The document is a presentation for a loan application by M/s Jaihind Auto Spare Manufacturers to SBI Panipat for a term loan of INR 19 Cr and working capital loan of INR 2 Cr to set up an auto spare manufacturing unit. It includes details of the project cost, means of financing, promoter profile and experience, management team, market analysis, implementation plan, financial projections, and credit appraisal. The banker will review the application and supporting documents to make a decision on approving or rejecting the loan.

1. Case Preparation for Advances & appraisal :Role
Play
Presented By :
1.Ravishekhar kumar
2.Nagaraj N.B
3.Rachita Luthra
4.Ankur Beniwal
5.Deepa Jain
Jindal Global Business School,Sonipat,Haryana

2. • Presentation on Loan Application Procedure: Term Loan &
Working Capital Loan:
• Case example - Loan application by M/s JAIHIND Auto Spare
Manufactures.
• Presentation on procedures followed in Credit Appraisal by SBI,
Panipat.
• Decision post due Diligence of facts & figures on the approval or
rejection of Loan application

3.  Credit Appraisal starts with the Promoter of M/s
JAIHIND visiting the SBI, Panipat Manager and
briefing about his business plan to set us Auto spare
manufacturing unit and further enquires the details
of procedure and documents that needs to be
submitted to avail the Loan.
 After hearing to the details, Bank Manager will
provide the Application copy with the complete list of
documents that needs to be submitted.
 Promoter will prepare all the documents and
schedules an appointment on 01st
Aug 2015 to
submit the Loan application including the necessary
documentation which is detailed in this presentation.

4. PROPOSAL:
1.Fund Based TERM LOAN OF INR 19 CR & WORKING CAPITAL LOAN 2 CR
Duly filled Loan Application Form
Key Project Parameters:
Borrower’s Profile M/s JAIHIND Auto Spare
Manufacturers
Promoters details Ravishekhar Kumar (CHAIRMAN)
Project Cost (Crores)
Debt (Fund Based) 21 84%
Equity 0 0%
Promoter’s contribution 4 16%
Total cost 25 100%

5. Cost of project (Crores)
Land (2 acres) 3
Building 2
P & M 12
Other assets 1
Contingencies 1
WC Margin 3
Total Project cost 25
Source of promoter fund Cash Balance (3 year ITR for references)
Tenure of Loan 7 years

6.  sales growth rate
 Capacity increase
 Change in product mix
 Change in price of Raw material
Assessment of Term Loan:
 Land
 P &M
 Buildings
 Other Assets
Standard Term & Condition :
 Technology from Siemens Germany.
 Land will be owned by company.
 Company is registered under Company Act and legal jurdiction will be
applicable according to Delhi High court.

7. Date of registration of Jaihind
Enterprise
12.02.2014
Legal consultant M/s Saha & Ray.
Production Capacity 50k spares like suspension system and
break parts per months
Technical collaborations Hyundai India and Siemen Germany
Manufacturing and sales unit Chennai,Delhi,Bangalore
Head office Gurgaon ,Haryana

8. Company Address 2010 2011 2012 2013 2014
Sales Turnover
JMT
Barubad, Jharkhand 214.87 291.77 363.45 306.85 285.8
% Increase in sales 36% 25% -16% -7%
Bharat Forge
Mundhwa, Pune 2947 3685 3151 3399 4712
% Increase in sales 25% -14% 8% 39%
Kalyani Forge
Pune, Maharashtra
412216
177 235 278 260 205
% Increase in sales 33% 18% -6% -21%
Sona Koyo Steerings
Systems Limited
38/6, Delhi-Jaipur Road,
Gurgaon
--- 1034 1140 1118 1043
% Increase in sales 10% -2% -7%
Industry Avg. %
Increase in sales
31% 10% -4% 1%
NET Profit
JMT
Barubad, Jharkhand 3.53 9.82 16.08 12.02 7.06
% Increase in Net Profit 178% 64% -25% -41%
Bharat Forge
Mundhwa, Pune 310 362 305 399 718
% Increase in Net Profit 17% -16% 31% 80%
Kalyani Forge
Pune, Maharashtra
412216
3.31 6.45 13.41 8.83 4.78
% Increase in Net Profit 95% 108% -34% -46%
Sona Koyo Steerings
Systems Limited
38/6, Delhi-Jaipur Road,
Gurgaon
--- 37.41 38.84 30.61 51.66
% Increase in Net Profit 4% -21% 69%
Industry Avg. %
Increase in NET
Profit
97% 40% -12% 15%
Source: http://www.moneycontrol.com/india/stockpricequote/auto-ancillaries

9. The graph shows the vehicle production rates
for the fastest-growing countries with GDP
thresholds of more than Rs7500 billion as of
2013.
Between 2009 and 2013, China’s automotive
industry had a compound annual growth rate,
or CAGR, of 18.6%. The CAGR for India’s auto
industry was 16.3%.
High-growth economies require better means
of transportation and faster mobility. So, more
vehicles are made and sold. This attracts more
investment. The auto industry benefits from
the cycle.
Car manufacturers—like Honda (HMC), Toyota
TM), General Motors (
GM), and Ford (F)—experienced high growth in Asia d
CARZ)
Source
http://marketrealist.com/2015/02/gdp-
automotive-industry-growth-related/

10. Demand for automobiles, particularly passenger vehicles and
commercial vehicles were adversely impacted during FY 2013- 14:
Due to lower GDP growth,
high interest rates and high fuel prices.
During FY 2013-14, RBI increased the key policy rates by 75 basis points to control
inflation. Interest rates remained firm thus making it difficult to purchase consumer
durable items on finance. High costs of borrowing and elevated consumer price inflation
adversely affected household consumer sentiment and spending.
Slowdown in GDP growth has been due to decline in both consumption and investment
growth.
Investments were stalled because of high interest rates, poor demand conditions, and
regulatory issues.
Future Growth Prospects of Automobile and ancillaries in India
Liberalization of foreign investment in India
Promoting Ease of business environment in India by the Government
Promoting Make in India Campaign
Ford and other major players plans to expand their business by setting up
manufacturing/assembly plants in India
Growing economy of the country (GDP on increasing notes)
Visioning Government in ruling position

12. Background of Promoters and Management
Promoters
 Mr. Ravishekhar kr is having technical and
Management degree. With 25 years of experience in
automobile sector as a CEO in india and abroad.
 He has good market reputation and credit worthiness.
Detail of the constitution of company’s board
• Jaihind will be headed by Chairman .
• Board member will consist of 3 joint director,CFO and
CTO .
• Business head of North location (Delhi),South
(Chennai) and Bangalore .
• Business head supported by VP and GM.
• GM heading manger and Engineers.

13. Managerial experience to run the business/Key managers
Team Consists of:
Chief technical officer (Mr. Rakesh) having 23 year of experience in
automobile sector .
Chief financial officer (Ms.Rachita ) having Degree in financé and
experience as CFO in reputed firm for 20 years.
Head marketing and Sales (Mr.Ankur) having experience of 23 years
in various MNC’s .
10 Managers and General manager (technical & projects) .
Human resource manager ( 5 no's) of more than 10 year experience.
Management style:
Professionally Managed

14.  JAIHIND will develop and offer only the highest
quality products and services.
 Our products will reduce customers' costs, and
have a longer life than the competitors' products.
 Our re-manufacturing services will also offer the
client a solid, value-based purchase backed by a
100% quality commitment and effort by our
employees and management.

15.  With the proper mix of equipment, JAIHIND can work as both a
manufacturer and a service provider. Additionally, the equipment gives
the business an opportunity to sell itself to its clients at the production
managers’ level and at the shop level, forging solid ties with production
and engineering managers.
 Our prototype services will be handled via the Internet: a client sends a
CAD file to our secure dedicated servers, we download the CAD file into
the 3-D software, and the process of developing a tangible prototype
begins. Including this type of technology will bring JAIHIND much closer
to the Aerospace and Automotive industries. This process can also help
JAIHIND develop additional products for different markets
 Our ability to share information about order status and offer products
and service from our distributor partners will allow for even more
opportunity with the clients, as they are always looking for ways to
reduce purchasing costs.

16. Why should the industrial buyers work with JAIHIND Products and Services?
•JAIHIND's products are developed to perform better than the competition. Our products are developed
with the goal of providing our clients a good, value-based purchase that will help them be more profitable
in their day-to-day operations. Our commitment to high quality and consistency in our products and
services is what sets us apart from others.
•Our services also combine a good value-based approach, and still provide quality. Our attention to
customer detail is a critical component in our customer service area. Our custom sales software allows
our staff to keep detailed, accurate notes on our customers' requirements, allowing us to fulfill orders to
their preferences. This commitment to consistency allows the customer to feel confident when they ship
orders in for service.
Future Products and Services
•JAIHIND will methodically seek out additional products to match our
customers' requirements while working closely on applications to provide our clients with a
better overall result in their manufacturing process
Market Analysis Summary
National market Description consists of 314,555 potential clients
•Automotive - Automotive repair, and Auto body industry.
•Automotive - Auto Makers, and their support industries.
Our sales goal is to integrate our Industrial Products and Services into the above markets.
Our sales approach is simple, utilizing a well trained inside sales staff to approach new
clients, and to respond to well-placed ads in industrial publications. Our software
applications will make it possible for these businesses to interact closely with JAIHIND
and its distributor partners.

17. • Set up JAIHIND's Industrial Services Location - Prepare working area for incoming equipment,
wiring, shipping and receiving areas, networked accounting systems, and develop a work flow
methodology for the entire shop.
• Complete the equipment selections and installation - Equipment will be selected from various
machine tool dealers throughout the U.S. These machine tools will be inspected closely for
quality, selecting the best possible pieces while working within our budget.
• Manager selections and training begins - JAIHIND will be looking for individuals who posess a
good aptitude for engineering, preferably with a background in QC and Machining.
• Contractor selection for outsourced manufacturing - Competing contract manufacturers will be
providing sample parts and quotations for our products, in particular, contractors will be quoting
on the Automotive and Sporting Goods lines as they have the highest potential volume and will
require substantially more manufacturing capacity than we will have available.
• JAIHIND Industrial Services Marketing Campaign - Our marketing campaign will initially target
the local Louisiana market with a letter to the key personnel within the target businesses. This
introduction will be a combination letter marketing the JAIHIND Industrial Sales Division as well;
alternately, the Industrial Sales Divisions sales personnel will follow up on these accounts.

19. Clearance achieved from
 Forest Department
 Environmental department
 Railway
 ISO standardization and all certificte norms
defined.
 Land Clearance
 Power connections.
 State permission

20. Key Goals to our marketing strategy are as follows:
• Develop a high profile sales environment, to bring our products to new and
existing clients.
• Develop new ways to market our products to potential clients via our branded
applications and software.
• Develop channel partnerships utilizing our own applications, drawing from these
partners services and products to develop a large base of products and
services to be offered to larger clients.
• Develop and maintain a quality customer service and follow-up program for all
of the JAIHIND divisions.
• Develop and utilize an ongoing automated marketing system to contact
potential clients.
• Carefully target marketing expenditures to maximize returns on the campaigns.
JAIHIND will develop and implement many strategic alliances to build its product
and services offering.
Strategic Alliances
• Alliances to manufacture our higher volume products will aid in keeping our
internal costs in check while allowing unlimited growth potential by utilizing our
channel partners' production capabilities.

21.  Our sales forecast table uses the following
assumptions:
 Auto Body Products average growth rate
of 34% annually.
 Auto Body Services average growth rate
of 14% annually.
 Industry Analysis Compounded Annual
Growth Rate of 7.02%

22. The goal is to build a solid base for the corporation with our primary products
and services while continuing the long term development of our distribution and
secondary services business.
Auto Body Products average growth rate of

23.  Tie-up for raw material with Tenova Engg.
Limited for fix rate (price hedging)
 Forecast of increase Sales growth.
 Detail Project allocation and Risk analysis is
done.

24. Jaihind Auto Spare Manufacturer
Collateral
Commercial Land (Own by Promoter) Market value 50 crore
Secondary Source of Repayment

25.  JAIHIND Products and Services' projected balance
sheet shows a strong cash development capability
over the projected 3year plan
 During the life of the plan, inventory requirements may
change as we offer our clients different purchasing
options and build our inventory of used products; any
differences in cash flow and inventory would show that
the cash is tied up in inventory

27.  IRR of business is 12%.
 Cost of funding and operations is below IRR.
 NPV
Projected NPV( Crore)
2016 2017 2018 2019
26 28 30 32

28. Financial Appraisal

29.  Land - 3
 Building - 2
 Plant and Machinery - 12
 Other Assets - 1
 Preliminary and pre Operating Expenses - 1
 IDC@ 8 % - 2
 Contingencies - 1
 WC Margin – 3
TOTAL COST OF PROJECT – 25 Crores

30. Net Sales 42.27
PBT 3.29
PBT/ N Sales 0.078
PAT 2.30
Cash Accruals 2.30
PBDIT 6.34
Interest
Coverage Ratio
2.07
PUC 0
TNW 22
Adjusted TNW 22
TOL/TNW 0.18
TOL/ Adjusted
TNW
0.18
Current Ratio 1.35
DSCR 1.21

31. 2016 2017 2018
Liquidity Ratios
Current Ratio 1.35 1.32 1.33
Efficiency ratios
PBT to Total Tangible Assets (%) 7.0% 8.0% 9.5%
Operating cost to Sales (%) 50.00% 47.00% 44.00%
Bank Finance to Current Assets 0.87 0.85 0.78
Profitability Ratios
Return on sales 6.09 6.57 6.99
Return on Assets 11.69 13.92 16.33
Leverage Ratios
Debt asset ratio 0.87 0.85 0.84
Interest coverage 2.38 2.67 2.99
Turnover Ratios
Fixed asset turnover ratio 2.35 2.65 3.00
Total asset turnover ratio 1.92 2.12 2.34
Debt Service Coverage Ratio 1.95 1.94 2.18

32. Credit Review

33. Documents Remarks Approved Not
Approved
Purpose of loan Business Ok
Character Ok
Capital Good ability to
raise finance
ok
Collateral Land worth 50
Crore
Capacity to repay Secondary source High
Market environment Industry
Backup to repay (primary
and secondary source)
Business risk
Financial statements

34. Managerial Experience
Track Record
Antecedents
Competency
Management structure
RBI/ECGC list check for
defaulter
Commercial Appraisal
Viability of business
Market Demand
Entry and Exit barrier
Scope of growth
Government policies

35. Promoters capacity to
raise finance
Source of margin
Fund to repay debt
Financial health of
borrower
Sensitivity Analysis
Financial Projections
Working capital
assessment
Ratios

36. Technical
Feasibility
Technology partner
Capacity
Machine life
reliability
Capacity
utilizations
Conditions
Economy
Number of
competitors
Demand vs. supply
Availability of
manpower
Pollution control

37. Collateral
Cash flow
Visit to Plant
Site

38. Appraisal decision

39.  Sanction Letter to borrower
 Acceptance of term and condition by borrower
 Opening of account for recording transections

40. Thank you