Flemingo for the project

AGENDA ITEM FOR IDCC II FORMAT: S SECTION A

EXECUTIVE SUMMARYCIRCLE/SBU: IBG BRANCH: DIFC DubaiCOMPANY: Flemingo International Limited – Jebel Ali Branch

Section Contents Pages1 Borrower Profile:

a. Name , Address, Manufacturing activity/ Locations, Date of incorporation, Banking arrangement etc

b. Brief Background (Company/ Group/ Promoters/ Management including shareholding pattern)

c. Brief write up on Industry/ Sector and Company’s standingd. RMD Advisory/qualitative approach/ Quantitative approach/

Comments e. Indebtedness/ Exposure & capital charge

2

2

45

52 Present Proposal:

a. Proposal: For sanction/approval/confirmationb. Credit limits (existing and proposed)c. Sharing pattern

666

3 Performance Details:a. Performance and Financial indicators

b. Comments c.Movement in TNWd. Compliance with Financial Covenantse. Synopsis of balance sheet

779910

4 Risk Assessment : a. Credit Rating b. Risk and mitigating factors c. Warning signals/ Major irregularities in Inspection Audit/

Credit Audit/ Other Reports d. Security e. Changes in Security if any, justification

121213

1414

5 Pricing:a. Conduct of accountb. Income analysisc. Other Bank’s/FIs pricingd. Proposed pricing

15151515

6 Loan Policy: Deviations & Compliance: a. Whether names of promoters, directors, company, group

concern figure in defaulters/willful defaulters list b. Deviation in Loan policy c. Deviation in Take over norms and commentsd. Directors of Borrowers company: status of relation with Board/ Sr. Official of the bank etc

17

171717

7 a. Future plans & Business Potential including cross selling/ retail marketing

b. Environmental and sustainability implications c.Earlier terms of Sanction: Compliance statusd. Statutory dues/ Contingent Liabilities

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8 a. Justification for the Proposalb. Recommendations

1919

SECTION 1 Circle/SBU: IBG Branch: DIFC DubaiBorrower’s Profilea.Name, Address, Manufacturing activity/locations, Date of incorporation, Banking arrangement etc. of – Company: Flemingo International Limited – Jebel Ali Branch

(Borrowing entity is a branch of Flemingo International Limited, a limited liability company registered in the British Virgin Islands)

Promoter Director(s): Mr. AAGroup to which company belongs:

Not a recognized group

Address: Regd. Office: Jebel Ali Free Zone, Dubai, United Arab EmiratesMfg facility(location): Warehouse at Jebel Ali Free Zone, Dubai, UAESegment: C&I Constitution:

Branch of a BVI Company, registered with Jebel Ali Free Zone

IRAC Status as on 31.12.2011Advances: Standard AssetInvestments: Not applicable

Industry: Trading Activity: General Trading Date of incorporation: Jul’ 2000 Banking with us since: Feb’2011 Banking arrangement: Multiple BankingNew unit: No If Take over, whether all norms complied with: Not a takeoverExisting Connection: Yes Date of Last Sanction: 27.08.2010

b. Brief Background (Company/ Group/ Promoters/ Management including shareholding pattern):

Company Profile: Flemingo International Limited BVI (FIL-BVI) operates a bonded warehouse in Jebel Ali, in the name of its branch, which is a supply source for duty free shops of the group and other companies at various Airports, Seaports, Border Shops, Defence Shops and United Nation Commissary Shops across Africa, Middle East and Asia. The borrower deals in perfumes, cosmetics, readymade garments, sunglasses, foodstuff, cigarettes, liquor (export only) and gift items. Group Profile: The group started its operations on 25 November 1997, with FIL-BVI as the holding company. Subsequently in March 2011, the shareholding pattern was changed and FIL-BVI became 100% subsidiary of an Indian Company (“Parent Company”). The group has a strong presence in Middle East, Africa, Mauritius, Maldives and parts of Asia. The principle activity of the group is to own and operate duty free shops at various international airports, seaports and diplomatic missions and operate bonded stores. Major brand partners of Flemingo are Diageo, Pernod Richard, Bacardi and Heineken in Liquor, Phillip Morris, British American Tobacco and Imperial in Tobacco, Coty Prestige, Swiss Army, Ferragamo, D&G, Armani, Hugo Boss, Mont Blanc and Lacoste in Perfumes, Ferrero, Kraft, Nastle and Lindt in Confectionary, Dior, Fossil and Guess in Watches and Bose, Apple, Sony, Canon and Nikon in Electronics. The group has distribution rights for some major brands in the UAE like Bacardi Martini and Nemiroff Vodka. The group also supplies some brands to Kingfisher Airlines, Jet Airways, Ethiopian Airlines and Kenya Airways for in-flight consumption. The major contribution to Group revenue is from the UAE operations and the Indian operations.

Indian OperationsThe parent company is the single largest operator of duty-free shops (DFS) chain in India and has brought Indian duty free industry on par with global standards enabling an international duty free shopping experience for the passengers utilizing Indian Airports. Parent Company has a subsidiary as well in India.

c. Brief write-up on industry/sector and company’s standing (domestic/ international) in the industry including market share, future growth strategies, comments on recent news reports, etc. (To mention/ dovetail Premarketing Committee Presentation, if applicable).

WORK ON IT

Country Rating of UAE –WORK ON IT

d. (i) RMD Advisory dated

Not Applicable(ii) Qualitative approach(iii) Quantitative approach(iv)

Comments

e. Indebtedness/ Exposure & Capital Charge: (Amount in USD million)Company Group Proposed exposure

Indebtedness Existing Proposed Existing Proposed Credit convr factor

Risk weight

Fund based 100% 100%

Non fund based

100% 100%

Total (Indebtedness)Investment Total(Exposure) Capital charge for total exposure: @12% of the total company exposure

The Company has fund based facilities of USD 11.90 and non fund based facilities of USD 2.10 mio outstanding with us.

Group has fund based facility of USD 2 mio and non fund based facilities of USD 9 mio from SBI apart from the above mentioned facilities.

Fill in the details above accordingly.

PRESENT PROPOSAL : SECTION 2

a. Proposal: For sanction / approval / confirmation :

A.Sanction of Corporate Loan of USD 6.30 Million with a tenor of 4 ½ Years.

B.Sanction of Working Capital Limit of USD 7.70 million

(including OD facility of USD 1.40 million, LC/TR Facility of USD 4.20 million

and

BG of USD 2.10 million)

This proposal falls within the powers of IDCC II as

(i) Total indebtedness is USD 14.00 Millions. (Corporate)

a. Credit Limits (Existing and Proposed): (Amount in USD mio)

Existing Proposed Change

Limits SBI % Total Cons/ MBA

SBI % Total Cons/MBA.

SBI Total Cons/ MBA.

FBWC (OD) - -TR/LC - -TL/CL - -Total FB - -LC - -BG - -Total NFB - -Total FB+NFB - -

Fill up the details based on the proposed facilities from SBI (as mentioned above) and other banking facilities availed by the company as provided below

Details of existing facilities –

Name of Bank Facility Limits/ O/s SecurityBank 1 OD – USD 0.27 mio

LC/TR – USD 1.36 mioTL – USD 2.07 mio

Fixed Deposit Personal Guarantee of Shareholders

in proportion to their shareholding in company

Mortgage over ware houseBank 2 OD – USD 0.27 mio

LC/TR – USD 0.68 mioBG – USD 0.43 mio


of company

Bank 3 OD – USD 0.54 mioLC/TR – USD 2.45 mioLetter of Guarantee – USD 0.05 mio


of company Corporate Guarantee of shareholders

of FIL-BVI in proportion to their shareholding

Mortgage over ware houseBank 4 OD – USD 1.60 mio SBLCBank 5 OD – USD 2.00 mio SBLC

Sharing Pattern: (Amount in USD mio)Financial Arrangement: Multiple Banking Arrangement

FB NFB Total

SBI

Associate Banks

SBI Group

Other Banks (4 Banks)

Total

Fill it based on the data provided above

PERFORMANCE DETAILS SECTION 3 a. Performance and Financial Indicators: Flemingo Intl. Ltd. (Jebel Ali branch), the

borrower entity: (Amount in USD in mio)

Particulars as on March 31

2008 2009 2010 2011 2012 HY results

AUD AUD AUD AUD PROJ as on 31st Dec.(9 months)

Installed Capacity (TPY)

Not applicabl

e

Not applicabl

e

Not applicabl

e

Not applicabl

e

Not applicable

2010 2011

Capacity Utilization (%)

Not applicabl

e

Not applicabl

e

Not applicabl

e

Not applicabl

e

Not applicable

Sale

Net Sales PAT

Operating ProfitProfit Before TaxPBT/ Sales (%)Profit After TaxCash AccrualPUC (Head Office Capital Account)TNWAdj. TNWTOL/TNW TOL/Adj. TNWNWCCurrent Ratio

1 USD = 3.67 AED (Assumed)

b. Comments only on adverse movements in the above: (Not to exceed 5-6 lines)Net Sales:

Operating Profit:

PAT: Profitability:

PUC:

Adj. TNW:

TOL/TNW and TOL/Adj. TNW:

NWC and Current Ratio: c. Movement in TNW (Amount in USD

million) Particulars

as on March 312009 2010 2011

AUD AUD AUD Opening balance1 Add i Profit/(-) Loss after Tax ii Increase in Capital

iii Dec./(-) Inc.in Intangible Assets

iv Inc../(-)\ Dec. in Reserves

v. Adjust prior year expenses

2 Less

Div Paid(Incl.Div.Tax)/ Withdrawals

TNW

d. Compliance with Financial Covenants: While sanctioning the facilities, certain financial covenants were stipulated. The parameters and position of the same, as on 31.03.2011, is as under:Parameter Stipulated level Levels as on

31.03.2011Compliance

TNW Minimum of USD 10 mioTOL/TNW Maximum of 2.50TOL/Adjusted TNW Maximum of 3.50Interest Coverage ratio (PBDIT/Interest)

Minimum of 4.00

Justification for not complying with the parameter of ------------ –

Synopsis of Balance Sheet: Flemingo Intl. Ltd. (Jebel Ali branch), the borrower entity: (Amount in USD in mio)

As on March 31 2010 (Audited) 2011 (Audited)Sources of FundsShare Capital 9.30 9.30Retained Earnings 7.48 11.89Term Liabilities 1.06 5.60Head Office Loan Account 3.06 2.06Long Term Loan from Directors - 9.74

Total 20.90 38.59Application of FundsFixed Assets (Gross Block) 5.31 6.02Less: Depreciation 0.87 1.25Net Block (1) 4.44 4.77Investments (2) 5.00 14.53Other Non-Current Assets (3) 1.98 0.39Inventories 7.49 11.84Sundry debtors 11.56 22.96Cash and Bank Balances 2.99 3.97Other Current Assets 2.51 2.98(Less: Current liabilities) 15.25 22.87Net Current Assets (4) 9.30 9.15Intangible Assets (5) 0.18 0.00

Total (1+2+3+4+5) 20.90 38.59Comments only on adverse movements in the above: Investments

Sundry debtors

RISK ASSESMENT SECTION 4

a. CREDIT RATINGBorrower rating Facility rating

Exist Prop Hurdle rate

Facilities Exist Prop

CRA - SB - 10 TL – USD 6.30 mio WC– USD 7.70 mio

CRISIL - - - - - -ICRA - - - -

CRA was validated on -------------(based on Audited Balance Sheet as on -----------)

Justification for considering the proposal even though the company is not rated by external credit agencies –

b. Risks and Mitigating factors: Critical Risks Perceived Mitigating Factors Economic Scenario

Competition Risk

Find out more Risk factors

c. Status of Auditors’ remarks which have an impact on Credit Risk on the unit:

Particulars DateSerious Irregularities /

Adverse features remaining unattended

Action Plan

Inspection & Audit Report

25.11.2010

Nil Not applicable

Offsite Credit Audit Report

21.02.2011

Nil Not applicable

Company’s Audited Balance Sheet

31.03.2011

Nil Not applicable

d. Security: (Amount in USD mio)Security Particulars Value and basis

of valuationDate of valuation / opinion report

Primary Nil Not applicable Not applicableCollateral Pledge on the funds held by

ABC Ltd. (ABC is a group Co. of the corporate guarantor in the advance) with a reputed European Investment Bank. The pledge has been created by way of a tripartite agreement between SBI. Maple & European Investment Bank. Important conditions in the tripartite agreement are: The value of the funds will be

maintained at a minimum of USD 12.60 mio and any shortfall will be made up by ABC by additional investment in the fund or by placing fixed deposits with the Bank.

In case of default by Flemingo International Ltd, SBI may ask the Investment Bank for liquidation of the funds and remit the same to SBI. Upon receipt of instructions from SBI, Investment Bank shall initiate to sell the pledged assets within 2 business days.

In case ABC fails to maintain the value of the collateral security at a minimum of USD 11.90 mio, the assets would be foreclosed/ automatically liquidated towards repayment of banks dues.

USD 12.94 mio as per Net Asset Value (NAV) of the Investment held by Investment Bank.

We are obtaining and scrutinising statement of NAV of the investment on monthly basis. The position has been satisfactory and there has not been any instance of NAV falling below the stipulated level of USD 12.6 mio.

01.02.2012

As per the Pledge Agreement, NAV is to be provided at monthly intervals.

Corporate Guarantee

Flemingo Intl. Ltd., BVI TNW – USD 10.57 mio. Corporate

31.03.2011

Indian Parent COmpany TNW –USD 27.04 mio. Corporate Guarantee given –USD 18.5 mio

31.03.2011

ABC Ltd., BVI These are investment vehicles based

in BVI and their net worth is difficult to ascertain. Their corporate guarantee has been taken as these companies are having substantial holding in the borrowing company.

XYZ Ltd., BVI

Personal Guarantee

Mr. AA Main Promoter of the Group

TNW – USD 4.40 mio. Validated by a CA

01.07.2010*

Other 15% cash margin for LC, Assignment of all rights and interests in the insurance policy

Not applicable Not applicable

Collateral coverage %

For SBI For others

*Information for 2011 awaited. e. Changes in security if any, Justification:

SECTION 5 PRICING a. Conduct of Account:

No. of occasions Average period for regularisation

Irregularity report last submitted on

Irregularity in WC :

No irregularities have been noticed in the account so far.

Comments Not applicableIrregularity in TL Not applicable Not applicable Not applicableComments: Not applicable Not applicable Not applicableUtilisation of limits:FB Limits Average

utilisation % Not applicable NFB Limits

b. Income Analysis: Not applicbalec. Other Bank’s/FIs Pricing: Not Available d. Proposed Pricing:

Item Existing Rate Card rate Proposed rate Int. on WC Not applicable Not available LIBOR plus 3.00% Int. on TL Not applicable Not available 6 M LIBOR plus 4.5% Processing fee (WC)

Not applicable 1% of Loan amount 0.50% *

Upfront fee (TL)

Not applicable Not applicable Not applicable

Commit charges

Not applicable 1% in case utilization is less than 75%. To be recovered half yearly

0.50% of unutilized portion in case utilization is less than 70%. Applied quarterly in arrears.

LC Not applicable 0.25% per quarter 0.375% per quarterBG Not applicable 0.25% per quarter 0.375% per quarter

Justification for concessions already extended / proposed: (mention about cost benefit)

Funding Arrangement:

Likely Cost of Funds: 2.25% for 3 monthsYield: 2.50% + 6 months LIBOR Net Margin: Based on likely cost of funds, net margin should vary from

0.50% to 0.85%.

The asset will be short term and we will be funding the same with borrowings of up to 3 months. Present cost of funds reflects the ongoing interbank rates. However, the present tight liquidity condition is not likely to sustain for a long time and with easing of liquidity, net margin in the account is expected to improve.

SECTION 6LOAN POLICY: DEVIATIONS AND COMPLIANCE:a. Whether names of promoters, directors, company, group concerns figure in defaulter/willful defaulters list: RBI defaulters’ list dated: Sep’ 30,2010 No Willful defaulters’ list dated: Dec’ 31, 2010 No ECGC caution list: Mar’ 31, 2011 No CIBIL (Suit filed cases): Dec’ 31,2010 No IBG defaulters list: Dec’ 31, 2009 No

b. Deviations in Loan Policy:

Parameters Indicative Min/Max level as per loan policy

Company's level as on 31.03.2011

1. Liquidity 1.002. TOL/TNW 3.003. Gross Average DSCR (TL) 1.75 Not applicable4. Debt / equity 2:1 Not applicable5. Promoters contribution

Prudential norms: Single Borrower

15% of the Bank’s total capital funds i.e. Rs 14,779.58 Crore

Prudential norms: Group


6. FB exposure to the industry Substantial exposure: Borrower

7.5% of the Bank’s total capital funds i.e. Rs 7,389.79 Crore

Substantial exposure: Group


7. Others Not applicableNOTE: Total capital funds 98530.55 Crore (as per the published accounts as on 31.03.2011).

c. Deviations in Take over norms and comments: Not Applicable

d. Directors of the borrower company are relatives (scope of the term ‘relative as defined in RBI Master Circular on loans and advances: Statutory and other Restrictions) of any member of the Bank’s Board/Senior Officer of the Bank/ Member of any other Bank’s Board: No

e. Compliance with Section 20 of the Banking Regulation Act: Whether any of the Directors of the Bank is Director of the borrower company or is having any interest in the same: No

SECTION 7 a. Future Plans & Business potential(over a 3-5 year horizon) including Cross selling / Retail Marketing based on Co / Group’s future plans: (to be quantified)

Item Present Position –

Whether Tied Up?(Yes / No)

Business estimated

(i) Corporate Salary Package Not Applicable, as DIFC branch cannot offer such products.(ii) P Segment Loans

(a) Housing (b) Auto Loans (c) Personal Loans(iii) SBI Credit Card(iv) SBI Life(v) SBI Mutual Funds(vi) SBI Vishwayatra Foreign Travel Yatra

Cards(vii) Vendor/ Dealer Finance(viii) Any Other (Please specify)

b. Environmental and sustainability implications:

c. Earlier terms of Sanction: Not applicable d. Statutory dues/other contingent liabilities: Nil

SECTION 8

a. Justification for the proposal: (Only bullet points)

b. Recommended for sanction/ approval:

Asst. Manager Vice President (Business Development) (Credit & Syndication)

Chief Executive Officer

Section B

Appraisal Memorandum for Term/Corporate Loan:

Not applicable.

SECTION C Assessment of WC facilities: a. Inventory & Receivable levels: (Amount in USD million)

Particulars as on 31st March2008 2009 2010 2011 2012AUD AUD AUD AUD PROJ

Inventory Receivables S. Creditors Other CreditorsOther Current Assets(Figures in italics represent holding period in months.)

Inventory holding

Receivables

Holding levels

Other Current Assets

b. Assessed Bank Finance: (Amount in USD million) 2008 2009 2010 2011 2012Particulars as on 31st March AUD AUD AUD AUD PROJ

Total CA

Other CL (Except Bank Borr.)

Working Capital Gap

Net Working Capital (Act./Proj)

Assessed Bank Finance

NWC to TCA (%)

Bank Finance to TCA %

S. Cr. to TCA (%)

Other CL to TCA (%)

Inv. to Net sales (days)

Rec. to gross sales (days)

S. Cr. to purchases (days)

c. Assessment of EPC/ FBD limits : Not applicable

d. Computation of LC limits for WC: (Amount in USD million)Annual Purchase for FY 2011-12 64.32Estimates of Purchase under LCs 50.46

Lead Time 45Average Usance Period 15Requirement of LC 8.41Recommended LC limit from us 4.20

LC assessment is being done on the projected financials as on 31.03.2012. The Company has tied up with other Banks for the balance of its requirement. However, LC facility is fully interchangeable with TR facility

e. Assessment of BG limit: (Amount in USD million)Outstanding BGs as on 31.03.2011 0.40Add: BGs required during the period 2.50

Less : Estimated maturity/cancellation of BGs during the period 0.40Estimated Requirements of BG Limits 2.50

Recommended BG limit from us 2.10

f. Efficiency ratios:

Particulars as on 31st March

2008 2009 2010 2011 2012

AUD AUD AUD AUDPRO

JNet Sales/ Total Tangible Assets (times)PBT/ Total Tangible Assets (%)Operating Cost to sales (%)Bank Finance/ Ct. Assets (%)Inventory + Receivables to net Sales (days)

Brief comments on the assessment of the above limits:

g. Fund Flow Analysis: (Amount in USD million)

Particulars as on 31st March

2008 2009 2010 2011 2012AUD AUD AUD AUD PROJ

Long Term SourcesLong Term UsesSurplus/Deficit

Comments:

TERMS AND CONDITIONS: SECTION D

1 Name of the Branch DIFC Dubai UAE

.

2

.

Module International Banking Group

3

.

Name of the Unit Flemingo International Limited (Jebel Ali Branch)

a. Security : (Amount in USD mio)

Explained already. Please reproduce here

b. ECGC Cover: Not applicablec. Margins:

ProposedLetter of Credit

Justification for deviation from existing margins, if any to be provided in the proposal: No deviation is proposed.

d. Pricing /Rate of Interest: Proposed

Fund Based WC (OD/TR)Term Loan/Corporate LoanLC/BG

e. Insurance: Insurance cover is assigned in our favour. f. Processing fees:

g. Pre-payment Penalty:

h. Inspection: Bank reserves the Right to inspect company’s office /factory whenever deemed necessary. Charges will be borne by the company. The borrowing company will have to share all relevant information with the bank.

i. Availability Period: The facility will be available for one year. j. Validity of Sanction: Not applicable

k. Term Loan margin: Not applicable. i) Repayment Schedule: Not applicable.

l. Other Critical Covenants:

Annexure I1. Name of the Branch DIFC Dubai UAE

2. Module International Banking Group

3. Name of the Unit Flemingo International Limited (Jebel Ali branch)

Date of Receipt Not applicable

Complete Information Submitted By The Branch/Company On 25.11.2011

Date of Submission To RCC 04.12.2011

Recommended by RCC to IDCC II on

Date of Sanction

Flemingo for the project

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