breakthru enterprise value creation for stake holders
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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. - PowerPoint PPT PresentationTRANSCRIPT
BREAKTHRU ENTERPRISE VALUE CREATION FOR STAKE HOLDERS
Through Strategic Financial Initiatives Through Strategic Financial Initiatives
and best Corporate Treasury Practicesand best Corporate Treasury Practices
(With Corporate Case Study)(With Corporate Case Study)
B R JAJUDirector and CFO
Welspun Corp
IMC-Mumbai, Oct 11,2013
The New Competitive Advantage MantrasThe New Competitive Advantage Mantras
Conventional Way of Managing Business /Finance
+No Ethical practices &
Growth Strategy
+IT iIlusion
=Dying Corporates
on Steroids
Steroids
304/22/23
• 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
Let us take deep dive
Changing business landscaping (India perspective with global paradigms)
Global Dynamics –India’s perspective
Initiatives
2005 - After - Achieve viability of operations in global environment
- Change in mindset to become a global company
Prior to 1990s- India is the only market
- The manufacturer could sell whatever it could produce
1990-2005
- Exposed to International Markets(Products
&Capital) and Competition
Initiatives
M&AChanging Business Models (Consolidation & Outsourcing)
Customer ExpectationRegulatory
Compliances
Business Risks & Security Concerns
Governance & Best Practices
Business Dynamics
GlobalCompetition
IT enabled Processes & Technology Advancement
How Global Corporates have destroyed values –Key learnings
Arrogance(Pride before fall)
Self Denial
Complacency
Emerging TechnologiesChanging Customer TastesConflicting Interests/Frauds
Exceptional Achieve of Past wraps present realitiesNobody can duplicate your products
You are smarter than others
Past Success under regulated monopolyU were chosen for success by govt
U are run with Govt. control
Greed Obsession
Justify every financial norms for growth and unearned profitsAchieve growth devoid of business fundamentals
Overleveraging and over trading on equity
Let us look at Corporate value destroyers
Corporate Scandal Jobs Lost Shareholders
wealth lost $ bln)
Enron Created off B/S exposures
to hide debts & losses 4500 80
Xerox Impropriety reports $ 6.5
bln. In revenue (over 5 years) 13600 3
Worldcom Hidden expenses ($ 3.9 bln)
to raise bottom line 17000 100
Merck Over $ 14 bln revenue reported
for many years, never collected NA 43
Quest.com Inflated revenue thru equip.
sales / Swaps 11000 33
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.
L. N. Mittal
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.
Revolutionary Balance Sheet To Capture True Enterprise Value
16
•Op. cash gen./FCF•Performing Assets•Sales Growth – New Product/Market/ Customers• Order Book-Visibility/ Profitability
•Off Balance Sheet Liabilities•LD/TP Claims•Tax /Legal Disputes•BG/CG Impact•Indirect borrowings
• Commitment Failures• Volatility -Forex /Commodity/Int.t
•Credit Rating•CustomerS & Vendors-In pipeline•Empowered HR resources•Business Intelligence•Brand Building -IPR•New Products in Pipeline• cutting Edge Technology
• Bad Publicity• Employee Disengagement•Customer mistrust.• Integration Failure -post M &A
•Financial Reputaion
TANGIBLE
INTANGIBLE
Assets Liabilities
Enterprise Value = NW +Debt Payable + Additional Value of Above Net Assets
Enterprise Value –Assets driving success
A company’s Assets
Intangible Assets•Human Capital•Relationships•Brands•Culture and Right Practices
•Knowledge, IT Infrastructure and Capabilities
However, it is the Intangible assets that drive the large success of a company and its enterprise value
Tangible assets are easily measured, monitored and controlled and hence are always in focus…
Tangible Assets•Land and Buildings•Plants and Equipment•Investments and Cash
•Debtors•Inventories
Net Profit growth
Sourcing efficiency
R&D /Technologyefficiency
Economies of scale
Efficient tax planning
Sales Volumegrowth
Higher labour
productivity
Higher supplier
credit
Fall in Inventory/Debtors
levels
Working capital
reduction
Assets getting
“sweated more”
Higher capital
productivity
Lower Capex
Lower Interest
cost
Acquisition funding Loans
repayments
Higher Cash Flows from Opns
Free Cash
Statutory Tax payments
BUILDING BLOCKS TOWARDS GENERATING FCF
Business Transformation- Major Enablers & Pillars.(to enhance enterprise value)
Business Drivers
Reduce Cost of Capital Divest / Hive off (NPB/NPA)
Operating Excellence Long term value creation
CostCompetitiveness
Engaged Employees
Technology Up-gradationInnovations
Customer Focus
Ethical practices & Governance
Ethical practices & Governance
WorkingCapital
Management
Reliable Operation
Throughput Improvement
RevenueGrowth
OrganizationCapability
ManpowerProductivity
A Strategy Map towards Transformational Value Creation
Productivity Strategy Growth Strategy
Human Capital
Information Capital
Organizational Capital
Culture Leadership Alignment Teamwork
Learning and Growth Perspective
•Supply•Production•Distribution•Risk Management
Operations Management
Processes•Selection•Acquisition•Retention•Growth
Customer Management
Processes •Opportunity Identification
•R&D Portfolio•Design / Develop•Launch
Innovation Processes
•Environment•Safety and Health•Employment•Community
Regulatory and Social ProcessesInternal
Perspective
Customer Value Proposition
SelectionAvailabilityQualityPrice Service BrandPartnershipFunctionality
Product / Service Attributes Relationships Image
Customer Perspective
Improve Cost
Structure
Increase Asset
Utilization
Expand Revenue
Opportunities
Enhance Customer
Value
Financial Perspective
Long-Term Shareholder
Value
ENHANCING STAKEHOLDERS VALUE -VALUE CHAIN : SOCIO ECONOMIC ENVIRONMENT
Critical Resources (X)
Preparing for renewed growth thru best financial practices
Moving into new orbits-Financial Innovations
Grow the volumes aggressively
Manage the net realisations judiciously
Control the costs / Eliminate the wastages ruthlessly
Sweat the assets relentlessly
S T R A T E G I C I M P E R A T I V E S
Cash is King-Increasing Cash Conversion
• Surplus property
- Disposal of surplus / empty properties
• Tail brands
- Disposal of non-core / declining brands
- Reduces management distraction.
Under Utilized Assets Intelligent Capital Allocation
Working Capital Management
• Invest right amount of Capex in the right places
• 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.
• Trade working Capital
• 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
Issue invoice
Forecast cash
Finance working capital
Resolve disputes
Collect cash
Settle & pay reconcile
Check credit
worthiness
Credit management
Cash & liquidity management
Dispute management
Collection management
Electronic bill presentation & payment
Treasury & risk management
In-house cash 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
Tripartite transfer of funds between bankers, customers & suppliers
FINANCIAL SUPPLY CHAIN – AN INTEGRATED PROCESS OF
EFFECTIVE FINANCIAL MANAGEMENT
For Driving Efficiencies – Enablers & Differentiators
Best Practices – driving forces & key differentiators
Assess potential business risks /alarms
1. Demand shortfall
2. Competition
3. M&A integration
4. Misaligned products
5. Customer pricing pressure
6. Loss of key customer
7. Regulatory problems
8. R&D delays
9. Supplier problems
10. Cost over-runs
11. Accounting irregularities
12. Management ineffectiveness
13. Supply Chain
14. Macro-economic issues
15. Commodity price shift
16. Interest rates
17. Lawsuits
18. Natural disasters/ physical risk
19. Chance losses
Losses by category of risk
Strategic: 58%
Operational: 31%
Financial: 6%
Hazard: 5%
Risk Mitigation Process and Tools
Elimination
TO
TA
L R
ISK
Strategic PlanningBusiness Consulting
Re-structuring
Reduction
Technical Improvements
Risk EngineeringProcedural Changes
Managed from:- Earnings and
Reserves
RetainedRisk
RiskTransfer
Contract Terms (e.g. PVC)Insurance/ HedgesRisk Securitisation
GUIDING MANTRAS OF CORPORATE FINANCENON 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.
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)
TAXTax (Current & FBT) %
to Net SalesReflect avenues for planning to bring down tax expenses
Measure Corporate Health-Diagnostic Tools
1604/22/23
Ideal Diagnosic Metrics of Corporate Health
Balance Sheet Ratios :Balance Sheet Ratios :
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.
Current Ratio Current Assets
Current Liabilities
Measure ability to survive in a Short term financial crisis
Debt Equity Ratio Net Worth (Tangible)
Total interest bearing Liabilities
Measures the Company’s ability to survive over Long term
1704/22/23 BR JAJU – Welspun Gujarat Stahl Rohren Ltd
Hybrid Ratios for Business performance :- B / S & P&LHybrid Ratios for Business performance :- B / S & P&L
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).
ROCEPBIT
Net Capital employed
To reflect profitability on Net Assets deployed
Inventory / Receivables Turnaround
No of Days of Sales
Reflect High Inventory / Receivables, and / or Unplanned & uncontrolled material inward
RONWPAT (Def.Tax to add back)
Tangible Net worth
To reflect accretive / decretive returns to Shareholders’ funds
EVA NOPAT – (WACC x C / E) Reflect if Organisation is creating economic value
Ideal Diagnosic Metrics of Corporate Health
Liquidity Ratios :-Liquidity Ratios :-
Red Signal : Depressed ratios could signal wrong or Stringent Accounting Treatments of non-cash charges. OR
Bad Management of working Capital & un-prudent Capex.
Free Cashflow (Operating)
FCF (Net of increamental WC / Capex & Tax)
If & to extent measure, future growth that can be supported & leverage capabilities
Cash ROCE / RONW
ROCE & RONW adding Non-Cash Charges
To reflect Management Performance & Value Creation for shareholders in cash terms
Ideal Diagnosic Metrics of Corporate Health
1904/22/23 BR JAJU – Welspun Gujarat Stahl Rohren Ltd
Best Financial Practices-Internal Controls
DetectivePreventative Corrective
Control Techniques
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
Regular Internal auditsExternal Audits Reconciliation of inventory counts with perpetual recordsComparison 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)…
FGV
COV
Renewal
Conversion
Future VA growth expectations
FutureGrowthValue
FutureGrowthValue VA VA
VAVAVA
VA
VA
Current Operations Value (COV) represents the "no-growth" value of the companyFuture Growth Value (FGV) represents the investors expectation of performance improvements over and above the level of current operations
Focus on both 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…
$2.5bn$2.5bn
2008
$6.2bn$6.2bn
2013
$2.5bn$2.5bn
$1.0bn$1.0bn
$2.7bn$2.7bn
Value of sustaining existing PAT
Value of growth in PAT
This exercise helps management in: a) better understanding the ‘Value Gap’ & implications to shareholders b) identifying/ crystallizing avenues to bridge the gap
Initial ‘Value Gap’
Value Gap
Identifed ‘Value Gap’
$2.5bn$2.5bn
$1.0bn$1.0bn
Value of sustaining existing PAT
$0.8bn$0.8bn
$0.8bn$0.8bn Talent Development (Global Leaders)Value of R&D pipeline
/ Technology
2013
Value of growth in PAT
$1.1bn$1.1bn M & A / Inorganic Growth
M&A and key concerns (Focus on Cross Border Deals)
Business growth strategies
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 CROSSBORDER M&A DEALS
• Consolidated & mature domestic markets – Do not offer sufficient opportunities to re-
invest 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
• 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 Without a clear understanding of objectives and expectations the the
path of least resistance will be followedpath of least resistance will be followed
• The best partner for marriage can become the most difficult spouse
Successful M & A leads to Value Creation for Stake
Holders
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
Integration Challenge & Shareholder’s value Addition
High
HighLow
To achieve integration by “ Best of Both and Transformation Process”
Low
Degre
e o
f C
han
ge in b
oth
C
om
panie
s C
ult
ure
and
Pra
ctic
es
Standalone
Absorption
Best of Both
TransformationBest Inte
gratio
n
Strate
gy
Objective - To create multinational centered around the principle of performance orientation
Guiding Principles - Values - Synergies - Respect of Talent
INTEGRATION CHALLAENGEKEY TO SUCCESS OF CROSS BORDER M&A DEALS
Fast Forward
DNA of Integration….
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
Social Integration Us vs Them Local vs Glocal
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
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
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 companyLowest cost steel producers
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
Target - Corus2nd largest steel producer in Europe. 10th largest in the world
Tata Corus Merger-Financing structure
TATA Steel India
Singapore Co
UK Co 2
UK Co 1
UK Co 3
TATA Steel UK Corus
100%
100%
100%
100%
100%
Debt
Debt
Debt
Debt
Equity of $ 4.1 Bn.
Equity of $4.1 bn, Quasi equity of $1.25 bn & Bridge loan of $ 1.41 b
Acquired Corus out of $6.76 bn received from SPVs & long term debt of $6.14 bn from consortium of bank
Methodology
• 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
JOURNEY TOWARDS EXCELLENCE - Encountering Challenges amidst
Survival risks and Emerging Business paradigms
A CORPORATE CASE STUDY - ON STRATEGIC FINANCIAL INITIATIVES FOR VALUE CREATION
Achieved financial & operational turnaround through innovative practices
& disciplines
COMPANY OVERVIEW
• Technological Leading player in global T & D business
• Strong Brand Equity
• Professionally managed company
• 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
USA Canada
Belgium Hungary Ireland
Indonesia
India
• Global footprint with inorganic growth - Revenue ~ USD 2bln. employee strength of 7500+ - Manufacturing facilities in 10 countries across the globe
FINANCIAL HEALTH RECOVERED THROUGH IMPLEMENTATION OF BENCHMARKED GLOBAL STRATEGIES
Vision and MissionCorporate Values
Industry Consolidation Low Interest Rate Partenerships&alliances
External Drivers
Improving realization -Thrust on Exports
Internal Drivers
Operational efficiency - Six SigmaMOST, Value engineering, relocation, Down-sizing, sale of non core business
Financial Re-engineering – Treasury & working
capital
Fixed cost amortized over a larger base
Higher capacity utilization
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
Company’s transformation from its economic turmoil to a model of wealth creation captivates overseas aspirants to join the ranks
1st acquisition in May 2005 with manufacturing site at
Belgium Ireland USA Canada Indonesia
2nd acquisition in Oct 2006with manufacturing site at Hungary
3rd acquisition in May 2007headquartered in Ireland with large presence in UK & USA
4th acquisition in may08headquartered in France
5th acquisition in oct.2008 in USA
55
Value Creation Approach & Strategy – Three Phases
Today’s Position
Shift to low cost locations Divestment of non core Quality / Productivity ImprovementFinancial Re-engineering Best Business Practices
Operational Excellence
Phase
Integrated Solutions and Superior knowledge-based Products & Services Company of choice in global market
Technology Leadership
IT as a business Tool
Global LeadershipPhase
Widening Global footprint Economies of Scale Strategic business a acquisitions / expansion Marketing drivesHR Initiatives
Growth Phase – Organic
& Inorganic
Phas
es
5 Values
-Performance Excellence
-Leading Edge Knowledge
-Nurturance
-Customer Orientation
-Intellectual Honesty
56
HOW FINANCIAL INNOVATIONS AND GLOBAL STRATEGIES
HAVE TRANSFORMED COMPANY FINANCIAL HEALTH -
SUCCESSFUL TRANSFORMATION OF INDIAN MNC
USD mlns
BUSINESS TRANSFORMATION ACHIEVED THROUGH INNOVATIVE FINANCIAL
INITIATIVES
0.8%
6.7%
0%
2%
4%
6%
8%
10%
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Interest as % to sales
7%
48%
35%
11%
0%
20%
40%
60%
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Borrowings as % to sales WC as % to sales
37
107
140
80
0
40
80
120
160
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 ……
1.6
1.00.8
0.5 0.4
0.0
0.5
1.0
1.5
2.0
2002-03 2003-04 2004-05 2005-06 2006-07
Debt-Equity Ratio (times)
13%18%
20%
28%
34%
0%
10%
20%
30%
40%
2002-03 2003-04 2004-05 2005-06 2006-07
ROCE % (Annualized)
Figures above are for standalone entity
10%
21%
28%33% 33%
0%
10%
20%
30%
40%
2002-03 2003-04 2004-05 2005-06 2006-07
RONW % (Annualized)
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
INNOVATION/TECK DRIVEN
EFFECTIVE GOVERNANCE
SPEED
COMPLIANCE
AUTHORITIESSTAKEHOLDERS
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