Escolar Documentos
Profissional Documentos
Cultura Documentos
FACULTY GUIDE:
DR. ANSHUL VERMA, ASSOCIATE
PROFESSOR (FINANCE), BIMTECH
SAURABH KUMAR
ROLL NO. - 11DM181
PGDM- C
BATCH- 2011-13
This is to certify that Mr. Saurabh Kumar has successfully completed the project on Financing
Working Capital at Punjab National Bank, Circle Office Patna as part of the requirement of
the fulfillment of course curriculum for the award of the Post Graduate Diploma in Management
(Finance) under my guidance. This is his original work to the best of my knowledge.
Signature ________________
2|Page
(Greater Noida)
LETTER OF TRANSMITTAL
Dear Sir,
RE: Summer Internship Report 2012
Attached herewith is a copy of my summer-project report entitled Financing Working
Capital which I am submitting in order to mark the completion of my 8-week summer project
at your organization.
This report was prepared by me using the best of practices and summarizes the work performed
on the project and is being submitted in partial fulfillment of the requirements for award of Post
Graduate Diploma in Management.
I would like to mention that the overall experience with the organization was very good, which
helped me to know how is the work carried out in real practice. The eight weeks of practical
exposure which I got through your esteemed organization helped me to know the details about
the development of the corporate campaign in real practice which will be beneficial for me in
future and was very different from the theories which I have learnt up till now.
I feel honored that I got an opportunity to work with Punjab National Bank. Towards the end, I
would like to say that this was only possible because of the support of yours as well as the other
managers and healthy working environment.
I hope I did justice to the project and add some value to your organization.
Suggestions/comments are highly solicited.
Yours truly,
Saurabh Kumar
3|Page
ACKNOWLEDGEMENT
The satiation and euphoria that accompany the successful completion of the
project would be incomplete without the mention of the people who made it
possible.
The researcher takes this opportunit y to express his sincere gratitude to m y
industry guide Mr. Deepak Kumar (Training Manager, Punjab National Bank )
for their valuable guidance, support and encouraging words during the entire
project duration. The researcher would like to extend his gratitude towards Mr.
Reetesh Patel (Senior Manager, Punjab National Bank ) and Mr. Rajesh Kumar
(Chief Manager, Buddha colony branch) without whom the imagination of
completing this project was very difficult.
The researcher would like to express his profound sense of gratitude to Dr.
Anshul Verma, m y facult y guide, who has always given me motivat ional boost
to go and perform. The researcher would further like to thank him for his
persistence to listen to m y prob lems and to give apt solutions.
Saurabh Kumar
4|Page
New Delhi
TABLE OF CONTENTS
SERIAL
NUMBER
CONTENTS
PAGE
NUMBER
EXECUTIVE SUMMARY
METHODOLOGY
COMPANY PROFILE
13
16
20
CASE STUDY
24
33
REFRENCES
34
5|Page
ANNEXTURES
35
ANNEXTURE A
35
ANNEXTURE B
48
ANNEXTURE C
49
ANNEXTURE D
51
LIST OF TABLES
SERIAL
NUMBER
1
CONTENTS
Performance highlights of the Bank
PAGE
NUMBER
11
Advances (Sectoral)
11
17
LIST OF FIGURES
SERIAL
NUMBER
1
2
6|Page
CONTENTS
Working capital
Working capital cycle
PAGE
NUMBER
14
15
1. EXECUTIVE SUMMARY
The study gives an insight of summer internship undertaken in the circle office of Punjab
National Bank, Patna.
The objective of the project is to study and analyze the various aspects and methods of financing
working capital loan.
This study covers the process Punjab National Bank follows to assess the credit worthiness of its
clients and grant the finance for the working capital. I studied the various types of facilities
offered by the bank under Project Finance, including both Fund based facilities like term loan
and Cash credit and Non Fund based facilities like Bank Guarantee and Letter of Credit and also
the procedure followed by the bank before granting the finance to its borrowers which includes
the calculation of the credit risk undertaken by the bank. Before granting finance, the bank
calculates the credit risk score of the client by using software called PNB Trac, generated by
feeding in both the quantitative and qualitative data of the client, which is used by the bank to
evaluate the credit risk of the bank and accordingly charge the rate of interest to the clients.
After evaluating a number of facilities sanctioned by the bank, the study includes a snapshot of
such evaluation for both working capital & term loan appraisal.
7|Page
2. METHODOLOGY
The project makes use of ample amount of data to arrive at the conclusion. It does so by paying
equal attention to both quantitative as well as qualitative data. The methodology that was
adopted while appraisal of the project is described as below:
Collection of data from borrowing party. (done by banks representative and I gathered
knowledge about the issues from the experience they gained from their discussions with
the promoters of the company)
Verification of data and preparation of revised project report and projections submitted
by the company.
Study of various bank circulars and govt. norms in order to arrive at figures required for
the borrower and facilities applied for.
8|Page
3. COMPANY PROFILE
Punjab National Bank (PNB) was registered on May 19, 1894 under the Indian Companies Act
with its office in Anarkali Bazaar, Lahore. With over 60 million satisfied customers and more
than 5670 offices including 6 overseas branches, PNB has continued to retain its leadership
position amongst the nationalized banks. The bank has 6009 ATMs and around 169 lakh card
holders.
The bank enjoys strong fundamentals, large franchise value and good brand image. Besides
being ranked as one of India's top service brands, PNB has remained fully committed to its
guiding principles of sound and prudent banking. Apart from offering banking products, the bank
has also entered the credit card, debit card; bullion business; life and non-life insurance; Gold
coins & asset management business, etc. PNB has earned many awards and accolades during the
year in appreciation of excellence in services, Corporate Social Responsibility (CSR) practices,
transparent governance structure, best use of technology and good human resource management.
9|Page
Since its humble beginning in 1895 with the distinction of being the first Swadeshi Bank to have
been started with Indian capital, PNB has achieved significant growth in business which at the
end of March 2012 amounted to Rs 6,73,363 crore.
PNB is ranked as the 2nd largest bank in the country after SBI in terms of branch network,
business and many other parameters. During the FY 2011-12, with 36.20% share of CASA to
domestic deposits, the Bank achieved a net profit of Rs 4884 crores.
Bank has a strong capital base with capital adequacy ratio of 12.63% as on Mar12 as per Basel
II with Tier I and Tier II capital ratio at 9.28% and 3.35% respectively. As on March12, the
Bank has the Gross and Net NPA ratio of 2.93% and 1.52% respectively. During the FY 201112, its ratio of Priority Sector Credit to Adjusted Net Bank Credit at 40.7% & Agriculture Credit
to Adjusted Net Bank Credit at 19.34% was also higher than the stipulated requirement of 40%
& 18% respectively. The Bank has also issued 40.8 lacs Kisan Credit Cards (KCC) till March 31,
2012.
The Bank has been able to maintain its stakeholders interest by posting a healthy Net Interest
Margin (NIM) of 3.84% in Mar12 (3.96% Mar11). The Earning per Share improved to Rs
154.02 (Rs 140.60 Mar11) while the Book value per share improved to Rs 777.42 (Rs 632.48
Mar11).
Punjab National Bank continues to maintain its frontline position in the Indian banking industry.
In particular, the bank has retained its NUMBER ONE position among the nationalized banks in
terms of number of branches, Deposit, Advances, total Business, Assets, Operating and Net
profit in the year 2011-12.
The impressive operational and financial performance has been brought about by Banks focus
on customer based business with thrust on CASA deposits, Retail, SME & Agri Advances and
with more inclusive approach to banking; better asset liability management; improved margin
management, thrust on recovery and increased efficiency in core operations of the Bank.
The performance highlights of the bank in terms of business and profit are shown below:
10 | P a g e
Parameters
Mar09
Mar10
Mar11
Mar12
YOY
Growth %
Operating Profit
5690
7326
9056
10614
17.2
Net Profit
3091
3905
4433
4884
10.2
Deposit
209760
249330
312899
379588
21.3
Advance
154703
186601
242107
293775
21.3
Total Business
364463
435931
555005
673363
21.3
Source: www.pnbindia.com/financials
Parameters
1
Global gross advances
2
Overseas advances
3 Domestic gross advances
3.a
Food credit
3.b Dom.Non food gross adv.
Of which
4
Aggriculture & allied
5
Industry
5.a MSME manufacturing
5.b
Large Industry
6
Retail Loans
Of which
6.a
Housing
6.b
Car/Vechicle
6.c
Other retail loans
7 Commercial real estate
Of which lease rental
8
Services & others
FY Mar'11
Dec'11
FY Mar'12
243998
12904
231094
4421
226673
265884
19778
246106
5424
240682
297892
21755
276137
5186
270951
35462
114072
26848
87224
23621
38306
118324
29912
88412
26009
45917
128162
32391
97771
29196
16.9
47.2
11.9
35.3
10.8
10455
14090
5543
8547
5575
29.5
12.4
20.6
9.8
23.6
11816
1626
10179
8955
3839
44563
12373
2178
11459
10382
4936
47660
13808
2502
12887
9661
5427
58437
5.1
0.9
4.7
3.6
2
21.5
1991
876
2708
706
1588
13875
16.9
53.9
26.6
7.9
41.4
31.1
Source: www.pnbindia.com/financials
11 | P a g e
% shareVariation
in
over 11 to 12
Gr.Non food
Amt.
(%)
53894
22.1
8851
68.6
45043
19.5
765
17.3
100
44278
19.5
Conferred with the Best Bank Award 2011 amongst all the banks in India by Business
India
Prestigious Most Productive Public Sector Bank Award 2011, instituted by
Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Banks
Association (IBA).
Best Bank Award among Large Bank for IT for internal effectiveness from
IDRBT.
MSME National Awards: One award for excellent performance in lending under
PMEGP scheme in North Zone and the other award at national level for excellence in
lending Interest Subsidy Eligibility Certificate (ISEC) scheme of KVIC.
Most Socially Responsible Bank Award 2011 by Business World & Pricewaterhouse
Coppers (PwC).
India Pride Award in Corporate Social Responsibility (CSR) for the year 2011 by
Dainik Bhaskar.
Golden Peacock National Training Award 2011 by institute of Directors.
SKOCH Financial Inclusion Award 2012 for its Jana Mitra Rickshaw Scheme.
Banks Overseas Branch, DIFC, Dubai has received Business Super Achiever Award
under individual category from Asian Leadership Awards in addition to the Asian most
preferred branch (Banking & Finance) Award.
Technology Adoption Award in public sector bank category instituted by Dun &
Bradstreet and Polaris Software.
Golden Peacock Award for HR Excellence instituted by Institute of Directors.
Global HR Excellence Award under the category Organization with Innovative HR
Practices instituted by ASIA PACIFIC HRM CONGRESS.
12 | P a g e
Working capital refers to that part of the firms capital which is required for financing shortterm or current assets such as cash, marketable securities, debtors & inventories. Funds, thus,
invested in current assts keep revolving fast and are being constantly converted in to cash and
this cash flows out again in exchange for other current assets. Hence, it is also known as
revolving or circulating capital or short term capital.
Thus, Working capital for any unit means the total amount of circulating funds required for
meeting day to day requirements of the unit. For proper working a manufacturing unit needs a
specific level of current assets such as raw material, stock in process, finished goods, receivables
and other current assets such as cash in hand/ bank and advances etc. So the working capital
means the funds invested in current assets. This topic explains the concept of working capital
cycle, gross working capital, net working capital, factors affecting the requirements of working
capital and role of banker in assessment of right amount of working capital.
13 | P a g e
14 | P a g e
Creditors
Cash
Collection
Debtors
Sales
Finished
Goods
Supply
Raw
Material
s
Production
Work in
progress
15 | P a g e
Line of credit
Account receivable financing
Factoring
Inventory financing
Term loan
The following table will give a fair idea about these five major forms of working capital
finance:
16 | P a g e
Account
Loan
Receivable
Factoring
Inventory Financing
Term Loan
Description
Key terms
Maximum
loan
limit Can be secured or unsecured.
established. Firms draw on Annual
repayment.
loan as needed up to limit.
Compensating balance may be
required.
(AR) Loan secured by accounts Loan amount based on
receivable.
percentage
of
accounts
receivable.
Accounts
receivable assigned to lender
as sales occur. Loan balance
paid down with AR collection.
Sale of accounts receivable to Company paid based on
a third party collector average collection period less
(Factor).
Factor
bears a collection fee. Collection
collection risk.
amount can be advanced with
an interest charge.
Loan secured by inventory.
17 | P a g e
2) Non Fund Based. These are the facilities for which the bank can issue letters of credit or
can give a guarantee on behalf of the customer to the suppliers, Government Departments
for the procurement of goods and services on credit.
Different ways of non fund based financing are:
Letter of credit(LC)/Letter of guarantee
Bank guarantee
Performance guarantee
Finance guarantee
Deferred payment guarantee
charge may be created by the act of parties or by the operation of law. It is only security for
payment.
Role of Banker:
The unit should have sufficient amount of working capital. A portion of it is to be financed from
long term sources called the liquid surplus or net working capital (NWC). The remaining is
normally financed by the bank in the form of working capital limits. Excess maintenance of
working capital may result in idle resources and high interest cost whereas less amount of
working capital may mean disruption in the working. So both the situations are to be avoided.
That is why the technique of calculation of right amount of working capital assumes
significance. For financing of working capital, a banker should be able to calculate right amount
of working capital needed by the unit being financed. It shall mean right amount of financing
which will result in higher profitability for the unit and safety of funds of the bank.
19 | P a g e
1) TURNOVER METHOD: It provide 5 crore to SME and 2 crore for general advances, while
financing we should assess that the operating cycle of the firm /company is approximately 8
month.
As per Nayak method or turnover method PBF as assessed under:
1.
2.
3.
4.
5.
20 | P a g e
Based on the level of activity decided and the unit cost and sales price projections, the
banks calculate at the annual sales and cost of production.
The quantum of current assets (CA) in the form of Raw Materials, Work-in-progress,
Finished goods and Receivables is estimated as a multiple of the average daily turnover.
The multiple for each of the current assets is determined generally based on the industry
norms.
The current liabilities (CL) in the form of credit availed by the business from its creditors
or on its manufacturing expenses are deducted from the current assets (CA) to arrive at
the Working Capital Requirement (WCR).
21 | P a g e
crores
22 | P a g e
The borrowing unit is putting its money upfront and the Drawing Power is a form of
reimbursement.
Responsiveness to sudden surges in demand/ seasonality/ other short term boom
conditions is non-existent, putting a burden on the company to finance this at exorbitant
rates from private financiers.
Finally, a growing company will always be playing catch-up and its Permissible Bank
Financing will be lagging its cash requirements by at least one year.
23 | P a g e
7. CASE STUDY
FORM- I
Facilities requested
Rs. In Lacs
A. Term Loan
B.
1.
80.00
- Cash Credit
500.00
- Packing Credit
(150.00)
- Bill Discounting
(300.00)
500.00
100.00
300.00
300.00
Interchangeability between fund based and non fund based limits, with total limits not to
exceed Rs. 800.00 lacs.
C.
Total Limits (A + B)
24 | P a g e
880.00
UB STAINLESS LTD.
ACTUAL
ACTUAL
Audited
Audited
EST.
Current
Yr
31-3-09
31-3-10
31-3-11
12
12
12
GROSS SALES
II
III
i.
Domestic sales
630.65
2554.27
4000
5000
5500
6050
6655
7320.5
ii.
Export sales
126.56
5.15
No. of months
1
PRO.
PRO.
Next Yr.
PRO.
Next Yr.
31-3-12
PRO.
Next
Yr.
Next Yr.
PRO.
Next Yr.
31-3-13
31-3-14
31-3-15
31-3-16
12
12
12
12
12
IV
VI
VII
VIII
Total
757.21
2559.42
4005
5000
5500
6050
6655
7320.5
65.44
198.32
412
515
566.5
623.15
685.47
754.01
691.77
2361.1
3593
4485
4933.5
5426.85
5969.53
6566.49
N/A
241.31%
52.17%
24.83%
10.00%
10.00%
10.00%
10.00%
Cost of Sales
i.)
516.95
2046.72
3000
3750
4125
4537.5
4991.25
5490.38
400
500
550
605
665.5
732.05
516.95
2046.72
2600
3250
3575
3932.5
4325.75
4758.33
Other Spares
27.84
51.08
70
87.5
96.25
105.88
116.46
128.11
(a) imported
(b) Indigenous
ii)
(b) Indigenous
27.84
51.08
70
87.5
96.25
105.88
116.46
128.11
iii)
20.6
30.64
40
50
55
60.5
66.55
73.21
iv)
Direct labour
16.22
44.31
70
87.5
96.25
105.88
116.46
128.11
vi)
Depreciation
vii)
viii)
ix)
x)
Cost of Production
xi)
xii)
xiii)
Sub-total
SUB-TOTAL
25 | P a g e
4.78
3.13
10
26.92
54.11
60
65
70
80
90
100
613.31
2229.99
3245
4046
4449.5
4897.76
5389.72
5929.81
2.3
76.43
286.06
352
400
442
484
532
615.61
2306.42
3531.06
4398
4849.5
5339.76
5873.72
6461.81
76.43
286.06
352
400
442
484
532
586
539.18
2020.36
3179.06
3998
4407.5
4855.76
5341.72
5875.81
539.18
2020.36
3179.06
3998
4407.5
4855.76
5341.72
5875.81
539.18
2020.36
3179.06
3998
4407.5
4855.76
5341.72
5875.81
8
9
10
11
(i)
71.65
178.06
185
194
204
214
225
236
610.83
2198.42
3364.06
4192
4611.5
5069.76
5566.72
6111.81
80.94
162.68
228.94
293
322
357.09
402.81
454.68
Interest
11.51
10.24
35
76
77
74
71
69
69.43
152.44
193.94
217
245
283.09
331.81
385.68
7.69
18.89
10
10
11.2
12
0.22
8.97
(d) Others
0.43
6.69
8.34
34.55
10
10
11.2
12
58.52
54.4
0.83
59.35
54.4
Sub-total ( income )
(ii)
(iii)
12
13
14
15
-51.01
-19.85
10
10
11.2
12
18.42
132.59
201.94
225
255
293.09
343.01
397.68
78.8
90.56
105.99
122.88
18.42
132.59
201.94
225
176.2
202.53
237.02
274.8
17
26 | P a g e
18.42
132.59
201.94
225
176.2
202.53
237.02
274.8
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
ACTUAL
ACTUAL
PRO.
PRO.
PRO.
PRO.
PRO.
Audited
EST.
Current
Yr
CURRENT LIABILITIES
Audited
Next Yr.
Next Yr.
Next Yr.
Next Yr.
Next Yr.
Year
31-3-09
31-3-10
31-3-11
31-3-12
31-3-13
31-3-14
31-3-15
31-3-16
No. of months
12
12
12
12
12
12
12
12
500
500
550
550
550
550
(ii)
(iii)
Of which BP & BD
SUB TOTAL
500
500
550
550
550
550
413.02
955.1
380
479
521
573
630
693
76.31
22.06
20
30
30
30
30
30
28.5
59.1
60
60
60
60
60
60
Dividend payable
30.4
30.1
31.5
20.52
16.16
178.69
172.22
173.42
173.42
183.42
183.42
183.42
80
696.52
1208.48
663.82
772.52
825.92
866.94
919.58
863
696.52
1208.48
1163.82
1272.52
1375.92
1416.94
1469.58
1413
SUB-TOTAL (B)
10
LIABILITIES
11
12
Preference shares
Term loans
8.75
44.7
98.28
68.18
36.68
16.16
14
15
Unsecured Loan
27 | P a g e
16
70
70
70
70
70
70
17
8.75
44.7
168.28
138.18
106.68
86.16
70
70
18
705.27
1253.18
1332.1
1410.7
1482.6
1503.1
1539.58
1483
365
365
365
365
365
365
365
365
NET WORTH
19
20
21
Share premium
170
170
170
170
170
170
170
170
22
83.41
83.41
83.41
83.41
83.41
83.41
83.41
83.41
23
10.23
212.17
437.17
613.37
815.9
1052.92
1327.72
-0.78
53.62
53.62
53.62
53.62
53.62
53.62
53.62
24
NET WORTH
495.27
682.26
884.2
1109.2
1285.4
1487.93
1724.95
1999.75
25
1200.54
1935.44
2216.3
2519.9
2768
2991.03
3264.53
3482.75
Others (specify)
ANALYSIS OF BALANCESHEET
Name: UB STAINLESS LIMITED
Formerly WEST COAST SAW PIPES LTD.
ASSETS
Year
26
27
(I)
(ii)
28
(I)
(ii)
29
No. of months
Cash and bank balances
Investment (other than long term Investmt
Government & other Trustee securities
Fixed Deposits with Banks
Receivables other than deferred &
exports (include bills purchased and
Discounted by banks
Export receivables(include bills
purchased & discounted by banks
Installments of deferred
Receivables (overdue within one yr.)
28 | P a g e
ACTUAL
ACTUAL
Audited
Audited
Amount in
Rs. Lacs
EST.
PRO.
Current
Yr
Next Yr.
Next Yr.
Next Yr.
Next Yr.
Next Yr.
31-3-09
12
60.01
31-3-10
12
17.65
31-3-11
12
5.79
31-3-12
12
14.73
31-3-13
12
20.74
31-3-14
12
23.23
31-3-15
12
52.33
31-3-16
12
79.32
0
30.66
0
1.9
0
100
0
100
0
125
0
125
0
140
0
150
143.05
521.06
666.67
833.33
916.67
1008.33
1109.17
1220.08
PRO.
PRO.
PRO.
PRO.
30
(I)
(ii)
(iii)
(iv)
31
32
33
34
35
36
37
38
(I)
(ii)
(iii)
(iv)
39
40
41
42
43
44
45
46
47
48
Inventory:
Raw materials(including stores & other
items used in the process of
manufacturing
(a) Imported
(b) Indigenous
Stock-In-Process
Finished goods
Other Consumable Spares
(a) Imported
(b) Indigenous)
Advance Recoverable in cash or in kind
Advance payment of taxes
Other Current assets Specify major items
(a.) Advance recoverable
(b.) Deposits
(c.)
(d.)
193.13
582.08
690
823
906.75
995.63
1094.19
1204.51
112.37
0
112.37
76.43
0
4.33
0
4.33
0
74.25
225.19
221.44
3.75
0
0
290.62
0
290.62
286.06
0
5.4
0
5.4
0
107.89
159.45
155.7
3.75
0
0
328
50
278
352
0
10
0
10
0
80
73.75
70
3.75
0
0
410.5
62.5
348
400
0
12.5
0
12.5
60
60
63.75
60
3.75
0
0
450.75
68.75
382
442
0
14
0
14
60
60
63.75
60
3.75
0
0
496.63
75.63
421
484
0
15
0
15
60
60
103.75
60
3.75
40
0
546.19
83.19
463
532
0
16
0
16
60
60
63.75
60
3.75
0
0
600.51
91.51
509
586
0
18
0
18
60
60
63.75
60
3.75
0
0
726.29
1390.03
1616.21
1954.81
2152.91
2375.94
2579.44
2837.66
717.57
245.8
471.77
823.82
299.91
523.91
940
359.91
580.09
975
424.91
550.09
1095
494.91
600.09
1175
574.91
600.09
1335
664.91
670.09
1395
764.91
630.09
2.48
0
0
21.5
0
0
20
0
0
15
0
0
15
0
0
15
0
0
15
0
0
15
0
0
2.48
21.5
20
15
15
15
15
15
2.48
21.5
20
15
15
15
15
15
0
1200.54
495.27
0
1935.44
682.26
0
2216.3
884.2
0
2519.9
1109.2
0
2768
1285.4
0
2991.03
1487.93
0
3264.53
1724.95
0
3482.75
1999.75
29.77
1.04
1.42
181.55
1.15
1.84
452.39
1.39
1.51
682.29
1.54
1.27
776.99
1.56
1.15
959
1.68
1.01
1109.86
1.76
0.89
1424.66
2.01
0.74
0.02
0.07
0.19
0.12
0.08
0.06
0.04
0.04
FIXED ASSETS
Gross Block (Land & Building
machinery, work-in-process)
Depreciation to date
NET BLOCK
OTHER NON-CURRENT ASSETS
Investment/book debts/advances/
deposits which are not current assets
a) Investment in subsidiary Co/ Asso.
b) Others
Advances to supplier of capital goods/cont.
Deferred receivables (maturity> 1 year
Others (Receivables over six months)
Non-consumables stores & spares
Other non-current assets including dues
from Directors
TOTAL OTHER NON-CURR. ASSETS
Intangible assets (patents, goodwill, prelim
expenses, bad/ doubtful exp not provided
etc
TOTAL ASSETS(34+37+41+42)
TNW (24-42)
NET WORKING CAPITAL
(17+24)-(37+41+42) tally with 34-10
CURRENT RATIO (34/10)
TOL/TNW (18/44)
Total term liabilities/tangible net
worth(17/44)
29 | P a g e
FORM
IV
COMPARATIVE STATEMENT OF CURRENTS ASSETS AND CURRENT LIABILITIES
Name:
PRO.
PRO.
PRO.
PRO.
PRO.
Audited
EST.
Current
Yr
Next Yr.
Next Yr.
Next Yr.
Next Yr.
Next Yr.
Year
31-3-10
31-3-11
31-3-12
31-3-13
31-3-14
31-3-15
31-3-16
No. of months
12
12
12
12
12
12
12
A. CURRENT ASSETS
17.65
5.79
14.73
20.74
23.23
52.33
79.32
1.9
100
100
125
125
140
150
521.06
666.67
833.33
916.67
1008.33
1109.17
1220.08
582.08
690
823
906.75
995.63
1094.19
1204.51
328
410.5
450.75
496.63
546.19
600.51
50
62.5
68.75
75.63
83.19
91.51
(a) Imported
290.62
278
348
382
421
463
509
(b) Indigenous
286.06
352
400
442
484
532
586
Stock-In-Process
Finished goods
5.4
10
12.5
14
15
16
18
5.4
10
12.5
14
15
16
18
(a) Imported
60
60
60
60
60
(b) Indigenous)
107.89
80
60
60
60
60
60
159.45
73.75
63.75
63.75
103.75
63.75
63.75
155.7
70
60
60
60
60
60
3.75
3.75
3.75
3.75
3.75
3.75
3.75
(b.) Deposits
40
(c.)
30 | P a g e
(d.)
TOTAL CURRENT ASSETS
1390.03
1616.21
1954.81
2152.91
2375.94
2579.44
2837.66
PRO.
PRO.
PRO.
PRO.
PRO.
Audited
EST.
Current
Yr
Next Yr.
Next Yr.
Next Yr.
Next Yr.
Next Yr.
Year
31-3-10
31-3-11
31-3-12
31-3-13
31-3-14
31-3-15
31-3-16
No. of months
12
12
12
12
12
12
12
500
500
550
550
550
550
Of which BP & BD
SUB TOTAL
500
500
550
550
550
550
955.1
380
479
521
573
630
693
22.06
20
30
30
30
30
30
59.1
60
60
60
60
60
60
Dividend payable
30.4
30.1
31.5
20.52
16.16
172.22
173.42
173.42
183.42
183.42
183.42
80
1208.48
663.82
772.52
825.92
866.94
919.58
863
B.
CURRENT LIABILITIES
31 | P a g e
FORM V
COMPUTATION OF MAXIMUM PERMISSIBLE BANK FINANCE FOR WORKING CAPITAL
Name:
ACTUAL
ACTUAL
EST.
Audited
Audited
Current Yr
PRO.
PRO.
PRO.
PRO.
PRO.
Next Yr.
726.29
1390.03
1616.21
696.52
1208.48
663.82
772.52
825.92
866.94
919.58
863.00
29.77
181.55
952.39
1182.29
1326.99
1509.00
1659.86
1974.66
7.44
45.39
238.10
295.57
331.75
377.25
414.97
493.67
5.Actual/projected NWC
29.77
181.55
452.39
682.29
776.99
959.00
1109.86
1424.66
22.33
136.16
714.29
886.72
995.24
1131.75
1244.89
1480.99
0.00
0.00
500.00
500.00
550.00
550.00
550.00
550.00
0.00
0.00
500.00
500.00
550.00
550.00
550.00
550.00
726.29
1390.03
1616.21
1954.81
2152.91
2375.94
2579.44
2837.66
696.52
1208.48
663.82
772.52
825.92
866.94
919.58
863.00
29.77
181.55
952.39
1182.29
1326.99
1509.00
1659.86
1974.66
181.57
347.51
404.05
488.70
538.23
593.99
644.86
709.42
1954.81
2152.91
2375.94
2579.44
2837.66
8.MPBF
5.Actual/projected NWC
29.77
181.55
452.39
682.29
776.99
959.00
1109.86
1424.66
-151.80
-165.96
548.34
693.59
788.76
915.01
1015.00
1265.24
0.00
0.00
500.00
500.00
550.00
550.00
550.00
550.00
8.MPBF
-151.80
-165.96
500.00
500.00
550.00
550.00
550.00
550.00
-151.80
-165.96
Thus the Maximum Permissible Bank Finance (MPBF) for the year 2010-11 and 2011-12 is
Rs. 500 Lacs.
32 | P a g e
2. After analyzing the process, I have realized that most of the delay in the process is due to the
delay in collection of documents from the customer end. Therefore initially at the point of
contact with the customers, there should be a checklist form provided to the customers for the
various loans that the customers have applied for. And the customer should be aware of all the
papers that would be required for the project appraisal.
For example : If any SME organization is applying for the Working Capital enhancement or
renewal or for the term loan, then the financial of the company i.e. Audited CMA data for the
last 3 years, Provisional documents upto the last quarter, Projected data should be submitted.
If the company is applying for the loan over the Collateral Security then some documents like
Copy of the Title deed, NEC ( Non-Encumbrance Certificate), Certified copy of the TITLE
DEED, Valuation report should be submitted by the customers issued by Bank approved Valuer
or Advocate.
33 | P a g e
REFRENCES
34 | P a g e
ANNEXTURES
ANNEXTURE A:
14.09.2011
Enhancement
Asset Classification as on ..
Standard
NIL
Customer ID No.
GAA000172
Activity Code
NA
03.07.2010
1.a)
b)
35 | P a g e
Gandhi maidan,Patna
c)
Works/Factory
d)
Date of incorporation/
establishment
2006
e)
12.09.2006
f)
Business
Activity
Installed Capacity
2.
DO
Branch Office/CO
3.a)
NIL
Directors/Partners/Proprietors
Proprietor; SAMIR KUMAR
(Name, Address, Mobile No., e- 9334254775.9931692445
mail
ID of main Directors/Key persons)
b)
c)
d)
e)
Whether Memorandum of
Association permits the Activity &
Powers for borrowings
NA
f)
Shareholding Pattern
Proprietary Concern
g)
36 | P a g e
to NO
YES
4. Facilities Recommended:
Nature
(Rs.in lacs)
Proposed
Existing
Fund Based
CC(H)/CC (Book Debt)
Inland Bills limit
FOBP/FOUBP/FABC
Others
Fund Based Ceiling
Non Fund Based
ILC/FLC
ILG/ FLG
Non Fund Based Ceiling
Term Loan
Limit of credit exposure on account of all
derivative products
TOTAL COMMITMENT
44.00
150..00
44.00
150.00
6. A
NIL
Existing
FB
NFB
Share %
FB
NFB
Proposed
FB
NFB
Share %
FB
NFB
FB
NFB
37 | P a g e
of
Gross Sales
Other Income
Operating
Profit/Loss
Profit before
tax
Profit after tax
Cash profit/
(Loss)
Block Assets
Depreciation
Net Assets
Secured Loan
Unsecured
Loan
Paid up capital
Reserves and
Surplus
excluding
38 | P a g e
Audited
103.12
0.17
4.48
Audited
277.65
0.14
11.67
Audited
663.35
0.38
18.55
Projected
993.82
0.5
38.14
2.42
4.14
6.55
5.85
2.42
2.57
4.13
4.14
6.21
6.77
5.44
5.7
1.15
0.15
1.00
6.04
0.00
1.00
0.12
0.88
9.80
0.00
1.73
0.56
1.17
38.03
0.00
1.11
0.27
0.84
160
0
10.18
0.00
20.00
0.00
73.55
0.00
87
0
revaluation
reserves
Misc.
expenditure
not written off
Accumulated
losses
Deferred Tax
Liability/Asset
Tangible Net
Worth
Net Working
Capital
Current Ratio
Debt Equity
Ratio
Operating
Profit/Sales
7.A(ii)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
10.18
20.00
73.55
87
9.18
15.47
56.24
69.93
2.39
NA
1.75
NA
3.21
NA
1.43
NA
4.34
4.20
2.80
3.84
CAPITAL:
31.03.09 31.03.10 31.03.11 31.03.12
The capital of
Audited Audited Audited Projection
the company
Capital
10.18
20.00
73.55
87.00
has
increased to Rs 73.55 lacs (2011) from 10.18 lacs in 2009.Retention of Profits and fresh
additions of capital has ensured that the capital has improved. It is projected to further
improve to Rs 87.00 lack as on close of F.Y 2012.
SALES
CURRENT RATIO
31.03.09 31.03.10 31.03.11 31.03.12
The Current account of the
Audited Audited Audited Projection
Firm has fluctuated on
C.R 2.39
1.75
3.21
1.43
account of the increases in
Current Liability .However it
Has always remained much above the accepted level.
7. B
7.C
NIL
7. D
7. E
7. F
unit
Overall likely impact of (7.B to 7.E) on the financial position of the borrowing
NIL
8. A
Primary Security.
40 | P a g e
i)
ii)
8. B
Guarantee/Guarantors
Name of Guarantor
Neelam Kumari
NMs
Previous
34.08
Jyoti Devi
18.15
17.50
12.00
12.00
17.50
12.70
7.50
7.50
Present
117.70
IPs
Previous
34.50
Present
61.00
CR Date
Previous
Present
12.11.2009
20.09.2011
12.11.2009
20.09.2011
12.11.2009
20.09.2011
41 | P a g e
Whet
her
existi
ng/
fresh
Vacant plot
Khata 17,Plot
386Tauji No:
302,Mauja
Kamarji.Patna
Khata
No:658,Plot
1690,Tauji
360,Mauja
Manpur
Bairia,Gopalpur
,Patna
Khata
No:658,Plot
1668,1690,Taji
360,MAuja
Manpur
Bairia,Patna
Khata No3,Plt
No: 672,Tauji
5753,Thana
93,Mauja
Chilbili,P.S.Beu
r,Patna
As per Sale
Deed 13017,Dtd
13.12.2009,Paha
ripar,Patna
As per Sale
Deed No:
15222,dtd
26.12.2006,Than
a 33,Tauji
5071,Beur,
Ward No: 55,PS
Mal
Salami,Patna
9.
1878.
18
2722
1769.
30
2722
1327
Neelam
Kumari
w/o
Sameer
Kumar
Neelam
Kumari
w/o
Sameer
Kumar
NA
16.18
15.00
Value
s
Report
27.06.201
1
Fres
h
NA
51.33
46.00
Value
s
Report
27.06.201
1
Fres
h
Sameer
Kumar
s/o
Ramad
har
Sngh
Sameer
Kumar
s/o
Ramad
har
Sngh
Ram
Naresh
Sharma
NA
40.97
37.00
Value
s
Report
27.06.201
1
Fres
h
NA
24.00
21.5
Value
s
Report
27.06.201
1
Fres
h
7.50
7.50
7.50
Value
s
Report
Exist
ing
Neelam
Kumari
w/o
Sameer
Kumar
34.50
34.50
34.50
Value
s
Report
Exist
ing
Jyoti
Devi
12.00
12.00
12.00
Value
s
Report
Exist
ing
Balance
(Rs. In lacs)
Irregularity
along
with
Position of Account as on
Nature
42 | P a g e
Limit
VS
DP
Cash Credit
44.00
99.42
69.59
50.26
reasons
NIL*
*Drawing above the sanctioned limit of Rs 44.00 permitted by the Chief Manager Incumbent)
within his vested powers.
10. a
Nature of Limit
Cash Credit
Amount
44.00 Lac
Interest/Commission Earned
365438
(Rs. In lacs)
Yield (%)
8.29%
Comments, if any
10.D
43 | P a g e
11.
Brief History (Should also include comments on industry scenario and industry outlook,
management, production and marketing, borrowers' diversification, expansion,
modernization programme, risk perception including environmental and social risk along
with proposed mitigations)
The applicant firm is a Proprietary concern of Shri Sameer Kumar Singh s/o Ramadhar
singh.The Firm has been dealing with PNB since its inception in 2006.Previously the
firm had its credit limits with PNBTransport Nagar Patna. Over a period of time the firm
was able to increase its sales and as a result of the same the need for higher Working
Capital forced them to Shift to the Current Branch wherein the Higher Authority was
vested with more. Powers .The Working Capital Limit has increased to R 44 lacs from Rs
8.00 lacs during the period. The firm is a Whole sale Distributor of Various big time
Cement Companies. To meet the future growth potential they have applied for revision of
limits to Rs 150.00 lacs
12.
Present Proposal
Enhancement of C/C (hypo) to Rs 150.00 lacs from existing Rs 44.00 lacs
Brief of the proposal
a)
b)
Justification for working capital sanction as per simplified method or traditional method
of lending, as the case may be
i)
ii)
PBF will be computed at 25% of estimated turnover accepted for PBF net of margin
The margin will be computed higher of 5% of estimated turnover or projected
NWC.
Since the bank finance is only intended to support need based requirement of
a borrower if the available N WC (net long term surplus funds) is more than 5
44 | P a g e
per cent of the turnover the former should be reckoned for assessing the extent
of bank finan ce
Since the applicant is within the stipulated credit limit the MPBF as per Nayak
Committee is as follows.
Projected Sales for t he period 2011-2012
WCG @ 25% of sales
Margin @ 5 % of Sales
NWC
MPBF
967.00 lacs
241.75 lacs
48.35.lacs
69.93 lacs
171.82 lacs
The actual working capital gap of Rs 229.93 will be met by bor rowing from
Bank (RS 150.00 lacs ) and existing NWC (RS 69.93 lacs)
Additional
funding of Rs 10.00 lac s will be brought in over the couple of months.
c) Justification of non-fund based facilities
(A)
ILC (Indigenous)
(Rs in Crore)
FLC
(Imported)
13.
Purpose
a) Comments on Credit Risk Rating Report (Reasons for down gradation be mentioned)
Credit Risk Rating of the Firm has improved from BB to AA.The improvement has
been on account of higher TNW (on account of fresh infusion of capital), Higher
Profitability and higher NWC.
Recommendations:
Recommended for Sanction of Cash Credit (Hypothecation) limit of Rs 150.00 lacs by
Enhancement from Rs 44.00 lacs with terms and conditions as per annexure.
46 | P a g e
General Instructions
If account is eligible for stock audit, the observations of stock audit reports along with
comments are furnished.
47 | P a g e
ANNEXTURE B:
SALES
PURCHASE
GROSS POFIT
NET PROFIT
C.A
C.L.
C.R
NWC
TNW
DER
31st
March
31st
March
2012
2013
105
68.5
11.95
2.06
59.28
44.6
1.32
14.68
18.65
1.53
155.1
98.5
23.45
10.68
67.11
45.34
1.48
21.77
28.13
A.PROJECTED
SALE
B. ACCEPTED
SALE
C. 25% OF ACCEPTED
SALE
(W/C requirement)
D. Less : 5%of Accepted sale
5.25
7.25
14.45
21.77
2012
2013
105
155.1
105
145
26.25
36.25
14.45
21.77
11.8
14.48
OR
E. NWC whichever is higher
MPBF
(C E)
48 | P a g e
Recommendation:
As when we go through the case we got to know that in 2013 his sales certainly go up and it let
to increase the NP.
And in this case the company asks for cash credit of Rs.12 .00 lacs but the bank provided these
organization Rs.10 lacs cash credit.
So according to me its a profitable approach to the bank that they provide cash credit to BIHAR
PRECISION FORGIEN and they have charges the rate of interest by rating method.
Rating can be done by analyzing Balance sheet and trading, P/L a/c in the software of the banks,
where they find the rate of interest to be charged.
They have taken a Land on Mortgage for this Cash Credit.
The basic rate of charging is 10.25 % + the rating.
ANNEXTURE C:
SHEETAL GARMENTS
SHEETALS GARMENTS
ACTUAL
2011
105.32
ESTIMATE
2012
1)
TOTAL C.A
2)
OTHER LIABILITIES
(EXCEPT BORROWING)
(.16+.15)
0.21
(.90+2.49+.06)
3.45
3)
105.11
288.3
4)
26.28
72.07
49 | P a g e
5)
NWC (ACTUAL/PROJECTED)
6)
ITEMS 3 MINUS
ITEM 4
105.11
(105.32.21)
108.3
(291.75183.45)
78.83
216.22
7)
ITEM 3 MINUS
ITEM 5
180
8)
PBF
(LOWER 0F 6 AND ITEM 7)
180
9)
NWC TO TCA %
99.8
37.12
10)
74.85
74.11
11)
12)
0.2
1.18
13)
INVESTMENT TO
NET SALES PER DAY
NA
NA
14)
15)
Thus Maximum Permissible Bank Finance for Sheetal Garments is Rs.180 Lacs.
50 | P a g e
Annexure D:
ONLINE CREDIT RISK RATING SYSTEM/PNB TRACThis a system developed by PNB for categorizing the risking BOND in the loan ACCOUNT
there are various tool for rating the account in this pnb track system, which is as under procedure
1. Small loan: For a loan above 2 lacs to 20 lacs
2. Small Loan II : This is for a limit greater than 20 lacs TO 50 lacs
3. Mid corporate loans: For 50 lacs to 5 crores.
4. Large corporate: 5 crore and above
5. New Entrepreneur:
6. NBFC
Risk rating is done through our model for categorizing the risk to linking with price (rate of
interest).
RATING SCALE
SCORE OBTAINED
RATING
DESCRIPTION
MINIMUM RISK
51 | P a g e
ABOVE 80
PNB
AAA
PNB
AA+
PNB AA
PNB AA-
PNB A+
PNB A
PNB A-
MARGINAL RISK
MODEST RISK
PNBBB+
PNB BB
PNB BB-
PNB B+
PNB B
PNB B-
PNB C
HIGH RISK
PNB D
CAUTION
AVERAGE RISK
52 | P a g e