Premier Explosives: Finance for Organic Growth Harvard Case Solution & Analysis

In the month of February 2015, Premier Explosives Limited (PEL) was getting ready for an abrupt growth. The Indian business was the sixth-largest manufacturer of explosives in the nation as well as made defence products for example pyrogen igniters and solid propellants. PEL had many prominent customers in defence business and the mining sector, and exported volume explosives to several nations. PEL signed a joint venture deal with the well-regarded Kalyani Group, to make added defence products.

To fund the expansion, PEL approached the Commercial Bank of India for a preferential allotment of equity shares to marshal 510 million and an enhancement of working capital limits from 460 million to 740 million. The proposition was perused by the Central Bank of the president of the investment banking group of India, but was presented with a dilemma due to the recent slowdown in the infrastructure and mining sectors - the chief businesses that used PEL's merchandises. Given the associated risks and the decline, should the banker reject the capital proposal for PEL to enlarge?

Learning Objective: After completion of the case, students will be able to:

Evaluate the performance of PEL based on projections and its previous financials.

Remark on the organic growth strategies of PEL in the context of its recent expansions and its signing of a joint venture arrangement to domestically make defence products.

Premier Explosives Finance for Organic Growth Case Study Solution

Analyze the chance of mobilizing financial resources through the risks identified in the suggestion from a corporate/investment banker’s view and the preferential allotment of equity shares of PEL.

Publication Date: 02/23/2016

This is just an excerpt. This case is about Finance

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