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The Bank has a very humble but a very inspiring beginning. On 14th September 1918 , "The Saraswat Co-operative Banking Society" was founded. Mr. J.K. Parulkar became its first Chairman, Mr. N.B. Thakur, the first Vice-Chairman faith, vision, optimism and entrepreneurial skills. These dedicated men in charge of the Society had a commendable sense of service and duty imbibed in them. Even today, our honorable founders inspire a sense of awe and respect in the Bank and amongst the shareholders. The Society was initially set up to help families in distress. Its objective was to provide temporary accommodation to its members in eventualities such as weddings of dependent members of the family, repayment of debt and expenses of medical treatment etc. The Society was converted into a full-fledged Urban Co-operative Bank in the year 1933. The Bank has the unique distinction of being a witness to History. The Bank, which was originally founded in 1918, i.e. close on the heels of the Russian Revolution, also witnessed as a Society and as Bank-the First World War, the Second World War, India's freedom Movement and the glorious chapter of postindependence India. During this cataclysmic cavalcade of history, the Bank as a financial institution and its members could not of course remain unaffected by the economic consequences of the major events. The two wars in particular brought in their wake, paucities of all kinds and realities and stand by its members in distress as a solid bulwark of strength. The Founder Members and the later-day management's of the Bank continued to demonstrate their unwavering faith in the destiny of the common man and the co-operative movement and they encouraged the shareholders to save despite all odds.

MISSION STATEMENT "To emerge as one of the premier and most preferred banks in the country by adopting highest standards of professionalism and excellence in all the areas of

working !!!"

MILESTONES Thanks to these sustained and assiduous efforts over 25 years after its inception, the Bank had gained Strong foundation in terms of its membership, resources, assets and profits. By 1942, the Bank was fulfilling all the banking needs of its customers. During the late fifties, the Bank grew from strength to strength. The Bank had established five branches within the city of Mumbai and one each at Pune and Belgaum. In its 50th year, the Bank chose a bee motif to symbolize the Bank's emblem - fitting and appropriate characteristics of a Bank that believed in hard work, a search for all that is good, a team spirit to achieve its objectives and a selfless service to its members and customers. The Bank has grown in stature, progressed in its social and economic objectives and produced an image of what an ideal bank should be. Resultantly, in the year 1977-78, the Bank's gross income crossed the Rs.3.00 crore mark for the first time. Last two decades the bank has witnessed a steady growth in the business. The bank has a network of 153 fully computerized branches covering five states viz. Maharashtra, Gujrat, Madhya Pradesh, Karnataka and Goa. The Bank is providing 24- hour service through ATM at 48 locations. In 1988 the bank was conferred with "Scheduled" status by Reserve Bank of India. The bank is the first co-operative bank to provide Merchant Banking services. The bank got a permanent license to deal in foreign exchange in 1978. Presently the Bank is having correspondent relationship in 45 countries covering 9 currencies with over 125 banks.

CREDIT POLICY:INTRODUTION: Business Plan of the Bank includes Credit Policy. The policy is reviewed in such a way that it is simple to use, informative and user friendly and exhaustive in nature. The Credit Policy stipulates various norms for exposure, security, ratios etc. However it is observed that these norms are many times diluted/deviated in an anxiety to achieve the targets sometimes compromising on quality. Without affecting the quality of the credit proposal, these norms can be relaxed. Therefore the success would depend upon its implementation both in letter and spirit. With this in view, implementation of the various norms stipulated in the credit policy are to be strictly adhered to. This credit policy addresses three segments of credit in detail: Commercial credit, Retail Credit and Export credit.

The objectives of the credit policy are as follows: Main focus is on SME segment and therefore bank is trying to Broaden the base of clientele of Corporate and Non-Corporate segments through aggressive credit marketing, Address the genuine credit needs of the existing clients to ensure quicker and prompt credit decision. Augment Credit Portfolio of the Bank consistent with the risk management strategy of spreading risk for the purpose of minimizing the same. Develop the skill set of the officials looking after credit portfolio in keeping with the changing trends in the economy, through training in areas like appraisal, monitoring and unit inspection. Stringent assessment of new credit proposals, maintain & improve upon the asset quality through effective monitoring the accounts and to maximize the yield on advances.









Government /RBI and all other regulatory requirements on credit matters. Evolve proper reporting system to fix the accountability The Credit Policy will be operative from the date of issue of the circular till it is reviewed next and generally it will be reviewed yearly. The Credit Policy would govern all credit and credit related exposures, fund based as well as non-fund based and prescribes acceptance criteria for all forms of credit dispensation. These would include short term, medium term and long term based facilities, as also letters of credit, guarantees, acceptances, etc. The functional divisions are expected to comply with the policy guidelines laid down in the policy. In case of any doubt about the applicability of any aspects of the policy to any situation, clarification/ approval shall first be sought from Credit department prior to committing the bank.

INTRODUCTION TO CREDIT APPRAISAL: The process by which a lender appraises the creditworthiness of the prospective borrower. This normally involves appraising the borrowers 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. Credit products are broadly categorized as Retail and Industry/business loans. The Credit Appraisal should strictly cover all the critical information about the proposal required for making the decision and the observations /

recommendations at various levels. The appraisal notes put up before the Board or any authority should have clarity, preciseness, objective assessment, consistency and proper linkage between two or more aspects of the appraisal. Repetitions should be avoided. There should be a checklist to check all the details stated in the note so as to avoid inconsistencies in figures. The proposals should be put up before the appropriate sanctioning authorities within a maximum period of one month from the date of receipt of full information. The credit appraisal note should be in a prescribed format only. For proposals of Rs. 50.00lacs and above, promoters' background with their experience and qualification should be given. Each zone should prepare a history sheet of the borrowers and should incorporate all the major events of the company, right from the beginning of the activity. Such history sheet should be properly preserved. The primary information for a credit decision would included. a. Details of unit b. Corporate Governance c. Organization structure. d. Financial spreadsheets. e. Merits/demerits of proposal f. Deviation from prescribed policy

g. Internal and External Risk factors as also remedial measures to contain their impact. h. Specific Recommendations. To reduce the gap between sanction and disbursement, process of general documentation and title clearance should be simultaneously initiated with the processing of credit proposal. Reserve Bank of India has stipulated that while entertaining applications for assistance from new borrowers, banks should insist on No Objection Certificate from the existing financing bank. Similarly, before putting up the preliminary proposal, processing official should verify whether the applicant firm/company and the proprietor/partners/directors are in the willful defaulters list and suit filed accounts list. These lists are now available on the website of Credit Information Bureau of India Ltd. (CIBIL) (cibil.com). Further , the bank has already subscribed for getting the credit reports from CIBIL. CIBIL will give us credit report in case of retail borrowers as well as corporate customers. The reports can be accessed and downloaded from any branch. The branches therefore, should make use of this facility to have quality accounts in the credit portfolio. Further, an appropriate declaration regarding payment of dues towards provident fund (employer and employees contribution), dues of Employees State Insurance and other statutory dues should now be obtained at the time of grant of new facilities and/or renewal/enhancement of credit facilities every year. This aspect should be verified by visiting officials and findings incorporated in their visit report.

EXISTING EXPOSURE LIMITS:Existing exposure & revised norms proposed are as under: Constitution Entry Level Existing Proposed 50.00 500.0 1000.00 100.00 750.00 1000.00 Ultimate exposure Existing Proposed 75.00 750.00 1500.00 250.00 1500.00 2500.00

Proprietary Partnership Company (Pvt. Ltd. with Promoters equity) & Closely held Public Ltd. Co Company (Pvt. Ltd. with part Equity from Finance cos.) Public Ltd. Co. Group





1000.00 --

2500.00 --

1500.00 2500.00

4000.00 6500.00

The above proposed exposure norms are applicable for export credit excluding diamond business. Only if at least 4 of the below mentioned 8 conditions are fulfilled the bank may take up additional exposure, in case of proprietary concerns, partnership firms and companys, over the above recommended norms, as detailed below: Rating of the borrower is not below B Borrower has applied for additional funds for diversifying into new ventures;

Borrower has finalized plans for introducing private equity whereby Debt equity ratio would further improve than the existing.

Borrower is arranging for another Bank in consortium and the arrangement is in the final stage. In case if the exposure is to the Export oriented unit, borrower has taken per party ECGC cover to secure against credit default. Independent collateral cover offered is more than 50% of the advance applied

Activity of the company is such that the value addition is very high (raw material consumption to sales is less than 70% as per the actual for the last three years)

Insurance cover is obtained. Max exposure

Constitution Proprietary

500.00 Partnership 2000.00 Company(Pvt. Ltd. with Promoters equity) & Closely held Public Ltd. co. Company (Pvt. Ltd. with part Equity from Finance cos.) Public Ltd. Co. 5000.00 3000.00 4000.00

Bank provide following Retail Loans:

1. Housing Loans 2. Education Loans 3. Vehicle Loans 4. Multipurpose Loans 5. Doctors Delite 6. E-Stock 7. Professional Advantage 8. Executive Privilege

COMMITTEES: For handling the proposals beyond the delegation of various authorities, different committees are operational. Their purview will be as under: Committee of Retail Loans - RLC To note the position of irregular Retail Loan Accounts, up to Rs.25.00lac and take decisions of calling back the advance, if required. Note For the purpose of delegation of retail loan committee, sanctioned limit or outstanding balance (for each individual account), higher of the two is to be considered. Each retail loan account is considered to be irregular on continuous 3 defaults and needs to be immediately reported to Committee of Retail Loans. It is the responsibility of the Zonal Head to keep a track of all the irregular accounts under their control and ensure that they are reported to Committee of Retail Loans in proper time.

Central Management Committee- CENMAC

Approval/sanction/renewal/review of all the proposals with individual/ group exposure beyond Rs.100.00lacs and above, up to Rs.750.00lacs (both funded + non funded). Noting the position of the account and recalling irregular business accounts of Rs.1.00lacs and above up to Rs.750.00lacs, shall be placed before the CENMAC.

Management Committee

Above committee of the Board of Directors will meet once in a month. All overdues cases with exposure of Rs.1.00 crore and above and all the cases where remission in interest/principal or cases under OTS shall be referred to this Committee.


Board of director Approval/sanction/renewal/review of all the proposals with individual/ group exposure beyond Rs.750.00lacs (both funded + non funded). Noting the position of the account and recalling irregular business accounts of above Rs.750.00lacs, shall be placed before the Board of Directors


RATIO PRESCRIPTIONS: The major criteria /prescribed ratios for assessment of any business proposal are as under: 1) Current Ratio: It continues to be a minimum of 1.33 and any ratio below 1.33 should be treated as deviation. As regards proposals having exposures below Rs.1.00crore and depending upon type of activities/products, life cycle of production process, performance under other parameters shall be permissible in deserving cases, but not below 1.17.Any such proposal having current ratio lower than 1.17 will be treated as deviation.

2) Debt Equity Ratio: For this ratio debt means sanctioned Fund based working capital limits or outstanding whichever is higher plus outstanding term loans plus Letter of Credit -usance limit or outstanding whichever is higher.

* Beyond which if proposal is considered, it would amount to deviation. 3) Debt Service Coverage Ratio (D.S.C R.): In case of Term loans working out of DSCR for stipulated repayment period / remaining repayment period is must. While computing the D.S.C R., the following numerator and denominator shall be used.

Profit after tax + Int. on Term loan & working capital limits + Depreciation Int. on Term loan & working capital limits + Term loan installment payable (on existing and proposed loans) Normally an annual/average DSCR should be minimum of 1.5 however annual/average DSCR Between 1.4 to 1.50 may be accepted with proper 12

justification. DSCR below 1.40 will be treated as a deviation. An annual/average DSCR 1.25 or less deserves outright rejection of the credit proposal. It is suggested that if the DSCR is low, a condition restricting appropriation of profit for Dividends / Drawings be stipulated.

4) Interest service coverage ratio (ISCR): ISCR has to be calculated where only working capital limits are enjoyed with us. The interest service coverage ratio is a measurement of the number of times the company could make its interest payments with its earnings before interest and depreciation but after tax. Higher ratio sounds the better financial capacity of the unit to serve the debt burden of the company.

PAT + Depreciation + Interest Total interest payable by unit to Banks, FIs including interest on WC limits and interest on Unsecured Loans # This ratio should not be less than 2.5. ISCR below 2.5 will be treated, as a deviation and proposals having ISCR below 2 deserve rejection.



We intend to continue with our present practice i.e. MPBF method or turnover method. For initial large exposures exceeding the entry-level norm prescribed in the Policy, we may look upon borrowers having existing consortium arrangements / insist upon formation of consortium. For borrowers enjoying fund based working capital limits in excess of Rs.5.00 crores, it should be explored that 25% of the book debts are financed through bills. The bank is in the process of arranging Credit insurance on the lines of ECGC from General Insurance Cos mainly for insuring receivables. The requirement of working capital therefore will have to be split into limit against receivables and limit against stocks. Margin against receivables can be reduced upto 10% and also finance against debtors beyond 90 days upto 180 days can be given where such insurance cover is available. Once the assessment of working capital limit including DA L/C limit is done and approved, the interchangeability between these two limits and interchangeability between L/C limit and bank guarantee limit if for any reason is required to be done, it should be done with proper assessment and approval by the respective sanctioning authority.

a. MPBF Method: Reserve Bank of India has withdrawn the prescription in regard to the assessment of working capital needs based on the concept of Maximum Permissible Bank finance (MPBF). However, our Bank has decided to continue with the existing practice of MPBF with following prescriptions: a. As far as possible second method of lending i.e. minimum NWC 25% of total current assets shall be applied to all the credit exposure above Rs.25.00lacs. The same can be relaxed to first method of lending i.e. minimum NWC 25% of Working capital Gap in deserving cases for credit limits of Rs.25.00 lacs to Rs.100.00 lacs with proper justification and future


plan of building up of NWC upto the desired level. b. As per earlier RBI guidelines following heads are to be excluded from current assets while calculating MPBF. Margin against L/C, B/G, Fixed deposits for payment of sales tax deferral, advances to associate concerns, directors, partners, investment in associates, shares, debentures, debtors above six months and non moving stock. c. However, while calculating net worth the above items except following should be treated as non current assets and should form part of net worth: Advances to associates/ investments in associates.

Debtors above six months if stuck up and not recoverable. Non-moving/ old obsolete stock. These items should be deducted from net worth. d. Bills negotiated under L/Cs: As working capital requirements for the same are assessed separately, receivables under L/C need not be included in the current assets. Similarly, bank borrowings under bills purchased/ negotiated under L/Cs need not be included under current liability. They should be shown as contingent liability as additional information. e. Term loan installments/ Deferred Payment Guarantee (DPG) installments falling due for payment during the next 12 months may be included under current liabilities. f. While calculating MPBF under first method of lending or second method of lending DA L/C will be considered as working capital limits and the credit enjoyed against D.A. L/C should be reflected in the creditors while assessing the limit and margins on stocks, debtors and creditors should be considered accordingly.

b. Turnover Method: For accounts with annual Turnover upto Rs.100.00 lacs or limits upto Rs.25.00 lacs the maximum limit based upon the Turnover method (25% of projected annual turnover for manufacturing unit and 20% for trading concerns of which 5% should be from the promoters) is applicable. In any


case, our Working Capital limit should not be more than 20% & 15% of the projected turnover, for Manufacturing and Trading units, respectively. These guidelines have been formulated assuming average production/ business cycle of 3 months. In reality, this cycle could be longer or shorter. The proponent's working capital requirements may be discussed on the basis of traditional approach of production/business cycle and limits may be considered in excess of 20% of the projected annual turnover wherever warranted due to longer cycle, keeping a minimum margin of one-fifth of the working capital requirements. On the other hand, in case of shorter production/ business cycle, working capital limits at 20% of the projected annual turnover may be sanctioned and actual drawing should be allowed on the basis of drawing power after excluding unpaid stocks/stocks acquired under D/A L/C. Since this type of facility is generally allowed for small units the D:E ratio above the stipulated norms maybe accepted if other parameters are favourable.

CASH FLOW ANALYSIS: 1. We need to examine the Cash flow of the borrower to determine, whether the company generated enough cash from its own operations to cover all its expenses, including its interest and loan installment payments. This will also enable detection of any aberrations in the cash flows of the unit.

2. Analysis of cash flow of the borrowers will also be monitoring tool for detection of diversion/siphoning of funds by the borrower. Such diversion/siphoning of funds should be construed to occur if any funds borrowed from Banks are utilized for purposes unrelated to the operations of the borrower to the detriment of the financial health of the entity or of the Bank. The decision as to whether a particular instance amounts to siphoning of funds would have to be a judgment of the Bank based on objective facts and circumstances of the case.


OTHER REQUIRMENTS FOR ASSESMENT OF WORKING CAPITAL:SECURITY MARGINS: Advance value is determined by the acquisition cost of asset (book value)/security net of prescribed margin. Margins prescribed herein form the general guideline. Exceptions with necessary justifications may be made in respect of accounts under nursing/rehabilitation. All the securities offered / held should be valued by our approved valuer. The valuers should be asked to give Fair Market value, Realizable value and Distress Sale value in their valuation report. Security position should give book value, market value and realizable value. Realizable value should be considered for the purpose of security. Such valuation should be done after every two years by valuers having expertise in the respective industry and the names will be intimated by the Commercial Credit Department. Valuation of primary security for advance to be considered as under: Stocks cost or market value whichever is lower. Debtors at invoice value fewer advances received if any. Plant and machinery/Land and building and other fixed assets as per latest WDV reflected in the balance sheet. In case this value is lesser than the outstanding Term loan balance due to higher rate of depreciation charged by the company, non-payment of installment by borrower, etc. present market value of the asset charged, be indicated by way of foot note in the security column, with reasons for lower value of security. Primary security should be considered at WDV while collateral security can be considered at realizable value.


The security-wise margin prescriptions are as follows: Type of Security Raw Materials Work-in-Progress Finished Goods Packing Materials Tools Dies, Moulds Receivables Up to 90 Days Margins prescribed 30 % 40 % 30% 50% 50% 30 % (Debtors from PSU/Listed Cos.) 40 % (Otherwise) 50% (With specific sanction by appropriate authority and also supported by additional security or further charge on fixed assets. In such cases the debtors should be from Govt. Department or from reputed industrial corporates. Each case may be considered separately) Alternatively insuring the receivables with the Insurance Company be considered. 10 % minimum NIL

91 Days to 180 Days

(As far as possible we should discourage the financing of these Debtors)

Supply Bills against the bills drawn on Multinationals / large Corporate Bills Discounting against accepted Hundies Plant & Machinery: (1st Hand and/or 2nd Hand) Imported Indigenous

25% 30%

40% Special Purpose Machinery of Machinery used in Chemical Processes / Industry which is subject to fast deterioration.


(In case of 2nd hand machinery the margin to be stipulated on the basis of valuation of the machinery or cost price whichever is low) Cars not older than 2 years, (No finance against the 2nd hand Commercial vehicles) Furniture & Fixtures Land & Building Computers Other Fixed Assets Demated Shares Special Scheme for Shares Life Insurance Policy


40% 25% 50% 40% 50 % of Market Value 50 % of Market Value 15 % of Surrender Value (Relaxation up to 10% can be given) 15 % of Face Value if residual maturity period is more than 3 years. otherwise 10 % of Face Value if residual maturity period is less than 3 years. 5 % of Face Value (If interest is received at regular intervals) 10 % of Face Value (If Interest is received on maturity) However lower margin of 5 % can be considered for Cumulative Scheme if residual maturity period is less than 1 year 10 % to 15 % of the balance outstanding 5 % to 15 % of the face value 30 % of the value assessed by Banks approved valuer or 20% in case of Hallmarked jewellery.


Special Scheme for RBI Bonds

Our Banks Term Deposit of cumulative nature Our Banks Term Deposit of non cumulative nature Gold


REVIEW / RENEWAL PROCEDURE: The review exercise is being done as an annual exercise, irrespective of the status of the account. Today, the relationship is seen as matter of convenience with cost and speed being major determining factors. Bank has now introduced simple forms for pure renewals. While undertaking review of the borrowal accounts, references should also be made for some important aspects listed below. Compliance of terms of earlier sanction/s; Out-of-order position of the account during the year; Ad-hoc limit/s granted during the year and frequency thereof; Any request for relaxation in the terms of sanction already considered which might be pending for confirmation by appropriated authority; Cheques returned unpaid- frequency and minimum/maximum amount/s thereof; Any devolvement/s of letters of credit/guarantees; Any diversion of funds for unauthorized uses; Statutory liabilities not paid or provided for; Any pending litigation/s against the borrower; and

Review / renewal note should invariably incorporate following information:

Evaluation of the performance for the review year vis--vis the projections. Current year's sales performance in the form of operating statement. Fresh working capital assessment based upon projections for the forthcoming year. Position of outstanding statutory dues.

Comments on market conditions in which industry operates in general and the unit in particular.

Comments on deficit areas if the credit rating is less than C as per latest Credit Rating Model. Units having three years' continuous operating losses or two years cash losses need justification for not weeding out. Reference to the compliance of conditions of earlier review/sanction.


Efforts made in cross selling the Banks products and the results obtained, new customers introduced, whether salary accounts of the employees opened with us. The time frame for submission of annual accounts provisional and/or audited by the borrowers is as under: Credit Limits (FB+NFB) Above Rs.5.00crores Above Rs.1.00 but up to Rs.5.00crore Below Rs.1.00crore Due Date for submission of accounts Provisional Audited 31st May 30th June 30th June 30th September 31st August 30th November


COLLATERAL SECURITY: It has been our practice to insist upon collateral security for every credit exposure funded and non funded. The Bank considers such collateral as additional cushion in the event of forced liquidation of debt. We may consider obtaining additional collateral security i.e. over and above the norms specified below, where the primary security is inadequate or for any other valid reasons like weak financials, risky ventures, untested projects/products, sunrise industries, etc. where primary security has limited market. In case of certain categories of advances such as Diamond Exports, Software, etc., where tangible primary security is not available/ valuation of which is difficult and advance is granted more on trust and track record of performance and conduct of the account it is advisable to obtain additional collateral cover. Whilst considering collateral security, we should also explore possibility of obtaining 1st/2nd charge on block of assets to cover working capital limits/all other facilities and cash and cash like securities like Bank's Term Deposits, government securities, shares, debentures, commercial real estate, residential real estate, etc. In respect of the credit exposure to non-corporate enterprises, the owners are also personally liable to the Bank for the credit facilities, enjoyed by the business unit. In regard to credit facilities to corporate enterprises, the guarantees of promoters/major

owners/directors should be insisted upon except for widely held companies. The value of such guarantees is generally more related to ensuring the continued involvement of the main persons behind the organisation than as a financial cushion in the event of loss to the Bank. Where beneficial ownership/control lies with person/s other than the borrower himself guarantee of such beneficial owner/controller should be obtained. Collateral cover percentage should be calculated based on 100% of FB limits + NFB limits. The requirement of collateral is now linked to the rating of the account and our reference for the related industry.


Sr. No.

Category of borrowers

Requirement as % of total exposure

Requirement as % of total exposure, if entire collateral offered/held is in the liquid form

Manufacturing Industries.
1. Prime, A or B Category. If the finance is against: a.Land & building b. Plant & Machinery General Purpose Machinery - Imported / Indigenous Special Purpose Machinery Imported / Indigenous c. Other Assets Elec. Installations, Furniture, Equipments, Computers etc. NIL NIL

20% 25%

15% 20%




d. Working Capital Facilities Other than Prime, A & B Category If the finance is against: a. Land & building b. Plant & Machinery General Purpose Machinery - Imported / Indigenous Special Purpose Machinery Imported / Indigenous c. Other Assets Elec. Installations, Furniture, Equipments, Computers etc. d. Working Capital Facilities





25% 30%

20% 25%

50% 50%

35% 35%


Trading/ Service Units

1. a.Trading in Industrial goods / 35% Components / tools with rating of 'Prime', 'A' or 'B'. and customers are reputed companies b. For acquisition of commercial office premises c. Against furniture & fixture a.Trading in Industrial goods/components/tools with Rating of 'C' and below and Customers are reputed companies and trading in commodity items, other retail trading. d. For acquisition of commercial Office premises 30% e. Against furniture & fixture 25% 20% 25%



25% 50%

20% 35%



The above norms of requirement of collateral security are minimum. Depending upon the nature of activity and risk perceived we may have additional collateral security. Collateral security mentioned above should be independent collateral security and not by way of cushion available on the assets already charged to the Bank.


CREDIT RATING SYSTEM: Appraisal of credit facilities would comprise 2 discrete segments: Appraising the health of the customer. Assessment of the customers credit needs. Both the aspects need to be examined simultaneously at the time of the initial entry for customer to the Bank as also subsequent periodic renewals. In regard to customers engaged in business/trade/industry (other than tiny units and agriculturists) a detailed risk-rating model has been evolved. Credit rating exercise is to be done annually on the basis of audited balance sheet. The rate of interest applicable as per credit rating shall be charged to the account from the due date of the review or actual date of review whichever is earlier or as stipulated in sanction. There are various parameters on which the credit rating of the firm/organization takes place which are as follows: FINANCIAL PARAMETERS :o Current Ratio o Debt-Equity Ratio o PBDIT / Sales: (Last 3 years trend to be considered) o Sales to Working Capital Exposure o Sales to Assets o Interest service coverage ratio o Debt Service Coverage Ratio o Trend Analysis (for last 3 years) Current Ratio Debt equity Ratio Sales growth rate Cash Accruals



o Raw Material Availability o Competition o User/Product profile o Technology o Quality Control o Distribution Network o Recovery

o Expertise / Technical competence o Integrity o Track Record


UNIT INSPECTION: It is observed that the area of Unit Inspection still remains a neglected area. This year it is expected that the inspection of accounts would be carried out before 31st August 07 and the reports will be available for incorporating in the renewal notes. The zones/branches are expected to go through the inspection reports and get the compliances on the discrepancies observed and the same to be reported in the renewal notes. Unit inspection of all other accounts where the limits are below Rs.100.00lacs or where the unit is enjoying only term loans, shall be carried out by the branch/zonal office as under: Status of account Standard accounts Substandard accounts Site inspection by Branch officials/ Zonal Office. Only by Branch Manager /Zonal office/ NPA Management Dept. Frequency Once in half year Once in a quarter

The inspection of all the units must be completed as prescribed above, every year. A report based on inspection findings and operations of the account has to be placed before G.M. Commercial Credit/ C.G.M. (Business) in respect of accounts with exposure of Rs.100.00lacs and above and in other cases before Zonal Manager within a period of one month from the date of Inspection.

Special Mention Accounts (SMA)

All the accounts carrying rating D and further should be marked as Special Mention Accounts (SMAs). Also units, which slip down directly from Prime to B or from A to C, then such units, must also be marked as SMA. Further any other units, which Branch/Zone feels that should be marked SMA, may be marked SMA. The purpose of Special Mention Accounts (SMAs) mechanism is to identify, monitor and improve status of the accounts and evolve strategies to avoid further slippages of identified Special Mention Account to NPA category. The bank assesses whether the default in an account is due to some inherent weakness or due to a temporary liquidity or cash flow problem and accordingly calibrates its


response. These temporary situation are being avoided by regularly monitoring the performance of the account in the repayment of installments or submission of stock statements on due dates, monitoring the financial performance of the unit, frequency of invocation of Bank guarantees, Devolvement of LCs and so on. Despite sizeable increase in credit portfolio in last 2 years, the number of SMAs have been indicating a declining trend, indicating improvement in quality of the credit portfolio of the Bank. In addition to the various measures suggested from time to time, following strategies will ensure effective monitoring to achieve the objective of early identification of sick Special Mention accounts, subsequently slipping into NPAs. Strategies for Special Mention Accounts: The strategies, in consonance with the present strategies to monitor new Special Mention Accounts, can be summarized as follows: The break-up of monitoring of SMA accounts is categorized as under Involving Credit exposure Exceeding Rs.5.00crore Rs.1.00crore - Rs.5.00crore Rs.0.25crore - Rs.1.00crore To be monitored by NPA Management dept Zones Branches

As non-submission of stock statements / control financial statements is also initial symptom of SMA turning into NPA, submission of the same should be strictly adhered to. The Branch Manager should be made responsible for the same. In case of SMAs, the recent valuation of all types of securities, properties has to be brought on the record. Reporting the position of SMA accounts should be done at least on monthly basis by giving necessary and up-to-date information. If information is not readily available, then instead of leaving blanks or old information, proper reasoning has to be given.


FACILITIES PROVIDED BY THE BANK: Bank Guarantee Letter of Credit Adhoc Consortium Lending: Term Loan Retail Loans

Bank guarantee: Borrowing and lending of money had become a part and parcel of commercial transactions. The lender naturally desires to safeguard his own position and wants to ensure that the money lent was received back without fail. As a means of such safeguard he seeks from the loanee the guarantee of another person (who was considered good for the amount in question) for the prompt repayment of the debt in case the loanee fails to repay. Applicant A) and Beneficiary B) had a business contract. This was primary contract. B wants to cover against the risk of any possible non-performance of contract by A. So B can ask for a monetary deposit as a cover. A was not willing to block his money (which he can otherwise profitably use) so A approaches his bank with a request to issue Bank Guarantee in favor of B. Thus, it arises the need for a Bank Guarantee. The Bank had been issuing Bank Guarantees of various types for our constituents since long. These were Performance Bank Guarantee, Bid-Bond Bank Guarantee, Earnest Money Bank Guarantee, Security Deposit Bank Guarantee Advance payment guarantee etc. Period of Bank Guarantee: As a normal practice, the period of Bank Guarantee not to exceed 3 years. However issuance of bank Guarantees covering period more than 3 years may be considered on following lines; For Customers rated in Prime or A and `B` category, Bank Guarantee may be issued for a max 10 years.


However such guarantees to be issued only after proper sanction from appropriate sanctioning authority. For Customers rated in B category, Bank Guarantee may be issued for a max. 5 years. For all other class of customers, the period will be maximum 3 years.

Margins: For Customers rated in Prime or A category, a margin i.e. 10% be stipulated. For Customers rated in B category, a margin in the range of 10% to 15% may be stipulated. For Customers rated in C category, margin more than 15% or more was stipulated. For all other categories of customers higher margin of min. 25% be stipulated. Margin stipulation be enhanced depending upon the period of Guarantee.

Letter of Credit: The expectation of seller of any goods/services was that he should get the payment therefore immediately on delivery of goods/services. This may not materialize if the seller and buyer were at different places (either within the same country or in different countries). The seller desires to have an assurance for payment by the purchaser. At the same time, the purchaser desires that he needs to pay the amount of goods/services only when they were actually received. Here arises the need for a Letter of Credit. The objective of a Letter of Credit was to provide a means of payment for goods and services supplied by a seller to buyer, by ensuring payment to seller and at the same time the delivery of goods/services to the buyer.

Adhoc/Temporary Overdraft: Bank had been generally granting adhoc limits to the accounts with credit ratings PRIME, A, B and C up to Rs.100.00lacs within the delegated powers of different category of officials. These delegated powers of sanctioning adhoc limits were


linked to existing sanctioned working capital limits including D/A L/C limits on percentage basis. As per the existing guidelines the adhoc limits were not supposed to be continued for a period exceeding 90 days and should not be for more than 2 occasions in a financial year. In order to had a proper assessment of such additional requirement it was proposed to consider sanctioning standby line of credit to the accounts with PRIME, A, & B rated accounts and in other cases for any requirement of adhoc limits the request should be entertained only by the appropriate sanctioning authority.

Consortium Lending: RBI had done away with the mandate on compulsory formation of consortium and had allowed lending under Multiple Banking System. It was considered advisable to prefer forming consortium for lending purpose. Where our Bank was the leader of the consortium, other participating Banks will be associated in the process of credit assessment; monitoring and control. Our share in consortium advance should not exceed 30% of total limits enjoyed by the unit and 50% in case we were the leaders of consortium subject to exposure limit as stated earlier. Additional exposure, by way of either Adhoc or regular limit, should be taken in the accounts in consortium unless approved by the consortium.

Term Loan: Term Loan was one of the most important source of external finance to many companies. Generally term loan was given for business purpose like building corporate office or purchase of Plant and Machinery or for factory set up. Term Loan was given maximum for 7 years according to Banks credit policy. Sometimes Moratorium period was also given for Term Loan. While approving the term loan, following parameters should be verified/ ascertained: a. Cost of project, value of land and building - whether reasonable considering the location, type of construction. Statements expressing verification,


ascertaining these costs- certifying the genuineness of the project cost, should be made. b. Machinery whether the proposed set-up was adequate for the activity proposed to be carried out and the projected turnover was possible. c. Installed capacity- installed capacity of the machinery and the plant should be stated in the note and be ascertained. d. Reference to the set up of similar units banking with us should be made and commented upon. For this, the processing officer should collect information on the units banking with us and their details as regards sales/ profitability, breakeven analysis, sensitivity analysis etc. should be compared/done. e. Means of finance- sources of own funds should be clearly stated. Sources should be verified. If the source was cash accruals, whether the cash accruals were possible with reference to earlier years position and actual sales in current year should be commented upon. f. Installed capacity of the plant should be stated. g. Projections should be independently ascertained. The facts submitted by the clients should be verified/ascertained. h. The executive summary should have projections minimum for the years during which the proposed repayment falls due.

Retail Loans: 1. Guidelines for assessment of a retail borrower, eligibility norms, purpose wise upper limits etc. for retail loan are issued under Multi purpose loan scheme and other schemes, which are already circulated. 2. Any deviations from the prescribed norms under retail products should be avoided. However, deviations from norms of Retail Loans MPLS, Vastusiddhi & Car Loans & Executive Finance / Privileged Finance can be made in exceptional cases by the Zonal In charge as per the guidelines issued in this respect thro Revised Delegation of Authority depending on the merits. The deviations approved by the Zonal In charge should be reported positively in the prescribed format (Chapter FORMATS) to G.M. RBD on quarterly basis.


3. Group loans, tie up with dealers should be explored on an on going basis. The deviations in-group loans, from the existing standard norms should be clearly brought out. A format is already circulated. Exposure above Rs.3.00crores to the employees of a single company should be approved by the CENMAC/Board.





Name of Borrower
Branch Constitution Date Establishment Banking with us since Group Name * Industry Code * Sector Excell group of Cos 56/03 Trading Aug.2000 Goregaon(W) Partnership Firm of 1978

M/s A Agencies

Zone Status Rating

III Standard Prime

(Basis of Accounts as on 31/3/08)

Priority Present PLR Present ROI

Priority 13.00% PLR+0.5%= 13.50% p.a. PLR 0.5%= 12.50 % p.a. PLR 0.5%= 12.50 % p.a.

Industry Type


Applicable ROI

Marketed by

Existing A/c

Proposed ROI

Activity and Products: The firm is indenting agent for M/s lS Product of USA and its subsidiary in Germany and Australia. M/s. T Industries Ltd. Baroda. M/s. I Filter Products, Belgium

2. Importing, Stocking and trading of specialty chemicals of foreign principles. The products are mainly chemical, filter etc and required by agricultural, pharmaceuticals and cosmetic industries.


Directors: Name Mrs. A.I Mr. A.S Mr. R.S Mr.H.S

Age 60 60 27 24

Qualification Chem. Engg. B.Sc Chem. Engg. B.Com

Other Major Shareholders: N.A

Key Person: Mr.A.S

MAJOR CLIENTALE: Name of the Party Sales (For FY 2007-08) CHC Limited- AHM EC Care Limited I Pharmaceuticals Ltd M Labs Limited - Goa R Laboratories Limited S Pharmaceuticals INDS. U Laboratories Limited- Factory U Phosphorus Limited Mumbai (Corp. off) OTHERS TOTAL 2686.41 4473.11 60.01 100.00 % 387.74 122.71 400.25 129.13 119.63 178.23 206.11 242.89 %age to Total Sales 8.67 2.74 8.95 2.89 2.63 3.98 4.61 5.43


Address Office: 31- N Laxmi Indl. Estate, New Link Road, Andheri (W) Mumbai

Factory: Plot No.2514/2515, Phase IV, GIDC, Vapi.

Type of Facility

Review/Renewal of following existing limits:

Sancd. Limit Ruling Limit O/s Bal. 27.06.08 Overdues

Cash Credit Total Funded Others Total N-Funded Total FB + NFB WHETHER BANKING:

500.00 500.00 0.00 0.00 500.00

500.00 500.00 0.00 0.00 500.00

179.08 179.08 0.00 0.00 179.08


0.00 0.00 0.00 0.00



Name of Unit Activity


Constitutio n

Facilities Bankers

U Chemicals Strategic Pvt. Ltd investment

Mr. U.A.S of Mr. J.R.N Mr. H.A.

Pvt. Ltd. Net lakh Worth:



the entire group



OUR GROUP EXPOSURE (Present & Proposed):

(Rs. In Lacs)


Facilities enjoyed Funded NFunded

Sales (Net) 06-07 0708

Net Worth 06-07 07-08

M/s.U Chemicals Pvt. Ltd.



2850.89lacs 185lacs



Activity:- Strategic investment of the entire group. There is no sales income in U Chemicals Pvt. Ltd.


BACKGROUND: Firm belongs to S family who owns a flagship company E Industries Ltd. The Group's principal activity is to manufacture chemicals, phosphorous and its compounds and organic manure. The Group is involved in the process developed in house to convert municipal solid waste into soil enriched. The Group operates in two segments namely Chemicals and Environment. The products are used for the pesticides, pharmaceuticals and polymers industry. E Industries Ltd came to be known as an industry leader in the area of agro-chemicals and agro-chemical intermediates. The turnover of E Industries is about Rs.4544.00lakh in the year 2006-07 & the S Family has 30% stake in the company. The applicant firm M/s. A Agencies was established in the year 1999 and banking with us since August 2000. The firm is indenting agent for M/s IS Products of
USA and its subsidiary in Germany and Australia, M/s T Industries Ltd, Baroda and M/s ISP Filter products- Belgium. It is also an authorized stockiest of M/s C Tech Services International France and Germany. The firm is also engaged in trading of specialty chemicals used by pharmaceutical companies, Chemical Industry, pesticide & cosmetic industry in general. Partners of the firm are well experienced and resourceful. The chemicals are imported from ISP, the major supplier of the firm & at times from European & local Manufacturers. The firm is having separate sales office headed by one of the partners & a team of sales managers, executives & personnel at different levels. The said office at G(E) is also having branches at Bangalore, Chennai, Kolkatta, Ahmedabad & Delhi to support the local customers. Godowns at different places also support the entire network. The firm was sanctioned cash credit limit of Rs.150.00lakh vide B. D. R. dated 06.08.2000 The limit was reduced to Rs.75.00lakh on 10.10.2004 as the firm did not require the same. However now the firm is proposing to expand its activities & therefore has set up new office & Gowdown at Hyderabad & Chandigarh respectively which are on rental basis. They have also converted their Godown at G (E) into technical laboratory. With the increase in volume of the business & to carry out the proposed expansion, the company requires additional working capital & therefore they have applied for additional limits of Rs.500.00lakh. The last renewal of credit facilities was done on 31.01.2007. The sales achieved till the Month of Dec 2007 is 5441.93lakh. The last review note was prepared on 18/02/08.


PERFORMANCE & FINANCIAL POSITION (In Brief): Particulars Audited Audited Projected Provisional. 2007-08 0.00 6387.43 6387.436387.43 6387.43 6387.43 532.29 1027.22 16.08% 626.29 9.81% 624.58 21.50 450.96 7.06% 114.21 0.00 2406.10 900.18 249.78 1370.35 -15.84% 73.23% 2.09 0.36 55.93 9.03 -12.51

Export Sales Local Sales Total Gross Sales Net Sales (Avg. P.M.) P.B.D.I.T (%age to Sales) Operating Profit (% age to Sales) Net Profit (Aft Tax) Depreciation Cash Accruals (% age to Sales) Fixed Assets Term Liabilities Current Assets Current Liab. Exc Finance Bank Finance Net Worth Sales Growth Rate Own Funds %age Current Ratio Debt/Eq. Ratio Sales F.A. Ratio D. S. C. R. Avg. D. S. C. R ISCR Bank

2005-06 2006-07 2007-08 0.00 0.00 0.00 3108.15 4850.80 7500.00 3211.73 3211.73 267.64 465.67 14.50% 253.37 7.89% 257.53 11.95 219.40 6.83% 57.02 6.85 1381.87 697.64 40.41 693.99 ----55.75% 1.87 0.12 56.33 21.49 -5.80 4942.33 4942.33 411.86 592.98 12.00% 401.30 8.12% 344.11 11.80 208.78 4.22% 63.91 2.58 1998.52 1135.99 9.95 913.91 53.88% 62.89% 1.74 0.08 77.33 18.47 -8.14 7590.00 7590.00 632.50 777.30 10.24% 618.50 8.15% 460.50 11.80 372.30 4.91% 52.11 0.00 2885.00 1172.76 500.00 1264.35 53.57% 73.11% 1.72 0.40 145.65 20.59 -9.29


Comments on variances Actuals vis-a-vis Projections: The firm is currently enjoying a Cash Credit limit of Rs.500.00lakh, which is assessed for the sales of Rs.4473.11, which is 11.18% of the total sales i.e. within the norms of 15% as per the credit policy. The firm maintains finished goods stock of 1.5 to 2 months, which is in same trend as the earlier years. The receipt of payments as per existing trend is 2.5 to 3 months while the creditors level as on 31.03.07 was 3.24 which reduced to 1.93 in F.Y 2007-08 because of the change in the suppliers policy of the company and that is the reason why they had availed additional Cash Credit facilities from us.

Sales: The applicant company has achieved sales of Rs.6387.43lacs for the F.Y.2007-08 i.e. there was an increase in the sales by 31.67% in comparison with the P.F. 2006-07. The applicant had projected sales of Rs.7590lacs for the F.Y. 2007-08 but achieved sales of 6387.43lacs only which is due to the High Seas sales opted by some of the companies customers where in the duty of the Import is directly paid by the companies customers and the value to that extent does not reflect in the companies sales figure. Inspite of the reduction in value of sales, the company has been able to achieve higher Profits in the same period than Projected.

Sales Performance


Rs. in lacs

4942 2953 3212







Profitability: The Net profit (after tax) has increased from Rs.344.11lacs to Rs.624.58lacs which shows an increase of 81.50% due to increase in sales the company is able to get raw material at an economical rates and other income has increased from 208.78lacs to 450.96lacs in F.Y.2007-08.

net profit (in lacs)

1000 800 600 400 200 0 2004-05 2005-06 2006-07 2007-08 2008-09 269 258 344 625 809

Cash Accruals Cash accruals has also increased from Rs.208.78lacs to Rs.450.96lacs in F.Y 2007-08 due to increase in profitability of the company and retention of profits in the firm

Current assets: Current assets have increased from 313.28 to 358.94 due to the increase in the cash and bank balance which have increased over the year this shows that the company is maintaining cash at hand and debtors are recovered at a faster rate than the previous year.


Net worth: Net worth for the F.Y 2007-08 is Rs.2060.22lacs which is higher as compared to the P.Y.2006-07 i.e. Rs.913.91lacs due to the increase in profitability from 344.11lacs to 624.58lacs in F.Y. 2007-08 and retention of profits in the firm.
net - worth

1973 914







Key Ratios: Current Ratio: Current Ratio has increased form 1.74 to 2.09 in the F.Y 2007-08 which is well above the minimum level of 1.33 (norms). This shows the healthy short term liquidity of the firm.
Current ratio











ISCR-Ratio: ISCR-Ratio is 12.51 in the F.Y 2007-08, which shows the better financial capacity of the unit to serve the debt burden of the applicant company.


Debt/equity ratio: Debt/equity ratio has increased from 0.01 to 0.18 in FY 2007-08 which is well within the norms of 2:1 which is acceptable by the bank.
Debt equity ratio



0.07 0.03
2004-05 2005-06

2006-07 2007-08 2008-09

Own Funds: Own Funds for the F.Y. 2007-08 is 73.23% which is well above our norm of 50%

% of Own Funds
100.00% 80.00% 60.00% 40.00% 20.00% 0.00% 2004-05 2005-06 2006-07 2007-08 2008-09 48.62% 55.75% 62.89% 73.23% 82.77%


(Rs. In Lacs)




Max. Bal.

Min. Bal. 0.01


01.04.07 31.03.08 01.04.08 31.05.08 Comments:

to 6513.96




to 1054.93





a) All the sales are routed through our account. b) Incidences of cheques returned (inward as well as outward) are negligible c) The limits are hardly utilized

Credit Rating: 05-06 A 06-07 A 07-08 A --REASONS (if downgraded)

Collateral Security: Description of Collateral Security Norms - % age Rs.100.00lakh term deposit (FQ) for 60 20% months in the name M/s A Agencies 20% Actual - % age


Visit / Inspection of Unit: Visit was paid by Mrs. M.T, Chief Manager, Goregoan (W) Branch in November 07 & the overall observations were satisfactory.

Particulars Verification of Security Record.

(whether verified and found correct)

Observation/s Maintained Maintained Upto date

Verification of Books of Account Physical verification of Security

Stocks/Machineries hypothecated to ------us or otherwise.

Adequacy of Security and insurance Adequate of the same

(whether security is adequate and fully covered under insurance)

Whether Unit Inspection Report in No, will be bought on record after prescribed format is brought on factory visit records? Position of payment of Statutory Paid up to date Dues

Documentation: N.A

Pending Compliances: N.A


PROSPECTS OF INDUSTRY (In brief): The chemical industry is a significant component of the Indian Economy. With revenues estimated over $28 billion, the industry constitutes over 6% of India's GDP and about 10% of total exports. The chemical industry manufactures a wide spectrum of products divided into basic, specialty and knowledge segments. Out of which specialty chemicals segment is about 25% and caters to paints and coating, adhesives and sealant, additives for pharmaceuticals, catalysts, water treatments, textile printing, finishing and sizing, paper coating and leather finishing segment.

Domestic market for specialty chemicals is estimated at about $1.2 billion, which constitutes 2.5% of the global specialty chemicals market. Specialty chemicals is now recognized that due to the inherent strength of skilled manpower and resources in research activity coming out of the success of pharmacy industry that the emphasis of growth and value addition needs to focus on specialty chemical industry. In fact, in a report on chemical industry in India, it has been estimated that to take the industry from a $30 million to a potential $100 million in the next 5-8 years the booster rocket needs to come from the specialty and knowledge industry.






Name of Borrower Branch Constitution (CIN NO.) Date of Establishment Banking with us since

M/S SMS Scientific Products Ltd.

Pali Hill Pvt Ltd Company

Zone Status

III Standard

1981 1993


(Basis of Prov.Accounts as on 31/3/08)

Group Name * Industry Code * Sector

-02 Manufacturing

Priority Present PLR Present ROI

Priority 13.00% PLR + 1% =14 % p.a.

Industry Type


Applicable ROI

PLR + 0.50% =13.50 % p.a. PLR + 0.50% = 13.50% p.a.

Marketed by

Existing A/C

Proposed ROI

Activity and Products: Activity: - Trading, manufacturing of gifts & novelty for pharmaceutical and allied industries Products: - Gift & Novelty items. PROPRIETOR/PARTNERS/DIRECTORS: Name/s Age Qualification. Income A.Y 2007-08 1) H.A.

Wealth as on A.Y. 2007-08 80.28 19.39


Graduate Graduate

13.73 4.99




ADDRESS/es: Office: Factory & Office : Plot No.94, Sector 1,V Taluka Co-op.Ind. Estate, V (E) . Factory: SAME AS ABOVE


MAJOR CLIENTELE: Name of the Party Sales (For FY 2007-08) A Pharma Ltd B Plastic Products E Pharma Ltd G Pharma Ltd P Ltd S-S India Ltd The H Drug Co W Ltd Others TOTAL 45.23 15.30 31.30 27.19 30.44 18.06 136.48 115.86 26.9 446.05 %age to Total Sales 10.14 3.43 7.02 6.10 6.82 4.05 30.60 25.97 5.87 100.00 %

REQUEST/s: Sr. No. 1. Details of Request/s To reduce the rate of interest from14% to 12%-11%.


REASONS FOR REQUEST/s: Sr. No. 1. Details of Reasons As per our credit policy, Company is presently charged 14% interest to their OD no.1513 since applicant company is B rated. But due to progressive financials the credit rating has upgraded to A so the proposed interest is PLR+0.50%. The client company has requested to reduce the interest by 3%-2%.


1. Applies for Additional Limit/s as given below: 2. Renewal/Review of Existing Limits.

Type Facility


Sancd. Limit

Ruling Limit

Addl./ New Applie d

Addl./ New Recomd.


O/s Bal. 20.06.0 8


(1) Cash Credit Bills Discg. Total Funded *Letter credit Total Funded Total NFB FB + Nof

(2) 35.00 35.00 -

(3) 35.00 35.00 -

(4) 20.00 30.00 50.00 30.00

(5) 20.00 30.00 50.00 30.00

(6) 55.00 30.00 85.00 30.00

(7) 13.34 13.34 -

(8) -








115.0 0


*The applicant company was enjoying Sub limit LC of Rs.15lacs, but has now applied for separate limit for LC of Rs.30lacs. Since the LC limit was by way of sub limit of Cash credit, L/C was not utilized. Hence no L/C is outstanding.

Details of Borrowing in the individual names of Partners/Directors: NIL





(Rs. In Lacs) Name of the unit Facilities enjoyed Funded NFunded

M/S Products M/s S Scientifc B Plastic CC-40.00 (LC15.00) Existing CC 35.00 (LC 15.00) Proposed: CC- 55.00 BD- 30.00 LC 30.00 249.96 410.34 92.45 75.73 359.61 386.49 79.41 92.18

Sales (Net) 06-07 07-08

Net Worth 06-07 07-08

Product Pvt. Ltd

M/S B Plastics Products is engaged in activity of only trading and import of gift articles. It is enjoying cash credit facility of Rs.40Lakhs with sub limit for LC Rs.15lakh. The collateral security for this facility is legal mortgage of office unit of M/S B Plastics Products, situated at 147/5-B, M Industrial Estate, M.



WORKING CAPITAL: The applicant company is presently enjoying CC limit of Rs.35.00lacs with sub limit of LC Rs.15.00lacs with our Bank. The said limit was sanctioned to achieve a sales turnover of Rs.280.00lacs (F.Y. 2006-07). The company has achieved sales of Rs.249.96lacs (i.e. 89.28% of its projection). The company has achieved net sales of Rs.410.85lacs for the year ended 200708. The company has applied for additional cash credit limit of Rs.20.00lacs making total Cash credit limit of Rs.55.00lacs & Bill Discounting limit of Rs.30.00lacs, total Rs.85.00lacs & separate LC limit of RS.30.00lacs to achieve sales of

Rs.526.05lacs for the F.Y. 2008-09.

The working capital assessment is as under: Particulars 2007-08 (Prov) Amt Lock-up (in months) Stock Debtors Other C. A. Sub-Total: Less: Creditors Other Liab. Wkg. Cap. Gap: Required NWC Available NWC M.P.B.F. Method) Sales (Net of Excise) W.C. to Sales % 410.34 8.52% 526.05 16.16% (2nd 120.75 20.83 5.41 94.51 30.19 53.39 41.12 15.73 90.78 14.24 0.57 2.64 0.00 0.00 0.95 0.00 0.00 0.00 0.00 0.00 36.14 137.50 13.45 187.0 9 31.88 7.00 148.21 46.77 63.21 85.00 Amt 2008-09 (Proj) Lock-up (in months) 1.01 3.00 0.00 0.00 1.00 0.00 0.00 0.00 0.00 0.00


Lock-ups: Level of inventory: The lockup of inventory is in the range of to 1 month which is expected to be maintain due to followings reason: 1. Increase in number of products 2. Fast changing technology 3. Higher Projection of sales turnover 4. Bulk quantity purchases due to bulk quantity order

Debtors Level: The lockup of debtors is projected at 3.00, which show increased over previous year as extension of average credit has increased from 60-70 days to 90 days, but it is acceptable as sales are also increased accordingly.

Creditor Level: The creditors lock-up in creditors is estimated at 1.00. Other current assets are of Rs.12.08lacs & cash and bank balance of Rs.1.37lacs. Other current liabilities of Rs.7.00 lacs mainly consist of creditors for expenses of Rs.4.00lacs & deposits accepted of Rs.3.00lacs. As per working capital assessment, Projected NWC is Rs.63.21lacs as against required margin of Rs.46.77 lacs, which is acceptable. Last year Available NWC was Rs.53.39lacs, the margin of Rs.9.82lacs will be brought by retention of Profit. On the basis of the above levels, the M.P.B.F. calculated under 2nd method works out to be Rs.85.00lacs, which is recommended for sanction: 1. CC limit Rs.55.00lacs 2. B.D Rs.30.00lacs

Bill discounting facilities will be given to all corporate buyers i.e. W, P, A etc. around Rs.34.00lacs, the need for Bill discounting come out of Rs.30.60lacs (margin 10%), so the office recommends B.D of Rs.30.00lacs.


LETTER OF CREDIT(60days D/P Basis): The company is engaged in activity of trading and manufacturing gift items. Till now there was purchasing raw material locally but now they are planning to import certain raw material, which will be approximately Rs.190.00lacs from China, Guanzou & Senzena Imports will be covered under OGL/Specific license. Lead period of 60 days is considered on the following basis: 1. 20 days from establishment of credit to shipment 2. 30 days transit period 3. 10 days for local transit

The calculation of L.C limit is as follows: D.P L/C = Purchases x lead time = 360 = 190 x 60 = 31.67lacs 360 The need come out of Rs.31.67lacs i.e. Rs.30.00 so the office recommends LC. On 60 D.P. basis of Rs.30lacs


M/S S Scientific Products Pvt. Ltd. established in the year May 1981. The company has engaged (over the last 21 years) in the manufacturing, trading and import of corporate gifts. The corporate clients are mainly pharmaceutical companies. Mr. H.A the managing director is the key person of the company. Since 1993 he has taken over the company and has given a vision and direction to the company. The company is banking with us since 1993. The company manufactures various plastic moulded gift items for pharmaceutical Companies like M/S L Lab. M/S R Lab Ltd. M/S C Pharma Pvt.Ltd. It is also trading in plastic novelties and gift items.


3) The company is having its associate concern, M/S B Plastic Product a partnership firm engaged in activity of trading of gift items. The Partners are Mr.N.A and Mrs. R.A Mr. N.A is brother of Mr. who is also director for M/S S.M.S scientific Product. Pvt. Ltd. They are enjoying cash credit facility of Rs40.00lacs with sub limit for LC limit of Rs.15.00lacs. 55



Audited 2005-06

Audited 2006-07

Prov. 2007-08

Projected 2008-09

Export Sales Local Sales Total Gross Sales Net Sales (Avg. P.M.) P.B.D.I.T (%age to Sales) Operating Profit (% age to Sales) Net Profit (Aft Tax) Depreciation Cash Accruals (% age to Sales) 156.92 13.08 10.49 6.68% 5.12 3.26% 5.11 3.63 8.74 5.57% 249.96 20.83 10.30 4.12% 5.50 2.20% 3.56 3.23 6.64 2.66% 410.35 34.20 28.49 6.94% 14.68 3.58% 14.93 1.39 16.32 2.46% Rs. Rs. 526.05 43.84 30.84 5.86% 18.86 3.59% 13.47 3.13 16.60 3.06% 79.48lacs 108.77lacs 165.57 251.29 412.47 550.80

Current year Sales last 2 months) Previous Period Sales for the similar period


Audited 2005-06

Audited Provisional. 2006-07 19.10 0.00 120.93 28.18 19.40 92.45 2007-08 22.34 0.00 120.75 26.24 41.12 75.73

Projected 2008-09 19.21 0.00 187.09 38.88 85.00 82.42

Fixed Assets Term Liabilities Current Assets Current Liability. Bank Finance Net Worth

21.63 0.00 103.80 19.88 18.75 86.80


Sales Growth Rate 59.29 12.31 2.54 0.21 13.09 5.22 0.00 15.00 0.00 64.16 36.84 1.79 0.54 18.37 2.34 0.00 35.00 (15.00) 28.20 50.40 1.51 1.03 27.38 3.02 0.00 85.00 0.00

Own Funds %age Current Ratio Debt / Equity. Ratio Sales F.A. Ratio I. S. C. R. Term Loans Working Capital Sub-limit Credit Letter of credit Sub-Total Other Banks TOTAL Letter of

9.18 2.69 0.22 7.25 7.19 0.00 15.00 0.00

0.00 15.00 0.00 15.00

0.00 15.00 0.00 15.00

0.00 35.00 0.00 35.00

30.00 115.00 0.00 115.00


COMMENTS ON ASSESSED PERFORMANCE/PROFITABILITY/FINANCIALS VIS--VIS ACTUAL ACHIEVED: Sales: The applicant company has achieved sales of Rs.410.85lacs for the F.Y.2007-08 as compared to Rs.251.29lacs in P.Y 2006-07, which show growth of 64% and he company has projected a sales of Rs.526lacs which is achievable.
Sales Performance

Rs. in lacs


410 157 250






Profitability: Gross profit margin has decreased from 19.33% to 18.69% in the F.Y 2007-08 but Net Profit (after tax) margin has increased from 4% to 3% in the current financial year due to control on selling & administration expenses. The cash accruals have also increased from Rs.6.64lacs to Rs.16.32lacs in F.Y 2007-08 in comparison to the previous year 2006-07.

net profit (in lacs)

30 25 20 15 10 5 0 26 15 5 4 13







Operating profit %


3% 2%








Net worth: Net worth has decreased from Rs.92.45lacs to Rs.75.73lacs in the F.Y 2007-08 The applicant company has paid off Rs.33.40lacs of its unsecured loan which has lead to a fall in the net worth of the company.



net - worth









Own Funds: Own Funds for the F.Y. 2007-08 is 50.40% which is above our norm of 50%

% of Own Funds
60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 56.98% 50.40% 36.84% 9.18% 12.31%






Key Ratios: Current Ratio: Current Ratio is 1.79, which is above the minimum level of 1.33 (norms) which show higher liquidity of the company and the current ratio is projected to improve over the years.



Current ratio










Debt-Equity Ratio: Debt-Equity Ratio is 0.54 is well within our norm of 2.50 which is reasonable.
De bt e quity r a tio 1.03 0.95

0.54 0.22 0.21

2005- 06

2006- 07

2007- 08

2008- 09

2009- 1 0

ISCR-Ratio: ISCR-Ratio is 2.34 in the F.Y 2007-08, which is just below our norms i.e. 2.5 so it is acceptable

Comments on reasonability of Projections: SALES: The applicant company has projected sales of Rs.550.00lacs for the year 200809 as they are going to add new products to their current product line. They are also planning to introduce the incentives scheme to attract more and more customers. And also concentrating on market extension by covering more market territory so the applicant company is confident about his projections.

Profitability: Gross profit margin is estimated at 18.49% for the year 2008-09 which is in line with Previous year 2007-08 i.e. 18.69%. Cash Accruals is projected to be Rs16.60lacs in the F.Y 2008-09. Net Worth: The company is projecting net worth of Rs.82.42lacs by way of retention of profit


Key Ratios: Current Ratio: Current ratio is projected to be 1.51 in the F.Y.2008-09, which shows that the firm has good short-term liquidity position and within our norms of 1.33.

Debt-Equity Ratio: The Debt Equity ratio of the firm is estimated to be 1.03 in the F.Y.2008-09 which is well within our norms of

ISCR Ratio: The ISCR ratio of the firm is estimated to be 3.02 in the F.Y.2008-09.

UTILISATION: (Rs. In Lacs) Period 01.04.07 to 31.03.08 01.04.08 to update Debits 479.06 65.27 Credits 477.07 68.23 Max. Bal. 55.00 17.62 Min. Bal. 36.96 34.51 Sales 446.05 79.48

*100% sales are routed through the account.

Exposure Proposed: Particulars Individual Exposure Group Exposure Norms(As per Credit Policy) 2500 6500 Actuals 115 160


Credit Rating: Particulars Marks in Financials Marks in Non-Financials TOTAL Norms for Min. Marks 32.50 17.50 50.00 Marks Out of 65.00 35.00 100.00 Marks Scored 60.00 39.00 89.00

05-06 A

06-07 B

07-08 A -

REASONS (if downgraded)

Collateral Security: Particulars (Give brief Details) Equi. Mortgage of factory bldg. At plot.No.94, Sector 1, V Taluka Ind Estate.Ltd, V(E) Dist. Thane 401208. Area 836 sq.mtrs., M.V Rs.59.48lacs valuation done by P.D on 20.05.06. KDR of Rs.1 lacs L.I.C Policies of Rs.3.80lacs Total Rs.64.28lacs for Proposed exposure of Rs.115lacs Key Ratios: Ratios Current Ratio D / E Ratio I.S.C.R. %age of Own Funds Norms 1.33 2.00 2.50 50 % 2006-07 2.54 0.21 5.22 12.31 Actuals 2007-08 1.79 0.54 2.34 36.84 Norms (% age) Actuals (% age)



Deviation/s made/proposed, reasons for such deviations from the norms and justification for the same: The % of own funds to net worth is 36.84% which is below our norms i.e. 50% but since net worth consists of unsecured loans from family members. The condition of subordination can be stipulated.


OTHER PARAMETERS: Brief comments on CED/Technical Report with special reference to adversities: Existing Account 1.Compliance of Terms & Conditions of sanction/review, Audit & LRM observations: N.A 2. Documentation + AOD: IN ORDER 3.Banking Relations: Cross Selling) : Applicant has taken HDFC Unit Link Insurance plan having Rs.5000 p.m premium 1. Comments on Income Earned: Interest Income: Rs.7.08 Non-Interest Income: 2. -

Efforts for revival/upgradation, in case of SMA/NPA Account: N.A

VISIT / INSPECTION OF UNIT: Mr. S.S, Branch Manager and V.N Manager paid visit, at v factory on 22.01.08 and at M Ofiice on 24.01.08

Particulars Verification of Security Record. Verification of Books of Account Physical verification of Security

Observation/s Yes & found correct

Stock is verified at random, found

Stocks / Machineries hypothecated to correct us or otherwise. Machines were not in operation since manufacturing activity has been

curtailed down & started outsourcing the same Adequacy of Security and insurance Yes of the same. Whether Unit Inspection Report in Yes prescribed format is records? Position of payment of Statutory Sales Tax paid upto November 07. Dues Income Tax paid upto March 07 brought on


UNIT SPECIFIC PROSPECTS OF THE INDUSTRY (In brief): Gift, novelty and souvenir shops have been assigned the Standard Industrial classification (SIC) Industry Number 5947. The market for gifts and home accessories is now active. Many gift shops are showing a profit, and industry sales volume continues to rise. Increasing affordability, acceptance of corporate gifts as a utility product rather than a luxury item and the low penetration of corporate gifts in India, is expected to a sales growth of 30-40% in corporate industry in 2008-09. STRENGTHS: 1. The company is banking with us since 1993. 2. Adequate collateral security. 3. Established client base. Clientele consists of reputed pharmaceutical companies 4. Experienced Directors. REMARKS & RECOMMENDATIONS: In view of the above, the office recommends, A) Additional CC limit of Rs.20.00lacs, Making total CC limit of Rs.55.00lacs & additional Bill Discounting of Rs.30lacs and separate LC limit Rs.15lacs subject to terms and conditions as per schedule 2 attached. B) Renewal of the existing Credit facilities be recorded on the basis of Provisional Accounts for the year ended on 31st March 2008.Audited accounts to be submitted before 30.09.08.If variation between audited and provisional accounts +-5%, the same would be reported to C.G.M., Business. C) Next Renewal on or before 30.09.09 on the basis of Audited accounts for the year ended 31.3.09.


M/s A Agencies OPERATING STATEMENT SCHEDULE 5 AUD 2005-06 3108.15 103.58 0.00 0.00 3211.73 0.00 3211.73 AUD 2006-07 4850.80 91.53 0.00 0.00 4942.33 0.00 4942.33 PROJ PROV PROJ PROJ 2007200820092007-08 08 09 10 7500.00 6387.43 8250.00 9075.00 90.00 0.00 0.00 0.00 90.00 0.00 90.00 0.00

Local Sales(Mfg.) Local Trading/ Jobwork conversion & service chg Export sales ( Trading) Total Gross Sales Less: Excise Duty/ Returns NET SALES MATERIAL CONSUMED Imported Indigenous Material consumption to sales ratio Packaging material Spares, stores & consumables Power, fuel, water Direct labour Other Mfg. Expenses. Depreciation Sub Total Add :Opening W.I.P. Less: Closing W.I.P. Cost of Production

0.00 0.00 0.00 0.00 7590.00 6387.43 8340.00 9165.00 0.00 0.00 0.00 0.00 7590.00 6387.43 8340.00 9165.00

0.00 2413.77

0.00 3922.49

0.00 0.00 0.00 0.00 6135.88 4903.28 6739.80 7402.15

75.15 0.00 0.00 0.00 0.00 0.00 11.95 2425.72 0.00 0.00 2425.72

79.37 0.00 3.83 0.00 0.00 11.45 11.80 3949.57 0.00 0.00 3949.57

80.84 0.00 0.00 0.00 0.00 4.80 11.80

76.76 0.00 0.00 6.76 0.00 0.00 21.50

80.81 0.00 0.00 0.00 0.00 5.10 11.80

80.77 0.00 0.00 0.00 0.00 5.40 11.80

6152.48 4931.54 6756.70 7419.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6152.48 4931.54 6756.70 7419.35


Add : Opening Finished Goods Less: Closing Finished Goods Cost of Sales GROSS PROFIT G.P.% Interest to Bankers Interest to Unsec. Loans Selling & Administration Exp. Salary/ Int.to partners/Dir. Sub Total OPERATING PROFIT Operating Profit % Other Income Other Expenses Net Other Income Profit Before Tax P.B.T.% Less: Tax Provision Less: Deferred Tax N.P. After Tax PAT % Add: Depreciation Less : Drawings/Dividend Less: tax on dividend Cash Accruals

0.00 0.00 2425.72 786.01 24.47% 10.71 45.48 385.67 90.78 532.64

0.00 0.00 3949.57 992.76 20.09% 11.95 37.91 432.24 109.36 591.46

0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

6152.48 4931.54 6756.70 7419.35 1437.52 1455.89 1583.30 1745.65 18.94% 22.79% 18.98% 19.05% 19.00 38.00 632.02 130.00 819.02 56.14 0.00 635.43 138.03 829.60 48.00 38.00 678.30 135.00 899.30 48.00 38.00 755.65 140.00 981.65

253.37 7.89% 144.16 0.00 144.16 397.53 12.38% 140.00 0.00 257.53 8.02% 11.95 50.08 0.00 219.40

401.30 8.12% 130.02 0.00 130.02 531.32 10.75% 187.21 0.00 344.11 6.96% 11.80 147.13 0.00 208.78

618.50 8.15% 90.00 0.00 90.00 708.50 9.33% 248.00 0.00 460.50 6.07% 11.80 100.00 0.00 372.30

626.29 9.81% 323.30 0.00 323.30 949.58 14.87% 325.00 0.00 624.58 9.78% 21.50 195.12 0.00 450.96

684.00 8.20% 90.00 0.00 90.00 774.00 9.28% 271.00 0.00 503.00 6.03% 11.80 100.00 0.00 414.80

764.00 8.34% 90.00 0.00 90.00 854.00 9.32% 299.00 0.00 555.00 6.06% 11.80 100.00 0.00 466.80


M/s A Agencies COMPARATIVE FINANCIAL POSITION 2005-06 0.00 13.68 0.00 7.97 0.00 35.37 57.02 0.00 57.02 0.00 0.00 6.85 6.85 50.17 0.00 0.00 0.00 381.39 103.92 6.44

SCHEDULE NO 6 AUD PROJ PROV PROJ PROJ 2006200907 2007-08 2007-08 2008-09 10 0.00 0.00 0.00 0.00 0.00 12.99 12.29 12.34 11.59 10.89 0.00 0.00 0.00 0.00 0.00 12.72 11.55 48.27 6.15 0.75 0.00 0.00 36.47 0.00 0.00 38.20 28.27 17.13 22.57 16.87 63.91 52.11 114.21 40.31 28.51 0.00 63.91 0.00 0.00 2.58 2.58 61.33 0.00 0.00 0.00 555.88 180.42 0.00 0.00 52.11 0.00 0.00 0.00 0.00 52.11 0.00 0.00 0.00 720.00 0.00 40.00 1875.00 0.00 0.00 114.21 0.00 0.00 0.00 0.00 114.21 0.00 0.00 0.00 806.15 0.00 6.36 1516.99 0.00 0.00 40.31 0.00 0.00 0.00 0.00 40.31 0.00 0.00 0.00 825.00 0.00 40.00 0.00 28.51 0.00 0.00 0.00 0.00 28.51 0.00 0.00 0.00 920.00 0.00 40.00

Land Building Capital W.I.P. Plant & Machinery Vehicles Other Fixed Assets TOTAL Less: Revaluation Reserve TOTAL FIXED ASSETS TL from Institutions. (excl. 1 year) Bank Term Loan (excl. 1 year) Other term loans TOTAL TERM LIABILITIES NET FIXED ASSETS Raw Material Indigenous ------"---------- Imported W.I.P. Finished Goods Stores & Spares Adv. To suppliers Trade Drs.-Local (within6 mths) TradeDrs. -Exports (within 6 mths) Trade Drs-Local (above 6 mths but recoverable Trade Drs-Exports (above 6 mths but recoverable) Loans & advances Cash & Bank Balance Other Current assets

763.12 1138.05 0.00 0.00

2060.00 2265.00 0.00 0.00







0.00 19.95 35.27 71.78

0.00 0.00 61.98 62.19

0.00 0.00 50.00 200.00

0.00 0.00 16.75 59.85

0.00 0.00 50.00 200.00

0.00 0.00 50.00 200.00


TOTAL CURRENT ASSETS Cash Credit Bill Purchase Term Loan Insta. In a year Creditors for goods Local '---------"--------Import Creditors for expenses Deposits accepted Advances received Tax Provisions Other provisions Others TOTAL CURRENT LIABILITIES NET CURRENT ASSETS Other Current Assets Less Other Curent Liabilities Net Other Current Assets TANGIBLE NET WORTH Represented By: Opening Balance of Capital +Profit/Loss in the year +Capital introduced +Reserves ( Excl Rev. Reserve) +Unsecured Loan/quasi equity - Drawings/Dividend NET WORTH (A) Dr.s above 6 mths (non-recovarable

1381.87 1998.52 40.41 9.95 0.00 0.00 0.00 0.00

2885.00 500.00 0.00 0.00 1091.76 0.00 21.00 0.00 5.00 0.00 0.00 55.00 1672.76

2406.10 249.78 0.00 0.00 790.33 0.00 4.40 0.00 1.96 0.00 0.00 103.49 1149.96

3175.00 3475.00 500.00 500.00 0.00 0.00 0.00 0.00 963.96 24.00 0.00 5.00 0.00 0.00 55.00 0.00 0.00 794.16 27.00 0.00 5.00 0.00 0.00 55.00

650.74 1060.59 0.00 3.77 0.00 1.41 0.00 0.00 41.72 0.00 4.77 0.00 2.43 15.01 0.00 53.19

738.05 1145.94

1547.96 1381.16

643.82 0.00 0.00 0.00

852.58 0.00 0.00 0.00

1212.24 0.00 0.00 0.00

1256.14 0.00 0.00 0.00

1627.04 2093.84 0.00 0.00 0.00 0.00 0.00 0.00





1667.35 2122.35

771.09 1079.31 257.53 100.77 0.00 344.11 0.00 0.00

1276.29 460.50 0.00 0.00 340.00 100.00 1976.79 0.00

1276.29 624.58 0.00 0.00 366.90 195.12 2072.65 0.00

1636.79 2039.79 503.00 0.00 0.00 555.00 0.00 0.00

307.11 339.15 50.08 147.13 1386.42 1615.44 0.00 69 0.00

340.00 340.00 100.00 100.00 2379.79 2834.79 0.00 0.00

+Investments including ICDs =Total non current assets -Non current liabilities =NET NON CURR. ASSETS(B) Intangible Assets (C) TANGIBLE NET WORTH (A-B-C) Difference:

680.00 680.00 0.00 680.00 12.43 693.99

689.10 689.10 0.00 689.10 12.43 913.91

700.00 700.00 0.00 700.00 12.44 1264.35

702.30 702.30 0.00 702.30 0.00 1370.35

700.00 700.00 0.00

700.00 700.00 0.00

700.00 700.00 12.44 12.44 1667.35 2122.35