M/s P.V.

Narotham Reddy, ZOCC(NZB)/2010-11/15/

MSME DUBBA BRANCH

PROPOSAL: C.C(BD) UNDER CONTRACTOR PLUS SCHEME

S Format: Section A
EXECUTIVE SUMMARY
Zone:NIZAMABAD : Branch: MSME DUBBA Firm: M/s P.V. Narotham Reddy
Section Contents Pages
1 Borrower profile 2-3
a) Name , Address, Manufacturing activity/Locations, Date
of incorporation, Banking arrangement etc of
a) Brief Background(Company/ Group/ Promoters/
Management including shareholding pattern )
b) Brief write up on Industry/Sector and Company’s standing
c) RMD Advisory/qualitative approach/Quantitative
approach/Comments
d) Indebtedness/Exposure & capital charge
2 Present Proposal 4
a) Proposal : For sanction/approval/confirmation/noting
b) Credit limits (existing and proposed)
c) Sharing pattern
3 Performance Details 5-6
a) Performance and Financial indicators
b) Industry exposure as on
c) Movement in TNW
d) Synopsis of balance sheet
4 Risk assessment : 7-8
a) Credit Rating
b) Risk and mitigating factors
c) Warning signals/Major irregularities in Inspection
Audit/Credit Audit/Other Reports
d) Security
e) Changes in Security if any, justification
5 Pricing 9
a) Conduct of account
b) Income analysis
c) Other Bank’s/FIs pricing
d) Proposed pricing
6 Loan Policy : Deviations & Compliance: 10
a) Whether names of promoters, directors, company, group
concern figure in defaulters/willful defaulters list
b) Deviation in Loan policy
c) Deviation in Take over norms and comments
d) Directors of Borrowers company: status of relation with
Board/ Sr Official of the Bank etc.

7 a) Future plans & Business Potential including cross 11

selling/retail marketing
b) Environmental and sustainability implications
c) Earlier terms of Sanction: Compliance status
d) Statutory dues /Contingent Liabilities
8 Justification for the Proposal 12-14
Recommendations :

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M/s P.V.Narotham Reddy, ZOCC(NZB)/2010-11/15/
MSME DUBBA BRANCH
SECTION 1
STATE BANK OF HYDERABAD: Branch : MSME DUBBA BRANCH

Borrower’s Profile
a. Name , Address, Manufacturing activity/Locations, Date of incorporation, Banking arrangement etc of
Company: M/s P.V. NAROTHAM REDDY, PAN AJUPP 8482 C, NW/IP
Rs.1.78/1.24 crores.
Address: H.No.11-1-165, Vidyuth Nagar, Kanteshwar, Nizamabad
Regd. Office: H.No.11-1-165, Vidyuth Nagar, Kanteshwar, Nizamabad
Mfg facility( Locations): --
Segment: Constitution: Individual IRAC Status
MSME Advances : Standard as on 31.07.2010
Investments : Not applicable
Industry: Class I contractor Activity : General Construction works / Civil Engineering
Date of incorporation: 2004 Banking with us since: 17/11/2006
Banking arrangement : Sole banking
Existing Connection : Yes New unit : No If Take over, whether all norms
Date of last Sanction 08/03/2008 OD Mortgage complied with : Not applicable
Loan Rs.0.1950crores for a period of 3 years

b) Brief Background (Company/ Group/ Promoters/ Management including shareholding pattern):

Sri P.V. Narotham Reddy is a Class I(Civil) Contractor executing Civil contracts and a valued client of
our Dubba branch dealing with us since 2006. He has been registered as Small Service Enterprises with
Department of industries. His major activity is Civil works in Rural Water Supply & Sanitation
Department of Government of Andhra Pradesh. He gets the orders from RWS normally through tenders.
He has taken machinery, Tippers on lease from outsiders. He has been successfully executing Railway
contracts since 2006.

c) Brief write-up on industry/sector and company’s standing (domestic / international) in the industry
including market share, future growth strategies, comments on recent news reports, etc.

As the Governments are focusing on development of rural areas, like providing pure drinking water,
roads, electricity etc, the Rural Water Supply & Sanitation Department, Govt. of Andhra Pradesh has
continuous requirement of contracts for providing this infrastructure developments in the state. The
contractor participates in tenders floated by Government Agencies/organizations for providing
infrastructure projects such as roads, water supplies etc. The contractor has maintaining relations with
Government officials and is able to bag orders from those Departments.
d)
i. RMD Advisory dated : (Circular) Not available
ii. Qualitative approach : Not available
iii. Quantitative approach: Not available
Comments: NIL

e) Indebtedness / Exposure & Capital Charge: (Rs. in Crores)

EXISTING PROPOSED CHANGE
LIMITS SBH % OTHERS SBH % OTHERS SBH OTHERS
CC -- -- -- 0.7000 100 -- 0.7000 --
OD Mortgage 0.1950 100 -- -- -- -- (0.1950) --
Total FBWC 0.1950 100 -- 0.7000 100 -- 0.5050 --
Term loan-I 0.0065@ 100 -- 0.0065 100 -- -- --
Term Loan -II 0.0485@ 100 -- 0.0485 100 -- -- --
TOTAL FB 0.2500 100 -- 0.7550 100 -- 0.5050 --
LCs -- -- -- -- -- -- -- --
BGs 0.0535* 100 0.5900# 0.3535 100 0.5900 0.3000 --
TOTAL NFB 0.0535 100 -- 0.3535 100 -- 0.3000 --
FB + NFB 0.3035 100 0.5900 1.1085 100 0.5900 0.8050 --
*Existing Bank Guarantee of Rs.0.0535crores is against 25% Cash Margin and EM of open plot
standing in the name of Smt N.Surekha Reddy W/o N.Nagesh Reddy and extention of EM of RCC roof
framed Ground floor & First floor standing in the name of Smt P.Swaropa Rani w/o P.V.Narotham
Reddy.

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MSME DUBBA BRANCH

# Bank Guarantees of Rs.0.59crores is availed against 100% Cash Margin in Andhra Bank, Bodhan
Branch, Andhra Bank Diamond Point Branch, Secundrabad and SBH, Abdullapur Branch.

@ O/s as against the sanctioned Term Loan limits for TL-I,II of Rs.0.04crores, Rs.0.06crores
Respectively(CAR loans).

Position of accounts as on 18.08.2010: (Rs. In Crores)

Facility Limit Value of Drawing Out standing Irregular by
stock Power
Over Draft 0.1950 0.3242 0.1950 0.1943 NIL
TL-I (Car Loan) 0.0400 0.0400 0.0091 0.0065 NIL
TL-II(Car Loan) 0.0600 0.0506 0.0506 0.0485 NIL
Bank Guarantee 0.0535 ----- ----- 0.0535 NIL

Statutory approvals/ registrations/ permissions etc., received/ obtained from::

Govt. of AP Proceedings of the Engineer-in-chief, Registration of Sri P.V.Narotham Reddy s/o
Panchayat Raj, Hyderabad. Venkat Reddy as Class-I (civil) Contractor.
Commercial Tax Officer, Nizamabad. VAT TIN Regn.No.28070221934 in the name of
Sri P.V.Narotham Reddy.
Commissioner Municipal Corporation, Regularization of Unapproved layout/ plot in
Nizamabad. Sy.No.322/A & 325 of Nizamabad.
Commissioner Municipal Corporation, Regularization of Unapproved layout/ plot in
Nizamabad. Sy.No.322/AA, 324/A & 325 of Nizamabad.
GM, DIC, Nizamabad. SSI Regn. No.280022200763 Dt.24.07.2010.

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MSME DUBBA BRANCH

SECTION 2
PRESENT PROPOSAL:
a. Proposal: For sanction / approval / confirmation /noting:
i. To sanction Cash Credit (Receivables) limit of Rs.0.70crores under MSME CONTRACTOR
PLUS.
ii. To cancel the existing Over Draft limit of Rs.0.1950 crores.
iii. To Sanction enhancement in Bank Guarantee limit from Rs.0.0535 crores to Rs.0.3535 crores.
iv. To Note the CRA rating of SB-4(New Scale) assigned to the firm based on the Provisional
Balance Sheet as on 31/03/2010.

This proposal falls within the powers of ZOCC as

(i) FB/NFB/Total indebtedness is Rs.1.1085crores to an individual.

b. Credit Limits (Existing and Proposed): (Rs. in Crores)

EXISTING PROPOSED CHANGE
LIMITS SBH % OTHERS SBH % OTHERS SBH OTHERS
CC -- -- -- 0.7000 100 -- 0.7000 --
OD Mortgage 0.1950 100 -- -- -- -- (0.1950) --
Total FBWC 0.1950 100 -- 0.7000 100 -- 0.5050 --
Term loan-I 0.0065 100 -- 0.0065 100 -- -- --
Term Loan -II 0.0485 100 -- 0.0485 100 -- -- --
TOTAL FB 0.2500 100 -- 0.7550 100 -- 0.5050 --
LCs -- -- -- -- -- -- -- --
BGs 0.0535 100 0.5900 0.3535 100 0.5900 0.3000 --
TOTAL NFB 0.0535 100 -- 0.3535 100 -- 0.3000 --
FB + NFB 0.3035 100 0.5900 1.1085 100 0.5900 0.8050 --
*O/s as against the sanctioned Term Loan limits for TL-I,II of Rs.0.04crores, Rs.0.06crores,
respectively (CAR loans).

c. SHARING PATTERN
Financial Arrangement: Sole Banking

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MSME DUBBA BRANCH
SECTION 3
Performance Details

a. PERFORMANCE AND FINANCIAL INDICATORS:

(Rs. in Crores)
As on 31/03 2008 2009 2010 2011 2012 2013
(Aud) (Aud) (Prov) (Esti) (Proj) (Proj)
Total Income 0.69 2.57 6.55 7.21 7.57 7.95
PBT 0.03 0.08 0.29 0.28 0.27 0.29
PBT / Net Sales 4.35 3.11 4.43 3.88 3.57 3.64
PAT 0.02 0.04 0.21 0.25 0.25 0.26
Depreciation 0.01 0.02 0.01 0.01 0.01 0.01
Cash Accruals 0.03 0.06 0.22 0.26 0.26 0.27
PBDIT 0.06 0.14 0.36 0.40 0.38 0.40
Interest 0.02 0.06 0.06 0.11 0.10 0.10
Capital 0.10 0.20 0.41 0.94 1.12 1.29
TOL 0.22 0.57 0.64 1.27 1.22 1.14
TNW 0.29 0.20 0.41 0.94 1.12 1.29
TOL/TNW 0.76 2.81 1.55 1.35 1.08 0.88
Current Assets 0.42 0.67 0.97 2.14 2.28 2.38
Current Liabilities 0.18 0.20 0.30 0.96 0.98 0.99
Current Ratio 2.33 3.40 3.27 2.23 2.33 2.40
NWC 0.24 0.47 0.67 1.18 1.30 1.39

b. Industry Exposure as on
FBL Not available
NFBL Not available
Total
Exposure of the company as per Within the prudential exposure limits of R.B.I
prudential exposure norms
To Industry exposure
To total advances (domestic)
Comments only on adverse movements in the above: (Not to exceed 5-6 lines)

Net Sales:

The Total Income of P.V.Narotham Reddy for year 2009-10 is Rs.6.55crores which shows an
increase of 155.86% over the Total Income of Rs.2.56crores for the FY’2008-09. The unit has made
a reasonable estimate of Rs.7.21crores as total Income for FY2010-11, which is acceptable.

Net Profit and Profitability:

Sri P.V.Narotham Reddy has earned a net profit of Rs.0.21crores for the year 2009-10 as against
Rs.0.04crores net profit made during the FY 2008-09. In view of the above and as per the past
performance of the promoter the estimated & projected net profit are considered achievable.

CAPITAL/TNW:

The Capital of the promoter is Rs.0.41crores as on 31.03.2010 as per the Provisional Balance Sheet
submitted and has estimated to increase the capital for coming years on account of plough back of
profit.

The TNW of the firm is at Rs.0.41crores as on 31.03.2010 The TNW is on an increasing trend
through out and hence considered achievable.

TOL/TNW Ratio:

The TOL/TNW at 1.55 as on 31.03.2010 is within the indicative level of 5.00 for other than
manufacturing units. The ratio is estimated to be good at 1.35, 1.08 as on 31.03.2011 and 31.03.2012
respectively which is also within the indicative level of 5.00.

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MSME DUBBA BRANCH
NWC and Current Ratio:

The Current Ratio was at 3.27 as on 31.03.2010 which is above the indicative level of 1.00. The ratio
is estimated at 2.23 as on 31.03.2011 & 2.33 as on 31.03.2012. The NWC is on an increasing trend
through out and hence is considered achievable.

Movement in TNW (Past three years)

(Rs in crores)

Year-->>>>> 2008 2009 2010

Opening TNW -- 0.10 0.20
Add PAT 0.02 0.04 0.21
Add. Increase in equity / premium 0.08 0.06 --
Add./Increase in unsecured loans -- -- --
Adjust prior year expenses -- --
Deduct :withdrawals -- --
Closing TNW 0.10 0.20 0.41
d) Synopsis of Balance Sheet:
(Rs. In crores)
Sources of funds Prev. year Last year
2009 2010
Share Capital 0.20 0.41
Reserves and Surplus -- --
Sundry creditors -- 0.17
Secured Loans : Short term 0.19 0.13
: Long term 0.08 0.05
Unsecured Loans 0.29 0.29
Rent deposit from tenants -- --
Total 0.76 1.05
Application of Funds
Fixed Assets (Gross Block) 0.10 0.09
Less Depreciation
Net Block 0.10 0.09
Income tax deduction
Margin on BG TDRs and EMD/FSD 0.38 0.38
Inventories 0.08 0.21
Sundry debtors 0.09 0.34
Cash & bank balances 0.08 --
Loans & advances to
subsidiaries and group companies
Loans & advances to others -- --
( Less : Current liabilities )
(Less : Provisions )
Net Current Assets
Other Current Assets 0.03 0.03
Misc. Expenditure
(To the extent not written off or
adjusted )
Total 0.76 1.05
Comments only on adverse movements in the above: (Not to exceed 5-6 lines)

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MSME DUBBA BRANCH
SECTION 4
RISK ASSESMENT
CREDIT RATING (WC/TL)/Pricing:
Working Capital Term Loan
Existing Proposed Existing Proposed
CRA# NA SB-4 Not applicable since TL
PRICING$ -- Floating rate of interest at 4.50% above extended are Car Loans
SBH Base rate – current effective rate
being 12.25% p.a. floating
Other Rating if available : Not Available

# Based on Provisional Balance Sheet as on 31/03/2010. The detailed scoring for CRA rating is placed
as Annexure –IV
$Pricing as applicable to CRA rating as per HO Circular No.MSME/2010-11/17 Dt 01/07/2010.

We recommend ZOCC, Nizamabad to note the CRA rating of SB-4(New Scale) assigned to the
firm.

b. Risks and mitigating factors:

Critical risks perceived Mitigating factors
The firm is engaged in execution of contracts Sri P.V.Narotham Reddy, a class I Civil
relating to the Govt. Agencies like Rural Water Contractor has good experience in the line of
Supply Dept., Panchayat Raj Dept. etc., The activity and he is getting orders from various
performance of the unit is directly relating to Govt. Departments continuously which can be
getting the tenders from the department. Since evidenced from the increase in performance of
this field is highly competitive the firm the firm year after year.
requires good experience right contact and
competency to bag the contracts.

c. Warning signals / Major irregularities in Inspection report / Credit Audit/Other reports

Report Warning Signal / Major Comments
irregularities
I/A Audit Report Not applicable
Credit Audit Reports Not applicable
Other Audit Reports Not applicable
Qualification if any, in Auditors report Not applicable

Security Details:
Primary Security : Hypothecation of Receivables(/Below 90 days) and available stocks of material
used in execution of works at different work areas. While drawing power under CC may be worked
out against receivables only, security will be hypothecation of entire current assets.
Sl. Details Market Value / Legal opinion
No. report by/date. by /report dated.
01. Open plot bearing No. Nil comprised in Sy.No.s 322/A, Rs.1.45 crores.* Sri B.Saya
322/AA, 324/A & 325, total land adm. 1038.55 sq.yds (Rs.1.24 crores). Reddy, Dated
situated near H.No.11-1-204, 300 Bye Pass Ring Road, Valuation report by 23.06.2010.
Armoor Road, Kanteshwar Shivar, Nizamabad Town K.V.Prasad Rao,
standing in the name of Sri P.V.Narotham Reddy s/o Approved Valuer,
Venkat Reddy R/o H.No.11-1-165, Vidyuth Nagar, Nizamabad vide
Nizamabad. report dt.28.06.2010.
Regd. Sale Deed Doc.No.5240 of 2009 & 3675 of 2010
02. RCC roof rcc framed ground floor and first floor posh Rs.0.32 crores. Sri B.Kishore
residential building bearing Mpl.H.No.11-1-59/21/C (Rs.0.30 crores). Reddy, Panel
constructed on open plot No.9 as per LP NO.219/91 in Valuation report by Advocate vide
Sy.No.331 in ward no.11, Block No.4 adm. Total site Sri D.Srinivas report dated
area 313.66 sq.yds situated at Vidyuthnagar, Kanteshwar, Verma, Approved 20.11.2006.
Nizamabad town and district standing in the name of Valuer Nizamabad
Smt. Podduturi Swaroopa Rani w/o Narotham Reddy R/o vide report
Nizamabad. Regd. Sale Deed Doc. No. 4360 of 1995 dt.13.02.2008.

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MSME DUBBA BRANCH
03. Open plot No.612 lying in Sy No.49/AA, as per GPLP Rs.0.05Crores Sri K.Maruthi,
No.20/2003 admeasuring 483 sq.yds situated at (Rs.0.05crores) Panel Advocate
Gangastan Phase –II, Grampanchayat limits of Valuation report by vide report
Goopanpally, town and district of Nizambad standing in Sri D.Srinivas dated
the name of Smt N.Surekha Reddy W/o N.Nagesh Reddy Verma, vide report 25/10/2008
Regd Doc No.6030/2004 dated 24/06/2004 dt.30.10.2008.
TOTAL 1.82Crs (1.59Crs)
Figures in brackets denote Conservative Market Value of the Properties.

*The property consists of two Sale Deeds for admeasuring area one of 433.75Sq. yds and another
for 604.8Sq yds.
As per the SRO Sale Deed No.5240/09 dated 29/08/2009 for admeasuring 433.75Sq yds the value of
the property is registered for Rs.11,71,500/=. And one more property as per the SRO Sale Deed
No.3675/10 dated 03/05/2010 for admeasuring 604.8Sq yds the value of the property is registered
for Rs.16,33,000/=. The valuer has valued the properties for Rs.1.45crores for the entire property
at prevailing market rate. The branch after a thorough enquiries is in agreement of the valuation
made by the valuer.

Panel Advocate Sri. B. Saya Reddy, vide his legal Scrutiny report dated 23.06.2010, in respect
of the property Sl.No.1, Sri Kishore Reddy, vide his report 20/11/2006 in respect of the
property Sl. No. 2 and Sri K.Maruthi, vide his legal scrutiny report dated 25/10/2008 in respect of
Property Sl No. 3 has confirmed that the title documents are clear and the mortgagors have
absolute, clear and marketable title on the said properties and can create valid enforceable
Equitable Mortgage in favour of the bank.

Valuation reports in respect of property Sl.No.01 is obtained from Sri K.V.Prasad Rao and
in respect of Sl No. 02 and 03 is obtained from Sri D.Srinivas Varma, Bank’s panel valuers

The Branch Manager has submitted Certificate that having inspected the properties on
28/06/2010 and confirmed that the valuation mentioned in the report is realistic/conservative
and as per prevailing market value.

The Open plots offered as security should be clearly demarcated with compound wall or barbed
wire fencing.

Equitable Mortgage of open plot and Residential House property to be registered with the
concerned S.R.O.

Branch to obtain up to date ECs to be applied by the panel advocate/Branch officials before
disbursement of the enhanced limits.

Guarantee : 01) Smt. Prodduturi Swaroopa Rani w/o Narotham Reddy R/o Nizamabad NW.Rs.0.42
crores, IP. Rs.0.32 crores. (credit report dated 02.07.2010)
02) Smt N.Surekha Reddy w/o P.V.Narotham Reddy R/o Nizamabad

Collateral Security Coverage: (Rs. In Crores)

A Value of Security Consv
Value of Collateral Security 1.590
25% Margin on proposed Bank Guarantee limit of Rs.0.3535crs 0.088
Total 1.678
B Proposed Liability 1.0535
C Security Coverage 159.28%

As per the guidelines issued by MSME Dept., H.O., for the Contractor Plus Collateral Security
coverage required is:

(1) If the Power of Attorney is registered with the principal- 75% of the limit.
(2) If the Power of Attorney could not be registered for any reason – 150 % of the limit.

In the instance case the Borrower is unable to provid Power of Attorney, and the security coverage of
159.28% is acceptable.

e. Changes in security if any, Justification: NIL

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MSME DUBBA BRANCH

SECTION 5
PRICING
a) CONDUCT OF ACCOUNT:
No. of occasions Average period for Irregularity report
regularization last submitted on
Irregularity in WC: NA
Comments:
Irregularity in TL NIL Not applicable
Comments:
Utilization of limits:
FB Limits Average utilization % 100%
NFB Limits Average utilization % 100%

b) INCOME ANALYSIS: ( Rs. in crores)

SBH
From Estimates Actual Actual
( last year) (2008-09) 01.04.09 to 31.03.2010
WC Int. NA NA NA
NA NA NA
NA NA NA
0.0014

Interest & Other Charges as per latest SBH Share Amount and percentage
Balance Sheet dated 31.03.2009
Interest----
Other Charges—NIL--

c. Other Bank’s/FIs Pricing

Existing Proposed
Term Loan Not available
Working Cap[ital

d. PROPOSED PRICING:
ITEM Existing Rate Card rate Proposed rate
Int. on WC NA 12.25% 12.25%
(4.50% above Base Rate )
Processing fee Rs.50,000/- Rs.50,000/- Rs.50,000/-
(Rs.500/- per lakh) (Rs.500/- per lakh) (Rs.500/- per lakh)
Commit charges 0.25% p.a on entire unutilized portion if average utilization is 60% or less.
Mortgage Charges Rs.15,000/- as per extent guidelines in vogue.
Upfront fee Not applicable
LC Not applicable
BG 2.75% per annum
Commission recoverable for completed quarters or part thereof.
Period of validity of BG to be a minimum of one month.

The applicable rate of interest is vide Head Office Circular No.MSME/2010-11/17 dated 01.07.2010.
The Service charges is as per the Head Office Circular No.GB/2008-09/41 dated 21.06.2008

Justification for concessions already extended / proposed: (mention about cost benefit):
Not applicable

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MSME DUBBA BRANCH

SECTION 6
LOAN POLICY: DEVIATIONS AND COMPLIANCE:
a. Whether names of promoters, directors, company, group concerns figure in defaulter/willful
defaulters list:
RBI defaulters’ list dated : 31.03.2009 : No
Name of the director Default in connection with: Remarks: NIL
(Name of the company)
Justification for considering The name of the borrower does not appear in the list.
continuation / enhancement
in facilities)
Wilful defaulters’ list dated : 30.06.2009 : No
Name of the director Default in connection with: Remarks: NIL
(Name of the company

Justification for considering The name of the borrower does not appear in the list.
continuation / enhancement
in facilities)
ECGC caution list Not applicable
CIBIL CIBIL report as on 30/06/10 verified and the company’s name
or names of its Directors are not appearing in the willful
defaulters list.

b. Deviations in Loan Policy:

Parameters Indicative Company's level as on
Min/Max level as per loan policy 31.03.2010 (PROV)
1. Liquidity 1.00 3.27
2. TOL/TNW 5.00 1.55
3. Average gross DSCR (TL) 1.75 Not applicable
4. Debt / equity 2:1 Not applicable
5. Promoters contribution 30% Not applicable
(i) Prudential norms Not to exceed 50 Cr (FB+NFB) Within the norms
(ii) FB exposure to the industry 15% of the bank’s total FB exposure Not applicable
(iii) Substantial exposure Borrower In excess of 7.5% of banks capital Within the norms
funds
(iv) Substantial exposure : Group In excess of 15% of bank’s capital Within the norms
funds
6. Others Not applicable Not applicable
Brief comments only if there is deviation (Not more than 5 lines)
c. Deviations in Take over norms and comments: Not applicable.
d. Directors of the borrower company are relatives (scope of the term ‘relative as defined in RBI Master
Circular on loans and advances- Statutory and other Restrictions) of any member of the Bank’s

Board/Senior Officer of the Bank/ Member of any other Bank’s Board - No

e. Compliance with Section 20 of the Banking Regulation Act: Whether any of the Directors of the Bank
is Director of the borrower company or is having any interest in the same: No

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MSME DUBBA BRANCH

SECTION 7

a. Future Plans & Business potential(over a 3-5 year horizon) including Cross selling / Retail
Marketing based on Co / Group’s future plans: (to be quantified).
Item Present Position Business
– Whether Tied estimated
Up?
(Yes / No) *
(v) Corporate Salary Package
(vi) P Segment Loans
(a) Housing
(b) Auto Loans
(c) Personal Loans
(vii) SBI Credit Card
(viii) SBI Life Yes
(ix) SBI Mutual Funds Yes
(x) SBI Vishwayatra Foreign Travel Yatra
Cards
(xi) Vendor/ Dealer Finance
(xii) Any Other (Please specify)
* If no, please advise efforts made and outcome thereof
Branch to explore to cross sell appropriate Group Products.

b. Environmental and sustainability implications: Not applicable

c. Earlier terms of Sanction: Complied with

d. Statutory dues/other contingent liabilities:

Dues Level (Rs Impact on financial
in lacs) position
Statutory dues NIL Not applicable
Contingent liabilities NIL Not applicable

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MSME DUBBA BRANCH

SECTION 8

a. Justification for the proposal: (Only bullet points)

Sri P.V.Narotham Reddy is one of the valued clients of our MSME Dubba branch. He has been dealing
with us since 2004 and the dealings are satisfactory.
Regional Office, Nizamabad has sanctioned an OD Mortgage Loan limit of Rs.0.1950crores and a Bank
Guarantee limit of Rs.0.0535crores(25% Cash Margin). Now, the borrower has submitted provisional
balance sheet as on 31.03.2010 along with CMA data and requested for sanction of a Cash Credit (Book
debts Hypothecation) limit of Rs.0.70crores under MSME(CONTRACTOR PLUS Scheme). He has also
requested for cancellation of the existing OD(Mortgage Loan) limit. The Branch Manager, MSME
Dubba Branch has recommended sanction of a Cash Credit (Hyp of book debts) limit Rs.0.70crores and
enhancement in bank guarantee limit from the existing Rs.0.0535crores to Rs.0.3535crores(against 25%
Cash Margin).

1) To sanction a Cash Credit (Hyp BD) limit of Rs.0.70crores under MSME Contractor Plus
Scheme.

The firm has requested for working capital limits of Rs.0.70crores for a period of 2 years, for which
Estimates / CMA is submitted.

The Assessment is based on the work orders on hand/under execution worked out as per Projected
Turnover Method. Margin of 50% on the receivables of below 90days.

 Branch should obtain Statement of Receivables at quarterly intervals duly supported by

relevant bills submitted and certified by Chartered Accountant.
 Branch is also advised to obtain Statement of Receivables as on Date of Sanction of the loan
duly supported by relevant bills submitted and certified by Chartered account.

The Working Capital requirements of the unit has been assessed under Traditional and Nayak
Committee methods and higher of the two would be the eligibility of the firm. In the instant case the
firm is found eligible for working capital limit of Rs.0.74crores for the FY’2010-11.Therefore we
propose to sanction Rs.0.70crs, as recommended by the Branch.

Branch should obtain an undertaking from the promoters stating that they would meet the shortfall if any
from own resources

Sri Narotham Reddy, Civil Contractor has following works are on hand:: (Rs. In Crores)
Sl.No.
01. CPWS Scheme at Balkonda Phase III (in joint venture with Maruthi Tubes Pvt. Ltd). 4.00
02. CPWS Scheme at Banswada Town. 3.00
03. CPWS Scheme at Nirmal and other habitations. 6.50
04. Laying of CC Roads and construction of community halls at Bodhan (in joint venture 4.00
with SSR Crest engineers and constructions Ltd).
05. Other Contracts. 1.60
Total 19.10
In terms of guidelines issued by MSME Department, Head Office Cir/MSME/2009-10/57 dt.01/10/09
The working Capital facilities for MSME units are to be sanctioned for a period of 2 years subject to
annual review.

The proposed working capital facilities are considered acceptable in terms of the detailed appraisal as
per Annexure-II.

We recommend ZOCC for sanction of Working Capital limit of Rs.0.70crores under C.C.(Hyp.
Book Debts) for a period of 2 years, as per terms of sanction placed as Annexure - III.

 Branch is advised to follow all precautions, which is to be taken wile lending against Book
Debts.

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A pre disbursement condition has been stipulated in the terms of sanction to obtain an undertaking from
the Firm to the effect that any short fall in the working capital requirement would be met by the Partners
from their own sources and that they will maintain the Gearing Ratio and NWC as estimated in CMA
submitted by the firm.

Inventory / receivable norms-

The inventory and receivable norms have been considered as per the extant guidelines. There is no
deviation in the inventory and receivable norms.

Inventory/ Payments Bank Norms 31.03.2010 (Est)

Raw Material -- --
- Imported
- Domestic -- --
Stock in process -- --
Finished goods -- --
Receivables 90days 90days
Sundry Creditors -- --
- Import -- --
- Domestic -- --

II) Branch is advised to obtain and hold on record copies of the following papers/ documents duly attested by the
firm/partners/promoters:

All necessary Registrations, Approvals for conducting activity viz., SSI Registration, Government
regulatory norms with proceedings etc., EPF/ESI Registration, Commercial Tax/VAT Registration,
Electricity feasibility/ Connected Load etc.,

Any other Licenses/registrations/approval that is required for conducting the activity of the firm.

2. To cancel the existing OD(Mortgage Loan) limit of Rs.0.1950 crores

As the Borrower has earlier availed the OD Mortgage loan of Rs.0.1950crores from our Dubba Branch
and the same property is now being offered for Working Capital and BG limits. Borrower requested for
cancellation of the OD Mortgage loan of Rs.0.1950crores.

We recommend the ZOCC, Nizamabad for cancellation of the existing OD(Mortgage Loan) limit
of Rs.0.1950 crores.

3. To sanction enhancement in Bank Guarantee limit of Rs.0.3535 crores.

TYPE OF BANK GUARANTEE: FINANCIAL

PURPOSE OF BANK GUARANTEE: EARNEST MONEY DEPOSIT (EMD)
MAX PERIOD OF BANK GUARANTEE: 18 MONTHS
MARGIN ON BANK GUARANTEE: 25%
a.
Outstanding BGs as on 31/10/2011
Average Estimated Stocks allotted against BG 100.00
Add: Security Deposit 5.00% for the stocks to be allotted 5.00
Less : Security Deposit and Bank Guarantee reversed / 1.00
Cancelled during 2011-12
Requirements of BGs 4.00
Recommended BG limit with 25% Cash Margin 4.00
Financial : -- Performance :--

* Terms and Conditions for BG: Allotment Letter and Dealership agreement from the company

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The borrower has requested for enhancement of the existing Bank Guarantee limit of Rs.0.0535crores to
Rs.0.3535crores, we recommend the ZOCC to consider the same.
Any BG above the sanctioned limit of Rs.0.3535crores would be against 100% cash margin.

We recommend ZOCC, Nizamabad to sanction enhancement in Bank Guarantee limit of Rs.0.3535

crores.

Recommended for sanction / approval:

In view of the foregoing, we recommend ::

a. Proposal: For sanction / approval / confirmation /noting:
Sanction of a Cash Credit (Hyp BD) limit of Rs.0.70crores under MSME CONTRACTOR PLUS
SCHEME
Cancellation of the existing Over Draft limit of Rs.0.1950crores.
Sanction, enhancement in Bank Guarantee limit from Rs.0.0535crores to Rs.0.3535crores.
Noting of CRA rating SB-4(On New Scale) assigned to the Firm based on PBS dt 31/03/2010.

Submitted,

Chief Manager (Credit Cell)

Zonal Office Credit Cell,
NIZAMABAD
Date: 24/08/2010
SANCTIONED/CONFIRMED/APPROVED
OBSERVATIONS SIGNATURE
DY.GENERAL MANAGER CHAIRMAN
ZO(NZB)
ASST.GENERAL MANAGER, MEMBER
RO- I,NZB
ASST.GENERAL MANAGER, MEMBER
RO- II, ADILABAD
ASST.GENERAL MANAGER, MEMBER
RO-III,MANCHERIAL

ZONAL OFFICE CREDIT COMMITTEE,

ZONAL OFFICE, NIZAMABAD.

****

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Annexure-l

Zone: Nizamabad Branch : MSME DUBBA

Firm: Sri P.V.Narotham Reddy, MSME Dubba Branch..

Term Loan/DPG : N.A.

Annexure-lI

Assessment of WC facilities:
(If the assessment of the WC limits is based on any other parameters, please specify them along with an
explanation).

Based on the projected financials for the year 2010-11 (Rs. in lacs)
2010-11
Anticipated monthly receipts 0.60
Cost of sales per month 0.55
Cost of production per month 0.55
Consumption of raw materials per month 0.39
Raw materials (30 days consumption) ----
Stock in process (---days cost of production) ----
Finished goods (60 days of cost of sales) --
Receivables ( 90 days sales ) 1.80
Other chargeable current assets ----
Gross Working Capital (A) 1.80

Arrival of Gross Working Capital as per Nayak Committee Recommendations:

Projected/accepted Annual Sales 7.21
Gross Working Capital ( 25 % of projected annual sales) (B) 1.80
Assessment of Working Capital requirement:
Gross Working Capital (Higher of A or B arrived above) (C) 1.80

Less: Promoter’s margin (NWC):

(i) 5 % of Projected annual sales 0.36
(ii) 1/5 th of GWC at (A) 0.36
(iii) Actual NWC available 31.03.10 (Prov) 0.67
Highest of NWC : (D) 0.67
Permissible Bank Finance (C-D) (E) 1.13
Less:
Creditors for purchase (1 month) (F) 0.39
Advance payment received, if any ---
NEED BASED BANK FINANCE (E-F) 0.74
The Working Capital limits assessed based on the activity of the borrower. As per the above the need
based Working Capital limit is arrived at Rs.0.74crores, the borrower has requested for working capital
limit CC Hyp-Rs.0.70crores. Accordingly we recommend sanction of working capital limit of
Rs.0.70crores.

b. Assessment of EPC / FBD limits :

c. Computation of LC limits for WC: Not applicable
d. Assessment of BG limit:
Outstanding BGs as on 31.07.2010 0.0535
Add: Earnest Money Deposit & security Deposit 3 ½ % for the 1.40
new tenders to be awarded Rs.40.00crores
Add: Retention Amount 2008-09 and 2009-10 of tenders worth 0.63
Rs.26.00crores
Less : Earnest Money Deposit and Security Deposit and Bank 1.60
Guarantee reversed / Cancelled during 2010-11
Requirements of BGs 0.43
Recommended BG limit 0.3535
Financial : 100.00 Performance :NIL
The borrower has requested for enhancement of the existing Bank Guarantee limit of Rs.0.0535crores to
Rs.0.3535crores, we recommend the ZOCC to consider the same.

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g. Fund Flow Analysis:

PARTICULARS 2009 2010 2011
(aud) (Prov) (Proj)
Long Term Sources :
Net Profit 0.04 0.21 0.25
Depreciation 0.01 0.01 0.01
Increase in Capital 0.06 - 0.28
Increase in Unsecured loans 0.10 -- --
Increase in Term Loans/other current assets -- -- --
Others
Total 0.21 0.22 0.54
Long Term Uses:
Net Loss --- ---
Term Loan Repayment 0.03 0.03
Increase in F.A. 0.02 -- --
Others Drawings --
Total 0.02 0.03 0.03
Surplus/Deficit 0.19 0.19 0.51

Comments:
The unit using a part of long term sourced funds for Short term uses and no diversion of short term
sources is observed, which is a healthy sign.

Review of the Accounts:

Cash Credit (Hyp): Limit Rs.0.1950crores. (Rs. In crores)
01.04.09 to 31.03.10 01.04.10 to 30.06.10
Debit Summations 6.34 2.26
Credit Summations 6.40 2.20
Max. Bal. Drawn 0.02 0.01
Min. Bal. Drawn 0.16 0.08
Interest Earned 0.0002 0.0002

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ANNEXURE III
Unit: Sri P.V.Narotham Reddy
1. LIMIT: CC (Hyp. Book Debts) : Rs.0.70crores.
B.G.(Financial) : Rs.0.3535crores.

Security Details:
Primary Security : Hypothecation of stocks, book debts, receivables etc.
Sl. Details Market Value / Legal opinion
No. report by/date. by /report dated.
01. Open plot bearing No. Nil comprised in Sy.No.s 322/A, Rs.1.45 crores.* Sri B.Saya
322/AA, 324/A & 325, total land adm. 1038.55 sq.yds (Rs.1.24 crores). Reddy, Dated
situated near H.No.11-1-204, 300 Bye Pass Ring Road, Valuation report by 23.06.2010.
Armoor Road, Kanteshwar Shivar, Nizamabad Town K.V.Prasad Rao,
standing in the name of Sri P.V.Narotham Reddy s/o Approved Valuer,
Venkat Reddy R/o H.No.11-1-165, Vidyuth Nagar, Nizamabad vide
Nizamabad. report dt.28.06.2010.
Regd. Sale Deed Doc.No.5240 of 2009 & 3675 of 2010
2. RCC roof rcc framed ground floor and first floor posh Rs.0.32 crores. Sri B.Kishore
residential building bearing Mpl.H.No.11-1-59/21/C (Rs.0.30 crores). Reddy, Panel
constructed on open plot No.9 as per LP NO.219/91 in Valuation report by Advocate vide
Sy.No.331 in ward no.11, Block No.4 adm. Total site Sri D.Srinivas report dated
area 313.66 sq.yds situated at Vidyuthnagar, Kanteshwar, Verma, Approved 20.11.2006.
Nizamabad town and district standing in the name of Valuer Nizamabad
Smt. Podduturi Swaroopa Rani w/o Narotham Reddy R/o vide report
Nizamabad. Regd. Sale Deed Doc. No. 4360 of 1995 dt.13.02.2008.
03. Open plot No.612 lies in Sy No.49/AA, as per GPLP Rs.0.05Crores Sri K.Maruthi,
No.20/2003 admeasuring 483 sq.yds situated at (Rs.0.05crores) Panel Advocate
Gangastan Phase –II, Grampanchayat limits of Valuation report by vide report
Goopanpally, toan and district of Nizambad standing in Sri D.Srinivas dated
the name of Smt N.Surekha Reddy W/o N.Nagesh Reddy Verma, vide report 25/10/2008
Regd Doc No.6030/2004 dated 24/06/2004 dt.30.10.2008.
TOTAL 1.82Crs (1.59Crs)
Figures in brackets represent Conservative Market Value of the Properties.

*The property consists of two Sale Deeds for admeasuring area one of 433.75Sq. yds and another
for 604.8Sq yds.
As per the SRO Sale Deed No.5240/09 dated 29/08/2009 for admeasuring 433.75Sq yds the value of
the property is registered for Rs.11,71,500/=. And one more property as per the SRO Sale Deed
No.3675/10 dated 03/05/2010 for admeasuring 604.8Sq yds the value of the property is registered
for Rs.16,33,000/=. The valuer has valued the properties for Rs.1.45crores for the entire property
at prevailing market rate. The branch after a thorough enquiries is in agreement of the valuation
made by the valuer.

Panel Advocate Sri. B. Saya Reddy, vide his legal Scrutiny report dated 23.06.2010, in respect
of the property Sl.No.1, Sri Kishore Reddy, vide his report 20/11/2006 in respect of the
property Sl. No. 2 and Sri K.Maruthi, vide his legal scrutiny report dated 25/10/2008 in respect of
Property Sl No. 3 has confirmed that the title documents are clear and the mortgagors have
absolute, clear and marketable title on the said properties and can create valid enforceable
Equitable Mortgage in favour of the bank.

Valuation reports in respect of property Sl.No.01 is obtained from Sri K.V.Prasad Rao and
in respect of Sl No. 02 and 03 is obtained from Sri D.Srinivas Varma, Bank’s panel valuers

The Branch Manager has submitted Certificate that having inspected the properties on
28/06/2010 and confirmed that the valuation mentioned in the report is realistic/conservative
and as per prevailing market value.

The Open plots offered as security should be clearly demarcated with compound wall or barbed
wire fencing.

Equitable Mortgage of open plot and Residential House property to be registered with the
concerned S.R.O.

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Branch to obtain up to date ECs to be applied by the panel advocate/Branch officials before
disbursement of the enhanced limits.

Guarantee : 01) Smt. Prodduturi Swaroopa Rani w/o Narotham Reddy R/o Nizamabad NW.Rs.0.42
crores, IP. Rs.0.32 crores. (credit report dated 02.07.2010)
02) Smt N.Surekha Reddy w/o P.V.Narotham Reddy R/o Nizamabad

Collateral Security Coverage: (Rs. In Crores)

A Value of Security Consv
Value of Collateral Security 1.590
25% Margin on proposed Bank Guarantee limit of Rs.0.3535crs 0.088
Total 1.678
B Proposed Liability 1.0535
C Security Coverage 159.28%

As per the guidelines issued by MSME Dept., H.O., for the mortgage loan scheme under MSME
segment, collateral security(realizable value of the property) of minimum of 153% of loan in the form of
equitable mortgage of land/Building.

B. ECGC COVER. : -NA-

C. MARGINS: (FOR EACH FACILITY AS APPLICABLE):

Cash Credit: Existing Proposed
RM: --- --
Domestic
Imported
SIP --- --
FG --- --
Receivables (Cover…90…days) ---- 50%
Letter of Credit ---- ----
BG ---- --
Term Loan ----- ----
Branch to collect 25% margin amount whenever Bank Guarantee is issued and hold the amount in TDR
duly discharged along with security delivery letter.
The position of Book Debts should be got certified by Chartered Accountant every quarter, with age
wise classification and Bank should reckon Book Debts below 90 days age for arriving at Drawing
Power.

D.BANK GUARANTEE:
TYPE OF BANK GUARANTEE: FINANCIAL
PURPOSE OF BANK GUARANTEE: EARNEST MONEY DEPOSIT (EMD)
PERIOD OF BANK GUARANTEE: 18 MONTHS
MARGIN ON BANK GUARANTEE: 25%
E.RATE OF INTEREST:
ITEM Existing Rate Card rate Proposed rate
Int. on WC -- 12.75% 12.75%
(5.00% above Base Rate )
Processing fee Rs.50,000/- Rs.50,000/- Rs.50,000/-
(Rs.500/- per lakh) (Rs.500/- per lakh) (Rs.500/- per lakh)
Commit charges 0.25% p.a on entire unutilized portion if average utilization is 60% or less.
Mortgage Charges Rs.15,000/- as per extent guidelines in vogue.
Upfront fee Not applicable
LC Not applicable
BG 2.75% per annum
Commission recoverable for completed quarters or part thereof.
Period of validity of BG to be a minimum of one month.

The applicable rate of interest is vide Head Office Circular No.MSME/2010-11/17 dated 01.07.2010.
The Service charges is as per the Head Office Circular No.GB/2008-09/41 dated 21.06.2008

F. REPAYMENT SCHEDULE:
Working Capital i.e., Cash Credit (Hypothecation): Repayable on demand

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G.OTHER TERMS AND CONDITIONS:

1. Period of sanction: For Cash Credit (Hypothecation): Two year.

2. In case the firm desires to continue to avail some / all of the above working capital facilities
beyond the due date, they should arrange to apply for the same and furnish well in time (say 2
months before due date) all necessary data, statements, records to enable the Bank to process their
request. In case the firm fails to make arrangements as above the firm should arrange for adjustment
of all amounts payable to the Bank before due date.

3. Disbursement: -In case of working capital limits Branch to ensure that the borrower pays the
amounts to suppliers of raw material etc. through borrower’s account with the Branch.

4. Insurance: -
The Machinery / stocks / properties offered as primary / collateral security should be insured for
their full value or 110% of Bank finance which ever is higher in the joint names of the borrower and
the Bank against all risks at borrower’s cost. In case of insurance of buildings all the structures
including compound wall and their value should be specifically mentioned in the policy to have
coverage for all of them.

5. Inspection: -
Books of Accounts of the Borrower to be verified once in a quarter. The progress of work to be
ascertained from the principal once in a quarter. Inspection of the progress in works may be
submitted in respect of limits of Rs.1.00crores and above.
For Collateral At the time of loan sanction, thereafter yearly by Field Officer/Divisional
Manager/Branch manger.
6. Storage & Possession:-
In the borrower’s own godown or rented godowns within the firm’s premises in open or any other
place of storage with prior approval of the Bank for each such place. It may be noted that the Bank
may not grant drawing power in respect of goods stored / given for processing to other units, unless
necessary prior approval have been obtained and “No-Lien” letters have been obtained from such
companies / owners of godowns, duly confirmed by their Bankers.

7. Basis of valuation:-
As per market value, cost price, invoice price whichever is lower. In case of imported goods the cost
price will be inclusive of import duty paid

9. Periodicity of submission of data:-

i) Stock statements : Once in a year in the month of February every year..
ii) SOD : NA
iii) FFR – 1 : NA.
iv) FFR – 2 : NA.
iii) Provisional Balance Sheet and financial Statements : Within one month from the closure of
financial year.
iv) Audited Balance Sheet and Financial Statements : Within 6 (Six) months from closure of
financial year.
v) Renewal data (CMA data, Estimates / Projections of performance for the current year and
subsequent year for which renewal of facilities is due): to be submitted well in advance, say 2
months prior to the date of expiry of present sanction.

11. Equitable Mortgage Charges: Rs.15000/- (As per H.O Circular No. GB/2008-09/41 dated 21-06-
2008)

14. Penal rates of Interest:

i) For delay in submission of renewal : 1% on entire outstanding till data is
data submitted.
ii) For delay in submission of stock : 1% on entire outstanding till stock
statements statement is submitted.
Iii) For delay in submission of SOD / : 1% on entire outstanding for that
Month / Quarter / Half Year.

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iv) For irregularities in accounts which : 1% on irregular drawings.
are not frequent (i.e. 3 times or 15
days or less in half year)

v) Frequent irregularities (i.e. 4 to 6 : 1% on entire outstanding.

times or 1 month in half year).
vi) For persistent irregularities : 2% on entire outstanding
vii) For delay in submission of SOD / : 2%
viii) Other : All expenses incurred by the Bank for
conducting inspections by its own
officials / outside qualified people
shall be borne by the applicant /
firm / company.
13. Bank’s Name Board(s) indicating charge of the Bank over the assets to be displayed at work
place / Godown at prominent place. All the Machinery / Implements / Vehicles charged to the Bank
shall be painted with words “Pledged / Hypothecated to S.B.H, MSME Dubba Branch”.

14. Equitable Mortgage: -

The title to the immovable properties offered as security should be got cleared by the panel advocate of
the Bank for valid creation of equitable mortgage and shall be got deposited at notified center. Branch
to go through the Title reports of the advocate and ensure that all the particulars as stipulated in
Cir.No.GB/04-05/51, dated 21.09.2004 are complied with.

Instructions contained in Head Office Circular No. GB/2004-05/95 dated 26-02-2005, GB/05-06/72
dated 06-09-2005,GB/05-06/Law/29 dated 05-07-06, Adv/ 05-06/51 dated 22-09-2006,GB/2006-07/127
dated 07.03.2007 and other circulars issued from time to time shall be followed
Branch to ensure that the advocate verifies the original title deeds and documents and only original shall
be deposited with the branch.

Branch to ensure to obtain layout approval from the authorized authorities in respect of open plots.
The charge on agricultural properties is to be registered with MRO and a copy of the acknowledgement
thereof may be held on record.

Branch to ensure that no other loans are outstanding against the IPs mortgaged as security for the
proposed limits.

In case of vacant lands besides examination of provisions of the urban land ceiling act the following
certificate to be kept on branch record for ready reference: (1)Conversion of land from Agricultural to
Non-agricultural approval to be ensured before releasing the limits.(2).Land usage certificates etc.

Apart from getting the equitable mortgage created by deposit of original title deeds, branch to obtain
certified copies of the extracts of the original sale deeds from the concerned registrar and hold on them
on record

Branch to ensure to comply H.O Circular No. GB/2008-09/155 dated 05.03.2009 in connection with the
vetting of documents.

15. The Borrower should maintain books of accounts to adequately reflect his business and should
submit to the Bank such periodical statements as may be called for by the Bank from time to time.

16. The valuation of immovable properties offered as security should be obtained from the panel
engineer of the Bank as per proforma enclosed to ADV/2003-04/113 dated 17.03.2004. Branch to go
through the valuation reports of the Engineer and ensure that all the particulars as stipulated in the above
circular are complied with.

17. The Borrower should route all his business transactions through the books of our financing Branch
only. They shall place their deposits if any with our Branches. The firm should close their accounts with
other banks / Branches and produce satisfactory evidence to this effect.

18. Branch should obtain suitable declaration from the firm that it has no outside Borrowings.

Branch to ensure that the turnover in the account is on par with projected sales and the monthly
drawings / credits in the account(s) are on par with projected purchases and sales.

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Branch to closely monitor the account for proper end use of funds and any adverse feature observed
should be brought to the notice of Z.O.C.C. apart from taking possible corrective steps.

Branch to submit post disbursal certificate (compliance certificate) vide Head Office Circular No.
GB/2007-08/10, dated 02-05-2007 along with duplicate copy of the sanction letter confirming that the
limits were released after complying all terms & conditions stipulated along with confirmation report of
creation of equitable mortgage.

Obtain monthly SOD statements along with stock statements and ensure that the drawings are related to
that statement.

Branch to include the following condition in the sanction letter.

“ I / We hereby agree as a pre-condition of the loan / advance given to me / us by the Bank that in
case I / we commit default in the repayment of Term Loan / Advances or in the repayment of interest
thereon or any of the agreed installment of the loan on due date, the Bank and / or the R.B.I. will have an
unqualified right to disclose or publish my / our name or the name of our company and its directors /
guarantors as defaulters in such manner and through such medium as the bank or R.B.I. in their absolute
discretion may think fit.”

An undertaking from borrowal firm and its guarantors containing CIBIL Clause vide Head Office
Circular No. ADV/2003-04/88, ADV/2002-03/63 dated 16-12-2002 shall be obtained.

The Bank will have the right to examine at all times the firm’s books of accounts and to have the firm’s
books of accounts inspected from time to time by officers of the Bank and / or qualified Auditors and /
or financial experts and / or management consultants of the Bank’s choice. Cost of such inspections
shall be borne by the firm.

During the currency of the bank credit facilities the firm will not without Bank’s permission in writing: -
Effect any change in capital structure.
Formulate any scheme of amalgamation or reconstruction.
Implement any scheme of expansion or acquire fixed assets.
Enter in to borrowing arrangements either secured or unsecured with any other Bank or financial
institutions or otherwise.
Undertake guarantee obligations on behalf of any other firm / applicant.
Declare dividends for any year except out of profits relating to that year after making all due and
necessary provisions and provided further that no default had occurred in any repayment obligations.
Invest by way of share capital in or lend or advance funds to or place deposits with any other concern
expect in normal course of business or as advances to employees. Investment in any associate and / or
subsidiary is expressly prohibited unless specifically permitted by the bank
Make any changes in its management setup.

The firm will maintain its net working capital position above the levels furnished in its projections for
working capital finance. In the event of any difference of opinion arising as to what constitute current
assets and current liabilities, the Bank’s decision will be final and binding on the firm.

The firm will keep the Bank informed of the happening of any event likely to have substantial effect on
their profit / business, if, for instance the monthly productions / sales are substantially less than what had
been indicated to the bank, the firm will inform the Bank accordingly with explanations and remedial
steps proposed to be taken.

The firm will keep the Bank advised of any circumstances adversely affecting the financial position of
their subsidiaries including any action taken by any creditor against the subsidiaries.

Branch to ensure that the borrowing unit is not having any statutory dues to Sales Tax / Income Tax /
Central Excise / Customs Departments etc. before release of loan / renewing the limits. Branch to follow
guidelines circulated vide Head Office Circular No. ADV/2005-06/21 dated 21-06-2005.

Branch to ensure compliance of K.Y.C. norms as per Head Office Circular No. GB/2003-04/16 dated
27-06-2003, GB/2003-04/56 dated 17-11-2003, GB/2002-03/16 dated 28-06-2002 and other circulars
issued from time to time.

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MSME DUBBA BRANCH
Branch to obtain particulars of sons and daughters of borrower(s) and guarantor(s) as per Head Office
Circular No. ADV/2002-03/24 dated 03-07-2002.
Branch, in order to safeguard and prevent the firm from opening accounts with other Banks, obtain a
declaration from the firm at quarterly intervals in the lines of proforma enclosed to Head Office Circular
No. ADV/2001-02/65 dated 01-02-2002 that the firm has not opened any account with any Bank other
than the financing Bank and also undertakes not to open any account with other Banks without written
consent of financing Bank.

Branch to obtain an undertaking from the firm that the unsecured loans obtained by them from their
friends / relatives will not be repaid during currency of bank loan.

In case the advance granted is utilized for the purposes of other than the one for which it is sanctioned,
the bank has a right to recall the advance without giving any notice. Cheques drawn in favor of other
Banks and over Rs. 5.00 lacs in favour of any party would require to be explained to the satisfaction of
the Bank. Working Capital funds shall not be diverted for purchasing fixed assets.

The credit facilities sanctioned are subject to directives issued by Govt. of India / Reserve bank of India
/ State Bank of India and other Regulatory Authorities from time to time.

The Bank will be free to suitably modify any of the terms and conditions detailed above if and when
considered necessary, this will of course, be done in consultation with the company.

Branch to obtain copies of all necessary licenses, permits etc. from competent Government Authority
and hold them on record before release of loan.

In case the Bank considers that the cheques issued by the firm is for purpose other than that for which
the credit facilities/limits have been sanctioned, these cheques are liable to be returned by the Bank with
the reasons “Refer to Drawer”.

The letter of sanction, containing the above terms and conditions should be advised to the borrower in
duplicate and his/her acceptance must be obtained on the duplicate and kept on record.

Similarly, we send herewith this sanction advice in duplicate, one copy of which must be returned to us,
duly signed by you, indication the complete compliance of the terms of sanction.

Any other terms and conditions, which are not specifically covered herein but stipulated in various Head
Office Circulars issued from time to time, shall be complied with.

Bank reserves the right to recall the advance at any time during the course of loan period without
assigning any reason thereof.

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M/s P.V.Narotham Reddy, ZOCC(NZB)/2010-11/15/
MSME DUBBA BRANCH
NON-TRADING SECTOR : SIMPLIFIED MODEL
BORROWER RATING SUMMARY
Financial Risk (FR) Max. Weight Maximum weighted Compan’s weighted
Parameters Marks Score Score
(i) TOL/ TNW 10 2.5 25 25
(a) Latest ratio -7
(b)Average of last 3 years-2
(c) Industry Comparison-1
(ii) Current Ratio 10 2 20 20
(a) Latest Ratio -7
(b)Average of last 3 years-2
(c) Industry Comparison-1
(iii) Return on Capital 10 2 20 20
Employed (ROCE) (%)
(a) Latest ratio -8
(b)Average of last 3 years-2
(iv) PBDIT/Intt. 10 1.5 15 15
(a) Latest ratio -8
(b)Average of last 3 years-2
(v) PAT/Operating income 10 1 10 4.44
(a) Latest ratio -7
(b)Average of last 3 years-2
(c) Industry Comparison-1
(vi) (a) Gross Average DSCR
(for All loans) (for TL
only) or
(b) Inventory/Net Sales +
Receivables/Gross Sales (Days) 10 2 20 20
(a) Latest ratio -6
(b)Average of last 3 years-2
(c) Industry Comparison-2
(for WC only) or
(c) [ Sum of Scores under
(A+B)]/2
(for a company enjoying
both WC & TL facilities)
(vii) Group Risk 10 0.5 5 Normalized
(viii) Forex Risk 10 0.5 5 Normalized
(ix) Future Prospects (FP) 10 2 20 14
(Projected Ratios)
Total Score 130 118.44
Total Score normalised to 70 140/2=70
Qualitative Factors (-ve) (-10) 1 (-10)
Total Score (FR) 70 63.78

(B) Business & Industry Risk(B & I R) Maximum Company’s

Score Score
(i) Access to Resources (Input Profile) 4 2
(ii) User/Product Profile 4 2
(iii) Technology & Consistency in Quality 2 1
(iv) Competition & Market Risk 4 3
(v) Industry outlook/cyclicality 4 NA
(vi) Regulatory, Labour & Environment Risk/Contemporary Issues 2 1
Total (B & I R ) 20 11.25
(C) MANAGEMENT RISK (MR)
(i) Integrity 4 3
(ii) Track Record/Conduct of Account 4 3
(iii) Expertise, Managerial Competence & Commitment 3 2
(iv) Payment Record 2 2
(v) Structure & Systems 1 1
(vi) Experience in the Industry 2 2
(vii) Length of Relationship with the Bank 3 3
(viii) Succession Plan/Key Person 1 1
Total Score under MR 20 17
Management Risk (MR) Score Normalised to 10 20/2=10 8.50
(D) Qualitative Parameter (External Rating) (+5)
(E) Aggregate Risk Score : (A+B+C+D ) ~ [70 + 20 + 10 + (+5) ] 83.53
(F) CRA Rating Based on the above Score SB-4
(G) Country Risk (CR) Assessment --
(H) Final Borrower Rating after CR SB-4
(I) Financial Statement Quality Excellent/Good/
Satisfactory/Poor
(J) Risk Score/Rating Transition Matrix Qualitative comments on
Trends

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M/s P.V.Narotham Reddy, ZOCC(NZB)/2010-11/15/
MSME DUBBA BRANCH

MOVEMENT CHART

PROPOSALS RECEIVED FROM BRANCHES::

I NATURE OF THE PROPOSAL:

a. Proposal: For sanction / approval / confirmation /noting:
i. To sanction Cash Credit (Receivables) limit of Rs.0.70crores under MSME CONTRACTOR
PLUS.
ii. To cancel the existing Over Draft limit of Rs.0.1950 crores.
iii. To Sanction enhancement in Bank Guarantee limit from Rs.0.0535 crores to Rs.0.3535 crores.
iv. To Note the CRA rating of SB-4(New Scale) assigned to the firm based on the Provisional
Balance Sheet as on 31/03/2010.
UNDER DISCRETIONERY POWERS OF: ZOCC.

II NAME OF THE UNIT: M/S P.V.Narotham Reddy.

III BRANCH: MSME Dubba

IV DATE OF RECEIPT: 19.08.2010.

V CLARIFICATIONS / FURTHER INFORMATION: Over phone
VI REPLY RECEIVED VIDE BRANCH LETTER NO:

VII FURTHER QUERIES, IF ANY, VIDE LETTER NO.: F/OD/189 Dated :: 20.08.2010.

VIII REPLY RECEIVED ON: 23/08/2010

IX BRANCH / UNIT VISITED ON: -----

X PROPOSAL SUBMITTED TO CHIEF MANAGER ON: 23/08/2010

XI. PROPOSAL SUBMITTED TO ZOCC ON: 23/08/2010

Chief Manager

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