Cement Manufacturing Company

C : Sure, before I analyze the problem, I would like to ask a few questions to better understand the client's situation.

I : Sure, go ahead.

C : Do we know the magnitude of the decline, and since when has it been happening?

I : It’s about 6-7% over the past 12 months.

C : Where is the client based out of, and do competitors also see a decline?

I : Competitors had a decline in the initial 2 months but now they are doing fine. The client is based in India.

C : Where does our client lie in the value chain? Are they an end-to-end manufacturer, or do they distribute through third parties?

I : Assume it to be end-to-end.

C : Understood. I think I have a fair understanding of the client, so I’ll move on to analyzing why they are facing this issue.

I : Sure.

C : We know that profit is a function of revenue and cost. So, the problem could stem from either declining revenues, increasing costs, or a combination of both. Do we have any information on which of these might be causing the issue?

I : I would want you to look at both.

C : Sure, I would like to start with revenues first. Revenue is a function of the number of units sold and the price per unit. Do we know if any of these factors have faced a decline?

I : None of these have changed.

C : So, is it fair to assume that revenues have remained stable, and can I focus on analyzing costs?

I : Yes.

C : Alright. I’ll now break down the cost structure into two main categories: fixed and variable costs. Has there been any notable change in fixed costs?