Uttam Bharat Proposal-final

Location Jaipur

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

SegmentCommercial Banking

Relationship Manager- Dinesh Jain

Last sanction Date of sanction

Sanctioning Authority Nature of proposal

28-11-2008 COCC Renewal of LCBD Limits

Internal Credit Rating (ICR)

Existing Proposed

NA IB2

Customer External rating, if any

SE 1A by CRISIL

(Rs in lacs)Existing Proposed

Borrower Exposure

500.00 1300.00

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 ChangeCash Credit 0.00 300.00 +300.00LCBD 500.00 500.00 --LC cum BG Limit 0.00 500.00 +500.00Total 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. 9-F, VKI Area, Jaipur appx market valuation in paripassu with Syndicate Bank

411.00 lacs

Equitable Mortgage of Industrial Land & Building of the company situated at VKI Area, Jaipur appx market valuation in paripassu with Syndicate Bank

365.00 lacs

Our Proportionate share on CC+LC cum BG Limit 238.70 lacs

Guarantees: Personal Guarantees of all the promoters Directors

1

Name Designation Net Worth Rs in lacs as 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 RelationshipsMangal Electricals IndustriesDynamic Cables P Ltd

Electrical Laminations

15 years

Zodiac Enterprises P Ltd Copper Insulated Wires and Rods

15 years

Airen Metals P Ltd Copper & Aluminum Wire & Rods

10 years

Coventry Metals P Ltd Copper & Aluminum Wire & Rods

7 years

Kalson Engineering & Industrial P Ltd

Transformer Tank 2 years

2

Terms of Purchase Domestic – Cash Payment / Credit of 60-90 days

Raw Material Availability AmplePrice Volatility HighAbility to pass on Raw Material Price Increase

Yes, company has price escalation clause 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 Relationship

s

% Share in Sales

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 Ltd

Transformer 2 years 1%

Terms of Credit Domestic – 30-45 days of credit for Government EntitiesExports – Usance of 60 days

Orders 70% orders through Tenders to Governments30% 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:

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)]

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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 FY05-06

FY06-07 FY07-08 FY 08-09 FY09-10

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

Ratios

Parameter FY05-06 FY06-07 FY07-08 FY 08-09

FY09-10

(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 0.51Debt/TNW excl. Pref. Share capital 1.91

1.50 0.56 0.74 0.51

Debt/EBIDTA 1.52 1.19 0.51 1.05 0.91Debt/EBIDTA excl. Pref. Share Capital 1.52

1.19 0.51 1.05 0.91

Current Ratio 1.15 1.19 1.46 1.69 2.01 Interest Cover 2.18 5.19 9.50 7.50 8.73

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Performance of current year up to December 2008

Particulars Rs in lacsNet 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. 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.

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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 agreement has been completed

: N.A.

Whether solicitor's certificate regarding validity and enforceability of documents obtained?

: Yes

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 and the same is valid as on date and adequate

: Yes

Whether branch is carrying out unit inspections at the prescribed periodicity and preparing unit visit reports

: Yes

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

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:

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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 10th & 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. Alok Agrawal, Mr Atul Agrawal and Mr Akhil Agrawal is also available. Hence structural risk is medium 6) Policy compliance status:

Sl No

Parameter Banks's Norm Actual Values

Status of Compliance

Reasons for Variance

1 Per Borrower Exposure (Bank Norm)

Rs.10000.00 lacs 1300 Yes

2 Per Borrower Rs 28612.59 lacs 1300 Yes

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Exposure (RBI Norm)

3 Group Exposure (Bank Norm)

Rs. 30,000.00 lacs 1300 Yes

4 Group Exposure (RBI Norm)

Rs. 76300.23 lacs 1300 Yes

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

8 Gearing TOL / TNW not to exceed 3 2.20 Yes

9 Industry Classification and Exposure

Thrust (10%) / Acceptable (5%) / Negative (Reduction)

Acceptable Yes

7) Security offered:

Facility & tenure Primary Collateral GuaranteesCash Credit 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

A) Equitable Mortgage of Factory Land & Building at Plot No B-189 (A) Road No. 9-F, VKI Area, Jaipur appx market valuation of Rs.411.00 lacs in paripassu with Syndicate Bank

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

Personal Guarantee of all the promoter directors of the company

LC cum BG Limit Cash Margin @ 10%

Net worth of Guarantors:





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

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financials of (Year)

Model Grade Rating rating

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 business7) 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.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

9

Manager – CCBJaipur

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 spreadsheet3. Annexure III- Internal Credit Rating Sheet4. Annexure IV- Term Sheet5. Annexure V – Industry analysis

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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. AuditorsYears of association

P C Modi & Co.Since Inception

7. If listed, stock market perception- Share price / market capitalization, 52 wk high/low, PE, volume traded

Unlisted Company

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:





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)

Facility Limit O/S 06-02-2009

Irregularity Exposure

Sales Bill Discounting under LC 500.00 91.57 Nil 500.00Total Exposure 500.00 91.57 Nil 500.00History of limits:

(Rs. in lacs)

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S. No

Date oflast

sanction /Renewal

Whetherrenewal /

enhancement

Nature of Facility

Limit Sanctioning Authority

1 14-08-2007 Fresh Sanction LCBD Limit 500.00 Corporate Office Credit Committee

2 28-11-2008 Renewal LCBD Limit 500.00 Corporate Office Credit Committee

Value of the account:(Rs. in Lacs)

Particulars 01.04.2007 to 31.03.2008

01.04.2008 to 31.01.2009

Interest on Bill discounting 14.19 8.40Commission on Bill discounting 0.03 0.05Total 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)

Name of the Bank

FB Limits NFB Limits Total Limits Sharing pattern (%) IRAC

status ROIE P E P E P E P

Syndicate Bank, M.I. Road, Jaipur

600 600 1200 1200 1800 1800 78% 58% Standard 11.50%

Sub-total (other banks)

600 600 1200 1200 1800 1800 78% 58% Standard -

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 Bank /FI

Limit Disbursed amount

O/s O/D Repayment Schedule IRAC status

Syndicate Bank 36 36 *27 0Repayable in 60 equal monthly instalments after a moratorium of 6 months.

Standard

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Syndicate Bank 75 75 *37 0Repayable in 60 equal monthly instalments after a moratorium of 6 months.

Standard

ICICI Bank 8.00 8.00 6.07 0 Repayable in 60 EMI of Rs. 0.08 lacs each

Standard

Sub-total (from other banks)

119 119 71.07 0 -

Total (Our Bank) 0 0 0 0

Grand Total 119 119 71.07 0 - -* Outstanding as on 31.10.2008The 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 AUDITED

2006-07 AUDITED

2007-08 AUDITED

2008-09 Estimated

2009-10 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 (Amount)

178.89 350.29 515.56 510.89 546.32

Total Current Liabilities (excluding Bank Bor) (B)

832.81 923.1 1228.98 985.89 966.32

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

MPBF (C-D) or (C-E) whichever is lower

98.41 371.23 503.09 900 900

Excess Borrowings 140.25 142.83 0 0 0

Comments on holding level:

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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)

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

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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 8200.00Projected Supplies to Governments 70% of

turnover 5740.00

BG requirement @ 10% 574.00

574

(-) 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

LC Requirement for Purchase of Copper / Aluminum

15% of Projected Monthly Turnover 102.50Usance Time 90 daysLead Time 15 daysTransit Time 15 daysLC Requirement 410.00

410

LC Requirement for Purchase of Lamination Sheets

20% of Projected Monthly Turnover 136.66

60% of above through Inland LC 82.00Usance Time – Inland 90 days

765

15

Lead Time 15 daysTransit Time 15 daysLC Requirement 328

40% of above through Import LC 54.66Usance Time – Import 180 daysLead Time 30 daysTransit Time 30 daysLC 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)

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

16

(annualisation)

Last year of audited results 2008

Year ended31-03-2006

31-03-2007

31-03-2008

31-03-2009

31-03-2010

Audited Audited Audited Estimates

Projections accepted by 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 15.00Less Excise Duty & Sales Tax (Manufacturing) 417.67 630.71 943.94 1050.00 1100.00Less 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 0.00Commission / Brokerage received 0.00 0.00 0.00 0.00 0.00

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 0.00Non-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

17

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

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 3.00Add: Purchases (Trading Activity) 1.00 0.00 4.21 5.00 7.00Less: 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

18

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 1530.60Profit 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 (excluding Prior year items)

56.47 228.73 580.00 857.59 1080.60

19

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 2.46Transfer 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 0.00Net 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 72.28Share 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:

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 2782.54Less: 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 0.00Less: 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

20

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 0.00Loans 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

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 12.00Loans & advances (Current portion) 79.59 155.30 137.70 100.00 100.00Statutory 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 15.00Share Application money (allotment not finalised) 0.00 0.00 0.00 0.00 0.00Bank Borrowings - From our Bank 0.00 0.00 0.00 800.00 800.00

21

Bank Borrowings - From other Banks 238.66 514.06 503.09 0.00 0.00Bank 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 0.00All 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

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

22

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 60.00Other loans & advances (current in nature) 24.95 39.06 56.08 80.00 90.00Deferred 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

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 0.00Other 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 0.00END OF P&L and BALANCE

SHEET

Uttam (Bharat) Electricals P LtdINR in Lacs

Profit & Loss 2006 2007 2008 2009 201023

Audited Audited AuditedEstimate

s ProjNo of Months 12 12 12 12 12

Revenues 3,352

3,718

6,459

8,465

9,922

Growth (%) 11% 74% 31% 17%

Cost of Goods Sold 2,975

3,064

5,186

6,754

7,932

COGS % 89% 82% 80% 80% 80%

Operating Expenses 207

211

271

285

310

EBITDA 169

443

1,002

1,426

1,680

Depreciation 8

13

16

30

28

Interest Expense 80

87

106

125

135

Net Non-oper Income (Income - Expenses)

4

10

8

11

14

Profit Before Tax 86

353

887

1,283

1,531

Income Taxes 30

124

307

425

450

Net Profits 56

229

580

858

1,081

Balance Sheet

Networth 138

351

914

1,754

2,818

Less: Inv in Group Cos 0 0 0 0 0

Tangible Net Worth 138

351

914

1,754

2,818

Total Debt 264

528

509

1,500

1,475

- Long term debt 14

6

3

175

135

- Short term debt 250

522

506

1,325

1,340

Other Liabilities 1,049

1,166

1,501

1,314

1,327

Total 1,450

2,045

2,924

4,569

5,620

Net Fixed Assets 213

318

330

479

461

Inventory 511

795

1,252

1,453

1,613

Sundry Debtors (< 6mths) 570

734

882

2,050

2,910

Cash & Bank Balances 2

4

5

10

15

Other Assets 192

232

492

614

658

Sundry Debtors (> 6mths) 23

25

38

40

38

Total 1,487

2,082

2,961

4,606

5,657

24

Cash Flow Analysis

Funds From Operations 64

241

596

888

1,109

Add: Long Term Sources -

30

30

178

6

Less: Long Term Uses -

149

110

197

67

Long Term Surplus / (Deficit) 64

123

516

869

1,048

Short Term Sources -

86

301

-

28

Short Term Uses -

484

806

1,666

1,076

Short Term Surplus / (Deficit) -

(570)

(1,108)

(1,666)

(1,104)

Net Surplus / (Deficit) 64

(448)

(592)

(797)

(56)

Increase in Bank Borrowings -

275

(11)

797

-

Total Outside Liabilities 1,313

1,694

2,011

2,814

2,802

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%

Gearing (Debt / Tangible Networth) 1.92

1.50

0.56

0.86

0.52

TOL / TNW 9.55

4.83

2.20

1.60

0.99

Total Debt / EBITDA 1.56

1.19

0.51

1.05

0.88

Interest Cover (EBITDA) 2.13

5.08

9.43

11.41

12.45

DSCR (PAT+Dep+Intt) / (TL Instt + Intt))

3.32

6.17

7.91

7.77

Current Ratio 1.15

1.19

1.46

1.70

2.13

Working Capital Turnover (days) 40

88

83

117

136

Adjusted for Inv in Grp Co Gearing (Debt / Networth (w/o Inv in grp co)

1.92

1.50

0.56

0.86

0.52

TOL / Networth (w/o Inv in Grp Co) 9.55

4.83

2.20

1.60

0.99

25

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 Company belongs

: Electric Equipment

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)(out of Max 100) - Standalone Score only

81.25

Rating Grade (Model-specific)(Best L1 & Worst L8)

L2

Single Scale Rating Grade (Translated across various rating models)

IB2

Facility Risk rating Grade (Model-specific) FR1

More detailed Rating Information (Model-specific Rating)

Max Score for the

Category

Score earned by the

Company

Rating Grade for the Category

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

26

ANNEXURE IV

Uttam (Bharat) Electricals P LtdTerms 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

Primary SecurityHypothecation 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

Type of Facility NON FUNDED LIMITTotal Non Funded Exposure: Rs.500.00 lacs

Facility Bank Guarantee

Nature Financial/Performance

Amount Proposed Up to Rs.500 lacs with in total non funded limit (100% 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 Proposed

Up to Rs.500.00 lacs with in total non funded limit (100% interchangeability between LC & BG)

Cash Margin 10%

Commission 50% concession in card rates

Primary Security Asset under LC

27

Extension of Charge of current assets.

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

Collateral Security

Equitable Mortgage of Factory Land & Building at Plot No B-189 (A) Road No. 9-F, VKI Area, Jaipur appx market valuation in paripassu with Syndicate Bank

411.00 lacs

Equitable Mortgage of Industrial Land & Building of the company situated at VKI Area, Jaipur appx market valuation in paripassu with Symdicate Bank

365.00 lacs

Personal Guarantee

Personal Guarantee of all the promoter directors of the company

Processing Charges

0.25%+ service tax

Penal interest rate

Applicable Interest rate + 2% - For non-compliance with sanction terms, 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 lacsSecurity 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 guidelinesPeriod 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 departmentOther 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 guidelines should be strictly followed

6. LCs should be issued by banks on our approved list or approval of International Banking Department

28

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.

29

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 improvement initiatives. A revamp of the existing APDRP is being planned.

30

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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