Project Dates
Revision date: First time approval – 16 May 07
Implementation - July 07
Operations - Feb 08
Project Description/Concept: Chitradurga has a hawkers project. The batteries are being supplied by a very reliable auto driver from the past one year. His name is Prabanna, age is 53 years and comes from a close by village called Malapahahatti, 3 km from Chitradurga. He currently pays a rent of Rs. 120/day for the auto that he uses. He now wants to go in for own auto.
Project Financials
http://spreadsheets.google.com/pub?key=pwRdPi0mYDcKsSm1101hxfg Candidate Investment Site: Chitradurga town
Know-how and Technology Partners and Supply Chain Issues: Bajaj petrol 3 wheeler auto
Other Partners Stakeholders and Beneficiaries and Related Issues:
CRWCWS is one of the stakeholders as the hawkers project is run by them. Canara Bank is another stakeholder as it is the bank giving loan
IS CRWCWS backing this person ?
Implementation and Other Issues:
The cost of an auto is Rs. 83,000. Bank requires a margin of 25%, which Prabanana does not have. Prabanna is also eligible to get assistance from the Backward Caste Welfare Office (BCWO) from a scheme called Chaithainya self employment. BCWO provides a subsidy of Rs. 5000 and a loan of 20,000 at an interest rate of 4%. The assistance of BCWO is routed to the bank. Payments will need to be paid to the bank.
1 is the auto a brand new one?
2. Is it goods auto or passenger auto ? If passenger auto is being planned to be purchased, we may have some risk if passenger auto is used for transporting goods. Usual insurance clauses clearly indicate that the vehicle shouldn’t be used for transporting goods, particularly of inflammatory in n ature.
Getting BCWO assistance takes time. BCWO has agreed to provide assistance to Prabanna, but it is not clear when this will come. The bank is also ready to give loan if 25% margin is provided and a guarantee equal to 20% of the project cost.
Since, Prabanna is know from the past one year and has been very reliable, S3IDF can assist him for the margin money and gaurntee amount. Also, our intervention will help Prabanna to get loan independent of the BCWO assistance, when it will come is uncertain. Prabanna now earns Rs. 40 per day from the hawkers project. Our assistance can be structured so that our repayments come through the payments Prabanna should receive for his services to the hawkers.
Financeing for an auto is a mainstream lending activity which any bank or financing agency can do. S3IDF funds need not be used for this kind of mainstream financing. Moreover since finacing facility through BCWO is available, I feel Prabanna should use that avenue. Regarding time loss as to when he gets the subsidy is not really an issue, as he is already getting an auto on hire. He can file the application and in the meantime continue to use the hired auto.
Age of Prabanna is also a concern as he is already 53 years. This age is also important from the point of view of savings he should have made by now, if he has any plans to buy his own auto prior to approaching S3IDF. Atleast some amount of savings proof will give us some certainity of his financial savings to repay the loan.
Capital cost of the infrastructure:
Rs. 84,400 for a 3 wheeler
Various Risks:
1. Market risks: Low market risk as Prabanna is already established with existing auto
2. Technology Performance risks: standard product, so no technology risk
3. Organisational risks: Prabanna has been very reliable not having missed even a single day in the delivery of batteries. He does not have any bank loans and has good credit history. What is source of the credit history. Is it the Canara Bank which proposed to lend loan.
4. Portfolio risks: No portfolio risk
5. Mission/Regulator’s perception risk: Prabanna is poor and currently earns Rs. 150 per day.
In the cashflows that are attached to this PAD, if the revenue and fuel costs are linked in term of kilometers that could likely to cover, we can be more sure of the fuel costs.
Transaction Diversity and target for existing donors:
1. Is a transportation project, so adds to diversity
2. Helps achieve donor targets
