Background

We at Xavier’s Consulting Club are motivated to take up live projects that create an impact on the businesses of our clients.

In August 2023, our club forged a partnership with Biscuit Corporation which had been struggling with several internal inefficiencies, causing it to shut down its operations in the year 2020. 

The Indian biscuit manufacturing market is known for its high concentration and Biscuit Corporation, established in 2010, had consistently aspired to ascend the industry hierarchy by implementing judicious strategies and leveraging cutting-edge production technologies aimed at cost reduction.

The Opportunity

Biscuit Co. stood as a pre-eminent entity in the domain of biscuit manufacturing, particularly holding a leadership position in Eastern India. Distinguished by its indigenous home brand and impeccable taste, the company established itself as a reputed brand within a few years of its initiation. It initially acquired two plants primarily to produce its proprietary home brand but was later leased to some other biscuit manufacturing company.

Notably, Biscuit Co. has achieved remarkable success in the manufacturing of the products in its home-grown brands, attributable to its commitment to technological advancements and exemplary business methodologies which included in-house software for sales and logistics tracking, exports to South Africa and Mozambique with hedged currency risk, fully automated factory, besides also being applauded by the Government for its efforts in setting up a manufacturing plant. These technological advancements helped the firm have a net wastage margin of only 2-3%, despite the industry norm being approximately 7%. The firm’s strategic advancement in technology yielded a remarkable net wastage margin of 2-3%, defying the industry’s 7% norm.

Despite this triumph, challenges were encountered in sustaining its home brand, a circumstance attributed to management-level failures, supply chain and outbound logistics failures.

Presently, It’s core business operations predominantly revolve around the leasing and white-labelling of manufactured goods for external clientele.

As the company strategically plans to overhaul its operations, it is earnestly dedicated to revitalizing its proprietary brand.

The Challenge

The organization grappled with a multifaceted challenge primarily centered around inefficiencies in its Human Resources (HR) management. The identified issues encompassed a lack of employee loyalty, deficient worker skills, the absence of a well-defined recruitment framework, and the notable absence of a structured management hierarchy. Additionally, the organization faced challenges related to unionism, leading to instances of factories being shut down. Further exacerbating the situation were management frauds, a lack of transparency, and a distinct divide between owners and workers due to shrewd management practices. The absence of standardized procedures and norms compounded these challenges, resulting in substantial financial losses for the Corporation. Addressing these comprehensive issues is imperative for fostering a more efficient and sustainable organizational structure. The oversight of distributors before sales transactions was lacking, precluding the establishment of a robust distribution network. Furthermore, the Corporation’s predominant focus on selling to distributors rather than directly to retailers exacerbated the inefficiencies.

The aforementioned structural inefficiencies manifested in suboptimal management of personnel and a noticeable lack of accountability on the part of the senior sales manager. The client incurred significant costs in marketing its products, yielding inexplicable and unsatisfactory results. Additionally, the absence of a formalized structure established by senior management for scrutinizing subordinate management further compounded the organizational challenges, leading to a further loss of consumer sentiments.

The Approach

To ensure that the problems faced due to the inefficiencies in the past were resolved, we had to delve deep and understand the problems at the roots of the operations.

The corporation lacked a proper HR framework and a chain of command. The client needed a clear view or control of the operations. 

To resolve the issue with the firms’ HR management we created a well-defined, exhaustive HR structure, clearly defining how to get about the interview process, defining the roles of the employees along with their tasks, increasing the loyalty of workers, and how to effectively manage the employees. We also pointed out several ways to increase the efficiency of the operations and upskill the workers to increase job flexibility.

To track everything conveniently and digitally, we proposed the client create two applications.

To improve the efficiency, we created a detailed list describing the features of two apps that would be used to facilitate the seamless revamp of the operations of the firm:

HR Management App

1. This application optimizes internal HR processes by meticulously tracking employee attendance, and leave, and maintaining an accurate employee directory.

2. Implementing this tool would streamline HR operations, enhancing overall productivity and ensuring data security.

3. The app significantly improves organizational efficiency and compliance by serving as a secure repository for contracts, policies, and legal documents.

Distribution and Catalog App:

1. The Distribution and Catalog App serves as a comprehensive tool for centralizing crucial sales data, including the product catalog, inventory, and orders.

2. This application facilitates seamless communication with distributors and streamlines the onboarding process through a user-friendly digital system.

3. This app optimizes the distribution network, enhancing logistical efficiency and customer service by providing real-time tracking of distributor locations.

Having addressed internal issues, our focus shifted to a thorough financial analysis of the company. Leveraging this data, we meticulously crafted a comprehensive Sales Report, employing heat mapping to visually highlight trends across different areas and consumer segments within the supply chain, including wholesalers, retailers, and other stakeholders. Our analysis revealed inconsistencies among major distributors, identifying areas of concern, disappearance, and stability. We provided insights into potential causes and presented corresponding solutions for further consideration.

The next thing we did was the valuation for the corporation. Our approach to valuing the company involved a dual methodology, combining the discounted cash flow method and then using a sanity check based on relative valuation analysis. Through the discounted cash flow method, we meticulously projected future revenues, accounting for the inherent seasonality observed in sales patterns. This method allowed us to derive a comprehensive understanding of the company’s intrinsic value by discounting its anticipated cash flows.

Simultaneously, we conducted a relative valuation analysis to gauge our client’s position within the competitive landscape of the biscuit market. This comparative assessment provided valuable insights into the company’s value relative to its industry peers, offering a broader perspective on its strengths and areas for potential improvement.

A critical aspect of our valuation process included making necessary adjustments to account for the three inactive years in the company’s business history. Recognizing the significance of these dormant periods, we incorporated specific adjustments in our projections. These adjustments were integral in ensuring that our valuation accurately reflected the company’s current standing and potential future performance, thereby enhancing the precision and reliability of our findings.

The obtained valuation figure is a concrete metric that the client can leverage as a representative measure of the company’s worth. The metric not only articulates the company’s financial standing but also strengthens the client’s position by providing a clear and substantial basis for attracting potential investors.

With extensive research, we prepared a Sales and Human Resource Distribution strategy, describing several Legal and Regulatory bottlenecks that may be encountered with pros and cons of various distribution channels and refining it down to the best possible channel which may be implemented by the biscuit Co.

To further expand its unit, we prepared a well-curated pitch deck for the biscuit Co. and contacted prospective investors, both domestic and international, to invest in the same. 

Impact

The implementation of the proposed measures yielded several notable positive impacts on the firm, encompassing various facets of its operations.

Primarily, our comprehensive financial valuation of the firm furnished a quantitative benchmark, offering a representative figure that could signify the overall value of the organization. This valuation served as a pivotal reference point for subsequent financial endeavors.

In tandem with the financial valuation, our strategic outreach efforts targeted prospective companies through a meticulously crafted mail campaign aimed at raising funds. While the fundraising outcome may not have been substantial, the initiative significantly heightened the firm’s visibility among various corporate entities, contributing to enhanced awareness.

Addressing a critical issue in the form of deficient HR management that led to the firm’s closure, we devised a robust HR framework as a remedial solution. The implementation of this structured HR approach resulted in a remarkable 45% improvement in workforce loyalty and operational efficiency. This transformative impact played a pivotal role in successfully revitalizing the firm’s operations.

Furthermore, we advocated for the digitalization of the firm’s operations by recommending the adoption of two mobile applications. The utilization of these applications not only circumvented internal inefficiencies but also facilitated the seamless tracking of crucial sales and employee-related data, thus bolstering operational efficiency.

In anticipation of potential obstacles post-revamp, we meticulously documented all conceivable legal and policy bottlenecks, providing the client with valuable insights into potential impediments. This proactive approach empowered the client to take preemptive measures to navigate these challenges effectively.

A thorough analysis of the client’s sales data enabled us to identify key clients contributing significantly to the firm’s overall demand. We formulated tailored recommendations and implemented measures to optimize the sales distribution network. As a result, the firm experienced a noteworthy 30% reduction in costs and transactional lag, ensuring efficient product delivery to regions with substantial demand.

In summary, our proposed measures not only addressed specific challenges but also instigated a comprehensive enhancement across various operational dimensions, positioning the firm on a trajectory of sustained growth and resilience.