XXXX BANK LTD.

Business Vertical Location SOL ID CC-I Meeting Date Item No.

ABC XYZ

Proposal for renewal of WC facilities

PART I – SUMMARY SHEET

1(a)Name of the company and XYZ Industries Limited

relationship since (Name of the
Group to be indicated in brackets Existing Relationship since July 2006
and in case the company does not
belong to any particular group, ‘No
particular Group’ to be indicated
within the brackets after the
company’s name)

(b)Business Activity of the company :

2. Proposal in brief:

1. Renewal of aggregate WC assistance of `32.50 crore (FB – `5.50 crore, NFB - `25
crore, and CMS (Intraday/Interday) – `2 crore), at the existing level.

3. Rating Details:
FY 2014 FY 2015 FY 2016
Rating /Score Month Rating /Score Month & Rating /Score Month &
Internal & Year Year Year
Rating “BBB” (5.12) January “BBB” May 05, “LCA” (5.99) Decemb
(Risk 09, (5.35) 2015. er 09,
a) Dept.) 2014. 2016.
b) External "BBB" for FB May "A-" for FB April "A+" for FB May 27,
Rating limit of 2013 limit of 2014 limit of `245 2016
`224.17 crore `212.50 crore and
and "A3+" for crore and "A+" for NFB
NFB limit of "A2+" for limit of `150
`130 crore NFB limit of crore
`126.00
crore

4. Asset Category / A/c Status

1 PSL / Non PSL Non PSL
2 Standard / NPA (If NPA, provision already Standard
made in % & Rs Cr)
3 SMA Status / JLF No
4 Restructured (under CDR / bilateral / others) NA
5 Referred to BIFR ,/ AAIFR No

5. Key financial parameters:

(`crore)
Sl Key Financial FY 2014 FY 2015 FY 2016 FY 2017 YTD (As
No. Parameters (Aud) (Aud) (Aud) (Est) on Sept
(Proj) (Aud) 30, 2016)
01 Net Sales 1151.52 1275.63 1464.54 1326.07 1570.68 755.81
02 PBDIT 90.84 126.59 132.42 123.44 178.96 79.58
03 PBDIT Margin (%) 7.89% 9.92% 9.04% 9.31% 11.39% 10.53%
04 PAT 13.60 49.02 53.92 50.64 87.99 47.98
05 PAT Margin (%) 1.18% 3.84% 3.68% 3.82% 5.60% 6.35%
06 Cash Accruals 57.73 81.15 96.92 83.37 119.99 51.88
07 T NW 95.31 142.80 227.90 194.66 257.63 -
08 Net Cash from - 44.81 71.57 76.93 (38.45) -
Operations
09 Current Ratio 0.74 0.85 1.29 0.98 1.23 -
10 TOL/TNW 5.41 3.32 1.78 2.38 2.16 -
11 DER 0.69 0.50 0.18 0.45 0.56 -
12 ICR 2.66 3.77 6.02 4.05 7.48 6.67
13 DSCR - 1.60 2.39 1.77 1.98 -

2
 6. Current Banking Arrangements (Existing)
A Consortium YES Leader/ Bank 1 Our 12.20% Other Banks/ 65.46%
Share 22.34% Share
B Multiple NA Main NA Our NA Other Banks/ NA
Banking Banker/ Share
Arrangement Share
C Sole Banking NA

7. Existing / Proposed Assistance:

(` crore)
Date of last Renewal of WC facilities of `32.50 crore of XYZ was approved at the
sanction / renewal meeting held on May 27, 2015
/ Review
Nature of Existing O/S O/D Pricing Proposed Capital
Assistance/Facility Limit Limit Charge
I. Facilities for (` Cr) Existing Proposed
which sanction is (% p.a.) (% p.a.)
sought
A. Working Capital Facilities [Renewal / enhancement / reduction]
FB
Cash Credit (CC) 5.50 0.00 - Existing: Proposed: 5.50 0.00
BBR+350 bpsMCLR (Y) plus
p.a., payable135 bps p.a.,
monthly payable
(present monthly
effective, 13%(present
p.a.) effective,
10.50% p.a.)
WCDL (3.00) 0.00 - Existing: FTP Proposed: FTP (3.00) 0.00
(sub-limit of CC) + 100 bps p.a. + 100 bps p.a.
(subject to (subject to floor
floor of of MCLR (Q)
BBR+50 bps plus 25 bps p.a)
p.a.) (Min.) (Min.)

3
CBD (3.00) 0.00 - Upto 90 days: Upto 90 days: (3.00) 0.00
(sub-limit of CC) FTP plus 100 FTP plus 100
bps (min) bps (min)
subject to floor subject to floor
of BBR plus of MCLR (Y)
50 bps p.a. plus 50 bps p.a.
Above 90 Above 90 days
days and upto and upto 180
180 days: FTP days: FTP plus
plus 100 bps 100 bps (min)
(min) subject subject to floor
to floor of of MCLR (Y)
BBR plus 200 plus 100 bps
bps p.a. p.a.
TOTAL 5.50 0.00 - 5.00 0.00
NFB
LC/TCBG 25.00 0.00 - 25.00 0.00
BG (sub-limit of (5.00) 0.00 - (5.00) 0.00
LC / TCBG)
TOTAL 25.00 0.00 25.00 0.00
c. LER (1.00) 0.00 - As per Treasury (1.00) -
d. CMS (Intraday/ 2.00 - - As per CMS Agreement 2.00 -
Interday)
Grand Total W=32.50 0.00 - X=32.50 0.00

B. Term Loan Facilities

(RTL,CL, STL/CAPEX NFB Facilities) Assistance sought (Rs Cr) Proposed Pricing
Nil Nil Nil
TOTAL Y =Nil

II. Existing facilities Original Outstan Overdues, Pricing Existing

for review (RTL, sanction ding (as if any exposure
CLS, CAPEX NFB (date of on date) Existing Proposed (o/s +
Facilities etc.) sanction) (` cr) undrawn) (`
(` cr) cr)
RTL-I - - - - - -
TOTAL - - - - - -

III. Existing - - - - - -
facilities other than I
& II, if any
Term Loans (Total) - - - - - -

4
 Investments - - - - - -
(Equity/QIB/Debent
ures/ Underwriting
etc)
TOTAL - - - - - -
G. Total Z=Nil

Total existing exposure (both Proposed exposure Sanction sought

documented & pending (X+Y+Z) (X + Y)
documentation)
(W + Z)
32.50 32.50 32.50

8. Indirect Exposure if any sought (not reckoned as company exposure):

Nature of Existing Out Over Pricing Proposed Limit
Assistance/Facility Limit standin due (` Cr)
Facilities for which (` Cr) g (` Cr) Existin Propose
sanction is sought (` Cr) g d
VBD/ LoC (similar - - - - - -
services)
TOTAL - - - - - -

9. Current & Proposed Borrowing Arrangement ( ` crore)

Outstanding as
WC Banks Current Limits on December 31, Proposed Limits
(%) (%)
2016
FB NFB Total FB NFB Total FB NFB Total
1. Bank 1 22.34 45.85 10.00 55.85 11.49 0.00 11.49 22.34 45.85 10.00 55.85
2. Lead Bank
(Bank 2) 12.20 5.50 25.00 30.50 0.00 0.00 0.00 12.20 5.50 25.00 30.50
3. Bank 3 30.64 26.60 50.00 76.60 0.27 15.20 15.47 30.64 26.60 50.00 76.60
4. XXXX 15.32 23.30 15.00 38.30 7.05 15.00 22.05 15.32 23.30 15.00 38.30
5. Bank 4 19.50 28.75 20.00 48.75 11.62 0.00 11.62 19.50 28.75 20.00 48.75
Total 100 130.00 120.00 250.00 30.43 30.20 60.63 100 130.00 120.00 250.00

(` crore)
Term Lenders (As on
November 30, 2016) Sanctioned Outstanding ROI (%) Proposed term loan
1. Bank 1 50.00 6.94 10.60 -
2. Bank 2 40.00 28.44 9.95 -
3. Bank 3 90.00 37.50 9.60 -
4. Bank 4 50.00 34.21 9.80 -
Total 230.00 107.09 -

10. Group exposure: (As on December 1, 2016) ( ` crore)

5
 Existing 629.50 XYZ Industries Ltd. 32.50
XYZ 1 Eng. Co. Ltd. 553.00
XYZ 2 Eng. Ltd. 23.00
XYZ 3 Engineering Ltd. - 21.00
Total 629.50
After Sanction 629.50 XYZ Industries Ltd. 32.50
XYZ 1 Eng. Co. Ltd. 553.00
XYZ 2 Eng. Ltd. 23.00
XYZ 3 Engineering Ltd. - 21.00
Total 629.50

Overall Banking Sector To the company To the Group

exposure & other exposure, `365.74 crore Not available
if any (March 31, 2016)

Company / Group exposure for the last 3 years (`crore)

Particulars FY 2014 FY 2015 FY 2016
Company(XYZ) 32.50 32.50 32.50
Group 509.50 577.50 629.50

11. Financials of Group companies (as on March 31, 2016)

(` crore)
Particulars Sales PAT TNW TOL/TNW
XYZ 1 Eng. Co. Ltd. 2417.02 (303.76) 113.05 40.87
XYZ 2 Eng. Ltd. 211.52 (26.78) 137.31 2.89
XYZ 3 Engineering Ltd. - 133.34 7.93 102.51 1.01

12. Cross sell & Account Profitability

Cross Sell (CMS/Salary account/ Tax Collection/ Excise/Dividend distribution/ CPA-CP

issues/Forex/LER/ Carbon Credit/Syndication/Corporate Advisory Services etc)
Present Arrangement Total Our Share Income Likelihood of
with Volume (%) Earned Shifting to our
Bank
Though, the company does not have any major CMS The company
requirement since sales proceeds are being routed through would be
CMS Line
consortium member banks, XYZ avails CMS facilities pursued to
from Bank 1 and Bank 2 open more
Major share of salary accounts is with Bank 1, Bank 2, salary
Salary and Bank 3. The company has opened about 220 nos. accounts and
salary accounts with Bank 1 making
The company routes tax payment through Bank 1, Bank 2payment of
Tax Collection/ Excise
and Bank 3 dividend
Dividend The company makes dividend payment through Bank 1 through Bank

Account Profitability:

6
Account Amount Avg. Net Interest Non-Interest ROC (%)
Profitability (` crore) Utilization Income Income [Income earned /
(` crore) (` crore) capital required ]
FB 5.50 0 0.00 -
NFB 25.00 0 - 0.00
Existing
Others 0.05 -
Total 30.50 - 0.03 0.00 -
FB 5.50 40% 0.02 -
NFB 25.00 70% - 0.08
Expected
Others - - 0.11 -
Total 30.50 - 0.13 0.08 13.51%
Details of Deposits
Bulk = Nil Non-bulk = Nil

13. Approvals sought from the Committee

1. Renewal of aggregate WC assistance of `32.50 crore (FB – `5.50 crore, NFB – `25
crore, and CMS (Intraday/Interday) – `2 crore), at the existing level.
2. Approval for reduction in pricing of:
Facility Existing Proposed
Cash Credit BBR+350 bps p.a. (present effective MCLR(Y) + 135 bps p.a. (present
13% p.a.) payable monthly effective 10.50% p.a., MCLR(Y) being
9.15% p.a.), payable monthly
WCDL FTP + 100 bps p.a. (subject to floor FTP + 100 bps p.a. (subject to floor of
of BBR+50 bps p.a.) (Min.) (present MCLR (Q) +25 bps p.a.) (Min.) (present
effective, 10.50% p.a.) effective, 9.10% p.a., MCLR(Q) being
8.85% p.a.)
LC Sight LC: 0.85% p.a. Sight LC: 0.45% p.a.
Usance LC: 1% p.a. Usance LC: 0.45% p.a.
The proposed pricing for usance LC is
below the NFBMR of 0.67% p.a for
usance LC for ‘A’ rated companies.
CBD FTP plus 100 bps (min) subject to FTP plus 100 bps (min) subject to floor of
floor of BBR plus 50 bps p.a.(upto MCLR (Y) plus 50 bps p.a.(upto 90 days)
90 days) (present effective, 10.00% (present effective, 9.65% p.a.) and FTP
p.a.) and FTP plus 100 bps (min) plus 100 bps (min) subject to floor of
subject to floor of BBR plus 200 bps MCLR (Y) plus 100 bps p.a. (above 90
p.a. (above 90 days and upto 180 days and upto 180 days). (present
days) (present effective, 11.50% effective, 10.15% p.a.).
p.a.).

3. List of waivers / relaxations / deviations

(a) Continuation of waivers / relaxations / deviations in respect of:
i) Continuation of waiver of cash margin of NFB facilities.

7
 ii) Continuation of allowing receivables up to 180 days.
(b) Fresh waivers / relaxations / deviations in respect of:
i) Ratification of transactions from January 21, 2017 till the date of regular
renewal.
ii) Condonation for not charging additional applicable interest on all FB facilities
as per the extant internal guidelines, in case the company fails in hedging of its
forex exposure.
iii) Condonation of EOD triggered in respect of current ratio less than 1.

14. Justifications
(a) For any sub-investment proposal, (if applicable):NA
(b) For sanction of incremental exposure to a company having overdues or under
stress or having stressed accounts in the group companies (if applicable):NA
(c) For any waiver/relaxation/modification/deviation sought:
(I) Fresh waiver/relaxation/modification/deviation sought:
i)Approval for reduction in pricing of cash credit facility from existing BBR+350 bps p.a.,
payable monthly to MCLR (Y) + 135 bps p.a., payable monthly.
XYZ is externally rated as "A+" in May, 2016 and internally rated as ‘A” in December,
2016. The company is availing WC facilities from 5 banks within consortium, and the rates
on CC, being charged by the banks are mentioned below:
Bank 1 Bank 2 (Lead) Bank 3 Bank 4 Bank 5
Present CC Rate 9.45% p.a. 11.80% p.a. 10.85% p.a. 11.10% p.a. 13.00% p.a.
Present WC limit 55.85 38.30 76.60 48.75 30.50
sanctioned (` crore)
WC o/s as on 11.49 22.05 15.47 11.62 0.00
December 31, 2016
(` crore)
Moreover, as informed by the company, Bank 1 and Bank 2 have agreed to revise the CC
rates, linking the rates to MCLR. In view of the above, XYZ has requested XXXX to
reduce pricing on FB facilities and charge interest in line with other consortium member
banks. It may be mentioned that XXXX bank’s interest rate is highest among all the
consortium members and utilization of FB facilities of XYZ in XXXX is negligible on
account of higher pricing. Hence, reduction in pricing i.r.o. cash credit facility has been
proposed.
ii) Approval for reduction in pricing of WCDL facility from existing FTP + 100 bps p.a.
(subject to floor of BBR+50 bps p.a.) (Min.) to FTP + 100 bps p.a. (subject to floor of
MCLR (Q) +25 bps p.a.) (Min.).

8
XYZ has been presently availing WCDL facility only from Bank 1 @8.75% p.a. Hence, it
is being proposed to reduce the pricing of WCDL to FTP + 100 bps p.a. (subject to floor of
MCLR (Q) +25 bps p.a.)(Min.) (Present effective, 9.10% p.a., present MCLR (Q) being
8.85% p.a.), for utilization of WCDL limit of XXXX bank by the company.
iii) Approval for reduction in commission on LC from existing 0.85% p.a. on sight LC
and 1% p.a. on usance LC, to 0.45% p.a. on both sight and usance LC, which is below the
NFBMR of 0.67% p.a on usance LC for ‘A’ rated companies.
The commissions on LC facility, charged by the member banks of XYZ, under consortium are
as mentioned below:

Bank 1 Bank 2 Bank 3 Bank 4 Bank 5

(Lead)
Commission 1.25% p.a. 0.40% p.a. 0.50% p.a. 0.75% p.a. for Sight LC : 0.85%
LC<90 days p.a.,
1.75% p.a. for Usance LC: 1%
LC>90 days p.a.
The company has been availing LC limits only from Bank 1 and Bank 2. The limits in
other member banks are unutilized due to higher commission charged. XYZ is externally
rated as "A+" in May, 2016 and internally rated as ‘A” in December, 2016. In view of the
above, CC-I is requested to reduce the commission charged on LC (both sight and
usance) by XXXX Bank to 0.45% p.a., for better utilization of NFB facilities by the
company. However, it may be mentioned that the proposed commission of 0.45% p.a. on
usance LC is below the NFBMR of 0.67% p.a. on usance LC for ‘A’ rated companies. We
may agree the same for better utilization of limits.
iv) Reduction in pricing of CBD from FTP plus 100 bps (min) subject to floor of BBR
plus 50 bps p.a.(upto 90 days) and FTP plus 100 bps (min) subject to floor of BBR plus
200 bps p.a. (above 90 days and upto 180 days), to FTP plus 100 bps (min) subject to floor
of MCLR (Y) plus 50 bps p.a.(upto 90 days) and FTP plus 100 bps (min) subject to floor
of MCLR (Y) plus 100 bps p.a. (above 90 days and upto 180 days).
XYZ has been presently availing CBD facility only from Bank 1 @8.95% p.a. Hence, it is
being proposed to reduce the pricing of CBD to FTP plus 100 bps (min) subject to floor of
MCLR (Y) plus 50 bps p.a. (upto 90 days) (Present effective-9.65% p.a., present MCLR
(Y) being 9.15% p.a.) and FTP plus 100 bps (min) subject to floor of MCLR (Y) plus 100
bps p.a. (above 90 days and upto 180 days) (Present effective – 10.15% p.a., present

9
MCLR (Y) being 9.15% p.a.), for utilization of CBD limit of XXXX Bank by the
company.
v) Condonation of EOD triggered in respect of current ratio less than 1
As on March 31, 2016, the current ratio of the company improved to 0.98 (previous year-
0.85). However, the current ratio of XYZ continued to be below unity on account of
increase in short term borrowings and the scheduled repayment of term loan instalments.
However, the same is estimated to be 1.23 as on March 31, 2017. Despite low current ratio,
the company has not been facing any liquidity problems and its overall utilization of
working capital limits has generally been low. In view of the above, CC-I is requested to
condone the above EOD triggered.
vi) Ratification of transactions from January 21, 2017 till the date of regular renewal.
CC-II, at its meeting held on December 22, 2016, approved the short renewal of WC
facilities of XYZ at the existing level for 90 days till January 21, 2017. The committee is
requested to ratify the transactions from January 22, 2017 till the date of regular renewal.
vii) Condonation for not charging additional applicable interest on all FB facilities as per
the extant internal guidelines, in case the company fails in hedging of its forex exposure.
CC-I, at its meeting held on May 27, 2015, had directed the dealing group to charge
additional applicable interest on all FB facilities as per the extant internal guidelines, in
case the company fails in hedging of its forex exposure. As on March 31, 2016, as per the
UHFCE certificate from the statutory auditors, the unhedged forex exposure of the
company was `38.31 crore. However, additional interest was not charged. The company
has been submitting the UHFCE certificate timely. In view of the above, CC-I is requested
to condone non-charging of additional interest.

(II) Existing waiver/relaxation/modification/deviation sought:

i) Waiver of cash margin for NFB facilities
The company does not provide any cash margin to consortium member banks for NFB
facilities. Hence, continuation of waiver of cash margin for NFB facilities has been
proposed.

ii) Continuation of allowing receivables up to 180 days.

10
Continuation of allowing receivables upto 180 days for calculation of DP instead of 90
days, as is being allowed by Bank 1, the lead and other member banks. Hence, continuation
of allowing receivables upto 180 days has been proposed. The same may please be
approved.

11
15. Recommendation

A. In view of the above, CC-I is requested to approve the proposal for renewal of
aggregate WC assistance at the existing level of `32.50 crore [FB (CC) – `5.50 crore with
WCDL / CBD as sub-limit of CC – `3 crore, NFB (LC / TCBG) – `25 crore, BG as sub-
limit of LC / TCBG – `5 crore, LER as sub-limit of NFB – `1 crore and CMS –
intraday/interday limit of `2 crore] to XYZ India Ltd., as per terms and conditions given in
the Terms Sheet at Appendix I to this memorandum, besides normal terms and conditions
applicable to grant of such assistance by XXXX Bank Ltd.
B. The committee is also requested to approve the waivers /deviations /modification etc.
and other approvals sought at para 13 above.

ABC ABC 1 ABC 2

AM DGM Sr. RH & GM
Date of Memorandum (date put by last signatory) :

ABC 3
CGM

XXXX Bank Ltd.,

12
 PART II - DETAILED APPRAISAL NOTE
1. Basic Information
1 Name and address XYZ Industries
of the Borrower /
Company Address: Regd. Office: A, Middleton Street, XYZ City-
X000xx, State Name
Corporate Office: 2, Rainey Park, XYZ City-X000XX,
State Name
Plants (As on March 31, 2016)
(i) Plant 1 (State 1)
(ii) Plant 2 (State 2)
(iii) Plant 3 (State 3)
2 Date of 19xx
Establishment
3 Company / Customer 4593xxx 4. BSR 31xxx
ID Code with [Manufacture of accumulators,
description primary cells and primary
batteries]
BSR code sheet attached as
Appendix – V
5 ARN / Loan -
Origination No.
6 Constitution (Govt / Public Limited Company
Pub / Pvt / Prop /
Partnership / LLP)
7 Nature of Business/ Manufacturing of dry cell batteries, flashlights & lighting
Products products (lamps and luminaries), marketing of packet tea
and home appliances.
8 Relationship with Existing (Since June 2006)
XYZ Bank
9 If the account is new, Not applicable since existing relationship
name of the present
bankers:
10(a) Name(s) of the S/Shri ABC, Shri EFG, Shri HIJ
Promoter(s)
10(b) Name of the XYZ Group
Promoter Group
10(c) Name of the Shri ABC
Chairman

13
10(d) Name(s) of the Shri ABC– Non- Executive Chairman
Directors Shri ABC– Non- Executive Vice Chairman
Shri ABC– Managing Director
Shri ABC– Whole time Director & CFO
Shri ABC – Independent Director (Non-executive)
Shri ABC– Independent Director (Non-executive)
Shri ABC– Independent Director (Non-executive)
Smt. ABC– Independent Director (Non-executive)
10(e) Name of Director, if Name Bank's name
any, who is on the
Nil Nil
Board of other
Bank(s)
11 Listed/Un-listed (As Yes
on January 17, 2017) Stock Price (52 week)
The company is High Low Face
listed in BSE. As Value
on January XX, BSE `318.15/- `190.00/- `5.00/-
20XX, the
company’s shares NSE `314.85/- `192.25/- `5.00/-
traded in BSE at
`239.50/-
12(a) Shareholding as on Shareholders No. of shares %
March 31, 2016 Promoters 3,19,90,995 44.01
FII 1,66,44,328 22.90
Mutual Funds 41,14,901 5.66
Bank/FI/Insurance 19,26,475 2.65
Individual 1,31,56,175 18.10
Others 48,54,386 6.68
Total 7,26,87,260 100.00
12(b) Name of Guarantors Corporate Guarantee
and their Name Percentage
shareholding in the
company (%) - -
Personal Guarantee
Name Percentage
- -
13 Promoter shares As on March 31, 2016, the promoters have 3,19,90,995
pledged (% of shares (44.01% shareholding) in XYZ INDUSTRIES, out of
promoters which 81,99,292 shares (25.63% of promoter shares) were
shareholding) pledged.
14 Date of last 1. Renewal of WC facilities at the existing level of `32.50
sanction/renewal/rev Crore to XYZ was approved by CC-I, at its meeting held
iew on May 27, 2015.
2. CC-II, at its meeting held on December 22, 2016 approved
the short renewal of WC facilities of `32.50 crore to XYZ
INDUSTRIES upto January 21, 2017

14
15 Directions, if any, a) Dealing group to Compliance
given by the examine the hedging a) The UHFCE certificate has
Committee and policy of the company been submitted by the company
status of compliance and obtain auditors' for March 2016, June 2016 and
thereof. certificate regarding September 2016.
unhedged for ex exposure
and if not already hedged,
vigorously pursue for
hedging the unhedged
forex exposure through
the Bank.
b) Dealing group to b) As on March 31, 2016, as per
charge additional the UHFCE certificate from the
applicable interest on all statutory auditors, the unhedged
FB facilities as per the forex exposure of the company
extant internal guidelines, was `38.31 crore. However,
in case the company fails additional interest was not
in hedging of its forex charged. Condonation for the
exposure. same has been sought from the
sanctioning authority.
c) To pursue with the b) The company has been
company for regular submitting QIS with some
submission of QIS/FFRs. delay. However, the company is
being followed up for timely
submission of the same.
d) To carry out valuation d) The valuation report dated
of collateral securities. August 2013 and May 2014 is
available for the properties at
Chennai and Lucknow
respectively. The valuation for
the property at Hyderabad is yet
to be carried out. XYZ Bank, in
this regard, has informed that it
is in the process of carrying out
valuation of the mortgaged
properties.
e) To carry out plant visit e) The plant visit of the
of the company. company would be carried out
in the last quarter of FY 2017.
16 Bank’s RM/DGM Ms. ABC, DGM/ Shri ABC, AM
17 Date of Visit/Call : Join visit was 19. Name & -
Inspection (Last conducted by XYZ Designation of the
inspection date, Bank and ABC BANK official of the
observations & on September 19, company
present position 2015 in Chennai plant called/visited:
of XYZ
INDUSTRIES.

15
 18 Observations of visit The visit report dated September 19, 2015 was submitted by
XYZ bank, lead bank. The major observations as mentioned
in the visit report are reproduced below:
 The unit is a modernized battery manufacturing plant
equipped with modern machineries for testing and packing
of AA size carbon zinc batteries.
 The inventory was adequate on the day of visit to cater to
the production plan.
 The Company had adequate power supply from Tamil
Nadu Generation and Distribution Corporation Limited
(TANGEDCO). Moreover, the unit had 3 silent DG sets
(each of 380 KVA capacity) to ensure un-interrupted power
supply.
 The unit also had sufficient skilled labour and the
hypothecation board was displayed properly on the day of
visit.
19 Banker’s Report & Not applicable since existing relationship
Comments
thereon (for new
relationships)
20 Nominee Director’s / Not applicable
Observer’s
observations, if any
21 Credit History As per the CRILC report generated on January 17, 2017, the
(including highlights account of XYZ INDUSTRIES is standard in all the banks.
of latest CRILC Moreover, there are no overdues in the name of the directors of
reports – copy the company as per CIBIL report generated on December 5,
attached) 2016.
22 Conduct of account Conduct of the account is satisfactory and there are no
and adverse overdues in the account of the company as on date.
observations, if any, Credmin review sheet annexed at Appendix IV.
as per the credmin
sheet

2. Company & Business Profile

Company Background & Promoters
 XYZ Industries, promoted by Shri ABC and associates was incorporated in 1934. XYZ
INDUSTRIES belongs to ABC Group, a diversified conglomerate having business
interests in battery, tea, infrastructure, execution of turn key projects and manufacturing
of equipments.

16
 The company is presently engaged in the manufacturing of batteries, flashlights,
alternative lighting solutions and marketing of packet tea. XYZ INDUSTRIES is a major
player in India with a market share of more than 30% in both the dry batteries and
flashlights segment. XYZ’s product portfolio comprises (a) dry cell and rechargeable
batteries (b) flashlights and lanterns (c) packet tea under (d) CFL, GLS, LED lamps &
luminaries and (e) devices like mobile power bank, rechargeable fan and radio (f) small
home appliances.
 In 2009, XYZ INDUSTRIES had set up a special purpose vehicle, ABC in COUNTRY A
for acquiring a controlling interest in a loss making company XYZ SAS, a leading
rechargeable battery manufacturer with the objective of turning it around. On account of
the poor economic situation in Europe and sluggish demand of the rechargeable batteries
subsequent to the acquisition, the Acquired group continued to incur losses. With a view
that, XYZ may not be able to recover its investments, it created a provision of `75 crore
covering this investment in FY 2012. During FY 2013, a French court ordered the
liquidation of the key entities of the ABC group and the relevant companies were put
under external administration. However, as on March 31, 2013, XYZ INDUSTRIES’s
exposure towards investments, advances and other obligatory commitments of `76.19
crore was fully provided (including the provision of FY 2012 and provision of `1.19
crore in FY 2013). During FY 2015-16, XYZ SAS has been liquidated.
 The company’s contemporary product portfolio in the domestic market comprise of:
i) Dry cell and rechargeable batteries.
ii) Flashlights and lanterns.
iii) Packet tea
iv) LED bulbs and luminaires
v) Devices like mobile power banks, rechargeable fans and radio
vi) Small home appliances
 During FY 2015-16, XYZ INDUSTRIES expanded its portfolio of LED based lighting
solutions and forayed into a new product segment (home appliances). However, the
company’s core business remained marginally subdued due to dumping of cheap Chinese
batteries and Company also raised prices of batteries across range due to currency
depreciation.
 The Indian battery market has few players, out of which XYZ INDUSTRIES has a

17
 market share of 30%. The next player lags by more than 10 percentage points.
 XYZ INDUSTRIES is also coming up with a new manufacturing plant in UVW
LOCATION, QWE STATE, spanning across 27 acres approximately, which is expected
to come up by March 2017. This facility is expected to come on stream by March 2017.
XYZ INDUSTRIES is vying for 5-10% of the LED market share. During FY 2015-16, it
bagged its first LED order from the Government of India worth `48.31 crore.
Management (As on March, 2016)
The composition of the present Board of Directors of EIIL is given below:
Name Designation Age Experience
Shri ABC Non-Executive Chairman 89 years 49 years
Shri ABC Non-Executive Vice- 48 years 21 years
Chairman
Shri ABC Managing Director 34 years 19 years
Shri ABC Whole time Director 58 years 40 years
Shri ABC Independent Director 55 years 25 years
Shri ABC Independent Director 71 years 46 years
Shri ABC Independent Director 70 years 40 years
Smt. ABC Independent Director 64 years 35 years

Key Management:
To enable better and more focused attention on the affairs of the company, the Board has
delegated certain powers to a Committee of Directors. The company is a professionally
managed company with qualified professionals heading various functions.

Key management personnel:

Smt. ABC – Company Secretary
Business Model:
XYZ INDUSTRIES sources the major raw material i.e. Zinc from UVW Limited. The other
raw materials like electrodes, acetylene black and zinc chloride solution are imported from
China. XYZ manufactures the batteries at its 8 plants located across India. The company
has developed a vast and wide distribution network across India through a vast network of
over 3.2 million outlets, 42+ closely connected distribution centres and 4000+ distributors.
Industry Outlook
Batteries: During FY 2014, the battery market saw all the players passing on significant
price increases to offset the increase in the price of raw materials. This met with stiff
consumer resistance and the demand started slowing down. Presently, the Indian market for

18
dry cell batteries is estimated to be worth over `1500 crore by value and 2.7 billion pieces
by volume.
The market segment pattern of battery underwent changes during the recent past as
consumers shifted from the more expensive ‘D’ size batteries to ‘AA’ sized ones. The shares
of the principal battery categories for the last three years are as per the table below:
Battery category FY 2015-16(%) FY 2014-15(%) FY 2013-14(%)
D 10.6 13.0 14.5
C 0.3 0.2 0.3
AA 73.5 73.6 74.3
AAA 15.6 13.2 10.9
The split of technology within the dry batteries market remained constant with the zinc
carbon battery segment virtually dominating the entire market with 97% share. The alkaline
battery segment has minimal share of the market at less than 2%. The rechargeable battery
segment, which accounts for the balance 1% market share, has remained stagnant.
The consumption of batteries is driven by the growth in the off-take of its applications. With
the increasing need for portable power and the advent of a number of battery operated
gadgets the consumption of batteries would increase.
Flashlights: The flashlight market in India comprises the organised segment and the
unorganised segment. During 2015-16, the volumes of flashlights de-grew by around 18%
due to erratic monsoon coupled with reduction in rural spending and proliferation of cheap
flashlights of poor quality by the unorganised and gray market players. A vast dormant
population of the country (almost 45 million households) of non-users represent a large
opportunity for the flashlights market.
Packet Tea: Tea is staple Indian beverage, sold either in loose, unbranded or packaged
branded forms. In India, consumption is hugely skewed towards loose tea with a 60%
market share. India’s packet tea industry is fragmented with a few large players occupying a
significant share and several localised players accounting for regional competition. Price of
packet tea is a function of loose tea prices, the latter being the main cost. Small and
unorganised players occupy a large part of the packet tea market. It has been established
historically that these small players go out of the market during periods when loose tea
prices rise, as they have very little pricing power. Loose tea prices have been firm over the
last 3 years.
Lighting & Electrical Products: XYZ INDUSTRIES started distributing CFL through its
distribution network from 2007. As a natural progression, ordinary GLS bulbs were also

19
introduced in 2009. Although not growing at present, the GLS market still presents and
significant growth opportunities.
In an emerging economy like India, the volume of lighting products will continue to have
high growth due to increase in housing & commercial development. Newer lighting
technologies will become more popular as these will be more environments friendly and
also provide higher value to consumer over time. The government of India’s country wide
campaign of providing LED bulbs at affordable prices will add filp to the category.
Small home appliances: The Company has just forayed into this segment by leveraging on
its existing pan India distribution network in batteries and flashlights and adding new
appliance selling outlets to supplement the vertical. This category having low level of
penetration, highly fragmented segmentation coupled with a large size offers a good
potential for the Company to augment its turnover substantially in the coming periods.
[Source: XYZ INDUSTRIES’s Annual Report for FY 2015-16]

20
 3) Performance / Financial Analysis
3.1 Key financial parameters of the company

Performance / Financial Indicators

(Details as per CMA to be Attached)
(` Crore)
Year ended 2014 2015 2016 2017 2018
(Aud) (Aud) (Est) (Proj)
(Proj) (Aud)
(I) Indicate Yearly / Yearly Yearly Yearly Yearly Yearly Yearly
Quarterly / HY
(i) Paid Up Capital 36.34 36.34 36.34 36.34 36.34 36.34
- Equity
- Preference - - - - - -
Share
(ii) Tangible Networth 95.31 142.80 227.90 194.66 257.63 406.18
(iii) Investment and 20.34 19.15 11.25 25.53 27.66 27.66
advances in Group
Cos]
(iv) Adjusted TNW 74.97 123.65 216.65 169.13 229.97 378.52
(v) Medium & Long 45.76 52.81 15.60 66.96 51.01 59.93
Term Loans
(vi) Capital Employed 659.46 695.77 721.20 747.01 891.40 1032.99
(vii) Current Assets 331.80 343.72 471.00 370.63 510.01 686.01
(viii) Current Liabilities 449.33 403.19 365.32 376.89 413.57 475.98
(ix) NWC [g-h] (117.64) (59.47) 105.68 (6.26) 96.44 210.03
(x) Net Block 246.44 242.18 142.20 251.89 265.30 286.49
(xi) Net Sales : Domestic 1151.52 1275.63 1437.5 1326.07 1570.68 1798.99
4
Export 0.00 - 27.00 0.00 0.00 0.00
Total 1151.52 1275.63 1464.5 1326.07 1570.68 1798.99
4
(xii) Other non-op 1.61 0.99 - 5.15 0.00 0.00
Income(net) of non-
op expenses
(xiii) EBIDTA / PBDIT 90.84 126.59 132.42 123.44 178.96 258.03
(xiv) Interest 34.13 33.60 22.00 30.50 23.91 21.85
(xv) Gross Profit / (Loss) 58.32 93.98 110.42 98.09 155.05 236.18
(xvi) Taxes 2.89 12.98 13.50 16.86 35.06 43.82

21
(xvii) Cash Accruals / Cash 57.73 81.15 96.92 83.37 119.99 192.36
Profits
(xviii) Depreciation 41.83 31.98 43.00 30.59 32.00 37.00
(xix) Net Profit / (Loss) 13.60 49.02 53.92 50.64 87.99 155.36
(xx) Net Cash from - 44.81 71.57 76.93 (38.45) 78.77
Operations
(xxi) Accumulated Losses - - - - - -
(xxii) Net Profit / Capital 2.06 7.04 7.48 6.78 9.87 15.04
Employed [%]
(II) RATIOS
(xxiii) Current Ratio 0.74 0.85 1.29 0.98 1.23 1.44
(xxiv) Debt / Equity 0.69 0.50 0.18 0.45 0.56 0.32
Term Liabilities / 0.88 0.57 0.07 0.52 0.63 0.34
Adjusted TNW
TOL / Adjusted TNW 6.87 3.83 1.88 2.74 2.42 1.60
TOL / Quasi Equity - - - - - -
(TOL + Contingent 5.68 3.81 1.78 3.32 2.16 1.49
Liability) / TNW
(xxv) Profitability % : 1.18 3.84 3.68 3.82 5.60 8.64
PAT / Net Sales
(xxvi) PBDIT as % of Sales 7.89 9.92 9.04 9.31 11.39 14.34
(xxvii) DSCR - 1.60 2.39 1.77 1.98 2.69
(xxviii) CFDSCR - 0.73 1.88 0.82 0.57 1.26
(xxix) Interest Coverage 2.66 3.77 6.02 4.05 7.48 11.81
(xxx) Inventory + 26.56 24.18 29.98 23.22 28.20 34.24
Receivables / Sales
(%)
(xxxi) Contingent Liability - 43.52 - 161.75 - -
– Normal
(xxxii) Contingent Liability 26.31 25.86 - 19.84 - -
– Disputed
(xxxiii) CAR (for NBFCs) - - - - - -
(xxxiv) NPAs (for NBFCs) - - - - - -
(xxxv) Cost of Funds (for - - - - - -
NBFCs)
(xxxvi) Imports 165.96 198.39 - 197.17 323.00 360.00
(xxxvii) Exports 0.00 0.00 - 0.00 - -
(xxxviii) Forex Loans - - - - - -
(xxxix) Unhedged Forex - 39.38 - 38.31 - -
Exposure
Observations /Comments

22
(i) Capacity and utilization: The capacity utilization of the main products manufactured by xyz
industries is as tabularized below:
Product FY 2015-16
Capacity (nos in million) Utilization (%)
Batteries 1360 66%
Flashlights 12.50 62%
During FY 2015-16, the revenue from the battery segment reduced by 1.3% to `760.19 crore.
The volumes also registered a de-growth of 1.2%. The revenue from flashlight segment reduced
by 14.5% to `206.65 crore during FY 2015-16. The sales volume de-grew by around 18% due to
erratic monsoon coupled with reduction in rural spending and proliferation of cheap flashlights
of poor quality by the unorganized market players.
(ii) Turnover: During FY 2016, the net sales increased by 3.95% to `1326.07 crore. The
increase in net sales may be attributed to the increase in the sales of lighting and electrical
products (LED bulbs, LED panels, battens, tube lights and luminaires) to `104.74 crore in FY
2015-16 (previous year `26.15 crore).
(iii) Profitability and margins: Despite increase in net sales, the PBDIT of the company has
decreased marginally by 2.49% `123.44 crore in FY 2016, mainly on account of increase in
labour expenses and selling and advertisement expenses. During FY 2016, the PAT of the
company increased by 3.30% to `50.64 crore, on account of decrease in interest expenses and
increase in non-operating income.
(iv)Tangible Net Worth: The TNW of the company improved from `142.80 crore as on March
31, 2015 to `194.66 crore as on March 31, 2016, mainly on account of ploughing back of
surplus profit.
(` crore)
Category FY 2014(A) FY 2015(A) FY 2016(A)
Ordinary Share Capital 36.34 36.34 36.34
Preference Share Capital 0.00 0.00 0.00
Reserve and Surplus
General Reserve 298.67 298.67 298.67
Capital Reserve 123.57 123.57 123.57
Surplus in P&L account (32.18) (0.97) 32.18
Share premium 164.12 164.12 164.12
Capital Redemption Reserve 0.00 0.00 0.00
Other Reserve 3.05 3.04 4.77
Less: Revaluation Reserve 0.00 0.00 0.00
Net worth 593.57 624.77 659.65
Intangible assets 498.26 481.97 464.99

23
 Tangible Net Worth 95.31 142.80 194.66
(v) Gearing and adjusted TOL/TNW: The TOL/TNW of the company has improved from
3.32 as on March 31, 2015 to 2.38 as on March 31, 2016. This may be attributed to the
increase in the TNW of the company.
Xyz industries as on March 31, 2016, had an aggregate investment of `2.66 crore in its
subsidiaries. The amount of investment is in line with the investment in subsidiaries as on
March 31, 2015. As on March 31, 2016, xyz industries had loans and advances of `29.73 crore
to its subsidiaries. Consequently, though there was an increase in the level of loans and
advances by xyz, its TOL/Adjusted TNW improved marginally from 3.83 as on March 31,
2015 to 2.74 as on March 31, 2016, on account of improvement in the TNW.
ABC Private Limited is a wholly owned subsidiary of XYZ INDUSTRIES based in Hong
Kong, China, for trading of raw materials from China. The company had registered a turnover
of `39.43 crore in FY 2016 and negligible profit. UVW Limited is also a subsidiary of XYZ
INDUSTRIES, with 99.60% ownership of XYZ. The subsidiary was set up in India for
distribution of flashlights. UVW Limited had incurred loss of `0.06 crore on a turnover of
`0.03 crore in FY 2016.
(vi) Current ratio: As on March 31, 2016, the current ratio of the company was 0.98 as against
0.85 as on March 31, 2015. The components of current assets and current liabilities are as under:
(` crore)
Current Assets March March Current liabilities March March
31, 2015 31, 2016 31, 2015 31, 2016
Cash, bank balance & 2.51 2.51 Bank borrowings 44.39 57.85
FDs
Inventory 259.55 237.41 Short term borrowing 76.29 13.92
& CP
Receivables 48.92 70.54 Trade payables 215.78 213.41
Loans & Advances 23.45 52.76 Current maturity of 33.78 48.79
debts / inst. due
Other current assets 9.29 7.41 Other CL & Provisions 32.95 42.92
Total Current Assets 343.72 370.63 Total Current 403.19 376.89
Liabilities
The company reported total inventory of `237.41 crore and receivables of `70.54 crore as on
March 31, 2016, which together constituted 22.09% of the total gross sales of `1393.90 crore.
(vii) Interest cover: Interest coverage ratio improved to 4.05 in FY 2016 from 3.77 in FY 2015
on account of lower interest outgo and increase in PBDIT of the company.

24
 (viii) Net working capital: As on March 31, 2016, the net working capital of the company
continued to be negative at `6.26 crore (previous year- negative `59.47 crore) on account of
continuation of higher level of sundry creditors.
(ix) Debt Profile: As on March 31, 2016, term liability of the company increased to `87.36
crore as against `71.00 crore as on March 31, 2015 mainly due to increase in term loans from
`52.81 crore as on March 31, 2015 to `66.96 crore as on March 31, 2016. The DER of the
company improved to 0.45 as on March 31, 2016 (0.50 as on March 31, 2015), due to ploughing
back of surplus profit.
(x) Net Cash from Operations: As on March 31, 2016, the net cash from operations was
`76.93 crore mainly on account of increase in the cash generated from sales in FY 2016. The
same is estimated at negative level of `38.45 crore as on March 31, 2017 considering estimated
increase of input cost. The details are as under:
(` crore)
2015 2016 2017
CASH FLOW STATEMENT
Audited Audited Estimated
Cash From Sales 1275.68 1304.45 1546.22
Cash Cost of Sales 986.53 981.10 1224.46
Expenses for Inc. / Dec. in Stocks (7.75) (5.78) 29.18
Cash from Asset Conversion Cycle 296.90 329.13 292.58
Selling, Gen. & Adm. Expenses 221.56 238.04 350.00
Cash From Operations 61.81 75.29 (90.95)
Other current assets 7.50 27.43 1.83
Other current liabilities 10.39 (23.92) (54.33)
Other Income / Expenses (net) (0.99) (5.15) 0.00
Net Cash From Operations 44.92 76.93 (38.45)
Capital Expenditure 27.72 40.30 45.41
Investment in Group Companies 1.26 0.00 0.00
Intangible / Other Term Assets (18.75) (11.68) 28.28
Cash Before Funding 34.69 48.31 (112.14)
Dues to Banks (18.99) 13.46 72.15
Short term Debts (1.14) (62.37) (13.92)
Term Debts 5.11 16.36 56.41
Other Loans & Reserves (17.82) (15.76) (0.01)
Total (32.84) (48.31) 114.63
Cash & Bank Balance 1.85 0.00 2.49
Investments (Other Than long term) 0.00 0.00 0.00
Movement in Cash Assets 1.85 0.00 2.49

(xi) Contingent Liabilities:

(` crore)

25
 Particulars March 31, 2015 March 31, 2016
Disputed
Excise Duty & Customs duty 17.70 17.70
Sales Tax 0.59 0.64
Income Tax 6.00 -
Others (includes ESI, Property Tax, 1.57 1.50
Water Tax etc.)
Total disputed contingent liabilities 25.86 19.84
Normal
Guarantees 33.34 40.45
Total normal contingent liabilities 33.44 40.45
Commitments:
Estimated amount of contracts remaining to be executed on capital account and not
provided for:
Tangible assets 8.75 120.39
Intangible assets 1.43 0.91
Total contingent liabilities 69.38 181.59
Observations /Comments
As on March 31, 2016, XYZ INDUSTRIES had contingent liabilities of `181.59 crore as
against the contingent liabilities of `69.38 crore as on March 31, 2015.

Auditors Qualifications and credentials, if any (and clarifications)

M/s. Deloitte Haskins & Sells, a firm, registered with ICAI (registration no: 302009E), statutory
auditors of XYZ INDUSTRIES, in company’s annual report of FY 2015-16 have qualified that:
(i) The company is generally regular in depositing undisputed statutory dues including provident
fund, investor education and protection fund, employees’ state insurance, income tax, sales tax,
wealth tax, service tax, custom duty, excise duty, value added tax, cess and other material
statutory dues applicable to it with the appropriate authorities.
(ii) There are no undisputed amounts payable in respect of provident fund, investor education
and protection fund, employees’ state insurance, income tax, sales tax, service tax, custom duty,
excise duty, value added tax, cess and other material statutory dues in arrears as at March 31,
2016 for a period of more than six months from the date they became payable.
(iii) Aggregate dues of sales tax, service tax, custom duty, excise duty and value added tax as on
March 31, 2016, which has not been deposited on account of a dispute is `23.88 crore which is
pending with different tax authorities across India.
3.2 YTD Financials of XYZ INDUSTRIES
(` crore)
YTD as on YTD as on

26
 Key Financial Sept 30, 2015 Sept 30, 2016
Parameters
Net Sales 753.52 755.81
PBDIT 69.83 79.58
PBDIT Margin (%) 9.26% 10.53%
PAT 38.48 47.98
PAT Margin (%) 5.11% 6.35%
Cash Accruals 43.83 51.88
Observations /Comments
XYZ INDUSTRIES has registered a marginal increase of 0.30% in net sales to `755.81 crore
during the first 6 months of FY 2017. The company has earned PBDIT of `79.58 crore and
PAT of `47.98 crore during the first 6 months of FY 2017, as against PBDIT of `69.83 crore
and PAT of `38.48 crore during the first 6 months of FY 2016. The company’s PAT during the
first six months of FY 2017, increased by 24.69% to `47.98 crore, mainly due to the decrease
in interest expenses and increase in non-operating income.

3.3 Consolidated Group Financials (As on_March 31, 2016)

(` crore)
Sales 1323.33
Other income 8.11
PBDIT 120.93
PAT 50.60
Cash accruals 79.05
TNW 194.61
Total Term Debt 87.36
Total Debt (incl. ST/BB for WC) 466.68
DER 0.45
TOL/TNW 2.40
Contingent liabilities (CL) 181.59
(TOL+CL) / TNW 3.33
The consolidated financial statements relate to xyz industries and its subsidiaries (holding
company and its subsidiaries)
During FY 2016, xyz industries, as a group, achieved a net profit of `50.60 crore on net
income of `1323.33 crore.
3.3 Financials of Group companies (as on March 31, 2016)
(` crore)
Particulars Sales PAT TNW TOL/TNW
XYZ Industries 1326.07 50.64 194.66 2.38
ABC Engineering Ltd. 135.08 7.93 102.85 0.99
DEG Engineering Ltd. 211.52 (26.78) 137.31 2.43
HIJ Engineering Co. Ltd. 2417.02 (303.77) 113.50 1.76

27
 Name of the BANK’s
group exposure , if
Whether supported by
company(ies) any, in the Credit
Asset category Corporate Guarantee of
/subsidiaries group co / rating
proposed company (Yes/No)
subsidiary co
(FB, NFB)
1 ABC Hong
Kong Private - - - -
Ltd.
2 DEG Ltd. - - - -
TOTAL - -

Investments:

(` crore)
As on March 31, 2015(A) 2016(A)
Non Current
In Subsidiaries
ABC SAS 46.46 46.46
DEG Limited 0.05 0.05
ABC Hong Kong Pvt. Ltd. 2.61 2.61
Less: Provision for decline, other than 46.46 46.46
temporary in carrying cost of investments
Total 2.66 2.66
The investment of XYZ INDUSTRIES in its subsidiaries is `2.66 crore as on March 31,
2016 which is same as the investment as on March 31, 2015.
3.4 Peer Comparison
(` crore)
XYZ ABC Batteries DEG Company HIJ Systems
As on March 31, 2016
Industries Ltd. Ltd.
Net Sales 1326.07 315.36 241.35 1288.36
PBDIT 123.44 19.20 23.06 131.90
PAT 50.64 16.94 16.53 19.43
PBDIT (%) 9.31% 6.09% 9.55% 10.24%
PAT (%) 3.82% 5.37% 6.84% 1.51%
Tangible Net Worth (TNW) 194.66 167.16 94.38 574.93
Current Ratio 0.98 3.68 3.24 1.33
TOL/TNW 2.38 0.48 0.40 1.51

Observations /Comments
i) As may be seen from the above, turnover and net profit of XYZ INDUSTRIES was more than
that of other 3 competitors.

28
ii) Though sales of XYZ were more than its peers, its PAT margin which stood at 3.82 was less
than its peer which was 5.37 and 6.84 respectively.
iii) The current ratio of XYZ INDUSTRIES was lower as compared to its peers, as on March 31,
2016.
3.5 EOD Status (As on March 31, 2016)
Particulars Status EOD Triggered?
(FY 2015-16) (Y/N)
Current Ratio < 1 0.98 Triggered,
condonation is being
sought from CC-I.
TOL/TNW > 3 2.38 Not triggered
Interest cover 3.27 Not triggered
Company incurring Cash Cash profit of `83.37 crore Not triggered
loss
Negative variation of Projected sales- `1464.54 -9.45% Not triggered
more than 10% between crore
provisional & audited Actual sales- `1326.07
results (in the stipulated
crore
parameters) Projected PAT- `53.92 -6.08%
crore
Actual PAT- `50.64 crore
Cross Default (events as - Not triggered
defined at the time of
sanction)
Change in Management No Not triggered

Observations /Comments
As may be seen from the above, EOD has been triggered in respect of current ratio, and the
condonation for the same is being sought from the sanctioning authority.
The current ratio of the company was 0.98 as on March 31, 2016 as against 0.85 as on March
31, 2015. However, the same is estimated to be 1.23 as on March 31, 2017.
3.6 Foreign Currency Exposure
( ` crore)
Name of the Existing Additional Total Proposed Country risk
Country Country Country Country exposure exposure limits
exposure Exposure
Proposed

(I) (II) (III) IV = II + III (V)

NA

3.6.1 Exposures and hedges based on underlying transaction (USD mn) (as on March 31, 2016)
(` crore)

29
 Trade Related Non – Trade
Other trade
Exports Imports Amou
Sr. Name of exposures Expos
nt
No. corporate Expos Expos Expos ures
Amount Amount Amount Hedge
ures ures ures O/S
Hedged Hedged Hedged d
O/S O/S O/S
Xyz
1. 3.53 3.53 53.17 14.86 - - - -
Industries
As per the UHFCE certificate of XYZ INDUSTRIES as on March 31, 2016, certified by the
statutory auditor, the company had unhedged foreign currency exposure of `38.31 crore as on
March 31, 2016.

3.6.2 Exposures and Hedges based on Past Performance (USD MIO)

Exports Imports
Cum.
Amt
Hedge Amt Eligible Cum. Amount Hedge Amt
Eligible Limits (Current
O/S Limits Hedged O/S
FY)
Hedged
Not Applicable

30
4. Assessment of Current Proposal
4.1. Assessment of WC Requirement
i) XYZ INDUSTRIES has been meeting its working capital requirements under consortium
banking arrangement (lead – UVW Bank) with aggregate working capital limit of `250 crore (FB
limit of `130 crore and NFB limit of `120 crore).
ii) UVW Bank, the lead has assessed the WC limit of XYZ INDUSTRIES for FY 2017, at the
existing level of `250 crore (FB limit of `130 crore and NFB limit of `120 crore).
iii) ABC Bank’s share is hence, proposed to be renewed at the existing level of `32.50 crore (FB:
`5.50 crore, NFB: `25 crore, LER as sub-limit of NFB – `1 crore and CMS – intraday/interday
limit of `2 crore).
The latest CMA data annexed at Annexure-I.
4.1.1 Assessment of Fund Based facilities
a) Build up of Current Assets & Current Liabilities
(` crore)
Particulars 2014 (A) 2015 (A) 2016 (A) 2017 (E) 2018 (P)
Raw Material (Indigenous) 77.63 61.92 58.20 69.01 90.01
Months’ holding 1.49 1.20 1.14 1.27 1.57
Raw Material (Imported) 25.09 32.67 30.27 48.00 70.00
Months’ holding 1.81 1.98 1.84 1.78 2.33
Consumable Spares (Indigenous) 4.64 5.02 5.36 6.00 7.00
Months’ holding 12.46 19.25 37.61 28.80 24.00
Stock in Process 68.34 59.92 64.54 82.84 103.00
Months’ holding 0.87 0.74 0.79 0.87 0.98
Finished Goods 81.23 100.02 79.04 142.16 223.00
Months’ holding 1.06 1.25 0.95 1.59 2.28
Domestic Receivables – Amt 48.97 48.92 70.54 95.00 123.00
Months’ holding 0.48 0.44 0.61 0.69 0.78
Export Receivables – Amt 0.00 0.00 0.00 0.00 0.00
Months’ holding - - - - -
Creditors for Purchases – Amt 230.86 215.78 213.41 136.00 150.00
Months’ holding 3.47 3.16 3.15 1.67 1.71
Comment on Holding levels
(i) Raw Material - Holding level for indigenous and imported raw material reduced marginally
to 1.14 months (previous year-1.20 months) and 1.84 months (previous year-1.98 months)
respectively as on March 31, 2016. However, the holding level for indigenous raw material is
expected to increase to 1.27 months as on March 31, 2017, on account of expected bulk purchase
of raw materials by the company. Further, XYZ INDUSTRIES’s product comprises sophisticated
electrical and lighting products with complex internal parts, requiring slightly higher holding

31
period, which may be considered acceptable.
XYZ INDUSTRIES has forayed into trading of imported goods (primarily from China). With the
estimated increase in the level of imported goods in FY 2018, the holding period is projected to
increase to 2.33 months.
(i) Stock in process and Finished Goods: As on March 31, 2016, holding level of stock in
process was 0.79 months (0.74 months as on March 31, 2015). XYZ has entered into new
business segment viz. small home appliances, lighting and electrical products which requires
higher level of holding of stock in process. The same is estimated to increase to 0.87 months as
on March 31, 2017.
As on March 31, 2016, holding level of finished goods reduced to 0.95 months (1.25 months as
on March 31, 2015). The same is expected to increase to 1.59 months as on March 31, 2017. The
company has forayed into new business arenas under different product categories and inventory
buildup is pertinent to exercise control over the markets. Considering the business strategy going
forward, the levels of holding period of finished goods may be considered acceptable.
(iii) Receivables: As on March 31, 2016, holding period of domestic receivables of the company
increased to 0.61 months (0.44 months as on Mar 31, 2015). The company has put forward a new
business sector under its electrical category & home appliances. The new sector would be
engaged in distribution of electrical products of the company to the electrical market. In order to
strengthen the market shares, the company feels that debtors be allowed more time. The same has
been estimated at a slightly higher level of 0.69 months, which may be considered acceptable.
(iv) Trade Creditors: The creditors’ holding period was 3.15 months as on March 31, 2016,
which was in line with the holding period of 3.16 months as on March 31, 2015. However, the
same is estimated at a reduced level of 1.67 months as on March 31, 2017. XYZ INDUSTRIES
has incorporated a wholly owned subsidiary, ABC Hongkong Private Limited, which would be
primarily supplying the raw materials. Further, in order to avail discount from its suppliers, the
company proposes to buy raw materials on cash.
b) Calculation of Maximum Permissible Bank Finance
(`
crore)
Particulars 2014(A) 2015(A) 2016(A) 2017(E) 2018(P)
1. Total Current Assets 331.80 343.72 370.63 510.01 686.01
2. Other Current Liabilities 347.74 325.02 270.25 225.81 315.91
3. Working Capital Gap (15.94) 18.70 100.38 284.20 370.10
4. Min. Stipulated NWC 82.95 85.93 92.66 127.50 171.50

32
5. Actual / Projected NWC (79.32) (25.69) 42.53 154.20 240.10
6. Item 3 Minus Item 4 (98.89) (67.23) 7.72 156.70 198.60
7. Item 3 Minus Item 5 63.38 44.39 57.85 130.00 130.00
8. MPBF (lower of 6 or 7) (98.89) (67.23) 7.72 130.00 130.00
9. Excess borrowings representing shortfall in 162.27 111.62 50.13 NIL NIL
NWC
Comments :
i) The current assets build up of the company mainly comprised of inventory, receivables, other
current assets and cash & bank balances. Overall current assets increased by about ` 26.92 crore
to `370.63 crore as on March 31, 2016, due to the increase in the level of receivables. As per the
company’s audited accounts, debtors exceeding six months were nil in FY 2016.
ii) Other Current liabilities of the company comprised of trade payables, advances from
customers, statutory liabilities etc, except bank borrowings and installments on term loan. Other
current liabilities have reduced from `325.02 crore as on March 31, 2015 to `270.25 crore as on
March 31, 2016, mainly due to the decrease in unsecured short term borrowings.
iii) The company is enjoying fund based limit of `130 crore under consortium banking
arrangement (UVW Bank-lead). The fund based requirement for FY 2016-17 of XYZ
INDUSTRIES has been assessed at the existing level by UVW Bank at `130 crore.
iv) The company had excess borrowings of `50.13 crore as on March 31, 2016. This was on
account of higher level of sundry creditors. The company had excess borrowings as on March 31,
2014 and March 31, 2015, as well. However, the company has not defaulted to any of the banks.
Moreover, the company’s utilization of fund based limit in ABC Bank has been low.
v) It is also proposed to continue WCDL of `3 crore, as sub-limit of cash credit facility at a
reduced rate of FTP plus 100 bps p.a. (Subject to floor of MCLR plus 25 bps p.a.), to meet the
cash flow pattern of the company.
vi) XYZ INDUSTRIES has not requested for any export credit limit. The Company is procuring
raw materials from various suppliers. Since the interest on bill discounting is borne by the seller,
the company opts for payment to its suppliers under PBD mode. The same is cost-effective to
them. Similarly, for effective liquidity XYZ INDUSTRIES gets the bills of its customers
discounted from ABC Bank. Hence the upfront payment received by the company is deployed
for effective working capital management and smooth operations. Hence, we may continue CBD
limit of `3 crore as a sub limit of CC limit.
4.1.2 Assessment of Non - Fund Based facility
UVW Bank (Lead) has assessed the requirement of non fund based facility at the existing level

33
of for `120 crore FY 2017.
a) Letter of Credit (LC):
XYZ INDUSTRIES requires LCs for procurement of raw materials. The company uses LC
facility for purchase of zinc, AAA battery, rechargeable battery, flashlight sales, promotion items
and other raw materials like plastic LED, bulbs, ammonium chloride etc. The company
purchases its major raw material from Hindustan Zinc Limited with a usance period of about 180
days. Further, the company also imports raw materials like electrode and Zinc chloride etc. from
China and Japan where the usance period is about 90 days. Out of the above limit of `120 crore,
ABC Bank’s LC/TCBG share would be `25 crore (within consortium).
Accordingly, LC requirement of the company for FY 2017 has been calculated by UVW Bank,
the lead, as hereunder:
(` crore)
Particulars (Amt in ` crore) Import Domestic
Estimated Total Purchases 323.00 649.64
Purchases under LC 95.00 190.00
Lead Time (Days) 30 20
Credit Usance (Days) 60 180
Total (Days) 90 200
LC Required 23.42 104.10
Total LC required 127.52(say 127)
ABC Bank’s share (fully interchangeable with TCBG 25
limit)
UVW Bank, the lead, has capped the overall requirement of the LC limit at `120 crore.
b) TCBG:
The Company imports raw materials like electrode and Zinc chloride etc under LC and hence,
has requested for TCBG limit to be fully interchangeable with LC limit, for availing buyer's
credit to plan accordingly with its cash flows. To avail buyer's credit, the company would require
TCBG to be executed in favor of the concerned bank. Therefore, continuation of TCBG limit,
fully interchangeable with LC limit is being proposed.
c) Bank Guarantee (BG) [sublimit of LC/TCBG]:
UVW Bank (lead) has not assessed the BG limit for xyz industries. It requires financial
guarantees for payment of excise, customs duty etc. Therefore, continuation of BG limit of `5
crore, as sublimit of LC limit is being proposed.
4.1.3 Assessment for LER Limits
Past performance method
(` crore)
Year Exports Imports

34
 PY (2014) 0.00 165.96
PY (2015) 0.00 198.39
PY (2016) 0.00 197.17
Total turnover (3 years) 0.00 561.52
Average turnover (3 years) 0.00 187.17
Eligible notional 0.00 197.17
Eligible notional = Higher of the average turnover of previous three years or of the last year.

Exchange Rate contracts (` crore)

Current Exposure Notional FC limit for exports Notional FC limit for imports
Proposed FC 0.00 5% 0.00 197.17 5% 9.86
limit
Total Limit 9.86
Forward contract Limit `9.86 crore. Out of the same it is proposed to sanction LER limit
of `1 crore as sub-limit of NFB facilities, for ABC bank.
4.1.4. CMS Inter-day:
The Company is in the business of manufacturing of dry cell batteries, flashlights & lighting
products (lamps and luminaries) and marketing of packet tea. This requires cheque purchase
facility for effective liquidity in operations. Hence, considering the current CMS arrangement of
the Company, it is estimated at `2.00 crore intra-day/inter-day facility and hence, continuation of
CMS line limit (intra-day/inter-day) of `2.00 crore is proposed.
In view of the foregoing, it is proposed to consider renewal of working capital limits of `32.50
crore (CC limits of `5.50 crore with sublimit of WCDL, NFB limits of `25 crore, LER of `1
crore as sublimit of NFB and CMS- intraday/interday limit of `2.00 crore). The terms and
condition are given at Appendix- I.

5. Review of existing facilities : NIL

6. Security Details

35
Security Existing
Primary First charge on the company’sSame as existing
current assets, present and
future by way of
hypothecation of stocks of
raw materials, semi-finished
goods, finished goods, stores,
book-debts and all other
current assets of the company
ranking pari-passu with other
consortium banks – created
Collateral Second charge on theSame as existing Net Block (as on March 31, 2016) -
company’s fixed assets,
present and future, on
properties situated at
Hyderabad (AP), Tiruvottiyur
(Tamil Nadu) and Lucknow
(UP) ranking pari-passu with
other consortium banks –
created.
Guarantees
Wherever Corporate guarantee of any other
company is proposed to be obtained as
additional security, the details of total
number and amount of Corporate
Guarantees issued by such company and its
Net worth be mentioned
Proposed Asset Cover
Existing as on March 31, 2016
Inventory – `237.41 crore
Receivables – `70.54 crore
WC limit - `250.00 crore
ACR – 1.23
Estimated as on March 31, 2017
Inventory – `348.01 crore
Receivables – `95 crore
WC limit - `250.00 crore
ACR – 1.77
`251.89 crore
Term Loan o/s - `115.75 crore.
Net Block available to WC bankers
- `136.14 crore.
WC limit - `250 crore
FACR for WC– 0.54
NA

Details of personal / Assets Liabilities Net worth Contingent liabilities of the

corporate guarantors guarantors (personal /
holding / group company)
NA

Insurance (Coverage, The company has taken insurance cover of `328.71 on current assets
validity & adequacy) against inventory of `232.69 crore (as per peak stock value reported in
stock statement dated September 30, 2016) and `432.61 crore on fixed
assets against net block of `163.90 crore (excluding land, as per audited
accounts for FY 2016). The policies are in force till June 30, 2017. ABC
Bank's name has been included in bank clause.

36
7. Key Risks / Mitigants / Rating

1. Business & a) Stagnant and Mitigant: XYZ INDUSTRIES is a leading

Industry Risks low margin manufacturer of dry cell batteries in India. The
company has strong brand equity with a pan India
distribution network. The core business of battery
remained marginally subdued due to dumping of
cheap Chinese batteries. Hence, the Association of
Indian Dry Cell Manufacturer have applied to the
Government to impose an anti-dumping duty for this
segment.
b) Market Mitigant: The battery market has few players, out of
competition which XYZ INDUSTRIES has market share of 30%,
75% of organised segment in flashlights.
2. Financial a) Default Risk Mitigant: The company is flagship company of ABC
Risks group and financial position of the company appears
good. ABC has been servicing its debt obligations on
time. The company is expected to withstand price
competition and being a listed company has the ability
to raise capital from the market as well as its own
resources. Going by the track record of the company, it
is expected that the Company will perform better in
future.
b) Forex risk Mitigant: Majority of the forex risk arising out of the
above is being hedged by booking forward contracts.
However, the company had unhedged foreign currency
exposure of `38.31 crore, as per the UHFCE
certificate as on March 31, 2016, certified by the
statutory auditor.
3. Management Future The company is in existence for more than seven
Risks management set decades and derives strategic importance to the
up promoters group. The promoters of the company have
considerable experience and expertise in the battery
industry.
4. ECGC Cover NA

5. Country Risk NA
6. Internal Rating LC “A” (5.99) by Risk Dept, on December 09, 2016.

8.Compliance

37
8.1 Compliance with exposure norms:
8.1.1 Cap in absolute terms
(` crore)
Particulars Existing Exposure($) Additional Total Proposed Pre-defined
Documented Exposure Exposure($) limits
Pending Proposed
Documentation
(I) (II) (III) (IV) (V)= II+III+IV (VI)
Company 32.50 - - 32.50 4000
Group 629.50 - - 629.50 11000

8.1.2. (a) As a percentage of Bank's Total Capital Funds (TCF) as on (September 30,2016)
(` crore)
Existing Exposure Proposed Exposure Pre-defined
Total % of XXXX Total % of XXXX limit
Exposure Bank’s capital exposure Bank’s capital
funds funds
Company 32.50 0.09 32.50 0.09 15%
Group 629.50 1.75 629.50 1.75 40%
As on September 30, 2016, XXXX Bank's Capital funds stood at `35,965.66 crore.
8.1.2(b) In case of substantial exposure (i.e. exposure beyond 10% of TCF)

Aggregate substantial Substantial exposure Pre-defined limit

exposure after Total Proposed
Exposure
NA
8.1.3. To individual industry (Consumer Durables)
Existing % of XXXX’s total Proposed Total % of XXXX’s Pre-defined
industry industry portfolio exposure exposure total industry limit
Exposure exposure as on 30- (Additional) exposure as on
09-2016 30-09-2016
Restricted to
10% of
357.31 0.081 - 357.31 0.081 XXXX Bank’s
industry
portfolio.
XXXX Bank’s Total Customer Exposure (TCE) as on September 30, 2016 was `4,40,446.41 crore.

8.2 Compliance in case of Take Over Loans /NBFC/HFC/MFI/CL etc. NA

8.3 Confirmation:
Yes/No/Not Applicable
a. Compliance with Bank’s Credit Policy : Yes, except EOD triggered in

38
 respect of current ratio less
than 1 for which condonation
is being sought from CC-I.
b. Compliance with Product norms / takeover norms : Product norms-Yes, Takeover
norms-Not Applicable.
c. Compliance of last sanctioned terms : Yes
d. Security Documents are valid/in force : Yes
e. Proper charge on securities created in Bank’s favour : Yes. The documentation for the
existing facilities has been
created.
f. Exposure is within Bank’s prudential Norms/RBI : Yes
guidelines
g. Whether company/directors are under Bank’s/RBI/ : As per report generated on
SASF/ECGC/CIBIL (with score) defaulters list. Whether January 17, 2017, the account
Company’s name appears under SMA0/1/2 category (If of XYZ is standard in all the
yes, brief details to be given). banks. Moreover, there are no
overdues in the name of the
directors of the company as
per CIBIL report generated on
December 5, 2016.
h. Whether declared as Wilful defaulter / Non Co-operative No
borrower
i. Any deviation from usual norms : No
j. Whether directors are disqualified under Section 164 of : No
The Companies Act, 2013
k. Any arrears in payment of statutory liabilities by the Co. : No
l. Whether status report/D&B report, if applicable, obtained : Not Applicable
m. Whether there are any adverse Auditor’s comments on : No
Corporate Governance Practices followed in case of
Limited companies - If yes, the observations of the
Auditor’s and response of the company may be suitably
mentioned in the memorandum.
n. Pending litigation against/by the company (If yes details to : The particulars of dues of
be given) sales tax, service tax, custom
duty, excise duty and value
added tax as on March 31,
2016 which has not been
deposited on account of a
dispute is `19.84 crore, which
is pending with different tax
authorities across India.
o. Exchange of information with participating banks has been : Yes
done in the RBI prescribed format
p. Whether a confirmation from the company has been : Yes
obtained regarding the status of different regulatory
compliances.
q. In respect of restructuring proposals, all RBI guidelines : NA

39
 have been complied with

r. In respect of restructuring proposals, the proposed : NA

package is not inferior to that of Consortium Lenders

s. No third parties involved at any stage in the loan sanction : No

process.

8.4. Certification

a. There were no un-rectified irregularities in the account.

b. All formalities regarding documentation and security creation for existing facilities have
been completed.
c. All other terms, including EODs, for existing exposures are in compliance except EOD has
been triggered i.r.o current ratio less than 1
d. The company / promoters / directors / group companies / guarantors do not figure in RBI’s
defaulter list (checked on January 3, 2017), or willful defaulter list (checked on January 3,
2017), or caution advice (checked on January 3, 2017), or CIBIL defaulter list (generated
on December 5, 2016). There are no litigations pending against borrowers, other than
those in the normal course of business. Certificate to this effect has been obtained by the
company and kept on record.
e. Neither Directors of the Bank nor their relatives are interested in the proposal nor do they
hold substantial interest in the borrowing entity. Further, none of the directors of any other
banking company and their relatives are interested in the proposal.
f. None of the relatives of any senior officers of the Bank holds substantial interest or is
interested as a partner or guarantor / director or guarantor of the company. Certificate to
this effect to be obtained from the company and kept on record.
g. The borrowing entity complies with the relevant environmental norms.
h. There are no deviations from the credit policy (including policy on Bill Finance), RBI
policy, FEMA and other related regulatory provisions.
i. There are no cases pending against the borrower / guarantor in any court in respect of any
dues to banks/ financial institutions.
2. Terms of Sanction (as per Appendix-I)

9.Recommendation

40
A. In view of the above, CC-I is requested to approve the proposal for renewal of aggregate
WC assistance of XYZ at the existing level of `32.50 crore [FB (CC) – `5.50 crore with
WCDL / CBD as sub-limit of CC – `3 crore, NFB (LC / TCBG) – `25.00 crore, BG (as
sub-limit of LC /TCBG) – `5 crore, LER (as sub-limit of NFB) – `1 crore and CMS –
intraday/interday limit of `2 crore] to XYZ India Ltd., as per terms and conditions given
in the Terms Sheet at Appendix I to this memorandum, besides normal terms and
conditions applicable to grant of such assistance by XXXX Bank Ltd.
B. The committee is also requested to approve the waivers /deviations /modification etc and
other approvals sought at para 13 of Part I of the memorandum.

ABC ABC 1 ABC 2

AM DGM Sr. RH & GM
Date of Memorandum (date put by last signatory) :

ABC 3
CGM

XXXX Bank Ltd.,

41
 Appendix – I
XYZ India Limited
TERM SHEET FOR WORKING CAPITAL
Facility I II

Limit
Under Cash Credit - `5.50 crore LC/TCBG – `25.00 crore
Consortium : WCDL(Sub-limit of CC) – `3.00 crore BG-`5 crore (sublimit of
CBD(Sub-limit of CC)- `3.00 crore LC/TCBG)
Outside
Consortium : NA NA
Working Capital
Purpose
Cash Credit: MCLR (Y) + 135 bps p.a.,
Pricing payable monthly (present effective
10.50% p.a., MCLR(Y) being 9.15% p.a.)
(% p.a.) WCDL: FTP + 100 bps p.a. (subject to
floor of MCLR (Q) plus 25 bps p.a) (Min.)
(present effective 9.10% p.a., MCLR (Q)
being 8.85% p.a.)
CBD (Upto 90 days) - FTP plus 100 bps
p.a. (min) subject to floor of MCLR (Y)
plus 50 bps p.a.
CBD (Upto 180 days) - FTP plus 100 bps
p.a. (min) subject to floor of MCLR (Y)
plus 100 bps p.a.
Tenor/ Cash Credit: 1 year
Validity WCDL: Max. 90 days;
CBD: Max 180 days.
Repayment / Not beyond the tenor / validity mentioned above or stipulated for individual
Due date facility.
Margins Raw Materials & packing materials:25% Nil
Stores and spares:25%
Stock-in-process:25%
Finished Goods:25%
Receivables (upto 180 days):25%
Security
Primary First charge on the company’s current assets, present and future by way of
hypothecation of stocks of raw materials, semi-finished goods, finished
goods, stores, book-debts and all other current assets of the company ranking
pari-passu with other consortium banks.
Collateral Second charge on the company’s fixed assets, present and future, on
properties situated at Hyderabad (AP), Tiruvottiyur (Tamil Nadu) and
Lucknow (UP) ranking pari-passu with other consortium banks.
Third Party -
Guarantees

42
Events of
Default
Financials Current Ratio < 1, TOL/TNW > 3; Cash Loss (Annual)
Others Cross default
Change of Management, without prior written approval of XXXX Bank
Processing Best effort basis. (Minimum `1 lakh plus applicable taxes)
charges
Other LC/TCBG:
Conditions (a) The Company shall honor commitments on due date.
(b) The Company shall ensure that stocks purchased under LC/TCBG are
shown separately.
(c) Stamped letter of undertaking will have to be furnished to the Bank, while
applying for opening of LCs in favour of indigenous / foreign suppliers.
(d) No drawings will be permitted against the materials covered by usance
drafts / bills drawn under the LCs during the currency of the draft / bills. The
drawing power on the Cash Credit A/c will be worked out after deducting the
value of stocks covered by these bills.
(e) It must be ensured that stocks covered by these usance bills / drafts are
kept separately by the company and the value of such goods should also be
declared in monthly stock statements submitted to the Bank. The company
will not, however, be entitled to drawing power against the stocks received
under LC until the relative bills are paid by them.
(f) The company should ensure that the bills drawn under LCs are retired
promptly either from the funds available under the company’s cash credit A/c
with us and / or from their own resources. The letters of credit will be opened
by the Bank without in any manner implying a commitment to allow
additional credit facilities to the company to retire the bills covered under the
LCs.
(g) The company should submit a stamped undertaking from the directors,
whose names/similar names appears in RBI defaulters list, stating their
position.
BG:
(a) The company shall provide margin upfront and maintain required margin
during currency of Bank Guarantee.
(b) The Bank Guarantees for disputed matters will be issued against 100%
margin only
(c) No Bank Guarantee shall be issued favoring associate concerns
(d) No onerous clause will be allowed in Bank Guarantees to be issued.
(e) Company's liability under Bank Guarantees issued will continue till Bank
Guarantee, in original, duly cancelled is received by IDBI Bank.
Due Date of One year from date of sanction.
next
renewal/
review
Waivers if Continuation of waiver of cash margin of NFB facilities
any proposed

43
Documents: As per consortium / As per Bank’s Norm/Guidelines, viz. Facility
Agreement, Deed of Hypothecation,
Omnibus Counter Guarantee, Board Resolution etc.

Insurance
Assets to be Risks to be covered
Insured Remarks
Current Assets Comprehensive -
& Fixed
Assets
Inspection Frequency
Location of Unit/s Proposed Reasons for relaxation, if any,
Frequency proposed.

44
 Sales Bill Discounting Limit
XYZ India Limited
Term Sheet
i Facility III Sales Bill Discounting Limit (Sub-limit of CC)
ii Limit / Amount ` 3 crore (Rupees Three crore only)
iii Purpose Working Capital requirement.
iv Rate of (Upto 90 days) - FTP plus 100 bps p.a. (min) subject to floor of MCLR
Interest (Y) plus 50 bps p.a.
/discount (Upto 180 days) - FTP plus 100 bps p.a. (min) subject to floor of MCLR
(Y) plus 100 bps p.a.
(To be payable upfront)
v Other charges Documentation charges & out of pocket charges at actuals.
vi Margin Nil
vii Security (i) Bills accepted by drawee
(ii) First charge on the company’s current assets, present and future by
way of hypothecation of stocks of raw materials, semi-finished goods,
finished goods, stores, book-debts and all other current assets of the
company ranking pari-passu with other consortium banks.
viii Tenure of Facility Tenure not to exceed 180 days/ 12 months line
ix Repayment Dates Realization on or before due date.
ix Method / source Out of internal accruals / working capital limits
of repayment
x Method / source Realization of the bill on due dates.
of repayment
xi AdditionalBills Schedule
Documentation Board Resolution and specimen signatures of drawee.
xii Other Conditions The company shall undertake to submit documentary proof for movement
(Facility Specific, of goods
if any ) Only bills covering genuine commercial transactions will be submitted for
discount / purchase.
Documents will be discounted only upon acceptance by Drawee
Payment will be released only to your Cash Credit Account Whenever
there is delay in realisation of the bill, overdue interest will be charged @
BPLR + 5.5% p.a.
(Interest to be paid upfront at the time of discounting).
The receivables (covered by the bills discounted) will not be included in
the stock statements submitted to lending bankers for the purpose of
calculation of drawing power.

45
 Purchase Bill Discounting Limit
XYZ India Limited
Term Sheet
i Facility III Purchase Bill Discounting Limit (Sub-limit of CC)
ii Limit / Amount `3 crore (Rupees Three crore only)
iii Purpose Working Capital requirement.
iv Rate of Interest (Upto 90 days) - FTP plus 100 bps p.a. (min) subject to floor of
/discount MCLR (Y) plus 50 bps p.a.
(Upto 180 days) - FTP plus 100 bps p.a. (min) subject to floor of
MCLR (Y) plus 100 bps p.a.
(To be payable upfront)
v Other Charges Documentation charges & out of pocket charges at actuals.
vi Margin Nil
vii Security (i) Bills accepted by drawee.
(ii) First charge on the company’s current assets, present and future
by way of hypothecation of stocks of raw materials, semi-finished
goods, finished goods, stores, book-debts and all other current assets
of the company ranking pari-passu with other consortium banks.
viii Tenure of Facility Tenure not to exceed 180 days / 12 months line

ix Repayment dates Realization on or before due date.

x Method or source of Out of internal accruals / working capital limits
repayment
xi Additional Bills Schedule
Documentation Board Resolution and specimen signatures of drawee
Xii Other Conditions The company shall undertake to submit documentary proof for
(Facility specific, if movement of goods
any ) Documents will be discounted only upon acceptance by you.
The company shall undertake that the unpaid stock (covered by the
bills discounted) will not be included in the stock statements
submitted to lending bankers for the purpose of calculation of
drawing power.
Only bills covering genuine commercial transactions will be
submitted for discount / purchase.
Discounted proceeds will be paid directly by cheque /DD favouring
working capital bankers of suppliers of raw material.
Interest to be paid upfront

Facility IV LER – Forex Forwards / derivative

Limit `1 crore (Rupee One crore only) [Sublimit of NFB]
Commission As per bank tariff
Other charges Documentation charges & other charges at actual

46
 Tenor Maximum 3 years with break clause of 1 year.
Termination The facilities are valid till one year from the date of sanction. In case it is not
clause renewed by one year from the date of sanction, then all the outstanding
contracts including Spot FX /Forward FX Covers / will be cancelled and
Marked to Market (MTM) will be exchanged.
Method or Out of internal accruals
source
of payment
Documentation Specimen signatures of your officials authorized by your Board of Directors to
accept the facilities and the conditions herein and to give instructions and execute
documents in connection therewith.
Request letter from Authorized Officials indicating / accepting the terms of the
contract for each deal done
Duly Accepted Sanction letter
Contract Note Acceptance
ISDA Master Agreement & Schedules
Risk Disclosure Statement
Covenants Loan Equivalent Risk (LER) is the Bank’s internal estimate and hence is only
indicative of the potential future loss / profit on account of one or more deals.
The models used by the Bank are confidential and are subject to change
without notice.
Kindly note that your liability is not limited to the LER amount since this is
only an estimate at the time of the deal. The client still has the obligation to
honour all commitments of individual deals irrespective of the LER amounts
indicated in the sanction letter.
The company hereby undertake to us:
To supply to us, within one week of their publication, copies of your
provisional quarterly and annual report and audited accounts;
To provide to us promptly information about all material and adverse changes
in your ownership and management;
Notwithstanding what is herein contained, we shall, at any time and from time
to time, be entitled to notify you and thereafter charge interest at such notified
rate and this letter shall be construed as if such revised rate were mentioned
herein. In case of default in the payment of cancellation charges / premium, or
compliance with terms and conditions or breach of specific covenants, etc you
shall be charged interest at the rate of 5.5% above Benchmark Prime Lending
Rate.

47
 The company shall pay to or reimburse all costs, charges, expenses (including
charges between the Attorney or Counsel and Bank and those of our internal
Legal Advisor / Officer and other experts, consultants or professionals),
disbursements, taxes, fees, stamp duties etc. whatsoever, incidental to or
arising out of the facilities, their negotiation, the preparation, execution,
registration and stamping of the documents relating thereto, the preservation or
protection of our rights and interests or the enforcement or realization of any
security or any demand or any attempted recovery of the amounts due from
you. We shall be entitled to debit the amounts of all costs, charges and
expenses to the account and such amounts shall stand secured by all securities
given to or created in our favour in connection with the Facilities. You
indemnify us fully and completely against the liability in respect of all such
costs, charges and expenses stipulated herein whether debited to your account
or not.
So long as any monies are due to us from you under any of the facilities, we
shall have a lien for such amounts on all your credit balances, deposits,
securities or other assets with, any of the offices of the XXXX Bank or of its
subsidiaries anywhere in the world and upon the happening of any of the
events of default referred herein, we shall be entitled to exercise a right of set
off between the amounts due and payable to us and the said credit balances,
deposits, securities and other assets.
The company shall not, except after prior written notice to us at least one
month in advance, make any alterations in your controlling ownership or any
other material change in your management or in the nature of your business or
operations during the period of subsistence of facilities.
Other Details / Supporting of exposures being hedged (underlying) to be supplied
Conditions before contract is opened. The company / firm / proprietary concern to
undertake that the company / firm / proprietary concern has not entered into
any transaction with any other Agency for the underlying transaction hedged
with us and also undertake not to do so in future. The company / firm /
proprietary concern also undertakes to advise the Bank on repayment / pre-
payment closure of the underlying pronto.
Acceptance of this Facility Letter authorizes XXXX Bank Ltd. to close out any
or all outstanding deals at the sole discretion of the Bank if margin in terms of
condition above, is either inadequate or not provided when required.
All monies due to the Bank shall be paid by you on demand / due date /
maturity date / settlement date (as applicable) and Bank reserves the right to
set-off monies due to it against monies payable to you.
In case of trigger of specific event/ covenants the Bank shall have the right to
cancel the related transaction at its sole discretion and you shall pay the Bank
all related monies unconditionally.
Any gains / losses on cancellation to be received / paid upfront

48
Payments All payments / repayments / reimbursements to be made to us under the
Facilities shall be made without fail on the due dates for such payments.
Should any due date happen to fall on a day which is not a bank business day
(which for the purpose of this letter shall mean a day on which this branch of
our bank is open for business) payment shall be made on the following bank
business day and such additional time shall be included in the computation of
interest.
All sums paid to us under the Facilities, whether in respect of principal or
interest or commission or charges or otherwise, shall be paid in full without
any set-off or counter claim and without any deduction or withholding levies,
imposts, duties, charges or withholdings of any nature whatsoever. In the
event of any such deductions or withholdings from such payments shall be
required, you shall pay to us such additional amount as will result in the
receipt by us of the payments which would otherwise have been received if no
withholdings or deductions had been made.
If as a result of any law, regulations or directive, enacted or issued by any
governmental, semi-governmental or other competent authority (or any
variation in the same) the cost of us maintaining the facilities increases, we
shall notify you of the amount or percentage conclusively determined by us of
such increase and you agree that you will on our demand, from time to time,
pay the amounts so notified from the date of our so notifying you.

49
 APPENDIX V
XYZ India Limited
BSR Code Sheet

BSR Codes Codes

DISTRICT CODE

State/District District Code

POPULATION CODE Metro Population

Code:
TYPE OF ACCOUNT

Type of Account Code

ORGANISATION CODE Type of Organization Code

OCCUPATION CODE

Description Code

BORROWER
CATEGORY CODE

Description Code

SECURITY CODE

Description Code

50
ABC ABC 2
AM DGM

51