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Assessment of Bank Guarantee Limit: M/S Xyz Company Limited

This document assesses the bank guarantee limit needs of XYZ Company Limited. It estimates the company will need a bank guarantee limit of Rs. 15.60 crores in 2004-2005 based on past trends and projected performance. The estimate accounts for opening balances, guarantees required for earnest deposits, security deposits, advance payments, retention/maintenance, sales/commercial/excise taxes, less guarantees to be cancelled, for a total recommended limit of Rs. 15 crores. It also requests a statement of the expected monthly bank guarantee position for the next 12 months.

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1K views2 pages

Assessment of Bank Guarantee Limit: M/S Xyz Company Limited

This document assesses the bank guarantee limit needs of XYZ Company Limited. It estimates the company will need a bank guarantee limit of Rs. 15.60 crores in 2004-2005 based on past trends and projected performance. The estimate accounts for opening balances, guarantees required for earnest deposits, security deposits, advance payments, retention/maintenance, sales/commercial/excise taxes, less guarantees to be cancelled, for a total recommended limit of Rs. 15 crores. It also requests a statement of the expected monthly bank guarantee position for the next 12 months.

Uploaded by

siddharthzala
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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ASSESSMENT OF BANK GUARANTEE LIMIT

M/s XYZ COMPANY LIMITED


BANK GUARANTEE LIMIT OF Rs. 15 CRORES Purpose : The Company need to furnish BGs in favour of its clients for the following purposes : a) Earnest Money Deposits b) Security Deposits c) Advance Payments d) Retention Money e) Sales Tax, Commercial Tax and Excise Duty payments
(Rs. in crores)

Based on past trends and projected performance, the limit requirement could be assessed as under: 1] Opening Balance as on 01.04.2004 2] Guarantees required: a) Earnest Money Deposits : 2% of additional tenders worth Rs. 80 crores during 2004-05 b) Security Deposits : 5% of tenders worth Rs. 50 crores expected to be awarded during 2004-05 c) Advance Payment Guarantees : 10% of new orders worth Rs. 50 crores expected during 2004-05 d) Retention / Maintenance Guarantees : 10% of the jobs valued at Rs. 60 crores expected to be completed during 2004-05 e) Guarantees on account of Sales Tax, Commercial Tax and Excise Duty payments f) Total : (1 + 2) 3] Less : Bank Guarantees to be cancelled during 2004-05 4] Bank Guarantees Limit required 5] Bank Guarantees Limit recommended for sanction 9.50

1.60 2.50 5.00 6.00 1.00 25.60 10.00 15.60 15.00

A statement should be called for from the applicant (Borrower) indicating the expected monthly position of Bank Guarantees for the next 12 months, i.e., outstandings at the beginning of every month, guarantees likely to expire during the month, guarantees likely to be issued during the month and the outstandings at the end of every month to arrive at the assessment of the limit.

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