Question Tag: Financial Revival

Afram River Plantations Ltd. is an exporter of bananas to North America, the EU countries and China. The business was established fifteen years ago by John Abaiido, aged 55, who is the sole shareholder of the company. The company has been your customer since its inception and has operated satisfactorily until in recent times when you noticed a significant deterioration in account operations. There is a hard core of GHC 1.500.000 on the account as a result of the problems faced by the business. You granted them an overdraft facility which expired a week ago with the balance standing at GHC 1.894.700 DR.

The company has a plantation located at Asesewa in the Eastern Region on the banks of the River Volta. The plantation is fitted with a sprawling warehouse and a packaging plant for the packaging of the bananas for export. The company has two articulated trucks it uses in conveying the produce to the harbor for export.

From your interaction with John you learnt that their operations were affected significantly by the poor weather experienced in 2011 which significantly reduced the volume of harvest. Furthermore, bushfire burnt down a significant number of the banana trees.

John, the CEO and Board Chairman has a first degree in Agriculture from the University of Cape Coast, whilst his wife, Eunice, a holder of an MBA in Banking and Finance serves as General Manager for Operations. She also has a first degree in B. Com. University of Cape Coast.

The Farm Manager is Egya Afedzie aged 61, who has a diploma in farm management from the Asuansi Agric Institute. He has been in the company since its inception.

Customer is asking for working capital support to help revive the operations of the farm. He estimates that he would require an increase in the existing overdraft limit from GHC 2.000.000.00 to GHC 3.000.000.00.

How would you respond to his proposition?

Afram River Plantations Ltd. Income Statement for the Period ending 31st Dec