A

Project Report
On
FOREX AND WORKING CAPITAL ANALYSIS
W.R.T.
LG ELECTRONICS GREATER NOIDA
Submitted in the partial fulfillment of
MASTER OF BUSINESS ADMINISTRATION-2!2-!"
UTTAR #RADES$ TE%$NI%A& UNI'ERSIT()&U%*NO+
Submitted to,- Submitted B.,-
Dr, Ra/i #ande. SONU *UMAR
A00ot #rof, Roll No, !21!11223
FM4 4ROU# OF INSTITUTIONS
#&OT NO 5)*NO+&ED4E #AR* III)4REATER NOIDA
1
PREFACE
Summer training is a very essential part of management program .This gives
exposure to corporate environment where a stuent can unerstan an
learn to tac!le with ifferent issues .stuent get opportunity to enhance
their s!ill in practical life.
F"RE# $anagement is a very important part of an organi%ation
which has to eal with international mar!et. As &' Electronics (nia mainly
eals with import of material an then assem)ly of such raw material or
semi finishe goos to prouce the finishe proucts* so Forex epartment
)ecomes a very important part of the organi%ation+s wor!ing.
$ain o),ective of the pro,ect is to learn the process of
import* the various rules an regulations relate to the import transactions
that have to )e followe uring payments or receiving the goos. To wor! on
the various processes over particular perio of time an thus gather
!nowlege a)out the importing process.
Forex covers payment $etho* )ill of entry* heging. For first
-. ays* ( wor!e on )ill of entry. (t is a account of goos entere at a
custom house for imports an exports* etailing the merchant * /uantity of
goos * their type an place of origin or estination .Through )ill of entry *
letter is prepare an su)mitte to the respective 0an!s an then after the
)an! will inform to R0( on six months cycle )asis as a proof of currency
where use.

1ext ( learne a)out ifferent methos of payment mae to exporter.
2ifferent methos which are use in &' electronics are open account*
ocument against acceptance * letter of creit an cash in avance. There (
learne how to eal with ifferent issues which comes in payment. 3eging
is a metho )y which traers use two counter)alancing investment strategies
so as to minimi%e any losses cause )y price fluctuations. Types of heging
are forwar contracts* future* options* money mar!et .0ut the heging which
is only use in &' is Forwar contracts heging. After this ( went through
the (nsurance which is also a very essential part of the mar!eting
epartment. 3ere* ( learne what is (nsurance* 1ature amages* what are the
treatments* types of policies aopt )y &'E(&. Then ( learne a)out wor!ing
capital management which is very essential part of an organi%ation for ay to
ay activity
-
The stuy is limite to only imports of the company. 3ow
the company ecies on the imports of the company* how they ecie upon
the metho of payment that has to )e ta!en up )y the company * an how to
averse the ris! of fluctuations in the currency rates. The exports part is not
inclue in my stuy.
(n this company* ( have learne an gaine lot of !nowlege
a)out mar!eting epartment as well as ay to ay activity of a multinational
organi%ation.


4
A%*NO+&ED4EMENT
This is my first experience in corporate life in &' electronics at
'reater 1oia. 3ere ( get familiar with environment an a)le to
unerstan the ifferent situation with the help of team mem)ers of
mar!eting epartment . ( got this golen opportunity where ( was a)le to
enhance my s!ills.

( woul li!e to than! to $r. Sumenra 5ain* Assistant 'eneral $anager
$ar!eting for his invalua)le support* guiance* inspiration an timely
monitoring my activities which woul help me to complete my pro,ect.
( woul also li!e to than! Dr, Ra/i #ande. 6$y Faculty 'uie 7. for
supporting* guiing an proviing their valua)le time in completing my
tas! on time.
Sonu 8umar
$0A 64
r
Sem7
Roll 1o. 1-9199.4-:
;
INDE6
7!8 About &4 ele9troni90 India #/t, &td :
728 Fore; mana<ement 1
2,! Forei<n e;9han<e
2,2 Mean0 of pa.ment0
2,2 Method0 of pa.ment-
%a0h in ad/an9e
Open a99ount
Do9ument a<ain0t a99eptan9e
&etter of 9redit
Bu.er=0 line of 9redit
7"8 Ob>e9ti/e of the Stud.
7?8Data Anal.0i0
7:8Findin< of the 0tud.
718Re9ommendation for further 0tud.
758 Introdu9tion of in0uran9e

3.1 T.pe0 of In0uran9e
738 Ban@ 4uarantee-
7!8 +or@in< 9apital mana<ement
7!!8 %on9lu0ion
7!28 Anne;ure
<
About &4 ele9troni90 india p/t, &td -
Company Profile
&' Electronics Esta)lishe as gol star in 1:<=* &' Electronics has risen to
the top of 8orea+s electronics an telecommunication inustries )y
eveloping innovative technologies an proucts. From a strong foot
hol at home* &' have successfully avance into international mar!ets
an has emerge as a ma,or glo)al player. (nia Pvt. &t.* a wholly
owne su)siiary of &' Electronics* South 8orea was esta)lishe in
5anuary* 1::9 after clearance from the Foreign (nvestment Promotion
0oar 6F(P07.
The tren of )eating inustry norms starte with the fastest ever>
nationwie launch )y &' in a perio of ; an 1?- months with the
commencement of operations in $ay 1::9.
&' set up a state>of>the art manufacturing facility at 'reater 1oia* near
2elhi* in 1::=* with an investment of Rs <.. Crores. This facility
manufacture Colour Televisions* @ashing $achines* Air>Conitioners
an $icrowave "vens* Aaccum Cleaners* Auio. 2uring the year -..1*
&' also commence the home prouction for its eco>frienly
Refrigerators an esta)lishe its assem)ly line for its PC $onitors at its
'reater 1oia manufacturing unit.
The )eginning of -..4 saw the roll out of the first locally manufacture
2irect Cool Refrigerator from the plant at 'reater 1oia. (n -..;*
&'E(& also came up its secon 'reenfiel manufacturing unit in Pune B
$aharashtra. Covering over <. acres* the facility manufactures Color
Televisions* Air Conitioners* Refrigerators* @ashing $achines*
$icrowave "vens* Color $onitors an 'S$ phones.
The 'reater 1oia manufacturing unit line has )een esigne with the
latest technologies at par with international stanars at 8orea an is one
of the most Eco>frienly units amongst all &' manufacturing plants in
the worl.
C
&' has )een a)le to craft out in Ten years* a premium )ran positioning in
the (nian mar!et an is toay the most preferre )ran in the segment.
Aarious stuies have shown that the consumer is well informe on the
health awareness front. &' was one of the first companies who
recogni%e the emerging change in consumer nees an ecie to
ifferentiate their proucts on the )asis of technology which appeale to
the consumer on the )asis of health )enefits.
(ts vision was to )ecome a D3ealth PartnerD for its consumers worlwie an
therefore formulate its corporate philosophy to ma!e peoplesD lives
)etter* convenient an healthier. The CTA range offere )y &' has
D'olen EyeD technology* which senses the light levels in the room an
a,usts the picture to ma!e it more comforta)le for the eyes.
The entire range of &' air>conitioners have D3ealth Air SystemD* which not
,ust cools* )ut !eeps pollution out. Similarly* microwave ovens have the
D3ealth @ave SystemD* refrigerators have the DP1 SystemD* which
preserve the nutrition in foo an washing machines have DFa)ricare
SystemD* which ta!es the health factor own to ones clothes. All the
proucts offere )y the company have uni/ue technologies* evelope
)y its RB2 epartments that give customers a healthier environment to
live>in.
The year -..1 witnesse &' )ecoming the fastest growing company in
the consumer electronics* home appliances an computer peripherals
inustry. The company ha till the month of "cto)er -..1 achieve a
cumulative turnover of Rs <... Crores in (nia since its inception in
1::9* ma!ing it the fastest ever Rs <... Crores cloc!e )y any company
in the (nian consumer electronics an home appliances inustry.
3aving achieve this milestone* &' achieve another )enchmar! with
the first ever sales of "ne &a!h ACs 6@inows an Splits7 in a calenar
year.
(n Colour Televisions having set the sales target of one million units of
Color Televisions for -..-* &' has alreay achieve the one million
mar! in the month ahea of its target. (n -..4* &' has emerge as the
leaer in Colour Televisions* Semi Automatic @ashing $achines* Air
Conitioners* Frost>Free Refrigerators an $icrowaves "vens. (n the
year -..;* &'E(& achieve unpreceente sales efficiency )oth in
9
2irect Cool an Frost Free segment an sol more than 1 million units
of refrigerators outperforming inustry expectations.
&' Electronics (nia is the fastest growing company in the consumer
electronics* home appliances an computer peripherals inustry toay.
&' Electronics is continually proviing superior technology proucts B
value for money to more than <. la!h househols in (nia. The company
has achieve a turnover of Rs C<.. crore in -..; an aims to touch a
turnover of 1. 0illion ES 2ollars )y -.1. an commans an envia)le
position in the 'S$ mo)ile phone mar!et. (t has alreay starte
manufacturing of 'S$ phones in its plant at Pune.
&' (nia has also )een ta!ing on a slew of initiatives as a part of
Corporate Social Responsi)ility. &'E(& is prou to have aopte a)out
-; villages aroun our 'reater 1oia facility. &' extens Free $eical
Care* which comprises of free chec! ups an a free istri)ution of
meicines on a aily )asis. &'E(& is also generating self>employment
opportunities for the people in the form of tailoring* !nitting etc. in
aition to all this* &' also sens veterinary octors regularly to these
villages.
0esies all this* &' (nia is one of the very few companies in the country
that has an internal Energy* Environment* Safety an 3ealth 2epartment.
This function caters to activities li!e Energy Conservation*
Environmental (ssues* @or! Place Fire an Safety as well as
"ccupational 3ealth for the )enefit of the employees. As &' is not an
acronym* there is no full name for &'."n renaming the 'roup* we
consiere D&'D to )e the most appropriate for a new 'roup name that
coul integrate ifferent images of two main streams of the 'roupDs
)usinesses* the Chemicals le )y D&uc!yD an the Electronics B
Telecommunications le )y D'ol star*D while incluing various )ran
images of other )usiness fiels.
%OR#ORATE MI&ESTONE
1:<= 'ol Star 6toay+s &' Electronics7 esta)lishe
1:<: 8orea+s first raio prouce
1:C- Raio exporte to the ES an3ong 8ong as 8orea+s first
1:C< 8orea+s first refrigerator prouce
1:CC 8orea+s first )lac! B white TA prouce
1:C= 8orea+s first air conitioner prouce
1:C: 8orea+s first washing machine prouce
=
1:9; 'olStar Communications went pu)lic
1:99 Color TA prouce
1:9= Exports surpasse ESF1.. million* a first for 8orea+s electronics
inustry
1:=. First EE sales su)siiary in 'ermany6&'E@'7 esta)lishe
1:=- Color TA plant esta)lishe in the ES in3untsville* Ala)ama
1:=; Sales surpasse 1 trillion @on
1:=C European>stanar ACR plant esta)lishe in 'ermany
1:=: Sales su)siiary an a ,oint prouction su)siiary esta)lishe in
Thailan
1::. (relan>)ase esign technology center esta)lishe
1::4 @ith the esta)lishment of 3ui%hou su)siiary in China 6&'E3G7*
mar!eting in China too! full swing
1::< Company name change to &' Electronics an ES>)ase Genith
ac/uire
1::9 ;.>inch Plasma TA an the worl+s first (Cset for 2TAs evelope
(nia prouction su)siiary 6&'E(&7 esta)lishe
1::= @orl+s first C.>inch Plasma TA evelope 1::: &'.Philips &C2
esta)lishe
-... &' (nformation B Communications merge the worl+s first
(nternet>ena)le refrigerator launche 'lo)al sales of refrigerators
reache the num)er one position
-..1 Asynchronous ($T>-... e/uipment commerciali%e The worl+s
first (nternet ena)le washing machine* air conitioner* an
microwave oven launche &'.Philips 2isplays* a ,oint venture with
Philips esta)lishe
-..- Ener the &' 3oling Company system* the Company spun off to
&' Electronics 6&'E7 B &' Electronics (nvestment 6&'E(7 The
first home networ! system commerciali%e in the glo)al mar!et
-..4 @orl+s first synchronous>asynchronous ($T>-... mo)ile phone
evelope The worl+s first 9C>inch Plasma TA evelope C2$A
mo)ile hansets too! the largest share in the ES an worl C2$A
mar!et &aunche the worl+s first Super $ulti 2A2 Rewriter
-..; EAS0* the next>generation 2TA transmission technology* chosen to
)e the ES?Canaa 2TA transmission stanar )y the ES ATSC All>
in>one &' <<>inch &C2 TA* the worl+s first an largest among
&C2 TAs* commerciali%e The worl+s largest an first 91>inch
Plasma TA commerciali%e The worl+s first terrestrial 2$0 phone
evelope 2evelope @ireless Spea!er 3ome Cinema System
:
-..C &aunche the &' Shine* the secon hanset launche the steam
washing machine an interactive TA refrigerator 2evelope the
worlDs first 1..>inch &C2 TA &aunche the worlDs largest Full 32
1.->inch
Plasma TA 61.=.p7 2evelope the worlDs first ual>format high>
efinition 2isc
PlayerB 2rive
VISION VISION
Global Top 3 By 2010
&' Electronics pursues its -1
st
century vision of )ecoming a true glo)al
igital leaer who can ma!e its customers worlwie happy through its
innovative igital proucts an services..
&' Electronics sets its mi>term an long>term vision to ran! among the
top 4 electronics* information* an telecommunication firms in the worl
)y -.1.. This is the H0&EE "CEA1 STRATE'I+.
As such* they em)race the philosophy of J'reat Company* 'reat
People*J where)y only great people can create a great company* an
pursue two growth strategies involving Jfast innovationJ an Jfast
growth.J &i!ewise* they see! to secure three core capa)ilitiesK prouct
leaership* mar!et leaership* an people>centere leaership.
1.
%orporate 9ulture
Embra9in< the 0lo<an of No,! &4) it i0 9ontinuou0l. 0teerin< /ariou0
reform initiati/e0 to 0e9ure <lobal 9ompetiti/ene00, The 9ompan. ha0
been underta@in< ASuper AA pioneerin< a9ti/itie0 0in9e !332) 0ee@in<
to 0tren<then it0 9ompetiti/ene00 and 9reate profitabilit., The
9ompan. i0 al0o pra9ti9in< T& 2?) a te9hnolo<i9al mana<ement
0trate<. aimed at buildin< and 0u0tainin< prominen9e in the <lobal
mar@et,
In addition) it i0 9arr.in< out the Si; Si<ma %ampai<n to a9hie/e an
ideal mana<ement ba0e, It i0 e;ertin< it0 be0t effort0 to re0pond
po0iti/el. to the fa0t-9han<in< bu0ine00 en/ironment and to 0hore up
it0 <lobal 9ompetiti/ene00 in it0 9ore bu0ine00e0,
Though a company implements perfect management strategies an )oasts of
outstaning an talente people* it shoul have an appropriate corporate
culture to unleash the power of these capa)ilities.
No E;9u0e0- They foster a corporate culture where)y they suggest an
alternative )efore saying JnoJ an aggressively wor! towars fulfilling
their goal.
A+eA not BI=- They pursue a corporate culture where)y they em)race a
strong teamwor!.
Fun @or!placeK
They create a wor!place where iniviualsD creativity an freeom are
respecte an wor!ing is mae fun.
Mana<ement b. prin9iple-
11
(t )elieves in Fair an Transparent $anagement. (ts management see!s to
employ fair an transparent methos in all its transactions to compete
fairly an to elicit customer acceptance an loyalty. (t mainly aims to
)ecome a superior an highly competitive company )ase on customer>
oriente services. A fair an transparent management is one of &'
Electronics corporate ethical criteria.
&' Electronics intens to continue this !in of management* striving to )e
!nown as a corporation that encourages fair competition while oing its part
to promote social responsi)ility. $any years since company eclare the &'
Electronics Ethical CoeL it has ta!en the initiative in practicing fair an
transparent management.
The face of the future. Find out about the meaning and inspiration behind LGs
logo design
The letters J&J an J'J in a circle sym)oli%e the worl* future* youth*
humanity* an technology. "ur philosophy is )ase on 3umanity. Also* it
represents &'Ds efforts to !eep close relationships with our customers
aroun theworl.
The sym)ol consists of two elementsK the &' logo in &' 'rey an the
styli%e image of a human face in the uni/ue &' Re color. Re* the
main color* represents our frienliness* an also gives a strong
impression of &'Ds commitment to eliver the )est. Therefore* the shape
or the color of this sym)ol must never )e change.
2esign
The 9ir9le 0.mboliCe0 the <lobe, The 0t.liCed ima<e of a 0milin< fa9e
in the 0.mbol 9on/e.0 friendline00 and approa9habilit., O/erall)
1-
&4=0 0.mbol repre0ent0 the Dorld) future) .outh) humanit.) and
te9hnolo<.,
One eye
'oal>oriente* focuse* confient.
Epper> right han space
(ntentionally left )lan! an asymmetric* which represents &'Ds creativity
an aapta)ility to changes.
Colors
&' Re* the main color* sym)oli%es frienliness* an also gives a strong
impression of &'Ds commitment to )e the )est. &' 'rey represents
technology an relia)ility. 0ran (entity
&earn a)out the meaning )ehin the &' )ran.
a!or Prod"#ts
$igital $isplay % edia $i&ision,
2igital TAs*
Plasma TAs*
Conventional TAs*
$onitors*
PCs*
2A2>R"$?C2>R"$ rives*
2igital auio?vieo evices* etc.
$igital 'pplian#e $i&ision
Air conitioners*
refrigerators*
microwave ovens*
ishwashers*
vacuum cleaners*
compressors for air conitioners?refrigerators* etc.
(ele#omm"ni#ations % )andset $i&ision ,
T2# switch)oars*
14
STARE# switch)oars*
"ptical switch)oars*
(ntelligent )uiling systems*
System integration*
Satellite terminals*
$o)ile multimeia hansets*
($T>-... hansets* etc.
Some Fa9t0 about &4 Ele9troni90
0y eveloping the nationDs first raio in 1:<:* &' Electronics create the
)eginning of 8oreaDs electronics inustry. "ver the past four ecaes*
&' Electronics has mae constant efforts to maintain high levels of
innovation an research an evelopment* ma!ing the company a
successful glo)al electronics manufacturer. Currently the company is
comprise of 2igital Appliance* 2igital 2isplay B $eia* an
Telecommunications B 3anset 2ivisions. (t also operates 94 overseas
su)siiaries in prouction an sales* an has a glo)al mar!eting team.
1;
1<
1C
(he LG *ay (he LG *ay
The &' @ay represents &'Ds coreK )eliefs* values B aspirations.
(t illustrates a vision structure that guies the thoughts an actions of &'
people in attaining the ultimate goal of )ecoming a 1o. 1 &'. (t
stipulates the way in which this goal is reache through the practice of
J5eong>2oJ $anagement* an the reali%ation of &'Ds management
principles* JCreating Aalue for customersJ an JRespecting human
ignity.J
5eong>2oJ $anagement is &'+s uni/ue coe of conuct that governs the
company+s management activities. English translation of J5eong>2oJ is
JRight @ay.J J5eong>2oJ $anagement is the way the company isplays
their uncompromising integrity in pursuing &'Ds management principles.
&' reali%es its management principles through the practice of J5eong>2oJ
$anagement. J5eong>2oJ $anagement is a coe of conuct that is
inigenous to &' an governs every aspect of &'Ds management
activities. This coe is foune on the principles of ethics* )ut goes
)eyon ethical management an re/uires a continuous )uil>up of
competence. The practice of J5eong>2oJ $anagement not only inclues
open an fair competition )ut also highlights )uiling the competence
necessary for &' people to create su)stantial value for customers* an to
earn their confience.
As a response to the rapily changing igital era* &' Electronics is
aggressively pursuing glo)al partnership in selecte )usiness an
technology areas )y esta)lishing wie ranging strategic alliances with
worl leaing companies.
(n particular* with focus of igital management moving turning towar
)ecoming first mover in the mar!et an leaing the inustry stanar*
&' Electronics is concentrating on strengthening strategic alliances in
the igital TA inustry.
&' Electronics has a)le to enhance not only the status of the company
itself* )ut also that of the 8orean electronics inustry in general through
the strategic alliances an colla)oration efforts with the worlly
19
renowne electronics companies.
Than!s to the alliances an colla)oration couple with worl class
technologies* &' Electronics now has a soli )asis for growing into a
front runner of the multimeia inustry.
J5eong>2oJ $anagement is a manifestation of the uncompromising integrity
that &' exercises to fulfill their funamental )eliefs of creating value for
customers through management* )ase on respect for human ignity.
Core Capabilities
Prod"#t Leadership
Refers to the a)ility to evelop creative* premium proucts through
speciali%e new technologies.
ar+et Leadership
Refers to the ability to achieve the "LG bran is No. !"
"oal bac#e by its for$iable $ar#et %resence &orl&ie.
People Leadership
Refers to talente people who perform excellently )y internali%ing an
practicing innovations.
1=
An introdu9tion to forei<n e;9han<e-
we !now that Mforeign exchangeN exists* an we have an in!ling of what the
newspapers are tal!ing a)out when they mention it* )ut we really on+t
unerstan the )asics of what foreign exchange is an how it wor!s. 3ere*
therefore* is a short MprimerN on the )asics of foreign exchange.
The term Mforeign exchangeN )asically refers to )uying the currency of one
country while selling the currency of another country. All nations have their
own an ifferent !ins of money 6currency7. This has existe throughout
the ages* pro)a)ly since the time of the 0a)ylonians. As traing evelope
)etween nations* they nee to convert one !in of money to another. This is
how* a formal system of foreign exchange arose. As trae )etween nations
evelope* 0ritain* as the nation with the largest an strongest navy* coul
sprea its commercial interests far an wie. (t is* therefore* )ecame the
most active traing nation* with a vast empire of colonies. As a result*
0ritain+s currency* the poun sterling* )ecame a )enchmar! to which other
currencies were compare 6an exchange7 for most of the seventeenth*
eighteenth an nineteenth centuries. Toay* most currencies are compare to
the E.S. 2ollar* currently the most active an commercially strong traing
nationL many currencies are still MpeggeN to the E.S. 2ollar for their
exchange rate.
3ow exactly are currencies traeO
A company that wants to import goos into the Enite States has to )uy the
foreign currency of the country the goos are coming from* in orer to pay
for them. The following is an exampleK an American shoe store may sell a
lot of 0ra%ilian shoes* since 0ra%il is a large exporter of leather goos 6a)out
F1.: 0illion per year7. The owner of this store woul have to )uy 0ra%ilian
Reals 6the currency of 0ra%il7 to pay for a shipment of shoes. 3e has a
num)er of choices. First* he coul )uy the Reals through his )an! or a
foreign exchange )ro!er at fixe rate of exchange* an then orer the shoes.
Since he !nows the exchange rate* he !nows how much the shoes are worth
in ollars* an how much his )ill 6in ollars7 will )e when he has to pay for
the shipment of shoes. @hen he Mta!es eliveryN of the Reals 6that is* he
tells his )an! to pay the 0ra%ilian exporter7* his )an! will e)it him the E.S.
2ollar e/uivalent at the rate agree upon when he purchase the Reals.s
1:
This importer has the secon option of waiting until the shoes arrive in the
Enite States* an then )uy the Reals to pay for them. 3e will not !now how
much he has to pay for this shipment of shoes until he pays for the Reals*
rather when he entere into the contract to purchase the shoes. (f the Real
got stronger* in other wors* )ecame more expensive compare to the ollar*
he woul pay more for them in ollars than on the ay of his contract. 3e
coul also pay less if the Real )ecame wea!er. 0ut most )usinessmen want
to protect themselves an the price of their proucts against higher costs an
)e a)le to manage their )ugets.
8nowing the exchange rate of the real when he processe his orer with the
0ra%ilian exporter woul allow him inclue that rate into his selling costs. (f
he ris!s that the rate will come own 6)y not )uying Reals ahea of time7*
an it goes up instea* he may en up with a loss in the price of his shoes.
$ost )usinessmen woul rather leave this !in of MspeculatingN to foreign
exchange traersP
Foreign Exchange Proucts an Services
Spot Contracts
Forwar Contracts
@inow Forwar Contracts
(nternational Chec! Clearing
Foreign 2raft (ssuance
(nternational @ire Transfers
Currency 1otes
Foreign Exchange 0enefits
0uy an sell goos in terms familiar to your customers an suppliers.
$anage your companyDs financial statements.
Protect profit margins from currency fluctuations.
(ncrease sales.
$aintain your glo)al competitive position.
FE$A > F"RE('1 E#C3A1'E $A1A'E$E1T ACT
-.
This Act was introuce in 1:::
To facilitate external trae B payments* for promoting the orerly
evelopment an maintenance of foreign exchange mar!et in (nia*
this Act was introuce. (t was put forth * to enact a law to
consoliate an amen the existing law relating to the foreign
exchange. This Act is also meant for managing the foreign exchange
as against restricting the ealings in foreign exchange an for the
smooth flow of foreign trae.
The management of Foreign trae an investment will )e one )y the
R0( an the 'overnment.
T" @3"$ (S T3E ACT APP&(CA0&E
The FE$A* is applica)le>
To the whole of (nia.
Any 0ranch* office an agency* which is situate outsie (nia* )ut is
owne or controlle )y a person resient in (nia.
Any contravention of provisions of FE$A* )y all those* who are
covere uner a)ove two aspects committe outsie (nia.
$A(1 FEATERES "F T3E ACT
1. The most important feature of the Act is that the efinition of a
resient an non>resient are almost in line with income tax &aw.
Therefore there is uniformity in efining the resiential status of
persons who are lia)le for income tax an who are entitle for foreign
exchange relate exemptions* relaxations an amenities.
-. The next feature that a JPersonJ efine inclues even artificial
persons li!e Firm* Company* etc.* which are again coherent with
income tax laws. Previously the R0( ha powers to etermine the
resiential status of artificial Persons an now the Act has )een
amene
4. The Applica)ility of FE$A is more or less same as FERA.
;. The Act empowers R0( to authori%e any person to eal in Foreign
exchange or in foreign securities. The R0( may specify the conitions
-1
in the authori%ation an may also revo!e the same in pu)lic interest in
the cases ofK
a. Contravention of provisions of the Act
). Failure to comply with the conitions in the authori%ation.
Except the JCurrent AccountJ transactions* other foreign exchange ealings
an payments are still to some extent controlle. All JCapital AccountJ
relate transactions are not freely permitte unless specifically allowe
uner the &aw. The restrictions as applica)le for JCapital AccountJ
transactions uner FERA continue in FE$A also
<. FE$A has )rought in export of services also uner regulation along
the line of goos.
C. FE$A has permitte all current Account transactions unless otherwise
specifically prohi)ite )y the R0(. The following are some of the
Current Account transactions.
Any payment in connection with foreign trae* other current )usiness*
services an short term 0an!ing an creit facilities in the orinary
course of )usiness.
Any payment ue as interest on loans an as net income from
investments.
Any remittances for living expenses of parents* spouse an chilren
resiing a)roa.
Any expeniture incurre in connection with foreign travel* eucation
an meical care of parents* spouse an chilren.
1. FE$A has not permitte Capital Account transactions unless
otherwise provie )y &aw or unless specific permission is o)taine
from the R0(. Capital Account transactions are those which have the
effect of altering the assets an lia)ilities. This inclues contingent
lia)ilities of a person resient in (nia* or the assets an lia)ilities of a
person resient outsie (nia.
The R0( has prohi)ite* restricte an regulate the following Capital
Account transactions.
Transfer or (ssue of any foreign Security )y a person resient in (nia.
--
Transfer or (ssue of any security )y a person resient outsie (nia.
Transfer or (ssue of any security or foreign security )y any )ranch
office or agency in (nia* of a person resient outsie (nia.
Any )orrowing or lening in Foreign Exchange in whatever form or
)y whatever name.
Any 0orrowing or &ening in rupees* in whatever form or )y
whatever name )etween a person resient in (nia an a person
resient outsie (nia.
2eposits )etween persons resient in (nia an persons resient
outsie (nia.
Export* (mport or holing of currency notes.
Transfer of immova)le property outsie (nia* other than a lease not
exceeing five years* )y a person resient in (nia.
Ac/uisition or transfer of immova)le property in (nia* other than a
lease not exceeing five years* )y a person resient outsie (nia.
'iving of a guarantee or security in respect of any e)t* o)ligation or
other lia)ility incurreK
)y a person resient in (nia an is owne )y a person resient
outsie (nia or
)y a person resient outsie (nia.
$EA1S "F PAI$E1T
The chief means of payment in foreign trae areK
17 mail or telegraphic transfer of the stipulate amount of money
-7 che/ues
47 )ills of exchange
Che/ues
-4
A che/ue is a written orer given )y the customer to his )an! to pay a
certain sum of money of his current account to the payee name in the
che/ue.
The parties to a che/ue areK
17 the rawer who raws the che/ue* who orers his )an! to )e pai
-7 the payee to whom the che/ue is to )e pai
47 the rawee Q it is the )an! which pays it
There are two !ins of che/uesK
a7 a che/ue to )earer which may )e pai )y a )an! to anyone who
presents it
)7 a che/ue to orer must )e enorse )y the payee* it means that the
payee must write his name on the )ac! of the che/ue )efore it is
pai to him
Standard Form0 of Do9umentation K
@hen ma!ing payment for prouct which are importe from out sie the
country these are the importe ocuments which are neee.
%ommer9ial In/oi9e-
The )illing for the goos an services. (t inclues a escription of
merchanise* price* F"0 origin* an name an aress of )uyer an seller.
The )uyer an seller information must correspon exactly to the escription
in the letter of creit. Enless the letter of creit specifically states otherwise*
a generic escription of the merchanise is usually accepta)le in the other
accompanying ocuments.
Bill of &adin<K
A ocument eviencing the receipt of goos for shipment an issue )y a
freight carrier engage in the )usiness of forwaring or transporting goos.
The ocuments evience control of goos. They also serve as a receipt for
the merchanise shippe an as evience of the carrierDs o)ligation to
transport the goos to their proper estination.
+arrant. of Title-
A warranty given )y a seller to a )uyer of goos that states that the title
)eing conveye is goo an that the transfer is rightful. This is a metho of
certifying clear title to prouct transfer. (t is generally issue to the purchaser
-;
an issuing )an! expressing an agreement to inemnify an hol )oth
parties harmless.
&etter of Indemnit.K
Specifically inemnifies the purchaser against a certain state circumstance.
(nemnification is generally use to guaranty that shipping ocuments will
)e provie in goo orer when availa)le.
#ur9ha0e order 7#O8-
A purchase orer 6P"7 is a commercial ocument issue )y a )uyer to a
seller* inicating the type* /uantities an agree prices for proucts or
services the seller will provie to the )uyer. Sening a P" to a supplier
constitutes a legal offer to )uy proucts or services. Acceptance of a P" )y a
seller usually forms a once>off contract )etween the )uyer an seller so no
contract exists until the P" is accepte.
R1S
P"s usually specify terms of
payment* incoterms for lia)ility an freight responsi)ility* an re/uire
elivery ate.
Structure of a purchase orer KA purchase orer usually containsK P"
num)er* shipping ate* )illing aress* shipping aress* terms of payment
6usually in the form of 1ET 4.* 1ET ;< an 1ET C. epening on
re/uirements set )y the seller7* an a list of services?proucts* often
incluing specifications an reference or part num)ers of the items to )e
purchase* with /uantities an prices. @hen accepte )y the seller* it forms
an agreement )etween )uyer an seller
ReasonsK There are several reasons why companies use P"s. They allow
)uyers to clearly communicate their intentions to sellers* an in the event a
)uyer refuses to pay for something which was sent* protects the seller. For
example* say Person A wor!s for Company A an orers some parts from
Person 0 at Company 0. There coul )e a pro)lem if Person A in+t
actually have authority to authori%e this orer Q may )e they thought they
ha the )ossDs permission )ut there was a miscommunication. So* the orer
gets returne an Company 0 loses money. 2epening on the situation*
Company 0 might only lose shipping an pac!ing costs* )ut they might lose
significant manufacturing la)or an materials costs an other expenses.
They might lose the prouct entirely 6for example* if it is perisha)le7.
(n orer to prevent such pro)lems* sellers often re/uest purchase orers from
)uyers. This ocument represents the )uyer+s intent to purchase specific
/uantities of prouct at specifie prices. (n the event of non>payment* the
-<
seller can use the P" as a legal ocument in a court of law to emonstrate
the )uyer+s intent an to facilitate collection efforts. Companies usually
re/uest P"s when oing )usiness with other companies for orers of
significant si%e* as the P" reuces the ris!s involve.
(n the course of the accounts paya)le process* purchase orers are matche
with invoices an pac!ing slips )efore the invoices are pai.
Bill0 of E;9han<e 7Draft08-
The )ill of exchange* commonly referre to as the raft or the )ill* is an
unconitional orer in writing* signe an aresse )y the rawer 6the
exporter usually7 to the rawee 6the confirming )an! or the issuing )an!
usually7* re/uiring the rawee to pay the rawer a certain sum of money at
sight or at a fixe or etermina)le future time.
MET$ODS OF #A(MENT-
@hen eciing which metho of payment to use* or com)ination of
methos* the seller must weigh the ris!s an costs involve. The )uyer
oesnDt want to tie up capital on prouct that it oesnDt yet possess* which
means that the seller can lose the sale if its competitors are willing to offer
more attractive terms. "n the other han* the seller nees assurances that the
)uyer wonDt efault on payment once it has receive the goos. Companies
nee to evelop an international creit policy that oes not impee sales* )ut
protects against loss.
"nce the seller has etermine the ris!s its company can affor to ta!e* itDs
time to evaluate the ris!s associate with the more common methos of
payment. Consulting with a /ualifie international )an!er at this time can
help the seller ma!e an informe selection. Ran!e in orer of ris! from the
sellerDs perspective* from the most secure to the least secure* the more
common methos of payment areK
Cash in avance
2ocumentary collection
"pen account
&etter of creit
0uyer+s line of creit
-C
%a0h in Ad/an9e
Cash in avance is typically consiere the safest metho of collecting
payment for the seller. Cash in avance can ta!e the form of a wire transfer
or payment )y chec!. An international wire transfer is the preferre metho*
)ecause it allows for /uic! receipt of goo funs. Sellers shoul provie
clear routing instructions to the )uyer when using an international wire
transfer incluing the name an aress of the receiving )an! an )ranch*
the )an!Ds S@(FT* Telex* an A0A num)ers* an the sellerDs name an
aress* )an! account title* an account num)er.
Collecting payment using an international chec! is a less attractive option
than wire transfer )ecause it can result in lengthy elays of final receipt of
goo funs. (f the foreign )uyer pays )y chec!* mae paya)le in E.S. ollars
an rawn on a E.S. )an!* the collection process is the same as any E.S.
chec!. (f* however* the chec! is in a foreign currency or rawn on a foreign
)an!* the collection process )ecomes more complicate an can elay the
availa)ility of funs. There is also a ris! that any chec! may )e returne ue
to insufficient funs in the )uyerDs account. This can result in a charge>)ac!
an possi)le overraft charges in the )uyerDs account.
STEP 0I STEP PR"CESSK
617 2eal is finali%e )etween exporter an importer.
6-7 Purchase orer is raise )y material epartment.
647 Payment is mae through wire transfer to exporter.
6;7 Then exporter ships the goos.
6<7 An finally* importer receives the goos.
O#EN A%%OUNT
An open account transaction means that the goos are shippe an elivere
)efore payment is ue* usually in 4. to :. ays. ")viously* this is the most
-9
avantageous option to the importer in cash flow an cost terms* )ut it is
conse/uently the highest ris! option for an exporter. 0ecause of the intense
competition for export mar!ets* foreign )uyers often press exporters foropen
account terms. (n aition* the extension of creit )y the seller to the )uyer
is more common a)roa. Therefore* exporters who are reluctant to exten
creit may face the possi)ility of the loss of the sale to their competitors.
8ey Points
T The goos* along with all the necessary ocuments* are shippe
irectly to the importer who agrees to pay the exporter+s invoice at a
future ate* usually in 4. to :. ays.
T Exporter shoul )e a)solutely confient that the importer will accept
shipment an pay at agree time an that the importing country is
commercially an politically secure.
T "pen account terms may help win customers in competitive mar!ets* if
use with one or more of the appropriate trae mar!eting techni/ues
that mitigate the ris! of nonpayment.
STEPS (1A"&AE2K>
617 &' an supplier finalise the eal a)out goos which are to )e
importe to &'.
6-7 Purchase orer is raise )y material epartment.
647 Shipment of goos is elievere at the port.
6;7 Supplier sens the original ocument 6invoice* )ill of laing* an
pac!aging list7 to &'.
6<7 &' sen this ocument at the port for clearence of goos.
6C7 &' sen payment re/uest letter 6inclue commercial invoice* letter*
air way )ill7 to lg )an! )efore payment ate.
697 &' )an! e)its the account an pays it to avisory )an! of supplier.

-=
DO%UMENTAR( %O&&E%TIONS-
There are )asically two types of metho. They are as followsK>
2?A Q 2ocuments against Acceptance K The )uyer receives the ocuments
after his accepting a 0ill of exchange rawn on him for the price* at a given
perio may )e 4.* C.* or even :. ays.
2?P Q ocuments against payment means 6cash against ocuments7 KThe
specifie ocuments with a copy of the invoice are hane over to the )uyer
on payment of the full price in cash.
(n &' E&ECTR"1(CS* 2ocument against acceptance is use.
DO%UMENT A4AINST A%%E#TAN%E-
STEPS (1A"&AE2K
17 1egotiation ta!es place )etween supplier an lg a)out price*
payment an eal is finalise.
-7 Supplier ships goos at it+s port an collects the ocument 6invoice*
pac!aging list* an )ill of laing7.
47 Supplier sens this ocument to its )an! 6avisory )an!7.
;7 Supplier )an! sens these ocuments to lg )an!.
<7 &g )an! sen )ill presentation memo 6for icici )an!7? ocument
arrival notice 6.a.n7 6for city )an!7 ocument against acceptance
along with )ill of exchange* invoice an ma!e the entry of receiving
ocument in chec! list.
C7 Chec! the invoice in system through open ap xl 6account paya)le.
97 (f invoice are in open ap* they are paya)le.
=7 Sen acceptance letter 6inclue )ill presentation memo* invoice7 to lg
)an! to e)it it+s account.
:7 0an! ma!es the payment on its ue ate an sens e)it avice to lg.
6then entry of voucher is mae in erp.7
1.7 &' )an! remits payment )y swift6society for worlwie inter)an!
financial telecommunications7 to supplier )an!.
-:
&ETTER OF %REDIT
A &etter of Creit 6&C7 is a ocument issue )y your )an! that essentially
acts as an irrevoca)le guarantee of payment to a )eneficiary. This means
that if you o not perform your o)ligations* your )an! pays. The letter of
creit can also )e the source of repayment of the transaction meaning that
the exporter will get pai with the reemption of the letter of creit.
&et ta@e an e;ample-
For simplicity sa!e lets imagine that your company imports raios from a
8orean manufacturer calle Seoul $anufacturing* which )an!s at First
Seoul 0an!. Iour company currently )an!s at First American 0an!
For the purpose of this example these will )e the roles that the parties will
play in the letter of creit transactionK
Iour company K applicant >importer
Seoul $anufacturing K )eneficiary >exporter
First American 0an! K (ssuing 0an! Q importer )an!
First Seoul 0an! K Avising 0an! Qexporter )an!
The exampleK Iou want to )uy F<.*... worth of raios from Seoul
$anufacturing* which agrees to sell the merchanise an gives you C. ays
to pay it with the conition that you provie them with a :. ays letter of
creit for the full amount. The steps to get the &C woul )e as followsK
17 Iou go to First American 0an! an re/uest a F<.*... letter of creit with
Seoul $anufacturing as a )eneficiary.
-7 The )an! goes through its unerwriting process. Although the )an! is not
avancing money* they are extening creit on your )ehalf an are ta!ing
on a contingent lia)ility. (f your company /ualifies from a creit stanpoint
the &C is issue.
47Even if your company oes not /ualify for creit* you can still get an &C
if you are willing to put cash collateral C2 secure letters of creit are very
common for small )usiness .
;7 The )an! sens a copy of the letter of creit to First Seoul 0an!* which
lets the venor* !nows an the merchanise is shippe.
Ta!e into consieration that the letter of creit itself might )e the source of
repayment of the transaction. (t coul )e that Seoul $anufacturing is
intereste in getting pai as soon as the merchanise is shippe. Therefore*
the letter of creit will inicate that payment shall )e mae as soon as Seoul
$anufacturing can present proof of shipping.
(f the letter of creit that your venor re/uires is not tie to a particular
transactions* )ut they are as!ing for a guarantee that ma!es sure that you
will not efault. They are pro)a)ly as!ing for a Stan>0y letter of creit or
a Revolving letter of creit. These types of &?Cs are usually for a longer
term. Esually a year an are the venor+s guarantee that they will get pai.
The example a)ove escri)es the simplest of letter of creit transactions.
Although there are other factors involve such as the role of corresponent
)an!s an confirmations* the thing that you shoul )e concerne as a
customer is expeiency an the fees involve* which can run anywhere
from 1.<U to =U of the value of the &C
TIPES "F &ETTERS "F CRE2(T
Re/o9able letter of 9redit
5ust li!e the name says the &C can )e revo!e )y the (ssuing 0an! without
the agreement of the )eneficiary.
Irre/o9able letter of 9redit
Can not )e cancelle or amene without all the parties agreement.
Standb. letter of 9redit
'uarantee of payment. (f the )eneficiary oes not get pai from its
customer it can then eman payment from the 0an! )y forwaring the
copy of the invoice that was not pai an supporting ocumentation.
Re/ol/in< letter of 9redit
(t is esta)lishe when there are regular shipments of the same commoity
)etween supplier an customer. Eliminates the nee to issue an &C for each
iniviual .
Element0 of a &etter of %redit-
A payment unerta!ing given )y a )an! 6issuing )an!7
"n )ehalf of a )uyer 6applicant7
To pay a seller 6)eneficiary7 for a given amount of money
"n presentation of specifie ocuments representing the supply of
goos
@ithin specifie time limits
2ocuments must conform to terms an conitions set out in the letter
of creit
41
2ocuments to )e presente at a specifie place
Benefi9iar.
The )eneficiary is entitle to payment as long as he can provie the
ocumentary evience re/uire )y the letter of creit. The letter of creit is a
istinct an separate transaction from the contract on which it is )ase. All
parties eal in ocuments an not in goos. The issuing )an! is not lia)le for
performance of the unerlying contract )etween the customer an
)eneficiary. The issuing )an!Ds o)ligation to the )uyer* is to examine all
ocuments to insure that they meet all the terms an conitions of the creit.
Epon re/uesting eman for payment the )eneficiary warrants that all
conitions of the agreement have )een complie with. (f the )eneficiary
6seller7 conforms to the letter of creit* the seller must )e pai )y the )an!.
I00uin< Ban@
The issuing )an!Ds lia)ility to pay an to )e reim)urse from its customer
)ecomes a)solute upon the completion of the terms an conitions of the
letter of creit. Ener the provisions of the Eniform Customs an Practice
for 2ocumentary Creits* the )an! is given a reasona)le amount of time
after receipt of the ocuments to honor the raft.
The issuing )an!sD role is to provie a guarantee to the seller that if
compliant ocuments are presente* the )an! will pay the seller the amount
ue an to examine the ocuments* an only pay if these ocuments comply
with the terms an conitions set out in the letter of creit.
Typically the ocuments re/ueste will inclue a commercial invoice* a
transport ocument such as a )ill of laing or airway )ill an an insurance
ocumentL )ut there are many others. &etters of creit eal in ocuments* not
goos.
Ad/i0in< Ban@
An avising )an!* usually a foreign corresponent )an! of the issuing )an!
will avise the )eneficiary. 'enerally* the )eneficiary woul want to use a
local )an! to insure that the letter of creit is vali. (n aition* the avising
)an! woul )e responsi)le for sening the ocuments to the issuing )an!.
The avising )an! has no other o)ligation uner the letter of creit. (f the
issuing )an! oes not pay the )eneficiary* the avising )an! is not o)ligate
to pay.
4-
%onfirmin< Ban@
The corresponent )an! may confirm the letter of creit for the )eneficiary.
At the re/uest of the issuing )an!* the corresponent o)ligates itself to
insure payment uner the letter of creit. The confirming )an! woul not
confirm the creit until it evaluate the country an )an! where the letter of
creit originates. The confirming )an! is usually the avising )an!.
&etter of %redit %hara9teri0ti90
Ne<otiabilit.
&etters of creit are usually negotia)le. The issuing )an! is o)ligate to pay
not only the )eneficiary* )ut also any )an! nominate )y the )eneficiary.
1egotia)le instruments are passe freely from one party to another almost in
the same way as money. To )e negotia)le* the letter of creit must inclue an
unconitional promise to pay* on eman or at a efinite time. The
nominate )an! )ecomes a holer in ue course. As a holer in ue course*
the holer ta!es the letter of creit for value* in goo faith* without notice of
any claims against it. A holer in ue course is treate favora)ly uner the
ECC.
The transaction is consiere a straight negotiation if the issuing )an!Ds
payment o)ligation extens only to the )eneficiary of the creit. (f a letter of
creit is a straight negotiation it is reference on its face )y Jwe engage with
youJ or Javaila)le with ourselvesJ. Ener these conitions the promise oes
not pass to a purchaser of the raft as a holer in ue course.
Re/o9abilit.
&etters of creit may )e either revoca)le or irrevoca)le. A revoca)le letter of
creit may )e revo!e or moifie for any reason* at any time )y the issuing
)an! without notification. A revoca)le letter of creit cannot )e confirme.
(f a corresponent )an! is engage in a transaction that involves a revoca)le
letter of creit* it serves as the avising )an!.
"nce the ocuments have )een presente an meet the terms an conitions
in the letter of creit* an the raft is honore* the letter of creit cannot )e
revo!e. The revoca)le letter of creit is not a commonly use instrument. (t
is generally use to provie guielines for shipment. (f a letter of creit is
revoca)le it woul )e reference on its face.
44
The irrevoca)le letter of creit may not )e revo!e or amene without the
agreement of the issuing )an!* the confirming )an!* an the )eneficiary. An
irrevoca)le letter of creit from the issuing )an! insures the )eneficiary that
if the re/uire ocuments are presente an the terms an conitions are
complie with* payment will )e mae. (f a letter of creit is irrevoca)le it is
reference on its face.
Tran0fer and A00i<nment
The )eneficiary has the right to transfer or assign the right to raw* uner a
creit only when the creit states that it is transfera)le or assigna)le. Creits
governe )y the Eniform Commercial Coe 62omestic7 may)e transferre
an unlimite num)er of times. Ener the Eniform Customs Practice for
2ocumentary Creits 6(nternational7 the creit may )e transferre only once.
3owever* even if the creit specifies that it is nontransfera)le or
nonassigna)le* the )eneficiary may transfer their rights prior to performance
of conitions of the creit.
Si<ht and Time Draft0
All letters of creit re/uire the )eneficiary to present a raft an specifie
ocuments in orer to receive payment. A raft is a written orer )y which
the party creating it* orers another party to pay money to a thir party. A
raft is also calle a )ill of exchange.
There are two types of raftsK sight an time. A sight raft is paya)le as soon
as it is presente for payment. The )an! is allowe a reasona)le time to
review the ocuments )efore ma!ing payment.
A time raft is not paya)le until the lapse of a particular time perio state
on the raft. The )an! is re/uire to accept the raft as soon as the
ocuments comply with creit terms. The issuing )an! has a reasona)le time
to examine those ocuments. The issuing )an! is o)ligate to accept rafts
an pay them at maturity.
Standb. &etter of %redit
The stan)y letter of creit serves a ifferent function than the commercial
letter of creit. The commercial letter of creit is the primary payment
mechanism for a transaction. The stan)y letter of creit serves as a
seconary payment mechanism. A )an! will issue a stan)y letter of creit
on )ehalf of a customer to provie assurances of his a)ility to perform uner
4;
the terms of a contract )etween the )eneficiary. The parties involve with
the transaction o not expect that the letter of creit will ever )e rawn upon.
The stan)y letter of creit assures the )eneficiary of the performance of the
customerDs o)ligation. The )eneficiary is a)le to raw uner the creit )y
presenting a raft* copies of invoices* with evience that the customer has
not performe its o)ligation. The )an! is o)ligate to ma!e payment if the
ocuments presente comply with the terms of the letter of creit.
Stan)y letters of creit are issue )y )an!s to stan )ehin monetary
o)ligations* to insure the refun of avance payment* to support
performance an )i o)ligations* an to insure the completion of a sales
contract. The creit has an expiration ate.
The stan)y letter of creit is often use to guarantee performance or to
strengthen the creit worthiness of a customer. (n the a)ove example* the
letter of creit is issue )y the )an! an hel )y the supplier. The customer
is provie open account terms. (f payments are mae in accorance with
the suppliersD terms* the letter of creit woul not )e rawn on. The seller
pursues the customer for payment irectly. (f the customer is una)le to pay*
the seller presents a raft an copies of invoices to the )an! for payment.
The omestic stan)y letter of creit is governe )y the Eniform
Commercial Coe. Ener these provisions* the )an! is given until the close
of the thir )an!ing ay after receipt of the ocuments to honor the raft.
Proceures for Esing the Tool
The following proceures inclue a flow of events that follow the ecision
to use a Commercial &etter of Creit. Proceures re/uire to execute a
Stan)y &etter of Creit are less rigorous. The stan)y creit is a omestic
transaction. (t oes not re/uire a corresponent )an! 6avising or
confirming7. The ocumentation re/uirements are also less teious.
Step-b.-0tep pro9e00-
0uyer an seller agree to conuct )usiness. The seller wants a letter of
creit to guarantee payment.
0uyer applies to his )an! for a letter of creit in favor of the seller.
4<
0uyerDs )an! approves the creit ris! of the )uyer* issues an forwars
the creit to its corresponent )an! 6avising or confirming7. The
corresponent )an! is usually locate in the same geographical
location as the seller 6)eneficiary7.
Avising )an! will authenticate the creit an forwar the original
creit to the seller 6)eneficiary7.
Seller 6)eneficiary7 ships the goos* then verifies an evelops the
ocumentary re/uirements to support the letter of creit.
2ocumentary re/uirements may vary greatly epening on the
perceive ris! involve in ealing with a particular company.
Seller presents the re/uire ocuments to the avising or confirming
)an! to )e processe for payment.
Avising or confirming )an! examines the ocuments for compliance
with the terms an conitions of the letter of creit.
(f the ocuments are correct* the avising or confirming )an! will
claim the funs )yK
o 2e)iting the account of the issuing )an!.
o @aiting until the issuing )an! remits* after receiving the
ocuments.
o Reim)urse on another )an! as re/uire in the creit.
Avising or confirming )an! will forwar the ocuments to the
issuing )an!.
(ssuing )an! will examine the ocuments for compliance. (f they are
in orer* the issuing )an! will e)it the )uyerDs account.
(ssuing )an! then forwars the ocuments to the )uyer.
%ommon Defe9t0 in Do9umentation
A)out half of all rawings presente contain iscrepancies. A iscrepancy is
an irregularity in the ocuments that causes them to )e in non>compliance to
the letter of creit. Re/uirements set forth in the letter of creit cannot )e
waive or altere )y the issuing )an! without the express consent of the
customer. The )eneficiary shoul prepare an examine all ocuments
carefully )efore presentation to the paying )an! to avoi any elay in receipt
of payment. Commonly foun iscrepancies )etween the letter of creit an
supporting ocuments inclueK
&etter of Creit has expire prior to presentation of raft.
0ill of &aing eviences elivery prior to or after the ate range state
in the creit.
Stale ate ocuments.
4C
Changes inclue in the invoice not authori%e in the creit.
(nconsistent escription of goos.
(nsurance ocument errors.
(nvoice amount not e/ual to raft amount.
Ports of loaing an estination not as specifie in the creit.
2escription of merchanise is not as state in creit.
A ocument re/uire )y the creit is not presente.
2ocuments are inconsistent as to general information such as volume*
/uality* etc.
1ames of ocuments not exact as escri)e in the creit. 0eneficiary
information must )e exact.
(nvoice or statement is not signe as stipulate in the letter of creit.
@hen a iscrepancy is etecte )y the negotiating )an!* a correction to the
ocument may )e allowe if it can )e one /uic!ly while remaining in the
control of the )an!. (f time is not a factor* the exporter shoul re/uest that
the negotiating )an! return the ocuments for corrections.
(f there is not enough time to ma!e corrections* the exporter shoul re/uest
that the negotiating )an! sen the ocuments to the issuing )an! on an
approval )asis or notify the issuing )an! )y wire* outline the iscrepancies*
an re/uest authority to pay. Payment cannot )e mae until all parties have
agree to ,ointly waive the iscrepancy.
Tip0 for E;porter0
Communicate with your customers in etail )efore they apply for
letters of creit.
Consier whether a confirme letter of creit is neee.
As! for a copy of the application to )e fax to you* so you can chec!
for terms or conitions that may cause you pro)lems in compliance.
Epon first avice of the letter of creit* chec! that all its terms an
conitions can )e complie with within the prescri)e time limits.
$any presentations of ocuments run into pro)lems with time>limits.
Iou must )e aware of at least three time constraints > the expiration
ate of the creit* the latest shipping ate an the maximum time
allowe )etween ispatch an presentation.
(f the letter of creit calls for ocuments supplie )y thir parties*
ma!e reasona)le allowance for the time this may ta!e to complete.
49
After ispatch of the goos* chec! all the ocuments )oth against the
terms of the creit an against each other for internal consistency.
1oteK
1.
The use of the letters of creit as a tool to reuce ris! has grown
su)stantially over the past ecae. &etters of creit accomplish their
purpose )y su)stituting the creit of the )an! for that of the customer*
for the purpose of facilitating trae.
-. The creit professional shoul )e familiar with two types of letters of
creitK commercial an stan)y. Commercial letters of creit are use
primarily to facilitate foreign trae. The commercial letter of creit is
the primary payment mechanism for a transaction.
4. The stan)y letter of creit serves a ifferent function. The stan)y
letter of creit serves as a seconary payment mechanism. The )an!
will issue the creit on )ehalf of a customer to provie assurances of
his a)ility to perform uner the terms of a contract.
;. Epon receipt of the letter of creit* the creit professional shoul
review all items carefully to insure that what is expecte of the seller
is fully unerstoo an that he can comply with all the terms an
conitions. @hen compliance is in /uestion* the )uyer shoul )e
re/ueste to amen the creit.
0asic Proceures for Esta)lishing a &etter of Creit
The letter of creit process has )een stanari%e )y a set of rules pu)lishe
)y the (nternational Cham)er of Commerce 6(CC7. These rules are calle the
Eniform Customs an Practice for 2ocumentary Creits 6ECP7 an are
containe in (CC Pu)lication 1o. <... The following is the )asic set of steps
use in a letter of creit transaction. Specific letter of creit transactions
follow somewhat ifferent proceures.
1. After the )uyer an seller agree on the terms of a sale* the )uyer arranges
for his )an! to open a letter of creit in favor of the seller. 1oteK The )uyer
will nee to have a line of creit esta)lishe at the )an! or provie cash
collateral for the amount of the letter of creit.
-. The )uyerDs issuing )an! prepares the letter of creit* incluing all of the
)uyerDs instructions to the seller concerning shipment an re/uire
ocumentation.
4=
4. The )uyerDs )an! sens the letter of creit to the sellerDs avising )an!.
;. The sellerDs avising )an! forwars the letter of creit to the seller.
<. The seller carefully reviews all conitions stipulate in the letter of creit.
(f the seller cannot comply with any of the provisions* it will as! the )uyer
to amen the letter of creit.
C. After final terms are agree upon* the seller ships the goos to the
appropriate port or location.
9. After shipping the goos* the seller o)tains the re/uire ocuments. Please
note that the seller may have to o)tain some ocuments prior to shipment.
=. The seller presents the ocuments to its avising )an! along with a raft
for payment.
:. The sellerDs avising )an! reviews the ocuments. (f they are in orer* it
will forwar them to the )uyerDs issuing )an!. (f a confirme letter of creit*
the avising )an! will pay the seller 6cash or a )an!ersD acceptance7.
1.. "nce the )uyerDs issuing )an! receives an reviews the ocuments* it
either 617 pays if there are no iscrepanciesL or 6-7 forwars the ocuments
to the )uyer if there are iscrepancies for its review an approval.
Amenment of a &etter of Creit
For the seller to change the terms note on an irrevoca)le letter of creit* it
must re/uest an amenment from the )uyer. The amenment process is as
followsK
1. The seller re/uests a moification or amenment of /uestiona)le
terms in the letter of creitL
-. (f the )uyer an issuing )an! agree to the changes* the issuing )an!
will change the letter of creitL
4. The )uyerDs issuing )an! notifies the sellerDs avising )an! of the
amenmentL an
;. The sellerDs avising )an! notifies the seller of the amenment. Tips
for 0uyers an Sellers
4:
BU(ER=S &INE OF %REDIT
0uyer+s creit is an agreement that arises )etween the importer+s )an! an
the importer. (t is a form of loan esigne to mar!eting a specific transaction
involving import of goos an services. Ener this the lening )an! pays the
exporter on presentation of the original ocuments an shipping etails 6li!e
)ill of laing or airway )ill an )ill of exchange7. The importer an the
lening )an! wor!s out the eferre payment agreement* which the )an!
treats as a loan. This is treate as any other loan an the )an! charges
interest from the importer as per the going rates. A num)er of formalities
have to )e complete )efore the exporter can raw the funs.

FolloDin< are the 0tep0 for B&%-
617 The )uyer arranges to o)tain allocation of funs uner the creit line
from the )orrower.
6-7 The elivery perio stipulate in the contracts shoul )e such that creit
can )e rawn from )an! within the terminal is)ursement ate stipulate
uner the respective line of creit agreements. Also all contracts shoul
provie for pre>shipment inspection )y the )uyer or agent nominate )y the
)uyer.
647K The )uyer arranges to comply with proceural formalities as applica)le
in his country an then su)mits the contract to the )orrower for approval.
The )orrower in turn forwars copies of the contract to )an! for approval.
6;7 0an! avices of the contract to the )orrower* with copy to exporter*
inicating approval num)er* eligi)le contract value* last ate for
is)ursement* an other conitions su),ect to which approval is grante.
6<7K After all the proceure the payment is one on ue ate.
;.
OBEE%TI'E OF T$E STUD(
(n this pro,ect report of mine ( woul )e focusing my attention on some of the important
o),ective that woul also )e the part of my stuy. The following are the o),ectivesK
To stuy inventory Turnover RatioL
To stuy channel of istri)ution of &' ElectronicsL
To stuy application of (nformation Technology in @or!ing capital analysisL
To fin out satisfaction level of @or!ing capital analysis planningL
To fin out the coorination among ifferent epartments through @or!ing
capital analysisL
To !now the factors effecting the ecision regaring @or!ing capital analysis.
;1
DATA ANA&(SIS AND DI%USSION
An O/er/ieD
This chapter focus its attention on the ata analysis of the responses receive as a part of
the /uestionnaire that was )een fille )y them. The graphical representation woul also
help me in proving my hypothesis which ( have set in my stuy. Along with that ( woul
)e focusing my attention on some others aspect )ut they will )e correlate to supply
chain in some form or the other.
;-
The graphical representation woul )e self explanatoryL )esie this some ata in form of
theory woul also )e written to help the reaer or the evaluator to unerstan it
completely.
5,! U0e of information te9hnolo<. Dhile implementin< +or@in< 9apital
anal.0i0
;4
(nformation technology has always playe an important role in the iversifie fiel.
@hen we specifically tal! in terms of supply chain of &' we foun that employees are
willing to accept it* as respone )y them in the /uestionnaire since it inirectly )enefit
them. The following iagram 1 represents the same
1ote 1 represents sample si%e
5,2 Re0ult0 deli/ered b. 0uppl. 9hain

;;
This iagram - inclues the response of )asically of the mile management who are in a
)etter position to say a)out the whether supply chain has elivere results to &'
Electronics or not. The involvement of lower level in answering this /uestion was not
very satisfactory )ecause of which the percentage of H1"+ is also high to some extent
1ote 1 V Sample si%e
;<
5,2 #ur9ha0in< of additional 0oftDare for 0uppl. 9hain
1oteK 1 V sample si%e
5," Appli9ation of Information Te9hnolo<. in 0uppl. 9hain
3ere the main reason for as!ing such a /uestion is to !now the application of (T with
special reference to satisfaction level. This woul help in giving an insight a)out the
performance level.
;C
1ote 1 V sample si%e
5,? Rea0on for implementin< 0uppl. 9hain
@hen organi%ations introuce something new there is some purpose or logic )ehin it. (n
case of supply chain we have trie to figure out the context in which the concepts is
implemente an the area of its greats impact. The iagram < represents the logic or
purpose
;9
1ote 1V sample si%e
5,: Trainin< to emplo.ee0 about 0uppl. 9hain
(n this iagram C we our trying to figure out the complexity involve in supply chain
training or that it a simple way process. (n this /uestion ( got a mixe response from the
employees* )ecause a ifferent !in of training was provie to ifferent employees. As
such a stanar training is not given to all the employees.
;=
1ote 1 V sample si%e
5,1 #erforman9e re0pon0e of 0uppl. 9hain Dor@in<
;:
1ote 1 V sample si%e
5,5 #referen9e for the pro9urement of material
Supply chain of &' Electronics is epene on the procurement of material. Since the
material is re/uire on a continuous )asis the management of the company nees to
ientify the preference sources from where to procure material. 2iagram = represents the
source from where the material is ta!en along with percentage /uantity.
<.
1ote 1 V sample si%e
5,3 +or@in< 9apital anal.0i0 effe9t on de9i0ion ma@in<
&' Electronics as researche has trie to offset a negative impact of ecision on the flow
of supply chain. 2ue emphasis is )eing pai to see that there is no elaye action that
irectly or inirectly affect the supply chain. As a result when the /uestionnaire was )een
<1
fille )y most of them* they showe their ignorance to the fact where ecision has affect
the concept.
Through iagram : ( have trie to epict the same
1ote 1 V sample si%e
FINDIN4 OF T$E STUD(
@or!ing capital analysis is a relatively a new su),ect of stuy* therefore shoul )e
cautiously )e use in orer to )e effectiveL
The primary ata collecte reveale that employees show enthusiasm towars the
new concept introuceL
<-
The research reveals that supply chain is most effective in the procurement an
istri)ution of goosL
The future prospects of supply chain are challenging an competitiveL
The research reveals that the o),ective of supply chain is to achieve operational
excellenceL
Supply chain facilitate executives in formulating a comprehensive strategy an
control framewor!L
Supply chain is an effective tool for increasing profita)ility* mar!et share* an
responsivenessL
Supply chain can )e )est escri)e as Fan e;tended enterpri0e 9on9eptG* as it not
only eals in internal matter )ut focus its attention externally.
RE%OMMENDATION FOR FURT$ER STUD(
@or!ing capital analysis is an integrate ocument useful for unerstaning the most
essential )usiness process of an enterprise an useful in confronting emerging challenges
pose )y the external environment. (t lai emphasis on the achievement of operational
excellence throughout the enterprise )y minimi%ing expense an ma!ing use of all the
firm+s assets.
<4
(n my stuy of @or!ing capital analysis in &' Electronics* ( have trie to epict* supply
chain in the light of information technology. That is how information technology can )e a
useful tool in the implementation an successful operating of supply chain. 0ut the stuy
is not perfect an further wor! nees to )e one in orer to gain in epth insight of it. As
such following are the recommenation for further stuy in relation to the points that
nees to )e focuseK
<;
To stuy the )enefits of an integrate framewor! for a coorinate system
wor!ing an its effective use relating to supply chainL
To stuy the recent evelopments in the fiel of (nformation Technology an its
use in supply chainL
To unerstan the implication of various technologies on the supply chainL
To unerstan the significance of an environment frienly supply chainL
To unerstan the )asic trae off involve in the selection of supply chainL
To stuy the )enefits of )eing competitive through the elements of @or!ing
capital analysis strategy as use )y.
<<
(n the en it can only )e sai that @or!ing capital analysis is a upcoming su),ect of stuy
an its inclusion in the curriculum of master egree of )usiness aministration is in itself
a proof. So the important thing is that what ever further stuies that will )e one in the
future woul )e crucial for the enterprise since in epth )enefits an implication woul
)e !nown an can )e verifie.
<C
Introdu9tion of in0uran9e
A contract where)y* for a specifie consieration* one party unerta!es to
compensate the other for a loss relating to a particular su),ect as a result of
the occurrence of esignate ha%ars.
The normal activities of aily life carry the ris! of enormous financial loss.
$any persons are willing to pay a small amount for protection against
certain ris!s )ecause that protection provies valua)le peace of min. The
term insurance escri)es any measure ta!en for protection against ris!s.
@hen insurance ta!es the form of a contract in an insurance policy* it is
su),ect to re/uirements in statutes* aministrative agency regulations* an
court ecisions.
(n an insurance contract* one party* the insure* pays a specifie amount of
money* calle a premium* to another party* the insurer. The insurer in turn
agrees to compensate the insure for specific future losses. The losses
covere are liste in the contract* an the contract is calle a policy.
<9
@hen an insure suffers a loss or amage that is covere in the policy* the
insure can collect on the procees of the policy )y filing a claim* or re/uest
for coverage* with the insurance company. The company then ecies
whether to pay the claim. The recipient of any procees from the policy is
calle the )eneficiary. The )eneficiary can )e the insure person* or other
persons esignate )y the insure.
A contract is consiere to )e insurance if it istri)utes ris! among a large
num)er of persons through an enterprise engage primarily in the )usiness
of insurance. @arranties or service contracts for merchanise* for example*
o not constitute insurance. (nsurance companies o not issue warranties an
service contracts* an the ris! istri)ution in the transaction is inciental to
the purchase of the merchanise. @arranties an service contracts are thus
exempt from strict insurance laws an regulations.
The )usiness of insurance is sustaine )y a complex system of ris! analysis.
'enerally* this analysis involves anticipating the li!elihoo of a particular
loss an charging enough in premiums to guarantee that insure losses can
)e pai. (nsurance companies collect the premiums for a certain type of
insurance policy an use them to pay the few iniviuals who suffer losses
that are insure )y that type of policy.
Private corporations provie most insurance* )ut the government provies
some. For example* the Feeral 2eposit (nsurance Corporation was
esta)lishe )y Congress to insure )an! eposits. The feeral government
provies life insurance to military service personnel. Congress an the states
,ointly fun Medi9aid an Medi9are* which are health in0uran9e programs
for persons who are isa)le or elerly. $ost states offer health insurance to
/ualifie persons who are inigent.
'overnment>issue insurance is regulate li!e private insurance* )ut the two
are very ifferent. $ost recipients of government insurance o not have to
pay premiums* )ut they also o not receive the same level of coverage
availa)le uner private insurance policies. 'overnment>issue insurance is
grante )y the legislature* not )argaine for with a private insurance
company* an it can )e ta!en away )y an act of the legislature. 3owever* if a
legislature issues insurance* it cannot refuse it to a person who /ualifies for
it.
$i0tor.
<=
The first examples of insurance relate to marine activities. (n many ancient
societies* merchants an traers plege their ships or cargo as security for
loans. (n 0a)ylon creitors charge higher interest rates to merchants an
traers in exchange for a promise to forgive the loan if the ship was ro))e
)y pirates or was capture an hel for ransom.
(n post meieval Englan local groups of wor!ing people )ane together to
create Jfrienly societies*J forerunners of the moern insurance companies.
$em)ers of the frienly societies mae regular contri)utions to a common
fun* which was use to pay for losses suffere )y mem)ers. The
contri)utions were etermine without reference to a mem)erDs age* an
without precise ientification of what claims woul )e covere. @ithout a
system to anticipate ris!s an potential lia)ility* many of the first frienly
societies were una)le to pay claims* an many eventually is)ane.
(nsurance graually came to )e seen as a matter )est hanle )y a company
in the )usiness of proviing insurance.
(nsurance companies )egan to operate for profit in Englan in the
seventeenth century. They evise ta)les to mathematically preict losses
)ase on various ata* incluing the characteristics of the insure an the
pro)a)ility of loss relate to particular ris!s. These calculations mae it.
Private corporations provie most insurance* )ut the government provies
some. For example* the Feeral 2eposit (nsurance Corporation was
esta)lishe )y Congress to insure )an! eposits. The feeral government
provies life insurance to military service personnel. Congress an the states
,ointly fun Medi9aid an Medi9are* which are health in0uran9e programs
for persons who are isa)le or elerly. $ost states offer health insurance to
/ualifie persons who are inigent.
'overnment>issue insurance is regulate li!e private insurance* )ut the two
are very ifferent. $ost recipients of government insurance o not have to
pay premiums* )ut they also o not receive the same level of coverage
availa)le uner private insurance policies. 'overnment>issue insurance is
grante )y the legislature* not )argaine for with a private insurance
company* an it can )e ta!en away )y an act of the legislature. 3owever* if a
legislature issues insurance* it cannot refuse it to a person who /ualifies for
it.
%ontra9t and #oli9.
<:
An insurance contract cannot cover all conceiva)le ris!s. An insurance
contract that violates a statute is contrary to pu)lic policy* or plays a part in
some prohi)ite activity will )e hel unenforcea)le in court. A contract that
protects against the loss of )urglary tools* for example* is contrary to pu)lic
policy an unenforcea)le.
In0urable Intere0t
To /ualify for an insurance policy* the insure must have an insura)le
interest* meaning that the insure must erive some )enefit from the
continue preservation of the article insure* or stan to suffer some loss as
a result of that articleDs loss or estruction. &ife insurance re/uires some
familial an pecuniary relationship )etween the insure an the )eneficiary.
Property insurance re/uires that the insure must simply have a lawful
interest in the safety or preservation of the property.
#remium0
2ifferent types of policies re/uire ifferent premiums )ase on the egree of
ris! that the situation presents. For example* a policy insuring a homeowner
for all ris!s associate with a home value at F-..*... re/uires a higher
premium than one insuring a )oat value at F-.*.... Though lia)ility for
in,uries to others may )e similar uner )oth policies* the cost of replacing or
repairing the )oat woul )e less than the cost of repairing or replacing the
home* an this ifference is reflecte in the premium pai )y the insure.
Premium rates also epen on characteristics of the insure. For example* a
person with a poor riving recor generally has to pay more for auto
insurance than a person with a goo riving recor. Furthermore* insurers
are free to eny policies to persons who present an unaccepta)le ris!. For
example* most insurance companies o not offer life or health insurance to
persons who have )een iagnose with a terminal illness.
%laim0
The most common issue in insurance isputes is whether the insurer is
o)ligate to pay a claim. The etermination of the insurerDs o)ligation
epens on many factors* such as the circumstances surrouning the loss an
the precise coverage of the insurance policy. (f a ispute arises over the
language of the policy* the general rule is that a court shoul choose the
interpretation most favora)le to the insure. $any insurance contracts
contain an incontesta)ility clause to protect the insure. This clause provies
C.
that the insurer loses the right to contest the valiity of the contract after a
specifie perio of time.
An insurance company may eny or cancel coverage if the insure party
conceale or misrepresente a material fact in the policy application. (f an
applicant presents an unaccepta)ly high ris! of loss for an insurance
company* the company may eny the application or offer prohi)itively high
premiums. A company may cancel a policy if the insure fails to ma!e
payments. A company may refuse to pay a claim if the insure intentionally
cause the loss or amage. 3owever* if the insurer !nows it has the right to
rescin a policy or eny a claim* )ut conveys to the insure that it has
voluntarily surrenere such right* the insure may claim that the insurer
waive its right to contest a claim.
An insurer may have a uty to efen an insure in a lawsuit file against
the insure )y a thir party. This uty usually arises if the claims in the suit
against the insure fall within the coverage of a lia)ility policy.
(f a thir party cause a loss covere )y a policy* the insurance company
may have the right to sue the thir party in place of the insure. This right is
calle su)rogation* an it is esigne to ma!e the party that is responsi)le
for a loss )ear the )uren of the loss. (t also prevents an insure from
recovering twiceK once from the insurance company* an once from the
responsi)le party.
An insurance company can su)rogate claims only on certain types of
policies. Property an lia)ility insurance policies allow su)rogation )ecause
the )asis for the payment of claims is inemnification* or reim)ursement* of
the in sure for losses. Conversely* life insurance policies o not allow
su)rogation. &ife insurance oes not inemnify an insure for a loss that can
)e measure in ollars. Rather* it is a form of investment for the insure an
the insureDs )eneficiaries. A life insurance policy pays only a fixe sum of
money to the )eneficiary an oes not cover any lia)ility to a thir party.
Ener such a policy* the insure stans no chance of ou)le recovery* an
the insurance company has no nee to sue a thir party if it has to pay a
claim.
(nsurance or assurance* evice for inemnifying or guaranteeing an
iniviual against loss. Reim)ursement is mae from a fun to which many
iniviuals expose to the same ris! have contri)ute certain specifie
amounts* calle premiums. Payment for an iniviual loss* ivie among
many* oes not fall heavily upon the actual loser. The essence of the contract
C1
of insurance* calle a policy* is mutuality. The ma,or operations of an
insurance company are unerwriting* the etermination of which ris!s the
insurer can ta!e onL an rate ma!ing* the ecisions regaring necessary
prices for such ris!s. The unerwriter is responsi)le for guaring against
averse selection* wherein there is excessive coverage of high ris!
caniates in proportion to the coverage of low ris! caniates. (n
preventing averse selection* the unerwriter must consier physical*
psychological* an moral ha%ars in relation to applicants. Physical ha%ars
inclue those angers that surroun the iniviual or property* ,eopari%ing
the well )eing of the insure. The amount of the premium is etermine )y
the operation of the law of averages as calculate )y actuaries. 0y investing
premium payments in a wie range of revenue>proucing pro,ects* insurance
companies have )ecome ma,or suppliers of capital* an they ran! among the
nationDs largest institutional investors.
T.pe0 of In0uran9e
(nsurance companies create insurance policies )y grouping ris!s accoring
to their focus. This provies a measure of uniformity in the ris!s that are
covere )y a type of policy* which in turn allows insurers to anticipate their
potential losses an set premiums accoringly. The most common forms of
insurance policies inclue life* health* automo)ile* homeownersD an rentersD*
personal property* fire an casualty* marine* an inlan marine policies.
&ife insurance provies financial )enefits to a esignate person upon the
eath of the insure. $any ifferent forms of life insurance are issue. Some
provie for payment only upon the eath of the insureL others allow an
insure to collect procees )efore eath.
A person may purchase life insurance on her or his own life for the )enefit of
a thir person or persons. (niviuals may even purchase life insurance on
C-
the life of another person. For example* a wife may purchase life insurance
that will provie )enefits to her upon the eath of her hus)an. This !in of
policy is commonly o)taine )y spouses an )y parents insuring themselves
against the eath of a chil. 3owever* iniviuals may only purchase life
insurance on the life of another person an name themselves )eneficiary
when there are reasona)le grouns to )elieve that they can expect some
0enefit from the continue life of the insure. This means that some familial
or financial relationship must unite the )eneficiary an the insure. For
example* a person cannot purchase life insurance on the life of a stranger in
the hope that the stranger will suffer a fatal accient.
3ealth insurance policies cover only specifie ris!s. 'enerally* they pay for
the expenses incurre from )oily in,ury* isa)ility* sic!ness* an acciental
eath. 3ealth insurance can )e purchase for oneDs self* an for others.
All automo)ile insurance policies contain lia)ility insurance* which is
insurance against in,ury to another person or against amage to another
personDs vehicle cause )y the insureDs vehicle. Auto insurance may also
pay for the loss of* or amage to* the insureDs motor vehicle. $ost states
re/uire that all rivers carry* at a minimum* lia)ility insurance uner a no>
fault scheme. (n states recogni%ing no>fault insurance* amages resulting
from an accient are pai )y the insurers* an the rivers o not have to go
to court to settle the issue of amages. 2rivers in these states may )ring suit
over an accient only in cases of egregious conuct* or where meical or
repair costs excee an amount efine )y statute.
3omeownersD insurance protects homeowners from losses relate to their
welling* incluing amage to the wellingL personal lia)ility for in,ury to
visitorsL an loss of* or amage to* property in an aroun the welling.
RentersD insurance covers many of the same ris!s for persons who live in
rente wellings.
Personal property insurance protects against the loss of* or amage to*
certain items of personal property. (t is useful when the lia)ility limit on a
homeownerDs policy oes not cover the value of a particular item or items.
For example* the owner of an original painting )y Pa)lo Picasso may wish to
o)tain* in aition to a homeownerDs policy* a separate personal property
policy to insure against loss of* or amage to* the painting.
0usinesses can insure against amage an lia)ility to others with fire an
casualty insurance policies. Fire insurance policies cover amage cause )y
fire* explosion* earth/ua!e* lightning* water* win* rain* collision* an riot.
C4
Casualty insurance protects the insure against a variety of losses* incluing
those relate to legal lia)ility* burglary an theft* accient* property
2amage* in,ury to wor!ers* an insurance on creit extene to others.
Fielity an surety )ons are temporary* speciali%e forms of casualty
insurance. A fidelit. bond insures against losses relate to the ishonesty of
employees* an a surety )on provies protection to a )usiness if it fails to
fulfill its contractual o)ligations.
$arine insurance policies insure transporters an owners of cargo shippe
on an ocean* a sea* or a naviga)le waterway. $arine ris!s inclue amage to
cargo* amage to the vessel* an in,uries to passengers. (nlan marine
insurance is use for the transportation of goos on lan an on lanloc!e
la!es.
$any other types of insurance are also issue. 'roup health insurance plans
are usually offere )y employers to their employees. A person may purchase
aitional insurance to cover losses in excess of a state amount or in excess
of coverage provie )y a particular insurance policy. Air travel insurance
provies life insurance )enefits to a name )eneficiary if the insure ies as
a result of the specifie airplane flight. Floo insurance is not inclue in
most homeownersD policies* )ut it can )e purchase separately. Mort<a<e
insurance re/uires the insurer to ma!e mortgage payments when the insure
is una)le to o so )ecause of eath or isa)ility.
(n )rief we can write the type of insurance policies* which can )e ta!en )y
the companies6 &4EI& ha0 ta@en /ariou0 poli9ie07 to protect them from
ris! an uncertainty. These are as followingK
Fire insurance policy
0urglary insurance policy
Acciental policy
0usiness interruption policy
$arine insurance policy
(nlan marine insurance policy
Export marine insurance policy
(mport marine insurance policy
C;
Special contingency insurance policy
All ris! insurance policy
Cash policies
Cash in safe
Cash in transit
Fielity insurance policy
$achinery )rea!own policy
Corp>insurance 'uieline
Nature of poli9ie0- in0uran9e 9ompan.
Transit *$ulti transit policy
Fire policy
0urglary policy
Acciental policy
Cash policies %holamandalam
Feility policy
Special contingency policy
Electronic policy for ish antenna
Transit import policy
Custom uty policy United In0uran9e
Export policy
6Claim relate to a)ove policies shoul )e aresse to respective insurance
company self survey limit of Rs. -.*...?V is for $ulti transit policy only.7S
(n case of amage or accient inform shoul )e immeiately give to
insurance company 6through $ail or letter7.
Survey must )e conucte for all Short 2elivery? Theft* if amage amount
is more then -.*....
C<
0urglary policy* Transit policy* $ulti transit policy* Fire policy* Acciental
policy* Cash policies* Special contingency policy* Electronic policy for ish
antenna these policy are not covere theft )y our own employee
61oteK (n case location is not insure claim is not paya)le. Always confirm
from corporate insurance for insurance coverage.7
For an. 9laim the0e are the Do9ument Dhi9h are reHuired-
Claim form
Claim )ill
(ntimation letter to insurance company.
Claim loge on transport )y Reg. Post
&R copy in original
2amage certificate in original
(nvoice copy?stoc! transit note?purchase invoice
(nspection report issue )y the service along with B contract 1o.
Estimate of loss
Cost of supporting
Photographs6mini.4 for single item7
(f survey has mae with a)ove all it nee two more ocuments that are
Survey )ill
Survey report
1atures of amages are ; types that areK
1. Total loss
-. Short elivery
4. Theft
;. Partly amages
(n )ellow we are iscussing a)out what are the treatment of
amages* from where that are coming* after claim settlement what
transaction entries are one.
Treatment0- 0our9e0- after re9ei/e-
CC
1..U finishe goos &ogistic write of from inventory
repair customer service Cr. to customer service
C?S spare parts 0ranches Cr. to 0ranches
Aenor claims venors Cr. to venors A?C
Pune factory claims Pune factory Cr. to Pune factory A?C
Fire poli9.
Fire policy cover fixe assets an inventories against fire* floo* earth/ua!e*
terrorism an natural calamities an ris!. Fire insurance policy is suita)le for
the owner of property* one who hols property in trust or in commissionL
iniviual?financial institutions who have financial interest in the property.
All immova)le an mova)le property locate at a particular premises such
as )uilings* plants an machinery* furniture* fixtures* fittings an other
contents* stoc!s an stoc! in process along with goos hel in trust or in
commission incluing stoc!s at suppliers? customer+s premises* machinery
temporarily remove from the premises for repairs can )e insure.
2ifferent types of fire policies* which are ta!en )y &'(E& Company areK
Fire policy for stoc!
1oia factory fire policy
1oia mouls fire policy
Aenors+ inventory fire policy
@arehouse inventory fire policy
0ranches warehouse fire policy
0ranch assets fire policy
(BC 2iv. Fire policy
'enerally this policy covers the following type of amagesK
1. F(REK Excluing estruction or amage cause to the property insure )y
(t+s own fermentation* natural heating or spontaneous com)ustion.
0urning of property insure )y orer of any pu)lic authority.
-. &('3T1(1'
4. E#P&"S("1? ($P&"S("1K excluing loss* estruction of or amage
C9
To )oilers 6other than omestic )oilers7* economi%ers or other vessels*
machinery or apparatus 6in which steam is generate7 or their contents
resulting from their own explosion?implosion.
;. A(RCRAFT 2A$A'EK loss* estruction or amage cause )y aircraft*
other aerial or space evices an articles roppe is exclue from those*
which is cause )y pressure waves.
<. R"(T* STR(8E* $A&(C("ES A12 TERR"R(S$ 2A$A'EK loss of or
visi)le physical amage or estruction )y external violent means irectly
cause to the property insure )ut excluing those cause )y
Permanent or temporary ispossession resulting from confiscation*
commaneering* re/uisition or estruction )y orer of government or any
lawfully constitute authority.
Permanent or temporary ispossession of any )uiling or plant or unit or
machinery resulting from the unlawful occupation )y any person of such
)uiling or plat or unit or machinery or prevention of access to the same.
C. &oss* estruction or amage irectly cause )y storm* cyclone* typhoon*
tempest* hurricane* tornao* floo or inunation excluing those resulting
from earth/ua!e volcanic eruption or other convulsions of nature.
9. &oss* estruction or amage irectly cause )y su)sience of part of the
site on which the property stans or lan slie?roc! slie excluingK
=. The normal crac!ing* settlement or )eing own of new structures.
:. The settlement or movement of mae up groun.
1..Coastal or river erosion.
11. 2efective esign or wor!manship or use of efective materials.
1-.2emotion* construction* structural alterations or repair of any property or
grounwor!s or excavations.
14.$issile testing operations.
1;.0ursting an?or overflowing of water tan!s* apparatus an pipes.
1<.0ush fireK excluing loss* estruction or amage cause )y forest fire.
This policy also has aitional coverage of Terrorism an
earth/ua!e.
GENERAL EXCLUSIONS
This oes not cover the followingK
0rea!own of machinery* apparatus an other wor!ing e/uipments.
The first <U of each an every claim su),ect to minimum of Rs 1.*...?V
in respect of each an every loss arising out of MAct of 'o perils N such
C=
as lightning* STF(* su)sience* lanslie an roc!slie covere uner the
policy.
&oss* estruction or amage cause )y war* invasion* act of foreign
enemy hostilities or war li!e operations 6whether war )e eclare or not7*
civil war* mutiny* civil commotion assuming the proportions of or
amounting to a popular rising* military rising* re)ellion* revolution*
insurrection or military or usurpe power.
Expenses necessarily incurre on Architects* surveyors an consulting
engineer+s fees an e)ris removal )y the insure following a loss*
estruction or amage to the property insure )y an insure peril in
excess of 4U an 1U of the claim amount respectively.
&oss or amage )y spoilage resulting from the retaration or interruption
or cessation of any process or operation cause )y operation of any of the
perils covere.
Any loss or amage cause )y or through or in conse/uence irectly or
inirectly ue to earth/ua!e* volcanic eruption or other convulsions of
nature.
Bur<lar. Itheft poli9.
This policy covers all the fixe assets an inventories against )urglary an
theft ris!. (n other wor we can say that it covers all the loss of or amage to
contents or any part thereof whilst containe in the insure premises cause
)y actual or attempte )urglary* house>)rea!ing* theft* ro))ery an hol>up
ris!s 6as efine in the ictionary7 only uring the policy perio.
E;9lu0ion
&oss or amage cause )y or arising from epreciation* graual
eterioration* wear an tear* moth* vermin an milew.
&oss or amage occasion )y theft or ishonesty or any attempt for
theft committe )y or where such loss or amage has )een expeite
or in any way sustaine or )rought a)out )yK
Any of the insure+s family mem)ers
Any servant or traveler or messenger in the exclusive
employment of the insure.
Any customer or )ro!er or )ro!er+s customer.
C:
&oss or amage arising from etention* confiscation* nationali%ation*
re/uisition* occupation or willful estruction )y or uner the orer of
the 'overnment or any pu)lic or local authority.
Any conse/uential loss or amage incluing elay.
Spe9ial 9ondition0
Reinstatement of the Sum insureK immeiately upon the happening
of any loss or amage as escri)e in the policy* the total sum insure
an the sum insure upon the various items of property which have
)een lost or amage* shall )e reuce )y the amount of loss or
amage an such reuce sums insure shall )e the limit of the
company+s lia)ility in respect of any further loss or amage occurring
uring the current perio of insurance unless the company consents
upon payment of aitional premium to reinstate the full sum insure.
$aintenance of 0oo!s an 8eysK the insure shall !eep a aily recor
of the amount of cash containe in the safe or strong room an such
recor shall )e eposite in a secure place other than the safe or
Strong room an prouce as ocumentary evience in support of a
claim uner this policy. The !eys of the safe or strong room shall not
)e left on the premises out of )usiness hours unless the premises are
occupie )y the insure or any other authori%e employee of the
insure in which case the !eys shall )e eposite in a secure place not
in the vicinity of the safe or strong room.
Extension of this policy is one to covers the theft case also.
A99idental poli9.
This policy operates in the event of all external amages.
6Coverage W $aximum &ia)ility at one time 1.U of Sum
(nsure7
Premium charge for 1.U &ia)ility
E;9ludin< dama<e0 9au0ed b. or in 9on0eHuen9e of
9.
$echanical or electrical )rea! own or erangement of machinery or
e/uipment
The free%ing soliification
2amage ue to impact )y rail?roa
2amage resulting from over loa experiment
2amage resulting from wear B tear* rust* ue to atmospheric
conitions or such other causes.
Property insure in transit other than with premises specifie in the
scheule.
Plant machinery or e/uipment uring installation removal or reciting *
if irectly attri)uta)le to such operation.
Any other cause specifically exclue hereuner.
Bu0ine00 interruption of poli9.
This policy operates in the event of amage to the premises of an insure
ue to any peril insure uner the stanar Fire B special perils policy*
causing an interruption to the )usiness. (t ena)les the insure to recoverK
&oss of 'ross profit ue to reuction in the turnover.
(ncrease cost of wor!ing incurring in minimi%ing that loss of gross
profit.
That means the even if the )usiness is interrupte some fixe
cost are incurre which the )usiness cannot pay* will )e pai )y
insurance company.
%ONDITIONS
The insurance )y this policy shall cease ifK
The )usiness is woun up or )e carrie on )y a li/uiator or receiver
or permanently iscontinue.
"r
The insure+s interest ceases otherwise than )y eath
"r
91
Any alteration is mae either in the )usiness or in the premises or
property therein where)y the ris! of amage is increase* at any time
after the commencement of this insurance* unless its continuance is
amitte )y memoranum signe )y or on )ehalf of the company.
1otice shall )e given to the company of alteration in existing )loc!s*
aition of new )loc!s an? or premises an? or eletion of existing
)loc!s an ?or premises uring the currency of the policy to ena)le the
company to etermine whether the )asis rate of the policy unergoes a
change as a result of such inclusions?exclusions an to effect
necessary a,ustments in the premium uner this policy.
(n no case whatsoever shall the company )e lia)le in respect of any
claim uner this policy after the expiration ofK
"ne year from the en of the perio of inemnity or if later*
Three months from the ate on which payment shall have )een
mae or lia)ility amitte )y the company covering the amage
giving rise to the sai claim*
Enless the claim is the su),ect of pening action of Ar)itration.
This policy an the scheule annexe 6which form an integral part of
this policy7 shall )e rea together as one contract* an wors an
expressions to which specific meanings have )een attache in any part
of this policy or of the scheule shall )ear such specific meaning
wherever they may appear.
This insurance oes not cover any loss resulting from amages
occasione )y or through or in conse/uence* irectly or inirectly* of
any of the following occurrences* namelyK
@ar* invasion* act of foreign enemy* hostilities or warli!e
operations 6whether war )e eclare or not7* civil war.
$utiny* civil commotion assuming the proportion of or
amounting to a popular rising* insurrection* re)ellion*
revolution* military or usurpe power.
(n &'E(& perio of inemnity is C months.
Marine poli9.
$arine cargo insurance provies coverage for loss of or amage to goos in
transit )y moe li!e rail* roa* sea* air* post* an courier etc.* either inlan
9-
purchases?sales or glo)al imports?exports. $arine insurance cover can )e
provie for export an import shipments )y ocean>going vessels of all
types* coastal shipments )y steamers* sailing vessels* an mechani%e )oats*
shipments )y inlan vessels or country crafts an consignments )y rail* roa*
air or post etc.
This policy coverK
Fire* lightning* straning* grouning* sin!ing or capsi%ing of vessel or
craft* overturning or erailment of lan conveyance* collision or
contact of vessel* craft or conveyance with any external o),ect other
than water* ischarge of cargo at a port of istress* general average
sacrifice an ,ettisoning.
Earth/ua!e* volcanic eruption or lighting* washing over)oar* entry of
sea* la!e or river water into vessel* craft* hol* conveyance* container*
lift van or place of storage* in aition to the perils also in the a)ove
case.
All ris!* su),ect only to the specifie exclusions.

This policy oes not cover K
@illful misconuct.
"rinary lea!age* orinary loss in weight or volume or orinary wear
an tear.
(nherent vice or nature of the su),ect matter. 2elay howsoever cause
(nsolvency of financial efault of carrier.
(nae/uate pac!ing* war an !inre perils* stri!es* riots* loc!out*
civil commotion an terrorism 6war an SRCC uring ocean voyage
an SRCC?T for inlan transits may )e covere at extra premium
Features an )enefitsK
Cargo policies are freely assigna)le.
Existence of insura)le interest nees to )e esta)lishe only at the time
of loss.
$arine policies are agree value policies.
94
An element of profit can also )e inclue in the sum insure* which is
allowe )y the insurers.
$arine policies are transit?voyage policies an not limite to any
specific perio.
The interpretation an applica)ility of various statues* the legislation
in various countries* the port conitions* customs proceures an the
legal systems in various parts of the worl* govern the operation an
interpretation of a marine insurance policy.
Types of policiesK
Specific policy> a separate policy for each consignment transit.
"pen policy> this is intene to cover all inlan consignments for one
year.
"pen cover is meant for consignments in exports an imports.
Special storage ris!s policy is grante in con,unction with an open
policy* specific policy or open cover.
Annual policy is issue for 1-months* covers goos )elonging to the
insure* which are not uner contract of sale an which are in transit
)y rail?roa from specifie epots?processing units to other specifie
epots?processing units.
2uty insurance policy covers customs uty alone if so re/uire )y the
insure.
(ncrease value insurance policy covers increase value of the cargo if
the mar!et value of the goos at estination port on the ate of
laning is higher than the c.i.f. an uty value of the cargo.
Pac!age policy is also availa)le to cover transits an storage ris!s
inciental to transits for tea* coffee* caramom an ru))er.
'll ris+ poli#y
All ris! insurance policies is suita)le to cover loss of amage to ,ewellery
an valua)les such as camera* watches* fur* trin!ets* laptop* mo)ile phones*
etc.* against fire* riot?stri!e* )urglary* accient or any misfortune occurring
anywhere within the geographical limits specifie in the policy.
9;
Thi0 poli9. 9o/er-
All ris!s policy covers loss or amage to insure items against fire
an allie perils.
Acciental means or any misfortune.
0urglary of mova)le items irrespective of the place where the loss
occurre.
Thi0 poli9. doe0 not 9o/er-
&oss ue to wear an tear or epreciation.
2amage ue to month* vermin* insects* an milew.
2amage uring cleaning* yeing* restoring or repairing.
$echanical erangement or amage to watches an cloc!s )y over
wining.
@hile in transit )y a carrier uner contract of carriage.
@ar an nuclear perils
Terrorism
&oss of money* )ills of exchange* promissory notes* share certificates*
stamps an travel tic!ets or
Traveler+s che/ue.
&oss ue to theft )y pic!>poc!et or chain snatching.
Falling of a iamon stone from a ring.
(nsure item mislai uring travel.
Articles roppe on the way uring ,ourney an iscovere much
later.
0rea!age* crac!ing or scratching or croc!ery* glass* cameras*
)inoculars* lenses* sculptures* curios* pictures* musical instruments*
sports gear an similar articles of )rittle or fragile nature* unless
cause )y fire or accient to the means of conveyance.
Spe9ial 9ondition0
S(1'&E ART(C&E &($(TK unless specifically an separately state* the
company+s lia)ility in respect of each article or pairs of articles shall not
excee <U of the total sum insure uner this policy.
9<
ART(C&ES (1 PA(RS "R SETSK where any item insure hereuner
consists of articles in pair or set* the company+s lia)ility in respect thereof
shall not excee the value of any particular part or parts which may )e lost
or amage without reference to any special value which such article or
article may have as part of such pair or set not more than a proportionate part
of insure value of the pair or set.
1o one article or pair or article is eeme to )e more than 1.U of the sum
insure uner this section unless separately specifie an value state.
The insure ,ewellery shall )e perioically examine )y a competent
,ewellery an that the insure shall have all fastenings an settings of stones
attene to as avise )y the ,eweler.
Fidelit. poli9.
This policy is issue to employers to cover the infielity of employees
occupying positions of trust involving uties such as haning cash* stoc!>
!eeping etc.
This policy coverK
Financial loss sustaine as a result of infielity* which inclues frau*
ishonesty* forgery* em)e%%lement* larceny* misappropriation* efault or
frauulent conversion of money or stoc!s committe )y salarie employees
in the course of performance of uties specifie.
This policy oes not coverK
&oss iscovere C months after the eath* ismissal or retirement of
the employee or C months after the expiry of the policy whichever is
earlier.
$is>representation or mis>escription of any type.
Alteration in the conition of employment.
$ore than one claim per employee.
9C
MONE( #O&I%(
Cash* )an! an currency notes* che/ue* money orers* postal orers an
current postage stamps are exclue from the cover given )y a fire insurance
policy an a separate money policy is usually re/uire. This is written on an
MAll Ris!sN )asis to cover any acciental loss or amage )ut will exclue or
limit cover for employee ishonesty. Cover can exten to money in or out of
a safe on )usiness premises* in the home of any irector or employee* in a
safety eposit )ox* in transit to or from the )an! or in the hans of )ill
collectors. "ne particular area that nees to )e consiere is the efinition of
money. The term money here inclues cash* )an! notes* currency notes*
)an! rafts* che/ue 6whether open or crosse7 postal orers* money orers*
treasury notes* current postage an revenue stamps.
ExclusionK
This policy oes not cover the loss ue to these reasonsK
2ue to ro))ery* theft* frau* ishonesty or collusion )y any employee
or agent of the insure.
Arme guars arme with firearms guns shall accompany any
shipment or transfer of money when the amount involve is in excess
of the amount specifie in the policy scheule.
The insure shall ta!e all orinary an reasona)le precautions for the
safety of the money.
Cash )oxes or till rawers after )usiness hours to )e !ept with their
contents in a safe or strong room.
Safe or strong room !eys or uplicates thereof at all times )e !ept
away from the portion of the premises in which such safe or strong
room is situate an always out of sight of the pu)lic.
$a,or exclusions are shortage of money ue to error or omission* loss
of money entruste to any person other than the insure or an
authori%e employee of the insure* conse/uential loss* loss ue to
floo* cyclone an other convulsions of 1ature* loss ue to war an
warli!e operations.
99
Ban@ 4uarantee0-
A )an! guarantee is a written contract given )y a )an! on the )ehalf of a
customer. 0y issuing this guarantee* a )an! ta!es responsi)ility for payment
of a sum of money in case* if it is not pai )y the customer on whose )ehalf
the guarantee has )een issue. (n return* a )an! gets some commission for
issuing the guarantee.
Any one can apply for a )an! guarantee* if his or her company has
o)ligations towars a thir party for which funs nee to )e )loc!e in orer
to guarantee that his or her company fulfils its o)ligations 6for example
carrying out certain wor!s* payment of a e)t* etc.7.
(n case of any changes or cancellation uring the transaction process* a )an!
guarantee remains vali until the customer ully releases the )an! from its
lia)ility.
(n the situations* where a customer fails to pay the money* the )an! must pay
the amount within three wor!ing ays. This payment can also )e refuse )y
the )an!* if the claim is foun to )e unlawful.
Benefit0 of Ban@ 4uarantee0
For 'overnments
1. (ncreases the rate of private financing for !ey sectors such as
infrastructure.
-. Provies access to capital mar!ets as well as commercial )an!s.
4. Reuces cost of private financing to affora)le levels.
;. Facilitates privati%ations an pu)lic private partnerships.
<. Reuces government ris! exposure )y passing commercial ris! to the
private sector.
For Private Sector
1. Reuces ris! of private transactions in emerging countries.
-. $itigates ris!s that the private sector oes not control.
4. "pens new mar!ets.
;. (mproves pro,ect sustaina)ility.
9=
&e<al ReHuirement0
0an! guarantee is issue )y the authori%e ealers uner their o)ligate
authorities notifie vie FE$A =? -... t 4
r
$ay -.... "nly in case of
revocation of guarantee involving ES F <... or more nee to )e reporte to
Reserve 0an! of (nia 6R0(7.

T.pe0 of Ban@ 4uarantee0
1. 2irect or (nirect 0an! 'uaranteeK A )an! guarantee can )e either irect
or inirect.
2irect 0an! 'uarantee (t is issue )y the applicantDs )an! 6issuing )an!7
irectly to the guaranteeDs )eneficiary without concerning a corresponent
)an!. This type of guarantee is less expensive an is also su),ect to the law
of the country in which the guarantee is issue unless otherwise it is
mentione in the guarantee ocuments.
(nirect 0an! 'uarantee @ith an inirect guarantee* a secon )an! is
involve* which is )asically a representative of the issuing )an! in the
country to which )eneficiary )elongs. This involvement of a secon )an! is
one on the eman of the )eneficiary. This type of )an! guarantee is more
time consuming an expensive too.
-. Confirme 'uarantee
(t is cross )etween irect an inirect types of )an! guarantee. This type of
)an! guarantee is issue irectly )y a )an! after which it is sen to a foreign
)an! for confirmations. The foreign )an!s confirm the original ocuments
an there)y assume the responsi)ility.
4. Tener 0on
This is also calle )i )ons an is normally issue in support of a tener in
international trae. (t provies the )eneficiary with a financial remey* if the
applicant fails to fulfill any of the tener conitions.
;. Performance 0ons
This is one of the most common types of )an! guarantee which is use to
secure the completion of the contractual responsi)ilities of elivery of goos
an act as security of penalty payment )y the Supplier in case of nonelivery
9:
of goos.
<. Avance Payment 'uarantees
This moe of guarantee is use where the applicant calls for the provision of
a sum of money at an early stage of the contract an can recover the amount
pai in avance* or a part thereof* if the applicant fails to fulfill the
agreement.
C. Payment 'uarantees
This type of )an! guarantee is use to secure the responsi)ilities to pay
goos an services. (f the )eneficiary has fulfille his contractual o)ligations
after elivering the goos or services )ut the e)tor fails to ma!e the
payment* then after written eclaration the )eneficiary can easily o)tain his
money form the guaranteeing )an!.
9. &oan Repayment 'uarantees
This type of guarantee is given )y a )an! to the creitor to pay the amount
of loan )oy an interests in case of no fulfillment )y the )orrower.
=. 0?& &etter of (nemnity
This is also calle a letter of inemnity an is a type of guarantee from the
)an! ma!ing sure that any !in of loss of goos will not )e suffere )y the
carrier.
:. Rental 'uarantee
This type of )an! guarantee is given uner a rental contract. Rental
guarantee is either limite to rental payments only or inclues all payments
ue uner the rental contract incluing cost of repair on termination of the
rental contract.
1.. Creit Car 'uarantee
Creit car guarantee is issue )y the creit car companies to its customer
as a guarantee that the merchant will )e pai on transactions regarless of
whether the consumer pays their creit.
$oD to Appl. for Ban@ 4uarantee
Proceures for 0an! 'uarantees are very simple an are not governe )y
any particular legal regulations. 3owever* to o)taine the )an! guarantee
one nee to have a current account in the )an!. 'uarantees can )e issue )y
=.
a )an! through its authori%e ealers as per notifications mentione in the
FE$A =?-... ate 4r $ay -.... "nly in case of revocation of guarantee
involving ES F <...? or more to )e reporte to Reserve 0an! of (nia along
with the etails of the claim receive.
Ban@ 4uarantee0 /0, &etter0 of %redit
A )an! guarantee is fre/uently confuse with letter of creit 6&C7* which is
similar in many ways )ut not the same thing. The )asic ifference )etween
the two is that of the parties involve. (n a )an! guarantee* three parties are
involveL the )an!* the person to whom the guarantee is given an the
person on whose )ehalf the )an! is giving guarantee. (n case of a letter of
creit* there are normally four parties involveL issuing )an!* avising )an!*
the applicant 6importer7 an the )eneficiary 6exporter7.
Also* as a )an! guarantee only )ecomes active when the customer fails to
pay the necessary amount where as in case of letters of creit* the issuing
)an! oes not wait for the )uyer to efault* an for the seller to invo!e the
unerta!ing.
+hat i0 Dor@in< 9apitalJ
(n orinary parlance wor!ing capital is ta!en to )e the fun availa)le
for meeting the ay to ay re/uirements of an enterprise.A measure of )oth
=1
a companyDs efficiency an its short>term financial health. The wor!ing
capital is calculate asK


Positive wor!ing capital means that the company is a)le to pay off its short>
term lia)ilities. 1egative wor!ing capital means that a company currently is
una)le to meet its short>term lia)ilities with its current assets 6cash* accounts
receiva)le* inventory7.
(f a companyDs current assets o not excee its current
lia)ilities* then it may run into trou)le paying )ac! creitors in the short
term. The worst>case scenario is )an!ruptcy. A eclining wor!ing capital
ratio over a longer time perio coul also )e a re flag that warrants further
analysis. For example* it coul )e that the companyDs sales volumes are
ecreasing* an as a result* its accounts receiva)les num)er continues to get
smaller an smaller.
@or!ing capital also gives investors an iea of the companyDs
unerlying operational efficiency. $oney that is tie up in inventory or
money that customers still owe to the company cannot )e use to pay off
any of the companyDs o)ligations. So* if a company is not operating in the
most efficient manner 6slow collection7* it will show up as an increase in the
wor!ing capital. This can )e seen )y comparing the wor!ing capital from
one perio to anotherL slow collection may signal an unerlying pro)lem in
the companyDs operations.
(f a companyDs current assets o not excee its current lia)ilities* then it may
run into trou)le paying )ac! creitors in the short term. The worst>case
scenario is )an!ruptcy. A eclining wor!ing capital ratio over a longer time
perio coul also )e a re flag that warrants further analysis. For example* it
=-
coul )e that the companyDs sales volumes are ecreasing* an as a result* its
accounts receiva)les num)er continues to get smaller an smaller.
@or!ing capital measures how much in li/ui assets a company
has availa)le to )uil its )usiness. The num)er can )e positive or negative*
epening on how much e)t the company is carrying. (n general*
companies that have a lot of wor!ing capital will )e more successful since
they can expan an improve their operations. Companies with negative
wor!ing capital may lac! the funs necessary for growth. Also calle net
current assets or current capital.
Cash flows in a cycle into* aroun an out of a )usiness. (t is the
)usinessDs life )loo an every managerDs primary tas! is to help !eep it
flowing an to use the cash flow to generate profits. (f a )usiness is
operating profita)ly* then it shoul* in theory* generate cash surpluses. (f it
oesnDt generate surpluses* the )usiness will eventually run out of cash an
expire.
!,Importan9e of %a0h FloD -
@hen planning the short> or long>term funing re/uirements of a )usiness* it
is more important to forecast the li!ely cash re/uirements than to pro,ect
profita)ility etc. @hilst profit* the ifference )etween sales an costs within
a specifie perio* is a vital inicator of the performance of a )usiness* the
generation of a profit oes not necessarily guarantee its evelopment* or
even the survival. 0ear in min that more )usinesses fail for lac! of cash
flow than for want of profit.
2,%a0h FloD /0, #rofit
Sales an costs an* therefore* profits o not necessarily coincie with their
associate cash inflows an outflows. @hile* a sale may have )een secure
an goos elivere* the relate payment may )e eferre as a result of
giving creit to the customer. At the same time* payments must )e mae to
suppliers* staff etc.* cash must )e investe in re)uiling eplete stoc!s* new
e/uipment may have to )e purchase etc. The net result is that cash receipts
often lag cash payments an* whilst profits may )e reporte* the )usiness
may experience a short>term cash shortfall. For this reason it is essential to
forecast cash flows as well as pro,ect li!ely profits.
=4
The following simplifie example illustrates the timing ifferences )etween
profits an cash flowsK
(ncome StatementK $onth 1
Sales 6F...7 9<
Costs 6F...7 C<
Profit 6F...7 1.
Cash flows relating to $onth 1K $onth 1 $onth - $onth 4 Total
Receipts from sales 6F...7 -. 4< -. 9<
Payments to suppliers etc. 6F...7 ;. -. < C<
1et cash flow 6F...7 6-.7 1< 1< 1.
Cumulative net cash flow 6F...7 6-.7 6<7 1. 1.
This shows that the cash associate with the reporte profit for $onth 1 will
not fully materiali%e until $onth 4 an that a serious cash short> fall will )e
experience uring $onth 1 when receipts from sales will total only
F-.*... as compare with cash payments to suppliers of F;.*....
2, %al9ulatin< %a0h floD
1ormally* the main sources of cash inflows to a )usiness are receipts from
sales* increases in )an! loans* procees of share issues an asset isposals*
an other income such as interest earne. Cash outflows inclue payments to
suppliers an staff* capital an interest repayments for loans* iviens*
taxation an capital expeniture.
1et cash flow is the ifference )etween the inflows an outflows within a
given perio. A pro,ecte cumulative positive net cash flow over several
perios highlights the capacity of a )usiness to generate surplus cash an*
conversely* a cumulative negative cash flow inicates the amount of
aitional cash re/uire to sustain the )usiness.
Cash flow planning entails forecasting an ta)ulating all significant cash
inflows relating to sales* new loans* interest receive etc. an then analy%ing
=;
in etail the timing of expecte payments relating to suppliers* wages* other
expenses* capital expeniture* loan repayments* iviens* tax* interest
payments etc. The ifference )etween the cash in> an out>flows within a
given perio inicates the net cash flow. @hen this net cash flow is ae to
or su)tracte from opening )an! )alances* any li!ely short>term )an!
funing re/uirements can )e ascertaine.
@or!ing capital is efine as the ifference )etween current assets an
current lia)ilities. (t measures how many li/ui assets are availa)le for a
)usiness to use for growth opportunities. A lac! of wor!ing capital can really
hol a )usiness )ac! from reaching their full potential. There are many
ifferent ways to o)tain capital for your )usiness.
@or!ing capital is essential for any )usiness to succee. (t is )ecoming
increasingly important to have access to more wor!ing capital when you
nee it.There are two elements in the )usiness cycle that a)sor) cash >
(nventory 6stoc!s an wor!>in>progress7 an Receiva)les 6e)tors owing
you money7. The main sources of cash are Paya)les 6your creitors7 an
E/uity an &oans.
Each component of wor!ing capital 6namely inventory* receiva)les an
paya)les7 has two imensions ........T($E ......... an $"1EI. @hen it
comes to managing wor!ing capital > T($E (S $"1EI. (f you can get
money to move faster aroun the cycle 6e.g. collect monies ue from
e)tors more /uic!ly7 or reuce the amount of money tie up 6e.g. reuce
inventory levels relative to sales7* the )usiness will generate more cash or
it will nee to )orrow less money to fun wor!ing capital. As a
conse/uence* you coul reuce the cost of )an! interest or youDll have
aitional free money availa)le to support aitional sales growth or
investment. Similarly* if you can negotiate improve terms with suppliers
e.g. get longer creit or an increase creit limitL you effectively create
free mar!eting to help fun future sales.
=<
(n the to pictures a)ove it refers to the operating cycle means how the cash is
coming an how it is utili%e an again it form as cash. (t is the recycle of
cash. The wor!ing capital cycle is all a)out the recycling of cash. (n the first
picture the cash first goes to the trae creitors an then it converte into
=C
raw material through wor! in progress it converte into finishe goos or the
goos for sale an then after the finishe goos goes to mar!et an generate
cash for the company an )y this cash the company can a)le to pay their
lia)ilities to their creitors an this cycle is going continuously. The
payments are for the taxation* overheas* other lia)ilities etc.
An in the other picture also the same case is happening. 0ut here
the picture is /uite clear. 3ere the company is assuming li!e a man an in
his han there is a wallet. (n this wallet the money is coming from the one
sie an after oing some wor! the money is generating from the other part
of the wallet. $eans the cash is going out an it spens on the inventory an
on some other overheas an after the sales the cash is again generating an
the process is going on. That+s why the process is calle wor!ing capital
cycle. An for an organi%ation this cycle is very much important.
(f you ....... Then ......
Collect receiva)les 6e)tors7 faster
Iou release cash
from the cycle
Collect receiva)les 6e)tors7
slower
Iour receiva)les
soa! up cash
=9
'et )etter creit 6in terms of
uration or amount7 from
suppliers
Iou increase your
cash resources
Shift inventory 6stoc!s7 faster
Iou free up cash
$ove inventory 6stoc!s7 slower
Iou consume more
cash
Sour9e0 of Additional +or@in< %apital
s
Sources of aitional wor!ing capital inclue the followingK
Existing cash reserves
Profits 6when you secure it as cash P7
Paya)les 6creit from suppliers7
1ew e/uity or loans from shareholers
0an! overrafts or lines of creit
&ong>term loans
(f you have insufficient wor!ing capital an try to increase sales* you can
easily over>stretch the financial resources of the )usiness. This is calle
overtraing. Early warning signs inclueK
Pressure on existing cash
==
Exceptional cash generating activities e.g. offering high iscounts for
early cash payment
0an! overraft excees authori%e limit
See!ing greater overrafts or lines of creit
Part>paying suppliers or other creitors
Paying )ills in cash to secure aitional supplies
$anagement pre>occupation with surviving rather than managing
Fre/uent short>term emergency re/uests to the )an! 6to help pay wages*
pening receipt of a che/ue7.
$andlin< Re9ei/able0 7Debtor08
Cash flow can )e significantly enhance if the amounts owing to a )usiness
are collecte faster. Every )usiness nees to !now.... who owes them
money.... how much is owe.... how long it is owing.... for what it is
owe.Slow payment has a crippling effect on )usiness * in particular on
small )usinesses who can least affor it. (f you onDt manage e)tors* they
will )egin to manage your )usiness as you will graually lose control ue to
reuce cash flow an* of course* you coul experience an increase
incience of )a e)t. The following measures will help manage your
e)torsK
1. 3ave the right mental attitue to the control of creit an ma!e sure
that it gets the priority it eserves.
-. Esta)lish clear creit practices as a matter of company policy.
4. $a!e sure that these practices are clearly unerstoo )y staff*
suppliers an customers.
;. 0e professional when accepting new accounts* an especially larger
ones.
<. Chec! out each customer thoroughly )efore you offer creit. Ese
creit agencies* )an! references* inustry sources etc.
C. Esta)lish creit limits for each customer... an stic! to them.
9. Continuously review these limits when you suspect tough times are
coming or if operating in a volatile sector.
=. 8eep very close to your larger customers.
:. (nvoice promptly an clearly.
1..Consier charging penalties on overue accounts.
=:
11. Consier accepting creit ?e)it cars as a payment option.
1-.$onitor your e)tor )alances an ageing scheules* an onDt let any
e)ts get too large or too ol.
Recogni%e that the longer someone owes you* the greater the chance you
will never get pai. (f the average age of your e)tors is getting longer* or is
alreay very long* you may nee to loo! for the following possi)le efectsK
wea! creit ,ugment
poor collection proceures
lax enforcement of creit terms
slow issue of invoices or statements
errors in invoices or statements
Customer issatisfaction.
2e)tors ue over :. ays 6unless within agree creit terms7 shoul
generally eman immeiate attention. &oo! for the warning signs of a
future )a e)t. For example.........
longer creit terms ta!en with approval* particularly for smaller orers
use of post>ate chec!s )y e)tors who normally settle within agree terms
evience of customers switching to aitional suppliers for the same goos
new customers who are reluctant to give creit references
receiving part payments from e)tors.
The act of collecting money is one which most people isli!e for many
reasons an therefore put on the long finger )ecause they convince
themselves there is something more urgent or important that eman their
attention now. There is nothing more important than getting pai for your
prouct or service. A customer who oes not pay is not a customer. 3ere are
a few ieas that may help you in collecting money from e)torsK
2evelop appropriate proceures for hanling late payments.
Trac! an pursue late payers.
'et external help if your own efforts fail.
2onDt feel guilty as!ing for money.... its yours an you are entitle to
it.
$a!e that call now. An !eep as!ing until you get some satisfaction.
(n ifficult circumstances* ta!e what you can now an agree terms for
the remainer. (t lessens the pro)lem.
:.
@hen as!ing for your money* )e har on the issue > )ut soft on the
person. 2onDt give the e)tor any excuses for not paying.
$a!e it your o),ective is to get the money > not to score points or get
even.
Mana<in< #a.able0 7%reditor08
Creitors are a vital part of effective cash management an shoul )e
manage carefully to enhance the cash position.
Purchasing initiates cash outflows an an over>%ealous purchasing function
can create li/uiity pro)lems. Consier the followingK
@ho authori%es purchasing in your company > is it tightly manage or
sprea among a num)er of 6,unior7 peopleO
Are purchase /uantities geare to eman forecastsO
2o you use orer /uantities which ta!e account of stoc!>holing an
purchasing costsO
2o you !now the cost to the company of carrying stoc! O
2o you have alternative sources of supply O (f not* get /uotes from
ma,or suppliers an shop aroun for the )est iscounts* creit terms*
an reuce epenence on a single supplier.
3ow many of your suppliers have a returns policy O
Are you in a position to pass on cost increases /uic!ly through price
increases to your customers O
(f a supplier of goos or services lets you own can you charge )ac!
the cost of the elay O
Can you arrange 6with confience P7 to have elivery of supplies
staggere or on a ,ust>in>time )asis O
There is an ol aage in )usiness that if you can )uy well then you can sell
well. $anagement of your creitors an suppliers is ,ust as important as the
management of your e)tors. (t is important to loo! after your creitors >
slow payment )y you may create ill>feeling an can signal that your
company is inefficient 6or in trou)leP7.
Remem)er* a goo supplier is someone who will wor! with you to enhance
the future via)ility an profita)ility of your company.
:1
In/entor. Mana<ement
$anaging inventory is a ,uggling act. Excessive stoc!s can place a heavy
)uren on the cash resources of a )usiness. (nsufficient stoc!s can result in
lost sales* elays for customers etc.
The !ey is to !now how /uic!ly your overall stoc! is moving or* put another
way* how long each item of stoc! sit on shelves )efore )eing sol.
")viously* average stoc!>holing perios will )e influence )y the nature of
the )usiness. For example* a fresh vegeta)le shop might turn over its entire
stoc! every few ays while a motor factor woul )e much slower as it may
carry a wie range of rarely>use spare parts in case some)oy nees them.
1owaays* many large manufacturers operate on a ,ust>in>time 65(T7 )asis
where)y all the components to )e assem)le on a particular toay* arrive at
the factory early that morning* no earlier > no later. This helps to minimi%e
manufacturing costs as 5(T stoc!s ta!e up little space* minimi%e stoc!>
holing an virtually eliminate the ris!s of o)solete or amage stoc!.
0ecause 5(T manufacturers hol stoc! for a very short time* they are a)le to
conserve su)stantial cash. 5(T is a goo moel to strive for as it em)races all
the principles of pruent stoc! management.
The !ey issue for a )usiness is to ientify the fast an slow stoc! movers
with the o),ectives of esta)lishing optimum stoc! levels for each category
an* there)y* minimi%e the cash tie up in stoc!s. Factors to )e consiere
when etermining optimum stoc! levels inclueK
@hat are the pro,ecte sales of each prouctO
3ow wiely availa)le are raw materials* components etc.O
3ow long oes it ta!e for elivery )y suppliersO
Can you remove slow movers from your prouct range without
compromising )est sellersO
Remem)er that stoc! sitting on shelves for long perios of time ties up
money which is not wor!ing for you. For )etter stoc! control* try the
followingK
Review the effectiveness of existing purchasing an inventory
systems.
8now the stoc! turn for all ma,or items of inventory.
Apply tight controls to the significant few items an simplify controls
for the trivial many.
:-
Sell off outate or slow moving merchanise > it gets more ifficult
to sell the longer you !eep it.
Consier having part of your prouct outsource to another
manufacturer rather than ma!e it yourself.
Review your security proceures to ensure that no stoc! Jis going out
the )ac! oor PJ
3igher than necessary stoc! levels tie up cash an cost more in insurance*
accommoation costs an interest charges.
8ey @or!ing Capital Ratios
The following* easily calculate* ratios are important measures of wor!ing
capital utili%ation.
Ratio Formulae Result (nterpretation
Stoc!
Turnover
6in ays7
Average
Stoc! X 4C<?
Cost of
'oos Sol
V x
ays
"n average* you turn over the value of
your entire stoc! every x ays. Iou
may nee to )rea! this own into
prouct groups for effective stoc!
management.
")solete stoc!* slow moving lines will
exten overall stoc! turnover ays.
Faster prouction* fewer prouct lines*
,ust in time orering will reuce
average ays.
Receiva)les
Ratio
6in ays7
2e)tors X
4C<?
Sales
V x
ays
(t ta!e you on average x ays to collect
monies ue to you. (f your official
creit terms are ;< ay an it ta!es you
C< ays... why O
"ne or more large or slow e)ts can
rag out the average ays. Effective
e)tor management will minimi%e the
ays.
Paya)les Creitors X V x
"n average* you pay your suppliers
:4
Ratio
6in ays7
4C<?
Cost of Sales
6or
Purchases7
ays
every x ays. (f you negotiate )etter
creit terms this will increase. (f you
pay earlier* say* to get a iscount this
will ecline. (f you simply efer
paying your suppliers 6without
agreement7 this will also increase > )ut
your reputation* the /uality of service
an any flexi)ility provie )y your
suppliers may suffer.
Current
Ratio
Total Current
Assets?
Total Current
&ia)ilities
V x
times
Current Assets are assets that you can
reaily turn in to cash or will o so
within 1- months in the course of
)usiness. Current &ia)ilities are
amount you are ue to pay within the
coming 1- months. For example* 1.<
times means that you shoul )e a)le to
lay your hans on F1.<. for every
F1... you owe. &ess than 1 times e.g.
..9< means that you coul have
li/uiity pro)lems an )e uner
pressure to generate sufficient cash to
meet oncoming emans.
Yuic! Ratio
6Total
Current
Assets >
(nventory7?
Total Current
&ia)ilities
V x
times
Similar to the Current Ratio )ut ta!es
account of the fact that it may ta!e
time to convert inventory into cash.
@or!ing
Capital
Ratio
6(nventory Z
Receiva)les >
Paya)les7?
Sales
As U
Sales
A high percentage means that wor!ing
capital nees are high relative to your
sales.
"ther wor!ing capital measures inclue the followingK
0a e)ts expresse as a percentage of sales.
Cost of )an! loans* lines of creit* invoice iscounting etc.
2e)tor concentration > egree of epenency on a limite num)er of
customers.
:;
"nce ratios have )een esta)lishe for your )usiness* it is important to trac!
them over time an to compare them with ratios for other compara)le
)usinesses or inustry sectors.

:<
%ON%&USION
Pro,ect was mainly focuse on )asic concepts of import system in
F"RE# an wor!ing capital management in &'E(& .This F"RE#
$anagement inclue )ill of entry* payment metho B heging techni/ues.
( have stuie a)out rules that comes uner the act of FE$A an also the
techni/ues use to reuce the fluctuation ris! . As per the policy * &' heges
minimum -.U B maximum <.U of 1ET "PE1 E#P"SERE.
They !eep on monitoring the exchange rates an traps the )est possi)le
existing rate for the payments to the venors. The management !eeps a very
goo relations with some of the )an! for future exchange rates* which will
help them in ta!ing the forwar contract at the )est possi)le rate.
(n foreign exchange * R0( wants to !now where (nian currency is use
when it goes out of country in import or export system.so letter is mae after
getting )ill of entry when goos has )een receive an then it is sen to
)an! B )an! su)mit it to R0( on C month cycle )asis.
( have also stuie the wor!ing capital management* proceure to prepare
a cash flow of the company* an what !in of insurance policy ta!en )y the
company B how it is helpful for the company .Thus overall pro,ect was very
useful for me for unerstaning the corporate going process.
:C
ANNE6URE
1. @hich @or!ing capital analysis software?$etho o you useO
Please specify. .. .. . .
-. 2i you ma!e use of (nformation Technology when implementing your @or!ing
capital analysis softwareO
Ies
1o
:9
4. 2i your supply chain software eliver the result expecte or promise )y the
companyO
Ies
1o
;. 2i your supply chain software re/uire aitional expeniture to customi%e the
program to your company operationO
Ies
1o
:=
<. 3ow often o you nee to purchase upgraes for your supply chain softwareO
"ften
Sometimes
Rarely
2o not purchase
C. @oul you li!e to purchase aitional software for the companyO
Ies
1o
9. 3ow satisfie were you with the application of (nformation Technology in @or!ing
capital analysisO
Satisfie
Somewhat Satisfie
Enecie
2issatisfie
::
=. @hat was the main reason you to implement the supply chain managementO
Planning
$ap out supply chain function
Solve conflicting o),ective within supply chain
Assistance in customi%ing operation
"ther specify[[[[.
:. 3ow much training of employees was involve to implement @or!ing capital
analysisO
A great eal
Some extent
&ittle
2on+t !now
1..
1.. 3ow flexi)le is your @or!ing capital analysis to promote graual changes an
ma!ing coorination with ifferent epartmentsO
Flexi)le
Some what flexi)le
1ot at all flexi)le
2on+t !now
11. "verall how satisfie are you with the performance of your @or!ing capital
analysisO
Aery satisfie
Somewhat satisfie
Enecie
Somewhat issatisfie
1-. @hich of the following proceure oes &' follows in purchasing materialO
1.1
Tener
"pen $ar!et
Existing supplier
"thers please specify[[..
14. @hat are the channels of istri)ution which the company normally followsO

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
1.-
BIB&IO4RA#$(

Referre )oo!sK
(ntrouction to Financial $anagement Q ($ PA12EI
Financial $anagement Q Chanra
@E0S(TESK
www.lginia.com
www.as!.com
www.traegoos.com
www.forexcapital.com
www.easy>forex.com
www.thehinu)usinessline.com
www.ictionary.com
www.export:11.com
1.4