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Flemingo for the project

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Anand Adeppa
Anand Adeppa

The document provides details regarding a loan proposal for Flemingo International Limited's Jebel Ali branch. Key details include: 1) The proposal is for a corporate loan of USD 6.3 million and a working capital limit of USD 7.7 million. 2) Flemingo operates a bonded warehouse in Dubai and deals in various consumer goods for duty free shops. 3) Key risks noted are the economic scenario and competition in the industry. Security proposed includes pledges on funds held by group companies and corporate guarantees from shareholders. 4) Performance details show growth in sales and profits as per interim financials, though some parameters like debt ratios require monitoring. Compliance with covenants is also

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AGENDA ITEM FOR IDCC II FORMAT: S SECTION A EXECUTIVE SUMMARY CIRCLE/SBU: IBG BRANCH: DIFC Dubai COMPANY: Flemingo International Limited Jebel Ali Branch Section Contents Pages 1 Borrower Profile: a. Name , Address, Manufacturing activity/ Locations, Date of incorporation, Banking arrangement etc b. Brief Background (Company/ Group/ Promoters/ Management including shareholding pattern) c. Brief write up on Industry/ Sector and Companys standing d. RMD Advisory/qualitative approach/ Quantitative approach/ Comments e. Indebtedness/ Exposure & capital charge 2 2 4 5 5 2 Present Proposal: a. Proposal: For sanction/approval/confirmation b. Credit limits (existing and proposed) c. Sharing pattern 6 6 6 3 Performance Details: a. Performance and Financial indicators b. Comments c. Movement in TNW d. Compliance with Financial Covenants e. Synopsis of balance sheet 7 7 9 9 10 4 Risk Assessment : 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 12 12 13 14 14 5 Pricing: a. Conduct of account b. Income analysis c. Other Banks/FIs pricing d. Proposed pricing 15 15 15 15 6 Loan Policy: Deviations & Compliance: 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 17 17 17 17 7 a. Future plans & Business Potential including cross selling/ retail marketing b. Environmental and sustainability implications c. Earlier terms of Sanction: Compliance status d. Statutory dues/ Contingent Liabilities 18 18 18 18 8 a. Justification for the Proposal b. Recommendations 19 19
Page 2 SECTION 1 Circle/SBU: IBG Branch: DIFC Dubai Borrowers Profile a.Name, Address, Manufacturing activity/locations, Date of incorporation, Banking arrangement etc. of Company: Flemingo International Limited Jebel Ali Branch (Borrowing entity is a branch of Flemingo International Limited, a limited liability company registered in the British Virgin Islands) Promoter Director(s): Mr. AA Group to which company belongs: Not a recognized group Address: Regd. Office: Jebel Ali Free Zone, Dubai, United Arab Emirates Mfg facility(location): Warehouse at Jebel Ali Free Zone, Dubai, UAE Segment: C&I Constitution: Branch of a BVI Company, registered with Jebel Ali Free Zone IRAC Status as on 31.12.2011 Advances: Standard Asset Investments: Not applicable Industry: Trading Activity: General Trading Date of incorporation: Jul 2000 Banking with us since: Feb2011 Banking arrangement: Multiple Banking New unit: No If Take over, whether all norms complied with: Not a takeover Existing Connection: Yes Date of Last Sanction: 27.08.2010 b. Brief Background (Company/ Group/ Promoters/ Management including shareholding pattern): Company Profile: Flemingo International Limited BVI (FIL-BVI) operates a bonded warehouse in Jebel Ali, in the name of its branch, which is a supply source for duty free shops of the group and other companies at various Airports, Seaports, Border Shops, Defence Shops and United Nation Commissary Shops across Africa, Middle East and Asia. The borrower deals in perfumes, cosmetics, readymade garments, sunglasses, foodstuff, cigarettes, liquor (export only) and gift items. Group Profile: The group started its operations on 25 November 1997, with FIL-BVI as the holding company. Subsequently in March 2011, the shareholding pattern was changed and FIL-BVI became 100% subsidiary of an Indian Company (Parent Company). The group has a strong presence in Middle East, Africa, Mauritius, Maldives and parts of Asia. The principle activity of the group is to own and operate duty free shops at various international airports, seaports and diplomatic missions and operate bonded stores. Major brand partners of Flemingo are Diageo, Pernod Richard, Bacardi and Heineken in Liquor, Phillip Morris, British American Tobacco and Imperial in Tobacco, Coty Prestige, Swiss Army, Ferragamo, D&G, Armani, Hugo Boss, Mont Blanc and Lacoste in Perfumes, Ferrero, Kraft, Nastle and Lindt in Confectionary, Dior, Fossil and Guess in Watches and Bose, Apple, Sony, Canon and Nikon in Electronics. The group has distribution rights for some major brands in the UAE like Bacardi Martini and Nemiroff Vodka. The group also supplies some brands to Kingfisher Airlines, Jet Airways, Ethiopian Airlines and Kenya Airways for in-flight consumption. The major contribution to Group revenue is from the UAE operations and the Indian operations. Indian Operations
Page 3 The parent company is the single largest operator of duty-free shops (DFS) chain in India and has brought Indian duty free industry on par with global standards enabling an international duty free shopping experience for the passengers utilizing Indian Airports. Parent Company has a subsidiary as well in India. c. Brief write-up on industry/sector and companys standing (domestic/ international) in the industry including market share, future growth strategies, comments on recent news reports, etc. (To mention/ dovetail Premarketing Committee Presentation, if applicable). WORK ON IT Country Rating of UAE WORK ON IT
Page 4 d. (i) RMD Advisory dated Not Applicable (ii) Qualitative approach (iii) Quantitative approach (iv) Comments e. Indebtedness/ Exposure & Capital Charge: (Amount in USD million) Company Group Proposed exposure Indebtedness Existing Proposed Existing Proposed Credit convr factor Risk weight Fund based 100% 100% Non fund based 100% 100% Total (Indebtedness) Investment Total(Exposure) Capital charge for total exposure: @12% of the total company exposure The Company has fund based facilities of USD 11.90 and non fund based facilities of USD 2.10 mio outstanding with us. Group has fund based facility of USD 2 mio and non fund based facilities of USD 9 mio from SBI apart from the above mentioned facilities. Fill in the details above accordingly.
Page 5 PRESENT PROPOSAL: SECTION 2 a. Proposal: For sanction / approval / confirmation : A.Sanction of Corporate Loan of USD 6.30 Million with a tenor of 4 遜 Years. B.Sanction of Working Capital Limit of USD 7.70 million (including OD facility of USD 1.40 million, LC/TR Facility of USD 4.20 million and BG of USD 2.10 million) This proposal falls within the powers of IDCC II as (i) Total indebtedness is USD 14.00 Millions. (Corporate) a. Credit Limits (Existing and Proposed): (Amount in USD mio) Existing Proposed Change Limits SBI % Total Cons/ MBA SBI % Total Cons/ MBA. SBI Total Cons/ MBA. FBWC (OD) - - TR/LC - - TL/CL - - Total FB - - LC - - BG - - Total NFB - - Total FB+NFB - - Fill up the details based on the proposed facilities from SBI (as mentioned above) and other banking facilities availed by the company as provided below Details of existing facilities Name of Bank Facility Limits/ O/s Security Bank 1 OD USD 0.27 mio LC/TR USD 1.36 mio TL USD 2.07 mio Fixed Deposit Personal Guarantee of Shareholders in proportion to their shareholding in company Mortgage over ware house Bank 2 OD USD 0.27 mio LC/TR USD 0.68 mio BG USD 0.43 mio Fixed Deposit Personal Guarantee of Shareholders of company Bank 3 OD USD 0.54 mio LC/TR USD 2.45 mio Letter of Guarantee USD 0.05 mio Fixed Deposit Personal Guarantee of Shareholders of company Corporate Guarantee of shareholders of FIL-BVI in proportion to their shareholding
Page 6 Mortgage over ware house Bank 4 OD USD 1.60 mio SBLC Bank 5 OD USD 2.00 mio SBLC Sharing Pattern: (Amount in USD mio) Financial Arrangement: Multiple Banking Arrangement FB NFB Total SBI Associate Banks SBI Group Other Banks (4 Banks) Total Fill it based on the data provided above
Page 7 PERFORMANCE DETAILS SECTION 3 a. Performance and Financial Indicators: Flemingo Intl. Ltd. (Jebel Ali branch), the borrower entity: (Amount in USD in mio) Particulars as on March 31 2008 2009 2010 2011 2012 HY results AUD AUD AUD AUD PROJ as on 31st Dec. (9 months) Installed Capacity (TPY) Not applicable Not applicable Not applicable Not applicable Not applicable 2010 2011 Capacity Utilization (%) Not applicable Not applicable Not applicable Not applicable Not applicable Sale Net Sales PAT Operating Profit Profit Before Tax PBT/ Sales (%) Profit After Tax Cash Accrual PUC (Head Office Capital Account) TNW Adj. TNW TOL/TNW TOL/Adj. TNW NWC Current Ratio 1 USD = 3.67 AED (Assumed) b. Comments only on adverse movements in the above: (Not to exceed 5-6 lines) Net Sales: Operating Profit: PAT: Profitability: PUC: Adj. TNW: TOL/TNW and TOL/Adj. TNW: NWC and Current Ratio:
Page 8 c. Movement in TNW (Amount in USD million) Particulars as on March 31 2009 2010 2011 AUD AUD AUD Opening balance 1 Add i Profit/(-) Loss after Tax ii Increase in Capital iii Dec./(-) Inc.in Intangible Assets iv Inc../(-) Dec. in Reserves v. Adjust prior year expenses 2 Less Div Paid(Incl.Div.Tax)/ Withdrawals TNW d. Compliance with Financial Covenants: While sanctioning the facilities, certain financial covenants were stipulated. The parameters and position of the same, as on 31.03.2011, is as under: Parameter Stipulated level Levels as on 31.03.2011 Compliance TNW Minimum of USD 10 mio TOL/TNW Maximum of 2.50 TOL/Adjusted TNW Maximum of 3.50 Interest Coverage ratio (PBDIT/Interest) Minimum of 4.00 Justification for not complying with the parameter of ------------
Page 9 Synopsis of Balance Sheet: Flemingo Intl. Ltd. (Jebel Ali branch), the borrower entity: (Amount in USD in mio) As on March 31 2010 (Audited) 2011 (Audited) Sources of Funds Share Capital 9.30 9.30 Retained Earnings 7.48 11.89 Term Liabilities 1.06 5.60 Head Office Loan Account 3.06 2.06 Long Term Loan from Directors - 9.74 Total 20.90 38.59 Application of Funds Fixed Assets (Gross Block) 5.31 6.02 Less: Depreciation 0.87 1.25 Net Block (1) 4.44 4.77 Investments (2) 5.00 14.53 Other Non-Current Assets (3) 1.98 0.39 Inventories 7.49 11.84 Sundry debtors 11.56 22.96 Cash and Bank Balances 2.99 3.97 Other Current Assets 2.51 2.98 (Less: Current liabilities) 15.25 22.87 Net Current Assets (4) 9.30 9.15 Intangible Assets (5) 0.18 0.00 Total (1+2+3+4+5) 20.90 38.59 Comments only on adverse movements in the above: Investments Sundry debtors
Page 10 RISK ASSESMENT SECTION 4 a. CREDIT RATING Borrower rating Facility rating Exist Prop Hurdle rate Facilities Exist Prop CRA - SB - 10 TL USD 6.30 mio WC USD 7.70 mio CRISIL - - - - - - ICRA - - - - CRA was validated on -------------(based on Audited Balance Sheet as on -----------) Justification for considering the proposal even though the company is not rated by external credit agencies b. Risks and Mitigating factors: Critical Risks Perceived Mitigating Factors Economic Scenario Competition Risk Find out more Risk factors c. Status of Auditors remarks which have an impact on Credit Risk on the unit: Particulars Date Serious Irregularities / Adverse features remaining unattended Action Plan Inspection & Audit Report 25.11.2010 Nil Not applicable Offsite Credit Audit Report 21.02.2011 Nil Not applicable Companys Audited Balance Sheet 31.03.2011 Nil Not applicable
Page 11 d. Security: (Amount in USD mio) Security Particulars Value and basis of valuation Date of valuation / opinion report Primary Nil Not applicable Not applicable Collateral Pledge on the funds held by ABC Ltd. (ABC is a group Co. of the corporate guarantor in the advance) with a reputed European Investment Bank. The pledge has been created by way of a tripartite agreement between SBI. Maple & European Investment Bank. Important conditions in the tripartite agreement are: The value of the funds will be maintained at a minimum of USD 12.60 mio and any shortfall will be made up by ABC by additional investment in the fund or by placing fixed deposits with the Bank. In case of default by Flemingo International Ltd, SBI may ask the Investment Bank for liquidation of the funds and remit the same to SBI. Upon receipt of instructions from SBI, Investment Bank shall initiate to sell the pledged assets within 2 business days. In case ABC fails to maintain the value of the collateral security at a minimum of USD 11.90 mio, the assets would be foreclosed/ automatically liquidated towards repayment of banks dues. USD 12.94 mio as per Net Asset Value (NAV) of the Investment held by Investment Bank. We are obtaining and scrutinising statement of NAV of the investment on monthly basis. The position has been satisfactory and there has not been any instance of NAV falling below the stipulated level of USD 12.6 mio. 01.02.2012 As per the Pledge Agreement, NAV is to be provided at monthly intervals. Corporate Guarantee Flemingo Intl. Ltd., BVI TNW USD 10.57 mio. Corporate 31.03.2011 Indian Parent COmpany TNW USD 27.04 mio. Corporate Guarantee given USD 18.5 mio 31.03.2011 ABC Ltd., BVI These are investment vehicles based in BVI and their net worth is difficult to ascertain. Their corporate guarantee has been taken as these companies XYZ Ltd., BVI
Page 12 are having substantial holding in the borrowing company. Personal Guarantee Mr. AA Main Promoter of the Group TNW USD 4.40 mio. Validated by a CA 01.07.2010* Other 15% cash margin for LC, Assignment of all rights and interests in the insurance policy Not applicable Not applicable Collateral coverage % For SBI For others *Information for 2011 awaited. e. Changes in security if any, Justification:
Page 13 SECTION 5 PRICING a. Conduct of Account: No. of occasions Average period for regularisation Irregularity report last submitted on Irregularity in WC : No irregularities have been noticed in the account so far. Comments Not applicable Irregularity in TL Not applicable Not applicable Not applicable Comments: Not applicable Not applicable Not applicable Utilisation of limits: FB Limits Average utilisation % Not applicable NFB Limits b. Income Analysis: Not applicbale c. Other Banks/FIs Pricing: Not Available d. Proposed Pricing: Item Existing Rate Card rate Proposed rate Int. on WC Not applicable Not available LIBOR plus 3.00% Int. on TL Not applicable Not available 6 M LIBOR plus 4.5% Processing fee (WC) Not applicable 1% of Loan amount 0.50% * Upfront fee (TL) Not applicable Not applicable Not applicable Commit charges Not applicable 1% in case utilization is less than 75%. To be recovered half yearly 0.50% of unutilized portion in case utilization is less than 70%. Applied quarterly in arrears. LC Not applicable 0.25% per quarter 0.375% per quarter BG Not applicable 0.25% per quarter 0.375% per quarter Justification for concessions already extended / proposed: (mention about cost benefit) Funding Arrangement: Likely Cost of Funds: 2.25% for 3 months Yield: 2.50% + 6 months LIBOR Net Margin: Based on likely cost of funds, net margin should vary from 0.50% to 0.85%. The asset will be short term and we will be funding the same with borrowings of up to 3 months. Present cost of funds reflects the ongoing interbank rates. However, the present tight liquidity condition is not likely to sustain for a long time and with easing of liquidity, net margin in the account is expected to improve.
Page 14 SECTION 6 LOAN POLICY: DEVIATIONS AND COMPLIANCE: b. Deviations in Loan Policy: Parameters Indicative Min/Max level as per loan policy Company's level as on 31.03.2011 1. Liquidity 1.00 2. TOL/TNW 3.00 3. Gross Average DSCR (TL) 1.75 Not applicable 4. Debt / equity 2:1 Not applicable 5. Promoters contribution Prudential norms: Single Borrower 15% of the Banks total capital funds i.e. Rs 14,779.58 Crore Prudential norms: Group 40% of the Banks total capital funds i.e. Rs 39,412.22 Crore 6. FB exposure to the industry Substantial exposure: Borrower 7.5% of the Banks total capital funds i.e. Rs 7,389.79 Crore Substantial exposure: Group 15% of the Banks total capital funds i.e. Rs 14,779.58 Crore 7. Others Not applicable NOTE: Total capital funds 98530.55 Crore (as per the published accounts as on 31.03.2011). 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 Banks Board/Senior Officer of the Bank/ Member of any other Banks 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 a. Whether names of promoters, directors, company, group concerns figure in defaulter/willful defaulters list: RBI defaulters list dated: Sep 30,2010 No Willful defaulters list dated: Dec 31, 2010 No ECGC caution list: Mar 31, 2011 No CIBIL (Suit filed cases): Dec 31,2010 No IBG defaulters list: Dec 31, 2009 No
Page 15 SECTION 7 a. Future Plans & Business potential(over a 3-5 year horizon) including Cross selling / Retail Marketing based on Co / Groups future plans: (to be quantified) Item Present Position Whether Tied Up? (Yes / No) Business estimated (i) Corporate Salary Package Not Applicable, as DIFC branch cannot offer such products.(ii) P Segment Loans (a) Housing (b) Auto Loans (c) Personal Loans (iii) SBI Credit Card (iv) SBI Life (v) SBI Mutual Funds (vi) SBI Vishwayatra Foreign Travel Yatra Cards (vii) Vendor/ Dealer Finance (viii) Any Other (Please specify) b. Environmental and sustainability implications: c. Earlier terms of Sanction: Not applicable d. Statutory dues/other contingent liabilities: Nil
Page 16 SECTION 8 a. Justification for the proposal: (Only bullet points) b. Recommended for sanction/ approval: Asst. Manager Vice President (Business Development) (Credit & Syndication) Chief Executive Officer
Page 17 Section B Appraisal Memorandum for Term/Corporate Loan: Not applicable.
Page 18 SECTION C Assessment of WC facilities: a. Inventory & Receivable levels: (Amount in USD million) Particulars as on 31st March 2008 2009 2010 2011 2012 AUD AUD AUD AUD PROJ Inventory Receivables S. Creditors Other Creditors Other Current Assets (Figures in italics represent holding period in months.) Inventory holding Receivables Holding levels Other Current Assets b. Assessed Bank Finance: (Amount in USD million) 2008 2009 2010 2011 2012 Particulars as on 31st March AUD AUD AUD AUD PROJ Total CA Other CL (Except Bank Borr.) Working Capital Gap Net Working Capital (Act./Proj) Assessed Bank Finance NWC to TCA (%) Bank Finance to TCA % S. Cr. to TCA (%) Other CL to TCA (%) Inv. to Net sales (days) Rec. to gross sales (days) S. Cr. to purchases (days) c. Assessment of EPC/ FBD limits : Not applicable
Page 19 d. Computation of LC limits for WC: (Amount in USD million) Annual Purchase for FY 2011-12 64.32 Estimates of Purchase under LCs 50.46 Lead Time 45 Average Usance Period 15 Requirement of LC 8.41 Recommended LC limit from us 4.20 LC assessment is being done on the projected financials as on 31.03.2012. The Company has tied up with other Banks for the balance of its requirement. However, LC facility is fully interchangeable with TR facility e. Assessment of BG limit: (Amount in USD million) Outstanding BGs as on 31.03.2011 0.40 Add: BGs required during the period 2.50 Less : Estimated maturity/cancellation of BGs during the period 0.40 Estimated Requirements of BG Limits 2.50 Recommended BG limit from us 2.10 f. Efficiency ratios: Particulars as on 31st March 2008 2009 2010 2011 2012 AUD AUD AUD AUD PROJ Net Sales/ Total Tangible Assets (times) PBT/ Total Tangible Assets (%) Operating Cost to sales (%) Bank Finance/ Ct. Assets (%) Inventory + Receivables to net Sales (days) Brief comments on the assessment of the above limits: g. Fund Flow Analysis: (Amount in USD million) Particulars as on 31st March 2008 2009 2010 2011 2012 AUD AUD AUD AUD PROJ Long Term Sources Long Term Uses Surplus/Deficit Comments:
Page 20 TERMS AND CONDITIONS: SECTION D 1. Name of the Branch DIFC Dubai UAE 2. Module International Banking Group 3. Name of the Unit Flemingo International Limited (Jebel Ali Branch) a. Security : (Amount in USD mio) Explained already. Please reproduce here b. ECGC Cover: Not applicable c. Margins: Proposed Letter of Credit Justification for deviation from existing margins, if any to be provided in the proposal: No deviation is proposed. d. Pricing /Rate of Interest: Proposed Fund Based WC (OD/TR) Term Loan/Corporate Loan LC/BG e. Insurance: Insurance cover is assigned in our favour. f. Processing fees: g. Pre-payment Penalty: h. Inspection: Bank reserves the Right to inspect companys office /factory whenever deemed necessary. Charges will be borne by the company. The borrowing company will have to share all relevant information with the bank. i. Availability Period: The facility will be available for one year. j. Validity of Sanction: Not applicable k. Term Loan margin: Not applicable. i) Repayment Schedule: Not applicable. l. Other Critical Covenants:
Page 21 Annexure I 1. Name of the Branch DIFC Dubai UAE 2. Module International Banking Group 3. Name of the Unit Flemingo International Limited (Jebel Ali branch) Date of Receipt Not applicable Complete Information Submitted By The Branch/Company On 25.11.2011 Date of Submission To RCC 04.12.2011 Recommended by RCC to IDCC II on Date of Sanction

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Flemingo for the project

  • 1. AGENDA ITEM FOR IDCC II FORMAT: S SECTION A EXECUTIVE SUMMARY CIRCLE/SBU: IBG BRANCH: DIFC Dubai COMPANY: Flemingo International Limited Jebel Ali Branch Section Contents Pages 1 Borrower Profile: a. Name , Address, Manufacturing activity/ Locations, Date of incorporation, Banking arrangement etc b. Brief Background (Company/ Group/ Promoters/ Management including shareholding pattern) c. Brief write up on Industry/ Sector and Companys standing d. RMD Advisory/qualitative approach/ Quantitative approach/ Comments e. Indebtedness/ Exposure & capital charge 2 2 4 5 5 2 Present Proposal: a. Proposal: For sanction/approval/confirmation b. Credit limits (existing and proposed) c. Sharing pattern 6 6 6 3 Performance Details: a. Performance and Financial indicators b. Comments c. Movement in TNW d. Compliance with Financial Covenants e. Synopsis of balance sheet 7 7 9 9 10 4 Risk Assessment : 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 12 12 13 14 14 5 Pricing: a. Conduct of account b. Income analysis c. Other Banks/FIs pricing d. Proposed pricing 15 15 15 15 6 Loan Policy: Deviations & Compliance: 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 17 17 17 17 7 a. Future plans & Business Potential including cross selling/ retail marketing b. Environmental and sustainability implications c. Earlier terms of Sanction: Compliance status d. Statutory dues/ Contingent Liabilities 18 18 18 18 8 a. Justification for the Proposal b. Recommendations 19 19
  • 2. Page 2 SECTION 1 Circle/SBU: IBG Branch: DIFC Dubai Borrowers Profile a.Name, Address, Manufacturing activity/locations, Date of incorporation, Banking arrangement etc. of Company: Flemingo International Limited Jebel Ali Branch (Borrowing entity is a branch of Flemingo International Limited, a limited liability company registered in the British Virgin Islands) Promoter Director(s): Mr. AA Group to which company belongs: Not a recognized group Address: Regd. Office: Jebel Ali Free Zone, Dubai, United Arab Emirates Mfg facility(location): Warehouse at Jebel Ali Free Zone, Dubai, UAE Segment: C&I Constitution: Branch of a BVI Company, registered with Jebel Ali Free Zone IRAC Status as on 31.12.2011 Advances: Standard Asset Investments: Not applicable Industry: Trading Activity: General Trading Date of incorporation: Jul 2000 Banking with us since: Feb2011 Banking arrangement: Multiple Banking New unit: No If Take over, whether all norms complied with: Not a takeover Existing Connection: Yes Date of Last Sanction: 27.08.2010 b. Brief Background (Company/ Group/ Promoters/ Management including shareholding pattern): Company Profile: Flemingo International Limited BVI (FIL-BVI) operates a bonded warehouse in Jebel Ali, in the name of its branch, which is a supply source for duty free shops of the group and other companies at various Airports, Seaports, Border Shops, Defence Shops and United Nation Commissary Shops across Africa, Middle East and Asia. The borrower deals in perfumes, cosmetics, readymade garments, sunglasses, foodstuff, cigarettes, liquor (export only) and gift items. Group Profile: The group started its operations on 25 November 1997, with FIL-BVI as the holding company. Subsequently in March 2011, the shareholding pattern was changed and FIL-BVI became 100% subsidiary of an Indian Company (Parent Company). The group has a strong presence in Middle East, Africa, Mauritius, Maldives and parts of Asia. The principle activity of the group is to own and operate duty free shops at various international airports, seaports and diplomatic missions and operate bonded stores. Major brand partners of Flemingo are Diageo, Pernod Richard, Bacardi and Heineken in Liquor, Phillip Morris, British American Tobacco and Imperial in Tobacco, Coty Prestige, Swiss Army, Ferragamo, D&G, Armani, Hugo Boss, Mont Blanc and Lacoste in Perfumes, Ferrero, Kraft, Nastle and Lindt in Confectionary, Dior, Fossil and Guess in Watches and Bose, Apple, Sony, Canon and Nikon in Electronics. The group has distribution rights for some major brands in the UAE like Bacardi Martini and Nemiroff Vodka. The group also supplies some brands to Kingfisher Airlines, Jet Airways, Ethiopian Airlines and Kenya Airways for in-flight consumption. The major contribution to Group revenue is from the UAE operations and the Indian operations. Indian Operations
  • 3. Page 3 The parent company is the single largest operator of duty-free shops (DFS) chain in India and has brought Indian duty free industry on par with global standards enabling an international duty free shopping experience for the passengers utilizing Indian Airports. Parent Company has a subsidiary as well in India. c. Brief write-up on industry/sector and companys standing (domestic/ international) in the industry including market share, future growth strategies, comments on recent news reports, etc. (To mention/ dovetail Premarketing Committee Presentation, if applicable). WORK ON IT Country Rating of UAE WORK ON IT
  • 4. Page 4 d. (i) RMD Advisory dated Not Applicable (ii) Qualitative approach (iii) Quantitative approach (iv) Comments e. Indebtedness/ Exposure & Capital Charge: (Amount in USD million) Company Group Proposed exposure Indebtedness Existing Proposed Existing Proposed Credit convr factor Risk weight Fund based 100% 100% Non fund based 100% 100% Total (Indebtedness) Investment Total(Exposure) Capital charge for total exposure: @12% of the total company exposure The Company has fund based facilities of USD 11.90 and non fund based facilities of USD 2.10 mio outstanding with us. Group has fund based facility of USD 2 mio and non fund based facilities of USD 9 mio from SBI apart from the above mentioned facilities. Fill in the details above accordingly.
  • 5. Page 5 PRESENT PROPOSAL: SECTION 2 a. Proposal: For sanction / approval / confirmation : A.Sanction of Corporate Loan of USD 6.30 Million with a tenor of 4 遜 Years. B.Sanction of Working Capital Limit of USD 7.70 million (including OD facility of USD 1.40 million, LC/TR Facility of USD 4.20 million and BG of USD 2.10 million) This proposal falls within the powers of IDCC II as (i) Total indebtedness is USD 14.00 Millions. (Corporate) a. Credit Limits (Existing and Proposed): (Amount in USD mio) Existing Proposed Change Limits SBI % Total Cons/ MBA SBI % Total Cons/ MBA. SBI Total Cons/ MBA. FBWC (OD) - - TR/LC - - TL/CL - - Total FB - - LC - - BG - - Total NFB - - Total FB+NFB - - Fill up the details based on the proposed facilities from SBI (as mentioned above) and other banking facilities availed by the company as provided below Details of existing facilities Name of Bank Facility Limits/ O/s Security Bank 1 OD USD 0.27 mio LC/TR USD 1.36 mio TL USD 2.07 mio Fixed Deposit Personal Guarantee of Shareholders in proportion to their shareholding in company Mortgage over ware house Bank 2 OD USD 0.27 mio LC/TR USD 0.68 mio BG USD 0.43 mio Fixed Deposit Personal Guarantee of Shareholders of company Bank 3 OD USD 0.54 mio LC/TR USD 2.45 mio Letter of Guarantee USD 0.05 mio Fixed Deposit Personal Guarantee of Shareholders of company Corporate Guarantee of shareholders of FIL-BVI in proportion to their shareholding
  • 6. Page 6 Mortgage over ware house Bank 4 OD USD 1.60 mio SBLC Bank 5 OD USD 2.00 mio SBLC Sharing Pattern: (Amount in USD mio) Financial Arrangement: Multiple Banking Arrangement FB NFB Total SBI Associate Banks SBI Group Other Banks (4 Banks) Total Fill it based on the data provided above
  • 7. Page 7 PERFORMANCE DETAILS SECTION 3 a. Performance and Financial Indicators: Flemingo Intl. Ltd. (Jebel Ali branch), the borrower entity: (Amount in USD in mio) Particulars as on March 31 2008 2009 2010 2011 2012 HY results AUD AUD AUD AUD PROJ as on 31st Dec. (9 months) Installed Capacity (TPY) Not applicable Not applicable Not applicable Not applicable Not applicable 2010 2011 Capacity Utilization (%) Not applicable Not applicable Not applicable Not applicable Not applicable Sale Net Sales PAT Operating Profit Profit Before Tax PBT/ Sales (%) Profit After Tax Cash Accrual PUC (Head Office Capital Account) TNW Adj. TNW TOL/TNW TOL/Adj. TNW NWC Current Ratio 1 USD = 3.67 AED (Assumed) b. Comments only on adverse movements in the above: (Not to exceed 5-6 lines) Net Sales: Operating Profit: PAT: Profitability: PUC: Adj. TNW: TOL/TNW and TOL/Adj. TNW: NWC and Current Ratio:
  • 8. Page 8 c. Movement in TNW (Amount in USD million) Particulars as on March 31 2009 2010 2011 AUD AUD AUD Opening balance 1 Add i Profit/(-) Loss after Tax ii Increase in Capital iii Dec./(-) Inc.in Intangible Assets iv Inc../(-) Dec. in Reserves v. Adjust prior year expenses 2 Less Div Paid(Incl.Div.Tax)/ Withdrawals TNW d. Compliance with Financial Covenants: While sanctioning the facilities, certain financial covenants were stipulated. The parameters and position of the same, as on 31.03.2011, is as under: Parameter Stipulated level Levels as on 31.03.2011 Compliance TNW Minimum of USD 10 mio TOL/TNW Maximum of 2.50 TOL/Adjusted TNW Maximum of 3.50 Interest Coverage ratio (PBDIT/Interest) Minimum of 4.00 Justification for not complying with the parameter of ------------
  • 9. Page 9 Synopsis of Balance Sheet: Flemingo Intl. Ltd. (Jebel Ali branch), the borrower entity: (Amount in USD in mio) As on March 31 2010 (Audited) 2011 (Audited) Sources of Funds Share Capital 9.30 9.30 Retained Earnings 7.48 11.89 Term Liabilities 1.06 5.60 Head Office Loan Account 3.06 2.06 Long Term Loan from Directors - 9.74 Total 20.90 38.59 Application of Funds Fixed Assets (Gross Block) 5.31 6.02 Less: Depreciation 0.87 1.25 Net Block (1) 4.44 4.77 Investments (2) 5.00 14.53 Other Non-Current Assets (3) 1.98 0.39 Inventories 7.49 11.84 Sundry debtors 11.56 22.96 Cash and Bank Balances 2.99 3.97 Other Current Assets 2.51 2.98 (Less: Current liabilities) 15.25 22.87 Net Current Assets (4) 9.30 9.15 Intangible Assets (5) 0.18 0.00 Total (1+2+3+4+5) 20.90 38.59 Comments only on adverse movements in the above: Investments Sundry debtors
  • 10. Page 10 RISK ASSESMENT SECTION 4 a. CREDIT RATING Borrower rating Facility rating Exist Prop Hurdle rate Facilities Exist Prop CRA - SB - 10 TL USD 6.30 mio WC USD 7.70 mio CRISIL - - - - - - ICRA - - - - CRA was validated on -------------(based on Audited Balance Sheet as on -----------) Justification for considering the proposal even though the company is not rated by external credit agencies b. Risks and Mitigating factors: Critical Risks Perceived Mitigating Factors Economic Scenario Competition Risk Find out more Risk factors c. Status of Auditors remarks which have an impact on Credit Risk on the unit: Particulars Date Serious Irregularities / Adverse features remaining unattended Action Plan Inspection & Audit Report 25.11.2010 Nil Not applicable Offsite Credit Audit Report 21.02.2011 Nil Not applicable Companys Audited Balance Sheet 31.03.2011 Nil Not applicable
  • 11. Page 11 d. Security: (Amount in USD mio) Security Particulars Value and basis of valuation Date of valuation / opinion report Primary Nil Not applicable Not applicable Collateral Pledge on the funds held by ABC Ltd. (ABC is a group Co. of the corporate guarantor in the advance) with a reputed European Investment Bank. The pledge has been created by way of a tripartite agreement between SBI. Maple & European Investment Bank. Important conditions in the tripartite agreement are: The value of the funds will be maintained at a minimum of USD 12.60 mio and any shortfall will be made up by ABC by additional investment in the fund or by placing fixed deposits with the Bank. In case of default by Flemingo International Ltd, SBI may ask the Investment Bank for liquidation of the funds and remit the same to SBI. Upon receipt of instructions from SBI, Investment Bank shall initiate to sell the pledged assets within 2 business days. In case ABC fails to maintain the value of the collateral security at a minimum of USD 11.90 mio, the assets would be foreclosed/ automatically liquidated towards repayment of banks dues. USD 12.94 mio as per Net Asset Value (NAV) of the Investment held by Investment Bank. We are obtaining and scrutinising statement of NAV of the investment on monthly basis. The position has been satisfactory and there has not been any instance of NAV falling below the stipulated level of USD 12.6 mio. 01.02.2012 As per the Pledge Agreement, NAV is to be provided at monthly intervals. Corporate Guarantee Flemingo Intl. Ltd., BVI TNW USD 10.57 mio. Corporate 31.03.2011 Indian Parent COmpany TNW USD 27.04 mio. Corporate Guarantee given USD 18.5 mio 31.03.2011 ABC Ltd., BVI These are investment vehicles based in BVI and their net worth is difficult to ascertain. Their corporate guarantee has been taken as these companies XYZ Ltd., BVI
  • 12. Page 12 are having substantial holding in the borrowing company. Personal Guarantee Mr. AA Main Promoter of the Group TNW USD 4.40 mio. Validated by a CA 01.07.2010* Other 15% cash margin for LC, Assignment of all rights and interests in the insurance policy Not applicable Not applicable Collateral coverage % For SBI For others *Information for 2011 awaited. e. Changes in security if any, Justification:
  • 13. Page 13 SECTION 5 PRICING a. Conduct of Account: No. of occasions Average period for regularisation Irregularity report last submitted on Irregularity in WC : No irregularities have been noticed in the account so far. Comments Not applicable Irregularity in TL Not applicable Not applicable Not applicable Comments: Not applicable Not applicable Not applicable Utilisation of limits: FB Limits Average utilisation % Not applicable NFB Limits b. Income Analysis: Not applicbale c. Other Banks/FIs Pricing: Not Available d. Proposed Pricing: Item Existing Rate Card rate Proposed rate Int. on WC Not applicable Not available LIBOR plus 3.00% Int. on TL Not applicable Not available 6 M LIBOR plus 4.5% Processing fee (WC) Not applicable 1% of Loan amount 0.50% * Upfront fee (TL) Not applicable Not applicable Not applicable Commit charges Not applicable 1% in case utilization is less than 75%. To be recovered half yearly 0.50% of unutilized portion in case utilization is less than 70%. Applied quarterly in arrears. LC Not applicable 0.25% per quarter 0.375% per quarter BG Not applicable 0.25% per quarter 0.375% per quarter Justification for concessions already extended / proposed: (mention about cost benefit) Funding Arrangement: Likely Cost of Funds: 2.25% for 3 months Yield: 2.50% + 6 months LIBOR Net Margin: Based on likely cost of funds, net margin should vary from 0.50% to 0.85%. The asset will be short term and we will be funding the same with borrowings of up to 3 months. Present cost of funds reflects the ongoing interbank rates. However, the present tight liquidity condition is not likely to sustain for a long time and with easing of liquidity, net margin in the account is expected to improve.
  • 14. Page 14 SECTION 6 LOAN POLICY: DEVIATIONS AND COMPLIANCE: b. Deviations in Loan Policy: Parameters Indicative Min/Max level as per loan policy Company's level as on 31.03.2011 1. Liquidity 1.00 2. TOL/TNW 3.00 3. Gross Average DSCR (TL) 1.75 Not applicable 4. Debt / equity 2:1 Not applicable 5. Promoters contribution Prudential norms: Single Borrower 15% of the Banks total capital funds i.e. Rs 14,779.58 Crore Prudential norms: Group 40% of the Banks total capital funds i.e. Rs 39,412.22 Crore 6. FB exposure to the industry Substantial exposure: Borrower 7.5% of the Banks total capital funds i.e. Rs 7,389.79 Crore Substantial exposure: Group 15% of the Banks total capital funds i.e. Rs 14,779.58 Crore 7. Others Not applicable NOTE: Total capital funds 98530.55 Crore (as per the published accounts as on 31.03.2011). 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 Banks Board/Senior Officer of the Bank/ Member of any other Banks 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 a. Whether names of promoters, directors, company, group concerns figure in defaulter/willful defaulters list: RBI defaulters list dated: Sep 30,2010 No Willful defaulters list dated: Dec 31, 2010 No ECGC caution list: Mar 31, 2011 No CIBIL (Suit filed cases): Dec 31,2010 No IBG defaulters list: Dec 31, 2009 No
  • 15. Page 15 SECTION 7 a. Future Plans & Business potential(over a 3-5 year horizon) including Cross selling / Retail Marketing based on Co / Groups future plans: (to be quantified) Item Present Position Whether Tied Up? (Yes / No) Business estimated (i) Corporate Salary Package Not Applicable, as DIFC branch cannot offer such products.(ii) P Segment Loans (a) Housing (b) Auto Loans (c) Personal Loans (iii) SBI Credit Card (iv) SBI Life (v) SBI Mutual Funds (vi) SBI Vishwayatra Foreign Travel Yatra Cards (vii) Vendor/ Dealer Finance (viii) Any Other (Please specify) b. Environmental and sustainability implications: c. Earlier terms of Sanction: Not applicable d. Statutory dues/other contingent liabilities: Nil
  • 16. Page 16 SECTION 8 a. Justification for the proposal: (Only bullet points) b. Recommended for sanction/ approval: Asst. Manager Vice President (Business Development) (Credit & Syndication) Chief Executive Officer
  • 17. Page 17 Section B Appraisal Memorandum for Term/Corporate Loan: Not applicable.
  • 18. Page 18 SECTION C Assessment of WC facilities: a. Inventory & Receivable levels: (Amount in USD million) Particulars as on 31st March 2008 2009 2010 2011 2012 AUD AUD AUD AUD PROJ Inventory Receivables S. Creditors Other Creditors Other Current Assets (Figures in italics represent holding period in months.) Inventory holding Receivables Holding levels Other Current Assets b. Assessed Bank Finance: (Amount in USD million) 2008 2009 2010 2011 2012 Particulars as on 31st March AUD AUD AUD AUD PROJ Total CA Other CL (Except Bank Borr.) Working Capital Gap Net Working Capital (Act./Proj) Assessed Bank Finance NWC to TCA (%) Bank Finance to TCA % S. Cr. to TCA (%) Other CL to TCA (%) Inv. to Net sales (days) Rec. to gross sales (days) S. Cr. to purchases (days) c. Assessment of EPC/ FBD limits : Not applicable
  • 19. Page 19 d. Computation of LC limits for WC: (Amount in USD million) Annual Purchase for FY 2011-12 64.32 Estimates of Purchase under LCs 50.46 Lead Time 45 Average Usance Period 15 Requirement of LC 8.41 Recommended LC limit from us 4.20 LC assessment is being done on the projected financials as on 31.03.2012. The Company has tied up with other Banks for the balance of its requirement. However, LC facility is fully interchangeable with TR facility e. Assessment of BG limit: (Amount in USD million) Outstanding BGs as on 31.03.2011 0.40 Add: BGs required during the period 2.50 Less : Estimated maturity/cancellation of BGs during the period 0.40 Estimated Requirements of BG Limits 2.50 Recommended BG limit from us 2.10 f. Efficiency ratios: Particulars as on 31st March 2008 2009 2010 2011 2012 AUD AUD AUD AUD PROJ Net Sales/ Total Tangible Assets (times) PBT/ Total Tangible Assets (%) Operating Cost to sales (%) Bank Finance/ Ct. Assets (%) Inventory + Receivables to net Sales (days) Brief comments on the assessment of the above limits: g. Fund Flow Analysis: (Amount in USD million) Particulars as on 31st March 2008 2009 2010 2011 2012 AUD AUD AUD AUD PROJ Long Term Sources Long Term Uses Surplus/Deficit Comments:
  • 20. Page 20 TERMS AND CONDITIONS: SECTION D 1. Name of the Branch DIFC Dubai UAE 2. Module International Banking Group 3. Name of the Unit Flemingo International Limited (Jebel Ali Branch) a. Security : (Amount in USD mio) Explained already. Please reproduce here b. ECGC Cover: Not applicable c. Margins: Proposed Letter of Credit Justification for deviation from existing margins, if any to be provided in the proposal: No deviation is proposed. d. Pricing /Rate of Interest: Proposed Fund Based WC (OD/TR) Term Loan/Corporate Loan LC/BG e. Insurance: Insurance cover is assigned in our favour. f. Processing fees: g. Pre-payment Penalty: h. Inspection: Bank reserves the Right to inspect companys office /factory whenever deemed necessary. Charges will be borne by the company. The borrowing company will have to share all relevant information with the bank. i. Availability Period: The facility will be available for one year. j. Validity of Sanction: Not applicable k. Term Loan margin: Not applicable. i) Repayment Schedule: Not applicable. l. Other Critical Covenants:
  • 21. Page 21 Annexure I 1. Name of the Branch DIFC Dubai UAE 2. Module International Banking Group 3. Name of the Unit Flemingo International Limited (Jebel Ali branch) Date of Receipt Not applicable Complete Information Submitted By The Branch/Company On 25.11.2011 Date of Submission To RCC 04.12.2011 Recommended by RCC to IDCC II on Date of Sanction