Working capital – Urabandai SS http://urabandai-ss.com/ Mon, 21 Nov 2022 15:46:32 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://urabandai-ss.com/wp-content/uploads/2021/09/cropped-icon-32x32.png Working capital – Urabandai SS http://urabandai-ss.com/ 32 32 Are you ready to weather the economic storm with agile working capital management? – ERP today https://urabandai-ss.com/are-you-ready-to-weather-the-economic-storm-with-agile-working-capital-management-erp-today/ Mon, 21 Nov 2022 15:46:32 +0000 https://urabandai-ss.com/are-you-ready-to-weather-the-economic-storm-with-agile-working-capital-management-erp-today/

As central banks battle the highest inflation rates in forty years, interest rates continue to rise rapidly, highlighting an area of ​​finance that has been overlooked for many years. ; cash forecasting and working capital management.

But after decades of incredibly low financing costs for businesses, swings in interest rates and savings are bringing liquidity back into the spotlight.

Cash and Liquidity Management

Rising funding costs mean CFOs need to find new ways to understand and micromanage their cash and liquidity, and a sea change in mindset is needed. In my conversations with finance leaders, many say they don’t have access to the up-to-date data they need to do accurate cash forecasting or working capital planning. It is not uncommon for the available data to be several weeks old. You can’t do much with old data, especially in today’s rapidly changing environments.

For the foreseeable future, you must be prepared to manage liquidity and cash flow with great precision so that your business can understand the impact of inflation, act quickly and be ready for what comes next.

How prepared are you today?

To understand how you’re doing with managing your cash and working capital, take the following self-assessment quiz.

How confident are you in your cash and liquidity forecasts? Are you able to easily include real-time data and the impacts of changing sales and commodity prices in your forecasts?

Few CFOs and Treasurers will say yes based on my conversations with them. The reality is that most liquidity forecasting is done in spreadsheets and it takes them days or even weeks to gather the necessary data from across their entire business. So, by the time they report and forecast, the data is outdated and the analyzes are no longer accurate.

Using disparate spreadsheets not only means you’re working with old data, it also hampers your ability to see and understand the impact of external factors such as rising interest rates on your ability to take critical business decisions.

What’s needed is a way to get information about the various risks, exposures, and true values ​​into a single financial system so you can manage working capital optimally.

For example, a unique system would allow you to prepare for rising commodity prices by predicting future cash flows. This would allow you to know your currency and interest rate exposures so that you can effectively execute hedging strategies.

An integrated financial system can also help you balance risk, inventory management, and customer service to help you manage your goals. Finally, and most importantly in these uncertain times, you can uncover savings opportunities with real-time enterprise-wide purchasing and supply chain insights.

How easily can you find and unlock cash tied up in your business and supply chain?

Without effective working capital management tools and processes in place, it is not easy to find and free up cash tied up in the business and supply chain. The ability to act quickly on pressing business events or CEO and CFO opportunities is more important than ever, yet most companies are unprepared to do so. Having visibility into your entire cash conversion cycle is a good starting point for you to make informed decisions.

How prepared are you to handle what’s next in our ever-changing and unpredictable world?

To be prepared, you need the agility to react quickly and effectively to forward-looking information and forecasts. This requires having the right strategy, the right tools (like a flexible working capital management platform that provides a centralized view of liquidity and scenario planning functionality) and the right processes to manage the impacts of proactive manner.

Is there CFO leadership to establish cross-company working capital management goals and aligned strategy?

Cash and working capital management is a cross-company effort. Think of it as a team sport that requires strong CFO sponsorship. Only the CFO can break down the layers of service denial on data sharing and work with stakeholders to determine what to prioritize and what strategy and goals to set. If you leave it all up to different departments to figure out, you’ll end up with conflicting goals and a misaligned strategy, something no business can afford anymore in times of high cost of liquidity and uncertainty.

So how did you do?

Were you able to answer all four questions? If you could, great, that means you’re in the minority today, and that’s a good place to be. If not, know that you are not alone. The good news is that solutions are available to help you take care of your cash flow and working capital. One thing is certain, liquidity will remain a priority for businesses today, especially in the context of an upcoming recession. So there has never been a better time to focus on this area.

If you want to learn more, I invite you to watch this panel discussion on Outsmarting Inflation: Best Practices in Working Capital Strategies where I discuss with other thought leaders on the subject.

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Inventory management issues impact working capital https://urabandai-ss.com/inventory-management-issues-impact-working-capital/ Mon, 14 Nov 2022 15:04:38 +0000 https://urabandai-ss.com/inventory-management-issues-impact-working-capital/

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The the largest public companies in the United States may have reached the limits of their ability to stretch payment terms with suppliers in mid-2022, as they navigated inventory management in the face of high levels of uncertainty, according to the second quarter 2022 update of the Working Capital Survey conducted by The Hackett Group, Inc.

After a slowdown in the growth of days unpaid (DPO) over the last two quarters, the DPO decreased by 1.1% (from 56.5 to 55.9 days) in the second quarter of 2022. This indicates a shift in the leverage to sellers, driven by supply chain bottlenecks, inflationary pressures and geopolitical risks, among other issues.

“This is the true definition of an inflection point and a trend that is set to continue,” says Shawn Townsend, Principal of The Hackett Group. “Buyers have become more concerned with assurance of supply and have had to become less prescriptive about how they receive goods and services. Additionally, while supply chain finance remains popular, buyers are more focused on using it to stabilize and strengthen the supply base than to extend payment terms.

From BusinessWire:

  • Days In Stock (DIO) remained virtually flat over the period, rising only 0.1% (staying at 46.5 days).
  • The number of days outstanding for sales, the third major component of working capital performance, also remained broadly stable during the period, decreasing by 0.1% (to remain at 40.1 days). These three elements of working capital combined to result in a 2% increase in the cash conversion cycle (CCC).
  • Operationally, revenue continued its meteoric rise in the second quarter, growing nearly 20% (4-5 times what was seen before the pandemic). Free cash as a percentage of revenue is down nearly 30% and back to pre-pandemic levels, signaling companies are using cash hoarded during the pandemic to pay down debt in anticipation of further interest rate hikes .

“We had seen an atypical improvement in DIO over the past year, which seemed to indicate that businesses had learned lessons from the pandemic. But businesses are still grappling with huge uncertainty and maintaining the inventory line in this environment is actually a big win,” says Hackett Group Director Istvan Bodo.

“The headwinds will clearly continue to persist for the foreseeable future, and working capital management discipline, planning and foresight can play a key role in helping businesses succeed,” says Townsend. “Inventory management presents one of the biggest conundrums for businesses today. It is critical for businesses to ensure they can quickly recognize and respond to changing demand signals. Regarding receivables, companies should continue to review the credit and collection management process, as well as payment terms and contractual milestones.With suppliers, improving supplier management is essential.The criticality of suppliers, competition for resources and availability of supply may warrant revisiting sourcing, location and working capital strategies.Contingency planning is also becoming increasingly important, including the integration risk in the cash/cost/service equation.

“Now is not the time for companies to slow down when it comes to working capital and cash flow management. Smart business leaders will double down on their working capital health management capabilities – increasing their visibility into key metrics, better sharing information across functions and automating processes – to enable agility in a context of continuous change,” adds Townsend.

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Intelligent Ultrasound raises £5.2m for balance sheet and working capital https://urabandai-ss.com/intelligent-ultrasound-raises-5-2m-for-balance-sheet-and-working-capital/ Fri, 11 Nov 2022 14:08:40 +0000 https://urabandai-ss.com/intelligent-ultrasound-raises-5-2m-for-balance-sheet-and-working-capital/

Artificial intelligence (AI) ultrasound technology developer Smart Ultrasound on Friday announced the raising of £5.2 million to strengthen its balance sheet and provide working capital.

The AIM-listed company said the funds were raised through the placement and subscription of 42,504,112 placement shares and 13,712,108 subscription shares to institutional and other new and existing ones, priced at 9.25 pence each.

He noted that the issue price was equivalent to a zero discount to the average closing price of 9.25p on Thursday, with the new shares to be issued representing 17.2% of the company’s enlarged share capital.

The board said the net proceeds of £4.8 million would be used to strengthen its balance sheet and provide additional working capital, including to fund the ongoing development of its existing products.

Intelligent Ultrasound said the fundraising remained conditional on shareholder approval at a general meeting in Cardiff on November 30.

“The directors are very pleased with the response to the oversubscribed fundraising and thank new and existing shareholders for their continued support,” Chief Executive Stuart Gall said.

“The directors consider it to have been an excellent year and the Group remains on track to meet market expectations of £10 million in revenue in 2022.”

“With a strong simulation portfolio for 2023 and three AI-related clinical products launched to market and generating early revenue, the board is confident that this fundraising will drive sales growth that will drive the group to profitability, as well as achieving the group’s ambitious vision of revenue of £25 million by 2025, in what the directors see as an exciting and dynamic market.

At 11:22 GMT, shares of Intelligent Ultrasound Group were up 0.11% at 9.26p.

Reporting by Josh White for Sharecast.com.

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Celonis Launches New Anti-Inflation Accounts Receivable Apps to Increase Working Capital and Reduce Costs https://urabandai-ss.com/celonis-launches-new-anti-inflation-accounts-receivable-apps-to-increase-working-capital-and-reduce-costs/ Wed, 09 Nov 2022 09:00:00 +0000 https://urabandai-ss.com/celonis-launches-new-anti-inflation-accounts-receivable-apps-to-increase-working-capital-and-reduce-costs/

NEW YORK and Munich, Germany, November 9, 2022 /PRNewswire/ — CELOSPHERE 2022 – Celonisthe global leader in fulfillment management, today unveiled a new set of Celonis fulfillment management applications for collections management, credit management and dispute management.

These applications are designed to optimize accounts receivable (A/R) and to specifically help businesses increase working capital and reduce costs. They will help clients fight inflationary pressures, preserve cash and reduce working capital. By uncovering hidden process inefficiencies in all areas of accounts receivable, clients can uncover new opportunities to save time and money.

These new Celonis apps were developed in conjunction with technology acquired from Sailfin. These new solutions combine Celonis’ market-leading process mining and execution management technology with Sailfin technology and expertise provide customers with innovative, secure and powerful solutions to accelerate cash conversion while reducing operating costs.

New Celonis Accounts Receivable apps help businesses:

  • Manage data complexity: Celonis provides businesses with a single source of relevant customer, balance, contract and process data, eliminating source system fragmentation by integrating data at scale and in real time into transactional and analytical systems.
  • Reduce reactive decision making: Celonis equips A/R teams with intelligent prioritization that takes into account risk factors as well as customer and balance assessment. Data-driven insights help collectors reduce noise, reduce reliance on instinct, and consistently pursue the most impactful actions, improving working capital.
  • Eliminate recurring manual labor: Celonis helps streamline and automate collection, litigation and credit processes, saving teams time. Common manual steps such as dispute coding or credit approvals are simplified or automated. Team orchestration is streamlined at all hierarchical levels; escalation decisions are driven by data and process intelligence.

“The new Celonis Accounts Receivable credit application allows our credit analysts to focus on higher value work,” said Michel Kleffman, Head of Global Accounting at Harting. “It allows us to take a much more proactive approach to our processes, so we know how to do the right things, at the right time, increasing employee and customer satisfaction. Because it leverages the data already in our system, credit analysts can get right to focus on the real task of making a good decision, without wasting time on data collection and interpretation – positive impact on productivity.We have already seen a decrease of 35 % manual credit changes. We’re very excited about the A/R credit app.”

The Celonis Execution Management System

Today’s business processes run in an extremely complex environment of hundreds of enterprise systems, some of which are over 30 years old. This creates fertile ground for process issues that even the best run companies cannot see. Celonis has spent more than a decade perfecting the science, methodologies and technologies that identify and correct hidden process inefficiencies in ERP, SCM and CRM systems.

Powered by its state-of-the-art process mining technology, Celonis’ Execution Management System (EMS) operates at a higher level than the underlying systems. The Celonis EMS uses real-time data from enterprise systems, desktops, devices, and third-party sources for “X-ray” processes. Celonis then applies intelligence to this data to identify the root cause of process issues, calculate business impact, and confirm the fastest path to resolution. Then, the Celonis EMS triggers automated actions in real time to correct inefficiencies and optimize process performance. This offers companies a new and modern approach to manage their business on intelligent processes.

Demo of app shipped unbilled (Youtube)
Customer Accounts Demo (Youtube)

About Celonis

Celonis uncovers and fixes inefficiencies businesses can’t see, enabling them to reach levels they never thought possible. Powered by its market-leading process mining core, Celonis’ execution management system provides a comprehensive set of platform features for business executives and users to eliminate billions of inefficiencies business, to provide a better customer experience and to reduce carbon emissions. Celonis has thousands of implementations with global customers and is headquartered in Munich, Germany and New York City, UNITED STATES with more than 20 offices worldwide.

© 2022 Celonis SE. All rights reserved. Celonis, Execution Management System, EMS and the Celonis “droplet” logo are trademarks or registered trademarks of Celonis SE in Germany and other jurisdictions. All other product and company names are trademarks or registered trademarks of their respective owners.

Contact: [email protected]

SOURCECelonis

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Hackett Group’s Second Quarter Working Capital Survey Update Reveals Companies Hit Payment Term Extension Limits as They Manage to Address Inventory Issues https://urabandai-ss.com/hackett-groups-second-quarter-working-capital-survey-update-reveals-companies-hit-payment-term-extension-limits-as-they-manage-to-address-inventory-issues/ Thu, 03 Nov 2022 14:00:00 +0000 https://urabandai-ss.com/hackett-groups-second-quarter-working-capital-survey-update-reveals-companies-hit-payment-term-extension-limits-as-they-manage-to-address-inventory-issues/

MIAMI & LONDON–(BUSINESS WIRE)–The largest public companies in the United States may have reached the limits of their ability to stretch payment terms with suppliers in mid-2022, as they managed inventory management quite well in the face of high levels of global uncertainty, according to the Q2 2022 Working Capital Survey Update by The Hackett Group, Inc. (NASDAQ: HCKT).

2021 was a year like no other in recent memory, with improvements in all three main components of working capital – businesses managed inventory more efficiently, collected customers faster and took longer to pay suppliers. But the first half of 2022 saw several new developments. As a follow-up, The Hackett Group® recently completed an analysis of working capital performance through the end of the second quarter of 2022, examining the 1,000 largest non-financial public companies in the United States and comparing their performance with the second quarter of 2021, in order to reduce the cyclical and seasonal impact on the data.

The updated survey is available for download, with registration at this link, and is also covered in this recent episode of The Hackett Group’s “Business Excelleration Podcast”. Here is a summary of the main findings:

Businesses may have reached the upper limits of payment term extensions. After a slowdown in the growth of days unpaid (DPO) over the last two quarters, the DPO decreased by 1.1% (from 56.5 to 55.9 days) in the second quarter of 2022. This seems to indicate a shift from leverage to sellers, due to supply chain bottlenecks, inflationary pressures, and geopolitical risks, among others. “This is the true definition of an inflection point and a trend that is set to continue,” said Shawn Townsend, Principal of The Hackett Group. “Buyers have become more concerned with assurance of supply and have had to become less prescriptive about how they receive goods and services. Additionally, while supply chain finance remains popular, buyers are more focused on using it to stabilize and strengthen the supply base than to extend payment terms.

Despite the difficulties, companies have maintained the performance of their inventories. Days In Stock (DIO) remained virtually flat over the period, rising only 0.1% (staying at 46.5 days). According to Hackett Group Director István Bodó, “We have seen an atypical improvement in DIO over the past year, which seems to indicate that companies have learned lessons from the pandemic. But businesses are still grappling with a tremendous amount of uncertainty, and maintaining the inventory line in this environment is actually a big win.

The number of days outstanding in sales – the third major component of working capital performance – also remained broadly stable during the period, decreasing by 0.1% (to remain at 40.1 days). These three elements of working capital combined to generate a 2.0% increase in the cash conversion cycle.

On the operational front, which often drives working capital performance, revenue continued its meteoric rise in the second quarter, growing nearly 20% (4X-5X what was seen before the pandemic). Earnings before interest, taxes, depreciation and amortization decreased slightly and net profit margin decreased by 4.6% compared to the same period in 2021, due to the increase in the cost of materials and high inflation since decades. Cash as a percentage of revenue fell nearly 30% and returned to pre-pandemic levels, signaling companies are using cash hoarded during the pandemic to pay down debt in anticipation of further interest rate hikes .

“The headwinds will clearly continue to persist for the foreseeable future, and working capital management discipline, planning and foresight can play a key role in helping businesses succeed,” Townsend said. “Inventory management presents one of the biggest conundrums for businesses today. It is critical for businesses to ensure they can quickly recognize and respond to changing demand signals. Regarding receivables, companies should continue to review the credit and collection management process, as well as payment terms and contractual milestones.With suppliers, improving supplier management is essential.The criticality of suppliers, competition for resources and availability of supply may warrant revisiting sourcing, location and working capital strategies.Contingency planning is also becoming increasingly important, including the integration risk in the cash/cost/service equation.

Bodó added: “Now is not the time for companies to ease their foot when it comes to working capital and cash flow management. Smart business leaders will double down on their working capital health management capabilities – increasing their visibility into key metrics, better sharing information across functions and automating processes – to enable agility in a context of continuous change.

About Hackett Group

The Hackett Group, Inc. (NASDAQ:HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking firm for global enterprises, delivering digital transformation, including leading enterprise cloud applications, workflow automation and analytics that enable Digital World Class™ performance.

Backed by our unrivaled intellectual property from nearly 20,000 benchmark studies of the world’s largest companies – including 97% of the Dow Jones Industrials, 94% of the Fortune 100, 70% of the DAX 30 and 51% of the FTSE 100 – captured through our leading benchmarking platform Quantum Leap® and our Digital Transformation Platform (DTP), we are accelerating the implementation of best practices.

More information about The Hackett Group is available at www.thehackettgroup.com, by emailing info@thehackettgroup.com or by calling (770) 225-3600.

The Hackett Group, the quadrant logo, World Class Defined and Enabled, Quantum Leap, Digital World Class and Hackett Excelleration Matrix are registered trademarks of The Hackett Group.

Caution regarding “forward-looking” statements

This release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements, including but not limited to words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates” or other similar expressions or variations of such words or similar expressions indicating present or anticipated or expected future events or results are intended to identify such forward-looking statements. Forward-looking statements are not statements of historical fact and involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results, performance or achievements to differ materially from the results, performance or achievements expressed or implied by the forward-looking statements. Factors that could impact these forward-looking statements include, but are not limited to, Hackett Group’s ability to effectively market its digital transformation and other consulting services, competition from other consulting and technology companies may have or develop similar offerings in the future, the commercial viability of The Hackett Group and its services, and other risks detailed in The Hackett Group’s reports filed with the Securities and Exchange Commission the United States. The Hackett Group assumes no obligation to update this release or any forward-looking statements contained herein.

]]> Air India could secure $1.8 billion in working capital loans https://urabandai-ss.com/air-india-could-secure-1-8-billion-in-working-capital-loans/ Mon, 31 Oct 2022 07:00:00 +0000 https://urabandai-ss.com/air-india-could-secure-1-8-billion-in-working-capital-loans/

The Tata Group is eyeing more capital infusion for Air India in the form of loans as it seeks to effectively run the airline and solve its problems. The new owners of the airline have ambitious plans for the next five years, which include the development of the fleet and the network, the digitization of various processes and the renovation of the aircraft, among others. The new loans will add to the billions the Tata Group raised for the purchase of Air India last year.


New loans

The Tata Group is said to be in talks with banks to raise around $1.8 billion in working capital loans for Air India, to be used for its turnaround strategy. A person familiar with the matter told the Economic Times (ET) that the money would go towards day-to-day operations, aircraft leasing and refurbishment, among other things.

SIMPLEFLYING VIDEO OF THE DAY

Air India is undergoing a facelift. The airline had been overlooked as a common carrier and had racked up billions in debt over the years. In fiscal 2022 alone, it lost around $1.1 billion.

Air India Airbus A320neo

Photo: Airbus

The Tatas had taken advice from consultants before buying the airline, and it was estimated that they would need more than $1 billion to refurbish the plane. Some sources reveal that these expenses have since increased. Some believe that given current trends, Tatas could secure the loans for three years at a rate of around 7.5-8%.

Previous funding

The Tatas had set up a new subsidiary to handle the deal with Air India, known as Talace, which took out unsecured loans of over $3 billion from various banks for a period of one year. This sum is about to be renewed at the end of January next year.

Most of that loan (about $2.36 billion) was used to fund the purchase of Air India, and the rest was set aside for the carrier’s operational costs.

But taming a beast like Air India was never going to come cheap, and the Tatas are aware they need more funding to go ahead with their ambitious plans.

Air India Boeing 787

Photo: Boeing

Plan Execution

Air India CEO Campbell Wilson has said he wants to create an airline brand that competes with other big-name global carriers, such as Qatar Airways, Emirates and Singapore Airlines. In order to deliver consistent quality, new owners need to invest in several things including new aircraft, technology and customer experience.

The new management has already put in place some of these plans, such as short-term aircraft leasing, although such arrangements can be costly. A former AI executive told ET,

“Depending on the age of the aircraft, short-term rentals could be 15% higher than a long-term rental. But be aware that Air India leased the Boeing 777-200LRs, which are hardly in vogue these days. He would have gotten a reasonable rate.

Air India B777-200LR

The airline is also hiring employees across all departments and recently attracted more than 73,000 applications in two months for flight and cabin crew roles. The Tatas are also not shy about recruiting qualified executives from industry, even if it means offering them impressive salary increases.

The carrier is also investing in technology and has signed contracts with companies based in the United States and Germany to effectively manage various aspects of business management, including customer interaction and relations and the integration of functions such as planning, inventory purchasing, sales and marketing.

While these changes will not happen overnight, given the scale of the improvements needed, the hope is that passengers will begin to notice stark differences in Air India’s product within the next year or two. .

What do you think of the Tata group’s strategy vis-à-vis Air India? Please leave a comment below.

Source: The Economic Times

  • Tom Boon-200

    Air India

    IATA/ICAO code:
    AI/AIC

    Airline type:
    Full service carrier

    Hub(s):
    Delhi Indira Gandhi International Airport

    Year of foundation:
    1946

    Alliance:
    star alliance

    CEO:
    Campbell Wilson

    Country:
    India

]]> EcoWorld issues first sukuk of RM550m for working capital and capital expenditure https://urabandai-ss.com/ecoworld-issues-first-sukuk-of-rm550m-for-working-capital-and-capital-expenditure/ Mon, 31 Oct 2022 05:52:53 +0000 https://urabandai-ss.com/ecoworld-issues-first-sukuk-of-rm550m-for-working-capital-and-capital-expenditure/

KUALA LUMPUR (October 31): Property developer Eco World Development Group Bhd (EcoWorld) has issued its first RM550 million Islamic bonds (sukuk) under its RM1.2 billion sukuk wakalah scheme. The funds will be partly used for working capital, capital expenditures and Sharia-compliant investments of EcoWorld and its subsidiaries.

The five-year term sukuk will also be used for general corporate purposes of the group and/or any joint ventures, as well as to refinance any existing debt.

In a filing on Monday (October 31st) in Bursa Malaysia, EcoWorld said the RM1.2 billion sukuk scheme, through its wholly owned subsidiary Eco World Capital Bhd, is guaranteed by EcoWorld and has assigned a final credit rating of AA-IS (CG) with a stable outlook by local rating agency MARC Ratings Bhd.

CIMB Investment Bank Bhd, HSBC Amanah Malaysia Bhd and Maybank Investment Bank Bhd are the main joint advisers and arrangers of the sukuk program. Meanwhile, the three banks along with RHB Investment Bank Bhd are co-managers of the first sukuk issuance.

At the lunch break on Monday, shares of EcoWorld closed up one sen or 1.69% at 60 sen, giving the company a market capitalization of RM1.77 billion.

]]> Tata eyeing Rs 15,000 crore working capital debt for Air India https://urabandai-ss.com/tata-eyeing-rs-15000-crore-working-capital-debt-for-air-india/ Fri, 28 Oct 2022 23:34:00 +0000 https://urabandai-ss.com/tata-eyeing-rs-15000-crore-working-capital-debt-for-air-india/ The Tata Group is in talks with banks to raise working capital loans of around Rs 15,000 crore for Air India, the carrier it bought from the government last year and is trying to revive.

The money will be used to cover day-to-day flight operations and losses, refurbish the fleet, pay for aircraft rentals and overhaul IT operations, a person familiar with the development said.

A second person said the term of the loan would be three years, setting it at a range of 7.5-8% reset each year.

Talace, the Tata Sons subsidiary that won Air India’s bid, raised Rs 23,000 crore in a one-year unsecured and unrated loan from the State Bank of India (SBI) last year , HDFC Bank and Bank of Baroda at 4.25%. The loan matures at the end of January.

Interest rates have risen and liquidity in the system has dried up, which will impact the cost of borrowing, a bank official said. The threshold for 364-day treasury bills is 6.91%, according to the Reserve Bank of India’s website.

Spokespersons for Tata Sons and Air India did not respond to ET’s emailed questions until press time.

In October last year, Tata Sons, through Talace, won Air India’s takeover bid for Rs 18,000 crore. He took control of the airline in January this year, 69 years after the government nationalized it in August 1953.

Change in carrier

Since then, the Tatas have tried to tackle every weak point – from poor customer service and archaic manual systems to inefficient old planes.

Air India’s cumulative losses at the end of March 2021 stood at Rs 83,916 crore. It lost another Rs 9,556.5 crore in FY22.

The airline aims to triple its fleet of 113 aircraft in the next five years. In September, it agreed to lease five Boeing wide-body aircraft and 25 Airbus narrow-body jets for the next few years. The planes will be added to the fleet in 15 months, starting in December. Air India has short-term leases, which tend to be expensive.

“Depending on the age of the plane, short-term rentals could be 15% higher than a long-term lease,” said a former Air India executive, who declined to be named. “But please note that Air India leased the Boeing 777-200LRs, which are hardly in vogue these days. It would have gotten a reasonable rate.”

During pre-purchase vetting, Tata executives found that the conglomerate would have to spend more than $1 billion to refurbish Air India planes and make them flight-ready, according to consultants who were part of the process. Well-informed people said these expenses exceeded estimates.

Aircraft refurbishment is also impacted due to supply chain issues across the globe, which would delay the delivery of new seats or in-flight entertainment screens.

Digitization costs

Air India’s new owners are also spending on IT integration. “The Tatas have formed six verticals to completely overhaul the airline’s back-end. It is led by Satya Ramaswamy,” the insider said.

The group would have awarded a new customer relationship management (CRM) contract to the American Salesforce. CRM is a technology for managing all of a company’s relationships and interactions with its customers and potential customers.

Tata also awarded a new enterprise resource planning (ERP) contract to German company SAP. An ERP software system can integrate several functions such as planning, inventory purchasing, sales, marketing, finance and human resources. “The ERP product is cloud-based,” the person with knowledge of the matter said. “Simply put, for the first time in Air India’s history, every penny it earns and spends will now be digitized and easily accessible.”

Meanwhile, Air India is rebuilding its core team, poaching seasoned executives from peer airlines, offering them salaries up to 50% above industry standards, ET reported on October 21. The Tatas have appointed a host of consultants to oversee the turnaround. PwC has been asked to advise on workforce management and expansion, one of the people quoted above said.

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Working Capital Adjustments in M&A Transactions – Corporate and Company Law https://urabandai-ss.com/working-capital-adjustments-in-ma-transactions-corporate-and-company-law/ Thu, 20 Oct 2022 11:07:41 +0000 https://urabandai-ss.com/working-capital-adjustments-in-ma-transactions-corporate-and-company-law/

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Assessing a company’s working capital is an essential part of merger and acquisition (M&A) transactions. A detailed financial assessment should be performed to determine the financial and legal expectations of both parties involved in the transaction. Working capital adjustments in mergers and acquisitions are essential in situations where the working capital of the acquiree has changed before the transaction is finalized. These adjustments are often used as the basis for changing the originally agreed purchase price.

What is working capital?

When a potential buyer is considering an M&A transaction, they will estimate the average net operating working capital (NOWC) needed to sustain the current revenue earned by the business. In many of these transactions, the buyer will require the business to provide a designated net working capital amount as well as the fair market value of the business’ fixed assets to support the overall enterprise value calculated for the business.

In simpler terms, the NYU Stern School of Business defines a company’s working capital as the difference between current assets (such as cash, accounts receivable, unpaid customer bills, etc.) and current liabilities. . This number measures a company’s liquidity, operational efficiency and short-term financial health. Companies with positive working capital often have significant potential for growth and investment. Conversely, a company whose liabilities exceed its assets (negative working capital) is more likely to struggle to grow or repay its creditors and risks bankruptcy.

What is a working capital adjustment?

A working capital adjustment is a purchase price adjustment based on the working capital of the business or the target business in connection with a merger and/or acquisition. Generally, businesses need a minimum amount of working capital to continue their activities. The party acquiring the target company must ensure that the target company has sufficient working capital after closing to continue its operations. When working capital is insufficient, the buyer may need to invest additional cash in the business, which increases the effective purchase price. To account for this increase, the buyer may require a working capital adjustment, which lowers the purchase price if the target company’s working capital is below a certain level on the closing date.

For working capital adjustments in mergers and acquisitions, both parties will agree on a working capital target that the acquired company should have at the time of closing. Shortly before closing, the seller will provide an estimate of the amount of working capital it expects the target company to have at closing. If the seller’s estimate is greater than the working capital target, the purchase price will be increased by this excess. If the estimate is less than the working capital target, the buyer will receive the difference as a reduction in the purchase price. After closing, the buyer will calculate the amount of working capital the target company had at closing. If the buyer’s calculation differs from the seller’s estimate, the purchase price will be adjusted.

When is working capital calculated?

The required working capital figure is usually calculated during the letter of intent stage of the deal process. In many of these transactions, the letter of intent is one of the first documents discussed between the two parties. It functions as a written record of the parties’ intention to reach an agreement and a summary of all the material terms of the potential agreement.

The Letter of Intent is primarily a starting point for this process, and it is not legally binding. This document helps to outline the main terms of the agreement and to ensure that there are no potential obstacles for either party. However, extensive research and negotiations usually take place for a long time after the letter of intent is written. This part of the process is known as “due diligence”, and the working capital figure can be redefined at this point.

When do working capital adjustments take place?

A working capital adjustment can be made at different times during the trading and transaction process. Although they may occur on the closing date, they generally occur between 90 and 120 days after closing. This delay gives the buyer’s auditors sufficient time to review the calculations. At this point, all accounts are closed, allowing the buyer’s team to calculate a more accurate working capital figure. This final figure is compared to the initial working capital estimate, and any adjustments are based on the differences between these two figures.

Working Capital Adjustment Considerations for Sellers

The owner of the business for sale in an M&A transaction should ensure that he understands how his working capital estimate was calculated. Additionally, knowing the true average net operating working capital (NOWC) needed to maintain current levels of revenue is essential. Sellers should also be aware that buyers may attempt to overestimate this number as a tactic to justify a downward working capital adjustment prior to closing.

Finally, sellers should be sure to include all current assets in their working capital calculations. This may include certain expenses that have been written off for tax savings. In an M&A transaction, some of these expenses and supplies, as well as prepaid expenses, must be reclassified as inventory and included in current assets.

Originally published August 23, 2022

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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DBS Launches AI-Based Working Capital Solution to Address Unmet Working Capital Needs of Micro and Small Businesses in Singapore https://urabandai-ss.com/dbs-launches-ai-based-working-capital-solution-to-address-unmet-working-capital-needs-of-micro-and-small-businesses-in-singapore/ Tue, 18 Oct 2022 07:43:14 +0000 https://urabandai-ss.com/dbs-launches-ai-based-working-capital-solution-to-address-unmet-working-capital-needs-of-micro-and-small-businesses-in-singapore/

Singapore, 18 October 2022 – While the Covid-19 pandemic appeared to be under control, SMEs in Singapore are now grappling with an inflationary environment, impending GST hike, supply chain issues and rising rates of interest. To help solve these problems, DBS is deploying two solutions to meet the unmet working capital needs of SMEs in Singapore: “DBS Quick Finance” and a partnership with Xero, a global accounting platform for small businesses.

With “DBS Quick Finance”, DBS will proactively reach out to identified clients through its DBS IDEAL platform to extend working capital and cash flow support. ‘DBS Quick Finance’ allows almost instant access to finance of up to SGD 300,000. Customers will have the option of choosing between an overdraft that can be drawn down when needed or a working capital loan that will be disbursed monthly.

Thanks to hyper-personalized artificial intelligence and data analysis, the DBS Quick Finance application process has been reduced to one minute to apply, one second to approve and, in some cases, even an instant disbursement, without paperwork. additional.

Gene Wong, Singapore Head of SME Banking (Micro & Small Segment), DBS, said: “Just as business owners sought to put behind them two years of economic uncertainty due to the pandemic, SMEs are now tested by inflationary pressures, a rising GST, supply chain headwinds and geopolitical tensions, DBS aims to double down on its support for micro and small businesses by leveraging our digital capabilities and analytics of advanced data to identify potential financial needs more accurately and proactively contact them before their needs become too overwhelming or urgent.After working hand in hand with our micro and small businesses to overcome the unprecedented challenges of Covid- 19, we are confident that business owners will remain resilient and that we will emerge stronger together.

Additionally, DBS’s partnership with Xero will also allow SME customers in need of financing to apply for working capital loans simply by sharing their daily accounting transaction records directly from Xero’s platform with DBS for credit reporting purposes. . With the aim of simplifying and facilitating access to working capital for SMEs in Singapore, this new feature could further benefit customers by offering personalized credit terms and loan amounts derived from a deeper understanding of the models. transactions and commercial flows of SMEs.

During the Covid-19 pandemic, DBS engaged SMEs in Singapore to expand working capital and cash flow support, with a greater focus on the micro and small business segment. Since 2020, DBS has approved over 16,000 unsecured loans totaling over SGD 7 billion to SMEs in Singapore, of which over 90% went to micro and small businesses. According to the DBS SME Pulse Check Survey released earlier this year[1]more than 85% of SMBs identified consistent cash flow and cost management as a key business priority in 2022.

At the same time, DBS leverages emerging technologies to help micro and small businesses manage their credit risk. DBS proactively engaged SMEs identified by its artificial intelligence and machine learning models at the first signs of trouble with advisory support and financing solutions before their financial situation became unrecoverable. With these capabilities, the bank has been able to successfully identify more than 95% of SME non-performing loans at least three months before businesses experience credit difficulties. Over 80% of identified risky borrowers were avoided.

DBS has also rolled out a series of enhancements over the past year to make the banking journey for business owners more intuitive, smart and invisible. These include:

  • Provide SMBs with a fully digitized end-to-end account opening and onboarding process. In February 2021, DBS became the first bank to introduce SingPass Face Verification as an authentication method for SMB account opening. Today, SMBs can access their new business account online in less than 20 minutes from the point of application, and over 10,000 new SMB accounts were opened with DBS in 2021.

  • Provide SMEs with a fully digital loan application, approval and acceptance process. Since July 2021, eligible SMEs can accept loan offers digitally through IDEAL, the bank’s unique online banking platform. This has saved SMEs up to a month of time by eliminating the hassle of scheduling face-to-face meetings with their bankers or arranging document filings, two of the most common loan acceptance methods in the industry today.

  • DBS offers SMEs a suite of solutions for their cross-border trade finance needs. The bank offers SMEs a multi-currency account to facilitate cross-border transactions, helping SMEs simplify the management of the 13 currencies most used by SMEs in Singapore, all from the convenience of a wallet. Testifying to the relevance of DBS’ digital finance solutions, more than nine out of 10 supply chain finance transactions from the bank in Asia were completed through digital platforms last year. This has translated into robust revenue growth for DBS’ commercial ecosystems, which doubled year-over-year in 2021. DBS has also offered same-day digital vendor onboarding to its enterprise customers since 2019. Coupled with digital capabilities such as intuitive lending, cash management and trade finance services, as well as foreign exchange solutions, DBS is able to provide SMEs with a more personalized and seamless experience.

Clients who wish to learn more about these two working capital solutions can access the DBS Financement PME toolkit here.

[1]DBS survey finds most SMEs in Singapore continue to closely monitor cash flow, despite confidence in ability to weather cost pressures

About DBS
DBS is a leading financial services group in Asia, present in 18 markets. Headquartered and listed in Singapore, DBS is present in all three major Asian growth areas: Greater China, Southeast Asia and South Asia. The bank’s “AA-” and “Aa1” credit ratings are among the highest in the world.

Recognized for its global leadership, DBS has been named “World’s Best Bank” by Global Finance, “World’s Best Bank” by Euromoney and “Global Bank of the Year” by The Banker. The bank is at the forefront of using digital technology to shape the future of banking, having been named the World’s Best Digital Bank< /a> by Euromoney and “World’s Most Innovative in Digital Banking” by The Banker. Additionally, DBS has received the “Safest Bank in Asia” award from Global Finance for 14 consecutive years from 2009 to 2022.

DBS offers a full range of services in the field of personal, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with its customers because it does its banking the Asian way. Through the DBS Foundation, the bank creates an impact beyond the bank by supporting social enterprises: enterprises with a double profit and social and/or environmental impact. The DBS Foundation also gives back to society in a variety of ways, including equipping communities with future-ready skills and building food resilience.

With its extensive network of operations in Asia and a focus on engaging and empowering its people, DBS presents exciting career opportunities. For more information, visit www.dbs.com.

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