Question no$.1.$

Crystal Industry Pvt$.$ Ltd manufactures ceramic tiles in the region of Mehsana, near Ahmedabad, Gujarat, and has a satisfactory track record of running its ceramic business, with a turnover of Rs$.30$ Crore and PAT of Rs$.3Cr$ per annum. The company has now requested to sanction a Term Loan of Rs$.10\mathrm{.}00$ Crore from its existing bank, PNB$,$ to set up a new unit with the following details.

Cost of the project $($IDC not considered in project cost$),($Rs$.$ Lakh$)$

Operating years...

$1$ Sales

Year $1$

Year $2$

$2$ Gross expenses $($other than depreciation, other write$-$offs, and interest$)$

$5,000\mathrm{.}00,5,500\mathrm{.}00$

$3$ Dividend $($including dividend tax$)$

$4,500\mathrm{.}00$

$4,900\mathrm{.}00$

$4$ Repayment of loan $10\%$ by the year$-$end

$5$ Current assets $($other than cash$)$

$6$ Trade credit

$50\mathrm{.}00$

$50\mathrm{.}00$

$7$ Bank borrowings for working capital

$\backslash$table$[[600\mathrm{.}00,660\mathrm{.}00],[80\mathrm{.}00,85\mathrm{.}00],[370\mathrm{.}00,410\mathrm{.}00]]$

Assumptions:

Interest on term loan has to be paid @

Interest on bank borrowings for working capital has to be paid @

$10\%pa.$

$12\%pa.$

The bank borrowings shown above will be raised at the beginning of the respective year and will remain utilized all through the year.

Aggregate Depreciation of Rs$.50$ Lakh in the each year of initial $2$ years of operation.

The depreciation rates for income tax purposes under the WDV method are as follows:

Building

$10\%$

$15\%$

Plant & machinery and other fixed assets

$6.$ Preliminary expenses $($assets$)$ have to be written off equally over $10$ years.

$7.$ Income tax provision is to be made

$30\%$

You are required to Prepare the following projected financial statements:

A$.$ Prepare the P&L accounts for the first $2$ operating years and calculate PBT$,$ PAT, and retained profit

$|$~$15$~$|(1)$

B$.$ Prepare the Balance sheets at the end of gestation and the first $2$ operating years.

$[15]$