個案資料

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?

This case can be taught in corporate banking, credit management, or advanced corporate finance courses in an MBA program or in executive development programs meant for senior management personnel in banks and financial institutions. The objectives of the case are:<ul><li>To challenge students in the area of short-term finance decisions, including the need to recognize the impact of specific decisions on quantitative benchmarks and qualitative parameters.</li><li>To assess short-term financing by banks and financial institutions.</li><li>To understand risk management strategies in fertilizer companies.</li><li>To identify the company’s strategy and to appreciate the concept of subsidy receivables in the Indian fertilizer industry, which is heavily regulated by the government.</li></ul>

• Cash credit
• letter of credit
• government subsidy