1. Borrower profile & initial credit bottleneck

  • Every municipal work order required a 5% Performance BG and a 5% Retention Money BG (released only after the 24–36 month defect liability period).
  • With 30% FD margin and 2.10% annual BG commission at its private bank, ₹2.25 crore of cash was frozen in bank FDs while running RA (Running Account) bills took 75 days to clear.
  • The contractor's existing Contractor's All Risk (CAR) policy insured only the base contract value without escalation or clearance/debris clauses, exposing the project to a 19% under-insurance average clause deduction.

2. How the file and cash-flow waterfall were structured

  • Migrated the working capital consortium to a PSU bank engineering-contractor scheme: ₹8.00 crore Non-Fund BG limit (at 0.95% p.a. commission and 15% FD margin) plus ₹4.00 crore Cash Credit / Overdraft at 9.25% p.a., releasing ₹1.05 crore of locked FD cash immediately.
  • Onboarded the contractor onto TReDS / bill discounting for approved municipal and PSU corporation RA bills at 8.40% p.a. without recourse, cutting the cash conversion cycle from 75 days to 4 days.
  • Placed a comprehensive Contractor's All Risk (CAR) insurance policy covering full contract value + 15% price escalation + ₹75 lakh debris removal + Section 2 Third-Party Liability with bank clause endorsement.

3. Before vs. after sanction comparison