TECHNICAL APPRAISAL BY FINANCIAL INSTITUTION

Name of the Institution (HO) MEETING

TO BE HELD ON:18/11/10
MEMORANDUM NO: 45
IDBI

TO CONSIDER THE SANCTION OF TERM LOAN OF RS. 73665.24

LACS TO SHRI MANOJ GAUR OF JP ASSOCITS LTD. REWA FOR SETTING-
UP A UNIT FOR MANUFACTURING OF CEMENT AT PLOT NO 254,BLOCK
NO.1_VILL-Bela (M.P.)

CIBIL STATUS : Name of the Concern/Promoters is not

appearing on CIBIL defaulters list (Public Domain)
Factory Location : PLOT NO 254,BLOCK NO.1_VILL-Bela ,Rewa (M.P.)

Administrative Office: Platinum Plaza 8th flore JP Puram, sector 24 Noida

Residential Address : Yamuna Vihar JRP Rewa (M.P.)
Constitution : Public Company

(Rs. in lacs)
Application Information BO/ZO HO Loan Loan For
Received on Completed Appraisal Appraisal Applied Appraised HO
Date by Completed Completed Consideratio
Promoters on on n
on
21.9.10 12.10.10 19.10.10 73665.24 73665.24 TL 73665.24
TL TL

Products Unit Capacity Prodn. Utilization based on Selling

being (at 70%) One shift working 300 price
installed in 1st year days in a year 70%
32 lakh Ton utilization in the 1st year,
78% in 2nd year & 80%
from 3rd year onwards
Cement Tons 32 lakh ton 2240000 2nd year Rs.5200/
2400000 ton
3rd year onwards –
2560000

THIS PROJECT IS:-

• SSI unit
• The promoter is third time loan to the Bank.
• The promoter is having experience in this line.
PROJECT COST
(Rs.in lacs)
Particulars Applied by Appraised For HO Security Utilization
the party by consideration Cover of Term
Bank loan
Land 5000.00 5000.00 5000.00 5000.00
Building 19391.8 19391.8 19391.8 19391.8 14733.48
Plant & Machinery 82537.7 82537.7 82537.7 82537.7 58931.76
incl. Electric
instillation
Misc. Fixed Assets 50 50.00 50.00 50.00
Margin Money for 2,339.32 2,339.32 2,339.32 2,339.32
Working Capital
Preoperative & 45.00 45.00 45.00 45.00
Preliminary
expenses
Total 109,363.82 109,363.82 109,363.82 109,363.82 73665.24

FINANCIAL PARAMETERS
Promoters 33.65% Appraised by Means of Finance
Contribution
Debt-Equity ratio 2.00 Technical Financial (Rs. In lacs)
D.S.C.R. 2.26 Capital 35698.58

Security Margin Virendra Mr.Ram Term Loan

(Project) Singh Bahadur 73665.24
(Overall) 97250.00 Bajaj, , Singh, CFO
Mgr.
Return on own capital 24% (Tech.)
R.O. Capital employed 8% Mr.Ravi
Shukla , DM
Repayment 8 years Mr.YS Pant,
Moratorium period 1.5 yrs.. Dy.G.M.
Installments 13 half
yrly
Interest Rate 12%
Rebate on timely 1%
payment
Penal Interest Rate on 2%
default
Employment (persons) 1000 Total 109363.82
CONSULTANTS : Lal Bahadur & Sons co.
BANKERS FOR W.C. : CANARA___Bank, Noida
MAIN Machinery SUPPLIER(s) : 1. HEW Jaypee Himanchal Pradesh
2. M/s. Jhon And Brothers Canada.

INTRODUCTORY
JP Associats, Indore is a proprietary concern of Shri Manoj Gaur The promoter proposes
to set-up a unit for manufacturing Cement plant at Bela with an installed capacity of 3.2
MTPA. The proposed unit will be in SSI Sector. The promoter has acquired land
admeasuring 50 hectare. situated at Plot No. 254 Bela from Villegers. The promoter
proposes to construct a building admeasuring .10 hectare. and the estimated cost of
constructing the factory building and auxiliary building is Rs. 15000.00 and Rs. 500.00
lacs respectively.

1. PROPOSAL IN BRIEF
The promoter of the concern proposes to establish a unit in the name of Jaypee Associats,
Limited for manufacturing cement. The main plant supplier is HEW Jaypee
HimanchalPradesh, Jhon And Brothers Canada.. The cost of project of the proposed
project is Rs. 109363.82 lacs and Shri X has approached the Bank for financial assistance
of Rs. 73665.24 lacs Term Loan for implementation of the project.

2. PROMOTERS AND MANAGEMENT

The promoter of the concern is Shri Mamoj Gaur S/o Jai Praaksh Gaur Brief details
about the promoters & management is as under:-

Shri Manoj Gaur S/o.Shri Jai Prakash Gaur Aged 55 years has great experience on
this field. He commenced more than 4 projects in various states of India. He is a qualified
person having degree of engineering and management.

2(b) Details about associate concerns

Not applicable.

2(c) The other details about the promoters be given in the following format.

(Rs. In lakh)
Name of the Age Father’s/ Qualifica Address Responsi- Financial I.T.
Promoter/ [yr] Husband’s tion bility Worth Payer
Guarantor Name [F.A.]
Shri Manoj 55 Shri Jai BE Noida Overall 190000 Yes
Gaur Prakash
Gaur

3. GUARANTORS
The Promoter shall provide personal guarantee for repayment of loan :
i) Shri Manoj Gaur S/o Shri Jai prakash Gaur
4. PAST PERFORMANCE AND FINANCIAL POSITION:
Have a great market share in cement industry, continuously profit margin
increases. Financially company is very strong.

5. DETAILS ABOUT THE PROJECT

Land Rs. 5000.00 lac:

The promoter has acquired land admeasuring 50 Hc. situated at Plot No 254 Bela
purchased from land lords who are villagers.

Building Rs. 15500.00 lac.

The promoter proposes to construct a building admeasuring 10 hc. and the estimated cost
of constructing the factory building and auxiliary building is Rs. 15000.00 and Rs. 500.00
lacs respectively.

Plant and machinery Rs. 75000.00 lac.

The Concern has proposed to purchase following machines costing Rs. 75000.00 lac .
(Rs.in lac)
Sr.No. Particulars Make/Name of the Amount
Supplier
01. Sewing Machine M/s Guru Teg Co., 9.29
Ludhiana.
02. Cutting Machine M/s Pareek Pvt.Ltd., 10.25
Indore.
03. Spare parts M/s Chhota Bhai & Co. 1.00
Khandwa.
04. Labor Charges for fabrication. 0.50
Total 21.04
05. Packing, Loading, Transport, 1.00
Insurance etc.
06. Erecting & Installation 0.50
07. Electrification 1.50
TOTAL 58931.76

Misc. Fixed Assets: Rs. 5.00 lacs.

Misc. fixed assets is estimated at Rs. 5.00 lacs which includes fire fighting equipment,
safety equipment, office furniture and fixtures, etc.

06. PRODUCT & MARKET DETAILS:

The unit is proposed to be established at Indore for manufacturing of readymade
garments. Indore is a growing area of Madhya Pradesh where numbers of retail garment
units exist. There is a good market base in all over India. Looking to the present and
future market demand of the readymade garments, the concern is not anticipating any
problem regarding market.

Madhya Pradesh has a prominent place as a leading textile centre of the Country. The
state has a thriving textile cluster in the south west region (Malwa). Since the Malwa belt
has a large cotton growing area, large number of textile mills are clustered around Indore,
Ujjain, Burhanpur, etc.
MANUFACTURING PROCESS:
Pattern

First, a pattern maker draws a pattern based upon measurements (of

samples) that were supplied by the supplier or the buyer's
merchandiser

Cutting

The material is ready to be cut, and it is laid out in layers on a cutting

table.

The cutting machine makes the separate piece and then marked with
it's size, using a piece of chalk so it won't show after washing.

The Stitching

After cutting on the cutting table the garments are then send for
stitching.

Inspection

The garment is inspected for faults and loose threads are cut.

The Packing

After that it goes on to the garment packing room where final quality
inspection takes place and paper tags and labels are placed or
attached.
 Other Factory Snaps

MARKET DETAILS:

The Indian Garmentl industry undergoes major revolutions. It is gradually becoming the
next boom industry. In India, there will be the fastest growth in Garment manufacturing.
The consumer buying patterns and behavior are changing steadily. The growth of India's
Garment sector is not only limited to urban areas but also growing in rural areas. In the
next five years, it is expected that, India's Garmentl industry will expand more than 80%.

EFFLUENTS:
The process of manufacturing of garments shall not discharge any harmful effluent. It
shall also not have any air/water pollution and no hazardous solids shall be produced.
However, a suitable condition is being stipulated to obtain NOC from competent
authority i.e. Pollution Control Board.

7. COST OF PRODUCTION :
- Average Cost of Production is Rs. 175/- per garment.

08. SELLING PRICE :

- Average selling price is Rs. 210/- per piece.

09. MARKETING ARRANGEMENTS

The readymade garments shall be sold through dealer net work.
10. ARRANGEMENT OF UTILITIES

RAW MATERIAL:
RAW MATERIAL:
The main raw material required for the unit is Cloth, which is easily and locally available.
The unit is being set-up at Indore & there is 15-20 cotton ginning factory are working in
and around Indore & they are producing cloth as finished product, so, no difficulty is
envisaged in procurement of Raw Material. The requirement of raw material at 100%
capacity utilization has been estimated.

POWER:
Required Power connection shall be available from State Electricity Board from ST line
connection. Since the unit is being set-up in Industrial Estate, getting power connection
shall not be a problem for the concern.

WATER:
Water will be required for drinking and sanitation, which is already available in the
existing premises through, tube well.

MANPOWER:
The manpower requirement of the unit is 8 workers ( Skilled & Unskilled workers) & 4
administrative. Skilled and unskilled workers are locally available.

11. PROFITABILITY ESTIMATES:

The concern has estimated following turnover and profit for first five years of its
working after providing interest depreciation and taxes:-

(Rs in lacs)
Particulars I II III IV V VI VII VIII
Capacity Utilization 60% 70% 80% 80% 80% 80% 80% 80%
Turnover 143.64 175.14 200.34 201.60 201.60 201.60 201.60 201.60
Profit before
Depreciation,
Interest and Tax 23.13 22.51 25.70 24.94 24.94 25.54 25.54 25.54
Interest 6.39 6.69 6.41 5.68 4.94 4.20 3.47 2.73
Depreciation 5.00 4.37 3.82 3.35 2.94 2.59 2.28 2.02
Profit before tax 11.75 11.45 15.47 15.91 17.05 18.74 19.79 20.79
Profit after tax 9.68 9.47 12.29 12.60 13.40 14.58 15.31 16.01
Cash accruals 14.68 13.84 16.11 15.94 16.34 17.17 17.59 18.03

Detailed profitability estimates together with Fund flow statements are appended
herewith in CMA Data Form

12. REPAYMENT:
The loan is proposed to be repaid in 8 years in 13 half yearly installments with one and
half years’ off period. The details are as under:
[Rs. in lacs]
Particulars Amount
I No repayment in the first year 0.00
 II First half yearly installment 0.00
Second half yearly installment 3.08

III First half yearly installment 3.08

Second half yearly installment 3.08

IV First half yearly installment 3.08

Second half yearly installment 3.08

V First half yearly installment 3.08

Second half yearly installment 3.08

VI First half yearly installment 3.08

Second half yearly installment. 3.08

VII First half yearly installment 3.08

Second half yearly installment 3.08

VII First half yearly installment 3.08

Second half yearly installment 3.08

Total 40.00

13. DEBT EQUITY RATIO:-

(Rs.in lacs)
Particulars Amount ( I Year)
Term Loan 40.00
Total 40.00

Net worth 20.00

Total 20.00
DEBT-EQUITY RATIO 2:1

14. SECURITY SCENARIO:

The security scenario vis-à-vis debt exposure shall be as under:-
[Rs.in lacs]
Particulars Amount Loan Amount
Prime Security Term Loan 40.00
- Proposed Assets 51.95
Additional Security if any 00.00
Total 51.95 Total 40.00

• The overall security margin available shall approx. 130%. (The additional security
is in form of freehold land admeasuring 8000 sq.ft. located at KH. No.78/2, 79/3
(Part) P.H. No.87, Industrial Area, Indore belonging to Shri X Proprietor of
M/s.XYZ, Indore)..

15. TECHNICAL FEASIBILITY

 The Manager (T) of the Corporation Shri A has examined the Technical
feasibility of the project and reported that the project is technically viable. His
report is on record.

16. IMPLEMENTATION SCHEDULE & PRESENT STATUS OF THE

PROJECT
The Building has been purchased and all the machinery has been identified. The
project is likely to be implemented within three months.

17. FINANCIAL INSTITUTIONS PRIOR EXPERIENCE

The Corporation’s experience of financing in this portfolio is satisfactory.

18. BROAD ASSUMPTIONS UNDERLYING PROFITABILITY ESTIMATES

Sr.No. Parameters Assumptions
01 Installed Capacity 120000 Garments
No. of working days 300
No. of shifts One
% Capacity Utilization Ist Year - 60%
2nd Year - 70%
3rd Year onwards – 80%
02. Raw Material – Cloth Rs. 140 per Mts.
03. Sale Price Rs. 210 per garment
04. Salary & Wages 12 persons 20% benefits per year
05. Power & Fuel ST Connection which shall be proposed to
be availed from MPEB.
06. Depreciation WDV method
07. Interest on Term Loan @12% p.a.
08. Interest on Working Capital @12.50% p.a.

19. RECOMMENDATIONS:
Bank's appraisal team has recommended sanctioning a Term Loan of Rs. 40.00 lacs
(Rupees Fourty Lacs) to Shri X, Prop. of M/s XYZ Industries, Indore, for setting up a
new unit for manufacturing of readymade garments at Indore (MP).

MANAGER DY. MANAGER

SECURITY : FIRST LEGAL MORTGAGE/ LEGAL MORTGAGE
a) By way of Equitable mortgage of Land admeasuring 2000 sq.ft. and building, of
the concern. admeasuring 2400 sq.ft. situated at Indore (M.P.)

b) Land (freehold) admeasuring 8000 sq.ft. situated at No. 87, Industrial Area,
Indore, belongs to Shri X, Prop. of the unit as additional security.

c) By way of hypothecation of plant & machinery.

d) The firm shall lodge post dated cheques for repayment of entire principal and for
Five years of interest amount.

MARGIN: - More than 25%

UTILIZATION:
(Rs. in lacs)
Particulars Amount
Land 5.00
Building 17.91
Plant & Machinery 24.04
Furniture 5.00
Preoperative and preliminary exp. 3.00
Margin Money for working capital 5.05
Total: 60.00

INTEREST:
@ 12% p.a. payable yearly on term loan.A penalty of 2% will be charged in case of
default for the period of default and on the amount of default. A rebate of 1% shall be
allowed for timely repayment of principal and interest installments.

GUARANTEE:
Personal guarantee for repayment of loan along with interest shall be offered by:

1) Shri X S/o Shri Y

REPAYMENT:
The loan is proposed to be repaid in 8 years in 28 quarterly installments with one year’s
off period. The details are as under:
Particulars Amount
I No repayment in the first year 0.00

II First half yearly installment 0.00

Second half yearly installment 3.08

III First half yearly installment 3.08

Second half yearly installment 3.08

IV First half yearly installment 3.08

Second half yearly installment 3.08
 V First half yearly installment 3.08
Second half yearly installment 3.08

VI First half yearly installment 3.08

Second half yearly installment. 3.08

VII First half yearly installment 3.08

Second half yearly installment 3.08

VII First half yearly installment 3.08

Second half yearly installment 3.08

Total 40.00

CAPITAL:
The firm shall invest capital of Rs. 20.00 lacs towards implementation of the project
before release of sanctioned loan.

PRE FIRST DISBURSEMENT CONDITIONS:

a) Copy of Registration papers of building is obtained from competent
authority.
b) Site plan/Map duly approved from competent authority
c) Sanction of power by MPEB.
d) Arrangement of required working capital is made with the Bank
e) Receipt of Air and Water Pollution Clearance from M.P. Pollution Control
Board.
f) Receipt of C.A. certified Net worth Statement of the promoters.
g) Receipt of favorable bank opinion about the concern, its promoters,
guarantors and associate concerns.
h) Paper Publication of the mortgage of Prime Securities and Additional
security.
i) Necessary legal documents are executed as per legal advice of the
Corporation.

OTHER CONDITIONS:
i) The sanctioned loan will be automatically cancelled, if documentation is not
done within nine months from the date of sanction. An extension of 3 months
can be given on deposit of additional fees @ 0.10% of the sanctioned loan.
ii) In case the full amount of loan is not availed within a period of 15 months from
the date of sanction, the balance loan will automatically be cancelled. An
extension of 3 months can be given on deposit of additional fees @ 0.10% of
the balance unavailed loan.
iii) The promoter/guarantors shall give undertakings stating that in case of the
Bank’s loan account goes out of order; the Bank shall have a right to publish the
name of the company and its promoters in the newspaper or through other
media and may publish their names in the defaulter list of CIBIL.
iv) Fixed Assets shall be insured with assignment in favor of the Banks.
v) No assistance from other financial institution should be availed on assets under
consideration, without prior consent of the Bank.
*****