CAPITAL FORMATION SERIES _ decision algorithms pathways for financial modeling in the manufacturing space - illustrative textile manufacturing as an extrapolation.
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The backdrop of contracting economies across the emerging and developed markets in the contemporary times is essentially an opportunity that needs to be construed for driving innovations and research driven initiatives to shape in the outcomes in profitability engineering with distressed pricing regimes for accommodating radically lowered aggregate consumption and falling real incomes and savings; the twin pillars of organic growth sans the speculative gaming in handling public wealth and building capital.
Fundamentals of driving capital formation in the manufacturing space to overcome the grip of cascading influences of contraction in the economies:
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CAPITAL FORMATION – functional derivatives of asset management efficiencies
Managing assets in the manufacturing space for advanced outcomes on productivity, throughput, process yield and the elements of differentiated product engineering are the critical aspects of sustained growth in organic capital formation and constitute the foundation for overcoming the macroeconomic weaknesses and the concomitant adverse impact on real incomes and radical reduction in aggregate consumption.
Asset management efficiencies are the critical aspects of accommodating the distress pricing regimes in an ever – weakening economy to yet maintain sales volumes and establish survival margins of EBITDA > 30%.
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DEBT LIQUIDATION – aggressive focus on profitability through product economy and product engineering initiatives to establish a perpetual EBITDA margin of > 30% along with provisioning for periodic transfers for foreclosing the outstanding long-term as well as working capital loans to effectively bring down the costs of capital and augment capacities to finance CAPEX organically without leveraging or gaming in the capital markets.
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EXPANSION IN CAPACITIES – capital expenditures should be financed through equity (interpret as retained earnings and not gamed IPOs at the expense of the gullible investing public) and never through leveraging and should be backed up by sound market research and intelligent extrapolation of probable balance sheet projections going into the futuristic timeline of the financial years.
SUSTAINABILITY
The economy needs to be inherently return more on invested capital, work on augmenting incomes; real incomes at that and boost consumption through raising incomes and disposable funds for more of consumption as well as discretionary goods and finally establish systemic distribution of wealth on humane and sustainable planes.
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As of now, the apocalypse in the economy is unfolding relentlessly and the industry needs to pay heed quick and fast to make the needle move.
CREDITS: Dr Debasish Banerjee C.Text FTI, PhD – Strategy, CEO & Executive Director-Blackstone Synergy Consulting Group Limited, Nairobi, Kenya. The content has not been edited and reviewed by us.

