Case Solution for Covalent: Term Loan for Expansion and Modernization

Case Solution & Analysis for Covalent: Term Loan for Expansion and Modernization by Maram Srikanth, Palanisamy Saravanan.

Complete Case details are given below :

Case Name :      Covalent: Term Loan for Expansion and Modernization
Authors :           Maram Srikanth, Palanisamy Saravanan
Source :              Ivey Publishing
Case ID :           9B15N009 / W15241
Discipline :        Finance
Case Length :    10 pages
Plagiarism : NO (100% Original work)
Description for case is given below :
Covalent Laboratories Private Ltd. is involved in the manufacture of active pharmaceutical ingredients and bulk drugs in Hyderabad, India. In March 2012, the company added a new manufacturing plant and was in the process of obtaining regulatory approvals for its products from the U.S. Food and Drug Administration and the European Directorate of Quality of Medicines. Anticipating good growth, the company approached the Commercial Development Bank of India in June 2014 for sanction of a term loan of INR350 million over seven years towards expansion and modernization of its existing manufacturing facilities, including the construction of a captive power plant and effluent treatment plant. As the proposed financial assistance is long term in nature and the company is a new client with average financial strength, the head of the bank’s Corporate Banking Department faces a dilemma. He has asked a credit analyst to research the financial performance of the company and to assess the financial viability of and identify the risks in the proposal.
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