Project Chestnut

An East African cement manufacturer faced an operational standstill due to working capital constraints which impeded its ability to fulfill its debt service obligations. As a result, PwC was appointed by the senior lender to conduct a diagnostic review to obtain visibility into the entity’s historical performance, identify the underlying reasons for distress and develop a turnaround plan for the business.

• Reviewed the entity’s historical financials and forecasted performance to understand key trends and business cycles, and their impact on performance.​
• With support from cement sector experts, conducted an operational diagnostic of the project to identify potential (in) efficiencies and opportunities for improvements​.
• Based on interviews with management and insights from cement sector experts, analysed the Company's primary expenditure categories across the supply chain to provide an overview of the Company’s current cost baseline and cost-saving initiatives, as well as to identify opportunities for further savings.​
• Recommended options available to stakeholders and developed an implementation plan for the selected option.​
• Supported the execution of the turnaround by establishing a Program Management Office to monitor implementation.

• Several initiatives were identified to drive improvements across the business prioritized across the below levers:​
  • Procurement, sourcing and supply chain: With technical input, we identified opportunities to optimize costs with regards to production including further work required to identify an optimal mix of raw materials, enhancing the quality of requisite raw materials and considering the use of alternative sourcing locations to manage logistic costs​.
  • Related party transactions and auxiliary business lines: Identified potential associated activities and related party transactions that contributed to the entity’s high-cost base and eroded profitability​.
  • Management capacity and staffing: Identification of critical vacant positions as well as excess capacity to drive performance improvement and reduce costs​.
• Supported management in the preparation of a turnaround plan and consequent financial restructuring proposal​.

Value impact

Business secured additional capital​

Supported management in developing a turnaround plan to support restructuring discussions with the senior lender, resulting in additional working capital for the business.​

Enhanced management capacity

Onboarded requisite expertise to support management indevelopment of the turnaround plan.

Cost optimisation

Identified opportunities for potential cost savings for the business.