A Project Report

on

“A study on Challenges in sanctioning of loan and issue related to repayment

of loan with reference to Mahalaxmi Automatives Pvt. Ltd.- Hero
MotoCorp”

Project report Submitted to

Savitribai Phule Pune University

In partial fulfilment of the requirement for the degree in

Masters of Business Administration (M.B.A)

In Finance

Submitted by

Rhutvik Siddhanath Bhokare

Under the Guidance of

Prof. Mrunali Pathak Mam

S.K.N SINHGAD SCHOOL OF BUSINESS MANAGEMENT, AMBEGAON (BK), PUNE

(2021-2023)

1
 ACKNOWLEDGEMENT

I wish to express my gratitude to those who have contributed their efforts & time for helping me
to complete this Project Report Successfully.

I would like avail this opportunity to extend my sincere gratitude to our motivator Prof. Mrunali
Pathak Mam for providing me an opportunity to undertake this Project. Words at mycommand
are not adequate to convey the depth of my feeling of gratitude to esteemed Guide Prof. Mrunali
Pathak Mam for his Expert Professional & Encouraging Guidance; She helped me for completing
the Project by all possible ways.

I am also thankful to all Staff of S.K.N Sinhgad School of Business Management, Pune moreover,
the most important is my Family Members who supports me and without their support this study
would not be possible.

2
 DECLERATION

I, Rhutvik Siddhanath Bhokare student of S.K.N Sinhgad School of Business Management,

Pune , hereby that the Project Report “A study on Challenges in sanctioning of loan and issue
related to repayment of loan with reference to Mahalaxmi Automatives Pvt. Ltd. – Hero
Motocorp”

is written and submitted by me to the Savitribai Phule University in partial fulfilment of

requirement for the award of degree of master of business administration under the guidance of
Prof. Mrunali Pathak Mam it is my original work

The empirical findings in this Report are based on data collected by me. The matter consisting in
this Report is not copied from any source.

I have prepared this Report independently and I have gathered all the relevant information
personally. I have prepared for MBA (Sem III) for the academic year 2022-2023

Place: -Pune Rhutvik Siddhanath Bhokare

Date: - MBA (Finance Management)

3
 INDEX

SR.NO CONTAINS PAGE NO.

Executive Summary 5

1 Introduction to study 6

2 Company Profile 12

3 Review of Literature 15

Research Methodology
4 18

Data Analysis & Interpretation

5 23

Findings
6 51

Suggestions
7 53

Conclusion
8 55

Bibliography
57

Annexures
59

4
 Executive Summary
1. Meaning of Business Loan
A business loan is kind of financing you can avail to meet the argent needs of your growing
business. If you need funding to expand your existing business, buy machinery, or boost
production. Avail financing at attractive interest rates, borrow capital without pledging any of
your asset and get access to credit that can be repaid over a specific period of time.

Definition of Business Loan

According to Kyra Sheahan

“Business required and adequate amount of capital to fund, start-up expenses or pay for
expansions. As such a companies take out business loans to gain the financial assistance they
need. A business loan is debt that the company is obligated to repay according to the loans terms
and conditions. According to the U. S. small business administration, before approaching a
lender for a loan it is imperative for the business owners to understand how loans works and
what the lender will want to see from the owner”

2. Types Of Business Loan

Secured loan-
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or house)
ascollateral.

Unsecured loan-
Unsecured loans are monetary loans that are not secured against the borrower's assets.
These may be available from financial institutions under many different guises or marketing
packages:

5
 CHAPTER 1
INTRODUCTION

6
 1. INTRODUCTION

Loan proposal

The business loan proposal is your chance to convey to the lender your passion for
knowledge of the business you own. The mechanics of the business loan proposal are the
numbers contained in cash, cash flow reports, Balance sheets, bank statement and list other
number .

The business loan proposal is detailed report (based on a potential borrower) loan
application and credit worthiness, presented usually by a banks officer (with his or her
comments) to a senior loan officer or the banks loan committee..

There are many different formats you can use for a loan proposal. You may want to contact the
lender to determine which format is preferred by the lender. Generally, a loan proposal should
include these elements:

 Executive Summary. Begin your proposal with a simple and direct cover letter or
executive summary. Clearly and briefly describe who you are, your business background,
the nature of your business or start-up, and how the loan will be used to help the company
succeed.
 Business Profile. Describe the history of your business and summarize current activity
and results. Describe your market, your customers, and your industry.
 Management Experience. Describe the experience, qualifications, and skills of each
owner and key member of your management team.
 Loan Request. State the amount of money you need and how you determined this
amount. Include quotes for equipment or supplies, for building costs, etc. In short, be able
to answer the question, “Why do you need that amount of money?” Also explain
specifically what the loan will be used for and why it is needed.
 Loan Repayment. Describe the terms you hope to receive (interest rate, term, etc.).
Show how you can meet that repayment schedule based on sales and cash flow
projections. Keep in mind that loan terms will need to be negotiated with your lender
based on their risk assessment of your business.

7
 Collateral. Describe collateral you would be willing to pledge as security for the loan.
Every loan program requires at least some collateral that can be sold in case the cash
generated by the small business isn’t sufficient to repay the loan. All loans should have at
least two identifiable sources of repayment. The first source is ordinarily cash flow
generated from profitable operations of the business. The second source is usually
collateral pledged to secure the loan.
 Personal Financial Statements. Include financial statements for all owners with 20
percent or more interest in the business. These statements should not be more than 90
days old. Some lenders may also require tax returns for the previous one to three years.
 Business Financial Statements. Include complete financial statements (balance
sheet, income statement, and reconciliation of net worth) for the last three years plus a
current interim financial statement (not more than 90 days old). If you are just starting
out, provide a projected balance sheet and income statement.
 Equity Investment. An owner must put some of his/her own money into the business to
get a loan; the amount depends on the type of loan, purpose and terms. Equity can be
built up through retained earnings or by the injection of cash from the owner. Most
lenders want to see that the total liabilities or debt of a business is not more than four
times the amount of equity.
 Projections. Provide projected income and cash flow statements for at least one year or
until positive cash flow can be shown. Be prepared to answer questions about how you
will change operations if you don’t reach your projections.
 Other Items (if applicable)
o Lease (or copies of proposal)
o Franchise agreement
o Purchase agreement
o Articles of Incorporation
o Partnership agreements
o Copies of business licenses and registrations required for you to conduct business
o Copies of contracts you have with any third parties

8
CHALLENGING EXPERIENCES FACED DURING TAKING A BUSINESS LOAN

 LENGTHY PROCEDURE

Your business is in dire need of upgrading, and you need immediate cash to fill the void. But
Indian business loans are known for long processing time even if you have all sorts of proofs.
It’s a pain point of taking a loan in India. First, you apply for business loan, and then you
submit the proofs. The real challenging journey begins after that. Lenders check your details
again and again until they are 100% satisfied. They get hundreds of signs on various kinds of
documents to get a repayment guarantee from your side. Also, they call you a hundred times
to confirm each and everything, including your business, the time when you started it, and how
much you are earning from it. It takes ages before you receive final approval or decline from
the business loan department. Till then, you have to keep your business expanding plans on
hold, which may affect your revenue goals.

 LACK OF TECHNOLOGY

Part of the reason why Indian business loans take more time than required is due to lack of
technology. You might have noticed that many online lending platforms grant a loan based
on your credit history and score, which is easily accessible through the web. Technology is the
key reason why online lending platforms are quick to offer a business loan. And lack of
technology is the key reason why banks are too slow in accessing your credit information.
Indian banks adopt the traditional way to check out your credit history. Calling you to confirm
details, visiting your office personally to see your business operations, clicking photographs of
office, tons of paperwork, etc. Are all age-old methods. They still exist in India to delay the
processes.
 EMPHASIS ON CREDIT HISTORY

That one bounced check a year ago, a delayed payment on your credit card, an ongoing loan
of your vehicle, etc. All affect your credit score and in turn, your credit history. For loans,
Indian banks generally put too much emphasis on the credit history of businesses which takes
them to check each and every minor detail in depth.

9
 A single glitch in your bank accounts may lead you to loan rejection after months of waiting.
Not only that, having low income than eligibility also puts you in a loan rejection dilemma.
Instead of decreasing your loan amount because of flawed credit history, banks directly reject
your loan.

 COLLATERAL REQUIREMENTS

Despite the efforts of RBI and SIDBI to push enterprise finance further for loan matters,
businesses face collateral challenges when seeking business loans in India. Banks still ask
business owners to provide traditional security (collateral) in exchange for getting a loan.
Because entrepreneurs have just started their business journey. They are unable to meet
collateral requirements, and thus, they fail to gain credit required to expand their business.

 DIFFERENT CRITERIA FOR VARIOUS BUSINESSES

In India, banks access cost and risk of offering money based on various factors for different
businesses. For example, companies with a turnover of more than Rs. 40 lakh are eligible for
a loan while lower than this is not acceptable at all.

It means banks set different criteria based on your business type, income, working capital,
etc. They don’t have a set of predefined rules or standards to accept or reject the business loan.
That’s why business owners waste time trying their luck with different banks. If banks have a
fixed set of standards while providing a business loan, owners would have applied in those
banks only that matches well with their loan eligibility.

 LESS FUND ACCESS THAN REQUIRED

Loans for business in India starts with a lesser amount. Generally, financial institutions like
banks can’t easily trust when it comes to offering business loans to aspiring entrepreneurs. The
risk of business closing down always lingers in the air. So, banks prefer to start small to avoid
risk. They offer a much lower amount than required to see the loan payment performance of
business owners. They wait at least six months before they decide to provide a slightly more
significant amount than the previous one. And the journey of loan continues based on the
payment history of the borrower.

10
 It may put banks in secure zones, but businesses have to adjust their plans based on the money
they get. Often, owners either cancel their business loan as it fails to meet their expectations
or they jump from one bank to another. They do it till they find the one who gives them the
exact needed loan amount.

ADDITIONAL STRESS

 Proofs submitted.

 Credit history, check.

 Documents signed.

 Process finished.

Now you are waiting for the day to come when you receive a message of the amount credited to
your accounts. You waited at least a month to receive the final approval. But instead of getting
an approval, you got a message of business loan declined because your credit history displayed
another glitch. Getting loans rejected is a common thing in India. Entrepreneurs often face such
situations. The real deal behind this is banks take too much time to announce the final results.

1.1 Objectives

1. To submit projected financial statement of the Mahalaxmi Hero Showroom.

2. To study loan statement for the sanctioning by bank or financial institute.

3. To make analysis of inflow and outflow of funds.

4. To study challenges for sanctioning of loan & issues related to repayment of the loans.

5. To study and to plan profit & loss A/C & balance sheet for submitted in the bank & financial
institute.

11
 CHAPTER 2
COMPANY PROFILE

12
 2 Company Profile

Name of the company : Mahalaxmi Automatives Pvt. Ltd.- Hero motocorp

Address : Karbhari Complex, kasba,

Baramati, Maharashtra

413102

Nature of Production : Two Wheeler Bike

Product Profile :

1. Pleasure

2. Maestro EDGE

3. Destini 125

4. HF Deluxe

5. Splendor

6. Passion Pro

7. Super splendor

8. Glamour

9. Xtreme 200

13
14
 CHAPTER 3
REVIEW OF LITERATURE

15
• Rastogi, Jain and Yadav (2006) in their research paper ‘Debt Financing in India in Public,
Private and Foreign Companies’ studied the debt financing decisions and practices of the public
sector, private sector and foreign controlled companies in India. The study also indicated that the
profile of debt financing has significantly changed during the period covered by the study.
Ownership control was observed to be a significant factor in influencing the debt financing
decisions in terms of its composition and maturity structure. Long- term debt was found more
prevalent among public sector firms vis-à-vis private sector business group firms. Interestingly,
foreign controlled firms made the least use of long-term debt among the three types of ownership
groups. The paper also suggested that sound financial management practices expect corporate
firms to have unused debt capacity for future needs in order to preserve operating flexibility,
particularly in circumstances when fund requirements are sudden and unpredictable. Hence, it is
imperative to study the objectives with which Indian firms – private, public or otherwise raise
funds via the credit route since the operational model of businesses in India evolved with the
macro-economic environment.
• Majumdar and Sen (2010) in their research paper ‘Debt in the Indian Corporate Sector: Its
Effects on Firm Strategy and Performance’ examined the effects of debt structure on firms’
strategic behaviour and performance for the Indian economy, which is one of the largest and most
important economies of the world today. We would also understand a variety of ownership
structures, for example state versus private ownership, foreign versus domestic ownership and
firms which are members of business groups and those which are independent.
• Singh and Saha (2011) in their research paper ‘Centralization of Microfinance’ found out
that microfinance is one of the most effective techniques for poverty alleviation in developing and
underdeveloped countries.
Our understanding would be that if microfinance is managed, organized and planned well, then it
should be supported by non-governmental organizations and socially oriented investors with low
default rates, encouraging greater commercial involvement because of attractive returns. Through
microfinance it will be easy to include this section of society into the economic mainstream to
achieve balanced growth, which is critical for social development and economic prosperity.

Mallik (2015) in her paper Being Credit Rationed: Delay and Transaction Cost explains the
problem of avoidance of formal credit. The paper developed alternative models explaining why
households with credit need to finance their projects (enterprises) avoid formal credit. Inthis
16
paper, we also understand that delay cost in conjunction with personal loan transaction cost may
also cause highly productive projects or larger projects shying away from formal credit in spite of
low interest rates. Nevertheless, these structural features of bank loans do have an effect on the
household’s cost of borrowing in the formal credit market. Moreover, the degree of impact is
unique to each household depending upon the level of education.
• Thomas (2013) in his paper Explaining the ‘jobless’ growth in Indian manufacturing
explained the ‘jobless’ growth in Indian manufacturing. The manufacturing sector in India has
seen growth and is even currently growing strong to support a massive economy such as India.
To enable this, we have government and RBI who are focused on easing of policies and rules to
enable businesses to get access to more funds for business operations. The ECB and FCCB data
primarily will help us understand the manufacturing sector and the probable road ahead.

17
 CHAPTER 4
RESEARCH METHODOLOGY

18
 4. Research Methodology
4.1 Research

Meaning
Research comprises of two words “Re” and “Search” “Re” implies a repetitive or
iterative process, “Search” denotes making a thorough examination of or looking over carefully
in an order to find something. Different researchers have defined research in various ways due to
its wide scope. But, in general, research can be defined as a scientific process where new facts,
ideas, and theories are establish and/or proved in different areas of knowledge. Research aims at
adding to the existing stock of knowledge for the betterment of world.

Definition
According to John Best,
“Research is a systematic activity directed towards discovery and the
development of an organized body of knowledge .”
According to waltz and Bausell,

“Research is a systematic, formal, rigorous and precise process employed to gain

solutions to problems or to discover and interpret new facts and relationships.”

4.2 Research Methodology

Meaning

The process of used to collect information and data for the purpose of making
business decisions . The methodology may include publication research, interviews, survey and
other research techniques, and could include both present and historical information.

Definition

According to Mr. C. R. Kothari,

“Defines that the research is an original contribution to the existing stock of knowledge making
for its developments & techniques.”

4.3 Process of Research

Research includes a series of steps which begins with defining a problem and ends with
the solution. It is not the static and linear activity, but generates new areas for further researches.
Generally, the research ends with bringing out new problems or new areas to explore, with or
without the solution and conclusion. Due to these characteristics of research, it is called a cyclic
process.

19
The goal of the research process is to produce new knowledge or deepen understanding of a topic
or issues.

 Exploratory research, which helps to identify and define a problem or question .

 Constructive research, which test theories and propose solution to problem or
question .
 Empirical research, which tests the feasibility of a solution using empirical
evidence .

The seven steps of the research process: The following seven steps outline a simple and
effective strategy for finding information for a research paper and documenting the sources you
find depending on your topic and your familiarity with the library, you made read to rearrange or
recycle these steps. Adapt this outline to your needs. We are ready to help you at every steps in
your research.

Identify and develop your topic

Find background information

Use catalogs to find books and media

Use indexes to find periodical articles

Find additional internet resources

Evaluate what you find

Cite what you find using a standard format

20
Types of Research

1. Applied Research

Also known as decisional research, use existing knowledge as an aid to the

solution of some given problem or set of problem .

2. Fundamental Research

Frequently called basic or pure research, seek to extend the boundaries of

knowledge in a given area with no necessary immediate application to existing problems’

3. Futuristic Research

Future research is the systematic study of possible future conditions. it includes

analysis of how those condition might change as a result of the implementation of policies and
actions, and the consequences of these policies and actions.

4. Descriptive Research

It includes surveys and fact-finding enquires of different kinds. It tries to

discover answer to the questions who, what, when and sometimes how. Here the researcher
attempts to describe or define a subject, often by creating a profile of a group of problems,
people or events. The major purpose of descriptive research is description of the state of
affairs as it exists at present.

5. Explanatory Research

Explanatory research goes beyond description and attempts to explain the

reason for the phenomenon that the descriptive research only observed. The research would use
theories or at least hypothesis to account for the forces that caused a certain phenomenon to
occur

21
6. Predictive Research

If we can provide a plausible explanation for an event after it has occurred, it is

desirable to be able to predict when and in what situations the event will occur. This research is
just as rooted in theory as explanation. This research calls for a high order inference making. In
business research, prediction is found in studies conducted to evaluate specific courses of action
or to forecast current and future values.

4.4 Sources Of Research

Primary Data:
Primary data is information that you collect specifically for the propose of your
research project. Primary data was collected through questionaries was use to collect required
information .data was collected from taking interview of 6 people by bank & medical for
collecting the primary data .

Secondary Data:
Secondary data refers to data that was collected by someone other than the user.
Taking 5 years of balance sheet from Waghmare medical to calculate their cash flows &
repayment of the loans .In this project is the secondary data used and the collected this data
I referred as the newspaper and books and other online information related the secondary data
sets.

In this project is the secondary data used and the collected this data I referred as the newspaper
and books and other online information related the secondary data sets.

22
 CHAPTER 5
DATA ANALYSIS AND
INTERPRETATION

23
 Data Analysis and Interpretation
1. Is there is possible to solve all problems of customer related loan?
Table:

Answer Respondents Percentage

Yes 4 66%
No 2 44%
Total 6 100%

Graph

70

60

50

40

Column1
30

20

10

Yes No

Interpretation: Above graph shows that major 66% respondents answer is Yes and 44%
answer is No.

24
2. What kinds of major problem faced by customer to take loan?

Table:

Answer Respondents Percentage

Low Income Source 3 50%
Cybil report 0 0%
Score card 2 33%
Address Proof 1 17%
Total 6 100%

Graph

60

50

40

30

20

10

Low Income Source Cibil report Score card Address Proof

Interpretation: Above graph shows that major 50% respondents answer is low-income source,
0% said Cybil report, 33% said score card and 17% said address proof.

25
3. What type of advertisement you prefer for your Showroom?

Table:

Answer Respondents Percentage

Newspaper 2 33%
Internet 3 50%
Friends and Family 1 17%
Magazines 0 0%
Total 6 100%

Graph

60

50

40

30

20

10

Newspaper Internet Friends and Family Magazines

Interpretation: Above graph shows that major 50% respondents said internet, 0% said
magazines, 33% said newspaper and 17% said friends and family.

26
4. Does your business have the ability to repay of loan?
Table:

Answer Respondents Percentage

Yes 5 77%
No 1 33%
Total 6 100%

Graph

90

80

70

60

50

40

30

20

10

Yes No

Interpretation: Above graph shows that major 77% respondents answer is Yes and 33%
answer is No.

27
5. How much money do you need for loan?

Table:

Answer Respondents Percentage

50,00,000-1,00,00,000 0 0%
1,00,00,000-2,00,00,000 2 44%
More than 2,00,00,000 4 66%
Total 6 100%

Graph
Respondents

Total

More than 2,00,00,000

1,00,00,000-2,00,00,000

50,00,000-1,00,00,000

0 1 2 3 4 5 6 7

Interpretation: Above graph shows that, 66% people want more than 2,00,00,000 money
for the loan. And 44% people need 1,00,00,000 – 2,00,00,000 money for loan.

28
6. Is there loan repayment work?
Table:

Answer Respondents Percentage

Yes 3 50%
No 3 50%
Total 6 100%

Graph

60

50

40

30

20

10

Yes No

Interpretation: Above graph shows that 50% respondents answer is Yes and 50% answer
is No.

29
 Schedule 1

Cost of Project and Means of Finance

PARTICULARS AMOUNT RS.

1) Hero 2,20,00,000

TOTAL RS. 2,20,00,000

PARTICULARS AMOUNT RS

Own Contribution @ 10% 20,00,000

Finance @ 90% 2,00,00,000

Term Loan @ 14.50% interest p. a.
for 5 years

TOTAL RS. 2,20,00,000

30
 Schedule 2

Loan Repayment

1st year

Particulars Year Month Opening Repayment Closing Interest on

Balance Principle Balance 14.50%
1 2,00,00,000 2,28,899 1,97,71,101 2,41,667
Fixed Capital 1
Loan 2 1,97,71,101 2,31,665 1,95,39,436 2,38,901
3 1,95,39,436 2,34,464 1,93,04,972 2,36,102
4 1,93,04,972 2,37,297 1,90,67,675 2,33,268
5 1,90,67,675 2,40,165 1,88,27,510 2,30,401
6 1,88,27,510 2,43,067 1,85,84,444 2,27,499
7 1,85,84,444 2,46,004 1,83,38,440 2,24,562
8 1,83,38,440 2,48,976 1,80,89,464 2,21,589
9 1,80,89,464 2,51,985 1,78,37,480 2,18,581
10 1,78,37,480 2,55,029 1,75,82,450 2,15,536
11 1,75,82,450 2,58,111 1,73,24,339 2,12,455
12 1,73,24,339 2,61,230 1,70,63,109 2,09,336

31
 2nd year

Particulars Year Month Opening Repayment Closing Interest on

Balance Principle Balance 14.50%
1 1,70,63,109 2,64,386 1,67,98,723 2,06,179
Fixed Capital 2 2 1,67,98,723 2,67,581 1,65,31,142 2,02,985
Loan
3 1,65,31,142 2,70,814 1,62,60,327 1,99,751
4 1,62,60,327 2,74,087 1,59,86,241 1,96,479
5 1,59,86,241 2,77,399 1,57,08,842 1,93,167
6 1,57,08,842 2,80,750 1,54,28,092 1,89,815
7 1,54,28,092 2,84,143 1,51,43,949 1,86,423
8 1,51,43,949 2,87,576 1,48,56,373 1,82,989
9 1,48,56,373 2,91,051 1,45,65,322 1,79,515
10 1,45,65,322 2,94,568 1,42,70,754 1,75,998
11 1,42,70,754 2,98,127 1,39,72,626 1,72,438
12 1,39,72,626 3,01,730 1,36,70,897 1,68,836

32
 3rd Year

Particulars Year Month Opening Repayment Closing Interest

Balance Principle Balance on
14.50%

Fixed Capital 3 1 1,36,70,897 3,05,376 1,33,65,521 1,65,190

Loan 2 1,33,65,521 3,09,066 1,30,56,455 1,61,500
3 1,30,56,455 3,12,800 1,27,43,655 1,57,766
4 1,27,43,655 3,16,580 1,24,27,075 1,53,986
5 1,24,27,075 3,20,405 1,21,06,670 1,50,160
6 1,21,06,670 3,24,277 1,17,82,394 1,46,289
7 1,17,82,394 3,28,195 1,14,54,199 1,42,371
8 1,14,54,199 3,32,161 1,11,22,038 1,38,405
9 1,11,22,038 3,36,174 1,07,85,864 1,34,391
10 1,07,85,864 3,40,236 1,04,45,627 1,30,329
11 1,04,45,627 3,44,348 1,01,01,280 1,26,218
12 1,01,01,280 3,48,508 97,52,771 1,22,057

33
 4th Year

Particulars Year Month Opening Repayment Closing Interest on

Balance Principle Balance 14.50%

Fixed 4 1 97,52,771 3,52,720 94,00,051 1,17,846

CapitalLoan 2 94,00,051 3,56,982 90,43,070 1,13,584
3 90,43,070 3,61,295 86,81,775 1,09,270
4 86,81,775 3,65,661 83,16,114 1,04,905
5 83,16,114 3,70,079 79,46,034 1,00,486
6 79,46,034 3,74,551 75,71,483 96,015
7 75,71,483 3,79,077 71,92,407 91,489
8 71,92,407 3,83,657 68,08,749 86,908
9 68,08,749 3,88,293 64,20,456 82,272
10 64,20,456 3,92,985 60,27,471 77,581
11 60,27,471 3,97,734 54,29,737 72,832
12 54,29,737 4,02,540 52,27,198 68,026

34
 5th Year

Particulars Year Month Opening Repayment Closing Interest

Balance Principle Balance on
14.50
%

Fixed 5 1 52,27,198 4,07,404 48,19,794 63,162

Capital 2 48,19,794 4,12,326 44,07,467 58,239
Loan 3 44,07,467 4,17,309 39,90,159 53,257
4 39,90,159 4,22,351 35,67,808 48,214
5 35,67,808 4,27,455 31,40,353 43,111
6 31,40,353 4,32,620 27,07,733 37,946
7 27,07,733 4,37,620 22,69,886 32,718
8 22,69,886 4,43,138 18,26,748 27,428
9 18,26,748 4,48,492 13,78,256 22,073
10 13,78,256 4,53,912 9,24,344 16,654
11 9,24,344 4,59,396 4,64,948 11,169
12 4,64,948 4,64,948 Nill 5,618

35
 Schedule 3

Loan Repayment and Interest Statement

Year Opening Balance Closing Balance

1 200,00,000 1,70,63,109
2 1,70,63,109 1,36,70,897
3 1,36,70,897 97,52,771
4 97,52,771 52,27,198
5 52,27,198 Nill

Chart Title
25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0
1 2 3 4 5

Opening Balance Closing Balance

36
 Schedule 4

Combine Loan Payment

Year Opening Balance Repayment Balance Closing Balance Interest

1 2,00,00,000 29,36,892 1,70,63,109 27,09,897
2 1,70,63,109 33,92,212 1,36,70,897 22,54,575
3 1,36,70,897 39,18,126 97,52,771 17,28,662
4 97,52,771 45,25,574 52,27,198 11,21,214
5 52,27,198 52,27,198 Nill 4,19,589

37
 Schedule 5

Details of sales statement

Particulars Years
1 2 3 4 5
A]Sale 24,75,48,659 30,94,35,824 33,41,90,690 36,09,25,945 38,98,00,021

Add:- 25% 8% 8% 8% 8%
Incr 6,18,87,165 2,47,55,866 2,67,35,264 2,88,74,076 3,11,84,001
Total 30,94,35,824 33,41,90,690 36,09,25,945 38,98,00,021 42,09,84,022

450000000
400000000
350000000
300000000
250000000
200000000
150000000
100000000
50000000
0
1 2 3 4 5

A]Sale

38
 Schedule 6

Details of Gross Profit statement

Particulars Years
1 2 3 4 5
A]Sale 7,34,62,034 11,25,41,517 12,55,61,207 14,40,83,605 16,29,79,950

Add:- 30% 11% 12% 12% 10%

Incr 3,90,79,483 1,30,19,690 1,85,22,398 1,88,96,345 1,60,42,204
Total 11,25,41,517 12,,55,61,207 14,40,83,605 16,29,79,950 179022154

Chart Title
180000000
160000000
140000000
120000000
100000000
80000000
60000000
40000000
20000000
0
1 2 3 4 5

A]Sale

39
 Schedule 7

Details of Workers and it’s Salaries

Sr.No Particulars Workers No Salary of Annual Salary

Workers
1 Workers 25 25,000 6,25,000
Total 75,00,000

Total Wages

Sr.No Particulars 1st Year 2nd 3rd 4th 5th

1 Workers 75,00,000 78,75,000 81,90,000 85,17,600 88,58,304
2 Increase by 3,75,000 3,15,000 3,27,600 3,40,704 3,54,332
5%
3 Total 78,75,000 81,90,000 85,17,600 88,58,304 92,12,636

Salary and wages increased by 5%

Workers
9,000,000

8,500,000

8,000,000

7,500,000

7,000,000

6,500,000
1st Year 2nd 3rd 4th 5th

40
 Schedule 8

Schedule of Other Expenses

Sr.No Particulars 1st Year 2nd 3rd 4th 5th

1 Electricity Expenses 45,21,865 47,47,958 49,37,876 51,35,391 53,40,807
5% Increase 2,26,093 1,89,918 1,97,515 2,05,416 2,13,636
47,47,958 49,37,876 51,35,391 53,40,807 55,54,439
2 Telephone Expenses 2,25,486 2,36,760 2,48,598 2,61,028 2,74,079
5% increase 11,274 11,838 12,430 13,053 13,704
2,36,760 2,48,598 2,61,028 2,74,079 2,87,783
3 Travelling & 15,98,465 16,78,388 17,62,307 18,50,422 19,42,943
Conveyance 79,923 83,919 88,115 92,521 97,147
5% Increase
16,78,388 17,62,307 18,50,422 19,42,943 20,40,090
4 Repairs & Maintenance 53,26,658 55,92,991 58,72,641 61,66,273 64,74,587
5% Increase 2,66,333 2,79,560 2,93,632 3,08,314 3,23,729
55,92,991 58,72,641 61,66,273 64,74,587 67,98,316
5 Miscellaneous Expenses 85,49,562 89,77,040 94,25,892 98,97,187 1,03,92,046
5% Increase 4,27,478 4,48,852 4,71,295 4,94,859 5,19,602
89,77,040 94,25,892 98,97,187 1,03,92,046 1,09,11,648
Total 2,12,33,137 22247314 23310301 2,44,24,462 2,55,92,276

41
 Schedule 9

Fixed Assets Schedule

Depreciation
Sr. Opening Additions / Closing
Particulars Total
No. Balance (Deductions) Balance
Rate Amount

1 Furniture 1,54,65,486 1,54,65,486 10% 15,46,549 1,39,18,937

Building 2,42,15,845 2,42,15,845 10% 24,21,585 2,17,94,260

3 Machinery 1,54,78,465 1,54,78,465 15% 23,21,770 1,31,56,695

Computer &
4 Printer 29,54,874 29,54,874 15% 4,43,231 25,11,643

Tools &
5 Equipment 7,54,856 7,54,856 15% 1,13,228 6,41,628

Total Rs. 5,88,69,526 0 5,88,69,526 68,46,363 5,20,23,163

42
 Schedule 10

Statement of Depreciation

YEAR OP BAL DEP @ 5% W.D.V

I 2,20,00,000 33,00,000 1,87,00,000
II 1,87,00,000 28,05,000 1,58,95,000
III 1,58,95,000 23,84,250 1,35,10,750
IV 1,35,10,750 20,26,613 1,14,84,137
V 1,14,84,137 17,22,621 97,61,516

43
 Depreciation decreased by 5%

DEP @ 5%
3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0
I II III IV V

44
 Schedule 11

Projected Trading Account

1st Year

Particulars Amount (Rs) Particulars Amount

To, Opening Stock 1,98,54,754 By Sales 24,75,48,659
To Purchases 18,86,90,832 By Closing Stocks 3,44,58,961
To, Gross Profit 7,34,62,034
Total 28,20,07,620 Total 28,20,07,620

2nd Year

Particulars Amount (Rs) Particulars Amount

To, Opening Stock 3,44,58,961 By Sales 30,94,35,824
To Purchases 20,37,86,099 By Closing Stocks 4,13,50,753
To, Gross Profit 11,25,41,517
Total 35,07,86,577 Total 35,07,86,577

3rd year

Particulars Amount (Rs) Particulars Amount

To, Opening Stock 4,13,50,753 By Sales 33,41,90,690
To Purchases 21,19,37,543 By Closing Stocks 4,46,58,813
To, Gross Profit 12,55,61,207
Total 37,88,49,503 Total 37,88,49,503

4th year

Particulars Amount (Rs) Particulars Amount

To, Opening Stock 4,46,58,813 By Sales 36,09,25,945
To Purchases 22,04,15,045 By Closing Stocks 4,82,31,518
To, Gross Profit 14,40,83,605
Total 40,91,57,463 Total 40,91,57,463

45
 5th year

Particulars Amount (Rs) Particulars Amount

To, Opening Stock 4,82,31,518 By Sales 38,98,00,021
To Purchases 22,92,31,647 By Closing Stocks 5,06,43,094
To, Gross Profit 16,29,79,950
Total 44,04,43,115 Total 44,04,43,115

46
 Schedule 12

Projected Profitability statement

Particulars I II III IV V
INCOME
Sales 24,75,48,659 30,94,35,824 33,41,90,690 36,09,25,945 38,98,00,021
Closing Stock 3,44,58,961 4,13,50,753 4,46,58,813 4,82,31,518 5,06,43,094
Total Rs. 28,20,07,620 35,07,86,577 37,88,49,503 40,91,57,463 44,04,43,115
Opening Stock - 3,44,58,961 4,13,50,753 4,46,58,813 4,82,31,518
Purchase 20,85,45,586 22,52,29,233 23,42,38,402 24,36,07,938 25,33,52,256
Electricity Expenses 45,21,865 47,47,958 49,37,876 51,35,391 53,40,807
Salary & Wages 75,00,000 78,75,000 81,90,000 85,17,600 88,58,304
Telephone Expenses 2,25,486 2,36,760 2,48,598 2,61,028 2,74,079
Travelling &
Conveyance 15,98,465 16,78,388 17,62,307 18,50,422 19,42,943
Repairs & Maintenance 53,26,658 55,92,991 58,72,641 61,66,273 64,74,587
Miscellaneous Expenses 85,49,562 89,77,040 94,25,892 98,97,187 1,03,92,046
Depriciation 33,00,000 28,05,000 23,84,250 20,26,613 17,22,621
Interest On Loan 27,09,897 22,54,575 17,28,662 11,21,214 4,19,590
Total Rs. 24,22,77,519 29,38,55,906 31,01,39,381 32,32,42,479 33,70,08,751
Net Profit Before Tax 3,97,30,101 5,69,30,671 6,87,10,122 8,59,14,984 10,34,34,364
Less: Income Tax 19,74,005 28,34,034 34,23,006 42,83,249 51,59,218
Net Profit After Tax 3,77,56,096 5,40,96,637 6,52,87,116 8,16,31,735 9,82,75,146
Depreciation - - - - -
TOTAL Rs. 3,77,56,096 5,40,96,637 6,52,87,116 8,16,31,735 9,82,75,146

47
 Schedule 13

Projected Fund Flow Statement

YEAR
PARTICULARS
I II III IV V
Sources of Fund
Capital A/C 5,22,04,877 4,54,12,735 5,53,00,629 7,01,47,274 8,50,68,016
Depreciation 33,00,000 28,05,000 23,84,250 20,26,613 17,22,621
Term Loan 2,00,00,000 - - - -
TOTAL (A) 7,55,04,877 4,82,17,735 5,76,84,879 7,21,73,887 8,67,90,637
Applications of Funds

Hero 2,20,00,000 - - - -
Closing Stock 3,44,58,961 4,13,50,753 4,46,58,813 4,82,31,518 5,06,43,094
Repayment of Loan 29,36,891 33,92,213 39,18,126 45,25,574 52,27,197
Sundry Debtors 61,88,716 15,47,179 6,18,872 6,68,381 7,21,852
TOTAL (B) 6,55,84,568 4,62,90,145 4,91,95,811 5,34,25,473 5,65,92,143

Opening Balance - 99,20,308 1,18,47,899 2,03,36,966 3,90,85,380

Add : During the year 99,20,308 19,27,590 84,89,068 1,87,48,414 3,01,98,494
Total Funds Available 99,20,308 1,18,47,899 2,03,36,966 3,90,85,380 6,92,83,875

48
 Schedule 14

Debt Service Coverage Ratio

PARTICULARS YEAR I YEAR II YEAR III YEAR IV YEAR V

Net Profit 3,77,56,095.95 5,40,96,637.45 6,52,87,115.90 8,16,31,734.80 9,82,75,145.80

Depreciation 33,00,000.00 28,05,000.00 23,84,250.00 20,26,613.00 17,22,621.00

Interest on Loan 27,09,897.00 22,54,575.00 17,28,662.00 11,21,214.00 4,19,590.00

Total Rs. 4,37,65,992.95 5,91,56,212 6,94,00,027.90 8,47,79,561.80 10,04,17,356.80

Repayment of
Loan 29,36,891.00 33,92,213.00 39,18,126.00 45,25,574.00 52,27,197.00

Interest on Loan 27,09,897.00 22,54,575.00 17,28,662.00 11,21,214.00 4,19,590.00

Total Rs. 56,46,788.00 56,46,788.00 56,46,788.00 56,46,788.00 56,46,787.00

D.S.C.R 7.75 10.48 12.29 15.01 17.78

Average
D.S.C.R 12.66

D.S.C.R= Cash generation/ Term Loan Obligation

Average

D.S.C.R=(7.75+10.48+12.29+15.01+17.78)/5

Average D.S.C.R=12.66

49
 D.S.C.R
20
18
16
14
12
10
8
6
4
2
0
YEAR I YEAR II YEAR III YEAR IV YEAR V

50
CHAPTER 6
FINDINGS

51
Findings:
 Sales increased in 1st year by 25% percent and after that 2nd,3rd,4th,5th year it
increased by 8% respectively.
 Gross profit increased by 30% in first year, 11% in second year, 12% in 3rd and 4th
year, 10% in 5th year.
 Salary and wages increased by 5% each for 5 years.
 Depreciation are Decreased by 5% each for 5 years.
 Other Expenses are increased by 5% each for 5 years.

52
CHAPTER 7
SUGGESTIONS

53
 There is need to improve proper business plan
 A lender needs to ensure timely loan repayment
 Investors gauge your financial management skills by looking at your credit score
 Keeping the proper documents
 A prospective borrower must have detailed plan of repaying the debt.

54
 Chapter 8
CONCLUSION

55
Conclusion:

Analysis of financial statements is extremely important for every business to grow and increase
their revenue. It should not be compromised since it increases the efficiency of business
operations. Better processes and expert analysts can help in the detailed analysis process.

Every entrepreneur, at some point in time or the other, will face the need for additional funds.
The most crucial factor for a bank to consider a loan is the Project Report for loan application.
The project report format for bank loans for new businesses will be somewhat different from
running businesses. Care should be taken that the right format is used.

56
BIBLIOGRAPHY

57
BIBLIOGRAPHY

Research Paper:
• Rajlakshmi Mallik (2015), “Being Credit Rationed: Delay and Transaction Cost”, International
Game Theory Review, Vol. 17, No. 2, 1540020 (28 pages).
• Jayan Jose Thomas (2013), “Explaining the ‘jobless’ growth in Indian manufacturing”, Journal
of the Asia Pacific Economy, Vol. 18, No. 4, 673–692

ON-LINE WEBSITE :

 WWW.GOOGLE.CO.IN
 WWW.bankofmaharashtra.com

BOOKS:

Research Methodology—Dr khandre Shital Arun, Abhijeet Chavan

58
APPENDIX

59
 ANNEXURE

Mahalaxmi Automotives Pvt. Ltd

Profit & Loss A/c as on 31 March 2022

Particulars Amount Particulars Amount

To Salary & Wages 70,00,000.00 By Gross profits 6,76,23,564.00

To Travelling & Conveyance 13,56,486.00

To Telephone Expenses 1,98,456.00

To Electricity Expenses 43,25,154.00

To Printing & Stationary 3,26,548.00

To Profession Fees 12,25,000.00

To Repair & Maintenance 48,65,454.00

To Miscellaneous Expenses 80,21,547.00

To Depreciation A/c 68,46,363.00

To Net Profit transferred 3,34,58,556.00

to Proprietors Capital A/C

Total Rs. 6,76,23,564.00 Total Rs. 6,76,23,564.00

60
 Mahalaxmi Automotives Pvt. Ltd
Trading A/c for the year ended 31/03/2022

Particulars Amount Particulars Amount

To Opening Stock 1,47,40,215.00 By Sales 21,72,54,874.00

To Purchases 15,47,45,849.00
.

To Gross profit Transfer 6,76,23,564.00 By Closing Stock 1,98,54,754.00

(value certified by
to P&L A/c Proprietor)

Total Rs. 23,71,09,628.00 Total Rs. 23,71,09,628.00

61
 Mahalaxmi Automotives Pvt. Ltd
Balance Sheet as on 31March 2022

Capital & Liabilities Amount Properties & Assets Amount

Capital A/c Fixed Assets

(as per Extract) 6,67,91,425.00 (as per Schedule) 5,20,23,163.00

Current Liabilities Current Assets

Sundry Creditors 65,12,125.00 Sundry Debtors 70,85,654.00

Provision 25,45,846.00 Closing Stock 1,98,54,754.00

Loans Liabilities Investment 40,28,283.00

Cash Credit 1,20,54,876.00

Other Loan & Advances 42,15,321.00

Bank Loan 25,48,648.00

Cash & Bank Balances

Cash & Bank Balances 32,45,745.00

Total Rs. 9,04,52,920.00 Total Rs. 9,04,52,920.00

62
 ANNEXURE

1. Is there is possible to solve all problems of customer related loan?

o Yes
o No

2. What kinds of major problem faced by customer to take loan?

o Low Income Source

o Cybil report
o Score card
o Address Proof

3. What type of advertisement you prefer for your medical?

o Newspaper
o Internet
o Friends and Family
o Magazines

4. Does your business have the ability to repay of loan?

o Yes
o No

5. How much money do you need for loan?

o 50,00,000-1,00,00,000
o 1,00,00,000-2,00,00,000
o More than 2,00,00,000

6. Is there loan repayment work?

o Yes
o No

63