ITTEHAD CHEMICALS

Abstract

The Senior Officer, National Development Finance Corporation was considering a request from Ittehad Chemicals for an LC/Mark-up facility of Rs 20 million to meet its increasing working capital requirements. The proposed facility would substitute for the existing mark-up facility of Rs 20 million and would be utilized for the import of engineering stores and raw materials. On the basis of various company indicators and economic projections, the Officer had to decide whether or not to grant the new facility. The primary purpose of this case is to give students an opportunity to i) examine project working capital needs by using the data provided in the income statement, balance sheet, and the estimates for future production and sales, and ii) to look at the repercussions of borrowing decisions.