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Business Diversification: A Dilemma of Sri Anal Fireworks*

ET Cases - FLAME, 4 Pages
AUTHOR(S) : Dr. Pranav Saraswat, Assistant Professor, Nirma University Ahmedabad

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Business Diversification: A Dilemma of Sri Anal Fireworks


Sri Anal Fireworks (SAF) is one of the leading fireworks manufacturers of India, today and its glory and reputation started long back since its inception during the British Regime as early as 1946.

Initially, started as Sri Anal Gunpowder Works, manufacturing only gunpowder, SAF gradually expanded into large proportions and started manufacturing various varieties of firework products to meet the indigenous market demands.

After its inception, the company proceeded to expand its growth rate with new stores throughout the country. With a good network of dealers throughout India SAF grew into a pioneer in the sales of consumer fireworks and built a reputation for excellent quality, value and extensive product variety that has set up a standard in the fireworks industry. SAF always puts its efforts to ensure the sale and...................

Recent Problems

Sivakasi is the nodal centre for firecracker manufacturing at the national level. As of 2011, the industry employed over 25,000 people and some of the private enterprises put together had an annual turnover of INR5 billion ($77 million).

Fireworks industry is taking a hit because of the changing mindset of the customer towards environment friendliness. This results in reducing demand year by year. Therefore, the future of the business is always uncertain.............

Future Challenges

The board members were interested in evaluating a business plan to set a new business. They needed to raise capital by using the financial results from fireworks business as the company will be eligible for a bank loan amounting to INR1,50,00,000 to meet its requirement every year. Now, the board of director required a loan amount of INR2,00,00,000 as a capital to start a new business..............

Assignment Questions

I. What problems SAF is facing? What are all the problems SAF may face when they work towards their future challenges?
II. What are all the key factors, bank is likely to consider while evaluating capital needs of SAF?
III. ..........


Exhibit I: Performance of SAF

Exhibit II: Credit Worthiness

Teaching Note Preview

Business Diversification: A Dilemma of Sri Anal Fireworks


Problems SAF Facing

  • • Present liabilities the company has and how have the company repaid the loans in recent times
  • • Credit History of the Borrower
  • • Cash Flow History and Projections for the Business
  • • ...............

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Product code: FIN-2-0022, FIN-2-0022A


Sri Anal Fireworks (SAF) is one of the leading fireworks manufacturers of India. SAF has done well in recent 5 years and sales have grown over the recent years.  Nevertheless, the changing mindset of the customer towards environment friendliness have resulted in reducing demand year by year and increased the problem of skilled workers. Therefore, the company wants to start a new business based on existing funds. SAF now faces the dilemma as to how to arrange working capital for the same. This case study evaluates the company’s working capital requirements and credit worthiness, based on the present situation.


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- Abstract
- Caselet
- Teaching Note (**ONLY for Academicians)

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