The client, a consumer goods multinational from the UK, decided to undertake a process optimization exercise for its Receivables function. The project also involved managing receivables, including cash application, collections, Proof of Delivery and Goods Received Note reconciliation and reporting.

The Nexdigm team decided to undertake the project in a phased manner. In the first phase, we focused on historical data and reduced the historical outstanding account balances by 92%, without any write offs. The second phase focused on process optimization, where we redesigned and detailed a process to streamline execution and reduce costs. The result was a reduction in the payment collection period (DSO) by 40% within the first 9 months of the project while enhancing data tracking, reporting, and controls, at each step. In this phase, we also managed to align the Cash Application method with global standards.

Using continual process improvement, robotics and excel automations, as well as enhanced query and conflict resolution process, the client managed to reduce data entry errors in receipt posting/allocation and improve customer relations through proactive communication.

Our client (Client), an international investment group was planning to invest in the Indian online gaming market. The target company provided an online platform for poker gaming using real and virtual money.

The Client engaged Nexdigm (SKP) to determine the broad level valuation of the online poker gaming company (Target Company).

Based on the two valuation methods decided (CCM and CTM), we arrived at a valuation range for the Target Company. We presented the appropriate valuation range to our Client, equipping the Client to effectively negotiate and close the deal.

NHK’s experienced global M&A team approached the transaction with a typical Japanese penchant for paying minute attention to details and information. They signed up Nexdigm (SKP) along with a leading law firm to act as its advisors for the transaction, with an initial mandate to conduct an onsite financial and tax due diligence and assist the legal firm and NHK corporate teams with pertinent facts for their respective legal, commercial and operational due diligences.

Customized technical deliveries combined with extensive local project management support

A right mix of experienced professionals with multivariate skills enabled us to quickly adapt to the developments and provide deliveries across all workstreams, including in situations that extended well beyond the traditional mandate in a typical M&A support assignment.

The client developed immense confidence in our project management ability and our solution-oriented approach, and hence, we were retained as the preferred advisory and implementation partner for almost every routine and non-routine aspect of the project, including:

• Enterprise/Asset Valuations, including developing a business case for structuring the transaction as a Slump Sale v/s Greenfield Set-up
• Negotiations with Sellers and Term Sheet Finalization, including measures to ensure that that the value base of various assets to be transferred on the cut-off date is not eroded. Anticipated and built in various other matters into the Term Sheet to avoid last minute re-negotiations, and thereby achieved a smooth transition to the Business Purchase Agreement.
• Onsite Financial and Tax Due Diligence, and thereafter ascertained fulfilment of various Conditions Precedent stated in the Business Purchase Agreement. These exercises greatly helped NHK to validate the enterprise value and financial performance of the unit, and to identify matters that called for valuation adjustments and/or indemnities from the Seller.
• Legal Support – Supported in various FEMA/FDI compliances and in devising a mechanism for efficient allotment of shares. SKP also extended support in managing transfer of operational contracts and OEM vendor contracts.
• Competition Law and Anti-Trust filings – Liaised with various NHK and Seller teams, legal advisorseconomist and with Competition Commission of India (CCI) authorities to gather relevant information for the filings. Adopted a unique methodology for discovery of the relevant market size, an input that greatly enabled unconditional clearance of the transaction by the CCI
• Tax Advisory, including approach for purchase price allocation amongst the acquired tangible and intangible assets based on judicial precedents.
• Support and Liaison for various Local Registrations –All documentation was put in place before the transaction closing date. Further, in-principal approvals were also obtained from various regulatory authorities to enable them to issue new registrations in the name of NHK on the transaction closing day itself.
• IT integration – After identifying the need for a new ERP license, SKP team also helped in finalizing the job order, MIS specifications and in selection of the IT consultant and ERP Vendor. Onsite SKP team enabled smooth transition of data on the closing date with a fully functional customized ERP.
• Accounting and Treasury support- SKP offsite teams managed accounting and treasury function of newly formed NHK entity until the transaction closing date, including efficient short-term investment of surplus funds and acting as authorized signatory for banking transactions.
• HR Support, Administration and Corporate Communications – SKP onsite team stepped in with their knowledge of the local culture, language and logistics to help with various day-to-day requirements during the project on a need basis. This ranged from support for smooth onboarding of employees, corporate communications to factory workers and vendors to travel and stay logistics for expatriate staff etc.

Nexdigm (SKP) enabled smooth interactions and exchange of information between various parties for the project that lasted well over 12 months. We became the single point of contact on behalf of NHK to take care all the issues holistically and ensured no disruptions in back-office operations during the transition of control to NHK.

The project included enterprise/asset valuations, negotiations with sellers, competition law and anti-trust filings, tax advisory, IT integration, accounting and treasury support, as well as HR Support, Administration and Corporate Communications.

NHK could conduct Business-As-Usual on the next business day after the transaction closing date, a critical achievement to maintain its status in the market.

One of the companies in the conglomerate, which dealt in consumer goods, was interested in entering the Indian market to conduct wholesale trading in the furniture market. In this regard, they wanted support in creating their India growth plan.

In pursuit of this objective, we conducted a market assessment, competition mapping, and evaluated various distribution channels and supply chain networks in the organized and unorganized market.

We identified target markets and the initial point of entry based on external environment such as market growth, competition, logistics, etc.

We used a combination of primary and secondary research to deliver the report as per the proposed scope. The assignment was structured in four areas:

Preparatory Work

• Selected target cities to conduct market study: As per the mandate, four cities, namely Mumbai, Pune, Chennai and Bangalore were chosen for conducting market study
• Identified relevant clusters and stakeholders to conduct proposed survey in each city: We had identified relevant furniture clusters and stakeholders in each city for market study.

Information gathering and analysis

Primary interviews were conducted in the four cities with the following stakeholders in the furniture industry value chain:

• Furniture manufacturers
• Furniture retail chains or shops (organised and unorganised)
• E-commerce companies (dealing in furniture business)
• Third Party Logistic (3PL) companies
• Custom house agents
• Institutional buyers (hotels, hospitals, etc.)
• Consolidators
• Industry experts

We interviewed 100+ stakeholders in India. The objective of the survey was to capture the following:

• Market Assessment: A comprehensive analysis of market forces, market trends, product segments, entry barriers, risks, opportunities and challenges.
• Competition Mapping: Analysis of various furniture manufacturers, retail chains, traders, e-commerce companies and their products, market operations, sales, promotion and brand building practices, strengths and weaknesses in the organised and unorganised market.

Supply Chain Analysis

• We analysed the sales and distribution models of the key furniture players and furniture retail chains, which includes information about their mode of operation, dealers, distributors, port of import, type and location of warehouse(s), information about various stakeholders involved from manufacturing/importing to delivering goods to end customers.
• We evaluated the business models of e-commerce companies in the furniture business.
• We evaluated margins, terms of trade at each intermediary level in the distribution channel.
• We mapped the supply chain with indirect tax cost at each stage and evaluate the possibilities to mitigate the said tax cost.

Tax and Regulatory Scrutiny

We analyzed product packaging related regulations while importing furniture to India, compared various warehouses from a commercial and tax perspective, and the structure of relevant taxes and duties applicable for the same.

We conducted a market study to gain sector and local insights from the organized and unorganized sector present in the market. Nexdigm (SKP) also recommended a target market for the client’s product portfolio and the initial point of entry. In addition, we assisted them in creating a tax efficient supply chain and distribution structure in line with the Indian ecosystem.

Based on the market assessment, competition mapping, supply chain analysis, and tax and regulatory scrutiny, we helped the client create a robust India expansion plan.

The client’s services were eligible for exemption from entertainment tax, but the government imposed the State Goods and Service Tax (SGST) on the admission fees. The
company needed support while representing their case to the relevant authorities and obtaining incentives in the form of investment-linked exemption.

After scrutinizing the client’s business, we focused on the previous indirect tax regime where it received incentives from the State Tourism Department. We obtained a meeting with representatives from the departments within 15 days of filing a representation.

Based on meticulous analysis and qualitative information, the State Finance Ministry acceded to the submissions of the company. Furthermore, the State Industries Ministry was directed to work with the company to devise a compensation formula, resulting in mitigation of a potential loss of USD 112 million to the client.

The client, a Japanese tractor manufacturing company, needed assistance in developing an entry strategy for the Indian market. The client engaged Nexdigm (SKP) to conduct an in-depth analysis of two major players in Indian tractor market (hereinafter referred to as target companies).

Pursuant to these objectives, we conducted a brief industry and market assessment study along with peer review and analysis.

Peer analysis involved extensive primary and secondary research on the information given below regarding the target companies:

• Business growth and strategy history
• Financial analysis and comparison with industry average
• Import and export details
• Government incentives
• Sales and distribution model
• Estimated cost analysis
• Challenges faced and future outlook

The project was structured in the following way:

Preparatory work

• A. We identified various associates (industry experts) from our associations, to get them on board and get relevant information on the target companies
• B. After on boarding the associate, we designed the structure of the report after considering the clients requirement.

Information gathering and analysis

Primary Survey

Primary interviews were conducted with the selected associates/stakeholders in the industry value chain to capture the relevant information

Secondary Survey

• We collected relevant data available from the website of target companies like information on the production facility, product information, distribution network, etc.
• With the help of our internal database, we were able to gather information on the financials, statistics on import and export, pricing strategy, etc. of the target companies.

We interviewed 20+ associates in select industries to validate the ourdata gathered from the primary and secondary survey. The objective of the survey was to capture and validate:

• The product portfolio of the target company; specifications of various farm equipment’s in different category
• The price points of target company’s products in India and a comparison with the industry average
• The sales and distribution model, distributor network, facility related information like manufacturing units, office locations across India, production capacity, after-sales support services, etc.
• Recent promotion and brand building practices.
• Brand positioning and information related to export and import statistics

Competitors Analysis: Peers Comparison

• SKP analyzed and compared the performance of various department of target companies like financial performance, operational strategy, sales and distribution network which included information about their mode of operation, dealers, presence in India, statistics of import and export, etc.
• We also evaluated the target companiesrecent promotion and brand building practices that they have implemented and were contemplating to put in place.
• On the product, pricing and operational strategy front, we analyzed how the target companies priced and designed the product mix suitable for various market places.

Incentives, Tax, and Regulatory Advisory

We analyzed and provided details of government incentives (central and state) that might be available to the client in a few target Indian states, e.g. Maharashtra, Haryana and Tamil Nadu, based on the client’s requirement.

On the regulatory and policy front, we analyzed and provided current and expected (future) structure of duties, indirect taxes and levies (both at national and state level) and their impact covering the initial tax feasibility study from current tax regime’s stand point. Our report included:

• Existing applicable indirect taxes
• An overview of the proposed indirect tax structure (new Goods and Services Tax system) and its implications based on the information available in the public domain

Nexdigm (SKP) analyzed and compared the performance of various department of the target companies such as financial performance, operational strategy, sales and distribution network which included mode of operation, dealers, presence in India, statistics of import and export, etc.

On the product, pricing and operational strategy front, we analyzed how the target companies priced and designed the product mix suitable for various marketplaces. We also evaluated their recent promotion and brand building practices.

Nexdigm (SKP) provided a roadmap of the Indian tractor market through an industry and market assessment along with peer review and analysis. The report also collected provided the current and future structure of duties, indirect taxes and levies along with their impact on the company.

Collection, a critical function for every NBFC, was identified as a problem area in the Client’s processes. The client faced approx. 10% dishonored monthly EMI payments and leading the collection process became expensive without significant results. The client wanted to execute improvement and optimization of their processes to increase collections while minimizing the costs of the same.

Nexdigm (SKP)’s approach to this project was based on the four pillars of time, cost, quality and risk. A thorough monitoring system was put in place with daily, weekly, fortnightly and monthly reports, to identify obstacles early on and ensure that all activities were on track.

The set-up process involves getting the right approvals, appointing the right vendors, and ensuring smooth coordination between them. To meet this end, Nexdigm (SKP) deployed a dedicated project team on-site to ensure that every detail was executed as planned. This enabled Nexdigm (SKP) to prepare for and handle obstacles smoothly without hampering the flow of the project.

Timely Delivery

Nexdigm (SKP) obtained crucial registrations in record time which were critical for completing the project on time. For example, the Pollution Clearance which must be obtained before setting up a factory in the State of Madhya Pradesh generally takes about 45 days. However, with the proactive approach of the project team and the concerned authorities, this was obtained in five days.

Cost Savings

Nexdigm (SKP) conducted various negotiations on behalf of the client with their vendors, bankers and suppliers, and resulted in a significant saving versus the initial project cost. Furthermore, the team systematically monitored costs and was involved in preparing and maintaining the project budget which was tracked periodically to identify optimal timing of capital infusion. Nexdigm (SKP) also conducted regular budgeted versus actuals checks to ensure that the project was on track.

Incentives

Nexdigm (SKP) identified, applied for and obtained incentives offered by the government through a dedicated liaising effort by its project team. These incentives were worth more than those available under regular state incentive schemes. This achievement was possible because Nexdigm (SKP) aided Avgol in convincing the State authorities of the value Avgolwould bring to the state.

Loan Syndication

Nexdigm (SKP) assisted in loan syndication with three banks (two nationalised banks and one private bank) and was able to get sanctions for term loans in foreign currency which justified the business case of the project.

Outsourced CFO Position

Nexdigm (SKP) deployed a lean finance and accounts team covering all aspects of a CFO in India for this project. The team worked in tandem with Avgol’s global finance team.

Nexdigm (SKP)’s assistance included setting up an accounting and compliance function including designing accounting policies that were aligned to global policies, initialising an accounting software, managing regulatory compliances without delays, preparation and finalisation of financial statements and MIS, and liaising with auditors. This also entailed managing the treasury function including forecasting monthly cash flows and advising on timing and modes of fund infusion.

ERP implementation support

Nexdigm (SKP) assisted in the implementation of SAP ERP for Avgolin India. It included assisting with a design review to the existing global SAP system to align with Indian tax regulatory compliances including GST and withholding taxes as well as the Indian accounting and reporting standards.

Import support

Nexdigm (SKP) supported the company in imports of nearly 100 containers, goods were imported from over 10 different countries across the globe. Nexdigm (SKP) also assisted in the appointment of a specialised Customs consultant to ensure duty benefits on the import of capital goods.

Mitigating Risks

By working proactively with various stakeholders, Nexdigm (SKP) helped identify risks in various areas such as, legal, compliance, financial and commercial amongst others.

HR Recruitment Support

Nexdigm (SKP) assisted in organizing and conducting a successful on-site recruitment program. Recruitment support for hiring the General Manager and top functional personnel, technical and non-technical hiring. The team assisted with commercial negotiations for all salaries involved.

On-site safety

Despite an average workforce of 400+ on-site on any given day, the team successfully achieved 450,000 manhours of safe time during project execution as on 1 August 2017.

Policies

Assisted in the implementation of Group level policies (viz. HR Policy, Safety and Security Policy, etc.) after fine-tuning these to suit Indian requirements.

Case Highlights

We obtained crucial registrations in record time which were critical for completing this project within the proposed deadline

Cost Savings

We conducted various negotiations on behalf of the client with their vendors, bankers and suppliers, which resulted in significant saving compared to the initial project cost

Incentives

We identified, applied for, and obtained incentives beyond those available under the regular state incentive schemes

Loan Syndication

We were able to get sanctions for term-loans in foreign currency which justified the business case of the project

ERP implementation support

Nexdigm (SKP) assisted with a design review to the existing global SAP system to align with Indian tax regulatory compliances including GST and withholding taxes as well as the Indian accounting and reporting standards

HR Recruitment Support

We organized a successful on-site recruitment program and assisted with commercial negotiations for all salaries involved