1

PROJECT REPORT

BORROWER

CHISELL EFFECTS

Total Loan Facility PCL Limit (interchangeable with FUBD) Of INR 70.00 Lacs

Prepared by: D.C. Garg & Co. Chartered Accountants 67, Navyug Market, Ghaziabad- 201001 98111-01273, 0120-4120601 Email: sgargca@gmail.com

PROJECT SNAPSHOT
Particulars
Borrower Constitution Proprietor Nature of Business Registered Office Factory Office Purpose of credit facility

Remarks
CHISELL EFFECTS Proprietorship Firm Smt. Shipra Priya Arora The firm is engaged in manufacturing & exporting leather and faux leather articles. B-10, Friends Colony (WEST), New Delhi. D 136, Sector-63, Noida. Packing Credit Limit (interchangeable with FUBD) for working capital finance.

Amount of Packing Credit limit (interchangeable with Rs. 70.00 lacs FUBD) Interest Rate Floating Rate linked to PLR Security Mortgage of stock & debtors as primary security Mortgage of the land in name of proprietor as collateral security. Smt. Shipra Priya Arora Smt. Kanti Mohan

Guarantors

CHISELL EFFECTS
INDEX CHAPTER-1 CHAPTER-2 CHAPTER-3 CHAPTER-4 CHAPTER-5 CHAPTET-6 CHAPTER-7 CHAPTER-8 CHAPTER-9 CHAPTER -10 CHAPTER 11 CHAPTER 12 CHAPTER 13 INTRODUCTION THE PROPRIETOR MAJOR PRODUCTS AND ITS MANUFACTURING PROCESS SWOT ANALYSIS LOACATIONAL ADVANTAGES INDUSTRY SCENARIO MARKETING ARRANGEMENTS THE PROPOSAL STATUTORY APPROVALS SECURITY DETAILS & GUARANTORS RECEIPTS PROJECTIONS EXPENSES PROJECTIONS FINANCIAL INDICATORS

CHAPTER -1
INTRODUCTION:
The Leather Industry holds a prominent place in the Indian economy. This sector is known for its consistency in high export earnings and it is among the top ten foreign exchange earners for the country. With an annual turnover of over US$ 7 billion, the export of leather and leather products increased manifold over the past decades and touched US$ 3.40 billion in 2009-10, recording a cumulative annual growth rate of about 5.43% (5 years). The Leather industry is bestowed with an affluence of raw materials as India is endowed with 21% of world cattle & buffalo and 11% of world goat & sheep population. Added to this are the strengths of skilled manpower, innovative technology, increasing industry compliance to international environmental standards, and the dedicated support of the allied industries. The leather industry is an employment intensive sector, providing job to about 2.5 million people, mostly from the weaker sections of the society. Women employment is predominant in leather products sector with about 30% share. Though India is the second largest producer of footwear and leather garments in the world, India accounts for a share of close to 3% in the global leather import trade of US$ 137 billion (2008). The major production centers for leather and leather products are located in Tamil Nadu - Chennai, Ambur, Ranipet, Vaniyambadi, Trichy, Dindigul ; West Bengal Kolkata ; Uttar Pradesh Kanpur, Agra & Noida ; Maharashtra Mumbai ; Punjab Jallandhar ; Karnataka Bangalore ; Andhra Pradesh - Hyderabad ; Haryana - Ambala, Gurgaon, Panchkula and Karnal; Delhi. Strengths of Indian leather sector Own raw material source 2 billion sq ft of leather produced annually Some varieties of goat / calf / sheep skins command premium position Strong and eco-sustainable tanning base Modernized manufacturing units Trained / skilled manpower at competitive wage levels World-class institutional support for Design & Product Development, HRD and R & D.

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Presence of support industries like leather chemicals and finishing auxiliaries Presence in major markets Long Europe experience Strategic location in the Asian landmass

Emerging strengths Design development initiatives by institutions and individuals Continuous modernization and technology upgradation Economic size of manufacturing units Constant human resource development programme to enhance productivity Increasing use of quality components Shorter prototype development time Delivery compliance Growing domestic market for footwear and leather articles

Government Support Measures: Leather sector is one of the Focus Sectors under Foreign Trade Policy of the Govt. of India Funding support provided towards export promotion & market development activities. Funding support provided towards technological upgradation and modernization of production units, leather industry infrastructure strengthening, environmental safeguard measures, Human Resource Development and other development projects. Entire leather sector is de-licensed facilitating for expansion on modern lines with state-of-the-art machinery and equipments. 100% Foreign Direct Investment permitted through automatic route. Import of specified machinery for use in leather and footwear industry allowed at a 5% concessional import duty. Duty free import of raw hides and skins, wet blue chrome tanned leather, crust leather and finished leather of all kinds including splits and sides thereof. Duty free import of specified critical inputs for manufacturers of leather garments and other leather products including footwear under Duty Free Import Scheme (DFIS). Basic customs duty exempted on machinery or equipment for Effluent Treatment Plants in leather industry.

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Duty neutralization/exemption/remission schemes are in place like Duty Drawback, Advance Authorization, Duty Entitlement Passbook Scheme (DEPB), Duty Free Import Authorization (DFIA) etc., Gradual lowering of import tariff current peak customs duty is 10% Simplified import/export procedures quick customs clearances.

Chisell Effects is an India based leather goods manufacturer and exporter specializing in various goods related to office or home dcor and also according to the customers specification. A loop list of satisfied customers has helped the firm to establish strong market goodwill and achieve exponential growth. Chisell Effects is a Proprietorship firm registered under the Trade Tax Act vide regn. No. ND0358655 dated 13.08.2007. Chisell Effects is an ISO 9001:2000 certified Firm. The firm has been formed by reputed entrepreneur having rich and successful experience of business of this kind. The regd. office of the Firm is located at B-10, Friends Colony (WEST), New Delhi. The existing administrative office of the firm is located at the rented premises at D 136, Sector-63, Noida. The firm will shift its factory office to Premise No 104, Block A Sector 80, Noida shortly. The Firm has been set up to carry the business of Manufacturing & exporting to create the lifestyle products in one of the richest materials - LEATHER. The variety of finishes, textures and colors are used to create the ambiance that would be most suitable for the office or home decor. And depending on the client's requirement, the handicrafts in the best of Hairon leathers, genuine skin leathers and faux leathers are created. The firm offers a wide range of quality products like storage products such as baskets, boxes, jewellery cases, magazine & CD racks, wine racks, watch cases, umbrella stands; furniture such as tables, chest of drawers, mirrors, ottomans, trunks; Office accessories such as desktop sets, photo frames, bins, charging stations, photo boxes; tableware such as placements & coasters, runners & chargers, trays & tissue boxes that are manufactured with proper planning to ensure their time delivery. A team of skilled and trained personnel supervise our entire gamut of manufacturing process. Manufactured in adherence to leading regulatory standards and to the highest levels of precision and accuracy.

Innovation & dedication to quality has always been the hallmarks of the business philosophy. The firm is dedicated to providing the customers with complete satisfaction through a firm commitment to quality and excellence throughout the operations.

KEY FINANCIALS OF THE FIRM: (Rs. in lacs)

Particulars / Years Sales Net Profits Depreciation Cash Profits Proprietors capital fund (including profits) Unsecured loan Gross Fixed Assets 31.03.2011 Provisional 178.27 5.68 1.15 6.83 58.13 41.50 47.01 31.03.2010 Audited 115.39 5.44 1.11 6.55 11.07 3.80 6.87 31.03.2009 Audited 115.98 5.39 1.21 6.60 13.70 2.26 7.55 31.03.2008 Audited 61.27 5.62 1.53 7.15 2.10 3.50 9.08

CHAPTER -2 THE PROPRIETOR:

Mrs. Shipra Priya Arora W/o Mr. Sanjay Arora, R/o B-10, Friends colony West, New Delhi is a successful and well experienced businesswoman since last 8 years in Ghaziabad. She looks after the marketing & production aspect of the firm. Already running successful business in manufacturing and export of leather goods. She has rich experience to deal in manufacturing of Leather items since last many years. The promoter is well qualified lady. She is responsible for functional areas like purchases, exports, personal marketing & projects etc. Her wide experience in this field is key to the management of the firm. The promoter is competent to complete the project in time. The promoter is very well known in the business community of the city. The goodwill of the promoter shall be helpful in the success of the proposed project.

CHAPTER -3
MAJOR PRODUCTS AND ITS END USERS: The firm is engaged in the business of manufacturing and exporting leather and faux leather articles since 2002. The firm specializes both in bulk production and at the same time is comfortable with smaller runs. The firm deals in allied hard goods like bags, belts, gift articles, office table ware and lifestyle hard goods in various materials like leather, hairon, PU and canvas. The firm has in house manufacturing facilities which give it an added advantage enabling the firm to offer the goods at most competitive prices, faster delivery turnaround and international quality standards. Moreover the firm has a very active design and sampling dept and the firm strives to offer new designs almost on a daily basis. The brief details of the item manufactured are as follows:-

1. Hard Goods
It includes photo frames, ottomans, storage boxes, placemats, buckle baskets, magazine racks, lamp base, candle/ votive holders, jewellery boxes, treys etc. of different specifications.

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2. Personal Accessories
It includes bags, belts etc of different specifications.

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3. Soft Furnishing
It includes cushion covers, runners etc.

4. Stationary
It includes items like desktop items, bins, portfolios, journal covers, albums etc.

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(Watch case) The main Customers of Chisell Effects are:

(Napkin Holder)

A- USA: I. Ross Stores (Ottomans, Charging Stations) II. Hottopic (Belts) III. Purva Designs (stationary, Frames, Luggage Tags) IV. Homegoods (Desktop Accessories) V. Divino, Uruguy (Magzine baskets, Trunks) VI. Seaich Corp (Wine Racks, desktop Accessories) VII. Hometown Healthcare (Office Turnkey Project) B- Canada: I. Le Chateau (Bags) II. Gift Craft (Placemats, Costers, Frames) III. Winners (Storage, Ottomans, Leather Furniture) IV. Homesense (Storage, Ottomans, leather Furniture) C- South Africa: I. Etherial Lifestyle (frames, ZJewellery boxes, baskets) II. @ Home (Journals, albums) D- Sweden: I. Gadino (Bags) II. Living A/S (Storage & Pohotframes) E- Germany: I. Impressionen (Jewellery Box) F- Italy: I. Parosh (Belts) G- UK: I. TKMAXX (frames, Stationary, Storage baskets) II. Tradestock Limited (Placemats, Costers, napkin Rings) III. NEWCOBAGS (Purses) IV. Tiger Tiger Home (Frames, Trunks, Furniture)

13 H- Spain: I. Casa Bella Hogar (basket, Box, Frame, Umbrella Stand) II. Cunill (Photoframes) I- Norway: I. Convent Garden (storage Log Baskets) J- France: I. SP Selection (frames, log baskets) II. Nows Home ( Furniture) K- Denmark: I. Impression ASP (Log baskets)
PROCESS OF MANUFACTURE FOR LEATHER GOODS The steps involved in the manufacture of leather goods are described below. I) DESIGNING The first step involved in the manufacture of leather goods is designing. The item, to be manufacture is designed as per the choice of the buyers or as per the market demand. The different patterns for different sizes are made and the total requirement of raw material for a particular item is estimated. II) SELECTION OF THE RAW MATERIAL The raw materials procured from the market are selected and sorted as per the quality into different grades. Different grades of raw materials are taken for manufacture of different components of various articles. The main aim of selection of raw materials is to obtain optimum use of expensive raw material and thereby avoiding wastage and reducing the cost of production. III) CLICKING Clicking or cutting is carried out to cut different components of leather goods as per the approved design or size. While clicking, it must be ensured to click the right component from the right area of the leather. Defected portion of leather should be carefully clicked so that the defective portion does not spoil the appearance of the finished product. Lining material is also clicked in this section. Clicking can be carried out mechanically using clicking press and also manually using clicking knives. The former method is recommended, when the production is carried out at a large quantity only. IV) STAMPING AND EMBOSSING After clicking, different components are stamped or embossed as per design number, size number, lot and serial number in stamping and embossing machine in order to avoid mixing of different components and also to avoid

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confusion in later stages of production. Trademarks can also be embossed in this machine. V) SKIVING During this operation the thickness of certain edge of leather are reduced by the help of skiving machine / skiving knife to allow seams to be produced without the bulkiness. This operation also ensures a uniform thickness to each edge of the item produced VI) PERFORATING Sometimes a series of small perforations of different sizes or shapes along the edges are made in shoes and leather goods for decoration purpose to give the finished article a pleasing look. Besides the aesthetic aspect, perforation is also done to cover certain defects in the finished leather and thereby enhancing the market value of the article. Perforation is generally done by hand. VII) CLOSING Different components of upper for leather goods are assembled and joined together in this operation. Closing is done by stitching and pasting, and in few cases of specially designed articles closing is carried out only by pasting. Stitching can be done by industrial sewing machines. Pasting is generally done with synthetic adhesives. VIII) FINISHING Finishing is done to enhance the aesthetic look of leather goods by covering the defects that might have occurred during long production process and handling during the operation thereby increasing the market value of the product. In this process finally the goods are polished to give a shining appearance. After the finishing operation the goods are finally inspected, packed properly and kept ready for dispatch to the market.

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CHAPTER -4
SWOT ANALYSIS Opportunities

Rising potential in the domestic market Growing fashion consciousness globally Use of information technology and decision support software to help eliminate the length of the production cycle for different products Use of e-commerce in direct marketing

Strengths

High Growth Ready availability of highly skilled and cheap manpower Large raw material base Policy initiatives taken by the Government Capability to assimilate new technologies and handle large projects Continuous emphasis on product development and design upgradation

Weaknesses

Lack of warehousing support from the government International price fluctuation Huge labour force resulting in high labour charges Lack of strong presence in the global fashion market Unawareness of international standards by many players

Threats

Major part of the industry is unorganised Limited scope for mobilising funds through private placements and public issues (many businesses are family-owned) Difficulty in obtaining bank loans resulting in high cost of private borrowing Stricter international standards High competition from East European countries and other Asian countries Lack of communication facilities and skills

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CHAPTER-5
LOACATIONAL ADVANTAGES
Chisell Effects is a firm formed by reputed person having vast experience to deal in such kind of activities. The registered office of the firm is located at B10, Friends Colony (WEST), New Delhi. The existing administrative office of the firm is located at the rented premises at D 136, Sector-63, Noida. The firm will shift its factory office to Premise No 104, Block A Sector 80, Noida shortly. The factory is located in the heart of industrial area. The infrastructure relating to road transport, power, labour availability are very favourable at this location. The market reputation and timely completion of contracts gives the firm an edge over the other firms. The firm has taken power connection with adequate generator power backup support. The firm has installed its own deep boring for its water requirements.

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CHAPTER-6
INDUSTRY SCENARIO
Items produced by this sector include, in addition to bags, handbags, hand gloves and industrial gloves, wallets, ruck sacks, folios, brief cases, travel ware, belts, sports goods, upholstery and saddlery goods. A surfeit of modern units in Chennai, Kanpur and Calcutta employing skilled human resources and equipped with modern and sophisticated machinery account for a diversified range of superlative small leather goods including bags, purses, wallets, industrial gloves etc. made of quality leathers of cows, sheep, goats and buffaloes. The products meet the requirement of bulk buyers and consumers in Europe, USA and Australia. The major market for Indian leather goods is Germany, with an offtake of about 25 per cent of the leather goods produced in India followed by USA, UK, France and Italy. With products ranging from designer collections to personal leather accessories, this sector has a share of 20.53 per cent in the leather industry, while maintaining an average growth rate of 11 per cent recorded in the last five years. The leather industry, one of the major foreign exchange earners of the country recorded significant growth since the beginning of the decade. Today the share of the value added finished products in the total exports from leather sector are 80% as against 20% in 1970s. There exists a large raw material base. This is on account of population of 194 million cattle, 70 million buffaloes, 95 million goats. According to the latest census, India ranks first among the major livestock holding countries in the world. In respect of sheep with 48 million sheeps, it claims the sixth position. These four species provide the basic raw material for the leather industry. The annual availability of 218 million pieces of hides and skins is the main strength of the industry. Some of the goat/calf/sheep skins available in India are regarded as speciality products commanding a good market. Abundance of traditional skills in training, finishing and manufacturing downstream products and relatively low wage rates are the two other factors of comparative advantage for India.

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Estimated Indian production capacities:

ITEM Hides Skins Leather Footwear Leather shoe uppers Non-leather footwear Leather Garments Leather Goods Industrial Gloves Saddlery & Harness Source: CLRI

CAPACITY 65 million pieces 170 million pieces 909 million pairs 100 million pairs 1056 million pairs 16 million pieces 63 million pieces 52 million pairs 12.50 million pieces

The major markets for Indian leather products:

Major Markets:

The major markets for Indian leather products are Germany with a share of 14.45%, UK 13.41%, Italy 11.72%, USA 8.71%, Hong Kong 7.35%, France 7.53%, Spain 6.43%, Netherlands 4.03%, Belgium 1.92%, U.A.E.2.03% and Australia 1.58% These 11 countries together accounts for nearly 79.16% of Indias total leather products export. Indias Import of Raw Hides & Skins and Leather.

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Country-wise export of leather & leather products 5 years

COUNTRY GERMANY ITALY U.K. U.S.A. HONG KONG SPAIN FRANCE NETHERLANDS U.A.E. PORTUGAL BELGIUM CHINA AUSTRALIA DENMARK SWEDEN CANADA KOREA REP. S. AFRICA SWITZERLAND AUSTRIA GREECE SAUDI ARABIA JAPAN RUSSIA INDONESIA FINLAND IRELAND NEWZEALAND OTHERS 2005-06 363.24 317.04 345.54 318.36 252.15 200.18 143.72 82.95 52.34 42.20 40.20 38.71 43.22 40.46 25.82 34.80 34.45 24.38 21.54 23.38 21.94 14.63 12.37 11.49 12.66 7.72 4.56 5.64 216.81 2006-07 410.08 413.35 359.84 317.59 279.72 185.78 174.04 100.82 62.55 49.92 43.01 42.52 39.38 42.30 29.01 32.17 36.28 35.23 21.92 21.79 24.22 15.77 12.26 17.18 12.17 9.87 5.46 6.05 259.15 3059.43 2007-08 493.34 490.77 417.64 311.21 280.97 216.07 198.52 134.75 76.23 56.93 55.32 55.46 50.44 49.58 38.99 36.92 29.55 27.90 25.79 25.68 23.57 15.96 15.95 15.77 15.31 14.39 8.15 5.61 361.74 3548.51 2008-09 508.45 461.56 413.24 359.22 237.72 219.18 221.33 148.77 85.79 48.17 54.77 49.96 55.76 60.12 38.03 35.29 26.17 22.45 26.07 27.22 17.82 19.28 20.24 12.01 13.45 15.52 6.44 5.46 389.97 3599.46 2009-10 491.36 398.58 455.96 296.23 249.91 218.63 256.15 136.96 69.16 39.27 65.42 48.52 53.65 55.68 36.02 27.65 29.02 24.55 27.11 28.00 12.77 20.98 17.08 6.68 9.55 9.96 5.78 4.28 306.06 3400.97 % Share 14.45% 11.72% 13.41% 8.71% 7.35% 6.43% 7.53% 4.03% 2.03% 1.15% 1.92% 1.43% 1.58% 1.64% 1.06% 0.81% 0.85% 0.72% 0.80% 0.82% 0.38% 0.62% 0.50% 0.20% 0.28% 0.29% 0.17% 0.13% 9.00% 100.00%

TOTAL 2752.50 Source : DGCI & S

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Indias Leather & Leather Products Export Basket (2009-10)

Indias export of leather and leather products for five years (Value in Million US$) 2005-06 2006-07 2007-08 Finished Leather Footwear Leather Garments Leather Goods Saddlery & Harness Total % Growth Source: DGCI&S 636.27 1045.24 333.30 660.17 77.52 2752.50 10.30% 724.00 1236.91 309.91 706.28 82.33 3059.43 11.15% 1489.35 345.34 800.46 106.18 3548.51 15.99%

2008-09 2009-10 673.37 1534.32 426.17 873.44 92.15 3599.46 1.44% 625.54 1507.51 428.52 756.02 83.39 3400.97 -5.51%

807.19

The Government of India had identified the Leather Sector as a Focus Sector in its Foreign Trade Policy 2004-09 in view of its immense potential for export growth prospects and employment generation. Accordingly, the Government is also implementing various Special Focus Initiatives under the Foreign Trade Policy for the growth of leather sector. With the implementation of various industrial developmental programmes as well as export promotional activities, and keeping in view the past performance, and industrys inherent strengths, the Indian leather industry aimed to augment the production, thereby enhance export to US$ 7.03 billion by 2013-14, and resultantly create additional employment opportunities for overall one million people.

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CHAPTER-7 MARKETING ARRANGEMENTS: With the growth in economy, the business opportunities have increased many folds. With commitment to achieve excellence in all the spheres of the business, the firm has created a niche for itself in the domestic & international market. The firm has team of professionals who work in close coordination with the clients to offer them best solutions for their specific requirements. Manufactured with highest level of precision, products comply with standards of quality. In an endeavor to achieve complete customer satisfaction, it gives assureance to its clients for timely execution of all orders, competitive pricing and excellent customer service. With innovation and customization, the firm made a strong presence in the competitive International market. The customers have always appreciated pursuit of the Firm to perfection and have placed repeat business orders. The unit has achieved turnover of Rs. 178.27 lacs during the current financial year 31.03.2011. The firm has no difficulty in marketing the product as the reputation of the firm is good in the market. The promoter of the firm is wellexperienced and skilled professional. She looks after the production and marketing. The firm does not foresee any major difficulty in selling the products. The customisation capabilities, firms strength, technical expertise, innovation, quality focus and quality policies of the firm are capable to reduce the market risk to some extent, which can be described as follows: Customization Capabilities The wide ranging experience in manufacturing & expertise spanning several industries makes the firm ideally suited to respond to the diverse needs of customers. The firm has the capability to undertake the design and development of leather goods to cater to the changing needs of customers. The firm is quite capable to meet the unique application demands of the customers with its high quality range of products. Strengths Some of the strengths that make the Firm an ideal partner to its customers are:

Cutting-edge manufacturing unit with leading equipments. Wide gamut of products built in adherence to leading standards Adequate warehousing facilities for stocking of products Superior logistics support ensuring timely & safe delivery of products Speedy turn around times in production

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Competitive pricing policy

Innovation Innovation and improvement is initiated on a sustained basis at Chisell Effects. As part of the efforts to upgrade the facilities, the firm has also incorporated cutting edge technologies. This has enhanced the Firms capabilities to offer its customers with innovative products on a consistent basis and cater to their most demanding custom requirements. Quality Focus: Quality has been an area of core significance to the operations. Every aspect of the operations from sourcing of raw materials to the production, packaging and shipping, the Firm ensures the highest standards of quality at all stages. The quality management system of the firm ensures that their clients are provided with products that meet their expectations in terms of quality and performance. The manufacturing capabilities of the firm cover a wide gamut of products in diverse specifications and configurations. Quality Policy: Chisell Effects in the business of leather products is committed to meet customer's expectation through continual improvements in all its processes and effective implementation of quality management system. It is also committed to improve its customer satisfaction level through consistently supplying of quality products.

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CHAPTER-8 THE PROPOSAL EXISTING CREDIT FACILITIES

The firm is at present availing only a Car loan from ICICI Bank. The outstanding balance of such loan as per the provisional balance sheet dated 31.03.2011 amounts to Rs. 0.49 lacs.

THE PROPOSED CREDIT FACILITIES

Now the firm wishes to apply for the Packing Credit limit (Interchangeable Limit with FUBD) of Rs.70 lacs for the purpose of financing its working capital requirements. The Firm has applied for PCL to finance the raw material purchase to fulfill the orders of the goods to be exported and also wishes to apply for the FUBD limit to finance the final dispatch of the export goods. Both the limits shall be inter changeable limits. For the justification of the proposed limit the CMA data has been enclosed herewith.

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CHAPTER-9
STATUTORY APPROVALS: Chisell Effects is a proprietorship firm which is presently engaged in business of manufacturing and exporting leather and faux leather articles, since 2002. The firm is running very successfully since many years and has all the necessary approvals, the details of which are as under: 1. The firm is registered under the Trade Tax Act vide regn. No. ND0358655. 2. Moreover the firm has also obtained Merchant Exporter certificate from Export Promotion Council for handicrafts vide regn no. EPCH/ REGN/ 26221/ 2006-07 dated 05.12.2006. 3. The firm has also obtained certificate of Importer Exporter Code vide IEC No. 0501067981 dated 18.03.2002.

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CHAPTER -10 SECURITY DETAILS & GUARANTORS

The details of security are as under: Details of securities
Primary Securities

i)

For Packing Credit limits lacs)

(Rs. In 26.51 28.40 54.91

Hyp. of Stock as on 31.03.2011 Hyp. of Debtors as on 31.03.2011 Total value of the primary security

Collateral security The land & building in the name of Ms. Shipra Arora located at Premise No 104, Block A Sector 80, Noida admeasuring 450 sq mtr valuing Rs. 125 Lacs approx shall be offered as collateral security to cover the proposed exposure. Thus the total value of the collateral security is of Rs. 125.00 lacs approx. The total value of security is Rs. 179.916 lacs against the proposed bank exposure of Rs. 70.00 lacs.

GUARANTOR DETAILS:
Personal guarantee of the proprietor of Chisell Effects shall also be offered to the bank for these proposed credit facilities. The total income and net worth of the proprietor/guarantor are as under: Name Total Income (Rs. in lacs) 5.44

1. Mrs. Shipra Priya Arora

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8.02

CHAPTER 11 RECEIPTS PROJECTIONS Sales

The net sales as per the audited balance sheet for the year ending on 31.03.10 are of Rs.115.39 lacs. The net sales as per provisional balance sheet for the year ending on 31.03.2011 is Rs. 178.27 lacs. The copy of VAT returns has been enclosed herewith. The net sales for the year ending on 31.03.2011 have been projected at Rs. 350.00 lacs.

Other misc. income: The other receipts for the year ending on 31.03.10 are of Rs. 7.22 lacs. The other income for the year ending on 31.03.2011 is Rs. 10.31 lacs. Thereafter, increase of 10% is projected at every year, which is reasonable.

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CHAPTER-12
EXPENSES PROJECTIONS:
Purchases: The purchases for the year i.e. 2011-12 have been projected at approx. 50% approx of the net sales keeping in view the past trends. Thereafter, the purchases have been projected at the same basis for the next years. These expenses have been projected keeping in mind the expenses level in this line of activity. Other manufacturing expenses: The direct expenses comprising of the freight, Power & Fuel, repairs & maintenance and other manufacturing expenses have been estimated at reasonable basis keeping in view the past trends and further at 5% increase every year. These expenses have been projected keeping in mind the expenses level in this line of activity and past trends. Salary These expenses comprising of salaries and all other benefits for employees and staff are projected at a reasonable level and are commensurate with the expenses incurred in same line of business. These expenses for the next years have been estimated to be increased by 10% approx. Administrative & Selling Expenses: The administrative expenses and all other office expenses are projected at a reasonable level and are commensurate with the expenses incurred in same line of business. The selling expenses have been projected at a reasonable level. Depreciation: Depreciation on fixed assets has been taken at the rates as prescribed by Income Tax Act, 1961 on the basis of WDV Method. The depreciation statement is shown in Annexure - III.

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Interest on PCL limit: The interest on term loan and PCL limit has been taken at the rate of 14% per annum.

CHAPTER 13
FINANCIAL INDICATORS
Projected Balance Sheet Projected Balance Sheet of the firm has been shown in Annexure-I. The projected balance sheet is clearly showing the sound future financial position of the firm. Projected Profitability Statement The projected profitability statement combined for the firm has been shown in Annexure-II. The excess of income over expenditure shown in profitability statement are sufficient to serve the repayment of term loan and interest on term loan. Gross Profit Ratio & Net Profit Ratio The calculation of GP Ratio & NP Ratio has been shown in Annexure-IV. Current Ratio The calculation of current ratio has been shown in Annexure-V. Debt Equity Ratio The calculation of debt equity ratio has been shown in Annexure-VI. Solvency Ratio The calculation of solvency ratio has been shown in Annexure-VII. Cash Flow Statement The cash flow statement worked out and shown under Annexure-VIII. CMA Data Statement The CMA Data statement worked out and shown under Annexure-IX.

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