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KERALA FINANCIAL CORPORATION

BO APPRAISAL MEMORANDUM (COMMON FOR SCHEME NO 1)

DOC NO. AMP1F07

ZONESub:- Proposal for term loan of Rs....................lakhs to ….....................................- reg.

PAGE NO. 1 OF 29DATE 15.05.2012

PART I (ABSTRACT)

Application Regn. No. & date:

Amount applied for : Rs. Lakhs

Amount recommended : Rs. Lakhs

New Loan/Additional Loan :

(in case of additional loan give the existing principal outstanding)

Sanctioning Authority :

1. Name of the the Unit :

2. Name of Chief promoter :

3. Address:

a) Regd.Office :

b) Concern :

c) SSI/MSME Registration EM No. with date (if any) :

4. Constitution :

5. Date of incorporation / Registration / : Commencement of activity :

6. (a) Name of product/ service :

(b) Industry code :

7. Scheme under which assistance sought for :

8. Whether new/existing :

9. Whether Manufacturing /Service sector :

10. Whether Micro/Medium/ Small Enterprise :

11. Whether eligible for State /Central subsidy :

12. Cost of the project : Rs. Lakhs

13. Promoters contribution : Rs. lakhs

14. Debt Equity Ratio :

15. Debt Service Coverage Ratio :

16. Overall Asset Coverage Ratio :

17. IRR (before tax) :

2

18. Break even point

In terms of capacity :

In terms of sales / income : Rs. lakhs

19. Pay Back period :

20. Employment generated :

21. Whether KYC Norms & CIBIL report satisfactory:

22. Score/ rating in Credit Rating :

23. Whether interest reduction allowed : (as per credit rating, SC/ST, Women entrepreneur etc)

24. Whether CGTMSE opted(Yes/No) :

25. Whether Energy saving involved(Yes/No) :

26. Whether Bank Take over involved :

27. Whether the unit located in BO jurisdiction area:

If no give details of prior permission taken :

28. Date of commencement of Commercial operations :

29. Appraisal done by : Name Designation

PART II

1. INTRODUCTION (Briefly describe the purpose for which the loan has been applied for)

2. PROMOTERS AND MANAGEMENT

(a) Particulars

(i) Partnership Firm

Date of Registration with Registrar of firms

Whether partnership deed allows the activity proposed

Name of partners

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(ii) Private or public limited companies

Date of Incorporation

Place of Incorporation

Name of company as per certificate of Incorporation

Whether Activity proposed has been allowed in the Memorandum of Association and Articles of Association

Authorised capital

Paid up capital

Borrowing power allowed as per MoA

Details of charges created as per Search Report

Whether the details of present Directors as per statement from ROC or search report from Company Secretary collected

Certificate from Company Secretary that company has complied with all provision as per Companies Act

(iii) Societies

Date of Registration

Whether certified copy of resolutions of the governing body and general body collected

Whether byelaws of the society collected

Whether the activity proposed is allowed as per the byelaws of the society

(iv) Trust

Specify whether Private Trust or Public Trust

Whether Trust Deed collected

Whether the trustees are entitled to avail loan and mortgage the trust properties.

(b) List of Board Members /Partners/Co-Obligants/Guarantees/Executive Members/Directors/Trustees

Name Designation Contact Address Age Phone Number

Relation with chief promoter

Whether giving personal

guarantee

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(c) Share Holding Pattern

Name of shareholder/

partnerNo of Shares Total Share value Percentage

Whether giving persona

guarantee

Total

3. MANAGEMENT AND TECHNICAL COMPETENCE

(Details of Qualification & Experience of Promoters and other technical Experts)

Name Designation Qualification Experience

4. SOLVENCY OF BOARD MEMBERS /PARTNERS/ CO-OBLIGANTS/ GUARANTORS AS PER AFFIDAVIT

(in lakhs)Name Details of

assets(movable & immovable)

EstimatedValue of

asset

Details of liabilities

Estimated value of liabilities

Net Asset

Annual income

based on last years IT

returns

5. KYC NORMS AND AML STANDARDS

(a) Details of Identity proof (to be verified with original and signed )

Name of Promoters/ Guarantors

Voters ID No/UID No

PAN No Ration Card No

Other ID with No if any

Pending criminal cases if

any

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(b) Credit Report from Bank

(credit report and bank statements of all banks of all promoters/unit to be obtained and details written here)

(c) Field Officer Report (give details with remarks)

Name :Designation :

(d) Details of bank account

Name of Unit / Promoters

Bank Name, Address & account No(1)

Bank Name, Address & account No(2)

Remarks

(e) Details of loans taken from other banks.Sl No

Name of institution Loan sanctioned /availed

Balance O/s

Arrears Loan category

Whether credit rating obtained

(f) Details of previous assistance from KFC (if any)(in lakhs)

Loan No Sanction date

Amount sanctioned

(a)

Amount disbursed

Outstanding as on----

The present proposal

(b)

Totala+b

(g) Group concerns/firms

(Rs. in lakhs)Sl. No.

Affiliated group companies/firms

Nature of Business

Any financial dealing with the

Corporation

Name and address of the Banker Turnover Net worth

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(h) Details regarding CIBIL Report of Unit/ Board Members /Partners/ Co-Obligants/Guarantors

Name of Unit & Promoters

CIBIL Score(individuals)/Opinion (unit/associated unit)

Remarks

(i) RBI’s caution list /willful defaulters’ list

State if the name of the company or its promoters, directors/partners/associated concerns appear in any of the following list.

Sl.No. Name of organisations

Whether name of unit/promoters/

associated concerns appear

Remarks

1 CIBIL list of suit filed defaulters of Rs. 1 crore and above.

2 CIBIL list of suit filed accounts of willful defaulters of Rs. 25 lakh and above.

6. REMARKS ON MANAGERIAL APPRAISAL

(write detailed remarks on managerial competence with following information)

Necessary local enquiry regarding promoters and unit have been conducted and general opinion about then is good. Original KYC documents are verified and photocopies are kept in file. Advocate signed Affidavit and gazette officer signed photo verification certificate is procured and kept in file. The managerial/technical competence/qualification of the promoters and technical experts are sufficient to run the unit. It is concluded that the managerial appraisal is satisfactory

PART III(TECHNICAL)

1. LAND AND LOCATION

The site is located near which is KM away from junction towards The plot is meters from .-----cents of land identified by the Legal Officer and it is sufficient for the proposed activity and only the value of the said area is taken into account for the computation of the project cost. The site has motorable access.

2. BUILDING AND CIVIL STRUCTURES

(a) Building permit No & date : (specify if it is not in the name of the loanee)

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(b) Area approved :(c) Total estimated value :(d) Details attached as : Annexure 'C'

3. FLOOR WISE ALLOCATION OF FACILITIES OF BUILDING

Floor type Facilities Proposed

Covered Area Rate/m2 Cost Estimated

Foundation

Basement

Ground Floor

First Floor

(Give details of all floors)

4. PLANT AND MACHINERY

The total cost of plant and machinery is estimated at Rs.A detailed list of Plant and Machinery required for the unit is given in Annexure-'D'The plant and machinery listed in Annexure- D are essential and sufficient for

the level of operations envisaged. Give reasons for the suppliers selected.

(In case, manufacturer/supplier selected are not known to the Corporation, a special condition to the effect, that disbursement would be made only after physical verification/performance evaluation may be stipulated.)

5. OTHER ASSETS IF ANY

6. DETAILS OF EXTERNAL VALUATION TAKEN (IF ANY)

( If value of land/building/machinery exceeds Rs. 1 crore or if loan amount exceeds Rs. 2.5 crore).

Name and address of approved valuer :

7. SPECIAL FACILITIES IN THE PROJECT (EXISTING / PROPOSED)

8. UTILITY SERVICES

a) Power: The total connected load is KW/KVA. The annual power charges including lighting is about Rs............ The consumer contribution/deposit payable to KSEB is estimated at Rs..............

The promoters have obtained/has obtained a feasibility certificate from KSEB regarding allocation of power supply. (Extra line if any to be drawn or deposit if any to be given etc. are to commented. DG set if any

included is also to be commented.) Diesel cost to be shown.

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b) Water: Water is required for industrial and general purposes. Requirement per day is about ….........ltrs. It is to be met from the existing/proposed well or protected water supply system.c) Transportation: The proposed site is located by the side of a

…............................................. Hence transportation by road is convenient. The nearest railway station is …....... which is about …........KM from the site.

d) Effluent disposal

(Harmful / No harmful effluent is generated during the process. (The arrangements provided / to be provided to be commented. State whether

NOC from PCB is required)

9. MANUFACTURING PROCESS

(manufacturing activities / various services offered)(Preferably give a flow chart)

10. RAW MATERIALS/INPUTS AND CONSUMABLES AT THE INSTALLED CAPACITY(100%) The annual requirement of raw materials and consumables for the unit at installed capacity on single shift basis is given as below for single shift operation / working.-

Sl No.

. Name of the item RequirementsPer year

Rate / Unit Total

11. PRODUCT MIX/INCOME FROM SERVICES OFFERED AT 100%

The details of income adopted for computation of profitability of the concern at installed capacity is given below for 1 shift working

Income from Products/services

No./qty Rate/day/unit No.of unit/day Total income

12. INCOME FROM OTHER FACILITIES (IF ANY)

13. MAN POWER REQUIREMENTS (in lakhs)

Sl No.

Designation Number of employee

Annual Salary per employee

Total annual expenses

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Total

14. DETAILS OF STATUTORY CLEARANCES

Sl No

Certificate/clearance Authority Validity Remarks (Obtained/

Not Obtained /Not Applicable)

Building construction permissionPollution Control BoardAllocation for power supply/feasibility for giving power supply by the KSEBApproval by the Electrical InspectorateLicense for the import of machinery.NOC from Fire Department Airport Authority of IndiaExplosive License Forest ClearanceQuarrying permitLicense for import of machineryPermission to run the unitCoastal Regulation zone Clearance

15. SCHEDULE OF IMPLEMENTATION

Sl. No

Description Duration in weeks/month Current status

1 Land acquisition and leveling 2 Construction of building 3 Placing orders for machinery 4 Arrangement for Power 5 Acquisition of Plant and machinery 6 Installation of machinery 7 Recruitment of persons 8 Procurement of raw materials 9 Trial run 10 Commercial production

It is expected that the unit can start commercial production within a period of weeks/months from the date of drawal of first installment of the loan.(Give reasons for variation if any in the implementation schedule from that proposed by the promoters)

16. REMARKS ON TECHNICAL APPRAISAL

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(Write opinion on technical feasibility of the project in view of the infrastructure facilities available , land & location, raw material availability, technology etc)

PART IV(FINANCIAL)

1. PAST PERFORMANCE OF THE UNIT (IF EXISTING)

(a) Brief description of the unit.

(The balance sheet analysis of the existing unit (if) to be annexed as Annexure 'A'. Give comments on the trends in income, expenditure, profit, debt, networth, DER, current ratio, quick ratio, debt ratio etc.)

(b) Brief description of the associated / sister concern

(The stake of the promoters in the associated /sister concern to be shown)(The balance sheet analysis of the associated / sister concern to be annexed Annexure 'B'. Give comments on the trends in income, expenditure, profit, debt, networth, DER, current ratio, quick ratio, debt ratio etc.)

2. COST OF THE PROJECT (Rs.in lakhs)

Assets taken into project cost for finance Cost

projection by applicant

Reasons for variation**Cost already

incurred(a)

Cost to be incurred

(b)

Total(a+b)

Land ( cents) Building and civil structures Contingency @ 10 % Plant and Machinery Contingency @ 10 % Equipment and tools Contingency @ 10 % Furniture and Misc.Items Vehicle Preliminary & Pre-op.expenses Working Capital* Total

* In case working capital is included in the project cost then the source for the same has to be mentioned in the Means of Finance.

**(Give reasons for variations in project cost from the project report submitted by the applicant)fffd

(Land value shall not exceed 50% of the promoters contribution)

3. PRELIMINARY AND PRE-OP.EXPS. (Rs.in lakhs)

Item AmountApplication processing fee Company registration and other expenses including project report Interest during construction period Supervision charges during construction

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period Start up expenses Total

4. MEANS OF FINANCE (Rs.in lakhs)

Item Existing Proposed Total Percentage Minimum percentage

as per scheme

Means of Finance as per

applicant

Reasons for variation

Promoter contributionTerm Loan from K.F.COthersTotal 100

5. RAISING OF PROMOTERS CONTRIBUTION

(Source of PC should be mentioned) 6. WORKING CAPITAL CALCULATION

Annual Turnover : …....................... lakhsAnnual cost of sales: ….................. lakhs

(Rs. in lakhs)Sl No Particulars Requirement

in days Amount Bank Finance

Margin Money

1 Stock in Trade(a) Raw Material(b) Work in progress(c) Finished goods

2 Receivables

3 Advances

4 Cash/Bank

5 Others

A TOTAL (1 to 5)

Less:

1 Creditors

2 Advance/Deposit Received

3 Others

B TOTAL (1 to 3)

6 Working capital required (A-B)

7. FINANCIAL ASSUMPTIONS

A statement showing the cost of production and profitability estimate for 10 years is given as Appendix . It is based on the following assumptions.

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a) The unit will work for ….......days an year and the installed capacity of the unit is Rs. …........ as given in para......

b) It is assumed that the capacity utilisation would be …. % in 1st year, …. % in second year and …... % from 3rd year onwards.

c) The cost of inputs have been taken as given in para 10 in this memorandum.

d) Wages and salaries have been increased by 5 % every year to cover the annual increments. Employees benefits like PF, ESI, Bonus etc. are assumed at 25 % of wages and salaries.

e) Repairs and maintenance have been taken at 1 % on building and 2 % on plant and equipments.

f) Depreciation has been taken at 5 % on building and 9.5 % on plant and machinery and miscellaneous assets. But for taxation purposes it has been provided at 9.5% on building and % on plant and machinery and 25 % on other assets.

g) Insurance has been taken @ 1% on building, plant and equipments etc.

h) Computation of income tax has been done as per Income Tax Act.

On the basis of the above assumptions, the total income, operating profit, income tax and net profit for the first three years of operation given below:

(in lakhs)

Particulars 1st year 2nd year 3rd

year

Financial projected by the applicant for 3rd year

Reasons for variation

Sales/IncomeExpensesOperating profitIncome TaxNet ProfitDepreciationCash Profit

(Give detailed reasons for the difference if any in the financial projections given by the applicant in the project report and the projections done by the appraisal team).

8. BENCH MARK FINANCIAL PARAMETERS

Sl No

Ratio Benchmark norms

Actual parameters in case of

this proposal

Deviation if any

(Yes/No)

Remarks/ Justification for

inferior ratio than

Benchmark

(a) DER 2 : 1

(b) Projected DSCR > 1.5

(c) Promoters Contribution 33.00%

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(d) BEP at installed capacity Maximum of 75%

(e) Pay back Period Maximum 10 years

(f) IRR before tax -

(g) IRR after tax -

(h) Asset Coverage ratio 2 times*

(i) Debt ratio for the company = Total debtTotal Asset (capital employed)

2 : 3

(j) Return on investment (last 5 year)

(k) Net Profit to sales (projected for term loan)

* Scheme/Sector wise ACR will change as per loan policy.

9. CASH FLOW STATEMENT

A cash flow statement for a period of 10 years is furnished as Annexure.

The cash position of the unit will be comfortable through out.(State if the repayments fixed are as per the cash flow statement).

10. CALCULATION OF NPV & IRR

Year Net Inflow Discounting Factor Net present value

Use Discounting factor which makes Net Present Value or Discounted Net inflow Zero after 8 years / Repayment period whichever is less.

11. PROJECTED BALANCE SHEET

A projected balance sheet of the unit for a period of 10 years is furnished as Annexure.

12. SENSITIVITY ANALYSIS(above 5 crores project)

I. (a) BY REDUCING UNIT SELLING PRICE BY 20%DSCR :IRR (before tax)BEP

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(b) BY INCREASE OF COST OF FUND BY 3%DSCR :IRR (before tax)BEP

(c) CAPACITY UTILISATION - 40% to 100%(d) BY Changing any other sensitive parameters as required

DSCR :IRR (before tax)BEP

II. (a) Matrix of combination of (a) & (c). Mark Break Even Point area.(b) Matrix of combination of (a), (b) & (c). Mark Break Even Point area.

(Matrix has to be done through Excel software. Sample of a matrix is enclosed)

13. SECURITY AND MARGIN FOR THE LOAN (Rs.in lakhs)

Particulars Value (a)

Percentage as per norms

Margin(b)

Eligibility(a)-(b)

PrimaryLand %Building %Plant & Machinery %Equipments %Vehicle %Others as per policy %CollateralLand %Building %Others %

The overall margin on security works out to …..... %

14. OVERALL ASSET COVERAGE

Total tangible security after margin including collateral security for first loan (if any)+ Security for second loan

= Loan amount (Balance outstanding of first loan (if any)

+ New loan (proposed)

15. CREDIT RATING HIGHLIGHTSSl No Details Remarks if any

(a) Name of rating agency (approved by SEBI/RBI)

(write interpretation of grading )

(b) Date of rating and validity

(c ) Rating grade

(d) Internal Credit Rating Score Attached as Annexure -E

(e) Whether reduction of interest allowed based on internal credit rating

Yes/No

16. TERM SHEET(Give details of the repayment period requested by the applicant and the reasons for variations if any proposed).

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The repayment period, interest rate and processing fee recommended are as follows:

(a) Repayment period

Sl No Item Terms Maximum as per scheme

(i) Initial Moratorium Years

(ii) Repayment period Years

(b) Interest rate

Sl No Item Terms Remarks , if any

(i) Gross Rate of interest(PLR + … ) %

(ii) Reduction based on credit rating %

(iii) Reduction based on SC/ST, Women entrepreneur etc

%

(iv) Net rate of Interest %

(v) Rebate on prompt repayment %

(vi) Effective interest rate %

(c) Processing fee

Sl No Item Terms Details of concession allowed, if any

(i) Processing Fee chargeable

(ii) Processing fee paid

(iii) Balance processing fee payable

(d) CGTMSE(if opted)

Amount of CGTMSE coverage

One time Guarantee fee for CGTMSE

17. REMARKS ON FINANCIAL APPRAISAL

(write remarks on financial feasibility of the project )(write whether the project is financially feasible)

PART V(COMMERCIAL)

1. THE PRESENT MARKET(Industry & market prospects , demand & supply position, price trends , major competitor etc)

2. STATUS OF SIMILAR PROJECTS ASSISTED BY KFC IN THE LOCALITY /DISTRICT.

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Name of the unit Year of sanction Loan amount in lakhs

Present balance

outstanding

Asset classification

3. ARRANGEMENTS MADE FOR WORKING CAPITAL

4. AVAILABILITY OF RAW MATERIALS AND CONSUMABLES

(whether the raw materials and consumables available locally etc)

5. MARKETING OF PRODUCTS/SERVICES(Marketing strategy, selling & distribution arrangements etc)

6. SWOT ANALYSIS

(a) Strengths of the project(b) Weakness of the project(c) Opportunities (d) Threats

7. REMARKS ON COMMERCIAL APPRAISAL (write whether the project is commercially feasible)

PART VI(LEGAL)

1. CONSTITUTION OF FIRM

(Opinion regarding AOA, MOA, partnership deed, trust deed etc)

(Opinion on resolutions of company, assignment of land to the name of firm , charges of the company with ROC etc, second charge etc )

2. PRIMARY SECURITY(INDUSTRIAL)

(a) DETAIL OF PRIMARY LAND

Item No.

Sy. No.

Extent Tandaper No

Village Taluk District Value assessed

by Corporation

Value assessed by

external valuer*

Total

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* Applicable if value exceed Rs. 100 lakhs.

(b) DETAILS OF OWNERSHIP OF PRIMARY LAND

Item

No.

Sy. No. Tandaper No Owned by SRO No. with date

Whether Original & Prior documents available

3. COLLATERAL SECURITY

(a) LOCATION OF COLLATERAL SECURITY(describe about the location of the land and marketability of the land)

(b) DETAIL OF COLLATERAL LAND

Item No.

Sy. No.

Extent Tandaper No

Village Taluk District Value assessed

by Corporation

Value assessed by

external valuer*

Total* Applicable if value exceed Rs. 100 lakhs.

(c) DETAILS OF OWNERSHIP OF COLLATERAL

Item

No.

Sy. No. Tandaper No Owned by SRO No. with date

Whether Original & Prior documents available

(d) DETAILS OF BUILDING AND CIVIL STRUCTURES IN COLLATERAL SECURITY

Name of Panchayath/ Muncipality/ Corporation

Building No & Ward No

Plinth Area Age Depreciated value

Value assessed by external valuer*

* Applicable if value exceed Rs. 100 lakhs.

(e) DETAILS OF OTHER COLLATERAL SECURITIES (IF ANY)

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(Other collateral security if any )

4. REMARKS ON LEGAL APPRAISAL

(remarks on various legal certificates accepted and any deviation from norms etc)

PART VII

1. DISBURSEMENT PATTERN SUGGESTED

2. WHETHER ACCEPTED BY THE PROMOTERS

PART VIII

DEVIATIONS IN THE PROPOSAL (IF ANY)

(Clearly specify all deviations (Managerial , technical , legal & commercial ) in the project with sanctioning authority for the deviations)

PART IX

RECOMMENDATIONS

(Give briefly the reasons for recommending the loan)

Based on the value of the existing and proposed assets and as per the financing pattern suggested at para a term loan of Rs......... lakhs is recommended for consideration to M/s. ………………………………….. on credit line basis subject to usual terms and conditions and on the following special conditions:-

1. Utilisation of the term loan

For acquisition of fixed assets

2. (a) Rate of Interest

Interest rate will be …...% p.a. With …...% penal interest for the defaulted amount for the defaulted period on monthly compound basis and …....% rebate for prompt repayment of interest. Further ….% reduction will be allowed based on credit rating.

Floating rate of interest based on the PLR fixed from time to time, depending on the market conditions will be applicable to this proposal. The rate of rebate can be revised (increased/decreased) by the Corporation from time to time and the borrower hereby agrees to such revision in the rate of rebate and that intimation of such revision shall be deemed to be served on the borrower when sent by post to the address of the borrower .

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2. (b) Interest reduction based on credit rating will be subject to annual review and will be continued only if the firm satisfies the norms for interest reduction applicable at the time of review.

2. (c) Rebate for prompt payment will be paid only if the insurance of all fixed assets is current and the policy is taken in the joint name of the firm and KFC.

3. Repayment Period

Term Loan: To repay in ….... monthly instalments commencing at the end of …............. month of drawal of the 1st Instalment of the term loan.. The principal amount will fall due on 1st day of every month.

4. The applicant has remitted Rs……….. + service tax as initial processing fee. Further sum of Rs…………….. + service tax is to be remitted.

5. Period of completion of project: ….........months

6. Personal Guarantee should be given by :

7. Before drawing any portion of the loan amount the applicant/Company should satisfy the following conditions:

1. Approval by the local authorities2. Approval by the Pollution Control Board3. Allocation for power supply/feasibility for giving power

supply by the KSEB4. Approval by the Electrical Inspectorate.5. Licence for the import of machinery6. Credit report from Bank7. Others (Please specify).

8. Sanction letter for electrical installation and installation of diesel generator set from Electrical Inspectorate should be produced before availing any amount for machinery and generator set. Approval from the Electrical Inspectorate shall be obtained after installation of DG set

9. Payment for machines supplied by manufacturers/suppliers not known to the corporation will be made only after physical verification/ performance evaluation.

10. The Borrower should pay foreclosure premium as per the prevailing rules of the Corporation in case the Borrower prepays the loan amount and settles the account before the expiry of the loan period.

11. Subsidy, if any, will be adjusted to loan account as and when received. 12. The assets of the company and collateral security building should be insured annually with New Assurance Company Limited, under the Agency Code 90145/900145 or any other agency approved by IRDA and evidence thereof should be produced. No rebate will be allowed if insurance is not done.

13. All statutory charges including Sales tax, Excise duties. P.F contributions,Land tax,Building tax and each other payments due to the Government or concerned authorities shall be paid and kept current by the borrower/co-obligants every year during the tenure of the loan.

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14. The capital should be raised at least to the minimum level of Rs.........Lakhs as shown in the financing pattern.

15. The sanction is subject to the availability of refinance from SIDBI/Banks/ FIs and such other conditions as may be imposed by them.

16. The loan amount should not be utilized for any kind of money laundering activities.

17. The loan will be disbursed through a no-lien bank account only.

18.Disbursement will be made on pro-rata basis as per investments made in the project after ensuring the required P.C and DER of ….... and keeping the required security margin.

19. All other usual terms and conditions will also apply.

20. The Borrower and Co-obligant should give consent to the Corporation for the disclosure by the Corporation of information and data relating to them, of the credit facility availed of/to be availed, by them, obligations assumed/to be assumed, by the them in relation thereto and default, if any, committed by the them, in discharge thereof, to Credit Information Bureau (India) Limited (CIBIL) or any other agency authorized in this behalf by Reserve Bank of India and consent to furnish the information by CIBIL or any other agency, so authorized, to any banks/financial institutions and other credit grantors or registered users.

21. Board should be displayed in front of the project stating that the project is financed by Kerala Financial Corporation.

22. The annual report/audited financial statements pertaining to the previous financial year shall be furnished to this office within six months from the 1st of April every year.

23. External credit rating by approved agency (if applicable) shall be furnished within a period of six months.

24. External valuation to be arranged as and when necessary.

* Additional conditions if required can be added by the sanctioning authority.

Legal Officer. Technical Officer Project Officer

BRANCH MANAGER/CHIEF MANAGER

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Reviewed by GM Approved by CMD Issued by MR

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ANNEXURE 'A'

ANALYSIS OF FINANCIAL STATEMENT OF UNITName of Unit:

Balance sheet as at 31st MarchRs. in lakhs

201 201 201ASSETS1. Fixed assets2. Investments3. Current assets4. Others ( current account)

TotalLIABILITIES1. Capital2. Reserves and surplus3. Current liabilities4. Secured loans5. Unsecured loan

Total

III. Profit and loss account1. Sales2. Net profit after tax3. Depreciation4. Cash profit

Analysis Benchmark*

Current ratio 2 : 1Quick ratio 1 : 1DER 2 : 1Net worth > 3 times of loan

proposalROI (EBIT / Net Assets) > 15Net Profit to sales (PBIT) > 10Debt Ratio 2 : 3

* Justification for interior ratio than benchmark may be explained as a footnote.

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ANNEXURE 'B'

ANALYSIS OF FINANCIAL STATEMENT OF ASSOCIATED CONCERNName of concern :

Balance sheet as at 31st MarchRs. in lakhs

201 201 201ASSETS1. Fixed assets2. Investments3. Current assets4. Others ( current account)

TotalLIABILITIES1. Capital2. Reserves and surplus3. Current liabilities4. Secured loans5. Unsecured loan

Total

Profit and loss account1. Sales2. Net profit after tax3. Depreciation4. Cash profit

Analysis Benchmark*

Current ratio 2 : 1Quick ratio 1 : 1DER 2 : 1Net worth > 3 times of loan

proposalROI (EBIT / Net Assets) > 15Net Profit to sales (PBIT) > 10Debt Ratio

* Justification for interior ratio than benchmark may be explained as a footnote.

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ANNEXURE-'C'

BUILDING AND CIVIL STRUCTURES

ANNEXURE-'D'

LIST OF PLANT AND MACHINERY AND EQUIPMENTS

Sl. No

Description Name of supplier/ manufacturer

Connected loadKW/KVA

Basic price as per invoice quotation

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Annexure E

INTERNAL CREDIT RATING FORMAT FOR TERM LOANS

Name of the Unit : Loan No:

Name of chief promoter: Rating period (FY):

Rating done by :

Rating points5 4 3 2 1

1. Constitution Govt/. Public Ltd. company

Pvt. Ltd. co./ Pvt. Trust/ Society/ AOP

Partnership Proprietor/ Individual

2. Qualification of promoter (CEO, principal partner)

Professional CA / Doctor / Engineer etc.

Post Graduate

Graduate +2 Others

3. Experience of promoter/ company

> 10 years > 5 < 10 yrs > 3 < 5 yrs < 3 yrs New

4. Asset Coverage Ratio ( ACR) for proposed project

> 2 times of loan

> 1.5 < 2 > 1.25 < 1.5 > 1.1 < 1.25 < 1.1

5. DSCR Profit after tax + depreciation +

Interest on term loanRepayment of term loan + Interest on

term loan

>2 > 1.5 < 2 > 1.25 < 1.5 > 1.1 < 1.25 < 1.1

6. IRR (%) for project >17 13 – 16 9 – 12 5 – 8 1 – 4 7. ROI – Last 5 years

AverageEBT / Net Assets

> 15 11 - 15 6 – 10 1 – 5 < 1

8. General reputation Excellent Very Good Good Average Adverse9. Past Record

(Repayment of earlier loan. Dealing with other Banks, CIBIL Report etc.)

Excellent Very Good Good Average Adverse

10. Net worth of the company

> 3 times of loan proposal

>2.5 < 3 > 2 < 2.5 > 1.5 < 2.5 < 1.5

11 Promoters Contribution in the project

> 50% 41% - 50% 33% - 40% 25% - 32% < 25%

12 DER for the companyTotal Debt /Net Worth of the concern

Upto 1 Upto 1-5 Upto 2 Upto 3 > 3

13 BEP(% ) <35 35- 40 41-50 51-55 >5514 Period of

RepaymentUpto 4 years 5-6 years 7-8 years 9-10 years > 10 years

15 Tie up for marketing

Existing Firm arrangement

made

Under process

To be made No arrangement made so far

16 Net Profit to sales% >10 >5≤10 >3≤5 <3 <1

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(PAT)

17 Exposure to the sector

Very low Low Normal High Very High

18 Credit report from existing Bankers

Excellent Very good good average Report not available/ Adverse

19 Availability of Audited financial statements

Up to the latest financial year

One year arrear

Two year arrear

Three year arrear

> 3 years arrear

20 Risk factor (As perceived by BO/ Appraising Authority)

Negligible Very low low High Very high

Rating Given

Col.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20Total

Out of 100

RatingPoint

Out of 100 = ─ ═ 100

Signature of the officers who have done the rating :

* 1. Appraisal Team can give higher grade than the actual rating point with proper justification with the approval of HO.

2. Only units which have rating of 70 and above are eligible for 1% reduction in interest rate. The reduction in interest rates will be available for these units as long as they are in the standard category.

3. Rating to be carried out on annual basis.4. Total rating points shall not be reduced from 100.

Gm/internal credit rating format

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METHOD OF CALCULATION OF RATIOS FOR INTERNAL RATING

(1) Experience of promoter

Relevant experience of promoter in senior management position like Director etc. can be considered, but proof of experience is to be collected.

(2) Asset Coverage Ratio (ACR)

Capital Investment in the project + Asset Coverage Ratio = Collateral security for proposed loan

Proposed loan

The value of the security to be taken for the proposed loan will be after deducting the margin on security. For calculating the value of assets the preliminary and pre operative expenses need not be taken. An example for calculation of ACR is given below.

Rs. in lakhs

Nature of Assets Cost/Value % value to be taken

Value to be taken for the purpose

of Asset coverageA. Land 100 100% 100B. Building

Pre-operatives expenses capitalized

20010

85%-

170-

C. Plant & MachinerySecond hand machineryPre-operative expenses capitalized

20010030

85%50%

17050

D. Tools, Dies, Moulds etc. 100 25% 25E. Technical knowhow 20 0 NILF. Office equipments 20 25% 5

TOTAL (A+B+C+D+E+F) 780 520 GH. Collateral Security

Land Building

200100

100%85%

20085

TOTAL 300 285 H GRAND TOTAL 1080 805 J

Loan amount proposed = Rs. 520 lakhsMaximum Loan Eligibility based on security = G = Rs. 520 lakhs

Asset Coverage Ratio = J = 805 = 1.54 : 1Loan Amount 520

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For certain business which involve huge investment in inventory, the minimum level of inventory can be considered for calculating ACR, if it is hypothecated to KFC and after taking approval of Credit Department.

(3) Debt Service Coverage Ratio (DSCR)

DSCR shall be calculated for the proposed project.

DSCR = Profit after tax + Depreciation + Interest on Term Loan Repayment of Term loan + Interest on Term loan

(4) Internal Rate of Return (IRR)

IRR has to be calculated for the proposed project. IRR is the rate of discount which would equate the present value of the investments (cash out flows) to the present value of benefits (cash inflows) over the period of repayment.

For (3) and (4) match the cash flow projected with repayment period and other investments made. Please ensure that cash flows are projected on a realistic basis.

(5) Return on Investment (ROI)

The average for the last 5 years has to be taken based on the audited financial account. If a concern is in existence for a period less than 5 years then ROI has to be calculated for the lesser period. For new concerns the rating point will be zero.

ROI = Earnings Before Tax (EBT) or Profit Before Tax (PBT) Net Assets as per balance sheet

Net Assets is fixed assets less depreciation.

If in a particular year the company is in loss then ROI should be calculated and the negative figures given as shown below and the average taken for rating purposes.

Rs. in lakhs2009 2010 2011

(a) Fixed Assets (after depreciation) 168.33 162.48 165.96(b) Net profit after tax -5.87 2.56 6.56(c) Taxes 1.99 0.59 3.48(d) EBT/PBT – [(b) + (c)] -3.88 3.15 10.04(e) ROI (EBT/Net Assets) d/a x 100 -2.30% 1.94% 6.05%

ROI = - 2.30 + 1.94 + 6.05 = 5.69 = 1.90% 3 3

(6) General Reputation:- Some field report, paper cutting, magazine articles etc. can be collected for the purpose.

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(7) Net Worth

Net Worth = Paid Capital + Free Reserves – Accumulated losses

The figures have to be taken from the latest audited figures of the company.

(8) Promoters Contribution has to be considered for the proposed project.

(9) Debt Equity Ratio (DER)

DER = Total Debt / Net worth of the concern.

For calculating the DER the total debt will include the existing debt as per balance sheet. Net worth will have to be taken from the latest audited figures of the company. This ratio shows the degree of indebtedness and portion of assets financed by equity.

(10) Break Even Point (BEP)

BEP = Fixed Cost Contribution

Contribution = Sale Price – Variable Cost

(11) Net Profit to Sales

The Net Profit to be taken is the profit after interest and tax (PAT). This ratio is a measure of the efficiency of the concern.

(12) Inventory Turnover Ratio = Cost of goods sold (or sales) Average Inventory

Average Inventory = Closing stock + Opening stock 2

(13) Current ratio shows the short term liquidity position of a unit.

Current Ratio = Current Assets Current Liability

Current assets include stock of raw material, stock in process, finished goods, receivables and short term investments.

Current liabilities include creditors for purchases, bills discounted with bank and other short term liabilities.

(14) Sectoral exposure shall be seen both with respect to the Branch as well as KFC as a whole. Necessary data can be obtained from systems division.

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(15) Receivable Turnover Ratio = Credit Sales Average Accounts Receivable

Average Accounts Receivable = Opening Balance + Closing Balance 2

(16) Quick Ratio = Current Assets – Stocks Current Liability – Bank Borrowings (short term)

Quick ratio evaluates the preparedness/quickness with which a liquidity crisis can be managed.

It is seen that certain Branch Offices are reducing the total rating points from 100 to 90 or 80 after deleting certain items. This is not acceptable. The rating has to be out of 100.

ROI, Net worth, DER has to be analysed based on the existing financial statements. Revised credit rating format is enclosed. The calculation will be verified by the post sanction scrutiny team.

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