BBC PVT LTD. Essay

847 Words Feb 17th, 2015 4 Pages
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
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The inventor at BBC is categorized into three main groups: raw materials, finished goods, and packing materials. With increase of total inventory by almost 85% from 2009 to 2011, it is obvious that BBC is holding more than they are selling. BBC utilizes FIFO when dealing with inventory.
Credit periods on loans fluctuated between 15 days to two years, with the largest amount owed at NIR 4million. With their AR Turnover ratio (net credit sales divided by the average AR) between 2.9 and 3.2, it means that they are overly lenient with the debtors when it comes to collecting.
BBC normally repays debt too quickly, thus, affecting the company’s liquidity. Since they paid the debts so quickly, they used the liquid cash that could have reinvested or saved.
The RI contract will also act as a gateway for BBC to become a preferred seller of bleaching powder for other major companies in the railway industry.
Requirements of the RI contract:
An onsite office
A warehouse
A workshop within the BBC factory premises
Quarterly onsite inspections before any product were dispatched to IR.
Price requirements for the RI contract (in INR)
200,000 – To build an IR office
Additional Admin expenses – To manage the IR office
500,000 – Build a new warehouse to store inventory
500,000 – Build a workshop in the BBC factory for IR Recommendations
It should be noted that all recommendations are based off the 2011, 2010, and 2009 information provided by the case
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