TECHNICAL APPRAISAL BY FINANCIAL INSTITUTION

Name of the Institution TO

M/s suzlon energy limited BE HELD ON:
MEMORANDUM NO:

TO CONSIDER THE SANCTION OF TERM LOAN OF RS. 602.18 LACS TO

SHRI TULSI R. TANTI PROP. OF M/S SUZLON ENERGY LIMITED, INDORE
FOR SETTING-UP A UNIT FOR MANUFACTURING OF READY MADE
GENERATORS AT PLOT NO. 42SM INDORE (M.P.)

CIBIL STATUS : Name of the Concern/Promoters is not

appearing on CIBIL defaulters list (Public Domain)
Factory Location : MAHALAXMI NAGAR Indore
Administrative Office: 42/2 MAHALAXMI NAGAR Indore
Residential Address : E-2-B, The Fifth Avenue, C-401, 4th Floor, Panchshil
Tech Park,
Dhole Patil Road, Near Regency Hotel, Yerawada, (Pune - 411001, India Pune -
411006, India
Constitution : A sole proprietorship concern

(Rs. in lacs)
Application Informatio BO/ZO HO Loan Loan For
Received n Appraisal Appraisal Applied Appraise HO
on Completed Completed Completed d Consideration
Date by on on
Promoters
on
602.18
12.02.10 12.04.10 20.04.10 602.18 602.18

Products Unit Capacity Prodn. Utilization based on Selling price

being (at 50%) One shift working
installed in 1st year 300 days in a year
4500Units 50% utilization in
the 1st year, 60% in
2nd year & 70%
from 3rd year
onwards
Generators 4500 4500 2250 2nd year – 45000/UNIT
2700

3rd year onwards –

3150

THIS PROJECT IS:-

• SSI unit
• The promoter is first time loanee to the Bank.
 • The promoter is having experience in this line.

PROJECT COST
(Rs.in MILLION)
Particulars Applied by the Appraised by For HO Security Cover Utilizatio
party Bank consideration n of
Term
loan
Land
102.79 102.79 102.79 102.79
Building

398.02 398.02 398.02 398.02 398.02

Plant & Machinery
incl. Electric
instillation 182.92 182.92 182.92 182.92 182.92
Misc. Fixed Assets
196.04 196.04 196.04 196.04
Margin Money for
Working Capital
23.47 23.47 23.47 23.47
Preoperative &
Preliminary
expenses 0.01 0.01 0.01 0.01
Total 580.94
903.27 903.27 903.27 903.27

FINANCIAL PARAMETERS
Promoters 33.33% Appraised by Means of Finance
Contribution
Debt-Equity ratio 2.00 Technical Financial (Rs. In lacs)
D.S.C.R. 2.40 Capital 301.09
Security Margin Mr. Ashok Girish Term Loan 602.18
(Project) 51.95 Jangid Mgr. R.Tanti,
(Overall) (Tech.) Manager
Return on own capital 49%
R.O. Capital employed 16% Mr. Pradip
Kumar
Khaitan
Repayment 8 years
Moratorium period 1.5 yrs..
Installments 13 half
yrly
Interest Rate 12%
Rebate on timely 1%
payment
Penal Interest Rate on 2%
default
Employment (persons) 20 Total 903.27

CONSULTANTS : PQR & Co. C.A.

BANKERS FOR W.C. : _______________Bank, Indore
MAIN Machinery SUPPLIER(s) : 1. M/s. Guru Teg Engg. Co., Ludhiana
2. M/s. Pareek Power & Pumps Pvt.Ltd.
Indore.
INTRODUCTORY
M/s suzlon energy limited, Indore is a proprietary concern of SHRI Tulsi R. Tanti. The
promoter proposes to set-up a unit for manufacturing Readymade Generators at Indore
with an installed capacity of 120000 Units per annum. The proposed unit will be in SSI
Sector. The promoter has acquired land admeasuring 2000 sq.ft. situated at Plot No.
42SM Indore from IDA. The promoter proposes to construct a building admeasuring
2400 sq. ft. and the estimated cost of constructing the factory building and auxiliary
building is Rs. 10.00 and Rs. 2.00 lacs respectively.

1. PROPOSAL IN BRIEF
The promoter of the concern proposes to establish a unit in the name of M/s suzlon
energy limited, Indore for manufacturing of readymade Generators. The main plant
supplier is M/s. Guru Teg Company, Ludhiana & M/s. Pareek Pvt.Ltd., Indore. The cost
of project of the proposed project is Rs. 90300 lacs and SHRI Tulsi R. Tanti has
approached the Bank for financial assistance of Rs. 602.00 lacs Term Loan for
implementation of the project.

2. PROMOTERS AND MANAGEMENT

The promoter of the concern is Shri Mr. Ashish Dhawan. Brief details about the
promoters & management is as under:-

Shri Mr. Ashish Dhawan Aged 25 years has done MBA in 1995 from Indore .
Thereafter he joined a Garment manufacturing company named M/s. Narayandas Udyog,
Indore as a Manager to gain experience. He is an income tax payee.

2(b) Details about associate concerns

Not applicable.

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

(Rs. In lakh)
Name of the Age Address Responsi- Financial I.T.
Promoter/ [yr] bility Worth Payer
Guarantor [F.A.]
Mr. Ashish 35 Indore Overall 1550.65 Yes
Dhawan
(1550.65)

3. GUARANTORS
The Promoter shall provide personal guarantee for repayment of loan :
Mr. Ashish Dhawan
 4. PAST PERFORMANCE AND FINANCIAL POSITION:
Not applicable. It is a new unit.

5. DETAILS ABOUT THE PROJECT

Land Rs 102.79LAC.
The promoter has acquired land admeasuring 2000 sq.ft. situated at Plot No. 42SM
Indore from IDA.

Building Rs. 398.02

The promoter proposes to construct a building admeasuring 2400 sq. ft. and the estimated
cost of constructing the factory building and auxiliary building is Rs. 10.00 and Rs. 2.00
lacs respectively.

Plant and machinery Rs.182.92

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

Misc.FixedAssets:R196.0
4
Misc. fixed assets is estimated at Rs. 5.00 lacs which includes fire fighting equipment,
safety equipment, office furniture and fixtures, etc.

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

7. COST OF PRODUCTION :
- Average Cost of Production is Rs. 25434/- per garment.

08. SELLING PRICE :

- Average selling price is Rs. 45000/- per piece.

09. MARKETING ARRANGEMENTS

The readymade Generators shall be sold through dealer net work.

10. ARRANGEMENT OF UTILITIES

RAW MATERIAL:
RAW MATERIAL:
The main raw material required for the unit is Cloth, which is easily and locally available.
The unit is being set-up at Indore & there is 5-6 factory are working in and around
Indore & they are producing cloth as finished product, so, no difficulty is envisaged in
procurement of Raw Material. The requirement of raw material at 100% capacity
utilization has been estimated.

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

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

MANPOWER:
The manpower requirement of the unit is 20 workers ( Skilled & Unskilled workers) & 5
administrative. Skilled and unskilled workers are locally available.

11. PROFITABILITY ESTIMATES:

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

(Rs in lacs)
Particulars I II III IV V VI VII VIII
Capacity
Utilization 50% 60% 70% 70% 70% 70% 70% 70%
Turnover 961.88 1204.88 1407.38 1417.50 1417.50 1417.50 1417.50 1417.50
Profit before
Depreciation,
Interest and 421. 507.9 596.0 595.6 595.6 616.3 616.3 616.3
Tax 43 7 2 4 4 3 3 3
Interest 80.7
1 82.69 76.09 65.03 53.92 42.80 31.68 20.57
Depreciation 66.94 59.87 53.66 48.20 43.39 39.15 35.40 32.07
Profit before
tax 273.78 365.41 466.26 482.40 498.33 534.38 549.25 563.69
Profit after
tax 193.11 257.25 327.84 339.14 350.29 375.53 385.94 396.05
Cash accruals 260. 317.1 381.5 387.3 393.6 414.6 421.3 428.1
05 2 0 4 8 8 3 2

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

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

II First half yearly installment 0.00

Second half yearly installment 46.32

III First half yearly installment 46.32

Second half yearly installment 46.32
 IV First half yearly installment 46.32
Second half yearly installment 46.32

V First half yearly installment 46.32

Second half yearly installment 46.32

VI First half yearly installment 46.32

Second half yearly installment. 46.32

VII First half yearly installment 46.32

Second half yearly installment 46.32

VII First half yearly installment 46.32

Second half yearly installment 46.32

Total 602.18

13. DEBT EQUITY RATIO:-

(Rs.in lacs)
Particulars Amount ( I Year)
Term Loan 602.18
Total 602.18

Net worth 301.09

Total 301.09
DEBT-EQUITY RATIO 2:1

14. SECURITY SCENARIO:

The security scenario vis-à-vis debt exposure shall be as under:-
[Rs.in lacs]
Particulars Amount Loan Amount
Prime Security Term Loan
- Proposed Assets 51.95 602.18
Additional Security if any 00.00
Total 51.95 Total 602.18

• The overall security margin available shall approx. 130%. (The additional security
is in form of freehold land admeasuring 10000 sq.ft. located at KH. No.42/2, 68/3
(Part) P.H. No.42, MAHALAXMI NAGAR, Indore belonging to SHRI Tulsi R.
Tanti Proprietor of M/s.XYZ, Indore)..

15. TECHNICAL FEASIBILITY

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

16. IMPLEMENTATION SCHEDULE & PRESENT STATUS OF THE

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

17. FINANCIAL INSTITUTIONS PRIOR EXPERIENCE

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

18. BROAD ASSUMPTIONS UNDERLYING PROFITABILITY ESTIMATES

Sr.No. Parameters Assumptions
01 Installed Capacity 4500 UNIT
No. of working days 300
No. of shifts One
% Capacity Utilization Ist Year - 50%
2nd Year - 60%
3rd Year onwards – 70%
02. Raw Material – Cloth Rs. 25434 per UNIT
03. Sale Price Rs. 45000 per UNIT
04. Salary & Wages 20 persons 20% benefits per year
05. Power & Fuel ST Connection which shall be proposed to
be availed from MPEB.
06. Depreciation WDV method
07. Interest on Term Loan @12% p.a.
08. Interest on Working Capital @12.00% p.a.

19. RECOMMENDATIONS:
Bank's appraisal team has recommended sanctioning a Term Loan of Rs. 602.18
lacs (Rupees Fourty Lacs) to SHRI Tulsi R. Tanti, Prop. of M/s suzlon energy limited,
Indore, for setting up a new unit for manufacturing of Generators at Indore (MP).

MANAGER DY. MANAGER

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

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

c) By way of hypothecation of plant & machinery.

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

MARGIN: - More than 25%

UTILIZATION:
(Rs. in lacs)
Particulars Amount
Land 102.79
Building 343.19
Plant & Machinery 157.72
Furniture 196.04
Contingencies 79.98
Preoperative and preliminary exp. 0.08
Margin Money for working capital 23.47
Total: 903.27

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

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

1) SHRI Tulsi R. Tanti

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

II First half yearly installment 0.00

Second half yearly installment 46.32

III First half yearly installment 46.32

Second half yearly installment 46.32

IV First half yearly installment 46.32

 Second half yearly installment 46.32

V First half yearly installment 46.32

Second half yearly installment 46.32

VI First half yearly installment 46.32

Second half yearly installment. 46.32

VII First half yearly installment 46.32

Second half yearly installment 46.32

VII First half yearly installment 46.32

Second half yearly installment 46.32

Total 602.18

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

PRE FIRST DISBURSEMENT CONDITIONS:

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

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