ABSTRACT(to be changed at last)

The present business scenario is one wherein constant change is the name of the game. For any firm to survive in any industry there has to be constant monitoring and improvement of its systems and operations. When a firm faces severe cash crisis or a consistent downtrend in its operating profits or net worth, it is on its way to becoming insolvent. The slide cannot be prevented unless appropriate actions, both internal and external, are initiated to change the future prospects. This process of bringing about a revival in the firms fortunes is what is termed as Turnaround Management. The literature on Corporate Turnaround has grown tremendously over the past four decade. However there are still many questions remain unanswered in regards to the concept of Corporate Turnaround. There are many conflicting results on the existing literature and many theoretical as well as empirical gaps, especially in respect to the turnaround research in developing countries, were still left unexplored. This project focuses on the Turnaround strategy that Pascal Group has adopted in order to bring the company in its now successful form. It was found that debt restructuring; changes in market entry and operating-asset reduction strategy were three among seven strategy- related factors that contributed significantly towards the business performance of Pascal group. The study also found that company size and government assistance do moderate the relationship between strategy related factors and business performance.

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INTRODUCTION Background Doug Hall in "Jump Start Your Business Brain" reported some fascinating statistics. Estimates of new product or service success rates vary widely depending on the industry studied and the definition of success. A review of academic studies and US census data found that on average about 75% of new businesses, products or services fail and are discontinued within two to five years. This means that you basically have only a 25% probability of success with your new advertising, product, service or business concept. A venture capitalist reported that 17% of the companies his firm invests in succeed. This would actually be an improvement over the 10% rate reported in the May-June, 97 "Research Technology Management" reviews of the results of 10 major venture capital firms. A 10-25% chance of success is terrible odds. Most business owners would have a greater probability of success if they went to a Las Vegas casino and gambled their investments. The following chart details the various probabilities of winning at gambling games: 1. Slot machines-32% probability of winning 2. Horse racing-41% 3. Blackjack (as usually played)-45% 4. Roulette-47% 5. Blackjack (perfect strategy and card counting)-50% Brian Tracy, in an article titled "How to Succeed in Business", cited even worse odds. He stated that 99% of businesses started by people lacking business experience fail within the first two to three years. However, and equally surprising, 80% of businesses started by experienced businesspeople succeed. He went on to explain the reason why there was such a dramatic difference in the failure of the inexperienced compared to the experienced business people: According to Dunn and Bradstreet, the Number One Reason Businesses in America Fail

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Dunn and Bradstreet's research shows that 96% of businesses in America fail due to Managerial Incompetence. In order to understand what exactly is meant by managerial incompetence, following are the listed top 12 reasons business fails from research by Jessie Hagen of U.S. Bank: Top 12 Reasons Why Businesses Fail?

82% Poor cash flow management skills/poor understanding of cash flow. 79% Starting out with too little money 78% Lack of a well-developed business plan, including insufficient research on the

business before starting it.

77% Not pricing properly - failure to include all necessary items when setting prices. 73% Being overly optimistic about achievable sales, money required and about what

needs to be done to be successful.

70% Not recognizing, or ignoring, what they don't do well and not seeking help from

those who do.

64% Minimizing the importance of promoting the business properly. 63% Insufficient relevant and applicable business experience. 58% Inability to delegate properly - micro-managing work given to others or over

delegating and abdicating important management responsibilities.

56% Hiring the wrong people - clones of themselves and not people with

complementary skills, or hiring friends and relatives.

55% Not understanding who your competitor is or ignoring competition. 47% Too much focus and reliance on one customer/client.

Companies are one of major contributors to the national income. Aside from taxes, they provide jobs where many people work, which then pay taxes to the government. Companies also contribute to the foreign exchange when they exported their goods to other countries. Bankrupt companies on the other hand, they no longer contribute anything. They do not pay their taxes; they retrench their workers, which could turn into social and political problems if these people did not find jobs soon. These bankrupt companies also do not pay their loans, which could add problems to the loan institution (Bum & Redwood, 2003). Accumulation of the large amounts of non-performing loan in the long term might erode bank's capital and performance, which could further weaken the banking system as a whole (Vlieghe, 2002). In addition, they also do not generate foreign currency since they no
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longer produce anything. The financial crisis that was soon followed by the economic crisis affected the South East Asian economies by the end of 1997 and drastically crippled the region's economy. Only India and China are the two major economies that withstand the crisis with sheer confidence in those days. Many companies, which had enjoyed a decade of tremendous economic development, suddenly faced imminent bankruptcy and many were eventually did. This situation forced managers of these troubled firms to rethink on better strategies in stopping the decline. Some of them took the st rat egy of m ergers (S iti M aim on, 1999), some ret renched t hei r workers accompanied with additional pay cuts and congealed promotion

(Jayaseelan, 1998) and also restructuring their debt (Nantha, 1998). ). During recession, smaller companies usually were the most vulnerable in this situation, as companies with smaller market capitalization were disappearing at a significantly higher rate than the large ones (Baker & Kennedy, 2002), Shapiro & Khemani (1987) further added, that most of these exits for small companies were due to business failure.

However, business failures did not occur only during recession but during good times as well. Troubled companies simply went bankrupt regardless whether the economy is booming or in recession, although their number tends to increase during economic downturn.

The above arguments suggested the fact that corporate failure was just a part of 'business life. Some scholars (for e.g. Baker and Kennedy, 2002) even argued that such turnover of companies were needed and significant to the economic change since it would allow the reallocation of p roductive resources from inefficient (nonsurviving) companies to efficient (surviving) companies. However, the costs for bankruptcy filings were enormous, and the cost for the society would even greater as we saw it happened in the United States in the wake of the 2008 economic crisis. Therefore, a better understanding on the s u b j e c t o f C o r p o r a t e T u r n a r o u n d w h i c h w a s u s u a l l y t a k e n a s t h e l a s t r e s o r t t o e vade bankruptcy would be much needed especially in the context of developing nation.

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Issues relating to the researches done in Corporate Turnaround Strategies

Although the body of literature on Corporate Turnaround has been developing tremendously over the past four decades (see for e.g. Schendel, Patton & Riggs, 1976; Chowdury, 2002; Sim, 2009), controversies on research findings of the subject were far from being resolved. There are several crucial research issues within the field of Corporate Turnaround, which can be described as follows:

I. Research issues in terms of Lacking in Comprehensive Model

Since the early writing by Argenti (1976) and Schendel & Patton (1976), researches on the subject of Corporate Turnaround has been developing rapidly for the last four decades. However, the developments of the literature on the subject were mostly in the form of case studies or qualitative research. From l970s to 2000, Pandit (2000) found only 47 studies of Corporate Turnaround, which can be categorized as quantitative research.

Literatures of Corporate turnaround have shown that many researches on this subject were concerned about turnaround strategies (see for e.g., Hofer, 1980) both in the form of case studies or in quantitative method. For e.g., Hofer (1980) argued that troubled companies could adopt three different strategies such as asset reduction, cost reduction, and revenue generation in the effort to turnaround. Slatter (1984) suggested on using 10 different generic strategies in achieving turnaround success for troubled companies. Hofer (1980) and Slatter (1984) both suggested on matching the causes of declines with the appropriate turnaround strategies for Turnaround Companies. Zimmerman (1991) suggested on using three different types of turnaround strategies, which is cost reduction, product differentiation, and management empowerment, to achieve turnaround success.

Even in the context of small businesses, turnaround strategies remain to be the holy grail of Corporate turnaround research (see for e.g. Dee Dee & Vorhies, 1998;
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Michael & Robbins, 1998; Rasheed, 2005). This trend still cont i nues i n t he l i t erat ure of C orp or at e Tu rnar ound, as few of t h e l at es t p ub l icat i on on t hi s s ubj ect s t i l l concentrated on turnaround strategies as the main focus of their research (see for e.g. Smith, Wright & Huo,2008;Cater & Schwab, 2008).

There were scholars who studied other aspect of Corporate Turnaround, such as on factors that contributed to turnaround success. Bibeault (1982) for example, argued that improved management process, a viable business core, adequate bridge financing, and improved overall motivation were all the recipes for turnaround success. A study by Chan (1993) on 10 multinational companies found that replacement of CEO, drastic cost cutting, refocusing on business core, and emphasizing on future investment were significantly related to turnaround success. Th e ab o v e a r gum en t s h av e s ho wn t ha t r es e ar c h es o n C o rp o r at e Turnaround, though has been developing for the last four decades, were also have been scattered into many different topics within the context of the literature itself. In the context of turnaround strategies, many of the literature were engaged in retrenchment strategies (see for e.g. Robbins & Pearce, 1992; Pearce & Robbins, 1994; Smith, Wright & Huo, 2008), without considering other turnaround strategies, even in a single study. Even more, there were other aspects of turnaround strategies, which were still scantly researched such as the role of marketing and strategic selling in turnaround (Harker & Harker, 1998).

The above arguments have shown that there were very limited lumbers of researches that studied the concept of Corporate Turnaround in a holistic approach. Some researchers considered only turnaround strategies, while some other considered only the factors of turnaround success. There even much less articles discussing on the contextual . factors of Corporate Turnaround. This kind of research practice were bound to produce many weaknesses, as argued by Pandit (2000), since some research questions were ignored (those that were less studied) while other qu es t i on s w e re an s w e r ed t o o fr e qu ent l y ( s u ch as retrenchment strategy). These practices might be one of the reasons that many research findings on studies of Corporate Turnaround produced conflicting results, which will be discussed in the next section.
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a. Research Issues related to Controversies in Research Findings

Researches on Corporate Turnaround, especiall y in the aspect of turnaround strategies found many conflicting results in their findings.

Controversies on the research findings of turnaround strategies were particularly on the subject of Retrenchment. Retrenchment strategies were identified as the first stage of a two-stage process in Corporate Turnaround, in which the later was called as the recovery stage (Robbins & Pearce II, 1992). Retrenchment strategies, which usuall y consisted of liquidation, divestment, product elimination, and laying-off workers, was initially carried out to improve operational efficiency and cash flow. Several researches in Corporate Turnaround found that retrenchment strategies were argued to be a necessary step in the turnaround process and considered an important element in the turnaround success (Chowdury & Lang, 1996; Bruton & Rubanik, 1996; Umbreit, 1996; Vaz, 1996; Ba1gobin & Pandit, 2001). However, Barker III & Mone (1994) found little evidence to support the above proposition. Their research found that retrenchment gave no significant contribution towards performance as opposed to capital infusion and integration of the parent company. Castrogiovanni & Bruton (2000) also supported these findings. A study by Arogyaswamy & Yasai-Ardekani (1997), in support of the above proposition, found that retrenchment of work force and pay cuts, were both done by successful and non-successful turnaround firms alike. Their research also found that several firms actually managed to turnaround even without cutting their workforce or implementing pay cuts.

Aside from retrenchment, researches on Corporate Turnaround also p roduced confli ct ing res ul ts i n regards to Top M anagem ent C hanges in Turnaround Companies. Barker & Duhaime (1997) argued that managers across organization reacted differently and even sometimes inappropriately to decline (Hofer, 1980: Schendel & Patton, 1976). These top managers of Turnaround Companies usually failed from the very beginning to take appropriate changes in strategy, as part of their turnaround attempts (DAveni, 1989; Starbuck, Greve & Hedberg, 1978). Therefore, changes in top management such as CEO or Managing Director might be necessary to ensure
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appropriate strategies were correctly chosen and implemented to achieve turnaround success (Belcher & Nail, 2000; Umbreit, 1996; Balgobin & Pandit, 2001). Furthermore, changes in top management sometimes viewed as message to the outside world that serious turnaround effort was being pursued (Slatter, 1984).

In this context however, Mueller & BarkerIII (1997) found that Top M anagem ent C hanges were not a good predi ctor of s ucces s ful Corporate Turnaround as opposed to Strategic Leadership. This finding supported further by BarkerIII & Barr (2004) who argued that Top Management Changes were more likely to be found if the decline was caused by internal factors, or in some cases if the decline was, caused by external factors that was considered to be under m a n a ge m e n t c o n t r ol .

b. Limited Research in regards to the Contextual Factors Aside from strategies, there are other contextual factors that were argued by scholars, which might also influence the outcome of turnaround effort. These contextual factors such as Character of Senior Managers (Clapham, Schweni & Caldwell, 2005; O'Connor, 2006), cause of decline and Severity of the Crisis (Hofer, 1980), Government Assistance (Biebault, 1982), Company Size (Pant, 1991), the impact of Industry and Macroeconomic Factor (Slatter, 1984, Pandit, 2000), the Influence of Stakeholders and the Effect of I historical Strategy (Slatter, 1984), and Bridging Finance (Bibeault, 1982) were argued by Pundit (2000) as rarely being considered in the literature of Corporate Turnaround. In t he wake of fi na nci al cri s i s o f 2008, t he cont ex t ual fact or of Government Assistance has received major attention in business communities. The crisis that started in the United States, which initiated by the failure of sub-prime mortgage quickly spread out to other developed countries. The crisis forced governments of many developed economies to give assistance in the resuscitation of troubled companies and even influence the turnaround process itself. For example, the United States government launched a bailout package of US$. 85 billion in addition to taking over AIG, Fannie Mae and Freddie Mac (Hamid, 2009) and another US$ 50 billion to resuscitate General Motors. The Japanese . government provided another
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example in which they proactively assist the turnaround of Japanese Airlines (JAL) through the state-backed Enterprise, Turnaround Initiative Corporation of Japan and providing a bailout package to the amount of US$ 4.3 billion for the company (Takizawa & Yamashita, 2010). Literature on cases of Corporate Turnaround, as will be discussed further in later chapter, showed many cases of turnaround assisted by the government (s ee for e.g. Tayl or, 1999; Lee, 1999). The assi st ance given b y governm ent i n resuscitation of troubled companies was not only found in developed countries. There were cases in developing nation as well showing that government also influence the turnaround process, such as in Malaysia (Sim, 2009; Ali, 2010) and also Indonesia (Chou, 2000) during the last financial crisis of 1998. However, to what extent the government assistance influenced turnaround success has not been fully explored in the literature of Corporate Turnaround, let alone other contextual factors mentioned above. In conclusion, there were limited numb ers of res earch, which considered the whole aspects of the concept in the literature of Corporate Turnaround. Holistic approach in viewing the concept of Corporate Turnaround was rarely found in the existing literature on the subject. Pandit (2000) argued that by linking the content of strategies, the context in which they occur, and the process by which they were implemented, with additional support from the appropriate theory, a richer and better explanation on the. Concept of Corporate Turnaround could be acquired.

2. R esearch is sues in regards to t he M ethodologi cal Inadequaci es

in the aspect of Methodological Inadequacies, there were three research issues classified under this category, which are: (a) research issue relating to small number of sample size, (b) relating to inappropriate use of qualitative methodology, and (c) relating to the limited use of theory in studying the concept of Corporate Turnaround.

Scholars argued that many researches on Corporate Turnaround were lacking in terms of sufficient number of samples (Sudarsanam & Lai, 200; Pandit, 2000). They argued that these facts could limit the ability to generalize the research

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findings and its applicability especiall y i n regards to the implementation of effective turnaround strategies (Sudarsanam & Lai, 2001). Many researches on Corporate Turnaround conducted using small sample size with less than 50 companies, which were accepted in the literature as general research practices (Barker III & Barr, 2002). Pandit (2000) tabulated 47 studies of Corporate Turnaround and found only 12 of them using sample size with more than 30 companies. In regards to the research method, many researches on Corporate Turnaround were analyzed using qualitative method. Pandit (2000) argued that from 21 studies that he came across, only one was found to follow the well-established qualitative research protocol. Pandit (2000) further argued that it was not about which method was important, it was about the appropriate method that were used in order to correctly tackle the proposed research question in Corporate Turnaround. Scholars also argued that many researches on Corporate Turnaround were lacking in terms of theoretical guidance and failed to relate their findings with relevant theory (Pandit, 2000). Pandit(2000.) further stated, A central issue that the body of literature as a whole has failed to properly address is the identification and testing of links between the content of the turnaround strategies, the context in which they occur, and the process by which they are implemented. Such effort, if well executed could lead to richer explanations of the phenomenon". Pandit (2000) further argued that from 47 studies that he had reviewed only three managed to relate their studies with relevant existing theories. According to Pandit (2000), research on Corporate Turnaround could provide better explanation by linking the study to the existing relevant theories. In the aspect of Strategic management, there are several theories that could be linked to the concept of Corporate Turnaround. For example, Agency Theory could be used to explain the phenomena of changes in top management, which usually happened in Turnaround Companies. Resource-based theory, as proposed by Pandit (2000) could also be used to explain the importance of resources in the implementation of turnaround strategies. Survival-based Theory could be utilized to explain the use of retrenchment strategy by troubled firms in dealing with turnaround. However, these theories were rarel y being considered in the researches of Corporate Turnaround.
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Lately however, several researches on Corporate Turnaround had started to relate their studies with relevant existing theories. For example, two studies by Bruton, Ahlstrom & Wan (2001, 2003), managed to relate Institutional Theory with their research in explaining the turnaround process of Chinese-owned firms. A study of turnaround by Chowdury (2002), who approached the concept using the Stage Theory perspective, was also another example in this case. However, the use of relevant theories was still very limited in the literature of Corporate Turnaround.

3. Research Issues in the Aspect of Empirical Findings

Although the literature on the subject of Corporate Turnaround has been growing remarkably well over the last few decades, however these researches were mainly performed within the context of western businesses. Research on Corporate Turnaround in non-western setting, such as in Asian countries has been very limited if not scarce (O'Neill & Rondinelli, 2004; Fisher, Lee & Johns, 2004; Bruton, Ahlstrom & Wan, 2001). It i s wel l unde rs t ood t hat t here we re s i gni fi cant di ffe renc es i n management practices between Western and non-Western businesses particularly the East Asia region (Bruton., et al., 2001). In the west, small businesses usually start as family business, in which as they grew larger, they usually raise money from the public equity market. Thus, the role of the family often diminished as the firm grows. Contrary to the west, East Asian businesses, in this case Chinese businesses in particular, kept their family role intact even as the company grew (Chen, 2001). This kind of business practices usually resulted in situation where the owner also acted as the manager of the firm, and who were given much discretion in making decision. This strong position of the owner-manager, were further empowered by strong family control over many important aspects of the firm, even in the case of public firm (Bachman, 2001; Young, et al., 2001). This is one of the differences in terms of top management structure between Western and East Asian businesses, especially in regards to Chinese businesses. Chinese businesses were also found to have large networking channel of cooperation among their typical firms (Claessens, Djankov & Lang, 2000; Kao, 1993,) in which they enjoyed having businesses among themselves. Their
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preference on short-term financing over the longer-ones somehow has hindered the development of long-term capital market, such as bond market in Asia until recently. Even in terms of financing, they would still prefer to acquire the capital from their own group of businesses, such as being practiced in India prior to the economic crisis of 1998 (Santoso, et al_, 2005). This kind of business practices has definitely created differences in the capital structure of Asian businesses in comparison to the west (Chui, Lloyd & Kwok, 2002).

These differences in terms or management structure, financing. and even the way of doing business would influence some of the practices of Corporate Turnaround in Asian region as well. A research by Bruton, Ahlstrom & Wan (2001) involving companies in Hong Kong and Thailand, found that changes in top management, which usually practiced by western companies, simply did not occur in Hong Kong and Thailand. They further argued that even those changes occurred, the pool of turnaround managers to replace the CEO were not readily available. Bruton, et al. (2001) also found that the turnaround effort appeared to be slower in Asia compared to their western counterparts.

Further research by Bruton, Ahlstrom & Wan (2003) involving companies in Hong Kong, Singapore and Taiwan, found that smaller companies were easier to achieve turnaround success compared to larger firms. They also found that certain retrenchment activities might have a significant impact towards the turnaround effort. Furthermore they also found that Turnaround Companies in these countries gain much needed support especially from their distributors due to their long-term business relationship. In contrast, Turnaround Companies in the western setting would not get much needed support especiall y from their suppliers due to ambiguity of not being paid. In support to these research findings from Asian countries, Bruton & Rubanik (1997) also found that top management change in Russian firms were also more difficult compared to American films. These differences in changing top management practices were later confirmed by Fisher, Lee & Johns (2004), who found that ownership change were more common practice for Australian companies (assumed
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to received western influence) than Singaporean companies (East Asian influence), though they did not find support that such changes would positively affect performance, However, in contradiction to the findings of

Bruton, Ahlstrom & Wan (2003); Fisher, Lee & Johns (2004) found that there was no significant difference in terms of the speed of turnaround between Australian and Singaporean companies. They also found no empirical support for both arguments that retrenchment might contribute to the improved performance in turnaround, and changes in top management were seen as important strategy in turnaround.

The study by Siti Maimon, et al., (1988) looked further into the causes of decline and which turnaround strategies that were popularly adopted by Troubled companies during turnaround. Their subsequent research in 1999, which also looked into causes and strategies of Turnaround Companies, found that changes in market demand and external factors beyond management control were both the main causes of the crisis (Siti Maimon, 1999). Some other causes were found to be quite significant, such as poor management, inadequate financial control, and competition arising from product feature, adverse movement in commodity prices, big project difficulties and high gearing. The research also found that among the strategizes, which popularly adopted by Turnaround Companies were de b t r es t r uc t u ri n g an d c os t r edu ct i on , an d t h en fol l o we d b y c h an ge of m an a gem ent, centralized financial control, decentralization, asset reduction, growth via acquisition, product market reorientation, improved marketing and additional investment. However, the objectives of both of these studies were only to observe which strategies were commonly adopted, and not which Strategies significantly contributed to performance. As discussed above, it would be a fallacy to assume that research findings in the western context might also be applicable to other parts of the world, especially in Asia in regards to Corporate Turnaround. Many significant differences do exist between these two business settings, such as differences in management structure, differences in financial structure, and especiall y differences in the way of

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doing businesses. These differences would definitely influence the practices or Corporate Turnaround in this region as several researches had shown. Discussion on the three research issues in regards to the literature Corporate Turnaround above has presented us with inconclusive and unsettled issues, which could be further explored in the effort to better understanding of the subject. However, the research issues would be in a much better foundation if it has a Firm theoretical justification to complement it.

Need for the study In Turnaround step 1, the company is exposed to a number of causes of business failure. Symptoms of a sick or failing business include: Cash flow difficulties such as frequent difficulties in making payroll or vendors

continually calling about getting paid Low morale of employees and higher than normal turnover Nervous banker with possible threats of calling your loan Flat sales or worse, declining at a significant rate Always fire fighting and problem solving You find you are continually in a crisis management mode Perhaps a confused sense of direction or no consistent strategy for the business

How sick is your business.are you in the Zone of Insolvency? First of all, what is the Zone of Insolvency? While there is not a clear-cut test for insolvency, a corporation or business can be said to be in the "zone" or "vicinity" of insolvency if its liabilities exceed its assets (balance sheet insolvency) or it is unable to pay its debts as they come due (equitable insolvency).

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It is time to dig into the financial statements, specifically your most recent Balance Sheet. Before we do, however, we must be very confident that financial statements are accurate. This can be one of the biggest problems with distressed businesses. If the financial statements are not accurate, then the remainder of the Critical Care for Companies Turnaround Program will be very difficult to pull off. How do we know if financial statements are accurate? Most failed companies have non-existent or poor financial reporting systems. The company may lack accurate information in three critical areas: profits, costs and cash position. Without good budgetary controls, you never know how profitable you are or even if you are operating above or below your break-even point. Without a good costing system, you won't understand how key activities relate to your bottom-line profits. And without good cash flow projections, you can never anticipate the next peak demand for cash or how you will meet it. Businesses that operate without audited statements are far more prone to financial distortions, whether intentional or not. Your statements may be nothing more than erroneous information. Now is the time to review your financial statements-perhaps with the assistance of your accountant. Note: many accounts are very good at preparing taxes but not good at financial analysis. When digging into the financials, here are a few key areas to run a "reality check" to see if we will need a more detailed audit of books.

Have you overestimated inventories? How about accounts receivable? Check the accuracy of the company's financial

statements (Balance Sheet in this case) as a starting point. How do your financials compare with your Receivables Aging Report? Have your overvalued receivables?

Do sales (on the Income Statement) seem accurate? What about expenses, do they seem accurate? Do sales (on the Income Statement) seem accurate? What about expenses, do they seem accurate?

Remember, all you are trying to do at this point in the analysis is get a degree of confidence that your financials are accurate. If you even sense that they are distorted, get a qualified accountant in ASAP to reconstruct financial statements!!
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Liquidity Ratios: Assuming that financials are accurate, we can now dig into a couple of simple ratios to determine the liquidity of your business. Liquidity ratios measure the amount of cash available to cover both current and long-term expenses. These ratios are especially important in keeping your business alive. If you run out of cash and your business is struggling, then chances are that the game will be over as it will be very difficult to raise more cash for your struggling business. Current Ratio: Current Assets divided by Current Liabilities: The generally accepted standard is a ratio of 2:1. This means that you have $2 of assets for every $1 of liabilities. A very low ratio means you will be having difficulty paying off your creditors and maintaining adequate cash flow in your business. It also means you are probably in the Zone of Insolvency and that is a very bad place to be!

Acid Test or Quick Ratio: The same as current ratio except it eliminates inventory so that only cash and accounts receivable are counted. If you want to be extra conservative when you run this calculation, reduce your receivables by some percentage (10-30% depending on your confidence in collecting them). Cash + Accounts Receivable divided by Current Liabilities: A safe margin would be at least 1:1 or $1 of Cash & Accounts Receivable for every $1 of Current Liabilities. Working Capital: Working capital is the money you must have to operate your business on a daily basis-to pay salaries and other bills.

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Working capital=current assets-current liabilities Any one of the previous calculations can give you more clarity into the liquidity of your business. Remember, liquidity is like the gas in your car's tank. When you are out of gas, everything stops! What are officers and directors responsibilities while in the Zone of Insolvency and how does operating in the Zone differ from business as usual? There is perhaps no other time when officers and directors are more concerned about personal liability for their decisions on behalf of a business, than when the business begins to experience financial problems. Officers and directors are accustomed to evaluating the best interest of the businesses' shareholders in their regular decision making process; however, once a corporation becomes insolvent, officers and directors must also consider the interests of creditors. If you have determined that your business is in the Zone of Insolvency and since I am not an attorney, I would strongly recommend that you seek competent legal council as this is very dangerous ground to be on. You can be held personally liable for your business decisions. Of particular concern is something called Fraudulent Conveyance of Assets. What does Fraudulent Conveyance of Assets mean? The illegal transfer of property to another party in order to defer, hinder or defraud creditors. In order to be found guilty of fraudulent conveyance, it must be proven that the accused's intention for transferring the property was to put it out of reach of a known creditor. If you are in the Zone of Insolvency you must be very careful in this area and, as already stated, I would highly recommend you consult an attorney if you are in the Zone. This can be a very tricky area and can land you in jail!! "Insanity is doing what you've always done and not expecting to get what you've always got." ---Albert Einstein We are finally getting to the point where the turnaround program can be launched. There is only one last stepbut it is very important. And the step is all about YOU.

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Are you really ready to change or, as Einstein says in the quote above, do you think

this time it will be different and you will get a superior outcome from doing business the "same old way"?

Can you make the tough decisions to be successful? Are you objective enough to pull this off? Do you have the energy for a turnaround? Does your family have the energy to support you in this project? Can you really be the turnaround leader for your business?

What do Turnaround managers do? "If you're the CEO of a struggling business, let's hope we never meet. I'm a turnaround guy. When I arrive, you leave, and profits return. You've probably smarter than me, undoubtedly know your industry better, and may be a superior leader. But I've fixed more businesses. I don't cling to unrealistic hopes or hesitate to change things. Any fresh set of eyes, not just mine, will simply do the rational and obvious things, getting results before those nasty creditors padlock your doors. We outsiders, having seen it all before, free of your emotional baggage, find the fixes and do them with comfort and confidence. The process would nauseate you. This faltering child was yours. We discipline and save the kid. You and I, together, might celebrate this youth's graduation much later. But for now, stand aside!!" Gary Sutton, author of "The Six-Month Fix-Adventures in Rescuing Failing Companies" Sutton points out the key differences between a turnaround specialist and the current CEO. Those differences are objectivity and the ability to see the situation with fresh eyes. So, what makes you think you can be objective? What makes you think you will be able to see your situation with fresh eyes? Since you have been living with your business problems for some time now, it may be very difficult to have these qualities. However, that does not mean you must go out and hire a turnaround specialist.

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We will address this point in more depth when we get into the Turnaround Team discussion. For now just realize that some outside assistance may be necessary. Perhaps a family friend, a board member, volunteers from a business organization such as the SBA's SCORE Program, etc. You may not be as objective as you need to be and your eyes can't possibly be fresh after what you have been through!! Critical Success Factors Necessary for a Turnaround Critical Success Factors (CSFs) are factors that ABSOLUTELY MUST BE IN PLACE for a successful outcome with the turnaround. The quote below gives a great overview of the Critical Success Factors for a turnaround. "You have to have four key elements to make the turnaround work. You've got to have the willingness. This means that the new man who is brought in to do the turnaround has to have absolute control. He has to report directly to the board, but he has to have the maximum flexibility that is given to any management. You cannot manage a turnaround by committee. It is strictly a star business, and you have to have a board that is willing to go along with that. The second thing is that he has to have something to work with. There has to be an economic reason for the business to be there. In other words, if you are making buggy whips, you can be the most efficient buggy-whip maker in the world; but, if there is no demand for buggies, you should recognize that, get out of the business, and get into something else. The third key element is the money and resources to turn around, to become a competitive entity. And the final ingredient is the motivation of people. You have to be able to attract and motivate top people in the key areas in which you are making the turnaround." Bob Brown quoted by Donald Bibeault, author of "Corporate Turnaround" Critical Success Factor Summary 1. Absolute Control. You can't manage a turnaround by committee! When the ship is

sinking, the captain does not practice leadership by consensus. 2. Is there a reason for the business to even be in business? What is your competitive

advantage? Why should customers buy from you versus your competition? Do you really have or can you quickly find a sustainable competitive advantage?

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3.

Money and resources to work with.and I would add time. It will be very difficult to

turn the business if you will run out of cash in 30 days or less. In the same token, there are many strategies to finance a turnaround using internally generated sources of cash. We will get into those strategies later in this program when we discuss "Financing the Turnaround". 4. The final CSF is motivation of your team and employees. If they are not motivated to

make this thing work. If the majority of your people are running scared with their resumes on the street and expending great levels energy in trying to locate alternative employment, the turnaround will not work. Denial Did you know that most businesses fail not because they can't solve their problems but because they won't see their problems? It may surprise you, but even the most seasoned business owners prefer blinders to reality when their businesses begin to slide. Nor will it be easy to convince you to act even when the signals clearly point to future disaster. Like most owners or senior leaders you won't, on your own initiative, accept the facts of your situation for what they are. A troubled company first needs a crisis, and until that crisis comes, they tolerate trouble. What may cause you to fight reality? Ego, Optimism, and as we have already mentioned, you simply may be too close to the problem. The ability to detect and act quickly to solve problems is the essence of good turnaround management.

Moment of Truth So the questions on the table are these: Has your business come to its moment of truth? Are you in such a financial crisis that you can't stall anymore? Can you put ego and denial behind you, face the facts and get going with this turnaround? Are the other Critical Success Factors previously discussed in this section in place? One Final QuestionAre You Suffering from Burnout? The definition of Burnout Burnout is a debilitating psychological condition of mental and/or physical exhaustion caused by excessive and prolonged stress resulting in:
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Depleted energy and emotional exhaustion Lowered resistance to illness Increased depersonalization in interpersonal relationships Increased dissatisfaction and pessimism Increased absenteeism and work inefficiency

Guess What? Since you are in a very stressful business situation where you are contemplating doing a turnaround, most likely you are also approaching Burnoutor have arrived! The problem with being in this condition (in addition to all of the points above) is the fact that you will make substandard decisions. And you can't afford to be weak in this areanot now. Here is what I would recommend. First go to this website on Burnout. It is one of the best that I have found. There you can take a test called "Checking Yourself for Burnout". It will just take a few minutes but will give you insight into the possible condition of Burnout. In addition, there are a number of good articles to assist with you in treating Burnout. Finally, if you are "off the scale" in terms of this condition, please get professional counselling assistance. If you are suffering from Burnout and it goes untreated, you will put yourself and your business at great levels of additional risk! Objectives of the Study As Pandit proposed earlier, richer explanations on the subject of Corporate Turnaround might be required if researchers were able to establish proper links between the content of the strategies, the context in which they occurred and the process in which they were implemented. Therefore, the primary objective of the research is to study the factors, both in terms of corporate strategies(content) as well as non-corporate strategies(context), which might contribute to the improvement of Business Performance in Corporate turnaround. the specific objectives of the project are:

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1. To determine the effects of Strategy-related Factors in Corporate Turnaround towards Business Performance. 2. To determine the moderating effect of: a. Company Size (non-strategy internal contextual factor) towards the relationship between Corporate Turnaround Strategies and Business Performance. b. Government Assistance (non-strategy external contextual factor), towards the relationship between Corporate Turnaround Strategies and Business Performance. Research Methodolgy As this report proposed to investigate the relationship among factors of interest, which in this case between Independent and Moderating Variables towards Dependent Variable, thus the nature of the study would be hypothesis testing (analytical and predictive), along with correlation. Two types of data were taken. The primary data comprises of sources from the personnel and employees of the company while the secondary data were fetched from the companys websites, along with the questionnaire rounds conducted among the students of Indian Institute of Finance. Limitations of the Study The following limitations are there in this report: There was a Lack of Quality of data available. There was lack of sufficient primary data available. Due to busy schedules of my Corporate Guide, there was insufficient time for the technical analysis done with the help of him. Lack of technical specialized knowledge about the industry. There were other factors also which can affect the Business Performance of a company such as Changes in Top Management, the Characters of Senior Managers, Industry Effect and the Macro Economic Factors but due to unavailability of sufficient time and limited resources, these factors were assumed to be constant all through the Organisation. And lastly, the completion time of the project was a challenge.
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Organization of the study

Pascal Physical Laboratory is one of the best calibration and testing laboratories in India catering to the growing needs of the industry. It is the subsidiary of Pascal Group. The calibration services for Torque, Force, Pressure, Mass, Volume and Density have been widely used and recognized as the best by various customers from many different sectors. The key focus area is to develop and provide world-class calibration and testing facilities with on-time and friendly customer service. From building one of the widely used Pascal Torque, Force & Pressure Testing, Measurement and Calibration Systems to moving towards providing services for the growing need in industry for traceability, credibility and confidence of measurement: this was howPascal Physical Laboratory was born.

History: Founded in 2008, Pascal Physical Laboratory provides a dedicated calibration and testing services to all industries whilst maintaining a reputation standing for quality, cost, effectiveness and reliability. Extensive facilities coupled with documented procedures and automated systems, it contribute towards a quality, cost effective service with quick turnaround time. Ongoing enhancements to the laboratory and close customer relations enable the company to offer their customers effective solutions for calibration and testing requirements.

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Vision
To be a globally recognised company for quality products and to create new benchmarks in Quality and Technology.

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Mission
To grow exponentially as a company keeping our values & ethics intact & creating a favourable atmosphere to all our customers & stakeholders.

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Values
Perfection that sets apart: By providing SOLUTIONS through standard products and custom-built solutions Experience in Design and Developing Torque & Force Sensors, Testing, Measurement and Calibration Systems One of the best Calibration & Testing Laboratory Over 170 different Products Strong domain knowledge in several industry sectors; over 50 different sectors catered to so far Mass Calibration of highest E1 Class Weights as per OIML R111 Pressure Deadweight Calibration of Uncertainty 0.008% with k=2 (Area & Pressure Method) NABL Accredited Laboratory

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Overview
Pascal Physical Laboratories is a dynamic organization, which is a blend of young and experienced individuals. They are focused on providing regulatory, testing and calibration service through an integrated approach. With the vision of building a long lasting professional organization, they have a simple objective of helping the Indian Industry to meet Global/ International Quality standards. Covering your instrument with a Pascal Service Contract helps to reduce instrument downtime and ensure the reliability of results. Service Contracts are designed to give peace of mind by minimizing the impact of service activities on throughput and resources. All services are provided by broad network of experienced and certified field service specialists, guaranteeing the high level of service Pascal customers have come to expect.

Greater flexibility, greater choice

With 4 years of service support experience, Pascal know that the same solution is not right for everyone. To better meet the needs of the customer, Pascal offer a flexible range of Service Contracts, including two new options designed specifically for users of Pascal detection instruments: P-Care Complete full package of regular on-site maintenance and coverage of all unscheduled service intervention costs with preferred response times NEW: P-Care Check on-site Operational Qualification (OQ) of instrument performance for customers without a dedicated Quality Control (QC) tool P-Care Maintenance scheduled regular preventive maintenance by a certified Pascal service engineer on-site NEW: P-Care Depot Repair cost efficient repair at Pascal technical center with easy handling for the customers and possibility to get a loaner instrument P-Care Repair on-site repair with preferred response time and coverage of all unscheduled service intervention costs

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Hazardous Area

Details of Tests
Products Standard

Conformity with standards applicable to the Products components and systems intended for use explosion in and in conjunction with potentially explosive safety of such products, components and atmospheres systems Electrical apparatus for explosive gas atmospheres: IS/IEC 60079-0:2004, IEC 60079-0:2007 General requirements Flameproof enclosures d Increased safety e IS:2148 : 2004, IS/IEC 60079-1:2007 IS / IEC 60079 7 : 2006 (corresponding to the earlier IS 6381:2004) IEC 60079-7:2006 IS / IEC 60079 11 : 2006 (corresponding to the earlier IS 5780:2002) IEC 6007911:2006 IS/IEC 60079- 15: 2004, IEC 60079-15:2005 IS/IEC 60079-18:2004, IEC 60079-18: 2004 IS/IEC 60079-19: 2006 EN 13463-1:2001 EN 13617-1:2004 IEC 60079-2:2007 IEC 60079-5:2007 IEC 60079-6:2007

Intrinsic safety i Type of protection N or n Encapsulation m Repair, Overhaul and Reclamation Non Electrical Equipment - General Requirements Metering pumps and fuel dispensers Pressurised apparatus p (Performed at Baseefa) Powder filling q (Performed at Baseefa) Oil immersion o (Performed at Baseefa)

Product Safety

Details of Tests
Products Measuring and Laboratory Equipment Information Technology Equipment & Business Equipments Household Equipments ( general Requirements) Audio/Video Equipments Medical Electrical Equipment ( General requirement) UPS Programmable Controllers Equipments IEC 61010-1 ed. IEC60950-1:2005 | IS 13252.2003 IEC 60335-1 ED 4.1, 2004 | IS 302,1979 IEC60665 ed 7..1 ,2005 | IS 616..2003 IEC 60601-1-1 ed | IS 13450 Part 1 IEC 62040-1 IEC 61131-2 Standard

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Environmental Testing

Details of Tests
Dry Heat Test Reference Standard Chamber Size Temperature Range Cold Test Reference Standard Chamber Size Temperature Range Cold Test Reference Standard Chamber Size Temperature Range Humidity Reference Standard Chamber Size Temperature Range Humidity Range Humidity(90C and 95% RH) Reference Standard Chamber Size Dust test Reference Standard Chamber Size Special Test Life cycle tests on components / equipment as well as accelerated life test as per specified requirements **CORROSION TESTS **SALT MIST IS 9000 PART XII 1.0 cubic M (1000 * 1000 * 1000mm) IS 9000 PART IV & V 1.0 cubic M (1250 * 950 * 950mm) 15 to 65 deg. C. DRY to 99% R.H. ---- to ---IS/IEC 60079-0 Cl.no. 26.8 1900H, 860W, 1200D ---- to ---IS 9000 PART II 0.5 cubic M (400 * 400 * 600mm) + 50 to - 65 deg. C. ---- to ---IS 9000 PART II 0.5 cubic M (1230 * 950 * 950mm) Ambient to - 15 deg. C. ---- to ---IS 9000 PART III 1.0 cubic M (1250 * 950 * 950mm) Ambient to 250 deg. C. ---- to ------- to ----

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Ingress Protection (IP)

Details of Tests
IP1X IS 12063, IS 13947,IS 4691 and IEC 60529 Rigid Sphere w/o handle or guard : 50+0.05.-0.0 mm dia Test Force : 50 10% N Test Finger : Test Force 10N Rigid Sphere w/o handle or guard : 12+0.05.-0.0 mm dia Force : 50 10% N Hi -Pot Tester Straight Rigid steel wire/rod : 2.5+0.05.-0.0 mm dia Straight Rigid steel wire/rod : 1+0.05.-0.0 mm dia Dust chamber : as per fig 2 IS 12063/IEC60529 with or without underpressure Talcum Powder Weighing Scale Dust chamber : as per fig 2 IS 12063/IEC60529 with underpresuure Talcum Powder Weighing Scale Drip Box , Fig.3 Water Flow rate 1+0.5,-0 mm/ min. Enclosure on Turn table Stop Watch Drip Box , Fig.3 Water Flow rate 3+0.5,-0 mm/ min. Enclosure on 4 fixed position of 15 tilt. Stop Watch Oscillating Tube Fig.4 ISO12063/IEC60529 Spray 60 from vertical distance max 200 mm or spray Nozzle Fig 5 Spray 60 from vertical As for Numeral 3 Spray 180 from vertical Water jet hose nozzle Fig. 6 IS 12063/IS 60529 Nozzle 6.3 mm dia , distance 2.5 m to 3 m Water jet hose nozzle Fig. 6 IS 12063/IS 60529 Nozzle 12.5 mm dia , distance 2.5 m to 3 m Immersion tank Water level on enclosure : Min. 0.15 m above top Min. 1 m above bottom Immersion Tank Water - Level : by agreement

IP2X

IS 12063, IS 13947,IS 4691 and IEC 60529

IP3X IP4X

IS 12063, IS 13947,IS 4691 and IEC 60529 IS 12063, IS 13947,IS 4691 and IEC 60529 IS 12063, IS 13947,IS 4691 and IEC 60529 IS 12063, IS 13947,IS 4691 and IEC 60529

IP5X

IP6X

IPX1

IS 12063, IS 13947,IS 4691 and IEC 60529

IPX2

IS 12063, IS 13947,IS 4691 and IEC 60529

IPX3

IS 12063, IS 13947,IS 4691 and IEC 60529 IS 12063, IS 13947,IS 4691 and IEC 60529 IS 12063, IS 13947,IS 4691 and IEC 60529 IS 12063, IS 13947,IS 4691 and IEC 60529

IPX4

IPX5

IPX6

IPX7

IS 12063, IS 13947,IS 4691 and IEC 60529 IS 12063, IS 13947,IS 4691 and IEC 60529

IPX8

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Type Examination

Details of Tests
Product Transducers Frequency/AC Voltage/AC Current/ Watt Specific Test Performed Intrinsic Error Variations with Influence quantities Variation due to continuous operation Variation due to unbalance current ( Polyphase) Variation due to over range Output Ripple content Response Time Exsessive Input Limiting values of output Temperature Limits of operation High Voltage & Insulation Resistance Test. Luminaries Resistance to Dust and moisture Humidity Test Insulation Resistance Test Electric Strength Test Measurement of Leakage Current Creepage & Clearance Measurment Mechanical Strength Endurance test Thermal test (Normal operation) Thermal test ( Abnormal Operation) Thermal Test ( failed Ballast or Transformer conditions) Resistance to heat Resistance to Flame & Ignition Resistance to tracking Resistance to corrosion ( Slat Spray Test Ammetre, Voltmeter, Wattmeter, VARmeter, Frequency Meter, Impedence Meter, Conductance meter, Multi-function meters Iintrinsic Error Variation Due to Ambient Temperature Variation due to Humidity Variation Due to position Variatin due to Power factor Limiting Values of Temperature Overshoot Response Time Overloads of short duration for IS 1248(part 9) IS 10322 IS Standard IS 12784

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instruments Overload of short duration for accessories Continuous overload for Instrument Continuous overload for Accessories Current circuit continuity after high current overload Deviation from Zero Self-heating Ohmmeter maximum current

Calibration:

Calibration

CALIBRATION , simply put, is the standardization of a measuring instrument. It is achieved by a set of operations that relate the values / quantities indicated by the measuring instrument against an accurate tracable standard in order to determine any deviation and correct the same for errors. Any industry, whether in manufacturing or service sector, must have accurate and reliable measurements if they are to achieve their quality and safety goals. We at KLPL have the latest instruments, standards, knowledge and skills to calibrate all types of electrical and electronic instruments. Our standards have traceability to national / international standards, so the customers can be assured as to the accuracy of their instrument. True value of a physical parameter is a myth. Calibration which is a process of comparison is therefore associated with a level of uncertainty. Our reports indicate the uncertainty associated with measurements. It has always been KLPL's policy to look at its services as a support to the customers commitment towards quality and safety. The entire KLPL team works keeping the 'customer needs ' as the focus, thereby offering the following value added services. Collection and delivery services On-site calibration service Committed turn around time Recalibration due date reminders Types of Calibration: Electro Technical Temperature Pressure

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Validation:

Validation

VALIDATION, in general, is the process of checking if something satisfies certain criterion - for e.g. to check if an appliance or process works as intended. By validation, one is able to testify that a process or equipment is correct or compliant with set standards or rules. In the chemical, pharmaceutical and biotechnology industry "validation" refers to establishing documented evidence that a process or system when operated within established parameters, can perform effectively and reproducibly to produce a product which meets its pre-determined specifications and quality attributes. KLPL's team of well qualified engineers and technicians have been executing the validation needs of the industry for the past decade. Our customers range from Pharmaceutical and Biotechnology multinationals to Life Science Companies, R & D Laboratories, Food Processing, Warehousing, Logistics, Hospitality etc Our Validation Services include: Autoclaves Sterilizer Deep Freezers Refrigerators Walk in coolers GC/ HPCL Systems Ovens and Furnaces Storages and warehousing facility We also provide "DQ / IQ / OQ / PQ documentation services" coupled with risk analysis

Services: Pascal strives to provide first class care and support to its customers across the globe. Its worldwide subsidiaries are located close to their customers to provide timely and efficient field service, and to build a close relationship with each customer. Its services can be tailored according to customers needs, and are covered by their set of PService Contracts or provided on demand.

Installation Pascal certified field service people support its customers throughout the installation of their newly purchased Pascal equipment and in setting up their application.
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Preventive maintenance Keep instrument in top condition with Pascal regular preventive maintenance, which helps to maintain the high standards of accuracy and precision that application needs, as well as minimizing instrument downtime. Regular maintenance can also help to increase the lifespan and productivity of Pascal instruments.

Repair A full range of repair services are available should the need arise. Pascals qualified and certified specialists provide timely and efficient servicing for Pascal instruments. As the first contact point, helpdesks are maintained at all Pascal subsidiaries India-wide, with trained specialists - that speak local language - available to assist you.

Upgrades Upgrades are an all-important part of keeping up with the latest developments at minimal costs and without compromising quality. Pascals highly qualified engineers are not only capable of servicing the equipment to a high standard, but can also perform any technical upgrades that the customers need.

Training Training courses are an effective method for acquiring the knowledge necessary to get the most out of Pascal instruments. Pascal offers a comprehensive range of courses (classroom or on-site) that combine in-depth theory with hands-on coaching sessions and absorb the persons with good performance.

On-site Calibration Pascal extends its capabilities by providing a range of on-site calibration services. On-site calibration services advantages include: Eliminates instrument down time and the need for spares Minimal interruptions to the manufacturing process Eliminated the risk of damage during the transport No questions as to where instruments are or when they will be returned Calibration technicians are available to answer customers questions immediately

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The entire on-site calibration services are handled by Pascals on-site co-ordinator who assists their customers from scheduling to document delivery. They assign the appropriate field service calibration technicians and answer all questions regarding instruments/ equipments. Repair Services Pascal also provides repair services on almost all types of test and measurement equipments. The laboratories are equipped with diagnostic and repair equipments to service from a simple to most complicated and sophisticated instruments in a timely manner.

Financial Position:
Balance Sheet (As of 31st March, 2010) In Rs '000 Assets Cash and cash equivalents Current loans and derivatives Trade accounts receivable Other accounts receivable Inventories Income tax receivables Prepaid expenses Current assets Non-current financial assets Property, plant and equipment Intangible assets Deferred tax assets Non-current assets Assets Liabilities and equity Current bank liabilities and derivatives Trade accounts payable Other accounts payable Deferred revenue Income tax payables Accrued expenses Vimalendu Vedatraya 40,347 9,486 11,046 19,170 8,360 31,268 6,332 9,638 15,334 19,549 7,458 30,441 Page 36 2009 91,810 32,474 76,764 14,527 38,264 2,560 2,564 2,58,963 2,295 19,692 56,061 11,608 89,656 3,48,619 2010 1,18,040 30,195 65,516 13,173 43,084 1,305 3,447 2,74,760 3,206 13,672 37,315 9,548 63,741 3,38,501

Current provisions Current liabilities Non-current bank liabilities and derivatives Liability for post-employment benefits Non-current provisions Deferred tax liabilities Non-current liabilities Total liabilities Share capital Capital reserve Treasury shares Retained earnings Translation differences Shareholders equity Liabilities and equity

11,762 1,31,439 854 6,889 2,598 3,906 14,247 1,45,686 1,141 14,022 -55,531 2,63,258 -19,957 2,02,933 3,48,619

9,917 98,669 1,088 4,876 1,993 3,835 11,792 1,10,461 1,144 13,114 -32,039 2,73,599 -27,778 2,28,040 3,38,501

Income Statement (For the year ended 31st March, 2010) In Rs '000 2010 3,70,548 55,971 2,100 -11,137 46,934 -30,730 16,204

Particulars Sales Operating profit Financial result Income taxes Profit from continuing operations Result from discontinued operation, net of income taxes Profit for the period

2009 3,56,248 59,521 689 -12,869 47,341 1,999 49,340

Personnel expenses Depreciation of property, plant and equipment Amortization of intangible assets Impairment losses Other expenses Total comprehensive income

1,23,051 1,28,525 -6,441 -6,024 -725 -1,738 0 0 -33,747 -37,372 47,565 8,383

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Ratios Liquidity Ratios Current Ratio: Quick Ratio: Asset Mgmt. Ratios Inventory Turnover: Total Assets Turnover: Profitability Ratios Profit margin: Return on Assets: 2009 2010 1.970214 2.784664 1.679098 2.348012 2009 2010 9.310266 8.600594 1.021883 1.094673 2009 13.85% 13.64% 2010 4.37% 2.48%

Current Ratio:
3 2.5 2 2009 1.5 2010 1 0.5 0

Quick Ratio:
2.5 2 1.5 1 0.5 0 2009 2010

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Inventory Turnover:
9.4 9.2 9 2009 8.8 2010 8.6 8.4 8.2

Total Assets Turnover:

1.12 1.1 1.08 1.06 1.04 1.02 1 0.98 2009 2010

Profit margin:
15.00%

10.00% 2009 2010 5.00%

0.00%

Return on Assets:
15.00%

10.00% 2009 2010 5.00%

0.00%

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Achieved solid sales growth in 2010 and sales increased by 4.0 % The gross profit margin reached 50.2 % of sales, 1.6 percentage points lower than in 2009

Several new development programs for OEM customers that were started in 2010 generated engineering income with no gross profit

A further decrease in material costs and increased prices had a positive impact on the gross profit

General and administration expenses increased by 8.3 % to CHF 35.7 million, mainly driven by two factors. Firstly, following the divestiture of the Sample Management operations, the costs of corporate functions are borne by a business that is smaller overall. The second factor was the introduction of the new Performance Share Matching Plan that replaces the Option Plans for top management. This has a more pronounced effect in 2010 as the Company had to account for both plans.

Sustainability: Customer loyalty and satisfaction: A high degree of customer loyalty and satisfaction is a key factor for sustainable business growth. In order to anchor this concept for the future, Pascal took the decision in the year under review to align its previously product-oriented organizational structure even more closely with its two main customer groups, namely end customers and OEM customers. In order to further improve customer satisfaction in the service business, Pascal launched its CustomerFIRST initiative. Risk management process: Pascal has a well established global risk management process that allows it to detect risks in any area of corporate activity early on, categorize them according to likelihood of occurrence and impact, and limit them with an appropriate action plan. The process encompasses, among other factors, strategic risks, environmental and product risks, market and customer risks as well as work safety risks. It also focuses on political and economic developments as well as the possible impacts certain events may have on Pascals external partners such as customers or suppliers. In 2010, Pascals risk management process was subjected to several audits carried out by independent bodies. Environmentally friendly materials and processes: Pascal acts responsibly and in an environmentally friendly manner in the development, manufacture and global distribution of all products as well as services it renders over the entire lifespan of the product. Pascal

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focuses on the assembly side of the production process; by keeping vertical integration down, production locations emit relatively low levels of pollutants, including CO2. Corporate responsibility to employees and society: As an employer, Pascal has a strong sense of responsibility, which is reflected in its personnel policies that are binding at all of its branches around India. National hiring rules ensure compliance with gender equality, nondiscrimination and other legal requirements. Pascal managers and employees are also held to strict ethical guidelines. They are set out in Pascals Rules of Employment and form part of corporate training in the fundamentals of visions and values. A process has been defined with regard to reporting cases of fraud. Social responsibility: Pascal offers a wide range of healthcare initiatives for its employees including medical courses, vaccination programs and various sporting activities. The Company also takes efforts to ensure that chronically ill employees remain integrated in the workplace as far as possible. Pascal attaches great importance to good cooperation with the people and authorities where it does business. The Company also supports projects serving the common good at its various locations across India.

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