- How did Mehta construct his financial forecast? Using the financial forecast, prepare to show the “cash cycle” of the firm (i.e., the flow of funds through the working-capital accounts of the firm)Using the financial projections and the assumptions provided in Annexes 10 and 11
- Examine the exhibits in the case. On the basis of Mehta’s forecast, how much debt will Kota need to arrange for the coming year? Will Kota be able to repay the line of credit this year?
- Why do Kota’s financial requirements vary across the year? What are the key determinants of Kota’s borrowing needs? Please exercise the spreadsheet model to identify the critical forecast assumptions.
- Why does the bank require 1 30-day “clean-up” of the loan? Should the bank continue to waive compliance with this covenant?
- Consider the four memos that Pundir received. Use your intuition to assess the desirability of the proposals. How each of them probably affect Kota's borrowing needs?
- Study the production level annex of Kota Fibers, related to the proposal at the production level and be prepared to explain why the average level of the loan increase grows and yet the maximum amount of the loans is reduced.
- Are there other strategies that should be considered? How viable are these other strategies in the context of the competitive landscape?
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