•RML Reddy Metalum Ltd was set up by Mr Shanker Rajesh Reddy.•RML manufactured metalum used by heavy industries in their manufacturing process.•Matalum- basic raw material whose ore is basically found in Bihar•RML headquartered at Bombay and works were done in Pune•Large customer base in Maharashtra, Gujarat Karnataka.

RML started production in 1968 and in early 1970’s gross profit margin was 7 percent.

Later the company faced threats like increased power cost and new entrants in Bihar who had a location advantage as the freight cost would be less for them.

To counter these threats Mr Rajesh initiated an expansion plan that doubled the plant’s capacity and reduced the overhead cost per tonne.

In 1988 ,Mr Rajesh passed away due to kidney failure.

After him whole family looked upon his only son Mr Raja Reddy to take over the business.

But Mr Raja who was a computer graduate along with his friends had opened a software company in US and was not interested in RML.

He left for US after making his brother in law Mr Ryan MD of the company.

The company made huge losses between 1990 and 1993. It stopped production in May 1993. Mr r

Ryan explained it as the effects of recession the industry is going through.

Mr Raja was called immediately by his worried mother so as to take over the business.

In July 1993 Mr Ryan sold off his stake in VIGA and came back to India.

Mr Raja did a SWOT analysis of the company and also met RML’s banker customers and suppliers to know what is the problem.

The problem which the company faced were: The industry was in middle of severe recession. Companies in Bihar had a location advantage RML had a location disadvantage due to which

freight charges were more. There was an acute shortage of working capital. RML’s workforce had become unionized. Inefficient management and excess staffing Large number of cases with its suppliers and

customers over payments and receivables. Organization was resistant to change. Employees were engaged in unethical practices.

Based on these findings Mr Raja formulated a turnaround plan and strategic plan to revive RML.

TURNAROUND PLAN Take personal care of all disbursements. Face unions and have reinstate

management control. Settle all cases with suppliers and

customers. Make everyone honest Change organizational culture, hire

personnel from different industries and encourage new ideas.

Begin production as early as possible. Build capable management team

STRATEGIC PLAN Attain leadership in India by purchasing and

developing the mine located near the plant using the new South American technology.

Make an export thrust into south and south Asian markets by setting up a captive power plant in a joint venture with an international power gaint.