POLICY FOR  RESCHEDULEMENT & REHABILITATION

A)                Reschedulement within the original time frame 

I)                    Interest should not be in default.

II)                  If current interest rate is higher than document rate, then deferred instalments would carry the current rate of interest and would be adjusted at the end.

III)                 If current interest rate is lower than document rate then deferred instalments would also carry interest at document rate. 

B)                Where the repayment span extends beyond the original time              frame 

I)                    Interest default of upto four quarters shall be thresh hold limit for identification of proposal for reschedulement beyond the original time frame.  Interest overdues should be cleared before consideration of reschedulement request.

II)                  Wherever the current rate is higher than document rate, the deferred instalments or the amount shifted beyond the original repayment span, whichever is higher, would carry current rate of interest and would be adjusted at the end.

III)                 Wherever the document rate is higher than the current rate, all th instalments would carry interest at document rate.

IV)              Normally not more than two reschedulement would be considered.  Wherever second reschedulement is to be considered, the deferred instalments for bearing higher rate of interest as per above proposal would relate to the original repayment schedule.

V)                Loans would not be rescheduled by more than 4 years beyond the terminal date of the  original repayment schedule. 

2)        POLICY FOR REHABILITATION

IDENTIFICATION OF CASES FOR REHABILITATION

Cases with interest default of more than four quarters would be treated as rehabilitation cases.

RBI GUIDELINES

A.      RBI has issued elaborate guidelines covering all areas of industrial  rehabilitation viz. detection of industrial sickness at incipient stage, identification of sick/weak units, carrying out viability study of the unit, then extending reliefs and concessions to only viable units, coordination among banks and financial institutions and banks themselves, norm for promoters’ contribution, extended period for repayment/reschedulement of loans, conversion of debt into equity, single window concept of lending, interest rate concessions and waiver.

a)    RBI parameters on interest rates concessions

i)                   Funded Interest Term Loan (FITL)

 (funding of overdue interest)

            2 percentage points below the prevailing PLR

ii)                 Working Capital Term Loan (WCTL)

(conversion of existing overdue working capital)

1 percentage point below the prevailing PLR.

iii)               Existing Term Loan (old)

May be reduced by not more than 2 percentage points below the document rate.

iv)                Fresh Rehabilitation Term Loan (RTL)

           At prevailing PLR

b)             Reliefs

Banks have to waive penal interest/compound interest, if any, and also liquidation damages.

c)              Period of package

The rehabilitation package could be upto 7 years with repayment period extended upto 10 years.

d)                Promoters’ Contribution

Promoters have to bring in minimum 30% of long term requirement of funds including the monetary value of sacrifices from banks, Fis and Government (for technocrat promoters/professional management, excluding the monetary value of sacrifices).  Banks/Fis may stipulate higher promoters’ contribution.

ELIGIBILITY CRITERIA TO BE APPLIED WHILE REGISTERING THE REQUEST FOR RESCHEDULEMENT BEYOND THE ORIGINAL TIME SPAN AND REHABILITATION

1.     The company’s bankers and other participating institutions should in principle be agreeable to go along with the reschedulement/rehabilitation of the company.  They should not be pursuing any coercive recovery action against the company or the promoters.  The promoters should give a compliance certificate to this effect.

2.    A diagnostic study should have been made by the promoters themselves to identify the reasons of sickness of their unit and also suggest the remedial measures.

3.    The promoters should be agreeable to pledge in favour of PICUP atleast 51% of the equity shares held by them (including that of their friends, relatives and associates) at the time of registration of request for rehabilitation.

4.    The promoters should be agreeable to provide their personal guarantee at the time of registration of request for rehabilitation if the same has not been furnished earlier by them at the time of availaing the loan.

5.    The track record of the company/promoters in respect of promoters’ contribution in the project and repayments made to PICUP would be relevant in cases where sickness is of recent origin.

6.    The assets should be physically present at factory site and in productive shape.  This should be verified through an inspection.

7.    The promoters should be agreeable to bring in additional contribution in the project as per the requirement of the rehabilitation package.  The promoters should also satisfy PICUP about the availability of required funds as and when required.

8.     The company should submit audited balance sheet and profit and loss account complete with all schedules of the last three financial years as well as provisional results of the current financial year till the last quarter.

FORMAT FOR FEHABILITATION/RESCHEDULEMENT PROPOSALS

 1.             Introduction :

This should broadly cover the promoters, product, capacity, location and history.

 2.            Salient features :

i)                    Factory address

ii)                  Head office/controlling office address

iii)                Board of Directors

iv)                Eligibility criteria and comments on compliance.  

S.No.     Criteria                                                Status of compliance

  v)                  Account position with all lending institutions.

vi)                Payment received in PICUP against the dues during the current financial year and previous financial year.

vii)              Age of default for interest and principal with PICUP and other lending institutions.

viii)            Details of working capital facility sanctioned and availed indicating irregularity in bank account, if any.

ix)                Past performance (for last 4 financial years including current year):-

x)                  Projections after rehabilitation/reschedulement.   (for next 3 financial years)

xi)                Date of start of commercial production.

a)     As per original appraisal.

b)     As per actual.

xii)              Loanwise repayment period indicating date of first instalment and ate of last instalment.

a)     As per original appraisal

b)     As per last appraisal, if any.

c)      As per current rehabilitation proposal indicating separately for funded interest and principal amount.

xiii)            Details of previous reschedulement within the same time span/out side the time span/rehabilitation given in the past.

xiv)             Comparison of critical assumption on the basis of last appraisal, current performacne as per result of current year and assumption taken for future projections after rehabilitation.

xv)               Break even point

a)     As per last appraisal

b)     As per results of current year

c)      As per current proposal

xvi)             Date of registration for rehabilitation.

3.               Reasons for sickness.

4.               Turn around strategy clearly indicating critical success factors.

5.               a) Market potential assessment and positioning of the products of

               the  company.

b)     Company’s marketing strategy for its products clearly indicating if any change in the strategy is envisaged.

 6.               Industry potential assessment and analysis of PICUP’s portfolio.

7.               Reliefs and concessions considered to be sanctioned by various institutions.

a)     Within the RBI guidelines.

b)     Beyond the RBI guidelines.

 8.               Projected profitability and cash flow statement.

9.               Assumptions for projected profitability and cash flow statements.

10.          Sensitivity analysis with respect to critical success factors.

11.          Terms and conditions.

12.          Recommendations.

13.          Annexures:

i)                   Summary of P & L account of the company for last three years.

ii)                 Profitability projections, cash flows and DSCR analysis.

iii)               Schedule of repayment of PICUP indicating original, last assessed and currently proposed schedule for principal and funded interest indicating applicable interest rate.

iv)                   Schedule of payment of other lending institutions.

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