Lending Decision

Topics: Balance sheet, Financial ratio, Net present value Pages: 14 (4357 words) Published: April 8, 2013
Lending Decisions Assignment


Title: AFW 3841 Assignment
By: Umasuthan Rengasamy (20365853)
To: Dr. Sockalingam
Faculty: School of Business and Economics
Date of Submission: 4 May 2012

1. Introduction
2. Company Profile
3. The Financial Performance (3 years)
4. The Proposed Project
5. Capital & Financials
6. Capacity
7. Collateral
8. Conditions
9. Compliance Issues
10. Justification for the Loan
11. Loan Decision and Terms & Conditions
12. Conclusions
13. References

* 1.0 Introduction
This report entails a loan structure for Air Asia Berhad, a low-cost airline service provider based in Malaysia (listed in the Bursa Malaysia) who aims to increase its annual sales by thirty percent and has approached the banking sector for a working capital loan of RM 10 million (tenure of five years). The bank would take its financial and non-financial standings into consideration and make an evaluation based on the five main credit evaluation criteria; mainly focusing on – capital, capacity, collateral, condition and compliance. The financial performance of the company over the past 3 years will also be assessed using audited financial statements. Moreover, both judgmental and financial ratio analysis approaches are applied to arrive at a conclusive decision. * 2.0 Company Profile

2.1 Name of Company
2.2 Date of Incorporation
December 20, 1993
2.3 Duration of Existence
Air Asia was established in 1993 and began operations on 18 November 1996, almost 19 years in existence 2.4 Objectives of the Company
Aims to be the largest low cost airline in Asia and serve the 3 billion people who are currently underserved with poor connectivity and high airfares. Aspires to attain the lowest cost so that everyone can fly with Air Asia. Maintain the highest quality product, embracing technology to reduce cost and enhance service levels.

2.5 The Business of the Company
The principle business activity of Air Asia is that of providing air transportation services. The business activities of the subsidiaries entail provision of in-flight meals, tour-operation, and aircraft leasing facilities and also media related publishing/advertising activities. 2.6 The Organizational Structure

Table 1: Air Asia Berhad Organizational Structure

2.7 Capital Structure
2.71 Authorized Capital
Authorized Share Capital:| 2011| |
| Amount (RM’000)| Number of Shares (‘000)|
Ordinary Shares of RM 0.10 each| 5,000,000| 500,000|

2.72 Paid up Capital
Paid up Capital:| 2011| |
| Amount (RM’000)| Number of Shares (‘000)|
Ordinary Shares of RM 2.35 each| 2,760,000| 1,174,468|

2.8 Board of Directors, Position & Shareholding
Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar - non-independent non-executive Chairman Dato’ Sri Dr. Anthony Francis Fernandes - Group Chief executive officer Dato’ Kamarudin bin Meranun - deputy Group Chief executive officer Conor Mc Carthy - non-independent non-executive director

Dato’ Leong Sonny @ Leong Khee Seong - independent non-executive director Dato’ Fam Lee Ee - independent non-executive director
Datuk Alias bin Ali - independent non-executive director
Dato’ Mohamed Khadar bin Merican - independent non-executive director En. Mohd Omar bin Mustapha - independent non-executive director Tune Air Sdn Bhd| 26.28%| RM 729,458,382|
Employees Provident Fund Board| 8.06%| RM 223,644,400|
Genesis Smaller Companies| 5.43%| RM 150,635,581|
Wellington Management Company| 5.31%| RM 147,342,635|
The Nomad Investment Partnership Lp Cayman| 4.91%| RM 136,300,000| Public| 48.51%| RM 1,388,143,082|
 | 100.0%| RM 2,775,524,080|
Table 2: Air Asia Berhad Shareholdings
2.9 Senior Management

Table 3: Air Asia Berhad Senior Management

2.10 Bankers & Auditors
PricewaterhouseCoopers and CIMB Bank/May-Bank
3.0 The Financial Performance (3...
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