CHAPTER-1 INTRODUCTION 1.1 Introduction about the sector:- BANKING Banking, the business of providing financial services to consumers and business. The basic services a bank provides are checking accounts, savings accounts and time deposits that can be used to save money for future use; loans that consumers and businesses can use to purchase goods and services; and basic cash management services such as check cashing and foreign currency exchange. TYPES Four types of banks specialize in offering these basic banking services: 1) Commercial banks, 2) Savings and loan associations, 3) Savings banks, and 4) Credit unions. A broader definition of a bank is any financial institution that receives, collects, Transfers, pays, exchanges, lends, invests, or safeguards money for its 1
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CHAPTER-1 INTRODUCTION
1.1 Introduction about the sector:-
BANKING
Banking, the business of providing financial services to consumers and
business. The basic services a bank provides are checking accounts, savings
accounts and time deposits that can be used to save money for future use;
loans that consumers and businesses can use to purchase goods and services;
and basic cash management services such as check cashing and foreign
currency exchange.
TYPES
Four types of banks specialize in offering these basic banking services:
1) Commercial banks,
2) Savings and loan associations,
3) Savings banks, and
4) Credit unions.
A broader definition of a bank is any financial institution that receives, collects,
Transfers, pays, exchanges, lends, invests, or safeguards money for its
customers. This broader definition includes many other financial institutions that
are not usually thought of as banks. These institutions include finance
Manufacturing, Trading and Job Work of Electric Wires & Power Cables
Defaulter / CIBIL List No
Key Person/Promoter
Key Person Sh. Vikas Nagpal
Promoter
Sh. Vikas Nagpal
Multiple / Consortium
Sole EXISTING PROPOSED
Leader Bank N.A. Asset Classification Standard Standard
Our share: [Rs. In Lakhs]Asset Category as per CMC Guidelines
P1 P1
FB - % 400.00 D2K Codes & Description
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NFB- % 350.00 Activity 8010
Insulated Wires & Cables – Electrical.
STL- Nil Sector 15 SME
TL- Nil Special Category
Priority No
BSR Code: Basel II Code:
Risk Weightage 100% Provisioning: 0.25%
Cr Credit Risk Rating “BBB”Risk Grade as per ABS Dt 31.03.2009
“Best” BPLR+ 0.75%
3. NAMES OF PARTNERS & NET WORTH (Rs. in Lacs)
Sr. Name Net Worth As on Basis
1 Shri Vikas Nagpal 486.76 31.03.09 Audited B/S
2 Smt Anjana Nagpal 151.88 31.03.09 Audited B/S
Whether Proprietor / Partner/ Director / Guarantor has any relationship with any Director or Senior Official (Scale IV & above) of the Bank. If so give details (Refer to Guidelines)
No
4. Major Shareholders: N.A. (Since it is Partnership A/c)
5. BRIEF HISTORY OF SANCTIONS INCLUDING REVIEWS AND ADHOCS DURING THE PAST TWELVE MONTHS.
Sanctions Dt. Gist
08.05.2008Renewal of existing limits by GM(Credit)
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6. PRESENT PROPOSAL:
Renewal of the existing limits, as under : (Rs in lacs)
Facility Existing Outstanding as on 22-10-2009
DRAWING POWER
Irregular/ Overdue amount
Proposed Variation
Limit Margin (%) Limit Margin (%)
a) Fund Based
1
CCH(Stock
cum Book Debts)
250.00
Stock-25%
Book
Debts-40%
135.82 250.00 250.00
Stock-25%
Book
Debts-40%
Nil
2. Negotiation of Bills under L/C
150.00 0.00 150.00 150.00 Nil
Total 400.00 135.82 400.00 400.00 Nil
b) Non - Fund Based
1 Bank Guarantee
350.00
Per-10%,
Fin/BidBond-25%
47.10 350.00 350.00
Per-10%,
Fin/BidBond-25%
Nil
Total 350.00 47.10 350.00 350.00 Nil
c) Forward cover
Nil Nil Nil Nil Nil
d) Grand Total (a+b+c)
750.00 182.92 750.00 750.00 Nil
e) Investment Exposure
Nil Nil Nil Nil Nil
TOTAL EXPOSURE
750.00 182.92 750.00 750.00 Nil
II. SECURITY / DOCUMENTATION:-
Prime security (Rs. in lacs)
Nature Value Basis
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Proposed
Hyp. of Stock and Book DebtsRs.312.36.00(Inventory)
Rs.195.98 (Receivables)
Stock Statement as of Aug.2009
Book Debt Statement as of Aug 2009.
Collateral Security Nature of Security Type
of Charge
Value Basis / Source Whether eligible under CRM (Basel II Norms)
1. Equitable Mortgage of Land and Building at plot No. 11, Sector-6, IMT Maneshar, HSIDC, Gurgoan, Haryana admeasuring 4050 Sq Mtr in the name of Shri Vikas Nagpal partner of M/s Paragon Cable India.
Equilateral Mortgage
The market value of the property is Rs. 653.46 lacs whereas the Distress value @80% is Rs.522.78 lacs
Valuation Report by our Panel Valuer, M/s Accurate Valuers dated 23.03.09.
Search Report by our Panel Advocate, Shri Vineet Sharma dated 09th April 2009 states that the subject property is unencumbered and marketable.
No
2.Hypothecation of Plant and Machinery, Furniture & Fixture and other equipments existing as well to be acquired in future.
Hypothecation
Rs. 21.74 lacs
WDV as per Audited B/S as of 31.03.09
No
Aggregate Collateral Security Rs. 544.52
lacs
i) Percentage coverage of collateral security:
1 Total value of Collateral Security Rs. 544.52 Lakhs
2 Of which our share Rs. 544.52 Lakhs
3 Total limits proposed from our Bank Rs. 750.00 Lakhs
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4 Collateral coverage 72.06%
ii) Reasons in case of dilution of security coverage:
Collateral Coverage at the time of last renewal was 77.20%. Reason for dilution of security coverage is that Market value of property (collateral) was considered whereas distress sale value of property is considered in the present case. In case Market value is considered in the present case, collateral coverage would be 90.03%
c) Date of creation of Charge: N.A. since partnership firm.
d) Date of subsequent modification of charge: N.A.
e) Date of vetting of documents by legal officer /Panel Advocate:18-07-2008
f) Name of Guarantors & their net worth (Rs. in lakh)
Shri D L Nagpal Guarantor 1000.00 26.11.07 Annexure CC
Shri Prem Nagpal Guarantor 300 26.11.07 Annexure CC
* Branch to obtain and keep on record C.A. certified Personal Balance Sheet/ Net Worth Statement of the guarantors as of 31-03-2009 and ensure there is no significant decline in Net Worth of the individual persons vis-a vis last sanction.
III. CREDIT RATING & Pricing:
Pricing Existing Proposed
Credit Rating Score Based on ABS [ March 09] ‘A’ “BBB”
Applicable interest rate as per Credit Rating BPLR+0.50% BPLR+0.75%
Interest rate presently Charged and Proposed BPLR+0.75% BPLR+0.75%
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Concession if any N.A. N.A.
Interest Rate charged by Lead Bank N.A.
Commission on NFB Limits As per norms
Processing Charges 1.25% of the sanctioned limit.
Factors contributing to the up gradation / slippage in credit rating:
Major factor contributing to decline in credit rating is due to decline in collateral coverage on account of factors already discussed in the note.
Justification for proposing lower rate of interest/concession in charges/ process fees: N.A.
IV.Permissions for Deviations, Issue of NOCsetc & Concessions in service charges
No Existing Proposed
1 N.A., since no concessions/deviations are proposed.
9. Ratifications required for actions, exceeding permitted etc. beyond discretionary powers: N.A.
10. COMPANY PROFILE (in brief)
(DETAILS OF MANAGEMENT, PRODUCTS MANUFACTURED, USER INDUSTRIES & COMPANY’S MAJOR CUSTOMERS)
M/s Paragon Cable India a Partnership Firm, established in 1991, is engaged in manufacturing, trading and job work of electric wires and power cables.
Managing Partner Shri Vikas Nagpal is having good experience of 15 years in the line of business. The Firm is selling its product to various State Electricity Boards ,Power Corporations and various Central Govt. Departments. Further, the Firm also sells it’s major products to private organization/ institutions viz Reliance Group,Tata Group,IVRCL, AREVA.
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The firm is enjoying credit facilities with our Bank since January 1991. The conduct of the account is satisfactory.
11. INDUSTRY SCENARIO
I Industry Categorisation Insulated Wires and Cables.
Demand and supply situation of the product – present and projected (source of information)
Demand for the product is satisfactory.
Major players & their market share There are various manufacturers in this line but the company is known for its products.
Bank’s exposure in this industryRs. 2729.47 lacs
NPA positionRs. 6.91 lacs i.e. 0.25% of the aggregate exposure
f. Cyclical trends There are no cyclical trends affecting the industry.
Govt. policies The policy of Govt. is favourable.
Whether the product is an import substitute, if so, what is the landed cost of import and what is the production cost of the indigenous manufacture
N.A.
Availability of raw materials, labour, infrastructural advantages
Raw material, labour etc. easily available at the site.
What are internal & external advantages of the borrower/technology used
The company is using latest technology.
What are the weaknesses Market uncertainties.
What are the relative opportunities The firm is looking for Govt. order & better opportunities.
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m. What are the threats Chinese imports of cheaper quality goods, market uncertainties and fluctuations.
Any other information Nil
12. PRODUCTION CAPACITY
Production Capacity Existing Proposed
Installed 2000 KM 2000KM
Utilised 1000KM 1000KM
% Utilisation 50% 50%
13. MARKET CAP: N.A. (Since it is a partnership account.)
14. FINANCIAL INDICATORS [Rs in lakhs]
Audited Audited Estimate Projection
As on 31.03.08 31.03.09 31.03.10 31.03.11
i. Capital 342.35 343.15 380.00 425.00
ii. Reserves & Surplus 0.00 0.00 0.00 0.00
iii. Intangible Assets 0.00 0.00 0.00 0.00
Tangible Net worth 342.35 343.15 380.00 425.00
Net Working Capital 227.92 234.43 320.00 374.00
Current Ratio 1.44 1.39 1.58 1.62
Gross Block
Net Block 143.48 167.03 154.00 145.00
Net Sales 2947.04 3347.76 2900.00 3200.00
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- of which exports
PBDIT 123.69 158.35 147.00 144.00
Gross Profit - PBDT 78.52 116.71 112.00 114.00
Net Profit / Loss – PAT 63.91 101.91 77.00 80.00
Depreciation 6.37 9.19 10.00 9.00
Cash Accruals 70.28 111.10 87.00 89.00
PBDIT/ Gross Sales 0.04 0.05 0.05 0.05
Gross Profit Margin 2.66 3.49 3.86 3.56
Net Profit Margin 2.17 3.04 2.66 2.50
TDER (TOL/TNW) 1.90 2.18 1.79 1.72
Interest Coverage Ratio 2.56 3.67 3.49 3.97
Current Assets to Turnover Ratio 4.37 4.25 3.89 3.79
Comments on financial performance:
Sales :
The existing Fund Based limit of Rs 400.00 and Non-Fund Based Limit of Rs 250.00 lacs was earlier assessed on an estimated Sales Turnover of Rs 2850.00 during FY
2007-08 against which the actual achievement is Rs 2947.04 lacs i.e. achievement index of 103.40%. Sales registered 15.52% during FY 2007-08 over the previous financial year, while the growth registered during FY 2008-09 is 13.60%.
The borrower has now estimated and projected a sales turnover of Rs 2900.00 lacs and Rs 3200.00 lacs during FY 2009-10 and FY 2010-11 respectively.
The borrower has attributed lower raw material as consequently lower finished good prices as the main reason for lower sales projections during FY 2009-10. The global financial crisis leading to depressed market conditions also partly contributed to the lower sales projections.
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During the first half of the current financial year i.e. Sept’09, the borrower has achieved a sales turnover of Rs 1075.00 lacs. The same translates into annualized turnover of Rs 2150.00 lacs i.e. 74.14% vis-à-vis target. However, based on orders on hand and improving market sentiments, the borrower is optimistic of achieving the estimated/projected sales turnover. In fact, the borrower has a track record of surpassing the projections.
In view of the above, the estimated and projected sales turnover is considered realistic and achievable and is hence accepted by us.
Capital/Net Worth :
The Capital/Net Worth of the borrower stood at Rs 343.15 lacs as of 31.03.09 and shows increasing trend over the years due to induction of capital/plough-back of profits in business.
Unsecured Loans :
As per existing terms of sanction, Unsecured Loans were stipulated to be maintained at the level of Rs 51.00 lacs against which the level of Unsecured Loans stood at Rs 87.75 lacs as of 31.03.09. The same is estimated and projected to be maintained at the level of Rs 80.00 lacs during FY 2009-10 and FY 2010-11.
Branch should obtain and keep on record an undertaking from the borrower to the effect that level of unsecured loans would be maintained at least at the level of Rs 80.00 lacs during the currency of bank finance and would not be withdrawn without the express consent of the Bank. The Unsecured Loans would also remain subordinated to Bank Finance.
Profitability :
Gross Profit and Net Profit Margin registered increase to 3.49% and 3.04% respectively.during the FY 2008-09 over the previous financial year.
Gist of Financial indicator of the Firm as of 30-09-2009 is as under-
(Rs. In lacs)
Sales 1075.00
Capital 362.00
Unsecured loan 82.00
Fixed Assets 162.00
Net Profit 36.00
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Auditor’s remarks and Management replies : No such qualifications/remarks.
Current performance trends: Rs in lacs
Estimated sales turnover for the year 2,900.00
Achievement till September 2009 1075.00
Pro-rata achievement 74.13%
INTER-FIRM COMPARISON (PEER GROUP)
N.A. (Since the proposed credit exposure is less that Rs 5000.00 lacs )
16. ASSESSMENT OF WORKING CAPITAL REQUIREMENTSA. Projection of sales as per last CMA DATA for the year ended 3103.09- Rs.2850.00 lacs
Actual sales for the year ended 31.03.09__Rs.3347.76 lacsLast Year Actual as
per audited Balance
Sheet
Current Year
EstimatesRegular
Following Year
ProjectionsPeak Level
Year endingNet Sales 3347.76 2900.00 3200.00Total Current Assets 843.15 870.00 974.00Less Current Liabilities (other than Bank borrowing for working capital) 369.47 300.00 350.00Working Capital Gap 473.68 570.00 624.00Minimum Stipulated margin 25% of current assets/projected NWC (whichever is higher) 210.79 217.50 243.50Max. Permissible Bank Finance 239.40 250.00 250.00Total Existing Working Capital limits 239.40 250.00 25.00Excess borrowing, if any, to be converted into Working Capital Term Loan
C. COMMENTS ON ASSESSMENT OF WORKING CAPITAL WITH JUSTIFICATION
The existing Fund Based limit of Rs 400.00 and Non-Fund Based Limit of Rs 250.00 lacs was earlier assessed on an estimated Sales Turnover of Rs 2850.00 during FY 2007-08 against which the actual achievement is Rs 2947.04 lacs i.e. achievement index of 103.40%. Sales registered 15.52% during FY 2007-08 over the previous financial year, while the growth registered during FY 2008-09 is 13.60%.
The borrower has now estimated and projected a sales turnover of Rs 2900.00 lacs and Rs 3200.00 lacs during FY 2009-10 and FY 2010-11 respectively. The borrower has attributed lower raw material as consequently lower finished good prices as the main reason for lower sales projections during FY 2009-10. The global financial crisis leading to depressed market conditions also partly contributed to the lower sales projections.
During the first half of the current financial year i.e. Sept’09, the borrower has achieved a sales turnover of Rs 1075.00 lacs. The same translates into annualized turnover of Rs 2150.00 lacs i.e. 74.14% vis-à-vis target. However, based on orders on hand and improving market sentiments, the borrower is optimistic of achieving the estimated/projected sales turnover. In fact, the borrower has a track record of surpassing the projections.
In view of the above, the estimated and projected sales turnover is considered realistic and achievable and is hence accepted by us.
The borrower has now estimated holding levels as under :
S.N. Particulars Months Amount
(Rs in lacs)
1. Finished Goods 1.27 290.00
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2. Receivables 1.88 455.00
3. Creditors 1.33 284.00
The holding levels as above are in tune with the actual holding levels of FY 2008-09 and are considered need-based and reasonable. Hence, the same is accepted by us.
Based on the accepted levels of inventory and receivables as above, the Drawing Power is calculated as under :
Particulars Months Amount
(Rs in lacs)Margin
D.P.
(Rs in lacs)
Finished Goods 1.27 290.00 25% 4.50
Less : Sundry Creditors 1.33 284.00
Paid Stocks 6.00
Receivables 1.88 455.00 40% 273.00
Total 277.50
The borrower has requested for renewal of the existing CCH limit of Rs 250.00 lacs and the same has been recommended by the Branch. As per assessment of limits under Modified MPBF Method, the permissible limit of Rs 250.00 lacs. The requisite D.P. is also available, as per the aforesaid table.
In view of the above, we recommend for renewal of the existing CCH (Stocks-cum-Book Debts) limit of Rs 250.00 lacs.
Renewal of Negotiation of Bills under L/C Limit :
The borrower is presently enjoying Bills Negotiation (under L/C) limit of Rs 150.00 lacs, outside the overall MPBF, which it has requested for continuation. Branch has informed that no Bills have being negotiated under the aforesaid limit during FY 2008-09.
However, looking to contingent requirement and based on the borrower’s request, Branch has recommended for renewal of the Bills Negotiation under L/C limit of Rs 150.00 lacs. We endorse the Branch recommendation.
17. ASSESSMENT OF TERM LOAN/ DEFERRED PAYMENT GUARANTEE: N.A.
A. LETTER OF CREDIT: N.A.
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B. BANK GUARANTEE
Purpose of the Limit Participation in Bidding Process for Tenders
b. Nature & amount of limit sanctioned Performance/ Financial /Bid Bond Guarantee limits of Rs. 350.00 lacs.
Outstanding as on 30-09-2009 Rs 47.10 lacs
Whether the existing limit is proposed to be continued, if so, justification
The Borrower is required to furnish Bank Guarantee for participation in Tenders. The borrower has requested for the Renewal of the existing B.G. limit.
In view of the above & since there has been no instances of invocation of B.G. in the past, we recommend for the renewal of existing B.G. limit of Rs. 350.00 lacs.
Name of the beneficiary / ies in whose favour guarantees to be issued
Various beneficiaries such as Reliance, Tata Group, IVRCL, AREVA,etc
Nature of the guarantee limit required i.e. performance/ financial/ Bid Bond etc.
Performance/Financial/Bid Bond Guarantee
Assessment and justification for the limit proposed
No. of BG s issued during FY 2008-09 10
Amount of Bank Guarantees (Rs in lacs) 47.10
Instances of invocation of BG,if any No
In view of the above and based on Branch recommendation, we recommend for renewal of existing Bank Guarantee Limit of Rs 350.00 lacs.
Margin proposed10% on Performance Bank Guarantee
25% on Financial Bank Guarantee
[HO, vide its’ sanction note no. DCC/SME/267/2009 dated 29.07.2009 by General Manager, has sanctioned with the margin of 15% to only specific institute NSIC in the form of Financial/Other Guarantee and the same is proposed to be continued].
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Security Extension of charge over the stock, receivables and fixed assets of the borrower.
ECGC cover for export performance guarantees
N.A.
Asset coverage for Non-Fund Based limits
Net Fixed Assets as of 31-03-09- Rs. 167.03 lacs.
B.G. limit - Rs. 350.00 lacs
Asset coverage:47.72%
Views/comments on the conduct of the account
A. Comments on utilisation of both fund and Non fund based limits
Whether stock statements are submitted every month. If not submitted regularly mention the date of last stock statement
Yes
Whether operations are within sanctioned limits Yes
Whether limits are utilised optimally /satisfactorily Yes
Frequency of inspection of stocks. Date of the last inspection and irregularity/adverse features, if any observed and steps taken to set right the same.
Insurance cover - Whether securities adequately insured and in force
Yes, as reported by the Branch.
Branch to ensure that the securities charged to the Bank (both Prime and Collateral) are adequately and comprehensively insured (with Bank Clause) and copy of the Policy should be kept on Branch record.
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Whether terms and conditions of previous sanction have been complied with, if not, specify time frame to complete (with explanation) & permission obtained from competent authority
Yes, as reported by Branch
Whether certificate from Pollution Control Board has been obtained.
N.A.
Whether the borrower is facing any litigation from banks /FIs/creditors/ Govt. Deptt./ Statutory bodies etc., if so, state in brief.
No.
In case of consortium advance, whether our bank is getting proportionate share of business
N.A.
Additional / temporary limits sanctioned subsequent to the last regular sanction and whether same is liquidated on due date or not
N.A.
Outstanding amount of unhedged Foreign Currency Exposures
N.A.
B. Income Value of account (Rs. in Lakh)
Last year Current year
Value of account (Deposits)
Process Fee recovered
Interest earned 18.82 11.20
Exchange income nil Nil
Commission earned 0.82 2.56
Income from Third party products / insurance
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Others (Lead Bank Fee, Commitment fee, Penal Interest, Syndication fee)
Total 19.64 13.76
Turnover in Foreign Exchange Business
Deposits placed (Owner Directors/ partners or Family Members, Relatives & Friends)
- Current
- Savings
- Term Deposits
a. Adverse features affecting credit decision and action proposed (including non compliance to terms and conditions of sanction and present position)
Sr No Pending Matters Present position Steps taken / Remarks
Nil
b. MAJOR INSPECTION / AUDIT IRREGULARITIES POINTED OUT IN THE LAST INSPECTION REPORT
Credit Audit Report dated 05-02-2009 :S.N Observations in Credit Audit Report Branch reply1. Certificate of Documentation and compliance
of terms and conditions of sanction not submitted
Scrutiny of Documents carried out by Shri Kalim Ur Rehman (Bank’s Panel Advocate) on 18.07.08.
Compliance of terms and conditions have been submitted.
2. Unit inspected but report not prepared. Give the date of report preparation and report any adverse observations if any
Latest Stock Inspection Report dated
No major/adverse observations.3. Observations in FFR to be analyzed and
reported to Regional Office FFR is being obtained/scrutinized and forwarded to Regional Office.
4. Valuation of Collateral not done once in two years as per guidelines
Valuation done on 23-03-2009
5. Inadequate Insurance of Stocks and Insurance taken from 17-3-2009
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insurance expired on 14/3/20096. Half- yearly review of Credit rating not done
as per extant guidelines.Branch to do credit rating exercise on the basis of Audited Balance Sheet for the year 2007-08.
Credit Rating based on the Audited B/S as of 31.03.09 is being carried out with the present proposal.
7. Branch to get the External Credit rating done, inform the status of External Credit rating
The borrower has obtained Credit Rating from SMERA (SMERA C3) on 05.12.08.
However, in terms of BASEL-II guidelines, the borrower has been advised to obtain External Credit Rating from any of the approved Rating Agencies i.e. CRISL, CARE, ICRA, FITCH..
8. Branch to ensure ostentation of CA Certified Book Debts Statement age-wise and ensure periodical inspection
received on 30-4-2009
Stock Inspection Report dated 24-10-2008 from M/s D.P. Gupta & Co. Charted Accountant.
Auditor Remarks Branch Reply
1. Hypothecation agreement for collateral security for Plant and Machinery , furniture and fixtures and other equipments existing as well as to be acquired in future is not obtained by the branch. Insurance of the same has also not been taken.
2. Audited B/s of the march, 2008 was not available for verification
Audited B/S as of 31-03-2008 and31-03-2009 has been obtained and kept on Branch Record.
3. Details of Collateral Security of property at Manesar is not recorded in Title Deed Register.
Details of Collateral Security of property at Manesar is recorded in Title Deed Register.
4. Banks name plate showing “stock hypothecated with Dena Bank” not displayed
Banks name plate showing “stock hypothecated with Dena Bank” is now being displayed.
5. Vetting of latest documents has not been done.( Documents vetted 05-06-2008)
Vetting of latest documents has been done.
6. One Bank guarantee of Rs. 2.69 lacs issued on behalf of the party has expired on 13-07-2008.
7. FFR-I & FFR-II has not been obtained by the branch from the Firm
FFR-I & FFR-II is now being obtained and scrutinized by the branch and submitted
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to Regional Office has not been obtained by the branch from the Firm
c. Directors’ name figuring in RBI/ Wilful Defaulters’ / CIBIL / SAL – ECGC list and comments thereon. Impact on taking exposure where names are appearing in the defaulters list: NIL
d. Position of statutory dues and incentives receivables:-
Provident Fund, ESI and Superannuation contribution paid upto Branch is advised to obtain and keep in record the Statutory Due Certificate from the borrower duly certified by the C.A. of latest date and Branch Manager should ensure that there are no Statutory overdues.
Wages and salaries paid uptoSales Tax paid uptoService Tax paid uptoIncome Tax Assessment completed upto and for the year ending #Advance Tax paid for the year endingExcise duty paid uptoMunicipal Tax, Octroi etc.Incentives from the Government and other agenciesDisputes not acknowledged as debtsContingent Liabilities (Likely to turn into Liabilities)Reconciliation of Debtors/ creditors
CA certificate to be obtained and kept on record
# wherever borrowers encounter tax disputes, searches, raids by tax authorities, details along with proceedings and present status should be reported.
e. Group dealings/experience & desirability of further exposure:
f. RISK ASSESSMENT
Risk Risk Factor Risk Mitigation
1.Industry/Activity Risk
There are large numbers of manufacturers both in the organized as well as unorganized sector and the expansion in their capacity
On account of growing economy and infrastructure development, the demand is likely to absorb the supply on account of capacity increase.
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could lead to recession/oversupply.
2.Borrower/Borrower Risk The firm may face competition
from the unorganized sector in the regular cable products.
The firm will be able to withstand the competition on the basis of quality and business experience.
3.Security Risk The product is prone to theft and fire.
The firm to take comprehensive insurance, with Bank clause, to cover such type of risk.
4. Other Risk Nil
20. Compliance oF RBI / Bank Loan Policy guidelines
Deviation if any with justification
The proposal is as per RBI / Bank’s Loan Policy guidelines.
21. MODIFICATION IN EXISTING TERMS OF SANCTION IF ANY:N.A.
22. VIEWS/RECOMMENDATIONS OF THE CREDIT COMMITTEE:
N.A. since it is a renewal proposal.
23. DISCRETIONARY POWER FOR SANCTION AND FOR APPROVAL OF DEVIATION, IF ANY:
The proposal falls within the overall discretionary powers of GM (Credit).
24. RECOMMENDATION:
Branch has recommended for renewal of existing fund based limit of Rs. 400.00 lacs and Non fund based limit of Rs. 350.00 lacs as per existing terms and conditions.
25. REGIONAL OFFICE RECOMMENDATION: It is an existing SME client of the branch. SME sector is
presently one of the thrust areas of finance of the Bank. The Borrower is dealing with us since 1991 and the
overall track record is satisfactory. The partners have experience of more than 15 years in
the line of business. The borrower is having profit making track record.
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Collateral base of the exposure is 72.60%, which may be considered satisfactory.
The limits are justified under Modified MPBF method. Branch has recommended for renewal of the existing limits.
PUT UP FOR APPROVAL.
Officer Manager Sr. Manager AGM DGMSME SME SME SME SME
ANNEXURE 'A' Ref No. NDR/ICFD/SS/ 01 Date : 23-10-2009
Name of the unit/borrower : M/s Paragaon Cable India1) Nature of arrangement : Cash Credit Hypothecation (Stock-cum-Book Debts)2) Limit : Rs. 250.00 lacs [Rupees Two Hundred & Fifty Lacs-
Renewal of existing limit
3) Margin : 25% (Against stock of raw material and finished goods) 33.33%(Against work in progress)
4) Interest : BPLR+0.75%-0.50% (concession in terms of H.O. circular no. 282/06/2008-09 dated 18.12.08) i.e. at present 12.75% p.a. presently, subject to change in BPLR from time to time. The concessional interest of 0.50% is at the sole discretion of the Bank and may be withdrawn at any point without notice.
TERMS AND CONDITIONS:-
1. Our usual documents to be executed by the firm and all the partners/proprietor in their personal capacity. In the case of limits companies, documents are to be executed under the common seal of the company backed by proper resolution.
2. Our advance to be guaranteed by the partners Viz. Shri Vikas Nagpal and Smt. Anjana Nagpal in their personal capacity alongwith Shri D.L.Nagpaland, and Shri Prem Nagpal
3. All the assets charged to the Bank to be fully insured against fire, theft, burglary, SRCC, breakdown of machinery with bank clause.
4. The unit/company to submit stock statement and monthly selected operational data (MSOD) every month.
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5. The unit/company to submit QIS/FFR statement regularly.6. Our advance is restricted to manufacturing/trading activities.7. Interest/Commisison rates are subject to revision as per RBI/HO guidelines or as
decided by consortium.8. Process fee and Supervision Charges to be recovered as per HO guidelines.9. Branch to ensure that there are no inter-firm transfer of funds except for genuine
sales transactions.10. Bank will have a right to examine all the times firm's/company's books of accounts,
assets etc. and have the company's workings and operations examined from time to time by the officers of the bank/or technical experts and/or management consultancy and fees to be borne by the firm/company.
11. Bank may charge penal rate of interest over and above the rate applicable under the following circumstances:-
a) delay in submission of stock statement, MSOD, QIS statement.b) delay in submission of renewal papers.
12. Guidelines issued by HO/RA from time to time are to be strictly adhered to.13. The borrower be informed of the terms and conditions of sanction and the
confirmation be obtained to the effect thereof in writing.14. Date of reconsideration - one year after sanction.