Location Jaipur

Borrower M/s. Uttam (Bharat) Electricals Pvt. Ltd.

Commercial Banking
Segment
Relationship Manager- Dinesh Jain
Date of
Last sanction Sanctioning Authority Nature of proposal
sanction
28-11-2008 COCC Renewal of LCBD Limits

Internal Credit Existing Proposed

Rating (ICR) NA IB2
Customer External
SE 1A by CRISIL
rating, if any
(Rs in lacs)
Existing Proposed
Borrower
500.00 1300.00
Exposure
Group Exposure 500.00 1300.00

1) Present proposal: For fresh sanction/ renewal/ enhancement of facilities listed below:
(Rs in lacs)
Facility Details Existing Limit Proposed Limit Net Change
Cash Credit 0.00 300.00 +300.00
LCBD 500.00 500.00 --
LC cum BG Limit 0.00 500.00 +500.00
Total Exposure 500.00 1300.00 +800.00

Brief comment on proposed request/transaction

Nature of Request: M/s. Uttam Bharat Electricals P Ltd is enjoying LCBD Limit of
Rs.500.00 lacs with us and Working capital Limits with Syndicate Bank. The company is
in the process of enhancing the limit. Hence, asked for our offer on CC and LC cum BG
Limits. The company is dealing with us for the last two years and no bill are overdue. We
have also approached number of times to the company for working capital limits. Now,
company has requested for our offer.

The company has also been rated as SE 1A (Highest Performance Capabilities and High
Financial Strengths) by CRISIL as on December 2008.

Security:
Primary Security:
Hypothecation of the current assets of the company comprising of stocks of raw material,
work in progress, finished goods, book debts and other current assets on paripassu with
Syndicate Bank

Collateral Security:
Equitable Mortgage of Factory Land & Building at Plot No B-189 (A) Road No. 411.00 lacs
9-F, VKI Area, Jaipur appx market valuation in paripassu with Syndicate Bank
Equitable Mortgage of Industrial Land & Building of the company situated at 365.00 lacs
VKI Area, Jaipur appx market valuation in paripassu with Syndicate Bank
Our Proportionate share on CC+LC cum BG Limit 238.70 lacs

1
Guarantees: Personal Guarantees of all the promoters Directors

Net Worth Rs in lacs as

Name Designation
at 31-03-2008
Mr. Atul Agarwal Director 33.96
Mr. Akhil Agarwal Director 37.37
Mr. Alok Agarwal Director 32.35

2) Brief Background:

I) Company / Promoters:

M/s Uttam Bharat Electricals P Ltd was incorporated on 10-05-1991 with a motive to
manufacture Power & Distribution Transformers. The company is one of the oldest suppliers
of Power Transformers for Sub Station requirement and Distribution Transformers for City /
Town / Village requirements.

Initially, M/s Uttam Bharat Electricals, a partnership firm, was established by Mr Purshottam
Agrawal in the year 1983, which was later on converted into company in 1991. Present
Directors of the company Mr Alok Agrawal, Mr Atul Agrawal and Mr Akhil Agrawal possess
25 years of rich experience in manufacturing the transformers. They are having strong
liason with officials of transmission companies, thus, success rate of the company in winning
the bids are very high, which is implied through Sales of the company in previous years.

M/s Uttam Bharat Electricals P Ltd always participates in bidding the tenders. The company
is regular supplier of state electricity board since inception 1991. Company’s product quality
is accepted. Company manufacturers Power and Distribution Transformers as specified in
tenders issued by RRVPNL, PSEB. Its product is tested and approved by Government
Electrical Engineers. Supply of quality products and completion of tenders with in the
prescribed time frame has received confidence.

The company is also engaged in repair & maintenance of Power & Distribution transformers.
These maintenance works are also allotted by state electricity companies through tenders,
in which M/s Uttam Bharat Electricals P Ltd also participates.

Company has Designing, Testing and R & D Teams to cater the demand of customers.
Products are tested by Government officials and in Government Approved Laboratory.

II) Business:

The company is engaged in manufacturing of Power and Distribution Transformers, which

are used for Stepping up or stepping down of electricity as required by customers.

Raw Material: Aluminum & Copper Wires, Transformer Cores, High & Low Tension Aluminum
& Copper Transformer Coils and other Insulation material

Supplier Name Product Length of Relationships

Mangal Electricals Industries Electrical 15 years
Dynamic Cables P Ltd Laminations
Zodiac Enterprises P Ltd Copper Insulated 15 years
Wires and Rods
Airen Metals P Ltd Copper & Aluminum 10 years
Wire & Rods
Coventry Metals P Ltd Copper & Aluminum 7 years
Wire & Rods
2
 Kalson Engineering & Industrial Transformer Tank 2 years
P Ltd

Terms of Purchase Domestic – Cash Payment / Credit of 60-

90 days
Raw Material Availability Ample
Price Volatility High
Ability to pass on Raw Material Price Yes, company has price escalation clause
Increase with its customers

In addition to above, CRGO sheet is also required for Manufacturing of Transformers, which
is imported from USA, Japan and Europe.

Customers: 70% of company’s sales are to government entities and 30% of sales go
towards turnkey projects, commercials projects and are used in all kinds of industries.
The company supplies around 15-20 government entities in north and west India as well.
These sales are on tender basis The Company is one of the approved suppliers of State
Electricity Companies: Sales of the company depend upon Tenders issued by these
companies. Tenders are issued as per requirement of electricity transmission companies for
supply of transformers.

M/s Uttam Bharat Electricals P Ltd always participates in bidding the tenders. The company
is regular supplier of state electricity board since inception 1991. Company’s product quality
is accepted. Company manufacturers Power and Distribution Transformers as specified in
tenders issued by RRVPNL, PSEB. Its product is tested and approved by Government
Electrical Engineers. Supply of quality products and completion of tenders with in the
prescribed time frame has received confidence.

In addition to supplying to government agencies, the company is also supplying

Transformers to various Power Infrastructure Turnkey Project Executants such as M/s Genus
Power Infrastructure Ltd, Jaipur, M/s Vestas Wind Technology India P Ltd, Chennai and
various builders for their commercial and residential complexes.

Major Customer Name Product Length of % Share in Sales

Relationships
Punjab State Electricity Board Transformer 17 years 24%
Jaipur Vidyut Vitran Nigam Ltd Transformer 17 years 18%
Ajmer Vidyut Vitran Nigam Ltd Transformer 17 years 15%
Genus Power Infrastructure Ltd Transformer 2 years 1%
Vestas Wind Technology India P Transformer 2 years 1%
Ltd

Terms of Credit Domestic – 30-45 days of credit for Government

Entities
Exports – Usance of 60 days
Orders 70% orders through Tenders to Governments
30% to private parties and turnkey project
executants
Exports Varies from 1-10% of net sales
To Bhutan, Nepal, Nigeria, Jorden on Tender basis
To Private Companies to Srilanka & Middle East

III) Industry:

3
The electrical equipment industry comprises several products such as transformers,
switchgears, motors, generators and control equipment. Large players also earn revenues
from erection of equipment and execution of turnkey projects. Electrical equipment is not
only used in the power supply industry [generation and transmission and distribution (T&D)]
but also in other manufacturing industries such as automobiles, cement, steel,
petrochemicals and refining.

The main buyers of electrical equipment are power utilities such as state electricity boards
(SEBs), National Thermal Power Corporation (NTPC), Power Grid Corporation, Tata Power,
and Reliance Energy Ltd (REL). Other manufacturing companies also purchase electrical
equipment, but in lesser volumes.

The supply of electrical equipment to power utilities and industrial undertakings is usually
done through competitive bidding. In view of the slowdown in investments in 2000-01 and
2001-02, there was intense competition, and hence, significant pricing pressure. However,
with the expected revival in investments in both the industrial and power sector over the
short-to-medium term, this pressure is expected to ease.

In 2007-08, the size of the electrical equipment industry stood at Rs 390 billion. The
industry grew at 15 per cent, marginally lower than 2006-07 (15.5 per cent). In 2008-09,
revenues are estimated to be around 15 per cent due to the expected growth in industrial
production and investments, especially in the power T&D sector.

3) Financial Summary & Review:

(Rs in lacs)
Parameter FY05- FY06-07 FY07-08 FY 08-09 FY09-10
06
(Aud) (Aud) (Aud) (Estm) (Proj)
Net Sales 3348 3709 6454 6765 7250
Non Operating
Income 7.51 10.80 8.37 15.00 17.00
EBIDTA 174 453 1009 1049 1178
PAT 56 229 580 581 669
Net cash flows 64 241 596 610 699
TNW 138 351 914 1477 2129
TNW incl. Quasi
Equity 336 565 1150 1715 2367
Debt 264 528 509 1100 1075
Debt Excl.
Preference
Share Capital 264 528 509 1100 1075
Total assets 1450 2045 2924 3801 4408

Ratios

Parameter FY05-06 FY06-07 FY07-08 FY 08- FY09-10

09
(Aud) (Aud) (Aud) (Estm) (Proj)
EBIDTA Margin 5.18 12.21 15.64 15.51 16.25
Net Margin 1.69 6.17 8.99 8.58 9.22
Debt/TNW 1.91 1.50 0.56 0.74 0.51
Debt/TNW excl.
1.50 0.56 0.74 0.51
Pref. Share capital 1.91
Debt/EBIDTA 1.52 1.19 0.51 1.05 0.91
Debt/EBIDTA excl. 1.52 1.19 0.51 1.05 0.91
4
 Pref. Share Capital
Current Ratio 1.15 1.19 1.46 1.69 2.01
Interest Cover 2.18 5.19 9.50 7.50 8.73

Performance of current year up to December 2008

Particulars Rs in lacs
Net Sales 5599.65
Net profit 84.57

Brief Comments on financials:

Sales Growth

(Rs.in lacs)
Year Net Sales Growth in Net Sales (%) PBDIT Margin (%)
2007-08 6454.55 73.99 % 15.52 %
2006-07 3709.63 10.78 % 11.95 %
2005-06 3348.65 60.62 % 5.05 %

The company has recorded robust performance during 2007-08. Net Sales of the company
as at 31-03-2008 was Rs.6454.55 lacs as against previous year net sales of Rs.3709.63 lacs
as at 31-03-2007, thereby registered growth of 73.99% during 2007-08.

The company is engaged in manufacturing of Power Transmission and Distribution

Transformers, which are used in Stepping up / stepping down the electricity. 70% Sales of
the company are to various state government electricity companies and remaining 30% of
sales are to Turnkey Project Executants and Commercial Projects. The promoters of the
company are into this line of activity since 1983 and have got very good contacts for
assured off take / Liason with Government Officials for tenders.

During 2005-06 the company undertook Capex and increased its production capacity of
Transformers from 336000 to 504000, which resulted into participation of additional tenders
and execution thereof, which boosted net sales during 2005-06.

Financial year 2007-08 was also remarkable year for the company and on account of better
utilization of capacity it could operate at maximum production level. The company also
bagged additional orders against increased requirement of other state governments such as
Punjab, UP, Bihar etc under Rural Electrification Project. The company also started supplying
Transformer to Turnkey Project Executants such as Genus Power & Infrastructure Ltd and
Vestas Wind Technology India P Ltd. This resulted in achievement of unprecedented growth.

In addition to supply of transformers, company also undertakes Repair & Maintenance Work
for State Electricity Companies through Government Tenders. Company has to repair the
burnt transformers and maintain the same for 5 years. These works are also allotted
through Tenders Process.

The company has established its name by supplying quality products and successful
completion of Repairing and Maintenance contracts of Transformers. Therefore, company
has recorded unprecedented growth.

5
PBDIT margin of the company has also improved substantially during last three years. It
has jumped from 5.05% as at 31-03-2006 to 15.52% as at 31-03-2008 on account of
improvement in production process and controlling Administrative Expenses.

The company has estimated net sales of Rs.6765.00 lacs during current year. Company has
also intimated that they have already registered net sales of Rs.5599.64 lacs as at 31-12-
2008 and are having orders worth Rs.4000.00 lacs in hand. Looking at the order book
position and performance of the company, we may accept the estimated sales.

Net profit:
The company registered net profit of Rs.580.00 lacs as on 31-03-2008 as against previous
year net profit of Rs.228.73 lacs. The company has also registered improvement in net
profit margin from 6.17% to 8.99%. The company also registered improvement in PBDIT
margin from 12.21% to 15.64% on account of improvement in production process and
controlling administrative expensive. During current year the company has estimated net
profit of Rs.580.46 lacs, which is in tune with previous year growth, which we may accept.

Current Ratio:
Current Ratio of the company is at 1.46 as on 31-03-2008 as against previous year ratio at
1.19 as at 31-03-2007. Ratio is estimated to improve to 1.69 as on 31-03-2009, it is well
above our bench mark level.

TOL/TNW:
TOL/TNW ratio of the company as on 31-03-2008 was 2.20 as against level of 4.83 as on
31-03-2007. The company has shown improvement in ratio due to plough back of entire
profit. Ratio is further estimated at 1.57 as on 31-03-2009 and at 1.07 as on 31-03-2010.
Improvement in ratio is expected on account of improvement in tangible net worth.

The overall financial position of the company is considered acceptable for the credit facilities
proposed.

4) Compliances:

Whether all terms of sanction complied with : Yes

Whether all prescribed documents obtained? : Yes
Whether necessary exchange of pari-passu letters/inter se :
N.A.
agreement has been completed
Whether solicitor's certificate regarding validity and enforceability of :
Yes
documents obtained?
Whether our charge with ROC has been filed : N.A.
Whether stock statements/QIS forms are regularly submitted : N.A
If not, whether penal interest is charged for delayed submission : N.A.
Whether insurance is available for all the securities charged to the bank :
Yes
and the same is valid as on date and adequate
Whether branch is carrying out unit inspections at the prescribed :
Yes
periodicity and preparing unit visit reports
Whether any adverse observations during inspections. If so, details. : No
Whether irregularity reports have been submitted to corporate office in time? : Yes
Any other pending issues : No

6
Conduct of the account:

Conduct of the account is satisfactory. No Bills under LC has been overdue / delayed till
date.

5) Risk & Mitigant Analysis:

Management Risk: Low:

The Core management team as explained above is highly qualified & well experienced in the
Industry. The average age of the Key Management Personnel is around 42-45 with 25 years
of experience.

Business Risk: Medium:

The Government of India acknowledged Power Distribution Reforms as the key area to bring
about the efficiency & commercial viability into the power sector in India. The Sub-
transmission and Distribution systems were the thrust areas during the 10 th & 11th Five Year
Plan. The reduction of AT&C losses with improvement of quality & reliability were given
special attention during the 10th & 11th Five Year Plan.

The demand for the T&D networks and power equipments would remain intact due to multiple
reasons over the next five years like:
 Ongoing power sector reforms initiated by Govt of India
 ‘Rajiv Gandhi Grameen Vidhyutikarn Yojna (RGGVY)’
 Notification of National Electricity Policy (2005)
 Rural Electrification Policy (2006)

Demand for power T&D devices is expected to grow at a CAGR of 12-15 per cent due to the
higher off-take expected from transmission and distribution (T&D) companies, which in turn
depends on successful implementation of the ongoing power sector reforms. The set up of the
National Grid and inter state connectivity in the 11th plan would be strong demand drivers.

With the government`s focus on power sector reforms aimed at increasing power-
generation capacity and improving efficiency in the T&D business, implementation of these
reforms will affect the industry positively.

In view of the government measures, demand of Power & Distribution Transformers will
continue to increase.

Financial Risk: Low: Overall financial position & ratios satisfactory.

1) Robust growth in turnover as reflected in strong revenue growth at a CAGR of
38.84% over the past three years.
2) Good Profitability as reflected in operating margins of 15.64% and net margin of
8.99% and return on Capital Employed of 70.75% during 2007-08.
3) Strong credit protection measured reflecting TOL/TNW Ratio of 2.20, interest
coverage ratio of 9.50 and total debt / net cash accruals of 1.25 and DSCR of 6.61 as
at 31-03-2008.
4) Good Liquidity as reflected in current ratio at 1.46 as on 31-03-2008.
5) Good Working capital management as reflected in receivables at 43 days, inventory
at 88 days and payables at 48 days, thereby net operating cycle of 83 days as on
March 2008

Structure Risk: Medium:

The Exposure is covered by way of Primary security of Current Assets & Fixed Assets of the
company on paripassu basis with syndicate Bank. Further, the Personal Guarantee of Mr.

7
Alok Agrawal, Mr Atul Agrawal and Mr Akhil Agrawal is also available. Hence structural risk
is medium

6) Policy compliance status:

Sl Actual Status of Reasons for

Parameter Banks's Norm
No Values Compliance Variance
Per Borrower
1 Exposure (Bank Rs.10000.00 lacs 1300 Yes
Norm)
Per Borrower
2 Exposure (RBI Rs 28612.59 lacs 1300 Yes
Norm)
Group Exposure
3 Rs. 30,000.00 lacs 1300 Yes
(Bank Norm)
Group Exposure (RBI
4 Rs. 76300.23 lacs 1300 Yes
Norm)
5 Credit Rating. IB 4 or Superior IB2 Yes
6 Profitability Profits for last 3 years 580.00 Yes
7 Liquidity Current Ratio: 1.33 1.46 Yes
TOL / TNW not to exceed
8 Gearing 2.20 Yes
3
Industry Thrust (10%) / Acceptable
9 Classification and (5%) / Negative Acceptable Yes
Exposure (Reduction)

7) Security offered:

Facility & tenure Primary Collateral Guarantees

Cash Credit Hypothecation of the A) Equitable Mortgage Personal
current assets of the of Factory Land & Guarantee of all
company comprising Building at Plot No B- the promoter
of stocks of raw 189 (A) Road No. 9-F, directors of the
material, work in VKI Area, Jaipur appx company
progress, finished market valuation of
goods, book debts Rs.411.00 lacs in
and other current paripassu with
assets on paripassu Syndicate Bank
with Syndicate Bank
LC cum BG Limit Cash Margin @ 10% B) Equitable Mortgage
of Industrial Land &
Building of the
company situated at
VKI Area, Jaipur appx
market valuation of
Rs.365.00 Lacs in
paripassu with
Syndicate Bank

Net worth of Guarantors:

Name Designation Net Worth Rs in lacs as

8
 at 31-03-2008
Mr. Atul Agarwal Director 33.96
Mr. Akhil Agarwal Director 37.37
Mr. Alok Agarwal Director 32.35

8) Internal Credit Rating- Movement & Justification:

Date of Rating Rating Comments in case of override of

generated rating
31-03-2008 IB2 Nil

ICR proposed: As per LCM Model rating sheet

Internal Credit Rating Based on Specific Facility Single scale

financials Model Grade Rating rating
of (Year)
Latest 2008 L2 FR1 IB42

External Rating (if any) along with details of rating agency and history of external
ratings:

Company has been rated as SE 1A – indicating Highest Performance Capability and

High Financial Strength by CRISIL as on December 2008.

9) Recommendations:

 The company was incorporated in the year 1991 and with presence of over 17
years in the manufacturing of power and distribution transformers, it has grown
into a valued vendor to electricity board, turnkey project builders, and other
government departments.
 The company has production capacity of 504000 KVA per annum.
 Promoters are into this activity since 1985
 Company has been rated as SE 1A – indicating Highest Performance
Capability and High Financial Strength by CRISIL as on December 2008.
 Internal Rating IB 2.
 Strength of the proposal are as under:

STRENGTHS:

6) Competent Promoters having 25 years of experience in the same line of business

7) Established Track Record of 25 years in the same line of business indicates the
company’s ability to survive business cycle.
8) Diverse Customer Base, product range, and well spread geographical reach add
stability to revenue streams.
9) Well established relationship with key customers and suppliers ensure regular orders
and timely availability of raw material, leading to stability in operations.
10)Robust growth in turnover as reflected in strong revenue growth at a CAGR of
38.84% over the past three years.
11)Good Quality of Production, as the company has an in house designing facility.
12)The company has its own testing team, which enhances execution capability.
13)High operational efficiency, owing to implementation of ERP Package for seamless
integration of all operation.

9
 14)The company is able to pass on raw material prices increases to customers, thus
shielding its margin from raw material price volatility.
15)Well defined organizational structure coupled with qualified and experienced second
tier management that has decision making powers.
16) Good Profitability as reflected in operating margins of 15.64% and
net margin of 8.99% and return on Capital Employed of 70.75% during
2007-08.
17) Strong credit protection measured reflecting TOL/TNW Ratio of 2.20,
interest coverage ratio of 9.50 and total debt / net cash accruals of 1.25 and
DSCR of 6.61 as at 31-03-2008.
18) Good Liquidity as reflected in current ratio at 1.46 as on 31-03-2008.
19) Good Working capital management as reflected in receivables at 43
days, inventory at 88 days and payables at 48 days, thereby net operating
cycle of 83 days as on March 2008

Submitted, for your kind approval

Dinesh Kumar Jain

Manager – CCB
Jaipur

10) List of Annexure:

1. Annexure I- Basic information file, present position of account MPBF calculation/

assessment of non funded requirement, financials of group companies, group exposure,
current borrowing arrangements
2. Annexure II- Financial spreadsheet
3. Annexure III- Internal Credit Rating Sheet
4. Annexure IV- Term Sheet
5. Annexure V – Industry analysis

10
 ANNEXURE I
1. Basic Information:
Parameter Details
1 Name of entity Uttam (Bharat) Electricals P Ltd
2 Constitution Private Limited Company

3 Year of incorporation 10-05-1991

4 Line of Business Manufacturer of Power and Distribution
Transformer and parts thereof
5. Plant location B–189-A, Road No. 9F, VKIA, Jaipur
6. Auditors P C Modi & Co.
Years of association Since Inception
7. If listed, stock market perception- Unlisted Company
Share price / market capitalization,
52 wk high/low, PE, volume traded
8. Ownership /shareholding pattern As under

Share Holding Pattern:

Paid up capital: Rs. 72.27 lacs (As on 31-3-2008)

Shareholder category % Holding
Promoters and Associates 100.00 %
Total 100.00 %

2. Management:

Net Worth Rs in lacs as

Name Designation
at 31-03-2008
Mr. Atul Agarwal Director 33.96
Mr. Akhil Agarwal Director 37.37
Mr. Alok Agarwal Director 32.35

2.1. Comment on:

• Whether company/ any director appears on latest RBI/CIBIL defaulters' list or SAL of
ECGC NO
• Whether company /any of its directors face any litigation from banks/Fis NO
• Whether the Directors/ senior executives of the company or their relatives are
connected with the Bank or are directors in any other bank NO
• Whether any commission has been paid to guarantors for extending their guarantee
for the advance NO

3. PRESENT POSITION OF ACCOUNTS WITH OUR BANK:

The company has been enjoying following credit facilities with our Bank:
(Rs in lacs)
O/S
Facility Limit Irregularity Exposure
06-02-2009
Sales Bill Discounting under LC 500.00 91.57 Nil 500.00
Total Exposure 500.00 91.57 Nil 500.00
11
 History of limits:
(Rs. in lacs)
Date of
Whether
last Nature of
S. No renewal / Limit Sanctioning Authority
sanction / Facility
enhancement
Renewal
Corporate Office Credit
1 14-08-2007 Fresh Sanction LCBD Limit 500.00
Committee
Corporate Office Credit
2 28-11-2008 Renewal LCBD Limit 500.00
Committee

Value of the account:

(Rs. in Lacs)
Particulars 01.04.2007 to 01.04.2008 to
31.03.2008 31.01.2009
Interest on Bill discounting 14.19 8.40
Commission on Bill discounting 0.03 0.05
Total 14.22 8.45

4. Group profile: NIL

5. Details of existing & proposed banking arrangement:

Type of Banking: Multiple Banking Arrangement

As On: 31-01-2009 (Rs. in lacs)
Sharing
Name of the FB Limits NFB Limits Total Limits IRAC
pattern (%) ROI
Bank status
E P E P E P E P
Syndicate Bank,
600 600 1200 1200 1800 1800 78% 58% Standard 11.50%
M.I. Road, Jaipur
Sub-total (other
600 600 1200 1200 1800 1800 78% 58% Standard -
banks)
Indusind Bank Ltd 500 800 0 500 500 1300 22% 42% Standard 11.50%
Grand Total 1100 1400 1200 1700 2300 3100 - -
E - Existing; P - Proposed

Primary security: - Hypothecation of Entire Current Assets of the company

Collateral security:
1. Equitable Mortgage of Factory Land & Building at Plot No B-189 (A) Road No. 9-F,
VKI Area, Jaipur
2. Equitable Mortgage of Industrial Land & Building of the company situated at VKI
Area, Jaipur

6.2 Term Borrowings:

As On: 31-10-2008 (Rs. in lacs)

Name of the Limit Disbursed O/s O/D Repayment Schedule IRAC
12
 Bank /FI amount status
Repayable in 60 equal Standard
Syndicate Bank 36 36 *27 0 monthly instalments after a
moratorium of 6 months.
Repayable in 60 equal Standard
Syndicate Bank 75 75 *37 0 monthly instalments after a
moratorium of 6 months.
Repayable in 60 EMI of Rs.
ICICI Bank 8.00 8.00 6.07 0 Standard
0.08 lacs each
Sub-total (from
119 119 71.07 0 -
other banks)
Total (Our Bank) 0 0 0 0
Grand Total 119 119 71.07 0 - -
* Outstanding as on 31.10.2008
The term loans availed by the company from Syndicate Bank were utilized for construction
of plant and for purchase of plant and machinery.
Loans availed from ICICI Bank are for the purchase of Cars.

6. MPBF CALCULATION

(Rs. in lacs)
2005-06 2006-07 2007-08 2008-09 2009-10
AUDITED AUDITED AUDITED Estimated Projected
Holding Level
Raw Materials (Amount) 287.96 364.05 667.41 757.00 900.00
[Months consumption] 1.26 1.41 1.58 1.77 1.97
Work in Progress (Amount) 33.68 45.12 239.64 250.00 275.00
[Months cost of production] 0.14 0.17 0.56 0.55 0.57
Finished Goods (Amount) 189.21 385.6 345.01 355.00 380.00
[Months cost of goods sold] 0.76 1.5 0.8 0.78 0.79
Domestic Receivables 570.13 733.53 881.84 1315.00 1555.00
[ Months Domestic Sales] 1.96 2.03 1.43 2.05 2.28
Other Current Assets (Amount) 160.65 197.47 398.24 553.92 710.90
Total Current Assets (A) 1241.63 1725.77 2532.14 3230.92 3820.90
Sundry Creditors (Amount) 653.92 572.81 713.42 500.00 450.00
[Months Purchases] 2.8 2.16 1.6 1.15 0.96
Other Current Liabilities
178.89 350.29 515.56 510.89 546.32
(Amount)
Total Current Liabilities
832.81 923.1 1228.98 985.89 966.32
(excluding Bank Bor) (B)
Assessment
Working Capital Gap (A-B) (C) 408.82 802.67 1303.16 2245.03 2854.58
Minimum Stipulated NWC (D) 310.41 431.44 633.04 807.73 955.23
Actual / Projected NWC (E) 170.16 288.61 800.07 1345.03 1954.58

13
MPBF (C-D) or (C-E) whichever is
98.41 371.23 503.09 900 900
lower
Excess Borrowings 140.25 142.83 0 0 0

Comments on holding level:

Raw materials:

Raw material holding level of firm as on 31-03-2008 was 1.58 months as against previous year
level of 1.41 months. It is estimated at 1.77 months as on 31-03-2009. Raw materials of the
company are Copper & Aluminum Wires, Conductors, Rods and Electrical Lamination, which are
purchased in bulk quantities / Full Truck Load to reap advantage of bulk purchase economies. In
view of the above, we may accept.

Work In Progress:

WIP level of the firm was 0.56 month during 2007-08 as against previous year level of 0.17
months during 2006-07. The firm has informed us that it is also supplying Power Transformers to
Turnkey Project Executants in addition to Regular Single Phase and Medium Phase Transformers,
which require additional configuration, hence WIP period during 2007-08 has increased. WIP Level
is estimated at 0.55 month during 2008-09 due to improvement in production process.

Finished Goods:

Finished goods inventory as on 31-03-2008 was 0.80 months as against previous year level of 1.5
months. Finished goods level of the firm is estimated at 0.78 months and 0.79 months during
2008-09 and 2009-10 respectively. Firm’s production is based on Tenders floated by electricity
companies and firm has to supply the transformers immediately, thus, FG holding level is projected
at lower side.

Debtors:

The debtors holding period reduced from 2.03 months as on 31-03-2007 to 1.43 months as on 31-
03-2008 due to better receivable management and realization of government proceeds. Company
has estimated debtor holding period at 2.05 months. Increase in debtor holding period is due to
generalized delay in realization of government bills.

Further, Debtors also included supply to Turnkey project executants under LC, therefore, company
is also availing Sales bill discounting facility under LC.

Sundry Creditors:

Creditor level of the firm is reduced from 2.16 months as on 31-03-2007 to 1.6 months as on 31-
03-2008. Holding level is estimated at 1351 months as on 31-03-2009. Holding level is reduced in
view of availing cash discount offered by suppliers.

MPBF:
The MPBF work out to Rs.900.00 lacs during 2008-09. The company is already enjoying CC Limit of
Rs.600.00 Lacs with Syndicate Bank. Thus, present request for CC Limit of Rs.300.00 lacs under
Multiple Banking is within the MPBF.

7.0 Assessment of LCBD limit:

(Rs. in lacs)
FY 2008-09
(Estimated)
14
Turnover for 2008-09 7700
Bills raised under LC (Approx. 30%) 2310
Monthly sales under LC 192.50
Tenor (Average) 90 Days
Total Eligibility 577.50
Total Requirement from our Bank 500.00
LCBD limit Recommended 500.00

The company supplies transformer to electricity board, turnkey project builders, and other
government departments. The average bill amount drawn by the company on its clients
depends on the material supplied. However, the billing ranges from Rs. 50 lacs to Rs.75
lacs. Some of the major buyers of company are: -

 Genus Overseas Electronics Ltd

 Vestas Wind Technology India P Ltd
 ABB Ltd.

8. Assessment of Non Fund Based Limits

Bank Guarantee
The firm is regular supplier of transformers and undertakes repair & maintenance works of
Electricity Companies. These companies issue tenders for supply of Power and Distribution
Transformers and Repair & Maintenance thereof. The firm is one of the approved suppliers
of transformers and regular bidder in the tenders since last 16 years. The firm has to submit
Bank Guarantees for the tenders bidding and onwards performance of orders.

(Rs. in lacs)
Present Outstanding
- Performance 340
- Adv. Payment 0
- Others 0
Total 340
(+) Additional guarantees required in the next one year

Projected Turnover 8200.00

574
Projected Supplies to Governments 70% of 5740.00
turnover
BG requirement @ 10% 574.00
(-) Guarantees expiring / Release in the next one year 50
Fresh Guarantees / Guarantees to be renewed 864

Letter of Credit

Projected Turnover 8200

Projected Monthly Turnover 683.33

15
 LC Requirement for Purchase of Copper / Aluminum

15% of Projected Monthly Turnover 102.50

Usance Time 90 days 410
Lead Time 15 days
Transit Time 15 days
LC Requirement 410.00
LC Requirement for Purchase of Lamination Sheets

20% of Projected Monthly Turnover 136.66

60% of above through Inland LC 82.00

Usance Time – Inland 90 days
Lead Time 15 days
Transit Time 15 days 765
LC Requirement 328

40% of above through Import LC 54.66

Usance Time – Import 180 days
Lead Time 30 days
Transit Time 30 days
LC Requirement 437
Total Projected LC Requirement 1175

Requirement of Guarantee Limits 864

Requirement of LC Limits 1175
Total Non Fund Based Limits 2039
Non Funded Limits with Syndicate Bank 1200
Limit yet to be tied up 739
Limit requested from us 500
Non Fund Based Limit Proposed 500

In view of the above, we propose the Bank Guarantee cum LC Limit of Rs.500.00 Lacs
(100% interchangeability)

16
 ANNEXURE II

FOR LARGE CORPORATES (LCM)

Uttam (Bharat) Electricals P Ltd

Output Sheet

(Rs. in
Lacs)
Part A- Operating Profit & Loss account
2006 2007 2008 2009 2010
Months for compute
(annualisation)
Last year of audited results 2008
31-03- 31-03- 31-03- 31-03- 31-03-
Year ended 2006 2007 2008 2009 2010
Projections
accepted by
Audited Audited Audited Estimates us

Actual duration of
Accounting Period
(months) 12 12 12 12 12

INCOME

Gross Sales :
Manufacturing - Domestic 3488.70 4332.52 7388.48 9500.00 11000.00
Manufacturing - Exports 274.26 7.82 10.01 10.00 15.00
Manufacturing - Total 3762.96 4340.34 7398.49 9510.00 11015.00
Trading - Domestic 0.00 0.00 0.00 0.00 0.00
Trading - Exports 3.36 0.00 0.00 0.00 0.00
Trading - Total 3.36 0.00 0.00 0.00 0.00
Sub Total - Gross Sales 3766.32 4340.34 7398.49 9510.00 11015.00

Of which, domestic gross

sales 3488.70 4332.52 7388.48 9500.00 11000.00
Export gross sales 277.62 7.82 10.01 10.00 15.00
Less Excise Duty & Sales Tax
(Manufacturing) 417.67 630.71 943.94 1050.00 1100.00
Less Duty & Sales Tax
(Trading) 0.00 0.00 0.00 0.00 0.00

Net Sales 3348.65 3709.63 6454.55 8460.00 9915.00

Export Incentives 0.00 0.00 0.00 0.00 0.00
Duty Drawback 0.00 0.00 0.00 0.00 0.00
Commission / Brokerage 0.00 0.00 0.00 0.00 0.00

17
received

Other Operating Income 2.86 8.30 4.15 5.00 7.00

Total Operating Income 3351.51 3717.93 6458.70 8465.00 9922.00

Profit on sale of assets/

investments 0.00 0.00 0.05 0.00 0.00
Interest from investments 5.81 3.58 7.08 10.00 12.00
Forex gains on capital items 0.00 0.00 0.00 0.00 0.00
Non-op. income from
subsidiaries 0.00 0.00 0.00 0.00 0.00
Tax Refund 0.00 0.00 0.00 0.00 0.00
Other Non Operating Income 1.70 7.22 1.24 1.25 1.50
Total non-operating
Income 7.51 10.80 8.37 11.25 13.50

TOTAL INCOME 3359.02 3728.73 6467.07 8476.25 9935.50

EXPENDITURE
Raw materials consumed -
Imported
Opening Stock 0 0.00 0.00 0.00 0.00
Add: Purchases 0.00 0.00 0.00 0.00 0.00
Less: Closing Stock 0.00 0.00 0.00 0.00 0.00
Sub Total 0.00 0.00 0.00 0.00 0.00

Raw materials consumed -

Indigenous
Opening Stock 232.6 287.96 364.05 667.41 800.00
Add: Purchases 2800.47 3179.68 5357.11 6650.00 7750.00
Less: Closing Stock 287.96 364.05 667.41 800.00 900.00
Sub Total 2745.11 3103.59 5053.75 6517.41 7650.00

Power and fuel 12.83 13.68 17.42 20.00 25.00

Direct labour and wages 53.86 51.80 95.08 100.00 105.00
Consumable stores 0.44 2.15 1.43 1.60 1.75
Repairs & maintenance 1.04 2.92 2.48 3.00 3.50
Packaging expenses 0.00 0.00 0.00 0.00 0.00
Other manufacturing expenses 72.20 97.58 165.97 175.00 200.00

Sub Total 2885.48 3271.72 5336.13 6817.01 7985.25

Add: Op. Stock of WIP 65.23 33.68 45.12 239.64 250.00

Less: Cl. Stock of WIP 33.68 45.12 239.64 250.00 260.00

18
Cost of Production 2924.85 3272.78 5157.87 6836.65 8003.25

Opening Stock (Trading

Activity) 0.97 0.30 0.30 2.55 3.00
Add: Purchases (Trading
Activity) 1.00 0.00 4.21 5.00 7.00
Less: Cl. Stock (Trading
Activity) 0.30 0.30 2.55 3.00 3.35
Sub Total 1.67 0.00 1.96 4.55 6.65
Opening F.G.
(Manufacturing) 245.51 188.91 385.30 342.46 400.00
Closing F.G.
(Manufacturing) 188.91 385.30 342.46 400.00 450.00
Cost of Goods Sold 2983.12 3076.39 5202.67 6783.66 7959.90

Personnel Cost 22.84 28.72 41.10 45.00 50.00

Gen. & Administration Exp 67.90 68.44 98.22 105.00 115.00
Selling exp. 116.24 113.53 131.45 135.00 145.00
Other Expenses 0.00 0.00 0.00 0.00 0.00
Depreciation 7.82 12.50 16.26 30.00 28.00
Cost of Sales 3190.10 3287.08 5473.44 7068.66 8269.90

Interest 79.55 87.19 106.21 125.00 135.00

Non Operating Expenses

Loss on sale of assets 0.00 0.00 0.00 0.00 0.00
Prem. Expenses w/off 0.00 0.00 0.00 0.00 0.00
Other Non- operating exp. 3.20 1.26 0.57 0.00 0.00

Sub-total : Total Non-

operating expenses 3.20 1.26 0.57 0.00 0.00

Total Expenses 3272.85 3375.53 5580.22 7193.66 8404.90

Provision for taxation 29.70 124.47 306.85 425.00 450.00

Gross Profit - Trading 1.69 0.00 -1.96 -4.55 -6.65

Gross Profit -Manufacturing 363.84 633.24 1253.84 1680.89 1961.75
Gross Profit - Total 365.53 633.24 1251.88 1676.34 1955.10
Operating Profit 161.41 430.85 985.26 1396.34 1652.10
OPBDIT 169.23 443.35 1001.52 1426.34 1680.10
PBDT (after interest) 93.99 365.70 903.11 1312.59 1558.60
Profit before interest & tax 165.72 440.39 993.06 1407.59 1665.60
Profit Before tax 86.17 353.20 886.85 1282.59 1530.60

19
Profit before Tax but
excluding extraordinary
items 86.17 353.20 886.85 1282.59 1530.60
Net Profit After tax 56.47 228.73 580.00 857.59 1080.60
Cash Profits 64.29 241.23 596.26 887.59 1108.60

Prior Years Adjustments

Cash Adjustments (+/-) 0.00 0.00 0.00 0.00 0.00
Non Cash Adjustments (+/-) 0.00 0.00 0.00 0.00 0.00

Extraordinary Expenses 0.00 0.00 0.00 0.00 0.00

Extraordinary Income 0.00 0.00 0.00 0.00 0.00

Adjusted PAT for the year 56.47 228.73 580.00 857.59 1080.60
(excluding Prior year
items)

Appropriation of Profits:
Dividend:
On Equity Capital 14.46 14.46 14.46 14.46 14.46
On Preference Sh.
Capital 0.00 0.00 0.00 0.00 0.00
Dividend tax 2.03 2.03 2.46 2.46 2.46
Transfer to/ (from) General
Res. 0.00 0.00 0.00 0.00 0.00
Other appropriations 0.00 0.00 1.14 0.00 0.00
Partners' withdrawal 0.00 0.00 0.00 0.00 0.00
Net profit after
appropriations 39.98 212.24 561.94 840.67 1063.68
63.37 275.61 837.55 1678.22
Retained Earnings 39.98 212.24 563.08 840.67 1063.68

BALANCE SHEET

LIABILITIES:
Equity Share Capital
Share Capital (paid-up) 72.28 72.28 72.28 72.28 72.28
Share Application (finalised for
allotment) 0.00 0.00 0.00 0.00 0.00

Sub Total 72.28 72.28 72.28 72.28 72.28

Reserves & Surplus:

20
Partners / Proprietor's capital 0.00 0.00 0.00 0.00 0.00
Balance in P&L Account 63.37 275.61 837.55 1678.22 2741.90
General Reserve 0.00 0.00 0.00 0.00 0.00
Revaluation Reserve 36.94 36.94 36.94 36.94 36.94
Share Premium 0.00 0.00 0.00 0.00 0.00
Capital subsidy 3.70 3.70 3.70 3.70 3.70
Others 0.00 0.00 0.00 0.00 0.00

Sub-total 104.01 316.25 878.19 1718.86 2782.54

Less: Investment in/advances
to group cos. 0.00 0.00 0.00 0.00 0.00
Less: Revaluation Reserve 36.94 36.94 36.94 36.94 36.94
Less : Accumulated Losses 0.00 0.00 0.00 0.00 0.00
Less: Misc. & Prem. Exp. Not
w/off 1.84 0.57 0.00 0.00 0.00
Less:Other intangible Assets 0.00 0.00 0.00 0.00 0.00
Tangible Networth 137.51 351.02 913.53 1754.20 2817.88

Term Liabilities:
Secured :

Debentures (due beyond a

year) 0.00 0.00 0.00 0.00 0.00
All Term loans from others 13.67 6.08 3.07 175.00 135.00
Project/ Capital creditors 0.00 0.00 0.00 0.00 0.00
Long term trade advances 0.00 0.00 0.00 0.00 0.00
Others 0.00 0.00 0.00 0.00 0.00

Total secured 13.67 6.08 3.07 175.00 135.00

Unsecured :

Preference share capital (due

beyond a year) 0.00 0.00 0.00 0.00 0.00
Loans from
Promoters/Partners/Associates 198.08 213.64 237.09 237.09 237.09
Due to group companies 0.00 0.00 0.00 0.00 0.00
Public Fixed Deposits 0.00 0.00 0.00 0.00 0.00
Others 0.00 0.00 0.00 0.00 0.00

Total unsecured 198.08 213.64 237.09 237.09 237.09

Total term liabilities 229.65 249.42 275.51 447.44 407.44

Deferred Tax Liability 17.90 29.70 35.35 35.35 35.35

21
Current Liabilities:

Creditors for purchases

- Under L/C 0.00 0.00 0.00 0.00 0.00
- Others 653.92 572.81 713.42 725.00 735.00
Creditors for expenses 5.44 8.97 5.69 10.00 12.00
Loans & advances (Current
portion) 79.59 155.30 137.70 100.00 100.00
Statutory liabilities due within
one year 12.38 10.16 23.49 25.00 25.00
Provisions
- Tax 30.47 112.90 301.19 150.00 160.00
- Dividend 16.49 0.00 0.00 0.00 0.00
-Others 28.27 57.54 41.01 25.00 15.00
Share Application money
(allotment not finalised) 0.00 0.00 0.00 0.00 0.00
Bank Borrowings - From our
Bank 0.00 0.00 0.00 800.00 800.00
Bank Borrowings - From other
Banks 238.66 514.06 503.09 0.00 0.00
Bank Borrowings - Bills
discounted 0.00 0.00 0.00 500.00 500.00
Commercial Paper 0.00 0.00 0.00 0.00 0.00
Other short term borrowings 0.00 0.00 0.00 0.00 0.00
All LT Liabilities due within one
year 11.79 7.59 3.01 25.00 40.00
Other Current Liabilities 6.25 5.42 6.48 7.00 8.00

Total Current Liabilities 1083.26 1444.75 1735.08 2367.00 2395.00

Total outside liabilities 1312.91 1694.17 2010.59 2814.44 2802.44
TOTAL LIABILITIES 1450.42 2045.19 2924.12 4568.64 5620.32

ASSETS

Fixed Assets:

Gross Block 279.29 398.37 425.35 605.00 615.00

Less: Accumlated Depreciation 68.24 80.74 96.46 126.46 154.46

Net Block 211.05 317.63 328.89 478.54 460.54

Capital Work in progress 1.64 0.00 1.33 0.00 0.00

22
Investments :

Investments in current assets 0.00 0.00 0.00 0.00 0.00

Deferred Tax Asset 0.00 0.00 0.00 0.00 0.00

Current Assets

Inventory
Raw Materials - Imported 0 0.00 0.00 0.00 0.00
Raw Materials - Indigenous 287.96 364.05 667.41 800.00 900.00
Work in process 33.68 45.12 239.64 250.00 260.00
Finished Goods (incl Traded
Goods) 189.21 385.60 345.01 403.00 453.35
Packing Materials/ Stores &
Spares 0.00 0.00 0.00 0.00 0.00

Sub total - Inventory 510.85 794.77 1252.06 1453.00 1613.35

Debtors < 6 mths.

- Export 0.00 0.00 0.00 0.00 0.00
- Domestic 570.13 733.53 881.84 2050.00 2910.00
Cash & Bank Balances 1.90 3.93 4.72 10.03 15.36

Loans & Advances:

Deposits 70.11 70.10 80.10 130.00 145.00

Advance payment of tax 22.80 56.21 247.13 270.00 275.00
Advances to suppliers 40.89 28.17 10.21 40.00 60.00
Other loans & advances
(current in nature) 24.95 39.06 56.08 80.00 90.00
Deferred receivable (due
within 1 yr.) 0.00 0.00 0.00 0.00 0.00

Sub total - Loans and

Advances 158.75 193.54 393.52 520.00 570.00

Other Current Assets 0.00 0.00 0.00 0.00 0.00

Total Current Assets 1241.63 1725.77 2532.14 4033.03 5108.71

Non-current assets:
Investments in Non Current
Assets 0.01 0.01 0.01 0.01 0.01
23
Margin money with banks 0.00 0.00 0.00 0.00 0.00

Deferred receivable (not due

within 1 yr.) 0.00 0.00 0.00 0.00 0.00
Other loans & advances (non
current in nature) 6.73 10.73 57.73 50.00 45.00
Other non-current assets: 2.97 3.29 3.26 4.00 5.00
Debtors > 6 mths. 23.33 24.70 37.70 40.00 38.00
Sub total 33.04 38.73 98.70 94.01 88.01

Less : Revaluation Reserve 36.94 36.94 36.94 36.94 36.94

TOTAL ASSETS 1450.42 2045.19 2924.12 4568.64 5620.32

DIFFERENCE IN B/S 0.00 0.00 0.00 0.00 0.00

END OF P&L and BALANCE
SHEET

INR in
Uttam (Bharat) Electricals P Ltd Lacs
Profit & Loss 2006 2007 2008 2009 2010
Audited Audited Audited Estimates Proj
No of Months 12 12 12 12 12
3, 3, 6, 8, 9,
Revenues 352 718 459 465 922
Growth (%) 11% 74% 31% 17%
2, 3, 5, 6,7 7,
Cost of Goods Sold 975 064 186 54 932
COGS % 89% 82% 80% 80% 80%

Operating Expenses 207 211 271 285 310

1, 1, 1,
EBITDA 169 443 002 426 680

Depreciation 8 13 16 30 28

Interest Expense 80 87 106 125 135

Net Non-oper Income (Income -
Expenses) 4 10 8 11 14
1, 1,
Profit Before Tax 86 353 887 283 531

Income Taxes 30 124 307 425 450

8 1,
Net Profits 56 229 580 58 081

Balance Sheet
1,7 2,
Networth 138 351 914 54 818
Less: Inv in Group Cos 0 0 0 0 0
1,7 2,
Tangible Net Worth 138 351 914 54 818
1,5 1,
Total Debt 264 528 509 00 475
24
- Long term debt 14 6 3 175 135
1, 1,
- Short term debt 250 522 506 325 340
1, 1, 1, 1,3 1,
Other Liabilities 049 166 501 14 327
1, 2, 2, 4, 5,
Total 450 045 924 569 620

Net Fixed Assets 213 318 330 479 461

1, 1,4 1,
Inventory 511 795 252 53 613
2,0 2,
Sundry Debtors (< 6mths) 570 734 882 50 910

Cash & Bank Balances 2 4 5 10 15

Other Assets 192 232 492 614 658

Sundry Debtors (> 6mths) 23 25 38 40 38

1, 2, 2, 4, 5,
Total 487 082 961 606 657

Cash Flow Analysis

1,
Funds From Operations 64 241 596 888 109

Add: Long Term Sources - 30 30 178 6

Less: Long Term Uses - 149 110 197 67

8 1,
Long Term Surplus / (Deficit) 64 123 516 69 048

Short Term Sources - 86 301 - 28

1,6 1,
Short Term Uses - 484 806 66 076
( (1, (1, (1,
Short Term Surplus / (Deficit) - 570) 108) 666) 104)
( ( (
Net Surplus / (Deficit) 64 448) 592) 797) (56)

Increase in Bank Borrowings - 275 (11) 797 -

1, 1, 2, 2, 2,
Total Outside Liabilities 313 694 011 814 802
TL Installments payable in current
year 12 8 3 25

Ratio Analysis
EBITDA margins 5.05% 11.92% 15.51% 16.85% 16.93%
PAT margins 1.68% 6.15% 8.98% 10.13% 10.89%
0
Gearing (Debt / Tangible Networth) 1.92 1.50 0.56 .86 0.52
1
TOL / TNW 9.55 4.83 2.20 .60 0.99
25
 1
Total Debt / EBITDA 1.56 1.19 0.51 .05 0.88
11. 12
Interest Cover (EBITDA) 2.13 5.08 9.43 41 .45
DSCR (PAT+Dep+Intt) / (TL Instt + 7
Intt)) 3.32 6.17 .91 7.77
1
Current Ratio 1.15 1.19 1.46 .70 2.13

Working Capital Turnover (days) 40 88 83 117 136

Adjusted for Inv in Grp Co
Gearing (Debt / Networth (w/o Inv 0
in grp co) 1.92 1.50 0.56 .86 0.52
1
TOL / Networth (w/o Inv in Grp Co) 9.55 4.83 2.20 .60 0.99

26
 ANNEXURE III

IndusInd Bank Ltd

Credit Department
Summary Information on Credit rating of the Applicant-Borrower

Name of the Borrower : Uttam (Bharat) Electricals P Ltd

Name of the industry to which the
: Electric Equipment
Company belongs
Name of the Branch : Jaipur

Summary Rating Information

Latest Rating Previous Rating

Done on (date) 30-01-2009
Rating Model Used Large Corporate Model
Score earned (Model-specific)
81.25
(out of Max 100) - Standalone Score only
Rating Grade (Model-specific)
L2
(Best L1 & Worst L8)
Single Scale Rating Grade (Translated
IB2
across various rating models)
Facility Risk rating Grade (Model-specific) FR1

More detailed Rating Information (Model-specific Rating)

Score earned by
Max Score for the Rating Grade for
the
Category the Category
Company
Industry Risk 8 5.78 III
Business Risk 8 5.88 III
Financial Risk 8 6.97 II
Management Risk 8 7.22 I
Total 6.5/8

27
 ANNEXURE IV
Uttam (Bharat) Electricals P Ltd
Terms and Conditions

Type of Facility Cash Credit

Amount Proposed Rs.300.00 lacs
Purpose To meet working capital requirements
Period of Sanction Repayable on demand. renewable annually
Margin
RM : Indigenous 25 %
WIP 25 %
FG 25 %
Book Debts(Margin) 25 %
(Cover period) 90 (days)
Rate of Interest BPLR – 5.25% p.a. at present 11.50% p.a. at monthly rests
Hypothecation of the current assets of the company comprising of
Primary Security stocks of raw material, work in progress, finished goods, book
debts and other current assets on paripassu with Syndicate Bank

NON FUNDED LIMIT

Type of Facility
Total Non Funded Exposure: Rs.500.00 lacs
Facility Bank Guarantee
Nature Financial/Performance
Up to Rs.500 lacs with in total non funded limit (100%
Amount Proposed
interchangeability between LC & BG)
Purpose Bid-bond, Performance, Retention money, Customs/Excise
guarantee, Quota for exports etc - relating to normal trade of the
borrower.

No guarantee to be issued for EPCG, DPG, ECB or disputed liability

without the permission of Corporate Office.
Period of Sanction Co-terminus with Cash Credit facility
Margin 10 %
Commission 1.00% p.a.

Facility Letter of Credit Inland/import, DP/DA usance upto 180 days

Amount Up to Rs.500.00 lacs with in total non funded limit (100% interchangeability
Proposed between LC & BG)
Cash Margin 10%
Commission 50% concession in card rates

28
 Asset under LC
Primary Security
Extension of Charge of current assets.

Others Terms and Conditions for CC, and LC cum BG Limit

Collateral Equitable Mortgage of Factory Land & Building at Plot No B-189 411.00
Security (A) Road No. 9-F, VKI Area, Jaipur appx market valuation in lacs
paripassu with Syndicate Bank
Equitable Mortgage of Industrial Land & Building of the 365.00
company situated at VKI Area, Jaipur appx market valuation in lacs
paripassu with Symdicate Bank
Personal
Personal Guarantee of all the promoter directors of the company
Guarantee
Processing
0.25%+ service tax
Charges
Penal interest Applicable Interest rate + 2% - For non-compliance with sanction terms,
rate delay/non submission of Stock/QIS statements.BPLR+5%+2% - For
irregularities in the account
Documentation As per Bank's Documentation Manual/Instructions
Insurance Assets financed / charged to the Bank to be insured fully for 110% of the
value in the name of the borrower with suitable bank clause.

Facility Bill Discounting limit (under Letter of Credit)

Continuation at existing level
Amount Rs.500 lacs
Security Accepted Bills of Exchange, drawn under domestic LCs
of approved Banks. All Bills of Exchange should be “with
recourse”.
Rate of Interest As per Bank’s extant guidelines
Period of sanction On demand / Renewable after one year
Tenor DP / DA max.90 days.
Processing charges Rs.500/- per bill flat + applicable service tax and out of
pocket expenses.
Documents As advised by Bank’s legal department
Other covenants 1. Documents to be strictly as per LC terms.
2. Please advise sanction of the LCBD limit to the
Lead Bank/Working capital banks (if Multiple
Banking Arrangement) and seek NOC. If no
response is received within 10 days, we may
consider it as NOC for the limit.
3. All the terms of the LC should be met &
negotiation for the Inland Bills will be done after
receipt of unqualified confirmation from the LC
issuing Bank that the documents are in order and
they will make payment on due date.
4. Bill discounting proceeds should be credited to
Syndicate Bank, Jaipur where WC limits are being
availed, proceeds should be remitted by means of a
pay order under our covering letter stating the
details of each transaction.
5. The bank’s policy relating to LCBD and RBI
29
 guidelines should be strictly followed
6. LCs should be issued by banks on our approved
list or approval of International Banking Department
should be obtained.
7. The documents submitted to evidence movement
of goods, should establish beyond doubt, that the
underlying transaction is a genuine commercial
transaction.
8. In case of any delay in the payment of the bills,
interest rate as per Bank’s rules will be charged for
the delayed period.
9. The firm/company shall periodically submit the
audited balance sheet as and when published along
with other renewal papers as may be required by
the Bank for renewal of the limits.
10. The Bank shall reserve the right to amend /add
to/ any of the conditions of the sanction during the
currency of the loan or may recall the advance
with/without assigning any reason.
11. In case the Letter of Credit is of Rs.200 lacs or
more, confirmation from Regional Office of the LC
issuing bank to be taken.
12. No service bills to be discounted.
13. The branch on best effort basis should try and
restrict the negotiation of documents to our Bank
only.
14. Funds angle clearance and discount rate should
be obtained prior to discount of any bill from
Business Head/ Treasury.
15. All other general and special covenants to be
followed.

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 ANNEXURE V

Industry Name : Electric Equipment

INDUSTRY RISK
The electrical equipment industry comprises several products such as transformers,
switchgears, motors, generators and control equipment. Large players also earn revenues from
erection of equipment and execution of turnkey projects. Electrical equipment is not only used
in the power supply industry [generation and transmission and distribution (T&D)] but also in
other manufacturing industries such as automobiles, cement, steel, petrochemicals and refining.

The main buyers of electrical equipment are power utilities such as state electricity boards
(SEBs), National Thermal Power Corporation (NTPC), Power Grid Corporation, Tata Power, and
Reliance Energy Ltd (REL). Other manufacturing companies also purchase electrical equipment,
but in lesser volumes.

The supply of electrical equipment to power utilities and industrial undertakings is usually done
through competitive bidding. In view of the slowdown in investments in 2000-01 and 2001-02,
there was intense competition, and hence, significant pricing pressure. However, with the
expected revival in investments in both the industrial and power sector over the short-to-
medium term, this pressure is expected to ease.

In 2007-08, the size of the electrical equipment industry stood at Rs 390 billion. The industry
grew at 15 per cent, marginally lower than 2006-07 (15.5 per cent). In 2008-09, revenues are
estimated to be around 15 per cent due to the expected growth in industrial production and
investments, especially in the power T&D sector.
Demand-Supply Gap
Huge investments expected in T&D by various states, the budgetary allocation under the
Accelerated Power Development and Reforms Programme (APDRP) scheme over the medium
term, and the recovery in industrial investments are expected to boost the revenues of electric
equipment manufacturers. This is reflected in the robust order books of players such as Asea
Brown Boveri (ABB) and Bharat Heavy Electricals Ltd (BHEL).

The demand for electrical equipment is likely to increase by around 20 per cent in 2008-09, as
both the central and state governments will focus on improving T&D infrastructure. In the
short-to-medium term, no major electrical equipment capacities are likely to be set up. Players
may optimise their product portfolio through product standardisation and rationalisation of
manufacturing capacity.

Several players such as BHEL, Larsen & Toubro (L&T) and Crompton Greaves are leveraging
their cost-competitiveness to focus on developing export markets in the Middle East, South-East
Asia and Africa. However, over the medium term, exports may stagnate due to oversupply in
the international markets.
Government Policies
The central and state governments have emphasised on reforms in the power sector,
particularly to lessen T&D losses and improve the reliability of T&D infrastructure. In the Union
Budget 2008-09, budgetary support under the APDRP scheme was maintained at Rs 8.0 billion.
Under the scheme, funds are available to states that undertake reforms and efficiency
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improvement initiatives. A revamp of the existing APDRP is being planned.

The government has proposed to bid projects via the international competitive bidding (ICB)
route. This would improve the pricing power of private sector players, though its
implementation could be delayed. Players have protested against free trade agreements (FTAs)
with Sri Lanka and Bangladesh as these countries have lower import tariffs. However, with the
cost-competitiveness of Indian players having improved over the past 2-3 years and with major
international players marking their presence in the manufacturing segment in the country, the
likelihood of significant pricing pressure is minimal over the medium term.
Input Related Risks
The raw material cost of electrical equipment manufacturers is estimated at 60-70 per cent of
operating income. Primary raw materials include copper, aluminium and steel. While the prices
of steel have increased by 6 per cent over last year, the prices for copper and aluminium have
declined by 5 per cent and 14 per cent, respectively. In 2008-09, prices of aluminium are
expected to be at $2,650-2,750 per tonne, while copper prices are expected to be at $8,000-
8,200 per tonne levels. Duties on aluminium, steel and copper have remained unchanged over
the last year (at 5 per cent).

Moreover, the past 3-4 years have witnessed the majority of electric equipment producers take
measures to optimize raw material consumption and reduce material costs through vendor
rationalization and by improving material management. Raw material costs, as a percentage of
sales, which were rising over the past 3-4 years, declined by 2 per cent last year. Other
expenses such as power and fuel, employee costs, and selling expenses (as a percentage of
sales) have been declining over the past 3-4 years.
Extent of Competition
A few large players such as BHEL, ABB, Alstom, Siemens, and Crompton Greaves dominate the
electrical equipment industry. However, several other small and medium-sized players too
specialize in specific product lines. Moreover, there was severe competition due to a slowdown
in demand in the past 2 years. The growth for 2007-08 was expected to be at 20 per cent, but
the last quarter saw only an 8-9 per cent growth on account of slow capacity additions by
PGCIL. However in 2008-09, the industry is expected to grow at 15 per cent on account of the
government’s focus on T&D.

As technology intensity is not high, the only entry barriers for domestic players are proven
execution skills, design capability and after-sales service. Although huge investments in the
sector and the consequent rise in demand will dilute domestic competition, the reduction in
duties and FTAs will fuel competition from cheaper imports, which will continue to exert
pressure on domestic prices.

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