Dilemma of the CEO of Dushyant Corporate Trainers (DCT)  

SITUATION 
Dushyant, the CEO of DCT was aghast at what the Chairman Naresh Kriplani had suggested in
the 8th board meeting of the company. Instead of the projected profit - that was to begin from the
4th quarter - the company was continuing to make losses for seven consecutive quarters. The
projections had gone wrong many times and Dushyant could not answer directors when the
company will begin making profit. Most board members admitted they had faith in him - but not
in his sales forecasts.

DCT FORMATION   
It was a mere 2 years ago that Dushyant Alande was rejoicing that the dream of his life had come
true. A self employed corporate trainer for most of his professional life of 20 years, he managed
to convince one of his client companies to float a training company in which the company owned
75% and he owned the rest 25%. Although the client company (Archimedes Ventures) was a
majority investor, they understood they did not know the training business well and left the
management entirely in the hands of Dushyant and made him the CEO of DCT.
The MD of Archimedes Ventures Limited (AVL) Naresh Kriplani became the Chairman of the
board and preferred to review the performance every quarter through the board meetings.
Archimedes Ventures was in the business of direct selling of men’s cosmetics (as Oriflame was
in women’s cosmetics) and had a large commission based sales force of 6000 people all over
India. The width and depth of the selling operation spanning over 100 cities needed continuous
training and Dushyant was the one who had been doing an excellent job as a trainer for AVL
over the last 8 years. Explaining his decision to invest in DCT to his board, Naresh had said that,
“ our investment in DCT is strategic and well timed. The training market is growing rapidly, we
ourselves can give a lot of business to DCT, and of course we know Dushyant for several years
to be a very good sales trainer. It has all come together very well”.
Dushyant himself had been a successful sales trainer. After working for 3 years in a Pharma
company where selling plays a key role, he set up his own business and operated out of his
home. In over a decade he became well known among the consumer sales industry in and around
Mumbai and had a good reputation for his training skills among his clients as well as fellow
trainers.

MINUTES OF THE BOARD MEETING SHOW AS FOLLOWS   
The CFO of DCT Ms Alka Kulkarni presented quarterly figures at the board meeting
Sale for the last quarter 50 Lakhs
10% commission : Business Development 5 Lakhs
40% fees of the trainers 20 Lakhs
Travel and incidentals allowances to trainers 5 Lakhs
Retainers for 5 Business Developers 3 Lakhs
Office rent / administration 6 Lakhs
Staff of 5 3 Lakhs
Staff reimbursements 2 Lakhs
CEOs cost 9 Lakhs
Other costs 2 Lakhs
Interest and Depreciation 2 Lakhs
Profit Before Tax (7) Lakhs

In response to the query from the Chairman the CFO gave the following information
• Billing : 250 batches, 2 days each, 25 participants each, at Rs 10000 per day per batch.
• Trainers were paid Rs 4000 per day as the fees and a daily allowance of Rs 1000 per day.
• 5 Business developers were paid a retainer of Rs 20000 pm.

The chairman expressed serious concern about the company performance. He said that we were
supposed to make profit from the 4th board meeting ( Indian laws demand that board meetings
are held every quarter) but even till this (8th) board meeting DCT was continuing to make losses
and that the equity of Rs 100 Lakhs has been wiped out forcing us to borrow – not for future
expansion but for current routines needs – for financing the loss from day to day operations -
which was Rs 7 Lakhs last quarter.

He suggested applying brakes on spending – hard and fast. He suggested that DTC should cut the
office staff from 5 to 2, give no commissions to free lance business development people and
work hard on business development.

Dushyant did not agree with the Chairman. He said that it will sap the morale of the
organization. Morale is very important in any service business and particularly at the start up
stage. The suggested steps may create a scare among the employees and they may take it even to
the customers and even they may get scared of impending closure and take the business away.
He suggested 2 things to the Chairman.
1. Instead of organizing more loans and money, AVL should create more training needs
inside its huge sales force and give the business to DCT and thus help shore up the top
line . This will take care of the bottom line automatically. The chairman said that such
artificial infusion of business will further weaken the business model of DCT which must
learn how to stand on its own feet.
2. There is a lot of demand for training of commission-based “Feet on Street” for various
industries like recovery agents in financial services, credit card, contacting people for
loans, telecom sales etc but actually trainers are difficult to find for Rs 4000 per day.
Good trainers may charge even Rs 6000 per day which he cannot afford. He requested
that AVL, being a good sales company, can spare its sales managers to act as trainers for
the training programs arranged by DCT. This way, the managers will get additional
money and will also become better trainers. The Chairman did not accept this idea either.

It was decided that the CEO will revert to the Chairman within 1 week about how the company
can be made profitable as early as possible.
QUESTION  
• What seems to be the problem and how it needs to be corrected ?
• What did Dushyant not do – in this board meeting ? so far ?
• What did Naresh not do – in this board meeting ? so far ?