· Growing venture capital industry.
· One of the best markets for investments.
· Upcoming entrepreneurs with high growth prospects.
· The case study explains the stages of finance.
CASE STUDY INTRODUCTION
· Company of study: Saraf Food Ltd.( An Indian company founded in 1992)
· Business: Production of frozen dried fruits and vegetables.
· Business profile in a nutshell: Saraf Food Ltd. Is an India based company. It produces …show more content…
The delay also resulted in a delay in the receipt of the subsidy, a to recover the subsidy amount, Saraf requested GVFT to provide a loan for 3 million against subsidy. Saraf foods suffered a significant production losses due to problems detected in the equipment like, operating defect in the defrosting system and leakage in the freezer door. These production difficulties let to 8 months delay for the first production process which led to a loss of Rs. 3645,000 for FY 1993/1994. The company needed additional finance. GVFL started to sell the venture to canbank venture capital fund(CVCF). In April 1994 CVCF agreed to finance the company in form of equity by buying stocks at a premium. CVCF provided Saraf foods with Rs. 2,592,000 in …show more content…
1.2 million. Due to the new purchases and increasing production the liquidity position of the company was tight and hence asked GVFL to reschedule income notes due and GVFL agreed for the same. By mid 1995 the company booked it 1 ton capacity. Dryers were installed giving rise to economies of scale. In order to expand the business, additional finance was required and hence Saraf Foods approached GIIC once again. Here is when GIIC came into the picture again and agreed to provide Rs. 9,400,000 in the form of term loan. GIIC initially rejected to finance Saraf foods in the initial phase, however, agreed to finance the company in its expansion phase as the company was now fully operational. In FY 1995/1996 the sales of the company increased, and reported a profit of Rs.145,000 which further increased to Rs.537,000 in the preceding year FY 1996/1997. In the expansion stage the company also tried introducing new products but did not receive a positive