Movie: The Power of One Essay

The director John G. Avildsen has made the concert scene memorable from the film â€Å"The Power of One† which was set in apartheid time in Africa by using many visual and verbal techniques such as lighting, music and dialog that support all the suggestions that the scene makes. These techniques make this scene and film memorable. During the concert scene Peekay conducted a group of non-white African prisoners to sing for the commandant. Peekay was proven to be smart and determined in this scene because he translated the guards speech to the prisoners incorrectly to encourage the tribes to unite. The Guard told Peekay to translate â€Å"†¦sorriest prisoners in all of Africa!† but Peekay translate it to â€Å"Let us be one under the African Sky†. The prisoners sang a song about the guards â€Å"they run this way, they run that way, they are afraid, they are cowards..† in Zulu. Sergent Boreman cornered Peet and made him tell what the words to the song meant and then beat him to death because he was aggravated about what the prisoners were singing. Peekay got to Peet in time for him to say his last words: â€Å"All the tribes as one, thanks to you rainmaker†. A visual technique which made the concert scene memorable was lighting. The dark dim lighting suggested that the conditions of the prison were harsh. An example of this is when Geil Peet is beaten to death by Sergeant Boreman, the lighting was harsh, artificial and spot lighten which made Boreman look evil. The lighting gives the audience clues about the dark emotions experienced by Geil Peet in this scene. Another technique used in this film is the music during this scene. There were only two types of music, the piano and the background singing of the African prisoners which suggest a lot of things, for example the prisoners singing from different tribes could suggest co-operation and equality between tribes and the singing in Zulu meant that the commandant and Sergeant and guards could not understand what the tribes were singing about the guards being cowards and afraid. â€Å"Alyea Olyeah mon!† is what one of the prisoners was shouting out. Peekay in this scene translated the commandants speech incorrectly which gave the prisoners encouragement to bring honor to  their tribe. The dialog also made this scene memorable in this film. The dialog was very moving and powerful. The speeches were moving because the verbal and visuals at each part of the scene were supporting each other to create something beautiful even though Geil Peet was dieing in Peekay’s arms saying â€Å"†¦ rainmaker† the over narration when Geil dies is also moving â€Å"†¦for a brief moment he was a freeman†. This suggest that Peet had a hard life before if he was a freeman just before he died. The actual English speech of the commandant suggest that he hated all black people and thought that whites are superior which also suggest racism. I believe that this film â€Å"The Power of One† is a bold, strong and moving film and many memorable and important scenes like the concert scene. The Director John G. Avildsen has attempted to recreate what apartheid was like in Africa and I strongly believe that this film has captured that image.

Control The Speed Of The DC Motor Engineering Essay

Direct current ( DC ) motor is applied in a broad scope of applications peculiarly in mechanization engineering due to minimum electromotive force ingestion. In the proposal DC motor plays an effectual function in Hardware execution. The chief rule behind the undertaking is to utilize the cascade control to run the DC motor ; it ‘s one of best feedback accountants. For gauging the speed and the armature current of the DC motor with 24 Vs and a dsPIC Microcontroller is programmed.The above all operation is done in a closed control cringle map. Table of Contentss 1.2 Objective 2. Specific Aims of the undertaking Chapter 1 1. Introduction 1.1 Background Brushed DC Motor DC motor theoretical account Digital control of District of Columbia motor Advantages of District of Columbia with regard to rush control Analogue control of District of Columbia motor 2.1 Dss PIC dsPIC30f 3010 2.2 MPLAB IDE 3. Design and Research Cascade control Currentloop kineticss Speed cringle kineticss 3.1 Components for commanding 24v brushed Dc motor 3.1. Flexible upside-down board 3.2.1 Generating PWM moving ridge signifiers 3.1.2 H-Bridge convertor 3.2 Software techniques used in DC motor Programing microcontroller in Flexible inverted board 4. Consequences and Discussion 5. Decision 6. Appendix List of Figures FIGURE 1: Operation of BRUSHED DC Motor FIGURE2: General block diagram of velocity cringle and current cringle of DC Motor FIGURE3: H-bridge convertor with different electromotive force VI ± & A ; VI?Chapter 11. Introduction1.1 ObjectiveThe chief map of the undertaking is to command the velocity of the DC Motor utilizing a dsPIC30f3010 microcontroller. For that implement a separate hardware to fulfill the chief map of the undertaking.1.2 Specific Aim of the undertakingIn order to accomplish the chief nucleus of the undertaking, concept Hardware for commanding the velocity control of DC motor. The chief hardware demands are Ds PIC microcontroller ICD interface & A ; connection for system interface DC power supply MOSFET Current detectors The above constituents are required to build a hardware called Flexible Inverted Board [ 4 ] .1.3 OUTLINE OF PROJECTStep1 In this paper a flexible upside-down board is constructed with the series of hardware constituents Step2 Then pass on the Flexible inverted board with system utilizing MPLAB IDE package with ICD-3 interface [ 4 ] .the linguistic communication used in the MPLAB package is C-language. Step3 The velocity cringle and the current cringle are the two of import maps for commanding the velocity of the Dc motor. In our undertaking the cardinal point is to command both the cringles by C-programming linguistic communication utilizing MPLAB ICD-3. The velocity cringle of the microcontroller is called velocity accountant and the current cringle of the microcontroller is called current accountant.Chapter 2THEORITICAL TECHNIQUES AND THEIR REVIEWS2 Background2.1 Brushed DC MotorIn automotive industries DC motor is used widely in â€Å" fuel pump control, electronic maneuvering control, engine control and electric vehicle control † [ 6 ] for its cost effectual and it is used in many applications like â€Å" mush and paper industries, fan pumps, imperativeness, winder motors † [ 2 ] , † place contraptions, washers, driers and compressors † [ 6 ] are some of the best illustrations. DC motor is one of the of import hardware employed in this paper, it consists of a rotor and stator, and the parts are placed in a lasting magnetic field. Commutator and coppice are placed in between the rotor and stator. Positioning the coppice at a peculiar way in the rotor is classified into some classs and they are â€Å" rad ial, trailling or taking † [ 3 ] places. When the rotor rotates the commutator and C coppice interface at a point, which produces an tremendous sum of magnetic field from the coppice of the motor and it produces current to the armature twist of the Dc motor. FIGURE 1: Operation of BRUSHED DC Motor [ a ]2.2 DC Motor theoretical account [ 8 ]Each motor will hold different specification and demands. Harmonizing to motor demands and inside informations the theoretical account can be designed. The purpose of motor theoretical account, trades with commanding the applied electromotive force of both velocity and current. The basic theoretical account for a Dc Motor is shown below FIGURE2: DC Motor theoretical account The above diagram is a simple RL circuit. RL circuit is called opposition induction circuit and a 24v DC Motor. All these constituents combine to organize RL circuit. Now the derivation portion of the RL circuit is explained below T ( T ) = J tungsten is the Angular speed J is the minute of inactiveness B is the clash T is the armature Torque T ( T ) = ( T ) is the Torque invariable is Armature current Harmonizing to Kirchhoff ‘s jurisprudence ( T ) – ( T ) = ( T ) + and are the induction and opposition for the armature current ( Iowa ) The electromotive of the motor can be determined by multiplying the back voltage with velocity The relationship for the electromotive force is shown below ( T ) = The province theoretical account for any DC motor utilizing Iowa and tungsten ( velocity ) is mentioned below.= +2.3 ds PIC -microchip Ds PIC stands for Programmable Interface Controller or programmable intelligent computing machine, which act as an of import controlling unit for full system. The chief aim of this undertaking is to do the Ds PIC to bring forth 6PWM wave form. In an ideal status the wave form from the pulsation width transition can command the H-bridge convertor. It non merely serves as an interface accountants but besides plays a function of a programmable logic accountant ( PLC ) . [ 16,20 ] Ds movie has a memory of 16bit microcontroller that has two major maps. Firstly it can move as a package portion functioning package maps and the other is a hardware portion functioning hardware maps. The input signals that are attain from the feedback service system are received by the package portion which in bend utilizes the codifications that are written on the bit on C – linguistic communication to analyse the input and run the hardware. Finally the package makes certainly the hardware runs based on the package maps to derive the needed end product. [ 18, 20 ] Our undertaking concentrated on working experiments that were run at lab conditions. Since a twosome of systems have certain differences from the stimulation that have been run in existent conditions compared to ideal conditions. This in bend is the working of the microcontroller. dsPIC30F 3010, 2010 4011 and 3012 are the series of french friess that have been available in the Lab. The missive ‘F ‘ in ds PIC30F and such bit provinces that the bit contains brassy memory. The ground for sing this brassy memory merchandise is because 30F has an ex-ordinary public presentation when compared to EPROM ( Effaceable Programmable Read-Only Memory ) and one clip programmable french friess ( OTP ) . This has been a major demand for the running of this undertaking to acquire the needed end product. 16-bit modified Harvard architecture has been added to the CPU incorporating Ds PIC30F for using the information and upgrading the set of usher lines for running digital signal processing ( DSP ) [ 14 ] . There is a drawn-out flexible opcode field which has been installed in the CPU that has a 24 spot broad user coder memory country and the entire turn toing velocity can travel up to 4MA-24 spot. This programming theoretical account has sixteen 16bit working registries in Ds PIC30F bit. There are two categories of debut commanding unit that have been integrated and used for executing they are integrated and used for executing [ 2 ] .2.3.1 dsPIC30F 3010This subdivision is about the pin constellation and the constituents available in dsPIC30F3010 microcontroller. Normally the memory allotment in dsPIC30F 3010 can classified in to three classs they are SRAM in Bytes EEPROM in Bytes Programmable memory in Bytes/instruction2.3.1.1 SRAMSRAM stands for inactive RAM ( Random Access Memory ) . Harmonizing to the tabular matter shown below the informations bound for inactive RAM should non transcend 1024 bytes. The memory in the map can sort in two types they are X – Datas RAM Y – Datas RAM The inactive RAM uses X -RAM and Y_RAM for hive awaying informations.2.3.1.2EEPROMThe memory allotment for EEPROM is same as inactive RAM. In read merely memory one of the of import types of ROM used to hive away memory is EEPROM. The chief map of this ROM is based on two parametric quantities they are endurance and keeping [ 2 ] . Endurance is to retain the informations even after the ROM fails. Therefore the informations ca n't be deleted at any instant. Time period is required to hive away informations that is taken attention by keeping [ 2 ] .2.3.1.3Program memoryIn a peculiar plan Ds PIC30f microcontroller has a separate memory allotment for hive awaying both the reference and information. The memory bound for the plan memory is 24K. plan reference infinite anda informations reference infinite Table 1: Tabulation for memory allotment in Ds PIC30f3010 The pin constellation of dsPIC30f3010 is described below FIGURE 3: Pin constellation of dsPIC30F 3010 [ 2 ] Pin descriptions ( PWM1L and PWM1H ) , ( PWM2L and PWM2H ) & A ; ( PWM3L and PWM3H ) [ 2 ] these are six different types PWM channels used in the pin constellation. In which each PWM brace generates three responsibility rhythms with one high end product ( H ) and one low end product ( L ) . INT0, INT1 & A ; INT2 are the interrupt buffers used in the PIC. VSS and VDD [ 2 ] are the supply electromotive force and land in the PIC accountant. U1RX & A ; U1TX, U1ARX & A ; U1ATX [ 2 ] are the series of pins used for pass oning PIC microcontroller with Personal computer, in other system interface operation can be done by UART map. In that RX stands for receiving system and TX stands for sender. The above pin map plays an of import in our undertaking.Chapter 3Methodology3.1 Components for commanding 24v brushed Dc motorSince the undertaking is to the full based on difficult ware so many constituents are available and how they work in that operation.3.1.1Cascade control operation in Dc Motor:The below operation is done by utilizing Double cascaded layout, it consists of two cringles they are current accountant with current mention and velocity accountant with velocity mention [ 5 ] as shown in. FIGURE4: General block diagram of velocity cringle and current cringle of DC Motor [ B ] The current cringle is covered by the velocity cringle, in the block diagram it has the two circles interior circle is called interior cringle and the outer circle is called outer cringle since the interior circle operation is ever quicker than the outer circle. In other words interior circle public presentation is multiple of 10 times faster than the staying 1. The cascade control rule is chiefly used in our undertaking to keep the velocity of the motor at a changeless degree and the current cringle in the cascade control is the armature current and it is otherwise called as torsion. Sometimes armature current may transcend the bound to avoid this state of affairs in cascade control, it has limiter, and the chief map of the clipper is to restrict the values of the armature current. For illustration To restrict the armature current to 64volt i.e. 1 ampere. So that the armature wo n't transcend those bounds since the clipper is available in cascade control. The velocity accountant in the cascade control used to bring forth demand current ia* . The motor runs to get the better of the demand current values. The demand current value will ever higher than the normal current values. So that the velocity motor bit by bit increases. PI accountant ( relative Integral accountant ) Current accountant Speed accountant The above all constituents construct a cascade accountant and the map each constituent is described below 3.1.1.1PI accountant ( relative and built-in accountant ) In cascade accountant map assorted accountants are used for observing the velocity and control of the motor, but PI accountant is recommended as high efficient accountant because it consist to constant addition Kip and Kid. By manually tuning the addition of both Kii and Kpi will cut down the steady province mistake and the stableness of the system will be increased. In recent study more than 70 % cascade accountant used PI accountant for commanding the velocity control DC Motor. In order to cut down the steady province mistake in the closed cringle system, bit by bit increase the relative addition changeless Kp. As the addition of the Kp increases the steady province mistake in the system decreases. But the stableness of the system will non be stable. To do the system stable, built-in term Ki is introduced in the system. When both the proportional and built-in term amount each other to cut down the steady province mistake and do the system stable.the above two maps can be done at th e same time in the PI accountant. The mathematical look for PI accountant is explained below. FIGURE 5: PI accountant of a closed cringle map [ 1 ] Kp-proportional addition Ki-Intergral addition Y- Output of the PI accountant Err-Error in the PI accountant At the get downing mistake ( Err ) will go through through both Kp and Ki. For relative addition the end product is Kp Err y1= Kp Err eqn1 [ 1 ] y2 = eqn 2 [ 1 ] Y = y1 + y2 eqn 3 [ 1 ] eqn 4 [ 1 ] The cardinal point in this PI accountant is the mistake Err in intergral addition Ki will be integrated. so that the steady mistake will be reduced and the system will be stable.3.1.1.2Current accountantThe current accountant in the closed cringle maps of the cascade control. The current cringle is besides called as current accountant. It is used to protect cascade circuit from harm. The chief map of the cascade map is to command the velocity. Before commanding the velocity the current of the accountant should be controlled. The current obtained from the closed cringle map is from armature circuit of the DC Motor [ 7 ] .the input in the current accountant is the back voltage ( ia* ) . Power convertor is chiefly used to better the control in the system. It has high exchanging frequence, since the power convertor in the current cringle is really speedy. The end product of the convertor is armature electromotive force ( Va ) . ( -E ) is the perturbation occurred in the current cringle, in order avoid the perturbation -E Iowa ia* RL CIRCUITT Power Converter Pi FIGURE 6: Functional block diagram of Current accountant The perturbation is added along with RL circuit, and the equation is shown below Va = ( S La + Ra ) ia + Tocopherol The map of the RL circuit is cut down complexness Va is Armature electromotive force. Iowa is armature current ( seeking to command ) Ra is Armature opposition Tocopherol is Disturbance RL = 1/ ( S La + Ra ) Current cringle is carried out by conveying the from Iowa ( armature current ) to ia* ( demand armature current ) . As speedy as possible without doing the over shoot acquiring so high. If the over shoot is high it creates job to the convertor. Similarly when the addition values ( Kp and Ki ) increases in PI controller the over shoot value reduces, but the same clip there is more sum of oscillation which may impact the system. Care should be taken in taking both Kp and Ki values. T Iowa ia** FIGURE 7: graph for armature current V subsiding clip ia – Armature current ia* – Demand armature current ts – Settling clip3.1.2 Flexible inverted boardThe major hardware has been designed and implemented as Flexible inverted board. It consists of many constituents they are dsPIC30F3010 microcontroller, H-bridge convertor and District of Columbia motor. The maps of these hardware constituents are explained earlier. The above all operation is implemented in a individual hard ware called flexible inverted board. FIGURE 8: Functional block diagram of Flexible inverted board3.1.2.1 IR2130 gate thrust circuit:There are three input signal generator blocks which are capable of supplying two end products each gives the inputs to the six end product drivers. L1, L2 and L3 are signal generators which drive exactly the three low-side end product drivers although H1, H2 and H3 signal generators must be flat shifted before it is fed to the high-side end product drivers. The drifting points of the driver, gate charge demands of the power switch and the maximal power switch â€Å" ON † times receives power from three bootstrap capacitances C1, C2 and C3. Bootstrap capacitances besides feed supply to the internal natation driver current. Once these energy demands are met there must be considerable sum of charge still on the 8.3V nominal to forestall halting. D7, D8 and D9 should be super-fast. VCC degree seen by an under-voltage sensor circuit gives an input to criminalize six end products of the signal generator circuits. Current detector R1 derives the ITRIP signal in the chief power circuit of the motor when it is segregated with a 0.5 V mention to criminalize the six signal generator end products. ITRIP inputs sets up a mistake logic circuit which in bend gives unfastened drain TTL end product for system gesture. FIGURE 9: Circuit diagram for IR2130 gate thrust circuit3.1.2.2Trim port map with PWMTrim port are little in size and they are really little in size.it is chiefly used in many PCB building board since it ‘s occupies less infinite. The spare port act like a potentiometer and it is otherwise called as pruner [ ] . By tuning the spare port, opposition value can be minimized or maximized. For illustration if a 50ohm opposition can be tuned by spare port from 0 – 50. The two leg of H-bridge convertor produce two pulse wave form one with low end product ( 1L ) and another 1 with high end product ( 1H ) . The responsibility ratio of the PWM wave signifier can set utilizing spare port.3.1.2.3DC MOTOR ENCLOSED WITH A ENCODERThe best methods of ciphering the velocity of the DC motor is utilizing optical encoder method. It consists of a disc, Light Emitting Diode ( LED ) and optical detector [ 6 ] . The disc is fitted with the rotor, as the rotor rotates the disc starts whirling along with the rotor and it is placed in between the LED beginning and the light detector. Once the rotary motion starts the disc passes through the LED beginning and the optical detector gets started, from which the velocity of the motor can be calculated because the optical detector Acts of the Apostless like a tachometer. In other words the encoder in the DC motor is otherwise called as velocity observing detectors. [ 6 ]3.1.2.4 H-Bridge convertorDC motor runs differential v elocity, but the applied electromotive force of the motor varies at every interval of clip. Since the electromotive force is straight relative velocity, as the electromotive force increases the velocity of the motor besides increases. Speed can be calculated by tachometer which is in physique in the DC motors, the applied electromotive force can be supplied and controlled by a convertor called h-bridge convertor. Soman GD – Gate Drive Circuit FIGURE 10: H-bridge convertor with different electromotive force VI ± & A ; VI? [ c ] In this H-bridge circuit it produces two unipolar pulsation breadth transitions because it has two leg inverter. Effective transition takes topographic point merely in the first half of the inverter. As a consequence two variable electromotive forces are generated on either side of the armature twist. In H-bridge, transition index is represented as ( +mi ) and the reciprocal of transition index is represent as ( -mi ) .the motor in our undertaking really sing two pulse breadth. Both the pulsations are reciprocally relative to each other bring forthing a unipolar PWM. The two legs in the convertor are called the shift signals or exchanging frequence. Bigger convertor comparatively has lower frequence and smaller convertor has higher frequence. If the frequence in the leg1 is high in contrast the frequence in the leg2 will be low. In our undertaking see VI ± and VI? are the exchanging channels of the H- span convertor. they are reciprocally relative to each other. The bearer signal is called the input frequence. the bearer frequence used in our undertaking is 10khz. Harmonizing to the bearer frequence the clip period of VI ± and VI? differs. In C coding VI ± and VI? is mentioned as PDC1and PDC2 from the below graph FIGURE 11 graphical representation of PWM signals in H- Bridge convertor. The end product electromotive force of the h-bridge convertor can be obtained both negative and positive electromotive force distribution [ 1 ] . Pulse width transition in the h-bridge convertor helps to command the armature circuit of the DC motor [ 1 ] . Maximal armature current ( torsion ) can be obtained by comparing clip invariable of both field twist and the armature weaving [ 1 ] . Since the motor is connected straight to the field twists supply electromotive force in the field twist is more when compared with the armature weaving. To keep equal clip invariable in both field and armature weaving [ 1 ] , the applied electromotive force in the armature twist should be increased, as the armature current increases the torsion end product is maximized [ 1 ] .3.1.3 Generating PWM moving ridge signifiersAs the torsion end product gets maximized, pulse breadth transition is introduced in the H-bridge system to avoid the perturbation in the armature current.it can be done by increasing the frequence degree of the H-bridge convertor at a higher scope. As the torsion end product gets maximized, pulse breadth transition is introduced in the H-bridge system to avoid the perturbation in the armature current.it can be done by increasing the frequence degree of the H-bridge convertor at a higher scope. FIGURE 12: Diagrammatic representation of the pulsation breadth transition is shown below [ 6 ] The below specification is referred from [ 6 ] Ton – Time is ON ( applied electromotive force ) Toff – Time OFF ( applied electromotive force ) T – Time period. Duty rhythm = . The mean electromotive force of the DC motor can be shown in an equation below Average = Duty rhythm A- Vin [ 6 ] When the motor is running at a changeless velocity the back voltage of the motor is besides remain changeless. As the back voltage remain the same the motor running at changeless velocity and the armature current ( Ia ) is zero. PWM is one chief portion that is required for the operation of cascade control.4. Software used to drive the Motors4.1 Programing microcontroller in Flexible inverted board utilizing C-languageIn the flexible inverter board PIC microcontroller plays a major place in directing the pulsation breadth transition. The Ton clip in the pulsation breadth transition ( PWM ) signal can be modulated or controlled by the microcontroller, as the microcontroller varies the clip, the speed of the motor alterations with regard to clip. The Programing linguistic communication used in microcontroller is embedded C. The scheduling codifications are downloaded in the microcontroller bit, the downloading attack can be done by a package development tool called MPLAB, this package exists in supervising the systems, this package should be foremost installed in the Personal computer, the code rs will compose the codifications to modulate the PI accountant to get Applicable beginning from the current cringle of the cascade control map. Once the codifications are accepted harmonizing to the current cringle [ 1 ] , the plans can be downloaded in the microcontroller through cosmopolitan consecutive coach or in circuit Debugger ( ICD ) ; ICD is a coach which interfaces Personal computer system and the flexible inverter Board. [ 6 ] In order to plan the microcontroller examine whether the hardware constituents are interfaced with the accountant. The scheduling linguistic communication used for programming the accountant is C linguistic communication. In c-language the information ‘s are classified in to input informations and end product informations. The microcontroller direct the information in linear signal, where the C-language wo n't accept linear signals.To avoid the state of affairs ADC convertor and encoder interface are introduced in the system. ADC stands for parallel to digital convertor ; it converts the linear signal in to digital signals. Then the digital signals get received by the C-program as input informations. In turns c-program will direct the end product informations to the PWM unit. UART communicating system is a bidirectional so that microcontroller and Personal computer can pass on at the same time. UART stands for cosmopolitan asynchronous receiving system sender. The basic diagram matic representation for system communicating with C-language is shown below FIGURE 13: System communicating in C – Programing Language. In C-language foremost initialise all the maps required for the velocity control of motor.4.1.1Current detector input:The current in the motor spiral is one of import parametric quantity in the effectual running of the motor. So it is indispensable to mensurate the value of this current. The measuring of the current is performed by utilizing particular detectors call Hall Effect Sensors. The scope of the current is determined by the evaluation of the motor. Any over current in the motor can severely damage the motor. The Hall Effect detectors produce a electromotive force matching to the stage current. This is fed to the ADC inputs of the micro accountant where it is converted into the digital signals. This is so fed into the microcontroller plan. Hence the current demands to be limited within specific limits.CL1, CL2 and CL3 are the three current detectors variables used in this cryptography. The spot ratio of the ADC input is 10 so the input informations scopes from 0 to 1023. The maximal informations bound for the current detector is 1023.so the current detector value in the C- codification is initiated as CL1 = 511 ; CL2 = 511 ; CL3 = 0 ;4.1.2 Encoder input:For any velocity accountant, the existent velocity of the rotor forms the footing for the control signals. The velocity control signal can be changed merely if there is an mistake between the existent velocity of the rotor and the coveted velocity of the rotor. If the measured velocity is less than the coveted velocity so the PWM pulsations are changing consequently to increase the velocity. To execute this action a shaft encoder is used. The shaft encoder uses an opto-mechanical system to bring forth pulsations. These pulsations so are used to deduce the velocity of the rotor. A mention pulsation is used as an index to number the pulsation. This information is fed to the microcontroller, which so uses a particular timing circuit that processes these encoder pulsations. The motor velocity to be accessed by the microcontroller needs to be stored in a variable within the micro accountant codification. The variable used in this plan is a variable called revolutions per minute. This variable is accessed to cipher all maps related to the motor velocity.4.1.3 Pulse Width Modulation:The MOSFET ‘s in the circuit is used as switches. These MOSFET ‘s are switched harmonizing to a PWM. To drive these MOSFETs ‘ a gate driver circuit is required. The gate thrust signal generates the electromotive force required for the operation of these MOSFET ‘s. The PWM is generated by the microcontroller harmonizing to the plan and is supplied to the gate thrust circuit. The PWM signals are sep arate for each if the 3 legs of the MOSFET inverter. Each of the PWM requires a transition index to bring forth the signal. These transition indexes are stored in a registry. The registries are named as PDC1, PDC2, and PDC3. These variables are really important in bring forthing the PWM signals for the MOSFET drivers. Since informations bound is 1023.4.1.4 Initializing the codification in C – linguistic communicationBefore executing any map in C-language, it requires an low-level formatting. It is of import to initialising the variable of a map. Some the maps are initialized below.Init PORT ( )This map initialise the digital input and end product port or parallel input and parallel end product of the microcontroller.Init UART ( )It is one of pin in the microcontroller.The chief map of the UART is used for bidirectional communicating with Personal computer. Since UART can able to observe the transmittal velocity in informations transportation between the microcontroller and Pe rsonal computer. The maximal transmittal velocity is around 19200.the informations transportation wo n't transcend the bound.Init PWM ( )The input frequence of our PWM signal is 10kHz.the clip bound for the transition index is around 0-1474.in the h-bridge convertor has two legs so each leg produces a PWM signal with a maximal clip bound of 0-737. Hence the Ton clip of PWM signal will be in 1:1 responsibility ratio.Init ADC ( )It is used to change over the parallel signals in to digital signals. In the microcontroller there are five pins reserved for the ADC inputs. During the informations transmittal ADC maps plays a of import function in disrupting the signal. An low-level formatting is required for the interrupt to execute any map in C- linguistic communication.Init CAPTURE ( )The gaining control map is chiefly used to mensurate the frequence and clip period of the PWM wave signifier generated from the two legs J30 and J31 pins of the H-bridge convertorInitTimer3 ( ) and InitTime r1 ( )To put initial clip in the microcontroller for the gaining control map and timer 1 set the starting clip for the interrupt map happened in the UART communicating system.Interrupts:Interrupts are occurred merely during the informations transportation, when the transmittal velocity that is the baud rate is known means the interrupts can be added to the system easily.in our undertaking the baud rate is 19200.the chief map of the interrupt is used synchronize clip period of PWM with the velocity cringle and the current cringle of the motor. In our undertaking four different type of interrupt service modus operandi are used. They are ISR_ADCInterput ( ) This interrupt is triggered when the ADC finishes its transition and hence its get synchronized to the microcontroller PWM clip base. From this all the application control codification to be implemented in this interrupts service modus operandi.ISR_T1Interput ( )The assorted information to the Personal computer is transferred by utilizing the UART communicating nexus in this interrupts service modus operandi. All the variables that are needed to be mentioned in this everyday utilizing standard C map dash ( ) .ISR_U1RXInterput ( )Assorted information is transferred from the Personal computer in to the C plan. This everyday concedes us to modulate the facets of the plan when it is running.ISR_IC1Interput ( )It measures the velocity value from clocking informations that are attained in the input gaining control faculty. FIGURE 14 The connexion diagram for the velocity control of Dc motor is shown above Chapter 55 Consequences and treatmentAs discussed earlier the assorted maps of hardware constituents in this undertaking, this subdivision discusses the inside informations sing how the undertaking deals with comparing and measuring the consequences. Undertaking has a series of stairss ; each measure is assigned with different operation techniques to put to death the concluding consequences. 5.1 Initial connexion trial between MPLAB IDE and Flexible inverted Board Initially the system needs to be interfaced utilizing the flexible inverter board. This operation is performed by linking the Personal computer to the flexible upside-down board. To link the Personal computer to the flexible upside-down board, ICD 3 interface port is used to finish the connexion. Since the informations transmittal velocity in ICD 3 is high when compared with ICD 2, the power supply to the inverted board is supplied through the Dc power supply generator. The Initial conditions were set to the power supply generator where the electromotive force bound and current bound is zero. For the Dc motor maximal electromotive force supply is 24voltage in VDC and a current of 0.5 ampere is set in the power supply generator which is so connected to the inverter board. Once the initial conditions are set, the power generator is fitted with a path button which needs to be held and at the same time the end product button needs to be pressed. Once the end product button is turned ON, the power is applied to the inverted board. On the other manus MPLAB IDE package is opened in the system, where a new file demands to be created so the needed compiler for this undertaking needs to be selected. Once these scenes are done the debugger option in the MPLAB ICD 3 is chosen, the package will initialise the tool and a verification message was displayed on the screen which says â€Å" ICD 3 is connected † . The codifications for this were designed in the MPLAB package and burnt in the Ds PIC microcontroller by ICD 3 interface. 5.2 Measure 3, 4 & A ; 5 One of the ADC input pin in the PIC microcontroller demands to be initialize as ADCBUF0. The maximal input scope of ADC interrupt is 1023 since ADC input is initialized as IN1. When IN1 is initialized as ADCBUF0 in C-language it can be written as{IN1 = ADCBUF0 ; PDC1 = IN1 ; IFS0bits.ADIF = 0 ;}Here IN1 is the informations value for the spare port in the flexible upside-down board. The maximal IN1 value is 1023. As mentioned earlier PDC1 is initialized as one leg portion H-bridge convertor, where PDC1 is 1474 and a unipolar pulsation breadth transition was generated. If IFS0bits.ADIF is zero, it means that the chief used to initialise ADIF value is 0 in other words it is the default value. PDC1 = 2*IN1 ; Similarly in measure 4 multiply the spare port input value with 2. Then the PDC1 input scope will transcend so ‘if ‘ statements are used to restrict the value of PDC1 from 0 to 1474. To restrict the values of PDC1 the codification in C-language can be implemented as ; PDC1 = 2*IN1 ; If ( PDC1 & gt ; 1474 ) PDC1= 1474 ; 5.3 Step6 & A ; 7 The flexible upside-down board consists of a gate triggered circuit in other words they are known as MOSFETS. Wholly 6 MOSFETS are available in the flexible upside-down board. In our undertaking two MOSFET are used and both of them are connected to the legs of the H-bridge convertor. The MOSFETS that are connected to H-bridge convertor are ‘U10 and U13 ‘ & As ; ‘U11 and U14 ‘ . To supervise and look into if the MOSFETS are triping the pulsation or non it can be done by analyzing the trial points available in the flexible upside-down board. This is done utilizing the CRO where the trial points are connected via investigations as a consequence triping pulsation is produced. The diagrammatic representation of Square wave signifier is shown below. FIGURE 15The above diagram represents the general pulsation wave form Depending on the transition index value produced by the ADC input the responsibility ratio of the pulse fit transition varies consequently. In other words the transition index is straight relative to the responsibility ratio. Using appropriate C plan the ensuing wave form from the three different responsibility ratios was observed to be in the square form. When the CRO is connected to the trial point J30, three different per centums were obtained due to the different responsibility rhythms. The C codifications that were used to obtain the wave forms are mentioned below: C codification for 50 % responsibility rhythm: PDC1 = MI + 737 ; PDC2 = MI – 737 ; Manual computation for 50 % responsibility rhythm Since PDC1 = 1474 If PDC1/2 = 1474/2 = 737. Resulting wave form for 50 % responsibility rhythm is shown below FIGURE 16 moving ridge from for 50 % responsibility rhythm C codification for 25 % dutycycle: PDC1 = MI + 1105.5 ; PDC2 = MI – 1105.5 ; Manual computation for 25 % dutycycle: ( PDC1 and PDC2 ) value for 50 % responsibility rhythm is 737 ( PDC1 and PDC2 ) value for 75 % responsibility rhythm is 368.5 For 25 % responsibility rhythm add both 737 + 368.5 = 1105.5 Resulting wave form for 25 % dutycycle: FIGURE 17 moving ridge signifier for 25 % responsibility rhythm Code for 75 % dutycycle: PDC1 = MI + 368.5 ; PDC2 = MI – 368.5 ; Manual computation for 75 % responsibility rhythm For PDC1 and PDC2 is 737 Divide PDC1 and PDC2 by 2 The solution for for PDC1 and PDC2 is 368.5. Resulting wave signifier for 75 % dutycycle FIGURE 18 moving ridge signifier for 75 % responsibility rhythm 5.4 Measure 7 The last operation is based on linking the CRO with the trial point J30 in the flexible upside-down board, likewise the same operation is performed in another trial point J31. The triggered pulsation obtained from the MOSFETS is shown below for the different responsibility rhythm ratio as already mentioned in measure 6. Resulting wave form for 25 % responsibility rhythm: FIGURE 19 Resulting wave signifier for 25 % responsibility rhythm in trial point J31 Resulting wave signifier for 50 % responsibility rhythm is shown below FIGURE 19 Resulting wave signifier for 50 % responsibility rhythm in trial point J31 FIGURE 20 Resulting wave signifier for 75 % responsibility rhythm: From above three wave signifiers each differs in their responsibility ratio. Then compare the wave form of J30 & A ; J31. The different is happened because of hold or mistake occurred during the informations transmittal. 5.5 Measure 10 In the initial status of the spare port is set as nothing. Then the responsibility rhythm of the PWM 1 is high and PWM 2 will be low.In other words PWM1 is reciprocally relative to PWM2. Similarly in the ulterior status when the spare port is turning toward the higher terminal. Now the responsibility rhythm of PWM 2 is found to be more than 95 % . The end product of the PWM is determined from the CRO. Since the value of PDC1 and PDC2 will be 1474.due to 1:1 responsibility ratio. The input informations values are every bit shared by both PDC1 and PDC2. In some conditions when the PDC1 = 2*IN1.the value of IN1 is 1023, and so value of PDC1 is 2046. As per the conditions mentioned earlier the value should non transcend the input informations bound 1474. Such state of affairs are handled with aid of if statements. Using if statement how the status is satisfied in C cryptography PDC1 = 737+MI ; PDC2=737-MI ; If ( PDC1 & gt ; 1474 ) PDC1 = 1474 ; If ( PDC2 & gt ; 1474 ) PDC2=1474 ; This codification C2=1474-PDC1 makes the motor to revolve at rearward way. When the above codification is compiled and executed the electric resistance value increased or decreased by manually tuning the spare port in the flexible upside-down board. Harmonizing to the opposition value in the microcontroller the amplitude and the current flow can be controlled. 5.6 Measure 11 Ripple current and RL Load Now connect the RL burden with the connection of the flexible upside-down board to cipher the ripple current. In the connection of the flexible inverted board has two points. They are sing as point A and point B. Ripple current can be calculated by a device called current investigation. First connect the current investigation to the point A of the connection and view the mean value of the ripple current in the CRO. The wave form for the mean ripple current value for point A is shown below. FIGURE 21 moving ridge signifier for responsibility cycle1 with 1H and duty rhythm 2 1L ( indicate A ) 1H – High End product 1L – Low End product In this wave form the conditions are wholly reversed when compared with the above wave form. The responsibility rhythm 1 with 1L and duty rhythm 2 with 1H ( indicate A ) FIGURE 22 moving ridge signifier for responsibility cycle1 with 2L and duty rhythm 2 1H ( indicate A ) Once the rippling currents are calculated in point A. the similar operation is performed by the current investigation in point B. the wave forms are shown below FIGURE 23 wave form for responsibility cycle1 with 1H and responsibility cycle2 with 1L ( point B ) FIGURE 24 wave form for responsibility cycle1 with 2L and responsibility cycle2 with 2H ( point B ) 5.7 Measure 12 This measure deals with ciphering the beginning and derive value of ripple current through current investigation as discussed earlier. These values are chiefly used for trying the input informations ‘s from the microcontroller. In order to cipher the beginning and addition value the values need to be identified as shown in the tabular matter below they are ; ADC electromotive force, current detector, PDC1 and PDC2. Initially the interface needs to be reloaded with the flexible upside-down board. The PDC1 and PDC2 value can be determined by the ticker option in MPLAB IDE package. The current detector in the flexible inverted board has a trial point J43. Then the current detector value was measured by multi metre through the trial point. For this a 24 electromotive force Dc motor the maximal current detector value gettable will be 2.57voltage. Initially set the spare port value to zero, so look into the current detector value by a multi metre where it showed 2.57. By increasing the electric resistance of the spare port the current detector and ADC electromotive force will be bit by bit decreased nevertheless at one phase the ADC electromotive force bit by bit decreases to zero. Later the ADC electromotive for ce value increased easy but the current detector invariably decreased as shown in the tabular matter. These values were recorded in the tabular matter. Subtracted ADC electromotive force value from PDC1 value and the mean value consequence was recorded in the new column. Then the mean value for the new column is calculated. Table 2 Tabular column for ciphering beginning and addition values ADC electromotive force Current detector PDC1 PDC2 PDC2 – ADC electromotive force Spot 27.51 2.569 41 1433 13.49 4.46039 25.43 2.559 143 1331 117.57 21.79 2.544 283 1191 261.21 20.51 2.527 444 1030 423.49 17.79 2.517 546 928 528.21 0.0007 2.497 757 717 756.9993 3.72 2.478 960 514 956.28 4.07 2.462 1123 351 1118.93 18.4 2.43 1431 43 1412.6 5588.7793 620.9754778 Manual computation for the above tabular matter is shown below Offset spot = ( PDC1 – ADC electromotive force ) / entire figure values ( PDC1- ADC electromotive force ) = 13.49 + 117.57 + 261.21 + 528.21 + 756.9993 + 956.28 + 1118.93 + 1412.6 = 5588.7793 PDC1-ADC electromotive force = 5588.7793 Entire figure of values = 9 Average ( PDC1 – ADC electromotive force ) = 5588.7793/9 = + 620.9754778. Calculate the entire ADC electromotive force Entire ADC electromotive force =27.51 + 25.43 + 21.79 + 20.51 + 17.79 + 0.0007 + 3.72 + 4.07 + 18.4 = 132.5 Offset spot = + 620.9754778./ 132.5 = 4.4602 spot 5.8 Measure 13 In this subdivision connect 24 volt Dc motor to the flexible upside-down board. When the power supply is turned ON the motor rotates at a peculiar velocity and this velocity of the motor rotates harmonizing to the responsibility ratio produced by the H-bridge convertor. Initially test all the conditions to verify the on the job status of the motor. The motor used here is fitted with an encoder that is attached together. Since the flexible inverted board has an encoder sensor the encoder portion of the motor was connected to the encoder sensor, therefore the motor satisfies the conditions mentioned above.5.9 Measure 14In this measure, J14 pin of the flexible upside-down board is interfaced together with the system through a overseas telegram. Using Lab position package ‘s the Tacho scope, RPM can be determined. PDC1, PDC2 and their corresponding responsibility rhythm per centum are viewed. Like this similar operation Table 3 Tabular column for ciphering electromotive force Vs velocity Tacho Vdc Revolutions per minute PDC1 PDC2 Duty 1 % Duty 2 % 1 -18.1 1776 150 1324 89.2 11.2 2 -14.5 1416 270 1204 81.1 19.9 3 -10.71 1047 388 1087 73.3 27.1 4 -7.46 727 482 992 66.5 35.5 5 -3.42 334 596 878 58 42 6 0 95 714 760 50 49.6 7 1.69 165 826 648 45.6 54.4 8 5.5 538 941 532 38.2 62.2 9 9.33 919 1049 423 29.8 70.1 10 12.9 1265 1155 320 22.3 72.9 11 16.1 1578 1256 219 15.5 85.5 12 19.6 1919 1374 97 9 92 RPM = K To cipher the value of the K K = Vdc12 – Vdc1/RPM12 – RPM1 K = 19.6-18.1/1919 – 1776 K = 0.0104 As per the demands from the tabular matter secret plan the graph for Vdc ( electromotive force ) V RPM The graph representation is shown below FIGURE 25 Voltage Vs Speed5.10 Measure 155.10.1Current cringleOnce the mean value of the ripple current and the beginning values are calculated, to command the velocity of the motor, foremost the applied electromotive force of the motor should be controlled. Interestingly the applied electromotive force can be determined from the current cringle of the relative and Built-in accountant in other words as PI accountant. Since the operation of PI accountant is explained before itself. In the PI accountant current plays the interior cringle, and it is 10 times faster than the outer cringle. So the interior cringle is executed foremost. A measure input given to the PI accountant. The consequence expected from the end product of the PI accountant as a measure end product with extremum over shoot. This extremum over shoot increases the steady province mistake besides increases. In bends steady province mistake produces a electromotive force bead in the motor. So the velocity of the motor bit by bit decreases. This state of affairs can be overcome by seting the addition of both relative and built-in. The maximal extremum over shoot degree is 7.5 % . If the degree exceeds, the end product of the current cringle is non in a stable status. If the system is non stable, it is hard to command the velocity of the motor. the graphical representation of the expected current cringle is shown below. FIGURE 26 measure response end product for current cringle In the above measure response the ia* and Iowa are the demand current and the armature current. Since the current detector value 1023. Two current detectors are used. They CL1 and CL2 The armature current Iowa = 511 Demand current ia* = 511 Tocopherol is the mistake E = demand current – armature current E = ia* – Iowa E = 511 – 511 = 0 ; Harmonizing to the computation shown above.The codification is compiled in C-language for the current cringle. In the cryptography First originate the addition values of the PI accountant as kpi and kii. int kpi, kii ; kpi=10 ; kii=0 ; Then initialise the mistake, armature current and demand current as i_error, Iowa and ia_demand int Iowa, ia_demand, i_error ; Iowa = CL1 ; ( initialise current detector 1 as armature current of the motor ) CL1 = 511 ; ( initialise the value of current detector 1 as 511 ) ia_demand = 511 ; ( demand armature current ) i_error = ia_demand – CL1 ; ( Error in the armature current can be determined by deducting the armature currenr ( Iowa ) from the demand armature current ( ia* ) . The expected mistake should be zero. when the above codification is executed in MPLAB package. In the get downing the mistake is non zero. Some clip the current detector value differs. As per the codification the expected CL1 value should 511. In this status, a new set of codification is implemented. In this codification, if statements are used for the CL1 value. Then the current detector value will be within the scope. if ( 510 & lt ; CL1 & A ; & A ; CL1 & lt ; 517 ) the value CL1 ranges from ( 511 to 517 ) The manual tuning of kpi and kii alterations CL1 from 511 to some other value. As a consequence mistake occurs in the extremum over shoot. For illustration if CL1 is 514, which is displayed on the ticker of MPLAB Since the expected CL1 is 511 but CL1 is 514 The mistake difference between the expected and the present value is 3. The avoid the mistake difference in CL1 a simple codification is designed below CL1 = CL1 -3 ; ( if CL1 is 514, 514 – 3 is 511 ) . The mistake is zero but the extremum over shoot is still high. This is due built-in air current up map because the built-in added with kii in PI accountant. To avoid this mistake separate codification is executed in C cryptography. The variable zi is initialized as built-in collector and its value is 737. if ( zi & gt ; 737 ) zi=737 ; if ( zi & lt ; -737 ) zi=-737 ; the above codification keeps the zi value within the scope. Since i_error = 511 zi = 737 + 511 zi = zi+i_error ; ( anti air current up codification added with an mistake ) In order to avoid the built-in mistake multiply built-in collector with built-in addition ( kii ) . kii * zi ( eqn 1 ) Multiply the mistake with the addition of proportional. kpi * i_error ( eqn 2 ) add both the eqn to acquire the concentrated transition index. This map will cut down the steady province mistake and extremum over shoot. myocardial infarction = ( kpi*i_error ) + ( kii*zi ) ; From this codification the expected extremum over shoot is obtained with zero steady province mistake. The expected current cringle moving ridge signifier implemented from the codification is shown below In this moving ridge signifier over shoot is high. To cut down the over shoot and stead province mistake manually tune the kpi and kii value. Manual tuning is like a loop method to acquire a peculiar solution after many comparings take topographic point between kpi and kii values. The expected end product is non yet determined. So the expected end product is still under procedure.Mention[ 1 ] D.J.Atkinson, â€Å" Control of Electric thrusts, † EEE 8014 talk notes, School of electrical, electronic and Computer technology, Newcastle University,2011. [ c ] [ 2 ] R.Roberge, â€Å" Carbon coppice public presentation and application in the mush and paper environment † , National Electrical Carbon Products, 2001. [ 6 ] E.A.CHOON, â€Å" DCmotor velocity control utilizing microcontroller pic16f877a † , 2005, pp. 1-64. [ 3 ] K.Hameyer, R.J.M.Belmans, â€Å" Permanent magnet excited brushed DC motors † Dept. of Electrical. Engineering. Katholieke University, Vol. 43, 1996, pp. 247-255 [ a ] CONDIT, R. ( 2004 ) Brushed DC Motor Fundamentals Microchip Technology Inc. [ 5b ] P.Chevrel, L.Sicot, S.Siala, â€Å" Switched LQ accountant for DC Motor Speed and Current Control: a comparing with cascade control † , 1996. [ 4 ] G.J.Atkinson, â€Å" Electrical Power and Control Project, † EEE8075 ( Semester 1 ) talk notes, School of electrical, electronic and Computer technology, Newcastle University, 2011. [ 7 ] M.V.Ramesh, J.Amarnath, S.Kamakshaiah, G.S.Rao, â€Å" SPEED CONTROL OF BRUSHLESS DC MOTOR BY USING FUZZY LOGIC PI CONTROLLER † ARPN Journal of Engineering and Applied Sciences.Vol.6, NO. 9, 2011. [ 8 ] R. K. Munje, M. R. Roda, B. E. Kushare, â€Å" Speed Control of DC Motor Using PI and SMC † IPEC, 2010 Conference Proceedings, 2010, pp.945- 950. DS movie mention [ 2 ] . ( 2010 ) dsPIC30f3010 Data Sheet. Microchip Technology Inc. [ 16 ] .D'SOUZA, S. ( 2004 ) detector less BLDC Motor Control Using dsPIC30f2010. Microchip Technology Inc. [ 18 ] . ELLIOTT, C. & A ; BOWLING, S. ( 2004 ) Using the dsPIC30F for mindless BLDC control. IEEE Inc. [ 20 ] . HUDDLESTON, C. ( 2007 ) Intelligent detector design utilizing the micro chip Ds PIC [ electronic resource ] / by Creed Huddleston. , Elsevier/News. Tabulation J. Plantier, H. Aziza, J.M. Portal, C. Reliaud, A. Regnier, J.L. Ogier, â€Å" EEPROM tunnel oxide life-time dependability anticipation based on fast electrical emphasis trials † ELECTRONICS LETTERS Vol. 46 No. 23, 2010. Tang Yiliang, Cui Wenjin, Xie Xiaorong, Han Yingduo, Man-Chung Wong â€Å" 80Cl96MC Microcontroller-based Inverter Motor Control and IR2130 Six-output IGBT Driver † Department of Electrical Engineering and Faculty of Science and Technology, 1999, pp.665-667. [ FIGURE9 and 3.1.2.1 ] David Cook â€Å" CHAPTER 14 Variable Resistors ROBOT Building FOR BEGINNERS † , 2010, pp 173-191. [ trimport ]

Airasia’s Strategic Management

Case Study: AIRASIA AirAsia was launched in 2002 by Tony Fernandes, at the time a pioneer of low-cost flights in Asia. At first, the company operated three Boeing 737s. In 2004, after a very successful public offering, AirAsia was listed on the Malaysian Stock Exchange and from there grew rapidly. As of 2011, the AirAsia Group has 93 aircraft spread across 12 hubs (see appendix 1) and is flying to more than 60 destinations in 16 countries with 130 domestic and international routes.AirAsia operates 3,500 flights every week on domestic and international routes from nine regional hubs in Malaysia, Thailand (Thai AirAsia) and Indonesia (Indonesia AirAsia). AirAsia’s head office and its main base is the Low Cost Carrier Terminal at Kuala Lumpur International Airport. This terminal handles 48. 4% of AirAsia’s traffic (see appendix 2). AirAsia is the leading low-cost carrier in the world and won the Skytrax award for World's Best Low-Cost Airline in 2009 and 2010.In addition, the company is Asia's largest low-fare, no-frills airline and has a long-haul arm, AirAsia X, which currently flies to China, India, Iran, Taiwan, the UK and Australia with plans to launch services to Japan and South Korea. This report will use the PESTEL framework to evaluate the opportunities and threats presented by AirAsia’s external environment. It will then apply a SWOT framework to analyse the Strengths, Weaknesses, Opportunities, and Threats of the AirAsia group.Finally, this report will list three recommendations, to be evaluated by the AirAsia board of directors before implementation. To begin, a PESTEL framework will enable us to understand all the macro-environmental factors affecting AirAsia. 1. Political Opportunities Deregulation and privatization present Air Asia with opportunities for new routes. For example, the ASEAN governments signed the ASEAN Multilateral Agreement on the Full Liberalisation of Passenger Air Services (an open skies policy) in 2010.From 2 015, designated airlines from ASEAN countries will be able to fly to any city with an international airport in a member nation. AirAsia will therefore have the opportunity to penetrate undeveloped markets in the ASEAN region by opening new routes. However, it should be noted that foreign competitors will have the same opportunity and new routes will require the utilization of more aircraft. The Malaysian Government has always supported the Malaysian airline industry. One example of this is the opening of the Low Cost Carrier Terminal at Kuala Lumpur International Airport.Further, the Malaysian Government has helped all low-cost carriers (LCCs), and in particular AirAsia, to develop a competitive edge by reducing their operating costs and improving their logistics. Secondly, the Malaysian Government has given AirAsia, along with all Malaysian airlines, significant tax incentives (see appendix 3). These tax-incentives in fact helped AirAsia to cover a substantial part of its loan inte rest when purchasing aircraft. It is also important to highlight that other Southeast Asian countries are often substantially state owned.This allows the government to control the airline and protect it from competition. As an example, AirAsia established a joint venture with Shin Corp when it began operating in Thailand with Thai AirAsia. AirAsia had a holding of 49% of Thai AirAsia while the remainder was held by Shin Corp. , owned by the former Thailand Prime Minister Thaksin Shinawatra (2001 -2006). Threats AirAsia and its competitors can also be negatively affected by government decisions. For example, unless the Malaysian government makes an effort to minimise crime, travellers may choose to visit other destinations.Low-cost carriers are also suffering from recent delays in the construction of a new permanent low-cost carrier terminal (Expected to open in October 2012), work being undertaken by the Malaysian government. These delays reduce the ability for low-cost carriers to expand their capacity by catering for new passengers. Barriers to trade between countries may also inhibit low-cost carriers in Malaysia from entering more protected markets like China where the government tightly controls the airline industry.Civil conflicts and conflicts between regional governments can also affect AirAsia’s operations. For instance, there has been a resurgence of violence in Southern Thailand and terrorism attacks have occurred in the rest of Thailand and Indonesia. Additionally, Malaysia's recent decision to explore oil-rich waters off the coast of Borneo has led to increased tensions with Indonesia. These tensions could harm customer confidence and affect all businesses operating in Southeast Asia. 2. Economic OpportunitiesThe economic situation in Malaysia is stable. As an illustration, from 2004 to 2010, Malaysia's average interest rate was 2. 91%, its average inflation rate was 2. 77% and its average unemployment rate was 3. 43%. In addition, the Gove rnment of Malaysia has a current account surplus that enables them to continuously boost domestic demand, resulting in an average annual GDP Growth of 4. 5% between 2000 and 2011. The global forecast for all Asian countries for 2011 anticipates an average GDP growth of at least 3% for 2011.Countries like China, India and Indonesia are expected to experience GDP growth exceeding 6% (see Appendix 4). Although, economic downturns are always complicated for any business to negotiate, they can also present certain opportunities for companies like AirAsia because, for example, aircraft leasing costs are often reduced by about 40% at such times. Thus, companies with ‘deep pockets’ are able to invest and expand their fleet at a very competitive price. Threats Fluctuating oil prices are a major challenge for airlines.For example, in 2009 and 2010 the price of jet kerosene price represented between 40 to 55% of AirAsia CASK (cost per available seat kilometre). From the latest inf ormation, the fuel price in 1Q11 was US$117 per barrel, relatively high when compared with 1Q10 when the price was only US$99. 6 per barrel. Fluctuating oil prices have a major impact on operational costs. This is why all airlines use fuel-hedging contracts to stabilise the price they pay for the purchase of jet kerosene. By hedging fuel, Air Asia paid an average price of US$107 per barrel in Q1 2011 from (see Appendix 5).The last decade was very prosperous for several Southeast Asian airlines and the Asia Pacific domestic LCC penetration by capacity has expanded rapidly, and has reached a saturation level in several countries. For instance, in countries like the Philippines (61. 8%) or Malaysia (56. 5%), more than half of the region's airline seats are supplied by low-cost carriers compared with the world average of 24% (see Appendix 9). 3. Social/Cultural / Demographic Opportunities Firstly, Southeast Asia offers an important advantage to airlines because the egion is comprised of multiple ethnic groups that are able to speak several languages. For example, Malaysia is composed of several ethnic groups – Malay, Chinese, Indian and Thai – and this provides a company like AirAsia with the ability to find staff that can speak several languages, something which is useful as they rapidly expand their business outside Malaysia. Secondly, the rapid urbanization of Southeast Asia clearly helps airlines because it forces governments to develop important infrastructures and open new airports in order to facilitate the flux of people between countries.According to the UN, seven out of the 15 most populated cities in the world (;10 million) are predicted to be in Asia by 2025 (see Appendix 6). Thirdly, rapid economic growth also drives a rapid growth in the middle class within Asia’s large population. According to the latest OECD forecast, the amount of money spent by the Asian middle class is expected to represent 59% of the total amount spent by t he middle class in the world by 2030 (see Appendix 7).By analysing average household consumption within Asia, we can also confirm that the communication and transport spending category will increase from less than 10% in 1995 to 15% in 2015 and this will definitely increase the demand for air travel between Asian countries (see Appendix 7). Threats The emergent middle class is growing more rapidly in countries like India and China. It is likely that these countries will develop foreign LCC competitors that will have a higher growth rate as well as a larger economy of scale than Malaysian airlines like AirAsia. 4.Technological Opportunities By utilizing information technology, airlines have been able to reduce their operating costs. LCCs were clearly the most effective players in the airline industry at implementing breakthrough information technologies. By implementing e-ticketing systems and using e-commerce to bypass traditional travel agents, LCCs have been able to ‘leanâ⠂¬â„¢ their processes by removing unnecessary costs. Furthermore, new, state-of-the-art aircrafts are more fuel-efficient than older models, and this has helped airlines to reduce their fuel consumption.AirAsia has implemented these technologies and they have contributed to their operational efficiency. Today, AirAsia has the world’s lowest CASK (cost per available seat kilometre), at just US$3. 52 in 2010 (see Appendix 8). It has achieved this by implementing the following best practices: a powerful Yield Management as well as Computer Reservation System (Novitiate Open Skies), a global Enterprise Resource Planning System (powered by Microsoft Business Solutions) and a Customer Relationship Management system provided by Siebel.Threats By being highly dependent on technology, LCCs incur costs in ensuring that their systems operate smoothly and safely (i. e. from backup systems and maintenance). In addition, by relying heavily on online sales, LCCs expose themselves to large f inancial losses when system disruption occurs. 5. Environmental/Legal Opportunities Firstly, AirAsia has the youngest fleet in Asia, with the new Airbus A320 and A330 providing improved fuel efficiency.This is fortunate because the EU has adopted a new policy (coming into effect January 1, 2012) that requires all airlines to pay for greenhouse gas emissions released on journeys to and from EU airports. Secondly, labour unions in Asia are relatively weak when compared with EU or USA and this helps airlines in Asia to remain competitive by reducing their overhead cost to a minimum. Threats Natural disasters force airlines as well as airports to reduce or shut down their operations for hours or even days.In the last decade, airlines have been exposed to Hurricanes, snow, fog, H1N1 influenza pandemic, volcanic eruptions and earthquakes. SWOT| Opportunities| Threats | O1) The population of Asian middle class is booming and will reach almost 700 million by 2012O2) Lots of potential to exp and and exploit growing markets in China, India, Japan and Korea as well as the long haul approach in Europe (AirAsia X)O3) Higher fuel costs may force some competitors out of the industry | T1) ASEAN Open Skies will increase competition, for example Singapore Airline and Thai Airways will start LCCs in 2012T2) Saturation of he LCC market in the Philippines and MalaysiaT3) Aviation regulation and Government interference will impact AirAsia’s passenger capacity (recent delays in the construction of the new, permanent low-cost carrier terminal (Expected opening date October 2012)T4) Accidents and disasters affecting customers| Strengths| Weaknesses| S1) Cost leadership: The world’s lowest CASK (Cost per available seat kilometre) with $US3. 52 in 2010. S2) Economies of scale: The biggest and youngest fleet among the LCCs in the region, with an average age of 2. 5 years.S3) Single aircraft fleet (which reduces maintenance and training costs)S4) Double digit growth of all A irAsia subsidiaries; AirAsia achieved record profit in Q42010S5) Quick turnaround of 25 minutes, which is the fastest in the regionS6) AirAsiaX has the world best fleet-utilisation, in excess of 17 hours, achieved by focusing on price-sensitive, time-insensitive customers S7) Profit margin is the highest margin in the LCC industry with 23%; by way of comparison, Ryanair's profit margin is 20%S8) The highest ancillary revenue in the LCC industry (through services like pick a seat, cancellation, baggage supersizing, excess baggage, cargo, as well as travel and tours through AirAsiaGo. com, e-coupon with AirAsia Megastore or Hotels with TuneHotels. om)S9) Brand name is well established in Asia PacificS10) Good at using IT to deliver low-cost operations (ticketless travel, online booking, online check-in)S11) Strong management team consist of industry experts with fast decision making processes (entrepreneurial)S12) Not sensitive to seasonal factors due to the high diversification of ro utesS13) Partnership ANA S14) Virgin Group has 20% share in AirAsia XS15) Weak labour unions | W1) AirAsia load factor fluctuates a lot and is not optimal. W2) Limited human resources due to low costsW3) Non-central location of secondary airportsW4) Heavy reliance on outsourcing (maintenance, repair). W5) Not financially strong enough to compete with â€Å"deep pocket† international airlines, e. g.Singapore Airline's new LCC | * | Main Recommendations| * | O3 with W1 = Recommendation 1 (CI to benchmark European LCC Load factors)O2, S13,S14 with T2 = Recommendation 2 (Partnership to enter new countries due to high LCC penetration level in Southeast Asia)S4 with T1 and W5 = Recommendation 3 (IPO of Thai and Indonesian AirAsia as well as AirAsia X to finance future growth)| Recommendations 1) Load factor As can been seen from the SWOT analysis, AirAsia is outperforming its competitors in terms of operation in several fields. It has the world’s lowest CASK, the worldâ€⠄¢s highest ancillary revenues per passenger and is the largest discount carrier in South East Asia.However by analysing the cost structure of Air Asia, it is clear that revenue can be improved by increasing the passenger load factor from 75% to more than 85%, something Easyjet has been able to do (see Appendix 10 for more information). The CI team must be deployed to investigate in detail the strategy that Easyjet has used. 2) LCC penetration in Southeast Asia is reaching maturity level need for diversification Appendix 9 and the SWOT together highlight the fact that domestic LCC penetration by capacity (seats) within Southeast Asia is starting to reach its maturity by exceeding LCC penetration worldwide (30% of Southeast Asian flights are supplied by LCCs compared with 24% in the world).Countries like the Philippines and Malaysia are clearly the most mature, with more than 50% of airline seats supplied by low-cost carriers. By analysing LCC penetration per country, we can see that AirAsia can leverage its AirAsia subsidiaries(Thai AirAsia and Indonesia AirAsia) to enter new countries with very low LCC penetration rate, such as Taiwan, Indonesia, China and Japan. The recent partnership of AirAsia with the Japanese airline ANA underlines the possibilities of this strategy. LCC penetration within Japan is only 9. 1%, far more than China with 6%, Indonesia with 5. 2% or the empty market in Taiwan with 0%. Meanwhile, Air Asia X (in which Virgin Group has an ownership position along with Air Canada) could be used to enter the difficult market in China more deeply.CI teams (AirAsia, Virgin Group, Air Canada) should be able to share information and knowledge in order to define several scenarios for future collaboration within China. 3) IPO to finance growth The construction of the new, world-class low-cost carrier terminal in Kuala Lumpur is expected to be completed in October 2012. Once built, it will be able to serve over 30 million passengers a year and, with exp ansions, will have the capacity to serve up to 45 million passengers a year. By analyzing the forecasted growth of AirAsia as well as it cost structure (see Appendix 11) we can see than the current economic downturn has increased the cost of aircraft by 212%, mainly due to the credit crunch.In addition, AirAsia’s ability to finance the expected growth forecasted is limited because its current structure includes only one publicly listed company that is used to finance all the capital expenditures for Thai AirAsia, Indonesia AirAsia and AirAsia X. One solution to cope with this situation of high growth and important capital requirements is to launch IPOs in 2011, especially because AirAsia X and Thai AirAsia are performing very well in 2011. The proceeds of IPOs could enable AirAsia to buy new planes and fund growth in order to compete with Singapore Airlines and Thai Airways who will start their own LCCs in 2011. In order to optimize the IPO the CI team will evaluate the best time for implementing this strategy.In, addition, the CI team will also evaluate the possible risks that IPO will have on the autonomy of AirAsia. Appendixes Appendix 1 AirAsia Group fleet composition: Q1-2011 Source: http://www. airasia. com/iwov-resources/my/common/pdf/AirAsia/IR/AA_1Q11_Analyst_Presentation. pdf Appendix 2 AirAsia's extensive domestic and regional network Source: http://www. airasia. com Source: http://www. centreforaviation. com/profiles/airlines/airasia-ak Appendix 3 Malaysian government Tax Incentive Source: http://www. centreforaviation. com/profiles/airlines/airasia-ak Appendix 4 Asian countries GDP Forecasts Appendix 5 Jet Kerosene prices Source: Centre for Asia Pacific Aviation & US Energy Information AdministrationAppendix 6 Top 15 most populated cities in the world (>10 million) are predicted to be in Asia by 2025 Appendix 7 Emerging middle class in Asia Source: http://www. oecd. org Source: http://www. adb. org Appendix 8 AirAsia has the world’s lowest CASK (Cost per available seat kilometre) with 3. 52 USD in 2010. Selected airlines RASK and CASK: Three months ended 30-Jun-2010 (RASK = Revenue per available seat kilometre and CASK = Cost per available seat kilometre) Airline| RASK| CASK| AirAsia| USD 4. 87| USD 3. 52| Air Arabia**| USD 4. 88| USD 4. 43| Tiger Airways| USD 4. 61| USD 4. 58| JetBlue| USD 6. 72| USD 6. 04| COPA| USD 7. 37| USD 6. 58|Norwegian Air Shuttle| USD 7. 34| USD 6. 82| Southwest| USD 7. 73| USD 6. 84| Vueling| USD 7. 68| USD 6. 91| China Southern Airlines**| USD 7. 32| USD 6. 98| Thai Airways| USD 6. 76| USD 7. 15| WestJet| USD 7. 95| USD 7. 43| Continental Airlines| USD 8. 25| USD 7. 52| Virgin Blue**| USD 7. 43| USD 7. 52| GOL| USD 7. 99| USD 7. 71| Air New Zealand**| USD 9. 22| USD 7. 71| Delta| USD 8. 65| USD 7. 74| US Airways| USD 8. 93| USD 7. 88| United Airlines| USD 8. 82| USD 8. 08| Air Berlin| USD 7. 76| USD 8. 12| Jet Airways| USD 8. 09| USD 8. 20| American Airlines| USD 8. 51| USD 8. 22| C athay Pacific| USD 9. 55| USD 8. 41| TAM| USD 8. 54| USD 8. 44|China Airlines**| USD 10. 60| USD 8. 49| Air China**| USD 9. 75| USD 8. 60| China Eastern Airlines**| USD 9. 25| USD 8. 63| Malaysia Airlines| USD 7. 90| USD 8. 75| Singapore Airlines| USD 9. 61| USD 8. 92| LAN| USD 10. 31| USD 9. 18| British Airways| USD 8. 88| USD 9. 21| EVA Air**| USD 10. 47| USD 9. 38| Qantas**| USD 9. 84| USD 9. 68| Iberia| USD 9. 78| USD 9. 75| Korean Airlines| USD 12. 65| USD 9. 82| Finnair| USD 10. 20| USD 10. 68| Asiana| USD 12. 48| USD 10. 69| Air France| USD 12. 05| USD 12. 51| SAS| USD 15. 03| USD 14. 18| Lufthansa**| USD 16. 41| USD 16. 49| easyJet| USD 6. 99| n/a| Source: Centre for Asia Pacific Aviation and company reports Appendix 9Asia Pacific domestic LCC penetration by capacity 2011: Source: Centre for Asia Pacific Aviation & OAG Facts Appendix 10 Passenger load factor Easyjet, Ryanair vs AirAsia Selected European airlines intra-Europe passenger load factor and passenger load factor gr owth: Mar-2011 AirAsia load factor development: 2Q2008 to 2Q2010 Source: Centre for Asia Pacific Aviation and AirAsia AirAsia cost structure Source: Centre for Asia Pacific Aviation & AirAsia Appendix 11 AirAsia A320 and A320neo aircraft delivery schedule: 2011 to 2026 Source: Centre for Asia Pacific Aviation and Ascend AirAsia cost breakdown / ASK: 1Q08 vs 1Q09 Source: Centre for Asia Pacific Aviation & Airasia

Non Performing Assets

1. a. EXECUTIVE SUMMARY The project is entitled â€Å"A study on The Management of Non-Performing Assets in the Canara Bank’s Loan Portfolio† is done at the Canara Bank, Donimalai Township, Sandur (TQ), Bellary (Dist), Karnataka State. INTRODUCTION: An efficient financial management is becoming inevitable for every manager in today’s corporate world. From a traditional aspect of raising funds whenever needed the importance has shifted to day to day financial decision making and problem solving.When initially the stress was on the internal analysis of the firm, procurement of funds, management of assets and allocation of capital, the present importance has shifted to decision making within the firm. With the modern aspect of finance function the responsibilities of the finance manager has also increased. In the process of making optional decision, he makes use of certain analytical tools in the analysis, planning and control activities of the firm. Financial analy sis is an essential prerequisite for making sound financial decisions.This study is intended to probe into the management of non performing assets in the Canara Bank’s Loan Portfolio, for the period of 2002-2003 to 2005-2006. The study is completely based on the analysis and interpretation of the published accounts of the bank and personal interview of the senior officials of the bank. OBJECTIVES OF THE STUDY: ? To evaluate the Canara Bank’s asset quality. ? To identify the effectiveness of the risk management system, undertaken by the bank. SCOPE OF THE STUDY: ? The scope of the study here was confined to the organization only. ? The study covers to find out the strategy required to reduce the NPAs.METHODOLOGY OF THE STUDY: ? Primary data. ? Secondary data. DATA ANALYSIS AND INTERPRETATION: When the data collected is completed the data is processed and the relevant information is obtained. The data collected is analyzed using various statistical tools like frequency d istribution, charts and percentage analysis. DURATION OF THE STUDY: This study is intended to probe into the management of non performing assets in the Canara Bank’s Loan Portfolio, for the period of 2003-2004 to 2005-2006. FINDINGS: ? The Net NPA ratio of the Canara Bank declined from 1. 88% as at March 31st 2005 to 1. 12% as at March 31st 2006. Canara Bank has recovered its NPA which is amounted to Rs. 865 crore during 2005-2006. ? The Net NPA of the Canara Bank declined from Rs. 1454 crore as on 31st March 2006. ? The Net NPA percentage of Canara Bank has reduced by over 19% during 2005-2006. RECOMMENDATIONS: ? Canara Bank should concentrate more on credit appraisal, monitoring, credit risk management and recoveries. ? Settlement is a better option for the banks wrestling with the problem of non-performing assets. ? Credit scoring allows lenders to determine whether or not you fit the profile of the type of customers they are looking for. Banks concerned should continuousl y monitor loans to identify accounts that have potential to become non-performing. CONCLUSION: ? Securitization Act will surely help banks in reduction of NPA to a great extent. ? Preventing fresh flow of NPAs to a great extent. ? Exchange of credit information among banks would be of immense help to avoid possible NPAs. 1. b. GENERAL INTRODUCTION: INDUSTRY PROFILE Banking in one form or another was in existence even in ancient times. The writings of Manu (the maker of old Hindu Law) and Kautilya (the Minister of Chandragupta Maurya) contained references to banking.However, banking as a kind of business i. e. , modern banking is of recent origin. It came into existence only after the industrial revolution. After the industrial revolution, with the increase in the size of industrial and business units, joint stock company people with small means to become shareholders of big industrial and business enterprises. Still, there were certain sections of public who were not prepared to inv est their money on the shares of joint stock companies. However they were willing to part with a little surplus money, if they were assured of the repayment of their money with a little interest thereon.So naturally, there arose the need for formation of financial institutions that could collect the surplus funds of people on terms acceptable to them and make them available to the needy for productive purpose. Accordingly a large number of financial institutions called joint stock banks were set up after industrial revolution. As such joint banks or modern banks are of recent development. MEANING OF BANKS: A banking company in India has been defined in the Banking Companies Act 1949 as â€Å"One which transacts the business of banking which means the accepting of he purpose of sending or investment of deposits of money form the public repayable on demand or otherwise and withdrawable by cheque, draft order or otherwise†. STRUCTURE OF BANKING SYSTEM IN INDIA: Indian Banking Sy stem has been categories into two: 1. Scheduled Banks. i. State Co-operative. ii. Commercial Banks. 2. Non-Scheduled Banks: Central Co-operative Banks and Primary Credit Societies. Commercial Banks. Commercial Banks are further divided into Indian Banks and Foreign Banks. Indian Banks are further divided into: 1. Public Sector Banks. 2. SBI and its Subsidies. 3. Other Nationalized Banks. 4. Regional Rural Banks.ACTIVITIES OF BANKS: I. Activities of Commercial Banks. II. Activities of Central Banks. I. Activities of Commercial Banks: The activities undertaken by commercial banks be subdivided into: a. Primary Functions. b. Subsidiary Functions. a. Primary Functions: i. Acceptance of deposits: It is very important for banks as it forms the basis of all other activities of banks. It accepts various types of deposits. They are current deposit, saving deposit, fixed deposit and recurring deposits. ii. Lending of Funds: It is also the most important function of Commercial Banks as it fetc hes the major portions of the income of the banks.Banks lend money by the way of loans, overdrafts, cash credit and discounting of bills. b. Subsidiary Functions: i. Agency Functions: The services rendered by banks as agent of their customers are called agency services. They are: †¢ Banks collect cheque, bank draft, bills, interest, dividends etc on behalf of the customer. †¢ Banks sells and purchases securities on behalf of the customers. †¢ Banks arranges for remittance of funds from one place to another place. †¢ Banks acts as trustees, executors, representatives of their customers. ii.General Utility Services: Services rendered by banks to their customers as well as the general public are called as general utility services. †¢ Banks accept precious articles, documents etc for safe custody. †¢ Banks helps exporters and importers in foreign trade. †¢ Banks issue travellers cheque, letter of credit, circular notes etc. †¢ Banks acts as a refe rence and supply information about the financial standing of the customers to others. II. Activities of the Central Bank: A. Monopoly of Note issue. B. Banker, Agent, Advisor to the government. C. Custodian of cash reserves of the banks. D. Lender of the last resort.FUNCTIONS AND IMPORTANCE’S OF BANKS: The importance of banks in the modern economy cannot be denied. Banks play a significant role in the economic development. Banks perform a number of functions. They are: 1. Banks mobilize the small scattered and ideal savings of the people, and make them available for productive purpose. In the sort, they aid the process of capital formation. 2. By accepting the savings of the people, banks provide safety and security to the surplus money of the depositors. 3. Banks provide a convenient and economical method of payment. The cheque system introduced by banks is convenient form making payments.Again the use of cheque economies the time and trouble involved in settlement of busine ss obligations. 4. Banks provide a convenient and economical means of transfer of funds from one place to another. Banks drafts are commonly used for remittances of funds from one place to another. 5. Banks helps the movement of capital from regions where it is no very useful to regions where it can be more usefully employed, by moving funds, banks increases the utility of funds. Again by moving funds from one place to another, banks contribute to the economic development of backward regions. 6.Banks influence the rates of interest in the money markets. Through the supply of money (i. e. bank money or bank deposits) banks expert a powerful influence on the interest rates in the money market. 7. Banks help trade and commerce industry and agriculture by meeting their financial requirements. But for the financial assistance provided by the banks, the pace of growth of trade and commerce industry and agriculture would have been very slow. 8. Banks direct the flow of funds into productio n channels. While lending money, they discriminate in favor of essential activities and against non essential activities.Thus they encourage the development of right types of activities which the society desires. 9. Banks always make it a point to help the industries, the prudent, the punctual and the honest and discourage the dishonest, the spendthrift, the gambler the lair and the knave (i. e. the rouge). Thus banks act as public conservators of commercial virtues. 10. Banks serves as the best financial intermediaries between the saver (i. e. the depositors or lenders) and the investor (i. e. the borrowers or the entrepreneurs). SERVICE PROFILE OF THE CANARA BANK: The bank has many financial services and different schemes.Important among them are as follows: DOMESTIC PRODUCTS SAVING BANK DEPOSITS: For individuals & non-trading organizations / institutions. CURRENT ACCOUNT: For business operations – trades, businessmen, corporate bodies. FIXED DEPOSITS: Secured way to high r eturns – individuals and institutions. KAMADHENU DEPOSITS: Re-investment money multiplier plan. CANBANK AUTO – RENEWAL: Higher return in a shorter plan. CANFLEXI DEPOSITS: A combination of savings & fixed deposits – high return & instant liquidity. ASHRAYA DEPOSITS: Respecting Indian values for senior citizens.RECURRING DEPOSITS SCHEME: Inculcating saving, a rewarding & recurring habit. FLOATING RATE DEPOSITS SCHEME (FRDS): Insures against interest rate fluctuations. LOAN PRODUCTS HOUSING LOAN SCHEME: Purchase of a ready built house / flat construction of house, purchase of a site and construction of house thereon, for undertaking repairs, renovations, upgradation, and creation of additional amenities and for taking over of the HL liability from other recognized housing finance companies and banks. HOME IMPROVEMENT LOANS: Furnishing the house / flat along with bank’s home loans / independently.CANMOBILE: Facilities purchase of new / used cards / jeeps of all make. The scheme also covers finance for purchase of brand new two wheelers. CANCARRY: Provided credit worthy individuals, professional and salaried class for buying consumer durables and household articles. CANCASH: Offer assistance for meeting unforeseen contingencies. Finance is granted against approved shares, bonds and debentures held by the clients. CANBUDGET: Fulfills the financial needs of confirmed employees of reputed PSU’s, joint stock companies, central / state / semi – government employees nd lecturers / professors / assistant professors of colleges / universities and research institutes. CANRENT: Provides loans to property owners whenever the property is leased / rented out to PSU’s central / state / semi – government undertakings. Reputed corporate banks. Financial institutions, Insurance companies and MNCs. CANMORTGAGE: Designed to meet the financial requirements against security of equitable mortgagee of property (land & building) to professional, businessman, salaried persons and individuals.VIDYASAGAR EDUCATIONAL LOAN SCHEME: Renders financial assistance for needy and meritous students for pursuing all type of studies (professionals / general) in India and Abroad. LOAN SCHEME TO TRADERS / BUSINESS ENTERPRISES: With hassle – free and minimum terms and conditions, the scheme cater to the needs of traders and other business enterprises for smooth flow of business activities. CANMAHILA: Exclusive loan scheme for women clientele. AGRI – LOAN SCHEME: Various loan schemes for agri-clinic, minor, irrigation, farm development / machinery, plantation crops fishers and for agro-exports.SSI LOAN SCHEME: A host of schemed available for technology up gradation fund in textile and jute industries, credit linked capital subsidy stand by credit for capital expenditure and margin money scheme of KVIC. OTHER PRIORITY SCHEME: These include loan for retail traders, small business, professional / self employed, medica l practitioners and loan for solar water heating / home lighting system. CREDIT CARD OPERATIONS †¢ The first Indian card issuers to bay ISO 9002 certification, CANCARD today as a distinct recognition in the domestic as well as international market. All verstors of CANCARD namely, CANCARD visa, classic, visa-corporate, master card and visa – international gold are issued through all CANARA BANK branches & 24 CANCARD service centers located at major cities across the country. †¢ Four Indian Banks are in affiliation with the bank for issue of CANCARD VISACARD. †¢ Launched DEBIT CARD on November 4, 2003, a value added and tech based product for its niche clients. CUSTOMER CENTRIC ETHOS †¢ CANARA BANK was the first to articulate the directive principles of good banking, detailing banker’s duties and customers rights. First bank to get ISO certification for one of its branches in Bangalore in the year of 1995-1996. †¢ Recommendations of the Goiporia Committee on Customer Service have been implemented by the bank. †¢ The bank has Computerized Information Facilitation Centers (CIFCs) at all circles to look exclusively into customer in a single window framework. †¢ A 24 hour tele – contact facility is also available for customers to air their grievances at corporate as well as circles levels. COMPANY PROFILE OF THE CANARA BANK: HISTORICAL TREND:Canara Bank established in 1906 with the name of Canara Bank Hindu Permanent Fund in Mangalore, India, by Ammembal Subba Rao Pai, is one of the oldest and major commercial bank of India. Its name was changed to Canara Bank Limited in 1910. The bank, along with 13 other major commercial banks of India, was nationalized on 19th July, 1969, by the Government of India. Currently (2005), the bank has 2508 branches spread all over India. The bank also has international presence in several centers, including London, Hong Kong, Moscow, Shanghai, Doha, and Dubai.In terms of business it is the largest nationalized commercial bank in India with a total business of about Rs. 2000 billion (about US $43 billion). ORGANISATION STRUCTURE: The bank has fourteen wings in the Head Office, Bangalore. 1. Personnel Wing 2. Corporate Credit Wing 3. Risk Management Wing 4. Priority Credit Wing 5. Inspection Wing 6. Department of Information Technology Wing 7. Marketing and Customer Relationship 8. Planning and Development Wing 9. Recovery Wing 10. General Administration Wing 11. Financial Management Wing 12. Treasury and International Operation Wing 13.Retail Banking and Subsidiaries Wing 14. Vigilance Wing OFFICE AND BRANCHES: Canara bank has a network of 2415 branches, spread over 22states/ 4 union territories of the country and overseas branch @ London which are administrated through †¢ Head Office at Bangalore †¢ 13 Circles offices / International Division †¢ 35 Regional offices †¢ 2441 Branches BRANCHES ABORAD: CANARA BANK established its Internation al Division in 1976, to supervise the functioning of it various foreign department to give the required thrust to Foreign Exchange business, particularly export and to meet the requirements of NRI’s.Though small in size the Bank’s presence abroad has brought in considerable foreign business, particularly NRI deposits. The presence of bank is shown under. †¢ CANARA BANK, London, UK (Branch) †¢ Indo Hong Kong International Finance Co Ltd Hong Kong (Subsidiary) †¢ AL Razouki International Exchange company , Dubai, UAE According to the latest information, both the CANARA BANK and State Bank of India have come into a mutual agreement as to both the banks will be operating as a one unit in the Moscow. CORPORATE VISION: To top as a World Class Bank with best practices in the realms of asset portfolio, Customer orientation, Product Innovation, Profitability an enhanced value for stake holders. †¢ To set new standards in IT application, Customer responsivene ss, Asset quality and profitability, culminating in higher stoke holder value. †¢ To scale new peaks in respect of IT based banking, efficient service delivery market leadership in profitability. CORPORATE MISSION: †¢ Augmenting low cost deposits. †¢ Toning up asset quality. †¢ Accent on cost control. †¢ Thrust on retail banking. †¢ Customer centric focus. Product innovation and marketing. †¢ Leveraging IT for comprehensive MIS. †¢ Maximize stockholder’s value. CORPORATE OBJECTIVE: E- Efficiency. P- Profitability and Productivity. O- Organization Effectiveness. C- Customers centric H- Hi Tech Banking ACHIVEMENTS: The Bank has already carved a niche in providing IT – based services. Computerized branches, for 65% of the branches & 81% of aggregated business provided a wide array of services such as Network ATM’s, any where Banking , Tele Banking & Remote Access Terminals etc. , The Bank was the first to launch networked ATM ’s & obtain ISO certification.CANARA BANK shares are listed & Bangalore, Mumbai & National Stock Exchanges. †¢ Establish well-developed quality circles have participated in many National & International level competitions and have returned with handsome prizes. †¢ Has set up its own Apex level Training colleges to its employees and thereby takes care of the knowledge, skills and attitudinal development of employees. †¢ Has also taken initiative in the environmental concerns. PERRFORMACE HIGHLIGHTS OF 2005-2006 †¢ Canara Bank has posted net profit of s. 581 cr for the half year ended September 2005 as against Rs. 19 cr during the corresponding previous half year, registered a growth rate of 38. 60%. †¢ The Bank operating profit registered an increase of Rs. 548 cr (57. 81%) to reach Rs. 1496 crore, up from Rs. 948 cr for the first half of the preceding financial. †¢ Return of assets a standard measure of profitability improved from 1. 08% (annuali zed) at a September 2002 to 1. 28% (annualized) as at September 2005. †¢ Number of branches moved up to 2441 from 2416 as at September 2002, besides 248 extension counter. †¢ Global deposits of the Bank aggregated to as Rs. 5, 396crore as against Rs. 67734 crore a year ago, year growth being 11. 31%. MATURITY CLASSIFICATION OF VARIOUS ASSETS AND LIABILITIES: In respects of the certain Assets and liabilities, CANARA BANK have undertaking a behavior study, embedded options in the basis of past of past data, based on which the bank is in a position to decide on the maturities of the asset and liabilities. 2. a. RESEARCH DESIGN A study on the Management of Non Performing Assets in the Canara Bank’s Loan Portfolio is done at the Canara Bank Donimalai Township, Sandur (TQ), Bellary (Dist), Karnataka State.The type of research used for the collection & analysis of the data is â€Å"Historical Research Method†. The main source of data for this study is the past recor ds prepared by the bank. The focus of the study is to determine the non-performing assets of the bank since its inception & to identify the ways in which the performance especially the non-performing assets of the Canara Bank can be improved. The data regarding bank history & profile are collected through â€Å"Exploratory Research Design† particularly through the study of secondary sources and discussions with individuals.Data Collection Method Discussion with the manager & officers of the bank to get general information about the bank & its activities. ? Having face to face discussions with the bank officials ? By taking guidance from bank guide & departmental guide. Secondary Data ? Collection of data through bank annual reports, bank manuals and other relevant documents. ? Collection of data through the literature provided by the bank. Research Measuring Tool: The tools used for data collection are: 1. Personal Interview 2. Secondary Sources 1. Personal Interview:In this, discussions more held directly with the manager & officials to get the clear-cut information about the topic and data to be collected for the purpose of analysis. 2. Secondary Sources: Annual company reports, Balance Sheets, Profit & Loss account are used to collect the data. b. 1. SATATEMENT OF THE PROBLEM: A crucial issue which is engaging the constant attention of the banking industry is the alarmingly high level of non performing assets (NPA). Another major anxiety before the banking industry is the high transaction cost of carrying non performing assets in their books.The resolution of the NPA problem requires greater accountability on the part of the corporate, greater disclosure in the case of defaults, an efficient credit information sharing system and an appropriate legal frame work pertaining to the banking system so that court procedures can be stream lined and actual recoveries made within an acceptable time frame. So the project titled â€Å"A study on the Management of Non Performing Assets in the Canara Bank’s Loan Portfolio† looks in to the implications of high NPAs and suggests effective recovery measures for resolving problem loans and thus making the banks NPAs level healthy.It also compares the position of the Canara Bank with other public sector banks in terms of their NPAs in the last three years and also to study the management of total assets and advances of the Canara Bank among other public sector banks. b. 2. OBJECTIVES OF THE STUDY: ? To evaluate the Canara Bank’s asset quality. ? To compare the position of the Canara Bank with other public sector banks in terms of their NPAs. ? To study the management of total assets and advances of the Canara Bank. ? To identify the effectiveness of the risk management system, undertaken by the bank. To analyze sector wise non-performing assets. ? To offer useful suggestions to reduce the NPA in banks. b. 3. SCOPE OF THE STUDY: ? The scope of the study here was confined to th e organization only. ? The study covers to find out the strategy required to reduce the NPAs. ? The concentration is given only in understanding the NPAs growth with the reference of Canara Bank. ? The data is purely based on the secondary data collected from website and journal. ? The scope is limited to drawn conclusions from analysis and interpretations of the primary and secondary data of the Canara Bank. . 4. METHODOLOGY: Introduction The quality of the project work depends on the methodology adopted for the study. Methodology, in turn, depends on the nature of the project work. The use of proper methodology is an essential part of any research. In order to conduct the study scientifically, suitable methods & measures are to be followed. Research Design The type of research used for the collection & analysis of the data is â€Å"Historical Research Method†. The main source of data for this study is the past records prepared by the bank.The focus of the study is to determ ine the non-performing assets of the bank since its inception & to identify the ways in which the performance especially the non-performing assets of the Canara Bank can be improved. The data regarding bank history & profile are collected through â€Å"Exploratory Research Design† particularly through the study of secondary sources and discussions with individuals. Data Collection Method Discussion with the manager & officers of the bank to get general information about the bank & its activities. ? Having face to face discussions with the bank officials ?By taking guidance from bank guide & departmental guide. Secondary Data ? Collection of data through bank annual reports, bank manuals and other relevant documents. ? Collection of data through the literature provided by the bank. Research Measuring Tool: The tools used for data collection are: 1. Personal Interview 2. Secondary Sources 1. Personal Interview: In this, discussions were held directly with the manager & official s to get the clear-cut information about the topic and data to be collected for the purpose of analysis. 2. Secondary Sources: Annual company reports, Balance Sheets, Profit & Loss account are used to collect the data. . 5. LIMITATIONS OF THE STUDY: ? The study is mainly based on the secondary data provided by the bank. As such it is subject to the limitations of the secondary data. ? The study is based only on NPAs with respect to loans. ? The study is based on the data given by the officials and reports of the bank. The confidentiality of some facts and figures is a limitation. ? The non-availability of relevant information is one of the limitations. ? The study is done only for the limited past 3 years. 3. THEORITICAL OVERVIEW NPA ITS IMPACT AND MAGNITUDE: MEANING OF NPA:An asset is classified as non- performing asset (NPA) if dues in the form of principal and interest are not paid by the borrower for a period of 180 days. How ever with effect from March 2004, default status woul d be given to a borrower if dues are not paid for 90 days. If any advance or credit facilities granted by bank to a borrower becomes non-performing, then the bank will have to treat all the advances / credit facilities granted to that borrower as non-performing without having any regard to the fact that there may still exit certain advances / credit facilities having performing status.A ‘non-performing asset’ (NPA) was defined as a credit facility in respect of which the interest and / or installment of installment of principal has remained ‘Past Due’ for a specified period of time. An amount due under any credit facility is treated as â€Å"past due† when it has not been paid within 30 days from the due date. Due to the improvement in the payment and settlement systems, recovery climate, up gradation of technology in the banking system, etc. , it was decided to dispense with ‘past due' concept, with effect from March 31, 2001. Accordingly, as from that date, a Non performing asset (NPA) shell be an advance where i.Interest and /or installment of principal remain overdue for a period of more than 180 days in respect of a Term Loan, ii. The account remains ‘out of order' for a period of more than 180 days, in respect of an overdraft/ cash Credit(OD/CC), iii. The bill remains overdue for a period of more than 180 days in the case of bills purchased and discounted, iv. Interest and/ or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purpose, and v.Any amount to be received remains overdue for a period of more than 180 days in respect of other accounts. ’90 days’ overdue norm’ With a view to moving towards international best practices and to ensure greater transparency, it has been decided to adopt the '90 days overdue' norm for identification of NPAs, form the year ending March 31, 2004 . Accordingly, with effect form March 31, 2004, a non-performing asset (NPA) shell be a loan or an advance where; i. Interest and /or installment of principal remain overdue for a period of more than 90 days in respect of a Term Loan, i. The account remains ‘out of order' for a period of more than 90 days, in respect of an overdraft/ cash Credit(OD/CC), iii. The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, iv. Interest and/ or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purpose, and v. Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.As a facilitating measure for smooth transition to 90 days norm, bank has been advised to move over to charging of interest at monthly rests, by April 1, 2002. However, the date of classification of an advance as NPA sho uld not be changed on account of charging of interest at monthly rests. Banks should, therefore, continue to classify an account as NPA only if the interest charged during any quarter is not serviced fully with 180 days from the end of the quarter with effect from April 1, 2002 and 90 days from the end of the quarter with effect from March 31, 2004. Out of Order’ Status An account should be treated as ‘Out of Order’ if the outstanding balance remains continuously in excess of the sanctioned limit / drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit / drawing power, but there are no credits continuously for 180 days (to be reduced to 90 days, with effect from March 31, 2004) as on the date of Balance Sheet or credits are not enough to cover the interest debited the same period, these accounts should be treated as ‘out of order’. ‘Overdue’Any amount due to the bank und er any credit facility is ‘overdue’ if it is not paid on the due date fixed by the bank. Asset Type Percentage of Provision Sub standard (age up to 18 months)10% Doubtful 1 (age up to 2. 5 years)20% Doubtful 2 (age 4. 5 years)30% Doubtful 3 (age above 4. 5 years)50% Loss Asset100% INCOME RECOGNITION-POLICY: The policy of income recognition has to be objective and based on the record of recovery. Internationally income from non-performing assets (NPA) is not recognized on accrual basis but is booked as income only when it is actually received.Therefore, the banks should not charge and take to income account interest on any NPA. However, interest on advances against term deposits, NSCs, VIPs, KVPs, and Life policies may be taken to income account on the due date, provided adequate margin is available in the accounts. Fees and commissions earned by the banks as a result of re-negotiations or rescheduling of outstanding debts should be recognized on an accrual basis over th e period of time covered by the re-negotiated or rescheduled xtension of credit. If Government guaranteed advances become NPA, the interest on such advances should not to be taken to income account unless the interest has been realized. REVERSAL OF INCOME: If any advance, including bills purchased and discounted, becomes NPA as at the close of any year, interest accrued and credited to income account in the corresponding previous year, should be reversed or provided for if the same is not realized. This will apply to Government guaranteed accounts also.In respect of NPAs, fees, commission and similar income that have accrued should cease to accrue in the current period and should be reversed or provided for with respect to past periods, if uncollected. THE CONCEPT OF GROSS NPA: Income recognition is not possible once an account becomes NPA. Interest accrued on non performing loan accounts is debited to the respective account and credited to the interest suspense account instead of t he profit and loss account. Usually no debits are permitted in non performing asset expect unavoidable expenditure like litigation expenses, insurance etc.Hence the balance outstanding in an NPA account includes: 1. Balance as on date of becoming an NPA. 2. Interest accrued but not realized. On balance sheet date banks make provisions for loan losses. This provision is calculated not on the balance outstanding but on the net balance, balance net of the amount kept in the interest suspense account. This book balance of the net of the interest suspense account is known as Gross NPA. But in cases where guarantee claim is received from credit guarantee corporations like ECGC, before making the provision for loan losses, such claim received is also netted from the gross NPA.The terminology net NPA indicates the balance in interest suspense account. For evaluation RBI and other rating agencies rely on purpose usually the net NPA balance. Thus Gross NPA means, balance outstanding minus bal ance in interest suspense account. Net NPA means: Gross NPA minus balance claim received amount and provision outstanding in that account. IMPACT OF NPA: At the Macro level, NPAs have chocked off the supply line of Credit of the potential lenders thereby having a deleterious effect on capital formation and arresting the economic activity in the country.At the Micro level, unsustainable level of NPAs has eroded current profits of banks and FIs. They have led to reduction of interest income and increase in provisions and have restricted and recycling of funds leading to various Asset Liability mismatches. Besides this, it has led to erosion in their capital base and reduction in competitiveness. The problem of NPA is not a matter of concern to banks and FIs alone. It is the matter of grave concern to the country and any bottleneck in the smooth flow of credit is bound to create adverse repercussions in the economy.The mounting menace of NPAs has raised the cost of credit, made Indian business man uncompetitive as compared to their counterparts in other countries. It has made banks more adverse to risks and squeezed genuine Small and Medium Enterprises (SMEs) from accessing competitive credit and has throttled their enterprising spirits as well, to a great extent. Due to their crippling effect on the operation of the banks, Asset quality has been considered as one of the most important parameters in the measurement of bank’s performance under the CAMELS Supervisory Rating System of RBI. THE MAGNITUDE:Non-Performing Asset (NPA) has emerged since over a decade as an alarming threat to the banking industry in our country sending distressing signals on the sustainability and endurability of the affected banks. The positive results of the chain of measures affected under banking reforms by the Government of India and RBI in terms of the two Narasimhan Committee Reports in this surging threat. Despite various correctional steps administered to solve and end this problem, concrete results are eluding. It is a sweeping and all pervasive virus confronted universally on banking and financial institutions.The severity of the problem is however acutely suffered by Nationalized Banks, followed by the SBI group, and the all India Financial Institutions. As at 31. 03. 2004 the aggregate gross NPA of all scheduled commercial banks amounted to Rs. 63883 crore. Table No. 1 gives the figures of net NPA for the last three years. The ratio of net non-performing assets to net advances also declined during 2005-06. Majority of the banks, this ratio is less than 4 percent. Punjab and Sind Bank has the highest ratio with 9. 62 percent followed by Dena Bank of India with 9. 4 percent. 4 banks reported â€Å"nil† ratio during 2005-2006.Further it is revealed that commercial banks in general suffer a tendency to understate their NPA figures. There is the practice of ‘ever-greening’ of advances, through subtle techniques. As per report appear ing in a national daily the banking industry has under – estimated its non-performing assets (NPAs) by whopping Rs. 3862. 10 Crore as on March 1997. The industry is also estimated to have under-provided to the extent of Rs. 1,412. 29 Crore. The worst offender is the public sector banking industry. Nineteen nationalized banks have underestimated their NPAs by Rs. 3,029. 29 Crore.Such deception of NPA statistics is executed through the following ways. ? Failure to identity an NPA as per stipulated guidelines: There were instances of ‘sub-standard’ assets being classified as ‘standard’. ? Wrong classification of an NPA: Classifying a ‘loss’ asset as a ‘doubtful’ or ‘sub-standard’ asset, classifying a ‘doubtful’ asset as a ‘sub-standard’ asset. ? Classifying an account of a credit customer as ‘substandard’ and other accounts of the same credit customer as ‘standardâ€℠¢, throwing prudential norms to the winds. REASONS FOR NPAs: In Priority Sector Advances: 1.Directed and pre-approved natures of loans sanctioned under sponsored programmes. 2. Mis-utilization of loans and subsidies. 3. Diversion of funds. 4. Absence of security. 5. Lack of effective follow-up (Post sanction supervision and control) 6. Absence of Bankruptcy and fore-closure loans. 7. Decrepit legal system. 8. Cost in-effective legal recovery measures. 9. Difficulty in execution of Decrees obtained. In Non-Priority Sector Advances: 1. Inadequate credit appraisal. 2. Demand recession. 3. Industrial sickness and labor problems. 4. Slow Legal system. 5. Diversion of funds. 6.Willful default. 7. Technology Obsolescence. 8. Managerial inefficiency. 9. Political compulsion and corruption. WRITING OFF NPAs: In terms of section 43(D) of the Income Tax Act 1961, income by way of interest in relation to such categories of bad and doubtful debts as may be prescribed having regard to the guideli nes issued by the RBI in relation to such debts, shall be chargeable to tax in the previous year in which it is credited to the bank’s profit and loss account or received, whichever earlier. This stipulation is not applicable to provisioning required to be made as indicated above.In other words, amounts set aside for aside for making provision for NPAs as above are not eligible for tax deductions. Therefore the banks should either make full provision as per the guidelines or write-off such advances and claim such tax benefits as are applicable, by evolving appropriate methodology in consultation with their auditors / tax consultants. Recoveries made in such accounts should be offered for tax purposes as per the rules. WRITE-OFF AT HEAD OFFICE LEVEL: Banks may write-off advances at Head Office Level, even though the relative advances are still outstanding in the branch books.However, it is necessary that provision is made as per the classification accorded to the respective ac counts. In other words, if an advance is a loss asset, 100 percent provision will have to be made there for. DEBT RECOVERY TRIBUNAL: Any person aggrieved by any measure taken by secured creditor or his authorized officer may file an appeal to Debts Recovery Tribunal, within 45days from date on which such measure was taken. That is action of taking possession of asset, takeover of management of business of borrower, appointing person to manage secured asset etc. is taken by the creditor.When a borrower files an appeal, the appeal cannot be entertained unless, the borrower deposits 75% of the amount claimed in the notice by secured creditor. The DRT can waive or reduce the amount required to be deposited. The amount is not required to be deposited at the time of filing appeal, but appeal will not heard till the amount is deposited. The borrower while filing the appeal should also file an application requesting the Debt Recovery Tribunal to admit the appeal without deposit of any amoun t. If the DRT orders partial deposit of the amount and the same is not deposited, appeal can be dismissed.The 75% deposit is only required if the appeal is filed by the borrower. If some other aggrieved person (e. g. guarantor, shareholder) files it the deposit is not required. If a person is aggrieved by the order of the DRT, it can file an appeal to the Appellate Tribunal within 30days from the date of receipt of the DRT order. If the DRT or Appellate Tribunal holds that possessions of assets by the secured creditor was wrongful and directs the secured creditor to return asset to concerned borrower, the borrower shall be entitled to compensation and costs as may be determined by DRT or Appellate Tribunal.SECURITIZATION ACT: With the enactment of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, banks can issue notices to the defaulters to pay up the dues and the borrowers will have to clear their dues within 60days. Once the b orrower receives a notice from the concerned bank and the financial institution, the secured assets mentioned in the notice cannot be sold or transferred without the consent of the lenders.The main purpose of this notice is to inform the borrower that either the sum due to the bank or financial institution be paid by the borrower or else the former will take action by way of taking over the possession of assets. Besides assets, bank can also takeover the management of the company. Thus the bankers under the aforementioned Act will have the much needed authority to either sell the defaulting companies or charge their management. OVERALL BANKING AND NPA BANKING REFORMS IN INDIA: The Nationalization of the major commercial banks in the year 1969 and 1980 had brought radical changes in the banking system in India.It had brought about major shifts in the priorities in the banking operations. Branch expansion policies of banks were tuned upto meet the banking needs of the people in rural and semi urban centers. For accelerating the socio-economic and rural development process several Governments sponsored programs were launched and lending in the priority sector, irrational lending under socio political pressures, mounting levels of bad debts, branch expansion at non viable centers etc. gradually started affecting the financial health of the banking sector in the country.Commercial banks were not following uniform accounting policies camouflaged the true financial position of banks. Quality of loan asset was not a concern and a high proportion of loan assets started becoming non performing. Most of the banks were under capitalized and some of them even with negative worth. Thus there was a compelling need for a change and various policy corrections had to be taken with the view of strengthening the economy. Thus the Government of India was forced to initiate a process of reforming the financial sector which banks constitute a dominant part. The reforms process inclu des: 1. Introduction of prudential norms. . Transparency in balance sheets. 3. Deregulation of interest rates. 4. Partial deviation from directed lending. 5. Upgradation of technology. 6. Entry of new private sector banks. NARASIMHAM COMMITTEE: The first phase of banking sector reforms was initiated in the year 1992 in pursuance of recommendations of the committee on financial sector reforms headed by Narasimham Committee. As per the recommendations of Narasimham Committee, The Reserve Bank of India introduced in a phased manner, prudential norms for income recognition, asset classification, and provisioning in the year 1998 Narasimham Committee-II came out with more tringent norms for the industry. The prudential norms were revised from time to time to fall in line with the best accounting practices and for transparency in published accounts. It is widely recognized that as a result of these reforms, the Indian Banking System is becoming increasingly mature in terms of the transfor mation of business processes and the appetite for risk management. Deregulation, technological upgradation and increased market integration have been the key factors driving change in the financial sector. EMERGING BANKING TRENDS:During the current financial year, the focus of non-going reforms in the banking sector was on soft interest rates regime, increasing operational efficiency of banks, strengthening regulatory mechanisms and on technological up-gradation. As a step towards a softer interest rate regime, RBI in its Annual Policy Statement had advised banks to introduced flexible interest rate system for new deposits, announce a maximum spread over PLR for all advances other than consumer credit and to review the present maximum spread over PLR and reduce them wherever they are unreasonably high. A BRIEF HISTORY OF NPA:The concept of Asset Quality on the books of Public Sector Banks (PSBs) and Financial Institutions (FIs) came into being when Reserve Bank of India (RBI) introd uced prudential norms on the recommendations of the Narasimham Committee in the year 1992-1993. The Committee recommended that an asset may be treated as Non-Performing Asset (NPA), if interest or installment of principal remains overdue for a period exceeding 180days and that banks and FIs should not take into their income account, the interest accrued on such Non-Performing Assets, unless it is actually received or recovered.The Committee also recommended that Assets be classified into four categories namely Standard, Sub-standard, Doubtful and Loss Assets and that certain specified percentage of the same be held as provision there against. Before the reform process, banks were booking income on an accrual basis and their balance sheets did not reflect their true specified financial health. Thus the profit, capital and reserves were overstated by them. After 10years of NPA terror in the banking industry, â€Å"Now the Banks Have Teeth†, a new law lightens the burden of bad loans for Indian Banks.The law that has been the catalyst for the bad loan clean up passed India’s Parliament in November 2002. It allows lenders to more easily foreclose on debtors assets or even demand a change in management. Within weeks of the law’s passage, banks saw a flood of loans once deemed unrecoverable being repaid in double time. The Act is The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Also know as the Securitization Act). This Act enables the setting up of asset management companies for addressing the problems of non-performing assets of banks and FIs.INDIAN BANKING AND NPA: The origin of the problem of burgeoning NPAs lies in the quality of managing credit risk by the banks concerned. What is needed is having adequate preventive measures in place namely, fixing pre-sanctioning appraisal responsibility and having an effective post-disbursement supervision. Banks concerned should continuously moni tor loans to identity accounts that have potential to become non-performing. The core banking business is of mobilizing the deposits and utilizing it for lending to industry.Lending business is generally encouraged because it has the effect of funds being transferred from the system to productive purposes which results into economic growth. However lending also carries credit risk, which arises from the failure of borrower to fulfill its contractual obligations either during the course of a transaction or on a future obligation. The history of financial institutions also reveals the fact that the biggest banking failures were due to credit risk. Due to this, banks are restricting their lending operations to secured avenues only with adequate collateral on which to fall back upon in a situation of default.GLOBAL NPA: The core banking is of mobilizing the deposits and utilizing it for lending to industry. Lending business is generally encouraged because it has the effect of funds bein g transferred from the system to productive purposes which results into economic growth. However lending also carries credit risk, which arises from the failure of borrower to fulfill its contractual obligations either during the course of a transaction or on a future obligation. A question that arises is how much risk can a bank afford to take? Recent happenings in the business world – Enron, WorldCom, Xerox, Global Crossing do not give much confidence to banks.In case after case, these giant corporates became bankrupt and failed to provide investors with clearer and more complete information thereby introducing a degree of risk that many investors could neither anticipate nor welcome. The history of financial institutions also reveals the fact that the biggest banking failures were due to credit risk. Due to this, banks are restricting their lending operations to secured avenues only with adequate collateral on which to fall back upon in a situation of default. It needs to be recognized that prudential norms in respect of loan classification vary widely across countries.A country follows varied approaches, from the subjective to the prescriptive. Illustratively, in the United Kingdom, supervisors do not require banks to adopt any particular form of loan classification and either is there any recommendation on the number of classification categories that banks should employ. Other countries, such as, the United States follow a more prescriptive approach, wherein loans are classified into several categories based on a set of criteria ranging from payment experience to the environment in which the debtor evolves.The adoption of such a system points to the usefulness of a structured approach those facilities the supervisor’s ability to analyze and compare banks loan portfolios. India is a better bet than China for investors to pump money into non-performing assets (NPAs) restructuring as it has better environment for recovery, according to consulti ng firm Price water House Coopers (PwC). WARNING: STANDARD & POOR: Standard & Poor’s and The Credit Rating Information Services of India Ltd. , (CRISIL) estimate that India’s schedule commercial banks require between US$11billion-US$13billion in new capital to support losses embedded in impaired assets.The significant capital shortfall estimated recognizes the existing moderate reported capital position of Indian banks, the inadequate loan loss reserves maintained by the banks to absorb likely losses. The weak capital position of the Indian banking system is largely a reflection of growing asset-quality problems stemming from weak underwriting and credit management system, and the vulnerabilities of the Indian banking sector to the impact of globalization on the country’s key industry sectors. The asset-quality position also has suffered from regulations with respect to lending to priority sectors. The capital shortfall calculated assumes a significantly higher system non-performing loan level to that reported under Indian regulatory standards,† said Peter Sikora, associate director, Financial Services Rating, Standard & Poor’s, together with CRISIL are, however, of the view that non performing loan levels for Indian banks will be significantly higher at 20%-25% if more conservative classification standards are adopted and restructured, and ever greened loans are included as impaired assets. LENDING BEHAVIOUR OF BANKS:Due to the excess liquidity in the banking system, banks are now giving credit to even non-priority sectors in an aggressive manner. Now banks give credit more to unproductive purposes, like car loans, housing loans, consumer durables loans and personal loans. This reckless lending paves the way to repayment irregularities and more of NPA in the banking system. But on the others side economy has become buoyant and the borrowers are now in a position to repay the loans even if it is an unproductive loan.Banks have improved their credit appraisal system. NPA percentage in City Bank’s Car Loan Portfolio is zero, because of the sophisticated credit appraisal system followed by the bank. Banks now give priority to ‘businesses’ and lending schemes also follow the path. CLASSIFICATION OF ASSETS: CATEGORIES OF NPAs: Banks are required to classify non-performing assets further into the following three categories based on the period for which the asset has remained non-performing and the realisability of the dues: a) Sub-Standard Assets. ) Doubtful Assets. c) Loss Assets. SUB-STANDARD ASSETS: A sub-standard asset was one, which was classified as NPA for a period not exceeding two years. With effect from 31March 2001, a sub-standard asset is one, which has remained NPA for a period less than or equal to 18 months. In such cases, the current net worth of the borrower / guarantor or the current market value of the security charged is not enough is not enough recovery of the dues to t he banks in full.In other words, such an asset will have well defined credit weakness that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the banks will sustain some loss, if deficiencies are not corrected. With effect from 31March 2005, a sub-standard asset would be one, which has remained NPA for a period less than or equal to 12 months. DOUBTFUL ASSETS: A doubtful asset was one, which remained NPA for a period exceeding two years. With effect from 31March 2001, as asset is to be classified as doubtful, if it has remained NPA for a period exceeding 18 months.A loan classified as doubtful has all the weaknesses inherent in assets that were classified as sub-standard, with the added characteristic that the weaknesses make collection or liquidation in full, – on the basis of currently know facts, conditions and values – highly questionable and improbable. With effect from 31March, 2005, an asset to be classified as doubtful if it remained in the sub-standard category for 12 months. LOSS ASSETS: A loss asset is one where loss has been identified by the bank or internal or external auditors or the RBI inspection but the amount has not been written off wholly.In other words, such an asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted although there may be some salvage or recovery value. It should be noted that the above classification is only for the purpose of computing the amount of provision that should be made with respect to bank advances and certainly not for the presentation of advances in the bank balance sheet. The Third Schedule to the Banking Regulation Act 1949, solely governs presentation of advances in the balance sheet.Banks have started issuing notices under The Securitization Act,2002 directing the defaulter to either pay back the dues to the bank or else give the possession of the secured assets mentioned in the notice. Ho wever, there is a potential threat to recovery if there is substantial erosion in the value of security given by the borrower or if borrower has committed fraud. Under such a situation it will be prudent to directly classify the advances as a doubtful or loss asset, as appropriate. RBI GUIDELINES FOR CLASSIFICATION OF ASSETS:Broadly speaking, classification of assets into above categories should be done taking into account the degree of well-defined credit weaknesses and the extent of dependence on collateral security for realization of dues. Banks should establish appropriate internal systems to eliminate the tendency to delay or postpone the identification of NPAs, especially in respect of high value accounts. The banks may fix a minimum cut off point to decide what would constitute a high value account depending upon their respective business levels.The cut off point should be valid for the entire accounting year. Responsibility and validation levels for ensuring proper asset cla ssification may be fixed by the banks. The system should ensure that doubts in asset classification due to any reason are settled through specified internal channels within one month from the date on which the account would have been classified as NPA as per extent guidelines. UPGRADATION OF LOAN ACCOUNTS CLASSIFIED AS NPAs:If arrears of interest and principal are paid by the borrower in the case of loan accounts classified as NPAs, the account should no longer be treated as non-performing and may be classified as ‘standard’ accounts. Asset Classification to be borrower-wise and not facility-wise: i. It is difficult to envisage a situation when only one facility to borrower becomes a problem credit and not others. Therefore, all the facilities granted by a bank to a borrower will have to be treated as NPAs and not the particular facility or part thereof which has become irregular. ii.If the debts arising out of development of letter of credit or invoked guarantees are p arked in a separate account, the balance outstanding in that account for should be treated as a part of the borrower’s principal operating account for the purpose of application of prudential norms on income recognition, asset classification and provisioning. Accounts where there is erosion in the value of Security: i. A NPA need not go through the various stages of classification in cases of serious credit impairment and such assets should be straightaway classified as doubtful or loss asset as appropriate.Erosion in the value of security can be reckoned as significant when the realizable value of the security is less than 50 percent of the value assessed by the bank or accepted by RBI at the time of last inspection, as the case may be. Such NPAs may be straightaway classified under doubtful category and provisioning should be made as applicable to doubtful assets. ii. If the realizable value of the security, as assessed by the bank / approved valuers / RBI is less than 10 p ercent of the outstanding in the borrowal accounts, the existence of security should be ignored and the asset should be straight away classified as loss asset.It may be either written off or fully provided for by the bank. RESTRCTURING / RESCHEDULING OF LOANS: A standard asset where the terms of the loan agreement regarding interest and principal have been renegotiated or rescheduled after commencement of production should be classified as sub-standard and should remain in such category for at least one year of satisfactory performance under the renegotiated or rescheduled terms.In the case of sub-standard and doubtful assets also, rescheduling does not entitle a bank to upgrade the quality of advance automatically unless there is satisfactory performance under the rescheduled / renegotiated terms. Following representations from banks that the foregoing stipulations deter the banks from restructuring of standard and sub-standard loan assets were reviewed in March 2001. In the contex t of restructuring of the accounts, the following stages at which the restructuring / rescheduling / renegotiation of the terms of loan agreement could take place can be identified: a) Before commencement of commercial production. ) After commencement of commercial production but before the asset has been classified as sub-standard. c) After commencement of commercial production and after the asset has been classified as sub-standard. PROVISIONING REQUIREMENTS: As and when an asset is classified as an NPA, the bank has to further sub-classify it into sub-standard, loss and doubtful assets. Based on this classification, bank makes the necessary provision against these assets. Reserve Bank of India (RBI) has issued guidelines on provisioning requirements of bank advances where the recovery is doubtful.Banks are also required to comply with such guidelines in making adequate provision to the satisfaction of its auditors before declaring any dividends on its shares. In case of loss asse ts, guidelines specifically require that full provision for the amount outstanding should be made by the concerned bank. This is justified on the grounds that such an asset is considered uncollectible and cannot be classified as bankable asset. Asset TypePercentage of Provision Sub-Standard (age upto 18 months) 10% Doubtful 1 (age upto 2. 5years) 20% Doubtful 2 (age 4-5years) 30%Doubtful 3 (age above 4-5years) 50% Loss Asset 100% THE NPA PROBLEM: The origin of the problem of burgeoning NPAs lies in the quality of managing credit risk by the banks concerned. What is needed is having adequate preventive measures in place namely, fixing pre-sanctioning appraisal responsibility and having an effective post-disbursement supervision. Banks concerned should continuously monitor loans to identify accounts that have potential to become non-performing. The performance in terms of profitability is a benchmark for any business enterprise including the banking industry.However, increasing NPAs h ave a direct impact on banks profitability as legally banks are not allowed to book income on such accounts and at the same time banks are forced t make provision on such assets as per the RBI guidelines. Also, with increasing deposits made by the public in the banking system, the banking industry cannot afford defaults by borrowers since NPAs affects the repayment capacity of banks. Further, RBI successfully creates excess liquidity in the system through various rate cuts and banks fail to utilize this benefit to its advantage due to the fear of burgeoning non performing assets.CREDIT APPRAISAL SYSTEM: Prevention of standard assets from migrating to non performing status is most important in NPA management. This depends on the style of Credit Management Mechanism available in banks. The quality of credit appraisal and the effectiveness of post credit appraisal and effectiveness of post credit follow up influences the asset quality of the banks in a big way. At Pre-Credit Stage: 1. Extensive enquiry about the character and the credit worthiness of the borrower. 2. Viability of the project to be financed is meticulously studied. 3. Adequate coverage of collateral is ensured to the extent possible. . Financial statement of the borrower is obtained and poor analysis of their financial strength is done. 5. Apart from the published financial statements independent enquires are made with previous bankers. 6. Pre-Credit inspection of the assets to finance is made. At Post-Credit Stage: 1. Operations in the account are closely monitored. 2. Unit visit is done at irregular intervals. 3. Asset verification is done on a regular basis. 4. Borrowers submit control returns regularly. 5. Accounts are periodically to evaluate the financial health of the unit. 6. Early warning signals are properly attended to. . Close contract with the borrower is maintained. 8. Potential NPAs are kept under special watch list. 9. Potentially viable units are restructured. 10. Repayment progra m of accounts with temporary cash flow problem is re