Case Studies
Case Studies
Select cases showcasing various facets of our services and clients’ triumph
Case 1 - Growth strategy and review system for an electrical component manufacturing company
Brief:
An electrical component manufacturing company, one of the top four players in the industry, was facing stagnancy in revenue and profit. For any major decisions, employees depended on the promoter-CEO of the company. The company wanted to grow and implement proper systems.
Infinity’s Role:
We conducted workshops with the promoter and the top management to articulate vision, mission, and BHAG (big, hairy, audacious goals). We then designed the business plan and developed balanced score cards for all the departments. We regularly reviewed the company’s performance and gave strategic guidance to the top management. Our engagement continued and we eventually became the advisors for strategic issues. Over 10 years, we conducted two more workshops to percolate the business plan targets in the organization, attended (once) its sales conference to understand the structure of its dealers and sales representatives, assessed its financial performance with its peers, and assisted in conducting budgeting exercises.
Outcome:
The implementation of the strategy was a major success as within a year, the top management was able to design the balanced scorecards for the second-rung on their own. An issue of heavy unsecured loan was also eventually resolved and the debt-equity ratio improved.
Case 2 - How an IT company got acquired by a Fortune-500 company
Brief:
The USA-based parent company had two subsidiaries in India. The project included the merger of two Indian entities and then sell the single entity to the Fortune-500 company in two phases. We provided our services in both phases. We valued both entities and completed the merging process. Post-merger, while selling the merged entity in two phases, we provided our services in the process of due diligence and firm valuation. We designed the valuation model and convinced the advisor of the buying company (one of the Big 4s). In the due diligence process, we resolved issues raised by the advisor related to accounting, direct tax, and indirect tax, about the Indian entity. During the project, we also resolved issues on transfer pricing, since the Indian entity was not only dealing with its parent company in the USA, but also with other group entities in Singapore, Japan, and Europe.
Outcome:
The deal was successfully closed, and Infinity remained with the acquired entity for a brief period to ensure a smooth transfer of accounts and resolve post-acquisition employee issues.
Case 3 - Fund-raising for an environment management company to expand its business pan-India
Brief:
An innovative company engaged in environmental management wanted to expand rapidly. It needed funding to accommodate its capital expenditure and working capital requirements.
Infinity’s Role:
Infinity prepared the expansion plan and financial model to determine the fund requirement amount. We then developed the investor pitch. We also collaborated with one of the top financial advisory firms in India to tap reputed investors. We then jointly designed the fundraising structure to allocate an appropriate percentage to equity and debt.
Outcome:
Equity funding of INR 23 crore was successful and the company could enter into new markets as planned.
Case 4 - Growth strategy for a near-stagnant chemical manufacturing company
Brief:
A chemical manufacturing company with a turnover of Rs. 250 crore wanted to grow rapidly and generate free cash flows too. The key target was to achieve a turnover of Rs. 500 crore in 3 years and increase profitability, and asset turnover ratio.
Infinity’s Role:
Infinity conducted 2 workshops with the top management and developed a business plan to achieve the desired goals. We advised them on various performance and process issues such as improving automation, introducing key account management, entering new segments, managing product portfolio to maintain the profit margin, etc. We also developed balanced scorecards for the company (or the CEO), and for each departmental head. We then tracked the company’s performance by regularly reviewing the BSC performance and meeting all the HODs to resolve strategy implementation issues. The business plan project was over, but our engagement with the company continued for almost 8 years. They still approach us as and when it is required.
Outcome:
The company could achieve its revenue target in 4 years. When the CEO first introduced the scorecards to the board of directors, they were appreciated unanimously. The company improved automation on a rapid pace, and also entered introduced new products to minimize the risk.
Case 5 - How an ITeS company grew rapidly and got sold
Brief:
An IT-enabled service company was formed with the help of foreign direct investment (FDI). The company grew rapidly and was sold to an MNC.
Infinity’s Role:
Infinity provided all the strategic and financial guidance to the Indian company as well as its parent company in the USA. We managed all the compliances related to FDI, overlooked accounting practices, helped the top management to handle issues related to the rapid growth, and negotiated with other consultants for issues related to GST and employee provident fund. We also valued Indian and the US companies, resolved due diligence queries, and negotiated acquisition terms with the MNC who eventually bought the whole umbrella (the US and the Indian companies).
Outcome:
The employee strength grew from just 5 to 60 in a span of 3 years. Revenue and profit also grew multi-fold. The company was sold to an MNC with all the employees intact along with the top management.
Case 6 - How a compressor manufacturing company triumphed valuation battle and secured at-par value
Brief:
A German compressor manufacturer had a joint venture with Indian promoters (having significant minority shareholding). The German company wanted to buy out Indian promoters’ stake.
Infinity’s Role:
We valued the Indo-German joint venture, based on the projections approved by the German parent. Our role was to assess the financials of the joint venture and get the fair value. We found that the Indian promoters were being offered a substantially lower value than what appeared to be the fair value based on their projections. We helped promoters negotiate for the fair value.
Outcome:
Our valuation exercise and arguments thereupon convinced the German company’s advisor (one of the Big 4s) to let the Indian promoters have their fair value of shares.
Case 7 - Devised a transfer pricing mechanism for a US-based parent company and its subsidiaries (based in India, Japan and Singapore)
Objective:
An IT-enabled service company had a parent company in the USA and subsidiary companies in various countries including India, Japan, and Singapore. The Indian subsidiary looked after the operations part, whereas subsidiaries in other countries act as sales and marketing functions. The group wanted to devise a transfer pricing mechanism.
Infinity’s Role:
Infinity prepared a document covering the broad-level group structure and a list of all the internal (within-group) and external (with the third parties) transactions. Internal transactions involved sales and purchase of services from the group entity, inter-company loans and interest thereof, and other related party transactions. We then devised a mechanism to primarily cover the Indian entity’s part of the transfer pricing to comply with the Indian income tax rules and regulations. We also designed a broad mechanism for the transfer pricing for all other entities and asked the parent company to implement the policy country-wise with the help of the local consultant to comply with the local laws.
Outcome:
The transfer pricing scheme for the Indian entity was accepted by the statutory auditors straight away. The broad structure with internal and external transaction lists was to be used to implement the policy at local levels.
