Credit Appraisal

Chap 1: Introduction
Project financing is an innovative and timely financing technique that has been used on many high-profile corporate projects, including Euro Disneyland and the Eurotunnel. Employing a carefully engineered financing mix, it has long been used to fund large-scale natural resource projects, from pipelines and refineries to electric-generating facilities and hydro-electric projects. Increasingly, project financing is emerging as the preferred alternative to conventional methods of financing infrastructure and other large-scale projects worldwide. Project Financing discipline includes understanding the rationale for project financing, how to prepare the financial plan, assess the risks, design the financing mix, and raise the funds. In addition, one must understand the cogent analyses of why some project financing plans have succeeded while others have failed. A knowledge-base is required regarding the design of contractual arrangements to support project financing; issues for the host government legislative provisions, public/private infrastructure partnerships, public/private financing structures; credit requirements of lenders, and how to determine the project's borrowing capacity; how to analyze cash flow projections and use them to measure expected rates of return; tax and accounting considerations; and analytical techniques to validate the project's feasibility Project finance is different from traditional forms of finance because the credit risk associated with the borrower is not as important as in an ordinary loan transaction; what is most important is the identification, analysis, allocation and management of every risk associated with the project. The purpose of this project is to explain, in a brief and general way, the manner in which risks are approached by financiers in a project finance transaction. Such risk minimization lies at the heart of project finance. In a no recourse or limited recourse project financing, the risks for a financier are great. Since the loan can only be repaid when the project is operational, if a major part of the

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project fails, the financiers are likely to lose a substantial amount of money. The assets that remain are usually highly specialized and possibly in a remote location. If saleable, they may have little value outside the project. Therefore, it is not surprising that financiers, and their advisers, go to substantial efforts to ensure that the risks associated with the project are reduced or eliminated as far as possible. It is also not surprising that because of the risks involved, the cost of such finance is generally higher and it is more time consuming for such finance to be provided. Project finance is the financing of long-term infrastaructure and industrial projects based upon a complex financial structure where project debt and equity are used to finance the project. Usually, a project financing scheme involves a number of equity investors, known as sponsors, as well as a syndicate of banks which provide loans to the operation. The loans are most commonly non-recourse loans, which are secured by the project itself and paid entirely from its cash flow, rather than from the general assets or creditworthiness of the project sponsors. The financing is typically secured by all of the project assets, including the revenue-producing contracts. Project lenders are given a lien on all of these assets, and are able to assume control of a project if the project company has difficulties complying with the loan terms. Generally, a special purpose entity is created for each project, thereby shielding other assets owned by a project sponsor from the detrimental effects of a project failure. As a special purpose entity, the project company has no assets other than the project. Capital contribution commitments by the owners of the project company are sometimes necessary to ensure that the project is financially sound. Project finance is often more complicated than alternative financing methods. It is most commonly used in the mining, transportation, telecommunication and public utility industries. Risk identification and allocation is a key component of project finance . A project may be subject to a number of technical, environmental, economic and political risks, particularly in developing countries and emerging markets. Financial institutions and project sponsors may conclude that the risks inherent in project development and operation are unacceptable (unfinanceable). To cope with these risks, project sponsors in these

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industries (such as power plants or railway lines) are generally completed by a number of specialist companies operating in a contractual network with each other that allocates risk in a way that allows financing to take place. The various patterns of implementation are sometimes referred to as "project delivery methods." The financing of these projects must also be distributed among multiple parties, so as to distribute the risk associated with the project while simultaneously ensuring profits for each party involved.

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Chap 2: AN OVERVIEW
2.1 Banking Sector There have been major structural changes in the financial sector since banking sector reforms were introduced in India in 1992. Since then Banks have been lending aggressively providing funds towards infrastructure sector. Major policy measures include phased reductions in statutory pre-emption like cash reserve and statutory liquidity requirements and deregulation of interest rates on deposits and lending, except for a select segment. The diversification of ownership of banking institutions is yet another feature which has enabled private shareholding in the public sector banks, through listing on the stock exchanges, arising from dilution of the Government ownership. Foreign direct investment in the private sector banks is now allowed up to 74 per cent. The co-existence of the public sector, private sector and the foreign banks has generated competition in the banking sector leading to a significant improvement in efficiency and customer service. The share of private and foreign banks in total assets increased to 31.5 per cent at end-March 2007 from 27.6 per cent at end-March 2006 and less than 10.0 per cent at the inception of reforms.
•

The nationalized banks have more branches than any other types of banks in India. Now there are about 33,627 Branches in India, as on March 2005. Investments of scheduled commercial banks (SCBs) also saw an increase from Rs 8,04,199 crore in March 2005 to Rs 8,43,081 crore in the same month of 2006. India's retail-banking assets are expected to grow at the rate of 18% a year over the next four years (2006-2010). Retail loan to drive the growth of retail banking in future. Housing loan account for major chunk of retail loan.

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•

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2.2 An Overview on Union Bank Of India
Union Bank of India was inaugurated by the father of the nation – Mohandas Karamchand Gandhi. It commenced operations in the year 1920. Union Bank has offered vast and varied services to its entire valuable clientele taking care of their needs. Today, with its efficient customer service, consistent profitability & growth, adoption of new technologies and value added services, Union Bank truly lives up to the image of, “Good People to bank with”. Anticipative banking is an integral ingredient of value-based services. This ability to gauge the customer's needs long before he realizes, best reduces the gap between expectance and deliverance Manpower is the key factor for the success of any organization. Union Bank has a dedicated family of about 26,000 qualified / skilled employees who will and always will be delighted to extend their services to the customers with heartfelt efforts The Bank is a Public Sector Unit with 55.43% Share Capital held by the Government of India. The Bank came out with its Initial Public Offer (IPO) in August 20, 2002 and Follow on Public Offer in February 2006. Presently 44.57 % of Share Capital is presently held by Institutions, Individuals and Others. The Bank has over the years earned the reputation of being a techno-savvy Bank and is one of the front runners amongst public sector bank in the field of technology. It is one of the pioneer public sector banks, which launched Core Banking Solution in 2002. As of September 2005, more than 719 branches/extension counters of Bank are networked under Core Banking Solution, powered with the centralized technology platform, the Bank has launched multiple Electronic Delivery Channels and has installed nearly 469 networked ATMs. Online Tele banking facility is available to all its Core Banking customers. The multi facility versatile Internet Banking Solution provides extensive information in addition to the on line transaction facility to both individuals and corporate

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banking with the Core Banking branches of the Bank. In addition to regular banking facilities, today customer can also avail variety of value added services like cash management service, insurance, mutual funds, Demat from the bank. Today there are more than 26,000 employees in Union Bank of India. UBI has been ranked at 5th position among the nationalized bank in India. Overview on banks deposits and advances

Items
Deposits Investments

2003-04

2004-05

2005-06

2006-07 2007-08

Advances

2.2.1

Rationale for the study

Offering credit is an operation fraught with risk. Before offering credit to an organization, its financial health must be analyzed. Credit should be disbursed only after ascertaining satisfactory financial performance. Based on the financial health of an organization, banks assign credit ratings. These credit ratings are used to fix the interest rate and quantum of installment. This study aims to analyze the credit health of organizations that approach Union Bank of India for foreign exchange credit facilities. After analyzing credit health, the credit rating is determined. On the basis of credit rating, the interest rate guidelines circular is consulted to fix a price for the credit facilities i.e. determine the interest rate. 2.2.2 Credit disbursement at Union Bank of India

This project was undertaken at the Industrial Finance Branch of Union Bank of India, at the Credit Department. Financial requirements for Project Finance and Working Capital purposes are taken care of at the Credit Department. Companies that intend to seek credit facilities approach the bank. Primarily, credit is required for following purposes:1. Working capital finance 6

2. Term loan for mega projects 3. non fund based Limits Like Letter of Guarantee, Letter of Credit Companies present audited balance sheets of the current and previous years. These are used to determine the financial health, turnover trends and rise and fall of profitability. Then credit rating is done. The financial health and credit rating are theoretical methods for determining the right interest rate. However, in practice, banks consider other factors such as history with client, market reputation and future benefits with clients. Thus, a difference exists between theory and practice.
2.2.3 Objectives of the project

 To assess the financial health of organizations that approach Union Bank of India for credit for import export purposes. This would entail undertaking of the following procedures: Analysis of past and present financial statements Analysis of Balance Sheet Analysis of Cash Flow Statements Examination of Profitability statements Examination of projected financial statements Examination of CMA data

     

 To assess the suitability of the company for disbursement of credit. This would involve the following actions:       Use of credit rating charts Evaluation of management risk Evaluation of financial risk Evaluation of market-industry risk Evaluation of the facility Evaluation of compliance of sanction terms

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

Calculation of credit rating

 Determination of interest rate: This would entail the following sequence of actions.     Collect data regarding financial health evaluation Noting down of credit rating Referencing the banks’ interest rate guidelines circular Choosing the interest rate from the circular on the basis of financial health and credit rating

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Chap 3 : Term Loan Assesment
3.1 Steps in term loan processing

Submission of Project Report along with the Request Letter .

Carrying out due diligence Preparing Credit Report

Determining Interest Rate

Preparing and submission of Term Sheet

If not approved

if approved

Preparation of proposal

Submission of Proposal to designated authority If No queries raised If queries raised

Project Rejected

Sanction of proposal on various Terms & Condition

Solve the queries

Communication of Sanction Terms & Condition

Acknowledgement of Sanction Terms & Condition Application to comply with Sanction Terms & Condition & execution of Loan Documents Disbursement

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3.1 CONDUCTING FEASIBILITY STUDY
The success of a feasibility study is based on the careful identification and assessment of all of the important issues for business success. A detailed Project Report is submitted by an enterpreneur , prepared by a approved agency or a consultancy organisation. Such report provides indepth details of the project requesting finance. It includes the technical aspects, Managerial Aspect, the Market Condition and Projected performance of the company. It is neccessay for the appraising officer to cross check the information provided in the report for dtermining the worhiness of the project. Project Details: Definition of the project and alternative scenarios and models.
• • • •

List the type and quality of product(s) or service(s) to be marketed. Outline the general business model (ie. how the business will make money). Include the technical processes, size, location, kind of inputs Specify the time horizon from the time the project is initiated until it is up and running at capacity.

Relationship to the surrounding geographical area.
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Identifies economic and social impact on local communities. Identifies environmental impact on the surrounding area.

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MARKET FEASIBILITY Industry description.
• •

Describes the size and scope of the industry, market and/or market segment(s). Estimates the future direction of the industry, market and/or market segment(s).

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Describes the nature of the industry, market and/or market segment(s) (stable or going through rapid change and restructuring).

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Identifies the life-cycle of the industry, market and/or market segment(s) (emerging, mature)

Industry Competitiveness.
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Investigates industry concentration (few large producers or many small producers).

• • •

Analyzes major competitors. Explores barriers/ease of entry of competitors into the market or industry. Determines concentration and competitiveness of input suppliers and

product/service buyers.
•

Identifies price competitiveness of product/service.

Market Potential.
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Will the product be sold into a commodity or differentiated product/service market?

•

Identifies the demand and usage trends of the market or market segment in which the proposed product or service will participate.

• • •

Examines the potential for emerging, niche or segmented market opportunities. Explores the opportunity and potential for a "branded product". Assesses estimated market usage and potential share of the market or market segment.

Sales Projection.
• •

Estimates sales or usage. Identifies and assess the accuracy of the underlying assumptions in the sales projection.

•

Projects sales under various assumptions (ie. selling prices, services provided). 11

Access to Market Outlets.
•

Identifies the potential buyers of the product/service and the associated marketing costs.

Investigates the product/service distribution system and the costs involved. ORGANIZATIONAL/MANAGERIAL FEASIBILITY Business structure.
• • •

Outline alternative business model(s) (how the business will make money). Identify the proposed legal structure of the business. Identify any potential joint venture partners, alliances or other important stakeholders.

• •

Identify availability of skilled and experienced business managers. Identify availability of consultants and service providers with the skills needed to realize the project, including legal, accounting, industry experts, etc.

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Outline the governance, lines of authority and decision making structure.

Managerial Personnel Managerial Personnel play a key role in directing the working of the company. It is important for an organisation to have a pool of eficient personnel who bear the capacity to bail the company out from crisis situation and work towards optimum utlisation of organisational resources. Such capacity of the personnel can be determined by having complete details on following key aspects:   Market reputation on the promoter / management of the company Hands on experience of the management personnel in the industry / Business managed by qualified personnel

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Ability of the promoters / management to bail out the company in case of crisis (for example, this could be derived from a strong group company) Decision making – Is it concentrated ? Organisation structure / Succession planning / Labour relations Is any group company in default / Any Directors on RBI’s negative list / Borrower’s track-record in honouring financial commitment Length of relationship with the bank

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TECHNICAL FEASIBILITY Technology plays an important role in maintaining a competitive position in this highly competitive market conditions. Investing in the proper technology is the key to success it irrespective of size of business thus for achieving its projected performance, it is important for it to have sound technological background. Such technical competence of the project can be determined by having detailed study done on following key aspects: Determining Facility Needs.
• •

Estimates the size and type of production facilities. Investigates the need for related buildings, equipment, rolling-stock

Suitability of Production Technology.
• •

Investigates and compare technology providers. Determines reliability and competitiveness of technology (proven or unproven, state-of-the-art).

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Identifies limitations or constraints of technology.

Availability and Suitability of Location.
• • •

Access to markets. Access to raw materials. Access to transportation. 13

• • • • • • •

Access to a qualified labor pool. Access to production inputs (electricity, natural gas, water, etc.). Investigate emissions potential. Analyze environmental impact. Identifies regulatory requirements. Explores economic development incentives. Explores community receptiveness to having the business located there.

Raw materials.
• • •

Estimates the amount of raw materials needed. Investigates the current and future availability and access to raw materials. Assesses the quality and cost of raw materials and markets of easily substituted inputs.

Other inputs.
• •

Investigates the availability of labor including wage rates, skill level, etc. Assesses the potential to access and attract qualified management personnel.

FINANCIAL FEASIBILITY Estimate the total capital requirements.
•

Assesses the capital needs of the business project and how these needs will be met.

• •

Estimates capital requirements for facilities, equipment and inventories. Determines replacement capital requirements and timing for facilities and equipment.

• •

Estimates working capital needs. Estimates start-up capital needs until revenues are realized at full capacity.

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•

Estimates

contingency

capital

needs

(construction

delays,

technology

malfunction, market access delays, etc.
• • •

Estimates other capital needs. Estimated equity and credit needs. Identifies alternative equity sources and capital availability -- producers, local investors, angel investors, venture capitalists, etc.

•

Identifies and assess alternative credit sources -- banks, government (ie. direct loans or loan guarantees), grants, local and state economic development incentives.

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Assesses expected financing needs and alternative sources -- interest rates, terms, conditions, covenants, liens, etc.

•

Establishes debt-to-equity levels.

Budgets expected costs and returns of various alternatives.
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Estimates expected costs and revenue. Estimates the profit margin and expected net profit. Estimates the sales or usage needed to break-even. Estimates the returns under various production, price and sales levels. This may involve identifying "best case", "typical", and "worst case" scenarios or more sophisticated analysis like a Monte Carlo simulation.

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Assesses the reliability of the underlying assumptions of the financial analysis (prices, production, efficiencies, market access, market penetration, etc.)

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Creates a benchmark against industry averages and/or competitors (cost, margin, profits, ROI, etc.).

• • •

Identifies limitations or constraints of the economic analysis. Determines project expected cash flow during the start-up period. Identifies project an expected income statement, balance sheet, etc. when reaching full operation.

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Study Conclusions The study conclusions contain the information you will use for deciding whether to proceed business. The major categories this section should include are:
• • • •

Identify and describe alternative business scenarios and models. Compare and contrast the alternatives based on their business viability. Compare and contrast the alternatives based on the goals of the producer group. Outline criteria for decision making among alternatives.

Next Step After the feasibility study has been completed and presented, a carefully study and analysis the conclusions and underlying assumptions. Next, you will be faced with deciding which course of action to pursue. Potential courses of action include:
• • •

Choosing the most viable business model, for investment Identifying additional scenarios for further study. Deciding that a viable business opportunity is not available and moving to end the business assessment process.

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3.2 CREDIT REPORT AND CREDIT RATING
The credit report is an important determinant of an individual's financial credibility. They are used by lenders to judge a person's creditworthiness. They also help the person concerned to narrow down on the financial problem areas. Credit report is a document, which comprises detailed information about the credit payment history of an applicant. It is mostly used by the lenders to determine the credit worthiness of an applicant. The business credit reports provide information on the background of a company. This assists one to take crucial business related decisions. People can also assess the amount of business risk associated with a company and then decide whether they would be comfortable in providing them with credit facilities. The degree of interest that would be shown by investors in their company can also be gauged from the business credit reports as they can get an idea of the conception of their customers regarding themselves. Since these records are updated at regular intervals of time they enable people to identify the risk levels associated with a business as well as its future. These reports also allow businesses to get detailed information about the financial status of business partners and suppliers.

What Is A Corporate Credit Rating?
Ratings can be assigned to short-term and long-term debt obligations as well as securities, loans, preferred stock and insurance companies. Long-term credit ratings tend to be more indicative of a country's investment surroundings and/or a company's ability to honor its debt responsibilities. . The ratings therefore assess an entity's ability to pay debts. There are various organization who perform credit rating for various business organization. Union Bank of India follows a finely defined Credit Rating Model for assessing the creditworthiness of the applicant. The credit rating model asses various aspects of the projects and assigns scores against them thereby determining the risk level involved with the project. It is divided in Four Sections: 17

1. Rating of the Borrower
 

Financial Risk Management Risk

2. Market Condition/ Demand Situation 3. Rating of the Facility 4. Business Consideration 5. Cash Flow related parameters 1) Rating of the Borrower: This part of credit rating model deals with assessing the financial and managerial ability of the borrower. The financial ability of the firm is derived by calculating ratios that determine the short term and long term financial position of the firm Short term ratios include Current Ratio, determines the liquidity position of the company over a period of one year. The current ratio is an indication of a firm's market liquidity and ability to meet creditor's demands. It is excess of current assets over current liability. If current liabilities exceed current assets (the current ratio is below 1), then the company may have problems meeting its short-term obligations. If the current ratio is too high, then the company may not be efficiently using its current assets. According to the guidelines given to UBI the ideal level is at 1.33:1 however the acceptable level is at 1.17:1. However at times current ratio may not be a true indicator, the current ratio for road projects is very high but this does not indicate that the company is not using its assets well but the ratio is high because the activity involves more in dealing with current assets. Hence it is important for the evaluator to understand the nature of the industry. Long term ratio include Debt Equity Ratio is a financial ratio indicating the relative proportion of equity and debt used to finance a company's assets. This ratio is also known as Risk, Gearing or Leverage. A high debt equity ratio is not preferable by an investor as the company already has aquired high amount of funds from market thereby reducing the investor share over the securities available, inreasing the risk.

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It is aslo important for the lender bank to assess the firms debt paying capacity over a period. Such capacity is derived by calculating ratio like Debt Serice Coverage Ratio minimum acceptable level is 1.50. It also necessary for the lender to determine the ability of the firm to achieve the projected growth by evaluating the projected sales with actuals.However such parameter remains non applicable if the business is new. Finacial risk evaluation is oly one of the parameter and not thje only parameter for determining the risk level. It is important to evaluate the Management Risk also while evaluating the risk relaing to borrower. It is the management of the company that acts as guiding force for the firm. The key managerial personnel should bear the capacity to bail out the company frm crisis situation. Inorder to remain competitive it is essential to take initiatives. Such skills are developed over years of experience, thus for better performance it is required to have a team of well qualified and expirienced personnel. 2) Market potential / Demand Situation A Company does not operate in isolation there are various market forces that acts in either favourable or unfavraouble manner towards its performance. Thus the rating would not give true picture if does take market or demand situation in consideration. The demand supply situation / market Potential plays an important role in determining the growth level of the company like i) Level of competition : monolpoly , favourable , unfavourable ii) seasonality in demand : affected by short term seasonality, long term seasonality or may not be affected by seasonality in demand. iii)Raw Material Availablity: iv)Locational Issues like proximity to market, neutral, unfavourable. v)Technology ie, proven Technology- not to be changed in immeditate future, technology undergo change, outdated technolgy. vi)Capacity utilisation inputs, infratstructure: Favourable,

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3)Rating of the Facility: The company can start functioning only after completing statutary obligations laid down by the governing authority. Such statutary obligation involves obtaining licenses, permits for ensuring smooth operations. Perparation and Submission of Finacial Statements, Stock statements in the standard format within the given time schedule. 4)Business Consideration: The length of relationship with the bank enables the lender to assess the previous performance of the account holder. A good track record acts in the favour of the applicant, however a under perfomance make the lender more vigiliant. The income value to the bank also given due consideration. Thus Credit Rating of the Business takes into consideration various aspects that directly or indiretly bears an effects the performance of the business. After evaluating the risk level involved the lender bank decided on lending Interest Rate. In UBI they are catagorised in 9 segements 1. lowest Risk CR-1 2. Low Risk CR-2 3. Medium Risk CR- 3 4. Moderate/ Satisfatory Risk CR- 4 5. Fair Risk CR- 5 6. High Risk CR- 6 7. Higher Risk CR- 7 8. highest risk CR- 8 9. NPA CR- 9 In UBI, a business receiving Credit Rating above level 6 are not considered good from point of investment and thus are avoided.

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3.3 DETERMINATION OF INTEREST RATE
The interest rate is determined from the interest rate guidelines circular. This circular is regularly updated to reflect the bank’s latest credit policies. The rupee credit is based on BPLR and the foreign exchange loans are based on LIBOR. The guidelines define how much interest rate is to be assigned for a particular credit rating and credit duration. However, credit rating and its use in determining interest rate is a theoretical concept and the bank may allow a reduction in interest rate under the following conditions: Good Client



The organization is a long term client and brings good business to the bank. The organization’s actions show that it intends to become a long term customer of the bank  Banking Consortium The organization is seeking credit from a consortium of banks. In some cases like this, the lead bank might decide the interest rate and all the member banks of the consortium follow this interest rate.

3.4 TERM SHEET
Following a favrouable feasibility check, credit rating the next step is preparing term sheet . A Term Sheet is breif document that provides details on aspects like:
• •

Account Details Financial highlights for immediate previous two audited years and projection for proceeding year Nature of Project Cost of Project Means of finace 1. Nature of Facility 2. Purpose 21

• • •

3. Tennure of Term Loan 4. Interest rate Reset 5. Margin 6. Interest Rate, Commission  Door to Door Tenor ie.the period within which the entire amount I sto be disbursed. o Repayment Terms o Prime Security o Collateral Security o Upfront fees ie the charges levied by the bank for processing the documents.

3.5 PROPOSAL
An approved term sheet leads to preparation proposal. A proposal is prepared in standard format, this enables the bank to keep a proper track record and also facilitates proper comparision. A proposal a full fledged document providing details on project submitted and requesting finance from bank. A proposal contains information on following aspects:

* Details of Account: It includes name of the Account Holder, Date of incorporation,
Line of Activity, Internal Credit Rating level, Address of the Registered Office, Name of Directors, Share Holding Pattern, Asset Classification, Purpose of the Loan.

* Securities:Lenders often feel more confident about a loan if they are given a security
interest in the assets of a business. Then, if the borrower does not repay the loan as promised, the lender can take the property the borrower pledged, sell it and use the proceeds to repay (or partially repay) the borrowed amount.it provides detailed information on nature of securities given in lieu of the Loan.they are of two types Prime securities, Collateral Secuties

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Prime Securities: Pari Passu is a term used in banking transactions which means that the charge to be created is in continuation of an earlier charge which might be held by the same institution or by an other institution. Collateral Securities: In lending agreements, collateral is a borrower's asset that is forfeited to the lender if the borrower is insolvent --- that is, unable to pay back the principal and interest on the loan. When insolvent, the borrower is said to default on the loan, in which case the lender becomes the owner of the collateral. It includes details on     Nature / Description of collateral security indicating area & location of property Value in Rupees. Date of valuation along with name of Valuer Insurance Amount & Date of Expiry

Personal guarantee / Corporate Guarantee if any, includes Name of the guarantor, Value of Guarantee. * Financial Highlights: It povides details of important financial elements over a period of years. It includes Details on Paid capital, Tangible Networth, Net working Cpaital,Current Assets, Current Liabilities, Net Profit, Net Sales, Reserves and Surplus, Intangible Asstes, Long Term Liailities, Fixed Assets, Investments, Non current Assets like guarantees , Cash Accruals, Capital employed. It also includes ratios like Debt Equity Ratio, Current Ratio, Debt Service Coverage Ratio and so. The interpretation of the financial data presented provides information on the perfomance trend of the company also of the Projections made. Such financial highlight play an important role in assesing the financial strenghts and weakness of the business.

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* Status of the project: A brief of Project In this part of proposal a brief about the project is explained, it includes information on nature, type of project, purpose of the project, commencement details, the promoters and related details of the project. If it is a on-goin project it also gives details on progress and status of progress

* Evaluation of Industry :
This Section gives brief details on the 1. Scope of the industry 2. Growth level and overall performance of the industry 3. Recent Developments and Trend Evaluation

* Conduct of the Account:
This section provides details on : Regularity in Submission of—     Stock Statements / Book Debt Statement QPR Statements / Half Yearly Statement Financial Statements CMA Data

* Compliance to Terms of Sanction
It furnishes information on following aspect:      Completion of Mortgage formalities Registration of Charges with RoC Whether documents valid and in force Compliance of RBI guidelines Whether consortium meetings held at prescribed periodic intervals where the Bank is the leader.

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* Exposure details from banking system (existing) (Incl. Our Bank) The sharing pattern of the banks is mentioned in this section of proposal. It includes    Name of the bank Percentage of share for the fund based and non Fund based Limits Amount in Rs.

Non Fund based credit are in form of gaurantees like Letter of Credit (L/c), Letter of gaurantee (L/g) Letter of Credit A ‘Letter of credit’ also known as documentary credit is the most commonly accepted instrument of settling international trade payments. A letter of credit is an arrangement whereby a bank, acting at the request of a customer, undertakes to pay a third party by a given date, on documents being presented in compliance with the conditions laid down. Letter of Guarantee A letter from a bank stating that a customer owns a particular security and that the bank will guarantee delivery of the security. A letter of guarantee is used by an investor who is writing call options when the underlying stock is not in his or her brokerage account. A Call Option is an agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period. Financial Guarantee: A non-cancelable indemnity bond guaranteeing the timely payment of principal and interest due on securities by the maturity date. If the issuer defaults, the insurer will pay a fixed sum of money to holders of the securities. Financial guarantees are similar to a Standby Letter of Credit, but are issued by an insurance company. A Standby Letter of Credit is a form of insurance on an underlying agreement or obligation (contract), insuring all parties to the contract against failure to perform or pay on the part of one or another party to the contract. Standbys are issued by banks. 25

Assessment of Non Fund Based Limit
1. Non Fund Based Limits are normally to be sanctioned for exixting customer only who already enjoy fund based limits 2. If new borrower full processing as applicable to Fund Based Limits to be carried. 3. Borrower’s background and experience of meeting commitments to be examined in details. 4. L/c limit to be considered as per terms of Purchase or contract, lead period and minimum econmical quantity of supply of stocks 5. Non Fundabsed Limits are to be supported by necessary fund based limits. 6. Past experience of payment of billsunder L/c to be verified before considering new request. 7. While Assessing the L/g Limit contract or agreement which is the base for L/g, should be examined in details for any ambigious clauses. 8. Any request for financial Guarantee to be critically examined before takin decision.

* Details of Sister/ Allied Concerns:
This section provides information about the Sister/ Allied Concerns aspects like the performance, promoters, share holding pattern, operation exposure and experience from various banks.

* Terms and Condition:
It is important both for the bankand the applicant to safegaurd its interest, this could be achieved by settling at mutually acceptable terms and condition inorder to ensure that both the parties the lender and borrower perform their part of obligation thereby not putting other party at loss. All loans are subject to regulations and conditions. The legal information relating to these regulations and conditions can be viewed in this section. It is advisable for both the parties to read this information carefully before approval.

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3.6 DISBURSEMENT:
After submission Proposal to Designated/ Sanctioning Authortiy for sanctioning the Term Loan. the authorities may raise querries, if any relating to projects and thereby convey it to the processing officer the processing officer inturn addresses them to the borrower for necessary step to be taken, such querries are required to be solved to the earliest by the applicant for further proceesing of the proposal. If the authoritiees are satisfied and have no further querries with respect to proposal,the Loan gets sanctioned and the disbursement would be released in as per the terms decided.

3.7 FOLLOW-UP:
This is most cruicial stage in process of term loan assesment. Since amount of credit required is usually high, such amounts are disbursed in one installment, they are paid in installments.this helps the lender bank to understand and assess the utilisation of funds disbursed by the lender Bank. Such evualtion is done by obtaining Lender’s Engineer Report, it is report that provides complete details of the status of the project. It is prepared on monthly basis. It also provides CA Report, it verifies the Finacial details furnished to bank for further disbursement.this is known as renewal of account.

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Chap 4: Analysis of Credit proposals
4.1 Prposal of JKL Ltd.

4.1.1 BACKGROUND:
The company was incorporated on January 5, 2001, however later the name was changed and the current name is effective from March 23, 2006 with the objective of generation of power based on coal. The proposed manufacturing facilities are located at Angul district, Orissa.. The group is already engaged in the business of manufacturing Photographic goods, Polyester film, BOPP films, Metallized films, Cold rolled steel strips and Galvanized sheets. The details of associate concerns are as under :JPL - Photographic films & equipment. JPFL - Polyester chips, Polyester film, PVDC film, BOPP film & Metallized film. The company’s manufacturing plant at Nasik, Maharashtra is one of the world’s largest single location plant for the manufacture of BOPET and BOPP films. JIL - Steel pipes, cold rolled strips & GP/GC sheets. Established in 1952, ranks among the major manufacturers of ERW / HFIW and galvanized steel pipes and tubes in the country. The company commenced business operations through establishment of a manufacturing facility in Howrah, West Bengal for manufacture of pipe fittings, bends and sockets. At present, the company has a manufacturing capacity of 160,000 TPA of steel pipes & tubes, 300,000 TPA of GP/GC sheets and 350,000 TPA of CR coil / sheets. Promoter JPL JPFL Shareholding (%) 26 % 4%

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Group Investment Companies include: Consolidated Photo & Finvest Ltd Rishi Trading Co. Ltd. Soyuz Trading Co. Ltd. Non-Group Companies Budhiya Marketing Pvt. Ltd. (BMPL) Edward Supply Pvt. Ltd. (ESPL) TOTAL

45%

25%

100%

EVALUATION OF MANAGEMENT
1) Market reputation on the promoter / management of the company: Satisfactory 2) Hands on experience of the management personnel in the industry / Business managed by qualified personnel: The qualified professionals & experienced persons are proposed to be appointed for managing the overall operation of the company. details of key management personnel of JKL Pvt. Ltd. Are as under: Mr Punit Gupta Mr. Punit Gupta, aged about 41 years, is a B.Sc. and M.B.A. He has work experience of about 18 years in the field of Project Management and Marketing with the group. He is presently heading the Project team for setting up of the proposed power project and is involved in budgeting, costing, financial analysis, sensitivity analysis, project planning, tendering, bid evaluation, award of contracts, post award activities, coordination with contractors, finalisation of MOUs, JV Agreements, and various types of studies required for Power Projects etc. Mr Umesh Chand Jain Mr. Umesh Chand Jain is a graduate with work experience of about 33 years in the areas of Trading, Liaisoning, Business management and implementation of new Projects. He

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has been working with the Group for the last seven years. He is on the Board of various group companies including Consolidated Finvest & Holdings Limited. Mr S. R. Yadav Mr. S.R.Yadav is an ex-Executive Director, NCR region, NTPC. He is also a Director on the board for NTPC-SAIL Power Company (P) Ltd. He will be heading the Engineering team in JKL Pvt. Ltd. He is a Mechanical engineer from RIT, Jamshedpur and has work experience of over 35 years in the areas of project planning, erection, commissioning, operation and maintenance. He has been involved in many green field projects of NTPC and was posted in Korba, Bokaro, Singrauli etc. Mr A. K. Sehdev Mr AK Sehdev is an engineering graduate from Delhi College of Engineering. He has over 36 years of experience of Navaratna Companies like IOC and NTPC. He is involved in preparation of action plan, project formulation, project scheduling, FRs and DPRs, cost estimation and cost control, financial analysis, tariff calculations, budget preparation, project engineering and finalization of technical specifications of various packages. Mr P. K. Patnaik Mr Patnaik has many years of experience in IPP (Industrial Power Projects) He had also worked in two UK based company as an advisor. He was VP and country Manager with Kennedy & Donkin Ltd and Head Business Development with Merz & McLellan Ltd. He worked in Lanco Kondapalli also. Prior to joining JITPL as Sr VP (Corporate affairs), he was Head (Corporate Affairs) at Egateway, New Delhi. Mr A C Sarkar Mr Sarkar is Executive Director (Eastern Region-1), Power Grid Corporation of India Ltd (PGCIL) and has work experience of about 35 years of experience in Power transmission. He is an Electrical engineer from Sibpur Engg College. He has been involved in the establishment of the national transmission grid and has experience in the areas of

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planning, coordination, project management, technical and commercial considerations. He is joining JITPL as Vice-President (Transmission). Mr J. Ramesh Chandra Mr Chandra is Master in Applied physics & Instrumentation. He has work experience of around 33 years in various companies including Desein and BHEL. He has joined JKL Pvt. Ltd as GM (Control and Instrumentation). He has experience of instrumentation process for BTG (boiler, turbine & generator) and BOP (balance of plant), project engineering, design and commissioning. Mr L. P. Soni Mr Soni is a Chartered Accountant and Company Secretary with over 25 years experience in various companies. Mr. Soni’s areas of expertise include project financing, working capital management, fund raising through capital market, foreign exchange management, Company law matters. Mr. Soni has been earlier associated with various companies including Surya Roshni Ltd., Maharaja Shree Umaid Mills Ltd. in senior positions prior to joining the group as VP (Finance). Mr Ashok Kr Kucheria Mr Kucheria is M Com and Chartered Accountant and has work experience of over 24 years. He was head of Finance of Jamlal Drilling and Industries Ltd for around 14 years and rose to the post of CFO of the Company. His strengths points are auditing, MIS, Taxation, project financing, working capital management, fund raising, capital market, foreign exchange management etc. Presently he is GM (Finance) for power project and he is involved in resource management and financial closure for the project. Mr P. Girish Mr P Girish is Vice President, (Corporate affairs) in charge of govt liaisoning for Delhi. He has 21 years of experience in corporate affairs, administration in various Companies. Mr. Girish has started his career with Rolls Royce Industrial Power Ltd in the Commercial department. He has been associated with the Malaxmi Infra Ventures Pvt

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Ltd as General Manager with the major responsibilities of Navabharat Power Pvt Ltd. and Simhapuri Energy Pvt Ltd Nellore based on Imported Coal. He has also worked for Lanco Power Pvt Ltd as a Manager Administration. Mr Naveen Goel Mr Naveen Goel is Head (State Liaisoning), Orissa. He is B .Com from Delhi University and inter in CA and ICWA. He started his career with Jindal Photo Limited since 1995. Mr. B L Dua Mr Dua is General Manager Project Development and Construction. He has over 38 years of experience on civil construction, especially power plants. He has experience of construction engineering and has completed a Diploma in civil engineering. He has been associated with various public sector companies including Central Board of Water, Central Electricity Authority and NTPC etc. 3) Ability of the promoters / management to bail out the company in case of crisis (for example, this could be derived from a strong group company) The experienced directors bear the capacity to bail out the company in case of crisis. 4) Decision making – Is it concentrated? A committee of directors comprising of qualified & experienced personnel will professionally manage the company. 5) Organisation structure / Succession planning / Labour relations The company will be a professionally managed company hence, any threat of succession planning is not perceived. 6)Is any group company in default / Any Directors on RBI’s negative list / Borrower’s track-record in honouring financial commitment?

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The company has confirmed that none of the Directors of JKL Pvt. Ltd are on RBI’s defaulters’ list in respect of JKL Pvt. Ltd. or any other company in which they are a Director. 7) Length of relationship with the bank The Group is new to us.

EVALUATION OF INDUSTRY
Thermal power stations constituting over 66% of the aggregate installed generation capacity and despite being relatively less environment-friendly as compared to hydroelectric projects (HEPs), thermal power plants offer certain advantages over HEPs as mentioned below: Lesser implementation time-frame: 2.5-3.5 years as compared to 5-6 years for HEPs; Ability to function as base load power plants as compared to HEPs which serve as peakload power plants; Standardized generation technology: independent of project site; Absence of seasonal variations in power generation; Location flexibility: Can be located either close to load-centre or at fuel pit-head while HEPs are site-specific and often located in challenging geographical terrain. Demand-Supply Scenario Power supply position in the country has worsened over the last few years with growth in power demand outstripping new capacity addition with peak power deficit being worst having peak deficit of 13.5% in 2006-07. The energy deficit at the national level has increased from 7.5% in 2003-04 to 9.9% in 2006-07
•

Projected Power Requirement beyond 2011-12 till 2021-22

With rapid growth of the economy, power requirement is projected to increase significantly over the next decade with per capita power consumption expected to increase from ~612 kWh at present to about 1000 kWh by 2012 (GoI’s target for 100% electrification). 33

•

Given the prevalent demand supply deficit scenario and projected growth in power requirement, huge addition in generation capacity is required in the country over the coming decade. Consequently, there exists an attractive business and market opportunity for establishment of power generation plants in the country, especially in the northern & western regions of the country.

Target States for Power Sale In view of the adverse power deficit scenario in western and northern region as mentioned in the previous sections, both these regions have been identified as target markets for ultimate sale of JKL Pvt. Ltd power.

Analysis
Projected Balance Sheet
As On Assets Gross Block CWP Less:Accum ulated Depreciation Closing Block Net Current Assets Cash & Bank Balances DSRA TOTAL ASSETS Liabilities Shareholders ' Equity Reserves & Surplus Net Worth Rupee Term Loan Sub-Debt Working Capital Loan Deferred AAD Mar-09 33 316 0 349 0 0 0 349 Mar10 33 816 0 849 0 0 0 849 Mar11 33 2188 0 2221 0 0 0 2221 Mar12 2818 0 49 2769 187 54 65 3075 Mar13 2818 0 196 2622 188 106 209 3125 Mar14 2818 0 343 2475 189 252 229 3145 Mar15 2818 0 490 2328 190 441 216 3174 Mar16 2818 0 637 2181 190 639 203 3213

Rs. in Crores
Mar17 2818 0 784 2034 178 783 190 3186 Mar18 2818 0 931 1887 179 934 177 3176 Mar19 2818 0 1078 1740 180 1092 164 3176 Mar20 2818 0 1225 1593 181 1259 151 3184

201 0 201 139 9 0 0

201 0 201 608 41 0 0

444 0 444 1666 111 0 0

573 70 643 2148 143 140 0

573 276 849 1987 140 141 8

573 492 1065 1772 125 142 40

573 718 1291 1558 111 142 72

573 954 1526 1343 97 143 104

573 1132 1705 1128 82 134 137

573 1319 1892 913 68 135 169

573 1515 2088 698 54 135 201

573 1719 2291 483 39 136 233

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As On TOTAL LIABILITI ES

Mar-09 349

Mar10 849

Mar11 2221

Mar12 3075

Mar13 3125

Mar14 3145

Mar15 3174

Mar16 3213

Mar17 3186

Mar18 3176

Mar19 3176

Mar20 3184

Projected Profit and Loss Account
FY Ending` Revenues Primary energy sale to GoO Powe sale PTC Less AAD Gross Revenues Operating Expense O& M exp. Travel and Fuel Exp. Secondary Fuel Exp. Environment Cess Total Operating Exp. PBDIT Depreciation PBIT Int. on RTL Int. Sub. Debt Int. on WC Loan PBT Tax PAT Mar12 60 253 0 313 24 55 8 6 92 221 49 172 80 6 6 79 9 70 Mar13 188 758 8 938 74 171 24 18 287 651 147 504 235 19 18 233 26 206 Mar14 209 758 32 935 77 178 25 18 298 638 147 491 211 18 18 244 28 216 Mar15 206 758 32 932 80 185 26 18 309 623 147 476 187 16 18 255 29 226 Mar16 202 758 32 928 83 192 28 18 321 607 147 460 163 14 18 265 30 235 Mar17 198 683 32 849 86 200 29 18 333 516 147 369 139 12 17 201 23 178

Rs. in Crores
Mar18 195 683 32 845 90 208 30 18 345 500 147 353 115 10 17 211 24 187 Mar19 192 683 32 842 94 217 31 18 359 484 147 337 91 8 17 221 25 196 Mar20 189 683 32 839 97 225 32 18 372 467 147 320 66 6 17 230 26 204

Sensitivity Analysis Scenario Base Case Increase in Project Cost by 5% Decrease in Power Sale Tariff through PTC by 5% during Year 1-5 Increase in Primary Fuel price by 5% Decrease in PLF by 5% Increase in Interest rate by 1% for both Senior debt & Subordinated debt Interpretation 35 Avg. DSCR 1.60 1.54 1.56 1.58 1.49 1.54 Min. DSCR 1.38 1.34 1.33 1.37 1.29 1.34 Project IRR* 15.6 % 14.9 % 14.9 % 15.3 % 14.2 % 15.6 %

Project is able to withstand the operations at a lower tariff and its debt servicing capacity (Average DSCR: 1.56, Min DSCR: 1.33) is satisfactory. Increase in Primary Fuel price by 5% Sensitivity has also been carried out for increase in the fuel prices by 5% over the base case numbers. The Project is able to sustain the increased fuel cost and its debt servicing capacity remains satisfactory with an average DSCR of 1.58 and minimum DSCR of 1.37. The impact of any fuel price escalation on the projected financials is partly mitigated on account of the pass-through effect in the power sale tariff applicable to Gridco. It may however be noted that since most of the coal requirement for the Project will be met from the captive coal block allotted to the company, the company will be able to have a better control over the coal price thereby reducing it exposure to any escalations in coal price. Decrease in Plant PLF by 5% Under the base case projections, the operations of the project have been projected at a PLF of 80%. Sensitivity has been carried out for the scenario of the Project running at a lower PLF i.e. 75%. It has been observed that the Project is able to withstand the operations at a lower PLF and its debt servicing capacity (Average DSCR: 1.49, Min DSCR: 1.29) is satisfactory. Considering the better operational performance of existing IPPs in the country vis a vis state sector projects, the situation of a PLF lower than 80% seems unlikely. Increase in RTL Interest Rate by 1% Sensitivity has also been carried out for increase in the RTL interest rate by 1% over the base case interest rate of 11.5% for Senior debt and 13.5% for Subordinated Debt. It is observed that the Project is able to sustain the increased interest costs comfortably and its debt servicing capacity (Average DSCR: 1.54, Min DSCR: 1.34) remains satisfactory. As can be seen above, the debt serviceability of the project is comfortable adverse sensitivities considered. Hence, it can be concluded that the proposed power project will

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be able to withstand adverse circumstances and the debt serviceability is satisfactory, even under adverse circumstances. Decrease in Power Sale Tariff through PTC by 5% during Year 1-5 Under the base case projections, tariff for power sale to PTC has been maintained at Rs. 2.60 per kWh for Year 1-5 and Rs 2.34 per kWh for subsequent years. Sensitivity has been carried out for the scenario of the power being sold at 5% lower than the base case tariff i.e. Rs. 2.47 per kWh. As seen above, the Project is able to withstand the operations at a lower tariff and its debt servicing capacity (Average DSCR: 1.56, Min DSCR: 1.33) is satisfactory. Increase in Project cost by 5% A sensitivity has been carried out for 5% increase in the works cost which have estimated at Rs. 2294 crore in the base case. The Project is able to sustain a 5% escalation in capital cost comfortably and its debt servicing capacity (Average DSCR: 1.54, Min DSCR: 1.34) remains satisfactory.

KEY POINTS: 1. Sensitivity analysis was done. The results of which are as follows: When the power sale tariff to “PTC” ( PTC India Ltd) are decreased by 5% the Average DSCR: 1.56, Min DSCR: 1.33 . This is above the benchmark level.  When project cost is increased by 5% Average DSCR: 1.54, Min DSCR: 1.34. This is above benchmark levels and is considered favourable.  In case of increase in RTL Interest Rate by 1% the Average DSCR: 1.54, Min DSCR: 1.34) remains satisfactory  When the primary fuel prices increase by 5% the Average DSCR of 1.58 and Minimum DSCR of 1.37 remains satisfactory. As can be seen above, the debt serviceability of the project is comfortable when adverse sensitivities considered. Hence, it can be concluded that the proposed power project will be able to withstand adverse circumstances.

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2. The profitability estimates are sensitive to fluctuation in sales. 3. The projected Debt Equity ratio and Current Ratio are at satisfactory level. As the project implementation is yet to commence, offering any comments on financial indicators would not be relevant at this juncture as the same would go on changing. 4. According to internal credit rating, the company has been rated as CR-3. 5. Primary fuel requirements for the Project will be met with from the Coal linkage from Mahanadi Coalfields Ltd (MCL) and Captive Mandakini coal block in Talcher coalfields, Orissa .JKL Pvt. Ltd. will enter into separate long-term Fuel Supply Agreements with the Mining JVC and MCL for supply of coal from the captive block and coal linkage respectively, taken together would be adequate for requirement of proposed 600 MW for its entire project life. 6. The company has already into Power Purchase Agreements (PPA) with Gridco for sale of 25% of the power. Company has also entered into HOA(Heads of Agreement) with PTC for sale of balance 75% power at reasonably attractive tariff. 7. Both Gridco and PTC would open LC in favor of JKL Pvt. Ltd for timely payment of invoices. 8. Even with an increase of 1% in the interest rate, average & minimum DSCR are comfortable.

29. Recommendations
JKL Pvt. Ltd. is being promoted by BCJ Group, implementing a 600 MW pit-head coal-based power project in Angul district of Orissa. The project capacity is proposed to be enhanced to 1200 MW through implementation of a second unit of 600 MW at a later stage. Salient features of the proposed project, are as under:

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1. Proven track record of promoters [JPL along with other group / investment companies of BCJ group] - in running profitable business operations and adequate financial strength to meet the equity requirements for the project; 2. Assured fuel at reasonable cost – fuel from allocated captive coal block adjacent to project site along with additional long-term coal linkage from MCL. Captive coal source will protect JKL Pvt.Ltd from fuel price fluctuations and make the power cost competitive; 3. Significant progress in project development activities as under. State support for land acquisition, water allocation and other developmental aspects of the project secured through MoU; Section (4) notification for acquisition of land issued; In-principle allocation of water sufficient to meet project requirements; Grant of various project clearances / approvals, including TOR for EIA study from MoEF, GoI; 4. Power off-take arrangement- Execution of PPA with Gridco for sale of 25% project capacity and execution of HOA for sale of balance power through PTC. Analysis of the project development structure and projected financial performance of the Project, based on the information pertaining to the project cost, financing plan, and prevalent market conditions while a sensitivity analysis has also been carried out to test the robustness of project financial in respect of key business and performance parameters. The projected financials of the project are reasonably comfortable under different sensitivity scenarios as required to service the project debt over proposed tenor. 5. Based on the projected financials, sensitivity analysis and risks factors, SBI Capital Markets has viewed the proposed project of JITPL, as financially viable. SBICAP has further stated that keeping in view the proven credentials of the project promoters, progress achieved in project development and projected financial performance of the project, the project appears to be bankable and accordingly, the proposal may be considered favorably for final sanction of RTL and Subordinated debt.

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In view of the above mentioned observations, recommended the following. (Rs. in Crores) Nature of Limit Existing Nil Amount Proposed 300.00 Margin 25%

Term loan Interest shall be 11.50% p.a. floating for senior debt and 13.50% p.a for subordinate debt payable monthly.

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Conclusion
Credit Appraisal is a process of appraising the credit worthiness of loan applicants. The funds of depositor’s i.e general public are mobilized by means of such advance / investment. Thus it extremely important for the lender bank to assess the risk associated with credit, thereby ensure the security for the funds deposited by the depositors. In UBI the credit appraisal is done by thorough study of the project which involves Following. 1) Evaluation of Management: A detailed study about the promoters is carried out in order to ensure promoters are experienced in the line of business and are capable to implement and run the project 2) Technical Feasibility: A detailed study about the technical aspects is done to determine the technical soundness of the project 3) Financial Viability: A detailed study relating to financial viability of the project is done; thereby ensuring that project will generate sufficient surplus to repay the lan installment and interest 4) Risk analysis: it determines the risk associated with the project this is done by performing a Sensitivity analysis and Credit Rating. With Sensitivity Analysis the projects capacity to service debts under worsened conditions is determined. Credit rating, provides rating for various parameters like management, financial, market and so, thereby determine the credit worthiness of the borrower 5) It is on the basis of the credit risk level, collateral securities to be given by the borrower are determined. This shows Union Bank of India has sound system for credit appraisal.

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Annexure 1: Format of Term Sheet
Union Bank OF India Industrial Finance Branch, Mumbai

APPROVAL OF BROAD TERMS OF THE PROPOSAL IFB:ADV:: Name of the account Account with Group Existing connection or new connection Credit Rating Background of promoters

Dated

(Rs. In Crores) Brief Financials Year (Aud.) Net Sales PAT(Loss) TNW* Current Ratio TOL/TNW RATIO (Rs. In Crores) Nature of Project Year (Aud.) Year (Prov.)

Cost of Project tal MEANS OF FINANCE Nature of Facility % of

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Amount Margin Interest/Commission Interest reset Purpose Period of the facility Moratorium Door To Door Tenor Repayment terms Security – Prime Collateral security Upfront fees

Rs.

Crores

Prepayment terms Whether conforms to Loan Policy Customer profitability, (in case of existing accounts) 1. Commission earned on bills purchased/discounted. 2. Processing charges 3. Commission on LC/LG 4. Credit balances in a. SB b. CD 5. Term deposits a. Through own sources b. Through third party

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