As per C-II and C-III, the FBWC requirement is assessed as Rs

- 3 -Friends Charitable society- 3 -

Punjab National Bank : MCB,Ghaziabad/U.P.West, Merrut 18.3.20081. Name of the Borrower and BO & Controlling Office : FRIENDS CHARITABLE SOCIETYWhether fresh/renewal/ enhancementEnhancement / Fresh

Asset Classification as on 31-03-2007Standard

Credit Risk Rating by BankRating

Date of Rating

Score

ABS

Reasons for degradation

Present

BB-22/02/0851.5131.03.2007Financial PerformancePrevious

BB+

03/01/0757.89

31.03.2006

N.A.

Whether Agriculture/Retail/ SME/LargeNo

a) Whether Sensitive Sector Real Estate/Capital Market

b) Applicable Risk weightNo

Consortium/Multiple BankingN.A. Sole Banking

Lead BankN.A.

PNBs Share %100%

Date of Receipt of Proposal at BO/CO/HO24/12/2007

Date of last sanction & authority/In Principle Consent7/2/2007, GM (Zone).

Gist of the proposal

Sanction of fresh Term Loan of Rs.10.22 Crores for construction of additional building, purchase of lab equipments, furniture & fixtures, computers, etc. for Engineering & Dental Colleges.

Renewal cum enhancement of OD limit of Rs.1.00 crores from Rs.0.50 Crores against Tangible security.

Renewal of Bank Guarantee (Specific) limit of Rs.2.25 Crores.

Other Issues :

Relaxation in applicable ROI by 3.25% for OD facility and 3.75%.for all the Term Loans. 50% relaxation in Up-front fee on proposed TL of Rs.10.22 Crores Sanction of Pay Fee Facility for collection of Annual Fee under CMS

& Branded Debit Cards.

Confirmation of AGM(Br.) action in having allowed term loan of Rs.1.50 Crs. out of the proposed term loan. Permission for disbursement of TL through CA with a maximum of 25% of TL amount.

Approval of Draw Down schedule.

PART I 2.Borrowers Profile a)Name of the BorrowerFriends Charitable Society

Name of Units1. Krishna Engineering College

2. Krishna Dental College

BAddress of Regd. Office and institutes

95, Katori Mill, Loni Road, Near Hindon Airforce Station, Mohan Nagar, Ghaziabad (U.P.)

CConstitution Registered Society

d.Date of incorporation/

Establishment13.03.2003

e.Dealing with PNB since24.11.2005

f.Industry/SectorEducational institutions

g.Business Activity (Product)/

Installed Capacity.Running Educational institutions

3.Members of Executive Committee (S/Shri)

NameDesignationWhether Promoter/ Professional /Nominee

1.Sh.Rakesh Garg

2.Sh.Atul Garg

3 Sh.Sarish Agarwal

4.Sh.Sunil P.Gupta5.Sh.Ghanshyam Das Jain

6.Sh.Ram Avtar Karanwal7.Sh.Mittul Singhal8.Sh.Om Parkash ShahChairmanVice Chairman

Secretary

TreasurerMemberMember

Member

Member

PromoterPromoter

Promoter

Promoter

Promoter

Promoter

Promoter

Promoter

a) If any of them, in the list of Caution Advices circulated by the Bank from time to time/RBI's/Wilful defaulters' list/Caution List of ECGC/CIBIL Database:

No. The company found in CIBIL data on 11.03.2008. There is an overdue of Rs.8632/- in Auto loan account of Atul Kumar Garg.

b) If any one of them connected in the past with any NPA/OTS/Compromise/unscrupulous defaulters

No

c) If any of them, related to Directors/Senior Officers of PNB:

No

d) Management Change since last sanction, if anyNo

e) Share Holding Pattern as on: N.A.Name of the Promoters/Major Share holdersNo. of sharesAmt. in Rs. Crores.% Holding

Promoters HoldingN.A.N.A.N.A.

FIs/ Mutual Funds/UTI/Banks/FIIsN.A.N.A.N.A.

NRIs/OCBsN.A.N.A.N.A.

PublicN.A.N.A.N.A.

TotalN.A.N.A.N.A.

f)Whether Shares pledged to any Bank/FI/others N.A

If yes, Percentage of shares pledgedN.A.

InstitutionN.A.

PurposeN.A.

4.A Facilities Recommended : (Rs. in lacs)NatureExistingProposedSecured/Unsecured alongwith the basis thereof

Fund Based

Overdraft against tangible security50.00100.00Secured

Fund based ceiling50.00100.00

Non Fund Based

ILG225.00225.00Secured

Non Fund Based Ceiling225.00225.00

Term Loan I (Rs.7.22 crores)232.11232.11Secured

Term Loan II (Rs.5.00 crores)377.80377.80Secured

Term Loan III (Rs.12.00 crores)959.98959.98Secured

Term Loan IV Fresh--1022.00Secured

Total Term loans1569.892591.89

Total Commitment1844.892916.89

Disbursements have been completed in all term loans.

4.B Our Commitment and Maximum Permissible Exposure Norms

ExistingProposed%age of Banks Capital Funds as on 31.03.______Exposure Norms in %age

KCT*1400.001400.00

FCS*1844.892916.89

* KCT : Kanha Charitable Trust

* FCS : Friends Charitable Society 4. C Short Term Loans sanctioned by PNB in last 12 months, if any -Date of sanctionAmountPeriodROIDate of Adjustment/ Roll over

NIL

4. D Details of facilities provided outside consortium, if any l Name of the InstitutionNature of facilitySecurity O/s

as onPurposeRate of Interest

a)NIL

b)

5.A Facilities from PNB Subsidiaries/Exposure by way of investment in Equity/Debentures/Derivatives/Foreign Exchange etc. :

NILName of the InstitutionNature of facilitySecurity O/s

as onPurposeOverdue, if any

a)NIL

b)

5.B Term Loans from other Banks/Financial Institutions/Other Institutions - (including Lease, ICDs, Corporate Loans, Debentures etc.)

Name of the Bank/FIFacility SanctionedBalance O/s in Rs. Overdue, if anyRate of Interest

HDFC BankAuto Loan 132609.45 NIL 7.30%

ICICI Auto Loan122025.00 NIL 7.30%

HDFC Auto Loan 132609.45 NIL 7.30%

5.C Credit Rating by agencies {CRISIL/ICRA/CARE/FITCH INDIA} with purpose of such rating.

Not applicableAgencyRatingDate of RatingSignificance of RatingPurposeValidity Date

NA

5D. Details of Working Capital Limits from the Consortium/Multiple Banking

Name of the BankExistingShare %ProposedShare %ROI

FBNFBFBNFBFBNFBFBNFB

NIL

6.Details of Group /Allied/Associate firms and the facilities sanctioned to them along with conduct of these accounts with our Bank/ other Banks and comments on adverse indicators, if any.

As per Appendix II

7.A (i) Financial Position of the Society (as a whole)

(Rs. In Lacs )Particulars31.03.0531.03.0631.03.07

AuditedAuditedAudited

(12 Month)(12 Month)(12 Month)

Gross Sales/Receipts* 00.0000.0000.00

-DomesticNIL NILNIL

-ExportNILNILNIL

Other Income NIL NILNIL

PBIDTNILNILNIL

Operating Profit/Loss-63.03-163.05-113.58

Profit before tax-63.03-163.05-113.58

Profit after tax-63.03-163.05-113.58

Cash profit/ (Loss)-63.03-163.05-113.58

Paid up capital/Corpus Fund 322.42280.02213.68

Reserves and Surplus excluding revaluation reserves---

Misc. expenditure not written off---

Accumulated losses0.000.000.00

Deferred Tax Liability/Asset0.000.000.00

a) Tangible Net Worth322.42280.02213.68

b) Investment in allied concerns and amount of cross holdings0.000.000.00

c) Net Owned Funds (a-b)322.42280.02213.68

Total322.42280.02213.68

Unsecured Loans540.18332.30872.67

Total Borrowings1090.48337.70872.67

Secured550.305.40-

Unsecured540.18332.30872.67

Investments1412.20586.31914.69

Total Assets1413.74619.551090.20

Out of which net fixed assets0.000.000.00

Net Working Capital0.6431.34171.60

Current Ratio1.7718.1345.69

Debt Equity Ratio 3.381.214.08

Operating Profit/Sales000000

TOL/TNW3.381.214.08

Fund flow

Long Term Sources1412.91617.721086.36

Long Term Uses1412.27586.38914.76

Surplus/Deficit0.6431.34171.60

Short Term Sources0.831.833.84

Short Term Uses1.4733.17175.44

Surplus/Deficit -0.6431.34171.60

*The fee etc. are received in the Institutes and unit wise surplus and deficit is transferred to Societys account.

(ii) Krishna Engineering College (Unit of Friends Charitable Trust)

(Rs. In Lacs)

31.03.200531.03.200631.03.2007

AuditedAuditedAudited

Receipts111.48234.80500.50

Other Income11.477.7612.69

Operating Profit (loss)-74.81-84.90-25.78

Excess of Expenditure over Income-63.34-77.14-13.09

Depreciation62.0783.29120.81

Cash Profit-1.276.15107.72

Capital Fund698.19507.46768.04

Miscellaneous Exps. Not written off0.000.000.00

Accumulated loss 0.000.000.00

Tangible Net Worth698.19507.46768.04

Debt Equity ratio0.061.371.12

Current Ratio1.610.941.19

NWC24.41-4.9719.70

(iii) Krishna Dental College (Unit of Friends Charitable Society)

(Rs. In lacs)

31.03.200531.03.200631.03.2007

AuditedAuditedAudited

Receipts4.23195.75379.94

Other Income0.311.492.12

Operating Profit -106.42-87.42-102.61

Excess of Expenditure over Income-106.11-85.93-100.49

Depreciation--60.0291.19

Cash Profit-106.11-25.91-9.30

Capital Fund714.0178.85146.65

Miscellaneous Exps. Not written off122.390.000.00

Accumulated loss0.000.000.00

Tangible Net Worth591.6278.85146.65

Debts Equity ratio0.0112.558.39

Current Ratio2.490.481.49

NWC14.01-51.1937.21

Till 2005, the bank loans taken by the society for Engineering College and Dental college were shown in the Balance Sheet of the Society and not in the Balance sheets of the respective colleges. Later on, on the observation of Fee fixation committee, the secured loans taken by the colleges were reflected in their respective balance sheets as at 31.03.2006. As such, there is no decline in capital fund of colleges from 2005 to 2006 but due to change in presentation, it is appearing as declining. Besides, capital account in the balance sheets of college represent amount invested by the society.

7A (ii) Key Financials upto last quarter ended 31/12/2007(as per Un-audited Results )M/s Krishna Engineering College

(Rs. in lacs)Period endedLatest quarter ended Corresponding quarter of last year % ChangeCumulative upto this quarter of current yearCumulative upto this quarter of previous year% Change

Sales7.69NIL857.85500.94+71.25%

Other Income3.52NIL6.925.43+27.44%

PBT-186.17-134.09(38.84%)467.21296.13+57.77%

PAT-186.17-134.09467.21296.13+57.77%

M/s Krishna Dental College Rs. in lacsPeriod endedLatest quarter ended Corresponding quarter of last year % ChangeCumulative upto this quarter of current yearCumulative upto this quarter of previous year% Change

Sales290.50231.54+25.45%486.50399.89+21.65%

Other Income5.463.61+51.24%12.337.30+68.90%

PBT204.63186.00+10%80.88161.66-50%

PAT204.63186.0080.88161.66-50%

7B Capital Market PerceptionN.A.ListingBSE/NSE

Face Value NA

Current Share Price as on NA

52 weeks High / Low NA

Market Capitalisation as on NA

7.C Comments on Financial Indicators (only major variation/trends to be explained)

(Rs. In Crores)

ParticularsAccepted during

last assessment for FY 2006-07Actuals for FY 2006-07

Net Sales/Receipt998.66895.24

Excess of income over Expenditure218.90 -113.58

Receipts : The Society has achieved total receipts of Rs.127.55 lacs during FY 2004-05 and Rs. 439.80 lacs in F.Y. 2005-06 including both Engineering as well as Dental college, registering an increase of Rs. 312.25 lacs in F.Y. 2005-06. Further, during academic session 2006-07, the society has achieved total receipt of Rs. 895.24 lacs showing that the society has achieved more than double as compared to the receipt of F.Y. 2005-06.

The party has achieved receipts of Rs.895.24 lacs against the projections of Rs.998.66 lacs during the FY 2006-07. The party has informed that they had assumed 60 students for MCA classes but only 30 students was admitted and also there is decline in hostel fees in Krishana Engg College. Besides, they got 86 students against the 100 students as proposed in Dental College in 2007. However, the party has got 100 students in Dental College in 2008. Profitability

Profitability during FY 2006-07 has suffered mainly due to increase in salary & other benefits of qualified faculty staff which the society had to incur so as to maintain quality of education. Due to increase in seats of Computer Science and Electronics & Communication and introduction of one new branch of Engineering i.e. Information & Technology, the profitability of the society will improve significantly. Further, MCA course with in take of 60 students has been started and society is going to start PGDBM course from ensuing session, consequently profitability is likely to increase.

The net of income and expenditures of colleges are transferred to P&L account of society. As such, there are cash losses of society because depreciation has not been transferred to P&L account of society due to net surplus/deficit transfer. The true picture is as under :-

200520062007

Losses as per P&L of society -63.03-163.05-113.58

Depreciation as per P&L of Colleges KEC 62.0783.29120.81

Depreciation as per P&L of Colleges KDC--60.0291.19

Actual cash loss/profit of society- 0.96-19.7498.42

Corpus Fund

The society prepares three balance sheets and income expenditure account every year. These represent (i) dental college, (ii) engineering college and (iii) society. The corpus is brought into the society and the money utilized by the society in college is shown as Investment in colleges, in the society balance sheet. The bank loan is shown in the balance sheets of colleges.

The society is raising corpus fund by obtaining donations every year but it is declining due to excess of expenditure over income as under :-

200520062007

Opening Balance of Corpus fund 221.89322.42280.01

+ Additions by taking donations163.57120.6547.24

Total385.46443.07327.25

- Excess of expenditure over income 63.04163.06113.58

Closing balance of Corpus fund 322.42280.01213.67

Besides, the society has raised unsecured loans from Rs.332.30 lacs as on 31.03.2006 to Rs.872.67 lacs as on 31.03.2007. As such, the society is raising its long term funds. Current Ratio

The current ratio is very high. Though the same is not of much relevance in such cases. Debt Equity Ratio

The debt equity ratio of the society is very high i.e. 4.08 as at 31.03.2007 due to high amount of unsecured loans in comparison to the corpus fund. The DE ratio of the colleges of the society as on 31.03.2007 are 1.12 and 8.39 as shown above. The society will raise the corpus fund to the tune of Rs.1222.74 lacs against the debt of Rs.2712.05 lacs resulting in DE ratio to 2.22 as.at 31.03.2008 The same will come to 1.61 by raising corpus fund to Rs.1598.17 inclusive of surplus against the debt portion of Rs.2570.85 resulting in DE ratio to 1.61 as at 31.03.2009. The corpus fund of the society has increased from Rs.213.67 lacs as at 31.03.2007 to Rs. 624.89 lacs as at 31.01.2008 as per Prov. Balance Sheet (Fund Rs.278.05 lacs + Surplus of income Rs.346.84 lacs = Rs.624.89 lacs).

The society is incurring losses in initial years and will be in positive soon. The overall financial position of the society may be termed as satisfactory.

7.D Details of investment in Shares, Debentures, Units or diversion of funds outside the business etc. (Along with comments in case of increase)

NIL7.E Details of Liabilities not accounted for/Contingent liabilities

Contingent Liabilities as on 31.03.2007 are only towards the Bank Guarantees issued by bank on behalf of the society which amount to Rs.2.25 crores.

7.F Status/details of adverse comments/ Qualification by Auditors of the borrowing unit

As per ABS as at 31.03.2007, contingent liabilities have not been provided for. 7.G Position of assessment of income tax/sales tax/wealth tax of the borrowing concern/partners/proprietor

The society is registered U/s 12AA of the Societies Registration Act 1860, hence it is exempted from Income Tax/Wealth Tax. Moreover sales tax is not applicable.

7.H Information on litigation initiated by other banks/FIs against the borrower as per latest Audited Balance Sheet, if any

NIL7.I Overall likely impact of (7.B to 7.F) on the financial position of the borrowing unit

BGs have been issued for normal course of business and shall not have any adverse impact on the financials of the society.

8.SECURITYA.Primary

i) For working capital limits N. A.ii) For Term Loans & Overdraft 1. Extension of EM of societys land & building valuing Rs.2466.84 lacs as per ABS as at 31.03.2007, situated at plot no. 27(1) & 28 Site 2, Industrial Area, Loni Road, Ghaziabad measuring 66910.57 Sq. Mtrs., market value Rs.9118.72 lacs and realizable value Rs.7537.75 lacs as per detailed valuation report of M/S Atul & Associates report dated 06.02.2008 plus cost of proposed construction of Rs.12.33 crores. Thus total value will be Rs.87.70 crores.2. Hypothecation of other fixed assets like equipments, furniture & fixtures, other assets valuing Rs.479.62.00 lacs as per ABS dt. 31-03-2007 and other assets to be created out of bank loan (both present & future) Thus total value will be Rs.779.62 lacs.

FOR BG LIMIT (Existing)

General Counter Indemnity by the society.

Both the securities held against TLs & OD limits shall also cover the BG limit.

Basis for valuaion of IPs:The market valuation of the society land and building has been done by Bank Approved Valuer M/s Atul & Associates. As per his valuation report dated 06.02.2008, the realizable market value of the land and building is Rs.7537.75 lacs. However, as per valuation report dated 08.02.2008 of Incumbent , the realizable value is about Rs.76 Crores. The present value is done on realistic basis. At the time of last sanction, the realizable value of IP was Rs.44.58 crores as per valuation report dated 15.03.2006 of S.P.Bansal & Associates. B.Collateral (Information in respect of mortgage of IP to be given only in the following format:

i) Hypothecation/ Mortgage of Block Assets Immovable Properties

Security DescriptionArea in Sq MOwnershipValue(Rs./crore)Basis for valuationDateWhether existing / fresh

Last sanctionPresent book valueRealisable value

NIL

ii) First/Second/Third charge/ Pari-passu charge N.A.Nature of limitsSecurityValue of block assets as on: (as per B/Sheet)Value of block assets excluding specific charge if anyExtent of first / second charge holdersBalance / residual value of charge available to bank/ consortium

Term Loan NA

Working Capital NA

iii) Personal /Corporate GuaranteeBy way of Personal Guarantee

(Rs. in lakh)

Sl.No.Name of GuarantorNet Worth

Immovable propertyDate of confidential report

Previous

Present

PreviousPresent

PreviousPresent

1.Sh.Atul Garg66.13643.57 87.50103.5020.11.200612.02.08

2.Sh.Rakesh Garg*19.00343.50 26.4970.0020.11.200620.11.07

3.Sh.Sarish Kr. Chaudhary*142.40473.90 142.00578.5020.11.200620.11.07

4.Sh.Sunil P Gupta*14.45297.5014.00200.0020.11.200620.11.07

Total241.981758.47269.99952.00

*They are also guarantors for the credit facilities in favour of Kanha Charitable Trust being availed at ours. ivComments on changes, if any.

Increase in Net Worth is due to acquiring fresh immoveable properties by the guarantors and also some of the old properties were not included in previous statement for want of proof of titles at that time.

V Status of creation of charge: N.A.8. CSecurity Margin ( Fixed Asset Coverage Ratio for term loans)

ExistingProposed

NatureBook value As per ABS 31.03.2007 FACRBook Value (31.03.2009) FACR on project completion

Primary 2946.482.014506.362.38

Collateral--------

Total2946.482.014506.362.38

T Loans 1460.612.011893.282.38

Total Exposure 1685.611.752218.282.03

There is improvement in FACR on completion of the project. However, on the basis of market/realizable value of IP it was 2.62 times at the time of last sanction and now it is 2.03. The matter for additional collateral security was discussed with the party who has submitted that the value of IP already mortgaged is adequate to cover the banks exposure. In view of partys submission and the fact that the other banks are also approaching the party, their market reputation and income value of the account, the security already offered is termed satisfactory by us. FIXED ASSETS COVERAGE RATIO

Rs in croresRs in crores

A. Our Exposure

FB OD (against Tangible Securities)1.00

Term Loans25.92

BG2.25

Total Exposure29.17

B. Value of Securities

EM of IPs87.70

Hypothecation of other assets7.80

Margin on BG @10%0.225

C. Total value of the securities offered.95.72

Asset Coverage Ratio- C/A3.28 times

At the time of last sanction , the value of IP was Rs. 56.67 crores ( 44.58 crores + 12.09 crores) but looking into the construction and rise in land values, we have accepted the same at Rs.87.70 crores ( App. Rs.75.37 crores + 12.33 croes) which is realistic and reasonable.

9.Position of Account as on 22. 02. 2008 (Rs. in lacs)

NatureLimitVSDPBalanceIrregularity

Term Loan I 90024.66232.11232.11Nil

Term Loan-II500377.80377.80Nil

Term Loan III1200959.98959.98Nil

Overdraft5060.0060.00*Allowed within discretionary powers of AGM(Br.)

Bank Guarantee225225.00225.00Nil

Disbursement in all term loans have been completed.

10.A.Conduct of the Account including details of terms & conditions not complied with

A) Status of compliance of terms & conditions of last sanction.

All the terms and conditions of last sanction have been complied with.

B) Status of availment of limits and over drawings:

The party is availing overdraft limit up to full extent.

C) Status of routing of proportionate business in consortium advance & relation ship in sales and credit summations:

All the receipts are being routed through accounts i.e.overdraft and current accounts of Krishna Engineering College & Krishna Dental College.

D) Status of honoring of commitment in non-fund based credit facilities:

Party is availing BG limit of Rs.225 lacs, BGs have been issued in favour of Dental Council of India and Secretary UP State Medical Education. There has not been any claim under BG.

E) Status of submission of stock reports, QIS & other financial information (including audited/ provisional balance sheet ):

The desired information is submitted normally in time.

F) Status of checking of stocks/ securities:

The securities have been checked/ verified as per Banks guidelines.

G) Status of insurance:

Insurance coverage held as per Sanction.

H) Deviation in general guidelines, if any: NILI) Reasons for delay in renewal/ review, if any:N.A.

J) Details of other adverse features observed: NIL

K) Any others:NIL

10.B i)

Value of the Account(Rs. in lacs)PeriodNature of LimitAmountInterest/Commission EarnedYield (%)

01.04.06 to 31.03.07TL 1443.75109.807.61%

01.04.07 to 31.12.07TL1543.71136.898.87%

01.04.06 to 31.03.07OD50.005.2611.38%

01.04.07 to 31.12.07OD50.002.175.78%

10.B ii) Deposits including Escrow/TRA account with details

No Escrow/TRS account maintained however Society is availing overdraft facility through OD a/c. Deposit accounts of all the staff members of both the Engineering and Dental colleges are maintained at the branch.

However, we are submitting a proposal for fee collection utility on CBS Payee and Scheme of branded debit card which is discussed in the following paragraph under Other Issues at Sl.No.14(iii) of the proposal

10.CReview of the Account and Summary of serious irregularities pointed out by Banks Inspectors, Concurrent Auditors, Credit Audit & Review Division (CA&RD), RBI Inspectors, Statutory Auditors, observations of Stock Audit Report, Comment on Preventive Monitoring Score Trends, (and status of rectification of these irregularities)

As per Appendix III

PART II

11 A.Brief HistoryFriends Charitable Society is a society registered under the Societies Registration Act 1860 registration number 1423 dated 13.03.2003. The society owns land measuring 69,000 Sq. Mtr. approx and has been running Engineering and Dental College at Mohan Nagar, Ghaziabad. An engineering college in the name of Krishna Engineering College has become operational from academic season 2004-05 and Dental college in the name of Krishna Dental College has become operational from the academic session 2005-06.

As per All India Council for Technical Education letter dated 06.06.2006, number of seats for admission to 1st year of Elect & Comm. Engg. w.e.f. academic session, 2006-07, has been increased to 120 from existing 60. Further one new branch of Engineering i.e., Information Technology with intake of 60 students and M.C.A. with intake of 60 students has been started.

Further, as per All India Council for Technical Education letter dated 21.08.2007, number of seats for admission to 1st year of Computer Science & Engineering w.e.f. current academic session, 2007-08, has been increased to 120 from existing 60.

Presently, the society is running the following courses/student strength:

Sl. No.Name of the Course(s) Intake

(2005-06) Intake

(2006-07)Revised Intake

(2007-08)

1.Computer Science & Engineering 6060120

2.Electronic & Electrical Engg606060

3.Electronic & Comm. Engg.60120120

4.Information Technology--6060

5.Mechanical Engineering606060

6.MCA--6060

7.BDS100100100

B. (i) Industry Rating as per RMD :

Favourable/ Marginally Favourable / Neutral/ Marginally Unfavourable/ UnfavourableThe credit risk rating of the society has been down graded from BB+ (57.89) as at 31.03.2006 to BB- (51.51) as at 31.03.2007 mainly due to financials. ZCRMD has identified following risk factors :-

S.

No. Risk FactorsMitigating Factors Our Views

1.The existing project of the society has been implemented by delay of 9 months. It should be ensured that this would not happen in the proposed project.Due to delayed sanction the society submitted us revised implementation schedule. The society has assured to get this project completed timely.

2.The DE ratio of the society is on higher side. It is properly considered in the rating.After completion of the project as at 31.03.09, the DE ratio will be 1.61 by raising corpus fund.

3.The sensitivity analysis shows the company value at 11.95%.It is properly considered in the rating. The same has been factored into the risk rating.

4.Number of professional institutes are coming in and around NCR region. The professional approach & quality education is required for survival in present scenario. The management has its own name and fame. The society has got award from UP Govt. for best institute among Pvt and Govt. sector.

B (ii) Detailed Industry Scenario and Comments on management, production and marketing as well as Borrowers' diversification, expansion, modernization programme

As per Appendix - IV

12.Present Proposal

Present proposal has been submitted by the society to finance the expansion plan of the existing Engineering College and the Dental College. To finance the construction of new academic and PGDBM block along with purchase of computers, lab equipments and furniture fixture.

For the above purpose, the party has requested for Term Loan of Rs.1022 lacs to be used for Engineering College & Dental College.

The society is already availing OD against tangible security of Rs.50 lacs , which the society has requested to enhance to Rs.100 lacs and renewal of BG limit of Rs.225 lacs. The party has requested for renewal of the same.a)Justification for working capital sanction-

Justification for OD of Rs.0.50 crore against Tangible Security

The society is running two colleges, one Engineering college and the other Dental college. A major part of the fees in Engineering college is received in the month of August/September every year, while the same is received in Dental college in September/October every year. The colleges are having surplus of funds in these month. However, when these funds are exhausted within six months, the society has to avail short-term loans to meet out their revenue expenses. In view of increase in intake from 340 (2005-06) to 520 ( 2006-07) and to 580 (2007-08), the society has applied for enhancement in OD facility from Rs.0.50 Crore to Rs.1.00 Crore to meet their deficit during the year. The party has requested for OD limit of Rs.1.00 crores against the peak deficit of Rs.99.13 lacs in June 2008 ( 50.76 + 48.37) . The said outstanding balance shall be liquidated in the month of August / September/October every year on receipt of fee etc. The monthly cash flow statement from September to August is placed in the next sheets for each college separately indicating the peak level deficit.

The society is already availing OD limit against tangible securities of Rs.0.50 crores. In order to meet the expenditure / deficit in cash-flow, we recommend for enhancement in OD limit from Rs.0.50 crores to Rs.1.00 crores.KRISHNA DENTAL COLLEGE

STATEMENT SHOWING PEAK LEVEL DEFICIT

ParticularsUp to March 08Apr-08May-08Jun-08Jul-08Aug-08Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09

Opening Balance2.40-38.93-39.19-39.45-50.76-49.0234.34-46.6539.21198.07139.8183.5030.82

INFLOW

Corpus Fund155.000.000.000.000.000.000.0010.000.000.000.000.00

Academic Fee530.500.000.000.000.00184.00184.00184.00184.000.000.000.000.00

Hostel Fee48.000.000.000.000.0028.1228.1428.1228.120.000.000.000.00

Misc. Recpt.23.002.372.372.372.372.372.372.372.372.372.372.432.37

Security from Student (Net)197.360.000.000.000.00123.500.000.000.000.000.000.000.00

Secured Loan - Term Loan367.6925.0025.0025.0025.0028.0028.0026.0025.0025.000.000.000.00

Unsecured Loan0.000.000.000.000.000.000.000.000.000.000.000.000.00

Net Current Assets55.0055.0065.0057.000.0010.000.000.000.000.000.000.00

TOTAL INFLOW1321.5582.3782.3792.3784.37365.99252.51250.49239.4927.372.372.432.37

OUTFLOW

Revenue Expenditure

Salaries & Other Benefits309.8430.4530.4530.4530.4530.4530.4530.4530.4530.4530.4530.8730.45

Administrative Expenses126.0311.5511.5511.5511.5511.5511.5511.5511.5511.5511.5511.5511.59

Hostel Expenses8.970.120.120.120.120.120.120.120.120.120.120.120.12

Interest on Loans147.7312.4712.4712.4712.4712.4712.4712.4712.4712.4712.4712.5212.52

Commission on Bank Guarantee4.050.000.004.050.000.000.000.000.000.004.050.000.00

Capital Expenditure

Construction & Other Assets344.6428.0028.0028.0028.0028.0028.0028.0026.0026.000.000.000.00

Repayment of Term Loans281.000.000.0017.000.000.00216.0032.000.005.000.000.005.00

Repayment of Unsecured Loans24.130.000.000.000.000.0034.870.000.000.000.000.000.00

Repayment of Car Loan-1.000.040.040.040.040.040.040.040.040.040.040.050.05

Net Current Assets117.490.000.000.000.00200.000.0050.00

TOTAL OUTFLOW1362.8882.6382.63103.6882.63282.63333.50164.6380.6385.6358.6855.1159.73

Net Flow-41.33-0.26-0.26-11.311.7483.36-80.9985.86158.86-58.26-56.31-52.68-57.36

OD from PNB0.000.00

Closing Cash Balance-38.93-39.19-39.45-50.76-49.0234.34-46.6539.21198.07139.8183.5030.82-26.54

KRISHNA ENGINEERING COLLEGE

STATEMENT SHOWING PEAK LEVEL DEFICIT

ParticularsUp to March 08Apr-08May-08Jun-08Jul-08Aug-08Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09

Opening Balance1.93-45.04-45.15-48.26-48.371.86154.25145.64318.03234.92146.8188.8130.47

INFLOW

Corpus Fund350.00

Academic Fee690.580.000.000.00250.25250.25250.25250.250.000.000.000.000.00

Hostel Fee165.560.000.000.0055.2555.2555.2555.250.000.000.000.000.00

Misc. Recpt.17.501.711.711.711.711.711.711.711.711.711.821.711.71

Security from Student (Net)26.0627.84

Secured Loan - Term Loan369.7170.0065.0065.0065.0065.0065.0065.0065.0065.00

Unsecured Loan104.97

Net Current Assets0.0090.0080.00100.00

TOTAL INFLOW1724.38161.71146.71166.71400.05372.21372.21372.2166.7166.711.821.711.71

OUTFLOW

Revenue Expenditure

Salaries & Other Benefits290.9232.3832.3832.3832.3832.3832.3832.3832.3832.3832.3832.4732.38

Administrative Expenses123.4512.8512.8512.8512.8512.8512.8512.8512.8512.8512.8512.9612.85

Hostel Expenses55.180.120.120.120.120.120.120.120.120.120.120.150.15

Interest on Loans141.4714.3914.3914.3914.3914.3914.3914.3914.3914.3914.3914.3914.46

Capital Expenditure

Construction & Other Assets738.93102.0090.0090.0090.0090.0090.0090.0090.0090.000.000.000.00

Repayment of Term Loans281.000.000.0017.000.000.00216.0050.000.005.000.000.005.00

Repayment of Unsecured Loans

Repayment of Car Loan1.030.080.080.080.080.080.080.080.080.080.080.080.12

Net Current Assets139.370.000.000.00200.0070.0015.000.000.000.000.000.000.00

TOTAL OUTFLOW1771.35161.82149.82166.82349.82219.82380.82199.82149.82154.8259.8260.0564.96

Net Flow-46.97-0.11-3.11-0.1150.23152.39-8.61172.39-83.11-88.11-58.00-58.34-63.25

OD from PNB0.000.00

Closing Cash Balance-45.04-45.15-48.26-48.371.86154.25145.64318.03234.92146.8188.8130.47-32.78

b) Justification for Non Fund based limits

Justification for NFB-BG limit of Rs.2.25 crores

The society has been sanctioned BG limit (specific) of Rs.2.25 crores for submission of the same to Government Deptt./ Dental council of India. GM (Zone) has also allowed relaxation in BG commission by 0.90% i.e. commission @ 1.50% is being levied against the rate of @2.40% p.a. on yearly basis. Accordingly two BGs of Rs.2.25 Crores have been issued in favour of DCI and Govt. for a period of 5 years for which bank commission is charged on yearly basis.

The society has requested for continuance of the same. We recommend for renewal of BG (Specific) limit of Rs.2.25 crores.

c) Justification for term loan/DPG

(i)Purpose

Construction of additional building, purchase of lab equipments, furniture/fixtures, computers, etc. for Engineering & Dental Colleges

ii) A.Appraising agency

The project has not been appraised by any bank/institution, because no technical process is involved. Number of seats for engineering/dental courses is decided by AICTE/DCI and fee to be charged is decided by U.P.Govt. However, the branch has appraised the proposal of the party and being a running institute based on estimates/projections, the same is found viable. The financial projections given by the party have been assessed and found reasonable and acceptable. We agree with the same. The cost of construction, implements are as per market trend and have been accepted. The party will purchase the same from reputed suppliers.

B.Whether vetted by any Technical Officer/ Other Official of Bank (Name and designation to be furnished).

N.A. (iii) Summary of cost of project and means of finance

COST OF PROJECT ( Rs.in lacs)

Engg. CollegeDental CollegeTotal COP

Civil Construction924.00309.001233.00

Lab Equipments40.00150.00190.00

Computers- Hardware & Software30.00---30.00

Furniture & Fixtures30.0015.0045.00

Books5.005.0010.00

Diesel Generator---10.0010.00

Dental Vans---15.0015.00

TOTAL1029.00504.001533.00

MEANS OF FINANCE :

Term Loan from PNB 1022.00

Internal Accruals 150.00

Own Contribution 361.00

Total 1533.00

(iv)Sources of Promoters Contribution and the time schedule as to when the funds will be brought. Promoters Contribution to the tune of Rs. 511.00 lacs will include Internal Accruals and Own Contribution by raising corpus fund. The funds will be brought in as per the margin proportionately. The party has informed that they will bring in their contribution well in time by withdrawing deposits/investments with their other sister concerns. They have also requested to release the term loan with proportion of their contribution from time to time.

The party has estimated cash accruals of Rs.267.51 lacs and Rs.375.43 lacs for FY 2007-08 and FY 2008-09 and they will bring an amount of Rs.150 lacs in the project. (v) Status of tie-up of loans The Society has requested for a term loan of Rs. 1022 lacs for the present expansion programme.

(vi) Brief explanation for each major individual item of cost of Project with present status along with comments on the reasonableness/competitiveness

As per Appendix VI

vii) Comments on all major technical aspects like locational advantage, Technology/ manufacturing process, power, man power, utilities,transportation, etc.

As per Appendix VI(A)

viii) Summary of profitability, Break-Even, DSCR and IRR with comments thereon including Assumptions underlying profitability projections:

Detailed projected profitability projections, balance-sheet, cash flow are as per Appendix VII

Society as a whole as on 31.03.2009

Debt-Equity Ratio 0.74

Average DSCR 1.57

Minimum DSCR 0.63

Internal Rate of Return (Pre Tax) 15.03

Break Even PointAs per Annexure VII

ix)Detailed Sensitivity Analysis:

x)Status of various statutory approvals and clearances

All necessary approvals have already been obtained by the society. The society has also got approved the map for proposed construction. xi) Present physical & financial status of the last project, if any :- The party had been sanctioned term loan of Rs.12.00 crores for construction of additional building , purchase of lab equipments, furniture & fixtures, computers etc. for both the colleges on 07.02.2007 by ZO. As per implementation schedule given at the time of sanction of proposal, the construction was to be completed in March 2007. But due to delay in sanction and the fact that the construction activities takes some time , the party approached us in the month of July 2007 and submitted the revised implementation schedule as under :- Acitivity Time Period

Completion of construction Dec 2007

Purchase of other assets Dec 2007

Looking into the genuine request of the party and the same was not properly estimated intially , the same was accepted by us. We recommend to note the facts. The above project also stands completed in Dec 2007. xii) Implementation schedule

ActivityStarting DateCompletion Date

ConstructionAlready commenced31.08.2008

Other fixed assets01.07.200831.08.2008

xiii)Draw Down Schedule Quarter-wise

Period of Draw Down Amount (Rs. In lacs)

Quarter Ending March 2008250.00

Quarter Ending June, 2008200.00

Quarter Ending September 2008150.00

Quarter Ending December 2008422.00

The party has submitted the above draw down schedule and we recommend for approval of the same. xiv) Proposed repayment schedule

Scheduled date of Completion of Project31.08.2008

Commercial Operations Date (COD)Sept 2008

Implementation period (in months)7 months

Moratorium (in months)1 month

Repayment period in months/quarters/ Half yearYearly

No. of installment5 (five)

Starting Date30.09.2008

End Date (Last installment) 30.09.2012

Door to door tenor4 Years 8 Months

13.Pricing

FacilityApplicable rateExistingProposed

Rate of interestOverdraft@ BPLR + 2% i.e. 14.50%@ BPLR -1.25%+ i.e. 11.25%@ BPLR -1.25%+ i.e. 11.25%

TL@ BPLR + 2%+ 0.50% (term premia) i.e. 15.00%@ BPLR %+ 0.50% (term premia)- 1.75% i.e. 11.25%@ BPLR %+ 0.50% (term premia)- 1.75% i.e. 11.25%

Processing FeeOD renewalRs.250 per lacAs per Bank rulesAs per Bank rules

Processing FeeNFB renewalRs.125 per lacAs per Bank rulesAs per Bank rules

Upfront FeeTL@1.25% of the loan amount@ 0.625% @ 0.625%

Documentation Fee--Rs.25,000.00Rs.25,000.00Rs.25,000.00

(a) Justification

As per Sl.No.14 given below.

(b) ROI/other charges stipulated by other participating banks, if applicable -N.A.14.Other Issues

(i)Relaxation in ROIThe members of the society are running four educational institutions at Ghaziabad and having very good reputation in the area. Party is presently availing overdraft and Term Loan facility on ROI @ 11.25% and requested to continue the same for existing as well as proposed facilities. They are availing credit facilities in their other organizations from OBC and other bank at competitive interest rates. Keeping in view the sizeable volume of business as recently another engineering college at Moradabad being established has come to our folds and also the possibility of taking over the accounts of their other institutions from other banks, we recommend for enhancement in existing overdraft facility from Rs. 50.00 lacs to Rs.1.00 crore at rate of interest @ 11.25% (Linked with BPLR) and sanction of fresh term loan of Rs.10.22 crores on ROI @ 11.25% (Linked with BPLR). Hence, we recommend for approval of relaxation in ROI by 3.25% in case of OD against Tangible Security and 3.75% in case of Term Loans (existing and proposed).(ii)Relaxation in Upfront Fee

The party has requested for charging of upfront fee @ 0.25% on the Term Loan of Rs.10.22 crores against the applicable rate of 1.25%. We have negotiated with the party and made them agreeable for 50% waiver in upfront fee. Therefore, we recommend for 50% relaxation in upfront fee on the proposed TL of Rs.1022.00 lacs.

(iii)Disbursement of Term Loan The party has submitted that they have appointed a contractor for civil construction and normally 25% of the amount is required for miscellaneous petty payments and expenses towards electricity fittings, sanitary fittings, construction and acquiring other fixed assets for which they will issue a/c payee cheque and the amount of payment bills/challans as well as certificate of CA shall be submitted in due course. As every time it is not possible to procure quotations for such purchases and ask the bank to issue pay orders / drafts for such small amounts. Hence, We recommend for release of part of the Term Loan, where direct payments to the suppliers of building construction material, furniture, equipments, library books etc will be made by the society through account payee cheques and a fully reconciled statement for all such payments made will be submitted to the bank alongwith certified copies of the bills.

(iv) Confirmation of Action The party vide its letter dated 9/2/2008 informed that their fourth year inspection by the Dental Council of India(DCI) may take place anytime after 10th March, 2008. As per norms of DCI, party had to buy 100 nos. dental chairs and other lab equipments to meet requirements of this inspection. Accordingly, the party had ordered 100 nos. of dental chairs and some other lab equipments costing approx. Rs.1.00 crore for fulfilling the requirements of DCI. Besides, the party also required Rs.50.00 lakhs aprox. to meet urgent building construction requirements. Party informed having incurred expenses of Rs.50.00 lakhs from its own sources towards construction work, etc. under the proposed expansion. It has further been informed that 95 Nos. of dental chairs were delivered at college and party had to make payment to the suppliers immediately. FCS therefore requested to allow them ad-hoc credit facility of Rs.1.50 crores to be utilized towards payment to dental chairs, lab equipments and building construction work which may be subsequently adjusted out of proposed term loan for expansion under consideration.

In view of urgent and pressing requirements of the party and discussions with your goodself, we have on 22/2/08 allowed term loan of Rs.1.50 crore for purchase of dental chairs, lab equipments, and building construction work for proposed expansion programme and moved for confirmation of our action vide letter dated 22/2/08. We once again recommend to confirm our action in having disbursed term loan of Rs.1.50 crores out to the proposed term loan of Rs.10.22 crores. After sanction of proposed term loan of Rs.10.22 crores , term loan of Rs.1.50 crores will be liquidated by making disbursement from TL 10.22 crores. (V) FEE COLLECTION UTILITY ON CBS PAYEE & SCHEME OF BRANDED DEBIT CARDS.

At present the society is running the following courses, through KEC & KDC

Name of the courses. Programme Codes Total Sanctioned strength

(A). B. Tech Courses

1. Computer Science 10 240

2. Electrical Engineering 21 180

3. Mechanical Engineering 40 180

4. Electronic Communication 31 300

5. Information Technology 13 120

(B) MCA 14 120

(C) BDS 15 300

Total 1440

The total projected number of students for all the courses will be 1700 approximately taken together in the year 2008-2009.

FEE DETAILS PER YEAR

Academic Programme Existing fees(2007-08) Projected Fees( 08-09)

B.TECH & MCA 2007 08 RS. 63950/- RS. 63950/-

HOSTEL FEES RS. 34000/- RS. 34000/-

BDS RS. 208620/- RS. 208620/-

HOSTEL FEES RS. 50000/- RS. 50000/-

(VI) COST BENEFIT ANALYSIS

The maximum fees under B.TECH & BDS Courses may be estimated at approximately Rs. 99000/- (Rs. 65000/- + Rs. 34000/-) and Rs. 258620/- (Rs. 208620/- +Rs. 50000/-) respectively. As per existing practice , the fees are being paid by the Guardians /Students through drafts issued by different Banks therefore a student who is required to purchase a draft for Rs. 99000/- is supposed to pay a commission of Rs. 300/- approximately to the issuing Bank . Therefore extending the leverage of CBS Facility to the students so that students are induced to deposit the fees only through the branches of PNB Charges of RS. 10/- per thousand with a maximum of Rs. 100/ per fees transaction is proposed. Such transactions will be a matter of routine and as such no significant cost is involved.

As Such if the facility is availed by say 1000 students (Conservative estimates) then the remuneration to be earned by Bank is estimated at Rs. 100000/- in the first year The Charges will be borne by the Students as agreed. With the above estimates and relaxation on the part of the students the above remuneration may be garnered by our Bank .

BRANDED DEBIT CARDS

This is proposed by the Institute that the Branded Debit Cards will be issued to approximately 800 salaried employees and students. As such this is estimated that average balance in the above accounts proposed to be opened with our Bank would be around Rs. 1 Crore which is a significant amount of Low Cost Deposit.

In view of the above we recommend for sanction facility of pay fee and branded debit Cards in favour of engineering & dental Colleges of the society.

15.Strengths & Weakness with mitigants, if any

Strengths

The Engineering & Dental College have been established by reputed entrepreneurs and professionals having very rich experience of running reputed colleges at Ghaziabad.

The college belongs to Krishna group having good reputation in UP for running higher education/engineering institutes with a strong financial background and experienced staff and Managing Committee.

The college is ideally located at Mohan Nagar, Ghaziabad near Delhi and is receiving very good response.

The Fixed asset coverage ratio at 2.29 is satisfactory and facility is also to be secured by personal guarantee of all the key office bearers /promoters of the society.

Weakness

Competition from the existing/upcoming engineering colleges in and around Ghaziabad.

Adverse Government policy may change the scenario.

16. Recommendations: We recommend for the following facilities:

Sanction of fresh Term Loan of Rs.1022 lacs on ROI @ 11.25% for construction of additional building, purchase of lab equipments, furniture & fixtures, computers, etc. for Engineering & Dental College Expansion.

Sanction of OD-against tangible security limit of Rs.100 lacs from Rs.50 lacs by way of enhancement.

Other Issues:-

Relaxation in applicable ROI by 3.25% for Overdraft facility and 3.75%.for all Term Loan facilities.

50% relaxation in upfront fee for Term Loan.

Sanction of Pay Fee Facility for collection of Annual Fee under CMS

& Branded Debit Cards.

Confirmation of AGM(Br.) action in having allowed term loan of Rs.1.50 Crs. out

of the proposed term loan. Approval of Draw Down schedule. Permission for disbursement of TL through CA with a maximum of 25% of TL amount.

Detailed Terms and Conditions are as per Annexure I.

SR.MANAGERCHIEF MANAGERASSTT.GENERAL MANAGER

DATE:

Appendix II

Details of Group /Allied/Associate firms and the facilities sanctioned to them along with conduct of these accounts with our Bank/ other Banks and comments on adverse indicators, if any.

Members are running Krishna Institute of Engineering and Technology-Muradnagar, Indraprastha Engineering College(IPEC)-Sahibabad and Ajay Kumar Garg Engineering College (AKG)-Ghaziabad and Krishna Institute of Management & Technology, Moradabad.

Name of the CompanyActivityFinancials (Rs. In lacs)Dealing BankFacilities

Nature & Amount

Indian Institute of Management & Engineering Society. Unit AKG Engg. College, Delhi Hapur By Pass Road Ghaziabad.

Educational InstitutePeriod

31.03.2006

31.03.2007

Corpus fund963.00

963.46

Add Reserves & Surplus

939.00

993.67

TNW

1902.00

1957.13

PBT

18.40

54.96

Sales

999.00

1037.65

Bank of BarodaOverdraft limit Rs.44.46 lacs & Term Loan of Rs.396.04 lacs

Shail Garg Shiksha Sansthan, Unit IPEC Site IV Sahibabad.Educational InstitutePeriod

31.03.2006

31.03.2007

Corpus fund450.00

572.40Add Reserves & Surplus

0.00

.0.00Less Acc. Losses & Intangible Assets

0.00

0.00

TNW

450.00

572.40PBT

55.00

122.76Sales

962.00

1302.00

UTI BankTerm Loan Rs.5.56 crores, Overdraft limit Rs.0.60 crores

Krishna Charitable Society Unit Krishna Institute of Engineering & Technology

Murad Nagar-GhaziabadEducational InstitutePeriod

31.03.2006

31.03.2007

Corpus fund 121.00

121.00

Add Reserves & Surplus

929.00

1011.80

TNW

1050.00

1132.76

PBT

63.00

83.09

Sales

1081.00

1327.20

ING Vysya Bank Ltd. Ghaziabad

Term Loan Rs.1200 lacs, Overdraft limit Rs.50.00 lacs

Kanha Charitable Trust Unit Krishna Institute of Management & Technology

Moradabad.Educational InstitutePeriod

31.03.2006

31.03.2007

Corpus fund--

--

Add Reserves & Surplus

--

--

TNW

--

--

PBT

--

--

Sales

--

--

Punjab National Bank, MCB, Rajnagar, Ghaziabad

Term Loan Rs.1400 lacs, under disbursement.

Kanha Charitable Trust is a new Trust formed in May 2007 and in a construction stage, there is no financials for the year ending 31.03.2006 and 31.03.2007.Comments on conduct of these accounts with our bank/other banks

NameDealing BankConduct

KIETING Vysya BankSatisfactory and Standard as on 31.03.07

IPECUTI BankSatisfactory and Standard as on 31.03.07

AKGBOBSatisfactory and standard as on 31.03.07

Kanha Charitable TrustPNB, MCBTerm Loan under disbursement

Appendix III

Review of the Account and Summary of serious irregularities pointed out by Banks Inspectors, Concurrent Auditors, Credit Audit & Review Division (CA&RD), RBI Inspectors, Statutory Auditors, observations of Stock Audit Report, Comment on Preventive Monitoring Score Trends, (and status of rectification of these irregularities)

As per last Annual IR dated 31.12.2006, there is no serious irregularity outstanding in the account. CARD report stands closed on 19.09.2007.

PMS rank is 3 as on 30.09.2007 due to irregularity in the account and non achievement of the financial targets. Appendix - IV

Detailed Industry Scenario and Comments on management, production and marketing as well as Borrowers' diversification, expansion, modernization programme

Technical courses are ever-demanding courses, more so when our economy has opened up and many Fortune 500 companies are having/evincing a presence in Indian sub-continent. Hence, demand for technically qualified personnel is on constant rise.

The students of West U.P. and Delhi used to go other place for studying Engineering, BDS and other professional courses. To bridge the demand and supply gap and to provide quality education to the students of U.P., the State Government has allowed higher technical education to the private sector by way of permitting opening of private Dental, Engineering, Management & Business Administration colleges. As per the Essentiality Certificate dated 21.11.2003 for Dental College issued by Govt. of U P there is 1 dental surgeon on 72248 population in the State and with the expansion of the dental college surgeon population ratio would improve. Demand of qualified engineers also is regularly on increase, particularly in I.T.Sector and many leading IT companies like Infosys, Microsoft, Wipro, Satyam and TCS are feeling acute shortage of trained IT personnels.

With the availability of these courses in West U.P. itself the students have natural shift towards these local colleges. The Engineering and Dental institutes are located at Ghaziabad, and due to its proximity to Delhi, it is fast becoming a major institutional area in the field of higher education and students from Delhi are attracted to Ghaziabad to pursue higher studies.Recent Developments

The UNESCO Education for All Global Monitoring Report2007 has ranked India at the 99th position with a composite Education for All Development Index (EDI) of 0.789. Referring to a Nationwide Sample Survey on out of school children by the Social and Rural Research Institute in 2005, the report notes that that the number of out of school children has halved from 25 million in 2002 to 13.5 million in 2005. The nation-wide sample survey was commissioned by the GoI under the Sarva Siksha Abhiyan (SSA) Programme.

In India, since private universities do not generally receive financial assistance from public outlays, the fees charged by them are reportedly higher than the fees charged by publicly funded universities. The University Grants Commission (UGC), is empowered under the UGC Act, 1956 to make regulations, with the prior approval of the Central Government, for Admissions and Fee Structure in Universities and Colleges. In August 2007, the UGC has constituted an Expert Committee to formulate:

Regulations with regard to admission and fee for self-financing, private professional institutions, including deemed to be universities.

Regulations for admission and fee for self-financing courses in aided Universities/Colleges.

Regulations for admission and fee for aided courses in aided Universities and Colleges.

Review of Latest Financials

The financials of educational institutions are not available.

Outlook

In future, demand for education is likely to increase further with the fall in poverty levels, fall in fertility levels, and increased awareness of benefits of education. The supply of education is also likely to increase with the increased public expenditure on education in India, and the increased demand for higher and professional education. Globalisation has created tremendous opportunities for some people in India, especially those with professional, managerial and technical skills. Education is an essential part of development effort, which contributes to social, economic and cultural development.

In India, it is largely the supply factors and not the demand factors, which are responsible for the large illiteracy levels in India. According to Government estimates, the additional requirement of funds to realise the fundamental right to education for every child is estimated at Rs. 98 billion per annum for ten years. There are critical gaps in the availability of infrastructure facilities and qualitative aspects of education including teachers training, educational curricula, equipment and training material, particularly, in the publicly funded schooling system of the country. Looking forward, the supply of educational institutions and the required manpower depends upon changes in the current education system, the rate at which it takes place, and the time, space and field of operation. Strategies are needed for turning India into a knowledge-based society through educationprimary as well as higher and wider use of IT, and enhanced training skills development. In India, the increasing priority in public expenditure to elementary and secondary education has brought down the relative share of higher and technical education in central Government budget over the years. Thus, the shift in resources towards elementary and secondary levels is likely to result in a continuing increase in private educational institutions (at schooling and professional levels) whose funding is derived mainly from tuition fees. Looking forward, given the fiscal squeeze in state budgets, parents who can afford it are likely to turn increasingly to the private sector for their children's education, and the private sector is likely to grow relative to the public education sector.

Risk Scoring

Overall Industry Risk ScoringScoreWeightScore x WeightScore

Industry Characteristics5.3315.33

Competitive Forces4.3814.38

Industry Financials3.8913.89

Total3.013.594.53

Definition of Scores

ScoreMeaning

6.01-7Highly Favourable

4.51-6Favourable

4.01-4.5Marginally Favourable

3.01-4Neutral

2.51-3Marginally Unfavourable

1.01-2.5Unfavourable

0-1Highly Unfavourable

This report has been prepared by ICRA for the exclusive and private use of Punjab National Bank (PNB). The report provides content and analytical inputs for the risk-scoring model being used by PNB, with the risk scoring scale and the respective definitions being those of PNB. All information contained herein has been obtained by ICRA from sources believed by it to be accurate and reasonable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion and ICRA shall not be liable for any losses incurred by users from any use of this report or its contents. In the course of work, ICRA may have received information from companies being rated or graded. However, this report does not contain any confidential information obtained by ICRA in the process of rating or grading. This report contains data/information available only in the public domain or available through secondary sources. Opinions expressed in this report are not an indication of any prospective rating/grading of any instruments to be issued by any entity operating in the industries for which the risk scores have been assigned.

Comments on management, production and marketing

The promoters of the society, Shri Rakesh Garg, Shri Atul Garg, Shri Sarish Agarwal and Shri Sunil P.Gupta are having rich experience of running the educational institutions and are already running/ associated with the reputed colleges in Ghaziabad:- Krishna Institute of Engineering Technology, Murad Nagar, Ghaziabad.- Ajay Kumar Garg Engineering College, Ghaziabad.- Indraprastha Engineering College, Sahibabad.

Shri Rakesh Garg, an entrerpreneur and educationist and philanthropist with growing taste and dream of making the society educated at large has a lot of experience. He is the Chairman of Krishna Engineering College, Ghaziabad, Krishna Dental College and Secretary of Ajay Kumar Garg Engineering College, Ghaziabad.

Shri Sarish Chaudhary, an Industrialist, and an Educationist with deep rooted interest in higher and technical education reforms in the country having vast experience as an educationist. He is the Vice-Chairman of Krishna Institute of Engineering & Technology, Ghaziabad, Krishna Dental College Ghaziabad, Krishna Engineering College, Ghaziabad.

Shri Atul Garg, an industrialist and an educationist with long qualitative experience in the education field. He is the Treasurer of Krishna Institute of Engineering & Technology, Ghaziabad, Vice-Chairman of Krishna Dental College, Ghaziabad, Krishna Engineering College, Ghaziabad and Secretary of Indraprastha Engineering College, Ghaziabad.

Shri Sunil P Gupta is a Chartered Accountant by qualification and an educationist with long qualitative experience in the education field. He is the General Secretary of Krishna Institute of Engineering & Technology and Joint Secretary of Krishna Engineering College & Krishna Dental College, Ghaziabad.

Borrowers' diversification, expansion, modernisation programme.

The present proposal is for construction of academic block, etc. for Engineering & Dental Courses. The society has started one new branch in engineering i.e. Information Technology with intake of 60 students and M.C.A. with intake of 60 students and their intake in Electronics & Communication has been increased from 60 to 120 seats by AICTE vide their letter dated 6/6/2006. Further, their intake in Computer Science & Engineering has been increased from 60 to 120 seats by AICTE vide their letter dated 21.08.2007. Also, the Management proposes to start PGDBM course also w.e.f. next session i.e. from 2008-09.

Appendix - VI

Brief explanation for each major individual item of cost of Project with present status along with comments on the reasonableness/competitiveness

CIVIL WORKThe Society will construct 41200 sq ft. area for Civil Construction of Dental College & Extension of academic block and 123200 sq ft. area for Civil Construction of Engineering College & Extension of academic block as well as PGDBM Block in Engineering College. Rs. in lacs Academic Blocks at KEC Basement and GF 4459.30 Sq.Mts. 360.07

Hostel Blocks KEC GF,FF,SF,TF 4756.60 Sq. Mts. 384.09

PGDM Block KEC GF, FF, SF 1672.23 SQ.Mts. 180.09

Hostel Block KDC GF,FF,SF 1505.01 Sq.Mts. 121.50

Academic Block KDC -- SF 2322.56 Sq.Mts. 187.50

Total 14715.70 Sq.Mts. 1233.25

Detailed estimates ( 5 Nos.) of M/s Atul & Associates dt. 06.02.2008 for different blocks to be constructed having detailed description of items is annexed. Total cost of construction has been estimated at Rs.1233.00 lacs with an average of Rs.838 per sq.mt. In view of increase in cost of cement , steel and other items as well as quality of construction, same may be treated as satisfactory. The rates are competitive. Lab Equipments & ComputersThe society has estimated the requirement of lab equipments of Rs.190.00 lacs , out of which Rs.40.00 lacs will be invested for Krishna Engineering College and 150.00 lacs for Krishna Dental college. Krishna Engineering College will start PGDBM course from the next session for which 120 computers are required costing to Rs. 30.00 lacs.

Krishana Engg. College

Electrical labs 25.00 lacs

Mechanical labs 15.00 lacs

Krishana Dental College

Dental Chairs 100.00 lacs

OPG Machines & Other Eqp 50.00 lacs

Total 190.00 lacs

Furniture & Fixtures

The requirements of furniture & fixtures for proposed expansion is estimated at Rs.45.00 lacs, out of which Rs.30.00 lacs will be invested for Krishna Engineering College and 15.00 lacs for Krishna Dental college.

Other Assets:

Other assets consists of Books & Periodicals, Diesel Generator and Dental van for ongoing expansion of the society are estimated at Rs. 35.00 lacs.

Appendix VI(A)

Comments on all major technical aspects like location advantage, Technology/ manufacturing process, power, man power, utilities, transportation, etc.

Members of the society are well experienced in the line and running reputed professional colleges like AKG, KIET and IPEC at Ghaziabad. They enjoy good reputation in the line. Location of the Institute is prime i.e. Mohan Nagar which is adjacent to Delhi and well connected with road and railway. Institution is already having well experienced/qualified staff and there is likely to be no problem in recruiting additional staff as and when required.Appendix VII

Summary of profitability, Break-Even, DSCR and IRR with comments thereon including Assumptions underlying profitability projections:

Krishna Engineering College and Krishna Dental College have earned good name in a very short span of time. Krishna Engineering College ranks amongst first 10 of private Engineering colleges of UP.T.U.LKO.

Summary of profitability (Rs. in lacs) 31.03.2008 31.03.2009 31.03.2010 31.03.2011 P A T I C U L A R SKECKDCTOTALKECKDCTOTALKECKDCTOTALKECKDCTOTAL

(I) I N C O M E

(a) Academic Fees690.58 530.50 1221.08 1001.00 736.00 1737.00 1427.00 766.00 2193.00 1725.00 820.00 2545.00

(b) Hostel Fees165.56 48.00 213.56 221.00 112.50 333.50 272.00 112.50 384.50 306.00 125.00 431.00

(c) Interest 5.00 1.00 6.00 5.00 1.00 6.00 5.00 1.00 6.00 5.00 1.00 6.00

(d) Miscellaneous Receipts12.50 22.00 34.50 15.63 27.50 43.13 19.53 41.25 60.78 21.48 45.38 66.86

873.64 601.50 1475.14 1242.63 877.00 2119.63 1723.53 920.75 2644.28 2057.48 991.38 3048.86

(II) E X P E N D I T U R E

(a) Salaries & Other Benefits290.92 309.84 600.76 388.65 365.82 754.47 513.31 402.41 915.72 671.64 442.65 1114.29

(b) Administrative Expenses123.45 126.03 249.48 154.31 138.64 292.94 231.46 152.50 383.96 347.19 167.75 514.94

(c) Hostel Expenses55.18 8.97 64.15 1.50 1.50 3.00 1.65 1.65 3.30 1.82 1.82 3.63

d) Commission on BG0.00 4.05 4.05 0.00 4.05 4.05 0.00 4.05 4.05 0.00 4.05 4.05

(e) Interest on Term Loan121.97 110.23 232.19 148.75 107.74 256.49 111.99 76.16 188.15 73.20 45.59 118.79

f) Interest on OD limit1.50 1.50 3.00 6.00 6.00 12.00 6.00 6.00 12.00 6.00 6.00 12.00

g) Intt on Unsecured loans18.00 36.00 54.00 18.00 36.00 54.00 18.00 36.00 54.00 18.00 36.00 54.00

(h) Depreciation179.45 147.00 326.45 205.26 161.98 367.24 194.84 159.06 353.90 217.50 156.32 373.82

790.46 743.62 1534.08 922.47 821.73 1744.20 1077.26 837.83 1915.08 1335.35 860.17 2195.51

Excess of Income over Exp.83.18 -142.12 -58.94 320.16 55.27 375.43 646.27 82.92 729.20 722.14 131.21 853.34

Net Cash Accurals262.62 4.88 267.51 525.42 217.25 742.67 841.11 241.99 1083.10 939.64 287.52 1227.16

Repayment Obligations0.00 0.00 562.00 290.60 272.60 563.20 335.00 265.00 600.00 315.31245.31560.62

Debt Service Coverage Ratio0.63 1.22 1.61 1.98

Summary of profitability (Rs. in lacs) 31.03.2012 31.03.2013 P A T I C U L A R SKECKDCTOTALKECKDCTOTAL

(I) I N C O M E

(a) Academic Fees1866.00 820.00 2686.00 1974.00 820.00 2794.00

(b) Hostel Fees340.00 125.00 465.00 374.00 125.00 499.00

(c) Interest 5.00 1.00 6.00 5.00 1.00 6.00

(d) Miscellaneous Receipts23.63 49.91 73.55 26.00 54.90 80.90

2234.63 995.91 3230.55 2379.00 1000.90 3379.90

(II) E X P E N D I T U R E

(a) Salaries & Other Benefits 839.55 486.91 1326.46 1049.44 535.60 1585.04

(b) Administrative Expenses520.79 184.53 705.31 650.98 202.98 853.96

(c) Hostel Expenses2.00 2.00 3.99 2.20 2.20 4.39

d) Commission on BG0.00 4.05 4.05 0.00 4.05 4.05

(e) Interest on Term Loan39.09 21.46 60.55 11.75 5.88 17.63

f) Interest on OD limit6.00 6.00 12.00 6.00 6.00 12.00

g) Intt on Unsecured loans18.00 36.00 54.00 18.00 36.00 54.00

(h) Depreciation223.09 147.67 370.77 235.49 136.53 372.03

1648.52 888.62 2537.14 1973.86 929.23 2903.10

Excess of Income over Exp.586.12 107.29 693.41 405.13 71.67 476.80

Net Cash Accurals809.21 254.96 1064.18 640.63 208.20 848.83

Repayment Obligations265.33165.33430.66 200.00100.00300.00

Debt Service Coverage Ratio2.29 2.73

1. The fee projections have been submitted and accepted are as given below. The fee structure is reasonable, comparable and as per prevailing market trend.

2. The hostel fees has been accepted @ Rs.34000/- per student for Krishana Engg. College with app. 40% student occupancy and @ Rs.50000/- per student for Krishana Dental College with app. 60% student occupancy. These fees are realistic and competitive. 3. Interest has been accepted on the FDRs submitted with AICTE , DCI and other Govt. departments.

4. Misc. receipts are related to OPD receipts, penalty charges etc. 1. The salary expenses for 2007-08 is estimated looking into the expenses incurred upto 31.10.2007 ( 6 M) under this head. The projections for 2008-09 is as under :- Krishna Engg CollegeKrishana Dental College

ParticularNos.Salary PMTotalParticularNos.Salary PM Total

Principal1500006.00Principal1660007.92

Deptt heads64000028.80Deptt heads1550001.00

Chief Admn1280003.36Professors115500072.60

Professors64000028.80Readers184400095.04

Asstt Prof.242800080.64Sr. Lecturer153200057.60

Lecturers7320500179.58Lecturers351890079.38

Registrar1250003.00Registrar1285003.42

Asstt Reg1120001.44Asstt Reg1132001.584

clerk1050006.00clerk455002.64

Librarian1250003.00Librarian1280003.36

Asstt Lib. 2125003.00Asstt Lib. 185001.02

AO1200002.40AO1220002.64

Acs Officer2200004.80Acs Officer1220002.64

Acs Assis360002.16Acs Assis166500.798

Lab Asstt12950013.68Lab Asstt15850015.30

Suprvisor275001.80Suprvisor285002.04

Store Asstt245001.08Store Asstt250001.20

Peon2430008.64Peon1235005.04

Sweepers2430008.64Sweepers1435005.88

Driver245001.08Driver265001.54

Recceptionist162500.75Recceptionist165000.78

Nurses366502.394

Total199370250388.65143453900365.82

Thereafter an increase of 10% in 2010, 15% in 2011, 10% in 2012 and 15% in 2013 has been estimated. The same is reasonable as per market trend.

2. The administrative expenses has been estimated from 15% to 25% of the total receipts. These expenses mainly comprises of electricity, advertisement, repairs, conveyance, consumable stores etc.3. The hostel expenses are related to mess charges of Hostels. 4. The commission on BG has been estimated looking into the estimated availment and bank rates.

5. Interest on TL has been calculated @ 11.75% ,OD @ 12% and 12% on unsecured loans.

6. Depreciation has been calculated on WDV basis.

The assumptions taken by the party is reasonable and realistic. Besides, the financial projections given by the party have been assessed and found reasonable and acceptable. We agree with the projections given by the party.

KRISHNA ENGINEERING COLLEGE FEE PROJECTIONSPARTICULARSRATE2008-092009-102010-112011-122012-13

StudentAmountStudentAmountStudentAmountStudentAmountStudentAmount

B.TECH

Ist year

Admission Fees60000 420 252 420 252 540 324 600 360 600 360

IInd year

Annual Fees60000 420 252 420 252 420 252 540 324 600 360

IIIrd year

Annual Fees50000 360 180

60000 420 252 420 252 420 252 540 324

IVth year

Annual Fees50000 233 117 360 180

60000 420 252 420 252 420 252

TOTAL -A1433 801 1620 936 1800 1080 1980 1188 2160 1296

M.C.A

Ist year

Admission Fees55000 60 33 120 66 120 66 120 66 120 66

IInd year

Annual Fees55000 59 32 60 33 120 66 120 66 120 66

IIIrd year

Annual Fees55000 28 15 59 32 60 33 120 66 120 66

TOTAL -B147 80 239 131 300 165 360 198 360 198

PGDBM

Ist year

Admission Fees200000 60 120 120 240 120 240 120 240 120 240

IInd year

Annual Fees200000 0 0 60 120 120 240 120 240 120 240

TOTAL -C60 120 180 360 240 480 240 480 240 480

G. TOTAL A+B+C1640 1001 2039 1427 2340 1725 2580 1866 2760 1974

KRISHNA DENTAL COLLEGE FEE PROJECTIONSPARTICULARSRATE2008-092009-102010-112011-122012-13

StudentAmountStudentAmountStudentAmountStudentAmountStudentAmount

BDS

Ist year

Admission Fees205000 100 205 100 205 100 205 100 205 100 205

IInd year

Annual Fees205000 100 205 100 205 100 205 100 205 100 205

IIIrd year

Annual Fees175000 86 151

205000 100 205 100 205 100 205 100 205

IVth year

Annual Fees175000 100 175 86 151

205000 100 205 100 205 100 205

TOTAL 386 736 386 766 400 820 400 820 400 820

DSCR

(Rs. In crores)31.03.0731.03.0831.03.0931.03.1031.03.1131.03.1231.03.13

Excess of Income over Expenditure-1.13-0.593.757.298.536.934.77

Depreciation2.123.263.673.543.743.703.72

Interest on term loan1.172.322.561.881.180.600.17

TOTAL (A)2.164.999.9812.7113.4511.238.66

Repayments Obligations TL 2.525.625.636.005.604.303.00

Total Interest on term loan1.172.322.561.881.180.600.17

TOTAL (B)3.697.948.197.886.784.903.17

DSCR (A)/(B)0.631.221.611.982.292.73

Average DSCR 61.02/38.86 = 1.57

Average DSCR on the basis of projections from the FY 2008 to 2013 comes to 1.57 with minimum 0.63 and maximum 2.73, which may be treated as satisfactory for such type of infrastructure projects. The party is developing its colleges and in initial stage of project and expenses are increasing due to increase in capacity as well as facilities like Hostel Block etc. As such, the DSCR is on lower level in starting years but it is improving gradually and reasonably. The party is meeting its all payment liabilities either from internal accruals or raising funds. In view of these facts, we may accept the average DSCR 1.57 looking into the past performance.

BEP :

KRISHNA ENGINEERING COLLEGE (Rs. in lacs)

Break-even analysis

Year20092010201120122013

Total no. of students16402039234025802760

Total Cost922.471077.261335.351648.521973.86

Fixed cost

Administrative expenses (25% fixed)140.62191.11259.66345.09430.16

Interest to bank (100% fixed)154.75117.9979.2045.0917.75

Depreciation (100% Fixed)205.26194.84217.50223.09235.49

Total500.63503.94556.36613.27683.40

Variable Cost(Cost other than fixed)421.85573.32778.991035.261290.47

Variable Cost per student (in Rs.) (A)0.260.280.330.400.47

Total Receipts1242.631723.532057.482234.632379.00

Receipts per student (B)0.760.850.880.870.86

Contribution per student (B-A)0.500.560.550.460.39

B. E. P. (in terms of student)(utilised capacity)1000893101813191733

B. E. P. (in terms of student)(installed capacity)4237425572

B. E. P. (in terms of Sales)757.92755.13895.361142.611493.56

KRISHNA DENTAL COLLEGE (Rs. in lacs)

Break-even analysis

Year20092010201120122013

Total no. of students386386400400400

Total Cost821.73837.83860.17888.62929.23

Fixed cost

Administrative expenses (25% fixed)136.50149.15163.07178.37195.21

Interest to bank (100% fixed)113.7482.1651.5927.4611.88

Depreciation (100% Fixed)161.98159.06156.32147.67136.53

Total412.22390.37370.98353.50343.62

Variable Cost(Cost other than fixed)409.51447.46489.20535.12585.62

Variable Cost per student (in Rs.) (A)1.061.161.221.341.46

Total Receipts877.00920.75991.38995.911000.90

Receipts per student (B)2.272.392.482.492.50

Contribution per student (B-A)1.211.231.261.151.04

B. E. P. (in terms of student)(utilised capacity)340318295307331

B. E. P. (in terms of student)(installed capacity)1413121314

B. E. P. (in terms of Sales)773.32759.44732.35764.02828.16

The party is estimated higher receipts against the BEP level . We may accept the same as it is on the basis of realistic projections. The units are performing well.

DEBT EQUITY RATIO

The debt equity ratio of the society is 4.08 as at 31.03.2007. The same will be improved to 2.22 as at 31.03.2008 and 1.61 as at 31.03.2009 by raising corpus fund. PUNJAB NATIONAL BANK

MCB, GHAZIABAD

ANNEXURE-I

PROPOSED TERMS AND CONDITIONS A/C FRIENDS CHARITABLE SOCIETY

FACILITY NO: 1

NatureTerm Loan - Additional

Amount Rs.10.22 crores (Rupees Ten Crore & twenty two lacs Only)

Margin25%

Interest@ 11.25% [BPLR +2.00%+ 0.50% (Term Premia) 3.75% (relaxation)] (Linked with BPLR)

Upfront feeAs per bank schedule of charges or as approved in the sanction

Primary Security1.Extension of EM of societys land & building valuing Rs.2466.84 lacs as per ABS as at 31.03.2007, situated at plot no. 27(1) & 28 Site 2, Industrial Area, Loni Road, Ghaziabad measuring 66910.57 Sq. Mtrs., market value Rs.9118.72 lacs and realizable value Rs.7537.75 lacs as per detailed valuation report of M/S Atul & Associates report dated 06.02.2008 plus cost of proposed construction of Rs.12.33 crores. Thus total value will be Rs.87.70 crores.2.Hypothecation of other fixed assets like equipments, furniture & fixtures, other assets valuing Rs.479.62.00 lacs as per ABS dt. 31-03-2007 and other assets to be created out of bank loan (both present & future) Thus total value will be Rs.779.62 lacs.

RepaymentThe Term Loan of Rs.10.22 crores shall be repaid in five yearly installment of Rs.2.044 crores each starting from 30.09.2008.

Interest to be recovered as and when levied.

InsuranceAll the assets charged to the Bank to remain fully insured with all probable risks with usual bank clause.

Repayment DefaultPenal Interest @ 2.00% p.a. or at any other rate as per discretion of the bank above the normal rate to be charged for the amount/period of default.

Prepayment PenaltyIn case of pre payment of loan by borrowing from other Bank/FIs, bank shall charge pre-payment penalty of 2.00%. However no pre-payment penalty shall be levied if borrower pays from his own sources.

EscalationsThe society shall meet out cost over run from its own sources and shall not ask for additional term loan from the Bank.

CONDITIONS

The payment shall be made directly to suppliers as far as possible. Original bills/cash memos/certified copies of Original bills, cash memos in the name of the Society/Engg.College/Dental College for all the fixed assets/machinery/other assets financed by bank, either in the name of society/Engg.College/Dental College, alone or jointly with the Bank, shall be submitted by the borrower and to be placed on banks record. When the payment to the supplier has been made through account payee cheques/draft and acknowledged by him on invoice/bill, no separate joint receipt for such payment made is required. In case the society is not in a position to submit bills/copies of bills for payments/investment made by it towards the project including banks loan, certificate of Chartered Accountant certifying such payment/investment will be treated as sufficient proof of the same, Certificate of Govt. approved Architect will be sufficient proof for investment made towards construction of building. The 25% of Term Loan may be released by crediting to Societys Current Account where from the payment to the suppliers may be made by the Society through Account Payees Cheques and after utilization of the amount so credited to Societys Current Account the Society to submit original/certified copies of the bills or certificate of Architect/Chartered Accountant for the payments/Investment made. Banks nameplate, evidencing hypothecation of security/asset to be prominently, displayed in the premises of the society. Our Term Loan shall be released only after societys having invested its margin or contributing pro-rata margin with our each release. The unsecured loans, if any, shall be subordinated to our Term Loan. Before disbursement of Term Loan, it should be ensured that all necessary statutory and other approvals/permissions, if any, have been obtained by the company. The company should undertake that necessary statutory and other approvals/permissions shall be obtained before disbursement.FACILITY NO.2NatureOverdraft against tangible Security Renewal cum enhancement

LimitRs.1.00 crores (Rs One Crore only) Enhancement from Rs.0.50 crores.

Interest@ 11.25% [BPLR +2.00% 3.25% (relaxation)] (linked with BPLR) with monthly rests. Interest in the A/c as and when levied will be serviced immediately by the Society.

Processing FeeAs per Bank Guidelines or as approved in the sanction

Security1.Extension of EM of societys land & building valuing Rs.2466.84 lacs as per ABS as at 31.03.2007, situated at plot no. 27(1) & 28 Site 2, Industrial Area, Loni Road, Ghaziabad measuring 66910.57 Sq. Mtrs., market value Rs.9118.72 lacs and realizable value Rs.7537.75 lacs as per detailed valuation report of M/S Atul & Associates report dated 06.02.2008 plus cost of proposed construction of Rs.12.33 crores. Thus total value will be Rs.87.70 crores.2.Hypothecation of other fixed assets like equipments, furniture & fixtures, other assets valuing Rs.479.62.00 lacs as per ABS dt. 31-03-2007 and other assets to be created out of bank loan (both present & future) Thus total value will be Rs.779.62 lacs.

FACILITY NO. 3NatureBank Guarantee (Specific) - Renewal

LimitRs.2.25 crores (Rupees Two crores and Twenty Five lacs only)

Margin10% in cash/ FDR. The margin may be kept by the company on consolidated Basis for the entire limit

CommissionAs per bank guidelines or as approved in the sanction and may be charged on yearly basis

PeriodUpto period of 5 years

PurposeGuarantees in favour of Govt. Deptt./ Dental council/AICTE/UPTU/other universities etc.

Security(i)General Counter Indemnity by the society

(ii)Both the securities held against TLs & OD limits shall also cover the BG limit.

ConditionsGuarantee to be issued as per Banks prescribed format or as may be approved by the AGM (Branch) as per requirement of the Society.

OVERALL TERMS AND CONDITIONS 1. The society should have exclusive dealing for its banking requirement with us and shall not open any current account with any bank/branch without our prior written permission.2. All facilities are to be secured by personal Guarantee of the following:- By way of Personal Guarantee

(Rs. in lakh)

Sl.No.Name of GuarantorNet Worth

Immovable propertyDate of confidential report

Previous

Present

PreviousPresent

PreviousPresent

1.Sh.Atul Garg66.13643.57 87.50103.5020.11.200612.02.08

2.Sh.Rakesh Garg*19.00343.50 26.4970.0020.11.200620.11.07

3.Sh.Sarish Kr. Chaudhary*142.40473.90 142.00578.5020.11.200620.11.07

4.Sh.Sunil P Gupta*14.45297.5014.00200.0020.11.200620.11.07

Total241.981758.47269.99952.00

3. Securities charged to the bank to be inspected at least once in a half year by banks officials.

4. The Society shall not undertake any further investment in any project or effect any material change in the proposed project without obtaining prior permission of the bank and without proper tie-up of funds. Similarly, no investment shall be made in associate/allied/group concerns without prior permission of the bank.

5. Monies brought in by the promoters will not be allowed to be withdrawn during the currency of banks loan without Banks prior permission.

6. The Bank or its authorized officials or other representatives will have the right to carry out periodical inspection or examine the books of accounts of the borrower and to have their premises/offices/assets inspected from time to time by officers of Bank and /or by outside agencies and the expenses incurred by the Bank in this regard will be borne by the society.

7. The Bank shall have the right to withdraw or modify all/any of the conditions of sanction or stipulate fresh conditions, under intimation to the society. Society shall undertake to give its acceptance to these stipulations.

8. In case the society commits default in the repayment of loan/advance or in the

payment of interest thereon or any of the agreed installment of the loan on due date, the bank, CIBIL and /or Reserve Bank of India will have an unqualified right to disclose or publish the names of the society and its office bearers as defaulters in such manner and through such medium as the bank/RBI in their absolute discretion may think fit.

9. The unsecured loans raised from friends/relatives will not be allowed to be repaid during currency of Banks loans. An undertaking to this effect to be obtained from the society and kept on banks record.

10. During the currency of banks credit facilities, the borrower shall not, without the

prior approval of the Bank in writing:

a. permit any transfer of the controlling interest or make any drastic change in the management set up;

b. divert/utilize Bank's funds to other sister/associate/group concerns or for purposes other than those for which the credit facilities have been sanctioned;

c. Effect any change in their capital structure, which may effect banks interest adversely.

d. Formulate any scheme of amalgamation or reconstruction.

e. Undertake any new project or expansion or moderni