CVs). These business verticals accounted for 90% of the companys disbursements in FY10. Recently the company has ventured into high-yield segments, viz; financing of used CVs, tractors and SME loans. Most of the loans disbursed are retail loans and have small ticket size except in the construction equipment segment. MFL has a concentrated focus on the under tapped semi urban and rural market to finance first time users, Small Road Transport operators, small contractors etc. 2. TATA CAPITAL: The Company was incorporated on March 8, 1991 and actively commenced business operations since September, 2007. The Company is a wholly owned subsidiary of Tata Sons Limited, the apex holding company of the Tatas. Their fund based businesses comprise Corporate Finance, Infrastructure Finance and Retail Finance fee based businesses comprise investment banking, broking and distribution, wealth management, private equity, treasury advisory, services relating to travel, forex and infrastructure. With the wide array of products and customized service, the commercial finance business, helps small, medium and large corporates grow their business. The companys team of handpicked professionals offers in-depth expertise to help customers keep pace with the changing marketplace and offer them appropriate solutions to meet their ever-growing financial needs. The companys management structure enables them to leverage relationships across lines of our businesses. Their product knowledge and multi-channel delivery model enhances the ability to cross-sell the companys services. TATA Capital is in the advanced stages of setting up institutional broking, insurance broking and rural finance businesses which would supplement the aforementioned lines of business. TATA Capital believes that the following are the key strengths: Unified financial services platform; Diversified and balanced mix of businesses; Experienced management team; Innovative solutions model; Respected brand; Controls, processes and risk management systems; and Access to capital. 3. LT FINANCE LIMITED: LT Finance Limited (LTF) is a subsidiary of Larsen and Toubro. It was incorporated as a Non-Banking Finance Company in November 1994. Through LTF, LT aims at making a strong foray in the ever-expanding financial services sector.LT Finance understands the intricacies of your business. We at LT Finance offer financing for your Construction Equipment in the form of term loans, working capital loan and operating lease facilities. In 1996, LT Finance had made a foray in financing of commercial vehicles. LT Finance offers financing Commercial Vehicles of all makes and sizes. We also undertake funding of the body for the Commercial Vehicles. LT Finance has an extensive network from where you can easily avail financing for your Commercial Vehicle. Advantages of partnering with LT Finance Presence in more than 70 locations Flexible repayment option Competitive interest rates Finance for used vehicles available Faster loan approval and disbursement A brief Comparison between SREI EQUIPMENT FINSNCE its Competitors: REASON FOR THE JOINT VENTURE WITH BNP PARIBAS LEGAL SOLUTIONS: Mr.HemantKanoria, Vice Chairman and Managing Director of SREI, termed this joint venture as a very significant step in the Indian Financial Services Market. â€Å"We are the largest player in the financing of infrastructure equipment and collaborating with BPLG will help in increasing our market share further and also expanding the product line into financing of agriculture, information technology, medical and other equipment.† Speaking at the occasion Mr. Bertrand Gousset, member of the Executive Committee of BPLG, in charge of Corporate Development, said, â€Å"We are delighted to be associated with the SREI group, who are the leaders in the financing of infrastructure equipment and provide a wide range of equipment finance products to large strategic clients as well as to retail customers, with pan-India coverage. This joint venture is very significant for us and we look forward to a long and prosperous association with them.† Mr. Sunil Kanoria said, â€Å"This joint venture signifies the coming together of two companies with the same shared values. Both SREI and BPLG are convinced that they are well positioned to build on the already strong platform established by SREI and that this will enable in reduction in cost of funds resulting in higher profitability.† Mr.Amoudru, CEO of BNP Paribas India and Head of Territory, said The acquisition of a 50% stake in this joint-venture with SREI a highly recognised firm in equipment and infrastructure financing further evidences the willingness of the BNP Paribas Group to expand its presence in India in activities where it has a strong expertise. It represents another substantial capital commitment from the Group- the largest so far- in this country and testifies our confidence in the long term prospects of the Indian economy. SWOT ANALYSIS: LITERATURE REVIEW: FLOW OF THE PROCESS AT SREI: CREDIT APPRAISAL: Credit Appraisal is a process to ascertain the risks associated with the extension of the credit facility. It is generally carried by the financial institutions which are involved in providing financial funding to its customers.These financial institutions appraise the technical feasibility, economic viability and bankability including creditworthiness of the prospective borrower. Credit appraisal starts from the time a prospective borrower walks into the branch and culminates in credit delivery and monitoring with the objective of ensuring and maintaining the quality of lending and managing credit risk within acceptable limits. Credit appraisal involves analysis of liquidity position/ financial soundness of the company. Although, the analysis also covers understanding growth trends in revenues and earnings, and profit margins, more emphasis is required to be placed on liquidity-both long term and short term. There are basically two types of proposals that are received by the companies for funds. The first types of proposals are financing against new and first hand assets to be purchased (EQUIK) and the other proposals are financing against pre owned assets (REQUIK). Asset finance is generally divided into three departments depending upon the risk exposure*: Retail: Aggregate risk exposure not exceeding Rs.1 crore. SME (Small Medium Enterprises): Aggregate risk exposure between Rs.1 5 crores. Strategic: Aggregate exposure more than Rs.5 crores. *NOTE: Risk exposure to a client is determined by the summation of Net Finance Amount for the approval(s) being considered, together with all existing exposures to the client all related concerns in aggregate and residual Net Finance Amounts under all previous valid approvals for the Client pending part or full disbursement. SOME IMPORTANT TERMINOLOGIES: ASSET FINANCE: Asset Finance category includes secured business loan in which the borrower pledges as collateral an asset used in the conduct of its business. Asset finance also includes business in which a client takes an asset on lease for use in the conduct of his business for a defined period with or without right of onward sub lease the asset. ASSET COST: In case of Equik, the invoice values of the Asset including all duties and taxes which are not refundable or adjustable under drawback or otherwise any scheme. Spares, consumables, accessories auxiliaries, consultancy fees, installation and erection charges, etc. shall not be considered as part of asset cost. In case of Requik, Asset cost will be determined by the lowest of: Present Intrinsic Value of Asset as determined through a process by an expert approved by SREI. Actual purchase price to be paid by the consumer Current Insured Declared Value. MARGIN: Margin means the clients contribution on the Asset Cost payable upfront or any amount deposited with us as Security Deposit in relation to the transaction before the disbursement or release of facility. AIRR: Internal Rate of Return (IRR) by definition is the rate of return at which the Net Present Value of the stream of payments (repayment of installments and interest by the customer vis-à  -vis the actual disbursement made by the company) become equal to zero. FIRR: Financial IRR (FIRR) shall mean the transaction IRR without factoring any benefit available to Srei BNPP in terms of normal MOU entered into by srei BNPP with concerned manufacturer. Management fees/ RTE/ Commitment Charges collected upfront, an extra credit period, subvention or other cash incentives extracted from the manufacturer over and above those available workings. YIELD: Yield means the rate of return to Srei-BNPP from the transaction, factoring all the benefits available to Srei-BNPP under normal MOU and otherwise from the manufacturers/vendors. ETR (Excellent Track Record): ETR means peak delay of not more than 30 days and average delay of not more than 15 days for payment of dues in all existing and past accounts of the proposed customer. GTR (Good track Record): GTR means peak delay of not more than 45 days and average delay of not more than 30 days for payment of dues in all existing and past accounts of the proposed customer. PTR (Poor track Record): PTR means peak delay more than 45 days and average delay of more than 30 days for payment of dues in all existing and past accounts of the proposed customer. ANALYSIS OF CREDIT APPRAISAL MEMORANDUM: Credit risk of each individual transaction is studied and managed from the five different perspectives: Customer credit worthiness Asset quality Asset deployment Collateral security Facility type Background of the proponent/ management: The identification of the borrower is done properly through scrutiny of his antecedents, experience, competence, integrity, initiative etc. This may be done by obtaining status reports from previous bankers. In case of corporate, the management structure, the background of the top management needs to be scrutinized. KYC guidelines as framed by RBI are adopted by the company. Commercial Appraisal: The nature of the product, demand for the same, the existing and perceived competition in the segment, ability of the proponents to withstand the same, government policies governing the industry etc. need to be taken into consideration. Technical Appraisal: Technical appraisal of the project needs to be carried out for industrial activity proposals beyond the cut off limits prescribed from time to time. Such appraisal may be carried out in house by technical officers. Financial Appraisal: Apart from ascertaining the need based character of the limits requested for, the financial health of the proponents, ability to absorb unanticipated financial costs need to be looked into which would include scrutiny of the cost of the project, means of financing, financial projections etc. important performance indicators like profitability ratios, debt equity ratio, operating profit margin etc. need to be within acceptable parameters for that industries/ activities. INTRODUCTION TO RISK: The interpretation of the word risk will determine the approach to risk management. The word risk is interpreted in three distinct senses namely risk as hazard, risk as opportunity and risk as uncertainty. Risk as hazard is the most commonly used meaning of risk and it means likely financial losses arising from negative events such as control failures, bad publicity and loss of reputation. Risk management in this context would mean eliminating possibilities of losses from such negative events by putting in place adequate control systems. Risk as an opportunity means, taking risks and earning adequate returns on them. This implies the trade-off between risk and return. Here risk management, becomes risk optimization meaning maximizing the upside potential and minimizing the downside. Here capacity and ability to manage risk is used to increase shareholders value and achieve a competitive advantage. Risk, as uncertainty is basically a statistical concept, which assumes a normal distribution for future outcomes. Here risk management means narrowing the difference between the expected outcomes and actual results. Banks and other similar financial institutions need to manage the risk inherent in the entire portfolio as well as the risk in individual credits or transactions. The effective management of risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organization. In simple words, risk is the possibility of losses associated with decrease in the credit quality of borrowers. In a financial institution, loss may stem from default due to inability or unwillingness of a customer to meet his commitments in relation to lending, trading, settlement and other financial transactions. A default reduces the present value of the loan and consequently the value of the banks business. Thus, it is imperative that these institutions have a robust risk management. MODEL BUILDING: Need for Study: A Risk Assessment Model (RAM) is necessary to avoid the limitations associated with a simplistic and broad classification of applicants into a good or bad category The comapny currently uses a judgemental risk assessing model. Grading System for Standardization of Risk: The grades (symbols, numbers, alphabets, and descriptive terms) used in the internal credit-risk grading system represent, without any ambiguity, the default risks associated with an exposure. The grading system will enable comparisons of risks for purposes of analysis and top management decision-making. The grading system is therefore, be flexible and should accommodate the refinement