Is Your Business Tired and Sick?
A company becomes sick when its cash inflows are insufficient to meet the cash outflows. Often such companies would be depending on debt to source their funds and eventually would move to a debt trap.
How to identify distressed Company?
The financial distress is not developed overnight. Distress is the culmination of various factors. The symptoms of distress are visible in an organization when the unit shows incipient sickness. Some of these symptoms are:
- Declining sales revenue coupled with large number of rejections of consignments by the customers.
- Delayed payment to suppliers resulting into withdrawal of credit facilities by them
- High leverage because of over borrowings
- Continuous overdrawing of the credit limits sanctioned by banks resulting into suspension/withdrawal of facilities by banks
- Default in repayment of interest and principal to financial institutions, bondholders etc.
- Declining capacity utilization
- Lack of proper maintenance of plant, machinery and equipment
- Poor asset turnover
- Large accumulation of inventories
- Suppliers showing reluctance to offer trade discounts
- High labour turnover
- Extension of accounting period
- Value erosion in respect of shares and debentures
- Declining market reputation
- Default in payment of statutory dues
How we help?
During turnaround process, we work alongside company management to develop an obtainable and executable plan.
We provide advice on specific aspects of the turnaround process, and help manage complex constituency relations and communications.
Our Turnaround Advisory professionals:
- Address liquidity concerns
- Stabilize core operations
- Develop business plans
- Review financial projections
- Develop / review of cost reduction initiatives
- Implement cash conservation guidelines and controls
- Implement ongoing communications processes with key constituencies
- Identify and dispose of non-core assets
- Assist in implementation of an operational restructuring
- Manage creditor communication and negotiation processes
- Develop employee incentive plans