Here are few steps to maintain the cash flow and to strive in the troubled times.
- Protect the cash flows and operating margins with emphasis on growing volumes.
- Better management of supply chain.
- Negotiate with the supplier on prices- clinch the best deal.
- Global buying of ingredients /spare parts to achieve economies of scale.
- Cut travel cost by at least 30 percent and use video conferencing.
- Hire selectively.
- Keep the inventory of finished goods to the minimum level.
- Collect the money as soon as possible from the trade.
- Rewrite the credit strategies.
Believe in yourself and in your country.
India is a country of hope and opportunities and progress.
Thanks
vibhor
Monday, March 23, 2009
Sunday, March 22, 2009
A food for thought.....
In August 2008, grocery prices soared and inflation ripped through the roof to breach the 12 percent mark.
The week ended march 7 inflation fells to a 30 year low of 0.44 percent from the previous week’s 2.43 percent (4 percent in January).
Such a sudden fall in inflation brings to fore another worry, namely Deflation.
What is Deflation?
It is sustained fall in prices that occurs when the inflation rate passes down below zero percent.
It merits attention that the current sharp fall in inflation is an outcome of :
- Correction in crude oil and commodity prices in the global markets and subsequent price correction in domestic markets.
The deflation is even more worrisome than inflation because it reflects too little money chasing goods and services. When prices start falling, a vicious cycle of lower spending and lower demand sets in, hampering growth.
As consumers defer spending, manufacturers cut production, workers lose jobs and household incomes fall. This, in turn, leads to drop in demand and a further fall in prices.
In these times most companies will be forced to sell their products at reduced prices, which means their sales and profits may soon start declining. And when profits get hit companies cut costs by cutting production and jobs. One devil will lead to the other – falling salaries will increase the burden you carry in the form of loans – home/car/personal.
During extended periods of deflation, equities as an asset class lose their significance as corporates deliver poor results.
Measures for Deflation:
-Measure to counter deflation is monetary policy operations by the central bank. By buying government bonds they increase the money supply and deliberately induce rising prices. Rising prices provide an essential lubricant for any sustained recovery because it increases profits and takes some of the depressive pressures off wages and debtors of every kind.
-And also theoretically government has to just print more money .Printing money is normally a pleasant experience for all governments. Printing more money increases the quantum of money in circulation making it easy for people to spend.
Vibhor
The week ended march 7 inflation fells to a 30 year low of 0.44 percent from the previous week’s 2.43 percent (4 percent in January).
Such a sudden fall in inflation brings to fore another worry, namely Deflation.
What is Deflation?
It is sustained fall in prices that occurs when the inflation rate passes down below zero percent.
It merits attention that the current sharp fall in inflation is an outcome of :
- Correction in crude oil and commodity prices in the global markets and subsequent price correction in domestic markets.
The deflation is even more worrisome than inflation because it reflects too little money chasing goods and services. When prices start falling, a vicious cycle of lower spending and lower demand sets in, hampering growth.
As consumers defer spending, manufacturers cut production, workers lose jobs and household incomes fall. This, in turn, leads to drop in demand and a further fall in prices.
In these times most companies will be forced to sell their products at reduced prices, which means their sales and profits may soon start declining. And when profits get hit companies cut costs by cutting production and jobs. One devil will lead to the other – falling salaries will increase the burden you carry in the form of loans – home/car/personal.
During extended periods of deflation, equities as an asset class lose their significance as corporates deliver poor results.
Measures for Deflation:
-Measure to counter deflation is monetary policy operations by the central bank. By buying government bonds they increase the money supply and deliberately induce rising prices. Rising prices provide an essential lubricant for any sustained recovery because it increases profits and takes some of the depressive pressures off wages and debtors of every kind.
-And also theoretically government has to just print more money .Printing money is normally a pleasant experience for all governments. Printing more money increases the quantum of money in circulation making it easy for people to spend.
Vibhor
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