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    Turnaround Trauma

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    citra1103
    RML Reddy Metalum Ltd was established in 1968 in India by Mr. Shanker Rajesh Reddy to manufacture metalum for heavy industries. In the 1970s, the company faced threats like increased costs and new local competitors. Mr. Rajesh initiated an expansion plan to counter these threats. After his death in 1988, control passed to his son Mr. Raja Reddy, who was not interested in running the company. The company struggled in the 1990s due to recession and inefficiencies, accruing losses until production stopped in 1993. Mr. Raja returned to implement a turnaround plan, addressing issues like high costs, unions, debts, and culture to revive the struggling company.

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    Turnaround Trauma

    Uploaded by

    citra1103
    406 views6 pages
    RML Reddy Metalum Ltd was established in 1968 in India by Mr. Shanker Rajesh Reddy to manufacture metalum for heavy industries. In the 1970s, the company faced threats like increased costs and new local competitors. Mr. Rajesh initiated an expansion plan to counter these threats. After his death in 1988, control passed to his son Mr. Raja Reddy, who was not interested in running the company. The company struggled in the 1990s due to recession and inefficiencies, accruing losses until production stopped in 1993. Mr. Raja returned to implement a turnaround plan, addressing issues like high costs, unions, debts, and culture to revive the struggling company.

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    Turnaround Trauma

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    RML Reddy Metalum Ltd was established in 1968 in India by Mr. Shanker Rajesh Reddy to manufacture metalum for heavy industries. In the 1970s, the company faced threats like increased costs and new local competitors. Mr. Rajesh initiated an expansion plan to counter these threats. After his death in 1988, control passed to his son Mr. Raja Reddy, who was not interested in running the company. The company struggled in the 1990s due to recession and inefficiencies, accruing losses until production stopped in 1993. Mr. Raja returned to implement a turnaround plan, addressing issues like high costs, unions, debts, and culture to revive the struggling company.

    Copyright:

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    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    406 views6 pages

    Turnaround Trauma

    Uploaded by

    citra1103
    RML Reddy Metalum Ltd was established in 1968 in India by Mr. Shanker Rajesh Reddy to manufacture metalum for heavy industries. In the 1970s, the company faced threats like increased costs and new local competitors. Mr. Rajesh initiated an expansion plan to counter these threats. After his death in 1988, control passed to his son Mr. Raja Reddy, who was not interested in running the company. The company struggled in the 1990s due to recession and inefficiencies, accruing losses until production stopped in 1993. Mr. Raja returned to implement a turnaround plan, addressing issues like high costs, unions, debts, and culture to revive the struggling company.

    Copyright:

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    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 6

    •RML Reddy Metalum Ltd was set up by Mr

    Shanker Rajesh Reddy.


    •RML manufactured metalum used by heavy

    industries in their manufacturing process.


    •Matalum- basic raw material whose ore is

    basically found in Bihar


    •RML headquartered at Bombay and works were

    done in Pune
    •Large customer base in Maharashtra, Gujarat

    Karnataka.
     RML started production in 1968 and in early
    1970’s gross profit margin was 7 percent.
     Later the company faced threats like increased
    power cost and new entrants in Bihar who had a
    location advantage as the freight cost would be
    less for them.
     To counter these threats Mr Rajesh initiated an
    expansion plan that doubled the plant’s capacity
    and reduced the overhead cost per tonne.
     In 1988 ,Mr Rajesh passed away due to kidney
    failure.
     After him whole family looked upon his only son
    Mr Raja Reddy to take over the business.
     But Mr Raja who was a computer graduate along
    with his friends had opened a software company
    in US and was not interested in RML.
     He left for US after making his brother in law Mr
    Ryan MD of the company.
     The company made huge losses between 1990
    and 1993. It stopped production in May 1993.
    Mr r
     Ryan explained it as the effects of recession

    the industry is going through.


     Mr Raja was called immediately by his worried

    mother so as to take over the business.


     In July 1993 Mr Ryan sold off his stake in VIGA

    and came back to India.


     Mr Raja did a SWOT analysis of the company

    and also met RML’s banker customers and


    suppliers to know what is the problem.
    The problem which the company faced were:
     The industry was in middle of severe recession.
     Companies in Bihar had a location advantage
     RML had a location disadvantage due to which

    freight charges were more.


     There was an acute shortage of working capital.
     RML’s workforce had become unionized.
     Inefficient management and excess staffing
     Large number of cases with its suppliers and

    customers over payments and receivables.


     Organization was resistant to change.
     Employees were engaged in unethical practices.
    Based on these findings Mr Raja formulated a
    turnaround plan and strategic plan to revive
    RML.
    TURNAROUND PLAN
     Take personal care of all disbursements.
     Face unions and have reinstate management
    control.
     Settle all cases with suppliers and customers.
     Make everyone honest
     Change organizational culture, hire personnel
    from different industries and encourage new
    ideas.
     Begin production as early as possible.
     Build capable management team
    STRATEGIC PLAN
     Attain leadership in India by purchasing and

    developing the mine located near the plant


    using the new South American technology.
     Make an export thrust into south and south

    Asian markets by setting up a captive power


    plant in a joint venture with an international
    power gaint.

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