KARNATAKA STATE FINANCIAL CORPORATION
It is my pleasure once again to meet you all. I welcome you to the 36th
Annual General Meeting of your Corporation. I am happy to report that the
Corporation has made a successful entry into new business areas covering
merchant banking, hire purchase, corporate loans, bill discounting and
deferred payment guarantee. Your Corporation has once again performed
exceedingly well in surpassing targets in all key operation areas.
Sanctions crossed the Rs. 500 crore mark in 1994-95, while disbursements
crossed the Rs. 400 crore mark. The Corporation recovered Rs. 374.83 crores
in 1994-95. The cumulative number of loans sanctioned crossed the one lakh
level. In the rehabilitation of sick units the share of the Corporation is
45% of the number of units covered by all SFCs in the country. For three
years in a row, the Corporation has been recognised by the IDBI as the
preeminent SFC in the country in all operational areas.
During the year under review, the Corporation generated a gross revenue of
Rs. 190.62 crores on cash basis as against Rs. 148.76 crores in 1993-94.
The working of the Corporation in 1994-95 resulted in an operational profit
of Rs. 36.06 crores before writeoff and taxes.
The performance of the Corporation against targets set for 1994-95 is given
(Rs. in crores)
target achievement % of achievements
1. Sanctions 398.50 520.18 130.53
2. Disbursements 353.50 432.09 122.23
3. Recovery 343.00 374.83 109.28
REHABILITATION OF SICK UNITS
61 units were provided rehabilitation assistance of Rs. 3.29 crores. With
this, the total assistance since the inception of, the scheme touched Rs.
64.28 crores in 1462 cases.
ASSISTANCE TO THE SMALL SCALE SCALE SECTOR
Rs. 289.61 crores were sanctioned to 7839 cases during the year as com- pared to Rs. 208.16 crores last year. Cumulative assistance to SSls at the
end of March 95 stood at Rs. 1607.99 crores in 67732 cases. Cumulative
assistance under the Vishwa programme stood at Rs. 23.20 crores in 15,507
EQUIPMENT LEASE FINANCE
The Corporation sanctioned Rs. 11.88 crores in respect of 23 units as
against Rs. 4.04 crores in the previous year. Disbursements amounted to Rs.
9.89 crores. (Rs. 2.00 crores in 1993-94) and recovery was 100%.
In the first year itself sanctions under hire purchase came to Rs. 15.67
crores and disbursements to Rs. 9.87 crores.
MERCHANT, BANKING AND FINANCIAL SERVICES
Merchant banking activity was started in the second quarter of 1994-95 as
envisaged in the corporate plan. Initially, 4 facilities like the
preparation of projects and pre-issue appraisal reports, syndication of
loans and the co-acceptance of bills of exchange was started. Later
underwriting of public issues was taken up and firm allotments of high
quality scrips picked up. Merger and amalgamation proposals were also
undertaken. Bill discounting and deferred payment guarantees were added.
KSFC's application for Category I merchant banking status was accepted by
the SEBI without any conditions. Issue management activity has also
Merchant banking activity generated an income of Rs. 703.02 lakhs.
TREASURY FUNCTIONS AND MARKET-LINKED RESOURCE-RAISING
During the year the Treasury department was carved out of the Finance and
Accounts Department to monitor fund raising and manage resources and
liquidity. Another pioneering effort was KSFCs entry (the first for any PSU
in Karnataka) into the area of unguarateed bonds. A five year bond was
structured for private placement at a highly competitive rate and Rs. 60.00
crores successfully mobilised. The medium and short maturity instruments
were tailored to meet the requirements of short maturity outflows like
bridge loans, corporate loans and NCDs and new business activities which
are not covered by IDBI and SIDBI refinance.
FUTURE OUTLOOK AND PROSPECTS
After the extensive diversification successfully completed in 1994-95, the
Corporation intends to further develop new activities as self-contained
profit centres. It hopes to assume its rightful role as the promoter of
industrial development in the small scale sector by entering into
relationships with national and international investors. KSFC hopes to
promote the improvement of services in areas where the small scale sector
is expriencing a dire need like factoring and venture capital. Continuous
improvement in appraisal and monitoring techniques to ensure upgradation of
portfolio quality will also be a principal concern of the Corporation.
The number of branch offices is expected to increase from 30 to 34 during
1995-96. There is also a proposal to enhance delegation of powers to branch
offices to improve the spread and quality of services. The building for the
corporate office has also been inaugurated and will be occupied in the
course of the year, facilitating a better operational environment.
Similarly, the office buildings in Hubli, Chitradurga and Raichur are
expected to be ready by the end of the year.
The plan for computerised networking of branch offices and bringing them on
line is under implementation. With that, KSFC, would be the first SFC in
the country to have advanced towards networking.
I wish to place on record my sincere thanks to the Governments of
Karnataka, Departments of Finance and Industries and Commerce for their
valuable co-operation and support. I am thankful to the Industrial Develop-
ment Bank of India (IDBI) and the Small Industrial Development Bank of
India (SIDBI) for their valuable guidance and needbased refinance.
May I place on record the support and co-operation extended by the RBI,
IRBI, KSIIDC, KSSIDC, DlCs, KEB, KIADB, LIC, UTI, Apex Bank, Canara Bank,
State Bank of India Capital Markets, State Bank of Mysore and other
commercial banks. I also wish to thank voluntary organisations like CII,
FKCCI, KASSIA, AWAKE and others for their contribution to our devel-
Finally, I take this opportunity to express my deep appreciation of the
untiring efforts put in by Dr. Renuka Viswanathan, Managing Director and
the officers and officials of the Corporation which has enabled the
Corporation to continue to occupy the preeminent position among SFCs in the
B. K. Bhattacharya
Place : Bangalore
Dated : 31st July 1995,