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- 1 -Friends Charitable society

Punjab National Bank : MCB,Ghaziabad/U.P.West, Merrut


1. Name of the Borrower and BO & Controlling Office

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18.3.2008

: FRIENDS CHARITABLE SOCIETY

Whether fresh/renewal/
Enhancement / Fresh
enhancement
Asset Classification as Standard
on 31-03-2007
Credit Risk Rating by
Rating Date of Score
ABS
Reasons for
Bank
Rating
degradation
Present BB22/02/08 51.51 31.03.2007 Financial
Performance
Previous BB+ 03/01/07 57.89 31.03.2006 N.A.
Whether
No
Agriculture/Retail/
SME/Large
a) Whether
No
Sensitive Sector
Real
Estate/Capital
Market
b) Applicable Risk weight
Consortium/Multiple
Banking
Lead Bank
PNBs Share %
Date of Receipt of
Proposal at BO/CO/HO
Date of last sanction &
authority/In Principle
Consent

N.A. Sole Banking


N.A.
100%
24/12/2007
7/2/2007, GM (Zone).

Gist of the proposal


Sanction of fresh Term Loan of Rs.10.22 Crores for construction of additional
building, purchase of lab equipments, furniture & fixtures, computers, etc. for
Engineering & Dental Colleges.
Renewal cum enhancement of OD limit of Rs.1.00 crores from Rs.0.50 Crores
against Tangible security.
Renewal of Bank Guarantee (Specific) limit of Rs.2.25 Crores.
Other Issues :
- Relaxation in applicable ROI by 3.25% for OD facility and 3.75%.for all the
Term Loans.
- 50% relaxation in Up-front fee on proposed TL of Rs.10.22 Crores
- Sanction of Pay Fee Facility for collection of Annual Fee under CMS
& Branded Debit Cards.
Confirmation of AGM(Br.) action in having allowed term loan of Rs.1.50 Crs. out
of the proposed term loan.

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- 2 -Friends Charitable society

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Permission for disbursement of TL through CA with a maximum of 25% of TL


amount.
Approval of Draw Down schedule.
PART I
2.

Borrowers Profile
a) Name of the Borrower
Name of Units
B Address of Regd. Office and institutes
C Constitution
d. Date of incorporation/
Establishment
e. Dealing with PNB since
f. Industry/Sector
g. Business Activity (Product)/
Installed Capacity.

3.

Friends Charitable Society


1. Krishna Engineering College
2. Krishna Dental College
95, Katori Mill, Loni Road, Near
Hindon Airforce Station, Mohan Nagar,
Ghaziabad (U.P.)
Registered Society
13.03.2003
24.11.2005
Educational institutions
Running Educational institutions

Members of Executive Committee (S/Shri)

Name
1.Sh.Rakesh Garg
2.Sh.Atul Garg
3 Sh.Sarish Agarwal
4.Sh.Sunil P.Gupta
5.Sh.Ghanshyam Das Jain
6.Sh.Ram Avtar Karanwal
7.Sh.Mittul Singhal
8.Sh.Om Parkash Shah

Designation
Chairman
Vice Chairman
Secretary
Treasurer
Member
Member
Member
Member

Whether
Promoter/
Professional /Nominee
Promoter
Promoter
Promoter
Promoter
Promoter
Promoter
Promoter
Promoter

a)

If any of them, in the list of Caution Advices


circulated by the Bank from time to
time/RBI's/Wilful defaulters' list/Caution List of
ECGC/CIBIL Database:

No. The company found in CIBIL


data on 11.03.2008. There is an
overdue of Rs.8632/- in Auto loan
account of Atul Kumar Garg.

b)

If any one of them connected in the past


with any NPA/OTS/Compromise/unscrupulous
defaulters

No

c)

If any of them, related to Directors/Senior


Officers of PNB:

No

d)

Management Change since last sanction, if


any

No

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- 3 -Friends Charitable society

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e) Share Holding Pattern as on: N.A.


Name of the Promoters/Major Share
holders
Promoters Holding
FIs/ Mutual Funds/UTI/Banks/FIIs
NRIs/OCBs
Public
Total

f)

No.
shares
N.A.
N.A.
N.A.
N.A.
N.A.

of Amt.
in
Crores.
N.A.
N.A.
N.A.
N.A.
N.A.

Whether Shares pledged to any Bank/FI/others


If yes, Percentage of shares pledged
Institution
Purpose

(Rs. in lacs)
Proposed

Secured/Unsecured
along
with
the
basis
thereo
f

50.00
50.00

100.00
100.00

Secured

225.00
225.00
232.11
377.80
959.98
-1569.89
1844.89

225.00
225.00
232.11
377.80
959.98
1022.00
2591.89
2916.89

Secured

Existing

Fund Based
Overdraft against tangible security
Fund based ceiling
Non Fund Based
ILG
Non Fund Based Ceiling
Term Loan I (Rs.7.22 crores)
Term Loan II (Rs.5.00 crores)
Term Loan III (Rs.12.00 crores)
Term Loan IV Fresh
Total Term loans
Total Commitment

N.A.
N.A.
N.A.
N.A.
N.A.

N.A
N.A.
N.A.
N.A.

4.A Facilities Recommended :


Nature

Rs. % Holding

Secured
Secured
Secured
Secured

Disbursements have been completed in all term loans.


4.B Our Commitment and Maximum Permissible Exposure Norms

KCT*

Existing

Proposed

1400.00

1400.00

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%age
of Exposure
Banks Capital Norms in %age
Funds as on
31.03.______

- 4 -Friends Charitable society

FCS*

1844.89

-4-

2916.89

* KCT : Kanha Charitable Trust


* FCS : Friends Charitable Society
4. C Short Term Loans sanctioned by PNB in last 12 months, if any Date of sanction

Amount

Period

ROI

Date of
Adjustment/
Roll over

Purpose

Rate
Interest

of

investment

in

NIL
4. D Details of facilities provided outside consortium, if any l
Name of
Institution

the Nature
facility

of Security

a)
b)
5.A

O/s
as on
NIL

Facilities from PNB Subsidiaries/Exposure by way


Equity/Debentures/Derivatives/Foreign Exchange etc. :

of

NIL
Name of
Institution

the Nature
facility

of Security

a)
b)

O/s
as on

Purpose

Overdue,
any

if

NIL

5.B Term Loans from other Banks/Financial Institutions/Other Institutions - (including


Lease, ICDs, Corporate Loans, Debentures etc.)
Name of the Bank/FI
HDFC Bank
ICICI
HDFC

Facility
Sanctioned
Auto Loan
Auto Loan
Auto Loan

Balance O/s
in Rs.
132609.45
122025.00
132609.45

Overdue, if
any
NIL
NIL
NIL

Rate of
Interest
7.30%
7.30%
7.30%

5.C Credit Rating by agencies {CRISIL/ICRA/CARE/FITCH INDIA} with purpose of such


rating.
Not applicable
Agency

Rating

Date of
Rating

Significance
of Rating
NA

Purpose

5D. Details of Working Capital Limits from the Consortium/Multiple Banking


-4-

Validity
Date

- 5 -Friends Charitable society

Name of the
Bank

Existing
FB
NFB

-5-

Share %
Proposed
FB
NFB
FB
NFB
NIL

Share %
FB NFB

ROI

6. Details of Group /Allied/Associate firms and the facilities sanctioned to them along
with conduct of these accounts with our Bank/ other Banks and comments on adverse
indicators, if any.
As per Appendix II
7.A (i) Financial Position of the Society (as a whole)
(Rs. In Lacs )
31.03.05
Audited

Particulars

(12 Month)

31.03.06
31.03.07
Audited Audited
(12 Month)

(12 Month)

Gross Sales/Receipts*
-Domestic
-Export
Other Income
PBIDT
Operating Profit/Loss
Profit before tax
Profit after tax
Cash profit/ (Loss)
Paid up capital/Corpus Fund
Reserves
and
Surplus
excluding
revaluation
reserves
Misc. expenditure not written
off
Accumulated losses
Deferred Tax Liability/Asset

00.00
NIL
NIL
NIL
NIL
-63.03
-63.03
-63.03
-63.03
322.42
-

00.00
NIL
NIL
NIL
NIL
-163.05
-163.05
-163.05
-163.05
280.02
-

00.00
NIL
NIL
NIL
NIL
-113.58
-113.58
-113.58
-113.58
213.68
-

0.00
0.00

0.00
0.00

0.00
0.00

a)
Tangible Net Worth
b)
Investment in allied
concerns and amount of
cross holdings
c)
Net Owned Funds (a-b)

322.42
0.00

280.02
0.00

213.68
0.00

322.42

280.02

213.68

Total

322.42
540.18
1090.48

280.02
332.30
337.70

213.68
872.67
872.67

Unsecured Loans
Total Borrowings

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- 6 -Friends Charitable society

Secured
Unsecured
Investments
Total Assets
Out of which net fixed assets
Net Working Capital
Current Ratio
Debt Equity Ratio
Operating Profit/Sales
TOL/TNW
Fund flow
Long Term Sources
Long Term Uses
Surplus/Deficit
Short Term Sources
Short Term Uses
Surplus/Deficit

-6-

550.30
540.18
1412.20
1413.74
0.00
0.64
1.77
3.38
00
3.38

5.40
332.30
586.31
619.55
0.00
31.34
18.13
1.21
00
1.21

872.67
914.69
1090.20
0.00
171.60
45.69
4.08
00
4.08

1412.91
1412.27
0.64
0.83
1.47
-0.64

617.72
586.38
31.34
1.83
33.17
31.34

1086.36
914.76
171.60
3.84
175.44
171.60

*The fee etc. are received in the Institutes and unit wise surplus and deficit is transferred
to Societys account.
(ii) Krishna Engineering College (Unit of Friends Charitable Trust)
(Rs. In Lacs)
31.03.2005 31.03.2006 31.03.2007
Audited
Audited
Audited
Receipts
111.48
234.80
500.50
Other Income
11.47
7.76
12.69
Operating Profit (loss)
-74.81
-84.90
-25.78
Excess of Expenditure over
Income
-63.34
-77.14
-13.09
Depreciation
62.07
83.29
120.81
Cash Profit
-1.27
6.15
107.72
Capital Fund
698.19
507.46
768.04
Miscellaneous Exps. Not written
off
0.00
0.00
0.00
Accumulated loss
0.00
0.00
0.00
Tangible Net Worth
698.19
507.46
768.04
Debt Equity ratio
0.06
1.37
1.12
Current Ratio
1.61
0.94
1.19
NWC
24.41
-4.97
19.70
(iii) Krishna Dental College (Unit of Friends Charitable Society)
(Rs. In lacs)
31.03.2005 31.03.2006
-6-

31.03.2007

- 7 -Friends Charitable society

Receipts
Other Income
Operating Profit
Excess of Expenditure over
Income
Depreciation
Cash Profit
Capital Fund
Miscellaneous Exps. Not written
off
Accumulated loss
Tangible Net Worth
Debts Equity ratio
Current Ratio
NWC

-7-

Audited
4.23
0.31
-106.42

Audited
195.75
1.49
-87.42

Audited
379.94
2.12
-102.61

-106.11
--106.11
714.01

-85.93
60.02
-25.91
78.85

-100.49
91.19
-9.30
146.65

122.39
0.00
591.62
0.01
2.49

0.00
0.00
78.85
12.55
0.48

0.00
0.00
146.65
8.39
1.49

14.01

-51.19

37.21

Till 2005, the bank loans taken by the society for Engineering College and Dental college
were shown in the Balance Sheet of the Society and not in the Balance sheets of
the respective colleges. Later on, on the observation of Fee fixation committee, the
secured loans taken by the colleges were reflected in their respective balance
sheets as at 31.03.2006. As such, there is no decline in capital fund of colleges
from 2005 to 2006 but due to change in presentation, it is appearing as declining.
Besides, capital account in the balance sheets of college represent amount invested
by the society.
7A (ii) Key Financials upto last quarter ended 31/12/2007
(as per Un-audited Results )
M/s Krishna Engineering College
Period
ended

Sales
Other
Income
PBT
PAT

Latest
quarter
ended

Corresponding
quarter of last
year

7.69
3.52

NIL
NIL

-186.17
-186.17

-134.09
-134.09

(Rs. in lacs)
%
Change

(38.84%)

M/s Krishna Dental College

Cumulative
upto this
quarter of
current year
857.85
6.92

Cumulative
upto this
quarter of
previous
year
500.94
5.43

+71.25%
+27.44%

467.21
467.21

296.13
296.13

+57.77%
+57.77%

Rs. in lacs

-7-

%
Change

- 8 -Friends Charitable society

Period
ended

Sales
Other
Income
PBT
PAT

Latest
quarter
ended

Corresponding
quarter of last
year

290.50
5.46

231.54
3.61

+25.45%
+51.24%

486.50
12.33

Cumulative
upto this
quarter of
previous
year
399.89
7.30

204.63
204.63

186.00
186.00

+10%

80.88
80.88

161.66
161.66

7B Capital Market Perception

%
Change

Cumulative
upto this
quarter of
current year

-8-

%
Change

+21.65%
+68.90%
-50%
-50%

N.A.

Listing
BSE/NSE
Face Value
NA
Current Share Price as on
NA
52 weeks High / Low
NA
Market Capitalisation as on
NA
7.C Comments on Financial Indicators (only major variation/trends to be explained)
(Rs. In Crores)
Particulars
Accepted during
Actuals
for
FY
last assessment for FY 2006-07
2006-07
Net Sales/Receipt
998.66
895.24
Excess of income
218.90
-113.58
over Expenditure
Receipts :
The Society has achieved total receipts of Rs.127.55 lacs during FY 2004-05 and Rs.
439.80 lacs in F.Y. 2005-06 including both Engineering as well as Dental college,
registering an increase of Rs. 312.25 lacs in F.Y. 2005-06. Further, during academic
session 2006-07, the society has achieved total receipt of Rs. 895.24 lacs showing that
the society has achieved more than double as compared to the receipt of F.Y. 2005-06.
The party has achieved receipts of Rs.895.24 lacs against the projections of Rs.998.66
lacs during the FY 2006-07. The party has informed that they had assumed 60 students
for MCA classes but only 30 students was admitted and also there is decline in hostel
fees in Krishana Engg College. Besides, they got 86 students against the 100 students
as proposed in Dental College in 2007. However, the party has got 100 students in
Dental College in 2008.
Profitability
Profitability during FY 2006-07 has suffered mainly due to increase in salary & other
benefits of qualified faculty staff which the society had to incur so as to maintain quality
of education. Due to increase in seats of Computer Science and Electronics &

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- 9 -Friends Charitable society

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Communication and introduction of one new branch of Engineering i.e. Information &
Technology, the profitability of the society will improve significantly. Further, MCA course
with in take of 60 students has been started and society is going to start PGDBM course
from ensuing session, consequently profitability is likely to increase.
The net of income and expenditures of colleges are transferred to P&L account of society.
As such, there are cash losses of society because depreciation has not been transferred
to P&L account of society due to net surplus/deficit transfer. The true picture is as under :Losses as per P&L of society
Depreciation as per P&L of Colleges KEC
Depreciation as per P&L of Colleges KDC
Actual cash loss/profit of society

2005
-63.03
62.07
-- 0.96

2006
-163.05
83.29
60.02
-19.74

2007
-113.58
120.81
91.19
98.42

Corpus Fund
The society prepares three balance sheets and income expenditure account every year.
These represent (i) dental college, (ii) engineering college and (iii) society. The corpus is
brought into the society and the money utilized by the society in college is shown as
Investment in colleges, in the society balance sheet. The bank loan is shown in the
balance sheets of colleges.
The society is raising corpus fund by obtaining donations every year but it is declining due
to excess of expenditure over income as under :2005
221.89
163.57
385.46
63.04
322.42

Opening Balance of Corpus fund


+ Additions by taking donations
Total
- Excess of expenditure over income
Closing balance of Corpus fund

2006
322.42
120.65
443.07
163.06
280.01

2007
280.01
47.24
327.25
113.58
213.67

Besides, the society has raised unsecured loans from Rs.332.30 lacs as on 31.03.2006 to
Rs.872.67 lacs as on 31.03.2007. As such, the society is raising its long term funds.
Current Ratio
The current ratio is very high. Though the same is not of much relevance in such cases.
Debt Equity Ratio
The debt equity ratio of the society is very high i.e. 4.08 as at 31.03.2007 due to high
amount of unsecured loans in comparison to the corpus fund. The DE ratio of the colleges
of the society as on 31.03.2007 are 1.12 and 8.39 as shown above. The society will raise
the corpus fund to the tune of Rs.1222.74 lacs against the debt of Rs.2712.05 lacs
resulting in DE ratio to 2.22 as.at 31.03.2008 The same will come to 1.61 by raising
corpus fund to Rs.1598.17 inclusive of surplus against the debt portion of Rs.2570.85
resulting in DE ratio to 1.61 as at 31.03.2009.
The corpus fund of the society has increased from Rs.213.67 lacs as at 31.03.2007 to
Rs. 624.89 lacs as at 31.01.2008 as per Prov. Balance Sheet (Fund Rs.278.05 lacs +
Surplus of income Rs.346.84 lacs = Rs.624.89 lacs).

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- 10 -Friends Charitable society

- 10 -

The society is incurring losses in initial years and will be in positive soon. The overall
financial position of the society may be termed as satisfactory.
7.D

Details of investment in Shares, Debentures, Units or diversion of funds outside


the business etc. (Along with comments in case of increase)
NIL

7.E

Details of Liabilities not accounted for/Contingent liabilities


Contingent Liabilities as on 31.03.2007 are only towards the Bank Guarantees
issued by bank on behalf of the society which amount to Rs.2.25 crores.

7.F Status/details of adverse comments/ Qualification by Auditors of the borrowing unit


As per ABS as at 31.03.2007, contingent liabilities have not been provided for.
7.G

Position of assessment of income tax/sales tax/wealth tax of the borrowing


concern/partners/proprietor
The society is registered U/s 12AA of the Societies Registration Act 1860, hence it
is exempted from Income Tax/Wealth Tax. Moreover sales tax is not applicable.

7.H

Information on litigation initiated by other banks/FIs against the borrower as per


latest Audited Balance Sheet, if any
NIL

7.I

Overall likely impact of (7.B to 7.F) on the financial position of the borrowing unit
BGs have been issued for normal course of business and shall not have any
adverse impact on the financials of the society.

8.

SECURITY

A.

Primary
i)

For working capital limits N. A.

ii)

For Term Loans & Overdraft


1. Extension of EM of societys land & building valuing Rs.2466.84 lacs as
per ABS as at 31.03.2007, situated at plot no. 27(1) & 28 Site 2,
Industrial Area, Loni Road, Ghaziabad measuring 66910.57 Sq. Mtrs.,
market value Rs.9118.72 lacs and realizable value Rs.7537.75 lacs as
per detailed valuation report of M/S Atul & Associates report dated
06.02.2008 plus cost of proposed construction of Rs.12.33 crores. Thus
total value will be Rs.87.70 crores.

- 10 -

- 11 -Friends Charitable society

- 11 -

2. Hypothecation of other fixed assets like equipments, furniture & fixtures,


other assets valuing Rs.479.62.00 lacs as per ABS dt. 31-03-2007 and
other assets to be created out of bank loan (both present & future) Thus
total value will be Rs.779.62 lacs.
FOR BG LIMIT (Existing)
General Counter Indemnity by the society.
Both the securities held against TLs & OD limits shall also cover the BG limit.
Basis for valuaion of IPs:
The market valuation of the society land and building has been done by Bank Approved
Valuer M/s Atul & Associates. As per his valuation report dated 06.02.2008, the
realizable market value of the land and building is Rs.7537.75 lacs. However, as per
valuation report dated 08.02.2008 of Incumbent , the realizable value is about Rs.76
Crores. The present value is done on realistic basis. At the time of last sanction, the
realizable value of IP was Rs.44.58 crores as per valuation report dated 15.03.2006 of
S.P.Bansal & Associates.
B.

Collateral (Information in respect of mortgage of IP to be given only in the


following format:
i) Hypothecation/ Mortgage of Block Assets Immovable Properties

Security
Descripti
on

ii)
Nature of
limits

Area in
Sq M

Ownership
Last
sanct
ion

Value(Rs./crore)
Prese Realisab
nt
le value
book
value
NIL

Basis
for
valuatio
n

Dat
e

Wheth
er
existin
g/
fresh

First/Second/Third charge/ Pari-passu charge N.A.


Security

Value of
block
assets as
on: (as per
B/Sheet)

Term
Loan
Working
Capital

Value of
Extent of first /
block assets second charge
excluding
holders
specific
charge if any
NA
NA

iii) Personal /Corporate Guarantee


By way of Personal Guarantee
(Rs. in lakh)

- 11 -

Balance /
residual value of
charge available
to bank/
consortium

- 12 -Friends Charitable society

Sl.No.

Name of
Guarantor

Net Worth
Previou
s

Present

- 12 -

Immovable property
Previou
s

1.
2.
3.

Present

Sh.Atul Garg
66.13
643.57
87.50
Sh.Rakesh Garg*
19.00
343.50
26.49
Sh.Sarish Kr.
142.40
473.90
142.00
Chaudhary*
4.
Sh.Sunil P Gupta*
14.45
297.50
14.00
Total
241.98 1758.47
269.99
*They are also guarantors for the credit facilities in favour of
being availed at ours.
iv

103.50
70.00
578.50

Date of confidential report


Previous

Present

20.11.2006
20.11.2006
20.11.2006

12.02.08
20.11.07
20.11.07

200.00
20.11.2006
952.00
Kanha Charitable Trust

Comments on changes, if any.

Increase in Net Worth is due to acquiring fresh immoveable properties by the guarantors
and also some of the old properties were not included in previous statement for want of
proof of titles at that time.
V
8. C

Status of creation of charge: N.A.

Security Margin ( Fixed Asset Coverage Ratio for term loans)

Nature
Primary
Collateral
Total
T Loans
Total Exposure

Existing
Proposed
Book value As FACR
Book
Value FACR on project
per
ABS
(31.03.2009)
completion
31.03.2007
2946.48
2.01
4506.36
2.38
----2946.48
2.01
4506.36
2.38
1460.61
2.01
1893.28
2.38
1685.61
1.75
2218.28
2.03

There is improvement in FACR on completion of the project. However, on the basis of


market/realizable value of IP it was 2.62 times at the time of last sanction and now it is
2.03. The matter for additional collateral security was discussed with the party who has
submitted that the value of IP already mortgaged is adequate to cover the banks
exposure. In view of partys submission and the fact that the other banks are also
approaching the party, their market reputation and income value of the account, the
security already offered is termed satisfactory by us.

FIXED ASSETS COVERAGE RATIO


Rs in crores
A. Our Exposure

FB OD (against Tangible Securities)


Term Loans

1.00
25.92

- 12 -

Rs in crores

20.11.07

- 13 -Friends Charitable society

BG

- 13 -

2.25

Total Exposure
B. Value of Securities

29.17

EM of IPs
Hypothecation of other assets
Margin on BG @10%
C. Total value of the securities offered.
Asset Coverage Ratio- C/A

87.70
7.80
0.225
95.72
3.28 times

At the time of last sanction , the value of IP was Rs. 56.67 crores ( 44.58 crores + 12.09
crores) but looking into the construction and rise in land values, we have accepted the
same at Rs.87.70 crores ( App. Rs.75.37 crores + 12.33 croes) which is realistic and
reasonable.
9.

Position of Account as on 22. 02. 2008

Nature
Term Loan I
Term Loan-II
Term Loan III
Overdraft

Bank Guarantee

Limit
900
500
1200
50

VS
24.66

225

(Rs. in lacs)
DP
232.11
377.80
959.98
60.00

225.00

Balance
Irregularity
232.11
Nil
377.80
Nil
959.98
Nil
60.00* Allowed within
discretionary
powers of
AGM(Br.)
225.00
Nil

Disbursement in all term loans have been completed.


10.A. Conduct of the Account including details of terms & conditions not complied with
A) Status of compliance of terms & conditions of last sanction.
All the terms and conditions of last sanction have been complied with.
B) Status of availment of limits and over drawings:
The party is availing overdraft limit up to full extent.
C) Status of routing of proportionate business in consortium advance & relation ship
in sales and credit summations:
All the receipts are being routed through accounts i.e.overdraft and current
accounts of Krishna Engineering College & Krishna Dental College.
D) Status of honoring of commitment in non-fund based credit facilities:
Party is availing BG limit of Rs.225 lacs, BGs have been issued in favour of
Dental Council of India and Secretary UP State Medical Education. There has not
been any claim under BG.
E) Status of submission of stock reports, QIS & other financial information (including
audited/ provisional balance sheet ):
The desired information is submitted normally in time.
- 13 -

- 14 -Friends Charitable society

- 14 -

F) Status of checking of stocks/ securities:


The securities have been checked/ verified as per Banks guidelines.
G) Status of insurance:
Insurance coverage held as per Sanction.
H) Deviation in general guidelines, if any:
I)

NIL

Reasons for delay in renewal/ review, if any: N.A.

J) Details of other adverse features observed :


K) Any others:
10.B i)

NIL

NIL

Value of the Account


(Rs. in lacs)
Period

01.04.06 to 31.03.07
01.04.07 to 31.12.07
01.04.06 to 31.03.07
01.04.07 to 31.12.07

Nature
of Limit
TL
TL
OD
OD

Amount
1443.75
1543.71
50.00
50.00

Interest/Commission Earned
109.80
136.89
5.26
2.17

Yield (%)
7.61%
8.87%
11.38%
5.78%

10.B ii) Deposits including Escrow/TRA account with details


No Escrow/TRS account maintained however Society is availing overdraft facility
through OD a/c. Deposit accounts of all the staff members of both the Engineering and
Dental colleges are maintained at the branch.
However, we are submitting a proposal for fee collection utility on CBS Payee and
Scheme of branded debit card which is discussed in the following paragraph under
Other Issues at Sl.No.14(iii) of the proposal
10.C Review of the Account and Summary of serious irregularities pointed out by
Banks Inspectors, Concurrent Auditors, Credit Audit & Review Division (CA&RD), RBI
Inspectors, Statutory Auditors, observations of Stock Audit Report, Comment on
Preventive Monitoring Score Trends, (and status of rectification of these irregularities)
As per Appendix III
PART II
11 A.

Brief History

- 14 -

- 15 -Friends Charitable society

- 15 -

Friends Charitable Society is a society registered under the Societies Registration Act
1860 registration number 1423 dated 13.03.2003. The society owns land measuring
69,000 Sq. Mtr. approx and has been running Engineering and Dental College at Mohan
Nagar, Ghaziabad. An engineering college in the name of Krishna Engineering College
has become operational from academic season 2004-05 and Dental college in the name
of Krishna Dental College has become operational from the academic session 2005-06.
As per All India Council for Technical Education letter dated 06.06.2006, number of seats
for admission to 1st year of Elect & Comm. Engg. w.e.f. academic session, 2006-07,
has been increased to 120 from existing 60. Further one new branch of Engineering i.e.,
Information Technology with intake of 60 students and M.C.A. with intake of 60
students has been started.
Further, as per All India Council for Technical Education letter dated 21.08.2007, number
of seats for admission to 1st year of Computer Science & Engineering w.e.f. current
academic session, 2007-08, has been increased to 120 from existing 60.
Presently, the society is running the following courses/student strength:
Sl. No.
1.
2.
3.
4.
5.
6.
7.

Name of the Course(s)

Intake
(2005-06)

Computer Science & Engineering


Electronic & Electrical Engg
Electronic & Comm. Engg.
Information Technology
Mechanical Engineering
MCA
BDS

60
60
60
-60
-100

Intake
(2006-07)
60
60
120
60
60
60
100

Revised
Intake
(2007-08)
120
60
120
60
60
60
100

B. (i) Industry Rating as per RMD :


Favourable/ Marginally Favourable / Neutral/ Marginally Unfavourable/ Unfavourable
The credit risk rating of the society has been down graded from BB+ (57.89) as at
31.03.2006 to BB- (51.51) as at 31.03.2007 mainly due to financials. ZCRMD has
identified following risk factors :S.
Risk Factors
No.
1.
The existing project of the
society
has
been
implemented by delay of 9
months.

2.

The DE ratio of the society is

Mitigating Factors

Our Views

It should be ensured that this Due to delayed


would not happen in the sanction the society
proposed project.
submitted
us
revised
implementation
schedule.
The
society has assured
to get this project
completed timely.
It is properly considered in the After completion of
- 15 -

- 16 -Friends Charitable society

on higher side.

3.
4.

- 16 -

rating.

The
sensitivity
analysis
shows the company value at
11.95%.
Number
of
professional
institutes are coming in and
around NCR region.

the project as at
31.03.09, the DE
ratio will be 1.61 by
raising corpus fund.
It is properly considered in the The same has been
rating.
factored into the risk
rating.
The professional approach & The management
quality education is required has its own name
for
survival
in
present and
fame.
The
scenario.
society has got
award from UP
Govt.
for
best
institute among Pvt
and Govt. sector.

B (ii) Detailed Industry Scenario and Comments on management, production and


marketing as well as Borrowers' diversification, expansion, modernization programme
As per Appendix - IV
12.

Present Proposal

Present proposal has been submitted by the society to finance the expansion plan of the
existing Engineering College and the Dental College. To finance the construction of new
academic and PGDBM block along with purchase of computers, lab equipments and
furniture fixture.
For the above purpose, the party has requested for Term Loan of Rs.1022 lacs to be
used for Engineering College & Dental College.
The society is already availing OD against tangible security of Rs.50 lacs , which the
society has requested to enhance to Rs.100 lacs and renewal of BG limit of Rs.225 lacs.
The party has requested for renewal of the same.
a)

Justification for working capital sanction-

Justification for OD of Rs.0.50 crore against Tangible Security


The society is running two colleges, one Engineering college and the other Dental
college. A major part of the fees in Engineering college is received in the month of
August/September every year, while the same is received in Dental college in
September/October every year. The colleges are having surplus of funds in these month.
However, when these funds are exhausted within six months, the society has to avail
short-term loans to meet out their revenue expenses. In view of increase in intake from
340 (2005-06) to 520 ( 2006-07) and to 580 (2007-08), the society has applied for
enhancement in OD facility from Rs.0.50 Crore to Rs.1.00 Crore to meet their deficit
during the year. The party has requested for OD limit of Rs.1.00 crores against the peak
deficit of Rs.99.13 lacs in June 2008 ( 50.76 + 48.37) . The said outstanding balance
shall be liquidated in the month of August / September/October every year on receipt of

- 16 -

- 17 -Friends Charitable society

- 17 -

fee etc. The monthly cash flow statement from September to August is placed in the next
sheets for each college separately indicating the peak level deficit.
The society is already availing OD limit against tangible securities of Rs.0.50 crores. In
order to meet the expenditure / deficit in cash-flow, we recommend for enhancement in
OD limit from Rs.0.50 crores to Rs.1.00 crores.
KRISHNA DENTAL COLLEGE
STATEMENT SHOWING PEAK LEVEL DEFICIT

Particulars
Opening
Balance

Up to
March
08

Apr08

May08

Jun08

Jul-08

Aug08

Sep08

Oct08

Nov08

Dec08

Jan09

Feb09

Mar09

2.40

-38.93

-39.19

-39.45

-50.76

-49.02

34.34

-46.65

39.21

198.07

139.81

83.50

30.82

155.00

0.00

0.00

0.00

0.00

0.00

0.00

10.00

0.00

0.00

0.00

0.00

INFLOW
Corpus Fund
Academic
Fee

530.50

0.00

0.00

0.00

0.00

184.00

184.00

184.00

184.00

0.00

0.00

0.00

0.00

Hostel Fee

48.00

0.00

0.00

0.00

0.00

28.12

28.14

28.12

28.12

0.00

0.00

0.00

0.00

Misc. Recpt.
Security from
Student (Net)
Secured Loan
- Term Loan
Unsecured
Loan
Net Current
Assets

23.00

2.37

2.37

2.37

2.37

2.37

2.37

2.37

2.37

2.37

2.37

2.43

2.37

197.36

0.00

0.00

0.00

0.00

123.50

0.00

0.00

0.00

0.00

0.00

0.00

0.00

367.69

25.00

25.00

25.00

25.00

28.00

28.00

26.00

25.00

25.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

55.00

55.00

65.00

57.00

0.00

10.00

0.00

0.00

0.00

0.00

0.00

0.00

1321.55

82.37

82.37

92.37

84.37

365.99

252.51

250.49

239.49

27.37

2.37

2.43

2.37

309.84

30.45

30.45

30.45

30.45

30.45

30.45

30.45

30.45

30.45

30.45

30.87

30.45

126.03

11.55

11.55

11.55

11.55

11.55

11.55

11.55

11.55

11.55

11.55

11.55

11.59

8.97

0.12

0.12

0.12

0.12

0.12

0.12

0.12

0.12

0.12

0.12

0.12

0.12

147.73

12.47

12.47

12.47

12.47

12.47

12.47

12.47

12.47

12.47

12.47

12.52

12.52

4.05

0.00

0.00

4.05

0.00

0.00

0.00

0.00

0.00

0.00

4.05

0.00

0.00

344.64

28.00

28.00

28.00

28.00

28.00

28.00

28.00

26.00

26.00

0.00

0.00

0.00

281.00

0.00

0.00

17.00

0.00

0.00

216.00

32.00

0.00

5.00

0.00

0.00

5.00

24.13

0.00

0.00

0.00

0.00

0.00

34.87

0.00

0.00

0.00

0.00

0.00

0.00

-1.00
117.49

0.04
0.00

0.04
0.00

0.04
0.00

0.04
0.00

0.04
200.00

0.04
0.00

0.04
50.00

0.04

0.04

0.04

0.05

0.05

TOTAL
INFLOW
OUTFLOW
Revenue
Expenditure
Salaries &
Other
Benefits
Administrative
Expenses
Hostel
Expenses
Interest on
Loans
Commission
on Bank
Guarantee
Capital
Expenditure
Construction
& Other
Assets
Repayment of
Term Loans
Repayment of
Unsecured
Loans
Repayment of
Car Loan
Net Current

- 17 -

- 18 -Friends Charitable society

- 18 -

Assets
TOTAL
OUTFLOW

Net Flow
OD from PNB
Closing Cash
Balance

1362.88

82.63

82.63

103.68

82.63

282.63

333.50

164.63

80.63

85.63

58.68

55.11

59.73

-41.33

-0.26

-0.26

-11.31

1.74

83.36

-80.99

85.86

158.86

-58.26

-56.31

52.68

57.36

0.00

0.00

-38.93

-39.19

-39.45

-50.76

-49.02

34.34

-46.65

39.21

198.07

139.81

83.50

30.82

26.54

KRISHNA ENGINEERING COLLEGE


STATEMENT SHOWING PEAK LEVEL DEFICIT
Particulars
Opening
Balance

Up to
March
08
1.93

Apr08

May08

Jun-08

Jul-08

Aug08

Sep08

Oct08

Nov08

Dec08

Jan09

Feb09

Mar09

-45.04

-45.15

-48.26

-48.37

1.86

154.25

145.64

318.03

234.92

146.81

88.81

30.47

INFLOW
Corpus Fund

350.00

Academic Fee

690.58

0.00

0.00

0.00

250.25

250.25

250.25

250.25

0.00

0.00

0.00

0.00

0.00

Hostel Fee

165.56

0.00

0.00

0.00

55.25

55.25

55.25

55.25

0.00

0.00

0.00

0.00

0.00

17.50

1.71

1.71

1.71

1.71

1.71

1.71

1.71

1.71

1.71

1.82

1.71

1.71

65.00

65.00

65.00

65.00

65.00

65.00

Misc. Recpt.
Security from
Student (Net)
Secured Loan
- Term Loan
Unsecured
Loan
Net Current
Assets
TOTAL
INFLOW

26.06
369.71

27.84
70.00

65.00

65.00

0.00

90.00

80.00

100.00

1724.38

161.71

146.71

166.71

400.05

372.21

372.21

372.21

66.71

66.71

1.82

1.71

1.71

290.92

32.38

32.38

32.38

32.38

32.38

32.38

32.38

32.38

32.38

32.38

32.47

32.38

123.45

12.85

12.85

12.85

12.85

12.85

12.85

12.85

12.85

12.85

12.85

12.96

12.85

55.18

0.12

0.12

0.12

0.12

0.12

0.12

0.12

0.12

0.12

0.12

0.15

0.15

141.47

14.39

14.39

14.39

14.39

14.39

14.39

14.39

14.39

14.39

14.39

14.39

14.46

738.93

102.00

90.00

90.00

90.00

90.00

90.00

90.00

90.00

90.00

0.00

0.00

0.00

281.00

0.00

0.00

17.00

0.00

0.00

216.00

50.00

0.00

5.00

0.00

0.00

5.00

1.03

0.08

0.08

0.08

0.08

0.08

0.08

0.08

0.08

0.08

0.08

0.08

0.12

139.37

0.00

0.00

0.00

200.00

70.00

15.00

0.00

0.00

0.00

0.00

0.00

0.00

104.97

OUTFLOW
Revenue
Expenditure
Salaries &
Other Benefits
Administrative
Expenses
Hostel
Expenses
Interest on
Loans

Capital
Expenditure
Construction &
Other Assets
Repayment of
Term Loans
Repayment of
Unsecured
Loans
Repayment of
Car Loan
Net Current
Assets

- 18 -

- 19 -Friends Charitable society

TOTAL
OUTFLOW

- 19 -

1771.35

161.82

149.82

166.82

349.82

219.82

380.82

199.82

149.82

154.82

59.82

60.05

64.96

-46.97

-0.11

-3.11

-0.11

50.23

152.39

-8.61

172.39

-83.11

-88.11

-58.00

58.34

63.25

0.00

0.00

-45.04

-45.15

-48.26

-48.37

1.86

154.25

145.64

318.03

234.92

146.81

88.81

30.47

32.78

Net Flow
OD from PNB
Closing Cash
Balance

b) Justification for Non Fund based limits


Justification for NFB-BG limit of Rs.2.25 crores
The society has been sanctioned BG limit (specific) of Rs.2.25 crores for submission of
the same to Government Deptt./ Dental council of India. GM (Zone) has also allowed
relaxation in BG commission by 0.90% i.e. commission @ 1.50% is being levied against
the rate of @2.40% p.a. on yearly basis. Accordingly two BGs of Rs.2.25 Crores have
been issued in favour of DCI and Govt. for a period of 5 years for which bank
commission is charged on yearly basis.
The society has requested for continuance of the same. We recommend for renewal of
BG (Specific) limit of Rs.2.25 crores.
c)

Justification for term loan/DPG


(i)

Purpose

Construction of additional building, purchase of lab equipments, furniture/fixtures,


computers, etc. for Engineering & Dental Colleges
ii)

A. Appraising agency

The project has not been appraised by any bank/institution, because no technical
process is involved. Number of seats for engineering/dental courses is decided
by AICTE/DCI and fee to be charged is decided by U.P.Govt. However, the
branch has appraised the proposal of the party and being a running institute
based on estimates/projections, the same is found viable. The financial
projections given by the party have been assessed and found reasonable and
acceptable. We agree with the same. The cost of construction, implements are
as per market trend and have been accepted. The party will purchase the same
from reputed suppliers.
B.

Whether vetted by any Technical Officer/ Other Official of Bank


(Name and designation to be furnished).
N.A.

(iii)

Summary of cost of project and means of finance

COST OF PROJECT

( Rs.in lacs)
Engg. College

- 19 -

Dental College

Total COP

- 20 -Friends Charitable society

Civil Construction
Lab Equipments
Computers- Hardware
& Software
Furniture & Fixtures
Books
Diesel Generator
Dental Vans
TOTAL

- 20 -

924.00
40.00
30.00

309.00
150.00
---

1233.00
190.00
30.00

30.00
5.00
---

15.00
5.00
10.00

45.00
10.00
10.00

--1029.00

15.00
504.00

15.00
1533.00

MEANS OF FINANCE :
Term Loan from PNB
Internal Accruals
Own Contribution
Total
(iv)

1022.00
150.00
361.00
1533.00

Sources of Promoters Contribution and the time schedule as to when the


funds will be brought.

Promoters Contribution to the tune of Rs. 511.00 lacs will include Internal
Accruals and Own Contribution by raising corpus fund. The funds will be brought
in as per the margin proportionately. The party has informed that they will bring in
their contribution well in time by withdrawing deposits/investments with their other
sister concerns. They have also requested to release the term loan with
proportion of their contribution from time to time.
The party has estimated cash accruals of Rs.267.51 lacs and Rs.375.43 lacs for
FY 2007-08 and FY 2008-09 and they will bring an amount of Rs.150 lacs in the
project.
(v) Status of tie-up of loans
The Society has requested for a term loan of Rs. 1022 lacs for the present
expansion programme.
(vi)

Brief explanation for each major individual item of cost of Project with
present status
along
with
comments
on
the
reasonableness/competitiveness
As per Appendix VI

vii)

Comments on all major technical aspects like locational advantage,


Technology/
manufacturing
process,
power,
man
power,
utilities,transportation, etc.
As per Appendix VI(A)

- 20 -

- 21 -Friends Charitable society

viii)

- 21 -

Summary of profitability, Break-Even, DSCR and IRR with comments


thereon including Assumptions underlying profitability projections:
Detailed projected profitability projections, balance-sheet, cash flow are
as per Appendix VII
Society as a whole as on 31.03.2009
0.74
1.57
0.63
15.03
As per Annexure VII

Debt-Equity Ratio
Average DSCR
Minimum DSCR
Internal Rate of Return (Pre Tax)
Break Even Point
ix)
x)

Detailed Sensitivity Analysis:


Status of various statutory approvals and clearances
All necessary approvals have already been obtained by the society. The
society has also got approved the map for proposed construction.

xi)

Present physical & financial status of the last project, if any :The party had been sanctioned term loan of Rs.12.00 crores for
construction of additional building , purchase of lab equipments, furniture
& fixtures, computers etc. for both the colleges on 07.02.2007 by ZO. As
per implementation schedule given at the time of sanction of proposal, the
construction was to be completed in March 2007. But due to delay in
sanction and the fact that the construction activities takes some time , the
party approached us in the month of July 2007 and submitted the revised
implementation schedule as under :Acitivity
Completion of construction
Purchase of other assets

Time Period
Dec 2007
Dec 2007

Looking into the genuine request of the party and the same was not
properly estimated intially , the same was accepted by us. We
recommend to note the facts. The above project also stands completed
in Dec 2007.
xii)

Implementation schedule
Activity
Starting Date
Completion Date
Construction
Already commenced 31.08.2008
Other fixed assets 01.07.2008
31.08.2008

xiii)

Draw Down Schedule Quarter-wise


Period of Draw Down

Amount (Rs. In lacs)


- 21 -

- 22 -Friends Charitable society

Quarter Ending March 2008


Quarter Ending June, 2008
Quarter Ending September 2008
Quarter Ending December 2008

- 22 -

250.00
200.00
150.00
422.00

The party has submitted the above draw down schedule and we recommend for
approval of the same.
xiv)

Proposed repayment schedule

Scheduled date of Completion of Project


Commercial Operations Date (COD)
Implementation period (in months)
Moratorium (in months)
Repayment period in months/quarters/ Half
year
No. of installment
Starting Date
End Date (Last installment)
Door to door tenor
13.

31.08.2008
Sept 2008
7 months
1 month
Yearly
5 (five)
30.09.2008
30.09.2012
4 Years 8 Months

Pricing

Rate of interest

Facility
Overdraft
TL

Processing Fee
Processing Fee
Upfront Fee
Documentation
Fee

OD
renewal
NFB
renewal
TL
--

Applicable rate
@ BPLR + 2%
i.e. 14.50%
@ BPLR + 2%+
0.50%
(term
premia)
i.e.
15.00%
Rs.250 per lac
Rs.125 per lac

Existing
@ BPLR -1.25%+
i.e. 11.25%
@ BPLR %+
0.50%
(term
premia)1.75%
i.e. 11.25%
As per Bank
rules
As per Bank rules

@1.25% of the @ 0.625%


loan amount
Rs.25,000.00
Rs.25,000.00

Proposed
@ BPLR -1.25%+
i.e. 11.25%
@
BPLR
%+
0.50%
(term
premia)1.75%
i.e. 11.25%
As per Bank rules
As per Bank rules
@ 0.625%
Rs.25,000.00

(a) Justification
As per Sl.No.14 given below.
(b) ROI/other charges stipulated by other participating banks, if applicable -N.A.
14.

Other Issues

(i)

Relaxation in ROI
The members of the society are running four educational institutions at
- 22 -

- 23 -Friends Charitable society

- 23 -

Ghaziabad and having very good reputation in the area. Party is presently
availing overdraft and Term Loan facility on ROI @ 11.25% and requested to
continue the same for existing as well as proposed facilities. They are availing
credit facilities in their other organizations from OBC and other bank at
competitive interest rates.
Keeping in view the sizeable volume of business as recently another engineering
college at Moradabad being established has come to our folds and also the
possibility of taking over the accounts of their other institutions from other banks,
we recommend for enhancement in existing overdraft facility from Rs. 50.00 lacs
to Rs.1.00 crore at rate of interest @ 11.25% (Linked with BPLR) and sanction of
fresh term loan of Rs.10.22 crores on ROI @ 11.25% (Linked with BPLR).
Hence, we recommend for approval of relaxation in ROI by 3.25% in case of OD
against Tangible Security and 3.75% in case of Term Loans (existing and
proposed).
(ii)

Relaxation in Upfront Fee


The party has requested for charging of upfront fee @ 0.25% on the Term Loan
of Rs.10.22 crores against the applicable rate of 1.25%. We have negotiated with
the party and made them agreeable for 50% waiver in upfront fee. Therefore, we
recommend for 50% relaxation in upfront fee on the proposed TL of Rs.1022.00
lacs.

(iii)

Disbursement of Term Loan


The party has submitted that they have appointed a contractor for civil
construction and normally 25% of the amount is required for miscellaneous petty
payments and expenses towards electricity fittings, sanitary fittings, construction
and acquiring other fixed assets for which they will issue a/c payee cheque and
the amount of payment bills/challans as well as certificate of CA shall be
submitted in due course. As every time it is not possible to procure quotations for
such purchases and ask the bank to issue pay orders / drafts for such small
amounts. Hence, We recommend for release of part of the Term Loan, where
direct payments to the suppliers of building construction material, furniture,
equipments, library books etc will be made by the society through account payee
cheques and a fully reconciled statement for all such payments made will be
submitted to the bank alongwith certified copies of the bills.

(iv) Confirmation of Action


The party vide its letter dated 9/2/2008 informed that their fourth year inspection
by the Dental Council of India(DCI) may take place anytime after 10 th March,
2008. As per norms of DCI, party had to buy 100 nos. dental chairs and other lab
equipments to meet requirements of this inspection. Accordingly, the party had
ordered 100 nos. of dental chairs and some other lab equipments costing approx.
Rs.1.00 crore for fulfilling the requirements of DCI. Besides, the party also
required Rs.50.00 lakhs aprox. to meet urgent building construction
requirements. Party informed having incurred expenses of Rs.50.00 lakhs from
its own sources towards construction work, etc. under the proposed expansion. It
has further been informed that 95 Nos. of dental chairs were delivered at college
and party had to make payment to the suppliers immediately. FCS therefore
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requested to allow them ad-hoc credit facility of Rs.1.50 crores to be utilized


towards payment to dental chairs, lab equipments and building construction work
which may be subsequently adjusted out of proposed term loan for expansion
under consideration.
In view of urgent and pressing requirements of the party and discussions with
your goodself, we have on 22/2/08 allowed term loan of Rs.1.50 crore for
purchase of dental chairs, lab equipments, and building construction work for
proposed expansion programme and moved for confirmation of our action vide
letter dated 22/2/08.
We once again recommend to confirm our action in having disbursed term loan
of Rs.1.50 crores out to the proposed term loan of Rs.10.22 crores. After
sanction of proposed term loan of Rs.10.22 crores , term loan of Rs.1.50 crores
will be liquidated by making disbursement from TL 10.22 crores.
(V) FEE COLLECTION UTILITY ON CBS PAYEE & SCHEME OF BRANDED DEBIT
CARDS.
At present the society is running the following courses, through KEC & KDC
Name of the courses.
(A). B. Tech Courses

Programme Codes

1. Computer Science
2. Electrical Engineering
3. Mechanical Engineering
4. Electronic Communication
5. Information Technology
(B) MCA
(C) BDS

10
21
40
31
13
14
15

Total

Total Sanctioned strength


240
180
180
300
120
120
300
1440

The total projected number of students for all the courses will be 1700 approximately
taken together in the year 2008-2009.
FEE DETAILS PER YEAR
Academic Programme

Existing fees(2007-08)

B.TECH & MCA 2007 08


HOSTEL FEES
BDS
HOSTEL FEES

RS. 63950/RS. 34000/RS. 208620/RS. 50000/-

(VI) COST BENEFIT ANALYSIS


- 24 -

Projected Fees( 08-09)


RS. 63950/RS. 34000/RS. 208620/RS. 50000/-

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The maximum fees under B.TECH & BDS Courses may be estimated at approximately
Rs. 99000/- (Rs. 65000/- + Rs. 34000/-) and Rs. 258620/- (Rs. 208620/- +Rs. 50000/-)
respectively. As per existing practice , the fees are being paid by the Guardians
/Students through drafts issued by different Banks therefore a student who is required to
purchase a draft for Rs. 99000/- is supposed to pay a commission of Rs. 300/approximately to the issuing Bank . Therefore extending the leverage of CBS Facility to
the students so that students are induced to deposit the fees only through the branches
of PNB Charges of RS. 10/- per thousand with a maximum of Rs. 100/ per fees
transaction is proposed. Such transactions will be a matter of routine and as such no
significant cost is involved.
As Such if the facility is availed by say 1000 students (Conservative estimates) then the
remuneration to be earned by Bank is estimated at Rs. 100000/- in the first year The
Charges will be borne by the Students as agreed. With the above estimates and
relaxation on the part of the students the above remuneration may be garnered by our
Bank .
BRANDED DEBIT CARDS
This is proposed by the Institute that the Branded Debit Cards will be issued to
approximately 800 salaried employees and students. As such this is estimated that
average balance in the above accounts proposed to be opened with our Bank would be
around Rs. 1 Crore which is a significant amount of Low Cost Deposit.
In view of the above we recommend for sanction facility of pay fee and branded debit
Cards in favour of engineering & dental Colleges of the society.
15.

Strengths & Weakness with mitigants, if any

Strengths
-

The Engineering & Dental College have been established by reputed


entrepreneurs and professionals having very rich experience of running reputed
colleges at Ghaziabad.
- The college belongs to Krishna group having good reputation in UP for running
higher education/engineering institutes with a strong financial background and
experienced staff and Managing Committee.
- The college is ideally located at Mohan Nagar, Ghaziabad near Delhi and is
receiving very good response.
- The Fixed asset coverage ratio at 2.29 is satisfactory and facility is also to be
secured by personal guarantee of all the key office bearers /promoters of the
society.
Weakness
16.

Competition from the existing/upcoming engineering colleges in and around


Ghaziabad.
Adverse Government policy may change the scenario.
Recommendations:

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We recommend for the following facilities:


Sanction of fresh Term Loan of Rs.1022 lacs on ROI @ 11.25% for construction of
additional building, purchase of lab equipments, furniture & fixtures, computers,
etc. for Engineering & Dental College Expansion.
Sanction of OD-against tangible security limit of Rs.100 lacs from Rs.50 lacs by
way of enhancement.
Other Issues:- Relaxation in applicable ROI by 3.25% for Overdraft facility and 3.75%.for all
Term Loan facilities.
- 50% relaxation in upfront fee for Term Loan.
- Sanction of Pay Fee Facility for collection of Annual Fee under CMS
& Branded Debit Cards.
Confirmation of AGM(Br.) action in having allowed term loan of Rs.1.50 Crs. out
of the proposed term loan.
Approval of Draw Down schedule.
Permission for disbursement of TL through CA with a maximum of 25% of TL
amount.
Detailed Terms and Conditions are as per Annexure I.

SR.MANAGER

CHIEF MANAGER

DATE:

- 26 -

ASSTT.GENERAL
MANAGER

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Appendix II
Details of Group /Allied/Associate firms and the facilities sanctioned to them along with
conduct of these accounts with our Bank/ other Banks and comments on adverse
indicators, if any.
Members are running Krishna Institute of Engineering and Technology-Muradnagar,
Indraprastha Engineering College(IPEC)-Sahibabad and Ajay Kumar Garg Engineering
College (AKG)-Ghaziabad and Krishna Institute of Management & Technology,
Moradabad.
Name of the
Company

Activity

Financials (Rs. In lacs)

Dealing
Bank

Facilities
Nature &
Amount
Bank
of Overdraft limit
Baroda
Rs.44.46 lacs
& Term Loan
of Rs.396.04
lacs

Indian
Educational
Institute
of Institute
Managemen
t
&
Engineering
Society. Unit
AKG Engg.
College,
Delhi Hapur
By
Pass
Road
Ghaziabad.

Period
Corpus
fund
Add
Reserves
& Surplus
TNW
PBT
Sales

Shail Garg Educational


Shiksha
Institute
Sansthan,
Unit IPEC
Site
IV
Sahibabad.

Period
31.03.2006 31.03.2007
Corpus
450.00
572.40
fund
Add
0.00
.0.00
Reserves
& Surplus
Less Acc.
0.00
0.00
Losses &
Intangible
Assets
TNW
450.00
572.40
PBT
55.00
122.76
Sales
962.00
1302.00

UTI Bank

Krishna
Educational
Charitable
Institute
Society

Unit Krishna
Institute
of
Engineering

Period
Corpus
fund
Add
Reserves
& Surplus

ING Vysya Term


Loan
Bank Ltd.
Rs.1200 lacs,
Ghaziabad Overdraft limit
Rs.50.00 lacs

31.03.2006 31.03.2007
963.00
963.46
939.00

993.67

1902.00
18.40
999.00

1957.13
54.96
1037.65

31.03.2006 31.03.2007
121.00
121.00
929.00

- 27 -

1011.80

Term
Loan
Rs.5.56
crores,
Overdraft limit
Rs.0.60
crores

- 28 -Friends Charitable society

&
Technology
Murad
NagarGhaziabad
Kanha
Educational
Charitable
Institute
Trust Unit
Krishna
Institute
of
Managemen
t
&
Technology
Moradabad.

TNW
PBT
Sales
Period
Corpus
fund
Add
Reserves
& Surplus
TNW
PBT
Sales

1050.00
63.00
1081.00

- 28 -

1132.76
83.09
1327.20

31.03.2006 31.03.2007
----

--

----

----

Punjab
Term
Loan
National
Rs.1400 lacs,
Bank,
under
MCB,
disbursement.
Rajnagar,
Ghaziabad

Kanha Charitable Trust is a new Trust formed in May 2007 and in a construction stage,
there is no financials for the year ending 31.03.2006 and 31.03.2007.
Comments on conduct of these accounts with our bank/other banks
Name
KIET
IPEC

Dealing Bank
ING
Vysya
Bank
UTI Bank

AKG

BOB

Kanha
PNB, MCB
Charitable Trust

Conduct
Satisfactory and Standard
as on 31.03.07
Satisfactory and Standard
as on 31.03.07
Satisfactory and standard
as on 31.03.07
Term
Loan
under
disbursement

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- 29 -Friends Charitable society

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Appendix III
Review of the Account and Summary of serious irregularities pointed out by Banks
Inspectors, Concurrent Auditors, Credit Audit & Review Division (CA&RD), RBI
Inspectors, Statutory Auditors, observations of Stock Audit Report, Comment on
Preventive Monitoring Score Trends, (and status of rectification of these irregularities)

As per last Annual IR dated 31.12.2006, there is no serious irregularity


outstanding in the account.
CARD report stands closed on 19.09.2007.
PMS rank is 3 as on 30.09.2007 due to irregularity in the account and non
achievement of the financial targets.

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Appendix - IV
Detailed Industry Scenario and Comments on management, production and marketing
as well as Borrowers' diversification, expansion, modernization programme
Technical courses are ever-demanding courses, more so when our economy has
opened up and many Fortune 500 companies are having/evincing a presence in Indian
sub-continent. Hence, demand for technically qualified personnel is on constant rise.
The students of West U.P. and Delhi used to go other place for studying Engineering,
BDS and other professional courses. To bridge the demand and supply gap and to
provide quality education to the students of U.P., the State Government has allowed
higher technical education to the private sector by way of permitting opening of private
Dental, Engineering, Management & Business Administration colleges. As per the
Essentiality Certificate dated 21.11.2003 for Dental College issued by Govt. of U P there
is 1 dental surgeon on 72248 population in the State and with the expansion of the
dental college surgeon population ratio would improve. Demand of qualified engineers
also is regularly on increase, particularly in I.T.Sector and many leading IT companies
like Infosys, Microsoft, Wipro, Satyam and TCS are feeling acute shortage of trained IT
personnels.
With the availability of these courses in West U.P. itself the students have natural shift
towards these local colleges. The Engineering and Dental institutes are located at
Ghaziabad, and due to its proximity to Delhi, it is fast becoming a major institutional area
in the field of higher education and students from Delhi are attracted to Ghaziabad to
pursue higher studies.
Recent Developments
The UNESCO Education for All Global Monitoring Report2007 has ranked India at the 99th position

with a composite Education for All Development Index (EDI) of 0.789. Referring to a Nationwide Sample
Survey on out of school children by the Social and Rural Research Institute in 2005, the report notes
that that the number of out of school children has halved from 25 million in 2002 to 13.5 million in 2005.
The nation-wide sample survey was commissioned by the GoI under the Sarva Siksha Abhiyan (SSA)
Programme.
In India, since private universities do not generally receive financial assistance from public outlays, the

fees charged by them are reportedly higher than the fees charged by publicly funded universities. The
University Grants Commission (UGC), is empowered under the UGC Act, 1956 to make regulations,
with the prior approval of the Central Government, for Admissions and Fee Structure in Universities and
Colleges. In August 2007, the UGC has constituted an Expert Committee to formulate:
Regulations with regard to admission and fee for self-financing, private professional institutions,
including deemed to be universities.
Regulations for admission and fee for self-financing courses in aided Universities/Colleges.
Regulations for admission and fee for aided courses in aided Universities and Colleges.

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Review of Latest Financials


The financials of educational institutions are not available.
Outlook
In future, demand for education is likely to increase further with the fall in poverty levels, fall in fertility levels,
and increased awareness of benefits of education. The supply of education is also likely to increase with the
increased public expenditure on education in India, and the increased demand for higher and professional
education. Globalisation has created tremendous opportunities for some people in India, especially those
with professional, managerial and technical skills. Education is an essential part of development effort,
which contributes to social, economic and cultural development.
In India, it is largely the supply factors and not the demand factors, which are responsible for the large
illiteracy levels in India. According to Government estimates, the additional requirement of funds to realise
the fundamental right to education for every child is estimated at Rs. 98 billion per annum for ten years.
There are critical gaps in the availability of infrastructure facilities and qualitative aspects of education
including teachers training, educational curricula, equipment and training material, particularly, in the
publicly funded schooling system of the country. Looking forward, the supply of educational institutions and
the required manpower depends upon changes in the current education system, the rate at which it takes
place, and the time, space and field of operation. Strategies are needed for turning India into a knowledgebased society through educationprimary as well as higher and wider use of IT, and enhanced training
skills development. In India, the increasing priority in public expenditure to elementary and secondary
education has brought down the relative share of higher and technical education in central Government
budget over the years. Thus, the shift in resources towards elementary and secondary levels is likely to
result in a continuing increase in private educational institutions (at schooling and professional levels) whose
funding is derived mainly from tuition fees. Looking forward, given the fiscal squeeze in state budgets,
parents who can afford it are likely to turn increasingly to the private sector for their children's education, and
the private sector is likely to grow relative to the public education sector.
Risk Scoring
Overall Industry Risk Scoring
Industry Characteristics
Competitive Forces
Industry Financials
Total

Score
5.33
4.38
3.89

Weight
1
1
1
3.0

Score x Weight
5.33
4.38
3.89
13.59

Score

4.53

Definition of Scores
Score
Meaning
6.01-7
Highly Favourable
4.51-6
Favourable
4.01-4.5
Marginally Favourable
3.01-4
Neutral
2.51-3
Marginally Unfavourable
1.01-2.5
Unfavourable
0-1
Highly Unfavourable
This report has been prepared by ICRA for the exclusive and private use of Punjab National Bank (PNB).
The report provides content and analytical inputs for the risk-scoring model being used by PNB, with the risk
scoring scale and the respective definitions being those of PNB. All information contained herein has been

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- 32 -Friends Charitable society

- 32 -

obtained by ICRA from sources believed by it to be accurate and reasonable. Although reasonable care has
been taken to ensure that the information herein is true, such information is provided as is without any
warranty of any kind, and ICRA in particular, makes no representation or warranty, express or implied, as to
the accuracy, timeliness or completeness of any such information. All information contained herein must be
construed solely as statements of opinion and ICRA shall not be liable for any losses incurred by users from
any use of this report or its contents. In the course of work, ICRA may have received information from
companies being rated or graded. However, this report does not contain any confidential information
obtained by ICRA in the process of rating or grading. This report contains data/information available only in
the public domain or available through secondary sources. Opinions expressed in this report are not an
indication of any prospective rating/grading of any instruments to be issued by any entity operating in the
industries for which the risk scores have been assigned.
Comments on management, production and marketing
The promoters of the society, Shri Rakesh Garg, Shri Atul Garg, Shri Sarish Agarwal and
Shri Sunil P.Gupta are having rich experience of running the educational institutions and
are already running/ associated with the
reputed colleges in Ghaziabad:- Krishna
Institute of Engineering Technology, Murad Nagar, Ghaziabad.- Ajay Kumar Garg
Engineering College, Ghaziabad.- Indraprastha Engineering College, Sahibabad.
Shri Rakesh Garg, an entrerpreneur and educationist and philanthropist with growing
taste and dream of making the society educated at large has a lot of experience. He is
the Chairman of Krishna Engineering College, Ghaziabad, Krishna Dental College and
Secretary of Ajay Kumar Garg Engineering College, Ghaziabad.
Shri Sarish Chaudhary, an Industrialist, and an Educationist with deep rooted interest in
higher and technical education reforms in the country having vast experience as an
educationist. He is the Vice-Chairman of Krishna Institute of Engineering & Technology,
Ghaziabad, Krishna Dental College Ghaziabad, Krishna Engineering College,
Ghaziabad.
Shri Atul Garg, an industrialist and an educationist with long qualitative experience in the
education field. He is the Treasurer of Krishna Institute of Engineering & Technology,
Ghaziabad, Vice-Chairman of Krishna Dental College, Ghaziabad, Krishna Engineering
College, Ghaziabad and Secretary of Indraprastha Engineering College, Ghaziabad.
Shri Sunil P Gupta is a Chartered Accountant by qualification and an educationist with
long qualitative experience in the education field. He is the General Secretary of Krishna
Institute of Engineering & Technology and Joint Secretary of Krishna Engineering
College & Krishna Dental College, Ghaziabad.
Borrowers' diversification, expansion, modernisation programme.
The present proposal is for construction of academic block, etc. for Engineering & Dental
Courses. The society has started one new branch in engineering i.e. Information
Technology with intake of 60 students and M.C.A. with intake of 60 students and their
intake in Electronics & Communication has been increased from 60 to 120 seats by
AICTE vide their letter dated 6/6/2006. Further, their intake in Computer Science &
Engineering has been increased from 60 to 120 seats by AICTE vide their letter dated
21.08.2007. Also, the Management proposes to start PGDBM course also w.e.f. next
session i.e. from 2008-09.
- 32 -

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Appendix - VI
Brief explanation for each major individual item of cost of Project with present
status along with comments on the reasonableness/competitiveness
CIVIL WORK
The Society will construct 41200 sq ft. area for Civil Construction of Dental College &
Extension of academic block and 123200 sq ft. area for Civil Construction of Engineering
College & Extension of academic block as well as PGDBM Block in Engineering College.
Rs. in lacs
Academic Blocks at KEC Basement and GF
4459.30 Sq.Mts.
360.07
Hostel Blocks KEC GF,FF,SF,TF
4756.60 Sq. Mts.
384.09
PGDM Block KEC GF, FF, SF
1672.23 SQ.Mts.
180.09
Hostel Block KDC GF,FF,SF
1505.01 Sq.Mts.
121.50
Academic Block KDC -- SF
2322.56 Sq.Mts.
187.50
Total
14715.70 Sq.Mts.
1233.25
Detailed estimates ( 5 Nos.) of M/s Atul & Associates dt. 06.02.2008 for different blocks
to be constructed having detailed description of items is annexed. Total cost of
construction has been estimated at Rs.1233.00 lacs with an average of Rs.838 per
sq.mt. In view of increase in cost of cement , steel and other items as well as quality of
construction, same may be treated as satisfactory. The rates are competitive.
Lab Equipments & Computers
The society has estimated the requirement of lab equipments of Rs.190.00 lacs , out of
which Rs.40.00 lacs will be invested for Krishna Engineering College and 150.00 lacs for
Krishna Dental college. Krishna Engineering College will start PGDBM course from the
next session for which 120 computers are required costing to Rs. 30.00 lacs.
Krishana Engg. College
Electrical labs
Mechanical labs
Krishana Dental College
Dental Chairs
OPG Machines & Other Eqp
Total

25.00 lacs
15.00 lacs
100.00 lacs
50.00 lacs
190.00 lacs

Furniture & Fixtures


The requirements of furniture & fixtures for proposed expansion is estimated at Rs.45.00
lacs, out of which Rs.30.00 lacs will be invested for Krishna Engineering College and
15.00 lacs for Krishna Dental college.
Other Assets:
Other assets consists of Books & Periodicals, Diesel Generator and Dental van for
ongoing expansion of the society are estimated at Rs. 35.00 lacs.

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- 34 -Friends Charitable society

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Appendix VI(A)

Comments on all major technical aspects like location advantage, Technology/


manufacturing process, power, man power, utilities, transportation, etc.
Members of the society are well experienced in the line and running reputed professional
colleges like AKG, KIET and IPEC at Ghaziabad. They enjoy good reputation in the line.
Location of the Institute is prime i.e. Mohan Nagar which is adjacent to Delhi and well
connected with road and railway. Institution is already having well experienced/qualified
staff and there is likely to be no problem in recruiting additional staff as and when
required.

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- 35 -Friends Charitable society

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Appendix VII
Summary of profitability, Break-Even, DSCR and IRR with comments thereon
including Assumptions underlying profitability projections:

Krishna Engineering College and Krishna Dental College have earned good
name in a very short span of time. Krishna Engineering College ranks amongst
first 10 of private Engineering colleges of UP.T.U.LKO.

Summary of profitability

(Rs. in lacs)

31.03.2008
PAT IC U LAR S

31.03.2009

31.03.2010

31.03.2011

KEC

KDC

TOTAL

KEC

KDC

TOTAL

KEC

KDC

TOTAL

KEC

KDC

TOTAL

(a) Academic Fees

690.58

530.50

1221.08

1001.00

736.00

1737.00

1427.00

766.00

2193.00

1725.00

820.00

2545.00

(b) Hostel Fees

165.56

48.00

213.56

221.00

112.50

333.50

272.00

112.50

384.50

306.00

125.00

431.00

(I) I N C O M E

(c) Interest

5.00

1.00

6.00

5.00

1.00

6.00

5.00

1.00

6.00

5.00

1.00

6.00

12.50

22.00

34.50

15.63

27.50

43.13

19.53

41.25

60.78

21.48

45.38

66.86

873.64

601.50

1475.14

1242.63

877.00

2119.63

1723.53

920.75

2644.28

2057.48

991.38

3048.86

(a) Salaries & Other


Benefits

290.92

309.84

600.76

388.65

365.82

754.47

513.31

402.41

915.72

671.64

442.65

1114.29

(b) Administrative Expenses

123.45

126.03

249.48

154.31

138.64

292.94

231.46

152.50

383.96

347.19

167.75

514.94

(c) Hostel Expenses

55.18

8.97

64.15

1.50

1.50

3.00

1.65

1.65

3.30

1.82

1.82

3.63

0.00

4.05

4.05

0.00

4.05

4.05

0.00

4.05

4.05

0.00

4.05

4.05

121.97

110.23

232.19

148.75

107.74

256.49

111.99

76.16

188.15

73.20

45.59

118.79

(d) Miscellaneous Receipts

(II) E X P E N D I T U R E

d) Commission on BG
(e) Interest on Term Loan
f) Interest on OD limit

1.50

1.50

3.00

6.00

6.00

12.00

6.00

6.00

12.00

6.00

6.00

12.00

g) Intt on Unsecured loans

18.00

36.00

54.00

18.00

36.00

54.00

18.00

36.00

54.00

18.00

36.00

54.00

(h) Depreciation

179.45

147.00

326.45

205.26

161.98

367.24

194.84

159.06

353.90

217.50

156.32

373.82

790.46

743.62

1534.08

922.47

821.73

1744.20

1077.26

837.83

1915.08

1335.35

860.17

2195.51

Excess of Income over


Exp.

83.18

142.12

-58.94

320.16

55.27

375.43

646.27

82.92

729.20

722.14

131.21

853.34

Net Cash Accurals

262.62

4.88

267.51

525.42

217.25

742.67

841.11

241.99

1083.10

939.64

287.52

1227.16

0.00

0.00

562.00

290.60

272.60

563.20

335.00

265.00

600.00

315.31

245.31

560.62

Repayment Obligations
Debt Service Coverage
Ratio

0.63

1.22

- 35 -

1.61

1.98

- 36 -Friends Charitable society

- 36 -

Summary of profitability (Rs. in lacs)


31.03.2012
PATICULARS

31.03.2013

KEC

KDC

TOTAL

KEC

KDC

TOTAL

1866.00
340.00
5.00
23.63
2234.63

820.00
125.00
1.00
49.91
995.91

2686.00
465.00
6.00
73.55
3230.55

1974.00
374.00
5.00
26.00
2379.00

820.00
125.00
1.00
54.90
1000.90

2794.00
499.00
6.00
80.90
3379.90

839.55 486.91
520.79 184.53
2.00
2.00
0.00
4.05
39.09
21.46

1326.46
705.31
3.99
4.05
60.55

1049.44
650.98
2.20
0.00
11.75

535.60
202.98
2.20
4.05
5.88

1585.04
853.96
4.39
4.05
17.63

6.00
18.00
223.09

6.00
36.00
147.67

12.00
54.00
370.77

6.00
18.00
235.49

6.00
36.00
136.53

12.00
54.00
372.03

1648.52

888.62

2537.14

1973.86

929.23

2903.10

586.12

107.29

693.41

405.13

71.67

476.80

809.21

254.96

1064.18

640.63

208.20

848.83

265.33

165.33

430.66
2.29

200.00

100.00

300.00
2.73

(I) I N C O M E
(a) Academic Fees
(b) Hostel Fees
(c) Interest
(d) Miscellaneous Receipts

(II) E X P E N D I T U R E
(a) Salaries & Other Benefits
(b) Administrative Expenses
(c) Hostel Expenses
d) Commission on BG
(e) Interest on Term Loan
f) Interest on OD
limit
g) Intt on Unsecured loans
(h) Depreciation

Excess of Income over Exp.


Net Cash
Accurals
Repayment
Obligations
Debt Service Coverage Ratio

1. The fee projections have been submitted and accepted are as given
below. The fee structure is reasonable, comparable and as per prevailing
market trend.
2. The hostel fees has been accepted @ Rs.34000/- per student for
Krishana Engg. College with app. 40% student occupancy and @
Rs.50000/- per student for Krishana Dental College with app. 60%
student occupancy. These fees are realistic and competitive.
3. Interest has been accepted on the FDRs submitted with AICTE , DCI and
other Govt. departments.

- 36 -

- 37 -Friends Charitable society

- 37 -

4. Misc. receipts are related to OPD receipts, penalty charges etc.


1. The salary expenses for 2007-08 is estimated looking into the expenses
incurred upto 31.10.2007 ( 6 M) under this head. The projections for
2008-09 is as under :Krishna Engg College
Particular
Nos. Salary
PM
Principal
1
50000
Deptt heads
6
40000
Chief Admn
1
28000
Professors
6
40000
Asstt Prof.
24
28000
Lecturers
73
20500
Registrar
1
25000
Asstt Reg
1
12000
clerk
10
5000
Librarian
1
25000
Asstt Lib.
2
12500
AO
1
20000
Acs Officer
2
20000
Acs Assis
3
6000
Lab Asstt
12
9500
Suprvisor
2
7500
Store Asstt
2
4500
Peon
24
3000
Sweepers
24
3000
Driver
2
4500
Recceptionist 1
6250
Total

199

Total
6.00
28.80
3.36
28.80
80.64
179.58
3.00
1.44
6.00
3.00
3.00
2.40
4.80
2.16
13.68
1.80
1.08
8.64
8.64
1.08
0.75

370250 388.65

Krishana Dental College


Particular
Nos. Salary
PM
Principal
1
66000
Deptt heads
1
55000
Professors
11
55000
Readers
18
44000
Sr. Lecturer
15
32000
Lecturers
35
18900
Registrar
1
28500
Asstt Reg
1
13200
clerk
4
5500
Librarian
1
28000
Asstt Lib.
1
8500
AO
1
22000
Acs Officer
1
22000
Acs Assis
1
6650
Lab Asstt
15
8500
Suprvisor
2
8500
Store Asstt
2
5000
Peon
12
3500
Sweepers
14
3500
Driver
2
6500
Recceptionist 1
6500
Nurses
3
6650
143
453900

Total
7.92
1.00
72.60
95.04
57.60
79.38
3.42
1.584
2.64
3.36
1.02
2.64
2.64
0.798
15.30
2.04
1.20
5.04
5.88
1.54
0.78
2.394
365.82

Thereafter an increase of 10% in 2010, 15% in 2011, 10% in 2012 and 15% in
2013 has been estimated. The same is reasonable as per market trend.
2. The administrative expenses has been estimated from 15% to 25% of the
total receipts. These expenses mainly comprises of electricity,
advertisement, repairs, conveyance, consumable stores etc.
3. The hostel expenses are related to mess charges of Hostels.
4. The commission on BG has been estimated looking into the estimated
availment and bank rates.
5. Interest on TL has been calculated @ 11.75% ,OD @ 12% and 12% on
unsecured loans.
6. Depreciation has been calculated on WDV basis.
- 37 -

- 38 -Friends Charitable society

- 38 -

The assumptions taken by the party is reasonable and realistic. Besides, the
financial projections given by the party have been assessed and found
reasonable and acceptable. We agree with the projections given by the party.
KRISHNA ENGINEERING COLLEGE
PARTICULARS

RATE

2008-09

FEE PROJECTIONS

2009-10

2010-11

2011-12

2012-13

Student

Amount

Student

Amount

Student

Amount

Student

Amount

Student

Amount

60000

420

252

420

252

540

324

600

360

600

360

60000

420

252

420

252

420

252

540

324

600

360

50000

360

180
420

252

420

252

420

252

540

324

360

180
420

252

420

252

420

252

B.TECH
Ist year
Admission Fees
IInd year
Annual Fees

IIIrd year
Annual Fees

60000
IVth year
Annual Fees

50000

233

117

60000

TOTAL -A

1433

801

1620

936

1800

1080

1980

1188

2160

1296

55000

60

33

120

66

120

66

120

66

120

66

55000

59

32

60

33

120

66

120

66

120

66

55000

28

15

59

32

60

33

120

66

120

66

147

80

239

131

300

165

360

198

360

198

60

120

120

240

120

240

120

240

120

240

M.C.A
Ist year
Admission Fees

IInd year
Annual Fees

IIIrd year
Annual Fees

TOTAL -B
PGDBM
Ist year
Admission Fees

200000

- 38 -

- 39 -Friends Charitable society

- 39 -

IInd year
Annual Fees

200000

TOTAL -C
G. TOTAL A+B+C

60

120

120

240

120

240

120

240

60

120

180

360

240

480

240

480

240

480

1640

1001

2039

1427

2340

1725

2580

1866

2760

1974

KRISHNA DENTAL COLLEGE


PARTICULARS

RATE

FEE PROJECTIONS

2008-09

2009-10

2010-11

2011-12

2012-13

Student

Amount

Student

Amount

Student

Amount

Student

Amount

Student

Amount

205000

100

205

100

205

100

205

100

205

100

205

205000

100

205

100

205

100

205

100

205

100

205

175000

86

151
100

205

100

205

100

205

100

205

86

151
100

205

100

205

100

205

400

820

400

820

400

820

BDS
Ist year
Admission Fees

IInd year
Annual Fees

IIIrd year
Annual Fees

205000

IVth year
Annual Fees

175000

100

175

205000

TOTAL

386

736

386

766

DSCR

(Rs. In crores)
31.03.07

31.03.08

31.03.09

31.03.10

31.03.11

31.03.12

31.03.13

-1.13

-0.59

3.75

7.29

8.53

6.93

4.77

Depreciation

2.12

3.26

3.67

3.54

3.74

3.70

3.72

Interest on term loan

1.17

2.32

2.56

1.88

1.18

0.60

0.17

TOTAL (A)

2.16

4.99

9.98

12.71

13.45

11.23

8.66

Repayments Obligations TL

2.52

5.62

5.63

6.00

5.60

4.30

3.00

Total Interest on term loan

1.17

2.32

2.56

1.88

1.18

0.60

0.17

TOTAL (B)

3.69

7.94

8.19

7.88

6.78

4.90

3.17

0.63

1.22

1.61

1.98

2.29

2.73

Excess of Income over


Expenditure

DSCR (A)/(B)

- 39 -

- 40 -Friends Charitable society

- 40 -

Average DSCR

61.02/38.86 = 1.57

Average DSCR on the basis of projections from the FY 2008 to 2013 comes to
1.57 with minimum 0.63 and maximum 2.73, which may be treated as
satisfactory for such type of infrastructure projects. The party is developing its
colleges and in initial stage of project and expenses are increasing due to
increase in capacity as well as facilities like Hostel Block etc. As such, the DSCR
is on lower level in starting years but it is improving gradually and reasonably.
The party is meeting its all payment liabilities either from internal accruals or
raising funds. In view of these facts, we may accept the average DSCR 1.57
looking into the past performance.

BEP :

KRISHNA ENGINEERING
COLLEGE (Rs. in lacs)
Break-even analysis
Year
Total no. of students
Total Cost
Fixed cost
Administrative expenses
(25% fixed)
Interest to bank (100% fixed)
Depreciation (100% Fixed)
Total
Variable Cost(Cost other than
fixed)
Variable Cost per student (in
Rs.) (A)
Total Receipts
Receipts per student (B)
Contribution per student (BA)
B. E. P. (in terms of student)
(utilised capacity)
B. E. P. (in terms of student)

2009
1640
922.47

2010
2039
1077.26

2011
2340
1335.35

2012
2580
1648.52

2013
2760
1973.86

140.62
154.75
205.26
500.63

191.11
117.99
194.84
503.94

259.66
79.20
217.50
556.36

345.09
45.09
223.09
613.27

430.16
17.75
235.49
683.40

421.85

573.32

778.99

1035.26

1290.47

0.26
1242.63
0.76

0.28
1723.53
0.85

0.33
2057.48
0.88

0.40
2234.63
0.87

0.47
2379.00
0.86

0.50

0.56

0.55

0.46

0.39

1000
42

893
37

1018
42

1319
55

1733
72

- 40 -

- 41 -Friends Charitable society

(installed capacity)
B. E. P. (in terms of Sales)

- 41 -

757.92

755.13

895.36

1142.61

1493.56

2009
386
821.73

2010
386
837.83

2011
400
860.17

2012
400
888.62

2013
400
929.23

136.50
113.74
161.98
412.22

149.15
82.16
159.06
390.37

163.07
51.59
156.32
370.98

178.37
27.46
147.67
353.50

195.21
11.88
136.53
343.62

409.51

447.46

489.20

535.12

585.62

1.06
877.00
2.27

1.16
920.75
2.39

1.22
991.38
2.48

1.34
995.91
2.49

1.46
1000.90
2.50

1.21

1.23

1.26

1.15

1.04

340

318

295

307

331

14
773.32

13
759.44

12
732.35

13
764.02

14
828.16

KRISHNA DENTAL COLLEGE


(Rs. in lacs)
Break-even analysis
Year
Total no. of students
Total Cost
Fixed cost
Administrative expenses
(25% fixed)
Interest to bank (100% fixed)
Depreciation (100% Fixed)
Total
Variable Cost(Cost other than
fixed)
Variable Cost per student (in
Rs.) (A)
Total Receipts
Receipts per student (B)
Contribution per student (BA)
B. E. P. (in terms of student)
(utilised capacity)
B. E. P. (in terms of student)
(installed capacity)
B. E. P. (in terms of Sales)

The party is estimated higher receipts against the BEP level . We may accept the same
as it is on the basis of realistic projections. The units are performing well.
DEBT EQUITY RATIO
The debt equity ratio of the society is 4.08 as at 31.03.2007. The same will be improved
to 2.22 as at 31.03.2008 and 1.61 as at 31.03.2009 by raising corpus fund.

- 41 -

- 42 -Friends Charitable society

- 42 -

PUNJAB NATIONAL BANK


MCB, GHAZIABAD
ANNEXURE-I
PROPOSED TERMS AND CONDITIONS A/C FRIENDS CHARITABLE SOCIETY
FACILITY NO: 1
Nature
Amount
Margin
Interest
Upfront fee
Primary
Security

Repayment
Insurance
Repayment
Default
Prepayment
Penalty
Escalations

Term Loan - Additional


Rs.10.22 crores (Rupees Ten Crore & twenty two lacs Only)
25%
@ 11.25% [BPLR +2.00%+ 0.50% (Term Premia) 3.75% (relaxation)]
(Linked with BPLR)
As per bank schedule of charges or as approved in the sanction
1.Extension of EM of societys land & building valuing Rs.2466.84 lacs
as per ABS as at 31.03.2007, situated at plot no. 27(1) & 28 Site 2,
Industrial Area, Loni Road, Ghaziabad measuring 66910.57 Sq. Mtrs.,
market value Rs.9118.72 lacs and realizable value Rs.7537.75 lacs as
per detailed valuation report of M/S Atul & Associates report dated
06.02.2008 plus cost of proposed construction of Rs.12.33 crores. Thus
total value will be Rs.87.70 crores.
2.Hypothecation of other fixed assets like equipments, furniture &
fixtures, other assets valuing Rs.479.62.00 lacs as per ABS dt. 31-032007 and other assets to be created out of bank loan (both present &
future) Thus total value will be Rs.779.62 lacs.
The Term Loan of Rs.10.22 crores shall be repaid in five yearly
installment of Rs.2.044 crores each starting from 30.09.2008.
Interest to be recovered as and when levied.
All the assets charged to the Bank to remain fully insured with all
probable risks with usual bank clause.
Penal Interest @ 2.00% p.a. or at any other rate as per discretion of the
bank above the normal rate to be charged for the amount/period of
default.
In case of pre payment of loan by borrowing from other Bank/FIs, bank
shall charge pre-payment penalty of 2.00%. However no pre-payment
penalty shall be levied if borrower pays from his own sources.
The society shall meet out cost over run from its own sources and shall
not ask for additional term loan from the Bank.

CONDITIONS

- 42 -

- 43 -Friends Charitable society

- 43 -

The payment shall be made directly to suppliers as far as possible. Original


bills/cash memos/certified copies of Original bills, cash memos in the name of the
Society/Engg.College/Dental College for all the fixed assets/machinery/other
assets financed by bank, either in the name of society/Engg.College/Dental
College, alone or jointly with the Bank, shall be submitted by the borrower and to
be placed on banks record.
When the payment to the supplier has been made through account payee
cheques/draft and acknowledged by him on invoice/bill, no separate joint receipt
for such payment made is required.
In case the society is not in a position to submit bills/copies of bills for
payments/investment made by it towards the project including banks loan,
certificate of Chartered Accountant certifying such payment/investment will be
treated as sufficient proof of the same, Certificate of Govt. approved Architect will
be sufficient proof for investment made towards construction of building.
The 25% of Term Loan may be released by crediting to Societys Current Account
where from the payment to the suppliers may be made by the Society through
Account Payees Cheques and after utilization of the amount so credited to
Societys Current Account the Society to submit original/certified copies of the
bills or certificate of Architect/Chartered Accountant for the payments/Investment
made.
Banks nameplate, evidencing hypothecation of security/asset to be prominently,
displayed in the premises of the society.
Our Term Loan shall be released only after societys having invested its margin or
contributing pro-rata margin with our each release.
The unsecured loans, if any, shall be subordinated to our Term Loan.
Before disbursement of Term Loan, it should be ensured that all necessary
statutory and other approvals/permissions, if any, have been obtained by the
company. The company should undertake that necessary statutory and other
approvals/permissions shall be obtained before disbursement.

FACILITY NO.2
Nature
Overdraft against tangible Security Renewal cum enhancement
Limit
Rs.1.00 crores (Rs One Crore only)
Enhancement from Rs.0.50 crores.
Interest
@ 11.25% [BPLR +2.00% 3.25% (relaxation)] (linked with
BPLR) with monthly rests. Interest in the A/c as and when levied
will be serviced immediately by the Society.
Processing
As per Bank Guidelines or as approved in the sanction
Fee
Security
1.Extension of EM of societys land & building valuing Rs.2466.84
lacs as per ABS as at 31.03.2007, situated at plot no. 27(1) & 28
Site 2, Industrial Area, Loni Road, Ghaziabad measuring
66910.57 Sq. Mtrs., market value Rs.9118.72 lacs and realizable
value Rs.7537.75 lacs as per detailed valuation report of M/S Atul
& Associates report dated 06.02.2008 plus cost of proposed
construction of Rs.12.33 crores. Thus total value will be Rs.87.70
crores.
2.Hypothecation of other fixed assets like equipments, furniture &
fixtures, other assets valuing Rs.479.62.00 lacs as per ABS dt. 31-

- 43 -

- 44 -Friends Charitable society

- 44 -

03-2007 and other assets to be created out of bank loan (both


present & future) Thus total value will be Rs.779.62 lacs.
FACILITY NO. 3
Nature
Bank Guarantee (Specific) - Renewal
Limit
Rs.2.25 crores (Rupees Two crores and Twenty Five lacs only)
Margin
10% in cash/ FDR. The margin may be kept by the company on
consolidated Basis for the entire limit
Commission
As per bank guidelines or as approved in the sanction and may be
charged on yearly basis
Period
Upto period of 5 years
Purpose
Guarantees
in
favour
of
Govt.
Deptt./
Dental
council/AICTE/UPTU/other universities etc.
Security
(i)General Counter Indemnity by the society
(ii)Both the securities held against TLs & OD limits shall also cover
the BG limit.
Conditions
Guarantee to be issued as per Banks prescribed format or as may
be approved by the AGM (Branch) as per requirement of the
Society.
OVERALL TERMS AND CONDITIONS
1. The society should have exclusive dealing for its banking requirement with us
and shall not open any current account with any bank/branch without our prior
written permission.
2. All facilities are to be secured by personal Guarantee of the following:By way of Personal Guarantee
(Rs. in lakh)
Sl.No.
Name of
Net Worth
Immovable property
Date of confidential
Guarantor
report
Previou Present
Previou
Present
Previous
Present
s
s
1.
2.
3.
4.

Sh.Atul Garg
Sh.Rakesh Garg*
Sh.Sarish Kr.
Chaudhary*
Sh.Sunil P Gupta*
Total

66.13
19.00
142.40

643.57
343.50
473.90

87.50
26.49
142.00

103.50
70.00
578.50

20.11.2006
20.11.2006
20.11.2006

12.02.08
20.11.07
20.11.07

14.45
241.98

297.50
1758.47

14.00
269.99

200.00
952.00

20.11.2006

20.11.07

3. Securities charged to the bank to be inspected at least once in a half year by


banks officials.
4. The Society shall not undertake any further investment in any project or effect
any material change in the proposed project without obtaining prior permission of
the bank and without proper tie-up of funds. Similarly, no investment shall be
made in associate/allied/group concerns without prior permission of the bank.
5. Monies brought in by the promoters will not be allowed to be withdrawn during
the currency of banks loan without Banks prior permission.

- 44 -

- 45 -Friends Charitable society

- 45 -

6. The Bank or its authorized officials or other representatives will have the right to
carry out periodical inspection or examine the books of accounts of the borrower
and to have their premises/offices/assets inspected from time to time by officers
of Bank and /or by outside agencies and the expenses incurred by the Bank in
this regard will be borne by the society.
7. The Bank shall have the right to withdraw or modify all/any of the conditions of
sanction or stipulate fresh conditions, under intimation to the society. Society
shall undertake to give its acceptance to these stipulations.
8. In case the society commits default in the repayment of loan/advance or in the
payment of interest thereon or any of the agreed installment of the loan on due
date, the bank, CIBIL and /or Reserve Bank of India will have an unqualified right
to disclose or publish the names of the society and its office bearers as
defaulters in such manner and through such medium as the bank/RBI in their
absolute discretion may think fit.
9. The unsecured loans raised from friends/relatives will not be allowed to be repaid
during currency of Banks loans. An undertaking to this effect to be obtained from
the society and kept on banks record.
10. During the currency of banks credit facilities, the borrower shall not, without the
prior approval of the Bank in writing:
a. permit any transfer of the controlling interest or make any drastic
change in the management set up;
b. divert/utilize Bank's funds to other sister/associate/group concerns or
for purposes other than those for which the credit facilities have been
sanctioned;
c. Effect any change in their capital structure, which may effect banks
interest adversely.
d. Formulate any scheme of amalgamation or reconstruction.
e. Undertake any new project or expansion or modernization scheme or
make any capital expenditure other than estimated/ projected , without
obtaining banks approval.
f. Undertake guarantee obligations on behalf of any other borrower/
organization.
g. Sell, assign, mortgage, alienate or otherwise dispose off any of the assets
of the borrower charged to the bank
h. Enterer into any contractual obligation of a long-term nature effecting the
borrower financially to a significant extent.
i. Undertake any activity other than those indicated in the objective
clause/bye laws of the society.
11. Margins/rates of Interest are subject to revision from time to time at the sole
discretion of the Bank.
12. The Bank shall charge penal interest for non compliance of terms and conditions
or due to irregularity as per LA Circular No 61/06 dated 08.06.2006.
13. The borrower shall execute all necessary legally enforceable loan documents, as
per banks guidelines. Documents will be drafted/vetted by banks counsel at
borrowers cost.
14. Branch to submit legal compliance certificate as per LA Circular No.87 dated
20.09.02.
15. Borrower shall give acceptance of terms and conditions as per letter of sanction
which will form part of documents and be placed on banks record.

- 45 -

- 46 -Friends Charitable society

- 46 -

16. All other HO/RBI guidelines applicable to such type of advances to be strictly
adhered to.

Sr. Manager

Chief Manager

- 46 -

Asstt.General Manager