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COMPANY PROFILE

FINE is engaged in manufacturing of electrical accessories since 1973 &


recognized as among leaders in electrical industry, company is known for its high
standards of quality products catering to the need of millions of people all over
India and Middle East countries to their entire satisfaction.

Fine Switchgears Factory View


Company's manufacturing plant is installed in an ultra-modern building complex
having the latest automatic machines, capable of producing highly sophisticated
products. Company maintains a modern Research & Development Centre and a
well equipped Laboratory which are being looked after by well qualified &
experienced professionals and keeps on updating the technology for bringing out
the latest designs & models comparable to global standards. Presently company
operates 6 in number BIS certification making licenses.
Fines Products are manufactured as per ISO 9001:2008 standards and we can
proudly say that we owe this achievement to our inspiring motto "QUALITY
KEEPS US AHEAD".
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ABOUT FINE SWITCHES PVT. LTD.


Fine

Switches

Pvt.

Ltd's

Corporate

Identification

Number

(CIN)

is

U31909PB1990PTC010784. It was registered on 25 October 1990 at Registrar of


Companies-Chandigarh and it's Registration number is . It's registered address is
Guru

Teg

Bahadur

Nagartibbi

Phagwara,

PUNJAB

Punjab,

INDIA.

It is classified as Company limited by shares. It's authorized share capital is


950,000 and paid capital is 467,500. Annual General Meeting (AGM) was last held
on 29 September 2012 and as per records from Ministry of Corporate Affairs
(MCA), it's balance sheet was last filed on 31 March 2012.
Fine Switches Pvt Ltd currently have 5 Directors/Partners. Current status of Fine
Switches Pvt Ltd is Active.
Company's manufacturing plant is installed in an ultra-modern building complex
having the latest automatic machines, capable of producing highly sophisticated
products. Company maintains a modern Research & Development Centre and a
well equipped Laboratory which are being looked after by well qualified &
experienced professionals and keeps on updating the technology for bringing out
the latest designs & models comparable to global standards. Presently company
operates 6 in number BIS certification making licenses.
Fine Switches Pvt Ltd's Annual General Meeting (AGM) was last held on 30
September 2013 and as per records from Ministry of Corporate Affairs (MCA), its
balance sheet was last filed on 31 March 2013.

CHAIRMANS DESK
S P SETHI CHAIRMAN

Companys progress / growth is based on its commitment to QUALITY, to meet


higher demands of its Customers by providing something new, something
innovative, something different with better aesthetics at competitive prices. At
FINE we have taken care of all these aspects and feel proud to state that
undoubtedly FINE have a satisfied customer base with ever increasing demand of
FINE products in spite of the stiff competition posed by globalization /
liberalization of the Industry.
FINE, a professionally managed group of Companies is engaged in manufacturing
of Electrical Wiring Accessories since 1973. The manufacturing Plant is installed
with the latest Automatic Machinery & Plant capable of producing highly
sophisticated Products at par with International standards. The Company maintains
a Modern Research & Development Centre and a Testing Laboratory equipped
with latest testing equipments as per BIS norms which are being looked after by
qualified and experienced professionals who keep on updating the technology for
bringing out the latest designs and models setting the Global Standards. Presently
the Company is operating 6 BIS Certification Marking Licences.

FINE is the first Company in northern India to be granted ISO 9001 : 2000
Certificate and we can confidently say that we owe this achievement to our
inspiring motto i.e. Quality Keeps Us Ahead. FINES Modular & Plate series,
Wires & Cables, MCBs, Distribution Boards & CFL along with vast range of
other products have widely been well accepted and acknowledged by all sections
of the Society. Every day more and more people are switching over to the fine
products.
FINE group is looked after by Highly Qualified & Experienced Professionals in
Development, Manufacturing, Marketing & Administration and are ably supported
by Trained Skilled & experienced workers. We feel proud in saying that Fine
Group of companies have achieved a substantial growth within a short span of
period and is looking forward to achieve its goals for Quality, Production & Sales
in the next financial years. In its diversification plans FINE is planning to enter
into several other Electrical & Electronic items.

DIRECTORS OF FINE SWITCHES PVT LTD


Director

Name

Designation

Identification

Date

of

Appointment

Number
01164804

CHANDAN SETHI

01164910

GOBIND RAM SETHI Director

01 January 1994

01167394

ANIL SETHI

Director

01 April 1999

01167446

GAUTAM SETHI

Director

23 July 2005

01179026

ASHOK

KUMAR

SETHI

Director

Managing director 23 July 2005

ACHIEVEMENTS
5

23 July 2005

We share the pride for having been awarded with number of state & national
awards viz. for:
Best Entrepreneurs Award by H E Bharion Singh Shekhawat, The Vice
President of India.
Best Quality Award by Dr. Manmohan Singh honble Prime Minister of
India.
Rajiv Gandhi National Quality Award by Shri Sharad Pawar Honble Union
Minister of Agriculture & Commerce.
Punjab State Productivity Award (Twice) & many other.
We bank upon the Quality, Production, R & D and Marketing Staff for their
untiring efforts, co-operative attitude and keeping an eagles eye on day to day
developments. I have all the faith in our valued Distributors, Dealers & ever
embracing customers all over India & Abroad. May God be with us and we
succeed.

QUALITY CONTROL AT FINE SWITCH PVT. LTD.


The essence of quality at QRG is closely wrapped in the way we think, plan and
work. It finds its true expression when we extend beyond ourselves to exceed our
customers expectations. To deliver products that are safer, faster and simply better.
Each time, every time. Building customer confidence through teamwork is a top
priority to provide a wide variety of products and services.
Realizing and respecting the basic needs of customers to feel more secure, we've
committed ourselves to make our products better, safer and smarter than what he or
she is looking for. That's a passion that began 30 years ago and that's how it
continues to be even today. Our customers rely on us and it is our responsibility to
give them the very best. All our products are as per IEC standards.

VISION, MISSION AND QUALITY POLICY


Vision
Total customer satisfaction
"To be a globally recognized corporation that provides best electrical &
lighting solutions, delivered by best-in-class people."
Mission

Encourage electric-based co-operative industry.

To develop co-operative movement in rural sector.


growth within a short span of period
To achieve our vision through fairness, business ethics, global reach,
technological expertise, building long term relationships with all our
associates, customers, partners, and employees.
Values
Customer Delight: A commitment to surpassing our customer
expectations Leadership by example. A commitment to set standards in
our business and transactions based on mutual trust. Integrity and
Transparency: A commitment to be ethical, sincere and open in our
dealings. Pursuit of Excellence : A commitment to strive relentlessly, to
constantly improve ourselves, our teams, our services and products so as
to become the best in class
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PRODUCTS RANGE
Electrical Wiring Accessories & Products of assorted designs & colours.
Copper, Silver, Brass Parts of various specifications manufactured from
material having the best Electrical/Mechanical Properties.
Brass, Copper and Phosphor Bronze, Sheet Parts of various specifications and
designs.
Machine & Wooden Screws of assorted sizes and specifications.
Our MODULAR/PLATE SERIES, WIRES & CABLES, RCCB's, MCBs,
DISTRIBUTION BOARDS, CFLs along with vast range of allied items have been
widely accepted & acknowledge by all sections of society that is why more and
more people are switching over to FINE PRODUCTS.

PRODUCT CATEGORIES

Modular Series

Electric Accesories

DP Switch, MCBs

Wire & Cables

& Isolators

Porcelain
KAT) & Tops

(KIT

General Accesories

LED
LED Panel Light(COB)
(SMD)

RF Remote ControlOther Traditional Bell


Switch & Wireless
Door Bell

10

Spot

Light

MODULAR SERIES

Silverline Series

Goldline Series

Modular Series

Modular Switch, Modular Plate, Socket Module, Support modules, Front Plates,
Inner Plates,Foot Light,Power Units, Plugs,Outer Plate, Flush Metal Boxes, Plastic
Boxes, etc.
ELECTRIC ACCESORIES

Fancy Series

Top Class Series

Deluxe Series

General Electrical Accesories from Fine Swiches.


DP SWITCH, MCBS & ISOLATORS
Total Electric Safety products for offices and homes

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Surface Type

D.P. Switch 32A 240V

Cat.No. 48 D.P. Switch 32A 240V

(Box Type)

(Box Type) Pkg 1Pcs

D.P. Switch 32A 240V

Cat.No. 416 D.P. Switch 32A 240V

(Classic)

(Classic) Pkg 10Pcs

D.P. Switch 32A 240V

Cat.No. 47 D.P. Switch 32A 240V

(Deluxe)

(Deluxe) - ISI Pkg 10Pcs

D.P. Switch 32A 240V

Cat.No. 46 D.P. Switch 32A 240V

(Dlx. Flush type)

(Dlx. Flush type) Pkg 10Pcs

WIRE & CABLES


Wire & Cables for all Electric Wiring of Home & Offices.

Electric
0.75

Cable

Sq.mm 0.75 (Click on Product for Full detail &


Specifications.)

12

Electric

Cable

1.5mm

Electric

Specifications.)

Cable

10mm

Electric

Sq.mm 1.5 (Click on Product for Full detail &

Sq.mm 10 (Click on Product for Full detail &


Specifications.)

Cable

1mm

Sq.mm - 1 (Click on Product for Full detail &


Specifications.)

PORCELAIN (KIT KAT) & TOPS


ISOLATORS & FUES of various rating from Fine Switches

3 Pin Push Type Plug

Cat.No. 68A 3 Pin Push Type Plug

Top 16A 240V(PC)

Top 16A 240V(PC) Pkg 20Pcs

3 Pin Triangular Plug

Cat.No. 69(A) 3 Pin Triangular Plug

Top 16A 240V (PC)

Top 16A 240V (PC) Pkg 20Pcs

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3Pin Triangular Plug Top

Cat.No. 68 3Pin Triangular Plug Top

6A 240V -ISI

6A 240V -ISI Pkg 20 Pcs

3Pin Triangular Plug Top

Cat.No. 69 3Pin Triangular Plug Top

6A 240V -ISI

6A 240V -ISI Pkg 20Pcs

Porce. Fues Unit 240V

Cat.No. 503 Porce. Fues Unit 240V

(Kit Kat 32A)

(Kit Kat 32A) Pkg 10Pcs

Porce. Fues Unit 240V

Cat.No. 504 Porce. Fues Unit 240V

(Kit Kat 63A)

(Kit Kat 63A) Pkg 10Pcs

GENERAL ACCESORIES
All Type Of General Electric Accesories of many designs includes Holders,Rose
Plates,Gang Box,Tube Fittings & Door Bell etc.

Cat.

Extension Cord 6A (Strip

No.

247(A)

MRP./Pc. Rs.284.00

Type)

14

Pkg.

(pc)10

Extension Cord 6A Fancy

Cat.

(8 Yards)

MRP./Pc. Rs.222.00

Extension Cord 6A (8

Cat. No. 247 Pkg. (pc)10 MRP./Pc.

Yards)

Rs.208.00

Pkg.

(pc)10

Rs.42.00

Cat. No. 38 Pkg. (pc)10 MRP./Pc.

Iron Connector 240V

Lamp

247(B)

Cat. No. 36 Pkg. (pc)20 MRP./Pc.

Multi Plug 240V

Pendent

No.

Rs.46.00

Holder

Cat. No. 79 Pkg. (pc)20 MRP./Pc.

250V -ISI

Rs.23.00

Braket Lamp Holder 250V

Cat. No. 80 Pkg. (pc)20 MRP./Pc.

Rs.25.25

LED PANEL LIGHT (SMD)


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LED SMD SQ 3W Cat No:905 Packaging:50Pcs


LED

SMD

SQ 3W

Voltage:240V Material:Aluminum Shell+ Light


Diffuser+SMD

LED

Working

Temperature:10to55c Color: WH/WW


LED SMD RD 3W Cat No:906 Packaging:50Pcs
LED

SMD

RD 3W

Voltage:240V Material:Aluminum Shell+ Light


Diffuser+SMD

LED

Working

Temperature:10to55c Color: WH/WW


LED SMD SQ 6W Cat No:907 Packaging:20Pcs
LED

SMD

SQ 6W

Voltage:240V Material:Aluminum Shell+ Light


Diffuser+SMD

LED

Working

Temperature:10to55c Color: WH/WW


LED SMD RD 6W Cat No:908 Packaging:20Pcs
LED
RD 6W

SMD

Voltage:240V Material:Aluminum Shell+ Light


Diffuser+SMD

LED

Working

Temperature:10to55c Color: WH/WW

RF REMOTE CONTROL SWITCH & WIRELESS DOOR BELL


Cat.No. 901 RF Remote Control Switch Pkg 50Pcs
RF

*RF remote control switch,for 4 channels of light

Remote

*30+ meters of rang (unobstructed). Signal can

Control

penetrate

Switch

receiver:1x12v/123(included)

walls

channel:

16

*Input

voltage
*Load

of

for
each

Cat.No.902 Pkg 40Pcs. *Wireless battery operated


Wireless

door chime,easy installations. *with LED indicator

Door

in the receiver. *The volume can be adjusted by the

Bells

bottom in the receiver. *operating range up to 100


meets in open area. *32 sounds select-able,you
Cat.No.903 Pkg 40 Pcs *Wireless door bell,battery

Wireless

operated *Operating range up to 100 meters in open

Door

area. *32 Polyphonic melodies (tune) *volume

Bells

control in 3 levels *LED strobe in the bell and push


*Battery for Push:1x12v/A23(included);for bell
Cat.No.904 Pkg 40 Pcs *Wireless door bell,battery

Wireless

operated *Operating range up to 100 meters in open

Door

area. *32 Polyphonic melodies (tune) *volume

Bells

control in 3 levels *LED strobe in the bell and push


*Battery for Push:1x12v/A23(included);for bell

LED SPOT LIGHT (COB)


LED
LED COB
SQ 3W

COB

SQ

3W

Packaging:100Pcs
Material:Aluminum
Working

Cat

No:915

Voltage:240V
Shell+COB

Temperature:10to55c

LED
Color:

WH/WW
LED COB

LED

COB

RD

RD 3W

Packaging:100Pcs
Material:Aluminum
17

3W

Cat

No:916

Voltage:240V
Shell+SMD

LED

Working

Temperature:10to55c

Color:

WH/WW
LED

COB

SQ

3W SF

Packaging:50Pcs

LED COB

Working

No:917

Voltage:240V

Material:Aluminum

SQ 3W SF

Cat

Shell+COB

Temperature:10to55c

LED
Color:

WH/WW
LED

COB

SQ

Packaging:50Pcs

LED COB

Material:Aluminum

SQ 5W

Working

5W

Cat

No:918

Voltage:240V
Shell+COB

Temperature:10to55c

LED
Color:

WH/WW

OTHER TRADITIONAL BELL

Door

Bell

Electric

Buzzer

Musical Door Bell Polo

Cat.No. 242 Door Bell Electric Buzzer Pkg


10Pcs

Cat.No. 243 Musical Door Bell Polo Pkg


10Pcs

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Musical

Door

Bell

Cat.No. 244 Musical Door Bell Bulbul Pkg

Bulbul

10Pcs

Fish Bell

Cat.No. 245 fish Bell Pkg 10Pcs

Ding Dong Bell

Cat.No. 246 Ding Dong Bell Pkg 10Pcs

Musical
(Square)

Door

Bell

Cat.No. 247 Musical Door Bell (Square)


Pkg 10Pcs

OBJECTIVE OF THE COMPANY


The object of the society is to encourage proper development of Electricals
Industrial amongst members on Co-operative lives by promotions of principal and
methods of Co-operative and joint forming methods so as to secure best merits of
modern large scale electrics production for this purpose.
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a) To encourage self-help, thrift and co-operate amongst members.


b) To acquire lands either by way of purchase or otherwise for cultivation of
sugar cane and other cost and for erection of building. Godawns staff
quarters etc and for installations of machineries.
c) To manufacture sugar jogger and their by products out of sugar-cane grown
and supplied by members of the society and other and to sell the same to the
best advantage.
d) To under take such other activities as are identical and conductive to the
development of the society etc.
e) To acquire and install machinery for the utilization of the product and buy
raw material and sell finished product is the course of utilizing and
marketing the by products.

SWOT- ANALYSIS
I have found some strengths and weaknesses, opportunities to the factory during
my training period at this plant. Factory is facing some problems regarding sale of
sugar under government restriction. How much government permits to sell the
sugar that much only factory has to sell not more than that it sells through
quotations. It covers small area only. Even there is no particular system for
appointment of employees.
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STRENGHTS The major strength is crushing capacity and highest chimney and
packing of bags per day.
It is producing own electricity it reduces the cost of electric bills.
It also sells electricity to the KPTCL.
This factory has its own trucks and some other vehicles, which
reduces transportation charges.
They have foreign customers too.
Good Administration
Healthy management labour relations
Superior product quality
Skilled and efficient staff and labour force
Maximum profitability due to various by products
Well structured distribution channel.
Improved infrastructure.
In total this factory has a very good organization structure
WEAKNESS
It does not have separate HR department, so the selection of employees is
not satisfactory and it creates lot of burden on labour welfare officer.
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Too much stock of sugar in godown.


They purchased two wheeler vehicles and trucks on loan. During off-season
they remain idle, but the interest of the loan is always shooting up.
They dont have particular employee for particular work. Anybody can do
any work assigned by their respective superiors.
High cost of production.
No control on minimizing the losses in process.
Company cant sell as much as sugar in the market at any specific time, as
sugar release mechanism is controlled by government of India.
OPPORTUNITIES It is located in the best area. Here all the resources are available in less cost.
Offer replacement of machinery to new machinery for good running of
factory.
Present production performance per tone is excellent.
Non-establishment of the programs to motivate and develop effective
manpower.
Restricted market opportunities shirked a better price for finished products.
Reducing the overhead expenditure.
To provide comfort and convince to employees for doing the work.

22

THREATS
The production comes under hazardous activities, competition are
updating latest technology.
Due to uncertain rainfall procurement of raw material is being affected.
High competition in procurement of raw material.
The main raw material sugarcane may not sufficiently be available in future.
Change in various government policies.
SAFETY MATTER
Protection against Electrical Shocks and fire:
With the ever increasing of the usage of electricity in our daily lives , the risk of
electrical shocks and hazards related to electrical fire to overcrowded wiring and
leakage due to installation failure.
Poorly insulated apparatus, faulty wires or the incorrect use of an electrical device
cause current to flow through the wrong face (i.e. through the insulation) to the
earth. This current is called the "Leakage Current". Leakage current in an electrical
system is responsible for two major risks.
Risk of electrocution(electric shocks)
Risk of fire

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Risk of Electrocution (Electric shocks)


Electrocution is the passage through human body, which is dangerous .The flow of
current through human body, affects two vital functions
Breathing
Heart Beat
Electrocution can lead to muscle contraction causing respiratory paralysis, cardiac
fibrillation and immediate cardiac arrest resulting in death depending upon the
magnitude of the leakage current and the contract voltage.
Risk of fire
Poorly insulated wiring or loose connections are enough to create fire hazards a
portion of the current which normally flows in the conductor can find a way back
to the earth through these "leaks" and through materials with varying degrees of
conductivity. These materials are not intended to conduct current, and may get
heated up to such a degree that they will set fire to whatever they are in contact
with (insulation, wood etc.). This is the start of fire.
Solution
Earth Leakage Circuit Breakers installed in the circuit senses these leakage
currents and isolates the faulty circuit thereby ensuring safety against the hazards
of earth leakage. It is mandatory to install an ELCB in the incoming circuit for all
installations except those specified by the section 30 of the Indian Electricity Act,
1910.

RESEARCH METHODOLOGY

24

Research methodology is a way to systematically solve the research problem. The


research methodology included various methods and techniques for conducting a
research. Marketing Research is a systematic design, collection, analysis, and
reporting of data and finding relevant solution to a specific marketing situation or
problem. Sciences define research as the manipulation of things, concepts or
symbols for the purpose of generalizing to extend, correct or verify knowledge,
whether that knowledge aids in construction of theory or in practice of an art.
Research is thus, an original contribution to the existing stock of knowledge
marketing for its advancement, the purpose of research is to discover answers to
the questions through the application of scientific procedure. My research project
has a specified framework for collecting the data in an effective manner. Such
framework is called Research Design. The research process which was followed
by me consisted following steps.
Defining the problem & Research Objectives
It is said, A problem well defined is half solved. The step is to define the project
under study and deciding the research objective. The definition of problem
includes Brand Awareness & Preference Regarding Fine Switches Pvt. Ltd.
GREEN CFL
Developing the Research Plan
The second stage of research calls for developing the efficient plan for gathering
the needed information. Designing a research plan calls for decision on the data
sources, research approach, research instruments, sampling plan and contacts
methods. The research is descriptive in nature and is aimed at analyzing the brand
awareness & preference regarding Fine Switches Pvt. Ltd. GREEN CFL.

25

The development of Research plan has the following Steps:


a.)

Data Sources

Two types of data were taken into consideration i.e. Primary data and
Secondary data. My major emphasis was on gathering the primary data. The
secondary data has been used to make things more clear.
i.

Primary Data: Direct collection of data from the source of information,


including personal interviewing, survey etc.

ii.

Secondary Data: Indirect collection of data from sources containing past


or recent information like, Annual Publications, Books, Newspaper and
Magazines etc.

Research Approach
Surveys are best suited for Descriptive Research. Surveys are undertaken to
learn about peoples knowledge, beliefs, preferences, satisfactions and so on
and to measure these magnitudes in the general public. Therefore I have done
this Survey for the Descriptive Research Process.
Research instrument
A close friend questionnaire was constructed for my survey. A Questionnaire
consisting of a set of questions was presented to respondents for their answers.
a.) Sampling Plan
The sampling plan calls for three decisions.
i.

Sampling unit: Who is to be surveyed?

26

The target population must be defined that has to be sampled. It is necessary so


as to develop a sampling frame so that everyone in the target population has an
equal chance of being sampled. The sampling unit of this project was
Chandigarh.
ii.

Sample Size: How many people have to be surveyed?

Generally large sample gives more reliable results than small samples. The
sample consisted of 100 respondents. The sample was drawn from 50 retailers
and 50 end users customers people having different educational qualifications,
occupations and age group. The selection of the respondents was done on the
basis of simple random sampling.
The sample was drawn from people having different educational qualifications,
occupation and age groups.
iii.

Contact Methods

Once the sampling plan has been determined, the question is how the subject
should be contracted i.e. by telephone, mail or personal interview. Here in this
survey, I have contacted the respondents through personal interviews.
Collecting the information
The collection of data is a tedious task. For conducting any sort of research data
was needed. So for my research, there was plenty of primary data and for
increasing the validity of information collected, some books, journals,
pamphlets, information about the company were studied and taken into
considerations. After this, I have collected the information from the respondents
with the help of questionnaire.

27

a.) Collection of Primary Data: Primary Data is the data collected from
the original source. In my survey and study, there was optimum
availability of primary data because every aspect was witnesses carefully
at each point. Questionnaire and personal interviews were the main
instruments, which were used for collecting primary data.
b.) Collection of Secondary Data: Secondary Data is the one which has
already been collected by someone else and some other person is using
that information. The source of secondary data was, some related books
and websites related to the company. The competent staff of the company
helped me a lot in providing information about the company.
Analyze the Information
The next step is to extract the pertinent findings from the collected data. I have
tabulated the collected data and developed frequency distributions. Thus the
whole data was grouped aspect wise and was presented in tabular form. Thus,
frequencies and percentages were prepared to render impact of the study.

OBJECTIVES OF THE STUDY


28

Every study is conducted with key objectives and aims kept in the fore. Without
aims and objectives the study is like a ship without radar. So aims and objectives of
this study are.
To understand the awareness level of Fine Switches Pvt. Ltd. and Fine
Switches Pvt. Ltd. green CFL.
To know how satisfied are customers and retailers with the products they
purchase and the services provided by the company.
To find out what the customer and the retailer wants from Fine Switches Pvt.
Ltd. GREEN CFL.
To know the market shares of GREEN CFL.
To know the perception of customer regarding the quality of GREEN CFL.
To know the most influential factors that influence the customer behaviour
towards GREEN CFL.

SCOPE OF THE PROJECT

29

The focus of all corporate today in the highly deregulated and competitive
environment has been to cut costs optimize their operations and with the
realization that only efficient structures which can cut their transactional costs can
survive in the current scenario. With the technology advent in all spheres it would
only follow that organisations would use it as a platform to cut their operating
cycles and to take advantage of all the available investment opportunities which
may arise. This can be done only with the help of better cash management, which
for long has been a neglected area, by Indian corporate. The project attempts to
understand the tolls offered by institutions today that make this possible. Both side
of the services of collections as well as payments have sought to be examined with
an emphasis on how these products have developed and offered by banks in India.

INTRODUCTION TO PROJECT
30

The world sometimes turns upside down and only those with light liquid assets
float to the top again. Anthony H Allen.
Whenever any long-term investment is considered the future cash flows from the
project, the uncertainty of those cash flows, and the opportunity cost of the funds
invested in the project are evaluated. Investment in current assets are also
evaluated by all organizations in the same manner but over a short-term period.
The time value of money plays an important role in the valuation of long term
investments as these investments produce expected cash flows into the future. In
the case of current assets (cash, marketable securities, accounts receivables,
inventory) provide expected cash flows only in the short term, therefore the time
value of money is of lesser importance while evaluating current assets.
Whenever decisions are made for new product development and marketing there is
capital investment. Aside from the outlay for assets to produce the product the
investment requires:
More cash to handle the increased volume of transactions.
More inventory (raw materials, work in progress and finished goods)
More accounts receivable ( because selling more goods on credit means
increasing credit to customers)
Investments made in current assets support the day to day operations of the firm.
Therefore investment in long term projects there has to be investment in current
assets in order to support the day to day operations that will be required by the
project. Current assets are the Working Capital put together to work in order to
generate benefits monetary or other wise from the investment made.
31

How much investment should be made in current assets? This is a difficult


question as this depends on various factors such as:
The type of business and product
The length of the operating cycle
Customs, traditions, ad the industry practices
The degree of uncertainty of the business
The type of business, whether extractive, retail, manufacturing or service, affects
the way an organisation invests. In some industries, large investments in machinery
and equipment are necessary. In other industries, such as retail firms less is
invested in plant and equipment and other long-term assets and more is invested in
current assets such as inventory and receivables. The firms operating cycle the
time it takes the firm to turn its investment in inventory into cash affects how
much the firm ties up its assets in current assets. The operating cycle includes the
time it takes to manufacture the goods sell, them, and collect cash on their sale.
The longer the operating cycle, the larger the investment in current assets.
This can be explained with an international example that differences also arise
from customary business practice. Mac Donalds does not extend credit to its
customers, but Chrysler, through its, financing subsidiary does. Chryslers major
competitors, General Motors and Ford, offer credit to their customers, but Mac
Donalds major competitors, Wendys and Burger King do not offer credit.
Some generalisations about operating cycles:

32

Firms in the retail industry tend to have shorter operating cycles; with firms
dealing in food products having the shortest operating cycles and firms dealing
in luxury items having the longest.
Firms involved in manufacturing tend to have longer operating cycles than
retailers because of the amount of time necessary to produce goods for sale.
Firms such as automobile manufacturers, which customarily extend credit to
their customers, tend to have longer operating cycles, but the length of time it
takes customers to pay varies among industries.
A firms investment in working capital (its current assets) depends on the length of
its operating cycle. The longer this cycle, the longer it takes to generate cash from
the firms investment in goods and services, This longer cycle increases a firms
risk and cost associated with its working capital investment.
And how much should a firm have in current assets anyway?
It was long believed that current capital / current assets bears a direct relation to
the current liabilities. This can be traced to the practice of Scottish bankers in the
seventeenth century, who felt that each obligation must be backed by a like amount
of current assets. Developed from this was the notion in banking that the ratio of
current assets to current liabilities should be 2. During the twentieth century,
grantors of credit have relaxed a bit and no longer require such a definite, direct
relationship between current assets and current liabilities. Because firms can now
raise capital in other ways than through bank loans and because of the changing
views about borrowers ability to generate cash flow, the focus has shifted from a
shift relation between current assets and current liabilities. (Source: Arthur Stone
Dewing The Financial Policy of Corporations, 5th Edition).
33

Customs and traditions developed over time also affect how much a firm invests in
current assets. Some industries, such as those selling raw materials, traditionally
require cash on delivery, this tradition developed when there was a small profit
margin on these goods that the seller could not bear the cost of extending credit.
What competitors do is also an influence, if competitors extend credit on generous
terms, the firm may have to do the same.
The greater is the uncertainty regarding the supply and the price of raw material
the larger will be the requirement of current assets. If the price of raw materials
fluctuates widely, a firm that requires these raw materials may have to keep either a
large store of these goods on hand or a sufficient supply of cash (or cash
equivalents) ready in order to take advantage of price fluctuations. If the supply of
raw materials may be interrupted (e.g. By a labour strike), the firm may want to
keep a large quantity of raw materials whose prices are volatile. Further, the greater
the uncertainty firms face regarding the sale of goods and services, the larger is the
investment they tend to make in current assets to ensure that there will be enough
in case demand increases. The influence of the nature of the business can be seen
from the illustration I. The current assets have been broken up into cash,
marketable securities, accounts receivable and other current assets. In addition to
the precautionary balances, firms tend to keep cash on hand for unexpected future
opportunities. This is referred to as Speculative Balance. This is the amount of
cash or securities that can be easily turned into cash, above what is needed for
transactions and precaution, it enables an organisation to take advantage of
investment opportunities on a short notice and to meet extraordinary demands for
cash. In addition to the cash balances for transaction, precautionary and speculative
needs, an organisation may keep cash in an account in the form of a
Compensating Balance- a cash balance required by banks in exchange for
34

banking services. By keeping a balance in an account, which is non-interest


bearing or low interest earning, the firm is effectively compensating the bank for
loans and other services it provides.
There is a cost to holding assets in the form of cash. Since cash does not generate
earnings, the cost of holding cash is referred to as Holding Cost which is an
opportunity cost, which is the profit the cash would have earned if it were invested
in another asset. If there is a requirement for cash there must be a sale of goods or
services, sale of an asset or borrowing of cash. There are transaction costs
associated with both selling of assets or borrowing. Transaction cost are the fees,
commissions or other costs associated with selling assets or borrowing, they are
analogous to ordering costs for inventory.
The next step in the cash management process is how much cash should an
organisation hold?
Firms hold some of their assets in cash for several reasons. They need cash to meet
transactions of their day to day operations. Referred to as the transaction balance,
the amount of cash needed for this purpose differs from firm to firm depending
upon the particular flow of cash into and out of the firm. This amount depends
upon:
1. The size of the transactions made by the firm
2. The firms operating cycle which determines its cash outflow and inflow, both
depending upon the firms production process, purchasing process and collection
policies.
There is always some degree of uncertainty about future cash requirements, firms
typically hold additional cash called as precautionary balance just in case the
35

transaction needs exceed the transaction balance. But how much to keep as a
precaution depends on the degree of uncertainty of the transaction or how well the
transactions can be predicted.
For transaction purposes, adequate to meet the day to day requirements of
operations. To determine what is adequate for day to day operations, the
comparison between the cost of having too much cash to the cost of getting cash or
the transaction cost of getting cash is compared. The holding cost and the
transaction cost is compared. As the cash holding increases the holding cost
increases. With higher balances however the transactional cost however declines
due to economies of scale. This is due to the fact that with larger cash balances ,
there are fewer transactions required for cash requirements.
There are two basic models that help in determining what levels of cash minimises
the sum of the cost of making transactions to get the cash and the opportunity cost
of holding more cash than required, they are :
(a) The Baumol Model
(b) The Miller Orr Model

36

WHAT IS CASH MANAGEMENT?


Before we define cash management, we need to understand the difference between
activities and products.
Activities are basic components of work done in a bank (e.g. account
opening, statement rendition, query handling, debiting an account, etc.)
Products are aggregation of activities put together in such a way as to
motivate the customer to deal with the preferred bank.
Some truths:
Account management

Transaction management

CM

Delivery management

Liquidity management

It is products that satisfy customer needs and not activities.


Customers value and pay for product and not activities
Efficient performance of activities is not enough to motivate customers to
come to a particular bank in preference to another
Cash management is the effective planning, management and monitoring cash and
cash equivalent resources with a view to minimizing costs, maximizing returns and
controlling cash flows and risk.

37

MARKETING ENVIRONMENT
In spite of the seemingly obvious advantage of the marketing concept, that is,
determining or filling customer needs or wants, not all organizations embrace this
approach. Kotler has identified five competing concepts of marketing activity in
todays business organizations.

According to Kotler:
1. The production concept holds that consumers will favour those products
that are widely available and low in cost. Manager of production oriented
38

organizations concentrate on achieving high production efficiency and wide


distribution coverage.
2. The product concept holds that consumers will favour those products that
offer most quality, performance and features. Managers in these productoriented organizations focus their energy on making good products and
improving them over time.
3. The selling concept holds that consumers, if left alone, will ordinarily not
buy enough of the organizations products. The organization must therefore
undertake an aggressive selling and promotion effort.
4. The marketing concept holds that the key to achieving organizational goals
consists in determining the needs and wants of target markets and delivering
the desired satisfactions more effectively and efficiently than competitors.
5. The societal marketing concept holds that the organizations task is to
determine the needs, wants and interests of target markets and to deliver the
desired satisfactions more effectively and efficiently than competitors in a
way that preserves or enhances the consumers and societys well being.

39

How does PCM fit this cycle ?


Cash

Investments / Depository
Term Deposits
Certificates of Deposit
Cash

Raw materials

SmartMove

Payable

Accounts Services

Work in process

Receivable
Finished Goods

It
is clear that these 5 views have a dramatic impact on the marketing and
advertising methods, approaches, and even the style each organization chooses
to fit its needs in the market place.
The four Ps of marketing are the following
1. A product or service of some sort to be offered to customers and prospects.
2. A price at which the product or service is offered.
3. A place or distribution system through which the product or service is made
available to customers and prospects.
4. Some form of promotion or communication by means of which prospects or
customers are made aware of the product or services availability.

40

The actual task of marketing consists of the mixing and refining of these various
elements by the firms management to optimize the profitable exchange of its
products or services in the marketplace. In economic terms, firms in our society
take scarce resources in the form of capital, labour and raw materials, and process
them into product or services that they exchange in the marketplace, hopefully at a
profit.
This marketing mix of the four basic elements- product, price, place and
promotion, is what marketing managers adapt and/or replace.
As important as the four Ps are to marketing success, they are not the only
elements involved today. Present marketing managers must also deal with the four
Cs.
1. The Consumer. With the fragmentation of the market place, there must be
much more emphasis on identifying and selecting the right consumer for
marketing.
2. Cost. It is a big factor in any marketing plan-cost of the product or service
compared to competition; cost of the marketing program to be implemented;
cost of distribution etc.
3. Competition. In many cases the marketing mix is adjusted or adapted to
moves competitors make. No marketing organization exists within a
vacuum. Marketing plans must be developed with competitors action and
reactions in mind.
4. Channels. The various forms of distribution namely, retailers, wholesalers,

41

5. distributors and brokers, which may be used to take the product to the
consumer. Today, as a result of the consolidation and concentration of the
retail trade, more and more attention must be paid to how the channel
members will accept and react to proposed marketing and promotion plans.
This is in addition to the attention paid to the consumers reaction.
Because there are many customers, many firms, many products and many markets,
it quickly becomes evident that success for a product or service is unlikely to occur
without some form of planning. The planning process even more vital when a
firms management realizes that its limited resources are in demand by other
organizations in the economy and within the own organization. The marketplace is
wide, varied and constantly shifting. The demand for a product or service is in a
state of flux and competitors are offering similar products. Without some sort of a
plan the management stands little chance of successfully marketing its products or
services. The development of a plan usually involves a series of considerations,
evaluations and decisions by the management and commonly includes
consideration of the four Ps and Cs.

42

COMPETITIVE STRATEGIES
The way in which the organization will use its resources to successfully bring its
products or services to the market involves a carefully orchestrated strategic
planning process .A brief review of this business strategic planning process will
help us realize its significance.

Competition in the Cash Mgt. business


Foreign Banks

Public Sector Banks

Private Banks

Technology driven

Offered by some
PSU banks

Recent entrants

Efficient tracking &


MIS systems
Limited branch
network
Tie up with
efficient local
Banks & Couriers
to provide
collection/Payment
Services

Large branch
network not all
technology driven
MIS & tracking
mechanism not
efficient
Can be price
competitive

43

Relatively high tech


& technology
driven
Good branch
network
Price competitive
Similar to Foreign
Banks in approach

ENVIRONMENTAL ANALYSIS
Two forms of environmental analysis are done. The first looks at the external
environment in which the organization will compete. That includes the macro
environmental forces (economy, demography, political climate, legal system and
social norms) and the micro environmental forces (customers, competitors,
suppliers and channel members), which will impact on the company.
In addition, a review of the internal environment must be made. This review
includes factors such as financial strengths of the company, marketing capabilities,
level and quality of manufacturing facilities, and the management skills of the
organization. The key imperative of success in the cash management is the ability
to provide responsive and integrated solutions to customers. The critical
requirements are
Processing Technology
High level of client & service orientation
Quick & error-free operations
Responsiveness to client queries
Effective information flow
Proper control on instruments
Quality orientation

44

In most cases these external and internal environmental reviews take the form of
lists of opportunities and threats that the organization faces or its significant
strengths and weaknesses.

GENERIC STRATEGIES
Once the units goals have been established, management then sets about
determining strategies to accomplish those objectives. Michael Porter has
identified three generic strategies that apply to most organizations.
1. Overall Cost Leadership. Become the lowest cost producer and distributor.
Price below competition. Achieve high market share.
2. Differentiation. Achieve superior performance in some important consumer
benefit area either through the product itself or through some form of
marketing excellence.
3. Focus. Identify and target some segment of the total market. Develop
expertise, cost leadership and/or and a focused approach to serve that niche
in the market.

Critical Success Factors for Cash Management


Extensive
corbank
network

Reliable
courier service

PCM

Integrated
system

45

Efficient
processing
setup

THE MARKETING ENVIRONMENT ANALYSIS


All organizations operate within an environment that dictates what the firm can or
cannot do. The environment exists at both the macro and micro levels.
The macro environment generally consists of such elements as:
1. SOCIAL: These are the characteristics of people in society, namely, their
values, culture, social class life-style, and goals. Given the importance of
socio-cultural values on advertising, these are the key elements that the
advertising planner must understand.
2. NATURAL: They encompass the physical situations in the marketer
operates, including such factors as natural resources, climate, terrain,
pollution and population density.
3. ECONOMIC: The economic system in which the marketing organization
operates and how the system influences potential growth rate, inflation, raw
material availability, investment capital availability and even interest rates.
4. GOVERNMENT: The specific rules laid by the government that the
marketer must conform to. In addition, government actions influence
economic and societal conditions as well.
5. TECHNOLOGICAL: The increase in knowledge and ability and
applications of innovations and inventions can have either a stimulating or
restraining effect on the marketing activities of the firm. These factors, of
course, influence the need for and the value and impact of advertising
campaign.
46

6. COMPETITIVE: There may be many or few competitors depending on the


economy, the product or service offered, the product category and so on. In
addition there are both direct and indirect competitors for almost all products
or services.
7. CONSUMER: The users, purchasers and prospective customers have much
to do with the overall marketing environment in which the organization
operates. There have been dramatic changes in consumers in the past two
decades, all of which have had an impact on how and why advertising
campaigns are planned and implemented.
Most of these macro forces are out of control of the organization. They exist and
must be dealt with by the managers as a vital part of the marketing activity. In
addition the macro environment for every firm is different. Thus individual
analysis of is required by each firm to develop an effective marketing program.
The microenvironment, or the situation within the firm, also dictates the type and
form of marketing actions that the organization can conduct. It consists of internal
functions as finance, credit, production and purchasing. They greatly influence the
final marketing activities that the firm can develop and use. Although the marketer
has much more control the micro environmental situations, they still dictate to a
great extent, what can or cannot be done in the firms marketing program.
The environment in which the firm operates is thus, one of the most basic
considerations in the overall performance of the organization.

47

ORGANISATIONAL GOALS
A bank which believes in partnership, listens to customer needs and offers end-toend solutions
Understanding customer needs
Internal accounting ease
Reconciliation related benefits
Information availability
Integration of information
Single window capability
Competitive pricing
Contingency

48

COMPETITIVE LANDSCAPE
The Indian market for cash management is a very competitive one with both global
and local banks offering a wide array of products. Citibank, Deutsche Bank, ANZ
Grindlays (which has recently merged with Standard Chartered) HSBC being some
of the strong global contenders with HDFC, ICICI, State Bank of India emerging
as the strong local banks. HDFC and ICICI are very aggressive banks which being
late entrants are trying to increase their market share by selling products at a very
low price and also by being the first to market company cheques making the
payments business largely fee income driven. Float sharing is not legal in India and
hence the players cannot offer float sharing to circumvent selling company cheques
like the rest of the region.

Business Environment - Competitor map


Citibank
HDFC Bk
Deutsche

Product
Depth
(PCM)

ABN
Amro

HSBC

Stanchart
ICICI Bk

B of A

UTI Bank

Corporation
SBI

Established

Customer Base (CBA)

Aspirants

49

Cash Mgt. Product Portfolio


Products
Receivable Mgmt.
ChequeMate

Payment Services
SmartCheque
SmartPay

QuickEncash

Autopay

Liability management
CUA
TMD / CD
Smart move

Lockbox
COS / TT Payout.

Try products

SmartCollect
Quickcollect

eBanking

50

Cluster Deposit

FOCUS PAYMENTS
Environment
No. of drawee bank locations > 10,000
No. of locations where clearing takes place > 860
No. of locations where MICR clearing takes place: 14
No. of locations where H/V clearing takes place

No. of locations covered by Electronic Funds Transfer :

No. of locations where clearing is through the RBI :

15

The Clearing System in India


Paper based
Cheques are the most common method of fund transfer
Wide geographical spread of locations on which cheques can be drawn
Banks have about 65,000 branches
About 860 independent clearing houses exist 14 sponsored by RBI
and others by SBI and its associates

51

Dynamic changes in the country system


Initiatives driven by the Reserve Bank of India
Increase in the number of centres offering MICR clearing
Introduction H/V clearing at additional centers
Electronic clearing services debits and credits
Electronic funds transfers
Real time gross settlement systems (RTGS)
Initiatives driven by the banks
Internet banking
MIS in a soft format through e-mail/floppy
Mobile banking
Cashier Orders:
Payable at par
Very profitable as the float income is based on anywhere from 4 to 8 days
float.
SUC currently is Rs.23. Market price can be anywhere from 0 to Rs.30.
Float sharing is not legal in India and hence the popularity of company
cheques.
52

Cannot issue post-dated cashier orders. However for customers who send
forward dated cashier orders we should have the ability to debit a day before
the mail out date or debit the account on Day 1 with Day 10 as the mail out
date and store it in a secure manner (deferred date of debit).
In India the following details are printed on a cashier order Paid by the order of
Amount (figures/words)
Date
Payee name
Company cheques:
Single location. For single location can be paid at only 1 particular location
where the account is maintained. Not very popular as customers find it
restrictive.
Payable at par
Cannot print client logos on the face of the cheque due to restrictions by RBI.
Client logo can only be printed on the top middle portion of the first page and
on the following payment advices.
Can print only up to Rs.999 million digits in the value field in a cheque/CO in
India.
Do not need to use MICR ink for printing company cheques in India as you can
use pre-printed stationery, as the customers account is not reflected in the
MICR line.
53

Post-dated company cheques are allowed. Customer should assign the value
date but the bank should assign the processing date.
MICR Line for company cheques in India:
A cheque number in India looks as follows: 001001 000039000 110051 29. In this
the information included is as follows:
001001 is the Cheque number and printed on the top right hand of the payment
advice.
000 039000 is a combination of the City code, Bank code and Branch code.
11 is the account code. Basically you have the numbers available from 11 to 19
and under each number you can issue up to 1 million cheques. RBI only
recognizes up to 6 digits for the account code.
29 is the2 digit transaction code. In this example 29 stands for cheques payable
at par. Other transaction codes could be savings account or current account.
Demand Draft:
Local currency DD
Both Local currency and multi-currency are required. Currently customers due
to the stringent RBI regulations do not issue a lot of multi-currency DDs.
Details which are included in a DD in India are as follows:
Beneficiary name
Amount (figures and words)
54

Date
Drawee bank
Drawee bank address
Signature
Drafts drawn on correspondent bank normally give ceiling limit of cheques
which can be issued
Pricing is also done based on urban and semi-urban locations.
A minimum balance needs to be maintained at the correspondent bank.
The correspondent bank sends back a monthly report on outstanding and
cancelled DD that leads to reconciliation issues.
Income earned is fee based.
Need to build interfaces with these correspondent banks as all the
correspondent banks require the information in electronic formats as
specified by them.

Demand Drafts - The process flow


DD request
DD to beneficiary

Customer

BANK
Funding with DD
issued report

Corresponde
nt bank

DD sent for
confirmation

Confirmation

Beneficiary

DD deposit

DD sent for
clearing

55
Clearing
House

Credit to
benef.. bank

Beneficiary
s bank

Multi- Currency DD
The Indian market is heavily regulated and customers cannot have a foreign
currency account unless it is an EEFC (Exchange Earners Foreign currency
account) wherein an individual can maintain this account provided he is
getting paid in USD.
Currencies supported in this account are USD/GBP/HKD/DB/Euro and Yen.
Customers currently issue FCY TT over Internet or from a branch.
Interest/dividend warrant:
This is a niche product, which arises due to the statutory regulations in India.
This product is very profitable, as customers have to pre-fund the account.
The product is used for either making payments towards fixed deposits or to
pay dividends, which is an annual activity.
Warrants are issued whilst making these payments. Warrants are like
cheques but the SUC is much lower than that of a cheque. The SUC for
warrants is Rs.3 as compared to the SUC for cheques, which is Rs.23.
For dividends the payments need to be payable at par at 50 odd locations
where the clearinghouses are situated. Hence normally a need for a
correspondent bank tie-up is required as most foreign banks have branches
in limited locations.
Income is generated both through fee income and float income. Bank make
anywhere from Rs.5 to 10 per instrument.
56

The registrar prints the warrants and mails them out. Problems usually faced
by customers are in reconciliation of paid and un-paid warrants given that
this information needs to be gathered from 50 odd locations across India.
It is a pre-funded instrument so the risk is lower. It never gets rejected unless
the instrument is fraudulent.
TT Payout

TT Payout - process flow

Customer instruction
BANK
CUSTOMER

Funding +
instruction
Cr to A/C /
CO issued

BENEFICIARIES

TT instruction

CORBANK BRANCH
AT PAYOUT LOC.

57

LOCAL CORBANK
BRANCH

This product is only offered as a deal clincher to niche corporates. This gives
the customers the ability to make payments at non-branch locations using
correspondent bank premises rather than issuing a LCY DD.
It is mostly for large value time critical payments like custom duty
payments etc
The cut-off time is 10.30, as the corr bank account needs to get funded by
that time. RBI in turn needs to get funded by 11 a.m. If the instruction is
received before 10.30 a.m. then the beneficiary gets credited the same day if
not it is the next day.
The correspondent bank charges a fee of 50 paise per Rs.1000 for payments
where RBI does the clearing.
For non-RBI locations the charge is 30 paise per Rs.1000
The charge for the customer is around Rs.1.50 per Rs.1000
This is a fee based income product.
Electronic Payment Types
Electronic Funds Transfer:
It is available in select locations across India.
In order for this product to succeed the beneficiary bank has to be a part of
this network.
Member banks have direct connection to Reserve Bank of India.
58

Bank on receiving the instruction from the customer creates a transaction in


a front-end, which is installed in their premises, and this file is sent to RBI
electronically.
Beneficiary gets the funds on Day 1 This product is a fee based product and
currently customers are being charged Rs.10 per transaction.
The H/W required at the banks end includes a UNIX server, which is
connected to RBI.
Electronic Clearing Services:
Why do clients need such structures?
Ensure prompt disbursements / collections
Avoid reconciliation problems
Eliminate frauds and errors
Reduce administrative load in having to deal with too many agencies
FEATURES
Is offered by the Reserve Bank of India and have two products, viz, ECS
credit and ECS debit.
These products complement the offerings - IW / DW and Bulk Collections
respectively.

59

The products are expected to become more popular with RBI removing the
minimum charge of Rs.2500/- per presentment and allowing ECS files for
all locations to be handed over at Mumbai, New Delhi or Chennai.
Available at 44 locations for ECS Credit and 4 locations for ECS Debit.
Initially proposed to be handled at only our branch locations.
Instruments have a cap of INR 500,000/- for debits and INR 500,000/- for
credits.
Our charges - mandated by RBI to be Re 3/- per instruction. The initiating
bank gets Re 1/- per instruction in both ECS Credit and Debit.
Higher charges can be realized through value added activities, e.g.,
reconciliation.
Credit limits need to be provided for customers that do not prefund the
account.
Returns, in practice, keep flowing much after Day 6.

Workflow Cycle:
Prior to Day 1: User hands floppy to bank for validation.
Day 1: Floppy provided by bank to RBI
Day 2: Details provided by RBI to dest banks

60

Day 3: Reports provided by service branches of dest banks to the


branches of account.
Day 4: Accounting entries passed to customers account and in the RBI
account of bank / HSBC.
Day 5: Unpassed entry info passed back to RBI.
Day 6: Unpassed amt credited to bank and to User
Case studies
1. Wockhardt Pharmaceuticals:
Currently using Deutsche Banks DB-Direct (using thin client version).
They issue around 600 cheques a week totaling Rs.10 crores.
They currently use company cheques and their account gets debited when the
cheques hit the counter. This service is available at non-DB locations also.
The cheques are payable at par at correspondent locations and this is known as
back ended funding.
The Deutsche Bank product has a multi-currency module.
The cutoff time for LCY DD is 11a.m.
Customers like the fact that after a transaction is initiated a reference is sent
back to the customer.

61

DB does not have multiple delivery modes. Only option is mail back to
customer.
DB has an in-house technical team that assists with building the interface,
which aids in the reconciliation process.
DB has correspondent bank relationships with Vijaya and State Bank of Patiala.
MODUS OPERANDI
Customer has subsidiaries around the region creating payments but they do not
need a multi-client functionality, as operations are very de-centralized.
Customer does not want the operator to make amendments to make a file after it
has been uploaded from the A/P.
Customer does not want authorizer to have the ability to edit/amend.
Would like authorization to be sequential.
Customer felt that the ability to remotely access transactions would be a useful
feature.
Customers workflow has an operator/verifier who is the credit controller and
does not have authorization rights. An individual authorizer does the
authorization across limits.
They use SBI for their dividend warrants payments. Main problem faced is
reconciliation, as they do not get information on lost cheques. Out of a total of
35,000 payments issued worth 12-15 crores they lose around 100-150.

62

Reconciliation is done on a monthly basis and the customer would like


transaction level details.
Statement of charges is sent monthly and has transaction level details.
Customer does not have any limits set up at their end.
Want only limits based authorization matrix.
2. Infrastructure Leasing Finance Company (Finance):
Citibank does collections while HDFC/State Bank of India handles the dividend
warrants.
They maintain a lot of surplus cash in their main operating account, as they do
not know when the cheques that they have issued will hit the counter. This is in
the case when they issue dividend warrants.
They would like to get interest on the surplus funds lying in the account.
They use ECS to make payments. HDFC currently has 41 branches and they
have access to another 60 locations via Vijaya Bank.
Salary payments are done via HSBC. However they are facing problems due to
the lack of locations and their staff does not always have access to a branch.
They issue around 70000 warrants in April and another 30000 in June.
Interest warrants are issued once a year whilst the dividend warrants are paid
out around 3-4 times a year.

63

The customer would like time bound reconciliation so that they know when the
cheques are presented and which cheques are outstanding.
HDFC do the reconciliation via a floppy, which enables the customer to get a
knock off and tell them which transactions are outstanding and what has been
presented. They also know when they are going to get the reconciliation
diskette.
3. Wyeth Lederie Ltd (Pharmaceutical):
They are currently looking for a complete cash management RFP and the 3
banks that have been singled out include HDFC/HSBC and Citibank.
Main issues are availability of time critical data, ease of reconciliation and costeffectiveness of solution.
Will be ready to transact over the Internet in 2001. Would like to start using
thick client and shift later.
Issue around 1100 cheques a month and would like the ability to make cheques
payable at par in 8 locations across India.
Main cities of interest are Baroda/Surat/Indore. The number of cheques issued
out of these cities is around 5-7 on a weekly basis.
Citibank has made an offer of free of charge cheques and local currency
demand drafts to get issued out of Citi and non-Citi locations.
Mentioned that other banks in the running are not offering company cheques
rather are only offering cashier orders.

64

Need a lot of flexibility, as there are only 2 authorizers in the organization. Do


not need a verifier feature.
Do not wish to set up limits at their end
Would not want authorizer to make amendments.
Have JD Edwards account payable system.
Payment fields to be included in the payment advice include the following: Purchase number
Paid date
Invoice number
Invoice amount
Remarks
They have their finance operations centralized out of the Bombay office even
though they have individual depots making emergency payments.
Need payable at par cheques because currently they have to change the
stationery based on the correspondent bank and the location that they have
make the payment out to.
Would like to make amendments in the A/P rather than the FES, as that would
complicate the reconciliation process.

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Would like reconciliation to be done on a cheque-by-cheque level. Would like


cheque level details.
Would like sequential authorization.
4. ACC (Cement):
Would like to outsource but are awaiting the installation of an ERP. Given it is a
very large corporate there are a lot of stages of approval and the treasury
department cannot expedite the process unless proper infrastructure is in place.
There is some resistance from senior management because there will be
redundancy, which cannot be accounted for, and there will be issues with
unions. Also the treasury manager feels that the savings achieved by
outsourcing are intangible and it is difficult to get senior management buy-in.
Suggested that we do a consultative approach and assist them in calculating
what the cost savings will be so that they can make a presentation to senior
management.
Currently use continuous stationery to print cheques. This is very cumbersome.
Main problems currently being faced are lack of MIS and reconciliation is a
problem.
Customer spends around 8-12 hours daily preparing/printing cheques and
would like to expedite the process.

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Assessment of Relationship Managers


ICICI and HDFC are currently offering company cheques in the market. As a result
more and more customers are asking for the same and there is less profits to be
made with the product, as banks cannot offer float sharing.
Outsourcing is a huge mind-shift for corporate, as union laws do not permit
these organizations to make redundant extra staff
Due to the mind-block mentioned above, a lot of the banks are focusing on
new market entrants as they do not have the set-up currently visible in
corporates either multinational or Indian. Main stumbling block on
completing a sale is the cost of Oracle software as most corporates refuse to
pay it and banks has to incur the cost. They are willing to do it in the
scenario they are offering cashier orders and they can make a profit on the
float.
There is no market potential for payroll outsourcing.
Relationship managers of foreign banks feel that IW/DW is a must have and
are happy that product are addressing this gap. They feel that as the account
has to be pre-funded they can enjoy the float earnings. Citibank allows
corporates to fund the account in bits like 45% up-front and the remainder
over a pre-defined period.
They believe that local currency DD and TT payouts on the new product are
a great proposition for corporates. However in order to be successful it is
critical to tie up with more correspondent banks, as location becomes an
important asset.
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Customers are still not very comfortable transacting on the net. Till such
time a thick client solution is being provided to them that allows the
customers to send the file across the modem and the net.
Currently there is no demand for an integrated AP/AR.
New initiatives
HSBC would like to set up an excellence center in India and would be
happy to liase with the vendor to ensure deliverables and quality of output.
Centralized BOS engine conceptually is a very good one but there will be
huge cost implications as bandwidth is very expensive in India. The reason
that the centralized database would cost a lot is because the cheque images
along with the signatures have to travel from the server to the branch of
transaction to get printed in the location of choice. In order to get away from
this, signatures can be stored at local sites. But in order to have remote
printing, you need intelligence checking for signatures for which you would
need to attach servers to the printers. This again has cost implications.
Inter-city transmission is expected to be enhanced in 2001 making remote
printing a technological possibility though business would need to think
through the product offering due to cost implications.
Firewalls and PSDN are in place by 2001 providing flexibility to customers
in terms of using both the Internet and the modem.
There is no need to auto mailers in India and it is cheaper to do things
manually. The main problem of using the auto-mailer is that the nearest
repair center is Singapore making it very expensive to maintain.
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FOCUS - COLLECTIONS
Customer Needs
Speed transit times
Coverage of sales/collection points
Information
o Positive confirmation
o Reconciliation
o Returned items
o Debtor control
o Stock dispatch
Security and control
Liquidity
Interest costs
Reconciliation/administrative ease
Long-term commitment

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Conventional collection systems


Cheques

Office
Receiving Bank

Local Bank

Credit to
account

Local clearing
Processing
Float

Deposit
Float

Clearing
Float

Remittance
Float

Environment
More than 10,000 drawee centers
Largely paper-based
Extremely competitive market
o Falling margins
o Fee vs. float revenue
Types of clearing
MICR and non-MICR clearing
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Processing
Float

H/V clearing
Bankers clearing
o Electronic clearing
o Returns
CHEQUEMATE

Collections of local cheques


Cheques can be picked up from customers office or deposited at the bank
MIS provided at a consolidated level for all cities
Funds are normally paid out at a central collection account of the customer
Cheque level information available

Day 0
Pick up Cheques
at Metros

Day 0

Day 0/1

Local ClearingCustomers Concentration A/C credited

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Competitions brand names for Local Cheque Collection Facility:

Citibank

Citiclear for their own center collections


Citispeed for collections thru correspondent banks

Stanchart Grindlays - GIFTS (Grind lays Instant Fund Transfer Service)


HDFC
SCB

National Collections
National Collections

Corp. Bank -

Fast Collection Service

SBI

Cash Management Product

HSBC

Chequemate

DEUTSCHE

H/V MICR

LOCKBOX

Local clearing of cheques through non-branch locations across India


Integrated MIS with customization for select relationships
Concentration of funds in a central account
Cheque pick-ups at the center with return cheque deliveries also the same
center
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Local clearing at non-branch locations

Local clearing site RBI/SBI

Courier deposits cheques at designated Corbank branch


Day

1/3

Day 1/3

Customers
Concentration A/C credited
DayAccount
0
Funds transfer to our Control

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Day 0
Courier picks
cheques
at location
Flexibility to define credit arrangements
forupeach
customers

QUICKENCASH
Utilities and arrangements with correspondent banks to enable faster
clearing of cheques
Allows the customer to receive credit on a fixed day, say, day 0 for
discounted cheques and day 8 for regular collections
Interest charged on return cheques for period for which the bank is out of
funds
Consolidated MIS provided
Courier pickup provided for select relationships

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QuickEncash
Upcountry collections through a correspondent bank

Day 0
Pick-up of Checks
at Metro locations

Day 0
Designated
Corbanks local
branch

Local Clearing at
Upcountry
locations

Day x
Banks Control
branch
credited

Day x
Customers
Concentration A/c
Credited

QUICKCOLLECT
Collection of upcountry cheques drawn on any location in the country
In the case of instant credit of such cheques, customer liability released upon
receipt of clear funds or 90 days whichever is earlier
Consolidated MIS provided
Cheques can be picked up from the customers office or deposited at the
bank
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QuickCollect
Collection of checks not drawn on our corbank network

Day 0
Pick-up of customers
Checks from Metro
locations

Day 0/1
Mailed directly to
Drawee Bank

Day 12/30
Customers
concentration A/c
credited

Day 10/28
Draft drawn on our
location mailed to
banks control branch

Local Clearing

SMART COLLECT
Efficient collection of USD / foreign currency cheques
Discounting of foreign currency cheques
Credit within 3 working days to Nostro account.
Credit to customer on the 12th (for New York cheques) / 21st calendar day
(other cheques) from the date of processing in Mumbai for USD cheques.
Credit on realization for all other currency cheques

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MIS not linked to local currency collections (only HUB statement


information available)

LIMITATIONS OF THE STUDY


1) The possibility of respondents responses being biased cannot be ruled out.
2) Limited access to secondary data pertaining to Fine Switches Pvt. Ltd.
performance in other regions or any other information was another problem
in finding a correct response.
3) Since a smaller sample was chosen so it may not be true representative of
population under study.
4) Most of the times people dont give appropriate information.
5) Mostly retailers dont want to give accurate information and act rudely.
6) The survey was to be conducted in a limited span of time (6 weeks) which
also posed a limiting factor.
7) The retailers are so busy in their business so that they did not show actual
picture of the situation.

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FINDINGS
Strength of Fine Switches Pvt. Ltd. is its Brand Name
Fine Switches Pvt. Ltd. is willing to take up any challenges customization
project & successfully implement it
Advertisement costs are too less because they manufacture the products
based on the orders
Fine Switches Pvt. Ltd. electric has ISO certifications
Quality assurance department is maintaining the quality of the product & it
has become basis of competition with other companies
Company is eco friendly, they recycle the waste water & reuse the same
water for their daily use like washing & gardening
They have well integrated use data base that co-ordinates & connects various
information of different departments, hence it provides ready information to
the top level management to take immediate decisions

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RECOMMENDATIONS AND SUGGESTIONS


1. More local/ regional advertisements should be there to make people aware
about Fine Switches Pvt. Ltd. and its products
2. There should be more advertisement on the world wide web also.
3. Campaigning should be done at all level.
4. Business Development Officers should contact Architects and Customers on
regular basis.
5. More flexible discount schemes should be provided
6. Product catalogues and price lists should be provided to the customers on
regular basis.
7. Increase the percentage rate of adjustment policy. Or start guarantee.
8. Improve the behavior of sales person of the company as well as distributor.
(6% of respondent).
9. Company should further reduce its price.
10.Fulfill all the commitments which are made by company or distributor.
11.There is more need in improvement of quality of Green CFL so that it
decreases the rate of replacement.
12.The adjustment policys rate is not enough because replacement rate is 15%
to 20%.
13.If company backs out any scheme, then it should give some time to the
retailer.
14.Provide updated information and knowledge to the retailers about the
product.
15.Provide equal Price to all the retailers.
16.Company should compromise with dealer according to the circumstances.
17.Company should improve its grievance handling system

CONCLUSION

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