Working Capital financing - model formats for Detailed Project Report (DPR) and Sanction Letter

Detailed Project Report (DPR) for Loan Proposal
DETAILED PROJECT REPORT

Proposal for Term loan of Rs…… lakh and Working Capital Limit of Rs…….lakh
for setting up a new project for manufacture of ………..
                                                           
I.          INTRODUCTORY, PROMOTERS AND MANAGEMENT

1.         Particulars of the Enterprise:

1.1
Name of the Enterprise

1.2
Constitution (Proprietorship/ Partnership/ Pvt. Ltd. Company/ Public Limited Company/ Limited Liability Partnership/ Cooperative Society

1.3
MSME Status

1.4
MSME Registration No./
Date of Registration

1.5
Date of incorporation / commencement of business

1.6
ROC Number, if applicable

1.7


Address
Registered Office:

Administrative Office

Factory
(Whether backward area)


1.8 Industry Status

Industry
Products
Installed Capacity
No of days / Shifts
End uses
Export orientation







2.         Promoters:

2.1.      Brief bio-data of the promoters:  

            Brief background of promoters may be furnished as under. Write up on other companies, if any, promoted by them with which they are associated.

Name of the promoter



Father’s/ Husband’s name



Age (years)



Residential Address



Educational Qualification



Passport No., valid till, place of issue



Permanent Account Number



Relationship with the chief promoter



Experience in what capacity/ industry/ years




Networth as on………………….



Income Tax / Wealth Tax Status



Other concerns interest / in which capacity / financial stake




Detailed biodata may be furnished as per APPENDIX I and networth statement of promoters and guarantors may be furnished as per APPENDIX II.

2.2       Brief financial position / working results of each associate concern

            Brief financial position/ working results of the associate concern(s) for the past …. years is furnished below:
(Rs. lakh)
Name of the Concern/ Location/ Established in
Product
Year/ Period
Sales
Net Profit
Net
worth














Details of associate concern(s) may be given as per APPENDIX III.

2.3       Brief history
            Brief history of the unit may be given.

3.         Management and Proposed shareholding pattern:

3.1       Management:
            Brief comments on the management be given.

3.2       Proposed Shareholding Pattern:

The authorised share capital of the company is Rs….. lakh. The shareholding pattern of the company is given below:

S.No
Name of the Directors
(S/Shri)
No. of shares
Shareholding
Rs. lakh
%
1




2




3




4




Total



100

OR

The unit is a partnership firm. The profit/loss of the firm shall be shared by the partners in the following proportion:

S.No
Name of the Partners
(S/Shri)
Percentage (%) in case of profit / loss
1


2


3


Total
100.00

II.         TECHNICAL ASPECTS

4.1       Scope of the project:

            Briefly mention scope of the project i.e. what the project is supposed to accomplish to deliver a product or service with the specified features and functions.

4.2       Location-availability of infrastructural facilities:

Locational advantages of premises with reference to absence of civic restrictions, proximity to the source of raw materials, market for the product, availability of power, water, labour and transport may be mentioned. Whether backward area benefits, if any, available.

4.3       Technology:

            Selection of technology, comments on alternative production process, comments on technology (latest/ appropriate/ proven). Discuss the impact of possible changes in technology in future. Indicate technical process whether it is a continuous process. In case of technical collaboration, please furnish a brief write-up on the period of collaboration agreement, the name of the collaborator company, indicating the activities, size, turnover, particulars of the existing plants, and other projects in India and abroad set up with same collaboration. Brief manufacturing process involved may also be given.

4.4       Raw materials/components:

            Details of raw material required and their sources may be indicated.

4.5       Utilities

4.5.1    Power:
Requirement of power depending upon plant and machinery and its availability from State Electricity Board may be mentioned. Back-up arrangement of power by way of DG Set may also be furnished.

4.5.2    Water:

Requirement of water for process/ human consumptions and its availability from Municipality/ bore well may be mentioned.


4.5.3    Fuel:

Details of fuels required depending upon production process and its arrangement of supply may be mentioned.

4.5.4    Others like steam/compressed air etc:

Details of steam/ compressed air required depending upon production process and its arrangement in the project may be mentioned. Capacity of boiler/ compressor may be furnished.

4.6       Effluent disposal:

            Mention about whether the unit falls under green, orange, red categories as per guidelines of State Pollution Control Department. Type of pollutants generated under the process and pollution control measures being taken in the project may be mentioned. Whether the unit has applied/ will apply to State Pollution Control Department for getting consent to establish.

4.7       Manpower:

The requirement of proposed manpower in various cadres viz. executives, technical persons, supervisors,  administrative staff, skilled and unskilled labours and their arrangements being made to be commented upon keeping in view the location of the unit, industry etc.

4.8       Implementation schedule:

Based on the progress already made and other arrangements made by the unit, the implementation schedule for following may be mentioned.

Particulars
Date of Commencement
Expected Date of Completion
Acquisition of Land


Development of Land


Civil Works for
- Factory building
- Machinery foundation
- Administrative Building


Plant & Machinery
- Imported
- Indigenous


Arrangement for power


Arrangement for water


Erection of equipment


Commissioning


Initial Procurement of Raw Material


Trial Runs


Commercial Production




III.        PROJECT COST AND MEANS OF FINANCE

5.         The broad break-up of cost of project is as under:
                         (Rs. lakh)
S.No.
Particulars
Already incurred
To be incurred
Total Cost
Firm
Non-firm
1
Land and Site Development




2
Buildings




3

Plant & Machinery – Imported




Plant & Machinery – Indigenous




4
Miscellaneous Fixed Assets




5
Preliminary expenses




6
Preoperative expenses 




7
Contingencies




8
Margin money for working capital





Total





5.1       Land and site development:

Location, area, purchase price, adequacy, availability for future expansion, comment if land acquired is in proportion to requirement, whether Non-agricultural (NA) permission obtained, freehold or leasehold, if leasehold, who owns, period of lease, whether lease deed registered, whether mortgage of leasehold rights possible, period of lease and adequacy thereof, price and reasonableness thereof, when acquired, land in the name of whom, if not steps taken for transfer to the company, break-up of site development cost viz. leveling & filling, internal roads, barbed wire compound etc. and reasonableness thereof.

Details of site development required and cost may be given in following table. It may be supported by the estimate from the architect.

S. No.
Description of Building
Cost
 (Rs. lakh)
(a)
Cost of leveling & development of ………..acres/ sq.mts. of land @ Rs……per acre/ sq. mt.


Cost of laying roads

(b)
(i) Approach road connecting the factory site to main road ……. running meters @ Rs……per rm.

(ii) Internal roads for the factory ……. running meters @ Rs……per rm.

(c)
Cost of fencing/ compound wall ……. running meters @ Rs……per rm.

(d)
Cost of ….. Gates





Total Cost of Site Development



5.2       Buildings:

Details may be furnished in following table:
(Rs. lakh)
S. No.
Description of Building
Type of Construc-tion
Estimated Cost
(Rs. lakh)
Area
(sq. mts. or sq. fts.)
Cost. per sq. mt. or sq. ft.
(Rs.)
(a)
Factory building for the main plant & equipment




(b)
Factory building for auxiliary services like steam supply, water supply, laboratory, workshop etc.




(c)
Administrative building




(d)
Godowns, warehouses and open yard facilities.




(e)
Misc. non-factory buildings like canteen, guest house, time office, excise house etc.




(f)
Quarters for essential staff




(g)
Silos, tanks, wells, chest, basin, cisterns, hoopers bins and other structures which are necessary for installation of plant and equipment and which may be constructed in RCC and such other structural civil engineering materials




(h)
Garages




(i)
Cost of Sewers drainage




(j)
Civil Engineering works not included above




(k)
Architects’ fees











Total Cost of Building





            Please furnish the particulars of Architect viz. name and address of the architect firm, scope of work, rates quoted and detailed estimate of expenses, fee payable and manner in which payable, time schedule, penalties, past experience of the architect in similar work.
           
5.3       Plant and machinery – imported & indigenous :

            The details of plant and machinery (imported & indigenous) proposed to be acquired may be furnished in following table:

            IMPORTED
 (Rs. lakh)  
S. No.
Name of Machinery and Specification
Quantity
Supplier
Unit Cost in Foreign Currency (CIF)
Foreign Currency
Exchange Rate
Total Cost (Rs. lakh)
Import Duty (%)
Import Duty (Amount)
1









2









3









4









5









6









7




















Total Cost of Imported Machinery












INDIGENOUS
(Rs. lakh)  
S. No.
Name of Machinery and Specification
Quantity
Supplier
Unit Cost in Rupees (Incl. taxes)
Total Cost (Rs. lakh)
1





2





3





4





5





6





7












Total Cost of Indigenous Machinery






Basis of selection of the suppliers whether based on recent competitive quotations or otherwise, reputation of suppliers and guarantees regarding performance may be mentioned. In case of fabricated equipment, cost should be reasonable and justifiable. In case of imported machinery, details of customs duty may also be given. If second hand machinery, please enclose valuation report regarding age, performance and value from an approved chartered engineer. Also indicate reasons for going in for second hand machinery. Separate mention may be made about towards transportation/ erection/ installation of plant and machinery. In case of imported machinery, details of customs duty may also be given. Separate mention may be made about towards transportation/ erection/ installation of plant and machinery.

If any consultant is engaged, following details may be furnished:
(a) Name and address of the consultants
(b) Fees payable and the manner in which payable
(c) Scope of work assigned to them
(d) Brief particulars of consultants including organisational set-up, bio data of senior personnel, names of directors/ partners, particulars of work done in the past and work on hand.


5.4       Misc. fixed assets:

The details of miscellaneous fixed assets proposed to be acquired may be furnished in following table.
(Rs. lakh)  
S. No.
Name of MFA and Specification
Quantity
Supplier
Unit Cost in Rupees (Incl. taxes)
Total Cost (Rs. lakh)
1





2





3





4





5





6





7












Total Cost of MFAs






Basis of selection of the suppliers whether based on recent competitive quotations or otherwise, reputation of suppliers and guarantees regarding performance may be mentioned.

5.5       Preliminary expenses:

            Expenses before incorporation of the company may be furnished in following table.

S. No.
Nature of expenses
Rs. lakh
(a)
Brokerage & commission on capital

(b)
Other capital issue expenses (legal, advertisement, printing stationary etc.)

(c)
Other preliminary expenses (company flotation & other initial expenses)





Total Preliminary Expenses




5.6       Pre-operative expenses:

            Pre-operative expenses may be furnished in following table.

S. No.
Nature of expenses
Rs. lakh
(a)
Establishment

(b)
Rent, rate & taxes

(c)
Traveling expenses

(d)
Misc. expenses

(e)
Interest during construction period

(f)
Insurance during construction including erection insurance

(g)
Mortgage expenses (stamp duty, registration charges and other legal expenses) (….% on loan of Rs. …. lakh)

(h)
Upfront fee for sanction of term loan

(i)
Security Deposit with Electricity Board and charges for power connection





Total Pre-operative Expenses


5.7       Contingencies:

            Contingencies may be related to non-firm cost on building, plant & machinery and Misc. fixed assets.

5.8       Margin money for working capital:

Margin money for working capital for first full year of projections either based on Nayak Committee Method (upto working capital limit of Rs.5 crore in respect of SSI units) or Second Method of Lending may be mentioned.

6.         Means of finance:

            The proposed means of finance is as under:
                                                                                                                         (Rs. lakh)                  
Sl No
Particulars
Amount already raised
Amount proposed to be raised
Total Amount
1
Share capital/ Partner’s Capital/ Proprietor’s capital



2
Subsidy- Central/ State Government



3
Interest free unsecured loans



4
Term loan from Bank




Total





IV.        ARRANGEMENTS MADE/PROPOSED TO BE MADE FOR WORKING CAPITAL

7.         Proposed arrangement for sanction of working capital limit from Bank or own sources may be mentioned.

V.         INDUSTRY/ MARKET AND SELLING ARRANGEMENTS

8.1       Industry Overview and Future Outlook:

Prospects of the industry may be mentioned here. Government Policies and   Regulations WTO related issues, Demand Supply Scenario, Competitor Analysis etc. may be covered.

8.2       Marketing & Selling Arrangements:

Details regarding main markets (locations), competitors, how does the unit propose to meet the competition, how does the unit's product compare with those of its competitors, any USP or specific market strength, whether product has multiple applications, distribution channels (e.g. direct sales, retail network, distribution network), Marketing team details, if any, firm tie up, orders on hand, details of marketing study done, if any, may be mentioned here.

VI.        FINANCIAL VIABILITY

Detailed profitability assumptions may be given as per APPENDIX IV. Detailed profitability estimates, projected cash flow statements, projected balance sheet, break even analysis, working capital computation, Debt Service Coverage Ratio and Internal Rate of Return calculations may be prepared as per Excel file (Profitability_Projections) and be attached as ANNEXURES I to XIV. Indicate the critical assumptions and give meaningful comments on projected capacity utilisation, selling prices assumed for finished products/ raw materials, gross profit percentage compared to industry average, indicate the critical factors on which viability depends.

VII.       STRENGTH/ WEAKNESS

Such as market standing, product/ service differentiation, technical expertise, infrastructure facilities etc.


VIII.      FINANCIAL ASSISTANCE SOUGHT FROM BANK

Amount of term loan and/ or working capital limit sought from the Bank may be mentioned. Repayment period in respect of term loan sought from the Bank, including repayment holiday may be mentioned.

IX.        DETAILS OF SECURITIES OFFERED TO THE BANK

(a) Primary (working capital and term loan securities to be indicated separately)
(b) Collateral (full details)
(c) Details of personal and corporate guarantees, if any




Signature of the Borrower
Date:
Place:



List of Enclosures

APPENDIX I
Bio-Data of the Promoter
APPENDIX II
Net worth Statement of the Promoter
APPENDIX III
Details of the associate concern (if applicable)

APPENDIX IV
Assumptions underlying profitability estimates

ANNEXURE I
Cost of Project and Means of Finance
ANNEXURE II
Projections of Performance & Profitability
ANNEXURE III
Projected Cash Flow Statement
ANNEXURE IV
Projected Balance Sheet
ANNEXURE V
Calculation of Margin Money for WC & Assessment of WC
ANNEXURE VI
Calculation of Depreciation
ANNEXURE VII
Calculation of Interest on Term Loan from Bank
ANNEXURE VIII
Break Even Point
ANNEXURE IX
DSCR
ANNEXURE X
Calculation of IRR & NPV
ANNEXURE XI
Cost of Capital
ANNEXURE XII
Return on Capital Employed
ANNEXURE XIII
Tax Provision

Other Documents

1
Audited Financial statements for the last three years of all the associate concerns of the applicant unit (if applicable)
2
Certified copy of Memorandum and Articles of Association/ Certificate of Incorporation/ Certificate of Commencement of business/ Partnership Deed/ Trust Deed/ Bye-laws/ Registration Certificate from Registrar of firms/ Societies, as the case may be.
3
IT/ Wealth Tax assessment orders/ returns/ certificates for the last 3 years in the respect of the promoters.
4
Photocopy of PAN card of all the promoters/ directors/ guarantors
5
Know Your Customer (KYC)* Documents of all the promoters/ directors/ guarantors.
6
Photograph of all the promoters/ directors/ guarantors with signatures duly certified by their bankers/ as per extant guidelines







Model Sanction Letter for Credit Facilities.

With reference to your application dated 09.06.2014 and subsequent correspondence, we have pleasure in advising you that the competent authority of the bank has sanctioned the following credit facilities on 20.10.2014 as per the terms and conditions detailed in Annexure–I.
                                                                                                (Rs. in Crores)
Facility
Limit

Existing
Proposed
1. Cash Credit (Hyp)
2.00
2.90
2. Term Loan
---
0.87
Total Fund Based Limits
2.00
3.77
4. Letter of Credit
4.00
4.50
5. Bank Guarantee
4.00
6.00
Total Non Fund Based Limits
8.00
10.50
T O T A L (FB + NFB)
10.00
14.27
                                                                                   
The sanctioning authority has approved the following:

·         Two-way interchangeability between BG and LC limits to the extent of Rs. 1.00 crore
·         Continuation of Margin on BG and LC @20% as against the stipulated margin of 25%
·         Enhancement In the tenor of LC from the existing level of 90 days to 120 days

While Sanctioning, the Competent Authority has made the following observation:
·         Enhanced limits will be released only after the receipt of ABS 2014 and verifying that the difference between audited and provisional sales and profits are not more than 10% and 5% respectively and there is no deterioration in CRA rating.
 ·         Before availing the enhanced limits, an affidavit should be submitted by the owner of the property countersigned by the Company that no agricultural activity is being carried out, supplemented by a certificate from the Revenue Authorities that no agricultural activity was happening on the land for  the last 3 years
·         The advance payment received against BGs should be factored accordingly while submitting stock statement.
·         External rating should be completed by 31.12.2014 failing which penal interest will be charged as per extant guidelines.
·         Second valuation and legal opinion will be obtained for the properties offered as  security.

The credit facilities sanctioned to the company are to be utilized for its genuine working capital requirements only with no diversion of short term funds for long term uses.

Please return the duplicate copy of this letter and annexure duly signed by the authorized signatories of the company and the guarantors in token of having accepted the terms and conditions of sanction. Please also arrange to pass suitable Board Resolution in this regard and arrange to call on us for executing the necessary documents along with certified copy of the resolution for our record.

Yours faithfully,

 
Asst. General Manager 
Encl. (as above)

ACCEPTED TERMS AND CONDITIONS

 




BORROWER                                                                                    GUARANTORS

ANNEXURE I

TERMS AND CONDITIONS
State Bank of Hyderabad, Sanathnagar, Hyderabad (20076)
Company: M/s New Energy Pvt. Ltd.

Limits:
Cash Credit   - Rs. 2.90 Crores
Term Loan  -  Rs. 0.87 crores
BG              - Rs. 6.00 Crore
LC               - Rs. 4.50 Crores
A) Security Details:
a. Primary Security:

For Working Capital limits
 First charge on all current assets of the Company  (Existing and future)

b. Collateral Security
I) Equitable Mortgage of the following Immovable Properties:
Sl No
Particulars of Property
1


All the securities available as first charge for working capital limits are extended to cover the existing and proposed term loans and all the securities available as first charge for Term Loans are extended to cover Working Capital limits.


c. Guarantees: Personal Guarantee of the following:
Sl No
Name
1

2

3

4

5

6

7

8

9


ECGC Cover:  Not applicable

C.   MARGINS: (FOR EACH FACILITY AS APPLICABLE):

Cash Credit:
Existing
Proposed
RM:      Domestic
--
--
RM:     Imported
--
--
SIP
--
--
FG
--
--
Receivables (Maximum cover period 90days)
--
50%
Letter of Credit
--
20%
BG
--
20%
TL (Margin)
33.59%
D. RATE OF INTEREST: (with details of fixed/ floating/ reset in spread intervals).

Facility
CRA
(As per ABS as on  31.03.2013)
Pricing
(w.e.f. Date of sanction)
Comments if pricing differs from CRA
Cash Credit
SB – 7
BR + 3.55%
--
Term Loan
SB – 7
BR + 4.05%
--

The Rate of Interest will be renegotiated whenever there is trigger for renegotiation, as stated below.
When there is a change in the CRA rating of the borrower.
When the interest rate scenario in the market changes, even if there is no change in the Credit rating and / or no change in the Base Rate.


E. REPAYMENT SCHEDULE      : (Uniform/ balloon / step up/ starting from / No. of installments / Qtly- Half-yly to be furnished)

Facility
Repayment
Cash Credit
Repayable on demand and will be reviewed / renewed every 12 months.
Term Loan
60 monthly Installments of Rs.1.45 lacs each commencing from 3 months after the first disbursement (i.e. after moratorium period of 3 months, Interest to be paid as and when debited.

F. PROCESSING FEE / UPFRONT FEE            : 
           
Processing Fee (for Working Capital limits)   : 0.30% of the limit
Upfront Fee                                                              :  1.25% of Loan  Amount
Mortgage Charges                                                 : As applicable
Documentation Charges                                      :  Rs. 20,000.00

G. COMMITMENT CHARGES      : 
1.  More than 75% - Nil
2. Between 50-75% - 0.25% to be recovered on the entire unutilized portion on a quarterly basis
3.  less than 50% -  0.50% p.a. on entire unutilized portion on a quarterly basis

H. DISBURSEMENT (TL):  Directly to the supplier

Term Loan:
l. Repayment Schedule: 60 monthly Installments of Rs.1.45 lacs each commencing from 3 months after the first disbursement (i.e. after moratorium period of 3 months, Interest to be paid as and when debited.

m. Basis of Valuation: 
§  Raw Material, stores and spares at cost price or market price or Government controlled rate, invoice rate whichever is lower.  In case of imported goods, the cost price will be inclusive of import duty paid.
§  Stock-in- process at cost of production.
§  Finished goods at cost price, invoice, or market price/export price whichever is lower.
§  Old and obsolete stocks should be shown separately in stock statement.


n. Periodicity of Statements:
Particulars
Interval / Periodicity
Stock Statements
Quarterly by 10th of every quarter or earlier whenever there is significant change in the level of stocks and receivables affecting the available drawing power.
Select Operational Data (SOD)
Monthly Intervals
FFR-I
Quarterly, to be submitted within six weeks from the close of a quarter.
FFR-II
Half yearly. To be submitted within 8 weeks from the close of a half year.
Submission of renewal data
At least two months before the date of expiry of limits.



o. Penal Rate of Interest:
Particulars
Rate of interest to be charged
Delayed submission of Stock Statements
1% on the entire outstanding if not submitted within 10 days. Interest to be charged from beginning of the month.
FFR-I & FFR-II
1% on the entire outstanding if not submitted as per the periodicity mentioned above
Delay in submission of renewal data
1% on the entire outstanding.
Irregular drawings
1% on the irregular portion of drawing on first two occasions not exceeding 60 days in a calendar year and 2% in the subsequent occasion or if the irregularity is persistent i.e. Continuing beyond 60 days.
Non-compliance with covenants of sanction
1% on the entire outstanding.


g. Terms & Conditions for financing against Receivables:

A
Limit (sub-limit)
--
B
Margin
50%
C
Tenor
90 days
D
Other Covenants
- Only book debts, which represent genuine transactions, evidenced by way of invoices, bills wherever applicable etc., shall be taken into account for financing.
- The statement of book debts, with age-wise classification and with clear bifurcation of receivables of Group companies and other companies shall be submitted monthly alongwith the stock statements.
- All book debts should be realized within the cover period stipulated above in normal manner.  Book debts remaining outstanding beyond this period will be removed from the cover and drawing power recalculated.  Any drawings in excess of this should be repaid immediately.
- The company should ensure that proper system of control over book debts is in vogue and Bank should be apprised of the position periodically.
- Bills discounted under LCs should not be included in the Book Debts statement.
- Quarterly certification from Chartered Accountant with regard to the quality, age and genuineness of book debts.
- Company should submit at regular quarterly intervals that it had not opened any account with any bank other than the financing bank and also undertake not to open any account with other banks without the written consent of the financing bank.





t. Letter of Credit (Inland / Foreign) (DA/DP):
A
Limit
Rs.4.50 crores
B
Tenor
120 days
C
Purpose
For procurement of Raw Material and other spares related to normal business activity of the company.
D
Margin
20%
E
Security
Application – cum – Indemnity from the borrower in respect of every LC.
Charge over current assets to cover the LC limits also.
Collateral security available for fund based limit would extend to cover the LC limit also.
F
Commission
As per Bank standard rates.
G
Period of Sanction
As applicable to CC limits.
H
Interchangeability
No

I
Other Stipulations
Foreign LCs shall be opened as per the provisions of UCPDC / FEMA / RBI guidelines / UCP.
In case of import LCs, an undertaking to be furnished by the company that they will bear the exchange fluctuation risks and will arrange for forward cover whenever called upon to do so by the Bank.
In respect of Usance LCs, the goods received under the unpaid LC should be excluded from the value of stocks for arriving at Drawing Power.
The borrower to ensure payment of LC bills on due date and the bank may insist for funding of future payments through a separate account prior to the due date.  Company has to submit an undertaking that they will retire the documents received under the LC from their own sources on the due dates without approaching the bank for additional funds.  In case of Sight LC, the company to retire the documents promptly on first presentation.
All bills under Usance LC must be paid promptly on due date.
The bank reserves the specific right not to deliver documents even under a Usance LC in case there are earlier devolvements and the entire risk for demurrage or any other charge shall be the sole responsibility of the borrower.
The bank reserves the right not to open fresh LCs or to raise the cash margin even within the sanctioned limits, if the accounts are irregular or bills under LCs devolved upon the bank earlier.
The LC will be opened only for the purpose of purchasing raw materials, stores and spares required by the company in normal course of their business. They will not be opened for the purpose of procuring capital goods under the limit.
While establishing LCs it will be ensured that the company is able to retire the relative documents within the sanctioned Cash Credit limit, without rendering the account irregular under the Cash Credit arrangement.





The goods covered by the LC will be fully insured against all transit risks.
LCs in favour of associate concerns will not be permitted.
Commitment charges @ 0.25% on the un-utilized portion of the limits, if the average utilization is 60% or less.








U. Bank Guarantee (Inland):
A
Limit
Rs.6.00 crores
B
Purpose
EMD / Security Deposit / Performance / Advance Retention Money / Provisional Excise Duty, Customs Duty / Export Obligation
C
Margin
20%; 100% for disputed BGs.
D
Security
Counter Indemnity of the company
Charge over current assets to cover the BG limits.
All collaterals to cover BG facility also.
E
Commission
As per Bank standard rates.
F
Period of BGs
Maximum 18 months.
G
Interchangeability
No.
H
Period of Sanction
As applicable to CC limits.
I
General
Guarantees required in the normal course of the company’s business will be executed under the limit.
The guarantees executed will be specific in regard to the amount and the period of validity and will contain our usual limitation and enforcement clauses.
The Bank Guarantees will be issued in the format acceptable to the Bank.
While executing the guarantees, it will be ensured that these do not contain any clauses prejudicial to the Bank’s interest.
The Bank shall be entitled at any time during the currency of the guarantee to demand and recover any margin upto the full extent of 100% on the guarantee and in case of default by the company in payment of the margin so demanded, the Bank reserves the right to recover such margin by debit to the accounts of the company and such debit shall be recoverable from the company as their dues.
In the case of invocation of the Bank Guarantees, the company should make sufficient funds available in the Cash Credit Account to meet the BG liability; otherwise the Bank reserves the right to charge penal interest as applicable in case of over drawings.


Calling up of the Loan:
The bank will be at liberty to call up the loan, or such portion thereof as may remain outstanding on the happening of any of the following or other events considered likely to jeo-paradise the bank’s interest.
a)
Any instance of the principal money being unpaid on the due date for payment thereof
b)
The company committing any breach of default in the performance or observance of the covenants in the mortgage deed executed by them.
c)
The company entering into any arrangement or compromise with its creditors or committing any act of insolvency.
d)
Any interest remaining unpaid and in arrears for a space of three months after the same shall have become due.
e)
Execution or distress being enforced or levied against the whole or any part of the company’s property.
f)
The company into liquidation (except for the purpose of amalgamation or reconstruction approved by the bank).
g)
Any of the directors of the company being adjudicated insolvent or taking advantage of any law for the relief of insolvent debtors.
h)
A receiver being appointed in respect of the whole or any part of the property of the company.
i)
The company ceasing or threatening to cease to carry on business.
j)
The occurrences of any circumstance which is prejudicial to or impairs, imperils or depreciate the security given to the bank.
k)
The occurrences of any event or circumstance, which would or is likely to prejudicially or adversely, affect in any manner the capacity of the company to repay the loan.
l)
If default is made in due and effective payment of legal expenses, commitment charges, cost, charges or any other monies payable by the company.

Negative Lien:
1
The company should not create, without prior consent of the bank, charges on any or all of their properties and assets during the currency of our loan.
2
Every year three copies of audited/printed balance sheet and profit and loss account statements of the company immediately on these being published/ signed by the auditors are furnished to the bank.
3
Half yearly profit and loss account statements within two months from the end of half-year should be furnished to the bank.
4
The communication of sanction of facilities should not be constructed as giving rise to any binding obligation on the part of SBH unless the company communicates to SBH within 15 days from the date of receipt of the sanction letter that the terms and conditions set out are acceptable to it and unless the loan agreement and other documents relating to the facilities are executed by the company in such form as required by SBH within the stipulated time or where no period is stipulated within six months from the date of sanction or such further time as may be allowed by SBH in its absolute discretion.
5
The bank reserves the right to change/revise/update any of the given conditions from time to time as per the guidelines of the bank/RBI/GOI/concerned authorities.
6
Bank reserves the right to cancel/withdraw the credit facilities without assigning any reason.


Security Documents
The company should execute such security documents including mortgage and other deeds as may be required by the bank.
Legal Expenses
All legal expenses like solicitor and lawyer's fees, stamp duty, registration charge and other incidental expenses incurred in connection with this loan arising there from to be borne by the company.
Inspection/site Visits
The company shall comply with the following conditions to the Bank’s satisfaction.
1
Appoint key technical, financial, marketing   and   administrative personnel with professional background and experience.
2
The company shall permit the authorized representatives of the bank to carry out any technical financial and or legal inspection(s) at the cost of the company whenever required.
3
During such inspections all related books of accounts, registers etc., shall be made available for verification/examination to the bank by the company.
4
The bank may at its sole discretion disclose such information to other Institutions, government bodies, in connection with the facility/ies granted to the company.




General Covenants
1
The Bank will have the right to examine at all times, the Company's  books  of  accounts  and  to  have  the   company/ factory(ies) inspected from to time by officer(s) of the Bank and/or  qualified  Auditors and/or technical  experts  and/or management  consultants  of the Bank's choice. Cost of such inspection shall be borne by the company.
2
During the currency of the Bank's facilities, the company will not without the permission of the consortium in writing:
a)
effect any change in the capital structure;
b)
formulate any scheme of amalgamation or reconstruction;
c)
implement   any  scheme  of  expansion  or   acquire   fixed  assets;
d)
invest  by  way of share capital in or lend  or  advance  funds  to place deposits with any other concerns  except  in  normal course of business or as advances to employees;
e)
enter in to borrowing arrangements either secured or   unsecured with any other bank or financial institutions,     company or otherwise;
f)
undertake guarantee obligations on behalf of any other  company;
g)
declare dividends for any year except out of profits   relating to that year after making all due and necessary provisions   and  provided  further  that  no  default   had occurred  in any repayment obligations.
3
The company will place with the Bank all its banking business including foreign exchange, if any, and deposits.
4
The company should not make any drastic changes in its management set up without the Bank's permission.
5
The company will maintain its net working capital position above the levels furnished in its projections for working capital finance. In the event of difference of opinion arising as to what constitute current assets and current liabilities, the consortium/Banks' decision will be final and binding on the company.


6
The company will keep the Bank informed of the happening of any event likely to have substantial effect on their profit   or   business, if, for   instance, the    monthly production / sales are substantially less than what had been indicated to the Bank, the company will inform the consortium accordingly with explanations and the remedial steps proposed to be taken.
7
The company will keep the Bank advised of any circumstances adversely affecting the financial position of their subsidiaries including any action taken by any creditor against the subsidiaries.
9
Any other terms and conditions which are not specifically covered herein but stipulated should be strictly complied with.
10
The Bank will be free to suitably modify the terms and conditions detailed above whichever considered necessary, this will of course, be done in consultation with the Company.
11
Processing charges shall be levied at applicable.
12
Our charges should be registered with Registrar of companies within 30 days of the date of documents and the certificate of charge should be submitted within 90 days.
13
The company should ensure that the current ratio is above the indicative level of 1.33.
14
Raw material which is old and slow moving should be excluded while computing the Drawing Power.  It will be necessary for the company to append appropriate certificate to this effect in their stock statement.
15
Bank’s name board must be exhibited in the premises of the factory of the company as financiers.
16
The limits as noted above are sanctioned for a period of one year unless renewed/extended. It may be understood by the company that unless renewed, the account will attract penal interest varying from 1 to 2.5 % or more, as such the Company is advised in your own interest to submit necessary financial statements/ CMA as required at least 2 months before the date of renewal.  Further any ad-hoc extension / continuation will attract fresh processing charges/additional interest.
17
As per RBI directives, sanction permission for issuance of Commercial  Paper would effectively reduce the  limit  to that  extent and any reinstatement would be considered  as  a fresh  limit, subject to the usual appraisal  and  processing charge including submission of fresh CMA/other data as may be required.
18
All the above facilities have been sanctioned for the purpose of your normal working capital requirements. If the facilities are used for any other purpose or the Bank apprehends that the facilities are likely to be used for such other purpose by you, the Bank may immediately withdraw the facilities and recall the amounts due from you.
19
 A declaration from the directors of the company to be obtained as under:
"I/ We hereby  agree as a pre-condition of  the  loan/advances given to me/us by the bank that in case i/we commit default in the  repayment  of the loan/advances or in  the repayment  of interest  thereon or any of the agreed installment of the  loan  on due date(s), the bank and/or the Reserve Bank of India will have  an unqualified right to disclose or publish my/our  name or the name of our company /company/ unit and its directors/partners/proprietors/ guarantors as defaulters in such  manner  and  through  such medium as the bank or Reserve Bank of India  in  their absolute discretion may think fit”.
20
The Bank will be free to suitably modify the terms and conditions detailed above whichever considered necessary, this will of course, be done in consultation with the Company.
21
A declaration from the borrower and the guarantor to be obtained as per circular No.ADV/2002-03/63 dt.16.12.2002 in respect of reporting to CIBIL.
22
The Bank reserves the absolute right to cancel the limits (either fully or partially) unconditionally without prior notice, in case of (a) the limits/ part of the limits are not utilized by you, and/or (b) deterioration in the loan accounts in any manner whatsoever (c) non-compliance of terms and conditions of sanction.
23
“The Company/Directors/Guarantors hereby agree  as a precondition of the credit facility sanctioned to it that in case it commits default in compliance of the terms and conditions and repayment of the Term Loan/ Cash Credit and/or other pecuniary obligations to the Bank/other lenders, the Bank/lenders and or Reserve Bank of India will have an unqualified right to disclose or publish name(s) of the Firm and its directors as defaulters including my/our photos in such manner and through such medium as the Bank/lenders or Reserve Bank of India in their absolute discretion may think fit.”
24
The borrower shall pay penal interest at 1% p.a. on the total outstanding in the event of any one or more of the following defaults/deviations during the currency of the loan for the relevant period as mentioned below:
Any adverse deviation by more than 20% from the levels stipulated in respect of TOL/TNW
Default in payment of interest or installments to the bank, for the period of default.
Default in payment of interest and / or installments to any other lender for the period of such default.
25
Unconditionally cancelable clause (HO cir No. IRMD 2008-09/11 dated 06.11.2008)
“The Bank reserves the absolute right to cancel the limits (either fully or
partially)  unconditionally without prior notice”
(a) in case the limits/ part of the limits are not utilized by you, and/or
(b) in case of deterioration in the loan accounts in any manner whatsoever, and/or
(c) in case of non-compliance of terms and conditions of sanction”.