Credit Policy

Century Plyboards (India) Limited

Effective from 1st August 2016
st
This Policy supersedes previous credit policy dated 1 October 2015

Objective of Credit Policy: To act as equilibrium to minimize the Credit Risk of the
organization at the same time to provide smooth transition to Sales force to
maximize the business growth.

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 INDEX
SN Particulars Page No
1 List of Documents New Customer Account Opening. 3
2 Agreement Signing Authority 4
3 Payment Terms (Credit Days) fixation 4
4 Special CD Customer – (Approved by MD) 4
5 Credit Limit fixation (First Time ) for Panel/Doors/LAM/DV 4
5. (A) Credit Limit for Panel & Doors 4
5.(B) Credit Limit for Laminates 4
5.(C) Credit Limit for Decorative Veneer 5
5.(D) Credit Limit for Customer including all LOB >40 Lacs 5
6 Basic Condition to avail Credit Limit 5
7 Credit Limit fixation (First Time ) for KAM 5
8 Temporary exposure enhancement (Sales Order Release) 6
8 (A) Sales Order Release in Credit Limit 6
8 (B) Sales Order Release in Credit Days 6
9 Credit Limit Revision/Re-structure 6
9 (A) Basis of Credit Limit Revision/Re-structure 6
9 (B) Conditions of Credit Limit Revision/Re-structure 6
10 Cheque Bounce & Re-storation of Credit Limit 7
11 Cash Discount Condonation approval & Debit Note 7
11.(A) CD Condonation 7
11.(B) CD Debit Note 7
12 Cash Discount Variance for Panel CD Dealers 7
13 Change in Customer Nature ( CD to Non CD & Vice Versa) 8
14 Change in Customer Status ( Operative, In-Operative , Legal ) 8
15 Revival of In-Operative Customers 8
16 Customer Link / De-link (Mother Code/Link Code) 8
17 Action Plan on Outstanding Recovery 9
18 Do & Don't for Legal 9
19 Channel Finance 9
20 Pending C Form 10
21 Half Yearly Customer Balance Confirmation 10
22 Credit Policy – NAP 11
23 Credit Policy – Prelam 12-13

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 1. List of documents for New Customer Account Opening

Sl No Particulars Policy
i. Customer Appointment Form duly filled and signed by customer with stamp
And BSM/RSM needs to mention the Territory Code on the Application Form
ii. Two blank undated signed cheques as security along with covering letter. For KAM
id the Customer has to submit 1 blank cheque & covering letter
iii. Copy of VAT / CST Registration Certificate
iv. Copy of PAN Card of the firm and 2 nos. PP Size Photo of Prop. / Director
v. Identity proof of Proprietor / Partner / Director as the case may be
vi. Address proof of Proprietor / Partner / Director as the case may be
vii .Address proof of the firm
viii. Payment collection responsibility letter duly accepted by the customer (on CPIL
letterhead)**
ix. Copy of Bank statement for last six months. (Not required for KAM )
Documents x. Last one years' VAT Return. (Except for newly opened firms)
1 required along xi. Copy of partnership deed in case the trade partner is a firm **
with application. xii DD/Cheque of First Transaction value billing as per clause no 3
Additional requirement for KAM Accounts
i. KAM Head shall personally check the credibility of the customer & forward the
same to the LOB Head with details of individuals with whom he spoke & ascertained
the financial status of the party.
ii. Blank & undated cheques (along with covering letter) as security or PDCs as per PO
(PO is mandatory) or Bank Guarantee or LC as per agreed terms (not exceeding 75
days)
iii. In case of any supply without PDC / Security cheque pre-approval from LOB Head
and Head Commercial is necessary.
iv. In case of multi account of same party only VAT / CST / TIN and Address Proof is
required.
**not applicable for KAM
Deviation in Recommended by RSM or GSM & RCM to Credit Controller and Commercial Head.
2 documents
SAP code will be opened for such customers with NIL Credit Limit
Following documents are required from new customers against 100% Advance
Payment :-
New account i. Customer Appointment Form duly filled & signed by the customer with rubber
opening ( against
3 stamp
100 % advance
payment ) ii. Copy of Sales Tax registration certificate.
iii. Copy of PAN card of the firm.
iv For assigning Credit Limit in future all other documents/cheques must be
submitted to the concerned RCM/DCM as per the credit policy.

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 2. Agreement Signing Authority

LOB/Division Customer Type Signing Authority

Panel Distributor NSM –Panel
NAP Distributor NAP- Head
Doors Distributor/Project Dealer Ms. Nikita Bansal
Deco Distributor/Dealer LOBH- Deco
 Agreement should be signed on Non Judicial Stamp Paper of Rs.100 Only-
 Signature with Stamp (Prop./Director/Authorized Signatory) on each page is required.

3. Payment Terms (Credit Days) fixation

It is recommended to have first transaction on advance basis, further Payment Term (Credit Days) varies
from branch to branch & LOB to LOB. LOB wise payment terms of the branch are available with
BCOM/RCOM. Any exception in Payment Terms needs prior approval of MD before creation of Customer
Code.

4. Special CD Customers:
It is for special customers only & should not include CD condonations and fresh approval should be taken
every year from MD.

5. Credit Limit fixation (New Customer/First Time Limit) :

5(A). PANEL (Ply & Doors)

Credit Limit (Rs Lacs) Recommendation by Approval by
Upto 10 BSM/Location Head RSM/GSM in absence of RSM
10 to 20 RSM GSM
20 to 40 GSM NSM

5(B) Laminates
Credit Limit (Rs Lacs) Recommendation by Approval by
Upto 10 BSM/Location Head Zonal Head
10 to 20 RSM NSM
20 to 40 GSM LOBH

5(C.) Decorative Veneer

Credit Limit (Rs Lacs) Recommendation by Approval by
Upto 10 BSM/Location Head Zonal Head
10 to 20 RSM NSM
20 to 40 GSM LOBH

5(D) FOR ONE CUSTOMER INCLUDING ALL LOBS.

Credit Limit (Rs Lacs) Recommendation by Approval by
Above 40 & upto 1 Crore Credit Controller LOB Head & Head Commercial
Above 1 Crore LOBH & Head Commercial MD

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 6. Basic conditions to avail above Credit Limit.

i. For Lam & DV 25% Security Deposit or Bank Guarantee to be submitted to avail 100% credit limit (i.e. Credit Limit
will be 4 times of the Security Deposit or Bank Guarantee) for all Dealers & Distributors.
ii. For Panel (Ply & Doors) 25% Security Deposit or Bank Guarantee to be submitted to avail 100% credit limit (i.e.
Credit Limit will be 4 times of the Security Deposit or Bank Guarantee) for Distributors Only.
iii. Rate of Interest on Security Deposit would be 7 %.
iv. In case Customer is not ready to submit the Bank Guarantee or Security Deposit, exception will be jointly
approved by LOB head & Head Commercial on case to case base
v. RCOM may give his feedback to the approving authority at the time of new limit assignment.

7. Credit Limit fixation - KAM

Credit Limit (Rs Lacs) Recommendation by Approval by

Upto 10 BSM/Location Head RSM/GSM in absence of RSM
10 to 20 RSM GSM
20 to 40 GSM LOBH
Above 40 & upto 1 Crore Credit Controller LOB Head & Head Commercial
Above 1 Crore LOB Head & Head Commercial MD

7 (A).Billing on the basis of PDC:

KAM Head can allow Credit Limit upto 20 Lacs provided PDC in hand. LOBH approval is required for
billing above 20 Lacs on PDC.

7(B) Open Credit:

Joint approval of LOB Head & Head Commercial will be needed till 20 Lacs, above 20 Lacs approval by
MD is MUST.

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 8. Temporary exposure enhancement (Sales Order Release)
8 (A) Sales Order Release in Credit Limit.
Credit Limit (% increase) Recommendation by Approved by Releasing authority
Upto 50% of the Existing Credit Limit GSM (Panel)/NSM
BSM /RSM GSM/RCOM
or Maximum Rs. 10 Lacs (Deco)/RCOM
Upto 50% of the Existing Credit Limit
GSM & Credit Controller NSM(Panel)/LOBH(Deco) Credit Controller
or Maximum Rs.35 Lacs.

Upto 100% of the Existing Credit NSM & Head

LOBH Credit Controller
Limit or maximum Rs.1 Crore Commercial

 Outstanding & Credit Limit of only concerned (billing) LOB need to consider
 In case of absence of the approving authority the control will shift to next level of hierarchy.

8 (B) Sales Order Release in Credit Days

Releasing
Credit Days (Block Reason) Recommendation by Approved by
authority
Above Payment Term upto 60 Days
GSM (Panel)/NSM
(Outstanding of only billing LOB need to RCOM RCOM
(Deco)/RCOM
consider ) #
Between 61 to 74 days (Outstanding of All the GSM (Panel)/NSM
RCOM RCOM
LOB need to consider ) # (Deco)/RCOM
LOBH & Head
Above 75 Days (within 5 Lacs Overdue) Credit Controller Credit Controller
Commercial
LOBH& Head
Above 75 Days ( above 5 Lacs Overdue) MD Credit Controller
Commercial
# supported by PDC upto 75 days or payment plan confirmation by RSM/GSM

9. Credit Limit Revision/Re-structure

9 (A) Basis of Limit Re-structure
LOB Type Basis of limit re-structure
Panel (Ply & Doors ) Dealers Last 6 months average sales X 2 Times
Panel (Ply & Doors ) Distributors Last 6 months average sales X 2.5 Times
Laminates All Last 6 months average sales X 2.5 Times
Decorative Veneer All Last 6 months average sales X 2.5 Times
Prelam All Last 6 months average sales X 2.5 Times

9 (B) Conditions of Revision/Re-structure

i. For 6 months’ average sales, bill value (with tax) amount need to consider
ii. Review to be done on half yearly basis (i.e., in April & October)
iii.Revised limit must be approved as per point no. 5. [i.e., revised limit must be approved by
RSM/DGSM/GSM/NSM/LOBH/MD as applicable in limit fixation matrix]
iv. To avail enhanced/additional limit in DV, Lam & Panel (Distributor only) has to fulfill
requirement as laid down in point no. 6. (i.e., 25% SD / BG for additional/enhanced limit
require)
v. To avail enhanced limit Branch must possess all the documents of the customer (Security
Cheque with covering letter, Payment Collection Responsibility Letter of the customer).

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 10. Cheque Bounce & Re-storation of Credit Limit :

a. Three instances of cheque bounce of any Channel Partner in a span of a quarter will auto-
reduce the credit limit value to “NIL” implying business to be conducted under Advanced
Payment thereafter.
b. For KAM – Credit Limit will auto-reduced to NIL after Single cheque bounce in a Quarter
implying business to be conducted under after recommendation of KAM Head.
c. For above two points bounces of both mother code & link code would be considered.
d. Credit Limit can be restored after recommendation of RCOM.

11. Cash Discount Condonation & Debit Note:

11 (A). CD Condonation:
 Condonations upto 7 days including grace period - Recommended by BSM / BCOM Approved by
GSM
 Condonations above 7 days upto 14 days (incl. grace period) -(Penalty 1%)-> GSM is the
approving authority however CD will be reduced by 1%
 Maximum nos. of invoices to be condoned should not exceed 4 per Branch per Month per LOB.
 CD Condonation as per GSM approval is also applicable for Special CD Customers.

11 (B). CD Debit Note:

 BCOM will raise the Debit Note [calculating delay days] on the same day of receipt of payment.
CD reversal Debit Note would be raised once in a month.
 For the above on 7th of each month BCOM will share the CD reversal working to BSM & RSM
with copy to GSM & RCM to confirm by 9th. BCOM will raise the CD reversal Debit Note by 10th
(even in case of non-receipt of any confirmation from BSM/RSM).
 Debit Note must be recovered within 30 days.
 No Sales Order (both Credit Limit & Credit Days enhancement as per point no 8) will be released
if the Debit Note is >30 days old.
12. Cash Discount Variance for Panel CD Dealers:
21 Days Payment Term. 30 Days Payment Term.

Payment received within CD % Payment received within CD %

Within 21 days 4% Within 30 days 4%

22 days to 30 days 3% 31 days to 37 days 3%

31 days to 37 days 2% 38 days to 44 days 2%

38 days to 44 days 1% > 44 days Nil

> 44 days Nil

 In case Non CD Customer pay us within above payment term, will be eligible for CD and
also avail the above CD variance policy.
 The above payment term is also applicable for Special CD Customer.
 The above payment term is also applicable for Chennai & Coimbatore Branches.

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 13. Change in Customer Nature:

a) Customer Nature would be changed from CD to Non CD in case full 4%/full 3% CD Debit Note is
raised against more than 50% of invoice in a span of 6 months. For CD to NON-CD before
conversion, concerned RCM to ensure that D/Ns are raised against the entire CD amount
already passed in the bill itself whose payment is yet to be realized.
b) For NON-CD to CD, on the basis of last 6 months performance along with recommendation of
RCM & RSM.
c) It should be done at the beginning of the month only, not in the middle of the month.

14. Change in Customer Status:

a. Operative to In-operative: In case of NO billing in any LOB in last 6 months, operative customer
be automatically transferred to In-operative and their Credit Limit would be automatically
withdrawn.
b. In-operative to Legal: In case where Legal cases are filed on any In-operative customer,
nature of such customer would be changed to Legal upon filing of legal case.

15. Revival of Customer:

a. In-operative to Operative: For revival of In-operative customer requires formalities as in

case of New Customer code creation. To convert from In-operative to Operative where
there was a Write off upto Rs.30k LOBH approval is require beyond 30k approval of MD
is required.
b. Legal to Operative: For revival of customer on which legal case was filed, along with
formalities as in case of New Customer code creation , approval of MD is MUST

16. Customer Code Link/De-link: Linking is done to club the exposure of Group of
Firm/having common proprietor/Director into one roof. Linking can be done between firms
within same Branch (except KAM), criteria of linking are as below-

a) Joint approval of GSM & RCM is required to link any code.

b) Linking can be done with common Proprietor/Partner/Director/family member.
c) Documents ( including Security Cheque )of link code are required as in case of New Code
Creation, purpose of linking is to share the Credit Limit/exposure.
d) Code can be de-linked on justified reason; RCOM would analyze the case and approve to
De-link the codes.
e) In case of direct sale to any end user/project through any dealer, linking can be done on
the basis of undertaking of payment by that Dealer.
f) Customer linking of KAM can be done on All India level with same condition as above.

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 17. Action plan for Outstanding Recovery:
SN O/S Date Range Action
60 Days to 75
1 BCOM/RCOM has to talk with BSM/RSM for recovery plan
Days
76 Days to 90
2 BCOM/RCOM will discuss directly with the Dealer/Distributor.
Days
BCOM/RCOM will visit the Dealer/Distributor. Credit Limit will be NIL & Material will be taken back
91 Days to 120
3 In case 100% O/S >90 Days , BCOM will send 1st Payment Reminder Notice to the Dealer/Distributor
Days
through Registered Post with AD

Notice from Regional/Branch level Advocate to the Dealer/Distributor (BCOM/RCOM Need to select
OS 120 to 150
4 Branch level/Regional level Advocate who will send 1st level Payment Reminder Legal Notice to the
Days
Dealer/Distributor)

Banking of Security Cheque after above 2 level of Reminders

In case above security cheque bounces, Case would be filed u/s 138 of NI Act at Kolkata/Meerut or as
5 OS > 150 Days
suggested by HO Legal Team (Mr. AL Sinha) & Advocate will take charge for Recovery of Outstanding
amount.

 BCOM/RCOM will be responsible for overdue recovery/collection of their region for all LOBs in co-ordination
with concerned BSM/RSM.
 BCOM/RCOM will submit the recovery/collection plan in co-ordination with BSM of their region to Credit
Controller on 7th and updates on 21st of the month.

18. DO & Don’t for Legal

1. Before initiating for Legal Case , BCOM must insure to send

Branch Level reminders to the party and to Check Payee's 1. Post Banking of the Security Cheque, DO NOT
Name , Cheque date/validity , amount in words and in figure share any Ledger, Invoice , Credit Note copy with the
and other parameters are correct/in order before deposit of Dealer/Distributor
the Security Cheque
2. DO NOT hold the Bounced Cheque hard copy at
2. While sending the hard copy documents for Legal to H.O.
Branch beyond 2 days , in order to avoid scenario of
BCOM will check that all docs are as per Legal Check List.
Time barred
3. In Case there is NO Security Cheque and billing done on the 3. DO NOT entertain any payment request from
basis of only 1 PDC of future date , if that PDC bounces, BCOM Customer locally at Branch level, please take a
will wait for 10 days for recovery after which they will proceed Confirmation from HO Legal Team before going into
for Legal. out of court settlement.

19. Channel Finance:

i) Customer with Annual Sales of => Rs.1 Crore and 2 years association with CPIL can be enrolled into
Channel Finance. Please contact your RCM to know the effective Rate of Interest.
ii) To fix any CF limit, approving authority would be as per point no 5 of this policy (Credit Limit fixation)
iii) Share of CPIL in total turnover of the customer should be => 20%
iv) Billing would be blocked in case parties are having more than 90 days outstanding in C. F. account.
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 20. C Form:

i. Fresh billing wouldn’t be allowed in case of C Form Pending older than 1 Year from the end of
previous quarter.
For example- In case of CST billing in April’16, C Form upto March’15 must be cleared/collected.

ii. If any Customer is unable to issue C Form due to any justified reason, RCOM can allow billing
with information to NSM & Commercial Head

21 Half Yearly Customer Balance Confirmation:

Objective of half yearly customer balance confirmation is to reconcile books and

address/highlight pending claims to the company for timely settlement of claims and
issuance of Credit Note.

1. Eligibility: BCOM need to do the reconciliation of all the customers of the branch. BCOM will send
the letter along with ledger stating that if confirmation is not received within 15 days of the receipt
of ledger than it will be assume that balance appearing in the ledger is correct. BCOM will share the
scan copy of balance confirmation with list of Pending claims (only when any customer declares any
pending claims) to respective RCM.

2. Due Date :

Half Year Closing Due date of submission

31st March By 15th June
30th September By 31st October

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 22 Credit Policy - New Age Product (NAP)

22. (A) Option 1 (Existing policy of NO CREDIT)

a) Delivery against 100% advance payment

b) 2%/4% Cash discount given in the invoice itself (Depending on product discount structure)

22. (B) Option 2 (Credit against 100% Security Deposit)

a) A distributor/dealer can have a credit limit of maximum 30days against security deposit. For
example, a distributor/dealer can have credit limit of Rs.25.00lac for 30 days if he deposit similar
amount with Centuryply.
b) Minimum security deposit from a metro town will be Rs.6.00lac and non-metro town will be
Rs.3.00lac
c) Company will pay an interest of @9.00% per annum on security deposit. (Subject to be reviewed
at the end of every financial year)
d) 2% cash discount won’t be deducted in the invoice (like we are doing for advance payment) and
the same will be given as follows
a. 2% on payment within 15 days
b. 1% on payment within 21 day
c. No CD if payment done after 21 days
e) Distributor/dealer supplies will be put on hold if payment not done within 30 days, irrespective
of invoice amount.
f) Company will change an interest of 15% for payment delay beyond 30 days
g) Company reserves the right of adjusting security deposit against overdue invoices at any given
point of time and distributor/dealer won’t have option or right to hold adjustment of security
deposit
h) A distributor/dealer can ask for refund of security deposit at 3 months’ notice. Company will
refund the same after adjusting all dues from the distributor/dealer

22.(C) Conditions for CST Billing of NAP

 Dealer/Distributor has to Submit Security Cheque against CST Billing which can be used in case
of non-submission of C Form.

22.(D) NAP is an advance payment vertical and there shouldn’t be any positive outstanding in
SAP (Division 21) at any given day and knocking off should be done on same day of billing .
BCOM & RCOM needs to insure strict compliance of the same in their Branch/Region.

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 23 Credit Policy – Prelam

 23.(A) For Sale of PLP/PLM to the market

SN Heads Distributor OEM

2 blank undated security cheques to be Not Mandatory, to be validated by R.Com and
1 Security Cheque
collected. Business Head.
25% of proposed credit limit to be obtained To securitize payment vide LC, BG, PDC. Some
2 Security Deposit as BG or SD (SD to attract annual interest of cases against after validation by R.Com and
7%) Business Head, to operate on open credit.
4% <=30 Days , 3% in 31-37 Day , 2% in 38-45 CD to be part of pricing. Secure Credit by
3 CD Terms
days, NIL>45 Day, SO blocked after 60 days. above. SO block after 60 days as a policy.
As per list. Exemption needed for Payment
4 List of Documents As per list. Collection Responsibility Letter, Bank
Statement and VAT return.
5 Agreement To have a written agreement with party. Not Applicable
6 Customer Nature CD Customer & Non CD Customer CD Customer Only.
CD reversal Debit Note may be raised, to be
supported by debit note acceptance letter. 4
7 In Case of Delay Payment Need exemption.
(Four) invoices per branch may be condoned,
for upto 7 days delayed payment.
Order Process Against Order Processing Form, duly filled in
8 Against P.O only.
Mechanism by distributor.

 23.(B) For Sale of PPB to the market

SN Heads Dealer OEM/SCP
2 blank undated security cheques to be Not Mandatory, to be validated by R.Com and
1 Security Cheque collected. Business Head.
To securitize payment vide LC, BG, PDC. Some
cases against after validation by R.Com and
2 Security Deposit Not Applicable Business Head, to operate on open credit.
CD to be a part of price. Secure Credit by CD to be a part of price. Secure Credit by
3 CD Terms above. SO block after 60 days as a policy. above. SO block after 60 days as a policy.
As per list. Exemption needed for - Payment As per list. Exemption needed for - Payment
Collection Responsibility Letter, Bank Collection Responsibility Letter, Bank
4 List of Documents Statement and VAT return. Statement and VAT return.
5 Customer Nature CD Customer Only. CD Customer Only.

6 In Case of Delay Payment Need exemption (need to fix a max days cap) Need exemption (need to fix a max days cap)
Order Process Against Order Processing Form, duly filled in
7 Mechanism by dealer. Against P.O only.

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  23.(C) Documents Checklist for New Customer Appointment -Prelam
S.N. Documents Description Distributor OEM
1 Distributor Agreement Yes No
2 Customer Appointment Form duly filled and signed by customer with stamp Yes Yes
3 Two blank undated signed cheques as security alongwith covering letter Yes Not Mandatory

4 Security Deposit/Bank Guarantee for 25% of proposed credit limit. Yes No

5 Letter of Credit/Bank Guarantee/Advance/PDC for Supply Value. Open credit for No Yes
collection of PDC/Payemtn on despatch in cases, against validation by R.Com and
Business Head.
6 Copy of VAT/CST Registration Certificate Yes Yes
7 Copy of PAN Card of the firm Yes Yes
8 Identity proof of Proprietor/Partner/Director as the case may be Yes Yes
9 Address proof of Proprietor/Partner/Director as the case may be Yes Yes
10 Address proof of the firm. Yes Yes
11 Payment collection responsibility letter duly accepted by the customer (on CPIL Yes Not applicable.
Letterhead)
12 Copy of Bank statement for last six months. Yes Not Mandatory

13 Last one years' VAT Return. (Except for newly opened firms) Yes Not Mandatory

14 Copy of partnership deed in case the trade partner is a firm.** Yes Yes
15 DD/Cheque of First Transaction value billing as per clause no 5 Yes No
16 Acceptance letter for Debit note for CD reversal. Yes No

 23.(D) Credit limit fixation -Prelam

Credit Limit (Rs Lacs) Recommendation by Approval by
Upto 20 BSM/Location Head/RSM DGSM/GSM -Prelam
20 to 40 GSM LOBH
Above 40 & upto 1 Crore Credit Controller LOB Head & Head Commercial
Above 1 Crore LOB Head & Head Commercial MD

 23.(E) Other condition for Prelam customers

 There are some common points for Prelam For SO Release point no 8 (A) & (B), For CD Condonation &
Debit Note point No 11(A) & (B),for change in Customer Status (Operative-Inoperative-Legal) point
no 14, for Revival of customer point no 15,for linking of customer point no 16,for Outstanding
recovery point no 17,for Do & Don’t for Legal point no 18,For Pending C Form point no 20 and for
Half Yearly balance confirmation point no 21.
 GM & DGM Prelam would be Agreement Signing Authority.

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