Case Studies

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CASE STUDY 01

Client Background:

A Pune-based SME manufacturing different types of windows

Problem Statement:

The client used to outsource the coating of windows, and as a strategic move, decided to manufacture the coat as well as conduct coating activity inhouse. In order to mobilize this faster, they finalized a piece of land to be purchased on lease for setting up manufacturing and machinery. They also purchased the required machineries worth INR 2.8 Cr for mixing and producing the chemical at the unit.
However, at the time of signing the agreement, while discussing the nature of operations, the land owner realized, since the operations also involved manufacturing chemicals, it might affect his farm and produce which was just adjacent to this plot. This was a deal-breaker.
The machinery was not productive for six months, until a new land with all the sanctions was finalized. Apart from creating stress due to last-minute cancellation of the deal, the entire exercise costed the client machine idling cost, and an interest of over 6% above the principal cost of the machinery.

Solution:

Our team at Admirable Business Care, understands the importance of setting up processes and documentation, in conducting timely due-diligence, pre-emptively identifying any pitfalls within the existing deal and maintaining a healthy cashflow.
The client was not aware of true gravity of the situation. It was only when our experts identified the flaws in the process, and calculated the actual loss on paper that the client realized the importance of having a standard process that can help optimize the cashflow, and help in critical decision making. Our team helped the client identify the right place for setting up the manufacturing plant immediately, and cut-down any further losses.


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CASE STUDY 02

Client Background:

A manufacturer of specialized boxes for packaging and exporting Mahindra engines

Problem Statement:

The specialized boxes are manufactured in the shape of the engines, and are made from pinewood. Pinewood is ideal for this kind of packaging as it is extremely sturdy and stays so for a much longer period of time. This pinewood is available in large quantities in Germany and Russia. Hence, the client sourced the material from these countries.
Over a period of time, the client realized that there were making negligible profit, just enough to keep the business running. The market potential was huge, but the business model looked non-sustainable.

Solution:

When our chief consultant was asked to perform the audit, he found an obvious leak in the decision-making process. The client compared the cost of pinewood in Germany and Russia, with that in India. India imports the same pinewood from Germany and Russia in bulk. The actual cost in each of these countries was marginally lesser than the cost of the material in India. The decision was based merely on the actual cost of the material in Germany and Russia, versus India.
The client had taken a loan of INR 2 Cr. with 11-12% interest, and used to source the material from Germany and Russia.
However, it would take about 80 days for the material to arrive in India, provided there are no holdups in the transportation. This blocked the principal cost and the interest for 80 days, which was a direct cost to the company. Further, the import duty, freight, etc. would add up to a large sum; large enough to make the decision of sourcing from abroad, an irrational one. Considering all the detailed costing, the profit margin reduced substantially, thereby failing on business-feasibility.
When this was identified, the costing model was modified and the decision-making process was streamlined. Now the client has a sustainable business model and is very happy with value the business generates.


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CASE STUDY 03

Client Background:

A CNC machine manufacturer based in Pune with a turnover of INR 70Cr.+ with a global market potential of INR 70k Cr.+.
The client had a thriving business, and the owner was happy with the success graph that his firm had created. However, when our team started understanding the business, it was evident that the company had not reached its true potential. There were certain key leaks even in the few processes which the company followed, while it generally lacked SOPs across various departments.
Following problems were identified by Team Admirable in the first visit itself:
  1. No SOPs
  2. Double payments made over a 12-month period
  3. Issues with material inwards
  4. Erroneous GST reconciliation
  5. Absence of material planning
  6. Errors in BOM

Solution:

It has been our experience for past several years working for different industries that companies even with a reasonably higher turnover, and appearing really successful, have critical leaks within their processes, when fixed give optimal profits which are exponentially higher than what they have with their incumbent systems. This is also a typical scenario especially when start-ups start small, and achieve unprecedented growth within just a few years. The incumbent systems and processes are not able to adapt to the growth at the same speed. Therefore, process re-optimization and redesign is imperative in such cases.
We implemented our PLuG Auditing and Monitoring solution at our client’s company to redesign SOPs for Inventory and Purchase modules in order to improving accountability, traceability, optimizing cashflows, and for strategic planning. The process is in progress, and the client has already started reaping the benefits of it.

Benefits:

  1. Sizeable GST refund received and even more GST paid in excess traced
  2. Even more savings expected with process optimization
  3. Cashflow within control
  4. Improved profitability
  5. Client set to achieve its full potential within a year

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