Cutting costs in some areas while increasing investment in others helped ride the crisis, reveals ADVAIT CHATURVEDI. The current financial year has not been an easy one for India and its companies. Overseas Infrastructure Alliance (OIA) is certainly not an exception. OIA is an EPC contractor building large industrial plants (sugar manufacturing units), transmission and distribution line (T&D) projects and housing projects for its clients in Africa. Within Africa, OIA began working in the Anglophone region of the continent, including but not limited to countries such as Sudan, Ethiopia and Mozambique. Although the clients were based in Africa, the bulk of the business processes (such as estimation and tendering, design and value engineering, supply chain logistics, HR processes, banking and finance, and many more) were conducted in India. Hence, it was no surprise that when slowdown hit India, it also affected the company. The Indian economic scenario The Indian economic scenario, with its new government, has not been in line with business expectations. According to the Economist Intelligence Unit (EIU), India´s GDP in the first quarter of the present fiscal (2015-16) grew by 7 per cent against a 7.5 per cent expansion during the same period in the last year. Inertia in the passage of bills, low investor confidence and other such hurdles have continued to drag down the country´s growth. At a macro level, the anticipated hike in interest rates in the US has added to the woes of emerging markets, including India. Given such an environment, a company has to be ´adaptable´ to survive the tough times. Mind you, it does not make sense to ´cut costs across the board´ in the company but to selectively pick areas to cut, while at the same time maintaining or even increasing investments in others. The following are a few steps OIA took during the year to tackle the country´s slow growth trajectory: Closely monitored cash flows: The company´s prime motive, over the past few quarters, has been ´to build cash reserves´. Conducting as many as three cash-flow review meetings per week, we are running a tight ship by speeding up the cash inflow (chasing invoices, monitoring various government-sponsored export incentives and other reimbursements) and closely scrutinising the cash outflows (any payments, bills and so on). Financially supported our subcontractors and manufacturers: Several of our subcontractors and manufacturers were also suffering in the environment and were unable to meet project schedules owing to shortage of working capital. Given the situation, OIA decided to selectively help its partners by injecting funds, where necessary, to speed up production and execution at site. Renegotiated existing contracts: We reached out to our financial partners and insurers for better terms. Other expenses such as rent, utilities, telecom and IT service providers were also revisited with the intent to get the most out of the money spent. Avoided wasteful investment: In the current scenario, we received many promotions to buy construction equipment and other assets at discounted or even throwaway prices. Although tempting, we steered away from such promotions and considered first leasing and then spending on asset acquisition, only if it added to improvement in operational efficiencies. Cut costs: A cut in the number of employees was another crucial move that had to be taken for the company´s survival in the long run. However, we were sure to not make this cut too deep as it would have not only led to low employee morale but made scaling up difficult when the time called for it. Further, the company also froze any further hiring at senior-level positions. Cross-functional job rotation: We also started a rotation of people in other areas of the company. For instance, the budgeting head took up procurement function responsibility; the design head took up costing and estimation responsibility; and so on. With some hard work, we were able to get by with the new roles. This cross-functionality also ensured that the company could increase its operational-efficiency by drawing more work out from the given resources. Called existing team to action: A few town-hall meetings and monthly budget meetings were conducted to sensitise the team about the existing economic environment to take them along through this phase. This built up a team spirit and ownership to act in such an economic environment. We have also considered monetary incentives for better team performance. Marketing focus: OIA deepened its focus on reaching to its clients. By selectively attending ´key conferences´ abroad and in India, the company has maintained its image in front of the client. In addition, it has innovatively leveraged social media´s full potential to reach out to its clients. Expanded into new sectors and countries: New sectors such as water and power generation were included in OIA´s current portfolio of projects. We even expanded into other countries in West Africa. Considering the slowdown, we believed it was the right time to enter into a sector and market. Innovation: We continued to invest and look out for products that provide better value proposition to the client. With design engineering and value engineering in the sectors of housing and water, OIA managed to provide better value proposition, thereby pulling ahead from its competition. Improved efficiencies: One of the many initiatives was travel monitoring. OIA´s travel cost is approximately 20 per cent of its annual budget. Considering that the project sites are on a different continent, this cost seems justified. However, the company decided to be more deliberate in each visit. Close monitoring and longer stay at project sites not only reduced the travel cost burden, but presented OIA as a committed contractor to its client. The second initiative was the review of the turnaround time (TAT) of various service-level agreements (SLA) in-house and holding team members more accountable. About the author: Advait Chaturvedi, Director, Overseas Infrastructure Alliance (India) (OIA), built up the company from scratch with a four member team in 2004 to its present stature as a pioneer project developer and execution company implementing large infrastructure projects worth $1 billion across Africa. He is engaged across global forums with decision-makers, government and political leaders and civic society in Africa and India to forge public-private partnerships for resolving development challenges.