2023W - FIN 3163 - Assignment 3 Business Proposal for ECA - 15% Case Scenario

1. Jordan & Randy corporation is an established clothing company in Canada which has seen unprecedented growth in Canadian Market in last 3 years. They have already captured 10% of market share and have established long terms relationship with their buyers.

2. They are now looking to expand globally and have identified India as a huge market for their clothing brand. They have identified 2 potential companies in India to form partnership with, Manish & Manish which owns 20% of clothing market and Kartik n Pratik which own 30% market in India. Both are willing to sign the contract with them as long as they have the investment to full contract terms and conditions. They are willing to import 50,000 units.

3. Currently, Jordan and Randy Co are manufacturing at 50% of their full capacity which fulfills the local demand. In order to manufacture at 100% and export to India, they would require additional $500,000 for which they are planning to submit a business proposal to renowned Private Export credit agency, Leah and Leila agency.

4. Leah and Leila agency has several clothing companies in Canada which have submitted business proposal to export clothing product to India. On average, companies have asked for $250,000 in loans with good payment terms. The agency has also identified a potential buyer (Importer) in India, Lakhan & Prashamsa Corporation which is at 1% market share but growing rapidly. They are willing to import 25,000 units only but planning on expanding their operations and importing more units in very short time period.

Question: Note 1. give a detail Business Proposal for ECA covering following points:

a. Current Business operation and future plan/growth projections.

b. Why should ECA provide loan to your company? Which is double then what other companies are asking for?

c. What would be payment terms for this loan? Are you taking insurance from ECA? What guarantee are you providing for not defaulting?

d. Is this a 1-time deal or are you expecting more export transactions in near future?

e. How would you manage the logistics of the whole transaction as you have never done business outside Canada.

f. Are you backing yourself with a bank and what kind of letter of credit are you providing.

g. Are you forming contract with one of your buyers in India? What would be the terms and condition of your contract with them.

h. What is the benefit for ECA to assist your export transaction with one of 2 companies that you have identified and not their own buyer which is paying ECA substantial amount.