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Integrated Appraisal
1.0
Introduction
MKRC
has evolved the concept of Integrated Appraisal
based on the experience of more than 500 companies both in 2.0
Performance Review
The
past performance of the company is analyzed in depth to understand the reasons for
sickness, and to assess the scope for optimizing performance and make cash profits at the
earliest. This includes each and every aspect of company operations - production, sales
and profit performance trends, inventories - current and obsolete, receivables, including
overdue and non-recoverable, creditors; organization and management skills, level of
technology and market share. Based on the performance review, we outline what is going
wrong to serve as a base line for the action plan. 3.0
Assessment of Potential
The
potential of the company is assessed in the following areas: 3.1 Manufacturing Potential
Present
capacity, quality of products, productivity, scope to step up output, as is and with
balancing equipment and the level of technology and scope for upgrading it. 3.2 Marketing Potential
Market
demand, market share, competitive strengths, and the scope to find the markets at optimal
production. 3.3 Profit Potential
If
the company sells everything it can make, the profit potential is assessed. This
will be an opportunity for the company to prove their ability to turn around by making the
best use of the existing facilities. In our experience, we find unproductive investments
as the major reason for sickness due to abnormal interest burdens. Unless the sick company
develops the ability to optimize return on investment, any new investment will only result
in further sickness. Therefore,
for both the company and the financial institutions & banks, this phased approach is
least risky to turn around. Once the company proves itself, then only the question of new
investments will arise. 4.0
Cash Needs & Method of Financing
A
thorough assessment of the cash needs and the method of financing will be outlined. In
line with the assessment of the potential, Phase I is usually limited to minimum cash
needs, such as working capital, to optimize performance. Once the company proves itself,
then only new investments can be made in line with the overall strategy for turnaround. 5.0
Turn Around Strategy
In
this section, we outline the overall strategy to turn around the company and optimize
performance, with a time bound action plan. While the strategy is specific to each
company, certain broad issues are common. A
turn around strategy is evolved keeping the perspective of the organization as a whole,
which includes management capabilities. While approaches to solving problems in each
function are outlined, there is a unified approach which attempts to correct the root
cause and not the symptoms. 6.0
To Sum Up
An
integrated Appraisal, in short, will relate to the integrated view of the organization.
Based on past performance, you can assess the company's strength and weakness. By
assessing the manufacturing and marketing potential, you can arrive at the profit
potential. To achieve this optimal performance, a
strategy will be outlined integrating the organizational structure, management skills and
cash needs with a time bound action plan to 'make the best of what you have' in the first
phase and optimizing the performance in the second phase, to emerge as a leader in the
industry. This includes an authentic and timely data base, cost improvement programs,
core group development, controls, participative culture and commitment.
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© M K Raju Consultants Private Limited
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