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Understanding business information landscape

Understanding business information landscape :

 

When it comes to understanding the information landscape, banks and businesses need to plan around the following 4 types of information sources and availability. This is normally with respect to the companies you want to lend to, or evaluate as a customer or supplier. You will need to understand these companies to get a better understanding of these companies before you do business with them.

 

  1. Private and Confidential information :

Such information are confidential and private information where you need the target company to share the information with you. In many cases, you will need to sign an NDA with the company. We have seen bankers, investment bankers, purchase department officials visit the target company to get a better understanding of the company. Sometimes this will involve the target company’s most recent financials, the last few months orders, etc. In order to access such information, you need to be on the verge of doing business with the target company and they in turn allow you access to non-public information.

 

  1. Bureau Information :

The concept of Bureau was setup by regulators, where adverse loan repayment related information on the business or individuals behind the business is shared with the Bureau, which in turn shares such adverse information with other bureau members. You don’t want one bank giving a loan to a business, when it is simultaneously defaulting the loan with another bank. Bureau’s can either be the approved entities by regulator and in some cases, the regulators themselves have setup such mechanisms to share information within the banking circles. Unfortunately, such information is privy to banks and other lenders. Corporates wanting to understand their customers or suppliers cannot access such information.

 

  1. Consent Based information :

With the proliferation of several structured source of information with the regulators, like GST, IT filings, bank statements, etc there is an increasing trend towards accessing such information based on consent – essentially the target company will need to provide you permission to access such information. It would probably be easier for a lender to access such information when the target company is looking to borrow. On the other hand, if the target company is a customer or a supplier, it would be a bit awkward to even ask for such information.

 

  1. Public Information :

Over the past 15 years, we have seen a proliferation of information available on companies in India. This covers various source like the MCA (financial, borrowing, shareholding, etc), Court records (legal cases from Supreme Court, High Court, District Court), rating, GST filing, news, etc. Some of these sources are available directly from the internet. In most other cases, you will need to be a registered user and get information upon payment or access documents. Such information is available publicly and it is a good first step to evaluate your potential borrower, customer or supplier. The information is quick to get, does not need permission from the target customer and helps with an initial first cut evaluation.

 

On the whole, there has been a significant evolution in the way one can evaluate companies in India over the past decade – and we believe this is part of the digital India journey – and you can benefit from this journey too. Ease of doing business is becoming real.

 

Most of the Public Information on a company can be accessed on Probe42.

Seven Financial Habits of Great Companies

The corporate world is a tough world with very high mortality rates and mediocre outcomes despite the best of intentions. Very few companies reach the very top cut of ‘true greatness’. Much of the true greatness can be seen in the financials of these companies, which in a sense is the quantifiable and measurable outcome. Our analysis shows that the following are some of the key business drivers these companies focus on – and something you can focus on too.

1.Consistent Growth :

Truly great companies have been around for a while, well over a decade or two, and have shown consistent growth. Consistency shows that the company is on top of its game and it is able to grow in a continuous and calibrated fashion. Growth is also necessarily above average. This also shows that the company has found its ‘Product-Market-Fit’ and it is addressing a very large opportunity. 

2.Ability to find new customers and reach new markets :

Great companies have processes to systematically find new markets and new customers. Competition is part and parcel of free markets, whereas these companies stay ahead of competition by consistently finding new markets and customers to serve. 

3.Prudent Use of Capex :

If Cash Flow is King, Capex is the enemy. Many great companies have managed to build large businesses, but with significantly lower fixed assets. Outsourcing is a key tool in reducing capex requirements. Why spend on capex, when you can outsource far more efficiently.  

4.Collecting money from customers promptly :

As they say, a sale is not completed till you collect money from your customers. Delayed customer payments is a great drag on your cash flows. Couple of bad customers, leading to bad debt, can eat away all your profits for the year. Work with customers who will pay you on time.

5.Reduced inventory levels :

Inventory is one area where cash can get locked up for ages. Management themes such as ‘Just-in-Time’, etc focus on reducing inventory levels and improving inventory turns. Not only does inventory  lock up funds, but also any obsolescence or change in prices leads to write down of inventory. Excellent companies have best in class inventory turns in their respective peer group. 

6.Stable suppliers / partner ecosystem :

All great companies need to work with suppliers and partners. In order to be great, you also need to work with highly efficient and quality conscious suppliers and partners. Before onboarding a supplier, do check their financial credentials to check if they are managing their business well. 

7.Industry leading margins : 

One result of doing all the above well is higher margins. Great companies do consistently have industry leading margins. Benchmark your margins with industry average margins and you will notice superior companies leading on all counts. 

As someone leading a company or on the board of a company, it is important to benchmark key business metrics of your company with its peer group and set goals to keep improving over time.

The Probe Newsletter February 2021

Universe of Registered Companies

  • As of Jan-2021, there were 22,30,547 companies incorporated out of which 13,17,832 are active.
  • 21.3% companies were incorporated after CY2018.
  • There are 7,941 active companies in Chandigarh city.
  • The chart does not include LLPs.

Company Classification

  • There are 11,295 active foreign companies in India.
  • 269 companies in India has unlimited liabilities.
  • 23,031 companies are not for profit company in India.

Probe New Company and LLP Incorporations Index

  • The Probe New Company and LLP Incorporations ( PNCLI) Index was constructed using Dec-00 as the base year.
  • In Jan-21, index value stood at 567 with 178,761 companies registered in the last 12 months.
  • 88,472 companies were incorporated in last 6 months.

New Company Incorporations

  • In Jan-21, 10,924 companies were incorporated of which 10,681 are private and 243 are public.
  • During the month of Jan-21, 795 companies were registered in Karnataka state.
  • 2,375 companies were registered under manufacturing business in Jan-21.

Company Incorporations – State-wise data

  • 1,057 companies incorporated in Uttar Pradesh which accounted 9.7% of total incorporation.
  • In Jan-21, 1,343 companies were incorporated in RoC Mumbai.
  • During the month of Jan-21, 5.2% of total companies were registered in Haryana state.

LLP Incorporations State-wise data

  • During the month of Jan-21, 3,293 LLPs were incorporated in India.
  • Gujarat stood at the 2nd position with 359 new LLP incorporation.
  • 638 LLP were incorporated under the trading business.

Nationwide Spread

  • There are 1,30,967 active companies which constituted 9.9% of total active companies.
  • 4,159 active company in Delhi are not for profit company.
  • As of Jan-21, Tamil Nadu has 86,543 active companies.

Statewide Spread – Karnataka

  • As of Jan-21, there are 88,310 active companies in Karnataka out of which 81.0% incorporated in Bengaluru city.
  • 2,665 companies are registered in Mysuru city.
  • There are 199 listed companies in Karnataka.

Paid Up Capital

  • 7,03,814 companies has paid up capital of upto Rs 1 lac.
  • As of Jan-21, 382 companies in Pune has paid up capital of more than Rs 25 cr.
  • 14% of the total active companies has paid up capital between Rs 1 – 5 lac.

Directorship Overview

  • As of Jan-21, there are 22,30,303 active directors
    in India.
  • Till Jan-21, there are 59,629 active foreign directors in India.
  • Gujarat has 1,47,233 active directors which constituted 6.6% of total directors.
The Probe Newsletter December 2020

Universe of Registered Companies

  • As of Nov-20, there are 22,03,735 companies registered in India out of which 12,93,006 companies are active.
  • Currently, there are 24,051 active companies in the state of Andhra Pradesh.
  • 19.7% of total active companies were incorporated after CY2018.
  • The chart does not include LLPs.

Company Classification

  • Presently, there are 11,62,689 private ltd companies in India.
  • 741 companies are incorporated under the guarantee & association.
  • There are 2,002 government company in India.

Probe New Company and LLP Incorporations Index

  • The Probe New Company and LLP Incorporations (PNCLI) Index was constructed using Dec-00 as the base year.
  • In Nov-20, index value stood at 561 with 139,784 companies and 36,886 LLP registered in the last 12 months.
  • In the last 6 months, 90,631 companies were incorporated in India.

New Company Incorporations

  • In Nov-20, 13,453 companies were registered out of which 13,154 were private and 299 were public.
  • 768 OPC (One Person Company) were incorporated in India in Nov-20.
  • During the month of Nov-20, 1,622 companies were incorporated under the trading business.

Company Incorporations – State-wise data

  • 628 companies were incorporated in the state of Haryana in Nov-20.
  • In Nov-20, 477 companies were registered under the finance business.
  • In RoC Ahmedabad, 645 companies were registered in Nov-20.

LLP Incorporations State-wise data

  • During the month of Nov-20, 3,793 LLPs were incorporated in India.
  • New LLP registration witnessed decline by 22.5% when compare to Oct-20.
  • Gujarat with 428 registration stood at 2nd position in terms of LLP registration in Nov-20.

Nationwide Spread

  • Till Nov-20, there are 1,29,687 active companies in West Bengal which constituted 10.0% of total active companies.
  • 69,580 companies are active in Gujarat state.
  • As of Nov-20, 6,813 companies are listed in India.

Statewide Spread – Uttar Pradesh

  • As of Nov-20, there are 89,861 active companies in Uttar Pradesh.
  • Noida has 13,559 active companies which accounted 15.1% of the total active companies in the state.
  • 260 companies the Uttar Pradesh has paid up capital of more than Rs 2 cr.

Paid Up Capital

  • Currently, there are 6,85,367 active companies with upto Rs 1 lac paid up capital.
  • Mumbai has 2,313 companies with paid up capital more than Rs 2 cr.
  • 9.0% active companies have paid up capital between Rs 15-50 lac.

Directorship Overview

  • Currently, there are 22,56,126 active directors in India.
  • Till Nov-20. There are 62,101 active foreign directors in India.
  • There are 1,50,498 active directors in the state of Karnataka.
The Probe Newsletter November 2020

Universe of Registered Companies

  • Till Oct-20, there are 21,89,385 companies incorporated out of which 12,80,520 companies are active.
  • As of Oct-20, 70,809 companies were active in Telangana state.
  • 42.6% of total active companies were registered after CY2015.
  • The chart does not include LLPs.

Company Classification

  • Currently, there are 60,574 public ltd companies in India.
  • As of Oct-20, there are 32,857 OPCs in India.
  • There are 11,010 foreign companies in India.

Probe New Company and LLP Incorporations Index

  • The Probe New Company and LLP Incorporations (PNCLI) Index was constructed using Dec-00 as the base year.
  • In Oct-20, index value stood at 548 with 1,36,938 companies and 35,638 LLP incorporated in the last 12 months.
  • 82,100 LLPs were incorporated in the last 6 months.

New Company Incorporations

  • During the month of Oct-20, there are 16,707 company registration out of which 16,323 were private and 384 were public.
  • 3,739 companies were incorporated under the manufacturing business in the month.
  • In Oct-20, 795 companies incorporated in RoC Chennai.

Company Incorporations – State-wise data

  • During the month of Oct-20, Karnataka stood at the 4th position with 1,262 companies registered in the state.
  • In the month of Oct-20, 536 companies registered in the education business.
  • 13,323 companies were incorporated with the paid up capital of up to Rs 1 lac.

LLP Incorporations State-wise data

  • In Oct-20, there are 4,895 LLPs registration in India.
  • There are 215 LLP registration in the state of Tamil Nadu in Oct-20.
  • During the month of Oct-20, 466 LLP registered in Gujarat state which constituted 9.5% of total LLP registered in the month.

Nationwide Spread

  • Uttar Pradesh stood at the 4th position with 88,634 active companies which accounted 6.9% of total active companies.
  • As of Oct-20, 41,064 active companies incorporat ed in the Rajasthan state out of which 20,752 companies are registered in Jaipur.
  • Till Oct-20, there are 8,764 active companies in the Assam state.

Statewide Spread – Maharashtra

  • Till Oct-20, there are 2,49,304 active companies in the state.
  • In Maharashtra capital – Mumbai there are 1,31,984 active companies which constituted 52.9 % of total companies in the state.
  • There are 1,848 listed companies in Maharashtra.

Paid Up Capital

  • As of Nov-20, there are 1,79,779 active
    companies between Rs 1 – 5 lac.
  • Delhi has 1,15,609 active companies with paid up capital of up to Rs 1 lac.
  • Currently, there are 22,561 companies with more than Rs 10 cr paid up capital.

Directorship Overview

  • Presently, there are 22,12,988 active directors in India.
  • As of Oct 20, there are 61,351 active foreign directors.
  • In Gujarat there are 1,44,765 active director which constituted 6.5% of total active director.