Research On The Financial Dilemma Of KAIDI After The Transformation Of Ecological Strategy

With the continuous development of economy and the progress of science and technology,the competition between enterprises is becoming increasingly fierce.Some enterprises will fall into financial difficulties because of the unsuccessful strategic transformation every year.This not only brings huge losses to the enterprise itself and stakeholders,but also brings serious negative effects to the social and economic development.Therefore,how to ensure the sustainable development of enterprises and avoid falling into financial difficulties has become the focus of enterprise managers.Biomass energy is an important renewable energy.Under the background of energy shortage and serious environmental pollution,its development has attracted much attention.Biomass power generation is a way to use the biomass energy of agricultural and forestry wastes,garbage and biogas to generate electricity.It plays an important role in air pollution control,rural revitalization,and solving the "three rural" problems,with significant economic and social benefits.Therefore,many enterprises have been involved in the industry,want to get a piece of this big cake.However,due to the late start of biomass power generation industry in China,it is not mature in both policy and technology.In addition,many enterprises blindly expand the industrial scale,do not payattention to the internal management of enterprises,and the joint effect of internal and external environment leads to financial difficulties.As the leading enterprise of biomass power generation,KAIDI ECO purchased 9 biomass power plants from the controlling shareholders in2009.Based on this,the company gradually changed from diversified operation to specialized operation,with biomass power generation business as the support business.With the scale expansion in recent ten years,KAIDI ECO ranks first in the capacity of ecological biomass power generation unit in China,becoming the real "leader" of biomass power generation industry.However,with the expansion of KAIDI ECO’s ecological scale,it is not the good operation,but the declining profitability and solvency,the shortage of cash flow,the downgrade of credit rating,a large number of litigation cases and the suspension of the listing of the company’s shares,which are in deep financial difficulties.This paper uses the literature research method and case analysis method.first of all,summarizes the relevant literature of strategic transformation and financial distress,and combs out the causes,process and the specific performance of the current financial distress of KAIDI ECO strategic transformation.Secondly,combining with a series of measures in the process of KAIDI ECO’ s strategic transformation,the paper analyzes the reasons why KAIDI ECO is in financial difficulties,mainly for four reasons: the speed of strategic transformation is too fastand blind expansion,the cost of biomass power generation business remains high,the project investment payback period is long and the financing structure is unreasonable.Finally,the paper puts forward the corresponding countermeasures for the reasons of financial difficulties.The short-term strategy is to alleviate the current debt pressure through asset restructuring and debt restructuring.The long-term strategy is mainly to adjust and implement the strategy scientifically,increase technological innovation and improve the gross profit margin of enterprise products,and make rational use of debt financing means.Through case analysis,this paper draws the following two inspirations:first,the process of strategic transformation should grasp the rhythm,not exceed the ability and level of the enterprise itself;second,the financing structure should be arranged well in the process of strategic transformation;third,biomass power generation enterprises are more likely to fall into financial difficulties than other enterprises.Although biomass power generation industry has significant social and environmental benefits,its current development still depends on the support of the government,and enterprises need to be more cautious if they want to transform to such an industry.