technical appraisal-final 222010

8/8/2019 Technical Appraisal-Final 222010

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TECHNICAL APPRAISAL BY FINANCIAL INSTITUTION

Name of the Institution (HO) MEETING

TO BE HELD ON:

MEMORANDUM NO:

IDBI

TO CONSIDER THE SANCTION OF TERM LOAN OF RS.21333.33 LACS TO

SHRI SUDHIR A BIDKAR CFO OF JK LAXMI CEMENT LTD. REWA FOR

SETTING-UP A UNIT FOR MANUFACTURING OF CEMENT AT CHORHATA

PLOT NO.5 ,REWA (M.P.)

CIBIL STATUS : Name of the Concern/Promoters is notappearing on CIBIL defaulters list (Public Domain)

Factory Location : Chorhata Plot No.5 ,Rewa (M.P.)

Administrative Office: 6th

Flore John Tower, Sirmour Square Rewa.Residential Address : Village Motibhoyan,Taluka Kalol

Distt. Gandhi Nagar- 382721,GujratConstitution : Public Company

(Rs. in lacs)Application

Received on

Date

Information

Completed

by

Promoters

on

BO/ZO

Appraisal

Completed

on

HO

Appraisal

Completed

on

Loan

Applied

Loan

Appraised

For

HO

Consideratio

n

20.10.10 20.11.10 05.12.10 21333.33

TL

21333.33

TL

21333.33

TL

Products Unit Capacity

being

installed

24 lakh

Tonn

Prodn.

(at 65%)

in 1st year

Utilization based on

One shift working

300 days in a year

65% utilization in

the 1st year, 75% in

2nd year & 90%

from 3rd year

onwards

Selling price

Cement MT 24 lakh

ton

1560000 2nd year – 1800000

3rd year onwards –

2160000

5000 per ton

THIS PROJECT IS:-

• SSI unit

• The promoter is first time loanee to the Bank.

• The promoter is having experience in this line.



PROJECT COST

(Rs.in lacs)Particulars Applied

by the

party

Appraised

by

Bank

For HO

consideration

Security

Cover

Utilization

of Term

loan

Land 1800.00 1800.00 1800.00 1800.00

Building 5400 5400 5400 5400 8533.34

Plant & Machinery

incl. Electric

instillation

24000 24000 24000 24000 12799.99

Misc. Fixed Assets 800 800 800 800

Margin Money for

Working Capital

2002.64 2002.64 2002.64 2002.64

Preoperative &Preliminary

expenses

10.00 10.00 10.00 10.00

Total 34012.64 34012.64 34012.64 34012.64 21333.33

FINANCIAL PARAMETERS

Promoters

Contribution

33.33% Appraised by Means of Finance

Debt-Equity ratio 1.43 Technical Financial (Rs. In lacs)

D.S.C.R. 3.32 Capital 14920.1

Security Margin

(Project)

(Overall)

51.95

Mr.Lokesh

Mgr.

(Tech.)

Mr. Rohit

Singh

Manager

Term Loan 21333.33

Return on own capital 24%

R.O. Capital

employed

10% Mr. Suraj

Gupta, DM

Repayment 8 years Mr. R.Kumar Dy.G.M.Moratorium period 1.5 yrs..

Installments 13 half yrly

Interest Rate 12%

Rebate on timely

payment

1%

Penal Interest Rate on

default

2%

Employment

(persons)

12 Total 36253.34



CONSULTANTS : PQR & Co. C.A.

BANKERS FOR W.C. : IDBI_____________Bank, Rewa

MAIN Machinery SUPPLIER(s) : 1. M/s. Guru Teg Engg. Co., Ludhiana2. M/s. Pareek Power & Pumps Pvt.Ltd.

Indore.

INTRODUCTORY

M/s XYZ Industries, Indore is a proprietary concern of Shri X. The promoter proposesto set-up a unit for manufacturing Readymade Garments at Indore with an installed

capacity of 120000 Units per annum. The proposed unit will be in SSI Sector. The

promoter has acquired land admeasuring 2000 sq.ft. situated at Plot No.

________5______ Indore from IDA. The promoter proposes to construct a buildingadmeasuring 2400 sq. ft. and the estimated cost of constructing the factory building and

auxiliary building is Rs. 10.00 and Rs. 2.00 lacs respectively.

1. PROPOSAL IN BRIEF

The promoter of the concern proposes to establish a unit in the name of M/s XYZIndustries, Indore for manufacturing of readymade garments. The main plant supplier is

M/s. Guru Teg Company, Ludhiana & M/s. Pareek Pvt.Ltd., Indore. The cost of project

of the proposed project is Rs. 60.00 lacs and Shri X has approached the Bank for financial assistance of Rs. 40.00 lacs Term Loan for implementation of the project.

2. PROMOTERS AND MANAGEMENT

The promoter of the concern is Shri X S/o Late Shri Y. Brief details about the promoters

& management is as under:-

Shri X S/o. Late Shri Y Aged 25 years has done B.Tech. in 2006 from DAVV, Indore

and MBA in 2008 from DAVV, Indore. Thereafter he joined a Garment manufacturing

company named M/s. Narayandas Udyog, Indore as a Manager to gain experience. He is

an income tax payee.

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

Promoter/

Guarantor

Age

[yr]

Father’s/

Husband’s

Name

Qualifica

tion

Address Responsi-

bility

Financial

Worth

[F.A.]

I.T.

Payer

Shri X

Proprietor

25 Late Shri Y B.Tech

MBA

Indore Overall 130.96

(120.96)

Yes

3. GUARANTORS



The Promoter shall provide personal guarantee for repayment of loan :

i) Shri X S/o Late Shri Y

4. PAST PERFORMANCE AND FINANCIAL POSITION: Not applicable. It is a new unit.

5. DETAILS ABOUT THE PROJECT

Land Rs. 5.00 lac:

The promoter has acquired land admeasuring 2000 sq.ft. situated at Plot No.

______________ Indore from IDA.

Building Rs. 12.00 lac.

The promoter proposes to construct a building admeasuring 2400 sq. ft. and the estimated

cost of constructing the factory building and auxiliary building is Rs. 10.00 and Rs. 2.00lacs respectively.

Plant and machinery Rs. 24.04 lac.

The Concern has proposed to purchase following machines costing Rs. 24.04 lac .

(Rs.in lac)

Sr.No. Particulars Make/Name of the

Supplier

Amount

01. Sewing Machine M/s Guru Teg Co.,

Ludhiana.

9.29

02. Cutting Machine M/s Pareek Pvt.Ltd.,

Indore.

10.25

03. Spare parts M/s Chhota Bhai & Co.

Khandwa.

1.00

04. Labor Charges for fabrication. 0.50

Total 21.04

05. Packing, Loading, Transport,

Insurance etc.

1.00

06. Erecting & Installation 0.50

07. Electrification 1.50

TOTAL 24.04

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 andfuture 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 thenext 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'sGarment sector is not only limited to urban areas but also growing in rural areas. In thenext 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 isenvisaged 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 theexisting 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 16.01Cash 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 andhalf 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


IV First half yearly installment 3.08


V First 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




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

- Proposed Assets 51.95

Term Loan 40.00

Additional Security if any 00.00

Total 51.95 Total 40.00

• The overall security margin available shall approx. 130%. (The additional securityis 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

PROJECTThe 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

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).

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.



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 AmountLand 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’soff period. The details are as under:

Particulars Amount

I No repayment in the first year 0.00

II First half yearly installment 0.00


III First half yearly installment 3.08


IV First half yearly installment 3.08Second half yearly installment 3.08



V First half yearly installment 3.08


VI 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 ControlBoard.

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 theCorporation.

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.*****

technical appraisal-final 222010

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