Cash Generation > Helping A Company Make Decisions About Entry Into New Business

XYZ is a company having a presence in over 14 cities across the country. The company employs over 500 people and upgrades telecom towers for its clients (such as Airtel, etc.). The company’s top line had been growing by over 50% over the past three years, however the owners were not satisfied with the profit that the business was generating. The company approached Vinculum to advise them on how to double their PAT.

Our resolution consisted of the following steps

• Establishing a commercial audit mechanism to identify and fix billing errors.
• Measuring KPIs and taking strategic actions.
• Measure manpower productivity at office level, to pro-actively identify and correct laggards.
• Measure client-driven productivity loss to negotiate better pricing with the client.
• Establish a strong purchasing mechanism to ensure better negotiation on purchase of raw materials (largest cost head).

The project was run over an 11-day period. We conducted a hypothesis-driven diagnosis by analyzing client cost data and interviewing client’s key personnel. The findings were alarming

• Client was being over-billed by its vendors and was under-billing its own clients. Due to client’s fast growth, this aspect was being overlooked.
• Not all work was profitable and not all offices were equally productive..

• Client’s profit and loss data
• Interviews with key client personnel

Client’s PAT doubled from 6% to 10% within a year. Cash flows improved by 50%.