The Open-ended question

In the last couple of weeks, I am seeing some different trends emerging. The VP who was least interested in having any interface with me started responding to my emails. A few times he called up on phone too. The VP’s activism is matched with complete silence of the Cartel. Production guy who was friendly to me also is not taking my calls on his mobile. B too did not reply to my calls.

I am not sure of the reasons for change of style. Is the cartel remaining silent with some reasons or objectives? Or is it the order of VP to have single point inter-face with me?

The CEO and the director are on a month long overseas trip. They are meeting each of our existing customers in Europe and in North America. I had also fixed a few meetings for them with the clients that I intend to develop for the company.

A couple of days after their departure, I had got to finalize a deal with a customer in Patna. The deal was very profitable. But somehow VP was finding some reasons to object. One by one on each day he gave reasons not to accept this order.

– We can supply the product only without labels as supplying with labels will ruffle the existing clients – I resolved it by convincing the client to accept the product without labels.

– The price is not attractive – I proved that the price is very lucrative by arranging invoices of / quotes from the competitors.

– Apart from A grade product that we will be supplying, VP wanted the new party to buy B grade by-product also. – The new client agreed to this also due to my persuasion.

This dilly-dallying lasted for 7 days while the customer helplessly had to wait for finalizing the order. I did not like this particular high-handed approach with a first-time customer. At the same time, I played along with VP as taking a confrontationist approach would not help.

Luckily for me, immediately after this deal, I finalized another order with a client based in Jaipur. Then, I received documents for an annual tender from a big Spanish company to supply them with 500 tonnes of product. The outcome for the tender is still not known yet. My informal interactions with the Spanish client had been positive so far. I do hope to receive a positive answer from him soon.

Why has VP suddenly become responsive? My wishful thinking is that after two quick deals, the VP may be sensing that my stars may be rising. So he may want to align with me slowly. Another guess is that the CEO was on the copy of all emails pertaining to the Patna deal and he would have noticed the VP’s trying to make things difficult. So it was possible that CEO may have called the VP from overseas and have asked to co-operate with me. If my second guess is the reason which made VP responsive these days, then it may last only for a short-term. Let us see!

It is not that VP’s responses are always qualitative. His English is rather poor and half the time, I do not understand what he writes about. VP finds it convenient to reply only those emails which concerns about domain he is comfortable with. Any projects which requires study of technical feasibility and which has a long-term scope does not elicit any response from him. Either his confidence is too low or he does not want me to succeed on those deals! There is a high probability that the former is the reason!

CEO had become very excited about the month-long trip on the eve of departing. It looked very childish to me. He neither prepared himself for various customer meetings nor collected copies of correspondences etc. One can be extempore in a public talk, but for business meetings? Need one not be prepared?

After every meeting, he used to call me on phone and brief me in a weird way. He has this tact of talking absolutely bereft of points or sense.

“I met XYX Corp’ Director. I asked him to buy from us. He says he cannot buy all the products from us. I told him he need not buy all the products, but few products from us. He is landing in India tomorrow for some personal work. So you can call him up on his US Mobile number and persuade him to buy from us”

My head started spinning. If I have to call up the customer on his phone to canvass business, when he is on a visit to India,  What was CEO doing in New York? How can one have a conversation with a customer in such a general fashion like the excerpt shown above? Shouldn’t we be talking about the past discussions with the customer, about the products discussed on the last occasion the customer visited the plant, and more specific details, etc? How can one have open-ended discussions if one wants to have some outcome? Are CEOs made this way? If CEO can’t conclude anything, why is he traveling in the first place? Won’t it make more sense to allow me or B to travel? At least, it gives chance to CEO to ask for results from us. Now who can ask CEO about results of the trip?

The Capitalist Circus

I remember going to circus when I was a kid. After a show, I was returning home along with my Dad. Asked him “wish there are more than two jokers in a circus…infact all players should be jokers ring acrobats etc…only jokers”….Dad remarked “if there are only jokers, it wont be called a Circus. We need all the characters to make circus more interesting”. Dad may have been right. But I still felt having full of jokers would only make circus more interesting. I did not realise that to enjoy such a circus, the viewers also have to be jokers.

The problem is that I refuse to become a joker myself. The circus I am talking about is the preparation of a capital budgeting proposal to be presented to the board of directors on the need to build a new freezing tunnel in the factory. Two of the Cartel Members (Finance and Production) and the VP parked themselves in the office in advance of three days. I was also embroiled into the proceedings when I was asked to project sales for next 5 years. wow…I am yet to make a decent sales myself in these 6 months and I am asked to predict sales for 5 years. what an honour! The sales projection for 5 years was needed as the Finance Manager wanted to work out pay-back period.

I just ran my imagination wild…and projected a volume of 800 tonnes in the current year and 4000 tonnes in the fifth year. Finance Manager made me sit with him and went through the costing for each product. As expected, he further increased the sales price by another two rupees in view of the investment in Freezing Tunnels. A whopping 5 crores (Rs 50 Millions) is being planned to be invested! I did not understand why the benefits of having a new and improved freezing tunnels are not being discounted to the current pricing structure to help us tap increased sales, but only costs being added to the price. The poor sales manager (that is myself!) has to bring Rs 2 per kilo more to the already over-costed product prices. hmm…things are going to be tough for me! I could not laugh like a joker.

I learned that it was the production manager’s “technical expertise” which helped arrive the magical figure of 50 Million Rupees as capital investment for this project. Apparently, two quotations were secured from two contractors based in the town where the factory is situated.

The production manager spent a good amount of time with me. He sought out ideas from me on modern freezing tunnels that are coming. He also sought my assistance to speak to some contacts from the Industry and to exchange notes on the project. These reputed consultants or project contractors are from Pune and Mumbai. Those guys discussed modern innovations such as maintenance-less compressors, tri-mix flooring needed for the freezing tunnels, plastic racking systems instead of steel, panelling instead of cement building etc., They also advised that these measures would bring down the project costs substantially. I also introduced the production manager to a friend of mine, working in another company. The company which this friend of mine is working is also building a freezing chambers in their factory. We asked that friend about the project details and about the outlay for the project. He replied – 10 Million. This confirmed my view that our project cost is over-estimated. The Production Manager said that he will consult these guys again once the project is approved by the board.

We three (myself, Finance Manager and Production Manager) were sitting with CEO. I raised the question of outlay – “don’t you think 50 millions is too high investment for a 1000 tonnes Freezing Tunnel?” CEO asked me in an irritating voice – “when did you become a technical staff? Do you think the Production Manager is insane?”. Production Manager was grinning. Finance Manager was expressionless. I did not know what to say. Then I said -” I am not. But I talk from the experience of working in other places”. CEO did not pay cognisance to what I said. He started discussing some unrelated subject with the Finance Manager.

It appeared that the project did not go through in the board meeting. CEO mentioned to me the next day that other directors are sore about this quarter’s performance. This made me presume that the project proposal did not find the board’s approval. After a couple of hours, I heard from H (CEO’s secretary) that the CEO and the tea-drinking Director are sitting in Chairman’s chamber. I also heard that the Chairman could not attend the previous day’s board meeting as he had returned from a far-east country only the previous night.

After a day, we all received a circular from CEO’s office that the Freezing Tunnel project is cleared by the Chairman. To my surprise, I noticed that the storage capacity had been reduced from proposed 1000 tonnes to only 500 tonnes. I looked at the financial outlay. It remained unchanged at Rs 50 Millions. The logical explanation to this change was escaping me.

I was discussing with a friendly colleague about all these. This person works in Corporate Finance dept of the Group. He is responsible for raising finance for capital investment of any of the group companies. He was not surprised about 5o millions. He said – “they have become sensible and have made plans which do not need a lot of outlay. Three years back they planned for an expansion at Rs 350 Millions…whose capacity is utilised at present just 15%.”

A lesson in Capital Budgetting indeed!