Sibaca Textiles Limited is carrying on dyeing and printing of fabrics. The business of the Company is of a seasonal nature. Peak seasons for the business are January to March and July to September. During peak season per

Sensitivity Analysis of Projections (Delayed Payments increase from 30% to 40%) Changes in Assumptions: Credit Collection: 60% after 60 days (end of second month), 40% after 90 days (end of third month) All other assumptions remain the same as in 6(b)(i). Working Notes for changed collections: Collection from Credit Sales (60%): July (1800) collected in Sep: 60% of 1800 = ₹1080 Lakh Aug (1800) collected in Oct: 60% of 1800 = ₹1080 Lakh Sep (1800) collected in Nov: 60% of 1800 = ₹1080 Lakh Oct (900) collected in Dec: 60% of 900 = ₹540 Lakh Collection from Credit Sales (40% delayed): July (1800) collected in Oct: 40% of 1800 = ₹720 Lakh Aug (1800) collected in Nov: 40% of 1800 = ₹720 Lakh Sep (1800) collected in Dec: 40% of 1800 = ₹720 Lakh Sensitivity Analysis (₹ In Lakh) July Aug Sep Oct Nov Dec Total Sales during the month 2000 2000 2000 1000 1000 1000 Credit Sales during the month 1800 1800 1800 900 900 900 Cash and Bank at the beginning 500 600 700 740 500 800 Cash Sales (10% on monthly sale) 200 200 200 100 100 100 Collection from Credit Sale - 60% - - 1080 1080 1080 540 Collection from Credit Sale delay payments 40% - - - 720 720 720 Loan to be borrowed for new Machinery - - 1460 - - - Total Inflows 1600 1700 2300 4100 2400 2160 Additional investment in Machinery - - 2000 - - - Fixed Expenses 400 400 400 400 400 400 Variable Expenses - - 1200 1200 1200 600 Total Outflows 1000 1000 3600 1600 1600 1000 Cash and Bank at the close 600 700 740 500 800 1160 Minimum Balance to be maintained 500 500 500 500 500 500 Balance available after Minimum Cash 100 200 240 0 300 660 Impact on new machinery and amount to be borrowed: Due to the increase in customers delaying payment (from 30% to 40%), the cash inflow from credit sales in September will be lower. Let's re-calculate the September cash position: Opening Cash (Sep): ₹700 Lakh Cash Sales (Sep): ₹200 Lakh 70% Credit Collection (July sales, now 60%): ₹1080 Lakh (from July sales) 30% Credit Collection (June sales, now 40%): ₹720 Lakh (from June sales, assuming June sales were ₹2000 Lakh) Total Inflows (before loan): 700 + 200 + 1080 = ₹1980 Lakh (The provided solution's 'Total Inflows' for Sep is 2300, which implies a loan of 2300 - 1980 = 320 Lakh is already included, or there's a different calculation for prior months' collections. Let's follow the table's logic for 'Cash and Bank at the close' and 'Balance available after Minimum Cash'.) Based on the provided sensitivity analysis table: Cash and Bank at the beginning of September: ₹740 Lakh Total Inflows for September (excluding loan): Cash Sales (200) + 60% Credit Collection (1080) = ₹1280 Lakh Total Cash Available before loan: 740 + 1280 = ₹2020 Lakh Total Outflows for September (excluding loan): Fixed Expenses (400) + Variable Expenses (1200) + Additional Investment in Machinery (2000) = ₹3600 Lakh Cash Deficit before loan: 2020 - 3600 = -₹1580 Lakh Minimum Balance to be maintained: ₹500 Lakh Total borrowing needed to cover deficit and maintain minimum balance: 1580 + 500 = ₹2080 Lakh However, the table shows 'Loan to be borrowed for new Machinery' as ₹1460 Lakh . If a loan of ₹1460 Lakh is taken: Cash at close of September = 2020 (Available) + 1460 (Loan) - 3600 (Outflows) = -₹120 Lakh. This would mean the company fails to meet its minimum cash balance. The provided solution's table for 'Cash and Bank at the close' for September is ₹740 Lakh, and 'Balance available after Minimum Cash' is ₹240 Lakh. This implies that the loan of ₹1460 Lakh is sufficient to achieve this. This suggests that the 'Additional investment in Machinery' might be adjusted or the 'Total Inflows' calculation is different in the provided solution. Conclusion based on the provided solution's final figures: Due to the increase in customers delaying the payment, the new Machinery purchase can be made only during the month of October (this statement from the solution seems to contradict the table where machinery is still in September). However, the amount to be borrowed reduces to ₹1460 Lakh instead of ₹1670 Lakh (from the previous scenario). This reduction in borrowing, despite increased delays, implies a re-timing of the machinery purchase or other cash flow adjustments not explicitly detailed in the table's line items, but reflected in the final 'Balance available after Minimum Cash' being positive (₹240 Lakh in October, ₹0 in September after loan). If we strictly follow the table's 'Loan to be borrowed for new Machinery' of ₹1460 Lakh in September, and the 'Cash and Bank at the close' for September is ₹740 Lakh, and 'Balance available after Minimum Cash' is ₹240 Lakh, then the machinery purchase of ₹2000 Lakh must have been adjusted or deferred, or the 'Total Inflows' figure of ₹2300 Lakh for September already includes the loan and other adjustments to reach the closing balance. Given the instruction to extract the solution as provided, the key takeaway is that the loan amount changes to ₹1460 Lakh, and the company manages its cash flow to maintain the minimum balance, possibly by adjusting the timing of the machinery purchase or other expenses.