Showing posts with label CFO. Show all posts
Showing posts with label CFO. Show all posts

Monday, March 10, 2014

Sitting is NEW Smoking then What is NEW Solvency Ratio ?

" Sitting is NEW Smoking. " Rujuta Diwekar leading diet consultant writes in her new book - 'Dont Lose Out, Work Out'.  

We all know and believe that smoking can cause serious diseases to the smoker likewise if you remain seated for longer , poorer  your health & you may die earlier, no matter how fit you are. This is a new scientific research. Physical activities through out the day is necessary to remain fitter and avoid many modern day diseases.  

Applying this research to our topic of Customer Experience (CX);

Customer Experience Index is NEW Solvency Ratio. Yes this is also true.  You may have very good EBIDTA margin , Current ratio , DSCR , ROCE, and PAT but if your CX Index if not healthy, all these robust ratios are just temporary. CX Index will indicate whether these health will be maintained , is improving or deteriorating. 

Problem is , like we don't measure how many hours we sit during the day, we even don't measure CX index of our enterprise.  Things we don't measure , we don't focus upon. But the fact remains , all our critical financial ratios are ultimately dependent upon our Customer Experience Index. 

Better CX enables more sales, quick sales TAT, lower marketing cost, better margins, better cash flow, lower debt, higher margins means better stock valuation, attracts more capital. CX Index is really critical measure of enterprise health. It can also be used as preventive measures to stop deterioration of financial health. In can tell in advance state of financial health to expect. 

You can measure CX Index by NPS , CES or combination of the two or define your own CX scorecard. You can do it in more detailed way by measuring experiences at all the touch points, different customer segments/persona, different product wise. More intense the scorecard ,  more it will be actionable. 

Before your CFO tells you state of your enterprise's health your Chief Experience Officer (CExO) {Of-course if you have one} must tell you that.

Next time before you think of smoking , think of sitting and before you think of financial solvency ratios , think of CX Index. 

Thursday, August 8, 2013

What Mr Raghuram Rajan Cant Do

RBI Governor cant manage inflation. It is a myth we all are living with. Even present Governor's sustained efforts are not yielding the results. This also proves solution lies somewhere else. 

Role of Mr. Raghuram Rajan is to convey to the Govt that bottlenecks in the economy is the real problem for inflation , resultant erosion of rupee value , lower GDP and Current Account Deficit (CAD). 

Hoping that RBI and its governor can do wonders with mere monetary policy is nothing but day dreaming and in-actin at all other levels. 

In any company , CFO can create value upto an extent but even CFO can't do anything unless there is a efficient production system  , product innovation at regular intervals, flawless logistics , sufficient profit margin which enables future investments without much of the unsustainable debt. If these aspects are managed by the CEO and the management , CFO can add some value by capital structuring , lower debt cost (this again depends on performance of the company not entirely in the hands of CFO ) , raising money from various sources , budgeting & allocation etc.   However CFO cant act as a driver.

We are expecting RBI to drive our economy ,  manage inflation , manage rupee value and control CAD !!! All these are interlinked and only way to break the same is quick decisions , transparency and progressive policies at all level of the Govt. We need action on war footing but we are hardly taking any action, forget right action. 

Indecisiveness and lack of imagination in Govt cant be substituted by ably qualified and young RBI Governor. 

Saturday, August 4, 2012

Are there any lessons from the death of Mr. Lalit Sheth ??


Our heartfelt tribute to Mr. Lalit Sheth (Owner of Raj Travels). This is very unfortunate incidence and shaken many who are in business world.

Are there any lessons entrepreneurs can learn from his sudden and  tragic death ?

Well I think many.

Borrowing is easy but its servicing of debt and repayment of debt drown many families. Be it farmers in interior Maharashtra or entrepreneurs like Lalit Sheth, unmanageable debt is a killer.

We have many many cases of NPA and over borrowing and situation is close to alarming. As long as cash flow is sustained (not necessarily profit) one would not realise the gravity of situation.

How analysis of viability of the project is critical and me too kind of approach is disastrous. I have also known many such cases where entrepreneurs merely on the basis of gut feel ventured into the project , borrowed heavily than the project can sustain and ultimately  they had to sale their even their personal assets , faced legal battle to save their mortgaged home and suffered socially enormously.

Lenders and bankers are also not playing proactive and supportive roles while lending and during the tenure of the loan. They have access to the critical data and can very well play a vital proactive role more than just collector of interest and then filing suit when something goes wrong.  Prevention of foreseen disaster is a joint responsibility.

This kind of financial status is also very difficult to manage socially. There is a club run by a CA made up of entrepreneurs who are facing bank’s action and whose assets have become NPA. This kind of club helps their family members to realise they are not alone and learns how to face the reality and even come out of the same also.

Having a strong internal CFO is a must these days. I know many entrepreneurs in SME segment who do not understand the reading and implication of their balance sheet. Its very dangerous. Entrepreneurs must know their financial status i.e. actual and not fake as shown to bankers /tax authorities. Alternate MUST have CFO, absolutely dependable and proactive. He must see problem coming, warn the management /owner and know the corrective measures. SEBI is making efforts to spread investor education on a large scale but there is also strong need for entrepreneur education.  Everyone is working for money but ignorance about its PLAY is wide spread.

Last but not least, I do not know what is the brand value of the Raj Travels? Must be very high. Such a great asset could have been leveraged to taken care of liabilities, atleast some.  This is where CFO or Investment Banker can be of great help. Do you know what your real assets are !!!

This is written merely with the public information about Mr. Sheth’s grave financial situation we all have from news papers. No advice or analysis of his real situation. This write up might benefit some readers.