A SUMMER INTERNSHIP PROJECT

ON
COMPANY VALUATION AND PROJECT FINANCING OF THE COMPANY
WITH SPECIAL REFERENCE TO

JMC Projects (India) Ltd.

(A Kalpataru Group Enterprise)

IN PARTIAL FULFILMENT OF THE REQUIRED FOR THE AWARD OF DEGREE

IN
MASTER OF BUSINESS ADMINISTRATION
SUBMITTED BY
GULTAREEN BANO
IN
FINANCE (SPECIALIZATION)
(ROLL NO. 1215070016)
IILM, ACADAMY OF HIGHER LEARNING,
GREATER NOIDA

UNDER THE GUIDANCE OF

MR. MANISH AGRAWAL(GM)

1
 TABLE OF CONTENTS

PREFACE 2

ACKNOWLEDGEMENT 3

DECLARATION 4

CERTIFICATE 5

EXECUTIVE SUMMARY 6

INTRODUCTION OF 7
AUDITORS REPORT 9
ANNEXURE TO THE AUDITORS 12

COMPANY PROFILE 18
HITORICAL MILESTONE 21
BUSSINESS OF JMC PROJECTS(INDIA) LTD. 22

AN OUTLINE OF THE INTERNAL AUDIT SYSTEM 25

SUMMARY OF JMC PROJECTS(INDIA) LTD. 31

OBJECTIVE OF THE STUDY 32

LIERATURE REVIEW 33

RESEARCH METHODOLOGY 78

DATA ANALYSIS 79

FINDINGS & SUGGESTIONS 113-114

LIMITATION 115

CONCLUSION 116

2
 BIBLIOGRAPHY 117

PREFACE

As a management student, summer training project is one of the prerequisite for the successful
completion of MBA.
I have done my summer training at JMC Projects (India) Ltd. (Infra Division),
A Kalpataru Group Enterprise. The topic of my project is COMPANY VALUATION AND
PROJECT FINANCING OF THE COMPANY.
The study carries a brief introduction about the COMPANY VALUATION AND PROJECT
FINANCING IN THE COMPANY.
I am fully confident that this study meets the complete requirement of MBA programme. It may be
possible of any suggestion for the improvement of contents of this project.

GULTAREEN BANO
MBA 3rd sem
IILM

3
 ACKNOWLEDGEMENT

The satiation and euphoria that accompany the successful completion of task would be incomplete
without the mention of the people who made it possible.

After all, success is the epitome of hard work, severance, un-deferred missionary, zeal, steadfast
determination, and most of all encouraging guidance. So, with immense gratitude, I acknowledge all
those whose guidance and encouragement served as a beacon light and crowned our efforts with
success.

My sincere thanks to Mr. Manish Agrawal (GM), JMC Projects(India) Ltd.A Kalpataru Group
Enterprise, who was my project guide in the organization. I thank him for allowing me to take up this
project and helping me throughout the project for his invaluable guidance, inspiration, support and
uninterrupted supervision and monitoring of my activities .Needless to add that without his advice and
support the thesis would never been completed.

I would also like to thank, Mr. Shobhit Srivastava (Assistant Manager) for their support and
invaluable time and providing me with deep insights and inputs in this relatively new concept and
enabling me with all the tools and techniques to help me in the project.

I will ever remain indebted towards my parents and thank them for giving the financial and moral
support throughout these days.

I am also deeply indebted to my friends and other colleagues for their help in the completion of work.

GULTAREEN BANO
MBA-3rd SEM
IILM

4
 DECLARATION

I, GULTAREEN BANO, student of Master Of Business Administration (MBA) 3rd semester

hereby declare that the project report entitled COMPANY VALUATION AND PROJECT
FINANCING OF JMC Projects (India)Ltd.A Kalpataru Group Enterprise, is submitted by me in
partial fulfillment of the awards of the degree of MBA-3 rd semester and the information presented in this
project report is correct to the best of my knowledge. It is an original work and has not been submitted to
any other academic institution for award of any degree in full or part by me.
The empirical findings in this report is based on the research conducted by me personally and is not a
production of any other sources.

MUMBAI GULTAREEN BANO

05/08/2013 MBA- 3rd Sem.
IILM

5
 CERTIFICATE

This is to certify that the project report entitle COMPANY VALUATION AND PROJECT
FINANCING OF JMC Projects(India)Ltd. by GULTAREEN BANO in partial fulfillment for award
of the MASTER OF BUSINESS ADMINISTRATION submitted to IILM,ACADMY OF HIGHER
LEARNING, as carried out under my guidance and supervision.
Her conclusions are based on the data collected by her during the implant training.
To the best of my knowledge and belief, the matter presented by her is original in nature and has not
copied down from any sources and also this report has not been submitted earlier for the award of any
degree or diploma.

MUMBAI Project guide

DATE:3rd Aug13
Mr. Shobhit Srivastava
(Assistant Manager)
JMC Projects(India)Ltd.

6
 EXECUTIVE SUMMARY

After getting the opportunity to undergo my 6 week summer training in JMC Projects (India)Ltd.A
Kalpataru Group Enterprise,Mumbai.I carried out my project concerning Company Valuation And
Project Financing Of JMC Projects (Indai) Ltd.A (Kalpataru Group Enterprise).
The first week I spend getting information about the company profile and projects knowledge from
company. From Tendering department I have collected information about credit monitoring arrangement
and various functions that are followed in the company for credit control and its monitoring system, term
sheet of financing loan from Banks, preparation of balance sheet, cash flow statement.

OBJECTIVE: Financial Analysis of JMC Projects (India) Ltd.

RESEARCH METHODOLOGY: It is basically based on the description of working structure of

tender deptt. instead of data collection and analysis because as per companys policy. This data is
sensitive and cant be reproduced.

ORGANISATION: JMC Projects (India) LTD. A Kalpataru Group Enterprise

DURATION OF SUMMER TRAINING: 6 WEEKS

7
8
 INTRODUCTION
AUDITORS REPORT

Report on the Financial Statements

We have audited the accompanying financial statements of JMC PROJECTS (INDIA) LTD. (the
Company), which comprise the Balance
Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for
the year then ended, and a summary of significant accounting policies and other explanatory
information.

Managements Responsibility for the Financial Statements

Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered Accountants of India.Those
Standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The
procedures selected depend on the auditors judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the Companys preparation and
fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances.An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.

9
 Opinion

In our opinion and to the best of our information and according to the explanations given
to us, the financial statements read with notes,
subject to third party confirmations give the information required by the Act in the
manner so required and give a true and fair view in conformity with the accounting
principles generally accepted in India:
a) in the case of the Balance Sheet, of the state of affairs of the Company as at March
31, 2013;

b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that
date; and
c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that
date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2003 (the Order) issued
by the Central Government of India in terms of sub-section (4A) of Section 227 of the
Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and
5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by the
Company so far as appears from our
examination of those books;

c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with
by this Report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow
Statement comply with the Accounting Standards referred to in sub-section (3C) of
Section 211 of the Companies Act, 1956;

10
e) On the basis of written representations received from the directors as on March 31,
2013, and taken on record by the Board
of Directors, none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in terms of clause
(f) Of sub-section (1) of Section 274 of the Companies Act, 1956;

(g) Since the Central Government has not issued any notification as to the rate at which
the cess is to be paid under Section
441A of the Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due and payable by the
Company.

For KISHAN M. MEHTA & CO.,

PLACE MUMBAI: Chartered Accountants
DATE 16MAY2013

11
Annexure
Reg: JMC PROJECTS (INDIA) LIMITED
(Referred to in paragraph 1 of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars,
(ii) including quantitative details and situation of fixed assets.

(b) As explained to us, the fixed assets have been physically verified by the management
in accordance with a phased programme of verification of its fixed assets adopted by the
Company, which in our opinion is reasonable, considering the size and the nature of its
business. The frequency of verification is reasonable and no material discrepancies have
been noticed on such physical verification.

(c) During the year, the Company has not disposed off any substantial part of fixed
assets.
(ii) (a) The inventory has been physically verified by the management during the year
at reasonable intervals. In our opinion, the
frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us,
procedures of physical verification of inventory followed by the management are
reasonable and adequate in relation to the size of the Company and the nature of its
business.

(c) The Company is maintaining proper records of inventory. In our opinion,

discrepancies noticed on physical verification of inventory have been properly dealt with
in the books of accounts.

(iii) (a) The Company has granted unsecured loan to two parties covered in the register
maintained under Section 301 of the Companies Act, 1956. The maximum amount
involved during the year was ` 93.07 lacs and year end balance of loan granted to such
parties was ` 41.69 lacs.

(b) In our opinion the rate of interest and other terms and conditions of loans given by
the Company are not prima facie, prejudicial to the interest of the Company.

(c) The parties have been regular in the payment of principal and interest as per
stipulation, if any.

(d) There is no overdue amount of loan granted to companies, firms or other parties listed
in the register maintained under
Section 301 of the Companies Act, 1956.

12
(e) The Company has not taken any loans, secured or unsecured, from companies, firms
or other parties listed in the register maintained under Section 301 of the Companies Act,
1956.Therefore the provisions of sub clause (e), (f) and (g) of clause (iii) of para 4 of the
Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there
are adequate internal control procedures commensurate with the size of the Company and
the nature of its business for the purchases of inventory and fixed assets and for sale of
goods and services. During the course of our audit, no major weakness has been noticed
in the internal controls in respect of these areas.

(v) (a) Based on the audit procedures applied by us and according to the information
and explanations provided by the management, we are of the opinion that the particulars
of contracts or arrangement that need to be entered into the Register maintained under
Section 301 of the Companies Act, 1956 have been so entered.

(b) According to the information and explanations given to us, the transactions made in
pursuance of contracts or arrangements entered in the register maintained under Section
301 of the Companies Act, 1956 have been made at the prices which are reasonable
having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the
Company has complied with the provision of Section 58A & 58AA or any other relevant
provisions of the Companies Act,1956 and rules framed there under. We are informed that
no order had been passed by the Company Law Board or National Company Law
Tribunal or Reserve Bank of India or any Court or any Tribunal.

(vii) In our opinion, the Company has an internal audit system commensurate with the
size and nature of its business.
26 I JMC Projects (India) Ltd.

13
 (viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government of India,
regarding the maintenance of cost records under Section 209(1)(d) of the Act and
are of the opinion that prima facie, the prescribed accounts and records have been
maintained.We have, however not made a detailed examination of the records
with a view to determine whether they are accurate or complete.

(ix) (a) According to the information & explanations given to us and records
examined by us, the Company is generally regular in depositing with the
appropriate authorities undisputed statutory dues including Provident Fund,
Investor Education and Protection Fund, Employees State Insurance, Income Tax,
VAT, Wealth Tax, Service Tax, Custom duty, Excise duty, Cess and other material
undisputed statutory dues applicable to it and there were no undisputed material
statutory dues in arrears as at March 31, 2013 for a period of more than six
months from the date they became payable.
(b) According to the information and explanations given to us, details of dues of
Income Tax, VAT, Wealth Tax, Service Tax, Custom duty, Excise duty and Cess
which have not been deposited on account of dispute are given below.
(x) There are no accumulated losses of the Company as on 31st March 2013.
The Company has not incurred cash losses during the financial year covered by
our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to
us, the Company has not defaulted in repayment of dues to a bank, financial
institution or debenture holders.

(xii) The Company has not granted any loans or advances on the basis of
security, by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or nidhi mutual benefit fund
/ Society, therefore, the provisions of para 4 (xiii) of the Companies (Auditors
Report) Order, 2003, are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities,
debentures and other investments. Accordingly, the
provisions of Para 4(xiv) of the Companies (Auditors Report) Order, 2003, are
not applicable to the Company.
(xv) In our opinion, the Company has not given any guarantee in respect of loans
taken by others from bank or financial institutions.

(xvi) According to the information and explanations given to us, in our opinion
the term loans raised during the year have been applied for the purpose for which
they were raised.

14
(xvii) According to the information and explanations given to us and on an overall
examination of the Balance Sheet and Cash Flow
Statement of the Company, we report that no funds raised on short-term basis
have been used for long term investment. (xviii) The Company has not made any
preferential allotment of shares during the year.
(ix) The Company has not issued any Debentures during the year.

(xx) The Company has not raised any money by way of public issue during the
year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the
true and fair view of the financial statement and as per the information and
explanation given by the management, we report that no fraud on or by the
Company has been noticed or reported during the course of our audit.

For KISHAN M. MEHTA & CO.,

Chartered Accountants
Firms Registration No.105229W

15
 PROFILE - AT A GLANCE

ENGINEERS & CONSTRUCTORS

16
17
 COMPANY PROFILE

DATE OF ESTABLISHMENT 1986

REVENUE 468.239
MARKET CAPITAL 1815.225186 ( Rs. in
Millions )
CORPORATE ADDRESS A 104,Shapath 4,S G
Road Opp
Karanavati
Club Ahmedabad -
Gujarat -
380051, ,
www.jmcprojects.com
MANAGEMENT DETAILS CHAIRPERSON- D.R.Mehta
M D-
Suhas Joshi

DIRECTORS Ajay Munot,

Amit Rava, Ashish Shah, D
Mehta, Hemant Modi,
Kamal
Jain, Manish Mohnat, Manoj
Kumar Singh
BUSINESS OPERATION Construction
Real Estate
BACKGROUND JMC Project
was

INCORPORATED IN THE YEAR 1982

UNDER
THE NAME OF CIVAN

CONSTRUCTION.LATER THE NAME

GOT
CHANGED TO JOSHI AND
MODI
CONSTRUCTION THEN
FINALLY
TO ITS PRESENT.

TOTAL INCOME- RS
25491.341MILION(YR ENDING)2013

18
 NET PROFIT
RS.183.31MILION(YR ENDING2013)
COMPANY SECRETARY AMIT RAVAL
BANKERS UNION
BANK OF INDIA
AUDITORS KISHAN M
MEHTA& CO.

INFRA DIVISION

19
20
Historical Milestones

21
 JMC Mission

To be a leader and model corporate participant in the development of the construction

industry.

22
To build, maintain and perpetuate a loyal and continuing relationship with every customer
through total commitment to quality, transparent dealings, timely completion, thereby
enhancing the values for our stakeholders.

We wish to introduce ourselves as a leading contracting company undertaking Civil &

Structural works for Commercial & Residential Buildings, Industrial, Infrastructure &
Power Plant projects at various locations in India.

Founded in 1982, JMC Projects (India) Ltd, a part of Kalpataru Group, is one of the
leading Civil contracting companies in India with strong workforce of 3000
professionally qualified construction managers, engineers and supervisors backed up with
latest construction equipment & technologically advanced work environment.

Today, JMC with a proven track record of completing prestigious projects within the
scheduled time and quality parameters to the customer's satisfaction, is one of the few
construction companies certified under ISO 9001:2008 quality system ISO 14000: 2004
Environmental Management and BS OHSAS 18001:2007 Occupational Health & Safety.

23
DIRECTORS REPORT

24
Your Directors have pleasure in presenting the 27th Annual Report on the business and
operations together with the Audited accounts for year ended March 31, 2013.

FINANCIAL RESULTS for the yr end for

31mar2013 2012

Total Revenue 25,491. 20,814.

34 60
Profit before Depreciation, Interest & Tax
1,257.3 1,587.8
Less: Depreciation
4 8
I
548.57 470.6
n
1
t 549.53
e 473.6
159.2
r 1
e 4 643.6
s
(24.0) 6
t
183.31 124.3
Profit before Tax
1,656.92 0
1,619.32
Provision for Tax
Net Profit after
Tax 26.12 52.24
Add: Surplus b/f from
8.47
previous year 4.44 32.50

Profit available for 32.50 52.50

Appropriation
22.50
APPROPRIATION: 1,473.61
Proposed Dividend on Equity Shares of ` 10/- 1,656.92 1,619.32
each

DIVIDEND
Your Directors are pleased to recommend payment of dividend for the year ended March 31,
2013 @ ` 1/- per Equity Share of the face value of ` 10/- (i.e. 10%) on 26,118,348 paid up Equity
Shares, subject to approval of shareholders at the ensuing Annual General Meeting.
TRANSFER TO RESERVES
We propose to transfer ` 32.5 millions to Debenture Redemption Reserve, ` 22.5 millions to
General Reserve and retain balance amount of ` 1,571.4 millions in the Profit and Loss Account.
RESULTS OF OPERATION

25
During the year ended March 31, 2013, your Company has achieved.Total Revenue (i.e. Revenue
from Operations & Other income) of 25,491.3 millions as against ` 20,814.6 millions for the
previous year ended March 31, 2012. The Company has achieved Profit before tax of ` 159.2
millions for the current year as against `643.7 millions for the previous year.
EMPLOYEE STOCK OPTION SCHEME
During the year under review, none of the employees has opted for conversion of the Options
into Equity shares.The disclosure required to be made under Securities and Exchange Board of
India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines,
1999, is provided in AnnexureA forming part of this Report.
FINANCE
During the year, the Company has further invested ` 527.7 millions as equity and provided loans
of ` 505.7 millions to Special Purpose Vehicles (SPVs) incorporated for execution of Road
Projects which was funded through long term loans & internal accruals.
Total addition in the fixed assets was ` 415.7 millions during the year, which was funded through
Rupee Term Loans and internal accruals.The Company has sufficient fund based & non-fund
based limits to cater its existing fund requirement.

FIXED DEPOSIT
During the year, the Company has accepted deposits from Publicand Shareholders within the
prescribed limits. As on March 31,2013, deposits stood at ` 152.8 millions, out of which a sum of
` 2.7 millions relating to 66 depositors remained unclaimed.
The Company had sent reminders to all the depositors for their unclaimed deposits, out of which
some deposits were claimed and paid subsequently. There were no deposits which were
claimedand remained unpaid by the Company as on March 31, 2013.
DIRECTORS
The terms of appointment of two Promoter Directors, Mr. Hemant Modi as CEO, Vice Chairman
& Managing Director and Mr. Suhas Joshi as Whole Time Director ended on March 31, 2013
and both the directors have expressed their desire to relinquish from the role of Executive
Directors. However, on the request of the Board, they have agreed to continue as Non-Executive
Directors of the Company effective from April 1, 2013.
The Board places on record its deep sense of appreciation for invaluable contribution made by
Mr. Hemant Modi as a Co-founder, Chief Executive Officer, Vice Chairman and Managing
Director and by Mr. Suhas Joshi as a Co-founder & Whole-time Director for the growth and
development of the Company. On behalf of the Company, the Board conveys gratitude for their
dedicated and committed efforts in creating and upholding JMC Brand for almost three decades.
In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of
the Company, Mr. Kamal Jain and Mr. Manish Mohnot are liable to retire by rotation at the 27th
Annual General Meeting. Both the Directors have offered project from Nagpur to
Wainganga Bridge section in the State ofMaharashtra on DBFOT basis awarded by NHAI.
During the year, the Company has provided loan of ` 2 millions.The Company has achieved
Turnover of ` 152.7 millions on account of utility shifting during the year. The brief particulars

26
of both the above directors have been provided in the Corporate Governance Report pursuant
to Clause 49 of the Listing Agreement.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of theCompanies Act, 1956, it is hereby

confirmed:
(a) that in preparation of annual accounts for the year ended March 31, 2013, the applicable
accounting standards have been followed;
(b) that the Directors have selected such accounting policies and applied them consistently and
made judgments and estimates that are reasonable and prudent so as to give a true and fair view
of the state of affairs of the Company at the end of the financial year and of the profit of the
Company for year ended on that date;
(c) that the Directors have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 1956, for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities;
(d) that the Directors have prepared the annual accounts for the year ended March 31, 2013 on a
going concern basis.

Vindhyachal Expressway Pvt. Ltd. (VEPL)

VEPL is Special Purpose Vehicle (SPV) incorporated as a wholly owned subsidiary of the
Company for execution of a road project from Rewa to Madhya Pradesh/Uttar Pradesh Border in
the State of Madhya Pradesh on DBFOT basis awarded by Madhya Pradesh Road Development
Corporation Ltd. (MPRDC). During the year, the Company has invested ` 270 millions in VEPL
by way of equity share capital and also has provided loan of ` 292.2 millions. As the construction
work is still going on, there was no Revenue from operations during the year.

The statement pursuant to Section 212 of the Companies Act,1956 containing details of
subsidiaries of the Company forms part of this Annual Report.The Ministry of Corporate Affairs,
Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st
February 2011 respectively has granted a general exemption from compliance with Section 212
of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular.The
Company has satisfied the conditions stipulated in the circular and hence is entitled to the
exemption. Necessary information relating to the subsidiaries has been included in the
Consolidated Financial Statements. The annual accounts of the subsidiary companies will be
kept open for inspection at the registered office of the Company as well as at the registered
offices of the respective subsidiary companies.

CONSOLIDATED FINANCIAL STATEMENTS

In compliance of clause 32 and clause 50 of the Listing Agreement with the Stock Exchanges,
the Company has prepared Consolidated Financial Statements of the Company and its

27
subsidiaries as per the Accounting Standard on Consolidated Financial Statements (AS -21).The
Audited Consolidated Financial Statements along with the Auditors Report have been annexed
with this Annual Report.The Auditors Report to the Board of Directors does not contain any
qualification.

PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the CompaniesAct, 1956, read with
Companies (Particulars of Employees) Rules,1975 as amended, the names and other particulars
of employees are required to be set out in annexure to the Directors Report. However, having
regard to the provisions of Section 219(1)(b).

NEW CONTRACTS
During the year under review, the Company has received new contracts of approximately `
24,410 millions. The details of some of the major contracts received during the year are provided
in Management Discussion and Analysis section of this Annual Report.As on March 31, 2013 the
aggregate value of orders on hand stands at ` 55,770 millions.

FUTURE PROSPECTS
The Company has sufficient order book position to achieve the growth in both top line as well as
bottom line in the coming years.The Company has already entered into international business by
securing a road project and is looking for better opportunities in International market. Looking at
the current scenario of global as well as Indian economy, the Company is well poised for growth
in turnover and some improvement in margins in the next year. The Company is taking all
necessary steps for improvement in productivity of key resources and reduction in costs
wherever required.

CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges, a
separate section on Corporate Governance and certificate obtained from Practising Company
Secretary confirming its compliance, is provided and forming part of this Report. Management
Discussion and Analysis report is provided separately and is forming part of this report.

SUBSIDIARIES
JMC Mining and Quarries Ltd. (JMQL)JMQL has achieved Total Revenue of ` 11.8 millions for
the current year as against ` 11.2 millions for the previous year. During the year the Company has
achieved profit before tax of ` 0.59 million as against loss of ` 1.08 millions in previous year.Brij
Bhoomi Expressway Pvt. Ltd. (BBEPL)

28
BBEPL is Special Purpose Vehicle (SPV) incorporated as a wholly owned subsidiary of the
Company for execution of a road project between Agra Aligarh in the State of U.P. on
DBFOT basis awarded by NHAI. As the construction activity is still going on, there was no
Revenue from operations during the year. The Company has invested ` 15 millions in BBEPL by
way of equity share capital and also provided loan of ` 210.8 millions during the year under
review.

Wainganga Expressway Pvt. Ltd. (WEPL)

WEPL is Special Purpose Vehicle (SPV) incorporated as a wholly owned subsidiary of the
Company for execution of a road project from Nagpur to Wainganga Bridge section in the
State Of Maharashtra on DBFOT basis awarded by NHAI. During the year, the Company has
provided loan of ` 2 millions.The Company has achieved Turnover of ` 152.7 millions on
account of utility shifting during the year.

STATUTORY DISCLOSURE
Particulars required to be furnished by the Companies (Disclosure of particulars in the report of
the Board of Directors) Rule, 1988.
Part A & B pertaining to Conservation of Energy andTechnology Absorption is not applicable
to the Company. The Company has, however, used information technology extensively in its
operations.
During the period, the Company has not earned any foreign exchange, while the outgo of
foreign exchange is of ` 2.4 millions (P.Y. ` 31.5 millions) towards Capital goods, ` 52.9 millions
(P.Y. ` 35.6 millions) for Construction Materials,` 1.7 millions (P.Y. ` 0.2 million) towards
foreign traveling,` 37.5 millions (P.Y. ` 9.2 millions) towards Interest on foreign currency
working capital loan, ` 2.02 millions (P.Y. `8.3 millions) towards Professional, Technical &
Consultancy fees and ` Nil (P.Y. ` 0.1 million) towards Advertisement expenses.

AUDITORS & AUDITORS REPORT

The Board of Directors has proposed to reappoint M/s. Kishan M. Mehta & Co., Chartered
Accountants as Statutory Auditor of the Company, who have consented to act as auditors, if re-
appointed. Members are requested to consider their re-appointment.Auditors comments on
your Companys accounts for year ended March 31, 2013 are self explanatory in nature and do
not require any explanation as per provisions of Section 217(3) of the Companies Act, 1956.

ACKNOWLEDGEMENT
Your Directors place on record deep gratitude to the stakeholders, banks, clients, suppliers and
business associates for their continued support and confidence.Your Directors also place on
record their appreciation of the dedication, commitment and contribution made by employees
at all levels and look forward their continued support in future as well.On behalf of the Board of
Directors.

Shailendra Kumar Tripathi Manoj Kumar Singh

29
CEO & Dy. Managing Director Executive Director

Place : Mumbai
Date : May 16, 2013

SUMMARY OF JMC (PROJECTS)LTD.

LANDMARK PROJECTS

ALSTOM PROJECTS INDIA LTD.

DMRC DELHI METRO RAIL CORP
Construction of General Civil, Structural and Architectural Construction of three elevated station-3c42a3c42b
Works for 228 MW Jegurupadu Phase II Combined Cycle for DMRC NEW DELHI.
Power Plant Project for M/s. GVK Industries Ltd.

ARVIND MILLS LTD. CENTARL PUBLIC WORK DEPTT.

Construction of Textile Factory for Shirting Division at vill Construction of multipurpose air conditioned indoor
. Khatraj Near Ahmedabad stadium with required facilities for
NETBALL 400mX8m lane synthetic athletic track,NDL

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 OBJECTIVE
FINANCIAL ANALYSIS IN JMC PROJECTS (INDIA)LTD.
OBJECTIVE:
1. To understand the working style of tendering ,preparation of ratios analysis, preparation
of balancesheet .
2. To understand the methodology of credit monitoring arrangement and its risk recovery of
business.
3. To assess the strength and weakness of the concern in various areas.
4. To assess the overall efficiency and performance of the company.

SCOPE OF STUDY:
I. By studying the data, JMC Projects(India) ltd., can find out its weak points,
improvements of which can help to increase their own demand in market.
II. A great opportunity in construction sectors where the competition is much increased.

III. Opportunity in construction sector.

SIGNIFICANCE OF STUDY:
One of the most important significance of Credit monitoring system for the company is that
minimize the risk of credit sales. Suppose when we are in business of credit sales then how we
can minimize or avoid the risk of credit sales. So what should we do and which types of tools
instrument and incentive will required to minimizing risk of credit sales of company.
.

LITERATURE REVIEW

Management discussion and analysis

Meaning of credit monitoring arrangement

31
 Tools for financial analysis of the company.

Terminologies regarding term sheet of the Banks.

Analysis of financial indicators.

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 MANAGEMENT DISCUSSION AND ANALYSIS

The Company presents its performance for the financial year

2012-13 and the outlook for the future based on current business environment which may
vary due to future economic, political and other developments in India as well as
overseas.

1. ECONOMIC SCENARIO

During FY 2012-13, the global economic scenario continued to be in despair, however

there has been partial rebound in some of the developing countries. Major economies
have registered slower growth in view of uncertain and difficult business environment.
Indian economy also remained largely affected by the slump in global macroeconomic
environment. Indias Gross Domestic Product (GDP) growth rate for FY 2012-13 is
below 5%, which is lowest in the decade. The impact of the slowdown has been felt
across all the sectors of economy. The growth in agriculture is estimated at 1.8% in 2012-
13 as compared to 3.6% in previous year. The manufacturing sector witnessed a decline
in growth to 1.9% in 2012-13 as against 2.7% in previous year. The growth in service
sector outperformed other two sectors but could not maintain double digit growth rate
achieved in previous six years.Although,Wholesale Price Index (WPI) has moderated
during the recent months, food inflation continues to be high. This has severely affected
consumption demand, savings and flow of investments.The Union Govt. has recently
announced several measures aimed at restoring fiscal health and improving growth rate
which should help in improving the Indian economys outlook for FY 2013-14.

2. INDUSTRY SCENARIO

Corporate and Govt. investment during FY 2012-13 remained subdued on account of

weak investment climate and infrastructure bottlenecks. Project implementation in rail,
road and power sectors got delayed considerably due to number of constraints including
acute shortage of critical inputs. Financing projects has become difficult as over
leveraged companies are unable to raise debt in absence of fresh equity. Infrastructure
industry is likely to register growth of 3.6% in FY 2012-13 as compared to 4.8% in the
previous year. The slowdown in housing and real estate sector has adversely affected
growth in construction sector. The measures announced by the Govt. in the recent union
budget clearly manifested huge investment requirements. Some of these measures include
raising funds through Infrastructure Debt Funds, credit enhancement by Indian
Infrastructure Finance Company Limited, additional issue of tax free bonds, raising
the corpus of the Rural Infrastructure Development Fund etc. For propelling growth in
power sector, a Cabinet Committee on Investment has been set up for monitoring delayed

33
as well as stalled projects and will guide the decision making process to remove
impediment. For expediting development in road sector, a regulatory authority will be
constituted to address the issues such as financial closure, construction risks and contract
management concerns which are stalling road projects. These initiatives to enhance
investment flows and push implementation of projects are going to bring much needed
growth momentum in the construction industry in the long run.

3. OPPORTUNITIES

The 12th Five Year plan envisages an investment of ` 55 trillion in the infrastructure
sector of which about 47% is expected to come from private sector. The significant
increase in plan outlay for power, roads, oil & gas, urban infrastructure and ports will
give major boost to the inflow of funds into various segments and consequently provide
abundant opportunities for sustaining growth in coming years. Budget announcement of
awarding 3000 kms of roads in the states of Uttar Pradesh, Madhya Pradesh, Gujarat,
Maharashtra, Rajasthan and North- Eastern region are expected to provide a stimulus to
the sector. The Ministry of Road Transport and Highways has been allocated ` 375 billion
for FY 2013-14 signifying high priority to the sector.The majority of new road projects
are expected to be awarded on EPC basis.There will be enormous spending through
Public Private Partnership on revamping of existing / development of urban infrastructure
over a period of next five years which will provide major opportunities for growth of
Construction Industry.

4. CONCERNS

Prices of the construction materials such as steel, cement, sand, aggregates and diesel
have increased substantially due to inflationary pressures. Welfare schemes like NREGA
provide employment opportunity in rural area resulting into acute shortage of labor for
construction industry in urban area. It has resulted into abnormal increase in labour costs
due to major gap in demand and supply of skilled / unskilled labour. There is strong need
for change in construction methodology and technology that reduces dependence on
labour. Apart of the sites are located at remote places. The Company has adequate
systems and procedural guidelines concerning all operational areas encompassing
tendering, budgeting, execution, quality, safety, procurement, asset management,
finance, accounts & audit, human resource etc. which are adequate and necessary
considering the size and level of operations of the Company. The management has
been making constant efforts to review and upgrade existing systems and processes
to gear up and meet with the changing needs of the business.

5. FINANCIAL DISCUSSION AND ANALYSIS

34
 The financial statements have been prepared in compliance with the requirement of
revised Schedule VI notified by the Ministry of Corporate Affairs, the Companies Act,
1956 and prescribed Accounting Standards. The management accepts responsibility for
the integrity and objectivity of these financial statements as well as estimates and
judgments used in preparing financial statements. However, investors are cautioned
that this discussion contains prospective views that involve risks and uncertainties.

RESULTS OF OPERATION
Operational Highlights / Achievements

The value of the order booked during the FY 2012-13 was over ` 24,410 millions and
value of orders on hand as on March 31, 2013 stood at around ` 55,770 millions. During
the year the Company has been awarded certain prestigious orders, some of which are
highlighted as under:

Infrastructure
Design and Construction of elevated Viduct & 6 stations including finishing
work
for Delhi Metro Rail Corporation Limited.
Construction work of Mombasa Nairobi Addis Ababa
Road corridor in Ethiopia

Factories and Buildings

Civil work and finishing services for Indian Institute of

Public Health at Gandhinagar.
Civil work for exhibition hall and multipurpose utility building for India
International Textile Machinery Exhibition Society at Gift City at Gandhinagar.
Construction of Residential Complex for Mahindra Life- spaces at Pune.
Construction of Civil structure and finishing works of Mahagun Mezzaria for
Nextgen Infracon Pvt. Ltd. at Noida.
Construction of Regional office for Maruti Suzuki India for Maruti Suzuki India
Ltd at Jaipur.
Civil & structural works of Krescent home towers forJaiprakash
Associates Ltd at Noida.
Civil work for Hinduja Software Technology Park at
Bangalore.
Construction of academic blocks and residential towers for International

35
 centre for Theoretical Sciences of Tata Institute of Fundamental Research at n
Bangalore.
Construction of Residential complex Embassy Lake Terraces at Bangalore
for Synergy Property Development Services Pvt. Ltd.
Construction of Residential and Commercial building Prestige Silversun & Trinity
Centre at Bangalore for Prestige Group
Civil works at Prestige Misty Waters for Prestige group at Bangalore
Power
Construction of foundation, power blocks and coal
handling packages at Raigarh, Chhattisgarh, for Cethar Construction Ltd.

REVENUES

The Income from Operations for the Company has increased from ` 20,660 millions in
the last year to ` 25,380 millions in the current year, up by 23%.
Other Operating Revenue & Other Income
Other Operating Revenue declined to ` 31 millions for FY
2012-13 from ` 40 millions for FY 2011-12.
Other Income reduced to ` 72.2 millions for FY 2012-13 from ` 111.5 millions for FY
2011-12, on account of reduction in interest and rental income from machineries.
Operating Margin

EBIDTA (including other income) for the year FY 2012-13 was ` 1,257 millions as
compared to ` 1,588 millions for the year FY 2011-12. In terms of percentage, EBIDTA
stood at

4.95% for the year FY 2012-13 as compared to 7.68% for FY

2011-12. The operating margin remained lower mainly due to inflationary pressure on
commodity prices like steel, cement, diesel etc. and labour cost.

COSTS & COSTS & EXPENSES

Employee Costs
Manpower Cost for the FY 2012-13 was ` 1,480 millions,
as compared to ` 1,421 millions for the year FY 2011-12. In terms of percentage of
Turnover, it reduced to 5.83% as compared to 6.88% in the previous year.

Other Expenses

36
Other expenses as a percentage of turnover have improved
from 6.09% in FY 2011-12 to 5 % in FY 2012-13. Other expenses mainly include general
and administrative expenses
such as traveling and conveyance, communications, security, insurance, information
technology expenses, sundry expenses, rates and taxes, professional and legal charges etc.

Interest Expenses

Interest expense for the year FY 2012-13 increased to

` 549.5 millions from ` 473.6 millions for FY 2011-12; in terms of percentage it is
reduced to 2.16% for FY 2012-13 from 2.29% for FY 2011-12. Increase in the interest
cost was mainly on account of investment in Special Purpose Vehicle (SPV) Subsidiary
Companies, Capital Expenditure and increase in interest rate.

Depreciation

Depreciation cost as a percentage of turnover has reduced from 2.28% in FY 2011-12 to

2.16% in FY 2012-13.

Taxes on Income and Deferred Tax Provision

The Companys Deferred Tax Asset (Net) has increased from

` 77.80 millions in 2011-12 to ` 174.85 millions in 2011-12 and the differential amount
was credited in the Statement of Profit and Loss for FY 2012-13.
For FY 2012-13, the Company has made Income Tax provision of ` 72.98 millions; net
Tax credit was ` 24.07 millions.

6.FINANCIAL STATUS

Net Worth

The net worth of the Company has increased from ` 4,224.7 millions as on March 31,
2012 to ` 4,401.7 millions as at March
31, 2013. The increase in amount of net worth is on account of internal accruals.

Borrowings

The total borrowing has increased from ` 2,884.3 millions as on March 31, 2012 to `
3,979.4 millions as on March 31, 2013. The Debt-Equity Ratio has stood at 0.92 as on
March 31, 2013 which was 0.69 on March 31, 2012.

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During the year the Company has raised funds through Terms loans and working capital
loans.

Investments

Total Investments of the Company increased to ` 1,706.8 millions as on March 31, 2013
as against ` 1,178.1 millions as on March 31, 2012; increase is mainly on account of
equity investments in its 100% subsidiaries and associate Company which are executing
road projects on BOT basis.

Capital Expenditure

During FY 2012-13, the Company made an additional investment of ` 415.7 millions

in fixed assets to increase its project execution capacity. Major funding of the capital
expenditure was made from the proceeds from Rupee Term
Loans and internal accruals.

Current Assets & Liabilities

The Companys current assets primarily consist of debtors, inventories, cash & bank
balances and loans & advances. Total current assets as on March 31, 2013 was ` 9,211
millions as against ` 7,989.5 millions as on March 31, 2012.

The Companys current liabilities primarily consist of short term borrowings, trade
payables, short term provisions and other current liabilities.Total current liabilities as on
March 31,2013 was ` 7,987.4 millions as against ` 6,824.4 millions as on
March 31, 2012. Current Ratio.The current ratio as at March 31, 2013 marginally reduced
from 1.17 as on March 31, 2012 to 1.15 as on March 31, 2013.

7. CORPORATE SOCIAL RESPONSIBILITY

Being a dominant player in the construction sector, JMC is actively involved in various
CSR activities. As JMC employs huge work force, these activities are mainly directed for
their benefit & also to serve as motivational force for them.

The major activities in these areas include:

Medical facilities / aids to labour by engaging doctors at labour camps on regular

basis

Free medical check-up for the labour is done in all the sites at regular intervals

Arranging blood donation camps

38
 Crche / Day care centre for providing free primary educations to the children of
workers at few sites

Organizing free food, distribution of sweets on festivals and other curricular activities

Performing plays related to social awareness such as HIV AIDS, save water, save
electricity, childhood marriage etc.

Distribution of toys, School bags, Study materials, etc. to the children of workers

Sponsorship of libraries in the schools in the nearby areas of project sites

Organizing Pulse Polio event for kids of workers at sites

Celebration of World Environment Day by organizing tree plantation and other

related activities at various project sites

Donations to philanthropic and charitable organizations

8. QUALITY, HEALTH & SAFETY MANAGEMENT SYSTEM

To strive for excellence through continual improvement and to maintain its commitment
to customers expectations for quality and services, the Company adheres to the Quality
Management Systems as per International Standard ISO
9001:2008.Company has implemented Integrated Management System by integrating
ISO 14001:2004 (Environmental Management System), BS OHSAS 18001:2007
(Occupational Health & Safety System) with ISO 9001:2008. The Company has been
consistently pursuing best construction practices with uncompromising quality,
environment and safety standards which are recognized by our clients / associates and
Govt. bodies through awards / accreditations.

Awards and recognitions

In our quest for maintaining best quality and safety standards, Company has received
following recognitions and awards during the year.

Prestigious National Safety Award from Hon. Union Minister for Labour and
Employment, Shri Mallikarjuna Kharge for four projects Viz. Classic Mall at Chennai,
Provident Welworth City, CISCO and Salarpuria Laxuria at Bangalore.

39
 BHEL project at Jamnagar was selected for the best performance in entire BHEL
Power Sector Western Region. BHEL presented Best Performance Award 2011-
2012 in their Associate Meet in November 2012. The same site has been awarded Best
Safety Performance Trophy by the clients GSECL & BHEL.
Power project at Mauda for TRF won Best Safety Champion Award among 22
organizations including L&T,TRF, BHEL, Gammon etc. in Best Safety competition
organized by NTPC.
Pritech Park -3 (LEED Platinum building), at Bangalore has been adjudicated as a
winner of the Greenest Project in the Commercial category at National Level for the
year 2012 - CNBC Awaaz Real Estate Awards.
RMZ Ecoworld Infrastructure & Purvankara Welworth City projects at Bangalore
have received Achievement Awards for Construction Environment, Health & Safety at
5th CIDC Vishwakarma Awards 2013.We also received special award for CIDC Partner
in Progress 2013.
Pritech Park - 3 site has won the 2nd Best Construction Project award from Dept. of
Factories & Boilers, Industrial Safety & Health, Govt. of Karnataka.
Reliance Power project at Butibori has received a certificate for Achieving 13.22
Millions Safe Man Hours without any Loss Time Accidents by Reliance,Vidarbha unit.

9. Human Resources

We strongly believe that the employees are the prime movers of the organization and
investment in the human capital and strategic alignment of human resources reaps the
business results & pay-off in the long run. The systematic approach in attraction,
retention & regular training and development of the talent brings congruence between
personal career goals of the employees & achievement of overall objective of the
organization. JMC has put in comprehensive system in place for identifying and
addressing the competency requirement and fulfilling the same through various training
programs at all the levels in the organization.Through various Organizational
Development (OD) interventions we are enhancing the competency of our
employees to work in challenging environment & empower them at work place.We
cultivate the culture of dedication, work ethics & values in the organization. Employees
have been provided training on behavioral aspects, such as personality development,
leadership development through self-awareness etc. to help to achieve higher level of
performance. During the year, Company has organized total 2,531 Training programs
involving 8,545 man days with average of 3 man-days training per employee; which
include technical Trade, managerial skills, functional skills, behavioral skills, etc.

In addition to the above, we continue to invest in the time & resources for our employees
and their families like Annual day celebrations, distribution of long service awards,

40
etc.We have created Employees Welfare Trust, which provides financial assistance to
the needy employees of the Company and also to other organizations working for social,
philanthropic and charitable objects.

10. Cautionary statement

Statements in Management Discussion and Analysis describing the companys

objectives, expectations or predictions may be forward looking within the meaning of
applicable securities law and regulations. Actual results may differ materially from those
expressed in the statement. Important factors that could influence the Companys
operations within the country and other factors such as litigation and
industrial relations.

SIGNIFICANT ACCOUNTING POLICIES

i Accounting Convention
Financial statements are prepared in accordance with applicable Accounting Standards
under the historical cost convention on accrual basis.
ii Use of Estimates
The presentation of financial statements requires certain estimates and assumptions.
These estimates and assumptions affect the reported amount of assets and liabilities on
the date of the financial statements and the reported amount of revenues and expenses
during the reporting period. Difference between the actual result and estimates are
recognized in the period in which the results are known / materialized.
iii Revenue Recognition

a. Construction Contracts
Running Account Bills for work completed are recognized on percentage of completion
method based on completion of physical proportion of the contract work. Income on
account of claims and extra item work are recognized to the extent Company expects
reasonable certainty about receipts or acceptance from the client. When it is probable that
total contract cost will exceed the total contract revenue, the expected loss is recognized
immediately.

b. Others

41
Dividends are recorded when the right to receive the payment is established. Interest
income is recognized in time proportionate basis.

iv Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation less impairment losses, if
any. Cost is inclusive of all identifiable expenditure incurred to bring the assets to their
working condition for intended use.When an asset is disposed off, demolished or
destroyed, the cost and related depreciation are removed from the books of accounts and
resultant profit or loss, is reflected in the Statement of Profit & Loss. Direct cost as well
as related incidental and identifiable expenses incurred on acquisition of fixed assets that
are not yet ready for their intended use or put to use as at the Balance Sheet date are
stated as Capital Work in Progress.

v Depreciation
Depreciation is provided on the straight line method on all depreciable assets at the rate
prescribed in Schedule XIV of the Companies Act, 1956 on pro-rata basis except that
considering the useful life based on technical evaluation by the management, higher rate
than the prescribed rates are applied on a few shuttering items of Machinery @ 30%, on
office equipments @ 12.5%, on all vehicles @ 15% and on remaining Plant and
Machineries which are acquired on or after 1st October, 2005 @ 12.5% .

vi Impairment of Fixed Assets

The carrying cost of assets is reviewed at each Balance Sheet date to determine whether
there is any indication of impairment of assets. If any indication exists, the recoverable
value of such assets is estimated.An impairment loss is recognized when the carrying cost
of assets exceeds its recoverable value. An impairment loss is reversed, if there has been
a change in the estimates used to determine the recoverable amount and recognized in
compliance with AS - 28.

vii Investments
Investments are stated at cost. Provision for diminution in the value of long term
investments is made only if such a decline is other than temporary in the opinion of the
Management.

viii Retirement Benefits

a. Gratuity liability is covered by payment there of to Gratuity fund, the defined benefit
plan under Group Gratuity Cash Accumulation Scheme of Life Insurance Corporation of
India and SBI Life Insurance under irrevocable trust. The Companys liability towards
gratuity are determined on the basis of actuarial valuation done by independent actuary.

42
b. Contribution to Provident Fund and Superannuation Fund, the defined contribution
plans as per the schemes are charged to the Statement of Profit & Loss.

c. Provision for Leave encashment liability is made based on actuarial valuation as at

the Balance Sheet date.

d. All other short-term benefits for employees are recognized as an expense at the
undiscounted amount in the Statement of Profit & Loss of the year in which the related
service is rendered.

ix Inventories

a. Construction materials, stores, spares and tools are valued at lower of cost or net
realizable value. Cost include cost of purchase and other expenses incurred in bringing
inventory to their respective present location and condition. Cost is determined using
FIFO method of inventory valuation.
b. Work in progress is valued at lower of cost or net realizable value. In case where
work is completed but Running Account bill can not be raised on client due to contractual
conditions, the work in progress is valued at contract rates.

x Provision for Taxes

a. Current Tax:
Tax on income for the current period is determined on the basis of estimated taxable
income and tax credit computed in accordance with provisions of the Income Tax Act,
1961.

b. Deferred Tax:
Deferred tax is recognized, on timing differences, being the difference between the
taxable income and accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. It is calculated using the applicable tax rates
and tax laws that have been enacted or substantially enacted as on the balance sheet date.
Deferred tax assets which arises mainly on account of unabsorbed losses or unabsorbed
depreciation are recognized and carried forward only to the extent that there is virtual
certainty supported by convincing evidence that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
xi Foreign Currency Transaction

a. Transactions denominated in Foreign Currency are recorded at the exchange rate

prevailing on the date of transaction.
43
b. In respect of transactions covered by forward exchange contracts, the difference
between the forward rate and the exchange rate at the date of the transaction is
recognized as income or expense over the life of the contract. Any income or expense on
account of exchange rate difference either on settlement or on translation is recognized in
the Statement of Profit & Loss.
c. Assets & Liabilities remaining unsettled at the end of the year, other than covered by
forward exchange contracts are translated at exchange rate prevailing at the end of the
year and the difference is adjusted in the Statement of Profit & Loss.
d. Translation of overseas projects of non-integral foreign operations:
i Assets and liabilities at the rates prevailing at the end of the year.
ii Income and expenses at the average exchange rate prevailing for the month of
transactions.
iii Resulting exchange differences are accumulated in foreign currency translation
reserve account.

xii Borrowing Costs

Borrowing Costs that are attributable to the acquisition or construction of qualifying

assets are capitalized as part of the cost of such assets. A qualifying asset is one that takes
necessarily substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.

xiii Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized

when there is a present obligation as a result of past events and that probability requires
an outflow of resources.
A disclosure for a contingent liability is made when there is a possible obligation or a
present obligation that may, but probably will not, require an outflow of resources. Where
there is a possible obligation or a present obligation in respect of which the likelihood of
outflow of resources is remote, no disclosure is made.

xiv Accounting for Project Mobilisation expenses

Expenditure incurred on creation of site infrastructures is written off in proportion to

work done at respective sites so as to absorb such expenditure during the tenure of the
contract.
xv Balance of Receivables

Trade receivables & Accrued value of work done (Uncertified work done bills), of the
clients in these accounts are disclosed net of advances outstanding at the year end from
the respective clients.

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 MEANING OF CREDIT MONITORING ARRANGEMENT

The credit management is one of the most important tools to monitor credit system under the
company policy. Company established CMA for credit concerned on yearly basis and review the
account position of various parties and their off take performance.
Chartered Accountants play a vital role in arranging the working capital funds for their various
clients. Though, the Banks have been given liberty by RBI not to follow CMA for deciding the
eligibility and magnitude of working capital finance, yet the CMA system is so scientific and
systematic, that it transpires the whole activity of the firm and also the way of using the working
capital finance by the borrower. It is said that long term funds can be used both for long term and
short term purposes but the short term funds should be used only for short term purposes and not
for long term use. The CMA shows the errors of the borrowers and also their ill intention to
misuse the Banks funds. That is why most of the Banks are still highly depending on CMA.

However, there are some points which are to be taken care of while preparing a case for working
capital. At times, it is seen that various Banks differ on treatment of certain items of the CMA.
Matter is discussed below:

Profitability Statement

1 Sales Projections:
So far as possible sales projections should be kept at an achievable level and on
conservative basis. Since this is directly connected with the rating of the proposal, hence,
if the sales can be achieved for Rs.100.00, it should be taken at Rs.90.00. If the
projections are not met, interest rate shall increase and renewal/ enhancement shall be
difficult.

2 Level of FG/ WIP:

The level of FG/ WIP in profitability statement has direct link with the projected/
estimated profitability, therefore, the level of FG/ WIP should be decided accordingly.
Since this is directly connected with the inventory holding period, drawing power and
current ratio too, hence this should be decided after due deliberation;

3 Profit after Tax:

45
 More profit will mean more tax, which the client has to decide. To avail more working
capital finance and to improve the net worth of the firm, projected profit should not be
overstated. Only the profit which is likely to be shown should be estimated/ projected.
Any negative variance from the projected profits will amount to increase in interest rate
and shall jeopardise the renewal/ enhancement in the limits.

Current Liabilities

1 Bank Finance: This column shows the amount of loan which is expected from the Bank. If
there is a sub limit against the book debts that can be shown under brackets. Ultimately,
this amount will appear in the MPBF statement too;

2 Channel Finance: Many companies work for other corporate like Garment distributers sell
the goods of branded companies or dealers of cars sell the cars of various car
manufacturers. These corporate provide channel financing through their Bankers to their
dealers/ distributors on the corporate guarantees of such corporate. Thus in the books of
the dealers/ distributors the channel financing amount is unsecured as the Banks/ FI do not
have even the charge on such stocks/ debtors. Thus the charge is created by the Banks of
the dealers/ distributors to whom the limits are being provided. Though the channel
finance is unsecured, yet it should be shown under current liability in the head namely
short term borrowings from others. A few professionals show the same as unsecured
loan as it is a long term finance and in the Balance Sheet of the borrower too, this is
shown under unsecured loan, yet the same should be categorized as current liability in
CMA since this finance is ultimately supporting and financing the current assets;

3 Sundry Creditors against goods:

If the creditors against goods are shown on a lower level, this will amount to improved
current ratio and net working capital and also better drawing power. Yet it has to be in
consonance with the past track record/ industry norms/ past financial results/ holding
period. To increase the limits sometimes level of creditors is reduced, which has to be
justified;

One important aspect is to deal with a case where the non fund based limits for LC
against purchase of raw material or Bank Guarantee for the same are also sought from the
Bank. In such a case, the creditors equivalent to the amount of LC/ BG should also be
shown. Though this may reduce the current ratio and NWC, yet the Banks prefer to show
the same as creditors to the full extent of LC/ BG limits even if the borrower does not use
the same on perennial basis;

Another case is when the borrower discounts the sales bills against LC. Though the
Banks are discounting the same and are providing finance, yet the same may not be
shown as current liability as on the other hand, the sundry debtors covered under LC can

46
 also be spared from being shown as current assets. This will improve the current ratio,
NWC and TOL/ TNW too;

4 Income Tax Provision:

Provision for income tax can be net off with the advance income tax deposited. This will
improve the current ratio/ NWC and TOL/ TNW too;

5 Term Loan Instalments:

Where the borrower has taken some term loan from the Bank/ FI, there are certain Banks
who insist to show the term loan instalments which are payable in the next FISCAL as
current liability whereas there are other Banks too who allow the borrower to show full
amount as term loan in the long term liability. In the former case the limit is affected
adversely as the current ratio and NWC both decline. In the latter case, the current ratio
and the eligibility of the higher amount improve;

6 Other Current Liabilities:

The other current liabilities may be towards sales tax liability or any other outstanding
expenses. Any statutory dues which are overdue for more than six months from the date of
the end of the financial year, shall compel the Bank to reduce the rating of the borrower to
the next lower level which will adversely affect the eligibility of the working capital
finance;

Term Liabilities

1 Term Loan:
Where the Bank does not insist to show the term loan instalments in current liabilities,
full amount of term loan can be shown under this head. Car loans/ other private loans like
LAP etc. can be shown under the category of deferred payment credits;

2 Unsecured Loans:
Loans taken from the promoter directors/ partners of the firm whether interest free or interest
bearing can be shown under this head. Normally, the level has to be static or should be increasing
but should not be decreasing unless with the permission of the Bank. Sometimes this amount is
treated as quasi equity;

Net Worth

47
 1 Equity Share Capital:
Equity share capital should be shown under this head. Share application money cannot be
shown as equity. Instead the share application money is treated as current liability if the
same is over and above the authorized share capital, which will adversely affect all ratios
including current ratio;

2 Preference Share Capital:

Preference Shares to be redeemed within one year should be treated as current liability
and beyond that, should be categorized as long term liability;

3 General Reserves/ Share Premium:

Sometimes to save on the cost of ROC fee for increase in authorized share capital, the
equity shares are issued on premium. This amount can be shown as general reserve;

4 Profit & Loss Account:

This amount will reflect the profit earned during the year. This amount sometimes is
shown under General Reserve too;

Current Assets

1. Cash & Bank Balance:

Cash & Bank Balance should be shown at the lowest level as the Bank will not finance
these items. The Bank shall finance against the drawing power which is based on stocks
and debtors less creditors but of course the balance of cash and bank shall form part of
the current assets and will govern the MPBF, yet higher cash and bank balance may not
serve the purpose as even if this will improve the current ratio but will not help the
drawing power;

2. Fixed Deposits:
There is serious disagreement with a few Banks for treatment of fixed deposits which are
kept by them against the margin for LC/ BG. There are Bank who consider the same as
non current assets whereas a few Banks allow the same to be categorized under the
current assets. This affects the current ratio and MPBF both;

3. Receivables (other than discounted under LC):

Book debts other than discounted against LC can be shown as current assets. The debtors
beyond six months are normally not considered as current assets. It holds true also as
drawing power will not be available on the debts beyond six months. In case of export
receivables maximum holding allowed in 180 days. The holding period has to be in

48
 consonance with the past holding period or as per industry norms. A long cycle will
depend on the nature of the industry; The holding period for jewellery and carpet cannot
be treated on the same footing;

Margin on Receivables: Normally Banks provide 35% to 50% margin on the receivables
while calculating the drawing power, whereas for CMA margin at 25% is provided. Thus
even if MPBF is higher, the drawing power is lower.

4. Export Receivables:
As mentioned above, export receivables are given maximum period of 180 days. On such
receivables no margins are prescribed, yet 100% recovery is expected in such cases as
such matters are closely kept under surveillance of RBI;

5. Inventory:
- Raw Material: The holding should be as per the nature of the trade/ product and past
records. If the material is imported, the holding period could be more as to avoid the
case of frequent import ordeals. However, in case of domestic purchases, the level has
to be realistic. Any increase or decrease in its level will not affect the profitability
unlike FG/ SIP;

- Stock in Process: Normally Banks confuse with the time of manufacturing with the
amount involved in the stock in process. Whereas the fact is, it is the calculation of
the level of stock vis a vis cost of production. Any increase/ decrease in its level shall
affect the profitability;

- Finished Goods:
It is the amount stuck up in Finished Goods at any point of time. Any increase/
decrease in its level shall affect the profitability. To justify the holding period of Book
Debts/ RM/FG/ SIP the stock levels can be corroborated with the amount of the same
as of the last date of the month of the past one year;

The projected/ estimated level of RM/ WIP/FG/ Debtors can be justified with the holding
levels at the month end for the past 12 months;

6. Other Current Assets:

The amount under this head cannot be abnormally high. It has to be explained. Like cash/
Bank deposits the same will improve the MPBF but not the drawing power;

7. Gross Block:
In case there are more profits as per projections where the proposal is composite for term
loan and working capital, such profits can be shown as invested in the gross block for the
next year instead of showing the same in cash and bank balance;

49
 8. Other Non Current Assets:
Investment made/ loans and advances given to the associate concerns should be shown as
noncurrent assets. Similarly security deposits given to RIICO, JVVNL, sales tax
department should also be categorized as noncurrent assets;

9. Net Working Capital:

NWC should always be on the increasing trend. Any decline in the NWC from the past
years NWC will adversely impact the eligibility for renewal/enhancement in the working
capital limits;

NWC can be increased by inducting long term sources viz. showing more profits in the
profitability statement which will accordingly attract income tax also. Other means are to
increase equity/ unsecured loans;

10. Current Ratio:

Minimum current ratio is 1.33 which is expected by the Banks. Where it is less than 1.33
sometimes, deviation is sought by the sanctioning authority from the one step up
authority in case of takeover. In case of trading concerns, a few Banks are complacent
with 1.20 current ratio too;

The current ratio if it is more than 1.33 can decline in the next year which is not a
disqualification but in any case, it should not be estimated/ projected below 1.33;

11. TOL/ TNW:

Preferably it should not exceed 3;

12. Maximum Permissible Finance:

There are two methods of lending. Method I is used for SMEs where the financing is
below Rs.5.00crore, it is one of the nationalised Banks. In another Bank, irrespective of
the size of the working capital assistance, I method is used. Largely second method is
used where 25% margin is considered on entire current assets whereas in first method,
margin is considered on net working capital that is Total Current Assets less Total Current
Liabilities;

In case of export receivables, margins are not considered on book debts;

13. Drawing Power:

50
 Drawing power is calculated as under largely by all the Banks:
A.
Stocks
Less: Creditors against Goods/ creditors against LC
Net Stocks
Less: Margin
Stocks for DP purpose

B.
Add: Book Debts
(up to 60/90/180 days as per sanction)
Less: Margin at 35% to 50%
Debtors for DP purpose

A+B: Drawing Power

However in some Banks, creditors are set off against the Debtors. Thus benefit of margin
is given to the borrower;

14. Drawing Power as per CMA:

Sometimes, while preparing the CMA, drawing power is not calculated on the basis of
the projected stocks/ debtors and creditors. Thus even if the MPBF is higher, drawing
power as per CMA is below the MPBF. The care should be taken while finalizing the
CMA data;

Case study- JMC PROJECTS( infra division)Ltd. CMA preparation

Preparation of credit monitoring assessment sheet of JMC PROJECTS( infra division) based on
the corporate profile and company statement of the same.
Calculations of financial ratios of the company based on last 3 years financial statement of the
company with the help of CMA sheet.
Interpreting the various P&L & balance sheet heads for the purpose of CMA preparation.

Financial model
Interpretation of all the financial ratios of the project model.
Impact of input variables on the outcome of the project on the basis of deciding ratios i.e.
PIRR,EIRR,NPV.

51
 Working on the flow of the data in the financial model by interpreting different sheets of the
model.
Sensitivity analysis on different variables.
Sponsors shortfall or EPC Retention money- The money which is been infused in the project in
the initial year where the DSCR Min is below the accepted level and after this will be released
when sufficient enough cash flows starts coming from the project.
Inflation and its impact- Inflation as a macroeconomic variable and its effect on revenues and in
turn the DSCR, without changing any other bid conditions.

PIRR,EIRR,NPV
NPV- Looking at the inferences by calculating NPV of the cash flows of the project and equity.
IRR- Looking at the PIRR & EIRR cash flows and seeing on what variables this is increasing or
decreasing and how much sensitive are these.
PIRR- As this is not the leveraged return so it is most sensitive on capital costs i.e. EPC and other
costs. The inflow in this case is grant, internal accruals and equity on premature termination.
EIRR- As this is the leveraged return which also involves repayments and cash for DSRA fund so
this is sensitive to debt & equity and all the revenue streams. In this case revenue from toll,
interest on DSRA and MMRA funds and sponsors shortfall equity if any are the source of inflow.

Banking products
1 Letter of credit
2 Discounting and factoring concept
3 Leasing and lease rentals discounting
4 Bank guarantee
5 Cash credit and overdraft

Letter of credit:
1 This is a facility which is been provided by the banks in accordance with the borrower
under term loan.

52
 2 This is been provided as the sublimit of the rupee term loan with letter of credit limit.
3 There is a tenor of letter of credit. e.g. 3 months L.C etc.
4 Function: Letter of credit is a paper issued by the issuing bank for which L.C
commission/charges is been paid to the bank by the borrower. Later this L.C can be
issued to the party(contractor) who later can discount the L.C and can take the amount by
paying the charges. Later the borrower can furnish the loan amount and can save on
interest cost.

Cash credit & C.C limit:

This is the loan given by the banks on the companys current account for meeting the
working capital gap. The collateral provided by the company is residential or commercial
property. Interest is charged on the utilized amount. Cash credit limit of a companys is
been decided by the account holding bank which is been dependent upon the business
cycle of the client, working capital gap and drawing power of the client. The drawing
power is determined, based on stock and statement submitted by borrower at monthly
intervals.

Overdraft funding:
short term funding but repayment been made on demand basis. Interest been charged on
amount overdrawn. The rate applicable is above the banks base rate.

Discounting and factoring concept:

Concept: If a company provides goods on credit and the debtors turnover of the company is
say 30-120 days, the result is cash flows difficulties for the company which is blocked due to the
debtors inflow. So in this case, company has to take working capital loans which increases its
interest cost and also disturbs its debt to equity ratio.
Need- the current need for the company therefore is an flexible funding solutions to increase its
cash flows so as to improve financials of the company.
Solution: 1) non recourse factoring agreement
2) recourse maturity factoring agreement
3) modified recourse factoring
What exactly this is all about: there comes the concept of factoring or discounting which is
getting funding for the company on its receivables.

53
 Factors governing discounting: a) financial strength and credit worthiness of the debtors.
b) on the basis of the above the company can get 70%-90% of the funding of the invoices or
receivables.
Fees for discounting: there is a certain fees which has to be paid by the company for the
discounting purpose which will be levied on the invoices amount. Generally 4.5%-5% of the
amount, which has to be paid to the bank or institution doing the factoring.
The certain percentage amount will be funded upfront and the rest after 45 days after deducting
the factoring fees amount.

Bank guarantee:
Bank guarantee is been used as a guarantee against certain amount which has to be provided, in
our case suppose performance security to be provided by the concessionaire to the authority.
Suppose concessionaire wish a B.G of 10 crore from the bank, then the borrower has to pay B.G
commission of 0.50%-1% of the amount. The bank keeps security in form of margin money (as a
% of B.G amount) which depends upon bank to bank. Generally those banks provided B.G who
holds the current account of the company, upon encashment of the B.G banks covers the amount
from the current account.

Leasing and lease rentals discounting:

Lease Rental Discounting (LRD) is a term loan offered against rental receipts derived from lease
contracts with corporate tenants. The loan is provided to the lesser based on the discounted value
of the rentals and the underlying property value.

Project finance:
is the long-term financing of infrastructure and industrial projects based upon the projected cash
flows of the project rather than the balance sheets of its sponsors. Usually, a project financing
structure involves a number of equity investors, known as 'sponsors', as well as a 'syndicate'
of banks or other lending institutions that provide loans to the operation. They are most
commonly non-recourse loans, which are secured by the project assets and paid entirely from
project cash flow, rather than from the general assets or creditworthiness of the project sponsors,
a decision in part supported by financial modeling. The financing is typically secured by all of
the project assets, including the revenue-producing contracts. Project lenders are given alien on
all of these assets and are able to assume control of a project if the project company has
difficulties complying with the loan terms.

54
Parties to a project financing:
There are several parties in a project financing depending on the type and the scale of a project.
The most usual parties to a project financing are;
1. Project company
2. Sponsor
3. Lenders
4. Financial Adviser
5. Technical Adviser
6. Lawyer
7. Debt financiers
8. Equity Investors
9. Regulatory agencies

Project development:
Project development is the process of preparing a new project for commercial operations. The process can
be divided into three distinct phases:
Pre-bid stage
Contract negotiation stage
Money-raising stage
Financial model:
A financial model is constructed by the sponsor as a tool to conduct negotiations with the sponsor
and prepare a project appraisal report. It is usually a computer spreadsheet that processes a
comprehensive list of input assumptions and provides outputs that reflect the anticipated real life
interaction between data and calculated values for a particular project.

Operation and maintenance agreement:

An operation and maintenance (O&M) agreement is an agreement between the project company and the
operator.
The project company delegates the operation, maintenance and often performance management of the
project to a reputable operator with expertise in the industry under the terms of the O&M agreement.
The operator could be one of the sponsors of the project company or third-party operator. In other cases
the project company may carry out by itself the operation and maintenance of the project and may
eventually arrange for the technical assistance of an experienced company under a technical assistance
agreement. Basic contents of an O&M contract are:
Definition of the service
Operator responsibility
Provision regarding the services rendered
Liquidated damages
Fee provisions

Concession Agreement:
An agreement between the project company and a public-sector entity (the contracting authority) is
called a concession deed. The concession agreement concedes the use of a government asset (such as a

55
plot of land or river crossing) to the project company for a specified period. A concession deed would be
found in most projects which involve government such as in infrastructure projects. The concession
agreement may be signed by a national/regional government, a municipality, or a special purpose entity
set up by the state to grant the concession. Examples of concession agreements include contracts for the
following:
A toll-road or tunnel for which the concession agreement giving a right to collect tolls/fares
from public or where payments are made by the contracting authority based on usage by the
public.
A transportation system (e.g., a railway / metro) for which the public pays fares to
a private company)
Utility projects where payments are made by a municipality or by end-users.
Ports and airports where payments are usually made by airlines or shipping companies.

Loan Agreement:
A loan agreement is made between the project company (borrower) and the lenders. Loan agreement
governs relationship between the lenders and the borrowers. It determines the basis on which the loan
can be drawn and repaid, and contains the usual provisions found in a corporate loan agreement. It also
contains the additional clauses to cover specific requirements of the project and project documents.

56
57
58
59
 Tools for financial analysis of the company.

RATIO ANALYSIS

Financial statement analysis is a study of accounting ratios between various items in

financial statements. Ratios are classified as profitability ratios, liquidity ratios, asset
utilization ratios, leverage ratios and valuation ratios based on the indications they
provide. Analysis of financial statements is an attempt to assess the efficiency and
performance of an enterprise. Thus, the analysis and interpretation of financial
statements is very essential to measure the efficiency, profitability, financial soundness
and future prospects of the business units.
This project report comprises the financial statement analysis through Ratio Analysis.

1. LIQUIDITY RATIOS :
A class of financial metrics that is used to determine a company's ability to pay off
its short-terms debts obligations. Generally, the higher the value of the ratio, the larger
the margin of safety that the company possesses to cover short-term debts.

Objective & Significance:

Some analysts will calculate only the sum of cash and equivalents divided by current
liabilities because they feel that they are the most liquid assets, and would be the most
likely to be used to cover short-term debts in an emergency.

i. Current ratio (Working Capital Ratio) :

The current ratio can give a sense of the efficiency of a company's operating cycle or its
ability to turn its product into cash.

2008-09 2009-2010 2010-2011 2011-12

Current Assets 59042.25 65928.7 94520.92 97867.91
Current Liabilities 41000.11 45664.92 69841.03 69703.94
CURRENT RATIO 1.44 1.44 1.35 1.40

COMMENTS:

60
 ii. Acid-test ratio (Quick ratio) :
A stringent indicator that determines whether a firm has short-term assets to cover its
immediate liabilities without selling inventory.
iii. Net worth/owners equity ratio:

The net worth is also referred to as the book value of the company, also known as
shareholders or owners equity. This determines the value of the company, which
shows the amount of money invested in the company since its inception & retained
earnings.

iv. Operating margin ratios:

This is one of the most important ratios which show the amount of revenue left over
after meeting the operating expenses of the company. This also shows the capability
of the company to cover the interest expenses. The higher the operating profit margin
the better for the company for repaying its interest obligations. Moreover, this margin
differs from industry to industry. This ratio may be used by the banks or other lender
institution for checking whether the company can fulfill the interest liability.

V. Net profit margin:

The profit margin tells you how much a company makes profit over the year after
paying all the taxes, interests and other expenses, for the companys future dividends
and reserves. Profit margin ranging from 4-5% is considered decent in construction
industry.

Vi. Return on assets

The return on assets shows the percentage of profit over the assets employed. This
also shows the management of the company, how it is managing the assets for
generating the profit out of it. In this case the returns are declining slowly over the
period which could be a cause of concern.

Vii. Return on capital employed:

It basically can be used to show how much a business is gaining for its assets,
or how much it is losing for its liabilities. A business which owns lots of fixed assets
but has little profit will have a smaller ROCE to a business which owns little fixed but
makes the profit.

61
viii. Return on equity:

This is also known as return on net worth. Return on equity measures a company's
profitability by showing how much profit a company generates with the money
shareholders have invested. If the ROE is higher than the company's return on assets,
may be a sign that management is using leverage to increase profits and profit margins.

ix. Proprietors or equity ratio:

There should be a minimum return on investment to shareholders. Bankers and

financers will not be ready to finance if it does not show adequate profit. The best way
to measure this ratio is to compare it with previous years.

x. Asset turnover ratio:

The asset turnover ratio shows the companys capability of converting assets into
generating income.

xi. Interest coverage ratio:

A ratio used to determine how easily a company can pay interest on outstanding debt. If
the ratio is below 1 then it shows that the company is not generating enough revenue to
serve its debt obligations. In this case the company is having sufficient revenue so is to
serve the interest.

xii. Solvency ratio:

Ratios used to measure a company's ability to meet long-term obligations. It provides a

measurement of how likely a company will be to continue meeting its debt obligations.
This ratio varies industry wise, generally more than 20% is considered as a healthy ratio.

xiii. Earnings per share:

Earnings per share serves as an indicator of a company's profitability. The portion of a

company's profit allocated to each outstanding share of common stock.

xiv. Debtors turnover ratio:

The debtors turnover ratios of a company defines the time its debtors take for the
payments. Debtors turnover ratios are in days. Suppose 45 days, which means debtors of
the company take 45 days for the payment.

xv. Creditors turnover ratios:

The creditors turnover ratios of a company defines the time a company takes to make its
payment to the creditors. Creditors turnover ratios are also in days. Suppose 30 days ,
which means company takes 30 days for the payment to its creditors.

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63
 Terminologies regarding term sheet of the Banks

Basic terms of a loan agreement inc lude the following provisions.

General conditions precedent
Conditions precedent to each drawdown
Availability period, during which the borrower is obliged to pay a commitment fee
Drawdown mechanics
An interest clause, charged at a margin over base rate
A repayment clause
Financial covenants - calculation of key project metrics / ratios and covenants
Dividend restrictions
Representations and warranties
The illegality clause
Term Sheet:

Agreement between the borrower and the lender for the cost, provision and repayment of debt.
The term sheet outlines the key terms and conditions of the financing. The term sheet
provides the basis for the lead arrangers to complete the credit approval to underwrite the
debt, usually by signing the agreed term sheet. Generally the final term sheet is attached to
the mandate letter and is used by the lead arrangers to syndicate the debt. The commitment
by the lenders is usually subject to further detailed due diligence and negotiation of project
agreements and finance documents including the security documents. The next phase in the
financing is the negotiation of finance documents and the term sheet will eventually be
replaced by the definitive finance documents when the project reaches financial close.

Applicable interest rate:

This is the interest rate which is been quoted by the banks on the debt amount as rate of interest.

Applicable interest rate=(Base rate of the bank + Spread).

Base rate of the bank:

The base rate is that rate of the bank on which it lends money. This is floating rate which keeps
on changing every year, can be month, depends on RBI monetary policies or other conditions
such as credit rating of borrower.

Spread:

This is applicable over and above the base rate of the bank and is subject to change or reset on
COD and every year thereafter.

64
Processing fees:

The processing fee is the one time fee payable by the borrower to the lender for the loan
processing. The service tax is to be paid over and above the processing fees.

Commitment fees:

The borrower has to pay the commitment fees + applicable taxes for the drawings not made as
per the quarterly drawdown schedule.

Liquidated damages:

The borrower has to pay additional interest of 2% over and above the applicable interest rate for
the period of default and the defaulted amount.

Novation/assignment:

The lenders have the right to down sell the loan to other lenders and the borrowers have to agree
on these terms.

Intercreditor agreement:

Is agreed between the main creditors of the project company. This is the agreement
between
the main creditors in connection with the project financing. The main creditors often
enter into the Intercreditor Agreement to govern the common terms and
relationships among the lenders in respect of the borrowers obligations.

Intercreditor agreement will specify provisions including the following:

Common terms
Order of drawdown
Cashflow waterfall
Limitation on ability of creditors to vary their rights
Voting rights
Notification of defaults
Order of applying the proceeds of debt recovery
If there is a mezzanine funding component, the terms of subordination and other principles to
apply as between
the senior debt providers and the mezzanine debt providers.

65
The financiers will usually require that a direct relationship between itself and the counterparty
to that contract be established which is achieved through the use of a tripartite deed (sometimes
called a consent deed, direct agreement or side agreement). The tripartite deed sets out the
circumstances in which the financiers may step in under the project contracts in order to
remedy any default.

A tripartite deed would normally contain the following provision.

Acknowledgement of security: confirmation by the contractor or relevant party that it consents to

the financier taking security over the relevant project contracts.

Notice of default:

obligation on the relevant project counterparty to notify the lenders directly of defaults by the
project company under the relevant contract.

Step-in rights and extended periods:

to ensure that the lenders will have sufficient notice /period to enable it to remedy any breach by
the borrower.

Receivership:

acknowledgement by the relevant party regarding the appointment of a receiver by the lenders
under the relevant contract and that the receiver may continue the borrowers performance under
the contract.

Sale of asset:

terms and conditions upon which the lenders may transfer the borrowers entitlements under the
relevant contract.

Tripartite deed:

can give rise to difficult issues for negotiation but is a critical document in project financing.

EPC:

The most common project finance construction contract is the engineering, procurement and
construction (EPC) contract. An EPC contract generally provides for the obligation of the
contractor to build and deliver the project facilities on a turnkey basis, i.e., at a certain pre-
determined fixed price, by a certain date, in accordance with certain specifications, and with
certain performance warranties. EPC contract is quite complicated in terms of legal issue,
therefore the project company the EPC contractor shall have enough experiences and knowledge
about the nature of project to avoid their faults and minimize the risks during the contract
execution.

66
An EPC contract differs from a turnkey contract in that, under a turnkey contract, all aspects of
construction are included from design to engineering, procurement and construction whereas in
the EPC contract the design aspect is not included. Other alternative forms of construction
contract are project management approach and alliance contracting.

Basic contents of an EPC contract are:

Description of the project

Price
Payment
Completion date
Completion guarantee and liquidated damages (LDs):
Performance guarantee and LDs
Cap under LDs.

The typical project finance documentation can be reconducted to four main types:

Shareholder/sponsor documents
Project documents
Finance documents
Other project documents

A financial model:

is constructed by the sponsor as a tool to conduct negotiations with the sponsor and prepare a
project appraisal report. It is usually a computer spreadsheet that processes a comprehensive list
of input assumptions and provides outputs that reflect the anticipated real life interaction
between data and calculated values for a particular project.
Properly designed, the financial model is capable of sensitivity analysis, i.e. calculating new
outputs based on a range of data variations.

Project development:

is the process of preparing a new project for commercial operations. The process can be divided
into three distinct phases:

Pre-bid stage
Contract negotiation stage
Money-raising stage

67
There are several parties in a project financing depending on the type and the scale of a project.
The most usual parties to a project financing are;

1. Project company
2. Sponsor
3. Lenders
4. Financial Adviser
5. Technical Adviser
6. Lawyer
7. Debt financiers
8. Equity Investors
9. Regulatory agencies
10.Multilateral Agencies
11.Host government / grantor.

Analysis of financial indicators

STANDALONE PERFORMANCE OF JMC PROJECTS (INDIA) LTD.
31 march 2009
31 march 2010
31 march 2011
31march 2012

CONSOLIDATED PERFORMANCE OF JMC PROJECTS (INDIA) LTD.

31 march 2009
31 march 2010
31march 2011
31march 2012

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69
70
71
72
73
74
 RESEARCH METHODOLOGY:

It is basically based on the description of working structure of company valuation & project
financing system instead of data collection and analysis because as per companys policy. This
data is sensitive and cant be reproduced. Since my project was evaluation of credit monitoring
but there were some obstacle to share confidential data of credit management.

It is based on primary and secondary data analysis.

It is a descriptive analysis.

RESEARCH DESIGN:

The descriptive design technique is used since we want to find out the employees views about
the company position.
The reason for using this technique is that it gives a good overall picture of the position at a
given time. It can cover many variables of interest, and is not affected by the movement of
elements in the sample.

DATA REQUIREMENTS:

We have used both primary and secondary data in our survey. Primary data provides first hand,
reliable and current information as compared to secondary data. It involves collecting
information specifically for the study on hand, from actual sources, in this case the source are the
candidates visiting JMC PROJECTS(INDIA)LTD., and the HR people we personally
interviewed. Secondary data has been collected through management books, newspapers,
journals, annual reports and the internet.

TOOLS AND TECHNIQUES:

Ratio Analysis
Comparative statements analysis
The data, which was collected, was summarized and tabulated on MS-excel for further
analysis.

75
 DATA ANALYSIS

Turnover in Mn. US $ 468

412
284 284 301
200

Net Worth in Mn. US $

81 82 80
54
36.9 43.4

2007-082008-092009-102010-112011-122012-13

76
 Net profit in Mn US $

11.56
11.31
11.19
10.36
10.24

3.4

2007-08

JMCs Market Capitalization INR 2070 Mn / US $

40 Mn

J M C PROJECTS:

JMC Projects (India) Ltd

77
 ROAD
WORKS

Highways
Completed over 1000 Lane Km of Highways and counting is on
4 Design Build Finance Operate Transfer DBFOT Projects Road
Portfolios amounting to INR 22 Bn (US $ 474 Mn) of length over
1030 Lane KM

JMC Projects (India) Ltd.

General Construction Experience Infrastructure Projects (1 of 5)

78
 Salient Features (All quantities are in
Cum.)

Earthwork 1,744,583.74

Granular Sub Base (GSB) 206,385.21

Wet Mix Macadam (WMM) 116,816.67

Dense Bituminous Macadam (DBM)

39,609.81

Concreting - 33,806.89

Bituminous Concrete 10,248.13

Completed Road Project

Name of the Project - Four laning and

strengthening of the existing two lane National
Highway No. 45-B from Trichy Bypass end to
Tovarankuchi (from Km. 0 to Km. 60.95) in Tamil
Nadu

(Contract Package No. VII A)

Name of Client National Highways Authority of

India

Contract Value INR 2637.00 Mn. / US $ 60.22

JMC Projects (India) Ltd
Mn.

Completed Road Project Start Date October 2005 Completion Date

General Construction Experience Infrastructure Projects (2 of 5)

Name of the Project - Four laning and
strengthening of the existing two lane
National Highway No. 45-B from
Tovarankuchi to Madurai (from Km.
60.95 to Km. 124.84) in Tamil Nadu

(Contract Package No. VII B)

Name of Client National Highways 79

Authority of India

Contract Value INR 3084.30 Mn. /

 Salient Features (All quantities are in
Cum.)

Earthwork 2,787,674.84

Granular Sub Base (GSB) 217,754.01

Wet Mix Macadam (WMM) 126,192.05

Dense Bituminous Macadam (DBM)

JMC Projects (India) Ltd

General Construction Experience Infrastructure Projects (3 of 5)

Completed Road Projects

Name of the Project - Two laning of

Mandleshwar Kasrawad - Khargone
Road State Highway in Madhya Pradesh

Name of Client Madhya Pradesh Road 80

Development Corporation
 Salient Features (All quantities are in Cum.)

Earthwork 1,015,350.03

Granular Sub Base (GSB) 201,329.68

Wet Mix Macadam (WMM) 151,092.75

JMC Projects (India)Dense

Ltd Bituminous Macadam (DBM) 50,867.61

Concreting - 25,942.35
General Construction Experience Infrastructure Projects (4 of 5)
Bituminous Concrete 25,048.66

Completed Road Projects

Name of the Project - Rehabilitation and

Strengthening of Badnawar Thandla Section of SH-
18 (Project Road No 21) Package 8
81
Name of Client Madhya Pradesh Road Development
Corporation
 Salient Features (All quantities are in Cum.)

Earthwork 470,377

Granular Sub Base (GSB) 146,330

Wet Mix Macadam (WMM) 108,474

Dense Bituminous Macadam (DBM) 35,669

Concreting - 2,632

JMC Projects (India) Ltd

General Construction Experience Infrastructure Projects (5 of 5)

Completed Road Projects

82

Name of the Project Four laning and Stregthening of Ahmedabad Mehsana Road SH-41 (22.9 Kms)
 Salient Features

Widening of existing road & construction of additional lanes to make it Four Lane
Road for the length of 22.90 KM including ROBs, Bridges and Culverts

Completed Road Projects

Name of the Project Strengthening of SH-5 from Godhra Shamlaji

Name of Client Ircon International Ltd

JMC Projects (India) Ltd

(PPP BOT Road) (1 of 4)
Ongoing Infrastructure Projects

Four laning of Rohtak-Bawal Road section of NH-71 on D B F O T

82.50 Km between Rohtak and Bawal in the state of Haryana

Name of Client National Highways Authority of India

Contract Value INR 8160.00 Mn. / US $ 177.37 Mn.

Concession Period 28 Years

83
Start Date Feb 2010
 JMC Projects (India) Ltd
(PPP BOT Road) (2 of 4)
Ongoing Infrastructure Projects

End of project Road (km 79/00)

ALIGARH
Two laning of Agra-Aligarh Road section of NH-93 on D B F O T

81.400 KM, Between Agra and Aligarh via Hathras in the state of Uttar Pradesh

Name of Client National Highways Authority of India

Contract Value INR 2500.00 Mn. / US $ 56.36 Mn.

Concession Period 15 Years

Start of Project Road (km 0/000)
Start Date Nov 2010 84
AGRA
 JMC Projects (India) Ltd

(PPP BOT Road) (3 of 4)

Ongoing Infrastructure Projects

Four Laning of Nagpur-Wainganga Bridge Section of NH-6 on D B F O T

Highway length 45.43 KM, Nagpur to Bhandara in Maharashtra State

Name of Client National Highways Authority of India

Contract Value INR 4841.90 Mn. / US $ 108.50 Mn.

Concession Period 18 Years

End Point
Start Date May 2011
Start Point

85
 JMC Projects (India) Ltd
(PPP BOT Road) (4 of 4)
Ongoing Infrastructure Projects
Four Laning of NH-7 Section from End of Rewa Bypass to Border of MP and UP, near
Hanumana, in the State of Madhya Pradesh on D B F O T

89.30 KM, stretch of NH 7, connecting Varanasi in Uttar Pradesh to Kanyakumari in

Tamil Nadu, traversing through the states of UP, MP, Maharashtra, AP and Tamil Nadu

Name of Client Madhya Pradesh Road Development Corporation

Contract Value INR 6708.20 Mn. / US $ 132.06 Mn.

Concession Period 30 Years

Start Date Dec 2011 86

 JMC Projects (India) Ltd

Recently Awarded Infrastructure Projects - Overseas

Construction Works of Mombasa - Nairobi - Addis Ababa Road Corridor Phase II

109.33 KM, 2 laning, connecting Mega to Moyale in Ethiopia

Name of Client Ethiopian Roads Authority

Contract Value ETB 1146.90 Mn. / INR 3285.54 Mn. / US $ 61.14 Mn.

Contract Sign 7th March 2013

87
 Start of Project

End of Project

JMC Projects (India) Ltd

BRIDGE WORKS 88
Urban Infra (Elevated Road Structures)
Completed 4 / 6 Lane Elevated Road Structures of length over 6 Km

JMC Projects (India) Ltd

General Construction Experience Infrastructure Projects (1 of 6)

Completed Flyover / Bridge Projects

Name of the Project Design & Construction of Flyover including approaches and construction of
slip roads on both sides at Bhosari on Pune Nasik highway

Name of Client Pimpri Chinchwad Municipal Corporation

Contract Value INR 868.50 Mn. / US $ 20.28 Mn.

Start Date August 2008 Completion Date April 2011

89
 JMC

Projects (India) Ltd

General Construction Experience Infrastructure Projects (2 of 6)

Completed Flyover / Bridge Projects

Name of the Project Construction of flyover at Santacruz Airport Junction near Centaur Hotel on
Western Express Highwway, Mumbai, Maharashtra

Name of Client Maharashtra State Road Development Corporation

Contract Value INR 440.00 Mn. / US $ 9.56 Mn.

Start Date October 2006 Completion Date January 2009

90
 JMC Projects (India) Ltd

General Construction Experience Infrastructure Projects (3 of 6)

Completed Flyover / Bridge Projects

Name of the Project Construction of Flyover / Elevated Road opposite Panvel Bus depot on Old
Mumbai Pune national Highway (NH-4)

Name of Client Maharashtra State Road Development Corporation

Contract Value INR 1850.00 Mn. / US $ 38.22 Mn.

Start Date August 2009 Completion Date December 2012

91
 JMC Projects (India) Ltd

General Construction Experience Infrastructure Projects (4 of 6)

Completed Flyover / Bridge Projects

Name of the Project Design and Construction of flyover at Greenlands Junction, Hyderabad

Name of Client Municipal Corporation of Hyderabad

Contract Value INR 135.50 Mn. / US $ 3.09 Mn.

Start Date October 2005 Completion Date December 2008

92
 JMC Projects (India) Ltd

General Construction Experience Infrastructure Projects (5 of 6)

Completed Flyover / Bridge Projects

Name of the Project Construction of Flyover Bridge including Approaches, either side Slip Roads,
Near Junction of Tata Motors, Sector 11,12,16, Pune

Name of Client Pimpri Chinchwad New Town Development Authority

Contract Value INR 320.49 Mn. / US $ 7.02 Mn.

93
 JMC Projects (India) Ltd

General Construction Experience Infrastructure Projects (6 of 6)

Ongoing Flyover / Bridge Projects

Name of the Project Design and Construction of two lanes flyover Vanjarpatti, Bhiwandi from Ch
0/200 to 0/950 M, Bhiwandi

Name of Client Mumbai Metropolitan Region Development Authority

Contract Value INR 252.00 Mn. / US $ 5.00 Mn.

Start Date March 2012

94
JMC Projects (India) Ltd

95
 METRO & ELEVATED
Urban Infra (Metros)

Completed over 7 Km of Metro Rail including 12 Elevated Metro Stations

Executing Bangalore Metro and Delhi Metro over 15 Km and 11 Elevated Metro Stations

JMC Projects (India) Ltd

General Construction Experience Other Infrastructure Projects (1 of 2)

CLIENT DELHI METRO RAIL CORPORATION

COMPLETED

BC 12, New Ashok Nagar Noida Corridor, Part Design and

Construction of Segmental Viaduct and Structural work of 3 elevated
stations
Noida Sector 15, Noida Sector 16, Noida Sector 18

BC 13, New Ashok Nagar Noida Corridor Phase II, Part Design
and Construction of Segmental Viaduct and Structural work of 3
elevated stations
Botanical Garden, Golf Course, Noida City Centre

Civil Work for the Construction of Six Elevated Stations on

Barakhamba Road Dwarka Section of Line No. 3 Under Contract
3C42A-B 96
 JMC Projects (India) Ltd

ONGOING

CLIENT DELHI METRO RAIL CORPORATION

CC 12, Design and Construction of Elevated Viaduct and 6 Elevated Stations,

including architectural finishing works of stations from Chainage 46200.863 to

CLIENT BANGALORE METRO RAIL CORPORATION

Reach 4a Construction of Elevated structure (Viaduct) of length 3.91 Km

from RV Road Station to Puttenhalli Cross and Construction of 3 Nos.
Elevated Metro Stations in the extension on South side of N-S Corridor
Banashankari, JP Nagar, Puttenhalli

Reach 3b Construction of Elevated structure (Viaduct) of length 2.50 Km

from Peenya Village to Hessarghatta cross and Construction of 3 Nos.
Elevated Metro Stations in the extension on North side of N-S Corridor
Jalahalli, Dasarahalli, Hessarghatta

97
 JMC Projects (India) Ltd

FINANCIAL DETAILS OF COMPLETED METRO & ELEVATED STATION WORKS

98
 DMRC Completed

JMC Projects (India) Ltd

WATER SUPPLY AND SANITATION WORKS

Water and Environment

Commissioned over 300 Km of Water and Sewerage Pipeline

Over 220 KM of Water Pipeline along with 69 MLD capacity Water Treatment
Plant and Intake well in progress

99
 JMC Projects (India) Ltd

Water & Waste Water Supply Network

Completed INR 1.70 Bn (US $ 41.82 Mn) water supply transmission main
project for Indore Municipal Corporation, India

7.5 Km fabrication and laying 1.5 m dia. MS pipeline for interplant piping
works for JSW Bellary, India

Completed Water supply distribution network of DI pipeline and Sewerage

Network for Bhopal Municipal Corporation, India INR 384.80 Mn (US $
9.60 Mn)

Completed Storm Water Drainage System for Ahmedabad Municipal

Corporation, India INR 495.90 Mn (US $ 12 Mn)

Executing Complete water Supply System of 69 MLD capacity including Intake

structure, Treatment Plant, Distribution Network to House Connections for
Nadiad City in Gujarat, India

Have vast experience in executing DBFOT projects in Highways which will

help to venture in water sector on DBFOT basis

100
 JMC Projects (India) Ltd

De-coiling of Plates for IMC Water supply Hydraulic Testing system at IMC Indore
project

MS Pipe of Dia 1800 mm Jointing for Laying of Pipes through crane for
IMC Indore Pipe line project IMC Water supply project, Indore

101
 JMC Projects (India) Ltd

MS Pipe Laying at Indore Pipeline Project

Break Pressure Tank Work at Indore Pipe line Project

102
 JMC Projects (India) Ltd

RAILWAY WORKS
Railways

Over 300 Km of Railway Tracks including Stations, OHE and Signaling works

OTHER INFRASTRUCTURE PROJECTS

103
 Elevated Metro Stations, Bus Terminal, Heliport, Multilevel Car Parking, Sports Complex

Elevated Metro Central Mofussil Bus

Stations, DMRC, Delhi Terminal, Chennai

Heliport, Lonavala Multilevel Car Velodrome,

Parking, CG, New Delhi
Bangalore

104
Multipurpose A/c Indoor Stadium Thyagaraj Sports Complex Commonwealth Games
2010, New Delhi

Indira Gandhi Cycling Velodrome Commonwealth Games 2010, New Delhi

Awards & Citation

105
 Award for 500,000 accident free manhours on Duponts Savli II Project

Citation for Excellence in Construction in High Rise Buildings presented by

Association of Consulting Civil Engineers (India) for JMC House at Ahmedabad

Award for Perfection in Time & Quality presented by Ahmedabad Management

Association AMA.

Award for achieving 2 million safe manhours from GE Capital International Service

Citation for Exemplary Service from Prestige group for Intel India Design Centre

Safety Award for Exceptional Work Done by Bovis Lend Lease

Awards & Citation

106
107
 AWARD FOR INDIAS FASTEST GROWING
CONSTRUCTION COMPANY FOR YEAR 2010

Our Training Initiative

108
Our Learning Centre Kalpa-Vriksha at Gandhinagar, Gujarat
Findings of the Study

As we know that the ideal current ratio is 2:1. If we see the current ratio of the company for

109
 last three years,it has decreased from 1.44 to 1.40.
The higher the current ratio, the more capable the company is of paying its
obligations.While this shows the company is not in good financial health,
it does not necessarily mean that it will go bankrupt - as there are many ways to
access financing - but it is definitely not a good sign.

Liquidity of the company is very low in 2012,while this shows the co.
is not able to fulfill their short term liabilities,it does not convert
immediately into cash.

Solvency of the company is proportion of debt and equity is not good

in 2012. If a lot of debt is used to finance increased operations (high
debt to equity),the company could potentially generate more earnings.

In Turnover ratio ,it means that assets are not consuming in sales
co,holding too much stock and retain it in business . so that asset
turnover is very low in 2012 as compare to 2011.

Working capital is required to finance day to day operations of a firm.

There should be an optimum level of working capital. It should not be
too less or not too excess. In the company there is increase in working
capital. The increase in working capital arises because the company
has expanded its business.

SUGGESTIONS

After interpretation and analysis, I am giving certain suggestions to the company which I hope
may be helpful for the company.

The company should utilize its stock more efficiently.

110
 The company should pay attention towards the proper and efficient utilization of working
capital.

There are many ways to access financing from different source of finance like preference
share, equity shares, debentures, long term loans. trade credit, etc.

Company should focus on their operating activities,so that cash flow form net operating
activities will be increased.

LIMITATIONS OF THE STUDY

Certain limitations do creep in a research study due to constraints of the time, money and human
efforts, the present study is also not free from certain limitation, which were unavoidable.
Although all effort were taken to make the result of the work as accurate as possible as survey
but the survey have following constraints.

Constraint of time.

As per company rules many information was not disclosed as the manager are busy in their
daily schedule. It was not possible to spend more time in interaction with them.

111
 Respondents were reluctant to discover complete and correct information about themselves
and their organization.

Also, in spite of being aware of the fact that inflation is so certain a factor, it could not be
taken into consideration in the present study.

Study is purely based on private sector companies, we could not compare with the data and
information of efficiently managed public sector companies for testing of liquidity position
and its efficiency.

Most respondents were not maintaining proper knowledge of various services provided by their
company, so they were unable to provide exact information.

CONCLUSION

India is one of the fastest growing economies of the world. There has been a recent boom in
infrastructure and housing sector with a flurry of activities in infrastructure project like highway
roads, bridges, ports and furthermore the government would be spending on infrastructure over
the next 5 years to sustain the economic growth and modernization of the country.

So there is a huge demand of construction & projects. The company is already working on
ambitious expansion of projects of different parts of the country. This will require huge capital
investment & assets. In view of expansion of capacity by the company which requires a very
high capital investment by credit monitoring arrangement in place, the company is targeting for
zero outstanding.

112
 BIBLIOGRAPHY

http://economictimes.indiatimes.com/jmc-projects-india-
ltd/stocks/companyid-7374.cms

http://www.moneycontrol.com/india/stockpricequote/constructioncontractingc
ivil/jmcprojectsindia/JMC

jmcho@jmcprojects.com

mumbaibd@jmcprojects.com

infra@jmcprojects.com

hyd@jmcprojects.com

www.jmcprojects/annualreports/2012-13_AR.pdf

blore@jmcprojects.com

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