From: Charu Sharma [mailto:
Sent: 05 April 2018 08:54
To:
Subject:Fwd: 2018/9 budget meeting with Premji team
CEO - RA
Sent from my iPhone
Begin forwarded message:
From: "Viney Singh" <
Date: 2 April 2018 at 10:08:05 IST
To: "'William Bissell'" <
Cc: "'Charu Sharma'" <>, "'Mukesh Chauhan'" <>, "'Dilpreet Sokhi Singh'" <>, "'Harpreet Duggal'" <
Subject:RE: 2018/9 budget meeting with Premji team
Dear William,
Noted thanks.
I will update you on our final proposal before we share with Premji team.
Regards
Viney
From: William Bissell <
Sent: 31 March 2018 09:27
To: Viney Singh <
Cc: 'Charu Sharma' <>; 'Mukesh Chauhan' <>; 'Dilpreet Sokhi Singh' <>; Harpreet Duggal <
Subject: Re: 2018/9 budget meeting with Premji team
RA – CEO
Dear Viney,
Thanks for sharing the meeting notes. My thoughts are in red alongside the points.
My best,
William
From: Viney Singh <
Date: Friday, 30 March 2018 6:27 pm
To: William Bissell <
Cc: Charu Sharma <>, Mukesh Chauhan <>, 'Dilpreet Sokhi Singh' <
Subject: 2018/9 budget meeting with Premji team
Dear William,
Mukesh and I had a sitting with the Premji team in Bangalore yesterday.
The keys points of discussion were:
1.We had sent them 2 options of our proposed budgets in advance: a) Rs.1300 cr sale and Rs.220 cr EBITDA and b) Rs.1250 sale and Rs.200cr EBITDA. Much as we would like toIdon’t think a number more than 1250 topline will be possible this coming year and a 1400 number will discourage the teams.
2. The Premji team stated their expectation of a revenue of Rs.1375-1400 cr and EBITDA of 290-300 cr. Here is where some intelligent cost savings might help us reach an EBIDTA of 210-215 on 1250 sales.
3. After deliberations they said they were at worst prepared to look a sale of Rs.1300 cr without building in the discounting inventory( approx. Rs.40 cr). Therefore the total sale expectation including discount planned would be approx. Rs.1340 cr. Their expectation on EBITDA is Rs.275 cr without incl the EBITDA loss on account of discounted inventory- while they have cleared sale of >18 month old inventory. They have agreed to account for this separately. ( Mukesh is that correct pl?). If we correct the problems with products and our relevance with cut and fit and right stocking, right sizing, then we should aim for a run rate of 110-120 cr per month by Q4.
To do this we will have to:
Become highly sensitive to customer feedback, and react on what customers are saying right away. Historically this has been a great weakness of ours and we are paying the price for it. But,I’m confident that with your approach we should be able to correct this quickly.
And our second historical weakness is getting our product cuts, fits and styling right An example even after 25 years of selling mens shirts each one of the same type is still different and we must address this failure on the part of our teams to deliver consistent quality, in our fabrics and this is where we should focus our energy.
4. We have agreed to break up the sales figures into Block 1 and Block 2 of 2018/9 and then explain the sales phasing based on initiatives to be rolled out across SBU’s and Apparel.
Right now we just have one significant SBU andIhope that the Home Business will begin to deliver by the middle of this year.
5. We have also agreed to do a zero based working on costs and to a) justify increase in costs over last 3 years and b) take a hard look at cost savings in 18/19 by function.c) Account for the GST savings
This sounds very sensible.
6. We have agreed to have a final round of discussions in w/b 9th April to close the discussion.Ihope we can close the gap at this meeting.
6. The Premji team expressed a big concern on the 18 month time periods agreed to in our SBU agreements for achieving each milestone. In order to get clarity they spoke with Dilpreet and understood that as per current terms full ESOP payments will be made if milestone achieved within 18 months. Dilpreet explained that there was a cap of 5 years for achieving all the 5 milestones. Their point was that if the SBU took 18 months each to achieve the first 3 milestones = 54 months they would be left with only 6 months to achieve the balance 2 milestones. In effect the leaders could achieve 3 milestones in 4.5 years without any penalty and thereby defeat the purpose of ESOP linkage to achievement of VP5 goals. Rahul has asked for a separate meeting to understand SBU milestones and linkage with VP5.
Ifeel theSBU’s will only make an impact if we shift all departments to the SBU model and link the market goals and scorecards by the end of this year.
7. In the SBU milestone setting discussions Mukesh was also not able to clarify issues as he had not been adequately briefed. In my view it is important that Mukesh is also fully involved in the milestone setting as he has to be fully convinced and in order to frontend discussions on financials.
Mukesh’s involvement will be key.
8. As there was such a big gap in the EBITDA numbers I did not raise the issue of Loyalty program start in 2018/9. TK was also not part of the meeting.
Ihave worked out another low cost way of launching the CRM program as the real disadvantage of a conventional points based system is that one has to account for all points issued as a liability for the first 3 years and this will make the program very costly to run.
Regards
Viney
P.S :
Mukesh: can we pl have a sitting on 3rd/4th and run thru detailed function wise( by cost head) increases from 15/16 till date and then fix sittings with function. I will request Elizabeth to keep ready function wise organograms for the same period. Also if we can run through detailed breakup of GST benefit and how it has been apportioned.
Dilpreet: Can you prepare a monthwise break up of sales by category for 2018/9 and link it with initiatives identified for the year. If we can run through with Ajay once you are ready with it.