CASE STUDY:

The Banbury Impex India

Priyanka gujral Yogesh Raheja

Raunak Dhawan Ratul Chowdhary

Arjun Abbi Siddharth Thapa

Group Members:

• 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

Company Products

• 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 &2007Profit projections for 2011 looked disastrously low

Case background

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

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 dollarthe euro

• Domestic loan rates in Turkey: 14%

• Domestic Indian deposit rates: 10.4%

The Turkish Sale

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

Question

AnswerThe 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

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

Thank You