Anandam case summary
- 1. 19DM119 FINANCIAL ACCOUNTOING ASSIGNMENT: ANANDAM CASE SUMMARY NANDITA AGRAWAL
- 2. EXECUTIVE SUMMARY Anand Agrawal, owner of Anandam Manufacturing Company Pvt. Ltd., established it in 2012. He specialised in formal party dresses for girls up to 12 years of age. He has 12 years of experience in garment industry. By 2021, this industry was expected to grow to US$223 billion in size with 4% contribution to GDP. He had initial capital of Rs. 1.2 million with which he purchased necessary machinery and opened his office in residential premises. He hired a Ragini Iyer, a fashion designer and skilled laborers. Fresh and creative designs, quality fabric and fine finishing led to growth in business. When he started, he and his wife were the only shareholders. He borrowed Rs. 0.736 million against mortgage of his assets worth Rs. 1.9 million. In second year, loan from mortgage was Rs. 1.236 million, in third year, it was Rs. 2.5 million. His financial statements were audited by a professional accountant. Business was generating profits after all expenses and interest payments, so Mr. Agrawal was happy. From 2012 to 2015, his sales increased fourfold, from Rs. 2,000 thousand to Rs. 8,000 thousand. His profit after tax went up to Rs. 840 thousand. Financial liquidity and funding problems started increasing. Mr. Agrawal urgently needed loan to meet cash and investment requirements. He submitted a detailed proposal and project report along with financial statements of previous years. His credibility in market was good, but faced a problem in collecting money from customers as he had no structured system for keeping track of extensions of credit periods. Stock was piling up in his factory, as orders were either not dispatched or customers delayed delivery. Machines were getting old and he wanted to replace them with modern and efficient ones. He needed additional staff and a spacious office. He proudly presented performance of his company to bank manager, which he believed was excellent in a competitive environment. He instructed loan officer to process loan application as sson as possible. And inform him the decision. He needed financing of 50 million at minimum to continue with smooth operations and to expand his business. He was waiting for the bank’s decision, which may be favourable, and help to take Anandam to new heights.