Here's the CEO further elaborating on Standard Cha
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Posted On: 08/20/2018 10:48:39 AM
Here's the CEO further elaborating on Standard Chartered in 17' investor call
https://seekingalpha.com/article/4109762-real...art=single
Caller:
First is the Standard Chartered credit facility, can you just talk a little bit about, if you can the size of the facility and what’s backing it? Is it an AR an inventory backed facility or is there other kind of collateral that’s going against that?
Anshu Bhatnagar:
No, it’s not really a trade facility in that regard. What we have done with Standard Chartered Bank is really, a program for discounting site LCs, which is not something that can happen here in the US. So, US banks don't discount. They can discount use on [indiscernible] which is basically an LC that has a term associated with it, but they won’t discount a side LC. So typically in a trade process what happens is, a customer will open a letter of credit to us and by the time we have to pay cash to our supplier, and by the time the product ships, and we can negotiate that LC and get paid, it can be anywhere between two weeks to 30 days.
And since it’s being paid on site, there is no discounting and what Standard Chartered Bank is willing to is discount that site LC and what that enables us to do is basically on that transaction get paid within five days, potentially, and so instead of on a call it $1 million a month order we can essentially with maybe $100,000 full fill that order by having the Standard Chartered relationship and the cost of that is negligible.
https://seekingalpha.com/article/4109762-real...art=single
Caller:
First is the Standard Chartered credit facility, can you just talk a little bit about, if you can the size of the facility and what’s backing it? Is it an AR an inventory backed facility or is there other kind of collateral that’s going against that?
Anshu Bhatnagar:
No, it’s not really a trade facility in that regard. What we have done with Standard Chartered Bank is really, a program for discounting site LCs, which is not something that can happen here in the US. So, US banks don't discount. They can discount use on [indiscernible] which is basically an LC that has a term associated with it, but they won’t discount a side LC. So typically in a trade process what happens is, a customer will open a letter of credit to us and by the time we have to pay cash to our supplier, and by the time the product ships, and we can negotiate that LC and get paid, it can be anywhere between two weeks to 30 days.
And since it’s being paid on site, there is no discounting and what Standard Chartered Bank is willing to is discount that site LC and what that enables us to do is basically on that transaction get paid within five days, potentially, and so instead of on a call it $1 million a month order we can essentially with maybe $100,000 full fill that order by having the Standard Chartered relationship and the cost of that is negligible.
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