Client Overview

When we partnered with this food processing and FMCG manufacturing company, they had strong demand but were struggling to maintain profitability and streamline operations:

  • Annual revenue of ₹50 Crores
  • Product portfolio across packaged snacks, beverages, and dairy products
  • Team of 150+ employees in production, logistics, and administration
  • Sales driven by large retail chains and distributors
  • Significant reliance on raw material imports and seasonal production cycles

While the business had a robust market presence, financial and operational systems were not optimized to handle scaling and growth.

The Challenge

Inventory control became a major problem as the business grew. The corporation encountered periodic overstocking of raw materials, especially during off-seasons, which resulted in increasing storage costs and perishable losses. Conversely, understocking of fast-moving SKUs led to stockouts and lost sales opportunities.

Additionally, the company was facing growing production expenses. Margin erosion resulted from ineffective management of raw material price fluctuation, especially in commodities like sugar, wheat, and oils. Some products were underpriced, and others were supporting low-margin items due to a lack of knowledge of cost allocation.

Working capital shortages were caused by distributors’ and big retail clients’ late payments, which affected cash flow. Liquidity was further strained by the company’s reliance on short-term financing to satisfy manufacturing demands. Furthermore, the manual invoicing procedure was laborious and prone to mistakes, which resulted in poor cash flow management and delays in collections.

The Solution

At Sharda Associates, we implemented a multi-faceted approach to address these challenges:

  • Implemented computerized inventory control systems to maximize stock levels in accordance with seasonal patterns and demand projections.
  • Real-time costing tools were put in place to monitor labor, overhead, and material costs, providing management with insight into product-level margins.
  • Improved working capital management by developing cash flow forecasting that matched distributor payment schedules.
  • Reduced delays and enhanced receivables management by automating the invoicing and payment collection process.
  • Worked on pricing methods to safeguard margins, such as adjusting product prices in response to market trends and changes in raw material costs.
  • Improved conditions of payment and vendor agreements to lower supply chain expenses and better match production cycles

The Impact

  • Inventory holding costs reduced by 25% through better stock management
  • Gross margins improved by 18% due to optimized pricing and better cost allocation
  • Cash flow stability improved by 30% through quicker invoicing and improved payment terms
  • Production efficiency increased by 20% through better material sourcing and stock planning

Conclusion

We assisted the food processing company in cutting expenses and increasing profitability while sustaining robust growth by putting in place improved inventory management, optimizing pricing tactics, and enhancing cash flow procedures.

Sharda Associates’ virtual CFO services can offer the clarity and control required to grow economically if your food processing or FMCG manufacturing company is having trouble with inventory management, cost control, or cash flow.