CREDIT SERIES- MARKET INTELLIGENCE

If market intelligence points to something, explore that further

  • We have all been caught with surprise on a number of occasions when an account always repaying on time suddenly starts delaying.
  • So my experience is that it is something which starts showing signs in other areas as well before it starts in the delay mode.

Case-I – Auto dealer with reducing sales volume and increasing inventory

There was this car dealer which was one of the prominent dealers in a certain geography. The repayments were all on time. But below was noted when it came for review-

  • Change in lenders and reduction in exposure by other lenders. It was cited that those lending institutions have reduced their exposure as industry stance.
  • Sales had substantially come down but inventory figures reported didn’t match with sales level.
  • Inventory amount reported and inventory ageing were not in sync.
  • All key outlets were rented.

On market check it came out that it is looking for selling its dealership.

On checking the inventory position of two periods it came out that two different invoice dates for same vehicle was given, leading to wrong ageing of inventory and that inventory as old as two years was being carried.

Now that dealer is looking at monetizing its other assets and reducing the debt. The dealership business may or may not continue in future.

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