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Restructuring: Perceptions and Realities in Financial Management

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Explore the need for restructuring in financial distress situations by analyzing root causes, evolving action plans, and monitoring progress while focusing on strategic partnerships and business fixes.

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Restructuring: Perceptions and Realities in Financial Management

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  1. Restructuring – Perceptions & Realities Neelakantan, Senior Consultant

  2. Definition

  3. Negative Vocabulary • Financial Distress • Need to change the way the cash flows / finances are managed • Poor Sales Performance • Need to change market strategy • High Employee Cost • Need to change the organizational structure • System breakdown • Need to change the processes & systems

  4. Why, How & When

  5. Planning & Execution • Analyze the financials • Evaluate the reasons for performance / non – performance • Conduct a root – cause analysis • Evolve an Action Plan • Give it a project management framework • Monitoring Progress – Don’t be ashamed to change decisions • Revisit your Financials

  6. Inference

  7. A Case STUDY

  8. Case Study – Current Situation • Cashflow problems • Unable to grow • Excessive Micro-Management at the top • Diminishing Returns on Equity • Enviable Distributorship arrangements

  9. Fix the Business • Market • Increased Trading Focus • Expand Geographical Base • Review Pricing Policies • People • Sales Team Structure; review sales incentive structure • Competence for trading • Process • Processes to address cross border trade

  10. Fix the Finance • Cash Flow Planning • Proactive budgeting and monitoring • Improve Receivables Management • Consider Leverage • Need to walk a tight rope between interest costs and better utilization of shareholders’ funds • Use the trading business line to improve cash flows

  11. Strategic Partnerships • Trading Focus • Geography based JVs • Bring fresh ideas to management team • Don’t be stuck with the current valuation • Approach with future value-addition in mind

  12. THANK YOU

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