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April 2017

Premi Itta Udhyog Pvt. Ltd.


Proposal for Bank Financing

Executive Summary
Premi Itta Udhyog Pvt. Ltd. is a private limited company established with the objective of production and sale
of bricks. The plant of the company is located in Harmanadi, Hetauda covering around 25 Bigha Land. The
company is led by Mr. Sundar Bahadur Baniya.

The company is currently operating solely on equity investments from the directors of the company. Director's
have invested around NPR 62 million as on Chaitra end, 2073 for construction of the plant, infrastructures
and procurement of machineries and equipment. Directors of the company have invested in the company
through their personal borrowings.

The value of the plant, machinery and equipment of the company as on Chaitra end, 2073 amounted to NPR
44.8 million which has been financed entirely from Director's advances. The company is further planning to
expand the horizon of the brick factory through installation of new machineries and modification of the brick
plant. Such proposed expansion of the company is valued at NPR 20 million.

The company has proposed the banks and financial institution for financing the capital investments and
working capital of the company. The company has proposed Term Loan amounting to NPR 45 million for
financing the existing and new capital investments of the company and Overdraft amounting to NPR 3 million
for financing the working capital of the company.

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Premi Itta Udhyog Pvt. Ltd.
Proposal for Bank Financing

Premi Itta Udhyog Pvt. Ltd.


Proposal for Bank Financing

Introduction

Premi Itta Udhyog Pvt. Ltd. (previously named Shanti Itta Udhyog Pvt. Ltd.) is established as private limited
company under Companies Act, 2063 in Hetauda. The company was registered in company registrar on
2072/07/22 with registration no: 141614/072/073. The main objective of the company is production and sale
of bricks.

Ownership

Premi Itta Udhyog Pvt. Ltd. is a limited liability company established with following shareholders;

S.N. Personnel Paid up Share Capital (NPR)


1 Mr. Sundar Bahadur Baniya 37,50,000
2 Mr. Surendra Lal Shrestha 37,50,000
Total 75,00,000

Mr. Surendra Bahadur Baniya

Mr. Sundar Bahadur Banya is chairman of Premi Itta Udhyog Pvt. Ltd. He has over 20 years experience in
the brick industry. He started his career in brick industry through transportation of bricks in hetauda and
initiated his own brick factory under the name of Premi Itta Udhyog as propreitorship firm before 4 years
which is now converted into private limited company. Besides running brick factory he also owns restaurant
namely Dhaulagiri Highway Restuarant which has been in operation for more than two years.

Mr. Surendra Lal Shrestha

Mr. Surendra Lal Shrestha is director of Premi Itta Udhyog Pvt. Ltd. Besides the brick industry, he has been
involved in production and sale of handicraft items (metal statues and items) for more than ten years. He is
also proprietor of Sam Handicrafts.

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Premi Itta Udhyog Pvt. Ltd.
Proposal for Bank Financing

Product

Premi Itta Udhyog Pvt. Ltd. is involved in production of bricks. The standard size of the bricks produced in
the industry is about 10*5*3 inches. The company current produces three categories of bricks (Grade A
Bricks, Grade B Bricks {Mitha Pak} and Rath {Half Bricks}.

Plant Capacity and Production

Area Coverage

The plant of the company is located in Harnamadi, Hetauda. The brick factory covers the area of
approximately 25 Bigha with dock area covering around 1 Bigha. The company has obtained the land on
leasehold for the period of 15 years which can be extended.

Plant Capacity

The proposed plant can produce 1.8 million bricks in each operation cycle at 100% capacity with room for
expansion. The operation cycle of the brick is of around 17 days. In a year 11 operation cycles can be run by
in the plant assuming that the plant will function for 6 months in a year running at 100% capacity. Annual
brick production is approximately around 19.8 million bricks.

Materials and Inputs

The primary raw materials used for the production of ordinary type of bricks is clay and coal. Labour costs
forms integral component for the production of bricks. Variable overheads include fuel and electricity for
operation of machinery, water and transportation charges. The materials and input cost per unit of bricks
amounts to NPR 8.65 for FY 2072/73. The details of which is as follows;

Particulars Cost per unit of Brick


Raw Materials (Coal) 4
Labour Costs 2.36
Variable Overheads (Fuel, Electricity & Water) 1.5
Total Cost 7.86
Wastage Costs (10%) 0.79
Cost Per Brick 8.65

Labour Costs Break Down


Indoor & Outdoor Transport 0.38
Firing 0.40
Loading 0.38
Brick Making 1.2
Total Labour Costs per Brick 2.36

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Premi Itta Udhyog Pvt. Ltd.
Proposal for Bank Financing

Materials and Inputs Percentage

10%
Raw Materials

17% Labour Costs


46%

Variable Overheads (Fuel,


Electricity & Water)
Wastage
27%

Category of Bricks Produced

Three categories of bricks are produced in the factory for sale which are as follows;

Category Percentage
Grade A Bricks 80-85%
Grade B Bricks (Mitha Pak) 15-10%
Rath (Half Bricks) 5%

The average sale price per unit of brick is NPR 11 for FY 2073/74.

Human Resources

The company has been employing 15 permanent staffs. Other staff are employed on contract basis as per
the necessity.

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Premi Itta Udhyog Pvt. Ltd.
Proposal for Bank Financing

Equity

The company is established with share capital amounting to NPR 7.5 million. The directors of the company
have further injected cash in the form of Director's loan in the company which amounts to NPR 62 million as
of Falgun 2073.

Plant, Machinery and Equipment's

The capital requirements of the company for construction of brick kiln, infrastructures, plant & machineries,
vehicles have been done through financing from director's loan. The value of the plant, machinery and
equipment of the company as on Falgun 2073 amounted to NPR 48 million. The company further plans to
purchase new machineries and expand the infrastructures amounting to NPR 20 million.

The details of capital assets of the company upto Falgun 2073 is as follows;

Particulars Amount (NPR)


Office Building 3,200,000
Vehicles
Tractor-1 2,200,000
Tractor -2 1,600,000
Tripper 2,300,000
Plant & Machineries
Dock & Plant Infrastructure 17,00,000
Brick Machine 8,500,000
Excavator 7,500,000
Electricity Line / Road & Infrastructures 2,000,000
Others 500,000
Total Investments done 44,800,000

The company is currently operating in traditional method of brick production which is Labour extensive. The
company has envisioned to introduce the modern technology for the production of bricks which would make
the production process smooth and produce even high quality of bricks. Hence, the company is proposing to
import the new brick machine, VAC Loader and Dock (Trust) Expansion for the total approximate value of
NPR 10 million.

Particulars Amount (NPR)


Brick Machine 5,000,000
VAC Loader JCB 4,500,000
Dock (Trust) Expansion 10,500,000
Total Proposed Investments 20,000,000

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Premi Itta Udhyog Pvt. Ltd.
Proposal for Bank Financing

Financing Requirement

The company has been currently running from the investments of the directors of the company. Directors of
the company has invested in the company through their personal borrowings. Directors have invested NPR
62 million in the company for capital infrastructures and operation of the company. The company has been
running entirely on equity investment till date.

The company now proposes to pay back the director's investment made as director's advances and introduce
debt financing. Further, the company is in need of financing for expansion of the brick factory through
procurement of new brick machine, loader and expansion of oven/dock.

The company proposes term loan amounting to NPR 45 million for financing the capital assets and Overdraft
amounting to NPR 3 million for financing the working capital of the company total NPR 7 million financing
from bank.

Term Loan

Particulars Amount (NPR)


Plant, Machinery & Equipment as of Falgun 2073 44,800,000
Proposed Expansions for FY 2074/75 20,000,000
Total 64,800,000
Bank Financing through Term Loan (65%) 45,000,000
Equity Financing (35%) 19,800,000

The company has proposed NPR 45 million term loan for financing of capital assets of the company. The
term loan shall be repaid within 5 years.

Overdraft

The company proposes overdraft facility of NPR 30 million for financing the working capital of the company.
The projected working capital of the company for FY 2074/75 is as follows;

Particulars Amount (NPR)


Stock 37,440,000
Receivables 11,085,165
Current Liabilities 2,261,760
Net Working capital 46,263,405
Overdraft Limit Required 30,000,000
Percentage 65%

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Proposal for Bank Financing

Proposed Collateral

The company has proposed collateral amounting to NPR 145.7 Million for the proposed loan. The details of
the collateral are as follows;

S.N. Type Location Area Tentative Market Value (NPR)


1 Land Naikap 7.5 Anna 15 Million
2 Land Naikap 5 Anna 7.5 Million
3 Land Naikap 22 Anna 55 Million
4 Land Khaireni 4.5 Ropani 20 Million
5 Land Khaireni 32 Anna 50 Million
Total 147.5 Million

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Proposal for Bank Financing

Annexure 1
Photos of Factory Site

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Proposal for Bank Financing

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Proposal for Bank Financing

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