BBC PVT LTD.
Table of Contents
Case Background 2
Key Findings 2
Recommendations 4
References 5
Case Background
Established in 2004, BBC Pvt. Ltd. was an Indian chemical manufacturing company that primarily manufactures stable bleaching powder. It should be noted that stable bleaching powder could be manufactured through two different techniques: adsorption or absorption. By using adsorption, this means that BBC’s product was of an inferior quality compared to the products of its competitors. However, the use of adsorption allowed the company to enjoy a favorable market share, and due to the cost advantage, BBC was able to pass on lower prices to its customers. Currently, BBC is contemplating starting a contract with Indian railways (IR), but will be requiring major modifications to the company and factory if it is going to come to succession. The main hindrance BBC is having is a maxed out credit line of INR 2.5million through the Union Bank of India. The managing director, Arpit Agarwal, knows of ways the company can improve to reach these financial goals, but is having troubles transitioning from ideas to plans.
Key Findings:
The price of this raw material could fluctuate wildly, from as low as INR 10 per ton to as high as INR 10,000 per ton. These figures are based upon suppliers’ capacity to store and sell liquid chlorine within their respected licenses.
Two methods to create stable bleaching power - adsorption and absorption. Absorption produces better quality, while Adsorption is more cost efficient. BBC used adsorption, which allows them to pass savings to their clients.
BBC is planning to sign a contract with Indian Railways (IR).
BBC currently has an INR 2.5million line of credit with the Union Bank of India, and is currently at its max. The bank discussed options of another loan for the IR contract, but this would be at 14.5% and would increase their interest payments to INR 600,000 annually.
Case Background 2
Key Findings 2
Recommendations 4
References 5
Case Background
Established in 2004, BBC Pvt. Ltd. was an Indian chemical manufacturing company that primarily manufactures stable bleaching powder. It should be noted that stable bleaching powder could be manufactured through two different techniques: adsorption or absorption. By using adsorption, this means that BBC’s product was of an inferior quality compared to the products of its competitors. However, the use of adsorption allowed the company to enjoy a favorable market share, and due to the cost advantage, BBC was able to pass on lower prices to its customers. Currently, BBC is contemplating starting a contract with Indian railways (IR), but will be requiring major modifications to the company and factory if it is going to come to succession. The main hindrance BBC is having is a maxed out credit line of INR 2.5million through the Union Bank of India. The managing director, Arpit Agarwal, knows of ways the company can improve to reach these financial goals, but is having troubles transitioning from ideas to plans.
Key Findings:
The price of this raw material could fluctuate wildly, from as low as INR 10 per ton to as high as INR 10,000 per ton. These figures are based upon suppliers’ capacity to store and sell liquid chlorine within their respected licenses.
Two methods to create stable bleaching power - adsorption and absorption. Absorption produces better quality, while Adsorption is more cost efficient. BBC used adsorption, which allows them to pass savings to their clients.
BBC is planning to sign a contract with Indian Railways (IR).
BBC currently has an INR 2.5million line of credit with the Union Bank of India, and is currently at its max. The bank discussed options of another loan for the IR contract, but this would be at 14.5% and would increase their interest payments to INR 600,000 annually.
References: Kapoor, N. & Goel, S. (2013). Ivey Publishing. BBC PVT. LTD. & Working Capital Challenges. Retrieved January 17, 2015 from https://hbr.org/product/bbc-pvt-ltd-and-working-capital-challenges/W12346-PDF-ENG