Case Studies & Testimonials 

Pharmax is a family owned and managed company with turnover close to INR 700 Crores. Pharmax is a leading name in the Active Pharmaceutical Ingredient (API) and Finished Drug Formulation (FDF) segments which is sold in both the regulated and the generic markets in India and over 50 countries worldwide. The company has state of the art manufacturing facilities approved by US FDA and has 17 Abbreviated New Drug Application (ANDA) filed and 12 in the pipeline. 

Challenges for MyCFO 

Budgeting at Pharmax was a simple ‘spread sheeting’ exercise restricted only to collation of data inputs received from various departments. The variance between budgets and actuals for instance in financial year 13-14 was more than 80%. The variances were reported every month to the HOD’s and the management on a month on month basis for their review and comments. 

MyCFO Approach 

MyCFO’s mandate here was to play the role of an ongoing CFO for Pharamax. MyCFO’s approach was to identify the principal reason behind the budgeting exercise, which in this case was to help the management get a clear idea on the cash flow requirement and in helping them stabilize the FDF business. This was followed by a communication from the management team on the need for the departments to participate in the budgeting exercise. A 6 member budgets team was constituted which was lead by MyCFO. This was followed by one on one meetings with the department heads where targets were discussed and agreed. Some of the meetings which involved key decision making were attended by the promoters. The targets were discussed and debated amongst teams on parameters such as stock (max order quantity, credit period, lead time, logistics, distribution), debtors, creditors, zero based budgeting for PDF business, competency of personnel involved in the process, inter departmental dependencies, product strategy, capacity utilization, investment in fixed assets and ANDA, making each SBU within the company profitable, EBITDA improvement, misses and issues based on last year’s achievements amongst others. The budget exercise was finally completed in 8 weeks with 3 revisions. The exercise also served to set individual KPI’s for department heads and were eventually linked to incentives. 

How the client benefitted 

The budget exercise allowed standardization of MIS reports across the company, helped the company to institute and track performance for the Senior Managers, formation of the budget committee helped the departments to resolve potential issues which may come in the way of achievement of targets. The process also allowed a formal mechanism to review actual progress and it also set the ball rolling in terms of weekly monitoring reports on sales, cash flow, stock movement to the management.  

 

Fulex is in the business of developing fuel efficiency solutions for the Genset manufacturers. This involves carrying out R&D on the technological and commercial feasibility of the products and, once the feasibility is demonstrated, developing and manufacturing these products. The Company is in a high growth phase with a need for maintaining high level of working capital to sustain the growth, in addition to capital requirement to fund expansion. The objective of the budget exercise was (a) to develop 5 / 10 year plans, Annual Operating Plan or Annual Budgets with monthly / quarterly break-ups at a departmental and segment level (b) Determine sales targets to the sales team, broken by products, geographies, customer segments etc. (c) Determine P&L position and cash/working capital requirements at various levels of sales (d) Determine the amount of capital to be infused to support ongoing operations and expansion plans (e) Planning for manpower needs (f) Expense control, by allotting expense budgets to departments (g) Determining profitability by product, geography, customer segments etc (h) Exploring feasibility of expansion plans with metrics such ROI and IRR (i) Scenario analysis, Sensitivity analysis and “what-if” analysis through modification of the assumptions.

Challenges for MyCFO 

Budgeting at Pharmax was a simple ‘spread sheeting’ exercise restricted only to collation of data inputs received from various departments. The variance between budgets and actuals for instance in financial year 13-14 was more than 80%. The variances were reported every month to the HOD’s and the management on a month on month basis for their review and comments. 

MyCFO Approach 

(a) Arriving at a meeting point between the “top-down” and “bottom-up” approaches (b) Maintaining a balance between “trend-based” and “zero-base” approach (c) Managing iterations and version control (d) Consolidation of inputs received from diverse sources (e) Seeking consensus and “buy-in” across the organization on a common set of goals (f) Changes in assumptions after freezing the budgets (this was handled through quarterly rolling forecasts)

How the client benefitted 

The exercise helped the company to formulate its 5 and 10 year plans along with the annual operating plan, department and segment sales and expense targets were formalized, key ratios and trends were fixed and tracked, this allowed the company to benchmark key metrics against industry parameters and allowed the Board and the Management to track actuals on a periodic basis against the budgets.   

 

IndFrag is an 80 year old, $ 100mn Indian group and the industry leader in industrial fragrances and flavours. The company is based in Mumbai having manufacturing capacities in Mumbai, Gujarat and Netherlands. 

Our MyCFO role 

MyCFO assisted the company in a comprehensive change management project from a Promoter managed to a Professionally managed company. MyCFO was involved preparation of MIS reports, preparation of financial statements under local GAAP, analysis of product and business profitability, project managing the implementation of an ERP, preparing the data room for potential PE partners. 

How our client benefited 

Under the Promoter management, MyCFO helped in providing better visibility into the operating parameters of the business and by playing the role of an Interim CFO. The company benefited from Business Process Improvement measures and streamlining of Finance procedures. MyCFO assistance helped the company client prepare well for investor due diligence. MyCFO helped in the Promoters to obtain a good valuation from PE investors, by building a credible investment case. MyCFO helped in the smooth transition in the management of the Company. Post transition, MyCFO continues to be involved in the areas of budgeting, performance measurement, Business Intelligence, helping the new professional management and investors to move the company to the next level of growth. 

Diagnostic Center is an ultramodern diagnostic centre with comprehensive facilities for Laboratory, Imaging investigations and other diagnostic facilities headquartered in Mumbai. Lifecare provides digital x-ray, digital imaging, mammography, bone densitometry, sonography, cardiac imaging, advanced dentistry, spirometry, eye check up amongst others. 

MyCFO role 

MyCFO plays the role of a full fledged CFO for the Diagnostic Center which involves partnering the CEO to support the execution of Diagnostic Center’s Business Plan, implementing a high quality MIS on both the Finance and the operating side which involves defining, designing and tracking of KPI’s, providing visibility into financial and operating performance through visual dashboards to the CEO. MyCFO has also assisted the Center to implement best practices and process improvements through development of Standard Operating Procedures (SOP’s), implement performance measurement systems for the Finance team, streamlining working capital flows including setting credit controls, improve collection mechanisms from hospitals and monitoring cash flows through preparation of rolling cash flow forecasts. MyCFO also plays a commercial decision making role by being involved in equipment purchase decisions, opening of new centers and front ending discussions with existing and potential franchisees. 

How the Client benefitted 

MyCFO’s involvement helped Improve collections from 90 days to 30 days, resulted in cost savings of 20% in costs relating to re-agents and consumables, closure of non – profitable units based on unit level P&L and Break even point analysis, increased stickiness of clients through introduction of loyalty schemes based on our analysis on repeatability of clients, improved prices for certain tests buypto 30% based on accurate test level costing and improvement in sales efficiency by 10% through regular sales person performance tracking 

Hospital Careis amongst the top 10 hospital chains currently operating in India and operates 10 hospitals in Maharashtra with a bed capacity of approx 750. The chain is Private Equity backed and is in the middle of a significant expansion plan. Management expectations are for Finance and Accounts (F&A) department to provide visibility on Return on Investments from the new facilities, capacity utilization, hospital profitability and Return on Capital Employed (ROCE). The Hospital also runs ‘health care delivery’ centers and specialty labs within each of the hospitals that they operate.

MyCFO role 

The Hospital Chain and the Private Equity Fund have recently engaged MyCFO to Benchmark the F&A’s staff capability with the best practice run hospitals. The role involves documenting the key outputs delivered by key F&A staff currently, their frequency and an assessment of the quality of such output, best possible organization structure in F&A to support the execution of Hospital Care’s Business Plan, Possible re-deployment of resources to enable more and better quality output, with the same F&A staff strength, Evaluation of what tasks may need to be executed by the chain’s F&A in the next 12 months, along with an assessment of which of these tasks can be carried out by existing F&A team and which ones may need external assistance. The objective of the study is to recommend ‘SMART’ measures to improve Finance Effectiveness.

How the Client benefitted 

MyCFO’s involvement helped Hospital Care to redeploy their team’s time from routine activities to those that resulted improvement of Finance Department effectiveness and allowed them to free up man power through implementation of systems and better utilization of current processes.

Implant India is an exclusive distributor of orthopedic implants and joint replacement products. The parent company is a leader in the manufacture and distribution of medical implants. The group is amongst the top 3 companies in this space globally. 

MyCFO role 

MyCFO role involves acting as the sounding board to the business team at Implant India. The role involves helping the management with a 3 year business plan, cash flow forecasting and fund management, inventory control, distributor evaluation and decision making based return on investment calculations, driving the finance agenda for Implant India, Product costing and fixing pricing and to play the role of a partner to the CEO/ business. 

How the Client benefitted 

MyCFO’s involvement has helped in 15% reduction in inventory holding through better visibility on implant consumption patterns, 10% improvement in sales through better distributor performance management, cash flow improvements by 12% through reduction in debtor days, 25% improvement in order to dispatch turn around time, implementation of bar coding system to help track inventory movement