Kota Fibres Ltd

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1. Problem Statement From the case study, we noted that several financial problems faced by Kota Fibres, Ltd. The problems are listed as below:- (a) The Company has liquidity problem, whereby it is in a negative cash position, i.e. cash borrowings is higher than its own cash. At the end of Dec 2001, it is forecast to have a debt outstanding of INR3.5 million; (b) In this current position, the Company would not be able to fulfill its promise to lending officer of All-India Bank & Trust Company of having to clean up seasonal line of credit for at least a month; (c) Looking at the Exhibit 2, we can observe that although the Company is forecasted its net sales registering growth of 20% in 2001, it does not translate to…show more content…
065,918 | 6,055,892 | 4,339,410 | 3,522,659 | 3,399,362 | Disburs.: | | | | | | | | | | | | | | | Accounts Paid (2) | | 1,438,866 | 1,591,054 | 2,446,072 | 4,842,338 | 7,637,058 | 9,673,607 | 8,973,543 | 4,715,053 | 2,767,050 | 2,446,072 | 1,942,469 | 1,521,878 | Capital Expenditures | | - | - | 350,000 | - | - | 350,000 | - | - | 350,000 | - | - | 350,000 | Interest Payments | | 9,469 | 14,275 | 30,902 | 71,883 | 138,591 | 217,157 | 253,676 | 195,925 | 98,195 | 37,904 | 13,184 | 1,362 | Excise Tax Paid | 15% | 392,418 | 433,924 | 667,111 | 1,320,638 | 2,082,834 | 2,638,256 | 2,447,330 | 1,285,924 | 754,650 | 667,111 | 529,764 | 415,058 | Operating Expenses | | 454,501 | 454,501 | 454,501 | 454,501 | 454,501 | 454,501 | 454,501 | 454,501 | 454,501 | 454,501 | 454,501 | 454,501 | Accrued Income Tax Paid | | - | - | - | - | - | 991,255

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