109829014 case-study

Homework Help
https://www.homeworkping.com/
Research Paper help
Online Tutoring
click here for freelancing tutoring sites
CASE STUDY
DENA BANK, SME CELL, REGIONAL OFFICE, NEW DELHI
PROPOSAL No:-ABC Date:15/07/2011
Proposal received at
Branch
Proposal received at RO Complete Proposal received
at HO
Date: 2-2-2011 Date :18.3.11/17.3.11/
15.3.11
Date
FOR APPROVAL
ASST. GEN. MANAGER
+
1. GIST OF THE PROPOSAL
Proposal for :
1. Renewal cum Enhancement of Working Capital limit from Rs. 55.00

Lacs to Rs. 65.00 lacs.
2. Renewal of existing Negotiation of Bills under L/C Limit of Rs. 50.00
Lacs. (outside MPBF)
3. Renewal of Forward Cover Limit of Rs. 200.00 Lacs.*
2. PROFILE
Name of borrower XYZ
Address
(Regd. Office)
15B Friends Colony (West),
New Delhi-65.
Tel.: 011-41629685, 26933279
Fax.: 011-41598604
Email: xyzapp@vsnl.net
Unit
Unit Address
RZ-3A/11, Tuglakabad Extension,
New Delhi-19.
Branch: Okhla Region: New Delhi
Established on 01.04.2008 Whether appearing in
Dealing with us
since
08.04.2008 Standard B List No
Group:
Yes
(XYZGroup)
Willful Defaulter List No
Line of Activity
Manufacturing
and export of
readymade
garments.
Defaulter / CIBIL List No
Key
Person/Promot
er
Key Person
Sh. Mohit Gupta
Promoter
Multiple /
Consortium
Sole EXISTING PROPOSED
Leader Bank N.A. Asset
Classification
Standard Standard

Our share: 100.00%
Asset
Category as
per CMC
Guidelines
N.A. P1
FB - 115.00 D2K Codes & Description
NFB- % 0.00 Activity 6519 READY MADE
GARMENTS (NON-
BRANDED)
STL- 0.00 Sector 15SME
TL- 0.00 Special Category
Priority No
BSR Code: Basel II Code:
Risk Weightage 100% Provisioning: 0.25%
Credit Risk
Rating
BB
Risk Grade as per ABS
Dt 31.03.09
“Best”
BPLR+1.00%
3. NAMES OF DIRECTORS/ PARTNERS / PROPRIETOR & NET WORTH
(Rs. in Lacs)
Sr. Name Net Worth As on Basis
1 Mohit Gupta 35.23 10.03.2011 As mentioned in
Branch Process
Note
Whether Proprietor / Partner/ Director / Guarantor has
any relationship with any Director or Senior Official (Scale
IV & above) of the Bank. If so give details (Refer to
Guidelines)
No
* CA certificate confirming Net Worth of the Proprietor to be obtained by the Branch before
release of enhanced limit and Branch to ensure that the same is in accordance with Net Worth
as mentioned in the Process Note.
4. Major Shareholders:
S.N Name Status No. of
Share
Percentage

N.A.( Proprietorship Firm)
5. EXPOSURE: [Rs in lacs]
Borrower EXPOSURE Existing Proposed Variation(+/-)
Fund Based 105.00 115.00 +10.00
Non Fund Based NIL NIL NIL
Forward Cover* 4.00 4.00 0.00
Total Credit Exposure 109.00 119.00 +10.00
Investments NIL NIL NIL
Other Commitments NIL NIL NIL
Total Exposure 109.00 119.00 +10.00
GROUP EXPOSURE
Fund Based 122.29 128.84 +6.55
Non Fund Based NIL NIL NIL
Forward Cover* 4.00 4.00 0.00
Total Credit Exposure 122.29 128.84 +6.55
Investments NIL NIL NIL
Other Commitments NIL NIL NIL
Total Exposure 122.29 128.84 +6.55
* (Specified 2% of forward cover limit, which is to be reckoned as part of exposure as per
extant guidelines.)
# The Firm has availed Car Loan of Rs. 4.50 lacs and the present outstanding is Rs.3.63
Lacs. The account is classified as Standard. However, being retail exposure, the present
outstanding is not reckoned in the overall exposure.
** Further the borrower is presently enjoying OD limit against FDR and the outstanding as
on date is Rs.6.52 Lacs. The account is classified as Standard. Since the loan is against FDR
the outstanding is not considered as part of overall exposure in the account.

With a view to ease the liquidity position, we propose a stipulation that the borrower should
liquidate the OD facility before release of the enhanced limits.
6 COMPLIANCE TO PRUDENTIAL / INTERNAL EXPOSURE LIMITS:
(Rs in crores)
As per RBI
guidelines
As per Internal Guidelines
For Corporate For Non
Corporate
Individual 476.96 400.00 15.00
Group 1271.80 800.00 60.00
Whether the limits proposed
exceed the prudential exposure
norms (Individual / Group)
No No No
In case of exceeding, details of
permission from the competent
authority
N.A.
7. BRIEF HISTORY OF SANCTIONS INCLUDING REVIEWS AND ADHOCS
DURING THE PAST TWELVE MONTHS.
Sanctions Dt.
11-07-09 Sanctioned by Dy. Regional Manager(NDR)
02-02-10 Approval for one time use of Negotiation of Bills under
L/C by DGM.

2. PRESENT PROPOSAL:
3.
To permit the following::
I. Status of existing and proposed limits (Rs in lacs)
Facility Existing Outstand
ing as on
DRAW
ING
POWE
R
Irregul
ar/
Overdu
e
amount
Proposed Variatio
n
Limi
t
Margin
(%)
10.01.10 Limit Margin (%)
a) Fund Based
1 PCH cum
FBP
55.00 PC-
10.00%
54.59 55.00 0.00 65.00 PC-10.00% +10.00
2 Neg. of
Bills/LC
50.00 23.56 50.00 0.00 50.00 0.00
Sub-Total (a) 105.0
0
78.15 105.00 0.00 115.00 +10.00
b) Non - Fund
Based
0.00 0.00 0.00 0.00 0.00
Sub-Total (b) 0.00 0.00 0.00 0.00
c) Forward
Cover *
4.00* 1.38 0.00 4.00 0.00
d) Grand Total
(a+b+c)
109.0
0
79.53 0.00 119.00 +10.00
e) Investment
Exposure
0.00 0.00 0.00 0.00 0.00
TOTAL
EXPOSURE
109.0
0
79.53 0.00 119.00 +10.00

*Borrower is enjoying Forward Cover Limit of Rs. 20.0 lacs ( 2% of the limits is reckoned as
part of exposure, as per extant guidelines).
II. SECURITY / DOCUMENATION
a) Prime Security (Rs. in lacs)
Nature Value Basis
Hypothecation of Stocks and Book
Debts
81.57 Paid Stocks as per Stock Statement of
Nov.2010
b) Collateral Security (Rs. in lacs)
Nature of
Security
Type of
Charge
Value Basis / Source Whether eligible
under CRM
(Basel II Norms)
Residential
property
belonging to
Mr. M.C. Gupta
situated at 15B
Friends Colony
(West), New
Delhi-65,
comprising of
418 sq. yards
having
construction on
Ground, First
and Second
Floor.
Equitable
Mortgage
680.26** Valuation Report by Banks’
Panel Advocate Shri K.C.
Talwar, as on 20.02.09.
As per Legal Opinion-cum-
Non-Encumbrance
Certificate by our
Panel Advocate, Shri Kalim
Ur Rehman dated 08-07-09,
the subject property
bears clear title and is
marketable.
No
Total Collateral Security (considering Realisable Value of property) is Rs 680.26 lacs

The said property is also mortgaged to the Bank for Mortgage Loan of Rs. 10.85 Lacs
sanctioned to Sh.. Mahesh C. Gupta, Smt. Shashi Khandelwal, Sh. Vikas Gupta, Sh. Mohit
Gupta –O/S as on 10.01.2010 being Rs. 7.95 Lacs and Machinery Term Loan sanctioned to
M/s xyz Apparels Inc-O/S as on 10.01.2010 being Rs. 5.89 Lacs. The conduct of the
aforesaid accounts are satisfactory as reported by the Branch and both the accounts are
classified as Standard.
** Value of Collateral Security (Rs. In Lacs.)
S. No. Particulars Value
1. Market Value of the Property 867.63
2. Realisable Value of the Property 694.10
3. Less: O/s in Mortgage Loan 7.95
4. Less: O/s in Machinery Loan to xyz Apparels 5.89
Total 680.26
i) Percentage coverage of Collateral Security:
1 Total value of Collateral Security(considering
Realisable value)
Rs. 680.26 lacs
2 Of which our share Rs. 680.26 lacs
3 Total limits proposed from our Bank Rs. 128.84 lacs
4 Collateral Coverage 527.99%
ii) Reasons in case of dilution of security coverage: N.A.
c) Date of creation of Charge: 22.07.2009
d) Date of subsequent modification of charge: N.A.
e) Date of vetting of documents by legal officer /Panel Advocate: 29.07.2009

f) Name of Guarantors & their Net Worth (Rs. in lacs)
Name Relationship Net Worth As of Basis
Mahesh Chand Gupta Father of Prop. 867.00 lacs 30.09.09 Annexure CC
Smt. Shashi
Khandelwal
Mother of Prop. 4.50 lacs 30.09.09 Annexure CC
Vikas Gupta Brother of Prop. 8.04 lacs 30.09.09 Annexure CC
* Net Worth of the guarantors includes their investment in the subject Company and Group
Companies.
*CA Certificate confirming Net Worth of the Guarantors to be obtained by the Branch before
release of enhanced limit and Branch to ensure the same is in accordance with Net Worth as
mentioned in the Process Note.
III. CREDIT RATING & Pricing:
Pricing Existing Proposed
Credit Rating Score Based on ABS [ March ’08 / Mar ‘08] BBB BB
Applicable interest rate as per Credit Rating BPLR+0.75% BPLR+1.00% at
present
Interest rate presently Charged and Proposed As per HO/RBI guideline issued
from time to time.
Concession if any Nil
Interest Rate charged by Lead Bank N.A.
Commission on NFB Limits N.A.
Processing Charges 0.25% of the Sanctioned Limit
- Credit Rating Work Sheet furnished as Annexure 1

a) Factors contributing to the up gradation / slippage in credit rating: Change in the
parameters of Risk Rating and lower profitability of the Firm.
b) Justification for proposing lower rate of interest/concession in charges/process fees:
N.A.
IV. Permissions for Deviations, Issue of NOCs etc & Concessions in service charges :
N.A.
9. Ratifications required for actions, exceeding permitted etc. beyond discretionary
powers: N.A.
10. COMPANY PROFILE (in brief)
M/s XYZ Exim is Proprietary concern of Sh. Mohit Gupta started in April 2008 and is
engaged in manufacturing and export of readymade garments. Sh. Mohit Gupta was earlier
working as a Partner in the Partnership Firm M/s xyz Apparels Inc. along with Sh. Vikas
Gupta and were availing credit facilities since 1999. The Partnership Firm was availing
various credit facilities from which a Machinery Term Loan is still operational having a
current outstanding balance of Rs. 5.89 lacs as on 10.01.2010.
Sh. Mohit Gupta, Proprietor, has a decade long experience in the manufacturing and
exports of readymade garments. They had been earlier sanctioned credit limits on 02.02.09
by DRM, New Delhi of Negotiation of Bills under L/C for one time use of Rs. 100.00 lacs.
The conduct of the account has been satisfactory.
The Firm manufactures Hi Fashion garments like ladies tops, blouses, dresses, skirts and
trousers etc. and exports to various customers in France, Germany and USA. The goods are
currently exported to M/s Palais Oriental on D.A. as well as L/C at 90 days sight basis, rest
all the customers are on L/C-DP on sight basis.
1. Palais Oriental- France
2. Ternay Diffusion Carling- France
3. Nolita NYC Inc.- USA

11. INDUSTRY SCENARIO
a. Industry Categorisation Manufacturing and exports of readymade garments.
b. Demand and supply
situation of the product –
present and projected
(source of information)
Due to slowdown in the Global Economy, mainly
in the EU and USA there has been slackness in the
demand and business. The Govt has by various
measures like increase in Duty Drawback Rates and
decrease in rates of interest in pre and post
shipment credits has helped the Garments Exports
sector to maintain its competitive edge. With now
the Global Economy is looking up, it is expected to
further increase & creates fresh demand as India is
one of the main producers of high quality cotton
garments. The raw material consisting of mill made
and a power loom fabric is readily available in
Delhi through various traders. The firm is located
in the one of the hubs of garments manufacturing in
India and hence essential requirements of skilled
labour and other value added services like
embroidery, dyeing and printing etc. are easily
available. The entire requisite infrastructure is also
in place.
c. Major players & their
market share
Mr. Mohit Gupta, proprietor has over the years
developed products for his own overseas
customers, who send their own designs which are
to be developed by the Firm under various brand
names like ELLYPS, ANJINI, CARLING etc and
therefore the firm would enjoy good clientage. As
the market for this product is good the scope for
increase in sales is immense.

d. Bank’s exposure in this
industry as of Sep. 2009
Rs. 1757.13 lacs
e. NPA position as of Sep.
2009
Rs. 239.07 lacs i.e. 15.74% of the aggregate Bank’s
exposure.
f. Cyclical trends Since the firm will be meeting requirements of
manufacturing mainly producing garments made of
cotton based fabrics they have more orders for the
summer month production and sales of it is mainly
from Oct-May. For the winter season the orders are
less than summers and hence there is a slight cyclic
trend in this business.
g. Govt. policies There are specific Govt Policies for boost in this
sector like Duty Drawback, etc to boost this
industry. Presently with the abolishment of quota
system the Govt policies are favourable for exports
as this sector is one of the major sources of Foreign
Exchange earning for the country. The govt has
also reduced the rate of interest on pre and post
shipment credit availed through Banks’ by way of
Interest Subvention.
h. Whether the product is an
import substitute, if so,
what is the landed cost of
import and what is the
production cost of the
indigenous manufacture
No
i. Availability of raw
materials, labour,
infrastructural advantages
Easily available.

j. What are internal &
external advantages of
the borrower/technology
used
The proprietor is well experienced in this line of
business. The Firm has installed the latest
machinery/ infrastructure etc. for execution of
orders as per the specification of buyers. The Firm
adheres to strict quality control and timely delivery
of shipment/ execution of orders. Since the
proprietor plans to work with the same customers
along with new customers, the firm is assured of
repeated orders from them.
k. What are the weaknesses The trade is very responsive to price factor as the
trade is very competitive from Indian and other
Asian Countries viz. China.
l. What are the relative
opportunities
Now with the revival of the Economy there would
be fresh & new opportunities for export of
readymade garments.
m. What are the threats Stiff competition
n. Any other information Nil
12. PRODUCTION CAPACITY :
Production Capacity Existing Proposed
Installed Firm vide Letter dated 14-12-2009 has informed us
that a lot of production is done in house as well as
from outside on job work basis depending on the
needs of the orders. Hence it is difficult to assess
production and capacity utilisation
Utilised
% Utilisation
13. MARKET CAP : N.A. (not a listed Company)

14. FINANCIAL INDICATORS : (Rs in
lacs)
Audited Audited Estimate Projection
As on 31.03.2008 31.03.2009 31.03.2010 31.03.2011
XYZ
Apparels XYZ Exim XYZ Exim XYZ Exim
i. Capital 22.10 15.62 21.17 26.60
ii. Reserves & Surplus 3.55 5.95 7.40
iii. Intangible Assets 0.00 0.00 0.00 0.00
Tangible Net worth 22.10 19.17 27.12 34.00
Net Working Capital 19.79 17.11 19.80 23.90
Current Ratio 1.29 1.41 1.24 1.29
Net Block 18.16 5.85 19.50 18.36
Net Sales 288.28 312.24 360.00 381.50
- of which exports 262.11 287.61 330.00 350.00
PBDIT 20.35 11.76 17.31 20.14
Gross Profit - PBDT 6.49 4.65 8.31 10.64
Net Profit / Loss – PAT 3.12 3.55 5.95 7.40
Depreciation 3.37 1.10 2.36 3.24
Cash Accruals 6.49 4.65 8.31 10.64
PBDIT/ Gross Sales 0.07 0.04 0.05 0.05
Gross Profit Margin 2.25% 1.49% 2.31% 2.79%
Net Profit Margin 1.08% 1.14% 1.65% 1.94%
TDER (TOL/TNW) 3.14 2.17 3.03 2.40
Interest Coverage Ratio 1.47 1.65 1.92 2.12
Current Assets to Turnover
Ratio
5.40
15.84 6.00 6.36
15. Comments on financial indicators, in brief:
Other Current Assets :
Other Current Assets of Rs 9.38 lacs as of 31.03.09 comprise the following :

(Rs in lacs)
DBK Receivable IGI 8.31
DBK Receivable JNPT 0.64
E.C.G.C. 0.10
VAT 0.33
---------------
Total 9.38
Total Debt Equity Ratio (TDER):
The TDER of the Company stood at 2.17 as of 31.03.09, which is under the norms
considering Bank’s desirable/benchmark TDER of 4:1 (in case of SSI units). The estimated
and projected TDER for the financial year 2009-10 and 2010-11 is found to be 3.03 and 2.40
which is again under the bank’s desirable/benchmark. The same indicates satisfactory long
term solvency of the Borrower.
Current Ratio :
Current Ratio stood at 1.41 as of 31.03.09. The same is above the minimum
desirable/benchmark level of 1.10 in terms of Bank’s Loan Policy guidelines. The Current
Ratio is estimated at 1.24 as of 31.03.10 and is projected at 1.29 as of 31.03.11, which is
above the benchmark level. The same is indicative of satisfactory liquidity position of the
borrower.
Current Asset to Turnover Ratio:
Current Asset to Turnover Ratio is above the desirable level of 1.75.The same is indicative of
satisfactory turnover of stocks.
I.Positive indicators
Sales:
Th Net Export Sales projected for the next two years is as under
2009-10---------Rs. 360.00 Lacs

2010-11---------Rs. 381.50 Lacs.
The Firm projects Export sales of Rs. 360.00 Lacs for the year 2009-10 & Rs. 381.50 Lacs
for the FY 2010-11. The Firm has already achieved sales of Rs. 184.01 lacs till 30-11-09
having achievement index 76.67% & have confirmed orders for Rs. 85.87 lacs as on
10.01.2010 to be shipped out by end of January, L/C of which already been received. We
have further been informed that they are in final stages of negotiation for further orders of
approx. Rs. 50.00 lacs. Thus the Firm is optimistic towards achieving the estimated
Turnover.
II.Negative indicators, if any, with reasons
Unsecured Loans:
Borrower has informed that there was an unsecured loan for Rs. 6.32 lacs from Mr. M.C.
Gupta, father of the prop. during the FY 2008-09. Unfortunately due to his ill health the same
had to be liquidated to him during February- March 2009, consequently the total unsecured
loans fell to Rs. 1.29 as on 31.03.2009 as against projections for Rs. 7.50 lacs. At present
unsecured loan stood at Rs. 2.66 lacs and Branch to obtain and keep on record an undertaking
from the borrower that the same would be continued during the currency of Bank finance.
III.Auditor’s remarks and Management replies. Nil as reported by the Branch.
IV.Contingent Liabilities: Nil.
V.Current performance trends: Rs in lakhs
Estimated Net sales turnover for the FY 2009-10 360.00
Achievement till 30.11.2009 184.01
Pro-rata achievement 76.67%

VI.Comment on current performance trends:
The Firm projects Export sales of Rs. 360.00 Lacs for the year 2009-10 & Rs. 381.50 Lacs
for the FY 2010-11. The Firm has already achieved sales of Rs. 184.01 lacs till 30-11-09
having achievement index 76.67% & have confirmed orders for Rs. 85.87 lacs as on
10.01.2010 to be shipped out by end of January, L/C of which already been received. We
have further been informed that they are in final stages of negotiation for further orders of
approx. Rs. 50.00 lacs. Thus the Firm is optimistic towards achieving the estimated
Turnover.
VII.INTER-FIRM COMPARISON (PEER GROUP)
(In case aggregate limit exceeds Rs.5000 lakhs)
(Rs in lakhs)
Particulars Our borrower Company A Company B Company C
Sales
N.A.
Net Worth
Net Profit
Borrowing
D/E Ratio
Current
Ratio
16.A. ASSESSMENT OF WORKING CAPITAL REQUIREMENTS : (Rs in lacs)
Audited Estimated Projected
31.03.09 31.03.10 31.03.11
Net Sales 312.24 360.00 381.50
1 Total Current Assets 58.73 101.90 105.40
2
Other Current Liabilities (Other than
Bank Borrowing and TL installment
payable within one year) 20.71 9.40 8.90

3 Working Capital Gap (WCG) (1 - 2) 38.02 92.50 96.50
4
Min Stipulated NWC 25% of TCA
excluding Export Receivable. 12.50 20.98 21.35
5 Actual/Projected Net WC 17.75 22.50 26.50
6 Item 3 minus 4 25.52 71.52 75.15
7 Item 3 minus 5 20.27 70.00 70.00
8 MPBF (Item 6 or 7 whichever is lower) 20.27 70.00 70.00
9 Excess borrowing 0.00 0.00 0.00
B. INVENTORY AND RECEIVABLE LEVELS: (Rs in lakh)
Inventory Audited Projected Estimated
Months Value Months Value Months Value
31.03.09 31.03.10 31.03.11
Raw Materials 0.00 0.00 0.00 0.00 0.00 0.00
Work in Progress 0.00 0.00 0.00 0.00 0.00 0.00
Finished Goods 0.83 19.71 2.18 60.00 2.09 60.00
Receivables
- Domestic 0.00 0.00 0.00 0.00 0.00 0.00
- Export 0.36 8.72 0.65 18.00 0.69 20.00
Stores & Spares 0.00 0.00 0.00
Creditors 1.43 17.89 0.56 9.00 0.67 8.50
C. TURNOVER METHOD:
(Rs. In lacs.)
S.No. Last Year
Actual
Estimates Projections
Year Ending 2008-09 2009-10 2010-11
(i) Projected/Accepted Turnover 312.24 360.00 381.50

(ii) Working Capital Funds @ 25%
of (i)
78.06 90.00 95.37
(iii) Of which Bank Finance @20% 62.45 72.00 76.30
(iv) Min. 5% Borrower’s
Contribution
15.61 18.00 19.07
(v) Actual/Projected NWC 17.11 19.80 23.90
D. COMMENTS ON ASSESSMENT OF WORKING CAPITAL WITH
JUSTIFICATION:
The working capital cycle stood at 1.19 months during FY 2008-09 comprising inventory
holding of 0.83 months and receivables at 0.36 months’ sales. The borrower has now
estimated working capital cycle of 2.83 months during FY 2009-10, comprising inventory
holding of 2.18 months and receivables at 0.65 months.
Nature of business of the borrower is seasonal considering the fact that most of the garment
exports to UK and US for Spring-Summer Season takes place during the period between
November to March.
Receivables :
In Balance Sheet Analysis, receivables have been taken as Rs 8.72 lacs as Rs 102.85 lacs out
of them have been excluded since these bills have been negotiated under FLC and
accordingly FLC outstanding is also excluded from Bank Borrowings. The Firm exports on
L/C-90 days DA/DP basis.
Receivables have been estimated at 0.65 months (Rs 18.00 lacs) and projected at 0.69 months
(Rs 20.00 lacs), as Rs 50.00 lacs have been excluded from Bank Borrowings towards export
bills negotiated under FL/C. The estimated and projected holding of receivables is considered
need based and reasonable to achieve the estimated/projected sales turnover.

Sundry Creditors:
The creditors for goods during FY 2008-09 stood at 1.43 months’ purchases (Rs 17.89 lacs)
which is estimated at 0.56 months’ (Rs 9.00 lacs) during FY 2009-10. The main reason for
low creditors’ level during FY 2009-10 is as under :
The Firm has represented that they had received certain goods during the last week of
March’09 for their suppliers, which were under checking as on the Audited date (31.03.09)
and hence remained unpaid as on that date. The same was paid during 1st week of April out
of available PCH limit. The creditors’ level is projected at 0.67 months (Rs 8.50 lacs) during
FY 2010-11, which is almost in line with the creditors’ holding level during FY 2009-10. In
view of the above, the estimated and projected creditors’ holding period is considered need
based and reasonable.
Based on the accepted level of holding and receivables, the working capital limit works out
to Rs 70.00 lacs under Modified MPBF Method during FY 2009-10 and FY 2010-11.
However, the Drawing Power, as of 31.03.10, based on the accepted holding levels as above,
works out as under:
Particulars Amount (Rs in lacs) Margin Drawing Power
(Rs in lacs)
2009-10 2010-11
10.00%
2009-
10
2010-11
Stocks 60.00 60.00
45.90 46.35Less: Sundry Creditors 9.00 8.50
Paid Stock 51.00 51.50
Receivable 18.00 20.00 10.00% 16.20 18.00
Total 62.10 64.35
Say
62.00
Say
65.00

The D.P. works out to Rs 62.00 lacs during FY 2009-10 and Rs 65.00 lacs during FY 2010-
11. Since only around tow and half months is left before the end of the current financial year,
the limits, based on the accepted projections of FY 2010-11 works out to Rs 65.00 lacs.
Accordingly and in line with the Branch recommendation, we recommend for enhancement
in working capital limits by way of PCH-cum-FBP limit from Rs 55.00 lacs to Rs 65.00 lacs.
However, the operative limit would be capped at Rs. 62.00 lacs during FY 2009-10. The full
limits i.e. upto Rs. 65.00 lacs may be released only during FY 2010-11, subject to availability
of D.P.
Renewal of Negotiation of Bills under L/C Limit :
The borrower is presently enjoying Bills Negotiation (under L/C) limit of Rs 50.00 lacs,
outside the overall MPBF, which it has requested for continuation. The borrower utilizes PC
limits basically for stocking purpose, which is evident from the month-wise position of
stocks is as under :
Date of Stock Statement Total (Rs in lacs)
31.07.08 26.88
31.08.08 57.22
30.09.08 75.53
31.10.08 93.84
30.11.08 109.12
31.12.08 92.85
31.01.09 102.25
28.02.09 75.60
31.03.09 19.17
30.04.09 90.67
31.05.09 80.25
30.06.09 65.20
31.07.09 51.78
31.08.09 62.40
30.09.09 63.75

31.10.09 66.44
30.11.09 90.25
In view of the above, the borrower is unable to utilize the FBP limit. The borrower requires
separate Bills Negotiation Limit for negotiation of the Bills under L/C, which is outside
overall MPBF.
The overall record has been satisfactory and no bills have been returned unpaid. Accordingly,
Branch has recommended for renewal of the Bills Negotiation under L/C limit of Rs 50.00
lacs and we endorse the Branch recommendation.
17. ASSESSMENT OF TERM LOAN/ DEFERRED PAYMENT GUARANTEE:
N.A.
18. ASSESSMENT OF NON-FUND BASED LIMITS
A. LETTER OF CREDIT (Rs in lakh)
For purchase of raw materials/stocks
N.A.
Average time taken from date of L/C till the date of shipment (Days)
Average time taken from date of shipment to the date of retirement of
the bill (Days)
(A)
Average rotation of letter of credit in one year (360/A)
(times B)
Projected Purchase
Level of L/C limit =
{Projected Purchase/Import during the year}/B
Say
Our share
Whether as per Cash Flow statement there will be adequate cash
accruals to retire the bills under L/C on first presentation/due dates.

Names of the Suppliers/beneficiaries in whose favour L/Cs to be
opened
Whether credit reports on the suppliers obtained from
bankers/outside agencies (especially in case of DA L/Cs)
B. BANK GUARANTEE : N.A.
1. Views/comments on the conduct of the account
A. Comments on utilisation of both fund and Non fund based limits
Whether stock statements are submitted every month. If not
submitted regularly mention the date of last stock statement
Yes, 30.11.2009
Whether operations are within sanctioned limits Yes
Whether limits are utilised optimally /satisfactorily Yes
Frequency of inspection of stocks. Date of the last inspection
and irregularity/adverse features, if any observed and steps
taken to set right the same.
30.10.2009, by Sr.
Manager.
No major/adverse
observations.
Insurance cover - Whether securities adequately insured and
in force
Yes
All Policies are
obtained directly by
the Branch from
Oriental Insurance
Co. Ltd.
Whether terms and conditions of previous sanction have been
complied with, if not, specify time frame to complete (with
explanation) & permission obtained from competent authority
Yes

Whether certificate from Pollution control Board has been
obtained.
Branch has reported
that the Firm falls in
category F of PC
Band hence
certificate is not
applicable.
Whether the borrower is facing any litigation from banks
/FIs/creditors/ Govt. Deptt./ Statutory bodies etc., if so, state
in brief.
None
In case of consortium advance, whether our bank is getting
proportionate share of business
N.A.
Additional / temporary limits sanctioned subsequent to the
last regular sanction and whether same is liquidated on due
date or not
Additional FBNLC
limit of Rs. 100.00
lacs sanctioned by
DGM,NDR on
02.02.2009 and
liquidated on time.
Outstanding amount of unhedged Foreign Currency
Exposures
FC
INR
Rs in Lakhs
Particulars 31.03.2009 31.11.2009
Sales – Actual 312.24 184.01
Purchases 150.46 94.14
Credit Summation 247.72 180.13
Debit Summation 258.09 223.02
Minimum Balance 0.01 14.26
Maximum Balance 57.97 57.98
LC Devolved -
Number
N.A. N.A.

Amount
Guarantee Invoked:
Number
Amount
N.A. N.A.
Whether sales and purchase figures match with the
turnover in the account
Satisfactory.
B. Income value of account (Rs. in Lakh)
Last year
08-09
Current year
09-10
Value of account (Deposits)
Process Fee recovered 0.28 0.26
Interest earned 6.67 3.29
Exchange income
Commission earned
Income from Third party products / insurance
Others (Lead Bank Fee, Commitment fee, Penal
Interest, Syndication fee)
Total
Turnover in Foreign Exchange Business 179.00 219.00
Deposits placed (Owner Directors/ partners or
Family Members, Relatives & Friends)
- Current 0.40 0.50
- Savings 1.50 1.50
- Term Deposits 20.00 20.00
a. Adverse features affecting credit decision and action proposed (including non-
compliance to terms and conditions of sanction and present position)
Sr Pending Matters Present position Steps taken / Remarks

No
N.A.
b. MAJOR INSPECTION / AUDIT IRREGULARITIES POINTED OUT IN THE
LAST INSPECTION REPORT
Brief details of irregularities
reported
Compliance Status
1 Internal
Inspectors
Nil as reported by Branch.
2 RBI-AFI
Inspectors
(i)Credit Rating 2008-09 not
on record.
(ii)Audited Balance Sheet 08-
09 not on record.
Credit Rating carried out as
per B/S 31.03.2009.
Audited B/S obtained and
kept on record.
3 Statutory
Auditors
Nil as reported by Branch.
4 Stock Auditors
5 Credit Auditor
c. Directors’ name figuring in RBI/ Wilful Defaulters’ / CIBIL / SAL – ECGC list and
comments thereon. Impact on taking exposure where names are appearing in the
defaulters list: Nil
d. Position of statutory dues and incentives receivables
Provident Fund, ESI and Superannuation contribution paid upto N.A.
Wages and salaries paid upto 31.10.2009
Sales Tax paid upto N.A.
Service Tax paid upto N.A.
Income Tax Assessment completed upto and for the year ending # N.A.
Advance Tax paid for the year ending 2010

Excise duty paid upto N.A.
Municipal Tax, Octroi etc. N.A.
Incentives from the Government and other agencies N.A.
Disputes not acknowledged as debts N.A.
Contingent Liabilities (Likely to turn into Liabilities) N.A.
Reconciliation of Debtors/ creditors
*Before release of enhanced limit Branch to obtain C.A. certificate and ensure that the
borrower has paid all its’ Statutory Dues upto date.
e. Group dealings/experience & desirability of further exposure: N.A.
f. RISK ASSESSMENT
Risk Risk Factor Risk Mitigation
Industry/Activity Risk Fluctuations in the Forex
market.
The Firm hedges by
Forward Contract.
20. COMPLIANCE OF RBI / BANK LOAN POLICY GUIDELINES :
The Proposal is as per RBI/ Bank’s Loan Policy Guidelines.
21. MODIFICATION IN EXISTING TERMS OF SANCTION IF ANY: N.A.
22. VIEWS/RECOMMENDATIONS OF THE CREDIT COMMITTEE:
In terms of HO circular No.DCC/GM-Cr/CAD/1249/08 dated 02.06.08, a meeting of the
Credit Committee was held on 07.01.10 at Regional Office, New Delhi.

The Committee cleared the proposal and suggested as under :
i. As per the estimates in CMA data submitted by the Borrower the D.P. stood at the
level of Rs. 62.10 lacs during FY2009-10 and Rs.64.30 thereafter. Accordingly the
operative limit can be capped at Rs. 62.00 lacs during FY 2009-10. The full limits
i.e. upto Rs. 65.00 lacs may be released during FY 2010-11 subject to the availability
of the Drawing Power.
ii. It is also being observed that at the time of last sanction/renewal Capital was
estimated at the level of Rs. 22.50 lacs for FY 2008-09, whereas as per the Audited
B/S of 31.03.2009 Capital stood at the level of Rs. 19.17 lacs.
Therefore it is being stipulated that the Firm has to introduce fresh Capital or
Unsecured Loan of Rs. 3.00 lacs before release of the enhanced limits.
23. DISCRETIONARY POWER FOR SANCTION AND FOR APPROVAL OF
DEVIATION, IF ANY:
The credit proposal falls within the overall discretionary powers of Asst. Gen. Manager-
NDR.
24. RECOMMENDATION:
 It is an Export Credit Account falling under SME sector.
 Though the Firm was established in April 2008, however the Proprietor, Sh. Mohit Gupta is
associated with the Bank since 1999 by virtue of being a Partner in M/s xyz Apparels Inc.
 Overall conduct of the a/c is Satisfactory, as reported by the Branch. One Time Additional
FBNLC limit of Rs. 100.00 lacs sanctioned by DGM, NDR on 02.02.2009 and liquidated on
time.

 The family members of the Proprietor are maintaining substantial deposit in the Branch.(O/s
as on Nov. 2009 Current A/c 0.50 lacs, Saving A/c 1.50 lacs, Term Deposits 20.00 lacs).
 Though the borrower has not offered any fresh collateral, however, extension of Equitable
Mortgage over the existing property would result in the coverage of 527.99%, which is
satisfactory.
 Overall financial indicators of the borrower are satisfactory as per Bank’s Policy Norms.
 Branch has recommended the proposal, as requested by the borrower.
In view of the foregoing and based on Branch recommendation, we recommend following
subject to the terms and conditions enclosed as per Annexure II
Release of the limits would be as under :
i. The operative limit can be capped at Rs. 62.00 lacs during FY 2009-10. The full limits
i.e. upto Rs. 65.00 lacs may be released during FY 2010-11 subject to the availability of
the Drawing Power.
ii. It is also being observed that at the time of last sanction/renewal Capital was estimated at
the level of Rs. 22.50 lacs for FY 2008-09, whereas as per the Audited B/S of 31.03.2009
Capital stood at the level of Rs. 19.17 lacs. Therefore it is being stipulated that the Firm
has to introduce fresh Capital or Unsecured Loan of Rs. 3.00 lacs before release of the
enhanced limits.
Put up for approval.
Deepika Kansal J.D. Sinha Devi Singh Chhonkar
Officer (SME) Sr. Manager (SME) Chief Manager-Credit

Annexure 1
FOR EXISTING BORROWERS AND NEW BORROWERS FOR EXISTING
UNITS.
FOR FUND BASED LIMITS ABOVE RS.10.00 LACS
CREDIT RATING REPORT
Branch and Region Okhla
Borrower M/s XYZ Exim
Sanctioning Authority Asst. General Manager
Date of Sanction /
Renewal
Renewal-cum-enhancement
Credit Rating as on 26.12.2009
Analysis for Credit
Rating done based on
the Audited /
Unaudited Balance
Sheet and Profit and
Loss A/c of the
borrower for the period
ending
Audited Balance Sheet as of 31.03.09
Credit facility enjoyed
Nature of Arrangement
Sanctioned limit
(Rs in lacs)
Outstanding as on
10.01.2010
i.
Fund Based
115.00 78.15
ii.
Non Fund Based
0.00 0.00
TOTAL ( i + ii ) 115.00 78.15
Marks secured Credit Risk Grade Interest Slab

Rating
95%+ AAA High - Prime BPLR
90% - 94% AA
Medium -
Prime
BPLR + 0.25
85% - 89% A Low - Prime BPLR + 0.50
80% - 84% BBB Excellent BPLR + 0.75
75% - 79% BB Best BPLR + 1.00
70% - 74% B Better BPLR + 1.25
65% - 69% C Very Good BPLR + 1.50
60% - 64% D Good BPLR + 1.75
55% - 59% E Satisfactory BPLR + 2.00
Non-Performing
Assets
NPA – SS Sub-standard
Interest to be
calculated at agreed
rates but not to be
charged
NPA - D1 Doubtful - 1
NPA - Loss Loss
Asst. General Manager

SUMMARY SHEET OF CREDIT RATING MODEL FOR EXISTING
BORROWERS AND NEW BORROWERS FOR EXISTING UNITS FOR FUND
BASED LIMITS ABOVE RS.10.00 LACS
Parameters / Risk factors to be rated
for existing projects /units
Maximum
score
Max.score
Applicable
parameter
Score allotted
1
External risk /Gov. Policy Risk/
Environmental risk
5 5 3
2 Industry / Business / Sector risk 20 20 11
3 Management Risk 15 15 13
4
Security (Collateral) 5 5 5
5
Income value to the Bank 5 5 3
6
Past Operating performance vis-a-vis
projections and financial position
represented by ratios/trends
40 37 33
7 Conduct of the Account 10 8 8
TOTAL MARKS 100 95 76
% age of Marks Scored 77.55%
SUMMARY SHEET OF CREDIT RATING MODEL FOR EXISTING
BORROWERS AND NEW BORROWERS FOR EXISTING UNITS FOR FUND
BASED LIMITS ABOVE RS.10.00 LACS
Parameters / Risk factors to be rated
for existing projects /units
Maximum
score
Max.
score
Score
allotted

Applicable
parameter
1
External risk /Gov. Policy Risk/
Environmental risk
5 5 3
2 Industry / Business / Sector risk
2.1 Intensiveness of Competition 2 2 1
2.2 Presence of substitute etc. 2 2 1
2.3 Barriers to entry for new players 1 1 0
2.4 Business returns 3 3 0
2.5
Cyclicality in earnings, subject to
vagaries of nature technological
obsolescence
2 2 1
2.6 Technology adopted by Borrower 3 3 2
2.7
Dependence on a few suppliers for raw
material
1 1 1
2.8
Borrower’s dependence on a few
customers
1 1 1
2.9
Foreign exchange component of total
business
1 1 1
2.10
Whether borrower dealing in perishable
commodity
1 1 1
2.11 Demand/supply gap in the business 3 3 2
Total 20 20 11
3 Management Risk
3.1 Ownership pattern 2 2 0
3.2 Past track record of the Management: -
a. Sales 1 1 1
b. Financial Discipline 1 1 1
c. Furnishing Information 1 1 1

3.3 Quality of the management personnel 1 1 1
3.4 Experience of the Management 2 2 2
3.5 Payment record with banks 2 2 2
3.6 Financial conservatism 1 1 1
3.6 Market standing / credibility 2 2 2
3.7 Support from Group Companies 1 1 1
3.8 Succession risk/plan 1 1 1
Total 15 15 13
4 Security (Collateral) 5 5 5
5 Income value to the Bank 5 5 3
6
Past Operating performance vis-a-vis
projections and financial position
represented by ratios/trends
6.1
Achievements of borrower’s projections
of sales / gross receipts
5 5 5
6.2 Current Ratio 5 5 5
6.3 Trend analysis - variation in Current ratio 1 1 1
6.4 Interest Coverage ratio 5 5 3
6.5 Current Asset to Turnover Ratio 3 3 3
6.6 Debt Equity Ratio 5 5 5
6.7
Trend analysis - variation in Debt Equity
ratio
2 2 0
6.8 Achievement of Profit Projections 3 3 2
6.9
Profitability to Net worth (Net Profit/Net
worth) i.e. Return on Net Worth
2 2 2
6.1 Profitability to sales (Net profit/sales) 2 2 0
6.11
Contingent Liabilities of the Borrower
(Total contingent liabilities to Tangible
net worth)
2 2 2
6.12 Qualifications in Audit Report of the 1 1 1

borrower’s Balance Sheet and Profit &
Loss A/c.
6.13 Diversion of funds - No diversion 2 2 2
6.14 Guarantee to Group Companies 1 1 1
6.15 Investment in Group Companies 1 1 1
Total 40 40 33
7 Conduct of the Account
7.1
Timely submission of stock and/or Book
debts statement
1 1 1
7.2
Compliance with terms and conditions of
sanction
2 2 2
7.3 Timely renewal/review of the account 2 2 2
7.4
Regularity/irregularity of Term Loan
A/c.
1 0 0
7.5
Regularity / irregularity of the working
capital facilities
2 2 2
7.6 Submission of FFR-I & FFR-II 1 0 0
7.7 Conduct of the Group Account, if any 1 1 1
10 8 8
TOTAL MARKS 100 98 76
% age of Marks Scored 77.55%
Annexure II
Detailed Terms & Conditions
RO/NDR/SME/24/10 12.01.2010
Borrower’s Name : M/s XYZ Exim
BRANCH : Okhla
Nature of Arrangement : PCH-cum-FBP

Sanctioned Limit : Rs.65.00 lakhs (Rs. Sixty Five lacs only.)
Margin : 10% for PCH
Rate of Interest : As per Ho guidelines
(Subject to change as per RBI Directives or bank's policy from time to time)
TERMS AND CONDITIONS (For PCH)
Security :
a. Hypothecation of stocks of raw materials, semi-finished goods and finished
goods such as fabric, ready-made garments etc, manufactured by the unit for
export purpose etc.
b. The advance under pre-shipment credit to be covered under Whole Turnover
Packing Credit Guarantee of ECGC granted to the Bank as a whole and monthly
premium to be recovered from the borrower wherever applicable and remitted to the
respective Regional/ Branch Office of ECGC.
2. Other Terms and Conditions
a. Lodgment of original irrevocable Letter of Credit/firm contract with the
Branch and our rubber stamp to be affixed on it. L/C should not be restricted to
other bank.
b. The goods to be fully insured against fire, theft, burglary, pilferage,
earthquake, flood, SRCC with Bank clause Place of storage is to be mentioned in
the Insurance Policy. Transit Risk Policy to be obtained if goods are to be
transported to a different centre for shipment.
c. Pre-shipment advance to be liquidated within specified period by negotiation/

purchase/discounting of export bills.
d. The borrower shall submit packing credit hypothecation stock statement every
month so that periodical inspection can be carried out by the bank.
e. Where the goods are given for processing "No Lien Letter" to be obtained from
the processors. Insurance policy including transit risk to cover stocks sent to 3rd
party for processing be obtained.
g. Packing credit for shipment to buyers in the countries placed under Restricted
cover by ECGC to be disbursed only with the prior permission from ECGC.
h. Preshipment advance will be treated as Cash Credit advance if the export does
not take place at all. Penal rate to be charged as per RBI/HO circulars issued from
time to time,
i. Packing credit to be allowed for a period not exceeding 180 days or till such
date shipping documents are tendered in compliance of terms of L/C order,
whichever is earlier. Due date diary to be maintained to monitor timely submission
of documents. Extension beyond 180 days but upto 360 days can be permitted by
concerned General Manager after satisfying about the need for the same. In
exceptional cases extension of shipment beyond 360 days can be permitted after
obtaining approval from ECGC.
j. The advance will be disbursed in phases depending upon cycle of
production/procurement period and delivery schedule. Application to be obtained
from the exporter client stating FOB value of the goods which will be initially
financed. Freight & insurance premium amount would be disbursed at the time of
shipment.
k. Bank’s name plate stating "GOODS HYPOTHECATED TO DENA BANK,
OKHLA BRANCH’ should be prominently displayed where goods are stored.
l. No Packing Credit to be disbursed against the goods received under DA Letter
of Credit.
m. Packing credit advances are to be liquidated only from the proceeds of foreign
bill purchased/discounted/negotiated. Repayment of packing credit advance from
local funds shall attract interest at commercial rate prevailing at the time.
q. In case of failure by the borrower in complying with the terms and conditions

as stipulated above, advance may attract charging of interest at commercial rates.”
Standard terms and conditions for Foreign Bills Purchase/ discounted
(DA/DP) (under L/C / confirmed order)
1. Security :
a. Export Bills with a maximum tenor of 180 days drawn on overseas buyers
accompanied by shipping documents like complete set of Bill of Lading /
Consignee copy of Airway Bill, Invoice, Drafts and other documents evidencing
the shipment of goods manufactured by the unit.
b. The party should obtain a comprehensive policy of ECGC (shipment and
contract). Monthly shipment made under the above policy to be declared to ECGC
every month.
2. Other Terms and Conditions
a. Advances to be covered under whole turnover post shipment guarantee of
ECGC taken by the Bank and monthly premium thereon will be paid by the
concerned branch to respective Regional/Branch office of ECGC. [Premium to be
paid by Branch where Exporter is maintaining the account.]
b. In case of Bills drawn under firm contract/order drawing should be allowed to
the extent of credit limit approved for each buyer by ECGC.
c. In case of bills negotiated under letter of credit, all documents as per terms
of L/C must be submitted at the time of negotiation of bills. Export bills should be
drawn strictly in conformity with LC terms.
d. Branch to ensure that documents tendered are clean. In case of discrepancies
and if the amount received is under reserve, it be held in margin/reserve and may
be released only against the guarantee signed by the firm and the proprietor in his
personal capacity. .
f. ECGC to be informed of the limits sanctioned by the Bank within 30 days of
sanction.
g. Proceeds of the Foreign Bills Purchased/Discounted/negotiated to be credited

to Packing Credit account if any Packing Credit has been disbursed against the
goods exported under such bills.
h. In case export proceeds are not received as per tenor, penal rate of interest as
per HO circular to be charged.
NOTE: while advising the terms of sanction to the borrower please incorporate the
details of penal rates.
Forward Contract Limit – Rs.200 lac
OTHER GENERAL TERMS AND CONDITIONS
1. The prescribed documents to be executed by the Firm and Proprietor, Sh.
Mohit Gupta, in his personal capacity.
2. The advance to be guaranteed by Shri Mahesh Chand Gupta & Smt. Shashi
Khandelwal and Sh. Vikas Gupta.
3.All the assets charged to the Bank to be fully insured against fire, SRCC, fIood,
breakdown of machinery with bank clause.
4. The unit to submit stock statement every month latest by 15th of the next
month.
5. The advance is restricted to manufacturing activities.
6. Interest rates are subject to revision as per RBI/HO guidelines or as decided by
consortium.
7. Branch to ensure that there are no inter-firm transfer of funds except for
genuine sales transactions.
8. Bank will have a right to examine all the times Firm's (borrowers) books of ac-
counts, assets etc. and have the Firms workings and operations examined from
time to time by the officers of the Bank or technical experts and/or management
consultants and/or C.A and fees to be borne by the Firm
9. Bank may charge penal rate of interest over and above the rate applicable under
the following circumstances:-
a. delay in submission of stock statement.

b. delay in submission of renewal papers.
10. Guidelines issued by HO/RO from time to time are to be strictly adhered to.
11. The Borrower be informed of the terms and conditions of sanction and the
confirmation be obtained to the effect thereof in writing.
12. Date of reconsideration - One year after sanction.
13. In case of Credit Limit of Rs. 25 lakhs and above there will be mandatory audit
of annual accounts by Chartered Accounts and the audited accounts of the
borrower should be furnished to the Bank latest by 31st October of each year with
reference to the position as at 31st march of the same year.
14. Process / Upfront Fee @ 0.25% of the sanctioned limit for Working Capital limit
to be charged at applicable rate p.a. plus applicable service tax.
15. Party to pay Supervision Charges @ 0.05% plus Service Tax, subject to maximum
of s 50000/- per quarter.
16. There will be mandatory audit of annual accounts by Chartered Accounts and the
audited accounts of the borrower should be furnished to the Bank latest by 31st
October of each year with reference to the position as at 31st march of the same year.
17. Stock audit may be conducted if bank so desires. The charges for the audit to be
borne by the borrower. Reports will be obtained and examined and necessary action
will be taken as may be decided by the Bank.
18. Plant and Machinery, equipments, furniture and fixtures to be taken as
additional security to cover both the fund based and non-fund based limits.
19. The Borrower to give an undertaking that they are not a defaulter to any Bank /
Financial Institution and has not any relation with any Director of the Bank.
20. Bank reserves the right to modify /alter terms and conditions of sanction and
cancel the limit at any time without assigning the reason
21. The borrower shall undertake that in case of project cost over-run, it shall arrange
funds from its’ own sources to meet the shortfall.

22. Date of reconsideration – one year after sanction. The borrower to submit the
review/renewal papers 2 months before the due date of sanction/approval.
23. The Borrower be informed of the terms and conditions of sanction and the
confirmation be obtained to the effect thereof in writing.
24. Branch to obtain an undertaking from the borrower that it would maintain its’
Capital/ Net Worth as per CMA projections.
25. The documents to be vetted by Advocate on Bank’s Panel (at the borrower’s cost)
to ensure that the documents are as per terms of sanction, valid and enforceable. A
copy of the Vetting Certificate should be kept on Branch record.
26. As per HO circular No.346/42/99 dated 22.11.1999 the following clause should be
incorporated in the sanction letter addressed to the borrower: “ In case you commit
default in repayment of the CC/Loan/Overdraft facilities/additional interest or any
other dues that may arise out of the loan amount /financial assistance, the bank
reserves the right to disclose or publish the names of the directors of the company as
defaulters, in such a manner and through such media as the Bank/RBI in their absolute
discretion may think fit.”
27. As per HO circular No.346/42/99 dated 22.11.1999, 54/1/2004 dt.22/5/2004,
consent letter to be obtained from the borrower for disclosing or publishing their
names in the event of borrower becoming defaulters. The said clause should be
incorporated as last clause of the respective document:
“ I/We hereby agree as pre-condition of the loan/advance( fund based and non-fund
based ) given to me/us by the Bank that in case I/We commit default in the repayment
of loan/advance or in the repayment of interest thereon or any of the agreed installment
of the loan on due dates the Bank and/or RBI will have an unqualified right to disclose
or publish my/our name or the name of the company/firm/unit and it’s
directors/partners/proprietor as defaulter in such manner and through such media as the
bank or RBI in their absolute discretion may think fit.”
28. Declaration about no pending court cases (as per H.O. circular no. 351/02/2003) to
be obtained and kept on Branch records.

29. An undertaking to be obtained from the borrower, that the Directors/Guarantors are
not, in any way, connected with any senior official (Scale-IV and above) of the Bank.
30. Commitment Charges: The utilization of limit should be made within 3 to 6
months of date of communication of sanction to the party for working capital. If
average utilization is less than 75% in case of working capital facilities, commitment
charges will be levied @ 0.50% p.a. at quarterly rests on the sanctioned amount.
31. Further an undertaking is to be obtained from the borrower that it will not effect
any change in neither management nor declare/pay dividend nor encumber any of the
securities charged to the Bank, without the express consent of the Bank.
32. Branch to submit certificate of compliance of terms and conditions, as per
prescribed format, to Regional Office.
33. General Undertaking as per H.O. Circular No. 54/1/2004 dated 22.05.04 to be
submitted by the borrower.
34. Branch Official should visit the site/property offered as collateral and cross-check
its’ Valuation/Title/Marketability etc. through discrete / market enquiries and ensure
that the valuation done by the valuer is justified. Significant divergence observed, if
any, vis-à-vis Reports submitted by Bank’s Approved Valuer and Panel Advocate
should be immediately brought to the notice of the sanctioning authority.
35. All legal expenses/other expenses including incidental charges to be incurred
during the course of operation in the account and for completion of documentation
formalities will be borne by the borrower
36. Declaration to the effect that no court cases are pending against the company, its
directors and the group concerns (as per H.O. circular no. 351/02/2003) to be obtained
and kept on Branch record.
37. Compliance of terms and conditions should be sent to RO in terms of H.O. circular
no.253/41/2002 dated 30.11.2002.
38. The borrower to furnish an undertaking that, where it transpires that the borrower
has given a false declaration, the Bank shall forthwith recall the loan.

39. The Company to submit full details of all the items of Statutory Dues along with
CA Certificate of latest date and Branch to ensure that there are no over dues.
40. Consent clause to be submitted by the borrower & guarantor permitting the Bank
for submission of credit information to Credit Information Bureau (India) Ltd.
41. The Branch to ensure that all the suggestions as suggested by the advocate in Non
Encumbrance Report / Legal Search Report ought to be complied before disbursement.
The Branch Head should personally ensure that if the proposed mortgagor acquired the
title from Government then Non Encumbrance Report / Legal Search Report should be
at least 30 years and if the proposed mortgagor acquired the title from sources other
than the Government then Non Encumbrance Report / Legal Search Report should be
at least 13 years. The Branch also obtains all the documents (chain of documents) in
original which are mentioned in the Non Encumbrance Report / Legal Search Report.
42. If the last documents of the mortgaged property is Lease Deed / Perpetual Lease
Deed then the Branch Manager personally go through the Lease Deed / Perpetual
Lease Deed and before creating mortgage obtain the stipulated permission from the
lessor and if there is any redemption clause (in case of sale of the property the lessor
have the first right in some percentage of the difference between the premium value
and market / sale value) in the Lease Deed / Perpetual Lease Deed, then valuation of
the property should be computed according to redemption clause.
Nature of
Security
Type of
Charge
Value Basis / Source Whether
eligible
under
CRM
(Basel II
Norms)

The said property is also mortgaged to the Bank for Mortgage Loan of Rs. 10.85 Lacs
sanctioned to Sh.. Mahesh C. Gupta, Smt. Shashi Khandelwal, Sh. Vikas Gupta, Sh. Mohit
Gupta –O/S as on 10.01.2010 being Rs. 7.95 Lacs and Machinery Term Loan sanctioned to
M/s xyz Apparels Inc-O/S as on 10.01.2010 being Rs. 5.89 Lacs. The conduct of the
aforesaid accounts are satisfactory as reported by the Branch and both the accounts are
classified as Standard.
Residential
property belonging
to Mr. M.C. Gupta
situated at 15B
Friends Colony
(West), New
Delhi-65,
comprising of 418
sq. yards having
construction on
Ground, First and
Second Floor.
Equitable
Mortgage
Non-Encumbrance
Certificate by our
the subject property bears
clear title and is marketable.
No

SPECIAL CONDITIONS ON CASE TO CASE BASIS
1. Plant and Machinery, equipments, furniture and fixtures to be taken as
additional security to cover both the fund based and non-fund based limits.
2. C.A. certificate confirming Net Worth of the Proprietor and Guarantors to be
obtained by the Branch before release of enhanced limit and Branch to ensure that
the same is in accordance with Net Worth as mentioned in the Process Note.
3. With a view to ease the liquidity position, we propose a stipulation that the
borrower should liquidate the OD facility before release of enhanced limits.
4. The Operative Limit can be capped at Rs. 62.00 lacs during FY 2009-10. The
full limits i.e. upto Rs. 65.00 lacs may be released during FY 2010-11 subject to
the availability of the Drawing Power.
5. It is also being observed that at the time of last sanction/renewal Capital was
estimated at the level of Rs. 22.50 lacs for FY 2008-09, whereas as per the
Audited B/S of 31.03.2009 Capital stood at the level of Rs. 19.17 lacs. Therefore
it is being stipulated that the Firm has to introduce fresh Capital or Unsecured
Loan of Rs.3.00 lacs before release of the enhanced limits.
Deepika Kansal J.D. Sinha Devi Singh Chhokar
Officer (SME) Sr. Manager (SME) Chief Manager
Date: Date: Date:

Annexure 3
FINANCIAL INDICATORS
(Rs in lacs)
Audited Audited Estimates Projection
As on 31.03.2008 31.03.2009 31.03.2010 31.03.2011
XYZ
Apparels
XYZ Exim XYZ Exim XYZ Exim
A. CURRENT
LIABILITIES
i. Bank Borrowings 46.01 20.27 70.00 70.00
iii. Term Loan
installments due
within one year. 1.00 0.64 2.70 2.60
iii. Deposits/Unsecured loans
iv. Sundry Creditors 22.36 17.89 9.00 8.50
v. Provision 0.00 0.00 0.00 0.00
vi. Other current liabilities 0.00 2.82 0.40 0.40
Total (A) 69.37 41.62 82.10 81.50
B. TERM LIABILITIES
a) Term Loan 7.51 3.50 10.80 8.20
b) Unsecured Loan 11.99 1.29 2.38 1.06
Other Term Liabilities 0.00 0.00 0.00 0.00
Total Term Liability 19.50 4.79 13.18 9.26
C. NET WORTH
i. Capital 22.10 15.62 21.17 26.60
ii. Reserves & Surplus 3.55 5.95 7.40
Total (I + ii) 22.10 19.17 27.12 34.00

Total (C) 22.10 19.17 27.12 34.00
Revaluation Reserve 0.00 0.00 0.00 0.00
Net worth Excluding
Revaluation Reserve 22.10 19.17 27.12 34.00
D. TOTAL LIABILITIES 110.97 65.58 122.40 124.76
(A+B+C)
E. CURRENT ASSETS
i. Cash & Bank Balance 3.01 19.34 17.30 17.40
ii. Receivables – Domestic
- Export 17.60 8.72 18.00 20.00
iii. Inventory 53.41 19.71 60.00 60.00
iv. Loans & Advances 3.71 1.58 0.00 0.00
v. Other current asset 11.43 9.38 6.60 8.00
Total (E) 89.16 58.73 101.90 105.40
F. NET FIXED ASSETS
(Excluding Revaluation
Reserve)
18.16
5.85 19.50 18.36
G. ADVANCES/
INVESTMENT IN
SUBSIDIARY/
ASSOCIATE CONCERNS
0.00
0.00 0.00 0.00
H. OTHER NON
CURRENT ASSETS
3.65
1.00 1.00 1.00
I. TOTAL ASSETS
(E+F+G+H+I)
110.97
65.58 122.40 124.76
J. FINANCIAL
PERFORMANCE

i. Gross Sales Domestic 0.00 0.00 0.00
Export 262.11 287.61 330.00 350.00
Duty Drawback 26.17 24.63 30.00 31.50
Less: Excise Duty 0.00 0.00 0.00 0.00
Net Sales 288.28 312.24 360.00 381.50
Growth (%) 8.31% 15.30% 5.97%
ii. Gross Profit 6.49 4.65 8.31 10.64
iii. Depreciation 3.37 1.10 2.36 3.24
iv. Taxation 0.00 0.00 0.00 0.00
v. Net Profit 3.12 3.55 5.95 7.40
vi. Dividend 0.00 0.00 0.00 0.00
- Amount
- Percentage
vii. Profit retained in
business 3.12 3.55 5.95 7.40
ix. Interest 13.86 7.11 9.00 9.50
x. PBDIT 20.35 11.76 17.31 20.14
K. RATIO ANALYSIS
i. Current Ratio 1.29 1.41 1.24 1.29
ii. Total Debt/Equity 3.14 2.17 3.03 2.40
iii. Gross Profit/Sales 2.25% 1.49% 2.31% 2.79%
iv. Net Profit/Sales 1.08% 1.14% 1.65% 1.94%
v. Debtors/Sales 0.73 0.34 0.60 0.63
vi. Creditors/Purchase 2.36 1.43 0.56 0.67
vii. Interest Coverage
Ratio 1.47 1.65 1.92 2.12
viii. Current Assets to
Turnover Ratio 5.40 15.84 6.00 6.36
Annexure 4

DETAILS OF CONSORTIUM / MULTIPLE BANKING ARRANGEMENTS
(Rs. in lakh)
Particulars % Share EXISTING PROPOSED
FB NFB FB NFB
Our Bank
NilOther Member Banks
Total
(Details as per Annexure)
Annexure 5
Limits enjoyed by Associate / Group concerns: (Rs. In lakh)
A. With our bank
Name Branch
Details of limits Last sanction Ass
et
Cla
ssi-
fica
tion
FBWC
TL as
of
10.01.10
NFB Date Authority
Mortgage Loan
of Rs. 10.85 lacs
sanctioned in
Sep.05 to Sh.
Mahesh C
Gupta,(Borrower)
Smt. Shashi
Khandelwal, Sh.
Vikas Gupta, Sh.
Okhla 7.95 11.07.08 DRM
(NDR)
Stan
dard

Mohit Gupta (Co
Borrowers)
Machinery Term
Loan Sanctioned
to M/s xyz
Apparels Inc
Okhla 5.89 11.07.08 DRM
(NDR)
Stan
dard
(Rs. In lakh)
B. With other bank/FIs/others
Name
Bank/FIs
/Others
Details of limits Outstanding Asset
Classi-
fication
FBWC TL NFB FBWC TL NFB
Nil
Annexure 6
Profile of the group concerns with brief financial indicators
The Firm is having a sister concern under the name and style of M/s xyz Apparels.
A machinery Term Loan is still operational having current O/s as of 10.01.2010 being Rs.
5.89. The Account is classified as Standard.
Gist of Financial Indicators of M/s Central Agencies
(Rs. In lacs.)
S.No. Particulars As per
Audited B/S
of 31.03.2009
1. Net Sales 144.19
2. Gross Profit 6.41
3. Net Profit 0.93

4. Capital 5.34
5. Net Worth 5.34
6. Net Fixed Assets 15.43
Annexure 7
Details of properties/assets etc. Under collateral security viz. Valuer, valuation date,
encumbrance & marketability status etc.
Nature of
Security
Type of
Charge
Value Basis / Source Whether eligible
under CRM
(Basel II Norms)
Residential
property
belonging to Mr.
M.C. Gupta
situated at 15B
Friends Colony
(West), New
Delhi-65,
comprising of
418 sq. yards
having
construction on
Ground, First
and Second
Floor.
Equitable
Mortgage
Non-Encumbrance
Certificate by our
the subject property
bears clear title and is
marketable.
No
The said property is also mortgaged to the Bank for Mortgage Loan of Rs. 10.85 Lacs sanctioned to
Sh.. Mahesh C. Gupta, Smt. Shashi Khandelwal, Sh. Vikas Gupta, Sh. Mohit Gupta –O/S as on

10.01.2010 being Rs. 7.95 Lacs and Machinery Term Loan sanctioned to M/s xyz Apparels Inc-O/S
as on 10.01.2010 being Rs. 5.89 Lacs. The conduct of the aforesaid accounts are satisfactory as
reported by the Branch and both the accounts are classified as Standard.
Annexure 8
Additional comments, if any along with investments details in associate /sister concerns,
comments on balance sheet, auditors remarks etc. Nil ______________________
Homework Help

Math homework help
Research Paper help
Algebra Help
Calculus Help
Accounting help
Paper Help
Writing Help
Online Tutor
Online Tutoring

109829014 case-study

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (14)

Similar to 109829014 case-study

Similar to 109829014 case-study (20)

More from homeworkping7

More from homeworkping7 (20)

Recently uploaded

Recently uploaded (20)

109829014 case-study