A

PROJECT REPORT
ON
"STUDY OF THE SME MANUFACTURING UNIT IN RAJKOT
WITH SPECIAL FOCUS TO MARKETING OF SBI’S SME
PRODUCTS."

PREPARED BY:
Mr.DIPAK CHAVDA
(AES POSTGRADUATE INSTITUTE FOR BUSINESS MANAGEMENT-AHMEDABAD)

As a part of partial fulfillment of MBA Programme.

SUBMITTED TO:
Mr.R.Khiyani-AGM
RBO-Rajkot
 ACKNOWLEDGEMENTS

At the outset, we would like to express our deep gratitude to Mr. R. Khiyani for allowing us
to work under his guidance, thereby, giving us an opportunity to gain tremendous knowledge
and skills in banking sector.

We are also grateful to Mr. Menon & Mr. Pradeep Chhabra without whose help, guidance,
valuable inputs and constant monitoring, our learning would have been incomplete. We are
also thankful to Miss. Kosha Nair and Miss. Urvi Mehta for extending helping hand in
completing our project successfully.

We are also sincerely thankful to our Director and faculty members for their guidance and
valuable suggestions prior to and during the entire course of training.

Our acknowledgement would be incomplete if we do not extend our sincere thanks to all the
executives & staff of REGIONAL BUSINESS OFFICE & SBI COMMERCIAL
BRANCH, specially, Mr. Ramesh Rathod and Mr. Vipul Raj-yadav for their help and
guidance.

2
 PREFACE

As a part of partial fulfillment of MBA program we are supposed to undertake

SUMMER INTERNSHIP PROGRAM in any organization for a period of two months. In
order to gain practical knowledge as well as to access applicability of different aspects of
organization. This kind of training enables us to face the real life situation of the market and
allows better insight to take the practical industrial problem.

We have undertaken this training at STATE BANK OF INDIA. The aim of the
training is to utilize the knowledge and fell about the theories we studied in MBA. It will
increase our ability to perform specific job systematically in a new way in business
environment when we will come out into the market.

We have studied the SME MANUFACTURING UNITS in RAJKOT DISTRICT

and undertook research on the requirement of different manufacturing units in Rajkot district.
On the basis of the research we came to know about different financial needs of the Small and
Medium Manufacturing enterprises in Rajkot District.

3
 TABLE OF CONTENTS

Executive Summary……………………………………………………………………….

Introduction of SME………………………………………………………………………

About The SBI……………………………………………………………………………

SME Products of SBI…………………………………………………………………….

Survey…………………………………………………………………………………….

Survey of Industry (Questionnaire)………………………………………………………

Rajkot district’s GIDC map………………………………………………………………

Field Work………………………………………………………………………………..

Analysis on the basis of ‘Forms of Industry’………………………… ………………..

Findings and Recommendations…………………………………………………………

Analysis on the basis of ‘Market Share’………………………………………………..

Findings and Recommendations………………………………………………………….

Analysis on the basis of ‘Facilities Used By Units’…………………………………….

Findings and Recommendations…………………………………………………………

Analysis on the basis of ‘Turn Over’……………………………………………………

Findings and Recommendations…………………………………………………………

Analysis on the basis of ‘Export and Domestic Market’………………………………

Findings and Recommendations…………………………………………………………

Analysis on the basis of ‘Prefrence To Public And Private Sector Bank’……………

Findings and Recommendations…………………………………………………………

Perception about SBI…………………………………………………………………….

Learning from the project………………………………………………… …………….

Conclusion……………………………………………………………………………….

Bibliography……………………………………………………………………………..

4
 EXECUTIVE SUMMARY
The project was aimed at understanding the various SME products offered by
banks to the SMALL AND MEDIUM SCALE MANUFACTURING ENTERPRISE.
An attempt was also made to get information about the present banking services
availed to the SMALL AND MEDIUM SCALE MANUFACTURING
ENTERPRISE, their further requirements and the ability of the banks to provide those
services.

The survey was undertaken for SBI BANK, Rajkot Branch. Hence, the region
surrounding it i.e. AJI, ATIKA, HADAMTALA, KUVADVA, METODA,
PADADHARI, SHAPAR (VERAVAL), SAMRAT, TANKARA & TARGHADI
was considered. The outcome of the survey showed that the financial needs of the
SMALL AND MEDIUM SCALE MANUFACTURING ENTERPRISE are very
limited due to which majority of the enterprises were not aware of the various SME
products offered by the SBI bank. This had been observed mainly in the Rajkot
region. But it is also a fact that the enterprises showed great interest in the additional
SME products provided by banks when they were explained the functions of the SME
products

The training was a great learning experience resulting in a better

understanding of the banking sector. We found that in spite of so many private sector
banks coming in, there are still a large number of companies who still prefer to carry
out their transactions with the public sector banks. The security aspect is perhaps
playing its part in this case.

The findings of the project suggest that SBI BANK should pitch into the
SMEs sector as fast as possible in order to cope up with the competition from other
private sector as well as public sector banks & co-operative and commercial banks
such as BOB, IDBI, BOI, ICICI, HDFC, RAJKOT PEOPLE, RAJ BANK etc. Which
have started penetrating aggressively.

5
 The report, which follows, is an outcome of our effort, which is prepared in
partial fulfillment of the MBA program. The facts and figures mentioned in the report
are absolutely true to us knowledge. Reader of this report is hence requested to keep
the information confidential and not use it for any other purpose.

Mr. BHAVIK MAKWANA

Mr. DIPAK CHAVDA
Miss. JALPA GOHEL
Mr. PRAJI NAIR
Mr. VARUN SOMAIYA

6
 INTRODUCTION TO SMALL AND MEDIUM ENTERPRISE

SMEs are major contributors to GDP, and an even larger contributor to

exports and employment. Given this background, banks will find SME financing an
attractive business opportunity rather than a compulsion, of lending to the priority
sector. SIDBI and banks jointly have to play a pivotal and proactive role in financing
the SMEs.

ROLE OF SMEs:
World over, the potential of SMEs has been realized. The following statistics
make it apparent:

There are 8 million SMEs in China that account for more than 99% of all the
enterprises in the country. Both industrial output and export volume of these
enterprises made up 60% of China’s total. The government has set up various
agencies to promote SME developed in China as SMEs play an important role in
easing unemployment opportunities in Chinese cities.

• In a city-state like Singapore, there are 1,05,000 successful SMEs

• Of the 18.6 million enterprises in the European Union, 99.7% are SMEs. There
are only 35000 enterprises with more than 250 employees, but 18 million
enterprises employ less than 10 people.

• In USA of the total number of firms, at least around 95% are SMEs.

Likewise, the role played by SMEs in Indian economy is indelible. Here are
some figures. 3.37 million SSIs in India provide jobs to 16.56 million people. The
output of SSIs is around 40% of the total manufacturing sector. Over one third of
national exports, excluding the handicraft sector, come from the SSIs.

However, the post liberalisation period has been unkind for the small-scale
industries because of increased internal and external competition. Further, the various
WTO agreements have affected the fortunes of SSIs. In the absence of adequate
infrastructure support and want of technological upgradation, small-scale industries
have taken the beating of globalisation resulting in the hike of industrial sickness.
Seeing from another perspective, the modern day economic priorities have in a way
augmented the role of SMEs, particularly in the services sector. Current day strategies
like business process outsourcing and supply-chain management is built around
SMEs and are tailor-made to small business houses. The advantage of lean
institutional structure and close and personal supervision, which the SMEs are
inherently endowed with, have enabled them to reposition themselves in the
competitive services sector.

7
DEFINITION OF SME SECTOR

(a) At present small scale industry is defined as one having original investment in
plant and machinery not exceeding Rs.1 crore. While recognizing need of larger
investment in some of the more important segments of SSI, the Government of India
has enhanced this to Rs.5 crore in respect of certain specified industries. A process of
graduation of several SSIs into medium enterprises, having larger investment is a
natural progression of successful units. Therefore, it was agreed that a separate
category of medium enterprises (ME) needs to be recognized. While ME may not
qualify for priority sector lending, it must be seen as contiguous with SSI.

(b) The SME definition, adopted by other countries is generally based on number of
employees, capital investment or turnover. The existing definition of SSI adopted
in India, based on investment in plant and machinery, excludes the rapidly growing
service sector. The past decade has witnessed the services sector contributing almost
half of the GDP. The Working Group strongly recommends the adoption of turn
over as a measure for defining the SME sector. Based on turn over, Tiny, Small
and Medium enterprises may be redefined as under:

Tiny :Turn over up to the financial limit of Rs.2 Crore,

Small: Turn over up to the financial limit of above Rs 2 Crore and Up to Rs.10
Crores,

Medium: Turn over above the financial limit Rs.10 Crores and up to Rs. 50 Crores.

Till the Government of India takes a view regarding turnover as

suggested above, the Working Group recommends that a medium enterprise
may be defined as a undertaking where the original investment in plant and
machinery is more than Rs.1 crore but less than Rs.10 crore.

8
 INTRODUCTION ABOUT SBI

Board Of Directors

Central Board Of State Bank Of India (As on 1st April 2008)

Sl.No. Name of Director Sec. of SBI Act, 1955

Shri O.P. Bhatt
1. 19(a)
Chairman
Shri S.K. Bhattacharyya
2. 19(b)
MD & CC&RO
3. Shri Suman Kumar Bery 19(c)
4. Dr. Ashok Jhunjhunwala 19(c)
5. Dr. Deva Nand Balodhi 19(d)
6. Prof. Mohd. Salahuddin Ansari 19(d)
7. Dr.(Mrs.) Vasantha Bharucha 19(d)
8. Shri Arun Ramanathan 19(e)
9. Smt. Shyamala Gopinath 19(f)

Evolution of SBI

The origin of the State Bank of India goes back to the first decade of the nineteenth
century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806.
Three years later the bank received its charter and was re-designed as the Bank of
Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of
British India sponsored by the Government of Bengal. The Bank of Bombay (15 April
1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These
three banks remained at the apex of modern banking in India till their amalgamation
as the Imperial Bank of India on 27 January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existence
either as a result of the compulsions of imperial finance or by the felt needs of local
European commerce and were not imposed from outside in an arbitrary manner to
modernise India's economy. Their evolution was, however, shaped by ideas culled
from similar developments in Europe and England, and was influenced by changes
occurring in the structure of both the local trading environment and those in the
relations of the Indian economy to the economy of Europe and the global economic
framework.

9
 Bank of Bengal H.O.

Business

The business of the banks was initially confined to discounting of bills of exchange or
other negotiable private securities, keeping cash accounts and receiving deposits and
issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period
of accommodation confined to three months only. The security for such loans was
public securities, commonly called Company's Paper, bullion, treasure, plate, jewels,
or goods 'not of a perishable nature' and no interest could be charged beyond a rate of
twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton
piece goods, mule twist and silk goods were also granted but such finance by way of
cash credits gained momentum only from the third decade of the nineteenth century.
All commodities, including tea, sugar and jute, which began to be financed later, were
either pledged or hypothecated to the bank. Demand promissory notes were signed by
the borrower in favour of the guarantor, which was in turn endorsed to the bank.
Lending against shares of the banks or on the mortgage of houses, land or other real
property was, however, forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the
business of discounts on private as well as salary bills was almost the exclusive
monopoly of individuals Europeans and their partnership firms. But the main function
of the three banks, as far as the government was concerned, was to help the latter raise
loans from time to time and also provide a degree of stability to the prices of
government securities.

10
 Old Bank of Bengal

Major change in the conditions

A major change in the conditions of operation of the Banks of Bengal, Bombay and
Madras occurred after 1860. With the passing of the Paper Currency Act of 1861,
the right of note issue of the presidency banks was abolished and the Government of
India assumed from 1 March 1862 the sole power of issuing paper currency within
British India. The task of management and circulation of the new currency notes
was conferred on the presidency banks and the Government undertook to transfer
the Treasury balances to the banks at places where the banks would open branches.
None of the three banks had till then any branches (except the sole attempt and that
too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the
charters had given them such authority. But as soon as the three presidency bands
were assured of the free use of government Treasury balances at places where they
would open branches, they embarked on branch expansion at a rapid pace. By 1876,
the branches, agencies and sub agencies of the three presidency banks covered most
of the major parts and many of the inland trade centres in India. While the Bank of
Bengal had eighteen branches including its head office, seasonal branches and sub
agencies, the Banks of Bombay and Madras had fifteen each.

Bank of Madras Note Dated 1861 for Rs.10

Presidency Banks Act

The presidency Banks Act, which came into operation on 1 May 1876, brought the
three presidency banks under a common statute with similar restrictions on business.
The proprietary connection of the Government was, however, terminated, though
the banks continued to hold charge of the public debt offices in the three presidency
towns, and the custody of a part of the government balances. The Act also stipulated
the creation of Reserve Treasuries at Calcutta, Bombay and Madras into which sums
above the specified minimum balances promised to the presidency banks at only
their head offices were to be lodged. The Government could lend to the presidency
banks from such Reserve Treasuries but the latter could look upon them more as a
favour than as a right.

11
12
 SME PRODUCTS OF STATE BANK OF INDIA

SMALL AND MEDIUM ENTERPRISE

State Bank of India has been playing a vital role in the development of
small-scale industries since 1956.The Bank has financed over 8 lacs SSI units in the
country. It has 55 specialised SSI branches, 99 branches in industrial estates and more
than 400 branches with SIB divisons.

The Bank finances for Small Business activities, which are of special
significance to a large number of people as many of these activities, can be started
with relatively lower investment and with no special skills on the part of the
entrepreneurs.

In recent time bank has come out with new products for the promotion of
SMALL AND MEDIUM ENTERPRISE. It has also made changes in the interest
rates of the existing facilities like CASH CREDIT & TERM LOAN.

13
1. BUSINESS CURRENT ACCOUNTS

Powerful Business Current Accounts to suit Powerful SME Business

Accounts Quarterly Average Balance

Sahaj Rs. 1,000
Standard Rs. 10,000 *
Power Gain Rs. 1,00,000
Power Pack Rs. 5,00,000
* daily minimum balance

 SME Sahaj Current Accounts

A business current account to provide basic banking facility

ATM cum Debit Card facility – Limit Rs. 15000
Transfer of funds through internet banking facility – free upto Rs. 20,000
No cheque book facility
Collection of outstation cheques
Handling of bills

Standard Current Accounts

Inter-core transaction facility (across over 4500 branches)

Internet Banking facility
Remittance through DD/TT/electronic transfer
Unlimited cash deposits (cash handling charges applicable)
Collection of outstation cheques
Handling of bills

 SME Power Gain Current Accounts

Unlimited free cash deposit

Free domestic ATM cum Debit Card
FreeInternet Banking facility
Cheque Return Protection facility – upto Rs.25,000
Multicity cheque facility at nominal rates
Inter-core transaction facility (roaming account across over 4500 branches)
Remittance through drafts/TTs/Electrnoic transfer -at nominal charges
FreeBankers Cheques
Free local cheque books
Free duplicate statement of accounts
Pre-approved car loans
Part waiver of processing charges for loans.

14
  SME Power Pack Current Accounts

Unlimited free cash deposit

Free International ATM cum Debit Card
FreeInternet Banking facility
Cheque Return Protection facility – upto Rs.1,00,000
Free Multicity cheque facility
Free Inter-core transaction facility (roaming account across over 4500 branches)
Free Remittance through drafts/TTs/Electrnoic transfer
FreeBankers Cheques
Free cheque books
Free duplicate statement of accounts
Pre-approved car loans
Part waiver of processing charges for loans.

15
2. TERM LOAN

The types of term assistance extended by the Bank can be broadly classified into
(i) Term Loans (including foreign currency loans),
(ii) Deferred Payment Guarantees (DPGs),
(iii) Underwriting of Shares/ Debentures.

The salient features of term loans are given below:

(a) A term loan is an advance, usually against security of the borrowers’ fixed assets,
for a fixed period to a business or an industrial undertaking whether a firm, company
or co-operative society and may be drawn by the borrower either in a lump sum or in
installments. A term loan may be granted for any period in excess of three years but
normally not exceeding seven years for the purpose of acquisition of fixed assets,
viz., land, buildings and plant and machinery for setting up new industrial units or
expansion or modernization of existing undertakings.

(b) While loans with deferred payment period up to three years will be termed as
short-term loans (STLs), loans with maturity exceeding three years but up to seven
years will be termed as medium term loans (MTLs) and those with longer maturity
will be known as long term loans or simply term loans (TLs).

16
3. CASH CREDIT

Cash credit may be given against

(a) Pledge of goods or produce or documents of title thereto,

(b) Pledge of goods or produce or documents of title thereto, with the additional
security of demand promissory notes bearing two or more names,

(c) Demand promissory notes bearing two or more names,

(d) Demand promissory notes bearing two or more names, collaterally secured by:

Hypothecation of stocks of goods or produce (sometimes supported by

hypothecation of other assets), debentures or fully paid shares of limited liability
companies, or immovable property or documents of title thereto;

(e) Hypothecation of book debts and other assets.

A cash credit account is a drawing account against credit granted by the

Bank and is operated in exactly the same manner as a current account on which an
overdraft has been sanctioned. The distinction between an overdraft and a cash credit
advance is that the nature of the security against which the latter is granted
necessitates certain documents being taken in evidence of an agreement between the
borrowers (and guarantors, if any) and the Bank.

When the advance is secured by the pledge or hypothecation of goods or

produce, the security may change from time to time according to the borrower’s
business requirements. However, branches should ensure that the balance outstanding
in the account is always fully covered by the value of security, with the stipulated
margin.

Where loans are given for seasonal operations, those must be repaid on
completion of the purpose for which they were given; borrowings on cash credit
accounts must ordinarily be cleared at the end of the season for which they were
allowed and the accounts should not be overdrawn again until the next season begins.
Branches must take the utmost care that cash credit accounts do not run block, i.e.,
remain permanently overdrawn to their limit regardless of the season and current
market conditions.

17
4. COMMODITY BACKED WAREHOUSE RECEIPT
FINANCING
Purpose:
To finance traders/owners of goods against warehouse receipts of warehouses
managed by Central Warehousing Corporations/ State Warehousing Corporation and
warehouse accredited by MCX by way of Demand Loan/Cash Credit

Eligibility:
Any trader dealing in commodities

Eligible Amount of Finance:

Demand Loan: 75 % of the value of the warehouse receipt, valued at the market value
OR
80% of the minimum support price declared by State/Central Government
Whichever is lower.

Cash Credit: 70 % of the value of the warehouse receipt, valued at the market value
OR
75% of the minimum support price declared by State/Central Government, whichever
is lower

Processingcharges:
CashCredit:
Rs.300/-per lac for the facility sanctioned

Demand Loan:
Nil where loan is sanctioned and disbursed Rs. 300 per lac in case the loan is
sanctioned but the borrower does not avail.

Margin:
Demand Loan: 25% (minimum) of the value of the warehouse receipt, valued at the
market value
OR
20% (minimum) of the minimum support price declared by State/Central
Government, whichever is higher

18
5. SME FUNDING

State Bank of India provides several financing options for SSIs.

GENERAL PURPOSE TERM LOANS

State Bank of India grants term loans to small scale industries for meeting general
commercial purposes like substitution of high cost debt,research and development,
shoring up net worth and funding business expansion.

The tenor of the loan is normally is 3 years, and the pricing is fine-tuned to suit the
risk profile of the borrower. The repayment is structured in monthly or quarterly
installments, according to the cash generation cycle.

What are the eligibility criteria for these term loans?

The SSI unit that takes the loan should not have any history of defaults in payment of
interest or installments of the principal. The unit should have a strong performance
record and a respectable credit rating as per the bank’s own credit assessment scales
( In case of loan above Rs. 25 lakhs ) .

What is the type of security/guarantee required for the loan?

Extension of hypothecation charge over the current assets and fixed assets is required
as primary security. Further, the borrower whose aggregate loans with the Bank
exceed Rs 5 lakh may explore the possibility of collateralizing tangible security such
as immovable property and third party guarantee. In all cases, personal guarantees of
proprietors/partners/promoters have to be furnished.

What are the margins applicable?

A minimum margin of 25 per cent is applicable for acquisition of land and building,
building construction, renovation of offices, showrooms, godowns, purchase of
equipment, vehicles etc. In other words, the quantum of the loan will be restricted to
75 per cent of the total expenditure.

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6. OPEN TERM LOAN

SBI OPEN TERM LOAN - the easy and hassle-free way to get finance

• Hassle free pre-approved line of credit

• Max Loan Amount: Rs. 250 lacs (for Manufacturing), Rs.100 lacs (for Trade
and Services)

• Validity of sanction - 12 months

• Freedom to avail the facility at your own convenience, within the validity of
sanction.
• Multiple disbursements allowed.
• No penalty on the unutilized amount (even if completely unutilized)

The loan can be utilized for any genuine commercial purposes in line with the
regular business activity of the customer. These would include term loans for:

a. Expansion and modernization.

b. Substitution of high cost debts / high cost term debts of other banks/FIs.

c. Design and introduction of new layouts in the factory to enhance

productivity.

d. Up gradation of technology& energy conservation schemes/ machinery.

e. Acquisition of software, hardware, consumable tools, jigs, fixtures etc.

f. Acquisitions of ISO & other similar certifications.

g. Visits abroad for acquiring technology, finalizing business deals,

participating in exhibitions/ fairs for market promotion etc.

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7. RETAIL TRADE

Business activities that can be started with relatively lower investment and with no
special skills on the part of the entrepreneurs.

In this category, the SBI extends loans to retail traders who act as a vital link between
the manufacturers of goods or commodities and the consumer.

The bank offers working capital products as well as loans for purchase, renovation
and repairing of equipment.

Retail trade finance is normally capped at Rs 5 lakh. Any individual or a firm

(partnership or proprietorship) engaged primarily in buying and selling mercantile
goods is eligible for this mode of finance.

For requirements up to Rs 25,000, no margins are involved. For needs ranging from
Rs 25,000 to Rs 50,000, the margin is set at 20 per cent. In other words, the quantum
of the loan will be restricted to 80 per cent of the unit's expenditure. For fund needs
above Rs 50,000, a 25 per cent margin may be applied.

Security

Primary Collateral
Loan upto Charge over the assets Nil
Rs.25000/- purchased out of Banks
finance.
Above Charge over Charge Over the
Rs.25,000/- the assets purchased out of immovable/movable
Banks finance. assets/third party guarantee as
per RBI guidelines.

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8. DOCTOR PLUS

Purpose

To finance qualified medical practitioners of any discipline

• For buying medical equipments (For dentists, the loan also covers dental
implants besides equipments; for orthopaedists, the loan also covers various
replacements/ implants for hip/knee/shoulder/spine etc)
• Setting up clinic, X-ray lab, nursing home, pathological lab, drug stores etc
• For purchase of vehicles, ambulance, computers, etc
• Expansion/renovation/modernisation of existing premises
• For marketing exercises, business trips
• Any other activities related to medical profession

Eligibility

• Individuals/ partnerships / Corporate /Trusts (with powers to borrow)

• Promoters should be registered practitioners and possess minimum
qualification such as MBBS / BAMS / GAMS / BDS / BHMS
• Key promoters should be qualified doctors.

Loan Amount

Maximum of Rs 5 crores of which a sub ceiling for Working Capital limits at

10% of total loan amount for up to Rs 1 crore
5% of total loan amount for above Rs 1 crore

Repayment

Maximum period up to 7 years

Maximum moratorium 12 months, except for construction purpose, for which
moratorium can be upto 24 months

Primary Security
Hypothecation of Assets financed by the Bank

22
Collateral Security

No need for tangible collateral security for loan amounts up to Rs 15 lacs for
Allopathic professionals and up to Rs 10 lacs for other professionals (Homeopathic,
Ayurvedic, Unani etc)

Above Rs 10/15 lacs: Tangible collateral security of at least 25% and Personal
guarantee of promoters

*There is provision for concession on collateral security

Margin

Upto Rs 5 lacs: 10%

Above Rs 5 lacs: 15%

* There is provision for concession on margin

Interest rates

Based on score obtained on simplified credit scoring model

*There is provision for concession on interest rates

23
9. SME CREDIT PLUS

Eligibility

The unit should be enjoying a good track record (standard assets for at least two
years)
Units with CRA rating of SB4 and above

Purpose

For meeting bulk orders

Repairs to machinery
Tax payments
Any other contingency

The idea behind the product designed is to meet the unforeseen and sudden
expenditure of SMEs.

Nature of facility

Clean Cash credit

Margin
NIL

Tenure of Loan

Each amount with drawn should be repaid within 2 months

There should be a gap of 15 days between the last date of repayment of outstanding
and for the next withdrawal

Primary security
NIL

Collateral security

Existing collateral to be extended to cover this limit and additional collateral to be

obtained only if considered necessary by the sanctioning authority

24
10. SMALL BUSINESS CREDIT CARD

A hassle free, convenient and novel Small Business Credit Card Scheme launched for
easy credit delivery to SSI and SBF segments.

Eligibility

SSI
Units with satisfactory track record of 2 years.
New units with excellent credentials.

SBF
Retail Trade
Professional and Self-Employed
Small Business Enterprises.

Quantum

Up to Rs.5 lacs.

Assessment

SSI - Limit @ 20% of projected annual turnover (Nayak Committee)

Small Business Enterprises (Retail Traders) - Credit limit @ 20% of annual turnover
declared for tax purpose or @ 20% of last 12 months turnover in the operation
account, whichever is higher.

Professional and Self Employed persons - Limit based on 50% of their gross annual
income as per IT Return.

Interest

As applicable [For details Contact your nearest Branch].

Validity

3 years subject to satisfactory conduct of the account. Annual review based on

conduct / operation of the account.

Margin

Upto Rs.25,000- NIL

Rs.25,000/- to Rs.5 lacs

25
Collateral Security

SSI
No Collateral Security

SBF
Charge over movable / immovable property / third party guarantee, if limit is over
Rs.25, 000/-.

Attractive Features

• Less paper work.

• Stock Statement waived.
• Submission of audited Balance-Sheet waived.
• Borrower to be issued a small plastic card.
• Half-yearly inspection.
• Simplified application.
• Simplified scoring model for appraisal.
• Annual review based on the conduct of the account.
• Repayment of term loan component upto 5 years.

26
11. LETTER OF CREDIT
A country rarely, if ever, produces everything it needs. This means that countries are
dependent upon one another for those products that they need but which they
themselves do not produce. The various steps covering the movement of goods
between countries the payment for such goods and the relationship between the
parties involved form the basis of international trade.

Following are the recognized methods of effecting payments under international

trade.

Advance Payment

 When the buyer’s credit is doubtful or the political or economic environment

in the buyer’s country is unstable seller may demand advance payment, which
will be to his advantage.

 Without any assurance for supply of goods, blocking his capital prior to
receipt of goods or services the buyer will be at a disadvantageous position.

Open Account

 By an arrangement between the buyer and the seller manufactured goods will
be delivered to the buyer directly or to his order and the buyer will pay at the
end of the agreed period.

 This type of trading requires a high degree of trust between buyer and seller
and it will be more advantageous to the buyer.

Bills On Collection Basis

 It is an arrangement by which the seller after shipping the goods submits the
documents to his bank as agent for collection.

 Documents are presented to the buyer through the correspondent bank of the
seller’s bank, which will be released upon buyer’s payment of the amount
specified.

Documentary Credits (Letters Of Credit)

 It is one of the most convenient methods of settling payments in international

trade.

 It provides complete financial security to the seller of goods.

 The seller may not know the credit worthiness of the buyer and the prevailing
regulations in the country of the buyer.

27
  But once a Letter of Credit is established by the buyer’s bank on behalf of the
buyer in favour of the seller and the seller submits the set of required
documents to the opening bank or the nominated bank, seller is assured of
payment.

 Buyer also gets the advantage of his banker’s assistance in closely scrutinizing
the documents and only after receiving the relevant documentary evidence
from the seller by the banker nominated in the credit the nominated banker
releases payment.

Operation Of Letter Of Credit

 Based on the agreement entered into between buyer and seller, buyer
approaches his bank to open a letter of credit in favor of the seller of the goods
in the other country.

 As per the terms of the contract and the application given by the applicant to
the opening bank establishes the Letter of Credit and forwards the same to its
correspondent in the seller’s country which advises the Letter if Credit to the
beneficiary.

 At times at the insistence of the seller the buyer requests his bank to make
available the confirmation of a bank in the seller’s country.

 In such a case, the bank, which adds its confirmation, becomes a confirming
bank.

 The bills received under the Letter of Credit will be negotiated by this bank
which will claim reimbursement from the bank mentioned in the Letter of
Credit for this purpose.

 The documents will then be sent to the opening bank which will hank over the
documents to the opener after recovering the value from him.

TYPES OF LETTER OF CREDIT

Revocable – Irrevocable Credit

 A letter of credit may be revocable or irrevocable. If there is no indication of

this reference the credit will be deemed as irrevocable.

 A Revocable Credit may be amended or cancelled at any moment without

prior notice to the beneficiary. However, the issuing bank is bound to
reimburse the negotiating bank for the negotiations made prior to receipt of
such notice.

28
  The Irrevocable Credit is a definite undertaking of the issuing bank an dcannot
be amended or cancelled without the agreement of the issuing bank, the
confirming bank and the beneficiary.

Confirmed Credit

 When another bank adds its confirmation on the irrevocable letter of credit at
the specific request of the issuing bank, it becomes a confirmed credit and it
constitutes a definite undertaking of the confirming bank in addition to the
issuing bank.

 All credits need not be confirmed credits.

Transferable Credit

 A letter of credit is transferable only if the issuing bank expressly designates

it.

 The beneficiary in such credit has the right to request the nominated bank to
transfer the credit in full or parts in favor of one or more second beneficiaries
into another party or more than one party if partial shipment is permitted.

 The transferable credit can be transferred once unless otherwise stated.

Red Clause Credit

 This credit bears a clause in red color authorizing the nominated bank to allow
advance to the beneficiary/seller prior to shipment to meet his pre-shipment
credit requirements.

 GREEN clause credits in addition to permitting pre-shipment advance also

provides expenses relating to storage charges before shipment.

Back To Back Credit

 In case it the exporter is not the actual manufacture and he gets his work done
by the sub-suppliers and if the sub-suppliers demand letter of credits in their
favour, the exporter who has received a letter of credit for export, approaches
his banker to establish second set of letters of credit on the basis of the export
letter of credit received by him.

 The second set of credit opened by a bank at the request of the exporter is
known as back to back credit.

 The beneficiary of the original letter of credit will become the applicant for
the second set of credit.

Revolving Credit

29
  In a revolving credit the amount of drawing is re-instated and made available
to the beneficiary again up to the agreed period of time on notification of
payment by the applicant or merely on submission of documents.

 The maximum value and period up to which the credit can be revolved will be
specified in the revolving credit.

 The re-instatement clause and the maximum amount of drawings under the
credit should always be incorporated in revolving credit.

Deferred Payment Credits And Acceptance Credits

 Under deferred payment credit the amount is payable in installments for a

stipulated longer period.

 Usually a part is paid in advance and the balance is payable in agreed

installments in terms of conditions of the letter of credit

FINANCING EXPORTS
Commercial banks, the major source of export finance in India, provide finance
before shipment of goods as well as after shipment of goods.

Pre-Shipment Finance

 The pre-shipment finance typically is in the form of packing credit facility.

 Packing credit is bank advance provided to an exporter for the purpose of

buying/manufacturing/packing/shipping goods to foreign buyers.

 Packing credit, a short-term credit, is normally required to be liquidated within

180 days by negotiation of export bills or receipt of proceeds for exports.

There are three broad types of packing credit

Clean Packing Credit

 This represents an advance made to the exporter on the basis of a firm export
order or a letter of credit, without any control over raw materials or goods.

 Each proposal is decided on the basis of particular requirement of the trade

and the creditworthiness of the exporter.

Packing Credit Against Hypothecation Of Goods

 Under this arrangement, the goods meant for export are hypothecated to the
bank as security.

30
  When the bank advance is to be utilized, the exporter is required to furnish
stock statements and continue to do so whenever there is stock movement.

Packing Credit Against Pledge Of Goods

 Under this arrangement, the goods meant for export are pledged to the bank
with an approved clearing agent who ships the same on the advice of the
exporter.

Post-Shipment Finance

The finance provided after the shipment may be in the following forms

Purchase/Discounting Of Documentary Export Bills

 A commercial bank may purchase export bills drawn payable at sight or

discount usance export bills covering confirmed sales and supported by
relevant documents like the bill of lading, post parcel receipts etc.

Advance Against Export Bills Sent For Collection

 A commercial bank may provide finance by way of advance against export

bills forwarded through it for collection after taking into account appropriate
margin.

Advance Against Duty Drawbacks, Cash Subsidy, Etc.

 To help exporter banks advance against duty drawbacks, cash subsidy, etc.,
receivable by them against their exports.

EXIM BANK FINANCE

 The export import bank of India (EXIM bank) was set up in 1982 to provide
export and import finance, to coordinate with others providing such finance,
and to promote the country’s foreign trade.

 The authorized capital of the EXIM bank is Rs 200 crores and the paid-up
capital is Rs 76 crores.

 The EXIM bank has some borrowings from the central government at a
concessional rate of interest.

 To augment its resources, it may also issue bonds and debentures

31
32
33
 SURVEY

PURPOSE:
• To study the financial needs of the small and medium enterprises.
• To know the services availed by the enterprises from their present banks.
• To assess their further requirements from the banks.
• To find out the level of satisfaction from their present bank.

METHODOLOGY:
• Preparation of questionnaire: After having a healthy discussion with our
project guide Mr.Menon and Mr. Pradip chhabra we prepared the
questionnaire. The copy of the same is attached on the next page.

• Database collection: The industries involved in manufacturing, export &

import

• Selection of area: The region for conducting the survey was selected on the
basis of proximity of the SBI, commercial branch, Rajkot. Thus, following
regions are selected.
1. Aji Industrial Area
2. Atika & Samrat Industrial Area
3. Metoda GIDC
4. Shapar Industrial Area
5. Kuvadva GIDC
6. Targhadi Industrial Area
7. Padadhri Industrial Area
8. Tankara Industrial Area
9. Hadamtala Industrial Area

34
 QUESTIONNAIRE

State Bank of India, Commercial Branch, Rajkot

1. Name of the Unit: _____________________________________________

2. Year of Establishment: __________________________________________
3. Address: _____________________________________________________
_____________________________________________________________
_____________________________________________________________
4. Name of the Directors/Promoters & Ph No.: _________________________
_____________________________________________________________
_____________________________________________________________
5. Contact Person’s Name, designation & Ph No.: _______________________
_____________________________________________________________
6. Are you into Exports/Imports? Yes / No
Export/Import Turnover: ______________ (in crores)
7. Annual Turnover: ________________ (in crores)
8. Products: _____________________________________________________
_____________________________________________________________
_____________________________________________________________
9. Associate Concerns:_____________________________________________
Are they into Exports/Imports? Yes/No
Export/Import Turnover: _______________ (in crores)
Annual Turnover: _____________ (in crores)
10. Banker’s Name: _______________________________________________
11. Facilities available from the current bankers:

Facility Type Limit (in crores)

12. Future Requirement: _____________________________________________

_______________________________________________________________
_______________________________________________________________
13. Name of the Consultant:
___________________________________________
14. Would you like to Bank with SBI? Yes / No
15. What do you expect from SBI? ____________________________________
_______________________________________________________________
_______________________________________________________________
16. Which Bank do you prefer do the most other than the current Bank?
______________________________________________________________
17. Are private sector banks better than public sector banks? Yes / No
18. Reasons: ______________________________________________________
______________________________________________________________

35
MAP REPRESENTING ROAD TO VARIOUS GIDC AREA

36
 FIELD WORK

1. ANALYSIS ON THE BASIS OF FORMS OF INDUSTRY

AJI INDUSTRIAL AREA

MACHINE TOOLS
FORMS OF
INDUSTRIES
OIL & ENGIENE
PARTS

CASTING
6% 6%
24%
6%
SUBMERSIBLE
PUMP & SPARE
17% PARTS
AGRICULTURE
EQUIPMENT
24%
17% FOOD PRODUCTS

OTHERS

In Aji industrial Area, Majority of the industries are dealing with manufacturing of
machine tools, agricultural equipments, casting and etc. the graph depicts that
machine tools and oil and engine parts industries are more dominating with a market
share of 24% each.

ATIKA & SAMRAT INDUSTRIAL AREA

FORMS OF INDUSTRIES

15%

40% INVESTMENT CASTING

SPARE PARTS

OTHERS

45%

In Atika and Samrat industrial Area, Majority of the industries are dealing with
manufacturing of investment casting and spare parts. There are 3 units in investment
casting and 9 units in spare parts.

37
TARGHADI AND PADADHRI

FORMS OF INDUSTRIES

7%
7%
GEANING
7% OIL

7% FOOD PRODUCT
AYURVEDIC PRODUCTS
6%
METAL
66%
POLYMERS

In Targhadi and Padadhri Area, Majority of the industries are dealing in Ginning
business, while remaining units are dealing with oil, food products, ayurvedic
product, metals and polymers.

METODA AREA

FORMS OF INDUSTRIES INVESTMENT CASTING

FORGING

POLYMERS

PACKAGING
10% 14%
6% KITCHEN WEAR

5% GRANITE
14%
5%
INDUSTRIAL GAS
4%
OIL AND DIESEL
6% 8% ENGINE
6% CEMENT
8%
3% 8% 3% AYURVEDIC
PRODUCTS
FOOD PRODUCTS

STEEL

CNC MACHINES

OTHERS

In Metod Region, There are Different forms of industry like investment casting,
forging, polymers, packaging, kitchen wear, granite, industrial gas and other.

38
HADAMTALA AREA

FORMS OF INDUSTRIES

7% 14%
7%

AGRO PRODUCTS
GINNING
CASTING
CEMENT

72%

In Hadamtala Area, Ginning sector is one that is having the majority hold of 72%.
Out of 14 units in Hadamtala 10units belong to Ginning sector.

TANKARA AREA

FORMS OF INDUSTRIES

32%
OIL
42%
GINNING

OTHERS
26%

In Tankara region, there mainly oil and ginning industries which are more functional.
Out of 20 units, 8units belong to oil, 5 units belong to Ginning and remaining 6 units
are those of casting, forging, etc.

39
SHAPAR AREA

FORMS OF INDUSTRIES
CASTING
COTTON
BEARING
12%
FORGING
26%
5% PIPE
AUTO PARTS
6% POLYMERS
MACHINERY
2% METAL
9%
3% AGRO EQUIPMENTS
2% OIL
7%
2% 5% CEMENT
5% 4% GRANITE & MARBLE
5% 7%
PAINTS
OTHERS

In Shapar Area, there are different forms of industry like casting, cotton, bearing,
forging, pipe, auto parts, polymers, machinery, metals and many others. All industrial
units are into manufacturing of variety of products.

40
 FINDINGS AND RECOMMENDATIONS

FINDINGS

All industrial areas in Rajkot district are having huge number of

manufacturing units. All this manufacturing units are dealing in variety of products
like diesel machines, agricultural tools, investing casting, forging, Ginning, polymers,
cement, food products, oil and so on.

But some regions like Tankara, Hadamtala and Targadi are the one, where
most of the industries are found of GINNING industry.

Saurashtra region is also famous as it is having well established industries of

diesel machines. Majority of the exports to other countries for diesel machines are
carried out through these regions only.

Kadavani forge, situated at Metoda GIDC region is famous for producing

spare parts for NANO car of TATA MOTORS. Apart from this, there are other
manufacturing units also that are producing spare parts for the big automobile
companies.

RECOMMENDATION

Bank can concentrate on industries like Ginning and diesel machine

manufacturing units as these units are in constant requirement of working capital for
their activity. Even the turnovers of these industries are also higher as compared other
industries.

Some industrial sector like polymers, foundry, paints and casting are the one
that are small in size and turnover. These industries are generally in need of funds for
their business expansion and development; bank can take the advantage of these by
providing expansion loans to these sectors

41
 2. ANALISIS BASED ON MARKET SHARE

AJI INDUSTRIAL AREA

MARKET SHARE OF BANKS

3% BOB
3% 3% 6%
3% BOI
12%
CENTRAL BANK
3%
SBI
HDFC
6%
14% AXIS
CORPORATION
RAJKOT PEOPLE
DENA
6% ANDHRA
20%
PNB
6% BOM
6% UCO
9%
VIJYA
In Aji industrial area,State banks have majority share i.e. 7 units are covered by
State banks. Where as Dena bank and Bank Of India have covered 5 and 4 units
respectively. Remaining market share is covered by other banks.

ATIKA AND SAMRAT INDUSTRIAL AREA

MARKET S HARE OF BANKS

BOB
5%
5% CORPORATION
5% 25% ICICI
5% HDFC
5% SBI
5% RAJKOT PEOPLE
RAJ CO-OPERATIVE
10%
DHARTI COMMERCIAL
30% 5%
BOI
CENTRAL BANK

In Atika and Samrat region also State Banks have covered good market share
compare to other banks. In this region there are 6 units, which are covered by
State Banks, Bank Of India has also covered good market there are 5 units, which
are banking with Bank of India.
TARGHADI AND PADADHRI:

42
 MARKET SHARE OF BANKS

KVB
7% 7%
7% 7% CORPORATION
7% 7% HDFC
BOI
OBC
19% SBI
CENTRAL BANK
32%
INDUSIND
7%
DENA

In Taraghadi and Paddhari State Banks have covered 10 units, which is highest
compare to the other banks. Bank of India comes at second rank as far as market
share in Targhadi and Paddhari is concern. It has covered 6 units in this region.

METODA GIDC REGION:

SBI
MARKET SHARE OF BANKS BOB
BOI
9% CENTRAL BANK
14%
5% DENA
10% 8% RAJ CO OPERATIVE
RNSB
5% OBC
11%
5% HDFC
ICICI
4%
13% CORPORATION
3% 4%
IDBI
9% OTHERS
In Metoda region State Banks, Bank of India and Central Bank have nearly equal
market share. There are 11, 9, and 10 units that are working with State Banks,
Bank of India and Central Bank respectively.

HADAMTALA REGION :

43
 MARKET SHARE OF BANKS
SBS
7% 14%
7% HDFC

7% BOI

21% BOB

DENA
30%
LAXMIVILAS
14%
AXIS

In Hadamtala region State Banks are not successful to cover major market share.
Bank of India has highest market share in this region and 4 units are working with
them. There are 3 units which are covered by HDFC bank.

TANKARA REGION:

MARKET SHARE OF THE BANKS

17% SBS

33%
HDFC
11%
BOI

KOTAK
39%

In Tankara region majority of market share is covered by Sate Banks and HDFC bank
they have covered 6 and 7 units respectively.

SHAPAR REGION:

44
 SBI
MARKET SHARE O F VARIO US BANKS
BOB

BOI
5% HDFC
15%
11%
CORPORATION

ICICI
7%
AXIS
15%
5% RAJKOT
DISTRICT
3% RNSB
2% RAJ CO-
6% OPERATIVE
14% CBOI
2%
10% DENA
5%
OTHERS STATE
BANKS

In Shapar region major market share is covered by State Banks. State Banks have
covered 44 units, 33 units are dealing with Bank of India, and 31 units are covered by
HDFC BANK.

45
 FINDINGS AND RECOMMENDATION

FINDINGS:

In Rajkot district there are several banks like SBI, HDFC, BOB, BOI, CBOI,
PNB, RAJKOT CO-OPERATIVE, SBS, CORPORATION BANK, KOTAK
MAHINDRA, and many other banks are actively functioning.

All these Banks provide various facilities to the small and medium
manufacturing units to performing their business activities smoothly.

Among all the banks market share of SBI is the highest. This is because its
associate STATE Banks are also included. In Saurashtra region SBS is having
majority hold over the other banks. HDFC and Bank of Baroda are the two banks,
which also hold a good market share.

Market share of SBI is 20% in which other state banks hold 12% and SBI hold
8%. Whereas HDFC and Bank of Baroda holds 12% and 10% market share
respectively.

Hadamtala and Tankara are the two region where the SBI is having a
negligible market share. Whereas Padadhri and Metoda are the two regions where
SBI is having a good number of customers.

RECOMMENDATION:

Followings are the major steps the SBI can undertake to attract the manufacturing
units:

 SBI should try to provide better services to the corporate customers as per
their requirement.

 SBI should concentrate on ginning industries and should try to fulfil their
requirement for cash delivery on daily basis.

 Hadamtala and Tankara are the areas where ginning industries are in majority;
therefore it should focus on these regions and try to increase the market share
in these regions.

46
3.ANALISIS BASED ON FACILITIES USED BY UNITS

AJI INDUSTRIAL AREA:

FACILITIES US ED BY S ME UNITS

33%
42%
CASH CREDIT
TERM LOAN
OTHERS

25%

In Aji industrial area, there are 15 units that avail the Cash credit facility, 9 units avail
the Term loan facility and remaining 12 units are using other facilities like current a/c,
demand draft, and etc. facilities only

ATIKA AND SAMRAT INDUSTRIAL AREA:

FACILITIES USED BY SME UNITS

35%
CASH CREDIT
50% TERM LOAN
OTHERS

15%

In Atika and Samrat industrial area, there are 7 units that avail the Cash credit facility,
3 units avail the Term loan facility and remaining 10 units are using other facilities
like current a/c, demand draft, and etc. facilities only

47
TARGHADI AND PADADHRI:

FACILITIES USED BY SME UNITS

27%

CASH CREDIT & TERM

LOAN
OTHERS

73%

In Targhadi and Padadhri industrial area, Majority of the units avail both the facilities,
that is, Term loan and Cash Credit. There are round about 23 units which take the
facility of both T.L and C.C. and remaining 8 units use the other facilities that are
provided by the bank.

METODA GIDC REGION:

FACILITIES USED BY SME UNITS

CASH CREDIT &

26%
TERM LOAN
32%
CASH CREDIT

TERM LOAN

OTHERS
14% 28%

In Metoda industrial area, there are 22 units that avail the Cash credit facility, 11 units
avail the Term loan facility, 21 units are using both facilities and remaining 26 units
are using other facilities like current a/c, demand draft, and etc. facilities only

48
HADAMTALA REGION:

FACILITIES USED BY SME UNITS

14%

29%

CASH CREDIT

TERM LOAN

CC & TL

OTHERS
7%

50%

In Hadamtala industrial area, there are 4 units that avail the Cash credit facility, 1
units avail the Term loan facility, 7units avail both the facilities and remaining 2 units
are using other facilities like current a/c, demand draft, and etc. facilities only

TANKARA REGION:

FACILITIES USED BY SME UNITS

16%

CASH CREDIT
11%
47% TERM LOAN

CC & TL

OTHERS

26%

In Tankara industrial area, there are 9 units that avail the Cash credit facility, 5 units
avail the Term loan facility, 2 units are availing both facilities and remaining 3 units
are using other facilities like current a/c, demand draft, and etc. facilities only.

49
SHAPAR REGION:

FACILITIES USED BY SME UNITS

16%

CASH CREDIT
11%
47% TERM LOAN

CC & TL
OTHERS

26%

In Shapar industrial area, there are 101 units that avail the Cash credit facility, 5 units
avail the Term loan facility, 59 units are taking both the facilities and remaining 55
units are using other facilities like current a/c, demand draft, and etc. facilities only

50
 FINDINGS AND RECOMMENDATIONS

FINDINGS:

In Rajkot district, various banks are providing different facilities to the small
and medium enterprises. There is always a battle between the banks to attract the
corporate client by providing different facilities better than other banks.

Most manufacturing units in Rajkot district avail the facilities like current
account, cash credit, term loan and EPC from the banks. Banks generally concentrate
on providing these facilities to corporate clients at competitive rates.

Out of 420 units surveyed, 184 units are availing the facility of cash credit
from different banks. Whereas there are 95 units are obtaining the facility of term
loan.

Some manufacturing units also make use of both facilities that is cash credit
and term loan. There are round about 87 units using both facilities.

There manufacturing units which also utilize other facilities like demand
draft, current account, RTGS, NBHC, etc.

RECOMMENDATIONS:

State bank should try to reduce the paper work pertaining to providing of
these funds.

Ginning sector is one in which they require the cash credit frequently and
that to of higher amount. Therefore Bank should emphasis and pays more attention to
this sector.

Banks should try to attract Ginning sector’s client by providing C.C at lower
interest rates compared to other banks and should try to reduce other charges like D.D
charge, multiple cheque book charge, RTGS charge etc.

Bank should try to increase the Cash credit for their existing clients as per
their requirement as there is huge demand among corporate clients for the increase in
Cash credit limit.

Bank should also try to promote the entrepreneurs and small-scale firms for
the development and expansion by providing different corporate loans.

51
4. ANALISIS BASED ON TURNOVER

AJI INDUSTRIAL AREA

TURNOVER (IN Rs)

17%

0-50 LAC
39%
50 LAC-1 CRORE
19% 1-5 CRORE
>5 CRORE

25%

In Aji industrial area, industries based on their operational activity and size have
different turnover ratio. Majority of the units in Aji region have turnover ranging
between 25 lacs to 1 crore.

ATIKA AND SAMRAT

TURNOVER (IN Rs)

10%
30%
0-50 LAC
25% 50LAC -1 CRORE
1-5 CRORE
>5 CRORE

35%

In Atika and Samrat, industries based on their operational activity and size have
different turnover ratio. Majority of the units in Atika and Samrat region have
turnover ranging between 50 lacs to 5 crore.

52
TARGHADI AND PADADHARI

TURNOVER (IN Rs)

13% 0-20 CRORE

7% 20-40 CRORE
47% 40-60 CRORE
13%
60-80 CRORE

20% >80 CRORE

In Targhadi and Padadhri, industries based on their operational activity and size have
different turnover ratio. Majority of the units in Targhadi and Padadhri region have
turnover above 10 crore. Ginning industry is the one where turnover is above 100
units.

METODA AREA:

TURNOVER (IN Rs.)

13%

9% 0-1 CRORE
42% 1-5 CRORE

5-10 CRORE
<10 CRORE
36%

In Metoda region, turnover of the industries depends on the basis of the working.
Units of forging, cnc machine, diesel machine have huge turnover exceeding above 5
crore.

53
HADAMTALA AREA

TURNOVER (IN Rs.)

21%

43% 0-10 CRORE

11-20 CRORE
21-30 CRORE
< 30 CRORE
29%

7%

In Hadamtala area, industries based on their operational activity and size have
different turnover ratio. Majority of the units in Hadamtala region, majority of the
units belong to Ginning industries.

TANKARA AREA

TURNOVER (IN Rs)

11%

26%
0-2 CRORE
2-5 CRORE
5-10 CRORE

31% 10-15 CRORE

15 + CRORE

16%

16%

In Tankara area, Ginning industry is having the major hold, therefore the turnover
ratio is also high. Majority of the units are having turnover higher than 50 crore.

54
SHAPAR AREA

TURNOVER IN (Rs)

26%
30%
0-50 LAC

50 LAC - 1 CRORE

1-5 CRORE

>5 CRORE
17%

27%

In Shapar Region, Casting industry is having the major hold, therefore the turnover
ratio is also high. Majority of the units are having turnover higher than 5 crore.

55
 FINDINGS AND RECOMMENDATION

FINDINGS:

In Rajkot district, all manufacturing units situated at industrial areas have

different turnover ratios based on their business activities. Following are the number
of units based on their turnover:

• Out of total 420 units, 130 units are having a turnover of less than 1 crore. It
depicts that round about 31% of the total industries in Rajkot District are
having turnover less than 1 crore.

• There are near about 170 units that is having a turnover between 1 crore to 5
crore. It depicts that 40% of the industries are in this range

• Remaining 120 units are having turnover above 5 crore, which forms about
29% of the total share.

Ginning sector is the one in Rajkot district that is having a huge turnover as
compared to other sectors. Generally each Ginning units generates a turnover
that is more than 100 crore every year.

RECOMMENDATION:

Tankara, Hadamtala and Padadhri are such region where Bank can get a
huge business if it concentrates properly. In these regions the market share of State
bank is negligible.

Bank should attract the Ginning sector units through facility of Cash
delivery at site, as these units are in need of huge cash on daily basis.

56
5. ANALISIS BASED ON EXPORTS AND DOMESTIC MARKET

In Rajkot district’s various GIDC regions are combination of exports oriented

units and domestic oriented units. The following charts depict the analysis of different
GIDC regions based on export and domestic oriented units.

AJI INDUSTRIAL AREA:

EXPORT & DOMESTIC SME UNITS

28%
EXPORT

DOMESTIC

72%

 In Aji region out of 36 units, 26 units are doing their business at domestic
level and 10 units are doing their business at export level.
 This chart shows that majority of units are in domestic market and other units
are in export.

The above chart we analyse the most of the SME units, which are the domestic
stage, they performing their activities.

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ATIKA AND SAMRAT INDUSTRIAL AREA:

EXPORT & DOMESTIC SME UNITS

25%

EXPORT

LOCAL

75%

In Atika and Samrat industrial area we have surveyed 20 units out of which 5
units were exporting their products and other 15 units were selling their product in
domestic market.

TARGHADI AND PADDADHARI:

EXPORT & DOMESTIC SME UNITS

47%
EXPORT
53%
DOMESTIC

In Taraghadi and Padadhari region we have visited 31 units out of which 16 units
were exporting their product and other 15 units were selling their products in local
market.

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METODA GIDC REGION:

EXPORT & DOMESTIC SM E UNITS

25%

EXPORT

DOMESTIC

75%

Metoda region has more units involved in domestic business. Out of 80 units we have
visited in Metoda 20 units were exporting their product and 60 units were selling their
product in domestic market.

HADAMTALA REGION:

EXPORT & DOMESTIC SME UNITS

43% EXPORT

57%
DOMESTIC

In Hadamtala region we visited 14 units out of which 8 units were involved in export
and 6 units were selling in just domestic market.

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TANKARA REGION:

EXPORT & DOMESTIC

21%

EXPORT

DOMESTIC

79%

Tankara region has more units involved in domestic business. Out of 19 units we have
visited in Tankara 4 units were exporting their product and 15 units were selling their
product in domestic market.

SHAPAR REGION:

EXPORT & DOMESTIC SME UNITS

17%

EXPORT

DOMESTIC

83%

In Shapar we visited 220 units out of which only 38 units were doing there business
on export level and other 182 units were involved only in domestic market.

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 FINDINGS AND RECOMMENDATION

FINDINGS:

In Rajkot district there are mainly 7 GIDC industrial regions namely: AJI,
ATIKA & SAMRAT ,KUVADVA, PADDHARI, TARGHADI, METODA,
HADAMTALA, TANKARA, SHAPAR.

In this industrial area there are number of small and medium manufacturing
units. Out of those units most of them are functioning at Domestic level as well as
international level.

OVERALL EXPORT-DOMESTIC RATIO

26%

Export
Import

74%

As par the research conducted of 420 units in which 319 units are functioning
at domestic level and 101 units are functioning at international level.

The chart indicated that 74% manufacturing units are functioning at domestic
level, in comparison to that of 26% that functioning at international level.

The vast difference between domestic and international level is due to that
majority of manufacturing units are initial stage of establishment. Due to which they
are not having large resources of funds. They can’t functioning at international level.

Among all the regions in which Hadamtala, Paddhari, are the one which is
having 57% and 53% respectively of its manufacturing units belong to the Export
oriented.

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RECOMMENDATION:

Followings are the major steps the SBI can undertake to attract the manufacturing
units :

 The bank can concentrate on those manufacturing units which are really
interested carrying out their activities at international level.

 The manufacturing units should be made aware about the SBI EXPORTERS’
GOLD CARD, EXPORT (EPC) AND LETTER OF CREDIT, etc facilities
which is provided by SBI.

 It should provide those facilities at competitive rates as compare to other

banks.

 Hadamtala and Paddhari are two region where bank should concentrate more
to provide bank export facilities.

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6. ANALISIS BASED ON PREFERENCE TO PUBLICE AND
PRIVATE SECTOR BANKS

AJI INDUSTRIAL AREA:

PRIVATE V/S PUBLIC

16%

PRIVATE

PUBLIC

84%

In Aji industrial area, majority of the firm give preference to pubic sector banks. They
consider public sector banks to be secured and does not have any hidden charges
associated like that in private banks. Only 6 units have shown their preference to
private sector in comparison to 30 unit that have preferred public sector banks.

ATIKA & SAMRAT INDUSTRIAL AREA:

PRIVATE V/S PUBLIC

30%

PRIVATE

PUBLIC

70%

In Atika and Samrat industrial area, majority of the firm give preference to pubic
sector banks. They preferred to do their transaction with public sector banks and
does not have any hidden charges associated like that in private banks. Only 6 units
have shown their preference to private sector banks in comparison to 14 units that
have preferred public sector banks.

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TARGHADI AND PADADHRI:

PRIVATE V/S PUBLIC

13%

PRIVATE

PUBLIC

87%

In Targhadi and Padadhri industrial area, majority of the firm give preference to
pubic sector banks. They consider public sector banks to be secured and does not
have any hidden charges associated like that in private banks. Only 4 units have
shown their preference to private sector in comparison to 27 units that have preferred
public sector banks.

METODA GIDC REGION:

PRIVATE V/S PUBLIC

21%
PRIVATE

PUBLIC

79%

In Metoda industrial area, majority of the firm give preference to pubic sector banks.
They consider public sector banks to be secured and does not have any hidden
charges associated like that in private banks. Only 17 units have shown their
preference to private sector in comparison to 63 units that have preferred public sector
banks.

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HADAMTALA REGION :

PRIVATE VS PUBLIC

PUBLIC

43% PRIVATE
57%

In Hadamtala industrial area, firms give preference merely same to pubic sector
banks and private sector banks. Out of 14 units, 6 units have shown their preference
to private sector in comparison to 8 units that have preferred public sector banks.

TANKARA REGION :

PRIVATE V/S PUBLIC

32%

PRIVATE

PUBLIC

68%

In Tankara industrial area, majority of the firms give preference to pubic sector
banks. They consider public sector banks to be secured and does not have any hidden
charges associated like that in private banks. Only 4 units have shown their
preference to private sector in comparison to 15 units that have preferred public sector
banks.

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SHAPAR REGION:

PRIVATE V/S PUBLIC

26%

PRIVATE

PUBLIC

74%

In Shaper industrial area, majority of the firm give preference to pubic sector banks.
They consider public sector banks to be secured and does not have any hidden
charges associated like that in private banks. Only 57 units have shown their
preference to private sector in comparison to 163 units that have preferred public
sector banks.

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 FINDINGS AND RECOMMENDATIONS

FINDINGS

In Rajkot district there is number of Banks, which provide their services to the
corporate sector as well as personal level. Which include public sector bank and
private sector bank. Those banks undertaken by government and run by government
are known as public sector bank i.e. State Bank of India (SBI), Bank of Baroda
(BOB), and Central Bank of India (CBOI). On other hand those banks that run by
other than government body known as private sector bank i.e. HDFC, ICICI, and
KOTAK MAHINDRA.

 As par research conducted most of GIDC region in which public sector bank
have a good number preferred by the corporate customers.
Due to following reasons corporate client prefer to public sector bank.

• They have trust on nationalised bank

• Lower interest rates
• Nationalised banks strictly follow RBI guidelines.

On the other hand HADAMTALA and TANKRA are two regions where private
sector banks like HDFC are preferred most. The marker share of HDFC in both
regions is 21% and 39% respectively.

Due to following reasons corporate client prefer to public sector bank.

• They provide faster and better services than public sector banks
• Easy paperwork and less formality
• Maintain good customer relationship.
• Understand the customer’s needs and try to solve personally.

RECOMMENDATION

Bank should be more responsive towards clients.

Employees should understand the responsibility and work accordingly.

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 GENERAL PERCEPTION ABOUT SBI

In banking sector SBI is having top position among all the banks. Even
though there prevails some negative impression in the minds of customers. Following
are some of the perception given by the customers about the SBI.

 In SBI employees are lazy and does not take responsibilities for their work.
 Services are not up to the satisfaction of the customers.
 Bank does not pay attention towards small units.
 There are too much formalities compare to other banks.
 SBI just follow the new facilities but they have not its own innovative idea.
 Employees of SBI are not doing business on the basis of customer
requirement but they are seeing self-security.
 When customer come to the branch there is no such hoarding about the
departments.

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 LEARNING FROM THE PROJECT

This 8 weeks training period has certainly added lot of depth to our shallow
knowledge of the banking sector as well as the working of the small and medium
scale industries. The research work undertaken by us at seven different regions
gave us a clear picture of the mentality and attitude of the industry owners in each
region. We became aware of the fact that the attitude of the people to a great
extent depends on the environment they work in. For example, the attitude of the
most of industrial areas in Rajkot was somewhat positive towards our survey
Thus, the outcome of the survey can be very well judged by the attitude of the
people working in a particular work environment.

Finally, this project has given us tremendous level of self-confidence, the

spirit to work in teams and the ability to manage things independently. Moreover,
it has helped us groom ourselves in to a professional, which is a pre-requisite in
this competitive world.

“It is good to learn from experience as long as it is others”. The experience

of the highly qualified staff of SBI has taught us the art of dealing with people and
the organization of the goal to be achieved. All this has certainly been useful to us
during the project and will always be useful in achieving many more endeavours
in future.

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 CONCLUSION

SBI is a renowned bank all over India and Abroad also. The bank has taken a
very wise step to survey the different industrial areas in Rajkot district to study the
financial needs of various manufacturing units.

There are so many private sector banks as well as multinational banks coming
up but very few are able to provide services that are up to the expectations of the
industries. If this will continue, a time will come when the banking sector will
saturate and there would be no scope for further development.

The findings and recommendations of the survey clearly reveal that there is a
need of proper understanding of the services on the part of the industries in most of
the industrial areas. This effort on the part of SBI to keep customers at the centre and
understand their needs will surely prove as a bull’s-eye in the progress of the bank as
well the banking sector as a whole.

With proper referencing, monitoring and examination of the weak areas of

each zone, the bank can pitch into the prospective sectors of each region and slowly
and gradually capture the major market share.

This positive note concludes the report. This may prove to be useful to the
bank for achieving new heights. Wishing all the very best to the bank and its
extremely dedicated staff.

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 BIBLIOGRAPHY

 www.statebankofindia.com
 www.rbigov.com
 Directory of Rajkot Engineering Association, shapar , Metoda
 E-credit book of SBI
 www.sidbi.com

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