11% → 8%interest cost
1.05 → 1.4current ratio
20% a yeargrowth after the change
The client
A growing multi-chain footwear retailer, opening new showrooms every year.
The challenge
Every new showroom (deposit, fixtures, ACs and Rs 30–40 lakh of stock) was paid for from the working capital limit meant for inventory and receivables.
What the bank saw
Long-term assets on short-term money pulled the current ratio down to 1.05. The business was doing well, but the balance sheet looked weak, and the bank priced it at 11%.
What we did
- 1Separated the two needs.
- 2Kept the working capital limit only for inventory and receivables.
- 3Arranged a term loan for each new showroom, repaid in EMIs.
The result
Same business, same owner. Only the structure changed.
Once the funding structure was corrected, the company grew 20% every year.
