From Cash Crunch to Capital Power For over 7 years, a manufacturing business was running as a partnership firm. Although it had a steady turnover of around ₹8–10 Cr, it constantly struggled with working capital shortages. The founders relied heavily on high-interest loans, credit from suppliers, and rolling debt to survive. Every attempt at expansion failed because investors hesitated — the business lacked a clear legal structure, proper valuation, and credible financial systems. That’s when they decided to professionalize the company.

Clear Legal Structure – Pvt. Ltd. Incorporation The business was restructured into a Private Limited Company, bringing governance, compliance, and transparency. A shareholding pattern was created to allocate equity to founders proportionately. Independent directors and auditors were appointed to build trust. Actual Valuation – Numbers That Spoke the Truth Instead of random guesses, a professional business valuation was done using EBITDA multiples, DCF (Discounted Cash Flow), and market comparables. The company’s value was projected at ₹50 Cr based on current revenues, profit margins, and potential scalability.

This gave investors confidence because the numbers were realistic and future-oriented. Working Capital Solution – Investor-Ready Model They prepared a cash flow forecast highlighting how much capital was stuck in receivables and how it limited growth. By showing that ₹10 Cr funding could release the bottlenecks and triple production capacity, the pitch became practical and compelling. Investor Pitch & Equity Dilution – 20% for ₹10 Cr Instead of begging banks for loans, the founders pitched to strategic investors and Bizla Capital-type funding partners.

They offered 20% equity stake for ₹10 Cr investment, valuing the company at ₹50 Cr. The new funds were earmarked for working capital (40%), expansion (40%), and branding & systems (20%). Transformation – From Struggle to Growth The ₹10 Cr infusion cleared all short-term debt, reducing financial stress and freeing up cash flow. Expansion into new markets and modernized production facilities doubled turnover within 2 years. With strong governance and investor backing, the company was re-rated at ₹150 Cr valuation in 3 years. Founders, once trapped in daily cash struggles, became confident leaders with structured growth and investor trust.

Proven Strategy Takeaway: When a business is stuck in working capital struggles, the solution is not more loans but a clear corporate structure (Pvt. Ltd.), realistic valuation, and strategic equity investment. By giving away a small share (20%), the company unlocked massive long-term value and freed itself from debt traps.