academy of economic studies bucharest

8/7/2019 Academy of Economic Studies Bucharest

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Academy of Economic Studies Bucharest

The Investment CreditAnalysis of the company S.C.RAAL S.R.L- Building

materials supplier- through theintermedium of BRD

Project Organizer: Alina Mihaela Dima

Deadline: 22.04.2011

Presented by: Suhina Robert

Hincu Andreea

1. Overview of the Romanian Bank for Development

In 1923 The National Company for Industrial Lending is created as a public institution,with the State holding 20% of the share capital, the central bank 30%, and the rest being held


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by individuals, amongst whom a group of former directors of Marmorosch Blank & Co., the

first Romanian modern bank. The mission of this new institution is to finance the first

development stages of the industrial sector in Romania.

On December 1, 1990, the Romanian Bank for Development was established as a commercial bank with the legal status as stock company, assuming the assets and liabilities of the

romanian Investment Bank. In December of 1998 the sale - purchase agreement is signed

between Socit Gnrale and the State Ownership Fund, the Romanian organism managing

the State holdings) whereby Socit Gnrale subscribes for a 20% increase of the share

capital and purchases a stake so that its ownership reaches 51% of the increased share capital

of BRD. In early 1999, the Romanian Bank for Development has become the first privatized

bank in the Romanian banking system,by the acquisition of Groupe Societe Generale

majority stake (51%) . For a larger and closer customer approuch - more than 900,000, BRD -

Groupe Socit Gnrale has developed and will continue to develop a network of local

branches, currently comprising 186 branches, agencies, offices and over 800 correspondent

banks in 80 countries.

In 2000, BRD - Groupe Socit Gnrale took a business plan built on three major

coordinates:

1. Market position and development implications of banking activities:

Strengthening the Bank's position as a leading bank on the romanian market and to

continue the transformation process in a universal bank with a full range of banking services;

Strengthening the Bank's reputation and preserve its identity as a romanian bank, part of the

huge Socit Gnrale streangth;

Strengthening the Bank's selective presence in the territory, through the reconfiguration and

modernization of the agency;

Continue to integrate the bank in the international financial community.

2. . The increase of its bank profit and revenue growth to shareholders by increasing the

number of customers and improving the operating margins.

3. Improving the organization, which depends on a restructured organization, for better

internal and external communication and a more effective management of information and

practices that at the same time align with the standards of BRD Socit Gnrale. The

Romanian Development Bank in 2000 confirmed its growth, outlined on the base of the

previous year, due to the macroeconomic context that remained difficult, the bank showed

some signs of recovery. Bank results are striking: a net income of 1.3548 trillion lei, which


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indicates new improved financial indicators, BRD has shown the ability to overcome the

difficulties inherent in the transformation period which is passing through.

Analyzing the customer numbers and corporate clients we can say that the number of individuals

increased from 731,386 to 451,118 in 31/12/2000 at 31/12/2000 representing an increase of 62.12%

while the number of corporate clients increased from 88,343 to 98,553 in in 12/31/1999 31/12/2000

representing an increase of 11.55%.The Romanian Bank for Development - Groupe Socit Gnrale

2000 made a net profit of 1,354.8 billion lei (52.25 million USD) at a gross profit of 1,608.3 billion lei

(62.03 million USD). Net profit increased by 76.8% in nominal value and 25.68% in real terms over

1999.

Fund dividend for 2000 is 752.2 billion lei. In 1999, net profit was 766.4 billion lei, and dividends

totaled 454.8 billion lei, an increase of 65.4% in nominal terms and 17.5% in real terms for the year

2000.2. Description of the loan

The company S.C. RAAL S.R.L. applied for an investment credit of 140.000 RON over a

period of 12 months (12.10.2001- 11.10.2002). The credit will be used for covering the need

for circular capital and share consolidation.The company's main objective is improving their

activity by expanding. These new activities are processed in the new hall which had been

purchased, so that the company decided to buy steel processing equipment. Their new

incomes will come from the processing of steel and concrete.The reimbursemnet of the loan will be made in equal monthly installments with an monthly

3,83% interest, according to a schedule previously agrred upon by bouth parties. The source

of the reimbursement is the monthly cash flow of the company. The credit will be backed up

by a first rank mortgage on building and a warehouse both located in Jilava, jud. Ilfov. The

assets are owned by Cantemir Ana and Iuga Alexandru.The accepted value of the collateral is

50.000 Euro.

Fees:1. Commitment Fee: 0.4%

2. Management Fee: 0.05%

3. Non-use Fee: 5% per annum on the unused amount

4. Other Fees: 57 RON - Analysis documentation

2.1 Description of the company RAAL S.R.L


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RAAL is a manufacturer of complete cooling systems and heat exchangers made of

aluminium alloys and stainless steel, in brazed construction: radiators, oil coolers, air coolers,

condensers and combined coolers, designed for agricultural, construction, industrial

equipment and automotive applications. The company's main objective is expanding theiractivities. These new activities are processed in the new hall which had been purchased, so

that the company decided to buy steel processing equipment. Their new incomes come from

the processing of steel and concrete. In the second half of 2001, revenues were 112% made in

proportion to the proposed level of budget revenues and expenditures (BVC). This overrun

was due to the following causes:

the BVC planned for 2001 were not taken into account the income from sales of imported

goods

diversification of goods sold

Attracting new customers

1)Headquarters, national working points, abroud working points:

Adress: Calea Dorobanilor 133, et. 1, ap. 2, sector 1Sales Point: Progresul Warehouse

a) storage space and sales point has been rented from the SC Progresul, rental agreement, the

premises located at Rd. No Giurgiu. 5, Jilava, Ilfov County

b) storage and sales space, purchased by contract for sale at 18.05.2000 - purchasing, storagearea consisting of 24,000 square meters in Rd. No Giurgiu. 5, Jilava, Ilfov county.

2) The Analysis of companys competitors

In this sector, competition is very high, with a significant number of companies with financial

strength. The most important competitors are BADUC SC, SC COMAT Bucuresti SA, ELF

SA.

In general, society benefits from discounts on contracts In general, society benefits from thediscounts for supply contracts concluded with leading suppliers of steel products in our

country (between 4% and 10%) as supplier for SC DUCTIL STEEL Buzau, SC Coke

TRGOVITE SA STAINLESS STEEL TRGOVITE SA.

3) Data on technical equipment of the company


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Company uses appropriate storage and disposal for specific activities, namely 5-t crane, rail

access, ample storage areas- it has a very good infrastructure.

The company doesnt own transportation means(to transport the products and supplies to the

customers), making calls on the services performed by third parties.

4)The prospect of economic development of the operating sector

Marketing perspective of building materials is closely linked to construction activity in the

homeland- economical prognostics show advantageous changes in the near future.

5) Comments on the the client`s economical- financial history

About RAAL Ltd. is a private company, founded in 1994, which covers the marketing of

construction activity, particularly steel products (steel, concrete, welded mesh) used to obtain

the bearing of precast concrete products.

Diversifying the company's activities and economical-financial performances - show real

improvements, by good management of the company and management's concern to place the

company among top- earning firms. Thus, since 1997, the company achieved joining the

company's first national top 100 companies compiled by the Chamber of Commerce and

National Council of Private SMEs in Romania. In the first semester of 2000, following the

financial bottleneck, the company was forced to seek short-term bank loans (at BancaTurco-

Romanian) worth 95000RON which was repaid in full. Compared to 1999, in 2000, the

company's activity increased following the incorporation of an asset consisting of an

industrial building with 4,200 sqm and a land surface of 22,035 sqm, with payment in

installments amounting to 24000 RON. This asset is equipped with a 5 t crane and access to

rail facilities to enable coverage of marketed products. For future activity is envisaged to

obtain additional sources of revenue for the development of productive activity (bending steel

concrete, metal, prefabricated - fence panels).


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The Solvency indicatori very good recording in 2000at 100% which meansthat the company

was able to cooperate without any credit line. In 2001,even though they used credits, their

solvency level is maintained close to100%.

Solvabilitatea patrimonial (%)

95

100

100

95,5

92 94 96 98 100 102

AN 1999

AN 2000

AN 2000

(8 luni)

AN 2001

(8 luni)

Solvabilitatea patrimonial (%)

The household debt increased in 2001 compared to 2000 by 3.4%, this shows that value will

grow to 100%, which is a negative aspect.

The Total liquidity of the company shows that it can pay his obligations due in short term,

this indicator increased to 115.15% in 2001.

Althougt the immediate liquidity also increases, this is reflecting the company's ability to pay

its debt immediately , the short-term credits and loans. The level of covering the expenditure

by revenue shows that the company is able to pay expenditures just by income, the indicator

shows values over 100%.


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Comparing 2000 to 1999, the average collection of clients increased which means that the

clients have paid their debt more difficult, this likely due to an economic crisis. This negative

aspect of financial problems can be also observed in the medium terms of supplier payment,

which increased from 27 days to 78 days. The average collection period from customers also

increase from 40 days to 50 days.

Termenul mediu de ncasare clieni i

termenul mediu de plat furnizori(zile)

4337

59

50

0

10

20

30

40

50

60

70

Termen mediu

ncasare clieni

Termen mediu

plat furnizori

AN 2000(8 luni)

AN 2001(8luni)

Stock levels remained stable in 1999 and 2000 but in 2001 due to financial problems, their

turnover has increased from 28 days to 45 days, this means that the manufactured goods or

109.34108.6

111.79112.73

106

107

108

109

110111

112

113

114

AN1999

AN2000

AN1200 (8

luni)

AN2001

(8luni)

Gradul de acoperire acheltuielilor din venituri (%)

Gradul deacoperireacheltuie


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products were kept in storage for an average of 45 days, which is a negative aspect for the

company.

Labour productivity increased in 2000 compared to 1999 with 153,5 Ron/employeeand and

in 2001 compared to 2000 with 111,9 Ron/ employee. Analyzing the economic situation inthe financial period 1998 - 2001, the company falls into the category B of financial

performance.

For 2001, the company's main objective is improving their activity by expanding their

activities. These new activities are processed in the new hall which had been purchased, so

that the company decided to buy steel processing equipment. Their new incomes come from

the processing of steel and concrete.

To achieve their goals in 2001, the company has proposed:additional sources of revenue through the development of the production

Promote marketing - sales, product development, the use of new instruments

recovery of debts especially of older customer debts

achieve superior returns by using all the resources an posibilities, that may increase the

profit.

The company estimates an income growth of 8.98 %.

To achieve this goals, the company reviewed its coverage so that the resources can finance thecosts of supply, production and sales.

6.Comments on cash flow

Designing cash flow for the period October. 2001 - oct. 2002 was made from total operating

revenue from fourth quarter 2001 level of 240,000 million and for 2002 at 124,830 million. It

is linked to BVC 2001 and 2002 which shows that the achievement of revenue and expected

profits.

Liquidity needs resulting from cash flows prepared forecast to peak during October.

It was to correlate the volume of credit (limit line) with the Company's ability to pay its

obligations to the bank at maturity.

The cash flow analysis shows that large fluctuations are not available or required cash in any

month of the forecast period and to estimate the BVC achievement indicators, the company

needs a credit line to cover working capital needs, the value 1400 million.


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7.SWOT Analysis

Strengths:

Seriousness of production marketed in addressing dissolution

adequate spacesales(property)

Business Partnerserious Weaknesses:

Lack of a professional distribution system is

Lack of promotion policies Opportunities:

Adequate facilities owned may be the basis of business development, including the

production of metallic structures for which there is high demand on the Romanian market

Threats:

Romanian market penetration of highly capitalized companies can create significant

problems for winning the current market.

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