Credit Policy

Century Plyboards (India) Limited

Effective from 1st October 2018
This Policy supersedes all previous credit policy

Panel (Ply & Doors)

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 Link Code Creation of Existing Customer Code 3
3 Customer Code Link/De-link 3
4 Extention of Customer from One LOB to Other LOB 3
5 Distributor, Payment Terms , SD/BG & Agreement Signing Authority 3
6 Payment Terms (Credit Days) fixation 3
7 Special CD Customer 4
8 Credit Limit Fixation for New Customers 4
9 Credit Limit Revision/ Re-structure 4
10 Penalty due to ODOS & Reduction of Credit Limit 4
11 Re-instatement of lapsed credit limit in case of revival of In-operative customer 4
12 Temporary exposure enhancement (Sales Order Release) 5
12 (A) Sales Order Release in Credit Limit 5
12 (B) Sales Order Release in Credit Days 5
13 Open/Un-Secured Credit 5
14 Timeline for posting Collection entry in SAP 5
15 Cheque Bounce & Restoration of Credit Limit 5
16 Cash Discount Condonation approval & Debit Note 5
16.(A) CD Condonation 5
16.(B) CD Debit Note 6
17 Cash Discount Variance for Panel CD Dealers & Distributors 6
18 Change in Customer Nature ( CD to Non CD & Vice Versa) 6
19 Change in Customer Status ( Operative, In-Operative , Legal ) 6
20 Revival of In-Operative Customers 6
21 Action Plan on Outstanding Recovery 7
22 Do & Don't for Legal 7
23 Channel Finance 7

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 1. List of documents for New Customer Account Opening

Nos of
SN Scenarios List of documents
docs

Billing against Advance Payment (i.e., billing after

A 3 Appl. Form|Copy of GST RC | Copy of PAN | Receipt of fund in CPIL bank a/c.
realization/credit of Fund into CPIL Bank a/c)

Appl. Form|Copy of GST RC |Copy of PAN | DD/PDC (original in custody of BCOM) or

B Billing against DD/LC */BG*/PDC 6 LC/BG (duly vetted by Mr. Sanchayan Tewary)|Residential address proof (any 1 :
Aadhar/Passport/Voter ID) |Covering letter of PDC.

Billing against Blank Security Cheque availing
C 8
Credit Limit in SAP
Appl. Form with latest Photo|Copy of GST RC |Copy of PAN|Residential address Proof
(any 1 : Aadhar/Passport/Voter ID) |2 nos Blank Cheque|Covering Letter of Blank
Cheque |last 3M Bank Statement |Payment collection responsibility letter.

*BCOM need to take confirmation of T&C of BG/LC from Mr. Sanchayan Tewary.
Deviation of any documents can be approved by Commercial Head only.
Additional requirement:
i. Territory Code confirmation by BAT (for all above scenarios)
ii. Partnership Deed in case of Partnership firm / Memorandum & Articles for Association if Ltd/ Pvt. Ltd. (for C only)

2. Link code creation for existing code (i.e., same/different firm name with different GST No.):
A) If mother code is availing limit, and want to open a link code then we need all docs as per s/n C of above
table.
B) If mother code is not availing limit (i.e., dealing on advance) , and want to open a link code with 100%
advance then code can be created as per s/n A & B above. In case new link code wants to avail credit limit
then all documents as per s/n C would be required for both mother and linked codes.

3. Customer Code Link/De-link: Linking is done to club the exposure of group of firms/having common
proprietor/director into one roof. Linking can be done between firms within same Branch, criteria
of linking are as below-
a) Joint approval of GSM & RCM is required to link/delink any code.
b) Linking can be done with common Proprietor/Partner/Director/family member.
c) 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 the dealer (provided we have security docs of the Dealer).

4. Extention of Customer Code from one LOB to Other LOB :

a) List of documents required would be as per s/n 1 above
b) Confirmation from exisiting LOB (BSM/RSM) is MUST to extend the code to New LOB
5. Distributor, Payment Terms , SD/BG & Agreement Signing Authority

Division Customer Type Signing Authority Payment Terms 25% SD/BG to avail CL
Ply Distributor NSM –Panel 30 days Not required
Doors Distributor/Project Dealer Nikita Bansal 45 days Required #
Agreement should be signed on Non Judicial Stamp Paper of Rs.100 only- & Sign with Stamp on each pages.
If Distributor is not ready to submit 25% BG/SD, exception will be jointly approved by LOBH & Commercial Head
# Rate of Interest of Security Deposit would be 6% p.a.

6. 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.

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7. Special CD Customers:

It is for special customers/projects only & should not include CD condonations and fresh
approval should be taken every year from MD. Approval would be valid for same financial year
only and require approval every FY to avail the benefit of extended days to next FY.

8. First time Credit Limit fixation for a New Customer :

8 (A) PANEL (Ply & Doors)

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

8 (B) FOR ONE CUSTOMER INCLUDING ALL LOBS.

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

9. Credit Limit Revision/Re-structure:

Credit Limit of Distributor can be revised at any point of time after taking additional 25% BG/SD,
same of Dealer to be revised on half yearly basis (i.e., in April & October), as per following terms
& conditions –
i. Dealer must be 6 month old as on 31st Mar (for Apr) & 30th Sep (for Oct) to avail the Limit Revision.
ii. Branch must possess all the documents of the customer (Security Cheque with covering letter, Payment
Collection Responsibility Letter, Residential Address Proof & ID Proof of Prop./Part/Director).
iii. Sales of Ply & Doors to be taken together for calculation and new limit would be fixed into Ply & Door as per
ratio of sales between Ply & Doors.
iv. Further change/shift in limit from Ply to Door & vice versa can be done based on request of BSM.

Eligible Limit = Gross Eligibility (GE) /Weightage Days (WD) X 60

GE = Sum of 1st highest & 2nd highest sales month (bill value after tax) of last 6 months
WD = Max of (i) Average Collection Days (ACD) of last 6 months & (ii) 60 days

M Code M Customer Name M1 M2 M3 M4 M5 M6 H1 + H2 ACD Elg CL

10000XXX ABC Plywood 15.00 - 16.00 20.00 12.00 18.00 38.00 25 38.00
10000XXX ABC Plywood 15.00 - 16.00 20.00 12.00 18.00 38.00 71 32.11

10. Penalty due to ODOS & Reduction of Credit Limit

a) If outstanding goes beyond max allowed days i.e. 65 days, the credit limit will get reduced by
20% by 1st week of every month.
b) Credit Limit of all such dealers can be revised /enhanced continuous Good payment track record
in last 3 months.
c) If 100% of the Outstanding goes beyond 120 days, entire Credit Limit will be withdrawn.
d) If the Dealer has return the material to clear the Outstanding, in that scenario entire credit limit
of the dealer will be withdrawn and dealer has to deal on advance only.
11. Re-instatement of lapsed credit limit in case of revival of In-operative customer :
In order to revive In-operative dealer, credit limit can be uploaded lower of below 2 points-
a) Up to 75% of the lapsed limit can be reinstated with GSM approval for the 1st time (if dues recovered within
1 year).
b) CL re-instatement 2 time onwards require joint approval of LOBH & Comm. Head, similarly for limit
reinstatement if dues recovered after 1 year require joint approval of LOBH & Comm. Head.

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12. Temporary exposure enhancement (Sales Order Release)
12 (A) Sales Order Block in Credit Limit.
Scenario Recommendation by Approved by Releasing authority
<= 25% of CL BSM /RSM GSM RCOM
>25% of CL Comm. Head MD Credit Controller
 Outstanding & Credit Limit of only concerned (billing) LOB need to consider

12 (B) Sales Order Block in Credit Days

Credit Days (Block Reason) Recommendation by Approved by Releasing authority
Ply & Door outstanding above 65 days and
LOBH MD Credit Controller
outstanding of rest other LOB within 75 days.

All outstanding above 75 Days LOBH MD Credit Controller

If ODOS is due to Quality Claim/Transit Damage case of which is pending with insurance co., Comm.Head can approve SO Release in days upto Rs.5 Lacs

13. Open/Un-secured Credit: This is for new cases where billing needs to happen in absence of Security
Cheque/PDC. Residential Address Proof of the Prop./Part./Director, Purchase Order are MUST
(Commercial Head can approve condonation of documents). Credit Limit can’t be uploaded in SAP.
Approval will be valid for the running financial year only and branch has to take renewal approval in
every FY. Approving authorities are as follows -
a) With joint approval of LOBH & Commercial Head, billing upto Rs.20 lacs can be done to any
customer (including all LOB).
b) MD approval for open/unsecured credit above Rs. 20 Lacs.

14. Timeline for posting Collection entry in SAP (BCOM is responsible to insure the adherence):

Scenario Entry against Timeline of making collection entry in SAP

All OS < 65 Days NEFT/RTGS Upon receipt/realization of fund in CPIL Bank a/c

On the day of banking (except last day of the month). On last working day of the
All OS < 65 Days Cheque banking by BCOM month or during Banking Holiday, where cheque would be banked on next working
day, entry can be taken on last day of the month.

Cheque banking by Out

All OS < 65 Days Upon receipt/realization of fund in CPIL Bank a/c
Station Dealer/Sales Team
OS >65 days in any LOB All above scenarios Upon receipt/realization of fund in CPIL Bank a/c

15. 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 above point bounces of both mother code & link code would be considered.
c. Credit Limit can be restored after recommendation of RCOM.

16. Cash Discount Condonation & Debit Note:

16 (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.
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 16 (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).
 BCOM will check Outstanding on weekly Basis and issue DN on & above 45 days in Panel where
Condonation is not applicable, & keep track ( Excel sheet)
 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.

17. Cash Discount Variance for Panel CD Dealers & Distributors:

21 Days Payment Term .. 30 Days Payment Term

Payment received within CD % Payment received within CD %
Within 21 days (adtnl. 3 Days Grace ) 4% Within 30 days (adtnl. 3 Days Grace ) 4%
22 days to 30 days (No Grace ) 3% 31 days to 37 days (No Grace ) 3%
31 days to 37 days (No Grace ) 2% 38 days to 44 days (No Grace ) 2%
38 days to 44 days (No Grace ) 1% > 44 days Nil
> 44 days Nil
 In case Non CD Customer pays 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.
 Above payment terms is NOT applicable for 45 days payment term.

18. 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, as per last 6 months collection trend with recommendation of RCM & RSM.
c) It should be done at the beginning of the month only, not in the middle of the month.

19. 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.

20. 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

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 21. Action plan for Outstanding Recovery:
SN O/S Date Range Action
1 60 Days to 75 Days BCOM/RCOM has to talk with BSM/RSM for recovery plan
2 76 Days to 90 Days BCOM/RCOM will discuss directly with the Dealer/Distributor.
BCOM/RCOM will visit the Dealer/Distributor. If the dealer is ready to return the material, material will be
taken back
3 91 Days to 120 Days
In case O/S >90 Days follow up would be made from HO Commercial team also.

4 OS 120 to 150 Days BCOM will send 1st Payment Reminder Notice to the Dealer/Distributor through registered post with AD.

Banking of Security Cheque after above 2 level of Reminders

5 OS > 150 Days In case above security cheque bounces, Case would be filed u/s 138 of NI Act at Kolkata/Meerut or as
suggested by HO Commercial Team & 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.

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

23. Channel Finance:

i) Customer with Annual Sales of => Rs.1 Crore with CPIL 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.