A STUDY ON CREDIT APPRAISAL SYSYEM OF

HIRE PURCHASE BUSINESS WITH REFERENCE

TO SUNDARAM FINANCE LIMITED, CHENNAI.

A PROJECT REPORT

Submitted By

V.P. SIVASAKTHI

Reg.No:11307631047

in partial fulfillment for the award of the degree

of

MASTER OF BUSINESS ADMINISTRATION

IN

DEPARTMENT OF MANAGEMENT STUDIES

R.M.K. ENGINEERING COLLEGE

ANNA UNIVERSITY: CHENNAI 600 025

JUNE 2009

ANNA UNIVERSITY: CHENNAI 600 025

BONAFIDE CERTIFICATE

Certified that this project report “A STUDY ON CREDIT APPRAISAL

SYSYEM OF HIRE PURCHASE BUSINESS WITH REFERENCE TO

SUNDARAM FINANCE LIMITED, CHENNAI” is the bonafide work of

“V.P.SIVASAKTHI” who carried out the project work under my

supervision.

SIGNATURE SIGNATURE

Dr. PREMA SANKARAN MRS. R. MUZHUMATHI

HEAD OF THE DEPARTMENT SUPERVISOR

Master of Business Administration Master of Business Administration

R.M.K. Engineering College R.M.K. Engineering College

R.S.M. Nagar, R.S.M. Nagar,

Kavaraipettai – 601 206 Kavaraipettai – 601206

Gummidipoondi Gummidipoondi.

ACKNOWLEDGEMENT

I express my foremost thanks to the Almighty God for his blessings in

helping me to complete my Project Work successfully.

I express my sincere gratitude to DR. K. CHANDRASEKARAN,

Principal, R.M.K. ENGINEERING COLLEGE, who granted me this

opportunity.

I express my sincere gratitude to DR. PREMA SANKARAN, Ph.D.,

Head of the Department, who granted me this opportunity.

I am deeply grateful to my internal guide MRS.R.MUZHUMATHI,

M.B.A., M.Phil., Ph.D. for her guidance and effective suggestion.

I extend my special thanks to Mr.J.RAVI, Manager (Operations), SFL

who has given his help and a source of great support throughout the project.

I also express my sincere gratitude to all the respondents who have

given me all necessary information for carrying out my study successfully.

V.P.

SIVASAKTHI.

TABLE OF CONTENTS

CHAPTER

NO.TITLE

PAGE

NO.

ABSTRACT i

LIST OF TABLE ii

LIST OF FIGURES iii

LIST OF ABBREVIATIONS iv

I INTRODUCTION

1.1 Introduction to the study

1.1.1 Need and Importance of the study

1.1.2 Scope of the study

1.1.3 Objectives of the study

1.1.4 Research Methodology

1.1.4.1 Research Design

1.1.4.2 Sources of Data

1.1.4.3 Population and sample

1.1.4.4 Hypothesis

1.1.4.5 Tools and Techniques

1.1.5 Limitations of the Study

1.1.6 Chapterisation

1.2 Review of Literature

1.2.1 Theoretical Review of the study

CHAPTER

NO.TITLE

PAGE

NO.

1.2.2 Industry Profile

1.2.3 Company Profile

1.2.4 Product Profile

II ANALYSIS AND INTERPRETATION

2.1 Percentage Analysis

2.2 Statistical Analysis

2.2.1 Chi square

2.3 SWOT analysis

III SUMMARY AND CONCLUSION

3.1 Findings of the Study

3.2 Suggestions

3.3 Conclusions

BIBLIOGRAPHY

APPENDICES

Data collected

ABSTRACT

SUNDARAM FINANCE LIMITED (SFL) is one of the leading

financial institutions in India comes under the category of non-banking

financial companies (NBFCs). SFL is a largest financial company belongs to

TVS group. SFL is a financial institution which provides vehicle finance,

leasing and accepts deposits from its customer. SFL has uncompromising

commitment to customer service and employee welfare. SFL has well

known for its loyal customer. SFL has more than 541 branches allover India.

The study is entrusted to analyze the credit appraisal process and

to find out the performance and workings of Hire Purchase business in SFL.

The study is also entrusted to view the development of Hire

Purchase business in SFL, its concepts, agreement, features, terms and

stages involved in Hire Purchase business.

This study is done by evaluating the performance of HP

business. A sample of HP customers is taken for analysis purpose. With

respect to data collection both primary data and secondary data have been

collected. Primary data are being collected by personal interviews and

discussions with the various officials of SFL. Secondary data are being

collected from the annual reports, company’s website, and credit appraisal

reports of the company.

From the study, the credit appraisal process and its performance

on HP is analyzed by applying of various tools and techniques. Based on the

findings, suggestions are given for the development of credit appraisal

process which in turn helps in the development of HP business of SFL.

i

LIST OF TABLES

2.1 Percentage Analysis

S.NO. TITLES Page No

2.1.1 Table showing the credit deviation in car contracts

2.1.2 Table showing the credit deviation in commercial

vehicle contracts

2.1.3 Table showing the performance of car contracts

2.1.4 Table showing the performance of commercial

vehicle contracts

2.1.5 Table showing the various credit deviations for car

contracts

2..1.6 Table showing the various credit deviations for

commercial vehicle contracts

2.1.7 Table showing the development of HP Business

2.1.8 Table showing the sales performance of HP Business

2.2.1 Chi-square

S.NO. TITLES Page No

2.2.1.1 Table showing the relationship between credit

deviation and performance of car contracts

2.2.1.2 Table showing the relationship between credit

deviation and performance of commercial vehicle

contracts

ii

LIST OF FIGURE

S.NO. TITLES PAGE

NO.

2.1.1 Figure showing the credit deviation in car contracts

2.1.2 Figure showing the credit deviation in commercial

vehicle contracts

2.1.3 Figure showing the performance of car contracts

2.1.4 Figure showing the performance of commercial

vehicle contracts

2.1.5 Figure showing the various credit deviations for car

contracts

2.1.6 Figure showing the various credit deviations for

commercial vehicle contracts

2.1.7 Figure showing the development of HP Business

2.1.8 Figure showing the sales performance of HP

Business

iii

LIST OF ABBREVIATIONS

iv

ABBREVIATIONS

SFL Sundaram Finance Limited

HP Hire Purchase

NBFC Non Banking Financial Company

EMI Equal Monthly Installments

CHAPTER I

INTRODUCTION

CHAPTER I

1. INTRODUCTION

1.1 Introduction to the Study

Hire Purchase is a type of installment credited under which the hire

purchaser, called the ‘hirer’ agrees to take the goods on hire at a stated rental

which is inclusive of the repayment of principal as well as interest, with an

option to purchase. A contract of hire is a contract act. The system of acquire

an asset to an intending purchaser who is unable to pay the full price of the

asset at one time in lump sum.

At the time, there was great deal of hire purchase particularly in

respect of customer durables. The sellers of consumer installment credit

were looked upon as disguised money lender who tempted their customers

into debt which they could not afford to pay, whereas the hirers were

accused of lending improvident lives. But social attitudes towards HP have

today undergone a remarkable change and not only the old prejudice against

it has practically disappeared, but HP is also fast receiving due recognition

as a mode of industry finance, one step further to non consumer finance.

All early HP transactions were financed by the manufactures or

dealers themselves who sold the goods on HP terms. Subsequently

independent financial houses come into existence who offered finance on

HP terms for the purchase of a wide variety of consumer articles,

automobiles and later industrial machinery also.

At one time, the dealer was expected to pay for the privilege of this

financing facility by selling the goods to the finance company to a discount

but competition among the finance houses led to a general increase in the

dealer bargaining power, and eventually the finance company was forced to

pay the dealer a commission on certain classes of transactions - e.g.,

agreements relating to motor vehicle - if it wished to obtain business.

The growth of and development of the system of HP finance can be

traced to the advent of industrial development in the UK, it is said that one

Mr. Henry Moore a bishop gate piano maker introduced the system of HP

first time in 1846. Thereafter this new method obtaining goods on credit

rapidly gained favor with the advent of sewing machine produced by singer

manufacturing company which let out machines to its customer under hiring

agreement containing on options, the sums paid by the way of hire rent

being allowed against the purchase price in the event of the option being

exercised.

At one time the dealer was expected to pay for the privilege of this

financing facility by selling the goods to the finance company to a discount

but competition among the finance houses led to a general increase in the

dealer bargaining power, and eventually the finance company was forced to

pay the dealer a commission on certain classes of transaction - e.g.,

agreements relating to motor vehicles - if it wished to obtain business.

Concept of HP:

Any product from pin to plane is financed. The purchaser or the user

identifies the product. He contact the HP company and after finalizing the

quantum of finance, period, finance charges, or rate he enter with the finance

company called the hire purchase agreement. The finance company is called

the owner and the user is called the hirer. Guarantor can be accepted as per

requirement. He then makes the initial payment called INITIAL HIRE.

Document charges as required in the particular state where the transaction is

put through and incidental charges if applicable. One rupee is collected as

option money in HP agreement. The reason is hire purchase is a deemed sale

at the end of the contract. The product is sold to the user and the end of the

contract and this is the sale price from the finance company to the user.

SFL is basically a hire purchase company. This company was established

on 1954 with a basic aim to support commercial vehicles operators. Now the

company has taken a major shift to cars for the sake of volume in the last 6

years and is doing a very good volume.

1.1.1 Need and Importance of the study

HP financing has gained much momentum. Many NBFCs have adopted this

mode of finance and the income from HP financing affect profitability of the

concern with the combination of risk. Hence the need for studying Hire

Purchasing and Profitability, and Credit appraisal process arises to assess the

impact of Hire Purchase transaction on profitability of the company and risk

associated with it.

1.1.2 Scope of the Study

The project work is undertaken to analyze the existing credit appraisal

system of Sundaram Finance Limited,Chennai. The impact on recovery

because of credit policy deviation is found and hence through which the

stringency of credit policies are found. The study was based on car contracts

and commercial vehicles contracts.

Suggestions that help improve the existing appraisal method will be stated.

Objectives of the Study

Primary objective:

To study the existing credit appraisal system of Hire Purchase

business of Sundaram finance limited.

Secondary objective:

To analyze the process of HP business in SFL

To study the development of HP in SFL

To assess the sales performance of HP business of SFL

To study on the deviation of credit policy.

1.1.4 RESEARCH METHODOLOGY

“Research means a search of knowledge”. Sometime it may refer to

scientific and systematic search pertinent information on specific topic

infact; research is an art scientific investigation. Redman and Mory defines

research as a “systemized effort to gain new knowledge”.

Research can be defined as “a Scientific and Systemic Search for

pertinent information on a specific topic”. Therefore, research could be

understood as an organized activity with specific objectives on a problem or

issues supported by compilation of related data and facts, involving

application of relevant tools of analysis and deriving logically on originality.

1.1.4.1 RESEARCH DESGIN

This research deals with the analytical research. Analytical research

is analyzing and making critical evaluation based on the facts and

information already available. Analytical research includes surveys and fact

finding enquires of different kinds.

1.1.4.2 SOURCES OF DATA

Primary data

The data collected for the first time through field survey is

known as primary data. Here the primary data was collected from the

employees by personnel interviews and discussions with various officials of

SFL.

Secondary data

The Secondary data are being collected from the annual reports,

company’s website, and credit appraisal reports of the company.

1.1.4.3 POPULATION AND SAMPLE

This study is based on the secondary data, for which the customer

database is taken as sample in terms of number of contracts. The total

number of contracts for the financial year 1st April to 31st March is 4458

contracts for car customers and 640 contracts for commercial vehicle.

The sampling method adopted here is systematic sampling. This

method of sampling involves selecting the samples in a systematic manner.

In this study every 20th contract is taken as sample. Sample size of 222

contracts for car customers and 32 for commercial vehicle customer, which

is 5% of the total population of car and commercial vehicle contracts.

1.1.4.4 HYPOTHESIS

Null Hypothesis (Ho)

It shows there is no significance difference between the sample

statistic and corresponding population parameter or between two sample

statistics.

Alternative Hypothesis (H1)

It shows there is significance difference between the sample

statistic and corresponding population parameter or between two sample

statistics.

1.1.4.5 TOOLS AND TECHNIQUES

STATISTICAL TOOLS

Statistical tools constitute an integral part of research analysis. Hence,

any analysis of data complied should be subjected to relevant analysis so

that meaningful conclusions could be arrived at. The following are the

statistical tools which were applied for this project.

1. CHART

Bar chart are used for analyzes to get a clear idea about the

tabulated data.

2. PERCENTAGE ANALYSIS

Show the entire population in terms of percentage. It reveals

the number of people belonging in a particular category or the number of

people preferring a particular theory, in terms of percentage. In this study

the number of people who responded in a particular manner is interpreted

in the term of percentage.

Percentage = (number of respondents / total respondents) * 100

3. CHI – SQUARE METHOD:

       The objective of chi-square test is to determine comparison of

expected frequency (E) with the observed frequency (O) to determine

where the difference between the two is greater than which might occur

chance.

Condition for use:

Two set data should be present i.e., observed and expected

Data based on sample size.

Each observed and expected count should be 5 or greater than 5,

otherwise Yates correction to be done.

The difference between rows and columns must represent

categorical variable.

If computed value is greater than the tabulated value at a

predetermined level of significance and degree of freedom the hypothesis

is rejected.

On the other hand if the calculated chi-square value is less than

the tabulated value, the hypothesis is rejected  

      x = SUM (Oi – Ei) 2/Ei

      Oi = Observed Frequency

      Ei = Expected Frequency

1.1.5 LIMITATIONS OF THE STUDY

The project is concerned with the activities of SFL only and does

not have any reference with the subsidies of SFL.

The procedures involved and schemes of HP business in NBFCs

are varying in nature. Hence, being a case study, the findings and

suggestions cannot be applied to other NBFCs.

The study could collect only limited samples, as the data were kept

confidential.

The period of study taken for analysis of credit process of HP

business of SFL was to one financial year i.e.2008-2009

1.1.5 CHAPTERISATION

The Chapter I give the introduction to the study, need and

importance of the study, scope of the study, objectives of the study, research

methodology, tools and techniques and limitations of the study. It also gives

the theoretical review of the concept, survey of literature, industry profile,

company profile and product profile.

The Chapter II shows the analysis and interpretation of the study. It

gives the tools and techniques used for the study. It also shows the analysis

in the form of tables and charts.

The Chapter III gives the findings of the study, suggestions based

on the study and conclusion.

1.2 Review of the literature

Credit analysis is the method by which one calculates the

creditworthiness of a business or organization. The audited financial

statements of a large company might be analyzed when it issues or has

issued bonds. Or, a bank may analyze the financial statements of a small

business before making or renewing a commercial loan. The term refers to

either case, whether the business is large or small.

Credit analysis involves a wide variety of financial analysis

techniques, including ratio and trend analysis as well as the creation of

projections and a detailed analysis of cash flows. Credit analysis also

includes an examination of collateral and other sources of repayment as well

as credit history and management ability.

Before approving a commercial loan, a bank will look at all of these

factors with the primary emphasis being the cash flow of the borrower. A

typical measurement of repayment ability is the debt service coverage ratio.

A credit analyst at a bank will measure the cash generated by a business

(before interest expense and excluding depreciation and any other non-cash

or extraordinary expenses). The debt service coverage ratio divides this cash

flow amount by the debt service (both principal and interest payments on all

loans) that will be required to be met. Bankers like to see debt service

coverage of at least 120 percent. In other words, the debt service coverage

ratio should be 1.2 or higher to show that an extra cushion exists and that the

business can afford its debt requirements.

1.2.1 Theoretical Review of the concept

Credit Appraisal

It is the process of appraising the credit worthiness of a loan applicant.

Factors like age, income, number of dependents, nature of employment,

continuity of employment, repayment capacity, previous loans, credit cards,

etc. are taken into account while appraising the credit worthiness of a

person. Every bank or lending intuition has its own panel of officials for this

purpose.

It is the process by which a lender appraises the creditworthiness of the

prospective borrower. This normally involves appraising the borrower’s

payment history and establishing the quality and sustainability of his

income. The lender satisfies himself of the good intentions of the borrower,

usually through an interview.

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. Credit risk is a risk related to non repayment of the credit

obtained by the customer of a bank. Thus it is necessary to appraise the

credibility of the customer in order to mitigate the credit risk. Proper

evaluation of the customer is performed this measures the financial

condition and the ability of the customer to repay back the loan in future.

Generally the credits facilities are extended against the security know as

collateral. But even though the loans are backed by the collateral, banks are

normally interested in the actual loan amount to be repaid along with the

interest.

Thus, the customer's cash flows are ascertained to ensure the timely payment

of the principal and the interest.

Credit appraisal techniques

The Banking sector in Pakistan continues to suffer from a loan problem

portfolio, due to a variety of reasons. While there is no guaranteed procedure

for ensuring loans do not go bad (certain circumstances can go against the

best of borrowers), I have tried to develop a procedure for analyzing credits,

as outlined below. This is based primarily on personal experience of over 20

years as a lending officer, sitting on the Board of Banks besides guidance

from earlier supervisors, and training programmes attended.

The important thing to remember is not to be overwhelmed by marketing or

profit center reasons to book a loan but to take a balanced view when

booking a loan, taking into account the risk reward aspects. Generally we

remain optimistic during the upswing of the business cycle, but tend to

forget to see how the borrower will during the downturn, which is a

shortsighted approach. Furthermore we tend to place greater emphasis on

financials, which are usually outdated; this is further exacerbated by the fact

that a descriptive approach is usually taken, rather than an analytical

approach, to the credit. Thus a forward looking approach should also be

adopted, since the loan will be repaid primarily from future cash flows, not

historic performance; however both can be used as good repayment

indicators.

Having postulated above guidelines, following is a suggested general

procedure for reviewing short term lending proposals

Company Profile / Ownership

Proposed Transaction

Purpose of facility

Source of repayment

Credit limits

Security

Financial analysis

Management evaluation

Organization culture, corporate strategy

Risk areas

Checking’s

Loan profitability

The above is a basic guideline to reviewing short-term credits and is not all

exhaustive. It should thus be reviewed on a case by case basis. Each

borrower has different the above is a basic guideline to reviewing short-term

credits and is not all exhaustive. It should thus be reviewed on a case by case

basis. Each borrower has different circumstances and should be reviewed as

such. I have attempted to cover short-term borrowings only - project finance

and other form of lending have different risk criteria, which have not been

addressed here. However 3 ‘C’s of a credit are crucial and relevant to all

borrowers / lending which must be kept in mind at all times

•Character

•Capacity

• Collateral

If any one of these is missing in the equation then the lending officer must

question the viability of the credit.

There is no guarantee to ensure a loan does not run into problems; however

if proper credit evaluation techniques and monitoring are implemented then

naturally the loan loss probability / problems will be minimized, which

should be the objective of every lending officer.

About the Author

The author has an honors degree in Economics / Accounting and a MBA,

both from British Universities. Subsequently he has gained over 20 years

lending experience with Citibank and American Express Bank, in Pakistan

and the Middle East. He has served on the Board of Directors of NDFC and

Orix Investment Bank besides other Companies and is presently working as

a Credit Advisor with Pakistan Kuwait Investment Company (Pvt.) Ltd.

The above article has been derived from presentations the author has made

to Bankers on Credit Analysis. It has been written in view of the positive

responses obtained, recognizing the need to reach a wider audience on this

relevant subject.

Concept of Hire Purchase:

Hire purchase (frequently abbreviated to HP) is the legal term for a

contract developed in the United Kingdom, and now found in India,

Australia, New Zealand, Ireland and other stateswhich have adopted the

English Law concept. (In North America, where the word hire most

commonly refers to employment, the comparable system is called closed-

end leasing.) In cases where a buyer cannot afford to pay the asked price for

an item of property as a lump sum but can afford to pay a percentage as a

deposit, a hire-purchase contract allows the buyer to hire the goods for a

monthly rent. When a sum equal to the original full price plus interest has

been paid in equal installments, the buyer may then exercise an option to

buy the goods at a predetermined price (usually a nominal sum) or return the

goods to the owner. In the United States, a hire purchase is termed an

installment plan; other analogous practices are described as closed-end

leasing or rent to own.

Hire purchase differs from a mortgage and similar forms of lien-secured

credit in that the so-called buyer who has the use of the goods is not the legal

owner during the term of the hire-purchase contract. If the buyer defaults in

paying the installments, the owner may repossess the goods, a vendor

protection not available with unsecured-consumer-credit systems. HP is

frequently advantageous to consumers because it spreads the cost of

expensive items over an extended time period. Business consumers may find

the different balance sheet and taxation treatment of hire-purchased goods

beneficial to their taxable income. The need for HP is reduced when

consumers have collateral or other forms of credit readily available.

Standard provisions

To be valid, HP agreements must be in writing and signed by both

parties.They must clearly set out the following information in a print that all

can read without effort:

1. a clear description of the goods

2. the cash price for the goods

3. the HP price, i.e., the total sum that must be paid to hire and then

purchase the goods

4. the deposit

5. the monthly installments (most states require that the applicable

interest rate is disclosed and regulate the rates and charges that can be

applied in HP transactions) and

6. a reasonably comprehensive statement of the parties' rights

(sometimes including the right to cancel the agreement during a

"cooling-off" period).

7. The right of the hirer to terminate the contract when he feels like

doing so with a valid reason.

The seller and the owner

If the seller has the resources and the legal right to sell the goods on credit

(which usually depends on a licensing system in most countries), the seller

and the owner will be the same person. But most sellers prefer to receive a

cash payment immediately. To achieve this, the seller transfers ownership of

the goods to a Finance Company, usually at a discounted price, and it is this

company that hires and sells the goods to the buyer. This introduction of a

third party complicates the transaction. Suppose that the seller makes false

claims as to the quality and reliability of the goods that induce the buyer to

"buy". In a conventional contract of sale, the seller will be liable to the buyer

if these representations prove false. But, in this instance, the seller who

makes the representation is not the owner who sells the good to the buyer

only after all the instalments have been paid.

Implied warranties and conditions to protect the hirer

The extent to which buyers are protected varies from jurisdiction to

jurisdiction, but the following are usually present:

1. the hirer will be allowed to enjoy quiet possession of the goods, i.e.

no-one will interfere with the hirer's possession during the term of this

contract

2. the owner will be able to pass title to, or ownership of, the goods

when the contract requires it

3. that the goods are of merchantable quality and fit for their purpose,

save that exclusion clauses may, to a greater or lesser extent, limit the

Finance Company's liability

4. where the goods are let by reference to a description or to a sample,

what is actually supplied must correspond with the description and the

sample.

The hirer's rights

The hirer usually has the following rights:

1. To buy the goods at any time by giving notice to the owner and

paying the balance of the HP price less a rebate (each jurisdiction has

a different formula for calculating the amount of this rebate)

2. To return the goods to the owner — this is subject to the payment of a

penalty to reflect the owner's loss of profit but subject to a maximum

specified in each jurisdiction's law to strike a balance between the

need for the buyer to minimize liability and the fact that the owner

now has possession of an obsolescent asset of reduced value

3. With the consent of the owner, to assign both the benefit and the

burden of the contract to a third person. The owner cannot

unreasonably refuse consent where the nominated third party has good

credit rating

4. Where the owner wrongfully repossesses the goods, either to recover

the goods plus damages for loss of quiet possession or to damages

representing the value of the goods lost.

Basically hirer has following rights – 1) Rights of protection, 2) Rights of

notice, 3) Rights of repossession, 4) Rights of Statement, 5) Rights of excess

amount

The hirer's obligations

The hirer usually has the following obligations:

1. to pay the hire installments

2. to take reasonable care of the goods (if the hirer damages the goods by

using them in a non-standard way, he or she must continue to pay the

installments and, if appropriate, compensate the owner for any loss in

asset value)

3. to inform the owner where the goods will be kept.

The owner's rights

The owner usually has the right to terminate the agreement where the hirer

defaults in paying the installments or breaches any of the other terms in the

agreement. This entitles the owner:

1. to forfeit the deposit

2. to retain the installments already paid and recover the balance due

3. to repossess the goods (which may have to be by application to a

Court depending on the nature of the goods and the percentage of the

total price paid)

4. to claim damages for any loss suffered.

Hire purchase in Australia

Hire purchases are commonly used by businesses (including companies,

partnerships and sole traders) in Australia to fund the purchase of cars,

commercial vehicles and other business equipment.

Under Australian Taxation Office rules, businesses who account for GSTon

a accruals basis are entitled to claim an Input Tax Credit for all of the GST

contained in the purchase price of the goods on their next Business Activity

Statement [Hire purchase] is also commonly known as commercial hire

purchase and corporate hire purchase (both abbreviated to CHP) in

Australia.

1.2.2 INDUSTRY PROFILE

NON-BANKING FINANCIAL COMPANIES [NBFCs]

DEFINITION

According to the Reserve Bank of India (Amendment Act) 1997, NBFCs

means “a non-banking financial institution which is a company and which

has its principal business receiving of deposits under any scheme or

arrangements or in any other manner or lending in any manner such other

non-banking institution or class of such institutions as the bank may with the

previous approval of the central government specify”.

The definition excludes financial institutions. Besides institutions

which carry an agricultural operations as their principal business NBFCs

consist of financial companies which carry on hire purchase finance, housing

finance, investments, loan, equipments, leasing or mutual benefits in

financial companies but do not include insurance companies or stock

exchanges or stock-brokering companies.

INTRODUCTION

Non-Banking Financial Companies [NBFCs] are financial

intermediaries, which mostly cater to the financial needs of small corporate

as well as non-corporate entities through activities such as leasing, bills

discounting, and extending trade finance through mortgage loans. NBFCs

are heterogeneous in nature in terms of activity and size, are important to

financial intermediaries and are integral part of Indian financial system.

They have been able to carve out themselves in meeting the credit needs of

both wholesale and retail customers. They serve a large spectrum of retail

customers by the way of automotive financing through hire purchase and

loan and by providing avenues for investments in the form of deposits.

NBFCs began their long trek as support companies. Their primary functions

included acting as fixed deposit collecting centers and working out leasing

deals for corporate clients. Initially, most of these NBFCs were

concentrated in South India. Bulging deposits pushed up confidence levels

leading to NBFCs for growing into greener pastures such as investment

banking, bill discounting consumer durable finance, auto finance, apart from

leasing and hire purchase. Finally NBFCs had arrived in the nation’s

financial scene. The boom came, a period of unrefined growth.

Mushrooming of NBFCs became the order of the day. With rising demand

and entry barriers, almost every corporate entity floated on NBFCs. The

eighties saw a dozen of NBFCs springing up. The number of NBFCs grows

up from 7003 in 1981 to 41000 in 1996.

A non-banking financial sectors in India are recorded a master

growth in the recent years in terms of number of NBFCs. The banking laws

(miscellaneous provision) act 1963 was introduced to regulate them. The

RBI Act regulates different types of NBFCs under the provision of Chapter

III-B, it was amended in 1997 in order to provide comprehensive regulatory

framework for the NBFCs sector. Today this sector alone finances most of

the transport business in the non-corporate sector, which is the most

important and the largest sector in the economy. The future does seem to be

bright for the NBFCs industry. Leasing is gaining grounds among the

industries. There is a significant role of NBFCs to play in which private

banks are yet to make their presence felt.

RBI GUIDELINES FOR NBFCs

The nineties witnessed a dramatic increase in the number of NBFCs

and it was thought necessary to have a regulatory framework for NBFCs.

RBI came out with set of guidelines for NBFCs specifically aimed at

protecting the depositors.

To encourage the NBFCs that is running on sound business principals, on

July 24th 1996, NBFCs were divided into two classes,

i. Equipment leasing and hire purchase (finance company)

ii. Loan and investment companies

CATEGORIES OF NBFCs

i. loan companies

ii. investment companies

iii. hire purchase companies

iv. equipment leasing companies

v. mutual benefits finance companies

vi. housing finance companies

1. Equipment leasing company – Any company, which is a financial

institution, carrying on its principal business. The activities of leasing

of equipment of the financing of such activity.

2. Hire purchase finance company – A company, which is a financial

institution, carrying on its principal business, hire purchase

transaction.

3. Investment Company – A company, which deals with acquisition of

securities.

4. Loan Company – A company, which is a financial institution and

carries on its principal business of providing finance by any activities

other than its own.

5. Mutual benefit finance company – A company, which is a financial

institution. This is notified by the central government under section

620 (a) of The Companies Act 1956.

FUTURE HOLDS FOR NBFCs

i. reduce number of players

ii. cross barrier competition

iii. segmentation and positioning

iv. end of tax based leasing

v. emergency of vendor leasing

vi. asset based funding

vii. price based competition

REASONS FOR RAPID GROWTH OF NBFCs

i. lower transaction costs

ii. quick financial decision-making

iii. customer orientation

iv. prompt provision of services

v. flexibility in month installment structure

vi. lower degree of regulation vis-à-vis banks

vii. no entry barriers

1.2.3 COMPANY PROFILE

SUNDARAM FINANCE LIMITED 

   Sundaram Finance was set up in 1954, when Late. T.S. Santhanam

envisioned the future of hire purchase finance in India. The company was

started with a paid-up capital of Rs. 2.00 lakhs. It was promoted by Madras

Motor and General Insurance Company that was then one of the leading

insurance companies in India prior to nationalization in 1971.

T.S. Santhanam who promoted Sundaram Finance is the son of Late T.

V. Sundaram Iyengar. Actually it was formed as a private limited company

under the company’s act 1913 in the year 1960 it becomes a subsidiary of

(MMGI) it is the largest non – banking finance companies [NBFCs] in the

country emerging as a leader in the industry and is holding.  

            The position for the last four decades:

In 1972 capital of Rs.1 crore was invested at that time. The company

shares of Rs. 100 each were such divided into 10 shares of the

nominal value of Rs. 10 each.

The company has the record interrupted divided declaration ever since

its incorporation and has been maintaining and improving the

quantum of dividends.

T.S.Santhanam is the founder and the first MD of the company. The

other members of the board are eminent persons who hold responsible

positions in the government banking institutions and Engineering

industry. The company is also a member of International Finance and

Leasing Associations (IFCA).

The company other than HP is also engaged in hypothecation of loans,

leasing of plant and machinery to corporate bodies.

As supplementary and allied activities to HP and leasing, car

financing, tyre financing, bills discounted and mortgaged loans on

section of properties are extended selectively.

OBJECTIVES OF THE COMPANY           

         Sundaram Finance was initiated with the sole objective of financing

commercial vehicles and passenger cars. Within a span of 55 years they have

spread their wings to every exposable area in the Non-banking finance

sector. Sundaram Finance – Where Truth, Fairness and Transparency guide

the management of finance. 

VALUES        

          A set of values have governed their growth over the years. Among

them are transparent in their business practices, dedicated customer service

fair, efficient and safe financial policies. 

STRENGTH

Support of the group companies.

Involvement of the directors on major policy matters.

High employee morale.

Good initial system for operation and control.

Efficiency and sophisticated software system for decision support

system.

Investor’s trust and faith in the company.

Easy financing schemes for all cars – new and second hand cars.

Simple documentation, quick processing and speedy approval.

Customized schemes, personalized service.

Direct dealing between customer and company.

No hidden costs.

Tailor – made products to suit individual requirements.

SUBSIDARIES / GROUPS

Sundaram Finance

Sundaram BNP Paribas Asset Management

Sundaram BNP Paribas Home Finance Limited

Royal Sundaram Alliance Insurance

Sundaram InfoTech Solutions

Sundaram Business Services

Sundaram Finance Distribution Limited

Infrieght Logistics Solutions Limited

 EXPANSION OF SUNDARAM FINANCE LIMITED

S = Services, Safety & Security.

U = Understanding the client needs.

N = No problem approach.

D = Development of human resources.

A = Attitude always positive.

R = Resourceful.

A = Anticipate customers need.

M = Marketing edges/Managerial edges. 

F = financial soundness.

I = Integrity

N = Never have a negative approach.

A = Authenticity.

N = Numerous among finance companies.

C = Commitment, Courtesy & Customer.

E = Efficiency and effectiveness. 

L = Love for the organization.

T = Technical experience.

D = Depositors concern paramount 

AWARDS RECEIVED       

‘Certificate of Commendation’ award by the Government of India

under the scheme of “Good Tax Payers”.

“Second Best Tax Payer” in the category of Private Sector Company

for Assessment Year 1994-95 in Tamil Nadu Region, from the

Income Tax Department, Tamil Nadu.

‘Rolling Trophy’ by Rotary Club of Madras South West for Best

Employer-Employee Relationship for the year 1995-96.

“Best Tax Payer” in the category of Private Sector Company for

Assessment Year 1995-96 in Tamil Nadu Region, from the Income

Tax Department, Tamil Nadu.

“Automan Award” to Shri T S Santhanam, Chairman, from Motor

India in 1998.

“Pioneering Service Award” to Shri T S Santhanam Chairman, from

Chennai Good Transport Association.

“Sarige Ratna Award” to Shri T S Santhanam, Chairman, from the

Bangalore City Lorry Transporting Agents’ Association (Regd).

“Most Valued Customer Award” to Shri T S Santhanam Chairman,

from the state bank of India.

“The Best Financier of the New Millennium 2000” to Shri. G K

Raman, Managing Director, from the All India Motor Transport

Congress.

 

MAJOR MILESTONES

1954 Birth of Sundaram Finance

1972 First finance company to be listed on the Madras Stock Exchange

1981 Started Leasing operations.  Formation of Lakshmi General Finance

1994 Receivables crossed Rs. 1000 crore (Rs. 10 billion)

1995 Deposits crossed Rs. 500 crore (Rs. 5 billion)

1996 Formed Sundaram Newton Asset Management Company Ltd. in collaboration with Newton Management Ltd., UK.

1996 Received Best Tax Payer Award

1997 Received Best Tax Payer Award

1997 Receivables crossed Rs. 2000 crore (RS. 20 billion)

1998 Promoted Fiat Sundaram Auto Finance Limited, a joint venture with Fidis S.p.A., Italy

1999 Promoted Sundaram Home Finance Limited with equity participation from International Finance Corporation (IFC), Washington, and FMO Netherlands

2000 Promoted Royal Sundaram Alliance Insurance Company Limited, a joint venture with Royal & Sun Alliance Plc, for Non-Life Insurance

2000 Promoted Sundaram InfoTech Solutions - InfoTech division of Sundaram Finance

2001 Promoted Sundaram Business Services - BPO arm of Sundaram Finance

2005 Merger with LGF making SF Billion dollar Balance sheet NBFC

2006 BBNP Paribas Asset Management Group, France acquires 49.90 % stake in Sundaram Asset Management Company Ltd from SFL.

2008 Union de Credit pour le Batiment SA (UCB), a wholly owned subsidiary of BNP Paribas SA, France, acquires 49.90% stake in Sundaram Home Finance Ltd from SFL.

BOARD OF DIRECTORS     

CHAIRMAN

Sri S Viji

DIRECTORS

Sri S Ram

Sri N Venkataramani

Sri P N Venkatachalam

Sri S Prasad

Sri S Ravindran

Sri Srinivas Acharya

Sri Aroon Raman

MANAGING DIRECTOR

Sri T T Srinivasaraghavan

DIRECTOR(strategy & planning)

Sri Harsha Viji

CHIEF FINANCIAL OFFICER

Sri M Ramaswamy

COMPANY SECRETARY

Sri P Viswanathan

1.2.4 PRODUCT PROFILE

PRODUCTS / SERVICES OFFERED

Hire Purchase

Leasing

Deposits

Car Finance

Commercial Vehicle Finance

Equipment Finance

Fleet Card

Tyre finance

 HIRE PURCHASE

        In hire purchase the vehicle is sold to the finance company, which in

turn hires it to the user. After the end of the contract the product is sold to

the user after collecting option money.

         A Hire Purchase has two elements which are governed by the Indian

Contract Act 1872, and Sale of Goods Act 1930. Bailment is one aspect,

which comes under the Indian Contract Act. A sale is the sale of goods act.

The hirer who becomes the purchaser is a bailee until he pays the full price

of goods. The contract of sale is completed only on the payment of the last

installment.

FEATURES OF HP AGREEMENT

    The seller contacts a finance company to finance a hire purchase deal:

The customer selects the good and expresses his desire to acquire

them on hire purchase basis.

The customer after filling the proposal form makes the down payment

to the finance company.

The sellers send the document to the finance company, requesting it to

purchase the goods and accept the HP transaction.

The finance company signs the agreement and sends a copy of the

agreement to the hirer along with instructions with regard to the

payment of installments. The seller is also informed by the finance

company and is instructed o deliver the goods to the hirer.

The sellers deliver the goods to the hirer and the ownership gets

transferred to the finance company.

The hire makes payment in the form of installments periodically as

per the agreement.

On payment of the last installment or on completion of the hire team,

the ownership is transfer the hirer on issue of completion certificate

by the finance company.

 

LEASING

It is only in financial lease, the ownership will get transferred while in

operating lease, the ownership is not transferred.

It is only a bipartite agreement involving lessor and lessee.

Depreciation is claimed by the lessor in the lease agreement.

In operation lease, through the lessor can be one person, there can be a

number of lessees.

Period of lease will be shorter, and duration as technological changes

will affect the lessee.

The relationship in a lease agreement is that of lessor and lessee.

Ownership will pass on when the lesser has collected sufficient money

from the lessee, which is equivalent to the value of the goods or

equipment.

Lease agreement is entered more among business concerns.

Sales tax depends on the actual value at the time of sale.

On the termination of lease agreement, if it is an operating lease, the

lessor takes the equipment back. In the case of financial lease, the

equipment can be sold for a particular value to the lessee.

Interest does not form a major part of lease agreement, but the lease

charges will include interest also as part of it.

 

DEPOSITS

         The term “Deposits” contained in section 451 of the Reserve Bank of

India Act, could cover “ all money received by Non-Banking institution by

way of deposits except the money received by the way of share capital or

contribution by the partners of the firm”. 

TYPES OF DEPOSIT

Fixed deposit

Cumulative deposit

FIXED DEPOSIT

    It is a deposit where the interest is being paid at regular intervals:

Monthly interest is payable n 16th every month (for 36 months

deposits only)

Quarterly interest is payable on 16th of March, June, September and

December of every month.

When the interest warranty amount exceeds Rs 25000, the same will

be spent through account Payee crossed cheque demand draft.

For all frequencies of interest payable, fixed deposit interest from the

last interest paying date till 31st march of each financial year, will be

credited to deposit amount on 31st march and the interest will be

included in the subsequent periodic interest payable as the case may

be.

Interest payable at Ahmadabad, Ban galore, Delhi, Nagpur,

Coimbatore, Chennai, Hyderabad, Kolkata, Madurai, Mumbai, and

Trivandrum will be made only through Electronic Clearing Service

(ECS) mode. 

CUMULATIVE DEPOSITS

        Cumulative deposits are accepted for periods at the rate of interest

mentioned overleaf. Interest compounded at the respected rates will be

credited at the depositors account on 31st arch every year. In all cases the

accumulated interest is payable only on maturity 

CAR FINANCE

            Sundaram finance is one of the largest and a leading player in the

area of car finance. It extends finance on all models of cars. It has a vast

network of over 150 branches and experienced field force help its customers

choose the vehicle and the finance package to suit their budget.

            The approval is fat and with minimum documentation. In fact

customers can drive away with their dream car in 48 hours flat. SFL’s car

finance schemes are easy to understand and without any hidden costs. It

deals with those employees who care of high integrity and extremely

customer friendly.

           Realizing the high growth potential of the car market, SF launched

Sundaram car finance exclusively to finance cars and utility vehicles.

Supported by a large country wide network, strong dealer relationship and

its customized service, SF has attained a portion of strength in its area,

servicing a large customer base. 

EQUIPMENT FINANCE

          Sundaram Finance provides finance for acquiring equipment either

under Hire Purchase or Lease finance routes. The mode of finance to the

employed for funding the requirement is left to its customers. Equipment

finance is generally provided only for general purpose machinery. 

TYRE FINANCE

            Sundaram Finance offers interest from finance up to 80% of invoice

value to get brand new tyres for the fleet. Fleet operators big or small, and

corporate can avail this facility for HCV, MCV, and LCV, including buses.

This facility would ease the customers’ working capital requirements of fleet

operations.

          For this facility Sundaram Finance has entered into an exclusive

arrangement with the largest commercial vehicle tyre manufacturers in

India, JK tyres.

            The customers can avail finance for minimum 2 tyres per transaction.

The repayment has to be made in 4 installments. 

FLEET CARD

          Sundaram Finance has tied up with Bharat Petroleum Corporation Ltd

(BPC) and Indian Oil Corporation Ltd (IOC) for extending credit facility to

the fleet customers, through co-branded fleet cards. The FLEET CARD

credit program was launched on 1st Oct 2004. Under this arrangement, BPL

and IOC would be the issuers of smart fleet and XTRAPOWER FLEET

CARDS. These fleet cards are based on smart card technology.

            Sundaram Finance would extend credit facility on these cards, for the

restricted use of purchasing auto fuel and tubes, at designated retail outlets

of IOC and BPC. These retail outlets would be based mainly in the highways

and major roads where diesel sales are high, apart from key city centric

locations catering to corporate. 

HIRE PURCHASE – in detail

 To begin with, let us say there are three ways of funding an asset. 

a) Hypothecation, b) leasing and c) Hire Purchase. 

HYPOTHECATION: 

In hypothecation, the title (ownership), according to the Sale of Goods Act,

1872, goes to the purchaser. The asset is hypothecated to the finance

company. The lien is cancelled at the end of the contract. In short, the

financier extends finance for the purchase of the asset.  The  parties  to  the 

contract  are  Lender  (financier)  and  Borrower  (one  who  takes finance

for the purchase of the  asset). The monthly dues are called installments.  

LEASING: 

The finance company buys the asset and lets it on lease to the user.  The title

or the asset cannot be sold or transferred to the lessee at the end of the

contract. The parties to the contract are Lessor (financier) and Lessee (user

of the asset). The installments are called Lease Rentals.  

HIRE PURCHASE (HP): 

The financier purchases the asset and lets it on hire to the user. The user

exercises an option to purchase the asset at the end of the contract after

paying all the dues. HP is a transaction in which the purchaser of goods pays

an initial deposit and takes possession. Subsequent installments are made

over a specified time after which ownership passes to the purchaser.  The

parties to the contract are Owner (financier) and Hirer (purchaser / user).

The installments are called Hire Money.

Usually every hire-purchase agreement shall contain the following terms: 

The cash price of the goods, cash price means the price at which

goods may be purchased.

The hire-purchase price, hire purchase price means the total amount

which is payable by the hirer under the agreement.

The date on which the hire-purchase agreement will commence.

The description of the goods that will be delivered to the hirer at the

commencement of the agreement.

The number of installments to be paid by the hirer along with the

amount of each installment and the date of payment of each

installment.

The down payment if any, the down payment means the amount

which is required to be paid by hirer to the hire vendor at the time of

commencement of hire-purchase agreement.

The rate interest charged by the hire vendor (optional).

 

 Characteristics of a Hire Purchase agreement:

The characteristics of hire-purchase system are as under

The goods are delivered in the possession of the purchaser at the time

of commencement of the agreement.

Hire vendor continues to be the owner of the goods till the payment of

last installment.

The hirer has a right to use the goods as a bailer.

The hirer has a right to terminate the agreement at any time in the

capacity of a hirer.

The hirer becomes the owner of the goods after the payment of all

installments as per the agreement.

If there is a default in the payment of any installment, the hire vendor

will take away the goods from the possession of the purchaser without

refunding him any amount.

 Why do people avail finance?

When individuals source of income or flow of money is low

When there is a need for working capital and maintain liquidity by

business class.

To enjoy tax benefits and income tax exemptions.

 Whom to finance:

Any individual who is above 18 yrs of age

Any individual who is mentally fit

Any individual who has the capacity to borrow

 Qualifications to finance:

Ability to repay

Willingness to repay

Ability to repay:

Financial ability to repay is judged by the income of a person or an entity.

Generally the net income should be taken for assessing his financial

capacity.

Net income    = [gross monthly income – deductions] x 12 

For business entities, 

Net income or cash profit = Net Profit after tax + Depreciation 

Net annual income should be equal to or greater than twice the annual

commitment of the contract.  This is called cash flow cover.   

Amount Commitment = Equal Monthly Installment [EMI] x 12  

Willingness to repay:

Though the methods adopted to check willingness to repay for any

individual is not completely reliable, still techniques like field enquiry is

carried out to enquire about the individual in his / her locality and to know

about the general behavior of the individuals. 

 

Operation and process involved in a Hire Purchase agreement.  

The field officers of the company are in constant touch with their

clients, whenever they spot a proposal; they approach the prospective

customer and explain the terms of hire purchase finance provided by

the company.

Once the customer makes up his mind, the company makes through a

quick credit evaluation of the customer. This is done at the branch

level and is then sent to the head office for approval.

A schedule giving a break up of finance is prepared and given to the

customer.

This contains details about the invoice amount, finance charges,

finance amount (normally 75% of the invoice amount) with the EMI

is shown along with the details regarding insurance amount.

Once the official and the customer are satisfied they prepare the HP

document and customer will sign this document along with a

guarantor and a witness.

After all formalities are fulfilled the vehicle is purchased in the name

of Sundaram Finance Limited and registered in the name of the hirer

with an endorsement in the RC book that the vehicle is under HP

agreement with the company.

Installments that are due are payable on the respective due dates, by

the hirer at any one of the branches or the field staff may collect the

same from hirer’s place.

If the hirer defaults, he is given enough time, before which the last

remedy i.e., repossession is sought.

A record of the installment received from hirer and the installments

due is also maintained in most efficient manner.

After collecting the entire amount that is due, termination papers are

issued to cancel the lien in the RC Book. The contract comes to a

close.

Calculation of EMI (Equated Monthly Installment) 

EMI    = (Finance amount + Finance charges) / No. of Installments

Finance Charges = Finance amount x flat rate of interest x No. of years. 

Flat rate of interest:  

This is generally used for computing the EMI manually, easily and

easy understanding of a monthly commitment.

The EMI is initially fixed and the hirer has to pay this fixed amount

for all the installments

The amount contributed towards the interest and principle varies with

installments. 

Simple rate of interest: 

In this technique, the Interest amount is calculated for every month

with respect to the principle remaining.

Hence the EMI charges payable by the consumers vary for every

installment and hence it is confusing.

 

 

PROCESS OF HP

Selection of product

Identifying procedures 

Broacher proposal form

Receipt of proposal appraisal of proposal 

  Acceptance          Rejection

     Offer letter        End

Party acceptance of offer

Placing of order

Drawing up of an agreement 

Insurance and installment

Accounting

  Fore closure                           Normal closure

Computing of fore                 Direct call for

Closure accounting              termination of contract

Settlement of account & agreement

End of flow                

HISTORY

The first Hire purchase company in India is Commercial Credit Corporation.

(Situated at Patullos Road next to Sundaram Finance, Head Office). The

concept of hire purchase began in the nineteenth century, when singer

sewing machine Company in the United Kingdom came out with an

Installment Credit Scheme. In India, Hire Purchase Act, 1972, controls all

Hire Purchase finance companies. However, in 1989, a bill was introduced

for making certain amendments in the Act, but the bill was introduced for

making certain amendments in the Act, but the has not been passed yet.

Sundaram Finance Limited extends finance through hire purchase for

Cars

Commercial vehicles

 The documents that are collected for the finance of cars and commercial

vehicles are the same. (E.g., Identity proof, address proof, income proof, and

asset proof). 

Cars: 

Generally classified as 

Segment A : Cars costing up to Rs. 3 lakhs

Segment B : Cars costing from Rs. 3 to Rs. 7 lakhs

Segment C : Cars costing from Rs. 7 to Rs. 13 lakhs

Segment D : Cars costing above Rs. 13 lakhs

 

Segment A and B, SFL funds up to 90% of the cost of the cars and  funds up

to Segment C and D, SFL funds up to 75% of the cost of the cars only,

because of the fact that the vehicles in segment C &D depreciate faster. 

The  repayment period  is  up to  5 years  for  salaried  class  and  4  years for

business class. 

Commercial vehicles: 

Buses, autos, tankers, lorries and trucks constitute commercial vehicle. It is

classified as follows 

Light commercial vehicles  (LCV)  carrying capacity up to 3 tons

Medium commercial vehicles  (MCV) carrying capacity up to 10 tons

Heavy commercial vehicles  (HCV) carrying capacity beyond 10 tons

 In the cases of buses, they are classified as 

Contract carriage: They are operators under with certain specified

companies or persons on contract. They vehicles have no particular

route or any specific time of operation. The route and operation will

depend as per request in the contract

Stage carriage:  These vehicles have a specific route and timing.      

(e.g., MTC buses)

For commercial vehicles, Sundaram Finance Limited extends finance up to

75% of the cost of the vehicle. The repayment period is up to 4 years for

Medium and Heavy Commercial vehicles and 3 years for Light commercial

vehicles.  

 

HIRE PURCHASE DOCUMENT PROCEDURE:  

 I. Agreement to enter in to HP agreement (AEHA)

This is the first and the basic document between the hirer and the

financier for entering into a HP business.

It contains the following:

Date of agreement

Asset type

Details of the hirer and dealer

Undertaking by the hirer to take a comprehensive

insurance policy for the vehicle.

Acceptance to indemnify the owner at times of losses.

Compliance to various terms and conditions.

II. Collection of necessary forms

a) Form 20 – application of registration of motor vehicle.

b) Form 27 – application for assignment of the new registration mark to

a motor vehicle.

c) Form 26 – application for the issue of duplicate

d) Form 28 – application and grant of non-objection certificate

e) Form 29 – notice of transfer of ownership of a motor vehicle

f) Form 30 – report of transfer of ownership of a motor vehicle

g) Form 33 – intimation of change address for recording it in the

certificate of registration and office records

h) Form 34 – application for making an entry of a HP

agreement/lease/hypothecation.

i) Form 35 – notice of termination of agreement hire

purchase/lease/hypothecation.

j) Form 36 – application for the issue of fresh certificate of registration

in the name of the financier.

k) Form 60 – this is to be submitted in case the hire does not have PAN

or GRIN.

l) Form 61 – this is a document whether the hire has agricultural

income.

III. Documents collected

Income proof

Identity proof

Location proof

Asset proof

Signature verification

Bank statement

Photograph

CHAPTER II

ANALYSIS AND INTERPRETATION

2. ANALYSIS AND INTERPRETATION

2.1 PERCENTAGE ANALYSIS

TABLE 2.1.1

Table showing the credit deviation in car contracts

Particulars No. of contracts Percentage

Deviation from credit policy 163 73.42

No deviation from credit policy 59 26.58

Total 222 100

Inference:

From the above table it is inferred that, 73.42% of car contracts are

deviated from the credit policy and 26.58% of car contracts are not deviated

from the credit policy.

CHART 2.1.1

Figure showing the credit deviation in car contracts

credit deviation in car contracts

01020304050607080

Deviation from creditpolicy

No deviation from creditpolicy

particulars

pe

rce

nta

ge

of

de

via

tio

n

TABLE 2.1.2

Table showing the credit deviation in commercial vehicle contracts

Particulars No. of respondents Percentage

Deviation from credit policy 30 93.75

No deviation from credit policy 2 6.25

Total 32 100

Inference:

From the above table it is inferred that, 93.75% of commercial

vehicle contracts are deviated from the credit policy and 6.25% of

commercial vehicle contracts are not deviated from the credit policy.

CHART 2.1.2

Figure showing the credit deviation in commercial vehicle contracts

credit deviation in commecial vehicle contracts

0

20

40

60

80

100

Deviation from creditpolicy

No deviation from creditpolicy

particulars

per

cen

tag

e

TABLE 2.1.3

Table showing the performance of car contracts

Particulars No. of contracts Percentage

Good 197 88.74

Average 14 6.31

Poor 11 4.95

Total 222 100

Inference:

From the above table it is inferred that, 88.74% of car contracts performance

is good, 6.31% of car contracts performance is average and 4.95% of car

contracts performance is poor.

CHART 2.1.3

Figure showing the performance of car contracts

Perofrmance of car contracts

0

20

40

60

80

100

Good Average Poor

Particulars

Per

cen

tag

e

TABLE 2.1.4

Table showing the performance of commercial vehicle contracts

Particulars No. of contracts Percentage

Good 27 84.375

Average 4 12.5

Poor 1 3.125

Total 32 100

Inference:

From the above table it is inferred that, 84.375% of commercial vehicle

contracts performance is good, 12.5% of commercial vehicle contracts

performance is average and 3.125% of commercial vehicle contracts

performance is poor.

CHART 2.1.4

Figure showing the performance of commercial vehicle contracts

Performance of commercial vehicle contracts

0

20

40

60

80

100

Good Average Poor

Particulars

Per

cen

tag

e

TABLE 2.1.5

Table showing the various credit deviations for car contracts

Particulars No. of contracts Percentage

Excess finance 90 40.54

Contract period 46 20.72

Exposure 13 5.86

PDC collection 45 20.27

Others 89 40.1

Total 222

Inference:

From the above table it is inferred that, 40.54% of car contracts has

deviation in excess finance, 20.72% of car contracts has deviation in contract

period, 5.86% of car contracts has deviation in exposure, 20.27% of car

contracts has deviation in PDC collection and 40.1% of car contracts has

deviation in other credit policy.

CHART 2.1.5

Figure showing the various credit deviations for car contracts

various credit deviation for car contracts

05

1015202530354045

Excessfinance

Contractperiod

Exposure PDCcollection

Others

credit deviaitions

per

cen

tag

e

TABLE 2.1.6

Table showing the various credit deviations for commercial vehicle

contracts

Particulars No. of contracts Percentage

Excess finance 26 81.25

Contract period 2 6.25

Exposure 20 62.5

PDC collection 0 0

Others 21 66

Total 32

Inference:

From the above table it is inferred that, 81.25% of commercial vehicle

contracts has deviation in excess finance, 6.25% of commercial vehicle

contracts has deviation in contract period, 62.5% of commercial vehicle

contracts has deviation in exposure, no commercial vehicle contracts has

deviation in PDC collection and 66% of commercial vehicle contracts has

deviation in other credit policy.

CHART 2.1.6

Figure showing the various credit deviations for commercial vehicle

contracts

various credit deviations for commercial vehicle contracts

0

20

40

60

80

100

Excessfinance

Contractperiod

Exposure PDCcollection

Others

credit deviations

per

cen

tag

e

2.2 STATISTICAL ANALYSIS

2.2.1 CHI-SQUARE METHOD

2.2.1.1 FOR ELUCIDATING THE RELATIONSHIP BETWEEN

DEVIATION FROM CREDIT POLICY AND PERFORMANCE OF

CAR CONTRACT

AIM:  To test the relationship between deviation from credit policy and

performance of car contract.

NULL HYPOTHESIS (H0):  Deviation from credit policy and

performance of car contract are independent

ALTERNATIVE HYPOTHESIS (H1): Deviation from credit policy

and performance of car contract are dependent

Table 2.2.1.1

IS THERE

DEVIATION

FROM

CREDIT

POLICY

IS THE

PERFORMANCE

OF CONTRACT

GOOD

ROW

TOTAL

CHI-

SQUARE

VALUE

DEGREE

OF

FREEDOM

TABLE

VALUE

YES NO

YES 144 18 162 1.2223 1 3.841

NO 50 10 60

COLUMN

TOTAL

194 28 222

FORMULA

EXPECTED VALUE: Row total X Column total / Grand total 

CALCULATION:

R1C1: 162*194/222 = 141.57

R1C2: 162*28/222 = 20.43

R2C1: 60*194/222 = 52.43

R2C2: 60*28/222 = 7.57

Oi Ei Oi-Ei (Oi-Ei)2 (Oi-Ei)2/Ei

144 141.57 2.43 5.90 0.0417

18 20.43 -2.43 5.90 0.2888

50 52.43 -2.43 5.90 0.1125

10 7.57 2.43 5.90 0.7793

SUM(Oi-Ei)2/Ei = 1.2223

Degree of freedom = (C-1) (R-1) =1

At 5% level of degree table value is = 3.841

The calculated value is = 6.297

CONCLUSION: since the calculated value of chi-square is less than the

table value, reject alternative hypothesis at 5% level of significance.

Hence there is no relationship between deviation from credit policy and

performance of contract and they are independent to each other.

2.2.1 CHI-SQUARE METHOD

2.2.1.2 FOR ELUCIDATING THE RELATIONSHIP BETWEEN

DEVIATION FROM CREDIT POLICY AND PERFORMANCE OF

COMMERCIAL VEHICLE CONTRACT

AIM:  To test the relationship between deviation from credit policy and

performance of commercial vehicle contract.

NULL HYPOTHESIS (H0):  Deviation from credit policy and

performance of commercial vehicle contract are independent

ALTERNATIVE HYPOTHESIS (H1): Deviation from credit policy

and performance of commercial vehicle contract are dependent

Table 2.2.1.2

IS THERE

DEVIATION

FROM

CREDIT

POLICY

IS THE

PERFORMANCE

OF CONTRACT

GOOD

ROW

TOTAL

CHI-

SQUARE

VALUE

DEGREE

OF

FREEDOM

TABLE

VALUE

YES NO

YES 25 5 30 0.3907 1 3.841

NO 2 0 2

COLUMN

TOTAL

27 5 32

FORMULA

EXPECTED VALUE: Row total X Column total / Grand total 

CALCULATION:

R1C1: 30*27/32 = 25.31

R1C2: 30*5/32 = 4.69

R2C1: 2*27/32 = 1.69

R2C2: 2*5/32 = 0.31

Oi Ei Oi-Ei (Oi-Ei)2 (Oi-Ei)2/Ei

25 25.31 -0.31 0.096 0.0037

5 4.69 0.31 0.096 0.0205

2 1.69 0.31 0.096 0.0568

0 0.31 -0.31 0.096 0.3097

SUM(Oi-Ei)2/Ei = 0.3907

Degree of freedom = (C-1) (R-1) =1

At 5% level of degree table value is = 3.841

The calculated value is = 0.3907

CONCLUSION: since the calculated value of chi-square is less than the

table value, reject alternative hypothesis at 5% level of significance.

Hence there is no relationship between deviation from credit policy and

performance of contract and they are independent to each other.

2.3 SWOT ANALYSIS

SWOT Analysis on process of HP business

STRENGTHS:

Detailed form of HP agreement

Clear and full details are collected

Full details of customer is collected

Every procedure is documented

Every document is verified

WEAKNESS:

Very long procedure

Too much of documentation

Documents to be submitted is more

Period for documentation is long

Minimum requirements are more

Guarantor is mandatory in some cases

When compared with other business HP has long procedure

Because of strict credit policy more deviation are found in HP

contracts.

OPPORTUNITIES:

More receivables through HP business

Most of the contracts performing well

Creating more knowledge in customers mind

Building customer relationship

THREATS:

Consumption of time is more for documentation

Customers shift to loan

Increase in competitors

Changes in market

TABLE 2.1.7

Table showing the development of HP Business

Year Turnover (Rs. In Cr.)1954 0.11972 9.861976 19.871978 27.181982 76.61986 184.661991 483.211996 1637.052003 2669.912004 3093.322005 4488.32006 5452.182007 7327.022008 8925.052009 15406.19

Inference:

From the above table it is inferred that, the turnover of SFL of HP

business has started with Rs. 10 lakhs and with a tremendous improvement

every year now it as reached a turnover of more than Rs. 15,000 Crores.

CHART 2.1.7

Figure showing the development of HP business

Development of HP

02000400060008000

1000012000140001600018000

Year

Tu

rno

ver

(Rs.

in C

r.)

TABLE 2.1.8

Table showing the sales performance of HP Business

Months 2007-2008 2008-2009

April 4105 4724

May 3691 4877

June 3722 4203

July 3744 3882

August 3475 3859

September 3365 4261

October 3308 4338

November 3540 3474

December 3720 5061

 

 

 

   

CHART 2.1.8

Figure showing the sales performance of HP business

Sales performance of HP business

0100020003000400050006000

Apr

il

May

June

July

Aug

ust

Sep

tem

ber

Oct

ober

Nov

embe

r

Dec

embe

r

months

no

. o

f u

nit

s

2007-2008

2008-2009

INFERENCE 

APRIL 2008 

Starting of the new financial year 2008, April has yielded positive results for

the Indian automobile industry especially car sales experiencing 14.64 %

growth rate.  It also revealed good show up by all segments of cars. 

Along with the market, the sales of cars in Sundaram finance through hire

purchase grew up to 13.1 % when compared with the figures of April 2007. 

The likely reasons for such high growth rate are - The government initiative

to cut down excise duty on two and three wheelers to enable consumers

afford them, is largely accredited for growth in the Indian automobile

industry in April 2008.

Festival of Tamil New Year and fear of price hike in automobile industry

also boosted vehicle sales during April 2008.

 

MAY 2008 

Overall car market sales figures growth was 12.47 %, and

Sundaram Finance car figures growth was 24.31 %.  

The likely reasons for are - In spite of high interest rates, the higher sales

rate was possible because of a very dominant presence in the compact

segment.

Purchases increased in anticipation of a price rise of as much as 3 % because

of increase in prices of steel.

Sensing opportunities several foreign players like NISSAN were signing in

with the Indian counterparts.

 

JUNE 2008 

Overall car market sales growth was only 5.75%

Sundaram Finance car figures growth was 11.44% 

The likely reasons for are - Creeping interest rates, Raising fuel prices,

Inflationary pressures

Despite the fact that car makers like Maruti, Tata Motors lowered discounts

on select models inflationary pressures failed to entice buyers.

 

 

JULY 2008 

Overall car market segment registered a negative growth at – 1.73%.

Sundaram Finance car figures growth dropped to 3.55 % 

The likely reasons for are - With high inflation, interest rates were soaring.

The Fuel prices were increased to about Rs. 5 per litre of petrol and Rs. 3 per

litre of diesel. And also rise in input costs because of the increase in prices

of raw material by about 50 % made the prices of the vehicles higher and as

a result the sales declined.

 

 

 

AUGUST 2008  

Overall car market sales showed a marginal increase of 4.56 %

Sundaram Finance car figures growth was 9.95 % 

The likely reasons for are - Continued inflationary scenario. Further increase

in prices of petrol and diesel were the predominant reasons for the

debilitated sales figures.

 

SEPTEMBER 2008  

Overall car market sales showed a marginal increase of 2.75 %

Sundaram Finance car figures growth was 21.02 % 

The likely reasons for are - Though the same scenario continued in the

month of September, the sales were boosted up in Chennai because of the

festival season. Intensive advertisement and launch of new models in the

market contributed to the sales

 

OCTOBER 2008 

Overall car market sales growth dropped to negative – 7.05 %

Sundaram Finance car figures growth was 23.74 % 

The likely reasons for are - Despite the season of festivals and the

government employees getting their additional pay (arrears) after 6th Pay

Commission created more disposable income sales did not prop up IT

professionals being a major source, dropped drastically.

 

NOVEMBER 2008 

Overall car market sales growth dropped drastically to negative – 24.04 %

Sundaram Finance car figures growth a negative – 1.89 % 

The likely reasons for are - Economic meltdown and recession dominated

the world and as a result there were several job losses and job cuts. A severe

liquidity crisis has also forced many of the car buyers to cut upgrades to

bigger cars and many are pushed back from buying new cars. With

deteriorating car sales, even production has gone down to a great extent,

which has eventually put a negative impact on the Indian automobile

industry.

 

DECEMBER 2008 

Overall car market sales growth dropped to negative – 7.51 %

Sundaram Finance car figures growth was 26.49 % 

The likely reasons for are - Though the economic meltdown was at its peak

during the month, the sales of new cars through SF were surprisingly high,

when analyzed it was found that,  the government employees were rewarded

with the arrears of pay after the implementation of the 6 th Pay Commission

and therefore the amount of disposable income was higher. This lead to the

purchase of compact cars by the middle income group, and the maximum

sales were contributed by the government employees. 

CHAPTER III

SUMMARY AND CONCLUSION

CHAPTER III

3. SUMMARY AND CONCLUSION

3.1 Findings of the Study

73.42% of car contracts are deviated from the credit policy and

26.58% of car contracts are not deviated from the credit policy.

93.75% of commercial vehicle contracts are deviated from the credit

policy and 6.25% of commercial vehicle contracts are not deviated

from the credit policy.

88.74% of car contracts performance is good, 6.31% of car contracts

performance is average and 4.95% of car contracts performance is

bad.

84.375% of commercial vehicle contracts performance is good, 12.5%

of commercial vehicle contracts performance is average and 3.125%

of commercial vehicle contracts performance is bad.

40.54% of car contracts have deviation in excess finance, 20.72% of

car contracts have deviation in contract period, 5.86% of car contracts

have deviation in exposure, 20.27% of car contracts have deviation in

PDC collection and 40.1% of car contracts have deviation in other

credit policy.

81.25% of commercial vehicle contracts has deviation in excess

finance, 6.25% of commercial vehicle contracts has deviation in

contract period, 62.5% of commercial vehicle contracts has deviation

in exposure, no commercial vehicle contracts has deviation in PDC

collection and 66% of commercial vehicle contracts has deviation in

other credit policy.

From the chi-square test it is found that, there is no relationship

between the deviations from the credit policy and the performance of

the car contracts. It shows the credit worthiness of the customers is

good.

From the chi-square test it is found that, there is no relationship

between the deviations from the credit policy and the performance of

the commercial vehicle contracts. It shows the credit worthiness of the

customers is good.

SWOT analysis on process of HP business shows that weakness and

threats is more in HP documentation procedure and hence necessary

steps to be taken to overcome it.

Receivable through HP business has been increasing from the year it

started. Now it reached more than 15000Crs. HP business shows a

good turnover for SFL.

Sales of cars through HP business have increased when compared

with the previous financial year. It has shown a tremendous growth in

performance of HP business.

3.2 Suggestions

HP business the major operation of SFL and the major portion of total

income is earned from HP business.

The credit policy can be made lien ant so that credit deviations can be

minimized or total eliminated. This in turn brings in more customers and

receivable to SFL.

The documentation procedures and HP process in SFL are very

complicated. Hence, the company should reduce the cumbersome procedure

and should make the process easy. This avoids customers shifting to other

means or other company.

The HP business can be further developed by building good customer

relationship and by comparing with their competitors and making necessary

changes.

SFL should concentrate on advertisement in print media and broadcast

media to attract more number of customers all over India. This helps in

growth of sales performance, which in turn helps in the development of SFL.

3. Conclusions

Sundaram Finance with its extensive network, dealer relationship, and

trade advance to dealers was able to take advantage of the conductive market

conditions and offset the negative conditions and beat the current trend of

declining productivity due to Economic Downturn by Strategic planning and

continued operational excellence

Sundaram Finance Limited is financial institution which plays well in

this competitive market. HP business is more profitable in SFL then the

other activities of the company. The company should concentrate more on

HP business to maintain the present level.

Thus, it is concluded that SFL is one of the important financial

institution in India which is operating well.

BIBLIOGRAPHY

BIBLIOGRAPHY

RESEARCH METHODOLOGY

Research Methodology -C.R. Kothari

Research Methods for Business – Uma Sekaran

STATISTICS ANALYSIS

Statistical Methods – S.P. Gupta

WEBSITES

www.google.com

www.sundaramfinance.com

www.wikepediya.com

APPENDICES

FORMAT OF DATA COLLECTION

Data collection - car contractsS.No. Proposal

no.Contract

no.Deviation from credit

policyPerformance of the

contract1 2 3 4 5 1 2 3

Data collection – commercial vehicle contractsS.No. Proposal

no.Contract

no.Deviation from credit

policyPerformance of the

contract1 2 3 4 5 1 2 3

Data collection:

Deviation from the credit policy:1. Excess finance2. contract period3. exposure limit4. PDC collection5. Others – yrs in service, yrs in location, guarantor not available, etc.

Performance of the contract:1. Good-repayment before 1month2. Average- repayment before 3months3. Poor- repayment or no repayment received beyond 3months

DATA COLLECTION

DATA COLLECTION - CAR CONTRACTS

S.No. Proposal No. Contract No.

Deviation from the credit policy

Performance of the contract

1 2 3 4 5 1 2 31 107118 C0001 No deviation 2 107119 C0002 3 107120 C0003 4 107121 C0004 5 107122 C0005 No deviation 6 107123 C0006 7 107124 C0007 8 107125 C0008 No deviation 9 107126 C0009 No deviation

10 107127 C0010 No deviation 11 107128 C0011 No deviation 12 107129 C0012 13 107130 C0013 14 107131 C0014 15 107132 C0015 No deviation 16 107133 C0016 No deviation 17 107134 C0017 18 107135 C0018 19 107136 C0019 20 107137 C0020 21 107138 C0021 No deviation 22 107139 C0022 23 107140 C0023 24 107141 C0024 No deviation 25 107142 C0025

S.No.Proposal

No.Contract

No.

Deviation from the credit policy

Performance of the contract

1 2 3 4 5 1 2 326 107143 C0026 27 107144 C0027 28 107145 C0028 No deviation 29 107146 C0029 30 107147 C0030 31 107148 C0031 No deviation 32 107149 C0032 33 107150 C0033 34 107151 C0034 No deviation 35 107152 C0035 36 107153 C0036 37 107154 C0037 38 107155 C0038 39 107156 C0039 No deviation 40 107157 C0040 41 107158 C0041 No deviation 42 107159 C0042 43 107160 C0043 44 107161 C0044 45 107162 C0045 46 107163 C0046 47 107164 C0047 48 107165 C0048 49 107166 C0049 50 107167 C0050

S.No.Proposal

No.Contract

No.

Deviation from the credit policy

Performance of the contract

1 2 3 4 5 1 2 351 107168 C0051 No deviation 52 107169 C0052 53 107170 C0053 54 107171 C0054 55 107172 C0055 56 107173 C0056 57 107174 C0057 58 107175 C0058 No deviation 59 107176 C0059 60 107177 C0060 61 107178 C0061 No deviation 62 107179 C0062 63 107180 C0063 64 107181 C0064 65 107182 C0065 66 107183 C0066 67 107184 C0067 68 107185 C0068 No deviation 69 107186 C0069 70 107187 C0070 71 107188 C0071 72 107189 C0072 73 107190 C0073 No deviation 74 107191 C0074 75 107192 C0075

S.No.Proposal

No.Contract

No.

Deviation from the credit policy

Performance of the contract

1 2 3 4 5 1 2 376 107193 C0076 77 107194 C0077 No deviation 78 107195 C0078 79 107196 C0079 80 107197 C0080 81 107198 C0081 82 107199 C0082 83 107200 C0083 84 107201 C0084 85 107202 C0085 86 107203 C0086 87 107204 C0087 88 107205 C0088 89 107206 C0089 90 107207 C0090 91 107208 C0091 92 107209 C0092 93 107210 C0093 No deviation 94 107211 C0094 No deviation 95 107212 C0095 96 107213 C0096 No deviation 97 107214 C0097 98 107215 C0098 No deviation 99 107216 C0099 No deviation

100 107217 C0100

S.No.Proposal

No.Contract

No.

Deviation from the credit policy

Performance of the contract

1 2 3 4 5 1 2 3101 107218 C0101 102 107219 C0102 No deviation 103 107220 C0103 104 107221 C0104 105 107222 C0105 No deviation 106 107223 C0106 107 107224 C0107 108 107225 C0108 109 107226 C0109 110 107227 C0110 111 107228 C0111 No deviation 112 107229 C0112 No deviation 113 107230 C0113 No deviation 114 107231 C0114 115 107232 C0115 116 107233 C0116 117 107234 C0117 No deviation 118 107235 C0118 119 107236 C0119 120 107237 C0120 121 107238 C0121 122 107239 C0122 No deviation 123 107240 C0123 124 107241 C0124 125 107242 C0125

S.No.Proposal

No.Contract

No.

Deviation from the credit policy

Performance of the contract

1 2 3 4 5 1 2 3126 107243 C0126 127 107244 C0127 128 107245 C0128 129 107246 C0129 130 107247 C0130 131 107248 C0131 No deviation 132 107249 C0132 133 107250 C0133 134 107251 C0134 135 107252 C0135 No deviation 136 107253 C0136 137 107254 C0137 No deviation 138 107255 C0138 139 107256 C0139 140 107257 C0140 141 107258 C0141 142 107259 C0142 143 107260 C0143 144 107261 C0144 No deviation 145 107262 C0145 146 107263 C0146 147 107264 C0147 148 107265 C0148 149 107266 C0149 150 107267 C0150 No deviation

S.No.Proposal

No.Contract

No.

Deviation from the credit policy

Performance of the contract

1 2 3 4 5 1 2 3151 107268 C0151 No deviation 152 107269 C0152 No deviation 153 107270 C0153 154 107271 C0154 155 107272 C0155 156 107273 C0156 157 107274 C0157 No deviation 158 107275 C0158 159 107276 C0159 160 107277 C0160 No deviation 161 107278 C0161 162 107279 C0162 163 107280 C0163 164 107281 C0164 165 107282 C0165 166 107283 C0166 167 107284 C0167 168 107285 C0168 169 107286 C0169 170 107287 C0170 171 107289 C0171 172 107290 C0172 173 107291 C0173 174 107292 C0174 No deviation 175 107293 C0175 No deviation

S.No.Proposal

No.Contract

No.

Deviation from the credit policy

Performance of the contract

1 2 3 4 5 1 2 3176 107294 C0176 177 107295 C0177 178 107296 C0178 179 107297 C0179 No deviation 180 107298 C0180 181 107299 C0181 No deviation 182 107300 C0182 183 107301 C0183 184 107302 C0184 185 107303 C0185 No deviation 186 107304 C0186 No deviation 187 107305 C0187 188 107306 C0188 189 107307 C0189 190 107308 C0190 191 107309 C0191 192 107310 C0192 193 107311 C0193 No deviation 194 107312 C0194 195 107313 C0195 196 107314 C0196 197 107315 C0197 198 107316 C0198 No deviation 199 107317 C0199 200 107318 C0200 No deviation

S.No.Proposal

No.Contract

No.Deviation from the credit policy

Performance of the contract

1 2 3 4 5 1 2 3201 107319 C0201 No deviation 202 107320 C0202 No deviation 203 107321 C0203 No deviation 204 107322 C0204 205 107323 C0205 206 107324 C0206 207 107325 C0207 No deviation 208 107326 C0208 209 107327 C0209 No deviation 210 107328 C0210 211 107329 C0211 212 107330 C0212 213 107331 C0213 214 107332 C0214 215 107333 C0215 216 107334 C0216 No deviation 217 107335 C0217 218 107336 C0218 No deviation 219 107337 C0219 No deviation 220 107338 C0220 221 107339 C0221 No deviation 222 107340 C0222

TOTAL 222 90 46 13 45 89 197 14 11PERCENTAGE 100 40.5 20.72 5.86 20.3 40 88.74 6.31 4.95

NO DEVIATION CONTRACTS = 60

DATA COLLECTION - COMMERCIAL VEHICLES

S.No.Proposal

No.Contract

No.

Deviation from the credit policy

Performance of the contract

1 2 3 4 5 1 2 31 O98837 C6501 2 O98838 C6502 3 O98839 C6503 4 O98840 C6504 5 O98841 C6505 6 O98842 C6506 7 O98843 C6507 8 O98844 C6508 9 O98845 C6509 10 O98846 C6510 11 O98847 C6511 12 O98848 C6512 13 O98849 C6513 14 O98850 C6514 15 O98851 C6515 16 O98852 C6516 17 O98853 C6517 18 O98854 C6518 19 O98855 C6519 20 O98856 C6520 21 O98857 C6521 22 O98858 C6522 23 O98859 C6523 24 O98860 C6524 25 O98861 C6525 No deviation 26 O98862 C6526 27 O98863 C6527 28 O98864 C6528 29 O98865 C6529 30 O98866 C6530 31 O98867 C6531 No deviation 32 O98868 C6532

TOTAL 32 26 2 20 0 21 27 4 1PERCENTAGE 100 81.25 6.25 62.5 0 65.6 84.375 12.5 3.125

NO DEVIATION CONTRACTS = 2