The reasons behind hind's predicament are two fold: an absence of vision and foresight; and the inability to respond to changing competitive trends in the market. The signals would have been evident well in advance. That Sethi did not catch them in time is clearly a failure on his part. While finding a new CEO is certainly a step in the right direction, it is only part of the solution. It is important, in my view, that the incumbent is from the synthetics industry. Time is not on Hind's side. The new CEO cannot simply have the luxury of a learning period, and he should be able to bring to bear a strong techno-commercial orientation on the job from day one.

The immediate priority at Hind is to arrest cash losses. The second is to generate enough liquidity in the working capital cycle. Both these measures can together help build confidence levels among lenders who can then be persuaded to agree to measures like a moratorium on payment of interest and the rescheduling of loans. There are four measures that I suggest in this context.

• Focus on exports: Rayon in particular has high export potential. Hind should target to export at least 25 per cent of its production. This move reduces the rate of interest by 4 to 5 per cent, and brings in the benefits of incentives like packing credit. It also eases pressure on working capital by a minimum of 25 per cent.

• Go in for domestic alliances: Hind should identify niche segments within each product category towards enhancing revenues from domestic sales. These would be areas where the customer is assured of a value added offering. Close on the heels of this initiative, Hind should quickly strike alliances with one or two major customers in each category. Alliances with these ''preferred customers'' could take various forms depending on mutual benefits but the major fallout is that Hind will be able to secure tangible benefits from each alliance. These could be liberal credit terms for supply of raw materials, advance payments for sales orders accepted, or payment against delivery. All these steps enhance liquidity in the working capital system. Alliances will also improve the image and credibility of Hind. That in turn could help secure better terms from other business associates.

• Cut costs: Next only to raw materials, which comprise 60 per cent of the cost of production, power is a major item of cost at about 18 per cent. Putting up a furnace-oil-based power plant-which the institutions would be willing to finance-cuts power costs by 50 per cent. Even leasing a dg set can cut power costs by 30 per cent.

Another element of cost is the payroll. Hind should follow the example of a number of firms in the country that have managed to achieve a voluntary reduction in wages and salaries to tide over difficult times.

• Finally, Hind should source finished goods from both domestic and overseas manufacturers and use its existing marketing resources to sell them at a higher margin towards generating quick cash.

The turnaround-strategy should cover three specific areas over the long-term. The first comprises changes in management and corporate governance. Clearly, it is time for Hind to call in a professional manager. It is, of course, imperative that he should have successfully managed turnarounds in the past. But it is also imperative that he should have the support of not only the existing management but, of the consortium of lenders as well. The time is ripe to install a rigorous framework of corporate governance as part of an attempt to enhance shareholder value.

The second area pertains to business restructuring. Hind must evolve a business restructuring plan based on a detailed analysis of the viability of its current operations. The basic question here is whether it makes sense to retain all existing products. Hind must identify the markets in which it can create a niche for itself by fully leveraging its available pool of resources. A detailed SWOT analysis of each of its four products could help the company.

It may be prudent to consider each product as an individual strategic business unit. It is possible that Hind's limited capacity turns out to be its strength-particularly while operating in niche markets. The SBU approach will help separate non-viable units from the mainstream business and facilitates their sale to companies who may find a better strategic fit. As part of this exercise, it is necessary to reassess manpower requirement in all viable units.

The third area pertains to financial restructuring. A major risk here is in undertaking it in isolation of the business restructuring exercise. Financial restructuring can only support the existing business restructuring plans and should be dictated by the 'servicing capacity' of the chosen business model.

While detailed business plans for next five to seven years should be chalked out as part of these initiatives, Hind should examine how it can best leverage its brand. For instance, technology partnerships can enhance its brand equity.

In the short-term, of course, Hind should prune costs across the board, liquidate unproductive and non-core assets, and improve cash flows. The company should utilise the cash from the liquidation of unproductive assets and funds from the divestment to reduce its debt and improve its working capital position.

Hind should also take up contract manufacturing for larger players. This will not only generate resources but also enhance its credibility in the market. Catering to export markets-or importing from a supplier-are some other options.

A successful transition will require clear and well-understood strategy, a buy-in of this strategy at all levels of the organisation, customer orientation and flawless implementation. A dedicated task force should be created to implement and monitor these strategies.

Hind's very survival is at stake. There are, therefore, some immediate measures it should take to ensure that the business continues to run and on course. These measures are, by their very nature, aimed at scoring some quick hits.

• Cost reduction: This must be undertaken on an aggressive basis covering all aspects including raw material, working capital, logistics and manpower.

• Financial restructuring: This covers a wide area, but three areas that Hind should focus on are, securing a reduction in interest rates, extending its repayment schedules; and converting its debt to equity. Evidently, the consortium of lenders will drive this initiative.

• Getting a grip on product profitability: Herein lies the key to survival. Hind should identify products that make a negative contribution (after accounting for working capital cost) and rationalise its product portfolio without delay. This single step will go a long way in stopping the internal haemorrhage at Hind.

• Liquidating unproductive assets: Selling off surplus office space and land, and outsourcing are some of the measures that Hind should undertake to generate immediate cash.

The message in the medium- to long-term is, 'consolidate and grow'. This requires Hind to pursue the following initiatives.

• Get the business focus right: Hind should undertake only those businesses that have a potential for the future. This assessment should factor in issues related to scale because of the impending rationalisation of the Customs duty structure as recommended by the WTO. That would open the Indian marketplace to global players.

• Divest: Hind should simply exit from businesses that do not have a long-term future.

• Restructure: It makes sense to look at each product as a distinct business entity. This will enable realistic valuations resulting in possibilities of raising funds at competitive rates for businesses that have a long-term future.

In those businesses that have been identified as having a bright future, Hind would have to decide whether it wants to be a volume player or a speciality player.

In case it chooses to be a speciality player, the company will need to enhance quality, focus on R&D and tie up with a commodity player like Vimoline to provide customers with a complete basket of products. This may be the preferred approach. However, if it chooses to be a volume player, it will have to look at significant capacity enhancements as well as expanding markets at home and overseas. This is a decision that it should take once the issue of survival has been dealt with successfully.

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