History of Karnataka Financial Services Ltd.
The Comp. was incorporated as a Public Limited Comp. with the Registrar of Companies, Karnataka, Bangalore, on 12th October 1990 vide registration No.11294/90. The Comp. has obtained Certificate of Commencement of business on 22nd October, 1990.
PRESENT BUSINESS
The Comp. commenced its operations in October 1990. The main activities undertaken by Comp. were Leasing, Hire Purchase & Short Term Financing in the form of Bill Discounting and Inter Corporate Deposits. The Comp. has grown steadily & has added expertise in diverse areas of financial services like Merchant Banking, Corporate Advisory Services, Primary Market Investments, Loan Syndications etc. The Comp. has obtained SEBI approval to act as Category III Merchant Banker. The Comp. has also been granted registration by SEBI as Category II Share Transfer Agents.
Leasing & Hire Purchase
The Company Leasing & Hire Purchase portfolio has more than trebled in the last three years showing an average growth rate of over 100%. The Comp. has a diversified corporate lease portfolio with some of major companies of Karnataka availing Lease & Hire Purchase facilities from the Company.
The disbursements made during the last three years are as follows:
[Rs. in lakhss] 31.03.92 31.03.93 31.03.94 Hire Purchase 159.45 195.16 251.18 Lease 56.44 85.55 427.37
Short Term Financing
The Comp. has been successful in the areas of Bill Discounting, placement of Inter Corporate Deposits & other short term funding.
The disbursements made during the last three years are as follows:
[Rs. in lakhss] 31.03.92 31.03.93 31.03.94 Bill Discounting 12.03 98.17 115.81
Merchant Banking
The Comp. has obtained SEBI approval to act as Category III Merchant Banker. The Comp. has on hand, mandates for three issues to act as Advisors.
Debt Recovery
The Company debt recovery record has been good as is indicated by following statistics:
Year Ending March 1992 1993 1994
Hire Purchase Instalments 100% 98.78% 98.90% Lease Rentals 100% 95.80% 97.40%
Policy on write off of debt
For writing off receivablesA committee of two Directors upto Rs.25.00 lakhs jointly with CEO
For writing off receivablesBoard of Directors over and above Rs.25.00 lakhs
CREDIT POLICY
The Company credit policy comprises of stringent criteria for assessing credit risk & fixing conservative norms for Company credit exposure. The general criteria followed by Comp. are as follows:
1s] Overall & individual exposure to each Industry and Client.
2s]Security of transaction
3s]Balance between risk & return
The Credit norms are distinct for each type of credit.
The appraisal procedure begins with the marketing department doing a detailed appraisal for each proposal & obtaining approval from the designated sanctioning authority ranging from departmental head to a committee of senior executives depending upon the value, period and nature of facility suggested.
The Comp. has a system of monitoring the repayment on a monthly basis & where rentals/instalments are in arrears, immediate steps are initiated to get Acc. regularized.
RBI NORMS FOR NBFCs
The Reserve Bank of India [RBIs] has come out with a set of guidelines for Non-Banking Finance Companies [NBFCss]. These norms are to be complied with by March 31, 1995.
These norms cover capital adequacy, classification of assets, provisions for loans, income recognition & credit/investment limits. NBFCs are also required to get credit rating for its public deposits.
The minimum capital adequacy required as per the norms will be 6% of risk weighted assets & off balance sheet items by March 31, 1995 & 8% by March 31, 1996. The Company current capital adequacy levels are higher than the prescribed norms. The loans & advances & other forms of credit are to be classified as standard assets, sub-standard assets, doubtful assets & loss assets. The Comp. follows the norms regarding classification of assets. The Comp. also follows the norms for provision for loans, income recognition and limits on lending. The Company has also approached ICRA for credit rating for its public deposits. Thus the Comp. doesn't envisage any difficulty in adhering to the norms in the future also.
MAIN OBJECTS
The Main objects of Comp. set out in the Memorandum and Articles of Association of Comp. are:
1. To carry on & undertake the business of finance, investment Hire purchase, Leasing, trading, & to finance operations, of all kinds including lease, Hire purchase & all forms of immovable properties including land & buildings & movable properties including plant and machinery, equipments, ships, vessels, hotel, equipments, medical equipments, air conditioners, air conditioning plants, office equipments, computers construction machinery, furniture & fixtures, electronic equipments, aeroplanes, helicopters, house hold equipments & appliances, automobiles, motorcycles & other two Wheelers and other consumable durables, commercial & industrial goods & otherwise deal with the aforesaid items in any manner whatsoever including resale thereof regardless of whether the property purchased or leased being new and/or used.
2. To advance, deposit or lend money, security & properties to/or with any company, body corporate, firm, person or association & to acquire & hold & otherwise deal with shares, stocks, debentures, bonds, obligations & securities, issued or guaranteed by any Comp. or any Government, sovereign, ruler commissioners, public body or authority supreme municipal, local or otherwise whether in India or abroad, & to invest & deal with monies of Comp. in such manner as may be determined from time to time, whether falling under the same management or otherwise in accordance with & to the extent permissible under the provisions contained in Sections 370 & 372 of Companies Act, 1956, with or without securities & on such terms as may be determined from time to time. However, the Comp. shall not carry on the business of banking as defined in the Banking Regulations Act, 1949.
3. To carry on the business as investors & investment advisors or otherwise organise, accept or implement any takeover bids, mergers, amalgamations, acquisitions, diversification, rehabilitation or restructuring of any business, concern, undertaking, Company, body corporate, Partnership firm, or any other association of persons, whether incorporated or not by acquisition of shares or assets & liabilities, & whether as a going concern, or as a part of concern, or otherwise as may be required having regard to business exigencies & to promote or procure incorporation, formation, or setting up of concerns & undertakings whether as Company, body corporate, partnership or any other association of persons for engaging in any industrial, commercial or business activities.
4. To set up, incorporate & manage provide and/or participate in providing in venture capital, technology turns, underwriting fund or any other funds for seed capital, risk capital foundation, including giving guarantees or such other financial assistance as may be conducive for development of new enterprises, innovative methods of production & development of existing & new technologies to identify project ideas, to prepare project profiles, project reports, market research, feasibility studies & reports, pre investment studies and investigation of industries on micro & macro level, to undertake appropriate service to identify scope or potential for economic & industrial development in any particular geographical areas or location whether in India or abroad, to act as lead managers in respect of project assignments by undertaking follow up, supervision, and co-ordination work at the instance, behest or on behalf of banks, financial institutions, Companies, body corporates & to monitor the same to the participants to act as an advisor in the management of undertakings business enterprises, offices, trade, occupations & professions by introducing modern methods & techniques & systems and render all assistance as may be necessary including by acting as agents for recruitment of personnel, technical, skilled, unskilled, supervisory, managerial or otherwise & to act as an advisor in the selection of technical process, economic size, source of plant & machinery & other utilities, for business entrepreneurs.
5. To carry on the business of merchant banking in all its aspects, to act as Managers to Issue & offers whether by way of public offer or otherwise of shares, stocks, debentures, bonds, units, participation certificates, deposit certificates, notes, bills, warrants, or any other instruments whether or not transferable or negotiable, commercial or other paper or scrips [hereinafter collectively referred to as Securitiess], to act as agents of and/or dealers in the securities in the course of merchant banking business to act as discount house for any of securities to act as financial consultants, joint managers, Lead Managers, Co Managers, advisors, & counselors, in investment & capital market to underwrite, sub underwrite or to provide stand by or procurement arrangements, to issue guarantees, & to give any other commitments for subscribing or agreeing to subscribe or procure or agree to procure subscription to securities, to manage, portfolio investments, to provide financial & investment assistance for purposes herein, to act as issue house registrars to issue, transfer agents, for securities to manage & administer computer centers & clearing houses for securities, to form syndicates or consortia of managers, agents & purchasers for or of any of securities to act as brokers, dealers & agents in connection with the securities, bullions, & precious metals to syndicates any financial arrangements whether in domestic market or international market & whether by way of loans or guarantees or export & yard credits, to undertake the work of factoring of bills & other commercial papers, & to arrange and/or co-ordinate documentation & negotiation in this regard.
SUBSIDIARY OF THE COMPANY
The Comp. doesn't have any subsidiary.
