International Business
SAMPLE CASE STUDIES – International Business
Case Study 1 - Documentary Credit M/S Auto India
Introduction M/S Auto India is a public limited company; they manufacture SUVs (sports utility vehicle), in technical collaboration with General Motors of USA. The company has established their manufacturing base at Ranjangaon in Pune. They have acquired an area of 250 acres and the total project cost is estimated at Rs 1500 crores. As per the projections, the company is slated to achieve a 25% market share in the Indian market, within a period of two years. Out of the total project cost, 49% is brought in by General Motors and the rest is tied up with financial institutions, international banks and Indian banks. The working capital is financed by a consortium of banks in which Global bank, Pune branch, is the leader. The company imports many parts of the car engine in a CKD (completely knocked down) condition from General Motors, Detroit, after establishing import letters of credit through its main bankers, Global Bank, Pune Branch. M/S Auto India approached Global Bank, Pune for opening of import letter of credit as per UCP ICC 600 for USD 100,000, on sight basis, in favour of General Motors, Detroit. Type of credit Application Applicant Beneficiary Issuing Bank Advising Bank Negotiating Bank Reimbursing Bank Availability Expiry Amount Merchandise Quantity and price - Irrevocable negotiable - UCP ICC 600 - M/S Auto India, Pune, India - M/S General Motors, Detroit, USA - Global Bank, Pune, India - The American Bank, New York - The American Bank, New York - International Bank, New York - Negotiable at sight - At the counters of The American Bank, New York - USD 100,000 - Car engine parts - 50 units @ USD 2000 per unit
Circumstances Issuing Bank Global Bank, Pune issued its irrevocable negotiable credit through its head office in Pune since Global Bank co-ordinated all its accounting and communication functions at its head office. The Bank’s head office transmitted the
Case Study 1 - Documentary Credit M/S Auto India
Introduction M/S Auto India is a public limited company; they manufacture SUVs (sports utility vehicle), in technical collaboration with General Motors of USA. The company has established their manufacturing base at Ranjangaon in Pune. They have acquired an area of 250 acres and the total project cost is estimated at Rs 1500 crores. As per the projections, the company is slated to achieve a 25% market share in the Indian market, within a period of two years. Out of the total project cost, 49% is brought in by General Motors and the rest is tied up with financial institutions, international banks and Indian banks. The working capital is financed by a consortium of banks in which Global bank, Pune branch, is the leader. The company imports many parts of the car engine in a CKD (completely knocked down) condition from General Motors, Detroit, after establishing import letters of credit through its main bankers, Global Bank, Pune Branch. M/S Auto India approached Global Bank, Pune for opening of import letter of credit as per UCP ICC 600 for USD 100,000, on sight basis, in favour of General Motors, Detroit. Type of credit Application Applicant Beneficiary Issuing Bank Advising Bank Negotiating Bank Reimbursing Bank Availability Expiry Amount Merchandise Quantity and price - Irrevocable negotiable - UCP ICC 600 - M/S Auto India, Pune, India - M/S General Motors, Detroit, USA - Global Bank, Pune, India - The American Bank, New York - The American Bank, New York - International Bank, New York - Negotiable at sight - At the counters of The American Bank, New York - USD 100,000 - Car engine parts - 50 units @ USD 2000 per unit
Circumstances Issuing Bank Global Bank, Pune issued its irrevocable negotiable credit through its head office in Pune since Global Bank co-ordinated all its accounting and communication functions at its head office. The Bank’s head office transmitted the