Credit and Lending Report: AGL Energy Company for MSI Bank

This report, prepared for MSI Bank, evaluates a lending request from AGL Energy, an Australian energy company. The report details AGL's background, including its history, operations, major shareholders, and beneficiaries. It analyzes AGL's past lending history with MSI Bank, highlighting its good repayment record. The report assesses AGL's income-generating activities, focusing on its sales of electricity, gas, and renewable energy. It also examines the company's marketing strategies and competitive position within the energy industry, including barriers to entry and the competitive landscape. The report concludes with an analysis of the borrower's characteristics and recommends a decision regarding the loan application, offering valuable insights for MSI Bank's lending decision-making process. This report is available on Desklib, a platform providing study resources for students.

CREDIT AND LENDING REPORT 1
CREDIT AND LENDING REPORT
(By (Student’s Name)
Professor’s Name
College
Course
Date

CREDIT AND LENDING REPORT 2
CREDIT AND LENDING REPORT
Introduction
The MSI bank has developed a new target of creating new business relationships. One of the
methods to build business relationships is through financial lending. The bank therefore
mandated a group to create a report of lending clients. Under this mandate, the group received a
lending request from the AGLC energy company. The group, therefore, developed a project
report on the same. The project report followed the company’s strict rules of lending in
determining whether the company was fit to borrow.
Name of the borrower
The team has recently received a lending application from the AGL energy company.
They have provided various submissions. This submission has helped the group in developing
the report. The report includes a recommendation that will help the company’s manager make a
right decision regarding lending the AGL energy company (Muller 2017).
Address of the company
699 Bourke St, Docklands VIC
3008, Australia.
Background Details of the Company

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From the submissions given the company was able to develop the following background
information from the lending company.
The AGLC public company. The company has its central headquarters in Melbourne
(Muller 2017). It was founded in 1841. It is an energy retail company that supplies power to
various parts of the country. It currently collects revenue of about 12.6 billion Australian dollars.
The net worth of the company is about 6.14 billion Australian dollars. The company relies on
various sources to retail electricity (Manivasakam 2016). The company retails electricity from
hydro, geothermal, thermal and wind-generated energy. It is the leading source of energy power
in Australia. The company supplies 61% of Eastern Australia. The company sells gas, solar PV
and other sources of energy.
The company has 175 years of experience. It was awarded a royal charter to light the
streets of Sydney. The company first began by storing gas in holder tanks. The company later
converted the gas to natural gas 15 years later. The company diversified officially into retailing
electricity when they bought Lo Yang Power Station.
They later owned Kiewa hydroelectric power scheme. The company through this move
had improved their supply of electricity and gas in the east of Australia. The company later
emerged with Alinta Company. This was a move that helped the company develop its retail and
infrastructure division. The merger also helped the AGL Company penetrate Western Australia.

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Major shareholders of the company
The company has the following shareholders.
Table showing shareholders of the AGL Company.
http://www.4-traders.com/AGL-ENERGY-LTD-6499237/company/
Major beneficiaries of the company
The company has many beneficiaries. They share up to be shareholders. Therefore, the
shareholders in the table given are the beneficiaries.
The company engages in different projects that will help in developing their millennium
goals (Ouyang and Lin 2015). They are focused to expand its wind project to accommodate most
of the places. The company plans to double its current electric capacity supply to 10000MW.

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This is possible after having discovered more natural sources in the region that can produce a lot
of power and sell the energy to the AGL Company (Cox 2018). They are also hoping to use the
carbon coal to produce gas in the near future. This will see the expansion of the revenues that the
company is seeking to make.
A few other projects had begun but were delayed due to various reasons.
The International electric project in Sydney was delayed to poor relations with the local
government (Graham and Williams 2014). Further consultations are being done to consider if the
place can be used for the project again. The kindergarten building plant was delayed to land
issues. The land issues were to be sorted by the government. The original landowners are seeking
the government’s compensation. The Sydney power station still needs funding to continue.
The company, however, have invested in the digital expansion of electricity to rural parts
of the continent who need it. The rural market constitutes on 7% of the continent supply
cumulatively. These contribute about 10 % of the company’s total revenue. The company is
looking forward to this number as it is too low (Kazemilari, Mardani, Streimikiene and
Zavadskas 2017).
The companies have several sections. All the divisions coordinate to the benefit of the
company. The first section is the operation section. Led by an operation director. It oversees all
the engineering operations of the company. The second section is the development unit, directed
by the development director. This section oversees all the projects by the company. They are
supposed to maintain and manage all the projects that the company is putting up. The third
section is the business unit. Led by a business director. This section oversees all the business

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negotiations between the company and other stakeholders (Holstenkamp and Kahla 2016). The
regulatory and corporate affairs division. In charge of this division is the corporate affairs
director. The division oversees all the quality assurance and safety of the company. Keeping in
mind energy distribution and management can be dangerous and hazardous. Legal affairs
division led by the legal affairs director is the next division. The division oversees all the laws
that govern the company’s operation. It is even in charge of the contract administration to the
employees (Kindström, Ottosson, and Thollander 2017). Other divisions include; the finance
division, the security division, and the human resource management division.
The company has well-structured management and employee operation. Led by a capable
board that selects a CEO. The current CEO of the company is Mr. Andrey Vessey. The CEO is
followed by sectional managers. These managers have various directors in their subsectors. The
directors have supervisors and team leaders working under them. The permanent employees
work under a team leaders. Lastly are the contractual workers. The company has a total of 3304
employees as of 2018.
Overview of the Borrower
Lending history
The borrower has a lending history with our bank (MSL bank Corporation). It is two
years since we lend a total of 6.3 million Australian dollars to the same company. According to
our documents and their submissions they qualified for the amount. In that case, the reason for
the lending was quite apparent. The company was seeking to expand its market consumer in the
rural parts of the continent. The project according to the previous submission lacked adequate

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capital to be completed. The project went well after the funding and has since increased the
revenues collected.
The company returned the money after 12 months. With each month collection of 11%
interest. The payment went well all through the 12 months as agreed during the borrowing time.
Currently, the company has no debts unpaid with any financial institutions including ours. The
company, therefore, has a good borrower history.
Income generating activity
The company generates revenue from various activities. The company sells electricity,
natural gas, and other energy-related products to the consumer markets. The company is
currently selling 3.7 million customers. They also engage in the spread of renewable energy.
These include hydro, wind and solar system. The company engages in gas storage operations for
other company who pay them also.
The primary income generating activity for the company is selling power. The other
events are also income generating. Such include. Selling shares, engaging in other contracts and
business engages with liked minded companies.
The individual behind the borrowing
The finance and project team have developed a budget for the full implementation of this
plan. The budget costs up to 20 million dollars. The 20 million dollars they seek to borrow from
us (MLS BANK) for their project. They are promising to adhere to our interest rates and our

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terms. The rest of the conditions are supposed to be discussed with other stakeholders with a
further report.
The project as submitted has been assessed by their experts. They hope it will improve
their profits margin and their revenues. The revenues for the company mainly come from the
selling of power energy to consumers. The consumers pay for power according to the rates at
which the consumer uses. The leading companies are factories and industries that use vast
amounts of power for distribution.
The company is seeking to use technology as a way of embracing transformation. The
company is planning to engage in the use of smart products. The use of smart products that
include smart cards, intelligent items, and smartphones is a move to influence the new set of
companies. The customers are mostly the youth. The youth according to research are easily
influenced by the smart products.
According to their managing director Mr. Rowels. The firm is seeking to improve its
second half of the year revenue collection and profit margins through this method. The company
has achieved their half year goals by increasing revenue; they are now focusing on the new
project.
The manager further acknowledges that. This project will expand the market for the
company. The endorsement will lead to increased consumers that translate into revenue. These,
as noted by the manager, is one way of winning the consumers over their competitors.

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The company uses marketing strategies that are unique to it. These strategies help them
overcome some of their competitors who include; The France electric, Viesgo, First energy and
Wester energy.
Key characteristics of the company
The marketing strategy used that is unique to the AGL company include;
The Burning Platform
This marketing strategy involves getting what the consumer needs most and giving it to
them. The consumers need a stabilized energy deliverance which is what the company strives to
offer its customers. The strategy also involves being alert to emergencies and responding well.
These together with kick-starting projects leads to territorial expansions that keep them a notch
above their competitors.
Implementing the G to G transformation
This is the second marketing strategy used by the AGLC energy company. This is a
strategy where the primary focus is based on three critical pillars. The three posts are planning
for capital, regulatory management, and excellence of operation. This strategy depends on the
company analysis of the market. They then plan for it correctly with the available capital. The
management then comes up with a way of implementing the needs through proper set-out

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regulation. All this procedure is done in excellence yield the market result expected. It is this
market strategy that the company has used in borrowing the money from the bank.
The company has changed over the years. They have been employing different planning
at different stages. These have happened until they have reached where they are currently. Their
first focus was an effective delivery of projects through execution of plans. This stage is where
they set up projects like; the power station project.
The company then moved to seeking stakeholders and financiers for the company. These
went on successful, as they got stakeholders starting from the government to interested
individuals.
The third stage where the company is at the moment is further expansions and
implementing marketing strategies. This will even lead to maximizing value for the energy
company. The strategies employed led to the company achieving different milestones. In 2015
the company completed the single largest geothermal power distribution plant. During the 40
months financial crisis, the company contributed the largest amount to the government.

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Industrial analysis of the Energy Industry
Competitive nature of the industry.
The company borrowing as mentioned earlier is an energy company. The committee went
ahead to determine the nature of the industry. The energy is slightly competitive based on the
issues that will be discussed. The group was therefore forced to look deeper into the quality of
the sector of the company borrowing. Being an energy company, we (MLS) analyzed the
competitive technical nature of the energy industries.
The energy industry is competitive especially now that the company is seeking quite a
new adventure.
Barriers regarding entry protocol. It is challenging to infiltrate the rural market. This is
because the areas too have existing energy companies probably owned by their government. The
government who is in charge of licensing can decide to deny the company operation license.
These make the industry very competitive.
Energy distribution depends on natural resources. The natural resources are scarce. The
increase in population increases the demand for energy. The energy companies will go any extra
mile to produce energy for their customers. The companies, therefore, compete for the resources
to satisfy their members. This makes the market extremely competitive.
Environmental issues. The development of agencies that defend the pollution of
environment has made the industry even more competitive. These agencies advise people on
non-environmental hazards in producing energy. This includes the use of the solar system and

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hydro systems. These narrow the industrial gap, therefore, increasing competition. As more
people engage in using the natural system of energy, they abandon other forms of energy. All the
other companies must, therefore, compete for the few remaining population. These increase the
competitive nature of the industry.
The nature of the customers. Most customers believe in industries that stayed longer in
the industry. This makes it difficult for the new industries. The new companies, therefore,
develop ways of infiltrating the market. Some go to the extreme extends of reducing the market
costs of energy products they provide. These comparatively, makes the energy industry very
competitive.
State of the economy and the industry
The introduction of technology into the system has made it very difficult to determine
common market trends. The technology can be used for the right or wrong purpose. Some
companies use technology for advertisements and endorsement. Therefore, is not a bad thing to
the industry? The use of technology to tarnish the name of another company is terrible. The
introduction of technology has created access to any information without verification, if its false
information that affects the customer, it narrows the market, making the industry very
competitive.
The nature of the products. Most energy products are the same. Example of petroleum
and electricity. These products by being the same are complicated to advertise to the customers.
For a company, therefore, to get a breakthrough, in the market they have to get a unique style of
packaging their products differently. With the increase in such companies, it is difficult to find