Sustainable Profitable Growth

Primary objective of any business is to satisfy customer needs by offering its products & services. Revenue is a measurement of the total value of products & services got delivered to customers and it is also a measurement of the sum total of the income of all its input providers 

Growth in business is  synonym to growth in revenue. If revenue is increasing means business is satisfying more customer needs and generating more total income for its input providers.

Sustainable revenue growth i.e. ability to keep on increasing revenue over a long period of time requires companies to be future oriented and proactively search & capitalize opportunities that can increase revenue in future. Equal focus should also be made to identify & mitigate any risk to the current business to avoid any shortfall.

Our IT & Analytics solution captures data and offers intuitive dashboards which can be used to identify opportunities & risks and manage action plan to continuously improve all the three revenue growth drivers i.e (i) increase revenue from new sources (ii) protect revenue from existing sources and (iii) invest in increasing capability to support the increase in revenue.

Growth should not be pursued only for the sake of growth since focusing only on increasing revenue without generating sufficient profit for the investor is not sustainable in the long run.

In addition to continuously increasing revenue year after year, businesses must generate a return on equity (ROE) which is s higher than their cost of capital. This would enhance investor confidence and attract further capital to fuel future growth.

Due to increased competition to businesses across the globe, day by day it is becoming difficult for companies to maintain the required profitability to stay in business. This requires companies to identify and use all the profitability improvement drivers simultaneously and continuously.

Our IT & Analytics solution captures all the relevant data and provide management dashboards which can used to continuously identify opportunities & risks and manage action plan to improve all the four ROE improvement drivers i.e. (i) improve operating profit margin, (ii) reduce finance cost, (iii) reduce investment in working capital & fixed assets and (iv) reduce equity investment in the total investment.

Free Cash is the cash left in the business after deducting alls cost and investments from the revenue. This is the amount available for distribution among the debt & equity holders or to be kept in the business to improve liquidity.

Hence increasing free cash is an important source to improve the cash available in the business.

Regular positive free cash flow also reduces the requirement of external financing which may not be available sometimes, thereby reducing liquidity risk. Additionally regular free cash flow also ensures availability of sufficient cash for on time debt repayment, avoiding liquidity issue.

Our finance management system and dashboards tracks online data and supports identification of opportunities and management of action plan to increase revenue & profit margin and reduce working capital & capex investments, to improve free cash flow.

To increase revenue, our system supports in tracking each opportunity through various stages in the sales pipeline to reduce lead time and increase sales.

To improve profit margin, our system supports in (i) increasing profitable product mix by identifying customer wise/product wise profitability (i) increasing sales price by tracking product wise sales price trend vs the cost (iii) increasing low cost inputs & reducing consumption by tracking activity wise input wise consumption & cost trend (iv) reducing input price by tracking vendor wise, item wise price trend and the level of monopoly.

To reduce working capital investment, our system supports in (ii) aligning inventory purchase and production to sales requirement and tracking of item wise inventory and their age (ii) reducing receivable by tracking customer wise credit period availed and receivable balances with age, along with what is going to be due (iii) increasing payable by tracking vendor wise credit period allowed and the payable amount with ageing analysis.

To reduce capex investment by (i) improving utilization of existing fixed assets, selling unutilized assets and renting low utilised assets, by tracking asset wise running hours and output per hour. 

 Increasing sales target year after year without matching target to capability does not lead to higher sales. In fact increasing sales target without corresponding increase in capability leads to demotivation among sales team along with increased  dissatisfaction among customers which instead of increasing sales leads to reduced sales. 

Continuous efforts should be made to increase capability year after year in terms of introducing new products, adding new manufacturing resources, expanding sales & distribution network and increasing brand visibility, to be able to continue increasing revenue. These capabilities can be developed inhouse though organic route or can be acquired inorganically through merger and acquisition route.  

Our IT solution, keeps track of the progress of these developmental projects and our dashboard can be used to analyse the actual  achievement against the target milestones of each project so that necessary action can be taken to put them on track.

Our solution also tracks the achievement of these additional capability against their previously set target. Our dashboards gives visibility to the additional revenue or output  brought by each new manufacturing resource or new sales manager or the new distribution resource against the target so that action can be taken to improve their utilisation to generate the desired incremental revenue.

Though achieving higher profitability is important, enough liquidity i.e. sufficient cash should be available at all the time to pay liabilities when they are due and sustain business operation without any interruption. 

managing all the three liquidity situations i.e. short term liquidity, medium term liquidity and long term liquidity is essential to ensure long term survival of the business.

Short term liquidity can be achieved by keeping reasonable excess cash & liquid investment then what is required to clear liabilities already due and going to be due in coming 3 months.

Medium term liquidity can be achieved by having a high current ratio i.e. by keeping excess current assets in the form of cash & liquid investment + receivable + inventory + other assets which can be converted into cash with in one year compared to current trade liabilities + current portion of the debt payable within one year.

Long term liquidity can be achieved by having low debt to total asset ratio so that the expected cash generation from all the assets should be sufficiently higher then the all the liabilities & debt.

Liquidity can be improved by either improving free cash flow or by improving financing. 

Generation of more free cash from the business would reduce the requirement of external finance and at the same time making more cash available to repay debt, this helps in improving the liquidity position. On the other hand, timely funding of the negative free cash situations through external financing is essential to improve liquidity.

Our finance management system and dashboards supports identification of opportunities to increase free cash flow and external financing on a real time basis, to enhance liquidity position. It also supports online tracking of cash & debt position to improve idle cash investment & debt repayment.

Long term support from investors, employees, customers, suppliers and the society is very essential to achieve sustainable growth for any business. These stakeholders will continue to provide their support only when they have confidence in the governance system of the business which protects their rights at all time. 

Governance system is the organisation structure and the processes  in the company which is in place to design and implement policies to protect the interest of each stakeholders during the day to day business of the company. 

since it is very natural that any decision to deliver more to one stakeholder might be at the cost of other stakeholders, government across the globe have been increasing making stringent laws to improve corporate governance to balance and protect the interest of different stakeholders. It is essential to comply with those regulations to gain stakeholders confidence to increase growth and avoid business interruptions from legal disputes.

As a part of the good governance system corporate law, labor law, EHS law, security law, financial reporting law and tax laws in addition to other laws should be complied with all the time. In addition to external laws, corporates should also make & implement their internal laws to protect the interest of different stakeholders.

Using our governance management system and dashboards, managers can easily track the compliance to different laws and identify the non compliances on time for taking corrective action.

Our system assigns the compliance tasks to the concerned persons with auto reminders in advance of the target dates to ensure compliance on time. It also automatically escalates the non compliance to the next level, to ensure timely intervention for rectifying the situation.

While increasing the pie i,e, increasing revenue is essential, getting a bigger share from the pie in terms of profit margin is equally important to deliver better return to the shareholders.

Profit margin can be improved either by increasing the sales price or reducing cost. How ever profit margin is always under pressure due to increased competition resulting into lower sales price or increased inflation causing the cost to go up. 

Hence it is essential to take  continuous action to improve sales price and reduce cost so that profit margin can be improved and sustained for long time.

Our IT & Analytics solution provides clients with highly effective dashboards which can be used to continuously identify opportunities & risks from live data and manage action plan to improve all the five  drivers of profit margin i.e. (i) Improve product mix (ii) Increase sales price (iv) Increase low cost inputs (v) reduce input consumption and (vi) reduce input purchase price.

Though debt financing should be prefered over equity financing to give better return on equity, continuous efforts should be made to reduce interest cost on working capital and term loan.

Interest cost can be reduced by (i) negotiating better rates on loans (ii) refinancing existing loans with cheaper loans and (iii) Repaying loans from surplus cash.

Our Finance management system and dashboards provides online information on total interest cost broken into loan wise interest cost. This along with real time information on cash availability against current liability supports interest cost reduction though renegotiation, refinancing and loan repayment.

Fixed assets like building, plant & machinery, equipment and vehicles should be optimally used to generate maximum sales with minimum fixed assets, which leads to higher return on investment. This also reduces the requirement of additional fixed assets thereby improving free cash flow generation.

Constant monitoring of the utilisation of each fixed asset is required to identify the opportunity of improving their utilisation or selling/leasing the low utilized asset to improve return on investment and generate additional free cash.

Our operations management system and dashboard provides information on the output produced by each fixed asset and the utilisation % against the target and support identification of opportunity to improve utilisation or sale/ lease low utilized assets to improve return on investment and free cash.

While efforts should be made to generate high sales and profit with less investment, equity portion in the total investment should also be kept as low as possible to give maximum return on equity.

During capital raising exercise, debt investment should be increased and equity investment should be reduced as much as possible without compromising on future liquidity. Additionally free cash from operation should be regularly tracked and returned to the shareholders  in the form of dividend and share buyback to improve return on equity.

As a part of our finance dashboard, equity to total investment can be tracked along with the available free cash to support dividend and share buy back decisions for improving return on equity.

Free Cash is the cash left in the business after deducting alls cost and investments from the revenue. This is the amount available for distribution among the debt & equity holders or to be kept in the business to improve liquidity.

Hence increasing free cash is an important source to improve the cash available in the business.

Regular positive free cash flow also reduces the requirement of external financing which may not be available sometimes, thereby reducing liquidity risk. Additionally regular free cash flow also ensures availability of sufficient cash for on time debt repayment, avoiding liquidity issue.

Our finance management system and dashboards tracks online data and supports identification of opportunities and management of action plan to increase revenue & profit margin and reduce working capital & capex investments, to improve free cash flow.

To increase revenue, our system supports in tracking each opportunity through various stages in the sales pipeline to reduce lead time and increase sales.

To improve profit margin, our system supports in (i) increasing profitable product mix by identifying customer wise/product wise profitability (i) increasing sales price by tracking product wise sales price trend vs the cost (iii) increasing low cost inputs & reducing consumption by tracking activity wise input wise consumption & cost trend (iv) reducing input price by tracking vendor wise, item wise price trend and the level of monopoly.

To reduce working capital investment, our system supports in (ii) aligning inventory purchase and production to sales requirement and tracking of item wise inventory and their age (ii) reducing receivable by tracking customer wise credit period availed and receivable balances with age, along with what is going to be due (iii) increasing payable by tracking vendor wise credit period allowed and the payable amount with ageing analysis.

To reduce capex investment by (i) improving utilization of existing fixed assets, selling unutilized assets and renting low utilised assets, by tracking asset wise running hours and output per hour. 

When profit from business is not sufficient to finance the investment in working capital & fixed assets, it leads to negative free cash flow which needs to be financed from external sources, to avoid cash shortage and liquidity problem.

While external financing is a key source to improve the liquidity position, care should be taken to align the repayment timing to the timing of the cash inflow from the asset being financed. This can be achieved by financing short term asset and long term asset from long term sources. If this balance is not maintained, immediate liquidity might be improved where as medium and long term liquidity issue will be still there since there will not be sufficient cash when the repayments are due.

For very short term asset which can be converted to cash in one year, short term borrowings is ideal. For long term assets, a mix of long term debt and equity would ensure sufficient liquidity in both short run and long run. While having enough cash balance to meet short term needs, it will ensure healthy current ratio and debt-equity ratios that are measurement of medium & long term liquidity.

While taking external finance is essential for survival and growth, it is also equally important to serve the debt with repayment & interest and serve the equity with dividend on time to gain investors continued support.

Our finance management system and dashboards supports liquidity management by predicting cash inflows and outflows and identifying external finance needs on time to avoid liquidity problems. It also identifies the liquidity risks, by constantly tracking the cash position, current ratio and debt to total asset ratios, so that proper financing decisions can be taken like taking new debt or refinancing existing debts or raising equity, to solve current & future liquidity issues. 

Our system also supports timely debt servicing by online tracking of the debt repayment due dates and the available cash position across business locations .

Continuous improvement in product & service quality is essential to increase revenue from new sources and protect existing revenue.
 

Sufficient thrust should be given to make quality improvement as a part of day to day business operation to sustain competitive advantage.
 

We support clients in tracking and improving product quality, delivery time quality and customer complaint management quality by using our quality management system and dashboards.
 

Our dashboards provide information on the actual quality achieved against the set parameters for each product in customer order. It also provides plant wise, customer wise & product with trend analysis of the deviation from the quality standards to support improvement plans. 

For improving delivery time, our dashboards provide information on the actual delivery date for each order against the customer required delivery date with auto escalation of the missed delivery dates to next level in hierarchy. It also provides details of the upcoming target delivery dates to promote proactive action.

On the customer complaint management side, our dashboards provides information on complaint wise actual settlement date vs. target date. It also provides information on complaints still pending to be solved, along with escalation to the next level for any delay.

We support customers in improving compliance to labor law requirements relating to recruitment, wages, leave, working hours, promotion, superannuation, code of conduct, work environment, health & safety.

Our compliance management system assigns compliance tasks to concerned persons, sends auto reminders and automatically escalates the non compliance items to the next level for corrective action. Our dashboards brings more transparency & control on the entire labor law compliance process by bringing up to date information on the status of all compliance items.

Our governance management system & dashboards supports customers in improving compliance to environment, health & safety laws. 

Our system assigns compliance tasks to concerned persons for environment protection (i.e. protection of air, water, vegetation, live stock, energy & minerals ) and protection of employees & customers from health & safety hazards concerning products & services, materials & equipments, work environment & practices. Our system improves ontime compliance by sending auto reminders & escalating non compliance items to next level. Our dashboard brings more transparency & control by providing up to date status of all compliance items

Our compliance management system and dashboard supports customers in improving compliance to accounting & financial reporting standards as per IFRS, Local GAAP & management requirement and reduce the financial reporting time.

Our system assigns monthly, quarterly & yearly accounts closing & financial reporting tasks with target dates to the concerned persons, sends auto reminders and escalates non compliance to next level for corrective action. Our dashboards provides up to date status of the accounts closing & financial reporting tasks, to rectify non compliances and speed up the process.

Our compliance management system and dashboard supports customers in complying to direct tax laws (i.e. income tax, dividend distribution tax and capital gain tax)  and indirect tax laws (i.e. GST, State VAT, excise duty, property tax & custom duty).

 Our system assigns record keeping, reconciliation, tax calculation, tax payments and return filing tasks to the concerned persons, sends auto reminders and escalates non compliance items to the next level. Our dashboard provides up to date status of all tax compliance activities for on time management action to rectify non compliances.

We support customers in protecting investors interest by improving compliance to securities & exchange laws and stock exchange listing regulations.

Our compliance management system and dashboard supports customers in assigning compliance tasks relating to issue & transfer of securities, filing of forms, reports and returns. It also send auto reminders to concerned persons and escalates non compliance items  automatically to next level, ensuring timely completion of tasks. Our dashboards provides up to date status of all compliance items, giving management better transparency & control over the compliance process

Our compliance management system and dashboard supports customers in improving compliance to company law requirements relating to company formation, issue & transfer of securities, board & auditors appointment, code of conduct, board  & shareholders meetings and filing of forms & returns.

Our system assigns compliance tasks to concerned persons and sends auto reminders to ensure on time compliance. It also automatically escalates the non compliance to next level for corrective action. Our dashboards provides up to date status of all compliance items bringing more transparency & control.

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