North India Based Steel Products' Manufacturer - Trade Finance Service

North India Based Steel Products' Manufacturer - Trade Finance Service

11 Oct 2018 09:56 AM
Myforexeye Research Report


A North India based steel products manufacturer with a top line of INR 20+ billion and import volume of INR 10+ billion. Client was facing difficulties in financing his imports post the discontinuance of Letter of Undertaking (LOU) backed Buyer’s Credit. Raising financing in INR was expensive and hence client availed financing facilities provided by his supplier. Albeit more cost effective than INR based borrowing, this was still more expensive than the traditional Buyer’s Credit facility. Additionally, the client had no control over the process as it was supplier driven despite the interest cost being borne by the client.

Myforexeye value addition:

The client approached Myforexeye with the above problem and on a pilot basis, engaged with us on two transactions, in two currencies – USD & EUR. Using an Usance Letter of Credit Payable at Sight (UPAS L/C), Myforexeye arranged funding from two large relationship banks based in Europe (for Euro transaction) and Asia (for USD transaction).

We used Reimbursement Authorisation route to avoid multiple negotiations between client and their supplier. Closing the deal under L+60bps for a 6-month tenor, the client was able to save a shade above 1% financing cost.

The client was delighted at this saving and is currently negotiating with suppliers to arrange funding at the client’s end (via Supplier’s Credit product) using Myforexeye for syndication.

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