Cost Accountants Can save Bankruptcy .. Through LLP
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.
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