/Solution to the business running in loss with high cost and stagnant sales
Industrial Equipment
Case Summary
Challenge
After 7 years of existence, situation of the Indian entity was a matter of concern:
- High manpower cost compared to the activity (26 sellers for 1M EUR).
- Same revenue for several years, the subsidiary was not able to self-sustain.
- Significant delays in clients’ receivables.
Head Quarters saw no other option but to close their subsidiary in India
Services Provided
Maier Vidorno Altios offered another option:
Outsource the entire management of the trading business to MV Altios:
- Reduced sales team (3 people)
- Focused on Business Development
- Implemented better payment terms that have been accepted by customers
Delivered Value
Contrary to what they had imagined, the company was able to maintain a presence in the Indian market with year-on-year revenue growth. The business was driven profitably thanks to reductions in manpower costs and payment issues were brought under control.
About the Client
The company is one of the world’s leading producers of pipe tools and pipe processing equipment. With a strong global presence, it operates in 60 countries and generates over 100 million EUR in revenue. In India, the company established its subsidiary in 2004 to expand its market reach and strengthen its footprint in the region.
Project Details
Despite operating in India for seven years, the subsidiary faced significant financial and operational difficulties. One of the primary concerns was the high manpower cost, with 26 sales personnel generating only 1 million EUR in revenue. This imbalance made the business model unsustainable.
Additionally, the subsidiary struggled with stagnant revenue growth for several years, preventing it from becoming self-sufficient. The company also faced significant delays in client receivables, which further strained cash flow and profitability.
Due to these ongoing challenges and the lack of financial viability, the headquarters saw no feasible option but to shut down its Indian operations.
Delivered Value
Despite initial concerns, the company successfully maintained its presence in India with year-on-year revenue growth. By outsourcing management to MV Altios, manpower costs were significantly reduced, improving profitability. The sales team was streamlined from 26 to 3, focusing on business development.
MV Altios also implemented better payment terms, reducing delays and improving cash flow. As a result, the subsidiary became financially stable and self-sustaining. This strategic turnaround transformed a loss-making unit into a profitable and growing business in the Indian market.
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