Rahul Dama Project

8/2/2019 Rahul Dama Project

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A PROJECT REPORT

ON

PROJECTED FINANCIAL STATEMENTS TO BE SUBMITTED TO THE BANK FOR

LOAN PURPOSES

BY

(RAHUL DAMA)

(T.Y.B.B.A) (20112012)

IN PARTIAL FULFILLMENT OF

Bachelor of Business Administration

UNIVERSITY OF PUNE

MITSOM College

PUNE: 411038


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CERTIFICATE

This is to certify that Mr. / Miss RAHUL DAMA

of MAEERs MITSOM College has successfully completed the project work

titled BANK LOAN PROPOSAL

in partial fulfillment of requirement for the award of Bachelor of Business Administration

prescribed by the University of Pune

This project is the record of authentic work carried out during the academic year 20112012.

Ms. Renu Kulkarni Dr.R.M.Chitnis

Project Guide Principal


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DECLARATION

I, Mr / Ms_________RAHUL DAMA______ hereby declare that this project is the record of

authentic work carried out by me during the academic year 2011 2012 and has not been

submitted to any other University or Institute towards the award of any degree.

Signature of the student

(RAHUL DAMA)


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ACKNOWLEDGEMENT

I would like to thankMrs.Anjali Sane, co-ordinator of BBA Department, for her

judicious Guidance and Encouragement during the project work.

It is my privilege to express my Gratitude to my project Guide Ms Renu Kulkarni,for

her Guidance,Inspiration, keen Interest,Help and Efforts during this project work.

Last but not the least,I would like to thank all the faculty members of MITSOM College

for their kind support and cooperation during the conduction of the project work.

(RAHUL DAMA)


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INDEX

Sr.no Particulars

1 Introduction

i. About the company

ii. Market potential

iii. Assumptions & List of Financial Documents to beSubmitted

2 Cost of production & means of finance

3 Schedule for calculation of depreciation

4 Loan repayment schedule

5 Profitability statement

6 Cash flow statement

7 Balance sheet

8 Debt Service Ratio

9 Bibliography


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Introduction And Market Potential


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Size of the IndustryToday India has around 78 Jute Mills.

Geographical Distribution - West Bengal, Andhra Pradesh, Assam, Odisha, Uttar Pradesh,Bihar, Tripura and Chhattisgarh

Output Per Annum - The Indian Jute Industry today accounts for a turnover of Rs 6,500 crore

annually, contributing to exports to the tune of nearly Rs.1000 crore.

Jute is also known as the 'Golden Fiber' a plant that produces a fiber mainly used for sacking and

cordage. This raw material is used for sacks globally which is a most versatile fiber of nature.

Jute is cheap and important among all textile fibers next to cotton.

The Indian Jute industry has been expanding really fast spanning from a wide range of life style

consumer products, with courtesy to the versatility of Jute. Innovative ways of bleaching, dyeing

and finished goods processes - the jute industry now provides finished jute products that are

softer, have a lustre with aesthetic appeal. Today Jute has been defined as eco-friendly natural

fiber with utmost versatility ranging from low value geo-textiles to high value carpets,

decoratives, apparels, composites, upholstery furnishings, etc.

The Indian Jute Industry plays a key role in the Indian economy, providing direct employment to

about 0.26 million workers, and supporting the lives of around 4.0 million farm families. Around

0.14 million people are engaged in the tertiary sector, that supports the jute industry. Currently it

contributes to exports about Rs. 1000 crore.

Government of India has included the Jute Production for special attention in its National

Common Minimum Programme. For this mission, it has approved a sum of Rs.355.55 crore. And

also in the year 2006-07 the approved allocations for Mini Mission -I and Mini Mission-II underthe JTM for the remaining year of X Plan was at Rs.2.46 crore. The Ministry of Agriculture

allocated 9.75 crore subject to the condition that the Department of Expenditure will find savings


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from the existing allocation of Ministry of Agriculture. The remaining years allocations for Mini

Mission-III and Mini Mission-IV of the X Plan at Rs.7.95 crore and Rs.30.85 crore respectivelyhave been approved, which would be funded from the Plan savings of Ministry of Textiles

The India Jute Industry consistitutes total mills from central government which owns 6 jute

mills, the state government owns 4, 2 are under cooperatives, and 64 jute mills are under privateownerships. India today has around 78 jute mills and the state of West Bengal alone has around

61 jute mills. Andhra Pradesh has 7 jute mills, 3 Utter Pradesh has 3 jute mills and Bihar,

Odisha, Assam, Tripura, and Madhya Pradesh has 1 Jute Mill each.

In the exports in the financial year 2006-07 total jute goods was at 104.3 thousand M.T valued atRs. 583.55 crore. The exports of jute goods were between Rs. 1100-1200 crores. The production

of raw jute varies between 90-180 lakh. In the year 2005-06 the Domestic consumption is 13.5-

14.5 lakh MT and the production was 85 bales. While the estimated production was 105 lakh

bales for jute season 2007. In the year 2008-09 the Import of Raw Jute was 66% in quantity andby 55% in value terms, whereas import of jute products saw a surge by 23% in quantity and by

47% in value terms when compared with the figures of 2007-08.

Import of jute and jute products

Period 2008 - 2009 2007 - 20082006

2007

Qty. Value Qty. Value Qty. Value

Raw Jute 59,042 8,900.31 1,71,800 19,672.39 94,363 15,031.15

Jute Products 70,935 20,299.48 57,688 13,809.41 60,932 17,162.87

Indian Exports of jute-diversified products (JDP) has gone up from Rs.93.4 crores in 1998-99 toRs.257.3 crores in 2004-05, constituting 22 % of India's total jute goods export. Floor coverings

and shopping bags together account for about 97 % of all lifestyle JDP exports. The U.S. is the

biggest market for Indian JDP, followed by a few European countries such as the UnitedKingdom, Germany, Italy and Spain. The government aims to increase the exports of jute and

jute products to nearly Rs.5,000 crores in the years to come.


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COMPANY PROFILE

NAME OF THE FIRM : Dama Trading Co.

CONSTITUTION OF THE FIRM : PROPRIETARY

NAME OF THE PROPRIETOR : Mr.Pratap Dama

OFFICE ADDRESS : Plot No.2,

Sakri Road,

Bilaspur (Chhattisgarh)-495001

NATURE OF BUSINESS : Manufacturing of Jute Bags

FINANCIAL REQUIREMENT : Term Loan Rs.24 Lakh.


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About the loan to be taken:-

The loan is taken for introducing a small scale jute industry. The total fixed assets thus purchased

from the loan amount will be hypothecated to the bank as security. The term loan would be taken

at 11% p.a. The interest rate for cash credit is taken at 15% p.a.

ASSUMPTIONS

Interest on the term loan is calculated at 11% p.a.

The term loan is repaid in 7 years and the instalments are paid monthly.

The utilization capacity is 60% in the 1st year, 65% in 2nd year, 70% in 3rd year,75%

in 4th year, 80%in 5th year, and 85%in 6th&7th year.

Income tax is calculated at 33.66%

Depreciation is taken as per the provision of income tax act 1961.

The depreciation rates are:-

a. plant & machinery @ 15%

b. computer @ 60%c. furniture & fixtures @ 10%d. land & building @ 10%

Depreciation of fixed assets is calculated on W.D.V (written down value) method.

The variable overheads are expected to increase at an average of 7.5%

Stock of raw material is maintained at a stock of 7 days.

Cash credit has been granted at an interest of 15%

The closing stock of finished goods is maintained at 7 days stock.


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The credit period for debtors is 20 days and through creditors is 15 days.

3/4th of the sales are on credit basis.

Raw Material of Rs.231/Kg is used in the manufacturing process.

Sales increase by 10.37%,7.70%,7.15%,6.67%,6.25% and 5.88% respectively.

Each Unit of Jute Bag Costs Rs 100 and 11528 Units are Sold in the 1st year.

10 Labors are hired @ Rs.6860/Month.

List of financial statements to be submitted

1. Cost of project and means of finance.

2. Profitability statement for the loan tenure.

3. Previous balance sheets of the company if existing; projected balance sheet if thecompany is a startup project.

4. Calculation of interest and loan repayment schedule

5. Schedule of depreciation of fixed assets.

6. Ratio analysis.

7. Projected cash flow statement of the company


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COST OF PROJECT

AND MEANS OF FINANCE


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[1] Cost of Project :

Particulars AMOUNT(RS.)

Machinery (20 machinery of 100000 each) 20,00,000

Land and building 7,25,000

Computer 60,000

Working Capital 3,55,000

C.S.E.B Deposit 1,00,000

Furniture and Fixtures 1,50,000

Total Cost of Project 33,90,000

[2] Means of Finance

Particulars Amount(Rs.)

Owners Contribution (Approx 20.65% of total cost of project) 7,00,000

Bank Term Loan (Approx 70.80% of total cost of project) 24,00,000

cash credit (81.69% of working capital) 2,90,000

Total 33,90,000

Bank Term LoanInterest 11%


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DEPRECIATION SCHEDULE


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Assets 2012-2013 2013-2014Op. Bal Dep. Clo. Bal Op. Bal Dep. Clo. Bal

Plant and Machinery

Dep. @ 15%

2000000 300000 1700000 1700000 255000 1445000

ComputerDep. @ 60% 60000 36000 24000 24000 14400 9600

Furniture and

Fixtures Dep.

@ 10% 150000 15000 135000 135000 13500 121500

Land and Building

Dep. @ 10% 725000 72500 652500 652500 65250 587250

Total Op. Bal. 2935000 2511500

Total Dep. 423500 348150

Total Clo. Bal 2511500 2163350


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Assets 2014-2015 2015-2016Op. Bal Dep. Clo. Bal Op. Bal Dep. Clo. Bal

Plant and Machinery

Dep. @ 15% 1445000 216750 1228250 1228250 184237.5 1044013

Computer Dep.

@ 60% 9600 5760 3840 3840 2304 1536

Furniture and Fixtures

Dep. @ 10%

121500 12150 109350 109350 10935 98415

Land and Building

Dep. @ 10%

587250 58725 528525 528525 52852.5 475673

Total Op. Bal. 2163350 1869965

Total Dep. 293385 250329

Total Clo. Bal 1869965 1619636

Assets 2016-2017 2017-2018 2018-2019


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Op. Bal Dep. Clo. Bal Op. Bal Dep. Clo. Bal Op. Bal Dep. Clo. Bal

Plant and

MachineryDep. @ 15%

1044013 156602 887411 887411 133112 754299 754299 113145 641154

ComputerDep. @ 60% 1536 922 614 614 369 246 246 147 98

Furniture andFixtures

Dep. @ 10%

98415 9842 88574 88574 8857 79716 79716 7972 71745

Land and

Building

Dep. @ 10%

475673 47567 428105 428105 42811 385295 385295 38529 346765

Total Op. Bal. 1619636 1404704 1219556Total Dep. 214932 185148 159793

Total Clo. Bal 1404704 1219556 1059762


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LOAN REPAYMENT

SCHEDULE

Loan Amount Rs. 24,00,000

Interest rate 11% 0.00917

Loan Tenure 84

EMI Rs. 41,093.85

Year Months Opening EMI Interest Principal Closing

balance repayement Balance

1.00 2400000.00 41093.85 22000.00 19093.85 2380906.15

2.00 2380906.15 41093.85 21824.97 19268.87 2361637.28

3.00 2361637.28 41093.85 21648.34 19445.51 2342191.77

4.00 2342191.77 41093.85 21470.09 19623.76 2322568.02

5.00 2322568.02 41093.85 21290.21 19803.64 2302764.38

6.00 2302764.38 41093.85 21108.67 19985.17 2282779.20

7.00 2282779.20 41093.85 20925.48 20168.37 2262610.83

8.00 2262610.83 41093.85 20740.60 20353.25 2242257.58

9.00 2242257.58 41093.85 20554.03 20539.82 2221717.76

10.00 2221717.76 41093.85 20365.75 20728.10 2200989.6611.00 2200989.66 41093.85 20175.74 20918.11 2180071.55

12.00 2180071.55 41093.85 19983.99 21109.86 2158961.69

2012-

2013 493126.17 252087.86 241038.31

13.00 2158961.69 41093.85 19790.48 21303.37 2137658.33

14.00 2137658.33 41093.85 19595.20 21498.65 2116159.68

15.00 2116159.68 41093.85 19398.13 21695.72 2094463.97

16.00 2094463.97 41093.85 19199.25 21894.59 2072569.37

17.00 2072569.37 41093.85 18998.55 22095.29 2050474.08

18.00 2050474.08 41093.85 18796.01 22297.84 2028176.24

19.00 2028176.24 41093.85 18591.62 22502.23 2005674.0120.00 2005674.01 41093.85 18385.35 22708.50 1982965.51

21.00 1982965.51 41093.85 18177.18 22916.66 1960048.84

22.00 1960048.84 41093.85 17967.11 23126.73 1936922.11

23.00 1936922.11 41093.85 17755.12 23338.73 1913583.38

24.00 1913583.38 41093.85 17541.18 23552.67 1890030.72

2013-

2014 493126.17 224195.19 268930.98


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25.00 1890030.72 41093.85 17325.28 23768.57 1866262.15

26.00 1866262.15 41093.85 17107.40 23986.44 1842275.71

27.00 1842275.71 41093.85 16887.53 24206.32 1818069.39

28.00 1818069.39 41093.85 16665.64 24428.21 1793641.17

29.00 1793641.17 41093.85 16441.71 24652.14 1768989.04

30.00 1768989.04 41093.85 16215.73 24878.11 1744110.9231.00 1744110.92 41093.85 15987.68 25106.16 1719004.76

32.00 1719004.76 41093.85 15757.54 25336.30 1693668.45

33.00 1693668.45 41093.85 15525.29 25568.55 1668099.90

34.00 1668099.90 41093.85 15290.92 25802.93 1642296.97

35.00 1642296.97 41093.85 15054.39 26039.46 1616257.51

36.00 1616257.51 41093.85 14815.69 26278.15 1589979.36

2014-

2015 493126.17 193074.81 300051.36

Year Months Opening EMI Interest Principal Closing

balance repayement Balance

37.00 1589979.36 41093.85 14574.81 26519.04 1563460.32

38.00 1563460.32 41093.85 14331.72 26762.13 1536698.19

39.00 1536698.19 41093.85 14086.40 27007.45 1509690.75

40.00 1509690.75 41093.85 13838.83 27255.02 1482435.73

41.00 1482435.73 41093.85 13588.99 27504.85 1454930.88

42.00 1454930.88 41093.85 13336.87 27756.98 1427173.90

43.00 1427173.90 41093.85 13082.43 28011.42 1399162.48

44.00 1399162.48 41093.85 12825.66 28268.19 1370894.28

45.00 1370894.28 41093.85 12566.53 28527.32 1342366.97

46.00 1342366.97 41093.85 12305.03 28788.82 1313578.1547.00 1313578.15 41093.85 12041.13 29052.71 1284525.44

48.00 1284525.44 41093.85 11774.82 29319.03 1255206.41

2015-

2016 493126.17 158353.22 334772.95

49.00 1255206.41 41093.85 11506.06 29587.79 1225618.62

50.00 1225618.62 41093.85 11234.84 29859.01 1195759.61

51.00 1195759.61 41093.85 10961.13 30132.72 1165626.89

52.00 1165626.89 41093.85 10684.91 30408.93 1135217.95

53.00 1135217.95 41093.85 10406.16 30687.68 1104530.27

54.00 1104530.27 41093.85 10124.86 30968.99 1073561.29

55.00 1073561.29 41093.85 9840.98 31252.87 1042308.4256.00 1042308.42 41093.85 9554.49 31539.35 1010769.06

57.00 1010769.06 41093.85 9265.38 31828.46 978940.60

58.00 978940.60 41093.85 8973.62 32120.23 946820.37

59.00 946820.37 41093.85 8679.19 32414.66 914405.71

60.00 914405.71 41093.85 8382.05 32711.80 881693.92

2016-

2017 493126.17 119613.68 373512.49


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61.00 881693.92 41093.85 8082.19 33011.65 848682.26

62.00 848682.26 41093.85 7779.59 33314.26 815368.00

63.00 815368.00 41093.85 7474.21 33619.64 781748.36

64.00 781748.36 41093.85 7166.03 33927.82 747820.54

65.00 747820.54 41093.85 6855.02 34238.83 713581.72

66.00 713581.72 41093.85 6541.17 34552.68 679029.0467.00 679029.04 41093.85 6224.43 34869.41 644159.62

68.00 644159.62 41093.85 5904.80 35189.05 608970.57

69.00 608970.57 41093.85 5582.23 35511.62 573458.95

70.00 573458.95 41093.85 5256.71 35837.14 537621.81

71.00 537621.81 41093.85 4928.20 36165.65 501456.16

72.00 501456.16 41093.85 4596.68 36497.17 464959.00

2017-

2018 493126.17 76391.25 416734.92

73.00 464959.00 41093.85 4262.12 36831.72 428127.28

74.00 428127.28 41093.85 3924.50 37169.35 390957.93

75.00 390957.93 41093.85 3583.78 37510.07 353447.8676.00 353447.86 41093.85 3239.94 37853.91 315593.95

77.00 315593.95 41093.85 2892.94 38200.90 277393.05

78.00 277393.05 41093.85 2542.77 38551.08 238841.97

79.00 238841.97 41093.85 2189.38 38904.46 199937.51

80.00 199937.51 41093.85 1832.76 39261.09 160676.42

81.00 160676.42 41093.85 1472.87 39620.98 121055.44

82.00 121055.44 41093.85 1109.67 39984.17 81071.27

83.00 81071.27 41093.85 743.15 40350.69 40720.58

84.00 40720.58 41093.85 373.27 40720.58 0.00

2018-

2019 493126.17 28167.17 464959.00


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PROJECTED TRADING, PROFIT AND LOSS

ACCOUNT


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Particulars 2012-2013 2013-2014 2014-2015 2015-2016

AMOUNT(R

S)

AMOUNT(R

S)

AMOUNT(R

S)

AMOUNT(R

S)

By Sales 11524800 12720400 13700400 14680400

By Closing Stock 416188 448626 481496 514625

Total (A) 11940988.4 13169025.6 14181896.33 15195024.69

To Opening Stock 0 416188 448626 481496To Purchases 9764092.8 10386314.4 11184034.4 11981754.4To Labor Charges 823200 891800 960400 1029000

To Power 223440 242060 260680 279300

To Other Expenses 90000 96750.00 104006.25 111806.72

Total (B) 10900732.8 12033112.8 12957746.25 13883357.44

To Gross Profit (A-B)

C 1040255.6 1135912.8 1224150.075 1311667.248

To Salaries 50000 53750 57781.25 62114.84To Telephone Expenses 18000 19350.00 20801.25 22361.34To Printing and Stationary 24000 25800.00 27735.00 29815.13

To Electricity 12000 12900.00 13867.50 14907.56

To Depreciation 423500 348150 293385 250329To Interest on Term Loan 252087.86 224195 193074.81 158353.22

To Interest on Cash Credit 43500 43500 43500 43500

Total Expenses

D 823087.86 727645.19 650144.81 581381.09

Net Profit (C-D) 217167.74 408267.61 574005.26 730286.16Less: Income Tax 73,098.66 137,422.88 193,210.17 245,814.32

Profit After Tax 144,069 270,845 380,795 484,472


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Particulars 2016-2017 2017-2018 2018-2019

AMOUNT(RS) AMOUNT(RS) AMOUNT(RS)

By Sales 15660400 16640400 16660000By Closing Stock 547931 581378 581288

Total (A) 16208331.46 17221777.6 17241288.28

To Opening Stock 514625 547931 581378

To Purchases 12779474.4 13577194.4 13561240To Labour Charges 1097600 1166200 1166200To Power 297920 316540 316540

To Other Expenses 120192.22 129206.64 138897.14

Total (B) 14809811.31 15737072.5 15764254.74

To Gross Profit (A-B) C 1398520.15 1484705.1 1477033.537

To Salaries 66773.46 71781.47 77165.08To Telephone Expenses 24038.44 25841.33 27779.43

To Printing and Stationary 32051.26 34455.10 37039.24To Electricity 16025.63 17227.55 18519.62To Depreciation 214932 185148.11 159793

To Interest on Term Loan 119613.68 76391.25 28167.17

To Interest on Cash Credit 43500 43500 43500

Total Expenses D 516934.70 454344.81 391963.93

Net Profit (C-D) 881585.45 1030360.29 1085069.61

Less: Income Tax 296,741.66 346,819.27 365,234.43

Profit After Tax 584,844 683,541 719,835


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Particulars 2012-2013 2013-2014 2014-2015 2015-2016

AMOUNT(RS) AMOUNT(RS) AMOUNT(RS) AMOUNT(RS)

Sources of Funds

Opening Balance 0 189883 482937 816383

Owners Contribution 700000 0 0 0

Bank Term Loan 2400000 0 0 0

Cash Credit 290000 0 0 0

cash sales 11030880 12175240 13113240 14051240

RECEIPT FROM DEBTORS 0 493920 545160 587160

Total(A) 14420880 12859043 14141337 15454783

APPLICATION OF FUNDS

Machinery 2000000 0 0 0

Land and Building 725000 0 0 0Computer 60000 0 0 0

Furniture and Fixtures 150000 0 0 0

M.S.E.B Deposit 100000 0 0 0

Purchases 9345632 9941187 10704719 11468251

Labour Charges 823200 891800 960400 1029000

Power 223440 242060 260680 279300

Other Expenses 90000 96750 104006 111807

Salaries 50000 53750 57781 62115

Telephone Expenses 18000 19350 20801 22361Printing and Stationary 24000 25800 27735 29815

Electricity 12000 12900 13868 14908

PAYMENT TO CREDITORS 0 418461 445128 479316

Interest Paid on Term Loan 252088 224195 193075 158353

Repayment of Term Loan 241038 268931 300051 334773

Interest on Working Cap. Loan 43500 43500 43500 43500

Tax paid for the year 73099 137423 193210 245814

TOTAL(B) 14230997 12376107 13324954 14279312

CLOSING BALANCE(A-B) 189883 482937 816383 1175470

Particulars 2016-2017 2017-2018 2018-2019

AMOUNT(RS) AMOUNT(RS) AMOUNT(RS)


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Sources of Funds

Opening Balance 1175470 1560615 1971311

Owners Contribution 0 0 0

Bank Term Loan 0 0 0

Cash Credit 0 0 0

Cash Sales 14989240 15927240 15946000

RECEIPT FROM DEBTORS 629160 671160 713160

Total(A) 16793870 18159015 18630471

APPLICATION OF FUNDS

Machinery 0 0 0

Land and Building 0 0 0

Computer 0 0 0

Furniture and Fixtures 0 0 0C.S.E.B Deposit 0 0 0

Purchases 12231783 12995315 12980044

Labor Charges 1097600 1166200 1166200

Power 297920 316540 316540

Other Expenses 120192 129207 138897

Salaries 66773 71781 77165

Telephone Expenses 24038 25841 27779

Printing and Stationary 32051 34455 37039

Electricity 16026 17228 18520PAYMENT TO CREDITORS 513504 547692 581880

Interest Paid on Term Loan 119614 76391 28167

Repayment of Term Loan 373512 416735 464959

Interest on Working Cap. Loan 43500 43500 43500

Tax paid for the year 296742 346819 365234

TOTAL(B) 15233255 16187704 16245925

CLOSING BALANCE(A-B) 1560615 1971311 2384546


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PROJECTED BALANCE SHEET FOR 7 YEARS


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LIABILITIES 2012-2013 2013-2014 2014-2015 2015-2016

AMOUNT(RS.) AMOUNT(RS.) AMOUNT(RS.) AMOUNT(RS.)

CAPITAL ACCOUNT

Opening Balance 0 844069.08 1114913.81 1495708.90Add : Capital Introduction 700000

Add : Net Profit ( PAT ) 144069 270845 380795 484472

SECURED&UNSECURED LOAN

Bank term loan 2158962 1890030.72 1589979.36 1255206.41

Bank cash credit 290000 290000 290000 290000

CURRENT LIABILITIES &

PROVISIONS

Creditors 418461.12 445127.76 479315.76 513503.76

TOTAL 3711492 3740072 3855004 4038891

ASSETS 2009-2010 2010-2011 2011-2012 2012-2013

AMOUNT(RS.) AMOUNT(RS.) AMOUNT(RS.) AMOUNT(RS.)

FIXED ASSETS (less depreciation) 2511500 2163350 1869965 1619636

Deposits

Deposit to MSEB 100000 100000 100000 100000

CURRENT ASSETS,LOANS &

ADVANCES

Finished Goods 224735.6 241218.4 258134.73 275308.69

Raw Material 191452.8 207407.2 223361.6 239316

Debtors 493920.00 545160.00 587160.00 629160.00

Other Current Assets 189883 482937 816383 1175470

TOTAL 3711492 3740072 3855004 4038891

LIABILITIES 2016-2017 2017-2018 2018-2019


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AMOUNT(RS.

)

AMOUNT(RS.

)

AMOUNT(RS.

)

CAPITAL ACCOUNT

Opening Balance 1980180.74 2565024.53 3248565.54

Add : Capital IntroductionAdd : Net Profit ( PAT ) 584844 683541 719835

SECURED&UNSECURED LOAN

Bank term loan 881693.92 464959.00 0.00

Bank cash credit 290000 290000 290000

CURRENT LIABILITIES &

PROVISIONS

Creditors 547691.76 581879.76 581196.00

TOTAL 4284410 4585404 4839597

ASSETS 2013-2014 2014-2015 2015-2016

AMOUNT(RS.

)

AMOUNT(RS.

)

AMOUNT(RS.

)

FIXED ASSETS(less depreciation) 1404704 1219556 1059762

Deposits

Deposit to MSEB 100000 100000 100000

CURRENT ASSETS,LOANS &

ADVANCES

Finished Goods 292661.06 310152.80 310063.48

Raw Material 255270.4 271224.8 271224.8

Debtors 671160.00 713160.00 714000.00

Other Current Assets 1560615 1971311 2384546

TOTAL 4284410 4585404 4839597


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30

Debt service coverage ratio

The debt service coverage ratio (DSCR), also known as "debt coverage ratio," is the ratio

of cash available for debt servicing to interest, principal and lease payments. It is apopularbenchmarkused in the measurement of an entity's (person or corporation) ability to

produce enough cash to cover its debt (including lease) payments. The higher this ratio is,

the easier it is to obtain a loan. The phrase is also used in commercial banking and may be

expressed as a minimum ratio that is acceptable to a lender; it may be a loan condition or

covenant. Breaching a DSCR covenant can, in some circumstances, be an act ofdefault.

In corporate finance, DSCR refers to the amount of cash flow available to meet annual

interest and principal payments on debt, including sinking fund payments.[1]

In personal finance, DSCR refers to a ratio used by bank loan officers in determining debt

servicing ability.

In commercial real estate finance, DSCR is the primary measure to determine if a property

will be able to sustain its debt based on cash flow. In the late 1990s and early 2000s banks

typically required a DSCR of at least 1.2,[citation needed] but more aggressive banks would

accept lower ratios, a risky practice that contributed to theFinancial crisis of 20072010. A

DSCR over 1 means that (in theory, as calculated to bank standards and assumptions) the

entity generates sufficient cash flow to pay its debt obligations. A DSCR below 1.0 indicatesthat there is not enough cash flow to cover loan payments.

Typically, most commercial banks require the ratio of 1.15 - 1.35 times (net operating

income or NOI / annual debt service) to ensure cash flow sufficient to cover loan payments

is available on an ongoing basis.

DSCR = (Annual Net Income + Amortization/Depreciation + Interest Expense + other

non-cash and discretionary items (such as non-contractual management bonuses)) /

(Principal Repayment + Interest payments + Lease payments[1])
http://en.wikipedia.org/wiki/Benchmarkinghttp://en.wikipedia.org/wiki/Benchmarkinghttp://en.wikipedia.org/wiki/Benchmarkinghttp://en.wikipedia.org/wiki/Default_(finance)http://en.wikipedia.org/wiki/Default_(finance)http://en.wikipedia.org/wiki/Default_(finance)http://en.wikipedia.org/wiki/Debt_service_coverage_ratio#cite_note-freedictionary-0http://en.wikipedia.org/wiki/Debt_service_coverage_ratio#cite_note-freedictionary-0http://en.wikipedia.org/wiki/Debt_service_coverage_ratio#cite_note-freedictionary-0http://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010http://en.wikipedia.org/wiki/Debt_service_coverage_ratio#cite_note-freedictionary-0http://en.wikipedia.org/wiki/Debt_service_coverage_ratio#cite_note-freedictionary-0http://en.wikipedia.org/wiki/Debt_service_coverage_ratio#cite_note-freedictionary-0http://en.wikipedia.org/wiki/Debt_service_coverage_ratio#cite_note-freedictionary-0http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010http://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Debt_service_coverage_ratio#cite_note-freedictionary-0http://en.wikipedia.org/wiki/Default_(finance)http://en.wikipedia.org/wiki/Benchmarking


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31

DEBT SERVICE COVERAGE RATIO(DSCR)

Debt Service Ratio = PAT +Depriciation + Interest onTerm Loan

Principal + Interest

Particulars2009-

2010

2010-

2011

2011-

2012

2012-

2013

Profit AfterTax(PAT) 144,069 270,845 380,795 484,472

Add: Depriciation

423500.

00

348150.

00

293385.

00

250329.

00

Add:Interest on Loan

252087.

86

224195.

19

193074.

81

158353.

22

Net Cash Flow(A)819656.

94

843189.

92

867254.

90

893154.

05

Interest in Term Loan

252087.

86

224195.

19

193074.

81

158353.

22

Term Loan Installment

241038.

31

268930.

98

300051.

36

334772.

95

Total Principal + Interest(B)

493126.

17

493126.

17

493126.

17

493126.

17

Debt Service Coverage Ratio 1.66 1.71 1.76 1.81


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BIBLIOGRAPHY

Websites

o www.icicibank.com

o www.google.com

o www.indianmirror.com/indian-industries/jute

o www.indiantextilejournal.com/articles/FAdetails
http://www.icicibank.com/http://www.google.com/http://www.google.com/http://www.icicibank.com/