A

SUMMER INTERNSHIP PROJECT

ON

“CREDIT APPRAISAL”
AT

PUNJAB NATIONAL BANK

Submitted in Partial Fulfillment of the Requirement of

Masters of Business Administration (MBA)
from

R.A. PODAR INSTITUTE OF MANAGEMENT,

UNIVERSITY OF RAJASTHAN, JAIPUR
Session 2018-20

Submitted by: Piyush Sitha

Roll No.: 40

pg. 1
 Declaration
I, PIYUSH SITHA a student of RA PODDAR INSITITUTE OF MANAGEMENT,
Jaipur, pursuing MBA course hereby declare that the project work entitled “Credit Appraisal”
carried on in “PUNJAB NATIONAL BANK”, and its value added services is an original work
carried out by me availing the guidance of my project guide to my entire satisfaction. This report
bears no resemblance with any other report submitted to RA PODDAR INSITITUTE OF
MANAGEMENT, Jaipur, during the current academic year, or earlier for the award of any degree
or diploma. I am presenting this during the year 2019 in partial fulfillment of “MASTERS OF
BUSINESS ADMINISTRATION (MBA)

I also declare that this project report work is not submitted to any other university for any degree

pg. 2
 CERTIFICATE
This is to certify that PIYUSH SITHA, a student of MASTERS OF BUSINSS ADMISTRATION,
2018-2020, RA PODDAR INSITITUE OF MANAGEMENT, Jaipur, bearing Roll No. 40 has
undertaken the Summer Internship Training at CREDIT ADMINISTRATION DIVISION,
PUNJAB NATIONAL BANK, CO: NEHRU PLACE, Jaipur under my supervision & guidance.
He has conducted a study & completed the Project on.

Signature of the Guide Seal of Organization

Mr. Sachin Kumawat

Manager, Credit
Administration Division;
CO: NEHRU PLACE,
JAIPUR

pg. 3
 Table of Contents

NO TITLE PAGE NO

1. Table of Contents 4

2. Acknowledgment 5

3. Introduction
I. Banking at Glance 6

II. Company Profile: Punjab National Bank 7

4. Research Objective 12

5. Research Methodology 13

6. Credit Appraisal
I. Credit Appraisal for Term Loan 14

II. Working Capital Financing Appraisal 15

7. Introduction of Loans 15

8. Risk Analysis 16

9. Building Up A Proposal 17

10. Sample Proposal 22

11. Conclusion 67

12. Bibliography 68

pg. 4
 Acknowledgment
Firstly, I would like to thank PUNJAB NATIONAL BANK for giving me such an
interesting project to work upon. It has been an honor and a privilege to undergo training at
this organization.
I would like to take an opportunity to express my humble gratitude to my departmental
supervisor MR. SACHIN KUMAWAT for their guidance and constant supervision as well
as for providing necessary information regarding the project and also for their support in
completing the project. Their constant guidance and willingness to share their vast
knowledge made me understand the project and its manifestations in great depth and helped
me to complete the assigned tasks.
I am also thankful to Senior Manager MR. SUNIL RAWAT whose invaluable guidance has
helped me understand the project better and also helped me through the completion of the
project report.
I am also thankful to all the employees of Finance Department who were very cooperative
and provided their maximum support to me in the completion of the report. Finally, I
express my gratitude to all those who have directly or indirectly contributed towards the
completion of this project report.
This project was a great learning experience.

pg. 5
 Introduction
Banking industry at a glance:

Bank is the main confluence that maintains and controls the “flow of money” to make the
commerce of the land possible. Government uses it to control the flow of money by managing
Cash Reserve Ratio (CRR) and thereby influencing the inflation level.
The functions of the bank include accepting deposits from public and other institutions and to
direct it as a loan and advances to party for growth and development of industry. It extends loan
for the purpose of education housing etc
The bank take the deposit at the lowest rate of interest and give loans at the higher rates of
interest the difference in this become the source of income for banks. this is known as net interest
margin.

Banking Industry Of India

Structure of banking industry:

pg. 6
 Punjab National Bank

Profile
Punjab National Bank, India’s first Swadeshi Bank, commenced its operations on April 12, 1895
from Lahore, with an authorised capital of Rs 2 lac and working capital of Rs 20,000. The Bank
was established by the spirit of nationalism by establishing the first bank purely managed by
Indians with Indian Capital. During the long history of the Bank, 7 banks have merged with PNB.
The Bank?s brand image and trust reposed by its customers have been reflected in growing
customer base and rising business graph of the Bank. Successful in accretion of Rs. 1,00,000 crore
in Domestic Business of the Bank which is now over Rs.11.45 lakh crore and the Bank continues
to maintain its forte in low cost CASA deposits. The Bank has shaken off one of the biggest
adversities in its history and has rebounded back. Focus on recovery and arresting fresh slippages
with a simultaneous shift towards higher earnings through qualitative credit growth alongwith
rationalization of Risk Weighted Assets (RWAs).
The Bank has been able to achieve better results in the quarter owing to MISSION
PARIVARTAN, a transformational exercise underway for Business Excellence aimed at
enhancing Efficiency, Productivity and Profitability for long term sustenance and giving the Bank
an edge over its competitors. `Mission Parivartan Division`, an independent `THINK
TANK` formed to initiate, implement and drive change through improvement in People,
Products and Processes, has enabled Bank to serve the customers with enhanced vigour and zeal
to live upto its tagline “The Name you can Bank Upon”.

Subsidiaries, Associates and Joint Ventures

A. Subsidiaries: Domestic
Sr Name of the Entity Country of Proportion of ownership
No. Incorporation %
i) PNB Gilts Ltd. India 74.07
ii) PNB Investment Services Ltd. India 100
iii) PNB Insurance Broking Pvt. India 81
Ltd.#
# PNB Insurance Broking Company is non-functional. The Broking licence has been surrendered
and steps are being initiated for winding-up of the Company.

A. 1. PNB GILTS LTD.

PNB Gilts Ltd., a subsidiary of the Bank, is engaged in the business of trading in Govt. securities,
treasury bills and Non SLR Investments. It is also engaged in dealing in Money Market Instruments
(Call/Notice/Term Money, Repo /Reverse Repo, Inter-corporate Deposits, Commercial Paper,
Certificate of Deposit) and Mutual Funds Distribution. The company is listed at NSE and BSE.
B. 2. PNB INVESTMENT SERVICES LTD
PNB Investment Services Ltd, a wholly owned subsidiary, has been set up by the Bank for carrying
out Merchant Banking Business. It provides services for Project Appraisal, Loan Syndication, Debt
Placement and to executes IPOs/FPO/QIPs. PNBISL is registered with SEBI as a Category- I
Merchant Banker.

pg. 7
 C. 3. PNB INSURANCE BROKING Pvt. Ltd.
The Bank is holding majority stake in above company, jointly with Vijaya Bank, minor
shareholder

A. Subsidiaries: International
Sr. Name of the Entity Country of Proportion
No incorporation of
ownership

1 Punjab National Bank (International) United Kingdom 100%

Ltd.
2 Druk PNB Bank Ltd Bhutan 51%

A. Associates: Domestic
Sr. Rural Name of Regional Rural Banks / Other Associates Proportion of
No. Banks ownership

1. Dakshin Bihar Gramin Bank, Patna 35%

2. Sarva Haryana Gramin Bank, Rohtak 35%

3. Himachal Gramin Bank, Mandi 35%

4. Punjab Gramin Bank, Kapurthala 35%

5. Prathama UP Gramin Bank, Meerut 35%

6. PNB Housing Finance Ltd. 39.08%

7. PNB MetLife 30.00%

A. Associates: International
Sr. No Name Of The Entity / Associates Country Of Proportion Of
Incorporation Ownership
1 JSC Tengri Bank, Kazakhstan Kazakhstan 41.64%

A. Joint Venture: International

Sr. No Name Of The Entity / Associates Country Of Proportion Of
Incorporation Ownership

1 Everest Bank Ltd. Nepal 20%

pg. 8
Some of the Awards Achieved by Punjab National Awards :
 ABP News Presented PNB With Global CSR Excellence 2014
 Vigilance Excellence Awards 2013-14
 PNB Bags Golden Peacock Awards 2014
 PNB Received Award For CSR Activity 2014
 Golden Peacock Business Excellence Award 2014
 Annual Social Banking Excellence Award 2014
 Best RSETI Award 2013-14 (Large Bank Category)
 PNB Bags RBI Rajbhasha Award 2014
 MSME Banking Excellence Award 2014
 PNB Bags IBA Banking Technology Award 2015
 CIMSME - Banking Excellence Award 2015
 Banking Financial Services And Insurance Category 2015
 The Banking Frontiers-Inspiring Workplace Awards 2015
 Rajbhasha Keerti Shield
 Agriculture Leadership Award 2015
 FICCI Corporate Social Responsibility Awards 2013-14
 PNB Conferred With Appreciation Certificate
 RBI Rajbhasha Award 2014-15
 Assocham Social Banking Excellence Award 2015
 Golden Peacock National Training Award 2016
 Rajbhasha Kirti Award 2017-18
 Aadhar Excellence Award
 NSDL Star Performer Awards 2018
 IBA Banking Technology Awards 2019
 Top Rankers Excellence Awards
 EASE Reforms Excellency Award
 PNB Wins Governance Now BFSI Awards 2019

Mission and Vision

VISION
"To be a Leading Global Bank with Pan India footprints and become a household brand in the
Indo-Gangetic Plains providing entire range of financial products and services under one roof"
MISSION

"Banking for the unbanked"

“TO provide excellent professional services and improve its position as a leader in financial and
related services; build and maintain a team of motivated and committed workforce with high work
ethos; use latest technology aimed at the customer satisfaction and act as effective catalyst for
socio- economic development”

Products and Services

➢Corporate banking

pg. 9
➢ Personal banking
➢ Industrial finance
➢ Agriculture finance
➢ Financing of trade
➢ International banking
➢ Home loan
➢ Auto loan
➢ ATM/Debit card
➢ Deposit interest rate
➢ Credit interest rate
➢ Other services: lockers facility, internet banking, EFT & Clearing services etc.

Organizational Structure:

Board of
directors

CMD

ED

GM ( NPA GM
GM GM GM GM GM
(Credit) & Weak (Retail &
(Treasury) (IRMD) (Deposits) (Audit) .......
Account) lending)

DGM DGM DGM ......

AGM AGM AGM ......

Funtional
Head

M.D and CEO and Chairman - Sunil Mehta

Directors - Executive Director -
1. Rabi N. Mishra A.K Azad
2. Mahesh Baboo Gupta L.V Prabhakar
3. Sanjay Verma R.K Yaduvanshi
4. Dr. Asha Bhandarkar

pg. 10
 Chief Manager - P.K Varshney
Dy. General Manager - S.K Jain
General Manager - P.K Sharma

Brief Introduction of Department:

• Credit Administration Department (CAD): Commercial lending organization structure in PNB
consists of Branches, Mid Corporate Branches (MCBs), Large Corporate Branches (LCBs), Circle
Office, ZonalOffice and Head Office (CAD). Credit Division (CAD) looks after the loan proposals
which fall into the purview of GMs-HO/ED/CMD/MC/Board. Medium corporate branches are
headed by AGMs and LCB by DGM. Authority to handle loan proposals is distributed as detailed
below.
The bank has introduced “Grid/Committee” system in credit sanction process wherein every loan
proposal falling within the vested powers of DGM and above is discussed in a credit committee
which on the merit of the case recommends the proposal to the sanctioning authority. Such
committee have been formed both at HO, CO and FGM level, the credit committee at HO includes
GM Credit and CGM/GM-RMD. For credit proposals falling within the vested power of
CGM/GM, the credit committee at HO includes DGM/AGM/Chief Manager-CD and
DGM/AGM/Chief Manager RMD. The credit administration division is to be assisted by Risk
Management Division (RMD) and Industry desk for risk vetting and techno-economic feasibility
of credit proposal.

Various Committees and their powers

CAC at CO/ HO level Headed by Credit proposals

Beyond loaning powers of Incumbent of the

COCAC Circle Head branch but within vested loaning powers of
Circle Head
Beyond loaning powers of Circle Head but not
ZMCAC Zonal Manager (ZM)
exceeding Rs.50 crore

HOCAC Level-I Senior most GM (Credit) Above Rs.50 crore& up to Rs.75crore

HOCAC Level-II Senior most ED Above Rs.75 crore& up to Rs.150 crore

HOCAC Level-III Managing Director & CEO Above Rs.150crore& up to Rs.400 crore
Management
Chairman (MD & CEO) Above Rs.400 crore.
Committee

pg. 11
Research Objective
Reasons for selecting the project
Whenever an individual or a company uses a credit that means they are borrowing money
that they promise to repay with in a pre-decided period. In order to assess the repaying
capability i.e. to evaluate their credit worthiness banks use various techniques that differ withthe
different types of credit facilities provided by the bank. In the current scenario where it isseen that
big companies and financial institutions have been bankrupted just because ofcredit default so
Credit Appraisal has become an important aspect in the banking sector andis gaining prime
importance.
It is the incident of credit defaults that has given rise to the financial crisis of 2008-09. But inIndia
the credit default is comparatively less that other countries such as US. One of thereasons leading
to this may be good appraisal techniques used by banks and financialinstitutions in India.
Eventually the importance of this project is mainly to understand thecredit appraisal techniques
used by the banks with special reference to Punjab NationalBank.

Scheme of the project

It covers the objective and structure of the project which is discussed as follows:-

Objective of the project

The overall objective of this project is to understand the current credit appraisal system usedin
banks. The Credit Appraisal system has been analysed as per the different credit facilitiesprovided
by the bank. The detailed explanation about the techniques and process has beendiscussed in detail
in the further chapters.

Structure or Plan of the project

The project first of all makes a study about the commercial banks- its important functions.Then it
highlights on the concept of Bank Credit & its recent trends. The project thenproceeds towards the
lending procedure of banks and here it highlights about credit appraisalbeing the first step in
building up of a loan proposal. Then it discusses the bank credit policywith respect to Punjab
National bank where the project was undertaken.The project then proceeds with the review of
literature i.e. review of some past workregarding credit appraisal by various researchers. The
project then moves towards researchmethodology where it covers the information regarding the
type of data collected and thetheoretical concepts used in the project are discussed in detail. Then
the project proceedswith the next chapter consisting of the analysis part which covers the analysis
of varioustechniques used by the banks for the purpose of credit appraisal. Then the project moves
toits next chapter i.e. findings where some results found out are interpreted and then moving onto
the last and the final chapter i.e. the suggestions and conclusions where some steps aresuggested
to be implemented to increase the work efficiency and to reduce to work pressure.

pg. 12
Research Methodology
Project Methodology means various method used by the structure to obtain the knowledge of
information about the subject any one selected for the project methodology may differ from person
to person, subject to subject. Some people refer book practical knowledge, through interview of
peoples and from questionnaire.
Project method gives guidelines how the data is collected and the presentation at information.
Project report is an attempt to collect the information and present it in order. The researches select
a topic in which he has interest present in with conclusion social research is explained as systematic
efforts of the researcher on the topic selected. Research is to discover intellectual and practical
answer to problem through the application of scientific methods, which means use of system and
arriving at a logical conclusion.

Problem Statement
To study the credit appraisal system PUNJAB NATIONAL BANK, JAIPUR.

Objectives
 To study the credit appraisal methods at PNB.
 To check the commercial, financial & technical viability of the project proposed & its
funding pattern.
 To check the primary & collateral security cover available for recovery of such funds.

Sources Of Data Collection

 Primary sources of Information

 Meetings and discussion with the Chief Manager and the Senior Manager of both
Credit and Credit Risk Management Department
 Meetings with the clients
 Secondary sources of Information
 Loan Policy and Internal Circulars of the bank
 Research papers, power point presentations and PDF files
 Referring to information provided by CIBIL, Income Tax files, Registrar of
Companies (Ministry of Corporate Affairs), and Auditor reports
 E circulars at PNB
 Database at PNB
 Library research

pg. 13
 Credit Appraisal
Meaning - The process by which a lender appraises the creditworthiness of the prospective
borrower is known as Credit Appraisal. This normally involves appraising the borrower’s payment
history and establishing the quality and sustainability of his income. The lender satisfies himself
of the good intentions of the borrower, usually through an interview.

 The credit requirement must be assessed by all Indian Financial Institutions or specialised
institution set up for this purpose.

 Wherever financing of infrastructure project is taken up under a consortium /syndication

arrangement – bank’s exposure shall not exceed 25%.

 Bank may also take up financing infrastructure project independently / exclusively in

respect of borrowers /promoters of repute with excellent past record in project
implementation.
 In such cases due diligence on the inability of the projects are well defined and assessed.
State government guarantee may not be taken as a substitute for satisfactory credit
appraisal.
The important thing to remember is not to be overwhelmed by marketing or profit centre
reasons to book a loan but to take a balanced view when booking a loan, taking into accountthe
risk reward aspects. Generally everyone becomes optimistic during the upswing of thebusiness
cycle, but tend to forget to see how the borrower will be during the downturn,which is a short-
sighted approach. Furthermore greater emphasis is given on financials,which are usually outdated;
this is further exacerbated by the fact that a descriptive approachis usually taken, rather than an
analytical approach, to the credit. Thus a forward lookingapproach should also be adopted, since
the loan will be repaid primarily from future cashflows, not historic performance; however both
can be used as good repayment indicators.

Credit Appraisal Techniques

Credit appraisal techniques act as tool for the credit portfolio managers to take right
decisions. It is the first and the prime most function performed by the Credit Appraisal Cell before
providing any sort loans or advances. The appraisal technique for each type of loan isseparate from
each other. Each type of loan whether secured or unsecured has to be analyzedin a different way.
The different techniques of credit analysis or credit appraisal arediscussed as under:

CREDIT APPRAISAL FOR TERM LOAN

Credit appraisal of a term loan denotes evaluating the proposal of the loan to find out repayment
capacity of the borrower. The primary objective is to ensure the safety of the money of the bank
and its customers. The process involves an appraisal of market, management, technical, and
financial.

pg. 14
Getting a term loan from a financial institution is not so easy. The corporate asking for the term
loan has to go through several tests. The bank follows an extensive process of credit appraisal
before sanctioning any loan. It analyses the loan proposal from all angles. The primary objective
of credit APPRAISAL is to ensure that the money is given in right hands and the capital and
interest income of the bank is relatively secured.
While appraising a term loan, a financial institution would focus on evaluating the credit-
worthiness of the company and future expected stream of cash flow with the amount of risk
attached to them. Credit worthiness is assessed with parameters such as the willingness of
promoters to pay the money back and repayment capacity of the borrower.

Working Capital Financing Appraisal

Appraisal of working capital financing proposals is mainly focused on accurate assessment of
working capital needs of the business. Objective here is to avoid overfunding or underfunding of
the operations. Working capital assessment is widely researched topic and has evolved over a time.
Methods of Lending
i) Simplified Turnover Method
Simplified Turnover method based on turnover for assessing working capital finance up to Rs. 2
crore (up to Rs. 5 crore in case of SME units) shall continue.
ii) MPBF System
Existing MPBF system with flexible approach is followed for units requiring working capital
finance exceeding the above-mentioned amount.
iii) Cash Budget System
Cash Budget System shall be followed in Sugar, Tea, Service Sector, construction activity, Film
Production accounts etc.

Introduction to loans
Loans are advances for fixed amounts repayable on demand or in instalment. They are
normally made in lump sums and interest is paid on the entire amount. The borrower cannotdraw
funds beyond the amount sanctioned.
A key function of the Bank is deploying funds for income-yielding assets.A major part of Bank’s
assets are the loans and advances portfolio and investments isapproved securities. Loans &
Advances refer to long-term and short-term credit facilities to
various types of borrowers and non-fund facilities like Bank Guarantees, Letters of Credit,Letters
of Solvency etc. Bill facilities represent structured commitments which arenegotiable claims
having a market by way of negotiable instruments. Thus, Banks extendcredit facilities by way of
fund-based long-term and short-term loans and advances as also byway of non-fund facilities.

WORKING CAPITAL / CASH CREDIT

Cash credit is a short-term cash loan to a company. A bank provides this type of funding, butonly
after the required security is given to secure the loan. Once a security for repayment hasbeen
given, the business that receives the loan can continuously draw from the bank up to acertain
specified amount. The bank provides certain amount to the company for its day today working
keeping certain margin in hand.

Process of Credit Appraisal for providing Cash Credit / Working Capital Limits

pg. 15
Working capital for any unit means the total amount of circulating funds required for
meeting day to day requirements of the unit. For proper working a manufacturing unit needs.
a specific level of current assets such as raw material, stock in process, finished goods,
receivables and other current assets such as cash in hand/ bank and advances etc. So the
working capital means the funds invested in current assets. The trading units need the
working capital for storing the goods and allowing credit to its customers

Risk Analysis at PNB

PNB has elaborate risk management structure, process and procedures in place. For the appraisal
of the loan proposals, RMD provides the risk ratings for the client and project based in the patented
internal models of the PNB that have been developed based on statistical analysis of data.
These models are placed on central server based system ‘PNB TRAC’, which provides facility to
assess credit risk rating of a client.

This credit risk rating captures risk factors under four areas:
1. Financial evaluation (40%)
2. Business or industry evaluation (30%)
3. Management evaluation (20%)
4. Conduct of account (10%)

Cumulative weighted score is calculated and rating of the project/company is ascertained as

per the chart below:

Rating Category Description Score Obtained Grade

AAA Minimum risk Above 80.00 AAA

Between 77.50 - 80.00 AA+
AA Marginal risk Between 72.50 – 77.50 AA
Between 70.00 – 72.50 AA-
Between 67.50 – 70.00 A+
A Modest risk Between 62.50 – 67.50 A
Between 60.00 – 62.50 A-
Between 57.50 – 60.00 BB+
BB Average risk Between 52.50 – 57.50 BB
Between 50.00 – 52.50 BB-
Between 47.50 – 50.00 B+
B Marginally Acceptable Risk Between 42.50 – 47.50 B
Between 40.00 – 42.50 B-
C High Risk Between 30.00 – 40.00 C

D Caution Risk Below 30.00 D

Some of the important risk rating models used in loan appraisals are summarized as below:

pg. 16
 S. Applicability
Credit Risk Rating
No. Total Limit Sales
1 Large Corporate Above Rs. 15 Cr. Above Rs. 100 Cr.
2 Mid Corporate Between 5 Cr. and 15 Cr. Between Rs. 25 Cr and 100 Cr.
Cost of Project above Rs. 15
3 New Project Rating Models Above Rs. 5 Cr.
Cr.
New Business requiring
Entrepreneur New Business
4 finance b/w Rs. 20 Lakhs and Cost of Project up to Rs. 15 Cr.
Model
5 Cr.
Credit Risk Rating model for
5 All Banks and Financial Institutions.
banks and FI

Rating Models and Their Applicability

PNB also takes into account the ratings of the company/project from the independent credit rating
agencies like ICRA, CRISIL, Fitch, CARE etc. Rating history of the borrower is studied and any
degradation in the rating demands causal analysis.
In some cases, final sanction is conditional upon the completion of credit rating by external
agencies

Building up a proposal
1 .GATHERING CREDIT INFORMATION :-
An appraisal of a proposal begins with the gathering of adequate background knowledge
about borrower’s character and credit worthiness. In the concept of appraisal, much relianceis
placed on the credentials of the borrower. Therefore, there is a necessity for evaluation ofthe
borrower in regard to his standing in the business, means and respectability. The result ofthe
elaborate scrutiny concerning all these aspects is required to be put into a precise creditreport
which helps in taking decision on a credit proposal. Each individual case has to beexamined in the
light of its own circumstances and judgment exercised on issues enumeratedabove and a final
decision has to be arrived at on the basis of scrutiny of all the issues.

Information by definition is that data which is relevant and meaningful for making decisions.An
information system is an aid to the decision making, carrying out and altering decisions.All
information required by the banker in the pre-sanction period should become part of asystem. It
should flow into the information system from various sources, such as theborrower, bank’s own
record, environment etc. A significant basis of banker-borrowerrelationship is governed by the
information which flows between the two parties. Afterascertaining the credit needs of the
borrower, the banker looks towards information about hisborrower’s credit worthiness. He seeks
out the credit information etc. from his co-bankers,other borrowers and market information.

2. VARIOUS SOURCES OF CREDIT INFORMATION

Information regarding character, honesty, and financial position has to be discreetly gatheredfrom
following sources:
a. The borrower: the bank should develop as much credit information as possible during
the initial interview with the borrower/partners of firm/ directors of company/

pg. 17
proposed guarantor /co-obligator and principal officials of firms/company, nature of itsbusiness,
past and expected profitability, the degree of competition that the
firm/company faces and whether or not it has had or anticipated any difficulty etc.
Information regarding its principal officers should be collected during such interview.

b. Borrower’s financial statements: for lending decisions, financial information is a

significant part of the total information system. It is derived basically from borrowers:
 Trading and profit and loss statement
 Balance sheet
 Cash and fund flow statements

c. Banks own records: If he is an existing borrower, bank’s own records are a rich
source of additional information. Operations in the borrower’s account and other
dealings at the bank level in regard to collections, discounting/retirement of bills etc.
often useful clues to borrower’s operating and financial transactions. A review of the
previous year’s operations in the account and assessments of borrowers’ financial
statements relating to that period will provide a rich source of information about the
borrower.

d. Opinions: Bank should compile opinions on their borrowers. They should contain
full and reliable records of the character, estimated means and business activities of all
firms and individuals who are under any form of liability to the bank, whether as direct
borrowers or as co-obligators. Full particulars of parties immovable properties where
they are situated, whether they are free from encumbrance and in the case of land,
acreage should be recorded together with fair estimates of their value. As far as
possible written statements of their properties should be taken in evaluating properties
owned by parties jointly with others and as a rule such properties should be
disregarded in arriving at the net means.

e. From other banks: in respect of fresh proposals, enquiries with local banks should be
made before entertaining the proposal to avoid multiple financing without our fullknowledge. In
case of new customer having dealings with other banks, confidential
opinion of his banker has to be obtained.

f. Income tax assessment order- Income tax assessment orders agricultural income tax
assessment orders give an insight into the borrower’s account and the extent to which
it is profitable. Comments thereon by the income tax office shall indicate the
shortcomings (lacunae) in the business. In the case of estate owners agricultural tax
assessment orders to be obtained to arrive at parties credit worthiness.

g. Sales tax assessment orders: Sales tax assessment orders will reveal the turnover in
business and when read with trading/ manufacturing and profit & loss account, it may
be possible to have a fair assessment of tendencies in trade i.e., whether over-trading
or carefully trading within recourses at command or trading entirely on the borrowed
funds.
h. Wealth tax assessment orders: wealth tax assessment order will indicate the net

pg. 18
worth of individuals and reveals the liquid source available to bring the required
margin money for the venture.

i. Market sources: Constant touch with the market will help to have first hand
information about the gains or losses in particular business transactions of the
borrowers.

j. Property statements: The property statement of borrower will give an idea of his
worth, liabilities and his income from real estate’s (immovable properties).

k. Municipal property registers: reference to municipal property registers will give an

idea of building owned within the municipality, Rental Values and house tax payable.
It may be noted that the said registers are open for reference to all persons.

l. Other external sources: other external sources, if any, like stock exchange directory,
business periodicals/magazines/journals etc.

REQUIREMENTS AS PER CONSTITUTION OF BOROWER:

Following Requirements as per constitution of borrower should be collected for proposals

emanating from-

1(A).Partnership :

 Copy of partnership deed

 Copy of certificate of registration of firm (if registered)

1(B).Company :

 Memorandum and articles of association

 Certificate of incorporation
 Certificate of commencement of business
 Search report indicating subsisting charges on the assets of the company.
 Board resolution for borrowings, creation on the assets of the company and
execution of the documents.

1(C). Cooperative societies :

 Bylaws
 Permission from registrar for the borrowings, creation of charge on the assets
of the society and execution of documents.

1(D). Trusts :

 Trust deed
 Resolution for the borrowings and execution of documents

pg. 19
1(E). Industrial units :

 Project report with cash flow, fund flow statements etc.

 Industrial licenses/SSI registration certificate.
 License from local authority, compliance of legal requirements or conditions as
applicable and clearance from regulatory bodies.

Documents Generated By Bank

Now on the basis of following documents duly submitted to the bank the bank will generate some
reports that will give an insight of the economic and financial viability of the project---
1) CIBIL report
2) PNB TRAC report
3) PNB SCORE CARD
4) Application cum pre sanction appraisal form
5) Loan process note

 CIBIL REPORT:
The CIBIL TransUnion Score is a 3 digit numeric summary of your credit history which
indicates your financial & credit health. The Score is derived from your credit history as
detailed in the Credit Information Report [CIR] and ranges from 300 to 900 points. Your credit
score tells the lender how likely you are to pay back loan or credit card dues based on your
past repayment behavior. The higher your score, the more the chance of your loan application
getting approved!
 PNB TRAC REPORT
The Delhi-based Punjab National Bank (PNB) has received the necessary approvals for
patenting its rating model -- PNB Trac -- for its entire category of lending loans with exposure
under Rs 20 lakh have been rated segment-wise on portfolio basis as per the terms of Basel II
accord. This means that the bank would be able to do credit ratings on its own for its lendings.

 PNB SCORE CARD

PNB score card generally generates the credit history of the borrower and as per his
creditworthiness he is rated on a score card and provided a credit rating to the borrower that
gives an idea of the viability of the project.
 APPLICATION CUM PRE SANCTION APPRAISAL:
The draft is prepared as per the guidelines of RBI and a prescribed format has been given in
which every detail of borrower is being filled in and out of which a pre sanction appraisal
draft is to be prepared that summarizes the important information of the borrower.
 LOAN PROCESS NOTE

pg. 20
 A document that shows the current income tax status,his occupation and prepayment period
,his income after deductions , credit history , EMI etc. it shows all the deductions from the
gross salary and take home salary on per month basis that helps to calculate EMI.

Pre Sanction Appraisal Document

1. Memorandum of Association
2. Article of Association
3. Income Tax Return of the company
4. Income tax return of the individuals
5. Suit filed accounts
6. LLP Agreement
7. e- Stamp Attested, Notary Public for LLP
8. Certificate Of Incorporation
9. Permission letter from govt.
10. Previous Balance Sheets
11. Branch Proposal
12. Observation from Circle Office
13. Guarantors, CIBIL and Equifax Report
14. Confidential Reports of each guarantor
15. CS and CA Report
16. Profit and loss statement, Balance Sheet and Cash Flow
17. Approved Rating Report (Internal)
18. Valuation Report of IPs as Collateral Security
19. Circle Office Proposal
20. COCAC Meeting Details
21. Credit section (Branch Office)
Post Sanction Appraisal
1. Original Valuation Report
2. Report for approval of amendment
3. Proposal for substitution of IP
4. Advocate Report
5. Valuation Report after substitution
6. Balance sheet of new guarantor

pg. 21
 SAMPLE PROPOSAL
Date:06.11.2018

M/s VVSV Industries LLP, BO: VKI Area, Jaipur: Proposal for fresh sanction of FBWC
limit of Rs 475.00 lakh.

The proposal falls under the powers of COCAC on account of fresh sanction of FBWC limit of Rs 475.00
lakh to M/s VVSV Industries LLP and Exposure to M/s VVSV Wire Products India Private Limited an
associate/Allied firm to the tune of Rs.4108.00 lakh as per L & A circular no. 55/18 dated 28.06.18 and
loaning power chart as per L&A circular no. 122/17 dated 30.12.2017 point No.20 it is stated that
“ COCAC and above have empowered to sanction credit facilities to Associate/Allied concerns taken
together, up to 2 times of their Aggregate commitment per borrower ”.Such CAC may consider in favour
of Associate/Allied Borrowers, even where the facilities of one or more such borrowers have been
allowed at higher level provided:

The aggregate exposure to all allied/associate concerns, including the one which have been sanctioned
facilities at higher level, does not exceed two times of Aggregate commitment per borrower
And
The aggregate exposure to any single borrower , other than one which has been sanctioned facilities at
higher level does not exceed the loaning power of the concern official.

Hence as per above, proposal falls under the powers of COCAC.

Credit Proposal Tracking System (CPTS) No. / Date:

1234567891223 11.10.2018

1. Name of the Borrower, BO & Controlling Office :M/s VVSV Industries LLP, CLPC MI
Road/VKI Area, Jaipur & CO: Jaipur
Date of proposal 05.11.2018
Whether fresh/renewal/ Fresh
enhancement/
In-principle
Asset Classification as on NA being fresh proposal
31.08.2018

Credit Risk Rating by Bank Rating Date of Score ABS Validity Reasons for
Rating Date* degradation
Credit Risk Rating signifies Present A3 06.11.18 67.83 31.03.18 31.12.19 NA
Modest risk Previous - - - - -

Facility Rating Present LA3 06.11.18 31.03.18 31.12.19

Previous Nil Nil Nil Nil Nil

pg. 22
Expected Credit Loss (as Particulars Percentage Absolute (Proposed
per internal credit risk (%) Exposure*Percentage)
rating) and Standard Expected Credit Loss 0.32 1.52
Provisioning
Provisioning as per 0.40 1.90
IRAC Norms

Last PMS Score (as on NA being fresh proposal

……), if applicable
Customer ID No./Corporate FUF007921
Identity No.(CIN)
Activity Code as per 7214( manufacturing of Pipe, Poles, Concrete Products
LADDER

Whether sensitive sector – No

Real estate/Capital market
alongwith applicable risk
weight
Whether priority/non Priority Sector, MSME (Manufacturing sector)
priority sector as per
PS&LB guidelines (Sub-
sector may also be
mentioned.)
Date of last sanction & NA as it is fresh sanction,
Sanctioning Authority
GIST OF THE PROPOSAL
The proposal falls under the powers of COCAC on account of group exposure of Rs.3083.00 lakh (
Rs.4108.00 in favour of VVSV Wire Products Private Limited + proposed exposure of Rs.475.00 lakh to
M/s VVSV Pole Industries LLP) as per loaning power chart as per L&A circular no. 122/17 dated
30.12.2017 and as per L & A circular no. 55/18 dated 28.06.18.

1. a) Name of the Borrower and Constitution M/s VVSV Industries LLP

Limited Liability Partnership Concern
PAN No: AAQFB0760N
GSTN:09AAQFB0760N1ZZ
Udyog Adhar:UP35B00163
b) Address of Regd. Office with e-mail ID A-123, Road No.17, VKI Area, Jaipur, Rajasthan
-302013
T No. 0141-4151124
Mob No: 9829052723
E-mail:VVSVpoleindustriesllp@gmail.com
c) Works/Factory Unit-I: B-1,2,3,& 4, Industrial Area “ Sandila
Phase-II” Village-Raiso, Pargana, Tehsil-Jaipur,
District-Jaipur (Rajasthan.)
&

pg. 23
 Unit-II:Plot B- 5,6,7,8,VKI Industrial Area,
District-Jaipur(Rajasthan)(Proposed)
d) Date of incorporation/ establishment 22.02.2016

e) Dealing with XYZ since Since 24.05.2016 by maintaining current account

bearing No. 3906002100022843 with BO: VKI
Area, Jaipur
f) Business Activity (Product)/ Installed Manufacturing of Pre Stressed Concrete
Capacity Cemented Poles

2. Branch Office/CO BO: VKI Area,Jaipur / CLPC, MI Road, Jaipur &

CO: Jaipur
3.a) Directors/Partners/Proprietors (Name, Address/Mobil Wheth PAN No.
Address, Mobile No., e-mail ID of main Name & e No./e-mail er
Directors/Key persons) with PAN No. Designati address of Promot
&DIN(in case of Co.) on Main Directors/ er/
Guarantor Profess
Directors/Key ional/
persons Nomin
ee

Smt. E-97, Shastri Partner AFDPM9752C

Tripti Nagar, Jaipur
Sharma DOB:
W/o Sh 15/02/1985
Ram Mobile No:

ShShaya 19A, Partner AGYPP2369W

m Singh Vidhyadhar
Nagar, Jaipur
DOB:
25/07/1984
Mobile No:
9314087724
Sh Ram E-94, Shastri Partner AGDPM1605R
S/o Shri Nagar, Jaipur
Vijay DOB:
Kumar 18/03/1981
Sharma Mobile No:
9829023451
b) Whether any of The name of firm & Partners is not mentioned
them/Borrower/Guarantor are in the list in the list of wilful defaulter published by RBI
of Caution advices circulated by the in March 16 in XYZ Knowledge Centre.
Bank from time to time /ECGC Caution
list/ list of defaulters of Rs 1 crore &
above (Suit filed and non- suit filed) and

pg. 24
 wilful defaulters of Rs 25 Lakhs and
above (Suit filed and non- suit filed)
available on the website of CICs. If yes,
the reasons for considering the proposal.
c) If any of them, related to Directors/ Sr. No
Officers of XYZ
d) Management Change since last sanction, NA
if any

e) Whether Memorandum of Association NA

permits the Activity & Powers for
borrowings
f) Shareholding Pattern NA, being a limited liability partnership firm,
However profit sharing ratio will be as under
Name Profit Sharing
Ratio( %)
Mr. Shayam Singh 50.00%
Mr. Ram 25.00%
Mrs. Tripti Sharma 25.00%
g) Details about borrower’s net worth:
Net Worth Immovable property1 Date of confidential
report
Prev. as at Present as at Prev. as at Present as Prev. Present
31.03.17 31.03.18 31.03.17 at 31.03.18
-- 390.55 NA 217.00 NA 04.10.18
Comments on changes, if any: NA

1Whether charged. If yes, give details: NA

h) (i) Confirmation that CRs have been
compiled/reviewed as per extant guidelines
(presently L&A Circular No. 33 dated
31.03.2011) and comments on adverse
features, if any
Yes, BH has confirmed that CRs have been compiled
and reviewed as per extant guidelines (presently
L&A Circular No. 33 dated 31.03.2011). It is also
confirmed that there is no adverse feature.

(ii) Confirmation that CIRs have been Date of CIR Name of CIC Adverse features, if
drawn from CICs data any observed
base(CIBIL/Equifax/Experian/ High Mark) 01.10.18 Commercial No adverse feature
and comments on adverse features, if any: CIBIL of Firm has been observed
01.10.18 CIBIL and No adverse feature
Equifax has been observed
As per CIR of Mr. Ram one written off account of
credit card is coming and one past due account of
Rs.1.05 lacs is coming from XYZ for which BH has
submitted that written off account of credit card is

pg. 25
 coming due to charges are unilaterally charged by the
issuing banker without intimating the card holder due
to which dispute regarding the same has been arrived
which was later on settled by the issuing banker, since
amount was only Rs.14052.00, which is insignificant
and second overdue of Rs.1.05 Lacs is related to M/s
VVSV Wire Products Private Limited and past
due was related to non recovery of processing fee
against OBD limit for which concerned Branch
has informed that same has been recovered.
(iii) In case of Joint Lending/multiple N.A
banking/
consortium lending arrangement:

 Due diligence report on prescribed N.A

from bank’s approved CA/CS.
 If qualified, whether rectified?
 Adverse features, if any, are discussed in
the proposal (copy to be enclosed with
the proposal)

 Confirmation that Sharing of Party is availing TL of Rs.5.00 cr from ABD under

Information on prescribed format [L&A multiple banking and it is stipulated that CLPC to
Circular No.31/2012 & 99/2012 ensure Sharing of Information on prescribed format
(compulsory)] have been obtained from all [L&A Circular No.31/2012 & 99/2012
lenders and adverse features, if any, are (compulsory)]is to be obtained from all lenders on
discussed* in the proposal (copy to be regular intervals ensuring no adverse features.
enclosed with the proposal)
No adverse Report about the borrower in the Public
iv) Views/comments* for the adverse report Domain/Media
about the borrower/guarantor, if any, in the
public domain/media:
Nil
v) Details regarding change in auditor of
the borrower, if any and reason for the same.

BH has confirmed that the membership number of

vi) Confirmation that the membership the Chartered accountant/firm has been verified from
number of the Chartered accountant/firm has the website of ICAI
been verified from the website of ICAI.

vii) Whether the borrower/prospective BH has confirmed from FRIMS data base dated
borrower/guarantor is appearing as red 26.09.2018, List of RFA/Fraud accounts and Non-
flagged/fraud account in the RFA/Fraud cooperative borrowers list have been checked no

pg. 26
 account report#. If Yes, action taken thereof adverse features observed. that borrower is not
and reason for considering the proposal. appearing red flagged/fraud account.

viii) Whether the borrower/prospective

borrower/guarantor/Director/partner/propriet
or are appearing as non-cooperative borrower
(in report for non-cooperative borrowers) No
and/or SMA 0/ SMA 1/ SMA
2/NPA/Restructured in CRILC database#. If
Yes, action taken thereof and reason for
considering the proposal.
#
This data/information is disseminated strictly
for internal use of bank and bank officials
should keep such information or its source
confidential.
Customer ID No./Corporate Identity Customer ID: FUF007921
No.(CIN)/LLPIN
LLPIN:AAF-7586
Yes, BH has confirmed that status of LLP is active on
Confirmation that the status of borrowing
MCA website.
company/ LLP is active on MCA website. If
no reason thereof
Whether Legal Entity Identifier( LEI) code NA as proposed fund based exposure is less than Rs
has been obtained by the borrower as per the 5.00 Cr
schedule given by RBI.
If yes, LEI code along with its issue date and
validity period.
If no, reason for not obtaining the LEI code
and reason for considering the proposal
ix) Confirmation that borrower BH has confirmed that borrower information has
information has been verified from Central been verified from Central fraud Registry(CFR) and
fraud Registry(CFR) and comments on no adverse features observed.
adverse features, if any

x) Passport Number of promoter/

Name of Passport Validity date
Director/Partner/Proprietor etc and other
Partner No
authorised Signatories along with Validity
date Ram K7327271 04/09/2022

Tripti Sharma K7330781 04/09/2022

Confirmation that certified copy of
passport/declaration or undertaking( as per L Shayam Singh N1467332 20/07/2025
& A Cir Presently No. 40/2018 and 92/2018)
from all promoters/
directors/partners/proprietor etc and other

pg. 27
 authorised signatories of companies/ firms etc BH has confirmed that certified copy of pass port of
has been obtained and if no, reason thereof. all the three partners have been obtained and held on
record.
xi) Confirmation that the GSTIN of borrower
is active and up to date GST return has been
filed, as checked from the website. If no,
details along with reason should be given

BH has confirmed that GSTIN of borrower is active

and up to date GST return has been filed, as checked
from the website.

Further, Branch has confirmed as under:

 Guidelines regarding pre-sanction appraisal conveyed vide L&A Circular No. 58/2018 have
been complied with. Due diligence has been carried out in terms of L&A Circular No. 33
dated 31.03.2011 and no adverse features found.
 Latest CIRs of the borrower & guarantors have been drawn from CICs data base (CIBIL/
Equifax/ Experian/ High Mark) as per extant bank guidelines and the same is satisfactory.
 Spot verification of business premises/ offices of the borrower and independent surprise
verification of IPs proposed to be mortgage have been undertaken and no adverse feature has
been found.
 The borrower is permitted to carry on the activity in which the firm is engaged as per deed of
the firm.
 KYC norms such as Identity proof of borrowers/ promoters / guarantors, his/her credentials,
stability of employment/business/profession, residence and assessment of other liabilities,
have been checked/verified and all the KYC complied documents of borrower & guarantors
have been obtained & held on record.
 The borrower & guarantors are not availing any loans from bank & FIs other than those
reported in the proposal and all loans availed by the borrower/co-borrower/guarantor from
other bank/FI as well as our bank, if any is running regular & in standard category.
 Credentials & antecedents of borrowers/ promoters/ guarantors have been verified.
 Physical verification of IPs, ascertaining genuineness of financial papers/title deeds of IPs
have been verified as per bank guidelines.
 All the assets have been physically verified as per bank guidelines shown/accepted in CRs &
CRs have been prepared as per the extant bank guidelines.
 Borrower/Guarantor are not in the list of Caution advices circulated from time to time
/ECGC Caution list/ list of defaulters of Rs 1 crore & above (Suit filed and non- suit filed)
and wilful defaulters of Rs 25 Lakhs and above (Suit filed and non- suit filed) available on
the website of CICs.

4. Facilities Recommended:
(Rs.in lakh)

pg. 28
 Nature Existing Proposed
Fund Based
CC(H)/CC (Book Debt) 0.00 475.00
Fund Based Ceiling 0.00 475.00
Non Fund Based
ILC/FLC 0.00 0.00
ILG/ FLG 0.00 0.00
Non Fund Based Ceiling 0.00 00.00
Term Loan 0.00 0.00
TOTAL COMMITMENT 0.00 475.00

5 Details of loans from other Banks/FIs/Consortium/Multiple Banking/JLA as on :

(Rs.in lakh)
S.No Name of Facility Amount Balance O/s Overdue, Rate of
the Sanctioned As on 30.09.18 if any interest
Bank/FI (Rs lacs)
1 ABC Commercial 22.10 2.73 NIL 8.45%
Bank Vehicle
Finance
2 ABC Commercial 25.34 12.30 Nil 8.46%
Bank Vehicle
Finance
3 ABC Commercial 26.47 21.20 Nil 8.61%
Bank Vehicle
Finance
4 ABC Commercial 26.47 21.20 Nil 8.61%
Bank Vehicle
Finance
5 ABC Commercial 22.45 20.52 Nil 8.71%
Bank Vehicle
Finance
6 ABC Commercial 22.45 20.52 Nil 8.71%
Bank Vehicle
Finance
7 ABD TL 480.00 375.00(availed Nil 8.93%
on 11.10.18)
8 ABD TL(Soft 20.00 --- Nil 8.75% up to 3
Loan) years from
date of
disbursement
and 11.90%
after 3 years
Branch has confirmed that all the loan accounts availed by the firm, guarantors and allied
concerns are running regular and in std. Category.

pg. 29
6.A Details of Group Companies/Allied/Associate firms and the facilities sanctioned to them:
(Rs in lakh)
Name of the Facilities Nature Classification
Activity Dealing Bank
company & Amt. of account
M/s VVSV Wire Manufacturing of XYZ, VKIA, CC 2500.00 standard
products Private PC wires of non Jaipur TL 608.00
Limited alloy steel NFB 1000.00
CC 4000.00 standard
ABC Bank Ltd
NFB 1000.00
M/s VVSV Power Manufacturing of CDB, VKIA, CC 450.00 standard
Industries LLP PCC Pole Jaipur
M/s VVSV Steel Manufacturing of XYZ, VKIA, Current standard
PC wires of non Jaipur account
alloy steel
M/s JCTC India Trading of Diamond CDB, BKC, Current standard
& Stone Mumbai account
M/s VVSV Manufacturing of XYZ, VKIA, Current standard
Concrete Industries PCC Pole Jaipur account
M/s VVSV Manufacturing of CSD Bank, CC 80.00 standard
Prestress Industries PCC Pole Jaipur
M/s Pole India Manufacturing of AGB Bank, Bani Current standard
PCC Pole Park, Jaipur account
M/s JS Landmark - - - - standard
(P) Ltd
M/s Jagrati - - - - standard
Premium Home
Private Limited
standard
M/s VVSV Infra Manufacturing of CDB, VKIA, CC 250.00 standard
Industries PCC Pole Jaipur

6.B Comments on conduct of these accounts with our bank/other banks: Satisfactory

6.C Key Financial Figures (Audited) of Group/Allied/Associate concerns (for the last 3
years): As per annexure (a)Details of Associate/ Allied/ Group concerns and the facilities
sanctioned to them
Name of the Activity Financials Facilities/Dealing Bank
company Including Nature and Amount

M/s VVSV Manufact Perio 31.03.16 31.03.17 31.03. CC 25.00

Wire uring of d 18 10.00

pg. 30
products wire Capit 883.35 883.35 883.35 XYZ, TL 6.08
Private drawings al VKIA, NFB
Limited Jaipur 40.00
10.00
CC
ABC Bank NFB
Ltd

TNW 3625.31 3592.24 3908.7 XYZ, CC 25.00

2 VKIA, TL 10.00
Jaipur
PAT 681.09 33.07 353.59 NFB 6.08

Sales 24340.59 26438.93 26917.

82

VVSV Steels Manufactu Perio 31.03.15 31.03.1 31.0 Current Account with XYZ VKI
ring of d 6 3.17 Area and SBI VKI Area, Jaipur
Cycle
Steel Balls Capit 21.65 26.81 12.0
al 7

TNW 24.09 29.26 14.5

1

PAT 2.45 1.10 3.33

Sales 94.11 125.21 121.

03

Perio 31.03.16 31.03.1 31.0

d 7 3.18

Capit - 46.95 27.6

al 1
M/s VVSV
Manufacturi TNW - 46.95 27.6 Current account with VKIA,
Concrete
ng of Poles 1 Branch, Jaipur
Industries
PAT - (0.25) (4.14
)

Sales - - 58.7
8

Manufacturi Perio 31.03.16 31.03.1 31.0 CC limit of Rs.80.00 lakh from

ng of Poles d 7 3.18 CSD Bank

pg. 31
 Capit 7.29 122.80 151.
al 76

TNW 7.29 122.80 151.

M/s VVSV 76
Prestress
Industries PAT (0.04) 0.73 48.3
0

Sales --- 311.79 796.

43

Perio 31.03.16 31.03.1 31.0

d 7 3.18

Capit 32.35 24.67 61.0

al 4

Manufacturi TNW 32.35 24.67 61.0 Current account with AGBBank,

M/s Poles India
ng of Poles 4 Bani Park, Jaipur

PAT 0.44 0.91 13.2

3

Sales 148.28 133.36 492.

43

M/sJCTC Export of Perio 31.03.16 31.03.1 31.0 Current account with CDB,
India Diamonds d 7 3.18 BKC, Mumbai

Capit 191.27 258.96 313.

al 44

TNW 191.27 258.96 313.

44

PAT 49.84 44.78 85.8

9

Sales 3615.79 4204.7 5486

6 .46

VVSV Infra Manufactu Perio 31.03.16 31.03.1 31.0 Cash Credit Limits of Rs. 130.00
Industries ring of d 7 3.18 Lacs and TL of Rs. 39.00 Lacs
PCC Poles (o/s) from CDB.
Capit 152.68 112.90 274.
al 96

pg. 32
 TNW 152.68 127.90 289.
96

PAT 28.13 51.04 91.7

2

Sales 761.98 848.48 1780

.12

VVSV Manufactu Perio 31.03.16 31.03.1 31.0 Cash Credit Limits of Rs. 250.00
Power ring of d 7 3.18 Lacs and TL of Rs. 275.00 Lacs
Industries PCC Poles (o/s) from CDB, VKI Area,
LLP Capit 162.12 126.97 465. Jaipur.
al 47

TNW 162.12 126.97 465.

47

PAT 51.92 89.96 111.

85

Sales 1115.58 1573.2 2346

.93

M/s JS Party has submitted that there is no working in the units.

Landmark
(P) Ltd &
M/s Jagrati
Premium
Home
Private
Limited
Comments on Financial Indicators: Branch has submitted thatFinancials of the allied firms
seems satisfactory.
(b) Comments on conduct of these accounts with our bank/other banks: BH has confirmed
that the conduct of account of the associate and allied firm with other banks and FIs are satisfactory
and the same are under standard category.
7.A(i) Financial Position of the borrower Rs. In lakh
31.03.17 31.03.18 31.03.19 31.03.20 31.03.21
Particular Audited Audited Estimates Projections Projections
Months in Operations 4.00 12.00 12.00 12.00 12.00
Gross Sales 42.75 1248.65 2450.00 3000.00 3500.00
Domestic 42.75 1248.65 2450.00 3000.00 3500.00
Export 0.00 0.00 0.00 0.00 0.00
% growth NA 2820.82 96.21 22.45 16.67
Net sales (net of ED etc.) 42.75 1248.65 2450.00 3000.00 3500.00
Other Income 3.36 7.56 8.00 10.00 10.00

pg. 33
Operating Profit/Loss* 1.22 124.67 211.30 258.92 299.72
Profit before tax 1.22 124.67 211.30 258.92 299.72
Profit after tax 0.82 81.50 146.01 178.91 207.10
Depreciation/Amortization 12.55 58.90 90.94 120.00 101.40
Cash profit/ (Loss) * 13.37 140.40 236.95 298.91 308.50
EBIDTA/PBIDTA 13.77 183.57 344.05 469.73 489.00
Paid up capital 129.44 390.56 800.00 900.00 1000.00
Reserves and Surplus 0.00 0.00 0.00 0.00 0.00
excluding Rev. reserves
Share application money 0.00 0.00 0.00 0.00 0.00
Misc. Exp. not written off 0.00 0.00 0.00 0.00 0.00
Accumulated losses 0.00 0.00 0.00 0.00 0.00
Deferred Tax Asset 0.00 0.00 0.00 0.00 0.00
Unsecured Loan (Quasi 0.00 0.00 0.00 0.00 0.00
Capital)
a) Tangible Net Worth 129.44 390.56 800.00 900.00 1000.00
b) Investment in allied 0.00 0.00 0.00 0.00 0.00
concerns and amount of cross
holdings
c) Net owned funds/Adjusted 129.44 390.56 800.00 900.00 1000.00
TNW (a-b)
Total Borrowings 247.36 169.58 1430.00 1369.00 1298.50
Secured 0.00 75.38 955.00 919.00 848.50
Unsecured 247.36 94.20 475.00 450.00 450.00
Other investments (
excluding investments in
allied concerns considered
for arriving at Net Owned
Funds) 0.00 4.57 25.00 25.00 25.00
Total Assets 560.59 943.45 2580.78 2673.61 2788.16
Current Assets 281.65 508.78 1081.72 1294.55 1510.50
Non-current assets 277.74 433.67 1499.06 1379.06 1277.66
Out of which net fixed assets 277.74 429.10 1474.06 1354.06 1252.66

Net Working Capital 97.86 125.47 275.94 430.15 557.06

Current Ratio 1.53 1.33 1.34 1.50 1.58
Debt Equity Ratio 1.91 0.43 1.22 1.01 0.83
Term Liability/Adjusted 1.91 0.43 1.22 1.01 0.83
TNW
TOL/Adjusted TNW 3.33 1.42 2.23 1.97 1.79
Operating Profit/Sales 2.85 9.98 8.62 8.63 8.56
Long Term Sources 376.80 560.14 1775.00 1809.21 1834.72
Long Term Uses 277.74 433.67 1499.06 1379.06 1277.66
Surplus/Deficit 99.06 126.47 275.94 430.15 557.06
Short Term Sources 183.79 383.31 805.78 864.39 953.44

pg. 34
Short Term Uses 281.65 508.78 1081.72 1294.55 1510.50
Surplus/Deficit -97.86 -125.47 -275.94 -430.16 -557.06

As per CA certified B/sheet & P&L of the firm as at 30.09.2018 financials are analysed as
under:-

Particular Accepted for FY Achievement up to % Achievement

2018-19 30.09.18
Sales 2450.00 951.90 38.83%$

Other Income 8.00 * 31.91 398.87%

PBT 211.30 76.09 36.01%$

TNW 800.00 748.62 93.58%

pg. 35
 Total
Total
order Unexecuted Unexecuted
value Order
quantity part of order part of order
Date of of quantity
S Order to be as on 01.10.18 as on 01.10.18
Customer receipt of order supplied
No No supplied
order till
Rs. In 30.09.18
Qty Qty Rs. In lakh
lakh

BAJAJ
1 445339 ELECTRICALS 13.06.2018 500 14.46 495 0.00 0.00
LTD

BAJAJ
2 445328 ELECTRICALS 13.06.2018 4000 115.64 3960 0.00 0.00
LTD

BAJAJ
3 445335 ELECTRICALS 13.06.2018 3500 101.19 843 2657.00 76.81
LTD

BAJAJ
4 445327 ELECTRICALS 13.06.2018 500 14.46 495 0.00 0.00
LTD

BAJAJ
5 448987 ELECTRICALS 02.07.2018 4000 115.64 2090 1910.00 55.22
LTD

BAJAJ
6 448985 ELECTRICALS 02.07.2018 7000 202.37 2243 4757.00 137.52
LTD

BAJAJ
7 448986 ELECTRICALS 02.07.2018 5000 144.55 3200 1800.00 52.04
LTD

NCC/M
VVNL-
SAUBH
AGYA/
8 BAHRA NCC LTD 14.05.2018 12000 346.92 2475 9525.00 275.37
ICH
/44005/P
UR/18-
19

TATA
9 SBU- PROJECTS 02.05.2018 24000 708.00 2000 22000.00 649.00
T&D LIMITED

pg. 36
 /SAUB
HAYA-
JALAU
N-
(CLUST
ER-
8)19999

SBU-
T&D
/SAUB
HAYA- TATA
10 BANDA PROJECTS 02.05.2018 28000 842.52 3803 24197.00 728.09
- LIMITED
CHITR
AKOOT
/20007

SBU-
T&D
/SAUB
HAYA- TATA
11 PROJECTS 02.05.2018 28000 826.00 0 28000.00 826.00
Hamirpu LIMITED
r-
Mahoba/
20011

Transrail
TLL/G- 2130.9
12 Lighting 20.06.2018 72237 18500 53737.00 0.00
367/27117 9
Limited

BAJAJ
13 443568 ELECTRICALS 06.06.2018 1000 29.50 990 0.00 0.00
LTD

POUPM
Ashoka
14 VL/0007 06.07.2018 2300 66.49 1402 898.00 25.96
Buildcon Ltd
0/18-19

5658.7
Total 192037 38041 149481 2826.01
2
$Sale viz-a viz profit will be higher in 2nd half of the year after start of operations of 2nd plant
situated in Sumerpur(District: Hamirpur-UP) in January,2019.
*Other income include operational income of Rs.30.44 lakh.

pg. 37
7.A(ii) Comments on Financial Indicators
SALES:
M/s VVSV Industries LLP has been incorporated on 22.02.2016 as a limited liability partnership
firm. Firm engaged in manufacturing of Pre Stressed Concrete Cemented Poles .

Firm has set up a manufacturing unit situated at Plot No. B-49,5056& 57, Industrial Area “ Sandila
Phase-II” Village-Raiso, Pargana, Tehsil-Sandila, District-Hardoi(U.P.). Further to tap the
growing market & to execute the orders in hand, setting up of another manufacturing unit at Plot
No. E-29 to E-33, UPSIDC Industrial Area, Semerpur, District-Hamirpur(UP) is under process
and will be operational by January,2019.To set the UNIT-II party has raised Term loan of
Rs.500.00 lakh from ABD for capital investment.

During 1styear of operation of four months in FY 2016-17, party has achieved sales turnover of Rs
42.75 lakh . Further during FY 2017-18 party has achieved sales turnover of Rs.1248.65 lakh. As
per CA certified provisional balance sheet as at 30.09.2018, party has achieved sale of Rs.951.90
lakh up to 30.09.2018.

Further party has submitted detail of orders in hand as under

Keeping in view of bunching of orders in hand to the tune of Rs.2826.00 lakh as on 01.10.2018
and expected growth in the industry, party is setting up another unit at Plot No. E-29 to E-33,
UPSIDC Industrial Area, Semerpur, District-Hamirpur(UP) to meet out demand of the market.

Keeping in view of level of sales of Rs.951.90 lakh achieved up to 30.09.2018 and orders in hand
as above of Rs.2826.01 lakh and as 2ND unit will commence operations from Jan 2019 UNIT ,
party has estimated and projected sale of Rs.2600.00 lakh and Rs.3000.00 lakh for FY 2018-19 &
FY 2019-20 respectively. Which seem reasonable and achievable, Hence we may accept the same.

Paid up Capital/TNW:
TNW of the firm was Rs. 129.44 lakh as at 31.03.2017. Same has increased to Rs.390.56 lakh as
at 31.03.2018 on account of induction of fresh capital and retention of profit in the business.
Statement Depicting Reconciliation of TNW (Rs. in lakhs)
Particular Amount
Tangible Net Worth as on 31.03.2017 129.44
Add: Increase in capital on account of fresh induction, interest on 180.12
capital to partners, remuneration to partners
Add: Retention of profit 81.50
Less:Withdwral 0.50
Tangible Net Worth as on 31.03.2018 390.56
Now party has estimated TNW of Rs.800.00 lakh as at 31.03.2019 & projected TNW of Rs.900.00
lakh as at 31.03.2020 on account of fresh induction of capital, interest on capital to partners,
remuneration to partners and retention of profit in the business. As per CA Cert. Provisional BS
as on 30.09.2018 TNW of the firm is Rs.748.64 lakh, which is 93.58% of the estimated level of

pg. 38
Rs.800.00, as at 31.03.2019, which is achievable keeping in view of the plough back of profit of
the firm. BH has recommended for accepting the same.

Profitability:
Firm has earned PAT of Rs.0.82 lakh during 1st year of operation as at 31.03.2017. Same has
increased to Rs.81.50 lakh on account of increase in turn over from Rs.42.75 lakh during FY 2016-
17 to Rs. 1248.65 lakh during FY 2017-18.

Now on account of proposed increase in sales turnover at the level of Rs.2450 lakh for FY 2018-
19 and Rs.3000.00 lakh for FY 2019-20, party has estimated PAT of Rs. 146.01 lakh and Rs.
178.91 lakh for the year ended on 31.03.2019 and 31.03.2020 respectively which is in line of past
trend. It is submitted that with the increase in sales subsequently, firm will be able to achieve
estimated/ Projected profit level for financial year FY 2018-19 and FY 2019-20 hence we may
accept the same.

Unsecured loans:

Level of unsecured loan taken from family members, friends and relatives was of Rs. 247.36 lakh
as at 31.03.2017. Same was decreased to Rs. 94.20 lakh as at 31.08.2018 on account of resultantly
increase in TNW. Party has already introduced USL of Rs.630.55 Lacs which is for payment of
factory as loan from ABD not finalised that time, however ABD has disbursed Rs.3.75 cr on
11.10.2018 and party will repay excess USL and will maintain USL of Rs 475.00 lakh for the
financial year 2018-19 & party has submitted that keeping in view of projected level of profit
during FY 2019-20 of Rs.178.91 lakh, they will pay unsecured loan of Rs.25.00 lakh during FY
2019-20 as well as for 2019-20. And USL for these years will be Rs.450.00 Lacs. Further, Party
has submitted that USLs pertains to friends and relative, family members & no interest will be paid
on such USL.

NWC:
Net working Capital (NWC) of the party was Rs 97.86 lakh as at 31.03.17.Same has increased to
Rs.125.47 lakh as at 31.03.2018 on account of account of fresh induction of capital, interest on
capital to partners, remuneration to partners and retention of profit in the business.

Now the party has projected NWC at the level of Rs. 275.94 lakh and Rs. 430.15 lakh as at
31.03.2019 and 31.03.2020 respectively, which can be easily achievable on account of retaining
of profit & induction of USL as estimated & projected for FY 2018-19 and 2019-20 and same
may be considered satisfactory keeping in view of volume of business, hence, we may accept the
same.

Further, It has been observed that less depreciation charged in FY 2018-19 despite of increase in
fixed assets in comparison to FY 2019-20 for which CLPC has submitted that as per prevalent
income tax law, Depreciation is to be calculated on gross block for additions during the year more
than 6 months and less than 6 months. As addition of fixed assets in the form of purchase of plant
&machinery , furniture & fixture along with building construction has been started w.e.f.
01.10.2018, therefore depreciation has been calculated for 6 months on recently purchased gross
block in FY 2018-19.

pg. 39
Current Ratio & DE Ratio:

Current Ratio of the firm remained at the level of 1.53:1 as at 31.03.2017 same has decreased to
Rs.1.33:1 on account of investment in fixed assets. However same was above the bench mark level.

Projected Current Ratio is 1.34:1 and 1.50:1 as at 31.03.2019 and 31.03.2020 respectively which
is above the benchmark level. We may accept the same.

DE Ratio of the firm remained at the level of is 0.43 for the FY ended on 31.03.2018. The DE ratio
is within acceptable levels i.e. less than 2:1. Projected DE ratio of the firm is 1.54 & 1.26 for the
financial year ended 31.03.2019 & 31.03.2020 respectively which may be considered satisfactory.

BH(CLPC) has confirmed the following:

 DSCR of the firm will be within prescribed norms after availing loan from us
 Financials of the firm including CMA Data (Projection & holding period) has been
thoroughly checked & accepted by the branch officials before submitting the same to our
office and found the same as satisfactory.
 The current maturities of all the Term Loans availed by the company are properly
calculated keeping in view the repayment of term loan due in the respective FYs.
 Calculation of Depreciation and Tax has been made as per the prevalent laws applicable to
the LLP.
 All the loan accounts availed by the firm guarantors and allied concerns are running regular
and in std. Category.

7.B Details of investment in Shares, Debentures, Units or diversion of funds outside the
business etc. Nil
7.C Details of Liabilities not accounted for/Contingent liabilities: Nil

7.D Status/details of adverse comments by Auditors of the borrowing unit: Nil

7.E Position of assessment of income tax/sales tax/wealth tax of the borrowing concern/
partners/proprietor: Branch has submitted that Income tax return for the FY 2018-19 of
the firm has been obtained& held on record. Further partners/Guarantors have been filed
ITR up to AY 201718 & copy of the same is held on record. .
GST returns for the FY 2018-19 up to July, 2018 has been obtained & held on record.

7.F Overall likely impact of (7.B to 7.E) on the financial position of the borrowing unit:
BH has submitted that no adverse impact on the financial position of the unit is foreseen
in view of above.

8.A Primary Security.

Working capital facility:

pg. 40
  First charge by way of Hypothecation over entire current assets of the firm present & future
including stock of raw material , Stock in process, Finished Goods, stores, spares & other
current assets
 Hypothecation of book debts arising out of genuine trade transactions. However DP to be
allowed against receivables of the party not older than 90 days.

Non Fund facility: NA

8.B Guarantee/Guarantors:
(Rs. In lakh )
Name of Relationship Net Means IP Date of CR
Guarantor with Previous Present Previous Present Previous Present
borrower as at as at as at as at
31.03.17 31.03.18 31.03.17 31.03.18
Mr. Ram Partner 181.50 451.01 - --- 28.12.17 04.10.18
Mr. Shayam Partner - 483.24 - 55.57 - 04.10.18
Singh
Mrs. Tripti Partner 278.44 - - - 04.10.18
Sharma
Total 181.50 1222.69 55.57
It has been confirmedthat IPs appearing in CR has been visited by R M Gupta on 26.10.2018.
Reason for Change in Net means

Sr Name of Guarantor Whether Increase/ Reason

No Decrease in
comparison to last
year

1 Mr. Ram Increase Increase due ti increase of investment in

firms

2 Mr. Shayam Singh NA Fresh

3 Mrs. Tripti Sharma NA Fresh

8.C Total Commitments by Guarantor(s): Credit Exposure of Rs.475.00 lakh

8.D (i) Collateral Security (Including details of changes in IPs as security from last
sanction, if any)
(Rs. in
lakh)
Security Owners Value Basis for Date Whether
Description hip Last Mark Realisa valuation existing/
Sancti et ble (Valuatio fresh
on Value value n Report
of)

pg. 41
IP situated at Plot M/s NA 242.0 217.80 As per 05/10/18 Fresh
No. Unit-I: B- VVSV 0 Valuation
1,2,3,& 4, Industrie report of
Industrial Area “ s LLP Shri
Sandila Phase-II” Ganesh
Village-Raiso, Engineerin
Pargana, Tehsil- g
Jaipur, District- Enterprise
Jaipur (Rajasthan.) s,
Measuring 12800 Lucknow,
SQM Approved
217.80 valuer 26.10.18
BH
valuation
Total value of Collateral Security 217.80
%age of security to exposure of Rs.475 lakh 45.85%
BH has submitted that NOC from UPSIDCL to mortgage the collateral security has been
obtained.

Further, BH (CLPC) has submitted that matter regarding providing further collateral security to
strengthen the collateral coverage has been taken with the party. Party has informed the they do
not have any additional collateral with them to offer the same as collateral security and requested
to accept the sanction of facility keeping in view of long relation of the VVSV group with the
bank. Keeping in view of reputation of group and promoters and long relation with the bank, BH
has recommended to accept the same.
Legal Search: Legal search of property have been obtained dated 03.10.2018 from Bank’s
approved advocate Sh. Awadesh Chandra Asthana and according to his report owners of the
properties possess clear, perfect and marketable title on the above IP and is legally entitled to create
mortgage.

(ii) Status of verification of the IP

Name of the Officer, who visited the Designation PF No. Date of Visit
site/IP
Kalyan Singh AGM 12345 26.10.2018
Visit of IP and site visit is to be done before release of limits.

(iii)Total collateral coverage:

(Rs.
in lakh)
S.No. Particulars of collateral security Existing value* Proposed value*
A Residual value of block assets 0.00 ---
B Value of IP mortgaged as collateral 0.00 217.80
C Others (Eg: FDR, etc.) 0.00 -
D Total value of security (A+B+C) 0.00 217.80
E Exposure 0.00 475.00
F Collateral coverage (D/E*100) 0.00 45.85%

pg. 42
BH(CLPC) has confirmed the following:
 Titles of the properties proposed to be mortgaged with our bank are clear, marketable &
mort gable and legal, valid & enforceable mortgage can be created on the said IPs. Further
search on the IPs from the site of CERSAI has been carried out and there is no adverse
features observed. Further Search report & NEC from bank’s approved advocate has also
been obtained in this regard & held in the record in terms of Law division Circular No.
07/2014 dated 30.01.2014 and the same is satisfactory & no adverse feature has been
observed.
 Site verification and valuation as per norms, by bank approved valuer, in terms of extant
guidelines, has been conducted/obtained. Value of IPs has been taken as per L&A circular
No. 58/2016 dated 05.08.2016. Observations pointed out by the Investigator/ valuer has
been taken care of.
 Physical verification of IPs, ascertaining genuineness of financial papers/title deeds of IPs
have been verified as per bank guidelines

8.E Confirm that the properties mortgaged/property to be mortgaged are SARFAESI

compliant or not. (Yes/No,In case of No, details along with the reasons, justifications and
action proposed should be furnished.): BH has confirmed that property proposed to be
mortgaged is SARFAESI compliant

9. Position of Account as on: NA being fresh proposal

(Rs. in
lakh)
Nature Limit VS DP (1) Balance Irregularity
along with
reasons
NA NA NA NA NA NA

10.A Conduct of the Account

S.No. Particulars Remarks

1 Availment of limit (FB & NFB), over drawings, NA as it is fresh account

2. Turnover in the A/c (FB/NFB), Routing of NA as it is fresh account
proportionate business in consortium, routing of
sale proceeds, honoring of commitment in non
fund based facilities(details of LC/LG
devolved/invoked with amount)
3. Regularity in submission of CMA data/ financial NA as it is fresh account
statement/QMS/Stock Statement. :
4 The information regarding no. of cheques
returned with amount involved due to financial
reasons during the review period should be NA as it is fresh account
mentioned.

pg. 43
 5 The amount/frequency of irregularity in the
account during the review period should be NA as it is fresh account
mentioned.

10.B Review of the Account (Appendix C also to be discussed) : NA being fresh proposal

a. Fund Based Limits (Rs in lakh)

Period Limit Credit Debit Maximu Minimum Sales Variation between
summationsummation m Availment sales & credit
Availme summations
nt
NA NA NA NA NA NA NA NA

10.C Value of the Account: NA being fresh proposal

(Rs in lakh)
Limit 01.04.17 to 31.03.18 (12M) 01.04.18 to 30.06.2018 (3M)

Nature Amount Average Interest/ Yield Average Interest/ Yield

Availment Commission (%) Availment Commission (%)

Comments, if any: Nil

10.D (i) Summary of irregularities pointed out by Bank’s Inspectors, Concurrent Auditors,
Credit Audit & Review Division (CA&RD), RBI Inspectors, Statutory Auditors,
observations of Stock Audit Report, Comment on Preventive Monitoring Score
Trends, (and status of rectification of these irregularities):NA being fresh proposal
10.D (ii) Confirm that No third party, except the professional services for specified purposes
such as Valuation, Legal opinion, Certification etc is involved in any stage in the loan
sanction process. Yes/No*: Yes
*In case of No, details along with the reasons, justifications and action proposed should be
furnished.
11. Brief History (Should also include comments on industry scenario and industry
outlook, management, production and marketing, borrowers' diversification,
expansion, modernization programme, risk perception including environmental and
social risk along with proposed mitigations):

Brief History
VVSV Industries LLP was established in year February, 2016 as a limited liability partnership
firm of 3 designated partners of Jaipur, Rajasthan. Amongst them two partners belonged to
renowned Sharma family which promoted VVSV Group in wire division and the third partner
belonged to another renowned Singh (Agarwal) family.

Firm is registered with Registrar of Companies, Jaipur. The firm is engaged in manufacturing of
Pre stressed Concrete Cemented Poles.The affairs of the firm were well distributed among the

pg. 44
members and they also considered availing services of experienced professionals for managing its
strategic and routine operations.

Firm is focused on continued investment in technology to keep abreast with the latest
developments in the world and in its quest to deliver a world class product to its customers.In the
globally competitive & complex business environment of today, VVSV Industries LLP has been
playing a small but meaningful role in adding strength to the growth of corporate India. Firm works
diligently towards the faithful discharge of all implicit and explicit responsibilities to its multiple
stake holders, be it customer, staff, the regulator, or society. Firm recognizes that each customer
is unique with its distinct needs.

VVSV group has integrated forward in the year 2013 in Joint Venture with Singh Group and had
put up a unit in Bhopal in name of M/s VVSV Infra Industries (Madhya Pradesh) to manufacture
Pre stressed Concrete Cemented Poles for 8.0M-140Kg and 9.1M-280Kg working Load Poles.
The unit is making 6000 PCC Poles per month.

VVSV Industries LLP is engaged in manufacture of Pre stressed Concrete Cemented Poles. VVSV
situated at Plot no. B-49, 50, 56 and 57, UPS, DC Industrial Area Phase -2, Santila, District Hardoi,
Uttar Pradesh.It is located at a distance of 55 kms from Lucknow. Land area of total factory is
12800 square meters with production capacity of 420 nos. of pole per day.

The firm, in order to achieve the economies of scale and raising demand for the product, under
expansion plan firm is setting up another unit situated at Sumerpur Industrial Area, Hamirpur
District, Bundelkhand region of Uttar Pradesh to increase its existing capacity.

Selling & marketing arrangements

VVSV Industries LLP has a long presence in the industry and its product has a wide application,
therefore it has a very large customer base.
Reputed customers of the firm are Government sector companies:
1. DakhsinancalVidhyutVitran Nigam Ltd., Agra.
2. MadhyanchalVidhyutVitran Nigam Ltd., Lucknow.
3. PurvanchalVidhyutVitran Nigam Ltd., Varanasi.

There are other reputed clients like Jackson, Faridabad, KEI Ind, Delhi, L&T, Chennai, NCC,
Hyderabad, Ashoka Buildcon, Nasik, IL & FS, Hyderabad etc.The above mentioned domestic
customer list proves the approval of quality of VVSV Industries LLP Product.
CLPC has further submitted that party is engaged in Cement Pole manufacturing, which are used
by SEBs only (Govt Sector) supplied through contract awardees to other companies. These
companies such as Bajaj Electricals, TATA Projects Ltd. onward procure the poles from
manufacturing companies including VVSV Industries LLP.

Comments on industry scenario and industry outlook

Pre stressed concrete poles are being used substantially now a days. These poles have many
advantages when compared to traditional poles like Mild steel poles. The manufacturing processes
are heavy duty process and involve many steps. The main factors considered in manufacturing and

pg. 45
designing of such poles are economy, required strength and durability. The various material used
are steel, cement, admixes like curing compounds, rapid hardening compounds etc. Pre stressed
concrete poles are commonly mass produced and are used in most countries for power
transmission, antenna masts etc.

These poles offer several advantages:

 Pre-stressed concrete poles are lighter and stronger,
 They require less reinforcing steel.
 Due to the special manufacturing process, in which the poles are spun at high speeds.
 The concrete is generally in compression, so cracking is unlikely except from rough handling,
and the concrete used is of higher strength.
 They have a smoother surface that is denser and less permeable.
 These are not susceptible to rot and decay.
 The poles are eco-friendly and require very low maintenance.
 Pilferage proof

The demand for pre stressed concrete electric pole directly depends on the growth of electric power
sector because these poles are solely meant for overhead transmission and distribution of power to
consumer units. PCC poles are available in different dimensions and weight depending on the
requirement. Types of Utility Distribution Poles:
 Tangent poles
 Guyed poles
 Self-supporting poles

The power sector is one of the crucial inputs to the growth of other industrial sectors and overall
economic growth of India. India has fourth largest installed generating capacity in world but the
per capita consumption of electricity is very low, owing to a huge gap between demand and supply
of power. Traditionally the power sector was dominated by the public sector but has now been
opened for competition from private and foreign players by the government sector.

Application of Pre-Stressed Concrete Poles

 Power Transmission
 Power Distribution Lines
 Antenna masts, siren and speaker poles
 Solar lighting poles
 Camera poles
 Street lights and traffic signals

Management,

VVSV Industries’ management consists of three partners.

1. Mr. Ram- Designated Partner

Mr. Ram aged 34 years, has rich experience in Steel Wire Industry for more than 13 years and
PCC Pole manufacturing for more than 5years. He is well-versed with International Marketing

pg. 46
techniques learnt from Scotland. After completing his educational qualification, he commenced
his family business which has been in operation since 1996. He began with a vision to take bold
technological initiatives for his company and grow it as a significant player in the Indian Prestress
Concrete Pole Industry.
Mr. Sharma holds various important positions at different forum, namely:
 Whole-time Director – VVSV Wire Products India Private Limited
 Director - Jagrati Premium Homes Private Limited
 Director - VVSV Power Industries LLP

2. Mr. Shayam Singh- Designated Partner

Mr. Singh, aged 34 years, has done his education from ICFA University, Gurugram. He holds
Master degree in Business Administration as well as a Chief Financial Analyst. After completing
his education, he joined his family business of PCC Poles which has been in operation from 20
years. His core areas of practice include marketing operations of the company. He helped the
company grow into multi-dimensional company of present structure leading a host of businesses.
With his strong professional qualification and rich experience, he has proved to be an ideal team
builder in the commercial and managerial operations of the company. He is leading the motivated
sales team in developing new markets for the products of the company and under his dynamic
leadership the company is on the way to strengthen its leadership position in the country and
became a significant player in the globe trade.
His vision has played a significant role in lifting the image of the company with its customers. he
identified the areas required for improvement in customer services and has maintained strong focus
on timely and reliable supplies by managing the entire cycle of supply chain operations in a
planned and controlled manner.
He is also Designated Director at Shree Veer Infra Power Private Limited.

3. Mrs.Tripti Sharma- Designated Partner

Mrs.Tripti, aged 31 years hold a Bachelors degree of Commerce done from Kolkata. She has 5
years of experience in manufacturing of PCC Poles and is an active participant in the activities of
Firm.

SHAREHOLDING PATTERN
Designated partners of VVSV Industries LLP are Tripti Sharma, Ram and Shayam Singh. Total
fixed contribution of the three partners of Firm is 25,00,000
Name of Partner DIN Contribution Percentage

Shayam Singh 03346067 12,50,000 50%

Ram Sharma 00293860 6,25,000 25%

TriptiSharma 06986673 6,25,000 25%

25,00,000

pg. 47
Production

Raw Material Availability

Major Raw materials used for the purpose of manufacturing of PCC Poles are Cement, HT Wire
– 4mm, G1 Wire – 4mm, Grit – 16mm, Bazri, Wooden Bhatta and Black Oil.
Major Raw Material Suppliers are located in India such as Sanju Traders, MaaOil Traders,
MaaVaishno Traders, Om Sai Construction, Ultra Tech Cement, MycemCement, VVSVWire,
Jaipur and BansalWire, Kanpur.

PROCESS FLOW
STEP
STEP 1 2:Automatic Step 3:Feeding and stressed
Button end Wire Caging Concrete is injected into the
on both ends Steel cages are cages and stressed at high
of PC Wire made (prestress temperatures
pole)

Step 4: Spun concrete Step5: Separation Step 6:

Pole
The mould is then
positioned between ten
wheels which are
specifically designed to
rotate the mould.
Controlled machine
then speeds up the
rotation to create a
centrifugal force,
essential for migrating
the concrete from the
mould walls.
Steamed Concrete pole
The mould is brought to
steam kiln where a
special boiler maintains
the desired amount of
heat

Step 7:
Step 8:Storage and
Dismantling of the tranportation
Mould
Thepoles are then
The concrete pole inpected,finished finely and
is then then transported.
demoulded.

2. Present Proposal :
a) Brief of the proposal: Present proposal has been submitted for sanction of FBWC limit of
Rs 475.00 lakh.
b) Justification for working capital sanction as per simplified method or traditional method of
lending, as the case may be:
Sales:-

31.03.17 31.03.18 31.03.19 31.03.20 31.03.21

Particular Audited Audited Estimates Projected Projected
Months in Operations 4.00 12.00 12.00 12.00 12.00
Gross Sales 42.75 1248.65 2450.00 3000.00 3500.00
Domestic 42.75 1248.65 2450.00 3000.00 3500.00
Export 0.00 0.00 0.00 0.00 0.00
% growth NA 2820.82 96.21 22.45 16.67

pg. 48
 Net sales (net of ED etc.) 42.75 1248.65 2450.00 3000.00 3500.00

SALES:
M/s VVSV Industries LLP has been incorporated on 22.02.2016 as a limited liability partnership
firm. Firm engaged in manufacturing of Pre Stressed Concrete Cemented Poles .

Firm has set up a manufacturing unit situated at Plot No. B-49,5056& 57, Industrial Area “ Sandila
Phase-II” Village-Raiso, Pargana, Tehsil-Sandila, District-Hardoi(U.P.). Further to tap the
growing market & to execute the orders in hand, setting up of another manufacturing unit at Plot
No. E-29 to E-33, UPSIDC Industrial Area, Semerpur, District-Hamirpur(UP) is under process
and will be operational by January,2019.To set the UNIT-II party has raised Term loan of
Rs.500.00 lakh from ABD for capital investment.

During 1styear of operation of four months in FY 2016-17, party has achieved sales turnover of Rs
42.75 lakh . Further during FY 2017-18 party has achieved sales turnover of Rs.1248.65 lakh. As
per CA certified provisional balance sheet as at 30.09.2018, party has achieved sale of Rs.951.90
lakh up to 30.09.2018.

Keeping in view of bunching of orders in hand to the tune of Rs.2826.00 lakh as on 01.10.2018
and expected growth in the industry, party is setting up another unit at Plot No. E-29 to E-33,
UPSIDC Industrial Area, Semerpur, District-Hamirpur(UP) to meet out demand of the market.

Keeping in view of level of sales of Rs.951.90 lakh achieved up to 30.09.2018 and orders in hand
as above of Rs.2826.01 lakh , Further as proposed operation in 2nd plant situated at Sumerpur
(District: Hamirpur-UP) will be started in January, 2019 which will further add in improve the
sales and starting of operations of 2nd plant in January, 2019, party is hopeful to achieve the sales
projection for FY 2018-19. party has estimated and projected sale of Rs.2600.00 lakh and
Rs.3000.00 lakh for FY 2018-19 & FY 2019-20 respectively which seems reasonable and
achievable, Hence we may accept the same.

i) Assessment of Fund Based Limits as per second method of lending

Detailed Note on Assessment of Maximum Permissible Bank Finance (MPBF)

31.03.17 31.03.18 31.03.19 31.03.20 31.03.21

Basic Data Audited Audited Estimates Projected Projected
Domestic Sales 42.75 1248.65 2450.00 3000.00 3500.00
Export Sales 0.00 0.00 0.00 0.00 0.00
Cost of RM Consumed 166.93 859.45 1810.00 2114.00 2504.00
Cost of Production 173.37 1027.98 2147.00 2498.00 2952.00
Cost of Sales 24.47 1051.08 2024.80 2441.00 2907.00
Raw Material 28.39 87.19 186.00 217.00 256.00
Stock in Process 0.00 0.00 0.00 0.00 0.00
Finished Goods 148.90 125.80 248.00 300.00 358.00
Basic Data Per Month
Domestic Sales 3.56 104.05 204.17 250.00 291.67

pg. 49
 Export Sales 0.00 0.00 0.00 0.00 0.00
Cost of RM Consumed 13.91 71.62 150.83 176.17 208.67
Cost of Production 14.45 85.67 178.92 208.17 246.00
Cost of Sales 2.04 87.59 168.73 203.42 242.25
Raw Material 2.37 7.27 15.50 18.08 21.33
Stock in Process 0.00 0.00 0.00 0.00 0.00
Finished Goods 12.41 10.48 20.67 25.00 29.83
Chargeable Current Assets
Raw Material 28.39 87.19 186.00 217.00 256.00
(Months Consumption) 2.04 1.22 1.23 1.23 1.23
Stock in Process 0.00 0.00 0.00 0.00 0.00
(Months Consumption) 0.00 0.00 0.00 0.00 0.00
Finished Goods 148.90 125.80 248.00 300.00 358.00
(Months Consumption) 73.02 1.44 1.47 1.47 1.48
Domestic Receivables 23.83 195.52 572.00 700.00 816.00
(Months Domestic Sales) 6.69 1.88 2.80 2.80 2.80
Export Receivables 0.00 0.00 0.00 0.00 0.00
(Months Export Sales) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Consumables 0.00 0.00 0.00 0.00 0.00
Total Chargeable Current
Assets 201.12 408.51 1006.00 1217.00 1430.00
Other Current Assets
Cash & Bank Balance 15.02 67.10 8.72 7.55 5.50
Advance to Suppliers 0.00 8.40 50.00 50.00 55.00
Advance Tax 0.00 0.00 0.00 0.00 0.00
Other Current Assets 3.04 0.92 17.00 20.00 20.00
Total Other Current Assets 18.06 76.42 75.72 77.55 80.50
Total Current Assets 219.18 484.93 1081.72 1294.55 1510.50
Other Current Liabilities
Creditors 180.91 244.13 90.00 125.00 150.00
(Months Holding) 13.00 3.41 0.60 0.71 0.72
Current Maturities of TL 0.00 0.00 52.78 20.39 47.44
Provision for Taxation 0.15 32.56 65.00 80.00 92.00
Other statutory Liability 0.10 11.33 12.00 14.00 16.00
Other Current Liabilities 2.63 95.28 111.00 150.00 173.00
Total Current Liabilities 183.79 383.30 330.78 389.39 478.44

Raw material :
The firm is engaged in manufacturing of Pre Stressed Concrete Cemented Poles. Major Raw
materials used for the purpose of manufacturing of PCC Poles are Cement, HT Wire – 4mm, G1
Wire – 4mm, Grit – 16mm, Bazri, Wooden Bhatta and Black Oil which are easily available in and
around the unit.
Holding period of raw material was of 2.04 M & 1.22 M for the year ended 31.03.2017 &
31.03.2018 respectively. The holding period of RM was on higher side as at 31.03.2017 being the
unit under initially stage of projection.

pg. 50
Now the firm has estimated and projected holding level of RM at 1.23 Months as at 31.3.2019
and 31.03.2020 respectively. The projected level of RM is in line with past trend and general
industry trend hence recommended for accepting the same.

Stock in process:
As stock in process is hardly of 1 to 2 days. As such inventory under stock in process in
considered.

Finished Goods

Finished goods are Pre Stressed Concrete Cemented Poles, which is mainly supplied to SEBs.
Holding period of finished goods was of 1.44 M for the year ended 31.03.2018 being the 1st full
year of operation.

Now the firm has estimated and projected holding level of finished goods at 1.47 Months as at
31.3.2019 and 31.03.2020 respectively. The projected level of finished goods is in line with past
trend and general industry trend hence recommended for accepting the same.

Receivables:
Receivables of the firm mainly are SEBs and Big companied engaged in electric distribution. In
such type of industry holding level of Receivables remains on higher side. Actual holding ratio of
receivables was 1.88 months as on 31.03.2018. The firm has estimated and projected receivables
holding levels at 2.80 Months at 31.3.2019 and 31.3.2020 respectively. Receivables holding ratio
has been accepted as per general industry trends We may accept the same.

Creditors:
The actual holding level of creditors has remained at 3.41 months as at 31.03.2018. Holding level
of creditors was on higher side because firm has not availed any short term finance. Now the firm
has been projected holding level of creditors at 0.60 months & 0.72 months as at 31.03.2019 and
31.03.2020 respectively.
As per the prevalent market trend discounts are being offered by the suppliers (reputed companies)
of finished goods if the prompt payment is being made by the firm. The firm is trying to streamline
the early payments for availing these discounts & maximize profit margin. We may therefore
accept the same keeping in view of above justification.
Other Current Assets:
Other current assets mainly include cash and bank balance, Advance payment of taxes. Advance
to suppliers etc. Other current assets of the firm seem reasonable looking at the size of the firm.
Growth in other current assets is reasonable looking at the past trends of the firm. We may accept
the same.

On asking higher holding level BH(CLPC) has submitted that Party is engaged in Cement Pole
manufacturing, which are used by SEBs only (Govt Sector) supplied through contract awardees
other companies. These companies such as Bajaj Electricals, TATA Projects Ltd. onward procure
the poles from manufacturing companies including VVSV Industries LLP. In such type of industry
holding level of Debtors remains higher. Further party has achieved sale of Rs.951.90 lakh up to
30.09.2018 against annual projection of Rs.2450.00 lakh accepted for FY 2018-19, which is

pg. 51
38.83% of annual projection. Further as proposed operation in 2nd plant situated at Sumerpur
(District: Hamirpur-UP) will be started in January, 2019 which will further add in improve the
sales. Keeping in view of sales achieved up to 30.09.2018 and on account of starting of operations
of 2nd plant in January, 2019, party is hopeful to achieve the sales projection for FY 2018-19.
Further party is trying to bring down the holding level with increase in financial efficiency.

Maximum Permissible Bank Finance

(Rs. In lakh)
S. No PARTICULARS 2018-19 2019-20
1 Chargeable current Assets 1006.00 1217.00
2 Other current Assets 75.72 77.55
3 Total Current Assets 1081.72 1294.55
4 Other Current Liabilities 330.78 389.39
5 Working Capital Gap (3-4) 750.94 905.16
Minimum Stipulated Net Working Capital i.e. 25% of WCG/25% 270.43 323.64
6 of total current assets other than export receivables
7 Available/Projected NWC 275.94 430.15
8 ( 5 - 6) 480.51 581.72
9 ( 5 - 7) 475.00 475.00
MAXIMUM PERMISIBLE BANK FINANCE
10 (8 or 9 whichever is lower) 475.00 475.00

Party has requested for fund based limit of Rs 475.00 lakh so as per second method of lending,
accordingly BH has recommended to sanction FBWC limit of Rs 475.00 lakh as requested by the
party.

c) Justification of non-fund based facilities:

i) Assessment of Non Fund Based Limits

LETTER OF CREDIT: NA

(Rs in Lakh)
Particulars ILC (Indigenous) FLC (Imported)
Total purchases during the year NA NA
Purchases proposed against LC (FOB/CIF Value) NA NA
RM requirement against LC per month NA NA
Usance Period in months NA NA
Lead Period in month NA NA
Total period in months NA NA
LC requirement (3 X 6) NA NA
LC recommended NA NA

pg. 52
BANK GUARANTEE: NA
Nature & amount of limit sanctioned
Outstanding as on
Name of the beneficiary / ies in whose
favour guarantees to be issued
Nature of the guarantee limit required i.e.
performance/ financial/ Bid Bond etc.
Margin proposed
Security -
Justification for the proposed limit

d) Justification for term loan/DPG:

(i) Review of existing Term Loan- Not applicable

13. a) Rate of Interest applicable as well as proposed:

Facility Existing Proposed Applicable
Rate

Rate of interest CC NA 1 year MCLR + 1.00 %= 9.50% 1 year MCLR + 1.00 %=

(1 year MCLR is 8.50) 9.50% (1 year MCLR is
8.50)

Commission NFB NA NA NA
Charges

Processing CC NA Rs. 300/- per lac or part Rs. 300/- per lac or part
Charges thereof+GST thereof+GST

Documentation CC NA Rs. 400/- per lac or part thereof, Rs. 400/- per lac or part
charges subject to a maximum thereof, subject to a
maximum
of Rs. 50,000/-+GST
of Rs. 50,000/-+GST
CIBIL charges NA Rs.54.50/-+ applicable GST Rs.54.50/-+ applicable
(18%) i.e. 64.31 per Individual GST (18%) i.e. 64.31 per
CIBIL Individual CIBIL
Rs.1417/-+ applicable GST Rs.1417/-+ applicable
(18%) i.e. 1672.06 per GST (18%) i.e. 1672.06
Commercial CIBIL per Commercial CIBIL

Cersai Charges NA Rs. 109+ applicable GST i.e. Rs. 109+ applicable GST
Rs.128.62/- above 5 Lakhs i.e. Rs.128.62/- above 5
Lakhs
CERSAI A/c No.
51660020810102

pg. 53
 CERSAI A/c No.
51660020810102

Other charges, if NA As per Bank’s norms As per Bank’s norms

any

b) Risk perception, if any: NIL

14. Other Issues: Nil

15. Summary of merits/justifications for considering the proposal.

SWOT Analysis Strength:
- Promoters are experienced in this line of activity since long and having
good orders in hand.
- Firm has earned net profit during 1st year of operation.
- Promoters are having long relation with the bank.

Weakness:
- Government policy, recession may affect the business. All these
weaknesses may affect the manufacturing sector of engineering products
but there would not be any problem individually to this sector

Opportunities:
- Party is having orders worth Rs 10.00 Cr in hand to achieve their
estimated sales turnover.

16. Recommendations:
16.A Deviations in the proposal observed by the recommending authority: Nil
16.B Recommendations:

In view of above we endorse BH recommendations for sanction of FBWC limit of Rs 475.00 lakh
in favour of captioned party detailed as under on terms and conditions enclosed as per annexure
and additional stipulations as under:
(Rs.in lakh)
Nature Existing Proposed
Fund Based
CC(H)/CC (Book Debt) 0.00 475.00
Fund Based Ceiling 0.00 475.00
Non Fund Based
ILC/FLC 0.00 0.00
ILG/ FLG 0.00 0.00
Non Fund Based Ceiling 0.00 0.00
Term Loan 0.00 0.00
TOTAL COMMITMENT 00.00 475.00

pg. 54
Additional Stipulations:

 Before release of the sanctioned facilities, BH to ensure that valid & legally enforceable EM
based on original title deeds with complete chain papers has been extended and all the
observations/suggestions of approved advocate have been taken into consideration suggested
through search cum opinion report. It should be ensured that the original title deeds kept under
EM must tally with the certified copy of title deeds submitted by the advocate along with his
search cum opinion report and same has been filed with CERSAI database within stipulated time
period..
 BH(CLPC) to ensure Sharing of Information on prescribed format [L&A Circular No.31/2012
& 99/2012 (compulsory)]is to be obtained from all lenders on regular intervals ensuring no
adverse features.
 BH to ensure that NOC from UPSIDCL to mortgage the collateral security has been obtained.
 An undertaking to be taken from borrower that any third party liability coming on the bank due
to wrong information/detail given by the borrower, will be his/her responsibility.
 BM to ensure that borrower is having all the valid statutory clearances and licenses for doing the
business
 Branch Head to explore the opportunity for cross selling of Retail Products of our Bank to all
staff members as well as directors of the company. Further to explore possibility to extract
ancillary business from the borrower by canvassing fresh salary accounts etc.
 Branch Head shall obtain fresh NEC from two bank’s approved advocate in terms of Law
division Circular No. 07/2014 dated 30.01.2014 and L&A Circular No. 44/2017 dated
29.04.2017. Branch Head to ensure that the report should be satisfactory.
 Branch Head to ensure that an undertaking be obtained from the firm as well as providers of
unsecured loan that these unsecured loans shall not be withdrawn during the currency of the loan
without prior written permission of the bank and shall be subordinate to bank borrowings. BH to
ensure and monitor the same.
 Borrower to provide a stamped undertaking that borrower will not avail any loan from other
Banks, FIs and NBFC without the prior written permission from our bank. In case of non
compliance of the same penal interest to charged in the account as per the prevalent bank
guidelines.
 BH to ensure that correct ROI is charged in the account as the terms of sanction/ bank guidelines.
In case of under recovery of interest the same should be recover in full so as to avoid any revenue
loss to the bank. BH to ensure the meticulous compliance of the same.
 Branch Head to ensure that CIRs of all the associate and allied concern of the borrower is to be
extracted as per extant bank guidelines from CICs (CIBIL/Equifax/Experian/Highmark) analyze
the same and ensure that there is no such adverse feature.
 BH to ensure that insurance cover is obtained in respect of all primary and collateral securities
against all the applicable risk for full value from Oriental Insurance as per agency agreement in
terms of extant bank guidelines. Policy in this regard must be kept with the branch.
 The firm to undertake that no investment outside business or in another Joint venture will be
made without Prior Written Permission of the bank and will maintain NWC and Current Ratio
at the prescribed level of 1.33:1
 The documents, including drafted documents, be vetted by the advocate at both pre-execution
and post execution stage to ensure that the same are enforceable in law and the advocate fees

pg. 55
 should be borne by the Company. The certificate from bank approved advocate confirming
proper and valid execution of documents/securities should be held on record.
 BH to ensure that borrower will comply all the conditions of UPSIDCL for running the unit.
 BM to ensure that the sanctioned limit is used for the business purpose and not for any
speculative purpose. An undertaking to this effect be taken from the party before disbursement
of the loan.
 Quarterly review report to be submitted along with PMS in terms of LA Cir 99/2011.

Annexure-I
Facility no. 1

Nature Cash Credit (Hypothecation & Book Debt)

Limit Rs.475.00 lakh ( Rupees Four crore seventy five lakh Only)
Margin Stocks – 25.00%
Book debts – 30.00%
Period One Year
Rate of 1 year MCLR + 1.00 %= 9.50% (1 year MCLR is 8.50) as per A3 rating
Interest ,presently chargeable on monthly rest subject to change from time to time as
per HO guidelines/RBI directives and also change in internal as well as external
rating and collateral coverage ROI shall change as per Bank guideline.
Reset period for rate of interest shall be one year. The frequency of reset as
above is only for the purpose of resetting of benchmark rate i.e. MCLR. Reset
of spread based on the change of the risk profile of the borrower (upward or
downward revision in risk rating) will be done as and when there is revision in
risk rating of the borrower. Next date of reset of MCLR for cash credit is one
year from the date of opening of cash credit account.
Security Hypothecation of entire stocks inclusive of all types of raw material, WIP &
finished goods and all other entire chargeable current assets both present and
future including Hypothecation of book debts both present and future arising
out of trade transactions loan & advances etc.However DP to be allowed
against receivables of the party not older than 90 days.

Stock Hypothecated goods to be valued at cost price less all rebates, discounts
Valuation etc/market value/realizable value, whichever is lower.
Submission of Borrower shall submit stock reports giving a complete list of all stocks, as at
Stock and the close of month or more frequently within 10 days from close of the month,
Book Debt unless otherwise specified in the sanction, giving all details viz. Location where
Statements stocks are kept; Details of old, obsolete, un-saleable, sub standard, second
quality and unpaid stocks (including stocks received under LC) separately
which shall remain hypothecated to the bank even if no Drawing Power is
allowed there-against.
Book-debt: The branch officials will verify the statement from the books of the
party,

pg. 56
  The statement is in agreement with the books of accounts maintained by
the party.
 The age wise classification of debts is correctly done and realization of
book debts is routed through our bank.
Book Debts are out of genuine trade transactions and for the activities for which
the limit has been sanctioned by the bank.

Drawing DP will be calculated as per Bank guideline and revised every month by the
Power Bank on receipt of stock statement.

No Drawing Power shall be allowed against -

i) Old, deteriorated and un-saleable stocks.
ii)Spares of more than 1 year old.
iii)
Stocks, which are unpaid for (including those received under DA-LCs)
after netting with Book Debt as per Bank’s guidelines.
iv) Stocks, which are more than 6 months old.
v) Book Debts outstanding for more than 90 days.
vi) Book Debts relating to allied/associate and group concerns and
consignment agents.
Stock & Book Stock verification : The stocks shall be checked/verified by the Bank’s officials
Debt at least once in a quarter at irregular intervals by BO:Sandila, District –
verification Hardoi(UP) and BO: Sumerpur, District-Hamirpur(UP) and on half yearly
basis by official from CLPC, Jaipur from the books of the borrower & also
physically, which include verification of valuation of stocks/unpaid for stocks
and book debts.
Book-debt verification : The branch officials will verify the statement from
the books of the party, at least once in a quarter at irregular intervals, and
satisfy themselves that :-
(i) The statement is in agreement with the books of accounts maintained by
the party;
(ii) The age wise classification of debts is correctly done; and
(iii) The realizations of book debts are routed through our bank.
(iv) Book Debts are out of genuine trade transactions and for the activities for
which the limit has been sanctioned by the bank.
(v) Balance Confirmation has been obtained.
Insurance Borrower shall get the hypothecated stocks/security insured for full value
covering the risks of fire, thefts, burglary, SRCC (Strikes, Riots, Civil
Commotion) earthquake, terrorist risks, floods, riots etc. in the joint names of
the Bank& the borrower with `Agreed bank clause' at borrower's cost.
Stock in transit will be insured against all transit risks.
The policies/cover notes or duly attested copies thereof will be obtained and
placed on the records of the Bank.

pg. 57
 Hypothecation A Bank’s Name plate evidencing hypothecation of stocks to be prominently
Plate displayed at site where the stocks Charged to the bank are kept.
Maintenance Borrower shall maintain proper books of accounts relating to Stocks and book-
of Books debts to the satisfaction of the bank and the representative of the Bank shall
have the right to have an access/inspect the books of the borrower.
Other 1. From the total of Book Debts as given in the statement shall be deducted
such Book Debts against which finance has been availed under any "bills
facility" i.e. Advance against Book Debts is allowed only against debts for
which the party has not availed any bills facility. Further the facility should
be spread over a reasonably good number of parties.
2. Party to undertake to give us a power of attorney to collect the payment of
book debts from their debtors if applicable.
3. Borrower to facilitate the Bank to obtain periodical market CR on parties
with sizable debts to ensure safety of advance.
4. Bank, at its discretion, may fix party-wise DP or maximum DP/ sub-limit
against the debts of one party to avoid advance against debts concentration
in few customers.
5. Borrower to submit complete addresses including email address and contact
details of top 20 book debts OR covering 50% of total book debts (amount
wise), whichever is higher, in all advances against book debts, at prescribed
intervals (As per L&A Circular No. 13/2014).
6. All guidelines conveyed vide L&A Circular No. 119/2013 dated 01.11.2013
and subsequent circulars issued from time to time in this regard should be
meticulously complied with.
Terms & Conditions:
1. Stock Valuation: The stock shall be valued as under:

Raw Material, At Cost, Market Rate, Contract Rate or Realizable Value, whichever is
Consumables, Stores lower. Cost of raw material be worked out by FIFO, LIFO or Weighted
Spares & Packing Average method of valuation consistently followed by the firm.
Material

Stock in Process Raw Material value plus direct overheads at each stage/ Department of
production as per actual cost sheet maintained by the borrower. If no
cost sheets maintained, stock in process to be valued at raw material
cost.
Finished Goods Actual cost of production or Market Rate or contracted control rate
or contracted sale price or realizable value less all discounts/ rebates
etc. whichever is lower. However, old/obsolete/sub-standard goods
should be valued at actual/properly assessed realizable value and no DP
to be allowed against such stocks if not permitted specifically for DP
purpose as per sanction.
2. Submission of the stock statement:
- The borrower to submit stock reports giving a complete list of all stocks as on the last day of
each month within 10 days of the following month. The stock statement to give details of

pg. 58
 location where stocks are kept, details of old, obsolete, un saleable and unpaid (including
stocks received under DA-LC) stocks separately, which shall remain hypothecated to the
bank even though no Drawing Power shall be allowed there against.
- Stock statements should be submitted in 3 parts based on ABC analysis viz. stocks of higher
value with lesser number of items be classified as Category ‘A’, stocks of lower value with
higher number of items be classified as Category ‘C’ and the remaining stocks be classified
as Category ‘B’.
- Borrower shall submit statement of receivables (on the Performa prescribed by the bank) as
on the last day of every month within 10 days from close of the month to which it relates.
- The statement should contain all the required information, such as realization of book-debts
during the period and their deposit with the bank, age of book debts and debts outstanding
for 0-90 days, 91 days to 180 days, 181 days to 365 days and more than 365 days. DP shall,
however, be allowed against the book debts up to 90 days.
3. Drawing Power: DP to be revised every month on receipt of stock and Book debt statement.
No Drawing Power to be allowed against
 Old deteriorated and un-saleable stock
 Spares of more than 1 year old.
 Stocks which are unpaid for (including those received under DA-LCs) after netting with
Book Debt as per Bank’s guidelines.
 Stocks which are more than 3 months old.
Further DP will also not be allowed against:
 Book debts outstanding for more than 90 days and
 Book debts relating to allied/associate/group concerns and consignment agents.
 Other current assets like security deposits, advance tax etc.
Sundry creditors (trade) shall be netted against stock in terms of bank’s guidelines. From the
total of Book Debts as given in the statement shall be deducted such Book Debts against which
finance has been availed under any "bills facility".
4. Insurance: Borrower shall get the hypothecated stock insured for its full value covering the
risk of fire, thefts, burglary, SRCC (Strikes, Riots, Civil Commotion) earth quack, terrorist
risks, floods, riots etc. in the joint name of the borrower and bank with agreed bank’s clause at
borrows cost.
 Stocks lying with Processors / Fabricators to be covered in the insurance policy.
 Stock in transit will be insured against all transit risks.
 The policies/cover notes or duly attested copies thereof will be obtained and placed on
the records of the Bank.
 Stocks with processors/fabricators, if any, to be got insured against all risks with agreed
bank’s clause.
 It should be ensured that the policies are renewed at an appropriate time.
Comprehensive insurance of the property mortgaged for the reconstruction cost only viz value
of land should not be included for the purpose of insurance. Comprehensive insurance of the
market value of assets acquired / hypothecated with agreed bank clause.

An Undertaking from the borrower must be taken and held on record that entire stocks of the
borrower including the stocks financed by the bank are insured as in case of any eventuality
the insurance firm will settle the claim on the pro rata basis where entire stocks are not insured.

pg. 59
 Borrower shall get the hypothecated stocks/security insured for full value against all possible
risks in the joint name of banks (in case of current assets) and borrower with agreed bank clause.
The policies/cover note or dully attested copies thereof will be obtained and placed on record
of bank

5. Maintenance of books: Borrower shall maintain proper books of accounts relating to stocks
and book-debts to the satisfaction of the bank and the representative of the Bank shall have the
right to have an access/inspect the books of the borrower. Stock audit is to be conducted as per
norms. (Checking official shall submit his report as per proforma/procedure means for that)

6. Hypothecation Plate: The plate shall be displayed prominently where the stocks charged to
the bank is kept.

7. Party to submit amount of outstanding creditors along with the stock report.

8. The book debts must be well dispersed over a number of customers and Detail of Debtors in
terms of L&A Circular No. 13/2014 to be obtained and held on record.

9. Borrower to facilitate the Bank to obtain periodical market CR on parties with sizable debts to
ensure safety of advance.

10. Bank, at its discretion, may fix party-wise DP or maximum DP/ sub-limit against the debts of
one party to avoid advance against debts concentration in few customers.

11. Stock received for job work be kept separately and be identifiable during verification of stock

12. BH to ensure that DP to be calculated and allowed strictly as per L&A Circular No. 10/2015
dated 10.01.2015 and only need based limits have been utilized by the party.

Overall Terms and conditions

Collateral Securities: (Rs. in Lacs)

Security Owners Value Basis for Date Whether

Description hip Last Mark Realisa valuation existing/
Sancti et ble (Valuatio Fresh
on Value value n Report
of)

pg. 60
IP situated at Plot M/s NA 242.0 217.80 As per 05/10/18 Fresh
No. Unit-I: B- VVSV 0 Valuation
1,2,3,& 4, Industrie report of
Industrial Area “ s LLP Shri
Sandila Phase-II” Ganesh
Village-Raiso, Engineerin
Pargana, Tehsil- g
Jaipur, District- Enterprise
Jaipur (Rajasthan.) s,
Lucknow,
Approved
12800SQM valuer
Total value of Collateral Security 217.80
%age of security to exposure of Rs.475 lakh 45.85%

Personal Guarantee/Guarantors: The entire facilities shall be secured by way of personal

guarantees as under:
(Rs. In lacs)

Name of Relationship Net Means IP Date of CR

Guarantor with Previous Present Previous Present Previous Present
borrower as at as at as at as at
31.03.17 31.03.18 31.03.17 31.03.18
Mr. Ram Partner 181.50 451.01 - --- 28.12.17 04.10.18
Mr. Shayam Partner - 483.24 - 55.57 - 04.10.18
Singh
Mrs. Tripti Partner 278.44 - - - 04.10.18
Sharma
Total 181.50 1222.69 55.57

Standard Covenants as per LA cir. no.102/2016:

I. Mandatory Covenants:

1. The borrower should maintain adequate books of accounts. As per applicable accounting
practices and standards, which should correctly, reflects its financial position and scale of
operations and should not radically change its accounting system without notice to the
Bank.

2. The borrower should submit to the bank such financial statements as may be required by
the Bank from time to time in addition to the set of such statements to be furnished by the
borrower to the bank as on the date of publication of the borrower accounts.

3. In case of default in repayment of the loan/advances or in the payment of the interest

thereon or any agrees instalments of the loan on the due date(s) by the borrower, the Bank

pg. 61
 and /or the RBI will have an unqualified right to disclose or publish the borrower's name
or the name of the borrower/unit and its directors/partners/proprietors as defaulters/willful
defaulters in such manner and through such medium as the Bank or RBI in their absolute
discretion may think fit.

4. The bank will have the right to share credit information as deemed appropriate with Credit
Information Companies (CICs) or any other institution as approved by RBI from time to
time.

5. The borrower should not induct into its Board as person whose name appears in the willful
defaulters list of RBI/CICs. In case such a person is already on the Board of the company,
it would take expeditious and effective steps of removal of that person from its Board.
Nominee directors are excluded for this purpose.

6. In the event of default in repayment to the Bank or if cross default has occurred the Bank
will have the right to appoint its nominee on the Board of Directors of the borrower to look
after its interests.

7. In stressed situation or restructuring of debt, the regulatory guidelines provide for

conversion of debt to equity. The bank shall have the right to convert loan to equity or other
capital in accordance with the regulatory guidelines.

8. Bank will have the right to examine at all times the borrower's books of accounts and to
have the borrower's factories inspected. From time 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 borrower.

9. After provision of tax and other statutory liabilities, unless expressly permitted otherwise,
the bank will have a first right on the profits of the borrower for repayment of amounts due
to the bank.

10. The borrower shall keep the Bank informed of the happening of any event likely to have
a substantial effect on their profit or business: for instance, if the monthly production o
sales are substantially less than what had been indicated, the borrower shall immediately
inform he bank with explanations and the remedial steps taken and /or proposed to be
taken.

11. Effect any change in the borrower's capital structure where the shareholding of the existing
promoter(s) gets diluted below current level or 51% of the controlling stake (whichever is
lower), without prior permission of the Bank – for which 60 days‟ prior notice shall be
required. In case of limited liability partnerships and partnership firm „promoters‟ would
mean managing partner for the purpose of this covenant.

12. The borrower will utilise the funds for the purpose they have been lent. Any deviation will
be dealt with as per RBI guidelines.

pg. 62
 13. Promoter‟s shares in the borrowing entity should not be pledged to any
Bank/NBFC/Institution without our prior consent.
14. For Term Loans (> Rs. 50 Crore) - Covenants [in relation to certain (say three) agreed
parameters as decided by the sanctioning authority] are to be stipuSwargiyad for all term loans and
these are required to be tested annually on the basis of audited Balance sheet (ABS). Penal interest
will be charged in case of breach (any or as mutually agreed between the Bank and the borrower)
of the parameters vis-a-vis values as approved. The penal interest will apply from the day after the
date of ABS, and shall continue till the breach is cured.
Further, it may be specifically indicated that the breach of financial covenant may be
considered by lenders as an Event of Default.
15. Each of the following events will attract penal interest/charges as applicable, at rates
circuSwargiyad from time to time, over and above the normal interest applicable in the account:
a. For the period of overdue interest/instalment in respect of Term Loans and over-drawings
above the drawing power/limit in Fund Based Working Capital Accounts on account of
interest/devolvement of letters of credit/bank guarantee, insufficient stocks and receivables
etc.

b. Delay in submission of stock statements after 10th of the following month.

c. Non submission of Audited Balance Sheet within 8 months of closure of financial year.
d. Non submission/ delayed submission of Follow-up/ Review Data such as QRS/ QMS
information, Project Progress Report etc. wherever stipuSwargiyad, within due date.
e. Non submission of review/renewal data at least one month prior to due date.
f. Non-obtention of External credit risk rating from agency approved by RBI

I Mandatory Negative Covenants:

1. In the event of default, or where signs of inherent weakness are apparent. The Bank shall have
the right to securities the assets charged and in the event of such securitization, the Bank will
suitably inform the borrower(s) and guarantor(s)
The undernoted covenants will be subject to prior notice being given by the borrower and being
agreed by the Bank. If the Bank turns down the borrower‟srequest but the latter still goes ahead,
the Bank shall have the right to call up the facilities sanctioned.
2. FormuSwargiya any scheme of amalgamation or reconstruction.

3. Undertake any new project, implement any scheme of expansion/ diversification or capital
expenditure or acquire fixed assets (except normal replacements indicated in funds flow
statement submitted to and approved by the bank) if such investment results into breach of
financial covenants or diversion of working capital funds to financing of long-term assets.

4. Invest by way of share capital in or lend or advance funds to or place deposits with any
other concern (including group companies); normal trade credit or security deposits in the
ordinary course of business or advances to employee can, however, be extended. Such

pg. 63
 investment should not result in breach of financial covenants relating to TOL/Adj.TNW
and current ratio agreed upon at the time of sanction.

5. Enter into borrowing arrangement either secured or unsecured with any other bank,
financial institution, company or otherwise or accept deposits which increases
indebtedness beyond permitted limits, stipuSwargiyad if any at the time of sanction.

6. Undertake any guarantee or letter of comfort in the nature of guarantee on behalf of any
other company (including group companies).

7. Declare dividends for any year except out of profits relating to that year after making all
due and necessary provisions and provided further that such distribution may be permitted
only if no event of default/breach in financial covenant is subsisting in any repayment
obligations to the Bank.

8. Create any charge, lien or encumbrance over its undertaking or any part thereof in favour
of nay financial institution, bank, company, firm or persons.

9. Sell, assign, mortgage or otherwise dispose of any of the fixed assets charged to the Bank.
However, fixed assets to the extent of 5% Gross Bloc may be sold in any financial year
provided such sale does not dilute FACR below minimum stipuSwargiyad level. (Not
applicable for unsecured loans.)

10. Enter into any contractual obligation of a long term nature or which, in the reasonable
assessment of the Bank, is detrimental to lender‟s interest, viz. acquisitions beyond the
capability of borrower as determined by the present scaleof operations or tangible net worth
of the borrower/ net means of promoters etc., leveraged buyout etc.

11. Change the practice with regard to remuneration of Directors by means of ordinary,
remuneration or commission, scale of sitting fees etc, expect where mandated by any legal
or regulatory provisions.

12. Undertake any trading activity other than sale of products arising out if its own
manufacturing operations. (Not applicable in case finance is for trading activity only.)

13. Permit any transfer of the controlling interest or make any drastic change in the
management set-up including resignation of promoter directors.

14. Repay monies brought in by the Promoters / Directors / Principal Shareholder and their
friends and relatives by way of deposits / loans / advances. Further, the rate of interest, if any,
payable on such deposits / loans / advance should be lower than the rate of interest charged by the
Bank on its term loan and payment of such interest will be subject ot regular repayment of
instalments to term loans granted / deferred payment guarantees executed by the bank or other
repayment obligations, if any, due from the borrower to the Bank.

pg. 64
 15. The borrower shall keep the Bank advised of any circumstance adversely affecting the
financial position of subsidiaries / group companies or companies in which it has invested,
including any action taken by any creditor against the said companies legally or otherwise.

16. The borrower shall deal with our bank / banks under consortium / multiple banking
arrangement exclusively, shall not open current account/s with any other bank without our
prior permission. The borrower's entire business relating to their activity including deposit,
remittances, bills / cheque purchase, non-fund based transactions including LCs and BGs,
Forex transactions, merchant banking, any interest rate or currency hedging business etc.
should be restricted only to the financing banks under consortium/ multiple banking
arrangement.

17. No commission to be paid by the borrowers to the guarantors for guaranteeing the credit
facilities sanctioned by the Bank to the borrowers.

18. Approach capital market for mobilizing additional resources either in the form of debt or
equity.

19. Fund Based Limits both in Working Capital and Term Loan, should be regulated through
as Escrow Mechanism as agreed among banks to avoid any kind of diversion of funds.

pg. 65
 Conclusions
1. Lending is more of an art than an exact science. Taking perfect lending decisions requires
understanding the business of the company and analysing it from multiple perspectives.
While attempt is made to infuse objectivity in the appraisal, sound lending decisions
involves taking subjective view of the proposal. This is where experience and judgment
of the appraiser plays a key role.
2. Since bank lends the funds deposited by the general public with expectations of safety and
security, the lending decisions taken by the banks primarily focus on the safety of funds.
Risk aversion and risk diversion are the main parameters in the bank lending.
3. To remain viable, a bank must earn adequate profit on its investment. This calls for
adequate margin between deposits rates and lending rates. In this respect, appropriate
fixing of interest rates on both advances and deposits is crucial. Unless interest rates are
competitively fixed and margins are adequate, bank may lose customers to their
competitors and become unprofitable.
4. To mitigate risk, banks lend to a diversified customer base. Diversification should be in
terms of geographical location, nature of business etc.
5. Banks achieve diversification by specifying strict exposure norms that limit the exposure
to a particular industry, business group and company.
6. Appraisal of working capital proposal is focused on ascertaining the working capital
requirement of funds. Overfunding will lead to operational inefficiencies while
underfunding could impact the normal operation.
7. Different industries possess different challenges in WC assessment as; the WC varies from
industry to industry.
8. Post sanction processes that include monitoring of accounts, ensuring end use of funds etc.
are as critical as pre sanction appraisal process for the security of funds.
9. The project is rejected without detailed appraisal if it has some features like banker’s report
on the promoters is not satisfactory, promoters are reported to have indulged in illegal and
anti-social activities, financial position of the promoter company is not satisfactory, cost
of the project is unduly high, industry to which a particular unit belongs has low priority
or is included in the negative list of government guidelines etc.

pg. 66
 BIBLIOGRAPHY

Books:
 Varshney, P.N. (2014) Banking Law and Practice (25th Edition), Sultan Chand &
Sons Publication.
 Indian Institute of Banking and Finance, (2014) Bankers’ Hand Book on Credit
Management, Taxmann Publications Pvt. Ltd.
 Mukherjee, D.D. (2010) Credit Appraisal, Risk Analysis and Decision Making (6th
Edition), Snow White Publication Pvt. Ltd.

Websites:
 http://www.rbi.org.in/home.aspx - RBI official website.
 https://www.pnbindia.in/En/ui/Aboutus.aspx
 https://www.pnbindia.in/En/ui/CorporateMission.aspx
 http://www.crisil.com/research/research.jsp

PNB Journals (for internal circulation only):

1. PNB, Annual Report 2016.
2. PNB, Credit Policy 2016.
3. PNB, Risk Rating Policy 2016.
4. Discussion with company mentor.

pg. 67