- The Banbury Group is a manufacturer and exporter of textiles founded in 1997 with customers in over 40 countries. - In 2010, Banbury's sales were close to INR 25.6 crores with most exports going to the Middle East, South America, and Europe. However, sales growth had slowed to 2.5% annually in recent years. - Banbury faced two issues in 2010 - negotiating a short-term textile sale to a Turkish company and increasing long-term profitability in light of rising cotton prices and an appreciating Indian rupee.

3. Priyanka gujral Yogesh Raheja
Raunak Dhawan Ratul Chowdhary
Arjun Abbi Siddharth Thapa

4. • The Banbury Group is a manufacturer and exporter of high
quality man-made fabrics.
• Founded in 1997.
• Customer base in over 40 countries in
Asia, Africa, Europe, Middle East, America.
• Banbury has embraced the most modern technology for the
manufacturing of its products.
• Today, The Banbury Group has interests in different arenas like
computer peripherals, real estate and renewable energy.
Company Background

5. Company Products

6. • The company expected sales close to INR 25.6 crores or
USD 5.4 million in 2010
• Export to:
Middle East (50%)
South America (30%)
Europe (10%)
• Sales growth:
Had been slow over the past five years: 2.5% per year
Had been satisfied with 5% margins in 2006 &2007
Profit projections for 2011 looked disastrously low
Case background

7. In 2010, Banbury Impex Pvt. Ltd. would close with a small growth in sales
and a small drop in profits.
Two problems:
1.Negotiating a short-term prospective sale to a Turkish company
2.Increasing overall profitability in a long term
Two price forces:
1.Rapid rise in the price of cotton
2.The rising value of the Indian rupee (INP) against the U.S. dollar (USD)
Key Issues

8. Lapura’s immediate problem:
• He had made sale of $250,000 textile to a Turkish
customer
• The contract allowed him to change the currency of
invoice from the Turkish lira to:
the dollar
the euro
• Domestic loan rates in Turkey: 14%
• Domestic Indian deposit rates: 10.4%
The Turkish Sale

9. Which factor do you think
is more threatening to
Banbury’s
profitability, cotton prices
or the rising value of the
rupee?
Question

10. Answer
The rising value of rupee is more threatening to
Banbury’s profitability because:
• Low rates of return
• Nominal interest rate yields
• Not expected to change much in the immediate
future
• Rise of inflation
• Credit crisis

11. On the Other hand cotton prices were not much
threatening to Banbury’s profitability because:
• Prediction of cotton futures in the coming year is
expected to be fallen down as -
 March 2011:113.09;
 July 2011: 102.06/;
 October 2011: 95.03.
The Curious case of high
cotton prices