‘Chase Cash, Sales Will Come’ and
‘Progress, Bill and Collect.’
S. N. SUBRAHMANYAN
Chief Executive Officer & Managing Director, Larsen & Toubro
Our FY 20 numbers make for very good reading: a healthy order backlog of INR 3.3 lakh crore, orders grew by 9%, sales by 8% and profits by 7% that reflect a very creditable performance in a tough year with a particularly tough Q4 which is normally our best quarter. It reveals that we had enough fuel in our tank to partially offset the disruptions due to the pandemic. We have, however, lost two whole months of billing and therefore have a lot of catching up to do. Although we have entered Unlock #1, there are still several distractions like the spiralling number of positive COVID-19 cases across the country and around us, the lack of sufficient labour at many of our projects, rising tensions at several of our borders and, last and by no means the least, an economy that is still trying to recover.
In such times, it is imperative for each one of us to stay focused on our objectives. The mantra I have been advocating in all my interactions has been ‘Chase Cash, Sales Will Come’ and ‘Progress, Bill & Collect.’ Nothing else matters.
Almost 90% of our projects have resumed operations safely. You need to press the pedal to speed up delivery and keep it floored till the end of this fiscal to catch up on lost ground. At the same time, as we are facing situations that we have never encountered before, we must keep thinking innovatively, strategizing differently, evolving out-of-the-box solutions to stay ahead of the curve.
Across the world, companies and businesses are grappling with unprecedented situations and unexpected developments. Global GDP is set to contract and ours is showing definite contraction. In such a scenario, it is very important to stick to the basics, stick to the knitting, as I say, and continue to do well what we do best. To achieve this, let me reiterate my 5 tasks or my 5 Cs that each one of you should concentrate on.
1. Cash flow: Our focus must be to monitor and proactively collect our monthly outlays. Since end-March, there has been almost zero billing, understandably so, but now that work has re-commenced, we need to chase revenue but with focus, strategy and a well chalked out action plan. Claims & penalties must be tracked more meticulously. Work out all possible negotiations with our obligations and this is the perfect time for such discussions. Our claims with clients should be liquidated as quickly as possible to add cash flow – the most required support for the company in such times.
2. Cost control: Every employee can make a difference if one is disciplined about incurring costs which is one of the most vital tools to keep our company agile and resilient in these turbulent times. It is important to consider and reconsider every expense incurred. Every area of functioning can be studied, analysed and costs saved be it for set-up expenses, hire charges, travel, or even certain administrative costs. Nothing is cast in stone and more so in these unprecedented times; every decision, every negotiation, every aspect of a contract can be re-visited to see if we can squeeze some savings from them. Bring new and competitive vendors on board, keep exploring opportunities for discounts from balance orders placed with significant quantities, strategically lock-in long term supplies of items that could be in short supply, such as construction bulk material. By being vigilant you can discover a hundred more ways to save costs. Apart from some of the big fish mentioned here, more savings can be made by being careful about the small things. Remember, many small drops of water make the might ocean.
3. Catch up: To begin well is half the battle won and it is great that most of our projects have resumed operations but now the onus is to keep up the momentum. Resource remobilization and optimization are key. Use optimal scenario planning, identify critical paths and resources for projects to be fast forwarded. Demobilization to close projects and handing over balance ones must be quick and precise.
4. Clients: Always be on the front foot and this will certainly reshape our position and improve our relationship with them. They must look at L&T as their most reliable partner even in these times. For example, we can identify top government projects that can be fast-tracked for award post lockdown and create a game plan to accelerate awards. Ensure that you frequently connect and keep communicating with them.
5. Care: This issue of ECC Concord is replete with stories from all businesses of how you have taken on the responsibility to selflessly safeguard the health and safety of your workmen and employees at our various project sites. The overall COVID-19 situation has not changed much and hence you need to remain in that same mode, meticulously following the SOPs to stay safe. Project Managers, Construction Managers and EHS personnel must take the lead to ensure that specific SOPs are adhered to. Our partners in the ecosystem including contractors and sub-contractors should also be impressed upon to abide by our guidelines. We must remain ever vigilant to ensure that hygiene, catering, waste management and preventive measures including social distancing are rigorously maintained. That is non-negotiable.
Such times require focus, resolve and strength of character. We have all these in good measure to emerge from this situation stronger, safer, and more successful! Remember, my mantra: ‘Chase Cash, Sales Will Come’ and ‘Progress, Bill & Collect.’
All the best!