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LUXHOMES BACK FROM THE BRINK

Luxhomes is a home building and improvement material supplier. Their products are typically targeted at affluent
households who are looking to add an element of novelty and luxury to their homes. Luxhomes was established in
2002 and has since gained a reputation for good quality and extensive range of products. Over the last few years
however growth has been nominal.
Luxhomes has been suffering severe cash problems with their lines of credit already stretched out to the maximum.
Luxhomes has approached you to help revive the business and bring it back to growth and profitability. After
extensive research the fact sheet that has provided to you by your diligence team reads as follows:
1. The market size for Luxhomes products in India is approximately INR 3000 Crores and likely to grow to over
INR 10000 Cr by 2020
2. The products being new to Indian consumer are currently often not in home owners consideration set and
customers often need to be educated about the availability and benefits of the products
3. Luxhomes offers over 400 SKUs as a part of almost 14 different collections
4. Luxhomes has appointed dealers throughout the country numbering to almost 350. Dealers act as both sales
coordinators as well as collection points.
5. Luxhomes procures high end products from manufacturers across Europe, North America and China.
Luxhomes does not manufacture any of the products except for ancillaries needed during installation.
6. Installation and post installation service is provided by Luxhomes.
7. Installation is done by contractors specifically trained by Luxhomes.
8. Luxhomes annual revenues are INR 80 Cr.
9. The inventory held is INR 40 Cr.
10. Gross margins for the year 2013-14 were at 33% but had reduced to 31% in the 2014-15 and further to 30%
in the year 2105-16.
11. Revenues over the same period were nearly steady at INR 80 Cr.

Luxhomes Business structure


Luxhomes has divided its business into 2 categories reflecting the nature of the selling process i.e. B2B and B2C. The
B2B vertical is named Projects and the B2C vertical is named Homes.
Currently the split between B2B and B2C verticals is 30:70.
The average ticket size for B2B sales is INR 2 million and B2C is around INR 30000.
The sales team for B2B sales has 9 members and B2C sales has 62 team members.
B2B sales are primarily made to builders for premium apartments and bungalows. B2C sales are typically to
homeowners, interior designers etc.

Problem Statement as verbalised by Luxhomes


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Availability is poor and sales team is often not confident that material will be available of time.
Cash is scarce, credit is expensive and difficult to acquire.
Customers have often been turned away due to long lead times.
Builders have long credit terms for the B2B business hence acquiring more business leads to cash leakage in
the short term.

Develop a Proposal for a Business Consulting Assignment to guide Luxhomes out of their problems and equip them
for future growth. Luxhomes is open to considering changes wherever necessary (strategy, operations, sales etc.).
1. Recommendations must be backed by analysis and/or data. Make justifiable assumptions wherever
necessary.
2. All recommendations must take cognizance of Luxhomes current position and other market realities.
3. Recommendations must be actionable and implementation plan must contain sequence of implementation.
4. All deliverables expected from you during the course of the assignment must be clearly stated.