Chief Financial Officer / India
The alternative mattered more than the attractive headline
Decisions & consequences
01Revising an investment account after the pool completed eight cycles instead of twelve
In 2022 I approved a model for a defined pool of 20,000 crates purchased at ₹2,500 each, a ₹5 crore investment. The model assumed twelve annual cycles, ₹110 revenue per completed cycle and ₹70 direct service cost per cycle. That produced ₹2.64 crore revenue, ₹1.68 crore direct cost and ₹96 lakh contribution before depreciation, overhead, finance and tax. The model's attractive contribution depended on the capital circulating as often as the assumption stated.
The completed review year produced eight cycles. On the same rate and direct-cost basis, revenue was ₹1.76 crore and direct service cost ₹1.12 crore, leaving ₹64 lakh contribution before the excluded costs. The commercial sponsor wanted to retain twelve in the next investment proposal, arguing that familiarity with the service would improve returns. Operating colleagues described the actual collection, inspection and availability sequence that had limited circulation. I accepted that an improvement was possible but not that it belonged in the base case without stronger evidence.
We deferred the next comparable pool purchase and revised its appraisal around the achieved cycle rate, with a separate case for a supported improvement. This did not declare the existing pool worthless or stop a positive-contribution service automatically. It made the capital decision depend on more than the margin of a single completed movement. We did not describe the ₹32 lakh difference between modelled and actual contribution as cash recovered through changing the paper, and neither contribution figure was presented as a return on the ₹5 crore investment.
The choice disappointed colleagues preparing for expansion and required finance to own an assumption it had previously endorsed. I worked with Nitin and operations to make the earning cycle more visible in future investment reviews. The figures apply to this defined higher-cost subset, not to all 620,000 mixed-size crates in the company. I would now ask what must happen between one earning movement and the next before approving the number of turns in a model. The asset's continued existence was not evidence that the capital had performed the work my forecast assigned to it.
Phasing a capital proposal after reserving for refundable customer deposits
A 2023 treasury discussion began with ₹3.6 crore bank cash and a proposed ₹1.2 crore capital purchase. The apparent surplus looked comfortable until the account included ₹1.8 crore of refundable customer-deposit exposure and ₹1.4 crore of known supplier payments. Those amounts formed a defined planning illustration; the actual timing and conditions of refunds still required review. The full bank balance could not responsibly be treated as uncommitted spending capacity merely because it was visible in one account.
The expansion sponsor wanted to approve the entire purchase and assume deposits would be replaced as new customers joined. That might have happened, but it made the investment depend on a continuing inflow whose timing was not yet supported. I recommended an internal liquidity reserve equal to the stated ₹1.8 crore exposure for this decision, alongside the known supplier payments. The reserve was not described as a statutory ring-fence, a separate bank restriction or a reason to remove the amount from cash in the accounts. It was a management boundary around the capital approval.
On that simplified basis, ₹40 lakh remained before additional commitments. The ₹1.2 crore proposal exceeded it by ₹80 lakh. Asha approved an initial ₹40 lakh stage, with the remaining ₹80 lakh subject to a later decision on cash and demand. That unapproved amount was not an operating saving. The staged approach also had disadvantages: a smaller initial service expansion and the possibility that a later purchase would cost more or arrive at a less convenient time. We retained those consequences in the paper.
No claim was made that every deposit would be refunded immediately or that the chosen reserve was a universal policy for all circumstances. Treasury and commercial colleagues continued examining the actual exposure, while accounting owners retained the appropriate presentation. The decision separated money held from money we were prepared to commit under the stated conditions. I would now put refundable exposure beside the bank balance at the start of the proposal, rather than let a large visible cash number establish an expectation that finance must later explain away.
Comparing repair and replacement without calling the initial outlay gap a lifecycle saving
In 2024 operating specialists identified 600 crates as technically eligible for a defined repair option. The proposal cost ₹900 per crate, or ₹5.4 lakh, and estimated eighteen additional months of service. New units at ₹2,500 each would cost ₹15 lakh and were assumed to provide forty-eight months. The initial outlay difference was ₹9.6 lakh. The procurement sponsor wanted to present that amount as the saving from repair.
I supported examining repair while challenging the comparison's meaning. The two amounts did not buy the same expected service horizon. Dividing the stated cost by the stated months gave ₹50 per crate-month for repair and approximately ₹52.08 for a new unit. That simple illustration excluded discounting, residual value, handling, further maintenance and uncertainty. It was useful for showing why the smaller upfront amount did not establish a ₹9.6 lakh lifecycle advantage, not for declaring a precise economic winner from two ratios.
The board authorised the ₹5.4 lakh repair programme for the technically cleared set, with condition review and follow-up retained by the appropriate operating specialists. Finance did not certify the crates as suitable because the arithmetic looked attractive. We also did not report that eighteen months of additional life had already been achieved at approval. The expected extension and new-unit life remained appraisal assumptions to be tested through subsequent experience. The case records the bounded authorisation, not a completed long-term performance result.
The choice preserved cash initially while accepting the need to revisit the asset sooner if the estimate proved reasonable. It also required a more careful account than a single savings headline. I would now ask every repair proposal to state the service bought, the technical eligibility and the basis of the alternative before calculating a financial benefit. The initial cash difference can matter greatly to a business, but it should be named for what it is. A shorter commitment can be useful without being presented as though it purchased the same future at a fraction of the cost.
Retaining a depot when its allocated loss overstated the benefit of closure
A 2025 depot management account showed annual revenue of ₹2.8 crore, variable service cost of ₹1.4 crore, direct fixed cost of ₹80 lakh and central allocation of ₹90 lakh. The resulting ₹30 lakh loss prompted a closure proposal. The operating sponsor wanted to remove the loss from the network report and concentrate activity elsewhere. That was an understandable response to the reported figure, but the decision required a separate account of what would actually change.
Nitin and I examined the stated annual costs with the responsible owners. Closure would avoid the ₹1.4 crore variable cost and ₹50 lakh of direct fixed expense. The other ₹30 lakh of direct fixed commitments would remain, as would the central costs represented by the ₹90 lakh allocation. Moving that allocation to other depots would not remove the enterprise's underlying expense. The proposal also assumed losing the depot's ₹2.8 crore revenue rather than transferring it intact to another location.
On those stated assumptions, closure would remove ₹2.8 crore revenue while avoiding ₹1.9 crore cost, worsening annual cash contribution by ₹90 lakh. This bounded comparison excluded additional closure costs, asset-disposal proceeds, financing and tax, which would require their own assessment. It was not a claim that the depot should remain forever or that its management account was useless. It showed why subtracting an allocated ₹30 lakh loss from a forecast did not describe the cash consequence of the proposed decision.
Asha retained the depot while asking management to develop a more supportable service redesign. The team continued examining demand and costs rather than treat the retention decision as proof of success. No cash improvement was attributed merely to changing the report. We accepted that a visible accounting loss would remain in the management discussion while the underlying choices were examined more carefully. I would now request the avoidable-cost view alongside any closure proposal from the beginning. A network can become smaller and financially weaker if it removes contribution while leaving the costs it intended to escape.