Professional Documents
Culture Documents
ON
CREDIT APPRAISAL OF TERM LOAN AND WORKING CAPITAL FINANCING
At
Punjab National Bank, Head Office
Submitted to
Name MR. R.K. gupta
Designation: CHIEF MANAGER
Batch: 2015-2017
Date of submission -
DECLARATION
I also declare that this project report work is not submitted to any other university for any
degree.
Date:
CERTIFICATE
KAMA PLACE, NEW DELHI under my supervision & guidance. He has conducted a
study & completed the Project on.
Seal of Organization
Mr. R.K.Gupta
Chief Manager, Credit
Administration Division;
HO: BHIKAIJI KAMA PLACE,
NEW DELHI
TABLE OF CONTENTS
NO
TITLE
PAGE NO
1.
Acknowledgement
2.
Executive Summary
3.
Introduction
i.
Background
ii.
Company Profile: Punjab National Bank
7
13
SWOT ANALYSIS
14
4.
5.
About Project
16
6.
Credit Facilities
18
7.
20
8.
23
9.
25
10.
Pricing
26
11.
Credit risk
29
12.
Case study
67
13.
Appendix
94
14.
Conclusion
95
15
Bibliography
96
ACKNOWLEDGEMENT
I wish to express my gratitude to PUNJAB NATIONAL BANK for giving me an
opportunity to be a part of their esteemed organization and enhance my knowledge by
granting permission to do summer training project under their guidance.
I am deeply indebted to the Credit Division and my company guide MR.R.K. GUPTA
(CHIEF MANAGER OF CREDIT DIVISION) of Punjab National Bank for his valuable
and enlightened guidance. He provided me with immense opportunity to learn about the
working at Credit Administration Department (CAD), HO. He took time away from his
busy schedule to help me gain insights into the Credit Management process. He helped
me with my queries at every step of the project and also arranged the critical resources
required for the successful completion of the project.
I am also highly thankful to the Library Staff of PNB who provided me the study
materials and helped me during training.
The learning during the project was immense and valuable. My work included the study
of various aspects of Credit Administration.
Regards
GUNJAN AGGARWAL
TECNIA INSTITUTE OF ADVANCED STUDIES
MADHUBAN CHOWK
EXECUTIVE SUMMARY
This was my First exposure to the corporate world and had an experience of working in
a banking. I was directly working under loan/advances: I was working on the credit
appraisal, Term loan which I feel is the basic requirement of any bank. While working I
observed the significance of the loan/advances in a bank, its working. I also got to
observe various functions of the credit department.
The project, which was given to me in this period of my summer internship, project was
to know the credit appraisal & term loan. For that, I have to talk to manager and try to
understand concept of credit in the bank.
Business needs credit facilities for long term to fund new projects, to expand existing
capacities new projects and in short term to meet operational and working capital
requirement. Banks earn interest income and fee based income on the loans and
advances disbursed.
Punjab National Bank being a leading national bank , provides ideal opportunity to study
the credit delivery mechanisms, processes and procedures prevalent in industry. Credit
Administration process at PNB has been described in details and different types of
credit facilities and credit delivery mechanisms provided to industrial consumers viz.
Overdraft, Term Loans, Working Capital, Cash Credit, Fund Based, Non Fund Based
Credit has been discussed.
Thus during this internship-period working on project and simultaneously observing has
proved to be a great experience in all as I have got to see and understand various
situations of the employees. I would like to conclude by saying that it is been a great
learning for me through this internship. I understand some realities of the bank , as, I
was part of the everyday activities of the organization. I also learned the fact that no
department can work on its own each department have to depend on other in one-way
or the other.
1. INTRODUCTION
Banking industry at a glance:
Bank is the main confluence that maintains and controls the flow of money to make
the commerce of the land possible. Government uses it to control the flow of money by
managing Cash Reserve Ratio (CRR) and thereby influencing the inflation level.
The functions of the bank include accepting deposits from public and other institutions
and to direct it as a loan and advances to party for growth and development of industry.
It extends loan for the purpose of education housing etc
The bank take the deposit at the lowest rate of interest and give loans at the higher
rates of interest the difference in this become the source of income for banks. this is
known as net interest margin
Presently, the Indian banking sector consists of 26 public sector banks, 20 private sector banks
and 43 foreign banks along with 61 regional banks rural banks and more than 90,000 credit
cooperatives
2. About Punjab National Bank
Punjab National Bank (PNB) was established in 1894 and is the second largest
government owned and over all fourth largest bank in India. It has about 6692 branches
across 764 cities and serves over 63 million customers. It has presence throughout the
length and breadth of the country and offers a wide variety of banking services that
include corporate and personal banking, industrial finance, agricultural finance,
financing of trade and international banking. Among the clients of the bank are
multinational companies, Indian conglomerates, medium and small industrial units,
exporters and non-resident Indians. The large presence and vast resource base have
helped the bank to build strong links with trade and industry. The strength of the bank
lies in its corporate belief of growth and stability.
Vision
To be a Leading Global Bank with Pan India footprints and become a household brand
in the Indo- Gangetic Plains providing entire range of financial products and services
under one roof .
To evolve and position the bank as a world class, progressive institution providing
comprehensive financial and related services.
Integrating frontiers of technology and services various segments of the society,
laying more emphasis on the weaker sections of the society.
Committed to excellence in servicing the public debt and also excelling in corporate
Mission
Banking for the unbanked
Use latest technology aimed at customer and act as an effective catalyst for an
overall socio-economic development.
To provide excellent professional services and improve its position as a leader in
financial and related services.
Build and maintain teams of motivated workforce with high work ethics.
Organizational structure
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CAD
TD
RMD
IBD
HRD
Brief Introduction of Departments
Credit Administration Department (CAD): Commercial lending organization structure
in PNB consists of Branches, Mid Corporate Branches (MCBs), Large Corporate
Branches (LCBs), Circle Office, ZonalOffice and Head Office (CAD). Credit Division
(CAD) looks after the loan proposals which fall into the purview of GMsHO/ED/CMD/MC/Board. Medium corporate branches are headed by AGMs and LCB by
DGM. Authority to handle loan proposals is distributed as detailed below.
The bank has introduced Grid/Committee system in credit sanction process wherein
every loan proposal falling within the vested powers of DGM and above is discussed in
a credit committee which on the merit of the case recommends the proposal to the
sanctioning authority. Such committee have been formed both at HO, CO and FGM
level, the credit committee at HO includes GM Credit and CGM/GM-RMD. For credit
proposals falling within the vested power of CGM/GM, the credit committee at HO
includes DGM/AGM/Chief Manager-CD and DGM/AGM/Chief Manager RMD. The credit
administration division is to be assisted by Risk Management Division (RMD) and
Industry desk for risk vetting and techno-economic feasibility of credit proposal.
Various Committees and their powers
CAC at CO/ HO level
Headed by
Credit proposals
COCAC
Circle Head
ZMCAC
HOCAC Level-I
HOCAC Level-II
Senior most ED
HOCAC Level-III
Managing
CEO
Director
11
&
Management
Committee
Human Resource Division (HRD):The banking industry being a service industry, the
human resource constitutes its most precious resource. The success of any bank
depends upon the ability and capacity to leverage its human talent, potential and
capabilities to achieve the greater efficiency increase in its market share as well as its
profitability due to the fast changing economic scenario, technological advancement and
increase in competition in the market.
This calls for attracting talented people, nurturing and developing them, providing them
necessary space for their individual growth, looking after their well-being, creating a
facilitating environment, developing an organizational culture that removes impediments
and foster in them the feeling of pride and belongingness to the organization, enabling
them to align their personal goals with the goals of the organization.
In this scenario, the role of Human Resource Development Division (HRDD) of the bank
is thus to find, attract, engage, upgrade skills, motivate, retain, grow the scarce talent
and to increase their efficiency level to enable them to deliver as per the banks Vision
and Mission through series a of HR interventions.
Risk Management Division (RMD): Credit risk is the possibility of loss associated
with changes in the credit quality of the borrowers or counter parties. In a banks
portfolio, losses stem from outright default due to inability or unwillingness of a borrower
or counter party to honour commitments in relation to lending, settlement and other
financial transactions.
PNB has an elaborate risk management structure in place. Credit Risk management
structure at PNB involves:
12
13
3 .SWOT ANALYIS
SWOT Analysis
1. Diversified operations with 5100 branches
2. Strong I. T support with best fit approach
3. Schemes for small and medium scale businesses
4. It is the second largest state-owned commercial bank in
India with about 5000 branches across 764 cities
Strengths
Weaknesses
Opportunities
Threats
14
To understand the factors affecting rate of interest levied viz. risk assessment, bank
guidelines, sectoral policies, business considerations etc.
Primary:
The main purpose of the study is the in depth study of the sanctioning and analysis of
the term loan and its appraisal by PUNJAB NATIONAL BANK for Corporates. This
includes the following:
Judge whether term loans are viable or not, i.e. whether they can generate adequate
surplus for servicing its debts within a reasonable period of time and still is left with
some funds for future development. This involves taking an over-all view of the
strengths and weaknesses of the project.
To see whether the management and organization can prove effective for successful
implementation of the project.
Secondary:
To prepare CMA data for WC assessment in order to ensure optimum investment in
current assets so that the normal operations are not affected adversely.
To track & evaluate the health of borrower accounts on a continuous basis through PMS
report that is to detect unsatisfactory/adverse signals/indicators at an early stage in a
comprehensive manner and to propose speedy corrective/remedial actions/steps to
prevent the account from becoming Non Performing Asset as well as to minimize the
loan losses.
To understand the importance of appropriate and effective risk management along with
maintenance of comprehensive risk policies.
To study the treatment of sick units either by their restructuring or by bifurcating the
units.
The bank has to answer following questions.
Whether the company is utilizing its working capital efficiently?
Whether the industry in which company falls has any major negative points, or if its
vulnerable to other economic factors?
15
Case Study describing actual appraisal of a Term Loan proposal and a Working Capital
Financing Proposal.
With ours being an open economy, rapid changes are taking place in the technological
and financial sector, exposing banks to greater risks. Thus, efficient project appraisals
have taken up huge importance as they can keep a check on and prevent induction of
weak accounts to a banks loan portfolio. All possible steps need to be taken to
strengthen the pre-sanction appraisal as prevention is better than cure.
This report seeks to present an overall picture of credit management in the bank as its
effectiveness is highlighted by the quality of its loan portfolio. The study also stands to
understand the process of preparation of CMA data for WC assessment as well as
credit risk management. Both of these are vital for any financial business.
In Indian financial context, it becomes important to keep a track on the borrowers
accounts in order to prevent them turning into NPA. This requires a continuous
evaluation. Furthermore, the sick units shall be suggested to undergo restructuring
and/or bifurcation.
Methodology
To fulfil the objectives of the study following methods were used:
Study of various bank guidelines and circulars.
Primary Sources:
Discussions with the project guide and staff members.
16
Secondary Sources:
RBI guidelines regulating the activities of the banks.
Research papers, power point presentations and PDF files prepared by the bank and its
related officials.
17
Bill Finance
Bill finance are the advances against the inland bills are sanctioned in the form of limits
for purchase of bills (ODD) or discount of bills (BD) or bills sent for collection. Bills are
either payable on demand or after usage period
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The non-fund based business is one of the main sources of bank income. Income is in
the form of fees and commissions as compared to interest income in case of fund based
lending.
Non-fund based credit plays an important role in trade and commerce. The borrowing
clients of banks prefer to avail of the non fund based facilities mainly because:
a) The facility does not require immediate outlay of funds and therefore the cost of
such funds tend to be lower than the cost of fund based credit facilities.
b) A bank guarantee (BG) or letter of credit (LOC) issued by a bank on behalf of its
client is an off-balance sheet item in the books of clients, hence do not show up
as debt or liability.
For the lending banks, cost of providing non-fund based facilities is significantly lower
than the cost of providing fund-based facilities.
Nevertheless, inherent risks associated with NFB credit facility are same as that
attached with FB credit proposals. In case of default, provision of funds becomes
necessary. Also, NFB exposure is facilities are not treated as off-balance sheet
exposure and minimum capital adequacy need to be maintained against the NFB
exposures as well.
Assessment of Non Fund based facilities shall be subjected to the same degree of
appraisal, scrutiny as in the case of fund based limits because outstanding in these
facilities are to be reckoned at 100% for exposure purposes. Therefore, need based
requirement of a borrower should be assessed after reckoning the lead time, credit
period available, source of supply, proximity of supplier, etc. in case of LCs and industry
practices and business requirements in case of LGs.
The working of NFB assessment is to be incorporated in the appraisal note. Further,
while assessing non-fund facilities, cash flow aspects should also be taken into account.
Bank Guarantees
BGs may be financial or performance in nature. In a financial guarantee, the issuing
banks assumes usual credit risk which is the domain of the banks. However, issue of a
performance guarantee involved technical competency and managerial ability of a
customer to ensure the performance of the contract for which guarantee has been
drawn.
Issuing banks responsibility against the BG is absolute. So proper appraisal needs to
be done before issuing BG as it is the responsibility of the issuing bank to honor its
guarantee when invoked.
Letter of Credit
A document issued by a bank that guarantees the payment of a customer's draft;
substitutes the bank's credit for the customer's credit. It is an undertaking issued by
bank on behalf of the buyer to the seller, to pay for the goods and services, provided
19
that the seller presents the documents which comply with the terms and conditions
stipulated in the LOC. All letters of credit are irrevocable, i.e., cannot be amended or
cancelled without prior agreement of the beneficiary, the issuing bank and the
confirming bank, if any. It is different from BG in the sense that in case of LOC, the
issuing bank does not wait for the buyer to default, and for the seller to invoke the
undertaking. While in BG, comes into play only when the principal party (the buyer) has
failed to pay its supplier.
6 Term Loans and Working Capital Loans
Term Loans
Term loans are those loans that are lent for extended period of time majorly for the
capital expenditure by the firm. This is different from the short term loans which are
mainly provided for meeting working capital requirements and maintaining short term
liquidity.
Term loans are provided for acquisition of fixed assets are to be repaid from the cash
generated from the operations. Credit delivery for term loans are broadly through two
means: Fund based and Non-fund based. Fund based term loans like cash credit
provided outright cash while non-fund based loans like Deferred Payment Guarantee
(DPG) where the liability to make payment crystallizes after the bill again such
guarantees are presented for payments.
Term loans are sanctioned for acquisition of fixed assets like land, building,
plant/machinery, office equipment, furniture-fixture and other capital expenditure like
purchase of transport vehicles and other vehicles, agricultural equipment etc. The term
loan is a loan which is not a demand loan and is repayable in terms of i.e. in Instalments
irrespective of the period or the security cover.
Term loans are normally granted for the periods varying from three to seven years and
under exceptional circumstances beyond seven years. The term loans with remaining
maturity period of above 5 years shall not exceed 50% of the term deposits with
remaining maturity period of above 5 years after taking into account the renewal of term
deposits as per the past trend, as is being done for ALM.
Since term loans are provided for a long tenure ensuring the viability of the project and
sufficient generation of cash over the long tenor of the loan becomes critical. Detailed
process of appraising Term Loan proposals is given in next section.
7 Working Capital Loans
Working Capital refers to the current asset holdings of the firm.Net working capital is the
difference between Current Assets and Current Liabilities. Working capital requirements
depend on various business specific internal factors like operating efficiency, technology
employed and the level of quality control.
Current Assets may further be classified in to two components:
i) A permanent Core Component.
20
21
As part of the market appraisal, the very first thing a financial institution would look at is
the gap between demand and supply. Bigger the demand-supply gap, higher is the
chances of the flourishing of that business. The demand versus the proposed supply by
the borrower should have a wide difference in demand of 50000 units against the
proposed supply of 10000 units.
Another most important parameter is marketing efforts and infrastructure. This is the
factor which converts a demand into sales for a business. The marketing side of the
company needs to be very strong as it is very critical to the success of the venture.
2.Management Appraisal:
Management of the company needs to be appraised for their intentions, knowledge, and
dedication towards the project. By intention, it is meant to evaluate the willingness of the
promoters of the company to pay the money back. It needs to evaluate the real
objective of borrowing.
Only good intentions would not generate cash flows to honor the installments of the
loan. The management needs to be strong in terms of their knowledge about business,
commitment towards achieving the set goals etc.
3 Technical Appraisal:
A technical appraisal is subject to the kind of business and industry of the borrower. If
its a manufacturing concern, all those parameters like project site, availability of raw
material and labor, capacity utilization, vicinity to selling market, transportation etc would
be examined. A project needs to be technically very sound to be able to sustain all
business cycles.
4 Financial Appraisal:
After all the other kinds of appraisal, everything boils down to financial appraisal. This
probably is the most important part of credit appraisal of business loans. The reason is
that it expresses everything in terms of money.
Financial appraisal tries to assess the correctness or reasonability of the estimates of
costs and expenses and also the projected revenues. These may include the estimation
of the selling price, cost of machinery, the overall cost of the project and the means of
financing.
Financial appraisal involves extensive financial modeling in excel. Basically, it takes the
financial statements of previous periods and forecasts the future financial position for at
least till the loan matures. From that, the cash flows of each year are compared with the
installment of loan because ultimately the cash flows are going to honor the payments
of the bank.
22
Feasibility of the project is evaluated in terms of debt servicing capacity of the firm. Debt
service coverage ratio is a key ratio which is calculated for each future financial period
and if that ratio is satisfying the norms accepted by the bank, the loan would get another
green signal.
It is difficult to explain the process of appraisal in an article or even a set of articles. It is
a very extensive work being done at financial institutions. They have a separate team of
professionals for conducting such project appraisals.
Calculating Key Financial Ratios
Current financials of existing operations, project funding information like sources of
funds etc. and future projections are used for calculating key financial ratios for a period
of time. These ratios tell us a lot about a unit's liquidity position, managements' stake in
the business, capacity to service the debts etc.
The financial ratios which are considered important are discussed as under:
()
, , .
DER signifies how much the project is leveraged. For a project of private firm, equity
capital is brought in by promoter, and hence, lower the DER higher is the promoters
stake in the project. DER also varies from industry to industry. In capital intensive
industries involving large capital investment, DER is normally higher as compared to the
other industries.
Debt Service Coverage Ratio (DSCR)
DSCR =
( ) + +
+
This ratio provides a measure of the ability of an enterprise to service its debts i.e.
`interest' and `principal repayment' besides indicating the margin of safety. The ratio
may vary from industry to industry but has to be viewed with circumspection when it is
less than 1.5. This ratio shows the relationship between cash generating capacity of the
unit and its repayment obligation and indicates whether the cash flow would be
23
adequate to meet the debt obligations and whether there is sufficient margin for the
lending banker.
Tangible Net Worth to Total outside Liabilities (TNW/TOL)
TNW/TOL= Worth (p +
)
This ratio gives a view of borrower's capital structure. If the ratio shows a rising trend, it
indicates that the borrower is relying more on his own funds and less on outside funds
and vice versa.
Profit-Sales Ratio
=
This ratio gives the margin available after meeting cost of manufacturing. It provides a
yardstick to measure the efficiency of production and margin on sales price i.e. the
pricing structure.
8.1.5 Sensitivity Analysis
The sensitivity analysis is carried out by the bank in order to evaluate capacity of the
project to absorb shocks due to adverse movement in prices/ some other adverse
developments and sustain financial viability. The viability of a project is dependent on
various factors which include selling price, cost of raw materials, cost of finance,
availability of critical inputs and dependence on market like buyer/seller market, other
key technical parameters etc.
In the absence of any defined factors and its values for carrying out the sensitivity
analysis, it has been decided that a common 5% sensitivity factor on sale price/cost
price of major raw materials should be applied in appraisals of all the projects
irrespective of the industry. However, 10% sensitivity factor may be applied in highly
volatile industries by assessing the expected volatility in sale price/ cost price of major
raw materials in future on case to case basis.
24
25
Under this method, it was thought that the borrower should provide for a minimum of
25% of total current assets out of long-term funds i.e., owned funds plus term
borrowings. A certain level of credit for purchases and other current liabilities will be
available to fund the build up of current assets and the bank will provide the balance
(MPBF). Consequently, total current liabilities inclusive of bank borrowings could not
exceed 75% of current assets. RBI stipulated that the working capital needs of all
borrowers enjoying fund based credit facilities of more than Rs. 10 lacs should be
appraised (calculated) under this method.
MPBF: 75% Total Current Assets Other Current Liabilities
Third Method of Lending:
Under this method, the borrower's contribution from long term funds will be to the extent
of the entire CORE CURRENT ASSETS, which has been defined by the Study Group
as representing the absolute minimum level of raw materials, process stock, finished
goods and stores which are in the pipeline to ensure continuity of production and a
minimum of 25% of the balance current assets should be financed out of the long term
funds plus term borrowings.
MPBF: 75% [(Total Current Assets Core Current Assets) Other Current Liabilities]
Third method of lending was not accepted by RBI for practical implementation and
hence is of only academic interest.
2 Chore Committee Recommendations
This committee streamlined the above guidelines further by stipulating annual review of
working capital credit limits above 50 lacs. Also the bifurcation of cash credit into
demand loan and cash credit components has also been withdrawn.
3 Nayak Committee Recommendations (Simplified Turnover Method)
Nayak committee recommended not to apply the norms for inventory and receivables.
Rather, the working capital limits shall be computed on the basis of a minimum of 20%
of their projected annual Turnover for new and existing units. Out of this, the borrower
shall provide 1/5th of the estimated working capital requirement (5% of PATO) as
margin money of working capital.
26
The Bank has the policy of evaluating MPBF for those limits that exceed 2 crore and up
to 5 crore, for limits less than 2 crore, the bank has a policy of following the simplified
turnover method.
Cash Budget System
Customers enjoying working capital limits in excess of Rs.5 crore can be given option to
adopt the cash budgeting method at the discretion of the bank. In case such borrowers
choose the cash budget system of lending, they have to satisfy the bank that they have
necessary infrastructure in place to submit the required information periodically in time.
The scope of internal MIS should be satisfactory and commensurate with the level of
operations. The borrower must have a finance professional and computerised
environment.
Cash flow based lending is more customer-friendly. This is well suited to units dealing in
seasonal products, construction activities and order based activities. Cash flow based
lending method is popular in developed countries
10 .Pricing
Loan pricing which was earlier based on the BPLR (Benchmark Prime Lending Rate)
regime has now been administered under MCLR (Marginal Cost of Funds Based
Lending Rate)regime as per the RBI directives. Under MCLR system banks specify a
rate above which all the loans are priced. MCLR rate is revised from time to time as per
the leads of RBI review of interest rates that depends on the macroeconomic situations.
At PNB, pricing of loans depends on following factors:
a) Credit Rating of the Client
Better the risk rating of a business lower is the spread (interest charged) over the base
rate.
b) Nature of the business sector
Apart from the credit rating, the business sector to which a borrower belongs also
effects the pricing of the loan. For example pricing for a business in Food processing
sector with credit rating AA will be different from a business in Real estate sector
having the same credit rating AA.
27
11 .Credit Risk
Credit risk is the most fundamental risk faced by a banking company. It is the risk of
default or decline in credit standing of the borrower. It is most difficult to quantify due to
the large amount of subjectivity involved in it.
Traditionally credit risk has been managed by setting up limits to the global exposure,
industry exposure, country exposure and individual client/group exposure. Credit risk
management is extremely important as the pricing of a portfolio or a transaction is
dependent on the risk factor built in.
Credit risk management has mainly two objectives:
1. Manage the asset portfolio in a manner that ensures that the bank have adequate
capital to hedge their risks.
2. Match the return to the risks.
Among the different types of risks, credit risk is the crown jewel as the profitability and
liquidity of the bank depends largely on forecasted cash flows.
28
Credit Risk needs to quantified so that it becomes more objective to deal with it. PNB
has its own credit risk analysis policy.
Description
Score Obtained
Grade
AAA
Minimum risk
Above 80.00
AAA
AA+
AA
AAA+
ABB+
BB
BBB+
B-
AA
BB
Marginal risk
Modest risk
Average risk
Marginally
Acceptable
Risk
29
High Risk
Caution Risk
Below 30.00
Some of the important risk rating models used in loan appraisals are summarized
as below:
S.
No.
1
2
3
Large Corporate
Applicability
Total Limit
Above Rs. 15 Cr.
Mid Corporate
New
Project
Rating
Models
Entrepreneur
New
Business Model
Credit Risk Rating model
for banks and FI
Business
Cr.
Cost of Project above Rs.
15 Cr.
requiring
Sales
Above Rs. 100 Cr.
Between Rs. 25 Cr and 100
30
ITEM NO:
CRR
Group Name
PNB share
100%
Gist
of crore
FreshforTerm
Loan of and
68.11
CR.
(i) For Fresh Term Loan: Sanction of Term
Loan of Rs. 68.11
Rehabilitation
operation
and maintenance of major district road proposal
and part of State Highway
in Kerala namely
Vidyanagarfor Construction
of Roads
and
Meppady- Seethangoli (MDR) and Uppala Kaniyana Road (MDR)
having
total
length
of
25
Kms.
BG Limit of Rs.4.05 Cr.
with total cost of Rs. 99.95 crore to be met by way of debt of Rs. 68.11 crore, promoters contribution
of Rs. 16.93 crore and VGF from State Govt. of Rs. 14.91 Crore.
Purpose
Rehabilitation and operation and maintenance of major district road and
part of State Highway in Kerala namely Vidyanagar- MeppadySeethangoli (MDR) and Uppala Kaniyana Road (MDR) having total
length of 25 Kms.
Cost of Project
Total Debt
Promoters
contribution
Grant
Proposed TL
(our share)
DER (Including Grant
Amt)
Repayment Period
Door to door tenor
TL
NA
Processing Fee
NFB
NA
Upfront fee
TL
NA
Document
Charges
Commission on
NFB
Other charges, if
TL
NA
NA
50% concession
NA
As applicable
BG
TL
31
Applicable rate
5 year MCLR i.e. 9.70%
+3.45% i.e. 13.15% p.a.
Rs. 300.00 per lakh or part
thereof.(Rs. 121500/-)
0.90% of the loan amount
with Min. Rs. 90.00 Lacs
Rs. 400/- per Lac or part
thereof max. Rs. 50000/BG: 0.50% per quarter min.
Rs. 200/During implementation:
any
TL
review
charges etc.
LB2
NA
27.05.16
NA
Score
ABS
Reasons
degradation
for
47.93
NA
NPM
NA
NA
NA
LGD-6
NA
NA
NA
NA
NA
Not yet rated. The Borrower shall get itself rated within 3 months from date of
sanction failing which additional interest of 1% p.a. shall be charged.
Non Priority
Weather Agriculture/
Retail/SME/ Others
Other- Infrastructure
NO
100% (being Unrated)
Sole-Banking
NA
100%
10.03.2016
03.05.2016
27.04.2016
20.06.2016
21.06.2016
NA. fresh relationship
NA, In-principle consent approved by NBG on 21.03.2016 at ROI of
BR+0.90%+0.50%TP i.e. 11.00%{Concession of 2.10%},
Upfront/Processing fee/Commission on BG: 50% concession.
Not created yet
-
32
4. Brief History:
The ABCD a state Govt. undertaking invited Proposal for Rehabilitation of State Highways and Major
District Roads - Package (A) (Modified) Total 25 Km in the state of Kerala under Design Build Finance
Maintenance & Transfer (DBFMT) on Annuity basis.
AB Tollways Ltd is a Company, which is a corporate partnership between Aand B group for execution of
Infrastructure Projects had submitted a bid for execution of Rehabilitation of State Highways and Major
District Roads. The main Criteria for selection of bidder was quoting of lowest annuity to be paid by the
concessioning authority. There were 4 bidders for this project. The details of the same are given
hereunder:
Sr. No.
Bidder Name
Annuity in Cr.
(half yearly)
Lower
10.73
L1
EK Consortium Ltd.
12.21
L2
E Engeering
13.50
L3
14.20
L4
AB Tollways Limited has quoted lowest annuity and declared as L1/Successful bidder.
The company has quoted half yearly annuity of Rs.10.73 cr. The Letter of Award (LOA)
was issued on 30th January 2016.
It was one of the conditions of tender document to float a new SPV for executing the project. Hence AB
TL has incorporated a new company under the name and style of ABCD Kerala Project Ltd., for executing
the project. ABTL will be having 99.99% shareholding in the SPV. The required concession agreement
has also been executed on 29th February 2016.
AB Tollways Ltd.
AB Tollways Ltd. Is a corporate partnership between A and B Group and was incorporated in 2005-06 for
executing BOT projects in Punjab A Builders (India) Private Limited and B Buildcon Private Limited along
with its associates are the major promoters and shareholders of ABTL.
The company has successfully completed and is operating 4 BOT projects and 2 operation and
maintenance projects in the state of Punjab. It has also entered into contracting activity and completed
one NHAI project in the year 2009-10 in the state of Punjab, 1 project in Rajasthan, and 1 in Maharashtra
recently as EPC contractor.
The company is dealing with our bank since 2006 and the track record of the company is satisfactory
The details of the BOT projects undertaken ABTollways Ltd are as under:
Particulars
A
B
C
D
Concession Period
17 years
17years
17 years
17 years
Awarding Authority
PIDB#
PIDB
PIDB
PIDB
Construction period as per 24 months
18 months
18 months
18 months
tender document
Actual Construction period
12 months
12 months
12 months
24 months
Toll Commencement date
6th March 2007
6th March 2007
20th Nov.2007
14th May 2009
Toll Collection in 2014-15 (Cr)
31.25
9.49
37.58
19.89
Toll collection till 30th Dec 2015
25.44
7.98
29.83
14.82
Banker
X
X
Y
Y
Details of 2 Operation & Maintenance Projects:
Particulars
Concession Period
(JN)
12 years
33
Awarding Authority
Toll Commencement date
Toll Collection from May Dec 2015
PWD (B&R)
May 2015
3.18 cr
The company had handed over Ropar-Phagwara project and Jagraon Nakodar project in the year 201415 after completion of contract. PWD (B&R) has once again awarded JN project to RRTL for operation
and maintenance. The concession period is 12 years and the toll collection has started in May 2015.
AB Group have successfully completed 9 BOT projects in the states of Maharashtra, Punjab and
Rajasthan. All the projects of the group have been completed within the time frames with good track
record with respective bankers.
4.A Facilities Recommended:
Nature
Existing
Proposed
Secured/Unsecured along with the
basis thereof (As per RBIs
guidelines)
Fund Based
Fund Based Ceiling
0.00
0.00
Non Fund Based
ILG
0.00
4.05
Unsecured
0.00
0.00
4.05
68.11
Unsecured
0.00
0.00
0.00
72.16
5.B
(i)Detail of loans from other Banks/Financial Institutions/Other Institutions
- (including WC limits, Term Loans, Lease, ICDs, Corporate Loans, Debentures
etc.)-NA, Fresh.
(ii)Non-interest Income/Service Charges by other Banks: - NA, Fresh
5.C Credit Rating by agencies {CRISIL/ICRA/CARE/FITCH INDIA} with purpose of such rating.
Agency
Rating
Date
of Significance of Purpose
Validity
Rating
Rating
Date
The Borrower shall get itself rated within 3 months from date of sanction failing which additional interest
of 1% p.a. shall be charged. Thereafter, the rating should be obtained and furnished to the Rupee Term
Lenders at least at annual intervals.
5D.
Details of Working Capital Limits from the Consortium/Multiple Banking/JLA Nil
Details of Group /Allied/Associate firms and the facilities sanctioned to them along with
conduct of these accounts with our Bank/ other Banks and comments on adverse
34
indicators, if any.:
Group exposure from Banking Industry:
6.A. Details of Group exposure with our Bank and comments on adverse indicators, if
any.:
(Rs. in Cr.)
Name of the company
FB Limit
NFB Limit
Term Loans
Grand Total
AB Tollways Ltd
15.00
60.00
0.00
3.00
7.00
22.00
74.00
137.00
29.10
66.57
95.39
20.45
72.13
283.64
35
197.63
197.63
512.50
286.51
167.42
167.42
512.70
247.27
160.87
160.87
516.42
384.16
31.04
1.70
0.70
1.36
10.98
1.16
0.59
1.28
(11.96)
0.86
0.52
1.26
170.67
118.84
72.13
81.00
442. 64
Particulars
31.03.13
Audited
1.81
19.27%
468.24
437.20
31.04
44.26
75.30
(31.04)
TOL/Adjusted TNW
Operating Profit/ total receipts
Long Term Sources
Long Term Uses
Surplus/ Deficit
Short Term Sources
Short Term Uses
Surplus/ Deficit
31.03.14
Audited
1.98
0.63%
443.53
432.55
10.98
69.18
80.16
(10.98)
31.03.15
Audited
2.05
7.39%
429.79
441.75
(11.96)
86.63
74.67
11.96
A. Primary
First Charge over annuity to be receivable from Road Infrastructure company Kerala
Ltd with escrow arrangement.
-
Hypothecation of all movables, tangible & intangible, receivables, cash & investments, project
current assets, all project agreements and monies lying in Trust & Retention A/c into which all the
investments in the Project and all Project revenues and insurance proceeds are to be deposited.
Assignment of all the rights along with escrow arrangement on annuity to the extent as
permissible under the already executed concession agreement.
36
Name of
Guarantor
Relationship
with
borrower
Net Worth
Prev.
As at
31.03.14
Shri K DirectorDirector
Shri P, Director Director
Shri
S
,Director
Director
Shri R
Director
Corporate
Guarantee of
M/s
AB
Tollways Ltd.
signment of all insurance
thereof in favour of bank.
-
Present
As at
31.03.15
Immovable property
Prev.
As at
31.03.14
Present
As at
31.03.15
Date of
confidential report
Prev.
As
Present
6.19
4.43
3.74
6.95
4.43
3.00
4.08
2.20
11.77
9.77
2.20
14.34
23.06.15 28.04.16
26.06.15 28.04.16
23.06.15 28.04.16
3.23
NA
3.23
279.01
2.76
0.00
2.76
0.00
23.06.15 28.04.16
12.06.16
Substitution rights for appointment of any other party in the event of default as available with the
concessionaire in favour of bank by way of required power of attorney and subject to terms and
conditions as contained in the concession agreement.
Collateral: Nil
v Status of verification of the IP:
Name of the Officer, who
Designation
PF No.
visited the site/IP
AGM(B) proposed that Site shall be physically verified before disbursement.
Date of Visit
37
financed by our bank have been implemented and toll collection has commenced.
10.B i) Value of the Account - NA. Fresh relationship
10.B ii) Deposits with details Nil
10.B (iii) Value of Group accounts:
AB Tollways Ltd
(Rs. In Crore)
Limit
2014-15
2015-16
Nature
Amou
Average
Interest/
Yield(% Average
Interest/
Yield(%
nt
Availmen Commissio )
Availmen Commissio )
t
n
t
n
Working
15.00
1.85
12.33
1.68
11.20
capital(FB)
NFB
60.00
0.41
0.19
Term Loan
12.96
12.97
Any
other
0.08
0.08
income such as
Escrow account
fee, etc.
Total
15.30
14.92
AB Rajasthan Infra Projects Ltd
Limit
2014-15
2015-16
Nature
Amount Average
Interest/
Yield Average
Interest/
Yield
Availment
Commission
(%)
Availment
Commission
(%)
NFB
3.00
Term Loan
131.20
18.15
16.69
Any other
0.05
0.05
income
such
as
Escrow
account
fee, etc.
Total
18.20
16.74
7.00
79.00
Average
Availment
2014-15
Interest/
Commission
0.29
Yield
(%)
(Rs. In Crore)
2015-16
Average
Interest/
Availment
Commission
0.91
0.24
0.08
0.30
0.08
0.61
1.29
Yield
(%)
PART II
11.A(i) Industry Rating: In terms of L & A Cir. No.08/2016 dated 28.01.2016, the industry rating
for Road project on BOT basis is Neutral.
11 A.(ii) Detailed Industry Scenario and Comments on management, production and
38
Sanction of fresh term loan of Rs. 68.11 Cr. for rehabilitation and operation and
maintenance of major district road and part of State Highway in Kerala namely
Vidyanagar-Meppady-Seethangoli(MDR) and UppalaKaniyana Road (MDR) having
total length of 25 Kms.
a) Justification for Fund Based Working Capital Limits: NA
b) Justification for Non Fund based limits: The Company have to provide performance security
of Rs. 4.05 Crores to the authority within 90 days from the date of Concession Agreement in the
form of Bank Guarantee. The Performance Security shall remain in force till the end of
construction period or shall be released upon the request of the concessionaire in case of
expenditure on project is not less than 30% of project cost. The BG is proposed at 10% cash
margin.
c) Justification for Term Loan/ILC:
The ABCD, a state Govt. undertaking is engaged in the development of State Highways and Major District
roads and had invited Proposal for Rehabilitation of State Highways and Major District Roads - Package
(A) (Modified) Total 25 Km in the state of Kerala under DBFMT on Annuity basis.
AB Tollways Limited has been selected as successful bidder based on lowest annuity quoted as
compared to other 3 bidders. The LOA is received on 30 th January 2016. The half yearly annuity quoted
by ABTL is Rs.10.73 cr.
Scope of work: Rehabilitation of the existing carriageway to the specified standard and operation and
maintenance of the road during the concession period. The Rehabilitation work will be within the available
ROW include improvements to the horizontal and vertical alignments, construction of new pavement,
construction/rehabilitation of major and minor bridges, culverts, road intersections, interchanges, drains,
road safety enhancement, project facilities and the operation and maintenance.
Location of the project
Rehabilitation, operation and maintenance of two road projects in
Kasardgod District having total length of 25 Km.
Vidyanagar-Seethangoli road and Upala Kaniyana Road
Length of the Road
25 KM
Awarding Authority
ABCD , State Government Undertaking
Date of Award
30th January 2016
Date of signing of Concession 29th February 2016
Agreement
Concession Period
14 years including Construction period of 12 months
Construction period as per
12 months
tender document
Annuity
Project is annuity based with half yearly annuity of Rs.10.73 Cr.
backed by LC for a period of 13 years commencing from March
2018.
Payment of Annuity
The annuity will be paid through LC. The first annuity will be paid
after 6 months from the date of COD i.e. August 2017.
Road Name
Type of Road
MDR
MDR#
39
40
(Rs in Crore)
Amount
84.84
4.24
2.83
4.29
3.75
99.95*
Amount
16.93
14.91
68.11
99.95
Equity
VGF (viability gap funding from authority)
Term Loan
Total
*AGM(B) has submitted that The Cost of Project accepted by ABCD is Rs. 81.00 crore, which is
excluding preliminary and pre operative expenses, interest during construction and interest after
construction but before the receipt of first annuity. Construction cost considered by ABCD as per
tender document is Rs. 81 crore i.e. Rs. 3.24 crore per KM.
The cost of construction (EPC contract value) is inclusive of 1% labour cess. The construction cost per
KM worked out by the company is Rs. 3.36 crore as against Rs. 3.24 crore considered by ABCD. The
cost worked out by ABCD is based on commodity and other indices in 2014-15 and the difference of Rs.
0.12 per KM is mainly on account of this.
The project will be funded out of equity of Rs. 16.93 Cr., Grant from the Authority i.e VGF of Rs. 14.91 Cr.
and term loan of Rs. 68.11 Cr. Authority will release the VGF after 50% equity is brought in by the
company and as per the stage of construction completion which is given hereunder:
Construction Phase
Grant (Rs.In Crores)
25%
50%
75%
90%
100%
Total
3.73
3.73
3.73
2.79
0.93
14.91
iv) Sources of Promoters Contribution and the time schedule as to when the funds will be
brought.:
The total contribution from the promoter company i.e. ABTL is proposed at Rs. 16.93 Crores, which will be
brought in from internal cash accruals of the company.
The construction of road will commence from September 2016. The detail of equity to be brought in
respective financial years is given hereunder:
Particulars
Equity
2016-17
11.51
2017-18
5.42
Total
16.93
ABTL is generating toll income from 5 road projects in Punjab. During the year 14-15, the company has
booked the total income of Rs.113.52 crores with PAT of Rs. 20.31 Crores and cash accruals of Rs. 44.70
Crores. The toll income till 31.12.2015 is Rs. 83.06 Cr.
Availability of internal resources with the company to bring in the required equity during the next two years
is estimated hereunder:
(Rs. in crores)
2017-18
Particulars
2016-17
159.78
Total income
140.63
62.97
PAT
42.44
85.16
Cash accruals
72.76
47.40
Repayment to be made during the year
49.81
37.76
Surplus available
22.95
41
Thus the company has the required means to bring in the required equity contributions.
v)Status of tie-up of loans: Company has requested our bank for entire funds requirement by way of
term loan of Rs. 68.11 Cr and BG limit of Rs. 4.05 Cr.
vi)Brief explanation for each major individual item of cost of Project with present status along with
comments on the reasonableness/competitiveness:
Construction cost: The total construction cost as estimated by the company is Rs. 84.84 Crores.
Particulars
Amount
Site clearance
0.32
Earth work
0.90
Granular sub base courses and base courses
9.43
Bituminous courses
21.78
Culverts
3.09
Repairs and rehabilitation of bridge and culverts
0.05
Electrical work
1.98
Drainage and protective works
39.54
Traffic signs, road marking etc
3.89
Bus bay
0.54
Wayside Amenities
1.92
Pavement distress treatment before strengthening
0.58
Sub total
84.00
Add: Labour cess 1%
0.84
Total 84.84
Add: Contingencies 5%
4.24
Total
89.08
The company intends to give a fixed price EPC contract for construction project to B Buildcon Private
Limited (BBPL) for the total consideration of Rs. 84.84 Cr. BBPL is the promoter company of ABTL and
has more than 25 years of experience in the contracting industry including construction of roads and
bridges. RBPL is currently executing two construction contracts having total contract value of Rs. 132.00
Cr. Considering the experience of BBPL in the contracting industry and working in Kerala it has been
decide to award the EPC contract for this project to them.
Preliminary Expenses: The Company has estimated the preliminary and pre-operative expenses at Rs.
2.83 crores and the details of the same are as under:
Paticulars
DPR Preparation Cost
Amount
0.89
1.78
0.06
0.10
2.83
Interest during construction: Rate of interest assumed is 11% p.a. payable monthly.
The construction period awarded in the tender is 12 months and interest during
construction has been worked out based on schedule of construction planned by the
company and the debt draw down schedule. The detailed working of interest during
construction period is as under:
42
Particulars
Sept
16
OctDec.16
Jan. 17March 17
Completion of
construction %
Construction cost
Preliminary and preoperative
Interest during
construction
Interest post
completion
Total out flow
Promoters
contribution
VGF from Authority
Loan from the
lenders
Total inflow
Cumulative loan
amount
15%
25%
35%
AprJune
17
20%
July and
Aug. 17
5%
Total
Sept. 17
to Feb.
18
Total
Project
100%
13.36
22.27
31.18
17.82
4.45
89.08
0.00
89.08
2.83
0.00
0.00
0.00
0.00
2.83
0.00
2.83
0.05
0.52
1.03
1.52
1.17
4.28
0.00
4.28
16.25
22.79
32.21
19.33
5.62
96.20
3.75
3.75
3.75
99.95
5.18
3.53
3.73
2.80
7.46
3.37
2.79
0.86
0.93
15.74
14.91
1.19
0.00
16.93
14.91
11.07
16.25
15.53
22.79
21.95
32.21
13.17
19.33
3.83
5.62
65.55
96.20
2.55
3.75
68.11
99.95
11.07
26.60
48.55
61.72
65.55
0.00
2.55
68.11
Contingency: The total construction cost of the project is estimated at Rs. 84.84 Cr. and
company has provided for contingency of 5% on the same amounting to Rs. 4.24
Crores.
vii Comments on all major technical aspects like locational advantage, Technology/
manufacturing process, power, man power, utilities, transportation, etc.
The said project includes two roads namely Vidyanagar-Seethangoli road and Uppala Kaniyana road.
Vidyanagar road starts at Vidyanagar from NH-17 and ends at Kumbala Badiadakka Road. UppalaKaniyana road starts from NH-17 at Kaikamba and ends at Bayar nesr Kerala- Karnataka Border.
The project roads have good connectivity to National Highways and State Highways.
Summary of profitability, Break-Even, DSCR and IRR with comments thereon including
Assumptions underlying profitability projections:
The road project has been awarded with the total concession period of 14 years with construction period
of 12 months. The project is fixed annuity based project with annuity period of 13 years. The construction
is estimated to commence from September 2016 and will be completed till August 2017. The first annuity
is payable after 6 months from the date of COD, hence the first annuity is expected in February 2018.
In case of completion of construction prior to schedule COD, then the bonus for earlier completion of the
project will be paid. Such bonus will be paid along with first annuity. The bonus will be equal to product of
average daily annuity and no. of days of earlier completion.
Amount of fixed half yearly annuity is Rs.10.73 Cr. i.e Rs. 21.46 Cr. p.a. payable for 13 years. The total
annuity payable for concession period is Rs. 278.98 Cr
Expenditure: The revenue costs associated with the project are mainly routine operation and
maintenance of the project. Routine operation and maintenance cost mainly consist of routine type of
repairs and maintenance, salary and wages of staff appointed for maintenance, administrative and other
cost required for maintenance of the project. The total estimate cost is Rs. 1.51 Cr. p.a. which is expected
to increase by 10% every year.
43
Periodic maintenance/renewal costs: The tender provides for the periodic maintenance and major
repairs till the facility is finally handed over to the Authority) with renewal (major maintenance) to take
place within 5th to 7th year. This being a capital expenditure has been provided in the cash flows and
amortized over the life of the project.
The periodic maintenance costs have been considered by company and the details of the same are as
under:
Particulars
Rs. in crores
10.27
14.57
Profitability: The construction of the project is estimated to be complete in August 2017 and first annuity
will be received in February/March 2018. The cash accruals are estimated at Rs. 5.68 Crores for the year
2017-18 and Rs. 13.30 Crores in the year 2018-19. The Net profit in the year 2017-18 is estimated at Rs.
1.20 Crores i.e. 10.59% of annuity income.
The project is eligible for Income Tax benefit U/s 80 (I) of the Income Tax Act. However, though the profits
of the company will be tax free, the company will have to pay Minimum Alternate Tax (MAT) @ 20% on
the book profits and has been factored in accordingly.
DSCR: Since the company is a SPV for execution of the Kerala Road Project, the DSCR for the project
and the company is the same:
(Rs. in crores)
1
2
3
4
5
6
7
8
9
10
11
Particulars
17-18
18-19
19-20
20-21
21-22
22-23
23-24
24-25
25-26
26-27
27-28
Profit after tax
0.62
4.76
5.55
6.11
6.50
5.81
5.53
6.16
7.52
9.02
10.00
Depreciation
4.48
7.39
7.39
7.39
7.39
8.00
8.69
8.69
8.69
8.69
8.69
Interest on term
loan
4.37
7.21
6.78
6.25
5.68
5.06
4.38
3.65
2.81
1.84
0.74
Total (A)
9.48
19.36
19.72
19.75
19.57
18.87
18.61
18.50
19.02
19.55
19.43
Interest on term
loan
4.37
7.21
6.78
6.25
5.68
5.06
4.38
3.65
2.81
1.84
0.74
Repayment of
term loan
1.50
3.50
4.60
5.00
5.50
6.00
6.50
7.25
8.35
9.75
10.16
Total (B)
5.87
10.71
11.38
11.25
11.18
11.06
10.88
10.90
11.16
11.59
10.89
DSCR (A/B)
1.61
1.81
1.73
1.75
1.75
1.71
1.71
1.70
1.70
1.69
1.78
Average DSCR
1.73
Maximum DSCR
1.81
Minimum DSCR
1.61
The commercial operations of the company are estimated to commence from the year 2017-18 and
hence computation of DSCR is from the said year.
Particulars
Stand Alone Project 2017-18
Company as a whole 2017-18
Debt-Equity Ratio
2.14
2.14
Average DSCR
1.73
1.73
Minimum DSCR
1.61
1.61
Interest coverage ratio
1.39
1.39
(ISCR)
2.07 (for full year of operation)
2.07 (for full year of operation
44
45
Physical Progress: The EPC contractor has started activities including site mobilisation,
mobilization of hot mix plant and site survey has been completed and preparation of DPR is in
advanced stage of completion. However, the EPC contractor will start the billing for the contract only
after financial closure and after the appointed date. By starting all these activities, the project will be
completed before time and the company will be able to get early completion bonus which has not
been considered in the finance model on a conservative side.
Financial Progress: The Company has received share application money of Rs. 8.74 crore and has
given mobilisation advance of Rs. 8.91 crore to EPC Contractor-M/s B Buildcon Pvt. Ltd.
Implementation schedule:
Issue of LOA
30th January 2016
Signing of concession agreement
29th Feb. 2016
Financial Closure
September-16
Start date of construction
September-16
Construction completion date
August-17
Start of First Annuity Payment
February-18
Concession period ends
August-30
xiii Draw Down Schedule Quarter-wise:
The construction period is 12 months. Hence the company will draw the term loan in 12 months period in
line with the execution of the project. The quarterly draw down schedule is projected as under:
Particulars
Sept 16
Oct Jan Apr July
Sept
Total
Dec 16
Mar 17
June 17
Sep 17
Feb 18
Equity
5.18
3.53
2.80
3.37
0.86
1.19
16.93
VGF
3.73
7.46
2.79
0.93
0.00
14.91
Debt
11.07
15.53
21.95
13.17
3.83
2.56
68.11
xiv) The construction will be completed in August 2017 and 1 st annuity will be received in March 2018.
Hence, the interest for the period till receipt of annuity has been capitalized.
xv) Proposed Repayment Schedule:
The loan is proposed to be repaid in structured 20 half yearly installments
Moratorium (in months)
Repayment period in months
No. of installment
Starting Date
6 months
121 months
20 half yearly installments
18 months from the date of first disbursement i.e.
March 2018
End Date (Last installment)
March 2028
Tail Period(18.59%)
29 Months
Door to door tenor (years)
139 months
The year wise repayment schedule is as under
Total repayment
Installment
1.50
2017-18
March 1.50
Sept 1.50
3.50
2018-19
March 2.00
Sept 2.10
4.60
2019-20
March - 2.50
Sept - 2.50
5.00
2020-21
March - 2.50
Sept - 2.75
5.50
2021-22
March - 2.75
46
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
Total
Sept - 3.00
March - 3.00
Sept- 3.25
March- 3.25
Sept - 3.5
March- 3.75
Sept 4.00
March- 4.35
Sept - 4.75
March 5.00
Sept - 5.25
March - 4.91
6.00
6.50
7.25
8.35
9.75
10.16
68.11
Detailed projected profitability projections, balance-sheet, cash flow are as per Appendix IV.
D) Review of existing term loan with present outstanding: NA, fresh relationship
13. Pricing:
Facility
Existing
Proposed
Applicable rate
TL
NA
5 year MCLR i.e. 9.70% 5 year MCLR i.e. 9.70%
Rate of Interest
+1.30% i.e. 11.00% p.a. +3.45% i.e. 13.15% p.a.
i.e. concession of 2.15%.
Processing Fee
NFB
NA
50% concession i.e. Rs. Rs. 300.00 per lakh or part
60750/thereof.(Rs. 121500/-)
Upfront fee
TL
NA
50% concession with min. 0.90% of the loan amount
Rs. 45.00 Lacs.
with Min. Rs. 90.00 Lacs
Document
TL
NA
As applicable
Rs. 400/- per Lac or part
Charges
thereof max. Rs. 50000/Commission on
BG
NA
50%
concession
i.e. BG: 0.50% per quarter min.
NFB
1.00% p.a +ST i.e. Rs. Rs. 200/- (Rs. 8.10 Lacs per
405000/- p.a.+ST
annum)
Other charges, if TL
NA
As applicable
During implementation:
any
10 paisa per Rs 100
TL
review
After implementation: 5
charges etc.
paisa per Rs 100
(a) Justification:
AGM(B) has submitted that the group has been banking with us since May 2006. The track record of the
group in terms of project performance, revenue and debt servicing is satisfactory.
ABTL, the holding company, maintains significant balances in the various escrow and current accounts
held with the bank.
NBG in its meeting held on 21.03.2016 have approved for evincing interest in the proposal at the above
pricing. Considering the value of the account, float in escrow and current accounts, long relation with the
group and future business prospects, AGM(B) has recommended for approval of pricing as above.
ZM, Ludhiana has endorsed the recommendation of AGM(B).
HO Views: We endorse the recommendations of AGM(B) & ZM.
ROI/other charges stipulated by other participating banks, if applicable: NA
(a) Projected income value:
(Rs. in Cr.)
47
NA
0.00
NA
0.70
NA
NA
NA
NA
NA
2.70
Strength-:
Excellent track record of the holding company, AB Tollways Limited (ABTL) in execution of BOT
Projects. ABTL is having track record of completing majority of projects before stipulated time.
RRTL is currently operating 5 large toll based projects in Punjab. The annual toll collection for the
year 2014-15 from all the 5 projects was Rs.113.52 crores.
The group as a whole has completed more than 12 BOT projects in the state of Punjab,
Maharashtra and Rajashtan. The promoters are experienced in this line of activity, with
established track record.
The scope of work involves only rehabilitation, operation and maintenance of Kerala Road
project.
Project is fixed annuity based, hence no risk of drop in traffic or change in Government policy is
involved.
The construction period for the project is 12 months and in case the company completes the
project before time, bonus will be paid to the company.
The total concession period is 14 years including construction period of 12 months. The total door
to door tenure of the loan is proposed at 139 months. Thus, there is a substantial tail after the
debt servicing is completed.
Weakness:
48
The performance of the infrastructure Industry is directly proportional to the economic growth of
the country. Any slowdown in this, can affect the performance of the company.
Mitigant: The project is fixed annuity based backed by LC from ABCD & there are assured level
of revenues.
Experience
Execution
Capability
&
MITIGATION/COMMENTS
2. DEVELOPMENT RISK
I.Pre Construction Risk
Finalization of key Low
With
contracts/
Concessionaire
agreements
Impact
Environment
Approval/
Consents/
Permits
Funding Risk
on
II Construction Risk
Land Acquisition
Low With Authority According to the Concession Agreement, the
and Concessionaire
Authority is under obligation to hand over 100% of
the Right of Way, free from all encumbrances for the
project site.
The Project is for rehabilitation and operation and
maintenance of major district road and accordingly
all required ROW is already available with authority
and no land acquisition is required.
49
of
Medium
With
Concessionaire
50
Risk of Material
Default
16. A
16.B
Recommendations :
Keeping in view the above, AGM(B) has recommended for sanction of fresh term loan of
Rs. 68.11 crore and Bank Guarantee of Rs. 4.05 crore on the terms & conditions as per
AppendixI and approval of pricing as per item no 13 of this note.
Nature
Term Loan
BG
Total Commitment
AGM(B) has certified that the stipulated terms and conditions have been duly discussed
with the borrower.
17. ZM Recommendations:
ZM, Ludhiana has also recommended for approval of sanction of fresh Term Loan of Rs.
68.11 crores and Bank Guarantee of Rs. 4.05 crore and approval of ROI/other charges
as proposed by AGM(B) subject to following stipulations:
51
Corporate guarantee of Holding company i.e. M/s Rohan Rajdeep Tollways Limited
be taken, apart from the guarantees of directors.
Cost of project be got vetted from the banks empanelled lender Engineer.
Margin on BG limit be kept in the shape of FDR under Banks Lien.
18. HO RECOMMENDATIONS:
1) Credit Risk Rating including Risk Factors & Mitigation:
The credit risk rating of the account is B2 with a score of 47.93%, signifying
Marginally Acceptable Risk, as per risk rating report dated 27.05.2016 carried out by
IRMD (HO) based on New Project Model(IRMD,HO report dated 27.05.2016 enclosed
as per Appendix VIII)
Major risk factors/other risk factors identified and factored in the Credit Risk Rating Report and its
mitigants are as under
S.No
Risk Factors
Mitigants by AGM(B)
DER
at
1.86
and
The project is annuity based project with half yearly annuity of
repayment period of Rs.
11 10.73 crore backed by LC for a period of 13 years
years is higher than
commencing from March 2018. As such higher repayment period
benchmark values.
of 11 years does not have major impact on the company.
IRR
at
15.32
and
The project is annuity based project with half yearly annuity of
Sensitivity on IRR at 14.27
Rs. 10.73 crore backed by LC for a period of 13 years
is lower than benchmark
commencing from March 2018. As such IRR at 15.32 is
values.
reasonable keeping in view the receipt of annuity backed by LC.
Most of the statutory
The company will apply for licenses from factories etc.,
clearances yet to clearance
be
of pollution control board and clearance of village
obtained by the company
Panchayats at the time of setting up Batching Plant and Asphalt
plant.
Delay in payment The
of project is annuity based project with half yearly annuity of
annuity may impact Rs.
the 10.73 crore backed by LC for a period of 13 years
revenue
commencing from March 2018. As such risk relating to delay in
payment of annuity is of no relevance.
BO/ZO to get the company
A condition in this regard has been stipulated to get the external
externally rated as per
rating done within a period of 3 months otherwise penal interest
extant guidelines
will be charged.
HO Views: We are stipulating that AGM(B) & ZO to monitor the Risk factors identified by IRMD, HO and
take necessary remedial steps to safeguard banks interest.
(2) Loan Policy:
The proposal conforms to banks policy guidelines.
(3) Industry Exposure:
Overall exposure ceiling for Infrastructure- Roads & Ports sector has been fixed at 5% of the total
advances of the bank as at 31.03.2016 and segment-wise sub-ceilings have been fixed as under:
(Rs. In crore)
Industry
Infrastructure-Road & ports
52
Exposure
% of Gross Credit in the Industry
Exposure Ceiling as per current loan policy
Amount of NPA in industry
% to total advances in the industry
13920.00
3.22%
5%
494.03
1.14%
NFB
NA
Upfront fee
TL
NA
Document
Charges
Commission on
NFB
Other charges, if
any
TL
review
charges etc.
TL
NA
Proposed
5 year MCLR i.e. 9.70%
+1.30% i.e. 11.00% p.a.
i.e. concession of 2.15%.
50% concession i.e. Rs.
60750/50% concession with min.
Rs. 45.00 Lacs.
As applicable
NA
50% concession
NA
As applicable
BG
TL
Existing
NA
Applicable rate
5 year MCLR i.e. 9.70%
+3.45% i.e. 13.15% p.a.
Rs. 300.00 per lakh or part
thereof.(Rs. 121500/-)
0.90% of the loan amount
with Min. Rs. 90.00 Lacs
Rs. 400/- per Lac or part
thereof max. Rs. 50000/BG: 0.50% per quarter min.
Rs. 200/During implementation:
10 paisa per Rs 100
After implementation: 5
paisa per Rs 100
The above is proposed on the terms and conditions as proposed in Appendix-I and additional
stipulations as follows:ZM Stipulations:
Corporate guarantee of Holding company i.e. M/s AB Tollways Limited be taken, apart from the
guarantees of directors.
Cost of project be got vetted from the banks empanelled lender Engineer(Since Done).
Margin on BG limit be kept in the shape of FDR under Banks Lien.
HO Stipulations:
i. Company to submit an undertaking certifying that accounts of all the group/allied concerns/companies are
in standard category. Further, the branch to extract CIR of the group companies from CIBIL &
Highmark at borrowers cost.
53
ii. Company to obtain statutory & non-statutory approvals, consents, NOC & clearances required for Project
implementation.
iii. The envisaged promoters equity contribution for the financial year 2016-17 to the extent of Rs. 11.51 Cr.
to be brought upfront before release of loan.
iv. Company to maintain DSRA equivalent to installment plus interest of minimum two quarters till LC to be
issued by ABCD .
v.
BO shall visit major risk factor, as identified by the IRMD, and take corrective steps, wherever
required, in order to safeguard the Banks interest.
vi. BO/ZO to monitor the timely induction of Promoters Equity Contribution so that the project is
implemented as per schedule within the given time & cost estimates.
vii. The Borrower shall get itself rated within 3 months from date of sanction failing which additional interest of
1% p.a. shall be charged.
viii. BO/ZO to get the Due Diligence Report before disbursement.
ix. Interest to be recovered on monthly basis as and when levied.
x. BO/ZO to ensure before release of loan that 100% right of Way is available.
Primary
security
of Term loan
Rs. 68.11 crores
31.87% (DER to be maintained at 2.13:1 at all times during the
execution of the project)
To finance
implementation
DBFMT
project
involving
Rehabilitation, operation and maintenance of major district road
and part of State Highway in Kerla namely Vidyanagar- MeppadySeethangoli (MDR) and Uppala Kaniyana Road (MDR)
The term loan together with interest, liquidity damages, costs,
charges, expenses and all other monies payable by the borrower:
54
55
Repayment
Prepayment
charges
Mandatory
prepayment
56
Penal Interest
Loan
documentatio
n
Registration of Charge in favour of ROC in favour of the bank to be got
charges
registered within the stipulated time period
Facility 2
Nature of facility
Amount
Purpose
Margin
Processing fee
Commission
Primary security
57
58
9. After provision of tax and other statutory liabilities, unless expressly permitted
otherwise, the bank will have a first right on the profits of the borrower for repayment of
amounts due to the bank.
10. The borrower shall keep the Bank informed of the happening of any event likely to
have a substantial effect on their profit or business: for instance, if the monthly
production or sales are substantially less than what had been indicated, the borrower
shall immediately inform he bank with explanations and the remedial steps taken and
/or proposed to be taken.
11. Effect any change in the borrowers capital structure where the shareholding of the
existing promoter(s) gets diluted below current level or 51% of the controlling stake
(whichever is lower), without prior permission of the Bank for which 60 days prior
notice shall be required.
12. The borrower will utilise the funds for the purpose they have been lent. Any
deviation will be dealt with as per RBI guidelines.
13. Promoters shares in the borrowing entity should not be pledged to any
Bank/NBFC/Institution without our prior consent.
14. Each of the following events will attract penal interest/charges as applicable, at rates
circulated from time to time, over and above the normal interest applicable in the
account:
a. For the period of overdue interest/instalment in respect of Term Loans and overdrawings above the drawing power/limit in Fund Based Working Capital Accounts on
account of interest/devolvement of letters of credit/bank guarantee, insufficient stocks
and receivables etc.
b. Non submission of Audited Balance Sheet within 8 months of closure of financial
year.
c. Non submission/ delayed submission of Follow-up/ Review Data such as QRS/ QMS
information, Project Progress Report etc. wherever stipulated, within due date.
d. Non submission of review/renewal data at least one month prior to due date.
e. Non-obtention of External credit risk rating from agency approved by RBI.
Other term and conditions
1. In the event of default, or where signs of inherent weakness are apparent. The Bank
shall have the right to securities the assets charged and in the event of such
securitization, the Bank will suitably inform the borrower(s) and guarantor(s).
2. Formulate any scheme of amalgamation or reconstruction.
3. Undertake any new project, implement any scheme of expansion/ diversification or
capital expenditure or acquire fixed assets (except normal replacements indicated in
funds flow statement submitted to and approved by the bank) if such investment results
into breach of financial covenants or diversion of working capital funds to financing of
long-term assets.
4. Invest by way of share capital in or lend or advance funds to or place deposits with
any other concern (including group companies); normal trade credit or security deposits
in the ordinary course of business or advances to employee can, however, be extended.
Such investment should not result in breach of financial covenants relating to
TOL/Adj.TNW and current ratio agreed upon at the time of sanction.
59
5. Enter into borrowing arrangement either secured or unsecured with any other bank,
financial institution, company or otherwise or accept deposits which increases
indebtedness beyond permitted limits, stipulated if any at the time of sanction.
6. Undertake any guarantee or letter of comfort in the nature of guarantee on behalf of
any other company (including group companies).
7. Declare dividends for any year except out of profits relating to that year after making
all due and necessary provisions and provided further that such distribution may be
permitted only if no event of default/breach in financial covenant is subsisting in any
repayment obligations to the Bank.
8. Create any charge, lien or encumbrance over its undertaking or any part thereof in
favour of nay financial institution, bank, company, firm or persons.
9. Sell, assign, mortgage or otherwise dispose of any of the fixed assets charged to the
Bank. However, fixed assets to the extent of 5% Gross Bloc may be sold in any financial
year provided such sale does not dilute FACR below minimum stipulated level. (Not
applicable for unsecured loans.)
10. Enter into any contractual obligation of a long term nature or which, in the
reasonable assessment of the Bank, is detrimental to lenders interest, viz. acquisitions
beyond the capability of borrower as determined by the present scale of operations or
tangible net worth of the borrower/ net means of promoters etc., leveraged buyout etc.
11. Change the practice with regard to remuneration of Directors by means of ordinary,
remuneration or commission, scale of sitting fees etc, expect where mandated by any
legal or regulatory provisions.
12. Not to Undertake any trading activity.
13. Permit any transfer of the controlling interest or make any drastic change in the
management set-up including resignation of promoter directors.
14. Repay monies brought in by the Promoters / Directors / Principal Shareholder and
their friends and relatives by way of deposits / loans / advances. Further, the rate of
interest, if any, payable on such deposits / loans / advance should be lower than the
rate of interest charged by the Bank on its term loan and payment of such interest will
be subject to regular repayment of instalments to term loans granted / deferred payment
guarantees executed by the bank or other repayment obligations, if any, due from the
borrower to the Bank.
15. The borrower shall keep the Bank advised of any circumstance adversely affecting
the financial position of subsidiaries / group companies or companies in which it has
invested, including any action taken by any creditor against the said companies legally
or otherwise.
16. The borrower shall deal with our bank / banks under consortium / multiple banking
arrangement exclusively, shall not open current account/s with any other bank without
our prior permission. The borrowers entire business relating to their activity including
deposit, remittances, bills / cheque purchase, non-fund based transactions including
LCs and BGs, Forex transactions, merchant banking, any interest rate or currency
hedging business etc. should be restricted only to the financing banks under
consortium/ multiple banking arrangement.
17. No commission to be paid by the borrowers to the guarantors for guaranteeing the
credit facilities sanctioned by the Bank to the borrowers.
60
18. Approach capital market for mobilizing additional resources either in the form of debt
or equity.
19. Fund Based Limits both in Working Capital and Term Loan, should be regulated
through as Escrow Mechanism as agreed among banks to avoid any kind of diversion of
funds
APPENDIX - II
(a)
Details of Associate/ Allied/ Group concerns and the facilities sanctioned to
them
Name Activity
Financials (Last 3 years)
Dealin Facilities
of the
g
Nature &
Co.
Bank Amount
AB
Infrastructu Period
31.03. 31.03. 31.03.
Tollwa re
and
TLRs.
13
14
15
ys Ltd
contracting Total
350.36cror
173.87 145.01 182.98
,
PNB,
es
income
SBI,
Profit after 27.53
8.34
20.31
Canar CC-Rs.15
tax
a,
cr
PAT/Sales 15.33
5.58%
10.81
%
%
%
L&T
BGRs.
Cash
56.59
73.34
81.39
Infra
60.89
accruals
crores
240.68 244.61 259.94
TN Worth
TOL
271.82 268.10 256.47
Outstandin
TOL/TNW
1.13
1.10
0.99
g TL Rs.
Current
66.22
40.51
69.03
167.47
Assets
crores
Current
77.76
69.18
91.44
Liab.
CCCurrent
1.50
1.38
1.52
Rs.11.72cr
ratio
without TL
BG Rs.
installmen
15.97 cr
t
(Rs.in cr)
Name of the Activity
Financials (Last 3 years)
Dealin Facilities
Co.
g Bank Nature &
Amount
B Builders Industrial Period 31.0 31.0 31.0
FB+TL
(India)
contracti
Rs.125
3.13 3.14 3.15
Pvt.Ltd.
ng,
crore
Total
722. 445. 312.
(BBIPL)
SBI,
and
income
47 00
61
Bank
NFB
Profit
14.9 10.9 4.28
Central Rs.138.0
after
2 1
Bank
0 crore
tax
61
PAT/Sa
les%
Cash
accrual
s
TN
Worth
TOL
TOL/T
NW
Current
Assets
Current
Liab.
Current
ratio
Name
Activity
of the
Co.
B
Constructio
Buildco n,
n
contracting,
Private
Limited
2.06
%
24.9
7
2.45
%
19.3
1
1.37
%
14.8
0
193.
95
323.
11
1.67
204.
47
223.
64
1.09
204.
26
157.
94
0.77
325.
96
222.
30
1.47
241.
69
157.
32
1.54
199.
06
125.
57
1.59
Period
Total
income
Profit
after tax
PAT/Sal
es%
Cash
accruals
TN
Worth
TOL
31.03
.13
421.0
7
13.97
31.03
.14
403.5
5
12.49
31.03
.15
363.2
1
8.84
3.32 3.09
2.43
% %
%
22.91 20.40 20.17
110.7
6
219.7
9
123.1
5
208.0
7
62
129.9
2
252.4
7
Axis
Bank
Saras
wat
Coop.
(outstand
ing as on
29.02.20
16 )
FB+TL
Rs.
52.08cr
NFB
67.70 cr
(Rs.in cr)
Dealing Facilitie
Bank
s
Nature
&
Amount
ICICI
Bank
Canara
Bank
Axis
Bank
Ratnak
ar Bank
FB Rs.
84 cr
NFB
Rs. 358
cr
Balanc
e
Rs.79.4
1
cr
and Rs.
TOL/TN
W
Current
Assets
Current
Liab.
Current
ratio
Name of Activity
the Co.
B
Road
Developer
s Private
Limited
SPV for
InfraStructur
e,
Project,
1.98 1.69
200.6
9
166.0
3
1.21
200.6
5
162.0
7
1.23
326 cr
1.94
PNB
257.8
3
204.8
2
1.26
Period
Total
income
Profit
after tax
PAT/Sale
s%
Cash
accruals
TN Worth
TOL
TOL/TN
W
Current
Assets
Current
Liab.
Current
ratio
0.18
96.30 90.23
%
%
0.26
9.88 10.06
9.6
5
0.0
0
-
0.01
0.00
0.00
0.001
0.00
0.01
0.00
0.12
0.00
63
0.0
01
0.0
01
-
(Rs.in cr)
Dealing Facilitie
Bank
s
Nature
&
Amount
Nil
Name of Activity
the Co.
AB
Infrastruct
ure
Name
the Co.
SPV for
road
projects
in
Maharas
htra
of Activity
(Rs.in cr)
Deali Faciliti
ng
es
Bank Nature
&
Amou
nt
Period
Total
income
Profit after
tax
PAT/Sales
%
Cash
accruals
TN Worth
TOL
TOL/TNW
Current
Assets
Current
Liab.
Current
ratio
1.94
0.11
27.67%
23.20%
5.10%
4.91
4.35
0.90
5.98
16.19
2.70
3.58
7.28
9.72
1.33
1.57
-0.47
0.00
0.00
1.67
0.73
0.51
2.16
4.90
3.07
0.77
64
NIL
(Rs.in cr)
Dealin Facilitie
g
s
Bank Nature
&
Amount
AB
Infrastructu
re Private
Limited
SPV for
Amritsa
r Bus
Termin
al
Project
Period
Total
income
Profit after
tax
PAT/Sales%
Cash
accruals
TN Worth
TOL
TOL/TNW
Current
Assets
Current
Liab.
Current
ratio
Name of Activity
the Co.
AB Toll SPV for
Roads
Amritsa
Limited
r
wagha
Road
Project
31.03.1
3
6.23
31.03.1
4
6.44
31.03.1
5
6.74
2.02
1.47
-1.92
32.42%
4.15
22.83%
1.52
0.50
5.72
4.21
0.73
4.22
7.63
2.68
0.35
6.93
5.97
6.38
1.07
11.21
4.21
2.40
6.38
1.00
2.88
1.76
(Rs.in cr)
Dealin Facilities
g Bank Nature &
Amount
31.03.1
3
36.90%
31.03.1
4
36.90
31.03.1
5
36.90
1.18
1.81
2.92
3.20%
13.05
4.91%
13.68
7.91%
14.79
52.39
175.77
3.35
17.50
54.21
154.28
2.84
18.20
57.12
152.42
2.67
11.22
65
NIL
BOB
India
Infra
Debt
TL
220.00 cr
O/S
Rs.165.5
9 cr
Current
Liab.
CR
Name of Activit
the Co.
y
AB
Rajastha
n
Infra
Projects
Ltd
Name
the Co.
SPV
for
Ghat
Ki
Guni
Road
Projec
t
16.80
11.42
6.38
1.04
1.60
1.76
(Rs.in cr)
Dealin Facilities
g Bank Nature &
Amount
of Activity
31.03.1
3
2.54
31.03.1
4
16.69
31.03.1
5
17.47
-1.92
-14.19
-11.90
-0.87
-5.54
-2.33
57.54
150.32
2.61
16.98
64.72
133.26
135.05
2.51
31.45
163.38
5.20
7.06
0.94
1.79
1.35
66
PNB
TL
112.50
TL
23.72
NFB 7.50
O/s TLRs.120.1
6 cr
BG- Rs.
3.00 cr
(Rs.in cr)
Dealin Faciliti
g
es
Bank Nature
&
Amoun
t
AB Warora
ROB
Infrastructu
re
Name
the Co.
SPV
for
Warora
ROB
in
Maharasht
ra
of Activity
AB Katol
ROB
Infrastructu
re
SPV
for
Katol
Byepass
in
Maharasht
ra
Period
Total
income
Profit after
tax
PAT/Sales%
Cash
accruals
TN Worth
TOL
TOL/TNW
Current
Assets
Current
Liab.
31.03.1
3
-
31.03.1
4
0.95
-2.21
-5.08
-0.97
2.82
12.78
25.43
1.99
0.48
13.96
25.09
1.80
0.54
14.61
23.15
1.59
1.50
1.39
1.38
0.02
Period
Total
income
Profit after
tax
PAT/Sales%
Cash
accruals
TN Worth
TOL
TOL/TNW
31.03.1
3
-
31.03.1
4
-
12.04
27.39
2.27
16.52
30.05
1.82
67
31.03.1
5
3.31SBI
TL23.75
O/S
Rs.22.
45
BG
0.87
o/s Rs.
0.65 cr
(Rs.in cr)
Dealin Faciliti
g
es
Bank Nature
&
Amoun
t
31.03.1
5
TL2.89SBI
26.80
O/S
-5.72
Rs.
25.96
cr
3.83
18.83
26.61
1.41
Current
Assets
Current
Liab.
AB
Highwa
ys Ltd.
SPV
for
Morind
a
Kurali
Projec
t
SPV
for
0.46
0.64
3.43
3.16
0.02
Period
31.03.1
3
31.03.1
4
Total
income
Profit after
tax
PAT/Sales%
Cash
accruals
TN Worth
TOL
TOL/TNW
Current
Assets
Current
Liab.
Name Activity
of the
Co.
AB
Hydro
0.37
Dealin Facilitie
g
s
Bank Nature
&
Amoun
t
31.03.1
5
TL - PNB
Rs.73
cr
24.75
72.28
2.92
0.08
3.39
Period
O/s Rs.
73 cr
31.03.1
3
68
31.03.1
4
Dealing
Bank
31.03.1
5
Facilitie
s
Nature
&
Amount
Power
Project
s
Chikotr
a
Hydro
Power
Project
Total
income
Profit after
tax
PAT/Sales%
Cash
accruals
TN Worth
TOL
TOL/TNW
Current
Assets
Current
Liab.
Bank
of TL-7.00
Maharashtr
cr
a
O/S
Rs.
7.00 cr
3.93
7.62
1.93
0.26
1.77
(b)
Comments on conduct of these accounts with our bank/other banks:
Satisfactory
(c)
Comments on adverse Financial Indicators, if any: NIL
APPENDIX III
(A)
Detailed Industry Scenario (As per latest updates of the
rating agency approved by the bank for advising the industry rating)
India has the second largest road network across the world at 4.7 million km. This road
network transports more than 60 per cent of all goods in the country and 85 per cent of
Indias total passenger traffic. Road transportation has gradually increased over the
years with the improvement in connectivity between cities, towns and villages in the
country.
In India sales of automobiles and movement of freight by roads is growing at a rapid
rate. Cognizant of the need to create an adequate road network to cater to the
increased traffic and movement of goods, Government of India has set earmarked 20
per cent of the investment of US$ 1 trillion reserved for infrastructure during the 12th
Five-Year Plan (201217) to develop the country's roads.
Market size
The value of roads and bridges infrastructure in India is projected to grow at a
Compound Annual Growth Rate (CAGR) of 17.4 per cent over FY1217. The country's
roads and bridges infrastructure, which was valued at US$ 6.9 billion in 2009 is
expected to touch US$ 19.2 billion by 2017. The financial outlay for road transport and
highways grew at a CAGR of 19.4 per cent in the period FY09-14.The plan outlay for
2015-16 stepped up budgetary support for Road Transport and Highways to Rs 42,912
crore (US$ 6.43 billion).
69
Key Investments/Developments
Some of the key investments and developments in the Indian roads sector are as
follows:
The Government of India plans to award 100 highway projects under the Public-Private
Partnership (PPP) mode in 2016, with expectations that recent amendments in
regulations would revive investor sentiments in PPP projects in the infrastructure sector.
The Ministry of Road Transport and Highways has undertaken development of about
7,000 km of national highways under Bharatmala Pariyojana at an estimated cost of Rs
80,000 crore (US$ 12 billion) in consultation with state governments. National Highways
Authority of India (NHAI) has invited bids for preparing Detailed Project Reports (DPRs)
for road development along the borders and coast lines under the Bharat Mala project.
The Union government approved the construction of around 1,000 km of expressways
at a cost of Rs 16.68 crore (US$ 2.5 million) on a design-build-finance-operate-transfer
(DBFOT) mode. The approved corridors are Delhi-Chandigarh (249 km), BengaluruChennai (334 km), Delhi-Jaipur (261 km) and Vadodara-Mumbai (400 km). The
government will also take up the development of 135 km long Eastern Peripheral
Expressway at an estimated cost of Rs 5,763 crore (US$ 865 million).
Government Initiatives: The Government has unveiled investments plans totalling Rs 10
trillion (US$ 150 billion) in highways and shipping sector by 2019. A total of 599
highways projects covering around 12,903 km of national highways have been
sanctioned1, incurring an expenditure of Rs 108,000 crore (US$ 16.2 billion).
The government, through a series of initiatives, is working on policies to attract
significant investor interest. The Indian government plans to develop a total of 66,117
km of roads under different programmes such as National Highways Development
Project (NHDP), Special Accelerated Road Development Programme in North East
(SARDP-NE) and Left Wing Extremism (LWE), and has set an objective of building 30
km of road a day from 2016.
Kerala Roads
There are 72 state highways in Kerala. Of them, MC Road (Main-Central Road),
proposed Hill Highway (Kerala) and Main Eastern Highway are the largest.The State
Road Improvement Project (SRIP) envisages to improve and upgrade 1200 km of State
Highways and Major District Roads to enhance the capacity and riding quality with
proper maintenance plan, road safety and reducing the expenditure on periodic
maintenance. The project is implemented by ABCD Company Kerala Ltd. Road
Infrastructure Company Kerala Limited (RICK) was incorporated on March 2012 as a
Special Purpose Vehicle with paid up capital contributed by Government of Kerala
(51%) and Kerala Road Fund Board (49%).[5] About 29 road sections totalling to a
length of 469 km has identified for rehabilitation improvements by the company.
Rehabilitation project include strengthening/reconstruction of pavement/structure,
70
junction improvements, provision of road furniture, bus bay byes and other traffic
management measures. The company plans to upgrade 32 roads of 644 km. Upgrades
involve widening the carriageway with paved shoulder (1.5 m on either side), widening
of narrow CD works, geometric improvements, junction improvements, identifying the
grade separation requirements, etc.
The company is executing rehabilitation project awarded by RICKL which is annuity
based project.
(B) Comments on
:i.
Management
Group
A
A
B
B
71
Mr. D is the promoter of B Group from Nagar. The group is engaged in industrial,
infrastructure contracting. He is a Civil engineer and having more than 20 years of
experience in this field.
A& B group have completed together various prestigious projects and is having skilled
technical staff and required infrastructure to execute such kind of projects. AB Tollways
Limited has been responsible for completion of 10 major projects. The track record of
AB Tollways Limited has been excellent and majority of the projects have been
completed on time.
APPENDIX IV
72
12
12
12
12
12
12
12
12
12
12
12
12
12
1718
1819
1920
2021
2122
2223
2324
2425
2526
2627
2728
2829
2930
3031
10.
73
0.5
7
11.
30
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
21.
46
1.1
5
22.
61
10.
73
0.5
7
11.
30
0.7
6
0.0
0
4.4
8
5.2
4
1.6
7
0.0
0
7.3
9
9.0
5
1.8
3
0.0
0
7.3
9
9.2
2
2.0
2
0.0
0
7.3
9
9.4
0
2.2
2
0.0
0
7.3
9
9.6
0
2.4
4
0.0
0
8.0
0
10.
44
2.6
8
0.0
0
8.6
9
11.
37
2.9
5
0.0
0
8.6
9
11.
64
3.2
5
0.0
0
8.6
9
11.
94
3.5
7
0.0
0
8.6
9
12.
26
3.9
3
0.0
0
8.6
9
12.
62
4.3
2
0.0
0
11.
70
16.
02
4.7
5
0.0
0
16.
85
21.
60
2.6
1
0.0
0
7.0
2
9.6
3
6.0
6
4.3
7
0.0
0
1.6
9
13.
56
7.2
1
1.3
6
7.7
0
13.
39
6.7
8
2.0
9
8.6
9
13.
21
6.2
5
2.4
5
9.4
0
13.
00
5.6
8
2.5
8
9.9
0
12.
17
5.0
6
2.0
4
9.1
5
11.
24
4.3
8
2.1
3
8.9
8
10.
97
3.6
5
1.9
2
9.2
4
10.
67
2.8
1
3.1
1
10.
97
10.
35
1.8
4
4.3
5
12.
86
9.9
9
0.7
4
5.6
1
14.
87
6.5
8
0.0
0
6.0
0
12.
58
1.0
1
0.0
0
7.3
2
8.3
3
1.6
7
0.0
0
7.6
6
1.6
7
0.4
9
1.2
0
1.7
9
5.9
1
2.0
0
6.7
0
2.1
5
7.2
5
2.2
5
7.6
4
2.1
9
6.9
6
2.3
0
6.6
8
1.9
4
7.3
1
2.3
0
8.6
7
2.7
0
10.
17
3.7
2
11.
15
3.1
5
9.4
4
2.0
8
6.2
5
0.4
2
1.2
5
5.6
Cash accruals
8
Projected Cash Flow Statement
Cash flow
statement
13.
30
14.
08
14.
64
15.
03
14.
96
15.
37
16.
00
17.
36
18.
86
19.
84
21.
14
23.
09
8.2
7
Particulars
Annuity Payment
Deferred Income
Total income
Routine maintenance
Concession Fees
Depreciation
Total Expenses
Particulars
Promoters
equity
VGF from
16-17
1718
11.51
11.19
5.4
2
3.7
18-19
1920
2021
2122
73
2223
2324
2425
2526
2627
2728
2829
2930
Authority
Term loan
48.55
Depreciation
Total inflow
Capital
expenses
Repayment of
term loan
71.25
2
19.
56
1.2
0
4.4
8
7.39
6.7
0
7.3
9
7.2
5
7.3
9
7.6
4
7.3
9
6.9
6
8.0
0
6.6
8
8.6
9
7.3
1
8.6
9
8.6
7
8.6
9
10.
17
8.6
9
11.
15
8.6
9
9.4
4
11.
70
6.2
5
16.
85
13.30
14.
08
14.
64
15.
03
14.
96
15.
37
16.
00
17.
36
18.
86
19.
84
21.
14
23.
09
5.1
4
6.5
0
7.2
5
8.3
5
9.7
5
10.
16
7.2
9
0.0
0
7.2
9
0.0
0
5.91
34.
38
28.
70
1.5
0
3.50
4.6
0
5.0
0
5.5
0
5.1
4
6.0
0
VGF written
off
0.5
7
1.15
1.1
5
1.1
5
1.1
5
1.1
5
1.1
5
1.1
5
1.1
5
1.1
5
1.1
5
1.1
5
1.1
5
30.
77
4.65
5.7
5
6.1
5
6.6
5
12.
28
12.
78
8.4
0
9.5
0
10.
90
11.
30
8.4
3
8.4
3
12.
26
8.3
3
20.
59
20.
59
8.4
9
29.
08
29.
08
8.3
8
37.
47
37.
47
2.6
8
40.
14
40.
14
2.5
9
42.
73
42.
73
7.6
0
50.
33
50.
33
7.8
6
58.
19
58.
19
7.9
6
66.
15
66.
15
8.5
4
74.
68
74.
68
12.
71
87.
39
87.
39
14.
66
102
.05
71.25
0.00
71.25
Opening
balance
0.00
Surplus/ deficit
Closing
balance
0.00
0.00
0.0
0
3.6
1
3.6
1
3.61
8.65
12.26
1819
1920
2021
2122
2223
2324
2425
2526
2627
2728
2829
2930
16.
93
13.
19
16.
93
10.
89
21.
06
48.
88
16.
93
9.7
5
28.
70
55.
38
16.
93
8.6
0
35.
66
61.
19
16.
93
7.4
5
42.
34
66.
73
16.
93
6.3
0
49.
65
72.
89
16.
93
5.1
6
58.
32
80.
41
16.
93
4.0
1
68.
49
89.
43
16.
93
2.8
6
79.
64
99.
43
16.
93
1.7
1
89.
07
107
.72
16.9
3
Net worth
11.
51
11.
19
0.0
0
22.
70
16.
93
14.
34
1.2
0
32.
46
7.11
37.
23
16.
93
12.
04
13.
80
42.
77
Term loan
48.
55
66.
61
63.1
1
58.
51
53.
51
48.
01
42.
01
35.
51
28.
26
19.
91
10.
16
0.0
0
0.0
0
0.00
Total
liabilities
71.
25
99.
07
100
.33
101
.28
102
.39
103
.38
103
.20
102
.23
101
.14
100
.31
99.
58
99.
43
107
.72
112.
82
Fixed assets
71.
99.
99.
99.
99.
99.
105
110.
110.
110.
110.
110.
117.
124.
VGF
Reserves and
surplus
74
0.57
95.3
2
112.
82
Net block
25
0.0
0
71.
25
95
4.4
8
95.
46
95
11.8
7
88.
07
95
19.
26
80.
69
95
26.
64
73.
30
95
34.
03
65.
92
.08
42.
03
63.
05
22
50.
72
59.
50
22
59.
40
50.
81
22
68.
09
42.
12
22
76.
78
33.
43
22
85.
47
24.
74
50
97.
18
20.
33
79
114.
02
10.7
6
0.0
0
3.6
1
12.
26
20.
59
29.
08
37.
47
40.
14
42.
73
50.
33
58.
19
66.
15
74.
68
87.
39
102.
05
Total assets
71.
25
99.
07
100
.33
101
.28
102
.39
103
.38
103
.20
102
.23
101
.14
100
.31
99.
58
99.
43
107
.72
112.
82
Depreciation
Conclusions
1. Lending is more of an art than an exact science. Taking perfect lending decisions
requires understanding the business of the company and analysing it from
multiple perspectives. While attempt is made to infuse objectivity in the
appraisal, sound lending decisions involves taking subjective view of the
proposal. This is where experience and judgment of the appraiser plays a key
role.
2. Since bank lends the funds deposited by the general public with expectations of
safety and security, the lending decisions taken by the banks primarily focus on
the safety of funds. Risk aversion and risk diversion are the main parameters in
the bank lending.
3. To remain viable, a bank must earn adequate profit on its investment. This calls
for adequate margin between deposits rates and lending rates. In this respect,
75
Varshney, P.N. (2014) Banking Law and Practice (25th Edition), Sultan Chand &
Sons Publication.
Indian Institute of Banking and Finance, (2014) Bankers Hand Book on Credit
Management, Taxmann Publications Pvt. Ltd.
Mukherjee, D.D. (2010) Credit Appraisal, Risk Analysis and Decision Making (6th
Edition), Snow White Publication Pvt. Ltd.
76
Websites:
https://www.pnbindia.in/En/ui/Aboutus.aspx
https://www.pnbindia.in/En/ui/CorporateMission.aspx
http://www.crisil.com/research/research.jsp
77