an executive summary of the anandam case for managers

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.