Bankruptcy code has come up to save the minority share holders and other stake holders into the system. But it’s being found that this code will be misused by crony capitalist which will end up creating more pain and devastation for the society in the long term. Before the bell of bankruptcy comes into play we need Asset Reconstruction Management which will be lead by Cost Accountants, MBA and also those who have turnaround experts who are entrepreneurs at heart, managers by training and experience, and committed to make companies in distress to perform brilliantly out of the blues. Cost Accountants know how to utilize resources and create turn around for sick industries. We need people who have strong vision of efficient utilization of resources. If we look towards history we find that in 1999 IBM made a turnaround and in 2015 Ford made a turnaround riding on the wheels of optimum resource utilization. Bankruptcy is nothing but wrong utilization of resources and mismanagement conducting deliberately or due to economic factors. . Bankruptcy will not save the economy neither the society over the long term. Those who will lose jobs will never get anything form Bankruptcy. Bankruptcy code is to protect banks, minority shareholders and creditors of the same. Cost Accountants who are looking for practicing opportunity can easily come up with this diverse manpower and intellectual capital to create Asset management companies under LLP.
The devastation of Bankruptcy code is that many ancillary industries will come to an end. Lay off staff, and auction off saleable assets to pay off creditors who get peanuts against their elephant size investments. Bankruptcy code has been implemented but where we have failed is reviving the business before the bell goes for bankruptcy. This Bankruptcy will finally make borrower richer since valuation of asset is always a gimmick and this gimmick loophole is being exploited. Let me put an example. Say my asset are actual valued at Rs 100 cr where as its being inflated to Rs 300cr. Now I take a loan of Rs150 cr and later on files for Bankruptcy. Now my original assets is valued RS 100 cr and by the time I go for Bankruptcy my value comes down to Rs 80 cr, which gets sold at Rs.50 cr. Now who makes how much and what you get out of Bankruptcy code. Now you place a Asset Management heading by a team of people having entrepreneurial mindset with Cost accountants, and MBAs who will get into the business cut down non productive business and will make the company turnaround. This will save mass lay off and les damage to the ancillary industry segment associated with the same. Practicing cost accounts can come together to form this type of organizations.
The government is giving a opportunity of non accountable business process which will harm the society more than creating protection of the stake holders. Indian Post Office also has been one of the key segments for the turnaround where staff was trained to use digital technology and making every one accountable for their deliveries. This is one of the key areas where reduction of cost and making every department to be ABC and making Product pricing and Target Pricing and create market segmentation and tweaking process and products to increase revenue would be a game changing tool. We all know that company gets into Bankruptcy due to extravagant and wrong business strategies and uncontrolled fund management. This is very grey area and as a profession cost accountants can work stupendously top cut and lean the organization wastages of resources and improvise the organization.
. Further Balance Score card and Six Sigma strategies help to improve the quality of management and improves the business revival strategy within everyone in the organization. A strong entrepreneur mind followed with strong business and financial acumen from a Cost Accountant would create game changing tool for saving the organizations. I find a group of professional should come up with Asset Management Banks who will work to save the society from Bankruptcy code segment.
Cost accounting profession has the necessary tools to develop and make turn around within an organization particularly the ones who are getting drowned. We as a profession have been working for the society and I find that we need to come forward with Asset Reconstruction Banks model where a team will revive the companies and save the society and taxpayers resources. Practicing cost accounts can come together to form this type of organizations.
Posts
