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EXECUTIVE SUMMARY

All what is taught in the classroom proves useful when applied in the practical field. Practical orientation of management studies is a must to qualify as a potential manager. Entering in the industry is like stepping into new world. Every concept, which is taught in the classroom, is practiced in the different way in the industry. And the study on the subject practiced in the organization gives a deep insight into the practical aspect of the functioning. Banks play a critical role in the economic development of an economy. They are important not only for economic growth but also financial stability. In an economy banks has three major roles to play i.e. first, they fulfil the financing needs of the corporate sector. Second, they cater to the needs of the vast number of household savers, providing assured returns on their surplus funds while maintaining liquidity and safeguarding them from financial risks. Third, they act as a support for development of financial markets and its participants. This project titled A Study of Credit Appraisal System of Bank Of India for Working Capital Requirement studies the credit appraisal methodology at Bank Of India for a proposal received either for term loan or working capital financing or both for Rs. 100 crore or less. Credit appraisal is the process of evaluating a proposals worthiness of being provided with the type of credit facility the borrower has asked for. This includes the evaluation of current financial status, appraisal of projected cash flows, fund flows, P&L and Balance sheets, purpose for which the facility is availed, technical and financial feasibility of the project, credit history, managerial competence and past experience, etc. in case for a term loan. The case study done by me was for M/s ABC Auto Co. which was incorporated in the year 1999 as a Partnership Concern. The company is engaged in sale of new and 2nd hand Maruti brand of motor vehicles and after sale services. The firm is having showroom cum workshop at Mathura Road, Faridabad. In last financial year, it has started its "True Value" section for dealing in 2nd hand Maruti cars and is setting up accidental repair workshop section at *** sector, Mathura Road, Faridabad which is near to previous unit.

The company has already availed CC limit upto Rs.34 crores for its working capital requirement from Bank of India in May'12. And now it wants to raise its credit limit upto Rs. 47 crores for the same. During the analysis of the companys proposal and the CMA Report, it was found that the Current Ratio and Profitability of the company doesnt satisfy the bank criteria. Other ratios like Turnover ratio, PBT margin, Gearing and other liquidity ratios were checked for the company. After all the analysis done by the bank, the CC limit of Rs. 47 crores was not sanctioned to the company and it remained same at Rs. 34 crores.

CHAPTER-1 INTRODUCTION
1.1 OVERVIEW OF THE INDUSTRY
Bank is the main confluence that maintains and controls the flow of money to make the commerce of the land possible. Government uses it to control the flow of money by managing Cash Reserve Ratio (CRR) and thereby influencing the inflation level. The functions of the bank include accepting deposits from the public and other institutions and then to direct as loans and advances to parties mainly for growth and development of industries. It extends loans for the purpose of education, housing etc and as a part of social duty, some percentage to Agricultural sector as decided by the RBI. The banks take the deposit at the lower rate of interest and give loans at the higher rates of interest. The difference in this transaction constitutes the main source of income for the banks.

Banking in India has undergone startling changes in terms of growth and structure. Organized Banking was active in India since the establishment of The General Bank of India in 1786. The Reserve Bank of India (RBI) was established as the central bank. In 1955, the Imperial bank of India, the biggest bank at that time, was taken over by the government to form State owned State Bank of India (SBI). RBI undertook an exercise to reduce the fragmentation in the Indian Banking Industry post independence by merging weaker banks with stronger banks. The total number of banks reduced from 566 in 1951 To 85 in 1969. The economic reforms unleashed by the government in early nineties included banking sector too, to a significant extent. Entry of new private banks was permitted by RBI under specific guidelines. A number of liberalization and deregulation measures like efficiency, asset quality, capital adequacy and profitability have been introduced by the RBI to bring Indian banks in line with International best practices. With a view of giving the State owned banks operational flexibility and functional autonomy, partial privatization has been authorized as a first step, enabling them to reduce the stake of the government to 51%.

1.2 BANK OF INDIA: AN INTRODUCTION

Bank of India was founded on 7th September, 1906 by a group of eminent businessmen from Mumbai. The Bank was under private ownership and control till July 1969 when it was nationalised along with 13 other banks. Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50 employees, the Bank has made a rapid growth over the years and blossomed into a mighty institution with a strong national presence and sizable international operations. In business volume, the Bank occupies a premier position among the nationalised banks. The Bank has 4467 branches in India spread over all states/ union territories including specialized branches. These branches are controlled through 50 Zonal Offices. There are 54 branches/ offices and 5 Subsidaries and 1 joint venture abroad. The Bank came out with its maiden public issue in 1997 and follow on Qualified

Institutions Placement in February 2008. . Total number of shareholders as on 30/09/2009 is 2,15,790. While firmly adhering to a policy of prudence and caution, the Bank has been in the forefront of introducing various innovative services and systems. Business has been conducted with the successful blend of traditional values and ethics and the most modern infrastructure. The Bank has been the first among the nationalised banks to establish a fully computerised branch and ATM facility at the Mahalaxmi Branch at Mumbai way back in 1989. The Bank is also a Founder Member of SWIFT in India. It pioneered the introduction of the Health Code System in 1982, for evaluating/ rating its credit portfolio.

Presently Bank has overseas presence in 20 foreign countries spread over 5 continents with 53 offices including 4 Subsidiaries, 4 Representative Offices and 1 Joint Venture, at key banking and financial centres viz., Tokyo, Singapore, Hong Kong, London, Jersey, Paris and New York. Contribution of foreign branches in the global business of the Bank as at 31.03.2013 is as under: Deposits Advances Business Mix 22.98% 30.36% 26.19%

Recent Awards and Accolades:

1.3 CREDIT APPRAISAL SYSTEM 1.3.1 Types of Lending:

For a business on the growth phase with a wide range of opportunities to explore timely availability of credit is an integral ingredient needed to scale new heights. Bank provide services ranging from Funded to Non-Funded, from Short Term to Long Term and from Credit to Trade Services ensures that you get finance the way it is best suited for the business. 1. Cash Credit Bank offer Cash Credit facilities to meet day-to-day working capital needs. Cash Credit is provided against the primary security of stock, debtors, other current assets, etc., and/or collateral security of movable fixed assets, immovable property, personal or corporate guarantee, etc. Interest is charged not on the sanctioned amount but on the utilized amount. 2. Working Capital Demand Loan Bank also provides working capital facilities in the form of Working Capital Demand Loan instead of cash credit facility. The primary or collateral security will be as mentioned in cash credit facility. Here also interest is levied on the amount drawn rather than on the amount utilized. 3. Export Finance Bank provides finance for export activities in the form of Pre-Shipment Credit against firm order and or Letter of Credit and Post shipment credit. Credit is available for procuring raw materials, manufacturing the goods, processing and packaging the goods and shipping the goods. Finance is provided in Indian or foreign currency depending upon the need of the borrower. 4. Short Term Loan Working Capital facilities can be availed to meet day-to-day working capital needs and Term Loan for the capital expenditure. However there may be occasions where ad hoc or short-term finance is needed for general corporate purposes, meeting temporary mismatches in working capital or for meeting contingent expenses. In such situations Bank provides Short Term Loans for tenure upto a year so as to ensure that business runs smoothly. 5. Long Term Loan
Given the growth opportunities business enjoys, long-term funds may be needed for capex or capacity expansions or plant modernization and so on. Keeping these requirements in mind Bank provides term loans up to acceptable tenor with suitable

moratorium, if required, and repayment options structured on the basis of your estimated cash flows. These loans are primarily secured by a first charge on the fixed assets acquired through the loan amount. Suitable collateral security is also taken whenever required.

6. Clean Bill Discounting Bank provide clean bill discounting facilities to fund receivables. Bank discount bills or receivables from credit worthy clients and provide credit against that. This facility is provided for a period of 3-6 months depending upon the tenor of the bill. 7. LC Backed Bill Discounting Bank discounts trade bills drawn under Letters of Credit issued by reputed banks to fund the receivables. This facility is provided for a period of 3-6 months depending upon the tenor of the bill or Letter of Credit. 8. Co-Acceptance of Bills Bank also provides co-acceptance of trade bills depending upon the need of the borrowers Credit Facilities against Guarantee or Stand by Letter of Credit issued by Foreign Banks. Various foreign companies set up subsidiary in India. Bank provides funding to such companies against guarantees or SBLCs of acceptable foreign banks. 9. Letter of Credit Apart from fund based working capital facilities Bank provide a range of Non-Fund Based facilities such as Letter of credit, Bank Guarantees, Solvency certificates, etc. Letter of Credit is provided to meet trade purchases. These are generally provided for 3-6 months depending upon Trade cycle. Apart from this Bank provide Import Letter of Credit for importing machinery or capital goods. Such LCs are for tenure ranging from 1-3 years depending upon the need of the borrower. 10. Bank Guarantee
Bank provides Bank Guarantee on behalf of the clients to various other entities such as Government, quasi govt. bodies, corporate and so on. Bank provides a range of guarantee such as Performance guarantee, financial guarantee, EPCG etc. The tenure of the Bank guarantees range from 1year to 10years depending upon the purpose of the guarantee.

11. Solvency Certificates Bank also provide solvency certificate depending upon the need of borrower.

1.3.2 Appraisal Techniques

The entire gamut of credit appraisal can be segregated into 7 categories as under: 1) Borrower Appraisal 2) Technical Appraisal 3) Management Appraisal 4) Financial Appraisal 5) Economic Appraisal 6) Market Appraisal 7) Environmental Appraisal.

1) Borrower Appraisal: Confidence is the basis of all credit transaction, which a lender should have in the honesty, ability & willingness of the borrower to repay the loan amount. The basis of this confidence is derived from 5 Cs of the borrower as given hereunder. a) Character: It is constituted by honesty, sobriety, good habits, personality, the ability & willingness to keep his words under all circumstances. b) Capacity: The ability of the borrower to manage an enterprise successfully with the resources available to him. His educational, technical, & professional qualification, his present activity, experience in the line of business, experience of family, special skill, knowledge, past record would indicate his capacity to manage the show & repay the loan successfully.

c) Capital: It is the ability of the borrower to meet the loss, if any, sustained in the business from his own investment or capital without shifting it to his creditor or banker. Unless a borrower has stake in the business, he may not take interest in its success. d) Conditions: It is the ability of the borrower to meet the conditions stipulated by the Bank e) Collateral: It is the ability of the borrower to provide collateral for safety of the loan 2) Technical Appraisal: It involves detailed study of following aspects: a. Availability of infrastructure e.g. land, location, power, water etc b. Leasing/registration requirements. c. Selection of technology d. Availability of suitable technical process. e. Availability of raw material, skilled labor etc. 3) Management Appraisal:

a) In case of Proprietorship firm/Partnership firm/Enterprises run by individuals, careful appraisal of the individual borrowers shall be the deciding factor to finance the project. b) In case of corporate borrowers and large borrowers, it is usually a set of professionals who manage the entity in specific areas of management i.e. production, finance, marketing, personal etc. Unless there is a complete integration of all these functions within an organization, it cannot function effectively. c) In all the above cases branches must ensure that concern has necessary key expertise required for the critical functions. 4) Financial Appraisal: It refers to the following aspects of the project/unit: a. Determination of the cost of the project. b. Assessment of the source of funds/means of financing of the project. c. Profitability Estimates d. Break Even Analysis e. Cash flow projection f. Projected Balance Sheet. 5) Economic Appraisal: a) The performance of a project is influenced by variety of other social, economic & cultural factors viz. employment potential, development of industrially backward areas, environmental pollution etc. b) The project must yield best possible return to the society in general & the investor in particular. c) One of the most important of appraising this is the computation of Internal Rate of d) Return of the Project (IRR). 6) Market Appraisal: Following aspects of market survey are taken into account: a) General market prospects of the product: various aspects such as Import/export policies, licensing norms, monetary & fiscal policies of RBI as well as total number of units producing similar products, their installed capacity, degree of health, special incentives or support program of the Govt. are looked into. b) Position of the product vis--vis the competitors: Requires in-depth study of competitive

strength/weakness of the proposed product in relation to its rivals/competitors to decide future strategies. c) Size of the market & share of the proposed unit: After the above studies, now, it is required to estimate the share of the market that may be claimed by the new product. d) Price: The price assumed by the entrepreneur should be realistic vis--vis those of his competitors. If the products are new, they must have competitive edge to make the presence felt.

7) Environmental Appraisal: Now that environmental issues can also hamper the performance of a project, obtaining certificate from pollution control board (if required) etc should be looked into before financing.

1.3.3. Financial Evaluation


It involves evaluation of financial statements of the borrowers to ascertain the financial health of the company. Financial statements are rearrangement as described in detail below and rearranged financial statements are used to ascertain the capital requirements, liquidity, long-term solvency, debt-repayment capacity etc. of the business involved. Various components of financial evaluation are as follows: Classification and Rearrangement of Balance Sheet items Financial statements contain the information about the financial health of enterprise. Since different applicants use different formats and classification of some of the items present in the balance sheet is subjective, it becomes necessary to re-arrange the balance sheet items to achieve standardization. Various components ofthe balance sheet are used in calculating ratios like Debt Equity Ratio (DER), Debt-Service Coverage Ratio (DSCR), Current Ratio, Fixed Asset Coverage Ratio (FACR), Maximum Permissible Bank Finance (MPBF) etc. There are guidelines from the RBI and Bank on the permissible values of these ratios and relaxation permissible, if any. Proper rearrangement of financial statements becomes critical in credit lending decision making. Classification of items into various heads depends on the policies of the bank. For BOB Classification of a particular liability as a current liability or long term liability etc. depends on the internal guidelines of the Bank.

The reclassifications to be done as per the Banks/RBIs guidelines are detailed below: Current Liabilities Current liabilities include the known obligations to be within a year. These are classified as: 1. It will include all short term bank borrowings, whether secured or unsecured, including bills purchased or discounted. 2. All liabilities which are maturing within a year will be treated as current liability, whether secured or unsecured. 3. Term loan instalments, repayment of deposits etc. due less than one year will be treated as current liability for the purpose of balance sheet analysis but not so for assessment of working capital. 4. Preference share capital to be redeemed within a year will be shown as current liability. 5. Provision for payment of taxes is to be netted with advance payment of tax. 6. Advances received from customers against supply of goods are to be treated as current liabilities. Whenever these are required to be statutorily invested in specified assets, to that extent netting may be allowed. 7. Deposits from dealers, security deposit, earnest deposit received, tender deposits received etc. should be treated as long term liability, irrespective of its maturity. 8. Disputed liabilities in respect of excise duty, income tax/customs duty shown as contingent liability should not be taken as current liability for the purpose of calculation of MPBF, if these are delayed beyond one year and borrower may be asked to make suitable provisions.

Current Assets 1. Bank balance will include any credit balance in any deposit account like savings bank, current account with any bank. It will not include fixed deposit. 2. Investments include only government securities which are unencumbered and fixed deposits which are not under lien for any facilities like bank guarantee, letters of credit etc. 3. Dead, obsolete, non-moving inventories should not be treated as current assets. 4. Sundry debtors which are very old should not be treated as current assets. 5. Loans and advances for supply of plant & machinery should not be included in

current assets. 6. Advances paid to suppliers including associate concerns for supplies of more than normal trade practice should not be treated as current assets. 7. Advance payment of tax and provision for taxation should be netted. 8. Deposit kept with public bodies for normal business operations like security deposit, earnest deposit, tender deposit should not be treated as current assets, irrespective of its maturity. 9. Export receivables will be treated as current assets. 10.Bills discounted and bills purchased outstanding will be included under receivables and corresponding amount shown as bank borrowings under current liabilities. Calculating key Financial Ratios: Current financials of existing operations, project funding information like sources of funds etc. and future projections are used for calculating key financial ratios for a period of time. These ratios tell us a lot about a unit's liquidity position, managements' stake in the bbtusiness, capacity to service the debts etc. The financial ratios which are considered important are discussed as under: Debt-Equity Ratio (DER) DER =

This ratio indicates relationship between the external term borrowings and the own funds of the concern. Bank takes total term liabilities as Debt i.e. total liabilities minus net worth and total current liabilities. Equity means net worth of the concern minus intangible and fictitious assets. However, the subordinated funds (i.e. long-term unsecured loans from friends and relatives, etc.) may be considered as quasi-equity, generally for non-corporate borrowers, and included in equity while arriving at ratio, if the borrower retains the same at the existing level/ projected level during the currency of Bank Loan. The subordinated debt however should not exceed borrowers tier I capital i.e. capital plus free reserves less intangible assets. A ratio of 3:1 is considered satisfactory.

Tangible Net Worth to Total Outside Liabilities (TNW/TOL):

TNW/TOL=

This ratio gives a view of borrower's capital structure. If the ratio shows a rising trend, it indicates that the borrower is relying more on his own funds and less on outside funds and vice versa.

Profit-Sales Ratio: PSR= This ratio gives the margin available after meeting cost of manufacturing. It provides a yardstick to measure the efficiency of production and margin on sales price i.e. the pricing structure.

1.3.4. Working Capital


Introduction: (i) Any business enterprise whether engaged in manufacturing or purely trading activity, has to have sufficient capital to finance both, its fixed and long term assets, viz. land, building, machineries, etc. and to maintain certain level of short term assets for smooth conduct of day to day business activities/ production schedule. Such short term assets which are required for day to day operation are called the current assets. (ii) The amount of current assets required for a smooth conduct of business is dependent on the nature of the activity, availability of the raw materials, level of production, storage capacity and funds available. So the funds/capital actually required to maintain this required level of current assets, is called the gross working capital. (iii) Out of the level of gross working capital, required as above, the borrower raises the necessary funds from many sources, viz.: (a) Share Capital (b) Retained Profits (c) Bank Borrowings (d) Trade Creditors (e) Advance from Purchasers
(iii) Out of the above, credit available in the form of trade creditors and advance from purchasers etc., are sources of finance which are short term in nature and are available as

per trade practices and market conditions. The remaining resources are, therefore, to be raised from own capital or through bank borrowing. Such short term credits available

to the firm are called current liabilities and the difference of gross working capital and the current liabilities is called the 'Net Working Capital'. Net Working Capital: There are two concepts of working capital: 1. Gross working capital 2. Net working capital The gross working capital is the capital invested in the total current assets of the enterprises current assets are those Assets which can convert in to cash within a short period normally one accounting year. Net working capital is the excess of current assets over current liability, or say NET WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES. In a narrow sense, the term working capital refers to the net working.

1.3.5 Appraisal of Bank Finance:


The appraisal of bank finance for working capital thus involves the following steps: (i) Estimation of the Level of Gross Working Capital (ii) Estimation of the Level of Current Liabilities (iii) Computation of Net Working Capital Gap (iv) Computing the share of NWC Gap required to be brought by the borrower as Margin. (v) Computation of the Level of Bank Finance. Estimation of Gross Working Capital: For a systematic and proper estimation of the gross working capital requirements of a firm, it is essential to identify its various components and analyze them in detail. (A) Operating Cycle Method

Every business unit has an operating cycle which indicates that a unit procures raw material from its funds, convert into stock in process which again is converted into finished goods which can be sold for cash and thus transformed into fund. Alternatively it can be sold on credit and on realization thereof gets converted into fund. Thus every rupee invested in current assets at the beginning of the cycle comes back to the promoter with the profit element added, after the lapse of a specific period of time. This length of time is known as operating cycle or working capital cycle.

Figure 1.1: Operating Cycle In order to keep the operating cycle going on, certain level of current assets are always required, the total of which gives the amount of total working capital required. Thus total working capital can be obtained by assessing the level of various components of current assets. The operating cycle is therefore measured in terms of days of average inventory held for every major category of working capital components. (B) Components of Gross Working Capital: In any typical manufacturing unit, the components that constitute the gross working capital or current assets are as under : i. Raw materials ii. Consumable stores and spares

iii. Stock in process iv. Finished goods v. Receivables vi. Cash and bank balance vii. Other current assets.

Data required for assessment of working capital requirement For assessing the working capital needs of an organization, bank follows CMA (Credit Monitoring Arrangement). It is required by banks and other financial institutions, to introspect or study the minutes of balance sheet and other financial statements of a body corporate for financing their projects. In other words it is the detailed explanation of the balance sheet and other financial ratios of the firm or any other corporate. The CMA includes analysis of following six documents: i) ii) iii) iv) v) vi) Existing and proposed banking arrangements Operating statement Analysis of Balance Sheet Buildup of current assets and current liabilities Calculation of MPBF (Maximum Permissible Bank Finance) Fund Flow Statement

Estimation of Level of Current Liabilities under MPBF method: Once the gross working capital or current assets are computed as above, it is essential to find out the amount of credit available to the borrowers in purchase of raw materials, advance payment received from buyers, deposits from dealers, provisions for statutory liabilities, etc. The RBI had issued guidelines on classification of various

items constituting current liabilities for the purpose of assessment of working capital. They are listed below with guidelines on composition of these items.: (a) Short term bank borrowings:

Includes bills purchased, bills discounted from the bank, etc.


Unsecured loans.

Public deposits, viz. fixed deposits maturing within one year.


Sundry creditors (trade) for raw materials and consumable stores and spares:

It is assessed on the basis of normal credit available for purchase of raw material. If usance letter of credit facility is proposed, the period of credit available due to availment of such letter of credit facilities should be reflected in the level of sundry creditors. Projected level of sundry creditors should be reasonable with reference to the quantum of purchases, market practice and past trends. (b) Interest and other charges accrued but not due for payment: It should be related to the amount of loans and debts due and its period for which such liabilities are accrued. (c) Advance/progress payments from customers: Where deposits are required in terms of regulations formed by the Government to be invested in a specified manner (advance for booking of vehicles), the benefit of netting may be allowed to the extent of such investment in approved securities and only the balance amount need be classified as current liability. Where on account of different accounting procedure progress payments are shown on the liabilities side without deduction from work-in-progress, bank may set off progress payments against work-in-progress. Advance payment received are also adjusted progressively from the value of work completed. Outstanding advance payment are to be reckoned as current liabilities or otherwise depending upon whether they are adjustable within a year or later. (d) Deposits from dealers, selling agents, etc.: Deposits from dealers, selling agents, etc. may be treated as term liabilities irrespective of their tenure, if such deposits are accepted to be repayable only when the dealership/agency is

terminated after due verification by banks. The deposits which do not satisfy the above condition should continue to be classified as current liabilities. (e) Instalments of term loans, deferred liabilities, debentures, redeemable preference shares and long term deposits payable within one year: It should be proportionate to the total liabilities under each of the items above. The RBI has directed that for the purpose of Working capital assessment only such installments of term loan, debentures, etc. due within a year need not be treated as current liability. In other words, such items will be treated as current liabilities only for the purpose of balance sheet analysis and computation of current ratio. (f) Statutory Liabilities: Provident fund dues. Provision for taxation. Sales tax, excise, etc. Obligations towards workers considered as statutory. Others. In cases where specific provisions have not been made for the estimated or accrued liabilities and will be eventually paid out of general reserves, estimated amount should be shown as current liabilities. Disputed excise liabilities shown as contingent liability or by way of note to the balance sheet, need not be treated as a current liability for calculating the permissible bank finance, unless it has been collected or provided for in the accounts of the concern. Provision for disputed excise duty should be classified as current liabilities, unless the amount is payable in instalments spread over a period exceeding one year as per the orders of competent authority like the Excise Department or in terms of the directions of a competent court. In such cases, instalments payable are to be classified as long term liability. Where the provisions made for disputed excise duty is invested separately, say in fixed deposits with banks, such provision may be set off against the relative investment. Disputed liabilities in respect of income tax, customs and electricity charges need not be treated as current liability for computing maximum bank finance, except to the extent provided for in the books of the concern. (j) Miscellaneous Current Liabilities:

(i) Dividends payable (ii) Liabilities for expenses (iii) Gratuity payable within 1 year (iv) Other provisions (v) Any other payment due within 12 months The amount would be based on estimated or accrued amount which are anticipated to cover expenditure within the year for known obligations, viz. the amount which can be determined only approximately as for example, provisions, accrued bonus, taxes, etc.

Computation of Net Working Capital: (i) Net working capital is defined as gross working capital minus total current liability. (ii) Total Current Liability is Short Term Bank Borrowing + Other Current Liabilities. (iii) If a short term bank borrowing is NIL, then the gross working capital is financed entirely by other current liability. Normally it is not the case. (iv) So the difference between gross working capital and other current liabilities (excluding bank borrowings) is called the working capital gap. The question is how much of this gap is to be financed by the bank and how is the borrower required to make up the remaining amount. Margin required to be brought by borrower under various methods of lending: The extent upto which the working capital gap can be financed by the bank will depend upon the method of lending under which the assessment of working capital is required to be made.

(A) First Method of Lending (I METHOD): Under the first method of lending, the borrower is required to contribute a minimum of 25% of the working capital gap from the long term sources. The balance amount i.e. 75% of the working capital gap represents the maximum permissible bank finance (MPBF). Where the net working capital is more than the amount required to be provided by the borrower, the maximum permissible bank finance would get reduced

to that extent. To ensure compliance under this method of lending, the current ratio of the concern should not be less than 1.17:1.

(B) Second Method of Lending (II METHOD): The second method of lending stipulates that the borrower is required to contribute a minimum of 25% of the total current assets from the long term sources(Net Working Capital) irrespective of the working capital gap. The maximum permissible bank finance will, therefore, be working capital gap less the amount to be so contributed by the borrower. Where the net working capital is more than the stipulated minimum contribution, the maximum permissible bank finance would get reduced to that extent. To ensure compliance under this method of lending, the current ratio of the concern should not be less than 1.33:1. The above two methods can be illustrated by an example given hereunder: In the example, it is observed that under the first method of lending the borrower is entitled for an MPBF of 165 only, whereas he has availed bank borrowing of 200, thus resulting in an excess borrowing of 35. Under the second method the MPBF works out to 128 only and the excess borrowings increases to 72.The borrower is thus, required to bring in additional long term funds of Rs. 35/- and 72/-under first and second method of lending respectively.

Current Liabilities Creditors for purchase Other Current Liabilities Total Current Liabilities other than Bank borrowing Bank Borrowing including bills discounted with bankers Total Current Liabilities

Current Assets 100 Raw materials 50 SIP 150 Finished goods Receivables including bills 200 discounted with bankers 350 Other Current Asset Total Current Asset 2nd Method 370 Total Current Asset

200 20 90 50 10 370

1st Method Total Current Asset Less: Current Liabilities other than bank borrowings Working Capital GAP

370

150 Less: 25% of Current Asset 220

92 278

Less: 25% of Working Caiptal GAP Maximum Permissible Bank Finance Excess Borrowing Current Ratio

Less: Current Liabilities other than bank 55 borrowing Maximum Permissible Bank 165 Finance 35 Excess Borrowing 1.17 Current Ratio TABLE 1.1

150

128 72 1.79

Assessment of Non-Fund Based Working Capital Facility The credit facilities given by the banks where actual bank funds are not involved are termed as 'non-fund based facilities'. These facilities are divided in three broad categories as under: Letters of credit Guarantees Co acceptance of bills/deferred payment guarantees. Units for the above facilities are also simultaneously sanctioned by banks while sanctioning other fund based credit limits. Facilities for co acceptance of bills/deferred payment guarantees are generally required for acquiring plant and machinery and may, technically be taken as a substitute for term loan which would require detailed appraisal of the borrower's needs and financial position in the same manner as in case of any other term loan proposal. Letter of Credit: Letter of credit (LC) is a method of settlement of payment of a trade transaction and is widely used to finance purchase of raw material, machinery etc. It contains a written undertaking by the bank on behalf of the purchaser to the seller to make payment of a stated amount on presentation of stipulated documents and fulfillment of all the terms and conditions incorporated therein. Letters of credit thus offers both parties to a trade transaction a degree of security. The seller can look forward to the issuing bank for payment instead of relying on the ability and willingness of the buyer to pay. Letter of Credit Mechanism Any business/industrial venture will involve purchase transactions relating to

machine/other capital goods and raw material etc., and also sale transactions relating to its products. The customer may be an applicant for a letter of credit for his purchases while be the beneficiary under other letter of credit for his sale transaction. The complete mechanism of a letter of credit may be divided in three parts as under: Issuing of Credit: Letter of credit is always issued by the buyer's bank (issuing bank) at the request and on behalf and in accordance with the instructions of the applicant. The letter of credit may either be advised directly or through some other bank. The advising bank is responsible for transmission of credit and verifying the authenticity of signature of issuing bank and is under no commitment to pay the seller.The advising bank may also be required to add confirmation and in that case will assume all the liabilities of issuing bank in relation to the beneficiary as stated already. Negotiation of Documents by beneficiary: On receipt of letter of credit, the beneficiary shall arrange t006F supply the goods as per the terms of L/C and draw necessary documents as required under L/C. The documents will then be presented to the negotiating bank for payment/acceptance as the case may be. The negotiating bank will make the payment to the beneficiary and obtain reimbursement from the opening bank in terms of credit. Settlement of Bills Drawn under Letter of Credit by the opener: The last step involved in letter of credit mechanism is retirement of documents received under L/C by the opener. On receipt of documents drawn under L/C, the opening bank is required to closely examine the documents to ensure compliance of the terms and conditions of credit and present the same to the opener for his scrutiny. The opener should then make payment to the opening bank and take delivery of documents so that delivery of goods can be obtained by him.

Types of Letter of Credit: Letter of credit may be divided in two broad categories as under: (i) Revocable letter of credit. This may be amended or cancelled without prior warning or notification to the beneficiary. Such letter of credit will not offer any protection and should not be accepted as beneficiary of credit.

(ii) Irrevocable letter of credit. This cannot be amended or cancelled without the agreement of all parties thereto. This type of letter of credit is mainly in use and offers complete protection to the seller against subsequent development against his interest.

Documents required from the Borrower for Bank Credit

a. Copies of audited financial statement for the last 3 years/ Provisional Financial statement for the latest year, if accounts for that year are not audited, and the audited Financial Statements for the preceding 2 years. b. Copy of last 2 years Income Tax Return for the firm. c. Copies of insurance policies in respect of goods and premises insured d. Documents evidencing constitution of the firm like Memorandum & Articles of Association, Certificate of Incorporation, and Partnership Deed etc. e. Pan card of the firm/ company f. Identity proof (passport copy, voter ID, driving license, PAN card) of proprietor/all partners/ all directors g. Signature verification of proprietor/ all partners/ all directors/ all authorized signatories from the existing Banker. h. CA certified certificate of Net Worth or Personal Balance Sheets of proprietor/all partners/ all directors i. CA certified Declaration of borrowing from Banks/ Financial Institutions (FIs) as on the date of declaration j. Duly completed application form k. CMA data for next year l. Electricity bill/ telephone bill copy in the name of the firm

Factors taken care of during the analysis

1. Credit ratingAn assessment of credit worthiness of corporations. It is based upon the history of borrowing and repayment, as well as the availability of assets and extent of liabilities. Credit is important since individuals and corporations with poor credit will have difficulty finding financing, and will most likely have to pay more due to the risk of default. a) Credit Rating by Bank of India Credit Rating Tool :It is software that is used by Bank of India for assessing the credit worthiness of the company. It helps the bank to give individual score to company on different parameters and according to which it scores keeping in view the past record and financial status of the company. If the score given by the software is acceptable then the appraisal can be taken beyond. b) External Rating : There are several RBI approved Credit rating Agencies like CRISIL, ICRA, CARE , Fitch etc. who do the rating of Mid-Corporate. CRISIL being most popular, it is considered here. CRISIL Rating indicates the enterprise performance capability and financial strength. CRISIL Ratings are entity-specific ratings, unlike credit ratings, which are debt-obligationspecific. CRISIL Rating reflects the level of creditworthiness of the enterprise, adjudged in relation to other enterprises.

2. Defaulters list- RBI DEFAULTERS LIST / CIBIL check In 2004, RBI authorised CIBIL to publish a list of defaulters of Rs 1 crore and above and also give out details of wilful defaulters of Rs 25 lakh and above against whom suits have been filed. The measure that followed the 2002 scheme that defined wilful defaulters and terms like diversion of funds and siphoning of funds, was aimed at exerting moral pressure on the defaulter. Under the securitisation ordinance, banks have the right to acquire assets of wilful defaulters. RBI later expanded the definition of wilful defaulters by including companies that try to dispose of mortgaged properties without the knowledge of the lenders. In July this year, RBI issued a master circular combining all its instructions and directions in this regard, with a view to making available credit information pertaining to willful defaulters to banks and blocking further bank finance to these firms.

3. Security Primary security- It is an investment for which the Bank Finance is being raised. Collateral security- Property or other assets that a borrower offers a lender to secure a loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup its losses. Because collateral offers additional security to the lender in case the borrower fails to pay back the loan. Loans that are secured by collateral typically have lower interest rates than unsecured loans. A lender's claim to a borrower's collateral is called a lien.

CHAPTER-2 RESEARCH METHODOLOGY


2.1 Objectives of study:
The objectives of the study are as follows: Gathering information about the company and its operations. It involves studying the following: a.) Stock maintained by the company. b.) Turnover of the Company and Customer & Industry / Market profile. c.) Further the general profile of the company is studied and also its past dealings with the bank are also considered. Industry analysis is taken up after studying about the company and its operations. Under this the present conditions in the industry are studied, likely trends in the industry and its expectations about future. Next the credit appraisal process is undertaken, it involves steps like studying the proposal, assessment of working capital requirement, proposed financing/sharing pattern and security details are studied. Then credit rating is done where the company is rated under different heads namely financial performance, market position, industry outlook etc. according to the guidelines given in the banks manual. Bank officials give comments on the conduct of account if it is an existing one. Then risk assessment is undertaken and policy compliance is considered. Then the analysis of periodic monitoring system is done and lastly the recommendations are given. The basic purpose of this whole process is assessing the viability of the project and minimization or management of the risk. It involves assessing the requirements of the borrower and studying its credentials, to decide upon acceptable level of exposure. Around 90% of commercial banking risks take the form of credit risk. Therefore the process of Credit Appraisal by Bank of India had a thorough feasibility reviews, followed by the credit rating so as to bring the risk exposure to bank within controllable limits.

2.2 Methodology
2.2.1 Type Of Research The data collected in the report is both qualitative and quantitative in nature. These
data is interpreted by the researcher as per his knowledge. Project report does not involve any specific research techniques, package and tools.

2.2.2 Research Design The study is descriptive in nature as it describes the CREDIT APPRAISAL SYSTEM OF BANK OF INDIA FOR WORKING CAPITAL REQUIREMENT. 2.2.3 Sources Of Data In order to learn and observe the practical applicability and feasibility of various theories and concepts, the following sources were followed and referred:

Primary Sources of Information: Meetings with the project guide and staff members of Bank of India. Meetings and discussions with clients at Bank of India. Meetings with various other department head. Secondary Sources of Information: RBI guidelines regulating the activities of the banks. Banks Credit and investment policy. Research papers, power point presentations and PDF files prepared by the bank and its related officials. Study of proposals and manuals. Mid-corporate Loan Policy at Bank of India. Referring to various national and international books and authors to study the strategies/models for measurement available in the market.

CHAPTER-3 FINDINGS AND ANALYSIS CREDIT APPRAISAL FOR WORKING CAPITAL REQUIREMENT ABC AUTO COMPANY

3.1 BRIEF HISTORY:


M/s ABC Auto Company was formed as a partnership concern in the year 1999 with Mr. X and Ms. Y as the main promoters. Mr. Z was the third partner in the firm. Upon his demise, Master P, minor son of Mr. X, has been admitted for the benefits of the partnership as per the reconstituted partnership deed dated 26.12.2008. The profit sharing ratio is as under: Mr. X Ms. Y Master P (Being represented by his mother) The partnership deed has been registered with The Registrar of Firms, Govt of N.C.T. of Delhi at no. 1685 of 2000 on 05.12.2000. Suitable Form no. V has been filed with Registrar of Firms, Delhi for change in constitution in partnership upon demise of Mr. Z and induction of Master P as partner. 60% 20% 20%

3.2 INFRASTRUCTURE:
The firm is having showroom cum workshop at Mathura Road, Faridabad (spread over area of 10000 sq yds owned by firm and 7000 sq yrds owned by M/s MNO enterprises). In the last financial year, it has started its "True Value" section for dealing in 2nd hand Maruti cars and is setting up accidental repair workshop section at **** sector, Mathura Road, Faridabad which is near to previous unit.

3.3 MANAGEMENT:

Unit is mainly managed by Mr. X. He is ably supported by qualified and well experienced by qualified and well experienced team of technicians and sales team to oversee various functions. Overall management setup is satisfactory.

3.4 INDUSTRY ANALYSIS:


The Indian automobile industry has been going through an extremely tough phase over the past 2 years due to the slowdown in economic growth, low consumer confidence, high fuel prices and interest rates. With sharp deceleration in growth, margins too have come under pressure and are at 5-year low. Nevertheless, automobile manufacturers are continuing to invest in launching new models and expanding capacity.

3.5 EXISTING FACILITIES:


The company has been availing CC limit of Rs. 34 crores from our ****** Branch. After initial sanction of the credit facilities in May12, the company now wants to avail its CC limit upto Rs. 47 crores.

3.6 FINANCIAL ANALYSIS:


ABC AUTO COMPANY BALANCE SHEET AS AT 31st MARCH, 2013 LIABILITIES PARTNERS CAPITAL Mr. X Ms. Y AMOUNT(Rs.) ASSETS FIXED ASSETS 111,230,703.88 Building 83,845,055.86 Electrical Installation Furniture & Fixture 61,799,334.60 Air conditioners RESERVES AND SURPLUS Office Equipments Photocopy Machine SECURED LOAN Term Loan (Against Land, Building and Plant & Machinery) 19,183,291.00 Plant & Machinery Refrigerator Scooter 63,520,489.85 178,688.41 940,022.29 95,765.27 577,441.37 4,949.31 3,258,318.89 14,765.40 4,010.16 AMOUNT(Rs.)

Against Hypothecation of Stocks & Book Debts

340,680,521.00 Television Tools & Equipments Motor Vehicles

13,404.91 179,020.27 689,766.81 57,794.59 47,775,190.00

UNSECURED LOAN From MNO Enterprises From Partners and Relatives

2,888,629.00 Computer 3,290,000.00 Capital WIP

CURRENT ASSETS 8,454,721.00 5,652,142.00 3,106,091.00 Sundry Debtors Inventories Cash and Bank

160,909,291.00 328,383,644.46 14,679,079.43 8,910,640.91 7,695,925.00 3,044,700.00

CURRENT LIABILITIES & PROVISIONS Sundry Creditors Advance from Customers Liability for Expenses Provision for Income Tax GRAND TOTAL

Advances 802,419.00 Recoverable Advance to Suppliers Deposits

640,932,908.34 GRAND TOTAL

640,932,908.34

TRADING, PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31st MARCH, 2013 PARTICULARS Opening Stock Purchases Electricity And Fuel Charges Carriage Inward Workshop Service Expense P.D.I. Expenses Free Service And Warranty Labour Expenses GROSS PROFIT c/d 1,974,568,096.46 TOTAL TOTAL 51,768,417.00 GROSS PROFIT b/d 128,100.00 Other Income Interest And Bank Charges Other Interest Insurance Establishment Expenses Travelling And Conveyance Printing And Stationary General Expenses Books And 421,839.00 Incentives 16,269,802.00 960,210.00 164,525.00 91,241.00 27,120.00 70,142.00 332,810.00 956,841.00 3,275,896.00 87,727,893.54 13,091,484.00 5,271,277.00 1,974,568,096.46 AMOUNT(Rs.) PARTICULARS 365,422,255.92 Sales 1,494,42,031.00 Closing Stock 4,581,557.00 3,225,461.00 8,818,457.00 8,062,140.00 2,295,301.00 AMOUNT(Rs.) 1,646,184,452.00 328,383,644.46

87,727,893.54

Periodicals Postage And Telegram Rent, Rates And Taxes Legal And Professional Charges Repairs And Maintenance Telephone Expenses Diwali Expenses Charity And Donation Subscription Charges Security Service Expenses Showroom Expenses Selling And Distribution Expenses Interest On Capital Partner's Remuneration Audit Fee Depreciation NET PROFIT TOTAL

990,142.00 135,012.00 22,425.00 6,698.00 367,145.00 385,214.00 7,006,129.00 5,696,326.00 900,000.00 30,000.00 8,115,318.46 7,969,302.08

106,090,654.54 TOTAL

106,090,654.54

3.7 CMA
The analysis of balance sheet in CMA data is said to give a more detailed and accurate picture of the affairs of a corporate. The corporates are required by all banks to analyse their balance sheet in this specific format called CMA data format and submit to banks.

Table 3.1- OPERATING STATEMENT (UNIT-1) (Rs. in lacs)


SR. NO. PARTICULARS Domestic Sales/Services Provided 2009-10 2010-11 2011-12 ACTUAL 14883.95 14903.42 0 14903.42 0 14903.42 0 14903.42 2012-13 PROV. 16461.84 0 16461.84 183.62 16645.46 0 16645.46 2013-14 2014-15 2015-16 PROJECTION 17126.9 0 17126.9 200 17326.9 0 17326.9 17469.44 0 17469.44 200 17669.44 0 17669.44

20

I II III 1 2 3

12303.79

16791.08 0 16791.08 190 16981.08 0 16981.08

17

4 5 A. I II B. I II C. D. E. F.

G. H. I. J.

K.

L. M.

N.

Export Sales 0 0 TOTAL SALES 12303.79 14883.95 OTHER INCOME 0 0 GROSS SALES 12303.79 14883.95 Less: Excise Duty 0 0 NET SALES(1-2) 12303.79 14883.95 %age rise(+) or fall(-) in Net Sales as compared to previous year 0 20.98 COST OF SALES Raw Material (Vehicles, Spares & Accessories) Imported 0 0 Indigenous 11834.91 13917.44 Other Spares Imported 0 0 Indigenous 0 0 Packing Material 0 0 Power 18.13 23.74 Fuel 7.91 8.63 Direct labour(Factory wages & Salary) 172.38 218.59 Other Trading/manufacturing Expenses 87.83 115.63 Depreciation 44.21 94.94 SUB-TOTAL (A TO 12165.37 14378.97 H) ADD:Opening Stock-inProgress 0 0 SUB-TOTAL 12165.37 14378.97 Deduct:Closing Stockin-Progress 0 0 COST OF PRODUCTION(I+J12165.37 14378.97 K) Add:Opening Stock of finished goods 2303.98 2790.19 14469.35 17169.16 SUB-TOTAL Deduct:Closing Stock of Finished Goods 2790.19 2951.87

17

18

18

0.14

11.69

2.02

2.04

1.98

0 14262.43 0 0 0 35.34 11.25 265.73

0 14944.21 0 0 0 35.56 10.25 250.39

0 15840.86 0 0 0 36 10.46 262.91

0 15990 0 0 0 36 10.66 265.54

0 16330 0 0 0 36 10.88 270.85

140.2 88.12 14803.07 0 14803.07 0

140.37 81.15 15461.93 0 15461.93 0

143.18 146.64 16440.05 0 16440.05 0

144.61 128.31 16575.12 0 16575.12 0

147.5 118.52 16913.75 0 16913.75 0

17

17

14803.07 2951.87 17754.94 3654.16

15461.93 3654.16 19116.09 3283.83

16440.05 3283.83 19723.88 3500

16575.12 3500 20075.12 3500

16913.75 3500 20413.75 3500

17

20

O.

TOTAL COST OF SALES(L+M-N)

11679.16

14217.29

14100.78

15832.26

16223.88

16575.12

16913.75

17

Table 3.1-Contd.. (Rs. in lacs)


SR. NO. PARTICULARS 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Selling General & 6 Administrative Exp. 7 SUB-TOTAL(O+6) Operating Profit Before 8 Interest(3-7) 9 Bank Interest: I. On Term Loan II. On Working Capital On Other LoansIII. Unsecured Loans OPERATING PROFIT AFTER 10 INTEREST(8-9) ADD: Other Non11(I) Operating Income Sub-Total(Income) Deduct:Other NonOperating Exp.(II) Director's Remuneration Pre. & Pre. Operating Exp. W/O Sub-Total(Expenses) Net of Other NonOperating Income/Exp.(net of (III) 11(I) & 11(i) Profit before tax/loss 12 10+11(III) 13 Provision for taxes NET 14 PROFIT/LOSS(12-13) Drawings by the 15(A) partners/divident declare (B) Divident Rate RETAINED PROFIT 16 (14-15) retained profit to net 17 profit(%age)

151.41 11830.57 473.22 76.14 320.7 0

185.74 14403.03 480.92 62.86 354.41 0

219.55 14320.33 583.09 48.23 460.61 0

225.21 16057.47 587.99 28.62 479.68 0

225 16448.88 532.2 16.39 425 0

225 16800.12 526.78 1.59 425 0

225 17138.75 530.69 0 425 0

76.38 0 0

63.65 0 0

74.25 0 0

79.69 0 0

90.81 0 0

100.19 0 0

105.69 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 76.38 0 76.38 0 0% 76.38 100

0 63.65 0 63.65 0 0% 63.65 100

0 74.25 0 74.25 0 0% 74.25 100

0 79.69 8.02 71.67 13.97 0% 57.7 80.51

0 90.81 9.08 81.73 12 0% 69.73 85.32

0 100.19 10.02 90.17 12 0% 78.17 86.69

0 105.69 10.57 95.12 12 0% 83.12 87.38

Depreciation Added 18 Back Add:Pre.-Pre- Operative Expense W/O 19 Net cash Accruals 20 Repayment Obligation 1. Towards Term Loan 2. Towards Other Loan, if any

44.21 0 120.59 0

94.94 0 158.59 0

88.12 0 162.37 0

81.15 0 152.82 151.92

146.64 0 228.37 57.88

128.31 0 218.48 0

118.52 0 213.64 0

Table 3.2- CALCULATION OF DEBT COVERAGE RATIO (UNIT-1)


PARTICULARS 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Net Profit Before Tax 76.38 Interest for the 76.14 Year Depreciation 44.21 Net Cash Generation 196.73 Interest 76.14 Installment 0 Intt. & Installment Due 76.14 DSCR 2.59 Avg. DSCR for next 3 years

63.65 62.86 94.94 221.45 62.86 0 62.86 3.53

74.25 48.23 88.12 210.6 48.23 0 48.23 4.37

79.69 28.62 81.15 189.46 28.62 151.92 180.54 1.05

90.82 16.39 146.64 253.85 16.39 57.88 74.27 3.42 2.23

100.19 1.59 128.31 230.09 1.59 0 1.59 144.72

105.69 0 118.52 224.21 0 0 0 0

116.32 0 103.7 220.02 0 0 0 0

(Rs. in lacs)

Table 3.3- ANALYSIS OF BALANCE SHEET (UNIT-1) (Rs. in lacs)


SR. NO. PARTICULARS CURRENT LIABILITIES 1 I II III Short Term Borrowings From Banks(Including BP/BD) From Applicant Bank From Other Bank For wich BP & BD SUB-TOTAL(A) Short Term Borrowings From OthersDemand Loans Against FD Sundry Creditors(Trade) Advance Pyaments From Customers/Deposit from Dealers Proviion for Taxation Dividend payable Other Stattutory Liabilities Deposits/Installment Of Term Loans/DPGs/Debenture,etc,(Due within 1 year) Other Current Liabilities & Provision (Due within 1 year) SUB-TOTAL(B) TOTAL CURRENT LIABILITIES (A+B) 2655.16 0 0 2655.16 0 47.37 39.62 0 0 0 3230.14 0 0 3230.14 0 62.98 105.48 0 0 0 3474.28 0 0 3474.28 0 75.87 37.18 0 0 0 3406.8 0 0 3406.8 0 84.54 56.52 8.02 0 0 3400 0 0 3400 0 75 35 9.08 0 0 3400 0 0 3400 0 75 35 10.02 0 0 3400 0 0 3400 0 75 35 10.57 0 0 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

2016-1

34

34

2 3 4 5 6 7

11.

8 9

51.93 24.41 163.33 2818.49

0 23.96 192.42 3422.56

0 47.11 160.16 3634.44

0 31.06 180.14 3586.94

0 50 169.08 3569.08

0 40 160.02 3560.02

0 40 160.57 3560.57

161.

10

3561.

TERM LIABILITIES 11 12 13 14 15 16 17 18 Debentures (not maturing within 1 year) Preference shares (redeemable after 1 year) Term Loans (excluding installments payable within 1 year) Deffered Payment Credits (excluding installments due within 1 year) Term Deposits (repayable after 1 year) Other Term Liabilities (Unsecured Loan) TOTAL TERM LIABILITIES (Total of 11 to 16) TOTAL OUTSIDE LIABILITIES (10+17) 0 0 529.27 0 0 361.81 891.08 3709.57 0 0 407.47 0 0 361.8 769.27 4191.83 0 0 301.01 0 0 363.65 664.66 4299.1 0 0 191.83 0 0 61.78 253.61 3840.55 0 0 56.3 0 0 60 116.3 3685.38 0 0 0 0 0 60 60 3620.02 0 0 0 0 0 60 60 3620.57

3621.

NET WORTH 19 20 21 22 23 24 25 Ordinary Share Capital/Partner's Capital General Reserve/Profit & Loss Account Revaluation Reserve Other Reserves(excluding provisions) Surplus(+) or Deficit(-) in Profit & Loss A/c NET WORTH (Total 0f 19 to 23) TOTAL LIABILITIES (18+24) 1139.1 407.42 0 0 0 1546.52 5256.09 1168.21 471.07 0 0 0 1639.28 5831.11 1598.77 545.32 0 0 0 2144.09 6443.19 1950.08 617.99 0 0 0 2568.07 6408.62 1950.08 699.73 0 0 0 2649.81 6335.19 1950.08 789.9 0 0 0 2739.98 6360 1950.08 885.02 0 0 0 2835.1 6455.67

1950.

989

2939.

6561.

Table 3.3 Cotnd.. (Rs. in lacs)


SR. NO. PARTICULARS 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

2016-

CURRENT ASSETS 26 27 I. II. 28. I. II. 29 30 I. a. b. II. III. IV. a. b. V. VI. 31 32 33 34 Cash and Bank Balance Investments (Other than long term investments) Government & Other Trustee Securities Fixed Deposit with Bank Receivables Other than deffered & exports (including under BP/BD) Export Receivables (including under BP/BD) Investments of deffered receivables (due within 1 year) Inventory Raw Material (including stores) Imported Indegenous Stock-in-Process Finished Goods Other Consumable Spares & Packing Imported Indegenous Fuel Packing Material Advances to Suppliers of Raw Material & Stores/Spares Advance Payment of Taxes/TDS Other Current Assets TOTAL CURRENT ASSETS total of 26 to 33) 0 0 0 2557.07 184.96 0 48.16 0 0 20.86 20.36 32.89 4348.39 0 0 0 2704.87 195.22 0 51.78 0 0 110.69 44.27 32.89 5010.77 0 0 0 3372.37 205.84 0 75.95 0 0 133.21 48.95 32.88 5678.95 0 0 0 2963.83 200 0 120 0 0 76.95 40.98 77.88 5235.53 0 0 0 3180 200 0 120 0 0 75 50 50 5308.73 0 0 0 3180 200 0 120 0 0 75 60 50 5411.85 0 0 0 3180 200 0 120 0 0 100 60 50 5626.03 58.24 425.59 0 0 1000.26 0 0 139.29 425.59 0 0 1306.17 0 0 83.26 477.75 0 0 1248.74 0 0 146.8 0 0 0 1609.09 0 0 33.73 0 0 0 1600 0 0 14.16 0 0 0 1712.69 0 0 119.09 0 0 50 1746.94 0 0

17

57

FIXED ASSETS 35 36 37 Gross Block Depreciation to Date Net Block (35-36) 1202.69 294.99 907.7 1210.27 389.93 820.34 1242.29 478.05 764.24 1732.29 559.2 1173.09 1732.29 705.84 1026.45 1782.29 834.14 948.15 1782.29 952.66 829.63

18

10

OTHER NON-CURRENT ASSETS 38 I. A B. II. III. IV. Investment/Book Debt/Advance/Deposit wich are not current assets Investment Subsidiary Companies/Affiliateds/Deposits 0 0 Others-GEB & Telephone Deposits Advances to Suppliers of Capital Goods & Contractors Deffered Receivables (maturity exceeding 1 year) Others (Loans & Advances) 0 0 0 0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

39 40 41

42 43 44

Non-consumable Stores & Spares Other Non-current Assets including due from directors TOTAL OTHER NON-CURRENT ASSETS (Total 0f 38 to 40) Intangible assets (patents, goodwill, prelim, expenses, bad/doubtful debts not provided for,etc) TOTAL ASSETS (34+37+41+42) Tangible Net Worth( 24-42) Net Working Capital (17+24)(37+41+42) to tally with (34-10) CURRENT RATIO (34/10) DEBT-EQUITY RATIO (18/44)

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 5256.09 1546.52

0 5831.11 1639.28

0 6443.19 2144.09

0 6408.62 2568.07

0 6335.18 2649.81

0 6360 2739.98

0 6455.66 2835.1

65

29

45 46 47

1529.9 1.55 2.4

1588.21 1.47 2.56

2044.51 1.57 2.01

1648.59 1.46 1.5

1739.66 1.49 1.4

1851.83 1.53 1.33

2065.47 1.59 1.28

22

A. B. I. II. III. IV.

ADDITIONAL INFORMATION Arrears of Depreciation Contingent Liabilities Arrears of Cumulative Dividends Gratuity Liability not provided for Disputed Excise/Custom/Tax Liabilities Other Liabilities not provided for

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

Table 3.4- OPERATING STATEMENT (UNIT-2) (Rs. in lacs)


SR. NO. I II III 1 2 3 4 5 A. I II B. I II C. D. E. F. G. H. I. J. K. L. M. PARTICULARS Domestic Sales/Services Provided Export Sales TOTAL SALES OTHER INCOME GROSS SALES Less:Excise Duty NET SALES(1-2) %age rise(+) or fall(-) in Net Sales as compared to previus year COST OF SALES Raw Material (Vehicles, Spares & Accessories) Imported Indigenous Other Spares Imported Indigenous Packing Material Power Fuel Direct labour(Factory wages & Salary) Other Trading/manufacturing Expenses Depreciation SUB-TOTAL (A TO H) ADD:Opening Stock-in-Progress SUB-TOTAL Deduct:Closing Stock-in-Progress COST OF PRODUCTION(I+JK) Add:Opening Stock of finished goods SUB-TOTAL Deduct:Closing Stock of Finished Goods TOTAL COST OF SALES(L+M-N) 0 0 0 3.5 2.5 30 20 8.5 7064.5 0 7064.5 0 7064.5 0 7064.5 1250 5814.5 0 0 0 6 3 36 21 9.56 7350.56 0 7350.56 0 7350.56 1250 8600.56 1350 7250.56 0 0 0 7.26 3.6 37.8 22.05 8.61 7999.32 0 7999.32 0 7999.32 1350 9349.32 1350 7999.32 0 0 0 8.42 4.21 39.69 23.15 7.81 8161.67 0 8161.67 0 8161.67 1350 9511.67 1350 8161.67 0 0 0 8.58 4.29 41.67 24.31 9.47 8328.29 0 8328.29 0 8328.29 1350 9678.29 1350 8328.29 0 0 0 8.75 4.38 43.76 25.53 8.62 8495.81 0 8495.81 0 8495.81 1350 9845.81 1350 8495.81 0 7000 0 7275 0 7920 0 8078.4 0 8239.97 0 8404.77 2013-14 6000 0 6000 0 6000 0 6000 0 2014-15 7500 0 7500 0 7500 0 7500 25 2015-16 8250 0 8250 0 8250 0 8250 10 2016-17 8415 0 8415 0 8415 0 8415 2 2017-18 8583.3 0 8583.3 0 8583.3 0 8583.3 2 2018-19 8754.97 0 8754.97 0 8754.97 0 8754.97 2

N. O.

Table 3.4 Cotnd.. (Rs. in lacs)


SR. NO. PARTICULARS Selling General & Administrative Exp. SUB-TOTAL(O+6) Operating Profit Before Interest(3-7) Bank Interest: On Term Loan On Working Capital On Other Loans-Unsecured Loans OPERATING PROFIT AFTER INTEREST(8-9) ADD: Other Non-Operating Income Sub-Total(Income) Deduct:Other Non-Operating Exp.- Director's Remuneration Pre. & Pre. Operating Exp. W/O Sub-Total(Expenses) Net of Other Non-Operating Income/Exp.(net of 11(I) & 11(i) Profit before tax/loss 10+11(III) Provision for taxes NET PROFIT/LOSS(12-13) Drawings by the partners/dividend declare Divident Rate 16 17 18 RETAINED PROFIT (14-15) retained profit to net profit(%age) Depreciation Added Back Add:Pre.-Pre- Operative Expense W/O Net cash Accruals Repayment Obligation 1. Towards Term Loan 2. Towards Other Loan, if any 13 0 15.6 0 15.6 0 15.6 0 15.6 0 3.9 0 5.71 121.88 0 17.92 0 0 0 0 0 0 17.92 2.69 15.23 0 0 15.23 100 8.5 0 23.73 5.79 162.5 0 21.15 0 0 0 0 0 0 21.15 3.17 17.98 0 0 17.98 100 9.56 0 27.54 4.49 162.5 0 23.69 0 0 0 0 0 0 23.69 3.55 20.14 0 0 20.14 100 8.61 0 28.75 3.02 162.5 0 27.81 0 0 0 0 0 0 27.81 4.17 23.64 0 0 23.64 100 7.81 0 31.45 1.35 162.5 0 31.15 0 0 0 0 0 0 31.15 4.67 26.48 0 0 26.48 100 9.47 0 35.95 0.5 162.5 0 36.61 0 0 0 0 0 0 36.61 5.49 31.12 0 0 31.12 100 8.62 0 39.74 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

6 7 8 9 I. II. III. 10 11(I)

40 5854.5 145.5

60 7310.56 189.44

60 8059.32 190.68

60 8221.67 193.33

60 8388.29 195.01

60 8555.81 199.61

(II)

(III) 12 13 14 15(A) (B)

19 20

Table 3.5- CALCULATION OF DEBT SERVICE COVERAGE RATIO (UNIT2) (Rs. in lacs)

PARTICULARS 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Net Profit Before Tax 17.92 21.15 23.69 27.81 31.15 36.61 40 Interest for the 5.71 5.79 4.49 3.02 1.35 0.5 Year Depreciation 8.5 9.56 8.61 7.81 9.47 8.62 7 Net Cash Generation 32.13 36.5 36.79 38.64 41.97 45.73 48 Interest 5.71 5.79 4.49 3.02 1.35 0.5 Installment 13 15.6 15.6 15.6 15.6 3.9 Intt. & Installment Due 18.71 21.39 20.09 18.62 16.95 4.4 DSCR 1.72 1.71 1.84 2.08 2.48 10.4 Avg. DSCR for next 3 years 1.96

Table 3.6- ANALYSIS OF BALANCE SHEET (UNIT-2) (Rs. in lacs)


SR. NO. PARTICULARS 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

CURRENT LIABILITIES 1 I II III Short Term Borrowings From Banks(Including BP/BD) From Applicant Bank From Other Bank For wich BP & BD SUB-TOTAL(A) Short Term Borrowings From OthersDemand Loans Against FD Sundry Creditors(Trade) Advance Pyaments From Customers/Deposit from Dealers Proviion for Taxation Dividend payable Other Stattutory Liabilities Deposits/Installment Of Term Loans/DPGs/Debenture,etc,(Due within 1 year) Other Current Liabilities & Provision (Due within 1 year) SUB-TOTAL(B) TOTAL CURRENT LIABILITIES (A+B) 1300 0 0 1300 0 6 6 2.69 0 0 1300 0 0 1300 0 7.5 7.5 3.17 0 0 1300 0 0 1300 0 7.5 7.5 3.55 0 0 1300 0 0 1300 0 7.5 7.5 4.17 0 0 1300 0 0 1300 0 7.5 7.5 4.67 0 0 1300 0 0 1300 0 7.5 7.5 5.49 0 0

2 3 4 5 6 7

8 9

0 10 24.69 1324.69

0 10 28.17 1328.17

0 10 28.55 1328.55

0 10 29.17 1329.17

0 10 29.67 1329.67

0 10 30.49 1330.49

10

TERM LIABILITIES 11 12 13 14 15 16 17 18 Debentures (not maturing within 1 year) Preference shares (redeemable after 1 year) Term Loans (excluding installments payable within 1 year) Deffered Payment Credits (excluding installments due within 1 year) Term Deposits (repayable after 1 year) Other Term Liabilities (Unsecured Loan) TOTAL TERM LIABILITIES (Total of 11 to 16) TOTAL OUTSIDE LIABILITIES (10+17) 0 0 50.71 0 0 0 50.71 1375.39 0 0 40.9 0 0 0 40.9 1369.07 0 0 29.78 0 0 0 29.78 1358.34 0 0 17.2 0 0 0 17.2 1346.37 0 0 2.96 0 0 0 2.96 1332.63 0 0 0 0 0 0 0 1330.49

NET WORTH 19 20 21 22 23 24 25 Ordinary Share Capital/Partner's Capital General Reserve/Profit & Loss Account Revaluation Reserve Other Reserves(excluding provisions) Surplus(+) or Deficit(-) in Profit & Loss A/c NET WORTH (Total 0f 19 to 23) TOTAL LIABILITIES (18+24) 350 15.23 0 0 0 365.23 1740.63 350 33.21 0 0 0 383.21 1752.27 350 53.35 0 0 0 403.35 1761.69 350 76.98 0 0 0 426.98 1773.36 350 103.46 0 0 0 453.46 1786.09 350 134.58 0 0 0 484.58 1815.07

Table 3.6 Cotnd.. (Rs. in lacs)


SR. NO. PARTICULARS 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

CURRENT ASSETS 26 27 I. II. 28. I. II. 29 30 I. a. b. II. III. IV. a. b. V. VI. 31 32 33 34 Cash and Bank Balance Investments (Other than long term investments) Government & Other Trustee Securities Fixed Deposit with Bank Receivables Other than deffered & exports (including under BP/BD) Export Receivables (including under BP/BD) Investments of deffered receivables (due within 1 year) Inventory Raw Material (including stores) Imported Indegenous Stock-in-Process Finished Goods Other Consumable Spares & Packing Imported Indegenous Fuel Packing Material Advances to Suppliers of Raw Material & Stores/Spares Advance Payment of Taxes/TDS Other Current Assets TOTAL CURRENT ASSETS total of 26 to 33) 0 0 0 1100 100 0 50 0 0 150 5 20 1664.13 0 0 0 1200 100 0 50 0 0 100 5 20 1683.42 0 0 0 1200 100 0 50 0 0 100 5 20 1699.21 0 0 0 1200 100 0 50 0 0 150 5 20 1697.63 0 0 0 1200 100 0 50 0 0 150 5 20 1717.12 0 0 0 1200 100 0 50 0 0 150 5 20 1754.35 39.13 0 0 0 200 0 0 35.13 0 0 0 173.29 0 0 39.45 0 0 0 184.76 0 0 12.23 0 0 0 160.41 0 0 39.3 0 0 20 132.82 0 0 75.87 0 0 30 123.48 0 0

FIXED ASSETS 35 36 37 Gross Block Depreciation to Date Net Block (35-36) 85 8.5 76.5 85 16.15 68.85 85 22.53 62.48 105 29.28 75.73 105 36.03 68.98 105 44.28 60.73

OTHER NON-CURRENT ASSETS 38 I. A B. II. III. IV. Investment/Book Debt/Advance/Deposit wich are not current assets Investment Subsidiary Companies/Affiliateds/Deposits 0 Others-GEB & Telephone Deposits Advances to Suppliers of Capital Goods & Contractors Deffered Receivables (maturity exceeding 1 year) Others (Loans & Advances) 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

39 40 41

42 43 44

Non-consumable Stores & Spares Other Non-current Assets including due from directors TOTAL OTHER NON-CURRENT ASSETS (Total 0f 38 to 40) Intangible assets (patents, goodwill, prelim, expenses, bad/doubtful debts not provided for,etc) TOTAL ASSETS (34+37+41+42) Tangible Net Worth( 24-42) Net Working Capital (17+24)(37+41+42) to tally with (34-10) CURRENT RATIO (34/10) DEBT-EQUITY RATIO (18/44)

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 1740.63 365.23

0 1752.27 383.21

0 1761.69 403.35

0 1773.36 426.98

0 1786.09 453.46

0 1815.07 484.58

45 46 47

339.44 1.26 3.77

355.25 1.27 3.57

370.66 1.28 3.37

368.46 1.28 3.15

387.45 1.29 2.94

423.86 1.32 2.75

A. B. I. II.

III. IV.

ADDITIONAL INFORMATION Arrears of Depreciation Contingent Liabilities Arrears of Cumulative Dividends Gratuity Liability not provided for Disputed Excise/Custom/Tax Liabilities Other Liabilities not provided for

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

0 0

0 0

0 0

0 0

0 0

0 0

Table 3.7- OPERATING STATEMENT (UNIT-1&2) (Rs. in lacs)


SR. NO. PARTICULARS Domestic Sales/Services Provided Export Sales TOTAL SALES III 1 2 3 OTHER INCOME GROSS SALES Less:Excise Duty NET SALES(1-2) %age rise(+) or fall(-) in Net Sales as compared to previus year COST OF SALES Raw Material (Vehicles, Spares & Accessories) Imported Indigenous Other Spares Imported Indigenous Packing Material Power Fuel Direct labour(Factory wages & Salary) Other Trading/manufacturing Expenses Depreciation SUB-TOTAL (A TO H) ADD:Opening Stock-inProgress SUB-TOTAL Deduct:Closing Stock-inProgress COST OF PRODUCTION(I+J-K) Add:Opening Stock of finished goods SUB-TOTAL Deduct:Closing Stock of Finished Goods TOTAL COST OF SALES(L+M-N) 0 0 0 18.13 7.91 172.38 87.83 44.21 12165.37 0 12165.37 0 12165.37 2303.98 14469.35 2790.19 11679.16 0 0 0 23.74 8.63 218.59 115.63 94.94 14378.97 0 14378.97 0 14378.97 2790.19 17169.16 2951.87 14217.29 0 0 0 35.34 11.25 265.73 140.2 88.12 14803.07 0 14803.07 0 14803.07 2951.87 17754.94 3654.16 14100.78 0 0 0 35.56 10.25 250.39 140.37 81.15 15461.93 0 15461.93 0 15461.93 3654.16 19116.09 3283.83 15832.26 0 0 0 39.5 12.96 292.91 163.18 155.14 23504.54 0 23504.54 0 23504.54 3283.83 26788.37 4750 22038.37 0 0 0 42 13.66 301.54 165.61 137.87 23925.68 0 23925.68 0 23925.68 4750 28675.68 4850 23825.68 0 0 0 43.26 14.48 308.65 169.55 127.12 24913.06 0 24913.06 0 24913.06 4850 29763.06 4850 24913.06 0 11834.91 0 13917.44 0 14262.43 0 14944.21 0 22840.86 0 23265 0 24250 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

I II

12303.79 0 12303.79 0 12303.79 0 12303.79

14883.95 0 14883.95 0 14883.95 0 14883.95

14903.42 0 14903.42 0 14903.42 0 14903.42

16461.84 0 16461.84 183.62 16645.46 0 16645.46

22791.08 0 22791.08 190 22981.08 0 22981.08

24626.9 0 24626.9 200 24826.9 0 24826.9

25719.44 0 25719.44 200 25919.44 0 25919.44

4 5 A. I II B. I II C. D. E. F. G. H. I. J.

20.97

0.13

11.69

38.06

8.03

4.4

K. L. M.

N. O.

Table 3.7 Cotnd.. (Rs. in lacs)


SR. NO. PARTICULARS Selling General & Administrative Exp. SUB-TOTAL(O+6) Operating Profit Before Interest(3-7) Bank Interest: On Term Loan On Working Capital On Other Loans-Unsecured Loans OPERATING PROFIT AFTER INTEREST(8-9) ADD: Other Non-Operating Income Sub-Total(Income) Deduct:Other Non-Operating Exp.- Director's Remuneration Pre. & Pre. Operating Exp. W/O Sub-Total(Expenses) Net of Other Non-Operating Income/Exp.(net of 11(I) & 11(i) Profit before tax/loss 10+11(III) Provision for taxes NET PROFIT/LOSS(12-13) Drawings by the partners/dividend declare Divident Rate 16 17 18 RETAINED PROFIT (14-15) retained profit to net profit(%age) Depreciation Added Back Add:Pre.-Pre- Operative Expense W/O Net cash Accruals Repayment Obligation 1. Towards Term Loan 2. Towards Other Loan, if any 0 0 0 0 0 0 123.3 0 164.92 0 22.84 0 15.6 0 76.14 320.7 0 76.38 0 0 0 0 0 62.86 354.41 0 63.65 0 0 0 0 0 48.23 460.61 0 74.25 0 0 0 0 0 28.62 479.68 0 79.69 0 0 0 0 0 22.09 546.88 0 108.74 0 0 0 0 0 7.37 587.5 0 121.34 0 0 0 0 0 4.49 587.5 0 129.38 0 0 0 0 0 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

201

6 7 8 9 I. II. III. 10 11(I)

151.41 11830.57 473.22

185.74 14403.03 480.92

219.55 14320.33 583.09

225.21 16057.47 587.99

265 22303.37 677.71

285 24110.68 716.22

285 25198.06 721.37

25

(II)

(III) 12 13 14 15(A) (B)

0 76.38 0 76.38 0 0 76.38 100 44.21 0 120.59

0 63.65 0 63.65 0 0 63.65 100 94.94 0 158.59

0 74.25 0 74.25 0 0 74.25 100 88.12 0 162.37

0 79.69 8.02 71.67 8 0 63.67 88.84 81.15 0 152.82

0 108.74 11.77 96.97 12 0 84.97 87.62 155.14 0 252.1

0 121.34 13.19 108.15 12 0 96.15 88.9 137.87 0 246.02

0 129.38 14.12 115.26 12 0 103.26 89.59 127.12 0 242.39

19 20

Table 3.8- CALCULATION OF DEBT SERVICE COVERAGE RATIO (UNIT1&2) (Rs. in lacs)

PARTICULARS 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 201 Net Profit Before Tax 76.38 63.65 74.25 79.69 108.74 121.34 129.38 Interest for the 76.14 62.86 48.23 28.62 22.09 7.37 4.49 Year Depreciation 44.21 94.94 88.12 81.15 155.14 137.87 127.12 Net Cash Generation 196.73 221.45 210.6 189.46 285.97 266.59 261 Interest 76.14 62.86 48.23 28.62 22.09 7.37 4.49 Installment 0 0 0 123.3 164.92 22.84 15.6 Intt. & Installment Due 76.14 62.86 48.23 151.92 187.01 30.21 20.09 DSCR 2.58 3.52 4.37 1.25 1.53 8.82 12.99 Avg. DSCR for next 5 years 7.7

Table 3.9- ANALYSIS OF BALANCE SHEET (UNIT-1&2) (Rs. in lacs)


SR. NO. PARTICULARS 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

CURRENT LIABILITIES 1 I II III Short Term Borrowings From Banks(Including BP/BD) From Applicant Bank From Other Bank For wich BP & BD SUB-TOTAL(A) Short Term Borrowings From Others-Demand Loans Against FD Sundry Creditors(Trade) Advance Pyaments From Customers/Deposit from Dealers Proviion for Taxation Dividend payable Other Stattutory Liabilities Deposits/Installment Of Term Loans/DPGs/Debenture,etc,(Due within 1 year) Other Current Liabilities & Provision (Due within 1 year) SUB-TOTAL(B) 10 TOTAL CURRENT LIABILITIES (A+B) 2655.16 0 0 2655.16 0 47.37 39.62 0 0 0 51.93 24.41 163.33 2818.49 3230.14 0 0 3230.14 0 62.98 105.48 0 0 0 0 23.96 192.42 3422.56 3474.28 0 0 3474.28 0 75.87 37.18 0 0 0 0 47.11 160.16 3634.44 3406.8 0 0 3406.8 0 84.54 56.52 8.02 0 0 0 31.06 180.14 3586.94 4700 0 0 4700 0 81 41 11.77 0 0 0 60 193.77 4893.77 4700 0 0 4700 0 82.5 42.5 13.19 0 0 0 50 188.19 4888.19 4700 0 0 4700 0 82.5 42.5 14.12 0 0 0 50 189.12 4889.12

2 3 4 5 6 7 8 9

TERM LIABILITIES 11 12 13 14 15 16 17 18 Debentures (not maturing within 1 year) Preference shares (redeemable after 1 year) Term Loans (excluding installments payable within 1 year) Deffered Payment Credits (excluding installments due within 1 year) Term Deposits (repayable after 1 year) Other Term Liabilities (Unsecured Loan) TOTAL TERM LIABILITIES (Total of 11 to 16) TOTAL OUTSIDE LIABILITIES (10+17) 0 0 529.27 0 0 361.81 891.08 3709.57 0 0 407.47 0 0 361.8 769.27 4191.83 0 0 301.01 0 0 363.65 664.66 4299.1 0 0 191.83 0 0 61.78 253.61 3840.55 0 0 107 0 0 60 167 5060.77 0 0 40.9 0 0 60 100.9 4989.09 0 0 29.78 0 0 60 89.78 4978.91

NET WORTH 19 20 21 22 23 24 25 Ordinary Share Capital/Partner's Capital General Reserve/Profit & Loss Account Revaluation Reserve Other Reserves(excluding provisions) Surplus(+) or Deficit(-) in Profit & Loss A/c NET WORTH (Total 0f 19 to 23) TOTAL LIABILITIES (18+24) 1139.1 407.42 0 0 0 1546.52 5256.09 1168.21 471.07 0 0 0 1639.28 5831.11 1598.77 545.32 0 0 0 2144.09 6443.19 1950.08 617.99 0 0 0 2568.07 6408.62 2300.08 714.96 0 0 0 3015.03 8075.81 2300.08 823.11 0 0 0 3123.18 8112.27 2300.08 938.37 0 0 0 3238.44 8217.35

Table 3.9 Contd.. (Rs. in lacs)


SR. NO. PARTICULARS 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

CURRENT ASSETS 26 27 I. II. 28. I. II. 29 30 I. a. b. II. III. IV. a. b. V. VI. 31 32 33 34 Cash and Bank Balance Investments (Other than long term investments) Government & Other Trustee Securities Fixed Deposit with Bank Receivables Other than deffered & exports (including under BP/BD) Export Receivables (including under BP/BD) Investments of deffered receivables (due within 1 year) Inventory Raw Material (including stores) Imported Indegenous Stock-in-Process Finished Goods Other Consumable Spares & Packing Imported Indegenous Fuel Packing Material Advances to Suppliers of Raw Material & Stores/Spares Advance Payment of Taxes/TDS Other Current Assets TOTAL CURRENT ASSETS total of 26 to 33) 0 0 0 2557.07 184.96 0 48.16 0 0 20.86 20.36 32.89 4348.39 0 0 0 2704.87 195.22 0 51.78 0 0 110.69 44.27 32.89 5010.77 0 0 0 3372.37 205.84 0 75.95 0 0 133.21 48.95 32.88 5678.95 0 0 0 2863.83 300 0 120 0 0 76.95 40.98 77.88 5235.53 0 0 0 4280 300 0 170 0 0 225 55 70 6972.85 0 0 0 4380 300 0 170 0 0 175 65 70 7095.27 0 0 0 4380 300 0 170 0 0 200 65 70 7325.25 58.24 425.59 0 0 1000.26 0 0 139.29 425.59 0 0 1306.17 0 0 83.26 477.75 0 0 1248.74 0 0 146.8 0 0 0 1609.09 0 0 72.85 0 0 0 1800 0 0 49.29 0 0 0 1885.98 0 0 158.54 0 0 50 1931.7 0 0

FIXED ASSETS 35 36 37 Gross Block Depreciation to Date Net Block (35-36) 1202.69 294.99 907.7 1210.27 389.93 820.34 1242.29 478.05 764.24 1732.29 559.2 1173.09 1817.29 714.34 1102.95 1867.29 850.29 1017 1867.29 975.19 892.1

OTHER NON-CURRENT ASSETS 38 I. A B. II. III. IV. 39 Investment/Book Debt/Advance/Deposit wich are not current assets Investment Subsidiary Companies/Affiliateds/Deposits 0 Others-GEB & Telephone Deposits Advances to Suppliers of Capital Goods & Contractors Deffered Receivables (maturity exceeding 1 year) Others (Loans & Advances) Non-consumable Stores & Spares 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

0 0 0 0 0 0

40 41 42 43

Other Non-current Assets including due from directors TOTAL OTHER NON-CURRENT ASSETS (Total of 38 to 40) Intangible assets (patents, goodwill, prelim, expenses, bad/doubtful debts not provided for,etc) TOTAL ASSETS (34+37+41+42)

0 0 0 5256.09

0 0 0 5831.11

0 0 0 6443.19

0 0 0 6408.62

0 0 0 8075.81

0 0 0 8112.27

0 0 0 8217.35

Table 3.9 Contd.. (Rs. in lacs)


SR. NO. PARTICULARS 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

44

Tangible Net Worth( 24-42) Net Working Capital (17+24)-(37+41+42) to tally with (34-10) CURRENT RATIO (34/10) DEBT-EQUITY RATIO (18/44)

1546.52

1639.28

2144.09

2568.07

3015.03

3123.18

3238.44

45 46 47

1529.9 1.54 2.4

1588.21 1.46 2.56

2044.51 1.56 2.01

1648.59 1.46 1.5

2079.08 1.42 1.68

2207.08 1.45 1.6

2436.12 1.5 1.54

ADDITIONAL INFORMATION A. B. I. II. III. IV. Arrears of Depreciation Contingent Liabilities Arrears of Cumulative Dividends Gratuity Liability not provided for Disputed Excise/Custom/Tax Liabilities Other Liabilities not provided for 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Table 3.10- COMPARATIVE STATEMENT OF CURRENT ASSETS & CURRENT LIABILITIES (UNIT-1&2) (Rs. in lacs)
SR. NO. PARTICULARS A. 1 a. b. c. d. 2 a. b. 3 4 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

2016

8 9

CURRENT ASSETS Raw materials including stores Imported 0 (Month's Consumption) Indigenous 0 (Month's Consumption) 0 Packing Material 0 (Month's Consumption) Fuel 0 (Month's Consumption) 0 Other Consumable Stores Imported 0 (Month's Consumption) Indigenous 48.16 (Month's Consumption) Stock-in-Process 0 (Month Cost Of Sales) 0 Finished Goods 2742.03 (Month Cost Of Sales) 2.81 Receivables Other than deffered & exports (including under BP/BD) 1000.26 (Month's Domestic Sales excluding deffered payment sales) 0.98 Export Receivables (including under BP/BD) (Month's Export Sales) 0 Advances to Suppliers of Raw Material & Stores/Spares 20.86 Advance Payment of Taxes 20.36 Other Current Assets 32.89 Other Current Assets including cash & bank balance & deffered receivables due within 1 year (furnish individual details of major items) 58.24 TOTAL CURRENT ASSETS total of 26 to 33) 3922.8

0 0 0 0 0 0 0 51.78 0 0 2900.09 2.44

0 0 0 0 0 0 0 75.95 0 0 3578.21 3.03

0 0 0 0 0 0 0 120 0 0 3163.83 2.38

0 0 0 0 0 0 0 170 0 0 4580 2.47

0 0 0 0 0 0 0 170 0 0 4680 2.34

0 0 0 0 0 0 0 170 0 0 4680 2.24

1306.17

1248.74

1609.09

1800

1885.98

1931.7

19

1.05

1.01

1.17

0.95

0.92

0.9

110.69 44.27 32.89

133.21 48.95 32.88

76.95 40.98 77.88

225 55 70

175 65 70

200 65 70

139.29 4585.18

83.26 5201.2

146.8 5235.53

72.85 6972.85

49.29 7095.27

208.54 7325.25

74

B.

10 11 12 13

14 15 16 17

CURRENT LIABILITIES (Other than bank borrowings for working capital) Creditors for purchase of raw material & stores/spares/consumables 47.37 62.98 75.87 84.54 81 (Month's Purchase) 0.05 0.05 0.06 0.07 0.04 Advances from Customers 39.62 105.48 37.18 56.52 41 Statutory Liabilities 0 0 0 8.02 11.77 Dividend payable 0 0 0 0 0 Other Current Liabilities & Provision Due within 1 year (specify major items) 24.41 23.96 47.11 31.06 60 Demand Loan Against F.D. 0 0 0 0 0 Installment of Term Loan 51.93 0 0 0 0 TOTAL CURRENT LIABILITIES 163.33 192.42 160.16 180.14 193.77

82.5 0.04 42.5 13.19 0

82.5 0.04 42.5 14.12 0

50 0 0 188.19

50 0 0 189.12

COMPUTATION OF MAXIMUM PERMISSIBLE BANK FINANCE FOR WORKING CAPITAL (UNIT 1&2) Table 3.11- FIRST METHOD OF LENDING (Rs. in lacs)
SR. NO. PARTICULARS 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

1 2

Total Current Assets Current Liabilities other than bank borrowing Working Capital Gap (WCG) (1-2) Min. stipulated net working capital (i.e. 25% of WCG/ 25% of total CURRENT ASSETS as the case may be depending upon the method of lending being applied) (Export receivables to be excluded under both the methods) Actual/ Projected NWC item (3) minus item (4) item (3) minus item (5) Maximum Permissible Bank Finance [item (6) or (7) whichever is lower] Excess borrowings representing shortfall in NWC (4-5)

4348.39 163.33

5010.77 192.42

5678.95 160.16

5235.53 180.14

6972.85 193.77

7095.27 188.19

7325.25 189.12

4185.06

4818.35

5518.79

5055.39

6779.08

6907.08

7136.12

1046.27

1204.59

1379.7

1263.85

1694.77

1726.77

1784.03

5 6 7 8

1529.9 3138.8 2655.16 2655.16

1588.21 3613.76 3230.14 3230.14

2044.51 4139.09 3474.28 3474.28

1648.59 3791.54 3406.81 3406.81

2079.08 5084.31 4700 4700

2207.08 5180.31 4700 4700

2436.12 5352.09 4700 4700

-483.64

-383.62

-664.81

-384.74

-384.31

-480.31

-652.09

Table 3.12- SECOND METHOD OF LENDING (Rs. in lacs)


SR. PARTICULARS NO. 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

1 2

Total Current Assets Current Liabilities other than bank borrowing Working Capital Gap (WCG) (1-2) Min. stipulated net working capital (i.e. 25% of WCG/ 25% of total CURRENT ASSETS as the case may be depending upon the method of lending being applied) (Export receivables to be excluded under both the methods) Actual/ Projected NWC item (3) minus item (4) item (3) minus item (5) Maximum Permissible Bank Finance [item (6) or (7) whichever is lower] Excess borrowings representing shortfall in NWC (4-5)

4348.39 163.33

5010.77 192.42

5678.95 160.16

5235.53 180.14

6972.85 193.77

7095.27 188.19

7325.25 189.12

4185.06

4818.35

5518.79

5055.39

6779.08

6907.08

7136.12

1087.1

1252.69

1419.74

1308.88

1743.21

1773.82

1831.31

5 6 7 8

1529.9 3097.96 2655.16 3097.96

1588.21 3565.66 3230.14 3565.66

2044.51 4099.05 3474.28 4099.05

1648.59 3746.51 3406.81 3746.51

2079.08 5035.87 4700 5035.87

2207.08 5133.26 4700 5133.26

2436.12 5304.81 4700 5304.81

-442.8

-335.52

-624.77

-339.7

-335.87

-433.26

-604.81

S Particulars No .

Audite d 31.03. 11 16.20 16.20 4.26 13.56 6.49

Estimat Audite Provision ed d al 31.03.12 17.11 17.11 4.26 14.56 4.95 31.03. 12 24.32 24.32 -24.32 2.45 31.03.13 25.69 25.69 -25.69 1.34

Estimat ed 31.03.14 30.15 30.15 -30.15 1.01

Project ed 31.03.1 5 31.23 31.23 -31.23 0.90

a. b. c. d. e.

f. g. h.

i. j.

Partner's Capital Tangible Net Worth Investment In Co.S Adjusted TNW Medium And Long Term Loans Capital Employed Current Assets Current Liabilities Net Working Capital (G-H) Net Block Net Sales: Domestic Exports Total Other Income EBIDTA Interest Gross Profit/Loss Taxes Cash Accruals Depreciation Net Profit/Loss Accumulated Lossses Net Profit/Capital Employed (%) RATIOS: Current Ratio Debt/Equity: Term Liab./Adjusted TNW

20.05 45.52 35.62 9.90 8.20 147.35 0.00 147.35

19.51 47.68 38.00 9.68 7.62 150.00 0.00 150.00

26.77 51.65 37.63 14.02 12.42 149.04 0.00 149.04

27.03 52.06 37.07 14.99 11.73 164.62 0.00 164.62

31.16 69.73 49.60 20.13 11.03 227.91 0.00 227.91

32.13 70.95 48.99 21.96 10.17 246.27 0.00 246.27

k. l. m. n. o. p. q. r. s. t.

1.49 6.37 4.78 1.59 0.19 1.40 0.95 0.45 -2.24

0.00 6.21 4.50 1.71 0.05 1.66 0.94 0.72 -3.69

0.00 6.84 5.26 1.58 0.08 1.50 0.88 0.62 -2.32

0.00 6.76 5.18 1.58 0.08 1.50 0.81 0.69 -2.55

0.00 8.21 5.69 2.52 0.12 2.40 1.55 0.85 -2.73

0.00 8.42 5.95 2.47 0.13 2.34 1.38 0.96 -2.99

u. v.

1.28 0.48 3.11

1.25 0.34 2.95

1.37 0.10 1.65

1.40 0.05 1.50

1.41 0.03 1.68

1.45 0.03 1.60

w. x. y. z.

TOL/Adjusted TNW Profitability: PAT/Net Sales Debt Service Coverage Ratio Interest Coverage (Inventory + Receivables)/S ales (%)

0.31

0.48

0.42

0.42

0.37

0.39

1.29 28.90

1.37 30.33

1.29 32.82

1.29 29.72

1.42 28.74

1.33 1.39 27.35

3.8 ANALYSIS OF CMA (Table-3.13) (Rs. in crores)

NET SALES: Firm posted net sales of Rs.149.04 crores as on 31.03.12 from sale of new and 2nd hand Maruti cars and it is only 1.15% increase over the corresponding previous year ended March,2011. The firm has achieved the sales of Rs. 164.62 crores for the year ended 31.03.13 as per provisional balance sheet submitted by the firm. The firm has estimated/projected net sales of Rs. 227.91 crores and Rs. 246.27 crores for the F.Y. 2013-14 and 2014-15 respectively. Since the firm has advised the bank that they have now planned to convert their Unit-2, situated at **** sector, Mathura Road, Faridabad to showroom cum workshop. Hence, the bank may accept. PROFITABILITY: Firm achieved EBIDTA and net profit of Rs. 6.84 crores and Rs. 0.62 crores respectively for the year ended 2011-12 as against estimated net profit of Rs. 0.72 crores. Firm's EBIDTA for the year ended March 2012 showed a modest increase of 7.38%. The firm has also achieved the profit of Rs. 0.69 crores for the year ended 31.03.2013 as per provisional balance sheet. The net profit is estimated to increase to Rs. 0.85 crores and Rs. 0.96 crores as on 31.03.2014 and 31.03.2015 repectively due to start-up/expansion of Unit-2. Thus the profitability ratio which was 0.42% as on 31.03.2012 is estimated to decrease to 0.37% as on 31.03.2014 considering low profit margins in trading concerns. CURRENT RATIO: The current ratio of the company is 1.37 as on 31.03.12 and 1.40 as per provisional balance sheet for the year ended 31.03.2013. It is estimated at 1.41 as on 31.03.2014 which is acceptable as per Bank's norms. Hence, Bank may accept. DEBT-EQUITY RATIO: Debt-Equity ratio (TOL/ATNW) as on 31.03.12 was at a comfortable level at 1.65 and 1.50 as per provisional balance sheet for the year ended 31.03.13. It is estimated/projected to 1.68 and 1.60 as on 31.03.14 and 31.03.15 respectively which is within the acceptable norms. DEBT SERVICE COVERAGE RATIO/ INTEREST COVERAGE RATIO: The DSCR of the company has been computed for the period of repayment of term loans i.e. 2009-10 to 2014-15. The average DSCR works out to be 1.33 with minimum DSCR of 1.10 as on 31.03.11 and maximum DSCR of 2.89 as on 31.03.14. Average DSCR of the firm is above the benchmark level. The ISCR was 1.29 as on 31.03.12 and it is estimated to be 1.42 as on 31.03.2014.

3.9 WORKING CAPITAL ASSESSMENT


Presently, firm is enjoying working capital fund based limit of Rs. 34 crores based on estimated sales of Rs. 165 crores for the FY 2012-13. Against this, the firm has posted actual sales of Rs. 164.62 crores achieved upto March 31, 2013 during the FY. The firm has advised the bank that they have now planned to convert their Unit-2, situated at **** sector, Mathura Road, Faridabad to showroom cum workshop. The above unit is presently being used as workshop. However keeping in view the

demands of the various models of Maruti Suzuki cars in the market, they are now planning to convert the Unit-2 to showroom cum workshop. Therefore they have approached us for sanctioning additional working capital limit of Rs.13 crores (i.e. total WCL to be Rs. 47 crores from existing level of Rs. 34 crores) in order to maintain stock and to meet the further incresed working capital requirements. They have also approached the bank for new Term Loan of Rs. 0.58 crores for acquiring fixed assets for this purpose of Unit-2. Now the firm has proposed enhancement in working capital limit from Rs. 34 crores to Rs. 47 crores on the basis of projected sales level of Rs. 227.91 crores for the FY 2013-14.

So the assessment of limit by bank is as under by MPBF method: Table 3.14 (Rs. in crores) S PARTICULARS No. a. b. Total Current Assets Other Current Liabilities (Excluding Bank Finance & Instalments Of T/L Payable Within One Year) Working Capital Gap (A-B) Minimum Stipulated Net Working Capital (25% Of "A" Excluding Export Receivables) Actual/ Projected Net Working Capital C-D C-E MPBF (Lower Of "F" & "G") Limits Requested By Firm Limits Suggested By Bank Excess Borrowings, If Any 31.03.12 31.03.13 31.03.14 Estimated 69.73 1.94 31.0315 Projected 70.95 1.88

Audited Provisional 51.65 52.06 1.69 1.80

c. d.

49.96 12.91

50.26 13.02

67.79 17.43

69.07 17.74

e. f. g. h. i. j. k.

15.22 37.05 34.74 34.74 34.00 34.00 0.00

16.19 37.24 34.07 34.07 34.00 34.00 0.07

20.79 50.36 47.00 47.00 47.00 34.00 0.00

22.07 51.33 47.00 47.00 47.00 34.00 0.00

Bank recommends for the Fund based limit at existing level of Rs. 34 crores due to following reasons:

1. The turnover of the firm has not increased suitably and is also not expected to increase substantially as there is overall down-turn in the entire auto segment. The query has been raised to the firm that under such slow down stage in auto segment, whether there is any need to proceed for expansion. In reply to that, the promoter of the firm has explained that they are since receiving lot of enquiry of the vehicles in the Mid-Segment. Hence the are keen for such expansion. However, they were also not able to achieve their targets during last year. 2. Their principal company M/s Maruti Suzuki India Limited has also withdrawn the cheque facility from them on account of returning of cheques and delay in payments, etc. 3. The firm has not offered any additional security . However, they are proposing approx. 40% increase in their working capital limit. 4. Auto Industry is not under growing trend. 5. As per last sanctioned proposal they had to external rating (bearing risk weight) from approved rating agency to be carried out within three months of finalization of audited balance sheet as on 31.03.12, however, they have not carried out the rating up to date. 6. As per last sanctioned proposal they had to convert from a firm to a company but still they have not converted into a company. 7. Stock is not covered with adequate insurance.

3.10 SECURITY:
Primary: Exclusive First Hypothecation Charge on the entire Current Assets of the company both present and future. (TCA as on 31st March 2013 stood at Rs. 52.36crores)

Collateral: 1. Exclusive charge by way of mortgage of land of Unit-1 measuring 10000 sq yrds at Mathura Road, Faridabad owned by firm of value Rs. 44.64 crores. 2. Exclusive charge by way of mortgage land of Unit-1 measuring 7000 sq yrds at Mathura Road, Faridabad owned by M/s MNO Enterprises of value Rs. 32.56 crores. 3. Exclusive charge by way of mortgage of land of Unit-2 measuring 3153 sq yrds at **** sector, Mathura road, Faridabad owned by M/s EFG Co. of value rs. 15.68 crores. SECURITY COVERAGE RATIO: Particulars Immovable (Rs. in crores) Immovable Property +

Property Value of immovable property Current Assets Total Value of Security Exposure Security Coverage Ratio 92.88 -92.88 34 2.73 Table-3.15

Current Assets 92.88 52.36 145.24 34 4.27

3.11 RISK ANALYSIS:


Risk Factors 1) Competition from other brand players and also from firms dealing in Maruti brand cars, as a result margin is always under pressure. Risk Mitigates 1) The firm holds a good share of Faridabad's Market for sale of Maruti model cars. However the firm is having workshop and has recently entered into dealership for sale of 2nd hand Maruti brand cars (under True Value flagship) for catering to wide range of customers in the city of Faridabad. Besides, establishment of new showroom cum workshop requires huge investment, so new entrant will face initial hurdles to create a dent on market share in Faridabad. 2) Though Mr. X is also into other business, he has able team of professionals and salesman who handle the day to day activities of showrooms and service centre and this unit has been operating satisfactorily for the last 10 years.

2) The association of partners in other businesses may affect the functioning of this unit.

CHAPTER-4 LIMITATIONS OF THE STUDY:


The detail data availability is proprietary, not readily shared for dissemination and is highly confidential. Assumptions and projections are based on current market conditions and have not taken into account the price volatility. Financial statements of the proposed project are subject to risks and uncertainties that could cause actual results to differ materially from those mentioned in the report. The risks and uncertainties include, but are not limited to, the following: (i) Changes in Indian laws (ii) Changes in Indian in global economic conditions (iii) Changes in government regulations (iv) Introduction of new technologies The staff although are very helpful but are not able to give much of their time due to their own work constraints. The study is being done keeping in mind the policies of the Head Office. Due to the ongoing process of globalization and increasing competition, no single model or method will suffice over a long period of time and constant up gradation will be required.

CHAPTER-5 SUGGESTIONS/RECOMMENDATIONS
After studying and evaluating the various aspects of the credit decisions taken up by Bank of India through the interviews with manager and the banks circulars, it is clear that the bank is following a sound process but i would like to give some suggestions which are as follows: 1. The study presents an example of a project related to trading industry. It was found that the bank relies mainly on its internal credit rating, DSCR & Debt equity ratio to appraise the project financially. But most of the banks have started checking the Internal Rate of Return of the project before doing its pricing. So, to be in accordance with the banking industry BANK OF INDIA should also modify its appraisal process to include the same. 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 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. 3. Credit Analysts works on mainly two applications i.e. Microsoft excel and Microsoft word. I observed that they spend a significant portion of their working hours on just formatting of a document and sometime they also stuck into technicalities of these applications which waste a lot of time. Credit analysts have basic knowledge of working on these applications but an advanced level knowledge of these applications can save lots of their valuable time. Work on these applications is generally repetitive in nature. So a 1-2 days training related to their requirements is much more sufficient to improve the efficiency of analysts.

4. There is one more suggestion about the industry data. Every proposal has one clause related to industry perception in memorandum. I have seen that this data is generally taken from internet. I also realized that this clause is not fulfilling its objective properly. For compliance of objective I would suggest that it should not be limited to some specific information like: Industry growth rate, future growth, cycle time, industry phase, etc. I also recommend that material on this clause should be provided by the R&D department every year because industry perception is generally same for the country and R&D department can provide a better bird eye view on the industry.

Bibliography
Books
1. Mukherjee, DD (2010),Credit Appraisal Risk Analysis & Decision Making, Jain Book Depot 2. Ganguin, B. and Bilardello,J (2005), Fundamentals of Corporate Credit Analysis, McGraw-Hill 3. Dash, S. K.(2006),Tit Bits of General Advances & Financial Services, Bank House 4. Management of bank credit by H. R. Suneja, Himalaya publishing house, first edition 1992. 5. Kiehnau, L. and Budyak, J. T. (2009),The Valuation of Collateral, THDE SECURED LENDER 6. Bidani,S.N. and Sahay,B. (1988), How Bank Credit is Administered: Supervision and Follow-up, Vision Books, Delhi 7. Chatterjee, A. (1978), Bank Credit Management (How to Lend Effectively), Suneja Publishing Corporation, Delhi

Bank of India Journal (Internal Circulation)/ Proprietary Information


8. Bank of India, Annual Report ( 2011-2012) 9. Bank of India, Book of Instruction 10. Gist of operative circulars on loans and advances 11. Information guidelines of Bank of India.

Internet Websites
12. www.investopedia.com 13. www.rbi.org.in 14. www.bankofindia.com