Case Solution for Coromandel: Enhancement of Short-Term Finance

Case Solution & Analysis for Coromandel: Enhancement of Short-Term Finance by Maram Srikanth, Palanisamy Saravanan, Tara Shankar Shaw.

Complete Case details are given below :

Case Name :      Coromandel: Enhancement of Short-Term Finance
Authors :           Maram Srikanth, Palanisamy Saravanan, Tara Shankar Shaw
Source :              Ivey Publishing
Case ID :           9B16N006 / W16066
Discipline :        Finance
Case Length :    13 pages
Plagiarism : NO (100% Original work)
Description for case is given below :
In April 2015, Coromandel International Limited (CIL), a manufacturer of fertilizers based in Chennai, India, requested that the National Bank of India increase CIL’s existing short-term finance arrangement. CIL operated 14 state-of-the-art manufacturing facilities across India with a combined installed capacity of four million tonnes per annum and over 2,000 employees. It sold its products through a countrywide dealer network as well as in its own 800 retail chain stores, with plans for aggressive expansion both at home and to various countries in Southeast Asia, Latin America, and Africa. However, CIL was dependent on government subsidies and, because many of its raw materials had to be imported, was also dependent on a positive foreign exchange rate. Over the previous three years, CIL had acquired four fertilizer companies as part of its growth strategy in inorganics. With extended short-term financing, CIL could integrate these companies and take advantage of the resulting synergy. The country head of the Wholesale Banking Group was concerned that CIL’s request would exceed the bank’s exposure norms on the fertilizer industry as well as the bank’s prudential exposure limits on a single borrower. Should the bank accept CIL’s request for enhanced short-term borrowing?
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