Raghunath. T, Director
- Lack of visibility on financials and unexpected drops in results due to old stocks and sticky receivables
Work done and Impact
- Root cause analysis was done. Primary reasons were lack of strong internal reviews and weak provisioning processes followed for stock and receivables. The existing provisioning processes for both debtors and stock were not aligned to reality. The age of the receivable was not adequately scrutinized and provision for stocks were not aligned to realizable discounted prices.
Action / Impact:
More realistic provisioning criteria were applied and a one-time hit in numbers was consciously taken. Related KPIs were also made and integrated with performance reviews. Subsequently, this resulted in greater internal sensitization among operating teams and also lesser surprises.
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