Question

what areas of improvement can you suggest for the future?

Anandam case

Answer 1

Background

Anandam manufecturing company is considered as the second largest garment manufacturer in the world. . The company was founded by Agarwal who worked in textile engineering department who had gained the experience needed for running the textile. He had the references for recruiting the desired skilled labours which would be used for making both small and large scale manufacturing units.

Issues

Agrawal had the experience in manufacturing the garments, running the machinery and information on the market. However, he lacked the experience for dealing with the financial dynamics of the company which has led the company to financial troubles.

The company no longer had the capital for further investments in the business, purchasing raw materials and hiring more skilled labours.

The main reason was that most of the customers bought the products on credit which led to the low generation of revenues and also the stocks were piling on the inventory as they were not being dispatched or the customer was postponing the delivery.

Suggested Measures:

The best course of action for the company would be to first getting rid of the stock which had been piling up through dispatching it and making the necessary agreements with its customer for freeing up space in the factory.

Agrawal (Founder) should also gain more knowledge about the market such as the demand for customers and fashion and use that information for capturing the market which would help the company in generating better revenues.

Agrawal(Founder) should sell the product on cash rather than on credit as most of its customers are delaying their payments which is generally creating more financial troubles. And some are not paying.

Agrawal(Founder) should put in place strong collection policyto reduce bad debts in the business.

An option of merger with a financial strong compny can be suggested.Because of it financialiy viable company can also set off & carry forward losses of the later.

Another opion before company is to apply for rehablitation finance & revive the business again. As he has good credibility in the market he should use this strength for mitigation of funding problem.