1.

Current state

<generic intro>There is lack of communication within the management itself as different departments
are not aware of reasons why certain methods/<things> are imposed which makes it difficult for many
other departments. The lack of transparency causes internal miscommunication which in turn affects
the entire company and its process.

There is a reduction in the revenue generation potential. Revenue fell from $1136.80m to $1014.25m

As per annexure 6, it takes

 323 day to convert raw materials to cash (mean for most industries is 94 days)
 114 days to convert inventory to sales (mean for most industries is 91 days)
 Receivable cycle is about 316 days (mean for most industries is 103 days)
 Days payable outstanding is about 108 days (mean for most industries is 99 days)

Here we can see that it takes a large amount of time before the raw material is converted to final
product, then sales and make profits compared to the industry mean. Market lead time is very high,
which makes it difficult for the company to absorb the market price fluctuations, hence loses a good
amount of revenue.

Another important concern is that the time from which order is placed to the time when the customer
receives the product is very high, which will also have a negative impact. This has another problem that
during the month ends, the delivery of the final products become a problem and expense increases in
order to get the orders delivered within the time.

End products that use high Nickel content are vulnerable to price fluctuations. Nickel price has been
between $15k and $10k per ton from 2nd quarter of 2015, with very small change from 2016. Lead time
for Nickel is 3 months, which is another disadvantage. Some customers take advantage of this
fluctuations for their advantage.

Lack of transparency in the final pricing of products is causing some <dislike> among some customers.

10-15% product comes out as not up to the quality standards which means reduction in revenue from
that 10-15% products.

<imo main issue> The order book is not checked properly, which means the month starts with less than
10% of the orders and then it builds up causing <difficulty> as the orders keep coming.

The management efficiency is also very low:

 Asset turnover ratio has been decreasing and has been even 50% lower than the industry means
in 2014-15 and 2015-16.
 Inventory turnover ratio has increased, but not significantly and still lower than most other
companies, and lower than industry mean.
 2. Identification of addressable issues

Most issues inevitably lead to same problem; increase in cost and no significant increase in revenue.

The revenue has dropped by 11% compared to last year. Profits dropped from $138.4m to $94.03m

Entire supply chain management is not efficient

From annexure 7, it is found that the days receivable has been increasing YoY from just above 50 in 2013
to more than 300 in 2016. This shows that the disposable income with the company is lower over time,
which can have adverse effect on company’s future investment plans.

Outbound trucks-During 1st week of a month, the maximum number of trucks required is 435, while at
the end of the month, the maximum number of trucks required becomes 1335(more than 3 folds). This
means the production and hence the delivery increases drastically from the start of the month to the
end of the month, which calls for additional trucks and hence increases expenses.

Location Revenue Number of customers No of sales rep

North $262.31 101 4
East $344.53 96 6
West $171.89 95 3
South $264.52 68 5
Total $1014.25 332 18

Expansion plans: Consumer durables market is untapped eg-India