BREAKTHRU ENTERPRISE VALUE
CREATION FOR STAKE HOLDERS
The New Competitive Advantage Mantras
Through Strategic Financial Initiatives
and best Corporate Treasury Practices
(With Corporate Case Study)
B R JAJU
Director and CFO
Welspun Corp
IMC-Mumbai, Oct 11,2013
Steroids
Conventional Way of
Managing Business /Finance
+
No Ethical practices &
Growth Strategy
+
IT iIlusion
=
Dying Corporates
on
Steroids
4/13/2015
3
Let us take deep dive
• Changing business landscaping : India perspective with
global paradigms & New age CFO challanges
• Value propositions : Enhance enterprise value and
strategy map
• Moving into new orbits : Preparing for renewed growth thru
best financial practices
• Business growth strategies : M&A and key concerns
• Corporate Case Study : trigger for learnings
• Parting thoughts and key take aways
Changing business landscaping
(India
perspective with global paradigms)
Global Dynamics –India’s perspective
Prior to 1990s
- India is the only market
- The manufacturer could sell
whatever it could produce
2005 - After
1990-2005
- Exposed to International
Markets(Products &Capital)
and Competition
- Achieve viability of operations
in global environment
- Change in mindset to become
a global company
IT enabled Processes &
Technology Advancement
Changing Business
Models (Consolidation &
Outsourcing)
Regulatory
Compliances
Global
Competition
Initiatives
Initiatives
Business
Dynamics
M&A
Customer
Expectation
Governance &
Best Practices
Business Risks &
Security Concerns
How Global Corporates have destroyed
values –Key learnings
Self Denial
Arrogance
(Pride before fall)
Complacency
Greed Obsession
Emerging Technologies
Changing Customer Tastes
Conflicting Interests/Frauds
Exceptional Achieve of Past wraps present realities
Nobody can duplicate your products
You are smarter than others
Past Success under regulated monopoly
U were chosen for success by govt
U are run with Govt. control
Justify every financial norms for growth and unearned profits
Achieve growth devoid of business fundamentals
Overleveraging and over trading on equity
Let us look at Corporate value destroyers
Corporate
Scandal

Created off B/S exposures
to hide debts & losses




Enron
Xerox
Worldcom
Merck
Quest.com
Jobs Lost
4500
Shareholders
wealth lost $ bln)
80
Impropriety reports $ 6.5
bln. In revenue (over 5 years)
13600
3
Hidden expenses ($ 3.9 bln)
to raise bottom line
17000
100
NA
43
11000
33
Over $ 14 bln revenue reported
for many years, never collected
Inflated revenue thru equip.
sales / Swaps
And list goes on………….
New Age Finance Leadership
Core concerns and Challenges
Competencies & Challenges
•Understanding of how money (or value is made) or lost in business
(value chain competencies)
•Appreciation of the concept of risk (risk competencies)
•Perspective on expectations of different stakeholders (stakeholders
expectations competencies)
•Regulatory compliances
•Performance measurement
AS STRATEGIC GUARDIAN OF THE ECONOMIC VALUES OF AN
ENTERPRISE
NEW AGE CFO_KEY DIFFERENTIATORS
• Be a key enabler in
• Drive growth
• Profitability – Product – Consumer
• Cost Control
• Customer analysis
• Internal controls
• Function/ Business partnership
• Asset management – F/A, Working capital (focus on inventory,
receivables), Cash
• Corporate Governance.
• Risk Management
• Efficient transaction processing/ reporting Co. Financial to stakeholders
• People development
• Uphold Company Values & create an environment of trust & reliance
Moving into New Orbits
• Value propositions
Enhance enterprise value and strategy map
Radical Performance Improvement is possible…
High performance companies exist even
in the so-called ‘unattractive’ industries.
It requires mindset and willingness to benchmark,
not against the average or the comparable,
but against the best
and draw both inspiration and learning
form those benchmarks to drive oneself forward.
L. N. Mittal
Revolutionary Balance Sheet
To Capture True Enterprise Value
TANGIBLE
INTANGIBLE
Assets
•Op. cash gen./FCF
•Performing Assets
•Sales Growth –
New Product/Market/
Customers
• Order Book-Visibility/
Profitability
Liabilities
•Off Balance Sheet Liabilities
•LD/TP Claims
•Tax /Legal Disputes
•BG/CG Impact
•Indirect borrowings
• Commitment Failures
• Volatility -Forex /Commodity/Int.t
•Credit Rating
•Financial Reputaion
•CustomerS & Vendors-In pipeline • Bad Publicity
• Employee Disengagement
•Empowered HR resources
•Customer mistrust.
•Business Intelligence
• Integration Failure -post M &A
•Brand Building -IPR
•New Products in Pipeline
• cutting Edge Technology
Enterprise Value = NW +Debt Payable + Additional Value of Above Net Assets
Enterprise Value –Assets driving success
A company’s Assets
Tangible Assets
•Land and Buildings
•Debtors
•Plants and Equipment •Inventories
•Investments and Cash
Intangible Assets
•Human Capital •Knowledge, IT
•Relationships
Infrastructure
•Brands
and Capabilities
•Culture and Right Practices
Tangible assets are easily measured,
monitored and controlled and hence are
always in focus…
However, it is the Intangible assets that drive the large success of a
company and its enterprise value
BUILDING BLOCKS TOWARDS GENERATING FCF
Higher
labour
productivity
Higher
supplier
credit
Fall in
Inventory/
Debtors
levels
Sales Volume
growth
Working
capital
reduction
Sourcing
efficiency
Statutory Tax
payments
Acquisition
funding
Loans
repayments
Higher
Cash Flows
from Opns
Net Profit
growth
R&D /
Technology
efficiency
Lower
Capex
Economies
of scale
Efficient tax
planning
Lower
Interest
cost
Assets
getting
“sweated
more”
Higher
capital
productivity
Free Cash
Business Transformation- Major Enablers & Pillars.
(to enhance enterprise value)
Business Drivers
Reduce Cost of Capital
Ethical
practices &
Governance
Operating Excellence
Cost
Competitiveness
Throughput
Improvement
Divest / Hive off (NPB/NPA)
Long term value creation
Reliable Organization
Operation Capability
Working
Capital
Management
Revenue
Growth
Engaged Technology
Customer
Manpower
Productivity Employees Up-gradation Innovations Focus
A Strategy Map towards Transformational Value
Creation
Long-Term
Shareholder
Value
Productivity Strategy
Financial
Perspective
Customer
Perspective
Improve Cost
Structure
Increase
Asset
Utilization
Expand
Revenue
Opportunities
Enhance
Customer
Value
Customer Value Proposition
Price
Quality
Availability
Selection
Functionality
Product / Service Attributes
Internal
Perspective
Growth Strategy
Operations
Management
Processes
•Supply
•Production
•Distribution
•Risk Management
Service
Partnership
Relationships
Customer
Management
Processes
•Selection
•Acquisition
•Retention
•Growth
Innovation
Processes
•Opportunity Identification
•R&D Portfolio
•Design / Develop
•Launch
Brand
Image
Regulatory and
Social Processes
•Environment
•Safety and Health
•Employment
•Community
Human Capital
Learning and
Growth
Perspective
Information Capital
Organizational Capital
Culture
Leadership
Alignment
Teamwork
ENHANCING STAKEHOLDERS VALUE VALUE CHAIN : SOCIO ECONOMIC ENVIRONMENT
Critical Resources (X)
Moving into new orbits-Financial Innovations
Preparing for renewed growth thru best financial practices
STRATE G I C
I M PE RAT IV E S
 Grow the volumes aggressively
 Manage the net realisations judiciously
 Control the costs / Eliminate the wastages ruthlessly
 Sweat the assets relentlessly
Cash is King-Increasing Cash Conversion
Under Utilized Assets
•
•
Surplus property
- Disposal of surplus /
empty properties
Tail brands
- Disposal of non-core /
declining brands
- Reduces management
distraction.
Intelligent Capital
Allocation
Working Capital
Management
• Invest right amount of
Capex in the right places
• Trade working Capital
• Capital to be allocated
to attractive and strategic
projects.
•Capital will become more
difficult to get… but not
under invest in the
business.
• Monitor Payback and
assets turn.
• Days Net Working
Capital
• Align with Peers
Making Balance Sheet strong and leverageble
•
•
•
•
Fixed assets, own or outsource → to create value and improve asset turn
Goodwill, → to enhance growth thru brand value and improve ROIC
Working Capital, → drive down the working capital to build operating efficiency
Investments → ensure safety of investments and optimize returns post tax and action plan to
minimize risks.
•
Cash, → reduce the idle cash in the business to improve operating efficiency
Physical verification of assets, valuation of inventories, confirmation of balances,
valuation of investment for market value thru expert valuers is critical. Mandate going
concern, Prudence and Consistency principles to protect the shareholders interest and
value of business.
• Loans → take care of liability by repaying in time principal & interest
• Reserve and Surplus → leverage the strength of capital to raise funds to build and
grow the business
• Share Capital → critical to drive ownership, voting rights, decision making and
control of business
FINANCIAL SUPPLY CHAIN – AN INTEGRATED PROCESS OF
EFFECTIVE FINANCIAL MANAGEMENT
Financial Supply Chain Management is an integrated approach to
Provide better visibility and control over all cash-related processes,
better predictability of cash flow, reduction of working capital, reduction
of operating expenses and end-to-end integration of business processes
Cash & liquidity
management
Credit
management
Check
credit
worthiness
Issue
invoice
Electronic bill
presentation & payment
Forecast
cash
Collection
management
Dispute
management
Finance
working
capital
Treasury & risk
management
Resolve
disputes
Collect
cash
Settle
& pay
In-house cash
management
Tripartite transfer of funds between bankers, customers & suppliers
reconcile
Best Practices – driving forces & key
differentiators
For Driving Efficiencies –
Enablers &
Differentiators
Assess potential business risks /alarms
1.
2.
Demand shortfall
11.
Accounting irregularities
12.
Management
ineffectiveness
Competition
Losses by
category of risk
3.
M&A integration
4.
Misaligned products
13.
Supply Chain
5.
Customer pricing pressure
14.
Macro-economic issues
15.
Commodity price shift
16.
Interest rates
17.
Lawsuits
18.
Natural disasters/ physical
risk
19.
Chance losses
6.
7.
Loss of key customer
Regulatory problems
8.
R&D delays
9.
Supplier problems
10. Cost over-runs
Strategic: 58%
Operational: 31%
Financial: 6%
Hazard: 5%
Risk Mitigation Process and Tools
Elimination
TOTAL RISK
Reduction
Risk
Transfer
Retained
Risk
Strategic Planning
Business Consulting
Re-structuring
Technical
Contract Terms (e.g. PVC)
Improvements
Insurance/ Hedges
Risk Engineering
Risk Securitisation
Procedural Changes
Managed from:Earnings and
Reserves
GUIDING MANTRAS OF CORPORATE FINANCE
NON CONVENTIONAL TRENDS
– Reliable, complete, timely MIS to support business decisions.
– Benchmark financial performance against best among peer group/Industry.
e.g. cost of funds, securitization, structure financing, treasury products & mix of
financing
– Focus on sustainability of business margins through efficient costing
system, WC management, commodity/Forex hedges, ongoing MSR analysis
and review of quality of order book (for potential LD & margins analysis)
– Monitoring of free cash flow to avoid potential NPA & sticky assets.
– Regulatory compliances & adherence to corporate policies & practices.
– Accurate budgetary & forecast to predict WC requirements and secure growth
financing well ahead of the needs.
– Drive accountability & performance review supported by measurable metrics &
indicators.
– Target to run all major business processes with least human intervention &
have them IT enabled to ensure data integrity & seamless processing of MIS.
Measure Corporate Health-Diagnostic Tools
Operating
Performance
EBIDTA % to Net Sales
Assess sustainability of
business margins if compared
with past period / Competition.
(MSR being vital driver)
Process Cost
efficiency
Process Cost (fixed) %
to Net Sales
Process Cost (Variable) %
to Net Sales
Reflect the trend and avenues
for cost controls & immediate
actions (mostly are controllable
costs)
Tax (Current & FBT) %
to Net Sales
Reflect avenues for planning to
bring down tax expenses
TAX
4/13/2015
16
Ideal Diagnosic Metrics of Corporate Health
 Balance Sheet Ratios :
Current Ratio
Current Assets
Current Liabilities
Debt Equity Ratio
Net Worth (Tangible)
Total interest bearing
Liabilities
Measure ability to
survive in a Short term
financial crisis
Measures the
Company’s ability to
survive over Long term
Red Signal : If Sales & revenue continue to climb while these ratios
show a decline (Scenario happens in fast growing company), you
see serious problem after some time e.g. symptoms of debt trap,
signs of near insolvency, diversion of Short term funds for Long
term Obligations.
4/13/2015
17
BR JAJU – Welspun Gujarat Stahl Rohren Ltd
Ideal Diagnosic Metrics of Corporate Health
 Hybrid Ratios for Business performance :- B / S & P&L
PBIT
ROCE
Net Capital employed
Inventory /
Receivables
Turnaround
RONW
EVA
No of Days of Sales
PAT (Def.Tax to add back)
Tangible Net worth
NOPAT – (WACC x C / E)
To reflect profitability on Net
Assets deployed
Reflect High Inventory /
Receivables, and / or
Unplanned & uncontrolled
material inward
To reflect accretive / decretive
returns to Shareholders’
funds
Reflect if Organisation is
creating economic value
Red Signal : with increasing EBIDTA margins but decline in ROCE could signify
idle capacity and no sweating of assets OR could be high generation of
NPA / NEA or irregular Accounting of capitalisation (Enron’s Case).
Ideal Diagnosic Metrics of Corporate Health
 Liquidity Ratios :-
Free
Cashflow
(Operating)
Cash ROCE /
RONW
FCF (Net of increamental
WC / Capex & Tax)
If & to extent measure, future
growth that can be supported
& leverage capabilities
ROCE & RONW adding
Non-Cash Charges
To reflect Management
Performance & Value Creation
for shareholders in cash
terms
Red Signal : Depressed ratios could signal wrong or Stringent
Accounting Treatments of non-cash charges. OR
Bad Management of working Capital & un-prudent Capex.
4/13/2015
19
BR JAJU – Welspun Gujarat Stahl Rohren Ltd
Best Financial Practices-Internal Controls
Control Techniques
Preventative
Segregation of duties - Authorization Matrix
Business systems integrity and continuity controls
Physical safeguard & access restriction control
(human, financial, physical & information assets)
Effective planning & budgeting process
Detective
Corrective
Regular Internal audits
External Audits
Reconciliation of inventory counts with perpetual
records
Comparison of reported results with plans &
budgets
Fundamental Value of the business could be viewed as the sum of Current
Operations Value (COV), and Future Growth Value (FGV)…
Current
Operating
Value
Market
Value
Future
Growth
Value
VA
Renewal
VA
VA
VA
VA
VA
FGV
VA
Future VA
growth
expectations
COV
Focus on both
Current Operations Value (COV)
represents the "no-growth" value of the
company
Future Growth Value (FGV) represents the investors
expectation of performance improvements over and
above the level of current operations
Conversion
Renewal of FGV through investments
for the future ……. &
Conversion of opportunities into
performance through operational
excellence
Illustration: Projections on future profitability and value of R&D investments and M&A
helped management better understand the ‘Value Gap’ to be bridged for delivering the
target shareholder returns…
Initial ‘Value Gap’
$2.7bn
Identifed ‘Value Gap’
Value
Gap
$1.1bn
$1.0bn
Talent Development
(Global Leaders)
Value of R&D pipeline /
Technology
Value of growth in
PAT
$2.5bn
Value of sustaining
existing PAT
$0.8bn
$0.8bn
$6.2bn
$2.5bn
$2.5bn
2008
$1.0bn
2013
Value of growth in
PAT
Value of sustaining
existing PAT
M & A / Inorganic Growth
2013
This exercise helps management in:
a) better understanding the ‘Value Gap’ & implications to shareholders
b) identifying/ crystallizing avenues to bridge the gap
Business growth strategies
M&A and key concerns (Focus on Cross Border Deals)
Most Common Cross Border
Transactions
• Export of Goods/ services - fuelled by BPO/Internet
• Setting up branch offices, subsidiaries & manufacturing
facilities
• Acquisitions abroad
• Raising funds thru’ foreign bourses/ ECB’s, etc
UNIQUE DRIVERS TO TRIGGER CROSS
BORDER M&A DEALS
• Consolidated & mature domestic markets
– Do not offer sufficient opportunities to reinvest earnings
• Overcome entry Barriers
- Ease entry into markets
• Access to local advantages
- Regional diversification
- Tax advantages
- Access to local capital markets
• Betting on future technologies
• Increasing value chain width
• Regulatory changes
KEY SUCCESS FACTORS & MAJOR
ENABLERS
Successful M & A leads to Value Creation for Stake Holders
• Acquisition involves making judicious choices between often
conflicting priorities
• Strategic fit, friendly transaction, due diligence (Social, Economic and
Legal) & Complimentary Resources are key to Synergy
• Each acquisition has a strategic rational that must be embedded into the
Integration Process
• Two stage Integration –
Reap benefits of Low hanging fruits in short term
– Strategic Road map to achieve long term objectives
• Without a clear understanding of objectives and expectations the
path of least resistance will be followed
• The best partner for marriage can become the most difficult spouse
SYNERGIES/ OPTIONS- FOR SUCCESSFUL CROSS
BORDER DELS • Cost Synergies
– R&D, procurement, manufacturing,
selling & marketing, distribution &
Administration
• Revenue Synergies
- New cross selling
– Pricing power & market share
– Increasing each product peak level sales
extending product’s life and adding new
products
• Evaluating Quality of synergy Estimates
– Sources of synergies - higher margins,
increased capital efficiency, high growth
& lower cost of capital
• Alternatives to Acquisition
- Joint ventures & Alliances
- Organic & Brownfield Expansions
INTEGRATION STRATEGY
Objective
- To create multinational centered around
the principle of performance orientation
High
Degree of Change in both
Companies Culture and
Practices
Guiding Principles
- Values
- Synergies
- Respect of Talent
Transformation
Best of Both
Absorption
Standalone
Low
Low
Integration Challenge & Shareholder’s value Addition
High
To achieve integration by “ Best of Both and Transformation Process”
INTEGRATION CHALLAENGE
KEY TO SUCCESS OF CROSS BORDER M&A DEALS
Intellectual Integration
Brands & Technology keeping
pace with market demands
Benchmarking
Learning & Unlearning
Operational improvements
(Best of Both)
Sourcing
Engineering
Quality
Technology
Emotional Integration
Guiding Principles
Belonging to the
Parent Group
Communication
Fast
Forward
Social Integration
Us vs Them
Local vs Glocal
DNA of Integration….
Valuation Challange
Once identification has been completed, the process of valuing the target begins. A
variety of valuation techniques are widely used in global business today, each with its
relative merits


Assets Based Valuations
Business Multiples - EV/ EBITDA, EV/ Turnover, PE (EPS)
•
•

Quicker and simpler
Equity markets use it to judge the deals
DCF Analysis
•
•
•
Allows for rigorous analysis
Key sensitivities can be evaluated
Additional cash flow due to synergies arising in case of mergers
“
A Business is worth what someone is prepared to pay for it !”
Deal structuring
 Financing
 Debt Equity ratio – bases on industry benchmarks, profitability, bankability
 Bridge loan, Mezzanine/Subordinated Debt, Overseas– ECB, FCCBs etc
 Share exchange, part cash and part share
 Management Control
 Shareholder Agreement – RoFR, Anti dilution, Drag along, Tag along rights, deadlock
provisions, Board representation (in JVs, PE investment)
 Indemnities for known risks, brand transfer etc. in the Agreement
 Forming an SPV
 Tax implications in different jurisdictions on dividend, interest income, capital gain,
operating income, etc
 Mauritius (incorporation status GBC I & GBC II differ in tax benefits) , DTAA
 Singapore (DTAA & FTAs, tax incentives in shipping)
 British Virgin Islands (negligible taxes)
Case Study on M&A and Structuring the Financial options
Tata Corus Merger
Deal
 100% stake in the Corus group in all cash deal, valued at USD 12.94 Bn.
 One of the largest Indian takeover of a foreign company
Acquirer – TATA Steel
 56th largest & India’s 2nd largest steel company
 Lowest cost steel producers
Target - Corus
 2nd largest steel producer in Europe.
10th largest in the world
Rationale
•Combined entity - 5th largest producer of steel from 56th position of TATA
• Would have taken several years for Tatas to build would an enterprise of a size of Corus
• Acquisition to provide significant presence in Europe
Tata Corus Merger-Financing structure
Equity of $ 4.1 Bn.
Methodology
TATA Steel
India
100%
Singapore Co
Debt
UK Co 1
Debt
UK Co 2
Debt
UK Co 3
Debt
TATA Steel UK
Corus
100%
Equity of
$4.1 bn,
Quasi
equity of
$1.25 bn
& Bridge
loan of $
1.41 b
100%
100%
100%
Acquired Corus out of $6.76 bn received from SPVs
& long term debt of $6.14 bn from consortium of
bank
• SPV’s were floated in UK under the
name Tata Steel UK. Tulip SPV
Holdings (1,2,3) which were
ultimately held by a Singapore SPV
• Tata Steel alongwith the SPV’s
incorporated in Singapore and UK
raised the requisite debt of USD 8.8
bn constituting 68% of the total
acquisition value of USD 12.94 bn.
• Debt was proposed to be pushed
in each subsequent subsidiary and
ultimately the same was infused as
equity in Corus.
Tata Corus Merger-Finacing rational
i. Tata Steel acquired Corus for $12.94 bn
 Equity Contribution of $ 4.14 bn &
 Borrowings of $8.80 bn through subsidiaries
ii. Tax consolidation in UK, tax shield on interest available to Corus
iii. Debt-equity ratio of funding is 68:32 as Tata Steel UK could not have raised so much
of loan due to strict UK regulations – Thin Capitalisation norms for tax
iv. Corus paid loan out of its own cash flows and eliminated the tax to be paid on the
dividend received from Corus
A CORPORATE CASE STUDY - ON STRATEGIC FINANCIAL
INITIATIVES FOR VALUE CREATION
JOURNEY TOWARDS EXCELLENCE - Encountering Challenges
amidst Survival risks and Emerging Business paradigms
Achieved financial & operational turnaround through innovative practices &
disciplines
COMPANY OVERVIEW
• Global footprint with inorganic growth
- Revenue ~ USD 2bln. employee strength of 7500+
- Manufacturing facilities in 10 countries across the globe
• Technological Leading player in global T & D business
• Strong Brand Equity
USA
Canada
Belgium
Hungary
Ireland
• Professionally managed company
India
• Strong Quality Management Systems
• Value based Corporate Governance practices
• High commitment to Corporate Social Responsibility
• High value Corporate Initiatives
• Recognition for excellence in manufacturing, exports, safety, innovations
Indonesia
FINANCIAL HEALTH RECOVERED
THROUGH IMPLEMENTATION OF BENCHMARKED GLOBAL STRATEGIES
Internal Drivers
Improving realization Thrust on Exports
Fixed cost
amortized over
a larger base
Operational efficiency - Six Sigma
MOST, Value engineering, relocation,
Down-sizing, sale of non core business
Financial Re-engineering
– Treasury & working
capital
Higher
capacity
utilization
Vision and Mission
Corporate Values
Industry Consolidation
Low Interest Rate
Partenerships&
alliances
External Drivers
Introduction of tough measures have helped re-direct
the corporate focus from survival to sustainable growth
GLOBAL STRATEGY-CROS BORDER
ACQUISITIONS
STEADY FLOW OF POWER & PROSPERITY
3rd acquisition in May
2007headquartered in
Ireland with large presence
in UK & USA
2nd acquisition in Oct 2006
with manufacturing site at
Hungary
1st
acquisition in May
2005
with manufacturing site at
4th acquisition in may08
headquartered in France
5th acquisition in
oct.2008 in USA
 Belgium
 Ireland
 USA
 Canada
 Indonesia
Company’s transformation from its economic turmoil to a model of
wealth creation captivates overseas aspirants to join the ranks
Value Creation Approach & Strategy
– Three Phases
5 Values
-Performance Excellence
Today’s
Position
Global Leadership
Phase
-Leading Edge Knowledge
-Nurturance
Phases
-Customer Orientation
-Intellectual Honesty
Operational
Excellence
Phase
 Shift to low cost locations
 Divestment of non core
 Quality / Productivity Improvement
Financial Re-engineering
 Best Business Practices
Growth Phase –
Organic
&
Inorganic
 Widening Global footprint
 Economies of Scale
 Strategic business a
acquisitions / expansion
 Marketing drives
HR Initiatives
 Integrated Solutions and Superior
knowledge-based Products & Services
 Company of choice in global market
 Technology Leadership
 IT as a business Tool
HOW FINANCIAL INNOVATIONS AND GLOBAL STRATEGIES
HAVE TRANSFORMED
COMPANY FINANCIAL HEALTH -
56
SUCCESSFUL TRANSFORMATION OF INDIAN MNC
Value creation through EPS and PAT
1000
16.0
USD mlns
175
14.0
800
13.4
Growth Story - Globalisation :
International Markets
Acquisition & Investments
12.0
600
115
10.0
85
8.7
400
8.0
55
45
6.3
6.0
200
25
15
4.4
5
1
4.0
3.6
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2.0
1.9
-200
1.1
-30
-40
-1.0
-400
0.4
0.1
-1.1
Maintanance of performance in
years of Acquisitions
Consolidation in
Home Country
2000 to 2001 the Disastrous
Years
0.0
-2.0
PAT
EPS
BUSINESS TRANSFORMATION ACHIEVED
THROUGH INNOVATIVE FINANCIAL
INITIATIVES
10%
60%
48%
40%
8%
35%
6.7%
6%
4%
20%
11%
7%
0%
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Borrowings as % to sales
160
120
2%
0.8%
0%
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Interest as % to sales
WC as % to sales
140
107
80
80
37
40
0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Inventory days
Debtors days
Figures above are for standalone entity
STEADILY ADDING VALUE TO
STAKEHOLDERS ……
2.0
Debt-Equity Ratio (times)
1.5
1.0
1.6
1.0
0.5
0.8
0.5
0.4
0.0
2002-03
40%
2003-04
2004-05
2005-06
2006-07
RONW % (Annualized)
40%
ROCE % (Annualized)
30%
30%
34%
20%
20%
18%
10%
33%
33%
2005-06
2006-07
28%
28%
20%
21%
10%
13%
10%
0%
0%
2002-03
2003-04
2004-05
2005-06
2006-07
2002-03
2003-04
Figures above are for standalone entity
2004-05
PARTING THOUGHTS
Enabling Deliverables Towards
Breakthru Financial Transformation
•
Acceptance of inalienable rights of
shareholders as the true owners of the
company .
•
Commitment to values & ethical
business conduct.
•
Be Innovative for capital efficiancy &
profitable growth mind set
Integrate with business objective
•
•
Maximize revenue thru derisking business
model.
Create & enhance long term shareholders
value.
New Age Financial Management- FOR ADMIRED
GLOBAL CORPORATES – A VISUAL
New Age Leadership
AUTHORITIES
STAKEHOLDERS
INNOVATION/TECK DRIVEN
EFFECTIVE GOVERNANCE
SPEED
COMPLIANCE
Köszönöm
THANK YOU !!
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