Information should be given separately in respect of each of the working capital credit facilities, viz. Cash Credit/Overdrafts, Export Packing Credit, Working Capital Term Loan, Bills Purchased and Discounted, both Inland & Exports etc. Details of quasi-credit facilities viz. Letters of Credit, Co-acceptances, Guarantees etc. should also be indicated. Data relating to Term Loans/DPGs etc. should be shown separately under sub-head ‘B’.
2) In the case of a multi-division company if separate credit limits are sanctioned for the different divisions, the data should be shown division-wise. Division-wise sub-totals should also be indicated.
3) Details of credit facilities, if any, availed of by the borrower from non-consortium banks should be indicated separately. Details of deposit accounts, if any, maintained with other non-consortium banks should also be indicated.
4) In case ‘the existing sanctioned limits have remained/are largely unutilised, the reasons therefor should be given.
5) Information on associate companies, if any, should be given separately in Annexure to Form I. Details of Name, Line of activity, Annual make up of accounts, Limits from all Banks and Financial Institutions should be furnished in respect of each of the associate companies clearly indicating the nature of association.
FORM II, III AND IV
1) In case the audited balance sheet and profit and loss account for the previous accounting year are not available, estimated/provisional data for that year may be indicated in Column (2) of Forms II, III and IV.
2) The assumptions on which the projections viz., sales turnover, profitability, build-up of stocks-in-trade and receivables, other current assets, current liabilities etc. have been based, should be indicated.
3) In the case of a multi-division Company, division-wise data should be indicated separately for each division, on Form II and IV. In such cases, Form III (Analysis of Balance sheet) should encompass data for the company as a whole. Wherever possible, separate data for each division may also be indicated on Form III.
4) The valuation of sales-projections should be based on the current ruling prices. Similarly, the valuation of various inputs of cost of sales in the projections should also be based on current costs.
5) The projected carry of stocks-in-trade and receivables shown in Form III should normally be in conformity with the levels prevailing in the trade and/or the past trends/levels usually maintained by the borrower whichever are lower. In case the level of projected stocks-in-trade/receivables is higher than that prevailing in the trade/past levels, the reasons therefor should be explained; in such cases, a definite programme for conforming to the stipulated levels should also be indicated. While projecting the levels of stocks-in-trade/receivables, the Government/RBI guidelines/directives, selective credit control provisions etc. in force in this regard, should be kept in view. In all cases, carry of inventory on speculative grounds in prohibited.
6) The projected level of current assets other than stocks-in-trade and receivables, and that of current liabilities should also compare with the past trends and prevailing market conditions. In case there are significant/abnormal variations, the position should be explained in respect of each item of variation.
7) The basis of valuation of current assets should be in accordance with that adopted for statutory balance sheet. The estimates of current liabilities and recording of income and expenses should also be on the same basis as that adopted for the statutory financial statements.
8) The classification of current assets and current liabilities should be done as per the usually accepted approach of the Bank and not as per definitions in the Companies Act: the guidelines indicated in this regard by RBI should also be kept in view.
9) Deposits from dealers, selling agents, etc. may be treated, as term liabilities irrespective of their tenure, if such deposits are accepted to be repayable only when the dealership/agency is terminated. The deposits, which do not satisfy the above condition, should be classified as current liabilities.
10) In case specific provisions have not been made for known liabilities like dividend payable, tax payable, etc. estimates thereof should be made for eventual payment during the year and the amount, through not provided, should be shown as current liabilities.
11) Details of term liabilities raised during the year (Debentures, Term Loans, Deferred Payment Credits, Long Term Deposits, etc.) should be furnished separately.
12) Bills purchased and discounted (though shown as contingent liability in the balance sheet) should be included under items 28(i) and (ii) of Form III.
13) Outstanding liabilities in respect of credit purchases under Usance Letter of Credit/Co-acceptance facility from the banks should be shown under item 3/Form III (sundry creditors (trade)).
14) In case of borrowers having seasonal activity where the working capital limits are required to be sanctioned based on peak level requirements (not coinciding with balance-sheet date) the corresponding data in respect of current assets and current liabilities for the previous/precing year(s) should also be indicated separately on Form IV. In such cases, the corresponding build-up of balance sheet position as on the date of peak requirement should also be indicated.
15) If the canalised items form a significant part of the stocks-in-trade, this may be shown separately.
16) Income received from and the expenses paid to subsidiary companies/affiliates or sales tÐuo /purchases from them, should be indicated separately by way of foot note(s) to Form II.
17) If the company is a subsidiary, the extent and nature of interest the holding company is having and also its name should be furnished as a footnote to Form III.
18) If the company is a holding company, the extent and nature of its interest in subsidiary companies and their names should be furnished as footnote to Form III.
19) 3 copies of the last audited balance sheet should be submitted along with the appraisal data.
Form V
1) Increase in carry of stocks-in-trade and receivables, which are disproportionate to percentage rise in sales turnover, should be explained in detail separately.
2) Similarly, a decrease in current liabilities which is not commensurate with percentage rise or fall in sales turnover should be explained in detail separately.
3) In case the increase in Working Capital Gap is not commensurate with the increase in net sales, the position should be explained in detail separately.
4) Item 7 (Net surplus/deficit) and item 8 (increase/decrease in bank borrowings) would be algebraically opposite figures, and these should agree with each other.
