In July 2005, Ramesh Jethani, FD of VDC, a CD and DVD replication house, faced the FD’s ultimate nightmare – the premises were destroyed in a huge fire. Now, nearly two years on, how has the company fared? And what work is there still to do?

Ramesh Jethani is FD of VDC, which replicates and distributes CDs, mainly for independent filmmakers. Every day, it produces 120,000 CDs and 220,000 DVDs. On July 14, 2005, a fire, caused by an electrical fault, raged for five days, destroying the offices and warehouse, and nearly bringing the business to a close. Even now, VDC is still recovering from the disaster.

9.30AM I’m on a trading estate in Wembley where VDC is based. Jethani talks me through the day ahead as he shows me round the rabbit warren of office and shop floor. Later, we’re going to London to talk to BDO Stoy Hayward, VDC’s consultant. BDO was responsible for putting in place an IT system just prior to the fire that was a large part of staying afloat after the event. It was essential for Jethani and his team to show that the company was still around, and the lines of communication were opened in three days when the company moved into a new building.

He explains: “With help from BDO and the suppliers that they had sourced to us with respect to IT, within two or three days we were able to get up communications and let the outside world know what the situation was.” Keeping continuity was essential. “Initially we decided to subcontract our customers’ orders because we had no manufacturing of our own, otherwise they would just have gone away and got on with it themselves.”

We sit down with a coffee and Jethani explains how he hung on to his customers in a time of such upheaval. “We explained to them how we were going to get it to work. One or two bigger clients decided that it would be too risky for their business and walked away,” he says. “Obviously, they said ‘when you are back up and running let us know and then we’ll be back’.”

So Jethani busied himself getting the DVD production line up again – the CD line would have to wait until later – to capture the all-important last quarter business in time for Christmas. “Luckily we survived – we had to borrow heavily to buy the assets here. For two months, when business hadn’t come back, we still had to pay our suppliers – it was quite hairy, but the banks were helpful in making the means available.”

10AM It’s time to head to the boardroom for a steering committee meeting to discuss the new company-wide bespoke IT system that has been put in place. All the department heads are here to report back on how it’s gone so far. All part of getting the business on track, Jethani explains.

“By September of last year, we’d pretty much got the business back to where we wanted it, so we’ve spent the last six months getting this project back on track with a view to going live on April 1.” He is optimistic about the prospects for the system. “It does seem that we’re on track. I’m not sure if we’ll hit the initial deadline, but I don’t think we’re too far behind on it.”

The software roll out is designed to improve efficiency across the business but there are specific aspects that will make Jethani’s job easier. “We get all the delivery notes and order information from despatch and customer services, and then we have to read the information manually using the current financial system,” he explains. “The new one will automate everything. In terms of time and money, it’s going to make it more efficient all round.”

11.30AM Once Jethani’s done, we drive to the buildings that VDC is currently renting, as he explains how he came to be working for VDC. A chartered accountant, he qualified with Ernst & Young in the early 1990s and saw his career developing in industry rather than in practice. He joined Honeywell for a couple of years before moving to Gillette. He stayed there, moving up the ranks, until he came to VDC in 2002. He was joining a business that had been owned by the current incumbents for 25 years and that had grown from a turnover of £250,000 to just over £40m at the time of the fire.

One factor that helped soften the blow was that the new warehouse had just been completed on different premises when the fire broke out. He says: “We had no disaster recovery plan as such. Initially our thoughts were: ‘get the insurance sorted out and hopefully within a few weeks they will have found alternative premises’. We had a building which by chance had just been rebuilt. We were very lucky to have that building to move into, so soon after the fire.”

The distribution centre, right near the new Wembley stadium, needed some work to satisfy the insurers it was fit for purpose. Today Jethani needs to check all the work has been carried out. “It’s just to make sure that certain doors have been secured, there are fire extinguishers and gas cylinders in the right areas – the usual,” he says. “You’ve got to be very diligent to make sure everything is right because if it isn’t the insurers won’t pay.”

Once bitten. Insurance irregularities after the fire nearly cost VDC the badly needed payout. Jethani shudders at the memory. “There were various problems with the warranties and the insurers picked up on it. It took almost 12 months to resolve. In that period, obviously we were struggling, having lost a huge amount of money.” It’s a testament to the team that the business didn’t go under.

We head to the new warehouse. The office part is still being refurbished. “The office isn’t being utilised so we’re taking our time completing it,” the FD says. “We haven’t had the funds to finish off the work before, so in the past three months we’ve accelerated the work to get that completed so that we can use the offices.” Satisfied that all the recommended changes have been carried out, we drive back to the offices.

1.20PM The man from the bank who was due to come in for a 1pm meeting hasn’t shown up. Jethani gets on the phone to find out what’s going on. The meeting is to rubber-stamp a £500,000 loan for the plant VDC bought in December.

Jethani describes how keeping tight control of the figures helped him through the bad times. “If you don’t do that, it tends to lead to a mess because you are always fire fighting (we’re assuming there was no pun intended). If you do that you always know where you are.” I wonder how that improved their relationship with the bank? “Well, whenever they asked us for forecasts we were able to deliver accurate information which added credibility to our relationship with the bank. When things are good it doesn’t really matter but when things are bad it adds more weight if they know that you’ve got things under control.”

He establishes that the man from AIB won’t be coming today and settles down with a sandwich to check his inbox.

2PM Jethani meets with Janet, the HR manager, for a quick chat. One of the engineers has said that expensive equipment is getting broken with surprising frequency. The FD discovers that £1,000 metal stampers – which hold the digital information used in the injection moulding machine for making the discs – are being dropped at a rate of three to four a month. So with an eye on costs, Jethani and Janet discuss a training programme to save money on replacements.

They also make headway with an induction programme and training scheme they want to set up. After the meeting, Jethani tells me: “Five years ago, we had little in the way of an HR department. We’ve come a long way in terms of developing our staff and providing benefits. We’re still committed as a business not only to our staff but to expanding.” Just as well, as the company lost 93 of its 240-strong workforce after the fire through redundancies.

2.15PM Remarkably, VDC managed to turn the fire to its advantage in the aftermath. In the process of subcontracting to various firms in the London area, one competitor, NPO, approached him. “They had found it difficult to make it into the market,” he says. “Their MD came to us and said ‘we know that when you are up and running, you will take the business back from us, why don’t you look at buying us out?’” So surely a good opportunity? “They wanted to move the deal quickly just as we did,” he says. “The fire happened on the July 14, we started negotiating from the end of that month.” VDC ended up with NPO’s assets, the lease of the building and some of their employees.

2.30PM On the way into town, we get the chance to talk through the HR challenges the FD faces. “After the fire we’ve had to downsize the business tremendously,” he tells me. “For the year ended September 2006, turnover is about £20m – so it’s virtually half the size it was. In terms of capacity and people the business has shrunk, but commitment’s gone up.” Which is just as well, really, given the mountain they have to climb.

3.30PM Safely into town, we head to BDO to meet with Peter Chadha. Three and a half years ago, VDC got BDO in as its IT consultant. This meeting is to talk about ideas for future IT strategy. “We’re coming to a position where the business has stabilised and I need to understand how they see us moving forward. We had little in the way of IT support prior to BDO coming on-board,” he says. “When Peter joined he realised that IT was in a bit of a shambles and brought in consultants to have a look at it.” Jethani touches wood when praising his advisers. “If we hadn’t put that plan in place, we’d have been left high and dry but thanks to their advice, we were able to get operations back up within days instead of weeks.” Since then, it’s been a steady tale of progress.

4.30PM We go our separate ways; Jethani is making his way back to Wembley. As he gets ready to leave, he reflects: “We made some tough decisions and luckily, they were the right ones. We’re a leaner machine, we’re efficient and we’ve got the future to look forward to now.” Amen to that.

Tags: vdc, ramesh jethani, bdo, film, fd, dvd, cd,

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