Who is Lender's Engineer (LE) ?
After TEV study, the next step is appointment of LIE.
The LIE can be an individual for a small project and a group of engineers or a venture management firm for bigger projects.
They will act as representative of the lender/ banker and get involved with the construction project from the very inception and look after the interests of the lender.
The LIE will visit the site on periodical intervals (once in quarter) till completion of the project or any other short interval (say monthly) given by the lender.
What is the Role of LE ?
Before Funds are released to the borrower, the Bankers need a report or certificate to release the fund to the borrower on a phased manner -
The Banker will issue a letter of indent to act as LIE
Study of the project report, TEV Study submitted by the borrower to the Bank.
LIE looks at the following:
Project implementation and progress.
Forecast in cost and time overrun.
Status of statutory compliance and regulatory formalities.
Reporting progress stage-wise.
Declaration of any milestones achieved.
Refer's any change in scope to the bankers.
Ensures the adequacy of margin at all stages of implementation is also ensured.
What is TEV Study ?
An entrepreneur / industrialist desirous of setting up to his own industry has to perform multifarious activities in a logical sequence.
Setting up of industry may be new or an addition to the existing unit.
He has to arrange finance for setting up of new industry or addition to existing industry.
He has obtain finance from the Bank or from the market.
Before obtaining finance from the Bank, the Bankers will conduct TEV study.
What is the expectation from TEV ?
Thorough analysis on all aspects of the project as a business model. We look into background, personal aspects of promoters, technical aspects of the project, commercial market aspect involving demand-supply, competitor analysis, risk analysis and also financial aspects namely sales achievability clientwise, level of creditors & debtors, profitability, debt-equity, repayment capacity, IRR, breakeven and also fixed asset cover and security aspect, a comprehensive risk analysis with proper weightages.
Cost Vetting
Thorough analysis of all cost components tangible & intangible is fairly reviewed in line with current market trend and practices. Relevance of cost , quantity, capacity is also evaluated. Cost vetting helps to avoid any possible cusioning in capital cost. It helps the bank to decide on extent of finance.
Stock/Credit Audit
Stock audit in its general usage in the auditing world refers to the physical verification of the inventory. However at times it may also include valuation of the inventory.Stock audit ensure there is no pilferage (generally for smaller items) or to ensure that they are properly stored, for larger or damageable goods.
Valuers of Immovable and Movable Properties
The one who estimates or assesses the value professionally. He is an expert in his field. He is authorized to declare the worth of a particular commodity, may be it property/machine/gold or any other item. The main categories under which the license is issued are: Immovable Properties.Agricultural Lands,.Forests,Mines & Queries,Stocks, Shares, Debentures, Securities,Plant and Machinery.
Loan Syndication
The process of involving several different lenders in providing various portions of a loan. Loan syndication most often occurs in situations where a borrower requires a large sum of capital that may either be too much for a single lender to provide, or may be outside the scope of a lender's risk exposure levels. Thus, multiple lenders will work together to provide the borrower with the capital needed, at an appropriate rate agreed upon by all the lenders.
Restructuring of Debts
Debt restructuring is a process that allows a private or public company – or a sovereign entity – facing cash flow problems and financial distress, to reduce and renegotiate its delinquent debts in order to improve or restore liquidity and rehabilitate so that it can continue its operations.Replacement of old debt by new debt when not under financial distress is referred to as refinancing.