e-circular SME BUSINESS UNIT. Sl. No. : 587/ Circular No. : NBG/SMEBU-TIEUPS/37/ Thursday,August 04,2016..

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1 e-circular SME BUSINESS UNIT. Sl. No. : 587/ Circular No. : NBG/SMEBU-TIEUPS/37/ Thursday,August 04, The Chief General Manager State Bank of India Local Head Office (All Circles except Bhubaneswar, Guwahati & Thiruvananthapuram) SME/ECOM/RR/ Cir- 38 / Date: Dear Sir / Madam, E COMMERCE TIE-UP WITH LENSKART SOLUTIONS PVT LTD (LSPL) SCHEME FOR FUNDING OF CAPITAL EXPENDITURE AND/OR WORKING CAPITAL OF FRANCHISEES OF LENSKART SOLUTIONS PVT LTD (LSPL) BRAND NAME: LENSKART We have entered into an agreement with Lenskart Solutions Pvt Ltd (LSPL) for financing of project Capex cost of new franchise stores, renovation/refurbishment of existing franchise stores and providing cash credit facility to existing franchise outlets operating under brand name Lenskart. The company has approx. 130 franchise stores in various Tier-I, II, III and IV cities of India. LSPL is present in 70-odd cities currently and is planning to expand operations by adding more stores. LSPL will recommend the franchisees along with the franchise agreement and breakup of the total investments to be made to facilitate the Bank in assessment of term loan through introduction mail. The introduction mail forwarded by corporate centre should be considered by the Branches/SME centers as comfort letter. The terms and conditions of the scheme have been placed at Annexure-I. Following additional precaution to be taken in each case by SMECC/Branch: 1) Investment in inventory and Franchisee fee not to be covered as a part of Capex Cost. 2) The residual period of the Franchise Agreement entered into between the Company and the Borrower should be greater than that of the total loan repayment period.

2 3) Branch to obtain Irrevocable Undertaking-cum-authorization letter as per the format as Annexure II. Product Codes & Scheme Code for the scheme is as under: Product Codes: FACILITY PRODUCT DESCRIPTION PRODUCT CODE CASH CREDIT MC-CC-SBF-LENSKART-FRN FIN CASH CREDIT MC-CC-C&I -LENSKART-FRN FIN TERM LOAN MC-TL-SBF-LENSKART-FRNFIN TERM LOAN MC-TL-C&I-LENSKART-FRNFIN Scheme Code: (Franchise Financing) Activity Code: 52319; Other Retail Sales of Goods by Shops Please bring the contents of this circular to the notice of all the branches / offices under your control. Yours faithfully, Chief General Manager (SME)

3 Annexure I CUSTOMISED PRODUCT FOR FRANCHISEES OF LENSKART Scheme Purpose Nature of Facility Eligibility Eligible amount of finance Margin Capital expenditure funding for new and existing franchisees and/or Cash Credit facility for only existing franchisees of Lenskart Solutions Pvt Ltd ( Lenskart or the Company ) operating retail stores under the brand name of Lenskart Term Loan: Funding for setting up/renovation cost of new and existing franchisees of the Company. Project Capex Cost to include cost of ceiling, flooring, layout, colouring, air conditioning, DG set, lighting, furniture, fixture and Eyetesting Equipment, Chair Unit and Computers etc. Investment in inventory and franchise fee will not be considered as part of the Project Capex Cost. Cash Credit facility: Working capital funding for existing franchisees Credit decision will be based on the Bank s norms. Term Loan and /or cash credit (CC) facility Franchisees of Lenskart operating outlets, whether existing or new, in Tier 1 and Tier 2 cities only given below - Tier 1 cities Mumbai, Delhi (including NCR region of Gurgaon, Ghaziabad, Noida and Faridabad), Bangalore, Hyderabad, Chennai and Kolkata Tier 2 cities Ahmedabad, Surat, Pune, Jaipur, Lucknow, Kanpur, Nagpur, Indore, Bhopal, Patna, Vadodara, Nashik, Aurangabad, Chandigarh and Gandhinagar Term loan 1. Minimum: 2 lacs 2. Maximum: Below Rs 25 lacs or 60% of the total estimated Project Capex cost, whichever is lower The Company will provide breakup of the total investments to be made to facilitate the Bank in assessment of loan. CC facility 1. Minimum: 1 lacs 2. Maximum: Rs 5 lacs Minimum 40% for both Term Loan and Cash Credit facility

4 Rate of Interest Repayment Security Charges (Upfront fee for TL & processing charge for CC) Comfort from the Company Total loan exposure (INR) Interest Rate + Spread Present Effective Interest Rate As on Upto Rs 10 lacs MCLR (one year) % p.a. 2.30% p.a. Above Rs 10 lacs MCLR (one year) + and 12.60% p.a. 3.50% p.a. below Rs 25 lacs Present effective rate is based on MCLR (one year) of 9.10% as on 1st August, 2016 Concession in interest rates of upto 25 bps for woman entrepreneurs. Interest rate will be reset periodically based on MCLR (one year) rate Term loan: Upto 5 years with a moratorium period of maximum 3 months CC facility: Repayable on demand Primary Security: Hypothecation of assets created out of Bank finance Collateral Security: Nil collateral for less than Rs 10 lacs of total exposure For total exposure of more than Rs 10 lacs, minimum 25% collateral in the form of SARFAESI compliant land/ building and/or liquid securities such as bank deposit, LIC policy, NSC, KVP etsc., which are pledged/assigned to the Bank Guarantee: Personal guarantee of all the promoters/directors/ partners or proprietor Total exposure (Term Loan plus Cash Credit facility) Upto Rs 10 lacs: 0.5% of the loan amount plus applicable taxes (upfront fees for Term Loan and processing fee for CC every year) More than Rs 10 lacs: Card rate i.e. Term loan Upfront fee of 1.30 % of the term loan plus applicable taxes CC facility Processing fee of 0.35% of loan amount plus applicable taxes every year The Company will introduce the franchisees to the Bank through Introduction Letter/ . The Company will recommend the cost to be incurred for setting up the franchisee stores. The Company will provide breakup of the total investments to be made to facilitate the Bank in assessment of term loan

5 The Company to stipulate in their agreement with the franchisee that the franchisee should have sole Banking arrangement with SBI for all transactions related to the franchise outlet under this arrangement. The franchisee to provide an undertaking to the Bank that they shall deposit/route all proceeds of the franchise outlet in/through the designated account with SBI (current account or Cash Credit account in case of working capital finance). The Bank to recover the monthly EMI for the TL from this designated account by way of Standing Instruction / hold / sweep. The Company shall ensure that the franchisee installs an exclusive Point-of-Sale terminal ( PoS ) supplied by the Bank, which will be mapped to the designated account (current account or the Cash Credit account of the Borrower in case of working capital finance). The Franchisee shall not install and/or operate any other PoS in the outlet. In case of default by the Borrower in repayment of 2 or more EMIs under the Financing Facility, the Bank shall be entitled to recover full or part of its dues from any deposit of the franchisee with the Company, subject to the Company s right to set-off amounts that are due to the Company from the Franchisee In case of default by the Borrower in repayment of EMIs under the Financing Facility, the Company including its Group Companies will, at the request of the Bank, stop further supplies of inventory to the franchisee, till over dues are recovered. Further, the Company shall issue a notice to the franchisee to give a warning to terminate the franchise agreement and withdraw all marketing, training, brand support, in case the dues are not cleared. However, under no circumstances will the Company be liable to indemnify the Bank in the event of default by the Borrower in repayment of amount due by the Borrower to the Bank by

6 virtue of the aforementioned Financing Facility. The Bank shall ensure that the Borrower provides an Irrevocable understandingcumauthorization letter( As given in annexure II) with following declaration---- a) That the Franchisee shall deposit sale and other proceeds (in cash / cheque / transfer / online) relating to operations of the franchise outlet in the aforementioned Franchisee Account held with SBI. Franchisee further undertake that this Franchise account will be the only bank account that will be used in connection to all transactions related to the operations of the franchise outlet. b) That the Franchisee authorizes the Franchisor to deposit all their dues and payments relating to operations of the franchise outlet, in the aforementioned Franchisee account held with SBI. c) That the Franchisee authorizes the Franchisor to make payment to the Bank any amount held by the Franchisor on their account in the event of their default in making payment or on occurrence of overdue in the account. d) That the Franchisee authorizes the Bank to recover full or part of instalment / interest / charges / over dues from any of their deposits with Franchisor, after adjustment of Franchisor s dues, in the event of their default in payment of 2 consecutive EMI under the finance facility. e) That the Franchise authorizes the Bank to give necessary instructions to the Franchisor to stop further supply of inventory/service support and withdraw all types of support, in the event of our defaulting in payment of any instalment / interest / charges / over dues to the Bank during the currency of the loan. f) That the Franchisee authorizes the Franchisor and/or the Bank to install an exclusive Point-of-Sale terminal ( PoS ) supplied by the Bank, which will be mapped to the aforementioned Franchisee Account held with SBI. g) That the Franchisee agrees and undertakes that he will not install and/or operate any other PoS in the outlet, except the PoS supplied by the Bank. In case the Borrower is unable to achieve satisfactory

7 performance in the store and is not making EMI payments on time, the Company shall consider offering assistance to the stressed franchisee by assisting the franchise in re-location of the store and/or sending a team from the Company to assist the store in improving performance and/or increasing monitoring of the store through centralised billing software system The Company will share details regarding the monthly revenues and estimated operating costs (based on model store performance) of each of the Borrower covered under the Financing Facility on a monthly basis with the Bank In case of default by the Borrower in repayment of EMIs under the financing facility, the Company will assist the bank in recovery and sale of equipment/capital assets on best-effort basis In case of default by the Borrower in repayment of EMIs, the Company would extend all possible help in joint follow up till recovery of the entire bank dues Any notice of termination of the franchise agreement between the Company and the Borrower shall be communicated to the Bank within 5 working days by the Company along with the reasons for termination by the Company Documentation Inspection SME Simplified Documents Irrevocable Undertaking-cum-authorization letter by franchisee as Annexure II. Copy of Franchise Agreement between the franchisor and franchisee. Inspection as per disbursement schedule of term loan. Quarterly after commencement of business and immediately in case of default/ delay in repayment of EMIs/working capital. Inspection charge as per bank s norms Annexure II (Irrevocable Undertaking-cum-authorization letter by the Franchisee under Franchise Financing Scheme)

8 To The AGM / CM / Branch Manager State Bank of India. Irrevocable Undertaking-cum-Authorisation letter We, M/s. (herein after referred as the Franchisee) hereby execute this Irrevocable Undertaking-cum-Authorisation letter in favour of the State Bank of India (SBI or the Bank) as under: Whereas the Franchisee is an approved Franchise of (Name of Franchisor) operating franchise outlet under the Brand name. Whereas the Franchisor has entered into a MoU with the Bank to offer finance to their Franchisees; and the Franchisee has decided to avail the finance facilities from the Bank under the said MOU. Whereas the Franchisee is also having a Savings Account/Current Account/Cash Credit Account no. (whichever applicable) (Franchisee Account) with the Bank. IN VIEW OF THE ABOVE PREMISE AND FOR VALID CONSIDERATION, WE (THE FRANCHISEE) HEREBY IRREVOCABLY AUTHORIZE, UNDERTAKE AND AGREE TO THE FOLLOWING TERMS AND CONDITIONS (tick whichever is applicable) We, the Franchisee, hereby undertake that we shall deposit all our sale and other proceeds (in cash / cheque / transfer / online) relating to operations of the franchise outlet in the aforementioned Franchisee Account held with SBI. We further undertake that this Franchise Account will be the only bank account that will be used in connection to all transactions related to the operations of the franchise outlet. We, the Franchisee hereby authorize the Franchisor to deposit all our dues and payments relating to operations of the franchise outlet, in the aforementioned Franchisee Account held with SBI. We, the Franchisee, hereby agree and authorize the Bank to debit our above Franchisee Account to the extent of any instalment / interest / charges / over dues under the finance facility provided by the Bank. We, the Franchisee, hereby further authorize the Franchisor to make payment to the Bank any amount held by the Franchisor on our account in the event of our default in making payment or on occurrence of overdue in the account. We, the Franchisee, hereby authorize the Bank to recover full or part of instalment / interest / charges / over dues from any of our deposits with Franchisor, after adjustment of Franchisor s dues, in the event of our default in payment of 2 consecutive EMIs under the finance facility. We, the Franchisee, hereby authorize the Bank to give necessary instructions to the Franchisor to stop further supply of inventory/service support and withdraw all types of support, in the event of our defaulting in payment of any instalment / interest / charges / over dues to the Bank during the currency of the loan. We, the Franchisee, authorize the Franchisor and/or the Bank to install an exclusive Point-of-Sale terminal ( PoS ) supplied by the Bank, which will be mapped to the aforementioned Franchisee Account held with SBI.

9 We, the Franchisee, hereby agree and undertake that we shall not install and/or operate any other PoS in the outlet, except the PoS supplied by the Bank. We, the Franchisee hereby agree that the Bank is not bound and obliged to verify the source or correctness of any deposit(s) made in the Franchisee Account or to ensure/verify that all or some of the terms and conditions of the Franchise Agreement are adhered to by the Franchisee and/or the Franchisor. We, the Franchisee further agree that the Bank will not be made a party to any dispute that may arise between us and the Franchisor in any respect, including the quantity and quality or defects in goods and services, under the Franchise Agreement. We, the Franchisee, agree and confirm that the Undertaking-cum-Authorisation given herein shall be absolute, irrevocable and unconditional and we shall be liable for all consequences arising out of any action hereunder. We, the franchisee, further agree that the Bank at its sole discretion, shall be at liberty to suspend / terminate / discontinue any or all of the above features under this Undertaking-cum- Authorisation at any time, without assigning any reason(s). For M/s Authorized Signatory Place: Date :